ACC Large Load/Data Center Workshop Highlights

Phoenix, Ariz.- The Arizona Corporation Commission hosted an initial workshop concerning the regulatory landscape involving large load and data center customers on Thursday, April 16, 2026. A diverse set of presenters contributed to a sweeping discussion including currently regulatory tools available in Arizona, what other states are doing, consumer and ratepayer protections, the data center perspective, potential independent power producer solutions, embracing free market principles in the digital world, as well as presentations from Arizona's three largest electric utilities.

Commissioner Kevin Thompson, who opened the docket on this topic in 2025, said … "This Commission wants to continue to encourage growth and help spur economic development. We must ensure new growth continues to pay for the demands large users place on our system. To date, Arizona has served as a model in protecting ratepayers, making sure residential and small business customers are not on the hook for large development that taxes our grid. However, we must still be proactive in considering ideas to improve our regulatory system in preparation for the tremendous growth that is coming. All of this must be done with the ratepayer at the top of mind, while ensuring utilities can continue to support growth in responsive and responsible ways."

There was a clear consensus among participants in the workshop that there is a need for new energy policies or improving existing policies to continue to safeguard ratepayers and to ensure that large users like data centers continue to shoulder the costs of building new generation and infrastructure. The workshop participants also appeared to be on the same page when it came to developing statewide standard service mechanisms, voluntary large load service programs, and better defining key terms and goals, such as "large load", "reliability", and "affordability."

"As Arizona continues to address the challenges of increased large load and data center demands, after the workshop, I was pleased to hear that utility companies, consumer advocate groups, and other stakeholders are aligned in assuring the 'cost causer' bears its fair share of expenses, in addition to other risk mitigation and consumer protection measures," said Commissioner René Lopez. "This shared consensus will shield existing ratepayers from unfairly inheriting costs or risks associated with new large load customers."

Arizona already has energy policies in place that require large load and data center developers to bear certain costs related to building new energy infrastructure, which to date has been effective in protecting residential and small business customers from cost shifts. This includes existing tariffs and energy supply agreements (ESAs), which can allow utilities to secure additional strong financial protections and help further ensure large load customers fund all new infrastructure directly.

In addition, the Commission discussed aligning State policy with the Ratepayer Protection Pledge and implementing a hybrid pathway for large load and data center customers, which could include a universal large load tariff along with ESAs that specifically outlines and assigns costs to large load and data center customers. The federal Ratepayer Protection Pledge was recently enacted in March by executive order. It requires U.S. hyperscalers and AI companies to guarantee that data centers' energy needs will not increase household electricity costs by assigning companies to build, bring, or buy the new generation resources and electricity needed to satisfy their energy demands, and pay for all new power delivery infrastructure upgrades to service their data centers. They will also negotiate individual rate structures with their utilities and State governments.

"As we learned, Arizona is one of the most active states in the nation in large load energy demand due to our lower electricity rates, energy reliability, and few natural disasters," said Commissioner Lea Márquez Peterson. "Commissioners, stakeholders and our regulated utilities spoke at length about the creation of large load tariffs to protect residential ratepayers from cost shifts from large commercial customers and the use of energy supply agreements. We will continue to study the activity in this area by other state Commissions and prepare the appropriate large commercial customer strategy for our state."

"While other states are losing extra high load industries, Arizona's lower electric costs, proven reliability, and regulatory environment continue to attract significant private investment," stated Chairman Nick Myers. "With properly structured tariffs and ESAs that prevent cost-shifts, data centers and other large load customers can help drive down rates and serve as powerful engines of local economic growth by expanding tax bases and creating high-quality jobs."

The Data Center Coalition, which represents the voice of the data center industry, stressed that access to Artificial Intelligence (AI) is crucial for nearly all sectors, and that requires the construction of new infrastructure and data centers. Similarly, the Goldwater Institute, an Arizona-based public policy research firm, published a policy paper on data centers, describing them as a core infrastructure for our digital economy. According to the Goldwater Institute, data centers benefit local communities in that they can serve as grid stabilizers by providing emergency backup in power outages, lessening the use of blackouts and brownouts.

Arizona Public Service Company (APS) and Salt River Project (SRP) representatives informed the Commission of the exorbitantly high interest their utilities are receiving from potential large load and data center customers which currently exceed their capacity to serve. SRP currently serves 59 large load customers, a nearly 7,000 MW combined load. APS estimates its peak demand load for large customers will reach approximately 13.1 gigawatts this year. APS and SRP have developed their own queue process for whittling down prospective data center customers and recommended existing and new policies and rules for large load customers, for example, creating a new extra high load factor (XHLF) rate with updated eligibility requirements, a bring your own power policy that would directly assign the costs to produce new electricity generation, and standard contractual agreements that require up-front financial support from prospective data center customers.

More than 80% of Tucson Electric Power (TEP)/Unisource Electric (UNS) Company's customers include residential and small/medium businesses. Their large load commercial customers consist of mainly mining and manufacturing projects; the two largest loads are mining customers. Currently, TEP/UNSE are not serving any data center customers, but are expecting several data center sites to go online in coming years. TEP/UNSE has one data center project under contract with an estimated load forecast of 286 MW; other prospective data center projects are forecasted to require about 800 MW. In addition, the utilities have approximately 8-10 gigawatts of speculative projects in their queue.

"I thank everyone who participated in the workshop and contributed to this important discussion on how we serve large load users while protecting rate payers from cost shifts" said Vice Chair Rachel Walden. "This is a time of unprecedented growth, but also an opportunity to have tremendous economic activity in Arizona. There were many solid strategies and take-aways from the presenters, and I look forward to the continued work alongside my fellow commissioners to refine best practices and develop sound policy."

Arizona ranks in the top five nationwide in data center capacity with even more projects coming. Currently, there are about two dozen data centers in operation in Arizona with more than 2,000 MW (2 GW) of operating capacity, with more than 10,600 MW of additional capacity planned.

Stakeholders and members of the public may continue to submit comments to the docket. All documents and presentations related to this workshop can be found in the Commission's eDocket system, located here (Docket No. E-00000A-25-0069).

Commissioner Thompson indicated his desire to host another workshop in the near future that would further explore possible solutions and policy objectives including developing certainty and consistency in tariffs and definitions across the state, Integrated Resource Planning modifications and reforms, revisions to the RFP process, water considerations, and developing "hook-up" fees similar to what is currently implemented in water cases.

Arizona is among more than 24 states that are currently considering either legislation or new energy policies targeting "large load" and data center customers.

To view the workshop in its entirety, go to the Commission's archives page, or click here: https://azcc.granicus.com/player/clip/6925?view_id=3&redirect=true.