The Arizona Corporation Commission held a workshop on April 16 to examine regulatory approaches for large load and data center customers. The event featured presentations from various stakeholders, including Arizona’s largest electric utilities, consumer advocates, and industry representatives.
The growing demand for electricity from data centers and other large users has raised questions about how to protect residential and small business ratepayers while supporting economic development. Workshop participants generally agreed that new or improved policies are needed to ensure that the costs of new infrastructure are fairly assigned to those who cause them.
Commissioner Kevin Thompson, who initiated the discussion 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.”
Commissioner René Lopez said: “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. This shared consensus will shield existing ratepayers from unfairly inheriting costs or risks associated with new large load customers.”
Existing state policies require developers of large loads like data centers to cover certain infrastructure costs through tariffs or energy supply agreements (ESAs). The federal Ratepayer Protection Pledge enacted by executive order in March also requires major technology companies operating data centers nationwide not only to fund their own power needs but also negotiate individual rates with utilities.
Commissioner Lea Márquez Peterson said: “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. Commissioners, stakeholders and our regulated utilities spoke at length about the creation of large load tariffs … We will continue to study activity … by other state Commissions.” Chairman Nick Myers added: “With properly structured tariffs … data centers … can help drive down rates and serve as powerful engines of local economic growth by expanding tax bases and creating high-quality jobs.”
Representatives from APS (Arizona Public Service Company) estimated peak demand loads for their largest customers could reach about 13.1 gigawatts this year; SRP (Salt River Project) serves nearly 7 gigawatts across 59 major clients; TEP/UNS expect several future projects totaling over one gigawatt combined.
Vice Chair Rachel Walden concluded: “I thank everyone who participated… This is a time of unprecedented growth but also an opportunity… There were many solid strategies… I look forward…to refine best practices.” Additional workshops may be scheduled as policy discussions continue.
