Arizona Attorney General Kris Mayes is pushing back against a recent decision by state utility regulators that she says undermines transparency and consumer protection. On December 10, 2025, the Arizona Corporation Commission (ACC) approved Tucson Electric Power’s (TEP) private energy agreement with Humphrey’s Peak Power LLC and its affiliate, Beale Infrastructure Group — a partnership designed to power a new hyperscale data center complex known as Project Blue.
Mayes argues that the approval process for the deal was “hasty” and left the public in the dark. Her office filed a formal challenge urging the ACC to revisit its decision, warning that the arrangement could allow TEP and its customer to set electricity rates behind closed doors — effectively sidestepping the Commission’s constitutionally mandated oversight.
“The loophole created for this project allows developers to negotiate electricity rates in private,” Mayes said. “That’s a dangerous precedent for Arizona consumers who could end up footing the bill through higher rates.”
According to the Attorney General’s office, the agreement lacks clarity on whether deviations from TEP’s approved tariff would still fall under Commission review. Arizona’s Constitution grants the ACC exclusive authority over ratemaking, and Mayes contends that authority cannot be delegated to private entities.
In addition to transparency concerns, the filing warns that the project’s energy demands could have ripple effects across the grid. TEP estimates it will provide roughly 286 megawatts to Project Blue by 2028 — enough power to cool around 57,000 homes. Any new generation capacity needed to meet that demand could, Mayes argues, ultimately be financed by ratepayers.
Her petition calls for a full evidentiary hearing, granting the State of Arizona and the City of Tucson the ability to cross-examine witnesses, present evidence, and obtain discovery materials — steps Mayes says are essential to ensure fairness and accountability.
“The public deserves to know how major utility agreements will affect their bills and the state’s grid,” Mayes emphasized. “The Commission’s duty is to make decisions rooted in transparency and the public interest.”
The dispute unfolds amid Arizona’s growing status as a hub for hyperscale data centers — massive, high-density operations built to handle data from millions of users. As the state’s digital infrastructure expands, so too does the debate over who should bear the cost of powering it.
For more details, the Attorney General’s rehearing request can be found here.
