Attorney General Kris Mayes Contests Utility Regulators Hasty Approval of Tucson Electric Power’s “Project Blue” Data Center Private Energy Agreement

TUCSON – Citing a lack of transparency, Arizona Attorney General Kris Mayes is contesting the Arizona Corporation Commission’s December 10, 2025 decision to authorize Tucson Electric Power’s (TEP)  private energy agreement with Humprey’s Peak Power LLC., and its affiliate Beale Infrastructure Group to power a hyperscale data center complex known as Project Blue.  

“The loophole created for the developers of this data center to secretly set electricity rates behind closed doors and outside of the public process is new, rare, and a dangerous recipe for massive price hikes for Arizona consumers,” said Attorney General Mayes. “That’s why my office is stepping in.”  

Attorney General Mayes asserts that a thorough review of TEP's private energy agreement for Project Blue by the Commission could have eliminated a key flaw: a provision allowing TEP and the data center customer to set their own electricity rates without Commission oversight. The Agreement does not clearly state whether such departures from the approved tariff would be subject to Commission review or approval. Article 15, Section 3 of the Arizona Constitution grants the Commission full power to make ratemaking decisions, and it cannot be delegated to private parties. 

“By approving an agreement that allows a utility and a customer to ‘choose their own rate,’ the Commission abdicated its constitutional and statutory authority and its duty to protect ratepayers,” Attorney General Mayes said. 

The Commission’s approval was made without knowing the full impact to customers, as it will require new generating capacity to which costs will be passed onto ratepayers. By 2028, TEP estimates it will be providing 286 megawatts to the project, as much energy as it would take to cool about 57,000 homes. 

The Attorney General’s filing requests that the Commission schedule a full evidentiary hearing and grant intervention to the State of Arizona and the City of Tucson, with full procedural rights, including pre-hearing discovery, the presentation of oral and written evidence, cross-examination of witnesses under oath, and the ability to subpoena witnesses. 

“The public deserves transparency and accountability when utilities enter into unprecedented agreements that may affect electricity rates and grid reliability across Arizona,” Attorney General Mayes said. “The Commission must ensure that its decisions are grounded in a complete record and made in the public interest.” 

The ACC’s decision comes at a time in which hyperscale data centers continue to break ground in Arizona. While traditional data centers typically support the specific information technology (IT) needs of one organization, hyperscale data centers are massive, high-density performance-based operations that are optimized to manage potentially millions of end-users. 

See Attorney General Mayes Rehearing Request here.