Arizona Public Service (APS) and Salt River Project (SRP), the main electric utilities serving central Arizona, say new large electricity users should pay the costs of serving them. SRP’s published price plan and Tucson Electric Power’s financial disclosures document specific payment protections. APS also publicly describes protections in its large-customer contracts. Those sources establish that safeguards exist, but do not clearly show whether every project’s costs are fully covered. SRP policies; SRP price plan; TEP quarterly report; APS pledge.

Two questions need separate answers:
1) Can utilities deliver power when customers need it?
2) Who pays if customers use less power than expected-or never open?

Demand is rising, but proposed demand is not current use

APS reached a record peak demand of 9,164 megawatts on August 2, 2026. SRP reached 9,072 megawatts on July 24. Both exceeded their earlier summer forecasts, according to the Arizona Corporation Commission’s summer report.

That report compares summer forecasts with later demand records. It does not establish exactly how much dependable power was available at each utility’s peak. Its figures should not be used to claim that a blackout was imminent.

Data centers are part of the increase. APS’s resource-planning director told KJZZ data centers accounted for about 5% of APS’s peak load in 2025 and an estimated 7% in 2026.
SRP separately says data centers contributed 5.1% of its summer 2025 peak. These figures describe different utilities and reporting periods; they do not establish a statewide share. KJZZ reporting; SRP data-center facts.

Heat, population growth and manufacturing also matter. Data centers should not be treated as the singular cause of every increase in electricity demand. Commission summer report; Pinnacle West annual report.

Building power infrastructure takes years

KJZZ reports that APS has sought roughly 8 gigawatts of additional resource capacity in bids since 2023.
For scale, 8 gigawatts supplied continuously for a year would equal the annual electricity purchases of roughly 6.5 million average U.S. homes, based on federal household-use figures for 2022. This is a size comparison: APS’s procurement total includes different resources and does not mean 8 gigawatts will actually be available around the clock.

An APS official separately estimated about 4.5 gigawatts of future demand from just data centers. These are procurement and demand-planning figures, not completed construction or electricity already being used. KJZZ reporting.

The resource mix matters. APS’s annual report lists procurements involving solar, wind, natural gas and batteries. Batteries store electricity supplied from elsewhere, and wind and solar output varies with available wind and sunlight. A total of proposed resource capacity cannot simply be treated as an equal amount of power available continuously. Pinnacle West annual report, Resource Planning; U.S. Energy Information Administration on storage; EIA on generator output.

APS’s 2025 request for proposals seeks at least 1,000 megawatts of resources, generally for operation between June 2029 and June 2031. It also allows proposals as early as 2028 and after June 2031. There is no single date when all additional power is supposed to arrive. APS procurement announcement.

SRP told KJZZ it planned about 2.4 gigawatts of transmission capacity for 10 prospective data-center customers. Its representative cautioned that not every project would necessarily proceed or use its full requested capacity, however. He described that it would take three to four years to build infrastructure and, for some customers, five to ten years to reach full design demand. Those are different timelines: a) construction time and b) the time needed to reach planned electricity use. KJZZ reporting.

A request for power, a signed service agreement, a completed connection and actual electricity use are different milestones. Treating them as interchangeable makes future demand look more certain than it is.

Who pays depends on which costs are involved

Customer-specific construction can have its own funding agreement. SRP says new large customers must fund upgrades assigned to their projects. TEP separately discloses a requirement to pre-fund transmission and switchyard construction for a data-center customer. Those payments should be distinguished from the costs of generating electricity and maintaining the wider system. SRP policies; TEP quarterly report, Energy Supply Agreement.

Rates and contracts also contribute to cost recovery. SRP’s large-load plan includes generation and transmission demand charges. APS describes deposits, minimum bills and termination provisions in its contracts. Whether those payments cover all relevant costs depends on the agreement and how costs are assigned. SRP E-67 plan; APS pledge; Commission explanation of cost allocation.

Ongoing fuel and purchased-power expenses are a separate issue. APS’s Power Supply Adjustor, or PSA, passes qualifying supply costs through customer bills without a profit markup, according to APS and the Commission. That explains how the charges work but it does not, by itself, settle whether they are fairly divided among customer groups. APS explanation; Commission statement.

SRP has upfront payments and a minimum-demand charge

SRP says it introduced its Large Customer Integration Process in 2025 to identify necessary infrastructure and assign upgrade costs. An SRP official told KJZZ that data-center customers must pay 60% of applicable system-upgrade costs before construction. The public policy page does not provide every agreement’s remaining payment schedule or cancellation terms. SRP policies; KJZZ reporting.

SRP’s E-67 plan generally requires defined new large-load accounts to have minimum billing demand equal to 80% of forecast demand. The plan covers qualifying accounts with loads of at least 20 megawatts, including those expected to reach that level within five years. It also covers accounts first becoming large-load accounts on or after November 1, 2025. E-67 applicability and Condition B.

For illustration, a forecast of 100 megawatts would ordinarily produce an 80-megawatt floor for the applicable demand charges, subject to the agreement and allowed reductions. This does not require paying 80% of the entire forecast electricity bill.
Importantly, it also does not establish the payment owed if a project is cancelled before service begins. E-67 billing-demand and minimum-bill provisions.

The exceptions matter. SRP must reduce minimum billing demand based on qualifying customer payments for resources and infrastructure under Condition C, with the reduction reasonably determined by SRP. It may separately reduce the minimum for economic-development purposes. A reduction tied to customer-funded infrastructure is another way to account for payment; its existence alone does not prove a subsidy. Individual service agreements can set additional conditions. E-67 Conditions B, C and E.

APS describes contract protections and has proposed rate changes

APS says its direct pricing contracts include deposits, minimum billing commitments and termination provisions. Its pledge says extra-large customers should cover the infrastructure and power needed to serve them. The public pledge does not disclose a uniform cancellation fee or security amount for every project. APS Pledge for Responsible Energy Growth.

APS has also proposed a 45% increase in base rates for extra-large customers and a mechanism to update rates annually. These are proposals, not evidence of a 45% increase in ever large customer’s total bill. The Commission described the rate case as ongoing in its October 9 statement. Its published schedule anticipated a recommended decision in late November and a vote by December 31, 2026. APS rate proposals; Commission October statement; Commission schedule.

Project Blue provides a specific cancellation example

The Commission approved TEP’s agreement with Humphrey’s Peak Power, LLC in December 2025 for the Project Blue development associated with Beale Infrastructure. TEP says the agreement provides up to 286 megawatts for the project’s first phase. Future phases would require separate agreements and regulatory review. TEP agreement summary; TEP explanation of project phases; Commission approval statement.

TEP’s quarterly report for the period ended June 30, 2026 provides specific financial terms:

  • A customer termination before electricity service begins requires a $40 million payment.
  • TEP received a $40 million letter of credit in April 2026 securing that same obligation.
  • A separate agreement requires the customer to pre-fund transmission and switchyard construction.
  • A $20 million advance payment was triggered in June 2026. The report also said TEP expected another $24 million after specified conditions were met.

Source: TEP quarterly report, Energy Supply Agreement.

The letter of credit is backing for the termination payment, not a second $40 million payment. The report does not show that a cancellation penalty was collected, or establish that the expected additional construction payment was later received. These terms also do not establish standard requirements for APS or SRP.

The approval has faced a separate legal challenge. Attorney General Kris Mayes argues that a provision on future rates improperly delegates the Commission’s authority. The Commission and TEP dispute that interpretation. KJZZ reported no ruling on rehearing at the September 24 hearing; that report does not establish the case’s status after that date. Attorney General’s appeal announcement; KJZZ court report.

The $587 million claim remains a disputed allegation

In an October 9 statement, the Attorney General cited analyst Abhay Padgaonkar’s allegation that $587 million in costs attributable to large electricity users may have been allocated to other APS customers between 2023 and 2025. The statement followed reporting by 12News. The allegation concerns data centers and other large users - not a verified data-center construction subsidy. Attorney General’s investigation request.

APS rejects the analysis. It says electricity-sales growth alone cannot explain fuel and purchased-power costs, and points to prices, weather, resource retirements and expiring contracts. The Commission also publicly disagrees with the analysis and says cost allocation is being examined in the rate case. These statements document a dispute, not a final finding that the claimed cost shift occurred or was disproved. APS response; Commission response.

Oversight exists, but different reviews answer different questions

The Commission says APS’s expenditures, purchases, PSA and cost-allocation methods are under examination in the rate case. APS’s procurement process also provides for an independent monitor. SRP’s combined financial statements for the years ended April 30, 2026 and 2025 received an independent audit opinion from PricewaterhouseCoopers. Commission statement; APS procurement process; SRP independent auditors’ report.

Those reviews serve different purposes. Procurement monitoring reviews a purchasing process. A financial-statement audit addresses whether accounts are fairly presented. Neither is interchangeable with a public calculation matching each data center’s costs, payments, guarantees and remaining cancellation exposure.

The documents reviewed for this article do not provide that complete project-by-project calculation across APS and SRP. That limits what can be concluded publicly; it does not prove that internal accounting or other reviews do not exist.

Arizona Revised Statutes §40-207 requires covered electric public service corporations to report semiannual counts of new extra-high-load-factor interconnection requests and completed connections.
It also allows the Commission to set specified contract protections for service outside a preexisting tariff, including infrastructure-payment requirements supported by schedules. Exemptions apply; the law does not automatically impose identical obligations on SRP. Counts alone cannot track individual projects from request to operation. Statute, subsections A-D; SRP governance background.

What matters if a project falls through

The stage of a project matters. A preliminary inquiry is different from a signed construction agreement. After a contract is signed, deposits, construction payments and termination obligations may apply.
After service starts, minimum bills may continue even when use is below expectations. SRP’s price plan and TEP’s disclosure show why the actual agreement needs to be examined. SRP integration process; SRP price plan; TEP disclosed obligations.

As a matter of financial analysis, the remaining questions are what has been spent, what payments can actually be collected and whether the infrastructure can serve other customers. A cancellation could leave underused assets. It could also leave assets that have value elsewhere in the system. Neither outcome can be assumed for every project.

The evidence supports a careful conclusion: specific safeguards are documented, but their existence alone does not establish complete protection against every project outcome. Equally, an uncertain project does not establish that household customers will pay for its failure.

The useful measures are completed infrastructure, actual power use, customer payments, collected cancellation charges and final regulatory findings. Those results can show whether Arizona is delivering power on time and recovering its costs fairly.

Editorial note: This article provides general information and analysis based on the cited sources available as of October 27, 2026. Information is provided “as is,” without a guarantee of completeness or continuing accuracy. Estimates, forecasts and project plans may change. Allegations and disputed positions are attributed to their sources and are not presented as findings of wrongdoing. This article does not constitute legal, financial or engineering advice. We welcome corrections supported by reliable sources.