Arizona regulators have approved a new safeguard for customers served by the state's rural electric cooperatives: a framework designed to prevent data centers and other major power users from passing new energy costs on to existing ratepayers.
The Arizona Corporation Commission's action applies to rural electric cooperatives, according to KTAR.
Here's what to know
Large-load service agreements involving a group of Arizona cooperatives will undergo a formal review before they can move forward.
Six utilities submitted the joint application: Mohave Electric Cooperative, Graham County Electric Cooperative, Trio Electric Cooperative, Sulphur Springs Valley Electric Cooperative, Duncan Valley Electric Cooperative and Arizona Electric Power Cooperative.
Those utilities said they are already in talks with several large-load businesses looking to build facilities in their service areas.
KTAR reported that this kind of growth can require new electric service agreements between the wholesale electricity provider, the retail electric company, and the customer.
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Arizona Corporation Commission Chairman Nick Myers said the goal is to make room for that growth without adding costs to customers' energy bills.
"This new large load process gives Arizona cooperative utilities a clear standardized framework for bringing data centers and large-load users online while protecting existing ratepayers from bearing the costs," Myers said in a news release.
More background
Rural Arizona is drawing growing interest from large-load customers, especially data centers, which can require significant new power capacity.
For households and small businesses already served by these cooperatives, that raises an affordability concern: If new energy-intensive projects, such as data centers, move in, will existing customers end up helping to pay for them?
The commission said the process is designed to protect affordability and reliability for existing customers while still allowing communities to pursue economic development tied to new facilities.
Commissioner Lea Márquez Peterson said the framework also reflects the fact that Arizona's cooperatives are not all structured the same way.
"I applaud our electric retail cooperatives for addressing the challenge of large-load customers interested in rural Arizona," Peterson said. "As we know, every cooperative is structured a little differently and represents diverse communities across the state. It's important that the process for onboarding large loads reflects this difference."
Data centers have raised not only affordability concerns — there are also issues with water consumption and noise pollution associated with them that can affect daily life.
What's being done?
Under the new system, proposed agreements for large-load service will go through a checklist-based application process.
The Arizona Corporation Commission may approve, deny, or amend those agreements.
According to KTAR, the commission's Utility Division Staff will review whether a proposed agreement serves the public interest, whether the rates being charged are reasonable, and whether other customer classes would end up subsidizing the large-load customer's activity.
The commission framed the policy as a way to keep responsibility with the businesses driving the added demand.
"As we confirmed in our meeting, large-load customers will be required (to) continue to cover all costs associated with commercial services under this framework, including new infrastructure and transmission construction," Commissioner Kevin Thompson said.
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