A new Arizona utility rule is taking aim at a growing concern in the era of data centers and other power-hungry developments: ensuring ordinary households are not left to help cover the cost.
State regulators approved a standardized review process for very large electricity customers in southeastern Arizona, creating a new safeguard for co-op members' monthly bills.
Here's what to know
The filing approved by the Arizona Corporation Commission on Aug. 12 came from Arizona Electric Power Cooperative, or AEPCO, which serves as the joint power supplier for Graham County Electric Cooperative, Duncan Valley Electric Cooperative, Sulphur Springs Valley Electric Cooperative, Trico Electric Cooperative, and Mohave Electric Cooperative.
As Gila Valley Central reported, the new process means every Commission case involving a very large power customer will move through the same review track. Each proposal must also include the same basic disclosures when submitted to regulators.
The point is to avoid passing the cost of serving a large new load — whether a data center, greenhouse, or industrial operation — onto residential and small retail members.
Electricity systems must be built and sized to meet demand. When a new customer requires an outsized amount of power, regulators must determine who will pay for the infrastructure and risk tied to that load.
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More background
Rural utilities across the country are increasingly trying to balance economic development opportunities with the need to protect existing customers from rate increases tied to speculative or unusually large projects.
Water was not part of AEPCO's request; the filing was limited to the electricity the participating co-ops could provide. In Arizona, that separation matters because large development proposals often draw scrutiny over water as well as power.
A proposed project in Cochise County's Kansas Settlement area near Willcox illustrates the kind of development at issue. Applicant Louis Mouza said a planned data center would take up about 1,200 square feet, while a solar farm covering roughly 35 to 37 acres of a 40-acre parcel would supply it, with room to grow if additional land becomes available.
What's being done?
The approved process provides AEPCO and its member co-ops with a more clearly defined set of disclosure requirements when they seek permission for large-load arrangements.
With that information laid out more consistently, regulators can better assess whether a large new customer is covering its own service costs rather than passing them on to households and smaller businesses. For co-op members, that works as an added rate-design protection.
It also creates a more transparent process for tracking how major power requests are handled through Corporation Commission proceedings and local co-op review.
Arizona is not necessarily closing the door on energy-intensive growth. It is trying to make sure that growth is priced more carefully.
AEPCO wrote in its application that its members have been "receiving inquiries from large-load customers who are investigating options to locate or expand their operations in rural Arizona. These customers span a variety of industries, including industrial, manufacturing, greenhouses and data center developers."
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