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APS settles with attorney general over alleged heat-related death

Key Points: 
  • Attorney General Kris Mayes secures settlement with APS after heat death
  • Agreement requires temperature-based disconnection rules, customer assistance
  • Mayes urges statewide reforms, clashes with ACC  on oversight failures

Attorney General Kris Mayes is calling on the Arizona Corporation Commission and the Legislature to make utility disconnection policies permanent after announcing a settlement with Arizona Public Service following a customer’s heat-related death.

Mayes accused the commission of not doing enough to investigate Katherine Korman’s 2024 death and APS’ disconnection policies. Both the commission and APS took issue with the attorney general’s claims about the May 13, 2024, disconnection of service that allegedly contributed to Korman’s death.

The settlement announced by Mayes on April 15 ensures APS abides by both a temperature and seasonal shut-off system, improves customer notification and safety net programs and pays $800,000 to cover costs for customers facing service termination this year. 

“Utilities have an obligation to, at a minimum, keep their customers alive,” Mayes said. 

Under ACC rules, utility companies in Arizona cannot disconnect electric service during periods of extreme weather.

The ACC gives companies two options for complying with those rules. Companies can either impose a disconnection moratorium between June 1 through October 15 or they can forgo disconnections if the temperature is above 95 degrees or below 32 degrees. 

At the time of Korman’s death, APS had opted for the disconnection moratorium option and had recently ended its voluntary participation in the temperature-based disconnection moratorium. Under the settlement agreement, APS will now implement both disconnection holds to ensure customers do not lose power when extreme temperatures occur outside of the typical summer months. 

APS will also be charged with updating its notification process for informing customers of past-due bills or potential disconnections. In a statement, APS disputed Mayes’ characterization of its policies and denied any wrongdoing. 

“While we have chosen to resolve this matter by adopting enhancements that benefit our customers, APS rejects the Attorney General’s assertions regarding our existing disconnection policies and customer communications, which already meet or exceed all applicable state laws and regulations,” the statement read. 

Now, Mayes is urging the ACC to update its disconnection rules to subject the rest of the state’s public power utilities, like Tucson Electric Power and UNS Electric, to the higher disconnection standards APS has agreed to. She’s also urging the Legislature to codify those standards, since the current disconnection rules could be repealed by the commission at any time. 

“This is a gap in oversight that should not exist, and it should not persist,” Mayes said. “The Commission has the authority to make temperature based disconnection protections permanent and universal across every utility in this state, the legislature has the authority to write them into law.”

In a statement, the commission’s Executive Director Doug Clark disagreed with Mayes’ claim that commissioners did not investigate the disconnection that led to Korman’s death.

“It is notable that nothing in the consent agreement contradicts the Commission’s own findings. We have investigated this matter and found no rule violation,” Clark said. “If APS wants to spend additional shareholder funds, it is free to do so. The consent agreement makes it clear that this payment is outside the regulatory framework and will not be passed on to ratepayers.”

Additionally, the all-Republican members of the commission seemed uninterested in revisiting the disconnection rules when Korman’s death made headlines last year. Commission Chair Nick Myers went so far as to get into an online spat with Korman’s sons, telling them they “failed to protect your own mother.”

“I refuse to tell utilities that they have to provide power to people that do not pay their bills,” Myers wrote in one post in April 2025. “To be honest, I’m not even happy about many of the programs that they have in place to help, but I understand the need for them.”

Still, Mayes sees a failure to act. 

“Protecting Arizonans from having their power cut off in life-threatening heat is not a novel or complicated idea,” Mayes said. “It is a basic obligation of utility regulation, and yet here we are with my office having to step in through a consumer fraud investigation to secure protections that the Commission and the Legislature could have mandated years ago.”

On May 10, 2024, APS discontinued its policy to keep services on for customers when temperatures eclipsed 95 degrees.

On May 13, APS disconnected services to Korman’s residence due to nonpayment. Temperatures reached a high of 99 degrees. Six days later, with electricity still disconnected, Korman was found dead.

Mayes alleged APS’s decision to discontinue its 95-degree policy and its failure to inform Korman and customers like her of more economical utility rate plans violated the Arizona Consumer Fraud Act. 

In a resulting settlement, APS admitted no wrongdoing or liability for Korman’s death. 

But the utility agreed to a list of monetary and policy stipulations. 

APS is now required to reinstate the voluntary 95-degree hold on power disconnections and agree not to disconnect services when temperatures fall below 32 degrees due to nonpayment. The company must also encourage other utilities to do the same. 

And APS must expand upon its Safety Net Program, in which a friend or family member receives alerts for any bills due. The settlement directs APS to make sure its program functions as an emergency notification system to third parties on past-due notices, disconnection warnings and outage notifications. 

As far as financials, APS pledged to funnel $1 million into the Arizona Consumer Assistance and Education Program, with at least $800,000 applied directly to bill credits for customers facing service shut-offs before September 1. 

The company must pay $3.4 million to improve consumer outreach, with a requirement for customer notification by text messages. 

And, finally, APS owes the Attorney General’s Office $2.75 million in shareholder funds to be put to the state’s Consumer Protection Consumer Fraud Revolving Fund and to cover up to $250,000 in attorneys’ fees. 

The settlement announcement comes amid a period of tension between Mayes and the commissioners. The Attorney General’s Office is challenging several recent commission decisions, either in court or at the commission itself.

Mayes’ office is also participating as an intervenor in APS’s ongoing rate case, in which she argues the company’s request for a 14% rate increase for customers could be whittled down to a 3% increase. 

Attorney General Mayes sparks turf war with Arizona Corporation Commission

Key Points:
  • Attorney General Kris Mayes is challenging several recent Corporation Commission decisions
  • Commissioners say Mayes is infringing on their authority to set utility rates
  • The battle is likely to head to court as Mayes looks to reverse several policy and rate decisions

Attorney General Kris Mayes is challenging several recent Arizona Corporation Commission decisions, sparking frustration from a body often considered Arizona’s fourth branch of government. 

In the month of March alone, Mayes’ office filed three rehearing requests in three separate commission matters, accusing commissioners of violating state law, ignoring the commission’s own rules or acting contrary to the best interests of utility customers. Mayes’ office has also filed a lawsuit over the commission’s approval of a controversial data center contract and is intervening in two rate cases involving Arizona Public Service and Tucson Electric Power.

The commission has the exclusive, constitutionally-granted authority to set rates for the state’s public utility companies. Its general counsel, Tom Van Flein, took issue with Mayes’ assertions that recent commission decisions violated any laws. 

“The Commission takes each complaint or application for rehearing seriously. However, policy disputes are not the same as legal error,” Van Flein said in a statement. “The Commission follows the statutes, the Constitution and relevant case law giving it guidance. Policy disputes are not to be resolved in court or even in a rehearing.” 

Commission Chair Nick Myers took it one step further and accused Mayes, herself a former commissioner, of wading into the commission’s jurisdiction to score points for her reelection campaign. Myers is also up for reelection this year, alongside fellow Republican Commissioner Kevin Thompson. 

“(Mayes) needs to get her name out there, and she’s using the office and using these goofy lawsuits to get her name in the public eye for campaign purposes,” Myers told the Arizona Capitol Times. 

Mayes’ communications director Richie Taylor defended the attorney general’s foray into ACC issues in a statement, noting that her office is charged with protecting Arizona consumers.

“When the commission springs 154% utility rate increases on senior citizens, or gives sweetheart deals to data center operators, AG Mayes is going to stand in their way,” Taylor said. “Chairman Myers should focus on fulfilling the constitutional obligations of the Commission on behalf of Arizonans so the Attorney General doesn’t have to step in and do it for them.” 

Former Democratic Attorney General Terry Goddard, who served in the role at the same time Mayes served on the commission in the early 2000s, told the Arizona Capitol Times that his office did not intervene in ACC matters.

“But I think that’s because the commission was doing its job,” Goddard said. “I didn’t see any reason for us to get involved, (the Residential Utility Consumer Office) was, as far as I could tell, advocating for consumers and we didn’t have the same environment that AG Mayes does.” 

Currently, the commission is made up of five Republican members. Without a single Democratic commissioner, many decisions are made unanimously and tend to favor conservative energy priorities, like promoting coal and natural gas generation and ending “Green New Deal” policies.

The tension between Mayes and the ACC has been simmering for months, with tempers flaring in August as the commission was in the process of repealing its Renewable Energy Standard and Tariff Rules. The rules — which required the state’s major utility companies to get 15% of their energy from renewable sources like solar and wind — were originally adopted by the ACC in 2006, when Mayes was serving as a Republican commissioner.

Mayes called the repeal “silly and ridiculous” which led Thompson, then the commission’s chair, to take a jab at her during an August 26, 2025, hearing on natural gas plants. He facetiously referred to Mayes as the “sixth commissioner” for her public opposition to the REST rules repeal.

The commission voted unanimously to repeal the rules on March 5 and Mayes’ office filed an application for rehearing on March 30, arguing the ACC violated its own rulemaking process by finalizing the repeal before a required economic impact statement was completed.

Myers told the Arizona Capitol Times that he believes Mayes has a more personal reason to oppose the REST rules repeal.

“The policies haven’t worked as well as she wanted them to, or she claimed they would, and we got rid of them and now maybe it seems like a personal attack on her,” Myers said. “I don’t know, but that’s my gut feeling on that.”

The day after filing an application for rehearing in the REST rules docket, Mayes’ office filed another rehearing application in a rate case for two water and wastewater companies serving the Robson Ranch retirement community near Eloy. While commissioners grew irritated, residents in the area celebrated. 

“We were pleasantly surprised about the AG’s office involvement,” said Raul Salmon, the leader of a local task force formed to oppose the rate increase. “I mean, the AG’s filing, if you just read it, it vindicates what we’ve been arguing all along.”

Mayes argued the ACC erred in approving a 22% rate increase for water and 154% increase for wastewater for the Picacho Water and Picacho Sewer Companies because commissioners did not adequately consider the impact on ratepayers and did not review documents related to a stock sale of the utilities to JW Water. 

“I think it is the kind of thing that just cries out for reexamination by another party,” Goddard said. “The commission seems to be granting the big increases fairly willingly, and I think that’s a bad standard.”

Thompson and Commissioner Lea Márquez Peterson voted against the rate increase, which could open the door for a potential rehearing, though the commission has yet to act on Mayes’ request. 

Mayes also requested a rehearing on the commission’s approval of a formula rate structure for UNS Gas, allowing the company to adjust customer rates annually rather than going through the typical rate case process every few years. Mayes’ office opposed the commission’s adoption of a formula rate policy statement in 2024, arguing the commission should have engaged in a rulemaking process to implement the policy. 

If the commission does not agree to take up any of the applications for rehearing, Mayes can take the issue to court. That’s exactly what she did in the case of Tucson Electric Power’s energy supply agreement with the developers behind a controversial data center project dubbed “Project Blue.”

The commission approved the contract between TEP and Beale Infrastructure Group in December and Mayes filed suit in Maricopa County Superior Court in November, alleging the agreement allows TEP and Beale to adjust an agreed upon rate schedule for electricity service without review by the commission. Mayes’ office argues that the commission violated its own constitutional ratemaking authority by approving that contract provision. 

The Attorney General’s Office has also been vocally opposed to 14% rate increases requested by both Arizona Public Service and Tucson Electric Power. Mayes’ staff attorneys have argued in filings to the commission that those rate increases could be slashed to 3% and 4% respectively, and in statements, Mayes has said approving anything more would be a rubberstamp of corporate greed. 

Those rate cases are ongoing, and a final decision isn’t expected until later this year. In the meantime, commissioners say Mayes’ efforts will not only fail, but will actually increase utility costs for customers by creating regulatory uncertainty and by filing lawsuits that taxpayers are footing the bill for. 

“As a candidate, as well as a commissioner, I am disgusted to see her doing all of this, knowing full well that there’s not a whole lot of legal (weight) to any of it,” Myers said. 

Get ready for utility rate increases every year

Amanda Ormond

Arizonans should be skeptical of anyone promising to end utility “rate shock,” especially when their so-called solution is a policy that makes onerous rate increases automatic.

Arizona Corporation Commissioner Rachel Walden recently voted for a formula rate plan for UNS Gas. Other utilities are lining up to get approval. In her recent op-ed, Walden argues these plans will smooth out utility bills and protect consumers. But the reality, backed by evidence from other states, tells a very different story.

Formula rate plans don’t eliminate rate increases. They eliminate accountability.

Walden’s central claim is that Arizona’s current system leads to sudden, painful spikes in utility bills. But those increases come after a rigorous, public process. In full rate cases, utilities must justify every dollar, under oath, with the opportunity for regulators, consumer advocates and the public to challenge them.

Formula rates replace that scrutiny with autopilot.

Instead of comprehensive reviews, rates are adjusted annually through a preset formula. That means less time, less transparency and fewer opportunities to catch errors or abuse. Oversight doesn’t just depend on whether a review happens. It depends on how thorough that review is, and under formula rates, that rigor is weakened.

Even more troubling: if the formula is flawed, those errors get baked into the system for five years until a full rate case. They can’t be meaningfully fixed in annual reviews. Consumers are stuck paying the price.

This is why the Residential Utility Consumer Office and Attorney General Kris Mayes are asking the Arizona Corporation Commission to reconsider this first of its kind rate plan and its new policy, which allows all monopoly utilities to take advantage. They point out these plans benefit the companies and shift significant risk to ratepayers. 

Make no mistake, formula rates are a gift to the utilities — one that the ACC has given without going through the normal rule development process. 

Walden points to states like Mississippi, Arkansas and Louisiana as success stories. But the evidence from those states doesn’t support her argument.

At the ACC’s  October 2024 workshop, an expert hired by commission staff found there are “no real-world examples nor evidence that shows ratepayers have received meaningful benefits” from formula rates. They certainly haven’t seen lower rates.

In Arkansas, regulators have warned formula rates “do little to incentivize a utility to control its costs.”  In that state capital spending by the largest electric utility — where a utility earns a profit — has nearly doubled since 2012.

In Louisiana, customers have seen average annual increases of more than 5% for nearly a decade.

That’s not stability. That’s a steady upward climb beyond most people’s income growth.

Walden also argues the current system allows utilities to “game the system” using outdated data. But formula rates don’t solve that problem.

Utilities still propose their own spending and revenue needs. The incentive to inflate those numbers doesn’t disappear. What does disappear is the time and scrutiny needed to challenge them.

And if affordability is truly the goal, there’s a far more direct solution that Walden doesn’t mention: Reduce utility profits.

Arizona’s largest monopoly utilities are thriving, and their executives and shareholders are reaping the rewards. Arizona Public Service reported more than $618 million in profit last year, with roughly 13% of customer bills going to shareholders. Tucson Electric Power brought in more than $283 million, with more than 16% of your bills becoming their profits.

These are guaranteed returns from captive customers.

If the concern is keeping bills affordable, why not start there? Why not lower the return on equity for monopoly utilities to reflect their lower risk, rather than locking in a system that virtually guarantees annual increases?

Arizonans deserve reliable service at fair prices. Fairness requires vigilance and accountability by the ACC, not less oversight of the state’s largest monopoly corporations. 

Formula rate plans don’t end rate shock. They normalize it.

And that’s a plan Arizona consumers can’t afford.

Amanda Ormond is director of Western Grid Group and founder of Ormond Group LLC. She is a former State Energy Office director for Arizona.

Insurers say Arizona’s wildfire mitigation plans are not enough

Key Points: 
  • Arizona law shields electric utilities from most lawsuits if their equipment sparks a catastrophic wildfire
  • Insurers and trial lawyers criticize the law’s wildfire mitigation plans as sparse and lacking detail
  • Arizona utilities’ wildfire mitigation plans are under review by the state Forestry Department

A 2025 law shielding Tucson Electric Power, Arizona Public Service and other electric utilities from most lawsuits if their equipment sparks a catastrophic wildfire had just one requirement: The power companies must create comprehensive plans to minimize the risk of fires.

But insurers and trial lawyers who initially argued against the law and negotiated changes to remove their opposition are rebelling now that the plans are being rolled out. They call them sparse, lacking detail and an exercise in “check the box” bureaucracy that will do little to boost protection while leaving homeowners and other Arizonans on the hook if they lose everything in a fire.

In exchange, the utilities will be shielded from lawsuits that could cost them billions of dollars if a town like Payson or Prescott is wiped out by a wildfire caused by their power lines.

The insurers and trial lawyers are also highly critical of the state agency charged with reviewing what are called “Wildfire Mitigation Plans.”

They say that, despite explicit authority in the law, the Department of Forestry and Fire Management failed to write detailed administrative rules requiring the plans written by TEP, APS, and other companies to lay out the specifics of the actions they would take to limit fires. 

Instead, the agency charged with reviewing the plans basically restated the general provisions in the 2025 law in 3 pages of rules it published last month. And despite telling lobbyists for insurance companies, their national associations, and trial lawyers in October that it would consult with them on potential rules and hold a public comment period before they were published, the agency never did so.

Tom Torres, director of the Forestry Department, said the legislation contained a series of details on what the wildfire mitigation plans must contain and the agency essentially adopted those so utilities had them before they filed their plans.

“Our approach to rulemaking was to describe what was required from the legislation. And as we receive the plans and we learn about what is submitted—we’ll learn from that,” Torres said in a Monday interview. “This isn’t to say that our rulemaking won’t be modified in the future, but we felt that the descriptions that were in … the bill were sufficient for us to get started.”

The public will have a chance to weigh in on the plan submitted by APS at an informal public meeting on Wednesday; APS serves about 1.4 million business and residential customers in 11 of Arizona’s 15 counties. Forestry officials will review the plan submitted by TEP’s parent company, Tucson-based UNS Energy, on April 7. Besides 458,000 Tucson-area customers, UNS provides electric services to 105,000 customers in southern and northwestern Arizona through Unisource Energy Services. 

The agency is under a tight timeline to review and approve the plans. Under the new law, if it requests no changes, it must OK one just four months after it is submitted. If it requests changes, the utility gets 90 days to respond, then the Forestry Department is allowed two months to review and approve the modified plan. 

APS’s plan was filed on Feb. 1, meaning it could be approved and the company given the massive liability shield by June 1 if no changes are requested. TEP’s most recent version was filed on March 2, so its plan could win approval by early July.

Torres said the review process has just started and as his staff pores through the plans, they will listen to comments made during the public meetings.

“We’re going to take public comment seriously, and that includes the stakeholders (like insurers). It includes the affected towns and counties, as required by the bill,” he said.

“We are not anywhere near complete with the review of the submitted plans, and we’re taking that responsibility seriously,” he added. “So if stakeholders have comments, and I know that stakeholders will have comments, I encourage them to provide them to us for consideration as we move through the review process.”

Sen. J.D. Mesnard, R-Chandler, added the provision specifically authorizing the Forestry Department to write rules detailing what specifics needed to be included in the utilities’ wildfire mitigation plans. Such administrative rules are frequently needed to put flesh on the bones of legislation that, by its very nature, is general and requires rules to implement legislative intent, but are time-consuming without the exemption Mesnard inserted in the bill.

Mesnard was surprised to learn that the agency had not done so, since the law outlines the agency’s review responsibilities and allows it to charge whatever fees it needs to cover employees’ and others’ review costs.

“I guess I assumed that there would be some level of detail, but figured that the oversight from DFFM would add to what is outlined in the statute itself,” Mesnard said.

The insurance and trial lawyer lobbyists were never told the “rules” had been published and didn’t learn about them until a Capitol Media Services reporter spotted them at the bottom of the agency’s utility mitigation plan website. 

“We consider this to be strikingly insufficient substantively,” Lee Ann Alexander, vice president for policy for the American Property Casualty Insurance Association, said in an email on Monday.

APS pushed hard for the liability shield bill, joined by TEP and other Arizona utilities, because they were worried that a wildfire sparked by their power lines could expose them to massive liability. Utilities in California, Oregon and Colorado have faced major lawsuits after their equipment was found or suspected of causing forest fires that, in some cases, consumed entire communities. 

Pacific Gas & Electric Co. in California was forced to seek bankruptcy protection a year after a hook holding up a transmission line broke in 2018, sparking a fire that destroyed the northern California town of Paradise and killed 85 people.

In 2025 alone, Arizona and seven other states passed laws limiting utilities’ liability for wildfires, according to the insurance association. 

Alexander pointed out that the rules adopted by a California agency for utilities creating wildfire mitigation plans run to 255 pages. Her group pushed for specific, detailed items to be included in the Forestry Department’s rules, but most were not adopted. 

A spokeswoman for APS, Yessica del Rincon, said the company has a “rigorous and comprehensive” wildfire mitigation strategy that includes modern technology like artificial intelligence and high-definition remote cameras to detect smoke to monitor its system. 

The company’s wildfire mitigation team includes former wildland firefighters, foresters and meteorologists.

“The plan shows APS’s commitment to proactive, industry-leading wildfire risk management, and we look forward to demonstrating our thoughtful approach during its review by the Arizona Department of Forestry and Fire Management,” said a company statement provided by del Rincon.

The filed plan outlines ongoing efforts by APS to trim back trees and other vegetation, upgrade power line equipment such as fuses and automatic shutoff switches, and to shut off power to vulnerable lines during high wind events. Those so-called “Public Safety Power Shutoffs” are required elements of the plans that must be included in the 2025 law.

Despite research showing they are highly effective in preventing fires, most utilities view Public Safety Power Shutoffs as a last resort, since they are highly disruptive to customers and carry their own risks, according to a research paper from the Pacific Northwest National Laboratory, a U.S. Department of Energy facility.

The wildfire mitigation plans filed by APS and TEP both discount the use of PSPS’s, saying they’d rarely be used.

“The Companies use a backstop approach where only under the most severe drought and extreme wind conditions would PSPS be triggered,” the plan filed by TEP and Unisource says.

Joseph Barrios, corporate communications manager for Unisource and TEP, said the companies work year-round to reduce wildfire risk. 

“The companies’ wildfire mitigation plan describes the standards and significant measures we use to reduce wildfire risks through robust operations, maintenance, system hardening, public safety preparation and prevention programs,” Barrios wrote in a statement provided to Capitol Media Services. 

APS’s plan notes that its “wildfire mitigation toolkit” includes widespread grid modernization, distribution system hardening, feeder coordination studies, hazard tree risk assessment and defensible space around poles programs, among others

“We rely on all these tools first and only use a PSPS when the conditions in certain areas of our system warrant this intervention,” its plan says. “If APS needs to initiate a PSPS, efforts are made to limit the number of customers affected and the amount of time they are without power.”

In a lengthy interview last week, Alexander said administrative rules that fill legislative gaps are critical, especially because homeowners and businesses, as well as insurance companies, are losing their ability to recover damages from electric companies.

Insurers opposed the bill because it prevents them from recovering what they pay their clients for losses from utilities. Alexander noted that means everyone’s premiums could rise after a major wildfire, to say nothing of the large number of uninsured people — both homeowners and those who own businesses – who will lose as well.

That means getting the wildfire mitigation plans right affects everyone.

“It will not necessarily stop fires to have a robust wildfire mitigation plan,” Alexander said. “But you’re sure going to get a lot closer to a place that people should feel comfortable if it’s robust and is detailed, and gives dates and timelines and specific processes, rather than just what may appear to be a ‘check the box’ plan that complies with the specific items outlined in the statute.”

She said that by comparing the size of the APS documents to those filed by utilities in other western states “it seems hard to imagine” that they will hold the power companies to account. Once a plan is approved by the Forestry Department, it becomes nearly impossible to sue a power company for sparking a fire under the 2025 law.

“To us, it does look very thin, and it proves the point to us you need to have a rulemaking,” she said. “You’ve got to have some very strict standards.”

The plans created by APS and TEP are strikingly lacking in detail when compared to those written by utilities in other states. APS’s plan runs 69 pages and contains no details on investment in new equipment, details of its inspection programs or other items contained in plans for Utah and California utilities. TEP’s runs just 26 pages. 

But Barrios said comparing the two is not reasonable, noting that each utility has “unique risk mitigation considerations” based on location and other factors. 

And he noted that while California utilities are required to list all their internal processes and procedures in their plans, “our plan complies with Arizona’s statutory requirements and the Department of Forestry and Fire Management has raised no concerns.”

PG&E, a utility that serves much of California, has a wildfire mitigation plan that runs 593 pages, plus a 66-page appendix. Rocky Mountain Power, which supplies 1.2 million customers in Utah, Wyoming and Idaho, uses 153 pages to detail its 2023-2025 plan — and notes it planned to invest $446 million over that time to replace fire-prone equipment and trim vegetation to help protect its customers.

The plans filed with DFFM by APS and TEP contain no details on how much money they might need to spend and only general outlines of how they plan to upgrade their systems. 

Barry Aarons, a lobbyist who represented trial lawyers who opposed the bill as it moved through the Legislature, said the final bill’s definition of the mitigation plans left a lot of wiggle room for utilities.

“This is what our worst nightmare was — they were going to decide what a ‘reasonable plan’ was, and DFFM was just going to hold some hearings and tell them what a great group of people they are for filing their reasonable plan,” Aarons said.

“And it’s not enough,” he said. “They have to have stakeholder meetings. They have to actually sit down with all the interested parties and go over their plans, line by line, and determine whether the plan is enough to make sure that they are living up to their part of the agreement that was made.”

The initial bill contained not only the sweeping liability protection for utilities but limited the ability of homeowners or business owners to recover anything but actual damages, things like use of a destroyed car or lost business. 

Facing strong opposition, Mesnard crafted an amendment that took those items out, making the bill more palatable, if not tasty for the opponents. People or businesses can still join in a class-action lawsuit to recover incidental damages — but only if the utility doesn’t follow its approved mitigation plan.

Christian Slater, spokesman for Arizona Gov. Katie Hobbs, a Democrat, said she stood up for ordinary Arizonans by fighting for the changes that eventually made it into the bill. Those included ensuring the wildfire plans were reviewed by experts at the Forestry Department rather than by the Arizona Corporation Commission, which oversees regulated utilities like APS and TEP, or by the boards of publicly owned utilities like the Salt River Project.

“The administration will continue working on a common-sense approach that ensures corporations are doing their fair share to prevent wildfires and protects Arizonans from potential negligence,” Slater said in a statement.

Aarons said it is critical for the Forestry Department, part of Hobbs’ administration, to ensure that his group and others who represent homeowners and others who are losing the right to sue are heard as they were promised during talks on the bill.

“There’s a lot more work that needs to be done, and their promises need to be kept,” Aarons said. “You’ve got to do rule making, got to have stakeholder meetings, got to do all of that — or else this whole thing was a sham.”

Arizona leaders struggle to find compromise on rising energy costs

Key Points:
  • Energy bill affordability is top of mind for Arizona leaders
  • Republicans and Democrats in the Legislature disagree on how to lower costs
  • Gov. Katie Hobbs is unlikely to sign many Republican energy bills 

In Mesa, six Arizonans gathered to tell Gov. Katie Hobbs about how utility bill assistance programs have made it easier for them to pay their bills, keep their homes and provide food for their families. 

One woman named Beverly told the governor that she received a $400 credit toward her Salt River Project utility bill with assistance from the Mesa Community Action Network. Without that credit, Beverly said she doesn’t know what she would do. 

“The prices keep going up and up and there’s nothing you can do about it except for just struggle,” she said. 

Down at the state Capitol, lawmakers and Hobbs are trying to figure out what the state can do to lower those prices as the cost of energy continues to soar. Over 50 bills have been introduced on energy issues like data centers, small modular nuclear reactors and solar and wind farms.

Hobbs tends to remain tight-lipped about legislation that is still making its way to her desk, but she told reporters she is eagerly awaiting policy recommendations from a task force she established via executive order in the fall. 

“There’s a lot of people who want to do something and so they write a bill, and the bill may or may not help,” Hobbs said. “I think framing it around what this group of experts looked at and using that to inform how we move forward is really important.”

With Arizona in a period of divided government, it is difficult for the state’s leaders to find solutions to any problem facing the state. And on a topic as complex as energy, there is no silver bullet answer that will satisfy everyone involved. 

Republicans in the Legislature want to make it easier for utility companies to build new nuclear, coal and natural gas plants, while placing additional burdens on solar and wind developments. Democrats and Hobbs want to boost renewable energy resources and rein in data center growth.

Further complicating efforts from both the legislative and executive branches is the Arizona Corporation Commission’s exclusive, constitutionally-granted authority to set utility rates. While other states have passed laws implementing performance-based ratemaking or issued executive orders allowing utility regulators to pause rate increases, only elected corporation commissioners can create policy around ratemaking in Arizona. 

But that hasn’t stopped lawmakers from nibbling around the edges of the commission’s authority this session. 

Most of the energy bills still active in the Legislature are from Republican lawmakers and target power plant regulations that can often increase utility bills for customers. One bill from Rep. Teresa Martinez, R-Casa Grande, would allow utility companies to replace existing power plants or build new power plants next to existing plants without going through the commission’s typical environmental review process. 

Martinez said during a March 10 House floor debate on the bill that she intends to make utilities cheaper. Representatives for Tucson Electric Power noted during a March 4 Corporation Commission hearing that the review process for new power plants can be arduous and that nearly all costs the utility incurs in the process will eventually be passed on to customers. 

“(It) is a process that could cost ratepayers hundreds of thousands of dollars to put an evidentiary hearing in front of the committee,” a TEP executive said. “… it’s logistically difficult and it’s expensive.” 

Even though most Republican bills on this topic would only forgo the review process if a plant or location has already undergone it once, environmental advocates and Democrats like Rep. Mariana Sandoval of Goodyear argue the legislation “reduces meaningful public oversight of new power plant construction.” 

Rep. Justin Olson, R-Mesa, previously served on the commission and introduced a bill that would prevent utility companies from prioritizing emission reduction goals or renewable energy sources when creating statutorily-required plans for energy generation and capacity. Olson says forcing utility companies to be “technology-neutral” will allow them to prioritize affordability, but Democrats say it will only promote costly coal and natural gas projects.

Hobbs vetoed a similar bill from Olson last year, and other attempts to kneecap renewable energy sources are also likely to face her veto pen. Hobbs wrote in a veto letter for Olson’s 2025 bill that she is not interested in bills that “work against building an energy economy of the future.” 

In the meantime, Arizonans are likely to continue facing high utility bills, as two of the state’s major electric utility companies — Arizona Public Service and Tucson Electric Power — are both seeking 14% rate increases from the commission. After meeting with the utility bill assistance recipients, Hobbs told reporters that she believes the state’s utility companies are eager partners in the quest to lower energy costs. 

“In my conversations with utility leaders, it’s a big concern for them,” Hobbs said. “Their top priority is making sure that electricity stays affordable for households and for existing customers, and it’s a challenge that we all have to tackle together.” 

ACC greenlights energy agreement for TEP to power Project Blue data center

Key Points:
  • The Arizona Corporation Commission approved an energy supply agreement between Tucson Electric Power and the developers of a controversial data center
  • Developers of the data center have been scrutinized for the project’s secrecy
  • The vote comes after Tucson City Council rejected the project earlier this year

The Arizona Corporation Commission voted on Dec. 3 to approve an energy supply agreement between Tucson Electric Power and the developers behind a controversial proposed data center dubbed “Project Blue.” 

The data center is planned for development on unincorporated land in Pima County by Beale Infrastructure and Humphrey’s Peak Power. It has been the center of controversy in southern Arizona for most of 2025 in part due to the developers’ secrecy, their attempts to use water from the city of Tucson and Amazon Web Services’ recent exit from the project. 

After more than three hours of discussion and nearly two dozen members of the public urging a no vote during a Dec. 3 meeting, four of the five commissioners voted in favor of the energy supply agreement, which will allow TEP to provide electricity to the data center starting in 2027.

However, Commissioner Lea Márquez Peterson — the only commissioner who lives in southern Arizona — and Commissioner Rachel Walden both raised questions about Project Blue and TEP’s plans to protect residential utility customers from costs. Márquez Peterson ultimately voted in favor of the agreement alongside Commissioners Kevin Thompson, Nick Myers and René Lopez, while Walden was the lone vote against it. 

“I’m still wary about whether or not there is a data center at the end of this,” Walden said during the meeting. 

Given the immense public interest in the issue, commissioners noted that their vote was not on Project Blue as a whole, but on whether TEP is permitted to provide the data center with the electric generation it will require. At one point, Commissioner René Lopez seemed to scold members of the public in attendance for being wholly against data centers.

“Data centers are not the enemy,” Lopez said. “I know that they’ve become a pariah recently, but data centers are used by all of us.”

Thompson and other commissioners said they believe TEP has crafted adequate guardrails to protect residential customers in the event that the project does not come to fruition, and pledged to hold the company accountable if it attempts to pass costs on to those ratepayers.

“I will be the first one to cry foul in the event that that happens,” Thompson said.

According to an Aug. 25 filing from TEP, the data center is expected to come online in May 2027 and use 286 megawatts of energy daily by 2028. One megawatt is enough energy to power around 225 homes in Arizona, according to local utility companies.

Prior to the Dec. 3 vote, Walden, Márquez Peterson and Myers sent three letters to TEP requesting clarification on how the company would power the data center while ensuring costs are not passed on to residential utility customers. Staff for TEP wrote that the data center will be billed as a “high-load factor customer,” with special provisions outlined in the energy supply agreement that will protect residential customers.

Those include minimum billing requirements regardless of energy usage, a contract termination fee and a capacity ramp-up schedule. Beale Infrastructure has also pledged to pay for two new transmission lines that will be needed to provide electricity to the data center.

TEP executives said during the Dec. 3 meeting that the data center customer will ultimately decrease rates for other customers because it will “make a larger revenue contribution than the actual cost of the project.”

“We believe that we’ve got the gold standard special contract for a data center with existing resources and existing capacity that’s available,” said Erik Bakken, senior vice president and chief administrative officer at TEP.

TEP asked the ACC to approve the energy supply agreement just weeks after the Tucson City Council voted against annexing the land purchased by Beale Infrastructure for development of the data center. Tucson residents rallied against the annexation, which would have allowed the data center to use the city’s water supply to cool the building and equipment.

Before the annexation vote reached the Tucson City Council, the developers of the data center were criticized for attempting to move the project forward in secrecy. Project Blue discussions between Pima County and the developers have been ongoing since 2023, and the county has been under a non-disclosure agreement since 2024.

Part of that non-disclosure agreement meant members of the Pima County Board of Supervisors could not publicly say which company would ultimately use the data center. Public records first obtained by Arizona Luminaria revealed in July that Amazon Web Services was behind Project Blue. 

However, Amazon Web Services will no longer use the data center after the project switched to air-cooling rather than water-cooling, following the Tucson City Council vote. Representatives for Beale Infrastructure told commissioners they are confident they will find a user by the time the data center goes online in 2027.

The project does have some supporters, including the Arizona Commerce Authority, the Arizona Chamber of Commerce and Industry, and the Chamber of Southern Arizona. Those groups say the approval of Project Blue will create jobs and attract more businesses — and data centers — to the state. 

If the data center expands in the future, which developers say is not out of the realm of possibility, TEP and any eventual customer will need to come before the commission for a new energy supply agreement.

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