Local opinion: TEP's plan to ACC on Project Blue is not acceptable

This week, the Arizona Corporation Commission (ACC) will consider an agreement between Tucson Electric Power and Humphrey’s Peak Power-Beale Infrastructure, the companies behind the proposed data center complex known as Project Blue. TEP’s proposed Energy Supply Agreement (ESA) explains how they are going to provide up to 350 MW of energy for the first phase of Project Blue, while not shifting any costs to residential customers. I’m highly skeptical.

Public opposition to the data center complex has continued to grow since a majority of the Pima County Board of Supervisors voted to sell 290 acres to Humphrey’s-Beale in June (Supervisor Cano and I voted against it). Six weeks later, the City of Tucson voted unanimously not to annex the property. Instead of leaving town in response to the groundswell of community opposition, Humphrey’s-Beale reconfigured the project and has picked up pace to lock in all agreements by the end of the year.

The land sale agreement between the County and Beale states that in order to finalize the land sale, they must show they have access to energy supply. In steps TEP, with a proposal to the ACC outlining how they can provide enough energy for the first phase of the data center complex.

One of the chief concerns we heard from the public was that TEP residential customers would inevitably bear the cost of TEP building additional energy infrastructure needed to meet the massive power demands of Project Blue’s data centers. Despite Beale and TEP dismissing this concern, the ESA doesn’t diminish these worries and, in fact, raises more concerns.

First, given how much energy is on the table (for just the first phase of the project!), there needs to be greater opportunity for public involvement and transparency. By comparison, TEP’s separate proposal to the ACC to increase residential rates by 14% will have hearings, “discovery” like in court proceedings, and cross-examination.

Second, TEP should be required to disclose not just the energy requirements for phase 1 of Project Blue, but for the totality of Beale-Humphrey's data centers in the region. This would include phase 2 of the data center complex on Pima County land, as well as any other data center sites in development in TEP’s service area (because, yes, there will be more).

Third, TEP should be required to reaffirm its commitment to retiring coal-fired power plants by 2032, generating 70% of its electricity from renewable energy by 2035, and achieving net-zero greenhouse gas emissions by 2050. As data centers line up to locate in our community, TEP’s commitments to protect air quality and our community from the impacts of climate change should not be put on the back burner.

Fourth, the ESA should lock in Beale’s pinky-promise that 100% of their phase 1 energy needs (up to 350 Megawatts) is generated by new, renewable energy.  Using renewable energy credits or deducting from TEP’s pre-existing commitments to renewable energy doesn’t cut it. The stakes are too high for our community to allow TEP and Beale to play a sleight-of-hand shell game that results in moving us backwards in our region’s climate resilience and energy goals.

Fifth, the financial security protections in the ESA are not strong enough to cover the investment needed by TEP to provide up to 350MW if Project Blue fails. Without strong protections, those costs could be shifted to rate payers.  Worrying about Project Blue’s collapse is not an unfounded concern. The companies have still not publicly shared who the end user is, and rumors are circulating that the end user might be changing. Without a dedicated end user, TEP is taking a huge risk on the backs of customers.

I’ve been clear from day one: data centers don’t make sense for southern Arizona. We are seeing hints of their proliferation across the region. TEP’s plan for Project Blue creates more concerns than it addresses. I hope the ACC members can zoom out to see how important this first proposal is for our region. Instead of opening the floodgates to data centers, I hope the ACC sends TEP and Beale back to the drawing board to come up with a plan that protects ratepayers and our desert region.