Tucson, Ariz. –Tucson Electric Power (TEP) is affirming that its recent request for a rate review was not influenced by Project Blue, a proposed data center reviewed by the Pima County Board of Supervisors.
The board approved a land sale and rezoning for Project Blue on June 17 after a discussion that addressed the facility’s energy use and other considerations. Later that day, TEP announced it had filed a request for a rate review that afternoon with the Arizona Corporation Commission (ACC).
“Project Blue in no way influenced our decision to ask for a rate review, and was not incorporated into our rate application,” said Erik Bakken, Senior Vice President and Chief Administrative Officer. Bakken attended Tuesday’s board meeting to answer questions from supervisors about the project’s energy use.
“We understand how the proximity of these two events raised concerns, and we regret any confusion or concern that may have caused. The timing was purely coincidental,” Bakken said.
TEP’s proposed rates, which would take effect in September 2026, reflect $1.7 billion in grid upgrades that have been completed since 2021. TEP filed a public notice with the Arizona Corporation Commission on May 15 indicating that a request for new rates was imminent.
While the proposed rates reflect historic costs, the discussion of Project Blue’s potential impact on TEP’s local energy grid was entirely forward-looking. Any benefits or impacts from the project would not occur for many years and were not factored into TEP’s rate request.
Because Project Blue would use energy at consistently high levels, its rates would more than cover its share of the cost of infrastructure needed to serve it. While most of TEP’s service costs are fixed, they are recovered mostly through usage-based charges. So the additional, steady consumption from new industrial-scale customers allows TEP to spread out those costs across more usage. This is why economic growth generally creates benefits for TEP’s existing customers.
TEP provides safe, reliable electric service to about 455,000 customers in Southern Arizona. For more information, visit tep.com. TEP and its parent company, UNS Energy, are subsidiaries of Fortis Inc., a leader in the North American regulated electric and gas utility industry. For more information visit fortisinc.com.
News Media Contact:
Joseph Barrios
(520) 884-3725
jbarrios@tep.com
