Arizona Corporation Commission greenlights Tucson data center energy agreement

The vote comes amid a growing national backlash to data centers, which have been shown to lead to contaminated water supplies, higher utility bills, and an increase in health issues in surrounding communities.

The Arizona Corporation Commission on Wednesday approved a proposal to allow Tucson Electric Power (TEP) to power a data center in Tucson, despite public opposition and questions about the project’s impact on local communities.

In a 4-1 vote that came after two hours of public comment, much of it from concerned residents and activists, the commissioners voted to approve the agreement between TEP and Beale Infrastructure for the “Project Blue” data center. 

In June, the Pima County Board of Supervisors voted to sell 290 acres of land to Beale, but the project depended on the city of Tucson annexing that land into the city to allow the developer to access city water in order to cool the data center.

Noting the strain the data center would have on the city’s water resources and the environment, the Tucson City Council unanimously rejected the proposal and ended negotiations with Beale in August. After the rejection, Beale restructured from water-based cooling to air-based cooling, instead, and began working with TEP on an agreement to power the center with electricity.

Per the agreement, TEP would provide nearly 300 megawatts to Beale to power the center, enough energy to power roughly 45,000 homes in Arizona, according to local utilities. The agreement needed approval from the ACC before developers could continue.

Vivek Bharathan, an organizer with the No Desert Data Center Coalition, encouraged the commissioners to wait for a more thorough public hearing before making a decision.

Last week, Bradford Borman, Tucson’s assistant city attorney, filed a request with the commission, asking for a hearing on the agreement.

“My community is being disregarded and overridden,” Bharathan said on Wednesday. “I’m asking you to vote no, but if you’re not prepared to vote no yet, I’m at least asking you to give time for the city of Tucson’s intervention.”

Lee Ziesche, another organizer with the No Desert Data Center Coalition, asked commissioners to reject the deal and stand with city residents instead.

“This whole deal is falling apart. Amazon dropped Beale, and now they’re trying to rush and push this data center through,” Ziesche said. “Don’t give them a lifeline. Don’t allow TEP to go against the will of the people of Tucson and bring this project back from the grave. The people of Tucson said no.”

Earlier this week, the Arizona Daily Star reported that Amazon had pulled out of the Project Blue data center after Beale switched from water-based cooling to air-based cooling.

Commissioner Rachel Walden questioned TEP, noting that Beale did not seem to have a customer for the proposed data center.

“I’m still wary about whether or not there is a data center at the end of this, since it’s not with the customer. If Google, Amazon or Microsoft were here today, I’d be questioning them,” Walden said.

Sam Arons, the vice president of energy and sustainability at Beale, addressed the commissioners’ concern over a lack of a customer, stating that they felt “confident” they’d find a new customer for the data center by the time it comes online, sometime in 2027.

Addressing the audience of data center critics, Commissioner Rene Lopez said data centers have existed for years and urged them to become comfortable with their rise.

“Data centers are not the enemy. I know they’ve become a pariah recently, but they’re used by all of us. They are a necessity of life. They are going to be around, so embrace the change.”

Lopez’s remarks come amid a growing national backlash to data centers and the heavy-handed way they are often forced on communities that don’t want them.

Residents living in communities located near data centers have reported a rise in a contaminated water supply.  Data centers also require a lot of water and energy to operate, and those costs can be passed on to nearby residents, raising utility bills. Environmental experts and advocates have also sounded the alarm about the rise in data centers and the harm they can cause to both the environment and community health. Lopez seemed to shrug off these concerns, instead telling opponents that they’d already had their say on the matter. 

“Tucson already heard you— you guys said no. You got to be aware of your unintended consequences,” Lopez said. “If this stayed in Tucson, Tucson [would] have control of the water. Understand the consequences of when ‘no,’ comes around, you lose that access. Be aware of what you are asking for.”

Only Walden voted against the proposal, with commissioners Lopez, Márquez Peterson, Chair Kevin Thompson, and Vice Chair Nick Myers supporting the deal.

Following the vote, activists turned their backs on the commissioners to signify their dissatisfaction with the final outcome and vowed to continue fighting the development, noting that the land sale has not yet been finalized. They say their efforts will now focus on urging the Pima County Board of Supervisors to halt the sale of the land.

Ziesche vowed to make the commissioners’ votes a campaign issue in 2026, noting that two commissioners, Thompson and Myers, are up for reelection next year.

“The commissioners failed to do their job today. There are no proper protections in this to protect rate payers, so they should expect to lose their jobs in the next election if they voted for this.”