(The Center Square) - The Arizona Corporation Commission implemented a new process for electric cooperatives to prevent ratepayers from subsidizing large-load customers such as data centers.
Last month, the ACC unanimously approved rule changes for electric cooperatives, which are nonprofit utility organizations, to prevent their customers from bearing the costs of new transmission and infrastructure investments to meet the needs of large-load customers.
The cooperatives will use the same general guidelines and checklist when they seek the ACC’s approval for a large-load customer. Under the new process, the ACC will determine the fate of electric cooperatives’ contracts with large-load customers.
ACC will determine whether the application is in the public interest, has reasonable rates and prevents other Arizona Electric Power Cooperative customer classes from being adversely affected.
ACC Chairman Nick Myers said the “new large load process gives Arizona cooperative utilities, a clear standardized framework for bringing data centers and large load users online while protecting existing ratepayers from bearing the costs.”
Myers noted large-load customers have increased their interest in Arizona’s rural parts.
“This new process allows rural Arizona to capture the economic growth responsibly without being subsidized by other customers of the utilities,” he added.
Commissioner Kevin Thompson said large-load customers will be mandated to “continue to cover all costs associated with commercial services under this framework, including new infrastructure and transmission construction.”
"This further protects ratepayers from potentially subsidizing costs attributed to serving ‘cost causers' such as manufacturing facilities and data centers,” he explained.
The new process will apply to AEPCO, Duncan Valley Electric Cooperative, Sulphur Springs Valley Electric Cooperative, Mohave Electric Cooperative, Graham County Electric Cooperative and Trico Electric Cooperative.
Allison Ellingson, chief communications officer of MEC, said the new process could make all of Arizona “more attractive to data centers and other large loads by providing a clearer regulatory pathway for serving these loads while protecting existing ratepayers.”
Ellingson called MEC “attractive” to “companies with large electrical loads” because its “bills are among the lowest in the state.”
“MEC did not set our rates to spur economic development or invite data centers to the area, but as a not-for-profit electric cooperative, MEC’s costs are more affordable and designed to recover costs rather than generate profits for shareholders,” she told The Center Square via email.
Ellingson said MEC, which has nearly 40,000 members, has been serving large load customers such as “mines, and manufacturing and industrial facilities” for over 60 years.
According to Ellingson, MEC has received numerous inquiries from potential large-load customers, but has only “actively engaged with one very large load consumer.”
She noted MEC anticipates submitting an application for this large-load customer to the ACC “in the near future.”
Ellingson did not disclose the customer's name to The Center Square.
