APS Rate Increase Under Investigation Over Alleged Cost Shifting

Plans to build AI data centers in the Arizona desert have faced strong pushback. Now, Arizona Attorney General Kris Mayes wants an investigation to find out if one of the state’s biggest power companies has made utility customers pay extra for this controversial technology.

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Arizona Public Service, known as APS, is the state’s largest power company. It supplies electricity to central and northern Arizona, covering most of the Phoenix area, Prescott, Payson, Flagstaff, Yuma, Douglas, and many rural towns. APS serves about 1.4 million homes and businesses in 11 out of Arizona’s 15 counties.

Attorney General Calls For Investigation Into APS Cost Shift Claims

People who get electricity from Arizona utilities may soon learn more about how their bills are figured out.

Arizona Attorney General Kris Mayes | Mario Tama, Getty Images

Attorney General Kris Mayes wants the Arizona Corporation Commission to start a public investigation. She is asking if Arizona Public Service (APS) moved almost $600 million in costs from big energy users, like some data centers, to regular people and small businesses between 2023 and 2025, according to 12News.

"Before the Commission approves any APS rate increase, Arizonans deserve answers," Mayes said in a statement. This request comes as APS is asking for a yearly rate increase of about $608.7 million.

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Questions Raised Over Data Center Energy Costs

The attorney general’s request comes after a 12News investigation and a separate review by consumer advocate Abhay Padgaonkar.

According to their analysis, a small group of large energy users may have shifted about $587 million in costs to other APS customers using the utility’s Power Supply Adjuster, or PSA.

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Mayes alleges this is a potential "textbook cost shift" and believes regulators should check the claims themselves instead of just taking the company’s word for it, according to a press release from EIN Presswire. According to 12News, APS strongly disputes the analysis.

In a public statement, APS said reports claiming data centers are raising residential bills are misleading. The company stated that "residential and small-business customers are not paying for data center power usage."

The Arizona Corporation Commission says it is already auditing and reviewing APS expenses as part of the current rate case.

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The Investigation Continues

It’s important to remember these are still just allegations and have not been proven. Kris Mayes wants regulators to look at the billing records and calculations before APS can raise rates.

The results of this investigation could have a big impact on APS customers and the fast-growing data center industry in Arizona.