(The Center Square) – Arizona utility companies stress they’re protecting customers’ electric bills as more data centers come online.
According to Upwind, a cybersecurity company, Phoenix expects its data center capacity to increase by 554%, adding an additional 5,340 megawatts to the state’s electrical grid.
With more data centers anticipated in the state, the Arizona Corporation Commission opened a new docket to examine the influx. ACC held a workshop last week on how the state should address the growing number of large-load customers, such as data centers.
ACC Chairman Kevin Thompson said he believes it’s important for the commission to review existing policies and create new ones that will protect ratepayers and ensure large-load customers pay for their infrastructure costs.
Scott Scharli, director of strategic energy management at Salt River Project, told The Center Square that his company currently powers around 20 data centers of varying sizes.
Ann Porter, communications director for Arizona Public Service, said the company’s data center customers use 400 to 500 megawatts of energy. She noted APS did not have an exact number of data centers on its grid.
SRP and APS are the main energy providers in the Phoenix area.
According to Scharli, SRP anticipates adding 10 additional data centers over the next five years.
Porter said APS plans to serve 4,000 megawatts to data centers expected to come online over the next 10 years.
APS is in talks with these types of customers that could see the company serve up to another 19,000 megawatts of energy, Porter said.
Nearly two hours south of Arizona’s biggest city, Joe Barrios, spokesman for Tucson Electric Power, told The Center Square by email that the company does not serve “high-load data centers.”
“Although we provide service to some small data centers, these facilities require less than 1 megawatt of capacity,” he said.
TEP anticipates “serving one or two high-load data center projects over the next five years,” Barrios said.
He noted TEP has “seen interest from other data center developers but has no other agreements in place at this time.”
With Arizona’s three biggest energy providers expecting to add more data centers, they said other customers will not have to pay for them.
SRP’s Scharli said data centers, which are categorized as large-load customers, will pay the full cost of their transmission infrastructure, including substation equipment, power lines and power poles.
Transmission infrastructure helps deliver power to data centers and generation infrastructure.
SRP requires data centers that use more than 20 megawatts to pay 80% of the forecasted peak energy demand over 15 years.
Similar to SRP, Porter said APS requires these customers to pay minimum thresholds for energy. The rate plan APS uses to charge data centers makes them pay for “their cost of service” because they use more energy than residents or small businesses, she added.
Barrios told The Center Square that, under TEP’s agreement with Humphrey’s Peak Power to build an incoming data center, the company will need to pay the full cost of service, which helps ensure other customers are not subsidizing it.
Regarding the impact on grid reliability, Scharli said SRP’s energy grid will not be affected by additional data centers.
Porter said APS only brings on data centers when there is enough power generation to support them. She added that the company always ensures its electrical grid has space for other uses, such as home developers and stores.
According to Barrios, TEP will not “connect new customers to the grid unless [it is] confident that they can be served reliably and without impacting reliability to other customers.”
When these large-load customers are added to an energy provider’s electric grid, they reportedly can help lower prices for others.
“ For every dollar that it costs [SRP] to serve large industrial customers, they actually are charged $1.14,” Scharli noted.
Barrios said large-load customers “typically support greater affordability for other customers by covering a higher percentage of a utility’s fixed system costs.”
