Arizona Attorney General Kris Mayes has filed an appeal in her legal challenge of the energy agreement between Tucson Electric Power and the developers behind Project Blue.
The Arizona Corporation Commission gave away its constitutional authority in approving the deal, Mayes says in the appeal filed Thursday in Maricopa County Superior Court. The commission approved a provision as part of the energy service agreement deal between TEP and Beale Infrastructure that allows energy rates to be set between themselves, without needing the commission's approval, she said.
Mayes is asking the commission to vacate its decision, made in a 4-1 vote Dec. 3, approving the agreement between TEP and Project Blue's owner, Humphrey's Peak LLC, and its developer, Beale Infrastructure.
Mayes also asked the commission to order a rehearing of the case "with instructions to strike the unlawful abdication of authority provision from (the section) prior to issue a final decision on the ESA," the appeal filed Thursday reads. In that case, the commission approved an agreement for TEP to sell Project Blue 286 megawatts of generating capacity.
Project Blue is a planned, major data center complex that would be built on 290 acres on Tucson's far southeast side.
Mayes announced in January that she would be challenging the utility regulators' approval of the energy service agreement. She said in a news release Thursday that, if large energy customers can negotiate "sweetheart rates" without public oversight, then "ordinary Arizonans will be left to pick up the tab."
Arizona Attorney General Kris Mayes
"The Arizona Corporation Commission cannot give away the constitutional authority Arizonans entrusted to it,” Mayes said in a news release. “The Commission does not have the power to let a utility and a data center operator quietly agree to set their own rates, cut the public out of the process, and call it a day."
Mayes' court filing focuses on a provision within a section of the agreement concerning tariff rates, which in-part states that electric service rates may be changed "only upon the mutual agreement" of the utility, TEP, and the customer, Beale Infrastructure. Mayes says that allows them "to mutually agree to change the rate schedule" without ACC approval.
"(The section) does not impose any other limitations on the ability of TEP and Customer to change the Commission-approved tariff," Mayes says in her appeal. For example, she said, the provision "does not otherwise contain any conditions regarding how and when the tariff rate may be changed, nor does it include any requirement that the Commission review or approve TEP and Customer's agreement to provide electric service" under a different rate schedule, she said.
Mayes says the ACC is unlawfully abdicating its exclusive ratemaking authority and duty, in violation of the Arizona Constitution, and that the ACC engaged in a practice of allowing customers "to engage in unregulated side agreements" impacting rate schedules.
"The Commission can approve special contracts for electric service between a public service corporation and a customer, but allowing such agreements to permit parties to change the rate schedule for electric service without further Commission approval is an unreasonable practice," Mayes said in the appeal, "because it bypasses the established ratemaking process," does not give adequate time to notify the public or leave an opportunity for interested parties to intervene, she said.
