Data centers in Arizona

📜 State laws

Data center tax break paused for 3 years (HB 4168, signed June 13, 2026) · June 13, 2026
The 2026-2027 state budget tax bill (HB 4168) stops the state's data center sales tax break for new projects. From July 1, 2026 through June 30, 2029, the Arizona Commerce Authority may not take applications from any new data center, and no new data center can qualify. Data centers that were already certified keep their tax break. Governor Katie Hobbs had asked for a full repeal; the budget deal with lawmakers paused it instead. The pause ends June 30, 2029 unless lawmakers change it. Source

Utilities must report data center hook-up requests (HB 2756, signed June 4, 2026) · June 4, 2026
HB 2756 makes APS, TEP and other big investor-owned power companies report to the Corporation Commission every 6 months how many new 'extra high load factor' customers (mostly data centers) asked to connect and how many were connected. SRP must give the same report to its own elected board. The law also lets the Commission set rules for these big customers: minimum bills, minimum contract length, exit fees, money held as security, and payments for new power lines and other equipment, so other customers do not pay for them. On request, the utilities must file a study showing what serving these customers costs. Small utilities (40,000 connections or less) and member-owned co-ops are exempt. The law ends Dec. 31, 2033. Most new 2026 laws took effect Sept. 12, 2026. Source

Other 2026 data center bills did not pass · June 13, 2026
Several data center bills died in committee in 2026: HB 2820 (repeal the tax break and require solar power, batteries and water limits for data centers), HB 2949 (energy costs of large data centers) and SB 1510 (limits on secret deals, called NDAs). Lawmakers can file new bills when the next session starts in January 2027. Source

No statewide pause on data centers · Sept 3, 2026
On Aug. 31, 2026, Attorney General Kris Mayes asked the governor and lawmakers to pause new data centers, pointing to rising power bills and cuts to Arizona's Colorado River water. On Sept. 3, 2026, Governor Hobbs said she does not support a statewide moratorium. There is no state law that stops data centers. Cities, towns and counties decide where they can go (see 'How to act'). Source

💡 Who pays for the power

Corporation Commission review of data center rates (docket E-00000A-25-0069) · April 16, 2026
The Arizona Corporation Commission (ACC) regulates APS, TEP and UniSource. In April 2025 it opened a review of how data centers are charged (docket E-00000A-25-0069). At a workshop on April 16, 2026, there was broad agreement that big users like data centers should pay the cost of the power plants and lines built for them. Ideas on the table: one statewide large-load rate plus individual contracts that spell out who pays. Utilities reported: APS expects about 13.1 gigawatts of peak demand from large customers; SRP serves 59 large customers using about 7,000 megawatts; TEP has one 286-megawatt data center contract and a queue of 8 to 10 gigawatts of possible projects. More workshops are planned. Anyone can file a comment in the docket. Source

APS rate case: 14% increase asked, data center rate up more than 45% · July 7, 2026
APS asked the ACC in 2025 for a rate increase of about 14% (docket E-01345A-25-0105), which APS says adds about $20 a month to an average home bill. It also wants yearly 'formula rate' changes. For extra-large users like data centers (the 'XHLF' rate), APS proposed an increase of more than 45%, plus minimum bills and collateral, and says data centers will pay their own costs. The residential consumer office (RUCO) and the Attorney General oppose the increase; RUCO says it is unclear whether data center costs are fully kept separate because many contracts are confidential. The hearing ran May 18 to July 7, 2026. A judge's recommended decision is expected in late November 2026; the Commission must vote by Dec. 31, 2026. New rates would start in early 2027. Source

TEP rate case and the Project Blue power contract · July 14, 2026
TEP asked for about a 14% increase, then lowered it to 12.6% ($162 million a year) in March 2026 (docket E-01933A-25-0103). TEP says a typical home bill would go up about $14 a month; the Attorney General's office says the real increase is closer to 14.6% for most homes and that 4% is enough. The AG ties the increase to TEP's power deal for the Project Blue data center (286 megawatts, approved by the ACC in December 2025); TEP says its request has no costs for new data centers. TEP says the data center pays its full rate with no discount and must pay a termination fee, minimum bills and credit security. TEP hoped for new rates by Dec. 1, 2026. Source

SRP (Phoenix area): minimum bills for data centers · Nov 2025
Salt River Project (SRP) is a public power district with an elected board; the Corporation Commission does not set its prices. SRP's E-67 price plan, approved by its board in 2025, covers customers with 20 megawatts or more. They must pay a minimum bill based on their real use or 80% of the demand they forecast, and pay for their own substations and power lines. Since 2025, SRP also studies each big new customer and charges them up front for upgrades. SRP says data centers were about 5% (441 megawatts) of its 2025 peak demand. From September 2026, SRP must report data center hook-up requests to its board every 6 months (HB 2756). Source

💵 Tax breaks

Computer Data Center tax break (new deals paused until mid-2029) · July 1, 2026
Since 2013, Arizona's Computer Data Center program lets certified data centers skip state and local sales and use tax on equipment they buy. A new data center must invest at least $25 million (counties with 800,000 people or fewer) or $50 million (bigger counties: Maricopa and Pima) within 5 years. The break lasts 10 years, or up to 20 years for 'sustainable redevelopment' projects that meet green building standards. The Arizona Commerce Authority certifies data centers. News reports put the cost at about $38 million a year. New certifications are paused from July 1, 2026 to June 30, 2029 (HB 4168); data centers already certified keep the break. KJZZ reported a rush of applications before the deadline. Source

🤐 Secret deals and public records

Public records: anyone can ask · Oct 7, 2026
Under Arizona's public records law, records of cities, towns, counties and state agencies are open to 'any person'. You can ask in person, by mail or by email. You do not have to say why, but you must say that it is not for a commercial (money-making) purpose, or explain the commercial use. The office must provide the records 'promptly'; there is no fixed number of days. If it does not answer promptly, or does not list what it is holding back, the law treats that as a denial and you can go to court. Copies may cost a fee. Good records to ask for: development agreements, water and power agreements, tax break papers, emails with the developer, and any NDA. Source

Free help with records and open meeting problems · Oct 7, 2026
The Arizona Ombudsman-Citizens' Aide helps residents for free with public records and open meeting problems. It can coach you, look into complaints, and send violations to the Attorney General. Phone (602) 277-7292 or 1-800-872-2879. Source

Secret deals (NDAs): no state limit yet · Sept 9, 2026
Arizona has no state law that limits secret deals (NDAs) between local governments and data center developers. A bill to limit them (SB 1510) died in committee in 2026. Pima County signed an NDA for Project Blue that kept Amazon's name secret; in September 2025 the county decided its NDAs must be reviewed every 6 months and last no more than 2 years, and on Sept. 9, 2026 it expanded this to deals with large water and power users. Other cities and counties set their own rules. Source

💧 Water

Who decides the water a data center uses · June 2026
Most data centers buy water from a city, town or private water company, so that provider and its council or board decide whether to serve them. Some providers have set their own rules for large water users, such as requiring a conservation plan, recycled water, or bringing their own water; Marana does not let data centers use town drinking water. There is no state permit just for data center water use. Source

Groundwater rules: strict inside 'Active Management Areas', voluntary outside · June 2026
In the state's Active Management Areas (AMAs), such as the Phoenix, Pinal, Tucson and Prescott areas, the Arizona Department of Water Resources (ADWR) sets conservation rules for industrial water users, including data centers. Outside AMAs, saving water is mostly voluntary. Some 'water-saving' cooling (dry cooling) uses more electricity instead. Source

Colorado River cuts raise the stakes · Sept 3, 2026
Arizona faces deep cuts to its Colorado River water. In her Aug. 31, 2026 call for a pause, the Attorney General said planned data centers around Phoenix could raise data center water demand by more than 450%. Governor Hobbs did not support a pause. Source

🌫️ Air and generators

Air permits for backup generators · July 16, 2026
Most Arizona data centers get a 'minor source' air permit to run backup diesel generators or small gas turbines. In Maricopa County, the Maricopa County Air Quality Department issues these permits (it has a general permit for emergency engines, revised April 10, 2026). The Arizona Department of Environmental Quality (ADEQ) issues permits in many other areas, and Pima and Pinal counties have their own air agencies. In July 2026 the U.S. EPA proposed dropping the federal public comment rule for minor source permits; ADEQ said its current public notice and comment steps stay in place for now. Source

🙋 How to have your say

Who decides a data center near you · Oct 7, 2026
Inside a city or town, the city or town council decides zoning, after a hearing by the planning and zoning commission. Outside cities and towns (unincorporated land), the county Board of Supervisors decides, after a hearing by the county planning and zoning commission. Arizona has no townships. Power is a separate decision by the utility (and the Corporation Commission for APS and TEP, or SRP's own board). Water is decided by the water provider. Source

Rezoning hearings and the 20% protest (3/4 vote) · Oct 7, 2026
A city or town rezoning needs a public hearing, announced at least 15 days before in a local newspaper and on a sign at the site; owners within 300 feet get a letter when the rezoning was not asked for by the owner. If owners of 20% of the land (by area and number of lots) in or next to the area file a written protest, the council needs a 3/4 vote of all members. File the protest by noon one business day before the vote. Counties: at least 15 days' newspaper notice, a commission hearing, and the same 20% protest forces a 3/4 vote of the Board of Supervisors (in counties with 5 or more supervisors). Source

Referendum: 30 days to collect signatures · Oct 7, 2026
Voters can ask for a public vote on a city or town ordinance, including some rezonings. The petition must be filed with the clerk within 30 days after the council passes it, with enough signatures from voters (a number based on the last city election). Courts check the forms closely: in Marana, the town clerk threw out petitions in February 2026 for leaving out the correct rezoning ordinances and legal land description, and a Pima County judge upheld that on May 2, 2026. Source

Going to court: 30 days for board of adjustment decisions · Oct 7, 2026
A decision by a city's board of adjustment (for example a variance) can be taken to superior court within 30 days, by a person harmed by it or a taxpayer who owns or leases land next to the site or within 300 feet of it. Source

Prop 207: why cities hesitate to restrict land · March 26, 2026
Arizona's Private Property Rights Protection Act (Prop 207, 2006) lets an owner claim money if a new land rule lowers the value of their land. Phoenix passed data center zoning rules in 2025; landowners then filed Prop 207 claims, and in some cases the city gave a 'waiver' that lets the project go ahead under the old rules instead of paying. Source

How to comment at the Corporation Commission · Oct 7, 2026
Anyone can file a public comment on an ACC case (for example the APS rate case E-01345A-25-0105, the TEP rate case E-01933A-25-0103, or the data center review E-00000A-25-0069) through the eDocket website. The Commission votes at open meetings that are streamed online. Source

🧾 Help with your bills

LIHEAP and Power AZ: help with power bills · March 24, 2026
Arizona's Department of Economic Security (DES) runs LIHEAP, the federal energy bill program, for homes with income up to 60% of the state median income. In March 2026 the governor added Power AZ ($15 million), which helps more working families (for example a family of four earning up to $108,000). Apply online through DES or through your local community action agency; one application is checked for both. Households can get up to $640. Source

📞 Who to contact

Arizona Corporation Commission (ACC) · Oct 7, 2026
Elected 5-member commission that sets rates for APS, TEP, UniSource and other investor-owned utilities, runs the data center rate review, and takes public comments in every docket. Also approves big power line and power plant siting cases. Source

Residential Utility Consumer Office (RUCO) · Oct 7, 2026
State office that represents home customers in ACC rate cases. Source

Salt River Project (SRP) Board · Oct 7, 2026
Elected board that sets SRP's power prices in the Phoenix area, outside the ACC. Source

Arizona Commerce Authority · Oct 7, 2026
Certifies data centers for the sales tax break (new applications paused July 2026 to June 2029). Source

Arizona Department of Water Resources (ADWR) · Oct 7, 2026
Manages groundwater and conservation rules in Active Management Areas, including for industrial users. Source

Arizona Department of Environmental Quality (ADEQ) · Oct 7, 2026
Issues air permits (for example for generators) where no county air agency does, and water quality permits. Posts permits for public comment. Source

Maricopa County Air Quality Department · Oct 7, 2026
Issues air permits for generators and other engines in Maricopa County. Source

Arizona Ombudsman-Citizens' Aide · Oct 7, 2026
Free help with public records and open meeting law problems. (602) 277-7292 or 1-800-872-2879. Source

Arizona Attorney General · Oct 7, 2026
Enforces public records and open meeting laws and takes part in utility rate cases for consumers. Source

Arizona Legislature · Oct 7, 2026
Makes state law. The next regular session starts in January 2027. Bill status is online. Source