Arizona Attorney General Challenges Project Blue Energy Agreement

Mayes argues the agreement's rate-setting provision violates the state constitution.

Published on Feb. 25, 2026

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Arizona Attorney General Kris Mayes has filed an appeal in Maricopa County Superior Court, challenging the Arizona Corporation Commission's approval of a special energy agreement between Tucson Electric Power and Beale Infrastructure as part of the proposed Project Blue data center. Mayes argues that the agreement's provision allowing TEP and Beale to set their own electricity rate schedules violates the Arizona Constitution, which grants the Commission the authority to regulate utility rates.

Why it matters

This case highlights the ongoing tension between state regulators, utility companies, and large energy customers over rate-setting authority. The Attorney General's challenge aims to preserve the public's role in overseeing electricity rates and prevent what Mayes calls "sweetheart rates" being negotiated outside of the normal regulatory process.

The details

The energy agreement was approved by the Arizona Corporation Commission in December 2025, allowing TEP and Beale Infrastructure to set their own rate schedules as part of the Project Blue data center deal. Mayes has now filed an appeal, arguing this provision violates the state constitution by ceding the Commission's authority over utility rates to the two parties.

  • The Arizona Corporation Commission approved the energy agreement in December 2025.
  • Mayes filed the appeal in Maricopa County Superior Court following the Commission's denial of his request for a rehearing.

The players

Kris Mayes

The Arizona Attorney General who is challenging the energy agreement approved by the Arizona Corporation Commission.

Tucson Electric Power (TEP)

The utility company that entered into the special energy agreement with Beale Infrastructure as part of the Project Blue data center proposal.

Beale Infrastructure

The company that partnered with TEP on the energy agreement for the Project Blue data center.

Arizona Corporation Commission

The state regulatory body that approved the energy agreement between TEP and Beale Infrastructure, which the Attorney General is now challenging.

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What they’re saying

“The Arizona Corporation Commission cannot give away the constitutional authority Arizonans entrusted to it. 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.”

— Kris Mayes, Arizona Attorney General (kold.com)

What’s next

The Maricopa County Superior Court will now consider the Attorney General's appeal and decide whether to vacate the Corporation Commission's approval of the energy agreement and send it back with instructions to remove the disputed rate-setting provision.

The takeaway

This case highlights the ongoing debate over the balance of power between state regulators, utility companies, and large energy customers when it comes to setting electricity rates. The Attorney General's challenge aims to preserve the public's role in overseeing rate-setting and prevent what he sees as a violation of the state constitution.