Arizona homeowners and small businesses may have been quietly footing the bill for the state’s booming data center industry — and now the state’s top law enforcement officer wants answers. A data analyst’s findings suggest the financial burden could be in the hundreds of millions of dollars.
Arizona Attorney General Kris Mayes is pressing the Arizona Corporation Commission to investigate allegations that Arizona Public Service (APS) improperly shifted massive costs — tied to serving large industrial customers like data centers — onto everyday ratepayers. In a formal letter, Mayes warned that failing to act could damage the credibility of both the commission and the utility itself.
What the Data Shows
Data analyst Abhay Padgaonkar has been tracking energy demand trends on APS’s grid and says the numbers tell a troubling story. According to his research, roughly 100 data centers and other large industrial users have been responsible for nearly all of the surge in demand on APS’s system in recent years.
To meet that surging demand, Padgaonkar says APS has been purchasing additional power from outside suppliers — and then spreading those costs across the entire customer base, including residential users and small businesses. An analysis he submitted to the commission on Oct. 2 estimates that large industrial users may have underpaid for their energy by as much as $600 million over that period, with other customers making up the difference.
The Attorney General Steps In
In an Oct. 9 letter to the commission, Mayes cited Padgaonkar’s findings and urged utility regulators to take a harder look at APS’s position that growth is paying for growth — meaning new large customers cover the costs they create. She argued the utility should be required to back up its claims with hard evidence.
“If that is the case, APS should show how the Commission and its ratepayers, using the underlying records and calculations, why Mr. Padgaonkar is incorrect.”
APS Pushes Back
APS has responded to Padgaonkar’s analysis and 12News reporting on it with a post on X. The utility disputed the characterization of its billing practices and insisted residential customers are being protected.
The utility wrote,
“With misleading claims circulating about whether data center growth is affecting energy bills, we know our customers want clear, accurate information. The simple fact is: APS is ensuring that residential and small-business customers are not paying for data center power usage.”
Mayes’s letter, however, argues that a public denial is not sufficient — and that APS must demonstrate its position through verifiable records and calculations reviewed by the commission.
The Commission’s Response
Late on Oct. 9, a spokesperson for the Arizona Corporation Commission issued a statement distancing the body from Padgaonkar’s conclusions. The commission noted that Padgaonkar had the opportunity to formally participate in the ongoing APS rate case as an intervenor but chose not to.
“The author, Mr. Abhay Padgoankar, as APS customer has the opportunity to intervene in the APS rate cases and participate in the creation of a thorough evidentiary record. He did not choose to participate in the current APS rate case as an intervenor,”
a Corporation Commission spokesperson said.
The spokesperson added that APS’s expenditures and power purchases are currently being audited by commission staff alongside 23 other intervenors involved in the active rate case. Because the proceeding is ongoing, commissioners are restricted from commenting on evidence in the record.
The dispute arrives at a critical moment for Arizona utility regulation. Voters and ratepayers can follow related developments, including the 2026 Arizona Corporation Commission race and a separate case in which Mayes has asked an appeals court to intervene in the Robson Ranch utility rate case. Meanwhile, reporting on how carbon-intensive Arizona’s electricity is compared to other Mountain West states adds further context to the pressures facing the state’s energy grid. Closer to home, Phoenix is also beginning to shut off water for residents with seriously delinquent accounts, a reminder of the broader financial strain many Arizona households are already navigating.
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