After TEP rate hike request, Heinz calls on fellow Supes to reconsider Project Blue deal

Hours after the Pima County Board of Supervisors voted Tuesday to approve a land sale for the “Project Blue” data center, Supervisor Matt Heinz called for a reconsideration of the vote as Tucson Electric Power surprised local leaders with a proposed rate hike.

The board voted 3-2 on both agenda items needed to seal the land agreement, with Supervisors Jen Allen and Andrés Cano voting no. Shortly after, TEP announced that it was requesting a rate review which would see customers’ bills go up by about 14% on average.

Heinz, who voted yes on both measures, asked for a reconsideration in a memo Tuesday afternoon. He later told the Tucson Sentinel that contracts once voted on are a done deal; the item he wants to reconsider is the rezoning of the land. 

If the zoning change to allow for the construction of a data center is reconsidered, it could nullify the whole agreement.

In a memo to County Administrator Jan Lesher, Heinz urged the board to revisit the vote at their next meeting on July 1. Because Heinz was on the winning side of the vote, his request to reconsider will be on the agenda. The supervisors then have to vote in favor of reconsidering, and if that passes, hold the rezoning vote again.

“The timing of that press release created some pretty bad optics for TEP and also for the county frankly. I want to make sure that people know these things are not related,” Heinz told the Sentinel after he sent his memo.

Thursday, TEP said in a press release that the decision to raise the rates was unrelated to the decision by the Board of Supervisors

“We understand how the proximity of these two events raised concerns, and we regret any confusion or concern that may have caused. The timing was purely coincidental,” said Erik Bakken, TEP’s chief administrative officer. Bakken attended Tuesday’s board meeting to answer questions from supervisors about the project’s energy use.

TEP said that Project Blue would use energy at consistently high levels, meaning its rates would cover its share of the cost of any infrastructure needed to deliver power to the planned data center on the Southeast Side.

The proposed rates would take effect in September 2026 and reflect $1.7 billion in grid upgrades that have been completed since 2021, the company said. TEP had filed a public notice with the Arizona Corporation Commission on May 15 indicating that a request for new rates was imminent. The ACC, a statewide elected board controlled by Republicans, would have to approve any increase.

Regardless, Heinz still called for a reconsideration vote, stating that he wanted to “clear the air” and educate the public, while reviewing the assurances that revolve around Project Blue.

“In light of the new information we learned literally minutes after the conclusion of the June 17th board meeting through a TEP press release, namely that TEP is now preparing to go to the Arizona Corporation Commission requesting a rate increase of 14% on residential customers, I believe the board must reconsider the assurances we were given and the overall project proposal at hand,” said Heinz in the memo.

The Board of Supervisors is set to meet again on July 1.

The Project Blue property still needs to be annexed by the city of Tucson to finalize the deal, officials said.