Arizona Public Service expects peak demand to grow about 3.4% a year for 15 years

Arizona Public Service, the state’s largest investor-owned utility, projects its peak demand will climb about 3.4% a year across the next 15 years, driven by industrial customers and data centers. The projection sits in the 2026 integrated resource plan the utility announced on Nov. 2. At that pace, peak demand would pass 14.5 gigawatts in 2041, nearly 60% above the current record of about 9.2 gigawatts set in August.

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Retail sales are on a steeper path, forecast to roughly double, and the plan answers with more gas, a large battery build, and a decision to keep a coal plant running years past its planned exit.

3.4% a year, 14.5 gigawatts, and a 9,166-megawatt record

Utility Dive reported that the 3.4% annual rate applies over 15 years after accounting for customer resources such as demand-side management. APS’s own announcement puts the current record at 9,166 megawatts, set Aug. 2, 2026, between 6 and 7 p.m., and projects annual retail sales rising from about 34,200 gigawatt-hours in 2025 to about 80,600 in 2041. The utility files one of these plans with the Arizona Corporation Commission every three years.

Large customers drive the curve. KJZZ reported that about 76% of anticipated energy growth is expected to come from data centers and large manufacturers, with chipmaker TSMC’s expanding Arizona investments as an example. APS acknowledges a risk of unrealized loads, meaning interest that never becomes a built facility, and says minimum-demand and energy-based contract terms, collateral and early-exit fees limit that exposure. Its growth-pays-for-growth approach is meant to make large users cover the costs and financial risks of serving them. Beyond the large accounts, APS expects up to 29,000 new residential customers a year in the near term and annual customer growth of 1.5% to 2.5% through 2030.

Customer-sited resources shape the forecast too. Behind-the-meter storage is projected to grow from 69 megawatts today to 1.2 gigawatts by 2045, behind-the-meter solar from 2.1 gigawatts to 3.7 gigawatts, and electric vehicles from 65,000 to 1.1 million, adding 5.2 terawatt-hours of charging load. The vehicle forecast is about 18% lower than the one made in 2023.

Four Corners coal through 2038

The most contested piece is the Four Corners plant on Navajo Nation land in New Mexico, which APS’s previous plan set to retire in 2031. Eugenis told KJZZ that Four Corners is an excellent example of a resource that provides energy around the clock. Under the preferred portfolio it could run until 2038, which APS says could save customers close to $1 billion; the utility says it will choose a retirement date between 2031 and 2038 based on customer needs and economics, and the plant’s lease requires retirement no later than 2038.

Mike Eugenis, APS director of resource planning, framed the plan around one idea: “Reliability is nonnegotiable.” Critics disagree on the tradeoffs. Sandy Bahr, director of the Sierra Club’s Grand Canyon Chapter, said the plan further delays the move from gas and coal to solar and wind, and the Sierra Club’s statement faults the coal supply extension for raising costs and pollution. Kate Bowman of Vote Solar said APS should invest in proven community-based solutions such as local solar and storage. In a separate pending case, the Sierra Club says, APS proposes a 14% rate increase, which it estimates would add about $240 a year to the average residential bill. The plan arrives about a year after APS walked back its goal of 100% clean energy by 2050.

Gas, batteries and the money behind the buildout

The portfolio adds about 4,000 megawatts of gas through 2036, including repowering Cholla as a 387-megawatt facility by 2030, 1,107 megawatts of new combustion turbines at existing sites, and the 1,238-megawatt Desert Sun combined-cycle plant in 2032. Storage reaches roughly 6 gigawatts by 2030, with about 2,000 megawatts of utility-scale solar by 2029. The plan includes no new nuclear: Eugenis said the economics of new nuclear facilities just do not pan out compared with alternatives, although APS, SRP and Tucson Electric Power are jointly studying potential sites.

The gas supply ties to Utility Dive’s 2025 coverage of the Transwestern pipeline expansion, where APS is the anchor customer and expected to spend $7.3 billion over 25 years on gas, for a project estimated at about $5.3 billion and targeted for late 2029. The existing line delivers 0.9 billion cubic feet a day to Arizona, the expansion would add 1.5 billion, and every existing interstate pipeline serving the state is fully subscribed. Federal money moved the other way: DOE confirmed on Jan. 29, 2026 that it canceled a $1.8 billion loan commitment that would have funded transmission, generation and storage, starting with the Agave battery system, rated 150 megawatts and 600 megawatt-hours.

The Arizona Corporation Commission will review the filing, and resource plans are not legally binding, according to KJZZ. The open question is how much of the doubling materializes: the contract protections exist because of the risk that some of the roughly 20 gigawatts of uncommitted large-customer interest APS described in 2025 never turns into load.

This article was produced with the assistance of AI and reviewed by Morning Overview editors prior to publication.

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