Arizona Gov. Katie Hobbs rejected Attorney General Kris Mayes’ call for a statewide moratorium on new data centers, exposing a policy split between two leading Democrats as concerns mount over water supplies, electric rates, and grid capacity.
Hobbs said she agrees the industry’s expansion raises legitimate concerns but does not believe a blanket pause is the right approach, Arizona’s Family reported. She called data centers part of Arizona’s high-tech economy and said the state should make them cover their costs without burdening residents.
Mayes has urged Hobbs and lawmakers to halt new approvals and construction, particularly for hyperscale artificial intelligence facilities, until Arizona develops a statewide growth plan. “The only sane thing to do is to pause the approval of new data centers,” Mayes said. Her office cited shrinking Colorado River supplies, record electricity demand and rising utility bills.
Arizona has about 160 data centers, with increasingly large projects proposed around the state. Arizona Public Service says the facilities accounted for about 5% of its peak demand in 2025, while an average data center in its territory uses as much electricity as roughly 64,000 homes. The utility has proposed raising rates for extra-large users by more than 45% to keep expansion costs from shifting to households.
Hobbs has backed narrower restrictions. Arizona’s 2026 budget imposed a three-year pause on new data center tax-incentive applications, and her office says she favors permanently ending the tax break and requiring projects to pay their share of water and energy costs.
Mayes cannot impose a moratorium unilaterally and is asking the governor and Legislature to act. She plans an Oct. 14 Ahwatukee town hall on Menlo Digital’s proposed hyperscale project. Hobbs says Arizona should balance economic growth with protections for water, grid reliability, and ratepayers.
