November 2, 2026 - Arizona Public Service Co. projects that keeping the Four Corners Power Plant operating through 2038, seven years beyond its previously planned retirement, could save customers approximately $1 billion while helping meet growing electricity demand.

The utility signed a new fuel agreement supporting extended operations and included the proposal in its Integrated Resource Plan filed October 30 with the Arizona Corporation Commission.

The proposal marks a change from APS’ 2023 assessment, which identified 2031 as the most cost-effective year to leave the coal-fired facility. Since then, electricity demand forecasts and the economics of replacement generation have changed.

Mike Eugenis, APS’ director of resource planning, said projected growth is now 76% higher than the utility previously forecast. Large industrial and manufacturing customers, including data centers, account for roughly three-quarters of the anticipated increase in energy demand. Residential customers, electric vehicles and other businesses are also expected to contribute.

The resource plan projects an increase of 41,691 gigawatt-hours in electricity demand. Eugenis said relying solely on existing resources would create reliability problems within a few years.

APS’ preferred plan would increase the contribution of natural gas and renewable energy by 2032 while continuing to draw on nuclear generation from Palo Verde, coal generation from Four Corners, purchased electricity and programs that improve efficiency or reduce peak demand.

The utility’s estimated savings from extending Four Corners depend on future natural gas prices and the cost of renewable generation and battery storage. APS did not provide annual operating costs for the coal plant.

Isaac Orr, vice president of research at Always On Energy Research, said rising construction costs and concerns about affordability strengthen the case for using existing generation.

His organization, working with the Arizona Free Enterprise Club, previously recommended extending Four Corners’ operating life because its upfront capital investment had already depreciated. Orr said retaining the plant could help APS accommodate industrial growth while limiting customer costs.

He also suggested that data centers or manufacturers seeking dependable electricity could potentially be interested in purchasing the facility after 2038. However, he cautioned that extending existing plants does not necessarily signal a broader recovery across the coal industry.

Federal officials have also supported continued investment in Arizona’s coal-fired generation. In October, the Department of Energy announced approximately $20 million for Arizona Electric Power Cooperative to modernize a coal turbine at Apache Generating Station.

Acting Assistant Secretary of Energy Curt Coccodrilli said the improvements could potentially support another 20 to 40 years of operation, although he emphasized that the plant’s actual operating life remains uncertain. He said coal could continue contributing to the nation’s energy supply as demand increases.

Lily Hsueh, associate professor of economics and public policy at Arizona State University, said Arizona reflects a national trend of utilities delaying coal retirements while continuing to invest in other resources.

Existing coal infrastructure can provide an immediate option for meeting demand, she said, and extending Four Corners could help limit near-term customer cost increases. She also noted that environmental impacts and longer-term investment trends remain part of the calculation.

Other observers called for closer scrutiny of the proposal’s costs and demand assumptions.

Stephanie Chase, research and communications manager at the Energy and Policy Institute, said regulators should consider fuel-price fluctuations, water consumption and pollution-control expenses alongside the cost of replacement generation. APS’ resource plan shows that retiring Four Corners in 2031 would substantially reduce the utility’s water use and carbon emissions.

Chase also urged a careful review of proposed data centers and other large customers to determine how much projected demand will materialize before committing to additional infrastructure.

APS is separately planning to repower the closed Cholla Power Plant with natural gas. Restarting that facility with coal was estimated to cost $1.9 billion.

Energy consultant Amanda Ormond questioned whether utilities can sustain the projected pace of expansion, citing constraints involving land, water, transmission infrastructure and workers. She also raised concerns about coal operating costs and the possibility that data-center demand could fall short of forecasts.

The Four Corners proposal places those questions before Arizona regulators as APS weighs the cost of maintaining existing generation against the investment needed to serve a growing customer base.