--- title: "Pinnacle West's Arizona Public Service asks regulators for a 25-year TSMC deal covering 1.9 gigawatts" description: "TSMC's north Phoenix fabs would draw the electricity of roughly 300,000 Arizona homes under the first deal on APS's subscription model for power-hungry users. The terms go before a state commission that just changed hands, set the yardstick for every data center that follows, and commit TSMC, on the filing's terms, to pay for new generation whether or not the fabs reach full buildout." publisher: "The Inference" section: "Power" published: 2026-11-11T15:12:27.222Z modified: 2026-11-11T15:12:27.222Z canonical: https://theinference.org/article/pinnacle-west-s-arizona-public-service-asks-regulators-for-a-25-year-tsmc-deal-covering-1-9-gigawatts language: en keywords: "Power, TSMC, Utilities, Arizona, Data Centers, Regulation" --- # Pinnacle West's Arizona Public Service asks regulators for a 25-year TSMC deal covering 1.9 gigawatts > TSMC's north Phoenix fabs would draw the electricity of roughly 300,000 Arizona homes under the first deal on APS's subscription model for power-hungry users. The terms go before a state commission that just changed hands, set the yardstick for every data center that follows, and commit TSMC, on the filing's terms, to pay for new generation whether or not the fabs reach full buildout. On November 6, 2026, Arizona Public Service (APS), Arizona's largest electric utility and the main subsidiary of [Pinnacle West Capital](https://theinference.org/markets/companies/pinnacle-west-capital) (NYSE: PNW), asked the Arizona Corporation Commission to approve a 25-year Direct Pricing Contract with [TSMC](https://theinference.org/markets/companies/tsmc) Arizona [1][2]. The Direct Pricing Contract is a long-term agreement designed for customers with extra-large energy needs [2]. TSMC (NYSE: TSM), the world's largest contract chipmaker [3], would be the first customer on APS's subscription model for power-hungry users [1]. The filing puts a number on its appetite: about 1.9 gigawatts at full buildout, the electricity use of roughly 300,000 homes [1]. ## The charge: growth that pays for itself The claim on file is that TSMC's growth pays for itself. The filing states that TSMC Arizona will make [long-term financial commitments tied to new generation resources and service infrastructure](https://pubt.io/view/05BC89D3FE076D1148DBC8D7AD17359EC12C45DF), so the cost of its expansion is not shifted onto the utility's other 1.5 million homes and businesses [2]. To serve the load, APS is adding renewable resources and natural gas generation, including the proposed Desert Sun plant west of Gila Bend, and says TSMC's contracted rates would cover the cost of building it [1]. ## The evidence: the small bar in a very big queue TSMC's own fabs are the small bar beside the campuses its chips are meant to fuel. In Cochise County, rocket company [SpaceX](https://theinference.org/markets/companies/spacex) is behind a [proposed 6-gigawatt supercomputing campus](https://www.kjzz.org/business/2026-11-11/document-shows-tsmc-could-use-as-much-energy-as-300-000-homes) that would rank third nationally, behind developer Fermi America's 11-gigawatt Project Matador and investor Kevin O'Leary's 9-gigawatt Stratos project [5][6]. *Chart: **TSMC's 1.9-gigawatt fab load is dwarfed by the data-center campuses its chips fuel** Horizontal bars of full-buildout electricity demand in gigawatts: Fermi America's Project Matador 11, Kevin O'Leary's Stratos 9, the proposed Cochise supercomputing campus 6, and TSMC Arizona 1.9.* *Full-buildout electricity demand, gigawatts. TSMC's figure is the estimate in the APS filing to the Arizona Corporation Commission; the other three are proposed design loads, uncontracted. Sources: KJZZ, 11, November 10 and 3, 2026 [1][5][6]. [1][5][6]* The money moves at the same pace. TSMC's board approved about $40.9 billion of capital spending on November 10, and [Goldman Sachs](https://theinference.org/markets/companies/goldman-sachs) forecasts annual spending of $85 billion in 2027 and $98 billion in 2028 [3]. Capacity is so tight that [Anthropic](https://theinference.org/markets/companies/anthropic), an artificial intelligence lab, says in its IPO filing that TSMC's constraints have at times delayed scheduled chip deliveries [3]. *Chart: **TSMC's quarterly capital spending has more than doubled since early 2024** Line chart of TSMC's quarterly capital expenditure in US dollar billions from Q3 2023 to Q2 2026, rising from about 7 billion to a record 15.6 billion.* *Capital expenditure as reported in TSMC's quarterly SEC filings, US dollar billions; Q2 2026 is the latest reported quarter. Source: TSMC SEC filings, retrieved November 11, 2026 [9]. [9]* ## The exhibits: three claims with no numbers attached APS's case leans on statements nothing yet quantifies: that TSMC's rates cover Desert Sun's cost, that the plant serves the grid beyond TSMC, and that capacity stays reserved for "existing homes, hospitals, schools, businesses, and communities" [2]. The public description of the deal carries no rate level and no plant cost. The commission will vote on those words. ## The prosecution: the court just changed hands The counter-claim comes from the two winning candidates themselves: they accused the commission of being [too deferential to the state's utilities](https://www.kjzz.org/elections/2026-11-06/democrats-jonathon-hill-and-clara-pratte-win-seats-on-arizona-corporation-commission-elex) [4]. Voters then ended the five-member commission's all-Republican control on November 3, electing Democrats Clara Pratte, co-founder of renewable developer Navajo Power, and Jonathon Hill [4]. The commission is no rubber stamp: established under the state constitution, it must approve utility capital spending and long-term contracts, and its rulings carry the weight of law [7]. The utility in front of it also plans to run the Four Corners coal plant as late as 2038 [1]. ## The defense: the ramp is real and the money is moving TSMC's side of the ledger is physical. Construction on its second Arizona fab finished in October, and volume production begins in the third quarter of 2027, "slightly ahead" of schedule, TSMC chief executive [C.C [8]. Wei](https://theinference.org/markets/people) [told investors on October 15](https://www.yourvalley.net/stories/second-arizona-fab-construction-complete-tsmc-says-during-third-quarter-revenue-report,728878) [8]. Nearly 20 facilities are under development worldwide, and Wei sent teams to inspect US data-center construction and grid capacity first-hand before committing more factory space [3]. ![TSMC's Fab 21 under construction in Phoenix, Arizona](https://storage.googleapis.com/theinference-public/img/9de55f2bd8d17de5.jpg) *TSMC's Fab 21 under construction in Phoenix in November 2023. Construction on the company's second Arizona fab finished in October 2026, with volume production slated for the third quarter of 2027. (Hunter Trick (TrickHunter))* The shape of the deal suggests why Pinnacle West wants it: a 25-year commitment on this scale is the demand a regulated utility is built to serve. The Inference has covered the [water and rare-earth magnets](https://theinference.org/article/tsmc-s-265-billion-arizona-bet-runs-on-nearly-5-million-gallons-of-water-a-day-and-magnets-it-does-not-own) the same campus depends on. ## The verdict watch: who pays if the ramp slips Nothing in the filing spells out who carries the risk, but the shape of a 25-year deal answers it: TSMC's commitments to the new generation run whether or not the fabs reach full buildout. If the ramp slips, it pays for the power anyway. Two dated readings show how that lands. TSMC's 2027 guidance in January is where overseas capacity, and the power behind it, gets priced. In Arizona the docket is open, and the terms APS and TSMC file there are what every later large Arizona load, including the 6-gigawatt Cochise campus, will negotiate against. ## Takeaway APS filed a 25-year Direct Pricing Contract covering TSMC's 1.9 gigawatts of planned Arizona fab load, the first deal on its subscription model for power-hungry users. The terms set the yardstick for every large Arizona load that follows and go before a commission that just flipped to Democratic control, with TSMC committed to pay for new generation whether or not the fabs reach full buildout. ## Sources 1. [KJZZ, Greg Hahne, "Document shows TSMC could use as much energy as 300,000 homes", 11 November 2026](https://www.kjzz.org/business/2026-11-11/document-shows-tsmc-could-use-as-much-energy-as-300-000-homes) 2. [Pinnacle West Capital Corporation, "APS Submits Long-Term Energy Agreement with TSMC to the Arizona Corporation Commission", 6 November 2026](https://pubt.io/view/05BC89D3FE076D1148DBC8D7AD17359EC12C45DF) 3. [South China Morning Post, "What Taiwanese chip giant TSMC gains from taking stakes in OpenAI and Anthropic's AI race", 11 November 2026](https://www.scmp.com/tech/big-tech/article/3374037/what-taiwanese-chip-giant-tsmc-gains-taking-stakes-openai-and-anthropics-ai-race) 4. [KJZZ, Wayne Schutsky, "Democrats Jonathon Hill and Clara Pratte win seats on Arizona Corporation Commission", 6 November 2026](https://www.kjzz.org/elections/2026-11-06/democrats-jonathon-hill-and-clara-pratte-win-seats-on-arizona-corporation-commission-elex) 5. [KJZZ, Taylor Griffith, "Largest data center proposal in Arizona heads to Cochise County. 1st community meeting scheduled", 3 November 2026](https://www.kjzz.org/business/2026-11-03/largest-data-center-proposal-in-arizona-heads-to-cochise-county-1st-community-meeting-scheduled) 6. [KJZZ, Greg Hahne, "SpaceX is behind proposed data center in Cochise County", 10 November 2026](https://www.kjzz.org/fronteras-desk/2026-11-10/spacex-is-behind-proposed-data-center-in-cochise-county) 7. [pv magazine USA, Ryan Kennedy, "Arizona election results open new opportunities for affordable clean energy", 10 November 2026](https://pv-magazine-usa.com/2026/11/10/arizona-election-results-open-new-opportunities-for-affordable-clean-energy/) 8. [Daily Independent (YourValley.net), "Second Arizona fab construction complete, TSMC says during 3Q report", 15 October 2026](https://www.yourvalley.net/stories/second-arizona-fab-construction-complete-tsmc-says-during-third-quarter-revenue-report,728878) 9. [TSMC, quarterly figures from its SEC filings, retrieved 11 November 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001046179) --- Pinnacle West's Arizona Public Service asks regulators for a 25-year TSMC deal covering 1.9 gigawatts — The Inference. Canonical: https://theinference.org/article/pinnacle-west-s-arizona-public-service-asks-regulators-for-a-25-year-tsmc-deal-covering-1-9-gigawatts