How Amazon, One of the Richest Companies in the World, Secretly Offloads Its Electricity Costs To Local Taxpayers Who Live Near Its Data Centers (bloomberg.com) 173
Several readers have shared this Bloomberg report: Amazon Web Services, the company's cloud computing business, is its fastest-growing and most profitable division, but it comes with a lot of upfront infrastructure costs and ongoing expenses, the biggest of which is electricity. Over the past two years, Amazon has almost doubled the size of its physical footprint worldwide, to 254 million square feet, including dozens of new data centers with vast fields of servers running 24/7. In at least two states, it's also negotiated with utilities and politicians to stick other people with the bills, piling untold millions of dollars on top of the estimated $1.2 billion in state and municipal tax incentives the company has received over the past decade.
Other companies, including Google and Tesla, have taken advantage of the power industry's hunger for growth and the relative secrecy that followed its 1990s deregulation in dozens of states. But Amazon stands out for its success in offloading its power costs and also because it dominates America's cloud business, which has gone from nonexistent to using 2 percent of U.S. electricity in about a decade. "Amazon had a huge advantage, because there weren't a lot of other sectors growing in the electricity market," says Neal Elliott, senior director of research at the American Council for an Energy-Efficient Economy (ACEEE), a green lobbying group. The company has also ratcheted up the secrecy around who's paying for electricity, says environmental advocate Greenpeace, which calls Amazon the single biggest obstacle to industry transparency.
Other companies, including Google and Tesla, have taken advantage of the power industry's hunger for growth and the relative secrecy that followed its 1990s deregulation in dozens of states. But Amazon stands out for its success in offloading its power costs and also because it dominates America's cloud business, which has gone from nonexistent to using 2 percent of U.S. electricity in about a decade. "Amazon had a huge advantage, because there weren't a lot of other sectors growing in the electricity market," says Neal Elliott, senior director of research at the American Council for an Energy-Efficient Economy (ACEEE), a green lobbying group. The company has also ratcheted up the secrecy around who's paying for electricity, says environmental advocate Greenpeace, which calls Amazon the single biggest obstacle to industry transparency.
Shocking! (Score:1, Funny)
SO that's what that is! (Score:5, Funny)
I wondered what that huge-ass extension cord going from the side of my house towards the general direction of the Amazon data center was for!
That and the $400k/month electric bills. I figured I just had the AC set kind of high.
Re:SO that's what that is! (Score:4, Insightful)
That editorial slant was really something.
Can't blame Amazon for taking the incentives offered to them. Sounds like some communities may need to have some sharp discussions with their city councils. Of course, they may learn there was a big win in total tax revenue that prevented their taxes from rising. Or maybe the city council was full of idiots.
Re:SO that's what that is! (Score:5, Insightful)
call me jaded, disgruntled, pessimistic, or just a crochety old guy; my angle on this was not so much Amazon 'taking incentives offered' but more greasing the palms of the 5-6 people that decided, for the entire city, to cut these deals and sack the residents to augment the funds. At this point I have little faith in any level of government doing things outside of all the tricks that are nothing more than loopholes to have 'legalized bribery'.
Re:SO that's what that is! (Score:5, Informative)
Generally speaking what happens is that the utility does a circuit extension to the property as “general facilities” rather than “customer facilities.” If the latter, the full bill goes to the owner, but common-use services theoretically benefit all users.
The game is that a transmission line extension generally doesn’t provide a benefit for an established community, although at times it will help improve system resilience.
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But I thought corruption was less likely and easier to address as government gets smaller! That's what a vocal portion of the population here seems to believe, in any case...
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It's interesting that you blame the 5-6 people instantly, but not the company. Perhaps if we removed the idea that companies are people that their bribing their way through life is unfair towards actual people, maybe we'd be in a better spot? Make it so that companies can't donate a single cent towards ANY politician at ANY level or offer a job for ANY politician until that political has been out of office for 1 decade. But then again, I find that \. seems to suck on corporate cock whenever they can...it's
Re: SO that's what that is! (Score:5, Insightful)
RTFA. The data centers donâ(TM)t provide hardly shit for jobs. Itâ(TM)s one thing to bend over backwards when a factory opens up and youâ(TM)ve got 800 to 2000 new jobs. Itâ(TM)s entirely another when the same footprint shows up and you created 15 damn jobs
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And 14 of those jobs are minimum wage security jobs.
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https://www.theatlantic.com/ma... [theatlantic.com] The 9.9% is the new bourgois, the 0.1% is the new aristocrats, the 90% is the proletariat.
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I guess technically speaking, I have a shit ton of stocks managed by a 401k management agency, but who doesn't? I had that back when I was making 8.50 an hour in fast food.
Technically speaking, I'm a lot more like a really well compensated prole, and I think quite a few people within the 9.9% are just that.
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Mom and Pop data centers?
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Mom and Pop data centers?
#908 [xkcd.com]
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Re:SO that's what that is! (Score:4, Interesting)
Data centers don't bring many jobs, except during construction. They might make it up on property tax, if they aren't giving away an indefinite exemption (and most places don't - they'll give a discount for a few years).
Re:SO that's what that is! (Score:4, Insightful)
Re:SO that's what that is! (Score:5, Interesting)
Of course, they may learn there was a big win in total tax revenue that prevented their taxes from rising.
When these sorts of sweetheart deals have been analyzed, it's generally been found that the promised benefits to the local economy are much more anemic than hoped.
But, yeah, it's not like Amazon is behaving any differently than any other company (or sports team, or ...).
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When these sorts of sweetheart deals have been analyzed, it's generally been found that the promised benefits to the local economy are much more anemic than hoped. But, yeah, it's not like Amazon is behaving any differently than any other company (or sports team, or ...)
And it's not like that is different than any product sold by any company ever. Whether buying a software suite, a car, or shampoo, if you blindly go by what a salesman or marketing campaign tells you then you will be swindled every time.
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It's the fundamental problem of regulation in a nutshell. The company is merely doing what's expected - we look to the local government to keep its people's interests first. When they don't, it's not obvious what could fix that, given we're starting with a government we don't trust.
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Can't blame Amazon for taking the incentives offered to them.
Yep can't blame arseholes for being arseholes because they did it for money. That justifies everything!
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Of *course* there can be something wrong with that. The moral problems are obvious: if the 20% discount is achieved by the site behaving immorally, you are then tainted by that same immorality; all the more so if you have actually encouraged them to behave immorally in the first place.
Out here in the real world, many companies manage their supply chains for these kinds of risks all the time. Other companies behave immorally and deliberately turn a blind eye (or actively encourage). But they are run by nasty
Sure you can (Score:2)
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Even if there is a tax benefit, that doesn't make it all better. Who benefits from tax cuts? People who pay taxes. Who doesn't pay much tax? The poor, so they don't benefit. On the other hand, who is hurt most by an electricity rate hike? The poor. And who can most easily absorb it? The wealthy. So increasing electricity rates in exchange for a tax cut is in effect shifting costs from the wealthy to the poor. As usual.
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Everyone pays property tax. Just because it's not it's own line item on your rent don't think you're not paying.
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OK, who pays the least property tax? People who own or rent the least space, and the least valuable space. Who is that? The poor. So they still benefit the least from a tax break.
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Property tax is somewhat proportional to income as most people spend as much as they can on their rent or mortgage. Who's hurt more by an X% tax increase, rich or poor? Who benefits more from an X% tax decrease?
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If most of the tax break is passed to the renter then I agree they could benefit more, I hadn't thought about it that way. However the wealthy (and I know not all landlords are what you would call wealthy) have a way of keeping savings for themselves and passing along costs.
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I'm pretty sure the city council decided something that was in their favour, not the city's.
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Based on the article, it appears that what happened was....
1. Amazon builds datacenter and needs power.
2. Power company was going to run overhead wires across a Civil War battlefield to supply power.
3. Citizen protest overhead wires successfully forcing the power company to bury the wire.
4. Power company goes to state legislature to get permission to place a fee to subscribers to pay for buying the line.
5. Citizens see their power bill increase due to fee/surcharge.
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Uh, that doesn't read well
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I wondered what that huge-ass extension cord going from the side of my house towards the general direction of the Amazon data center was for!
Sucks to be you. I solved that by purchasing a giant Tesla PowerWall and moving the Amazon extension cord over to there!
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I wondered what that huge-ass extension cord going from the side of my house towards the general direction of the Amazon data center was for!
That and the $400k/month electric bills. I figured I just had the AC set kind of high.
Not living in the USA, My home 2000sq feet on 2 floors, and all our hotwater needs for 7 people cost us 307/mo. Our home is electrically heated and cooled. Our electricity is around 7.8cents / kwh
We opted out of using natural gas for heating. Did not want to maintain a flu and chimney and the worry of a potential leak.
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Interesting, but the whole community benefits from an improved power network - less downtime and probably cleaner power, leading to reduced electronic failure (I've had a projector die two times from logic board failures before I put it behind a power conditioner...)
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There still is zero indication that they had any impact on the rates of nearby residents.
You're not thinking like a household and thinking literally about rates. It doesn't matter if there rate for power is still $0.01/kWh or whatever it might be. If a surcharge for $5 has been added to the bill then to the end consumer household their power rates have gone up $5/mo and that is precisely the situation that occurred.
Regardless, the outcome is that all residents in the state are paying this additional surcharge to secure less than two dozen jobs.
Benefits (Score:5, Insightful)
Re:Benefits (Score:5, Insightful)
But they are job creators.
JOB CREATORS.
Governments will bend backwards so a big company goes into their town and make Jobs.
The real winner is the town next to it. Where they have lower costs, and all the employees move there to live, and pay taxes to them.
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Jobs may be the reason politicians claim they make such deals, but I suspect there are often kickbacks, connections, and/or some other wink-wink shenanigans that benefit just the politicians themselves. "Jobs", "protect the children", and/or "outsiders are coming to gitcha" are political gimmicks to justify all kinds of crap.
Re:Benefits (Score:5, Insightful)
Perhaps, or perhaps most of our "Leaders" are just really stupid.
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If that's the case, we really are a "representative democracy". The average person doesn't pay much attention to politics outside of headlines, and has a short memory for past screwups.
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Of course they're stupid, it's a requirement for the job. Plus of course, anyone who's smart can't get elected because they're too elite for the voters.
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dont forget establishing a 'legacy'. But otherwise, no truer statement has ever been uttered. The shit deal is these data centers only create a handful of jobs. Should require amazon to provide their own Tokamak, lol
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Bentonwho?
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It is easier to brag to voters "I brought Amazon JOBS to the state ( and will raise the electricity fees on every household in the state by $10 to pay Amazon to come here)!" then "I have been working my ass off and I think I can save every taxpayer 82 cents next year with better run gov't."
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The real winner is the town next to it. Where they have lower costs, and all the employees move there to live, and pay taxes to them.
Given we're talking about a data center, and we're also talking about multi-million dollar tax breaks - how exactly is "the town next to it" getting those millions back?
I don't think anyone won here (Score:2)
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I'd like my house price to double. You're welcome not to participate.
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So you want the house you can afford to become unaffordable?
Amazon data centers don't increase neighboring property value...
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You move to a lower cost area which is just as nice as your area was before the prices skyrocketed.
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What he said. The traffic would get ugly, so I'd be wanting to move after 5 years or so anyway. Be nice to pocket a few hundred thousand from the deal.
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In CA your house only gets reappraised if you add finished square footage. Otherwise it's a statutory 1% per year max appreciation.
So six car garage with workshop it is. Sucks we don't have basements, but basements imply deep footings, which imply frost heaves. You can have them.
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If these magically cheaper-but-just-as-nice homes are anywhere near your current house, your current house won't appreciate in price
Why would they need to be nearby? America is a big and beautiful country. If you think the prices are a bubble, you can also switch to renting a house when it get ridiculous - two of my friends did just that, one in FL and one in CA, at the peak of the recent real estate bubble. Worked out quite well for them.
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exactly, unless you move somewhere else where you can buy cheap again. Or retire and move to Costa Rica. With inflation going the way it has been (real cost of living increases not just what is admitted) no nest egg will let someone retire for more than 10-15 years before that same monthly amount becomes 1/2 of what it used to provide.
Re: Benefits (Score:3)
Real Estate prices are not standardized. See: selling a tiny 900 square foot home in Berkeley and moving to Indianapolis where you can buy a 3000 square foot home with the proceeds.
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Everything is negotiable. Real estate commish IS negotiable, or you find another realtor.
Re:Benefits (Score:5, Insightful)
Luring big corporations to cities with tax money only benefits a) the company and b) the politicians who took campaign donations to lure the company in the first place.
And yes, that includes professional sports franchises. The benefits to an area are always overestimated. Every single time.
Re: Benefits (Score:5, Insightful)
Corporate socialism is the only socialism allowed in America!
Re: Benefits (Score:5, Insightful)
I would prefer to have none, thanks. But technically this would be closer to Fascism, where private businesses and government work hand in hand, without actual consideration of the people.
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But technically this would be closer to Fascism, where private businesses and government work hand in hand, without actual consideration of the people.
By some definitions we are already in a facist state.
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That's a clear sign the definitions are broken. Ignore the people pushing such silly, historically ignorant propaganda.
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Ignore the people pushing such silly, historically ignorant propaganda.
Meh, I was comparing what I observe with what the definitions of faciscm are in wiki. Some match all the checkboxes one by one.
If it looks like a duck and quacks like a duck, what are the chances it is actually a duck?
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Your big mistake is trusting wiki for anything political or controversial.
That's exactly the kind of place/people you should ignore. Voting on definitions (biased by obsessiveness and lack of life) is no way to reach sane answers.
Wikipedia is useless for such subjects.
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Jesus tits you are tiresome drinkypoo.
Comment removed (Score:4, Interesting)
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Or just have a better contract that includes things like performance metrics or service level agreements. This is common in many industries. Ie, database is contracted to have an uptime of 99.8% or such.
A good contract might be that in order to get $X tax breaks and benefits and the company promises $Y increase in tax revenue (because of jobs, tourism, etc), then if the tax revenue is only $Z then the penalty should be $Y-$Z up to a maximum of $X. If the company is not confident enough to make this deal t
Comment removed (Score:4, Insightful)
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If they did have cash, beware that they may want to pay with Amazon Bucks or other sorts of scrip.
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Leeching or leaching?
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Quite a lot of theories depend upon omniscient actors, meaning that everyone has perfect knowledge of what is going on everywhere.
As for what you're describing about corporations needing to be more involved, remember that this used to be the case. Employees were hired for the long term, and on-the-job training was the norm. Profits were based on long term results as well. So that naturally meant that good education was important, so that they would get good workers. Good health care and safety was import
Tesla (Score:5, Funny)
Re:Tesla (Score:4, Funny)
Now that I know Elon Musk is into entheogens, I'm much more inclined to like him. I didn't really care for him before, but now that I know he's just really, really high, I think he's kind of alright.
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What is The MATRIX?
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unsure I'd call an ambien coma 'high'. Definitely out of their mind. Right now the VA still treats PTSD with ambien. Now Ambien is not an actual treatment for PTSD, but the docs figure it will help them sleep. So lets take a vet with PTSD, someone prone to night terrors, and give them a drug that lists sleep walking as a side effect. The Ft Hood shooter was a PTSD patient taking ambien. I believed Roseanne Barr when she said it was a 2am Ambien rant. Just use some cannabis and get some sleep already. Never
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I have it on good authority that someone 'awake' but in an Ambien fuge will do anything you ask, and not remember it in the morning.
Highly suggestible state. The night shift at the Tesla factory is brainwashing Elon while he sleepwalks.
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Psychotropic narcotics would help explain his Twitter posts.
Doesn't excuse them.
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depends on who is to be believed. If we take that whistleblower's word for it, they exist to smuggle drugs into the main factory. lol
It's at the point... (Score:2)
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"But it's the only way I can afford to buy all this stuff!"
I've heard some variation of that countless times when discussing some predatory retailer or other.
So Amazon uses Electricity like a Grow-Op? (Score:4, Funny)
Honest officer, they're not marijuana plants, I'm running an experimental, all natural, plant based data centre for Amazon!
Re:So Amazon uses Electricity like a Grow-Op? (Score:5, Funny)
but we keep having to change out memory chips on the servers. They seem to have a problem retaining short term data.
hmm (Score:5, Insightful)
In at least two states, it's also negotiated with utilities and politicians to stick other people with the bills
So, is this Amazon's fault, or the fault of the "utilities and politicians"?
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Can't it be both?
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You could also ask if it's not ultimately the fault of the people who elect said politicians into office.
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Base Loads (Score:5, Insightful)
Every corporation ever... (Score:1)
...offloads/externalizes as much of their costs as they possible can onto the public.
That's how capitalism works!
Greenpeace vs the Environment (Score:5, Insightful)
Re:Greenpeace vs the Environment (Score:5, Insightful)
Typical disaster blindness. You only notice the scary things and not the real killers.
Well, it's a good thing Amazon is lowering... (Score:2)
... their electrical costs. It'd be too bad if their insane power use forced an increase of the cost of Amazon Prime.
Oh... wait...
That article is not convincing (Score:2)
There is nothing uncommon about volume purchasers paying less per unit. Nobody runs around claiming this practice raises the cost for everyone else under some circumstances it can even reduce costs because the producer is making a large profit on the high volume.
Statements like "AEP exempted it from surcharges other Ohioans must pay" are very vague. They don't describe what the surcharges are for. Some localities attach public transit and other public service fund surcharges to energy bills. A super hig
Privatised profit, socialised risk—what a su (Score:2)
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Seriously though - (simplified) company puts electric rates into giant spreadsheet, sorts spreadsheet by price, opens datacenter in one of the cheapest places.
EVIL!
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That's not what they did though. They got the power company and the relevant PSC to sign off on hiking residential rates to pay for the installation of an additional transmission line to service the datacenter.
If you or I wanted a higher capacity feed, we'd get the bill for the installation.
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They got the power company and the relevant PSC to sign off on hiking residential rates to pay for the installation of an additional transmission line to service the datacenter.
And if they didn't, they would have gone to the next-cheapest item on the list. This is a problem with the local politicians and regulatory agencies, not with Amazon. I mean, unless there is bribery or other shenanigans taking place.