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Businesses The Almighty Buck United States

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.

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How Amazon, One of the Richest Companies in the World, Secretly Offloads Its Electricity Costs To Local Taxpayers Who Live Near

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  • Shocking! (Score:1, Funny)

    by Anonymous Coward
    This is truly shocking...
  • by SuperKendall ( 25149 ) on Monday August 20, 2018 @02:31PM (#57161232)

    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.

    • by lgw ( 121541 ) on Monday August 20, 2018 @02:44PM (#57161346) Journal

      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.

      • by e3m4n ( 947977 ) on Monday August 20, 2018 @02:49PM (#57161390)

        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'.

        • by aaarrrgggh ( 9205 ) on Monday August 20, 2018 @03:02PM (#57161474)

          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.

        • Re: (Score:2, Interesting)

          by Anonymous Coward

          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...

        • Re: (Score:1, Interesting)

          by Anonymous Coward

          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

      • by 93 Escort Wagon ( 326346 ) on Monday August 20, 2018 @03:15PM (#57161560)

        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 ...).

        • by ranton ( 36917 )

          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.

        • by lgw ( 121541 )

          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.

      • 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!

      • When they lobby for them and buy off the politicians with campaign donations. This isn't just a case of town making a bad deal. It's widespread political corruption that's been legalized by multiple supreme & lower court rulings.
      • by nasch ( 598556 )

        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.

        • by lgw ( 121541 )

          Everyone pays property tax. Just because it's not it's own line item on your rent don't think you're not paying.

          • by nasch ( 598556 )

            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.

            • by lgw ( 121541 )

              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?

              • by nasch ( 598556 )

                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.

      • I'm pretty sure the city council decided something that was in their favour, not the city's.

    • by Tablizer ( 95088 )

      huge-ass extension cord

      Uh, that doesn't read well

    • 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!

    • 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.

  • Benefits (Score:5, Insightful)

    by fluffernutter ( 1411889 ) on Monday August 20, 2018 @02:31PM (#57161238)
    I say again. After tax breaks and all other leaching, does it really make sense for us to allure these huge companies to cities if there is no net benefit for the city?
    • Re:Benefits (Score:5, Insightful)

      by jellomizer ( 103300 ) on Monday August 20, 2018 @02:36PM (#57161268)

      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.

      • Re: (Score:3, Insightful)

        by Tablizer ( 95088 )

        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)

          by jellomizer ( 103300 ) on Monday August 20, 2018 @02:51PM (#57161398)

          Perhaps, or perhaps most of our "Leaders" are just really stupid.

          • by Tablizer ( 95088 )

            Perhaps, or perhaps most of our "Leaders" are just really stupid.

            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.

          • 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.

        • by e3m4n ( 947977 )

          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

        • by pnutjam ( 523990 )
          Everybody is falling over themselves for the Amazon 2nd HQ, like Amazon made Seattle. I always ask them why Bentonville isn't an economic powerhouse.
        • 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."

      • 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?

      • except the politicians who got big campaign contributions. It was only a handful of jobs. Nobody's going to much notice the tax dollars. They _will_ notice their taxes go up to pay the subsidies though. But, well, I hate to say it but they'll probably blame those tax and spend liberals...
    • by lgw ( 121541 )

      I'd like my house price to double. You're welcome not to participate.

      • So you want the house you can afford to become unaffordable?

        Amazon data centers don't increase neighboring property value...

    • Re:Benefits (Score:5, Insightful)

      by PopeRatzo ( 965947 ) on Monday August 20, 2018 @02:39PM (#57161306) Journal

      I say again. After tax breaks and all other leaching, does it really make sense for us to allure these huge companies to cities if there is no net benefit for the city?

      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)

        by Anonymous Coward on Monday August 20, 2018 @02:44PM (#57161340)

        Corporate socialism is the only socialism allowed in America!

        • Re: Benefits (Score:5, Insightful)

          by e3m4n ( 947977 ) on Monday August 20, 2018 @02:59PM (#57161448)

          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.

          • 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.

            • That's a clear sign the definitions are broken. Ignore the people pushing such silly, historically ignorant propaganda.

              • 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?

                • 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.

      • Comment removed (Score:4, Interesting)

        by account_deleted ( 4530225 ) on Monday August 20, 2018 @04:10PM (#57162010)
        Comment removed based on user account deletion
        • 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 based on user account deletion
    • by fermion ( 181285 )
      That is the question. When a big box store, like Wal Mart, is built, the improvement made to the area, such as roads and the like, are paid by the store. However, the store then gets a equal set of tax abatements to offset those upfront costs.The cost were incurred to bring customers to the stores, but ultimately the taxpayer cover the costs. Sure the roads are used for everyone, but we got by with small roads until Wal Mart wanted bigger ones. Just like we all benefit from power plants, so it just depe
    • by antdude ( 79039 )

      Leeching or leaching?

  • Tesla (Score:5, Funny)

    by 110010001000 ( 697113 ) on Monday August 20, 2018 @02:34PM (#57161252) Homepage Journal
    Don't lump in Tesla with Google and Amazon. Tesla is a green company and has a mission to save the environment and the planet. They would never do this just to save some money.
    • Re:Tesla (Score:4, Funny)

      by PopeRatzo ( 965947 ) on Monday August 20, 2018 @02:41PM (#57161318) Journal

      Don't lump in Tesla with Google and Amazon. Tesla is a green company and has a mission to save the environment and the planet. They would never do this just to save some money.

      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.

      • I figured out he was high when he said that we were all living in a simulation.
      • by e3m4n ( 947977 )

        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

        • 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.

      • Psychotropic narcotics would help explain his Twitter posts.

        Doesn't excuse them.

    • by e3m4n ( 947977 )

      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 where it's not just Amazon to blame; we've been informed enough that those of you who choose to still support this evil monstrosity and give it their business have a shitload to answer for as well.
    • "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.

  • by mykepredko ( 40154 ) on Monday August 20, 2018 @02:39PM (#57161308) Homepage

    Honest officer, they're not marijuana plants, I'm running an experimental, all natural, plant based data centre for Amazon!

  • hmm (Score:5, Insightful)

    by cascadingstylesheet ( 140919 ) on Monday August 20, 2018 @02:46PM (#57161360) Journal

    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"?

  • Base Loads (Score:5, Insightful)

    by PPH ( 736903 ) on Monday August 20, 2018 @03:01PM (#57161466)

    ... are what pay utilities bills. Fixed and predictable, they bring in revenue and utilize the transmission/distribution systems needed to feed them most efficiently. It's what makes it possible for power companies to provide you power when you fire up the Jacuzzi or stand in front of an open freezer, trying to make up your mind about ice cream flavors.

  • ...offloads/externalizes as much of their costs as they possible can onto the public.

    That's how capitalism works!

  • by FeelGood314 ( 2516288 ) on Monday August 20, 2018 @04:12PM (#57162032)
    Coal would have died without Greenpeace and others like them driving up the cost of nuclear. Coal mines were going bankrupt in the late 60s and early 70s but then nuclear costs went up 10x and suddenly coal was viable again. Greenpeace is responsible for a good portion of the CO2 in the atmosphere as well as lead, arsenic and radioactive dust released from coal burning (yes, coal has radio active material in it, usually in the form of daughter particles of radon decay). Plus all the deaths from the mining of coal. Screw them and their virtue signalling about being good for the environment.
  • ... their electrical costs. It'd be too bad if their insane power use forced an increase of the cost of Amazon Prime.

    Oh... wait...

  • 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

  • That's the way *all* of Big Business operates. It's not restricted to Amazon.

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