Amazon Requests Discounted Power for New Ohio Data Centers

Amazon Ohio data centers PUC
An aerial view of Amazon’s solar rooftops. Credit: Amazon.com, Inc.

Testifying before the Public Utilities Commission of Ohio, an Amazon representative requested discounts on energy rates prior to the construction of 12 additional data centers in the state, DataCenter Knowledge reported.

Amazon energy initiatives manager Charles Daitch, whose role supports Amazon Web Services, testified on behalf of Vadata, an Amazon subsidiary that operates data centers and provides cloud computing services to businesses. The exact amount of the discount requested from AEP Ohio was not made public, but Daitch suggested that it’s in the state’s interests to approve the deal because otherwise the company could build the data centers in another state, DataCenter Knowledge’s Yevgeniy Sverdlik reported.

“Many of the data center capital and operating costs are similar across US regions,” Daitch testified. “Data centers in Ohio will be competing for growth with other low energy price regions in the US. Other regions may also have existing advantages based on existing scale as well as personnel and support operations.”

In May 2015, Amazon announced plans to spend $1.1 billion developing data centers in central Ohio, the Columbus Dispatch reported. The state offered Amazon a 15-year exemption on paying state and local property and sales taxes, up to $77 million, part of a deal that Bloomberg Businessweek’s Mya Frazier called “maybe too good.” Last fall, three massive AWS data centers opened in Hilliard, Dublin, and New Albany, Ohio.

Although all the key numbers were blacked out of the public version of Daitch’s testimony, Columbus Business First reporter Carrie Ghose took a guess. “From the character widths of blacked out figures, it appears that the discount on the kilowatt hour usage rate rises from single to double digits once the fifth data center is online,” she wrote.

The potential for Amazon to receive a secretive discount on energy in the state prompted an agency representing residential rate-payers and the Ohio Manufacturers’ Association to submit public comments saying that other customers will have to make up for AEP’s lost revenue, Ghose reported.

Besides seeking a discount, Amazon doesn’t want to be stuck with the utility for energy purchasing. “It’s also asking for permission to shop for energy on its own while using AEP’s transmission system to deliver it to its data centers — as opposed to buying energy from AEP at rates set by the state and the utility,” Sverdlik wrote. However, the tech company would still have to pay AEP for transmission, distribution, and services related to delivery.

As major tech companies like Amazon, Facebook, Microsoft, and Google look to break ground on new data centers, incentives and discounts could make a big difference given that monthly electric bills for a data center can easily blow past $1 million, Bisnow Chicago reported. Energy efficiency and power from 100% renewable sources have become hallmarks of the modern data center, but it’s not surprising that corporations are seeking to lower costs in other ways.

A ruling by the Public Utilities Commission of Ohio is expected to follow the conclusion of the hearing although a date has not been set.

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