Microsoft’s Energy Practices in Quincy Under Fire

An aerial view of the two Microsoft data centers in Quincy, Washington.

Is Microsoft reducing its data center energy usage because it’s the right thing to do for the environment and local communities, or only to save money? The company’s commitment to sustainability was challenged by a report Monday that it was prepared to waste tens of megawatts of electricity at its Quincy, Washington data center in order to reduce a potential fine from the local utility. The incident was first reported by the New York Times on Monday.

Microsoft has invested millions of dollars in designing highly efficient servers and data centers, and has made a company-wide pledge to become carbon neutral. But the details of the December 2011 incident in Quincy suggest that when it came to the politics of power, in at least one instance, finances trumped philosophy.

Microsoft says the incident has prompted it to reassess its approach to working with local utilities, hiring additional staff with experience in utility relations. The company said it also has designed two of its newest data centers to operate without diesel generators, another source of contention in Quincy and a focus of sharp critiques from the Time.

Power Penalties at Issue

The dispute in Quincy is rooted in complex power agreements between Microsoft and the Grant County Power Utility District (PUD), the local electric utility. In late 2011, Microsoft faced a $210,000 fine from the PUD for using less power than it had requested for the year. Because data centers seek large up-front commitments of power capacity, many utility agreements include provisions to compensate the power company if the customer buys less than the amount it has requested. A Yahoo data center in Quincy also faced a penalty from the Grant County PUD, and paid its $94,608 fine.

Microsoft argued that the fine created an “illogical financial incentive” but said it was prepared to consume $70,000 in electricity in a “commercially unproductive” manner to avoid the fine, the Times reported. This apparently would be accomplished by running load banks, devices that generate heat and are usually used to test a data center’s ability to cool racks of densely-populated servers.

Microsoft’s position led the PUD to revise its position and waive all but $60,000 of the penalty. But it also indicated that the company was willing to waste energy if the financial math made conservation unprofitable. The dispute conjured up images of Microsoft using load banks to burn off megawatts of electricity, and doing so alongside state-of-the-art servers and data halls that have been optimized to use as little energy as possible.

‘Our Goal is to Reduce Consumption’

Christian Belady, the general manager of Data Center Services for Microsoft, says that the incident highlighted a disconnect between Microsoft’s values and its negotiating tactics.

“Microsoft’s goal is to reduce energy consumption,” said Belady. “The situation in Quincy was an isolated incident and the initial reaction was made without the context of a broader consideration of the implications. We quickly reversed course because it didn’t seem like a good outcome to use power we didn’t need. Since that time, we have hired additional energy and utility experts to ensure that we put the right incentives in place to continue to minimize energy use and costs and accelerate efficiency gains in our data centers.”

In late 2011 Microsoft hired Brian Janous as Utility Architect, a position that will focus on Microsoft’s power sourcing, with a mandate to use less overall power and more renewable energy. Earlier this month Janous disclosed that Microsoft plans to reduce its use of diesel generators as part of its efforts to make Microsoft’s server farms less reliant on the utility grid.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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  1. Steve

    The City of Houston does the same thing to residents. They ask them to conserve energy but them apply a penalty when each home owner does not use a certain amount they provisioned for. The whole system is backward and calling Microsoft out to make them look bad only supports the bad habits of the energy industry to get away with this behavior. Fix the real probblems in energy.

  2. sam 1

    This article is a worst hack job than the Times Article. There is no mention that the power is hydro generated hence it is Green Power. It was the utility that arbitrarily fined Microsoft for being good stewards and NOT using all the power they thought they would. Microsoft just called their bluff, when government agencies run a muck someone needs to shout out loud. I know all the green nuts will salivate at the Times and now this piece but they are using Hydro power of this data center, having the green nuts always nipping at your heals is just annoying and counter productive. Oh and another thing this all happened YEARS ago so what is the point now!

  3. This kind of thing should not become commonplace. Giving energy companies the power to trash others over this crap is ridiculous. The above comment from sam 1 even states that Microsoft uses hydro generated power. These kind of happens are setting a precedence that worries me.

  4. Cory

    Microsoft had 24 so called “back up” *diesel* generators for “emergency backup electrical power” or unspecified “maintenance purposes.” They later expanded to 37 generators. Microsoft repeatedly ran the facility on generator power. (DIESEL POWER) Yahoo had 65 hours in 2010 compared to Microsoft’s generators operating for a combined total of 3,615 hours that year of backup generator use. The Grant County Public Utility District fined Microsoft for using too little of their green hydroelectric power because they told Grant County how much they needed but didn’t come close to the expected forecast. So was Microsoft really being environmentally cautious/ friendly???