5 ms·

Reminds me of a loophole Microsoft found in their utility contract: http://www.nytimes.com/2012/09/24/technology/data-centers-in-rural-washington-state-gobble-

by uvdiv 14y ago

Reminds me of a loophole Microsoft found in their utility contract: http://www.nytimes.com/2012/09/24/technology/data-centers-in-rural-washington-state-gobble-power.html?pagewanted=all http://www.nytimes.com/2012/09/24/technology/data-centers-in... Threatened to waste $70,000 of electricity to circumvent a $210,000 contract penalty (for not buying enough electricity), and thus negotiated their way out of it. (Note this is MSFT not GOOG, so be sure to interpret this as an act of disreputable evil and not a clever funny hack).

GhotiFish 14y ago
I think what's important here is that it's funny. Google exploiting good faith rules to shirk payment? Funny. Microsoft blowing $70K in power to meet a contract? Also Funny.
- deleted 14y ago
  [deleted]
UnoriginalGuy 14y ago
It is kind of stupid that the penalties were MORE than the actual electricity. Shouldn't it have just been the cost of the electricity that they failed to use? That way loopholes like this wouldn't have existed.
- icebraining 14y ago
  No, because disposing of the unused electricity has costs for the provider. The way this works is that the provider offers a cheaper rate to ensure constant energy output, since the power plants can't be easily and cheaply scaled back. As an example, Ontario paid millions[1] to get others to use their surplus energy; MS' provider could have been forced to do the same, hence the penalty. [1]: http://www.thestar.com/business/2011/08/29/ontario_pays_others_to_take_its_surplus_power.html http://www.thestar.com/business/2011/08/29/ontario_pays_othe...
  - mnarayan01 14y ago
    It seems...unlikely that they actually needed to pay people to take their power (though I'm no EE; it may well be possible). My intuitive sense from that article was that it was a contract issue (and possibly not even that; they also throw in something about "below costs", which would obviously not be negative price).
    - calinet6 14y ago
      Depends on the scale.
    - Spooky23 14y ago
      Electrical generation and distribution is a tough business. Places where you have generation capacity aren't necessarily accessible via the transmission network. So if NYC isn't using power, you can't just send it to Cleveland. Sometimes, you have a certain amount of "fixed" generation capacity that you must use, or must commit to taking offline for days before restarting. 80% of your power may come from a few big, centralized, cheap power plants (nukes, big hydro, coal) and a bunch of geographically dispersed, small, more expensive plants that you spin up to meet peak demands. (natural gas, small hydro) Utilities sign contracts with big industrial users who have steady-state energy demands to ensure that they have a place to send lots of power to. They also have contracts that when peak demand is reached, the industrial customers shut down lines in exchange for discounts. (I worked at a place that financed a DR datacenter largely by committing to failing over 50% of our energy workload to another region during a peak demand emergency.) I'm not doing the topic justice, but there's alot of behind the scenes stuff there -- I'm sure it wasn't just a contract dispute.
      - mnarayan01 14y ago
        From the article it doesn't sound like there was any sort of dispute...my guess would be that the contract formalized payment as a function of capacity and demand, in such a way that payment could be negative. This might not even be a mistake or from a need to distribute the power, it could just be a low-cost (due to rarity) sweetener.

by uvdiv 14y ago

GhotiFish 14y ago

I think what's important here is that it's funny. Google exploiting good faith rules to shirk payment? Funny. Microsoft blowing $70K in power to meet a contract? Also Funny.

deleted 14y ago
[deleted]

UnoriginalGuy 14y ago

It is kind of stupid that the penalties were MORE than the actual electricity. Shouldn't it have just been the cost of the electricity that they failed to use? That way loopholes like this wouldn't have existed.

icebraining 14y ago
No, because disposing of the unused electricity has costs for the provider. The way this works is that the provider offers a cheaper rate to ensure constant energy output, since the power plants can't be easily and cheaply scaled back. As an example, Ontario paid millions[1] to get others to use their surplus energy; MS' provider could have been forced to do the same, hence the penalty. [1]: http://www.thestar.com/business/2011/08/29/ontario_pays_others_to_take_its_surplus_power.html http://www.thestar.com/business/2011/08/29/ontario_pays_othe...
- mnarayan01 14y ago
  It seems...unlikely that they actually needed to pay people to take their power (though I'm no EE; it may well be possible). My intuitive sense from that article was that it was a contract issue (and possibly not even that; they also throw in something about "below costs", which would obviously not be negative price).
  - calinet6 14y ago
    Depends on the scale.
  - Spooky23 14y ago
    Electrical generation and distribution is a tough business. Places where you have generation capacity aren't necessarily accessible via the transmission network. So if NYC isn't using power, you can't just send it to Cleveland. Sometimes, you have a certain amount of "fixed" generation capacity that you must use, or must commit to taking offline for days before restarting. 80% of your power may come from a few big, centralized, cheap power plants (nukes, big hydro, coal) and a bunch of geographically dispersed, small, more expensive plants that you spin up to meet peak demands. (natural gas, small hydro) Utilities sign contracts with big industrial users who have steady-state energy demands to ensure that they have a place to send lots of power to. They also have contracts that when peak demand is reached, the industrial customers shut down lines in exchange for discounts. (I worked at a place that financed a DR datacenter largely by committing to failing over 50% of our energy workload to another region during a peak demand emergency.) I'm not doing the topic justice, but there's alot of behind the scenes stuff there -- I'm sure it wasn't just a contract dispute.
    - mnarayan01 14y ago
      From the article it doesn't sound like there was any sort of dispute...my guess would be that the contract formalized payment as a function of capacity and demand, in such a way that payment could be negative. This might not even be a mistake or from a need to distribute the power, it could just be a low-cost (due to rarity) sweetener.