Internet Server Bases in Pacific Northwest to Require A Lot of Electricity

Source: Knight Ridder/Tribune Business News Publication date: 2000-10-05 Arrival time: 2000-10-07

Oct. 5--A new industry about to pop up along the Interstate 5 corridor -- so-called computer server farms -- has regional electric utility executives scurrying for their worry beads. Such facilities, where large racks of servers run Internet sites, send movies and music to homes and provide other services to computer-based companies, could drain electric power from the region faster than new generating facilities can be built.

"They can be put in tomorrow, but with (an electrical) load equivalent to a pulp mill or a refinery," said Doug Kirkpatrick, electric industry coordinator for the Washington Utilities and Transportation Commission.

"The utility industry is just now starting to plan how to serve these loads," said Bill Gaines, vice president of energy supply for Puget Sound Energy. "It's going to be tough."

Both Seattle City Light and Puget have requests for hundreds of megawatts of power from applications service providers.

Puget has requests for 440 megawatts of power, more than 20 percent of its existing average load. Seattle has requests for nearly 130 megawatts, more than 10 percent of its load.

By contrast, the entire University of Washington campus, including lighting Husky Stadium, consumes about 30 megawatts.

Load growth of around 2 percent a year is considered normal in the Northwest.

"It's a real increase in what we projected for load growth," Seattle City Light's Dan Williams said of requests to that utility.

The trend has yet to hit Tacoma, despite its fiber optic network and "No. 1 wired city" moniker.

Advanced Telecom Group, a telephone and Internet service provider located in downtown Tacoma, could be the largest, but with only 13 servers and a half-dozen colocation customers, its power drain isn't large.

"We're pretty insignificant in the big picture," said ATG's Bruce Greene.

Tacoma Power hasn't yet received any requests for major new power supplies from such companies, but superintendent Steve Klein is working on a proposed policy to handle a number of issues surrounding the business.

"There will be an interesting policy debate," Klein said.

"We are (legally) obligated to serve them," added Seattle's Williams, "but that could impact our (other) customers, and we don't want to do that."

Among questions to be answered, both by public utilities like Tacoma and Seattle, and by investor-owned power suppliers like Puget:

-- Who pays the multimillion-dollar capital costs of hooking a large server farm up to the local utility? Probably the company, Klein said, and almost certainly right upfront because the risky and highly competitive nature of the business could leave the utility -- and its regular ratepayers -- on the hook for start-up costs if a company failed.

-- How much should a utility charge for the power it provides around the clock? Most utilities are considering charging the real-time price levied on a wholesale power market like the Mid-Columbia Power Exchange.

Prices on that exchange Tuesday were around $125 per megawatt at times of peak demand and $75 per megawatt for off-peak power.

That would mean that a server farm using 10 megawatts of electricity would pay around $26,000 for 24 hours of power.

-- And, perhaps most importantly, will the emergence of server farms, which create very few jobs, force the Northwest to build expensive new electric generating stations to increase capacity in a power grid already stressed by growth in the region?

There exist no estimates of how much power a full-blown server-farm industry would consume in the region.

"This would be a hell of a thing to try to forecast," said Ken Corum, an analyst with the Northwest Power Planning Council in Portland. "I don't know how you'd do it."

There is a portent, however, in Santa Clara, a town of about 100,000 residents that sits in the heart of California's Silicon Valley.

Silicon Valley Power's current load of about 450 megawatts is expected to double in just two or three years, Corum said.

The Northwest already is 3,300 megawatts short of the capacity needed to handle extraordinary peak loads in the region, according to the Bonneville Power Administration's latest forecast.

The Northwest Power Planning Council has predicted a one-in-four chance of blackouts if a severe storm hits the area this winter.

There are a few combustion turbine plants being built in the region, but they aren't expected to begin operating until 2001 or 2002.

And those plants can be expensive, perhaps $1 million a megawatt in capital construction costs.

Whatever happens isn't expected to be a transitory blip on the region's energy future.

"These businesses are not going to go away," said Puget spokeswoman Dorothy Bracken.

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=14608322&ID=cnniw&scategory=Utilities%3AElectricity

-- Martin Thompson (mthom1927@aol.com), October 07, 2000

Answers

"These businesses are not going to go away," said Puget spokeswoman Dorothy Bracken.

Guess we'll have to hope not. Once all the money gets spent to build new plants, it would sure be a shame to see these companies relocate. Unlike a paper mill, which has a huge mostly immobile physical infrastructure, most of a server farm can be picked up and moved.

Seems to me the prospect of relocating will give server farms unbelievable leverage in negotiating rates. And for all this risk to state taxpayers and normal electricity consumers, there will be little or no boost to regional employment.

Truly, these are businesses from hell.

-- Neil Ruggles (nmruggles@earthlink.net), October 08, 2000.