Report: Microsoft wasted "millions of watts" of energy to avoid a fine

Microsoft may have used up lots of electrical power at a data center in Washington simply to avoid paying a fine to the local power utility. That's what a new report by the New York Times claims, which says that the company may have overestimated how much power it would use from the data center.

The report says that Microsoft purchased 75 acres of former farmland in Grant County, Washington in 2006 to set up a data center, which would get its power via hydroelectric generators connected to the nearby Columbia River. The data center opened in 2007.

However, in 2011 the Grant County Public Utility District found itself in a conflict with Microsoft. The report claims that the company was due to get a $210,000 fine from the power utility, because Microsoft did not use as much power from the data center location as it had predicted.

Microsoft's response was simply to waste millions of watts in electrical power from the data center. The company also reportedly told the utility that it would continue its "unnecessarily wasteful" acts until the fine was reduced. In the end, the utility's board voted four to one to cut Microsoft's fine down to $60,000.

A Microsoft spokesperson claims that the dispute with the Grant County Public Utility District was a "a one-time event that was quickly resolved.” The spokesperson added, "Microsoft’s focus on efficiency and resource utilization has not changed."

Source: New York Times
Electrical power tower image via Shutterstock

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I't interesting how they actually wasted all that electricity. Maybe disabled HLT or something on their servers? Or just put thousands of heaters outside?

WOW a fine for not using a butt load of power hmmm sounds like screwed if you do screwed if you don't either way I agree with MS on this I would have thought the utility company would have been happy that MS wasn't putting such a high draw on their systems thereby relieving pressure to produce gigawatt's of power for just one user

I think @TechieXP has it right - if it's anyone's fault, it's the power companies. they should have agreed to lower the fine instead of essentially forcing Microsoft to waste the power (Microsoft has an obligation to their shareholders to make money). And it's not like it the energy they used was from fossil fuels & polluting the environment or anything, it was hydropower. jm2c

W...for those finding an issue with Microsoft, you have it backwards.
The utility company wants to fine Microsoft for NOT using asmuch power as they estimated they would. So you are going to fine them for doing something good?

Maybe we as drivers should be fined for obey signals?
I would have sued the ******* and todl them threaten me again and Iwill close the center and make your location jobless. Microsoft has the money, you sue them.

Basically the fine is whatever the utility company would have gotten providing MS woudl ahve used the amount of power they estimated. So they estimated to high, so you are going to fine them the difference? I would have taken tehm right to court. That is utter ridiculous.

2xSilverKnight said,
What people doesn't seem to grasp is that electricity that is not used will be wasted, because it cannot be stored, up to a certain level.

yeah, but powerpants do ramp up and down generation or turn units off when demand drops so they aren't constantly generating 100% output

2xSilverKnight said,
What people doesn't seem to grasp is that electricity that is not used will be wasted, because it cannot be stored, up to a certain level.

That may sound like a legit reason on one side, but on the hand, it can also be easily interpreted as a way for the power company to get something out the unused portion of its current operating capacity, which may or may not have to do, directly, with clients' estimates.

Microsoft: The increased server farm operating capacity is in relation to the anticipated Windows 8, Windows Phone 8, and other related Microsoft serices launches and that they had previously operated on reduced capacity. Just say it! lol

2xSilverKnight said,
What people doesn't seem to grasp is that electricity that is not used will be wasted, because it cannot be stored, up to a certain level.

Yes it can. It's a hydroelectric dam. You just stop letting water through.

Let's fine everyone for somehow saving/using less than the expected average per person amount of energy.

Seriously, though, they should at least allow adjustments to the estimated energy use for better projections. It's strange that some policies lack common sense or practicality to a point where it requires an illogical response sometimes to rectify the idiotic cause.

I realize its a shock to some of you... but... companies exist to meet their fiduciary responsibility to their shareholders....not to give you benefits or to be "green" .. if those two things happen along the way great....but they certainly have zero consideration to the bottom line... as it should be .. I for one do not want any company I invest in to take losing 220 k lightly ...

But it's wrong for Microsoft to promote its environmental credentials and then pull sleazy manoeuvres like this. When did it become acceptable for companies to act in an immoral way in order to make a greater profit? People should not be accepting of this. It may have been financially prudent but it is morally and socially wrong.

theyarecomingforyou said,
But it's wrong for Microsoft to promote its environmental credentials and then pull sleazy manoeuvres like this. When did it become acceptable for companies to act in an immoral way in order to make a greater profit? People should not be accepting of this. It may have been financially prudent but it is morally and socially wrong.

it's not like this was polluting the environment - or at least I thought hydropower was clean

A regulatory practice that fails to comply with the basic assumption that humans are self-interested beings. Make the fine equal to the power usage so that MS doesn't go out of it's way to waste power since the marginal cost of doing so was obviously less than the fine.

What else would you expect them to do when the fines cost more than the power would cost if you used it? The fines shouldn't be more than the cost of the power, it makes no sense.

mrp04 said,
What else would you expect them to do when the fines cost more than the power would cost if you used it? The fines shouldn't be more than the cost of the power, it makes no sense.

I expect companies to pay the fine, just like Yahoo did. If you think it's morally or socially acceptable to do what Microsoft did then that's very sad. It was Microsoft that miscalculated their usage and they should accept responsibility for that and pay the charge.

theyarecomingforyou said,

I expect companies to pay the fine, just like Yahoo did. If you think it's morally or socially acceptable to do what Microsoft did then that's very sad. It was Microsoft that miscalculated their usage and they should accept responsibility for that and pay the charge.

They just increased their power usage to meet the power requirement they said they'd use as that was cheaper than paying for not using power. How is this morally wrong? If I said I'd buy 10 of X at $10 a piece, but then only needed 5 and the store said they'll charge me $100 for not taking all 10, I'd just take the 10.

mrp04 said,
They just increased their power usage to meet the power requirement they said they'd use as that was cheaper than paying for not using power. How is this morally wrong?

It's morally wrong because Microsoft claims to be for the environment but when there's an opportunity to save money they're happy to burn through electricity in a wasteful manner, all the while contributing to climate change through the burning of fossil fuels. Microsoft went out of its way to waste electricity simply to save money, all because they made a poor calculation of what they'd actually need.

You can't surely think it was the right thing to do? Doing the right thing is more important than making money.

theyarecomingforyou said,

It's morally wrong because Microsoft claims to be for the environment but when there's an opportunity to save money they're happy to burn through electricity in a wasteful manner, all the while contributing to climate change through the burning of fossil fuels. Microsoft went out of its way to waste electricity simply to save money, all because they made a poor calculation of what they'd actually need.

You can't surely think it was the right thing to do? Doing the right thing is more important than making money.


So to be morally right, they just suck up the fine they didn't deserve? For real?

I don't know why this is a surprise. Manufacturing plants and other large facilities make these deals all of the time to guarantee that they have power to meet their manufacturing needs. I used to work in "Auto" and I can tell you that everyone "burns" through energy and excess materials in part to keep up their production quotas or to keep their suppliers going. Alot of this happened in the lean times of the 2000-2011 period where the orders didn't match the supplies, but they had made contracts to purchase parts from their suppliers. Its just a fact of business.

It was probably a contract for x amount of power at y rate. They failed to meet the usage for the contracted amount and were expected to pay up..

They just ducked the issue the smart way

hjf288 said,
It was probably a contract for x amount of power at y rate. They failed to meet the usage for the contracted amount and were expected to pay up..

They just ducked the issue the smart way

It's not smart to waste electricity and pollute the environment by burning fossil fuels - it's sleazy and greedy.

theyarecomingforyou said,

It's not smart to waste electricity and pollute the environment by burning fossil fuels - it's sleazy and greedy.

What's sleazy and greedy is making the fine for not generating electricity more than the cost of generating electricity. It can't cost them more if Microsoft isn't using the electricity than if they are.

mrp04 said,

What's sleazy and greedy is making the fine for not generating electricity more than the cost of generating electricity.

I'm not arguing otherwise but Microsoft agreed to that when they signed the contract.

The problem is that the fines are higher than the cost of the energy. Yahoo and other companies also had to do the same thing to avoid the fines. There is no incentive for companies to improve their energy consumption during the estimate period because of the fines. Microsoft will estimate much lower energy this time use because of the alternate energy sources they've added over the last year.

I didn't know you could be fined for using less energy than predicted. Surely in this day and age we should be fining people for using too much, and then rewarding for using less =/

dave164 said,
I didn't know you could be fined for using less energy than predicted. Surely in this day and age we should be fining people for using too much, and then rewarding for using less =/

It's not a "fine" but a charge. That's because the company providing the service couldn't offer that capacity to another paying business. It's a "lost business" clause. Obviously a government shouldn't be issuing a fine for using less energy than expected but this is a private company.

I think they did the smart thing. Fining a company for using less power than expected is ridiculous. They shouldn't be paying any fine at all.

nesl247 said,
I think they did the smart thing. Fining a company for using less power than expected is ridiculous. They shouldn't be paying any fine at all.

Exactly. What a pathetic thing to fine someone over.

nesl247 said,
I think they did the smart thing. Fining a company for using less power than expected is ridiculous. They shouldn't be paying any fine at all.

Yeah, good for Microsoft for playing the game. Businesses big and small all need to play these games in order to not be steam rolled by ridiculous things like this.

nesl247 said,
I think they did the smart thing. Fining a company for using less power than expected is ridiculous. They shouldn't be paying any fine at all.

That's not what the article says happened though, it says they were fined for not meeting their estimated generated power figure.

I'm not quite sure why they'd then go and start wasting energy, this article makes no sense at all.

nesl247 said,
I think they did the smart thing. Fining a company for using less power than expected is ridiculous. They shouldn't be paying any fine at all.

It's not a "fine" but a charge stipulated in the contract that Microsoft signed. Further, it's not "smart" to miscalculate your anticipated electricity usage and then deliberately waste electricity in order to avoid a charge - it's sleazy and immoral. Microsoft should have accepted its mistake and paid the charge, especially when it touts its commitment to the environment - clearly that's just marketing.

Perverse incentive in the original deal. Seems to have been structured in such a way that MS didn't pay anything for extra power, the power actually had a negative price. (The more you use, the less (fines) you pay).
In the circumstances, the ensuing behaviour is hardly surprising.

gb8080 said,
Perverse incentive in the original deal. Seems to have been structured in such a way that MS didn't pay anything for extra power, the power actually had a negative price. (The more you use, the less (fines) you pay).
In the circumstances, the ensuing behaviour is hardly surprising.
Imagine this scenario and you may understand it better.

MS was quoted a dollar amount for their estimated use of energy. The energy company ramps their production to accommodate this additional use and then MS didn't come through with the use as declared. The energy company has a cost associated to that extra energy production, and MS isn't using it. The fine is associated to the cost required to create the extra energy based on the estimated demand, which is now falling on the floor. Once the energy is created, they cannot capture it and if it goes unused it's wasted. Hence the fine.
By wasting the energy MS is merely completing its original contracted estimate of demand.

gb8080 said,
Perverse incentive in the original deal. Seems to have been structured in such a way that MS didn't pay anything for extra power, the power actually had a negative price. (The more you use, the less (fines) you pay).
In the circumstances, the ensuing behaviour is hardly surprising.
The stupid part of all this, is that the fine is exceeding the actual use of the energy.

Ricardo Dawkins said,
I didn't know a data center generated energy. something new for me.
Data centers can have large generators, capable of creating more electricity than they use. The balance of which is sent back into the grid, giving them an energy credit. In this case however, the article posted to Neowin has a mistake in stating it is related to power generation. It is not.

John Callaham said,
That's what a new report by the New York Times claims, which says that the company may have overestimated how much power it would generate from the data center.

The original post from the NY Times states that the fine was based on underestimating the power use, not the generation of it.

New York Times said,
In an attempt to erase a $210,000 penalty the utility said the company owed for overestimating its power use, Microsoft proceeded to simply waste millions of watts of electricity, records show. Then it threatened to continue burning power in what it acknowledged was an “unnecessarily wasteful” way until the fine was substantially cut, according to documents obtained by The New York Times.

Tyler R. said,
They make billions of dollars, but panic over a 210,000 dollar fine and waste precious fossil fuels. Wow.

They are wasting precious fossil fuels from a hydroelectric damn?

Tyler R. said,
They make billions of dollars, but panic over a 210,000 dollar fine and waste precious fossil fuels. Wow.

And how many fossil fuels do hydroelectric generators use?

it's hydroelectric so it's renewable energy. I think it's greedy Grant County P.U that wants to fine Microsoft.

Tyler R. said,
They make billions of dollars, but panic over a 210,000 dollar fine and waste precious fossil fuels. Wow.

Tyler R. said,
They make billions of dollars, but panic over a 210,000 dollar fine and waste precious fossil fuels. Wow.
I guess hydro-electric power is generated by Dinosaurs swimming in the river? Seems legit.

Tyler R. said,
They make billions of dollars, but panic over a 210,000 dollar fine and waste precious fossil fuels. Wow.

They "wasted" that energy when they were required to estimate their energy use and over estimated. The real question is, if you give a **** about fossil fuels is why the law doesn't allow them to over estimate w/o penalty. But then again, that would require thinking.

MrHumpty said,

They "wasted" that energy when they were required to estimate their energy use and over estimated. The real question is, if you give a **** about fossil fuels is why the law doesn't allow them to over estimate w/o penalty. But then again, that would require thinking.

+1. Penalties like this are nothing more than a money grab.

minster11 said,
AFAIK only when starting the generator to kick start it.

No, the backup diesel generators are provided by a separate company in case Microsoft's primary hydroelectric supply was interrupted or insufficient.

MrHumpty said,
The real question is, if you give a **** about fossil fuels is why the law doesn't allow them to over estimate w/o penalty. But then again, that would require thinking.

Unfortunately the fine wasn't by the government but a private company that Microsoft had contracted to supply power as redundancy. Microsoft used considerably less energy than they had requested and were fined, as the company was unable to sell that electricity to other companies (it's a "lost business" clause).

Rather than Microsoft accepting that they made a mistake in their forecast and accepting the fine (like Yahoo did) they decided to take the immoral action of needlessly burning fossil fuels. For a company that has made pledges to the environment and talked up how it is going carbon neutral it's truly pathetic. Environmentalism is a sham used by corporations to pretend they are socially responsible.

ahinson said,
I guess hydro-electric power is generated by Dinosaurs swimming in the river? Seems legit.

It's part of the Jurassic Park... They're swimming in Rango style...

theyarecomingforyou said,

No, the backup diesel generators are provided by a separate company in case Microsoft's primary hydroelectric supply was interrupted or insufficient.

Unfortunately the fine wasn't by the government but a private company that Microsoft had contracted to supply power as redundancy. Microsoft used considerably less energy than they had requested and were fined, as the company was unable to sell that electricity to other companies (it's a "lost business" clause).

Rather than Microsoft accepting that they made a mistake in their forecast and accepting the fine (like Yahoo did) they decided to take the immoral action of needlessly burning fossil fuels. For a company that has made pledges to the environment and talked up how it is going carbon neutral it's truly pathetic. Environmentalism is a sham used by corporations to pretend they are socially responsible.

Why would the fine ever be more than the cost they were selling the electricity for? That makes no sense. If it were the same price or slightly less, Microsoft would have paid the fine. Charging more to generate less electricity makes no sense.

Xerax said,

They are wasting precious fossil fuels from a hydroelectric damn?

Power is power, doesn't really matter how it was generated in the end. Its great that they contracted power from a hydro damn, but there is only so much hydro power out there to be sold on any given day, by taking it off the market it means someone else is burning another kind of fuel.

jamieakers said,
Company needs to minimize fines to maximize revenue. Don't see the surprise here?

It's not a surprise, it's just sad that companies commit immoral acts for the sake of increased profits.

theyarecomingforyou said,

It's not a surprise, it's just sad that companies commit immoral acts for the sake of increased profits.


It's cute that you think that rather than realize it is the ever so present unintended consequence of politicians not understanding business.

If they weren't required to estimate power usage which is likely very hard to do in an emerging industry they wouldn't have worried about this and not used a bunch of extra energy to SAVE MONEY.

Just a reminder. Profits exist as do Losses. They exist to make money not to lose it.

MrHumpty said,

It's cute that you think that rather than realize it is the ever so present unintended consequence of politicians not understanding business.

If they weren't required to estimate power usage which is likely very hard to do in an emerging industry they wouldn't have worried about this and not used a bunch of extra energy to SAVE MONEY.

Just a reminder. Profits exist as do Losses. They exist to make money not to lose it.

Exactly, good post.

MrHumpty said,

It's cute that you think that rather than realize it is the ever so present unintended consequence of politicians not understanding business.

If they weren't required to estimate power usage which is likely very hard to do in an emerging industry they wouldn't have worried about this and not used a bunch of extra energy to SAVE MONEY.

Just a reminder. Profits exist as do Losses. They exist to make money not to lose it.

They make everyone estimate their usage so that they can save money on techs actually checking meters. They have a lot of older equipment and they don't have the budget to send people to every meter. This is so they spend less tax money on the utility.

theyarecomingforyou said,
It's not a surprise, it's just sad that companies commit immoral acts for the sake of increased profits.

Define "immoral".

theyarecomingforyou said,

It's not a surprise, it's just sad that companies commit immoral acts for the sake of increased profits.

Who is immoral here? You could easily flip the story around like this:

Power Company: MS, you need to use a lot more power or we will slap you with a fine.
Microsoft: Really? Can't you lower the fine?
Power Company: No, you signed a contract 5 years ago, live with it.
Microsoft: Okay :-( I guess we will use the power

theyarecomingforyou said,

It's not a surprise, it's just sad that companies commit immoral acts for the sake of increased profits.

in other news millions of cell phone users waste cell phone data so that it does not go to waste because it is prepaid for

MrHumpty said,
It's cute that you think that rather than realize it is the ever so present unintended consequence of politicians not understanding business.

This has NOTHING to do with politicians - it is the action of a private company. It helps if you know what you're actually talking about.

mahara said,
Define "immoral".

The dictionary definition is "unethical" or "transgressing accepted moral rules", both of which apply to what Microsoft did.

DeathsyctheHe11 said,
$210k for a company that makes billions in revenue? I guess is the message that counts...

It was the message more than anything. If they allowed this to go once they'd be coming out of the woodwork. I say good for Microsoft for playing the game.