According to the New York Times:
In an attempt to erase a $210,000 penalty the utility said the company owed for [over]estimating 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.
To which my initial reaction was, “hell, yes. Go Microsoft! You kick ass!”, and my more considered reaction is, yes, that is perfectly rational. Microsoft used “giant heaters” to burn $70,000 worth of electricity in three days and avoid the penalty; an impressive feat.
[Edit for clarity]: The utility “requires large industrial customers to file load forecasts each fall for the next calendar year and face a penalty if they are off by a significant margin in either direction”. Microsoft used less electricity than it forecast and realised it could just burn some up to avoid paying the penalty.
The obvious question is, why would the penalty for overestimating use be more than the cost of the estimated use? It is a question that commenters at the Verge, where I first read this story, are speculating about. My favourite comment here is a response to complaints that all the comments are excusing Microsoft: “I don’t think it’s MS apologists in this instance. They seem more like libertarians and climatology deniers.”
It could simply be that the fees really are in line with the utility’s costs, but in that case Microsoft’s actions would be nothing for anyone to complain about. It seems more likely that some sort of market distortion is going on. The “utility” in question is Grant County Public Utility District, tagline “Community Owned and Operated”. Perhaps there are some clues there.
The Verge also reports on a New York Times crusade against the energy cost of the Internet. Sigh.
The Horse & Buggy is trying to stay afloat.
I think that there are a couple of typos in your post, Rob.
According to the linked articles, the penalty was for overestimating power use, rather than underestimating.
With that change made to the text, Microsoft’s actions make sense, although the utility’s still fail fail to do so.
Upon reading to the end of the NYT piece and finding a correction replacing “underestimating” in “a previous version of the article” with “overestimating” in the current version, I see that the typo is not, in fact Rob’s but more likely the NYT’s.
Thanks for spotting that, other rob. The odd thing is I copied and pasted the NYT typo and then went on to make the same mistake myself. I hope I have fixed it now.
A pity they couldn’t have done something useful with it, such as split water into hydrogen and oxygen, or pump some water uphill, or the like.
Having NO confidence in NYT reporting, my conclusion is that the effect of Federal Regulations overlaying the operations of this Co-Op are the root cause.
Can’t wait until “Health Insurers” become Public Utilities under Federal Regs.
Usage estimates tell the power company how much capacity they are free to contract to outside customers. There is no free lunch. Although it does seem nutty to make the penalty so large that wasting power fixes the problem.
I seem to remember an obscure !8th century writer called Adam Smith writing about this in his 1775 book “The Wealth of Nations”, something about “Incentives Matter” (even perverse incentives).
Our American cousins were in the middle of The War of Independence at the time, so they might have missed it. Maybe the Adam Smith Institute can arrange for the RAF to air-drop some copies over Washington DC. Given their debt problems they will probably find the books useful.
On the way back, they should drop some over Westminster too, preferrably on Nick Clegg’s useless fat head.
As I understand it:
– It costs almost as much to have too much electrical power as it does to have too little. From an abstract POV, the utility wasn’t just making something up.
– BUT: the fact that MS was able to rejig the penalty by using power wastefully suggests that the ground-rules were designed by a bureaucrat, not an engineer.
This is an opportunity for the entire ‘system’ (utility and MS) to become smarter and more efficient. Unfortunately, the bureaucrats will have to do work.
I think your initial reaction is correct.
Seriously,
I think these issues arise because Federal Regs require this facility to provide real-time estimates of power consumption, which are based in turn on contract user estimates. As I understand, MSFT wound up using Diesel, not hydro power to meet its use est. Hydro is the basis for Federal Reg. on the Columbia, for non-federal generation. I used to invest in that stuff in that area.
“The Verge also reports on a New York Times crusade against the energy cost of the Internet. Sigh”. Oh, yes, New York Times, by all means let us return to the energy-efficient days of inscribing data on woodpulp and transporting it long distances in large vehicles.
I’m not certain why there’d be any reason to complain about this at all.
Either the prediction requirement is stupid, in which case the utility is punishing its customers for nothing
or
The failure to match your actual demand to your predicted demand costs the utility a significant amount of money – which the penalty would be designed to place the burden back on the customer.
In which case MS cut the costs that were going to be born by the utility for MS’s mistake – the exact sort of behavior that these penalties are designed to encourage.
MS simply modified its behavior to eliminate the burden its incorrect consumption prediction caused.
“The Cloud” is just virtualization on a bigger scale, the energy savings come from not having to run large power hungry desktops to look at cat videos.
“Internet Energy Consumption” by server farms is only one end of the equation, they are eventually connected to something, and iPads are probably extremely energy efficient for what they do.
“.and iPads are probably extremely energy efficient for what they do…”
Made with Chinese Coal Power, unknown end-user recycleables, massive African rare earth metals mining, astonishingly short projected life span (planned obsolescence SEE: Apple) and I’m willing to guess about ZERO projected land-fill energy/resource recovery. (maybe SOME some local component melt value)
I try to think “cradle to cradle” when considering energy efficiency. EVERY switch from DC, to AC, transmission, and back to DC “wastes” energy along the way. (do any of those server farm components use “clocks”)
Why can’t they put those server/storage farms in MY northern NH (cold) Back Yard? As long as it was in an
regionally appropriate looking piece of arcitetecture (Barn/Silo) I’d be willing to buy the “waste” heat for…say…15% of what solar/hydro/bio/coal/nuke/LP/oil “futures” market (strangely, adjustable daily, mockingly-to the 1/10,000 of a $US dollar cent) costs me.
Hey, maybe that “extra” heat could even be used for defrosting the frozen, snow covered, solar/wind/diesel back-up sources of energy overnight, in the bound-to-be- pronounced “outlier”, anomalous, “unexpected”, and “SEE! Fit’s the AGW cap-and-“trade” model PERFECTLY…” amosphereic cooling trend this winter.
The squirrel’s tails ’round here sure are bushy for this time of year.
As for the “Fines”. I can see it.
“Wadda’ ya’ mean I have to pay a PENALTY for paying off that home-“owners” loan waaaaay early???”
In the dicey world of scheduling the electron production, pumping/retarding, distribution into “the grids” (three of them in the U.S. 48), there’s not a lot of room for major (discounted) users to be submitting “casual” expectations on EITHER side of the bell curve, written by semi-skilled, flex-time monkeys, using Underwood “processors”.
Major municipalities of “traditional” Democratic majority, please take SPECIAL note.
CaptDMO: You wind up in the realm of rounding errors real fast when you think in those terms. Look at it this way: Trying to do 20 years ago what an iPad does today would have cost you megawatts. We’re getting ludicrously more efficient over time.
I’m with Incunabulum on this. Electric power cannot be stored in significant quantities (batteries have limitations), so for the most part it has to be manufactured as needed, and the infrastructure costs are immense. Household use is fairly predictable, but industrial use is not. So asking large users of power to predict their usage, and to pay a penalty for material errors in that prediction, makes perfect sense. It’s just a futures contract (they’re essentially pre-buying their electricity so the power company can build appropriate capacity) and all futures contracts have penalty clauses for breach.
The only change I would make is to set the penalty for underutilization at slightly less than the cost of the power. That way there wouldn’t be an incentive for Microsoft (or anyone) to waste that power, some of which might be able to be diverted to other uses (such as selling it onto the grid). And I would charge a premium rate if the company uses materially more power than it contracted for. In the case of underutilization Microsoft is paying for the electricity whether they use it or not, so if they choose to waste it rather than paying a penalty which is greater than the cost of the power that’s an entirely rational decision.
“CaptDMO: You wind up in the realm of rounding errors real fast when you think in those terms. Look at it this way: Trying to do 20 years ago what an iPad does today would have cost you megawatts. We’re getting ludicrously more efficient over time.”
Quite right! It would have taken me MUCH longer than
three days to “vent off” millions of watts of electricity.
When I think of the all that “labor saving” going on, I wonder why there’s so many unemployed folk.
Granted, It’s MUCH less energy to simply “beem” the unsolicited information, entertainment, drivel, and lies that I want, to a much broder audience, without wasting an astonishing amount of energy establishing
an actual personal handshake relationship. Geeze, I could NEVER pull off intenational asset transfer scams from third world countries twenty years ago. The “new” and “effortless” opportunities to be stupid, on a pandemic scale, are seemingly endless.
Sure, moving the decimal point over from “20 years ago” has also been a “carrier” of the human condition virus. GIGO consequences, as well as the “magic”, apparently “free” (to the end user) resources to sustain them, somehow seem to rear their ugly heads at greater multiplier rate than the “progress”.
I had kinda hoped that the flying cars depicted in The Jetsons would have come to fruition sooner than the driverless cars now available in California. Can’t WAIT to see the “progress” of the “unintended” consequences from removing the individuals thought process on THAT one. I’m SURE those good old fashioned Class Action ambulance chasers, community activists, data miners, repair “specialists”, as well as the black market of “circumvention” providers, are already siddling up to “legislators” with open palms.
Wait, those cars need to be plugged in, right?
Even The Jetsons had fraudulent “backgrounds”, and “masks”, for using with their “TV” phones.
“Rounding errors” indeed.
Though of course, this is small potatoes in comparison to all the energy (and time) spent fixing their buggy P-O-S software.