Wasted Electricity & Public Policy

Incentives matter, always, a lot. There’s a lesson in here for public policy.

Microsoft wasted ‘millions of watts of electricity’ to evade power usage penalty – The Verge: Microsoft deliberately burned through “millions of watts of electricity” to avoid a penalty for overestimating its power use last year, according to the New York Times. The company planned to continue wasting power at dozens of diesel generators in Quincy, Washington until the $210,000 fine was cut. Microsoft uses the utility as a backup for a large hydroelectric data center dedicated to cloud services and billed as a green, efficient facility. The company has pledged to go carbon neutral from this summer. Since any excess power set aside could have been sold to other customers, the backup utility has a policy of charging clients extra for both over and underuse. Yahoo was the other company that overestimated its power consumption, but paid a fine of $94,608 without complaint. Microsoft, on the other hand, worked out that going through $70,000 of extra power by running “giant heaters” would put them in the clear and save $140,000 from the $210,000 fine.