Amazon, which has taken heat for harnessing taxpayer funds to further its own gains, is attempting to pass on the cost of powering its massive data centers to consumers in the form of higher electric bill fees.
According to Bloomberg, Virginia’s largest utility Dominion Energy, recently negotiated with state legislators to pass on the cost of running a power line underground to connect to one of the tech firm’s subsidiaries—to the tune of $172 million—to consumers in the form of an as-yet-unannounced monthly fee.
Rosie Thomas, 87, who already struggles to pay her monthly $170 electric bill, said “Lord, have mercy” when she learned of the new fee.
Amazon Web Services, the company’s highly-profitable cloud computing business, which runs websites and services for a wide range of firms including Verizon, Major League Baseball and Comcast, grew revenue by 49 percent in the second quarter to $6.11 billion.
However, that comes with a large amount of upfront infrastructure costs to operate dozens of data centers that hold massive server farms operating around-the-clock.
State legislators have consistently courted Amazon, regardless of how many jobs its data centers generate. The firm is one of countless U.S. businesses to take advantage of any tax incentives and existing laws to lower its costs. Amazon Web Services has also set a goal of achieving 100 percent energy sustainability for its global infrastructure.
In at least two states, reports Bloomberg, Amazon has negotiated with utilities and lawmakers to force residents to pay its electric bills—on top of the estimated $1.2 billion in state and municipal tax incentives Jeff Bezos’ company has received over the past decade.
Although Amazon isn’t the only company to take advantage of the power industry’s hunger for new customers, as the largest player in cloud computing it has the biggest footprint.
In Ohio, the company opened three data centers in 2016 that are currently operating with electric rates that are hidden from public view. As reported by Bloomberg, only five representatives on a public utility commission, along with Amazon and American Electric Power (AEP), know how much is being paid for a public service.
Late last year, Amazon offered to open 12 more data centers and AEP exempted it from surcharges that other customers pay.
“That’s de facto cost-shifting,” Ned Hill, an economist who teaches at Ohio State University, told Bloomberg.
Amazon has claimed that its discounted rates are a trade secret and must be redacted in any requests for public records.
“Price cuts are treated as trade secrets by the utilities. Baloney,” Hill said. “All should be made public and made in advance of any action.”
In Virginia, Amazon’s Vadata Inc. reportedly has 29 data centers. The tech giant’s 78-page application for a special rate agreement has two versions—one that’s heavily redacted for the public and one that’s under seal with state regulators.
The idea of businesses shifting costs to lower income residents isn’t new.
A range of businesses have reaped rewards from U.S. taxpayers for locating their business in certain states, including Tesla ($1.3 billion from Nevada for a battery factory), Foxconn ($4.8 billion for a display screen plant) and Apple ($214 million for a data center in Iowa).
According to a study from the American Council for an Energy-Efficient Economy (ACEEE), an environmental lobbying group, lower income Americans already pay about three times more of their income on utility bills than wealthier households.
However, unlike when an Amazon warehouse opens, which may employ a few thousand residents, data centers don't fuel major job growth.
“When you attracted the steel mill years ago, you got 2,000 employees. When you attract a data center, you get maybe 50,” Hill told Bloomberg.
Meanwhile, in Thomas’ Virginia neighborhood, most residents are elderly and living on fixed incomes; they’ve already seen energy bills increase by 30 percent over the last ten years.
“Amazon’s got all the money they ever needed,” she said. “They don’t need any more.”