Amazon’s history is littered with crony capitalism. The company exists partially because states took a decade to finally get it to pay taxes, driving a lot of local retail out of business because of the unfair practice. Cties have recently been scrambling to outdo each other’s wild promises in order to get Amazon to build a new headquarters nearby (some are promising new access roads just for Amazon vehicles, or sweetheart zero-tax deals for the first few years, or new high density housing for its workers). And now we’re learning that it’s twisted state regulators’ arms to give it cheap electricity (passing the costs onto the rest of the residents in these states):
For a little while earlier this year, it seemed as though 87-year-old Rosie Thomas and her neighbors in the small town of Gainesville, Va., had beaten Amazon. Virginia’s largest utility, Dominion Energy Inc., had planned to run an aboveground power line straight through a Civil War battlefield—and Thomas’s property—to reach a nearby data center run by an Amazon.com Inc. subsidiary. After three years of petitions and protests in front of the gated data center, skirmishes punctuated by barking dogs and shooing police, Dominion agreed to bury that part of the line along a nearby highway, at an estimated cost of $172 million.
Within a month, however, the utility and state legislators had passed on the cost to Thomas and her fellow Virginians. The state’s House of Delegates approved Dominion’s proposal to raise the money needed for the Amazon line with an as-yet-unannounced monthly fee…
This sort of thing is becoming a pattern. Amazon Web Services, the company’s cloud computing business, is its fastest-growing and most profitable division, but it comes with a lot of upfront infrastructure costs and ongoing expenses, the biggest of which is electricity…
Unlike tax incentives, which must eventually be disclosed to the public, the costs of electricity deals usually remain hidden, because they’re technically struck between companies. They do, however, require approval by state regulators. Although data centers typically yield few new jobs, politicians desperate to make up for fading manufacturing businesses have worked closely with utility companies to land Amazon data centers, using the company’s name as a shorthand for economic resurgence.
In Virginia, where Amazon’s Vadata Inc. is believed to operate at least 29 data centers and be planning 11 more, the company’s 78-page application for a special rate agreement has two versions—a heavily redacted public one and another under seal with state regulators.
Amazon has also negotiated an unknown rate discount with American Electric Power in Ohio, where it received $77 million in tax incentives for three data centers in 2016. Late last year, Amazon dangled 12 more in exchange for reduced electricity rates, and AEP exempted it from surcharges other Ohioans must pay. “That’s de facto cost-shifting,” says Ned Hill, an economist who teaches economic development policy at Ohio State University. “Other businesses and households in Ohio are now bearing all the costs of those riders.”…