A dark side to inviting datacenters to your community

Many rural areas are vying heavily for the chance to have a major technology vendor build a datacenter in their town. I’ve talked about this before and have wondered if the short term benefits (construction jobs) outweighs the concessions in tax base, etc., that are often offered to attract these new datacenter projects. There are few jobs involved in operational datacenters, and a rural community would be unlikely to have people with the right skill sets for those jobs, meaning they go to a few people who need to relocate to the rural area. And is it really that good for a community to be able to say “XYZ Corp is building their new datacenter here?”

Beyond the lack of long-term positive impact on a community, my feeling was that the benefits of this type of addition to your community were simply ephemeral. After a brief period of construction, things would go back to what they had been, with the addition of a large, quiet building that has little impact on the surrounding area.

But a recently published article in the small newspaper the East Oregonian (a local paper with a circulation of less than 11,000), highlights a potential problem that would have a lasting impact on the small community that was celebrating the construction of not one, but two Amazon datacenters in their area. It’s an interesting commentary on what can happen when you add a single customer who will increase the power demand by as much as 40% more than the utility currently provides to the entire customer base.

Granted, the Umatilla Electric Cooperative (UEC) utility is a small one, with just under 14,000 subscribers (compare that to the three-quarters of a million that are supported by Portland General Electric) but that is part of the problem. Umatilla Electric is a cooperative, established, like many rural electric cooperatives in the late 1930’s under the Federal Rural Electrification Act, which was implemented for the purpose of bringing power to low-population rural communities. I have a home in north-central Pennsylvania where the power is provided by a similar organization, so I have some familiarity with the business of rural co-op electricity and its one member, one-vote management. And there is one key point to remember; co-ops almost universally buy 100% of their power. Few, if any, own any power generation facilities.

UEC has the misfortune of being covered by regulation in Oregon which mandates how much power a utility provides comes from renewable resources.  This standard was going to bring about an increase in rates to customers over the next decade and a half, but the requirement for a utility on the scale of UEC was only 10% renewable power, as they fall into the small electric utility category. This would have limited the increase over the next 20 years to about $15 million.  But with the increase in power demand caused by the new datacenters, UEC would creep over the limit for small utilities and be lumped into the larger power provider category and require that 25% of the power be from renewable sources, almost quadrupling the rate increase, to $56 million.

This puts the UEC in an unenviable position; they can pass that rate increase along directly to their customers, they can pass it along to residential customers in order to attract more businesses or they can do a combination of things to minimize the impact that the additional charges will require, while trying to serve the needs of many different constituents.  UEC is hoping that they will be able to get an exemption from the regulation, due primarily to the fact that they will just barely fit into the standard (which is based on the overall amount of power sold relative to the entire state consumption).

However this situation plays out in Oregon it brings up a point that should be considered by any rural community looking to attract power-hungry facilities; what will the long term effects of the power demands have on the local community?