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Utah votes for Facebook power deal

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The tug-of-love continues as Utah bids against New Mexico

The Utah Public Service Commission has approved Rocky Mountain Power’s plan to supply electricity to a potential Facebook data center, ahead of further votes on whether to allow the facility itself later today (Update: the vote has been delayed a week).

Given the unique rate structure of the power deal, PSC had given itself two days to approve the request, but ultimately did so in just 45 minutes. Last week New Mexico, competing for the same data center, also approved a power deal for Facebook.

Facebook logo, Facebook, Facebook metal

Source: Facebook

They have the power

Officials from the Utah Office of Consumer Services and the state Division of Public Utilities also supported the energy proposal, The Salt Lake Tribune reports. The agencies testified that Rocky Mountain Power’s existing ratepayers would not be impacted negatively by the Facebook deal, which would provide large amounts of renewable energy to the proposed data center.

The exact details of the rate structure are sealed from public view as they have been deemed proprietary. 

RMP chief commercial officer Gary Hoogeveen said in prepared testimony that the new rate structure “is easy to implement and allows for customization of rate design and structure” for firms whose capacity needs are 5MW or greater. While Facebook has stayed quiet about its energy needs, it is expected that it will meet that threshhold.

Hoogeveen added that large retail customers decide where to locate facilities based on the energy they can get from suppliers.

He said that if the company “is not responsive to the needs of these customers and does not develop product offerings to meet their needs customers will choose to locate in other states and Utah customers will miss out on the economic benefits associated with these customers.”

The rate structure PSC approved will allow Facebook to buy non-renewable power from Rocky Mountain at the beginning, while the utility ramps up enough renewable resources to meet the demand.

“After the early years,” he said, “Facebook meets the majority of its generation-supply needs with customer-dedicated renewable resources paid for entirely by Facebook.”

Philip Hayet, an expert brought in to evaluate the contract, said it would generate enough revenue that “other retail customers would not ultimately have to subsidize the contract.”

However, he cautioned that the contract’s “unique structure” could result in Rocky Mountain Power facing similar deals in the future.

A rocky road

This is just the latest step in a battle between New Mexico and Utah as the two states try to entice Facebook and become the home for its next major data center.

So far, New Mexico has rolled out hefty industrial revenue bonds, while Utah has countered with hundreds of millions in tax incentives.

Earlier this month, New Mexico’s Attorney General threw his backing behind the project, while the mayor of West Jordan called for Facebook to pick Utah.

But this rush for Facebook’s facility has led some to question the rationale behind the large tax incentives.

Utah’s Salt Lake County voted against the proposal, although it represents just two votes out of eight, while others have raised doubts about the data center’s water usage.

Countering these arguments, former Salt Lake City mayoral candidate George Chapman penned an op-ed in The Salt Lake Tribune backing the project.

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