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On Reflection: Shopping for Electricity
Microsoft seeks permission to buy its juice on the open market.
| FROM THE PRINT EDITION |
The utility’s job is usually straightforward: to generate or buy power and get it to the customer. The customer’s job is to pay the bill and flip the switch. Microsoft wants to shake up that arrangement.
In a filing with the Washington Utilities and Transportation Commission (UTC), Microsoft and the utility that serves it, Puget Sound Energy (PSE), have proposed switching the software company from full service to “delivery only.” Microsoft will shop for electricity for its Redmond campus and Bellevue offices, negotiating its own deals and taking its own price risks, and PSE will deliver the power.
Microsoft says it’s more than capable of doing so. “Microsoft has an internal energy group that specializes in the energy supply chain for its global portfolio of over 50 large data centers,” says Irene Plenefisch, Microsoft’s government affairs director, in testimony filed with the UTC. “The Microsoft energy team has extensive experience on a range of sophisticated power supply transactions. In our most recent fiscal year, the team arranged over 2.5 million megawatt hours of power supply in over 20 countries, including arrangements in eight states. Wherever Microsoft has facilities, it engages with local utilities and independent power producers to identify sources of reliable, affordable, sustainable energy.”
Microsoft says going it alone would allow it to speed up the process of switching to noncarbon, renewable generating resources.
PSE will still receive revenue as the distribution utility wheeling power to Microsoft’s facilities, and Microsoft is paying the utility a $23.7 million exit fee.
The commission still has to approve the deal, and a lot of interested parties are watching the outcome, either to see if they can cut similar deals or learn the impacts on the utility and its customers left behind. Kroger, parent of Fred Meyer and QFC stores, has asked to participate in the case.
Open-market access never caught on in the Pacific Northwest, but it’s a common practice in other parts of the country for both consumers and businesses. Just under 10 percent of utility customers around the nation are considered delivery only.
Seattle City Light doesn’t offer a delivery-only option and says it has had no requests for the service. At present, Boeing is PSE’s sole delivery-only customer, but if Microsoft wins approval, other companies — especially in tech, an industry known for copying what everyone else is doing — may start thinking, “Hmm, maybe we should go electricity shopping, too.”