2013 05 20 WRD Utah Springs Surprise Tax on Massive NSA Data Center | Wired Enterprise | Wired.com


Utah Springs Surprise Tax on Massive NSA Data Center

Photo: Phil Windley/Flickr

The National Security Agency should complete construction of its 1 million square foot data center near Bluffdale, Utah, this year. As Wired first reported last year, its purpose is to intercept, analyze and store data passing through both domestic and foreign communications networks — including the e-mails, phone calls and Google search history of U.S. citizens.

The NSA will spend around $40 million per year on energy bills for the data center, according to one estimate. But those energy costs may be a bit higher than expected, thanks to a new state law that could levy a 6% energy tax on the facility, the Salt Lake City Tribune reports.

The NSA isn’t happy about it, according to e-mails obtained by the Salt Lake City Tribune. “The long and short of it is: Long-term stability in the utility rates was a major factor in Utah being selected as our site for our $1.5 billion construction at Camp Williams,” Harvey Davis, NSA director of installations and logistics, wrote by e-mail to Herbert’s staff.

But the NSA didn’t protest the tax during legislative hearings, despite being informed that it was under discussion, according to the Tribune. Davis’ e-mail was sent April 26, weeks after Herbert signed the bill.

If the $40 million per year estimate holds, the agency would pay up to $2.4 million per year. Sure, $2.4 million a year is a lot, but is a 6 percent bump on an already massive energy bill enough to nuke the project?

“Data center site selection is very competitive — particularly for the larger projects, as states often end up in bidding/benefits war to secure advantage,” says Greenpeace IT analyst Gary Cook. He says any increase in power costs will cast a long shadow on future operational costs of the facility. It’s a reminder that changes in the local tax or regulatory environment can blow the financial models for big data centers, by adding millions in unexpected costs.

Cook also points out that the NSA chose to locate the data center in a state that is still heavily dependent on coal power, despite the Obama administration’s commitment to having the federal government lead the way on renewable resources. “It apparently could stand to learn a few things from Google and Facebook,” he says, noting that reliance on coal poses a long-term cost risk.

The Utah agency that will levy the energy tax on the data center is called the Utah Military Installation Development Authority (MIDA). It provides municipal services to military properties being leased to and developed by private companies. For example, the agency installed utilities for a 550-acre commercial development at the Hill Air Force Base near Ogden, the Salt Lake City Tribune reports. MIDA was asked by the federal government to help build the utilities for the NSA data center, according to the paper. MIDA typically funds its operations by taxing the private companies that lease property. But since the NSA data center has no private sector tenants, MIDA asked to be able to levy an energy tax instead. Rather than tax the federal government, it will tax the PacifiCorp-owned utility company Rocky Mountain Power, MIDA director Rick Mayfield told the paper.

The NSA could not immediately be reached for comment.