Amazon is using an ever-increasing amount of electricity, but ratepayers and local businesses are having to shoulder the burden.
According to a recent article in Bloomberg, cloud technology utilized by Amazon — which is owned by richest person in the world, Jeff Bezos — is responsible for roughly two percent of all electricity usage in the U.S. by itself. However, the internet retail giant has been especially crafty in securing tax breaks that allow it to shift the cost of its sizable utility bill to ordinary taxpayers and local business owners.
Amazon Web Services, along with the company’s cloud technology, is largely supported by its data centers, which are located in various states throughout the U.S. and around the world. Bloomberg estimates that Amazon’s facilities around the world encompass a total area of 254 million square feet — which would amount to more than one-third of Manhattan.
Even though the data centers themselves don’t employ very many people, the company has nonetheless been able to persuade at least two state governments to give them free electricity in exchange for building data centers. This corporate welfare, on top of what Amazon already gets from taxpayers in terms of negative federal income tax rates and workers having to live on public assistance, is essentially a means of shifting cost from Jeff Bezos to everyday ratepayers.
The details of most of Amazon’s deals are shielded from taxpayers. In Virginia, for example, Vadata Inc. (an Amazon company) has a 78-page agreement with the commonwealth for additional tax incentives for nearly a dozen new data centers (in addition to its 29 current data centers) is under seal. The only publicly available version is heavily redacted, according to Bloomberg.
The company also apparently has an ongoing arrangement with American Electric Power (AEP) in Ohio. AEP already gave Jeff Bezos’ company $77 million in incentives for three data centers two years ago, and now AEP is apparently granting Amazon unknown millions more for roughly 12 more data centers in the future.
“Other businesses and households in Ohio are now bearing all the costs of those riders,” Ohio State University economist Ned Hill told Bloomberg, criticizing the deal as “de facto cost-shifting.”
Hill is right — whether or not it’s a direct correlation to Amazon’s various tax incentives for electricity usage, customers are seeing an increase in their rates in both of those states. A January 2018 story for WTVR-TV in Richmond, Virginia reported on one customer with Dominion Energy (Virginia’s largest power company) who had a monthly bill of $572. While this individual’s bill was likely due to heating their house in the winter, Dominion has already stated plans to raise all of its customers’ bills later this year. AEP, in the meantime, wants to raise Ohio customers’ fixed fees by 120 percent.
Amazon is one of the most notorious beneficiaries of public tax dollars. In 2017, the company paid a negative federal income tax rate, and actually ended up getting a $789 million tax benefit from the federal government. The Intercept also found that last year, Amazon ranked among the top 20 employers in at least five different states for most employees on food stamps. Even though the company was the 28th largest employer in the state of Arizona in 2017, it ranked fifth in number of employees enrolled in food stamps.
Logan Espinoza is a freelance contributor specializing in economic issues. He lives in Phoenix, Arizona with his wife and daughter. Contact him at logan DOT espinoza AT yahoo DOT com.