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Facebook looking at New Mexico for data storage center

Copyright © 2016 Albuquerque Journal

Facebook is considering New Mexico as one of two states for a new data center, according to a Public Service Company of New Mexico regulatory filing.

The filing did not specify a location, but the Los Lunas Village Council late last month approved up to $30 billion in industrial revenue bonds for a data center.

The filing with the Public Regulation Commission, submitted by PNM on Friday, states that the utility was approached by Facebook about a proposed data center in the state and that Utah is also in contention for the center.

Facebook wants to get all of its energy needs for the data center through renewable resources, according to PNM’s filing. PNM, in turn, is asking for an expedited approval process – without a public hearing – for recovering from Facebook the costs associated with providing the energy, which includes a newly built solar facility. PNM says it needs approval by Aug. 31 in order for New Mexico to remain competitive with Utah in the race to win over Facebook.

“We’re always evaluating potential new sites as we expand our global infrastructure and developing a pipeline for future data center locations. But, we’re not committing to anything right now,” Facebook spokeswoman Lindsay Amos said in an emailed statement. “When evaluating potential new sites, it’s important to have all the information we need readily available – including our access to renewable energy. By doing work upfront, we can move fast when we do need more capacity.”

Facebook “is also considering locating its new facility in another state and has informed PNM that the state which is best able to meet its requirement will be the state chosen by the Customer for building its new data center,” Thomas J. Wander, PNM senior project manager, said in an accompanying letter.

The PNM documents say the utility needs PRC approval by Aug. 31 because the Rocky Mountain Power Co. has filed an application with the Utah Public Service Commission seeking necessary approvals by that date to meet Facebook’s electric needs under Utah law.

PNM is specifically seeking PRC approval for:

  • A “special service contract” to meet Facebook’s electric needs.
  • A “special service rate” for the renewable electricity that PNM would provide to Facebook, with an initial rate set for 10 years and a formula to calculate costs after that.
  • A “power purchase agreement” authorizing PNM to buy solar electricity from installations that would be developed and owned by PNM’s affiliate company, PNMR Development and Management.
  • A new “green energy rider” allowing PNM to procure renewable energy for just one large-sized customer.

PNM spokesman Pahl Shipley said the utility’s 530,000 customers would not absorb any of the costs of the Facebook project if it moved forward because it would be entirely funded by the technology giant. In a separate matter, PNM is seeking a customer rate increase of an average of more than 14 percent, which the PRC is expected to rule on by the end of August.

“This is an exciting prospect,” said Shipley. “It has the potential to be very positive for the entire community.”

Under proposed agreements with Facebook, PNM said it would build a high-voltage electric line to serve the data center. Facebook would pay for the line up front. Over time, as Facebook expanded its facility and its electric needs grew, PNM would procure more renewable generation to meet Facebook’s full requirements, if possible.

“It’s big news,” said Mariel Nanasi, executive director of New Energy Economy, which has opposed many of PNM’s proposals. “Finally, green energy may actual be coming to the state in a real way.”

Nanasi said PNM forwarded the filing to her and other individuals who had been intervening parties in other PNM cases in an attempt to begin gathering support for the project.

“I’d be surprised if there wasn’t consensus from the PRC about expediting the process,” said Steve Michel, an attorney with the enviornmental group Western Resource Advocates. “But to have everything approved without a hearing? That’s a bigger lift.”

The $30 billion industrial revenue bond request in Los Lunas was filed by a data hosting company called Greater Kudu LLC, seeking to build a data center campus at the Huning Ranch Business Park. Kudu’s parent company was not named but was described as a “large, publicly traded, multi-national internet company.”

The deal would not provide money or credit to the company, but rather would create a mechanism for it to receive a property tax abatement over a 30-year period, for which it makes payments to Los Lunas in return. The applicant would be responsible for paying off the bonds.

The name of the parent company was not disclosed to the Los Lunas council before the IRB proposal was approved last month.

According to PNM’s filing, if Facebook does decide to locate its data center in New Mexico, the first phase of development would require an initial $250 million investment. “Although additional phases are not guaranteed, the project has the potential to reach six phases if fully built out,” the utility said.

The IRB proposal approved by Los Lunas describes a project of up to six phases. It potentially would create 200 to 300 construction jobs for seven years, according to the application, and between 30 and 50 full-time jobs at the data center in its initial phases.

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