
Amazon's electricity rate discounts have pushed up utility costs - petethomas
https://www.bloomberg.com/news/articles/2018-08-20/amazon-isn-t-paying-its-electric-bills-you-might-be
======
jrockway
I feel like this is nothing new. Every few years, some major sportsball team
threatens to leave their city unless the taxpayers fork over mega-billions for
a new stadium. Despite any measurable economic benefits to having a stadium,
the cities fall for it every time. It's the same thing, right? Amazon says
"give us free electricity and we'll make jobs", and the politicians buy it
even though it's very unlikely to be true.

Maybe someday we'll get an itemized tax bill, so you can see that you paid
$4.12 for Amazon's electricity and $1.23 for a new sports arena, and can vote
for someone else if that upsets you. Now that I think about it, that will
never happen. And so, the cycle continues.

~~~
bcohen5055
To be fair they don't pay for it every time... The chargers are now in LA, not
SD

~~~
brandonmenc
tbf, anyone saying "sportsball" isn't even going to know who the chargers are

~~~
amerkhalid
I have heard term "sportsball" before. It seems that it is used mostly in
context of making fun of people's addiction to their favorite teams.

------
jdshutt
Interesting that the regulations they're running up against were built to
constrain the railroads, since this looks almost identical to the railroad
rebates that Standard Oil and other gilded age trusts used to pump up their
monopolies at the expense of smaller competitors and regular people.
Basically, if you're a big enough customer, you can play service providers
(railroads, power companies, municipal governments, etc.) against each other
to get absurdly below-market rates and stick the bill to someone with less
bargaining power. The railroad regulations were passed after a series of
exposés of Standard Oil and other monopolists that took advantage of secret
rebates.

More on Standard Oil, rebates, and the breakup of the trust:
[https://repository.law.umich.edu/cgi/viewcontent.cgi?referer...](https://repository.law.umich.edu/cgi/viewcontent.cgi?referer=https://duckduckgo.com/&httpsredir=1&article=1125&context=articles)

I also recommend Titan, the well-researched John D. Rockefeller, Sr. biography
by Ron Chernow.

~~~
james_niro
I am listening to Titan at the moment great book

------
maym86
I'm not suprised. This is what they do. When you think about it a lot of
Amazon's business is partially subsidized by the tax payer. They pay less for
the roads the drive on, they get huge tax breaks to open new wearhouses and
headquarters and their workers' low wages are subsidized by welfare. The great
deal you get and their ability to kill their competition is partially paid for
by your taxes.

[http://www.businessinsider.com/amazon-not-paying-taxes-
trump...](http://www.businessinsider.com/amazon-not-paying-taxes-trump-
bezos-2018-4)

[https://www.politifact.com/truth-o-
meter/statements/2018/may...](https://www.politifact.com/truth-o-
meter/statements/2018/may/03/bernie-s/amazon-paid-0-federal-income-
taxes-2017/)

~~~
usaphp
> They don't pay for the roads

They do pay taxes...

~~~
vuln
Which taxes?

[https://itep.org/amazon-inc-paid-zero-in-federal-taxes-
in-20...](https://itep.org/amazon-inc-paid-zero-in-federal-taxes-
in-2017-gets-789-million-windfall-from-new-tax-law/)

~~~
cycrutchfield
Presumably gas taxes, which in most states go towards funding road maintenance

~~~
vuln
Amazon pays for it's 3rd party (1099) workers gas? That's news to me... Amazon
does not own any semi trucks.

'To be clear, Amazon purchased only the trailers and will use third-party
companies for the actual truck cabs and drivers. The original source report
did not make clear there was a distinction.'

[https://www.technobuffalo.com/2015/12/04/amazon-prime-now-
ha...](https://www.technobuffalo.com/2015/12/04/amazon-prime-now-has-its-own-
fleet-of-semi-trucks/)

~~~
Johnny555
They do, that's part of the pay.

You could make a (good) argument that they are underpaying their contract
drivers, but nontheless -- everytime they pay a contract driver to drop a
package off at your house, Amazon is paying for that gas in their pay to the
delivery driver.

The same is true when they use a commercial delivery service at all -- the
cost of fuel tax is bundled into the delivery price.

Whether Amazon owns any trucks of their own is immaterial, if they are
contracting with Amazom, Amazon is ultimately paying for the fuel (including
taxes).

------
gojomo
Deceptive [original] headline ["Amazon Isn’t Paying Its Electric Bills. You
Might Be "]: Amazon is surely paying all the bills it negotiated.

Economically-questionable conclusions: although individual secretive utilities
might on occasion make dumb deals, they'll charge households whatever the
market & regulators will allow, and then charge Amazon whatever the market &
regulators allow.

And utilities would like Amazon as a customer because of the efficiencies of
scale it'd provide. They'd not want Amazon at-a-loss, that then _requires_
making other customers to pay more – and if utilities already had the market-
power or case-to-regulators to charge others more, they'd already be doing it.

~~~
haney

      Economically-questionable conclusions: although individual secretive utilities might on occasion make dumb deals,
      they'll charge households whatever the market & regulators will allow, 
      and then charge Amazon whatever the market & regulators allow.
    

Because most utilities are monopolies that are allowed by regulators I'm not
sure that the market's invisible hand has that much of an impact is this
particular situation. The consumers who need electricity for their homes don't
have much choice here.

Edit: formatting

~~~
kwhitefoot
most utilities are monopolies

That's interesting. In Norway and UK, etc., You can buy your electricity from
any operator you like. The only monopoly is the power cable. So I get two
bills, one for energy and the other for the transport of it.

~~~
mmt
> The only monopoly is the power cable.

That there, is enough, though. It's not as if you could choose _not_ to pay
for that portion and pay only for the energy.

As such, the rate could go up without bound. (Well, bounded by competition
from off-grid systems that are 2-6x as expensive in the long run and have a
huge up-front cost).

------
0xmohit
Brace yourself for an updated version of this post:

"Jeff Bezos Becomes the Richest Man in Modern History, Topping $150B"

[https://www.bloomberg.com/news/articles/2018-07-16/happy-
pri...](https://www.bloomberg.com/news/articles/2018-07-16/happy-prime-day-
jeff-amazon-ceo-s-net-worth-tops-150-billion)

------
donkeyd
It's interesting how this sort of means that the cost of Amazon is in a way
socialized (including all the tax breaks for building a new office somewhere),
while it's impossible to socialize healthcare in the US.

~~~
maym86
The cost is socialized but the gains are not.

~~~
donkeyd
I can't say that I fully agree with that. The Amazon store and AWS have made a
lot of stuff possible that otherwise might not have been possible. AWS for
example gives out free services to startups, some of which might have major
impact on many lives.

Sure, I'm playing the devil's advocate here, but in the end it's also really
hard to define what is 'good spending' on tax dollars. For all we know, Amazon
venturing into health care will end up being a great substitute for socialized
health care. It could become Bezos' ultimate philanthropy. It could also be
what gives him super villain-like power over the US.

~~~
knuththetruth
>Sure, I'm playing the devil's advocate here, but in the end it's also really
hard to define what is 'good spending' on tax dollars.

Most social services in developed European countries that allow people to be
better off and not squeezed and abused by companies like Amazon? Healthcare,
transportation, public housing, higher education? Literally almost anything
besides what is spent on the USA’s unwinnable, forever wars?

It’s not hard as soon as you set aside American Exceptionalism as having any
legitimacy.

~~~
frockington
What about America as a culture, economy or military is unexceptional. People
all over the world wear blue jeans, trade on the NYSE, have iPhones and
Androids and are protected by the United States. I don't think American
Exceptionalism is not legitimate. Some countries may have more welfare but I
don't think anyone in America is trying to claim otherwise

~~~
knuththetruth
>Some countries may have more welfare but I don't think anyone in America is
trying to claim otherwise

Actually, this is the party line of the right-wing in the US. It's not more,
it's less, because...freedom?

[https://www.independent.co.uk/news/world/americas/us-
politic...](https://www.independent.co.uk/news/world/americas/us-politics/fox-
news-host-ridiculed-for-comparing-denmark-to-venezuela-a8495686.html)

------
ProAm
When Bezos said "Your margin is my opportunity." he was talking to consumers
and not completion. Amazon is killing off small business and forcing tax
payers to take up the brunt of Amazons expansion.

~~~
wmfiv
What are examples of the small businesses that survived Walmart/Target but are
now being killed by Amazon? Small hosting providers maybe.

~~~
ImAtWorkLol
Specialty brick and mortar. No need to drive to a store specializing in your
quirky hobby when you can get any supplies you need in 2 days off Amazon. Not
exactly a bad thing, but those stores tend to serve as knowledge
centers/gathering spots for the hobby. So some groups make it a point to shop
brick and mortar, the whole FLGS (friendly local game store) in the tabletop
community thing comes to mind.

~~~
NathanKP
From what I see people tend to shop brick and mortar for things that they
enjoy shopping for, and at places where the shopping experience is enjoyable.
Going to the friendly local game store is an experience. The local store in my
neighborhood hosts gaming nights, and scavenger hunts, and all sorts of nice
things. These types of brick and mortar stores are still successful.

But buying toilet paper, towels, and other random supplies is not a fun or
enjoyable experience. There is nothing fun about going to a big box store,
walking down crowded aisles, loading up a rickety, squeaky cart, and pushing
it to a checkout lane with a long line. No one likes going to the store to
shop for boring stuff so Amazon delivery is a clear winner there.

But brick and mortar isn't going anywhere. It will always continue to be
successful for sales that are actually fun and enjoyable things to buy.

------
sailfast
I'm empathetic to those impacted by preferential and redacted rate
negotiations, but not to my fellow Virginian complaining about rate hikes.

The community wanted it buried at a higher cost? Well, Dominion has a right as
a regulated utility to negotiate rates for the following year to match
infrastructure and other costs. This is so they can recoup / respond to storms
and other issues. It's a part of utilities regulation.

Now, if they get a sweetheart deal on top that's certainly a different story,
but the infrastructure cost passed on to the consumer thing has been part of
the deal for a long time. It would likely only be higher for that following
year, and then rates would return higher but closer to normal as the buried
pipe went into O&M mode.

------
deathanatos
I know I am supposed to feel sorry for this person in the article, and this
doesn't justify anything Amazon is doing, but,

> _She was already struggling to pay her monthly $170_

Her bill is 2x mine in the winter, and 5x it in the summer, and I pay 2x per
kWh¹ more than she does. Am I unusual, or is this an absurdly high electric
bill?

¹[https://www.electricitylocal.com/states/georgia/gainesville/](https://www.electricitylocal.com/states/georgia/gainesville/)
; Gainesville electric rates appear to be 11.6¢/kWh; I'm paying over 20¢/kWh

~~~
compuguy
That links to the wrong Gainesville. Your looking for Gainesville, _Virginia_.
The closest city to Gainesville is Haymarket, VA:
[https://www.electricitylocal.com/states/virginia/haymarket/](https://www.electricitylocal.com/states/virginia/haymarket/)

~~~
mmt
And that page says the average for Virginia is... 11.64c/kWh. I'd say the OC's
mistake ends up being incidental.

------
bitxbit
Took something as big as Amazon to topple Walmart. It’s going to take
something even bigger to topple Amazon in the future. That should scare
people. Scale begets scale.

~~~
dsfyu404ed
Walmart isn't exactly on the ropes. Also the customer bases are fairly
different.

------
ChuckMcM
I have always felt that these sorts of issues were behind the simple elegance
of Google (another prodigious power user) creating a wholly owned subsidiary
that was a registered power company. Sure it started as an argument between a
local power company's onerous demands, but as a result Google just pays the
inter-power company transfer rate, and the agreements are all private between
power companies and not between a company and a "retail" user.

------
bxtt
But, this is not just Amazon specific. Even when discussing on renewable
energies (e.g solar), this is the same argument that most conservative
lawmakers and utilities make about applying a tax on residential solar. You
have users of the grid that are not paying the same as others, but it's still
utilizing the same grid as everyone else, therefore increasing the cost for
everyone else that are not discounted, etc.

------
SilasX
To save you the time, it's talking about how Amazon negotiates cheaper rates
with electric companies, effectively passing off utility costs to the general
userbase.

It starts with a story about how Amazon wanted to get power lines through a
data center, and the community forced it to expensively route around a
historic site, and the user base ended up getting a rate hike to pay for it
(despite most of them not needing that part of the grid).

~~~
pc86
It's only effectively passing costs off to other consumers if Amazon is paying
less than the total cost in the first place. If they're paying something
heavily discounted but still profitable for the electric company, nothing is
being passed on to others.

~~~
SilasX
True, but their story at the beginning, despite not following the general
pattern, _would_ count as passing off costs, because everyone had to pay a
rate hike that was only necessary for one user.

~~~
scarejunba
If people want to play this game, then I don’t want to pay for rural and
suburban electricity lines. They have higher cost to provide and I don’t need
that part of the grid.

~~~
SilasX
I would agree that, in a sense, these are getting a subsidy too, but far less
lop-sided than the Amazon example.

------
kwhitefoot
The problem of transparency seems to be getting worse everywhere. Local
authorities in the UK regularly refuse to reveal details on the ground that
the information is confidential even when the deal has to be debated in
public.

------
patrickg_zill
Put "amazon tax abatements" in your favorite search engine and prepare to be
surprised ...

------
flixic
While it doesn’t seem ethical or “good”, in a certain way I kind of have to
appreciate the way how Amazon pits different municipalities or companies
against each, extracting maximum value for itself. They play from a clear
power position, and by doing so remain in this position.

~~~
astrodust
It should be illegal for municipalities to throw huge tax breaks at companies
so they don't have to fight to the death for each and every scrap.

This should also apply to stadiums where, for reasons I cannot even fathom,
small cities throw billions into a building that they don't own, that has an
astonishingly short life-span, and for which they derive very little in the
way of actual benefits.

~~~
coastal-fiesta
What is the lifespan of a sports stadium?

~~~
astrodust
For a major sports team it can be as little as twenty years. For the Olympics,
two weeks.

------
trumped
Hopefully Facebook will die first, but maybe Amazon will be next...

------
mmagin
Kind of like what they've done to shipping costs!

------
deadmik3
this is the exact same issue with bandwidth costs. when you have major
companies using up to 90% of the world's bandwidth it squashes on the
resources of the little guys. this is why net neutrality was, in some aspects,
not that great.

------
tempotemporary
.

------
superkuh
This article is behind a computational* paywall. Paywall articles are against
the general spirit of Hacker News. It should be replaced with a mirror of the
text or removed.

* A computational paywall is one where you have to run arbitrary code from an untrusted source in order to access the content.

~~~
ctvo
I... think you made up everything in your post.

You made up the term computational paywall, made up that paywall articles are
against the spirit of HN (the "web" button specifically helps with getting
cached versions of articles or bypass some paywalls through Google redirect.
It's available on each thread).

A quick Google search shows you're are the only person who has used the term
computational paywall.

~~~
superkuh
I did make up the term. Times change and new words are needed to describe new
practices. But it isn't the first time I've used it. I've done so 2 or 3 times
on HN.

Paywalls are against the spirit of HN. They always get switched out with non-
paywall sources if possible.

The 'web' button unfortunately does not help in this case. The only source is
bloomberg.

