Fortune Data Centers

Direct Access to Power Means Cost Savings for our Tenants

Unlike many data centers in Silicon Valley, Fortune San Jose doesn’t buy power from either Silicon Valley Power or Pacific Gas & Electric. Fortune buys power on the open market – directly from the same suppliers that sell power to both SVP and PG&E. In 2010, we bought electricity from Constellation Energy. Fortune still receives ‘distribution’ services from PG&E, for which we pay a monthly fee. But the commodity (the electricity or power) is competitively procured.

Because the right to bypass the Utility (e.g. Direct Access) is not universal, . The CPUC has allowed a limited number of customers to go “Direct.” Fortune applied for and received this right last year in a lottery.

Background: Most data centers are served by Investor Owned Utilities (IOUs) or Municipalities. In Silicon Valley, the primary IOU is Pacific Gas and Electric and the main municipality is Silicon Valley Power. For the most part, Santa Clara is served by SVP and PG&E serves the rest of Silicon Valley, and both of these entities are obligated to serve all customers in their respective territories, and in exchange for meeting that service obligation, they are granted a monopoly – meaning there is no competing utility service provider. For both PG&E and SVP, electric service is bundled, meaning both distribution and the commodity are priced as an integrated service. The price – or tariff in industry terms – is set by a regulated process (in CA the price setting occurs under the jurisdiction of the CPUC). While customers can participate in CPUC process, they cannot negotiate tariffs directly with the utility. Given that length and number of interest represented in the tariff setting process, there is limited visibility w/r/t to price. In this region of California, the Utility/Municipality will adjust price once or twice a year. Sometimes 3 times. Most of the revisions are upward, generally tracking with inflation and broad energy price movements.

Most data centers are considered large users, and thus are eligible for industrial or large commercial service tariffs. Historically speaking, Silicon Valley Power has an industrial Tariff that is a few cents cheaper than PG&E’s comparable Tariff. Our ability to bypass the utility has closed that gap.

Our personal belief is that every data center should be on Direct Access. There are other advantages besides price – such as price visibility, choice of pricing product (fixed vs. variable), and the ability to market the “peaking” capacity of the generation back to the Utility in an emergency basis.