Microsoft Corporation (MSFT): Waste Electricity, or Be Fined?

Microsoft Corporation (NASDAQ:MSFT) has actually been trying to be environmentally sensitive in its operations, but it seems that in one case, where being environmentally sensitive was actually going to cost the company more money than being wasteful. At least, if a report in the New York Times is to be believed. Apparently a utility that supplies power to one of Microsoft’s data centers was going to fine the company for using too litle electricity – and the fine was going to be hefty, according to the report.

A recent blog post cited the article from the New York Times, which stated that Microsoft Corporation (NASDAQ:MSFT) was facing a $210,000 fine if it used less electricity than it estimated. According to the Times, Microsoft bought some land in rural Grant County, Wash., back in 2006 in order to build a data center. The land was selected because it was located close to hydroelectric generators that were expected to provide cheap power to the data center. However, in order for the utility to provide power, Microsoft Corporation (NASDAQ:MSFT) was required to provide an estimate of a minimum amount of power that the data center would use, and the company would face a fine if it did not meet that minimum.  The utility claimed it needed this mimimum to ensure that its generators meet demand with its output.

In order to ensure there is no fine, the report claimed that Microsoft Corporation (NASDAQ:MSFT) “proceeded to simply waste millions of watts of electricity, records show. Then it threatened to continue burning power in what it acknowledged was an ‘unnecessarily wasteful’ way until the fine was substantially cut.”

In the push for companies and others to be more environmentally sensitive, it seems ironic that Microsoft Corporation (NASDAQ:MSFT) would feel compelled to use more electricity that it needs just to avoid a fine for using too little power. Investors in Microsoft stock – including hedge-fund manager Seth Klarman of Baupost Group – recognize Microsoft’s environmental advocacy, so it’s certainly an interesting story for Windows watchers.