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Carbon tax repeal won't see data centre operators cut prices

Rackspace says electricity isn't a major cost, Equinix promises 'no levy'

Internet Security Threat Report 2014

Australia last week repealed its carbon tax, a wildly controversial piece of legislation that required the nation's largest polluters to pay up for the privilege of pumping CO2 into the atmosphere. But data centre operators don't think the repeal will see their prices fall.

The nation's government has promised that the tax's repeal will leave households $AUD550 a year better off. Electricity generators have taken out ads in local media promising that consumers will see a more pleasant bottom line on their next bill.

Businesses acquire electricity on different terms to consumers, but the government has promised that the tax's repeal should see the price of just about everything come down because the price of electricity is an input to just about everything.

The Register therefore thought it sensible to ask data centre operators and tenants if they felt the abolition of the tax would make a difference to their prices.

Rackspace offered a definite no, sending us the following statement:

“We have recent revised our prices and also increased our service levels and we do not envisage making further changes due to the abolition of the carbon tax. Although electricity is a meaningful component of our Data Centre operational costs, it does not form a large enough portion of our overall Managed Cloud costs to warrant a price reduction in itself.”

Rackspace Australia lives in Digital Realty bit barns, so that position is likely a reflection of the landlord's attitude.

Amazon Web Services, which is believed to be resident in Equinix facilities, hedged with this statement:

“AWS has lowered prices 44 times since 2006, and you’ll continue to see prices go down.  Our pricing philosophy says that when we achieve efficiencies we pass those savings on to our customers in the form of lower prices. This is what drives the timing and amounts of our pricing reductions.”

Equinix Australia MD Jeremy Deutsch had this to say:

"Now that the Carbon Tax has been repealed we are working with our providers to make sure that, going forward, no Equinix customers will need to pay a levy.”

We're not sure what that means either.

NextDC CEO Craig Scroggie told us "We aren’t a power retailer / reseller – its a pass through."

NEC said it can't pass on any savings because its own data centres are used only for NEC business. It's also a NextDC tenant for its cloudy offerings and gave no indication it is expecting a nicer number from its landlord.

IBM is yet to respond at the time of writing. HP said it “has no updates regarding this enquiry”.

Australian Prime Minister Tony Abbott's press release announcing the abolition of the tax says, in part, "Scrapping the Carbon Tax will take a cost burden off Australian businesses" and adds "Australian businesses either had to absorb the costs or pass it on the consumers."

The release also points out that the repeal legislation includes extra funding for the Australian Consumer and Competition Commission to give it "strong price monitoring powers [that] will ensure that the Carbon Tax hit on every Australian family and business is removed."

With data centre kit providers constantly telling The Register that energy is the number one concern for bit barn operators, and kit-makers of all sorts emphasising energy efficiency, it will be interesting to see if data centre operators escape the Commission's gaze if they don't drop prices. ®

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