The NSA’s new data supercenter: Powered by Warren Buffett
When the National Security Agency’s massive new data center opens in Utah later this year, the one-million square-foot facility will house servers, technical support and some of the world’s most powerful supercomputers, tasked with sorting, decoding and analyzing billions of bits of data secretly collected from telephone records and emails, among other sources.
All that equipment, running 24 hours a day, 365 days a year will consume up to 65,000 kilowatts of electricity at any moment in time, the same amount of power used by about 33,000 single-family homes. The center, located about 25 minutes south of Salt Lake City in Bluffdale, will run an annual power bill of about $40 million, according to the Army Corp of Engineers.
And when the N.S.A. makes out its check each month, the payment will go to Rocky Mountain Power, a division of MidAmerican Energy Holdings, a subsidiary of Berkshire Hathaway, owned by billionaire investor Warren Buffett.
Though the data center’s electricity bill will surely fluctuate with the market, dictated by the price of transmission as well as energy supply and demand, the power usage is not likely to dip lower than the estimated $40 million estimate. Pinned at the rate, the agency will spend $1.6 billion on electricity over 40 years.
Dave Eskelsen, a spokesman for Rocky Mountain Power, declined to discuss with Vocativ specifics about the power needs of the N.S.A. center, which is codenamed “Bumblehive.” But he said that the agency was “on our schedule nine, which is our regular industrial-rate schedule.”
MidAmerican Energy, with more than seven million customers in 10 states, is expected to see a significant bump in revenue, even after taxes and operational costs, because the N.S.A. center has simply landed in its “footprint,” according to Khai Nguyen of Boston-based investment research firm Saibus Research. The development is an indication that Berkshire’s utilities strategy continues to bring in a steady stream of cash.
“Berkshire has all that cash earning zero percent interest and utilities are guaranteed an ROE [return on equity] of nine percent to 13 percent,” Nguyen said. “So it makes sense for [Berkshire] to strategically put idle cash to work.”
Berkshire should be able to ensure “steady-state growth on it,” Nguyen said. And given the enormity of both the initial launch investment, the center – the largest of its kind in the country – will remain a major customer indefinitely.
The N.S.A .announced it was building the data facility in 2009, and the agency went about constructing the secretive project largely unnoticed, save a profile last year in Wired detailing some of the work expected to go on inside its doors.
Then, last month, the agency (and its plans for a massive new collection center) was thrust into the spotlight after Edward Snowden, a Booze Allen contractor, alleged that the N.S.A. was turning its foreign surveillance efforts inward and collecting Americans’ phone metadata and personal information from nine major internet companies. Snowden’s allegations reignited a debate on whether the N.S.A was overstepping its mandate of monitoring foreign communications, spying on Americans and potentially violating their privacy and the Fourth Amendment.
Despite the controversy, the Utah center is moving ahead without pause, according to the N.S.A. Bumblehive will employ about 150 to 200 people when fully staffed, and the first phase of the facility “is on target for completion at the end of fiscal year 2013,” N.S.A. spokeswoman Marci Green Miller said in an interview.
The N.S.A. picked Utah, in part, because of the low cost of utilities. The state has one of the lowest average industrial electricity rates in the nation, hovering at less than five cents per kilowatt-hour. The national average is 6.68 cents per kilowatt-hour, according to Rocky Mountain Power’s website. According to the U.S. Energy Information Administration, industrial electricity rates in Maryland, where the NSA’s headquarters at Fort Meade is located, was about 30 percent higher than Utah during April 2013. That means the $40 million bill estimated in Utah would have been about $52 million closer to home.
Over the past few years, Buffett, who is nicknamed the “Oracle of Omaha,” has been strategically expanding his energy holdings. Last month, his company announced the $5.6 billion acquisition of Nevada’s largest electric utility, NV Energy, folding it into MidAmerican and making it the ninth largest electricity company in terms of U.S. electric customers, according to data compiled by Reuters.
The company reported a net income of $444 million in the first quarter of 2013, 17 percent more than a year earlier. And in a recent letter to investors, Buffett called MidAmerican’s earnings “recession-resistant” because the company was offering “an essential service.”
Buffett’s energy acquisitions out West provide both competitive energy rates and the chance at large customers that come to the region, like the NSA center. “In areas like utilities, you get a whole range and load of customers,” said Michael Granowski, principal with Bridge Strategy Group, a management consultancy firm. “It’s always nice to have large, stable customers. Whether they are industrial, hospitals, as well as military bases. I don’t know if that’s a pillar of his strategy, it’s just a nice thing to have.”
MidAmerican did not respond to a request for comment on revenue projections from its new customer. But it seems likely the amount of data collected by the N.S.A. won’t be the only thing growing in Utah.