NSA, Herbert confident data center can avoid new energy tax

Washington • Gov. Gary Herbert and National Security Agency officials are confident they can work out an agreement to avert taxing the new Utah Data Center on millions of dollars in electricity it needs to run the mammoth computer farm.

The Legislature this year passed and Herbert signed a new law that would allow the Utah Military Installation Development Authority (MIDA) to collect a tax of up to 6 percent on electricity flowing from Rocky Mountain Power to the new Bluffdale data center.

The law irked NSA officials, though the parties now say tweaks can be made to exempt the center, which was located in Utah partly because of the cheap energy costs.

"There's probably more than one way to skin the cat but the bottom line would end up being ... that NSA will not be charged something in addition to what they were told to begin with," Herbert told The Salt Lake Tribune this week. "I believe the NSA had a legitimate complaint and that complaint is going to be dealt with by the Legislature in a satisfactory way to the NSA."

Harvey Davis, NSA director of installations and logistics, had raised concerns in emails to Herbert's office after learning of the new law.

On Thursday, Davis said in an interview he was confident it would be worked out so that the agency doesn't face larger energy bills.

"That was just more of a hiccup," Davis said. "Sometimes things get through legislatively that people really aren't focused on and as soon as the governor and I saw that, there was a commitment to fix it right away, get us back to status quo. I think it was much to do about nothing."

Herbert wasn't sure whether the law would need to be amended or if it could be worked out in another way, but he said he recognized that Utah lawmakers feel the need to find a revenue stream for the military authority, which was set up to help develop unused military lands.

However, Herbert added, "They also recognize that when NSA came to Utah there is a certain set of rules and parameters they were told about and so the concern everybody has, including the NSA, and I think legislators themselves in hindsight don't want to be accused of a bait and switch."

NSA officials haven't released detailed information on how much energy the data center will consume, though a story in Wired magazine estimate it would pay some $40 million for electricity a year. If the new tax were applied in full, the NSA would have to fork over an additional $2.4 million annually.

Sen. Jerry Stevenson, R-Layton, who sits on MIDA's board, said negotiations between MIDA, Utah lawmakers and the NSA are underway and an agreement is supposed to be reached by September. He declined to give details of those negotiations.

But Stevenson said an agreement needs to include money going to MIDA to fund future projects.

"There's a lot of ways to treat the NSA project separate and different and keep the legislation in place," Stevenson said.

tburr@sltrib.com

Nate Carlisle contributed to this report.