The three ways power gets charged
There are only three billing models in common use, and a quote will be one of them or a blend. The difference between them is not the price. It is who carries the risk of the gap between what you reserve and what you draw.
| Model | How the bill is built | Who carries the risk |
|---|---|---|
| Committed kW | A monthly rate per kW of contracted capacity, paid whether or not you draw it | You |
| Breaker or circuit | A price per circuit, set by the breaker rating rather than by your load | You |
| Metered draw | A base fee plus measured consumption, usually with a monthly minimum | Shared |
Committed kW dominates wholesale and most multi-megawatt retail deals. Circuit pricing dominates cabinet and cage deployments. Genuinely metered billing is the rarest of the three, and where it exists there is almost always a floor that makes it behave like a commitment until you grow into it.
Ask: "if I draw half of what I contracted, what does my invoice say?" If the answer is the same number, you are on committed kW no matter what the proposal calls it. That is not a trap, it is how the operator finances the building, but it should change the capacity you commit to.
The 80 percent rule, and why your circuit is smaller than it looks
This is the most common surprise on a first colocation invoice, and it is not the operator being clever. Electrical code requires a circuit serving a continuous load to be rated at 125 percent of that load, which means the usable capacity of any circuit is 80 percent of its breaker rating. A 20 amp circuit is a 16 amp circuit in practice.
| Circuit | Nominal | Usable at 80 percent | What that runs |
|---|---|---|---|
| 20A at 120V | 2.4 kW | 1.9 kW | A light cabinet, network gear, older 1U servers |
| 30A at 208V | 6.2 kW | 5.0 kW | A typical enterprise cabinet |
| 50A at 208V three phase | 18.0 kW | 14.4 kW | A dense cabinet, virtualization or storage |
| 60A at 415V three phase | 43.1 kW | 34.5 kW | High density and GPU deployments |
You are usually billed on the nominal rating. You can only use the derated figure. When a quote says "two 30 amp circuits" it is describing 12.5 kW of billing and 10 kW of usable load, and that difference is the first thing to normalize before comparing two proposals.
A and B feeds double the story
Nearly every colocation deployment is fed twice, so that losing one path does not lose the load. How those two feeds are billed varies more than anything else in a quote, and it is where two proposals at the same headline rate stop being comparable.
- Billed on total installed capacity. Both feeds are charged, so a 5 kW usable deployment appears as 10 kW of billing. Common in retail and cabinet pricing.
- Billed on usable capacity. You pay for 5 kW and the redundancy is built into the rate. Common in wholesale, and the reason wholesale rates look higher on a raw comparison.
- Primary plus a redundancy premium. One feed at the headline rate, the second at a discount. Ask what the discount is, because it is negotiable and frequently is not offered unless raised.
Convert every quote to dollars per usable kW per month, all in. That means the derated circuit capacity, both feeds counted the way that quote counts them, and cooling and cross-connects included or excluded consistently. Two quotes that look 20 percent apart routinely land within a few percent once they are on one basis, and occasionally the cheaper headline is the more expensive deal.
What the rate does and does not include
The word "power" in a colocation quote covers a different set of things at every operator. These are the five that move the total most, and every one of them should be answered in writing before signing.
Cooling
Sometimes inside the kW rate, sometimes a separate line, sometimes a share of facility overhead recovered through a factor. A power rate that excludes cooling is not comparable to one that includes it.
Utility pass-through
Many contracts pass utility rate changes straight through. Ask which index, how often it can move, whether there is a cap, and how much notice you get.
Escalators
An annual uplift on the power rate compounds over a five or seven year term. A 3 percent escalator on year one is a materially different deal by year seven.
Ramp and burn-down
If you are growing into the commitment, the ramp schedule is worth more than the rate. A twelve month ramp on a 500 kW commitment can be worth more than the discount you were arguing about.
Stranded capacity is where the money actually goes
The single largest source of colocation overspend is not the rate. It is the gap between the capacity committed and the load actually drawn, paid for every month of the term. Enterprise deployments frequently draw well under half of what they reserved, because the commitment was sized from nameplate ratings on equipment that never runs at nameplate.
The fix is unglamorous. Size the commitment from measured draw at your current site rather than from the sum of power supply labels, then negotiate the right to grow rather than paying up front for headroom you will reach in year three. Operators would generally rather sell you a ramp than lose the deal, and the ramp is rarely offered unless asked for.
The questions that make an invoice match the quote
- Is the quoted kW committed, or metered, and what is the monthly minimum?
- Is the figure nominal breaker capacity or usable capacity after derating?
- Are A and B feeds both billed, and at what rate each?
- Is cooling inside this rate, or is it a separate charge or a recovery factor?
- Does the contract pass utility rate changes through, against what index, with what cap and what notice?
- What is the annual escalator, and does it apply to power, to space, or to both?
- What does it cost to add a circuit later, and is that fee schedule contractual or at list price on the day?
- If I never exceed half my commitment, is there any mechanism to reduce it?
This page describes billing structures rather than rates. For what those rates run by market, see the pricing benchmarks, which carry only published figures with their sources, or the colocation pricing guide. No operator's contract is described here specifically, and terms vary between two buildings owned by the same company.