While oil prices have retreated significantly from last year's high, no one expects a return to the cheap energy that companies enjoyed just a few years ago. In fact, most American corporations are aggressively looking for ways to cut their electric bills—and a key focus is their air-conditioned data centers and the power-hungry computer servers they house.

A report in the July issue of CIO Insight said that the amount of electricity needed to run a big data center could power a city of 40,000 people. As a result, energy costs and power grid capacity are being pushed to the brink—so much so that research company Gartner says half of all data centers could run into problems by 2008.

"I've been talking to a lot of customers about the challenges they have," says Mark Bramfitt, principal program manager for the High Tech Energy Efficient Team at Pacific Gas and Electric Co. (PG&E); the team works with customers on cutting data-center energy needs.

"For [PG&E customers], it's the space and power cooling issues," Bramfitt points out. "They're running out of physical space, running out of power capability to add equipment, running out of cooling capacity."

As if to underscore the concern about information technologies' energy needs, President Bush signed a bill in December requiring the U.S. Environmental Protection Agency (EPA) to study the rapid growth and energy consumption of computer data centers.

PG&E, well aware of the need to find ways to power computers more efficiently, in November joined with a number of technology companies to offer businesses financial incentives for consolidating data centers and adopting energy-efficient server technology. PG&E says that customers can earn a rebate of as much as $4 million per project site.

But PG&E isn't just telling everyone else what to do. The energy company is practicing what it preaches. "The ability to cool the data centers in terms of the servers themselves, and the increased cost to do so—these are the things we're working on," says the utility company's data center manager, Jose Argenal.

In particular, PG&E is implementing energy efficiency measures in its own data centers. PG&E has consolidated its servers in three data centers; turned to virtualization, which allows companies to run multiple operating systems and applications on a single server; and undergone an extensive review of its energy usage to ferret out waste.