I had a story in Monday's paper about how much of the low-cost hydropower reserved for Western New York industry has gone unused and been sold by the authority to fund programs and operations that have little to do with our region. I'm following up the next four days on this blog with interviews with officials with varying degrees of influence to change how that hydropower is used.
I'm starting off with with Niagara Falls Mayor Paul Dyster, who has impressed a lot of people since taking office in January. He's smart, well-informed and forward-thinking. If you like progressive Democrats, he's your man.
I'll follow Wednesday with state Sen. George Maziarz, chairman of the Senate Energy Committee; Thursday with Congressman Brian Higgins; and Friday with D. Patrick Curly, a member of the Power Authority's governing board who represents Western New York. I've tried to get Power Authority President Roger Kelley on the record, but his people say he's too busy to talk.
Here's the Dyster interview.
You've been fairly critical of the way low-cost replacement and expansion power has been used in recent years. What's the problem?
"Without any notion of where we should be going in terms of future industrial strategy, we've been easily persuaded that the first order of business is to 'do no harm.' So our tendency has been to keep on allocating power incentives in the way they have always been allocated without stopping to ask 'why.' Even if the best use of some of this power really is to try to minimize job losses at disinvesting companies that are traditional power recipients, we should decide to do that as a matter of policy, not of habit. We need to ask for better explanations from everyone -- new industry or old -- that wants a piece of low-cost power, and be able to explain the strategy behind why we are allocating to one company or industry and not another. We're just starting to do that now."
Does fixing the problem require a tweak or an overhaul?
"Power allocation decisions for incentive power need to be made by business experts, not power production experts, and they need to be made on the basis of rationale and publicly defensible criteria. Whether that's a tweak or an overhaul depends on how badly broken you think the current system is now."
What changes would you like to see?
"Look for new industries, new processes and new criteria for deciding who gets cheap power, but also give existing power users the chance to make their case for continuation. Many are exploring new markets, new products and new processes, and essentially deserve to evaluated as new enterprises.
"We also need to look for opportunities for various types of "double leveraging." For example, if we use 'x' units of renewable hydropower to manufacture materials for construction of solar panels that will produce '10x' units of renewable solar power, we are exponentially increasing benefits. Similarly, we can link incentive power for one part of a manufacturing process to location of other parts of the process in the region -- e.g., by requiring manufacturers of a critical material like solar-panel grade silicon to sell a fixed percentage of their output to local New York manufacturers of the end product. That retains more of the value-added here, where the cheap power that makes production of the component material possible comes from."
The power authority sold unused replacement and expansion power earmarked for local industry for an estimated $161 million from 2005 through the end of this year. What do you think about that?
"If the power was intended to be used here for local benefit, then profits derived from selling any power that is unused should also be retained here. This is particularly critical if someone from outside the region is helping making the decision whether to award the incentive power, since it would be in their interest to sell it instead. It's a classic conflict of interest."
Some folks think that at least of portion of those profits should be coming back to Western New York to promote economic development. What do you think?
"Of course that would be appropriate, especially if the money was earmarked for brownfields redevelopment, or incentives for 'green' industries like retrofitting inefficient buildings, building more fuel efficient or alternative-powered vehicles, developing other renewable power sources (e.g., solar, wind or biofuels), expanding public transportation, or training workers for new jobs like solar panel installation, repair of hybrid vehicles, etc."
How would you use the money?
"See above. Whatever dollars we have to spend in the public sector will go a lot further if we use them to reinforce loans and investments made by private sector institutions, e.g., by reducing the risk in forward-leaning projects where conservative bankers need a little nudge. Loans that become grants if and only if measurable performance targets (for job creation, energy savings, etc.) are met are a better bet than cash giveaways based on empty job-creation or other promises that are never monitored."
You say green is the way to grow the local economy? What's involved?
"We need to stop thinking about the high cost of energy as merely a
problem and start thinking about it as a challenge to be met. Identifying and meeting challenges is what grew the American economy in the past, and meeting the challenge of high energy costs head-on with sound policies and wise investments can provide the foundation for future economic growth. The Erie Canal wasn't dug as a hobby project; it was done to correct a pressing deficiency in the transportation system: the inability to move people and goods quickly and cheaply enough from the East Coast to the interior of the country. Solving that problem created new jobs, new industries and new urban areas. But the world does not stand still. Those regions that adapt most rapidly, efficiently and creatively to changed conditions will prosper, and those that lag behind will suffer. So far, our track record is not exactly stellar."
What does the political, business and labor leadership have to do as a first step to get the ball rolling?*
"Hopefully by now everyone everywhere in the country knows the general outline of what needs to be done to bring our economy into the 21st Century. So the issue isn't so much "what" as "how." Because we have limited resources, we need a strategy that identifies the highest-priority, highest-payoff projects, policies and programs and systematically removes the obstacles to making the right things happen. Want a model? Look at the Apollo Alliance plan for New York developed by a coalition of labor, academic and environmental organizations. It's concise, action-oriented and creative."
Tomorrow's interview: State Sen. George Maziarz.