Old world thinking for a new world

A few years ago, somebody I worked with calculated the savings that a pulp mill in New Brunswick gets from incentive power rates from NB Power and found that over a ten year period, it was literally tens of millions of dollars. He complained at the time that the rest of us (whomever that is) shouldn’t be subsidizing large power users in perpetuity.

I believe my response at the time was something like “we get 1,100 high paying jobs in rural NB, somebody has made the calculation that this is a good deal for New Brunswickers” and left it at that.

But this line of thinking was stirred in my mind again last week when someone told me that Google was in the advanced stages of negotiating a major data centre for Montreal (to make some use of the massively underutilized Mirabel facility) but the government pulled the plug at the last minute because they would not agree to the deeply discounted power rate required by Google. For those of you that don’t know what a ‘data centre’ is, it is where all that YouTube content is stored (among other things). A data centre typically is a large facility (100,000 square feet or more) filled with tens of millions in computer equipment. They employ between 50-150 people usually at salaries of $70k or more.

Without knowing the specifics of the Google deal (it must have been a whale of incentive for the Quebec gov. to turn it down), I can’t comment directly but I will say this:

Data centres are the 21st century equivalent of pulp mills (give me a little latitude on this).

They do not have to be in an urban area (there are many reason why they are being put up in farmers’ fields in Washington State, Upstate New York, etc.).

They pay (usually) relatively big time wages.

They are power hogs (literally up to the amount of a small pulp mill).

So, all I am saying here is this. If it was okay to give pulp mills and other old economy users a deep discount in power rates for decades, maybe – from a public policy perspective – it might make sense to give power rate discounts to data centres. We are right now in Atlantic Canada spending literally hundreds of millions of taxpayer dollars to keep a few mills around the region open for a few more years.

Might it not make sense to dot the landscape with data centres (the predictions are there will be hundreds of them set up over the next decade) – a sector with a foreseeable life span considerably longer than many of these mills?

I’m just asking the question.