Wanna buy a data centre?

Remember that guy from Sesame Street that was always trying to sell you a vowel?  I get that feeling these days with data centres.  They are hot and they are sexy from an economic development perspective (probably why Atlantic Canada hasn’t attracted one yet).

There is one being shopped around the U.S. northeast by Yahoo!

[U.S. senator] Schumer has had direct meetings and conversations with Yahoo CEO Carol Bartz to specifically pitch Western New York as the site for the data center. Yahoo recently announced plans to build a 150,000-square-foot, $100 million regional data center in Nebraska.

A handsome incentive package is being crafted by state and local economic development officials, with one of the keys being the provision of six to 8 megawatts of low-cost hydropower from the New York Power Authority. Gov. David Paterson, late Friday, demanded that NYPA offer the low-cost hydropower. The authority may consider the making the offer when its directors meet this week.

A few points:

Eight megawatts of low cost hydropower is a big deal.  It is probably worth something like $1 million per year in perpetuity. To subsidize 50 jobs?   But that really isn’t the issue.  The issue is whether or not a jurisdiction wants to use its electricity system (a public utility) for economic development – or not.  New York has some of the highest residential electricity rates in North America – and if you are Yahoo! you will get power at 3 cents/kwh.   In New Brunswick, residential electricity rates are among the lowest and industrial – let’s just say they are creeping up.

Imagine the Governor of New York demanding that the Power Authority offer low-cost hydropower to this project.  Imagine Senator Schumer meeting with the firm and working the file.  For 50-100 jobs?  That would be equivalent to the Prime Minister of Canada and a senior federal Cabinet official working the file (New York is almost as big as Canada).  Why?  Because they know that 50-100 jobs in rural, upstate NY has the same political capital as 5,000 jobs in NYC.  I’ll never see the day that the PM of Canada is ‘working’ on a economic development file for New Brunswick.  And that’s too bad.

1 thought on “Wanna buy a data centre?

  1. There is one logical fallacy there. A tax credit isn’t the same as cash. YOUR money doesn’t go to it. Less money comes into government, but it isn’t a given that that money ‘must’ be paid from government. That’s because of those 50 jobs, they will provide income tax, whereas without them there would be a further drain. So its definitely not the same as a grant. To the company it may be the same-depending on payroll administration, etc., but it isn’t the same for government. The big issue in NB is the ‘fairness’ issue, but that doesn’t have to do with tax credits, but I’d suggest more to do with the fact that every new brunswicker knows how much money Irving already has.

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