January 29, 2007

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Korky Koroluk

Seeking innovative management

The various “green” technologies being developed hold out tremendous promise for public bodies with the wit and imagination to take advantage of them.

I doubt there’s a municipal government in Canada — including oil-rich Alberta — that isn’t under enormous budgetary pressure. Unfortunately, most seem to respond by looking for programs they can cut in order to save money.

In Ottawa, where I live and work, our city council and the public school board are both facing a huge cash shortfall as they struggle with their new budgets. At the board of education, there is, as always, talk of closing a few schools and, as always, of eliminating special education programs — programs designed to meet the needs of our most vulnerable children.

But nowhere in the debate have I seen a mention of the fixed operating costs the board faces, like its hydro bill. After all, apart from turning lights off when a room is empty, what, really, is possible?

Well, the Pleasanton Unified School District, near San Francisco, has just signed a contract with Honeywell Building Solutions under which Honeywell will install, own and maintain solar panels on seven of the school board’s buildings. It will sell the electricity the panels produce to the school board at a price “significantly below” the rate the local electrical utility is charging.

The solar technology is expected to supply about 20 per cent of the board’s electrical power at a saving of $2.5 million over the 20-year life of the contract. At the end of the deal, the board will have the option of continuing to buy electricity from Honeywell, buy the panels, or explore deals with other energy providers.

The panels are to be installed and producing energy by this coming October.

Energy costs are, or should be, an automatic choice for examination, even though no one should expect that cutting energy bills will solve all budget problems. But sometimes, saving energy can cost money in some sort of initial capital investment, and continuing maintenance.

The Honeywell deal eliminates that. The system’s energy costs will drop as soon as the switch is turned on. There are no up-front costs.

For its part, Honeywell says it’s looking forward to making similar deals with other school districts, so it’s not thinking of Pleasanton as a one-off deal.

But by expressing its desire for more such deals, the company is demonstrating a high degree of flexibility itself. It is, after all, a control company that makes, installs and operates building-automation systems. To go a step further and become, in effect, an electric power utility may seem obvious in retrospect. But most corporate cultures resist change, so this deal represents a bold move.

It’s also a bold move on the part of the Pleasanton board, because public bodies have corporate cultures, too, and they are even more rigid. That’s why it’s so rare for a public body to do anything innovative or imaginative.

So if the alternative energy industry is to make significant gains, if we are serious about our environmental concerns, we need to have Honeywell — and its competitors — out there in the marketplace, pushing and prodding.

The little start-ups doing innovative things are great, and we need them. But it takes the bigger players, the companies with real heft and credibility, to bring the innovative ideas before the public bodies dithering over difficult decisions.

The present debate in Ottawa about closing schools and eliminating programs is just a replay of the debate we had last year and the year before and the year before that. It’s wasteful and time consuming and not at all productive.

Sooner or later, of course, the Ottawa board will come up with a balanced budget because the law says it must. But without innovative management, it will all happen again next year.

Innovative management: That, perhaps, is the magic of the Pleasanton deal.

Korky Koroluk is an Ottawa-based freelance writer. Send comments to editor@dailycommercialnews.com

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