The August 22, 2011 Issue of The Capitol

www.nycapitolnews.comVOL. 4, NO. 14 AUGUST 22, 2011

Courtney Burke aims to rescue her troubled state agency.

Page 15

Joe Martens drills down on hydrofracking.

Page 27

The energy-from-waste movement picks up steam.

Page 6

www.nycapitolnews.comVOL. 4, NO. 14 AUGUST 22, 2011

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www.nycapitolnews.comwww.nycapitolnews.com THE CAPITOL AUGUST 22, 2011 32 AUGUST 22, 2011 THE CAPITOL

What if the man working at the desk next to you turned out to be not just another fellow in a

suit but a celebrated experimental novelist?New York Senate staffers, meet Shane

Jones, a special-events coordinator who is also a writer of fi ction, most notably his 2009 novella Light Boxes, a surrealistic tome about a town confronting an intermi-nable February.

“He’s a really genuine person despite the fact he’s got semicelebrity status and some notoriety,” said Tracey Pierce-Smith, a Senate communications staffer who found out Jones was a writer when she hired him in 2008 and got to look at his résumé.

Light Boxes was picked up by Penguin Press before being optioned by director Spike Jonze. A Bookforum review called it “an enchanting and witty fable.” The fi rst run of the book sold out, and in the surest sign of literary success, bookish types accused Jones of selling out.

But like many political workers in Albany, Jones also has his own contro-versy to contend with. In 2010 a Mexican author named Salvador Plascencia accused Jones’ book of borrowing heavily from Plascencia’s own novel, The People of Paper, published in 2005 by McSweeney’s.

Jones, Plascencia says, has admitted to being infl uenced by the work.

“Light Boxes excessively borrows from The People of Paper and does so without any attribution,” Plascencia wrote in an email. “Any side-by-side reading of the two novels will expose the glaring similarities in characters, plot, topology, and imagery.”

Jones’ agent, Bill Clegg—who is famous as both a literary agent and a memoirist detailing his former crack addiction—

seeking an answer to similarities between the two novels.

“They responded by saying the claims had no merit but proceeded by reprinting a version that altered the text and some graphics in minor but telling ways,” Plascencia wrote.

Jones declined to discuss his book or his day job, but next year plans to release a new book called Daniel Fights a Hurri-cane, which he describes as “a novel of hallucinations.”

—Laura [email protected]

reprinting a version that altered the text and some graphics in minor but telling

Jones declined to discuss his book or his day job, but next year plans to release

Daniel Fights a Hurri-, which he describes as “a novel of

UPFRONT

22 23 24 25 26 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

M T W Th F S Su M T W Th F S Su M T W Th F S Su M T W Th F S Su

The Month Ahead (Aug. 22–Sept. 18)

Senate hearing on hydrofracking in Katonah

By The Numbers

State Democratic

Party

State Republican

Party

Democratic Assembly Campaign

Republican Assembly Campaign

Democratic Senate

Campaign

Republican Senate

Campaign

Independent Democratic Conference*

$62,894Cash on hand

$208,576Cash on hand



$12,091Cash on hand

$2,001,660Cash on hand

$1,008,157Cash on hand

$1,000,000

$900,0000

$800,0000

$700,0000

$600,0000

$500,0000

$400,0000

$300,0000

$200,0000

$100,0000

$0

$300,000$235,000

$125,375$57,045 $48,645

$259,223 $249,409

$0 $0

$75,350$8,150 $40,750

$125,850 $132,919

$430,332

$1,354,850

$605,000

$148,600

$722,500

$37,611

$203,000

The First Six Months

* Combined fund-raising by four IDC members

January–July fund-raising by state party organizationsIndividual contributions:Corporate contributions:

PAC and union contributions:

Fund-raiser for Assemblywoman Vanessa Gibson

Senate hearing on legalizing casino gambling

Downtown –Lower Manhattan Association breakfast with

Sheldon Silver

Tenth anniversary of 9/11 terrorist attacks

Assemblyman David Gantt’s birthday

Former Sen. Pedro Espada’s trial begins

Primary Election Day

Sen. Liz Krueger holds a karaoke-themed fund-raiser

Assemblyman Jack McEneny’s birthday

Rep. Kathy Hochul’s birthday

Sen. Eric Adams hosts mobile mammogram van at his offi ce

Sen. Greg Ball’s birthdayAssemblyman Daniel Losquadro’s birthday

Labor Day

Stranger Than FictionState Senate worker Shane Jones leads a double life as a fi ction writer

, which he describes as “a novel of

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r.com

“On Education” panel hosted by City Hall


EDITORIALEditor: Adam [email protected] Editor: Andrew J. [email protected]: Chris Bragg [email protected] Nahmias [email protected] Lentz [email protected] Editor: Andrew SchwartzIntern: Jeff Jacobson

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The Capitol is published monthly.Copyright © 2011, Manhattan Media, LLC

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Publisher/Executive Director: Darren Bloch

If They Can Make It Here…How will GOP presidential contenders fare in New York?

Four years ago, New York was abuzz over a potential presidential contest between Rudy Giuliani and Hillary Clinton. Four years from now, Gov. Andrew

Cuomo and his New Jersey counterpart, Chris Christie, could be taking aim at each other over who could best lead the country. But even without a legitimate in-state contender at the moment, New York will still play a role in determining who ends up challenging President Barack Obama. Here’s a quick look at the top Republican contenders and how they could fare in the state.

—Jon [email protected]

Mitt Romney New York’s most impor-

tant role in many races is as a campaign ATM, and Romney has easily withdrawn the most cash so far. The former Massachusetts governor and early front-runner has raked in $2.12 million from New York donors, more than from any state except California. No other candidate has raised near that amount in New York.

Romney has also put in time in the state, including a

rare visit upstate to attend a Conservative Party dinner last year. “I think that’s because he’s got New York folks on his team, and because he sees the value of New York as a state for money, but they do know there are some good, real right-of-center votes that can come out of this state,” said Lynn Krogh.

Rick PerryThe Texas governor made a splash when he jumped

into the race this month. He’s already getting New York party regulars excited and is tapping the state’s wealth of campaign dollars. But how much the big bucks fl ow may depend on Perry’s relationship with fellow Texan George W. Bush. “I think he’ll do all right as long as those Bush folks unlock the money,” GOP political consultant Lynn Krogh said. “A lot of those Bush folks are in New York.”

Rick Perry may also appeal to the state’s “wildcat tax-cutters,” said veteran Republican operative Roger Stone. “Romney is not really their cup of tea,” he said. “They might be comfortable with Perry as a tax-cutter, since there’s no other logical supply-side candidate here. That’s an important pocket of money.”

One downside is Perry’s limited name recognition here, with a recent Siena poll showing that half of all New Yorkers don’t know him or have no opinion of him.

Rudy GiulianiThe former mayor is

projected to do the best against Obama in the state, though he trails by 6 percentage points, and at least one poll shows him beating the president nationally. Unsur-prisingly, he’s the New York favorite early on, but he has yet to enter the race.

One Republican insider speculated Giuliani might end up as Perry’s running mate, given their friendship, Giuliani’s Texas-based law fi rm and Perry’s support for Giuliani in 2008. “If Rudy’s going around the track and is polling well and you want someone who covers the bases you don’t cover, Rudy could be the choice,” the insider said. “It helps if you stay active.”

Michele Bachmann The Tea Party insurgent has

attracted large crowds on Long Island, but local party chairs are looking for someone with an executive record, said one party insider.

Roger Stone added that Bach-mann’s appeal would be limited here. “The New York primary electorate, unlike others, is more Catholic than evangelical Christian, and the Tea Party—while it’s not not a force in New York—it’s not a force in New York as much as it is in, say, Florida. That said, the nomination for Carl Paladino still proves it’s a conservative-based electorate.”

Sarah PalinThe former VP

nominee would get the lowest support in a handful of potential head-to-head matchups with Obama in the state, the Siena poll found. Several New York Republicans said they didn’t expect Palin to get

into the race, and that her moment had passed.“I see Sarah Palin having limited appeal in

New York, other than Trump—Trump’s a big Palin fan, and he can be a signifi cant fund-raiser,” Roger Stone said.

George Pataki The former New York governor, who has not

entered the race, is registering little support nationally and is doing marginally better with the state’s voters. “Pataki continues to pull a small handful of people because of this federal-debt thing he’s trying to ride,” Roger Stone said.

Lynn Krogh, who once worked for Pataki, warned against ruling him out too early. “Remember, George Pataki loves to be the dark horse, so don’t ever underestimate that,” she said.

www.nycapitolnews.comwww.nycapitolnews.com THE CAPITOL AUGUST 22, 2011 PB4 AUGUST 22, 2011 THE CAPITOL

By Laura Nahmias

Josh Zwerin is 8 years old. He is entering the third grade, reading Harry Potter and climbing trees in

the gaslit glow outside his Tudor home in suburban Rockville Centre, Long Island. He also has two dads—Jeff Friedman and Andy Zwerin, the gay couple who adopted him the day he was born—the only family he’s ever known.

But in the last six months of the same-sex marriage debate in Albany, as politicians and lobbyists jockeyed for position, Josh turned out to be improb-ably powerful in a way he seems barely to comprehend.

Josh, a handsome little fellow in a dark suit and tie, could often be seen in the Senate gallery and Capitol hallways in the last few weeks of the session. Long before the rest of the world knew the legislation would even come to a vote, he had private meetings with senators that proved fruitful for the bill’s chances.

Sandwiched between his two 43-year-old dads on the couch in their home in late July, barefoot and clad in a Mark Sanchez football jersey, Josh tallied up the sena-tors he had met: “Senator Kennedy, Senator Skelos, Senator Huntley, oh, that really stupid guy…”

“Josh!” shushed Friedman.“I don’t like him! I’m not going to say

his name,” Josh said.Friedman and Zwerin coaxed Josh to

talk about the marriage vote. “Why did we go to Albany?” Friedman asked.

“For the vote,” Josh replied. Friedman: “What were we doing?”Josh: “We were working.”Friedman: “What kind of work, Josh?”Josh: “We were lobbying.”Friedman first became active in the

same-sex marriage movement five years ago, after he suffered a heart attack on the day of Zwerin’s mother’s funeral. His partner and their son rushed to the hospital to fill out paperwork for cardiac surgery, only to find that Zwerin had no legal right to make decisions on Fried-man’s behalf.

“A nurse asks me, ‘What’s your relation-ship to him?’” Zwerin said. “We weren’t legally married by the state, so she said, ‘I’m sorry, but you can’t sign those.’ ”

The danger passed, but the lesson lingered.

“The person that you know your whole life may not survive, and then they’re saying, in front of Josh, that we’re not family,” Friedman said. “The following week I was still in cardiac intensive care,

and having Josh run in and ask, ‘Are we still a family?’—that’s not something that is appropriate for any child to feel.”

When their family started lobbying senators, they brought Josh along. One of the senators they spoke with was Shirley Huntley, a Queens Democrat who voted against same-sex marriage in 2009 and told The New York Times, “If they gave me a million dollars, tax free, I just wouldn’t vote for it.”

Last winter, though, she decided she was undecided. And when Friedman and

Zwerin brought Josh to Albany one day, the 73-year-old grandmother met with them with an open mind.

“There was this cute little boy with a whole flock of curly hair,” Huntley said. “He’s a happy child… I guess it just got to my heart, because I could see this child was well-reared. Then they brought him up for me to meet the child, and I was just so happy to meet him.”

Josh, who is biracial, reminded Huntley of one of her own relatives, Friedman said. He recalls telling Huntley how he met Zwerin in high school chem-istry class in Merrick, Long Island, 26 years ago. He showed her the photo album from their 2008 marriage in Cali-

fornia, a marriage that would be recog-nized in New York if the law passed.

Advocates had focused for years on the abstract notion of rights, afraid to talk about their families, Friedman said. But most of the conversations he had with the senators he tried to convince were about parenting.

“I first talked to Shirley about the fact that me and Andy, we met in high school. I told her we’d been together for 26 years and that we live lives no different than anybody else,” Friedman said. “I am an

active member of the PTA, you know. I am part of the social-action committee of my temple here.”

The meeting with Huntley was impromptu. She didn’t say why she didn’t vote for it in 2009, and Friedman didn’t ask. He recalled that her main concern was whether voting “No” would hurt Josh.

“At the end of the conversation, after we were both crying for a while, that’s when she told me not to worry, to trust her,” Friedman said. “She was going to be voting for marriage.”

Josh was the tipping point, Huntley said later. Though she kept her new posi-tion a secret for weeks, she made up her mind that spring day.

“You say, ‘What the hell,’ ” Huntley said, throwing up her hands. “It’s wonderful.”

She expects to be invited to some weddings. She does not expect a primary challenge because of the vote and has received no angry phone calls from pastors in her district. She thinks she did the right thing.

“If people are going to judge me by that vote, after all the other things I have done in my community…” She shook her head. “If they’re going to judge me for that one vote, then so be it.”

Josh remembers Albany mostly for the thrills of playing with Senate Majority Leader Dean Skelos’ iPad and sitting in Assemblyman Danny O’Donnell’s chair on the chamber floor. But he has some sense of the import of his lobbying at the Capitol.

His parents prodded him to say why marriage equality was needed. He leaned against Zwerin and said, “I just wanted you to be treated good.”

[email protected]

Jeff Friedman, Josh and Andy Zwerin made trips to Albany to lobby senators, like Dean Skelos (below), on same-sex marriage

The Littlest Lobbyist

“I was still in cardiac intensive care, and having Josh run in and ask, ‘Are we still a family?’—that’s not something that is appropriate for any child to feel.”

How an 8-year-old boy helped pass the same-sex marriage bill

Andr

ew S

chw

artz

www.nycapitolnews.comwww.nycapitolnews.com THE CAPITOL AUGUST 22, 2011 5PB AUGUST 22, 2011 THE CAPITOL

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NY Electric & Gas Companies Seek Lobbying Firm

An association of regulated electric and gas utility companies is seeking expressions of interest from experienced lobbyists and lobbying firms to represent

the combined interests of the member companies on common legislative issues in New York State. The “association” is comprised of Central Hudson Gas & Electric Corporation, Consolidated Edison of New York, National Fuel Gas, National Grid, New York State Electric & Gas, Orange and Rockland Utilities and Rochester Gas and Electric Corporation.

The expected scope of work for the successful lobbyist/firm shall include:• Identifying and developing political priorities and strategies for

the association;• Establishing a trusted, respected, and recognized point of

contact for the association within New York State; • Serving as the spokesperson on general industry issues of the

association, including preparing and presenting testimony in public forums and hearings;

• Tracking relevant legislation weekly and drafting memoranda in support and opposition on key legislation;

• Coordinating legislative meetings, and advocating effectively on industry related issues;

• Working with various media outlets to advance the association’s agenda;

• Hosting and attending Legislative and Executive fundraisers.

The successful lobbyist or lobbying firm should set forth its qualifications with special emphasis on expertise related to the energy arena or the regulated utility industry while highlighting any significant past lobbying campaigns. The successful lobbyist should also disclose any potential conflicts of interest with the association and the successful candidate should be prepared to remedy any such conflicts prior to representing the association of companies. Submittals should also set forth an estimated MONTLHY representation fee based on a 12 month contract plus any estimated monthly expenses.

Interested parties should submit six (6) copies of their qualifications and interest to: Anthony Campagiorni, Esq. Central Hudson Gas & Electric Corporation 284 South Road Poughkeepsie, New York 12601

Submittals must be received by September 9, 2011.An electronic copy of all submittals is also requested to: [email protected].


By Jon Lentz

Each day, the garbage trucks line up and rumble into a huge, boxlike building that towers over

the surrounding housing subdivisions, shopping centers and fast-food joints.

Once inside, the trucks dump their garbage, which is scooped into a vast concrete pit. A mechanical claw above the pit descends into the mounds of trash and collects enough to fill a single truck, lifts it up and ferries over to one side, then dumps it into a chute to be burned—and ultimately to provide electricity for the plant’s neighbors.

If Covanta Energy gets its way, the state will help replicate the process by subsidizing more waste-to-energy plants like this one, which the company oper-ates near Hempstead in Nassau County. But first, in order to qualify for millions of dollars in state energy subsidies, the tech-nology must be designated as providing renewable energy.

John Waffenschmidt, a Covanta vice president for environmental science and community affairs, said the company’s plants reduce landfill waste and generate much-needed energy while releasing

emissions well within state and federal standards. This alone should qualify the technology as renewable, he argued.

“If you are going to get rid of waste, you’re going to reuse and recycle as much as possible,” Waffenschmidt said. “Once you finish that process, you come to a fork in the road. You’re either going to go to a landfill, or you’re going to go to an energy-from-waste plant.

“If you choose to go to the energy-from-waste plant instead of going to the landfill, you’re going to actually produce less net greenhouse-gas emissions, because there’s no methane emissions whatsoever.”

Waffenschmidt’s argument is one of many the state Public Service Commission will sift through over the next few months as it weighs whether to put garbage on an equal footing with wind, solar and biomass as a renewable resource.

New York’s energy law already defines “wastes” as renewable resources, but the Renewable Portfolio Standard (RPS), a fee-based program the state established in 2004, does not include it in its own list of renewables.

Covanta will not have an easy task as it seeks to sway the commission. The

company has failed before to be included in the RPS, which awards hundreds of millions of dollars, from a small monthly fee of about 25 cents charged to utility ratepayers. Many environmentalists are also staunchly opposed to including waste incineration in the RPS.

The idea that plants like Covanta’s can reduce landfill waste and produce energy at minimal cost is too good to be true, said Eddie Bautista, executive director of the New York City Environmental Justice Alliance.

“When you run a waste stream through one of these facilities, you’re not, at the end, left with zero waste,” Bautista said. “You’re left with the residue of what’s the post-process material, and that’s no longer just waste that becomes landfilled.”

A Covanta spokesman said the remaining ash, which is about 10 percent the size of the incoming waste, is tested for hazardous materials and disposed of in conventional landfills.

Bautista added that any plants sited in New York City would likely end up in poorer communities like the South Bronx, further burdening residents already struggling with health and envi-ronmental problems. Relying on such facilities would also put less emphasis on recycling, he said, since a steady stream of trash is needed to fuel operations.

Other environmentalists said waste-to-

energy facilities can be useful, but some still oppose diverting money from other renewable resources.

Municipal garbage, while abundant, is neither emissions-free nor renew-able, said Adrienne Esposito, executive director of Citizens Campaign for the Environment.

“It isn’t this secret war against incin-eration,” Esposito said. “If Covanta wants subsidies, they should talk to the state about that. But they shouldn’t be stealing renewable money.”

But Waffenschmidt argued waste-to-energy produces more energy with lower emissions than landfill gas and biomass, both of which are included in the RPS.

Numerous filters and a scrubber in the plant reduce dioxins, mercury, lead and other particulate emissions to well within state and federal standards, he added, and the facility also salvages and resells useful metals.

“If you really think about it—of all the products that we have in society, it’s probably metals that you want to keep in circulation more than anything else,” Waffenschmidt said.

But environmentalists aren’t convinced trash is just as good as wind and solar, and they’re pushing back.

“Nothing has changed from the first two times this was rejected, except now they’ve met with a multitude of state senators, the governor’s office, the attorney general’s office—they’ve really gone on a full-scale public relations campaign,” Esposito said. “I get it. They want the money. We’re saying, ‘No, not on our watch.’”

[email protected]

Trash And BurnCovanta seeks funds for waste-to-energy plants as environmentalists push back

Andrew Schwartz

Garbage trucks line up outside a waste-to-energy plant on Long Island (above), while a massive mechanical claw lifts the trash to be burned.

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The Capitol: What should New York State do to boost its energy policy?

Sen. Michael Gianaris of Queens: The most important thing we can do is develop a plan to come up with the

proper fuel mix in the long term. We’re always going to need a mix, and the ques-tion we have to answer is: What is the right balance? What is the right balance of all of the various fuel sources? What is the right way to use them responsibly and in as safe a way as possible?

Ashok Gupta, Director of Energy Policy, Natural Resources Defense Council: We don’t really still have a policy blueprint for how you fi nance generation, infrastructure, energy effi -ciency, unless we solve that business-model problem that we’ve created for ourselves over the last 20 years. I think there’s a lot of technology, a lot of solu-tions, a lot of things that we can do, but we’re stuck because there is no fi nanc-ing for the repowering, or fi nancing for

transmission, or fi nancing for offshore wind, and you need clarity of policy in terms of long-term investments that we don’t have.

Jerry Kremer: Former Chairman, Assembly Ways & Means Com-mittee; Chairman of Empire Gov-ernment Strategies: On a go-forward basis it’s really time for the state to show some leadership on energy issues. It’s really time for the state to step up to the plate and become the major player, which will send the signals to the private inves-tors it’s safe to come into New York and spend money here—and invest in capital construction, and send a message to the people who want to bring new technolo-gies into this state. But the idea is, the job of the state of New York is far from done.

Kevin Lanahan, Director of Gov-ernment Relations, Con Edison: We can’t forget that the electric infrastruc-ture and natural-gas infrastructure makes all of this possible. We need to balance out investments in resource planning, long-term planning, with costs.

Ray Long, Vice President, Govern-ment Affairs, NRG Energy, Inc.:Here in New York we have the oppor-tunity to take advantage of all of these

Experts weigh in on New York’s energy outlook

All the pieces are in place to develop a sustainable and effi cient energy supply in New York State except one: leadership.That was the consensus from a panel of experts, advocates and government offi cials who said New York has the capacity to grow its wind, solar and natural-gas energy production, while also conserving more power and improving the electric

grid—as long as there’s a plan for doing so.The six panelists spoke at an event this month moderated by John Gilbert, chief operating offi cer of Rudin Management, and spon-sored by The Capitol, Baruch College, New York Affordable Reliable Electricity Alliance (NY AREA) and McKenna Long & Aldridge LLP. What follows is an edited transcript.

Photos by Andrew Schwartz(From left to right) John Gilbert, Michael Gianaris, Ashok Gupta, Jerry Kremer, Kevin Lanahan, Ray Long and Sergej Mahnovski


The New York Affordable Reliable ElectricityAlliance (New York AREA) is a diverse coalition ofNew York's best-known business organizations,labor unions, independent energy experts andcommunity leaders working together for clean,

low-cost and reliable energy solutions that fosterprosperity and jobs for the Empire State.

W W W . A R E A - A L L I A N C E . O R G

Energy DumpingDrives ResourcesOut of the NYMarket&DiscouragesOthers fromInvesting HereBy Gavin J. Donohue

Although numerous reports and studies recently have shown thatNew York's energy supply will be sufficient through at least 2020,New Yorkers must plan for the future. This plan should examinethe resources available in-state to ensure self-sufficiency.

New York is fortunate to have a generation fleet that optimizes abroad spectrum of technologies and fuels, and does so whilecomplying with the state's significant environmental rules andpublic policies. Private companies continue to invest in new,efficient generation – critical development that will lead to jobsand tax revenues - in addition to an even more reliable electricsystem.

Certain actions can put such investment at risk. New Yorkoperates in a competitive marketplace for energy and marketsignals are very effective for driving the location and timing ofinvestment in new resources. The disruption of those signals,particularly through unwarranted government intervention, sendsa chilling message to those entities considering investment inNew York.

The latest example of this is the New York Power Authority’s(NYPA) effort to artificially crash energy prices by importingunneeded capacity from New Jersey via a new transmission line.This project makes no economic sense, yet NYPA is pushingforward with its plans despite a potential multi-million dollar pricetag to its customers.

More problematic is that NYPA is partaking in this classic"dumping" in an effort to crash the energy market in New YorkCity. This cuts the legs out from under companies that haveinvested billions of dollars, pay millions in taxes, and employthousands of workers.

While NYPA's efforts may result in the short-term lowering ofprices, the medium - and long-term effect will be driving existingresources out of the market and discouraging others frominvesting. Furthermore, New York won't see a single additionaljob created, as the new transmission line will simply tap into NewJersey's resources.

Behavior like NYPA's cannot be allowed to stand and derail thebenefits that have been provided to New York through the successof competitive energy markets. New York has the resources,workforce, and investment capability to generate its own energywithout such interference.

Gavin J. Donohue is President and CEO of the Independent PowerProducers of New York, Inc. and a member of the New York AREAAdvisory Board.

S P E C I A L S P O N S O R E D S E C T I O N

things, the new trends going for-ward. We’ve got to give the people what they want. And what we’re seeing is that people want electric vehicles; they want smart meters; they want new technologies. But at the same time they want the big trifecta of energy issues. They don’t want to overpay for electric-ity. They want the reliability that the power is always going to be

there. Finally, New York has been a leader on environmental regula-tion. They want to see their emis-sions reduced across the board.

Sergej Mahnovski: Senior Advisor and Director, Office of Energy Policy and Infra-structure, New York City Department of Environmen-tal Protection: There is no magic bullet, so we have to be careful. I think we have to balance all of these resources. Going forward, regardless of what happens with

Indian Point, New York City needs to have a more robust natural-gas and electricity infrastructure feed-ing the city.

TC: What are the obstacles to upgrading existing plants through repowering?

Gupta: It goes back to lack of financing in the business models. If we support those repowerings and we want them to happen, it’s a policy decision of the Public Service Com-mission to have long-term contracts. This goes back to: What’s the role of Con Ed, and possibly the New York Power Authority taking power. But unless you solve that business-model issue, you’re not going to have the financing to do the repowering.

Long: There are resources out there that are ready to go that will do a number of things, back to those three major points that I made before. Natural-gas combined-cycle technology sta-bilizes cost. It’s among the low-est conventional, proven-out technologies that are out there today, reducing emissions. We don’t need to look much further than our own backyard in and around the New York City area to see the opportunity to get new technology in place in a reason-able amount of time that achieves those three objectives.

Lanahan: Emissions, with repow-ering, come down, certainly the health-based emissions. Carbon emissions are maybe in the 50 per-cent range, but [nitrogen oxide] and other emissions are going to come down 90 percent. So even if you get an extra 500 megawatts or 1,000 megawatts from repowering, the health-based emissions we’re talking about that result in asthma are going to be declining in any neighborhood. And so it’s not true that repowering results in higher emissions and higher health costs.

Kremer: Repowering—it’s not the ultimate solution. I think that there’s a lot of facilities on Long Island in the LIPA service area which, to go ahead and repower those facilities would be an enor-mous waste of money. They’re past their state of practical use. They’re obsolete. And the answer is, when you repower, somebody’s got to pay the cost of repowering. It’s going to be passed on, ultimately, to the con-sumer. The answer is, how do we get new power sources—and the 800-pound gorilla in the room is the 2,000 megawatts from Indian Point. While we can talk about all these potential sources of new power, how do we deal with the potential shortage of 2,000 megawatts in a region that relies on Indian Point power to the extent of 25 percent of the city’s power?

TC: What should happen, and what will happen, with Indian Point?

Gupta: If you were to shut it down, how would you replace the power? For the combination of the power and the new transmission, you could replace it. There would be a cost impact and there would be CO2 penalty, but it can be done. The question is: Can we reliably meet the electricity needs if Indian Point wasn’t there? And the answer would have to be: Yes. The question would be: What to get in terms of the benefit from shutting it down and what are the costs of shutting it down? But from a purely “Can it be done?” and “Can you meet the

needs?”—yes. The trade-off for the public decision: What are the benefits, or perceived benefits, of

shutting it down, versus the cost of shutting it down, in terms of peo-ple paying more for electricity and higher CO2? The trade-off has to be made—and that is what the pub-lic debate is about. And the policy decision is really the mix of: What do you want; what are the trade-offs—short-term, long-term health versus catastrophic risk? But I don’t think people should assume that if the decision was made that it had to be shut down—or was to be shut down—that we couldn’t keep our lights on.

Gianaris: One of the things about the Indian Point debate…is an environmental-justice plan. We’re talking about closing a nuclear plant in one of the wealthiest coun-ties in the entire nation and the replacement for that is undoubt-edly going to come in neighbor-hoods like mine that are already producing more than their fair share. So you’re trading off a low-risk, high-yield possibility, in terms

of a catastrophe that could happen in Westchester County that could affect us all, undoubtedly, for a greater certainty that you’re going to increase asthma; you’re going to increase emphysema in some of the lower-income neighborhoods in New York City where the replace-ment is going to come from. And that needs to be part of this discus-sion, because that hasn’t been.


When it comes to job creation, New York is in a race for the middle.

Unemployment is on the rise. The state is adding jobs more slowly than the national average. New York consistently falls at the bottom of lists of business-friendly states. Experts acknowledge there’s no chance of reaching the top—taxes in the state are too high, regu-latory hurdles too insurmountable.

Instead, they say the state should aim to be some-where in the middle. And that might not mean a complete overhaul of the state’s economic development policy, just some tinkering under the hood.

Who better for the job than self-professed “car guy” Gov. Andrew Cuomo?

Meeting with his cabinet in Albany last month, the governor declared that “Phase I” of his master plan to remake the state—which included closing a $10 billion budget gap without raising taxes, capping property taxes and legalizing same-sex marriage—was complete. Phase I was important, he said, but “Phase II” was going to be where the rubber hit the road.

“Jobs, jobs, jobs” would be the focus, he said, adding: “It’s going to be fun. It’s going to be different.”

But job creation has never been the forte of state government. And New York’s past efforts to encourage private-sector growth have been scattershot at best, hobbled by the lack of a cohesive, statewide strategy,

and undermined by deep divisions and dissimilarities between the state’s upstate and downstate economies.

Cuomo won’t be able to wine-and-dine the economy, like he did with legislators during the fi rst part of the year. And the state’s lead agency for job creation, Empire State Development, has been weakened by years of infi ghting, budget cuts and the lack of a clear chain of command.

The risks for Cuomo are huge. By taking ownership of the state’s struggling economy, he is committing himself to turning one of the nation’s least business-friendly states into one of the best. He is also taking the old cliché that “government doesn’t create jobs” and attempting to prove it wrong.

The hope is an aggressive marketing effort, coupled with a regional approach to strategic planning, will improve the state’s standing and encourage businesses to stay in New York while bringing in new industries and nurturing emerging sectors across the region.

He is already tying the effort to his reelection, blasting out emails to supporters trumpeting a “fundamental shift in the state’s approach to economic development.”

But not everyone is optimistic about Cuomo’s attempt to monkey with the engine of New York’s sputtering economy.

“What really is going to drive the future of the economy, upstate or downstate, is not government

economic development,” said E.J. McMahon, director of the fi scally conservative Empire Center for New York State Policy. “It gives everybody something to do, more or less.

“If it were possible to have a plan implemented to make things better,” he added, “somebody would have done it already.”

New York’s problem is well-documented. Chief Exec-utive magazine polled 550 CEOs across the nation in May, asking them to rank the most and least business-friendly states. Texas was number one. California was at the bottom, with New York nipping at its heels.

The conservative Tax Foundation presented a bleaker picture, placing New York dead last in its annual ranking of state business climates. The state has “the third-worst individual income tax, the ninth-worst sales tax and the worst property tax,” according to the 75-year-old group.

The prospect of a rising tide lifting all boats is bleak. Upstate communities continue to hemorrhage popula-tion and jobs. And the main economic driver downstate, Wall Street, is bracing itself for a double-dip recession.

Stores are closing, factories are decommissioning, construction jobs are drying up just as fast as federal stimulus dollars, and the state’s infrastructure budget is stretched thin.

Cuomo isn’t the fi rst governor to come up with plans to revitalize the economy. New York has had a

Open For Business?By Andrew J. Hawkins

Dan Burnstein

Lt. Gov. Robert Duffy, center, will lead the regional council effort.

Andrew Schwartz


history of strategies that sounded grand but amounted to nibbling around the edges, shuffling desks and looking for marginal gains.

For decades New York has tried to boost the economy and encourage private-sector development through either bond sales or tax incentives, but those efforts inevitably fell short. Twenty years ago, then Gov. Mario Cuomo introduced an $800 million bond act aimed at creating jobs through infrastructure projects. But voters concerned about increasing debt service ultimately rejected the plan.

Former Gov. George Pataki created the Empire Zone program in hopes of spurring economic growth through tax incentives and government subsidies for businesses. But after years of allega-tions of fraud and mismanagement, the program was shut down.

While his predecessors have approached the state’s diverse economy by bifurcating it into upstate and down-state areas, Cuomo’s approach has been to decentralize economic develop-ment efforts. He divided the state into ten regions, and appointed councils to develop strategic plans for each with representatives from business, labor, higher education and advocacy groups. The regional economic development councils will compete for a pot of $130 million in grants and tax credits to spur job growth.

“Get off the bottom of the list! Get into the middle of the pack!” Kenneth Adams

said, his voice rising with emotion. “We have enough assets and a big enough economy that we don’t need to be at the top of the list.”

Adams, president and CEO of Empire State Development, is sitting in his new 37th floor office in midtown Manhattan, preaching the administration’s new mantra. He believes New York shouldn’t aspire to be on par with Texas, the nation’s top state for job creation. Instead

he wants New York to beat its immediate peers and climb to the middle.

New York can beat New Jersey (ranked #47 in Chief Executive); it can beat Connecticut (#43); it can even beat Pennsylvania (#39). But the road to true economic development will be long and contentious, as members of the newly formed regional councils are just begin-ning to figure out.

“Successful plans will not just iden-tify key projects that will require state resources but they’ll also identify reforms to the region’s business climate that could be in tax, regulatory and govern-ment procedures,” he said.

Adams said regions that developed successful plans would receive the largest chunk of state dollars. Other regions

would have to settle for less. The spirit of competition would encourage council members to set their natural differences aside and unite under the common goal

of winning more state dollars, he said.That said, Adams acknowledged that

the amount of state money available is not a lot: $130 million for the initial competition, $10 million for a world-wide marketing campaign and $1 billion through a new consolidated funding stream for projects the councils deter-mine to be part of their regional strategy.

“Remember, it’s a $1 trillion economy,” Adams said. “$1 billion in $1 trillion is a tenth of a percent.”

Adams, who formerly ran the state’s Business Council, said he is aware that government more often hurts than helps private-sector growth. He said Cuomo aims to change that, first by streamlining government and making it more effi-cient, and then by listening to the private sector’s concerns about red tape and obstacles to job creation.

“There are a lot of reasons to come here,” Adams said, gesturing to the Manhattan skyline outside his window. “But there’s just as many obstacles.”

As the 10 regional councils begin meeting across the state to hash out their individual strategic

plans, tensions are already emerging.Higher education wants more

community development, much like the Federal Empowerment Zones deployed

during Cuomo’s tenure as secretary of the U.S. Housing and Urban Develop-ment agency—a combination of bond measures, grants, and tax incentives to

encourage building and construction projects. Business executives say enough community development; what the state really needs is economic development, a.k.a. tax incentives and public subsidies for private companies in exchange for job development.

Labor wants more infrastructure spending, as well as better benefits and better-paying jobs for workers. Tech-nologists and venture capitalists want more incentives for the state’s emerging biotechnology and nanotechnology clus-ters.

“I’ve already seen strain in our council,” said Andrew Rudnick, presi-dent of the Buffalo Niagara Partnership and a member of the Western New York council. “But it’s not melodramatic.”

The regional councils could deepen the rifts between labor and business. Pat Purcell, assistant to the president at United Food & Commercial Workers Local 1500, said unions and businesses need to overcome their differences before reaching a consensus on any stra-tegic plan for economic development.

“To be successful, there needs to be acknowledgement that wages and benefits and working conditions, in rela-tion to tax breaks and subsidies—they matter,” Purcell said. “When we’re at the table with businesses and companies, the

“If it were possible to have a plan implemented to make things better, somebody would have done it already.”

Andrew Schwartz

Andrew Schwartz


Recruitment And Retention

Once in a while, Gov. Andrew Cuomo’s office fires off an email to reporters touting the latest success in keeping and growing jobs in New York.

“Agro Farma will invest $97 million to build new facility,” one reads.

“Investment in state-of-the-art machinery will retain 81 at-risk jobs and create 40 jobs in Monroe County,” says another.

Cuomo likes to pat himself on the back after making these deals, knowing they bolster his image as a job creator and smart fiscal steward. But some of the business owners touted by his office say the state could be doing much more to encourage private-sector growth in New York.

Back in June, Cuomo released a statement announcing biotechnology firm Acorda Therapeutics’ decision to expand and create 190 new jobs in Westchester. The deal, the governor declared, “sends another signal that New York is open for business.”

But Ron Cohen, president and CEO of Acorda, argues that other states are much more attractive to biotech companies than New York. A native New Yorker who was looking to get back home from the West Coast, Cohen says the state’s high cost of living and exorbitant taxes make hiring new employees very difficult.

“That is a major issue,” Cohen said. “Most of the people we’re trying to hire here…they don’t want to come because it’s much more expensive.”

Acorda, which produces a drug called Ampyra that fights the symptoms of multiple sclerosis, received $5.2 million in tax benefits from the state in exchange for investing an estimated $36 million in a new facility. Cohen says the governor’s determination to put his own political capital on the line is encouraging, but the state has a long way to go before it can boast a biotech sector on par with that of New Jersey or California.

“I would say I’m less pessimistic than I would otherwise be,” he said. “I’m not prepared to say I’m optimistic, just given the history I’ve seen in the last 25 years in the state.”

Bill Flynn, president and CEO of Atlas Air Worldwide, sounded slightly more optimistic in the aftermath of his company’s deal with the state, announced by the governor in early June, to keep its headquarters in Purchase and create 50 new full-time positions.

At the time, Cuomo applauded Atlas Air “for recognizing the benefits of staying in the Lower Hudson Valley” despite attractive offers from other states to move its facilities.

Flynn credits the deal to a solid sales pitch from the governor and his advisors.

“We talked with Empire State Development, and certainly heard Cuomo’s new policy objectives about retaining jobs in New York,” Flynn said. “That certainly resonated for us.”

That said, the state often ignores the needs of small to medium-size businesses in its rush to retain and attract companies to New York, Flynn said. If Atlas Air, which operates the largest fleet of Boeing 747 freighter aircraft in the world, were located further downstate, the state might have overlooked the company’s interest in expanding, and might not have come up with the tax exemption plan it did to convince the firm to stay in-state, Flynn said.

“The closer you get to Manhattan…be mindful not to lose perspective on the smaller-to medium-sized compa-nies that are important to the economy as well,” he said.

—Andrew J. [email protected]

Companies trumpeted by Cuomo for growing jobs see ways the state can grow itself

minute we start discussing this, the eyes roll and the faces frown.”

So the questions remain: Can the state be all things to all people? Will Cuomo’s attempt to bring everyone to the table be enough to course-correct New York’s economic future? Will it pay off like his similar Medicaid effort, which brought all sides to the table to find savings?

Some ideas are already starting to emerge. None of them reach for the stars, but all of them could bring incremental progress.

The New York City regional council is looking at ways to merge two separate state taxes—a bank tax and a corporate tax—to ease the burden on local financial institutions. The Southern Tier regional council is examining ways it can capitalize on hydro-fracking in the Marcellus Shale.

The regional council in Central New York is debating ways to reduce the expense of workers’ compensation payouts while looking to better connect the region’s economy—which includes a thriving clean-technology sector—to the interna-tional market.

Some participants are curbing their enthusiasm,

saying success will rely on more than just a few million dollars for local development projects. Rob Simpson, CenterState CEO and co-chair of the Central New York regional council, said the state needs to reconsider the types of businesses that receive public assistance and subsidies.

“A lot of programs we’ve had over the years really favored and targeted the growth of large industries and heavy manufacturing, which has been at the detriment of innovative companies and small busi-nesses,” Simpson said.

Others agree the state needs to focus most on the creation of long-term, sustainable jobs for the 21st

century. That would mean fewer subsidies for the muffler plant in Monroe County, for example, and

more public assistance for small biotech firms in Westchester.

The business community was encouraged by Cuomo’s ability to cut spending and impose a property tax cap, but other policy changes, like mandate relief and tort reform, are a much heavier lift. What priorities the governor sets for next year will be just as important as the regional councils, if not more so.

When businesses close, government usually takes the blame. In Rochester, the plan to build a downtown

headquarters for Paetec, a telecommunications firm, has been thrown into question by the sale of the company to an outside group—three years after then Gov. Eliot Spitzer triumphantly announced the development project. He even showed up at a press conference in Rochester to trumpet the deal.

Brian Sampson, executive director of the business advocacy group Unshackle Upstate, said the culprit wasn’t Paetec or the company that bought it. The real reason the development stalled, he said, was government.

“Government just took too long to get into the game and at the table to make things work,” Sampson said. “And as a result, we stand to lose the opportu-nity to keep Paetec here in upstate New York.”

A similar scene is playing out in Ticonderoga, in the North Country. A Lowe’s store recently closed, abruptly eliminating 87 jobs and leaving lingering questions among business owners about job growth in the region.

“New York State and the Ticonderoga area are going through trying economic times,” said Matthew Courtright, executive director of the Ticonderoga Chamber of Commerce, adding that the shuttering of Lowe’s was “not expected and a surprise to everyone.”

But Courtright is optimistic that Cuomo’s focus on job creation will bear fruit.

“It’s our hope that the councils will truly assist each region…particularly small-business owners,” he said.

Tony Collins, president of Clarkson University and co-chair of the North Country regional council, said the combination of the population drift from rural communities to cities and the state’s unfriendly busi-ness climate will make the administration’s efforts a heavy lift. But he thinks it can be done.

“It’s going to be extremely difficult, it’s going to be a lot of work and it’s going to be contentious,” Collins said. “But nothing ventured, nothing gained.”

[email protected]

“It’s going to be extremely difficult, it’s going to be a lot of work and it’s going to be contentious. But nothing ventured, nothing gained.”

Andr

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Dan

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ESDC President Kenneth Adams thinks New York can be more competeive.


BY SUSAN ARBETTER

Martha Robertson sat in her Ithaca offi ce recapping the previous night’s meeting of the

Southern Tier’s Regional Economic Development Council.

“While I felt there was some disunity around ‘fracking,’ there was a strong feeling that this is a great opportunity,” she said.

Across the state, 10 new regional economic councils are busy organizing and trying to develop strategies for creating jobs and improving the outlook for their particular sections of New York.

As chair of the Tompkins County Legislature, though, Robertson sits on a council that faces pressure points unique to the Southern Tier: Theirs is the most economically depressed region of the state, but it could reap an economic wind-fall from the natural gas drilling technique known as “hydrofracking.”

“When the Southern Tier was identi-fi ed as a region [with an economic devel-opment council], gas drilling became the elephant in the room,” she said. “If a proposal supporting the gas-drilling industry comes out of this, there’s going to be a fi restorm.”

Robertson and the 31 other members of the council are expected to develop a fi ve-year strategic plan for this predomi-nantly rural region, in order to compete for one of four $40 million grants. The six regions that don’t win those grants will have to split another $40 million among them.

From Robertson’s perspective, the dilemma is clear: Is the future in agri-culture or hydrofracking? If we invest in both, do we risk our farms?

When he campaigned for governor in 2006, Eliot Spitzer memorably referred to the Southern Tier as “like Appalachia.” But if the region is poorly understood by other New Yorkers, it holds surprises, as well.

The state Department of Labor says private-sector employment in the Southern Tier has increased over the past year by 2,800 jobs. A big reason is Hamdi Ulukaya, a Turkish transplant to Chenango County who founded Agro Farma, makers of Chobani, the best-selling Greek yogurt in the country.

Many of the 213 dairy farms in the county contribute milk to Ulukaya’s yogurt, and he wouldn’t do business anywhere else.

“You have the milk right here, at the source,” Ulukaya said. “That’s one. And

two, you have access to the markets. From the daily perspective, it couldn’t be any better. Boston, New York—it’s what all the food manufacturers want.”

His company recently announced plans for a $97 million expansion, and he thinks the state should use economic development money to prop up the dairy industry with temporary price supports.

“Let’s bring back the boutique farmers who have lost their farms over the last two decades,” Ulukaya said. “A lot of people will go back to their land because they love what they do.”

But the founder of the county’s largest dairy-dependent industry won’t discount the benefi ts the region could see from gas drilling.

“If there are natural resources under the ground,” he said, “and we can get it safely, and that could provide some economic advantage to the people of this area, then I can see that, too.”

“I disagree with Hamdi on that,” Drew Piaschyk said. “That’s not teaching some-body to fi sh. That’s just giving them the fi sh.”

Piaschyk owns and operates a 100-acre organic farm called Lamb’s Quarters. A Saturday night in late July found him attending an annual event in support of county farms called “Savor the Flavor,” featuring local delicacies.

A member of the Plymouth Town Council and the Chenango County Farm Bureau, Piaschyk has seen too many farmers go belly-up—and he doesn’t share Ulukaya’s optimism about an agri-

cultural future.“You cannot rely on a whole group

of people like Hamdi who say, ‘This is a great spot and I’m going to put my yogurt factory here,’” he said. “That happens very rarely.”

He believes gas drilling holds the promise of long-term prosperity for the region, and at a meeting of organic farmers he cast the single vote opposing a moratorium on hydrofracking. He calls himself a “gas deliberator,” but fi nds himself increasingly aggravated by the anti-drilling crowd.

“Basically I’m responding against fear,” Piaschyk said. “I have an organic farmer who has an old gas tractor that spews out stuff all over the place, and he’s complaining about potential prob-lems with hydrofracking!”

All around him at the Farm Bureau

fund-raiser, farmers meet and mingle. They all know each other—and their positions on gas drilling. Erin Heaton is one of the opponents, fearing it will spoil the region’s agricultural lifeblood.

“Chenango County provides 1 percent of the dairy needs of New York City, but it could be so much more,” Heaton says. “If you bring in heavy industrialization, I fear we’ll lose all of it.”

Whatever the Southern Tier council recommends for a fi ve-year strategic plan, Robertson and the other members know it will come with a ready-made and organized contingent of angry detractors.

But the council’s fi rst meeting was productive, not divisive, she said. It was packed with staff from more than a dozen state agencies, and a couple of consul-tants, as well, who commended them for having such an active and involved group of stakeholders.

Prior to the meeting, members of Gov. Andrew Cuomo’s task force sent online surveys to all the members of the Southern Tier council asking them to rank the area’s fi ve greatest economic development assets, among other ques-tions. The top vote getters, Robertson said, were higher education, then a combination of agriculture and tourism, and then natural gas.

Robertson believes the deep-pocketed natural-gas industry doesn’t need taxpayer assistance from an economic development grant, but other sectors of the region’s economy do—desperately.

And she wonders why Cuomo made this into a competition in the fi rst place: The Southern Tier needs the grant money more than any other region in the state, yet has the least political power.

“It’s hard to picture fewer than two of the grants going downstate. So the rest of us are in competition for two grants,” she said. “We all pay state taxes. We all pay into the system. If they think this is a way to make people think better or smarter—well, that’s sort of condescending.”

Choosing Sides In The Southern TierBEYOND THE CAPITOL

Cuomo’s economic development grants force the region to confront its future

Susan Arbetter reports from the Capitol in Albany for Central New York’s PBS station, WCNY in Syra-cuse. She hosts a daily live radio show, “The Capitol Pressroom,” and produces The Capitol Report, broadcast daily on television across New York.

“We all pay state taxes. We all pay into the system. If they think this is a way to make people think better or smarter—well, that’s sort of condescending.”

Hamdi Ulukaya Drew Piaschyk

Martha Robertson


By AnA Tinsly

The Spano family was once the most powerful Republican clan in Westchester County, back when

Westchester County was all Republican. Yet as Westchester voters have turned their county decidedly blue, the once-red Spanos have straddled party lines to stay comfortably in the center.

Nick Spano, a former Republican state senator who lost his seat five years ago, is now an influential lobbyist who works closely with Democrats. His brother Michael, an Assemblyman who switched parties from Republican to Democrat the year after his brother’s loss, is a front-runner in the race for mayor of Yonkers.

Their opponents call it political oppor-tunism. Nick calls it pragmatism.

“I was a Republican because my father was one, though I wouldn’t trade my

experiences for anything,” he said. “When you look at Michael’s transition, his posi-tions were clearly more in line with the Democratic Party. In the end his switch made sense in order for him to be able to deliver.”

Their father, Leonard Spano, is a beloved Republican figure who served 34 years as a legislator and county clerk. Michael, who would not be interviewed for this story, has served on and off as an Assemblyman since 1992. Nick was elected to the Assembly at 25, then served 20 years in the Senate.

He earned the nickname “Jolly St. Nick” as a wheeler-dealer who would bring home the bacon for his district. He was a Republican, but supported liberal causes like emergency contraception, same-sex marriage and a $2 hike in the minimum wage.

“I was able to get results because I worked in a bipartisan way,” Nick

said. “I stand by every decision I ever made. The minimum-wage fight, for example, was a tough one. Many people were vehemently opposed, but I felt we had to respect the dignity of people who were struggling to put food on the table.”

Despite support from unions and women’s groups, Nick finally succumbed to a Democrat, popular local legislator Andrea Stewart-Cousins. In 2004 he beat her by 18 votes; in 2006 she beat him by 1,800.

Today Nick continues to wield political influence in the Capitol as a lobbyist, with clients that include Con Edison, Cablevi-sion and Congressman Eliot Engel—a Democrat trying to protect himself in a time of redistricting. Most recently Nick was back in Albany chiding his former GOP colleagues for delaying the same-sex marriage vote.

“I had to speak out,” he said. “I was the first in my party to support it, so it was natural for me, not for business reasons, but because I felt the time was now.”

But some would rather see Nick retire from politics altogether.

Yonkers Council President Chuck Lesnick, who is challenging Michael in the Democratic mayoral primary, believes Nick is pulling strings for his brother in

the party and the city. And he fears Nick, whose local clients include the Yonkers Raceway, will have undue influence over the office.

“I feel like I’m running against the whole family,” Lesnick said.

Nick has been accused of manipulating politics behind the

scenes. He was rumored to have engi-neered the local Conservative Party’s

2009 endorsement of Democrat Andy Spano (no relation) over Republican

Rob Astorino for county execu-tive, in exchange for Andy later supporting Michael for mayor.

When Nick endorsed Andy, he warned of “Republican extremists” who had hijacked his party—which insiders say signaled the end of his ties with

the Republicans. He says his decision was based on friendship.“I felt he was the most effective

candidate. We had a good working rela-tionship, and it was natural to support him,” Nick said. “The loyalty that existed between us transcended politics.”

Michael is favored in the mayor’s race, with support from the local Demo-cratic Party and several Latino officials, who don’t hold his Republican past against him.

“Mike will represent the whole city, not just the parts that don’t feel it’s impor-tant to maintain our schools or services,” says County Legislator José Alvarado. “Yonkers needs someone that’s acces-sible, regardless of origin.”

Former Westchester Democratic Chairman Ken Jenkins said Michael had made an honest transition to his new party and won its backing the hard way.

“He told me, ‘I’m going to go out and I’m going to earn their support.’ And obviously he did,” Jenkins said. “Mike understands what needs to be done to move an item across the line. Something he shares with his dad and brother. You need to be able to work with legislators across the aisle.”

[email protected]

Purple Dynasty

Michael and Nick Spano cross party lines to hold power in Westchester County

“When you look at Michael’s transition,

his positions were clearly more in line

with the Democratic Party. In the end his

switch made sense in order for him to be

able to deliver.”

Thomas James


By Laura Nahmias

It took Brad Pivar two years to find someone willing and able to take his son Scott to a local park once a week.Scott has a developmental disorder

called “Fragile X syndrome” that leaves him entirely nonverbal. New York state helps pay for a care plan that includes weekly trips outside, but like other well-intentioned programs connected to the state’s Office for People With Develop-mental Disabilities, it suffered in practice.

“It sounded great,” Pivar said. “The agencies were never able to find someone to do it.”

Now Pivar is part of a 100-member task force the state created to help draft a new plan for the scandal-scarred agency. New York is petitioning the federal govern-ment for the right to throw out the rules governing how its developmental-disability programs are funded and managed, in favor of new ones developed by the task force.

The petition, known as an experi-mental waiver, is the first major initiative from the agency’s new commissioner, Courtney Burke. Gov. Andrew Cuomo chose her to lead OPWDD in March after he forced predecessor Max Chmura to resign, following devastating reports in The New York Times on how the agency did little to deter or punish rampant abuse of the people under its care.

“I was only going to take the job if I knew [the waiver] was going to move forward,” said Burke, who worked on state health policy for more than a decade at the Rockefeller Institute.

The waiver works like a science exper-iment, Burke said. The state takes money it is supposed to use in structured ways, and instead uses it in a series of pilots to test theories of what programs might work better.

This is a watershed moment, advo-cates said, to reform an agency in dire need of better communication, better care and more varied services. But advo-cates, patients and parents also worry about whether the many good parts of OPWDD will get thrown out with the bathwater.

“At the end of the process, there’s a finite pile of money to be carved up,” said Pivar, who worries nonessential programs will get short shrift as the agency fixes its critical problems.

The scale of this departmental reform, and its relative speed, has never been attempted before. OPWDD has more than 23,000 employees, oversees more than 126,000 people and hopes to start

new pilot programs by next spring. At the same time, the state has asked all agen-cies, including OPWDD, to make a 10 percent spending cut.

Burke believes the state can save money naturally, by moving people who need less supervised care out of insti-tutions and into more flexible environ-ments. Some 10–20 percent of the popu-lation receiving institutional care doesn’t need to be there, Burke said, and institu-tionalization is four times more expen-sive than flexible home care.

The Times found New York spends more than $1.8 million a year on each of the 1,300 individuals still living in state-run institutions, or more than $1,200 a day each. Nonprofit group homes also have high costs: One home with just 35 people in it charged the equivalent of $700 a day for each resident. The problem plagues the entire healthcare system.

“The money is paying for too high inten-sive care in too expensive of a setting. It goes toward buildings for inpatient care when, if you had invested in primary care, the person would have never ended up in that institution,” Burke said. “New York ranks last in the country for avoidable

hospitalizations. That’s an incredible indi-cator that we’re not meeting the primary needs of our population.”

The waiver could help loosen bureau-

cratic tangles that cost money, too, Burke noted. Wendy Orzel, a woman with cerebral palsy who uses a wheelchair, needed help setting up services in another state when she planned to visit an ailing relative. But to do that, she had to go through an authorization process to show she was still disabled.

“C.P. is a lifelong disability!” Orzel said, throwing up her hands.

Her husband, Michael, 54, who also has cerebral palsy and has a much harder time speaking than his wife, said the reforms should aim to help workers learn to respect his dignity. He had trouble getting the words out, but he spoke them slowly and clearly.

“The workers talk to Wendy great,” he said. “They talk to me like a child.”

But a waiver is not alchemy, and it can’t create resources out of thin air. There isn’t money to pay workers more, Burke said, even though advocacy groups have cited low pay as a disincentive to their ability to hire and retain competent, caring individuals.

The starting salary for a direct-support worker, who works closely with disabled people every day, is just $29,900. And more than 80 percent of the workforce is made up of volun-tary workers, who receive far less.

Burke also plans to cut costs by complying with the state’s top-down mandate to roll the developmentally disabled popu-lation into managed care, some-thing that scares people like Ann Hardiman, the executive director of a consortium of nonprofit caregivers called the New York State Association of Community and Residential Agencies.

The principle behind managed care, Hardiman said, is that it becomes affordable for providers to subsidize sick popu-lations in part by balancing them against healthier ones.

That doesn’t necessarily work for the developmentally disabled.

“A person with a develop-mental disability has a lifelong disability,” Hardiman said. “It’s not going to go away.”

Illinois, which has moved developmentally disabled populations into managed care, has had difficulty finding providers who would cover a population that is so sick.

OPWDD has already undertaken some transformative measures, including a recent agreement to refer abuse complaints to the state police. Cuomo also pressured the Civil Service Employees Association to accept uniform punish-ment standards for employees accused of wrongdoing. Those changes will make it easier to hold employees accountable for bad behavior, Burke said.

Cuomo has also placed Deputy Secre-tary for Health Jim Introne and Special Assistant to the Governor Linda Lace-well, who worked with him when he was attorney general, in charge of helping coordinate the waiver process with Burke, among other reforms they are overseeing.

But one outcome the agency can’t ensure is that providers will actually treat disabled individuals as individuals. Making that philosophical change take root could take much longer than the five years the waiver process is expected to last.

Burke is optimistic. But with 120,000 individuals to oversee, and a waiting list on top of that, the task will likely prove daunting.

“To me, the more impactful thing we can do in the long term,” Burke said, “is have a different culture that’s just much more supportive of the individuals.”

[email protected]

The Metamorphosis

“New York ranks last in the country for avoidable hospitalizations. That’s an incredible indicator that we’re not meeting the primary needs of our population.”

How Courtney Burke plans to transform an agency with an ugly past

Commissioner Courtney Burke hopes a medicaid waiver can help overhaul a troubled agency.

Patrick Dodson


116th Assembly DistrictAnthony Brindisi (D) vs. Gregory Johnson (R)

Upstate Republican Gregory Johnson is taking another crack at the Oneida County Assembly seat

vacated in May by RoAnn Destito, who Gov. Andrew Cuomo nominated to run the state Offi ce of General Services.

Johnson lost by 6,000 votes to Destito in 2010, but this year he hopes to win offi ce by emphasizing jobs, improving the economy and reducing the state’s defi cit by curbing state spending.

He’s facing a stiff challenge from Demo-crat Anthony Brindisi, who boasts endorse-ments from several regional unions and the Mohawk Valley Chamber of Commerce.

A Utica newspaper’s editorial board slammed Brindisi for failing to recuse himself from a Board of Education vote that saved a teacher’s job. He had hired the teacher’s mother as a musician for a campaign event.

The race is expected to be tight.Brindisi has raised $101,152 since

Destito stepped down, and he is plowing through it. This week he has only $26,539 on hand, while Johnson, as of last month, raised $25,000 and had $23,000 on hand.

144th Assembly DistrictSean Ryan (D) vs. Sean Kipp (R)

It’s the battle of the Seans!Buffalo has itself a barn burner next

month when Democrat Sean Ryan and Republican Sean Kipp will fi ght to succeed 19-year veteran Assemblyman Sam Hoyt, who stepped down from his seat in June for a job in the Empire State Development Corporation.

Ryan, an attorney representing some of Buffalo’s neediest citizens in housing-discrimination cases, is likely to secure a large swath of the progres-sive vote. He has advocated for afford-able housing, food-stamp programs, living-wage legislation and energy-effi cient buildings.

But Kipp is talking tough, calling his opponent “another rubber stamp for New York City corruption,” and claiming Ryan will raise taxes and force companies to move out of state.

Neither candidate has raised much cash, with only a month to go.

Ryan raised $8,200 and has $7,733 on hand; Kipp has a measly $200 in his campaign account.

—Aaron [email protected]

Two upstate Assembly races will be decided Sept. 13

BY CHRIS BRAGG

Nassau County Comptroller George Maragos has been an elected offi cial for less than two

years—but he is already making his second long-shot run for statewide offi ce.

Last year Maragos campaigned for the Republican nomination in the race to take on popular Democratic Sen. Chuck Schumer, but failed to garner enough

votes at the state GOP convention to make it onto the ballot.

Now Maragos is back making an only slightly less quixotic run against the state’s junior senator, Kirsten Gillibrand, and insists losing last year’s nomination was part of a grander plan.

“It wasn’t a serious attempt against Schumer,” Maragos acknowledged on his way to a clambake in upstate Onondaga County. “It was a reason to go around the

state and visit county chairs.”Several other candidates have

approached state GOP Chairman Ed Cox about running against Gillibrand, but so far Maragos is the only one campaigning. He has already visited 25 different counties, and has said he is willing to spend up to $5 million of his own personal fortune in the race. But Maragos said he would be inclined to do most of that spending once he has the Republican nomination wrapped up.

A Greek immigrant who came to the U.S. at 8 years old (and still retains an accent), Maragos has a compelling personal story to tell. He paid his own way through college before making a fortune in the fi nancial industry. In 2009 Maragos swept into offi ce on the tails of the Tea Party wave that also undid heavily favored former Nassau County Executive Tom Suozzi.

Since becoming comptroller, Maragos has been at times an ally and a thorn in the side of Nassau County Executive Ed Mangano, overseeing the fi nances of one of the nation’s more affl uent coun-ties, which has seen spiraling property taxes and years of overspending undo its solvency.

Both Maragos and Mangano supported the failed proposal to build a new taxpayer-funded arena for the Islanders hockey team. That deal was opposed by the Nassau County Interim Finance Authority, which took over the county’s fi nances after it ran up a budget defi cit of more than 1 percent of county spending.

As an elected offi cial in a county with a population of 1.3 million and an annual budget of $2.6 billion—and with his personal fortune—Maragos cannot be entirely dismissed, said Larry Levy, executive dean of Hofstra University’s National Center for Suburban Studies. But Maragos may not get much help from the the Nassau Republican Party, which is more focused on 2012 state Senate races, Levy said. And Gillibrand is experiencing her own rise in popularity, which has even spawned 2016 presidential chatter.

“It sounds crazy to say, but fi ve million bucks is nothing in a U.S. Senate race,” Levy said. “Gillibrand has the ability to raise virtually unlimited amounts of money to hold the seat.”

[email protected]

The Kamikaze Comptroller

116th

144th

“It wasn’t a serious attempt against Schumer. It was a reason to go around the state and visit county chairs.”

Nassau Comptroller George Maragos, left, seen here campaigning in New York City, is running a quixotic campaign against Sen. Kirsten Gillibrand.

Face

book

Anthony Brindisi (D)

Gregory Johnson (R)

Sean Ryan (D) Sean Kipp (R)

Upstate Smackdowns


Hugh Carey died this month. The praise and pride we heard were well-placed and well-spoken. The former

governor was an unusual and interesting man who was thrust into an unexpected crisis and managed it well. And the lessons of his success are available to anyone watching the failures of Washington.

Democracies are fragile. They can fail over small matters. Success and failure are both choices.

Societies fail when large social prob-lems overwhelm them. Famine, war, oppression and institutionalized inequality smash the social contract; chaos and revo-lution ensue; and a new social structure emerges. It happened in America, China and Russia, and may be happening today across the Arab world.

Governments fail for much smaller reasons, often because the political culture stops working. It’s not that bad ideas rule the day, or that the problems are overwhelming. It’s that political institutions simply can’t do the job they were created to do. Diffi cult decisions aren’t made, factional allegiances prevail over larger social interests and the

populace loses faith that government can function, much less be effective.

So it was this month, when American democracy was stymied over the relatively small question of an inevitable increase in the federal government’s ability to borrow. Put aside the intense disagreements over continued federal defi cits; there’s legiti-macy on all sides. The catastrophe was in the way the federal government approached and resolved the problem. A collective madness damaged our economy, our standing in the world, and faith and confi dence in our system.

So it could have been 36 years ago when the fi nancial insolvency of an obscure New York state authority, the Urban Development Corp., forced New York City and state to the brink of bankruptcy. Again, the reasons and contending positions weren’t the issue. But the process made the difference.

The outcome was different back then, because New York’s political culture was strong. Public offi cials shared a view of how a democracy functions, what are matters of principle and what are matters of strategy, the role of compromise and, most impor-tant, the consequences of failure.

Carey was the architect of that solu-tion. He was a man of grand and common-

place virtue, with the kinds of abilities and shortcomings we see in ourselves and our friends. He came to be governor after a long career in the Congress, and he under-stood the complex interplay between executive and legislative responsibilities.

The Legislature was beginning to emerge from its vestigial role under Gov. Nelson Rockefeller, whose charm, power and money overwhelmed the Senate and Assembly. The leadership of both houses was a superb and unusual odd couple, the conservative and elegant

Sen. Warren Anderson of Binghamton, and the brassy and old-style liberal Stanley Fink of Canarsie.

They and their members were willing to take political risks, push back when needed and take on traditional allies to get a deal done. They stood strong, compromised, led the

public debate and enabled their members to make decisions that were politically dangerous. The Legislature was a full partner, and no one complained about “three men in a room.”

Carey assembled his own team, including future Lieutenant Gov. Richard Ravitch, and brought the bankers, the unions, Mayor Abe Beame, the business community and the Legislature together. He provided the political leadership that forged a political solution requiring pain and change, and solved the problem.

Most important, New York saw that

democratic institutions could face and overcome profound problems.Carey couldn’t have succeeded without a deep appreciation of what makes democ-racies function. American isn’t a beacon of light and liberty around the world because of our chief executives. It is—or was—the highest expression of the idea of popular self-rule because of its legislative bodies.

Therein lies the soul of democratic government: the check on unbridled and concentrated executive power, and the point of access for regular people who wish to affect their government. And because Carey understood this from his own experience, he, Fink and Anderson could solve a fi scal crisis and protect the idea of popular government.

The Washington fi asco will do real damage for years. Blame, if you will (as I do), Tea Party fanaticism and right-wing populism. Blame (as many do) President Barack Obama for his inability to knock heads together and get a deal. Blame a culture of incivility and infl exibility, where compromise is a sign of weakness instead of a necessary part of any democracy.

But take a moment to sing the praises of Carey, Fink and Anderson; lift a beer, Scotch or martini, and think upon the frailty of the institutions we rely on and the people who make them work.

Richard Brodsky is a senior fellow at Demos, a NYC-based think tank, and at NYU’s Wagner School of Public Administration.

Despite the claims of partisans on both sides, there is little the federal government can do to

quickly turn around the economy—but eventually it will recover. Generating confi dence is tricky and unpredictable, but businesses will invest and hire once they believe customers are ready and able to buy what they are selling.

The question for New York is: How can the state position itself to take advantage of that national recovery when it comes?

Over 1.5 million New Yorkers fl ed the state in past decade. This startling statistic is most likely the result of a lack of jobs, high taxes and a terrible climate for business investment. Other states are acting now to reduce costs. New York needs to do so as well, despite the polit-ical diffi culty in that approach.

Gov. Andrew Cuomo’s property tax cap was a fi rst step. However, mandate relief to lower costs on local govern-

ments and school districts is essential to ensure the tax cap is a success.

The state Triborough law is the most expensive Albany mandate, and must be repealed. This law perpetu-ates all terms of government-employee contracts after they expire unless both sides agree to changes. While this seems fair on the surface, in prac-tice it has perpetuated scores of unjustifi ed benefi ts that can no longer be sustained. Already taxpayers are on the hook for $150 billion in unfunded retiree health obligations.

Take, for instance, the Buffalo school district, which provides elective cosmetic surgery to its employees. Tummy tucks, nose jobs, breast enhancement—all courtesy of the taxpayers, and costing $9 million in 2009. This expense is fully 10 percent of all health-insurance costs for the school district.

Or how about Clarkstown in Rockland County? Cops there average $142,000 in pay and, like police offi cers and fi refi ghters across the state, routinely retire after larding up with overtime to

boost the fi nal average salaries in their pension calculations. It isn’t unusual for many police and fi re retirees to receive pensions higher than their base salaries.

A state arbitrator just ruled that the town must pay retroactive 3.5 percent salary increases for the last two years, and that Clarkstown cops shouldn’t pay

anything for health insurance because other towns don’t make their employees pay either.

The examples are too numerous to cite, but the consistent thread is this: Laws passed by Albany—at the behest of unions—mean New York has the highest property

taxes in the nation. Unless Albany fi xes the things that drive up local and state taxes, the property tax cap is likely to fail.

Controlling governmental costs is the single best thing Albany can do to create an environment where the private sector can create jobs when the national economy turns. This involves tough deci-sions to reform collective bargaining; requiring all public employees to pay something for health insurance; and creating alternative pension systems, including optional 401(k)-type plans for new employees.

Albany also shouldn’t simply throw

money at business. Instead we should move to a simpler tax system, with lower rates and fewer deductions for all, thereby creating a level playing fi eld for individual and business taxpayers. Expe-diting new energy development upstate, and funding transportation capital plans for both upstate and downstate, is also critical.

Wisconsin, Indiana, Massachusetts, Ohio and New Jersey, among others, have modifi ed or reformed collective bargaining for public workers. Other states are moving to simplify envi-ronmental permitting. Still others are reducing impediments to growth, by reforming the process for business lawsuits, for instance.

New York can and should move now in all these areas to take advantage of the national economic recovery when it arrives. Simply continuing the status quo without fundamentally changing the incentives for investment will leave New York behind in the race for new jobs and prosperity.

John Faso is a former minority leader of the state Assembly and was the Republican candidate for governor in 2006. He is a partner in the Albany offi ce of the national law fi rm Manatt, Phelps & Phillips, LLP.

Ready For Recovery?

John Faso

New York must act now to be ready for growth when economy rebounds

PERSPECTIVES

Richard Brodsky

When Democracies FailHugh Carey showed New York how—and why—democracy works

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By Jeff JacoBson

Public utilities are some of the most heavily regulated companies in the nation—and also some of

the most stable. State regulators typically approve their rates, profit margins and service standards after a quasi-judicial process of weighing testimony from the companies, their customers and consumer advocates.

Yet the process has been evolving in New York, where the state Public Service Commission is increasingly trying to set a regulatory scheme that reaches beyond individual rate cases to consider long-term issues about how essential public services should be provided.

New York regulators have been immersed in how to encourage energy conser-vation, expand natural- gas distribution, spur the growth of renewable power sources and manage the state’s resources more effi-ciently.

“The commissioners, their job is to balance the interest of the utility with the public,” said Rob Thormeyer, spokesman for the National Association of Regula-tory Utility Commissioners. “Regulation works. And in New York, I know it works well.”

From 2007 to 2011, New York’s electric and gas companies asked for more than

$5 billion in rate hikes—but were granted only $2 billion.

When utilities seek higher rates or other changes in how they operate, the PSC weighs each request against expert testimony from the Department of Public Service, consumer groups, business coun-cils and environmentalists, among others.

After exchanging thousands of pages of accounting records and legal argu-ments for months, the sides present their case to the PSC for a decision—unless they are able to reach a compromise among themselves and submit it to the commissioners for approval.

“It’s rarely, any more, just two sides,”

said Scott Hempling, executive director of the National Regulatory Research Institute. “It may have been that way 30 years ago when I was getting started, but not any more. There can be renewable-energy advocates, environmentalists, labor unions and other groups involved. It can address a whole range of utility policy.”

While most states operate under a similar

system, he said, they are often at the whim of legislative funding, which determines the quality of the regula-tors’ in-house staff.

“The New York staff is one of the higher-quality staffs in the country,” said Hempling. “You have an excellent chairman, in particular. He’s top of the line, Garry Brown.”

Thirteen states currently elect utility commissioners; South Carolina and Virginia pick them in their Legislatures, and the rest—including New York—are chosen by the governor and confirmed by the Legislature.

New York’s five commissioners serve six-year terms and are stag-gered to prevent any lapses in regulation. The terms of three commissioners expire next year, while Brown’s term ends in 2015.

The PSC is not without its critics, who say it needs to be more receptive to the concerns of ratepayers and more relevant to New Yorkers’ concerns.

“The Public Service Commis-sion is generally biased, I believe, in favor of the utility and not in favor of the ratepayer,” said attorney Irving Like, who has represented consumers in Nassau

and Suffolk counties since the 1970s.Like recently lost a case at the

PSC against National Grid, in which he intervened to stop the utility from billing customers to clean up a now-defunct power plant that had released carcinogens.

“With the stockholders making no contribution,” he said, “it was unfair to burden the ratepayers to clean up some-

thing that they had no participation in.”Like wants PSC commissioners to be

elected rather than appointed, saying that would force them to be more respon-sive to ratepayers’ concerns. But David Bomke, executive director of the Energy Consumers Council, New York’s largest consumer-advocacy organization, said that’s the wrong remedy for an imperfect system.

“Just because they could get elected does not necessarily mean that they would be the best qualified to under-stand the difference between rate- structure designs and so forth,” Bomke said. “I do like the idea of accountability. My concern is how you ensure the level of expertise that’s necessary.”

[email protected]

ISSUESPOTLIGHT Public Utilities

From Con Edison to the Oriskany Falls Telephone Corporation, New York’s public utilities are allowed to operate as monopolies. The state Public Service Commission sets their rates and oversees their performance, guaranteeing them stable revenue in exchange. But the process involves more than just delivering electricity, natural gas, water and telecommunications services: It increasingly takes into account envi-

ronmental concerns, government finances, union relations and technological changes. In the pages that follow, The Capitol looks at how New York regulates utilities and tries to promote the common good.

Utility PlayersNew York regulators try to balance growing needs

VOICES

Donna DeCostanzo, Senior Attorney, Natural Resources Defense Council

Q: How well does the system serve New York?DD: The current utility system in New York serves us well, but we

need to continue to build our clean-energy economy and invest in our aging-energy infrastructure to ensure that our system continues to meet our needs in the most reliable, clean and cost-effective way possible. We need to harness the tremendous oppor-tunities we have to make New York a leader in the

clean-energy industry, attracting billions in private investment, creating thousands of good quality jobs, reducing New Yorkers’ energy bills, increasing reli-ability and improving public health.

Q: How can New York ensure higher quality and reliability?DD: In order to attract clean-energy investment and all of the economic development benefits associated with it, New York needs to demonstrate long-term commitment to these technologies, as well as regu-latory certainty. New York also needs to ensure that policies are in place that align the interests of util-ity shareholders and consumers. These include the

implementation of effective revenue-decoupling mech-anisms that remove the utility disincentive to scale up energy efficiency, as required by the April 2007 PSC order, and a framework of performance-based incen-tives and penalties that provides a way for sharehold-ers to earn money from investing in cost-effective efficiency. In addition to increasing energy efficiency, the state should implement policies to scale up renew-ables, as well. The RPS [Renewable Portfolio Stan-dard] has greatly helped upstate wind in New York, but the state should adopt a framework to foster a robust solar energy industry, including a market-based pro-gram to achieve the installation of 5,000 megawatts of solar photovoltaic generation by 2025.

“There can be renewable-energy advocates, environmentalists, labor unions and other groups involved. It can address a whole range of utility policy.”

Andrew Schwartz

The Interborough Rapid Transit Powerhouse at West 59th Street and 11th Avenue.


BY JEFF JACOBSON

The greatest upheaval in the history of New York’s regulated public utilities came 15 years ago,

when then Gov. George Pataki shepherded a plan through Albany that opened the state’s electric market to competition.

It’s still too soon to say how well it worked.

“Even now the jury is really still out,” said Arthur “Jerry” Kremer, chairman of the New York Affordable Reli-able Electricity Alliance and former chairman of the Assembly Ways and

Means Committee.“It’s been a long-term thing, and I can’t

say if it was bad, and I can’t say it was good,” he said. “It may take another fi ve to ten years before we fi gure out whether it was a success. It’s really hard to pinpoint right now what it is.”

The 1996 law let utilities keep their monopoly on the wires that distribute electricity, but created an open market for generating power. It was presented as a way to reduce costs, improve effi ciency and help New York businesses cut their bills.

Yet the market’s ability to plan for the state’s long-term supply needs is still untested, Kremer said, pointing to the lack of a fi rm road map for how aging power plants will be made more effi cient, powerful and environmentally friendly.

“Where’s the money going to come from?” he asked. “We could have a system in future years that breaks down because plants are too old. The question has not been answered: So who’s going to pick up the tab for it?”

Kevin Jones, a professor at Vermont Law School’s Institute for Energy and the Environment, and former director of power market policy for the Long Island Power Authority, said deregulation was “a mixed success” that missed opportuni-ties to make the system better.

While the nonprofi t New York Inde-pendent System Operator that manages the state’s electric grid is a leader in responding to demand, Jones said, the new regulatory system may not be enough to bring down electric prices. Consumers can’t accurately monitor their consumption in real time, he said, and new entrants to the power market still face high barriers.

“There’s not as many new players and smaller players” as the law’s

authors had hoped, he said.The state’s wholesale

power generators have a more clear-cut verdict: They believe deregula-

tion was a boon for New York.

“Wholesale energy price has remained fl at, if not gone

down, under an infl ation-adjusted basis during the last ten years,” said

Chris LaRoe, director of market policy for the Independent Power Producers of New York, a trade group representing electrical plants across the state.

He said New York has robust protec-tions against market manipulation, collu-sion and price-fi xing, while the state has also benefi ted from a drastic reduction in air pollution.

NYISO spokesman Ken Klapp said the nonprofi t is implementing a $74 million “smart grid” to better manage power supplies, one of many changes premised on the benefi ts of competition.

“Open, nondiscriminatory access to the grid and wholesale electricity market incentives have helped to culti-vate the development of renewable sources of electricity in New York,” Klapp said.

[email protected]

Still Plugging Away

when then Gov. George Pataki shepherded a plan through Albany that opened the

“Even now the jury is really still out,” said Arthur “Jerry” Kremer, chairman of the New York Affordable Reli-

and smaller players” as the law’s authors had hoped, he said.

The state’s wholesale

tion was a boon for New York.

“Wholesale energy price has remained fl at, if not gone

down, under an infl ation-adjusted

Public Utilities

“It may take another five to ten years before we figure out whether it was a success.”

No clear lesson from deregulating New York’s electric market

NEW YORK PRESS ASSOCIATION

2010 Better NewspaperContest Excellence Awards

Coverage of Elections and PoliticsFirst Place & Second Place

Coverage of Local GovernmentFirst Place & Second Place

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News That’s NewsworthyNews That’s Newsworthy

It has been a tumultuous summer in the education world, full of budget fi ghts and labor showdowns. Heading into the new school year we are sitting down with a panel of leaders and infl uencers in the education

fi eld to better understand how the past year’s fi ghts will play out in the school year ahead and how these events will impact education policy, city politics, teachers and parents for years to come.

LEO CASEYVice President of Academic

High Schools, UFTSYDNEY MORRIS

Co-Founder of Educators 4 Excellence

EVA MOSKOWITZFormer City Council Member & Founder/Chief Executive Offi cer

of Success Charter NetworkSHAEL POLAKOW-SURANSKY

Department of Education Deputy Chancellor & Chief

Academic Offi cer

BILL THOMPSONFormer President of the NYC Board of Education & Former

NYC ComptrollerMERRYL TISCH

Chancellor of the NY Board of Regents

JOSEPH P. VITERITTIThomas Hunter Professor of

Public Policy at Hunter CollegeSTEPHEN LAZAR,

English teacher in Brooklyn

Andrew HawkinsManaging Editor at

City Hall News

Philissa CramerManaging Editor of

GothamSchools.Org

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VOICES

John Reese, Senior Vice President, US Power Generating Company

Q: Are there efforts to lower utilities fees or taxes?JR: There’s been a continuing effort to reduce costs of providing elec-

tric service from generation through customer usage. There are very expensive programs for energy effi-ciency in the marketplace through NYSERDA, through Con Ed, through cooperation with the city. One of the things that has had a huge impact is twelve, fourteen years ago, the move to competitive markets. The fact is that electric generating units are available more now than they ever were. They are being optimized because of the pricing system ensuring the most efficient units run the most, and those are the lowest-priced units. We have, on the wholesale side, historically low elec-tric prices. Often the end user doesn’t get to see that, because other costs have gone up while the wholesale price of electricity has gone down.

Q: How can New York ensure higher quality and reliability?JR: We’re in the midst of something of a difficulty right now, where new entrants in the marketplace, on the wholesale market side, have resulted in the existing suppliers not being able to cover their day-to-day operating costs. So how that issue, which is at the federal level before the Federal Energy Regula-tory Commission—the outcome of those processes has a direct impact on New York City and New York

State as a whole on getting the pricing right. While no one wants high prices, there have to be sufficient revenues to ensure the health, safety, reliable opera-tion and investment in supply. We’re in the midst of kind of a mess in that area. Prices in July and now, going forward for the next several years, are going to look to be below the basic operating cost of the existing generators.

Q: Do utilities have access to necessary capital? JR: For us, for the independent power production center, the worst thing is uncertainty, and right now we’re in the midst of as much regulatory uncertainty as there’s been since the markets were created, which makes it much more difficult to get capital for investment. It also sort of places a burden for that next generation, then, on additional regulatory sup-port, additional incentives that make it worthwhile. Because currently, given the market volatility, both S&P and Moody’s have been out there saying, “In this sector and this city, it’s very uncertain.” There’s a lot of regulatory uncertainty that brings an increase in investment costs.

Heather Briccetti, Acting President and CEO, the Business Council of New York State

Q: How well do public utilities serve New York? HB: New York is recognized, both

nationally and internationally, as providing utility customers with a high-quality and reliable prod-uct. Unfortunately, the state has received notoriety

for its high cost of electricity. Recently there has been an acknowledgement that additional taxes and mandates on electric generation and/or dis-tribution contribute significantly to the high cost of electricity and create an adverse impact on the state’s economic competitiveness.

Q: Are there efforts to lower utilities fees or taxes?HB: A 2010 report by the Public Policy Institute shows that 26 cents of every dollar spent on electricity goes to state and local taxes, and that state-imposed assessments and fees are a major factor in New York’s rates. In 2009 the state Legislature adopted a proposal by then Gov. David Paterson to impose a sixfold increase in the PSC Section 18a assessments. This resulted in an estimated $600 million increase annually to the consumer, which was used to bolster increased state spending. An effort is under way to repeal the entire fee, but most importantly, the cur-rent governor and legislative majorities have recog-

nized the need to reduce the growth of state spend-

ing, obviating the need for additional revenue-raisers.

Q: Do utilities have access to necessary capital? HB: While the PSC continues to impose added costs to utility bills, they reject utilities’ proposals for increased capital for infrastructure investment. If New York does not do a better job on agreeing on how utilities can fund these infrastructure needs, the customer will either see a downgrade to their service or a higher cost.

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Kevin Cahill, Chairman, Assembly Energy Committee

Q: How well do the public utilities serve New York?KC: I think the current system has a lot of flaws in it, particu-larly in these last few years since the consumer representation has

been significantly diminished. The governor has cho-sen not to fund a public utilities board for utilities’ rate cases. The Public Utility Law Project, a not-for-profit that was funded with certain revenues, is no longer in existence. The Consumer Protection Board has had its purposes largely dismantled. So we have a real loss in consumer representation. That’s in a system rigged against the consumer to begin with. The utilities come in with high-priced talent to make their case. Citizens are out there to fend for themselves, and the hearings aren’t even held at a time that’s reasonable for consumers to participate. They’re almost always scheduled at 10:30 in the morning, when most people are working. They are

usually held in places where it’s not particularly conve-nient for individuals to participate. From a consumer perspective, I would say the system is broken.

Q: Are there efforts to lower utilities fees or taxes? KC: I opposed the Article 18a assessment that doesn’t even go to the benefit of utility customers any more. It became a general revenue source for New York at a significantly higher rate than it had been previously posed, and we’re continuing to argue that it should be retired before its expiration date in 2014. There are other fees that are included in the bill: the renewable portfolio standard and the system benefits charge. Those charges are off-budget. That is, they are not subject to any oversight in the budgetary process and not subject to legislative approval. They are imposed at the whim of the Public Service Commission.

Q: How can New York ensure higher quality and reliability?KC: We have to reinvigorate the staffing of the Public Service Commission, so it’s more evenly matched when

it comes to rate hearings, so that our state resources [are being used or that we have something] at least as good as those resources being used to justify a rate increase or justify a particular approach of the utility. A second thing, I think, is that the Public Service Com-mission should be using things like the benefits charge and other charges that are included in the bill since deregulation, to actually reinvest in the state’s trans-mission and distribution system.

Q: Does the regulatory system allow enough access to capital?KC: The rate structure with a guaranteed rate of return on investment makes utilities one of the most attractive places to lend money to. With the exception of the Long Island Power Authority and a few municipals around the state, they are by and large shareholder-owned enti-ties. How much of the emphasis of these companies is going toward that bottom line on a quarterly balance sheet, and how much is going for long-term investment? What we have seen is a diminishment in the investment, and in particular in the human-resource investment in maintaining the infrastructure.

George Maziarz, Chairman, State Senate Committee on Energy and Telecommunications

Q: Can New York improve regulation to ensure higher quality and reliability?GM: I think we have a lot of reg-ulation already. Maybe what we

need is greater oversight so that the utility companies carry out the things that they promise when they come in for a rate increase. Last year the energy committee held hearings on National Grid’s rate increase request. That’s the one where we found out that they had put in the rate increase some obscene expenditures. They were sending their kids to private school here. At that

time, most of the National Grid people had come over from London, and one of the things they put in was to reimburse their kids’ education expenses.

Q: Are there efforts to lower utilities fees or taxes?GM: The taxes that were imposed in 2009 and 2010 never should have happened. The 18a assessment, which was raised in 2010, expires in 2014, and we should let it expire. What I’d like to see is some of the federal money we used for the heat program to be used for improving people’s energy efficiency within their homes—better doors, windows, things like that.

Q: Does the regulatory system allow enough access to capital?GM: I think it does. Utilities are private companies with a public purpose, and they always have to be

improving their system. Improving the system is good for ratepayers, because generally it makes it more energy-efficient. In the long run these energy up-grades will actually save their consumers money, and probably be better for their shareholders, too.

Q: Do consumers have adequate access to the PSC?GM: I think in theory, yes, but in practice, no. The Pub-lic Service Commission complaint procedure could be much better. You’ve got expand their accessibility through the Internet. The PSC has to do a far better job of publicizing its activities. More than anything, the PSC has to do a much better job of speeding up its decision-making process. In some respects it’s like a dark hole when they’re asked for a decision. For a decision from the PSC, the time frame to get an answer is measured in months or years, not in weeks or days.

EXPERT ROUNDTABLE

Garry Brown, Chairman, Public Service Commission

Q: How well does the public utilities system serve New York? GB: Quite well. Around the na-tion, the New York Public Ser-vice Commission is recognized

as a national leader in both policies and capabilities in terms of regulating public utilities. We literally get hundreds of thousands of calls per year. The way the law works, utilities come in for rate filings and we have eleven months to review them, so they get what they ask for. Since 2007 our review processes reduced elec-tric and natural-gas bills by more than $3 billion from what the utilities asked for, without compromising in any way the reliability of the system.

Q: Do consumers have adequate access to the Public Service Commission?GB: During the rate case, it’s very important to us

to go out and do public hearings in the area where the rates will be impacted. We do numerous public hearings a year where any member of the public can come in and speak to an administrative law judge and be on the record. We’re also very proud of our online availability of data—probably more than any human being could ever want. We’ve got every item in every case, unless it’s confidential. Literally hundreds of thousands of people a year hit that website to get that sort of information on what’s going on in our various proceedings through the state.

Q: Are there any efforts to lower utilities fees or taxes to help consumers?GB: One of the rate-drivers has been the property tax-es that utilities pay. If you allow the utilities to just pass those along to the consumers, it provides very little incentive for the utilities to challenge the appropriate-ness of the property taxes or anything else. What we’ve done is develop a sharing mechanism where, if utilities can actually reduce the property taxes, then the con-sumers benefit, but we also make sure there’s a way that shareholders benefit, as well.

Q: How can New York better regulate utilities to ensure higher quality and reliability?GB: We’ve been doing some really interesting things on this in the last five to ten years in penal-izing or rewarding the utility on the basis of what they do in terms of quality and reliability. How many times a year are customers losing their pow-er? If they do lose their power, how long do they lose it for? We set goals for the utilities to meet, with meaningful penalties or rewards associated with that goal. In addition, we’ve got a fairly sig-nificant inspection staff, especially for natural-gas pipelines.

Q: Does the regulatory system allow utilities access to necessary capital?GB: This is part of the balancing act we’re always doing, of trying to keep the rates as low as possible for consumers, but also making sure the utilities are financially viable organizations. Since 2009 the utili-ties have issued approximately $6.6 billion of debt at fairly favorable rates, so they have been able to access capital, even in these tough times.

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Regulated utilities by the numbers

Electric Companies CustomersSales revenues (in millions) Average annual residential bill

Central Hudson 282,073 $475 $1,260Consolidated Edison 3,277,856 $7,139 $1,074National Grid 1,350,393 $2,124 $1,124New York State E&G 875,297 $1,163 $888Orange & Rockland 223,339 $438 $1,178Rochester G&E 362,559 $573 $793Gas Companies

Brooklyn Union Gas 1,014,510 $1,706 $1,237Central Hudson 63,668 $155 $1,398Consolidated Edison 1,058,356 $1,768 $1,099Corning Natural Gas 11,622 $17 $1,150KeySpan Gas East 509,665 $1,186 $1,578National Fuel Gas Distribution (NYS & Penn. )

622,250 $873 $1,281

National Grid 459,691 $629 $1,166New York State E&G 222,267 $369 $1,302Orange & Rockland 127,654 $239 $1,412Rochester G&E 244,722 $314 $1,160St. Lawrence 15,375 $34 $1,353Valley Energy 1,640 $2 $965Water Companies

Heritage Hills Waterworks 2,487 $1 $534Long Island 73,966 $46 $560NY Water Service 44,173 $23 $490Sea Cliff 4,373 $2 $472United Water New Rochelle 31,592 $40 $695United Water New York (Spring Valley) 73,032 $59 $593United Water Oswego 1,665 $1 $731United Water Westchester 12,221 $11 $757

Source: New York State Public Service Commission. All fi gures from 2009.

VOICES

David Bomke, Executive Director, New York Energy Consumers Council

Q: How well does the sys-tem serve New York?DB: Over all, the current

system serves New York very well. The appoint-ment process ensures that the commissioners themselves are fully vetted and proven to have the expertise and skills necessary to serve. The terms of offi ce help ensure that commissioners have a reasonable level of insulation from politi-

cal pressure, while still ensuring that citizens have some opportunity to shape the com-mission through their election of the gov-ernor and their representatives in the New

York State Senate.

Q: Do consumers have adequate access to the PSC?DB: Yes. New York demonstrates some of the best characteristics of participatory democracy, allowing individual consumers to participate as fully as their schedules permit. In addition, con-sumers can work through an organization such as the New York Energy Consumers Council to ensure that they have representation in the pro-cess. The NYECC and its predecessor organiza-tions have intervened in countless Con Edison rate cases and other regulatory matters of inter-est to consumers in Con Edison’s service fran-chise during the past six decades. The adminis-trative law judges at the PSC and the staff of the DPS consistently demonstrate exceptional legal and technical expertise.

terms of offi ce help ensure that commissioners have a reasonable level of insulation from politi-

cal pressure, while still ensuring that citizens

York State Senate.

Q: Do consumers have adequate access to the PSC?

Public Utilities


The Capitol: How does your experience shape your approach as commissioner?

Joe Martens: I’ve worked with the first Gov. Cuomo back in the 1990s, ’90 to ’94. Before that, I worked for the Adirondack Park Agency, then about fifteen or sixteen years with the Open Space Insti-tute before I came back to work for DEC. My experience with the governor’s office obviously gave me a good view of how DEC works, and certainly helped prepare me for the commissioner’s job because I was familiar with most of the programs in a fair amount of detail. But obviously a lot had changed over fifteen years. I spent fifteen years working on land-conservation issues, which was very satisfying and rewarding, and not quite as rough-and-tumble as all the issues you face at DEC, which is a much broader spectrum of issues. With the combi-nation of my APA experience, which was strictly a regula-tory role on land use, and my work in the governor’s office, I think it gave me a good background on problems that DEC faces today, including high-volume hydrofracking.

TC: Some environmentalists raised concerns about the size of buffers around New York City’s water-shed and risks to tunnels that carry water to the city. Could that change?

JM: Lots of concerns have been raised about various aspects. I’d first point out that, relative to the draft that I inherited when I became DEC commissioner, these are completely new provisions. The prior draft did not ban high-volume hydraulic fracturing in the New York City watershed or the Syracuse watershed, and our most recent draft did, with a generous buffer around the water-sheds. There were not prohibitions on drilling on state land in the first draft, and now there are. There are pro-hibitions on drilling in floodplains, which seemed to me to be a no-brainer. There are lots of improvements that we’ve made from the original draft that I’m proud of, that I think were the right thing to do. Concerns remain about size of buffers and we’re looking at everything. Obviously it’s still a draft, and we plan to go into a public comment period shortly. Once again we’re going to take all the com-ments seriously, and we’re going to look at the informa-tion we get, reevaluate and finalize the document.

TC: Will the yet-to-be-completed EPA study on hydrofracking impact state regulations?

JM: We don’t intend to wait for the EPA study to be

complete. We’re going to continue on with our process, which we have been doing for three years. We feel like we have studied the issue intensively. We’re always receptive to new information. Nothing is ever cast in stone. When the EPA study comes out—or any other

study, for that matter—we’ll take a look at it and see if there’s anything in it that would help inform us and help improve our own process in New York. We feel like we’re very much ahead of the game here. We’ve been studying the issue for a long time, and we have developed state-of-the-art regulations that are the best in the country.

TC: How will you carry out your mis-sion, given steep budget cuts and the addition of hydrofracking to your responsibilities?

JM: I think it’s pretty clear that, in order to accommodate the anticipated volume of permit applications, we will need more staff at DEC. We’re actually convening an advisory panel that consists of environmentalists, industry and local-government groups, to look at that issue of resources at DEC, and also look at some of the impacts to local governments and resources available to local governments to address issues at the local level. We’re very cognizant of the fact that this is a big new activity, potentially, in New York, and that we’ll need new resources to address it. We’ve devoted a lot of time and effort across many divisions at DEC thus far. If we don’t get new staff, then we’ll have to proceed extraordi-narily slowly reviewing permit applications. We have a lim-ited number of staff people now, and we’ll only review those applications that we can responsibly review; and then, if we issue permits, to monitor activity and enforce, if necessary. We’ll absolutely do what we can with the staff we have. If we’re going to accommodate a higher level of activity, we’ll need more staff, no question about it.

TC: What role will the advisory panel play?

JM: It’s an important group. These are individuals that have been immersed in the issue for a long time. They bring a lot of expertise to the table. I wouldn’t be spend-ing the time pulling them together if we weren’t going to take their recommendations seriously, and I think we’re going to have a very interesting process with them, which once again will help inform where we come out on the process in the end.

TC: Is renewable energy taking a backseat to hydrofracking?

JM: I don’t think we’ve been talking any less about renew-able energy. Our main task right now on the environmen-tal front is to complete this SGEIS, but the state of New York has very ambitious renewable goals. NYSERDA is the agency that is collecting money and making grants to help promote renewables in New York. Obviously DEC is very involved in the Regional Greenhouse Gas Initia-tive, which once again raises funds to promote renewable energy and lower the emissions of carbon in the state. The state as a whole is still very aggressively pursuing and promoting renewables. They’re obviously very important to DEC, but our primary role, as far hydrofracking goes, is as a regulator, so that’s what we’re busy with right now.

TC: Do you support Comptroller Thomas DiNapoli’s proposed recovery fund for gas-drilling accidents?

JM: That’s one of the issues that we’re having the advisory panel look at: the impact on local governments. It’s pre-mature at the moment for us to comment about funds for potential accidents, because we’re busy putting together a program that will prevent accidents. That doesn’t mean nothing will ever happen. Accidents can happen anyplace, but we’ve taken a very precautionary approach here, and don’t expect problems. It’s obviously something we want to look at, and we’re going to take his proposal very seri-ously. It’s going to be a topic with the advisory panel.

TC: Are there any major misconceptions about hydrofracking?

JM: I think there’s a lot of misconceptions and misin-formation about the issue as a whole. There are lots of concerns about contamination from the hydrofracking process itself, issues and concerns about migration from these well bores that are thousands of feet underground and a long way from aquifers—that there could be con-tamination. There’s no question that there have been prob-lems in this industry, but I think that we’ve done our best to address any possible problem that’s occurred. We have very cautious regulations and proposed requirements in the SGEIS, and we’re working on regulations to imple-ment those. We’ve been trying our best to just educate the public and make people as well-informed as possible.

TC: What else is on your plate?

JM: This place is busy all the time, on many fronts. The legislature passed an Article X bill for siting power plants, and we have to come up with two major compo-nents of those regulations. The governor just signed the water-withdrawal bill, and we’re responsible for drafting the regulations for that. We are very active on invasive-species issues. If you drive around the state you’ll see our purple pyramids all around the state that we have to pull down and examine to see what kind of critters are traveling around New York State. If we have inva-sives showing up, we take action against them. This is the height of our visitor season, so our campgrounds and our boat-access sites are all very active, and we’ve spent a lot of the early part of the summer fixing places that have been damaged by the floods in the spring. This is an incredibly busy place all the time on lots of fronts.

TC: How much of your day is spent on hydrofrack-ing, as a percentage?

JM: It’s hard to say—it’s a long day. This is a very inten-sive effort. I spend a lot of time, and staff at the agency is spending a lot of time. I don’t sit around and calculate the percentage, but it’s a significant issue, and I spend a lot of time on it.

—Jon [email protected]

Gas RegulatorA

s commissioner of the Department of Environmental Conservation, Joe Martens is at the forefront of an intense debate over high-volume hydraulic fracturing, a contro-versial gas-drilling procedure commonly called “hydrofracking.”

Before he was appointed commissioner, Martens said hydrofracking in the Marcellus Shale may be “the most difficult and daunting” environmental challenge the agency has faced in 40 years. After he took over earlier this year, the DEC issued its updated draft sup-plemental generic environmental impact statement—known as an SGEIS—outlining how hydrofracking could go forward.

Permitting could start some time in 2012, but Martens says he is certain the agency will have the country’s best regulations in place before anyone starts drilling.

What follows is an edited transcript.

BACK & FORTH

Richard C. Iannuzzi, President

Andrew Pallotta, Executive Vice President

Maria Neira, Vice President

Kathleen M. Donahue, Vice President

Lee Cutler, Secretary-Treasurer

Representing more than 600,000 professionals in education and health care.

www.nysut.org

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Documents

The August 22, 2011 Issue of The Capitol