N.Y. Power Authority Trustees Approve 2012 Operating Budget: Reduces Overhead Costs While Providing For Essential Capital Investments In Generation And Transmission Facilities And Energy Efficiency
December 15, 2011
FOR IMMEDIATE RELEASE
WHITE PLAINS—The New York Power Authority (NYPA) Board of Trustees Thursday approved an operating budget for next year that provides for necessary capital investments in the Authority’s generation and transmission facilities, primarily located in upstate New York, and increased financing of energy efficiency and clean energy technologies statewide. At the same time, it provides for the implementing of measures for holding down the overhead costs of the public power utility.
The 2012 Operating Budget sets forth NYPA’s expected revenues and expenses for next year. The plan is consistent with Governor Cuomo’s emphasis on a fiscally disciplined, streamlined government that also gives importance to preserving and upgrading aging infrastructure and creating jobs from capital investments. The Power Authority’s contracting with engineering and construction firms and other entities in support of the operating plan is expected to help spur the creation of more than 1,000 private-sector construction jobs around the state.
“The Power Authority trustees have adopted a fiscally sound and balanced operating budget for next year that reflects a hard look by the Authority’s management at the organization’s priorities and costs,” said Michael J. Townsend, NYPA chairman. “The tough economic times call for sharper focus on optimizing productivity and making every dollar count. At the same time, we are making sure that our more than $3 billion in generation and transmission assets continue to bring great value to future generations of New Yorkers in providing clean, reliable and economical power to our various categories of customers. That’s what this budget is all about.”
“I want to commend NYPA’s senior management, led by Acting President and CEO Gil Quiniones, for putting together an operating budget that is suitable for these fiscally challenging times,” said John S. Dyson, a NYPA trustee. “Governor Cuomo has set a yardstick for all state agencies to work toward reducing costs while making the most of the available resources for maintaining and improving the state’s critical infrastructure. The 2012 NYPA budget is aligned with this pragmatic approach to the current fiscal realities and includes significant initiatives for supporting future economic competitiveness and growth in the state.”
The 2012 Operating Plan includes an Operation and Maintenance (O&M) Budget of $345 million and Capital and Energy Services Budgets totaling $367 million. Among the key O&M elements are the performance of nonrecurring maintenance work at various NYPA facilities, for $37 million, and scheduled maintenance outages, for $13 million; development of a life extension and modernization plan for refurbishing and upgrading the Authority’s decades-old transmission assets; the launching of Governor Cuomo’s Recharge New York Power Program, a new statewide economic development initiative; and $3.1 million in overhead cost reductions, offsetting increases in New York State pension and medical insurance costs.
The overhead reductions include cuts in NYPA payroll, by $1.3 million; in contract and consulting services, by $1.2 million; and in contributions, sponsorships and other miscellaneous costs, by $600,000.
The Capital Budget, one of the other major components of the 2012 Operating Plan, accounts for nearly $167 million. Approximately 70 percent of the Capital Budget will be in support of NYPA’s more than half-century-old Niagara and St. Lawrence-Franklin D. Roosevelt hydroelectric projects near Niagara Falls and in Massena, respectively, and for investments in the Authority’s statewide transmission system, a network of power lines that accounts for approximately one-third of the state’s high-voltage grid.
The capital expenditures include the start of a nine-year $460 million life extension and modernization (LEM) initiative at NYPA’s Lewiston Pump-Generating Plant at the Niagara Power Project; a continuing $281 million LEM project at St. Lawrence-FDR, scheduled for completion in 2013; and the carrying out of commitments under the successful federal relicensing several years ago of the two large hydroelectric projects, including ongoing recreational and environmental enhancements of public-use areas. In addition, the Capital Budget provides for initial costs of $2.6 million for startup tasks related to the relicensing of the NYPA’s Blenheim-Gilboa Pumped Storage Power Project, in the northern Catskills, whose operating license expires in 2019.
Consistent with Governor Cuomo’s clean energy focus, the Energy Services Budget, providing energy efficiency retrofits to public buildings and schools, at $200 million, represents a more than 30 percent increase over the 2011 level. With the investments in energy efficiency and clean energy projects recovered from customers over a multiyear period, the Power Authority shares in the savings of the public facilities and other entities receiving the installation upgrades until the costs are paid off over several years, after which the customers retain all of the savings.
The typical investments on new energy-saving equipment have included high-efficiency lighting; heating, ventilating and air-conditioning systems; electric motors; automated energy management systems; and more efficient boilers and chillers. Other clean energy technologies that NYPA has partnered on with public facilities in various parts of the state have ranged from fuel cells to solar power photovoltaic installations to introducing electric vehicles in government automotive fleets.
Over the last two decades, the Power Authority has financed nearly $1.5 billion on energy efficiency and clean energy initiatives at more than 3,800 public facilities, resulting in current annual savings to those tax-supported facilities of nearly $136 million and reduced greenhouse gas emissions of 826,000 tons a year. NYPA expects its investment this year in these energy services will surpass the $175 million amount that it undertook in 2010, reducing energy consumption by a projected 75,000 megawatt-hours per year. This would establish a record for the third consecutive year for the Authority’s annual expenditures on these initiatives, with 2012 expected to be another pace-setting year.
The Energy Services Program, which NYPA currently funds from the sale of commercial paper notes, is supportive of the state’s goals to reduce electricity use by 15 percent below projected levels by 2015 and to increase the proportion of electricity from renewable power sources to 30 percent of the total consumed in the state by the same year.
“The 2012 Operating Budget adopted by the NYPA trustees is a multidimensional plan supporting the Power Authority’s contributions to the energy, economic development and environmental goals of the Governor,” said NYPA Acting President Quiniones. “This detailed plan of action will help to enhance the reliability of the generating and transmission facilities under our stewardship and provide for continued increased investments in energy efficiency and clean energy technologies for making a real difference in lowering the state’s energy costs in meeting future energy demand. All of this is being undertaken with a vigilant eye on using our public resources as wisely and prudently as possible.”
The Power Authority trustees on Thursday also approved a four-year financial plan for the period 2012 through 2015, with the 2012 Operating Budget as the first year of the plan, and preliminary forecasts of revenues and expenditures provided for the remaining three years.
The four-year financial plan, which is being submitted to the Office of the New York State Comptroller as provided for under state regulations, is also available on the Power Authority Website.
■ The New York Power Authority uses no tax money or state credit. It finances its operations through the sale of bonds and revenues earned in large part through sales of electricity. ■ NYPA is a leader in promoting energy efficiency, new energy technologies and electric transportation initiatives. ■ It is the nation's largest state public power organization, with 17 generating facilities in various parts of New York State and more than 1,400 circuit-miles of transmission lines. ■ Approximately 80 percent of the electricity it produces is clean renewable hydropower. Its lower-cost power production and electricity purchases support hundreds of thousands of jobs throughout the state. ■For more information, www.nypa.gov.