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Roger B. Kelley President and Chief Executive Officer

Thomas J. Kelly Executive Vice President, General Counsel and Chief of Staff

Joseph Del Sindaco Executive Vice President and Chief Financial Officer

Gil C. Quiniones Executive Vice President – Energy Marketing and Corporate Affairs

Vincent C. Vesce Executive Vice President – Corporate Services and Administration

Steven J. DeCarlo Senior Vice President – Transmission

Angelo S. Esposito Senior Vice President – Energy Services and Technology

William J. Nadeau Senior Vice President – Energy Resource Management and Strategic Planning

Brian Vattimo Senior Vice President – Public and Governmental Affairs

Edward A. Welz Senior Vice President and Chief Engineer – Power Generation

James H.Yates Senior Vice President – Marketing and Economic Development

Thomas P. Antenucci Vice President – Project Management

Arnold M. Bellis Vice President, Controller

John M. Hoff Vice President – Procurement and Real Estate

Donald A. Russak Vice President – Finance

William V. Slade Vice President – Environmental, Health and Safety

Thomas Warmath Vice President and Chief Risk Officer

Daniel Wiese Inspector General and Vice President – Corporate Security

Brian C. McElroy Treasurer – Corporate Finance

Anne B. Cahill Corporate Secretary

Angela D. Graves Deputy Corporate Secretary

Dennis T. Eccleston Chief Information Officer

Arthur T. Cambouris Assistant General Counsel and Managing Attorney – Litigation

Joseph J. Carline Assistant General Counsel – Power and Transmission

Paul F. Finnegan Executive Director – Public and Governmental Affairs

John J. Suloway Executive Director – Licensing, Implementation and Compliance

Thomas A. Davis Director – Financial Planning

Joseph Leary Director – SENY – Public and Governmental Affairs

James F. Pasquale Director – Business Power Allocations, Compliance and Municipal and

Cooperative Marketing

Michael A. Saltzman Director – Media Relations – Public and Governmental Affairs

Denise D’Ambrosio Principal Attorney I – Finance and Risk Management

Marilyn J. Brown Manager – Market Pricing Analysis

Caroline G. Garcia Manager – Power Contracts

Lesly Y. Pardo Manager – Internal Audit

Mary Jean Frank Associate Corporate Secretary

Lorna M. Johnson Assistant Corporate Secretary

Chairman McCullough presided over the meeting. Corporate Secretary Cahill kept the Minutes.

3. Report from the President and Chief Executive Officer

President Roger Kelley also welcomed Trustee Curley to the Authority’s Board of Trustees. President Kelley encouraged Mr. Curley to call upon him if he had any questions. President Kelley then introduced and welcomed Mr. Gil Quiniones as the Authority’s new Executive Vice President – Energy Marketing and Corporate Affairs. He said that prior to coming to the Authority, Mr. Quiniones had served as Senior Vice President for Energy and Telecommunications for the New York City Economic Development Corporation and Chairman of the New York City Energy Policy Task Force. President Kelley said that he is pleased that the Authority is bringing Mr. Quiniones on board in this new and vitally important position. He said that Mr. Quiniones’ broad experiences in the utility industry and government in shaping enlightened energy policies are consistent with the Authority’s initiatives in supporting Governor Spitzer’s efforts for diversified energy supplies, clean air and growing jobs for the economy. President Kelley said that Mr. Quiniones’ contributions over the years in his former position strengthened the Authority’s partnership with New York City in meeting the electricity needs of schools, hospitals, subways, commuter trains, bridges, tunnels, airports, street lights and other public utilities and lowering their energy bills. He said that Mr. Quiniones will be responsible for overseeing four Authority business units that work together with customer groups and the public: Marketing and Economic Development, Public and Governmental Affairs, Energy Services and Technology and Supply Planning, Pricing and Power Contracts. In addition, Mr. Quiniones will assist in overseeing new Authority projects. President Kelley said that Mr. Quiniones’ position had been created in response to the Authority-commissioned Hay report, which had recommended such an executive-level position to oversee the Authority’s work with all of its external stakeholders. President Kelley added that he is very happy to have Mr. Quiniones here.

President Kelley said that work continues on the extremely important energy efficiency and clean energy collaborative process that has evolved as a result of the Governor’s “15 by 15” initiative. President Kelley said that the clean energy collaborative group, which includes the heads of all key authorities and State agencies, is meeting on a monthly basis. He said that Mr. Angelo Esposito is putting forth his best efforts in this regard to continue to promote and expand the Authority’s successful Energy Services and Technology program. President Kelley said that the Lieutenant Governor’s Renewable Energy Task Force, of which he is the Authority’s official member. President Kelley stated that each of the Task Force’s four subcommittees have each developed five recommendations, all 20 of which have been submitted to the Governor’s Office. These 20 recommendations are being looked at from regulatory, financial and public policy perspectives. In addition to Mr. Esposito, the following Authority staff will be working on these initiatives: Mr. Quiniones on the financial side, Ms. Agnes Harris on the workforce development, education and economic development side and Mr. John Osinski on the regulatory and legislative side, with Mr. Brian Warner as President Kelley’s designee.

President Kelley stated that he recently toured the Life Extension and Modernization project at the Blenheim-Gilboa Pumped Storage Project, which he said is moving along well. The project is on schedule with the second unit, allowing for some workarounds, as well as being on budget.

President Kelley then advised the Trustees that in the very near future the Authority would be issuing a Request for Proposals for the future energy requirements of the Authority’s New York City Governmental Customers, in view of the scheduled closure of the Poletti power plant in January 2010. He added that the options for the near term included seeking bids from power generating firms that already have permits to provide the additional capacity, while the long-term plans may include the potential for the construction of additional generating capacity.

Chairman McCullough said that he appreciates the tremendous energy that President Kelley is putting into his job and complimented him on his efforts on behalf of the Authority. He also said that the Trustees should feel free to ask President Kelley any questions they may have.

4. Power for Jobs Program – Extended Benefits

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve extended benefits for 38 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘4-A.’ These customers have been recommended to receive such extended benefits by the Economic Development Power Allocation Board (‘EDPAB’).

BACKGROUND

“In July 1997, the New York State Legislature approved a program to provide low-cost power to businesses and not-for-profit corporations that agree to retain or create jobs in New York State. In return for commitments to create or retain jobs, successful applicants receive three-year contracts for PFJ electricity.

“The PFJ program originally made 400 megawatts (‘MW’) of power available. The program was to be phased in over three years, with approximately 133 MW made available each year. In July 1998, as a result of the initial success of the program, the Legislature amended the PFJ statute to accelerate the distribution of the power and increase the size of the program to 450 MW.

“In May 2000, legislation was enacted that authorized another 300 MW of power to be allocated under the PFJ program. Legislation further amended the program in July 2002.

“Chapter 59 of the Laws of 2004 extended the benefits for PFJ customers whose contracts expired before the end of the program in 2005. Such customers had to choose to receive an ‘electricity savings reimbursement’ rebate and/or a power contract extension. The Authority was also authorized to voluntarily fund the rebates, if deemed feasible and advisable by the Trustees.

“PFJ customers whose contracts expired on or prior to November 30, 2004 were eligible for a rebate to the extent funded by the Authority from the date their contract expired through December 31, 2005.

“PFJ customers whose contracts expired after November 30, 2004 were eligible for rebate or contract extension, assuming funding by the Authority, from the date their contracts expired through December 31, 2005.

“Approved contract extensions entitled customers to receive the power from the Authority pursuant to a sale-for-resale agreement with the customer’s local utility. Separate allocation contracts between customers and the Authority contained job commitments enforceable by the Authority.

“In 2005, provisions of the approved State budget extended the period PFJ customers could receive benefits until December 31, 2006. Chapter 645 of the Laws of 2006 included provisions extending program benefits until June 30, 2007. In 2007, a new law (Chapter 89 of the Laws of 2007) included provisions extending program benefits until June 30, 2008.

“At its meeting of October 18, 2005, EDPAB approved criteria under which applicants whose extended benefits EDPAB had reduced for non-compliance with their job commitments could apply to have their PFJ benefits reinstated in whole or in part. EDPAB authorized staff to create a short-form application, notify customers of the process, send customers the application and evaluate reconsideration requests based on the approved criteria.

DISCUSSION

“At its meeting on October 30, 2007, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 38 businesses listed in Exhibit ‘4-A.’ Collectively, these organizations have agreed to retain more than 64,000 jobs in New York State in exchange for the rebates.

“The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘4-A’ in a total amount currently not expected to exceed $4.1 million. Staff recommends that the Trustees authorize a withdrawal of monies from the Operating Fund for the payment of such amount, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented. Staff expects to present the Trustees with requests for additional funding for rebates to the companies listed in Exhibit ‘4-A’ in the future.

FISCAL INFORMATION

“Funding of rebates for the companies listed on Exhibit ‘4-A’ is not expected to exceed $4.1 million. Payments will be made from the Operating Fund. To date, the Trustees have approved $98 million in rebates.

RECOMMENDATION

“The Executive Vice President and Chief Financial Officer and the Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibit ‘4-A.’

“The Executive Vice President, General Counsel and Chief of Staff, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Public and Governmental Affairs and I concur in the recommendation.”

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has recommended that the Authority approve electricity savings reimbursements to the Power for Jobs (“PFJ”) customers listed in Exhibit “4-A”;

NOW THEREFORE BE IT RESOLVED, That to implement such EDPAB recommendations, the Authority hereby approves the payment of electricity savings reimbursements to the companies listed in Exhibit “4-A,” and that the Authority finds that such payments for electricity savings reimbursements are in all respects reasonable, consistent with the requirements of the PFJ program and in the public interest; and be it further

RESOLVED, That based on staff’s recommendation, it is hereby authorized that payments be made for electricity savings reimbursements as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $4.1 million, and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

RESOLVED, That such monies may be withdrawn pursuant to the foregoing resolution upon the certification on the date of such withdrawal by the Vice President – Finance or the Treasurer that the amount to be withdrawn is not then needed for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

RESOLVED, That the Senior Vice President – Marketing and Economic Development, or his designee, be, and hereby is, authorized to negotiate and execute any and all documents necessary or desirable to effectuate the foregoing, subject to approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolutions, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

Mr. James Pasquale presented the highlights of staff’s recommendations to the Trustees. In response to a question from Chairman McCullough, Mr. Pasquale said that only one customer had gone through the reconsideration procedure offered to customers whose allocations are cut due to job shortfalls.

5. Power for Jobs Program and Energy Cost Savings Benefits - Compliance Review

The President and Chief Executive Officer submitted the following report:

“The Trustees are requested to approve modifications to the benefits for 25 Power for Jobs (‘PFJ’) customers and four Energy Cost Savings Benefit (‘ECSB’) customers as detailed in Exhibits ‘5-A’ and ‘5-B’ that have reported actual job numbers below their contractual commitments. The Trustees are requested to approve that these customers have their allocations reduced proportionately to their job shortfalls where appropriate. In addition, the Trustees are requested to approve that no modifications be made to the benefits for 28 PFJ customers and eight ECSB customers that, after having reported actual job numbers below their contractual commitments, have applied for and met the criteria to have their benefits reinstated in full through the reconsideration process.

BACKGROUND

“PFJ provides either power or electricity savings reimbursements to businesses and not-for-profit corporations that have agreed to retain or create jobs in New York State. Businesses may have their benefits reduced if they fail to meet their contractual commitments.

“ECSBs protect certain Authority power program customers from bill increases that resulted from higher market prices. These businesses may also have their benefits reduced if they fail to meet their contractual commitments.

“In 2007, a new law (Chapter 89 of the Laws of 2007) included provisions extending program benefits for both programs until June 30, 2008.

“At its meeting of October 18, 2005, the Economic Development Power Allocation Board (‘EDPAB’) approved reconsideration criteria under which applicants whose extended benefits EDPAB had reduced for non-compliance with their job commitments could apply to have their benefits reinstated in whole or in part. EDPAB authorized staff to create a short-form application, notify customers of the process, send customers the application and evaluate reconsideration requests based on the approved criteria.

DISCUSSION

“At its meeting on June 25, 2007, EDPAB recommended that the Authority’s Trustees approve the extension of benefits for 524 PFJ and 106 ECSB program customers through June 30, 2008. In light of a legislative mandate that current PFJ and ESCB program participants receive extended benefits with minimal disruption, a blanket extension was given subject to staff review of the customers’ applications to determine if they are in compliance with their prior contractual commitments.

“In the past, EDPAB would recommend that the Trustees reduce allocations before the customers had an opportunity to apply for reconsideration. To facilitate a more efficient process, due in part to the short period of time left before the programs expire, staff sent the reconsideration criteria mentioned above to those customers that had reported job numbers below their contractual commitments.

“Staff has completed its review of 53 PFJ customers and 12 ESCB customers whose applications indicated job commitment shortfalls as listed on Exhibits ‘5-A’ and ‘5-B.’ Staff received and reviewed 49 letters from these customers making the case to keep their full benefits.

“Twenty-eight PFJ and eight ECSB customers met the criteria in full and therefore staff recommends that these customers have no modification made to their benefits.

“Staff has determined that six PFJ customers have partially met the criteria and therefore should have their allocations reduced in part based on their job shortfalls, where appropriate.

“Finally, staff recommends that 19 PFJ customers and four ECSB customers that have either not submitted a request for reconsideration or have not met the criteria have their allocations reduced proportionately to their job shortfalls.

RECOMMENDATION

“The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees approve modifications to the benefits for 25 Power for Jobs customers and four Energy Cost Savings Benefit customers to have their benefits reduced proportionately to their job commitment shortfalls, where appropriate. In addition, the Trustees are requested to approve that no modifications be made to the benefits for 28 Power for Jobs customers and eight Energy Cost Savings Benefit customers that, after having reported actual job numbers below their contractual commitments, have applied for and met the criteria to have their benefits reinstated in full through the reconsideration process. The above recommendations are detailed in Exhibits 5-A’ and ‘5-B.’

“The Executive Vice President, General Counsel and Chief of Staff, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Public and Governmental Affairs and I concur in the recommendation.”

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has recommended that the Authority approve modifications, where appropriate, to 25 allocations for Power for Jobs (“PFJ”) customers and four for Energy Cost Savings Benefit (“ECSB”) customers that have applied to have their benefits extended and reported actual job numbers below their contractual commitments, as detailed in Exhibits “5-A” and “5-B”; and

WHEREAS, EDPAB has recommended that the Authority approve that no modifications be made to the benefits for 28 PFJ customers and eight ECSB customers that have applied to have their benefits reinstated after having applied for and met the approved reconsideration criteria n full, as detailed in Exhibit “5-A” and “5-B”;

NOW THEREFORE BE IT RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to negotiate and execute any and all documents necessary or desirable to effectuate the foregoing, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them thereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolutions, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

October 30, 2007
Exhibit “6-A1”

APPLICATION SUMMARY

Replacement Power

Company: Ashton Potter (USA) LTD

Location: Depew

County: Erie

IOU: New York State Electric and Gas Corporation

Business Activity: Manufacturer of United States Postal Service (USPS) stamped envelopes

Project Description: Ashton Potter has an existing facility in Amherst; however, the company will be expanding its operations by leasing a building in Depew. The project will include making building modifications and adding new equipment. The company will purchase and install new equipment, including presses, ink jet systems and other manufacturing equipment. It will also make building improvements, including foundation work, installing HVAC, compressors and humidifier systems.

Existing Allocation: None

Power Request: 712 kW

Power Recommended: 700 kW

Job Commitment:

Existing: 0 jobs

New: 48 jobs

New Jobs/Power Ratio: 69 jobs/MW

New Jobs -

Avg. Wage and Benefits: $31,000

Capital Investment: $2.93 million

Capital Investment per MW: $4.19 million/MW

Summary: Ashton Potter, primarily a print manufacturing company, produces and sells secured documents. The majority of its business results from a long-term contract with the USPS. It is one of three companies that print postal stamps. The company is competing for a new USPS project with a Virginia company that currently performs the work. A low-cost power allocation will help Ashton Potter reduce its cost and compete effectively. The Empire State Development Corporation has pre-approved a grant for this project.

October 30, 2007
Exhibit “6-A2”

APPLICATION SUMMARY

Replacement Power

Company: Great Lakes Concrete Products, LLC

Location: Hamburg

County: Erie

IOU: New York State Electric and Gas Corporation

Business Activity: Manufacturer of concrete products

Project Description: The project would include an expansion at the company’s existing site, including installing overhead cranes, rails and machinery for its mix operation. In addition, the company will install concrete forms and new generators. The expansion will also include new lighting and cooling systems.

Existing Allocation: None

Power Request: 110 kW

Power Recommended: 110 kW

Job Commitment:

Existing: 60 jobs

New: 46 jobs

New Jobs/Power Ratio: 418 jobs/MW

New Jobs -

Avg. Wage and Benefits: $47,000

Capital Investment: $2.0 million

Capital Investment per MW: $18.2 million/MW

Summary: This expansion project will help the company expand its manufacture of products used in road construction, parking lot expansions and home and building materials markets. The availability of low-cost power is essential to the economics and competitiveness of this project. It will help the company compete and be able to grow in western New York. This expansion will also have a positive effect on work produced at the company’s other western New York sites.

October 30, 2007
Exhibit “6-A3”

APPLICATION SUMMARY

Replacement Power

Company: Hurtubise Tire Inc

Location: North Tonawanda

County: Niagara

IOU: National Grid

Business Activity: Automotive tire recapping

Project Description: The project would include the purchase and renovation of a building in North Tonawanda. The company will install new and reconditioned state-of-the-art tire recapping equipment. The new equipment would include buffers, extruders, tire painters, air compressors, new lighting and other equipment associated with tire recapping. In addition, the company will modify and upgrade its warehouse.

Existing Allocation: None

Power Request: 232 kW

Power Recommended: 180 kW

Job Commitment:

Existing: 3 jobs

New: 15 jobs

New Jobs/Power Ratio: 83 jobs/MW

New Jobs -

Avg. Wage and Benefits: $29,000

Capital Investment: $1.1 million

Capital Investment per MW: $6.1million/MW

Summary: The availability of low-cost power is essential to the economics and competitiveness of this project. The company would be competing with tire recappers in other states, as well as foreign tire manufacturers. The company is also considering alternative locations for this project in Bradford and Erie, Pennsylvania. A low-cost power allocation would help Hurtubise build its case to locate this new business in western New York. Niagara County will assist the company with a $200,000 loan and it has qualified for real property tax exemptions on its building improvements.

October 30, 2007
Exhibit “6-A4”

APPLICATION SUMMARY

Replacement Power

Company: Niagara Sheets, LLC

Location: Wheatfield

County: Niagara

IOU: National Grid

Business Activity: Manufacturer of corrugated sheets

Project Description: The project includes the purchase of a building and an expansion of approximately 23,000 square feet. All new equipment will be installed for the manufacturing, handling, banding, tagging and loading of the company’s product. In addition, new computer hardware and software for order entry, costing, scheduling, accounting, inventory, purchasing and billing will be installed.

Existing Allocation: None

Power Request: 1,000 kW

Power Recommended: 1,000 kW

Job Commitment:

Existing: 0 jobs

New: 64 jobs

New Jobs/Power Ratio: 64 jobs/MW

New Jobs -

Avg. Wage and Benefits: $35,000

Capital Investment: $12.5 million

Capital Investment per MW: $12.5 million/MW

Summary: Niagara Sheets was formed in 2007 to produce corrugated fiberboard sheets used in manufacturing boxes. The company is a joint venture owned by Jamestown Container Corp., Smurfit- Stone Container Enterprises and Norampac Industries, Inc. The availability of low-cost power is essential to the economics and competitiveness of this project, which will supply cardboard sheets for Norampac’s Lancaster factory and other customers. The company is in the process of working with local and state economic development agencies to apply for various project incentives.

7. Request to Approve Extensions to the Terms of Service for Nine Existing Expansion Power Customers

The President and Chief Executive Officer submitted the following report:

Summary

“The Trustees are requested to approve extensions to the terms of service for nine allocations of Expansion Power (‘EP’) totaling 11,100 kW to the nine companies listed in Exhibit ‘7-A,’ all of which are existing customers. In addition, the Trustees are requested to approve a reduction in the allocation and job commitments of one of the customers as detailed below.

BACKGROUND

“Under Section 1005(13) of the Power Authority Act, the Authority may contract to allocate or reallocate directly, or by sale for resale, 250 MW of firm hydroelectric power as EP to businesses within the state that are located within 30 miles of the Niagara Power Project (‘Project’), provided that the amount of power allocated to businesses in Chautauqua County on January 1, 1987 (19,732 kW) continues to be allocated in such county.

“Each application for an EP allocation must be evaluated under criteria that include, but need not be limited to, those set forth in Public Authorities Law Section 1005(13)(a), which sets forth eligibility criteria, and (b), which sets forth revitalization criteria.

DISCUSSION

3M Company (‘3M’)

“3M’s Tonawanda facility, located in Erie County, is part of 3M’s Home Products Division. The plant has been in existence for approximately 52 years. The main products manufactured at this site are cellulose sponges and sponge abrasive laminate sponges. Over the years, the company has spent large amounts of capital on both production machinery and infrastructure projects at this site. The company’s manufacturing process uses a large amount of electricity that adds a significant cost to production expenses.

“The manufacturing operations at this site are significantly more affected by electric rate structure than other 3M sites due to the process design. Cellulose sponge is cooked with electricity to create the final product. Energy cost is a significant factor when expansion projects are considered. Ultimately, the continuation of lower-cost electricity will stabilize the company’s job base through reduced plant operating costs. Cost-effective production capacity can then be leveraged to increase market share.

“In the last 18 months, 125 engineering projects costing approximately $10 million were completed at the plant. The plant undergoes an annual capital forecasting process that targets further investment in plant efficiency, occupational safety and health systems and technology, manufacturing capacity and site infrastructure.

“The EP contract extension is considered a necessity from 3M’s perspective to maintain a favorable manufacturing position for its facility in western New York. With low-cost EP, the company can stabilize and/or reduce its electricity costs and help secure the facility’s future. 3M’s 500 kW EP allocation terminated on June 30, 2007. Since then, the Authority has been serving 3M on a month-to-month basis.

“Staff recommends that the Trustees approve an extension of the term of service for the 500 kW allocation for five years. 3M has been above its job commitment and will commit to maintaining its current employment level of 330 jobs.

C&S Wholesale Grocers Inc. (‘C&S’)

“C&S, located in Cheektowaga, Erie County, has been providing warehousing and distribution services to supermarket chains, independent grocers and military facilities across the nation for more than 85 years. C&S entered western New York in 2002 when it entered an agreement with Tops Markets to purchase its distribution facilities in Lancaster, New York, Cheektowaga, New York and Cleveland, Ohio. C&S currently supplies Tops Markets, Martins’ and other local grocery stores from these three locations.

“C&S is dedicated to the Empire State. In addition to its western New York presence, C&S also operates more than 1.5 million square feet of warehouse space on Long Island and in the Hudson Valley. Statewide, the company employs more than 1,600 workers.

“Unlike some types of facilities, frozen-food warehouses have to maintain operations regardless of sales. The Cheektowaga facility must keep products at temperatures as low as 15 degrees below zero. The company maintains a fleet of electric forklifts to keep products moving onto their shelves from suppliers’ freezer trucks and from their shelves onto their grocery customers’ waiting trucks. The battery chargers for these forklifts are in constant operation. This keeps the C&S’s electric demand and consumption constantly high around the clock and throughout the year. After lease and property tax expenses, electricity is the highest occupancy expense at the facility. Electricity costs account for approximately 20% of the freezer’s occupancy costs.

“C&S has 45 full-time-equivalent employees at this location. The company’s goal, as it rebuilds shipment volumes at this location is to bring full-time staffing levels to between 50 and 55 employees.

“The contract for C&S’s 300 kW allocation of EP, with a commitment of 50 jobs, at its Cheektowaga facility expired on January 31, 2006. Since then, the Authority has been serving C&S on a month-to-month basis.

“Staff recommends that the Trustees approve an extension of the term of service for the 300 kW allocation for five years with an employment commitment of 50 jobs.

Delphi Automotive Systems (Amherst) (‘Delphi’)

“Delphi produces plastic molded components, primarily radiator tanks, for the automotive industry at its facility in Amherst, Erie County. On October 8, 2005, Delphi filed voluntary petitions for business reorganization under Chapter 11 of the U. S. Bankruptcy Code. Delphi took this action to preserve the value of the company and complete the transformation plan designed to resolve its existing legacy issues and the resulting high cost structure of its U. S. operations. As this reorganization process continues, the U. S. Delphi plants, offices and other facilities will continue to operate, including the Amherst injection molding facility.

“As part of the transformation plan, Delphi must realign its global product portfolio and manufacturing footprint to preserve the core business. Each individual Delphi plant site will be evaluated within the next several months as to the successful progress to its revitalization plan, and the future viability of its site.

“To remain viable, the Delphi Amherst Injection Molding facility must continue to meet its commitments with respect to cost. The extension of the company’s contract for 500 kW of EP for 124 jobs will help Delphi maintain costs and is vital for the company to remain in business.

“Delphi’s current EP allocation has had a direct impact on lowering its overhead costs, enabling the company to competitively quote on new business with positive results. In the last few years, Delphi has been awarded new business and existing business that was running in other molding shops throughout the country. Booking this business allowed Delphi to add equipment to the facility. Delphi is competing in a global market and it is a challenge to stay competitive. It has become critical to have avenues to offset rising operational costs. The EP allocation is one of these avenues. Currently, approximately 90% of the product manufactured at the Amherst site feeds the assembly lines at Delphi’s Lockport Facility.

“In 2005 and 2006, a new Cure in Place Gasket (‘CIPG’) Line and four plastic injection molding machines that cost $1.8 million were added to the operation. In 2006, new pallets that cost $60,000 were purchased for the CIPG Line; these pallets reduce scrap and improve productivity levels.

“Delphi has been meeting its contractual commitments, but its contract for its EP allocation terminated on September 30, 2006. Since then, the Authority has been serving Delphi on a month-to-month basis.

“Staff recommends that the Trustees approve an extension of the term of service for the 500 kW allocation for five years with an employment commitment of 124 jobs.

Dunkirk Specialty Steel, LLC (‘DSS’)

“DSS is a wholly owned subsidiary of Universal Stainless & Alloy Products, Inc. (‘USAP’). The company is located in Dunkirk, Chautauqua County. DSS manufactures round and shaped bars, coiled rods and wire products from specialty stainless steel billets produced by USAP in Bridgeville, PA. At present, DSS is producing and delivering nearly 1.7 million pounds of these products to various customers each month; that total is increasing year by year. These products serve a variety of end-markets, such as petrochemical, mining, aerospace, nuclear and power generation, medical, transportation, marine and machine building.

“Domestic manufacturers of stainless steel products face significant challenges, especially due to foreign competition. At the Dunkirk facility, electrical costs as a percentage of operational/production costs averaged 10% over the past five years. DSS’s present EP allocation gives the company the ability to combat foreign producers’ cost advantages.

“DSS’s EP allocation is essential for business growth and an integral part of existing plans to modernize its hot rolling technology. Building improvements at the site are ongoing to prepare for a new production line start-up in January 2008. This investment totals nearly $4 million in equipment alone and will increase bar production capacity by 15-20%, requiring the hiring of several new employees. The company is actively recruiting in all departments, with the goal of reaching 180 jobs by the end of 2007.

“The contract for DSS’s 6,800 kW EP allocation for 250 jobs expired on December 31, 2006. Since then, the Authority has been serving DSS on a month-to-month basis. The company has never fully utilized its allocation, peaking at slightly more than 5,900 kW in early 2006.

“Staff recommends that the Trustees reduce the allocation to 5,800 kW, lower DSS’s employment commitment to 180 and approve an extension of the term of service for the 5,800 kW allocation for five years.

Fairbank Reconstruction Corp. d/b/a Fairbank Farms (‘Fairbank’)

“Fairbank is a medium-sized USDA-inspected ground beef processing facility located in Ashville, Chautauqua County. This food-processing business remains the only locally owned and operated ground beef facility serving the retail supermarket trade in the Northeast. The business survived a devastating fire in 1989 and with the assistance of the Authority, and the determination of the Fairbank family, has developed into one of the industry-leading suppliers of modified-atmosphere packaged fresh ground beef and ground beef patty products. Fairbank’s annual new equipment expenditures have averaged more than $800,000 a year since 2003. The company plans to add a new product storage freezer and associated dock space to the facility in fall 2008 at an estimated cost of $1.2 million.

“Today, Fairbank produces approximately 1.1 million pounds per week of fresh case-ready ground beef in modified-atmosphere packaging and ground beef chubs for sale to retail distributors and their stores. The company’s sales efforts are geared to adding new customers to fill the capacity created during its last expansion. Fairbank’s sales have increased 24% in 2007 and are expected to increase in 2008-09 by an additional 25%, which would move total volume to 1.6 million pounds/week. The increase in employment from 2006 to 2009 will be in excess of 40 full-time positions. Fairbank’s EP allocation significantly helps the company’s competitive edge. Without the allocation, jobs would have to be redirected to another company facility. Since 1990 (following the plant fire), the company’s workforce has grown from 30 to an annual average of 110 employees.

“Fairbank’ contract for a 700 kW EP allocation with a commitment of 100 jobs at its Ashville facility expired on November 20, 2005. Since then, the Authority has been serving Fairbank on a month-to-month basis.

“Staff recommends that the Trustees approve an extension of the term of service for the 700 kW allocation for five years with an employment commitment of 110 jobs.

International Imaging Materials, Inc (‘IIMAK’)

“IIMAK, an international business based in Amherst, Erie County, manufactures thermal transfer ribbons and associated products for the printing industry. In addition, the company manufactures and distributes glass imaging products, contract inks and coatings and distributes other printing supplies. The Amherst site includes corporate offices for executive management, sales, marketing and finance, as well facilities for direct manufacturing and distribution of IIMAK’s products.

“The company continues to explore ways to expand its business to new markets, either as a contract manufacturer or new product developer, and anticipates future acquisitions to help facilitate its growth, which will result in new jobs in Amherst. IIMAK continues to invest in its business to remain competitive and expand into new markets. The facility has remained state of the art through capital investment over the last 10 years. The company has spent more than $15 million on capital investment since 2001. IIMAK recently expanded into the glass decorating market and has modified parts of its plant for this business unit. To date, the company has spent $600,000 on clean rooms and equipment such as printers, laminators and tempering ovens to support this new business.

“IIMAK’s marketplace is highly competitive. Low-cost power is essential to the company’s operation being cost effective. Hydropower has allowed IIMAK to effectively automate and update its equipment and to stay competitive and remain in New York. Without its EP allocation, the company’s automation projects would not be cost effective. IIMAK continues to look for growth opportunities in related manufacturing areas with a goal of bringing increased production to Amherst to take advantage of the company’s core business knowledge and manufacturing capability. EP is critical to this cause. The company currently employs 393 people.

“The contract for IIMAK’s 1,250 kW EP allocation for 380 jobs expired on June 30, 2007. Since then, the Authority has been serving IIMAK on a month- to-month basis.

“Staff recommends that the Trustees approve an extension of the term of service for the 1,250 kW allocation for five years with an employment commitment of 393 jobs.

Special Metals Corporation (‘SMC’)

“SMC, founded in 1952, is a world leader in super-alloy technology located in Dunkirk, Chautauqua County. The company pioneered the vacuum induction melting method to produce super-alloys for military and civilian use in jet engine turbines. Nearly every jet engine in the free world has some alloy in it produced by SMC. Due to the recession in the aerospace industry and the collapse of Enron, SMC went into bankruptcy in 2002, significantly dropping its employment level. Since then, the company has restructured and emerged from bankruptcy at the end of 2003. The industry has improved and SMC has dramatically recovered lost business. In 2005, Precision Castparts Corporation (‘PCC’) acquired SMC with plans to increase investment and employment at the facility.

“SMC recently completed a significant expansion project. The company spent approximately $35 million to install a GFM Rotary Forge Press. The equipment itself cost about $27 million, and the building expansion to accommodate the equipment cost an additional $8 million. This investment is expected to double SMC’s forging capacity and improve material yield by 5%. The new capital investment should enable the company to increase market share in the high-tech metals alloying business and provide a measure of job security for employees at the company’s Dunkirk and New Hartford, New York facilities.

“The aerospace market is increasingly competitive. The engine manufacturers that use SMC’s alloys continuously demand lower-cost products to ensure their own viability. Electricity represents about 14% of SMC’s total variable cost at the Dunkirk site. SMC’s management believes that its EP allocation has been an important factor in enabling the company to competitively price its products in the marketplace. An extension of the EP contract will be key in enabling SMC to stay competitive with other specialty alloy manufacturers.

“The contract for SMC’s 1,000 kW EP allocation for 81 jobs expired on February 28, 2007. Since then, the Authority has been serving the company on a month-to-month basis.

“Staff recommends that the Trustees approve an extension of the term of service for the 1,000 kW allocation for five years with an employment commitment of 81 jobs.

The Red Wing Company (‘Red Wing’)

“Production operations began for Red Wing at its site in Fredonia, Chautauqua County, in the early 1900s when fruit juices produced from local crops were packaged and marketed under the ‘Red Wing’ label. In the late 1920s and early 1930s, ketchup and jam and jelly production were added. Presently, the company operates four distinct production departments: Peanut Butter, Preserves and Jelly, Tomato and Salad Dressing. Within these departments are 10 production lines that produce a broad variety of products: peanut butter, jelly, preserves, spaghetti sauce, salsa, chili sauce, cocktail sauce, barbeque sauce, mayonnaise, pourable salad dressing, pancake syrup, chocolate syrup, marinade and Bloody Mary mixes.

“The full-time staffing level is currently at 637, with 155 administrative employees and 482 hourly employees. The average wage is approximately $18 per hour, plus 43% added on for benefit costs.

“Red Wing’s parent company, Ralcorp, has spent more than $20 million on capital invested in the Fredonia facility over the last six years, primarily to improve productivity in an effort to maximize output with available resources. Several million dollars have been spent during this time on building infrastructure projects, namely, replacing and repairing roofing and floor systems throughout the facility.

“The current EP allocation has helped the company keep variable overhead spending at reasonable levels in the midst of significant price increases over the last several years. This is especially true with respect to utility costs and packaging material (plastic) costs, as the oil and natural gas markets have driven other prices higher, namely electricity.

“Continued availability of this allocation is vital to Red Wing’s maintaining market share, since the company must remain at par with competing companies in other states that benefit from lower utility costs. Recently, a study conducted by an international energy management company for Ralcorp found that Red Wing is paying nearly two-thirds more in electrical demand charges for the New York facilities than the 10 biggest electrical users throughout Ralcorp’s various other divisions. The manufacturing sites continue to compete for production volume within the company. Red Wing’s EP allocation helps offset the disparity in demand charges and thus will help keep production volume at the Fredonia site, keeping jobs in western New York. Current employment is 510 jobs.

“The contract for Red Wing’s 750 kW EP allocation for 440 jobs at its Dunkirk facility expired on May 31, 2007. Since then, the Authority has been serving the company on a month-to-month basis.

“Staff recommends that the Trustees approve an extension of the term of service for the 750 kW EP allocation for five years with an employment commitment of 440 jobs.

Tulip Corporation (‘Tulip’)

“Tulip, located in Niagara Falls, Niagara County, has been in operation since the turn of the last century. The company was part of the Prestolite Battery family until 1985, when Tulip purchased the facility. The plant has a long history of manufacturing automotive battery cases, covers and safety vents. Today it is Tulip’s core business, but Tulip has also expanded into manufacturing recycled polypropylene and polyethylene materials that are both used internally to manufacture new battery components out of 100% recycled materials and sold to various outside customers. Tulip plans to invest at least another $1 million over the next 2-5 years to grow its business further.

“The expansion into manufacturing with recycled materials has increased Tulip’s demand for electricity significantly. Currently electric costs represent 28.2% of the company’s material sales cost and 7.2% of its battery component sales cost. Therefore, Tulip’s EP allocation is vital to its operation.

“The contract for Tulip’s 300 kW EP allocation for 122 jobs at its Niagara Falls facility expired on October 31, 2005. Since then, the Authority has been serving Tulip on a month-to- month basis. With the new product expansion that will occur over the next 2-4 years, Tulip can commit to an employment level of 110 employees.

“Staff recommends that the Trustees approve an extension of the term of service for the 300 kW allocation for five years.

“The extensions requested above will help maintain costs and enable these nine companies to compete more effectively. In addition, they will further secure employment levels in Western New York.

“The request was reviewed in accordance with the applicable criteria set forth in Part 460 of the Authority’s Rules and Regulations governing the Allocation of Industrial Power (21 NYCRR Part 460 (1988)).

RECOMMENDATION

“The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees approve extensions to the terms of service for nine allocations of Expansion Power totaling 11,100 kW to the nine companies listed in Exhibit ‘6-A’ and approve a reduction in the allocation and jobs commitment for one of the customers as detailed above.

“The Executive Vice President, General Counsel and Chief of Staff, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That the Trustees find that staff’s review supports an extension of 11,100 kW of Expansion Power as detailed in Exhibit “A,” that is hereby approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Trustees approve a reduction in the allocation and jobs commitment for Dunkirk Specialty Steel, LLC as described in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Senior Vice President – Marketing and Economic Development, or his designee, be, and hereby is, authorized to negotiate and execute any and all documents necessary or desirable to effectuate the foregoing, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

8. Transfers of Industrial Power

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve the transfer of power allocations for six existing customers that have either changed their names for various business reasons and/or moved the location of their business.

BACKGROUND

“Three companies have requested that the Authority grant approval of their requests for the continued delivery of Authority power allocations to facilities that have all gained prior approval for an allocation with pre-existing company names and/or ownership. The present owners of these same facilities are now requesting that the Authority authorize the continuation of the power allocations granted to the previous company names and ownership associated with these facilities. One company requested that the Authority grant approval of its request to transfer its allocation to a company that has agreed to maintain the current business operation and commit to the existing terms of the contract; however, the new owners are changing the company name. Two companies requested that the Authority grant approval of their request to transfer their allocations to another facility. The reasons for such transfers are described below.

“The Trustees have approved transfers of this nature at past meetings.

DISCUSSION

“The proposed transferees are as follows:

“Alcan Packaging Food & Tobacco Inc. (‘Alcan’), located in New Hyde Park, Nassau County, has been in business for more than 60 years. Alcan manufactures flexible plastic packaging primarily used in the food industry. The company, originally Cellu-Craft Inc., was awarded an 850 kW Economic Development Power (‘EDP’) allocation for 141 jobs by the Trustees at their meeting of January 23, 1991. At their September 23, 2003 meeting, the Trustees recognized the company’s name change from Lawson Marden Label, Inc. to the legal name of its parent company, Alcan Packaging Food & Tobacco Inc. At their September 30, 2005 meeting, the Trustees extended the allocation to the end of 2006 and granted the company Energy Cost Savings Benefits (‘ECSBs’) for the same period in exchange for 175 jobs. At their November 28, 2006 meeting, the Trustees extended the allocation from January 1, 2007 through June 30, 2007 and granted the company ECSBs for the same period in exchange for 170 jobs. At their June 26, 2007 meeting, the Trustees extended the allocation through June 30, 2008 and granted the company ECSBs for the same period in exchange for 163 jobs. Alcan has moved most of its manufacturing to a modern facility in Edgewood, Long Island that can handle the 10 new color printing presses and slitters required for its customers. Alcan requests that the 850 kW EDP allocation be transferred to its Edgewood facility, where the company will continue to honor all of the terms and commitments of its contract with the Authority.

“The NewYork chapter of the American Cancer Society (‘ACS’), formerly located on West 56^th Street in Manhattan, New York County, moved its office to West 32^nd Street in August 2007. The New York chapter is part of the nationwide community-based not-for-profit organization dedicated to eliminating cancer as a major health problem through prevention and diminishing suffering through research, education, advocacy and services such as counseling, doctor referral and home care assistance. ACS was awarded a 100 kW Power for Jobs (‘PFJ’) allocation with 113 jobs by the Trustees at their April 28, 1998 Trustees meeting. The contract was extended, with 99 jobs, by the Trustees at their April 17, 2001 Trustees meeting. ACS chose to take the rebate option in 2005, and was approved for 100 kW and 114 jobs through the end of 2006, by the Trustees at their November 29, 2005 meeting. ACS continued with the rebate for January 1, 2007 through June 30, 2007, with 80 kW and 83 jobs, as approved by the Trustees at their meeting of November 28, 2006. The rebate option has been extended through June 30, 2008, with 80 kW and 91 jobs, as approved by the Trustees at their meeting of June 26, 2007. ACS requests that the PFJ rebate benefit be transferred to its West 32^nd Street office, where ACS agrees to comply with all obligations associated with its allocation.

“Ferro Electronic Materials Inc. (‘Ferro’), located in Niagara Falls, Niagara County, since 1906, is the premier supplier of ceramic dielectric powders used to make capacitors used by both the military and commercial electronics industries. Furthermore, Ferro is a worldwide supplier of zircon, zirconia and rutile base ceramics used in tiles and high-performance refractories. TAM Ceramics, Inc. (‘TAM’) was awarded four hydro allocations, one Expansion Power (‘EP’) and three Replacement Power (‘RP’), from the early 1960s through the 1990s. The oldest allocation is a 7 MW RP allocation with 147 jobs. Then TAM received a 3 MW EP allocation with 224 jobs, an RP allocation of 1MW with 257 jobs and finally an RP allocation of 3,115 kW with 306 jobs. At their September 30, 1997 meeting, the Trustees reduced the employment commitments for the 3MW EP allocation and 3,115 kW RP allocation for productivity improvements made to 220 jobs and 302 jobs, respectively. Ferro purchased TAM in 1999 and the Trustees transferred the EP allocation (RP allocations contractually do not require permission for transfer if substantially all the assets were sold) to Ferro at their October 26, 1999 meeting. At their September 26, 2000 meeting, the Trustees reduced the 3,115 RP allocation’s employment level for productivity improvements to 276 jobs. At their April 24, 2007 meeting, the Trustees reduced the 3MW EP allocation, the 3,115 kW RP allocation and the 1MW RP allocation due to Ferro’s not meeting employment commitments to 2,100 kW, 1,700 kW and 600 kW, respectively, with a revised employment commitment of 152 jobs. Ferro is in the process of selling all its assets at its Niagara Falls location to All-American Holdings, LLC and/or its affiliates (‘AAH’). AAH plans to operate the same business for the long term and has plans to grow. AAH will hold the business as a newly formed LLC and plans to change the name of the newly formed company back to TAM Ceramics. AAH will honor all existing contract terms and conditions stated in the Ferro contracts, with plans to build up the company over the next three years to meet the employment thresholds in those contracts. Ferro requests that the Trustees transfer its hydro allocations from the Niagara facility to AAH.

“Homogenous Metals Inc. (‘Homogenous Metals’), located in Clayville, Oneida County, is a wholly owned subsidiary of United Technologies Corporation. Homogenous Metals was founded in the mid-1960s. The company manufactures super alloy metal powders used in military and commercial aircraft engines, in addition to the space shuttle engines. The company is changing its name only, without any ownership change, to HMI Metal Powders. The Trustees approved 500 kW PFJ allocation with 109 jobs at their January 27, 1998 meeting. The allocation was extended, with 518 jobs, by the Trustees at their meeting on January 30, 2001. At their February 23, 2005 meeting, the Trustees extended the allocation, with 108 jobs, through December 31, 2005. At their September 20, 2005 meeting, the Trustees extended the allocation, with 109 jobs, through December 31, 2006. At their October 24, 2006 meeting, the Trustees extended the allocation was extended through June 30, 2007. At their June 26, 2007 meeting, the Trustees extended the allocation, with 106 jobs, through June 30, 2008. The company requests that the Trustees approve its name change for contractual purposes.

“Orion Bus Industries, Inc. (‘Orion’) located in Oriskany, Oneida County, has been in business since 1982, and manufactures heavy-duty state-of-the-art transit buses. The Trustees approved the company for a 700 kW EDP allocation with 463 jobs at their August 28, 1990 meeting. At their September 28, 1998 meeting, the Trustees approved a 300 kW PFJ allocation with 775 jobs. At their April 27, 1999 meeting, the Trustees adjusted the PFJ allocation employment commitment to 644 jobs. The Trustees extended the PFJ allocation at their April 17, 2001 meeting. At their February 23, 2005 meeting, the Trustees extended the PFJ allocation, with 596 jobs, through December 31, 2005. The Trustees extended the PFJ allocation, with 250 kW and 508 jobs, through December 31, 2006 at their meeting on September 20, 2005. At their meeting of January 31, 2006, the Trustees reinstated the PFJ allocation to 300 kW. The Trustees extended the PFJ allocation, with 523 jobs, through June 30, 2007 at their November 28, 2006 meeting and then extended it through June 30, 2008, with 571 jobs, at their June 26, 2007 meeting. The EDP allocation was extended through December 31, 2006 by the Trustees at their September 20, 2005 meeting and Orion was granted ECSBs for this period, with an employment commitment of 507 jobs. The EDP allocation was extended through June 30, 2007, with ECSBs, by the Trustees at their November 28, 2006 meeting, with 523 jobs. At their June 26, 2007 meeting, the Trustees extended the EDP allocation through June 30, 2008 with ECSBs, with 571 jobs. The company requests that the Trustees change their name for contractual purposes to DaimlerChrysler Commercial Buses North America Inc. The company changed its name only, without any ownership change, in September 2006.

“Silver Eagle Technology Inc. (‘Silver Eagle’) located in North Tonawanda, Niagara County, started in Pennsylvania in 2003. The company recovers tungsten carbide and cobalt raw materials from used carbide tools and worn parts. The powders produced are then reused by the carbide manufacturers. The Trustees approved a 600 kW RP allocation at their meeting on September 26, 2006 in return for a commitment to create 15 jobs. Silver Eagle has not taken its allocation down yet. The company wanted to have a New York corporation run the business instead of a Pennsylvania corporation, so it established a New York corporation called Bestung Carbide, Inc. The ownership has not changed. The company will honor all commitments associated with its RP allocation. Silver Eagle requests that the Trustees transfer the allocation to the new corporation.

RECOMMENDATION

“The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees approve the transfer of power allocations for three existing customers that have changed their names or transferred their allocations for various business reasons, approve the transfer of two customers’ existing allocations to their new facilities and approve the transfer of one customer’s allocations to a company that has agreed to maintain the current business operation and commit to the existing terms of the contracts, although the new owner is changing the company name.

“The Executive Vice President, General Counsel and Chief of Staff, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That the Authority hereby authorizes the transfers of six industrial power allocations in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

9. Economic Development Power Programs – Service Tariff Amendments – Notice of Adoption

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve amendments to the Authority’s tariffs for Economic Development Power (‘EDP’), High Load Factor (‘HLF’) and Industrial Economic Development served by Municipal Distribution Agencies (‘IED/MDA’) (collectively, the ‘Power Programs’) to increase rates for certain of the Power Program customers that have been recently authorized by the Trustees to receive Energy Cost Savings Benefit Awards (‘ECSB Awards’). These customers have long-term price commitments that expire on October 31, 2007. This action is necessary to be in compliance with legislation passed in June 2007 that extends the ECSB Awards to these customers. In the absence of this legislation, they would be billed at market supply costs as of November 1, 2007. The proposed rates reflect the increased costs incurred by the Authority to serve these Power Program customers, partially offset by receipt of such ECSB Awards.

BACKGROUND

“In June 2007, the Legislature passed the second extension of the ECSB Awards. The amendment was signed into law by the Governor on June 29, 2007. The legislation extended the ECSB Awards expiration date from June 30, 2007 to June 30, 2008. ECSB-eligible customers are those whose power prices may be subject to increase before June 30, 2008.

“At their June 26, 2007 meeting, the Trustees took steps to implement the 2007 amendment to the Public Authorities Law. Specifically, the Trustees approved contract extensions for 66 Power Program customers to June 30, 2008; these customers’ contracts were to have expired before that date. Second, the Trustees approved the Economic Development Power Allocation Board (‘EDPAB’) recommendation that all Power Program customers be approved for ECSB benefits, subject to subsequent verification. Finally, that agenda item noted that those customers with price protection expiring on October 31, 2007 would be subject to an 11.3% delivered rate increase effective November 1, 2007 (the subject of today’s item) consistent with the October 19, 2005 Trustees’ action that approved an 11.3% delivered rate increase for the initial ECSB recipients.

DISCUSSION

“At their July 31, 2007 meeting, the Trustees authorized the Corporate Secretary to file a Notice of Proposed Rulemaking of the Authority’s proposed action to amend the tariffs with the New York State Department of State for publication in the New York State Register. On August 14, 2007, the customers newly eligible for ECSB awards were provided written notice of both the proposed rates and a public forum on September 18, 2007 in the Authority’s White Plains office. On August 15, 2007, the Notice of Proposed Rulemaking and a notice concerning the public forum were published in the State Register. At the September 18^th public forum, no party made any comments on the record. In addition, no written comments were received during the statutory comment period, which expired on Monday, October 1, 2007.

“Exhibit ‘9-A’ shows the rates for the newly approved ECSB customers that have pricing protection ending October 31, 2007. These rates will be effective November 1, 2007 through June 30, 2008. The applicable tariffs are: ST-1, ST-1S, ST-35 and ST-50. In the absence of either another program extension or the implementation of a permanent power program, customers that have contracts beyond June 30, 2008 will be subject to market-based supply costs beginning July 1, 2008.

“Since the beginning of the ECSB Awards, Authority staff has monitored the negative differential between the costs to the Authority for purchased power to supply the customers and customer revenues at the ECSB rates. These customer-related costs and the offsetting hydro revenues have been periodically reported to senior management. From the inception of the ECSB Awards in November 2005 through July 2007, customer-related costs have been $37.4 million. This is offset by $44.6 million of hydro revenues, bringing the total net to a positive $7.2 million. With the addition of 32 new customers with ECSB Awards, customer-related costs will increase, while the source of hydro revenues will remain constant. Staff will continue to track and report the net results and anticipates that future withdrawals of monies from the Operating Fund may be required for the payment of such awards. The withdrawals should be made provided that such monies are not needed for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations.

FISCAL INFORMATION

“The 11.3% rate increase effective November 1, 2007 is expected to produce an estimated $3.7 million for the eight-month period through June 30, 2008. The total cost to the Authority for the same period is estimated to be $5.4 million.

RECOMMENDATION

“The Manager - Market and Pricing Analysis recommends that the attached schedules of tariff amendments be approved.

“The Manager - Market and Pricing Analysis further recommends that the Corporate Secretary be authorized to publish a Notice of Adoption of this action in the New York State Register.

Marilyn Brown presented the highlights of staff’s recommendations to the Trustees. In response to a question from Chairman McCullough, Ms. Brown said that the Authority will be absorbing $1.7 million in costs as a result of these service tariff amendments.

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

WHEREAS, on July 31, 2007, the Trustees authorized the Corporate Secretary to file a Notice of Proposed Rulemaking to amend certain tariffs to increase total rates by 11.3% effective November 1, 2007 and approve funding of the Energy Cost Savings Benefit (“ECSB”) Awards in order to offset the cost of electrical commodity supply incurred for serving customers of the Authority’s Economic Development Power, High Load Factor and Industrial Economic Development programs; and

WHEREAS, such notice was duly published in the New York State Register on August 15, 2007 and more than 45 days have elapsed since such publication; and

WHEREAS, no public comments were received at the public forum held on September 18, 2007 and no written comments in response to the proposed action have been received by the Authority;

NOW THEREFORE BE IT RESOLVED, That the proposed tariff amendments be increased, based on total delivered rates, by 11.3%, effective November 1, 2007, subject to the availability of funds in the ECSB Awards; and be it further

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to take such other and further actions as may be necessary to effectuate the foregoing; and be it further

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, authorized to file a Notice of Adoption of this action with the Department of State for publication in the New York State Register; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

Exhibit "9-A"

Table III

NEW YORK POWER AUTHORITY
BUSINESS CUSTOMERS
RATES APPLICABLE TO SERVICE TARIFFS NOS. 1, 1S, 35 AND 50
Effective November 1, 2007 to June 30, 2008

			Demand	Energy
Rate Category	Local Service Territory/Customer	Service Tariff	Rate	Rate
			$/kW	mills/kWh
	CON EDISON
CE 2.2
	American International Group, Inc.	35	10.00		30.00
	CBS Inc.	35	10.00		30.00
CE 2.3
	Excelsior Transparent Bag Manufacture	35	10.00		29.25
CE 2.4
	Citigroup	1S	10.00		28.60
	Hunts Point Cooperative Market, Inc.	35	10.00		28.60
	J.J. Cassone Bakery, Inc.	1S	10.00		28.60
	National Broadcasting Company, Inc.	35	10.00		28.60
CE 2.5
	Tyco Plastics (formerly World Class Film)	35	10.00		28.27
	LIPA
LIPA 2.1
	Fortunoff	35	10.50		27.50
LIPA 2.2
	Burton Industries, Inc.	1S	8.80		31 .55
	Island Container Corp.	1S	8.80		31 .55
	Oceanside Laundry	35	8.80		31 .55
LIPA 2.3
	Angelica Textile Services	1S	9.00		30.24
	Kozy Shack, Inc.	1S	9.00		30.24
LIPA 2.4
	Ellanef Manufacturing Corporation	35	8.16		31 .60
	General Semiconductor, Inc.	1S	8.16		31 .60
LIPA 2.5
	GKN Aerospace Monitor (Stellex)	1S	9.85		27.61
	NBTY, Inc.	1S	9.85		27.61
LIPA 2.6
	Newsday, Inc.	1S	9.85		26.96
	NIMO
NIMO 2.1
	Metropolitan Life Insurance Company	50	10.00		26.55
	SCA Tissue	1S	10.00		26.55
NIMO 2.2
	Air Products and Chemicals, Inc.	1	10.00		26.10
	Harden Furniture Company	50	10.00		26.10
	Mele Manufacturing (Farrington Packg.)	50	10.00		26.10
NIMO 2.3
	DOT Foods	50	10.00		25.60
	Granny's Kitchens	50	10.00		25.60
	The Fountainhead Group, Inc.	50	10.00		25.60
	Oak-Mitsui, Inc.	50	10.00		25.60

NIMO 2.4
	Revere Copper Products	50	9.00	27.32
	NYSEG
NYSEG 2.2
	Endicott Interconnect Technologies	50	9.60	26.94
NYSEG 2.3
	Tessy Plastics Corp.	50	9.50	26.40
	Transelco Div. of Ferro Corp.	50	9.50	26.40

10. Governmental Customers – Consolidation of Service Tariffs – Notice of Adoption

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to take final action to approve the consolidation of the Authority’s current production and delivery service tariffs applicable to New York City Governmental Customers and Westchester County Governmental Customers (collectively, ‘Governmental Customers’) into two consolidated single tariffs (each a ‘Single Tariff’ and collectively ‘Single Tariffs’). One Single Tariff (attached as Exhibit ‘10-A’) would be for the New York City Governmental Customers and the other (attached as Exhibit ‘10-B’) would be for the Westchester County Governmental Customers.

BACKGROUND

“At their June 26, 2007 meeting, the Trustees directed the Corporate Secretary to file a Notice of Proposed Rulemaking (‘NOPR’) with the New York State Department of State for publication in the New York State Register that the Authority proposed to consolidate the Authority’s current production and delivery service tariffs into two Single Tariffs. The NOPR was published in the New York State Register on July 11, 2007. The public comment period closed on August 27, 2007, in accordance with the State Administrative Procedure Act (‘SAPA’). In addition, all governmental customers were notified of the proposed Single Tariffs and invited to review and submit comments.

DISCUSSION

“The City of New York (‘City’) filed formal written comments in accordance with SAPA, which are attached as Exhibit ‘C.’ No other comments were received. Staff has reviewed the City’s written comments and has substantially accepted their recommendations. Staff’s recommendations will be incorporated into the Single Tariffs.

“Following is a summary of the comments and staff’s response.

Issue 1: Rider A - Schedule of Rates for Back-up and Maintenance Power (Section III)

“The City commented that even though the Authority does not serve any customer under Rider A, Rider A should be continued for customers that do install on-site generation facilities. Staff agrees with the City’s comment and recommends continuing the use of Rider A.

“The City commented that the Authority should consider amending Rider A to allow the Authority to negotiate discounted Rider A rates where applicable, as many other utilities do. Staff recommends that until a rate redesign study is performed, the production rates stated in Rider A in the Single Tariffs be updated to reflect appropriate production rate increases approved by the Trustees since 2004.

“The City commented that the tariffs, as written, are unclear in that it may be interpreted that Rider A is a charge in addition to the rates and charges specified for each service classification. The City recommended that the Authority remove all references to Rider A in each service classification and then clarify in Rider A that the back-up charges provided in Rider A are designed to be alternative to the rates and charges specified for each service classification.

“In response to the City’s comments, staff recommends a change in the statement in Section IV of the Single Tariffs, from ‘Rates and charges under this Service Classification may be subject to Rider A’ to ‘If Rider A applies under this Service Classification, the Rates and Charges under Rider A will replace the above production rates.’ Staff also recommends that in Rider A of the Single Tariffs, the following language be included in the Applicability section: “The rates and charges shown below are substitute rates to the rates and charges specified in Section IV of this tariff.’

“The City asked to define two terms that are not defined in Rider A in the Energy Charge Adjustment (‘ECA’) section, ‘Base Average Energy Cost’ and ‘Base Incremental Energy Cost.’ Staff recommends that the ECA provision under Rider A be subject to the same ECA provision described in the Single Tariffs (Section VI.A). Accordingly, for Rider A, all components for calculating the ECA are included in Section VI.A. The ECA language in Rider A in the Single Tariffs was modified to reflect this recommendation.

Issue 2: Calculation of the Bill - Components of the Bill (Section III.A)

“The City commented that the Authority’s use of the term ‘other’ was used in two different contexts: as one of three general types of charges (Production, Delivery Service and Other) and then as a component of Delivery Service that is measured in ‘Charge Units’ of $/kW-month. With respect to the use of ‘other’ as a Bill Component of the Delivery Service Charge, the City suggested replacing the Charge Units ($/kW-month) with ‘various’ since the charge units may vary depending on the type of cost being recovered. Staff agrees with, and recommends this change in the Single Tariffs.

Issue 3: General Provisions Applicable to Production - Minimum Bill (Section VI.B)

“The City recommends that the Authority clarify when and how it will determine to issue a minimum bill for unmetered service. Staff views that the purpose of the NYC Single Tariff is not to address how and when data are collected but how the calculation is done. Therefore, Staff believes that the language in the NYC Single Tariff is clear on the calculation, however recommends clarifying language on how unmetered service charges will be applied.

“The City commented that there should be language in the termination-of-service provision conditioning termination of service on the requirements of the Customer Supply Contract. Staff agrees with the City’s comment and recommends that the language ‘Unless otherwise provided in the Customer Supply Contract’ be included in the Termination of Service paragraph of the Minimum Bill provision in the NYC Single Tariff.

Issue 4: Common Provisions - Rules and Regulations (Section V.A)

“The City suggested the overriding effect of the Long Term Agreement (‘LTA’) (with NYC Governmental Customers) be acknowledged. Staff agrees with the City’s comment regarding the potential conflicts with the LTA and recommends adding a third paragraph to Section V.A of the NYC Single Tariff as follows: “In the event of any inconsistencies, conflicts or differences between any provisions of the 2005 Long Term Agreement and any of the agreements or documents referenced in Section V, Common Provisions A.1 and 2, the provisions of the 2005 Long Term Agreement shall govern.” Staff also recommends adding similar language to the Westchester County Service Tariff, as appropriate.

“Staff recommends that these proposed Single Tariffs go into effect January 1, 2008 along with the 2008 production rates that will be presented to the Trustees for their approval at their December 2007 meeting.

FISCAL INFORMATION

“Adoption of the proposed Single Tariffs has no financial impact. The changes proposed are administrative changes and have no effect on current production or delivery service rates.

RECOMMENDATION

“The Manager – Power Contracts recommends that the attached Single Tariffs be approved and that the Trustees authorize the Corporate Secretary to file a Notice of Adoption with New York State Department of State for publication in the New York State Register for the adoption of the Single Tariffs for the Authority’s New York City and Westchester County Governmental Customers.

“It is also recommended that the Senior Vice President – Marketing and Economic Development, or his designee, be authorized to issue notice of final action to the affected customers.

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That the Trustees adopt the consolidation of the Authority’s current production and delivery services tariffs applicable to its Governmental Customers, as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file a Notice of Adoption with the New York State Department of State for publication in the New York State Register in accordance with the State Administrative Procedure Act and to submit such other notice(s) as may be required by statute or regulation concerning the proposed tariff consolidation; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

11. NYC/DEP East Delaware and Neversink Hydroelectric Facilities – Change Order to North American Energy Services Contract

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve a change order to the existing contract with North American Energy Services (‘NAES’) to implement capital projects necessary for the proper maintenance and operation of the New York City Department of Environmental Protection’s East Delaware and Neversink Hydroelectric Facilities (the ‘Facilities’).

“The City of New York (‘City’), acting through its Department of Environmental Protection (‘NYC/DEP’), concurs with the issuance of the change order and will reimburse the Authority for all incurred costs on a monthly basis.

BACKGROUND

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of change orders associated with non-personal services or equipment purchase contracts in excess of $1 million requires Trustee approval.

DISCUSSION

“At their meeting on February 9, 2005, the Trustees authorized the execution of new Long-Term Supplemental Electricity Supply Agreements (‘LTAs’) with the New York City Governmental Customers, substantially in the form as that executed with the City on March 18, 2005. Article XV of the March 18^th LTA provides, subject to certain conditions, that the Authority will operate the Facilities on behalf of the City.

“At their meeting on September 26, 2006, the Trustees approved $2.144 million for the award of a contract to NAES to provide management, supervisory, engineering, operational, administrative, technical and maintenance services in addition to capital improvements for the Facilities. NAES mobilized in the fourth quarter of 2006 and continues to operate and maintain the Facilities.

“As presented at the September 2006 meeting, and based on engineering studies of the Facilities, several future capital projects were identified as necessary. During the course of operations, the City requested that additional improvements be managed by the Authority.

“Based on studies conducted by NAES and recommendations made, a cost estimate for providing drawings, specifications and implementation of the proposed capital work was prepared.

“NAES has obtained cost estimates for the following capital projects:

		East Delaware Tunnel Outlet
		Priority	Cost
-	Assess/Test Contaminants-of-Concern Condition	1	$30,000
-	Remediate Contaminants of Concern	1	$500,000
-	Install Emergency Lighting and Evacuation Alarm System	1	$100,000
-	Repair Main Plant Isolation Valve (DOW)	1	$750,000
-	Upgrade or Replace Main Generator Fire Protection System	1	$200,000
-	Replace Existing Boilers and Control System	1	$85,000
-	Remove two USTs at EDTO, install AST	1	$150,000
-	15kV Switchgear Replacement	2	$330,000
-	Arc Flash Study	2	$40,000
-	Generator Exciter/Voltage Regulator Replacement	2	$585,000
-	Containment Separation, Modernization, and Monitoring for Main Station Sumps	2	$200,000
-	Indoor Relay Control Panels	2	$600,000
-	New Oil Spill Containment and Monitoring System for Main Transformers and Oil Containment Within Switchyard	3	$215,000
-	125VDC Battery/Battery Rack and Charger Replacement	3	$90,000
-	Relocate or Replace Revenue Metering	3	$100,000
-	Parking Lot Paving	3	$85,000
-	Install Motorized Gate	3	$20,000
-	Office/Bathroom Remodel	3	$100,000
-	Study Conversion of Greasing Systems to Biodegradable Vegetable- Based Greases	3	$22,000

	Subtotal ---------------------------------------------------------------------------------->		$4,202,000

	Subtotal for 2008 Priority 1 items -------------------------------------------------->		$1,815,000

		Neversink Tunnel Outlet
		Priority	Cost
-	Installation of Interchange Metering Equipment	1	$160,000
-	Assess/Test Contaminants-of-Concern Condition	1	$30,000
-	Remediate Contaminants of Concern	1	$500,000
-	Install Emergency Lighting and Evacuation Alarm System	1	$100,000
-	Main Generator Fire Protection System	1	$400,000
-	Generator Exciter/Voltage Regulator Replacement	1	$585,000
-	SPCC Plan	1	$20,000
-	Indoor Relay Control Panels	2	$600,000
-	Arc Flash Study	2	$40,000
-	Reinforcement and Extension of Draft Tube Steel Liner and Repair of Damaged Concrete in the Draft Tube	2	$205,000
-	New Oil Spill Containment and Monitoring System for Main Transformers with Oil-Containing Equipment Within Switchyard	2	$215,000
-	Containment Separation, Modernization and Monitoring for Main Station Sumps	2	$200,000
-	Revenue Metering	3	$100,000
-	Parking Lot, Driveway Paving	3	$85,000
-	Study Conversion of Greasing Systems to Biodegradable Vegetable- Based Greases	3	$22,000

	Subtotal ----------------------------------------------------------------------------------->		$3,262,000

	Subtotal for 2008 Priority 1 items --------------------------------------------------->		$1,795,000

“At this time, staff recommends proceeding with only the most critical items (Priority 1), in the amount of $3.61 million. It is expected that the capital projects listed above will be completed by June 30, 2008. These cost estimates have been presented to and approved by NYC/DEP. The figures were presented to the City as part its proposed 2008 budget, totaling $5.38 million. The latter budget figure captures the O&M costs and Priority-1-only capital improvements. On August 24, 2007, the City approved the 2008 budget.

“Contingent on Trustee approval, NAES will now move forward with evaluating bids and awarding contracts to complete the work. NAES, under the Authority’s oversight, will provide project management services to ensure that all related contracts are awarded per the Authority’s policies and procedures and that the work is completed in a safe and reliable manner.

“The Authority will continue to directly market the electric-generating energy, capacity and ancillary services and any other energy products produced by the Facilities and for which a market exists on behalf of the City.

“The City has reviewed the estimated expenditures and agrees to proceed with such improvements to increase the overall quality of the Facilities. Any award by NAES is conditioned on the Authority’s prior approval.

FISCAL INFORMATION

“Payments will be made from the Authority’s O&M Fund with the City to reimburse all costs (direct and administrative) associated with operating the Facilities.

RECOMMENDATION

“The Director – Budgets, the Corporate Secretary and Principal Attorney II, the Vice President – Project Management, the Vice President – Procurement and Real Estate and the Regional Manager – Central New York recommend that the Trustees authorize $3.61 million for a change order to North American Energy Services.

“The Executive Vice President, General Counsel and Chief of Staff, the Executive Vice President – Corporate Services and Administration, the Executive Vice President and Chief Financial Officer, the Senior Vice President and Chief Engineer – Power Generation, the Vice President – Controller and I concur in the recommendation.”

Mr. Thomas Antenucci presented the highlights of staff’s recommendations to the Trustees. In response to a question from Chairman McCullough, Mr. Antenucci said that this additional work had been contemplated at the time of the original contract.

The following resolution, as submitted by the President and Chief Executive Officer, was adopted by a vote of 5 to 1 with Trustee Besha recusing.

RESOLVED, That pursuant to the Guidelines for Procurement Contracts and the Expenditure Authorization Procedures adopted by the Authority, expenditures in the amount of $3.61 million are approved as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

Capital Contract Approval

Implement priority 1 critical capital $3,610,000

projects at the NYC/DEP plants

12. Security Enhancement Program – Phase III – Securiy Enhancement Project – Expenditure Authorization

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve the initiation of Phase III of an ongoing security enhancement and assessment program with a capital expenditure of $14.1 million from October 2007 thru December 31, 2009. The expenditure represents enhancements to the Authority’s facilities where security assessments are completed, including final design and installation.

BACKGROUND

“The Security Enhancement Program was established to identify and enhance the protection of power generation and transmission infrastructure and assets that are deemed most critical in terms of public safety and business continuity. The program is supervised by the Executive Security Team and uses specialized security consultants to assist staff in evaluating and designing site-specific procedures and defenses to address vulnerabilities.

DISCUSSION

“Phase I of the Program has been completed, Phase II is under way and Phase III is now in the early stages of implementation.

FISCAL INFORMATION

“Payments will be made from the capital fund.

RECOMMENDATION

“The Vice President – Project Management, the Vice President – Engineering and the Vice President – Corporate Security and Inspector General recommend that the Trustees approve Phase III of the Security Enhancement Program and authorize capital expenditures of $14.1 million.

“The Executive Vice President, General Counsel and Chief of Staff, the Executive Vice President – Chief Financial Officer, the Senor Vice President and Chief Engineer – Power Generation and I concur in the recommendation.”

Mr. Thomas Antenucci presented the highlights of staff’s recommendations to the Trustees. In response to a question from Chairman McCullough, Mr. Antenucci said that Phase III is expected to take two years.

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That the Security Enhancement Program – Phase III – Security Enhancement Project is approved and that capital expenditures are hereby approved to be committed in accordance with the Authority’s Expenditure Authorization Procedures in the amount of $14.1 million; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

13. New York Power Authority Other Post-Employment Benefits Trust Fund: Selection of Investment Managers and Authorization to Appoint an Additional Dealer for the Taxable Commercial Paper Program

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve the award of a selected number of multiyear procurement contracts relating to professional investment management services in connection with the Authority’s Other Post-Employment Benefits Trust Fund and to authorize the appointment of Lehman Brothers Inc. as an additional dealer for marketing the Authority’s Taxable Commercial Paper Notes.

BACKGROUND

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year. The terms of the contracts considered herein are for more than one year and, therefore, Trustee approval is required.

“Certain Governmental Accounting Standards Board (‘GASB’) standards[1] issued in 2004 require governmental employers to account for other post-employment benefits (‘OPEB’) liabilities on an ‘accrual’ basis, i.e., as the benefits are earned during the working career of the employee, rather than the ‘pay-as-you-go’ basis, where costs are recorded as the benefits are paid during the employee’s retirement. As of December 31, 2006, the Authority’s unfunded actuarial accrued liability for OPEB was $325 million.

“At their meeting of December 19, 2006, the Trustees authorized staff to initiate certain actions to establish a separately managed Trust for OPEB, which included: establishing the parameters of a trust; developing investment guidelines and competitively searching and/or soliciting for a financial management consultant, investment manager(s) and Trustee Custodian.

“At their July 31, 2007 meeting, the Trustees (1) approved the creation of the New York Power Authority Other Post-Employment Benefits Trust; (2) adopted the Trust Investment Policy Statement; (3) appointed The Bank of New York (Mellon) as Trustee Custodian and (4) approved an initial $225 million funding plan, including the transfer of $100 million from the OPEB Reserve within the Operating Fund and the issuance of $125 million in taxable commercial paper for deposit into the Trust.

“The Authority’s Commercial Paper Program is authorized pursuant to the Resolution Authorizing Commercial Paper Notes (‘Resolution’) adopted by the Authority on June 28, 1994, as subsequently amended and supplemented. The Resolution authorizes the issuance of general obligation notes known as ‘Power Authority Commercial Paper Notes,’ which may be issued as separate series of Notes from time to time in accordance with the provisions of the Resolution. Currently, three series of Commercial Paper Notes, designated as Series 1, Series 2 and Series 3, have been authorized and are outstanding. A fourth series, Series 4 Notes, is authorized, but no Series 4 Notes are currently outstanding. Series 1 and Series 2 consist of Notes, the interest on which is excluded from gross income for federal income tax purposes (‘Tax-Exempt Notes’) and Series 3 consists of Notes, the interest on which is not excluded from gross income for federal income tax purposes (‘Taxable Notes’). The Resolution authorizes the issuance of Series 1 Notes up to a maximum amount of $400 million, Series 2 Notes up to a maximum amount of $450 million, Series 3 Notes up to a maximum amount of $350 million and Series 4 Notes up to a maximum amount of $220 million.

“The Trust Investment Policy Statement included a strategy for diversification among five Asset Types and 10 classes so as to be aligned with the Authority’s overall return objectives and risk tolerances. The following table summarizes these various categories and the initial percentage targets for each class of investment:

Asset Type	Target % Allocation	Range of Allocation
Equities	61%
Domestic Equity	42%	37% - 47%
- Large Cap – Value	- 9%
- Large Cap – Growth	- 9%
- All Cap – Core	- 18%
- Small Cap – Core	- 6%
International Equity	19%	14% - 24%
- Value	- 9.5%
- Growth	- 9.5%
Real Estate (REITs)	6%	1% - 11%
- Public	- 6%
- Private	- 0%
Fixed Income	33%
Domestic Fixed Income	30%	25% - 35%
- Core Fixed Income	- 15%
- Intermediate	- 15%
Cash Equivalent	3%	0% - 10%

DISCUSSION

“Pursuant to the above-mentioned Trustee authorization, staff solicited proposals for professional investment management services for the 10 investment classes by notice to a number of firms providing such services and by advertisement in the New York State Contract Reporter. The Authority received a total of 52 proposals from 32 different firms, as summarized on Exhibit ‘13-A.’ In nine of the 10 classes, a sufficient number of responses were received for consideration. In one class, Real Estate – Private, only one response was received and this was deemed insufficient to make a recommendation. Staff determined that the proposed size of the Authority’s planned investment in this class was too small to attract the interest of investment managers, so the portion of assets allocated for this class will be distributed among the other investment classes within the already approved investment ranges.

“Staff, with the support of its financial advisor, PFM Advisors, evaluated each proposal according to various criteria, including, but not limited to, performance, performance consistency and volatility, correlation to market, schedule of fees and supporting organizational capabilities. Based on this evaluation, the following recommendations are presented:

Recommended Investment Managers – Domestic Equities:

Large Cap – Value (8 proposals): Brandywine Global Investment Management, LLC

Large Cap – Growth (8 proposals): BlackRock, Inc.

All Cap – Core (4 proposals): State Street Global Advisors

Small Cap – Core (4 proposals): Denver Investment Advisors, LLC

Recommended Investment Managers – International Equities

Value (3 proposals): Brandywine Global Investment Management, LLC

Growth (4 proposals): Baring Asset Management

Recommended Investment Managers – Other Equities (Real Estate)

Public (6 proposals): Urdang Securities Management, Inc.

Private (1 proposal): None

Recommended Investment Managers – Fixed Income

Full Duration (8 proposals): Evergreen Investments (Tatersall Advisory Group)

Intermediate (6 proposals): C. S. McKee, LP

“The recommended manager for each class has shown steady performance against its respective benchmark averages over the past seven years. Overall risk-adjusted returns showed solid results and each firm is backed by appropriate research support. On the basis of the evaluation criteria established for this review by staff and its financial advisor, each of the recommended investment managers scored the highest in their respective categories. In order to achieve consistency and stability in the management of the Trust’s assets, it is recommended that each of the above-listed investment managers be awarded a 5-year contract, subject, however, to early termination at any time by the Authority on 60 days’ notice.

“With respect to its Commercial Paper Program, the Authority currently uses a field of seven commercial paper dealers, including: Bear Stearns, Citigroup, Goldman Sachs, JPMorgan, Lehman Brothers, RBC Dain Rauscher and UBS, only two of which are authorized for the Taxable Notes Program. With the anticipated increase in the use of Taxable Notes to support the establishment of the OPEB Trust, it is recommended that another dealer be added to the list of authorized dealers for the Taxable Notes. Accordingly, staff is recommending that Lehman Brothers, which is already an authorized dealer of the Authority’s Tax-Exempt Notes, be included as an additional dealer for marketing the Authority’s Taxable Commercial Paper Notes. This authorization would provide increased flexibility and diversification for the Commercial Paper Note program with a dealer that is well known to the Authority and would thus better allow the Authority to meet its OPEB obligations.

FISCAL INFORMATION

“The fees for the Investment Managers will be paid from OPEB Trust Fund (‘Fund’) assets. While the fee structure for each asset class varies, the overall average totals 49 basis points (a basis point is equal to 1/100^th of 1 percent, or 0.01%). The fees should equal about $1.1 million per year, growing somewhat as the Fund’s assets grow. Over the course of the recommended 5-year term of the investment management contracts, fees are estimated to total about $6.6 million, assuming a normal growth rate in the Fund’s Assets.

“The commercial paper that staff intends to amortize over a 10-year period will provide additional earning opportunities for the Fund. It is estimated that the issuance of commercial paper for this purpose will provide more than $20 million in additional savings.

RECOMMENDATION

“The Vice President – Finance recommends the Trustees’ approval of the award of multiyear service contracts to the nine investment managers so named and described above for the New York Power Authority Other Post-Employment Benefit Trust Fund and that the Trustees also appoint Lehman Brothers Inc. as an additional dealer for marketing up to $125 million of the Authority’s Taxable Commercial Paper Notes.

“The Executive Vice President, General Counsel and Chief of Staff, the Executive Vice President and Chief Financial Officer and I concur in the recommendation.”

Mr. Donald Russak presented the highlights of staff’s recommendations to the Trustees. In response to a question from Chairman McCullough, Mr. Russak said that staff would report back to the Trustees on the financial performance of the Trust Fund on a quarterly basis beginning next year.

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award and funding of the multiyear investment management service contracts for the New York Power Authority Other Post-Employment Benefits Trust (“Trust”) are hereby approved and their execution by the Executive Vice President and Chief Financial Officer or his designee is approved, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff, on behalf of the Authority, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That Lehman Brothers Inc. is appointed as an additional Commercial Paper Dealer for marketing up to $125 million of the Authority’s Taxable Commercial Paper Notes; and be it further

RESOLVED, That the Vice President – Finance or the Treasurer is hereby authorized to enter into a Commercial Paper Dealer Agreement with Lehman Brothers Inc. for marketing up to $125 million of the Authority’s Taxable Commercial Paper Notes, having such terms and conditions as the Vice President – Finance or the Treasurer deems necessary or advisable, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President, General Counsel and Chief of Staff.

15. Amendments to the Authority’s Governance Committee Charter and Audit Committee Charter

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested: (1) to amend both the Governance and Audit Committee Charters to require an agenda and minutes for each meeting in accordance with the Open Meetings Law, and to provide for a majority of the Committee members to constitute a quorum; (2) with respect to the Governance Committee Charter, to include review of Authority By-Laws and corporate policies, including those related to equal opportunity employment, (3) with respect to the Audit Committee Charter, to change the number of regularly scheduled meetings from at least three times per year to at least four times per year and (4) to reflect ancillary and incidental corrections.

BACKGROUND

“The Public Authorities Accountability Act of 2005 (‘Accountability Act’) added a new section to the Public Authorities Law (Section 2824) delineating the roles and responsibilities of board members of public authorities including, but not limited to, oversight of the authority’s senior management in the effective and ethical management of the authority and oversight and review of the authority’s fundamental financial, management and operational policies and procedures. The Accountability Act also required the Authority to have both a Governance Committee and an Audit Committee. To that end, on February 28, 2006, the Trustees established a Governance Committee by amending the Authority’s By-laws, adopted a Governance Committee Charter and amended the existing Audit Committee Charter.

“The Governance Committee is required to: (1) oversee Authority management and policies relating to ethical conduct; (2) update and revise the Authority’s Code of Conduct; (3) review and update the Authority’s policies on procurement of goods and services and the acquisition and disposal of real and personal property and (4) adopt a corporate policy on the protection of whistleblowers from retaliation.

“The Audit Committee is responsible for oversight of the Authority’s: (1) relationship with independent accountants, (2) internal audit process, (3) internal control systems and (4) complaints to and investigations by the Vice President – Corporate Security and Inspector General. On February 28, 2006, the Trustees amended the Authority’s By-laws and the Audit Committee Charter as necessary, to strengthen the role of the Authority’s Audit Committee by providing for the Office of Internal Audits and Corporate Compliance (‘Internal Audit’), Committee appointment and compensation of the head of Internal Audit and responsibility for making recommendations concerning the staffing of Internal Audits and its related functions. Oversight and reporting requirements were also established for the Office of the Inspector General.

DISCUSSION

“The Accountability Act required that the Authority’s Board of Trustees be increased from five to seven independent members and that members not simultaneously serve as either Chairman of the Board of Trustees or in a position of Authority management. Increasing membership of the Governance Committee to three members, similar to that of the Audit Committee, and providing for a majority of the Committee members to constitute a quorum for both the Governance Committee and the Audit Committee will significantly enhance Trustee participation in the governing affairs of the Authority. In the event that one committee member is unable to participate at a scheduled meeting, the presence of a majority of Committee members will be required for action to be taken. Requiring independent, non-conflicted members of the Committee and increasing the quorum to a majority will insure a deliberative process consistent with sound audit and governance principles.

“Additionally, the Accountability Act created the State Authority Budget Office (‘ABO’). The ABO has authority to review, audit and monitor compliance with operations and practices required of public authorities. Although the Authority independently performs such functions, recent ABO audits of other public authorities have recommended that Committee charters specifically require that an agenda and minutes be prepared for each meeting, and that the Governance Committee review all corporate policies.

“With respect to the Governance Committee Charter, the Trustees are requested to amend: (i) Section A(1) to increase the membership of the Governance Committee from two Trustees to three independent Trustees who are not the Chairman or in any other position of Authority management; (ii) Section A(4) to require that an agenda be prepared and distributed prior to each meeting, to require that minutes of each meeting be prepared in accordance with the Open Meetings Law and to change the number of Committee members constituting a quorum from one to a majority of the Committee members and (iii) Section B to include review of Authority By-laws and corporate policies, including those related to equal opportunity, consistent with ABO recommendations. The proposed amended Governance Committee Charter is attached as Exhibit ‘15-A1.’ A redlined version with strikethroughs denoting deletions and underlining reflecting new language is attached as Exhibit ’15-A2.’

“With respect to the Audit Committee Charter, the Trustees are requested to amend:

(i) Section A(1) to provide that Committee members must be independent and shall not simultaneously serve as Chairman or in any other position of Authority management; (ii) Section A(4) to require that an agenda be prepared and distributed prior to each meeting, to require that minutes of each meeting be prepared in accordance with the Open Meetings Law and to change the number of Committee members constituting a quorum from one to a majority of the Committee members and (iii) Sections A(4) and B(3) and (4) to increase the number of regularly scheduled Committee meetings from at least three to at least four per year. In addition, changes have been that are ancillary to those above and/or appropriate for clarity. The proposed amended Audit Committee Charter is attached as Exhibit ‘15-B1.’ A redlined version with strikethroughs denoting deletions and underlining reflecting new language is attached as Exhibit ‘15-B2.’

FISCAL IMPLICATIONS

“None.

RECOMMENDATION

“The Executive Vice President, General Counsel and Chief of Staff and I recommend that the Trustees approve the proposed amendments to the Governance Committee Charter and the Audit Committee Charter.”

Mr. Thomas Kelly presented the highlights of staff’s recommendations to the Trustees. Chairman McCullough said that the proposed amendments reflect recommendations made as a result of audits of other authorities’ Audit Committee and Governance Committee charters. He said that the fourth meeting of the Audit Committee is essential in order to provide the Committee with the opportunity to meet directly with the Authority’s independent auditors. Mr. Kelly added that the Authority has historically been ahead of where the State is going in matters of authority governance and that the Authority will continue to stay in front of the law and any directives from the Authority Budget Office.

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That Section A(1) of the Governance Committee Charter be amended to increase the membership of the Governance Committee from two Trustees to three independent Trustees who do not serve as Chairman or in any other position of Authority management; and be it further

RESOLVED, That Section A(4) of the Governance Committee Charter and the Audit Committee Charter be amended to require that an agenda be prepared and distributed prior to each meeting, minutes of each meeting be prepared in accordance with the Open Meetings Law and the number of Governance Committee and Audit Committee members required for a quorum be increased from one to a majority of the Committee members; and be it further

RESOLVED, That Section A(1) of the Audit Committee Charter be amended to provide for independent members, none of whom can serve as Chairman or in any other position or Authority management, and be it further

RESOLVED, That Sections A(4) and B(3) and (4) of the Audit Committee Charter be amended to increase the number of regularly scheduled Committee meetings from at least three to at least four per year; and be it further

RESOLVED, That the attached Governance Committee Charter and Audit Committee Charter be adopted substantively in the form proposed in Exhibits “15-A” and “15-B.”

[1] These standards include Statement No. 43 – Financial Reporting for Post-employment Benefit Plans Other Than Pension Plans and Statement No. 45 – Accounting and Financial Reporting by Employers for Post-employment Benefits Other than Pensions.

Table of Contents

SUMMARY

DISCUSSION

RECOMMENDATION

Date Location Time

No Meeting in August

23. Next Meeting