MINUTES OF THE REGULAR MEETING

Minutes of the Regular Meeting of the Power Authority of the State of New York held via videoconference at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York at approximately 11:00 a.m.

The Members of the Board present were:

Michael J. Townsend, Chairman

D. Patrick Curley, Trustee

John S. Dyson, Trustee

R. Wayne LeChase, Trustee

Eugene L. Nicandri, Trustee

Mark O’Luck, Trustee - NYO

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Gil C. Quiniones Acting President and Chief Executive Officer

Judith C. McCarthy Executive Vice President and General Counsel

Edward Welz Acting Chief Operating Officer

Donald Russak Acting Chief Financial Officer

Thomas Antenucci Senior Vice President – Power Supply Support Services

Thomas DeJesu Senior Vice President – Public, Governmental and Regulatory Affairs

James Pasquale Senior Vice President – Marketing and Economic Development

Joan Tursi Senior Vice President – Corporate Support Services

Paul Belnick Vice President – Energy Services – Energy Services and Technology

John Canale Vice President – Project Management

Thomas Davis Vice President – Financial Planning and Budgets

Dennis Eccleston Vice President – Information Technology/Chief Information Officer

Michael Huvane Vice President – Marketing – Business and Municipal Marketing

John Kahabka Vice President – Environmental, Health and Safety

Joseph Leary Vice President – Community and Government Relations

Lesly Pardo Vice President – Internal Audit

Patricia Leto Vice President – Procurement

Scott Scholten Vice President and Chief Risk Officer – Energy Risk Assessment and Control

John Suloway Vice President – Project Development, Licensing and Compliance

Vincent Esposito Assistant General Counsel – Legislative and Regulatory Affairs

Karen Delince Corporate Secretary

Jill Anderson Director – Business Integration

Robert Hopkins Director – Budgets

Mike Lupo Director – Marketing Analysis and Administration

Michael Nash Director – Engineering and Design

Michael Saltzman Director – Media Relations

Russell Bahm Director of Operations, Site Administration Holtsville

Paul Tartaglia Regional Manager SENY, Site Administration Poletti

Gary Schmid Manager – Network Services Infrastructure

Kevin O’Keeffe Manager – Video Production Services – Media Relations

Steven Weiner Manager O&M – Budgets

Ruth Colon Senior Business Integration Project Manager

Linda Payne Senior Pricing and Power and Contract Analyst – Power Contracts

Egle Travis Pricing and Power Contract Analyst II – Marketing Analysis and Administration

Lorna M. Johnson Assistant Corporate Secretary

Sheila Baughman Senior Secretary – Corporate Secretary’s Office

Michael Schneider Contractor – Media Relations

Anthony Fazio Contractor

Mikey Wade Intern – President’s Office

Chairman Townsend presided over the meeting. Corporate Secretary Delince kept the Minutes.

Introduction

Chairman Michael Townsend welcomed the Trustees and staff to the meeting.

1. Approval of the December 15, 2011 Meeting Agenda

On motion made and seconded, the agenda for the meeting was approved.

2. Consent Agenda:

On motion made and seconded, the Consent Agenda was approved. Trustee Curley recused himself as regards the vote on item #2c – Allocations of Expansion
Power – as it relates to MOD-PAC Corporation.

a. Approval of the Minutes

The Minutes of the Regular Meeting held on November 15, 2011 were unanimously adopted.

b. Village of Marathon – Revised Retail Rates – Notice of Adoption

The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

“The Board of the Village of Marathon (‘Village Board’) has requested the Trustees to approve revisions to the Village of Marathon’s (‘Village’) retail rates for each customer
service classification. These revisions will result in additional total annual revenues of about $84,000 or 6.3 percent.

BACKGROUND

“The Village Board has requested the proposed rate increase to provide additional revenues to meet forecasted increases in operation and maintenance expenses and additional debt
payment requirements. The current rates have been in effect since September 2007.

                “The Village Board has planned upgrades to the electric system amounting to $330,000. With the proposed upgrades the system will complete the implementation of a capital program
    that started in 2007 and after completion the system will be able provide reliable service to its customers. The upgrades will be directed primarily at its distribution system, the renovation of the
    electric garage and the purchase of a bucket truck. The Village is planning to debt-finance $265,000 or 80% of its capital program.

“Under the new rates, an average residential customer who currently pays about 6.6 cents per kWh will pay about 7.0 cents after the increase. A small commercial customer that currently
pays 7.3 cents per kWh will pay 7.8 cents and large commercial customers that presently pay 5.1 cents per kWh will pay 5.4 cents after the increase.

DISCUSSION

“The proposed rate revisions are based on a cost-of-service study requested by the Village and prepared by Authority staff. A public hearing was held by the Village on August 22, 2011.
No ratepayer comments were received at the public hearing. The Village Board has requested that the proposed rates be approved.

    “Pursuant to the approved procedures, the Senior Vice President – Marketing and Economic Development requested that the Corporate Secretary file a notice for publication in the
    New York State Register of the Village’s proposed revision in its retail rates. Such notice was published on October 12, 2011. No comments concerning the proposed action have been received
    by the Authority’s Corporate Secretary through November 28, 2011, the end of the public comment period.

“An expense and revenue summary, comparisons of present and proposed total annual revenues and their corresponding rates by service classification are attached as Exhibits ‘2b-A,’ ‘2b-B’
and ‘2b-C,’ respectively.

RECOMMENDATION

“The Director – Marketing Analysis and Administration recommends that the attached schedule of rates for the Village of Marathon be approved, as requested by the Board of the Village
of Marathon, to take effect beginning with the first full billing period following the date this resolution is adopted.

“It is also recommended that the Trustees authorize the Corporate Secretary to file a Notice of Adoption with the Secretary of State for publication in the New York State Register and
to file such other notice as may be required by statute or regulation.

“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”

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

RESOLVED, That the proposed rates for electric service for the Village of Marathon, as requested by the Board of the Village of Marathon, be approved, to take effect with the first full billing period following this date, as recommended in the foregoing report of the Acting President and Chief Executive Officer; and be it further

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, authorized to file a Notice of Adoption with the Secretary of State for publication in the New York State Register and to file any other notice required by statute or regulation; and be it further

RESOLVED, That the Chairman, the Vice Chairman, the Acting President and Chief Executive Officer, the Acting Chief Operating 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 and General Counsel, or her designee.

c. Allocations of Expansion Power

The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

                 “The Trustees are requested to approve an allocation of 400 kilowatts (‘kW’) of available Expansion Power (‘EP’) to MOD-PAC Corporation as described herein and in Exhibit ‘2c-A.’
    The allocation of hydropower will support capital expansion of $6.0 million and the creation of 45 jobs in Western New York. The Trustees are also requested to approve a modification to the
    EP allocation awarded to Nestle Purina PetCare Company on June 30, 2009.

BACKGROUND

“Under §1005(13) of the Power Authority Act, as amended by Chapter 313 of the Laws of 2005, the Authority may contract to allocate 250 megawatts (‘MW’) of firm hydroelectric power
as EP and up to 445 MW of Replacement Power (‘RP’) to businesses in the State located within 30 miles of the Niagara Power Project, provided that the amount of power allocated to businesses
in Chautauqua County on January 1, 1987 shall continue to be allocated in such county.

“Each application for an allocation of EP and RP must be evaluated under criteria that include but need not be limited to, those set forth in PAL Section 1005(13)(a), which details general
    eligibility requirements. Among the factors to be considered when evaluating a request for an allocation of hydropower are the number of jobs created as a result of the allocation; the business’
    long-term commitment to the region as evidenced by the current and/or planned capital investment in the business’ facilities in the region; the ratio of the number of jobs to be created to the amount
    of power requested; the types of jobs created, as measured by wage and benefit levels, security and stability of employment and the type and cost of buildings, equipment and facilities to be
    constructed, enlarged or installed.

“The Authority works closely with business associations, local distribution companies, and economic development entities to garner support for the projects to be recommended for allocations
    of Authority hydropower.   Discussions routinely occur with National Grid, Empire State Development Corporation, the Buffalo Niagara Enterprise, Niagara County Center for Economic
    Development and Erie County Industrial Development Agency to coordinate other economic development incentives that may help bring projects to New York State. Staff confers with these
    entities to help maximize the value of hydropower to improve the economy of Western New York and the State of New York.

DISCUSSION

              “At this time, there is 11,075 kW of unallocated EP and 24,868 kW of unallocated RP that is available to be awarded to businesses under the criteria set forth in PAL Section 1005(13)
    (a). The MOD-PAC Corporation (‘MOD-PAC’) submitted an application for hydropower requesting 400 kW to serve a proposed production equipment expansion within its existing Buffalo
    facility. MOD-PAC is a publicly traded company that produces folding cartons, packaging, and printed products for various industries. The company practices energy efficient manufacturing
    operations as well as participating in sustainability initiatives through its certifications with the Sustainable Forestry Initiative and other green organizations.

    “MOD-PAC would make a total capital investment of $6.0 million to purchase and install a large specialized printing press, two die cutters and a sheeter, as well as to build a new substation
    with associated electrical equipment. The company’s facility is currently isolated from the electric grid, having all of its electrical needs met by its cogeneration plant. A substantial part of the project
    plan is to reconnect to the grid by investing in the necessary electrical infrastructure to support the facility’s current and projected new electric load from this expansion project. Specifically,
    MOD-PAC expects to spend $1.5 million to build a new substation and line extension with parallel switching gear. The remaining expansion project costs break down as follows: $2.5 million for
    the printing press; $1.5 million for two die cutters; and $0.5 million for the sheeter; for a total investment of $6 million.

                “MOD-PAC, which currently has a headcount of 360 employees, commits to add 45 new jobs to its payroll as a result of this project. The job creation ratio for a recommended amount
    of 400 kW is 112.5 new jobs per MW. This ratio is well above the recent historic average of 16.7 new jobs per MW. The total project investment of $6.0 million results in a capital investment
    ratio of $15.0 million per MW. This ratio is below the recent historic average of $23.0 million per MW.

                “MOD-PAC operates at its Buffalo facility and recognizes the value of a solid work force in Western New York. To increase competitiveness, the company is open to pursuing alternative
    strategies, including expansion outside of New York State if production costs cannot be contained. An allocation of hydropower would support MOD-PAC’s commitment to expansion at its
    Western New York location, enabling the creation of 45 jobs and adding to the 360 existing high-quality jobs at its Buffalo facility. Staff recommends an allocation of 400 kW be awarded to
    MOD-PAC in return for an investment of $6.0 million and creation of 45 jobs at its Buffalo facility.

                “On June 30, 2009, the Trustees awarded Nestle Purina PetCare Company (‘Nestle Purina’) a 1,000 kW allocation of EP for a $50 million project expansion at its Dunkirk facility. Along
    with the capital investment, the company committed to create 15 new jobs above its current employment level of 327 jobs in return for the allocation. Nestle Purina applied for this hydropower
    allocation to support an expansion project to manufacture a new, innovative and proprietary pet food product line. The Dunkirk facility was competing with several sister facilities of Nestle S.A.,
    the parent company that has sixty facilities worldwide. The proposed project involved sophisticated new technologies and required a complex construction plan that would integrate a new multi-story
    processing tower with its existing manufacturing facilities.

    “Although the plant began engineering planning and site preparation and completed some building renovations and reconfiguration associated with the project, the project was put on hold in
    mid-2010. Due to the preparation for the proposed project, however, the Dunkirk plant was able to demonstrate to its corporate management that the facility was in a position to quickly capitalize
    on several alternative projects that Nestle S.A. was looking to implement. Nestle Purina was able to convince its corporate management to bring expanded production capabilities and associated
    investments for nine new or improved product formulations to the Dunkirk plant.

               “Nestle Purina built a 100,000 square-foot warehouse expansion, purchased and installed a new production line and reconfigured two existing production lines. Because of these actions and
    the need to contain production costs, Nestle Purina submitted a request to begin using the EP allocation as soon as possible. Authority staff performed a project review and determined that in
    completing the alternative projects, the company invested $24.0 million or 48% of the original project’s capital investment commitment. The company has added 12 jobs for the new production
    capacity, or 80% of the 15 new jobs that were committed for the original project.

                “Based on these results, staff recommends the allocation be reduced from 1,000 kW to 500 kW, with the company’s job creation commitment remaining at 15 new jobs in addition to base
    employment level of 327 employees. The job creation ratio for a revised allocation amount of 500 kW is 30 new jobs per MW or slightly less than double the recent historic average of 16.7 new
    jobs per MW. The total project investment of $24 million results in a capital investment ratio of $48 million per MW. This ratio is more than double the recent historic average of $23.0 million per
    MW. Nestle Purina has an existing 3,400 kW allocation of EP that is in compliance.

                “Through June 30, 2013, the EP allocations for both MOD-PAC and Nestle Purina will be delivered by National Grid under the Authority’s and National Grid’s existing Expansion Power
    sale-for-resale agreement. Standard three-party allocation agreements between the customer, the Authority and National Grid, as offered to all EP resale customers located in National Grid service
    territory, will effectuate the sale and delivery of the EP allocations to the customers until that time. The allocation amounts will be subject to enforceable employment commitments of 405 jobs in the
    case of MOD-PAC and 342 jobs in the case of Nestle Purina. The contracts include annual job reporting requirements and a standard job compliance threshold of 90%. Should the Customers’
    actual jobs reported fall below the compliance threshold, the Authority has the right to reduce the allocation on a pro-rata basis. For July 1, 2013 and beyond, the allocations will be sold to the
    customers under a direct sale arrangement, the contract for which may be brought before the Trustees for approval at that time.

SUMMARY

                 “Staff recommends an EP allocation totaling 400 kW be awarded to MOD-PAC for a $6.0 million capital expansion and the creation of 45 new jobs at MOD-PAC’s Buffalo facility.
    Staff also recommends a reduction, from 1,000 kW to 500 kW, to the EP allocation previously awarded to Nestle Purina for a revised $24.0 million capital expansion and the creation of 15 new
    jobs. Both recommendations are described in Exhibit ‘2c-A’ showing, among other things, the amount of power requested by the applicant, the recommended and revised allocation amounts and
    the applicant’s commitment to job creation and capital investment. Additional information on the projects is contained in the application summaries attached as Exhibits ‘2c-A-1’ and ‘2c-A-2.’

RECOMMENDATION

“The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the allocation of hydropower totaling 400 kW to MOD-PAC Corporation and a
modification to the previously approved hydropower allocation to Nestle Purina PetCare Company, reducing the allocation from 1,000 kW to 500 kW, as detailed in Exhibit ‘2c-A.’

“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”

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

                                    RESOLVED, That the allocation of 400 kW of Expansion Power to MOD-PAC Corporation, as detailed in Exhibit “2c-A” be, and hereby is,
                       approved on the terms set forth in the foregoing report of the Acting President and Chief Executive Officer; and be it further

RESOLVED, That the reduction to the allocation of Expansion Power to Nestle Purina PetCare Company from 1,000 kW to 500 kW, as detailed in Exhibit “2c-A” be, and hereby is, approved on the terms set forth in the foregoing report of the Acting President and Chief Executive Officer; and be it further

d. Procurement (Services) and Other Contracts – Business Units and Facilities – Awards, Extensions and Additional Funding

The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

    “The Trustees are requested to approve the award and funding of the multiyear procurement (services) and other contracts listed in Exhibit ‘2d-A,’ as well as the continuation and
    funding of the procurement (services) contracts listed in Exhibit ‘2d-B,’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities. Detailed explanations
   of the recommended awards and extensions, including the nature of such services, the bases for the new awards if other than to the lowest-priced bidders and the intended duration of such
   contracts, or the reasons for extension, the additional funding required and the projected expiration dates, are set forth in the discussion below.

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 Authority’s Expenditure Authorization Procedures (‘EAPs’) require the Trustees’ approval for the award of non-personal services, construction, equipment purchase or
non-procurement contracts in excess of $3 million, as well as personal services contracts in excess of $1 million if low bidder, or $500,000 if sole-source or non-low bidder.

“The Authority’s EAPs also require the Trustees’ approval when the cumulative change- order value of a personal services contract exceeds the greater of $500,000 or 25% of the
originally approved contract amount not to exceed $500,000, or when the cumulative change-order value of a non-personal services, construction, equipment purchase or non-procurement
contract exceeds the greater of $1 million or 25% of the originally approved contract amount not to exceed $3 million.

DISCUSSION

Awards

“The terms of these contracts will be more than one year; therefore, the Trustees’ approval is required. Except as noted, all of these contracts contain provisions allowing the Authority
    to terminate the services for the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination. Approval is also requested for
    funding all contracts, which range in estimated value from $75,000 to $35 million. Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources
    or expenditures.

“The issuance of multiyear contracts is recommended from both cost and efficiency standpoints. In many cases, reduced prices can be negotiated for these long-term contracts. Since these
services are typically required on a continuous basis, it is more efficient to award long-term contracts than to rebid these services annually.

Extensions

“Although the firms identified in Exhibit ‘2d-B’ have provided effective services, the issues or projects requiring these services have not been resolved or completed and the need exists
    for continuing these contracts. The Trustees’ approval is required because the terms of these contracts will exceed one year including the extension, the term of extension of these contracts
    will exceed one year and/or because the cumulative change-order limits will exceed the levels authorized by the EAPs in forthcoming change orders. The subject contracts contain provisions
    allowing the Authority to terminate the services at the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination. These
    contract extensions do not obligate the Authority to a specific level of personnel resources or expenditures.

            “Extension of the contracts identified in Exhibit ‘2d-B’ is requested for one or more of the following reasons: (1) additional time is required to complete the current contractual work
    scope or additional services related to the original work scope; (2) to accommodate an Authority or external regulatory agency schedule change that has delayed, reprioritized or otherwise
    suspended required services; (3) the original consultant is uniquely qualified to perform services and/or continue its presence and rebidding would not be practical or (4) the contractor provides
    a proprietary technology or specialized equipment, at reasonable negotiated rates, that the Authority needs to continue until a permanent system is put in place.

“The following is a detailed summary of each recommended contract award and extension.

    Contract Awards in Support of Business Units/Departments and Facilities:

                                                                                Business Services

                                                                                        Treasury

                “The contract with PFM Asset Management, LLC (‘PFM’) (Q11-5134; PO# TBA) would provide for financial management consulting services with respect to the Other
     Post-Employment Benefits (‘OPEB’) and Nuclear Decommissioning Trust (‘NDT’) Funds. Services include, but are not limited to, providing advice and analysis regarding the management
    of such Funds, assisting the Authority in updating its investment policy and guidelines for management of the Trusts, reviewing and recommending appropriate asset allocation and rebalancing,
    selecting managers providing investment of assets, performance reporting, monitoring portfolio compliances, and any other services required to manage trust investments. The consultant may
    also be requested, from time to time, to perform special analytical work or provide advice with respect to investment or other asset management issues of particular importance to the Authority.
    Since the existing contract is expiring and the need for such services is ongoing, bid documents were prepared by staff and were downloaded electronically from the Authority’s Procurement
    website by 57 firms, including those that may have responded to a notice in the New York State Contract Reporter; two proposals were received and evaluated. Based on criteria that included,
    but were not limited to, portfolio management experience, technical analysis capabilities, qualifications of primary and support personnel, fee schedule and consulting style, both firms were deemed
    qualified and capable of providing such services. Staff recommends award of a contract to PFM, the lower-priced bidder, which is qualified to perform such services, meets the bid requirements
    and has provided satisfactory service under an existing contract for such work. The new contract would become effective on or about February 14, 2012 for an intended term of up to five years,
    subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for the term of the contract, $895,000. (It should be noted
    that such fees will be paid directly from the respective Trusts.)

CSS / Enterprise Shared Services

Information Technology

    “The contracts with Linwood C. Scott Jr., Inc. T/A LCSJ Communications, Inc. (‘LCSJ’) and TCE Systems, Inc. (‘TCE’) (Q11-5080; PO#s TBA) would provide for the
    services of temporary engineering personnel specializing in radio frequency (‘RF’) technology and microwave communications, when such supplemental services are needed to support
    improvement projects undertaken by the Authority. Bid documents were downloaded electronically from the Authority’s Procurement website by 33 firms, including those that may have
    responded to a notice in the New York State Contract Reporter; two proposals were received and evaluated, based on the experience and capabilities of the bidders and the technical merits
    of their proposals, as further set forth in the Award Recommendation documents. Both firms were found to be technically qualified and their proposals offered viable RF and microwave technology
    temporary engineering personnel at competitive rates. Staff recommends award of contracts (master outline agreements) to both firms. As specific positions are required, the Authority will request
    résumés of candidates based on the requirements and experience required for each position from both prequalified firms. The hiring supervisor will review the submitted résumés, interview
    candidates and select the most qualified individual for the required position at the contractual hourly rate, subject to successful completion of a required background check. Commitments will be
    made through individual Purchase Order Releases issued to the firm that successfully places a candidate, as each required position is bid between the two prequalified firms. Such competition is
    expected to benefit the Authority by providing a variety of qualified talent at competitive rates. The contracts would become effective on or after January 1, 2012 for an intended term of up to
    three years, subject to the Trustees’ approval, which is hereby requested. Both contracts will expire on December 31, 2014, regardless of their duration. Approval is also requested for the
    aggregate total amount expected to be expended for the term of the contracts, $300,000. Total commitments and expenditures for the contracts will also be tracked against the approved
    aggregate total. Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures. It should also be noted that TCE is a New York
    State-certified Minority/Woman-owned Business Enterprise (‘M/WBE’).

“The contracts with Oracle America, Inc. (‘Oracle’) and PowerRunner, LLC (‘PowerRunner’) (Q11-5060; PO#s TBA) would provide for maintenance and support services for
    the new Long-Term Market Forecast (‘LTMF’) software / system purchased and implemented under separate contracts with both firms (not included in this request). The contracts for
    maintenance and support services for each firm’s respective software comprising the LTMF system would become effective as follows: upon completion of the first year of maintenance included
    with the software purchase, a 4-year maintenance contract with Oracle would commence on or about November 15, 2012) and a 5-year maintenance contract with PowerRunner would
    commence upon acceptance by the Authority of the software / system implementation (currently projected to be on or about March 1, 2012). Bid documents (which included the purchase of
    software and implementation, as well as maintenance and support services) were downloaded electronically from the Authority’s Procurement website by 19 firms, including those that may have
    responded to a notice in the New York State Contract Reporter; one joint proposal, submitted by a partnership of PowerRunner and Oracle, was received and evaluated, as further set forth
    in the Award Recommendation documents. Based on the selection of both firms to provide their respective software / system and implementation services, staff now recommends award of
    corresponding multi-year maintenance contracts to both Oracle and PowerRunner. Each firm is uniquely qualified to perform maintenance services to support its respective software / system.
    The maintenance contracts would become effective per the aforementioned projected schedule for an intended term of up to four years for Oracle and up to five years for PowerRunner,
    subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amounts expected to be expended for the term of the contracts, $216,000 for Oracle
    and $348,300 for PowerRunner, respectively.

“The contract with Gotham Technology Group, LLC (‘Gotham’) (Q11-5117; PO# TBA) would provide for maintenance services to support InfoBlox network hardware appliances
    purchased and implemented under a separate contract with Gotham. Bid documents (which included the purchase of such hardware and implementation services, as well as maintenance and
    support services) were downloaded electronically from the Authority’s Procurement website by 26 firms, including those that may have responded to a notice in the New York State Contract
    Reporter; one proposal was received and evaluated, as further set forth in the Award Recommendation documents. Based on the selection of Gotham to provide the InfoBlox hardware and
    implementation services, staff now recommends award of a corresponding multi-year maintenance contract to Gotham. Such contract would become effective on or about December 16, 2011
    for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for the term of
    the contract, $77,818.

“The contract with ReadSoft, Inc. (‘ReadSoft’) (Q11-4904-A; PO# TBA) would provide for an Accounts Payable automation system, software implementation and integration services,
    and five years of maintenance services (to commence upon acceptance by the Authority of system implementation, currently projected to be not later than September 30, 2012). The purpose
    of this software solution is to automate and improve the Authority’s SAP Accounts payable process, by capturing various types of incoming images and data and attaching them to SAP
    documents, with the capability of integrating them with the Authority’s Content Management System. To this end, bid documents (as revised to include the Software-as-a-Service, ‘SaaS,’
    solution as an alternate approach) were downloaded electronically from the Authority’s Procurement website by 48 firms, including those that may have responded to a notice in the New York
    State Contract Reporter; five firms submitted proposals that were evaluated by a team of Authority staff. Two proposals were determined to be not fully responsive and were eliminated from
    further consideration. The remaining proposals were evaluated in greater detail, as further set forth in the Award Recommendation documents. Based on the foregoing, staff recommends award
    of a contract to ReadSoft, the lowest most technically acceptable bidder, which fully satisfied the core functional requirements. The contract would become effective on or about December 16, 2011
    for an intended term of up to five years and nine months, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for
    the term of the contract, $496,000.

Law

Corporate Secretary’s Office

(on behalf of MED and Power Supply – Environmental Division)

            “The Authority is required to publish notice of public hearings on proposed contracts for the sale of power, public forums, certain prospective allocations of power, allocations of
    economic development power recommended by the Economic Development Power Allocation Board, as well as notices relating to permitting and other environmental actions and various
    events that affect communities. The unique and specialized services that media advertising firms provide ensure timely, cost-effective compliance with such statutory mandates and internal Authority
    procedures. The contract with Creative Media Agency, LLC (‘Creative Media’) (Q11-5108; PO# TBA) would provide media advertising services for the placement of such mandatory
    legal notices and public advertisements for the Authority in newspapers and periodicals in New York City and throughout New York State, primarily on behalf of the Marketing and Economic
    Development Business Unit and the Environmental Division. Such services may include, but are not limited to: advertising design, preparation and proofs, as well as affidavits of publication. Bid
    documents were downloaded electronically from the Authority’s Procurement website by 18 firms, including those that may have responded to a notice in the New York State Contract Reporter.
    Three proposals were received and evaluated, as further set forth in the Award Recommendation documents. Staff recommends award of a contract to Creative Media, which is qualified to
    perform such services, fully met the bid requirements and has provided efficient and reliable services under an existing contract for such work. The new contract would become effective on or
    about January 1, 2012 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the aggregate total amount expected
    to be expended for the term of the contract, $600,000.

                                                                                                MED Energy Efficiency Resources & Technology Services

                                                                                                                                   Energy Services

            “The contract with Dialight Corporation (‘Dialight’) (Q11-5128; PO# TBA) would provide for the furnishing and delivery of Light Emitting Diode (‘LED’) bulbs to be used for
     replacement of incandescent series bulbs and compact fluorescent tunnel lights for the New York City Transit (‘NYCT’) subway tunnels, as part of the Authority’s Energy Services Program.
    An initial release order, in the amount of $250,000, for three thousand pieces will be issued to Dialight for testing by NYCT to determine if the product is acceptable. Upon approval by NYCT,
    the Authority will issue releases for the remainder of the material in accordance with NYCT’s needs. In the event that the material is deemed unacceptable by NYCT, no further releases will be
    issued to Dialight and the contract will be cancelled. If the material is considered unacceptable due to performance issues (i.e., excessive failure rate, low light level, electrical problems,
    environmental failure, etc.), the bulbs will be returned to the vendor at no cost to the Authority or NYCT. Bid documents were downloaded electronically from the Authority’s Procurement
    website by 30 firms, including those that may have responded to a notice in the New York State Contract Reporter; three proposals were received and evaluated. The apparent low bidder
    submitted an incomplete proposal, failed to meet the bid requirements and follow-up requests for requisite information from Authority staff, and therefore was deemed non-responsive and was
    not considered further. The next lowest-priced bid, submitted by Dialight, was then evaluated in greater detail. Based on its experience, resources and capability to perform such work, staff
    recommended award of a contract to Dialight, the lowest-priced qualified bidder, which fully meets the bid requirements and has performed satisfactorily while supplying other LED items under
    a prior contract for energy efficiency work. The contract would become effective on or about December 16, 2011 for an intended term of approximately five years, subject to the Trustees’
    approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for the term of the contract, $5.5 million. It should be noted that all costs will
    be recovered by the Authority.

Renewable Energy Resources & Technology

“The contract with UTC Power Corporation (‘UTC’) (Q11-5102; PO# TBA) would provide for operations and maintenance services for the current fleet of Authority-owned fuel
    cell power plants (‘FCPPs’) providing clean, reliable power in the greater New York City and Westchester County metropolitan area. Services include, but are not limited to, scheduled
    preventative and unscheduled maintenance to support the ongoing operation of the FCPPs, remote monitoring, off-site technical support, and major overhauls. Since the existing contract is
    expiring and the need for such services is ongoing, bid documents were prepared by staff and were downloaded electronically from the Authority’s Procurement website by 23 firms, including
    those that may have responded to a notice in the New York State Contract Reporter; one proposal was received and evaluated. Reasons for the lack of other proposals include, but are not
    limited to: not their scope of work, unable to meet specification requirements, lack of relevant experience or expertise, or downloaded the documents for information purposes only. UTC is the
    original equipment manufacturer of the fuel cells and, as such, is uniquely qualified to provide the required monitoring, diagnostics and maintenance services for the FCPPs. Additionally, a
    re-examination by staff of FCPP operations and maintenance indicated that outsourcing such services continues to be more economical and prudent. Staff therefore recommends award of a
    contract to UTC, which is highly qualified to perform such services, fully meets the bid requirements and has provided satisfactory service under an existing contract for such work. The new
    contract would become effective on or about January 1, 2012 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested
    for the total amount expected to be expended for the term of the contract, $3 million.

Power Supply

            “The contract with Access Health Systems (‘AHS’) (C11-185257; PO# TBA) would provide for various medical examinations and related medical services for employees at the
    Clark Energy Center, as required by all applicable safety and health standards, federal or state requirements or Authority policy. Services include, but are not limited to, annual physicals, pre-
    employment physicals, return-to-work examinations, fitness-for-duty testing, on-the-job injury examinations, as well as testing for respirator clearance and fit, lyme titer and other specialized
    tests, where applicable, flu and hepatitis B vaccinations and medical consultations or other medical services, as may be requested. Since the existing contract is expiring and the need for such
    services is ongoing, bid documents were prepared by staff and were downloaded electronically from the Authority’s Procurement website by 15 firms, including those that may have responded
    to a notice in the New York State Contract Reporter; one proposal was received and evaluated. Reasons for the lack of other responses include lack of geographic proximity or the bid
    documents were downloaded for information purposes only. Based on its experience and reasonable pricing, staff recommends award of a contract to AHS, which is qualified to perform such
    services, meets all the bid requirements and has provided excellent service under an existing contract for such work. The new contract would become effective on or about January 1, 2012 for
    an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for the term of the
    contract, $150,000.

“The contract with Anderson Medical, P.C. dba Emergency One (‘Emergency One’) (B11-126393; PO# TBA) would provide for on-site annual physicals and other medical
    examinations and services for employees at the Blenheim-Gilboa Project. Since the existing contract is expiring and the need for such services is ongoing, bid documents were prepared by staff
    and were downloaded electronically from the Authority’s Procurement website by 27 firms, including those that may have responded to a notice in the New York State Contract Reporter; two
    proposals were received and evaluated. Staff recommends award of a contract to Emergency One, the lower-priced bidder, which is qualified to perform such services and meets the bid
    requirements. The contract would become effective on or about January 1, 2012 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.
    Approval is also requested for the total amount expected to be expended for the term of the contract, $75,000. It should be noted that Anderson Medical is a New York State-certified
    Minority/Woman-owned Business Enterprise (‘M/WBE’).

“The contracts with AON Fire Protection Engineering (‘AON’) and Walter T. Gorman, PE, PC (‘WT Gorman’) (Q11-5111; PO#s TBA) would provide for engineering
     permitting services to support multiple projects at the Authority’s plants and facilities in the Southeastern New York (‘SENY’) Region, on an ‘as needed’ basis. Such services include, but are
     not limited to, serving as the Engineer of Record and Permitting Consultant to ensure compliance with all applicable permitting requirements for power plants issued by the New York City
    Department of Buildings (‘NYC DOB’) and the New York City Fire Department (‘NYC FD’). Bid documents were downloaded electronically from the Authority’s Procurement website by
    88 firms, including those that may have responded to a notice in the New York State Contract Reporter. Three proposals were received and evaluated on criteria that included, but were not
    limited to: experience with New York City agencies, public works projects and power plant operation, demonstrated expertise in NYC DOB permitting requirements pertaining to power plants
    and NYC FD testing, commissioning and permitting requirements for power plants. Staff recommends award of contracts to AON and WT Gorman, the most technically qualified bidders,
    which have the requisite experience and expertise to perform such services and meet the bid requirements, as further set forth in the Award Recommendation documents. Both firms demonstrated
    a complete understanding of the work required by the Authority and have the best relevant experience on similar projects with good references from the NYC DOB. Furthermore, both firms have
    also provided satisfactory services under existing contracts for such work and have worked successfully with such agencies. Based on the large amount of work that is anticipated, the award of
    contracts to both firms would ensure sufficient coverage, especially during peak workload periods; additionally, the rates would be more competitive based on the disciplines required for each task.
    The new contracts would become effective on or about January 1, 2012 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested. Approval is also
    requested for the aggregate total amount expected to be expended for the term of the contracts, $1 million. Such contracts will be closely monitored for utilization levels, available approved funding
    and combined total expenditures.

“The contract with AquatiPro LLC, a Division of Sentry Equipment Corp. (‘AquatiPro’) (Q11-5124; PO# TBA) would provide for maintenance services for online process chemistry
    panel analyzers at the 500 MW Plant. Services include, but are not limited to, preventative maintenance and reports for pH, conductivity, silica, phosphate, and dissolved oxygen and sodium
    analyzers, on a monthly or ‘as needed’ basis, as well as parts and training of the Authority’s plant technician/s in maintaining such analyzers. Bid documents were prepared by staff and were
    downloaded electronically from the Authority’s Procurement website by 12 firms, including those that may have responded to a notice in the New York State Contract Reporter; one proposal
    was received and evaluated. Reasons for the lack of other responses include, but are not limited to, the work was not in their scope of services or the bid documents were downloaded for
    information purposes only. Staff recommends award of a contract to AquatiPro, which is qualified to perform such services, meets the bid requirements and has provided satisfactory service
    under an existing contract for such work. The new contract would become effective on or about January 1, 2012 for an intended term of up to five years, subject to the Trustees’ approval, which
    is hereby requested. Approval is also requested for the total amount expected to be expended for the term of the contract, $200,000.

“The contract with Gomez and Sullivan Engineers, PC (‘GSE’) (Q11-5106; PO# TBA) would provide for compliance and implementation services required to fulfill the Authority’s
    commitments made in connection with the relicensing of the Niagara Power Project (‘Project’). Although a number of implementation projects required by the new license, Comprehensive
    Settlement Offer and New York State Department of Environmental Conservation’s Section 401 Water Quality Certification have been completed, many other such projects and activities have
    yet to be implemented. Most of this work is related to environmental habitat improvement projects and recreational enhancement projects in the vicinity of the Project and the Niagara River
    Basin. The support of a compliance and implementation services consultant continues to be necessary in order to assist Authority staff with the ongoing implementation of such commitments by
    providing design development, permitting and contracting support and construction oversight, as well as maintenance planning and records turnover for all such projects. Since the existing contract
    is expiring and the need for such services is ongoing, bid documents were prepared by staff and were downloaded electronically from the Authority’s Procurement website by 64 firms, including
    those that may have responded to a notice in the New York State Contract Reporter; one additional firm obtained the bid documents without downloading. One proposal was received and
    evaluated. Reasons for the lack of other proposals include, but are not limited to: unable to submit a competitive bid, key personnel unavailable, not their scope of work, present work load too
    heavy or downloaded for information purposes only. GSE proposed a team of four highly qualified engineering firms to serve in principal design and project management roles, with qualified
    specialty subcontractors to support them, as needed. Key personnel from each firm have been closely involved in both the relicensing and the compliance and implementation efforts to date. The
    team has firsthand knowledge of all project elements, has worked together efficiently for many years and possesses the required expertise and depth in the multiple technical disciplines described
    in the RFQ, as well as the required project management skills and resources. The GSE team’s past performance with respect to Niagara relicensing and compliance and implementation activities
    has been excellent, and their proposed approach to the remaining scope of the implementation work is sound and consistent with the Authority’s needs. GSE has a strong understanding of the
    entire project and its environmental resources, is familiar with various stakeholders at federal, state and local levels, and has first-hand knowledge of the Authority’s Niagara Compliance Information
    System, which they assisted in developing and which they will turn over to the Authority upon completion of all implementation projects. All these factors will allow for smooth and seamless transition
    into the next phase of license implementation. Based on the foregoing reasons, staff recommends award of a contract to Gomez & Sullivan, which is qualified to perform such services, meets the bid
    requirements and has provided excellent service under an existing contract for such work. The new contract would become effective on or about March 1, 2012 for an intended term of up to five
    years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for the term of the contract, $5 million.

“The contract with Hudson Technologies Company (‘Hudson Technologies’) (A11-125919; PO# TBA) would provide for refrigerant recovery and evacuation services for the inlet
    chiller system, which is critical to the efficient operation of the Authority’s 500 MW Plant. Services include, but are not limited to, providing the requisite qualified personnel and equipment, tools
    and materials for the recovery, decontamination, storage, evacuation and supply of R-22 refrigerant. Since the existing contract is expiring and the need for such services is ongoing, bid documents
    were prepared by staff and were downloaded electronically from the Authority’s Procurement website by 10 firms, including those that may have responded to a notice in the New York State
    Contract Reporter; one proposal was received and evaluated. Reasons for the lack of other proposals include, but are not limited to: unable to perform the entire scope of work, unable to meet
    the bid requirements or downloaded for information purposes only. Based on its ability and resources to perform the work (including both the expertise and the specialized equipment) in accordance
    with the Authority’s specifications and all applicable safety, environmental and other regulations, staff recommends award of a contract to Hudson Technologies, which is highly qualified to perform
    such services, meets the bid requirements and has provided excellent service under an existing contract for such work. The new contract would become effective on or about January 17, 2012 for
    an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for the term of the
    contract, $2.5 million.

“The contracts with L.J. Gonzer Associates (‘Gonzer’), Metro Tech Consulting Services, Inc. (‘Metro Tech’), NPTS, Inc. (‘NPTS’) and Rotator Staffing Services, Inc.
    (‘Rotator’) (Q11-5100; PO#s TBA) would provide for the services of temporary engineering personnel to support the Authority’s Projects and facilities throughout the state, on an ‘as
    needed’ basis. Services may include engineers, technicians and support personnel in the following disciplines: electrical, mechanical, civil/structural, licensing, environmental, chemical, construction
    and construction management, cost and scheduling, instrumentation and control, estimating, quality assurance/quality control and code compliance; as well as procurement professionals, engineering
    aides and clerical aides. Tasks may include, but are not limited to: performing engineering calculations; system design; preparation of engineering sketches and drawings; preparation of procedures,
    schedules, purchasing specifications; review of design drawings; construction supervision; field engineering, testing, and procurement/contract administration. Such personnel will also continue to be
    used to support the Authority during outages, as well as non-outage maintenance and construction activities for several long-term capital projects, including the Life Extension and Modernization
     (‘LEM’) and upgrade programs for the St. Lawrence/FDR, Niagara and Blenheim-Gilboa Projects. Staff estimates that approximately 25 such temporary engineering personnel work under such
    contracts to provide continued support for the ongoing LEM programs, and also to provide additional support, including environmental, code compliance and construction support at the White Plains
    Office, as needed. Since the existing contracts were reaching their compensation limit and, based on current and anticipated staffing projections, the need for such services is ongoing, these services
     were rebid. Bid documents were downloaded electronically from the Authority’s Procurement website by 76 firms, including those that may have responded to a notice in the New York State
    Contract Reporter; 13 proposals were received and evaluated, as further set forth in the Award Recommendation documents. Based on their mark-up rates for existing and new personnel, staff
    recommends the award of contracts to four firms: Gonzer, Metro Tech, NPTS and Rotator, the lowest-priced bidders, which are qualified to perform such work and meet the bid requirements.
    These mark-up rates (which include Federal and State unemployment taxes, FICA, Workers’ Compensation insurance, overhead and fee) are among the lowest in the industry. Additionally, two
    of these firms have provided satisfactory services (personnel) under existing contracts for such work. The new contracts would become effective on or about January 1, 2012 for an intended term
    of up to five years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts,
    $20 million. Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures. It should be noted that Metro Tech and NPTS are New
    York State-certified Minority/Woman-owned Business Enterprises (‘M/WBEs’).

“The contract with NAES Corporation (‘NAES’) (Q11-5091; PO# TBA) would provide for operations and maintenance (‘O&M’) support services for 10 gas turbine units (LM6000s)
    and related equipment installed at the Small Clean Power Plants in six locations within the Boroughs of New York City. (The Brentwood, Long Island unit is operated and maintained by Authority
    personnel from the Richard M. Flynn Power Plant.) O&M support by the contractor continues to be required to provide ongoing operating and prevention and maintenance activities, verify site
    integrity, troubleshoot problems and related activities; to support outage-related activities and to provide additional support during the peak summer season, as may be required. Since the existing
    contract is expiring and the need for such services is ongoing, bid documents were prepared by staff and were downloaded electronically from the Authority’s Procurement website by 42 firms,
    including those that may have responded to a notice in the New York State Contract Reporter; five proposals were received and evaluated, as further set forth in the Award Recommendation
    documents. Based on its experience, ability to perform the work, qualifications and resources, staff recommends award of a contract to NAES, the lowest technically qualified bidder, which fully
    meets the bid requirements and has provided excellent service under an existing contract for such work. The new contract would become effective on or about January 1, 2012 for an intended
    term of up to five years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for the term of the contract,
    $35 million (including adjustments for labor cost increases, inflation, emergencies and unforeseen events).

“Pursuant to 19 NYCRR 1204, each State agency is charged with providing, at a minimum, an annual fire safety inspection for each building within its custody in an effort to determine
    compliance with the Uniform Fire Prevention and Building Code (‘UFPBC’). An inspection report must also be prepared by the agency, violations corrected and re-inspected and a corrective
    action plan prepared and maintained for any violations that remain uncorrected. The Authority has been fulfilling such requirements through a contract with the New York State Department of
    Homeland Security and Emergency Services - Office of Fire Prevention and Control (‘OFPC’). Pursuant to Section 156 of the Executive Law, OFPC has the authority and responsibility
    for providing fire safety inspections at State-regulated facilities, upon the request of the State agency. OFPC has the personnel, training and equipment to assume the fire and safety inspections of
    such facilities and the Authority is requesting OFPC to undertake the responsibility to conduct fire safety inspections for, and at, certain facilities under the Authority’s control. The existing contract
    is expiring and the need for such services is ongoing. Based on the foregoing reasons and OFPC’s reasonable pricing, as well as its satisfactory services provided under the existing contract, staff
    recommends award of a new contract to OFPC (PO# TBA) on a single-source basis. Such contract would provide for the services of a trained, experienced and certified fire protection specialist
    to perform inspections and various other fire safety-related services for the Authority statewide, in compliance with all applicable State fire codes, laws and regulations. Services include, but are not
    limited to: (1) initial inspection of each Authority owned or operated facility statewide (consisting of fire and life safety inspections, issuance of certificates of compliance and assistance in devising
    corrective actions, as needed; (2) re-inspection of those facilities found to need corrective actions during initial inspections, as well as assistance in preparing responses to any safety complaints, as
    needed and (3) consultative services (including, but not limited to, a customized fire safety employee training program, fire safety and emergency response planning and evaluation drills), as may be
    requested by the Authority. The new contract would become effective on or about January 1, 2012 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby
    requested. Approval is also requested for the total amount expected to be expended for the term of the contract, $175,000.

“The contract with RFJ Insulation Contractor, Inc. (‘RFJ’) (Q11-5123; PO# TBA) would provide for all labor, supervision, tools, equipment and materials to install new insulation and
    repair existing insulation at the Authority’s Richard M. Flynn Plant and the Small Clean Power Plants, on an ‘as needed’ basis. Since the existing contract is expiring and the need for such services
    is ongoing, bid documents were prepared by staff and were downloaded electronically from the Authority’s Procurement website by 44 firms, including those that may have responded to a notice
    in the New York State Contract Reporter; three proposals were received and evaluated. Staff recommends award of a contract to RFJ, the lowest-priced bidder, which is qualified to perform
    such services, meets the bid requirements and has provided satisfactory service under an existing contract for such work. The new contract would become effective on or about January 1, 2012
    for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested. Approval is also requested for the total amount expected to be expended for the term of the
    contract, $240,000.

Contract Extensions and Additional Funding:

CSS / Enterprise Shared Services

Information Technology

(on behalf of the Corporate Secretary’s Office)

“At their meeting of December 16, 2008, the Trustees approved the award of a contract to Directors Desk, LLC (a NASDAQ OMX Group Company) (4500169664) to provide
    for a Boardroom Portal Service (a secure online platform for access to documents and related information management features) for use by the Trustees and Corporate Secretary’s Office
    staff. Services also include 24/7 support, an assigned account manager and training. The original award, which was competitively bid, became effective on January 31, 2009 for a three-year
    term, in the amount of $75,000. The externally-hosted web-based portal provides a secure and efficient platform for the Corporate Secretary’s Office and the Trustees to communicate and
    collaborate on scheduling, agenda items and presentation materials. It reduces hard copy printing and shipping costs and streamlines preparations for meetings. Directors Desk fulfills current
    business requirements and the Trustees have adopted it. Staff therefore recommends a two-year extension of the subject contract in order to provide for the continuation of such services and
    the existing working environment. The current contract amount is $56,250 (of the approved total $75,000); staff anticipates that additional funding in the amount of $18,750 will be required for
    the extended term. It should be noted that the proposed cost for the extension maintains the original pricing. The Trustees are requested to approve an extension of the subject contract through
    December 31, 2013, as well as the additional funding requested.

Information Technology
(on behalf of Human Resources)

            “At their meeting of September 23, 2008, the Trustees approved the award of a contract to SilkRoad technology, inc. (4600002056) to provide for web-based software and services to
    support eRecruitment, applicant tracking and onboarding functions for the Authority’s Human Capital and Development Employment Group at the Authority’s White Plains Office and the Human
    Resources Departments at the Facilities. The original award, which was competitively bid, became effective on September 29, 2008 for a three-year term, in the amount of $150,400; the initial
    term was subsequently extended by six months due to a prolonged implementation period. Services include externally hosting the software for the Authority to provide turnkey services, including
    requisitioning, candidate acquisition, applicant tracking and onboarding, as well as communication management reporting/ analytics, data management, application integration and application security
    to support these activities. A two-year extension of the subject contract is now requested in order to continue such services and support the aforementioned HR functions. The current contract
    amount is $150,400; staff anticipates that additional funding in the amount of $78,000 may be required for the extended term. The Trustees are therefore requested to approve an extension of the
    subject contract through March 28, 2014, as well as the additional funding requested.

FISCAL INFORMATION

“Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2012 Approved O&M Budget. Funds for subsequent years,
where applicable, will be included in the budget submittals for those years. Payment will be made from the Operating Fund.

“Funds required to support contract services for capital projects have been included as part of the approved capital expenditures for those projects and will be disbursed from the Capital
Fund in accordance with the project’s Capital Expenditure Authorization Request. Payment for certain contracts in support of Energy Services Programs will be made from the Energy
Conservation Effectuation and Construction Fund.

RECOMMENDATION

“The Deputy General Counsel, the Senior Vice President – Power Supply Support Services, the Vice President – Energy Services, the Vice President – Project Management, the Vice
    President – Engineering, the Vice President – Environment, Health and Safety, the Vice President – Technical Compliance, the Vice President – Procurement, the Vice President – Information
    Technology/Chief Information Officer, the Vice President and Controller, the Treasurer, the Director – Marketing Analysis and Administration, the Regional Manager – Northern New York, the
    Regional Manager – Central New York, the Regional Manager – Western New York, the Regional Manager – Southeastern New York and the General Manager – Clark Energy Center
    recommend that the Trustees approve the award of multiyear procurement (services) and other contracts to the companies listed in Exhibit ‘2d-A’ and the extension and additional funding of the
    procurement (services) contracts listed in Exhibit ‘2d-B,’ for the purposes and in the amounts discussed within the item and/or listed in the respective exhibits.

“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”

The following resolution, as submitted by the Acting 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 procurement services and other contracts set forth in Exhibit “2d-A,” attached hereto, are hereby approved for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the Acting President and Chief Executive Officer; and be it further

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the contracts listed in Exhibit “2d-B,” attached hereto, are hereby approved and extended for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the Acting President and Chief Executive Officer; and be it further

3. Discussion Agenda:

a. Report of the Acting President and Chief Executive Officer

Acting President and Chief Executive Officer Quiniones provided an update of the Authority’s performance, as reflected in the corporate performance matrix
developed by Authority staff, and highlighted some of the key initiatives.

Key Issues
Operations
Acting President and Chief Executive Officer Quiniones said that the Authority is working with Long Island Power Authority and National Grid to repair the
Y49 345 kV transmission line and it is expected to return to service on January 1, 2012.

Environmental Incidents
Acting President and Chief Executive Officer Quiniones said that while the Authority exceeded its “stretch goals” for environmental incidents, it is performing above
industry standard, a move in the right direction.

Economic Development - ReChargeNY Program
            Acting President and Chief Executive Officer Quiniones said that the deadline to submit applications the first segment of the ReChargeNY program was November 30th.
    The Authority received 924 applications and staff is in the process of reviewing the applications for completeness. Staff is also working with the Governor’s office and the
    Empire State Development Corporation (“ESD”) to reopen the process for restarting future rounds of the process.

In response to a question from Trustee Eugene Nicandri, Acting President and Chief Executive Officer Quiniones said that the Authority is not an official member of the
    Regional Councils. He also stated that the ReChargeNY Program is one of the incentives available to businesses in the various regions of the State. In response to further
    question from Trustee Nicandri, Acting President and Chief Executive Officer Quiniones said that Mr. James Pasquale, Senior Vice President of Marketing and Economic
    Development and staff attended meetings of the Regional Councils and works with ESD and the Governor’s office to ensure that the Authority is fully integrated in the
    ReChargeNY application process.

In response to a question from Chairman Townsend, Acting President and Chief Executive Officer Quiniones said that Authority staff has contacted existing
customers who have submitted incomplete applications to assist them with their applications; staff has also contacted existing customers who have not submitted an
application, encouraging them to apply for power in future segments of the application process.

In response to a question from Trustee O’Luck, Acting President and Chief Executive Officer Quiniones said that staff is working with customers who submitted
incomplete applications in order to ensure that their applications are accurate and complete.

Hudson Transmission Partners Project (“HTP”)

Acting President and Chief Executive Officer Quiniones said that construction has started on the HTP project; he visited the site and the work is going well. The
estimated completion date for the project is July 2013. He added that the project will provide energy security, reliability and diversity in the city and state.

2012 Budget

Acting President and Chief Executive Officer Quiniones said that, with the guidance of the Trustees, the Authority’s budget for 2012 is completed and the Board will
be asked to approve it at this meeting. He said that the budget is in alignment with the Governor’s goal for the Authority to invest in its critical and aging infrastructure
and to stimulate job creation in the state. He added that the projected year-end Revenue is $2.7 billion and the projected year-end Net Income is $228 million.

b. Report of the Acting Chief Operating Officer

Acting Chief Operating Officer, Mr. Edward Welz, provided highlights of the report to the Trustees.

Performance Measures
System-wide Net Generation exceeded projections.
Key Issues

§ Y49 345 kV Transmission Line Failure – Repairs on the Y49 transmission line continues; scheduled to be back in service January 2012.

§ Succession Planning – Working on succession planning and overall staffing of the Department.

§ Operational Efficiencies – Planning restructuring the energy control center.

§ Blenheim-Gilboa and Vischer Ferry – Tropical Storm Damage – to date, $700,000 has been spent on repairs as a result of the damages from Tropical Storm Irene.
Projected remediation cost for repairs at B-G and Vischer Ferry Plants is $13 million.

§ St. Lawrence-FDR Life Extension and Modernization – Unit 19 scheduled to return to service on April 18, 2012.

§ Lewiston Pump Generating Project Outage – Scheduled to return to service in October 2012.

§ Niagara Unit 2 Standardization – Scheduled to return to service on July 12, 2012.

§ Flynn Outage – Repairs completed – returned to service.

§ NERC CIP Standard for 2011 – completed self certification for NERC CIP standards in October.

c. Report of the Acting Chief Financial Officer

Acting Chief Financial Officer, Mr. Donald Russak, provided highlights of the report to the Trustees. He said that the Authority continues to perform well financially.

Net Income

§ Net income through November 2011 was $217 million, which was $52 million higher than budgeted. This was due primarily to higher generation levels and higher market
based sales at the Niagara and St. Lawrence facilities.

§ Net Income for the month of November ($6.4 million) was $3 million below the previous forecast, reflecting lower than forecasted energy prices for the month of November.

§ Year-end net income is currently projected to be $228 million, $49 million above the 2011 budget.

Financial Metrics

§ Key financial metrics, cash-flow (debt service coverage) and liquidity, remain on target – at or above the median for like-entities, i.e., AA rated wholesale public power organizations.

4. 2012 Operating Budget and Filing of the 2012-2015 Four-Year Financial Plan Pursuant to Regulations of the Office of the State Comptroller

The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

                “The Trustees are requested to approve the 2012 Operating Budget, Operations and Maintenance (‘O&M’) Budget, Capital Budget and Energy Services Budget for the Power Authority.
    The Operating Budget sets forth the expected revenues and expenses of the Authority and includes the recommended 2012 O&M Budget, the Capital Budget and the Energy Services Budget
    (see attached Exhibits ‘4-A,’ ‘4-B,’ ‘4-C’ and ‘4-D,’ respectively) in the following amounts:

2012 Budget ($ million)

O&M $ 345.1

Capital $ 166.7

Energy Services $ 200.0

    “Also, in accordance with regulations of the Office of the State Comptroller (‘OSC’), the Trustees are requested to approve the 2012-2015 Four-Year Financial Plan (‘Four-Year Financial
    Plan’ – see attached Exhibit ‘4-E’) and authorize: (i) submitting the approved Four-Year Financial Plan to OSC, (ii) posting the approved Four-Year Financial Plan on the Authority’s website and
    (iii) making the approved Four-Year Financial Plan available for public inspection at not less than five convenient public places throughout New York State.

    BACKGROUND

                “The Authority is committed to providing clean, low-cost and reliable energy consistent with its commitment to the environment and safety, while promoting economic development and job
    development, energy efficiency, renewables and innovation, for the benefit of our customers and all New Yorkers. The 2012 Budgets are intended to provide the Authority’s operating facilities and
    support organizations with the resources needed to meet this overall mission and the Authority’s strategic objectives while holding down administrative costs.

    “The OSC implemented regulations in March 2006 addressing the preparation of annual budgets and four-year financial plans by ‘covered’ public authorities, including the Authority.
    (See 2 NYCRR Part 203 (‘Part 203’)). These regulations establish various procedural and substantive requirements, discussed below, relating to the budgets and financial plans of public authorities.
    The Budget and Four-Year Financial Plan have been prepared in accordance with these regulations.

                “In approving the 2012 O&M, Capital and Energy Services Budgets, the Trustees will be authorizing spending for 2012 operations, spending for capital projects and general plant purchases
    of $750,000 or less and the addition of 12 new positions in various functions in Plant Operations. In accordance with the Authority’s Expenditure Authorization Procedures, the President and Chief
    Executive Officer may, during course of the year, authorize an additional 1% in the O&M Budget, up to 15 new positions, capital projects of $3 million or less, or an increase in spending of no more
    than $1 million to a capital project previously approved by the Trustees.   All other spending authorizations must be approved by the Trustees.

DISCUSSION

O&M Budget

“The base O&M Budget of $345.1 million (Exhibit ‘4-B’) reflects a renewed focus on the effective operation and maintenance of the Authority’s critical investments in New York State’s
electric infrastructure while holding down overhead costs.

    “The 2012 O&M Budget for Operations provides $206 million for baseline, or recurring, work. In addition to the baseline work, scheduled maintenance outages at the 500 MW Plant
    and the Small Clean Power Plants (totaling $13 million) and planned enhancements in non-recurring maintenance work at the operating facilities (totaling $37 million) are designed to support high
    reliability goals. Some of the major non-recurring projects include: Preliminary Engineering – Transmission System Assessment, ($4.0 million); Gowanus Bulkhead and Sinkhole Repairs,
    ($2.8 million); Niagara’s Moses Units #2 and #13 Standardization, ($1.3 million); and the Niagara Headgate Refurbishment, ($1.2 million).

    “Cuts in the budget for the support functions of $3.1 million enabled the overhead budget to remain flat as it offset significant increases in New York State pension costs and medical
    benefits. Reductions in payroll, ($1.3 million), in contract and consulting services, ($1.2 million) and in contributions, sponsorships and other miscellaneous costs, ($0.6 million) are reflected in
    the Budget request.

    “Payroll costs, which include salaries, overtime and fringe benefits, account for $195.2 million, or 56.6% of the budget, down from 58.0% last year. Overall, headcount at the Authority
    will decline by 14 positions. While 12 new positions are being proposed in various areas of plant operations, the net elimination of a total of 26 positions in headquarters and succession planning
    transitional positions will more than offset the newly requested positions.

“The Astoria Energy II budget totals $25.8 million and represents the contractual O&M costs for the plant, which was placed in commercial operations in New York City in July 2011.
These costs are being recovered from the Authority’s New York City Governmental customers, who are the beneficiaries of the output of this plant, via a long-term contract.

Capital Budget

    “The 2012 Capital Budget (Exhibit ‘4-C’) totals $166.7 million, a decrease of $11.1 million from 2011. Of this amount, $118 million – or 70% of the total – represents planned investments
    in the Authority’s Upstate New York facilities at Niagara and St. Lawrence, as well as in its statewide Transmission network. Significant capital projects for 2012 include the St. Lawrence Life
    Extension and Modernization (‘LEM’), ($20.2 million), the Lewiston Pump Generating Plant LEM, ($26.1 million), the Robert Moses Restacking, ($7.1 million), Niagara/St. Lawrence Relicensing
    Implementation, ($12.9 million) and the Robert Moses Power Project Unit Standardization, ($5.6 million).

“The Capital Budget includes $8.9 million of minor additions and general plant purchases that will be authorized by approval of this budget.

Energy Services Budget

    “The budget for Energy Services and Technologies (Exhibit ‘4-D’) totals $200.0 million, an increase of $50 million over the 2011 budget. These expenditures will be subsequently
    recovered over time from the benefiting customers. The budget includes increased funding for energy efficiency projects for Authority customers and other eligible entities as the Authority strives
    to support Governor Cuomo’s improved energy efficiency and clean, renewable energy goals.

Operating Budget

                “The 2012 Operating Budget (Exhibit ‘4-A’) sets forth the expected revenues and expenses of the Authority on a Project/Market Area basis and serves as the basis for the Authority’s
    financial reporting during the year. Expected revenues received from customers are based on contracts and tariffs that are approved by the Trustees. Market-based sales of any surplus energy
    from the Authority’s generating facilities or purchases made on behalf of customers (except for those made through previously approved purchased power agreements) are assumed to be transacted
    at the market clearing price in the wholesale market. Projected expenses for O&M are detailed above. The Other Expenses category largely reflects various accruals (e.g., Other Post-Employment
    Benefit prior service obligations) and other miscellaneous expenses for which Trustee approval is sought on a case-by-case basis (e.g., Power for Jobs Rebates, Recharge New York Residential
    Discount Program, etc.). Also reflected in the 2012 Operating Budget is an assumed level of contributions to New York State totaling $85 million. Of this amount, $60 million has been authorized
    by the Legislature for State Fiscal Year (‘SFY’) 2011-2012 and an additional $25 million is estimated for the Authority’s calendar year 2012 operations as part of SFY 2012-2013. Any such
    contribution may only be made if authorized by the Legislature and upon a determination (not requested at this time) by the Trustees that the payment would be feasible and advisable at the time of
    such disbursement.

Four-Year Financial Plan

“Under Part 203 of the OSC Regulations, the Trustees are required to adopt a 2012 Budget and Four-Year Financial Plan (Exhibit ‘4-E’). The 2012 Budget, which is the first year of
    the Four-Year Financial Plan, is being brought to the Board for approval at this time. The remaining three years are indicative forecasts. The approved Four-Year Financial Plan must be
    available for public inspection not less than seven days before the commencement of the next fiscal year for a period of not less than 45 days and in not less than five convenient public places
    throughout the State. The approved Four-Year Financial Plan must also be submitted to OSC, via electronic filing through the Public Authorities Reporting Information System maintained by
    OSC and the Authority Budget Office, within seven days of approval by the Trustees. The regulations also require the Authority to post the Four-Year Financial Plan on its website.

            “Under Part 203, each approved Four-Year Financial Plan must be shown on both an accrual and cash basis and be prepared in accordance with generally accepted accounting principles;
    be based on reasonable assumptions and methods of estimation; be organized in a manner consistent with the public authority’s programmatic and functional activities; include detailed estimates of
    projected operating revenues and sources of funding; contain detailed estimates of personal service expenses related to employees and outside contractors; list detailed estimates of non-personal
    service operating expenses and include estimates of projected debt service and capital project expenditures.

“Other key elements that must be incorporated in each approved budget and Four-Year Financial plan are a description of the budget process and the principal assumptions, as well as a
self-assessment of risks to the budget and financial plan. Additionally, the approved Four-Year Financial Plan must include a certification by the Chief Operating Officer.

FISCAL INFORMATION

                “Payment of O&M expenses will be made from the Operating Fund. Payment for Capital and Energy Services expenditures will be made from the Capital Fund and the Energy
    Conservation Construction and Effectuation Fund, respectively. Monies of up to $136.1 million from the Operating Fund will be transferred to the Capital Fund for capital expenditures,
    provided that at the time of withdrawal of such amount or portions of such amount, the monies withdrawn are not then needed for any of the purposes specified in Sections 503(1)(a)-(c)
   of the General Resolution Authorizing Revenue Obligations, as amended and supplemented. The 2012 Operating Budget shows adequate earnings levels so that the Authority may maintain
    its financial goals for cash flow and reserve requirements.

“The Four-Year Financial Plan net income estimates for each of the years 2013 through 2015 are indicative forecasts and the Trustees are not being asked to approve any revenue and
expenditure amounts for those years at this time.

RECOMMENDATION

            “The Director of Budgets and the Director of Financial Planning recommend the Trustees approve the 2012 Operations and Maintenance, Capital and Energy Services Budgets and the
    Operating Budget as discussed herein and authorize (i) submitting the approved Four-Year Financial Plan to the Office of the State Comptroller in the prescribed format, (ii) posting the approved
    Four-Year Financial Plan on the Authority’s website and (iii) making the approved Four-Year Financial Plan available for public inspection at not less than five convenient public locations
    throughout New York State.

“For the reasons stated, I recommend the approval of the above-requested actions by adoption of a resolution in the form of the attached draft resolution.”

Mr. Donald Russak presented highlights of staff’s recommendation to the Trustees. Responding to a question from Trustee Nicandri, Mr. Russak said that the Authority
    has a succession planning program in place, and, particularly at the Projects, part of that program allows a fully trained technical employee in a transitional position to
    transition to the position of a retiring employee, after which the transitional position is eliminated. This is an on-going process as part of the Authority’s succession
    planning program.

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

RESOLVED, That the 2012 Operating Budget, specifically including the 2012 Budgets for Operation and Maintenance, Capital and Energy Services expenditures, as discussed in the foregoing report of the Acting President and Chief Executive Officer, are hereby approved; and be it further

RESOLVED, That up to $136.1 million of monies in the Operating Fund are hereby authorized to be withdrawn from such Fund and deposited in the Capital Fund, provided that at the time of withdrawal of such amount or portions of such amount, the monies withdrawn are not then needed for any of the purposes specified in Sections 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations as amended and supplemented, with the satisfaction of such condition being evidenced by a certificate of the Treasurer or the Deputy Treasurer; and be it further

RESOLVED, That pursuant to 2 NYCRR Part 203, the attached 2012-2015 Four-Year Financial Plan, including its certification by the Acting Chief Operating Officer, is approved in accordance with the foregoing report of the Acting President and Chief Executive Officer; and be it further

RESOLVED, That pursuant to 2 NYCRR Part 203, the Corporate Secretary be, and hereby is, authorized to submit the approved Four-Year Financial Plan to the Office of the State Comptroller in the prescribed format, post the approved Four-Year Financial Plan on the Authority’s website and make the approved Four-Year Financial Plan available for public inspection at not less than five convenient public places throughout New York State; and be it further

RESOLVED, That the Chairman, the Vice Chairman, the Acting 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 and General Counsel.

5. Decrease in Westchester County Governmental Customer Rates – Notice of Adoption

The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

        “The Trustees are requested to approve a modification in the rates for the sale of firm power to the Westchester County Governmental Customers (‘Customers’) in 2012. This
    proposed action is consistent with the rate-setting process set forth in the Supplemental Electricity Agreements executed by the Customers and the Authority and in accordance with the State
    Administrative Procedure Act (‘SAPA’).

“This proposed final action seeks approval to decrease the production rates of the Customers by 6.79% as compared to 2011 rates. The decrease would be effective with the
January 2012 bills.

“Authority staff is also seeking final approval to correct the service tariff to clarify the production minimum billing provision.

BACKGROUND

        “At their meeting of September 27, 2011, the Trustees directed the publication in the New York State Register (‘State Register’) of a notice that the Authority proposed to decrease
    the production rates by 2.71% and make technical corrections to clarify the production minimum billing provision contained in the service tariff. The State Register notice was published on
    October 12, 2011, as revised by an erratum published on November 2, 2011. In accordance with SAPA, a forty-five day comment period was established, ending on November 28, 2011.
    Since this proposal called for no rate increase to the Customers, in accordance with the Authority’s policies and procedures, no public forum was held. There were no public comments received
    and the public record was closed on November 28, 2011.

DISCUSSION

“Based on further staff analysis, the final projected 2012 Cost-of-Service (‘COS’) is $35.20 million and the projected 2011 rate revenues are $37.76 million, resulting in an
over-recovery of $2.57 million or 6.79%. This represents an additional decrease of $1.73 million from the proposed rate decrease discussed at the September 2011 Trustees’ meeting.

        “The decrease from the preliminary COS is primarily attributable to decreases in the projected market price of energy and capacity, as well as lower ancillary services costs. In
    addition, the final 2012 COS incorporated an updated 2012 sales and revenue forecast. The final projected 2012 revenue forecast is $0.19 million lower than the preliminary 2012 COS. The
    final 2012 rate revenues were calculated using the currently effective 2011 rates based on the new rate design approved by the Trustees at their June 28, 2011 Trustees’ meeting, while the
    preliminary COS, issued to Customers in April 2011, used the old rate design.

“Staff is proposing a 6.79% reduction in base production revenues through customer rates to reflect the continued reduction in the power supply costs as contained in the currently
effective 2011 rates.

        “In 2012, the Customers will continue to be subject to an Energy Charge Adjustment, under which the Authority passes through all actual variable costs to the Customers. This
    cost-recovery mechanism employs a monthly charge or credit that reflects the difference between the projected variable costs of electricity recovered by the tariff rates and the monthly actual
    variable costs incurred by the Authority.

“The current 2011 and final 2012 proposed rates with the 6.79% overall reduction in revenues are shown in Exhibit ‘5-A.’

“The proposed technical corrections to the minimum bill provision are revenue-neutral. As no comments were received regarding these tariff changes, they should also be approved.

FISCAL INFORMATION

        “The adoption of the 2012 production rate decrease would have no net effect on the Authority’s financial position. The rate change would result in an estimated reduction in revenues
    of $2.57 million, which is offset by the forecasted reduction in costs. The Energy Charge Adjustment mechanism will protect the Authority’s net revenues from the effects of movements in variable
    costs above those projected.

“The corrections to the minimum bill provision are revenue-neutral to the Authority.

RECOMMENDATION

    “The Director – Market Analysis and Tariff Administration, recommends that the Trustees authorize the Corporate Secretary to file a Notice of Adoption with the New York State
    Department of State for publication in the New York State Register of a decrease in production rates for the Westchester County Governmental Customers.

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

“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”

Mr. Mike Lupo presented highlights of staff’s recommendation to the Trustees. In response to a question from Trustee Nicandri, Mr. Lupo said that, overall, the rates are
at the level as that of the rates in 2005. The costs then were at $35.3 million in 2005 versus $35.2 million in 2012.

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

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to issue written notice of this final action by the Trustees to the affected Customers; and be it further

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file such notices as may be required with the New York State Department of State for publication in the New York State Register and to submit such other notice as may be required by statute or regulation concerning the rate decrease; and be it further

RESOLVED, That the Chairman, the Vice Chairman, the Acting President and Chief Executive Officer, the Acting Chief Operating 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 and General Counsel.

6. Withdrawal of Proposal to Increase New York City Governmental Customer Fixed Costs Component and Request to Adopt Rulemaking

The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

           “The Trustees are requested to approve the withdrawal of a proposal contained in the Notice of Proposed Rulemaking (‘NOPR’) authorized by the Trustees at their
    September 27, 2011 meeting that would increase the Fixed Costs component of the production rates to be charged in 2012 to the New York City Governmental Customers (‘NYC
    Governmental Customers’ or ‘Customers’). The result of the withdrawal of the proposed action is that the existing 2011 Fixed Cost value will remain in effect for 2012.

“NYPA staff is also seeking final approval of the proposals included in the NOPR to correct the service tariff to clarify the production minimum billing provision and to correct
a typographical error in Table of Contents. Staff asks that the Corporate Secretary be directed to file a Notice of Adoption consistent with these recommendations.

BACKGROUND

            “At their September 27, 2011 meeting, the Trustees authorized publication in the New York State Register (‘State Register’) of a notice that the Authority proposed to increase
    the Fixed Costs component of the production rates to be charged in 2012 to the Customers. As indicated in the September 27th Memorandum to the Trustees, the Customers’ Long Term
    Agreements (‘LTAs’) establish two distinct cost categories: Fixed Costs and Variable Costs. Fixed Costs include Operation and Maintenance (‘O&M’), Shared Services, Capital Cost, Other
    Expenses (i.e., certain directly assignable costs) and a credit for investment and other income. The LTAs require the Authority to establish Fixed Costs based on cost-of-service principles;
    changes may be made only under a State Administrative Procedure Act (‘SAPA’) proceeding with the approval of the Trustees.

            “As authorized by the Trustees, a State Register notice was published on October 12, 2011 in accordance with SAPA requirements. Since the proposed Fixed Costs component
    increase was greater than 2%, a public forum was held, in accordance with Authority policy, at the New York City office on November 17, 2011. The public comment period was closed on
    December 1, 2011. The City of New York (‘City’) is the only one of the eleven NYC Governmental Customers that made a verbal statement at the public forum and filed formal written
    comments during the SAPA process.

            “Over the years, NYPA estimates that public facilities in New York City have saved hundreds of millions of dollars in their electric bills as NYPA customers. Based on Authority’s
    internal customer savings analysis, it is estimated that in calendar year 2010 Customers saved $368 million in their production and $236 million in delivery bills when compared to estimated Con
    Edison retail rates and charges.[*]

    DISCUSSION

            “The November 17, 2011 public forum was conducted in accordance with the terms of the Policy and Procedures – Public Forum on Rate Proposals adopted by the Authority’s
    Trustees at their meeting of November 27, 1990. Authority staff spoke at the forum to explain the procedures and summarize the results of the Fixed Costs component portion of the 2012
    Cost-of-Service (‘COS’) Study. Aside from Authority staff, one individual representing the City attended the forum and made a statement in regards to the proposed Fixed Costs increase and
    asked for a short extension of the SAPA set public comment period to submit written comments. Exhibit ‘6-A’ is the transcript from the public forum on the Authority’s proposal to increase the
    Fixed Costs component of the production rates in 2012.

“Under the LTAs, Customers’ concerns must be considered in a confidential process prior to presenting any proposed changes to the Fixed Costs to the Trustees or issuing them
for public comment. Numerous Customer data requests were presented to staff, and in all cases, responses to relevant questions were provided to the Customers.

1. Staff Analysis of Public Comments on Fixed Costs and Recommendations

“Below is staff’s analysis and recommendations addressing the public comments received on the Fixed Costs proposal, which are included in Exhibit ‘6-B.’

                         “First, staff provides a review of the recently concluded annual process with the NYC Governmental Customers that led to the proposed 2012 Fixed Costs and the Final
    2012 COS. Second, staff provides its analysis and recommendations regarding five issues raised by the City in its comments filed on December 1, 2011. No other party filed comments.
    Two of the issues raised (Issues 3 and 4) concern only a request for more information and no specific relief is requested. NYPA has provided the information and accordingly makes no
    recommendations for Issues 3 and 4.

                          “Staff Review of 2011 LTA Annual Process: During this cycle of the LTA annual process, NYPA staff has provided the Customers with abundant verifying information via
    the issuance of a comprehensive Preliminary 2012 COS and its accompanying, explanative, staff report and by responding to numerous Customer data requests made during the discovery
    process. “After distribution of the Preliminary 2012 COS on May 27, 2011, the City and the Metropolitan Transit Authority (‘MTA’) submitted numerous discovery requests. There were
    32 discovery requests put forth by the City; many of these contained multiple parts, such that 81 responses and/or analyses were provided to the City. The MTA issued eight data requests
    that were answered. All responses and analyses were provided over various points during June through early September.

                        “In addition to the written responses, NYPA staff conducted conference calls with the Customers and their consultants on various COS issues. On August 25, 2011, pursuant
    to the terms of the LTA, NYPA and the Customers teleconferenced on the Fixed Costs. Particular focus was placed on the O&M and Shared Services expenses with the Customers voicing
    concerns about the adequacy of the data provided up until that point. In its comments, the City stated that ‘this year, it did not receive details on the level of the Fixed Costs until two weeks
    before the expiration of the public comment period.’ The City remarked that it did not have sufficient time to fully analyze and understand NYPA’s proposal.

                        “These statements foster an impression that NYPA has not been responsive to the discovery process required in the LTA. In this current rate action, the City received budget
    information concerning the Fixed Costs that surpassed anything that had been provided in past LTA annual processes. For the first time, the Customers were provided with budget data prior
    to the completion of any Final COS, including the O&M and Shared Services expense information that is normally not available until the completion of NYPA’s annual budget process.

                        “As staff has explained to the Customers, the Authority’s annual budget cycle, which is finalized near the end of the year, is not ‘in-sync’ with the discovery process that occurs
    under the LTA, which takes place mid-year. As a result, only preliminary budget estimates can be provided for these expenses during the discovery process.

                        “However, to overcome this problem, NYPA staff offered to provide, for the first time, the full detail and back-up to the official NYPA budget estimates for the LTA Customers’
    O&M and Shared Services expenses as they came to finalization by NYPA’s Budget Group in early to mid-November. Staff also offered to be on call to answer any Customer questions
    regarding the information that was to be provided. The Customers readily accepted NYPA’s offers.

                        “The promised data was provided on November 14, 2011, along with the offer by staff to be available to answer any questions. In response, the City asked for a three-day
    extension to have more time to analyze the information, and this request was granted.

“Despite the provision of detailed, final budget data for Customer review; the offer by staff to be on call to answer any questions; and the granting of an extension of the public
comment period, there were no follow-up inquiries from the City concerning the O&M and Shared Services expenses data provided.

Issue 1: Consistency of Proposed Fixed Costs With Trustees’ Directives

                        “Comments: The City cited a July 26, 2011 press release in which NYPA announced a directive by the Board of Trustees to cut costs and a November 15, 2011 press release
    where NYPA reported that it reduced its overhead costs by $3 million, which comprises part of its plan to achieve its goal of a 10% reduction in costs. The City further stated that NYPA and
    the Board of Trustees should treat all of their O&M and Shared Services assessments in a manner commensurate with other NYPA customers. According to the City, O&M expenses should
    be reduced by $3.6 million and Shared Services expense by $3.0 million.

                        “Staff Analysis: The press releases cited by the City refer to targets that NYPA has set for certain headquarters expenses concerning salaries, consulting expenses, travel and
    other overhead expenses. Three million dollars of savings were achieved overall from those areas and they effectively offset increases in medical benefits and pension costs. The cost-cutting
    goal of 10% does not refer to NYPA’s O&M expenses.   In fact, the press releases highlight that the spending cuts in overhead will allow for a renewed focus on the maintenance and reliability
    of the Authority’s generating and transmission facilities.

“The Shared Services expenses component of the Fixed Costs consists of the portion of the headquarters O&M budget not directly assignable to any facility or project, plus the
Research and Development O&M budget, with those two components offset by the allocation of labor personnel costs to capital projects.

“These Shared Services estimates are based on the level of headquarters resources required to support the Customers and the proportional amount of corporate overhead
allocated on the basis of labor assigned to the 500MW combined cycle unit and the Small Hydro projects.

                        “NYPA uses the same labor cost methodology to allocate the headquarters costs to other Authority facilities. This allocation methodology is consistent with the decision made
    in Village of Bergen v. Power Auth. of State of N.Y., 249 A.D.2d 902 (4^th Dep’t 1998), appeal den’d, 97 N.Y.2d 606 (2001). The use of the labor cost approach to the allocation of
    overhead costs is fairly standard throughout the electric industry.

                        “Reasons for the increase of roughly $1 million in the Customers’ Shared Services expense in the 2012 COS is an overall Authority-wide increase of $3.7 million in the Research
    and Development component and a slight shift in labor ratio allocation weighting amongst the Authority’s facilities. This allocation shift reflects the typical annual change in relative labor costs
    that are the result of personnel movements at the facilities.

                        “Recommendation: NYPA uses the same Shared Services expenses allocation methodology for all its customers and the Shared Services expenses are derived from the 2012
    annual budget that is presented to the Trustees today for their approval, in a separate action. Staff finds no basis for the City’s proposed O&M reduction proposal of $3.6 million or their
    proposal for reduction in the Shared Services expense of $3.0 million.

Issue 2: Criticism of O&M Expense Levels

“Comments: Customers have performed an analysis showing the $/MWh of Fixed Costs as a function of generator output. The analysis shows a 100% per-unit increase from
2006 to present and estimates a 16.7% increase from 2011 to 2012.

                        “Staff Analysis: Staff does not disagree with the City’s calculations, but questions their relevancy. Putting aside that changes in annual MWh can be driven by varying market
    conditions, outage durations, the arrival of new competitive generation stations, such as the AEII Project, and the retirement of the Poletti unit, the more important, even critical, factor is to
    keep NYPA’s generators operating efficiently, economically and reliably. NYPA is putting a renewed focus on the maintenance and reliability of its generating and transmission facilities. NYPA
    staff and management work to develop O&M and Capital plans that will ensure this outcome with the Trustees providing fiduciary oversight of the process and plans. The conclusion of this
    collaborative effort is today’s Trustees vote to approve the 2012 NYPA O&M budget. The O&M expenses associated with the 2012 COS is directly derived from the overall NYPA budget
    approved by the Trustees and ensures that the NYC Governmental Customers are treated in the same manner as the Authority’s other customers.

“As noted in the background section to this Memorandum, the Customers saved $368 million in their production costs as a result of NYPA’s generation assets and transmission
contracts. The capability of maintaining the reliability of generation assets dedicated to the NYC Governmental Customers plays a formative role in bringing about this competitive margin.

“Recommendation: Staff recommends that the City’s proposed O&M expense reduction of $3.6 million in the 2012 COS be rejected.

Issue 3: Request for Additional Explanation and Justification for Certain 2012 Proposed Projects

                        “Comments: The City raised concerns about the O&M expenses related to valve replacement and roof leaks at the 500 MW Project, and questioned why these activities are
    occurring so soon after the Project was placed in service in 2006.   The City also asks why there is a relocation of temporary trailers on the 500 MW Project site when there is an existing
    Administration Building.

                        “Staff Analysis: Concerning the valve replacement issue, the 500 MW Project was engineered as a base load plant and generally runs in a cycling mode. Most valves installed
    in the plant were not designed for a cycling mode. The 500 MW Project has experienced a large number of valve failures which have delayed plant operations and caused emissions
    exceedances, premature maintenance work and forced outages. Upgrading to severe service valves has been successful at the Poletti Plant and throughout the power industry in reducing
    maintenance requirements, failures and forced outages.

            “At the beginning of commercial operation of the 500 MW Project, office trailers and trailer restroom facilities were installed at the site for contractor use due to the administration
    building not being equipped with adequate facilities to house the contractors. The trailers were installed in close proximity to the plant under the Air Cooled Condenser. The trailers have become
    a semi-permanent installation which houses a fire suppression system (i.e. sprinkler system). This close proximity poses a life and safety issue that puts at risk the Air Cooled Condenser, a piece
    of equipment vital to the plant’s operation. The trailers need to be relocated in order to mitigate this risk.

            “The 2012 budgeted roof leak amount is meant to fix any leaks which occur at the 500 MW Project in order to protect valuable assets. NYPA’s roofing consultant performed an
    assessment of the Project’s roof and recommended replacement within the next few years based on its observed condition. The roof warranty expires in 2015 and repairs have been performed
    under the warranty and any emergent leaks will be investigated against warranty coverage.

Issue 4: Certain Poletti-Related Costs

“Comments: The City raised concerns about the Poletti-related decommissioning costs and stated that NYPA has told them that it does not have a plan. The City posited that the
absence of a Poletti retirement plan raises questions regarding the cost effectiveness of expenditures to date.

“In a separate concern, the City asserted that NYPA was not responsive in its answer included in the January 2011 Memorandum to the Trustees (regarding the 2011 Fixed Costs)
to the City’s belief that any Poletti expenses incurred after January 2010 should be paid from the asset retirement fund.

                        “Staff Analysis: The City is mistaken in its view that NYPA lacks a decommissioning plan. In fact, in answer to a specific City data request, NYPA responded ‘it is likely that the
    final recommended plan for the Poletti decommissioning will be completed by year’s end (2011) or the early part of 2012. If the decommissioning costs are lower than those that have been
    forecasted for COS purposes, the Customers will either have the period of collection truncated or the annual assessed cost lowered.’

                        “Staff has reviewed its response in the January 2011 Memorandum and does not in agree with the City’s assertion that NYPA did not adequately answer their concerns that all
    Poletti expenses incurred after January 2010 should be drawn from the asset retirement fund. Staff would be willing to explain the handling of any 2012 COS Poletti-related expenses, but the City
    has not questioned any specific costs. Indeed, the City’s Exhibit ‘1’ shows four projected Poletti-related costs in the 2012 COS and the City offered no proposed adjustments to any of these items.

Issue 5: Request to Adjust Costs Related to the 500 MW Unit

A. Oil Inventory Carrying Cost

“Comments: The City objected to the Oil Inventory Carrying Cost being included in the 2012 COS since it is a Variable Cost and not a Fixed Cost, and it is not an expense
included in any of the cost categories shown on Attachment B to the LTA.

“Staff Analysis: The LTA allows additions to cost categories shown in Attachment B if they can be justified as reasonably incurred to provide service to the NYC Governmental
Customers provided that such an addition to Fixed Costs is consistent with accepted regulatory methodologies.

                        “A standard cost-of-service rate base item is working capital. Working capital is capital that has been advanced by the utility in order to provide service. The Federal Energy
    Regulatory Commission (‘FERC’) accepts working capital as a legitimate cost item that can be put into the rate base when an electric utility develops its rates. A rate base item is capital on
    which a return can be earned. Those advances can take the form of cash, materials, supplies, and fuels. See 18 C.F.R. § 35.13(h)(12) (‘Statement AL’) (2011) for a more detailed description
    of the working capital components.

B. 500 MW Project 7A & 7B Turbine Repair

“Comments: The City indicated that it has not been given information from NYPA and therefore ‘has not been able to confirm the veracity of the annual amortization of the alleged,
underlying $15.5 million capital expenditure’ related to the 500 MW Project turbine repair.

“Staff Analysis: As noted by the City, the January 2011 Memorandum cited the amortization of the $15.5 million of capital expenditures to justify the $1.0 million capital cost
charge. However, staff was not advised by the City during the 2012 discovery process that it was dissatisfied with the response provided in January 2011.

                         “Staff notes that the City presented written data requests for the following capital items: $0.54 million in capital additions, $0.25 million in minor capital additions, and $0.34 million
    in spare transformer amortization costs. These items, plus the 500 MW Project turbine repair amortization amount of $0.96 million, are all delineated under the same internally funded capital
    additions category on ‘Figure 4I – Other Capital Cost’ of the Preliminary 2012 COS.

                         “However, during the discovery process, the City issued no data requests regarding the turbine repair capital cost. Staff has always attempted to be as responsive as possible to
    all Customer data requests and makes every effort to answer the inquiries presented to us during the discovery process. Now that we understand the City’s request, staff will move expeditiously
    to provide the City with this data.

C. GE Litigation Expenses

                         “Comments: The City requested that Fixed Costs be reduced for GE litigation by $0.2 million. The City claimed that since it was not given specific supporting documentation
    during the initial discovery they cannot verify the validity or magnitude of the claims and subsequent settlement and therefore the charges are not consistent with cost-of-service principles. The
    City also requested back-up data on legal fees and related costs, and claims that it should have access to outside counsel billing rates.

             “Staff Analysis: As NYPA has indicated previously, the GE litigation was pursued on behalf of the Customers in an attempt to recover the costs overruns and delays relating to
    construction of the 500 MW Project. In October 2006, NYPA filed a complaint with the NY Supreme Court against GE and five of its subcontractors to recover damages resulting from delays
    and cost overruns due to inadequate engineering and design services and defective equipment. GE countered to seek recovery of damages due to delays in construction claimed to be caused by
    NYPA. The claim was settled in 2007 with GE giving credits to NYPA for future work at the 500 MW Project. The total cost of the litigation was $2.6 million. In its settlement agreement with
    GE, NYPA agreed to keep the matter confidential, which prohibits NYPA from disclosing the settlement terms to Customers or any other outside party. As has been explained to the Customers
     previously, maintaining this confidentiality is necessary to protect the Customers’ best interests and NYPA cannot subject itself to legal action by violating these confidentiality provisions.

                        “However, NYPA has further reviewed this matter, and finds that while it has previously provided total legal cost data to Customers, billing rates and related information requested
    by the City is not covered by the confidentiality commitments referenced above. Accordingly, NYPA will retrieve this billing information, including outside counsel billing rates and the costs for
    experts such as forensic engineers, and provide it to the City as soon as possible.

                         “Recommendation: Staff recommends no changes in the 2012 COS for Oil Inventory Carrying Cost, 500 MW Project turbine repair and GE litigation costs. However, staff will
    provide back-up cost data for the turbine repair and requested information on billing rates and other costs related to the GE litigation as soon as possible.

    Issue 6: Hudson Transmission Project-Related Expenses

                         “Comments: The City stated that there exists a non-binding term sheet which represents the understanding between NYPA and the City regarding a number of issues associated
    with the Hudson Transmission Project (‘HTP’), including the allocation of the costs NYPA has incurred to date. According to the City, the City is not responsible for NYPA’s costs related to
    HTP, other than RFP costs which have already been recovered.

                         “Staff Analysis: Staff reviewed the term sheet dated February 28, 2011 and concludes that the City’s contention has merit.

                         “Recommendation: Staff will eliminate the $300,000 from the Other Expense category of the Final 2012 COS.

    2.     Staff Analysis of Public Comments on Minimum Billing and Recommendations

             “Comments: The City, which was the only party that filed comments on the minimum bill proposal, maintained that the proposed changes to the minimum bill provision in NYPA’s
    service tariff are unsupported and that NYPA has not verified that its proposal is revenue neutral. Furthermore, the City challenged the notion that NYPA may assess any production minimum
    charges, no matter how they are calculated.

             “The City asks the Authority to reject the tariff amendments regarding the production minimum demand billing, re-evaluate the need for instituting production minimum billing at all,
    and if the Authority determines that production minimum bill charges are needed, that the Board of Trustees ensures that such provisions be implemented on a revenue-neutral basis.

                         “Staff Analysis: First, the Trustees should reject the City’s claim that NYPA must ‘justify the need for a Production minimum charge.’ This claim has no foundation because a
    production minimum charge was already included in NYPA’s tariff. The fact that NYPA had previously waived the implementation of this provision does not alter the fact that production
    minimum charges were lawfully permitted under the tariff. In fact, before NYPA implemented its rate redesign, which the Trustees’ approved at their June 2011 meeting, NYPA could not be
    confident that minimum bill provisions would yield the desired, cost-based results. Only after NYPA implemented its rate redesign, which eliminated cross-subsidies between Customer service
    classes, did it make sense for NYPA to implement the minimum bill provision.

                         “The City’s second claim is that NYPA is unjustified in making the proposed change to the minimum bill provision such that a minimum charge is applied to the demand portion of
    the bill only and that energy charges continue to apply. The City’s claim that NYPA’s proposal lacks a ‘rationale’ is belied by the facts, including the detailed discovery responses provided to
    the City which show that the proposed minimum bill provision is revenue neutral in practice.

             “The City actually conceded that NYPA’s 2011 example (a ‘revenue flow-through’ model showing the effects of the proposed minimum bill provision) demonstrated revenue
    neutrality to NYPA for calendar year 2011. The City described this as using ‘hypothetical 2011’ rates, but this severely minimizes the import of that demonstration because it was based on
    data used to derive the actual 2011 NYC Governmental Customer rates. This analysis showed that the proposed minimum demand charge leads to these specific effects: (i) increased billing
    determinants; (ii) an increase in NYPA’s estimated ‘total tariff revenues’ which is used to calibrate rates downward; (iii) a rate decrease based on the incorporation of increased billing determinants;
    and (iv) no change to the total COS.

                         “NYPA also provided a similar revenue flow-through model demonstrating the same result for the preliminary 2012 COS. While the City remains ‘concerned’ that the impact of
    the proposed minimum bill provision may not be revenue neutral for 2012, as a matter of rate design, the methodology used is precisely the same as that contained in the 2011 example. Thus,
    there can be no question that NYPA staff presented substantial evidence and a rationale for its proposal. In response to the City’s concerns, Exhibit ‘6-C’ includes an updated revenue flow
    model using the final proposed 2012 COS. As expected, this demonstrates that the minimum demand charge results in revenue neutrality through the comparison of the proposed 2012 rates
    with and without minimum bill.[†]

                         “Furthermore, the proposed correction to the minimum demand charge is appropriate because it allows for allocation of proportional amounts of fixed charges based on customer
    usage patterns. Those accounts with usage patterns that vary significantly from month to month will trigger a minimum demand bill and, as NYPA explained in its September 27, 2011 Memorandum,
    the result will allow for a more fair recovery of the fixed costs amongst customers. The previous minimum bill provision was arguably defective because it could be interpreted to include energy
    charges in the calculation of the minimum charge. This does not appropriately recover the fixed costs of providing production service. The proposed minimum demand charge correction addresses
    this concern, and as such, is consistent with cost-causation principles. Moreover, the use of a minimum demand charge is commonly used within the electric utility industry.

“Recommendation: Staff recommends that the Trustees approve the proposed tariff corrections to clarify minimum demand bill provision. Staff has demonstrated that its proposal
is revenue neutral to NYPA and adheres to cost-causation principles.

3. Final Recommendation on 2012 Fixed Costs

             “Based on Customer comments received and further staff analysis, Authority staff recommends the withdrawal of the originally proposed Fixed Costs increase. The Fixed Costs
    for 2012 would remain at the current 2011 level. The withdrawal of the proposed increase represents a $3.4 million decrease from the proposed Fixed Costs estimate discussed at the
    September 27, 2011 Trustee meeting. While there would be no change in the total value of the Fixed Costs component, the specific cost items of the Fixed Costs vary as compared to 2011.
    There would be a $1.4 million increase in Shared Services and O&M, which would be offset by a $1.4 million decrease in Capital Costs and Other Expenses, resulting in no change in the
    total $159.7 million of the 2011 Fixed Costs subject to the NOPR. The Astoria Energy II (‘AE II’) plant lease costs, which have been separately agreed to between NYPA and the Customers
    and are outside this NOPR process, remain unchanged at $129 million and, when added to the Fixed Costs that are the subject of the NOPR, raise the total 2012 Fixed Costs component of the
    production rates to $288.7 million.

4. For Trustee Information: Description of Final 2012 COS and Customer Rates

             “Because the Variable Costs component (i.e., fuel and purchased power, risk management, New York Independent System Operator (‘NYISO’) ancillary services and O&M
    reserve, less a credit for NYISO revenues from Customer-dedicated generation) is developed in collaboration with the Customers in accordance with the provisions of the LTAs previously
    approved by the Trustees, staff is not requesting the Trustees’ approval of the Variable Costs component of the production rates for 2012. Additionally the Authority passes through all Variable
    Costs to the Customers by way of the ‘Energy Charge Adjustment (‘ECA’) with Hedging’ cost-recovery mechanism which the Customers collectively selected for 2012. This cost-recovery
    mechanism offered under the LTA employs a monthly charge or credit that reflects the difference between the projected Variable Costs of electricity (i.e., the Variable Costs recovered under the
    Customers’ tariffs) and the monthly actual Variable Costs incurred by the Authority to serve the Customers.

             “For the Trustees’ information, the projected Variable Costs are expected to decrease 15.6% from 2011 levels. The final projected 2012 Cost of Service is $863.9 million and
    the projected 2011 rate revenues are $855.5 million, resulting in an under-recovery of $8.4 million or 1.0%. The forecasted Customer sales and revenues for 2012 include the effects of the
    production minimum demand bill, which in turn lowers the projected revenue shortfall by $9.4 million. Due to the expected collections resulting from the minimum demand bill, this has a lowering
    effect on final rates. In total, the minimum demand bill provision is revenue neutral to the Authority. The final rates are derived from the costs of combining the Fixed Costs described herein, AE II
    costs and the Variable Costs decrease. The current 2011 and final 2012 Customer rates with the 1.0% overall increase needed to recover the $8.4 million revenue shortfall are shown in Exhibit ‘6-D.’

    FISCAL INFOMATION

“The withdrawal of the originally proposed Fixed Costs increase would have no net effect on Authority’s financial position.

“The corrections to the minimum bill provision are revenue neutral to the Authority and will have no net effect on the Authority’s finances.

RECOMMENDATION

“The Director – Market Analysis and Tariff Administration, recommends that the Trustees approve the withdrawal of the Authority’s 2012 Fixed Costs proposal, and
approve tariff modifications to effectuate the corrections to the minimum demand bill provision and eliminate typographical errors.

“It is also recommended that the Corporate Secretary be authorized to publish a Notice of Adoption of the Notice of Proposed Rulemaking, consistent with the discussion
herein, in the State Register.

“The Trustees are also requested to authorize the Senior Vice President – Marketing and Economic Development, or his designee, to issue written notice of adoption and the
revised tariff leaves, as necessary, to the affected customers.

“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”

            Mr. Mike Lupo presented highlights of staff’s recommendation to the Trustees. In response to a question from Trustee Nicandri, Mr. Lupo said that the process
    in the rate analysis is identical to that used for the hydropower rates which was approved by the Trustees at the November 15^th Meeting. In response to further question from
   Trustee Nicandri, Mr. Lupo said there is transparency in the process which includes the issuance of a Preliminary Report by Authority staff; Notice of the Proposed Rule making,
   opening a public comment period, a public forum and staff’s analysis of customers’ comments. He added that the analysis involved a significant amount of collaborative effort
   between the Authority and the customers. Trustee Dyson added that he thought staff did a great job in responding to the customers’ comments.

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

                                     WHEREAS, on September 27, 2011, the Trustees authorized the Corporate Secretary to file a Notice of Proposed Rulemaking for publication in the
                        New York State Register of the Authority’s intention to increase the 2012 Fixed Costs component of the New York City Governmental Customers production
                        rates, make corrections to the tariff provision concerning production minimum billing and make other ministerial tariff corrections; and

WHEREAS, such notice was duly published in the New York State Register on October 12, 2011; and

WHEREAS, Authority staff has received and responded to numerous data requests, and conducted a public forum on November 17, 2011 in accordance with Authority policy, at which forum interested parties were heard; and

WHEREAS, Authority staff recommends that the Fixed Costs proposal for 2012 be withdrawn and that the correction to the production minimum bill tariff provision and other ministerial tariff changes be adopted;

NOW THEREFORE BE IT RESOLVED, That the existing 2011 Fixed Costs value will remain in effect for 2012 and the tariff changes recommended herein are approved; and be it further

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file such notices as may be required with the New York State Department of State for publication in the New York State Register and to submit such other notice as may be required by statute or regulation concerning the rate decrease; and be it further

RESOLVED, That the Chairman, the Vice Chairman, the Acting President and Chief Executive Officer, the Acting Chief Operating 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 and General Counsel.

7. Extension of Hydropower Contracts with Upstate Investor-Owned Utilities for the Benefit of Rural and Domestic Consumers – Notice of Public Hearing

The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

                         “The Trustees are requested to approve the negotiation of contract extensions for the sale to Niagara Mohawk Power Corporation d/b/a National Grid (‘National Grid’), New
    York State Electric and Gas Corporation (‘NYSEG’) and Rochester Gas and Electric Corporation (‘RGE’) (hereinafter referred to collectively as the ‘Utilities’) of a total of 360 MW of firm
    ‘peaking’ hydropower for terms of at least one year to as many as three years. Due to legislation enacted in 2011, the proposed contract extensions would no longer include the sale of firm
    hydropower to the Utilities. The extensions are subject to the public hearing and gubernatorial review process in Public Authorities Law (‘PAL’) § 1009. Accordingly, the Trustees are further
    requested to authorize a public hearing on the final proposed contract extensions and transmittal of the extension contracts to the Governor and legislative leaders, and the execution of the 2011
    contract extensions providing for the sale of the allocations on a short-term basis pending completion of the public hearing process and gubernatorial approval of the 2011 extensions. The proposed
    contract extensions are attached as Exhibit ‘7-A’ (National Grid), Exhibit ‘7-B’ (NYSEG) and Exhibit ‘7-C’ (RGE), respectively.

BACKGROUND

“In accordance with hydropower contracts signed with the Utilities in 1990 (‘1990 Hydro Contracts’) and subsequent contract extensions made annually, the Utilities have continued
to purchase both firm power and firm peaking power from the St. Lawrence/FDR and Niagara Power Projects.

“The Utilities have purchased such power and energy at the Authority’s cost-based hydropower rate, the benefits of which have been passed on to the Utilities’ residential and small
farm customers (also referred to as their rural and domestic or ‘R&D consumers’) without markup, through the electric service provided by the Utilities under their retail tariffs.

“The last extensions of the 1990 Hydro Contracts were approved by the Trustees at their December 2010 meeting and ultimately approved by the Governor. The 2010 extensions
are set to expire on December 31, 2011.

“Since August 31, 2007, the original expiration date of the 1990 Hydro Contracts, the Authority’s Trustees have been careful not to approve any long-term contract commitments
for the sale of this hydropower in anticipation of enacted legislation providing for the creation of a new hydropower-based economic development program.

“Chapter 60 (Part CC) of the Laws of 2011 created the Recharge New York Power Program (‘RNY Program’). This law authorized the Authority to use the firm hydropower
previously allocated to the Utilities for the RNY Program. See PAL § 1005(13-a).

“Effective August 1, 2011, the Authority withdrew the firm power allocations from the Utilities in accordance with the withdrawal provisions of the 2010 extensions and the new
law, and terminated the firm power allocations of 189 MW for National Grid, 167 MW for NYSEG and 99 MW for RGE.

DISCUSSION

                        “As a result of the use of the firm power for the RNY Program, the firm power is no longer available for allocation to the Utilities. However, the proposed 2011 contract extensions
    would continue the sale of 360 MW of firm peaking hydropower to the Utilities, which consists of 175 MW for National Grid, 150 MW for NYSEG and 35 MW for RGE. These peaking power
    allocations would continue to allow the Authority to pass on the benefits of the firm peaking power to the Utilities’ R&D consumers. The Authority would continue to have a right to withdraw the
    firm peaking power on 30 days’ written notice.

            “As noted, the proposed 2011 extensions are subject to the public hearing and gubernatorial review process provided for in PAL §1009. Accordingly, staff further recommends that
    the Trustees authorize a public hearing on the proposed contract extensions. In addition, because the 2010 extensions are scheduled to expire on December 31, 2011, staff recommends that it be
    authorized to execute the 2011 contract extensions providing for the sale of the peaking power allocations on a short term basis pending completion of the public hearing process and gubernatorial
    approval of the 2011 extensions. In the unlikely event that gubernatorial approval is not received, the extensions would expire on the last day of the month following disapproval or the date by which
    the Governor is required to act on the contracts.

FISCAL INFORMATION

                        “The proposed 2011 contract extensions would provide that the Utilities continue to pay for firm peaking hydropower at the same rates they are currently charged, i.e., the cost-based
    rates that are currently charged to the Authority’s preference customers and determined in accordance with the Authority’s rate-setting methodologies and principles. The Trustees approved a
    preference power rate increase at their November 2011 meeting, which became effective in the December 2011 billing period. The proposed 2011 extensions would incorporate the new
    preference power rates. Accordingly, there will be no fiscal impact to the Authority associated with these contract extensions.

RECOMMENDATION

            “The Director – Marketing Analysis and Administration recommends that the Trustees (i) authorize staff to negotiate extensions of the 1990 Hydro Contracts for terms of at least
    one year to as many as three years as part of the proposed 2011 extensions; (ii) authorize the Corporate Secretary to convene public hearings on the final negotiated 2011 contract extensions and
     transmit copies of such extensions to the Governor and legislative leaders pursuant to PAL § 1009; and (iii) authorize staff to execute final negotiated 2011 contract extensions providing for the sale
    of the peaking power allocations on a short-term basis pending completion of the public hearing process and gubernatorial approval of the 2011 extensions.

“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”

Mr. Mike Lupo presented highlights of staff’s recommendation to the Trustees. In response to a suggestion from Trustee Mark O’Luck, Mr. Lupo said that, going
forward, the Trustees be provided with a schedule of expected rate increases and contract extensions.

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

RESOLVED, That the Corporate Secretary be and hereby is authorized to convene public hearings on the final proposed contract extensions in accordance with the procedures set forth in Section 1009 of the Public Authorities Law; and be it further

RESOLVED, That the Corporate Secretary be, and hereby is, authorized to transmit copies of final proposed contract extensions to the Governor, the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Ways and Means Committee, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee pursuant to Section 1009 of the Public Authorities Law; and be it further

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized, subject to approval of the form thereof by the Executive Vice President and General Counsel, to negotiate and execute any and all documents necessary or desirable to implement the contract extensions with National Grid, New York State Electric and Gas Corporation and Rochester Gas and Electric Corporation as set forth in the foregoing report of the Acting President and Chief Executive Officer; and be it further

8. Procurement (Services) Contract – Governmental Customers and Statewide Energy Services Programs – Program Management
and Implementation Services for Data Centers – Contract Award

The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

                        “The Trustees are requested to approve the award of contracts for up to five years for program management and implementation services for data center energy services projects
    with the firms of Willdan Group, Inc. (‘Willdan’), RCM Technologies, Inc. (‘RCM’), Wendel Companies in affiliation with the LiRo Group, Ltd. (‘Wendel/LiRo’), and SourceOne, Inc., for an
    aggregate amount of $30 million, in connection with the Governmental Customers Energy Services (‘GCESP’) and Statewide Energy Services (‘SWESP’) Programs. These funds will be
    disbursed from previously approved funding for both the GCESP and SWESP; therefore, no additional program funding is requested at this time. The contracts will cover a five-year period
    starting in January 2012 and ending on December 31, 2016. The cost of each project will be recovered from each participant in the GCESP and SWESP.

“The services for this award will be conducted primarily in the Boroughs of New York City, Westchester, Orange, Rockland, Putnam, Suffolk and Nassau Counties. However,
projects throughout New York State are foreseeable.

BACKGROUND

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment contracts in excess of $3,000,000, as well as personal
services contracts in excess of $1,000,000 if low bidder, or $500,000 if sole source or non-low bidder, requires the Trustees’ approval.

                         “The Authority’s mission is to provide clean, economical and reliable energy consistent with its commitment to safety, while promoting energy efficiency and innovation for the benefit
    of its customers and all New Yorkers. In that regard, since the late 1980’s the Authority has offered energy efficiency programs statewide. These programs have been very successful and to date
    the Authority has achieved over $135 million in annual customer savings.

                         “Data Center conservation measures involve unique solutions including, but not limited to, implementation of hot/cold aisle configuration and controlling air migration, implementation
    of economizer cooling, rack and server level liquid cooling, active/passive harmonic filtering, consolidation and server virtualization and high density blade servers and dual core processor servers.
    The Authority’s program participants have expressed a great deal of interest in the implementation of these types of measures at their facilities. Since these measures are unique, this solicitation
    was done to obtain firms that specialize in this area.

DISCUSSION

                         “As the general contractor, the Authority contracts for the installation of Energy Services Program (‘ESP’) measures with Implementation Contractors (‘ICs’). The services
    provided by the ICs complement the Authority’s headquarters personnel resources. The ICs, experienced in Data Center technologies and industry-leading assessment tools, will identify gaps
    in infrastructure, recommend energy efficiency improvements and implement measures. To that end, the ICs will be responsible for complete turn-key Data Center Energy Efficiency (‘DCEE’)
    Technical Services, as required by the Authority, including on-site screening, feasibility audit development, design, construction management, installation, final report development and closeout.

“In addition, the ICs will be required to work directly with the customer/program participant from facility audit to the final acceptance of efficiency improvement measures.

Contractor Selection

                                  “On July 1, 2011, the Authority advertised a Request for Proposals (‘RFP’) in the New York State Contract Reporter soliciting firms interested in providing program management
    and implementation services for Data Center Energy Services Projects in the downstate region. As a result of that advertisement and invitations to bid, 90 firms downloaded the RFP from the
    Authority’s website. A mandatory bidders’ conference was held on Wednesday, July 20, 2011 to explain the proposed scope-of-work and provide an opportunity for potential bidders to ask
    questions and seek clarification. Eighteen firms attended the mandatory pre-bid conference.

                          “Eight proposals were received for the program. A summary of the pricing submitted is attached as Exhibit ‘8-A.’ The bids were evaluated based on a number of technical
    criteria and costs by a team of staff members. These criteria included experience, cost, support and references. Each proposal received a score of 0 to 5, with 5 being the highest score. A
    summary of the ratings is also attached as Exhibit ‘8-B.’ The bids from Eaton and PTS were disqualified because they did not meet the commercial and/or experience requirements of the RFP;
    the bids from Lend Lease/ARUP and Johnson Controls were not considered further because of high pricing.

“Staff recommends the award of contracts to the following firms: Willdan Group, Inc., SourceOne Inc., RCM and Wendel/LiRo. These firms scored the highest and were also
the lowest-cost, technically qualified bidders. The following is a summary of each recommended company:

Willdan

                          “Willdan, with offices nationally, including Nanuet, New York City and Long Island, is a recognized leader in providing the energy industry with reliable, compatible and user-friendly
    information technology (‘IT’) solutions. The company has demonstrated creative solutions, and proven frameworks; it also has experienced professionals on its staff. Willdan is a reputable
    contactor and is suitable for this program because of its years of experience in the IT industry involving Data Center management. The company is also the exclusive Data Center program
    management contractor for the New York State Energy Research and Development Authority (‘NYSERDA’). Further, Willdan is knowledgeable of the Authority’s Energy Services Program
    through its professional relationships with other state agencies. Willdan is a new Authority Contractor.

RCM

                          “RCM, with offices in New York City, has provided professional engineering services to commercial and government clients for many years. RCM capitalizes on its diverse
    engineering and technology platform to offer clients fully-integrated and coordinated design, construction management and consulting services. With more than 35 years experience delivering
    complex business IT and Data Center solutions and services; RCM has seen several technological and business process advances over the years. Because of its extensive knowledge and years
    of technical and business process experience, RCM integrates business consulting, software, training and IT services into proven business solutions in its market. RCM Technologies is also currently
    providing services to the Authority.

Wendel/LiRo

                          “Wendel also provides services in the greater New York State Region. For more than 20 years, Wendel has been providing innovative ideas to clients looking to stabilize their
    current and future operating expenses, particularly, IT infrastructures. The company’s Energy Services team uses their engineering and construction expertise to develop Green Building Designs,
    including Data Centers, and deliver turn-key solutions that are both environmentally friendly and economically responsible. Wendel is performing energy services for the Authority.

              “LiRo, an accredited Energy Services Company (‘ESCO’), with offices throughout the State of New York and New Jersey, provides construction management, engineering,
    environmental, architectural and program management solutions. LiRo has experience in Data Center infrastructure and public building modeling. The company’s reputation has led to its
    involvement with some of the country’s top projects and landmarks, including the post 9/11 rebuilding of Lower Manhattan. LiRo is currently satisfactorily performing asbestos consulting services.

“The Wendel/LiRo affiliation will meet the Authority’s need to be responsive to all the Authority’s ESP participants.

SourceOne

                          “SourceOne, with offices in New York City, has dedicated energy efficiency experts and carbon consultants who are able to provide a full range of energy efficiency and carbon
    management services to the IT Industry. SourceOne identifies cost-saving energy conservation and planning opportunities and is able to support the Authority’s clients through various programs
    with the goal of achieving a sustainable future. With expertise in Data Center energy auditing, renewable energy solutions, cogeneration, Leadership in Energy and Environmental Design (‘LEED’)
    certification, among others, SourceOne helps customers improve their operational efficiency to generate significant savings. SourceOne has active contracts with the Authority for other energy
    services projects.

FISCAL INFORMATION

                          “Funding for these contracts will be from previously approved funds in the GESP and SWESP in an amount not to exceed $20 million for the GCESP and $10 million for the
    SWESP and to be distributed, as applicable, for the particular project. This funding will be provided from the proceeds of the Authority’s Commercial Paper Notes and/or the Operating Fund
    and will be recovered consistent with Energy Services and Technology Programs. Initially, each contractor will be allocated $5 million dollars to execute a key Data Center project.

RECOMMENDATION

                          “The Vice President – Energy Services and Technology and the Director of Engineering and Design – Energy Services recommend that procurement services contracts for program
    management and implementation services for Data Center Energy Services Projects be awarded to Willdan Group, Inc., RCM Technologies, Inc., Wendel Companies in affiliation with the LiRo
    Group, Ltd., and SourceOne, Inc.

                          “For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”

                          Mr. Michael Nash provided highlights of staff’s recommendation to the Trustees. In response to a question from Trustee Nicandri Mr. Nash said that an example
    of what can be done at the data centers include changing the power supply and reconfiguring conditioned air flow to the data center space to reduce the cooling requirement .

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

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority and the Authority’s Expenditure Authorization Procedures, the Trustees hereby authorize the award of contracts in the amount of up to $30 million, in aggregate, to Willdan Group, Inc., RCM Technologies, Inc., Wendel Companies in affiliation with the LiRo Group, Ltd., and SourceOne, Inc., to facilitate the development of the design, engineering equipment procurement, installation and financing for Data Center Energy Efficiency improvement projects in the Energy Services Programs; and be it further

RESOLVED, That in accordance with the Guidelines for Procurement Contracts adopted by the Authority and Expenditure Authorization Procedures, $30 million of the foregoing amount be allocated to the approved contracts for Willdan Group, Inc., RCM Technologies, Inc., Wendel Companies in affiliation with the LiRo Group, Ltd., and SourceOne, Inc. in the amounts for the purposes listed below:

Commercial Paper Program/Operating Fund	Ceiling	Expiration Date
1. Willdan Group, Inc.	Initial allocation of $5 M per contract up to $30 million	01/31/2016
2. RCM Technologies, Inc.	(aggregate)*
3. Wendel Companies in affiliation with the LiRo Group, Ltd.
4. SourceOne, Inc.

AND BE IT FURTHER RESOLVED, That the Chairman, the Vice Chairman, the Acting President and Chief Executive Officer, the Acting Chief Operating 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 resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

9. Informational Item: Richard M. Flynn Power Plant Maintenance Outage

Mr. Russell Bahm presented highlights of the major maintenance outage at the Flynn Plant to the Trustees; this was followed by a video presentation of
the maintenance work. Responding to a question from Trustee Nicandri, Mr. Bahm said that a major part of the work was done by contractors because it
requires specialized skills. In response to further question from Trustee Nicandri, Mr. Welz said that staff at the Flynn Plant is highly skilled, however, the
amount of work required to be done in a short, compressed, time-frame necessitated that it be performed by a contracted firm. Also, the entire staff at the Flynn
Plant consists of 21 employees and it would not be cost-effective to hire more people at the Plant when the major maintenance of the plant is required to be done
every four years. Mr. Bahm added that some of the work is done by staff in-house. Staff also provides oversight and support to the contractors.

10. Motion to Conduct an Executive Session

             Mr. Chairman, I move that the Authority conduct an executive session pursuant to the Public Officers Law of the State of New York section §105 to discuss
        matters leading to the appointment, employment, promotion, demotion, discipline, suspension, dismissal or removal of a particular person or corporation. On
        motion made and seconded, an Executive Session was held.

11.      Motion to Resume Meeting in Open Session

Mr. Chairman, I move to resume the meeting in Open Session. On motion made and seconded, the meeting resumed in Open Session.

12. Next Meeting

The next regular meeting of the Trustees will be held on Tuesday, January 31, 2012, at 11:00 a.m., at the Clarence D. Rappleyea Building, White Plains, New York, unless otherwise designated by the Chairman with the concurrence of the Trustees.

On motion made and seconded, the meeting was adjourned by the Chairman at approximately 1:30 p.m.

[*] The analysis used Customers actual 2010 billing determinants and applied corresponding Con Edison rates as published under Schedule for Electricity Service, P.S.C. No. 9. The results of the calculations were compared against NYPA’s 2010 actual billed amounts for both production and delivery charged to Customers.

[†] Included in Exhibit ‘6-C’ are NYPA’s discovery responses provided to the City on November 3, 2011 and November 14, 2011 that indicated the revenue-neutral effects of the minimum demand charge.

* A total of $30 million will be allocated to Willdan Group, Inc., RCM Technologies, Inc., Wendel Companies in affiliation with the LiRo Group, Ltd., and SourceOne, Inc. The final allocation will be determined as facilities are assigned based on performance and specialization.