MINUTES OF THE REGULAR MEETING
OF THE
POWER AUTHORITY OF THE STATE OF NEW YORK

 

 

                Subject                                                                                                                                                

    1.    Approval of the July 26, 2011 Meeting Agenda                                                                         

    2.    Consent Agenda:                                                                                                                      

                    a.    Minutes of the Regular Meeting held on June 28, 2011                                    

                    b.    Transmission System – Life Extension and Modernization Program – Contract Award
                           Resolution                          



    Discussion Agenda:

    3.        Q&A on Reports from:

                    a.    President and Chief Executive Officer, Exhibit - “3a-A”

          b.    Chief Operating Officer, Exhibit - “3b-A”

                    c.    Chief Financial Officer, Exhibit - “3c-A” 


    4.        Proposed Expansion Power Contracts – Notice of Public Hearing, Exhibit - “4-A”; “4-A-1”  “4-A-3”; “4-B-1” – “4-B-2”
               Resolution   

    5.       Annual Review of Hydropower Allocation Job Compliance, Exhibit - “5-A-1” – “5-A-3”
              Resolution

    6.        Power for Jobs and Energy Cost Savings Benefits Programs Compliance Review, Exhibit - “6-A-1” – “6-A-2” – “6-B-1” – “6-B-2”
               Resolution

    7.        Increase in Hydroelectric Preference Power Rates –  Notice of  Proposed Rule Making and Reinstatement of
               Tariff Provisions for Preference and Industrial Power Rates, Exhibit - “7-A”
               Resolution

    8.        Niagara Power Project – Lewiston Pump Generating Plant Life Extension and Modernization Program – Static Excitation              
               Systems Procurement – Contract Award
               Resolution

    9.        Procurement (Services) Contract – EME Group, WSP Flack & Kurtz and Horizon Energy Services – Retro-Commissioning              
               Resolution                                                                                                                                                

    10.    Contract Award for Energy Efficient Window Replacement (Furnish/Deliver/Install) Project for NYC Health and
             Hospitals Corporation - Coney Island Hospital
             Resolution                                           

    11.    Amended and Restated Ninth Supplemental Resolution Authorizing 2011 Revenue Bonds, Exhibit - “11-A-1” –  “11-A-3”
             Resolution

    12.    Amendments to the Authority’s Governance Committee Charter, Exhibit - “12-A”
            
Resolution

    13.    Amendments to the Authority’s By-laws, Exhibit - “13-A” & “13-B”
            
Resolution

    14.    Department Procedure Requiring Trustee Approval of Competitive Solicitations for Power Supply Products, Exhibit - “14-A”
             Resolution           

    15.    Motion to Conduct an Executive Session

    16.    Motion to Resume Meeting in Open Session                                                                  

    17.    Election of Acting President and Chief Executive Officer
             Resolution

    18.    Request for Proposal for a Search for President and Chief Executive Officer
             Resolution

    19.    Next Meeting                                                                                                                            

            Closing                                                                                                                                                           

                                                                                                                                                                                                           


Minutes of the Regular Meeting of the Power Authority of the State of New York held via videoconference at the following participating locations at approximately 11:40 a.m.

        1)    New York Power Authority, 123 Main Street, White Plains, NY

        2)    New York Power Authority, St. Lawrence/FDR Power Project, Massena, NY

        The Members of the Board present were:

                    Michael J. Townsend, Chairman
                    Jonathan F. Foster, Vice Chairman
                    D. Patrick Curley, Trustee
                    John S. Dyson, Trustee
                    R. Wayne LeChase, Trustee
                    Eugene L. Nicandri, Trustee
                    Mark O’Luck, Trustee

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Richard M. Kessel                                President and Chief Executive Officer
Gil C. Quiniones                                   Chief Operating Officer
Judith C. McCarthy                              Acting General Counsel
Francine Evans                                     Executive Vice President, Chief Administrative Officer
and Chief of Staff
Elizabeth McCarthy                               Executive Vice President and Chief Financial Officer
Edward Welz                                        Executive Vice President and Chief Engineer – Power Supply
Jordan Brandeis                                    Senior Vice President – Power Resource Planning and Acquisition
Thomas Antenucci                                 Senior Vice President – Power Supply Support Services
Steve DeCarlo                                      Senior Vice President – Transmission
Thomas DeJesu                                     Senior Vice President – Public and Governmental Affairs
Paul Finnegan                                        Senior Vice President – Public, Governmental and Regulatory Affairs
James Pasquale                                     Senior Vice President – Marketing and Economic Development
Donald Russak                                      Senior Vice President – Corporate Planning and Finance
Joan Tursi                                             Senior Vice President – Corporate Support Services
Paul Belnick                                         Acting Senior Vice President – 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
John Kahabka                                     Vice President – Environmental, Health and Safety
Joseph Leary                                       Vice President – Community and Government Relations
Patricia Leto                                        Vice President – Procurement
Lesly Pardo                                         Vice President – Internal Audit
Christine Pritchard                               Vice President – Media Relations and Corporate Communications
Frank Ryan                                          Vice President – Emergency Management
Scott Scholten                                      Vice President and Chief Risk Officer
John Suloway                                       Vice President – Project Development, Licensing and Compliance
Karen Delince                                      Corporate Secretary
Brian McElroy                                      Treasurer
Jill Anderson                                         Director – Supply Acquisition and Renew Energy
Jenny Liu                                              Director – Generation Resource Management – Energy Resource Management
Mike Lupo                                           Director – Marketing Analysis and Administration
Michael Saltzman                                  Director – Media Relations
Keith Hayes                                         Manager – Business Marketing and Economic Development
Christine Schmitt                                  Tolling Agreement Manager – Energy Resource Management
Rino Trovato                                        Program Manager – Energy Services
Timothy Sheehan                                                Special Counsel
Sarah Barish-Straus                            Special Assistant – Project Development, President's Office
Lenny Catalino                                    Lead Account Executive – Business and Municipal Marketing
Lorna M. Johnson                               Assistant Corporate Secretary
Sheila Baughman                                 Senior Secretary – Corporate Secretary’s Office
Brian Wilkie                                        Legal Analyst
John V. Connorton, Jr.                        Hawkins Delafield & Wood LLP
Tony Modafferi                                   Executive Director – MEUA
Kevin Brocks                                      Partner – Read and Laniado, LLP
Richard E. Skiera                                Managing Director – Topstone Capital Advisors, Inc.
Scott Fairclough                                  Managing Director – Topstone Capital Advisors, Inc.
 



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

Introduction
                Chairman Michael Townsend welcomed the Trustees and staff to the meeting.  He also welcomed Mr. Kevin Brocks, Partner at Read and Laniado, LLP and Mr. Tony Modafferi, Executive Director of MEUA, to the meeting.
 

    1.    Approval of the July 26, 2011 Meeting Agenda

                On motion made and seconded the Agenda for the Meeting was approved.

    2.    Consent Agenda

                Chairman Townsend said the Economic Development Power Allocation Board had recommended that the Authority’s Trustees approve item 6 (Power for Jobs and Energy Cost Savings Benefits Programs Compliance Review) at their meeting held on July 25, 2011. 

                The Minutes of the Regular Meeting held on June 28, 2011were unanimously adopted.

        The President and Chief Executive Officer submitted the following report:

SUMMARY

                “The Trustees are requested to approve the award of a contract to Quanta Technology (‘Quanta’) of Raleigh, NC, in the amount of $1,279,800 to perform a condition assessment of the Authority’s existing Transmission System assets.

BACKGROUND

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

                “The Authority’s Transmission System assets are reaching their end-of-design life and are in need of upgrades to comply with regulatory requirements and to maintain reliability.  A series of conditions within the Authority’s Transmission System outline the need to develop an overall program for performing an assessment in accordance with items listed in the Power Supply Long Range Work Plan.

The Authority sought to procure the services of an Engineering Consultant to:

 

“The results of the assessment will allow the Authority to prioritize future work to ensure the continued reliability of its Transmission System.  This prioritization will provide the Authority with added information to better utilize its financial and personnel resources.

DISCUSSION

“The Authority issued an advertisement to procure bids in the New York State Contract Reporter and bid packages were available as of May 2, 2011.  The bid documents were downloaded by 107 potential bidders and 9 potential bidders participated in a site visit on May 13, 2011.

“The following proposals were received on June 2, 2011:

Bidder                                           Location                                               Base Bid                               Final Bid

Quanta Technology                    Raleigh, NC                                          $1,374,816                           $1,279,800

Hatch                                             Amherst, NY                                         $1,306,500                           $1,423,400

TRC Engineers                             Liverpool, NY                                       $1,582,103                           $1,582,103

Mott MacDonald                       Westwood, MA                                    $1,925,189                           $1,925,189          

Vanderweil                                    Boston, MA                                          $4,140,712                           $4,140,712

Shaw                                              New York, NY                                      $4,268,345                           $4,268,345

“Following a review of the proposals, the Authority recommends an award to the lowest-priced and technically qualified bidder, Quanta.

“Quanta will focus on the evaluation of the following projects:

 

“These projects have been determined to require a large financial investment to provide anticipated maintenance.  Quanta will be responsible for performing risk of failure assessment and providing the Authority with interim and final reports detailing the areas to be addressed immediately within the next three years; short-term, within the next three to five years; and long-term, within the next five to ten years.

“The scope of work will include field inspections and extensive reviews of maintenance records and studies.  The work will be coordinated by Project Management and Transmission staff.  As part of the deliverable, the consultant will provide preliminary schedules and cost estimates for implementing its recommendations.

“Recommendations received from Quanta will be reviewed by the Authority and budgeted accordingly in future fiscal years.

“In 2010, the Authority issued a similar Request for Proposal (‘RFP’) and awarded a contract to Quanta.  Quanta was engaged with the Authority until the end of 2010, at which point funding constraints necessitated the need to postpone the project activities.

FISCAL INFORMATION

                “Payments will be made from the Authority’s Operating Fund.

RECOMMENDATION

“The Executive Vice President and Chief Engineer – Power Supply, the Senior Vice President – Power Supply Support Services, the Senior Vice President – Transmission, the Vice President – Project Management and the Vice President – Procurement recommend that the Trustees authorize the amount of $1,279,800 for the award of a contract to Quanta Technology to perform a condition assessment of the Authority’s Transmission System.

“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 President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a contract to Quanta Technology of Raleigh, NC, in the amount of $1,279,800, to perform a condition assessment of the Authority’s Transmission System, as recommended in the foregoing report of the President and Chief Executive Officer, as listed below:


     Contractor
     Quanta Technology
                  Raleigh, NC

Contract Approval

        $1,279,800

AND BE IT FURTHER RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the 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 agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Acting General Counsel.


   3.   a.    Report of the President and Chief Executive Officer

                President Kessel said that he was resigning as the Authority's President and Chief Executive Officer.  He said that he had mixed feelings about his decision and that it was a pleasure to work with the Board members with whom he had a great relationship.  He also enjoyed working with the Executive Management team, Authority staff and union leaders.   He said that one of his mandates when he came on board was to visit all of the Authority's facilities and he has done that.  President Kessel then highlighted some of his accomplishments since his appointment, which include the following:
1.     The Hudson Transmission Project, a major asset for the Authority;
2.     Saving ALCOA from closing its facility in Massena, New York;
3.  Lowering of electric bills for businesses in Western New York;
4.  Revitalizing Western New York, including the Erie Harbor Waterfront;
5.  Negotiating with Yahoo! for its facility in Western New York;
6.  Working with local officials and successfully negotiating expansion and replacement power contracts;
7.  Setting records with energy efficiency projects in downstate New York.
President Kessel said that when he came on board, the officials at upstate New York were skeptical about his appointment; however, during his tenure he has worked hard to turn that around through visits to the regions and meetings with local businesses and officials.  He said that the Authority needed to focus on the needs of upstate New York, especially the North Country and Western New York, as they face real economic challenges and need the help of the Authority.
President Kessel ended by saying that it was a pleasure working for Governor Paterson who recommended him for the position and Governor Cuomo on the Recharge New York Program.  He also said that he appreciated all of the staff’s support and cooperation and for the friendships that will be with him for a long time to come.
Chairman Townsend said that it was with deep regret that he received President Kessel's resignation.  He said that he appreciated President Kessel's efforts on behalf of the Authority during his tenure.  President Kessel has energized the staff and has worked very hard to revitalize the economy of upstate New York.  He ended by saying that he has utmost respect for him and will miss him.

Trustee John Dyson said that he endorsed Chairman Townsend's remarks and added that  the Authority owe a debt of gratitude to President Kessel for the work he has done on behalf of the Authority. 
Chairman Townsend added that, after conferring with the Trustees, Mr. Gil Quiniones will act as President and Chief Executive Officer on an interim basis, effective September 6, 2011 and that a professional search firm will be engaged for the search of a new President and Chief Executive Officer.  He then asked Ms. Judith McCarthy to formulate motions for formal trustee approval at the end of the meeting. 
 

Mr. Gil Quiniones echoed the remarks made to President Kessel and thanked him for the work he has done on behalf of the Authority.  He then provided highlights of the report to the Trustees.  He said that the Authority's net generation and its transmission availability has increased; the audit related to the North American Electric Reliability Corporation’s (“NERC”) requirements continues to go well and the Life Extension and Modernization (“LEM”) of the Authority's hydroelectric assets are also going well – the LEM of Unit 24 at the St. Lawrence project has been completed and the work on Unit 19 has been deferred.  He ended by saying that the Authority’s business assets are doing well.
 

Ms. Elizabeth McCarthy provided highlights of the financial report to the Trustees.  She said that the Authority’s financial condition remains very strong.  For the period ended June 30, 2011, Net Income was $72 million, which is $7.8 million higher than budgeted.  To date, O&M expenses were lower than budgeted; however, it is expected that it will correct itself over time.  Other operating expenses were higher than budgeted due to the unbudgeted voluntary contributions to the state and as a result of the extension of the Power for Jobs program.  For the year 2011, Net Income is estimated to be approximately $200 million.  She continued that, at the end of the reporting period, the Authority had $1.117 billion in cash and liquidity, an increase of $48 million from the beginning of the year, which has been invested in a variety of instruments with a variety of maturities.   The T&D and Power Supply capital programs are approximately $30 million behind budget while capital expenditures for Energy Efficiency programs are about $13 million over budget.  As of June 30, 2011, the Authority's debt is $1.87 billion, which is down $55 million from the beginning of the year.
In response to a question from Trustee Nicandri, Ms. McCarthy said that, year- to-date, Net Income is approximately $8 million over budget and that at the end of the year it is expected to be approximately $20 million over budget.  In response to further question from Trustee Nicandri, Ms. McCarthy said that, if needed, staff will ask for the Board's approval to adjust the O&M budget at the September Trustees’ meeting.  Trustee Dyson added that, as an addition to the remarks by Trustee Nicandri, the Authority needs to maintain its facilities in top condition and it should not allow artificial ceilings on its budget to delay maintenance of its facilities.

 

4.    Proposed Expansion Power Contracts – Notice of Public Hearing      

The President and Chief Executive Officer submitted the following report:

SUMMARY

                “The Trustees are requested to approve allocations of 3,000 kW, 300 kW and 200 kW of Expansion Power (‘EP’), respectively, to M&T Bank Corporation (‘M&T’), Moog, Inc. (‘Moog’) and Try-It Distributing Co., Inc. (‘Try-It’).  The Trustees are also requested to authorize a public hearing pursuant to §1009 of the Public Authorities Law (‘PAL’) on the proposed contracts (‘Contracts’) for the allocations to Moog and Try-It.

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 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.

“As required by §1009 of the PAL, when agreement has been reached by an authority and its co-parties, the authority shall transmit the proposed contract to the governor and other elected officials.  Subsequent to the transmittal, a public hearing shall be held, upon a 30-day notice provision and publication of the hearing in six selected newspapers.  Following the public hearing, the contracts maybe modified, if advisable.  Upon approval of the contract by the authority and the co-parties, the authority will submit the contracts, its recommendations and the public hearing records to the governor and other elected officials.  Upon approval by the governor, the contracts will be executed by the chairman and secretary of the authority to become fully effective.  Procedures to satisfy the requirements of PAL §1009 can take several months to administer when factoring in Board schedules, public hearing notification requirements and time needed for approval by the governor.

“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, 11,425 kW of unallocated EP and 23,818 kW of RP are available to be awarded to businesses under the criteria set forth in PAL Section 1005(13)(a).  Staff recommends EP allocations totaling 3,500 kW be awarded to the companies set forth in Exhibit ‘4-A.’  The exhibit shows, among other things, the amount of power requested by the applicants, the recommended allocation amounts, and the commitment to job creation and capital investment to be made by these companies.  Additional information on each project is contained in the application summaries attached as Exhibits ‘4-A-1’ through ‘4-A-3,’as well as in the individual expansion project descriptions below.

               


M&T Bank Corporation

                “M&T is a financial holding company headquartered in Buffalo with over 4,900 employees in Western New York.  The company competes nationally and internationally with banking and financial services companies including foreign and out-of-state financial institutions.  M&T is proposing to purchase and upgrade a vacant data center in Amherst, New York, to serve as its existing and future primary data center needs.  The upgraded facility would more than double the current data processing capability, supporting M&T business operations and product lines in all the states and foreign countries where the company does business.  The expanded capacity would support the growth of the business, enabling the company to add 124 jobs in Western New York.

                “The project would require significant electrical and mechanical infrastructure upgrades of the existing 59,000-square-foot facility, along with other physical plant improvements.  M&T would relocate its current primary data center operations, also in Amherst, to the new facility, with the former data center remaining a major operations center for the bank, housing offices, back-office production functions and potential other uses.  Additionally, one of the bank’s data centers, currently located in Wilmington, Delaware, would be relocated to the new Amherst facility.  The company is in the process of applying for tax incentives from the Amherst IDA.

“M&T has requested an allocation of 3,500 kW to support the anticipated electric demand of the proposed project.  The company would commit to the creation of 124 new jobs, adding roughly $7.2 million to its annual payroll.  The job growth would be associated across a multitude of areas of the business including securities and insurance products, risk management, administration and back-office functions.  M&T’s job ratio of 41.3 new jobs per megawatt (‘MW’), based on a recommended allocation amount of 3,000 kW, is well above the recent historic average of 15.1 new jobs per MW for hydropower allocations approved by the Trustees since January 2009. 

                “The capital investment for this project includes $13.625 million, comprised of approximately $7.1 million for infrastructure upgrades, $4 million for cooling equipment upgrades and the remaining $2.475 million for uninterruptable power supply (‘UPS’) equipment.  The project also includes a $38 million investment in new computer equipment (data servers, routers, storage devices and related hardware and software) over five years.  The capital investment ratio for this project is $17.2 million per MW, which is below the recent two-year historical average of $23.0 million per MW for hydropower allocations approved by the Trustees since January 2009.

                “While M&T has placed the majority of its core operations in the Buffalo area, and prefers to grow its primary data center operations in Western New York, it has been presented with options in Maryland, Virginia and Delaware, where the company also has business operations.  Since electricity cost is a significant portion of the operating cost of any data center, an allocation of hydropower is critical to the decision to move forward with this project.  A hydropower allocation would help offset the large up-front investment and help make this site a viable expansion solution.  Staff recommends an allocation of 3,000 kW be awarded to M&T in return for an investment of $51.6 million and the creation of 124 new jobs in Western New York.

                Moog Inc.

                “Moog is a publically traded international company that is headquartered in Western New York.  The company is a designer and manufacturer of precision motion controls for aerospace, defense, industrial and medical markets.  The applicant has four existing allocations totaling 5,450 kW, serving roughly half of the company’s East Aurora campus’ electrical load.  Its highest existing job commitment is 2,446 jobs and the allocations are all compliant.

                “Moog submitted an application for hydropower, requesting 300 kW to serve a proposed new headquarters facility on its existing property.  Moog would make a capital investment of $13.0 million to build and equip the two- story, 68,000-square-foot corporate-shared services building.  The new building plan would enable various administrative functions across the campus to be relocated into one facility, freeing up space needed by manufacturing/operating business units.  Gains in operational efficiency due to the project would support growth in the business. 

“As a result of this project, the company would commit to creating 70 new jobs, adding over $6 million to its annual payroll.  The job creation ratio is 233 new jobs per MW.  This ratio is well above the recent historic average of 15.1 new jobs per MW.  The investment of $13 million for the project results in a capital investment ratio of $43.3 million per MW for a 300 kW allocation.  This ratio is above the recent historic average of $23.0 million per MW.

                “An allocation of hydropower would support Moog’s commitment to Western New York.  The company’s plans will further solidify the nearly 2,500 existing high quality jobs and enable the creation of an additional 70 jobs.  Staff recommends an allocation of 300 kW be awarded to Moog in return for an investment of $13.0 million and creation of 70 jobs at its facility.

                Try-It Distributing Co., Inc.

                “Try-It Distributing, founded in 1928 in Lackawanna, New York, is a family-owned wholesaler of beer and non-alcoholic beverages.  The company has grown from 100 employees in the 1990’s to over 240 at its Lancaster office and warehouse facility.  To accommodate business growth and to attract new brands for distribution, the company needs to expand its warehouse operations.  Try-It plans to invest $14 million to build an addition to its existing facility of over 100,000 square feet.  A majority of the new facility will be warehousing and requires climate control equipment able to meet exacting standards of beverage product manufacturers. 

“This expansion project would enable Try-It to create 23 new jobs above its current employment of 242.  The jobs ratio for a recommended 200 kW allocation is 115 new jobs per MW, which is well above the recent historic average of 15.1 new jobs per MW.  The investment of $14.0 million results in a capital investment ratio of $28.0 million per MW which is above the two-year historic average of $23.0 million per MW for hydropower allocations approved since January 2009.

                “The Lancaster IDA is supporting this project with tax abatement incentives.  Additionally, Try-It is working with NYSERDA on energy-efficient, new construction measures, as well as pursuing certain aspects of LEED certification applicable to warehousing facilities.

                “The wholesale beverage industry is in consolidation mode with smaller, family-owned businesses not being able to keep up with demanding beverage producers and the scale of competition.  The project would enable Try-It to increase operational efficiencies, add sales volume, reduce costs and acquire more brands for distribution.  An allocation of hydropower is an important factor in Try-It’s decision to expand operations because in its volume driven industry, operating costs are directly tied to sales, which, in turn, drives employment growth.  Staff recommends an allocation of 200 kW be awarded to Try-It in return for a $14.0 investment and the creation of 23 new jobs.

                Proposed Contracts

                “The proposed Contracts for Moog and Try-It follow the standard commercial terms offered to EP and RP customers.  The Authority will directly sell firm electric service from the Niagara plant, consisting of firm power (capacity) and energy service.  Power service is subject to pro-rata curtailment when there is insufficient generation at the Niagara and St. Lawrence/FDR facilities.  Delivery will be provided and billed directly to the Customers by the local utility, New York State Electric and Gas (‘NYSEG’).  Arrangements for the delivery will be agreed to by the Authority, the Customers and NYSEG prior to any delivery under the proposed Contracts.  The Authority will continue to act as the Load Serving Entity and will bill the Customers for all ISO charges as it currently does for both direct sale and sale-for-resale billing procedures.

                “Regarding compliance requirements of the Contracts, the allocation amount will be subject to an enforceable employment commitment of 2,567 jobs in the case of Moog and 265 jobs in the case of Try-It.  The Contracts include annual job reporting requirements and a standard job compliance threshold of 90%.  Should the Customer’s actual jobs reported fall below the compliance threshold, the Authority has the right to reduce the allocation on a pro-rata basis.  The rates, terms and conditions for the sale are contained in service tariffs applicable to all EP/RP allocations.  Specifically, Service Tariffs EP-1 (EP) and NP-F1 (RP) are effective through June 30, 2013.  Thereafter, Service Tariff No. WNY-1 is effective from July 1, 2013 until the expiration of the Customers’ Contracts for both EP and RP service.  The proposed Contracts are attached as Exhibits ‘4-B-1’ and ‘4-B-2.’

RECOMMENDATION

“The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the allocations of hydropower, totaling 3,500 kW, to M&T Bank Corporation, Moog Inc., and Try-It Distributing, as detailed in Exhibit ‘4-A.’   The Trustees are also requested to authorize a public hearing on the terms of the proposed Contracts for Moog and Try-It’s allocations, attached as Exhibits ‘4-B-1’ and ‘4-B-2,’ on a date to be determined, at the Niagara Power Project’s Power Vista Visitors’ Center.  It is further recommended that, pursuant to §1009 of the Public Authorities Law, the Corporate Secretary be authorized to transmit copies of the proposed contract to the Governor and legislative leaders and to arrange for the publication of a notice of public hearing in six newspapers throughout the State in accordance with the Public Authorities Law.

                “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. James Pasquale presented highlights of staff's recommendation to the trustees.  Chairman Townsend and Trustee Curley recused themselves from voting on this item.
The following resolution, as submitted by the President and Chief Executive Officer, was adopted by a vote of 5 to 2, with Chairman Townsend and Trustee Curley recusing themselves.

RESOLVED, That the allocation of  3,500 kW of Expansion Power to M&T Bank Corporation, Moog Inc. and Try-It Distributing Co., Inc., as detailed in Exhibit “4-A” be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it

RESOLVED, That the Trustees hereby authorize a public hearing on the terms of the proposed contracts for the sale of Expansion Power to Moog Inc. and Try-It Distributing Co., Inc., to be held at the Niagara Power Project’s Power Vista Visitors’ Center; and be it further

RESOLVED, That the Corporate Secretary be, and hereby is, authorized to transmit copies of the proposed contract 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 §1009 of the Public Authorities Law; and be it further

RESOLVED, That the Corporate Secretary  be, and hereby is, authorized to arrange for the publication of a notice of public hearing in six newspapers throughout the State, all done in accordance with the provisions of §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 the approval of the form thereof by the Acting General Counsel, to enter into such agreements, and to do such other things, as may be necessary or desirable to implement the Contracts as set forth in the foregoing report of the President and Chief Executive Officer; and be it further


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


5.    Annual Review of Hydropower Allocation Job Compliance

The President and Chief Executive Officer submitted the following report:

SUMMARY

“Staff conducted the annual review of hydropower allocation job compliance covering the reporting period from January through December 2010.  The Trustees are requested to take no action regarding 27 customers holding 36 allocations that were not meeting job commitments, as described in Section I, and as set forth in Exhibit ‘5-A-2.’  The Trustees are also requested to approve reductions to allocations for three companies as described in Section II, and as set forth in Exhibit ‘5-A-3.’

BACKGROUND

“Each year staff performs a review of all in-service hydropower allocation contracts for compliance with agreed-upon job commitment levels.  The contracts contain a customer commitment to retain and add a specific number of jobs.  For compliance evaluation, customers are required, by contract, to report the monthly employment numbers for calendar year 2010 by March 1, 2011.    

“If the reported twelve-month average employment level is below the compliance threshold of 90% of the job commitment (or below 80% of the 2-year average for ‘vintage’ customers, i.e., those having allocations prior to 1988), the Authority may reduce that customer’s power allocation proportionately. 

DISCUSSION    

“In 2010, the Authority had 123 hydropower customers holding 217 Replacement Power (‘RP’), Expansion Power (‘EP’) and Preservation Power (‘PP’) allocation contracts.  Of these, a total of 104 customers held 189 contracts that required the customers to report job levels for 2010.  The 189 contracts and allocation commitments reviewed by staff represent total power allocations of 1,048 MW and total employment commitments of 30,274 jobs.  In the aggregate, these customers reported actual employment of 32,114 jobs.  This represents 106% of the total job commitment for hydropower customers reporting in 2010.   

“For the year 2010, a total of 137 of the 189 contracts reviewed were found to be compliant.  These compliant contracts are held by 73 companies.  Additionally, there are 11 companies with 12 contracts that, although reporting employment below their total commitment, contractually have more time to attain the commitment levels.  These companies, included for information purposes, have newer allocations that are still within the time-frame allowed per contract to create the new jobs committed to when the allocations were awarded.  These twelve contracts, together with the 137 compliant contracts, comprise 79% of the allocations reviewed and are listed in Exhibit ‘5-A-1.’

“Nevertheless, about 21% of the allocations reviewed were not meeting job commitments.  Specifically, 30 customers with 40 contracts reported actual 2010 job levels below the compliance threshold.  The main cause of this under-performance, as described by nearly every customer, was the continued effects of the economic downturn which began in 2008.  During 2010, many customers were again faced with the difficulty of meeting their job commitments while trying to cope with the lasting effects of the 2008 – 2009 global financial crisis and national recession.  Although some industries and companies experienced improving conditions in 2010, the businesses that did not meet job commitment levels cited continued challenges, including the loss of business stemming from decreased sales and demand, as well as, in some cases, increased costs for raw materials, labor and regulatory requirements.  As the economy has struggled to grow, as evidenced by the persistently high national unemployment rate, so have non-compliant customers struggled to increase employment, as detailed in Section I and II and listed in Exhibit ‘5-A-2’ and ‘5-A-3.’ 

“Staff recommends the Trustees take no action regarding 27 non-compliant customers holding 36 allocations, as described in Section I and as set forth in Exhibit ‘5-A-2.’  Staff also recommends that the Trustees approve reductions to allocations as described in Section II and set forth in Exhibit ‘5-A-3.’

Section I
Non-Compliant Allocations to Continue with No Change

 

Buffalo Newspress Inc., Buffalo, Erie County
Allocation:                           200 kW of EP
Jobs Commitment:            149 jobs

Background:  Buffalo Newspress Inc. (‘Buffalo Newspress’), founded in 1979, prints advertising inserts, brochures and weekly newspapers.  Although an award-winning company, it operates in a declining industry.  For the past year, Buffalo Newspress averaged 113.1 jobs, which is 75.9% of its contractual commitment and down 5 jobs from the previous year’s average.  During the 2008-2009 recession, the company experienced a drop in business of nearly 30% which resulted in significant layoffs.  During 2010, Buffalo Newspress saw improved sales volume as business stabilized and began to turn around, however, not yet to the degree to increase hiring. 

Recommendation:  Staff recommends that the Trustees take no action at this time.

C & S Wholesale Grocers, Inc., Lancaster, Erie County
Allocation:                           550 kW of EP
Jobs Commitment:            682 jobs

Background:  C & S Wholesale Grocers, Inc. (‘CSWG’) provides warehousing and distribution services to supermarket chains, independent grocers and military facilities across the nation.  In 2010, CSWG averaged 583.8 jobs, or 85.6% of its contractual commitment.  The company is below its job commitment due to the continued effects of, and slow recovery from, the recession which had a significant impact on employment levels in 2009.  CSWG’s 2010 average was 57 jobs higher than the previous year’s average.  It is important to note that the Board approved a reduction to CSWG’s job commitment to 560 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative.

Recommendation:  Staff recommends that the Trustees take no action at this time.

CertainTeed, Buffalo, Erie County  
Allocation:                           3,100 kW of EP  
Jobs Commitment:            157 jobs

Background:  CertainTeed Corporation (‘CertainTeed’), a wholly-owned subsidiary of the Saint–Gobain company, is a vinyl fence, deck and railing manufacturer.  In 2010, CertainTeed averaged 120.3 jobs, or 76.6% of its contractual commitment.  The company was directly impacted by the challenging economic conditions of the building industry, experiencing a significant reduction in demand for its products over the last several years.  The company continues investing in research and development and capital equipment at its Buffalo facility and expects to increase employment as sales volume increases.  It is important to note that the Board approved a reduction to CertainTeed’s job commitment to 113 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Coyne Textile Services, Buffalo, Erie County
Allocation:                           350 kW of EP  
Jobs Commitment:            93 jobs

Background:  Coyne Textile Services, (‘CTS’) is a family-owned business that provides textiles rental products (work uniforms, shop floor mats, etc.) and laundering services.  For the past year, CTS averaged 40.5 jobs, or 43.5% of its contractual commitment.  This is a slight decrease from the previous year.  CTS was unable to increase its headcount last year citing the difficult economy and decline in its customer base.  The company recently implemented a growth plan, certifying workers at its Buffalo location, to be more attractive to food-based customers from restaurant, chain store and food processing plants.  It is important to note also that the Board approved a reduction to CTS’s job commitment to 52 jobs for the extended term (2013 – 2020) during last year’s WNY contact extension initiative.

Recommendation:  Staff recommends that the Trustees take no action at this time.

E.I. DuPont de Nemours & Co., Niagara Falls, Niagara County
Allocation:                           3,000 kW of RP
Jobs Commitment:            260 jobs

Background:  E.I. DuPont de Nemours & Co. (‘DuPont’) is a manufacturer of chemicals for the intermediate chemicals markets.   For the past year, DuPont averaged 202.4 jobs, i.e., 77.8% of its contractual commitment. DuPont has two other allocations at this location exceeding compliance levels at 88% for a vintage allocation and another at 114.3%.  In spite of the economic downturn, DuPont started to see improvements in 2010.  The company increased its headcount by 27 jobs, from January to December’s monthly average, and hired 9 more employees during the first quarter of 2011.  It is important to note that the Board approved a reduction to DuPont’s job commitment to 195 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Ford Motor Company,Buffalo, Erie County
Allocations:                         4,300 kW and 2,900 kW of EP
Jobs Commitments:           950 jobs

Background: Ford Motor Company (‘Ford’) opened its Buffalo Stamping Plant in 1950, where it manufactures doors, floor pans, quarter panels and some inner-body components.  The components then go to other Ford assembly plants and distributions center throughout the U.S. and Canada.  In 2010, Ford averaged 840.0 jobs, or 88.4% of its contractual commitment.  The automotive industry has undergone a dramatic transformation over the past several years.  The downturn in the economy has forced significant changes in the way Ford does business, which has adversely affected employment levels.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Global Abrasive Products, Inc., Lockport, Niagara County
Allocations:                         150 kW of EP
Jobs Commitments:           45 jobs

Background: Global Abrasive offers a complete selection of abrasive products for metal and woodworking applications.  For the past year, Global Abrasive averaged 39.7 jobs, i.e., 88.2% of its contractual commitment.  The continued weakness in the overall economy is the primary factor influencing the company’s employment levels.  Global Abrasive’s business had dropped 30% to 40% in 2009, and only came back 13% in 2010.  The company expects to be able to meet its job commitment level in 2011.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Goodyear Dunlop Tires North American Ltd., Tonawanda, Erie County
Allocation:                           800 kW & 850 kW of RP and 6,000 kW of EP
Jobs Commitment:            1449 jobs, 1422 jobs & 1412 respectively

Background:  Goodyear Dunlop Tire Company N.A. (‘Goodyear Dunlop’) manufactures tires for automobiles, motorcycles and all-terrain vehicles at its Tonawanda facilities.  For the past year, Goodyear averaged 1237.8 jobs, or 85.4%, 87.0% and 87.7% of its contractual commitments, respectively.  The company is above commitment levels associated with its two vintage RP allocations (4,191 kW and 250 kW) and it is trending up with an increase of 53 jobs.  It is important to note that the Board approved a reduction to Goodyear Dunlop’s job commitment to 1,239 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Greatbatch, Inc, Clarence/Alden, Erie County
Allocation:                           1,500 kW of EP  
Jobs Commitment:            368 jobs

Background: Greatbatch is a leading developer and manufacturer of battery and precision engineered components used in medical devices as well as for commercial applications.  For the past year, Greatbatch averaged 316.9 jobs, i.e., 86.1% of its contractual commitment. Although the economic climate continued to be challenging during 2010, the company was able to increase employment by 5%, or about 15 jobs, through gains in new product growth.  It is important to note that the Board approved a reduction to Greatbatch’s job commitment to 333 jobs for the extended term (2013 – 2020) during last year’s WNY contact extension initiative.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Honeywell International, Buffalo, Erie County
Allocation:                           300 kW of RP
Jobs Commitment:            168 jobs

Background:  Honeywell International (‘Honeywell’), a technology research and manufacturing conglomerate, develops and produces atmospherically safe fluorocarbons at its Buffalo facility.  For the past year, Honeywell averaged 150 jobs, i.e., 89.3% of its contractual commitment.  Honeywell is still very committed to its Buffalo facility, as seen by the increase in staffing levels as 2010 progressed.  During the last quarter 2010, the company averaged 161 jobs and continues to trend up in 2011.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Ingram Micro Corporation,Williamsville, Erie County
Allocation:                           900 kW of EP
Jobs Commitment:            1,525 jobs

Background:  Ingram Micro Corporation (‘Ingram’) is a leading wholesale distributor of microcomputer products worldwide, including hardware, software and networking equipment.  For the past year, Ingram averaged 1,223.3 jobs, i.e., 80.2% of its job commitment.  Ingram reported that its business rebounded sharply and it was able to add 46 jobs in 2010.  The company anticipates employment will continue to trend upward into 2011.  Ingram continued to invest in its state-of-the-art facility to remain competitive.  It is important to note also that the Board approved a reduction to Ingram’s job commitment to 1,293 jobs for the extended term (2013 – 2020) during last year’s WNY contact extension initiative.

Recommendation: Staff recommends that the Trustees take no action at this time.

International Imaging Materials, Inc., Amherst, Erie County
Allocations:                         1,000 kW of EP and 250 kW of RP
Jobs Commitments:           499 jobs and 393 jobs, respectively

Background:  International Imaging Materials, Inc. (‘International Imaging’), in business since mid-1980, manufactures thermal transfer ribbons.  For the past year, International Imaging averaged 325.9 jobs, i.e., 65.5% and 82.9% of its contractual commitments, respectively.  This is an increase from the previous year.  In 2010, the company was able to add an additional 11 employees and is cautiously optimistic about its growth in 2011.  It is important to note that the Board approved a reduction to International Imaging’s job commitment to 310 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative.

Recommendation: Staff recommends that the Trustees take no action at this time.


Lockheed Martin, Niagara Falls, Niagara County
Allocation:                   250 kW of RP
Jobs Commitment:   45 jobs

Background:  Lockheed Martin (‘Lockheed’) manufactures gravity gradiometer technology for the U. S. Navy and commercial use.  For the past year, Lockheed averaged 35.7 jobs, i.e., 79.4% of its contractual commitment.  Due to the state of the economy and restrictions on defense spending, the company did not experience much growth in 2010.  The company managed to maintain about the same employment levels as the previous year and anticipate the same job levels throughout 2011.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Luvata  Buffalo, Inc., Buffalo, Erie County
Allocation:                            250 kW of RP
Jobs Commitment:             831 jobs

Background:  Luvata Buffalo, Inc. (‘Luvata’) manufactures copper and brass sheets and rolls.  For the past year, Luvata averaged 593 jobs, i.e., 71.4% of its contractual commitment.  This is a significant increase, 48 jobs, from the previous year’s average.  Business improved during 2010 and the trend is positive.  It is important to note that the Board approved a reset of all of Luvata’s job commitments to 575 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Malyn Industrial Ceramics, Inc., Clarence, Erie County
Allocation:                            150 kW of EP
Jobs Commitment:             13 jobs

Background:  Malyn Industrial Ceramics (‘Malyn’) is a low-cost producer of advanced ceramic components.  For the past year, Malyn averaged 10 jobs, i.e. 76.9% of its contractual commitment.  The company gave back 175 kW of its original 325 kW EP allocation which represented a 54% reduction in its contract allocation and the Board approved a job commitment reduction based proportionally to the reduced contract demand.  Due to the state of the economy Malyn continues to struggle to grow but is confident the current job commitment will be attained. 

Recommendation:  Staff recommends that the Trustees take no action at this time.

Niagara Ceramics Corporation, Buffalo, Erie County
Allocations:  250 kW & 600 kW of RP & 250 kW of EP
Jobs Commitments:           190 jobs

Background:  Niagara Ceramics Corporation (‘Niagara Ceramics’), founded in 2003, produces dinnerware.  For the past year, Niagara Ceramics averaged 120.5 jobs, i.e., 63.4% of its contractual commitments.  This is an increase of 15 jobs from the previous year.  In September of last year, Niagara Ceramics had to slow operation due to an unusual slowdown in its incoming order volume.  This continued through the holiday season and into the first quarter of 2011.  Recently, the company started to see an increase in volume, mainly attributed to its exposure at national trade shows.  The company plans to add additional employees during the 2nd quarter 2011.  It is important to note that the Board approved a reduction to Niagara Ceramics’ job commitment to 140 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative.

 Recommendation:  Staff recommends that the Trustees take no action at this time.

Niagara LaSalle Corporation, Buffalo, Erie County
Allocation:                           700 kW and 700 kW of RP respectively
Jobs Commitment:            164 jobs and 92 jobs respectively

Background:  Niagara LaSalle Corporation (‘Niagara LaSalle’) manufactures cold-finished and thermal-treated steel bars.  Niagara LaSalle averaged 72.9 jobs, i.e., 44.5% and 79.3% of its contractual commitments, respectively.  This is an average decrease of 5 jobs from the previous year.  In 2009, the total business volume of shipments for Niagara LaSalle Corporation declined 44%, with the Buffalo facility registering a 38% sales decline from the prior year.  The company was forced to reduce staffing levels at all its facilities, including 38 employees between January and December 2009.  Conditions stabilized in 2010 and the company recalled employees to its workforce in January 2011.  The company is optimistic that sales volume and employment levels will increase in the near future.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Nuttall Gear Company, Niagara Falls, Niagara County
Allocation:                           350 kW of EP
Jobs Commitment:            135 jobs
Background:  Nuttall Gear Company (‘Nuttall’) manufactures enclosed gear drives for industrial, commercial, transportation and utility applications.  For the past year, Nuttall averaged 94.2 jobs, or 69.8% of its contractual commitment.  This is an average increase of 6 jobs from the previous year.  The company was forced to operate with fewer employees in 2010 due to continuing soft economic conditions.  Nuttall is trending up towards its job commitment, adding 12 employees between January 2010 and December 2010. 

Recommendation:  Staff recommends that the Trustees take no action at this time.

PEMCO – Precision Electro Minerals Co., Inc., Niagara Falls, Niagara County
Allocation:                           800 kW of RP
Jobs Commitment:            22 jobs
Background:  PEMCO – Precision Electro Minerals Co., Inc. (‘PEMCO’) makes and sells fused silica for use in the foundry and refractory industry.  For the past year, PEMCO averaged 17 jobs, i.e., 77.3% of its contractual commitment.  This is an average increase of 13 jobs over the previous year.  During the last quarter of 2010, the company reached a headcount of 21 jobs and has maintained this level for the first quarter of 2011.  The company anticipates a continued trend upwards above its commitment level this year.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Protective Industries, Inc., Buffalo, Erie County  
Allocation:                           250 kW of EP
Jobs Commitment:            310 jobs

Background:  Protective Industries (‘PI’) manufactures plastic caps, plugs and temperature-control equipment through plastic injection molding and vinyl dip molding and extrusion.   For the past year, the company averaged 258 jobs, or 83.2% of its contractual commitment.  This is an average increase of 24 jobs from the previous year.  Due to economic conditions, PI found it necessary to reduce its workforce in 2009.  However, the company experienced a relatively good rebound in 2010, ending the year with 33 more jobs than were on payroll at the beginning of the year.  Business has improved and the company remains optimistic about the continuing trend up toward its commitment in 2011.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Rosina Food Products, Inc., Cheektowaga, Erie County
Allocation:                           200 kW of EP
Jobs Commitment:            270 jobs

Background:  Rosina Food Products Inc., (‘Rosina Food’) manufactures food products that are distributed nationally from its production facility in Buffalo.   For the past year, Rosina Food averaged 221.6 jobs, or 83.1% of its contractual commitment.  The company’s overall sales volume declined in 2010, due to the ‘soft’ national economy and competitive pressures.  Also, unseasonable weather conditions during the company’s peak months limited produce supply that resulted in less product availability.  The company has made a significant financial investment of $1.2 million in equipment and improvements to the facility for a new product line.  It has recently hired an additional 13 employees to support this new line.  The company is confident it can exceed the job commitment level for 2011 and beyond.  It is important to note that the Board approved a reduction to Rosina Food’s job commitment to 235 jobs for the extended term (2013 – 2020) during last year’s WNY contact extension initiative.

Recommendation:  Staff recommends that the Trustees take no action at this time.

RubberForm Recycled Products, LLC, Lockport, Niagara County  
Allocation:                           500 kW of EP
Jobs Commitment:            30 jobs

Background:  RubberForm Recycled Products, LLC (‘RubberForm’) is a start-up company manufacturing products made from 100% New York recycled crumb rubber, such as traffic sign bases, parking lot wheel stops, speed bumps, dock bumpers and various other products.   For the past year, RubberForm averaged 12.5 jobs, i.e. 42% of its contractual commitment.  This is an increase from the previous year of 5 jobs on average.  In 2009, RubberForm placed a freeze on hiring due to economic effects of the recession.  Business conditions improved in 2010 and the company was recently awarded a multi-year contract.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Special Metals Corporation, Dunkirk, Chautauqua County
Allocation:                           1,000 kW of EP
Jobs Commitment:            81 jobs

Background:  Special Metals Corporation (‘SMC’) is a world leader in super-alloy technology, using vacuum induction melting methods to produce super-alloys for military and civilian use in jet engine turbines.  For the past year, SMC averaged 72.3 jobs, i.e., 89.3% of its commitment.  Additionally, the company has been above the 90% threshold since May of last year.

Recommendation:  Staff recommends that the Trustees take no action at this time.

TAM Ceramics Group of New York, LLC, Niagara Falls, Niagara County
Allocations:                         7,000 kW of RP & 500 kW of EP
Jobs Commitments:           100 jobs

Background:  TAM Ceramics Group of New York, LLC (‘TAM’) is a supplier of dielectric powder to the passive electronic component industry and zirconia-based ceramic powders to the industry.  For the past year, TAM averaged 52 jobs, i.e. 52% of its job commitment.  These two allocations are ‘vintage’ contracts with an 80% job ratio based on a two-year average.  In April 2010, TAM completed a management buyout of the facility and recently celebrated its one-year anniversary of the new TAM.  Now, effectively a start-up operation, the company is currently working on a project that would require a multi-million dollar investment and hiring of 15 to 50 additional employees.  In 2010, TAM gave back 3,900 kW and was granted a job reduction from 152 jobs to 100 jobs.  The company is optimistic that, with continued investments and projected sales growth over the next year, it will be able to meet its job commitment levels.

Recommendation:  Staff recommends that the Trustees take no action at this time.

The Carriage House Companies - Dunkirk Facility, Dunkirk, Chautauqua County
Allocation:                           500 kW of EP
Jobs Commitment:            199 jobs

Background:  The Carriage House Companies (‘Carriage House/Lakeside’) is a storage facility for both raw materials and finished products associated with syrups.  For the past year, Lakeside averaged 169.3 jobs, or 85.1% of its contractual commitment.  This is an increase from the previous year of about 12 jobs.  The company operates a sister facility in nearby Fredonia, which also has a hydropower allocation.  Taken together, the company’s commitment is 639 jobs and actual jobs reported for both were 672 jobs for 2010, representing a combined average of 105.2%.

Recommendation:  Staff recommends that the Trustees take no action at this time.

Tulip Corporation,            Niagara Falls, Niagara County
Allocations:                         300 kW of EP and 1,200 kW of RP
Jobs Commitments:           110 jobs and 122 jobs respectively

Background:  Tulip Corporation (‘Tulip’), an injection-molding company, recycles rubber and plastic and manufactures battery cases for the major battery manufacturers.   For the past year, Tulip averaged 75.5 jobs, or 68.6% of its EP allocation and 61.9% of its RP allocation commitments.  The RP allocation is a ‘vintage’ contract, with an 80% ratio threshold.  This represents an increase of 20 jobs from the previous year.   Tulip continues to aggressively pursue growth in its reprocessed material line, an emerging industrial jar markets. The company stated that continued hydropower availability is vital to its recovery effort and increased employment.   During the last quarter of 2010 the company’s average job count was 92 jobs and it continues to trend up towards its contractual commitment in 2011.  It is important to note that the Board approved a reduction to Tulip’s job commitment to 70 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative. 

Recommendation:  Staff recommends that the Trustees take no action at this time.

Washington Mills Electro Minerals Corp., Niagara Falls, Niagara County
Allocation:                           9,700 kW of RP
Jobs Commitment:            171 jobs

Background:  Washington Mills Electro Minerals Corp. (‘Washington Mills’) manufactures abrasive grains for sandpaper and grinding wheels.  For the past year, Washington Mills averaged 109.1 jobs, i.e., 63.8% of its commitment.  This is a decrease of about 14 jobs from the previous year.  The economic difficulties have hit the company’s industry particularly hard.  Market conditions in most of its businesses have been unfavorable and this decline in volume has affected its workforce.  Some of Washington Mills product lines have lost approximately 60% of its sales volume. The company is experiencing a slow recovery in sales volume, but remains hopeful sales will turn around with the economy, leading to increased hiring.  It is important to note that the Board approved a reduction to the company’s job commitment to 107 jobs for the extended term (2013 – 2020) during last year’s WNY contract extension initiative. 

Recommendation:  Staff recommends that the Trustees take no action at this time.

Section II
Allocations to Be Reduced 

APP Pharmaceuticals LLC, Grand Island, Erie County
Allocation:                           700 kW of RP
Jobs Commitment:            508 existing jobs and 60 new jobs

Background:  APP Pharmaceuticals, LLC (‘APP’) develops, manufactures and markets injectable pharmaceutical products.  The company has 2,000 kW of RP in service and is compliant, reporting 582 jobs in 2010.  The company was awarded a 700 kW RP allocation in June 2008, based on a commitment to invest $25 million for a business expansion and the creation of 60 new jobs.  The project entailed two programs: a small facility and equipment expansion and the purchase of a facility next door.  Staff reviewed the project and has determined that the company spent nearly 50% of the committed capital investment to complete the purchase of the facility.  However, the existing facility expansion was delayed and ultimately canceled.  Although not completing the full project, APP has already met the job creation commitment.  Based on this outcome, staff is recommending a 200 kW reduction to the 700 kW allocation.  The job commitment for the resulting 500 kW RP allocation will remain at 568 jobs.

Recommendation:  Staff recommends that the Trustees approve a reduction of 200 kW from the original award of 700 kW. 

Contract Pharmaceuticals Limited Niagara, Buffalo, Erie County
Allocation:                           250 kW of RP
Jobs Commitment:            329 jobs

Background:  Contract Pharmaceuticals Limited Niagara (‘CPL’), a Canadian company, is a contract manufacturer of dermatological products and various cold medicines under contract for other companies.  For 2010, CPL averaged 283.7 jobs, or 85.6% of its contractual commitment.  This is a slight increase, up 4 jobs from the previous year.  CPL also has a 750 kW EP allocation that met its 265 job commitment (107.1%).  Due to a decline in contract manufacturing orders, the company announced its decision to close the facility at the end of 2011.  CPL will continue operating until that time and has requested the Authority allow continued use of the allocations until manufacturing ceases at the facility.  Staff recommends a reduction to the 250 kW allocation based on the reported job shortfall.

Recommendation:  Staff recommends that the Trustees reduce the 250 kW RP allocation down  to 200 kW.

Quebecor World Buffalo, Inc., Depew, Erie County
Allocation:                           4,000 kW and 1,000 kW of EP
Jobs Commitment:            810 jobs and 1,015 jobs respectively

Background:  Quebecor World Buffalo, Inc. (‘Quebecor’) manufactures paperback books, magazines and tab-size inserts.  For the past year, Quebecor averaged 527 jobs, or 65.7% of its 810 job commitment and 52% of its 1,015 job commitment.  Both allocations are both ‘vintage’ contracts with an 80% job ratio.  The company announced a decision to close the facility by the end of 2011 and has requested the Authority allow continued use of the allocations until manufacturing ceases at the facility.  Staff recommends a reduction to the total 5,000 kW based on the reported job shortfalls.

Recommendation:  Staff recommends that the Trustees reduce the 4,000 kW allocation down to 3,150 kW and the 1,000 kW allocation down to 0 kW.

RECOMMENDATION

“The Senior Vice President – Marketing and Economic Development recommends that the Trustees take no action on 27 customers holding 36 allocations as described in Section I and as set forth in Exhibit ‘5-A-2’ and recommends that the Trustees approve reductions to allocations as described in Section II and as set forth in Exhibit ‘5-A-3.’ 

“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 President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That the Trustees hereby take no action with respect to companies and power allocations as set forth in Exhibit
“5-A-2” and reduce the power allocations of three customers as set forth in Exhibit “5-A-3” and as described in the foregoing report of the President and Chief Executive Officer; and be it further

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


6.    Power for Jobs and Energy Cost Savings Benefits Programs Compliance Review

The President and Chief Executive Officer submitted the following report:

SUMMARY

“Staff conducted its annual review of job compliance for Power for Jobs (‘PFJ’) and Energy Cost Savings Benefit (‘ECSB’) program customers.  The review compared employment levels reported in the customers’ recent applications to extend program benefits through June 30, 2012 to contractual job commitments.  Eighty one percent of these customers, or 402 of 498 allocations, were found to be in compliance, with the remaining 96 allocations found to be non-compliant.   

“Upon review of the job compliance for all customers continuing in the programs, staff recommends that the Trustees take no action at this time to reduce the allocations found to be non-compliant for the PFJ and ECSB customers, as detailed in Exhibits ‘6-B-1’ and ‘6-B-2.’

BACKGROUND

                “The PFJ program provides either power or electricity savings reimbursements to businesses and not-for-profit corporations that have agreed to retain or create jobs in New York State.  Under the program’s requirements, businesses could have their benefits reduced if they fail to meet their contractual job commitments.

“The ECSB program provides a rate discount to customers participating in the Economic Development Power, High Load Factor and Municipal Distribution Agency power programs.  These businesses may also have their benefits reduced if they fail to meet their contractual job commitments.

“On April 14, 2011, the Governor signed legislation authorizing a new economic development power program called ‘Recharge New York’ to begin service on July 1, 2012.  The legislation also authorized an extension of the PFJ and the ECSB programs through June 30, 2012.  In light of the desire to minimize disruption in receipt of program benefits, the legislation required expedited extensions of PFJ and ECSB benefits and deferral of the job compliance review until after the applicant had been awarded extended benefits.

“At its meeting on April 21, 2011, the Economic Development Power Allocation Board (‘EDPAB’) recommended that the Authority’s Trustees approve the extension of benefits for 427 PFJ and 86 ECSB program customers through June 30, 2012, including a recommendation to defer job compliance review until on or before June 30, 2011.

“The Trustees approved the extension of both the PFJ and ECSB program allocations at their April 22, 2011 meeting.  In addition, the Trustees also approved EDPAB’s recommendation to defer the job compliance review until on or before June 30, 2011.

“Upon request, at its June 27, 2011 meeting, EDPAB allowed more time for a compliance review to be completed.

DISCUSSION

“Upon extension of the PFJ and ECSB programs, applications were sent to existing PFJ and ECSB customers.  Four hundred and twelve PFJ customers submitted applications to the Authority requesting extension of their contracts.  Fifteen PFJ customers chose to opt out of the program or did not submit an application.  The customers continuing in the program reported a total of 234,150 jobs as compared to 232,182 jobs, an aggregate of their commitments.  Thus, current PFJ participants reported employment levels at 101% of job commitments, in aggregate.

“All ECSB customers submitted applications to the Authority requesting extension of their allocations and program benefits.  The customers reported a total of 61,306 jobs as compared to 61,451 jobs, an aggregate of its commitments.  Thus, current ECSB participants reported employment levels at nearly 100% of job commitments, in aggregate.

“Eighty-one percent of the customers in the PFJ and ECSB programs are compliant, as detailed in Exhibits ‘6-A-1’ and ‘6-A-2.’  The remaining nineteen percent, comprised of seventy-eight PFJ allocations, and eighteen EDP, MDA, or HLF allocations receiving ECSB benefits, are not job compliant, as detailed in Exhibits ‘6-B-1’ and ‘6-B-2.’

“At its meeting on July 25, 2011, EDPAB recommended the Trustees take no action on non-compliant PFJ and ECSB allocations at this time.  EDPAB also resolved to preserve the ability to revisit job compliance action, if deemed necessary and appropriate, at a future time.  Based on EDPAB’s recommendation, and in consideration of the state of the economy along with the short-term nature of these extended benefits, staff recommends that the Trustees take no action at this time on the companies that were non-compliant, as detailed in Exhibits ‘6-B-1’ and ‘6-B-2,’ while preserving the ability to revisit job compliance action for these allocations at a future time.

“Staff also advises the Trustees that, in the case of ECSB, only customers deemed to be in substantial compliance are eligible for consideration to receive allocations under Recharge New York.

RECOMMENDATION

“The Manager – Business Power Allocations and Compliance recommends that the Trustees take no action at this time on Power for Jobs and Energy Cost Savings Benefit customers that are non-compliant, as detailed in Exhibits ‘6-B-1’ and ‘6-B-2,’ while preserving the ability to revisit job compliance action for these allocations at a future time.

                “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. James Pasquale presented highlights of staff's recommendation to the trustees.  In response to a question from Trustee O'Luck, Mr. Pasquale said that the Authority intends to conduct extensive marketing for the Recharge New York (“RNY”) program so that companies that were not a part of the Power for Jobs (“PFJ”) or Energy Cost Savings Benefit (“ECSB”) programs will have an opportunity to apply for power under the new program.
In response to concerns expressed by Trustee Nicandri as to possible conflict of interest with him being a member of both EDPAB and the Board of Trustees, Ms. Judith McCarthy said that, in the interest of caution, he can recuse himself from voting on this item today and she will get back to him with a response regarding his concerns. 
Trustees Nicandri, Curley and LeChase recused themselves from voting on this item.
The following resolution, as submitted by the President and Chief Executive Officer, was adopted by a vote of 4 to 3 with Trustees Nicandri, Curley and LeChase recusing themselves.

WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has recommended that the Authority Trustees take no action at this time on Power for Jobs (“PFJ”) customers and Energy Cost Savings Benefit (“ECSB”) customers that are non-compliant, as detailed in Exhibits “6-B-1” and “6-B-2,” while preserving the ability to revisit job compliance action for these allocations at a future time;

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

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the 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 resolutions, subject to the approval of the form thereof by the Acting General Counsel.


7.    Increase in Hydroelectric Preference Power Rates – Notice of Proposed Rule Making and Reinstatement of
       Tariff Provisions for Preference and Industrial Power Rates

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve a Notice of Proposed Rule Making (‘NOPR’) to increase the rates for preference power supplied from the Niagara and St. Lawrence Hydroelectric Projects (‘Hydro Projects’).  In accordance with the requirements of the State Administrative Procedure Act (‘SAPA’), the Trustees are also requested to direct the Corporate Secretary to publish the NOPR in the New York State Register.  This proposed rate action would, if approved, implement the first preference power rate increase since May 2008, as the Trustees in March 2009 withdrew a previous NOPR which sought to raise such rates effective May 2009.  

“The Authority’s preference rates apply generally to sales to forty-seven municipal electric systems, four rural electric cooperatives (collectively, ‘M&C customers’), three upstate investor-owned utilities (for the benefit of their residential customers), the ‘Neighboring States’ customers and the Niagara Project relicensing host communities.  In total, 1,892 MW of power and energy sold by the Authority is currently subject to the preference power rate.  Staff recommends that the proposed rates be phased-in over a 42-month period from November 2011 through April 30, 2015.  This three and a half-year rate proposal will help mitigate customer bill impacts to a great extent.    

                “Further, the Trustees are requested to authorize the Secretary to schedule a public forum for obtaining the views of interested parties, consistent with Authority ratemaking policy.  After the 45-day comment period required under SAPA, Authority staff will address any filed comments, including any comments raised at the public forum, and return to the Trustees to seek final adoption of the revised preference power rates, which is anticipated to occur at the October 25, 2011 Trustee meeting.

                “The Trustees are also requested to approve the removal of their earlier suspension of two annual contract-based rate adjustment mechanisms:  the Rate Stabilization Reserve (or ‘RSR’) applicable to preference power rates and the price indices applicable to the production rates for a number of classes of Authority industrial customers receiving hydroelectric power.  Such suspensions were approved at the March 31, 2009 Trustee meeting affecting sales to Replacement Power (‘RP’) and Expansion Power (‘EP’) customers and sales to General Motors (‘GM’) and ALCOA/Reynolds. 

BACKGROUND

Preference Power Rates

                “At their April 24, 2007 meeting, the Trustees adopted a two-year rate plan for the 2007 and 2008 rate years which extended from May 1, 2007 to April 30, 2009.  No increase to these rates has occurred since May 2008, the start of the final rate year under the two-year plan.

“Though the Trustees authorized a NOPR in January 2009 to increase the preference power rates for rate years 2009 and 2010, this was later withdrawn.  That proposal called for increasing revenues in the 2009 rate year by $9.7 million as compared to the rates in effect in the 2008 rate year and increasing revenues in the 2010 rate year by $14.6 million as compared to the rates in effect in the 2008 rate year.  Based on public comments, consideration of the national economic downturn and the extent to which the downturn had adversely affected the region’s customers, the Trustees, on March 31, 2009, approved the withdrawal of the NOPR, deferring the recovery of costs.  This action also included a suspension of the RSR, a contractual rate adjustment for preference power customers, to ensure that the tariff rates do not over-collect or under-collect costs.
“The current rates consist of a demand charge of $2.96 per kilowatt (‘kW’) and an energy charge of $4.92 per megawatt-hour (‘MWh’).  At an indicative load factor of 70%, these rates equal $10.71/MWh, which compares favorably to, and is about 73% lower than, the $39.22/MWh average hourly market rate for 2010 in the New York Independent System Operator (‘NYISO’) Zone A located in western New York.

“The proposed rate plan would allow rates to return to cost-based levels in accordance with the methodologies adopted in the April 29, 2003 final rate action approved by the Trustees.  Such methodologies were also agreed to by the M&C customers as part of the 2003 ‘global’ settlement agreement reached with the Authority.   

Industrial Power Rates

“At their March 31, 2009 meeting, the Trustees suspended the production rate increases for industrial customers receiving hydroelectric power.  No increase to these rates has occurred since May 2008.  The tariffs applicable to the RP, EP and GM customers specify that effective on May 1st of each year, the base production rates will be adjusted by a formula employing four indices:  the weighted average fuel cost, the Bureau of Labor Statistics (‘BLS’) Producer Price Index (‘PPI’) for Industrial Commodities, the BLS PPI for Industrial Electric Power and an inflation adjustment (published by the U.S. Department of Commerce).  The adjustment for the RP, EP and GM customers that was expected in May 2009 would have increased production revenues by approximately $4 million for the rate year based on the applicable indices.

“Similarly, for ALCOA/Reynolds, the applicable tariffs specify that the base rates are adjusted on May 1st of each year.  These adjustments are based on two industrial power price indices and an industrial commodities index, each published by the U.S. federal government.  The May 2009 adjustment to the ALCOA/Reynolds production rates would have increased revenues by approximately $1.2 million for the rate year based on the applicable indices.

DISCUSSION

Preference Power Rates and the Rate Stabilization Reserve

“The attached Preliminary Staff Report (‘Staff Report,’ attached as Appendix ‘7-A’) includes the Cost of Service (‘CoS’) that sets forth the estimated costs required to serve the preference power customers from the Authority’s Hydro Projects.  Details of the CoS study are shown in Exhibit ‘A’ to the Staff Report.  The CoS continues the ratemaking methodologies adopted by the Trustees at their April 29, 2003 meeting.  These methodologies and principles include: 

 

 

 

 

“The total Hydro Projects’ costs, net of the ancillary service credits, are $230.6 million, $238.6 million, $247.3 million and $255.6 million for the 2011 to 2014 calendar years, respectively.  (Refer to Exhibit ‘A,’ page 2, line 14 of Appendix ‘7-A’).  The principal cost driver responsible for the increases is the ongoing capital investments at the facilities, including the Niagara and St. Lawrence relicensing expenditures, and the life extension and modernization for both the St. Lawrence Project and the Lewiston Pump-Generating Plant at the Niagara Project.  During the two years of the rate freeze and the four years of the proposed rate plan period, the Authority will have invested over $490 million in the Hydro Projects. 

“Consistent with past ratemaking practice, the costs used to set new rates starting in 2011 will be based on projected calendar year 2011 costs, although the 2011 ‘rate year’ would extend only from November 1, 2011 through April 30, 2012.  For the subsequent rate years in this proposed plan, Authority staff proposes to adopt its traditional rate year approach, under which the new rate year will begin on May 1st of 2012, 2013 and 2014 and will be based on projected calendar year costs for 2012, 2013 and 2014, respectively.  The cost-based demand and energy rates for the four rate years and the overall rates at the 70% load factor (before the recommended phase-in) are shown below.

 

Rate Year

Demand Rate
$/kW-month

Energy Rate
$/MWh

Effective Rate
 $/MWh

 

2011

3.85

4.92

12.45

 

2012

3.97

4.92

12.69

 

2013

4.12

4.92

12.98

 

2014

4.32

4.92

13.37

 

                “The 2011 increase reflects the change in costs from 2008 levels when rates were last reset at $10.71/MWh.  In comparison, had the rates initially proposed in January 2009 been put into effect, the 2010 rate year effective rate would have been $12.04 per MWh. 

                “The Rate Stabilization Reserve, established in 1987, was designed to provide rate stability and to provide a mechanism by which to capture the under-recovery or over-recovery of costs relative to the costs collected in the fixed demand and energy charges of the tariff due to differences in net generation and actual cost incurrence.  By design, if the RSR balance exceeds a range of -$25 million to +$25 million, a surcharge or credit will be assessed against the preference power hydro rate over the ensuing 12-month period.  Authority staff’s calculations show the RSR balance as of December 31, 2010 to be about -$51.3 million, indicating a $26.3 million shortfall beyond the
-$25 million threshold.  Most of this $26.3 million shortfall is attributable to the 2009 and 2010 cost-of-service increases. 


Phased-in Cost Recovery

                “Staff recommends phasing-in the cost-based proposed demand and energy rates over a three-year period in order to mitigate customer impacts.  The phase-in of the rates would result in an under-recovery of costs during the two rate years ending April 30, 2013.  These under-recovery amounts are estimated to be $12 million in 2011 and $4 million in 2012 and would contribute to making the current RSR balance more negative.  By the 2013 rate year, the proposed increase would bring rates up to the current costs estimated for calendar year 2013.  Starting with the 2014 rate year, the suspension of the RSR would be lifted and the Authority would begin to pay down the negative RSR balance through the collection of an RSR surcharge.  To mitigate cost impacts to the preference customers, staff recommends that the RSR surcharge be limited to $0.50/MWh in 2014.  Based on the current negative RSR balance, staff anticipates that RSR surcharges will need to continue in the rate years subsequent to the years covered by the proposed rate plan in order to bring the RSR balance back to the -$25 million level.  Staff will keep the Trustees informed regarding the RSR balance and will make further recommendations, as appropriate.

                “To the extent the Authority’s proposed rate plan defers projected costs to be collected beyond the rate year in question, this is consistent with the March 2009 action concerning the withdrawal of the preference rates NOPR and the RSR surcharge suspension.  That Trustee action resulted in the deferral of 2009 and 2010 rate year costs which, nonetheless, would be ‘recovered over appropriate, subsequent year(s).’  This proposed plan extends, in part, the 2009 and 2010 deferrals.

                “The proposed rate plan thus combines two elements:  (1) a phase-in of the cost-based rates for each of the three upcoming rate years with a deferral of full cost recovery until the third rate year in order to mitigate rate impacts upon customers; and (2) a projected RSR surcharge starting with the 2014 rate year, capped at $0.50/MWh, to start the process of collecting deferred costs in order to retire balances that exceed the -$25 million threshold. 

 

Rate Year

Proposed
Demand Rate
$/kW-month

Proposed
Energy Rate
$/MWh

RSR
Surcharge
$/MWh

Effective Rate
$/MWh

 

2011

3.32

4.92

-

11.42

 

2012

3.70

4.92

-

12.16

 

2013

4.12

4.92

-

12.98

 

2014

4.32

4.92

0.50

13.87

 

                “As has been the Authority’s practice, all RSR surcharges would be subject to an annual reconciliation process and reported to the Trustees as necessary. 

“For each year of the phase-in, the proposed rate change would impact a customer’s overall bill by less than 1% per month.  For a typical municipal system residential customer paying about $72 per month for 1,000 kWh of electricity, the average increase would be about 60 cents per month for each year of the phase-in.  For a typical utility system residential customer paying about $89 per month for 650 kWh of electricity, the average increase would be about 5 cents per month for each year of the phase-in.  (Details are shown in Exhibit ‘B’ of Appendix
‘7-A’.)

“The proposed action to adjust the preference power rates must be posted for public comment in the New York State Register.  In addition, as a matter of Authority policy, any proposed action that would increase rates by 2% or more will be the subject of a public forum for the purpose of gathering the views of interested persons concerning the proposal.  Any comments received during this comment period, along with supporting staff analyses, will be presented to the Board at the time the proposal is considered for final action, which is anticipated for the October 2011 Trustee meeting.  A final staff report will be issued shortly after this meeting and will reflect public comments, staff analysis of those comments and the final action of the Trustees.

Industrial Power Rates

“In conjunction with the preference power rate increase, staff recommends removal of the suspension of the indexed production rate increase for industrial customers.

“Staff has updated the production rates for the RP, EP, GM and ALCOA/Reynolds customers applying various economic indices and recommends the following proposed demand and energy rates for the 2011 rate year commencing September 1, 2011.  Though the Authority normally implements revised indexed rates effective May 1 of each year under its contracts, staff agrees to waive recovery of increased charges from the May 1 – August 31, 2011 period.  Customers will receive the usual duration of notice for the increased industrial hydroelectric rates.

 

EP/RP/GM

ALCOA

Reynolds

 

Demand ($/kW)

Energy ($/MWh)

Demand ($/kW)

Energy ($/MWh)

Demand ($/kW)

Energy ($/MWh)

Current

5.17

8.84

4.31

8.52

4.38

8.67

Proposed

5.47

9.36

4.40

8.69

4.47

8.84

                “Like the reinstatement of the RSR, the reinstatement of the price indices for the Authority’s hydroelectric industrial customers can be achieved by Trustee approval and is not part of the NOPR described herein.

FISCAL INFORMATION

                “Implementation of the proposed schedule of rate increases would allow the Authority to recover its costs associated with serving the preference power customers.  For the 2011 rate year, the estimated revenue increase would be about $3.0 million.  For the 42-month period from November 2011 through April 30, 2015, the estimated cumulative base rate revenue increases would be about $56.4 million with the additional RSR surcharge of $3.3 million being collected from preference power customers for the period May 1, 2014 to April 30, 2015.

“In addition, the reinstatement of the price indices for the Authority’s hydroelectric industrial customers would provide for an estimated revenue increase of about $3.5 million for the period September 1, 2011 to April 30, 2012.

RECOMMENDATION

                “The Vice President – Financial Planning and Budgets recommends that the Trustees authorize the Corporate Secretary to: (1) file notice for publication in the New York State Register of the proposed Authority action to adjust the hydroelectric preference power rates; and (2) schedule a public forum for the purpose of gathering the views of interested persons concerning the preference power customers.

                “It is also recommended that the Senior Vice President – Corporate Planning and Finance be authorized to reinstate the Rate Stabilization Reserve mechanism used to calculate surcharges/credits for preference power customers.

“It is also recommended that the Senior Vice President – Marketing and Economic Development be authorize to reinstate the application of indices used to calculate revised production rates for the Authority’s industrial hydroelectric power customers.
“It is also recommended that the Senior Vice President – Marketing and Economic Development, or his designee, be authorized to issue written notice of the proposed actions to the affected customers.

“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 provided highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Mark O'Luck, Mr. Russak said that following the discussions with him on the subject, staff, in consultation the Authority’s Communications department, modified its outreach efforts with elected officials and affected customers.  Trustee Dyson added that, in addition to the fact that the Authority is legally obligated to take this action, the Authority is requesting a modest increase which would be phased-in over four years in order to reduce the impact on its customers.  Chairman Townsend suggested that, since staff is requesting approval to file a notice of proposed rulemaking and to conduct a public forum, the Board should wait for customer responses after the hearing before considering engagement of outside marketing assistance.  Trustee Dyson said in an effort to show that the Authority is taking measures to contain costs, for example, reductions in spending in order to cut down its overhead (personnel; salary levels; contributions to outside organizations; obligations under the relicensing agreements), in keeping with Governor Cuomo’s ten percent cost reduction goal, he would request that Ms. Elizabeth McCarthy provide a budget plan for the Board’s review at the September meeting.
The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file such notices as may be required with the Secretary 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 proposed preference power rate increase; and be it further

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to schedule a public forum for the purpose of obtaining the views of interested persons concerning the Authority’s proposed action to adjust the hydroelectric preference power rates, as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Senior Vice President – Corporate Planning and Finance  or his designee be, and hereby is, authorized to reinstate  the Rate Stabilization Reserve surcharge/credit mechanism applicable to hydroelectric sales made at the preference power rate no later than May 2014; and be it further

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to reinstate the price indices to effectuate revised production rates for industrial hydroelectric power customers commencing September 2011; and be it further

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to issue written notice to affected customers of this proposed hydroelectric preference power rate action and industrial customer rate action; and be it further

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


8.    Niagara Power Project – Lewiston Pump Generating Plant Life Extension and Modernization Program –
       Static Excitation Systems Procurement – Contract Award          

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve the award of a nine-year contract to GE Energy Control Solutions, Inc. (‘GE’), in the amount of $4.0 million for the procurement of 13 Static Excitation Systems (‘SES’) and associated items, as part of the Life Extension and Modernization (‘LEM’) Program at the Lewiston Pump Generating Plant (‘LPGP’).  

BACKGROUND

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services contracts in excess of $3 million or contracts exceeding a one-year term requires Trustee approval.

“At their June 29, 2010 meeting, the Trustees approved the Lewiston Pump Generating Plant Life Extension Program at the estimated cost of $460 million and authorized capital expenditures in the amount of $131 million.  This requested contract award is a part of the previous capital expenditure authorization.  As a result of the LPGP modernization, an increase in pump efficiency will be realized and the SES requires an increase in capacity rating to support the pumping capacity increase.  In addition, the plant’s aging rotary exciters are at the end of their useful life and are becoming increasingly difficult to maintain. 

DISCUSSION

                 “The scope-of-work under this contract includes the design, manufacturing, delivery and commissioning of the SES, as well as technical support during the installation.  The installation of the SES will be performed under a separate contract.  The SESs are scheduled to be delivered prior to the first Unit outage in December 2012.  The installation of the SES will take place as per the Unit Outage schedule of the LPGP LEM Program.

                “The Authority issued an advertisement to procure bids in the New York State Contract Reporter and bid packages were available as of February 28, 2011.  The bid documents were downloaded by 27 potential bidders and 8 potential bidders participated in a site visit on March 9, 2011.

“The following proposals were received on April 26, 2011:

                Bidder                                                                           Location                                               Lump Sum

           GE Energy Control Solutions, Inc.                                 Longmont, CO                                 $3,996,630.00

           Eaton Corporation                                                            Leroy, NY                                         $5,350,035.00

           Voith Hydro                                                                       York, PA                                            $6,804,600.00

           ABB, Inc.                                                                            Quebec, Canada                              $6,878,167.00

           Emerson                                                                              Pittsburgh, PA                                   $10,064,079.00

“The proposals were reviewed by an evaluation committee comprising staff from Engineering, Procurement, Niagara Site Personnel and Project Management.

                “GE’s bid was the lowest-priced and was evaluated as technically acceptable.  GE, which has extensive experience in electrical construction and projects of this magnitude and demonstrated knowledge of the scope of work, is capable of completing this project in a timely manner.  GE has performed satisfactory work for the Authority on prior projects.

                “The estimated cost of this work is within the authorization of this project which was approved by the Trustees at their June 29, 2010 meeting; this work is included in the 2011 approved Capital Budget.  Future funding will be included in the Capital Budget request for that year.

FISCAL INFORMATION

                “Payment associated with this project will be made from the Authority’s Capital Fund.

RECOMMENDATION

“The Executive Vice President and Chief Engineer – Power Supply, Senior Vice President – Power Supply Support Services, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Procurement, the Project Manager and the Regional Manager – Western New York recommend that the Trustees approve the award of a multi-year contract to GE Energy Control Solutions, Inc. of Longmont, CO, in the amount of $4.0 million.

“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 President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a nine-year contract to GE Energy Control Solutions, Inc. of Longmont, CO, in the amount of $4.0 million, for the procurement of 13 Static Excitation Systems as part of the Life Extension and Modernization program to renovate and modernize the Lewiston Pump Generating Plant, as recommended in the foregoing report of the President and Chief Executive Officer;

Contractor                                                           Contract Approval

GE Energy Control Solutions, Inc.                       $4.0 million
Longmont, CO                                                   

AND BE IT FURTHER RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the 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 agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Acting General Counsel.

 

9.    Procurement (Services) Contract – EME Group, WSP Flack & Kurtz and Horizon Energy Services – Retro-Commissioning            

The President and Chief Executive Officer submitted the following report:
SUMMARY
“The Trustees are requested to approve the award of retro-commissioning, third party commissioning and project implementation services with the firms of EME Group, WSP Flack and Kurtz and Horizon Engineering for an aggregate amount of $25 million (initial award $5M each) in connection with the Authority’s Governmental Customers Energy Efficiency Services Programs (‘GCESP’).  These funds will be taken from program funds previously approved by the Trustees, so no additional funding is requested at this time.
“As provided in the 2005 Long-Term Agreements governing the supply of electricity (‘LTAs’) with the Authority’s Governmental Customers, these funds, along with the cost of advancing these funds, will be recovered from the customers participating in the GCESP.
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.
“In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment 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, require the Trustees’ approval.
“The Trustees previously authorized funding in the amount of $1.5 billion to finance energy efficiency and clean energy technology projects for the Authority’s Governmental Customers.  Subsequent to the Trustees’ authorization of funding, the City of New York has significantly increased its participation in the Authority’s GCESP in order to meet Mayor Bloomberg’s plaNYC goals.  It is anticipated that the City will release $25 million in Retro-Commissioning and Third Party Commissioning initiatives over the next three years, specifically to meet the requirements of the newly-approved Local law 87.   Local law 87 requires all private and public buildings over 50,000 sq-ft to be retro-commissioned.
“Retro-commissioning is the process by which existing building systems are evaluated with the idea of optimizing operation, maintenance and performance in accordance with the existing use of the building.  The intent is to develop energy savings from existing buildings that suffer from one or more of the following: poor initial design, multiple renovations, changes to control settings and poor operating and maintenance procedures.  Energy savings are derived from either the replacement or rehabilitation of poor performing equipment or changes in use and system operation.
DISCUSSION
Contractor Selection
“On April 25, 2011, the Authority advertised a Request for Proposals (‘RFP’) in the New York State Contract Reporter soliciting firms interested in providing retro-commissioning services for the GCESP.  As a result of that advertisement and invitations to bid, 74 firms downloaded the RFP from the Authority’s website.  Eighteen firms attended the mandatory bidders’ conference held on May 4, 2011 to explain the proposed scope-of-work and provide an opportunity for potential bidders to ask questions and seek clarification. 


“On May 24, 2011, nine firms submitted bids for the program.  The bids were evaluated based on a number of technical criteria and cost by a team of staff members.  These criteria included the firm’s and its personnel’s relevant technical experience in conducting retro-commissioning surveys and preparing retro-commissioning plans, including third party commissioning; fees; practical knowledge of building systems and energy-efficiency driven projects; quality of specifications; operation and maintenance manuals and the firm’s financial security.  As a result of staff’s evaluation, staff recommends awarding contracts to the following firms which offered the best services at the lowest cost: EME Group, WSP Flack & Kurtz and Horizon Engineering.  The contracts would cover a three-year period starting in August 1, 2011 and ending in July 31, 2014.
EME Group (‘EME’)
“Headquartered in New York City, EME, the best evaluated bidder, is a full-service consulting engineering group that provides turnkey energy conservation services, including retro-commissioning, third-party commissioning development, design and construction implementation of energy efficiency and sustainable design projects.  EME has been in business for over 20 years and has been recognized over the years for its contributions to energy efficiency. 
WSP Flack and Kurtz (‘Flack & Kurtz’)
“With offices worldwide, including New York City, Flack & Kurtz, the second best evaluated bidder, is a full-service engineering company that provides turnkey energy conservation services, including retro-commissioning, third-party commissioning, development, design and construction implementation of energy efficiency and sustainable design projects.  Flack & Kurtz has been in business for over 20 years and has been recognized over the years for its contributions to energy efficiency and sustainable design.
Horizon Engineering Associates (‘Horizon’)
“Headquartered in New York City, Horizon, the third best evaluated bidder, is a full-service consulting engineering company that provides turnkey energy conservation services, including retro-commissioning, third-party commissioning development, design and construction implementation of energy efficiency and sustainable design projects.  Horizon has also been in business for over 20 years and is recognized as one of the nation’s leading providers of commissioning and sustainable consulting of building systems. 
FISCAL INFORMATION
“No additional funding is requested to implement the Authority’s service offering under the GCESP.  The existing funding will be provided from the proceeds of the Authority’s Commercial Paper Notes and/or the Operating Fund.  In addition, projects may be funded, in part, with monies from the Petroleum Overcharge Restitution (‘POCR’) fund.  All Authority costs, including Authority overheads and the costs of advancing funds, but excluding any grant of POCR funds, will be recovered consistent with other Energy Services and Technology Programs.
RECOMMENDATION
“The Acting Senior Vice President – Energy Services and Technology recommends that $25 million of the previously approved funding for the Governmental Customer Energy Services Program be allocated and that procurement services contracts for Retro-Commissioning Implementation Contractor services be awarded to EME Group, WSP Flack & Kurtz and Horizon Engineering.

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 President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That the Trustees authorize the President and Chief Executive Officer, the Chief Operating Officer, the Acting Senior Vice President – Energy Services and Technology or such officer designated by the President and Chief Executive Officer to execute agreements and other documents between the Authority and EME Group, WSP Flack & Kurtz, and Horizon Engineering, such agreements having terms and conditions approved by the executing officer, subject to the approval of the form thereof by the Acting General Counsel, to facilitate the development of the Governmental Customers Energy Services Program (“GCESP”); and be it further

RESOLVED, That in accordance with the Guidelines for Procurement Contracts adopted by the Authority and the Authority’s Expenditure Authorization Procedures, that $25 million be allocated from previously approved funding for contracts for EME Group, WSP Flack & Kurtz and Horizon Engineering in the amounts and for the purposes listed below:
               
                                Commercial Paper Program/
                                Operating Fund/POCR                     Ceiling                                  Termination Date

                                EME, WSP Flack and                       $25 million (aggregate)      07/31/2014
                Kurtz and Horizon

AND BE IT FURTHER RESOLVED, That the Authority’s Commercial Paper Notes, Series 1, Series 2 and Series 3 and Operating Fund monies may be used to finance GCESP; and be it further

RESOLVED, That the Authority’s Commercial Paper Notes, Series 1, Series 2 and Series 3 and Operating Fund monies may be used to finance GCESP costs; and be it further

RESOLVED, That the Acting Senior Vice President – Energy Services and Technology is authorized to determine which projects in the GCESP will be deemed to be energy services projects within the meaning of Section (7) of Part P of Chapter 84 of the Laws of 2002 (the “Section (7) POCR Legislation”) to be funded in part with Petroleum Overcharge Restitution (“POCR”) Funds allocated pursuant to the Section (7) POCR Legislation; and be it further

RESOLVED, That POCR funds allocated to the Authority by the Section (7) POCR Legislation may be used to the extent authorized by such legislation, in such amounts as may be deemed necessary or desirable by the Acting Senior Vice President – Energy Services and Technology to finance projects within the GCESP; and be it further

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


10.    Contract Award for Energy Efficient Window Replacement (Furnish/Deliver/Install) Project for NYC Health and Hospitals
         Corporation – Coney Island Hospital             

The President and Chief Executive Officer submitted the following report:
SUMMARY
“The Trustees are requested to approve the award of a procurement contract up to the amount of $8.8 million to Whitestone Construction Corporation, the lowest bidder, for window replacement (furnish/deliver/install) at NYC Health & Hospital Corporation’s Coney Island Hospital.  The anticipated duration of work is two years, including the winter work stoppage time.
“As provided by the Long-Term Agreements (‘LTAs’) with the Authority’s New York City Governmental Customers and the Governmental Customers Energy Services Program (‘GCESP’), funds to pay for the implementation of the project, including the costs of advancing these funds, will be recovered from the Customer program-participant (i.e., the City of New York).

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.

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment contracts in excess of $3 million requires the Trustees’ approval.
“NYC Health & Hospitals Corporation is the largest municipal healthcare organization in the country.  It serves 1.3 million New Yorkers per year, including 450,000 uninsured.  The corporation provides health care services through its 11 hospitals, 4 nursing facilities, 6 diagnostic and treatment centers and more than 80 community clinics.  At its Coney Island Hospital facility, the existing windows are original to the building from its construction in the 1950s.  They are of steel frame and single pane construction, which provide little insulation value.  After over 60 years of service, the window frames and seals have all deteriorated, causing water leaks and air infiltration, to the extent that resulted in NYS Department of Health violations.  The conditions caused by the aging windows have not only significantly affected the Hospital’s day to day operation, but also wasted significant amount of heating and cooling energy.  The Authority is currently working with Health & Hospitals Corporation to replace the existing windows at Coney Island Hospital with energy efficient windows that are double glazed, thermally broken and coated with low-E coating.  The project will also help the Hospital comply with NYS Department of Health citations which had ordered the windows to be replaced.
DISCUSSION
“On April 28, 2011, the Authority advertised a Request for Proposals (‘RFP’) in the New York State Contract Reporter soliciting bids for the window replacement (furnish/deliver/install) project.  As a result of that advertisement and invitations to bid, 31 firms downloaded the RFP from the Authority’s website. 

                “On June 16, 2011, the Authority received three bid proposals.  After review and evaluation of the three submitted bids, a recommendation was made to award the contract to the low bidder, Whitestone Construction Corporation.

“Subject to the Trustees’ approval, the Authority will enter into a procurement contract with Whitestone Construction Corporation for furnishing, delivery and installation of energy efficient windows.  The prospective contractor has confirmed that it will meet the Authority’s Women/Minority Business Enterprises (‘W/MBE’) requirements.
“The window replacement project is subject to a Customer Installation Commitment (‘CIC’) agreement between the Authority and the City of New York.  The CIC will form a part of the Energy Efficiency-Clean Energy Technology Program (ENCORE II) Agreement effective March 18, 2005 by and between the Authority and the City of New York.  The CIC will be fully executed by the Authority and the City prior to awarding a contract to the successful bidder.
FISCAL INFORMATION
“Financing for the overall Project will be provided by previously-approved funds in the GCESP.  The existing funding will be provided from the proceeds of the Authority’s Commercial Paper Notes and/or the Operating Fund.  All Authority costs, including Authority overheads and the costs of advancing funds, will be recovered from the participant, consistent with other Energy Services and Technology Programs.
RECOMMENDATION
“The Acting Senior Vice President – Energy Services and Technology recommends that the Trustees approve a contract award up to the amount of $8.8 million to Whitestone Construction Corporation for the Furnishing/Delivery/Installation of energy efficient windows.

“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 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 a procurement contract in an amount up to $8.8 million to Whitestone Construction Corporation for furnishing, delivery and installation of energy efficient windows for NYC Health & Hospitals Corporation at its Coney Island Hospital facility; and be it further

RESOLVED, That Commercial Paper and/or Operating Fund monies will be used to finance contract costs in the amounts and for the purposes listed below:

                                Commercial Paper              Expenditure Authorization           Expiration
                                Operating Funds                          (not to exceed)                                  Date       

                                Whitestone Construction                $8,800,000                                 8/1/2013    
                                Corporation

AND BE IT FURTHER RESOLVED, That the Authority’s Commercial Paper Notes, Series 1, Series 2 and Series 3, may be issued and Operating Fund monies may be used to finance the Project costs; and be it further

RESOLVED, That the Trustees authorize the President and Chief Executive Officer, the Acting Senior Vice President – Energy Services and Technology or such other officer designated by the President and Chief Executive Officer to execute agreements and other documents between the Authority and NYC and to execute agreements and other documents, as required, having such terms and conditions as such executing officer deems advisable, subject to the approval of the form of such agreement by the Acting General Counsel, as necessary or advisable for the development and implementation of the project; and be it further

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


11.    Amended and Restated Ninth Supplemental Resolution Authorizing 2011 Revenue Bonds

                Ms. Elizabeth McCarthy presented the highlights of staff’s recommendations to the Trustees and Mr. Timothy Sheehan provided an overview of the resolutions the Trustees were being asked to vote on.  Chairman Townsend said that the Finance Committee had recommended that the Authority’s Trustees approve the recommendation at their meeting held earlier today.   Ms. Judith McCarthy added that since action on this item may take place after September 6th, the resolution will also authorize the Acting President and Chief Executive Officer to act on it.  Trustee O’Luck suggested that an additional resolution be added to state that the Acting President and Chief Executive Officer will have the same authority as the current President and Chief Executive Officer.
The resolutions, as submitted by the President and Chief Executive Officer and as amended, were unanimously adopted.

               

12.    Amendments to the Authority’s Governance Committee Charter                  

The Chairman submitted the following report:

SUMMARY

The Trustees are requested to amend the Governance Committee Charter, as set forth in Exhibit ‘12-a,’ for the purpose of conforming the functions and powers of the Committee with amendments to the Authority’s By-laws made by separate item at this meeting.

BACKGROUND AND DISCUSSION

The Governance Committee Charter was last amended in October of 2010.  Among other changes, the By-Laws have been amended to provide that the Trustees, upon recommendation of the Governance Committee, shall determine the election and compensation of all statutory and non-statutory officers. 

The amendments to the Governance Committee Charter shown in Exhibit ‘12-A’ reflect the addition of this responsibility.

FISCAL INFORMATION

None.

RECOMMENDATION

The Acting General Counsel and I recommend that the Trustees approve the proposed amendments to the Governance Committee Charter.

                The following resolution, as submitted by the Chairman, was unanimously adopted.

RESOLVED, That the attached Governance Committee Charter be adopted in the form proposed in Exhibit “12-A.”

 

13.    Amendments to the Authority’s By-laws 

The Chairman submitted the following report:

“The Trustees are requested to amend the Authority’s By-laws for the purpose of: (1) implementing further changes regarding the powers and duties of the Chair and the Trustees consistent with Chapter 506 of the Laws of 2009, which amended the Power Authority Act and other provisions of the Public Authorities Law, including the New York Public Authorities Accountability Act; and (2) making other conforming and non-substantive changes.

“A redlined version of the proposed amended By-laws is attached as Exhibit ‘13-A.’ Deletions are shown by strikethroughs in brackets; additions are shown by bolded and underscored text.  The final version of the proposed amended By-laws is attached as Exhibit ‘13-B.’

“The Acting General Counsel and I recommend that the Trustees approve the proposed By-laws amendments.”

Chairman Townsend presented highlights of the recommendation the Trustees.  In response to a question from Trustee Nicandri, Chairman Townsend said that the Public Authorities Accountability Act (“PAAA”) has been amended to state that the Chairman of a Board and the President and Chief Executive Officer can be the same person.  Ms. Judith McCarthy confirmed this and added that the Authority’s By-laws, as amended, are consistent with the change in the law.  Trustee Dyson added that in addition to Board confirmation of the position of Chairman and President and Chief Executive Officer, Senate confirmation is also required, under the amended PAAA.  In response to further question from Trustee Nicandri, Ms. McCarthy said that there is a change in the reporting structure for the General Counsel and the Chief Financial Officer under the proposed amended By-laws.
The following resolution, as submitted by the Chairman, was unanimously adopted.

RESOLVED, That the revisions to the By-laws (originally adopted on April 9, 1954, and last amended on October 26, 2010) discussed in the foregoing report of the Chairman and attached hereto as Exhibit “13-B,” be hereby adopted; and be it further

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the 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 agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Acting General Counsel.


14.    Department Procedure Requiring Trustee Approval of Competitive Solicitations for Power Supply Products                  

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to authorize the adoption of a new Department Procedure entitled ‘Competitive Solicitations for Power Supply Products’ (the ‘Procedure’), and attached as Exhibit ‘14-A,’ establishing a requirement for Trustee approval prior to the issuance of competitive solicitations for purchases of energy, capacity, ancillary services and Environmental Attributes (‘Power Supply Products’).  The Procedure will be adopted by the Power Resource Planning and Acquisition Business Unit and applicable to all Business Units in the Authority.

DISCUSSION

“Authority staff conducts competitive solicitations for Power Supply Products through the issuance of requests for proposals and other methods to solicit industry information to inform a potential initiative, to award, negotiate and execute purchase agreements.  In addition to awarding purchase agreements, these competitive solicitations have the effect of signaling energy market participants of the Authority’s procurement plans and policy positions.  Through this Procedure, the Trustees establish approval authority of proposed power supply acquisition efforts prior to the initiation of competitive solicitations.

FISCAL INFORMATION

              “There is no fiscal impact associated with implementing the Procedure.

 RECOMMENDATION

“The Senior Vice President – Power Resource Planning and Acquisition recommends that the Trustees authorize the adoption of this Procedure.

“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 President and Chief Executive Officer, was unanimously adopted.

RESOLVED, that the Trustees hereby authorize the adoption by the Senior Vice President – Power Resource Planning and Acquisition of the Procedure for “Competitive Solicitations for Power Supply Products” as described in the foregoing report of the President and Chief Executive Officer and as attached to this Resolution; and be it further

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

 

15.    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.

16.    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.

 

17.    Election of Acting President and Chief Executive Officer

The Chairman submitted the following report:

SUMMARY
The Trustees are requested to consider the election of Gil C. Quiniones of New York, New York as Acting President and Chief Executive Officer of the Authority, effective September 7, 2011.
BACKGROUND AND DISCUSSION
Article IV of the Authority’s By-laws provides for the election of certain non-statutory officers by the Trustees. 
RECOMMENDATION
It is recommended that, pursuant to Article IV of the By-Laws, adopted December 18, 1984, and last amended on July 26, 2011, Gil C. Quiniones be elected as Acting President and Chief Executive Officer, effective September 7, 2011, to hold such office until the President and Chief Executive Officer is elected by the Trustees and confirmed by the State Senate.
The following resolution, as submitted by the Chairman, was unanimously adopted.

RESOLVED, That pursuant to Article IV of the Authority’s By-Laws, adopted December 18, 1984, and last amended on July 26, 2011, Gil C. Quiniones is hereby elected as Acting President and Chief Executive Officer, effective September 7, 2011, to hold such office until the President and Chief Executive Officer is elected and confirmed by the State Senate.


18.    Request for Proposal for a Search for President and Chief Executive Officer

The Chairman submitted the following report:

SUMMARY

The Trustees are requested to authorize the issuance of a request for proposals for a search for the best qualified candidate for the position of President and Chief Executive Officer.
RECOMMENDATION
It is recommended that, the Trustees authorize the issuance of a request for proposals for a search for the best qualified candidate for the position of President and Chief Executive Officer.
The following resolution, as submitted by the Chairman, was unanimously adopted.

  RESOLVED, That the Trustees authorize the issuance of a request for proposals for a search for the best qualified candidate for the position of President and Chief Executive Officer.


19.    Next Meeting

The next regular meeting of the Trustees will be held on Tuesday, September 27, 2011, 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.


Closing
                On motion made and seconded, the meeting was adjourned by the Chairman at approximately 2:20 p.m.

 

 

Karen Delince
Corporate Secretary

 

  These customers are certain municipal utility systems in the states of Connecticut, Massachusetts, New Jersey, Ohio, Pennsylvania, Rhode Island and Vermont.

  The RSR is explained in the Discussion section, below.

  The January 2003 Report used the equivalent term Post Retirement Benefits Other than Pensions (‘PBOPs’) for this analysis.

  Except for 2011, the preference power rate year runs from May 1 of the calendar year indicated to April 30 of the following year.  Due to the timing of this NOPR, the 2011 rate year would be from November 1, 2011 to April 30, 2012.

  Effective rate at 70% load factor.

  By the time new preference rates are made effective in November 2011, the RSR balance may need to be altered due to the loss of a portion of the hydroelectric power sales made at preference power rates.  As a result of Chapter 60 (Part CC) of the Laws of 2011, which directs NYPA to implement the Recharge New York power program, NYPA will be withdrawing 455 MW of firm hydroelectric power currently allocated to upstate utilities which is priced at the preference power rate.  To the extent staff anticipates that such withdrawal will affect the RSR balance and the RSR surcharge in a material manner, staff will inform the Trustees and adjust the rate proposal accordingly when it is submitted for final approval, which is anticipated to occur in October 2011. 

  Runs from May 1 of the calendar year indicated to April 30 of the following year; for the 2011 rate year the period would be November 1, 2011 to April 30, 2012.

  Effective rate at 70% load factor.

* A total of $25 million will be allocated to EME, WSP Flack & Kurtz, and Horizon.  The allocation will be determined as GCESP project work is assigned.  The initial award will be $5 million to each contractor.