ECONOMIC DEVELOPMENT POWER
ALLOCATION BOARD

MINUTES

October 26, 2009
Video conference – 10:00 a.m.

                                New York Power Authority Offices:
123 Main Street, 16th Floor, White Plains, NY
30 South Pearl Street, 10th Floor, Albany, NY
St. Lawrence/FDR Power Plant, 830 Barnhart Island, Massena, NY
Empire State Development Corp., 95 Perry Street, Suite 500, Buffalo, NY

                                               
1.             Approval of the Minutes of the Meeting of September 24, 2009.

                Electricity Savings Reimbursements                                               

 

Con Edison - Service Territory

AT&T Corp.
White Plains - Westchester County

Bowne & Co.
New York - New York County

Fordham - Marymount College
Tarrytown - Westchester County

Kingsbrook Jewish Medical Center
Brooklyn - Kings County

Long Island Jewish Medical Center
Manhasset - Nassau County

Memorial Sloan-Kettering Cancer Center
New York - New York County

Norampac - New York City, Inc.
Maspeth - Queens County

North General Hospital
New York - New York County

S. R. Guggenheim Museum
New York - New York County

 

Long Island Power Authority - Service Territory

Ametek Hughes-Treitler
Garden City - Nassau County

B.H. Aircraft Company, Inc.
Ronkonkoma - Suffolk County

John Hassall, Inc.
Westbury - Nassau County

Kleer-Fax Inc.
Amityville - Suffolk County

Silver Lake Cookie Co.
Islip - Suffolk County

 

 

 

 

National Grid - Service Territory

Bestway Enterprises
Cortland - Cortland County

Borg Warner Morse TEC Corp.
Cortland - Cortland County

Cascades Tissue Group
Waterford - Saratoga County

Cortland Line Co., Inc.
Cortland - Cortland County

Crucible Specialty Metals
Syracuse - Onondaga County

Diemolding Corporation
Canastota - Madison County

Edward John Noble Hospital
Gouverneur - St. Lawrence County

Fiber Glass Industries Inc.
Amsterdam - Montgomery County

HMI Metal Powders
Clayville - Oneida County

Lewis County General Hospital
Lowville - Lewis County

Met Weld International, LLC
Altamont - Albany County

Mohawk Paper Mills
Cohoes - Albany County

Queensboro Farm Products, Inc.
Canastota - Madison County

Robison & Smith, Inc.
Gloversville - Fulton County

St. Joseph's Hospital Health Center
Syracuse - Onondaga County

Standard Manufacturing Co., Inc.
Troy - Rensselaer County

Syracuse Casting Sales Corp.
Cicero - Onondaga County

Syracuse Label Co., Inc.
Liverpool - Onondaga County

Syracuse Plastics, Inc.
Liverpool - Onondaga County

Vicks Lithograph & Printing
Yorkville - Oneida County

New York State Electric & Gas – Service Territory

A.T. Reynolds & Sons, Inc.
Kiamesha Lake - Sullivan County

Borg Warner Morse TEC Corp.
Ithaca - Tompkins County

Corning, Inc. (Big Flats facility)
Big Flats - Chemung County

Corning, Inc. (SCC & IDM facilities)
Corning - Steuben County

Merritt Machinery, LLC
Lockport - Niagara County

Vail Ballou Press, Inc.
Binghamton - Broome County

Orange & Rockland Service Territory

IBM Corp.
Sterling Forest – Orange County

 

Rochester Gas & Electric Service Territory

Flower City Printing, Inc.
Rochester – Monroe County

IBM Corp. (Rochester facility)
Rochester – Monroe County

 

                by Sale of Expansion Power as Industrial Incentive Awards     

 


                A regular meeting of the Economic Development Power Allocation Board was held via video conference at the following participating locations:

 

The following Members of the Board were present at the following locations:
Kenneth Schoetz, Chairman (Buffalo, NY)
Bernard P. McGarry, Member (Albany, NY)
Eugene L. Nicandri, Member, (Massena, NY)

 

Also in attendance were:
Terryl Brown                        Executive Vice President & General Counsel, NYPA
Karen Delince                      Corporate Secretary, NYPA
James F. Pasquale               Acting Senior Vice President - Marketing & Economic Development, NYPA
Anthony C. Savino             Manager – Business Power Allocations and Compliance, NYPA
Lorna Johnson                     Assistant Secretary, NYPA
Mary Jean Frank                 Associate Corporate Secretary, NYPA

 

 

 


1.             Adoption of Minutes
The minutes of the meeting of September 24, 2009 were unanimously adopted.


2.             Power for Jobs Program – Extended Benefits

SUMMARY

The Members of the Economic Development Power Allocation Board (“EDPAB”) are asked to recommend that the Power Authority’s Trustees (“Trustees”) approve extended benefit electricity savings reimbursement rebates for 43 Power for Jobs (“PFJ”) customers as listed in Exhibit “A.”

BACKGROUND

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

The PFJ program originally made 400 megawatts (“MW”) of power available and was to be phased in over three years.  As a result of the initial success of the program, the Legislature amended the PFJ statute to accelerate the distribution of the power and increase the size of the program to 450 MW.                In May 2000, legislation was enacted that authorized additional power to be allocated under the program.  Legislation further amended the program in July 2002.

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

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

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

In 2005, provisions of the approved State budget extended the period PFJ customers could receive benefits until December 31, 2006.  Chapter 645 of the Laws of 2006 included provisions extending program benefits until June 30, 2007.  Chapter 89 of the Laws of 2007 included provisions extending program benefits until June 30, 2008.  Chapter 59 of the Laws of 2008 included provisions extending the program benefits until June 30, 2009.  Chapter 217 of the Laws of 2009 included provisions extending the program benefits until May 15, 2010.

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

DISCUSSION

EDPAB is requested to recommend that the Authority’s Trustees approve electricity savings reimbursement rebates to the 43 PFJ customers, all of which are meeting their job commitment and are listed in Exhibit “A.”  Collectively, these organizations have agreed to retain more than 30,000 jobs in New York State in exchange for rebates.  The rebate program will be in effect until May 15, 2010, the programs’ sunset.

RECOMMENDATION

It is requested that the Economic Development Power Allocation Board recommend that the Authority Trustees approve the payment of electricity savings reimbursements to the 43 business listed in Exhibit “A.”
The following resolution was unanimously adopted by members of the Board present.

WHEREAS, the following entities have applied for extended benefits recommendations for electricity savings reimbursements under the Power for Jobs program:

 

Con Edison - Service Territory

AT&T Corp.
White Plains - Westchester County

Bowne & Co.
New York - New York County

Fordham - Marymount College
Tarrytown - Westchester County

Kingsbrook Jewish Medical Center
Brooklyn - Kings County

Long Island Jewish Medical Center
Manhasset - Nassau County

Memorial Sloan-Kettering Cancer Center
New York - New York County

Norampac - New York City, Inc.
Maspeth - Queens County

North General Hospital
New York - New York County

S. R. Guggenheim Museum
New York - New York County

 

Long Island Power Authority - Service Territory

Ametek Hughes-Treitler
Garden City - Nassau County

B.H. Aircraft Company, Inc.
Ronkonkoma - Suffolk County

John Hassall, Inc.
Westbury - Nassau County

Kleer-Fax Inc.
Amityville - Suffolk County

Silver Lake Cookie Co.
Islip - Suffolk County

 

National Grid - Service Territory

Bestway Enterprises
Cortland - Cortland County

Borg Warner Morse TEC Corp.
Cortland - Cortland County

Cascades Tissue Group
Waterford - Saratoga County

Cortland Line Co., Inc.
Cortland - Cortland County

Crucible Specialty Metals
Syracuse - Onondaga County

Diemolding Corporation
Canastota - Madison County

Edward John Noble Hospital
Gouverneur - St. Lawrence County
Fiber Glass Industries Inc.
Amsterdam - Montgomery County

HMI Metal Powders
Clayville - Oneida County

Lewis County General Hospital
Lowville - Lewis County

Met Weld International, LLC
Altamont - Albany County

Mohawk Paper Mills
Cohoes - Albany County

Queensboro Farm Products, Inc.
Canastota - Madison County

Robison & Smith, Inc.
Gloversville - Fulton County

St. Joseph's Hospital Health Center
Syracuse - Onondaga County

Standard Manufacturing Co., Inc.
Troy - Rensselaer County

Syracuse Casting Sales Corp.
Cicero - Onondaga County
Syracuse Label Co., Inc.
Liverpool - Onondaga County

Syracuse Plastics, Inc.
Liverpool - Onondaga County

Vicks Lithograph & Printing
Yorkville - Oneida County

New York State Electric & Gas – Service Territory

A.T. Reynolds & Sons, Inc.
Kiamesha Lake - Sullivan County

Borg Warner Morse TEC Corp.
Ithaca - Tompkins County

Corning, Inc. (Big Flats facility)
Big Flats - Chemung County

Corning, Inc. (SCC & IDM facilities)
Corning - Steuben County

Merritt Machinery, LLC
Lockport - Niagara County

Vail Ballou Press, Inc.
Binghamton - Broome County

Orange & Rockland Service Territory

IBM Corp.
Sterling Forest – Orange County

 

Rochester Gas & Electric Service Territory

Flower City Printing, Inc.
Rochester – Monroe County

IBM Corp. (Rochester facility)
Rochester – Monroe County

NOW THEREFORE BE IT RESOLVED, That the Board hereby finds and determines that such applications meet the requirements of the extended benefits provisions of the Power for Jobs legislation contained in Article 6 of the Economic Development Law as amended by Chapter 217 of the Laws of 2009; and be it further

                RESOLVED, That the Board recommends to the Power Authority of the State of New York the 43 applications for extended benefits recommendations for electricity savings reimbursements discussed herein totaling 36,898 kW for the period through May 15, 2010.

 

 



3.             Extension of Economic Development Plan – Use of Net Revenues
Produced by Sale of Expansion Power as Industrial Incentive Awards

SUMMARY

                The Economic Development Power Allocation Board (“EDPAB”) is requested to approve an extension of the Economic Development Plan (“Plan”) for 2009–2016 submitted by the New York Power Authority (“Authority”) for use of industrial incentive awards pursuant to Section 188 of the Economic Development Law (“EDL”).

BACKGROUND

Section 1005 if the Public Authorities Law (“PAL”), as amended by Chapter 32 of 1987, directs the Authority to identify net revenues produced by the sale of Expansion Power (“EP”) and further, to identify an amount of such revenues to be used solely for Industrial Incentive Awards, (“IIA”).  These awards are to be made in conformance with a Plan covering all such net revenues.  The Authority is to submit Plans annually to be approved by EDPAB pursuant to the EDL.  

Net revenues are defined by Section 1005 as any excess of revenues properly allocated to the sales of EP over the costs and expenses properly allocated to such sales.  The Authority is directed in Section 1005 to identify net revenues no less than annually.  Section 188 of the EDL provides that EDPAB is to review each Plan applying the same economic development criteria as those used to evaluate applications for power.  The statute does not specify a definition of IIA. 

At their meeting of May 18, 2009, EDPAB extended the Plan to 2010.  The Plan provides for use of 2008–2010 net revenues from the sale of EP to provide electric discounts to manufacturing companies in New York State that are at identifiable risk of closure or relocation to another state.  Through calendar year 2008, the Authority has reported net revenues culminating to $144 million.

DISCUSSION

Authority staff is currently working with Computer Associates (“CA”) which has demonstrated that the company meets the qualifying criteria for an IIA (Attachment A).

The condition of the current economy, and the need to drive down operational costs in order to remain competitive, domestically and globally, are key considerations for CA’s location in Islandia.  The company is at a critical juncture as it is in the process of evaluating its global data center strategy due to a pending lease roll-over of its backup data center, which is currently located in a Midwestern state.  The current lease on the backup data center will expire in 2011 and CA must decide now whether to roll over the lease.  CA has been offered very attractive relocation packages from North Carolina and Texas.  The prevailing electric tariff rates in both these states are more competitive than those in New York.  While CA has enjoyed the benefits of the Authority’s Economic Development Power program since 1992, in recent years the program has been extended on a year-to-year basis by the New York State Legislature.  This rate uncertainty severely inhibits long-term business operations planning.  This is especially true as CA articulates its global business strategy. 

Electricity is a significant cost driver for CA’s Islandia production center and centralized labs.  As the data center represents a substantial portion of the total power consumption, energy costs will be a primary consideration in its decision to maintain and expand the data center in Islandia or relocate out of state.  Staff recommends that EDPAB authorize deployment of IIA to CA in an innovative way to address the unique, time-sensitive economic challenges of the company.  The recommendation comes after consideration of detailed cost data provided by CA which underscores the potential risk of relocating out of state. 

The form of the award will be a cents/kWh price discount applied to a level of electric consumption per year, mutually agreed to by CA and the Authority not to exceed 6 MW.  Due to CA’s significant presence and positive impact on the New York and Long Island economies, Authority staff proposes that the term of the company’s IIA be seven years, through calendar year 2016.
CA currently pays an all-in price of $6.4 cents/kWh.  Staff has calculated that an IIA for the all-in cost of electricity could range from $368K for a $.01 cents per kWh award to a maximum of $3.6 million per /year, depending on market prices on Long Island.  The IIA will remain in effect as long as the company continues to meet an agreed-upon job commitment of 1,800 full-time New York State employees.  CA also agrees that it will continue to participate in the existing EDP program and the associated Energy Cost Savings Benefit Program should it be extended beyond May 15, 2010 and apply for any new EDP program in the future, sponsored by the State.  In the event that CA qualifies for and participates in a future, yet-to-be-determined, statewide program that offers similar or greater value than the proposed IIA, the IIA will be zero.

It is therefore proposed that the Authority’s Chairman be authorized to submit the Authority’s Plan to EDPAB for the extended period providing for the use of calendar years 2011–2016 EP net revenues.  The Authority will report to EDPAB annually on the actual disbursement of these funds.

RECOMMENDATION

It is recommended that the Economic Development Power Allocation Board approve the Economic Development Plan submitted by the Authority, which provides for use of net revenues produced from the sale of Expansion Power from 2008–2016 to provide Industrial Incentive Awards in the form of a cents/kWh electric discount.  In addition, it is also recommended that the Economic Development Power Allocation Board approve an Industrial Incentive Award to Consumer Associates and extend CA’s Economic Development Power allocation for a period coterminous with the Industrial Incentive Award.

Mr. James Pasquale presented the highlights of staff’s recommendation to the Board. 
Mr. Bernard McGarry said that he was going to vote in favor of the award to Computer Associates (“CA”) largely because of the circumstances and the number of jobs involved.  However, he expressed concern that this award was going to tie up approximately half of the resources for this program for an extended period of time, thus limiting the Power Authority’s ability to help other companies.  He added that he appreciated the fact that staff has limited the award somewhat by making it dependent on what the Legislature does with regard to the Energy Cost Savings Benefits (“ECSB”) award program.  Mr. Pasquale said that the Economic Development Plan is recommended by the Power Authority’s Trustees for EDPAB’s approval.  Mr. McGarry asked if legislative approval of a multiyear ECSB program would free up some of the money being committed to CA.  Mr. Pasquale replied that CA would be required to apply for such a new program, with its Industrial Incentive Award (“IIA”) becoming the difference between its new rate and the ECSB rate, subject to a maximum of $3.6 million annually.  Thus, CA’s IIA would be smaller than it is now and the rest of its IIA money would be available for other IIAs.  Mr. Pasquale also pointed out that since the other three IIA contracts are for a maximum of three years each, a sizable amount of money should become available for new awards each year.  He said that the IIA program has ranged between $7 million and more than $9 million a year, with the amount varying due to the amount of Expansion Power sold and the Authority’s profit margin on such sales.  In response to a question from Judge Eugene Nicandri, Mr. Pasquale said that the IIA does not involve a power allocation to CA.  Responding to another question from Mr. McGarry, Mr. Pasquale said that CA would not receive any IIA money in 2010 if the Legislature extends the ECSB program.

 

The following resolution was unanimously adopted by members of the Board present.

WHEREAS, section 1005 of the Public Authorities Law authorizes the Power Authority of the State of New York to identify an amount of the net revenues produced by the sale of Expansion Power which shall be used for industrial incentive awards; and

WHEREAS, such industrial incentive awards must be made with an Economic Development Plan submitted by the Authority and approved by the Economic Development Allocation Board (“EDPAB”) pursuant to Section 188 of the Economic Development Law; and

WHEREAS, EDPAB on December 1, 1988, endorsed the use, to the extent necessary, of available industrial incentive awards for the purpose of assisting Authority efforts to limit future rate increases for Fitzpatrick Power Program customers; and

WHEREAS, EDPAB on December 1, 1988, recommended that any Economic Development Plan submitted by the Authority in the future be approved to the extent it provides for such use of industrial incentive award; and

WHEREAS, the Authority has approved an Economic Development Plan through calendar year 2016 that provides for the use of net revenues from the sale of Expansion Power to provide electric bill discounts to manufacturing companies located in New York State that are at identifiable risk of closure or relocation to another state and further has authorized the submission of such Plan to EDPAB for its approval;

NOW THEREFORE BE IT RESOLVED, That the members of the Economic Development Power Allocation Board hereby approves an Economic Development Plan that provides for the use of net revenues from the sale of Expansion Power (calendar years 2008-1016) to provide electric bill discounts to manufacturing companies in New York State that are at identifiable risk of closure or relocation to another state; and be it further

RESOLVED, That EDPAB hereby approves an Industrial Incentive Award to Computer Associates and an extension of Computer Associates’ Economic Development Power allocation to December 31, 2016, in accordance with the attached memorandum.                                   


                                                                                                                                                Attachment A
October 26, 2009

 

 

 

Industrial Incentive Award – IIA (November 1, 2009 – CY 2016) 

 

 

Computer Associates


4.            Next Meeting

                The next meeting of the Board is to be determined.