ECONOMIC DEVELOPMENT POWER

ALLOCATION BOARD

MINUTES

 

June 25, 2012

Clarence D. Rappleyea Building, White Plains, New York – 10:00 a.m.

 

 

 

 

 

                                New York Power Authority Offices:                                               

                                       123 Main Street, 16th Floor, White Plains, NY

                                      501 7th Avenue – 9th Floor, New York, NY

                                      30 South Pearl Street – 10th Floor, Albany, NY

                                Empire State Development Corporation, 95 Perry St., Suite 500, Buffalo, NY

                                   

 

 

 

                               

1.                 Approval of the June 25, 2012 Proposed Meeting Agenda

2.                 Approval of the Minutes of the Meeting of April 24, 2012

3.                 ReCharge New York Power Program

4.                 Other Business

5.                 Next Meeting

 

 

 


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

 

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

2)       New York Power Authority, 501 7th Avenue – 9th Floor, New York, NY

3)       New York Power Authority, 30 South Pearl Street – 10th Floor, Albany, NY

4)       Empire State Development Corporation, 95 Perry Street, Suite 500, Buffalo, NY

 

The following Members of the Board were present:

Samuel Hoyt, Chairman

Eugene L. Nicandri, Member

Robert B. Catell, Member

Bernard McGarry, Member

 

 

Also in attendance were:

 

John R. Koelmel                   Chairman, NYPA

 

Gil Quiniones                        President and Chief Executive Officer, NYPA

 

Judith McCarthy                  Executive Vice President and General Counsel, NYPA

James F. Pasquale                Senior Vice President – Economic Development & Energy Efficiency, NYPA

Michael Saltzman Director, Media Relations, NYPA

Michael Huvane                   Vice President Marketing, Marketing & Economic Development, NYPA

Dennis Eccleston                 Vice President Information Technology/Chief Information Officer – Information

Technology, NYPA

 

Timothy Muldoon               Manager – Business Power Allocations and Compliance, NYPA

 

Tabitha Robinson                                Analyst I, Business Power Allocations & Compliance, NYPA

 

Emily Alkiewicz                    Analyst, Business Power Allocations & Compliance, NYPA

 

Gary Schmid                          Manager, Network Services, NYPA

 

Lorna Johnson                     Assistant Secretary, NYPA

Sheila Baughman                 Senior Secretary, NYPA

 


Chairman Hoyt welcomed Board members, new Trustee, John Koelmel, President Quiniones and staff to the meeting.

 

1.             Adoption of the Proposed Meeting Agenda

The agenda for the June 25, 2012 meeting was unanimously adopted.

 

 


2.             Adoption of the Minutes

 

The Minutes of the Regular Meeting of April 24, 2012 were unanimously adopted.


3.             Recharge New York Power Program

 

SUMMARY

               

The Members of the Economic Development Power Allocation Board (“EDPAB” or “Board”) are requested to (1) recommend that the New York Power Authority Trustees (“Authority” or “Trustees”) approve allocations of available power under the ReCharge New York (“RNY”) power program to the businesses and not-for-profit corporations listed in Exhibit “A”; (2) deem the application for the business listed in Exhibit “B” not eligible for a RNY power allocation; (3) determine that the applications by businesses and not-for-profit corporations listed in Exhibit “C” are not recommended for a RNY allocation award; and (4) recommend that those businesses and not-for-profit corporations listed in Exhibit “D” be authorized by the Trustees to receive a transitional electricity discount.

               

BACKGROUND

 

        On April 14, 2011, Governor Andrew M. Cuomo signed into law the RNY power program as part of Chapter 60 (Part CC) of the Laws of 2011 (“Chapter 60”).  RNY makes available 910 Megawatts (“MW”) of economic development power, 50% of which will be provided by the Authority’s hydropower resources and 50% of which will be procured by the Authority on the open market.  RNY contracts can be for a term of up to seven years in exchange for job and capital investment commitments.  The statewide program is available to businesses and not-for-profit corporations for job retention, business expansion and attraction purposes. 

 

                The RNY legislation stipulates that at least 350 MW of RNY power will be allocated to entities served by the New York State Electric and Gas, National Grid and Rochester Gas and Electric utility companies.  At least 200 MW will be set aside for the purpose of attracting new businesses and encouraging expansion of existing businesses statewide.  In addition, the legislation stipulates that up to 100 MW will be awarded to not-for-profit corporations (as defined in section 102 of the State’s Not-for-profit Corporation Law subdivision five of paragraph (a)) and small businesses statewide.

 

Under the legislation, eligible applicant shall mean an eligible business, eligible small business, or eligible not-for-profit.  Further, an eligible applicant shall not include retail businesses as defined by EDPAB, including, without limitation, sports venues, gaming or entertainment-related establishments or places of overnight accommodations.  For purposes of the RNY power program, EDPAB adopted, at their meeting of April 24, 2012, the existing definition of a retail business as a business that is primarily used in making retail sales of goods or services to customers who personally visit such facilities to obtain goods or services, consistent with the rules previously promulgated by EDPAB for implementation of the Economic Development Power program.

 

RNY allocation awards are comprised of 50% hydropower and 50% Authority-procured market power.  Prior to entering into a contract with an eligible applicant for the sale of RNY power, and prior to the provision of electric service relating to the RNY power allocation, the Authority shall offer each eligible applicant the option to decline to purchase the RNY market power component of such allocation.  If an eligible applicant declines to purchase the RNY market power component, the Authority shall have no responsibility for supplying such market power to the eligible applicant.

 

 As envisioned by the legislation, the Authority worked cooperatively with the Department of Public Service (“DPS”) to recommend to the NYS Public Service Commission (“PSC”) reduced rates by utility corporations of RNY power program allocations.  Pursuant to Chapter 60 and by order of the PSC, NYS utilities are required to deliver RNY power using discounted delivery rates.  The discount derives from exempting RNY power from the Renewable Portfolio Surcharges, the Systems Benefits Charge and the Energy Efficiency Portfolio Standard Surcharge.  The delivery discount will apply to a customer’s total allocation even if the customer decides to purchase the RNY market power component of its allocation from a non-Authority source. 

 

 The application for the RNY power program was approved by EDPAB at their meeting of September 26, 2011.  Applications for RNY power were subject to a competitive evaluation process and were evaluated based on the twelve criteria set forth in the RNY legislation.   Pursuant to legislation, the criteria were considered in the aggregate and no one of which was presumptively determinative. 

                In an effort to receive high quality RNY applications and to announce the program, advertisements announcing the program were placed in major newspapers and business publications statewide; website postings were issued; mass emails were distributed and regional meetings were hosted by the Authority throughout the state.  In addition, the program was promoted with assistance from state and local entities, including the Regional Economic Development Councils (“REDCs”), the Empire State Development Corporation and other local and regional economic development organizations within the state such as the Manufacturers Association of Central New York.  Further, a RNY Call Center was established to assist prospective applicants and to further disseminate information regarding the RNY program.  The RNY Call Center remains in operation.  Finally, a targeted postal mailing to business customers utilizing a list of ten thousand businesses in New York State was made to foster interest in the program.

 

As part of Governor Andrew M. Cuomo’s “New York Open for Business” initiative, requests for all statewide economic development programs, including RNY, have been incorporated into a single on-line Consolidated Funding Application (“CFA”).  Beginning in September 2011, the CFA was available to applicants, marking a fundamental shift in how economic development resources are allocated.  The CFA continues to serve as an efficient and effective tool to streamline and expedite the state’s efforts to generate sustainable economic growth and employment opportunities across the state.  All applications that are considered for an RNY allocation were submitted through the CFA process.

 

To support the Governor’s transformative plans to improve New York’s business climate and stimulate economic growth, ten REDCs were created.  Through a performance-based, community-driven approach, each REDC has designed a strategic economic development model for their area and use the CFA as the primary support mechanism to work with eligible applicants to advance projects that demonstrate the greatest potential for job creation and economic opportunity.

The Power for Jobs (“PFJ”) and Energy Cost Savings Benefit (“ECSB”) programs expire on June 30, 2012.  Current customers participating in these programs are required under legislation to apply for RNY in order to be considered for a RNY power allocation.  RNY is a new economic development power program unrelated to the earlier PFJ and ECSB programs.  All RNY applications are considered solely on their merits under the criteria established by the RNY legislation.

 

Current PFJ and ECSB customers who submit applications and who do not receive a RNY allocation will be considered for the transitional electricity discount (“TED”).  Pursuant to section 188-a of the economic development law, the Authority is authorized, as deemed feasible and advisable by the Trustees, to provide such TED as recommended by EDPAB.  The Authority shall identify and advise EDPAB whether sufficient funds are available for funding of such discounts through June 30, 2016.  The amount of the TED for the period of July 1, 2012 through June  30, 2014 shall be equivalent to  66% of the unit  (per kilowatt-hour) value of the savings received by the applicant  under the PFJ or ECSB during the 12 months ending on December 31, 2010.  The amount of the TED for the period July 1, 2014 through June 30, 2016 shall be equivalent to 33% of the unit (per kilowatt-hour) value of the savings received by the applicant  under the PFJ or ECSB during the 12 months ending on December 31, 2010.  As of January 27, 2012, of the applications received, 410 PFJ and ECSB customers have applied for an RNY allocation.

               

 As of January 27, 2012, the number of RNY applications submitted via the CFA process, totaled 1,009, requesting over 2,100 MW, a figure more than twice the amount available for allocation under the legislation.  Staff evaluated the completed applications pursuant to the following twelve criteria as set forth in the RNY legislation:

 

“(i) the significance of the cost of electricity to the applicant's overall cost of doing business, and the impact that a recharge New York power allocation will have on the applicant's operating costs;

 

(ii) the extent to which a recharge New York power allocation will result in new capital investment in the state by the applicant;

 

(iii) the extent to which a recharge New York power allocation is consistent with any regional economic development council strategies and priorities;

 

(iv) the type and cost of buildings, equipment and facilities to be constructed, enlarged or installed if the applicant were to receive an allocation;

 

(v) the applicant's payroll, salaries, benefits and number of jobs at the facility for which a recharge New York power allocation is requested;

 

(vi) the number of jobs that will be created or retained within the state in relation to the requested recharge New York power allocation, and the extent to which the applicant will agree to commit  to  creating or  retaining such jobs as a condition to receiving a recharge New York power allocation;

 

(vii) whether the applicant, due to the cost  of  electricity, is at risk  of  closing  or  curtailing facilities or operations in the state, relocating facilities or operations out of the state, or losing a significant  number of jobs in the state, in the absence of a recharge New York power allocation;

 

(viii) the significance of the applicant's facility that would receive the recharge New York power allocation to the economy of the area in which such facility is located;

 

(ix)  the extent to which the applicant has invested in energy efficiency measures, will agree to participate in or perform energy audits of its facilities, will agree to participate in energy efficiency programs of the authority, or will commit to implement or otherwise make tangible investments in energy efficiency measures as a condition to receiving a recharge New York power allocation;

 

(x) whether the applicant receives a hydroelectric power allocation or benefits supported by the sale of hydroelectric power under another program administered in whole or in part by the authority;

 

(xi)  the extent to which a recharge New York power allocation will result in an advantage for an applicant in relation to the applicant’s competitors within the state; and

 

(xii) in addition to the foregoing criteria, in the case of a not-for-profit corporation, whether the applicant provides critical services or substantial benefits to the local community in which the facility for which the allocation is requested is located.”

               

                Based on the evaluation of these criteria, staff scored and ranked the applicants.  Staff’s recommendations also considered the scores of criteria numbers three and eight given by each REDC to each applicant in its region.  All recommended RNY allocations are based on a composite of staff’s and REDC’s scoring.  Allocations were recommended for those applicants who scored the highest under this evaluation process.

 

                In arriving at the recommended amount of each RNY allocation, staff attempted to maximize the economic benefits of low cost Authority hydropower – the critical state asset at the core of the RNY program.  To do so, staff recommended allocation amounts for each applicant with the goals of expanding participation in the program while also assuring that each recipient receives a meaningful allocation.

 

Accordingly, business applicants scoring highly were recommended for allocations of RNY power of 50% of the requested amount or average historic demand, whichever was lower; business applicants were capped at 10 MW for any recommended allocation.  Not-for-profit applicants who scored high were recommended for allocations of RNY power of 33% of the requested amount or average historic demand, whichever was lower; these allocations were capped at 5 MW.  Authority customers currently receiving hydropower allocations under other Authority power programs were recommended for allocations of RNY power of 25% of the requested amount with the same caps as stated above. 

 

Based on this evaluation process, EDPAB recommended 517 allocations for Trustee approval and deemed three applicants ineligible at its April 24, 2012 EDPAB meeting.  The April recommendations, all of which were approved by the Trustees at their April 24, 2012 meeting, were to 320 businesses recommended for 510.1 MW; 122 small businesses recommended for 12.7 MW; and 75 not-for-profit corporations recommended for 73.1 MW.

 

 

DISCUSSION

 

The Board is now being asked to address a majority of the remaining applications.  Consistent with the evaluation process used for the April recommendations as described above, the resulting recommendations are as follows:  161 applications are being recommended for an allocation of RNY power.  The 161 businesses or not-for-profit corporations listed in Exhibit “A” have stated on their applications a willingness to create or retain nearly 25,000 jobs in New York State.  Additionally, these applicants will be committing to capital investments totaling

$1 billion over five years in exchange for the allocations.  Of these recommendations, 103 businesses are recommended for 73.3 MW; 57 small businesses are recommended for 6.4 MW; and one not-for-profit corporation is recommended for 0.33 MW.

 

                In addition to the 161 new recommendations, there are 49 applications previously recommended in April that required a modified recommendation based on evaluation data discrepancies discovered after the April meeting.  The discrepancies involve the commitment of jobs or capital investment, or the amount of power recommended.  The Board is being asked to recommend these modified allocations as noted in Exhibit “A.”  In total, RNY power allocation recommendations, including the April 24, 2012 allocations and modifications recommended herein, will have been made to 423 businesses recommended for 590.8 MW, 179 small businesses recommended for 21.0 MW, and 76 not-for-profit corporations recommended for 74.8 MW.

 

                The RNY allocations in Exhibit “A” are recommended for a period of up to seven years. Consistent with the legislation, each allocation recommended by EDPAB shall qualify an applicant to enter into a contract with the Authority pursuant to the terms and conditions of the recommendation by EDPAB and on such other terms as the Authority determines to be appropriate.  The contract will have provisions for effective periodic audits of the recipient of an allocation for the purpose of determining contract and program compliance, and for the partial or complete withdrawal of an allocation if the recipient fails to maintain mutually agreed-upon commitments, relating to among other things, employment levels, power utilization, capital investment and/or energy efficiency measures.  In addition, there shall be a requirement that a recipient of an allocation make its facilities available at reasonable times and intervals for energy audits and related assessments that the Authority desires to perform.  At their March 27, 2012 meeting, the Trustees approved the form and substance of a retail contract that incorporates these requirements.

 

There was one application that fell under the definition of a retail business as established by EDPAB. Staff recommends that EDPAB deem ineligible the application for the business listed in Exhibit “B.”

 

After careful consideration and evaluation, 255 of the 1009 applications have not scored high enough in the competitive evaluation process to receive an allocation of RNY power.  As such, EDPAB is requested to determine that these applications, listed in Exhibit “C,” are not recommended for an allocation of RNY power.

 

Those existing PFJ and ECSB benefit recipients who applied for RNY through the CFA process but were not awarded an allocation may be considered for the transitional electricity discount under the RNY authorizing legislation.  EDPAB is requested to recommend that the Trustees, as they deem feasible and advisable, provide transitional electricity discounts to 93 such applicants that are current PFJ and ECSB recipients as listed in Exhibit “D.”  As per statute, the Trustees will determine and advise EDPAB whether sufficient funds are available for funding of such discounts through June 30, 2016.

               

                There are, additionally, a number of applicants that are not being considered for RNY power.  Some applicants did not have demand meters to effectuate delivery of RNY power, others submitted incomplete applications and were unresponsive to follow-up outreach, and some applicants were a public entity such as a municipality or public benefit corporation.  In some cases, the applicant formally withdrew its application.  These applications are listed in Exhibit “E.”

 

EDPAB is further advised that a remaining twelve applicants located in municipal or electric cooperative districts have yet to be evaluated due to unresolved issues regarding delivery of RNY within those districts.  There are also applicants requesting power for expansion projects that have yet to be evaluated.  All these applicants, along with additional applications received after January 27, 2012, will undergo review and will be brought to subsequent EDPAB meetings.

 

Recommendation

 

For the reasons stated above, it is requested that the Economic Development Power Allocation Board recommend that the Authority’s Trustees approve the allocations of available power under the ReCharge New York power program to the businesses and not-for-profit corporations listed in Exhibit “A;” deem the business listed in Exhibit “B” not eligible for a RNY power allocation; determine that the applications by businesses and not-for-profit corporations listed in Exhibit “C” are not recommended for a RNY allocation award; and recommend that those businesses and not-for-profit corporations listed in Exhibit “D,” being recipients of Power for Jobs or Energy Cost Savings Benefits and not being recommended for a RNY power allocation, be authorized by the Authority to receive a transitional electricity discount.

 

Chairman Hoyt asked if any member had a conflict of interest based on the list of applicants being considered for power allocations which was provided by staff.  Mr. Bernard McGarry recused himself from the vote as it relates to SCA Tissue and Mohawk Fine Paper Company; Mr. Robert Catell recused himself from the vote as it relates to North Shore University Hospital.

Chairman Holt stated that, at the April 24th meeting, the Board was provided with an overview of the ReCharge New York Power Program (“RNY”) and made the initial approval of staff’s recommendation of 517 allocations for 596 MW of power.  Also, based on a determination of eligibility pursuant to the RNY legislation, the Board deemed three applicants ineligible for an allocation of power.  Further, applications not addressed at this meeting would be brought to the Board for consideration at future meetings. 

In addition, Chairman Hoyt said the Board will be asked to affirm that certain businesses and not-for-profit corporations will not receive an allocation of power and recommend that certain businesses and not-for-profit corporations who will not be receiving an allocation of Recharge New York power be authorized as eligible to receive the “soft landing” provision, i.e., the transitional electricity discount, stipulated in the RNY legislation. 

Chairman Hoyt then asked Mr. James Pasquale, Senior Vice President of Economic Development and Energy Efficiency, to further discuss RNY.  Mr. Pasquale said that staff would be recommending that the Board approve allocations of 80 MW of power to approximately 161 applicants.  Staff would also be requesting that the Board approve modifications to 49 of the allocations approved in April due to various discrepancies found in the recommendations after the meeting.

Mr. Pasquale stated that, to date, recommendations for RNY power under the program, including the applications being considered for approval today and the modifications previously mentioned, have been made to 678 businesses and organizations for approximately 687 MW of power.  This power is from the 710 MW block set aside for retention, i.e., applicants existing load, for large and small businesses and not-for-profit organizations. The applicants were from a pool of 1,009 applications that were received as a result of “Round 1” of the Governor’s Consolidated Funding Application (“CFA”) process; “Round 2” is currently underway.  Staff anticipates receiving additional applications and returning to the Board at future meetings to discuss those applications.

Mr. Pasquale continued that, at the last meeting of the Board he explained how the applications were reviewed and scored based on the very prescriptive criteria contained in the RNY legislation.  He said the legislation also stipulates that the Board issue its findings and conclusions with respect to every application submitted.  As such, staff will be asking the Board to affirm that 255 businesses and not-for-profit corporations will not be recommended for an allocation of RNY power.  The RNY legislation contains a “soft landing” provision for those existing Authority customers in prior programs (Power for Jobs and Energy Cost Savings Benefits) who applied for, but did not receive a RNY allocation.  As a result of this, of the 255 organizations not recommended for an allocation, 95 will receive a transitional electricity discount.

Mr. Pasquale said that, in addition, staff has not yet made recommendations to the Board for any allocations from the 200 MW set aside for business expansion and/or attraction. However, staff anticipates coming to the Board as early as the July meeting with recommendations for allocations from this pool of power.  He then asked Mr. Michael Huvane to formally present the item and provide an update on staff’s recommendations.

Mr. Huvane presented highlights of staff’s recommendations to the Board.

In response to a question from Mr. Robert Catell, Mr. Pasquale said the legislation stipulates that if a business which is in the Authority’s existing programs applied for RNY and did not receive an allocation, it is eligible for the transitional electricity discount; the other applicants who did not qualify for RNY are not entitled to this “soft landing” provision.

                Trustee Nicandri congratulated staff and expressed appreciation for the diligent work they did over the past six months to implement RNY.  Chairman Hoyt concurred, adding that this new process which was enacted by state legislation and signed into law by the Governor, required insurmountable time and effort by the entire staff and thanked them for their hard work.

                By motion made and seconded the Board approved staff’s recommendations for allocations under the ReCharge New York Power Program, as amended, and also the modifications to the allocations previously approved at the meeting on April 24, 2012.

Mr. Bernard McGarry was recused from the vote as it relates to SCA Tissue and Mohawk Fine Paper Company; Mr. Robert Catell was recused from the vote as it relates to North Shore University Hospital.

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

   RESOLVED, That the Economic Development Power Allocation Board hereby recommends that the New York Power Authority’s Trustees approve the allocations of power under the ReCharge New York Power Program, to the businesses and not-for-profit corporations listed in Exhibit “A;” deem the business listed in Exhibit “B” not eligible for a RNY power allocation; determine that the applications by businesses and not-for-profit corporations listed in Exhibit “C” are not recommended for a RNY allocation award; and recommend that those businesses and not-for-profit corporations listed in Exhibit “D,” being recipients of Power for Jobs or Energy Cost Savings Benefits and not being recommended for a RNY power allocation, be authorized by the Authority to receive a transitional electricity discount.

 

 

 


 





 


 

 

 

                                      

 



 

 

 

 








 


4.           Other Business

 

                No other business to report.


 

5.           Next Meeting

 

The next meeting of the Board will be held on Tuesday, May 22, 2012 at 10:00 a.m.