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NYPA Trustees Approve Agreement in Principle With Alcoa Toward Hydropower Contract and Preservation of Jobs and Capital Investment in North Country

Contact:
Michael Saltzman
914-390-8181
michael.saltzman@nypa.gov

January 29, 2008

FOR IMMEDIATE RELEASE 

WHITE PLAINS—The New York Power Authority (NYPA) Tuesday took an important step toward a formal contract with Alcoa for the aluminum manufacturer’s continued receipt of low-cost hydropower at its two Massena facilities and long-term commitment to Northern New York.

The NYPA Board of Trustees ratified an Agreement in Principle for the continued supply of hydropower to Alcoa from the Power Authority’s St. Lawrence-Franklin D. Roosevelt Power Project. The company would commit to retain 1,065 jobs initially at its Massena operations and at least 900 jobs over a 30-year contract term beginning on July 1, 2013. It would also invest approximately $600 million for a major modernization and overhaul of its Massena East smelter (formerly owned by Reynolds Metals).

“Few assets in the North Country are of greater importance to the region’s economy than the St. Lawrence-FDR project, whose low-cost electricity has been integral to Massena’s aluminum manufacturing industries since the project began harnessing the power of the St. Lawrence River in 1958,” said Roger B. Kelley, NYPA president and chief executive officer. “The Agreement in Principle announced last month by Governor Spitzer reflects the extraordinary value of this power for preserving jobs and promoting investment, and puts us on solid footing for a new long-term contract with Alcoa.”

Kelley noted that a new contract would, for the first time, establish fixed job commitments that Alcoa would be required to meet in a manner similar to arrangements the Power Authority now has with virtually all of its business customers throughout the state. Alcoa would continue to benefit from 478 megawatts (mw) of hydropower (374 mw of firm power and 104 mw of interruptible power) over the 30-year contract term and would have an option to extend the contract for an additional 10 years under certain economic conditions.

As another first in NYPA’s long relationship with Alcoa, the power rates would be linked, in part, to the price of aluminum on the world market. This would allow NYPA and Alcoa to share in the benefits of higher market prices and provide the company with protection against lower prices for its products.

Under the Agreement in Principle, Alcoa has two years from its signing of the agreement on Dec. 21, 2007 to conduct an engineering study on the proposed rebuilding of the Massena East smelter. The Agreement in Principle (or the power supply contract if it has been executed) would be canceled if the company decided not to proceed with the overhaul.

Alcoa would create a $10 million North Country Economic Development Fund after it committed to rebuild the smelter. The fund, which would be jointly administered by NYPA and another entity specified by New York State, would be used exclusively for economic development in St. Lawrence, Franklin, Essex, Jefferson, Lewis, Hamilton and Herkimer counties and for the Akwasasne Mohawk Reservation.

After the power supply contract is negotiated, it will be submitted to the NYPA trustees and the Alcoa Board of Directors for their approvals, followed by a public hearing. The contract must also be approved by Governor Spitzer.

 

About NYPA:

■    NYPA uses no tax money or state credit.  It finances its operations through the sale of bonds and revenues earned in large part through sales of electricity.  ■    NYPA is a leader in promoting energy-efficiency, new energy technologies and electric transportation initiatives.  ■    It is the nation’s largest state-owned electric utility, with 18 generating facilities in various parts of the state and more than 1,400 circuit-miles of transmission lines.

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