MINUTES OF THE REGULAR MEETING OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

September 26, 2006

 

 

Table of Contents

 

                Subject                                                                                                                                  

 

1.              Minutes of the Regular Meeting held on July 25, 2006                                       

2.              Financial Reports for the Eight Months Ending August 31, 2006, exhibit   ‘2-A’

3.              Report from the President and Chief Executive Officer                                       

4.              Power for Jobs Program – Extended Benefits Resolution,  Exhibit '4-A'

5.              Allocation of 3,800 kW of Hydro Power Resolution   

6.              Steuben Rural Electric Cooperative – Increase in Retail Rates –  Notice of Adoption  Resolution, Exhibit ‘6-A’ – ‘6-C’ 

7.              Productivity Improvement Request Reductions Resolution, Exhibit, ‘7-A’

8.              Increase in New York City Governmental Customer Rates –  Notice of Proposed Rule Making Resolution   

9.              Modification of Westchester County Governmental Customer Rates – Notice of Proposed Rule Making Resolution, Exhibit ‘9-A’ – ‘9-C’

10.           Budget Information Pursuant to Section 2801 of the Public Authorities Law Resolution, Exhibit ‘10-A’ & ‘10-B

11.           Banking Resolution Amendment to Reflect Change of Position  Title to Executive Vice President and Chief Financial Officer Resolution

12.           Authority Billing Systems Implementation – Systems Integration Services – Contract Award Resolution

13.           Petroleum Overcharge Restitution Funds – Transfer of Funds to the State of New York and Authorization of Programs Resolution, Exhibit ‘13-A’

14.           Approval and Funding of the Hydro Power-to-Hydrogen Initiative Resolution                                                                                                                             

15.           Seymour-to-Greenwood Interconnection Project – Expenditure Authorization Request  Resolution       
              

16.           New York City Department of Environmental Protection East  Delaware and Neversink Hydroelectric Facilities – Operations
 and Maintenance Services – Award Resolution   

17.           Revisions to the Regulations of the Authority Implementing the State Environmental Quality Review Act (21 NYCRR Part 461)  Resolution Exhibit ‘17-A’ – ‘17-C’ 

18.           Informational Item: New York Power Authority’s Annual Strategic Plan Exhibit ‘18-A

19.           St. Lawrence/FDR Power Project – Surplus Lands – Approval of the Conveyance of Surplus Property Resolution Exhibit ‘19-A’  

20.           Assignment and Assumption of Bank of New York Lease by J. P. Morgan Chase  Resolution

21.           Procurement (Services) Contracts – Business Units and Facilities – Awards Resolution Exhibit ‘21-A’ 

22.           Procurement (Services) Contracts – Business Units and  Facilities – Extensions and Approval of Additional Funding Resolution, Exhibit ‘22-A’ 

23.           Proposed Schedule of Trustees’ Meetings in 2007 Resolution

24.           Informational Item: World Trade Center Redevelopment – Lower Manhattan Energy Independence Initiative 

25.           Motion to Conduct an Executive Session                                                               

26.           Motion to Resume Meeting in Open Session                                                          

27.           Next Meeting                                                                                                                 

Closing                                                                                               

 

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

 

Present:                  Frank S. McCullough, Jr., Chairman

                                Michael J. Townsend, Vice Chairman

                                Joseph J. Seymour, Trustee

                                Elise M. Cusack, Trustee   

                                Robert E. Moses, Trustee

                                Thomas W. Scozzafava, Trustee

                                Leonard N. Spano, Trustee

 

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Timothy S. Carey                                 President and Chief Executive Officer

Joseph Del Sindaco                             Executive Vice President and Chief Financial Officer

Thomas J. Kelly                                    Executive Vice President and General Counsel

Vincent C. Vesce                                  Executive Vice President – Corporate Services and Administration

Robert J. Deasy                                    Senior Vice President – Energy Resource Management

Steven J. DeCarlo                                 Senior Vice President – Transmission

Angelo S. Esposito                              Senior Vice President – Energy Services and Technology

Louise M. Morman                              Senior Vice President – Marketing and Economic Development

William J. Nadeau                                Senior Vice President – Energy Resource Management and Strategic Planning

Brian Vattimo                                        Senior Vice President – Public and Governmental Affairs

Edward A. Welz                                   Senior Vice President and Chief Engineer – Power Generation

Anne B. Cahill                                      Corporate Secretary

Thomas P. Antenucci                          Vice President – Project Management

Richard J. Ardolino                              Vice President – Engineering

Arnold M. Bellis                                   Vice President – Controller

John M. Hoff                                        Vice President – Procurement and Real Estate

Donald A. Russak                                Vice President – Finance

William V. Slade                                   Vice President – Environmental Management

Tom H. Warmath                                  Vice President and Chief Risk Officer

James H. Yates                                     Vice President – Major Account Marketing and Economic Development

Angela D. Graves                                 Deputy Corporate Secretary

Michael E. Brady                        Treasurer

Dennis T. Eccleston                     Chief Information Officer

Thomas A. Davis                         Director – Financial Planning

James F. Pasquale                        Director – Business Power Allocations, Regulations and Billing

Michael A. Saltzman                    Director – Media Relations

Daniel Wiese                              Inspector General and Director – Corporate Security

Mary Jean Frank                                  Associate Corporate Secretary

Lorna M. Johnson                               Assistant Corporate Secretary

Daniel J. Cappiello                               Manager – Performance Planning

Lesly Y. Pardo                                      Manager – Internal Audit

Jeffrey Carey                                         Special Assistant to President and Chief Executive Officer

William Helmer                                     Special Licensing Counsel

Jack Murphy                                         Special Advisor to President and Chief Executive Officer

Ricardo DaSilva                                    Associate Electrical Engineer

Oksana U. Karaczewsky                     Senior Procurement Compliance Coordinator

Jennifer Mayadas-Dering                   Senior Project Engineer

Guy Sliker                                  Senior Research and Technical Development Engineer

Edward Gibbs                              Executive Director, County of Westchester Public Utility Service Agency 

 

Chairman McCullough presided over the meeting.  Secretary Cahill kept the Minutes.

 

 

1.             Approval of the Minutes

 

The Minutes of the Regular Meeting of July 26, 2006 were unanimously adopted.

 

 

2.             Financial Reports for the Eight Months Ending August 31, 2006

 

Mr. Bellis presented an overview of the reports to the Trustees. 


 

3.             Report from the President and Chief Executive Officer

               

                President Carey asked Mr. Del Sindaco to introduce the newest member of the management team.  Mr. Del Sindaco said that Mr. Deasy has decided to retire at the end of the year after 32 years of service to the Authority.  He introduced Mr. William Nadeau, who will be the Authority’s Senior Vice President – Energy Resource Management and Strategic Planning.  Mr. Nadeau thanked Mr. Del Sindaco for the warm welcome.

                President Carey said that the Authority has received a positive report from the Office of the State Comptroller (“OSC”) regarding its recent audit of the Niagara plant.  He stated that even though only a few issues had been raised by the OSC report, the Authority did not concur in total with the report and that the Authority had sent a letter to the OSC setting forth its position and requesting a meeting to discuss this issue.

                President Carey also said that he had been asked to serve on the Board of Directors of the U.S. Green Building Council and that the Authority would be the only electric utility represented on the Council’s Board.  Chairman McCullough congratulated President Carey on his appointment to this Board, saying it was consistent with President Carey’s goals for the Authority in this regard.          
 

4.             Power for Jobs Program – Extended Benefits

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to approve extended benefits for 60 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘4-A.’  These customers have been recommended to receive such extended benefits by the Economic Development Power Allocation Board (‘EDPAB’).

 

BACKGROUND

 

“In July 1997, the New York State Legislature and Governor George E. Pataki 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 receive three-year contracts for PFJ electricity.

 

“The PFJ program originally made 400 megawatts (‘MW’) of power available.  The program was to be phased in over three years, with approximately 133 MW made available each year.  In July 1998, as a result of the initial success of the program, the Legislature and Governor Pataki amended the PFJ statute to accelerate the distribution of the power, making a total of 267 MW available in Year One.  The 1998 amendments also increased the size of the program to 450 MW, with 50 MW to become available in Year Three.

 

“In May 2000, legislation was enacted that authorized another 300 MW of power to be allocated under the PFJ program.  The additional MW were described in the statute as ‘phase four’ of the program.  Customers that received allocations in Year One were authorized to apply for reallocations; more than 95% reapplied.  The balance of the power was awarded to new applicants.

 

“In July 2002, legislation was signed into law by Governor Pataki that authorized another 183 MW of power to be allocated under the program.  The additional MW were described in the statute as ‘phase five’ of the program.  Customers that received allocations in Year Two or Year Three were given priority to reapply for the program.  Any remaining power was made available to new applicants. 

 

“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.  As an alternative, such customers could choose to receive a rebate to the extent funded by the Authority from the date their contract expired as a bridge to a new contract extension, with the contract extension commencing December 1, 2004.  The new contract would be in effect from a period no earlier than December 1, 2004 through the end of the PFJ program on December 31, 2005.

 

“PFJ 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.  In 2006, a new law (Chapter 645 of the Laws of 2006) included provisions extending program benefits until June 30, 2007.

 

“Section 189 of the New York State Economic Development Law, which was amended by Chapter 59 of the Laws of 2004, provided the statutory authorization for the extended benefits that could be provided to PFJ customers.  The statute stated that an applicant could receive extended benefits ‘only if it is in compliance with and agrees to continue to meet the job retention and creation commitments set forth in its prior power for jobs contract.’

 

“Chapter 313 of the Laws of 2005 amended the above language to allow EDPAB to consider continuation of benefits on such terms as it deems reasonable.  The statutory language now reads as follows:

 

An applicant shall be eligible for such reimbursements and/or extensions only if it is in compliance with and agrees to continue to meet the job retention and creation commitments set forth in its prior power for jobs contract, or such other commitments as the board deems reasonable. (emphasis supplied)

 

“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.  To date, staff has mailed 200 applications, received 109 and reviewed 108.

 

DISCUSSION

 

“At its meeting on September 26, 2006, EDPAB recommended that the Authority’s Trustees approve the electricity savings reimbursement rebates to the 60 businesses listed in Exhibit ‘4-A.’  Collectively, these organizations have agreed to retain more than 54,000 jobs in New York State in exchange for rebates.  The rebate program will be in effect until December 31, 2006, the program’s sunset.  The power will be wheeled by the investor-owned utilities as indicated in the Exhibit. 

 

“The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘4-A’ in a total amount currently not expected to exceed $4,800,000.  Staff recommends that the Trustees authorize a withdrawal of monies from the Operating Fund for the payment of such amount, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.  Staff expects to present the Trustees with requests for additional funding for rebates to the companies listed in the Exhibit in the future.

 

FISCAL INFORMATION

 

“Funding of rebates for the companies listed on Exhibit ‘4-A’ is not expected to exceed $4,800,000.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $48.5 million in rebates.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer and the Director – Business Power Allocations and Regulation recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibit ‘4-A.’

 

“The Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Vice President – Major Account Marketing and Economic Development, the Senior Vice President – Public and Governmental Affairs and I concur in the recommendation.”

 

                Mr. Pasquale presented the highlights of staff’s recommendations to the Trustees.  Chairman McCullough explained that when Power for Jobs customers’ benefits are identified for reduction due to noncompliance with their job commitments, Authority staff notifies the customers of the reconsideration procedures that are in place to allow these customers to ask for EDPAB reconsideration based on special circumstances.  Mr. Pasquale said that 109 customers have sent in requests for reconsideration of their reduced power allocations to date.

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

 

WHEREAS, the Economic Development Power Allocation Board has recommended that the Authority approve electricity savings reimbursements to the Power for Jobs customers listed in Exhibit “4-A”;

 

NOW THEREFORE BE IT RESOLVED, That to implement such Economic Development Power Allocation Board recommendations, the Authority hereby approves the payment of electricity savings reimbursements to the companies listed in Exhibit “4-A” and that the Authority finds that such payments for electricity savings reimbursements are in all respects reasonable, consistent with the requirements of the Power for Jobs program and in the public interest; and be it further

 

RESOLVED, That based on staff’s recommendation, it is hereby authorized that payments be made for electricity savings reimbursements as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $4.8 million, and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

 

RESOLVED, That such monies may be withdrawn pursuant to the foregoing report upon the certification on the date of such withdrawal by the Vice President – Finance or the Treasurer that the amount to be withdrawn is not then needed for any of the purposes specified in Section 503 (1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

 

RESOLVED, That the Senior Vice President – Marketing, Economic Development or her 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 Executive Vice President and General Counsel; and be it further

 

RESOLVED, That the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolutions, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 


 


 

5.             Allocation of 3,800 kW of Hydro Power  

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to approve one allocation of available Replacement Power (‘RP’) totaling 600 kW to Silver Eagle Technology, Inc. and one allocation of available Expansion Power (‘EP’), totaling 3,200 kW to HSBC Technology & Services Inc. 

 

BACKGROUND

 

“Under the RP Settlement Agreement, National Grid (‘Grid’) (formerly Niagara Mohawk Power Corporation), with the approval of the Authority, identifies and selects certain qualified industrial companies to receive delivery of RP.  Qualified companies are current or future industrial customers of Grid that have or propose to have manufacturing facilities for the receipt of RP within 30 miles of the Authority’s Niagara Switchyard.  RP is up to 445,000 kW of firm hydro power generated by the Authority at its Niagara Power Project that has been made available to Grid, pursuant to the Niagara Redevelopment Act (through December 2005) and Chapter 313 of the 2005 Laws of the State of New York.

 

“Under Section 1005 (13) of the Power Authority Act, as amended by Chapter 313, the Authority may contract to allocate or reallocate directly, or by sale for resale, 250 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.

 

DISCUSSION

 

“On October 22, 2003, the Authority, Grid, Empire State Development Corporation and the Buffalo Niagara Enterprise signed a Memorandum of Understanding (‘MOU’) that outlines the process to coordinate marketing and allocating Authority hydro power.  The entities noted above have formed the Western New York Advisory Group (‘Advisory Group’) with the intent of better using the value of this resource to improve the economy of Western New York and the State of New York.  Nothing in the MOU changes the legal requirements applicable to the allocation of hydro power. 

 

“Based on the Advisory Group’s discussions, staff recommends that the 600 kW of available Replacement Power be allocated for Silver Eagle Technology, Inc. and 3,200 kW of available Expansion Power be allocated for HSBC Technology & Services Inc.  These projects will help maintain and diversify the industrial base of Western New York and provide new employment opportunities. 

 

RECOMMENDATION

 

“The Director – Business Power Allocations and Regulation recommends that the Trustees approve an allocation of available Replacement Power totaling 600 kW to Silver Eagle Technology Inc. and an allocation of available Expansion Power, totaling 3,200 kW to HSBC Technology & Services Inc. 

 

“The Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Vice President – Major Accounts Marketing and Economic Development and I concur in the recommendation.”

 

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

 

RESOLVED, That the allocation of 600 kW of Replacement Power to Silver Eagle Technology, Inc. and 3,200 kW of Expansion Power to HSBC Technology & Services Inc., be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel. 


 

6.             Steuben Rural Electric Cooperative – Increase in Retail Rates – Notice of Adoption

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Board of the Steuben Rural Electric Cooperative (‘Cooperative Board’) has requested the Trustees to approve revisions in the Steuben Rural Electric Cooperative’s (‘Cooperative’) retail rates for each customer service classification.  These revisions will result in additional total annual revenues of about $378,500, or 6.1%. 

 

BACKGROUND

 

“The Cooperative Board has requested the proposed rate increase primarily to provide revenues to allow for sufficient working funds, meet forecasted increases in operation and maintenance expenses and meet federal regulatory financial ratio level requirements.  Current rates have been in effect since March 1988.  

 

“The management of the Cooperative has planned additions to plant-in-service amounting to $1.2 million.  The capital program consists of a major upgrade of the Cooperative’s extensive distribution lines and conductors and an increase to its substation capacity. 

 

“Under the new rates, an average residential customer who currently pays about 9.4 cents per kWh will pay about 10.0 cents per kWh.  A commercial customer that currently pays 8.5 cents per kWh will pay 9.0 cents after the increase.  Industrial customers that presently pay 8.8 cents will pay 8.9 cents after the increase.  A new service class, ‘Large, Separated, Electric Cold Storage or Processing Plant’ was created, to serve only large industrial customers from a different metering point.  The creation of this new class allows the cooperative to explicitly calculate and monitor the cost of serving this unique load.  The estimated average rate for this new class is 5.3 cents per kWh.

 

DISCUSSION

 

“The proposed rate revisions are based on a cost-of-service study prepared by the Cooperative and reviewed by Authority staff.  Two public hearings were held by the Cooperative, on July 18 at the Cherry Creek district office and another on July 19, 2006 at the Bath main office.  No rate payer comments were received at the public hearing.  The Cooperative Board has requested that the proposed rates be approved.  No comments concerning the proposed action have been received by the Authority’s Corporate Secretary.   

 

“Pursuant to the approved procedures, the Senior Vice President – Marketing and Economic Development requested the Corporate Secretary to file a notice for publication in the New York State Register of the Cooperative’s proposed revision in retail rates.  Such notice was published on August 2, 2006. 

 

“An expense and revenue summary, comparisons of present and proposed total annual revenues and their corresponding rates by service classification are attached as Exhibits ‘6-A,’ ‘6-B’ and ‘6-C,’ respectively.

 

RECOMMENDATION

 

“The Director – Business Power Allocations and Regulation recommends that the attached schedule of rates for the Steuben Rural Electric Cooperative be approved as requested by the Board of the Steuben Rural Electric Cooperative to take effect beginning with the first full billing period following the date this resolution is adopted.

 

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

 

“The Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

                Mr. Pasquale presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Seymour regarding the Board’s jurisdiction to consider such matter, Mr. Pasquale said that the Authority regulates the rates of the municipal utilities and rural electric cooperatives under provisions of our contract and State law.

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

 

RESOLVED, That the proposed rates for electric service for the Steuben Rural Electric Cooperative, Inc., as requested by such Cooperative Board, be approved, to take effect with the first full billing period following this date, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

RESOLVED, That the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

 

 

Steuben Rural Electric Cooperative

Expense and Revenue Summary

 

                                                                                                                          Five-Year             

                                                                                                             Average                  Proposed ¹

 

 

            Purchase Power Expense

            (NYPA hydro, incremental & ISO charges)                                     $1,217,713                $1,595,691

 

            Distribution Expense (Coop-owned facilities)                                    1,926,045                  2,179,797

 

            Transmission Expense                                                                             0                      17,007

 

            Depreciation Expense

            (on all capital facilities and equipment)                                              957,365                  1,033,118

 

            General & Administrative Expenses

            (salaries, insurance, mgmt services & adm. expenses)                           679,298                    796,256

 

            Rate of Return – (Average 4.6%, Proposed 4.0%)

            (includes debt service on current & planned debt,

            federal regulatory financial ratio level

            requirement, Coop members’ patronage capital

            distribution and cash reserves for contingencies)                                  956,826                   966,649

 

            Total Cost of Service                                                                  $5,737,247                $6,588,518

 

 

            Revenue at Present Rates                                                                                          $6,210,065

         

            Deficiency at Current Rates                                                                                          378,453

 

            Revenue at Proposed Rates                                                                                        $6,588,518

 

            Increase % at Proposed Rates                                                                                                 6.1%

 

 

 

¹ Based on five years of historical and projected data.


 

 

 

Steuben Rural Electric Cooperative

Comparison of Present and Proposed Annual Total Revenues

 

 

 

 

            SERVICE                                                       PRESENT                     PROPOSED                       %

            CLASSIFICATION                                         REVENUE                     REVENUE                 INCREASE   

 

 

                                                                                      

            Residential, Schedule 1                                       $5,342,984                      $5,686,487                       6.4%

 

 

            Commercial Service, Schedule 2                              267,948                          285,257                       6.5%

 

 

            Industrial Service, Schedule 3                                  455,355                          459,393                       0.9%

 

 

            Security Lighting, Schedule 4                                   143,778                          157,381                       9.5%

 

 

 

            Total                                                               $6,210,065                      $6,588,518                       6.1%

 

  


 

 

Steuben Rural Electric Cooperative

Comparison of Present and Proposed Net Monthly Rates

 

      Present ¹                                                                                                                  Proposed ¹

                  Rates                                                                                                                         Rates

 

                                                Residential, Schedule 1

                  $ 9.75                                  Customer Charge                                                             $ 10.33

 

                  $ .0789                                 Energy Charge, per kWh.                                                  $ .0841

 

 

                                                Commercial Service, Schedule 2

                  $ 9.75                                  Customer Charge                                                             $ 10.33  

 

                  $ .0789                                 Energy Charge, per kWh.                                                  $ .0841  

 

 

                                                                                Industrial Service, Schedule 3

                  $ 3.81                                  Demand Charge, per kW                                                   $ 3.81   

 

                  $ .0612                                 Energy Charge, per kWh.                                                  $ .0619

 

 

                                                Security Lighting, Schedule 4

                                                            (Charge per lamp, per month)

 

                  $ 7.84                                  100 Mercury Vapor                                                          $ 8.60

 

 

                                                Large, Separated, Electric Cold Storage or

                                                Processing Plant Service, Schedule 5

                  New Service

                    Class

                                                                                                                                                                       

                        N/A                              Demand Charge, per kW                                                   $ 4.84   

 

                        N/A                              Energy Charge, per kWh.                                                  $ .0216

 

            -------------------------

¹ Average annual purchased power adjustment (PPA) reflected in present and proposed rates.

 

 


 

7.             Productivity Improvement Request Reductions

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“It is requested that the Trustees approve reductions to the employment commitments for each of the five companies listed in Exhibit ‘7-A.’  These customers have clauses in their contracts that allow them to request a reduction in their commitments if the reduction is due to productivity improvements.  Each of the five companies that made the productivity improvement requests met the appropriate criteria. 

 

BACKGROUND

 

“Each year, Authority staff initiates a review of all business power allocations and the customers’ performance against agreed-upon job commitments.  In 2005, the Authority had 289 contracts with 210 business customers, excluding Power for Jobs (‘PFJ’) agreements.  In 2005, five customers (with 12 contracts) requested a reduction to their base employment commitments due to productivity improvements made during the reporting period.

 

“The contracts contain a customer commitment to retain or add a specific number of jobs.  A company may request a productivity review to have its job commitment reduced if the reduction in employment is due to increased efficiency or improved technology.  Relocation of specific activities away from the facility will not be considered an increased efficiency, improved technology or productivity improvement.  Employment reductions made due to reduced production or sales volume will not be considered as an increased efficiency, improved technology or productivity improvement.

 

“A recommendation to lower a customer’s job commitment due to productivity improvements is made when:

 

  1. The customer submits documentation of procedural or operational change, and

 

2.     Staff conducts a site visit to verify the improvement(s) and the resulting reduction(s) in

   jobs.

 

“The most common types of productivity improvements are automation, job consolidation, rebalancing and new process/design change.

 

“Automation reduces employment by increasing efficiency or improving technology.  Job consolidation and rebalancing are similar improvements – job consolidation takes two jobs and eliminates one by giving the other job the duties of that job, while rebalancing redistributes work among many workers while eliminating one or two workers.  New process/design change is a new method of doing something or a new design for a part that requires fewer workers to produce the same amount of work or product.

 

DISCUSSION

 

“Staff recommends that the Trustees approve action regarding the five customers meeting the productivity improvement requirement for a reduction to their employment commitments in 12 contracts.  Brief descriptions of those companies that meet the productivity improvement employment reduction requirements are listed in Section I.

 

“A summary of all contracts discussed in this item is provided as Exhibit ‘7-A.’

 

 

   

 

Section I.

 

Allocations To Continue with Job Commitment Changes for Productivity Improvements

 

E.I. Du Pont De Nemours & Co., Inc., Niagara Falls, Niagara County

Allocation:                    790 kW of Expansion Power (‘EP’) and 31,700 kW of Replacement Power (‘RP’)

Jobs Commitment:      254 jobs and 201 jobs, consecutively

Background:  E. I. Du Pont De Nemours & Co., Inc. (‘DuPont’) has been in the chemicals business for more than 200 years and has been producing sodium chloride and lithium at this plant for more than 100 years.  Both allocations are ‘vintage’ contracts, meaning that they have an 80% job ratio and a two-year job average.  For the past two years, DuPont averaged 262.96 jobs, i.e., 103.53% and 130.83% of its contractual commitments, respectively.  The company was able to reduce three jobs due to productivity improvements in 2005 made through new, more reliable equipment.

Recommendation:  Staff recommends that the Trustees reduce DuPont’s employment commitments for both its EP and RP allocations by 3 jobs, to 251 and 198 positions, respectively.

 

Ford Motor Company, Buffalo, Erie County

Allocation:                    4,300 kW of EP and 2,900 kW of EP

Jobs Commitment:      1,869 jobs and 1,869 jobs, consecutively

Background:  Ford Motor Company (‘Ford’) opened its Buffalo Stamping Plant in 1950.  Currently, Ford stamps doors, floor pans, quarter panels and some inner body components for the Windstar, Taurus and Crown Victoria models.  The components then go to other Ford assembly plants and distribution centers throughout the U.S. and Canada.  For the past year, Ford averaged 1,667.67 jobs, i.e., 89.23% of its contractual commitment.  The company requested a productivity improvement reduction of its job commitment by 97 jobs.  Ford’s reduction comes from automating the inspection of parts and various handling processes, as well as from new manufacturing processes.

Recommendation:  Staff recommends that the Trustees reduce Ford’s EP allocation employment commitments by 97 jobs to 1,772 positions each.

 

General Motors Corporation – Powertrain, Buffalo, Erie County

Allocation:                    13,800 kW, 1,100 kW and 800 kW of EP and 2,000 kW and 725 kW of RP

Jobs Commitment:      3,404 (13,800, 1,100 kW, 800 kW and 725 kW), and 3,404 base jobs and 44 created jobs (2,000 kW)

Background:  General Motors Corporation – Powertrain (‘GM Powertrain’) manufactures engines for several of GM’s automobile models, including the Chevy Colorado and Canyon pick-up.  The company requested a productivity improvement reduction of its jobs commitment by 282 jobs, which included two employment reductions that qualify for 2006, resulting in 280 reductions qualifying for 2005.  The bulk of GM’s reduction comes from replacing an old engine line with the world’s most advanced engine manufacturing facilities and processes for the new engines, as well as from rebalancing job duties along the assembly lines, automation and new manufacturing processes.  For the past year, GM – Powertrain averaged 2,914.50 jobs, i.e., 84.53% of its contractual commitment.

Recommendation:  Staff recommends that the Trustees reduce GM Powertrain’s EP and RP allocation employment commitment by 280 jobs to a base of 3,124 positions.  The RP allocation that still has time to create jobs will have its employment commitment reduced to 3,124 base jobs, with 44 created jobs (3,168).

 

Occidental Chemical Corporation, Niagara Falls, Niagara County

Allocation:                    56,000 kW of RP and 38,700 kW of EP

Jobs Commitment:      237 jobs and 245 jobs, respectively

Background:  Occidental Chemical Corporation (‘Oxy’) is the country’s largest merchant marketer of chlorine and caustic soda, which is used for the plastics, pulp and paper, water purification, bleach and sanitation industries.  The company requested a productivity improvement employment commitment reduction.  Both allocations are ‘vintage’ contracts, meaning that they have an 80% job ratio and a two-year job average.  For the past two years, Oxy averaged 254.21 jobs and 246.75 jobs, i.e., 107.26% and 100.71% of its contractual commitments, respectively.  In 2005, Oxy reorganized its maintenance program through combining jobs (six jobs reduced) and through a new inventory process (one job reduced).

Recommendation:  Staff recommends that the Trustees reduce Oxy’s RP and EP allocation employment commitments by seven jobs to 230 and 238 positions, respectively.

OAB Holding, Inc., Buffalo, Erie County

Allocation:                    8,060 kW of RP

Jobs Commitment:      501 jobs

Background:  OAB Holding, Inc (‘OAB’), in business since 1906, manufactures copper and brass sheets and rolls.  The allocation is a ‘vintage’ contract, meaning that it has an 80% job ratio and a two-year job average.  The company requested a productivity improvement reduction of its job commitment by 19 jobs.  However, only 18 of the 19 qualified as productivity improvement reductions.  OAB’s reduction comes from rebalancing job duties (14 positions), eliminating a process (three positions) and new equipment (one position).  For the past two years, OAB averaged 634.50 jobs, i.e., 126.65% of its contractual commitment.

Recommendation:  Staff recommends that the Trustees reduce OAB’s RP allocation employment commitment by 18 jobs to a base of 483 positions.

 

RECOMMENDATION

 

“The Director – Business Power Allocations and Regulation recommends that the Trustees adjust the job commitments for five customers with 12 contracts due to productivity improvements as described above and set forth in Exhibit ‘7-A.’

 

“The Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Vice President – Major Account Marketing and Economic Development and I concur in the recommendation.”

 

                Mr. Pasquale presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Cusack, Mr. Pasquale said that all of the companies requesting these reductions are located in the western part of the State because they are hydro power customers.  Responding to another question from Trustee Cusack, Mr. Pasquale said that Authority staff conducts inspections at the customers’ facilities to ensure that the claimed improvements have in fact been made.  Chairman McCullough added that the Authority wants more companies to implement productivity improvements.

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

 

RESOLVED, That the Authority hereby approves adjustment of the future job commitment levels for five customers (with 12 contracts) that made productivity improvements as described in the foregoing report of the President and Chief Executive Officer and as set forth in Exhibit “7-A”; and be it further

 

RESOLVED, That the Director – Business Power Allocations and Regulation is hereby authorized to provide written notice to these companies whose allocations and job commitments are being reduced; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolutions, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

 

 

I. ALLOCATIONS TO CONTINUE WITH JOB COMMITMENT CHANGES FOR PRODUCTIVITY IMPROVEMENTS

 

 

 

Company

 

 

 

Location

 

Date of Trustee Approval

 

Type of Power

 

Allocation kW

Employment Commitment

 (# of jobs)

Average

2005

Jobs

Average Annual %

Achieved

 

Revised Jobs

E.I. Du Pont De Nemours & Co., Inc.

Niagara Falls

Oct. 88

EP

790

254

262.96

103.53

251

E.I. Du Pont De Nemours & Co., Inc.

Niagara Falls

1961

RP

31,700

201

262.96

130.83

198

Ford Motor Company

Buffalo

Dec. 94

EP

4,300

1,869

1,667.67

89.23

1,772

Ford Motor Company

Buffalo

Feb. 93

EP

2,900

1,869

1,667.67

89.23

1,772

G. M. Powertrain  – Tonawanda Plant

Buffalo

Sep 97

EP

1,100

3,404

2,914.50

85.62

3,124

G. M. Powertrain  – Tonawanda Plant

Buffalo

Jun. 96

EP

800

3,404

2,914.50

85.62

3,124

G. M. Powertrain  – Tonawanda Plant

Buffalo

Aug 97

RP

725

3,404

2,914.50

85.62

3,124

G. M. Powertrain  – Tonawanda Plant

Buffalo

Jan 94

EP

13,800

3,404

2,914.50

85.62

3,124

G. M. Powertrain  – Tonawanda Plant

Buffalo

Jun 00

RP

2,000

3,448

2,914.50

84.53

3,168

Occidental Chemical Corporation

Niagara Falls

 1963

RP

56,000

237

271.84

108.74

230

Occidental Chemical Corporation

Niagara Falls

Oct 88

EP

38,700

245

248.75

96.41

238

OAB Holding Inc.

Buffalo

Various

RP

8060

501

634.50

126.65

483

EP = Expansion Power                             RP = Replacement Power       

 

 


 

8.             Increase in New York City Governmental Customer Rates – Notice of Proposed Rule Making 

 

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 Fixed Costs component of the production rates to be charged in 2007 to the New York City Governmental Customers (‘Governmental Customers’).  This proposed action would increase production rates by 1.8% on average as compared to 2006 rates.  The Trustees are also requested to direct the Corporate Secretary to publish a NOPR in the State Register in accordance with the requirements of the State Administrative Procedure Act (‘SAPA’). 

 

“This proposed action is consistent with the rate-setting process set forth in the Long-Term Agreements (‘LTAs’) for the purchase of electric service executed by each of the Governmental Customers and the Authority.  Under the LTAs, any proposed increase in the Fixed Costs component of the Governmental Customers’ production rates must be done in accordance with a SAPA proceeding.  After the 45-day statutory comment period concerning this proposed rate action, Authority staff will address any concerns that have been raised and return to the Trustees at their meeting on December 19, 2006, to seek final adoption of this proposal. 

 

BACKGROUND

 

“In 2005, the Authority and the Governmental Customers entered into LTAs for the purchase of electric service through December 31, 2017.  The LTAs replaced prior agreements entered into during the mid-1990s with most of these same Governmental Customers.  The LTAs also established a new relationship between the Authority and the Governmental Customers that reflects the costs of procuring electricity in the restructured marketplace managed by the New York Independent System Operator (‘NYISO’).  The LTAs define specific cost categories with respect to providing electric service, and establish new methods for acquiring resources and managing risk and a collaborative process with the Governmental Customers for selecting a cost-recovery mechanism.

 

“The LTAs separate all costs into two distinct categories:  Fixed Costs and Variable Costs.  Fixed Costs include Operation and Maintenance (‘O&M’), Shared Services, Debt Service, Other Expenses (i.e., certain directly assignable costs) and a credit for investment and other income.  Under the LTAs, the Authority must establish Fixed Costs based on Cost of Service (‘COS’) principles and make changes only under a SAPA proceeding.  In addition, the LTAs contemplate that year-to-year changes in Fixed Costs will be reviewed by the Governmental Customers in advance of a filing made under SAPA.  On August 25, 2006, Authority staff conducted a telephone conference with the Governmental Customers to discuss the proposed Fixed Costs increase and solicit their views.  Under the LTAs, the Governmental Customers’ concerns must be considered prior to presenting any proposed changes to the Fixed Costs to the Trustees or issuing them for public comment.  Governmental Customers will also have the opportunity to submit comments in accordance with SAPA procedures. 

 

“Under the LTAs, the Authority also develops the Variable Costs (i.e. fuel and purchased-power expense, risk management, NYISO ancillary services and O&M reserve, less a credit for NYISO revenues from Governmental Customer-dedicated generation), which are subject to the Governmental Customers’ review and comment.  The Variable Costs includable in the 2007 rates, which are determined in accordance with the methods and procedures set forth in the LTAs previously approved by the Trustees, are not a matter for Trustee approval.  For 2007, the Governmental Customers have selected an ‘Energy Charge Adjustment (‘ECA’) with Hedging’ cost recovery mechanism under which all Variable Costs are passed on to the Governmental Customers.  Since an ECA mechanism was selected, Authority invoices will include an addition or subtraction each month that reflects changes in the cost of energy as described in the LTAs.  Staff will incorporate the Trustee-approved Fixed Costs, the Variable Costs determined under the LTAs’ rate-setting process and the ECA set forth in the LTAs, into new tariffs effective for 2007 billings. 

 

“All of the Governmental Customers would be subject to this proposed increase in the Fixed Costs component of their production rates.  This proposed action does not affect Westchester County and other local governmental entities in the County, which are the subject of a separate Trustee action.

DISCUSSION

               

“A proposed increase in Fixed Costs was presented to the Governmental Customers on May 15, 2006, for their review and comment.  As part of the rate-setting process set forth in the LTAs, Authority staff provided its pro forma 2007 COS, 2007 revenue projections (at current  rates), a comparison with pro forma 2006 costs and revenues and the cost of different risk management and cost-recovery options affecting Variable Costs that are not part of this proposed rate action.

 

“Based upon the projected 2007 COS, a Fixed Costs increase of $12.2 million is proposed for the Governmental Customers.  This proposed action would increase the Governmental Customers’ estimated billed production revenues by 1.8% on average as compared to 2006 rates.  Collectively, the Fixed Costs are projected to be $153.2 million in 2007 versus $141.0 million in 2006.  Contributors to the increase are: Debt Service, $4.5 million; Other, $3.1 million; Shared Services, $2.6 million; O&M, $1.9 million; and credit offsets bring the net total to $12.2 million. Staff proposes to apply this increase equally to both the demand and energy rates.

 

“Because this proposal would increase revenues to the Authority by less than the 2.0% required for a public forum under Authority procedures, none is requested for this proposed action.  Advanced notice and comment procedures under the LTAs concerning changes to Fixed Costs were followed, and interested parties will have opportunity to file comments in accordance with SAPA after the issuance of this NOPR in the State Register.              

 

“Staff anticipates returning to the Trustees at their December meeting with a request for final adoption of a Fixed Costs increase with an analysis of any comments received from interested parties.  Subsequent to such final adoption, staff will incorporate the approved Fixed Costs, the final Variable Costs that are determined in the rate-setting process with the Governmental Customers and the ECA set forth in the LTAs into new tariff rates to become effective in January 2007. 

 

FISCAL INFOMATION

 

“The adoption of this proposal concerning the increase in Fixed Costs applicable to the Governmental Customers under the LTAs would result in the recovery of approximately $12.2 million in additional revenues to the Authority over current rates.  These new revenues are offset by corresponding increases in the costs of serving the Governmental Customers.

 

RECOMMENDATION

 

“The Manager – Power Contracts, Wholesale and Electric Systems Marketing recommends that the Trustees authorized the Corporate Secretary to file a Notice of Proposed Rule Making in the New York State Register for the adoption of an increase in Fixed Costs applicable to the New York City Governmental Customers under the Long-Term Agreements.

 

“It is also recommended that the Senior Vice President – Marketing and Economic Development, or her designee, be authorized to issue written notice of proposed action to the affected customers.

 

“The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Vice President – Controller, the Vice President – Major Accounts Marketing and Economic Development, the Vice President – Finance, the Assistant General Counsel – Power and Transmission and I concur in the recommendation.”

 

                Mr. Yates presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman McCullough, Mr. Yates said that the adoption of these rates would come before the Trustees for their approval at the December meeting.

 

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

 

RESOLVED, That the Authority projects an increase in the Fixed Costs of serving the New York City Governmental Customers when comparing those costs contained in current rates to 2007 projected costs; and be it further

 

RESOLVED, That the Authority has entered into supplemental Long-Term Agreements with the New York City Governmental Customers and those agreements provide for the recovery of additional Fixed Costs through a rate filing under the State Administrative Procedure Act; and be it further

 

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

 

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

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

9.          Modification of Westchester County Governmental Customer Rates – Notice of Proposed Rule Making

 

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 production rates to be charged in 2007 to the Westchester County Governmental Customers (‘Westchester Customers’ or ‘Customers’) and to reinstitute a monthly Energy Charge Adjustment (‘ECA’) mechanism applicable to the Westchester Customers.  This action is necessary in the event that ongoing discussions with the Westchester Customers regarding a new long-term agreement are not concluded by January 1, 2007.

 

“Under staff’s proposal, the production rates of the Westchester Customers would increase by 25.8% on average as compared to 2006 rates.  With respect to the ECA, staff proposes a revised tariff provision that would update the ECA mechanism approved by the Trustees in 1994 that currently resides in the tariff.

 

“The Trustees are requested to authorize the Corporate Secretary to publish a NOPR in the New York State Register in accordance with the requirements of the State Administrative Procedures Act (‘SAPA’).  Since the proposed new rates will increase Customer revenues to the Authority by more than 2%, a public forum will be held in accordance with Authority policy, and Trustee authorization is also requested to direct the Corporate Secretary to provide all appropriate notice for such public forum. 

 

BACKGROUND

 

“In 1994, the Authority’s Trustees adopted tariff modifications, still in effect today, that instituted a ‘Stabilized ECA,’ which allowed the Authority to pass through to Customers only the costs of demand side management programs and decontamination and decommissioning (‘D&D’) charges related to the Indian Point 3 nuclear plant.  The Trustees took this action in order to mitigate the impact on Customers of the ongoing, extended outage of the Indian Point 3 nuclear plant.

 

“By 1996, the majority of Westchester Customers had signed Supplemental Power Service Agreements with the Authority (‘Supplemental Agreements’), and the County of Westchester signed an additional Supplemental Agreement in 2001.  These Supplemental Agreements contained, among other things, commitments from the Customers to remain full-requirements electricity customers of the Authority for certain fixed terms, in return for which the Authority agreed to constrain its ability to raise production rates from those established in 1990.  The Supplemental Agreements also affirmed the ‘Stabilized ECA’ adopted in the 1994 tariff modification.

 

“Under the Supplemental Agreements, the Westchester Customers realized rates frozen at 1990 levels for 10 years.  Then, in both January 2005 and January 2006, as permitted by the Supplemental Agreements, the Authority increased production rates by 2.4% based on a prescribed index.  These pricing arrangements essentially insulated the Westchester Customers from the significant increases in costs the Authority has experienced in serving them over the last several years.  The Supplemental Agreements could no longer accommodate additional costs and volatility resulting from industry restructuring and changes in the Authority’s supply portfolio.  Therefore, the Authority gave the Customers the requisite three-year notice of termination of the Supplemental Agreements, to be effective at the end of 2006, with the intent that rates in 2007 would fully recover the actual costs to supply electricity to these Customers.

 

“In March 2006, in anticipation of these changes, staff advised the Westchester Customers of the likelihood of a substantial increase in their electricity costs and a fundamental change to their pricing structure beginning in January 2007. 

 

 

 

DISCUSSION

 

“Because the production rates for the Westchester Customers remained unchanged from February 1990 through the end of December 2004, with only modest increases in 2005 and 2006, a significant increase in the base rates is needed to recover the Authority’s actual costs of serving the Customers. 

 

“Consistent with the Authority’s past rate-making practices, the proposed increase is based on a pro forma Cost-Of-Service (‘COS’).  The pro forma 2007 COS for the Westchester Customers, which is summarized in Exhibit ‘9-A,’ is $44.4 million and revenues at current production rates are expected to be $35.3 million, resulting in a projected revenue deficiency of $9.1 million.  Significant cost components that drive this proposed increase include the cost of purchased power, the cumulative effects of inflation since 1990 and charges associated with the New York Independent System Operator (‘NYISO’). 

 

“The new base production rates proposed would result in a 25.8% increase over 2006 rates.  Staff proposes to apply the production increase equally to both the base demand and energy rates.  Both the current and proposed new rates are contained in the table in Exhibit ‘9-B.’  Since the new rates will increase Customer revenues by more than 2%, a public forum will be held in accordance with Authority policy.

               

“In order for the Authority to recover all costs incurred to serve the Westchester Customers, staff proposes to reinstitute a monthly ECA mechanism, replacing the tariff modifications approved by the Trustees in 1994.  Under this proposed ECA mechanism, Authority invoices to the Westchester Customers will include a charge or credit each month that reflects the difference between the projected  cost of electricity recovered by the base rates and the actual costs incurred by the Authority for, among other things, purchased power and NYISO charges.  Exhibit ‘9-C’ contains the existing tariff provision marked up to show the proposed changes required to implement this updated ECA mechanism.

 

“After the 45-day statutory comment period concerning this proposed action, Authority staff will address any concerns that have been raised and return to the Trustees at their December 2006 meeting to seek adoption of this proposal.  Subsequent to such adoption, staff will incorporate the approved production rates and a new ECA mechanism into new tariffs to become effective in January 2007. 

 

“It is important to note that staff has been engaged in an ongoing discussion with the Westchester Customers regarding terms of a suitable new agreement that would include provisions and pricing reflecting the additional costs and risks of supplying these Customers.  If such an agreement is reached, staff will return to the Trustees under a separate memorandum to request authorization to execute the new agreement with the Westchester Customers.  In the event a new agreement is not concluded by January 1, 2007, or if certain Westchester Customers opt to not sign the new agreement, it is necessary to proceed with this proposed action so that new production rates will be in effect by January 1, 2007 that will be applicable to any and all Westchester Customers that have not executed a new agreement.

 

FISCAL INFORMATION

 

“The proposed rate increase is expected to collect $9.1 million in additional production revenue from the Westchester Customers through the end of 2007.

 

RECOMMENDATION

 

“The Manager – Power Contracts, Wholesale and Electric Systems Marketing recommends that the Trustees authorize the Corporate Secretary to file a Notice of Proposed Rule Making in the New York State Register for the adoption of a production rate increase and the reinstitution of an updated Energy Charge Adjustment applicable to the Westchester County Governmental Customers, and because the proposed new rates will increase Authority revenues by more than 2%, be authorized to schedule, and issue appropriate notices for, a public forum on this proposed action.

 

“It is also recommended that the Senior Vice President – Marketing and Economic Development, or her designee, be authorized to issue written notice of the proposed action to the affected customers under the provisions of the Authority’s tariffs.

 

“The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President of Marketing and Economic Development, the Vice President – Controller, the Vice President – Major Accounts Marketing and Economic Development, the Vice President – Finance, the Assistant General Counsel – Power and Transmission and I concur in the recommendation.”

 

                Before Mr. Yates presented the highlights of staff’s recommendations to the Trustees, Chairman McCullough introduced Mr. Edward Gibbs, Executive Director of the County of Westchester Public Utility Service Agency.  In response to a question from Trustee Seymour, President Carey said that the recommended increase was necessary to cover the Authority’s cost of providing electric service to these customers.

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

 

RESOLVED, That the Authority proposes an increase in the production rates and reinstitution of an updated Energy Charge Adjustment mechanism applicable to the Westchester County Governmental Customers as set forth in the foregoing report from the President and Chief Executive Officer; and be it further

 

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

 

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

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, authorized to schedule and provide all appropriate public notice of a public forum for the purpose of obtaining the views of interested persons concerning the Authority’s proposed action to adjust the rates for the Westchester County Governmental Customers; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel. 


 

10.          Budget Information Pursuant to Section 2801 of the Public Authorities Law

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to authorize the Corporate Secretary to submit budget information to the Governor and legislative leaders pursuant to Section 2801 of the Public Authorities Law, as amended by the Public Authorities Accountability Act of 2005.

 

BACKGROUND

 

“On January 15, 2006, Governor Pataki signed the Public Authorities Accountability Act of 2005 (Chapter 766 of the Laws of 2005).  The Public Authorities Accountability Act of 2005 (‘PAAA’ or ‘Act’) reflects the State’s commitment to maintaining public confidence in public authorities by ensuring that the essential governance principles of accountability, transparency and integrity are followed at all times.  To facilitate these objectives, the PAAA established an Authority Budget Office (‘ABO’) that will monitor and evaluate the compliance of State authorities with the requirements of the Act.  The ABO has advised the Authority that it is subject to the PAAA effective with the Authority’s fiscal year beginning January 1, 2006.  As one of its many changes, the PAAA amended Section 2801 of the Public Authorities Law to require that budget reports by a State authority be submitted to designated governmental officials 90 days, rather than 60 days, before the start of the Authority’s fiscal year.

 

DISCUSSION

 

“The Trustees are requested to authorize the Corporate Secretary to file the attached budget information (Exhibit ‘10-A’) pursuant to Section 2801 (1) of the Public Authorities Law, which provides as follows:

 

State authorities.  Every state authority or commission heretofore or hereafter continued or created by this chapter or any other chapter of the laws of the State of New York shall submit to the governor, chairman and ranking minority member of the senate finance committee, and chairman and ranking minority member of the assembly ways and means committee, for their information, annually not less than ninety days before the commencement of its fiscal year, in the form submitted to its members or trustees, budget information on operations and capital construction setting forth the estimated receipts and expenditures for the next fiscal year and the current fiscal year, and the actual receipts and expenditures for the last completed fiscal year.

 

“As provided in Executive Order No. 173 (Exhibit ‘10-B’), this information will also be submitted to the State Division of the Budget.

 

FISCAL INFORMATION

 

“There is no anticipated fiscal impact.

 

RECOMMENDATION

 

“The Vice President – Controller recommends that the Trustees authorize submittal of the attached budget information (Exhibit ‘10-A’) as discussed herein.

 

“The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and I concur in this recommendation.”

 

                Mr. Davis presented the highlights of staff’s recommendations to the Trustees, adding that at their October meeting, the Trustees would be asked to approve the Authority’s proposed 2007 budget and multiyear financial plan.  In response to a question from Chairman McCullough, Mr. Davis said that the financial plan, after it is approved, is still subject to change.  Responding to a question from Trustee Cusack, Mr. Davis said that the Public Authorities Accountability Act of 2005 (“PAAA”) had simply moved up by 30 days the requisite filing of the budget information called for by Section 2801 of the Public Authorities Law.  Mr. Kelly added that this change was part of the effort to improve public authority transparency as envisioned by the PAAA.

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

 

RESOLVED, That pursuant to Section 2801 of the Public Authorities Law, the Corporate Secretary be, and hereby is, authorized to submit to the Governor, the Chairman and Ranking Minority Member of the Senate Finance Committee, the Chairman and Ranking Minority Member of the Assembly Ways and Means Committee, the Division of the Budget and the Authority Budget Office the attached budget information on operations and capital construction setting forth the estimated receipts and expenditures for the next fiscal year and the current fiscal year, and the actual receipts and expenditures for the last completed fiscal year in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

11.          Banking Resolution Amendment to Reflect Change of Position Title to Executive Vice President and Chief Financial Officer 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to approve the attached Resolution (‘Resolution’) which amends the Banking Resolution adopted by the Trustees on July 27, 2004, to reflect the change in title from Senior Vice President and Chief Financial Officer to Executive Vice President and Chief Financial Officer.

 

BACKGROUND

 

“The Banking Resolution adopted by the Trustees on July 27, 2004 establishes procedures and specifies those individuals by title who may, among other things, establish bank accounts, sign checks, invest Authority funds and execute agreements and other documents on behalf of the Authority, as well as establishes who may authorize other individuals within the Authority to sign checks, deposit money and transfer and invest funds on behalf of the Authority.

 

“The proposed amendments would reflect the position title change of the Senior Vice President and Chief Financial Officer to Executive Vice President and Chief Financial Officer and would transfer functions previously assigned to the former title to the new title.

 

“The proposed Resolution has been reviewed by and meets with the approval of the Authority’s Vice President – Controller and its Vice President – Internal Audits and Compliance.

 

FISCAL INFORMATION

 

“There is no anticipated fiscal impact.

 

RECOMMENDATION

 

“The Treasurer recommends that the Trustees approve the attached proposed Resolution. 

 

“The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Vice President – Finance and I concur in the recommendation.”

 

                Mr. Brady presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman McCullough, Mr. Brady said that this was a housekeeping item.

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

 

RESOLVED, That the resolution adopted by the Trustees at their meeting of July 27, 2004 relating to the Management of Authority Banking Relationships is hereby amended in its entirety to read as follows (added material in italics; deleted material in brackets):

 

RESOLVED, That the following authorizations are established with respect to the national or state banks (hereinafter referred to individually as the “Bank”) or trust companies organized under the laws of any state (hereinafter referred to individually as the “Trust Company”) that may be designated as a depository of the Authority and the execution of account-related agreements or documents on behalf of the Authority:

 

1.       The establishment, maintenance or closing of bank accounts, including depository and custody accounts, for and in the name of the Authority with any Bank or Trust Company shall be authorized by the Vice President – Finance, the Treasurer or the Deputy Treasurer with concurrence by one of the following: the Chairman, the President and Chief Executive Officer or the [Senior] Executive Vice President and Chief Financial Officer;

 

2.       The [Senior] Executive Vice President and Chief Financial Officer, the Vice President – Finance, the Treasurer and the Deputy Treasurer, or such other individual(s) as may be designated by the Treasurer with the concurrence of the [Senior] Executive Vice President and Chief Financial Officer, are hereby authorized to: (i) sign checks, drafts and other items for withdrawal or deposit of monies for and on behalf of the Authority, and (ii) initiate the transfer of monies by wire or otherwise for the payment or withdrawal of funds, for and on behalf of the Authority;

 

3.       The [Senior] Executive Vice President and Chief Financial Officer, the Vice President – Finance and the Treasurer are hereby authorized to sign checks with a facsimile signature for the withdrawal of monies from Authority accounts;

 

4.       The [Senior] Executive Vice President and Chief Financial Officer, the Vice President – Finance,  the Treasurer and the Deputy Treasurer or such other individuals as may be designated by the Treasurer, are authorized to invest and reinvest monies in the account for, and on behalf of, the Authority; and

 

5.       Execution of agreements, certificates, indemnities and other documents related to conducting business with the Bank or Trust Company may be authorized by the Vice President – Finance, the Treasurer or Deputy Treasurer with the concurrence of one of the following: the Chairman, the President and Chief Executive Officer, or the [Senior] Executive Vice President and Chief Financial Officer; and it be further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

12.          Authority Billing Systems Implementation –  Systems Integration Services – Contract Award

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to approve capital expenditures for, and award of a contract to, Axon Solutions, Inc. (‘Axon’) in the amount of $11,500,000 for system integration services in connection with the replacement of the Authority’s multiple billing systems.  These systems are antiquated and no longer meet the current demands of the Authority’s business requirements.

 

“The Trustees approved the necessary Capital Expenditure Authorization Request (‘CEAR’) for total project funding in the amount of $18,745,000 at their July 25, 2006 meeting.   The total approved CEAR includes the allocation for the above system integration services.

 

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 purchase contracts in excess of $3,000,000, as well as personal services contracts in excess of $1,000,000 if low bidder, or $500,000 if sole source or non-low bidder, require the Trustees’ approval.

 

“The Authority’s current billing systems were custom developed in the mid-1980s.  These systems are mainframe-based, written in a programming language that is no longer widely used and use an outdated database structure.  The two major systems, governmental and wholesale billing, are separate computer applications with separate databases and separate programming processes.  The size and complexity of these systems make programming changes difficult and time consuming.  Difficulties with keeping the billing systems operational while responding to change have forced staff to work around the system at times.  Numerous external systems have been developed over the past five years to meet new requirements, rather than attempt to change the core billing systems.

 

“The billing systems run on a leased mainframe provided by the New York State Office for Technology in Albany.  The leased services cost the Authority more than $800,000 annually. The application support staff who maintain the applications are part of the Authority’s Information Technology team.

 

DISCUSSION

 

“In late 2004, a cross-functional team was assembled to evaluate alternatives to the current billing system environment.  This team developed a list of necessary requirements based on a series of interdepartmental meetings.  The team then reviewed software alternatives available in the marketplace.  Systems used by other utilities were also assessed.  A Request for Proposals (‘RFP’) was developed and submitted to the leading software vendors.  Their responses led to a short list and the short-listed vendors were brought in to demonstrate their solutions and their products’ ability to meet the Authority’s business requirements.  In the fall of 2005, the team selected a suite of modules from SAP America, which will now be added to the Authority’s existing SAP R/3 environment.

 

“The SAP billing and customer information modules represent world-class functionality.  Additionally, expansion of the Authority’s current SAP environment to include SAP billing and customer information will eliminate a number of existing interfaces and problem areas.

 

“Based on the size and complexity of an implementation of this type, it was decided that the Authority would require the use of a consultant system integrator (‘SI’).  An RFP was developed and issued in the fall of 2005 to locate a vendor to act as SI on the Authority’s behalf.  Four vendors responded to the RFP, as follows:

 

1.        Accenture

2.        Axon Solutions, Inc. (‘Axon’)

3.        IBM Global Business Services (‘IBM’)

4.        Sapient

 

“Detailed evaluations of the four proposals were conducted by the Authority’s evaluation team.  Candidate responses were assessed and a numerical score was assigned to each vendor in each of the following major categories:

 

·         Proposal Quality and Compliance

·         Reasonableness of Budget (Cost)

·         Methodology and Work Plan, Project Management

·         Respondent Qualifications   

 

“All four vendors were then invited to the Authority’s offices to present their proposals and key personnel to the evaluation team over a two-day period.  Sapient decided to withdraw from the process prior to presentation.  The remaining bidders, Accenture, Axon and IBM, were subjected to a rigorous evaluation of their teams and qualifications.  The evaluation focused on each vendor’s project approach, work plan and methodology, as well as the experience of their proposed key personnel.  Additional criteria such as adherence to their proposal and responsiveness to questions were also considered.  The Authority allowed all three bidders to revise their cost proposals and assumptions based on these detailed discussions with Authority staff.

 

“After receiving the revised bids, the evaluation team assessed the total staffing requirements (both internal and external), and proposed project duration submitted by the respondents in order to ‘normalize’ the total cost of the proposals.

 

“The following table represents the final results of the evaluation team’s scoring and the bidders’ cost proposals*:

 

 

Axon

IBM

Accenture

Total Score

75

74

64

Total Cost (000s)

$9,966

$11,725

$16,967

 

“The evaluation team is satisfied that all three vendors are technically qualified to perform the required services.  Therefore, based on the team’s scoring and the respondents’ total cost proposals, the team recommends the award of a contract to the lowest-cost qualified bidder, Axon Solutions, Inc.

 

FISCAL INFORMATION

 

“Payments will be made from the Capital Fund. 

 

RECOMMENDATION

 

“The Chief Information Officer – Information Technology recommends that the Trustees approve the capital expenditure for the award of a contract to Axon Solutions, Inc. at a contract value of $11,500,000 for system integration services to assist the Authority with the implementation of a new billing system. 

 

“The Executive Vice President and General Counsel, the Executive Vice President  – Corporate Services and Administration, the Executive Vice President and Chief Financial Officer and I concur in the recommendation.”

 

 

 

                Mr. Eccleston presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman McCullough, Mr. Eccleston said that the Trustees had already authorized the expenditure of these funds at their July meeting and that with this item they were approving the contract itself.  Responding to questions from Chairman McCullough and Trustee Cusack, Mr. Eccleston said that the contract amount of $11.50 million (compared to the contractor’s bid amount of $9.97 million) includes a contingency amount, and that even with the contingency amount included, the contractor had the lowest-priced bid.  In response to a second question from Chairman McCullough, President Carey said that it would be up to project management staff to keep contract costs under control.  Responding to a second question from Trustee Cusack, Mr. Eccleston said that the contractor is based in the United Kingdom, but also has an office in New Jersey.

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, the award and funding of a multiyear procurement contract to Axon Solutions, Inc., to serve as the system integrator for the Authority’s new billing system be, and hereby is, approved as recommended in the foregoing report of the President and Chief Executive Officer, in the amount indicated below:

                                                    Contract               Projected

Contract Award                        Amount              Completion

 

Axon Solutions, Inc.            $11,500,000          04/30/2008

 

AND BE IT FURTHER RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

13.          Petroleum Overcharge Restitution Funds – Transfer of Funds to the State of New York and Authorization of Programs 

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to authorize the transfer of up to $700,000 to the State of New York (‘State’) in exchange for an equal amount in Petroleum Overcharge Restitution (‘POCR’) funds from the State, upon execution of an agreement between the State and the Authority concerning such transfer. 

 

“The Trustees are also requested to authorize the Senior Vice President – Energy Services and Technology to develop and implement the various programs using POCR funds authorized by the 2006 legislation discussed below. 

 

BACKGROUND

 “On June 22, 2006, Governor Pataki approved the 2006 Budget Bill as Chapter 55 of the Laws of 2006 (‘Chapter 55’) (Exhibit ‘13-A’).  Sections 2 and 3 of this legislation reflect an understanding between the Authority and the State that the Authority will transfer $700,000 to the State and that the State will transfer to the Authority a like amount constituting monies appropriated to the statewide energy improvement account (i.e., POCR monies).  The monies will be used by the Authority as specified in Sections 4-6 of Chapter 55.

 

“Section 4 of this legislation authorizes the Authority to use $233,333 in POCR funds for existing programs of the Authority that are eligible under federal guidelines for the use of such funds.

 

“Section 5 authorizes the Authority to use $233,333 in POCR funds to implement energy services projects.  Section 6 authorizes the Authority to use $233,333 in POCR funds to implement energy projects that are eligible under POCR guidelines, including, but not limited to, energy conservation, energy efficiency, weatherization, alternative fuels, other non-electric energy projects, flexible technical assistance, technology transfer and/or renewable or innovative energy projects.  Under Sections 5 and 6, the Authority may supplement the POCR funds with any or all monies available from the Authority’s Energy Services Program to implement projects.

 

“At their meeting of January 30, 1996, the Trustees approved five POCR-funded programs: a Solar Electric Grant Program, an MTA Hybrid Bus Program, a Pilot Coal Conversion Program, an Independent College and University Energy Assistance Loan Program and a High Efficiency Lighting Program (‘HELP’) Revolving Loan Program.

 

“At their meetings of December 17, 1996 and December 16, 1997, the Trustees approved the continuation of these programs and several new POCR-funded grant initiatives, including a statewide energy efficiency program for primary and secondary public schools and public facilities and the reinstatement of the furnace and boiler demonstration program established by Section 21 of Chapter 598 of the Laws of 1993.

 

“At their meeting of December 15, 1998, the Trustees approved the continuation of: (a) the independent college and university energy assistance loan program (b) the HELP programs and (c) several new POCR-funded grant initiatives, including energy efficiency improvements in public facilities.

 

“At their meeting of December 14, 1999, the Trustees approved various energy-related programs established by Sections 1-9 of Chapter 413 of the Laws of 1999.

 

“At their meetings of December 20, 2000 and September 17, 2002, the Trustees approved the continuation of various energy-related programs established by Sections 1-8 of Chapter 61 of the Laws of 2000 and Sections 1-9 of Chapter 84 of the Laws of 2002.

                               

 

DISCUSSION

 

“Before the State can disburse POCR funds, the Authority is required to develop the various energy-related programs that would use them.  With the assistance of the New York State Energy Research and Development Authority (‘NYSERDA’), the Authority must apply to the U.S. Department of Energy (‘U.S. DOE’) for program approval.  POCR funds cannot be used for purposes or programs that U.S. DOE does not approve.

               

“Judicial decisions and federal regulations that apply to POCR funds (both principal and interest) require that they cannot be used for general Authority purposes and must ultimately be used for consumer restitution through energy-related programs.  Any interest earned on the POCR funds can only be used for approved POCR programs and for administration of such programs.

 

“If approved by the Trustees, payment by the Authority of the $700,000 in funds matching the POCR funds identified in Chapter 55 would be reasonable and consistent with the Authority’s mission and statute.

 

“The POCR funds the Authority receives as part of its understanding with the State will be used for energy efficiency projects throughout the State.  Accordingly, the Trustees are also requested to authorize the Senior Vice President – Energy Services and Technology to develop and implement the various programs using POCR funds authorized by the 2006 legislation.

 

FISCAL INFORMATION

 

“The funds to be paid to the State, as described above, will be disbursed from the Operating Fund, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1) (a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.

 

RECOMMENDATION

“The Senior Vice President – Energy Services and Technology recommends that the Trustees authorize payment to the State of New York for the purposes, and under the conditions, described above, and that the Trustees authorize the implementation of Petroleum Overcharge Restitution programs as described above.

 

“The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Power Generation, the Senior Vice President – Public and Governmental Affairs and I concur in the recommendation.”

 

                Mr. Esposito presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Cusack, Mr. Esposito said that this is a housekeeping item.  Chairman McCullough added that the item does have a fiscal impact.

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

 

RESOLVED, That the payment to the State of New York of up to $700,000 for the purpose described in the foregoing report of the President and Chief Executive Officer is hereby authorized, contingent on execution of an agreement between the Authority and the State relating to such payment, and that the Chairman, the President and Chief Executive Officer, the Treasurer or such other officer designated by the President and Chief Executive Officer, are, and each hereby is, authorized to execute such agreement with the State having such terms and conditions as such officer deems necessary or desirable, subject to the approval of the form thereof  by the Executive Vice President and General Counsel; and be it further

 

RESOLVED, That it is hereby authorized that up to $700,000 of the Operating Fund monies be withdrawn from such Fund and used for making the payment specified in the foregoing report of the President and Chief Executive Officer, provided, however, that such withdrawal be conditioned on a certification by the Executive Vice President and Chief Financial Officer, the Vice President – Finance, the Treasurer or Deputy Treasurer that such amounts to be withdrawn from the Operating Fund are not then required for any of the purposes specified in Paragraphs (a)-(c) of Section 503 (1) of the General Resolution Authorizing Revenue Obligations adopted on February 24, 1998, as supplemented; and be it further

RESOLVED, That the Senior Vice President – Energy Services and Technology is hereby authorized to develop and implement the various programs using Petroleum Overcharge Restitution funds authorized by the 2006 legislation discussed in the foregoing report of the President and Chief Executive Officer,  including the use of such funds to finance programs under the Authority’s Energy Services Program, provided that such programs shall be implemented only upon approval by the U.S. Department of Energy and by any other agency or court having jurisdiction over such programs; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 
 
 
POCR PROVISIONS OF CHAPTER 55 OF THE LAWS OF 2006

 

Section 1. Funds appropriated from the statewide energy improvement account, special revenue fund – other, for services and expenses of the power authority of the state of New York, shall be available for implementation of restitutionary programs. The use of these funds is not intended to limit the right or obligation of the power authority of the state of New York to comply with the provisions of any contract, including any existing contract with or for the benefit of the holders of any obligations of the power authority.

 

§ 2. The power authority of the state of New York shall transfer $700,000 to New York State on or before March 31, 2007.

 

§ 3. Notwithstanding section 1010-a of the public authorities law, the comptroller is hereby authorized and directed to transfer to the power authority of the state of New York $700,000, constituting monies appropriated to the statewide energy improvement account for the power authority of the state of New York pursuant to a chapter 55 of the laws of 2006 and the power authority of the state of New York is authorized to hold such monies for the purposes specified in a chapter of the laws of 2006.

 

§ 4. The power authority of the state of New York is authorized to use $233,333 in petroleum overcharge restitution funds made available to the authority in fiscal year beginning April 1, 2006 for programs of the power authority of the state of New York which are eligible under federal guidelines governing petroleum overcharge restitution funds; and which also may include a sub-allocation to the energy research and development authority or other public authority or public benefit corporation for energy conservation purposes.

 

§ 5. The power authority of the state of New York is authorized to use $233,333.33 in petroleum overcharge restitution funds made available to the authority in fiscal year beginning April 1, 2006 to implement energy service projects. The authority may supplement these funds with any or all monies available from the Power Authority’s Energy Service Program to implement projects.

 

§ 6. The power authority of the state of New York is authorized to use $233,333.34 in petroleum overcharge restitution funds made available to the authority in fiscal year beginning April 1, 2006 to implement energy projects, which are eligible under federal guidelines governing petroleum overcharge restitution funds and which include, but are not limited to, energy conservation, energy efficiency, weatherization, alternative fuels, other non-electric energy projects, flexible technical assistance, technology transfer and/or renewable or innovative energy projects. The authority may supplement these funds with any or all monies available from the Power Authority’s Energy Service Program to implement projects.

 

§ 7. This act shall take effect April 1, 2006 shall take effect immediately and shall be deemed to have been in full force and effect on and after April 1, 2006.

 


 

14.          Approval and Funding of the Hydro Power-to-Hydrogen Initiative

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to authorize the hydro power-to-hydrogen initiative to be implemented in the Buffalo/Niagara region and expenditures of up to $21 million for program financing.  To reduce overall program costs, staff will seek available co-funding from participating partners and federal, state and local grants.   

 

BACKGROUND

 

“In January 2006, Governor Pataki laid out an aggressive series of initiatives that would boost production and use of renewable fuels, and provide incentives for developing new, more efficient vehicles and ancillary technologies.  His goal and the Authority’s mission are to help spur energy research as well as economic growth in the Empire State.  These initiatives are aligned with the New York State Hydrogen Roadmap, a document jointly developed in 2005 among the Authority, the New York State Energy Research and Development Authority (‘NYSERDA’) and the Long Island Power Authority (‘LIPA’) that sets goals for expanded use of hydrogen fuel statewide.

 

“Hydrogen is considered to be the ultimate fuel for transportation because it is clean burning and can also be used directly in a fuel cell engine where the principal emission is chemically pure water.  Hydrogen fuel can be produced through a variety of processes, including electrolysis of water and steam reformation of natural gas.  Currently, most hydrogen fuel is produced by steam reformation.  Reforming natural gas, however, releases significant amounts of CO2, and because steam is required in this process, it also generates NOx and other emissions.  The use of renewable hydro power for electrolysis generates clean and renewable hydrogen.  The hydro power-to-hydrogen program has the potential to jumpstart a new high-tech hydrogen industry, reduce the state’s dependence on fossil fuels and improve local air quality.

 

“In early 2006, the Authority teamed up with the Electric Power Research Institute (‘EPRI’) of Palo Alto, California, to undertake an engineering feasibility study exploring the use of hydro power to produce hydrogen through electrolysis, and using this hydrogen for a fleet of vehicles to be operated in the Buffalo/Niagara region.  The long-term goal of the study is the design and eventual installation of hydrogen vehicle fueling stations that could be replicated at other locations in New York State, and to educate the public about the potential of hydrogen as a vehicle fuel and energy carrier.  When installed, the fueling stations will serve as a key infrastructure advance that could lead to future growth in economic development activities for the state.   

 

“Dedicating low-cost and renewable hydro power to a sizable electrolysis project in the Buffalo/Niagara region will both insure successful hydrogen fuel demonstration projects and attract companies to the region that are developing this technology.  The Buffalo/Niagara region is particularly suitable for the innovative hydrogen industry, given the region’s availability of a skilled workforce and state universities, and its proximity to inexpensive hydro power resources.  Locally produced hydrogen will power not only transportation and stationary fuel cells but will also help establish advanced technology parks in the area that can serve as business incubators and create new high-tech jobs for the region.

 

“This project, as envisioned, will be one of the largest hydrogen demonstration projects in the world, and will be capable of attracting support from a variety of private and public partners.  With the Authority supplying low-cost hydro power, it is likely that several project co-funding partners could be identified, including manufacturers, the U.S. Department of Energy (‘U.S. DOE’) and the U.S. Department of Transportation (‘U.S. DOT’).  General Electric (‘GE’) has already approached the Authority regarding a joint fuel cell bus development initiative.  Praxair, Shell, UTC, Natural Resources – Canada, NYSERDA and others have also expressed interest in supporting the program.  NYSERDA, with the support of the Authority, has discussed this initiative with U.S. DOE and U.S. DOT, exploring the possibility of multimillion-dollar federal co-funding.  U.S. DOE has also reacted positively to an initial inquiry from Governor Pataki with regard to co-funding and partnership.

 

DISCUSSION

Program Scope and Cost

“The proposed program scope involves two central hydrogen generation, storage and fueling facilities, each capable of producing approximately 120 kg of hydrogen per day, as well as a number of hydrogen-fueled transit buses and utility and passenger vehicles.  The hydrogen generation and fueling stations will together use up to 700 kW of hydro power and will be among the largest such projects in the world today. 

 

“The electrolysis, hydrogen storage and dispensing equipment for the fueling stations would require a capital investment of approximately $7.5 million.  This includes investments in infrastructure upgrades and educational displays.  Hydrogen-based fuel cell, fuel cell hybrid and internal combustion engine vehicles would require a capital investment of approximately $13.5 million.  The possibility of leasing, as well as purchasing, vehicles will be considered.  The overall project cost is estimated at $21 million, with the program scheduled to be fully implemented within a three-year period.  

 

“Subject to the Trustees’ approval, the Authority will design, permit and install the hydrogen generation and fueling stations through a competitive bid process.  No construction will take place until a State Environmental Quality Review Act determination has been completed by the Authority.  The competitive bid process will also be used to lease and/or procure hydrogen vehicles for use at these stations.  

 

Availability of Hydrogen Vehicles

 

“Today, all major domestic and foreign car and bus manufacturers are actively developing, testing and demonstrating fuel cells and hydrogen engines for the next generation of vehicles.  These activities assure the availability of vehicles for the hydro power-to-hydrogen initiative.  Some industry activities are listed below:

 

 

 

 

 

 

Potential Project Sites

 

“Presently, designated potential project sites are Niagara Falls State Park (‘NFSP’) and the Niagara Frontier Transportation Authority (‘NFTA’).  Both agencies have expressed interest in developing a hydrogen initiative with the Authority.  NFTA has also expressed interest in owning and operating both hydrogen fueling stations and hydrogen vehicles.

 

“NFSP serves more than six million visitors per year and operates a large number of compressed natural gas (‘CNG’) vehicles.  Its CNG fueling stations are also used by other state agencies.

 

“NFTA carries 94,000 people per day, operating 332 buses, 35 vans, 27 rail cars and four trolley buses.  NFTA is a recipient of Authority hydro power and is authorized by state law to receive such power and energy as the Authority determines to be available.  The approximately 700 kW of hydro power necessary for the hydrogen fueling stations may be available in late summer 2007.  Prior to that, the Trustees’ approval will be sought for a hydro power allocation to NFTA for the purposes of hydrogen production.

 

FISCAL INFORMATION

 

“Funding for this initiative will be provided from the Operating Fund.  The total cost of the program is not expected to exceed $21 million.  A portion of the costs may be recovered from the participating partners and through federal, state and local grants and co-funding.   

 

RECOMMENDATION

 

“The Senior Vice President – Energy Services and Technology recommends that the Trustees approve the hydro power-to-hydrogen program in the Buffalo/Niagara region and authorize up to $21 million for the program’s financing.

 

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Public and Governmental Affairs, the Senior Vice President – Power Generation and I concur in the recommendation.”

 

                Mr. Sliker presented the highlights of staff’s recommendations to the Trustees.  Chairman McCullough noted that a presentation had been made at the Strategic Planning Conference in January on the initiative now being brought before the Trustees.  President Carey said that former Chairman Seymour had been instrumental in pushing forward this initiative of Governor Pataki’s.  He said that Shell Oil is going to be working with General Motors (“GM”) and the City of White Plains to set up a hydrogen fueling station in White Plains and that there already is a fueling station in Albany.  President Carey said that at yesterday’s event at SUNY’s College of Environmental Science and Forestry (“SUNY ESF”) in Syracuse, SUNY ESF President Neil Murphy had said that a hydrogen fueling station was also going to be installed there, meaning that hydrogen-powered vehicles would be able to traverse the entire State once the fueling stations envisioned under this initiative have been built.  In response to a question from Trustee Cusack, President Carey said that the Authority’s leadership had certainly helped to expedite the progress of this technology and its infrastructure in the State.  He said that the hydrogen roadmap created in 2004 under the leadership of the New York State Energy Research and Development Authority (“NYSERDA”) was being read by entrepreneurs.  President Carey said that the New York State Thruway Authority was retrofitting its fueling stations to include hydrogen fuel in order to promote fuel diversification.  Responding to a question from Trustee Cusack, Mr. Sliker said that it is projected that the Niagara Falls State Park and Niagara Frontier Transportation Authority (“NFTA”) hydrogen fueling stations will be developed within the next 18 to 24 months.  Mr. Esposito said that NFTA is already receiving hydro power from the Authority.  Chairman McCullough said that this is a most worthwhile and appropriate Authority initiative.  He said that significant support from the private sector, including active investors, is already being seen.  President Carey said that GM, Honda and Plug Power are talking about developing a hydrogen-powered in-home unit that would be reversible so that in the event of a blackout, the home could be powered by the car.  He said that SUNY ESF’s President Murphy had talked about the potential for sending hydrogen-powered vehicles out to remote locations, where the car could be used to power up tools needed for work in these locations.  In response to a question from Chairman McCullough, Mr. Esposito said that the Authority would be seeking grants and co-funding support from NYSERDA, the U.S. Department of Energy and private companies.  Trustee Seymour said that this is the type of project the Authority should be undertaking, following Governor Pataki’s leadership.  He complimented Authority staff on their diligence in moving this initiative forward so quickly.

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

 

RESOLVED, That the Trustees hereby authorize the hydro power-to-hydrogen program encompassing the installation of two central hydrogen generation, storage and fueling facilities in the Buffalo/Niagara region, and the procurement and/or lease of a number of hydrogen  vehicles; and be it further

 

RESOLVED, That Operating Fund monies will be used to finance program costs in the amounts and for the purposes listed below:

 

                                                                             Expenditure

                                                                           Authorization

Operating Funds                                    (not to exceed)

 

Fueling stations, including

electrolysis, hydrogen storage

and dispensing equipment                     $7.5 million

 

Procurement and/or lease of

hydrogen vehicles                                $13.5 million

 

         TOTAL                                          $21.0 million

 

AND BE IT FURTHER RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

15.          Seymour-to-Greenwood Interconnection Project – Expenditure Authorization Request

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to authorize capital expenditures of $11.2 million for the Seymour-to-Greenwood Interconnection Project and to ratify funding previously approved by the President in the amount of $2.7 million.  The total project cost is $13.9 million.

 

BACKGROUND

 

“As a strategic initiative, Authority staff examined transmission opportunities in Southeastern New York that could provide economic and environmental benefits.  One such opportunity is the reconfiguration of the Seymour electrical connection.

 

“New York City has two electric transmission systems: a 345kV bulk power transmission system and a 138kV transmission system, which is essentially the same as the New York City 138kV Load Pocket and consists of two major sub-pockets.  One sub-pocket is the Astoria Load Pocket and the second is the Vernon-Greenwood-Staten Island Load Pocket.

 

“The Greenwood-Staten Island Load Pocket is a sub-pocket of the Vernon-Greenwood-Staten Island Load Pocket, where a minimum of 40% of the electrical requirements must be generated within the pocket during peak-load periods.  Currently, the Authority’s Pouch plant operates within this load pocket.  The Authority’s Seymour generating units interconnect just outside this load pocket.

 

“The Authority investigated reconfiguring the electrical connection of the Seymour Gas Turbines (‘GTs’), which produce 79.8 MW from their existing interconnection point in the Gowanus-Greenwood 138kV feeder, downstream of the Gowanus Phase Angle Regulator to reconnect the turbines directly into the Greenwood 138kV bus.  With this reconfiguration, the Seymour units would be connected directly into the Greenwood-Staten Island Load Pocket, thereby increasing the power supply to the Greenwood-Staten Island Load Pocket and providing increased revenues.

 

“As this change will not change the interconnection point electrically and the units will not be physically moved, the Authority was granted approval by the New York Independent System Operator to proceed with this change on the grounds that it did not constitute a ‘material change.’

 

DISCUSSION

 

“The new connection would include installing approximately 3,000 feet of cable that will run from the Seymour GTs to Con Edison’s Greenwood Substation on 24th Street.  The Greenwood Substation modifications, to be performed by Con Edison with the cost to be reimbursed by the Authority, will include installation of two new circuit breakers, two disconnect switches at each circuit breaker and a feeder disconnect switch to accommodate the new connection.  The Seymour Substation modifications would include installing a new circuit breaker and two new disconnect switches.  Relay and protection modifications will also be made at each site.  The Authority will obtain the necessary regulatory approvals for the work and Con Edison will obtain street opening permits from New York City.

 

“The estimated cost to construct the new interconnection is $13.9 million.  This cost estimate is based on Con Edison’s preliminary analysis regarding additions and modifications required at the Greenwood Substation to accommodate the incoming feeder, as well as the construction of the new underground 138kV feeder from the Seymour Substation to the Greenwood Substation.  The approved funding will provide for the design and engineering of the Seymour Substation expansion, the substation modifications at Con Edison’s Greenwood Substation, and the feeder routing and street construction; procurement of all necessary substation equipment for both Seymour and Greenwood Substations; installation of equipment at Seymour and Greenwood Substations; installation of underground interconnecting feeder and associated street construction; construction and engineering support; surveys; and Con Edison interface and support.

 

“In order to maintain the schedule, the President and Chief Executive Officer granted interim approval for expenditures in the amount of $2.7 million for the engineering and design contract and procurement of 138kV cable, disconnect switches, potential transformers and relay panels for the Seymour Plant, as well as all equipment to be supplied by Con Edison at the Greenwood Substation.

 

“A cost analysis was completed that demonstrated a cost recovery over a five-year time period as a result of additional revenues from this interconnection.

 

FISCAL INFORMATION

 

“Payment will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

“The Deputy General Counsel, the Vice President – Project Management, the Vice President – Procurement and Real Estate and the Vice President Engineering – Power Generation recommend that the Trustees authorize (1) $13.9 million for the construction of the Seymour-to-Greenwood Interconnection and (2) the Senior Vice President and Chief Engineer – Power Generation, or his designee, to negotiate and enter into construction and procurement contracts having such terms as deemed necessary or advisable in support of the construction of the 3,000-foot transmission connection between the Authority’s Seymour Plant and Con Edison’s Greenwood Substation and the associated substation modifications.

 

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Transmission, the Senior Vice President and Chief Engineer – Power Generation, the Vice President – Controller and I concur in the recommendation.”

 

                Ms. Mayadas-Dering presented the highlights of staff’s recommendations to the Trustees.  In response to questions from Chairman McCullough, Ms. Mayadas-Dering said that Authority staff is comfortable with the estimated construction costs, which had been developed by Con Edison and the Authority.

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts and the Expenditure Authorization Procedures adopted by the Authority, capital expenditures in the amount of $11.2 million are approved as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Trustees ratify funding previously approved by the President in the amount of $2.7 million in support of the Seymour to Greenwood Interconnection Project as shown below:

 

Previously Approved                             $ 2,700,000

Current Request                                  $11,200,000

TOTAL AMOUNT
AUTHORIZED                                      $13,900,000

 

AND BE IT FURTHER RESOLVED, That the Trustees authorize the Senior Vice President and Chief Engineer – Power Generation, or his designee, to negotiate and enter into construction and procurement contracts having such terms as deemed necessary or advisable in support of construction of the 3,000-foot transmission connection between the Authority’s Seymour Plant and Con Edison’s Greenwood Substation and associated substation modifications; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

16.          New York City Department of Environmental Protection East Delaware and Neversink
Hydroelectric Facilities – Operations and Maintenance Services – Award 

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to approve the award and funding of a multiyear contract with North American Energy Services (‘NAES’) to provide the management, operation, and maintenance services necessary for the operation and maintenance of the New York City Department of Environmental Protection’s East Delaware and Neversink Hydroelectric Facilities (cumulatively, the ‘Facilities’). The City of New York (‘City’), acting through its Department of Environmental Protection (‘NYC DEP’), will reimburse the Authority for all incurred costs on a monthly basis.

 

BACKGROUND

 

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require 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 purchase contracts in excess of $3,000,000, as well as personal services contracts in excess of $1,000,000 if low bidder, or $500,000 if sole source or non-low bidder, require Trustees’ approval.

 

“At a special meeting on February 9, 2005, the Trustees authorized the execution of new long-term supplemental electricity supply agreements (‘LTAs’) with the New York City Governmental Customers, substantially in the form as that executed with the City on March 18, 2005.  Article XV of this agreement provides that, subject to certain conditions, the Authority would operate the Facilities on behalf of the City.  The LTA is for a 12 year term and allows the City to terminate service from the Authority at any time on three years notice, and under certain limited conditions, on one year's notice, contingent upon notice and circumstances.

 

“Authority staff has completed negotiations of an operating agreement with the City.  The terms and conditions are satisfactory to the Authority, including (1) recovery by the Authority of its direct costs and administrative overheads associated with operating the two plants, (2) the use by the Authority (at its election) of outside firms for direct operation of the plants, (3) protocols for bidding the output of the plants into the marketplace, (4) disposition of the revenues from the sale of the output, and (5) limitation of the Authority’s liability to the City and to third parties, except where the Authority engages in willful misconduct.  In addition, the City agreed to reimburse the Authority for its costs incurred prior to executing the operating agreement.

 

“Also, on behalf of the City, the Authority will directly market the electricity, capacity, ancillary services and any other energy products produced by the two facilities for which a market exists, and credit the City with the net revenues.

 

DISCUSSION

 

“The Authority solicited bids in the New York State Contract Reporter for a third party to provide management, supervisory, engineering, operational, administrative, technical, and maintenance services and capital improvements for the two facilities.  One bid was received from North American Energy Services (‘NAES’).

 

“To date, NAES has successfully transitioned 61 different facilities to NAES operational responsibility.  The Authority currently has a contract with NAES for operations and maintenance support services for its six Small Clean Power Plants in New York City.  That contract was initially awarded in 2001 and has been extended twice to date.

 

“The first award term will be until June 30, 2008 with an option to extend for two additional years.  Based on the preliminary O&M budget estimate prepared by NAES, the Authority projects total costs to be $2.144 million during the first contract term.  An assumption of an October 1, 2006 award date has been made.

 

Transition Period Fee (est.)

 

Plant Setup Fees (est.)

 

O&M Fees

     For 20-month period from 10/1/06   

     through 6/30/08, based on

     NAES’ preliminary O&M budget

     estimate

 

Engineering Studies

 

Total

   $  106,000

 

148,000

 

1,631,667

 

 

 

 

 

      258,500

 

$2,144,167

 

“Several potential capital projects were identified based on both prior studies and site visits.  The deliverables from NAES for each of these studies would be a cost estimate for providing drawings and specifications and implementing the proposed capital work.  This cost estimate would then be submitted to NYC DEP for approval.  Upon NYC DEP approval, the Authority would then follow its Expenditure Authorization Procedures to fund implementation by NAES, with NYC DEP reimbursing the Authority for the costs it incurs.

 

“This contract contains provisions allowing the Authority to terminate services for the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.

 

“The City has reviewed the proposal submitted by NAES and concurs with the award.   Any award to NAES will be conditioned upon the Authority providing NAES with written notice that the Operating Agreement has been registered with the office of the Comptroller of the City of New York and that any further City requirements have been completed.

 

FISCAL INFORMATION

 

“Payments will be made from the Authority’s Operating Fund with reimbursement by the City of all direct costs and administrative overheads associated with operating the two plants.

 

RECOMMENDATION

 

“The Vice President – Project Management, the Vice President – Procurement and Real Estate and the Regional Manager – Central New York recommend that the Trustees authorize $2,144,167 million for the award of a contract to North American Energy Services to provide necessary management, operation and maintenance services for the New York City Department of Environmental Protection East Delaware and Neversink Hydroelectric Facilities.

 

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Power Generation, the Vice President – Controller and I concur in the recommendation.”

 

 

 

 

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts and the Expenditure Authorization Procedures adopted by the Authority, expenditures in the amount of $2,144,167 million are approved as recommended in the foregoing report of the President and Chief Executive Officer, in the amount and for the purposes listed below:

 

 

       O&M

 

Provide management,
operation and maintenance services of the NYC DEP East Delaware and Neversink Hydroelectric Facilities

Contract Approval

 

$2,144,167

 

AND BE IT FURTHER RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

17.          Revisions to the Regulations of the Authority Implementing the State Environmental Quality Review Act (21 NYCRR Part 461) 

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to approve certain revisions to the Authority’s regulations  implementing the State Environmental Quality Review Act (‘SEQRA’) and to authorize and direct the Corporate Secretary of the Authority (and/or her designees) to file a Notice of Adoption and Certification verifying such approval with the New York State Secretary of State for publication in the New York State Register and to make any and all other filings and take all steps necessary or appropriate therewith in accordance with the requirements of the State Administrative Procedures Act (‘SAPA’), the Executive Law and SEQRA so that such amendments may be published in the Official Compilation of Codes, Rules and Regulations of the State of New York (‘NYCRR’).

 

BACKGROUND

 

“SEQRA directs State agencies (a term that includes public authorities) to review their regulations, policies and procedures for the purpose of insuring conformity of the same with the ‘purpose and provisions’ of SEQRA (N.Y. Environmental Conservation Law, Section 8-109).  Various sections of SEQRA and the implementing regulations adopted by the New York State Department of Environmental Conservation (‘DEC’) make it clear that an agency may adopt its own ‘SEQRA regulations’ and that, once adopted, such agency-specific regulations will generally supersede the DEC regulations.

 

“Until 1985, the Authority relied on internal memoranda to guide its implementation of the requirements of SEQRA.  At their meeting of June 25, 1985, the Trustees approved the regulations appearing at 21 NYCRR Part 461 (the ‘Part 461 Regulations’), and the Authority has used them since that time to implement the requirements of SEQRA.  The Part 461 regulations have not been amended since they were originally adopted.  On March 28, 2006, the Trustees authorized the publication of a Notice of Proposed Rule Making (‘NOPR’) in the New York State Register in connection with the proposed adoption of certain amendments to the Part 461 regulations.  A copy of the NOPR, which includes the text of the proposed amendments, is attached hereto as Exhibit ‘17-A.’

 

“In accordance with the NOPR, a public hearing was held at the Authority’s New York City office on June 6, 2006, and the hearing record remained open until and through June 13, 2006.  No parties appeared at the hearing other than the hearing officer and the Authority’s Vice President – Environmental Management, both of whom made brief introductory and explanatory remarks for the record.  A comment was received on June 13, 2006 from New York State Assemblyman Ruben Diaz, Jr. and is attached hereto as Exhibit ‘17-B.’  Authority staff evaluated Assemblyman’s comment and prepared an Assessment of Public Comment pursuant to SAPA;  however, no changes to the proposed regulations were deemed necessary.  The Assessment of Public Comment is attached hereto as Exhibit ‘17-C.’

 

DISCUSSION

 

“Changes in law and circumstances make amendments to the Part 461 regulations appropriate at this time.  SEQRA has been amended on a number of occasions and several provisions and references appearing in the Part 461 regulations have become obsolete.  The Authority’s Environmental Division has carefully reviewed the list of Type II actions appearing in the Part 461 regulations (the ‘Type II List’) and elicited from all business units within the Authority suggestions regarding the updating of the same.  In order to reflect the changes in law and circumstances, as well as to satisfy the Authority’s desire to make certain convenient changes to the Type II List and to other aspects of the Part 461 regulations, the Environmental Division and the Law Department prepared a revised text of the Part 461 regulations.  Among other things, the revised text adds provisions for electronic filing via e-mail, updates definitions and corrects a number of cross-references. 

 

“The proposed regulations differ from those presented at the March 28, 2006 Trustee meeting only with respect to their effective date.   The proposed regulations would be effective upon the filing of a Certification with the New York State Department of State and publication of the Notice of Adoption in the State Register.

 

RECOMMENDATION

 

“The Vice President – Environmental Management recommends that the Trustees approve the adoption of the proposed revisions to the Part 461 regulations and authorize and direct the Corporate Secretary of the Authority (and/or her designees) to file Certification of such approval with the New York State Secretary of State for publication of the Notice of Adoption in the New York State Register and to make any and all other filings and take all steps necessary or appropriate therewith in accordance with the requirements of  the State Administrative Procedures Act, the Executive Law and the State Environmental Quality Review Act, so that the approved amendments may be published in the New York Compilation of Codes, Rules and Regulations.

 

“The Executive Vice President and General Counsel and I concur in the recommendation.”

 

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

 

RESOLVED, That the Authority be, and hereby is, designated “lead agency” for the purposes of conducting the review of the action described in the next succeeding paragraph called for and mandated by the State Environmental Quality Review Act and that, pursuant thereto, the Authority determines that such action will not have a significant effect on the environment and that an Environmental Impact Statement need not and will not be prepared in connection therewith; and be it further

 

RESOLVED, That the revisions to the regulations appearing at 21 NYCRR Part 461 as set forth in the Notice of Proposed Rule Making appearing in the New York State Register on April 19, 2006, be, and hereby are, approved; and be it further

 

RESOLVED, That the Corporate Secretary or her designees be, and hereby are, authorized to file Certification of such approval with the New York State Secretary of State, and a Notice of Adoption for publication in the New York State Register and to make any and all other filings and take all steps necessary or appropriate therewith in accordance with the requirements of the State Administrative Procedures Act, the Executive Law and the State Environmental Quality Review Act so that the approved amendments may be published in the Official Compilation of Codes, Rules and Regulations of the State of New Cork; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer, the Vice President –  Environmental Management and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things,  take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

18.          INFORMATIONAL ITEM: New York Power Authority’s Annual Strategic Plan

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are presented with the 2007-09 Strategic Plan as set forth in Exhibit ‘18-A’ attached hereto. 

 

BACKGROUND

 

“Article VII – Fiscal Management of the Authority By-Laws states in Section 2 – ‘Strategic Plan, that the Trustees shall annually review a strategic plan which shall become the basis for the development of departmental plans, the annual budget and the capital expenditure plan.’  As part of the Authority’s annual review and planning process, it was decided in 2005 to expand the content of the Strategic Plan to make clear and specific the Authority’s role and intentions as to Generation, Transmission, Economic Development, Energy Efficiency and New Technology so that all stakeholders have a clear understanding of the driving forces behind the Authority’s direction and decisions.

 

DISCUSSION

 

“This annual review of the overall Strategic Plan begins early each year with the Authority’s annual planning conference.  In preparation for the conference, a number of preliminary steps are taken to ensure that the agenda is structured so that those issues of most concern to both internal and external stakeholders are addressed.  The process begins with a series of one-on-one interviews with government and industry thought leaders, customer visionaries, Authority employees, stakeholders and business partners.  In addition, market data, industry press and academic material are reviewed.  Inputs from data and interviews generate an issue listing of topics that clearly articulate a fact-based hypothesis.  Whenever possible, employee teams prepare presentations that will generate open discussion at the planning conference and recommend speakers/participants.  At the strategic planning conference, Authority executives hear from a variety of issue leaders, proponents and influencers and debate issues and priorities.  As an output of the conference, action plans are developed with specific initiatives and assignments.  Recommendations based on these initiatives and assignments and/or initiative/assignment updates are then presented throughout the year at monthly Executive Management Committee meetings.

 

“Concurrently, the Strategic Plan document is updated to reflect any changes resulting from those discussions in the Authority’s Mission, Decision Drivers, Strategic Result Areas and Balanced Scorecard metrics and targets over the next three years.

 

·         MISSION STATEMENT – A Mission Statement is a clear definition of the Authority’s aims, focus and emphasis for a specified time frame.

·         DECISION DRIVERS – Underlying this Mission Statement is a set of core drivers that define the priorities for the organization.  Drivers determine how we will make decisions, perform our work and deal with others.  By understanding the driving forces behind our mission, we will make decisions that will support our company's goals.

·         STRATEGIC RESULT AREAS – If we are to succeed in our Mission, there are specific areas where we need to articulate our vision and make clear our intentions. In order to do that for both internal and external stakeholders, we need to define our goals and objectives, as well as identify the specific actions we are taking that support the vision. (The Balanced Scorecard then translates mission and strategy into objectives and measures with specific targeted performance organized according to different perspectives.)

“The attached Strategic Plan reflects the results of the planning process.”

 

Mr. Cappiello presented the highlights of staff’s report to the Trustees.  He said that the Ethics action statement (on page 4 of the Plan) would be revised to include the Authority’s officers in the ethics and compliance training provided to all employees.  In response to a question from President Carey, Ms. Cahill said that each Trustee was mailed the certificate for the training he or she had taken as required by the Public Authorities Accountability Act of 2005  and that the Corporate Secretary’s Office would endeavor to obtain copies of these certificates.  Chairman McCullough thanked Mr. Cappiello and said he was pleased to see matters that had been talked about at the Strategic Planning Conference coming before the Trustees for action.  In response to a question from Trustee Seymour, President Carey said that the Authority had decided that the cost of retrofitting the Poletti plant to meet present-day standards would be prohibitive and that the plant was set to close by January 31, 2010.  He said that the City of New York had contacted the Authority and that Mr. Kelly had put together a team that was talking to discuss the future of the plant with the City.  President Carey said that if the Authority’s Southeastern New York customers want the plant to stay open, they will be required to provide the necessary funding.  He said that in January 2007 the Authority would be sending a letter to the New York Independent System Operator (“ISO”) to request that the Poletti plant be kept open for an additional year, through January 31, 2011.  He pointed out that this summer power distribution, not power generation, had been the problem.  President Carey said that, as a way of fine-tuning the system, the ISO, the New York State Department of Environmental Conservation and the Public Service Commission were working with the Authority on a new program to activate the Small Clean Power Plants if load pockets need new energy.


 

19.          St. Lawrence/FDR Power Project – Surplus Lands – Approval of the Conveyance of Surplus Property   

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Trustees are requested to approve the transfer of a 95-acre parcel known as Massena Point (‘Massena Point Parcel’), as shown on Exhibit ‘19-A,’ to the Town of Massena. 

 

BACKGROUND

 

“As early as 1986, the Authority began to identify land surplus to the needs of the St. Lawrence/FDR Power Project that could be transferred to public or private entities and that was not required for operations, environmental or recreational purposes.  At their meeting of October 31, 1991, the Trustees identified property (‘surplus property’) located in the Towns of Massena, Louisville, Waddington and Lisbon deemed unnecessary for the aforementioned purposes.  The Trustees further authorized the conveyance of the surplus properties to these municipalities, without charge, to establish private development, subject to appropriate State Environmental Quality Review Act (‘SEQRA’) review.  The municipalities were to use the revenues from the sale of these parcels for development to offset the cost of infrastructure. 

 

“At their meeting of July 24, 2001, the Trustees approved the conveyance of a total of 781.6 acres of surplus land to the aforementioned municipalities with no restrictions as to the use of the proceeds generated therefrom.  These conveyances were completed in 2001 and included: Massena – 66.8 acres, Louisville – 40.4 acres, Waddington – 670.4 acres and Lisbon – 4.0 acres.

 

DISCUSSION

 

“Although the Massena Point Parcel was identified as a surplus parcel in 1991, it was not included in the Trustee authorization of July 24, 2001 resolution to convey surplus lands.  This is because the Massena Point Parcel, as part of the Robert Moses State Park (‘RMSP’), was under the operational control of the New York State Office of Parks, Recreation and Historic Preservation (‘OPRHP’).  To help develop additional recreational improvements at the RMSP, OPRHP obtained funding from the U. S. Department of the Interior’s National Park Service under the Federal Land and Water Conservation Fund Act (‘FLWCFA’).  Section 6(f)(3) of the FLWCFA provides that:

 

‘No property acquired or developed with assistance under this section shall, without the approval of the Secretary, be converted to other than public outdoor recreation uses.  The Secretary shall approve such conversion only if he finds it to be in accord with the then existing comprehensive statewide outdoor recreation plan and only upon such conditions as he deems necessary to assure the substitution of other recreation properties of at least equal fair market value and of reasonably equivalent usefulness and location.’

 

“As the Massena Point Parcel was never developed as a park, in May 2006, OPRHP submitted a revised Section 6(f) Boundary Map to the National Park Service for the RMSP that excludes the Massena Point Parcel.  In forwarding this map, OPRHP acknowledged that while the Massena Point Parcel was ‘. . . extensive [it] was not suitable for, nor used by the public for, outdoor recreational opportunities in the Park.’ The National Park Service agreed that the Massena Point Parcel did not fall within the restriction of Section 6(f)(3) of the FLWCFA.  Title 5-A of Article 9 of the Public Authorities Law (the ‘Act’) and the Authority’s Guidelines for the Disposal of Real Property (the ‘Guidelines’) allow the Authority, with the approval of its Trustees, to dispose of Authority property by negotiation and for less than fair market value when the disposal is intended to further the economic development of the State or a political subdivision thereof.  Accordingly, the transfer of this 95-acre parcel to the Town of Massena, a political subdivision of the State, complies with the Act and the Guidelines. 

 

“The Act and the Guidelines require that the purpose and the terms of such disposal are documented in writing and approved by resolution of the Trustees.  Further, the Act and the Guidelines require that an explanatory statement be prepared of the circumstances of each such disposal by negotiation and for less than fair market value and transmitted to the New York State Comptroller, the Director of the Budget, the Commissioner of General Services and the Legislature not less than 90 days in advance of the disposal.  Accordingly, this transfer is subject to approval by the Trustees and the timely filing of the required statement.  This Trustee action, if adopted, would constitute the foregoing required explanatory statement and Trustee action.

 

FISCAL INFORMATION

 

“The conveyance of surplus parcels to the municipalities has no fiscal impact.

 

RECOMMENDATION

 

“The Director – Real Estate recommends that the Trustees authorize the conveyance by Quitclaim Deed of the 95 acres known as the Massena Point Parcel, as shown on the attached Exhibit ‘19-A,’ to the Town of Massena in consideration of the sum of ten dollars ($10.00), payment of which is waived, so as to further economic development in the Town of Massena.

 

“The Vice President – Environmental Management recommends that the Trustees approve the attached resolution ratifying, approving and adopting: (1) the determination that the transfer of the listed parcel to the Town indicated in the Environmental Assessment will not have a significant adverse impact on the environment and will not require the preparation of an environmental impact statement and (2) the issuance of a Negative Declaration with respect to such action.

 

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Vice President – Procurement and Real Estate and I concur in the recommendation.”

 

                Mr. Hoff presented the highlights of staff’s recommendations to the Trustees regarding the proposed land transfer.  In response to a question from Chairman McCullough, Mr. Hoff stated that presently he is not aware that the Town of Massena has any plans for the property being transferred to the Town.  He also pointed out that this property transfer is not part of the St. Lawrence relicensing implementation plan.

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

 

RESOLVED, That pursuant to title 5-A of the Public Authorities Law, the Authority’s Guidelines for the Disposal of Real Property and the Power Authority Act, the Trustees hereby authorize the conveyance by Quitclaim Deed of the Massena Point Parcel described in Exhibit “19-A” (attached) to the Town of Massena amounting to 95 acres in furtherance of economic development for the Town of Massena and in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Authority hereby ratifies, approves and adopts a determination that: (1) the transfer of the Massena Point Parcel to the Town of Massena and the Authority’s Environmental Assessment for the proposed action will not have a significant adverse effect on the environment and (2) an environmental impact statement need not be prepared in connection with such proposed action.  The Vice President of the Environmental Division is directed to prepare, file and publish a Negative Declaration for the proposed action in accordance with the requirements of the State Environmental Quality Review Act; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority, to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

20.          Assignment and Assumption of Bank of New York Lease by J. P. Morgan Chase

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The Bank of New York desires to assign its interest in its lease of premises located on the 4th and 5th floors of the Clarence D. Rappleyea Building to J. P. Morgan Chase and J. P. Morgan Chase desires to assume the obligation of this lease.  The Trustees are requested to consent to this assignment and assumption of this lease.  

 

BACKGROUND

 

“At a meeting held on March 26, 1991, the Trustees approved the purchase of the building at 123 Main Street, White Plains, New York (hereinafter ‘the Building’).  At the time of the purchase, the building had several tenants, the largest of which was the Bank of New York, which occupied 58,800 sq. ft. on the entire 4th and 5th floors of the Building.  The original lease was for a period of 20 years commencing on August 1, 1981, and terminating on July 31, 2001.   Pursuant to its options to extend, the lease was extended from August 1, 2001 to July 31, 2006.  This lease was further extended for a term of July 31, 2006, through July 31, 2011.  The current annual rental is $1,117,219.

 

DISCUSSION

 

“On April 8, 2006, J. P. Morgan Chase announced an agreement to acquire the Bank of New York’s computer, small business and middle-market banking businesses (retail banking business) in exchange for Chase’s Corporate Trust business plus a cash payment in the amount of $150 million.  Recently, Bank of New York’s representatives forwarded to the Authority a form of Assignment and Assumption of Lease in connection with the Bank of New York sale to J. P. Morgan Chase and requested the Authority’s consent to said Assignment and Assumption.  In this Assignment and Assumption of Lease, the Bank of New York intends to assign the lease of its space in the Building to J. P. Morgan Chase, a subsidiary of J. P. Morgan & Company.   J. P. Morgan Chase would assume all the obligations under the lease on and after the effective date of Assignment and Assumption of Lease.  As assignor, the Bank of New York would remain secondarily liable for the performance of the terms of the lease.

 

FISCAL INFORMATION

 

“There is no fiscal impact from consenting to this transaction.

 

RECOMMENDATION

 

“The Vice President – Procurement and Real Estate and the Director – Corporate Support Services recommend that the Trustees approve the consent to the Assignment and Assumption of the lease of the Bank of New York to J. P. Morgan Chase.

 

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration and I concur in the recommendation.”

 

                Mr. Hoff presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman McCullough, Mr. Hoff said that the space had been fully occupied, but that the Bank of New York has been downsizing.

 

 

 

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

 

RESOLVED, That the President and Chief Executive Officer, the Executive Vice President – Corporate Services and Administration or the Vice President – Procurement and Real Estate be, and hereby is, authorized to execute a Consent to Assignment and Assumption of Lease between the Bank of New York and J. P. Morgan Chase substantially on the terms set forth in the foregoing report of the President and Chief Executive Officer and subject to the approval of the Assignment and Assumption documents by the Executive Vice President and General Counsel or his designee; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

21.          Procurement (Services) Contracts – Business Units and Facilities – Awards

               

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

“The Trustees are requested to approve the award and funding of the multiyear procurement contracts listed in Exhibit ‘21-A’ for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the nature of such services, the bases for the new awards, if other than to the lowest-priced bidders, and the intended duration of such contracts are set forth in the discussion below.

BACKGROUND

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.

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

DISCUSSION

“The terms of these contracts will be more than one year; therefore, the Trustees’ approval is required.  Except as noted, all of these contracts contain provisions allowing the Authority to terminate the services for the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  Approval is also requested for funding all contracts, which range in estimated value from $24,267 to $5,500,000.  Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.

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

Contracts in Support of Business Units/Departments and Facilities:

Business Services

“The contract with Sharehouse Inc. (Q02-3865; PO# TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of this contract is to provide for support and services for Apple/MacIntosh hardware and software to supplement the Authority’s Information Technology staff.  Services will be provided by an authorized Apple service representative and include, but are not limited to, the following areas: networking, printing, photos/illustrations, browser and integration issues, video streaming and video editing for the Authority’s Graphic Communication and Video Production groups.  Bid documents were downloaded electronically from the Authority’s Procurement website by 13 firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Staff recommends the award of a contract to Sharehouse Inc., the sole responding bidder who is qualified to perform such services.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $107,000.

Corporate Services and Administration

“The two contracts with APOW Towing and Proline Servcies Corp. (‘APOW’ AND ‘Proline’) (Q02-3898; PO#s TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of these contracts is to provide for towing/transport services throughout New York State for the Authority’s Electric Vehicles (‘EVs’) in support of Corporate Support Services and various Energy Services Programs (e.g., EVs shipped to and from press events, etc.), on an ‘as needed’ basis.  Such vehicles will be transported by ‘flatbed only’ by qualified towing companies licensed by the New York State Department of Transportation, in compliance with specified Authority requirements.  Bid documents were downloaded electronically from the Authority’s Procurement website by ten firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Based on their ability to perform such services, as well as reasonable pricing, staff recommends the award of contracts to both firms, APOW and Proline, thereby providing the Authority with flexible and competitive coverage, as needed.  The intended term of these contracts is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the combined total amount expected to be expended for the term of the contracts, $105,000.

“Due to the need to commence services, the contract with Johnson Controls, Inc. (4500108089) became effective on May 1, 2006, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for a service agreement for the Security Management (Cardkey Access Control) System for the Authority’s New York City leased office space at 501 Seventh Avenue – 8th and 9th floors subleased by the New York State Office of Alcohol and Substance Abuse Services (‘OASAS’).  This award was made on a sole source basis, since Johnson Controls is the original equipment manufacturer and, as such, is uniquely qualified to provide such services.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $24,267.

“In 2004, the Authority awarded a competitively bid contract to Lopez and Associates, Inc. to replace and revalidate a battery of pre-employment aptitude tests to screen candidates for placement in the Authority’s Operations area.  Additional consulting services are now required to review, update/revise, validate and finalize the original battery of aptitude tests and placement exercises for electrical, mechanical and transmission line worker classifications in other areas, such as Maintenance and Technicians.  To this end, the Authority requested a proposal (Q02-3886) from the Lopez firm for such services.  This award is made on a sole source basis in order to provide consistency and continuity of methodology, since this consultant originally developed the time-tested methodology and procedures on which the Authority has based its pre-employment testing and selection program.  As the developer of this program, the consultant (an industrial organizational psychologist) is uniquely qualified to provide such services.  The new contract with Lopez and Associates, Inc. (PO# TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  Notice of the intended sole source award was published in the New York State Contract Reporter.  The intended term of this contract is up to three years, subject to the Trustees’ approval, which is hereby requested.  This would allow for the design and development of additional tests in new areas, as may be required.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $95,000.

“Due to the need to commence services, the contract with US Auctions (4500128208) became effective on September 19, 2006, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for auction services for surplus Authority equipment, vehicles and other materials, on an ‘as needed’ basis.  Bid documents were sent to five firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  The incumbent firm, Surplus Asset Sales, offered its traditional sealed-bid method and proposed an additional fee of 15% to be paid by the Authority.  The other two bidders (JJ Kane and US Auctions) are auction houses offering ‘absolute public auctions,’ where the bidding is live (i.e., offers are made verbally until a high bid is achieved and the auction process is completed).  Both JJ Kane and US Auctions submitted more competitive bids, proposing an additional fee (equal to 10% of the highest quoted price) to be paid to the auctioneer by the prospective buyer of each auctioned item.  Under such arrangement, the Authority would not pay the auctioneer any amount.  The evaluation also took into account the fact that US Auctions holds its auctions more frequently, at its own facilities and with a full-time presence, attracting a greater number of prospective buyers regionally and even nationwide.  On the other hand, JJ Kane typically holds its auctions at or near the customer’s location, thus attracting a reduced potential pool of prospective buyers by comparison.  Staff expects that the Authority will achieve the greatest return for its surplus equipment, vehicles and other materials with US Auctions.  The Trustees are therefore requested to approve the previously authorized contract with US Auctions for an intended three-year term.  It should be noted that the contract also requires the auctioneer to advertise the sale of surplus Authority equipment, vehicles and other materials and prepare fair market value estimates prior to any auctions, in compliance with the Authority’s Guidelines and Procedures for the Disposal of Personal Property and the Public Authorities Accountability Act.

Energy Services and Technology

“The contract with Banner Electrical Contracting Corp. (‘Banner’; Q02-3885; PO# TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of this contract is to provide for electrical installation warranty services in connection with the Authority’s High Efficiency Lighting Program (‘HELP’), on an ‘as needed’ basis, predominantly in the Southeastern New York (‘SENY’), Westchester and Long Island areas.  Bid documents were downloaded electronically from the Authority’s Procurement website by four firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Staff recommends award of the subject contract to Banner, the sole responding bidder that is qualified to perform the work.  The intended term of this contract is two years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $50,000.  It should be noted that all costs will be recovered by the Authority.

Internal Audit and Compliance

“The contract with Pro-Comply (Q02-3883; PO# TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of this contract is to provide for Authority employee training mandated by the Federal Energy Regulatory Commission (‘FERC’) under FERC Order 2004 regarding FERC Standards of Conduct, via online computer and video training.  Services also include providing training materials that are appropriate in scope and duration, an implementation plan, a mechanism to track trainees’ completion and certification and the ability for the Authority to create ad hoc reports on a regular basis.  Bid documents were downloaded electronically from the Authority’s Procurement website by two firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommends award of the subject contract to Pro-Comply, the lowest-priced bidder who is qualified to provide the services.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $35,000.

Law Department

“On May 8, 2006, Consulting Solicitation Q02-3837 appeared in the New York State Contract Reporter, seeking qualification statements from parties interested in providing generic legal services in a variety of legal areas relevant to the business of the Authority.  Twenty-seven (27) firms responded with qualification statements, which were reviewed by an Evaluation Team of Authority legal staff.  The team also conducted a review of the need for the assistance of outside counsel and consulting services and the availability of resources to meet that need in the form of both existing firms providing legal services and prospective firms responding to the solicitation.  Of the 27 firms who responded, the following eight (8) firms already have some form of generic or continuous service agreements with the Authority (and have been previously approved by the Trustees as multiyear contracts):

·         Bond, Schoeneck & King, PLLC

·         Carter Ledyard & Milburn LLP

·         Dickstein Shapiro LLP

·         Holland & Knight LLP

·         Kaplan, von Ohlen & Massamillo, LLC

·         Mintz Levin Cohn Ferris Glovsky & Popeo PC

·         Troutman Sanders LLP

·         VanNess Feldman, PC

 

“Given the overall quality of services these firms have provided, staff recommends that these contracts remain in place through their current respective expiration dates (which may include options to extend for two additional years).  The remaining qualification statements were reviewed by the Evaluation Team, taking into account the background and experience of the bidders, the location of their practice, and their typical hourly rates.  In many cases, the Authority’s legal needs are driven by geographic location, as well as legal expertise.  Having outside counsel familiar with the local courts in the area of New York State where our facilities and offices are located is extremely important, since the Authority may be sued or may choose to sue in such local courts.  In addition, firms with a statewide presence are key because the Authority’s transmission and generation facilities are scattered throughout the state and have in the past provided the venue for litigation.  Finally, there is also the need to have firms with sufficient personnel and resources available to provide legal support in any of the varied specialized areas in which the Authority may require legal advice, such as those that are FERC- or energy-related, where a presence in New York City, Washington, D.C. or elsewhere, will be important.  As a result of the Evaluation Team’s review, and utilizing the criteria previously noted, the Team recommends that new contracts (PO#s TBA) for generic legal services be awarded to the following ten (10) firms, on an ‘as needed’ basis:

                White Plains

·         Keane & Beane PC

·         Robinson & Cole LLP

 

Albany

·         Gilberti Stinziano Heintz & Smith PC

·         Whiteman Osterman & Hanna LLP

 

Statewide

·         Harris Beach PLLC

·         Wilson, Elser, Moskowitz, Edelman & Dicker LLP

Nationwide

 

·         Akin Gump Strauss Hauer & Feld LLP

·         Orrick Herrington & Sutcliffe LLP

·         Winston & Strawn LLP

 

New York City/Municipal Finance

·         Hawkins Delafield & Wood LLP

“The Trustees’ approval is hereby requested for the procurement of services under the new contracts for the full five-year period (comprising an initial term of three years and an option to extend for two additional years).  Approval is also requested for the release and allocation of funding to the proposed contracts with the subject firms from an aggregate total of $5.5 million for the three-year period ending September 30, 2009, to be drawn from Legal Outside Counsel Budget funds, as well as capital funding (where appropriate), as tasks are assigned.

“In addition, the award of a separate contract is recommended to Franklin S. Abrams, (PO# TBA), who specializes in legal services relating to immigration matters.  The Trustees are requested to approve the intended term of five years (comprising an initial term of three years and an option to extend for two additional years).  Approval is also requested for the total estimated amount expected to be expended for the initial three-year term of the contract, $90,000.

Power Generation

“Due to the need to commence services, the contract with American Loss Prevention Services, Inc. (4600001687) became effective on August 1, 2006, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for semi-annual inspection services for vertical transportation systems (elevators, wheelchair lifts and escalators) at the Niagara Power Project, in accordance with the New York State Fire Prevention and Building Codes.  Services also include witnessing annual safety load tests and five-year full-load tests.  Bid documents were sent to six firms, including any that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommended award of the subject contract to American Loss Prevention Service, the lowest-priced bidder that is qualified to perform the work.  The intended term of this contract is four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $28,000.

“Due to the need to commence services, the contract with Certified Safety Valve Repair Co. (4600001665) became effective on July 1, 2006, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for all labor, supervision, tools and equipment to perform on- and off-site valve repair services (e.g., for globe, gate, check safety and plug valves) for the Charles Poletti Power Project and the 500 MW, Flynn and Small Clean Power Plants, on an ‘as needed’ basis.  Bid documents were originally sent to three firms, including any that may have responded to a notice in the New York State Contract Reporter, but only one proposal was received and rejected.  Proposals were re-solicited and, as a result of this effort, four proposals were received and evaluated.  Staff recommended award of the subject contract to Certified Safety Valve Repair, the lowest-priced bidder that is qualified to perform the work.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $500,000.

“The contract with EarthCare, A North Star Waste Co. (Q02-3859; PO# TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of this contract is to provide for supervision, labor, materials and equipment to load, transport and dispose of 7,000-60,000 gallons (per request) of wastewater from a 100,000-gallon storage tank at the Richard M. Flynn Power Plant (‘Flynn’) to a Suffolk County Department of Public Works Publicly Owned Treatment Works (‘POTW’) or Scavenger Plant, and up to 1,000 gallons of non-toxic biomass sludge from a holding tank at Flynn to the Bergen Point facility in West Babylon (as approved by Suffolk County).  Bid documents were downloaded electronically from the Authority’s Procurement website by 12 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.   Staff recommends award of a contract to EarthCare, the lowest-priced bidder that is qualified to perform such work.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $550,000.

“Due to the need to commence services, the contract with Fox Fence Inc. (4600001685) became effective on August 1, 2006, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for on-call emergency repair services for security gates (mechanized and manual) and fences at the Niagara Power Project on an ‘as needed’ basis.  Service is available on a ‘24/7’ basis and response time is within four hours of receiving the call for service.  Bid documents were sent to three firms, including any that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommended award of the subject contract to Fox Fence Inc., the lowest-priced bidder that is qualified to perform the work.  The intended term of this contract is four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $100,000.

“The two contracts with GZA GeoEnvironmental of New York (‘GZA’) and Baker Engineering NY, Inc. (‘Baker’) (Q02-3830; PO#s TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of these contracts is to provide for on-call civil and geotechnical engineering and design services in support of the operation and maintenance of the Authority’s hydroelectric, pumped storage and fossil-fuel power generation facilities, as well as its transmission and ancillary facilities throughout New York State.  Such external engineering services will be used when engineering requirements are beyond the resources of existing Authority engineering staff, or during emergencies when special expertise or Authority staff is not immediately available to support operational needs.  Projects may involve civil, geotechnical, geophysical, dam safety instrumentation and monitoring, hydraulic or structural design of new or existing facilities at power generation and transmission projects.  Services/tasks may include, but are not limited to: site investigations, soil/rock drilling and laboratory testing, surveys, grading and drainage design, storm water management, erosion and sedimentation control, as well as inspections, feasibility studies, calculations, analyses, safety assessments and construction support for modifications and additions to the Authority’s Projects (including preparation of new design drawings and revisions to the Authority’s drawings, dam safety procedures and equipment manuals affected by each modification).  Bid documents were downloaded electronically from the Authority’s Procurement website by 37 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Six proposals were received and evaluated on the following primary criteria:  professional qualifications and experience of key personnel and support staff in specific technical areas, size and depth of organization and resources, availability and commitment of resources and competitive pricing.  The evaluation team compiled and summarized each bidder’s proposed hourly rates, then ranked the bidders based on the total costs to perform a typical 100-man-hour task; the technical qualifications of the three lowest-cost/most cost-effective bidders were then evaluated.  The results of the selected low-bidder analysis indicated that selection of two firms would provide a mix of cost-competitive engineering firms, with strength across multiple disciplines covering a broad spectrum of technical expertise, experience and services.  Staff therefore recommends the award of contracts to two firms:  GZA and Baker, the lowest-priced qualified bidders.  The intended term of these contracts is four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $1,200,000.

“The four contracts with Hatch Acres Corporation (‘Acres’), E/Pro Engineering & Environmental Consulting, LLC (‘E/Pro’), Greenman-Pedersen, Inc. (‘GPI’) and RCM Technologies, Inc. (‘RCM’) (Q02-3833; PO#s TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of these contracts is to provide for professional design, engineering and consulting services to support the operation and maintenance of the Authority’s hydroelectric, pumped storage and fossil-fuel generation projects, as well as for its transmission and other support facilities.  Services include, but are not limited to:  preparation of engineering and design packages, estimating, scheduling, safety assessments, testing activities, equipment and construction specifications, permits, licenses and procedure preparation.  Such external engineering services will be used when engineering requirements are beyond the resources of existing Authority engineering staff, or during emergencies when special expertise or Authority staff is not immediately available to support operational needs.  In addition, the Federal Energy Regulatory Commission requires that Licensees maintain the resources necessary to respond to unusual or changed conditions that may affect public safety.  To this end, staff prepared a Request for Proposals for the subject services.  Bid documents were downloaded electronically from the Authority’s Procurement website by 66 firms, including those that may have responded to a notice in the New York State Contract Reporter.  13 proposals were received and evaluated on the following primary criteria:  professional qualifications and experience of key personnel and backup staff, size and depth of organization and resources, ability to respond quickly to requests for services, and experience in specific technical areas of interest to the Authority, as well as competitive pricing.  The evaluation team reviewed the seven proposals with the lowest composite hourly rates in further detail; four companies were interviewed to clarify information in their proposals.  The results of the selected low-bidder analysis indicated that selection of four firms would provide a mix of cost-competitive engineering firms, with strength across multiple disciplines covering a broad spectrum of technical expertise and services and providing a choice of at least two firms that are capable of performing a particular task at any given time, as well as the ability to respond to emerging work requirements in a timely manner.  Past experience also indicates that no one firm has all the technical experience, qualifications and resources that may be required to support the Authority’s projected needs.  Staff therefore recommends award of contracts to the following four firms:  Acres, E/Pro, GPI and RCM, the lowest-priced qualified bidders.  The intended term of these contracts is four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $5,000,000.

“The contract with Innovative Automation, Inc. (‘IAI’) (Q02-3860; PO# TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of this contract is to provide for engineering consulting services to assist the Authority in the start-up and commissioning of unit controls for hydro generators at the Blenheim-Gilboa Pumped Storage Project, as part of the Life Extension and Modernization program.  Services also include the preparation of procedures, including but not limited to, the review and revision of all affected plant Operating Procedures and the plant Operations Manual.  Bid documents were downloaded electronically from the Authority’s Procurement website by 43 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  One bidder submitted a proposal that the Authority deemed incomplete and unacceptable and a second bidder was disqualified based on lack of experience with hydropower plant start-up and commissioning.  The third (IAI) submitted a very comprehensive proposal, addressed all exceptions/issues/concerns and provided clarifications to the Authority’s satisfaction, and was deemed qualified to perform such services.  Staff therefore recommends award of the subject contract to Innovative Automation, Inc., the lowest-priced qualified bidder.  The intended term of this contract is four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $905,670.

“The contract with John R. Robinson, Inc. (‘Robinson’; 4600001650) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of this contract is to provide for jet brush cleaning services for condenser tubes at the Charles Poletti Power Project.  Bid documents were sent to six firms, including any that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Staff recommends award of the subject contract to Robinson, the lowest-priced bidder.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $100,000.

“In accordance with requirements of the International Joint Commission (‘IJC’), the Authority and Ontario Power Generation (‘OPG’) are required to test the turbine-generator units at the Moses/Saunders Power Dam at the St. Lawrence/FDR Power Project (‘Project’) using the same flow-measurement methodology and equipment in order to ensure accuracy, consistency and reliability of the performance data and to ensure that both entities are responsible for an equal share of St. Lawrence River flows between Canada and the United States.  To this end, the Authority and OPG jointly developed unit rating tables using the performance test results from OPG’s unique Intake Current Meter System (‘ICMS’).  Such unit rating tables form the basis for a water ‘metering’ system, which ultimately allows the Authority to calibrate water usage to electrical output.  In addition, OPG previously performed pre-upgrade efficiency tests on several units in the 1990s using the ICMS system.  Future turbine-generator upgrades require the same test methodology using OPG’s ICMS system, which has been accepted by both entities, as well as the IJC and other controlling bodies.  Based on the foregoing reasons, staff recommends the award of a sole source contract to Ontario Power Generation (4500127640) to conduct such turbine performance tests on upgraded Unit 22 at the Project in compliance with the aforementioned IJC requirements.  Such contract would become effective on October 3, 2006, for an intended term of up to two years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $99,500.

“The contract with Reuther Engineering & Machine (‘Reuther’; 4600001675) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of this contract is to provide for on- and off-site machining services, mechanical work and repairs for the Charles Poletti Power Project and the 500 MW, Flynn and Small Clean Power plants on an ‘as needed’ basis.  Bid documents were sent to seven firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Staff recommends award of the subject contract to Reuther, the sole responding bidder that is qualified to perform the work.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $300,000.

Transmission

“The contract with Power Engineers Consulting (RFQ CEC-MWP; PO# TBA) would become effective on October 1, 2006, subject to the Trustees’ approval.  The purpose of this contract is to provide for engineering services to perform a LIDAR (Light or Laser Imaging Detection and Ranging) survey and to develop a PLSCADD (Power Line Systems Computer-Assisted Design and Drawing) engineering model for approximately 212 miles of Authority-owned 345kV and 230kV transmission lines.  Bid documents were sent to 12 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Six proposals were received and evaluated.  Staff recommends award of the subject contract to Power Engineers Consulting, the lowest-priced bidder that is qualified to perform the work.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $725,860.

“As a participant in the deregulated market operated by the New York Independent System Operator (‘NYISO’), the Authority acts as a Load Serving Entity on behalf of its customers by scheduling electricity usage in the Day Ahead Market and by receiving associated settlements.  Additionally, each of the Authority’s generators at its facilities throughout New York State also has associated scheduling requirements and settlements.  Such load and generator settlement data requires hourly, daily and monthly review and analysis to ensure that charges are accurate, reasonable and in accordance with New York Market Rules.  This is currently achieved by the Authority’s Scheduling and Settlement (‘S&S’) staff, using internally developed software and procedures.  Third-party suppliers now offer new Anomaly/Shadow Settlement Processor software products that are compliant with NYISO settlements.  These online computer tools are designed to assist market participants with the verification of such settlements and the estimation of future settlements.  The advantages of third-party products include: ongoing compliance with market rules and requirements, automated settlement review and error reporting, issue management and improved efficiencies.  In addition, Authority staff will spend less time on manual processes and designing changes to software, enabling them to analyze other market phenomena.  To this end, a Request for Proposals (Q02-3784) was prepared.  Bid documents were downloaded by 20 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommends award of a contract to Structure Consulting Group LLC dba The Structure Group (PO# TBA), the lowest-priced qualified bidder.  This contract will provide for the procurement, licensing, installation/implementation and maintenance of anomaly processing software that performs calculations to verify NYISO settlements and ensures that the associated data is reasonable and accurate.  The annual software maintenance includes support on a routine basis to keep the software up-to-date with current NYISO requirements and market changes.  The intended term of this contract, which would become effective on October 1, 2006, is five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $1,104,000.

FISCAL INFORMATION

“Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2006 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  Payment will be made from the Operating Fund.

“Funds required to support contract services for capital projects have been included as part of the approved capital expenditures for those projects and will be disbursed from the Capital Fund in accordance with the project’s Capital Expenditure Authorization Request.  Payment for contracts in support of the Energy Services Programs will be made from the Energy Conservation Effectuation and Construction Fund.  All costs, including Authority overheads and the cost of advancing funds, will be recovered by the Authority, consistent with other Energy Services and Technology Programs.

RECOMMENDATION

“The Deputy General Counsel, the Senior Vice President – Public and Governmental Affairs, the Vice President – Procurement and Real Estate, the Vice President – Engineering, the Vice President – Project Management, the Vice President – Environmental Management, the Vice President – Internal Audit and Compliance, the Vice President – Finance, the Treasurer, the Chief Information Officer, the Director – Corporate Support Services, the Director – Energy Services, the Director – Human Capital and Development, the Regional Manager – Northern New York, the Regional Manager – Western New York, the Regional Manager – Central New York, the Regional Manager – Southeastern New York, the Transmission Superintendent, the Fleet Manager – Special Vehicles and Rolling Equipment, and the Manager – Scheduling and Settlement recommend the Trustees’ approval of the award of multiyear procurement contracts to the companies listed in Exhibit ‘21-A’ for the purposes and in the amounts set forth above.

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President – Chief Financial Officer, the Senior Vice President – Energy Services and Technology, the Senior Vice President and Chief Engineer – Power Generation, the Senior Vice President – Transmission and I concur in the recommendation.”

Mr. Hoff presented the highlights of staff’s recommendations to the Trustees.  Mr. Kelly said that Vice Chairman Townsend and Trustee Moses have recused themselves from the vote on this item, and wanted the minutes to reflect that fact.  He said that the contracts with the various local, state, regional and national law firms would enable the Authority to tap into their expertise on an as-needed basis.  Chairman McCullough concurred.

The following resolution, as submitted by the President and Chief Executive Officer, was adopted by a vote of 5 to 2, with Vice Chairman Townsend abstaining with reference to Harris Beach PLLC and Trustee Moses abstaining with reference to Bond, Schoeneck & King,

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award and funding of the multiyear procurement services contracts set forth in Exhibit “21-A,” attached hereto, are hereby approved for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

22.          Procurement (Services) Contracts – Business Units and Facilities – Extensions and Approval of Additional Funding

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 “The Trustees are requested to approve the continuation and funding of the procurement (services) contracts listed in Exhibit ‘22-A’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the nature of such services, the reasons for extension, the additional funding required and the projected expiration dates are set forth below.

BACKGROUND

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.

“The Authority’s revised Expenditure Authorization Procedures (‘EAPs’) require the Trustees’ approval when the cumulative change order value of a personal services contract exceeds the greater of $250,000 or 35% of the originally approved contract amount not to exceed $500,000, or when the cumulative change order value of a non-personal services, construction, equipment purchase or non-procurement contract exceeds the greater of $500,000 or 35% of the originally approved contract amount not to exceed $1,000,000.

DISCUSSION

“Although the firms identified in Exhibit ‘22-A’ have provided effective services, the issues or projects requiring these services have not been resolved or completed, and the need exists for continuing these contracts.  The Trustees’ approval is required because the terms of these contracts exceed one year and/or because the cumulative change order limits will exceed the levels authorized by the EAPs in forthcoming change orders.  All of the subject contracts contain provisions allowing the Authority to terminate the services at the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  These contract extensions do not obligate the Authority to a specific level of personnel resources or expenditures.

“Extension of each of the contracts identified in Exhibit ‘22-A’ is requested for one or more of the following reasons: (1) additional time is required to complete the current contractual work scope or additional services related to the original work scope; (2) to accommodate an Authority or external regulatory agency schedule change that has delayed, reprioritized or otherwise suspended required services; (3) the original consultant is uniquely qualified to perform services and/or continue its presence and re-bidding would not be practical or (4) the contractor provides a proprietary technology or specialized equipment, at reasonably negotiated rates, that the Authority needs to continue until a permanent system is put in place.

Contracts in Support of Business Units/Departments and Facilities:

Energy Services and Technology

“The contract with ABLE Company (4500110237) provides for furnishing, delivery and installation services for the boiler control upgrade at Lincoln Hospital in the Bronx as part of the Authority’s Southeastern New York (‘SENY’) Governmental Customers’ Energy Services Program.  The original award, which was competitively bid, became effective on July 5, 2005 for a term of less than one year.  Due to an unanticipated delay by the facility, which denied the contractor access to the equipment until the facility staff completed a maintenance task, the contractor was forced to push back its start date which, in turn, has caused the completion date of this project to be delayed as well.  An interim extension through September 26, 2006 was subsequently authorized in accordance with the Authority’s Guidelines for Procurement Contracts and EAPs.  An additional three-month extension is now requested in order to provide sufficient time to complete all contract services.  The current contract amount is $458,955; it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to ratify the previously authorized interim extension and to approve the additional extension of the subject contract through December 15, 2006, with no additional funding requested.  It should be noted that all costs will be recovered by the Authority.

The contract with DMJM + Harris, Inc. (4500002774) provides for program management and implementation services in support of the Authority’s Southeastern New York (‘SENY’) Energy Services Programs (‘ESP’).  As part of these programs, the Authority provides energy services to reduce the SENY Governmental Customers’ overall energy costs by implementing energy efficiency measures.  At their meeting of December 15, 1998, the Trustees approved the award of the subject contract for an initial term of three years, with an option to extend for two additional years with the approval of the President and Chief Executive Officer.  The original award, which was competitively bid, became effective on January 4, 1999.  At their meeting of June 29, 1999, the Trustees approved additional funding in the aggregate amount of $50,000,000 to support the SENY ESP programs.  The President and Chief Executive Officer subsequently authorized the aforementioned option to extend services for two years.  At their meeting of December 16, 2003, the Trustees approved an extension through December 31, 2006.  New York City funding constraints, as well as multiple levels of customer review and approval, have delayed the progress of various projects previously assigned under this contract. In recent months, a number of projects have received the requisite funding and are moving forward from feasibility study to design and construction.  They include the Coney Island Waste Water Treatment Plant (‘WWTP’) ($18 million) and the Bronx Family/Criminal Court ($10 million).   The feasibility study for the Coney Island WWTP was completed in June 2003, but approval to proceed to the design phase was not received until November 2004.  In addition, the Customer Installation Commitment (‘CIC’) was not approved until December 2005.  The feasibility study for the Bronx Family/Criminal Court was completed in January 2001, but was subsequently put ‘on hold’.  It is expected that customer funding will be committed in the near future to enable the Authority to proceed with the design phase of this project.  The lack of timely review and approval by multiple agencies has been the major contributing factor for the delays.  (Typically, approvals are needed from the customer, the New York City Office of Management and Budget, the New York City Department of Citywide Administrative Services, and other entities, as may be required.)  An additional three-year extension is now requested in order to continue and complete services in support of such projects, which are in various stages of implementation or development.  The current contract amount is $49,914,768; it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to approve the extension of the subject contract through December 31, 2009, with no additional funding requested.  It should be noted that all costs will be recovered by the Authority.

“At their meeting of September 25, 2001, the Trustees approved the award of contracts to three firms, DMJM + Harris, Inc. (4600000663), CDM Constructors, Inc. (formerly Camp, Dresser & McKee, Inc.) (4600000665) and PB Power Inc. (4600000664), and an initial aggregate amount of $100 million, to provide for program management and implementation services in connection with the Southeastern New York (‘SENY’) Governmental Customers’ Energy Services Programs (‘ESP’).  The contracts, which were competitively bid, became effective on October 1, 2001 for an initial term of three years, with an option to extend for two additional years.  The intended option was subsequently exercised.  The aforementioned Trustee item also advised the Trustees that additional funding of up to $100 million might be needed to complete the work assigned under these contracts, based on program participation, and the Trustees’ authorization for the release and allocation of such additional funding would be requested as such needs were identified.  At their meeting of June 28, 2005, the Trustees authorized the release and allocation of an additional $45 million (from a previously approved Capital Expenditure Authorization Request, ‘CEAR’), thereby increasing the aggregate compensation ceiling to $145 million.  New York City funding constraints, as well as multiple levels of customer review and approval, have delayed the progress of various projects previously assigned under this contract. In recent months, a number of projects have received approvals and are moving forward from feasibility study to design.  Such projects include: Fashion Institute of Technology ($13 million), 179th Street Pump Station ($8 million), Owl’s Head ($4.7 million), and Red Hook Waste Water Treatment Plant ($18 million).  Projects already in construction include Waste Water Treatment Plants at North River ($37 million) and Bowery Bay ($6 million).  The lack of timely review and approval by multiple agencies has been the major contributing factor for the delays.  (Typically, approvals are needed from the customer, the New York City Office of Management and Budget, and the New York City Department of Citywide Administrative Services, as well as other entities, as may be required.  A four-year extension of the two contracts with DMJM + Harris and CDM Constructors is now requested in order to continue and complete services in support of such projects, which are in various stages of implementation or development.  (The contract with PB Power will not be extended.)  The current ‘Target Values’ total $145,000,000; it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to approve the extension of the subject contracts through September 30, 2010, with no additional funding requested.  It should be noted that all costs will be recovered by the Authority.

“The contract with Siemens Power Transmission & Distribution, Inc. (4500111336) provides for the furnishing and delivery of a production-grade Phasor Measurement Unit (‘PMU’) telemetry/data acceptance system and an Enhanced State Estimator (‘SE’) using the phasor data as part of the Authority’s Energy Management System (‘EMS’) at the Energy Control Center (‘ECC’).  The original contract, which was awarded on a sole source basis, became effective on August 1, 2005 for a term of one year.  This project is part of the much larger EMS upgrade, which has taken longer than expected due to requirements for development, testing and implementation.  This, in turn, has delayed the implementation and completion of this project.  The phasor-based enhanced SE project still needs to be installed and tested in conjunction with the upgraded EMS.  Most of the development work and factory testing have been completed; site implementation and acceptance testing are the only remaining tasks.  An interim extension through September 30, 2006 was authorized in accordance with the Authority’s Guidelines for Procurement Contracts and EAPs.  An additional nine-month extension is now requested in order to provide sufficient time to complete all work under this contract.  The implementation of phasors in the SE adds many advantages to the performance and accuracy of this important tool.  It should be noted that the Authority is a pioneer and industry leader in implementing phasors into the SE and the EMS; other major utilities are now embarking on the use of this technology, using the Authority as a model.  The current contract amount is $181,500; it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to ratify the previously authorized interim extension and to approve the additional extension of the subject contract through June 30, 2007, with no additional funding requested.

Power Generation

“The Public Utility Regulating Plant System (‘PURPS’) functions as both a pressurizing and cooling system to maintain rapid circulation of dielectric fluid in pipelines of the Feeder No. Q35 L&M Legs for the purpose of forced-cooling the cable for maximum load-carrying capability.  Under an inter-utility agreement between the Authority and Consolidated Edison Company of New York (‘Con Ed’), the procedural operations and maintenance of this system, including power transformers, are maintained by Con Ed.  On November 8, 2004, the Authority issued a sole source purchase order (4500098429) to Con Ed, in the not-to-exceed amount of $162,500, to perform needed maintenance and replacement of three PURPS transformers for the Authority; they are located on Con Ed’s property in Astoria, adjacent to the Charles Poletti Power Plant.  Con Ed would provide two transformers (from its inventory) needed to replace two of the existing units and use its own workforce to deliver, rig and install the units, and to load the old units onto a truck for disposal by a contractor hired by the Authority.  Since these units had to be replaced in like and kind to match Con Ed’s system, and Con Ed had these transformers available in its inventory, and since Con Ed procedurally has maintenance responsibility for this facility on its property, it was only prudent and practical to use Con Ed for this work.  Authority staff was satisfied that the price to furnish, deliver and install these transformers was fair and reasonable.  The work was originally scheduled to be performed in April 2005, but was deferred due to concerns that the outages needed for the transformer replacements might affect the power needed for the 500 MW plant construction.  This work will be rescheduled after the demands of the summer cooling season have been met.  Since the third transformer was not available through Con Ed, the Authority separately bid and ordered the third transformer, which was delivered and installed by Con Ed in May 2006 (with the exception of completing the primary connection, which is expected shortly).  Interim approval to extend the subject contract through September 30, 2006 was subsequently obtained.  Staff projects that an additional six-month extension will be required to allow sufficient time to complete all work.  The current contract amount remains $162,500; it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to ratify the previously authorized interim extension and to approve the additional extension of the subject contract through March 31, 2007, with no additional funding requested.

“The contract with Johnson Controls, Inc. (4600001479) provides for a service agreement for the Cardkey Security Access Control system installed at the Niagara Power Project.  The original contract became effective on August 1, 2005 for an initial term of one year, with an option to extend for up to four additional years.  Although this contract was awarded on a sole source basis, since Johnson Controls is the original equipment manufacturer, pricing for maintenance labor and parts is based on rates in the New York State Office of General Services contract with this vendor for such services.  An interim extension through September 30, 2006 was subsequently authorized in accordance with the Authority’s Guidelines for Procurement Contracts and EAPs.  A four-year extension is now requested to exercise the option in order to provide for the continuation of such services.  The current ‘Target Value’ is $90,000; it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to ratify the previously authorized interim extension and to approve the extension of the subject contract through July 31, 2010, with no additional funding requested.

FISCAL INFORMATION

“Funds required to support contract services for various Headquarters Office Business Units/Departments and Facilities have been included in the 2006 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  Payment will be made from the Operating Fund.

“Funds required to support contract services for capital projects have been included as part of the approved capital expenditures for those projects and will be disbursed from the Capital Fund in accordance with the Project’s Capital Expenditure Authorization Request (‘CEAR’).   Payment for contracts in support of the Energy Services Programs will be made from the Energy Conservation Effectuation and Construction Fund.  All costs, including Authority overheads and the cost of advancing funds, will be recovered by the Authority, consistent with other Energy Services and Technology Programs.

RECOMMENDATION

“The Deputy General Counsel, the Vice President – Procurement and Real Estate, the Vice President – Engineering, the Director – Energy Services, the Director – Research and Technology Development, the Regional Manager – Western New York and the Regional Manager – Southeastern New York recommend that the Trustees’ approve the extensions and additional funding of the procurement contracts listed in Exhibit ‘22-A.’

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President – Chief Financial Officer, the Senior Vice President – Energy Services and Technology, the Senior Vice President and Chief Engineer – Power Generation and I concur in the recommendation.”

                Mr. Hoff presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Seymour, Mr. Hoff said that the Authority will be replacing the chiller plant at SUNY’s Fashion Institute of Technology.

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, each of the contracts listed in Exhibit “22-A,” attached hereto, is hereby approved and extended for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

  

 

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.
 

23.          Proposed Schedule of Trustees’ Meetings in 2007

The Corporate Secretary submitted the following report.

 

“The following schedule of meetings for the year 2007 is recommended:

Date                                                            Location                                                            Time

January 30, 2007                                       WPO                                                                  11:00 a.m.

February 27, 2007                                     WPO                                                                  11:00 a.m.

March 27, 2007                                         ALBANY                                                           11:00 a.m.

April 24, 2007 – Annual                          WPO                                                                  11:00 a.m.

May 22, 2007                                             NIAGARA                                                        11:00 a.m.

June 26, 2007                                             CLARK ENERGY CTR                                    11:00 a.m.

July 31, 2007                                              WPO                                                                  11:00 a.m.

                                                        No Meeting in August

September 25, 2007                                  POLETTI                                                           11:00 a.m.

October 30, 2007                                       WPO                                                                  11:00 a.m.

November 27, 2007                                   WPO                                                                  11:00 a.m.

December 18, 2007                                   WPO                                                                  11:00 a.m.

RECOMMENDATION

“The President and Chief Executive Officer and I support the proposed schedule for the Authority’s Trustees’ Meetings for the year 2007, as set forth in the foregoing memorandum.”

Ms. Cahill presented the highlights of her recommendations to the Trustees, pointing out that the 2007 Trustees’ Meetings would be held on the last Tuesday of each month, except for May and December.

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

RESOLVED, That the schedule of Trustees’ Meetings for the year 2007, as set forth in the foregoing report of the Corporate Secretary, be, and hereby is, approved.
 

24.          INFORMATIONAL ITEM: World Trade Center Redevelopment – Lower Manhattan Energy Independence Initiative                              

 

The President and Chief Executive Officer submitted the following report.

 

SUMMARY

 

“The State of New York has appropriated $25 million for the Lower Manhattan Energy Independence Initiative (‘LMEI Account’).  These funds will be allocated to the Power Authority to fund energy efficiency measures and clean energy technologies for the World Trade Center (‘WTC’) site.  The $25 million will be allocated as follows:  $19.5 million for natural gas- powered fuel cells in WTC Towers 2, 3 and 4, and $5.5 million for state-of-the-art energy efficiency measures in the WTC Memorial and Museum.

BACKGROUND

 

“Consistent with its commitment to make the WTC a global example of green building design and to break the cycle of dependence on foreign energy, the State of New York has appropriated $25 million in the Fiscal Year (‘FY’) 2006-07 New York State budget for the LMEI Account.  The Authority has agreed to create an LMEI Account(s) for the receipt of such appropriation. The funds will be used to fund energy efficiency measures and clean energy technologies for the WTC site, as more fully described below.

DISCUSSION

 

“The funds will be used to fund energy efficiency measures and clean energy technologies in WTC Towers 2, 3 and 4 and the WTC Memorial and Museum.  Up to $19.5 million will be used for the purchase and installation of cutting-edge fuel cell technology, with 1.2 MW of fuel cell capacity to be installed in each of the WTC Towers 2, 3 and 4.  To assist in defraying any incremental costs associated with achieving a U. S. Green Building Council Leadership in Energy and Environmental Design (‘LEED’) Gold certification and an energy efficiency level 20% above the New York State Energy Conservation Construction Code, $5.5 million will be provided to the WTC Memorial Foundation for the WTC Memorial and Museum.

“The funds in the LMEI Account may be invested by the Authority in accordance with its investment guidelines, with net interest credited to the LMEI Account.

FISCAL INFORMATION

“Funding will be provided from the $25 million appropriated by the State of New York in the FY 2006-07 New York State budget for the Lower Manhattan Energy Independence Initiative and sub-allocated to the Authority.”


 

25.          Motion to Conduct an Executive Session

               

“Mr. Chairman, I move that the Authority conduct an Executive Session for the purpose of discussing matters relating to litigation and potential litigation.”  Upon motion moved and seconded, an Executive Session was held.


 

26.          Motion to Resume Meeting in Open Session

“Mr. Chairman, I move to resume the meeting in Open Session.”  Upon motion moved and seconded, the meeting resumed in Open Session.


 

27.          Next Meeting

The next meeting of the Trustees will be held on Tuesday, October 24, 2006, at 11:00 a.m., at the Blenheim-Gilboa Power Project, Gilboa, New York, unless otherwise designated by the Chairman with the concurrence of the Trustees.

 

Closing

 

On motion duly made and seconded, the meeting was adjourned by the Chairman at approximately
1:40 p.m.

 

 

 

 

Anne B. Cahill

Corporate Secretary

 

 


 

*   Team’s weighted score out of a possible 100.   Total cost submitted by vendor inclusive of travel and living expense estimates but without contingency.  Each vendor identified an average contingency of $1,500,000.