1.
Approval of the Minutes
The minutes of the Regular Meeting of February
28, 2006 were unanimously adopted.
2.
Financial Reports for the Two Months Ended February 28, 2006
Mr. Bellis presented an overview of the reports
to the Trustees. In response to questions from Chairman Seymour regarding
ongoing losses from SENY energy sales, Mr. Bellis said the situation through
the first quarter resulted from the complex supply and demand situation. He
said that certain fuel and energy prices had been locked in, but nothing had
been locked in on the revenue side for the Poletti and 500 MW plants. On
the expense side, the Authority did not benefit when fuel prices fell
because of its locked-in fuel and energy prices. President Carey stated
that finance staff is analyzing how some of this information is communicated
and that it is likely they will recommend ways to restructure it. Mr.
Bellis also said that most of the Authority’s risk of financial exposure in
the SENY territory arose in January and February, but that it could also
occur in the coming summer if it is a cool one or customer loads continue to
soften. Responding to a question from Chairman Seymour as to the possible
use of insurance to hedge agreement losses, Ms. Morman said that the “trip”
insurance the Authority used to purchase was actually for a different
purpose than for protecting the Authority from such financial exposure and
that such exposure insurance was not available. Mr. Bellis added that there
is not much that the Authority can do now to improve the situation.
3.
Report from the President and Chief Executive Officer
President Carey asked Mr. Vattimo to report on
the status of the State’s 2006-07 budget discussions. Mr. Vattimo said that
the budget is now in conference committee and that the issues affecting the
Authority have, for the most part, been finalized. It appears that the
Power for Jobs program will be extended through December 31, 2007. The
Legislature is also going forward with the Governor’s recommendation to
establish a commission to review all of the Authority’s power distribution
programs. President Carey added that Authority management has been in
constant contact with regard to the effects the 2006-07 budget will have on
the Authority’s ability to do business.
With respect to the Niagara relicensing, Mr.
Kelly reported that draft settlement agreements for the City of Buffalo and
Erie County have gone out to the two municipalities for their review and
that the Authority expects to have comments back from them within the next
10 days. One minor issue relating to the form of the agreement remains to
be negotiated in the draft of the Niagara University settlement agreement.
President Carey said that he would be visiting
the various Authority facilities in the coming months to meet with Authority
staff at the facilities, as well as members of the host communities. He
said that this week he will be visiting the Blenheim-Gilboa plant. In
response to a question from Chairman Seymour, Vice Chairman McCullough said
that he would be accompanying President Carey when he visits the St.
Lawrence/FDR Power Project.
Chairman Seymour said that Authority management
needs to keep a careful watch on what happens with the New York State
Budget, especially with respect to financing the Power for Jobs program.
President Carey added that staff was not recommending to the Trustees that
the Authority make a $75 million voluntary contribution to the New York
State Treasury until these issues were satisfactorily resolved.
4.
Transfers of Industrial Power
The President and Chief Executive Officer
submitted the following report:
SUMMARY
“The Trustees are requested to approve the
transfer of power allocations for five existing customers that have changed
their names for various business reasons. Additionally, the Trustees are
requested to approve a transfer of 100 kW between two companies currently
receiving Municipal Distribution Agency (‘MDA’) power through the Suffolk
County Electrical Agency (‘SCEA’).
BACKGROUND
“Five companies have requested that the
Authority grant approval of their requests for the continued delivery of
Authority power allocations to facilities that have all gained prior
approval for an allocation with pre-existing company names and/or
ownership. The present owners of these same facilities are now requesting
that the Authority authorize the continuation of the power allocations
granted to the previous company names and ownership associated with these
facilities.
“In addition, the Authority sells industrial
power to downstate municipal distribution agencies, including 5,000 kW to
SCEA. This power is resold to industrial customers designated by SCEA and
approved by the Authority. Two existing MDA power customers have requested,
and SCEA has proposed, that part of one customer’s allocation be transferred
to the other existing customer. SCEA has requested that the Authority grant
approval of the transfer for the reasons indicated below.
“The Trustees have approved transfers of this
nature at past meetings.
DISCUSSION
“The proposed transferees are as follows:
“CEN Electronics, which has a facility in
Caledonia, manufactures industrial battery chargers for forklifts, pallet
jacks and other battery-powered transportation equipment. At their
September 28, 1998 meeting, the Trustees approved CEN Electronics for a 300
kW Power for Jobs (‘PFJ’) allocation in return for 121 jobs. The company
was purchased by a private owner and the name was changed to Applied
Energy Solutions. The new company maintains the Caledonia facility’s
operations and produces the same products as the original company. In
August 2005, the company applied for extended PFJ benefits in the form of an
electricity savings reimbursement. Applied Energy Solutions will receive a
reduced level of extended benefits proportional to its job shortfall through
December 31, 2006, the sunset date for the PFJ program.
“CWM Chemical Services, Inc. (‘CWM’) of
Model City is a chemical and industrial waste management facility offering
waste treatment, storage and disposal solutions. At their June 29, 1999
meeting, the Trustees approved CWM for a 400 kW PFJ allocation in return for
100 jobs. CWM created CWM Chemical Services, LLC as a wholly owned
subsidiary of its parent corporation, Waste Management, Inc. There was no
purchase, only a contribution of assets to the new entity for business
purposes. The new company’s products and services, facility operations and
ownership remain unchanged. In August 2005, the company applied for
extended PFJ benefits in the form of an electricity savings reimbursement.
CWM Chemical Services, LLC will receive a reduced level of extended benefits
proportional to its job shortfall through the remainder of the PFJ program,
December 31, 2006.
“Fala Direct Marketing, Inc. (‘Fala’) is
a direct marketing production services company in Melville. At their
September 30, 1998 meeting, the Trustees approved Fala for a 1,500 kW PFJ
allocation in return for 554 jobs. In July 2005, the company was acquired
in an operating asset purchase by IWCO Direct, a Minnesota firm. The
new company’s products and services and New York facility operations remain
unchanged. On September 20, 2005, the Trustees approved an extension of the
company’s PFJ contract through December 31, 2006, at a reduced level of
1,150 kW proportional to its job shortfall. IWCO Direct agrees to honor all
terms and conditions of its extended PFJ contract.
“Hammer Lithograph Corp., with a facility
in Rochester, is a multicolor packaging printer of labels, box wraps and
premium packets for consumer products. At their March 31, 1998 meeting, the
Trustees approved Hammer Lithograph for a 900 kW PFJ allocation in return
for 222 jobs. In July 2005, the company changed its name to Hammer
Packaging Corp. The company’s name was changed when it consolidated its
business with New Frontier Packaging, a flexographic packaging printing
operation. The new company’s products, services, facility operations and
ownership remain unchanged. On September 20, 2005, the Trustees approved an
extension of the company’s PFJ contract through December 31, 2006. Hammer
Packaging is in job compliance and agrees to honor its job commitments and
all terms and conditions of its contract.
“Utica Corporation manufactures at its
facility in Whitesboro a variety of engine-ready components for use in the
aerospace and industrial gas turbine industries. At their June 26, 2001
meeting, the Trustees approved Utica Corporation for a 1,200 kW PFJ
allocation in return for 395 jobs. The company’s ownership has acquired
other operations across the country and changed its corporate name to
Turbine Engine Components Technologies (‘TECT’), in order to build and
brand the new operations under the TECT name. The new company’s ownership,
products and services remain unchanged. In August 2005, the company applied
for extended PFJ benefits in the form of an electricity savings
reimbursement. TECT will receive a reduced level of extended benefits
proportional to its job shortfall through the remainder of the PFJ program,
December 31, 2006.
“Ellanef Manufacturing (‘Ellanef’) is a
manufacturer of aerospace machined parts and assemblies with a facility in
Bohemia. Ellanef currently receives an allocation of 1,300 kW of MDA power
via resale from SCEA in return for 195 jobs. Air Industries Machining
Corp. (‘Air Industries’) manufactures complex aircraft parts and
assemblies for the commercial and defense aerospace industries. Air
Industries receives a 500 kW allocation of MDA power through resale from
SCEA at its Bay Shore facility. The allocation was approved by the Trustees
at their September 23, 2003 meeting in return for 120 jobs. Ellanef and Air
Industries have requested that 100 kW of Ellanef’s allocation be transferred
to Air Industries. At their December 2005 board meeting, SCEA approved such
a transfer. As proposed, Ellanef’s power allocation will be reduced from
1,300 kW to 1,200 kW, while Air Industries’ allocation will increase from
500 kW to 600 kW. The companies and SCEA are requesting that the Trustees
approve the transfer of 100 kW between them with job commitments remaining
the same for both companies.
RECOMMENDATION
“The Director – Business Power Allocations,
Regulation and Billing recommends that the Trustees approve the transfer of
power allocations for five existing customers that have changed their names
for various business reasons and approve the transfer of 100 kW between two
companies currently receiving Municipal Distribution Agency power through
the Suffolk County Electrical Agency.
“The Executive Vice President and General
Counsel, the Senior Vice President – Marketing, Economic Development and
Supply Planning, the Vice President – Major Account 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 Authority hereby authorizes the transfers of industrial
power allocations in accordance with the terms described 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.
5.
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 57 Power for Jobs (‘PFJ’) customers, as listed in Exhibits
‘5-A1,’ ‘5-A2’ and ‘5-B.’ In addition, the Trustees are requested to
approve modifications to the benefits for six customers that have applied to
have their PFJ benefits reinstated after having been reduced by the Board
for non-compliance with their job commitments, as detailed in Exhibits
‘5-C1’ and ‘5-C2.’ These customers have been recommended to receive such
extended benefits and modifications 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.
“In 2004, provisions of the approved State
budget 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.
“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, the program’s new sunset date.
“Section 189 of the New York State Economic
Development Law, which was also amended by Chapter 59 of the Laws of 2004,
provided the statutory authorization for the extended benefits that could be
provided to PFJ customers with contracts that expire before December 31,
2005. The statute authorized EDPAB to, but stated 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 were
reduced by EDPAB 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 said customers the application and evaluate reconsideration requests
based on the approved criteria. To date, staff has mailed 195, received 104
and completed review of 97 applications.
DISCUSSION
“At its meeting on March 27, 2006, EDPAB
recommended that the Authority’s Trustees approve the allocations and/or
electricity savings reimbursement rebates to the 57 businesses listed in
Exhibits ‘5-A1,’ ‘5-A2’ and ‘5-B.’ Exhibits ‘5-A1’ and ‘5-A2’ lists
businesses that have requested and are being recommended for a contract
extension, while Exhibit ‘5-B’ lists those businesses that have requested
and are being recommended for electricity savings reimbursements.
Collectively, these organizations have agreed to retain more than 49,000
jobs in New York State in exchange for the contract extensions or rebates.
The contracts will be extended and 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 Exhibits.
“Also at its meeting on March, 27, 2006, based
on their reconsideration criteria, EDPAB recommended that the Authority’s
Trustees approve modifications to the benefits for six customers that have
applied to have their PFJ benefits reinstated after having been reduced by
EDPAB for non-compliance with their job commitments.
“The Trustees are requested to approve contract
extensions for the companies listed in Exhibits ‘5-A1’ and ‘5-A2,’ and the
payment and funding of rebates for the companies listed in Exhibit ‘5-B’ in
a total amount currently not expected to exceed $5,500,000. 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 for the companies
listed in the Exhibits in the future.
FISCAL INFORMATION
“Funding of rebates for the companies listed in
Exhibits ‘5-B’ and ‘5-C2’ are not expected to exceed $5,500,000. Payments
will be made from the Operating Fund. To date, the Trustees have approved
$31.7 million in rebates.
RECOMMENDATION
“The Senior Vice President and Chief Financial
Officer and the Director – Business Power Allocations, Regulation and
Billing recommend that the Trustees approve the contract extension for, and
the payment of electricity savings reimbursements to, the Power for Jobs
customers listed in Exhibits ‘5-A1,’ ‘5-A2’ and ‘5-B.’ It is also
recommended that the Trustees approve modifications to the benefits for six
customers that have applied to have their Power for Jobs benefits reinstated
after having been reduced by Economic Development Power Allocation Board for
non-compliance with their job commitments as detailed in Exhibits ‘5-C1’ and
‘5-C2.’
“The Executive Vice President and General
Counsel, the Senior Vice President – Marketing, Economic Development and
Supply Planning, 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. In response to a question from Chairman
Seymour, Mr. Del Sindaco said that the Authority could afford to pay the
$5.5 million in rebates recommended by staff.
The following resolution, as submitted by
the President and Chief Executive Officer, was unanimously adopted.
WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has
recommended that the Authority approve contract extensions and electricity
savings reimbursements to the Power for Jobs (“PFJ”) customers listed in
Exhibits “5-A1,” “5-A2” and “5-B,” respectively; and
WHEREAS, EDPAB has recommended that the Authority approve modifications to
six allocations for customers that have applied to have their PFJ benefits
reinstated after having been reduced by EDPAB for non-compliance with their
job commitments as detailed in Exhibits “5-C1” and “5-C2”;
NOW THEREFORE BE IT RESOLVED, That to implement such EDPAB recommendations,
the Authority hereby approves a contract extension for the companies listed
in Exhibits “5-A1” and “5-A2,” and the payment of electricity savings
reimbursements to the companies listed in Exhibit “5-B,” as submitted to
this meeting, and that the Authority finds that such extensions and payments
for electricity savings reimbursements are in all respects reasonable,
consistent with the requirements of the PFJ program and in the public
interest; and be it further
RESOLVED, That to implement such EDPAB recommendations, the Authority hereby
approves modifications to the benefits for six customers that have applied
to have their PFJ benefits reinstated after having been reduced by EDPAB for
non-compliance with their job commitments as detailed in Exhibits “5-C1” and
“5-C2”; 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 $5,500,000 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
resolution 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
and Supply Planning 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 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 resolutions, subject to the
approval of the form thereof by the Executive Vice President and General
Counsel.
6.
Lake Placid Village, Inc. – Increase in Retail Rates – Notice of Adoption
The President and Chief Executive Officer
submitted the following report:
SUMMARY
“The Board of the Village of Lake Placid
(‘Village Board’) has requested the Trustees to approve revisions in the
Village of Lake Placid’s (‘Village’) retail rates for each customer service
classification. These revisions will result in additional total annual
revenues for the Electric Department of about $449,000, or 6.3%.
BACKGROUND
“The Village Board has requested the proposed
rate increases primarily to provide revenues to allow for sufficient working
funds to meet significant forecasted increases in operation and maintenance
expenses, meet current and planned debt service related to capital programs
and pay back the Authority, in monthly payments, Lake Placid’s portion of
the Tri-Lakes Transmission Agreement. The last time the Electric
Department’s revenues were increased was in 1997.
“The Village Board has planned additions to
plant-in-service amounting to $1,900,000 to upgrade and expand its electric
system. The capital program includes $1,300,000 for upgrades to its
distribution substation equipment to accommodate for significant future
growth and efficiency. The remaining $600,000 is planned for the purchase
of three trucks ($225,000), line transformers ($125,000) and customer meters
($115,000), as well as improvements to the street lighting system
($135,000). The Village Board plans to debt-finance 75% of the capital
program by issuing a 30-year serial bond.
“Under the new rates, an average residential
customer who paid about 4.9 cents per kWh under the old rates will pay about
5.1 cents. A small commercial customer that paid 5.3 cents per kWh under
the old rates will pay 5.7 cents after the increase. The large
commercial-class rate increases from 3.8 to 4.1 cents and the Olympic Arena
rate from 3.6 to 4.0 cents per kWh.
DISCUSSION
“The proposed rate revisions are based on a
cost-of-service study prepared by Authority staff. No ratepayer comments
were received at the public hearing held by the Village on November 21, 2005
and the Village Board has requested that the proposed rates be approved. On
December 16, 2005, the Village Board formally requested that approval of the
proposed rates be delayed until the March 28, 2006 Trustees’ meeting. This
delay allowed the Electric Department time to submit bill comparisons using
the current and proposed rates during the winter months, showing ratepayers
the monetary impact of not conserving energy during those high-cost months.
The Village Board also wants to give customers enough time to implement
energy conservation practices during the non-winter months, in preparation
for the next winter season.
“Pursuant to the approved procedures, the Senior
Vice President – Marketing, Economic Development and Supply Planning
requested the then Executive Vice President, Secretary and General Counsel
to file a notice for publication in the New York State Register of the
Village’s proposed retail rate revisions. Such notice was published on
December 14, 2005. No comments concerning the proposed action have been
received by the Secretary’s Office.
“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,
Regulation and Billing recommends that the attached schedule of rates for
the Village of Lake Placid be approved as requested by the Village Board 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 Deputy Secretary and Deputy General Counsel of the Authority
to file 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, Economic Development and
Supply Planning and I concur in the recommendation.”
The following resolution, as submitted by
the President and Chief Executive Officer, was unanimously adopted.
RESOLVED, That the proposed rates for electric service for Lake Placid
Village, Inc., as requested by such Village 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 Deputy Secretary and Deputy General Counsel 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 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.
7.
Otsego Electric Cooperative – Increase in Retail Rates – Notice of Adoption
The President and Chief Executive Officer
submitted the following report:
SUMMARY
“The Board of the Otsego Electric Cooperative
(‘Cooperative Board’) has requested the Trustees to approve revisions in the
Otsego Electric Cooperative’s (‘Cooperative’) retail rates for each customer
service classification. These revisions will result in additional total
annual revenues of about $366,000, or 8%.
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 government regulatory financial ratio level
requirements. Current rates have been in effect since March 2000.
“The management of the Otsego Electric
Cooperative has planned additions to plant-in-service amounting to $4.3
million. The capital program consists of a major upgrade of its
distribution lines and conductors and an increase to its substation
capacity. The Cooperative plans to finance its capital program by borrowing
$4 million of new debt.
“Under the new rates, an average residential
customer who currently pays about 9.3 cents per kWh, will pay about 10.0
cents. A small commercial customer currently pays 9.1 cents per kWh and
will pay 9.9 cents after the increase. Large commercial (single-phase)
customers are presently paying 12.3 cents and will pay 13.1 cents after the
increase. Large commercial (multiphase) customers currently pay 9.6 cents
and will pay 10.4 cents after the rate increase.
DISCUSSION
“The proposed rate revisions are based on a
cost-of-service study prepared by the Otsego Electric Cooperative and
reviewed by Authority staff. A public hearing was held by the Cooperative
on December 27, 2005. No comments were received from the ratepayers at the
public hearing. The Cooperative Board has requested that the proposed rates
be approved.
“Pursuant to the approved procedures, the Senior
Vice President – Marketing, Economic Development and Supply Planning
requested the then Executive Vice President, Secretary and General Counsel
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 February 1, 2006. No comments concerning the proposed action have been
received by the Authority’s Secretary.
“An expense and revenue summary, comparisons of
present and proposed total annual revenues and their corresponding rates by
service classification are attached as Exhibits ‘7-A,’ ‘7-B’ and ‘7-C,’
respectively.
RECOMMENDATION
“The Director – Business Power Allocations,
Regulation and Billing recommends that the attached schedule of rates for
the Otsego Electric Cooperative be approved as requested by the Cooperative
to take effect beginning with the first full billing period following
Trustee approval of the rates.
“It is also recommended that the Trustees
authorize the Deputy Secretary and Deputy General Counsel to file 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, Economic Development and
Supply Planning and I concur in the recommendation.”
In response to a question from Vice Chairman
McCullough, Mr. Pasquale said that the Cooperative is in compliance with
certain federal government regulatory financial ratio level requirements.
Responding to a question from Chairman Seymour, Ms. Morman said that the
Cooperative’s rates are so much higher than the Village of Lake Placid’s
rates because the Cooperative has a much larger rural service territory and
thus higher transmission and distribution costs.
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 Otsego
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 Deputy Secretary and Deputy General Counsel of the
Authority be, and hereby is, authorized to file notice of adoption of the
proposed rates 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 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.
