MINUTES OF THE REGULAR MEETING

MINUTES OF THE REGULAR MEETING OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

May 23, 2006

Subject

1. Minutes of the Annual Meeting held on April 28, 2006

2. Financial Reports for the Four Months Ending April 30, 2006

3. Report from the President and Chief Executive Officer

4. Allocation of 5,450 kW of Hydro Power , exhibits, 4-A,’ ‘4-A1,’ Resolution ,‘4-A2’

5. Power for Jobs Program – Extended Benefits Resolution, exhibits, ‘5-A,’ ‘5-B’

6. Operations and Maintenance Payments for New York State Parks Resolution

7. Amendments to the Authority’s Investment Guidelines Resolution, exhibits, ‘7-A1,’ ‘7-A2’

8. Procurement (Services) Contract – St. Lawrence/FDR Power Project – Life Extension and Modernization Program – Increase in Expenditure Authorization and Contract Compensation Limit Resolution

9. Statewide Energy Services Program – Inclusion of Municipal and Rural Electric Cooperative System Customers Resolution

10. Appointment of Trustee Elise Cusack to the Audit Committee Resolution

11. Niagara-Adirondack Tie Line – Acquisition of Property ’Resolution, exhibit ‘11-A,’ ‘11-A1, ‘11-A2’

12. New York State 2006 “Stay Cool!” Program Resolution

13. Motion to Conduct Executive Session

14. Motion to Resume Meeting in Open Session

15. Blenheim-Gilboa Pumped Storage Project – Proposed Settlement – NYISO Market Clearing Prices Resolution

16. Collective Bargaining Agreement Between the Authority and Local Unions 2032 and 2104, International Brotherhood of Electrical Workers – Successor Agreement Resolution, exhibit, ‘16-A’

17. Niagara Power Project – Authorization of Niagara University Relicensing Settlement Agreement and Filing of Supplement to Offer of Settlement Resolution

18. Niagara Power Project – Authorization of Good Neighbor Agreement with Niagara University Resolution , exhibit ‘18-A’

19. Other

20. 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 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

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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

Steven J. DeCarlo Senior Vice President – Transmission

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

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

Brian Vattimo Senior Vice President – Public and Governmental Affairs

Edward A. Welz Senior Vice President – Power Generation

Anne B. Cahill Corporate Secretary

Carmine J. Clemente Deputy General Counsel

Joseph J. Carline Assistant General Counsel – Transmission

Wendy Lane Assistant General Counsel – Human Resources & Labor Relations

Thomas P. Antenucci Vice President – Project Management

Arnold M. Bellis Vice President – Controller

Arthur M. Brennan Vice President – Internal Audits and Corporate Compliance

Robert J. Deasy Vice President – Energy Resource Management

Joseph W. Gryzlo Vice President – Ethics and Employee Resources

John M. Hoff Vice President – Procurement and Real Estate

Charles I. Lipsky Vice President and Chief Engineer

Donald A. Russak Vice President – Finance

William V. Slade Vice President – Environmental Management

Tom H. Warmath Vice President and Chief Risk Officer

Michael E. Brady Treasurer

Stephen P. Shoenholz Deputy Vice President – Public Affairs

Dennis T. Eccleston Chief Information Officer

Edgar K. Byham Principal Attorney I

William Helmer Special Licensing Counsel

Angela D. Graves Deputy Corporate Secretary

Frederick Chase Executive Director – Hydro Relicensing

John Osinski Executive Director of Regulatory Affairs

Ida Gencarelli Director – Employee Benefits

Keith Silliman Director – Niagara Relicensing

Daniel Wiese Director – Corporate Security and Inspector General

Richard J. Ardolino Project Manager – Project Management

Michael Mitchell Project Manager – Project Management

Richard Hackman Program Manager – Energy Services & Technology

Carol Geiger-Wank Senior Employee Relations Specialist

Michael A. Saltzman Senior Information Specialist

Brian G. Warner Senior Policy Specialist

Mary Jean Frank Associate Corporate Secretary

Lorna M. Johnson Assistant Corporate Secretary
Jeffrey Carey Special Assistant to President and Chief Executive Officer

Lisa Farrell Secretary to Executive Vice President and General Counsel

Kevin Brocks Read and Laniado – Counsel to Municipal Electric Utilities Association

Ken Stabb Village of Boonville – Superintendent

Ray Core Vice President – Transpower US

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

2. Financial Reports for the Four Months Ended April 30, 2006

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

3. Report from the President and Chief Executive Officer

President Carey said that Chairman McCullough and he had recently taken a very successful trip to the North Country, visiting the St. Lawrence plant, where they met with plant employees, and Watertown, where they had positive meetings with Authority customers, State and local officials, and the media. Chairman McCullough added that President Carey’s efforts in the past few months to visit each Authority facility and meet with the employees, as well as local editorial boards, were very worthwhile. He agreed that the North Country trip had been a most positive one and mentioned that one of the highlights had been the public announcement of the first loan commitment by the Seaway Private Equity Corporation (“SPEC”), started by the Authority last fall. He said that three other loans are in the works. President Carey added that the SPEC loans involved a 2:1 match on investment in energy technology and environmental research and had the potential to create meaningful jobs in the North Country. President Carey also said that the meeting he and Chairman McCullough had with Alcoa had gone very well.

4. Allocation of 5,450 kW of Hydro Power

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve two allocations of available Expansion Power totaling 5,450 kW to two industrial companies.

BACKGROUND

“Under Section 1005 (13) of the Power Authority Act, as amended by Chapter 313 of the Laws of 2005, the Authority may contract to allocate or reallocate directly, or by sale for resale, 250 MW of firm hydroelectric power as Expansion Power (‘EP’) and up to 445 MW of Replacement Power (‘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, National Grid (formerly Niagara Mohawk Power Corporation), 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 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 available power be allocated between two companies, as set forth in Exhibit ‘4-A.’ The Exhibit shows, among other things, the amount of power requested by each company, the recommended allocation and additional employment and capital investment information. These projects will help maintain and diversify the industrial base of Western New York and provide new employment opportunities. They are projected to result in the creation of 80 jobs.

RECOMMENDATION

“The Director – Business Power Allocations, Regulation and Billing recommends that the Trustees approve the allocation of 5,450 kW of hydro power to the companies listed in Exhibit ‘4-A.’

“The Executive Vice President and General Counsel, the Senior Vice President – Marketing, Economic Development and Supply Planning, 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 5,450 kW of Expansion Power, as detailed in Exhibit “4-A,” 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.

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