MINUTES OF THE ANNUAL MEETING OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

April 24, 2007

 

 

 

            Subject                                                                                                                     

 

1.              Minutes of the Regular Meeting held on March 27, 2007                                                                                           

2.              Financial Reports for the Three Months Ended March 31, 2007, Exhibit ‘2-A’                  

3.              Report from the President and Chief Executive Officer                                                                         

4.              Allocation of 550 kW of Hydro Power, Exhibit ‘4-A’; ‘4-A1’ – ‘4-A2’
 
Resolution                                                                                                                                       

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

6.              Municipal and Rural Cooperative Economic Development Program – Allocation to the Town of Massena
 Resolution

7.              Annual Review of Job Commitments, Exhibit ‘7-A’
 Resolution

8.              Increase in Hydroelectric Preference Power Rates - Notice of Adoption, Exhibit ‘8-A’ – ‘8-C’
 Resolution

9.              Transfer of Ownership of Electric School Bus to Byram Hills Central School District
 
Resolution

10.           2006 Annual Report of Procurement Contracts and Annual Review of Open Procurement Service Contracts, Exhibit ‘10-A1’ – ‘10-A3’
 Resolution

11.           Disposal via Sale of Beechcraft King Air B-350 Aircraft, Exhibit 11-A’ – ‘11-B’
 Resolution

12.           New York State 2007 “Be Cool!” Program                                                                 
 Resolution

13.           Richard M. Flynn Power Plant – Major Outage and Life Extension Modifications – Capital Expenditure Authorization
 Resolution

14.           Motion to Conduct an Executive Session                                                                                                                    

15.           Motion to Resume Meeting in Open Session                                                        

16.           Election of Authority Non-Statutory Officers and Amendment of Annual Meeting Date
 Resolution

17.           Review and Approval of Revised Guidelines and  Procedures for the Disposal of Personal Property and Revised Guidelines and Procedures for the
Disposal of Real Property,
Exhibit ‘17-A’ & ‘17-B’
Resolution

18.           Next Meeting                                                                                                                 

               Closing                                                                                                                             

 


 

Minutes of the Annual Meeting of the Power Authority of the State of New York held via video conference at the following participating locations at 11:04 a.m.:

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

2)       New York Power Authority, Niagara Power Project, 5777 Lewiston Road, Lewiston, NY

The following Members of the Board were present at the following locations:

                                Frank S. McCullough, Jr., Chairman (White Plains, NY)

                                Michael J. Townsend, Vice Chairman (White Plains, NY

                                Elise M. Cusack, Trustee (Lewiston, NY)

                                Robert E. Moses, Trustee (White Plains, NY)

                                Thomas W. Scozzafava, Trustee (White Plains, NY)

                                Joseph J. Seymour, Trustee (White Plains, NY)

                                Leonard N. Spano, Trustee (White Plains, NY)

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Timothy S. Carey                                 President and Chief Executive Officer

Thomas J. Kelly                                    Executive Vice President and General Counsel

Joseph Del Sindaco                             Executive Vice President and Chief Financial Officer

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

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

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

Thomas H. Warmath                           Vice President and Chief Risk Officer

Daniel Wiese                              Vice President – Corporate Security and Inspector General

Anne B. Cahill                                      Corporate Secretary

Angela D. Graves                                 Deputy Corporate Secretary

Dennis T. Eccleston                     Chief Information Officer

Brian C. McElroy                        Treasurer

Lisa Cole                                   Deputy Treasurer

Joseph J. Carline                         Assistant General Counsel – Power and Transmission

Paul F. Finnegan                         Executive Director – Public and Governmental Affairs

Helen L. Eisenfeld                                Director – Cost Control and Electric Transportation

James F. Pasquale                        Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing

Michael A. Saltzman                            Director – Media Relations

Marilyn J. Brown                                  Manager – Market and Pricing Analysis

John M. Kahabka                                 Manager – Environmental Operations

Arnold J. Schuff                                   Manager – Transmission Planning

Denise D’Ambrosio                             Principal Attorney I

Gary D. Levenson                                Sr. Attorney II

Jacquline E. Carmody                          Attorney I

Kevin J. Falvey                                     Lead Financial Analyst – Corporate Finance

Diane Gil                                                Sr. Procurement Specialist

Oksana Karaczewsky                          Sr. Procurement Compliance Coordinator

Mary Jean Frank                                  Associate Corporate Secretary

Lorna M. Johnson                               Assistant Corporate Secretary


 

Jack Murphy                                         Temporary PR Counsel

Randy Nelson                                       Auditor, Ernst & Young

Steve Wilson                                        Attorney, Read & Laniado

 


 

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


 

1.             Approval of the Minutes

The Minutes of the Regular Meeting of March 27, 2007 were unanimously adopted.


 

2.             Financial Reports for the Three Months Ended March 31, 2007
 

                Mr. Bellis presented an overview of the financial reports. 

 

 

3.             Report from the President and Chief Executive Officer

               

                President Carey said that, along with Mr. Del Sindaco and Mr. Bellis, he had just completed the first quarter budget reviews for each business unit and department and that the Authority is operating within its budget for the 2007 fiscal year. 

                President Carey then briefly outlined Governor Spitzer’s “15 by 15” energy plan, which calls for a decrease in energy use by 15% and an increase in the use of renewable energy resources by 15% by the year 2015.  He said that staff is currently reviewing Mayor Bloomberg’s recently released energy plan, especially since the City of New York and its Housing Agency are among the Authority’s largest SENY customers. 

                According to President Carey, the Province of Ontario, Canada, has banned the sale of incandescent light bulbs, as has Australia. 

                President Carey also mentioned that the Public Service Commission is exploring the feasibility of “decoupling” for utilities as California has done.  Under decoupling, utilities’ revenues are not tied completely to how much energy they sell, since they can make money by lowering energy usage.  Decoupling also has the potential to decrease the need for new power plant construction and to shave peak load.

 


 

4.             Allocation of 550 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 Expansion Power (‘EP’) totaling 300 kW to ISOCHEM, Inc. (‘ISOCHEM’) and one allocation of available EP totaling 250 kW to Moldtech, Inc. (‘Moldtech’).  These two allocations total 550 kW.

 

BACKGROUND

 

“Under the Replacement Power (‘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

 

“At their meeting of February 27, 2007 the Trustees approved a 400 kW RP allocation to Moldtech.  This allocation was to support Moldtech’s plan to move and expand from its existing site in Lancaster to a new facility in Amherst.  Since that time, the owner of Moldtech informed the Authority that the move to Amherst is not cost effective and has canceled the project.  As a result, Moldtech is now considering expanding its existing facility in Lancaster and has applied for hydro power for this expansion.

 

“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 available power be allocated to two companies as set forth in Exhibit ‘4-A.’  The Exhibit shows, among other things, the amount of power requested, the recommended allocations 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 33 jobs.

 

RECOMMENDATION

 

“The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees approve the allocation of 550 kW of hydro power to the companies listed in Exhibit ‘4-A.’

 

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 550 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 allocation of 400 kW of Replacement Power that the Trustees approved for Moldtech, at their February 27, 2007 meeting be withdrawn since the project that the allocation was approved for was canceled; 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.

 

 

 


 

 

 

 

 

APPLICATION SUMMARY

Expansion Power

 

Company: ISOCHEM, Inc.

 

Location:                                                  Lockport

                                                                            

County:                                                     Niagara County

 

IOU:                                                           New York State Electric and Gas Corporation

 

Business Activity:                                  Phosgene chemical products

 

Project Description:                               The project involves installing new processing equipment for distilling phosgene derivatives and an on-site nitrogen (N2) production unit.  The distillation process enables ISOCHEM to produce new products and recycle organic solvents, creating new raw material streams and reducing hazardous waste.  The on-site N2 generator will reduce production costs and provide a beta site for new products in cooperation with Praxair.

 

Prior Application:                                  None

 

Existing Allocation:                               None

 

Power Request:                                       410 kW

                                                                  

Power Recommended:                            300 kW  

 

Job Commitment - Existing:                 93 jobs

                                     New:                       3 jobs

                                                                           

New Jobs/Power Ratio:                          10 jobs/MW

 

New Jobs -

Avg. Wage and Benefits:                       $71,000

 

Capital Investment:                                $1.84 million 

 

Capital Investment Per MW:                $6.1 million/MW

 

Summary:                                             ISOCHEM would invest in processing equipment that creates the opportunity for new products, lowers production costs and reduces hazardous waste by distilling and recycling organic solvents.  A hydro allocation would enhance competitiveness internationally, where 90% of the company’s competitors operate and 50% of its products are sold.  The allocation will also enable the company to win projects from a sister facility in Hungary where fixed costs remain substantially lower.  ISOCHEM is actively pursuing other economic development opportunities, including a grant from Empire State Development’s Environmental Investment program via the Niagara County Industrial Development Agency.

 

 


 

APPLICATION SUMMARY

Expansion Power

 

Company: Moldtech, Inc.

 

Location:                                                  Lancaster

County:                                                     Erie

 

IOU:                                                           New York State Electric and Gas Corporation

 

Business Activity:                                  Injection-molded rubber products

 

Project Description:                               The project includes building improvements to increase production capacity and meet growing sales demand.  Moldtech will double its capacity of injection molding machines over the next five years. The company will install seven new injection presses.

 

Prior Application:                                  Yes

 

Existing Allocation:                               400 kW of RP, which will be withdrawn upon approval of this application

 

Power Request:                                       400 kW

Power Recommended:                            250 kW  

 

Job Commitment:     

                   Existing:                                45 jobs

                   New                                        30 jobs

                                                                           

New Jobs/Power Ratio:                          120 jobs/MW

 

New Jobs -

Avg. Wage and Benefits:                       $38,000

 

Capital Investment:                                $4.3 million 

Capital Investment per MW                  $17.2 million /MW

 

Summary:                                                Moldtech has grown significantly over the last two years and expects 30-50% growth for 2007, requiring additional manufacturing space and equipment since it will have outgrown its current space.  Moldtech is considering relocating to Indiana, including scoping an existing facility and negotiating electricity costs.  A hydro allocation will help Moldtech stay in Western New York.  Moldtech is actively pursuing other economic development opportunities, including a capital grant from Empire State Development and other incentives from local agencies.

 


 

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 51 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘5-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 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 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 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 completed review of 108.

 

DISCUSSION

 

“At its meeting on April 24, 2007, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 51 businesses listed in Exhibit ‘5-A.’  Collectively, these organizations have agreed to retain more than 26,000 jobs in New York State in exchange for rebates.  The rebate program will be in effect until June 30, 2007, the program’s sunset. 

 

“The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘5-A’ in a total amount currently not expected to exceed $3.4 million.  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 in Exhibit ‘5-A’ is not expected to exceed $3.4 million.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $73.2 million in rebates.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer and the Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibits ‘5-A.’

 

“The Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Public and Governmental Affairs, 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.

 

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 “5-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 “5-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 $3.4 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 and 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 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 resolutions, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 


 

6.             Municipal and Rural Cooperative Economic Development Program – Allocation to the Town of Massena

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve an allocation of power under the Municipal and Rural Cooperative Economic Development Program (‘Program’) to the Town of Massena (‘Town).’

 

BACKGROUND

“The 1991 amendment to the power sales agreement between the Authority and the Municipal and Rural Cooperative Systems reserved 108,000 kW of power for economic development in the systems’ service territories.  As of January 30, 2007, 38,640 kW have been allocated.

 

“Power from this block can be allocated to individual systems to meet the increased electric load resulting from eligible new or expanding businesses in their service area.  The recommended allocations under the Program comprise half hydropower and half incremental power.  Under the guidelines established for the Program, an allocation to a system should meet a target number of new jobs per MW.  The guidelines provide that for businesses new to a system, the jobs-per-MW ratios are considered on a case-by-case basis.  For projects involving existing businesses, the number of jobs per MW is the number of new jobs as compared to the level of employment prior to the expansion.  Specifically, for companies employing 100 or less, the target ratio is 25 jobs per MW; for companies employing between 101 and 250, the ratio is 50; for companies employing between 251 and 500, the ratio is 75 and for companies employing more than 500, the ratio is 100 jobs per MW.

 

“The Town has submitted an application for power under the Program for consideration by the Trustees.

 

DISCUSSION

“An application has been submitted by the Town on behalf of Curran Renewable Energy, LLC (‘Curran Renewable’).  Curran Renewable is a privately held company incorporated in the State of New York.  The company will be in the business of manufacturing wood pellets for wood stoves and other heating sources.  The company will be the principal supplier of this new and growing market in the North Country.

 

“Curran Renewable considered opening this new manufacturing facility in Canada, but the potential advantages of reduced power cost and the strategic location of two buildings in Massena will allow the company to compete more efficiently and at the same time bring much-needed additional jobs to the community. 

 

“Curran Renewable is planning to purchase two buildings from the St. Lawrence County IDA currently vacant and suitable for their needs without alterations, for approximately $1.7 million, invest $5.4 million on machinery and equipment and $2.9 on site work, start up-cost and fees.  The estimated cost of the project is expected to total $10.0 million.  The new facility is expected to produce 100,000 tons of wood pellets annually and provide for approximately 23 full-time jobs over the next three years, adding revenue to the local economy and resulting in 25 jobs per MW of hydropower.  The estimated electrical monthly peak load for the facility is 1,840 kW.  It is recommended that the Trustees approve an allocation of 1,840 kW, of which half is hydropower, for the Town on behalf of Curran Renewable Energy, LLC.

 

“The Municipal Electric Utilities Association Executive Committee supports the recommended allocations to the Town.

 

“The recommended allocations under the Program comprise half hydropower and half incremental power.  In accordance with the Authority’s marketing arrangement with the municipal and cooperative customers, the hydropower will be added to the recipient system’s contract demand at the time a project becomes operational.  The hydropower earmarked for this Program is presently sold to the municipal and cooperative customers on a withdrawable basis.  As partial-requirement customer, the Town of Massena may purchase the incremental power from the Power Authority or an alternate supplier.

 

RECOMMENDATION

“The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees approve the allocation of power under the Municipal and Rural Cooperative Economic Development Program to the Town of Massena in accordance with the above.

 

“The Executive Vice President and General Counsel, the Senior Vice President – 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 power to the Town of Massena under the Municipal and Rural Cooperative Economic Development Program is hereby approved as set forth in the attached memorandum of 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 execute any and all documents necessary or desirable to effectuate these allocation; 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.


 

7.             Annual Review of Job Commitments

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“It is recommended that the Trustees grant termination authority for two customers with two contracts; reduce the power allocations and/or job commitments for four customers with six contracts; take no action on 32 customers with 35 contracts and defer action with respect to six customers in the automotive industry with 15 contracts, as set forth in Exhibit ‘7-A’ attached hereto. 

 

BACKGROUND

 

                “Each year, Authority staff initiates a review of all business power allocations and the customers’ performance against agreed-upon job commitments.  In 2006, the Authority had 290 contracts with 185 business customers, excluding Power for Jobs (‘PFJ’) agreements.  This year’s review covers a total of 174 customers with 269 contracts that required the customers to report job levels for 2006.  The contracts reviewed by staff represent overall power allocations of 1,435.068 MW and total employment commitments of 120,502 jobs.  In the aggregate, these customers reported actual employment of 138,868.18 jobs.  This represents 115.24% of the total job commitment for business customers reporting in 2006.  Nevertheless, 43 customers with 58 contracts have actual job levels below the minimum threshold.

 

“The contracts contain a customer commitment to retain or add a specific number of jobs.  If the customer’s actual job level falls below 90% of that commitment (80% for ‘vintage’ customers, i.e., those having contract allocations prior to 1988), the Authority may reduce that customer’s power allocation proportionately.  Provided contract language allows for it, 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.

 

DISCUSSION

 

“This annual review of business power allocation job commitments covers the period from January through December 2006.  Of the companies reviewed in this item, staff recommends that the Trustees grant termination authority for two customers with two contracts, as discussed in Section I of Exhibit ‘7-A;’ reduce the allocations and/or jobs commitments for four customers with six contracts, as discussed in Section II of Exhibit ‘7-A’ and take no action on 32 companies with 35 contracts that are not meeting their commitments, as discussed in Section III of Exhibit ‘7-A.’

 

“In addition, in Section IV of Exhibit ‘7-A,’ staff recommends that the Trustees defer action for six customers in the automotive industry with 15 contracts.  The Authority has had a long history of supporting the automotive industry with allocations of nearly 60 MW of hydro power and 8 MW of Economic Development Power.  Customers include General Motors, Ford, American Axle, Delphi and North American Höganäs.  Each of these customers have facilities facing a daily struggle to survive as their corporations decide which plants to close and which to keep open.  Hydro power has been a key factor in the survival of the Authority’s automotive customers, especially for the last five years.  The U. S. auto industry is dramatically restructuring in response to global pressures.  Staff is asking the Trustees to defer action regarding the Authority’s automotive customers for one year.  During this time, staff will revisit these customers’ original contractual job commitments and assist the customers in documenting traditional productivity improvements, as well as productivity improvements related to changes in human resources practices, new work rules, redefinition of job descriptions, etc.  The 2007 annual review of jobs Trustee item will include a recommendation and justification for refreshing the job commitments of the Authority’s automotive customers while allowing their allocations to remain intact, provided that each individual business case warrants such action, with the result that the companies can recover and remain open and competitive. 

  


 

Section I

 

Allocations Requesting Special Trustee Authorization

 

Saint-Gobain Corporation – Microelectronics, Sanborn, Niagara County

Allocation:                            900 kW of Replacement Power (“RP”)

Jobs Commitment:              35 jobs

Background:  Saint-Gobain Corporation – Microelectronics (“SGC”) develops ceramics to dissipate the heat generated by electrical circuits in order to make smaller, faster and more powerful computer chips and other heat-sensitive devices.  The bottom has fallen out of the market for the computer chip industry and the company has not been able to recover this business.  The plant closed this past year.

Recommendation:  Staff recommends that the Trustees terminate SGC’s 900 kW RP allocation, as the facility has ceased operation.

 

Sherwood, A Division of Harsco Corp., Lockport, Niagara County

Allocation:                            240 kW of Expansion Power (“EP”)

Jobs Commitment:              361 jobs

Background:  Sherwood, A Division of Harsco Corp. (“Sherwood”), founded in 1923, manufactures gas-control valves and regulators for compressed gas, refrigerants and scuba diving gear.  For the past year, Sherwood – Lockport averaged 86.25 jobs, i.e., 23.89% of its employment commitment.  Employees from Lockport have been moved to the more modern Wheatfield plant, since the Lockport facility, which was old and no longer capable of accommodating the changes required for the business, closed in 2006.

Recommendation:  Staff recommends that the Trustees terminate Sherwood’s 240 kW EP allocation, as the company has closed the facility.

 

 

Section II

Allocations and Job Commitments To Be Reduced

 

Brenner Paper Products Company, Inc., Glendale, Queens County

Allocation:                            600 kW of Municipal Distribution Agency (“MDA”) Power

Jobs Commitment:              140 jobs

Background:  Brenner Paper Products Company, Inc. (“Brenner”) manufactures dry office supply paper products.  For the past year, Brenner averaged 99.17 jobs, i.e., 70.83% of its contractual commitment.  Brenner’s business and employment were down last year as there has been a slowdown in the envelope industry.  The company had to switch from three shifts to two shifts.  This year, employment is down even further, but Brenner is doing all it can to stem the loss and grow back to at least its 2005 level and, hopefully, more.

Recommendation:  Staff recommends that the Trustees reduce Brenner’s 600 kW MDA Power allocation by 175 kW to 425 kW and reduce its employment commitment by 41 jobs to 99 jobs.

 

Buffalo Newspress Inc., Buffalo, Erie County

Allocation:                            250 kW of EP

Jobs Commitment:              200 jobs

Background:  Buffalo Newspress Inc. (“Buffalo Newspress”), founded in 1979, prints advertising inserts, brochures and weekly newspapers.  For the past year, Buffalo Newspress averaged 149.17 jobs, i.e., 74.58% of its contractual commitment.  Buffalo Newspress lost its biggest account in 2005, representing 35% of its business.  The company has been trying hard to replace the lost business but it has been difficult to do.  Buffalo Newspress has maintained its workforce throughout this challenging period.

Recommendation:  Staff recommends that the Trustees reduce Buffalo Newspress’ 250 kW EP allocation by 50 kW to 200 kW and reduce its employment commitment by 51 jobs to 149 jobs.

 

Ferro Electronic Materials, Niagara Falls, Niagara County

Allocation:            3,115 kW and 1,000 kW of RP and 3,000 kW of EP

Jobs Commitment:              276 jobs, 257 jobs and 220 jobs, respectively

Background:  Ferro Electronic Materials (“Ferro”) is a supplier of dielectric powder to the passive electronic component industry and zirconia-based ceramic powders to industry.  For the past year, Ferro averaged 152.25 jobs, i.e., 55.16% and 59.24% of its RP allocations’ commitments.  The EP allocation is a “vintage” contract, meaning that it has an 80% job ratio and two-year job average.  The two-year average is 159.50 jobs, i.e., 72.50% of the company’s commitment.  Ferro’s employment level will remain stable for the foreseeable future, as no new production is scheduled.  The company is currently in the process of looking for a purchaser of the site.

Recommendation:  Staff recommends that the Trustees: (1) reduce Ferro’s 3,115 kW RP allocation by 1,415 kW to 1,700 kW and the related employment commitment by 124 jobs to 152 jobs, (2) reduce the company’s 1,000 kW RP allocation by 400 kW to 600 kW and the related employment commitment by 105 jobs to 152 jobs and (3) reduce its 3,000 kW EP allocation by 900 kW to 2,100 kW and the related employment commitment by 68 jobs to 152 jobs.

 

Habasit Globe, Inc., Buffalo, Erie County

Allocation:                            250 kW of RP

Jobs Commitment:              123 jobs

Background:  Habasit Globe, Inc. (“Habasit”), in business since 1916, manufactures conveyor belts primarily for the food industry.  The company uses a non-rubber, non-woven specially treated fabric that is lighter, stronger and easier to clean than rubber.  For the past year, Habasit averaged 80.17 jobs, i.e., 65.18% of its contractual commitment.  The company has had a very steady employment level for the past several years but is growing slightly in 2007, with four new hires.  The company remains committed to being a steady employer in Buffalo.

Recommendation:  Staff recommends that the Trustees reduce Habasit’s 250 kW RP allocation by 50 kW to 200 kW and reduce its employment commitment by 43 jobs to 80 jobs.

 

 

Section III

Allocations to Continue with No Change

 

Buffalo Tungsten Incorporated, Depew, Erie County

Allocation:                            800 kW of RP

Jobs Commitment:              62 jobs

Background:  Buffalo Tungsten Incorporated (“Buffalo Tungsten”), founded in 1987, produces tungsten powder that is primarily used by the electronics and sporting goods industries and the military.  For the past year, Buffalo Tungsten averaged 54.83 jobs, i.e., 88.44% of its contractual commitment.  Buffalo Tungsten grew this year, meeting its commitment over the last six months with more than 57 employees.

 

Ceres Corporation, Niagara Falls, Niagara County

Allocation:            1,700 kW, 1,600 kW and 1,300 kW of RP

Jobs Commitment:              60 jobs for all allocations

Background:  Ceres Corporation (“Ceres”), founded in 1976, was the first U. S. producer of cubic zirconia, as well as the first cubic zirconia manufacturer to develop and sell colored cubic zirconia.  The product is used in the gem-cutting industry and is also used in jewelry.  Ceres developed and sells the industry’s leading diamond-testing instruments.  For the past year, Ceres averaged 46.42 jobs, i.e., 77.36% of its contractual commitments.  While the company is in the midst of developing a new product line and is growing, it implemented productivity improvement measures this past year, resulting in a reduced employment level of 47 jobs.  Though the productivity improvement reduction request has not been verified by an on-site visit, if approved, it would allow Ceres to meet its commitment.

 

Columbia University Audubon Business & Technology Center, New York, New York Co.

Allocation:                            1,000 kW of MDA Power

Jobs Commitment:              166 jobs

Background:  Columbia University Audubon Business & Technology Center (“Columbia Audubon”), operating since 1995, houses biotechnology research and development companies.  The center was developed by Columbia University in conjunction with New York City and New York State in order to expand the biotechnology sector of the local and regional economies.  The job ratio for this allocation is 75% of its commitment.  For the past year, Columbia Audubon averaged 104.25 jobs, i.e., 62.80% of its employment commitment.  Columbia Audubon has not reported the jobs for all of the biotechnology companies that exist in the center, which resulted in underreporting its actual employment level.  Obtaining the updated information is not feasible due to the nature of the business center.  In 2007, Columbia Audubon is meeting its employment commitment.

 


 

Contract Pharmaceuticals Limited Niagara, Buffalo, Erie County

Allocation:                            250 kW of RP

Jobs Commitment:              329 jobs

Background:  Contract Pharmaceuticals Limited Niagara (“CPL”), a Canadian company, purchased Bristol-Myers Squibb’s facility in 2005.  The company manufactures dry skin, anti-inflammatory and antifungal dermatological products, in addition to various cold medicines under contract for other companies.  For the past year, CPL averaged 242.38 jobs, i.e., 73.67% of its contractual commitment.  While CPL claims it is in the process of ramping up its business and expects to grow, the company has not grown in several years.

Recommendation:  Staff recommends that the Trustees reduce CPL’s 250 kW RP allocation by 50 kW to 200 kW and reduce its employment commitment by 87 jobs to 242 jobs.

 

Dunkirk Specialty Steel, LLC, Dunkirk, Chautauqua County

Allocation:                            6,800 kW of EP

Jobs Commitment:              250 jobs

Background:  Dunkirk Specialty Steel, LLC (“Dunkirk”), initially Dunkirk Acquisitions, purchased the assets of Empire Steel in 2002 and manufactures stainless steel and alloys, primarily for the tool industry.  For the past year, Dunkirk averaged 157.33 jobs, i.e., 62.93% of its contractual commitment.  The company is growing and foresees continued growth in the future.  Not only has the company been getting customers back, but it is adding new ones as well.  Currently, Dunkirk is at 180 jobs, with more expected this year.  Focused on making a profit, the company has made careful investments to continue growth in a sustainable way but does not foresee meeting its commitment this year.  Staff will follow up with Dunkirk’s employment level in the second half of the year.

 

Ellanef Manufacturing Corp., Corona, Queens County

Allocation:                            1,100 kW of Economic Development Power (“EDP”)

Jobs Commitment:              251 jobs

Background:  Ellanef Manufacturing Corp. (“Ellanef”), founded in 1940, is the largest privately held manufacturer of aerospace machined parts and assemblies in the nation.  Ellanef manufactures parts for both the commercial and the defense industries, with Boeing, NASA and Space Administration and IBM as major customers.  For the past year, Ellanef averaged 221.08 jobs, i.e., 88.08% of its contractual commitment.  The company made it through many tough years and is now growing again with a resurgence in business.  Ellanef has spent a significant amount of money trying to fill job vacancies.  The company is just a few jobs short of its commitment and would be above its commitment if the vacancies are filled.

 

Endicott Interconnect Technologies, Inc., Endicott, Broome County

Allocation:                            20,000 kW of EDP

Jobs Commitment:              5,500 jobs

Background:  In 2002, Endicott Interconnect Technologies, Inc. (“Endicott”) purchased this microelectronics manufacturing facility, which had been in operation since 1906, from IBM.  Endicott manufactures electronics panels and boards and develops data-processing equipment such as PC panels and banking systems.  For the past year, Endicott averaged 4,117.17 jobs, i.e., 74.86% of its contractual commitment.  Last year was a growth year for Endicott, as more than 300 new jobs were added and more are being added in 2007.  Just recently, Endicott received a $160 million defense contract.  The company’s EDP allocation expires in 2007, however, staff will follow up with Endicott’s employment level in the second half of the year.

 

Excelsior Transparent Bag Manufacturing, Inc., Yonkers, Westchester County

Allocation:                            700 kW of MDA Power

Jobs Commitment:              180 jobs

Background:  Excelsior Transparent Bag Manufacturing, Inc. (“Excelsior”), a privately held company founded in 1946, prints and converts plastic film mainly for the food industry.  For the past year, Excelsior averaged 135.00 jobs, i.e., 75.00% of its contractual commitment.  Excelsior suffered in 2006 due to Hurricane Katrina, which damaged or destroyed so many petrochemical plants that there was a shortage in polymer resins, the main component of the film the company produces.  Though the company lost substantial business, it is very optimistic that the volume of sales and employment will return in 2007.

 

Granny’s Kitchens, Ltd., Frankfort, Herkimer County

Allocation:                            750 kW of EDP

Jobs Commitment:              315 jobs

Background:  Granny’s Kitchens, Ltd. (“Granny’s”), in business since 1981, is a wholesale bakery manufacturer specializing in cakes and donuts.  For the past year, Granny’s averaged 275.50 jobs, i.e., 87.46% of its contractual commitment.  While 2006 was not a good year for Granny’s, 2007 is shaping up to be one of growth, and hopefully the company will meet its commitment.

 

Honeywell International, Buffalo, Erie County

Allocation:                            300 kW of RP

Jobs Commitment:              168 jobs

Background:  Honeywell International (“Honeywell”), formerly Allied-Signal Inc., has been a research and development lab since the early 1900s.  Honeywell develops and produces atmospherically safe fluorocarbons.  For the past year, Honeywell averaged 136.77 jobs, i.e., 81.41% of its contractual commitment.  Since the site is a research facility, it depends on continued funding from Honeywell businesses.  The facility is at its highest employment level in five years and is growing; it expects to either come close to or meet its employment commitment in 2007.

 

ICM Controls Corporation, Cicero, Onondaga County

Allocation:                            500 kW of EDP

Jobs Commitment:              300 jobs

Background:  ICM Controls Corporation (“ICM”), established in 1984, designs and manufactures electronic controls for the HVAC market worldwide.  For the past year, ICM averaged 232.92 jobs, i.e., 77.64% of its commitment.  Though the company grew in 2006, it was still below its commitment.  However, ICM’s employment level meets its 2007 jobs commitment of 225 jobs.

 

Ingram Micro Corporation, Williamsville, Erie County

Allocation:                            900 kW of EP

Jobs Commitment:              1,525 jobs

Background:  Ingram Micro Corporation (“Ingram”) is a leading wholesale distributor of microcomputer products worldwide, including hardware, software and networking equipment.  For the past year, Ingram averaged 1,177.33 jobs, i.e., 77.20% of its job commitment.  Ingram invested $6 million in its new Solution Center this past year.  While this only adds 10 more jobs, it points towards growth, which is steadily taking place at Ingram.  The company will not meet its commitment in 2007 but is growing.

 

International Imaging Materials, Inc., Amherst, Erie County

Allocation:                            250 kW of RP

Jobs Commitment:              472 jobs

Background:  International Imaging Materials, Inc. (“International Imaging”), in business since the mid-1980s, is a manufacturer of thermal transfer ribbons.  For the past year, International Imaging averaged 421.58 jobs, i.e., 89.32% of its contractual commitment.  The company is only short of its commitment by two jobs.

 

Lakeside Warehouse Corporation/The Carriage House Companies, Dunkirk, Chautauqua Co.

Allocation:                            500 kW of EP

Jobs Commitment:              199 jobs

Background:  Lakeside Warehouse Corporation/The Carriage House Companies (“Lakeside”), in business since 1988, is a storage facility for both raw materials and finished products associated with syrups.  For the past year, Lakeside averaged 166.42 jobs, i.e., 83.63% of its contractual commitment.  The company recently changed its business from a focus on food bottling to producing foods.  Lakeside is trying to grow its business, and National Grid has recently worked with the company to help it maximize its hydro benefit.

 

Lockheed Martin, Niagara Falls, Niagara County

Allocation:                            250 kW of RP

Jobs Commitment:              45 jobs

Background:  Lockheed Martin (“Lockheed”) manufactures gravity gradiometer technology for the U.S. Navy and commercial use.  For the past year, Lockheed averaged 34.72 jobs, i.e., 77.15% of its contractual commitment.  While Lockheed’s workforce needs fluctuate, the company’s business has not allowed it to hire personnel to perform the work in house, so the work is outsourced.  The company grew by more than 30% in 2006 and is continuing to grow in 2007.  While Lockheed does not expect to meet its commitment this year, it does foresee meeting its commitment within two years.

 

M. Fortunoff, White Plains, Westchester County

Allocation:                            1,689 kW of MDA Power

Jobs Commitment:              380 jobs

Background:  M. Fortunoff (“Fortunoff”), an emporium originally founded in 1923, opened this location in 2003, specializing in unique home furnishings, jewelry and kitchenware.  For the past year, Fortunoff averaged 329.58 jobs, i.e., 86.73% of its commitment.  The company grew by 40 employees in 2006 and in the last quarter met its commitment.

 

Markin Tubing, Division of M & R Ind., Wyoming, Wyoming County

Allocation:                            1,200 kW of EDP

Jobs Commitment:              145 jobs

Background:  Markin Tubing, Division of M & R Ind. (“Markin”), founded in 1958, manufactures small-diameter welded steel tubing, mainly for the automobile industry.  For the past year, Markin averaged 126.17 jobs, i.e., 87.01% of its contractual commitment.  Despite difficult times in the automotive industry and financial problems at several large customers, the company’s employment level has been almost completely maintained.  Furthermore, Markin has made major capital investments intended to expand its product line and strengthen its manufacturing capabilities.  Markin was just two jobs short of its commitment in the last quarter.  The company foresees growth and expects to meet its commitment next year.

 

Mele Manufacturing Co., Utica, Oneida County

Allocation:                            475 kW of EDP

Jobs Commitment:              164 jobs

Background:  Mele Manufacturing Co. (“Mele”), founded in 1912, manufactures jewelry cases, custom packaging, desk accessories, legal binders and custom injection molding.  For the past year, Mele averaged 75.79 jobs, i.e., 46.21% of its contractual commitment.  Mele’s new, highly efficient facility requires fewer workers than before, and the facility’s cost-efficient operation has enabled the company to continue its viability in Utica and sustain a level workforce.  The company does not see further growth, but does foresee stability.  Mele maintains a strong job-to- megawatt ratio.  Mele will have its business situation addressed in the next Productivity Improvement item.

 

Monofrax Inc., Falconer, Chautauqua County

Allocation:                            2,082 kW of EP

Jobs Commitment:              380 jobs

Background:  Monofrax Inc. (“Monofrax”) uses an electric furnace ceramic foundry to manufacture fused cast refractories primarily used to line melting furnaces for glass product manufacturing.  For the past year, Monofrax averaged 236.83 jobs, i.e., 62.32% of its contractual commitment.  Monofrax does not ever foresee meeting the commitments made originally.  However, Monofrax was recently purchased by RHI, an Austrian company that has a few other refractory sites around the world, and is either looking to grow this location or shut it down.  RHI, in agreement with the Authority, will look at operations for one year before the company makes a determination as to what it will do with the site based on global competition.

 

NBTY, Inc., Bohemia, Suffolk County

Allocation:                            600 kW of EDP

Jobs Commitment:              675 jobs

Background:  NBTY, Inc. (“NBTY”), formed in 1971, manufactures and distributes health supplements, such as vitamins.  For the past year, NBTY averaged 589.25 jobs, i.e., 87.30% of its contractual commitment.  NBTY currently has 611 employees and met its jobs commitment for the last quarter reported.

 

Norampac Industries Inc., Niagara Falls, Niagara County

Allocation:                            12,000 kW of High Load Factor Power

Jobs Commitment:              140 jobs

Background:  Norampac Industries Inc. (“Norampac”), incorporated in 1987, is a paper mill producing recycled paper and corrugated boxes.  For the past year, Norampac averaged 123.75 jobs, i.e., 88.39% of its commitment.  Currently, the company has 127 employees, meeting its commitment, with eight more positions to be filled.

 

PEMCO – Precision Electro Minerals Co., Inc., Niagara Falls, Niagara County

Allocation:                            800 kW of RP

Jobs Commitment:              22 jobs

Background:  PEMCO – Precision Electro Minerals Co., Inc. (“PEMCO”), incorporated in 1987, makes and sells fused silica for use in the foundry and refractory industry.  For the past year, PEMCO averaged 18.92 jobs, i.e., 85.98% of its contractual commitment.  However, the company is less than one job short of its commitment.

 

Plascal Corporation, Farmingdale, Nassau County

Allocation:                            600 kW of MDA Power

Jobs Commitment:              73 jobs

Background:  Plascal Corporation (“Plascal”), founded in 1975, manufactures vinyl sheeting for commercial applications, such as swimming pool liners, loose-leaf binders and automotive products.  For the past year, Plascal averaged 58.25 jobs, i.e., 79.79% of its contractual commitment.  This past year, there was a shortage of the plastic vinyl used in the company’s products, in addition to significant worldwide competition for the material.  Plascal is pursuing many routes to continue as a manufacturer in New York State.  Its employment data meets the 2007 employment commitment of 60 jobs. 

 

Precious Plate, Inc., Niagara Falls, Niagara County

Allocation:                            800 kW of RP

Jobs Commitment:              145 jobs

Background:  Precious Plate, Inc. (“Precious”), established in 1973, provides leading-edge electroplating services to high-tech companies, primarily for computers, cell phones and phone switching gear.  For the past year, Precious averaged 127.92 jobs, i.e., 88.22% of its commitment.  2006 was a great year for Precious, as it grew by over 25% and met its commitment for the last six months reported.

 

Revere Copper Products, Rome, Oneida County

Allocation:                            6,000 kW of EDP

Jobs Commitment:              490 jobs

Background:  Revere Copper Products (“Revere”) manufactures rolled copper, rolled alloys and milled bars and rods.  For the past year, Revere averaged 421.08 jobs, i.e., 85.94% of its commitment.  Currently, excess capacity exists in the industry but the cost of raw materials and fuel has risen.  Revere has not been able to pass the cost increase on to customers due to stiff competition mainly from companies that are in low-labor-cost countries or are subsidized.  In order to survive, the company has put in place a continuous “lean manufacturing” program.  Revere has made productivity improvements that have allowed the company to remain competitive but put it permanently below 90% of its employment commitment.  The company is very proud that it has not lost any of its product line or assets and is getting stronger as it gets leaner.  Given that the company’s business is energy intensive, the allocation has been critical to its success.  Revere’s Massachusetts plant recently closed and may shift workers to this facility.  The Authority will watch Revere closely and revisit its situation in the second half of the year.

 

Sherwood, A Division of Harsco Corp., Wheatfield, Niagara County

Allocation:                            400 kW of EP

Jobs Commitment:              207 jobs

Background:  Sherwood, A Division of Harsco Corp. (“Sherwood”), founded in 1923, manufactures gas-control valves and regulators for compressed gas, refrigerants and scuba diving gear.  For the past year, Sherwood – Wheatfield averaged 181.58 jobs, i.e., 87.72% of its employment commitment.  Employees from the company’s Lockport facility have been moved to Wheatfield since the Wheatfield plant is more modern and capable of accommodating the changes required for its business.  The company met its jobs commitment for the last month reported and has five more openings to be filled.

 

Special Metals Corporation, Dunkirk, Chautauqua County

Allocation:                            1,000 kW of EP

Jobs Commitment:              81 jobs

Background:  Special Metals Corporation (“SMC”), founded in 1952, is a world leader in super-alloy technology.  The company pioneered the vacuum induction melting method to produce super alloys for military and civilian use in jet engine turbines.  Nearly every jet engine in the free world has some alloy in it produced by SMC.  For the past year, SMC averaged 64.10 jobs, i.e., 79.14% of its commitment.  SMC went into bankruptcy in 2002 and restructured, emerging from bankruptcy at the end of 2003.  In 2006, Precision Castparts Corporation (“PCC”) completed the acquisition of SMC, keeping it as a wholly owned subsidiary.  Currently, PCC is in the process of investing more than $30 million in new equipment that will significantly increase its capabilities, allowing it to regain lost business and increase market share in high-tech metals.  Employment is expected to grow enough in 2007 for the company to be in compliance.  Staff will follow up with SMC’s employment level in the second half of the year.

 

Steuben Foods Incorporated, Elma, Erie County

Allocation:                            750 kW of EP

Jobs Commitment:              364 jobs

Background:  Steuben Foods Incorporated (“Steuben”) was founded in 1980, with a manufacturing facility in Elma and a research facility in Jamaica, Queens.  The company primarily contract-manufactures aseptic extended-life dairy products for various brands.  For the past year, Steuben averaged 325.50 jobs, i.e., 89.42% of its commitment.  Steuben has brought on a significant number of new customers.  The company is growing and is in the midst of a multimillion-dollar expansion.  Steuben was only two jobs shy of meeting its commitment in 2006 and met the commitment for the last six months reported.

 

Syracuse China Company, Syracuse, Onondaga County

Allocation:                            1,484 kW of EDP

Jobs Commitment:              371 jobs

Background:  Syracuse China Company (“Syracuse China”), founded in 1871, manufactures high-end china for restaurants, hotels, universities and health care facilities.  For the past year, Syracuse China averaged 311.67 jobs, i.e., 84.01% of its commitment.  Although Syracuse China has been planning growth, the slow economy has hampered those plans.  Additionally, the company had a six-week work stoppage in April and May.  The company permanently lost a significant number of employees during this period who found employment elsewhere.  After concentrating on improving efficiencies and product flow, Syracuse China is ready to hire many new employees.  By the end of March 2007, the company will be at 15 employees more than the same time last year and is now meeting its commitment.

 

Tulip Corporation, Niagara Falls, Niagara County

Allocation:                            300 kW of EP and 1,200 kW of RP

Jobs Commitment:              122 jobs each

Background:  Tulip Corporation (“Tulip”), an injection-molding company, recycles rubber and plastic and manufactures battery cases for the major battery manufacturers.  For the past year, Tulip averaged 80.25 jobs, i.e., 65.78% of its commitment.  The RP allocation is a “vintage” contract, meaning that it has an 80% job ratio and two-year job average.  The two-year average is 87.09 jobs, i.e., 71.38% of the company’s commitment.  The company suffered a major decline in business in mid-2005, saw an increase in production through much of 2006, but then declined again late in the year.  Tulip is aggressively seeking growth in its reprocessed material line and emerging industrial jar market.  In 2006, the company made major investments in new equipment for industrial jar molding, allowing it to increase its production capacity.  Tulip expects to grow its production and employment.  Staff will monitor the company closely and follow up with its employment level in the second half of the year.

 

TYCO Plastics/Covalence Plastics Corp., Yonkers, Westchester County

Allocation:                            1,900 kW of MDA Power

Jobs Commitment:              91 jobs

Background:  TYCO Plastics/Covalence Plastics Corp., (“TYCO”), formerly World Class Film, founded in 1992, produces extruded polyethylene film rolls, sheeting and bags.  For the past year, TYCO averaged 78.71 jobs, i.e., 86.49% of its contractual commitment.  The company had a shortfall due to a slowdown in the plastics industry that was driven by raw material price fluctuations.  Raw material prices have begun to stabilize and the company expects to recover the business it lost within six months.

 

Uniflex, Inc., Westbury, Nassau County

Allocation:                            350 kW of MDA Power

Jobs Commitment:              192 jobs

Background:  Uniflex, Inc. (“Uniflex”) is a manufacturer and printer of plastic specialty bags.  For the past year, Uniflex averaged 170.75 jobs, i.e., 88.93% of its commitment.  Uniflex is just two jobs short of meeting its commitment.  Since this customer is in bankruptcy, staff will watch the company closely and revisit its situation in the 2007 annual item.

 

 

Section IV

Allocations for Customers in the Automotive Industry to Continue with No Change

 

American Axle and Manufacturing Inc., Buffalo, Erie County

Allocation:            300 kW, 500kW and 2,200 kW of EP and 3,200 kW of RP

Jobs Commitment:              1,720 base jobs and 85 created jobs, and 1,720 jobs for the others, respectively

Background:  American Axle and Manufacturing Inc. (“American Axle”) – Buffalo Gear & Axle Facility manufactures automobile driveline and chassis systems and components, including axles and drive-shafts for light trucks and SUVs.  For the past year, American Axle – Buffalo averaged 1,006.17 jobs, i.e., 55.74% of its commitment and 58.50% of its commitment for the balance of the allocation.

 

Delphi Automotive Systems, Lockport, Niagara County

Allocation:                            14,300 kW of EP

Jobs Commitment:              5,042 jobs

Background:  Delphi Automotive Systems (“Delphi”), formerly a division of GM, manufactures radiators, condensers and heaters mainly for GM automobiles, but has diversified to other car makers as well.  For the past year, Delphi averaged 3,527.17 jobs.  The EP allocation is a “vintage” contract, meaning that it has an 80% job ratio and two-year job average.  The two-year average is 3,807.42 jobs, i.e., 72.58% of the company’s commitment.  Delphi has been in bankruptcy and is in the midst of restructuring.  Early in 2006, Delphi was awarded an additional 10 MW revitalization allocation.

 

Ford Motor Company, Buffalo, Erie County

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

Jobs Commitment:              1,772 jobs and 1,772 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, Fusion 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 1,556.50 jobs, i.e., 87.84% of its contractual commitments.

 

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:              3,124 (13,800, 1,100 kW, 800 kW and 725 kW), and 3,124 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.  For the past year, GM – Powertrain averaged 2,409.50 jobs, i.e., 76.06% of its contractual commitment for the 2 MW RP allocation and 77.13% of its contractual commitment for the other allocations.

 

North American Höganäs, Inc., Niagara Falls, Niagara County

Allocation:            1,000 kW of RP and 4,000 kW of EP

Jobs Commitment:              67 jobs and 71 jobs

Background:  North American Höganäs, Inc. (“NAHI”), formerly Pyron Corporation, founded in 1940, manufactures sponge iron and atomized steel powders for powder metallurgical processes.  The company's powder metals are used in the automotive parts business for anti-lock brakes, brake pads, cams, transmission parts, steering systems, etc.  The EP allocation, as a “vintage” contract, has an 80% job ratio and a two-year job average.  For the past year, NAHI averaged 37.92 jobs, i.e., 56.60% of its employment commitment, and for the past two years 38.21 jobs, i.e., 53.82% of its employment commitment, respectively.  In 2005, after NAHI restructured the organization, sustainable employment levels were reached.  An upswing in business in 2006 has continued into 2007, with expected growth in employment of four new jobs.  NAHI has a new product in development that it expects will increase sales and employment.

 

Valeo Engine Cooling – Truck USA, Jamestown, Chautauqua County

Allocation:                            1,000 kW of EP

Jobs Commitment:              500 jobs

Background:  Valeo Engine Cooling – Truck USA (“Valeo”) manufactures engine-cooling parts for the trucking industry.  For the past year, Valeo averaged 412.33 jobs, i.e., 82.47% of its contractual commitment.  The company lost two large customers’ business in late 2006 to out-of-state competitors due to the high cost of doing business in Western New York.  However, a current customer is about to give the company a significant increase in business in a few months, which will have a positive impact on sales and employment levels.

 

RECOMMENDATION

 

                “The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees grant termination authority for two customers with two contracts, approve reductions in power allocations and/or job commitments for four customers with six contracts, take no action for 32 customers with 35 contracts and defer action for six customers with 15 contracts, 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.  He said that Contract Pharmaceuticals had contacted him the previous evening to inform him that it was planning a new capital investment that would increase its productivity.  President Carey added that staff was recommending to the Trustees that the action on this company be delayed for two months so that staff can assess the actual effect of this capital investment. 

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

 

RESOLVED, That the Authority hereby grants termination authority for two customers with two contracts and approves the reduction of power allocations and/or job commitments for four customers with six contracts as described in the attached memorandum 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, Compliance and Municipal and Cooperative Marketing 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, 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.


 

Exhibit “7-A”

 

I. ALLOCATIONS REQUESTING SPECIAL TRUSTEE AUTHORIZATION

 

 

 

Company

 

 

Location

Date of Trustee Approval

 

Type of Power

 

Allocation kW

Employment Commitment  (# of jobs)

Average

2006

Jobs

 

Average Annual %

Achieved

 

Saint Gobain Corp-MicroElectronics

Sanborn

Jan 83

RP – Vintage

900

35

NA

NA

Sherwood, A Division of Harsco Corp.

Lockport

May 94

EP

240

361

86.25

23.89

 

 

II. ALLOCATIONS AND/OR JOB COMMITMENTS TO BE REDUCED

 

 

Company

 

 

 

Location

 

Date of Trustee Approval

 

Type of Power

 

Allocation kW

Employment Commitment

(# of jobs)

Average

2006

Jobs

Average Annual %

Achieved

 

Revised Allocation

 

Revised Jobs

 

Brenner Paper Products Company Inc.

 

Glendale

 

Sep 90

MDA

600

140

 

99.17

 

70.83

425

 

99

Buffalo Newspress Inc.

Buffalo

Jan 94

EP

250

200

149.17

74.58

200

149

Ferro Electronic Materials

Niagara Falls

Apr 94

RP

3,115

276

152.25

55.16

1,700

152

Ferro Electronic Materials

Niagara Falls

Jan 89

RP

1,000

257

152.25

59.24

600

152

Ferro Electronic Materials

Niagara Falls

Dec 88

EP – Vintage

3,000

220

159.50

72.50

2,100

152

Habasit Globe, Inc.

Buffalo

Jul 86

RP

250

123

80.17

65.18

200

80

 

 

III. ALLOCATIONS TO CONTINUE WITH NO CHANGE

 

 

 

Company

 

 

Location

Date of Trustee Approval

 

Type of Power

 

Allocation kW

Employment Commitment  (# of jobs)

Average

2006

Jobs

 

Average Annual %

Achieved

 

Buffalo Tungsten Incorporated

Depew

1987

RP

800

62

54.83

88.44

Ceres Corporation

Niagara Falls

Jun. 00

RP

1,700

60

46.42

77.36

Ceres Corporation

Niagara Falls

Apr. 94

RP

1,300

60

46.42

77.36

Ceres Corporation

Niagara Falls

Apr. 91

RP

1,600

60

46.42

77.36

Columbia University-Audubon Business & Technology Center

New York

May 01

MDA – .75 jr

1,000

166

104.25

62.80

Contract Pharmaceuticals Limited Niagara

Buffalo

Apr. 91

RP

250

329

242.38

73.67

Dunkirk Specialty Steel, LLC

Dunkirk

Jan 02

EP

6,800

250

157.33

62.93

Ellanef Manufacturing Corporation

Corona

Dec 93

EDP

1,100

251

221.08

88.08

Endicott Interconnect Technologies, Inc.

Endicott

Aug 93

EDP

20,000

5,500

4,117.17

74.86

Excelsior Transparent Bag Mfg. Inc.

Yonkers

Dec 93

MDA

700

180

135.00

75.00

Granny’s Kitchens, Ltd.

Frankfort

Sep 02

EDP

750

315

275.50

87.46

Honeywell International

Buffalo

Apr 89

RP

300

168

136.77

81.41

ICM Controls Corporation

Cicero

Jun 03

EDP

500

300

232.92

77.64

Ingram Micro Corporation

Williamsville

Sep 97

EP

900

1,525

1,177.33

77.20

International Imaging Materials, Inc.

Amherst

Jan 89

RP

250

472

421.58

89.32

Lakeside Warehouse Corporation – The Carriage House Companies

Dunkirk

May 99

EDP

500

199

166.42

83.63

Lockheed Martin

Niagara Falls

Feb 93

RP

250

45

34.72

77.15

M. Fortunoff

White Plains

Mar 04

MDA

1,689

380

329.58

86.73

Markin Tubing, Division of M & R Ind.

Wyoming

1993

EDP

1,200

145

126.17

87.01

Mele Manufacturing Co.

Utica

Jul 94

EDP

475

164

75.79

46.21

Monofrax Inc.

Falconer

Sep 97

EP

2,082

380

236.83

62.32

NBTY, Inc.

Bohemia

Apr 90

EDP

600

675

589.25

87.30

Norampac Industries, Inc.

Niagara Falls

Dec 96

HLF

12,000

140

123.75

88.39

PEMCO – Precision Electro Minerals Co., Inc.

Niagara Falls

Aug 89

RP

800

22

18.92

85.98

Plascal Corp.

Farmingdale

Nov 03

MDA

600

73

58.25

79.79

Precious Plate, Inc.

Niagara Falls

Jun 02

RP

800

145

127.92

88.22

Revere Copper Products

Rome

May 93

EDP

6,000

490

421.08

85.94

Sherwood, A Division of Harsco Corp.

Wheatfield

May 99

EP

400

207

181.58

87.72

Special Metals Corporation

Dunkirk

May 91

EP

1,000

81

64.10

79.17

Steuben Foods Incorporated

Elma

Jun 01

EP

750

364

325.50

89.42

Syracuse China Company

Syracuse

Jul 94

EDP

1,484

371

311.67

84.01

Tulip Corporation

Niagara Falls

Oct 90

EP

300

122

80.25

65.78

Tulip Corporation

Niagara Falls

May 61

RP –Vintage

1,200

122

87.09

71.38

TYCO Plastics Corp./Covalence Plastics Corp.

Yonkers

Apr 94

MDA

1900

91

78.71

86.49

Uniflex Inc.

Westbury

Jun 01

MDA

350

192

170.75

88.93

 

EP = Expansion Power                             RP = Replacement Power        EDP = Economic Development Power

MDA = Municipal Distribution Agency Power

 

 

 

IV. ALLOCATIONS FOR CUSTOMERS IN THE AUTOMOTIVE INDUSTRY TO CONTINUE WITH NO CHANGE

 

 

Company

 

 

 

Location

 

Date of Trustee Approval

 

Type of Power

 

Allocation kW

Employment Commitment

 (# of jobs)

Average

2006

Jobs

Average Annual %

Achieved

American Axle & Mfg Inc. – Buffalo Gear & Axle Facility

Buffalo

Mar 98

EP

300

1,805

1,006.17

55.74

American Axle & Mfg Inc. – Buffalo Gear & Axle Facility

Buffalo

May 94

EP

500

1,720

1,006.17

58.50

American Axle & Mfg Inc. – Buffalo Gear & Axle Facility

Buffalo

Feb 93

EP

2,200

1,720

1,006.17

58.50

American Axle & Mfg Inc. – Buffalo Gear & Axle Facility

Buffalo

Feb 93

RP

3,200

1,720

1,006.17

58.50

Delphi Automotive Systems LLC

Lockport

Dec 88

EP – Vintage

14,300

5,042

3,807.42

72.58

Ford Motor Company

Buffalo

Dec. 94

EP

4,300

1,772

1,556.50

87.84

Ford Motor Company

Buffalo

Feb. 93

EP

2,900

1,772

1,556.50

87.84

G. M. Powertrain  – Tonawanda Plant

Buffalo

Sep 97

EP

1,100

3,124

2,409.50

77.13

G. M. Powertrain  – Tonawanda Plant

Buffalo

Jun. 96

EP

800

3,124

2,409.50

77.13

G. M. Powertrain  – Tonawanda Plant

Buffalo

Aug 97

RP

725

3,124

2,409.50

77.13

G. M. Powertrain  – Tonawanda Plant

Buffalo

Jan 94

EP

13,800

3,124

2,409.50

77.13

G. M. Powertrain  – Tonawanda Plant

Buffalo

Jun 00

RP

2,000

3,168

2,409.50

76.06

North American Hogänäs Corporation

Niagara Falls

Jan 89

RP

1,000

67

37.92

56.60

North American Hogänäs Corporation

Niagara Falls

Oct 88

EP – Vintage

4,000

71

38.21

53.82

Valeo Engine Cooling – Truck USA

Jamestown

May 99

EP

1,000

500

412.33

82.47

 

 

 


 

8.             Increase in Hydroelectric Preference Power Rates – Notice of Adoption

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve an increase in the hydroelectric rates supplied from the Niagara and St. Lawrence/FDR Hydroelectric Projects (individually, ‘Niagara Project’ and ‘St. Lawrence Project,’ and collectively, the ‘Hydro Projects’) proposed at the January 30, 2007 meeting of the Trustees.  Such rates apply to the Authority’s sales of Preference Power to, among others, the municipal electric systems and rural electric cooperative customers, the neighboring state customers and the upstate utilities.  The final rates are for the 2007 and 2008 rate years, which extend from May 1, 2007 to April 30, 2008 and from May 1, 2008 to April 30, 2009, respectively.  This action accepts one significant adjustment to the final rates based on the customer comments on the amount of Shared Services includable in rates.  As a result, this modified proposal would increase rates for a typical preference power customer by 5.5% in the first rate year and by 5.9% in the second rate year.  A detailed analysis of the Cost-of-Service (‘CoS’) issues is presented in the ‘Staff Analysis of Public Comments and Recommendations, Rate Modification Plan, April 2007’ (‘Staff Analysis’; see Appendix ‘8-A’).

                 

BACKGROUND

 

“At their meeting of January 30, 2007, the Trustees authorized publication in the New York State Register of a Notice of Proposed Rulemaking to increase the hydroelectric preference power rates.  The proposed rate plan was prepared by Authority staff and explained in its January 2007 report on ‘Hydroelectric Production Rates, Rate Modification Plan – 2007 and 2008 Rate Years’ (see Appendix ‘8-B’; referred to herein as ‘Rate Modification Plan’).  The two-year rate plan was based on the results of a preliminary 2007-08 CoS study.  The January proposed rulemaking would have increased rates for the typical preference customers by 7.1% in the first rate year and 5.8% in the second. 

 

“The current rate plan, which ends April 30, 2007, is based on CoS principles approved by the Trustees at their meeting of April 29, 2003, all of which the municipal systems, rural electric cooperatives and neighboring state customers agreed to either through settlements or in their contracts concerning their purchases of Preference Power.  Those CoS principles are continued in this Rate Modification Plan.

 

“The Rate Modification Plan details the costs of production at the Hydro Projects.  The major cost components are: (1) Capital Costs; (2) Operations and Maintenance; (3) Relicensing; (4) Indirect Overheads, and (5) Other Postemployment Benefits.  After summing the CoS components, a credit was calculated based on the embedded costs of producing regulation service, operating reserves, voltage support and black-start service from the Hydro Projects to meet contract customers’ needs for those four ancillary services.  This credit is calculated in the same manner as under the current rate plan approved in 2003.

 

“The customers were provided with written notice of the Rate Modification Plan and notice of a public forum on February 5, 2007.  The Notice of Proposed Rulemaking was published in the New York State Register on February 14, 2007, and the public forum was held on March 22, 2007 for the purpose of obtaining the views of interested parties.

 

DISCUSSION

 

                “After issuing the Rate Modification Plan, Authority staff responded to 159 data requests from the following organizations:  the Municipal Electric Utilities Association (‘MEUA’), the New York Association of Public Power (‘NYAPP’) and the Neighboring States Preference Customers (‘NS Customers’).  Many requests were answered with work papers supporting the CoS calculations, but others required detailed explanations. 

 

                “On March 22, 2007, the public forum was held in Albany.  The forum was conducted in accordance with the terms of the Policy and Procedures – Public Forum on Rate Proposals adopted by the Authority’s Trustees at their meeting of November 27, 1990.  Authority staff spoke at the forum to explain the procedures and summarize the results of the CoS and proposed rates.  Nine representatives of various customers attended.  Speakers included representatives from MEUA, NYAPP and NS Customers.  In addition to oral or written comments delivered at the public forum, written comments were accepted if received before the close of the public comment period.  The public comment period was extended for one week, from April 2, 2007 to April 9, 2007, based on customers’ feedback.  By April 9, the Authority received written comments from MEUA, NYAPP and NS Customers.  The transcript of the public forum and all written comments are attached as Appendix ‘8-C.’

 

                “All of the public comments were evaluated by Authority staff.  The Staff Analysis, a detailed description of the issues raised and staff’s recommendations, is contained in Appendix ‘8-A.’ The following is a summary of staff’s disposition of the issues.

 

Staff Analysis of Public Comments

 

Prudency of Niagara Project Upgrade:  NYAPP claims that the Authority’s proposed rate increase cannot be sustained because the $298 million of the Niagara Project Upgrade costs included in the CoS were imprudently incurred.  This is premised on the mistaken notion that the Upgrade produced insufficient additional benefits to the preference customers to warrant charging these customers for the proposed amount of such costs.  The Authority, of course, did allocate to preference customers (consistent with the Niagara Redevelopment Act) the increased firm capacity that arose from increased efficiency of the upgraded turbines, as required under its contractual and license commitments.  As the Staff Analysis shows, NYAPP misunderstands the purposes of the Upgrade and ignores the extensive nature of the work conducted to extend the life of the Project so that it could continue its generating capabilities for decades into the future.  The Authority recommends no adjustment to the CoS based on this argument.

 

Increased Credit for Ancillary Services Production:  NYAPP claims that the Authority’s continuation in the Rate Modification Plan of the method introduced in 2003 to credit the CoS with the value of the ancillary services production costs results in an inappropriately low credit, and that it should be dramatically increased.  However, the current method for providing an ancillary services production credit was previously agreed to in the customers’ settlements with NYPA, and there is no basis to revisit it here.  NYAPP’s claim is also inappropriate because it is based on the mistaken premise that there is now more firm capacity available from the Niagara Project than is the case.  While NYAPP is careful to point out that it is not seeking a share of the Authority’s gross ancillary services revenues from sales into the New York Independent System Operator (‘NYISO’) (such a claim would be disallowed under the terms of the Auer settlement) its proposal would nonetheless undo the existing crediting methodology to which NYAPP’s members and the all the other municipal customers have agreed.[1]  As Staff’s Analysis shows, there is no additional Hydro Project firm capacity being diverted from the preference customers when NYPA makes ancillary services sales to the NYISO, and the current quantity of MW upon which the cost-based credit is based is appropriate.  NYAPP does not dispute that the Authority provides the appropriate cost-based credit based on the total amount of sales from the Hydro Projects (including sales of ancillary services) when it does its annual reconciliation to the Rate Stabilization Reserve (‘RSR’).  NYAPP has provided no basis to change the way the Authority has treated the revenues from such sales, a practice followed in the 2003 rate proceeding and continued in the Rate Modification Plan.

 

Inflation Compensation Adjustment:  MEUA argues that the Authority has used the incorrect Handy-Whitman Index (‘HWI’) numbers in calculating the annual inflation compensation adjustment used in the CoS.  MEUA proposed that the initial HWI number used should be that for July 1, 1981 and not the July 1, 1980 number that has been used in all of the Authority’s CoS analyses.  The change in the HWI for the 12 months ended July 1, 1981 was 7.5%, while that for the 12 months ended July 1, 1982 was 4.5%.  MEUA proposes that the Authority restate more than 20 years of cost studies and make a $11.5 million positive adjustment in the RSR.  NYAPP and NS Customers concur in this proposal.  Staff does not recommend changing the base period HWI to July 1, 1981 from July 1, 1980.  The choice of the July 1, 1980 starting date was appropriate and necessitated by the availability of data at the time of the initial studies.  To change the base year now would amount to rolling back the clock on more than 20 years of cost analyses and rate approvals by the Authority’s Trustees.  This is a long-settled matter and MEUA’s recommendation should not be accepted.

 

CoS Credit for Sales of Unforced Capacity (‘UCAP’) into NYISO:  The NS Customers propose that the Authority include a UCAP revenue credit for anticipated sales in the proposed CoS.  Staff has been including and the customers have been receiving a credit for short-term sales of capacity above the base level of capacity sales in the annual RSR reconciliation.  This calculation is performed after the actual amounts for the year are known.  A review of the monthly auction prices of Rest of State Capacity for the past four years shows a fluctuation of prices between $0.25/kW-month to $3.30/kW-month.  This market price volatility, together with the natural uncertainty in the amount of excess capacity available from the Hydro Projects, make forecasting a UCAP credit for inclusion into current rates problematic.  Staff does not recommend adopting this change. 

 

Request for Credits for Energy Sales into NYISO:  The NS Customers acknowledge that the Authority’s ratemaking methodology includes a cost-based credit for the all sales of energy made into the NYISO, which is reflected in the annual reconciliation to the RSR, but nonetheless assert that a credit to the CoS for such sales should be made in deriving the base hydro rates based on the full market revenues the Authority garners in the NYISO markets.  Because this is a collateral attack on Auer settlement principles, which all of the customers have accepted as direct signatories or through their power contracts, there is no adjustment warranted.  As the Staff Analysis explains, the customers have no entitlement to the revenues of the Hydro Projects due to energy sales into the NYISO because once the cost-based rate is set, any revenues above cost garnered from other sales may be deposited into the general fund of the Authority and such excess revenues should not be used to produce preference rates that are below cost.  Staff recommends no CoS adjustment based on the NS Customers’ claim.

 

Request for Credits Based on Authority Investment Income:  The NS Customers argue (with NYAPP concurring) that the Authority’s investment income should be treated as derived from ‘customer-contributed’ capital and therefore credited against the CoS.   This novel argument again runs counter to the ratemaking principles established by contract.  The preference rates are cost-based rates where no working capital charge is included and no real rate of return is earned.  A portion of the Authority’s investment income is derived from the Hydro Projects, but the Authority’s investments are not preference-customer-contributed capital for which the interest must be credited to the preference customers.  A claim for a share of the Authority’s investment income would produce preference rates that are below cost in violation of Auer settlement principles.  Yet that is exactly the result if investment income derived from such excess revenues is used as a credit to the CoS.  Staff recommends that no credit to the CoS be provided for Authority investment income.   

 

Treatment of Headquarters Expense in Shared Services:  MEUA and NYAPP both contend that certain elements of the Headquarters Expense portion of the Shared Services allocated to the CoS should be reallocated to other cost categories.  MEUA proposes redistributing the allocation based on the organizational title of each department included in the Headquarters component of the Shared Services cost category.  NYAPP makes the further claim that certain Headquarters functions should be allocated based on NYISO market revenues.  As explained in the Staff Analysis, certain cost centers within the Headquarters departments are more correctly allocated based on the functions they perform rather than a straight labor allocation.  As a result, staff has recalculated the Headquarters component of the Shared Services category, and recommends reducing the Shared Services by $3 million for 2007 and $2.9 million for 2008 to be reflected in the attached revised CoS.  The Staff Analysis also explains that NYAPP’s proposal to allocate such costs based on revenues runs contrary to the Authority’s cost-based ratemaking methodology.  No further adjustment is recommended.

 

Incentive Pay Component of Shared Services:  MEUA and NYAPP contend that the Incentive Pay portion of the Shared Services allocated to the CoS is overstated.  MEUA infers that the $1.2 million allocated for this component already includes the separate, directly assigned Hydroelectric Production component of $1 million, resulting in an overstatement of the allocation by $247,800 for each of the proposed rate years.  As explained in the Staff Analysis, the Incentive Pay allocation is appropriate because such costs are not included in the annual budget process and therefore not included in the projected O&M budget.  Incentive Pay is expensed in the year awarded if the goals approved by the Trustees are met.  Staff recommends no change to this component of the CoS.

 

Inclusion of Research & Developments (‘R&D’) Costs:  MEUA, NS Customers and NYAPP argue that most, if not all, of the Authority’s R&D costs should not be allocated to the CoS.  All parties contend that most of the programs that make up the R&D cost projections do not relate to hydroelectric production and should therefore be excluded.  The customers further argue that such costs are not recoverable because the Federal Energy Regulatory Commission (‘FERC’) does not allow such costs to be recovered in wholesale rates.  The Authority is mindful of, but not bound to follow, FERC precedent in this area.  As explained in the Staff Analysis, because the customers benefit from the Authority’s funding for and involvement in the R&D programs, it is appropriate that such costs be included in the CoS.  Staff recommends no change to this cost component.

 

Request to Adjust RSR Balances:  NYAPP requests an additional adjustment to the RSR balance based on the amount of ancillary services sales by NYPA into the NYISO.  This would again violate the existing principles to which the customers have agreed concerning how NYPA handles ancillary services revenues.  There is no basis to adopt this change, and Authority staff recommends that it be rejected.

 

Request to Defer Final Rate Action:  All parties expressed concerns regarding the time allotted for review of the data supporting the pending rate action and have requested a delay in implementing the proposed rate increase.  NYAPP requested a delay in the increase until July 1, 2007 and NS Customers requested a delay at least until October 2007, both citing the need for more time to review the responses to the data requests.  As the Staff Analysis explains in more detail, there was sufficient time to review the data supporting the pending rate action, including the responses to the significant number of data requests received.  The proposed rate action employs the same principles and methodologies agreed to by the customers and adopted by the Trustees in the 2003 rate action.  In addition, the key components of the proposed rate increase relate to the costs of relicensing the Niagara Project, which was approved by FERC on March 15, 2007.  These costs are real and indisputable. Any delay in implementation of the proposed rates would allow the customers to enjoy the benefits of the Authority’s relicensing efforts while deferring their obligation to pay the increased costs associated with the new license.  Staff does not recommend any delay in the implementation of the modified rates.

 

Summary of Final Rate Proposal

 

                “For the reasons summarized above and described in detail in the Staff Analysis, Authority staff recommends that the demand rates originally proposed in the January 2007 Rate Modification Plan be amended and approved as shown below.  The proposed final demand and energy rates, the overall rates at the 70% load factor, and the percent increases are shown below, together with current rates:

 

Rate Year               Demand Rate                 Energy Rate                  $/MWh Rate 

Beginning               $/kW-month                      $/MWh                        at 70% LF             % Increase

 

Current                             2.38                                 4.92                                 9.58

5/1/07                               2.65                                 4.92                               10.11                         5.5

5/1/08                               2.96                                 4.92                               10.71                         5.9

 

FISCAL INFORMATION

 

                “Implementation of the proposed schedule of 2007-08 rate increases would allow the Authority to recover its increased costs associated with serving the Preference Power customers.  The rates recover cost increases of $6.0 million in the first rate year and $12.8 million in the second.

 

RECOMMENDATION

 

                “The Manager – Market and Pricing Analysis recommends that the Trustees: (1) adopt the conclusions of the Staff Analysis attached hereto as Appendix ‘8-A’ and (2) approve the hydroelectric preference rates for the two-year plan commencing May 1, 2007, as set forth above.

 

                “It is also recommended that the Secretary be authorized to publish a Notice of Adoption of the 2007-08 rates in the New York State Register, including notice of the availability of the Final Rate Modification Plan and other materials included in the record of these proceedings.

 

                “It is also recommended that the Senior Vice President – Marketing and Economic Development, or her designee, be authorized to issue written notice of the final action, including a copy of the revised tariff leaves, as necessary, 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 – Finance, the Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing and I concur in the recommendation.”

 

                Ms. Brown presented the highlights of staff’s recommendations to the Trustees.  In response to questions from Trustee Seymour, Mr. Russak said that the four-year 2003 rate plan, which is coming to an end on April 30th, had provided for an increase in rates each year from 2003 on.  Mr. Russak said that prior to 2003, the hydroelectric preference power rates had been fixed for a number of years.  He said that the bulk of the rate increases reflected in the new rate plan was attributable to the Niagara relicensing process and that plant upgrade costs also contributed to the increase.  Responding to another question from Trustee Seymour, Mr. Russak said that staff would be assessing the need for additional rate increases beginning with the 2009-10 rate year.

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

 

                WHEREAS, on January 30, 2007, the Authority authorized the Secretary to file a Notice of Proposed Rulemaking for publication in the New York State Register of its intention to increase the hydroelectric Preference Power rates; and

 

WHEREAS, such notice was duly published in the State Register on February 14, 2007 and more than 45 days have elapsed since such publication; and

 

WHEREAS, a Public Forum was held on March 22, 2007 and staff has received and responded to comments and data requests as set forth in the attached Final Rate Modification Plan; and

 

WHEREAS, the proposed rate action should be modified, in accordance with the changes contained in the foregoing report of the President and Chief Executive Officer, and as explained in detail in the Staff Analysis contained in Appendix “8-A”;

 

NOW THEREFORE BE IT RESOLVED, That the rates for sale of power and energy to hydroelectric Preference Power customers, as recommended in the foregoing report of the President and Chief Executive Officer, are hereby approved effective May 1, 2007; 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 as required by contract with respect to the modification in rates, including applicable tariff leaves; and be it further

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file a Notice of Adoption with the Secretary of State for publication in the State Register and to submit such other notice as may be required by statue 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, 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.

 

 

SEE EXHIBIT INDEX FOR LINK TO VOLUMINOUS APPENDIX ITEM #8-C

 


9.             Transfer of Ownership of Electric School Bus to Byram Hills Central School District

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

               

“The Trustees are requested to authorize the transfer of ownership of a 1997 Blue Bird electric-powered school bus (VIN 1BAAGBUH5VF072614) from the Authority to the Byram Hills Central School District (‘BHCSD’).  BHCSD has had exclusive use of the bus since September 2005.  Due to liability concerns, staff has determined that it would be beneficial to the Authority to discontinue ownership of the bus.  BHCSD has agreed to accept ownership and to continue to operate the bus for as long as is mechanically and economically feasible.  If approved by the Trustees, transfer of ownership of the bus will provide an immediate benefit to the school district and a long-term benefit to the State by demonstrating the advantages of clean, energy-efficient electric-drive technology for school bus applications.

 

BACKGROUND

 

“The Authority has been implementing electric-drive transportation development and demonstration projects since 1994 as part of its overall mission to promote clean, efficient electric technologies that lessen dependence on imported oil and improve air quality for the benefit of the people of New York State.  The Authority has helped place in service more than 850 electric-drive vehicles.  The vehicles have traveled more than 6.5 million miles, saved more than 21,000 barrels of crude oil and avoided the release of 3,000 tons of CO2.

 

“In 1996, the Authority purchased an electric school bus from Blue Bird Body Company (‘Blue Bird’) and Westinghouse Corporation (‘Westinghouse’) for demonstration and reporting (to the Authority) of certain performance data such as mileage and energy consumption.  The bus was a pre-production model and only the second of its kind to be manufactured in the U.S.  The bus cost $130,000.  The Authority received co-funding in the amount of $104,000 from the New York State Department of Transportation.  The bus was placed in service with New York City school bus operators in the Bronx and Brooklyn and was then transferred to Westchester County.

 

“Shortly after the bus was purchased, Blue Bird and Westinghouse discontinued production of electric school buses, and Westinghouse dismantled the engineering group responsible for electric-drive system development.  Over the next few years, the Authority contracted with other drive-system manufacturers that provided technical support for the bus.  This included the replacement, in 2000, of the bus’ electric-drive system and batteries.  In 2005, Atlantic Express, a Brooklyn operator, returned the bus to the Authority after operating it for five years.  The Authority then canvassed other New York City school bus operators but did not find a company interested in the bus.  In Westchester County, the Authority found an enthusiastic and willing partner in BHCSD.  BHCSD was willing to accept a loan of the bus for a two-year period to operate, store and maintain it, and provide the Authority with performance data.  BHCSD invested labor and funds in charging infrastructure and bus upgrades before placing the bus in service.  

 

DISCUSSION

 

“Since no manufacturers are currently producing electric school buses, the continued demonstration of this technology has value for both BHCSD and the State.  School buses serving urban and suburban routes travel short distances with significant stop-and-go driving patterns, and extended periods of idling.  Electric school buses are more efficient than conventional diesel school buses.  Electric vehicles use no energy at idle and recapture energy during braking.  They also release no tailpipe emissions, thus providing significant health benefits to schoolchildren compared with conventional technologies.

 

“There is, moreover, a renewed interest in all-electric vehicles for specialty applications, and several New York State companies are working on developing advanced batteries.  As the market for advanced batteries grows and costs come down, the business case for electric buses and trucks becomes stronger.  BHCSD’s willingness to keep the bus in service at its own expense and to continue to demonstrate and provide performance data to the Authority for this clean, energy-efficient electric-drive technology would be a significant benefit to the State.

 

“It is difficult to place a monetary value on this 10-year-old bus.  Type D school buses such as this one are built to have a 10-year life.  The Authority’s canvass in 2005 of New York City bus operators failed to find an operator interested in accepting even a no-cost loan of the bus.  Furthermore, any operator accepting the bus would need to install a charging infrastructure that would cost at least $5,000.  This cost, together with the fact that Westinghouse technical support is no longer available, detracts from the bus’ value.  BHCSD, on the other hand, already has charging infrastructure in place, and has proven to be an excellent steward of the bus.  It has provided the Authority with performance data and will continue to do so.  Therefore, staff recommends that the Authority transfer the bus to BHCSD at no cost.

 

“Title 5-A of Article 9 of the Public Authorities Accountability Act (the ‘Act’) and the Authority’s Guidelines for the Disposal of Personal Property (the ‘Guidelines’) allow the Authority, with the approval of the Trustees, to dispose of Authority property by negotiation and for less than fair market value when the disposal of property is intended to further public health and safety.  Accordingly, based on the foregoing, transferring ownership of the bus to BHCSD at no cost, for continued demonstration of the advantages of clean, energy-efficient electric-drive technology for school bus applications as part of the Authority’s mission of lessening dependence on imported oil and improving air quality, complies with the Act and the Guidelines.

 

“The Act and the Guidelines require the purpose and the terms of such disposal to be 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 disposal by negotiation and be 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.

 

“The transfer is to be further conditioned on the execution of an agreement between BHCSD and the Authority.  The terms of such an agreement are to include transferring the bus in its ‘as is’ condition and such additional provisions that reasonably safeguard the Authority from future responsibility.

 

FISCAL INFORMATION

 

“The bus will be transferred to BHCSD at no payment to the Authority.

 

RECOMMENDATION

 

“The Senior Vice President – Energy Services and Technology and the Vice President – Procurement and Real Estate recommend that, pursuant to Title 5-A of Article 9 of the Public Authorities Law and the Authority’s Guidelines for the Disposal of Personal Property, the Trustees authorize the transfer of ownership of the Authority’s Blue Bird electric school bus to Byram Hills Central School District.  The transfer of this property to the School District for its use for as long as is technically and economically feasible will provide both an immediate benefit to the school district and a long-term benefit to the State by demonstrating the feasibility of clean, energy-efficient electric-drive technology for school bus applications.

 

“The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Executive Vice President – Corporate Services and Administration, the Senior Vice President – Public and Governmental Affairs 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 Title 5-A of Article 9 of the Public Authorities Law, the Authority’s Guidelines for the Disposal of Personal Property, and the Power Authority Act, the Trustees hereby approve the transfer of ownership of the Authority’s 1997 Blue Bird electric-powered school bus (VIN 1BAAGBUH5VF072614) to Byram Hills Central School District for its use to demonstrate the feasibility of clean, energy-efficient electric-drive technology for school bus applications; 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 or his designee.


 

10.          2006 Annual Report of Procurement Contracts and Annual Review of Open Procurement Service Contracts

               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve the 2006 Annual Report of Procurement Contracts (‘Annual Report’) (Exhibit ‘10-A3’) and the Guidelines for Procurement Contracts (‘Guidelines’) (Exhibit ‘10-A2’) and to review open service contracts exceeding one year that were active in 2006 as detailed in the Annual Report (Exhibit ‘10-A3’).  An Executive Summary is set forth in Exhibit ‘10-A1.’

 

BACKGROUND

 

                “Section 2879 of the Public Authorities Law (‘PAL’) governs the administration and award of procurement contracts equal to or greater than $5,000.  Section 2879 of the PAL requires public authorities to adopt comprehensive guidelines detailing their operative policy and instructions concerning the use, awarding, monitoring and reporting of procurement contracts.  The Authority’s Guidelines were adopted by the Trustees at their meeting of October 31, 1989 and were implemented as of January 1, 1990.  The Guidelines have been amended as required and approved annually since that date.  The current Guidelines were approved by the Trustees at their meeting of April 27, 2006.

 

“Section 2879 of the PAL also requires authorities to review and approve such guidelines annually and to file a report regarding procurement contracts with the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee and the Assembly Ways and Means Committee.  The Annual Report must include a copy of the Authority’s current Guidelines, details concerning any changes to the Guidelines during the year and particular information concerning procurement contracts.  For each procurement contract included in the report, the following information must be identified:

 

[A] listing of all procurement contracts entered into [by the Authority], all contracts entered into with New York State business enterprises and the subject matter and value thereof, all contracts entered into with foreign business enterprises, and the subject matter and value thereof, the selection process used to select such contractors, all procurement contracts which were exempt from the publication requirements of article four-C of the economic development law, the basis for any such exemption and the status of existing procurement contracts.

 

                “Lastly, Section 2879 of the PAL requires an annual review by the Trustees of open service contracts exceeding one year.  Those long-term service contracts exceeding one year and awarded after January 1, 1990 are also included in the Annual Report.

 

DISCUSSION

 

                “The 2006 Annual Report is attached for the Trustees’ review and approval (Exhibit ‘10-A3’).  The Annual Report reflects activity for all procurement contracts equal to or greater than $5,000, as identified by the Authority’s SAP computer system, that were open, closed or awarded in 2006, including contracts awarded in 1990 through 2006 that were completed in 2006 or were extended into 2006 and beyond.  All additional information required by the statute is also included.  The Trustees are requested to approve the attached Annual Report pursuant to Section 2879 of the PAL prior to submittal thereof to the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee and the Assembly Ways and Means Committee.

 

                “A copy of the Guidelines effective April 24, 2007 (Exhibit ‘10-A2’) is attached to the Annual Report.  These Guidelines are amended in accordance with the recently enacted Public Employee Ethics Reform Act of 2007, as set forth in Exhibit ‘10-A1.’

“The Guidelines generally describe the Authority’s process for soliciting proposals and awarding contracts.  Topics detailed in the Guidelines include solicitation requirements, evaluation criteria, contract award process, contract provisions, change orders, Minority/Women Business Enterprise (‘M/WBE’) requirements, employment of former officers and reporting requirements.  The Guidelines have been designed to be self-explanatory.

 

RECOMMENDATION

 

                “The Vice President – Procurement and Real Estate recommends that the Trustees approve the 2006 Annual Report of Procurement Contracts, the Guidelines for Procurement Contracts and the review of open service contracts as attached hereto in Exhibits ‘10-A1’ through ‘10-A3.’

 

                “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 – Power Generation and I concur in the recommendation.”

 

                Mr. Hoff presented the highlights of staff’s recommendations to the Trustees.  Chairman McCullough congratulated Mr. Hoff on a job well done with this report and Mr. Hoff said that all of the credit belonged to Ms. Gil, Ms. Karaczewsky and Ms. Carmody.  In response to a question from Trustee Cusack, Mr. Hoff said that the newly enacted Government Employees Ethics Reform Act (the “Act”) would require that some minor changes be made to the Authority’s procurement policy and guidelines.  Mr. Kelly said that the Act signed by Governor Spitzer was effective on April 25, 2007.  He suggested that the language of the resolution for this item be changed to authorize staff to make the necessary changes to the procurement policy and guidelines to reflect changes in the law.

The following resolution, as submitted by the President and Chief Executive Officer, was adopted by a vote of 6 to 1, with Trustee Moses abstaining.

               

RESOLVED, That pursuant to Section 2879 of the Public Authorities Law and the Authority’s Procurement Guidelines, the Annual Report of Procurement Contracts, as listed in Exhibit “10-A3,” and the Guidelines for the use, awarding, monitoring and reporting of Procurement Contracts (Exhibit “10-A2”), as amended and attached hereto, be, and hereby are, approved; and be it further

 

RESOLVED, That the open service contracts exceeding one year be, and hereby are, reviewed and approved; 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.


 

 

 

 


 


 

 

 


 


 

Exhibit “A-1”

 

 

POWER AUTHORITY OF THE STATE OF NEW YORK

 

2006 ANNUAL REPORT OF PROCUREMENT CONTRACTS

 

EXECUTIVE SUMMARY

 

The Power Authority of the State of New York (the “Authority”) is a corporate municipal instrumentality and political subdivision of the State of New York.  The Authority generates, transmits and sells electric power and energy principally at wholesale.  The Authority’s primary customers are municipal and investor-owned utilities and rural electric cooperatives located throughout New York State, high load factor industries and other businesses, various public corporations located within the metropolitan area of New York City, and certain out-of-state customers. The Authority does not use tax revenues or State funds or credit.  It finances construction of its projects through bond and note sales to private investors and repays the debt holders with proceeds from operations.

 

The Authority continued a major effort to implement energy services programs which include the installation of high efficiency lighting, motors and controls; conversion to efficient chiller and boiler plants; and clean distributed generation at customer sites statewide.  Other efforts include an electric transportation program to promote the use of electric-drive vehicles (cars, pick-up trucks and buses) throughout the State.

 

The Authority requires the services of outside firms for accounting, engineering, legal, public relations, surveying and other work of a consulting, professional or technical nature to supplement its own staff, as well as to furnish varied goods and services and perform construction work.  Many of these contracts are associated with the construction, maintenance and operation of the Authority's electric generating facilities and transmission lines, as well as with support of the energy efficiency projects noted above.

 

PROCUREMENT GUIDELINES (Exhibit “A-2”)

In compliance with the applicable provisions of Section 2879 of the Public Authorities Law, as amended, the Authority has established comprehensive guidelines detailing its operative policy and instructions concerning the use, awarding, monitoring and reporting of procurement contracts.

 

The Guidelines describe the Authority's process for soliciting proposals and awarding contracts.  Topics detailed in the Guidelines include solicitation requirements, evaluation criteria, contract award process, contract provisions, change orders, Minority/Women Business Enterprise (“M/WBE”) requirements, employment of former officers and reporting requirements.  The Guidelines have been designed to be self-explanatory.

 

These Guidelines, approved by the Authority's Trustees, were implemented on January 1, 1990, and have been amended annually as necessary.  A redlined copy of the Guidelines for Procurement Contracts, which will become effective April 24, 2007, is attached.  These Guidelines have been amended with the following changes as highlighted below.

 

  1. DEFINITIONS  page 2, insert paragraph E

 

E.             “Relative” is defined in Section 9.E.1 of these Guidelines.

 

3.       SOLICITATION REQUIREMENTS  page 3, insert paragraph C

 

C.                   The Authority may withdraw any pending solicitation (including, but not limited to, Requests for Proposals and Requests for Quotations) at any time, for cause or no cause. Any person or entity submitting any responsive document to the Authority does so at its own cost or expense and will not be reimbursed by the Authority for the preparation of any responsive document, unless otherwise agreed to in writing by the Authority and signed by an authorized representative of the Authority.

 

6.       AWARD OF CONTRACT  page 12, Paragraph I, second sentence, add underlined phrase as follows:

 

The Authority shall not enter into the Procurement Contract for said goods until at least 15 days have elapsed from the notification of the award, except for a Procurement Contract awarded on an emergency or critical basis.

 

 

7.       CONTRACT PROVISIONS  page 12, paragraph B. Contract Attachments, number 10, change title to read:

10.           Appendix “J” (Bidder/Contractor Compliance with State Finance Law §§ 139-j and 139-k Providing for Certain Procurement Disclosures)

 

9.       PROHIBITION OF CURRENT EMPLOYEES;EMPLOYMENT OF FORMER OFFICERS AND EMPLOYEES  Pursuant to the provisions of the Public Employee Ethics Reform Act of 2007: page 15, add the following paragraphs:

 

D.                  No Authority employee who is involved in the award of Authority grants or contracts, may ask any officer, director or employee of such current or prospective contractor or grantee to reveal: (a) the political party affiliation of the individual; (b) whether the individual or entity has made campaign contributions to any political party, elected official, or candidate for elective office; or (c) whether the individual or entity voted for or against any political party, elected official or candidate for elective office. 

 

E.                   No Authority employee may award or decline to award any grant or contract, or recommend, promise or threaten to do so because of a current or prospective grantee’s or contractor’s: (a) refusal to answer any inquiry prohibited by Section 9.D above or (b) giving or withholding or neglecting to make any contribution of money, service or any other valuable thing for any political purpose.

 

F.                   No Authority employee may take part in any contracting decision involving the payment of $1,000: (i) to a Relative; or (ii) to any entity in which the Authority Employee or a Relative of such Authority employee owns or controls 10% or more of the stock of such entity (or 1% in the case of a corporation whose stock is regularly traded on an established securities exchange); or serves as an officer. Director or partner of that entity.  If a contracting matter arises relating to this Section 9.F, then the employee must advise his or her supervisor of the relationship, and must be recused from any and all discussions or decisions relating to the matter. 

 

 

1.             For purposes of this Section 9.F, the term “Relative” shall mean any person living in the same household as the Authority employee or any person who is a direct descendant of the Authority employee’s grandparents or the spouse of such descendant.

 

G.                   Restrictions 9.D through 9.F above also apply to disposal of property which are governed by the Authority’s Disposal of Personal Property Guidelines and Disposal of Real Property Guidelines.

 

 

11.    REPORTING REQUIREMENTS AND PROCUREMENT RECORD Section B. change time period from 120 days to 90 days.  The first sentence shall read:

 

B.                   Such annual report, as approved by the Trustees, shall be submitted to the Division of Budget within 90 days after the end of such calendar year and copies shall be distributed to the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee and the Assembly Ways and Means Committee and any other entity as may be required by law. 

 

 

ACCOMPLISHMENTS

 

Major procurement efforts in 2006 included purchase of goods, services and construction work in support of the Authority's operating projects and headquarters facilities, close-out of the General Work Contract with Slattery Skanska for the 500 MW Combined Cycle Project, Life Extension and Modernization (“LEM”) Programs at Niagara and St. Lawrence, and the Energy Services and Technology (“EST”) Programs as mentioned above.  Procurement is continuing efforts to optimize use of the Authority’s credit card system for procurements under $5,000 and the SAP procurement and materials management system, as well as supporting the requirements of our operating and capital projects and headquarters operations.

 

(1)     Credit Card Procurement System (“CCPS”)

 

The Credit Card Procurement System is used to procure goods and services valued under $5,000.  At the end of 2006, the Authority had approximately 150 cardholders in both headquarters and operating facilities.  The number of credit card transactions averaged 860 per month, with an average monthly value of $368,000, totaling more than $4,400,000 (compared to nearly $4,900,000 in 2005).

               

(2)     Negotiated Savings Program

 

The Authority’s procurement staff established a goal of achieving 1.5% of non-fuel expenditures in additional savings by negotiating improved pricing and other commercial terms with recommended low bidders and resolving back charges and claims with the Authority’s outside vendors and contractors. 

 

(3)     Supplier Diversity Program (“SDP”)

 

In 2006, the Authority continued to optimize the use of M/WBEs to provide goods and services in support of Authority operations.  As noted in Attachment I, in 2006, the Authority awarded over $23,000,000 for goods and services to M/WBE firms.  This included direct and indirect procurements of office supplies, computer equipment, chemicals, consulting services, temporary engineering personnel and design.  In 2006, 11.4% of total reportable procurement expenditures were for M/WBEs, almost doubling the Authority’s 6% goal.  A large percentage of the 2006 M/WBE expenditures continued to be in support of the 500 MW project which was completed December 2005.  Final expenditures for M/WBE subcontracting in support of the 500 MW project were received in 2006 and exceeded $ 46 Million. 

 

The Authority includes subcontracting goals for M/WBE firms in non-construction procurements of more than $25,000 and construction procurements of more than $100,000.  Staff will continue to pursue other direct and indirect procurement opportunities wherever possible. 

 

The Authority continues to focus on increasing opportunities for M/WBE firms to participate in investment banking activities and Treasury bill investments, as well as including an M/WBE firm as a co-manager in the Tax-Exempt Commercial Paper Program.  In 2006, M/WBE investment banking firms purchased and sold more than $943,874,000 (in principal) of securities transactions for the Authority.

 

In June 2006, the Authority hosted its 16th Annual Purchasing Exchange for M/WBEs in White Plains.  The 17th Exchange will take place in June 2007.

 

Procurement representatives also worked closely with, and were members of, the National Minority Business Council, the Association of Minority Enterprises of New York, the New York/New Jersey Minority Purchasing Council, the Long Island Hispanic Chamber of Commerce, Professional Women in Construction and the African American Chamber of Commerce for Westchester and Rockland Counties, to name a few.

 

(4)      Review of Inventory Practices and Relocation of the Niagara Warehouse

 

The Authority is also planning to move the Niagara warehouse to a new location due to the recent agreement with Niagara University, and a new warehouse will have to be constructed.  In addition, there are other opportunities to review and optimize inventory levels and on-time deliveries, and review the potential for bar-coding or Radio Frequency Identification Tags (RFID) technology, Vendor-Managed Inventory (VMI), and automation of Asset Management. An internal team, referred to as Parts Inventory Review Team (PIRT), has been assembled consisting of Procurement, Materials Management, Operations, Asset Management, Information Technology, and Controller’s staff. A scope of work was developed and competitive proposals were reviewed to award a contract to a qualified consultant to assist PIRT in reviewing the foregoing potential opportunities. A contract award was made in October 2006, to the low qualified bidder, Logistics Consulting Inc. (LCI) of York, Pennsylvania, to act in the consulting role to PIRT. LCI visited the various warehouses at our operating facilities and reviewed data regarding inventory and purchasing transactions. Initial recommendations regarding potential improvements in purchasing consumable and fast-moving stock, and replacement of the Niagara warehouse have been formulated.  LCI has been requested, as extra work, to review various processes relating to requisitioning, purchase order and contract initiation and warehouse activities to identify potential efficiency improvements for such processes.  A report of these recommendations is expected in May 2007.

 

 

ANNUAL REPORT - 2006 PROCUREMENT CONTRACTS (Exhibit “A-3”)

 

The Annual Report includes specific details of procurements of $5,000 or greater awarded since January 1, 1990 that were active in 2006.  There were 2,268 such contracts with an estimated value of more than $3.6 billion, which also includes fossil fuel and corporate finance expenditures. 

 

Total procurement expenditures in 2006 exceeded $753 million.  This included more than $500 million for the purchase of fossil fuels.  

 

Approximately 58% of the contracts active in 2006 were closed in 2006. 

 

As noted in Attachment II: 

 

 

It should also be noted that while approximately 52% of the total number of 2006 non-fuel contracts covered by the Report exceeded $25,000, the total value of those contracts was approximately 99% of the total non-fuel expenditures.

 

Attachment III indicates that, based on the total value of the contracts included in the Annual Report, approximately 98% of the total dollars expended (including fuels and corporate finance) were for contracts that were competitively bid.  In terms of the numbers of contracts processed (Attachment IV), approximately 76% were competitively bid and 24% were sole source awards.  Major reasons for the sole source awards included the purchase of spare parts and services from original equipment manufacturers and procurement of services on an emergency basis and from proprietary sources.

 


 

Exhibit “A-2”

 

 

 

 

GUIDELINES FOR PROCUREMENT CONTRACTS

 

1.         PURPOSE

 

The purpose of these Guidelines for Procurement Contracts (“Guidelines”), which comply with the applicable provisions of Article 4-C of the Economic Development Law, § 2879 of the Public Authorities Law and §§ 139-j and 139-k of the State Finance Law, is to establish the basis for soliciting and evaluating proposals from individuals and/or firms providing goods and/or services as defined in section 2 below.  Consistent with these Guidelines, individual facilities or headquarters departments may establish specific supplementary guidelines based on their own needs.

 

2.         DEFINITIONS

 

A.                 “Procurement Contracts” are all contracts for the acquisition of goods and/or services in the actual or estimated amount of $5,000 or more.  Such goods and/or services shall consist of all those necessary to support the Authority’s headquarters Facilities and Operating and Capital Construction Projects, including but not limited to: goods such as office supplies, major electrical equipment, construction and maintenance work and services as more fully described in section 2. B below.  Procurement Contracts shall not include contracts for energy, capacity, ancillary services, transmission, distribution or related services in support of the provision of service to Authority customers; contracts for differences; financial hedge contracts (including but not limited to swaps, calls, puts or swap options); and credit rating services.  In addition, Procurement Contracts shall not include funding agreements, co-funding agreements, grants or memberships in various industry groups, professional societies and similar cooperative associations, nor any cooperative projects and procurement activities conducted or sponsored by such organizations in which the Authority participates. Direct placement of advertisements with radio, television and print media shall also be excluded.

 

B.                 “Services Contracts” are Procurement Contracts for services of a consulting, professional or technical nature provided by outside consultants/contractors (individuals, partnerships or firms who are not officers or employees of the Authority) for a fee or other compensation.  Services Contracts comprise three specific types: Personal Services, Non-Personal Services and Construction.  Personal Services include, but are not limited to: accounting, architectural, engineering, financial advisory, legal, public relations, planning, management consulting, surveying, training (when provided on Authority property and/or exclusively for Authority employees) and construction management.  Non-Personal Services include, but are not limited to: skilled or unskilled temporary personnel, including clerical office staff, technicians or engineers working under Authority supervision; maintenance, repairs, and printing services.  Construction includes Procurement Contracts involving craft labor.

 

Note:  Use of such services may be appropriate (1) when a consultant/contractor possesses special experience, background or expertise; (2) when there is insufficient Authority staff and retention of a consultant/contractor is more appropriate or economical than hiring additional permanent staff; (3) to provide independent external review or a second opinion; (4) to meet unusual schedule requirements or emergencies or (5) for a combination of these factors.

C.                 “Goods” include equipment, material and supplies of every kind.

 

D.                 “Contacts” shall mean any oral, written or electronic communication with the Authority under circumstances where a reasonable person would infer that the communication was intended to influence the procurement.

 

E.                  “Relative” is defined in Section 9.F.1 of these Guidelines.

 

3.         SOLICITATION REQUIREMENTS

 

A.D.         Solicitation of proposals for Procurement Contracts is the joint responsibility of the Procurement Division at the headquarters offices, or the Procurement Departments at the facilities and the initiating unit.  Except as otherwise authorized by these guidelines, a request for proposal (“RFP”) shall be sought from a minimum of three providers and/or firms (if available) for purchases valued under $25,000 and a minimum of five providers and/or firms (if available) for purchases valued at $25,000 and greater, commensurate with the magnitude and nature of the goods and/or services, and the schedule for performance. It is preferable that more than five proposals be requested whenever possible and practicable.

 

B.E.           Prospective bidders on Procurement Contracts may be prequalified by invitation.  In such cases, proposals will be requested only from those providers and/or firms whose prequalification submittals show sufficient ability and competence to supply the particular goods and/or perform the particular services required.

F.                  The Authority may withdraw any pending solicitation (including, but not limited to, Requests for Proposals and Requests for Quotations) at any time, for cause or no cause.  Any person or entity submitting any responsive document to the Authority does so at its own cost or expense and will not be reimbursed by the Authority for the preparation of any responsive document, unless otherwise agreed to in writing by the Authority and signed by an authorized representative of the Authority.

 

D.G.         The Authority shall, in order to promote the use of minority and women-owned business enterprises (“M/WBEs”), solicit offers from M/WBEs known to have experience in the area of goods and/or services to be provided, regardless of the type of contract.  For the purpose of these Guidelines, an M/WBE shall be any business enterprise at least 51% of which is owned by blacks, Hispanics, Native Americans (“Indians”), Asians, Pacific Islanders and/or women, and as further described in the Authority’s Supplier Diversity Program Policy and Procedures and Executive Law Article 15-A.

 

E.H.          To foster increased use of M/WBEs, a single proposal may be sought, negotiated and accepted for purchases of goods or services not exceeding $5,000 from a New York State-certified M/WBE that offers a reasonable price for such goods or services (not exceeding $5,000).

 

F.I.             Pursuant to Public Authorities Law § 2879, it is the policy of New York State to promote the participation of and maximize the opportunities for New York State business enterprises and New York State residents in Procurement Contracts.  The Authority shall use its best efforts to promote such participation and shall comply with the applicable provisions of the Act.

 

1.                  For the purpose of this section, a New York State business enterprise shall mean a business enterprise, including a sole proprietorship, partnership or corporation that offers for sale or lease or other form of exchange, goods sought by the Authority that are substantially manufactured, produced or assembled in New York State or services sought by the Authority that are substantially performed within New York State as further described in Public Authorities Law § 2879.

 

2.                  For the purpose of this section, a New York State resident means a  person who maintains a fixed, permanent and principal home in New York State to which such person, whenever temporarily located, always intends to return as further described in Public Authorities Law § 2879.

 

3.                  For the purpose of this section, a foreign business enterprise shall mean a business enterprise, including a sole proprietorship, partnership or corporation, that offers for sale, lease or other form of exchange, goods sought by the Authority that are substantially produced outside New York State, or services sought by the Authority that are substantially performed outside New York State as further described in Public Authorities Law § 2879.

 

G.J.            Pursuant to the Public Authorities Law § 2879, the Authority shall, where feasible, make use of the stock item specification forms of New York State manufacturers, producers and/or assemblers for any Procurement Contract for the purchase of goods when preparing a request for proposals, purchase order, price inquiry, technical specifications and the like. The headquarters Procurement Group will develop a system for collecting such data and disseminating a list of such New York State manufacturers for consultation by Authority employees preparing a specification or bill of materials for goods.

 

H.K.         Goods may be procured pursuant to Procurement Contracts let by any department, agency, officer, political subdivision or instrumentality of the state or federal government or any city or municipality where the Procurement Division at the headquarters offices, or the Procurement Departments at the facilities, and the initiating unit determine that a reasonable potential exists for cost savings or other benefit to the Authority and have approved the specifications and proposed terms and conditions of such contract.

 

I.L.             An RFP will include a scope of work that defines the goods required and/or the services to be performed, the required completion of any “milestone” dates, the Authority’s M/WBE Program requirements, if applicable, all other applicable Authority requirements and any special methods or limitations that the Authority wishes to govern the work.  Telephone solicitation, usually for those procurements valued at $25,000 or less, may be used where time constraints do not permit issuance of an RFP, where issuance of an RFP is otherwise impracticable or for goods that are catalog items or do not require a detailed bill of materials or specification.

 

J.M.          For all Procurement Contracts with a value equal to or greater than $15,000  (except for those contracts noted below)  the Authority shall, prior to solicitation of proposals, submit the following information to the Commissioner of the New York State Department of Economic Development to be included in the weekly New York State Contract Reporter published by that department (unless such publication would serve no useful purpose): (1) the Authority’s name and address; (2) the contract identification number;  (3) a brief description of the goods and/or services sought, the location where goods are to be delivered and/or services provided and the contract term;  (4)  the address where bids or proposals are to be submitted;  (5)  the date when bids or proposals are due;   (6)  a description of any eligibility or qualification requirements or preferences;  (7)  a statement as to whether  the contract  requirements  may be fulfilled by a  subcontracting, joint venture, or coproduction arrangement;  (8) any other information deemed useful to potential contractors; (9)  the name, address, and telephone number of the person to be contacted for additional information; and (10) a statement as to whether the goods or services sought had, in the immediately preceding three-year period, been supplied by a foreign business enterprise.  Such information shall be submitted to the Commissioner of the New York State Department of Economic Development in accordance with the schedule set forth by the Department of Economic Development, in order that the pertinent information may be published in the New York State Contract Reporter.  A minimum of 15 business days shall be allowed between the date of publication of such notice and the due date of the bid or proposal. 

 

This provision shall not apply to Procurement Contracts awarded on an emergency basis as described below in section 3. ML; Procurement Contracts being rebid or resolicited for substantially the same goods or services, within 45 business days after the date bids or proposals were originally due; and/or Procurement Contracts awarded to not-for-profit providers of human services.

 

In addition, this provision shall not apply to contracts for differences, energy, capacity, ancillary services, transmission, distribution or related services in support of the provision of service to Authority customers, financial hedge contracts, including, but not limited to, swaps, calls, puts or swap options and credit rating services, and shall not include memberships in various industry groups, professional societies and similar cooperative associations, nor any cooperative projects and procurement activities, conducted or sponsored by such organizations, in which the Authority participates.  Advertising agreements with radio, television and print media shall also be excluded.

Certain Procurement Contracts may require purchases: (1) on the spot market; (2) that require a completion time less than the time limits for noticing in the Contract Reporter; or (3) that do not lend themselves to the solicitation for proposal process. In accordance with paragraph 3(h) of         § 2879 of the Public Authorities Law, the Authority declares its policy to be that such purchases, including, but not limited to, oil or gas purchases on the spot market, are exempted from the noticing requirements of Article 4-C of the Economic Development Law subject to the approval of the Vice President – Procurement and Real Estate and the head of the initiating unit. Where appropriate, generic ads may be included from time to time in the Contract Reporter notifying potential bidders of such opportunities and soliciting qualification statements from such firms for consideration by the Authority.

 

K.N.        Proposals for certain Services Contracts may also be solicited by competitive search, as follows:

 

For contracts where the scope of work cannot be well defined or quantified, or where selection requires evaluation of factors such as breadth and depth of experience in a unique or highly specialized field and suitability as an Authority representative, a “competitive search” shall be conducted to determine which consultants are most qualified, for reasonable compensation terms, to perform the work.  Depending on market conditions, at least five potential sources should be evaluated.  If there are less than five sources, all sources shall be evaluated.  The Procurement Division shall interface with the initiating unit to gather information from potential sources, which should include a description of the qualifications of the consultant or firm, résumés of key personnel, past experience and proposed billing rates.

 

L.O.          A Procurement Contract may be awarded on a sole source basis where:

 

1.                  The compatibility of equipment, accessories or spare or replacement parts is the paramount consideration.

2.                  Services are required to extend or complement a prior procurement and it is impracticable or uneconomic to have a source other than the original source continue the work.

3.                  A sole supplier’s item is needed for trial use or testing, or a proprietary item is sought for which there is only one source.

4.                  Other circumstances or work requirements exist that cause only one source to be available to supply the required goods or services.

5.                  Award to certified M/WBE firms for purchases not exceeding $5,000, pursuant to section 3. D.

 

M.P.         Subject to the Authority’s Expenditure Authorization Procedures (“EAPs”), a Procurement Contract may be awarded without following the solicitation requirements that would ordinarily apply (but using such competitive selection procedures as are practicable under the circumstances) where emergency conditions exist, such as:

 

1.                  A threat to the health or safety of the public or Authority employees or workers.

2.                  The proper functioning of the Authority’s offices or construction or operating projects require adherence to a schedule that does not permit time for an ordinary procurement solicitation.

 

N.Q.        Whenever an initiating unit determines that a Procurement Contract should be awarded on either a sole source or emergency basis, the head of the unit shall provide to the Procurement Division at headquarters or Procurement Departments at the Facilities, a written statement explaining the reasons therefore.

 

O.R.         Pursuant to State Finance Law §§ 139-j and 139-k, it is the policy of New York State to discourage improper communications intended to influence a governmental procurement.  The Authority shall use its best efforts to control such practices and shall comply with the applicable provisions of the statutes.

1.      For purposes of §§ 139-j and 139-k of the State Finance Law, a “Procurement Contract” shall mean any contract or other agreement for a commodity, service, technology, public work, construction, revenue contract, the purchase, sale or lease of real property or an acquisition or granting of other interest in real property that is the subject of a governmental procurement.  Grants, contracts between the Authority and non-profit organizations pursuant to Article 11-B of the State Finance Law, intergovernmental agreements, railroad and utility force accounts, utility relocation project agreements or orders and eminent domain transactions shall not be deemed procurement contracts.

 

2.      For purposes of §§ 139-j and 139-k of the State Finance Law, the “Restricted Period” shall mean the period of time commencing with the earliest written notice, advertisement or solicitation of a request for proposal, invitation for bids, or solicitation of proposals, or any other method for soliciting a response from bidders/contractors intending to result in a procurement contract with the Authority and ending with the final contract award.

 

3.      The Authority shall designate a person or persons who may be contacted, with respect to each Authority procurement, by bidders/contractors or persons acting on their behalf where a reasonable person would infer that the communication was intended to influence the procurement during the Restricted Period.

 

4.         EVALUATION OF PROPOSALS

 

A.                 Evaluation of proposals shall be made by a fair and equitable comparison of all aspects of the proposals against the specifics of the RFP and against each other, including an analytic study of each offer considering: the quality of the goods and/or the competence of the bidder, the technical merit of the proposals and the price for which the goods and/or services are to be supplied.

 

B.                 In the event that the price submitted by the bidder recommended to be awarded a contract exceeds the cost estimated on the contract requisition at the time of bidding, the initiating department shall prepare an explanation of any reasons why the initial cost estimate was incorrect or should be revised. 

 

This will be reviewed by the Procurement Division at headquarters and/or Procurement staffs at the Facilities and appropriate management levels for approval as stipulated in the Expenditure Authorization Procedures.  Consideration will be given at that time for: (1) rejecting bids, resoliciting proposals and/or possibly modifying the scope of work; (2) revising the cost estimate and proceeding with the award of contract; or (3) negotiating with the low bidder(s), as determined by the Vice President – Procurement and Real Estate, to reduce the price quoted.  Factors to be considered in reaching the proper course of action will include, but not be limited to, the effects (both schedule and cost) of a delay to the specific capital construction project or outage at an operating facility, the magnitude of the contract, available bidders, the ability to attract additional competition if proposals are resolicited and the accuracy of the original cost estimate.  The recommended course of action and the reasons therefor will be fully documented in a memorandum for consideration by the appropriate level of management prior to approval.

 

C.                 Important items to be considered in evaluating the goods to be supplied and/or competence of the bidder are: previous experience (including applicable experience within New York State and evaluations from other clients to whom the bidder has provided goods and/or services); the abilities and experience of the personnel to be assigned to the Authority’s work and the ability to provide any needed advanced techniques such as simulation and modeling.  The approach proposed in meeting the exact requirements of the scope of work will be given consideration in evaluating the technical merit of proposals, together with a well-organized task structure, the ability to timely supply the goods and/or perform the proposed services and the ability to meet M/WBE goals, if any.  The need to purchase the goods from and the need to subcontract performance of services to others will be evaluated as to effect on cost, as well as quality, schedule and overall performance.

 

D.                 For Services Contracts, the technical merits of the proposals and the experience and capabilities of the bidders will be the primary factors in determining the individual or firm to be awarded the contract, provided that the price for performing such work is reasonable and competitive.

 

E.                  For Procurement Contracts other than Personal Services (as defined in section 2. B of these Guidelines), award should usually be made to the lowest-priced firm submitting a proposal that meets the commercial and technical requirements of the bid documents.

 

F.                  Pursuant to § 139-j of the State Finance Law, the Authority shall not award a Procurement Contract (as defined in section 3. ON.1. of these Procurement Guidelines) to a bidder/contractor who fails to disclose timely, accurate and complete responses to inquiries about past determinations of non-responsibility (unless awarding the contract is necessary to protect public property or public health or safety and it is the only source capable of supplying the required article of procurement within the necessary timeframe.)

 

A bidder/contractor’s knowing and willful violation of the Authority’s policy providing for certain procurement disclosures, shall result in a determination of non-responsibility of such bidder/contractor pursuant to State Finance Law §§ 139-j and 139-k only.

 

More than one determination of non-responsibility due to violations of State Finance Law § 139-j in a four-year period shall render a bidder/contractor ineligible to submit bids for four years from the second determination of non-responsibility.

 

G.                 Award to “other than low bidder” can be made only with the approval of the appropriate management level as stipulated in the EAPs, and should be based on such a proposal providing a clear advantage to the Authority over that of the lower-priced proposal.  Such factors justifying an “other than low bidder” award may include, but are not necessarily limited to, improved delivery schedules that will reduce outages, longer warranty periods, improved efficiency over life of equipment use, reduced maintenance costs, financial resources of the bidders or ability to meet or exceed M/WBE goals.

 

5.         RECOMMENDATION OF AWARD

 

A.                 A recommendation for approval of a proposed award of a Procurement Contract will usually be prepared in the form of a memorandum by the unit requiring the goods and/or services.  The recommendation will include an evaluation of proposals as specified in section 4, above, as well as proposed specific compensation terms that provide a clear breakdown of cost factors and methods of calculation, including, as applicable:

 

1.                  Lump sum and/or unit prices for equipment and construction work.

 

2.                  Hourly or daily rates for personnel.

 

3.                  Markups for payroll taxes, fringe benefits, overhead and fees, if the proposal is based on reimbursement of actual payroll costs.

 

4.                  Terms for reimbursement of direct out-of-pocket expenses, such as travel and living costs, telephone charges, services of others and computer services.

 

5.                  Provisions, if any, for bonus/penalty arrangements based on target person-hours and/or target schedule.

 

B.                 The recommendation shall also review any substantive exceptions to commercial and technical requirements of a price inquiry, RFP or bidding documents, including, but not limited to, payment terms, warranties and bond (if any) requirements.

 

6.         AWARD OF CONTRACT

 

A.                 Services Contracts to be performed over a period in excess of 12 months shall be approved and reviewed annually by the Trustees.  Services Contracts covering less than a 12-month period shall be approved by authorized designees in accordance with existing EAPs.  Extending a contract for services with an initial duration of less than 12 months beyond 12 months shall be approved by the Trustees at the request of the initiating department and shall be reviewed by the Trustees annually.  The extension for a cumulative term exceeding 12 months of a contract for services that has previously been approved by the Trustees requires further Trustees’ approval.  Extensions of 12 months or less of the term of a contract previously approved by the Trustees shall be approved by an authorized designee in accordance with existing EAPs.

 

B.                 For those Services Contracts to be performed for a period in excess of one year, which must be awarded prior to the next scheduled quarterly Trustees’ meeting, the initial contract shall be issued for the entire term of the contract.  Based on the total value, such contract must be approved by the appropriate management level set forth in the EAPs.  Such contract shall be subject to the Trustees’ approval, which shall be solicited at the next earliest quarterly Trustees’ meeting.  If such approval is not granted, the contract will be terminated immediately.

 

C.                 A contract or contract task shall be deemed to be for services in excess of 12 months where it does not specify a definite term and the work will not be completed within 12 months, and any “continuing services” contract with no fixed term that provides for the periodic assignment of specific tasks or particular requests for services.  This would include contracts for architect/ engineering services with the original engineers of operating facilities, as well as the original supplier of steam supply systems or boilers and turbine generating equipment, that have been approved by the Trustees. Each task authorized under such contracts (which may be referred to as a “Change Order”, “Purchase Order” or “Task Number”) shall be considered a separate commitment and be separately approved in accordance with the EAPs.

 

D.                 The term of a Personal Services contract will be limited to a maximum of five (5) years, inclusive of extensions.

 

E.                  Where time constraints or emergency conditions require the extension beyond a year of an existing contract with an initial duration of less than a year, and the cumulative change order value does not exceed the appropriate monetary limit set forth in the EAPs, the Business Unit Head, with the prior concurrence of the Vice President – Procurement and Real Estate, may authorize the extension of such contracts, subject to Trustees’ ratification of such action as soon as practicable.

 

F.                  In cases where the total estimated contract value or the value of the extension exceeds the monetary limits set forth in the EAPs, the President’s interim approval will be required subject to Trustees’ ratification of such as soon as practicable.

 

G.                 Where time constraints or emergency conditions require immediate commencement of services to be performed over a period in excess of one year, and where the contract value exceeds the President’s monetary approval limit set forth in the EAPs, the President, with the prior concurrence of the Vice President-Procurement and Real Estate, may authorize the commencement of such services.   The initial compensation limitation may not exceed the President’s authorization level set forth in the EAPs.  Such contract shall be subject to the Trustees’ approval, which shall be solicited at their next scheduled meeting.

 

H.                 The Procurement Division at the headquarters offices, or the Procurement Departments at the project sites, will prepare the contract for execution by the Authority and the successful bidder to be awarded the purchase order/contract.  No work shall commence by the selected contractor until the contract is executed by both parties, except that mutually signed letters of award or intent may initiate work prior to formal execution.  Authority signatories of such letters must be authorized to approve contract awards pursuant to existing EAPs.

 

I.                    Pursuant to Public Authorities Law § 2879, the Authority shall notify the Commissioner of Economic Development of the award of any Procurement Contract for the purchase of goods or services from a foreign business enterprise (as defined in section 3. FE. 3 of these Guidelines) in an amount equal to or greater than $1,000,000 simultaneous with notifying the successful bidder therefor. The Authority shall not enter into the Procurement Contract for said goods until at least 15 days have elapsed from the notification of the award, except for a Procurement Contract awarded on an emergency or critical basis.  The notification to the Commissioner shall include the name, address, telephone and facsimile number of the foreign business enterprise, the amount of the proposed Procurement Contract and the name of the individual at the foreign business enterprise or acting on behalf of same who is principally responsible for the proposed Procurement Contract.

 

 

7.         CONTRACT PROVISIONS

A.                 Standard forms of contracts currently in use are available from the Procurement Division.  They generally include: purchase order format for standard procurements of goods or services; furnish and deliver format for major equipment purchases; letter agreements and agreement formats for consulting work; and contract work orders (for construction work of small magnitude), construction contracts (for major construction work) and furnish, deliver, and install contracts (for specialized major procurements where single responsibility is required for procurement and installation).  These contract forms are intended to govern the purchase of goods and/or performance of the services.  Authority units proposing to initiate a Procurement Contract should review these forms to suggest any modifications and additions that may be required for the particular goods and/or services.  Under no circumstances should contract forms be shown to proposed bidders without prior approval of the Procurement Division, which, along with Procurement Departments at operating facilities, is solely responsible for requesting proposals.

B.                 The following types of provisions setting forth the responsibilities of contractors are to be contained in the standard forms of Procurement Contracts except that any of the provisions listed below that are inapplicable or unnecessary because of the nature or duration of the work to be performed, the location or locations where they are to be performed or the type of compensation being paid therefor need not be included.  Other provisions may be added as the particular needs of the Authority may require.

1.                  Schedule of Services or Specifications

2.                  Time of Completion

3.                  Compensation or Itemized Proposals

4.                  Relationship of Parties

5.                  Delays

6.                  Termination

7.                  Changes in the Work

8.                  Claims and Disputes

9.                  Warranty

10.              Insurance

11.              Records, Accounts, Inspection and Audit

12.              Assignment

13.              Notices

14.              Indemnification

15.              Governing Law

16.              Proprietary Nature of Work

17.              Testimony

18.              Entire Agreement

19.              Minority and Women-Owned Business Enterprise Program Requirements

20.              Omnibus Procurement Act of 1992 Requirements

Contract Attachments

1.                  Compensation Schedule

2.                  Schedule of Services or Specifications

3.                  Appendix “A” (Miscellaneous Statutory Provisions)

4.                  Appendix “B” (Prompt Payment Provisions)

5.                  Appendix “C” (Minority and Women-Owned Business Enterprises Provisions)

6.                  Appendix “D” (Background Security Screening for Authority Contractors)

7.                  Appendix “E” (Omnibus Procurement Act of 1992 Requirements)

8.                  Appendix “G” (EEO Requirements)

9.                  Appendix “H” (Tax Law Requirements)

10.              Appendix “J” (Bidder/Contractor Compliance with State Finance Law §§ 139-j and 139-k and Authority Policy Providing for Certain Procurement Disclosures)

 

C.                  Any firm, person or entity retained by the Authority to provide conceptual studies, designs or specifications is prohibited from being awarded future phases of work, including implementation, related to the original work.  If there is no qualified response to the solicitation for preparation of studies, design or specifications, the approval of the Vice President-Procurement & Real Estate, applicable Business Unit Head, Assistant General Counsel, and President & CEO is required to waive the requirement on a case-by-case basis.

 

8.         CHANGE ORDERS

 

A.                 Change Orders to existing contracts are justified in the following cases:

 

1.                  To incorporate additional work related to the original scope, to delete work or otherwise modify original work scope

 

2.                  To exercise options previously included in the original contract to perform additional work or to extend the contract term

 

3.                  Emergency conditions, defined in section 3. ML, that require the immediate performance of work by a firm already under contract;

 

4.                  Rebidding would not be practical or in the best interests of the Authority’s customers; and

 

5.                  To meet the Authority’s M/WBE goals in accordance with Executive Law Article 15-A.

 

B.                 All Change Orders must be approved in accordance with the Authority’s EAPs, and should include specific schedules for completion of work at the earliest possible time.

 

9.         PROHIBITION OF CURRENT EMPLOYEES;EMPLOYMENT OF FORMER OFFICERS AND EMPLOYEES

 

A.H.         All current employees and their immediate families (spouse, parent, or sibling) or individuals or entities in which such employees and their immediate families have an ownership interest are prohibited from employment as contractors, vendors or consultants.

 

B.I.             Former Authority officers and employees are eligible to be considered for employment as contractors and/or consultants, provided that: they meet all criteria for contractors and/or consultants generally as specified in these Guidelines; their employment is not barred by N.Y. Public Officers Law     § 73 (8); if requested, they obtain an opinion by the State Ethics Commission that such employment is permissible; and upon the approval of the President.

 

C.J.            Pursuant to the provisions of N.Y. Public Officers Law § 73 (8):

 

1.                  No Authority officer or employee is eligible, within a period of two years after the termination of Authority service to appear or practice before the Authority or receive compensation for any services rendered on behalf of any person, firm, corporation or association, in relation to any case, proceeding or application or other matter before the Authority.

 

2.                  No Authority officer or employee is eligible, at any time after the termination of Authority service, to appear, practice, communicate or otherwise render services before the Authority or any other state agency or receive compensation for any such services rendered on behalf of any person, firm, corporation or other entity in relation to any case, proceeding, application or transaction that such person was directly concerned with and personally participated in during his or her period of service, or which was under his or her active consideration.

 

K.        No Authority employee who is involved in the award of Authority grants or contracts, may ask any officer, director or employee of such current or prospective contractor or grantee to reveal: (a) the political party affiliation of the individual; (b) whether the individual or entity has made campaign contributions to any political party, elected official, or candidate for elective office; or (c) whether the individual voted for or against any political party, elected official or candidate for elective office.  
L.            No Authority employee may award or decline to award any grant or contract, or recommend, promise or threaten to do so because of a current or prospective grantee’s or contractor’s: (a) refusal to answer any inquiry prohibited by Section 9.D above or (b) giving or withholding or neglecting to make any contribution of money, service or  any other valuable thing for any political purpose.
M.         No Authority employee may take part in any contracting decision involving the payment of more than $1,000: (i) to a Relative; or (ii) to any entity in which the Authority employee or a Relative of such Authority employee owns or controls 10% or more of the stock of such entity (or 1% in the case of a corporation whose stock is regularly traded on an established securities exchange); or serves as an officer, director or partner of that entity.  If a contracting matter arises relating to this Section 9.F, then the employee must advise his or her supervisor of the relationship, and must be recused from any and all discussions or decisions relating to the matter.  
1.              For purposes of this Section 9.F, the term “Relative” shall mean any person living in the same household as the Authority employee or any person who is a direct descendant of the Authority employee’s grandparents or the spouse of such descendant. 
N.           Restrictions 9.D through 9.F above also apply to disposal of property which are governed by the Authority’s Disposal of Personal Property Guidelines and Disposal of Real Property Guidelines.

 

10.         MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISE (M/WBE) REQUIREMENTS

 

It is the objective of the Authority to continue to foster the development of business opportunities on Authority contracts for M/WBE firms.  Article 15-A of the Executive Law established a statewide office of M/WBE development that is responsible for developing rules and regulations for implementation of this statute, certifying M/WBE firms and reviewing and monitoring goal plans, compliance reports, and contract provisions to be included in all non-construction contracts for more than $25,000 and construction contracts for more than $100,000.  The definition of an M/WBE firm is included in section 3.DC of these Guidelines.  It is the Authority’s objective to solicit proposals from certified M/WBE firms that are qualified to perform the required work.  In addition, specific goals may be included in certain contracts for consulting work, construction and procurement of goods and other services requiring the contractor/vendor to subcontract a portion of the work to certified M/WBE firms, as required by law.  Bidders’ proposals shall include Preliminary Subcontracting Plans for M/WBE firms, where required, as part of their proposal, and failure of such bidders to meet these requirements may be grounds for rejection of the proposal, or cancellation of the contract if a contractor did not make a good faith effort to meet its goals after contract award.

 

11.       REPORTING REQUIREMENTS AND PROCUREMENT RECORD

 

A.C.         At the headquarters offices, the Procurement Division shall maintain records of such Procurement Contracts, including bidder’s names, the selection processes used and the status of existing contracts, including goods provided and/or services performed and fees earned, billed and paid.  At the project sites, such records shall be kept by the Procurement Departments.  After the end of each calendar year, the Vice President ‑ Procurement and Real Estate shall prepare and submit an annual report to the Trustees for their approval that shall include:

 

1.                  Copy of the Guidelines;

2.                  Explanation of the Guidelines and any amendments thereto since the last annual report;

3.                  List of all Procurement Contracts entered into since the last annual report, including all contracts entered into with New York State business enterprises and the subject matter and value thereof and all contracts entered into with foreign business enterprises and the subject matter and value thereof;

4.                  List of fees, commissions or other charges paid;

5.                  Description of work performed, the date of the contract and its duration, the total amount of the contract, the amount spent on the contract during the reporting period and for the term of the contract to date and the status of existing Procurement Contracts;

6.                  Method of awarding the contract (e.g., competitive bidding, sole source or competitive search); and

7.                  Reasons why any procurements over $15,000 were not noticed in the Contract Reporter.

 

B.D.          Such annual report, as approved by the Trustees, shall be submitted to the Division of Budget within 90120 days after the end of such calendar year and copies shall be distributed to the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee and the Assembly Ways and Means Committee and any other entity as may be required by law.  Copies shall be made available to the public upon reasonable written request therefor.

 

C.E.          State Finance Law §§ 139-j and 139-k.

 

1.                  A statement describing the basis for a determination of a bidder/contractor’s non-responsibility (per State Finance Law §§ 139-j and 139-k only) and the Authority’s decision not to award bidder/contractor the Procurement Contract must be included in the procurement record.

 

2.                  The Authority shall notify the Office of General Services of bidders/contractors who have been determined to be non-responsible bidders (per State Finance Law §§ 139-j and 139-k only) or debarred due to violations of§ 139-j of the State Finance Law.

 

3.                  All forms entitled “Record of Contact” shall be included in the respective procurement record.

 

4.                  A statement describing the basis for a termination of a Procurement Contract for providing an intentionally false certification must be included in the procurement record.

 

 

12.       THIRD PARTY RIGHTS: VALIDITY OF CONTRACTS

 

A.                 These Guidelines are intended for the guidance of officers and employees of the Authority only, and nothing contained herein is intended or shall be construed to confer upon any person, firm or corporation any right, remedy, claim or benefit under, or by reason of, any requirement or provision hereof.

 

B.                 Nothing contained in these Guidelines shall be deemed to alter, affect the validity of, modify the terms of or impair any contract or agreement made or entered into in violation of, or without compliance with, the provisions of these Guidelines.

 

 

 

 

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EXHIBIT ‘A-3’

VOLUMINOUS DOCUMENT UNDER SEPARATE COVER


 

11.          Disposal via Sale of Beechcraft King Air B-350 Aircraft

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to delegate authority to the President and Chief Executive Officer to approve the disposal via sale of the Authority’s Beechcraft King Air B-350 aircraft, S/N FL-283, Registration Number N4083L (the ‘Plane’).

 

BACKGROUND

 

“In June 2000, the Authority purchased the Plane for use by the Authority primarily to transport employees to and from Authority facilities throughout New York State, for the purchase price of $5,582,350.

 

“At their meeting of December 19, 2006, the Trustees delegated authority to the President and Chief Executive Officer to approve the purchase of a new King Air aircraft.  The schedule for fabrication and delivery of the new plane is outlined in Exhibit ‘11-A.’  The contract with Hawker Beechcraft (formerly Raytheon Aircraft Company) for such purchase includes an option for the Authority to trade in the current King Air 350 for a trade-in allowance of $2,650,000.  However, based on the current fair market value of the Plane (estimated between $2.6 and $3.2 million), staff recommended that competitive bids be sought in an attempt to maximize the Authority’s return-on-investment. 

 

“In addition, the Public Authorities Accountability Act of 2005 (‘PAAA’) and the Authority’s Guidelines for the Disposal of Personal Property (the ‘Guidelines’) require the Authority, with the approval of the Trustees, to dispose of Authority property through solicitation of competitive proposals with public advertising for disposal of personal property over $15,000 in value.  To this end, staff prepared a Request for Proposals (‘RFP’; Q02-3998), which was posted on the Authority’s Procurement website.  Notices of the availability of the RFP were included in the New York State Contract Reporter and on various industry internet services.

 

DISCUSSION

 

“As a result of this competitive solicitation, 31 potential bidders downloaded the RFP from the Authority’s Procurement website.  Six proposals to purchase were received ranging in price from $2.5 to $2.7 million, as summarized in Exhibit ‘11-B.’  Authority staff is currently in the process of evaluating these proposals from the standpoint of pricing, overall background, qualifications and financial condition of the bidders.  Due to the need to finalize the transaction as soon as possible in order to lock in the sale of the Plane on the most advantageous terms to the Authority, an award to the successful bidder is expected in the first half of May 2007.  In order to support this schedule, staff recommends that the Trustees authorize the President and Chief Executive Officer to approve the sale of the Plane to the bidder that provides the most advantageous value to the Authority.  A separate report will be sent to the Trustees documenting this decision.

 

“Three of the proposal prices received are higher than the aforementioned trade-in allowance proffered by Raytheon, and staff expects to recommend an award to the successful bidder at an amount greater than such allowance.  Therefore, the Authority will not be exercising the option in the Raytheon purchase contract.

 

FISCAL INFORMATION

 

“The disposal will be conditioned on the execution of an agreement between the successful bidder and the Authority, with a 10% deposit required on execution.

 

“Prior to the closing, the buyer will be allowed to conduct a detailed inspection of the aircraft and, if any reasonable deficiencies are noted, the Authority and the buyer will negotiate an adjustment to the purchase price, reflecting the cost of such corrections.  The agreement will provide that once the inspection and negotiation is completed, the sale of the aircraft will be ‘as is,’ with no warranty of any kind from the Authority, along with such additional protections that reasonably safeguard the Authority from future responsibility.

“The balance of the payment, subject to any such adjustment, in accordance with the terms of the agreement, will be paid to the Authority at the time of closing.  The closing of this transaction will occur after delivery of the new airplane to the Authority by Hawker Beechcraft.

 

“All proceeds from this sale will be deposited in the Authority’s Operating Reserves.  Any amounts above the current book value of $1.5M will be treated as net revenue for 2007.

 

RECOMMENDATION

 

“The Inspector General and Vice President – Corporate Security, the Vice President – Procurement and Real Estate and the Director – Corporate Support Services recommend that pursuant to the Public Authorities Accountability Act of 2005 and the Authority’s Guidelines for the Disposal of Personal Property, the Trustees delegate authorization to the President and Chief Executive Officer to approve the disposal via sale of the Authority’s King Air B-350 aircraft to the bidder that provides the most advantageous value to the Authority.

 

“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. Hoff presented the highlights of staff’s recommendations to the Trustees. In response to a question from Chairman McCullough, Mr. Hoff said that the purchaser would put 10% down on the plane, which funds would be escrowed, and that the other 90% of the plane’s price would be paid upon delivery of the plane.  Responding to a question from Trustee Scozzafava, Mr. Vesce said that, aside from price, the other factors being considered in selecting a purchaser were the results of a background check and the end use to which the plane was to be put.

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

 

RESOLVED, That pursuant to the Public Authorities Accountability Act of 2005 and the Authority’s Guidelines for the Disposal of Personal Property, the Trustees hereby delegate authorization to the President and Chief Executive Officer to approve the disposal via sale of the Authority’s King Air B-350 aircraft (S/N FL-283, Registration Number N4083L) to the bidder that provides the most advantageous value to the Authority, as 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, 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 or his designee.

 


 

Exhibit “11-A”

April 24, 2007

 

Current Schedule for Delivery of New Plane

 

5/14                                         Production completed at Beechcraft’s Wichita factory

5/23                                         Flight test complete

6/5                                           Paint complete

6/11                                         Interior loaded

6/15                                         Certificate of airworthiness issued

6/15 – 7/9                               Installation of pre-delivery modifications

7/12                                         Projected flight completion date

7/18                                         Projected delivery date


 

April, 24, 2007

Exhibit “11-B”

 

Bid Results for B-350 Sale (Q02-3998)

 

                                                                                                                                                Unit Price Adjustment

                                                                                                                                                      (per Flight Hour

Bidder                                                                    As-Received Pricing                           above or below 3350 hours)

Bell Aviation, Inc.                                                $2,786,000                                              None required

Piedmont Hawthorne                                           $2,727,000                                              None required

Aviation, LLC

dba Landmark Aviation

 

JNS Aircraft Sales, LLC                                       $2,676,000                                              None required

Elliott Aviation Aircraft                                      $2,555,555                                              $300 per hour

Sales, Inc.                                                                                                                              above or below

 

Front Range Aviation, LLC                                $2,526,000                                              $500 per hour above;

                                                                                                                                                $    0 per hour below

 

Atlanta Jet, Inc.                                                    $2,500,000                                              $600 per hour above;

                                                                                                                                                $327 per hour below

 

Note:  Bidders’ qualifications, financial capabilities and exceptions to commercial terms and conditions will be reviewed by Authority staff and a recommendation will be forwarded to the President and Chief Executive Officer for award.


 

12.          New York State 2007 “Be Cool!” Program

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize the President and Chief Executive Officer to enter into an agreement with the New York State Energy Research and Development Authority (‘NYSERDA’) and provide $1 million to support the coordinated 2007 statewide ‘Be Cool!’ program. The program is intended to promote the use of higher-rated energy-efficient ENERGY STAR® products and increase public awareness of the need for energy conservation through New York Energy $martSM .  In addition to the public education to be funded with Authority support, the program will include a new bounty program for older, less efficient air conditioner units among homeowners and owners of large multifamily dwellings in the metropolitan New York City region, the area of the state with the highest level of demand for electricity.

 

BACKGROUND

 

“Since 2001, the Governor’s Office has directed state agencies to engage in a variety of energy demand-reduction initiatives. Among those efforts was a coordinated campaign involving NYSERDA, the Authority and the Long Island Power Authority (‘LIPA’), in cooperation with the New York State Public Service Commission (‘PSC’) to promote prudent use of electricity in New York State.  These programs, known as ‘Keep Cool’ and ‘Stay Cool,’ incorporated ENERGY STAR® product awareness campaigns and an air conditioner bounty program for the purchase of residential ENERGY STAR® room air-conditioning equipment and the return of old, inefficient units.

 

DISCUSSION

 

“The focus of the public awareness campaigns is educating consumers on the value of energy efficiency and providing advice on ways to stay cool during the summer months while controlling energy costs.  The public appeal highlights the need to use power sensibly, coupled with ways to be more energy efficient.  The program uses assorted communications media, including television, internet, radio, newspapers and direct mail.  Promotional materials direct consumers to the ENERGY STAR® retailer partners, participating state government websites and the toll-free consumer hotline 1-877-NY-SMART (1-877-697-6278).  It is noteworthy that more than three-quarters of New York State consumers now recognize the ENERGY STAR® label, compared to one-third in 1999.

 

“In 2001 and 2002, the ‘Keep Cool’ Air Conditioner Replacement Bounty Program was designed to ensure that old, inefficient air conditioners were taken out of circulation, recycled and replaced with highly efficient ENERGY STAR® models.  State residents could receive a $75 bounty when they turned in their old, working room air conditioner and purchased an ENERGY STAR® model.  In 2003, the bounty was reduced to $35. Market share of ENERGY STAR® room air conditioners increased to approximately 70%, compared to 14% in 1999. According to NYSERDA, ENERGY STAR® room air conditioners now comprise approximately 80% of the room air conditioner units sold to consumers.  More than 250,000 older units were removed from operation statewide and residential peak demand was permanently reduced by nearly 83 MW statewide as of 2006.  In addition, the demand-reduction and load-shifting tips marketed to consumers resulted in nearly 100 MW of reduced peak demand. 

               

“Authority participation in the program specifically enabled residents of municipal electric systems and rural electric cooperatives to become eligible for the bounty program.  From 2001 through 2003, municipal and cooperative customers turned in more than 4,500 units.  By the end of 2005, with more than 1.5 million room air conditioners in operation statewide, 961,000 were ENERGY STAR® appliances.  Consequently, a revised ‘Stay Cool!’ program was instituted to sustain public awareness of energy-efficient products and focus on energy conservation during the summer peak demand period through New York Energy $martSM, a statewide program to promote ‘clean, energy-efficient products and solutions.’  The 2006 ‘Stay Cool’ Program and the ‘Have an Energy Smart Summer’ campaign were estimated to have reached three million consumers.

               

“The 2007 ‘Be Cool!’ Program will introduce a two-tiered bounty incentive, $100 for the through-the-wall air conditioners found in large multifamily dwellings and $35 for window- mounted room air conditioners.  NYSERDA program administrators project that up to 150,000 units will be replaced with new ENERGY STAR®  units, achieving peak demand reductions of 27 MW and annual savings of 16 gWh.  Authority funds would only be used to raise public awareness of the bounty. Other funding will support the actual bounties.

 

FISCAL INFORMATION

 

“The Trustees have authorized the following amounts for the above-mentioned energy efficiency programs: 

 

 

Year

Total Authorized

by Trustees

Amount Transferred

to NYSERDA

2001

$2,000,000

$1,097,000

2002

$2,000,000

$1,470,000

2003

$1,250,000

$1,050,000

2004

$750,000

$710,755

2005

$550,000

$538,560

2006

$500,000

$464,000

TOTAL

$7,050,000

$5,330,315

 

“For 2007, the Trustees are requested to authorize a contribution of up to $1 million, which will be drawn from the Authority’s Operating Fund.

 

RECOMMENDATION

 

“The Senior Vice President – Public and Governmental Affairs, the Senior Vice President – Energy Services and Technology and the Vice President – Governmental Affairs and Policy Development recommend that the Trustees authorize the President and Chief Executive Officer to enter into an agreement with the New York State Energy Research and Development Authority for the purpose of providing up to $1 million to New York State’s 2007 ‘Be Cool!’ and New York Energy $martSM  summer energy conservation awareness programs.

 

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

 

                Mr. Vattimo presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman McCullough, President Carey said that the Authority had authorized $7 million and spent $5.3 million for this annual program since 2001. 

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

 

RESOLVED, That the energy challenges facing New York State require sustained public attention to the need for energy efficiency; and be it further

 

RESOLVED, That Section 1001 of the Power Authority Act states “that it is desirable that the authority give its fullest cooperation to the energy research and development authority in advancing and promoting the development and implementation of new energy technologies …”; and be it further

 

RESOLVED, That Section 1854(3) of the Public Authorities Law empowers the New York State Energy Research and Development Authority to contract with the Power Authority with respect to ‘the construction and operation of experimental or developmental facilities which implement new energy technologies which have prospects of reducing the economic, environmental and social costs of energy production and utilization’; and be it further

 

RESOLVED, That such energy technologies as are referred to in the foregoing statutory provisions include advanced high-efficiency products promoted under the ENERGY STAR® program; and be it further

 

RESOLVED, That a coordinated effort among and between New York State agencies and authorities is a proven effective means to educate consumers to the value of energy efficiency and raise public awareness of the availability of high-efficiency ENERGY STAR® products; and be it

 

RESOLVED, That the President and Chief Executive Officer of the Authority be, and hereby is, authorized to execute, on behalf of the Authority with the New York State Energy Research and Development Authority, an agreement to contribute up to $1,000,000 for the New York State 2007 ‘Be Cool!’ and New York Energy $martSM summer energy conservation awareness programs, subject to 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, 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.          Richard M. Flynn Power Plant – Major Outage and Life Extension Modifications – Capital Expenditure Authorization

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize capital expenditures of $8.642 million to extend the useful life of the Richard M. Flynn Power Plant’s (‘Flynn’) gas turbine and other plant components for another 100,000 operating hours.

 

BACKGROUND

 

“Flynn, a gas-turbine-powered combined cycle plant in Holtsville, was put into service in May 1994.  The gas turbine was purchased with an expected service life of 100,000 Equivalent Operating Hours (‘EOH’).  EOH take into account the number of starts, unexpected trips and severe events and types of fuel used.  The Flynn gas turbine crossed the 100,000 EOH threshold in January, 2005.  It currently has about 120,000 EOH and is scheduled for its next   major overhaul (outage) in October, 2007, when components of the gas turbine, steam turbine and the balance of the plant will be replaced.  The last major overhaul was completed in October/November, 2003.  Flynn is base-loaded and rarely shuts down.  A four-year cycle accumulates approximately 33,000 EOH.

 

“Some tasks covered by this Capital Expenditure Authorization Request will be scheduled for April and May 2007 due to premature failure of the gas turbine generator rotor.

 

“These improvements will prepare Flynn for another 100,000 hours of service, which coincides with the projected end (2020) of the current Capacity Supply Agreement between the Authority and the Long Island Power Authority.

 

DISCUSSION

 

“Various components of Flynn’s Siemens V84.2 gas turbine, including diffusion gas and fuel oil burners, dome bolts, turbine blades and vanes, compensators, dome plates, fuel oil and fuel gas lines, are at or near the end of their useful life, which puts the safety and reliability of the gas turbine at risk.  In addition, mixing elbows will be upgraded to improve reliability.

 

“The steam turbine generator developed a stator ground fault in February, 2005; the generator was repaired and returned to service 18 days later.  During the repair, it became obvious that the general condition of the stator bars was very poor, compromising reliable operation of the unit.  Stator bars of superior design were procured and the installation (rewind) was planned for the 2007 major outage.  Contingency plans were developed in case the unit faulted again before October, 2007.

 

“All gas turbines use some system of washing compressor blades when the unit is running and also when it is turned off.  When the compressor blades are dirty, they cause the gas turbine to lose efficiency.  The original water wash system on the Siemens gas turbine will be replaced with new technology that will provide superior washes and less blade-coating damage.

 

“Modern technology will also be used to replace the steam turbine governor controls, excitation controls and balance of plant controls, which are original equipment and have become unreliable in terms of performance, service and available parts. 

 

“The station batteries, which are near the end of their useful life, will also be replaced.

 

FISCAL INFORMATION

 

“Payments for costs associated with the major outage and life extension for the Flynn plant will be made from the Capital Fund.

RECOMMENDATION

 

“The Vice President – Procurement and Real Estate, the Vice President – Engineering and the Regional Manager – Southeastern New York recommend that the Trustees authorize capital funding of $8.642 million for the Richard M. Flynn Power Plant major outage and life extension project.

 

“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 and Chief Engineer – Power Generation, the Vice President – Controller and I concur in the recommendation.”

 

 

                Mr. Welz presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman McCullough, President Carey said that, other than the rotor work, which would cost an additional $1.5 million to $2 million, all of the work being carried out during the current unplanned outage had been included in the 2007 budget.  Mr. Welz added that the ongoing work would reduce the time required for the planned October 2007 outage from seven weeks to five weeks.  President Carey said that the work being done now is aimed at getting the plant ready for the summer air-conditioning season.  Mr. Bellis said that the net revenues for this plant for 2007 are projected to be on the order of $8 million to $9 million.  President Carey added that this had been taken into consideration in the projections for the Authority’s end-of-year revenues as well.  In response to a question from Trustee Seymour, Mr. Welz said that the capacity of the Flynn plant, which is 13 years old, is 150 MW.

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

 

RESOLVED, That capital expenditures are hereby approved in accordance with the Authority’s Expenditure Authorization Procedures, as recommended in the foregoing report of the President and Chief Executive Officer, in the amounts and for the purposes listed below:

                                                                                                                           Total

                                     Current                   Previously               Current              Authorized

                                Description              Estimate                  Authorized              Request                  Amount

 

Engineering

Design                              $105,000                 $0                    $105,000                   $105,000

 

Procurement                $5,720,000                 $0                 $5,720,000               $5,720,000

 

Construction                $2,360,000                 $0                 $2,360,000               $2,360,000

 

Direct / Indirect              $457,000                 $0                    $457,000                   $457,000

   

Totals                                                                                                                            $8,642,000

 

 


 

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.


 

14.                Motion to Conduct an Executive Session

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


 

15.          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.


 

16.          Election of Authority Non-Statutory Officers and Amendment of Annual Meeting Date

The Corporate Secretary submitted the following report:

 

SUMMARY

“The Trustees are requested to consider the election of certain non-statutory officers of the Authority and to amend the date of the Authority’s Annual Meeting from April to March.

BACKGROUND AND DISCUSSION

“Article IV, Section 2 of the Authority’s By-laws provides for the election of certain non-statutory officers by the Trustees.  Section 3 of the same Article provides that such non-statutory officers shall hold office for a term expiring at the Trustees’ next Annual Meeting, or until their successors are elected.

“Pursuant to enactment of the Public Authorities Accountability Act of 2005, as Chapter 766 of the Laws of 2005, the date by which various annual reports and other annual reporting documents of the Authority must be filed with the Governor’s Office, the respective offices of the legislative leaders and the Office of the State Comptroller has been amended to require the filing of such reports and documents by March 31st.  As many of these very same annual reports were previously considered and adopted by the Trustees at the annual meeting that traditionally has occurred in April, it now makes sense to amend the time of the Authority’s Annual Meeting from April to March. 

RECOMMENDATION

“It is recommended that the following non-statutory officers provided for in Article IV of the By-laws, adopted December 18, 1984, and last amended on April 28, 2006, be elected by the Trustees to hold office for terms expiring at the next annual meeting of the Trustees in 2008, or until their successors are elected:

Timothy S. Carey                 President and Chief Executive Officer

Thomas J. Kelly                    Executive Vice President and General Counsel

                                                                Chief Operating Officer

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

                                                                Executive Vice President – Power Generation

Joseph M. Del Sindaco       Executive Vice President – Chief Financial Officer

Anne B. Cahill                      Corporate Secretary

“For the reasons set forth above, it is recommended that the date of the Authority’s Annual Meeting be changed from April to March of each year beginning in March 2008.”

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

 

RESOLVED, That  pursuant to Article IV, Section 2 of the Authority’s By-laws, the following individuals are hereby appointed to the position listed next to their name for terms expiring at the next annual meeting of the Trustees in 2008, or until their successors are elected: 

 

 

Timothy S. Carey - President and Chief Executive Officer

                Thomas J. Kelly - Executive Vice President and General Counsel

                Vincent C. Vesce - Executive Vice President – Corporate Services

                                                    and Administration

                Joseph M. Del Sindaco - Executive Vice President – Chief Financial

                                                                Officer

                Anne B. Cahill - Corporate Secretary.

AND BE IT FURTHER RESOLVED, That the Annual Meeting of the Authority be held in March of each year, commencing in March 2008.

 

 17.          Review and Approval of Revised Guidelines and Procedures for the Disposal of Personal Property and Revised Guidelines

and Procedures for the Disposal of Real Property  

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to review and approve revisions, necessitated by the newly enacted Public Employee Ethics Reform Act of 2007, to the following two Guidelines:  (1) Guidelines and Procedures for the Disposal of Personal Property (hereinafter ‘Personal Property Guidelines’) for the disposition of surplus or obsolete material, equipment and supplies, and (2) Guidelines and Procedures for the Disposal of Real Property (hereinafter ‘Real Property Guidelines’) for transfers of land or interests in land.  Such Guidelines are set forth in Exhibits ‘17-A’ and ‘17-B,’ respectively, as attached hereto.

 

BACKGROUND

 

“On January 13, 2006, Governor Pataki signed the PAAA into law.  The subject law codified the Model Governance Principles established for public authorities in 2004 by the Governor’s Advisory Committee on Authority Governance, which was chaired by Ira Millstein.  Among its provisions, the PAAA established new rules for the disposal of public authority real property, as well as the disposal of personal property owned by public authorities.  The law also required each authority to draft guidelines consistent with the legislation dealing with these issues, to review and approve such guidelines annually, and to prepare an annual report of the disposal of personal and real property (including the full description, price received and name of the purchaser for all such property disposed of by the Authority during such period).

 

“At their meeting of March 27, 2007, the Trustees reviewed and approved the amended Personal Property Guidelines and the Real Property Guidelines in accordance with the above.  As of the date of the March 2007 Trustee meeting, Governor Spitzer had issued Executive Orders providing for restrictions on politics and nepotism in contracting and these Guidelines were modified in accordance with such Executive Orders.  The enactment of the Public Employee Ethics Reform Act of 2007, to become effective on April 25, 2007 and which includes modified versions of the restrictions contained in the prior Executive Orders, has necessitated this item requesting approval of revised Guidelines to reflect the provisions of the law.

 

DISCUSSION

 

“On March 26, 2007 Governor Spitzer signed into law the Public Employee Ethics Reform Act of 2007 (Chapter 14 of the Laws of 2007).  Among its many provisions, there are two which directly impact current Authority Guidelines.  These specific provisions (A) prohibit any state officer or employee from participating in: (1) any hiring, termination, disciplinary or promotional decision concerning a relative; or (2) any contracting decisions involving relatives and entities in which their relatives have a significant financial interest; and (B) bar non-legislative employees from asking about the political affiliation, contributions or voting records of any prospective employees or contractors, except as necessary to comply with existing laws or policies the purpose of which are to ensure diverse political representation on multi-member bodies.

 

“In order to make both the Personal Property Guidelines and the Real Property Guidelines comply with Chapter 14, staff recommends the following changes:

 

Personal Property Guidelines

 

(i)                             Modify Section II., ‘Definitions,’ to reference the definition of ‘Relative.’

 

(ii)                           Modify Sections X.E, and X.F, ‘Evaluation of Proposals; Award of Contract,’ to clarify restrictions on inquiring about the politics of a contractor or prospective contractor in accordance with the Public Employee Ethics Reform Act of 2007.

 

(iii)                          Modify Section X.G, ‘Evaluation of Proposals; Award of Contract,’ to limit the nepotism provisions to those contracting decisions involving the payment of $1,000 to Relatives; to replace the definition of ‘Family Member’ with ‘Relative’ and to clarify an ownership interest regarding corporations with regularly traded stock, as required by the Public Employee Ethics Reform Act of 2007. 

 

Real Property Guidelines

 

(i)                               Modify Section II, ‘Definitions,’ to reference the definition of ‘Relative.’

 

(ii)                             Modify Sections 5.9-5.10, ‘Disposition of Real Property,’ to clarify restrictions on inquiring about the politics of a contractor or prospective contractor in accordance with the Public Employee Ethics Reform Act of 2007.

 

(iii)                            Modify Section 5.11, ‘Disposition of Real Property’ to limit the nepotism provisions to those contracting decisions involving the payment of $1,000 to Relatives; to replace the definition of ‘Family Member’ with ‘Relative’ and to clarify an ownership interest regarding corporations with regularly traded stock, as required by the Public Employee Ethics Reform Act of 2007. 

 

“Such Guidelines and corresponding Annual Reports will be reviewed annually and approved by the Trustees on or before the 31st day of March and will be filed with the State Comptroller, the Director of the Budget, the Commissioner of General Services and the State Legislature, as well as being posted on the Authority’s website.

 

FISCAL INFORMATION

 

“There will be no financial impact on the Authority.

 

RECOMMENDATION

 

“The Vice President – Procurement and Real Estate and the Director – Real Estate recommend that the Trustees approve the revisions to the Guidelines and Procedures for the Disposal of  Personal Property and the Guidelines and Procedures for the Disposal of Real Property, as set forth in Exhibits ‘17-A’ and ‘17-B,’ respectively.

 

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Vice President – Internal Audits and Corporate Compliance 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 provisions of the Public Authorities Accountability Act of 2005, the Authority hereby reviews and approves revisions to the Guidelines and Procedures for the Disposal of Personal Property and the Guidelines and Procedures for the Disposal of Real Property, as amended and set forth in Exhibits “17-A” and “17-B,” respectively, and attached hereto, in order to comply with Chapter 14 of the Laws of 2007; 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.


 

Exhibit “17-A”

 

 

 

 

 

 

 

GUIDELINES

 

 

AND

 

 

PROCEDURES

 

 

 

FOR THE

 

 

 

DISPOSAL OF PERSONAL PROPERTY

 

 

 

INDEX

 

 

 

Section                        Description                                                                 Page

 

 

 

I.                                  PURPOSE…………………………………………..1

 

II.                                 DEFINITIONS……………………………………...1-2

 

III.                               OBJECTIVE………………………………………...2

 

IV.                               TRANSACTIONS NOT COVERED  ………………3

 

V.                                DESIGNATION OF PROPERTY                              

                                    DISPOSAL COORDINATORS AND

                                    DISPOSAL OPTIONS……………………………...3-4

 

VI.                               BIDDING PROCEDURES…………………………4-8

 

VII.                              CENTRALIZED DISPOSAL  ………………………8-9

 

VIII.                             DECENTRALIZED DISPOSAL…………………...9-10

 

IX.                               PARTIES PROHIBITED FROM BIDDING……….10

 

X.                                EVALUATION OF PROPOSALS;                           

                                    AWARD OF CONTRACT…………………………10-13

 

XI.                               AUTHORIZATION LEVELS……………………...13-14

 

XII.                              OTHER METHODS FOR DISPOSAL OF                

                                    PERSONAL PROPERTY…………………………..14-165

 

XIII.                             METHODS OF PAYMENT………………………...165

 

XIV.                            REPORTING REQUIREMENTS…………………..16-17

 

                                    ATTACHMENTS A - C

 

 

 

GUIDELINES AND PROCEDURES

FOR THE

DISPOSAL OF PERSONAL PROPERTY

 

 

 

I.                    PURPOSE

 

These Guidelines and Procedures for the Disposal of Personal Property (hereinafter “Guidelines”), which comply with the applicable provisions of Title 5-A, Article 9 of the Public Authorities Law, establish the procedures which detail the Authority’s policy and instructions regarding the use, award, monitoring and reporting of the disposal of personal property.  In addition, the Guidelines designate a Contracting Officer who shall be responsible for the Authority’s compliance with, and enforcement of, the Guidelines.

 

II.                 DEFINITIONS

A.     “Contracting Officer” shall mean the officer or employee of a public authority who shall be appointed by resolution of the Authority’s Board of Trustees to be responsible for the disposition of personal property.  The “Contracting Officer” is hereby designated to be the Vice President - Procurement & Real Estate, or a designee so stated in writing.

B.     “Dispose” or “disposal” shall mean transfer of title or any other beneficial interest in personal property in accordance with these Guidelines.

 

C.     “Property” shall mean personal property owned by the Authority, and any other interest in such property, to the extent that such interest may be conveyed to another person for any purpose, excluding an interest securing a loan or other financial obligation of another party.  For the purposes of these Guidelines, personal property includes, but is not limited to, materials, tools, equipment, or vehicles which are not expected to be of any future use to the Authority, i.e., typically surplus or obsolete materials and supplies.

D.     “Fair Market Value” shall mean the estimated dollar amount that a willing buyer would pay to a willing seller for the material in an arms-length transaction in the appropriate marketplace.  Fair Market Value may be determined by consulting industry-recognized sources, contacting original suppliers, depreciation analysis, appraisals, or other methods, as may be approved by the Vice President – Procurement & Real Estate.

E.      RelativeFamily Member” is defined in Section X.GF.12. of these Guidelines.

 

III.       OBJECTIVE

The objective of these Guidelines is to identify those Authority personnel responsible for authorizing the disposal of Property owned by the Authority and to insure that the Authority receives fair and reasonable value for such Property.   The transfer or sale of Property shall be accounted for in accordance with the Authority's Corporate Accounting Policy No. CAP 4.3 dated 6/30/05, Revision 2 -- “Accounting for Materials and Supplies.”

 

IV.       TRANSACTIONS NOT COVERED

These Guidelines shall not apply to any of the following transactions:

1.                  Disposal of real property interests

2.                  Exchange of Property with other utilities or power plant owners, where such owners will provide an identical or in-kind replacement.

3.                  Disposal of rubbish or scrap materials, contracts for which are subject to the Authority’s Guidelines for Procurement Contracts.

4.                  Transfer/re-deployment of Property from one Authority facility to another Authority facility.

 

V.        DESIGNATION OF PROPERTY DISPOSAL COORDINATORS AND DISPOSAL OPTIONS

 

A.     The Contracting Officer (hereinafter referred to as the Vice President – Procurement & Real Estate) shall be responsible for the Authority’s compliance with, and enforcement of, the Guidelines.

B.     The overall disposal coordinator of all Property at the Authority’s operating facilities shall be the Facilities Materials Superintendent (“FMS”) currently located at the Clark Energy Center.  The FMS reports organizationally directly to the Vice President – Procurement & Real Estate.

C.     The Purchasing and Warehouse Manager from each Operating Facility will function as the local Property Disposal Coordinator for his or her facility or location ("Facility PDC").  The Facility PDC reports to the FMS.

 

D.     The Vice‑President - Procurement & Real Estate shall designate an individual from the White Plains office's Procurement Division to function as the Property Disposal Coordinator for the White Plains, Albany and New York corporate offices ("WPO PDC").  The WPO PDC will confer and interface with the Vice President – Procurement & Real Estate.

E.      For the purposes of these Guidelines, disposal options include, but are not limited to: sale (directly to the Buyer, through a third party or on a centralized basis); return to the original equipment manufacturer or to the source; trade-ins; or disposal through the New York State Office of General Services (“OGS”).  Use of the internet, in conjunction with the foregoing options, may also be utilized, as applicable.  The Authority's Environment, Health and Safety Division shall be consulted, on a case-by-case basis, regarding disposal of those items that may be potentially considered to be hazardous waste.

F.      The Facility PDC shall confer with the FMS to determine if a "centralized" sale of Property, as outlined in Section VII, is being planned. If agreed, the Facility PDC shall arrange for shipment of the property to be sold from the facility to the location of the sale.  If no sale is being planned, the Facility PDC shall proceed in accordance with the "decentralized" procedures, as outlined in Section VIII.

VI.       BIDDING PROCEDURES

The responsible PDC shall cause the solicitation of proposals from at least 5 bidders, whenever practicable, for the purchase of the Property to be sold, whatever its estimated Fair Market Value, and shall maintain records of his or her solicitations.  Attachment “A” is appended hereto and shall be utilized by the PDC for soliciting proposals. 

A.     FOR PERSONAL PROPERTY VALUED AT $15,000 OR LESS

Telephone notices and/or mailings may be used where the estimated Fair Market Value of the Property to be disposed of is equal to or less than $15,000.  All bids must be submitted in writing on the forms and in the manner prescribed by this procedure and by the date and time (the “Bid Due Date”) included in the solicitation.

 

B.     FOR PERSONAL PROPERTY IN EXCESS OF $15,000 IN VALUE

1.                  All disposals or contracts of Authority Property to be disposed of in excess of $15,000 in value shall be made after publicly advertising for bids except as provided in paragraph 3 below.

2.                  Whenever public advertising for bids is required under paragraph 1:

a.       the advertisement for bids (Attachment “B” is appended hereto and shall be utilized for all such advertisements) shall be made at such time prior to the disposal or contract, through such methods, and on such terms and conditions as shall permit full and free competition consistent with the value and nature of the Property. Typically, this will include advertisements in one or more of the following publications, depending on the nature of the property: local newspapers at the facility where the sale is taking place,  trade journals, regional or nationwide publications (if the market for such sale is a regional or nationwide one), the New York State Contract Reporter or internet services;                        

b.      all bids must be submitted in writing on the forms and in the manner prescribed by this procedure and by the Bid Due Date included in the solicitation;

c.       all bids shall be publicly disclosed, by posting on the Authority’s website accessible to the public, at the time and place stated in the advertisement; and

d.      the award shall be made with reasonable promptness by notice to the responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Authority, price and other factors  considered;  provided,  that all bids may be rejected when it is in the public interest to do so.

3.   Disposals and contracts for disposal of property may be negotiated or made      by public auction without regard to paragraphs 1 and 2 above, but subject to             obtaining such competition as is feasible under the circumstances, if:

a.   the  Property involved is of a nature and quantity which, if disposed       of under paragraphs 1 and 2 of  this subdivision, would  adversely           affect the state or local market for such Property, and the estimated    Fair Market Value of such Property and other satisfactory terms of        disposal can be obtained by negotiation;

b.   bid prices after advertising therefore are not reasonable, either as to all or some part of the Property, or have not been independently arrived in open competition;

c.   the disposal will be to the state or any political subdivision, and the         estimated Fair Market Value of the Property and other satisfactory            terms of disposal are obtained by negotiation;

d.   the disposal is for an amount less than the estimated Fair Market            Value of the Property, the terms of such disposal are obtained by        public auction or negotiation, the disposal of  the  Property is       intended  to further  the public health, safety or welfare or an      economic development interest of the state or a political subdivision     (to  include  but  not be limited  to, the prevention or remediation of a    substantial threat to public health or safety, the creation or retention        of  a  substantial number of job opportunities, or the creation or             retention of a substantial source of revenues, or where the Authority's              enabling  legislation permits), and the purpose and the terms of such       disposal are documented in writing and approved by Authority’s             Board of Trustees; or

e.   such action is otherwise authorized by law.

4.      An explanatory statement shall be prepared of the circumstances of each disposal by negotiation of any Property which has an estimated Fair Market Value in excess of fifteen thousand dollars.   In addition, an explanatory statement shall be prepared of the circumstances of each disposal by negotiation of any property disposed of by exchange, regardless of value.  Each such statement shall be transmitted to the Commissioner of General Services, the State Legislature, the State Comptroller, and the Division of the Budget, not less than ninety days in advance of such disposal, and a copy thereof shall be preserved in the Authority’s files.

 

C.        DISPOSAL OPTIONS IF NO BIDS ARE RECEIVED

      If bidding pursuant to paragraphs VI.A. and VI.B. does not result in the             submittal of proposals to purchase the Property from the Authority,   or if all such proposals received are less than the Authority’s Fair Market Value         estimate, the appropriate PDC shall confer with the FMS and the Vice President – Procurement & Real Estate to decide (i) if re-bidding is feasible;      (ii) if  shipment to a third-party contractor would result in higher-priced           proposals; (iii) if disposal by other methods would be appropriate; and/or (iv)             if the Fair Market Value estimate requires review and possible adjustment.

 

VII.     CENTRALIZED DISPOSAL

A.     Subject to the approval of the Vice President - Procurement & Real Estate,  Property may be disposed of using any of the following methods:

1.                  Shipment of the material to a third-party vendor(s), selected by competitive bidding, which, pursuant to these Guidelines, will market the material for sale or dispose of such material in accordance with environmental and any other Authority requirements.

2.                  Consolidation of such Property at one of the Authority's facilities or an offsite warehouse for the purpose of conducting a sale to be managed by Authority staff, possibly with the assistance of an outside contractor.

3.                  Participation in auctions at other utility company facilities (e.g., Con Edison, National Grid (formerly Niagara Mohawk), NYSEG).

 

VIII.    DECENTRALIZED DISPOSAL

            A.        The Regional Manager, Project Manager, or head of a Department or                           Division requiring disposal of Property which he or she believes to be                               surplus, shall submit to the appropriate PDC a written description of the                                   material, with the original price (if known), and estimate of the material's                                     Fair Market Value (if available).  If practical, a photograph of the material or                 equipment in question should be provided.  Such submission shall be made                            to the    PDC designated at the location at which the Property is located, the                                  responsible PDC.

B.         If the responsible PDC, in conference with the FMS, determines that other        Authority facilities may have an interest in the material, a notice shall be sent to the other Authority facilities advising them of its availability and             requesting a response    within a specified time frame.  A record of the notice     shall be maintained by   the responsible PDC.  In the event that the PDC and           FMS conclude that there would be no interest in such material at other            Authority facilities, a written explanation should be prepared by the PDC to       that effect and maintained in the file for that transaction.

C.        If no response to the notice is received, the responsible PDC shall arrange for    the solicitation of bids for the purchase of such Property in accordance with          the procedures described in Section VI.

 

IX.       PARTIES PROHIBITED FROM BIDDING

A.     All current and former employees of the Authority and relatives of such employees or third parties acting on behalf of such employees shall not be eligible to bid for the purchase of such Property and are prohibited from subsequently acquiring it in any manner. Each bidder will be required, as part of his or her bid, to certify, by signing Attachment "B", that he or she is not a current or former employee of the Authority, is not related to any current or former employee of the Authority and is not acting on behalf of a current or former employee of the Authority or a relative of any such employee. No bid will be accepted unless accompanied by such certification.

B.     The term "related to" as used in paragraph A above means the relationship of spouse, child, parent, sister, brother, grandparent, grandchild, aunt, uncle, cousin, niece, nephew, stepchild, stepparent, stepsister, stepbrother, mother-in-law, father-in-law, sister-in-law, brother-in-law, daughter-in-law or son-in-law.

 

X.        EVALUATION OF PROPOSALS;  AWARD OF CONTRACT

A.     Following the receipt of proposals for the property, the responsible PDC shall evaluate the proposals submitted and determine whether the highest of such proposals is reasonable, given the estimate of the Fair Market Value of the Property.

B.     If the responsible PDC determines that the highest of such bids is reasonable, the responsible PDC shall recommend to the Responsible Officer(s), as hereinafter defined in Section IX, that such bid be accepted, and upon the written approval of the Responsible Officer(s), the sale shall be made to the person offering such proposal.  Appended as Attachment “C” is a Sales Agreement which must be executed, after obtaining all necessary approvals in accordance with Section XI “Authorization Levels”, by the responsible PDC, FMS or VP – Procurement & Real Estate and the successful bidder prior to completion of the transaction.

C.     If either (a) the responsible PDC determines that the highest of such bids is not reasonable or (b) the Responsible Officer(s) decline(s) to authorize the sale, the Property shall, except as provided in paragraph D below, be retained for future disposal in accordance with these procedures.  Factors to be considered in determining whether a bid is reasonable include, but are not limited to:  adequacy of the estimate of the Fair Market Value, anticipated improved future market conditions, potential for other means of disposal or redeployment, financial viability of the bidder, and condition of Property.

D.     Notwithstanding any determination by the responsible PDC, the Responsible Officer(s), with the review and approval of the Vice President - Procurement & Real Estate, may direct the sale of the Property to the person or firm submitting the highest bid.

E.      No Authority employeeindividual who is involved in the award of Authority grants or contracts, may ask any officer, or director or employee of such current or prospective contractor or grantee to reveal: (a) the political party affiliation of the individual; (b) whether the individual or entity has made campaign contributions to any political party, elected official, or candidate for elective office; or (c) whether the individual or entity voted for or against any political party, elected official or candidate for elective office.
F.      No Authority employee may award or decline to award any grant or contract, or recommend, promise or threaten to do so because of a current or prospective grantee’s or contractor’s: (a) refusal to answer any inquiry prohibited by Section E above or (b) giving or withholding or neglecting to make any contribution of money, service or  any other valuable thing for any political purpose.  
1.Any violation of this section E may result in disciplinary action up to and including termination.
F.G.          No Authority employee may take part in any contracting decision involving the payment of $1,000: (i) relating to a RelativeFamily Member; or (ii) relating to any entity in which a RelativeFamily Member owns or controls 10% or more of the stock of such entity (or 1% in the case of a corporation whose stock is regularly traded on an established securities exchange); or serves as an officer, director or partner of that entity.  If a contracting matter arises relating to this Section Ga Family Member, then the employee must advise his or her supervisor of the relationship, and must be recused from any and all discussions or decisions relating to the matter.  
1.Any violation of this section F may result in disciplinary action up to and including termination.
2.1.            For purposes of this section GF, the term “RelativeFamily Member” shall mean any person living in the same household as the Authority employee or any person who is a direct descendant of the Authority employee’s grandparents or the spouse of such descendant. related to the employee within the third degree of consanguinity or affinity to the Authority employee (e.g., the employee’s spouse, child, parent, sibling, half-sibling or step-relative in the same relationship; the spouse of the employee’s child, parent, sibling, half-sibling or step-relative; the employee’s in-laws, aunt, uncle, niece, nephew, grandparent, grandchild or first cousin.
G.H.         Restrictions E, F and GF above also apply to procurements which are governed by the Authority’s Procurement Guidelines.

 

XI.       AUTHORIZATION LEVELS

A.     For the purposes of these procedures, the Responsible Officer(s) shall in each case review the appropriateness of the Fair Market Value estimate and the recommendation for contract award for disposal of the Property.  Responsible Officers are designated as follows:

1.                  The Trustees, if  the Fair Market Value of the Property is greater than $1,000,000; or

2.                  The President or the Chief Operating Officer, if  the Fair Market Value of the Property is greater than $500,000 but less than $1,000,000; or

3.                  The Executive Vice President – Corporate Services & Administration,  if  the Fair Market Value of the Property is greater than $250,000 but not greater than $500,000; or

4.                  The Vice President - Procurement & Real Estate, if  the Fair Market Value of the Property is greater than $50,000 but not greater than $250,000; or

5.                  The FMS, if  the Fair Market Value of the Property is greater than $5,000 but not greater than $50,000; or

6.                  With the prior written approval of FMS, the Purchasing & Warehouse Manager, if the  Fair Market Value of the Property is $5,000 or less.

 

XII.     OTHER METHODS FOR DISPOSAL OF PERSONAL PROPERTY

A.     Trade-Ins

This procedure is not intended to restrict the trade‑in of equipment (i.e., computer or office equipment), materials, and/or vehicles for replacements from dealers furnishing replacement equipment, materials, and/or vehicles, where reasonable value can be obtained for the trade-in.  Any such proposed trade‑in must be included as part of the solicitation of bids for the replacement equipment, materials and/or vehicles and the trade‑in value must be stated in the proposals from solicited bidders.  No trade-in shall be made unless the value of the trade-in is equal to or exceeds the Fair Market Value.

 

B.  Return to the Original Equipment Manufacturer (“OEM”) or to the Source

      Return of materials to the OEM or the source is permissible provided that the Authority receives full value for any materials equal to the price paid by the Authority.  In the event a re-stocking fee is charged by the OEM or the source, the FMS and Vice President – Procurement & Real Estate shall be consulted to determine if such a re-stocking fee is reasonable and if there are other opportunities for sale of such material.  The Vice President – Procurement & Real Estate must approve all returns to the OEM or the source when a re-stocking fee is charged, subject to the Authorization Levels delineated in Section XI.

C.  Disposal through the New York State Office of General Services (OGS)

When it is determined to be advantageous to the Authority, the Authority may enter into an agreement with OGS for OGS to dispose of Authority-owned Property, including but not limited to use of on-line disposal methods by OGS.  In addition, in accordance with New York State law, surplus computers and accessories (monitors and keyboards) and surplus office furniture and other equipment may, with the approval of the Vice President - Procurement & Real Estate, may be transferred to OGS for disposition, and in the case of computers and accessories to school districts located near Authority operating and headquarters’ facilities, or in the case of office furniture and office equipment, to other state agencies.  Disposal of these items in this manner represents the best value to New York State in lieu of attempted re-sale of such materials.

 

XIII.    METHODS OF PAYMENT

   The proceeds from the sale of Property in the form of cash or a certified check made payable to the Authority shall be forwarded to the Authority’s Treasurer by the Facility PDCs and to the Authority’s Controller's Office by the FMS and WPO PDC.  In certain cases involving a transfer of Property to other state agencies or authorities, the performance of documented services to the Authority equal to or greater in value to the Fair Market Value of the Property, will serve as payment for such Property. The authorization limits of Section XI shall apply to such transactions. 

 

XIV.    REPORTING REQUIREMENTS

A.     The Authority shall publish, not less frequently than annually, a report of all Property disposed of during the reporting period, including the full description, price (if any) received and the name of the purchaser for all such Property disposed of by the Authority during such period.  Such report shall be prepared in conjunction with the report required by the Authority’s “Guidelines and Procedures for the Disposal of Real Property.”

B.     Such report, as approved by the Trustees, shall be submitted to the Comptroller, the Director of the Budget, the Commissioner of General Services and the Legislature.

C.     These Guidelines, as approved by the Trustees, shall be reviewed and approved annually by the Authority’s Board of Trustees.  On or before the thirty-first day of March in each year, the Authority shall file with the Comptroller a copy of the Guidelines most recently reviewed and approved by the Trustees, including the name of the Authority’s designated Contracting Officer.  At the time of filing such Guidelines with the Comptroller, the Authority shall also post such Guidelines on the Authority’s internet website and maintain such Guidelines on the website.

D.     For disposal by negotiation or exchange (except when an identical or in-kind replacement is provided to the Authority) an explanatory statement shall be prepared and submitted to the parties described more fully in Paragraph VI.B.4.

 

                                                                                                                                                                                                                                                                                                                                                                                Attachment A

                                                                                                                                                                Page 1 of 2

 

                                                                                             BID SHEET

 

 

The following personal property is available for sale "AS IS, WHERE IS" and the Power Authority gives no warranty whatsoever as to its condition.

 

 

 

  

 

 

                                                                LUMP SUM BID AMOUNT* $________________________________                      

 

Subject to all terms and conditions set forth on the reverse hereof, the undersigned offers and agrees to purchase the above-described personal property at the bid amount indicated.

 

 

 

                                                                                                                                                                                                 

Signature                                                                                               Company Name

 

 

                                                                                                                                                                                                 

Name (Printed)                                                                                      Street Address

 

 

                                                                                                                                                                                                 

Date                                                                                                        City, State, Zip Code

 

 

                                                                                                                                                                                 

FAX number                                                                                         Telephone number

 

 

*              All sales are subject to New York State Sales Tax and Compensating Use Tax unless the Purchaser furnishes the Authority with an exemption certificate.


 

 

                                                                                                                                                                Attachment A

                                                                                                                                                                Page 2 of 2

 

 

PERSONAL PROPERTY SALE

SALE NO.                                              

NEW YORK POWER AUTHORITY

(ADDRESS OF  PROJECT)

Telephone: (   )                    

FAX: (   )                               

 

Subject to the terms and conditions stated below, bids will be received on the personal property, either by mail, fax or hand delivery at the (Location)                                                               no later than (Date)                             .

 

The personal property is available for inspection, by appointment, at the (Project)                                                .  For an appointment, please contact the Property Disposal Coordinator, (Name)                                        at (Telephone no.)                                             .

 

Successful bidders will be required to pay by certified check, on notice from the Authority that the bid has been accepted, and remove the personal property from the Authority's premises within ten (10) calendar days after receipt of notice of award.

 

Envelopes containing bids submitted by mail should be marked on the outside to indicate that a bid on Sale No.            is enclosed.

 

Current and former employees of the Power Authority or relatives of such employees or third parties acting on behalf of such employees or relatives are ineligible to bid and are prohibited from subsequently acquiring such personal property in any manner.

 

1.             INSPECTION. Bidders are invited, urged and cautioned to inspect the personal property being sold prior to submitting a bid.  The personal property will be available for inspection at the time and place specified above. In no case will failure to inspect constitute grounds for the withdrawal of a bid after opening.

 

2.             CONDITION OF PROPERTY. All personal property listed is offered for sale "AS IS, WHERE IS".  The Authority does not in any way warrant the fitness of the personal property for any particular use or its merchantability and disclaims any other representations or warranties, express or implied, including, but not limited to, quality, character, performance or condition of the personal property or any of its component parts, assemblies, or accessories.

 

3.             CONSIDERATION OF BIDS. Bids must be submitted in writing on the form provided by the Authority (see reverse side) and shall be submitted on all items listed. The Authority reserves the right to reject any and all bids, to waive technical defects in bids and to award sale of the items as may be in the best interest of the Authority.

 

4.             PAYMENT. The Purchaser agrees to pay for the awarded personal property in accordance with the prices quoted in his/her bid. Payment of the full purchase price must be made within the time allowed for removal, and prior to the release of any personal property to the Purchaser.

 

5.             NEW YORK STATE SALES AND COMPENSATING USE TAX. All sales will be subject to New York State Sales and Compensating Use Tax unless the Purchaser furnishes the Authority with an exemption certificate.


 

                                                                                                                                                                                                                                                                                                                                                                Attachment B

                                                                                                                                                                Page 1 of 1

 

 

                                                            ADVERTISEMENT FOR PROPOSALS

 

 

 

The following described personal property, shall be sold "AS IS, WHERE IS" by the New York Power Authority ("the Authority").

1.             Sealed bids are invited for the above, which will be available for inspection by inquiry at the        (Location/Building)                                    at the        (Project and Address)                                        between the hours of          a.m. to      p.m. on    (Date/s)             .  Bids must be submitted on the Authority's bid form, which can be obtained by calling (Telephone no.)              .  No bid will be accepted unless it is on such form.  Bids shall be accepted on or before         p.m. on (Date)           .

2.             Current and former employees of the Authority or relatives of such employees or third parties seeking to act on behalf of such employees or relatives shall be ineligible to bid.

3.             Successful bidders, on notice from the Authority, shall be required to pay by certified check and shall promptly remove the personal property from the Authority's property.

4.             The Authority reserves the right to reject any and all bids.

 


 

 

Attachment C

                                                                                                                                                                Page 1 of 2                            

 

 

PERSONAL PROPERTY

SALES AGREEMENT

 

 

                                                                                , the Buyer, and the Power Authority of the State of New York ("the Authority"), agree as follows:

 

1)             The personal property identified herein is sold by the Authority and purchased by Buyer "AS IS, WHERE IS" at the price(s) shown, plus any applicable sales tax.

 

2)             THE AUTHORITY DOES NOT IN ANY WAY WARRANT THE FITNESS OF THE PERSONAL PROPERTY FOR ANY PARTICULAR USE OR ITS MERCHANTABILITY AND DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED INCLUDING, BUT NOT LIMITED TO, THE QUALITY, CHARACTER, PERFORMANCE, OR CONDITION OF THE PERSONAL PROPERTY OR ANY OF ITS COMPONENT PARTS, ASSEMBLIES, OR ACCESSORIES.

 

3)             The Bidder warrants that he/she/it is not a current or former Authority employee, is not related to an Authority employee and did not bid on behalf of an Authority employee. Bidder is aware that Authority employees and their family members are precluded from subsequently receiving, or acquiring, in whole or in part, by any manner including gift, sale, loan or lease, the personal property acquired by the Bidder pursuant to this sale. The term "related to" as used in this paragraph means the relationships of spouse, child, parent, sister, brother, grandparent, grandchild, aunt, uncle, cousin, niece, nephew, stepchild, stepparent, stepsister, stepbrother, mother‑in‑law, father‑in‑law, sister-in-law, brother‑in‑law, daughter-in-law, or son-in-law.  The Authority reserves the right to invoke any available legal or equitable remedy in the event of a breach by the Bidder of his or her warranty under this paragraph, including but not limited to, rescinding the sale and recovering the property sold and all costs associated with the sale and the rescission of said sale.

 

4)             The Buyer shall indemnify and hold harmless the Authority and all of its officers, agents and employees from any loss, damage, remedial or response cost, liability or expense, on account of damage or contamination to property and injuries, including death, to all persons, including Buyer's employees, or any third parties, arising or in any manner growing out of the sale of any personal property or the performance of any work under this agreement and shall defend at its own expense any suits or other proceedings brought against the Authority and its officers, agents and employees, or any of them, on account thereof, and pay all expenses and satisfy all judgments which may be incurred by or rendered against them or any of them in connection therewith.

 

5)             The Buyer shall remove the personal property from the Authority's premises by                                                                    at Buyer's expense.  The Buyer shall make payment upon delivery by certified check payable to the New York Power Authority.


 

 

                                                                                                                                                        Attachment C

                                                                                                                                                    Page 2 of 2

 

 

 

Description of Personal Property:

 

 

 

 

 

 

 

 

 

                                                                                                                Selling Price:                                                                        

 

Executed this                                         day of                                    , 20                          .

 

Buyer (Print or Type):                                                                         Seller:

 

                                                                                                                Power Authority of the State of New York

 

                                                                                                                123 Main Street

 

                                                                                                                White Plains, New York 10601

 

 

 

 

                                                                                                                                                                                               

Authorized Signature                                                                          Authorized Signature

 

 

 

                                                                                 

Full Name (Printed)

 

 

                                                                                                                                                                                               

Title                                                                                                        Title

 

 

 

 

               


 

Exhibit “17-B”

 

 

 

 

 

 

 

 

 

GUIDELINES

 

 

AND

 

 

PROCEDURES

 

 

 

FOR THE

 

 

 

DISPOSAL OF REAL PROPERTY

 

 

 

 

 

 

 

 

INDEX

 

 

 

Section                  Description                                                                                           Page

 

 

 

I.                                              PURPOSE………………………………………….…...1

 

II.                                            DEFINITIONS…………………………………….…....1-2

 

III.                                           CONTROLLING LEGISLATION………………….….2

 

IV.                                                                 DUTIES OF THE DIRECTOR OF REAL ESTATE…..2-3

 

V.                                                                   DISPOSITION OF REAL PROPERTY………………..3-7

 

VI.                                           ANNUAL REPORTS BY AUTHORITY……………...7-8

 

VII.                                          APPROVAL OF GUIDELINES BY THE

AUTHORITY’S BOARD…………………………...…8                  

 

VIII.                                        REFERENCES……………………………………....…98

                                                                                                                               

 


 

 

GUIDELINES AND PROCEDURES

FOR THE DISPOSAL OF REAL PROPERTY

 

 

I.                     PURPOSE

 

The purpose of these Guidelines and Procedures for the Disposal of Real Property (“Guidelines”), which comply with the applicable provisions of Title 5-A, Article 9 of the Public Authorities Law, is to establish the procedures which detail the Authority’s operative policy and instructions regarding the disposal of real property and designate a Contracting Officer who shall be responsible for the Authority’s compliance with, and enforcement of, such Guidelines.

 

II.            DEFINITIONS

 

2.1           “Contracting Officer” shall mean the officer or employee of the Authority who shall be appointed by resolution of the Authority’s Trustees to be responsible for the disposition of real property.  The “Contracting Officer” is hereby designated to be the Vice President - Procurement & Real Estate, or a designee so stated in writing.

2.2           For the purposes of these Guidelines, “dispose” or “disposal” shall mean transfer of title or any other beneficial interest in real property in accordance with these Guidelines.

                                2.3           For the purposes of these Guidelines, “real property” shall mean real property, including land, owned by the Authority, and any other interest in such real property, to the extent that such interest may be conveyed to another person or entity for any purpose, excluding an interest securing a loan or other financial obligation of another party. 

2.4           For purposes of these Guidelines, the term “RelativeFamily Member” is defined in Section 5.110.12.

 

III.                 CONTROLLING LEGISLATION

The Public Authorities Accountability Act of 2005 (PAAA) requires the Authority to establish policy guidelines to accomplish the following:

3.1           Maintain inventory controls and accountability systems for all real property under the Authority’s control. 

3.2           Periodically inventory Authority real property to determine which real property shall be disposed of.

3.3           Dispose of Authority real property interests in accordance with the PAAA.

3.4           Prepare annual reports of real property disposal transactions.

 

IV.       duties of the director of real estate 

4.1           The Director of Real Estate shall maintain adequate inventory controls and accountability systems

 

                for all real property under the Authority’s control.

 

4.2           The Director of Real Estate shall annually inventory Authority real property to determine which Authority real property shall be disposed of and shall prepare a report identifying such real property for disposal.

4.4           The Directory of Real Estate shall produce for publishing written reports of such real property as

 

set forth in Section VI of these Guidelines.

 

4.5           The Director of Real Estate shall arrange for the transfer or disposal of any real property identified for disposal by the Authority in accordance with these Guidelines and the Authority’s Expenditure Authorization Procedures and as soon as reasonably practical under the circumstances.

V.        Disposition of Real Property 

5.1           The Authority may dispose of real property for not less than the fair market value of such real property by sale, exchange, or transfer, for cash, credit or other property, without warranty, and upon such other terms and conditions as the Contracting Officer deems proper under the provisions of the PAAA and as implemented by these Guidelines.  Fair market value of the Authority real property subject to disposal shall be established by an independent appraiser. Such appraisal report shall be included in the record of the real property disposal transaction.

5.2           Except as set forth in Section 5.3 of the Guidelines, any disposal of real property with a fair market value in excess of fifteen thousand dollars ($15,000.00) shall only be made after publicly advertising for bids in accordance with the following: 

(i)        the advertisement for bids shall be made at such time prior to the

disposal or contract, through such methods, and on such terms and conditions as shall permit full and free competition consistent with the value and nature of the real property;

                                    

   (ii)        all bids shall be publicly disclosed at the time and place stated

in the advertisement; and

 

   (iii)       the award shall be made with reasonable promptness by notice to the responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Authority, price and other factors  considered;  provided, that all bids may be rejected when it is in the public interest to do so.

 

5.3    The disposal of Authority real property may be negotiated or made by public auction without regard to Section 5.2 but subject to obtaining such competition  as is feasible under the circumstances, if:

 

     (i)       the fair market value of the real property does not exceed fifteen

thousand dollars ($15,000.00);

 

     (ii)      bid prices after advertising therefore are not reasonable, either

as to all or some part of the real property, or have not been  independently arrived at in open competition;

 

     (iii)     the disposal will be to the state or any political subdivision,

and the estimated fair market value of the real property and other  satisfactory terms of disposal are obtained by negotiation;

 

     (iv)     the disposal is for an amount less than the estimated fair market

value of the real property, the terms of such disposal are obtained by public auction or negotiation, the disposal of  the real property  is  intended  to further  the public health, safety or welfare or an economic development interest of the state or a political subdivision (to include but not limited to, the prevention  or remediation of a substantial threat to public health or safety, the creation  or  retention  of  a  substantial number  of job opportunities, or the creation or retention of a substantial source of revenues, or where the Authority's  enabling  legislation   permits),  and the  purpose and the terms of such disposal are documented in writing and approved by the Authority’s Trustees; or

 

     (v)      such action is otherwise authorized by law.

 

 

5.4           An explanatory statement detailing the disposal by negotiation of Authority real property subject to the PAAA as set forth in Section 5.3 shall be made for any disposal of:

 

(i)          Real property with a fair market value in excess of one hundred thousand dollars ($100,000.00) except that real property disposed of by lease or exchange shall only be subject to (ii) through (iv) of this Section 5.4;

 

(ii)       Real property leased for a term of five years or less, if the estimated fair annual rent exceeds one hundred thousand dollars ($100,000.00) for any of such years;

 

(iii)      Real property leased for a term of more than five years if total estimated rent over term is in excess of one hundred thousand dollars ($100,000.00); and

 

(iv)      Any real property or real and related personal property disposed of by exchange, regardless of value, or any property any part of the consideration is for real property:

 

5.5           Each explanatory statement prepared in accordance with Section 5.4 above shall be transmitted to the State Comptroller, the Director of the Budget, the Commissioner of General Services, and the State Legislature not less than 90 days in advance of such disposal, and a copy shall be kept by the Authority.

 

5.6                 In the Authority's discretion, when it shall be deemed advantageous to the Authority and the State, the Authority may enter into an agreement with the Office of the Commissioner of General Services (OGS) under which such OGS may dispose of the Authority’s real property under terms and conditions agreed to by the Authority and the OGS.  In disposing of any such real property of the Authority, the OGS shall be bound by the relevant provisions of the PAAA.

5.7                 The Guidelines shall not apply to any transfers of jurisdiction by the Authority pursuant to Public Lands Law §3(4). 
5.8                 The Director of Real Estate shall provide all relevant documentation to the Environmental Division for the purposes of determining, if applicable, whether the disposal of real property is in compliance with the State Environmental Quality Review Act, and for whether it adheres to the ASTM’s guidelines for Environmental Site Assessments, if applicable.
5.9                 No Authority employeeindividual who is involved in the award of Authority grants or contracts, may ask any officer,  or director or employee of such current or prospective contractor or grantee to reveal: (a) the political party affiliation of the individual; (b) whether the individual or entity has made campaign contributions to any political party, elected official, or candidate for elective office; or (c) whether the individual or entity voted for or against any political party, elected official or candidate for elective office.
5.10              No Authority employee may award or decline to award any grant or contract, or recommend, promise or threaten to do so because of a current or prospective grantee’s or contractor’s: (a) refusal to answer any inquiry prohibited by Section 5.9 above or (b) giving or withholding or neglecting to make any contribution of money, service or any other valuable thing for any political purpose.  
5.9.1Any violation of this section 5.9. may result in disciplinary action up to and including termination.
5.105.11   No Authority employee may take part in any contracting decision involving the payment of more than $1,000: (i) relating to a RelativeFamily Member; or (ii) relating to any entity in which a RelativeFamily Member owns or controls 10% or more of the stock of such entity (or 1% in the case of a corporation whose stock is regularly traded on an established securities exchange); or serves as an officer, director or partner of that entity.  If a contracting matter arises relating to this Section 5.11a Family Member, then the employee must advise his or her supervisor of the relationship, and must be recused from any and all discussions or decisions relating to the matter.  
5.10.1Any violation of this section 5.10. may result in disciplinary action up to and including termination.       
5.10.25.11.1              For purposes of this section 5.110, the term “RelativeFamily Member” shall mean any person living in the same household as the Authority employee or any person who is a direct descendant of the Authority employee’s grandparents or the spouse of such descendant. related to the employee within the third degree of consanguinity or affinity to the Authority employee (e.g., the employee’s spouse, child, parent, sibling, half-sibling or step-relative in the same relationship; the spouse of the employee’s child, parent, sibling, half-sibling or step-relative; the employee’s in-laws, aunt, uncle, niece, nephew, grandparent, grandchild or first cousin.
5.115.12   Restrictions 5.9 throughand 5.110 above also apply to procurements which are governed by the Authority’s Procurement Guidelines.
 
 

VI.           Annual Reports by Authority

6.1           The Director of Real Estate shall publish the following two separate reports in accordance with these Guidelines:
(i)          Pursuant to Section 2800 of the Public Authorities Law, the Director of Real Estate shall furnish a report for incorporation in the Authority’s annual report which is distributed to the Governor, the Senate Finance Committee, the Assembly Ways and Means Committee, and the State Comptroller.  This report shall include: (a) a listing of all Authority real property having an estimated fair market value greater than fifteen thousand dollars ($15,000.00) that the Authority intends to dispose of; (b) a listing of all real property having an estimated fair market value greater than fifteen thousand dollars ($15,000.00) intended for disposal but still owned by the Authority at the end of the fiscal reporting period; and (c) a listing of all real property having an estimated fair market value greater than fifteen thousand dollars ($15,000.00) disposed of during the fiscal reporting period including the name of the purchaser of the real property and the price paid for the real property. 

(ii)       Pursuant to Public Authorities Law § 2896(3)(a), the Director of Real Estate shall prepare for distribution to the State Comptroller, the Director of the Budget, the Commissioner of General Services, and the State Legislature, an annual report which shall consist of a list and full description of all real property disposed of during such the fiscal reporting period.  This annual report shall include the price received by the Authority and the name of the purchaser of the real property.      

 

VII.         Approval of Guidelines by the Authority's Board

7.1           The Guidelines shall be annually reviewed and approved by the Authority’s Trustees. On or before the thirty-first day of March in each year, the Authority shall file with the State Comptroller a copy of the most recently reviewed and approved Guidelines, including the name of the Authority’s designated Contracting Officer. At the time of filing such Guidelines with the State Comptroller, the Authority shall also post such Guidelines on its internet website.

 
VIII.        REFERENCES
8.1                 Chapter 766 of the Laws of 2005
8.2                          8.2               Public Lands Law §3 (4)
8.3                 Chapter 14 of the Laws of 2007

 

18.          Next Meeting 

The next Regular Meeting of the Trustees will be held on Tuesday, May 22, 2007, at 11:00 a.m., at the Niagara Power Project, Lewiston, 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
12:15 p.m.

 

 

 

 

Anne B. Cahill

Corporate Secretary

 

 


 

[1]   Though it is not entirely clear, it appears that the NS Customers adopt a similar argument to claim a larger cost-based credit for producing ancillary services at the Hydro Projects.  To the extent the NS Customers are requesting such inflated credit, their claim is disposed with in the same manner as NYAPP’s.  To the extent they are claiming a direct share of NYPA’s ancillary services sales revenue, that is a violation of the Auer Settlement principles to which they have agreed. See section entitled ‘Request for Credits for Energy Sales into NYISO.’