Minutes of the Regular Meeting of the Power Authority of the State of New York held at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, NY at 11:00 a.m.

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

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

D. Patrick Curley, Trustee (White Plains, NY)

James A. Besha, Sr., Trustee (White Plains, NY)

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

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

Elise M. Cusack, Trustee (Lewiston, NY) – was unable to participate due to technical difficulties

Michael J. Townsend, Vice Chairman – excused

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Roger B. Kelley President and Chief Executive Officer

Thomas J. Kelly Executive Vice President, General Counsel and Chief of Staff

Joseph Del Sindaco Executive Vice President and Chief Financial Officer

Gil C. Quiniones Executive Vice President – Energy Marketing and Corporate Affairs

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

Steven J. DeCarlo Senior Vice President – Transmission

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

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

James H. Yates Senior Vice President – Marketing and Economic Development

Arnold M. Bellis Vice President and Controller

John M. Hoff Vice President – Procurement and Real Estate

Donald A. Russak Vice President – Finance

William V. Slade Vice President – Environment, Health and Safety

Thomas Warmath Vice President and Chief Risk Officer

Thomas P. Antenucci Vice President – Project Management

Joseph J. Carline Assistant General Counsel – Power and Transmission

Daniel Wiese Inspector General and Vice President – Corporate Security

Brian C. McElroy Treasurer – Corporate Finance

Anne B. Cahill Corporate Secretary

Angela D. Graves Deputy Corporate Secretary

Dennis T. Eccleston Chief Information Officer

Paul F. Finnegan Executive Director – Public and Governmental Affairs

Thomas A. Davis Director – Financial Planning

Joan Tursi Director – Business Services

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

Cooperative Marketing

Michael A. Saltzman Director – Media Relations

Marilyn J. Brown Manager – Market Pricing Analysis

Daniel J. Cappiello Manager – Performance Planning

Alice T. Conway Senior Benefits Administrator

Mary Jean Frank                                 Associate Corporate Secretary
Lorna M. Johnson                               Assistant Corporate Secretary
Jack Murphy                                         Temporary Public Relations Counsel

Oksana U. Karaczewsky Senior Procurement Compliance Coordinator

Mike Schneider Contractor
Chris Isca Contractor

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

Introduction

Chairman Frank McCullough said that the Trustees’ Meeting was not being webcast in real time due to technical difficulties, but that a quorum was present at the meeting, since five of the seven Trustees were in the White Plains Office.

3. Report from the President and Chief Executive Officer

President Roger Kelley apologized for the Authority’s internet difficulties that were interfering with real-time webcasting. He extended his wishes for happy holidays to the Trustees and all Authority staff, saying that it has been an eventful year and that he wanted to thank everyone for their efforts.

According to President Kelley, the Authority’s proposed overall 2008 budget had been developed through meetings with the business unit heads and review of the operations and maintenance (“O&M”), capital, energy services and fuels budgets. He said that the 2008 proposed O&M, energy services and fuels budgets were at slightly higher levels than in 2007, but that the 2008 proposed capital budget was 74% less than the 2007 capital budget, primarily due to recognition of the Niagara relicensing settlement agreements in the 2007 budget.

President Kelley distributed the highlights of the Authority’s new business plan to the Trustees, saying that the six strategic goals developed from the Authority’s mission statement were in turn linked to objectives added by the business unit heads that would drive their departments’ deliverables for 2008. He said that this was the first time the Authority’s strategic plan was not a stand-alone document, adding that employee performance documents were also being streamlined in order to enhance the performance management process.

Updating the status of Request for Proposals #5 for 500 MW of capacity for New York City, President Kelley said that the bids would be opened on December 20^th and that it was anticipated that staff would make its recommendation to the Trustees at their April 2008 meeting.

President Kelley said that the New York Independent System Operator’s recently released reliability needs assessment report stated that the State’s electricity resources were expected to be adequate through 2011, but that the additional capacity needs projected for the Southeastern New York region beginning in 2012 would become acute if additional resources are not marshaled by 2017. President Kelley said that the Authority’s potential contribution to these needed additional resources include the extra capacity sought under RFP #5, possible construction of a new power plant and enhancement of the Authority’s transmission facilities.

On December 10^th, the Governor’s Energy and Environmental Collaborative met in Albany. President Kelley said that the Authority is in good shape to assist the State in meeting the Governor’s 15 by 15 goals. He said that the Authority is expected to spend upwards of $120 million in 2007 on energy efficiency measures for its government customers, adding that Mr. Gil Quiniones and Mr. Angelo Esposito had done a good job in exceeding previous projections for 2007. President Kelley said that it is anticipated that an additional $150 million will be spent on energy efficiency projects in 2008, with expenditures through 2015 projected to be $1.4 billion. The Long Island Power Authority anticipates expenditures of $100 million by 2015 through its own energy efficiency programs, which would bring energy efficiency expenditures by both authorities to nearly $2.5 billion.

President Kelley reported that the Authority is just beginning transmission studies aimed at improving both upstate and downstate transmission facilities by easing congestion.

In President Kelley’s opinion, the Authority overall has had a very good year.

Chairman McCullough echoed President Kelley’s sentiments, saying that 2007 had been a terrific year for the Authority, highlighting such achievements as the issuance of the new 50-year license for the Niagara power project, the community programs implemented as a result of the settlement agreements connected with the relicensing, the facility upgrades under way and President Kelley’s smooth transition into his job. President Kelley mentioned the settlement agreements with Entergy and General Electric as additional 2007 accomplishments.

4. Power for Jobs Program – Extended Benefits

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve extended benefits for 30 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘4-A.’ These customers have been recommended to receive such extended benefits by the Economic Development Power Allocation Board (‘EDPAB’).

BACKGROUND

“In July 1997, the New York State Legislature 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 and increase the size of the program to 450 MW.

“In May 2000, legislation was enacted that authorized another 300 MW of power to be allocated under the PFJ program. Legislation further amended the program in July 2002.

“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.

“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. Chapter 645 of the Laws of 2006 included provisions extending program benefits until June 30, 2007. In 2007, a new law (Chapter 89 of the Laws of 2007) included provisions extending program benefits until June 30, 2008.

“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.

DISCUSSION

“At its meeting on December 18, 2007, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 30 businesses listed in Exhibit ‘4-A.’ Collectively, these organizations have agreed to retain more than 27,000 jobs in New York State in exchange for the rebates.

“The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘4-A’ in a total amount currently not expected to exceed $2.8 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 Exhibit ‘4-A’ in the future.

FISCAL INFORMATION

“Funding of rebates for the companies listed in Exhibit ‘4-A’ is not expected to exceed $2.8 million. Payments will be made from the Operating Fund. To date, the Trustees have approved $104.2 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 Exhibit ‘4-A.’

“The Executive Vice President, General Counsel and Chief of Staff, the Executive Vice President – Energy Marketing and Corporate Affairs, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Public and Governmental Affairs and I concur in the recommendation.”

Chairman McCullough said that the Economic Development Power Allocation Board (“EDPAB”) meeting scheduled for earlier that morning had been postponed until Thursday, December 20^th at 10 a.m. due to the internet difficulties that had made a videoconference impossible. He said that if the Trustees approved the rebates proposed in this item, such approval would be subject to EDPAB also approving them at its Thursday meeting. Mr. James Pasquale then presented the highlights of staff’s recommendations to the Trustees.

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

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

NOW THEREFORE BE IT RESOLVED, That to implement such EDPAB recommendations, the Authority hereby approves the payment of electricity savings reimbursements to the companies listed in Exhibit “4-A,” and that the Authority finds that such payments for electricity savings reimbursements are in all respects reasonable, consistent with the requirements of the PFJ 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 $2.8 million, and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

RESOLVED, That such monies may be withdrawn pursuant to the foregoing 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 his 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, General Counsel and Chief of Staff; and be it further

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

5. Allocation of Hydropower

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve an allocation of available Replacement Power (‘RP’) totaling 12,000 kW to three industrial companies.

BACKGROUND

“Under Section 1005(13) of the Power Authority Act, as amended by Chapter 313 of the Laws of 2005, the Authority may contract to allocate or reallocate directly, or by sale for resale, 250 MW of firm hydroelectric power as Expansion Power 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.

“Each application for an allocation of EP or RP must be evaluated under criteria that includes, but need not be limited to, those set forth in Public Authorities Law Section 1005(13) (a), which sets forth general eligibility requirements, and (b), which sets forth the special criteria for revitalization allocations.

“Among the factors to be considered when evaluating a request for an allocation of hydropower are the number of jobs created as a result of a power allocation; the business’ long term commitment to the region as evidenced by the current and/or planned capital investment in business’ facilities in the region; the ratio of the number of jobs to be created to the amount of power requested; the types of jobs created, as measured by wage and benefit levels, security and stability of employment; and the type and cost of buildings, equipment and facilities to be constructed, enlarged or installed.

“Among the factors to be considered when evaluating a request for revitalization purposes are whether or not the business is likely to partially close or relocate, resulting in loss of jobs, whether or not the business is an important employer in the community and whether or not the business has pursued other available sources of assistance to reduce energy costs.

“On October 22, 2003, the Authority, National 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 hydropower. 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 hydropower.

DISCUSSION

“Staff recommends and the Advisory Group supports the available power being allocated to the three companies set forth in Exhibit ‘5-A.’ The Exhibit shows, among other things, the amount of power requested, the recommended allocation and additional employment and capital investment information. These projects will help maintain and diversify the industrial base of Western New York and provide new employment opportunities. They are projected to result in the creation of 470 jobs.

“Sorrento Lactalis, Inc. (‘Sorrento’) is seeking an allocation of Replacement Power for revitalization purposes. Sorrento, which produces Italian-style cheeses, is one of the largest private employers in Erie County, supporting approximately 500 direct jobs. In addition, the Buffalo facility purchases milk from 340 local diary farmers, supporting an estimated additional 6,000 indirect jobs. Consequently, 95% of the raw materials used in manufacturing at the facility are produced in New York State – adding $100 million to the State’s economy.

“Sorrento’s current business situation is problematic and the facility has been losing money annually. More than 500 jobs are currently at risk at Sorrento’s Buffalo facility and 30 jobs have already been relocated from Buffalo to Idaho. A Sorrento plant in Goshen, New York was closed in 2005, resulting in the loss of 120 jobs. Its parent company (Groupe Lactalis of France) has provided $29 million in cash subsidies since 2001. However, Groupe Lactalis has announced that the annual subsidy has ended and that the Buffalo facility must stop its downward spiral or the facility will be closed. The parent company has announced that $100 million in capital investment will be made available to its American facilities. Sorrento’s Buffalo facility must convince Groupe Lactalis and its board that it is making efforts to reduce and stabilize costs in order to capture a percentage of the $100 million available for capital investment. Sorrento spent more than $1 million in 2006 on capital improvements. In addition, it received two grants from the New York State Energy Research and Development Authority for lighting and an energy consumption reduction study. Sorrento has applied to the Authority for an allocation of RP for revitalization purposes.

“Staff recommends that a 1,500 kW allocation of Replacement Power be made under revitalization criteria. The proposed contract would be for a non-renewable term of three years and be conditioned on Sorrento agreeing to incorporate the expansion in its capital plan for 2008. In return, Sorrento agrees that within 36 months of the takedown of power it will secure $10 million in new capital investment and relocate a product line from the West Coast, creating 25 jobs. (Sorrento will be able to apply for a new allocation for the increased load.) If within three years the company fails to meet the agreed-on targets, the 1,500 kW revitalization allocation will be returned to the Authority.

RECOMMENDATION

“The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees approve the allocation of 10,500 kW of hydropower to the companies listed in Exhibit ‘5-A’ and a 1,500 kW allocation to Sorrento Lactalis, Inc. under the criteria for the evaluation of applications for power allocated for industry revitalization.

Mr. Pasquale presented the highlights of staff’s recommendations to the Trustees. Trustee D. Patrick Curley recused himself from the vote on the resolution as it pertained to Brunner International, Inc.

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted with Trustee D. Patrick Curley recusing himself from Brunner International, Inc. The item is subject to ratification by the Economic Development Power Allocation Board.

RESOLVED, That the allocation of 12,000 kW of Replacement Power, as detailed in Exhibit “5-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 1,500 kW of Replacement Power to Sorrento Lactalis, Inc. under the criteria for the evaluation of applications for power allocated for industry revitalization be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, 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, General Counsel and Chief of Staff.

Exhibit “5-A1”

APPLICATION SUMMARY

Replacement Power

Company: Brunner International, Inc.

Location: Medina

County: Orleans

IOU: National Grid

Business Activity: Manufacturer of parts for the heavy-duty truck industry

Project Description: The project will include the expansion of the company’s existing building by 10,000 to 20,000 square feet to support the installation of a new product line. In addition, the company will purchase and install new equipment, including presses, lathes, heat scanners, controls, robot machines and other manufacturing equipment.

Existing Allocation: 1,800 kW of EP and 1,200 kW of RP

Power Request: 3,200 kW

Power Recommended: 2,500 kW

Job Commitment:

Existing: 291 jobs

New: 50 jobs

New Jobs/Power Ratio: 20 jobs/MW

New Jobs -

Avg. Wage and Benefits: $47,000

Capital Investment: $12.37 million

Capital Investment per MW: $4.95 million/MW

Summary: Brunner manufactures parts for the heavy-duty truck industry. This expansion will help the company remain competitive in a global market. Brunner is also looking to expand in North and South Carolina, Kentucky and Mexico. A low-cost power allocation will help the company secure this expansion in Western New York.

Exhibit “5-A2”

APPLICATION SUMMARY

Replacement Power

Company: Government Employees Insurance Company (“GEICO”)

Location: Amherst

County: Erie

IOU: National Grid

Business Activity: Automobile insurance company

Project Description: The project will include expanding GEICO’s existing site with a new 25,000-square-foot raised-floor data center to serve as the new primary corporate data center. The company will purchase additional land necessary to accommodate the utility substations required to serve the facility. Equipment to be installed includes hundreds of servers, switches, routers, fire-suppression systems, switch gear and air-conditioning units.

Existing Allocation: 1,600 kW of Expansion Power

Power Request: 12,000 kW

Power Recommended: 8,000 kW

Job Commitment:

Existing: 1,354 jobs

New: 420 jobs

New Jobs/Power Ratio: 53 jobs/MW

New Jobs -

Avg. Wage and Benefits: $37,000

Capital Investment: $200 million

Capital Investment per MW: $25 million/MW

Summary: GEICO, which was incorporated in 1937, is the largest direct marketer and private passenger auto insurance company in New York State, based on direct written premiums. GEICO is a wholly owned subsidiary of Berkshire Hathaway, Inc. The company is planning a new data center. GEICO is looking at other sites, including locations in North Carolina, Georgia and West Virginia. A low-cost power allocation would make this project cost effective in western New York.

Exhibit “5-A3”

APPLICATION SUMMARY

Replacement Power - Revitalization

Company: Sorrento Lactalis, Inc

Location: Buffalo

County: Erie

IOU: National Grid

Business Activity: Food processor manufacturing Italian-style cheeses

Project Description: Sorrento is requesting power under the revitalization criteria to serve existing load. Sorrento has agreed that within 36 months it will secure $10 million in capital investment from its parent company and will relocate a product line from the West Coast.

Existing Allocation: 250 kW of Replacement Power and 1,500 kW of Power for Jobs

Power Request: 1,500 kW

Power Recommended: 1,500 kW

Job Commitment:

Existing: 500 jobs

New: 0 jobs

New Jobs/Power Ratio: NA

New Jobs -

Avg. Wage and Benefits: NA

Capital Investment: NA

Capital Investment per MW: NA

Summary: The Buffalo plant has been manufacturing Italian-style cheeses for 55 years. This location also serves as a major distribution center for the East Coast. A hydro revitalization allocation will help Sorrento reduce and stabilize its costs, which is key to keeping the plant running. Reducing costs will signal to Sorrento’s parent company that the plant can yield a higher cash flow to support a future capital investment in a new or relocated process line.

6. Productivity Improvement Request Reductions

The President and Chief Executive Officer submitted the following report:

SUMMARY

“It is requested that the Trustees approve reductions to the employment commitments for each of the nine companies listed in Exhibit ‘6-A.’ These customers have clauses in their contracts that allow them to request a reduction in their commitments if the reduction is due to productivity improvements. Each of the nine companies that made the productivity improvement requests met the appropriate criteria.

BACKGROUND

“Each year, Authority staff initiates a review of all business power allocations and the customers’ performance against agreed-upon job commitments. In 2005, the Authority had 290 contracts with 185 business customers, excluding Power for Jobs (‘PFJ’) agreements. In 2006, nine customers (with 15 contracts) requested a reduction to their base employment commitments due to productivity improvements made during the reporting period.

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

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

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

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

jobs.

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

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

“Two companies, Delphi Automotive Systems and North American Höganäs, will still be below their job commitments even after the reduction to their base employment commitments for their productivity improvements. However, both of these companies are in the automotive industry and, as directed by the Trustees at their April 2007 meeting, staff will defer action regarding the Authority’s automotive customers for one year. The Annual Review of Jobs Trustee item that will be presented in 2008 will include a recommendation and justification for refreshing the job commitments of the Authority’s automotive customers.

DISCUSSION

“Staff recommends that the Trustees approve action regarding the nine customers meeting the productivity improvement requirement for a reduction to their employment commitments in 15 contracts. Brief descriptions of those companies that meet the productivity improvement employment reduction requirements are listed in Section I.

“A summary of all contracts discussed in this item is provided as Exhibit ‘6-A.’

Section I.

Allocations to Continue with Job Commitment Changes for Productivity Improvements

Ceres Corporation, Niagara Falls, Niagara County

Allocation: 1,700 kW, 1,600 kW and 1,300 kW of Replacement Power (‘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. One job was reduced due to new product design; 3 were reduced due to automation; 4 were reduced due to more efficient new equipment and 5 were reduced due to a new process.

Recommendation: Staff recommends that the Trustees reduce Ceres’ 1,700 kW, 1,600 kW and 1,300 kW RP allocations’ employment commitments by 13 jobs to 47 positions.

Delphi Automotive Systems, Lockport, Niagara County

Allocation: 14,300 kW of Expansion Power (‘EP’)

Jobs Commitment: 5,246 jobs

Background: Delphi Automotive Systems (‘Delphi’), formerly a division of General Motors (‘GM’), manufactures radiators, condensers and heaters mainly for GM automobiles, but has diversified to other car makers as well. The company requested a productivity improvement reduction of its job commitment by 477 jobs. 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. Of the 477 jobs requested, only 365 job reductions qualified as actual productivity improvements. The 365 employment reductions made were accomplished through rebalancing job duties, job combinations, new methods of manufacturing parts, new designs for parts and restructuring of workstations.

Recommendation: Staff recommends that the Trustees reduce Delphi’s 14,300 kW EP allocation employment commitment by 365 jobs to 4,881 positions.

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

Allocation: 790 kW of EP and 31,700 kW of RP

Jobs Commitment: 251 jobs and 198 jobs, respectively

Background: E. I. Du Pont De Nemours & Co., Inc. (‘DuPont’) has been in the chemicals business for more than 200 years and has been producing sodium chloride and lithium at this plant for more than 100 years. Both allocations are ‘vintage’ contracts, meaning that they have an 80% job ratio and a two-year job average. For the past two years, DuPont averaged 267.13 jobs, i.e., 106.42% and 134.91% of its contractual commitments, respectively. The company was able to reduce 9 jobs due to productivity improvements in 2006, with 5 jobs reduced through new computerized handling of every aspect of inventory and supply chain management and business planning, and 4 jobs reduced through new processes in handling personnel files and engineering.

Recommendation: Staff recommends that the Trustees reduce DuPont’s employment commitments for both its 790 kW EP and 31,700 kW RP allocations by 9 jobs, to 242 and 189 positions, respectively.

FMC Corporation, Tonawanda, Erie County

Allocation: 2,500 kW of RP

Jobs Commitment: 142 base jobs and 25 created jobs

Background: FMC Corporation - active oxidants division (‘FMC’), at this site since 1960, manufactures peracetic acid, a biocide for the food industry, and persulfates, used in the cosmetics industry. At the time of the 2006 Annual Item, FMC had two allocations that required reporting, a 5.5 MW RP allocation with 71 jobs and a 750 kW RP allocation with 106 jobs. FMC took down 2 MW of its newest allocation of 2.5 MW with 142 base jobs and 25 created jobs in June 2007, with the remainder to be drawn down in June 2008. This 2.5 MW allocation will not be required to be reported until the 2008 Annual Item. For the past year, FMC averaged 105.33 jobs, i.e., 99.37% of its 106 jobs contractual commitment. FMC requested a reduction of 6 jobs due to productivity improvements made in 2006. The 6 jobs were reduced through installation of new high-efficiency equipment and a new computerized monitoring system.

Recommendation: Staff recommends that the Trustees reduce FMC’s 2,500 kW RP allocation’s base employment commitment by 6 jobs to 136 positions, for an overall reduction to 161 jobs.

Ford Motor Company, Buffalo, Erie County

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

Jobs Commitment: 1,772 jobs and 1,772 jobs, respectively

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 Fusion, Edge 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 commitment. The company requested a productivity improvement reduction of its job commitment by 113 jobs. Of the 113 jobs, only 106 qualified as productivity improvements. Ford’s reduction comes from new product design, new equipment, job rebalancing on the lines, job combinations and new manufacturing processes.

Recommendation: Staff recommends that the Trustees reduce Ford’s 4,300 kW and 2,900 kW EP allocation employment commitments by 106 jobs to 1,666 positions each.

Luvata Buffalo, Inc., Buffalo, Erie County

Allocation: 3,000 kW of RP

Jobs Commitment: 602 base jobs and 55 created jobs

Background: Luvata Buffalo, Inc. (‘Luvata’), formerly Outokumpu American Brass or OAB Holdings, Inc., in business since 1906, manufactures copper and brass sheets and rolls. The company requested a productivity improvement reduction of its job commitment by 10 jobs. Luvata’s reduction comes from rebalancing job duties (6 positions), eliminating a process (1 position) and new equipment (3 positions). For the past year, Luvata averaged 618.21 jobs, i.e., 102.69% of its contractual commitment. (Per its contract, the company is not yet required to have added the 55 new positions.)

Recommendation: Staff recommends that the Trustees reduce Luvata’s RP allocation employment commitment by 10 jobs to a base of 592 base positions and 55 created positions.

Mele Manufacturing Co., Utica, Oneida County

Allocation: 475 kW of Economic Development Power (‘EDP’)

Jobs Commitment:

Table of Contents

SUMMARY

Allocations to Continue with Job Commitment Changes for Productivity Improvements