Minutes of the
Regular Meeting of the Power Authority of the State of New York held via video conference at the
following participating locations at 11:25 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:
Present: 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, NYPA
Joseph Del Sindaco Executive Vice
President and Chief Financial Officer, NYPA
Thomas J. Kelly Executive Vice President and
General Counsel, NYPA
Vincent C.
Vesce Executive
Vice President – Corporate Services and Administration
Steven J. DeCarlo Senior Vice
President – Transmission, NYPA
Angelo S. Esposito Senior Vice
President – Energy Services and Technology, NYPA
Louise M. Morman Senior Vice
President – Marketing and Economic Development, NYPA
William J. Nadeau Senior Vice
President – Energy Resource Management and Strategic Planning, NYPA
Brian Vattimo Senior
Vice President – Public and Governmental Affairs, NYPA
Edward A. Welz Senior Vice
President and Chief Engineer – Power Generation, NYPA
Thomas P. Antenucci Vice President –
Project Management, NYPA
Arnold M. Bellis Vice President – Controller, NYPA
Arthur M. Brennan Vice President –
Internal Audit and Compliance, NYPA
John M. Hoff Vice
President – Procurement and Real Estate, NYPA
Donald A. Russak Vice President –
Finance, NYPA
Thomas H. Warmath Vice President and
Chief Risk Officer, NYPA
Anne B. Cahill Corporate
Secretary, NYPA
Angela D. Graves Deputy
Corporate Secretary, NYPA
Dennis
T. Eccleston Chief
Information Officer, NYPA
Brian
C. McElroy Treasurer,
NYPA
Lisa
Cole Deputy
Treasurer, NYPA
Joseph
J. Carline Assistant
General Counsel – Power and Transmission, NYPA
Albert
Swansen First
Deputy Inspector General, NYPA
Paul
F. Finnegan Executive
Director – Public and Governmental Affairs, NYPA
James F. Pasquale Director – Business Power
Allocations, Compliance and Municipal and Cooperative Marketing, NYPA
Michael
A. Saltzman Director
– Medial Relations, NYPA
Marilyn
J. Brown Manager
– Market and Pricing Analysis, NYPA
John
M. Kahabka Manager
– Environmental Operations, NYPA
Joanne
Wilmott Manager
– Community Relations, Niagara, NYPA
Benjamin
C. Wong Project
Manager, NYPA
Michael
E. Carey Senior
Energy Markets and Hedging Specialist, NYPA
Oksana U.
Karaczewsky Senior
Procurement Compliance Coordinator, NYPA
Jeffrey
Carey Special
Assistant to President and Chief Executive Officer, NYPA
Jack Murphy Temporary PR Counsel, NYPA
Lynnette J. Taylor Senior Legal
Secretary, NYPA
Steven
A. Mitnick Assistant
Secretary for Energy and Telecommunications, Governor Eliot Spitzer’s Office
Chairman McCullough presided over the meeting. Secretary Cahill kept the Minutes.
1. Opening Remarks
Chairman
McCullough welcomed Steven Mitnick, who serves as the Assistant Secretary for Energy
and Telecommunications in Governor Spitzer’s Office, to the meeting.
2. Approval of the Minutes
The Minutes of the Regular
Meeting of December 31, 2006 were unanimously adopted.
3. Financial Reports for the Twelve
Months Ending December 31, 2006
Mr.
Bellis provided the Financial Reports for the twelve months ending December 31, 2006.
4. Report
from the President and Chief Executive Officer
President Carey requested an Executive
Session at the end of the meeting.
President
Carey asked Mr. Del Sindaco to introduce the new Treasurer, Brian McElroy, and
the new Deputy Treasurer, Lisa Cole. Mr.
Del Sindaco said that Mr. McElroy and Ms. Cole each have nearly 20 years of
outstanding service with the Authority.
Chairman McCullough acknowledged that Mr. McElroy and Ms. Cole both
have a great deal of support within the
organization.
5. Allocation
of 2,800 kW of Hydro Power
The President and Chief Executive
Officer submitted the following report:
SUMMARY
“The Trustees are requested to approve
two allocations of available Replacement Power (‘RP’) totaling 2,800 kW to two
industrial companies.
BACKGROUND
“Under the RP
Settlement Agreement, National Grid (‘Grid’) (formerly Niagara Mohawk Power
Corporation), with the approval of the Authority, identifies and selects
certain qualified industrial companies to receive delivery of RP. Qualified companies are current or future
industrial customers of Grid that have or propose to have manufacturing facilities
for the receipt of RP within 30 miles of the Authority’s Niagara
Switchyard. RP is up to 445,000 kW of
firm hydro power generated by the Authority at its Niagara Power Project that
has been made available to Grid, pursuant to the Niagara Redevelopment Act
(through December 2005) and Chapter 313 of the 2005 Laws of the State of New York (‘Chapter
313’).
“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 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.
DISCUSSION
“On October 22, 2003, the
Authority, Grid, Empire State Development Corporation and the Buffalo Niagara
Enterprise signed a Memorandum of Understanding (‘MOU’) that outlines the
process to coordinate marketing and allocating Authority hydro power. The entities noted above have formed the
Western New York Advisory Group (‘Advisory Group’) with the intent of better
using the value of this resource to improve the economy of Western New York and
the State of New York. Nothing in the MOU changes the legal
requirements applicable to the allocation of hydro power.
“Based on the Advisory Group’s
discussions, staff recommends that the available power be allocated to two
companies as 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.
RECOMMENDATION
“The Director –
Business Power Allocations, Compliance and Municipal and Cooperative Marketing
recommends that the Trustees approve the allocation of 2,800 kW of hydro power
to the companies listed in Exhibit ‘5-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 2,800 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 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
Replacement Power
Company: Citigroup, Inc.
Location: Amherst
County: Erie County
IOU: National Grid
Business Activity: Leading
international financial services company
Project Description: The
applicant will make tenant improvements and spend additional funds on
furniture, fixtures and office equipment (primarily personal computers and
networking and telecommunications equipment).
In addition, a new three-story 155,000-square-foot office building will
be constructed. The cost of constructing
the building will be $26 million. The
building will be constructed and owned by a third-party developer and leased to
the applicant.
Prior Application: No
Existing Allocation: None
Power Request: 1,450 kW
Power
Recommended: 1,400 kW
Job Commitment:
Existing: 0 jobs
New: 500 jobs
New Jobs/Power Ratio: 357 jobs/MW
New Jobs –
Avg. Wage and Benefits: $42,000
Capital Investment: $8
million
Capital Investment $5.7 million /MW
Per MW
Summary: Citigroup is a leading international
financial services company that offers consumer and business product offerings,
including banking services, credit cards, loans and insurance. An increasing demand for its products and
services prompted the consideration to add additional office space. The final location selected for this project
will be based on a business analysis.
Other locations under consideration include locations in Manila, the Philippines;
Mumbai, India
and Jersey City, New Jersey.
APPLICATION SUMMARY
Replacement Power
Company: Saint-Gobain
Ceramics & Plastic, Inc.
Location: Niagara Falls
County: Niagara County
IOU: National Grid
Business Activity: Manufacturer
of ceramic abrasive grain
Project Description: Saint-Gobain
will add additional capacity for both existing products and new products that
have been developed by the company’s R&D group. The company will purchase and install new
equipment, including processing kilns, electrically heated dryers and other
supporting equipment and machines.
Prior Application: Yes
Existing Allocation: 2,200 kW of RP
Power Request: 1,270 kW
Power
Recommended: 1,100 kW
Job Commitment:
Existing: 57 jobs
New: 12 jobs
New Jobs/Power Ratio: 11 jobs/MW
New Jobs –
Avg. Wage and Benefits: $58,000
Capital Investment: $4.6
million
Capital Investment $4.2 million/MW
Per MW
Summary: This investment is crucial to the future
viability of this operation, since it shifts the mix of products away from
standard seeded gel abrasive, which is being replaced by new and more advanced
products. Saint Gobain will add
specialty products that have diversified markets. The project will also help the company’s
competitiveness in the worldwide markets that it serves, as well as help it
compete with its sister plant in France that is in a position to develop and
manufacture these products. In addition,
Niagara County will support training grants for
Saint Gobain.
6. 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 the 31 Power for Jobs (‘PFJ’) customers listed in
Exhibit ‘6-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 January 30, 2007,
EDPAB recommended that the Authority’s Trustees approve electricity savings
reimbursement rebates to the 31 businesses listed in Exhibit ‘6-A.’ Collectively, these organizations have agreed
to retain more than 35,000 jobs in New York State in exchange for the
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 ‘6-A’ in a total amount currently not expected to
exceed $2,600,000. Staff recommends that
the Trustees authorize a withdrawal of monies from the Operating Fund for the
payment of such amount, provided that such amount is not needed at the time of
withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the
General Resolution Authorizing Revenue Obligations, as amended and
supplemented. Staff expects to present
the Trustees with requests for additional funding for rebates to the companies
listed in the Exhibits in the future.
FISCAL INFORMATION
“Funding of rebates for the
companies listed on Exhibit ‘6-A’ is not expected to exceed $2.6 million. Payments will be made from the Operating
Fund. To date, the Trustees have approved
$64.4 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 ‘6-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 “6-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 “6-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 $2.6 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
resolution, subject to the approval of the form thereof by the Executive Vice
President and General Counsel.
7. Power
for Jobs Program – Extended Benefits – 2007
The President and Chief Executive
Officer submitted the following report:
SUMMARY
“The Trustees are requested to
approve extended benefits for two Power for Jobs (‘PFJ’) customers as listed in
Exhibit ‘7-A’ until June 30, 2007 to reflect recently enacted changes in
law. 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.
“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.
“In 2006, a new law (Chapter 645 of
the Laws of 2006) included provisions extending program benefits until June 30,
2007.
DISCUSSION
“At its meeting on January 30,
2007, EDPAB recommended that the Authority’s Trustees approve the extension of
eligibility to continue to receive electricity savings reimbursement to the two
businesses listed in Exhibit ‘7-A.’
Collectively, these organizations have agreed to retain more than 224
jobs in New York State in exchange rebates.
The rebate program will be in effect until June 30, 2007, the program’s
new sunset date. The power will be
wheeled by the investor-owned utilities as indicated in the Exhibit.
FISCAL INFORMATION
“The cost of rebates to these
customers will not be known until staff receives actual utility bills from
customers later in 2007. Payments will
be made from the Operating Fund. To date,
the Trustees have approved $64.4 million in rebates.
RECOMMENDATION
“The Executive Vice President and
Chief Financial Officer, the Director – Business Power Allocations, Compliance
and Municipal and Cooperative Marketing and the Director – Business Power
Allocations and Regulation recommend that the Trustees approve the extension of
eligibility to receive electricity savings reimbursements to the Power for Jobs
customers listed in Exhibit ‘7-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 “7-A”;
NOW THEREFORE BE IT RESOLVED, That to
implement such Economic Development Power Allocation Board recommendations, the
Authority hereby approves the extension of eligibility to receive electricity
savings reimbursements to the companies listed in Exhibit “7-A”; 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
resolution, subject to the approval of the form thereof by the Executive Vice
President and General Counsel.
8.
Municipal
and Rural Cooperative Economic
Development Program Allocations to the City of Sherrill and Village of Tupper Lake
The President and Chief Executive
Officer submitted the following report:
SUMMARY
“The Trustees are requested to
approve allocations of power under the Municipal and Rural Cooperative Economic
Development Program (‘Program’) to the City of Sherrill and the Village of Tupper Lake.
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 October 24,
2006, 35,330 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 City of Sherrill and the Village of Tupper Lake have
submitted applications for power under the Program for consideration by the
Trustees.
DISCUSSION
City of Sherrill
“An application has been submitted
by the City of Sherrill
on behalf of International Wire Group, Incorporated (‘International
Wire’). International Wire’s bare-wire
division started in 1973 and has continued to grow over the years with the
subsequent acquisitions of eight wire-manufacturing corporations. The company is considered the market leader
and principal supplier of bare wire to the aerospace, medical devices,
electronics, data communications, automotive, appliance and energy industries
in the U. S. and Europe.
International Wire considered opening a new manufacturing facility in
either Inman, South Carolina, or Trenton, Georgia,
but the potential advantages of reduced power costs and the strategic location
of Sherrill will allow the company to compete more efficiently. The Sherrill facility will include new
product lines and bring much-needed additional jobs to the community.
“International Wire is planning to
invest approximately $23 million to improve and renovate the old Oneida Ltd.
knife plant in Sherill, as well as purchase new manufacturing equipment. The new facility will provide for
approximately 37 full-time jobs over the next three years, adding revenue to
the local economy and resulting in 26 jobs per MW of hydropower. The estimated electrical monthly peak load for
the facility is 2,700 kW. It is recommended
that the Trustees approve an allocation of 2,700 kW, of which half is
hydropower, for the City of Sherrill
on behalf of International Wire.
Village of Tupper Lake
“The Village of Tupper Lake has
submitted an application for expansion on behalf of Jarden Plastic Solution,
Incorporated (‘Jarden Plastic’). The
company purchased the Tupper Lake facility, which has been in Tupper Lake
since 1970, from OWD Incorporated in 2003, and will be expanding the facility
in the near future. Jarden Plastic is
considered the largest manufacturer and supplier of plastic cutlery, straws and
other plastic products using the injection molding and extrusion processes in
the U.S.
“The proposed expansion project entails
internal building modifications, installation of new chilled water and electric
lines and purchase of eight new injection molding machines and other auxiliary
equipment, for a total investment of approximately $350,000. Jarden Plastics currently employs 83 people
on a full-time basis. The expansion will
provide for 21 new jobs over the next three years, adding revenue to the local
economy and resulting in 69 jobs per MW of hydropower. The existing electrical load is approximately
940 kW and is expected to increase to 1,550 kW after the expansion is
completed. It is recommended that the
Trustees approve an allocation of 610 kW, of which half is hydropower, for the
Village of Tupper Lake on behalf of Jarden Plastic.
“The Municipal Electric Utilities
Association Executive Committee supports the recommended allocations to the
City of Sherrill
and the Village of Tupper Lake.
“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.
RECOMMENDATION
“The Director – Business Power
Allocations, Compliance and Municipal and Cooperative Marketing recommends that
the Trustees approve the allocations of power under the Municipal and Rural
Cooperative Economic Development Program to the City of Sherrill and the Village of Tupper Lake 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 allocations of power to the
City of Sherrill and the Village of Tupper Lake under the Municipal and Rural
Cooperative Economic Development Program are hereby approved as set forth in
the foregoing report 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 allocations; 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.
9.
Increase
in Hydroelectric Preference Power
Rates – Notice of Proposed Rule Making
The President and Chief Executive Officer
submitted the following report:
SUMMARY
“The
Trustees are requested to approve a Notice of Proposed Rule Making (‘NOPR’) to
increase the hydroelectric rates supplied from the Niagara and St. Lawrence/FDR
Hydroelectric Projects (individually, ‘Niagara Project’ and ‘St. Lawrence
Project,’ and collectively, the ‘Hydro Projects’). Such rates apply to the Authority’s sales of
Preference Power to, among others, the municipal and rural electric cooperative
customers, the neighboring state customers, plus the upstate utilities that
purchase Preference Power from the Hydro Projects for resale to their
residential customers. The proposed
hydroelectric 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. The proposed action would
increase rates for a typical preference power customer by 7.1% in the first
year of the plan and by 5.8% in the second.
In accordance with the requirements of the State Administrative Procedure
Act (‘SAPA’), the Trustees are requested to direct the Corporate Secretary to
publish a NOPR in the New York State Register.
“Second,
consistent with Authority ratemaking policy, the Trustees are requested to authorize
the Corporate Secretary to schedule a public forum for obtaining the views of
interested parties. After the 45-day
comment period required under SAPA, Authority staff will address any filed
comments, including any comments raised at the public forum, and return to the
Trustees at their meeting on April 24, 2007, to seek final adoption of this
proposal.
BACKGROUND
“The current preference rates and
ratemaking methodology were approved by the Trustees at the April 29, 2003
meeting. At that time, the Trustees
authorized the refund of $4.5 million and adopted a four-year rate plan based
on a Cost of Service (‘CoS’) study for the CY
2003-2006 period. The final rate year
under this plan terminates on April 30, 2007.
“In April and
May of 2003, the Authority entered into ‘global’ settlements with its in-state
municipal and rural electric cooperative Preference Power customers that
established, among numerous other matters, that these customers would not
object to the use of certain ratemaking methodologies adopted by the Trustees
in their April 2003 rate action.
DISCUSSION
“The attached ‘Preliminary Staff
Report, Hydroelectric Production Rates’ (‘Report’) to the Trustees sets forth
in detail how the Hydro Projects’ CoS study was performed and the findings of
that study. The Report continues the
ratemaking methodologies adopted by the Trustees at their April 29, 2003
meeting. Exhibit ‘9-A’ of the Report
shows the results of the CoS and resulting
proposed rates. The key points are summarized below.
1)
Operations and Maintenance (‘O&M’) and
Administrative and General (‘A&G’) Costs
“The
site O&M and A&G expenses for the Hydro Project include the day-to-day
operations of the projects and on-going expenses associated with major
maintenance programs and non-capital modifications. In addition, staff has included the
amortization of roadwork of $51.3 million incurred from 1991 to 1996. The 15-year amortization ends in 2010.
“Also
included in the O&M/A&G category of the CoS are payments reflecting the
Authority’s assumption from the New York State Office of Parks, Recreation and
Historic Preservation (‘OPRHP’) of responsibility for the annual cost of
operations at the Robert Moses and Coles
Creek State
parks.
Funding for these parks is part of the Federal Energy Regulatory
Commission (‘FERC’)-approved recreation plan for the St. Lawrence Project and
the Authority has the ultimate responsibility for these costs under the terms
of its FERC license for this Project.
“Most
recently, in May 2006, the Trustees authorized a payment to OPRHP. Included in the payment was $0.8 million
related to Robert Moses and Coles
Creek State
Parks.
These payments are also expected to be made for SFY 2007-08. The Trustees have annually authorized similar
payments for SFY 2003-04, SFY 2004-05 and SFY 2005-06, and payments were
subsequently made in conformance with such authorizations. It is proposed that these costs be included
in the base hydroelectric rates.
2)
Indirect Overheads
“The
costs of overheads include shared services, R&D and indirect debt service
used to support the Hydro Projects.
3)
Relicensing Costs
“Included in current rates are
relicensing costs, primarily related to the St. Lawrence Project. On August 18, 2005, the Authority filed with
FERC its Application for a new license for the Niagara Project. On August 19, 2005, the Authority filed its
Offer of Settlement with FERC, which consisted of four separate agreements,
including the Relicensing Settlement Agreement Addressing New License Terms and
Conditions along with the Host Community and Tuscarora Settlements. The total cost of compliance and implementing
the new license and settlement agreements is estimated to be $210 million. Of the $210 million, $173.2 m