MINUTES OF THE REGULAR MEETING O

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 11:00 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

3) Harris Beach, PLLC, 99 Garnsey Road, Pittsford, 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, (Pittsford, NY)

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

Elise M. Cusack, Trustee (Lewiston, NY)

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

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

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

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Roger B. Kelley 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

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 Yates Acting Senior Vice President – Marketing and Economic Development

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

Donald A. Russak Vice President – Finance

Brian C. McElroy Treasurer – Corporate Finance

Albert Swansen First Deputy Inspector General – Corporate Security

Anne B. Cahill Corporate Secretary

Angela D. Graves Deputy Corporate Secretary

Dennis T. Eccleston Chief Information Officer

Richard Hackman Chief Technology Development Officer – Energy Services and Technology

Joseph J. Carline Assistant General Counsel – Power and Transmission

Paul F. Finnegan Executive Director – Public and Governmental Affairs

John J. Suloway Executive Director – Licensing, Implementation and Compliance

Thomas J. Concadoro Director – Accounting

Joseph Leary Director – SENY – Public and Governmental Affairs

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

Cooperative Marketing

Michael A. Saltzman Director – Media Relations – Public and Governmental Affairs

Marilyn Brown Manager – Market Pricing Analyst

Daniel J. Cappiello Manager – Performance Planning

Steven Lockfort Manager – Risk Reporting – Energy Risk Assessment and Control

Lesly Y. Pardo Manager – Internal Audit

Paul Tartaglia Regional Manager – SENY – Poletti Power Project

Denise D’Ambrosio Principal Attorney – Finance and Risk Management

Jacquline Carmody Attorney – Regulatory and Contracts

Carlos Gutierrez Attorney – Power and Transmission

Mary Jean Frank Associate Corporate Secretary

Lorna M. Johnson Assistant Corporate Secretary

Gerard Vincitore Senior Investment Analyst – Corporate Finance

Dan Miner Reporter – Niagara Gazette

D. Stierer Photographer – Niagara Gazette

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

3. Report from the President and Chief Executive Officer

President Kelley said that he’s had an exciting first month on the job. He’s toured almost all of the White Plains office, floor by floor, and he hopes to get to the floors he’s missed in the near future. In addition, he’s also toured the St. Lawrence and Niagara projects. According to President Kelley, he’s transitioning into the job well, getting to know the issues and challenges the Authority faces. He said that Authority staff has been great in terms of meeting with him and responding to the President’s blog. He’s also met with Tom Congdon from the Governor’s Office, as well as with Congressman Higgins and Assemblyman Hoyt from western New York.

The Power for Jobs program has been extended by legislation through June 30, 2008 and 100% of the customers have signed up for the extended program. President Kelley said that the Trustees would be asked today to authorize the Authority to continue its electricity sales to the three upstate utilities for the benefit of rural and domestic customers through June 30, 2008, pending potential legislative or further Trustee action.

President Kelley is looking forward to a day-and-a-half retreat in August on energy and environmental policy issues sponsored by the Governor’s Office for key staff from the Authority, the Public Service Commission, the Department of Environmental Conservation, the New York State Energy Research and Development Authority and the Long Island Power Authority.

According to President Kelley, staff morale seems good and the Authority is moving forward.

Chairman McCullough thanked President Kelley for the thorough report, although he said that it understated all that President Kelley had done in his first month on the job. With regard to the extension of the Power for Jobs program, Chairman McCullough said that staff should be commended for the fact that, despite the tight timeframe created by the last-minute enactment of the legislation, there had been no lapse in service for any of the Authority’s customers.

4. Allocation of 1,700 kW of Hydro Power

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 1,700 kW to two industrial companies.

BACKGROUND

“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. Allocations are made pursuant to criteria set forth in Section 1002 (13).

“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.

DISCUSSION

“Based on the Advisory Group’s discussions, staff recommends that the available power be allocated to the 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 150 jobs.

RECOMMENDATION

“The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees approve the allocation of 1,700 kW of hydropower to the companies listed in Exhibit ‘4-A.’

“The Executive Vice President and General Counsel, the Acting 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 1,700 kW of Replacement Power, as detailed in Exhibit “4-A,” be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

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


New York Power Authority									Exhibit "4-A"
Replacement Power									July 31, 2007
Recommendations for Allocations



				Power		Estimated	New Jobs	Power
Exhibit				Requested	New	Capital	Avg. Wage	Recommended	Contract
Number	Company Name	City	County	(kW)	Jobs	Investment	Benefits	(kW)	Term
A-1	Moog, Inc.	North Tonawanda	Niagara	1,250	140	$16,850,000	$45,000	1,200	Five Years
A-2	Niacet Corporation	Niagara Falls	Niagara	2,100	10	$15,300,000	$75,000	500	Five Years
	Total RP Recommended				150	$32,150,000		1,700

Exhibit “4-A1”

APPLICATION SUMMARY

Replacement Power

Company: Moog, Inc.

Location: East Aurora

County: Erie

IOU: New York State Electric and Gas Corporation

Business Activity: Manufacturer of precision controls

Project Description: This two-phase project will add 66,900 sq. ft. to the company’s existing facility to expand manufacturing and office space for its Space-Defense and Industrial Groups. The company will add equipment that will increase its output. Products manufactured at this site as a result of this project will include combat vehicle turret and gun controls; space products, principally for new NASA programs; tactical missiles and flight simulators.

Existing Allocation: 4,250 kW of Expansion Power

Power Request: 1,250 kW

Power Recommended: 1,200 kW

Job Commitment:

Existing: 2,306 jobs

New: 140 jobs

New Jobs/Power Ratio: 117 jobs/MW

New Jobs -

Avg. Wage and Benefits: $45,000

Capital Investment: $16,850,000

Capital Investment per MW: $14 million/MW

Summary: Moog is a leading worldwide designer, manufacturer and integrator of precision control components and systems for aircraft, satellites, space vehicles, missiles, automated industrial machinery and medical equipment. A low-cost hydro allocation would make it cost effective for the firm to expand in western New York and remain competitive.

Exhibit “4-A2”

APPLICATION SUMMARY

Replacement Power

Company: Niacet Corporation

Location: Niagara Falls

County: Niagara

IOU: National Grid

Business Activity: Manufactures specialty chemicals

Project Description: The project includes the installation of new processing equipment to expand the company’s current production capacity. The company’s existing facility will be modified to accommodate the expansion. New equipment will include various pumps, agitators, compressors, tanks, ventilation equipment, fans and HVAC equipment.

Prior Application: Yes

Existing Allocation: RP 1,400 kW and EP 500 kW

Power Request: 2,100 kW

Power Recommended: 500 kW

Job Commitment:

Existing: 82 jobs

New 10 jobs

New Jobs/Power Ratio: 20 jobs/MW

Total jobs/Power Ratio: 34 jobs/MW (all allocations)

New Jobs -

Avg. Wage and Benefits: $75,000

Capital Investment: $15.3 million

Capital Investment $ 30.6 million/MW

Per MW

Summary: Niacet is a manufacturer of specialty chemicals. It is an important industry and employer in Niagara Falls. The company is making a substantial investment in its plant that will help it remain competitive and grow in the area. The alternative location for this project would be Mobile, Alabama. A low-cost hydro allocation will help the company grow and implement this project in Niagara Falls.

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 50 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. 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.

“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 July 31, 2007, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 50 businesses listed in Exhibit ‘5-A.’ Collectively, these organizations have agreed to retain more than 70,000 jobs in New York State in exchange for rebates. The rebate program will be in effect until June 30, 2008, 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 $4.4 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 $4.4 million. Payments will be made from the Operating Fund. To date, the Trustees have approved $85.7 million in rebates.

RECOMMENDATION

“The Executive Vice President and Chief Financial Officer and

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