MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

June 30, 2009

 

 

Table of Contents

 

                Subject                                                                                                                                             

 

1.             Introduction                                                                                                                                                    

 

2.       Consent Agenda:                                                                                                                                

 

a.        Minutes of the Regular Meeting held on May 19, 2009                                                                    

b.        Power for Jobs Program – Extended Benefits, Exhibit - “2b-A”                                                                                  

 Resolution

                                                                                                          

c.        Annual Review of Hydropower Allocation Job Commitments, Exhibit - “2c-A” -  “2c-C”                                                                               

 Resolution                                                                                                                                        

 

d.        and Rural Electric Cooperative Economic Development Program – Allocation to the City of  Sherrill                                       

                                

e.        Niagara Relicensing, Niagara Frontier Transportation Authority and Metropolitan Transportation Authority                                                                     

                        Customers – Service Tariff Amendments – Notice of  Adoption, Exhibit - “2e-A” - “2e-E”                                                                     

                         Resolution  

                           

 

f.         Authorization to Enter into Credit Enhancements for forward Fuel and Energy Transactions                       

 

 

g.       Approval of Hedge Transaction Authority for 2010 Long-Term Energy Supply Agreements with New                                                                         

York City Governmental Customers, Exhibit - “2g-A”  

 Resolution

 

h.       Procurement (Services) Contracts – Business Units and                                                              

Facilities – Awards and Extensions, exhibit-  “2h-A” -   “2h-B”                                                                                               

 

i.         Procurement (Services) Contracts – Energy Services                                                 

 Implementation Contractor Awards

 

j.         Procurement (Services) Contracts – Energy Services –                                              

 Program Management and Implementation Services

 for Small Facilities                                                                                                                                             

Discussion Agenda:

3.       Resolution – Horace Horton                                                                                                            

4.       Resolution – Joseph Carline                                                                                                            

5.       Q&A on Reports from:

a.        President and Chief Executive Officer                                                                            

b.        Chief Operating Officer                                                                                                     

c.        Chief Financial Officer, Exhibit- “5c-A”
Resolution        

6.       Power for Jobs Extended Benefits, Energy Cost Savings Benefit Awards and Economic  

        Development Power Program Contract Extensions, Exhibit- “6-A” - “6-C”

        Resolution                                                                  

  

7.       Allocation of 6,000 kW of Hydropower, Exhibit- “7-A;” “7-A-1”- “7-A-2”

Resolution                                                                                                                                                                     

8.       Procurement (Services) Contract – State University of New York at Buffalo – Solar Photovoltaic System – Award

         

9.       Procurement (Services) Contracts – Offshore Windpower Initiatives – Power Resource Planning and Acquisition –

        Awards, Exhibit- “9-A”                                                                           

        Resolution
 

10.    Motion to Conduct an Executive Session                                                                                    

11.    Motion to Resume Meeting in Open Session                                                                               

12.    Next Meeting                                                                                                                                      

Closing                                                                                                                                                

    


 

Minutes of the Regular Meeting of the Power Authority of the State of New York held at the Niagara Power Project – Power Vista Visitors’ Center, Lewiston, New York, at 11:35 a.m.

Members of the Board present were:

                                Michael J. Townsend, Chairman

                                Jonathan F. Foster, Vice Chairman

                                D. Patrick Curley, Trustee

                                Elise M. Cusack, Trustee

                                Eugene L. Nicandri, Trustee

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Richard M. Kessel                               President and Chief Executive Officer

Gil C. Quiniones                                   Chief Operating Officer

Terryl Brown Clemons                        Executive Vice President and General Counsel

Joseph Del Sindaco                             Executive Vice President and Chief Financial Officer (White Plains)

Edward A. Welz                                   Executive Vice President and Chief Engineer – Power Supply

Joan Tursi                                             Acting Executive Vice President – Corporate Support and

                                                                     Administration (White Plains)

Bert J. Cunningham                             Senior Vice President – Corporate Communications

Steven J. DeCarlo                                 Senior Vice President – Transmission (White Plains)

Paul F. Finnegan                                  Senior Vice President – Public and Governmental Affairs

William J. Nadeau                                Senior Vice President – Energy Resource Management and Strategic Planning (White Plains)

Donald A. Russak                                Senior Vice President – Corporate Planning and Finance (White Plains)

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

Arnold M. Bellis                                   Vice President and Controller (White Plains)

Jordan Brandeis                                   Vice President – Power Resource Planning and Acquisition

Thomas A. Davis                                 Vice President – Energy Risk Assessment and Control (White Plains)

John Kahabka                                       Vice President – Environment, Health and Safety (White Plains)

Patricia Leto                                          Vice President – Procurement (White Plains)

Horace Horton                                      Regional Manager – Western New York

Joseph Kessler                                     Senior Electrical Engineer – Niagara Power Project

Dennis T. Eccleston                            Chief Information Officer (White Plains)

Francine Evans                                     Special Advisor to the President and Chief Executive Officer

Karen Delince                                       Corporate Secretary

Helen Eisenfeld                                    Director – Energy Services and Technology

Guerino Trovato                                   Program Manager – Energy Services and Technology (White Plains)

Lou Paonessa                                       Community Relations Manager – Niagara Power Project

Marilyn Brown                                     Manager – Marketing Analysis and Tariff Administration (White Plains)

Jenny Lee Liu                                       Manager – Energy Market Analysis (White Plains)

Maribel Cruz Brown                             Business Development and Engineering Facilitator (White Plains)

Angela D. Graves                                 Deputy Corporate Secretary

Mary Jean Frank                                  Associate Corporate Secretary
Lorna M. Johnson                               Assistant Corporate Secretary

Paul Pasquarello                                   Photography Services Supervisor – Niagara Power Project

Paul Dyster                                           Mayor, City of Niagara Falls

Mark Scheer                                          Reporter, Niagara Gazette

Chris Fahey                                           Deputy Chief of Staff – Congressman Higgins Office` 

John Byrne                                            (former colleague of Terryl Brown Clemons from the Governor’s Office)

 

 
 

Chairman Townsend presided over the meeting.  Corporate Secretary Delince kept the Minutes.


 

1.                     Introduction

 

                Chairman Michael Townsend said that the Trustees were glad to be having their meeting at the Authority’s Niagara Power Project.  He welcomed Niagara Falls Mayor Paul Dyster to the meeting and invited him to address the Trustees.

 

                Mayor Dyster welcomed the Trustees to Western New York, saying that he had been at the Yahoo! press conference in Buffalo that morning and commending the work that Authority staff has done to bring Yahoo! to this area of the State.  He said that the Yahoo! project is an example of how the Authority can help Western New York, adding that Niagara County could be an economic engine for the region and the State as a whole.  Mayor Dyster said that the Yahoo! model demonstrates how this can be done with a combination of inexpensive power, bipartisan support from all levels of government and public-private partnerships.  He thanked the Authority on behalf of Western New York for the very proactive role it is playing in the area’s economic revitalization. 

 

                Chairman Townsend thanked Mayor Dyster for his kind words and also thanked President and Chief Executive Officer Richard Kessel and Authority staff for the hard work they’d done in the past couple of months to bring the Yahoo! project to fruition. 


 

2.                     Consent Agenda

 

Chairman Michael Townsend said that the Economic Development Power Allocation Board had recommended that the Authority’s Trustees approve item 2b (Power for Jobs Program – Extended Benefits) at their meeting of June 26, 2009.

 

Vice Chairman Jonathan Foster said that item 2c (Annual Review of Hydropower Allocation Job Commitments) was not supported by any numbers or facts.  He said that the Trustees were being asked to approve something that doesn’t have the back-up information to support it.  Chairman Townsend suggested that he and Vice Chairman Foster send an e-mail to staff detailing the types of back-up information he is seeking. 

 

With reference to item 2g (Approval of Hedge Transaction Authority for 2010 Long-Term Energy Supply Agreements with New York City Governmental Customers), Vice Chairman Foster said that he would like staff to make a presentation on the Authority’s hedging program at the July Trustees’ Meeting.

 

President Kessel said that he wanted to disclose that several of the companies listed in item 2h (Procurement (Services) Contracts – Business Units and Facilities – Awards and Extensions) had done work for the Long Island Power Authority but that he had not been involved in their selection for contract awards.


 

a.                    Approval of the Minutes

 

                                The Minutes of the Regular Meeting held on May 19, 2009 were unanimously adopted.


 

b.                    Power for Jobs Program  - Extended Benefits

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve electricity savings reimbursement rebates for 69 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘2b-A.’  This request is to approve rebate dollars only.  The decision to allow these customers to receive extended benefits was made at past Trustee meetings.  These customers have been recommended to receive such rebates 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 received three-year contracts for PFJ electricity.

 

“The PFJ program originally made 400 megawatts (‘MW’) of power available and was to be phased in over three years.  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 additional power to be allocated under the 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.  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.  Chapter 89 of the Laws of 2007 included provisions extending program benefits until June 30, 2008.  Chapter 59 of the Laws of 2008 included provisions extending the program benefits until June 30, 2009.

 

“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 June 26, 2009, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 69 businesses listed in Exhibit ‘2b-A.’  Collectively, these organizations have agreed to retain more than 56,000 jobs in New York State in exchange for the rebates.  The rebate program will be in effect until June 30, 2009, the program’s sunset.

 

“The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘2b-A’ in a total amount currently not expected to exceed $6.8 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 the Exhibit in the future for other rebate months.

 

FISCAL INFORMATION

 

“Funding of rebates for the companies listed in Exhibit ‘2b-A’ is not expected to exceed $6.8 million.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $178.4 million in rebates.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer and the Director – Marketing Analysis and Administration recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibit ‘2b-A.’

 

        “The Chief Operating Officer, 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.

 

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 “2b-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 “2b-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 $6.8 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 and General Counsel; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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 and General Counsel.

 

 


 

 


 


 

c.                    Annual Review of Hydropower Allocation Job Commitments

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “It is recommended that the Trustees refresh the employment commitments for seven customers in the auto industry to reflect its fundamental restructuring, as set forth in Exhibit ‘2c-A’; adjust the future job commitment levels for four companies that made productivity improvements, as listed in Exhibit ‘2c-B’ and take no action on 19 customers, as set forth in Exhibit ‘2c-C.’

 

BACKGROUND

 

                “Authority staff reviewed all business hydropower allocations and the customers’ performance against agreed-upon job commitments.  In 2008, the Authority had 200 contracts with 104 business customers.  This year’s review covers a total of 94 customers with 170 contracts that required the customers to report job levels for 2008.  The contracts reviewed by staff represent overall power allocations of 521,298 kW and total employment commitments of 32,153 jobs.  In the aggregate, these customers reported actual employment of 31,165 jobs.  This represents 97% of the total job commitment for business hydropower customers reporting in 2008.  Nevertheless, 27 customers have actual job levels below the minimum threshold.

 

“The contracts contain a customer commitment to retain or add a specific number of jobs.  If the actual job level falls below 90% of that commitment, (80% for ‘vintage’ customers, i.e., those having contract allocations prior to 1988), the Authority may reduce that customer’s power allocation proportionately.  Provided contract language allows for it, a company may request a productivity review to have its job commitment reduced if the reduction in employment is due to increased efficiency or improved technology.

 

DISCUSSION

 

“Staff recommends that the Trustees refresh the employment commitments for seven customers in the automotive industry.  The impact of this industry sector on the New York State economy is significant and accounts for 75% of all manufacturing within the transportation manufacturing sector.  The majority of these jobs are associated with automotive parts manufacturing.  More than one-third of the total cluster employment is in Western New York region (Buffalo, Jamestown, Cheektowaga, Niagara Falls, Medina and Lockport).  The Authority has had a long history of supporting the automotive industry with allocations of nearly 70 MW of hydropower.

 

“In 2005, the downturn in the U. S. automotive industry began to rapidly accelerate.  In the last four years, the Authority’s automotive customers’ primary concern has been their contractual job commitments.  Contractual employment obligations have remained essentially unchanged since the various allocations were first awarded, in many cases more than a decade ago.  This has created a situation whereby the automotives in Western New York have continued to be at risk of having their allocations significantly reduced due to the difference between contractual job commitments and actual employment.  Without access to their full allocations, the Authority’s automotive customers will have to severely reduce operations or, more likely, close entirely.  

 

“The fundamental restructuring of the automotive industry in response to shrinking markets has changed the landscape of this sector forever.  The Authority’s customers must be able to operate with greater efficiency, increased productivity and less manpower.  This fact is at the center of the recommendation to refresh job commitments for automotive customers so that they reflect reasonable, sustainable commitments versus commitments made when the industry was at significantly higher production levels.

 

“Authority staff has revisited each customer’s original contractual job commitment.  The recommendation to refresh the job commitments of these automotive customers, while allowing their allocations to remain intact, is made as each individual business case warrants such action, so that the companies can recover and remain open and competitive.

 


 

Section I

Allocations in Auto Industry with Refreshed Employment Commitments

 

“Staff recommends that the Trustees refresh the job commitments for seven companies in the automotive industry, as discussed below, and listed in Exhibit ‘2c-A.’

 

American Axle and Manufacturing Inc. (‘AAM’), Cheektowaga, Erie County

 

Allocations:                          250 kW and 650 kW of Expansion Power (‘EP’)

Jobs Commitments:            114 jobs and 159 jobs, respectively

 

Background:  After a protracted strike, AAM closed two Western New York facilities in 2008.  The Cheektowaga facility is still at risk.  This facility manufactures automobile driveline and chassis systems and components, including axles and drive-shafts for light trucks and SUVs.  This facility machines differential gears, side gears and pinion gears.  The crisis in the auto industry, with its drastic volume reductions to 60% of normal levels, has led to AAM closing three U. S. facilities, including two in the Buffalo area, leaving this one remaining, but in a compromised position.    

 

Recommendation:  Staff recommends that the Trustees refresh AAM’s hydropower allocation commitments to 60 jobs for both EP allocations.

 

Brunner International, Inc. (‘Brunner’), Medina, Orleans County

 

Allocations:                          1,200 kW of Replacement Power (‘RP’) and 1,500 kW of EP

Jobs Commitments:            291 jobs each

 

Background:  Brunner’s primary market is the truck and trailer customer.  As a result of the economic crisis of 2008, consumer demand for these vehicles is only 50% or less of what it was in 2007.  

 

Recommendation:  Staff recommends that the Trustees refresh Brunner’s employment commitments to 160 jobs for all of their hydropower allocations.

 

Curtis Screw Co., Inc. (‘Curtis Screw’), Buffalo, Erie County

 

Allocations:                          1,450 kW, 350 kW and 300 kW of RP

Jobs Commitments:            276 jobs and 260 jobs, respectively

 

Background:  Curtis Screw is an industry leader in precision-machined components and assemblies for the automotive market.  The company’s Buffalo operation is almost entirely dedicated to supplying the automotive industry and the crisis in the auto industry has resulted in drastic volume reductions.

 

Recommendation:  Staff recommends that the Trustees refresh Curtis Screw’s employment commitments to 150 jobs for all of its RP allocations.

 

Delphi Automotive Systems (‘Delphi’), Lockport, Niagara County

 

Allocation:                            14,300 kW and 10,000 kW

Jobs Commitment:              4,638 jobs

 

Background:  Delphi declared bankruptcy in 2005.  On June 1, 2009, Delphi announced that it has filed modifications to its plan of reorganization, which it believes will lead to a successful emergence from its Chapter 11 restructuring.  The success of the plan is directly related to General Motors’ (‘GM’) restructuring plan.  Delphi’s executive management has closed all but two plants in North America, one of which is in Lockport.  The company is the largest single employer in Niagara County.

 

Delphi manufactures radiators, condensers and heaters, mainly for GM autos, but has diversified to other car makers as well.  The automotive market meltdown has forced the company to permanently reduce employment levels at the Lockport plant.  Production volumes declined 30% per year from 2007 through the present.  In order to remain viable and competitive, Delphi has been completely streamlining its manufacturing operations and implementing innovative technology, and in mid-2008 the company completed a competitive operating agreement plan with its union.  The company believes that it will strengthen its position in the marketplace, but restructuring will result in further declines in its employment levels in the future.

 

Recommendation:  Staff recommends that the Trustees refresh Delphi’s hydropower allocation commitments to 950 jobs for the above listed EP allocations.

 

Ford Motor Company (‘Ford’), Buffalo, Erie County

 

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

Jobs Commitments:            1,534 jobs

 

Background:  Although the ‘strongest’ of the Big Three, Ford and its stamping plant could still experience job losses due to continuing industry restructuring and reduced consumer demand.  Of immediate concern is the bankruptcy of Visteon, one of the country’s largest automotive parts suppliers. Visteon‘s major customer is Ford.  The company doesn't have any financing lined up from banks and will have to lean heavily on Ford for cash to get it through its restructuring.

 

In order to stay competitive, Ford is in the process of a major restructuring due to the changes in the automotive industry.  According to Ford, its hydropower allocations are the reason that management decided to keep this plant open.  The company invested more than $200 million in the plant in the past few years as part of this plan, bringing production of the new Edge to this facility, as well as the new Flex.  However, Ford must continue to streamline itself and implement further productivity improvements in order to remain viable.  A strategic plan has been embarked on to invest in new markets and new products, which will hopefully bring the company back to profitability.

 

Recommendation:  Staff recommends that the Trustees refresh Ford’s employment commitments to 950 jobs for all of its hydropower allocations.

 

General Motors Powertrain – Tonawanda Engine Plant, Tonawanda, Erie County

 

Allocation:                            20,700 kW of EP and 2,725 kW of RP

Jobs Commitment:              1,600 jobs

 

Background:  GM’s Tonawanda facility is one of the company’s most efficient engine plants worldwide.  Despite the company’s bankruptcy filing, this facility managed to escape being closed, which has been the fate of 14 other GM plants in the past two years.  Nonetheless, employment will be significantly reduced from its current level of 871 employees to 500 employees, or 43%, by the end of 2013.  By comparison, in 1989, GM was one of the area’s largest employers, with 4,350 employees.  At late as 2003, the plant supported 3,400 jobs.  The loss of jobs is directly related to the phase-out of two major product lines:  the V-6, which accounted for 43% of GM’s total sales in 2008, and the V8 engine, manufactured for medium- sized trucks.

 

Recommendation:  Staff recommends that the Trustees refresh GM Powertain – Tonawanda Engine Plant’s employment commitments to 500 jobs for all of its hydropower allocations.

 

 

TitanX Engine Cooling, Inc. (‘TitanX’), Jamestown, Chautauqua County

 

Allocation:                            1,000 kW of EP

Jobs Commitment:              500 jobs

 

Background:  TitanX manufactures engine-cooling parts for the trucking industry.  With customers such as GM, Ford, Freightliner, Mack and Volvo, the slowdown in the U. S. transportation market had a negative impact on employment levels at TitanX.

 

Recommendation:  Staff recommends that the Trustees refresh TitanX’s employment commitment to 310 jobs for its EP allocation.

 

 

 

Section II

Allocations to Continue with Job Commitment Changes for Productivity Improvements

 

“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 and employment reductions made due to reduced production or sales volume will not be considered increased efficiency, improved technology or productivity improvements.

 

“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 eliminates one job by assigning its duties to another job, while rebalancing redistributes work among many jobs while eliminating one or two jobs.  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.  A summary of the four customers discussed in this section is provided in Exhibit ‘2c-B.’  Brief descriptions of these companies follow.

 

E. I. Du Pont De Nemours & Co., Inc. (‘DuPont’), Niagara Falls, Niagara County

 

Allocation:                            3,000 kW of RP, 790 kW of EP and 31,700 kW of RP

Jobs Commitment:   238 base jobs and 30 created jobs, 238 jobs and 185 jobs, respectively

 

Background:  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.  The 790 kW and 31.70 MW allocations are ‘vintage’ contracts, with an 80% job ratio and a two-year job average.  For the past two years, DuPont averaged 251 jobs, i.e., 105% and 136% of its contractual commitments, respectively.  For the past year, the company averaged 247 jobs, i.e., 104% of its contractual commitment (the 30 jobs are not up for review yet).  DuPont was able to reduce eight jobs due to productivity improvements in 2008 through new automated equipment handling of the lithium production raw material feed system.

 

Recommendation:  Staff recommends that the Trustees reduce DuPont’s employment commitments for its 3,000 kW, 790 kW EP and 31,700 kW RP allocations by 8 jobs, to 230 base jobs and 30 created jobs, 230 jobs and 177 jobs, respectively.

International Imaging Materials, Inc. (‘International Imaging’), Amherst, Erie County

 

Allocation:                            250 kW of RP, 1,000 kW and 1,250 kW of EP

Jobs Commitment:              450 jobs, 556 jobs and 393 jobs, respectively

 

Background:  International Imaging, in business since the mid-1980s, manufactures thermal transfer ribbons.  For the past year, International Imaging averaged 372 jobs, i.e., 83%, 67% and 95%, respectively, of its contractual commitments.  In 2007, the company’s employment level fell due to tough competition and a steep decline in the price of its core product line.  To help ensure the company’s health, International Imaging’s strategy is to diversify and expand its current product line, as well as acquire other companies.  International Imaging’s capital investments in productivity improvements have allowed it to remain globally competitive.  The company requested a productivity improvement reduction of its employment commitments by 57 jobs due to installation of new equipment (16 jobs), rebalancing job duties (17 jobs) and new processes (24 jobs).

 

Recommendation:  Staff recommends that the Trustees reduce International Imaging’s RP allocation employment commitment by 57 jobs to 393 jobs and the company’s 1 MW EP allocation employment commitment by 57 jobs to 499 jobs, as well as the company’s 1.25 MW EP allocation employment commitment by 57 jobs to 336 jobs.

 

Quebecor World Buffalo, Inc. (‘Quebecor’), Depew, Erie County

 

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

Jobs Commitment:              822 jobs and 1,027 jobs, respectively

 

Background:  Quebecor has been in business under various names and owners since the late 1800s.  The company manufactures paperback books, magazines and tab-size inserts.  For the past year, Quebecor averaged 675 jobs; however, the EP allocations are ‘vintage’ contracts, with an 80% job ratio and a two-year job average.  The two-year average is 717 jobs, i.e., 87% and 70% of the company’s commitments, respectively.  Quebecor underwent a productivity improvement and capital investment project in 2008, installing horizontal stackers on two photopolymer presses.  These new automated stackers resulted in a reduction of 12 jobs.  These changes help Quebecor to remain competitive and cost efficient.

 

Recommendation:  Staff recommends that the Trustees reduce Quebecor’s 4,000 kW EP and 1,000 kW EP allocation job commitments by 12 jobs to 810 jobs and 1,015 jobs, respectively.

 

Saint-Gobain Structural Ceramics (‘Saint-Gobain’), Niagara Falls, Niagara County

 

Allocation:                            3,450 kW, 300 kW, 1,400 kW and 1,000 kW of RP

Jobs Commitment:              125 jobs, 171 base jobs and 7 created jobs, 168 base jobs and 18 created jobs, and 182 base jobs and 17 created jobs (not required to report this allocation in 2008), respectively

 

Background:  Saint-Gobain manufactures silicon carbide materials, primarily for armor products.  For the past year, Saint-Gobain averaged 180 jobs, i.e., 144%, 105% and 107%, respectively, of its contractual commitments.  2008 was a good year for the company.  However, Saint-Gobain always looks for ways to streamline its processes to stay competitive.  The company requested a productivity improvement reduction of its employment commitments by 15 jobs due to rebalancing of job duties, job combinations and new equipment.  Of the 15 jobs requested, only 13 job reductions qualified as actual productivity improvements.

 

Recommendation:  Staff recommends that the Trustees reduce Saint-Gobain’s 3,450 RP allocation’s job commitment by 13 jobs to 112 jobs, the 300 kW RP allocation’s job commitment by 13 jobs to 158 base jobs and 7 created jobs, the 1,400 kW RP allocation’s job commitment by 13 jobs to 155 base jobs and 18 created jobs and the 1 MW RP allocation’s job commitment by 13 jobs to 169 base jobs and 17 created jobs.

 

 

Section III

Allocations to Continue with No Change

 

“This annual review of hydropower allocation job commitments covers the period from January through December 2008.  Staff recommends that the Trustees take no action on 18 companies not meeting their commitments, as discussed below and listed in Exhibit ‘2c-C.’

 

Bernzomatic/IRWIN Industrial Tool Company (‘Bernzomatic’), Medina, Orleans County

 

Allocation:                            750 kW of EP

Jobs Commitment:              247 jobs

 

Background:  Bernzomatic manufactures torches and distributes torches and gas.  Additionally, the company sells gas matches, patio heaters and gas.  For the past year, Bernzomatic averaged 202 jobs, i.e., 82% of its commitment.  Bernzomatic had a significant reduction in workforce in June 2008 due to the economic downturn in the housing market and the reduced demand for torches. 

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

BMP America, Inc. (‘BMP’), Medina, Orleans County

 

Allocation:                            120 kW of RP

Jobs Commitment:              120 base jobs with 10 created jobs

 

Background:  BMP, incorporated in 1982, specializes in the design and manufacture of textile-related components used in business machines, with customers such as Xerox, Kodak, Hewlett-Packard, IBM and Heidelberg.  For the past year, BMP averaged 94 jobs, i.e., 79% of its commitment.  The company is transitioning into the consumer appliance market, particularly, laundry dryers, which is directly tied to consumer spending and the housing market.  Since demand has been significantly down due to the recession, BMP has had to lay off workers.  Additionally, demand for the company’s products in the business machine market has been down as well.  BMP is very optimistic that it is poised to do well once the economy begins to recover; however, it does not foresee meeting its employment commitment in 2009 due to the recession.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

C & S Wholesale Grocers, Inc. (‘C&S’), Lancaster, Erie County

 

Allocation:                            550 kW of EP

Jobs Commitment:              682 jobs

 

Background:  C&S has been providing warehousing and distribution services to supermarket chains, independent grocers and military facilities across the nation for more than 85 years.  C&S entered Western New York in 2002, when it entered into an agreement with Tops Markets, Martins and other local grocery stores.  For the past year, C&S averaged 572 jobs, i.e., 84% of its contractual commitment.  C&S was below its commitment in 2008 because its largest customer, Tops Markets, is suffering from the recession and the employment level reflects this reality.  Tops Markets is working hard to rebuild its brand after restructuring in 2008.  C&S is poised to have good employment growth once the economy improves, which the company forecasts to be in 2010.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Contract Pharmaceuticals Limited Niagara (‘CPL’), Buffalo, Erie County

 

Allocation:                            250 kW of RP

Jobs Commitment:              329 jobs

 

Background:  CPL, a Canadian company, purchased Bristol-Myers Squibb’s facility in 2005 and manufactures dry skin, anti-inflammatory and anti-fungal dermatological products, in addition to various cold medicines under contract for other companies.  For the past year, CPL averaged 284 jobs, i.e., 86% of its contractual commitment.  After a couple of years of large growth, CPL was proud to have maintained stable employment levels throughout 2008, given the slowdown in the economy.  The company is optimistic about its continued growth and expects to report increased employment in the next report.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Greatbatch, Inc. (‘Greatbatch’), Clarence, Erie County

 

Allocation:                            1,500 kW of EP

Jobs Commitment:              325 base jobs and 43 created jobs

 

Background:  Greatbatch, founded in 1970, designs, develops and manufactures batteries, capacitors, EMI filters, coated electrodes, stimulation leads, catheters, introducers and assemblies that are used in the implantable medical industry.   For the past year, Greatbatch averaged 289 jobs, i.e., 89% of its contractual commitment.  Employment was lower in 2008 due to an unforeseen drop in demand for implantable medical devices in the first half of 2008 and a transfer of the sales and marketing team to the new corporate headquarters.  However, the market did improve and employment grew in the second half of 2008.  With new employees and transferred ones combined, employment is in the original projected range.  Greatbatch met its commitment in the last quarter of 2008.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Honeywell International (‘Honeywell’), Buffalo, Erie County

 

Allocation:                            300 kW of RP

Jobs Commitment:              168 jobs

 

Background:  Honeywell, formerly Allied-Signal Inc., has been a research and development lab since the early 1900s.  Honeywell develops and produces atmospherically safe fluorocarbons.  For the past year, Honeywell averaged 139 jobs, i.e., 83% of its contractual commitment.  Honeywell grew steadily from 2002 through 2007 and 2008 is only slightly lower than 2007’s employment level.  Based on current economic conditions, the company expects to remain at its current employment level through 2009 but is hopeful that the facility will grow in the years ahead.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Ingram Micro Corporation (‘Ingram’), Williamsville, Erie County

 

Allocation:                            900 kW of EP

Jobs Commitment:              1,525 jobs

 

Background:  Ingram is a leading wholesale distributor of microcomputer products worldwide, including hardware, software and networking equipment.  For the past year, Ingram averaged 1,293 jobs, i.e., 85% of its job commitment.  The company has invested millions over the past few years to keep the facility state of the art and competitive, which has helped fuel employment growth in the past year.  Ingram is poised to grow even further as the economy improves.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

International Imaging Materials, Inc. (‘International Imaging’), Amherst, Erie County

 

Allocations:                          1,000 kW of EP and 250 kW of RP

Jobs Commitments:            449 jobs and 393 jobs, respectively

 

Background:  International Imaging, in business since the mid-1980s, manufactures thermal transfer ribbons.  For the past year, International Imaging averaged 372 jobs, i.e., 67% and 83% of its contractual commitments, respectively.  In 2008, International Imaging saw employment levels fall due to productivity improvements made during the year, as well as the economic crisis, causing a downturn in business. 

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Lakeside Warehouse Corporation/The Carriage House Companies (‘Lakeside’), Dunkirk, Chautauqua County

 

Allocation:                            500 kW of EP

Jobs Commitment:              199 jobs

 

Background:  Lakeside, in business since 1988, is a storage facility for both raw materials and finished products associated with syrups.  For the past year, Lakeside averaged 165 jobs, i.e., 83% of its contractual commitment.  The Lakeside facility in Dunkirk is very close to the Red Wing facility in Fredonia and Carriage House considers it one entity for employment purposes, with workers shifting from one facility to the other.  As specific needs arise, the manufacturing capabilities of each facility determine the company’s employment levels and the facility where personnel spend the majority of their time is where they are reported.  So, while Dunkirk’s average was 14 jobs below its commitment, Fredonia’s average was 53 jobs above the commitment; the combined commitment would be 639 jobs, with the company’s actual jobs at 658.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Lockheed Martin (‘Lockheed’), Niagara Falls, Niagara County

 

Allocation:                            250 kW of RP

Jobs Commitment:              45 jobs

 

Background:  Lockheed manufactures gravity gradiometer technology for the U. S. Navy and commercial use.  For the past year, Lockheed averaged 38 jobs, i.e., 85% of its contractual commitment.  Lockheed expected to grow in 2008 but the economic crisis had a significant impact on the company’s orders.  The company managed to roughly maintain the same employment levels as the year before.  Lockheed is optimistic that it will capture a few new contracts and that the economy will see some improvement in 2009.  The company foresees some employment growth by the fourth quarter. 

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Luvata Buffalo, Inc. (‘Luvata’), Buffalo, Erie County

 

Allocation:                            250 kW of RP

Jobs Commitment:              831 jobs

 

Background:  Luvata, formerly Outokumpu American Brass or OAB Holdings, Inc., in business since 1906, manufactures copper and brass sheets and rolls.  For the past year, Luvata averaged 589 jobs, i.e., 71% of its contractual commitment.  The company attributes its decline in business to the economic downturn and expects business and employment to increase once the economy rebounds.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Niagara Ceramics Corporation (‘Niagara Ceramics’), Buffalo, Erie County

 

Allocations:                          250 kW and 600 kW of RP and 250 kW of EP

Jobs Commitments:            190 jobs each

 

Background:  Niagara Ceramics Corporation (‘Niagara Ceramics’), founded in 2003, purchased the majority of Buffalo China’s manufacturing assets and produces dinnerware.  For the past year, Niagara Ceramics averaged 101 jobs, i.e., 53% of its commitments.  As part of the purchase agreement between Niagara Ceramics and Buffalo China’s parent company, Oneida Ltd., Niagara Ceramics agreed to a non-competition covenant with certain exceptions, with Oneida being obligated to purchase a set amount of product from Niagara Ceramics for five years, at decreasing levels each year, at a fixed price.  The company has suffered due to rising production costs; Oneida’s decreasing purchase obligation and the non-competition provision.  Though the company is at an all time low, it is poised to spring back fully with the non-competition agreement expiring in March 2009.  The chain restaurant accounts, such as Outback and Olive Garden, have begun, with Outback’s first delivery occurring in February.  The economy is dampening business prospects a bit, but due to the closing of a competitor, and former Authority customer, Syracuse China, Niagara Ceramics will be picking up business.  The company expects to expand this year and be heading back to the range of meeting its commitments by the end of 2009.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Nuttall Gear Company (‘Nuttall’), Niagara Falls, Niagara County

 

Allocation:                            350 kW of RP

Jobs Commitment:              135 jobs

 

Background:  Nuttall, started in 1983 from a leveraged buy-out of Westinghouse’s Electric Gear division, manufactures enclosed gear drives for industrial, commercial, transportation and utility applications.  For the past year, Nuttall averaged 103 jobs, i.e., 76% of its commitment.  Nuttall’s below-commitment reporting is a direct result of the economic downturn.  The company is doing all it can to maintain its current employment level and expects employment to rebound appropriately as the economy begins to rebound.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Precious Plate, Inc., Niagara Falls, Niagara County

 

Allocation:                            800 kW of RP

Jobs Commitment:              145 jobs

 

Background:  Precious Plate, Inc. (‘Precious’), established in 1973, provides leading-edge electroplating services to high-tech companies, primarily for computers, cell phones and phone-switching gear.  For the past year, Precious averaged 125.92 jobs, i.e., 86.84% of its commitment.  The company had a good year in 2008 and was on target to meet its employment commitment for the year except the downturn in the economy affected business and staffing levels beginning in December.  Though the economy is still affecting business, Precious foresees a good year overall for 2009, with hiring beginning again in the 3rd Quarter.  The company has new business with parts that fit into its current manufacturing operation.  New equipment has been installed to manufacture product for solar cells.  The new business is beginning to grow and Precious foresees even more new customers providing significant new business this year.  The company anticipates a positive 2009 that should bring employment up towards meeting its commitment.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Quebecor World Buffalo, Inc. (‘Quebecor’), Depew, Erie County

 

Allocation:                            1,000 kW of EP

Jobs Commitment:              1,015 jobs

 

Background:  Quebecor, in business under various names and owners since the late 1800s, manufactures paperback books, magazines and tab-size inserts.  For the past year, Quebecor averaged 675 jobs; however, the EP allocation is a ‘vintage’ contract, with an 80% job ratio and a two-year job average.  The two-year average is 717 jobs, i.e., 70% of the company’s commitment.  Quebecor’s employment decreased in 2008 due to loss of customers and decreased orders from customers, which resulted in decreased volume.  Additionally, the company implemented productivity improvements that require fewer workers.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

TAM Ceramics, LLC (‘TAM’), Niagara Falls, Niagara County

 

Allocations:                          7,000 kW, 1,700 kW and 600 kW of RP and 2,100 kW of EP

Jobs Commitments:            147 jobs, then 152 jobs each

 

Background:  TAM is a supplier of dielectric powder to the passive electronic component industry and zirconia-based ceramic powders to industry.  For the past year, TAM averaged 52 jobs (i.e., 34; however, the 7 MW and 2.1 MW allocations are ‘vintage’ contracts, with an 80% job ratio and a two-year job average.  The two-year average is 74 jobs, i.e., 50% and 48% of the company’s commitments.  Business from the beginning of 2008 through the end of the third quarter doubled and then the economic downturn hit the company’s business, and in turn, employment.  However, two large contracts were signed in 2008 that should add 43 employees soon.  Additionally, R&D is focusing on new fuel cell development, thermoelectric materials and material for the solar power industry, which should, hopefully, add new business as well. 

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Tulip Corporation (‘Tulip’), Niagara Falls, Niagara County

 

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

Jobs Commitments:            110 jobs and 122 jobs respectively

 

Background:  Tulip, an injection-molding company, recycles rubber and plastic and manufactures battery cases for the major battery manufacturers.  For the past year, Tulip averaged 83 jobs, i.e., 76% of its commitment.  The RP allocation is a ‘vintage’ contract, with an 80% job ratio and two-year job average.  The two-year average is 75 jobs, i.e., 61% of the company’s commitment.  The company grew and employment increased significantly in 2008.  Tulip is aggressively pursuing growth in its reprocessed material line, emerging industrial jar market and the plastic lumber businessThe company is optimistic that its continued growth will help it meet its job commitments once again.

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

Washington Mills Electro Minerals Corp. (‘Washington Mills’), Niagara Falls, Niagara County

 

Allocation:                            9,700 kW of RP

Jobs Commitment:              171 jobs

 

Background:  Washington Mills manufactures abrasive grains for sandpaper and grinding wheels.  For the past year, Washington Mills averaged 145 jobs, i.e., 85% of its job commitment.  The company is only a few jobs below its commitment.  Unfavorable market conditions in most of its key businesses in 2008 resulted in reduced sales volume, which led to the reduction in jobs.  Washington Mills anticipates further declines and does not expect employment levels to increase this year.

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

ZEMCO Industries dba Tyson Retail Deli (‘Tyson’), Buffalo, Erie County

 

Allocation:                            500 kW of EP

Jobs Commitment:              502 jobs

 

Background:  Tyson, at this location since 1970, manufactures a full line of processed meats for delicatessens and supermarkets.  Tyson is the largest processed meat manufacturer in New York.  For the past year, Tyson averaged 408 jobs, i.e., 81% of its commitment.  2008 was a year of change at Tyson.  The facility lost its hot dog production line and associated workers, which dropped employment to near-record lows.  However, Tyson added two sausage lines to use the hot dog equipment and added several ham lines and slicing products, which have the facility now running at full capacity.  The company is now near its job commitment. 

 

Recommendation:  Staff recommends that the Trustees take no action at this time.

 

RECOMMENDATION

 

                “The Director – Marketing Analysis and Administration recommends that the Trustees refresh the employment commitments for 7 customers in the automotive industry, as described above and set forth in Exhibit ‘2c-A’; adjust the future job commitment levels for 4 companies that have made productivity improvements, as listed in Exhibit ‘2c-B’ and take no action on 19 customers, as described above and set forth in Exhibit ‘2c-C.’

 

The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

 

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

 

RESOLVED, That the Authority hereby refreshes the employment commitments for seven companies, adjusts  the job commitments for four customers due to productivity improvements and defers action with respect to 19 companies described in the foregoing report of the President and Chief Executive Officer and set forth in Exhibits “2c-A,” “2c-B” and “2c-C”; and be it further

 

RESOLVED, That the Director – Marketing Analysis and Administration is hereby authorized to provide written notice to the companies whose job commitments are being reduced; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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.

 


 

 

 

 

ALLOCATIONS IN AUTO INDUSTRY WITH REFRESHED EMPLOYMENT COMMITMENTS

 

 

 

Company

 

 

Location

Total

Allocation (kW)

Current Employment Commitment

Current Jobs/ mW

Refreshed Employment Commitment

Refreshed Jobs/ mW

American Axle & Mfg Inc.

Cheektowaga

2,400

159

66

60

25

Brunner International, Inc.

Medina

5,500

341

62

160

29

Curtis Screw Co., Inc.

Buffalo

2,100

276

131

150

71

Delphi Automotive Systems

Lockport

25,800

4,638

180

950

37

Ford Motor Company

Buffalo

8,700

1,695

194

950

109

General Motors Powertrain

Tonawanda

23,425

1,600

68

500

21

TitanX Engine Cooling, Inc.

Jamestown

1,000

500

500

310

310

 

 

 

 

ALLOCATIONS TO CONTINUE WITH JOB COMMITMENT CHANGES FOR PRODUCTIVITY IMPROVEMENTS

 

 

Company

 

 

 

Location

 

 

Type of Power

 

Allocation kW

 

Employment Commitment

 

Average

2008

Jobs

Average Annual %

Achieved

 

Revised Commitment

 

Revised

%

E.I. Du Pont De Nemours & Co., Inc.

Niagara Falls

EP

790

238

V 251

105%

230

109%

E.I. Du Pont De Nemours & Co., Inc.

Niagara Falls

RP

3,000

268

247

104%

260

107%

E.I. Du Pont De Nemours & Co., Inc.

Niagara Falls

RP

31,700

185

V 251

136%

177

142%

International Imaging Materials, Inc.

Amherst

RP

250

450

372

83%

393

95%

International Imaging Materials, Inc.

Amherst

EP

1,000

556

372

67%

499

75%

International Imaging Materials, Inc.

Amherst

EP

1,250

393

372

95%

336

111%

Quebecor World Buffalo, Inc.

Depew

EP

1,000

822

V 717

87%

810

89%

Quebecor World Buffalo, Inc.

Depew

EP

4,000

1,027

V 717

70%

1,015

71%

Saint-Gobain – Structural Ceramics

Niagara Falls

RP

3,450

125

180

144%

112

161%

Saint-Gobain – Structural Ceramics

Niagara Falls

RP

300

178 (171)

180

105%

165 (158)

114%

Saint-Gobain – Structural Ceramics

Niagara Falls

RP

1,400

182 (168)

180

107%

169 (155)

116%

Saint-Gobain – Structural Ceramics

Niagara Falls

RP

1,000

199 (182)

--

--

186 (169)

--

EP = Expansion Power                        RP = Replacement Power   V = Vintage allocation – 2-year average         


 

 

 

ALLOCATIONS TO CONTINUE WITH NO CHANGE

 

 

 

Company

 

 

Location

Date of Trustee Approval

 

Type of Power

 

Allocation kW

Employment Commitment  (# of jobs)

Average

2008

Jobs

 

Average Annual %

Achieved

 

Bernzomatic/Irwin Industrial Tools

Medina

Nov 06

EP

750

247

202

82

BMP America, Inc.

Medina

Mar 05

RP

120

120

94

79

C & S Wholesale Grocers, Inc.

Lancaster

Oct 90

EP

550

682

572

84

Contract Pharmaceuticals Limited

Buffalo

Apr. 91

RP

250

329

284

86

Greatbatch, Inc.

Clarence

Apr 04

EP

1,500

325

289

89

Honeywell International

Buffalo

Apr 89

RP

300

168

139

83

Ingram Micro Corporation

Williamsville

Sep 97

EP

900

1,525

1,293

85

International Imaging Materials, Inc.

Amherst

Jan 89

RP

250

450

372

83

International Imaging Materials, Inc.

Amherst

Mar 95

EP

1,000

556

372

67

Lakeside Warehouse Corporation

Dunkirk

May 99

EP

500

199

165

83

Lockheed Martin

Niagara Falls

Feb 93

RP

250

45

38

85

Luvata Buffalo, Inc.

Buffalo

Apr 94

RP

250

831

589

71

Niagara Ceramics Corporation

Buffalo

Jan 89

RP

250

190

101

53

Niagara Ceramics Corporation

Buffalo

Jan 94

RP

600

190

101

53

Niagara Ceramics Corporation

Buffalo

Mar 04

EP

250

190

101

53

Nuttall Gear Company

Niagara Falls

Feb 93

RP

350

135

116

86

Precious Plate, Inc.

Niagara Falls

Jun 02

 

RP

800

145

126

87

Quebecor World Buffalo, Inc.

Depew

Jul 00

EP Vintage

1,000

1,027

717

70

TAM Ceramics, LLC

Niagara Falls

Apr 94

RP

1,700

152

52

34

TAM Ceramics, LLC

Niagara Falls

Jan 89

RP

600

152

52

34

TAM Ceramics, LLC

Niagara Falls

Dec 88

EP Vintage

2,100

152

77

48

TAM Ceramics, LLC

Niagara Falls

Oct 59

RP Vintage

7,000

147

74

50

Tulip Corporation

Niagara Falls

Oct 90

EP

300

110

83

76

Tulip Corporation

Niagara Falls

May 61

RP Vintage

1,200

122

75

61

Washington Mills Electro Minerals

Niagara Falls

Dec 86

RP

9,700

171

150

88

ZEMCO Industries dba Tyson Retail

Buffalo

Jun 01

EP

500

502

408

81

               


 

d.                    Municipal and Rural Electric Cooperative Economic Development Program – Allocation to the City of Sherrill   

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve an allocation of 1,000 kW of hydropower under the Municipal and Rural Electric Cooperative Economic Development Program (‘Program’) to the City of Sherrill.

 

BACKGROUND

 

“The 1991 amendment to the power sales agreement between the Authority and the Municipal and Rural Electric Cooperative Systems sets aside a block of 54 MW from the 752 MW of hydropower allocated to the systems for economic development in the systems’ service territories.  The total allocation was increased to 764.8 MW as a result of additional power resulting from the Niagara Project upgrade. 

 

“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.  Recommended allocations under the Program will now be made using guidelines that were approved by the Trustees on September 23, 2008.  Under the revised program, the first 100 kW allocated will be from 100 % hydropower and any additional kW at 50% hydropower and 50% incremental power. 

 

“As of December 16, 2008, 20,185 kW have been allocated.  The City of Sherrill has submitted an application for power under the Program for consideration by the Trustees.

 

DISCUSSION

 

“An application has been submitted by the City of Sherrill to the Authority on behalf of Tibro Water Technologies, Ltd. (‘Tibro’).  Tibro is a private Canadian company owned by the Chandaria family.  The Chandaria family has been in the chemical trading and manufacturing business in East Africa for more than 35 years.   

 

“The most common methodology to create bleach is to combine pressurized chlorine gas with caustic soda.  This system is inherently dangerous, as storage and transport of large quantities of chlorine gas are needed.  Tibro’s process, on the other hand, works by creating bleach directly from salt, an inert and safe raw material.  Tibro’s model is to install and operate an appropriately sized, safe, cost-effective and scalable bleach plant in the City of Sherrill.            

 

“The Trustees had previously approved an allocation for the Village of Frankfort, on behalf of Tibro at their January 27, 2009 meeting.  However, contamination was found underneath a slab of a building Tibro wanted to occupy in Frankfort.  Tibro’s management decided then not to open operations in Frankfort due to the high level of uncertainty surrounding the environmental work needed to be done at the site. 

 

“The company is attracted to Sherrill because of its low-cost power and proximity to Tibro’s customers and their distribution centers.   

 

“Tibro is planning to invest approximately $3.4 million on this project, including leasing a 75,000-square-foot facility and purchasing machinery and equipment.  It is also expected to create 54 full-time jobs over the next three years.  The estimated electrical monthly load for the fully operational facility is expected to peak at 2 MW. 

               

“It is recommended that the Trustees approve an allocation of 1,000 kW of Economic Development Power for the City of Sherrill on behalf of Tibro.  This allocation is equivalent to 54 jobs per MW of hydropower.  Per the program guidelines, a minimum of 50 jobs per MW of hydropower should be attained.

 

“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 the project becomes operational and the additional jobs and load commitments are reached.  The hydropower earmarked for this program is presently sold to the municipal and rural electric cooperative customers on a withdrawable basis. 

 

RECOMMENDATION

 

“The Manager – Market Analysis and Tariff Administration and the Director – Marketing Analysis and Administration recommends that the Trustees approve the allocation of power under the Municipal and Rural Electric Cooperative Economic Development Program to the City of Sherrill in accordance with the above.

 

“The Chief Operating Officer, 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 an allocation of power to the City of Sherrill under the Municipal and Rural Electric Cooperative Economic Development Program is 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 his designee be, and hereby is, authorized to execute any and all documents necessary or desirable to effectuate this allocation, 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 Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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.

 


 

e.                    Niagara Relicensing, Niagara Frontier Transportation Authority and Metropolitan Transportation Authority Customers –

Service Tariff Amendments – Notice of Adoption

 

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve amendments to the Authority’s current production service tariffs applicable to its Niagara Relicensing, Niagara Frontier Transportation Authority (‘NFTA’) and Metropolitan Transportation Authority (‘MTA’) customers.  Staff recommends that changes to the Authority’s tariffs for firm hydroelectric power and energy from the Niagara and St. Lawrence/FDR Power Projects and served under Service Tariffs HC-1, TN-1, NP-1, ST-37 and ST-8, each attached as Exhibits ‘2e-A’ through ‘2e-E,’ respectively, become effective on July 1, 2009.

BACKGROUND

“At their March 31, 2009 meeting, the Trustees authorized the Corporate Secretary to file a Notice of Proposed Rulemaking (‘NOPR’) with the New York State Department of State for publication in the New York State Register that the Authority proposed to amend service tariffs applicable to its Niagara Relicensing, NFTA and MTA customers.  These amendments were needed to include certain standard provisions now applicable to all Authority service tariffs and updated terminology and to improve the organization and formatting.

 

“The NOPR was published in the New York State Register on April 15, 2009.  In addition, Niagara Relicensing, NFTA and MTA customers were notified of the proposed service tariff amendments and invited to review the materials and submit comments.  In accordance with the State Administrative Procedure Act (‘SAPA’), interested parties were afforded a 45-day comment period.  The public comment period closed on June 1, 2009.

DISCUSSION

“No written comments were received during the statutory comment period.  Staff recommends that the amended service tariffs become effective at the start of the first billing period subsequent to the Trustees’ approval, which is July 1, 2009.

 

FISCAL INFORMATION

“Adoption of the proposed revisions to the Niagara Relicensing, NFTA and MTA service tariffs will have no financial impact.  The changes proposed are administrative in nature and have no effect on current production rates.

 

RECOMMENDATION

“The Manager – Market Analysis and Tariff Administration recommends that the attached amended service tariffs for the Authority’s Niagara Relicensing, NFTA and MTA customers be approved and that the Trustees authorize the Corporate Secretary to file a Notice of Adoption with the New York State Department of State for publication in the New York State Register in accordance with the State Administrative Procedure Act.  The requested effective date of these tariffs is July 1, 2009.

“It is also recommended that the Senior Vice President – Marketing and Economic Development, or his designee, be authorized to issue a notice of final action to the affected customers.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Director – Marketing Analysis and Administration and I concur in the recommendation.”

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

 

RESOLVED, That the Trustees adopt the amendments to the service tariffs applicable to the Authority’s Niagara Relicensing, Niagara Frontier Transportation Authority and Metropolitan Transportation Authority customers, as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file a Notice of Adoption for publication in the New York State Register in accordance with the State Administrative Procedure Act; and be it further

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to submit such other notice(s) as may be required by statute or regulation concerning the adoption of the service tariff amendments; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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 and General Counsel.

 


 

f.                     Authorization to Enter into Credit Enhancements for Forward Fuel and Energy Transactions

                                

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize the use of additional credit support-enhancing measures related to the hedging of natural gas, fuel oil and electrical energy prices.  These enhanced measures include: (1) ‘clearing’ of hedging transactions using the CME ClearPort Clearing Services, (2) using master agreement two-way credit support annexes (‘CSAs’) in connection with over-the-counter (‘OTC’) transactions entered into directly with counterparties, (3) providing collateral as may be required by the CSAs, or other master agreement credit support requirements, in the form of cash, cash equivalents, or bank letters of credit (‘L/Cs’) and (4) increasing the Energy Hedging Reserve Fund to $200 million to provide the necessary funding for use as collateral that may be required to support all authorized fuel and energy hedging transactions.  

 

BACKGROUND

 

“During the normal course of business, the Authority enters into forward contracts to lock in the costs it will pay for fuel at its fossil power plants and to lock in the costs it will pay for energy on behalf of its customers.  For example, on behalf of the Authority’s Southeastern New York (‘SENY’) Governmental Customers, the hedges include physical energy transactions, such as the fixed-price electrical energy purchased from the Indian Point Nuclear Generation Plants, and financially settled derivative transactions relating to natural gas, fuel oil and electrical energy prices.  The hedge transactions are entered into either with a clearing broker associated with the New York Mercantile Exchange (‘NYMEX’) or with individual OTC counterparties.

 

“At their meeting of April 27, 2004, the Trustees authorized the use of commodity brokers to effectuate the trading and ‘clearing’ of commodity transactions on the NYMEX related to the hedging of natural gas and fuel oil prices.  The Trustees also authorized the creation of the NYMEX Margin Reserve Fund (subsequently renamed with the Trustees’ approval as the Energy Hedging Reserve Fund), currently funded at $90 million, to provide collateral in support of those transactions.  This authority was provided in recognition of the fact that execution of contracts on the NYMEX minimizes counterparty default risk.  Default risk for exchange-cleared transactions is minimized since the exchange requires collateral from all market participants, referred to as ‘margin,’ in an amount at least equal to the current market value of transactions.  The market value of exchange-traded transactions is recalculated at the end of each trading day and margin requirements are updated accordingly.  The overall function of protecting transactions against counterparty default is generally referred to as ‘clearing.’   

 

“Direct OTC transactions with counterparties are presently used for hedging the price of natural gas and natural gas transportation, in anticipation of future purchases for the Authority’s fossil fuel generators, and for hedging the price of electrical energy in anticipation of future purchases to serve Authority customers.  Although some of these OTC hedge transactions are for a physical fuel or energy commodity, the majority of hedge transactions are financially settled derivatives, where settlement is ultimately calculated based on the commodity prices for natural gas and electrical energy.  Presently, virtually all of these OTC derivative transactions are entered into with counterparties under the terms of the standard master agreement of the International Swaps and Derivatives Association (‘ISDA’).  In the past, the Authority’s use of the ISDA standard master agreement with its counterparties has not included the use of the CSA to that agreement. 

 

                 “The counterparties to the OTC hedge transactions are mostly the financial institutions and merchant trading companies that continue to be challenged during the ongoing credit and liquidity crisis.  Most of the hedges with these entities are unsecured, or are backed only by guarantees from their parent corporations.  Although, to date, none of the counterparties to the SENY Governmental Customers or other hedges on behalf of Authority customers have failed to perform under their master agreements, several of these counterparties have recently been downgraded by nationally recognized credit ratings agencies Standard & Poor’s (‘S&P’) and Moody’s Investor Service.  In 2008, 12 S&P downgrades affected 8 Authority counterparties.  So far in 2009, 4 S&P downgrades have affected 3 counterparties. 

DISCUSSION

 

“Recent events in the financial services industry highlight the importance of protecting against potential counterparty default.  To reduce the Authority’s exposure to potential counterparty default, staff seeks authorization to both expand the use of exchange-cleared transactions and implement direct collateral arrangements with several of its counterparties to OTC transactions. 

 

“To further benefit from the credit protections afforded by entering hedge transactions through the Authority’s clearing brokers, staff also seeks authorization to enter into transactions listed on the CME ClearPort.  ClearPort allows for clearing many transactions the Authority presently enters into OTC.  These include transactions based on natural gas priced against additional natural gas trading hubs and transactions priced between natural gas trading hubs (locational basis) and transactions priced against electrical energy at locations within and adjacent to the New York Independent System Operator’s (‘NYISO’) system.  It is anticipated that the additional transactions will be entered into on ClearPort using the Authority’s existing broker and margin accounts. 

 

“To reduce the default risk associated with OTC transactions, staff seeks authorization to enter into master agreement CSAs with hedging counterparties.  A CSA implements a collateral requirement similar to that used for exchange-cleared transactions.  Under the CSA, collateral is required when the current market value of transactions with the counterparty exceeds a predetermined threshold amount.  Terms of the CSA negotiated with each counterparty include a table of collateral posting thresholds corresponding to various credit ratings assigned by nationally recognized credit rating agencies.  The CSA table requires counterparties with low credit ratings to post collateral at a zero-dollar threshold in an amount equal to the current net market value of all transactions with the counterparty.  Counterparties with high credit ratings post collateral only in an amount by which current overall net market value exceeds the corresponding collateral threshold.  If a counterparty’s credit rating changes, as determined by a nationally recognized rating agency, then the collateral threshold and the amount of collateral required would change as required by the table. 

 

“In accordance with the terms of a two-way CSA, the Authority may be required to post collateral in support of OTC transactions that have a negative net market value to the Authority.  Typically an OTC transaction such as a swap would represent a negative net market value if the Authority had locked in a fixed price that was higher than the current market price for that same transaction.  In that case, the Authority may be required to post the net margin value of all transactions with that counterparty in the amount that exceeds the threshold agreed to within the negotiated CSA table corresponding to the Authority’s then-current credit rating.  The Authority may also be required to post collateral based on other credit-related terms in OTC transaction master agreements.  The level of collateral required corresponds to the net market value of transactions and the credit rating assigned to the Authority by the nationally recognized independent rating agencies.  In the event the Authority’s credit rating is lowered, the anticipated amount of collateral required may increase.  The Authority will endeavor to maintain its strong credit rating and to enter into transactions across multiple counterparties so as to optimally manage the Authority’s potential collateral requirements.  

 

“In order to fund the potential collateral requirements of the CME ClearPort and OTC transactions covered under the CSA, the Authority seeks to increase the Energy Hedging Reserve Fund from the current authorized value of $90 million to $200 million.  This amount is considered adequate given current gas and energy market pricing to fund the potential collateral requirements associated with the fuel and energy hedges currently anticipated on behalf of Authority customers. 

 

“The Authority’s plan is to have a portfolio of measures to manage its market risk, counterparty default risk and collateral requirements, including continued use of select counterparties for OTC transactions without collateral, one-way CSAs, two-way CSAs and use of CME ClearPort.  Additionally, certain hedge transactions may be exited in order to stay within the collateral available in the Energy Hedging Reserve Fund.

 

 

FISCAL INFORMATION

 

“Any cash or securities pledged would be held as collateral by the counterparty or broker in the name of the Authority, to be returned once the Authority has fulfilled its obligations under the relevant contracts.  Any bank letters of credit (‘L/C’) issued would be drawn on only if the Authority failed to fulfill its obligations under the relevant contracts.  Collateral payments to be made under NYMEX, CME ClearPort or CSA contracts will be paid from and returned to the Energy Hedging Reserve Fund.  Payment of broker fees, NYMEX fees, CME ClearPort fees, bank fees for custodial accounts and issuance of L/Cs will be treated as fuel or energy payments to be paid from the Operating Fund.  Interest payments associated with Authority and counterparty collateral will be treated as fuel or energy payments to be paid from or credited to the Operating Fund.

 

RECOMMENDATION

 

“The Vice President – Energy Risk Assessment and Control recommends that the Trustees authorize using CME ClearPort, executing two-way credit support annexes and increasing the Energy Hedging Reserve Fund to $200 million, as described and subject to the limitations discussed above.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Corporate Planning and Finance, the Senior Vice President – Energy Resource Management and I concur in the recommendation.”

 

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

 

RESOLVED, That the Trustees hereby authorize the “clearing” of transactions relating to hedging natural gas, fuel oil and electrical energy prices using CME ClearPort Clearing Services, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Trustees hereby authorize (i) the execution of two-way credit support annexes (CSAs) to the master agreements governing over-the-counter (“OTC) fuel and energy-related transactions and (ii) the provision of collateral, in support of OTC transactions entered into under the terms of CSAs to the master agreements, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Trustees hereby approve increasing the Energy Hedging Reserve Fund (Fund) within the Operating Fund for the purpose of providing necessary collateral in the form of cash, securities or bank letters of credit, as may be required to support fuel and energy transactions entered into in the normal course of business, with funds from monies or securities in the Operating Fund in such amounts as deemed advisable by the Treasurer or the Senior Vice President – Corporate Planning and Finance, to a maximum amount in such Fund at any one time of $200 million, from which monies or securities may be drawn to pay margin requirements, as described in the foregoing report of the President and Chief Executive Officer, and providing that the Treasurer or the Senior Vice President – Corporate Planning and Finance shall certify that such funds to be provided as collateral are not needed for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations and that any margin requirements will be satisfied first by monies or securities drawn from such Fund and then from other monies or securities in the Operating Fund, if necessary, and that the Treasurer shall have the discretion as he or she deems advisable to transfer monies or securities from the Fund to the Operating Fund; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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 and General Counsel.  


 

g.                   Approval of Hedge Transaction Authority for 2010 Long-Term Energy Supply Agreements with New 

       York City Governmental Customers 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

                “The Trustees are requested to authorize the execution of fuel- and energy-related hedging transactions (‘Hedge Transactions’) for 2010 as required to meet the New York Power Authority’s obligation under the long-term energy supply agreements (‘Agreements’) with the New York City governmental customers (‘Governmental Customers’).

BACKGROUND

“On February 9, 2005, the Trustees approved Agreements between the Authority and the Governmental Customers effective for the annual rate years commencing January 1, 2006 through December 31, 2017, unless terminated earlier.  By executing the Agreements, each of the Governmental Customers agreed to be a full-requirements electricity customer of the Authority and to support and pay for its share of the Authority’s supply portfolio dedicated to the Governmental Customers.  The Agreements require that the Authority and the Governmental Customers engage in an ‘Annual Process’ prior to the next calendar year (‘Rate Year’) to determine the fixed and variable costs of service, future energy and fuel market risks, hedging strategies, submission of load forecasts and supply resource planning.  During this process, the Governmental Customers are obligated to propose three cost-recovery options for analysis by the Authority.  The Authority must develop estimated costs for the cost-recovery options in accordance with the specified criteria and offer them to the Governmental Customers for selection.  The Governmental Customers are required by the Agreements to select one of the energy cost-recovery options by June 15 [or another mutually agreed date] of the year preceding the applicable Rate Year.  In the event the Governmental Customers are not able to agree on and/or do not select an option by June 15 [or another mutually agreed date], the Authority implements the Default Option.

            “Once the option is determined, the Authority is obligated to obtain market prices for the Hedge Transaction components of the selected option.  If the option is an Energy Charge Adjustment (‘ECA’) with Hedging Option and the prices of the option are within a 5% tolerance of the prices contemplated by the option, the Authority is authorized to proceed with the execution of the Hedge Transactions.  Should the actual cost exceed 5%, the Authority cannot proceed without the consent of the Governmental Customers, and in the event there is no consent within 10 days, the Authority will implement the Default Option.  An ECA option, which may be applicable for 2010, is a full variable-cost pass-through option using an ECA, and, once selected, is the only type of option permitted by the Agreements for at least two consecutive Rate Years.

            “Generally, Hedge Transactions serve to fix the price paid for actual purchases of energy or fuel in the future.  If the Authority entered into an energy swap where it agreed to pay the counterparty a fixed price and the counterparty agreed to pay the Authority the market price, the Authority would always pay the fixed price per MWH regardless of market fluctuation.  Essentially, the Authority would pay to the counterparty the difference between the fixed price and the market price when the market price is lower than the fixed price.  The counterparty would pay the Authority the difference between the fixed price and a higher market price.  This payment would be used by the Authority to offset physical purchases in the market at the higher price.

                “For the 2006 Rate Year, the Governmental Customers did not select one of the cost-recovery options defined by them, so the Default Option designed and developed by the Authority was implemented.  For the 2007, 2008 and 2009 rate years, the Governmental Customers collectively elected an ECA with Hedging Options.

 


DISCUSSION

                “For the 2010 Rate Year, the Governmental Customers and Power Authority are currently in discussions regarding the hedging strategy.  Through a consultative process, the Authority will collaborate with the Governmental Customers during the implementation of the anticipated hedging strategy to achieve the best outcome.  Because the Hedge Transactions are market based and could influence the market, a summary analysis of the Hedge Transactions associated with, and presently contemplated by, the Governmental Customers and the Power Authority will be presented to the Trustees for discussion in Executive Session if required.  The monetary cap that needs to be authorized to implement the Agreement is included in the summary analysis.  In the event the cost of the Hedge Transactions exceeds the anticipated cost by 5%, the Authority will require consent from the Governmental Customers before continuing with the implementation.

                “Multiple, varied and sizeable hedges will be necessary to implement the hedging strategy option selected by the Governmental Customers.  Timely implementation of the hedging strategy will be necessary to obtain Hedge Transactions at current market prices.  The nominal value (price x volume) of the individual Hedge Transactions will likely exceed the maximum individual transactional authority granted to Authority officers.  The current ‘Transaction Authorization Limits for Energy and Energy-Related Financial Transactions,’ (which was Exhibit ‘7-A’ to a Trustee item dated February 26, 2008), attached hereto as Exhibit ‘2g-A,’ provides that any Hedging Transaction in excess of $15 million in nominal value requires the Senior Vice President – Energy Resource Management to obtain the written concurrence of the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and the Vice President – Energy Risk Assessment and Control.  Since delay in executing the Hedge Transactions could be very costly, it is important that the Authority have sufficient flexibility to proceed quickly in executing the Hedge Transactions.

“Expanded Hedge Transaction authority allowing Hedge Transactions above $15 million, with a monetary cap and consistent with the selected cost recovery option, would permit the Senior Vice President – Energy Resource Management to approve Hedge Transactions that exceed both (i) the fuel and electric per-transaction limits for financial hedge transactions and (ii) the spot-trade limits for physical transactions established by the Trustees.  The aggregate nominal value of the Hedge Transactions will be limited to the monetary cap for Hedge Transactions set forth to meet the cost recovery option.  The Hedge Transactions will include both purchases and sales.

                “While the cumulative authority sought represents a significant commitment, the value of the commitment does not give rise to a dollar-for-dollar financial exposure for the Authority.  As explained earlier, the Authority’s financial exposure created by the proposed authorization for Hedge Transactions (most typically swaps and NYMEX contracts) would be measured by the difference between the fixed price the Authority would pay and the floating price to be paid by the counterparty.  If the market price rises above the fixed price, payments would he made to the Authority based on the difference.  If the market price falls below the fixed price, the Authority would make payments based on the difference.  It is these differences that will determine the Authority’s (and counterparties’) financial obligations. Regardless, the costs associated with the Governmental Customers’ selected hedging strategy will be recovered in their 2010 rates.

                “In prior requests to increase Hedge Transaction authorization for the Governmental Customers’ selection of the ECA with Hedging Option, authority was sought and provided to the Senior Vice President – Energy Resource Management with the concurrence of the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and the Vice President – Energy Risk Assessment and Control.  The concurrence of these managers is not being sought here.  Given the specificity of the Hedge Transactions requested by the Governmental Customers, the Trustees’ approval of the execution of the Hedge Transactions, coupled with the monetary cap, the pass-through of costs to the Governmental Customers and the necessity for Governmental Customer approval of any Hedge Transactions in excess of 5%, such concurrence is neither necessary nor warranted.

                “The Senior Vice President – Energy Resource Management will report to the Trustees on the implementation of the Hedge Transactions upon final execution of transactions comprising the elements of the cost recovery option for the 2010 Rate Year, or as may otherwise be requested by the Trustees.

FISCAL INFORMATION

                “Since the costs associated with the Authority’s implementation of the hedging strategy will be fully recovered in the Governmental Customers’ 2010 rates, there will be no costs to the Authority for implementing the selected cost recovery option as provided for in the Agreement.

RECOMMENDATION

        “The Senior Vice President – Energy Resource Management and the Senior Vice President – Marketing and Economic Development recommend that the Trustees grant authority to the Senior Vice President – Energy Resource Management to execute Hedging Transactions consistent with the cost recovery option selected by the Governmental Customers.

                “The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Vice President – Energy Risk and Control and I concur in the recommendation.”

 

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

  

RESOLVED, That the Senior Vice President – Energy Resource Management is hereby authorized to enter into, on behalf of the Authority, those Hedge Transactions requested by the Governmental Customers in connection with the cost recovery option selected by the Governmental Customers for the 2010 Rate Year under the New York City Governmental, Customers’ Long-Term Agreements, consistent with the Hedge Transaction authority provided for in “Transaction Authorization Limits for Energy and Energy-Related Financial Transactions” (Exhibit “7-A” to a Trustee item dated February 26, 2008), except insofar as the Senior Vice President – Energy Resource Management is authorized to enter into such Hedge Transaction in excess of $15 million without the need to obtain managerial concurrence; and be it further

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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.

 


 

Authorization Limits1 for Energy- and Energy Hedging-Related Transactions2

(financial and physical settlement, spot and term tenure, excluding transactions with the NYISO)

 

 

Physical

Financial

Transaction Notional Value 3, 4, 5

Term6,  4

Title7

--

OTC

NYMEX8

Fuel9, 10

Electricity11

Emissions12

(months)

($MM)

($MM)

($MM)

 

President and Chief Executive Officer

P

P

P

30

30

10

48

Chief Operating Officer

P

P

P

30

30

10

48

Executive Vice President and Chief Financial Officer

P

P

P

30

30

10

48

Executive Vice President – Energy Marketing and Corporate Affairs

P

P

 

30

30

10

48

Senior Vice President and Chief Engineer –  Power Generation

P

 

 

25

 

4

36

Senior Vice President –  Energy Resource Management  and Strategic Planning

P

P

P

20

20

2

36

Senior Vice President –  Marketing and Economic Development

P

P

 

 

25

1

36

Director –  Power Resource Planning and Acquisition

P

P

 

 

15

1

24

Others - trading authorization limits delegated by respective department executive13

 

 

 

                                             

Notes to table:


1 All limits apply only to transactions with external counterparties and each limit operates independently of every other limit.

 

2   The Vice President – Chief Risk Officer shall determine what instruments qualify as a financial instrument and/or energy-related financial transaction for hedging purposes, and what constitutes an emission, emission credit or environmental attribute.

 

3   Notional value for a specific transaction is calculated as the volume of the commodity (or in the case of a derivative transaction, the volume of the underlying commodity) times the contracted per-volume price. For futures or options, this price is typically referred to as the strike price.  Multiple transactions entered into with the same counterparty in a single day for the same delivery date or transaction period are considered a single transaction for purposes of this limit. 

 

4  Transactions exceeding the notional value or term authorization limits require the specific authorization of the Trustees, except in cases where the President and Chief Executive Officer is of the view, based on recommendations by the Vice President – Chief Risk Officer and/or other Authority officers, that a proposed transaction exceeding the limits must be entered into on an expedited basis to protect the Authority from adverse financial consequences.  In this circumstance, the President and Chief Executive Officer shall be authorized to approve such transactions with the approval of the Chairman or, if the Chairman is unavailable, the Vice Chairman; and in the event that the President and Chief Executive Officer is not available, the Senior Vice President and Chief Engineer – Power Generation, in cases involving fuel-related transactions, and the Executive Vice President and Chief Financial Officer, in cases involving either financial or physical transactions, shall be so authorized.

 

5   In addition, in the case of any physical or financial transaction having a value of  $15 million or more, prior to any officer or staff member approving such transaction under the authority granted hereunder, such officer or staff member would obtain the  verbal concurrence of (a) those members of his or her staff at the level of Manager and above (or their designees in the case of  their absence) having responsibility for such transaction, (b) the Executive Vice President,  General Counsel and Chief of Staff as to the acceptability of the contractual arrangement governing such transaction and (c) in the case of financial derivative and physical transactions, the Vice President – Chief Risk Officer, or, in his absence, his designee, as to the acceptability of the transaction from a risk management perspective.  Such verbal concurrence shall be followed up with written concurrence within 3 working days of the actual execution of such transaction. 

 

6  Transaction term is measured as the period from the date a transaction is entered into through the last day of delivery.  For example, a transaction entered into in January 2007 to purchase natural gas for delivery during the month of January 2008 has a term of 13 months.  However, an exception to this limitation is warranted for interruptible natural gas transportation (‘IT’) contracts because IT contracts are generally understood to be evergreen in nature and do not obligate or commit the Authority, except as the Authority determines in its sole discretion, to transport natural gas consistent with the tariff provisions of such transporting pipeline.

 

7  Titles are representative of executive personnel under current Authority organizational structure.  Where future organizational changes revise specific position titles, the designated transaction authorization levels are applicable to the individuals within those new titles provided that the President and Chief Executive Officer deems that such  new title is the successor for the purpose of the delegations of authority herein.

 

8 The aggregate purchase cost of all NYMEX contracts (natural gas, fuel oil, jet kero) not to exceed $250 million.    

 

9  Fuel-related transactions include the purchase or sale of physical fuel that can be burned at an Authority fossil- powered generation facility, as well as financially settled derivative transactions where such fuels are the underlying commodity, or derivative transactions for fuels recognized as representative for hedging purposes of those fuels burned at an Authority fossil-powered generating facility.  These transactions also include contracts for the transportation of fuel, as well as financially settled derivative transactions where transportation is the underlying commodity.

 

10 The cumulative volume represented by the physical fuel transactions plus the equivalent volume obligated by the financial transactions, if such were to be physically delivered, for a particular Authority generating facility or group of facilities (i.e., Small Clean Power Plants) cannot exceed the maximum volume of fuel that could be consumed and/or stored at such facility(ies) during any time period. The cumulative volume represented by the physical electricity for a particular Authority customer or customer group (i.e., SENY Governmental Customers) cannot exceed the maximum volume of electricity that could be consumed by that customer during any time period.  The Senior Vice President – Energy Resource Management and Strategic Planning shall delegate specific volumetric control limits to immediate managers, and they to their respective staff, to ensure such total volumetric limits are not exceeded.  Such delegation of volume limits shall be subject to the approval of the Vice President –Chief Risk Officer, or his designee.

 

11 Electricity-related transactions include the purchase or sale of electrical energy or capacity products locationally within the area controlled by the New York Independent System Operator (‘NYISO’), or within an area contiguous to that controlled by the NYISO where protocols are in place to facilitate the transfer of such products to within NYISO’s area.  Electricity-related transactions also include financially settled derivative transactions where such electricity products are the underlying commodity.  These transactions may also include contracts for the transmission of electrical energy, as well as financially settled derivative transactions where transmission is the underlying commodity.

 

12 Emissions-related transactions include the purchase or sale of CO2 emissions under the RGGI program (or any successor program), nitrous oxide (NOx) or sulfur dioxide (SO2) emissions credits under either U. S. Environmental Protection Agency or New York State Department of Environmental Conservation programs (or successor programs).  The transactions may also include the purchase or sale of other emissions, emissions credits or environmental attributes (such as green tags), as those terms may be defined, not specifically cited herein subject to the approval of the Vice President – Chief Risk Officer.

 

13 Trading authorization limits may be delegated for a short or extended term.  All delegations, whether in whole or in part, and re-authorizations, must be in the written format prescribed by the Vice President – Chief Risk Officer.  Extended-term delegations must be signed by the staff member receiving the delegation, approved by the immediate supervisor of the delegating manager, co-signed by the Vice President – Chief Risk Officer or his designee, accompanied by the staff member’s certification of his or her  understanding of all applicable Authority policies and procedures and re-authorized annually.  In the case of short-term delegation, such as during a period of vacation or illness, unless specifically stated otherwise, the full trading authorization limits are considered to be delegated.


 

h.                   Procurement (Services) Contracts – Business Units and Facilities – Awards and Extensions                             

                         

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve the award and funding of the multiyear procurement contracts listed in Exhibit ‘2h-A,’ as well as the continuation and funding of the procurement contracts listed in Exhibit ‘2h-B,’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the recommended awards, including the nature of such services, the bases for the new awards if other than to the lowest-priced bidders and the intended duration of such contracts, are set forth in the discussion below.

BACKGROUND

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.

“The Authority’s Expenditure Authorization Procedures (‘EAPs’) require the Trustees’ approval for the award of non-personal services, construction, equipment purchase or non-procurement contracts in excess of  $3 million, as well as personal services contracts in excess of $1 million if low bidder, or $500,000 if sole source or non-low bidder.

“The Authority’s EAPs also require the Trustees’ approval when the cumulative change- order value of a personal services contract exceeds the greater of $500,000 or 25% of the originally approved contract amount not to exceed $500,000, or when the cumulative change-order value of a non-personal services, construction, equipment purchase or non-procurement contract exceeds the greater of $1 million or 25% of the originally approved contract amount not to exceed $3 million.

DISCUSSION

Awards

“The terms of these contracts will be more than one year; therefore, the Trustees’ approval is required.  Except as noted, all of these contracts contain provisions allowing the Authority to terminate the services for the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  Approval is also requested for funding all contracts, which range in estimated value from $95,000 to $11 million.  Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.

“The issuance of multiyear contracts is recommended from both cost and efficiency standpoints.  In many cases, reduced prices can be negotiated for these long-term contracts.  Since these services are typically required on a continuous basis, it is more efficient to award long-term contracts than to rebid these services annually.

Extensions

“Although the firms identified in Exhibit ‘2h-B’ have provided effective services, the issues or projects requiring these services have not been resolved or completed and the need exists for continuing these contracts.  The Trustees’ approval is required because the term of extension of these contracts will exceed one year.  The subject contracts contain provisions allowing the Authority to terminate the services at the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  These contract extensions do not obligate the Authority to a specific level of personnel resources or expenditures.

“Extension of the contracts identified in Exhibit ‘2h-B’ is requested for one or more of the following reasons:  (1) additional time is required to complete the current contractual work scope or additional services related to the original work scope; (2) to accommodate an Authority or external regulatory agency schedule change that has delayed, reprioritized or otherwise suspended required services; (3) the original consultant is uniquely qualified to perform services and/or continue its presence and re-bidding would not be practical or (4) the contractor provides a proprietary technology or specialized equipment, at reasonable negotiated rates, that the Authority needs to continue until a permanent system is put in place.

“The following is a detailed summary of each recommended contract award and extension.

Contract Awards in Support of Business Units/Departments and Facilities:

Energy Marketing and Business Development

Energy Services and Technology

“The Authority provides energy efficiency and renewable energy program services primarily to its governmental customers in Southeastern New York, as well as to public entities throughout the State.  Such programs have resulted in annual savings of 1 million MWh of electricity since the late 1980s through cumulative investments in energy services projects exceeding $1.1 billion since the program’s inception.  The Authority now plans to expand its investment in energy efficiency measures for program participants by an additional $1.3 billion, with expected annual investments of more than $200 million by 2012 or earlier.  The Authority has also been a leader in renewable energy resources in New York and has invested more than $20 million in renewable energy technologies in the State since the late 1980s, including the installation of 30 solar photovoltaic (‘PV’) systems and 15 fuel cells, generating more than 3.5 MW of renewable energy capacity.  An additional $21 million has been approved to demonstrate large-scale PV and fuel cell installations at selected sites throughout the State, as well as to develop a thermal solar program for the Authority’s municipal and rural cooperative customers.  The contracts with AWS Truewind, LLC (‘AWS’) and Optimal Energy, Inc. (‘Optimal Energy’) (Q09-4510; PO# TBA) would provide for consulting services in connection with the Authority’s expanded energy efficiency and renewable energy program initiatives, in order to ensure the successful implementation of these programs.  Such services will include assisting the Authority in assessing the existing programs and developing a comprehensive program evaluation plan, as well as advising the Authority regarding the identification and development of new renewable program offerings and opportunities, including project site selections and technical evaluation services.  To this end, bid documents were downloaded electronically from the Authority’s Procurement website by 90 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Thirteen proposals were received for one or more of the above options and were evaluated on the following criteria:  relevant experience of the firm; experience in evaluating energy efficiency and renewable energy programs; organization of the project team; qualifications of the support staff; financial resources; location/s of support offices and proposal content and format.  Of this number, four proposals were not considered due to the higher-than-average hourly rates; and three of the lower-priced bidders did not meet the bid requirements and were not considered further.  The proposals of the five lowest-priced qualified bidders, as well as that of a sixth bidder possessing unique technical qualifications in renewable energy, were evaluated further.  Staff recommends award of contracts to two firms:  Optimal Energy, the lowest-priced qualified bidder that meets the bid requirements and has both the resources and qualifications to complete the scope of work identified in the RFP for both energy efficiency and renewable energy tasks; and AWS, the most technically qualified bidder in renewable energy, to perform feasibility and site assessments and to supplement work assigned to Optimal Energy for the renewable program, as may be required.  AWS is a worldwide leader in such renewable energy resource assessments; the firm is uniquely staffed with meteorologists and scientists who have generated the primary wind and solar resource data used by other consulting firms, renewable energy developers and national laboratories (e.g., AWS has served as technical consultant to both the New York State Energy Research and Development Authority and the National Renewable Energy Laboratory to develop wind resource assessment tools and programs); and, based in Albany, AWS is also very familiar with New York State renewable energy resources and will be able to provide timely support for the Authority’s activities in this area.  None of the other bidders demonstrated this level of relevant experience.  The contracts would become effective on July 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $1 million.

“The contracts with Bohler Engineering, P. C. (‘Bohler’) and Schuyler Engineering, P.C. (‘Schuyler’) (Q09-4534; PO#s TBA) would provide for preparation and filing of applications and other documents necessary to obtain required approvals from the New York City Department of Buildings (‘NYCDOB’) in connection with implementing the Authority’s energy services projects for many of its customers.  Services also include, but are not limited to, related expediting services and providing ongoing consultations regarding building codes and procedures, as needed.  Bid documents were downloaded electronically from the Authority’s Procurement website by 39 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated; three proposals were fully responsive and one did not meet the bid requirements and was not evaluated further.  A fifth proposal was received after the bid due date and was returned to the bidder unopened.  Staff recommends award of contracts to two firms, Bohler and Schuyler, the lowest-priced bidders, which are qualified to perform such services and meet the bid requirements.  The award of contracts to two firms will ensure the availability of sufficient resources to obtain all necessary work permits during periods of peak work volume, in order to meet project schedules.  The contracts would become effective on July 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $100,000.  All costs will be recovered by the Authority.

“The contract with Millennium Maintenance & Electrical Contractors, Inc. (‘Millennium’) (Q09-4476; PO# TBA) would provide for installation services for sample/ prototype lighting fixtures in connection with the Authority’s energy conservation projects at various locations in Westchester County and New York City.  Bid documents were downloaded electronically from the Authority’s Procurement website by 22 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Five proposals were received and evaluated.  Staff recommends award of a contract to Millennium, the lowest-priced bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory service under an existing contract for such work.  The contract would become effective on July 1, 2009 for an intended term of up to two years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $500,000.  All costs will be recovered by the Authority.

Enterprise Shared Services

Corporate Support Services

“The contract with Integrated Systems and Power, Inc. (‘IS&P’) (Q09-4478; PO# TBA) would provide for maintenance and repair services for the fire alarm system in the Authority’s Clarence D. Rappleyea Building and garage.  Services include, but are not limited to, maintenance and repair of all building and garage local panels, smoke detectors, heat sensors, bell/strobes, horn/strobes and speakers; quarterly testing of building and garage alarm systems; annual testing of tenant alarm systems; central station monitoring and dialer maintenance; coordination and testing of tie-ins for new construction build-outs with general contractors and electricians; 24-hour on-call service; and documentation indicating functional testing and performance of fire alarm systems for quarterly, annual and new construction and repairs testing.  Bid documents were downloaded electronically from the Authority’s Procurement website by 10 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Staff recommends award of a contract to IS&P, the lowest-priced bidder, which is qualified to perform such services and meets the bid requirements.  The contract would become effective on July 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $150,000.

“The contract with The Trane Company (‘Trane’) (Q09-4548; PO# TBA) would provide for preventive maintenance and service repairs for two Trane chillers at the Authority’s Clarence D. Rappleyea Building.  This award is made on a sole-source basis, since Trane is the original equipment manufacturer and, as such, is uniquely qualified to perform such services, and has quick access to parts and technical information related to its proprietary software (Trane Tracer Program) in order to service this equipment in a timely and cost-effective manner.  Furthermore, Trane has provided satisfactory service under an existing contract for such work.  There were no respondents to a notice in the New York State Contract Reporter of the Authority’s intent to enter into a sole-source contract with Trane.  The new contract would become effective on July 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $95,000.

Information Technology

“Deregulation of the electric and natural gas markets and fluctuating oil prices introduced uncertainty into projecting price trends for these energy commodities, which, in turn, increased the need for long-range energy planning models and tools.  The Authority’s Integrated Resource Planning (‘IRP’) group, responsible for developing long-term resource plans for the Authority, currently relies on external consultants to run proprietary software models and interpret data to assist the Authority in developing and maintaining its long-range resource plan.  The Energy Resource Management (‘ERM’) group, responsible for short-term planning, currently uses the Fast Forward forecasting application, augmented by external consultants, for its short-term planning activities.  Based on the results of a previous competitive bid for a short-term forecasting solution, for which no contract was awarded, two vendors were identified as the only technically qualified firms to propose solutions that would meet the Authority’s business needs, objectives and functional requirements for energy planning.  The Authority continued to search for additional firms capable of meeting these planning needs and refined the scope of the original RFP.  The two previously qualified firms were invited to submit proposals to provide software solutions to develop integrated resource plans and forecast energy and capacity prices and to identify the impact of changing conditions in the marketplace (including new plants, plant retirements and emerging technologies for both short- and long-term planning). Two proposals were received and evaluated.  Although the smaller of the two firms demonstrated a thorough understanding of the Authority’s business requirements and functional expertise in short-term forecasting modeling, its long-term market analysis tools were not fully developed or integrated into resource planning and forecast modeling solutions; the evaluation team determined that this firm did not meet the Authority’s requirements and was not considered further.  Based on the other firm’s depth and breadth of experience and expertise in long-term power system planning and modeling, energy industry information databases and analysis consulting, as well as its demonstrated understanding of the Authority’s business needs and processes, its proposed methodology and integrated suite of applications, staff therefore recommends award of a contract to Ventyx Energy, LLC (‘Ventyx’) (Q09-4482; PO# TBA), the more technically qualified bidder, which meets the bid requirements and the Authority’s business needs and objectives.  The contract with Ventyx would provide for an Integrated Resource Plan and Generation Dispatch Modeling Forecast System Software Solution for short- and long-term energy planning.  Due to the urgent need to initiate planning discussions with Ventyx, as well as to lock in the pricing and related discounts, interim approval was obtained to issue a Letter of Intent on June 15, 2009, to enter into a contract with Ventyx for a term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $1.9 million.

Power Supply

“The contract with Bancker Construction  Corp. (‘Bancker’) (P09-99476; PO# TBA) would provide for excavating services for the Southeastern New York (‘SENY’) plants (Charles A. Poletti, 500 MW, Richard M. Flynn and the Small Clean Power Plants) on an ‘as needed’ basis.  Services include all labor, supervision, equipment and materials to excavate and repair any onsite subsurface steam, water, gas, drain or fuel pipe lines, including properly shoring a trench when necessary, and replacing the surface to the original condition after all such repairs are complete.  Tasks may include excavating and reinforcing trenches/holes of various depths and lengths to uncover underground water, steam, fuel, oil and electrical utilities; pumping water out of any excavations that become filled due to rain or leakage and responding to emergent excavation issues in a timely manner.  Bid documents were downloaded electronically from the Authority’s Procurement website by 54 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Five proposals were received and evaluated.  Staff recommends award of a contract to Bancker, the lowest-priced evaluated bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory service under an existing contract for such work.  The new contract would become effective on July 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $750,000.

“The contract with Merit Constructors Inc. (‘Merit’) (P09-99479; PO# TBA) would provide for repair services on fences, gates, hinges, new installations, barbed wire, etc. at the SENY plants on an ‘as needed’ basis.  Bid documents were downloaded electronically from the Authority’s Procurement website by 30 firms, including those that may have responded to a notice in the New York State Contract Reporter; one other vendor responded to the Request for Quotations without downloading.  Five proposals were received and evaluated.  Staff recommends award of a contract to Merit, the lowest-priced evaluated bidder, which is qualified to perform such services and meets the bid requirements.  The contract would become effective on July 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $175,000.

“The contract with Professional Health Services, Inc. (‘PHS’) (S0901 / 6000100036; PO# TBA) would provide for annual physical examinations, as well as respirator clearance and fit tests, where applicable, for up to 200 employees at the St. Lawrence/FDR Project, as required by all applicable safety and health standards, federal and State requirements and Authority policy.  Bid documents were downloaded electronically from the Authority’s Procurement website by five firms, including those that may have responded to a notice in the New York State Contract Reporter.  A sixth firm requested that a bid package be sent and a hard copy was mailed accordingly.  Two proposals were received and evaluated.  Staff recommends award of a contract to PHS, the lower-priced bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory service under an existing contract for such work.  The new contract would become effective on September 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $130,800.

“In 1998, a contract was competitively bid and awarded to Software Sense Enterprises, Inc. (‘SSEI’) (formerly Software Sense Systems) to provide for a safety and clearance tagging system (‘lockout/tagout’) with an outage coordination feature for the Authority’s generation and transmission facilities.  The system was implemented in connection with the Power Supply Maintenance Resource Management (‘MRM’) work management program.  The contract provided for specialized application software (‘PTR-Plus!’) to develop, issue and control safety clearances, as well as associated maintenance, training and related consulting services, including customized software interfaces to the Authority’s MRM software system (MAXIMO) and the Energy Control Center.  The PTR-Plus! software has been successfully tailored to reflect the Authority’s work practices, enabling employees to work safely on de-energized equipment.  The software and its interfaces to other components of the MRM program have become essential to the work management and safety processes that have been established at the Authority.  In order to provide for the continuation of such specialized services and support for this program, the Trustees have approved several extensions of and additional funding for such services during the past 10 years, most recently at their meeting of June 29, 2004, for the award of a new sole-source contract to SSEI for a term of up to five years.  Since the existing contract is expiring and the need for such services is ongoing, staff recommends the award of a new sole-source contract to SSEI, based on the firm’s unique qualifications, expertise and knowledge of its proprietary software system.  SSEI has successfully integrated the Authority’s requirements into this software application in order to establish a safe electrical working environment and coordinate multiple concurrent outages.  The Authority’s lockout/tagout safety system has become a leader in the electric utility industry.  Services would include providing the operations and maintenance departments at each operating facility with continued 24/7 maintenance for this proprietary software product, as well as consulting services for ongoing software upgrades, custom revisions and specialized modifications to the PTR-Plus! application software and training, as the lockout/ tagout work process is improved or otherwise revised, as needed.  The new contract (PO# TBA) would become effective July 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $275,000.

“The contract with TechnoScouts, Inc. (‘TSI’) (Q09-4530; PO# TBA) would provide for consulting services in connection with the implementation of air program requirements for emissions sources at the Authority’s SENY plants (Charles Poletti, 500 MW, Richard M. Flynn and Small Clean Power Plants), in compliance with all applicable federal, State and local regulations.  Services include executing various tasks related to the organization of the air program, as well as providing onsite personnel for technical and operations support.  Such tasks include, but are not limited to, developing air program management and QA/QC manuals, Title V Permit reporting (which includes gathering performance and operating data, data review and development of supporting documentation),  preparation of compliance certifications, air emission statements/reports and electronic data reporting for the Continuous Emissions Monitoring Systems.  Bid documents were downloaded electronically from the Authority’s Procurement website by 45 firms, including those that may have responded to a notice in the New York State Contract Reporter; one other firm responded to the Request for Quotations without downloading.  Six proposals were received and evaluated; two proposals did not meet the bid requirements and were not evaluated further.  The evaluation criteria included, but were not limited to: documented Title V permit compliance and regulatory experience, demonstrated understanding of the required tasks, detailed planning to ensure fulfillment of the tasks and sample documents.  Based on the foregoing, staff recommends award of a contract to TSI, the lowest-priced qualified bidder, which meets the bid requirements and has provided satisfactory services under an existing contract for related work.  The contract would become effective on July 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $1 million.

“The contract with Utility Pole Technologies, Inc. (‘UPT’) (Q09-4516; PO# TBA) would provide for the inspection, evaluation and supplemental remedial treatment of approximately 6,700 in-service transmission line wood poles in St. Lawrence, Franklin, Clinton, Lewis, Delaware, Sullivan and Orange counties.  Services include, but are not limited to, all labor, supervision, tools, equipment, preservatives and materials to perform all requisite visual and sound inspection, sound and bore inspection, partial excavation, excavation and treatment, external ground-line treatment, fumigant treatment and internal void treatment (with ant treatment, where applicable).  Poles more than eight years old will be inspected both above and below the ground-line area.  Bid documents were downloaded electronically from the Authority’s Procurement website by 22 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Staff recommends award of a contract to UPT, the lowest-priced bidder, which is qualified to perform such services and meets the bid requirements.  The contract would become effective on July 1, 2009 for an intended term of up to two years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $670,967.

“Cultural resources compliance is an integral element of the permitting process that requires strategic and knowledgeable approaches to identify, evaluate and document cultural and historic resources.  Pursuant to the new licenses for the Niagara and St. Lawrence/FDR Projects and the related Historic Properties Management Plans (‘HPMP’) and/or Programmatic Agreements among the Authority, State and federal resource agencies, local and tribal governments and non-governmental organizations, the Authority has undertaken and will continue to undertake numerous activities and projects at these and other locations where such activities and projects may have the potential to impact cultural and historic resources.  The five contracts with Gray & Pape, Inc. (‘Gray & Pape’), Hartgen Archeological Associates, Inc. (a New York State-certified Woman’s Business Enterprise) (‘Hartgen’), Landmark Archeology, Inc. (‘Landmark’), TRC Environmental Corp. (‘TRC’) and VHB Engineering, Surveying and Landscape Architecture, P. C. (‘VHB’) (Q09-4507; PO# TBA) would provide for cultural resources consulting services to assist the Authority on an ‘as needed’ basis, by conducting cultural resources surveys and evaluations related to the investigation and management of cultural and historic resources at various Authority or third-party facilities, as mandated by various federal, State and local statutory requirements.  Services include, but are not limited to: implementation of various field and office investigations related to the potential effect of Authority activities on cultural and historic resources; documentation of cultural and historic resources to be altered or demolished; monitoring of existing cultural and historic resources to assess the potential effects of project operations, construction, erosion, vehicle traffic and/or vandalism; providing support to the Authority in responding to unanticipated discoveries of human remains and archeological resources and the preparation of nomination documents for resources that may be eligible for listing in the National Register of Historic Places.  Bid documents were downloaded electronically from the Authority’s Procurement website by 86 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Eighteen proposals were received and evaluated.  Based on a cost evaluation, the eight lowest-priced evaluated bidders were identified; a technical evaluation was performed based on the bidders’ personnel meeting the Secretary of the Interior’s Professional Qualification Standards for cultural resources professionals and their ability to perform fieldwork and prepare reports in accordance with the various other standards set forth in the Request for Quotations (‘RFQ’), and as further evidenced by the bidders’ writing samples.  Based on the foregoing, staff recommends award of contracts to five firms: Gray & Pape, Hartgen, Landmark, TRC and VHB, the lowest-priced evaluated bidders, which are qualified to perform such services and meet the bid requirements.  The award of multiple contracts will ensure the availability of sufficient resources to cover assignments in all three regions specified in the RFQ (Northern, Western and Southeastern New York), as needed, in a timely and cost-effective manner.  Specific assignments will be determined by the consultant’s area of expertise and experience, proximity to the field site, workload and ability to respond or other relevant criteria, including cost.  The contracts would become effective on or about July 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $625,000.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

“The four contracts with B&N&K Restoration Co., Inc. (‘B&N&K’), JBH Environmental, Inc. (‘JBH’), OP-TECH Environmental Services, Inc. (‘OP-TECH’) and WRS Environmental Services, Inc. (‘WRS’) (Q09-4523; PO# TBA) would provide for planned and emergency response asbestos abatement services at Authority facilities and sub-facilities throughout New York State.  Services include asbestos abatement, transport and disposal services and emergency response services for asbestos removal, repair, encapsulation, enclosure or cleanup, on an ‘as needed’ basis, at Authority facilities in five geographic regions (Northern, Western, Capital, Central and Downstate New York).  The scope of work includes all labor, supervision, material, equipment, vehicles, fuel, highway use taxes, insurance, permits, licenses, other forms of governmental approval and any other services necessary to contain, clean up, remove and transport asbestos-containing materials and asbestos-contaminated materials.  The work will be performed by licensed asbestos contractors, in the most environmentally safe, responsible and timely manner and in compliance with all applicable federal, State and local laws and regulations and Authority specifications, and within a response time to each Authority facility of not more than three hours.  All services must employ the most cost-effective, up-to-date and appropriate technologies that will efficiently mitigate the asbestos hazard.  Bid documents were downloaded electronically from the Authority’s Procurement website by 46 firms, including five that were invited to bid and those that may have responded to a notice in the New York State Contract Reporter; five other firms were also invited to bid but did not respond, and one additional vendor responded to the Request for Quotations without downloading.  Six proposals were received and evaluated.  Based on its ability to respond to an emergency within three hours, with sufficient labor, equipment and resources to perform the work, as well as proof of all requisite licenses, certifications, waste transporter permits and landfill sites, each bidder was determined to be technically qualified and able to perform such work.  Each bidder’s cost proposal, which was based on a predetermined formula that weighted each bid item as an estimated percentage of projected use, was then assessed.  The bid items for each bidder were tabulated and a weighted average bid number was generated.  The lowest weighted average bid was determined to be the lowest-priced evaluated bidder.  Based on the foregoing, staff recommends award of contracts to four firms: B&N&K (for the Downstate region), JBH (for the Capital/Central region), OP-TECH (for all regions) and WRS (for the Northern and Western regions), the lowest-priced evaluated bidders in each region, which are technically qualified to perform such services and meet the bid requirements.  The contracts would become effective on or about July 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $1 million.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

“The five contracts with Environmental Products & Services of Vermont (‘EP&S of VT’), Miller Environmental Group (‘Miller’), National Vacuum Corp. (‘National Vacuum’), OP-TECH Environmental Services (‘OP-TECH’) and WRS Environmental Services, Inc. (‘WRS’) (Q09-4519; PO# TBA) would provide for emergency oil spill response, clean-up and disposal services for the Authority’s electric generating stations, substations, transmission facilities and maintenance and support facilities throughout the State.  Emergency response services include containment, cleanup and recovery of substances such as No. 2 and No. 6 fuel oil, kerosene, lubricating oils, hydraulic fluids and dielectric fluids.  Disposal services include the removal of spilled oil, contaminated environmental media, absorbents and debris from the Authority’s facilities and the subsequent transportation of such oily waste to Authority-approved disposal facilities.  All clean-up, transport and waste management services will be provided in the most environmentally safe, responsible and timely manner, in compliance with all federal, State and local laws, regulations and permit requirements.  All services must employ the most cost-effective, up-to-date and appropriate technologies that will efficiently recover free product and clean up contaminated materials in a manner that minimizes waste generation.  Bid documents were downloaded electronically from the Authority’s Procurement website by 34 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Six proposals were received and evaluated; one proposal did not meet the bid requirements and was not evaluated further.  The evaluation criteria included:  proposal completeness, response time to the Authority facility, amount and type of equipment at the contractor’s staging facility, U. S. Coast Guard Oil Pollution Act of 1990 certification, indicating level of marine environment response capability and calculated costs for typical land and surface water spill scenarios.  A contractor response time of two hours or less with sufficient resources to contain, control and clean up discharged oil was a primary factor in bidder selection.  A cost associated for response and clean-up was established using contractor-supplied rates for labor and equipment based on a recent spill that required land and water response. The five qualified bidders were ranked based on this cost analysis.  Based on the foregoing, staff recommends award of contracts to five firms, EP&S of VT, Miller, National Vacuum, OP-TECH and WRS, which are qualified to perform such services and meet the bid requirements. The award of multiple contracts will ensure that each facility will be able to obtain sufficient resources to respond to an oil spill within two hours of notification in a timely and cost-effective manner.  The contracts would become effective on or about July 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $3.75 million.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

“The three contracts with Rotator Staffing Services, Inc. (‘Rotator’), L. J. Gonzer Associates (‘Gonzer’) and Equa-Tech Services, LLC (‘Equa-Tech’) (Q09-4484; PO# TBA) would provide for the services of temporary engineering personnel to support the Authority’s facilities, as needed.  Services may include engineers, technicians and support personnel in the following disciplines: electrical, mechanical, structural/civil, licensing, environmental, facility (HVAC, plumbing), fire protection, chemical, construction and construction management, cost and scheduling, instrumentation and control, estimating, quality assurance/quality control and code compliance; as well as procurement professionals, engineering aides and clerical aides.  Tasks may include, but are not limited to: performing engineering calculations; system design; preparation of engineering sketches and drawings; preparation of procedures, schedules, purchasing specifications; review of design drawings; construction supervision; field engineering and procurement.  Such personnel will also be used to support the Authority during outages, as well as non-outage maintenance and construction activities.  There are approximately 12-15 such temporary engineering personnel on assignment at any given time, working under the Authority’s direction and supervision, on several long-term capital projects.  These include the Life Extension and Modernization and upgrade programs for the St. Lawrence/FDR, Niagara and Blenheim-Gilboa Projects, as well as the 500 MW Combined Cycle Plant.  In addition, some personnel have been retained on a temporary basis to support the Project Management and Environment, Health and Safety Divisions at the White Plains Office.  Since the existing contracts for such services are expiring and, based on current and anticipated staffing needs, as well as the ongoing need to continue services to support the aforementioned efforts, services were rebid.  Bid documents were downloaded electronically from the Authority’s Procurement website by 98 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Thirteen proposals were received and evaluated.  Based on their mark-up rates for existing and new personnel, staff recommends the award of contracts to three firms: Rotator, Gonzer and Equa-Tech, the lowest-priced bidders, which are qualified to provide such services and meet the bid requirements; additionally, two of these firms have provided satisfactory services (personnel) under existing contracts.  It should be noted that two of these firms have also agreed to hold their mark-up rates firm for the entire contract term; the third firm will only modify those components of its mark-up that may be statutorily adjusted on an annual basis and will pass through those percentage increases as may be required.  These mark-up rates (which include federal and State unemployment taxes, FICA, workers’ compensation insurance, overhead and fee) are among the lowest in the industry, at less than 20% for existing contractor personnel and 19.95-23% for new personnel.  The new contracts would become effective on July 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $11 million.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.


 

Disposal-related Awards:

Enterprise Shared Services

Fleet Operations

“The two contracts with Auctions International, Inc. and J. J. Kane Auctioneers (‘J. J. Kane’) (C09-032009BHS) would provide for auction services for surplus Authority vehicles, equipment and other materials, on an ‘as needed’ basis.  To this end, bid documents were downloaded electronically from the Authority’s Procurement website by 14 firms, including three that were invited to bid and those that may have responded to a notice in the New York State Contract Reporter; five other firms were also invited to bid but did not respond.  Three proposals were received and evaluated.  Based on the information in its proposal, one of the bidders specializes in real estate foreclosures, business liquidations and bankruptcy auctions.  It is unlikely that this firm would be able to attract a large or high-caliber pool of potential buyers for surplus electric utility vehicles and equipment; furthermore, the firm’s fee structure was higher by comparison.  A second bidder, Auctions International, operates exclusively via the internet to conduct online auctions and has no physical auction facility; Authority staff is of the opinion that the best auction results for vehicles and large equipment are achieved when bidders are able to inspect the equipment on site (not ‘virtually’ via photographs).  Furthermore, the costs associated with the additional efforts required on the part of the Authority, as well as the setup fee per vehicle, would more than offset the savings realized from no commission fee. As an established, well-known nationwide auctioneer and a leader in utility industry absolute public auction sales, the third bidder, J. J. Kane, offers turnkey services with a full-time presence and more value to the Authority.  The firm’s expertise in utility industry auctions, as well as its contracts with several large investor-owned utilities and its commitment to thorough advertising, attracts and ensures participation by a greater number and higher-caliber of prospective buyers that offer the best prices. Services also include preparing fair market value estimates prior to any auctions, in compliance with the Public Authorities Accountability Act and the Authority’s Guidelines and Procedures for the Disposal of Personal Property.  J. J. Kane conducts five auctions per year in New York State (three in Rome and two on Long Island); its yard in Rome is only 13 miles from the Authority’s facility in Marcy, keeping transportation fees to a minimum.  Additionally, the Buyer’s Premium (an additional fee equal to 10% of the highest quoted price to be paid to the auctioneer by the prospective buyer of each auctioned item) is reasonable, as is the 3% commission fee to be charged to the Authority.  Based on the foregoing, staff recommends award of a contract to J. J. Kane, the most qualified bidder, which meets the bid requirements and is best-suited to meet the Authority’s needs.  Staff expects that the Authority will achieve the greatest return for its surplus vehicles, equipment and other materials with J. J. Kane, which has provided satisfactory service to the Authority during the past year and has a proven track record with recent successes in disposing of Authority vehicles and equipment totaling more than $1.2 million.  Staff also recommends the award of a second contract to Auctions International to augment individual vehicle disposals through online auctions, as needed, or for comparison purposes.  The contracts would become effective on July 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  These are expected to be ‘no cost’ income-generating contracts; therefore, no funding is requested.

Contract Extensions:

Enterprise Shared Services

Information Technology

“In 2004, the Authority implemented an Energy Trading Portal (‘Portal’), providing a single integrated gateway of information for traders, business analysts and executives in order to meet the evolving business needs of its Energy Resource Management group.  At their meeting of June 27, 2006, the Trustees approved the award of a three-year contract, which was competitively bid, to Perficient Inc. (4600001671) and funding in the amount of $800,000, to provide for consulting services to enhance the Authority’s Portal application.  Services include, but are not limited to, designing, developing and implementing technical improvements and functional enhancements to the TIBCO integration software (the major Portal component, which extracts data from several internal Authority systems and external sources, and loads such data into one integrated database), as well as providing ‘best practice’ expertise and guidance to the Authority, as needed.  Frequent modifications to the integration application are required to meet emergent business needs and requirements for new data or data source changes.  In order to maintain system reliability, it is critical that the application be properly maintained and monitored.  A two-year extension is therefore requested to provide for the continuation of the strong technical support and expertise provided by Perficient staff, which is integral to implementing new requirements, solving any production issues that may arise and maintaining system reliability.  Such expertise would also be a valuable asset with respect to testing and verifying data during the Authority’s planned transition to a newer, more cost-effective integration software/system, currently projected to be implemented by mid-2011.  The current ‘Target Value’ is $800,000, of which $788,054 has been released to date.  Staff anticipates that an additional $450,000 may be required to provide such services, as needed, for the extended term.  The Trustees are requested to approve the extension of the subject contract through July 23, 2011 and to approve the additional funding requested.

Power Supply

SENY Plants

“At their meeting of December 19, 2006, the Trustees approved the award of a contract to Day & Zimmermann NPS, Inc. (‘D&Z NPS’) (4600001730) for a term of up to four years and funding in the amount of $9 million, to provide for general maintenance support services at the Charles Poletti, 500 MW and Richard M. Flynn Power Plants.  (The Small Clean Power Plants were subsequently included via change order to the contract.)  Services generally consist of providing skilled craft labor to supplement and assist the Authority’s plant employees during periods of routine maintenance, scheduled outages, emergency shutdown or technical inspections, as directed by Authority management at these facilities.  The following categories of work are included: general plant maintenance, plant modifications and corrections and retrofit work.  An additional $1 million was subsequently authorized in accordance with the Authority’s EAPs.  The current ‘Target Value’ is $10 million, of which $8,275,648 has been released to date.  The 500 MW and Poletti plants have been using the subject contract more than originally anticipated and funding has been expended at an accelerated rate.  The 500 MW plant had a forced outage in the second quarter of 2008, requiring additional manpower and overtime during the extended outage.  In addition, D&Z NPS has proven to be the low-cost provider for manufacture and installation of permanent work platforms at the 500 MW plant.  The Poletti plant has also increased its use of this contract by subcontracting for the services of four full-time equivalent employees, due to the attrition of permanent Authority staff.  Such additional service requirements are expected to be used until the Poletti plant closes (currently projected for the first quarter of 2010).  Based on the foregoing, staff has concluded that re-bidding these services would not be feasible.  Therefore, it is anticipated that an additional $3 million will be required for the duration of the originally approved term (through December 31, 2010).  It should be noted that the D&Z NPS rates for workers’ compensation, liability insurance percentages and overhead and fee percentages will remain firm for the duration of the contract; the only increases will be in the actual craft labor rates as determined by increases in the New York State Prevailing Wage Rates and applicable collective bargaining agreements.  The Trustees are requested to approve the additional funding requested, increasing the compensation ceiling to $13 million.

FISCAL INFORMATION

“Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2009 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  Payment will be made from the Operating Fund.

“Funds required to support contract services for capital projects have been included as part of the approved capital expenditures for those projects and will be disbursed from the Capital Fund in accordance with the project’s Capital Expenditure Authorization Request.  Payment for the contracts in support of Energy Services Programs will be made from the Energy Conservation Effectuation and Construction Fund.  All costs, including Authority overheads and the cost of advancing funds, will be recovered by the Authority consistent with other Energy Services and Technology Programs.

RECOMMENDATION

“The Vice President – Project Management, the Vice President – Engineering, the Vice President – Project Development and Management, the Vice President – Environment, Health and Safety, the Vice President – Business Development and Asset Management, the Vice President – Power Resource Planning and Acquisition, the Vice President – Procurement, the Chief Information Officer, the Chief Technology Development Officer, the Director – Corporate Support Services, the Director – Engineering and Design, the Regional Manager – Northern New York, the Regional Manager – Western New York, the Regional Manager – Central New York, the Regional Manager – Southeastern New York, the General Manager – Transmission Maintenance, the Facilities Materials Superintendent and the Director – Fleet Operations recommend that the Trustees approve the award of multiyear procurement contracts to the companies listed in Exhibit ‘2h-A,’ and the extension and/or additional funding of the procurement contracts listed in Exhibit ‘2h-B,’ for the purposes and in the amounts discussed within the item and/or listed in the respective Exhibits.

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Executive Vice President and Chief Engineer – Power Supply, the Senior Vice President – Enterprise Shared Services, the Senior Vice President – Energy Services and Technology, the Senior Vice President – Energy Resource Management, the Senior Vice President – Transmission and I concur in the recommendation.”

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award and funding of the multiyear procurement services contracts set forth in Exhibit “2h-A,” attached hereto, are hereby approved for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the contracts listed in Exhibit “2h-B,” attached hereto, are hereby approved and extended for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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.

 

 

i.                     Procurement (Services) Contracts – Energy Services Implementation Contractor Awards  

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

                “At their meeting of May 20, 2008, the Trustees approved funding in the amount of $750 million to finance energy efficiency and clean energy technology projects for the Authority’s Governmental Customers Energy Services Program (‘GCESP’).  This was in addition to $780 million previously approved for this program.  Subsequent to the Trustees’ authorization of the additional funding, the City of New York (‘City’) significantly increased its participation in the GCESP to help meet Mayor Bloomberg’s plaNYC goals of reducing greenhouse gas emissions by 30% by 2030.  It is anticipated that the City will release $60 million a year in energy efficiency/clean energy technology project monies over the next five years.

                “In order for the Authority to respond to the City’s and other Governmental Customer requests for energy efficiency/clean energy technology work in a timely fashion, the Trustees are requested to approve contracts with the firms of Wendel Energy Services, PB Americas, Applied Energy Management, RCM Technologies and The Fulcrum Group for an initial amount of $300 million in aggregate for implementation contractor services in connection with the GCESP in Southeastern New York.  These funds will be taken from program funds previously approved by the Trustees, so no additional funding is requested at this time.  The terms for these contracts will be up to five years.

                “As provided by the Long-Term Agreements concerning the supply of electricity (‘LTAs’) with the Authority’s Governmental Customers, these funds, along with the cost of advancing these funds, will be recovered from the customers participating in the GCESP.

BACKGROUND

                “Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.

                “In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment contracts in excess of $3 million, as well as personal services contracts in excess of $1 million if low bidder, or $500,000 if sole source or non-low bidder, requires the Trustees’ approval.

                “The Authority’s mission is to provide clean, economical and reliable energy consistent with its commitment to safety, while promoting energy efficiency and innovation for the benefit of its customers and all New Yorkers.  In that regard, since the late 1980s, the Authority has offered energy efficiency programs Statewide.  These programs have been very successful and, to date, the Authority has achieved nearly $115 million in customer savings.  Of these savings, more than $77 million is attributable to the Authority’s downstate Governmental Customers.

                “In January 2009, Governor David Paterson announced plans to reduce overall electricity usage and greenhouse gas emissions in New York State.  Due to the anticipated growth in demand due in large part to the energy plans set forth by Governor Paterson (45% X 2015) and Mayor Bloomberg (PlaNYC 2030), the Authority is expanding its energy services program to help the State and the City achieve the aggressive goals outlined in their plans.


 

DISCUSSION

Contractor Selection

                “Since the early 1990s, the Authority has offered ‘in-house’ energy services for its downstate Governmental Customers.  The Authority’s energy services projects provide a turnkey approach to identifying, procuring and implementing energy-savings technologies and clean energy initiatives.  On these projects, the Authority not only serves as the general contractor but also provides its own staff to perform all engineering and construction management required to implement the project.  Due to the expansion of the GCESP, the Authority will need to augment its capabilities by using outside firms (Implementation Contractors, or ‘ICs’).

                “If the Authority uses an IC, the Authority serves as the general contractor for the GCESP.  The services provided by the ICs complement the Authority’s staff resources in implementing the GCESP.  The scope of work consists of the following:

o        On-site screenings of participants’ facilities to determine likely candidates for significant energy and operational cost savings realized by installing energy efficiency measures.

o        On-site surveys, energy audits and technical feasibility studies to identify potential applications for energy efficiency measures approved for the GCESP.

o        Detailed engineering studies and analyses of specific energy efficiency measures or systems.

o        Design of proposed systems and/or measures.

o        Preparation of project proposal documents and solicitation of competitive bids.

o        Construction management and oversight of proposed system and/or measure installation and project closeout (including waste management).

                “In addition, the IC, under Authority staff supervision, is required to work directly with the customer/participant from facility audit to final acceptance of the equipment installed.  The IC, which competitively bids procurement of materials and installation of the recommended energy efficiency/clean energy measures, is required to guarantee the quality of all work.

                “On April 20, 2009, the Authority advertised a Request for Proposals (‘RFP’) in the New York State Contract Reporter soliciting firms interested in providing IC services for the GCESP.  As a result of that advertisement and invitations to bid, 45 firms downloaded the RFP from the Authority’s website.  Twenty firms attended the mandatory bidders’ conference held on May 1, 2009 to explain the proposed scope of work and provide an opportunity for potential bidders to ask questions and seek clarification. 

                “On May 26, 2009, 10 firms submitted bids for the program.  The bids were evaluated based on a number of technical criteria and cost by a team of staff members.  These criteria included the firm’s and its personnel’s relevant technical experience in conducting audits and preparing energy analysis reports, including ASHRAE Level II Audits; fee percentages; general knowledge of lighting and comprehensive energy efficiency projects; office location; quality of materials used; contractor list; safety and OSHA procedures and manuals and hazardous waste and recycling program and procedures.  As a result, staff recommends awarding contracts to the following firms, which offered the best services at the lowest cost:  Wendel Energy Services, PB Americas, Applied Energy Management, RCM Technologies and The Fulcrum Group. The contracts would cover a five-year period starting on July 1, 2009 and ending on June 30, 2014.


 

Wendel Energy Services (‘Wendel’)

                “Headquartered in Amherst, New York, Wendel, the lowest-priced qualified bidder, is a turnkey energy services company that has been working as an IC for the Authority’s Statewide Energy Services Program, specializing in development, design and construction implementation at various governmental facilities throughout New York State.  As a result, Wendel understands the Authority’s specific requirements as they relate to detailed designs, cost estimates, competitive bid preparations, procuring equipment and waste disposal.  

PB Americas (‘PB’)

                “Headquartered in New York City, PB is a full-service company that provides turnkey energy conservation services including development, design, construction and implementation of lighting and comprehensive energy efficiency projects.  PB has extensive knowledge about working in the public sector and has conducted energy services projects for many governmental agencies and institutions, including SENY projects implemented under Authority contracts.

Applied Energy Management (‘AEM’)

                “Headquartered in Lee, Massachusetts, AEM specializes in development, design and construction management of lighting systems, including energy conservation analysis.  AEM has extensive experience working in the public sector and has conducted energy services projects for many governmental agencies and institutions, including SENY projects implemented under Authority contracts.

RCM Technologies (‘RCM’)

                “RCM has provided professional engineering services to commercial and government clients for decades.  With offices in New York City, RCM capitalizes on its diverse engineering and technology platform to offer clients fully integrated and coordinated design, construction management and consulting services for HVAC, electrical and plumbing systems, with strengths in utility coordination. 

The Fulcrum Group (‘Fulcrum’)

                “Fulcrum, which has an office in New York City, has performed commissioning services and energy management for customers throughout New York State.  Fulcrum has experience serving hospitals, universities and school systems.  Fulcrum, which has strengths in detailed audits and developing feasibility studies, has conducted energy services projects for many governmental agencies and institutions, including SENY projects implemented under Authority contracts.

FISCAL INFORMATION

                “No additional funding is requested to implement the Authority’s service offering under the GCESP.  The existing funding will be provided from the proceeds of the Authority’s Commercial Paper Notes and/or the Operating Fund.  In addition, projects may be funded, in part, with monies from the Petroleum Overcharge Restitution (‘POCR’) fund.  All Authority costs, including Authority overheads and the costs of advancing funds, but excluding any grant of POCR funds, will be recovered consistent with other Energy Services and Technology Programs.

RECOMMENDATION

                “The Senior Vice President – Energy Services and Technology and the Vice President – Project Development and Management recommend that $300 million of the previously approved funding for the Governmental Customer Energy Services Program be allocated and that procurement services contracts for Implementation Contractor services be awarded to Wendel Energy Services, PB Americas, Applied Energy Management, RCM Technologies and The Fulcrum Group.

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Enterprise Shared Services, the Vice President – Procurement and I concur in the recommendation.”

 

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

 

RESOLVED, That the Trustees authorize the President and Chief Executive Officer, the Chief Operating Officer, the Senior Vice President – Energy Services and Technology or such officer designated by the President and Chief Executive Officer to execute agreements and other documents between the Authority and Wendel Energy Services (“Wendel”), PB Americas (“PB”), Applied Energy Management (“AEM”), RCM Technologies (“RCM”) and The Fulcrum Group (“Fulcrum”), such agreements having terms and conditions approved by the executing officer, subject to the approval of the form thereof by the Executive Vice President and General Counsel, to facilitate the development of the Governmental Customers Energy Services Program (“GCESP”); and be it further

 

RESOLVED, That in accordance with the Guidelines for Procurement Contracts adopted by the Authority and the Authority’s Expenditure Authorization Procedures, $300 million be allocated from previously approved funding for contracts with Wendel, PB, AEM, RCM and Fulcrum in the amounts and for the purposes listed below:

               

                                Commercial Paper Program/                                                           Termination

Operating Fund/POCR                           Ceiling                                   Date

 

                                Wendel, PB, AEM,                     $300 million (aggregate)*           06/30/2014

                                RCM and Fulcrum

 

AND BE IT FURTHER RESOLVED, That the Authority’s Commercial Paper Notes, Series 1, Series 2 and Series 3, and Operating Fund monies may be used to finance GCESP costs; and be it further

 

RESOLVED, That the Senior Vice President – Energy Services and Technology is authorized to determine which projects in the GCESP will be deemed to be energy services projects within the meaning of Section (7) of Part P of Chapter 84 of the Laws of 2002 (the “Section (7) POCR Legislation”) to be funded in part with Petroleum Overcharge Restitution (“POCR”) Funds allocated pursuant to the Section (7) POCR Legislation; and be it further

 

RESOLVED, That POCR funds allocated to the Authority by the Section (7) POCR Legislation may be used to the extent authorized by such legislation, in such amounts as may be deemed necessary or desirable by the Senior Vice President – Energy Services and Technology to finance projects within the GCESP; and be it further

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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 and General Counsel.


 

j.                     Procurement (Services) Contracts – Energy Services – Program Management and Implementation Services for Small Facilities

                                                                                                                       

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

“The Trustees are requested to approve the award of contracts to the firms of Wendel Energy (‘Wendel’), SourceOne and PRES Energy in the amount of up to $50 million in aggregate for implementing contractor services in connection with the small facility market in the Governmental Customers Energy Services Program (‘GCESP’) and Statewide Energy Services Program (‘Statewide ESP’) throughout the five regions of New York State – Western, Central, North Country, Capital District and Southeastern.  The terms for these contracts would be up to five years.  Funds will be taken from program funds previously approved by the Trustees, so no additional funding is requested at this time.  All costs will be recovered from program participants.

 

BACKGROUND

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment contracts in excess of $3 million, as well as personal services contracts in excess of $1 million if low bidder, or $500,000 if sole source or non-low bidder, requires the Trustees’ approval.

“The Authority’s mission is to provide clean, economical and reliable energy consistent with its commitment to safety, while promoting energy efficiency and innovation for the benefit of its customers and all New Yorkers.  In that regard, since the late 1980s, the Authority has provided energy services programs throughout New York State (‘State’).  These programs have been very successful and, to date, the Authority has achieved nearly $114 million in annual customer savings. 

                “In January 2009, Governor Paterson announced plans to reduce overall electricity usage and greenhouse gas emissions in the State.  Due to anticipated growth in connection with the energy plans set forth by Governor Paterson (45% X 2015) and New York City (‘City’) Mayor Bloomberg (plaNYC 2030), the Authority is implementing an expanded energy efficiency program to help the State and the City achieve the aggressive goals outlined in these plans. 

 

                “Due to the continuing expansion of GCESP and Statewide ESP to address the small facility market, the Authority will need to further augment its capabilities with additional outside firms (Implementation Contractors, or ‘ICs’).  This allows the Authority to expand its capabilities without increasing its number of full-time staff.  Authority staff has developed a streamlined design and implementation process to serve these customers Statewide.  To better serve the small facilities customers (annual electric usage under 500 kW), the design and implementation procedures have been tailored to suit their specific needs.

 

DISCUSSION

                “Since the initial expansion of the Authority’s Energy Services Program last year, and with the unfavorable economic forecast for the State and the City, the Authority’s customers, public facilities and governmental stakeholders are again turning to the Authority to increase their participation in the Authority’s energy efficiency programs in an effort to reduce costs.  In order to meet the requests of Authority customers, it is necessary to award contracts to the three listed firms to meet the needs of the facilities with less-than-average electricity and fuel usage.

                “The smaller facilities, because of either their lower rates or hours of operation, typically see longer paybacks for energy efficiency upgrades.  The ICs that will work in this market will use a tailored design and implementation process to increase the economic benefit of the ESP to these customers.  This will be done by segmenting the small facility market into five regions Statewide and will allow the ICs to address multiple facilities within their designated region and reduce travel and additional overhead expense.

Contractor Selection

                “The services provided by the ICs complement the Authority’s staff resources in implementing the GCESP and Statewide ESP.  The scope of work required of the ICs generally consists of the following:

o        On-site screenings of participants’ facilities to determine likely candidates for significant energy and operational cost savings realized by installing energy efficiency measures.

o        On-site surveys, energy audits and technical feasibility studies to identify potential applications for energy efficiency measures approved for the GCESP and Statewide ESP.

o        Detailed engineering studies and analyses of specific energy efficiency measures or systems.

o        Design of proposed systems and/or measures.

o        Preparation of project proposal documents and solicitation of competitive bids.

o        Construction management and oversight of proposed system and/or measure installation and project closeout (including waste management).

                “In addition, the IC, under Authority staff supervision, is required to work directly with the participant from facility audit to final acceptance of the equipment installed.  The IC, which competitively bids procurement of materials and installation of the recommended energy efficiency measures, is required to warrant the quality of all work.

                “On March 30, 2009, the Authority advertised a Request for Proposals (‘RFP’) in the New York State Contract Reporter soliciting firms interested in providing IC services for the Statewide ESP and GCESP.  As a result of that advertisement and invitations to bid, 49 firms downloaded the RFP from the Authority’s website.  Eleven firms attended the mandatory bidders’ conference held on April 9, 2009 to explain the proposed scope of work and provide an opportunity for potential bidders to ask questions and seek clarification. 

                “On April 21, 2009, five firms submitted bids for the program.  The bids were evaluated based on a number of technical criteria and cost by a team of four staff members.  These criteria included the firm’s relevant technical experience in conducting audits and preparing energy analysis reports; fee percentages; general knowledge of energy efficiency measures; office location; quality of the materials used; contractor list; safety and OSHA procedures and manuals and hazardous waste and recycling program and procedures.  As a result, staff recommends awarding contracts to the following three firms due to their location in the State and their ability to perform work in a cost-effective manner in each region.  The recommendation is based on the firm’s ability to offer the best services at the lowest cost.  The contracts would cover a five-year period, starting in June 2009 and ending in May 2014.  The firms are Source One, PRES Energy and Wendel.  These contractors were the lowest three bidders.

SourceOne

                “Headquartered in New York City and Boston, SourceOne, the best evaluated bidder, is a full-service company that provides turnkey energy conservation services including development, design, construction and implementation of lighting and comprehensive energy efficiency projects.  SourceOne has extensive experience working in the public sector and has conducted energy services projects for many governmental agencies and institutions, including several relevant projects in the City.

PRES Energy

 

“PRES Energy is a New York-based firm with offices in Getzville (a suburb of Buffalo), Rochester and Syracuse.  PRES Energy is a new contractor to the Authority’s ESP programs.  The proposal submitted by PRES Energy demonstrated relevant experience in design and construction management of energy measures as described in the Engineering, Design and Implementation Services description with strengths in complex design-build implementation systems; the ability to identify/evaluate potential energy efficiency projects during the initial ‘discovery’ phase of a project and committed presence with respect to geographically challenging assignments.  PRES Energy has diverse experience in all facility types (schools, municipal water treatment, courthouses, hospitals, universities, government buildings, etc.).  PRES Energy clearly and successfully demonstrated the expertise necessary to satisfy the requirements of Statewide ESP.

 

Wendel

                “Wendel is an architectural and engineering/design build firm with offices in Buffalo, Albany and Long Island.  Wendel has provided design-build services for the Authority in the past on various programs.  Wendel understands the Authority’s processes and has proven experience under the Clean Air for Schools Program (‘CASP’) and Statewide ESP.

FISCAL INFORMATION

                “No additional funding is requested to implement the Authority’s Small Facilities energy services offerings under the GCESP and Statewide ESP.  The existing funding will be provided from the proceeds of the Authority’s Commercial Paper Notes and/or the Operating Fund.  In addition, projects may be funded, in part, with monies from the Petroleum Overcharge Restitution (‘POCR’) fund.  An initial allocation of $10 million will be made to each of the three firms being recommended.  All Authority costs, including Authority overheads and the costs of advancing funds, but excluding any grant of POCR funds, will be recovered consistent with other Energy Services and Technology Programs.

 

RECOMMENDATION

 

“The Senior Vice President – Energy Services and Technology and the Vice President –  Project Development and Management recommend that implementation services contracts for the following regions be awarded as follows:

 

Western New York – Wendel and PRES Energy

Central New York – PRES Energy

North Country – PRES Energy

Capital District – PRES Energy

Southeastern New York – Wendel and SourceOne

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Enterprise Shared Services, the Vice President – Procurement and I concur in the recommendation.”

 

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

 

RESOLVED, That the Trustees authorize the President and Chief Executive Officer, the Chief Operating Officer, the Senior Vice President – Energy Services and Technology or such officer designated by the President and Chief Executive Officer to execute agreements and other documents between the Authority and Wendel, SourceOne and PRES Energy, such agreements having terms and conditions approved by the executing officer, subject to the approval of the form thereof by the Executive Vice President and General Counsel, to facilitate the development of the Governmental Customers Energy Services Program (“GCESP”) and the Statewide Energy Services Program (“Statewide ESP”); and be it further

               

RESOLVED, That in accordance with the Guidelines for Procurement Contracts adopted by the Authority and the Authority’s Expenditure Authorization Procedures, $50 million be allocated from previously approved funding for contracts with Wendel, Source One and PRES Energy in the amounts and for the purposes listed below:

               

                                Commercial Paper Program/                                                           Termination

Operating Fund/POCR                                      Ceiling                          Date

 

Wendel, Source One                 $50 million (aggregate)*              06/30/2014

                                and PRES Energy

 

AND BE IT FURTHER RESOLVED, That the Authority’s Commercial Paper Notes, Series 1, Series 2 and Series 3, and Operating Fund monies may be used to finance GCESP and Statewide ESP costs; and be it further

 

RESOLVED, That the Senior Vice President – Energy Services and Technology is authorized to determine which projects in GCESP and Statewide ESP will be deemed to be energy services projects within the meaning of Section (7) of Part P of Chapter 84 of the Laws of 2002 (the “Section (7) POCR Legislation”) to be funded in part with Petroleum Overcharge Restitution (“POCR”) Funds allocated pursuant to the Section (7) POCR Legislation; and be it further

               

RESOLVED, That POCR funds allocated to the Authority by the Section (7) POCR Legislation may be used to the extent authorized by such legislation, in such amounts as may be deemed necessary or desirable by the Senior Vice President – Energy Services and Technology to finance projects within GCESP and Statewide ESP; and be it further

               

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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 and General Counsel.

                               
3.                   Resolution – Horace Horton

 

                Mr. Edward Welz read a resolution thanking Mr. Horton for all of his years of service to the Authority.  Trustee Elise Cusack said that Mr. Horton had been a great Regional Manager for Western New York and thanked him for his helpfulness.  Trustee Eugene Nicandri said that he had been looking forward to the presentation that Mr. Horton had been scheduled to make at the November 2008 Trustees’ Meeting, and was sorry that it had been pulled from the agenda. 

 

                                WHEREAS, Horace R. Horton has brought a singular combination of intelligence, technical expertise and consummate professionalism to a succession of vital assignments during his distinguished 17-year career at the New York Power Authority; and

                                WHEREAS, that career, which began as a technical trainer at the Niagara Power Project, came full cycle in 2006 with Mr. Horton’s return to Niagara as Regional Manager for Western New York; and          

                                WHEREAS, Mr. Horton’s unflappable manner, quiet confidence, firm integrity and unparalleled work ethic, all complemented by a wry sense of humor, have earned him widespread respect and affection as a leader, mentor and colleague; and

                                WHEREAS, following his initial stint at Niagara and service in several key positions at the Blenheim-Gilboa Pumped Storage Power Project, Mr. Horton vividly demonstrated his versatility and value when, in a span of just over a year, he was named General Manager of Transmission Maintenance at the Clark Energy Center, returned to Blenheim-Gilboa as Regional Manager for Central New York and then moved on to the Regional Manager’s post at Niagara; and

WHEREAS, after having been engaged in preparing for a Life Extension and Modernization Program at Blenheim-Gilboa, he presided over the final phase of a multiyear upgrade at the Niagara Project’s Robert Moses Niagara Power Plant and the start of a life extension program at the project’s Lewiston Pump-Generating Plant; and

WHEREAS, Mr. Horton’s productive three-year tenure at Niagara has also been marked by the receipt of a new 50-year federal license for the project, the implementation of relicensing initiatives that have profoundly benefited nearby communities and his own service as Secretary of the Greater Niagara Manufacturers Association; and

WHEREAS, under Mr. Horton’s leadership, the Niagara project in 2008 not only recorded its best year in meeting performance targets, but also ranked first among all NYPA projects and departments in that respect; and

WHEREAS, building on his experience as a technical instructor in the U. S. Navy, in which he served for 10 years; in the private sector and at NYPA,  Mr. Horton has remained a superb teacher who has facilitated the professional growth of countless Authority engineers and managers; and

WHEREAS, Mr. Horton will soon retire from NYPA, leaving an enduring legacy of accomplishment, dedication and commitment to excellence;

NOW THEREFORE BE IT RESOLVED, That the Trustees of the Power Authority of the State of New York express their thanks and appreciation to Horace Horton for his exemplary service to the Authority and the people of this State and that they convey to him; his wife, Jayne and their family best wishes for a happy, healthy and rewarding future.

June 30, 2009

         

4.                   Resolution – Joseph Carline

 

                Chief Operating Officer Gil Quiniones read a resolution commending Mr. Carline for his 35 years of service to the Authority.  Trustee Cusack said that Mr. Carline had been one of the first Authority staff people that she came into contact with and that his institutional knowledge had been invaluable.  Chairman Townsend echoed Trustee Cusack’s sentiments, saying it was a comfort to know that the Authority had such excellent legal staff.  Trustee Nicandri said that while he hadn’t always been on the same side in negotiations with the Authority, Mr. Carline had always been very professional in those dealings.

 

              WHEREAS, Joseph J. Carline stands among a select group of New York Power Authority attorneys who have played critical and indispensable roles in events and developments that have shaped the Authority’s history; and

              WHEREAS, Mr. Carline has dedicated his entire 35-year professional career to the Authority, with service of nearly 19 years as the Assistant General Counsel responsible for such vital areas as power contracts, rates, transmission and legislation affecting the Authority; and

              WHEREAS, he represented the Authority with skill and distinction in a wide range of significant matters that included, among countless others, the forging of a global settlement with the State’s municipal electric systems and rural cooperatives that has immensely benefited the systems and the Authority; the negotiation of new long-term power supply contracts with the Authority’s Southeastern New York governmental customers and Alcoa and the enactment of landmark economic development legislation that has helped to create or protect hundreds of thousands of jobs for his fellow New Yorkers; and

              WHEREAS, Mr. Carline’s keen knowledge of the law, combined with his practical, common-sense approach, his constructive negotiating demeanor and his unique ability to chart a course to the resolution of seemingly intractable disputes, enabled him to consistently achieve the Authority’s objectives while meeting legal and regulatory requirements and earning the abiding respect of his colleagues and adversaries; and

              WHEREAS, as the holder of an undergraduate degree in engineering, Mr. Carline was at ease with the technology and terminology of the power industry and frequently provided valued tutorials to other attorneys and to his clients within the Authority; and

WHEREAS, he won the confidence and gratitude of those clients through his singular aptitude for distilling and explaining complex issues and his unfailing willingness to work with them to identify and address their priorities and concerns; and

              WHEREAS, Mr. Carline’s considerable professional prowess was complemented by his status as the Authority Law Department’s resident expert on cameras, cars and computers; his own exceptional photographic skills and his distinguished service as a Board member of the Paramount Center for the Arts in Peekskill; and

              WHEREAS, Mr. Carline has retired from the Authority staff after three-and-a-half highly productive decades in which his talents, his dedication and his personal attributes brought enduring benefits to the Authority and the people of New York State;

NOW THEREFORE BE IT RESOLVED, That the Trustees of the Power Authority of the State of New York convey their appreciation and admiration to Joe Carline for his extraordinary record of service and accomplishment and that they wish him; his wife, Maureen and their family a future of health, happiness and continued success.

June 30, 2009

 

5.                   a.             Report of the President and Chief Executive Officer

 

                President Kessel echoed the Trustees’ comments about both Mr. Horton and Mr. Carline, saying that they each had been extraordinary employees and shining examples of the competence of all Authority employees. 

 

                President Kessel said that this was the second Trustees’ Meeting that had been held in Western New York since he started at the Authority in October 2008, the first having been in Buffalo in November, and that he was sure the Trustees would be back here again soon.  He said that in his 8-1/2 months at the Authority, he had made 14 visits to Western New York.  President Kessel said that the Yahoo! project would not have happened without the support of the Trustees and Authority staff and that the Authority would continue to focus on economic development in Western and Northern New York.

 

                President Kessel provided updates on the following:

 

Renewable Energy Projects

 

                Great Lakes Off-Shore Wind:  Staff met with environmental and public interest groups about the project on June 16th.  A total of 16 responses were received to the Request for Expressions of Interest (“RFEI”) and the Request for Proposals (“RFP”) should be issued by the end of the year.   

 

                Solar 100 MW RFP:  The RFEI responses are due the first week in July, the RFP will be issued in the fall and the contract award will be brought to the Trustees for their approval by the end of the year or in the first quarter of 2010.    

 

                University of Buffalo (“UB”) Solar Project:  This 1.1 MW installation will be the largest solar project on any college campus in New York State and one of the largest on any college campus nationwide.  The bulk of the work will be done by Solar Liberty of Williamsville in Erie County.  Approximately 5,000 solar panels will generate 1.3 million kilowatt-hours of energy annually, providing power for 735 student apartments housing nearly 2,000 undergraduate and graduate students.  Ground will be broken this summer and the project could be operational by the spring of 2010.  Solar Liberty’s owner is a graduate of UB’s law school and most of his employees went to UB.  This project will result in Solar Liberty hiring 10-15 more technical workers and 5-10 administrative workers. 

 

Legislation

 

The legislation extending the Power for Jobs and Energy Cost Savings Benefit programs through May 15, 2010 has been passed by the Assembly.  If the Senate doesn’t pass the legislation today, the programs will end at midnight tonight. 

 

Community Outreach

 

Upstate: 

 

·         Press conference with Mayor of Solvay showcasing new hybrid bucket truck and green fleet of four hybrid vehicles.

·         Press conference with Niagara Falls Mayor Dyster kicking off partnership for energy efficiency upgrades to multiple municipal buildings, including Hyde Park Ice Complex.

·         Energy Conservation Seminars with municipal officials from Central New York.

·         New York Association of Public Power meeting and speaking engagement in Glens Falls.

·         Briefing on Great Lakes Off-Shore Wind Project at Niagara Power Vista for environmental groups and public officials.

 

Downstate:

 

·         Long Island Association Energy Committee and Hauppauge Industrial Association Trade Show.

·         Long Island Sustainability Conference.

·         Press conference with New York State Office of General Services, the New York State Energy Research and Development Authority, the Long Island Power Authority and State Senator John Flanagan announcing completion of major energy efficiency upgrades, including a fuel cell, at the Duryea State Office Building in Suffolk County.

·         Brookhaven Labs ribbon cutting.

·         Israeli Prime Minister of Energy meeting.

 

 

b.                    Report of the Chief Operating Officer

 

                Mr. Gil Quiniones presented the following report:

The Power Authority recorded a highly successful operating month in May, with no significant unplanned generation outages and no forced outages on the transmission lines.1  The monthly targets for systemwide net generation and transmission reliability were exceeded.

 

The period since the last Trustees’ meeting has also seen the start of construction on several major energy efficiency projects and continued progress on the Great Lakes and Long Island-New York City offshore wind projects and other renewable energy initiatives.

 

Key Activities of the Past Month

 

POWER SUPPLY

 

Plant Performance

 

                Total net generation in May was 2,348,212 megawatt hours (MWh), compared with the projected 2,210,362 MWh.2,3  This brought year-to-date net generation to 11,297,902 MWh, surpassing the target of 10,777,696 MWh.

 

                The plants were available to produce electricity 93 percent of the time in May, boosting the year-to-date figure to 89.8 percent.

 

                The unforced capacity rating for May was 98 percent, slightly below the target of 98.5 percent.4  For the year, the rating is 97.2 percent, compared with the 98.5-percent target.  Despite the plants’ strong performance, the ratings have been below the target because the New York Independent System Operator (ISO) has called on some NYPA facilities to supply electricity less frequently than had been anticipated, reflecting the economic downturn and relatively mild weather. (The ratings are based on the plants’ availability to provide energy when called into service by the ISO.)5

 

                River flows at the Niagara Power Project were at the historical averages and slightly above normal compared with the long- and short-term forecasts.  At the St. Lawrence-Franklin D. Roosevelt Power Project, flows were slightly above the historical averages and consistent with the forecasts.


 

Life Extension and Modernization Programs

 

                The third of the four units that are being refurbished as part of the Life Extension and Modernization (LEM) program at the Blenheim-Gilboa Pumped Storage Power Project resumed operation on May 30, two weeks ahead of schedule and on time for the summer peak-demand season.6  The unit had been out of service since Sept. 15, 2008.

 

                The final unit will be removed from service this September, with the outage scheduled to continue until completion of the work, and the overall LEM project, in June 2010.  A dewatering of the Blenheim-Gilboa project’s upper reservoir at the start of this fall’s outage will require the shutdown of the other three units for about seven weeks.  The dewatering will permit the replacement of the spherical valve on the unit that will be refurbished.7    

 

The LEM program at the St. Lawrence-FDR project moved ahead, with work on the 12th of the 16 units on schedule for completion in December.  The overall program will continue through 2013.     

 

Transmission Performance

 

                Although no forced transmission outages occurred in May, there were eight scheduled outages for a total of 308 hours. 

 

                The transmission reliability rating for the month was 94.03 percent, exceeding the target of 92.56 percent.  This brought the year-to-date rating to 98.07 percent, above the target of 97.70 percent. 

 

Forced year-to-date transmission outages totaled 23 hours, less than 10 percent of the projection.

 

Siemens – PTI Study

 

A benefit analysis is being performed concerning a conceptual project identified in the study of transmission system improvements that NYPA and Siemens-PTI began last December.  The study showed that from a system planning perspective, public policy objectives of increasing imports from Canada, promoting the development of renewable resources in Northern and Western New York and delivering the energy to Southeastern New York can be achieved.

 

          In addition to conducting the benefit analysis, staff is meeting with other New York State transmission owners, private developers and Canadian energy producers to explore potential opportunities for collaboration.  A steering committee of NYPA senior managers has been established to provide guidance to a task force of Authority staff members who will be working on this project.

 

National Hydropower Association Award

 

                The Authority in May received an Outstanding Stewards of America’s Waters  Award from the National Hydropower Association (NHA) in recognition of its lake sturgeon spawning beds project on the St. Lawrence River.8  NYPA was one of four winners of this year’s awards, which, according to the NHA, recognized “exceptional programs and practices.” 

 

The winning initiative is among 10 Habitat Improvement Projects that NYPA will carry out as part of its relicensing commitments for the St. Lawrence-FDR project.  Five of the projects are complete; three, intended to be completed in phases, are on schedule; and the other two are being designed.

 

                The sturgeon project, completed in late 2007, entailed the installation of one spawning bed downstream and another upstream of the power project’s Iroquois Dam.9 The one-foot-thick beds, consisting of large gravel and each covering about 10,000 square feet, are intended to improve the population of lake sturgeon, listed as a threatened species in New York State.  The project has been extremely successful in its first two years of operation, and four more beds are scheduled for installation in future years.

 

Organizational Review

 

                The organizational review of the Power Supply Business Group was completed in May and Scott Madden, the consultant that conducted the study, presented its findings to the group’s senior leaders.  Actions are pending to implement most of the study’s recommendations.

 

                The review, which began in March, focused on processes, organizational structure and the synergies that resulted from combining the Power Generation, Transmission, and Project Development, Licensing and Compliance units in a single business group.

 


 

ENERGY SERVICES AND TECHNOLOGY

 

Energy Efficiency Investment

 

                The Authority invested $8 million in energy efficiency projects during May, bringing the year-to-date total to $40.2 million.  Overhead cost recovery was 79 percent for the month and stands at 78 percent for the year.

 

Clean-energy Benefits

 

                NYPA provided 22,978 megawatt hours (MWh) of clean-energy benefits in May, with 2,978 MWh from energy efficiency and 20,000 MWh from renewable energy projects and purchases of renewable energy attributes.10 

 

                The year-to-date total through the end of May was 121,400 MWh, including 34,492 MWh from energy efficiency and 86,908 MWh from renewable energy projects and attributes.  We thus remained on course to exceed the annual target of 234,000 MWh.

 

Electric Transportation

 

                Village of Solvay Hybrid Truck—President Kessel participated in a May event marking the delivery of a hybrid-electric bucket truck to the Village of Solvay in Onondaga County as part of the Authority’s Municipal and Rural Cooperative Electric-Drive Vehicle Program. NYPA provided a $55,800 grant to cover the vehicle’s incremental cost (the difference in cost between the hybrid truck and a conventional truck of the same type) and financed the remainder of the purchase.

               

Joining Mr. Kessel at the event in Solvay were Mayor Kathleen Marinelli and Tony Modaferri, a former village mayor who is now executive director of the state Municipal Electric Utilities Association.

 

                The truck’s hybrid-drive system achieves up to 25 percent fuel savings in local haul applications.  Total savings can reach 80 percent with the addition of a battery-powered aerial lift and associated reductions in engine idling.

 

Project Development and Management

 

                World Trade Center Redevelopment Fuel Cells—UTC Power of South Windsor, Conn., successfully completed full-load testing in early June of the first of the three 400-kilowatt fuel cell power plants to be installed in Tower 1 at the redeveloped World Trade Center site.  Testing of the other units is proceeding.  Arrangements are being made for the delivery or storage of these units to accommodate the delays in Tower 1 construction.

 

                Meanwhile, UTC continues to fabricate additional fuel cells for Towers 2, 3 and 4 at the Trade Center site.  The units for Tower 1 will be provided to the Port Authority of New York and New Jersey and those for Towers 2, 3 and 4 to WTC Properties, Inc., the private company responsible for development of those buildings.

 

                Long Island Rail Road Hillside Support Facility Center (Queens, New York City)—A new $438,000 chiller, designed and installed by NYPA staff, began operation on May 29.  The 188-ton chiller is expected to provide annual savings of more than $42,000.

 

City University of New York, New York City College of Technology (Brooklyn)—Construction has started on this $66 million project following execution of a Customer Installation Commitment (CIC).11  The work will include the replacement of the central boiler and chiller plant with new energy efficient equipment, as well as an electrical service upgrade. Savings of $2.7 million a year are anticipated, along with a reduction of more than 4,800 tons in annual carbon dioxide emissions.

 

                New York City Housing Authority Castle Hill Houses Controls and Lighting Upgrade (Bronx)—The replacement of steam traps and lighting fixtures and the installation of wireless energy modules began on June 8 as part of this $17.6 million initiative.12,13  Work has been completed in more than 100 of the 2,025 apartments that will be involved in the project.  Annual savings of $1.4 million are anticipated.  In a separate $11 million project at Castle Hill, discussed in last month’s report, five new efficient boilers are in service and await final inspection and signoff by the city’s Department of Buildings. 

 

United Nations Development Corporation— Following execution of a CIC, the installation of energy efficient lighting is under way at 1 and 2 U.N. Plaza, office buildings owned and operated by the United Nations Development Corporation, a NYPA electricity customer since 1994.14  The total cost is expected to be about $3.8 million, with annual savings of more than $536,000.

 

                State University of New York College at Purchase—This $11.8 million project, with estimated annual savings of $480,000, includes the installation of new chillers, a new emergency generator and 12 ice storage tanks, along with a high-tension service upgrade.15  Demolition of the two previous chillers, pumps, heat exchangers, an air handling unit and piping is complete, as is installation of the emergency generator pad.16 Delivery and installation of the ice storage tanks is scheduled to begin in July.

 

State University of New York at Buffalo—Installation of room-by-room temperature controls at the Ellicott dormitory complex on the University’s Amherst campus has begun.  The $3.9 million project is expected to produce annual savings of more than $284,000 and to reduce yearly carbon dioxide emissions by over 1,700 tons. The CIC has been executed.

 

Solar Energy Projects

 

100-Megawatt Project—The Authority has issued a Request for Expressions of Interest (RFEI) to explore a public-private partnership for the installation of up to 100 megawatts of solar photovoltaic systems at municipal facilities, public and private schools, businesses and state agencies throughout New York.17  Responses to the RFEI are due July 7, and current plans call for issuance of a Request for Proposals to potential developers in the fall.18

 

Governor Paterson announced the initiative, which would be the largest solar photovoltaic project in New York State, on May 15.

 

State University of New York at Buffalo—It now appears that construction of a 1.1- megawatt solar photovoltaic project on the university’s Amherst campus could be completed well in advance of the fall 2010 date cited in last month’s report to the Trustees, with operation possible before the end of this year.  NYPA is supporting the project with a grant of $6 million to $7.5 million and is helping to provide site design, engineering and construction services.

 

 

POWER RESOURCE PLANNING AND ACQUISITION

 

 Offshore Wind Projects

 

                The Trustees will be asked at the June 30 meeting to approve one or more awards in response to a Request for Proposals (RFP) for technical consulting assistance that will cover both the Great Lakes and Long Island – New York City Offshore Wind Projects.  NYPA issued the RFP on April 27 and bids were received on May 19.

 

                Sixteen responses have been received to the Request for Expressions of Interest for the Great Lakes Project, which was issued on Earth Day, April 22.  Responders have included developers, contractors and stakeholders from Western New York, elsewhere in New York State, other states, Ontario and Europe.  Information obtained from their submittals will be used to assess environmental, economic development, technical, financial and socio-economic issues as NYPA updates siting studies and prepares to issue an RFP to prospective developers.

 

                The proposed installation of a minimum of 120 megawatts of offshore wind capacity in Lake Erie and Lake Ontario would be the largest commercial-scale wind-power project in the Great Lakes.

 

Hudson Transmission Partners Project

 

                Staff will brief the Trustees in executive session at the June 30 meeting on elements of the Hudson Transmission Partners project, including the details of potential power-purchase agreements and financing arrangements.  We are carrying out an aggressive outreach effort with the New York City governmental customers to determine the approaches that will best meet their needs and to obtain their concurrence before submitting recommended agreements for Trustee approval.

 

New York City Medium-Term Supplies

 

                A revised draft Request for Proposals and related documents were distributed to the New York City governmental customers following meetings of a NYPA/Customer Working Group.  The RFP is expected to be released shortly, subject to customer approval.

 

  The RFP will seek bids for physical supplies of 300 to 500 megawatts of energy and capacity to serve the governmental customers for up to five years, beginning as soon as 2010.19  The supplies would come from existing power plants in New York State.

 

 

OFFICE OF THE CHIEF OPERATING OFFICER

Corporate Emergency Management Plan

                The first phase of the Corporate Emergency Management Plan study has been completed and the results were presented to Executive Management in mid-June.  The study entailed an assessment of NYPA’s current emergency management plans and risks, as well as recommendations on how to improve emergency management planning at the Authority.  We will continue to work with our consultants—Beck DR—to develop a comprehensive corporate plan and put into place the necessary support documentation and capabilities to ensure readiness.

 

Corporate Sustainability Plan

                An interdepartmental team of NYPA employees has been working over the past four months to develop a Corporate Sustainability Plan. A Chief Sustainability Manager, Jenifer Becker, who joined the Authority staff in February, is overseeing the effort, which includes opportunities for all employees to provide ideas on how to promote sustainability at NYPA.

 

The plan will incorporate the “triple bottom line” approach, a widely used method that encompasses environmental stewardship, social equity and economic prosperity and will help to support our efforts to further Governor Paterson’s environmental and energy goals. 

 

We will share more detailed information on the plan with the Board in the coming months, and one-on-one briefings will be scheduled to obtain suggestions and feedback.

 

 

ANTICIPATED DEVELOPMENTS OVER THE NEXT SIX MONTHS

 

ENERGY SERVICES AND TECHNOLOGY

 

Weatherization

 

                Municipal and Cooperative Customers—The Authority expects to announce its 2009 weatherization program for municipal electric system and rural cooperative residential customers in September.  NYPA will assist customers in financing and installation of attic and crawl space insulation to help reduce the amount of electricity needed for home heating.  The state’s two public power organizations—the Municipal Electric Utilities Association and the New York Association of Public Power—will identify the systems that will participate in the program.  In addition to the insulation services, NYPA will offer participating systems incentives for the installation of solar photovoltaic systems at homes and commercial facilities.

               

Westchester County Housing Authority—We anticipate that the Trustees will be asked at the September meeting to extend the program, previously approved in September 2008, to promote energy efficiency in the Housing Authority’s apartments.  Under the extension, NYPA will provide energy efficiency items to up to 10,000 Housing Authority tenants.  The items will include compact fluorescent bulbs, gaskets for outlet covers and light switches, a thermometer to measure refrigerator and freezer temperatures and a light-emitting-diode night light.20

 

CORPORATE SERVICES AND ADMINISTRATION

 

Compensation Review

 

                A new compensation policy, based on an ongoing review by Human Resources staff, is expected to be recommended to the Trustees in July.

 

GLOSSARY

 

1 Outage—The removal of a power plant or transmission line from service.  Outages may be scheduled for purposes such as anticipated maintenance, or forced by unexpected events.  A significant forced or emergency outage of an individual generating unit is an event of more than 72 hours in duration, entailing a repair cost of more than $75,000 or resulting in more than $50,000 of lost revenues.  A significant forced or emergency outage of an individual transmission line is an event that directly affects the reliability of the state’s transmission network, or the availability of any component of the network, for more than eight hours or has a repair cost of more than $75,000.

 

2 Net generation—The energy generated in a given time period by a power plant or group of plants, less the amount used at the plants themselves (station service) or for pumping in a pumped storage facility.

 

3 Megawatt hours—The amount of electricity needed to light ten thousand l00-watt light bulbs for one hour.  A megawatt is equal to 1,000 kilowatts and can power about 800 homes, based on national averages.

 

4 Unforced capacity rating—All power plants have an installed capacity, or ICAP, meaning the amount of power they could generate under perfect conditions.  Since conditions are not always perfect and plants are shut down, there is a second measurement, called the unforced capacity, or UCAP, which is how much power a plant actually can produce.  For New York State power plants, this measurement is influenced by the amount of time a plant is forced out of service when it is called into service through the New York Independent System Operator to provide energy.

 

5 New York Independent System Operator—A not-for-profit organization that operates New York State’s transmission system, administers the state’s wholesale electricity markets and engages in planning to ensure the future reliability of the statewide power system.

 

6 Life Extension and Modernization programs—Major undertakings in which all the turbines at the St. Lawrence-Franklin D. Roosevelt and Blenheim-Gilboa projects are being replaced and the generators and other components significantly refurbished.  The programs are intended to ensure that the projects operate at maximum efficiency far into the future.

 

7 Spherical valve—A component at the bottom of the powerhouse that receives water that has surged downward from the Blenheim-Gilboa project’s upper reservoir and releases it to spin a turbine-generator to produce electricity.  The project has four spherical valves, one for each of its four pump-generating units.  Each spherical valve is about nine feet in diameter and can be closed within 30 seconds if necessary to shut off water from the upper reservoir.

 

8 National Hydropower Association—The U.S. hydropower industry’s national trade organization, with approximately 140 members, including NYPA.  Its mission is to protect and promote hydropower development through legislative, regulatory, technical and public communication activities.

 

9 Iroquois Dam—A 1,980-foot-long installation that is located about 28 l/2 miles upstream from the power dam at the St. Lawrence-Franklin D. Roosevelt Power Project.  Its function is to regulate the outflow from Lake Ontario.

 

10 Renewable energy attributes—The environmental, social and economic features of renewable energy that may be sold separately from the energy itself; NYPA obtains such attributes on behalf of its New York City government customers.

 

11 Customer Installation Commitment—An agreement by a participating customer authorizing NYPA to proceed with implementation of an energy efficiency project.  If a customer elects to terminate a project after executing the agreement, it will be obligated to reimburse the Authority for all expenses incurred to that point.

 

12 Steam traps—Devices used to discharge condensate and non-condensable gases from a steam system while not permitting the escape of live steam.

 

13 Wireless energy modules—Temperature sensors used to monitor and control energy use.

 

14 United Nations Development Corporation—A not-for-profit public benefit corporation created by the State Legislature in 1968 to provide commercial office space and other facilities for the United Nations community in New York City.

 

15 High-tension service—Electric service at levels above 4,160 volts.  NYPA will install upgraded control and metering devices in a substation that is owned by the college and is connected to the Con Edison system.

 

16 Emergency generator pad—A concrete pad or platform used to support an emergency generator.

 

17 Request for Expressions of Interest—A document issued to prospective vendors and contractors in the early phases of a project to obtain preliminary information on the nature and cost of the services they can provide and to determine their potential interest in bidding on the project.

 

18 Request for Proposals—A formal solicitation of bids for a project; it may or may not be preceded by a Request for Expressions of Interest or a Request for Information.

 

19 Energy and capacity—Energy, in this context, is the amount of electricity that is used by a customer in a given time period; it is usually expressed in megawatt hours or kilowatt hours.  Capacity, as used here, is the share of a power plant’s output that is contractually reserved for a customer; it is usually expressed in megawatts or kilowatts.

 

20 Light emitting diode—A transistor-type device that emits light when voltage is applied.  LEDs are used for such purposes as electric lighting, traffic signals and displays on digital watches.  They offer many advantages over traditional light sources, such as lower energy consumption, longer lifetime and the fact that they are mercury - and lead-free.

 

 

              In response to a question from Trustee Nicandri, Mr. Quiniones said that staff has been meeting with National Grid about its planned transmission system improvement project and that the licensing process would begin sometime early next year.  President Kessel added that staff will keep the Trustees informed about the progress of this work, saying that the Authority may have to go public sooner rather than later due to Federal Energy Regulatory Commission disclosure requirements.  Trustee Curley said that he found Mr. Quiniones’ written report very helpful, particularly the glossary, and Mr. Quiniones said that Vice Chairman Foster had requested that the glossary be added to the report.

 

 

 

c.        Report of the Chief Financial Officer

 

Mr. Joseph Del Sindaco presented highlights of the report to the Trustees.

 


 

6.                   Power for Jobs Extended Benefits, Energy Cost Savings Benefit Awards and Economic Development Power Program Contract Extensions

 

               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “It is expected that the Governor will sign legislation authorizing a one-year extension of the Power for Jobs (‘PFJ’) and the Energy Cost Savings Benefit (‘ECSB’) Programs through June 30, 2010.  In anticipation of the enactment of the extension, it is expected that the Economic Development Power Allocation Board (‘EDPAB’) will recommend to the Authority that the Trustees approve the extension of PFJ to the customers listed in Exhibit ‘6-A’ and ECSB program benefits to the customers listed in Exhibit ‘6-C’ through June 30, 2010.  It is therefore recommended that, subject to enactment of legislation, the Trustees approve such extensions and also, as necessary, extension of contracts for Economic Development Power, High Load Factor and Municipal Distribution Agency power through June 30, 2010, to coincide with the term of extended ECSB benefits to such entities for the customers listed in Exhibit ‘6-B.’  Lastly, the Trustees are requested to extend the expiration dates of the ECSB rates contained in the attached Table I of the applicable tariffs (ST-1, ST-1S, ST-35, ST-50 and ST-50A) to June 30, 2010. 

 

BACKGROUND

 

                “In July 1997, the New York State Legislature and the Governor 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 program, originally intended to last three years, has been extended many times by the Legislature.  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 or a power contract extension.  The Authority was also authorized to voluntarily fund the rebates, if deemed feasible and advisable by the Trustees.

 

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

 

“In 2008, a new law (Chapter 645 of the Laws of 2008) included provisions extending program benefits until June 30, 2009.

 

“In 2009, a new law (Chapter 645 of the Laws of 2009) included provisions extending program benefits until June 30, 2010.

 

Contract Extensions and ESCB Awards

 

“The Authority sells electricity to businesses under several State-authorized economic development power programs.  These power sales are made through the Economic Development Power Program, High Load Factor Manufacturer Program, Municipal Distribution Agency Industrial Power Program and other power sales programs.  The capacity and energy for these sales are provided by market purchases and supported by other Authority sources, as needed.  In some instances, these customers are served directly by the Authority and in other cases the customers receive Authority power through resale arrangements with municipal distribution agencies or investor-owned utilities.  Contracts range in length from 5 to more than 20 years.

 

“Chapter 313 of the Laws of 2005 allowed customers from the above listed economic development programs that would otherwise be exposed to price increases to apply for benefits under the ECSB program.  The legislation also authorized the Authority to sell certain amounts of unallocated hydropower into the wholesale market and use the net earnings from such sales to fund the Energy Cost Savings Benefits.  During periods of lower market prices, the net earnings from the available hydropower have been sufficient to cover the cost of the ECSB program.  In higher-priced markets, however, the Authority has needed to contribute to the ECSB program.  From the inception of the program in November 2005 through February 2009, the net earnings from the unallocated hydropower sold into the wholesale market ($75.2 million) as compared to the costs of the ECSB ($92.9 million) has resulted in a cumulative net cost to the Authority of $17.7 million.

 

Discussion

 

Power for Jobs

 

“Legislation concerning further extension of the PFJ program would allow PFJ recipients to continue with existing elections (i.e., power contracts or rebates) for an additional year through June 30, 2010, with the program benefits administered as in current law.  In addition, the legislation would, in effect, extend for another year the availability of ‘restitution’ for those PFJ power contract customers that incur aggregate higher costs in the program as opposed to taking service from their local utilities under standard tariff provisions.

 

“Under the Economic Development Law, as would be amended by the legislation, EDPAB may prescribe a simplified form and content for an application for such extended PFJ benefits.  An applicant is eligible for extended PFJ 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 PFJ contract, or such other commitments ‘as the board deems reasonable.’  However, in light of the need to avoid disruption in receipt of such benefits, the legislation requires that EDPAB expedite the award of extended PFJ benefits and defer the review of compliance with job commitments until after the applicant has been awarded extended benefits.

 

“In light of this legislative goal that current PFJ program participants receive PFJ extended benefits with minimal disruption, EDPAB recommends that review of compliance matters be deferred until on or before September 29, 2009.  EDPAB recommends that the Authority approve such extensions for all PFJ program participants, subject to receipt of proper documentation requesting such extensions and agreement to the requisite commercial terms. 

 

“It should be noted that, due to the requirements of the host utilities and the late consideration by the Legislature, there could be unavoidable gaps in the continuation of PFJ contract service.  There will likely not be disruption in the provision of PFJ rebates since they are calculated after the fact.

 

“The Trustees are requested to approve contract extensions or the funding of rebates for the companies listed in Exhibit ‘6-A’ through June 30, 2010.  The actual payment of rebates for the companies listed in Exhibit ‘6-A’ will continue to be made as in prior years subject to the financial considerations contained in the Fiscal Information section below.  While the Trustees will not be asked to approve the payment amounts on a monthly basis, the information will be made available to them when requested.  The total cost of the extended rebate program is estimated to be about $27 million at current market prices. From the inception of the rebate program in 2005 through the end of 2008, the Authority incurred $185 million in rebate payments to eligible customers, averaging slightly more than $45 million per year. 

 

Contract Extensions and ECSB Awards

 

“There are 70 High Load Factor, Economic Development Power and Municipal Distribution Agency program customers whose underlying power contracts have terms ending on June 30, 2009, or on other dates before June 30, 2010.  In order for such customers to receive an extension or initial award of ECSB benefits, it is necessary to extend their underlying power contracts.  Pursuant to the Economic Development Law, EDPAB has recommended extension of Economic Development Power contracts, as necessary, so that such businesses will be able to receive ECSB benefits through the end of the legislation’s extension period on June 30, 2010.   These customers are listed on Exhibit ‘6-B.’

       

“ECSB awards serve to moderate rates for businesses served under the High Load Factor, Economic Development Power and Municipal Distribution Agency programs.  Under the proposed new legislation EDPAB is authorized to approve extensions of ECSB awards through June 30, 2010.  The legislation would extend availability of ECSB benefits to entities that are currently receiving such benefits and businesses under these programs whose rates would be subject to increase on or before June 30, 2010.  For entities currently receiving ECSB awards, the legislation provides for continuation of the existing level of benefits for another year while allowing the Authority to continue to use up to 70 MW of unallocated Replacement Power to fund the ECSB awards, provided that any such Replacement Power must be made available for allocation in Western New York during the extension period. 

 

                “As under current law, applications for extensions of ECSB awards are to be in the form and contain such information, exhibits and supporting data as EDPAB may prescribe.  EDPAB is to review the applications received and determine the applications that best meet the criteria established for the ECSB awards and recommend such applications to the Authority with ‘such terms and conditions as it deems appropriate.’  In order to avoid disruption in the delivery of ECSB benefits, the bill directs EDPAB to expedite the award of ECSB and to defer the review of compliance with job commitments until after applicants have been awarded ECSB.       

 

“In light of the requirement of the legislation that current recipients receive extended ECSB benefits with minimal disruption subject to later review of compliance matters, EDPAB has recommended that the Authority approve extensions for all current ECSB program participants, subject to receipt of proper documentation requesting such extensions and agreement on the requisite commercial terms.  In light of the legislative goal that current ECSB program participants receive extended benefits with minimal disruption, EDPAB recommends that review of compliance matters be deferred until on or before September 29, 2009. 

 

                “It is recommended that subject to enactment of legislation and subject to the financial considerations contained in the Fiscal Information section below, the Trustees approve ECSB awards to companies listed in Exhibit ‘6-C,’ through June 30, 2010, the cost of which, at current market prices, is expected to be fully offset by the net receipts from the sale of unallocated Replacement Power and Preservation Power as allowed by the legislation.  However, as noted above, should market prices increase to levels higher than those of today, there may be a net cost to the Authority, which would not be expected to exceed $20 million.  Accordingly, in such an event, staff recommends that the Trustees authorize a withdrawal of up to $20 million from the Operating Fund for the payment of such amounts, 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.

 

                “It should be noted that due to the requirements of the host utilities and the late consideration by the Legislature, there could be unavoidable gaps in the continuation of service to certain power program customers that request ECSB benefits.

 

“Given the financial condition of the Authority, its estimated revenues, operating expenses, debt service and reserve requirements, staff is of the view that it is feasible for the Authority to pay the anticipated added costs associated with the extension of the PFJ and ECSB programs through June 30, 2010 without compromising the Authority’s financial integrity. 

 

FISCAL INFORMATION

 

                “Based on today’s market prices, the ECSB program costs are expected to be fully offset by the net earnings from the unallocated hydropower sold into the wholesale market.  The one-year extension of the PFJ program is estimated to cost the Authority approximately $27 million, a decrease from previous estimates due in large part to lower energy prices.   

 

Recommendation

 

“The Director – Marketing Analysis and Administration and the Executive Vice President and Chief Financial Officer recommend that the Trustees approve the extended Power for Jobs and Energy Cost Savings Benefits and the contract extensions, as set forth above.  Finally, the Trustees are requested to amend the service tariffs’ Energy Cost Savings Benefits expiration date from June 30, 2009 to June 30, 2010.

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

 

Mr. James Yates presented the highlights of staff’s recommendations to the Trustees.  Trustee Curley recused himself from the vote with respect to H. H. Dobbins Inc. 

The following resolution, as submitted by the President and Chief Executive Officer, was adopted by a vote of 4/1 with Trustee Curley recusing himself from the vote as it pertains to H. H. Dobbins Inc.

 

WHEREAS, the Economic Development Power Allocation Board has recommended that the Authority approve contract extensions and electricity savings reimbursements to the Power for Jobs customers listed in Exhibit “6-A”; and

 

WHERAS, the Economic Development Power Allocation Board has recommended that the Authority approve contract extensions to the Economic Development Power program customers listed in Exhibit “6-B”; and

 

WHEREAS, the Economic Development Power Allocation Board has recommended that the Authority approve the award of Energy Cost Savings Benefit Awards to the customers listed in Exhibit “6-C”;

 

NOW THEREFORE BE IT RESOLVED, That subject to enactment of legislation substantially in the form described in the foregoing report of the President and Chief Executive Officer, the Authority implement such Economic Development Power Allocation Board recommendations, and the Authority hereby approves Power for Jobs contract extensions through June 30, 2010 for those companies listed on Exhibit “6-A,” and authorizes the continued payment of  Power for Jobs electricity savings reimbursements to the companies listed in Exhibit “6-A” as submitted to this meeting, subject to the terms set forth in the foregoing report of the President and Chief Executive Officer, and that the Authority finds that such extensions 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 the Authority approves contract extensions for the Economic Development, High Load Factor and Municipal Distribution Agency customers set forth in Exhibit “6-B,” provided the Authority receives proper documentation requesting such extensions and agreement on the requisite commercial terms; and be it further

 

RESOLVED, That subject to enactment of authorizing legislation substantially in the form described in the foregoing report of the President and Chief Executive Officer, the Authority approves contract extensions for the Economic Development, High Load Factor and Municipal Distribution Agency customers set forth in Exhibit “6-B,” provided the Authority receives proper documentation requesting such extensions and agreement on the requisite commercial terms; and be it further

 

RESOLVED, That the customers’ service tariffs be modified accordingly to reflect the extension of the program as shown in Table I; and be it further

 

 

RESOLVED, That based on the recommendation of staff, 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 $45 million for all extensions of such programs after

July 1, 2009 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 Senior Vice President – Corporate Planning and 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; and be it further

 

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


 

7.                   Allocation of 6,000 kW of Hydropower

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve an allocation of available Expansion Power (‘EP’) totaling 1,000 kW to Nestle Purina PetCare Company and an allocation of available Replacement Power (‘RP’) totaling 5,000 kW to Sunworks Solar, LLC.

 

BACKGROUND

 

“Under Section 1005(13) of the Power Authority Act, as amended by Chapter 313 of the Laws of 2005, the Authority may contract to allocate or reallocate directly, or by sale for resale, 250 MW of firm hydroelectric power as Expansion Power (‘EP’) and up to 445 MW of 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 include, but need not be limited to, those set forth in Public Authorities Law Section 1005(13)(a), which sets forth general eligibility requirements.

 

“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 the allocation; the business’ long-term commitment to the region as evidenced by the current and/or planned capital investment in the 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.

 

“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 two companies as set forth in Exhibit ‘7-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.  The Sunworks expansion project is projected to result in the creation of 175 jobs with a related jobs-per-MW ratio of 35.  This is slightly more than the average ratio for allocations since the formation of the Advisory Group.  The project will also require a capital investment of $200 million that will result in a capital investment-per-MW ratio of $40 million.  This is almost four times higher than the average of previous allocations.  The Nestle Purina PetCare expansion is projected to result in the creation of 15 jobs with a related jobs-per-MW ratio of 15.  This project will also require a capital investment of $50 million that will result in a capital investment-per-MW ratio of $50 million.  This is almost five times higher than the average of previous allocations.

 

RECOMMENDATION

 

“The Director – Marketing Analysis and Administration recommends that the Trustees approve the allocation of 6,000 kW of hydropower to the companies listed in Exhibit ‘7-A.’

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

 

                Mr. Yates presented the highlights of staff’s recommendations to the Trustees.  In response to a remark from Vice Chairman Foster that it wasn’t clear what metrics staff used in analyzing this project, Mr. Yates said that it was very attractive from a jobs-per-MW standpoint.  President Kessel said that the Sunworks allocation would be creating 175 green jobs.

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

 

                RESOLVED, That the allocation of 6,000 kW of hydropower, as detailed in Exhibit “7-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 Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 


 

 

 

                                                APPLICATION SUMMARY                                  

                                                         Expansion Power                                            

 

Company: Nestle Purina PetCare Company 

 

Location:                                                  Dunkirk

 

County:                                                     Chautauqua

 

IOU:                                                           National Grid

 

Business Activity:                                  Pet foods and pet care products

 

Project Description:                               The expansion project involves building an additional multistory further processing tower to be built over a portion of the existing facility.  The new production line would allow the company to be first-to-market with an innovative new product.  The new process will be proprietary and require complex construction and sophisticated new technology.  The expansion will require an investment of more than $50 million over a period of three years.

 

Existing Allocation(s):                           3,400 kW Expansion Power

 

Power Request:                                       1,000 kW

 

Power Recommended:                            1,000 kW

 

Job Commitment:     

                   Existing:                                327 jobs

                   New:                                         15 jobs

                                                                           

New Jobs/Power Ratio:                          15 jobs/MW

New Jobs -

Avg. Wage and Benefits:                       $80,000

 

Capital Investment:                                $50 million

 

Capital Investment per MW:                $50 million/MW

 

Summary:                                                 Nestle Purina will develop a new production line requiring an additional multistory further processing tower to be built over a portion of the existing facility.  An allocation of hydropower is needed to improve the chances that this site is chosen for this new and proprietary line.  The company has 60 factories worldwide and is considering a plant in Iowa for this expansion due to lower grain, electricity and energy costs.  Nestle Purina plans to work with Empire State Development for grant assistance and Chautauqua County for a payment-in-lieu-of-taxes agreement. 

                                                  

 

 

 

                                                APPLICATION SUMMARY                                  

                                                        Replacement Power                                        

 

Company:                                                 Sunworks Solar LLC 

 

Location:                                                  Within 30 miles of Niagara Power Project

 

County:                                                     Within 30 miles of Niagara Power Project

 

IOU:                                                           National Grid or New York State Electric and Gas Corporation

 

Business Activity:                                  Solar photovoltaic (“PV”) panel manufacturing

 

Project Description:                               Sunworks will invest in a 200,000-sq.-ft. manufacturing facility to produce high-tech, low-cost, thin-film amorphous/micromorph silicon solar PV panels.  The facility will manufacture fully functional, ready- to-deploy panels to be sold to utilities and other utility-scale solar panel buyers.  The project entails equipment for a manufacturing line, including line automation system, laminator, coater and plasma-enhanced chemical vapor deposition. Sunworks will also build material handling and warehousing areas.

 

Existing Allocation:                               None

 

Power Request:                                       6,150 kW

                                                  

Power Recommended:                            5,000 kW

 

Job Commitment:     

                   Existing:                                   0 jobs

                   New:                                       175 jobs

                                                                           

New Jobs/Power Ratio:                          35 jobs/MW

New Jobs -

Avg. Wage and Benefits:                       $61,000

 

Capital Investment:                                $200 million

 

Capital Investment per MW:                $40 million/MW

 

Summary:                                                 Several North American sites are under consideration for this project.  A hydropower allocation is critical for Sunworks to cost-effectively produce solar panels and compete with the mostly offshore manufacturers that currently supply the market.  An additional two lines of solar manufacturing may be built within three years.  Buffalo Niagara Enterprise is coordinating other New York State incentives.  


 

8.            Procurement (Services) Contract – State University of New York at Buffalo – Solar Photovoltaic System – Award  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award of a contract in the amount of up to $7.5 million to DeCloet Greenhouse Manufacturing Ltd. (‘DeCloet’) for the design, engineering, equipment procurement and installation of a 1.1 MW solar photovoltaic (‘PV’) system at the State University of New York at Buffalo (‘UB’) North Campus.  DeCloet is teaming with Solar Liberty of Williamsville, NY (‘Solar Liberty’) on the project.  As much as $6 million of the contract value, or 80%, is expected to go to Solar Liberty, which will be responsible for the solar panel procurement and providing the Western New York labor for installing the equipment.  The installation will be owned and operated by UB.

 

BACKGROUND

 

                “Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.  In addition, in accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment contracts in excess of $3 million requires the Trustees’ approval.

 

“At their meeting of July 29, 2008, the Trustees authorized a $21 million Renewable Energy Program to help create a pathway to commercialization of emerging renewable energy technologies by providing incentives to promote demonstration and validation of new technologies.  Those objectives are closely aligned with Governor Paterson’s plan to meet 45% of New York State’s electricity needs through improved energy efficiency and clean renewable energy by 2015. 

 

“Much of the focus of the Authority’s Renewable Energy Program is expected to be on Western New York and other upstate areas where there has been strong interest in new clean energy technologies for promoting economic development and developing clean energy jobs.  The diverse initiatives under the Authority’s program will make the most of opportunities to help build a sustainable renewable energy market in the state by demonstrating clean energy technologies in various applications.  In addition to solar energy, the initiatives will include projects involving wind power, anaerobic digester gas and electric transportation.  The project at UB, consisting of approximately 5,000 solar panels, will be one of the cornerstones of the program.

 

“UB is able to provide both the electrical load and the real estate required for a solar energy project of this size.  UB has allocated up to 10 acres for the project and has committed to the installation of a fence around the solar PV system to provide long-term security.  Generating more than 1.3 million kWh of energy annually, the solar PV system will provide power for 735 student apartments housing nearly 2,000 undergraduate and graduate students.

 

 “The Authority has also partnered with UB on major energy efficiency initiatives over the past several years.  The Authority has completed and financed nearly $16 million in energy conservation work (window replacement, boiler replacements and HVAC upgrades) at the university.  The Authority is also nearing completion of a $10 million project to replace chillers and upgrade campus lighting, and is evaluating an additional $14 million in energy conservation projects.

 

“The solar and energy efficiency initiatives are consistent with UB’s commitment to protecting the environment through programs like ‘UB Green,’ which promotes numerous environmentally friendly campus initiatives.  UB’s President, John B. Simpson, was also one of the recent signatories of the American College and University Presidents Climate Commitment, which pledges higher educational institutions to take steps to minimize global warming emissions in pursuit of climate neutrality. 

 


 

DISCUSSION

 

“In March 2009, the Authority issued a Request for Proposals (‘RFP’) for the design, engineering, equipment procurement and installation of a 1.1 MW solar PV system for installation at UB’s North Campus.  Six bids were received on April 21, 2009 from DeCloet, Eaton Corporation, Mercury Solar Systems, O’Connell Electric Company, SunDurance Energy and SunWize Technologies.  Authority staff conducted a review of the six bids in cooperation with the National Renewable Energy Laboratory through its Technical Assistance Program.  Further, Authority staff conducted bid review meetings with the two low bidders, DeCloet and SunDurance Energy.  Both bidders exhibited the necessary experience and abilities for a project of this size.  The proposal from DeCloet, the lowest-priced bidder, satisfied all the requirements contained in the RFP.  DeCloet, an Ontario firm, is partnering with Solar Liberty, a Buffalo-area firm, on the project.  As much as $6 million, or approximately 80% of the contract value of up to $7.5 million, is expected to go to Solar Liberty, which is one of the premier integrators and installers of renewable energy technologies in North America

 

“Subject to the Trustees’ approval, the Authority will enter into a contract with DeCloet to design, engineer, procure and install the solar PV project, as well as to provide maintenance and warranty services for the system for five years.  The warranty provision will allow UB to become familiar with required operation and maintenance practices and ensure a successful and safe demonstration project.

 

“The solar PV project is subject to a site installation agreement between the Authority and UB.  This site agreement will be fully authorized prior to awarding a contract to DeCloet.  The Authority will be responsible for overall project implementation and will pay for project capital costs.  Upon installation, UB will assume ownership of the solar PV system.

 

“The solar PV system, once put into operation, is expected to be the largest solar PV system in New York State, one of the largest systems on a college campus in the U. S. and one of the largest PV systems in the Northeast.

 

FISCAL INFORMATION

 

“Funding for this initiative will be provided primarily from the Operating Fund from the previously approved $21 million Renewable Energy Program.  Any additional required funds would be provided through the existing Statewide Energy Services Program.

RECOMMENDATION

 

“The Senior Vice President – Energy Services and Technology and the Chief Technology Development Officer recommend that the Trustees approve a contract award in the amount of $7.5 million to DeCloet Greenhouse Manufacturing Ltd. for the solar photovoltaic system project at the State University of New York at Buffalo.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Vice President – Procurement and I concur in the recommendation.”

 

                Mr. Richard Hackman presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Nicandri, Mr. Hackman said that solar mapping indicates that the potential for solar energy in Western New York is excellent compared to other areas of the State.  President Kessel added that Western New York is one of the sunniest places in the country and that the panels installed for this project would constantly track the sun.

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority and the Authority’s Expenditure Authorization Procedures, the Trustees hereby authorize the award of a contract in the amount of up to $7.5 million to DeCloet Greenhouse Manufacturing Ltd. for the design, engineering, equipment procurement, installation and financing of a 1.1 MW solar photovoltaic system for the State University of New York at Buffalo’s North Campus.  DeCloet has teamed with Solar Liberty of Williamsville, NY, which will be providing approximately 80% of the contract value of this project, including solar panel procurement and on-site installation labor; and be it further

 

RESOLVED, That Operating Fund monies will be used to fund contract costs in the amount and for the purposes listed below:

                                                                                                                                                 Expenditure Authorization

Operating Funds                                                 (not to exceed)

 

DeCloet contract:  design, engineering,

equipment procurement, installation and

Authority overhead and financing                    $7.5 million

 

AND BE IT FURTHER RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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 and General Counsel.

 

 

       

9.             Procurement (Services) Contracts – Consulting Support Services – Offshore Windpower Initiatives –

                Power Resource Planning and Acquisition – Awards              

               

 

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

“The Trustees are requested to approve the award and funding of five consulting services contracts, listed in Exhibit ‘9-A,’ to support the Authority’s Offshore Wind Initiatives.  It is anticipated that five-year contracts in an aggregate total of $5 million will be awarded.

BACKGROUND

                “Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.  In addition, the Authority’s Expenditure Authorization Procedures (‘EAPs’) require the Trustees’ approval for the award of personal services contracts in excess of $1 million if low bidder, or $500,000 if sole-source or non-low bidder.

“Since the terms of the subject contracts will be more than one year and the requested funding exceed $1 million, the Trustees’ approval is required to execute these contracts.  The contracts include provisions allowing the Authority to terminate the services for the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  Approval is also requested for funds associated with these contracts.  It should be noted that these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.  If, as, and when a need for services is identified, staff will solicit proposals for services from amongst the five consultants, and assign the work to the firm(s) most qualified to perform those particular services.

DISCUSSION

              “On April 22, 2009, the Authority issued a Request for Expressions of Interest (‘RFEI’), as part of its initiative for the potential development of wind power projects in the New York State waters of Lake Erie and/or Lake Ontario (‘Great Lakes Offshore Wind Project’).  The RFEI’s goal was to gather relevant wind project information and feedback from the wind industry and other potential stakeholders for use in a wind development Request for Proposals (‘Wind Park RFP’).  The Authority is also part of the (working title) Long Island – New York Offshore Wind Collaborative (‘Collaborative’), along with the Long Island Power Authority (‘LIPA’), Consolidated Edison Company of New York, Inc. (‘Con Ed’) and other New York City and New York State governmental entities.  The Collaborative is working to develop wind power off the coast of Long Island and is also planning to issue an RFEI shortly.

              “On April 27, 2009, in support of the Great Lakes Offshore Wind Project, the Collaborative and other potential wind power initiatives, the Authority issued an RFP to obtain technical consultants.  A notice of the RFP was published in the New York State Contract Reporter on April 27, 2009.  The RFP requested competitive proposals from qualified consultants with previous successful experience to provide technical consulting expertise, and related assistance with the potential development of offshore windpower projects for the Great Lakes Offshore Wind Project, the Collaborative and any other potential related projects.

                “Consulting assistance was sought in a wide range of disciplines and for support throughout all phases of the Great Lakes Offshore Wind project.  Initial work would focus on reviewing and evaluating the technical responses to the RFEI, as well as updating existing Great Lakes wind studies.  The initial work will also include analyzing factors such as available wind resources, avian impact, visual conditions and lake-bottom areas to determine the best sites for a commercial-scale offshore wind farm in Lake Erie and/or Lake Ontario.  It is anticipated that the results of the studies performed will be published by the Authority for use by developers bidding on a potential Wind Park RFP.  In addition, consultants may be asked to: (i) provide technical assistance to Authority staff in developing the Wind Park RFP; (ii) participate in the technical evaluation of proposals received by the Authority in response to any Wind Park RFPs the Authority may issue and (iii) provide project management support for the development and construction of any projects selected by the Authority as part of a Wind Park RFP.

 

                “The RFP was downloaded by 64 firms or other entities, and 18 bids were received from technically oriented firms with varying degrees of relevant experience in the disciplines requested.  A number of the bids contained team proposals for a lead consulting firm partnering with subcontractors that have specialized expertise.

 

                “An interdepartmental team consisting of staff from Power Resource Planning and Acquisition, Energy Services and Technology, Special Projects and Business Integration and Corporate Communications reviewed the proposals to assess the bidders’ experience and qualifications.  The main selection criteria were previous successful experience with offshore wind projects and the requisite combination of management, staff and scientists with expertise in the required disciplines as specified in the RFP.  The five firms recommended for award (AWS Truewind, LLC.; DNV Global Energy Concepts; ESS Group, Inc.; Germanischer Lloyd Industrial Services and Hatch Acres Corporation) each have relevant experience with major offshore wind projects, as well as a team of professionals with expertise in all or nearly all of the disciplines needed to perform the work delineated in the RFP Scope of Services.  Additional details about the five firms are provided in Exhibit ‘9-A.’

 

                “The Trustees are hereby requested to approve the award of the subject contracts for a five-year term.  Approval is also requested for the total estimated amount expected to be expended through 2014, $5 million in the aggregate, to be released as needed.  Should additional funding be required, approval of such funding will be requested in accordance with the Authority’s EAPs.

 

FISCAL INFORMATION

                “Funds required to support these contracts listed will come from the 2009 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  To the extent that work performed under these contracts is in support of power supply for specific customers, the Authority intends to recover the costs incurred from the affected customers, either through a direct surcharge or as part of their cost-of-service rates.

 

RECOMMENDATION

                “The Vice President – Power Resource Planning and Acquisition, the Vice President – Procurement, the Chief Technology Development Officer and the Chief Sustainability Manager recommend that the Trustees approve the award of procurement contracts to the companies listed in Exhibit ‘9-A’ for the purposes and in the aggregate amount set forth above.

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – Chief Financial Officer, the Senior Vice President – Energy Services and Technology, the Senior Vice President –  Marketing and Economic Development and I concur in the recommendation.”

 

                Mr. Jordan Brandeis presented the highlights of staff’s recommendations to the Trustees.  Trustee Cusack said that in the four years she’s been a Trustee, she’s never seen projects move as quickly as they have in the past several months.  She said that the progress over these months is good to see and that it is clear that staff is working hard to make things happen.

 

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts and Expenditure Authorization Procedures adopted by the Authority, the award and funding of the procurement services contracts set forth in Exhibit “9-A” attached hereto are hereby approved for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating 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.

 

 

 

 

Procurement (Services) Contracts – Consulting Support Services

 Offshore Windpower Initiatives –

Power Resource Planning and Acquisition – Awards

 

 

·         RE: Inquiry No. Q09-4541RH – Consulting Services – Windpower Project – Provide for consulting services to assist the Authority in its initiatives for potential development of offshore windpower projects in New York State

·         For description of contracts,  see "Discussion" in attached Memorandum from the President and Chief Executive Officer                         

·         Contracts to run for 5 years – on or about 7-1-2009 to 6-30-2014         

·         Authorization is requested for $5 million in the aggregate for the contracts listed below

 

Company                                                                                            Location

1. AWS Truewind, LLC                                                                       Albany, NY

2. DNV Global Energy Concepts, Inc.                                                Seattle, WA

3. ESS Group, Inc                                                                               East Providence, RI

4. Germanischer Lloyd Industrial Services                                         Montreal, Quebec

5. Hatch Acres Corporation                                                                Amherst, NY

 

                                                                                                                                                                                            

 


 

10.          Motion to Conduct an Executive Session

 

                “Mr. Chairman, I move that the Authority conduct an executive session pursuant to Section 105(1)(f) of the Public Officers Law of the State of New York to discuss matters leading to the appointment, employment, promotion, discipline, suspension, dismissal or removal of a particular person or corporation.”  Upon motion made and seconded, an Executive Session was held. 


 

11.          Motion to Resume Meeting in Open Session

 

                “Mr. Chairman, I move to resume the meeting in Open Session.”  Upon motion made and seconded, the meeting resumed in Open Session.


 

12.                Next Meeting

 

The next Regular Meeting of the Trustees will be held on Tuesday, July 28, 2009, at 11:00 a.m., at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York, unless otherwise designated by the Chairman with the concurrence of the Trustees.

 

 


 

Closing

                On motion made and seconded, the meeting was adjourned by the Chairman at approximately

3:00 p.m.

 

 

 

Karen Delince

Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                

 

 

 

JUNEMINS.09


 

* A total of $300 million will be allocated to Wendel, PB, AEM, RCM and Fulcrum.  The allocation will be determined as GCESP project work is assigned.  The initial award will be $20 million to each contractor.

* A total of $50 million will be allocated to Wendel, SourceOne and PRES Energy.  The allocation will be determined as GCESP and Statewide ESP project work is assigned.  The initial award will be $10 million to each contractor.