MINUTES OF THE ANNUAL MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

March 23, 2010

 

 

Table of Contents

 

                Subject                                                                                                                                  Page No.               Exhibit

 

1.             Motion to Conduct an Executive Session                                                                                                                      

2.             Motion to Resume Meeting in Open Session                                                                           

3.             Reaffirmation of Contribution of Funds to the State Treasury                                           

            Resolution

4.             Consent Agenda:                                                                                                                          

a.       Minutes of the Regular Meeting held on February 23, 2010                            

b.       Power for Jobs Program – Extended Benefits,  Exhibit - “4b-A”;  “4b-B-1”; “4b-B-2”

        Resolution

 

c.        Village of  Tupper Lake – Increase in Retail Rate  Notice of Adoptions, Exhibit  – “4c-A” – “4c-C”

        Resolution

 

d.       Employees’ Savings and Deferred Compensation Plans –   Contract Award and Investment Fund Lineup, Exhibit  - “4d-A”

        Resolution

   

e.        Lease of Office Space – New York City Office, 501 Seventh Avenue, Exhibit  - “4e-A”; “4e-B”

        Resolution

 

f.        Review and Approval of the 2009 Annual Reports of the Disposal of Real Property and the Acquisition of Real Property, Exhibit  - “4f-A”

        Resolution                                        

 

g.       Review and Approval of the 2009 Annual Report of the Disposal of Personal Property, Exhibit  - “4g-A”

        Resolution

   

h.       2009 Annual Report of Procurement Contracts and Annual  Review of Open Procurement Service Contracts, Exhibit  - “4h-A-1”;“4h-A-2”

        Resolution

  

i.         Procurement (Services) Contracts – Business Units and Facilities – Awards and Extensions, Exhibit  - “4i-A”; “4i-B”

        Resolution

   

j.         Governance Committee Appointment                                                                                   

k.       Annual Review and Approval of Certain Authority Policies, Exhibit  - “4k-A” – “4k-H”
Resolution       

l.         New York Power Authority’s Annual Strategic Plan, Exhibit  -  “4l-A”; “4l-B”
Resolution                                                                                                                             

 

Discussion Agenda:

 

5.             Q&A on Reports from:

a.       President and Chief Executive Officer                                                                 

b.       Special Staff Report – Video Presentations:                                                       

1.       Restoration Efforts

2.       NYPA: Powering Success

 

c.        Chief Operating Officer                                                                                         

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

6.                   Annual Review and Approval of Guidelines for the Investment of Funds and 2009 Annual Report on Investment of Authority Funds, Exhibit  - “6-A”
 Resolution
 

7.                   2009 Financial Reports Pursuant to Section 2800 of the Public Authorities Law and Regulations of the Office of the State Comptroller, Exhibit  - “7-A”; “7-B”
 Resolution                           

 

8.                   Niagara Power Project – Ice Boom Storage Project Phase II – Workshop and Crew Facility Contract Award
Resolution

 

9.                   Niagara Power Project – Robert Moses 30-Ton Gantry Crane Upgrade – Capital Expenditure Authorization and Contract  Award
 Resolution                                 

       

10.                Niagara Power Project – 115 kV Circuit Breaker Upgrade Project – Capital Expenditure Authorization and  Contract Award

                 Resolution 

 

11.                STL-CEC Microwave Communication System Upgrade – Expenditure Authorizations
 Resolution

 

12.                Marcy Energy Control Center – Energy Management System 2010-15 Incremental Upgrades – Capital Expenditure Authorization and Contract Award
 Resolution                                

         

13.                Power for Jobs Program – Contribution to the State Treasury                                       

 Resolution

14.                Next Meeting                                                                                                                            

Closing                                                                                                                                       


 

Minutes of the Annual Meeting of the Power Authority of the State of New York held at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York.

Members of the Board present were:

                                Michael J. Townsend, Chairman

                                Jonathan F. Foster, Vice Chairman

                                D. Patrick Curley, Trustee

                                Eugene L. Nicandri, Trustee – Melbourne, FL

                                 

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Richard M. Kessel                               President and Chief Executive Officer

Gil C. Quiniones                                   Chief Operating Officer

Terryl Brown                                        Executive Vice President and General Counsel

Elizabeth McCarthy                           Executive Vice President and Chief Financial Officer

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

Thomas Antenucci                              Senior Vice President – Power Supply Support Services

Bert J. Cunningham                            Senior Vice President – Corporate Communications

Steve DeCarlo                                      Senior Vice President – Transmission

Angelo Esposito                                   Senior Vice President – Energy Services and Technology

Paul Finnegan                                      Senior Vice President – Public, Governmental and Regulatory Affairs

William Nadeau                                   Senior Vice President – Energy Resource Management

James F. Pasquale                               Senior Vice President – Marketing and Economic Development

Donald A. Russak                               Senior Vice President – Corporate Planning and Finance

Joan Tursi                                             Senior Vice President – Enterprise Shared Services

John L. Canale                                     Vice President – Project Management

Thomas DeJesu                                   Vice President – Public and Governmental Affairs, SENY

Rocco Iannarelli                                  Vice President – Human Resources

John Kahabka                                     Vice President – Environment, Health and Safety

Patricia Leto                                         Vice President – Procurement

Lesly Pardo                                           Vice President – Internal Audit

Christine Pritchard                               Vice President – Media Relations and Corporate Communications

Brian McElroy                                     Treasurer

Dennis Eccleston                                 Chief Information Officer

Francine Evans                                    Chief of Staff – President’s Office

Karen Delince                                      Corporate Secretary

Carol Garcia                                         Executive Director – Human Resources

Joseph Leary                                        Executive Director – Corporate Community Affairs

Thomas Concadoro                            Director – Accounting

Michael Huvane                                  Director – Business Muni and Coop Marketing and Economic

                                                                     Development

Mike Lupo                                            Director – Marketing Analysis and Administration

Mark O’Connor                                   Director – Real Estate

Michael Saltzman                               Director – Media Relations

Andy Cline                                            General Manager – Transmission Maintenance

Alice Conway                                       Manager – Benefits

Al Martin                                               Manager – Energy Management Systems

Reynaldo Salcedo                               Senior Mechanical Engineer II

Janis Archer                                          Strategy Change Specialist

Angela D. Graves                                 Deputy Corporate Secretary

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

 


 

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


1.                     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.  On motion made and seconded, an Executive Session was held.

 

2.                     Motion to Resume Meeting in Open Session

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

3.                     Reaffirmation of Contribution of Funds to the State Treasury

                The President and Chief Executive Officer submitted the following report:

SUMMARY 

“The Trustees are requested to reaffirm that the contribution of $107 million to the New York State’s (‘State’) general fund conditionally approved by the Trustees at their special meeting of February 3, 2009 remains feasible and advisable and to authorize such transfer of funds pursuant to the legislative authorization provided in Chapter 2 of the Laws of 2009.   

 

BACKGROUND

 

“The Authority is requested, from time to time, to make financial contributions and transfers of funds to the State or to otherwise provide financial support for various State programs.  Such financial support has come in the form of direct transfers to the State’s general fund, rebates to customers of the Power for Jobs (‘PFJ’) Program, the provision of below-cost energy to the beneficiaries of the State’s Energy Cost Savings Benefit Program and contributions toward the operation and maintenance expenses for State parks in the vicinity of the Niagara and St. Lawrence projects. 

 

“Any such contribution or transfer of funds must: (1) be authorized by the Legislature; (2) be approved by the Trustees ‘as feasible and advisable’ and (3) satisfy the requirements of the Authority’s General Resolution Authorizing Revenue Obligations dated February 24, 1998, as amended and supplemented (‘Bond Resolution’).  The Bond Resolution’s requirements to withdraw monies ‘free and clear of the lien and pledge created by the [Bond] Resolution’ are as follows:  such withdrawals (a) must be for a ‘lawful corporate purpose as determined by the Authority,’ and (b) the Authority must determine, taking into account among other considerations anticipated future receipt of revenues or other moneys constituting part of the Trust Estate, that the funds to be so withdrawn are not needed for (i) payment of reasonable and necessary operating expenses, (ii) an Operating Fund reserve for working capital, emergency repairs or replacements, major renewals or for retirement from service, decommissioning or disposal of facilities, (iii) payment of, or accumulation of a reserve for payment of, interest and principal on senior debt or (iv) payment of interest and principal on subordinate debt.

 

DISCUSSION

 

“In light of the severe budget problems facing the State, the Governor proposed in his State Fiscal Year (‘SFY’) 2009-10 Executive Budget Plan legislation authorizing the Authority, as deemed ‘feasible and advisable by its trustees,’ to make four payments to the State totaling $544 million during SFY 2008-09 and SFY 2009-10.  Of that amount, $226 million was to be in the form of voluntary contributions, with $119 million to be paid during the remainder of SFY 2008-09 and $107 million to be paid during SFY 2009-10.  The remaining $318 million would be in the form of two temporary asset transfers of certain funds held in reserves that are to be returned to the Authority at a later date as described below.   

 

“Pursuant to the terms of a Memorandum of Understanding dated February 23, 2009 (‘MOU’) between the State, acting by and through the Director of the Budget of the State, and the Authority, the Authority agreed, subject to Trustee approval, to transfer $215 million associated with its Spent Nuclear Fuel Reserves by the end of SFY 2008-09.  The MOU provides for the return of these funds to the Authority, subject to appropriation by the State Legislature, at the earlier of the Authority’s payment obligation related to the transfer and disposal of the spent nuclear fuel or September 30, 2017.  The MOU further provides for the Authority to transfer $103 million during SFY 2009-10 from funds set aside for future construction projects, with such amount to be returned to the Authority, subject to appropriation by the State Legislature, at the earlier of the funds being required for operating, capital or debt service obligations of the Authority or September 30, 2014. 

 

“The Legislature adopted this portion of the Governor’s Executive Budget Plan in Chapter 2 of the Laws of 2009.  Pursuant to this and other prior legislative authorizations, the Authority’s Trustees, at their meeting of January 27, 2009, approved a voluntary contribution in the amount of $119 million and such payment was made by the Authority on January 30, 2009.  At their special meeting of February 3, 2009, the Authority’s Trustees authorized the execution of the MOU and approved the first temporary asset transfer in the amount of $215 million, with such transfer being completed by March 26, 2009.  At this same meeting, the Trustees also conditionally approved the other two payments – the $103 million temporary asset transfer and the $107 million contribution – subject to the Trustees’ reaffirmation that such payments remain feasible and advisable at the time contemplated for the release of the funds.

 

“The Trustees reaffirmed on July 28, 2009 that the second temporary asset transfer of $103 million remained feasible and advisable and in conformance with the requirements of the Authority’s Bond Resolution and such additional funds were transferred to the State at that time.

 

“The final payment amount, a contribution of $107 million, is now before the Trustees for consideration.

 

“Staff reviewed, at the time of each payment, the effects of both the voluntary contribution and the temporary asset transfer portions of the Governor’s Executive Budget Plan against the Authority’s expected cash position and reserve requirements. The primary business criteria staff used to evaluate the potential transfers are: (a) that the Authority maintains an adequate debt service coverage ratio (at or above the median coverage ratio for comparable wholesale public power systems); and (b) that the Authority maintains in total 100 days’ worth of cash on hand to continue to provide for adequate liquidity.   

 

“In 2009, the Authority’s financial and operating results produced net income somewhat below budget while net cash flow was slightly above budget.  During this time, the Authority stayed well within the criteria described above.  The outlook for 2010 shows expected net cash flow and reserve levels to be more than adequate to achieve the above-stated financial goals.  Accordingly, given the current financial condition of the Authority, its estimated future revenues, operating expenses, debt service and reserve requirements, and the other voluntary contributions being considered by the Trustees, staff is of the view that it is feasible for the Authority to make the contribution of $107 million as contemplated during March 2010 without compromising the financial integrity of the Authority. 

 

FISCAL INFORMATION

 

“Staff has determined that sufficient funds are available in the Operating Fund to transfer $107 million to the State’s general fund during March 2010 and that such Authority funds are not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s Bond Resolution.  The transfer of these funds was anticipated and reflected in the 2010 Operating Plan approved by the Trustees at their December 15, 2009 meeting.

RECOMMENDATION

“The Senior Vice President – Corporate Planning and Finance recommends that the Trustees reaffirm that the transfer to the State Treasury of $107 million is feasible and advisable and authorize such transfer during the month of March 2010.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and I concur in this recommendation.”

 

                Ms. Terryl Brown presented the highlights of staff’s recommendations to the Trustees.  Trustee Eugene Nicandri said that in February 2009 he had voted “nay” on the advisability and feasibility of the Authority making continued contributions to the New York State general fund.  He said that he still did not find it advisable for the Authority to do so, but that he understood the dynamics of the present situation.  He lost the vote in February 2009 and at that time the Board of Trustees made a commitment to make the contributions outlined in that agenda item.  He said that now that there are only four Trustees on the Board, a negative vote by him would put the Board of Trustees in the position of reneging on their February 2009 commitment.  Trustee Nicandri said that with great reluctance, and with notice that he would vote with his conscience on any future requests for contributions that come before the Trustees, he was prepared to vote in favor of this resolution.  Chairman Townsend said that Trustee Nicandri was a man of honor and integrity, acknowledging his concession to the Board.  He said that he appreciated Trustee Nicandri’s comments and vote.

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

 

                RESOLVED, That the Trustees determined in the February 2009 Trustees’ meeting, reconfirm that their determination that the payment to the State Treasury of $107 million from the Authority’s Operating Fund is feasible and advisable and authorize such payment to be made during the month of March 2010 pursuant to the authorization in Chapter 2 of the Laws of 2009, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

                RESOLVED, That the amount of $107 million to be used for the contribution to the State Treasury described in the foregoing resolution is not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

 

                RESOLVED, That as a condition to making the payment specified in the foregoing resolutions, on the day of such payment the Senior Vice President – Corporate Planning and Finance or the Treasurer shall certify that such monies are not then needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

 

                RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – Chief Financial Officer, the Senior Vice President – Corporate Planning and Finance, the Vice President – Controller, the Corporate Secretary, the Treasurer and all other officers of the Authority be, and each of them hereby is, authorized and directed, for and in the name and 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 that they, or any of them, may deem necessary or advisable to effectuate the foregoing resolutions, subject to the approval as to the form thereof by the Executive Vice President and General Counsel.

 

4.                   Consent Agenda

                Chairman Michael Townsend said that the Economic Development Power Allocation Board had recommended that the Authority’s Trustees approve item 1b (Power for Jobs Program – Extended Benefits) at their meeting the previous day.  Trustee D. Patrick Curley abstained from the vote on item 1b as it related to Mayer Brothers Apple Products, Inc.

 

a.       Approval of the Minutes

 

                The Minutes of the Regular Meeting held on February 23, 2010 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 payments (rebates) for 31 Power for Jobs (‘PFJ’) customers as listed in ‘4b-A.’  The rebates are calculated for historical periods only.  These customers have been recommended to receive such rebates by the Economic Development Power Allocation Board (‘EDPAB’).  In addition, the Trustees are requested to approve payment for PFJ Restitution to the company listed in Exhibit ‘4b-B-1.’  This company has been evaluated for Restitution and is due a payment.  The Trustees have approved similar extended benefit payments at past Trustee meetings. 

 

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. Chapter 217 of the Laws of 2009 included provisions extending the program benefits until May 15, 2010.

 

“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. 

 

                                “PFJ Restitution was created by Chapter 645 of the Laws of 2006 that extended the PFJ program for six months to June 2007; the law states: ‘for the period beginning January 1, 2006, for recipients who choose to elect a contract extension, and whose unit cost of electricity under the contract extension exceeds the unit cost of electricity of the electric corporation, the Power Authority shall reimburse the recipient for all dollars paid in excess of the unit cost of electricity of the electric corporation.’  Customers eligible to apply for restitution are those who chose to extend their Power for Jobs electric service contract beyond January 1, 2007 but terminated their service on June 30, 2007, June 30, 2008, or on or after June 30, 2009.

 

DISCUSSION

 

“At its meeting on March 22, 2010 EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 31 businesses listed in Exhibit ‘4b-A.’  Collectively, these organizations have agreed to retain more than 31,000 jobs in New York State in exchange for the rebates.  The rebate program will be in effect until May 15, 2010, the program’s sunset.

 

                “The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘4b-A’ in a total amount currently not expected to exceed $5.8 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 ‘4b-A’ in the future for other rebate months.

 

                    “Restitution is based on whether the net amount paid by the customer for Power for Jobs service exceeded the ‘unit cost of electricity’ of the host utility over the measurement period for the same quantity of electricity. Under current law, the measurement period begins January 1, 2006 and ends with the date that the eligible customer ceases to be in the PFJ electricity program.

 

                                “The host utilities, in conjunction with the Authority and the Public Service Commission, determine what the otherwise applicable full-service electric rates of the host utility would have been for service throughout the measurement period, calculate what the customer charges would have been under those rates, compare that total to the total actual charges paid by the customer for PFJ and determine whether the customer had net savings overall in the PFJ program or is due a Restitution payment.

 

                                “Staff has evaluated an additional 13 customers for Restitution.  One (1) customer is eligible for Restitution payment and is presented for approval on Exhibit ‘4b-B-1’.  Twelve customers listed on Exhibit ‘4b-B-2’ had overall PFJ program savings; therefore no payment is required.

 

FISCAL INFORMATION

 

“Funding of rebates for the companies listed in Exhibit ‘4b-A’ is not expected to exceed $5.8 million.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $211 million in rebates.

 

“Funding of restitution payments for the companies listed on Exhibit ‘4b-B-1’ is not expected to exceed $30,000.  Payments will be made from the Operating Fund.  This is the sixth payment request to date, which will bring the total approved for PFJ Restitution payments to $5.75 million.  Additional requests will follow based on subsequent evaluation of other restitution eligible customers.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer and the Senior Vice President – Marketing and Economic Development  recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibit ‘4b-A’ and payment of Power for Jobs Restitution for the customer listed in Exhibit ‘4b-B-1.’

 

                “The Executive Vice President and General Counsel and I concur in the recommendation.”

 

The following resolution, as submitted by the President and Chief Executive Officer, was adopted by a vote of 3-1 with Trustee D. Patrick Curley abstaining as it relates to Mayer Brothers Apple Products, Inc.

 

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 “4b-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 “4b-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 $5.8 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 based on staff’s recommendation, it is hereby authorized that payments be made for Power for Jobs Restitution payments as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $30,000 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, 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, 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.

 

 

 

Exhibit “4b-B-1”

 

 

 

 


 

Exhibit “4b-B-2”

 


 

c.                    Village of Tupper Lake – Increase in Retail Rates –     Notice of Adoption 

                             

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Board of the Village of Tupper Lake (‘Village Board’) has requested the Trustees to approve revisions to the Village of Tupper Lake’s (‘Village’) retail rates for each customer service classification during three consecutive years.  These revisions will result in additional total annual revenues of about $325,000, or 8%, during the first year, $203,000, or 5%, during the second year and $203,000, or 5%, during the third year, for an overall increase in annual revenues of $731,000, or 18%. 

 

BACKGROUND

 

                “The Village Board has requested the proposed rate increase primarily to provide additional revenues to allow for sufficient working funds and to meet forecasted increases in operation and maintenance expenses and additional debt payment requirements.  The current rates have been in effect since December 1992.  

 

                “The Village Board has developed a capital program for its electric system totaling $730,000 in order to provide reliable service to its customers.  Upgrades will be directed primarily at substation distribution equipment and consumer meters, as well as purchasing a digger/derrick truck, meter reader vehicle and SCADA system.  The Village is planning to debt-finance 62% of its capital program by issuing a new bond.

 

                “Under the new rates, an average residential customer who currently pays about 5.1 cents per kWh will pay about 6.0 cents per kWh after the increase; a small commercial class customer that currently pays 5.0 cents per kWh will pay 5.8 cents per kWh; a large commercial customer on service class number 3A will see the rate increased from 4.4 cents per kWh to 5.2 cents per kWh; customers under the large commercial service class number 3B that currently pay 4.9 cents per kWh will pay 5.8 cents per kWh and the large commercial ‘Sunmount’ service class number 4 will increase from 4.2 cents per kWh to 5.0 cents per kWh.

 

DISCUSSION

 

“The proposed rate revisions are based on a cost-of-service study requested by the Village and prepared by Authority staff.  A public hearing was held by the Village of Tupper Lake on December 10, 2009.  No ratepayer comments were received at the public hearing.  The Village Board has requested that the proposed rates be approved. 

 

“Pursuant to the approved procedures, the Senior Vice President – Marketing and Economic Development requested that the Corporate Secretary file a notice for publication in the New York State Register of the Village’s proposed revision in its retail rates.  Such notice was published on January 13, 2010.  No comments concerning the proposed action have been received by the Authority’s Corporate Secretary.   

 

                An expense and revenue summary, comparisons of present and proposed total annual revenues and their corresponding rates by service classification are attached as Exhibits ‘4c-A,’ ‘4c-B’ and ‘4c-C,’ respectively. 

 

RECOMMENDATION

 

                “The Director – Marketing Analysis and Administration recommends that the attached schedule of rates for the Village of Tupper Lake be approved as requested by the Board of the Village of Tupper Lake to take effect beginning with the first full billing period following the date this resolution is adopted.

 

                “It is also recommended that the Trustees authorize the Corporate Secretary to file a notice of adoption with the Secretary of State for publication in the New York State Register and to file such other notice as may be required by statute or regulation.

 

                “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 proposed rates for electric service for the Village of Tupper Lake, as requested by the Village Board, be approved, to take effect with the first full billing period following this date, as recommended 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, authorized to file a notice of adoption with the Secretary of State for publication in the New York State Register and to file any other notice required by statute or regulation; 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.

 

 


 

                                                Exhibit “4c-A”

                                                                                                                                                                                      March 23, 2010

 

Village of Tupper Lake

Expense and Revenue Summary

 

 

                                                 Four Year

                                                                                                            Average               2008           Proposed

 

Purchase Power Expense

(NYPA hydro and incremental)                                                        $2,045,657        $3,064,219     $3,328,230

 

Distribution Expense (Village-owned facilities)                                     608,023             937,123          709,000

 

Depreciation Expense

(on all capital facilities and equipment)                                                  174,194             177,556          250,781

 

General and Administrative Expenses                                                                       

(salaries, insurance, management services and                                        377,467             189,083          283,982

administrative expenses)

 

Total Operating Expenses                                                                    3,205,341          4,367,981       4,571,993

 

Net Rate of Return – (Four-year average - 4.7%,

2008  -  (1.9%), proposed - 7.0%)

(includes debt service on current and planned debt,

cash reserves and contingencies)                                                            159,654            (58,690)           217,726

 

 

Total Cost of Service                                                                         $3,364,995        $4,309,291      $4,789,719

 

Revenue at Present Rates                                                                                                                      4,059,502

           

Deficiency at Current Rates                                                                                                                     730,217

 

Revenue at Proposed Rates                                                                                                                 $4,789,719

 

Increase % at Proposed Rates                                                                                                                     18.0%

 

 

1Based on five years’ worth of historical and projected data.


 

 Exhibit “4c-B”

March 23, 2010

 

 

Village of Tupper Lake

Comparison of Present and Proposed Annual Total Revenues

 

 

 

                                                                                                                                     

            SERVICE                                                                    PRESENT       PROPOSED              %     CLASSIFICATION                                                  REVENUE        REVENUE       INCREASE      

 

 

            Residential – SC1                                                       $ 2,809,489          $ 3,314,856            18.0%

 

 

            Small Commercial – SC2                                                  322,494                380,504            18.0%

 

 

            Large Commercial - SC3A                                               622,618                734,614             18.0% 

 

           

            Large Commercial – SC3B                                                117,152                138,225           18.0%

 

           

            LC Sunmount Development Center – SC4                       124,996               147,480           18.0%

 

           

            Security Lighting –SC5                                                        7,680                    9,061           18.0%

 

 

            Street Lighting – SC6                                                          55,073                  64,979           18.0%

 

 

                                     

            Total                                                                               $4,059,502           $4,789,719           18.0%

 


 

Exhibit “4c-C”

                                                                                                                                                                                March 23, 2010

Village of Tupper Lake

Comparison of Present and Proposed Net Monthly Rates

                                    

                                                                                            

Present ¹                                                                                               Proposed Rates ¹

            Rates                                                                                                                                                                   

                                      Residential SC 1                               Year 1             Year 2             Year 3

 

            $ 2.45                          Customer Charge                               $2.98               $3.12              $3.26

               

                                                                                                                           Non-Winter (May-October)

 

                $.04237                       Energy Charge, per kWh.                   $.03274           $.03425           $.03576

 

                                                                                                                             Winter (November-April)

Energy Charge, per kWh                                                       

 

$.04237                       First 1,500 kWh                                  $.03274            $.03425           $.03576

$.06017                       1,501 – 4,500 kWh                             $.07026            $.07350           $.07675

            $.06017                       Over 4,500 kWh                               $.10274            $.10749           $.11224          

 

 

 

 

                                      Small Commercial SC 2

                       

            $ 2.45                          Customer Charge                               $2.97              $3.11              $3.25

 

                                                                                               

Non-Winter (May-October)

 

$.04143                       Energy Charge, per kWh                   $.04108                         $.04298          $.04488

 

 

 Winter (November-April)

 

$.05243                       Energy Charge, per kWh                    $.05868           $.06139           $.06411

 

 

 

                                      

 

 

   ___________________

¹ Average annual purchased power adjustment (PPA) reflected in present and proposed rates.


 

Exhibit “4c-C”

                                                                                                                                                                                        March 23, 2010

 

Village of Tupper Lake

Comparison of Present and Proposed Net Monthly Rates

 

                                    

                                                                                            

Present ¹                                                                                                Proposed Rates ¹

                Rates                                                                                                                                                                     

                                      Large Commercial SC 3A                Year 1             Year 2             Year 3

 

                $ 3.65                          Demand Charge, per kW                   $4.50               $4.50              $4.50

           

$.03147                       Energy Charge, per kWh                  $.03205             $.03425           $.03646

 

 

 

 

                                      Large Commercial SC 3B                Year 1             Year 2             Year 3

 

                $ 4.00                          Demand Charge, per kW                   $4.75               $4.75              $4.75

           

$.03037                       Energy Charge, per kWh                  $.03459             $.03706           $.03953

 

                                                                                                                                                         

               

                                                                               

                                      LC Sunmount DC  SC 4                   Year 1             Year 2             Year 3

 

                $ 4.75                          Demand Charge, per kW                   $5.50               $5.50              $5.50

           

            $.03357                       Energy Charge, per kWh                  $.03479             $.03689           $.03899

 

 

 

                            

 

 

 

   ___________________

¹ Average annual purchased power adjustment (PPA) reflected in present and proposed rates.

 

 

                               

Exhibit “4c-C”

                                                                                                                                                                                        March 23, 2010

 

Village of Tupper Lake

Comparison of Present and Proposed Net Monthly Rates

 

                                    

 

                                                                                            

Present ¹                                                                                                 Proposed Rates ¹

            Rates                                                                                                                          

                                                Security Lighting SC 5                     Year 1             Year 2             Year 3

                                                                               

(Charge per Lamp, per month)                                                               

 

 

$7.85                           150 High Pressure Sodium                 $8.48               $8.87              $9.26

 

$7.85                           175 Mercury Vapor                             $8.48               $8.87              $9.26                         

$14.05                         250 High Pressure Sodium                 $15.17             $15.88             $16.58

 

$14.05                         400 Mercury Vapor                             $15.17             $15.88             $16.58

 

 

$7.85                           Facility Charge (per lamp)                  $8.48               $8.87              $9.26

 

                                               

 

                                                Street Lighting S.C. 6

                             

$4.65                           Facility Charge (per lamp)                  $6.22               $6.51              $6.79

 

$.02826                       Energy Charge, per kWh                    $.01496         $.01566             $.01635

 

 

                   

                                 

 

 

    __________________

¹ Average annual purchased power adjustment (PPA) reflected in present and proposed rates.

 


 

d.                   Employees’ Savings and Deferred Compensation Plans – Contract Award and Investment Fund Lineup 

                                

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve: (1) the award of a five-year contract to T. Rowe Price to provide record-keeper, investment management and trustee services for the Authority’s two retirement savings plans, the Employees’ Savings (‘401(k)’) Plan and the Deferred Compensation (‘457’) Plan (collectively, ‘the Plans’); and (2) a change in the investment fund lineup of both Plans resulting in the removal of certain funds, a transfer of those funds’ assets to other funds and the addition of new funds.

 

BACKGROUND

               

“In February, 1984, the Trustees approved the implementation of the 401(k) Plan.  The 401(k) Plan is designed to provide salaried employees with a means of saving through a tax-deferred compensation arrangement.  Under the 401(k) Plan, employees may elect to defer receiving a portion of their salary and direct the investment of this deferred compensation in a selection of investments.  At present, more than 95% of eligible salaried employees participate in the 401(k) Plan.  As of December 31, 2009, 401(k) Plan assets totaled approximately $197 million.

 

“In March, 1989, the Trustees approved the implementation of the 457 Plan.  The 457 Plan was established primarily to provide those Authority employees covered by a collective bargaining agreement with a means of saving through a tax-deferred compensation program, although the Plan is also available to salaried employees.  Under the 457 Plan, employees may elect to defer receiving a portion of their salary and direct the investment of this deferred compensation in a selection of investments.  At present, more than 75% of eligible collective bargaining agreement employees and 14% of eligible salaried employees participate in the 457 Plan.  As of December 31, 2009, 457 Plan assets totaled approximately $57 million.

 

“The Authority’s 401(k) Plan and 457 Plan Committees (collectively, ‘the Committees’) administer the respective Plans and may act on behalf of the Trustees in certain circumstances.  The Request for Proposals (‘RFP’) for the Plan administrator and the change to the investment fund menus described below was approved by the Committees.  The 401(k) Plan Committee was chaired in 2009 by Arnold Bellis, Vice President and Controller; other Committee members were Terryl Brown, Alice Conway, Steven DeCarlo and Agnes Harris-Mattos.  Recently, Rocco Iannarelli and Brian McElroy were appointed 401(k) Plan Committee members to replace Arnold Bellis and Agnes Harris-Mattos.  The 457 Plan Committee is chaired by Alice Conway; other Committee members are Paul Grozio, Michele LaPorte, Donald Russak and David Teuscher.

 

DISCUSSION

 

“On June 29, 2009, the Authority solicited proposals for record-keeper, investment management and trustee services (‘Plan Administrator’ services) on behalf of both Plans by notice to a number of firms providing such services and advertisement in the New York State Contract Reporter and State Register.  On or before July 28, 2009, the Authority received responses from the following nine firms:

 

                                                                ICMA – RC

                                                                ING

                                                                Merrill Lynch

                                                                MetLife

                                                                Prudential

                                                                T. Rowe Price

                                                                TIAA – CREF

                                                                Vanguard

                                                                Wells Fargo

 

“The Committees, with the support of the Authority’s financial advisor, PFM Advisors (‘PFM’), conducted the vendor selection.  Based on a scoring and assessment process developed by the Committees and PFM, vendor responses were evaluated and scores applied to each of the following criteria: firm background, compliance and legal capabilities, recordkeeping business, investment menu architecture, participant and plan sponsor services, fees, expenses and terms.  As a result of the evaluation of the vendor responses, and an interview with T. Rowe Price, the Committees determined that T. Rowe Price was the lowest-priced qualified bidder.  T. Rowe Price has also agreed to accommodate the Committees’ proposed investment fund lineup (Exhibit ‘4d-A’).  In addition, T. Rowe Price agreed that its recordkeeping and administration fee will be $80 per participant per year which also includes plan communications and trustee fees.  It is expected that the participant fee will be offset by revenue generated from the investment funds based on a sharing arrangement with T. Rowe Price.  T. Rowe Price has agreed to credit the respective Plan 25 basis points on assets invested in T. Rowe Price funds and varied basis points on assets invested in non-T. Rowe Price funds.    If the revenue generated is not sufficient to offset the participant fees, the difference will be invoiced to the Authority. If the revenue generated is in excess of the participant fees (as expected), the revenue will be returned to the Plan to cover other qualified Plan expenses.

 

Investment Fund Lineup Changes

 

“The Committees periodically review the Plans’ investment fund lineup to ensure it meets participants’ needs and the Plans’ objectives.  At the outset of the Plan Administrator search, the Committees agreed to enhance the investment fund lineup by providing a broader array of investment options using best-in-class funds that create the best value for Plan participants.  At the direction of the Committees, PFM reviewed the universe of mutual funds taking into consideration asset allocation, diversification, risk tolerance, style analysis, performance, benchmarking and cost when developing the fund lineup.  The attached fund lineup (Exhibit ‘4d-A’) incorporates a number of T. Rowe Price funds along with funds offered by non-T. Rowe Price companies.  A mutual fund window, which allows participants to invest a portion of their savings in a wide range of investments beyond those selected by the Committees, will also be available to participants.  In addition, the Committees agreed that the investment fund lineup will be the same for both Plans.  Prior to implementing the new investment fund lineup, participants in both Plans will be provided with the opportunity to participate in employee meetings where investment materials and fund descriptions will be presented and discussed by a representative from T. Rowe Price.  Written information about the new fund lineup will also be available to participants.

 

FISCAL INFORMATION

 

“Based on revenue sharing projections it is estimated that participant fees ($80 per participant per year or approximately $176,000) – will be offset by revenue generated from the sharing arrangement.  If the sharing arrangement does not generate sufficient revenue to offset the participant fees, the difference will be invoiced to the Authority. 

 

RECOMMENDATION

 

“The Vice President – Human Resources recommends that the Trustees approve the award of a five-year contract to T. Rowe Price and the investment fund lineup for the Plans approved by the Employees’ Savings Plan and Deferred Compensation Plan Committees.

 

“The Executive Vice President and General Counsel and I concur in the recommendation.”

 

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

 

RESOLVED, That the agreement for recordkeeping, investment management and trustee services with T. Rowe Price Associates in connection with the 401(k) and 457 Plans is hereby approved for a period of five years commencing April 1, 2010; and the changes to the investment fund lineup as shown in Exhibit “4d-A” are 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.

                                                                                                                                             

 


 

e.        Lease of Office Space – New York City Office – 501 Seventh Avenue

             

               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize the execution of an Amendment of Lease with 501 Seventh Avenue Associates (‘Landlord’) for office space on the 9th floor of 501 Seventh Avenue (‘Building’), New York, New York.  The proposed Amendment of Lease would retain the existing space the Authority currently occupies, consisting of approximately 7,974 rsf as shown on Exhibit ‘4e-A’ attached hereto; terminate the remaining 40,216 rsf under the existing Lease and extend the term of the Lease an additional one year terminating on August 31, 2011.  The proposed Amendment of Lease is anticipated to commence May 1, 2010 at a base rent of $38.50 per square feet and adjustments for taxes and operating expenses over a base year as discussed in Exhibit ‘4e-B’ attached hereto.

 

BACKGROUND

 

                “At their meeting of February 25, 1997, the Trustees approved the execution of a Sublease for approximately 40,122 square feet of office space on the 21st floor of 1633 Broadway with The People of the State of New York (‘State’) as Subtenant.  The State used the premises for a general business office for the New York State Office of Alcoholism and Substance Abuse Services (‘OASAS’).  At a subsequent meeting on December 14, 1999, the Trustees approved the execution of a Lease for approximately 37,500 rsf of office space at 501 Seventh Avenue for a term of 10 years and 5 months terminating on April 30, 2010.  The purpose of the Lease at 501 Seventh Avenue was to serve as the new location for OASAS from 1633 Broadway.  The Authority entered into a lease with 501 Seventh Avenue Associates for the entire 8th and 9th floors and subleased to OASAS approximately 40,216 rsf and the Authority retaining the remaining 7,974 rsf for its use as a New York City office. 

 

DISCUSSION

 

                “As the Sublease with OASAS will terminate as of April 30, 2010, OASAS has been negotiating directly with the Landlord for its own Lease.  As a result of these negotiations, Authority staff was able to negotiate with Landlord the termination of the space subleased to OASAS and retain the existing 7,974 square feet presently occupied by the Authority.  The termination of the OASAS space will result in a cost savings to the Authority of approximately $427,757 in base rent.  The Authority will retain the remaining 7,974 rsf for its use and extend the term for an additional one year.

 

FISCAL INFORMATION

 

“The Authority pays its lease obligations out of the operating fund.  By reducing the area of the premises to 7,974 rsf, the Authority’s base annual rent without electricity, taxes and operating expenses will be $306,999.

 

RECOMMENDATION

 

                “The Director – Real Estate and the Director – Corporate Support Services recommend that the Trustees approve entering into an amendment of lease agreement with 501 Seventh Avenue Associates for commercial office space at 501 Seventh Avenue, New York, New York on terms substantially in accordance with the foregoing and with Exhibit “4e-B” attached hereto.

 

“The Executive Vice President and General Counsel, the Senior Vice President – Enterprise Shared Services and I concur in the recommendation.”

 


 

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

 

RESOLVED, That the President and Chief Executive Officer and the Senior Vice President – Enterprise Shared Services hereby are, authorized to enter into an amendment of lease for office space at 501 Seventh Avenue with 501 Seventh Avenue Associates on substantially the terms set forth in the foregoing report of the President and Chief Executive Officer and Exhibit “4e-B” and subject to the approval of the amendment of lease documents by the Executive Vice President and General Counsel or her designee; and be it further

 

RESOLVED, That the Senior Vice President – Enterprise Shared Services or the Director – Real Estate be, and hereby is, authorized on behalf of the Authority to execute any and all other agreements, papers or instruments that may be deemed necessary or desirable to carry out the foregoing, subject to the approval of the form thereof by the Executive Vice President and General Counsel or her designee; 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 agreements, certificates and other documents to effectuate the foregoing resolution subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

 

 


 

Exhibit “4e-B”

March 23, 2010

 

 

Basic Lease Terms                                                                                                     

 

 

Landlord:                                                        501 Seventh Avenue Associates

 

Tenant:                                                            New York Power Authority

 

Premises:                                                         Approximately 7,974 rsf

 

Term:                                                               Reduced rent anticipated to commencing on May 1, 2010 and terminating on August 31, 2011.

 

Base Rent:                                                       Base rent will be $306,999 annually or $38.50 per square foot.

 

Renewal Option:                                             None.

 

Electric:                                                           Actual electric usage based on sub-metering.

 

Operating Escalation:                                      Pro-rata share of increases in operating expenses over a base year of 2010.

 

Real Estate Tax Escalation:                            Pro-rata share of increases in real estate taxes over a base year of 2010/2011.

 

Tenant Improvement:                                      None.

 

Brokerage Commissions:                                Any brokerage commission associated with this amendment will be paid by Landlord.

 

                                                                       

 


 

f.                    Review  and Approval of the 2009 Annual Reports of the Disposal of Real Property and the Acquisition of Real Property 

 

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to review and approve the 2009 Annual Report of the Disposal of Real Property and the Annual Report of the Acquisition of Real Property, as set forth in Exhibit ‘4f-A’ and attached hereto.  Amendments to the Guidelines and Procedures for the Disposal of Real Property (‘Real Property Disposal Guidelines’) and the Guidelines and Procedures for the Acquisition of Real Property (‘Real Property Acquisition Guidelines’), necessitated by Chapter 506 of the Laws of 2009, which became effective as of March 1, 2010, were reviewed and approved by the Trustees at their meeting of February 23, 2010, in compliance with the Public Authorities Accountability Act (‘PAAA’) of 2005.

 

BACKGROUND

 

“On January 13, 2006, Governor Pataki signed the PAAA into law, codifying the Model Governance Principles established for public authorities in 2004 by the Governor’s Advisory Committee on Authority Governance.  The PAAA was subsequently amended by the Public Authorities Reform Act (Chapter 506 of the Laws of 2009) which Governor Patterson signed into law on December 11, 2009.  Among its provisions, the PAAA established rules for the disposal and acquisition of real property owned by public authorities.  In addition to requiring each authority to draft and annually review and approve guidelines consistent with the legislation, each authority must also prepare an annual report of ‘all real property of such authority having an estimated fair market value in excess of fifteen thousand dollars that the authority acquires or disposes of during such period.  The report shall contain the price received or paid by the authority and the name of the purchaser or seller for all such property sold or bought by the authority during such period.’

 

DISCUSSION

 

“The Real Property Disposal Guidelines and the Real Property Acquisition Guidelines set forth the methodology detailing the Authority’s policy regarding the use, award, monitoring and reporting of contracts for the disposal and acquisition of real property and designate a Contracting Officer responsible for the Authority’s compliance with, and enforcement of, such Guidelines.

 

“The Real Property Disposal Report lists the real property disposal transactions conducted during the reporting period having an estimated fair market value in excess of $15,000, including a description of the property, the purchaser’s name and the price received by the Authority, as required by New York Public Authorities Law (‘PAL’) §2800.  The Real Property Acquisition Report lists the real property acquisition transactions conducted during the reporting period having an estimated fair market value in excess of $15,000, including a description of the property, the seller’s name and the price paid by the Authority, as required by PAL §2800. 

 

“These acquisitions and dispositions were reviewed and approved by the Authority’s Governance Committee at their meeting of February 23, 2010.  The Trustees are now requested to review and approve the Authority’s 2009 Annual Report of the Disposal of Real Property and the Authority’s 2009 Annual Report of the Acquisition of Real Property.

 

“The Real Property Disposal Guidelines and the Real Property Acquisition Guidelines became effective as of March 1, 2010 and were posted on the Authority’s internet website.  On or before the 31st day of March, the Real Property Disposal Guidelines, the Real Property Acquisition Guidelines and the corresponding 2009 Annual Reports, as reviewed and approved by the Trustees, will be filed with the State Comptroller, the Director of the Budget, the Commissioner of General Services, the State Legislature and the Authorities Budget Office.  The 2009 Annual Reports will also be posted on the Authority’s internet website.

 

FISCAL INFORMATION

 

“There will be no financial impact on the Authority.

 

RECOMMENDATION

 

“The Senior Vice President – Enterprise Shared Services and the Director - Real Estate recommend that the Trustees approve the 2009 Annual Report of the Disposal of Real Property and the 2009 Annual Report of the Acquisition of Real Property, as set forth in Exhibit ‘4f-A’ and attached hereto.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – Chief Financial Officer, the Vice President – Internal Audits and I concur in the recommendation.”

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

 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, the Authority hereby reviews and approves the 2009 Annual Report of the Disposal of Real Property and the 2009 Annual Report of the Acquisition of Real Property, as set forth in Exhibit “4f-A” attached hereto; 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.

 

 

 


 

g.                   Review and Approval of the 2009 Annual Report of the Disposal of Personal Property 

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to review and approve the 2009 Annual Report of the Disposal of Personal Property, as set forth in F ‘4g-A’ attached hereto.  Amendments to the Guidelines and Procedures for the Disposal of Personal Property (‘Personal Property Disposal Guidelines’), necessitated by Chapter 506 of the Laws of 2009, which became effective as of March 1, 2010, were reviewed and approved by the Trustees at their meeting of February 23, 2010, in compliance with the Public Authorities Accountability Act (‘PAAA’) of 2005.

 

BACKGROUND

 

“On January 13, 2006, Governor Pataki signed the PAAA into law, codifying the Model Governance Principles established for public authorities in 2004 by the Governor’s Advisory Committee on Authority Governance.  Among its provisions, the PAAA established rules for the disposal of personal property owned by public authorities.  In addition to requiring each authority to draft and annually review and approve guidelines consistent with the legislation, each authority must also prepare an annual report of the disposal of personal property (including the full description, purchaser’s name and price received for all such property disposed of by the authority during such period). 

 

DISCUSSION

 

“The Personal Property Disposal Guidelines set forth the methodology detailing the Authority’s policy regarding the use, award, monitoring and reporting of contracts for the disposal of personal property and designate a Contracting Officer responsible for the Authority’s compliance with, and enforcement of, such Guidelines.

 

“The Personal Property Disposal Report lists the personal property disposal transactions conducted during the reporting period, including a description of the property, the purchaser’s name and the price (amount) received by the Authority, as required by New York Public Authorities Law §2896.

 

“A more comprehensive version of such Report was reviewed and approved by the Authority’s Governance Committee at their meeting of February 23, 2010.  The Trustees are now requested to review and approve the Authority’s 2009 Annual Report of the Disposal of Personal Property, in compliance with the Authority’s Personal Property Disposal Guidelines.

 

“The Personal Property Disposal Guidelines became effective as of March 1, 2010 and were posted on the Authority’s internet website.  On or before March 31, 2010, the Personal Property Disposal Guidelines and the corresponding 2009 Annual Report, as reviewed and approved by the Trustees, will be filed with the State Comptroller, the Director of the Budget, the Commissioner of General Services, the State Legislature and the Authorities Budget Office.  Such Report will also be posted on the Authority’s internet website.

 

FISCAL INFORMATION

 

“There will be no financial impact on the Authority.

 

RECOMMENDATION

 

“The Vice President – Procurement and the Vice President – Internal Audit recommend that the Trustees approve the 2009 Annual Report of the Disposal of Personal Property, as set forth in Exhibit ‘4g-A’ and attached hereto.

 

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

 

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

 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005 and the Authority’s Personal Property Disposal Guidelines, the Authority hereby reviews and approves the 2009 Annual Report for the Disposal of Personal Property, as set forth in Exhibit “4g-A” and attached hereto; 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.


 

h.                   2009 Annual Report of Procurement Contracts and Annual Review of Open Procurement Service Contracts

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve the 2009 Annual Report of Procurement Contracts (‘Annual Report’) (Exhibit ‘4h-A-2’) and to review open service contracts exceeding one year that were active in 2009 as detailed in the Annual Report (Exhibit ‘4h-A-2’).  An Executive Summary is set forth in Exhibit ‘4h-A-1.’

 

BACKGROUND

 

                “Section 2879 of the Public Authorities Law (‘PAL’) governs the administration and award of procurement contracts equal to or greater than $5,000.  Section 2879 of the PAL requires public authorities to adopt comprehensive guidelines detailing their operative policy and instructions concerning the use, awarding, monitoring and reporting of procurement contracts.  The Authority’s Guidelines were adopted by the Trustees at their meeting of October 31, 1989 and were implemented as of January 1, 1990.  The Guidelines have been amended as required and approved annually since that date.  The current Guidelines were approved by the Trustees at their meeting of February 23, 2010.

 

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

 

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

 

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

 

DISCUSSION

 

                “The 2009 Annual Report is attached for the Trustees’ review and approval (Exhibit

‘4h-A-2’).  The Annual Report reflects activity for all procurement contracts equal to or greater than $5,000, as identified by the Authority’s SAP computer system, that were open, closed or awarded in 2009, including contracts awarded in 1990 through 2009 that were completed in 2009 or were extended into 2010 and beyond.  In addition, fossil fuels transactions as reported by the Fuels Planning and Operations group, a part of the Energy Resource Management business unit, and financial-related services as reported by the Corporate Finance group, a part of the Business Services business unit, are included in the Annual Report of Procurement Contracts.  All additional information required by the statute is also included.  The Trustees are requested to approve the attached Annual Report pursuant to Section 2879 of the PAL prior to submittal thereof to the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee and the Assembly Ways and Means Committee.

 


 

RECOMMENDATION

 

                “The Vice President – Procurement recommends that the Trustees approve the 2009 Annual Report of Procurement Contracts and the review of open service contracts as attached hereto in Exhibit ‘4h-A-2.’

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – Chief Financial Officer, the Executive Vice President and Chief Engineer – Power Supply, the Senior Vice President – Enterprise Shared Services 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 Section 2879 of the Public Authorities Law and the Authority’s Procurement Guidelines, the Annual Report of Procurement Contracts, as listed in Exhibit “4h-A-2,” as amended and attached hereto, be, and hereby is, approved; and be it further

 

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

 

RESOLVED, That the Chairman, the 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 – 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 ‘4i-A,’ as well as the continuation and funding of the procurement contracts listed in Exhibit ‘4i-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 $75,000 to $598,000.  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 ‘4i-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 ‘4i-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 (‘ES&T’)

“The contract with Airmatic Compressor Systems, Inc. (‘Airmatic’) (Q10-4702; PO# TBA) would provide for audit services of compressed air systems at various customers’ facilities throughout New York City and Westchester County, as part of the Authority’s Energy Services program.  The purpose of such audits is to identify the energy-saving potentials of the recommended replacement or upgrade to more energy-efficient equipment.  To that end, bid documents were downloaded electronically from the Authority’s Procurement website by 28 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 Airmatic, 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 new contract would become effective on or about April 1, 2010 for an intended term of up to four 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, $400,000.  It should be noted that personnel rates will remain firm for the duration of the contract.  It should also be noted that all costs will be recovered by the Authority.

Enterprise Shared Services

Real Estate

“The contract with Joanne Darcy Crum, LS (‘JD Crum’), a New York State-certified Woman-owned Business Enterprise (Q09-4675; PO# TBA) would provide for routine land surveying support services for the Engineering, Licensing and Real Estate divisions, including capital project construction and hydro project relicensing compliance, and also to perform work associated with ongoing maintenance and management of the Geographic Information System (‘GIS’), under the direction and supervision of Authority staff.  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.  Four proposals were received and evaluated.  Staff recommends award of a contract to JD Crum, the lowest-priced qualified bidder, which meets the bid requirements and has provided satisfactory service under an existing contract for such work.  The new contract would become effective on or about April 1, 2010 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, $598,000.

Power Supply

“The contract with Aubertine and Currier Architects, Engineers & Land Surveyors, PLLC (‘Aubertine & Currier’) (Q09-4683; PO# TBA) would provide for design engineering services for local recreational facilities in the Towns of Louisville, Massena and Waddington and the Village of Waddington, pursuant to Article 415 of the Comprehensive Settlement Agreement in connection with the new Project License for the St. Lawrence/FDR Project issued by the Federal Energy Regulatory Commission (‘FERC’).  Such services include, but are not limited to, reviewing engineering drawings and technical specifications prepared by professional engineers hired by the above-named municipalities for proposed modifications; providing all plan drawings, details and technical specifications of improvements requested by the Authority for proposed modifications; reviewing proposed changes to local recreational facilities by the municipalities or the Authority; maintaining a record of all design changes to submit certified as-built drawings; etc.  To that end, bid documents were downloaded electronically from the Authority’s Procurement website by 117 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 the personnel rates provided, the apparent low bidder did not submit a complete proposal (e.g., did not include billable travel time) and proposed extensive use of subcontractors for which rates and locations were also not provided.  Additionally, the firm’s offices are almost twice as far from the Project area as those of the next lowest bidder, which would also incur additional costs and travel expenses. Staff therefore recommends award of a contract to Aubertine & Currier, the next lowest-priced bidder, which is qualified to perform such services and meets the bid requirements. The contract would become effective on or about April 1, 2010 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, $350,000.

“The Authority is required to operate an eel passage facility at the St. Lawrence/FDR Project (‘Project’) pursuant to Articles 405 and 406 of the new Project License issued by FERC and the associated FERC-approved Effectiveness Monitoring Plan and Passage Criteria. These FERC requirements are:  (1) estimating the efficiency of the facility by counting tagged eels through the use of a Passive Integrated Transducer (‘PIT’) tag monitoring system, with PIT tag monitors placed at strategic locations throughout the facility; (2) measuring and monitoring the water flow at critical points in the eel passage facility through the use of five flowmeters, including unique software flowmeter communication, software interface and critical alarming functions and (3) estimating the number of eels that pass through the facility each year and providing biweekly updates to regulatory agencies (such as the U. S. Fish and Wildlife Service and the New York State Department of Environmental Conservation) through the use of two eel counters, which interface with the eel passage facility computer system.  The three contracts with (1) Biomark, Inc. (Q10-4707; PO# TBA), (2) Deadline Solutions, Inc. (Q10-4706; PO# TBA) and (3) Milieu, inc. (Q10-4705; PO# TBA) would provide for the operation and maintenance of the aforementioned systems, which these firms designed, built and installed for the Authority, respectively. These awards are made on a sole-source basis, since each firm is the original equipment manufacturer/designer of the respective devices/equipment /system and related specialized software and, as such, is uniquely qualified to provide such services. Furthermore, all three firms have provided satisfactory service to the Authority under existing contracts for such work and have demonstrated their ability to get the work done safely, correctly, on schedule and at reasonable cost.  The new contracts would become effective on or about April 1, 2010 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 contracts, $174,000 for Biomark, $139,000 for Deadline Solutions and $75,000 for Milieu.

“The contract with Cemtek Systems Inc. (‘Cemtek’) (P09-108064; PO# TBA) would provide for maintenance services for two Continuous Emissions Monitoring Systems (‘CEMS’) at the 500 MW Combined Cycle Plant, in compliance with New York State Title V Permit requirements.  Bid documents were downloaded electronically from the Authority’s Procurement website by 35 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 Cemtek, 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 new contract would become effective on or about April 1, 2010 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, $217,500.

“The contract with Clarkson University (‘Clarkson’) (Q09-4693; PO# TBA) would provide for the services of Dr. Hung Tao Shen to conduct ice studies in connection with the ice sluice drum gates at the Authority’s Robert Moses Power Dam at the St. Lawrence/FDR Power Project and Ontario Power Generation’s (‘OPG’) adjoining  Robert H. Saunders Powerhouse.  Recent evaluations determined that the ice sluice gates require rehabilitation due to significant corrosion and deterioration.  The Authority also conducted a recent feasibility study comparing rehabilitation versus replacement of the gates with concrete structures and concluded that the latter option would provide a more cost-effective permanent solution.  The ice sluice gate replacement project would require review and approval by the International Joint Commission (‘IJC’) and FERC, as well as by OPG.  This process requires that the proposed ice studies be conducted to determine the viability of replacing the ice sluice drum gates with concrete structures and also to determine if the design of the concrete structures would need to incorporate emergency ice release gates.  Such studies would involve mathematical and numerical hydraulic and ice modeling and comparative sensitivity studies to evaluate the potential impact of the gate replacement option, and would require the technical input of an expert proficient in the unique characteristics and experienced in evaluating and providing an expert opinion regarding the impact of removing the ice sluice gates.  To that end, bid documents were downloaded electronically from the Authority’s Procurement website by 28 firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Procurement staff followed up with vendors that declined to bid; their principal reasons for not bidding included, but were not limited to, the work/project requirements not being in their area of expertise or scope of work, resources were not available or they had downloaded the bid documents for information purposes only.  Staff recommends award of a contract to Clarkson for the services of Dr. Shen, who is eminently qualified to perform such services, possesses unique expertise in river ice engineering and is very familiar with the dynamics of the St. Lawrence River.  Additionally, Dr. Shen’s expertise in ice sluice modeling was effectively used with the IJC and FERC in the successful FERC relicensing of the Niagara Power Project to determine the relationship between the operation of the project and the ice flows.  Since the proposed studies may be subject to a potentially lengthy IJC and FERC approval process, staff recommends that the contract be approved for a five-year term.  The contract would become effective on or about April 1, 2010 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, $250,000. (It is anticipated that OPG will share the cost of these studies.)

“The contract with Milieu, Inc. (‘Milieu’) (Q09-4691; PO# TBA) would provide for the operation, maintenance and monitoring of the eel passage facility at the St. Lawrence/FDR Project (‘Project’) pursuant to Articles 405 and 406 of the new Project License issued by FERC. This competitively bid contract differs from the sole-source contract with Milieu described in the paragraph above, in that the sole-source contract is only for the maintenance and operation of the eel counters, while this contract is for the operation, maintenance and monitoring of the entire eel passage facility (except for the original equipment manufacturer components discussed above). Bid documents were downloaded electronically from the Authority’s Procurement website by 42 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated on the following main criteria: cost, experience and knowledge of the operation of the St. Lawrence eel passage facility. Staff recommends award of a contract to Milieu, 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. Furthermore, Milieu’s designated project manager and field personnel have the most extensive operating experience with respect to eel passage facilities. The new contract would become effective on or about April 1, 2010 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, $520,000.

“At their meeting of May 19, 2009, the Trustees approved the award of a five-year contract to GEI Consultants, Inc., in the amount of $220,000, for the services of an independent consultant to perform dam safety inspections, submit reports and provide related consulting and follow-up services for the St. Lawrence/FDR Power Project, as mandated by FERC.  The contract with GEI (4600002118), which was competitively bid, became effective on May 20, 2009.  Since that time, however, GEI’s performance has been less than satisfactory, requiring a great deal of intervention by Authority staff and raising issues and concerns about GEI’s execution of required tasks and the potential impact on the Authority’s compliance with FERC requirements. After thorough consideration, staff recommends the award of a second contract to PB Americas, Inc. (PO# TBA) for all subsequent work required to be performed during the remaining four years of the originally-approved five-year contract term for such services. It should be noted that PB Americas, Inc. was the second lowest-priced bidder of the four firms that submitted proposals in response to the Authority’s original Request for Quotations (Q09-4489) for these services. PB Americas has the required knowledge and expertise, is qualified to perform such services, and has successfully performed such work for the Authority in the past.  Staff also recommends that the existing contract with GEI remain open, should GEI be required to respond to initial FERC inquiries, with a Target Value of up to $50,000. Staff recommends that the remaining unspent balance (approximately $170,000) of the originally-approved funding ($220,000) be transferred and allocated to the new award to PB Americas for services to be provided during the remaining approved term. The new contract would become effective on or about April 1, 2010 for an intended term of approximately four years (through May 19, 2014), subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the transfer and allocation of the aforementioned remaining balance from the GEI contract to the new award to PB Americas.

“The contract with Quintal Contracting Corp. (‘Quintal’) (P09-108034; PO# TBA) would provide for algae removal and basin depth maintenance at the Richard M. Flynn Power Plant.  Services include the removal of algae buildup from the bottom and sides of the North and South Reinjection Basins (on an ‘as needed’ basis, approximately seven times per year), and the addition of duct bank material (coarse sand) to the bottom of the basins to maintain basin depth within 12 inches of the top of the water inlet vault.  Bid documents were downloaded electronically from the Authority’s Procurement website by 19 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommends award of a contract to Quintal, 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. It should be noted that rates will remain firm for the duration of the contract. The new contract would become effective on or about April 1, 2010 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, $100,000.

“The two contracts with Schirmer Engineering of Illinois, PC dba Schirmer Engineering of New York (‘Schirmer’) and Walter T. Gorman, PE, PC (‘Gorman’) (Q09-4687; PO# TBA) would provide for engineering permitting services to support multiple projects at the Authority’s Southeastern New York (‘SENY’) plants in the New York City area on an ‘as needed’ basis.  Services include, but are not limited to, serving as the Engineer of Record and Permitting Consultant to ensure compliance with all applicable permitting requirements for power plants issued by the New York City Department of Buildings and the New York City Fire Department. To that end, bid documents were downloaded electronically from the Authority’s Procurement website by 81 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.  Two proposals were received and evaluated.  Staff recommends award of a contract to both firms, Schirmer and Gorman, which are qualified to perform such services and meet the bid requirements.  Both firms demonstrated a complete understanding of the work and have relevant experience on similar projects with good references. Furthermore, the Gorman firm has provided satisfactory service under an existing contract for such work and the Schirmer firm has worked successfully with other New York State and federal agencies. Based on the foregoing, as well as the large amount of work that is anticipated, the award of contracts to both firms would ensure sufficient coverage, especially during peak workload periods; additionally, the rates would be more competitive based on the disciplines required for each task.  The contracts would become effective on or about April 1, 2010 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate amount expected to be expended for the term of the contracts, $400,000. Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

 

Contract Extensions:

Business Services

Controller’s Office

“At their meeting of March 26, 2002, the Trustees approved the award of a five-year contract to Ceridian Corp. (4500056531), as well as funding in the amount of $1.465 million, to provide for payroll system implementation and payroll processing services for all Authority employees.  The contract, which was awarded as the result of a competitive search, became effective on April 1, 2002.  Due to the complexity of the payroll system, the conversion and transition period from the previous provider to Ceridian was longer than originally anticipated.  In order to provide services for the full five-year period intended under the initial contract, at their meeting of December 19, 2006, the Trustees approved a three-year extension of the subject contract through March 31, 2010, with no additional funding in excess of the originally approved amount.  In view of the very significant time and effort required to implement a new payroll system and the limited number of firms capable of performing such services, staff has determined that it would not be prudent to rebid these services at this time and recommends that Ceridian be retained as the Authority’s payroll processor for the next five years.  Ceridian has demonstrated its unique qualifications by developing and implementing customized enhancements and upgrades to accommodate the Authority’s complex processing requirements.  Furthermore, Ceridian has demonstrated its commitment to continue serving the Authority by offering favorable pricing that would limit average annual price increases to approximately 1% per year over the next five years.  Based on the foregoing, a five-year extension is now requested in order to provide for the continuation of such services.  The current contract amount is $1.323 million (of the approved $1.465 million); staff anticipates that additional funding in the amount of $1.2 million will be required for the extended term.  The Trustees are requested to approve the extension of the subject contract through March 31, 2015 and the additional funding requested, thereby increasing the total contract value to $2.665 million.

Energy Marketing and Business Development

Marketing and Economic Development

“The contract with Black & Veatch New York LLP (4500172433) provides for consulting services in connection with the analysis and redesign of the electric rate structure and pricing for the Authority’s governmental customers in Southeastern New York (‘SENY’).  The contract, which was competitively bid, became effective on April 20, 2009 for a one-year term, in the amount of $220,000.  The work is being performed to fulfill the Authority’s commitment pursuant to the Long-Term Agreement with its SENY governmental customers, which provides for the commencement of a load research program and the completion of a load study (currently in the third year of a five-year program that underpins the rate design project). The SENY governmental customer rate redesign has been delayed for several reasons, most notably, due to a data quality issue associated with the 2008 implementation of the Authority’s new SAP billing system, as well as the need to study the rates in detail in response to reasonable customer requests.  In addition, due to the proprietary information provided by Black & Veatch, a change in consultants would not be prudent.  A three-year extension is therefore requested in order to complete the electric rate redesign project, which would require additional analyses based on the customers’ input.  Such analyses include, but are not limited to: completion of the Preferred Production Rate design; preparation of exhibits, supporting data and responses to customer interrogatories; preparation of analytical studies to determine the variance between Con Edison’s and the Authority’s delivery service rate structures; assessment of the capacity of the Authority’s internal metering and billing infrastructure to adopt and manage the proposed redesign; development of complete delivery rate and production rate structures based on the final selected method and operational support sessions to train Authority staff on the rate design model. The current contract amount is $220,000; staff anticipates that additional funding in the amount of $500,000 will be required for the extended term.  The Trustees are requested to approve the extension of the subject contract through April 19, 2013 and the additional funding requested, thereby increasing the total contract value to $720,000.  It should be noted that the Authority will recover all costs from customers.

Enterprise Shared  Services

Corporate Support Services

“At their meeting of September 25, 2007, the Trustees approved the award of a three-year contract to R.W. Beck, Inc. (4500145933) to provide for consulting services in connection with the development and implementation of an Enterprise-wide Risk Management (‘EWRM’) function and a Disaster Recovery/Business Continuity Planning Process for the Authority’s Headquarters operations, in the amount of $430,000.  The contract, which was competitively bid, became effective on September 5, 2007.  Services included, but were not limited to, assessing the Authority’s current risk management practices and processes, identifying and prioritizing major risks facing the Authority, performing analyses and recommending metrics to monitor and measure EWRM risks, in order to assist the Authority in developing and implementing strategies and risk profiles to manage the identified major risks facing the Authority.  An additional $200,000 was subsequently authorized in accordance with the Authority’s EAPs for the development of a Comprehensive Emergency Management Plan (‘CEMP’), which has been developed but not yet field tested.  A 16-month extension (beyond the originally approved three-year term that is scheduled to expire on September 4, 2010) is now requested to extend the Business Continuity Plan to the Authority’s major generation and transmission facilities, in order to ensure that the Authority’s most critical business functions will continue to function in the aftermath of an emergency, as well as to conduct tabletop exercises of the CEMP at the major facilities and headquarters.  It would not be prudent or cost-effective to rebid these services. The R.W. Beck firm is among the industry leaders in Business Continuity Planning, has provided such services for other utilities and has developed proprietary customized tools for use in collecting information and integrating it into the Authority’s plan. The firm’s consultants have become fully familiar with the Authority’s organization, key operations, areas of major risk and most critical functions, Disaster Recovery Plan and site emergency plans.  Furthermore, they have been very responsive to the Authority’s requests and have provided excellent service in a timely manner and at reasonable rates under the existing contract. The current contract amount is $630,000; staff anticipates that additional funding in the amount of $350,000 will be required for the extended term.  The Trustees are requested to approve the extension of the subject contract through December 31, 2011 and the additional funding requested, thereby increasing the total contract value to $980,000.

FISCAL INFORMATION

“Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2010 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 contract in support of Energy Services Programs will be made from the Energy Conservation Effectuation and Construction Fund.

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 – Project Development, Licensing and Compliance, the Vice President – Procurement, the Vice President – Emergency Management, the Director – Corporate Support Services, the Director – Accounting, the Director – Marketing Analysis and Administration, the Director – Real Estate, the Regional Manager – Northern New York, the Regional Manager – Southeastern New York and the Director of Operations (Flynn) recommend that the Trustees approve the award of multiyear procurement contracts to the companies listed in Exhibit ‘4i-A,’ and the extension and/or additional funding of the procurement contracts listed in Exhibit ‘4i-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 Engineer – Power Supply, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Enterprise Shared Services, the Senior Vice President – Energy Services and Technology, the Senior Vice President – Power Supply Support Services 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 “4i-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 “4i-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.

 

 


 

j.                     Governance Committee Appointment

 

The Chairman submitted the following report:

 

SUMMARY

 

“In accordance with Article V the By-Laws of the Power Authority of the State of New York, as amended January 26, 2010 (‘By-Laws’), and in accordance with the Charter of the Governance Committee, the Trustees are requested to appoint D. Patrick Curley to the Governance Committee effective March 23, 2010.

 

BACKGROUND

 

“The Public Authorities Law and the By-Laws require that three independent Trustees sit on each of the Audit, Governance and Finance Committees, and it is desirable for the Board of Trustees to fill those vacancies as soon as possible.

RECOMMENDATION

 

“I recommend that the Trustees approve the Governance Committee appointment as submitted herein.”

 

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

 

RESOLVED, That D. Patrick Curley is hereby selected as a member of the Governance Committee effective March 23, 2010.

 


 

k.                   Annual Review and Approval of Certain Authority Policies 

                               

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve certain Authority policies as required by Section 2824 of the Public Authorities Law and Section 2 of Article II of the Authority’s By-laws.

 

                “The Trustees are also requested to delegate to the President and Chief Executive Officer the authority to modify these policies, as necessary, except in the event that any powers, duties or obligations of the Trustees would be affected by such modification.

 

BACKGROUND AND DISCUSSION

 

                “Section 2824 of the Public Authorities Law requires the Authority’s Trustees to, among other things, establish policies regarding the payment of salary, compensation and reimbursements to, and establish rules for the time and attendance of, the chief executive and senior management; and Section 2 of the Authority’s By-laws requires the Authority’s Trustees to review and approve annually the policies and procedures governing: (i) the salary, (ii) compensation, (iii) benefits and (iv) time and attendance of the chief executive and senior management.

 

                “The Authority’s policies relating to salary, compensation, benefits and time and attendance of its employees, inclusive of the chief executive and all senior management, are attached as Exhibits ‘4k-A’ through ‘4k-H’ and respectively entitled:

 

A.            Salary Administration Policy (EP 2.1), last revised 8/15/08;

B.            Variable Pay Plan (EP 2.6), last revised 1/2/08;

C.            Employee Benefits Eligibility (EP 3.1), last revised 2/20/09; 7/15/09;

D.            Reimbursement of Employee Meal Costs (CAP 1.5), last revised 4/6/07; 2/25/10;

E.            Attendance & Flexible Hours (EP 4.6), last revised 8/15/08; 12/1/09;

F.             Vacation (EP 3.2), last revised 1/1/08; 5/13/09;

G.            Sick Time and FMLA (EP 3.3, 3.9), last revised 2/20/09; 1/15/09; and

H.            Travel (CP 2-1), last revised 6/26//09.

 

RECOMMENDATION

 

                “It is recommended that the Trustees approve the Authority’s policies related to salary, compensation, benefits and time and attendance, which are applicable to all Authority employees, including the chief executive and senior management.  It is further recommended that the Trustees delegate to the President and Chief Executive Officer the authority to modify these policies, as necessary, except in the event that any powers, duties or obligations of the Trustees would be affected by such modification.”

 

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

 

RESOLVED, That pursuant to Section 2824 of the Public Authorities Law and Section 2 of Article II of the Authority’s By-laws, the below-listed policies of the Authority relating to salary, compensation, benefits and time and attendance of its employees, including the chief executive and senior management, are hereby approved:

 


 

A.            Salary Administration Policy (EP 2.1), last revised 8/15/08;

B.            Variable Pay Plan (EP 2.6), last revised 1/2/08;

C.            Employee Benefits Eligibility (EP 3.1), last revised 2/20/09; 7/15/09;

D.            Reimbursement of Employee Meal Costs (CAP 1.5), last revised 4/6/07; 2/25/10;

E.            Attendance & Flexible Hours (EP 4.6), last revised 8/15/08; 12/1/09;

F.            Vacation (EP 3.2), last revised 1/1/08; 5/13/09;

G.            Sick Time and FMLA (EP 3.3, 3.9), last revised 2/20/09; 1/15/09; and

H.            Travel (CP 2-1), last revised 6/26/09.

 

AND BE IT FURTHER RESOLVED, That the President and Chief Executive Officer is authorized to modify the foregoing policies, as necessary, except in the event that any powers, duties or obligations of the Trustees would be affected by such modification; 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 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.

 

 

 


 

l.                     New York Power Authority’s Annual Strategic Plan 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are presented with the Authority’s proposed 2010 Strategic Plan, set forth in Exhibit ‘4l-A’ attached hereto, and are requested to adopt the Strategic Plan and authorize the filing of the mission statement and performance measures with the Authorities Budget Office (‘ABO’) as required by Section 2824-a of the Public Authorities Law.

                                                                                                                                             

BACKGROUND

 

                “Chapter 506 of the Laws of 2009 added a new Section 2824-a to the Public Authorities Law requiring state and local public authorities to develop and adopt a mission statement.  The law also requires public authorities to develop performance measures to assist the authority in determining how well it is carrying out its mission.  Pursuant to this section, each state authority is to provide a copy of its mission statement and performance measures to the ABO on or before March 31, 2010 and to post and maintain its mission statement and performance report on its web site.

 

                “For subsequent reporting years, the mission statement is to be included as part of the Annual Report required to be filed with the ABO pursuant to Section 2800 of the Public Authorities Law.  Every public authority is also expected to annually review its mission statement and measures and publish a measurement report.

 

                “The Authority has for many years annually reviewed and updated as necessary its mission statement and performance measures.  The Authority’s By-Laws (Article VII, Section 2) provide that ‘the Trustees shall annually review a Strategic Plan which shall become the basis for the development of departmental plans, the annual budget and the capital expenditure plan.’

 

DISCUSSION

 

                “In 2007, Authority staff undertook a wholesale review of its annual strategic planning process wherein the content of the Strategic Plan was redesigned to make more clear the Authority’s role and intentions so that stakeholders may form a better understanding of the driving forces behind the Authority’s direction and decisions.  In addition, the strategic planning process was reformed from the prior, shorter-term tactical view to a new, longer-term strategic view of the work plan.  Further work by staff provided additional refinements to the Strategic Plan this year, which is presented in Exhibit ‘4l-A’ in the format delineated below: 

 

·         Mission Statement – A mission statement is a clear definition of the charter and underlying purpose of the organization, articulating the aims, focus and emphasis of the organization.

·         Vision Statement – The vision statement articulates the direction(s) that the organization will pursue.  It implicitly recognizes the underlying Mission, but provides a clear statement of upcoming priorities and focus for the management team.

·         Values – Values articulate the underlying principles and aims of the business philosophy that guide the conduct, practices and decisions toward which the organization will consistently strive.

·         Strategic Goals – Strategic goals are the specific programs that focus the organization’s resources and efforts over the horizon of the strategic plan.  Strategic goals are supported by business unit initiatives that are projects with defined objectives and a clear beginning and end.  Each business unit organization must balance the incremental effort defined by these initiatives with management of the ongoing business of the enterprise.

·         Balanced Scorecard – The balanced scorecard sets the performance goals and targets by which the organization may measure its success in achieving its mission.

 

                Staff’s efforts also provided greater linkage between the Strategic Plan and each organizational unit and employee within the Authority through the development of business plans for each of the major functional areas within the Authority.

 

                “Each business plan covers planned work and anticipated resource requirements for the period 2010 through 2014.  The business plans have been designed to both complement and translate the 2010 Strategic Plan goals into operational plans for each of the business units.  There is direct line-of-sight between the 2010 Strategic Plan goals and many of the business unit initiatives detailed in each business plan.  More importantly, the business plans were designed to describe all the responsibilities and functions carried out within each business unit, including the day-to-day baseline work, specific business unit initiatives required to improve the effectiveness or efficiency of the core business and the resources required to perform the Authority’s business activities.  By taking this holistic view, it is possible to gain a broad view of the total resource requirements – people, O&M dollars and capital dollars – necessary to complete both the baseline work and the work associated with one-time initiatives.

 

                “On March 1, 2010, the ABO issued a Policy Guidance statement concerning the implementation of Chapter 506 of the Laws of 2009.  In addition to the filing of the mission statement and performance measures, the ABO has requested that each authority provide responses to five questions related to matters of the mission and to certain policy issues regarding the role of the Board and the appointment and role of management.  These matters are clearly spelled out in the Authority’s By-Laws, last approved by the Trustees at their January 16, 2010 meeting.  Exhibit ‘4l-B’ attached hereto lists the additional questions and responses that are to be filed with the mission statement and performance measures.

 

RECOMMENDATION

 

                “The Senior Vice President – Corporate Planning and Finance recommends that the Trustees adopt the 2010 Strategic Plan presented herein and authorize the filing of the mission statement and performance measures with the Authorities Budget Office as required by Section 2824-a of the Public Authorities Law.   

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and I concur in this recommendation.”

 

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

 

                RESOLVED, That the Trustees hereby adopt the Authority’s 2010 Strategic Plan attached hereto as Exhibit “4l-A” as discussed in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to Section 2824-a of the Public Authorities Law, the Corporate Secretary be, and hereby is, authorized to file with the Authorities Budget Office the mission statement and performance measures contained in the Authority’s Strategic Plan and post such information on the Authority’s website; and be it further

 

RESOLVED, That pursuant to the Policy Guidance issued by the Authorities Budget Office on March 1, 2010, the Corporate Secretary be, and hereby is, authorized to file with the Authorities Budget Office the responses to the additional questions posed by such Office attached hereto as Exhibit “4l-B”; 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 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.

 


 

5.                   Reports

 

a.                   Report of the President and Chief Executive Officer

 

            President Richard Kessel said that 11 companies from all over the world had notified the Authority that they were considering submitting bids in response to the Great Lakes Offshore Wind (“GLOW”) Request for Proposals.  The Jefferson and Oswego County Legislatures have both passed resolutions stating that they do not want to be considered as potential sites for the GLOW project, but both Erie and Niagara County have expressed an interest in being the site for the project, which will create thousands of jobs. 

                Authority staff met with Alcoa’s union leaders and on April 30 will meet with key Alcoa executives to discuss the progress toward reopening the East Plant.  A senior-level meeting will be arranged among Authority staff, the unions and Alcoa to discuss these issues. 

President Kessel’s upstate and downstate community outreach efforts over the past month included:


 

b.                   Special Staff Report – Video Presentations

 

                                                   i.            Restoration Efforts – (Andy Cline)

 

President Richard Kessel said that within 24 hours of the recent storm on Long Island, Authority crews were on their way there to help restore power to Long Island Power Authority customers.  He expressed thanks on behalf of the Trustees and himself to Mr. Gil Quiniones, Mr. Edward Welz, Mr. Steven DeCarlo, Mr. Andrew Cline, union leaders and the workers who volunteered for this effort.  He said that he has asked Mr. Francis Ryan to work with Mr. Quiniones, Mr. Welz and Mr. DeCarlo on both an emergency management plan and mutual aid agreements with other utilities (if practical) for similar future situations. 

Mr. Cline said that the Authority staff who worked on this effort deserved the kind words and that they enjoyed the opportunity to help.  He thanked Mr. Michael Flynn and Mr. Kevin O’Keeffe and his crew for taking photographs and creating video of the restoration work.  The Authority crew worked until 2:00 a.m. on the first day they were on Long Island.  He said that this wasn’t the first time the Authority had helped out in this way.  In the 1980s, Authority crews helped restore power after Hurricane Gloria struck Long Island and also helped out after a hurricane hit Puerto Rico.  In 2006, Authority crews pitched in with restoration efforts after a major storm in Buffalo.

 President Kessel pointed out that the Authority staff who did this work normally work on transmission, not distribution, lines, and he thanked Mr. Welz for emphasizing safety first as the project got under way.

                                                 ii.            NYPA: Powering Success – (James Pasquale)

 

Mr. James Pasquale introduced a video highlighting the work of the Marketing and Economic Development department, saying that the video told the story of the more than 100 agenda items he has presented to the Trustees over the last few years. 

 

President Kessel said that he planned to have similar videos detailing other Authority work presented to the Trustees at their meetings every few months.  He said that the May Trustees’ Meeting would be held in Elmira, possibly at Anchor Glass; at the very least, a tour of Anchor Glass will be scheduled.  Chairman Townsend said that the Authority’s economic development success stories are all very impressive and that he and the other Trustees appreciate the work Authority staff are doing every day. 


 

c.        Report of the Chief Operating Officer

 

                In February, NYPA placed the Long Island Sound Cable – a critical transmission asset in a sensitive area – back in service after a fault damaged the cable in December.  This month generating plants exceeded targets for availability to bid into the NYISO energy market, but prices remain low.

 

POWER SUPPLY

 

Plant Performance

 

In February, systemwide net generation1 was 1,676,270 megawatts (MWh)2, which is below the projected net generation of 1,728,710 MWh.  For the year, actual net generation was 4,097,248 MWh, below the year-to-date net generation target of 4,137,843 MWh.

 

The plants were available to produce electricity 92.9 percent of the time during February, while the generation market readiness factor3 was 99.9 percent, compared to a target of 99.4 percent.  For the year, generation market readiness is also 99.9 percent.

 

While there were no significant unplanned generation events4 in February, a few unscheduled outages5 did occur.  The total lost opportunity cost of all unscheduled outages in the month was $0.07 million, compared with generation revenue of $150.7 million. The year-to-date lost opportunity cost was $0.12 million compared to generation revenue of $322 million.

 

River flows for the month at the Niagara project were below historical averages.  At St. Lawrence-FDR, flows were consistent with forecast and slightly above historical averages.  The forecast 2010 river flows for both the Niagara River and the St. Lawrence River are below historical average flows.

 

Transmission Performance

 

                The transmission reliability6 for February was 94.0 percent, which is under the target of 95.8 percent.  The year-to-date actual reliability is 93.7 percent, below the target of 94.3 percent.  This is primarily due the Long Island Sound Cable outage described below.

               

There were four significant unplanned transmission events7 in February, two that occurred in February and two that continued from January, totaling 1,259 hours.  The 345 kV Long Island Sound Cable8, damaged in December, was placed back in service on February 19.  Detroit Edison will be analyzing parts of the damaged cable during the latter part of March to determine the as-yet unknown cause of the outage.  The Marcy Capacitor Bank #1 outage, described in last month’s COO Report, was repaired and placed back into service on February 1.  An outage along Marcy South, on the Utica-Coopers Corner line in Central New York, occurred during a winter storm due to ice on the conductors9.  The outage was limited to less than 15 hours due to the quick response by NYPA’s Transmission Maintenance group to locate and correct the problem.  There was an outage on the Niagara-Beck line, connecting the Niagara Power Project to Canada, due to problems with the Niagara 345 kV circuit breakers10.  The cause of this outage is currently under investigation.

               

Life Extension and Modernization Programs

 

                Work on the 13th of the 16 units at the St. Lawrence-FDR project was started on schedule as part of the project’s Life Extension and Modernization11 (LEM) program on December 19, 2009.  The unit is currently scheduled to return to service in late July following its refurbishment.  Recent inspections of the unit revealed that significant repairs will be required that could extend the outage.  Staff is evaluating these findings and their impact to the overall LEM schedule.  The overall LEM project is scheduled for completion in 2013.

 

                Work on the fourth and final unit at Blenheim-Gilboa remains on course for completion in June 2010. 

 

 

Transmission Initiatives

 

NYPA staff is continuing to work with National Grid, Con Edison, and the Long Island Power Authority (LIPA), regarding a proposed transmission line that would deliver power from Canada and upstate renewable energy projects to New York City. 

 

A request for proposals12 (RFP) to perform economic studies in relation to the proposed transmission initiative was awarded in February.  Con Edison and LIPA provided comments and input in developing the final scope of work for the RFP.  After reviewing the proposals and estimated costs for the work submitted in response to the RFP, NYPA and National Grid selected PA Consulting to conduct the economic analysis.  A meeting between NYPA, National Grid, Con Edison, LIPA, and PA Consulting was held on March 9 to review the assumptions and sensitivity analyses that will be included in the economic study.  The analyses are scheduled to be completed during the second quarter of 2010.    

Con Edison and LIPA had expressed an interest in exploring commercial arrangements for the Transmission Initiative in conjunction with the economic analyses.  On February 2, NYPA and National Grid held a multi-disciplinary internal meeting with our consultants at Navigant to explore commercial arrangements to present to Con Edison and LIPA.  A follow-up meeting of this group was held on March 3, and staff is preparing several commercial scenarios to review with NYPA Executive Management prior to meeting with National Grid, Con Edison and LIPA.

 

Organizational Realignment

 

                Preliminary results of the assessment of potential operational interfaces between the Power Generation and Transmission groups are anticipated in the second quarter of 2010.  The review of potential organizational synergies between the Energy Control Center, Energy Resource Management (ERM) and Power Generation operations will start in March 2010.

 

Environmental

 

                There was one recordable environmental incident this month, a discharge from a storm water drain at the St. Lawrence switchyard that was in violation of a State Pollution Discharge Elimination System (SPDES) Permit13 for total suspended solids14.  This is the second recordable environmental incident of 2010; the annual target is 25.

 

Technical Compliance – NERC Reliability Standards

 

In late January and early February, NYPA self-reported potential non-compliance and submitted mitigation plans to the Northeast Power Coordinating Council (NPCC)15 for two standards that apply to facility ratings methodology and data for NYPA’s generation and transmission assets and one standard that applies to NYPA’s Critical Infrastructure Protection16 program.  All three of these are in the Northeast Electric Reliability Council’s17 top 10 list of most violated standards in the industry.  In response to these self reports, NYPA received Initial Notification of Alleged Violation Letters from the NPCC, and the NPCC is now evaluating whether violations of the standards occurred. 

 

NYPA received a Compliance Inquiry letter from the NPCC on February 3, requesting information and documentation regarding a system event that occurred at the Niagara Power Project on February 1 that took a 345 kV transmission line to Ontario, Canada, out of service.  A response with the supporting data was delivered to the NPCC on February 25.  A subsequent request for clarification was received from the NPCC, and NYPA is preparing a response.

 

 

ENERGY RESOURCE MANAGEMENT

 

NYISO Markets

 

In February, ERM bid more than 1,746,757 MWh of NYPA generation into the New York Independent System Operator (NYISO)18 markets, netting $27.6 million in power supplier payments to the Authority.  ERM has bid more than 3,841,037 MWH year-to-date netting $85.4 million in power supplier payments.

 

  February energy markets trended even lower than January and remain significantly lower than five-year historical averages.  This reflects a continuing downward trend in energy prices, which was highlighted in a March 11 announcement by the NYISO that wholesale power prices in 2009 were at a 10-year low.  Decreasing energy markets continue to affect NYPA’s net income attributed to market sales.

 

Owing in part to Poletti’s retirement on January 31, the in-city capacity markets19 responded with an increase in prices from a weighted average in January of $2.34/kW-mo20 to $7.20/kW-mo in February.

 

Fuel Planning & Operations

 

In February NYPA’s Fuels Group transacted $18 million in natural gas and oil purchases, compared with $19 million in February 2009.  The reduction is mainly attributed to the retirement of the Poletti unit.  Year-to-date natural gas and oil purchases are $59 million.

 

 

OFFICE OF THE CHIEF OPERATING OFFICER

 

Sustainability Action Plan

 

NYPA’s Sustainability Action Plan was publically released on January 13.  Presentations at the power projects are continuing, offering employees across the organization a chance to learn more about the initiative and provide feedback.  Progress on the 41 action items has already been made with an enhanced sustainability section on the public website, development of green office renovation guidelines, and the launch of a green fleet management study.    

 

New York City Climate Change Adaptation Task Force

 

NYPA has been a member of Mayor Bloomberg’s New York City Climate Change Adaptation Task Force since August 2008.  The mission of the Task Force is to identify critical infrastructure in New York City that could be at risk from the effects of climate change and to develop coordinated adaptation strategies to secure these assets.  As a member of the Task Force, NYPA has been working with other utilities in New York City on identifying potential risks to our utility infrastructure and strategies to mitigate those vulnerabilities.  The exercise has provided valuable insights, and NYPA has made the development of an adaptation plan one of the initiatives in the Sustainability Action Plan. 

 

A final New York City Climate Change Adaptation Plan is expected to be released in April 2010 that will provide recommendations and a roadmap for future planning.            

 

GLOSSARY

 

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.

 

Megawatt hour (MWh) – 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 800homes, based on national averages.

 

Generation Market Readiness – The availability of generating facilities for bidding into the NYISO market.  It factors in available hours and forced outage hours which drive the results.

 

Significant Unplanned Generation Events – Forced or emergency outages of individual generator units of duration greater than 72 hours, or with a total repair cost of greater than $75,000, or resulting in greater than $50,000 of lost revenues.

 

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.

 

Transmission reliability – A measurement of the impact of forced and scheduled outages on the statewide system’s ability to transmit power.

 

7  Significant Unplanned Transmission Events –Forced or emergency outages of individual transmission lines which directly affect the reliability of the state’s transmission network, or affect the availability of any component of the state’s transmission network for greater than 8 hours, or that have a repair cost greater than $75,000.

 

8   Long Island Sound Cable – The Sound Cable Project, designated as Feeder Y49, is a 345 kV AC transmission circuit connecting the Consolidated Edison Company of New York, Inc. Sprain Brook Substation in Westchester County with the LIPA East Garden City Substation in Nassau County.  The project is approximately 26.3 mile long, including 18.4 miles of underground high pressure fluid filled pipe-type cable and 7.9 miles of underwater self-contained fluid filled cable submarine crossing in the Long Island Sound.

 

9  Conductor – A substance that heat or electricity can pass through or along, such as the components in transmission lines.

 

10  Circuit breaker—A device that connects and disconnects a generator from the electric grid.

 

11  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.

 

12  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.

 

13  State Pollution Discharge Elimination System (SPDES) Permit –A permit required by the New York State Department of Environmental Conservation to regulate the point source discharge of pollutants contained in process water and storm water to surface water and ground water in New York State.

 

14  Total Suspended Solids – A measure of the suspended solids in wastewater, effluent, or water bodies, determined by laboratory analysis.

 

15   Northeast Power Coordinating Council (NPCC) - The Northeast Power Coordinating Council, Inc. (NPCC) is the cross-border regional entity and criteria services corporation for Northeastern North America.  NPCC’s mission is to promote and enhance the reliable and efficient operation of the international, interconnected bulk power system in Northeastern North America pursuant to an agreement with the Electric Reliability Organization (ERO) which designates NPCC as a regional entity and delegates authority from the U.S. Federal Energy Regulatory Commission (FERC), and by Memoranda of Understanding with applicable Canadian Provincial regulatory and/or governmental authorities.  The ERO to which NPCC reports is the North American Electric Reliability Corporation (NERC).

 

16   Critical Infrastructure Protection (CIP) – The Critical Infrastructure Protection (CIP) program coordinates all of the North American Electricity Reliability Corporation’s (NERC) efforts to improve physical and cyber security for the bulk power system of North America, as it relates to reliability.  These efforts include standards development, compliance enforcement, assessments of risk and preparedness, disseminating critical information via alerts to industry, and raising awareness of key issues.  

 

17   North American Electric Reliability Corporation (NERC) – The organization that develops and enforces mandatory reliability standards for the bulk power system in the United States, issues long-term and seasonal reliability forecasts and monitors the power system.  (NERC standards are also mandatory and enforceable in parts of Canada.) 

 

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

 

19  In-City Capacity Markets – The New York Independent System Operator (NYISO) must ensure that sufficient resources are available to meet projected load on a long-term basis. In order to facilitate this, the NYISO administers a capacity market. This market matches buyers and sellers of capacity using the clearing price methodology.  Given the constrained nature of the transmission system, the New York State Reliability Council (NYSRC) requires loads in New York City and Long Island to buy a certain percentage of their capacity from suppliers physically located in those areas.

 

20  Dollars per Kilowatts-months ($/kW-mo) – The unit of sale in capacity markets.  A kilowatt-month is roughly equivalent to the capacity needed to generate one kilowatt for one month.

 

 

Chairman Townsend thanked Mr. Quiniones for coming to Rochester to brief him on the reorganization of the Authority’s operating departments and Mr. Quiniones’ vision for the future.

 

               


 

d.                   Report of the Chief Financial Officer

 

                Trustee Jonathan Foster thanked Ms. Elizabeth McCarthy for the improved format of the report.

                Trustee Nicandri noted that the Trustees received a pre-meeting briefing on the financials and other items from Mr. Russak.


 

6.                   Annual Review and Approval of Guidelines for the Investment of Funds and 2009 Annual Report on Investment of Authority Funds 

 

               

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to review and approve the attached 2009 Annual Report on Investment of Authority Funds (Exhibit ‘6-A’).

 

 BACKGROUND

 

                “Section 2925 of the Public Authorities Law requires the review and approval of an annual report on investments.  Pursuant to the statute, the attached report includes Investment Guidelines (‘Guidelines’) that set standards for the management and control of the Authority’s investments, total investment income, a statement of fees paid for investment management services, the results of an independent audit, a detailed inventory report for each of the Authority’s nine portfolios as of December 31, 2009 and a summary of transactions with dealers and banks.  The approved annual report is filed with the State Division of the Budget, with copies to the Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee.  The report is also available to the public upon written reasonable request. 

 

DISCUSSION

 

                “In 2009, the Authority’s investment portfolios, exclusive of the separately managed Other Post-Employment Benefits Trust Fund and Nuclear Decommissioning Trust Fund, averaged $979 million with a December 31, 2009 cost of $1.10 billion and positive mark-to-market of $17.2 million.  At year-end, $907 million was held in the Authority’s Operating Fund.  The Operating Fund was created by the Authority’s Bond Resolution (General Resolution Authorizing Revenue Obligations dated February 24, 1998).  A number of reserves have been established within the Operating Fund, as follows:

 

·         Debt Service Reserve ($101 million) – The Debt Service Reserve is funded monthly to have sufficient amounts available to pay debt service obligations when due.  The Authority’s scheduled principal and interest payments total approximately $200 million per year, with payment dates set each February, May and November.  

 

·         Energy Hedging/Fuel Reserve ($71 million) – The Fuel Reserve was established to maintain funds to match a federal obligation to pay for the processing and final disposition of spent nuclear fuel burned by the Authority when it owned nuclear plants, and to have funds available for use as collateral that may be required to support the Authority’s authorized fuel and energy hedging transactions.  On February 3, 2009, the Trustees approved the temporary transfer of $215 million held in the Energy Hedging/Fuel Reserve for the spent fuel obligation to the State of New York (‘State’) to assist with the State’s budgetary deficits.  The temporary asset transfer was completed on February 25, 2009 and is in accordance with the terms and conditions of a Memorandum of Understanding between the State and the Authority.  The December 31, 2009 balance of $71 million represents $70 million of collateral available for fuel and energy hedging transactions and an additional $1 million in accrued spent fuel liabilities.

 

·         Capital Project Reserve ($413 million) – This amount is being set aside to help fund any major new investments in energy infrastructure by the Authority.  In order to minimize customer costs, maintain the Authority’s financial metrics and maintain ready access to the capital markets, it has been determined that the next major investment should be financed with a portion funded by debt and a portion funded by Authority cash or, in effect, its ‘equity.’  This Reserve has been established to provide this equity.  On February 3, 2009, the Trustees approved the temporary transfer of $103 million from the Capital Project Reserve to the State of New York to assist with the State’s budgetary deficits.  The transfer was conditioned on a reaffirmation by the Trustees that such transfer remains feasible and advisable at the time of payment.  On July 28, 2009, the Trustees reaffirmed the transfer and payment was made to the State in September 2009.  The temporary asset transfer is in accordance with the terms and conditions of the aforementioned Memorandum of Understanding. 

 

·         Operating Reserve ($322 million) – The Operating Reserve includes a reserve for working capital and its emergency repair fund.  The Authority’s Trustees have established a minimum amount of $175 million for this purpose and funds cannot be released for ‘any lawful corporate purpose’ (pursuant to Section 503(1)(e) of the Bond Resolution) unless this minimum reserve level is satisfied.  The December 31, 2009 Operating Reserve of $322 million reflects this $175 million minimum, plus the retention of funds anticipated for various economic development programs and other voluntary contributions to the State.  On January 27, 2009, the Trustees approved a voluntary contribution of $119 million to the State in light of the State’s budgetary deficits to be made before the end of the State’s 2008-09 fiscal year.  Such payment was made on January 30, 2009.  On February 3, 2009, the Trustees approved an additional voluntary contribution of $107 million to the State to be paid by March 31, 2010 conditioned on a reaffirmation by the Trustees that such transfer remains feasible and advisable at the time of payment.  In a separate item, the Trustees will be asked to reaffirm this voluntary contribution.  The Operating Reserve balance at February 28, 2010 was $422 million. 

 

“In addition to the Operating Fund portfolio, as of December 31, 2009, the Authority separately held a total of $208 million from the proceeds of bond and note issuances in its Energy Conservation, Note Debt Reserve and Construction portfolios.  These funds are earmarked for construction projects currently under way, such as the St. Lawrence Life Extension and Modernization Project and various Energy Services Projects.

 

In 2009 and 2008, the Authority’s portfolios earned approximately $38 million and $48 million in investment income, respectively.  The decrease in investment earnings is primarily due to historically low interest rates resulting from the Federal Reserve’s continued accommodative monetary policy.  In 2009, the Authority’s portfolios had an average yield of 3.58%, exceeding the Authority’s targeted performance by 30 basis points (30/100 of 1%).  Targeted performance for 2009 was the three-year rolling average yield of the two-year Treasury note plus 25 basis points

 

“As of December 31, 2009, the portfolio comprised various government-sponsored agency securities (74.4%), municipal securities (11.9%), mortgages guaranteed by the U. S. government (6.9%) and, certificates of deposit and repurchase agreements (6.8%).

 

Other Post-Employment Benefits Trust

 

                “The Authority’s Other Post-Employment Benefits Trust (‘OPEB Trust’) was established in 2007 as authorized by the Authority’s Trustees at their meeting of December 19, 2006 to provide for medical, prescription drug, life and other long-term care benefits offered by the Authority for retirees and eligible beneficiaries.  The OPEB Trust allows for investments in a diversified portfolio of assets, including domestic and international equity securities, fixed-income securities, public Real Estate Investment Trusts and a U. S. Treasury Money Market fund.  During 2007 and 2008, the Authority deposited a total of $225 million into the OPEB Trust to partially fund its actuarial accrued liability which, at December 31, 2009, was approximately $362 million. 

 

                “As of December 31, 2009, the OPEB Trust’s market value was approximately $218 million, representing a gain of 14.7% for 2009.  This positive performance was the result of a dramatic rebound in the financial markets as an appetite for risk and confidence returned to the market amidst an unprecedented amount of government support.

 

                “Investment management fees associated with the OPEB Trust Fund totaled $516,947 in 2009 and were paid from such Trust Fund.  These fees and the firms paid are detailed in Section III (B) of the attached report.

 


 

Nuclear Decommissioning Trust

 

“On November 21, 2000, the Authority completed the sale of its Indian Point #3 and James A. FitzPatrick nuclear plants to two subsidiaries of Entergy Corporation pursuant to a purchase-and-sale agreement dated March 28, 2000.  In accordance with the Decommissioning Agreements, the Authority retains contractual decommissioning liability until license expiration, a change in the tax status of the fund or any early dismantlement of the plants, at which time the Authority will have the option to terminate its decommissioning responsibility and transfer the plant’s fund to the Entergy subsidiary owning the plant.  At that time, the Authority will be entitled to be paid an amount equal to the excess of the amount in the fund over the Inflation Adjusted Cost Amount (a fixed estimated decommissioning cost amount adjusted in accordance with the effect of increases and decreases in the U. S. Nuclear Regulatory Commission minimum cost-estimate amounts applicable to the plant), if any.  The Authority’s decommissioning liability is limited to the lesser of the Inflation Adjusted Cost Amount or the amount of the plant’s fund, guaranteeing that no additional cost burdens may be placed on the Authority. 

 

                “As of December 31, 2009, the Nuclear Decommissioning Trust’s market value was approximately $942 million, representing a gain of 16.3% for 2009.  As previously noted, the positive performance was the result of a dramatic rebound in the financial markets, as well as a partial recovery on commercial and residential mortgage-backed securities held in the Trust from severely distressed levels.

 

                “Investment management fees associated with the Nuclear Decommissioning Trust Fund totaled $529,970 in 2009 and were paid from such Trust Fund.  These fees and the firms paid are detailed in Section III (C) of the attached report. 

 

                “In connection with its examination of the Authority’s financial statements, KPMG LLP (‘KPMG’) performed tests of the Authority’s compliance with certain provisions of the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.  KPMG’s report, a copy of which is attached as Exhibit ‘B,’ states that the Authority complied, in all material respects, with the requirements during the year ended December 31, 2009.  Consequently, staff believes the Authority is in compliance with the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.

 

“The Investment Guidelines and procedures have not been amended since last presented to and approved by the Trustees at their meeting of March 31, 2009.  They remain fundamentally sound and meet the requirements of the Authority.  Furthermore, these Guidelines continue to meet the requirements of Section 2824(1)(e) of the Public Authorities Law, which requires the Authority’s Trustees to establish written policies and procedures with respect to investments.

 

RECOMMENDATION

 

                “The Treasurer recommends that the Trustees approve the attached 2009 Annual Report on Investment of Authority Funds.

 

                “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 and I concur in the recommendation.”

 

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

 

RESOLVED, That the 2009 Annual Report on Investment of Authority Funds be, and hereby is, approved; 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.

 


 

Exhibit “6-A”

March 23, 2010

 

 

 

 

 

                                                           2009 Annual Report on

                                                     Investment of Authority Funds

 

 

                                                                Table of Contents

 

 

Section I                      Guidelines for the Investment of Funds

 

Section II                     Explanation of the Investment Guidelines

 

Section III                    A.        Investment Income Record

                                    B.         Fees Paid for Other Post-Employment Trust Fund

                                    C.         Fees Paid for Nuclear Decommissioning Trust Fund

                                    D.        Results of the Annual Independent Audit

 

Section IV                    Inventory of Investments Held on December 31, 2009

 

Section V                     Summary of Dealers and Banks from Which Securities Were Purchased and Sold

 

 

 

 

 

 
 

                                                                                                       

Section I

 

                                                      New York Power Authority

                                             Guidelines for the Investment of Funds

 

I.          General

 

      These Guidelines for the Investment of Funds (the “Guidelines”) are intended to effectuate the applicable provisions of the General Resolution Authorizing Revenue Obligations, adopted February 24, 1998 (the “Resolution”), the lien and pledge of which covers all accounts and funds of the Authority and that governs the Authority's existing policies and procedures concerning the investment of funds as contained in these Guidelines.  In a conflict between the Guidelines and the Resolution, the latter shall prevail.  In addition, these Guidelines are intended to effectuate the provisions of Section 2925 of the New York State Public Authorities Law.

 

II.        Responsibility for Investments

 

      The Treasurer and Deputy Treasurer have the responsibility for the investment of Authority funds under the general supervision of the Executive Vice President and Chief Financial Officer.  The Treasurer shall ensure that an operating manual is maintained that provides a detailed description of procedures for maintaining records of investment transactions and related information.

 

III.       Investment Goals

 

            The Treasurer and Deputy Treasurer are responsible for maximizing the yield on investments consistent with requirements for safety, liquidity and minimization of risk. Monies will not be invested for terms in excess of the projected use of funds.

 

IV.       Authorized Investments

 

            A.        Monies in funds established pursuant to the Resolution shall be invested in Authorized Investments or Authorized Certificates of Deposit, defined as follows:

 

                        “Authorized Investments” shall mean:

 

                        1.         Direct obligations of or obligations guaranteed by the United States of America or the State of New York;

 

2.         Bonds, debentures, notes or other obligations issued or guaranteed by any of the following: Federal National Mortgage Association (including Participation Certificates), Government National Mortgage Association, Federal Financing Bank, Federal Home Loan Mortgage Corporation and Federal Home Loan Banks, Federal Housing Administration, Federal Farm Credit Banks Funding Corporation, Federal Farm Credit Banks, Federal Intermediate Credit Banks, Federal Banks for Cooperatives, Federal Land Banks or any other agency controlled or supervised by and acting as an instrumentality of the United States government;

 

3.                  Obligations of any state of the United States of America or any political subdivision thereof or any agency, instrumentality or local government unit of any such state or political subdivision that shall be rated at the time of the investment in any of the three highest long-term Rating Categories, as such term is defined in the Resolution, or the highest short-term Rating Category by a Rating Agency, as such term is defined in the Resolution.

 

4.                  Public Housing Bonds issued by Public Housing Authorities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an Annual Contributions Contract with the United States of America; or Project Notes issued by Local Public Agencies, in each case, fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; provided that such Bonds or Notes are guaranteed by the United States of America.

 

“Authorized Certificate of Deposit” shall mean a certificate of deposit authorized by the Resolution as an “Authorized Investment.”

 

                        B.        The Authority, as an issuer of tax-exempt obligations, must not engage in any arbitrage practice prohibited by the arbitrage regulations promulgated under the Internal Revenue Code.  In no event shall Authority funds be invested in a manner that would violate the provisions of such arbitrage regulations.

 

V.        Provisions Relating to Qualifications of Dealers and Banks

 

            A.1.     The purchase and/or sale of Authorized Investments shall be transacted only through banks, trust companies or national banking associations (herein collectively termed “Banks”) that are members of the Federal Reserve System and government security dealers (herein termed “Dealers”), which are Banks and Dealers reporting to, trading with and recognized as primary dealers by the Federal Reserve Bank of New York.  A list of authorized Banks and Dealers shall be maintained.  Banks and Dealers shall have demonstrated an ability to:

 

                                    a)       offer superior rates or prices on the types and amounts of securities required;

                                    b)      provide a high degree of attention to the Authority's investment objectives; and

                                    c)       execute trades in a timely and accurate manner.

            A.2.     Authorized Investments may also be purchased or sold through minority- and women-owned firms authorized to transact business in the U.S. government and municipal securities markets.  Such qualified firms shall demonstrate the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

            A.3.A. Municipal securities qualifying as Authorized Investments may also be purchased or sold through any municipal bond dealer registered in the State of New York that demonstrates the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

B.                 Authorized Certificates of Deposit and time deposits (“Time Deposits”) shall be purchased directly from Banks that:

                        (1)        are members of the Federal Reserve System transacting business in the State of New York;

                        (2)        have capital and surplus aggregating at least $50 million; and

                        (3)        demonstrate all the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

            C.        Authorized Investments purchased by the Authority or collateral securing its investments shall be deposited only with custodians designated by the Authority. Such custodians shall be Banks that are members of the Federal Reserve System transacting business in the State of New York.

 

            D.        The Authority shall file with each qualified dealer a letter agreement that designates the (1) type of authorized investments, (2) Authority employees who are authorized to transact business and (3) delivery instructions for the safekeeping of investments.

 

            E.         The Authority shall enter into a written contract with any (1) Dealer from which Authorized Investments are purchased subject to a repurchase agreement and (2) Bank from which Authorized Certificates of Deposit are purchased.

 

VI.       General Policies Governing Investment Transactions

 

            A.        Competitive quotations or negotiated prices shall be obtained except in the purchase of government securities at their initial auction or upon initial offering. A minimum of three quotes shall be obtained and documented from Dealers and/ or Banks, except as indicated above, and the most favorable quote accepted.  The Treasurer or Deputy Treasurer may waive this requirement on a single-transaction basis only if warranted by market conditions and documented in writing.

 

            B.        Authorized Investments purchased shall be either delivered to the Authority's designated custodian or, in the case of securities held in a book-entry account maintained at the Federal Reserve Bank of New York or the Depository Trust Company, recorded in the Authority's name or in the name of a nominee agent or custodian designated by the Authority on the books of the Federal Reserve Bank of New York or the Depository Trust Company.  Payment shall be made to the Dealer or Bank only upon receipt by the Authority's custodian of (1) the securities or (2) in the case of securities held in a book-entry account, written advice or wire confirmation from the Federal Reserve Bank of New York or the Depository Trust Company that the necessary book entry has been made.

 

            C.        Each purchase or sale of Authorized Investments or Authorized Certificates of Deposit shall be authorized by the Treasurer or Deputy Treasurer.  Investment orders may be placed by Authority employees as designated by the Treasurer.  The custodian shall have standing instructions to send a transaction advice to the Authority's Controller for purposes of comparison with internal records.  The Controller shall advise the Treasurer of any variances, and the Treasurer shall ensure appropriate corrections are provided.

 

VII.     Policies Concerning Certain Types of Investment Diversification Standards Required

 

            A.        Authorized Certificates of Deposit and Time Deposits

 

                        1.         Authorized Certificates of Deposit and Time Deposits shall be purchased directly from a Bank in the primary market.

 

                        2.         Authorized Certificates of Deposit and Time Deposits shall be continuously secured/collateralized by Authorized Investments defined in subsection (1) or (2) of Section IV.A., having a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such Certificates of Deposit or Time Deposits.  Such Authorized Investments shall be segregated in a separate custodian account on behalf of the Authority.  Collateral pledged for Certificates of Deposit or Time Deposits held as investments shall be market valued (marked to market) not less than once per week.

 

                        3.         Investments in Authorized Certificates of Deposit or Time Deposits shall not exceed 25% of the Authority's invested funds.  The par value of Authorized Certificates of Deposit purchased from any one Bank shall not exceed $25 million.

 

            B.        Repurchase Agreements

 

                        The Authority may from time to time elect to enter into arrangements for the purchase and resale of Authorized Investments (known as “Repurchase Agreements”).  This type of investment transaction shall be used only when there is no other viable, short-term investment alternative.

                        1.         A Repurchase Agreement shall be transacted only with a Dealer or Bank qualified to sell Authorized Investments to the Authority that is recognized by the Federal Reserve Bank as a primary dealer.

 

 

                        2.         Authorized Investments purchased subject to a Repurchase Agreement shall be marked to market daily to ensure their value equals or exceeds the purchase price.

 

                        3.         A Repurchase Agreement shall be limited to a maximum fixed term of five business days.  Payment for the purchased securities shall be made against delivery to the Authority's designated custodian (which shall not be a party to the transaction as seller or seller's agent) or, in the case of securities held in a book-entry account maintained at the Federal Reserve Bank of New York or the Depository Trust Company, written advice that the securities are recorded in the Authority's name or in the name of a nominee, agent or custodian designated by the Authority on the books of the Federal Reserve Bank or the Depository Trust Company.

 

                        4.         No more than $50 million of Authorized Investments shall be purchased under a Repurchase Agreement with any one Dealer or Bank.  This requirement may be waived by the Senior Vice President – Corporate Planning and Finance on a single- transaction basis only if warranted by special circumstances and documented in writing.

 

                        5.         The aggregate amount invested in Repurchase Agreements may not exceed the greater of 5% of the investment portfolio or $100 million.  The Executive Vice President and Chief Financial Officer may waive this requirement on a single-transaction basis only if warranted by cash-flow requirements and documented in writing.

 

                        6.         The Authority may not enter into arrangements (known as Reverse Repurchase Agreements) for the purpose of borrowing monies by pledging Authorized Investments owned by the Authority.

 

VIII.  Review

 

                 These Guidelines and any proposed amendments shall be submitted for Trustee review and approval at least once a year.

 

                 In addition to the Authority's periodic review, the Authority's independent auditors, in connection with their examination of the Authority, shall perform an annual audit of the investment portfolio, review investment procedures and prepare a report, the results of which will be made available to the Trustees.


 

IX.       Reports

 

            A.        The Treasurer shall submit an investment report to the Trustees, at least quarterly.  Such report shall contain a (1) detailed description of each investment;

                        (2) summary of the dealers and banks from which such securities were purchased and (3) a list of fees, commissions or other charges, if any, paid to advisors or other entities rendering investment services.

 

            B.        The Treasurer shall submit an annual report for approval by the Trustees.  In addition to the information provided quarterly, the Annual Report shall include

                        (i) a copy of the Guidelines; (ii) an explanation of the Guidelines and any amendments thereto since the last annual report; (iii) the results of an annual independent audit of investment inventory and procedures and (iv) a record of income earned on invested funds.  The approved report shall be submitted to the State Division of the Budget with copies distributed to the Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee.  Copies shall be made available to the public upon written reasonable request.

 

            C.        Any waivers that occurred during the prior month shall be reported to the Executive Vice President and Chief Financial Officer.

 

X.  Miscellaneous

 

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

 

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

 

            C.        No provisions in these Guidelines shall be the basis of any claim against any Trustee, officer or employee of the Authority in his or her individual or official capacity or against the Authority itself.


 

Section II

 

                                EXPLANATION OF INVESTMENT GUIDELINES

 

 

Section II Responsibility for Investments

 

            Establishes responsibility for the Investment of Authority Funds and limits the number of individuals authorized to place investment orders.

 

Section III Investment Goal

 

            Establishes the policy that earning a reasonable return on investments must be consistent with standards set for minimization of risk and availability of funds when needed.

 

Section IV Authorized Investments

 

            Details the types of investments the Authority can undertake as prescribed in Section 101 of the Resolution.

 

      This section also requires that investments made in each of the Funds established under the Resolution be invested for a term commensurate with cash-flow expectations and that such investments not violate the arbitrage regulations of the Internal Revenue Code.

 

Section V Provisions Relating to Qualifications of Dealers and Banks

 

            Establishes criteria for the selection of banks and dealers from which the Authority may buy or sell investments.  Business is transacted with firms that have demonstrated financial strength and a high degree of reliability with respect to servicing the Authority's needs.  This section also directs that custody of Authority investments be maintained by banks that are members of the Federal Reserve System transacting business in the State of New York.

 

            This section also addresses the subject of contracts with banks and dealers for the purchase or sale of Authorized Investments.  The Authority has written Letters of Agreement with authorized dealers that specify the types of securities in which the Authority may invest and identify those Authority individuals authorized to give instructions related to the purchase and sale of securities.  In addition, the Authority shall have a written form of agreement for use in repurchase transactions with any authorized dealer with which the Authority may transact this type of investment.

 


 

Section VI General Policies Governing Investment Transactions

 

            Requires that the Authority solicit no less than three bids for the purchase or sale of securities in order to ensure the most favorable rate except when securities are purchased at their initial auction, upon new issue or through negotiated prices.

 

            Requires that the Authority or its custodian, prior to payment, take possession of such securities, or in the case of book-entry securities, obtain written advice or wire confirmation that transfer or ownership has been recorded.

 

            Establishes authorized employees to approve the purchase or sale of securities.

 

            Establishes control procedures whereby the Controller shall compare the custodian's confirmation to Authority records.

 

Section VII Policy Concerning Certain Types of Investment Diversification Standards Required

 

            Establishes a policy concerning the purchase of Authorized Certificates of Deposit and Time Deposits intended to minimize the risk associated with such transactions.  Authorized Certificates of Deposit or Time Deposits may be purchased directly from a bank that is a member of the Federal Reserve System transacting business in the State of New York.  Such deposits shall be continuously secured by Authorized Investments as outlined in subsection (1) or (2) of Section IV.A.  This collateral shall be regularly priced to current market to assure the Authority's security interest is continuously protected.  Aggregate holdings of Authorized Certificates of Deposit shall not exceed 25% of the Authority's total investment.  Authorized Certificates of Deposit purchased from any one bank shall not exceed $25 million.

           

            Establishes a policy intended to minimize the risk associated with arrangements for the purchase and resale of Authorized Investments known as Repurchase Agreements (“Repos”).  Repos purchased from any one qualified dealer or bank shall not exceed $50 million and shall be limited to a maximum fixed term of five business days.  Aggregate investments in Repos shall not exceed the greater of 5% of the Authority's total investments or $100 million.  All securities purchased under the terms of a Repo shall be held in safekeeping by a designated custodian for the Authority.  Such securities shall be priced to market on a daily basis to assure the Authority's security interest.  Reverse Repurchase Agreements are not authorized transactions.

 

Section VIII Review

 

            Establishes policy requiring review of the Guidelines at least once a year.  Requires an annual audit by the Authority's independent auditors of the Authority's investment portfolio and compliance with the guidelines established by the Authority and the State Comptroller.

 

Section IX Reports

 

            Establishes policy requiring submission of reports to the Authority's Trustees concerning the management and performance of the Authority's portfolio.

 

            This Section also requires that an annual report be submitted for approval by the Authority's Trustees.  Copies of the approved report shall be sent to the State Division of the Budget, Office of the State Comptroller, Senate Finance Committee and Assembly Way and Means Committee.

 

 

 


 

 

                                                                     Section III

 

 

A.        Investment Income Record

 

            During 2009, the Authority's investment portfolio averaged approximately $979 million and earned approximately $38 million.

 

            The earnings, by fund, were as follows (dollars in millions):

                                                                       

            Operating Fund                                                                  $32

            Capital/Construction Funds                                                    5

Other (Energy Conservation/Note Debt Reserve)                 

                        Total                                                                       $ 38    

 

            The 2009 investment income is $10 million less than in 2008.  The decrease in investment earnings is primarily due to historically low interest rates resulting from the Federal Reserve’s continued accommodative monetary policy.

 

B.        Fees Paid for Other Post Employment Benefit Trust Fund Investment Services

 

            $112,572                     Baring Asset Management

            $  87,742                     Brandywine Global Investment Management

            $  89,899                     C.S. McKee

            $  49,232                     Evergreen Investment Management Company

            $    9,100                     Fiduciary Management, Inc.

            $  95,463                     Global Currents Investment Management

            $    8,042                     State Street Global Advisors

            $  64,897                     Urdang Securities Management, Inc.

            $516,947                     Total

 

            Investment management fees were paid from the OPEB Trust Fund.

 

C.        Fees Paid for Nuclear Decommissioning Trust Fund Investment Services

 

            $257,319                     Blackrock Financial Management, Inc.

            $  17,262                     JPMorgan Investment Management, Inc.

            $155,091                     Tattersall Advisory Group, Inc.

            $  18,414                     TCW Asset Management Co.

            $  81,884                     The Bank of New York Mellon

            $529,970                     Total

 

            Investment management fees were paid from the Nuclear Decommissioning Trust Fund. 

 

 

D.        Results of the Annual Independent Audit

 

In connection with its examination of the Authority’s financial statements, KPMG LLP, performed tests of the Authority’s compliance with certain provisions of the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.  KPMG’s report, a copy of which is attached as Exhibit “6-B,” states that the Authority complied, in all material respects, with the requirements during the year ended December 31, 2009.  Consequently, staff believes the Authority is in compliance with the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.

 

 

 


 

7.                   2009 Financial Reports Pursuant to Section 2800 of the Public Authorities Law and Regulations of the Office of the State Comptroller

               

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the financial report for the year ended December 31, 2009 and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders and the State Comptroller pursuant to Section 2800 of the Public Authorities Law, as amended by the Public Authorities Accountability Act of 2005 (‘PAAA’).  In accordance with regulations adopted by the Office of the State Comptroller (‘OSC’), the Trustees are also requested to approve and authorize posting a report of actual versus budgeted results for the year 2009 on the Authority’s website.

 

BACKGROUND

 

              “The PAAA reflects the State’s commitment to maintaining public confidence in public authorities by ensuring that the essential governance principles of accountability, transparency and integrity are followed at all times.  To facilitate these objectives, the PAAA established an independent Authorities Budget Office (‘ABO’) that monitors and evaluates the compliance of State authorities with the requirements of the Act.  The PAAA became effective with the Authority’s fiscal year beginning January 1, 2006.  The PAAA amended Section 2800 of the Public Authorities Law to require that financial reports submitted by a State authority under Section 2800 be certified by the chief executive officer and chief financial officer and approved by the authority’s board.

 

                            “Following rulemaking proceedings undertaken pursuant to the State Administrative Procedure Act, OSC implemented regulations on March 29, 2006 that address the preparation of annual budgets and related reporting requirements by ‘covered’ public authorities, including the Authority.  These regulations establish various procedural and substantive requirements relating to the budgets and require the chief financial officer to report publicly not later than 90 days after the close of each fiscal year on actual versus budgeted results. 

 

DISCUSSION

 

“The Trustees are requested to approve the required financial report for the year ended December 31, 2009 (Exhibit ‘7-A’) and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders and the State Comptroller pursuant to Section 2800 of the Public Authorities Law, as amended by the PAAA.  This report was reviewed by the Audit Committee at its meeting of February 23, 2010.  The Trustees are also requested to approve a report of actual versus budgeted results for the year 2009 (Exhibit ‘7-B’) and authorize posting it on the Authority’s website.

 

FISCAL INFORMATION

 

                “There is no anticipated fiscal impact.

 

RECOMMENDATION

 

                “The Director – Accounting recommends that the Trustees approve and authorize submittal of the attached reports (Exhibits ‘7-A’ and ‘7-B’) as discussed herein.

 

                “The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and I concur in this recommendation.”

 


 

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

               

WHEREAS, pursuant to Section 2800(1) of the Public Authorities Law, the Authority is required to annually submit to the Governor, the Chairman and Ranking Minority Member of the Senate Finance Committee, the Chairman and Ranking Minority Member of the Assembly Ways and Means Committee, the State Comptroller and the Authorities Budget Office, within 90 days after the end of its fiscal year, a complete and detailed report or reports setting forth certain information regarding, among other things, certain financial information; and

 

WHEREAS, pursuant to Section 2800(3), financial information submitted under Section 2800 shall be approved by the Authority’s Trustees and shall be certified in writing by the Chief Executive Officer and the Chief Financial Officer of the Authority that based on the officer's knowledge the information provided therein (a) is accurate, correct and does not contain any untrue statement of material fact; (b) does not omit any material fact which, if omitted, would cause the financial statements to be misleading in light of the circumstances under which such statements are made and (c) fairly presents in all material respects the financial condition and results of operations of the Authority as of, and for, the periods presented in the financial statements; and

 

WHEREAS, the Chief Executive Officer and the Chief Financial Officer have so certified as to the financial information contained within the attached reports for the fiscal year ending December 31, 2009 as evidenced by a writing dated even date hereof;

 

NOW THEREFORE BE IT RESOLVED, That pursuant to Section 2800 of the Public Authorities Law, the financial reports attached hereto are adopted and the Corporate Secretary be, and hereby is, authorized to submit to the Governor, the Chairman and Ranking Minority Member of the Senate Finance Committee, the Chairman and Ranking Minority Member of the Assembly Ways and Means Committee, the State Comptroller, the Division of the Budget and the Authorities Budget Office the attached financial report for the year ending 2009 in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the attached report of actual versus budgeted results for the year 2009 is approved in accordance with the foregoing report of the President and Chief Executive Officer; and the Corporate Secretary is authorized to post the report on the Authority’s website; and be it further

 

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

 

 

 


 

8.                   Phase II – Workshop and Crew Facility Contract Award    ase II – Workshop and Crew Facility Contract Award   

                  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve the award of a contract to Keleman-Bauer Construction, Inc. d/b/a EdBauer Construction (‘EdBauer’) of Blasdell, New York, in the amount of $4.1 million for construction of a new workshop and crew facility for Phase II of the Ice Boom Storage Project (‘Project’) located at the Killian site for the Niagara Power Project.

 

BACKGROUND

 

                “In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services contracts in excess of $3 million and contracts exceeding a one-year term requires the Trustees’ approval.

 

                “The Niagara River Ice Boom (‘Ice Boom’) operation is a critical component of the Niagara Power Project in Lewiston.  Since 1964, the Ice Boom has been installed in the late fall and removed in the spring of each year.  When installed, the Ice Boom spans approximately 8,800 feet across the outlet of Lake Erie and reduces the amount of ice being released from Lake Erie into the Niagara River.

 

“The Authority presently stores the Ice Boom at 175 Fuhrmann Boulevard in Buffalo, adjacent to the existing Times Beach site, during the off-season (from mid-spring to late fall).  As part of the City of Buffalo and Erie County Relicensing Agreement with the Authority dated June 27, 2006, the Authority agreed to ‘commission a consultant to produce a feasibility study’ regarding relocation of the Ice Boom and to ‘diligently seek to relocate the ice boom to an alternate site.’  The Authority conducted an extensive search to procure an alternate site and received approval from the Trustees at their meeting of March 31, 2009 to purchase the Killian site at 41 Hamburg Street in Buffalo for the purpose of relocating the Ice Boom storage operations.  The Killian site requires extensive modifications to meet both the Authority’s operational needs and requirements set by local officials.  At their September 29, 2009 meeting, the Trustees approved capital expenditures in the amount of $23.9 million and a contract award of $5.9 million for the first phase of construction.

 

DISCUSSION

 

                “With the site development contract in progress for Ice Boom storage in the spring of 2010, construction for the remainder of the project will occur in a sequential manner: a maintenance facility will be constructed by the end of 2010, a boat rail system will be constructed by the spring of 2011 and a public park, including a boathouse facility and canoe/kayak launch, will be developed by the end of 2011.

 

“The scope of work for Phase II includes the procurement and erection of a pre-engineered maintenance workshop building.  The facility will include such features as a crew area, two traveling cranes, a monorail hoist and welding stations to support Niagara personnel in performing inspections, maintenance and repairs, as needed, on material and equipment required for annual Ice Boom operations.  In addition, Phase II work includes the installation of utility services associated with the new facility, a security system for protection of the property and completion of the concrete caps for the north, south and central wharfs.

 

Phase II - New Workshop and Crew Facility Contract

 

                “The Authority issued an advertisement to procure bids for Phase II in the New York Contract Reporter and bid packages were available as of January 11, 2010.  The bid documents were downloaded by 123 potential bidders and 17 potential bidders participated in a site visit on January 22, 2010.

               


 

“The following five proposals were received on February 11, 2010:

 

                Bidder                                                                           Location                                               Lump Sum

 

                EdBauer Construction                                                Blasdell, NY                                         $4,108,000

 

                Gerace Construction Co., Inc.                                   Midland, MI                                         $4,130,498

 

                Sicoli Construction Services, Inc.                             Niagara Falls, NY                                $4,214,850

 

                Concept Construction Corp.                                      Elma, NY                                             $4,344,480

               

                Sicoli & Massaro, Inc.                                                Niagara Falls, NY                                $4,801,000  

                                                                                                                                 

                “The proposals were reviewed by an evaluation committee comprising staff from Procurement and Project Management, as well as the Authority’s consultant, Hatch Acres Corporation. 

 

                “EdBauer’s bid was the lowest in price and was also technically acceptable.  EdBauer, which has extensive experience in general construction and projects of this magnitude and demonstrated knowledge of the scope of work, is capable of completing the Project in a timely manner. 

 

                “The estimated cost of this work is within the authorization of this project approved by the Trustees at their September 29, 2009 meeting and this work is included in the 2010 approved Capital Budget for work related to the Niagara Ice Boom Storage Project.  

 

FISCAL INFORMATION

 

                “Payment associated with this Project will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

“The Senior Vice President – Power Supply Support Services, the Vice President – Procurement, the Vice President – Engineering, the Regional Manager – Western New York and the Vice President – Project Management recommend that the Trustees approve award of a contract to Keleman-Bauer Construction, Inc. d/b/a EdBauer Construction in Blasdell, New York for $4.1 million for construction of a new workshop and crew facility for Phase II of the Ice Boom Storage Project for the Niagara Power Project.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Engineer – Power Supply, the Executive Vice President and Chief Financial Officer 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, approval is hereby granted to award a contract to Keleman-Bauer Construction, Inc. d/b/a EdBauer Construction, Inc. of Blasdell, New York in the amount of $4.1 million for Phase II of the Ice Boom Storage Project located at the Killian site for the Niagara Power Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 

                                                       

Contractor                                               Contract Approval

                                        Keleman-Bauer Construction, Inc.               $4.1 million

                                        d/b/a EdBauer Construction, Inc.         

 

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 agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

 


 

9.                   Niagara Power Project – Robert Moses 30-Ton Gantry Crane Upgrade – Capital Expenditure Authorization and Contract Award  

               

                

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize capital expenditures in the amount of $2.9 million and to approve the award of a two-year contract to Simmers Crane Design & Services Company (“Simmers”) of Salem, Ohio, in the amount of $1.81 million for the refurbishment and upgrade of the Robert Moses (“RM”) 30-Ton Gantry Crane at the Niagara Power Project.

 

BACKGROUND

 

                “In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services contracts in excess of $3 million and contracts exceeding a one-year term require Trustees approval.

 

                “The 30-Ton Gantry Crane, located on the draft tube deck at RM, is primarily used for installation and removal of the hatch covers and draft tube gates at each of the 13 unit intake blocks. 

 

                “The crane was originally manufactured by Milwaukee Crane, a division of Industrial Enterprises in Cudahy, Wisconsin circa 1960.  Many of the components are exhibiting signs of wear and approaching the end of their useful life.  Replacement and spare parts for these components are no longer available.  In 2006, a comprehensive mechanical and structural analysis of the crane determined that many components are in need of repair and modification based on current crane codes and standards.  An Occupational Safety and Health Administration Compliance Inspection also determined that several components need to be added and/or modified to meet current codes. 

 

DISCUSSION

 

                “The Authority issued an advertisement to procure bids in the New York State Contract Reporter and bid packages were available as of October 19, 2009.  The bid documents were downloaded by 36 potential bidders and 15 potential bidders participated in a site visit on November 5, 2009.

 

“The following four proposals were received on December 1, 2009:

 

                                                                                                                                                                    With Selected

Bidder

Location

Base Bid

     Options

 

Simmers Crane                                                                                              

Design & Services Co.

 

Salem, OH

 

$1,637,781

 

$1,811,833

 

Han-Tek Inc.

 

Victor, NY

 

$2,025,108

 

$2,314,756

 

Crane America Services

 

Pittsburgh, PA      

 

$2,051,850

 

$2,232,550

 

Apollo Steel Corporation  

 

Niagara Falls, NY

 

$2,425,681

 

$2,708,443

               

“The four proposals were reviewed by an evaluation committee comprising staff from Engineering, Procurement and Project Management.  Following an extensive review process, the committee recommends award of this contract to Simmers, which submitted the lowest-cost and technically acceptable bid.

 

                “Simmers has extensive experience in design, fabrication and installation of crane upgrade equipment and projects of this magnitude.  The company demonstrated knowledge of the scope of work and is capable of completing the project in a timely manner. 

 

                “Simmers will complete engineering and design work in 2010 and refurbishment activities in 2011.  This two-phase approach allows adequate time for Simmers to properly assess the existing condition of the crane, design appropriate repairs, with Authority approval and deliver long-lead material and equipment.

 

“Simmers projects that approximately 71% of material, field labor and engineering to be used on this project will be provided by New York State companies.  It is anticipated that, of this percentage, more than 90% of all field labor will be performed by New York State firms.

 

                “An additional $174,000 above the bid amount is requested to refurbish the main hoist motors and gearbox; replace the main hoist and gantry drive pillow blocks; replace the gantry drive motor; replace the collector assembly and install a storage compartment.

 

                “Funding in the amount of $709,000 has been included in the 2010 approved Capital Budget.  Funding for 2011 will be included in the Capital Budget request for that year.

                               

FISCAL INFORMATION

 

                “Payment associated with this project will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

“The Senior Vice President – Power Supply Support Services, the Vice President – Procurement, the Vice President – Engineering, the Vice President of Project Management and the Regional Manager – Western New York recommend that the Trustees authorize capital expenditures of $2.9 million and award of a contract to Simmers Crane Design & Services Company in Salem, Ohio, for $1.81 million to refurbish and upgrade the Robert Moses 30-Ton Gantry Crane at the Niagara Power Project.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Engineer – Power Supply, the Executive Vice President and Chief Financial Officer and I concur in the recommendation.”

 

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

 

RESOLVED, That expenditures are hereby approved in accordance with the Authority’s Expenditure Authorization Procedures, for capital expenditures in the amount of $2.9 million and a two-year contract award to Simmers Crane Design & Services Company in Salem, Ohio, for $1.81 million to refurbish and upgrade the Robert Moses 30-Ton Gantry Crane at the Niagara Power Project; 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 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.


 

10.             Niagara Power Project – 115 kV Circuit Breaker Upgrade Project – Capital Expenditure Authorization and Contract Award

 

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve capital expenditures in the amount of $10.03 million for the Niagara Power Project circuit breaker replacement program and to approve the award of a two-year contract to Ferguson Electric Company Inc. (‘Ferguson’) of Buffalo, New York, in the amount of $3.02 million for services to remove and install thirteen 115 kV Circuit Breakers (‘Niagara Breakers’) for the Niagara Power Project’s Switchyard (‘Switchyard’).

 

BACKGROUND

 

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services contracts in excess of $3 million and contracts exceeding a one-year term require Trustee approval.

 

“The retirement of the NRG Energy Company 760 MW Huntley generating station in Western New York has necessitated network improvements to National Grid’s (‘Grid’) local transmission system, along with the construction of a new substation, Paradise Lane.  Thirteen 115 kV oil circuit breakers in the Switchyard are being overdutied by Grid’s upgrades and therefore require replacement.  In an effort to support Grid’s schedule for completion of its work, the Authority is procuring and installing the Niagara Breakers on an expedited basis.

 

DISCUSSION

 

“In May 2009, the President and Chief Executive Officer authorized preliminary Project funding in the amount of $490,000 to begin engineering and design services in order to finalize the scope and cost estimate and support Grid’s schedule, as required.

 

“At their meeting of December 15, 2009, the Trustee’s approved a $1.8 million contract award to ABB Inc. for furnishing the Niagara Breakers and capital expenditures in the amount of $3.73 million for engineering, design and procurement. Also at that meeting, the Trustees were advised that a revised capital expenditure request would be presented for their approval at the March 2010 meeting. 

 

“In accordance with the Authority’s agreement with Grid, installation of the Project will begin in June 2010 and be completed by December 31, 2011. 

 

“This capital expenditure authorization with contingency comprises the following:

 

Niagara Breaker Removal and Installation

$  3,483,200

600V Power Cables

$     525,000

Niagara Site Support          

$  1,269,100

Authority Direct Expenses

$     252,000

Authority Indirect Expenses             

$     276,500

SUBTOTAL

$  5,805,800

President Preliminary Funding Authorization

$     490,000

December 2009 Trustee Authorization

$  3,734,200

TOTAL

$10,030,000

Niagara Breaker Removal and Installation Contract

 

“Procurement of contractor services to remove and install the Niagara Breakers at this time is necessary to meet the Authority’s commitment to complete the Project by the end of 2011 to support Grid’s March 2012 estimated completion date of its system reliability improvements to the local supply network in Western New York. 

 

“The Authority issued an advertisement for procurement of services to remove and install the Niagara Breakers in the New York Contract Reporter and bid packages were available as of December 7, 2009.  The bid documents were downloaded by 60 parties and 10 potential bidders participated in a site visit on December 21, 2009.

 

“The following proposals were received on January 15, 2010, as noted below:

 

Bidder  

Location

Lump Sum

Ferguson Electric Construction Co. Inc.

Buffalo, NY

$2,208,000

O’Connell Electric Co. Inc.

Victor, NY

$2,834,619

Eaton Corp.

East Syracuse, NY

$2,842,421

Hawkeye LLC    

Hauppauge, NY

$3,216,358

Northline Utilities LLC

Au Sable Forks, NY

$3,469,194

ABB Inc.

Mt. Pleasant, PA

$5,622,552

“The proposals were reviewed by an evaluation committee comprising staff from Engineering, Niagara, Procurement and Project Management.

 

                “Ferguson’s bid was the lowest in price and technically acceptable.  Ferguson has performed successfully on previous projects at the Niagara Power Project, has demonstrated knowledge of the scope of work and is capable of completing the Project within the Authority’s schedule.

 

“Ferguson will provide materials and services to remove and install the Niagara Breakers and provide Niagara staff with functional testing support.

 

“The evaluation committee recommends including $675,000 for materials and services to replace Switchyard tower foundations, $36,000 for removal of existing power cables and $100,000 for additional training associated with the Niagara Breaker replacement in the award to Ferguson, for a total of $811,000 above the bid amount.

 

“Funding in the amount of $6.915 million has been included in the 2010 Capital Budget.  Expenditures for subsequent years will be budgeted in those years.

 

FISCAL INFORMATION

 

“Payment associated with this project will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

“The Senior Vice President – Power Supply Support Services, the Senior Vice President – Transmission, the Vice President – Procurement, the Vice President – Engineering, the Regional Manager – Western New York and the Vice President Project Management recommend that the Trustees authorize capital expenditures in the amount of $10.03 million and approve the award of a contract to Ferguson Electric Company Inc. of Buffalo, New York, in the amount of $3.0 million for services to remove and install thirteen 115 kV Circuit Breakers.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Engineer – Power Supply and I concur in the recommendation.”

 

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

 

RESOLVED, That expenditures are hereby approved in accordance with the Authority’s Expenditure Authorization Procedures for capital expenditures in the amount of $10.03 million and a two-year contract award to Ferguson Electric Company Inc. of Buffalo, New York, in the amount of $3.02 million for services to remove and install thirteen 115 kV Circuit Breakers for the Niagara Power Project’s Switchyard; 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 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.

 

 


 

11.                STL-CEC Microwave Communication System Upgrade - Expenditure Authorizations  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve capital expenditures of $4.683 million to upgrade the Microwave Communication System (‘System’) from the St. Lawrence/FDR Power Project (‘STL’) to the Frederick R. Clark Energy Center (‘CEC’), the ‘Project.’  The Project includes engineering, procurement, installation, testing and commissioning needed to replace the existing ‘analog’ microwave communication equipment with the ‘digital’ type. 

 

BACKGROUND

 

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of construction contracts in excess of $3 million and contracts exceeding one year require the Trustees’ approval.

 

“The System supports the operation of the Bulk Power System transmission lines that are routed from STL to the Marcy Switchyard at CEC and serves as a back-up communication ‘link’ for the relay protection and control systems.  The System was built and commissioned in 1986; the equipment has reached the end of its operating life and spare parts are difficult to obtain.  An upgraded digital microwave system would ensure System reliability, provide a more efficient communication medium for data and expand the Authority’s capabilities to implement future ‘Smart Grid’ technology, for example, phasor measurement units, new digital relays and smart meters, that is presently being advocated by the power industry.

 

DISCUSSION

 

“The System ‘link’ from STL to CEC contains four ‘repeater’ facilities.  These repeater facilities ensure that the data is properly transmitted over the long distance between the STL and CEC facilities.  These repeater facilities are known as Belfort, Talcottville, Cooper Hill and Wilson Corners.   

 

“The Project would include the replacement of all existing electronic equipment with ‘state-of-the-art’ hierarchical digital electronic equipment at STL, CEC and the four repeater facilities.  In compliance with the North American Electric Reliability Corporation Critical Infrastructure Protection (‘NERC-CIP’) recommendations, all electronic equipment would be contained within physically secured cabinets.  The equipment to be replaced would include antennas and elliptical cables, lightning protection, dehydration equipment and channelization equipment.  The Project will also include the replacement of analog equipment serving the ‘spur link’ to the Adirondack substation.

 

“In advance of the equipment replacement, the existing back-up protective relaying communication systems will be transferred to two new, temporary, leased T1 telephone circuits. This temporary arrangement will simplify the installation of the new communication equipment while maintaining the transmission system’s operational reliability.

 

“In accordance with the New York State Environmental Quality Review Act and the Authority’s implementing regulations at 21 NYCRR Part 461, this project will not have a significant effect on the environment.  The Vice President – Environment, Health and Safety has determined this project to be a Type II action in accordance with Part 461.17 (a) and/or (b).  Furthermore, all aspects of this project will be handled in accordance with all applicable environmental laws, rules and regulations.

 

“The engineering, procurement and installation of the System  is  scheduled to be completed by the fourth quarter of 2010 and the testing and commissioning of the installed System for all sites is scheduled to be completed by the second quarter of 2011.  The various phases of the work will be implemented through competitively bid contracts in accordance with the Authority’s Expenditure Authorization Procedures.

 

“The total estimated project cost to furnish and install an upgrade to the System at STL, CEC and the four repeater facilities is $4.683 million, as follows:

               

Engineering                                                           $    420,000                          

Installation contractors                                         3,120,000                

NYPA installation support                                       300,000

Project and construction management                 620,000                          

Authority indirect expenses                                     223,000                          

Total                                                                      $ 4,683,000                         

 

“The 2010 estimated expenditure of $3.738 million is included in the 2010 capital budget approved by the Trustee at their December 15, 2009 meeting.  The balance will be included in the 2011 budget submission.

 

FISCAL INFORMATION

 

“Payment will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

“The Senior Vice President – Power Supply Support Services, the Vice President – Project Management, the Vice President – Engineering, the Chief Information Officer, the Regional Manager – Northern New York and the Project Manager – Power Supply Support Services, recommend that the Trustees authorize capital expenditures of $4.683 million to upgrade the Microwave Communication System from the St. Lawrence/FDR Power Project to the Frederick R. Clark Energy Center.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President and Chief Engineer – Power Supply, the Executive Vice President and Chief Financial Officer 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 Authority’s Expenditure Authorization Procedures, capital expenditures in the amount of $4.683 million are hereby authorized as recommended in the foregoing report of the President and Chief Executive Officer, in the amount and for the purpose listed below:

 

Capital                                                          Expenditure Approval

 

Engineering, Procurement,

Construction, Project Const. Mgt.,

Authority Direct & Indirect                            $ 4,683,000

               

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


 

12.                Marcy Energy Control Center – Energy Management System 2010-15 Incremental Upgrades – Capital Expenditure Authorization and Contract Award 

               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize capital expenditures in the amount of $7.1 million and to approve the award of a six-year contract to Siemens Energy, Inc. (‘Siemens’) of Minnetonka, Minnesota, for $6.225 million to upgrade the existing Energy Management System (‘EMS’) software (the ‘Project’).

 

BACKGROUND

 

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of a non-personal service contract in excess of $3 million for a term exceeding one year requires the Trustees’ approval.

 

“The 2010-15 EMS incremental upgrades Project would provide for enhancements to the security and functionality of the Siemens EMS installed at the Energy Control Center (‘ECC’) in Marcy, New York.  Spreading the upgrades over six years will provide annual functional benefits and smaller manageable projects.

 

“Siemens supplied ECC’s EMS in 1995 as well as subsequent wholesale software upgrades in 2001 and 2007.  These wholesale upgrades were time intensive, lasting up to 30 months, and required staff support from EMS, Engineering and Operations.  Implementing the Project over six years will ease the demand on staff and will allow annual updates to the EMS hardware and software, resulting in increased user functionality for monitoring the power system’s security and reliability. These upgrades will also continue to ensure compliance with Authority, New York State and North American Electric Reliability Council Cyber Security Standards, Policies and Procedures.

 

DISCUSSION

 

“The EMS upgrade contract with Siemens is requested as a sole-source award for the following reasons:

 

1.             Siemens is the original supplier of the ECC’s EMS and has all of the personnel and expertise to install the required software updates.

 

2.             The proposed incremental upgrades are only available from Siemens; the associated software is an integral part of the existing EMS hardware configuration and software design.

 

3.             Siemens’ product development is an ongoing process and it is the Authority’s commitment to stay current with the evolution of software enhancements and vulnerability corrections.

 

4.             The Authority has a six-year Master Service Agreement and Software Subscription Agreement in place to ensure accessibility to the software enhancements at a reduced rate.

 


 

“Details of the proposed schedule of upgrades, which have been agreed upon by Siemens, are as follows:

 

Budget

Year

Incremental Upgrade Phase

 Siemens 

Cost Estimate

                 $

Authority

Cost Estimate

                 $

2010

AIX 5.3 and Oracle 10g

280,000

50,000

2011

Oracle-Based Advanced Applications & Operator Training Simulator

945,000

100,000

2012

Communications Front End on AIX

330,000

50,000

2013

Spectrum V3.10 & Historical Information System on AIX

1,972,000

100,000

2014

Information Model Manager

432,000

100,000

2015

Spectrum V3.11

1,891,000

100,000

 

Siemens Expense

 =SUM(ABOVE) $5,850,000

 

 

Travel Expenses

80,000

 

 

Contingency

295,000

 

 

Total Siemens Cost

 =SUM(ABOVE) $6,225,000

 

 

Authority Direct Expense + 5% contingency

525,000

 

 

Authority Indirect Expense

350,000

 

 

Total CEAR Request

 =SUM(ABOVE) $7,100,000

 

 

FISCAL INFORMATION

 

“Payments associated with this Project will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

“The Senior Vice President – Transmission and the Director Power System Operations recommend that the Trustees authorize capital expenditures of $7.1 million and award the contract to Siemens Energy, Inc of Minnetonka, Minnesota, for $6.225 million to perform the 2010-15 Energy Management System incremental upgrades.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Engineer – Power Supply and I concur with the recommendation.”

 

Ms. Terryl Brown presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Townsend, Ms. Brown said that this was a sole-source contract award.

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

 

RESOLVED, That in accordance with the Authority’s Expenditure Authorization Procedures, the Trustees hereby approve capital expenditures in the amount of $7.1 million and a six-year contract award to Siemens Energy, Inc. of Minnetonka, Minnesota, for $6.225 million to perform the 2010-15 Energy Management System incremental upgrades; 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 agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

13.                Power for Jobs Program – Contribution to the State Treasury 

 

The President and Chief Executive Officer submitted the following report:

SUMMARY  

“The Trustees are requested to authorize a voluntary contribution in the amount of $12.5 million to the State Treasury in support of the Power for Jobs (‘PFJ’) Program pursuant to Chapter 217 of the Laws of 2009.

 

BACKGROUND

 

“In July 1997, the New York State Legislature and the Governor approved the PFJ 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 program, originally intended to be three years in length, has been extended many times by the State Legislature.  It is currently scheduled to end on May 15, 2010.

 

“Under the PFJ Program, distributors of the power are allowed to take a tax credit against their gross receipts tax (‘GRT’) to offset lost revenues resulting from the delivery of PFJ power.  Legislation enacted into law as part of the 2000-01 State budget, and as amended in subsequent years, authorized the Authority ‘as deemed feasible and advisable by the trustees’ to make a number of ‘voluntary contributions’ to the State treasury in connection with the PFJ Program to off-set the State’s revenue loss resulting from the GRT Credit.  

 

“From December 2002 through January 2009, the Authority made a number of voluntary contributions to the State pursuant to authorizing legislation in an aggregate amount of $449 million, the most recent of which was a $25 million payment in January 2009 made as part of a total contribution of $119 million.  Pursuant to legislation enacted in July 2009 (Chapter 217 of the Laws of 2009), the Authority is authorized to make an additional voluntary contribution of $12.5 million to the State in connection with the PFJ Program for State Fiscal Year 2009-10.  If paid, this would bring the aggregate total to $461.5 million.

DISCUSSION

 

“The Authority is requested, from time to time, to make financial contributions and transfers of funds to the State or to otherwise provide financial support for various State programs.  Such financial support has come in the form of direct transfers to the State’s general fund, rebates to customers of the PFJ Program, the provision of below-cost energy to the beneficiaries of the State’s Energy Cost Savings Benefits Program and contributions toward the operation and maintenance expenses for State parks in the vicinity of the Niagara and St. Lawrence projects. 

 

“Any such contribution or transfer of funds must (1) be authorized by the Legislature; (2) be approved by the Trustees ‘as feasible and advisable’ and (3) satisfy the requirements of the Authority’s General Resolution Authorizing Revenue Obligations dated February 24, 1998, as amended and supplemented (‘Bond Resolution’).  The Bond Resolution’s requirements to withdraw monies ‘free and clear of the lien and pledge created by the [Bond] Resolution’ are as follows:  such withdrawals (a) must be for a ‘lawful corporate purpose as determined by the Authority,’ and (b) the Authority must determine, taking into account among other considerations, anticipated future receipt of revenues or other moneys constituting part of the Trust Estate, that the funds to be so withdrawn are not needed for (i) payment of reasonable and necessary operating expenses, (ii) an Operating Fund reserve for working capital, emergency repairs or replacements, major renewals or for retirement from service, decommissioning or disposal of facilities, (iii) payment of, or accumulation of a reserve for payment of, interest and principal on senior debt or (iv) payment of interest and principal on subordinate debt.

 

“Staff reviews each request for such contributions against the Authority’s expected cash position and reserve requirements.  The primary business criteria staff use to evaluate the potential transfers are (a) that the Authority maintains an adequate debt service coverage ratio (at or above the median coverage ratio for comparable wholesale public power systems); and (b) that the Authority maintains in total 100 days’ worth of cash on hand to continue to provide for adequate liquidity.   

 

“In 2009, the Authority’s financial and operating results produced net income somewhat below budget while net cash flow was slightly above budget.  During this time, the Authority stayed well within the criteria described above.  The outlook for 2010 shows expected net cash flow and reserve levels to be more than adequate to achieve the above-stated financial goals.  Accordingly, given the current financial condition of the Authority, its estimated future revenues, operating expenses, debt service and reserve requirements and the other voluntary contributions, including the request for $107 million being considered by the Trustees in a companion item today, staff is of the view that it is feasible for the Authority to make the contribution of $12.5 million without compromising the financial integrity of the Authority. 

 

FISCAL INFORMATION

 

“Given the financial condition of the Authority, its estimated revenues, operating expenses and debt service and reserve requirements, staff is of the view that it is feasible for the Authority to make the voluntary contribution of  $12.5 million authorized by the PFJ legislation.  The Authority has reserved for this amount in its 2009 financial reports as the GRT credit is associated with calendar year 2009 PFJ sales.        

RECOMMENDATION

 

“The Senior Vice President – Corporate Planning and Finance recommends that the Trustees authorize the payment to the State Treasury of $12.5 million pursuant to the authorization in Chapter 217 of the Laws of 2009, which would bring the Authority up to a cumulative payment of $461.5 million for the Power for Jobs Program.   

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and I concur in this recommendation.”

 

                Ms. Brown presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Townsend, Mr. Pasquale said that he and Mr. Russak were talking on a daily basis with staff at the New York State Legislature on the future of the Power for Jobs (“PFJ”) program.  Chairman Townsend suggested that it might be a good idea to schedule a meeting of the Trustees with key legislators at which the Marketing and Economic Development video could be shown.  President Kessel asked Mr. Pasquale, Ms. Brown and Mr. Russak to work with Ms. Karen Delince to set up calls with each of the Trustees to brief them on the status of the PFJ efforts in the Legislature, as well as the Governor’s bill and his letter to the legislative leaders in this regard.  He said that in view of the fact that the expiration date for the current PFJ program is May 15 (as opposed to June 30 as in previous years), the Governor was trying to incorporate some provisions for PFJ in his budget bills. 


 

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

 

RESOLVED, That the Trustees hereby authorize a payment to the State Treasury of $12.5 million from the Authority’s Operating Fund pursuant to the Power for Jobs legislation discussed in the foregoing report of the President and Chief Executive Officer, with such payment of $12.5 million authorized to be made on or before March 31, 2010; and be it further

               

RESOLVED, That such monies in the amount of $12.5 million to be used for the payment to the State Treasury described in the foregoing resolution are not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

 

RESOLVED, That as a condition to making the payments specified in the foregoing resolutions, on the day of such payment the Senior Vice President – Corporate Planning and Finance or the Treasurer shall certify that such monies to be used for the payment to the State Treasury described in the foregoing resolutions are not then needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, 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 Treasurer and all other officers of the Authority be, and each of them hereby is, authorized and directed, for and in the name and 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, which they, or any of them, may deem necessary or advisable in order to effectuate the foregoing resolutions, subject to the approval as to the form thereof by the Executive Vice President and General Counsel.

 

 

14.                Next Meeting

 

                Chairman Townsend said that the next meeting of the Trustees would be held at a location to be determined in Elmira on Wednesday, May 26 (rather than Tuesday, May 25). 

 

 

Closing

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

12:20 p.m.

 

 

 

Karen Delince

Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

                                                                

 

MARCH MINS.10