Minutes of the Regular Meeting of the Power Authority of the State of New York held at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York at approximately 11:00 a.m.
The Members of the Board present were:
Michael J. Townsend, Chairman
Jonathan F. Foster, Vice Chairman
D. Patrick Curley, Trustee
John S. Dyson, Trustee
R. Wayne LeChase, Trustee
Eugene L. Nicandri, Trustee
Mark O’Luck, Trustee
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Gil C. Quiniones Acting President and Chief Executive Officer
Judith C. McCarthy Acting General Counsel
Donald Russak Acting Chief Financial Officer
Thomas Antenucci Senior Vice President – Power Supply Support Services
Steve DeCarlo Senior Vice President – Transmission
Thomas DeJesu Senior Vice President – Public, Governmental and Regulatory Affairs
Paul Finnegan Senior Vice President – Public, Governmental and Regulatory Affairs
James Pasquale Senior Vice President – Marketing and Economic Development
Joan Tursi Senior Vice President – Corporate Support Services
Paul Belnick Vice President – Energy Services – Energy Services and Technology
John Canale Vice President – Project Management
Thomas Davis Vice President – Financial Planning and Budgets
Dennis Eccleston Vice President – Information Technology/Chief Information Officer
Michael Huvane Vice President – Marketing – Business and Municipal Marketing
John Kahabka Vice President – Environmental, Health and Safety
Joseph Leary Vice President – Community and Government Relations
Lesly Pardo Vice President – Internal Audit
Scott Scholten Vice President and Chief Risk Officer – Energy Risk Assessment and Control
John Suloway Vice President – Project Development, Licensing and Compliance
Lori Alesio Assistant General Counsel – Human Resources and Labor Relations
Vincent Esposito Assistant General Counsel – Legislative and Regulatory Affairs
Karen Delince Corporate Secretary
Brian McElroy Treasurer
Jill Anderson Director – Business Integration
John Brennan Director – Strategy and Governance
Robert Knowlton Director – Civil/Structural Engineering
Mike Lupo Director – Marketing Analysis and Administration
Michael Saltzman Director – Media Relations
Lynn Hait Regional Manager Central NY – Site Administration, B-G
Gary Schmid Manager – Network Services Infrastructure
Kevin O’Keeffe Manager – Video Production Services – Media Relations
Meg Smilowitz Manager – SAP Portfolio, Application Services
Ali White Senior Attorney I – Human Resources and Labor Relations
Tannille Santos Conservation Engineer – Energy Services and Technology
Trish Hennessy Photographer – Video and Photographic Services
Michael Schneider Contractor – Media Relations
Lorna M. Johnson Assistant Corporate Secretary
Sheila Baughman Senior Secretary – Corporate Secretary’s Office
Mikey Wade Intern
Kenneth F. Deon Managing Partner, KPMG LLP
Brendan Kennedy Senior Manager, KPMG LLP
Chairman Townsend presided over the meeting. Corporate Secretary Delince kept the Minutes.
Introduction
Chairman Michael Townsend welcomed the Trustees and staff to the meeting.
1. Approval of the November 15, 2011 Meeting Agenda
On motion made and seconded, the agenda for the meeting was approved as amended.
On
motion made and seconded, the Consent Agenda was approved. Trustee Curley
recused himself as regards the vote on item #2c – Expansion Power Contracts
with Moog, Inc.
and Try-It Distributing Co., Inc. – Transmittal to the
Governor.
a. Approval of the Minutes
The Minutes of the Regular Meeting held on October 25, 2011 were unanimously adopted.
b. Inclusion of Independent Not-for-Profit Institutions of Higher Education in the Statewide Energy Services Program
The Acting President and Chief Executive Officer submitted the following report:
SUMMARY
“The Trustees are
requested to authorize the inclusion of independent not-for-profit colleges and
universities within New York State as eligible participants in the Statewide
Energy Services Program (‘Statewide ESP’). As deemed feasible and advisable by
the Trustees, pursuant to a recent amendment to Chapter 477 of the Laws of 2009
(Public Authorities Law
§1005(17)) recently signed by Governor Cuomo, the
Authority was authorized to finance and design, construct, implement, provide
and administer energy related projects, programs and
services for this group of
prospective customers. If authorized by the Trustees, all Authority costs will
be recovered directly from each participating not-for-profit college or
university.
BACKGROUND
“Since the 1980s,
the Authority, through its Energy Services Programs (‘ESP’), has offered
various types of energy services and clean energy technology programs to
participants
throughout the State to help them lower their energy usage and/or
achieve cleaner and more energy-efficient use of energy and natural resources.
“As an outgrowth
of the State’s continuing efforts in the areas of energy efficiency and clean
energy technologies (e.g., its 45x15 goal to meet 45% of the State’s
electricity needs
through improved energy efficiency and renewable sources by
2015 and Executive Order No. 111, which requires agencies to reduce energy
consumption while transitioning to renewable
energy sources), the State signed
into law Chapter 477 of the Laws of 2009 on September 16, 2009. Governor Cuomo
amended Section 1005 of the Public Authorities Law by adjusting
subsection 16
(now 17) which enhanced the Authority’s ability to provide energy efficiency,
clean energy and green building programs and services to reduce energy
consumption and
mitigate environmental impacts from energy usage and eliminated
the sunset date originally designated. Subsequently, he signed into law,
effective August 31, 2011, the Authority’s
ability to carry out energy
efficiency and clean energy projects for independent, not-for-profit colleges and
universities.
“The amendment
now authorizes the inclusion of this new customer group of independent
not-for-profit institutions of higher learning for energy efficiency services
consistent with
the State’s energy and environmental policies.
DISCUSSION
“There are more
than100 independent not-for profit colleges and universities in the State. The
addition of these institutions as eligible participants in the Statewide ESP
would assist
these institutions to address critical energy efficiency concerns,
help them to reduce their energy costs, free up monies for capital expenses,
which in turn could have a favorable impact on tuition
and fees. All
Authority costs will be recovered directly from each participating institution.
“Assisting these institutions of higher education has benefits for the State:
·
The facilities in the new market serve over 450,000 undergraduate
and graduate students. More than 300,000 of these students are New York
residents. Fifty-four percent of the
baccalaureate degrees, seventy-three
percent of the master’s degrees and seventy-nine percent of the doctoral and
first professional degrees earned in the State are from these
institutions;
· Boost local economy – the schools in nine of the State’s counties provide five percent or more of those counties’ total local employment;
· These institutions contribute $54 billion to the economy, employ 174,000 people and sponsor 500 research centers and institutes that are available to businesses and local communities.
“If approved by
the Trustees, the Statewide ESP projects, programs and services will be
available to not-for-profit colleges and universities that sign a cost-recovery
agreement and
commit to repay the Authority for the costs associated with any
financing provided for eligible ESP project(s).
FISCAL INFORMATION
“No additional
funding is requested for the implementation of energy-related projects,
programs and services to be included in the Statewide ESP for the benefit of
the independent
not-for-profit institutions. Funding will be provided through
Authority financing options previously approved by the Trustees for Statewide
ESP. In addition, projects may be funded, in part,
with monies from the
Petroleum Overcharge Restitution (‘POCR’) fund. All Authority costs, including
Authority overheads, excluding any grant of POCR funds, will be recovered from
the
individual participating institution, similar to other Energy Services and
Technology programs. The Authority will continue to evaluate each applicant in
order to best mitigate risk of loss to
the Authority.
RECOMMENDATION
“The Vice
President – Energy Services and Technology recommends that the Trustees approve
the inclusion of independent not-for-profit colleges and universities in the
Statewide
Energy Services Program.
“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”
The following resolution, as submitted by the Acting President and Chief Executive Officer, was unanimously adopted.
RESOLVED, That the
Trustees authorize inclusion of independent not-for-profit colleges and
universities into the Statewide Energy Services
Program as described in the
foregoing report of the Acting President and Chief Executive Officer; and be it
further
RESOLVED, That the
funding for the energy related projects, programs and services for the benefit
of the independent not-for-profit institutions
be provided through Authority
financing options previously approved by the Trustees for Statewide Energy
Services Programs;
Commercial Paper Program/ Statewide ESP
Operating Fund/POCR Authorization
Previously Authorized $833 million
Additional Funding $ 0 million
Total Amount Authorized $833 million
AND BE IT FURTHER
RESOLVED, That the Vice President – Energy Services and Technology is
authorized to determine which projects in the
Statewide Energy Services
Programs will be deemed to be energy services projects within the meaning of
Section (7) of Part P of Chapter 84 of the Laws
of 2002 (the “Section (7) POCR
Legislation”) to be funded, in part, with Petroleum Overcharge Restitution (“POCR”)
Funds allocated pursuant to the
Section (7) POCR Legislation; and be it further
RESOLVED, That
POCR funds allocated to the Authority by the Section (7) POCR Legislation may
be used to the extent authorized by such
legislation, in such amounts as may be
deemed necessary or desirable by the Vice President – Energy Services and
Technology to finance Statewide
Energy Services Program projects; and be it
further
RESOLVED, That the
Chairman, the Vice Chairman, the Acting President and Chief Executive Officer,
the Acting Chief Operating Officer
and all other officers of the Authority are,
and each of them hereby is, authorized on behalf of the Authority to do any and
all things and take any and
all actions and execute and deliver any and all
certificates, agreements and other documents to effectuate the foregoing
resolution, subject to the
approval of the form thereof by the Acting General
Counsel.
c. Expansion Power Contracts with Moog, Inc. and Try-It Distributing Co., Inc. – Transmittal to the Governor
The Acting President and Chief Executive Officer submitted the following report:
SUMMARY
“The Trustees are
requested to approve the proposed agreements (‘Agreements’) for the sale of
Expansion Power to Moog, Inc. (‘Moog’) and Try-It Distributing Co., Inc.
(‘Try-It’) and to authorize their transmittal to the Governor. The proposed
Agreements with Moog and Try-It are attached as Exhibits ‘2c-A’ and ‘2c-B,’
respectively.
BACKGROUND
“At their July 26, 2011 meeting, pursuant to criteria set
forth in §1005 (13) of the Public Authorities Law (‘PAL’), the Trustees approved 300 kilowatt (‘kW’) and 200 kW
Expansion
Power allocations to Moog and Try-It, respectively, each for a
term of five years. The Trustees also authorized a
public hearing, pursuant to §1009 of the PAL, on the proposed Agreements
to effectuate the sale of power and energy for the allocation to the
companies.
“In return for the 300 kW
allocation, Moog, a designer and manufacturer of precision motion control
equipment, committed to invest $13 million to build and equip a new,
two-story,
68,000 square-foot corporate shared services building at its East
Aurora campus. As a result of this project,
the company would commit to creating 70 new jobs in addition to the nearly
2,500
existing high-quality jobs.
“In return for the 200 kW allocation, Try-It, a wholesale
beverage distributor located in Depew, New York,
committed to invest a total of $14.0 million to expand its existing
office and
warehouse facility by over 100,000 square feet. A majority of the
new space will be climate controlled warehousing operations. As a result of this expansion project, the company
would commit
to creating 23 new jobs above its existing 242 jobs.
“Regarding the
proposed Agreements, firm electric service will be equivalent to that provided
to all other Authority firm hydropower customers and subject to pro-rata
curtailment when
there is insufficient generation at the Niagara and St.
Lawrence/FDR facilities to meet the energy requirement of the firm hydropower
customers. The allocations will be subject to enforceable
employment
commitments. The Agreements include an annual job reporting requirement with a
job compliance threshold of 90%. Should the ratio of actual jobs reported to
jobs committed
fall below the compliance threshold, the Authority have the
right to reduce the hydropower allocation on a pro-rata percentage basis.
“Electricity will
be sold directly to the customers (‘direct service’), with delivery service
provided by New York State Electric and Gas, the local distribution company.
The rates, terms,
and conditions for direct EP sales, as applicable to all
other direct service EP allocations, are contained in the ‘Schedule of Rates
for Sale of Expansion Power – Service Tariff No. EP-1,’ that is
effective
through June 30, 2013. Thereafter, sales for these Agreements and all EP and
Replacement Power allocations will be served under the ‘Schedule of Rates for
Sale of Firm Power to
Expansion and Replacement Customers located In Western
New York – Service Tariff No. WNY-1.’
“Regarding the
status of the individual expansion projects, both Moog and Try-It’s projects
have commenced and are progressing as planned. If the Agreements are approved
by
the Trustees and the Governor, the individual customer agreements will only
be executed after a project review is completed by and to the satisfaction of
the Authority.
DISCUSSION
“A public hearing
on the Agreements was held on October 4, 2011 at the Niagara Power Project’s
Power Vista Visitor Center in Lewiston. There were no oral statements made at
the
public hearing and no written statements were submitted. The official
transcript of the public hearing is attached as Exhibit ‘2c-C.’ As such, the
Agreements are submitted for final approval
as proposed.
RECOMMENDATION
“The Manager – Business Power Allocations and Compliance
recommends that the Trustees approve the proposed Agreements for the sale of
Expansion Power to Moog, Inc. and
Try-It Distributing Co., Inc. and authorize the transmittal of the Agreements to the
Governor for approval.
“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”
The following resolution, as submitted by the Acting President and Chief Executive Officer, was unanimously adopted.
RESOLVED, That the Expansion Power agreements for the sale of hydroelectric power and energy generated by the Authority for sale to Moog, Inc. and Try-It Distributing Co., Inc., respectively, are in the public interest and should be submitted to the Governor for approval and that the agreements, along with the record of the public hearing thereon, be forwarded to the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Ways and Means Committee, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee; and be it further
RESOLVED, That the Chairman and the Corporate Secretary be authorized and directed to execute such agreements in the name of and on behalf of the Authority after it has been approved by the Governor; and be it further
RESOLVED, That the Senior Vice President – Marketing and Economic Development, or his designee, be, and hereby is, authorized, subject to the approval of the form thereof by the Acting General Counsel, to negotiate and execute any and all documents necessary or desirable to implement the agreements with the companies as set forth in the foregoing report of the Acting President and Chief Executive Officer; and be it further
RESOLVED, That the Chairman, the Vice Chairman, the Acting President and Chief Executive Officer, the Acting 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 Acting General Counsel.
a. Report of the Acting President and Chief Executive Officer
Acting
President and Chief Executive Officer Quiniones discussed the Authority’s
performance, as reflected in the performance matrix developed by Authority
staff, and highlighted
some of the key initiatives. He said that the Authority
is performing well operationally and financially.
Key Issues
Governor’s Energy Efficiency Initiative
Acting
President and Chief Executive Officer Quiniones said that because of the
Authority’s success in its energy efficiency program, Authority staff is
assisting the Governor’s office
staff in their effort to accelerate the
implementation of energy efficiency initiatives in public buildings around the
state.
Recharge New York
Acting
President and Chief Executive Officer Quiniones said that, to date, staff has
received 133 completed applications for power under the new Recharge New York
(“RNY”)
Program with approximately 600 additional applications in progress in
the online system. Staff from Marketing and Public and Governmental Affairs
continue to visit stakeholders
around the State in order to explain the program
and the application process.
Proposed Hydro Rate Increase
Acting
President and Chief Executive Officer Quiniones said that based on comments
received at the public forum to consider the hydropower rate increase, staff
will be recommending
that the rates be modified downward from the initial
proposal. He thanked Trustee Dyson for his input in identifying measures to
reduce the Authority’s expenses, adding that these measures
will continue with
the objective of achieving ten percent reductions in overhead expenses in
keeping with the Governor’s goal.
In
response to a question from Trustee Nicandri, Acting President and Chief
Executive Officer Quiniones said that two employees have been assigned to
support the Governor’s office
with regard to its energy efficiency initiative.
He said the assignment will be for approximately six months and they will be
providing technical expertise for the development of the program.
In
response to a question from Trustee LeChase, Acting President and Chief
Executive Officer Quiniones said that the number of applications received, to
date, for the RNY program
is less than anticipated; but it is expected
additional applications will be submitted. He added that RNY is a very
valuable program, and, eventually, the number of potential customers
applying
for the program will increase.
In
response to a question from Chairman Townsend, Acting President and Chief
Executive Officer Quiniones said that although customers who were a part of the
Power for Jobs (“PFJ”)
or Energy Cost Savings Benefit (“ECSB”) programs are
more aware of the new program because of the Authority’s outreach activities,
the Authority is expecting to receive applications from new
businesses that are
not a part of the PFJ or ECSB program.
In
response to a question from Trustee Curley, Acting President and Chief
Executive Officer Quiniones said that under the Recharge New York program,
applications go through the
Central Funding Application (“CFA”) process and
that the Regional Economic Development Councils have access to the applications
submitted through the CFA. In response to further
question from Trustee
Curley, Acting President and Chief Executive Officer Quiniones said that no
applications have been rejected by the Authority; staff reviews the
applications and if they
are incomplete, staff will contact the applicant and
assist them with the application.
b. Report of the Acting Chief Operating Officer
Senior Vice President – Power Supply Support Services, Mr. Thomas Antenucci, provided highlights of the report to the Trustees.
Performance Measures
· Net Generation exceeded projections; transmission reliability measures exceeded its target and there were no significant transmission events in October.
Key Issues
Forced Outages
·
500 MW Plant – two forced outages from problems on Unit 7B
which tripped out of service on September 27 and had an oil leak on
October7th. The unit was repaired and
returned to service on October 7 and 10,
respectively.
· Y-49 feeder located near the east Garden State substation – reason for outage has been located and the unit is in the process of being repaired.
Planned Maintenance Outages
· Richard M. Flynn Power Plant – scheduled to return to service by the end of November.
· Niagara-Lewiston Plant – replacement of the generator step-up transformer to be completed in December.
· Blenheim-Gilboa Project – Unit #3 expect to return to service by the end of the week.
Technical Compliance – NERC Reliability Standards
·
The Northeast Power Coordinating Council (“NPCC”) conducted
a Culture of Compliance Survey of its 350 registered entities. On October 18,
the Authority received a letter
from NPCC stating that the Authority has
demonstrated that it meets or exceeds all minimum characteristics for a
favorable culture of compliance.
c. Report of the Acting Chief Financial Officer
Acting
Chief Financial Officer, Mr. Donald Russak, provided highlights of the report
to the Trustees. He said that the Authority continues to perform well
financially. For the period
ended October 30, 2011, Net Income was $19
million, which is $7 million above budget. Net Income through October 31, 2011
is $211 million; this amount is $62 million above budget.
In
response to a question from Vice Chairman Foster, Mr. Russak said that the
lower capacity prices in the marketplace have a greater effect on the
Blenheim-Gilboa (“B-G”)
Power Plant than the Niagara and St. Lawrence-FDR
Plants because B-G receives a higher percentage of its revenues from the
capacity market. In response to a question from
Trustee Nicandri, Mr. Russak
said that the overall revenue impact at B-G is the result of a combination of
the lower capacity prices and the reduced on-peak and off-peak price
differentials
in the energy market.
Mr.
Russak continued that the Operating Fund balances for October increased
temporarily because of the proceeds from the 2011 bond sale; this will be used
to refund the 2001
series bonds during November. Mr. Russak ended by stating
that the 2012 budget briefing package is being prepared for the Trustees’
review. Staff will also set up individual briefings with
the Trustees to
answer any questions they may have. In response to a question from Trustee Nicandri, Mr. Russak said that the 2012 budget will be presented to the
Trustees for approval at
the December meeting. In response to a question, from
Trustee O'Luck, Mr. Russak said that last year the Authority did have a flat
budget, however, later in the year, staff sought and received
approval from the
Trustees for an adjustment to that budget.
4. Hydroelectric Preference Power Rates - Notice of Adoption
The Acting President and Chief Executive Officer submitted the following report:
SUMMARY
“The Trustees are
requested to adopt a final rule with respect to the preference power rates
supplied from the Niagara and St. Lawrence/FDR Hydroelectric Projects
(individually, ‘Niagara
Project’ and ‘St. Lawrence Project,’ and collectively,
the ‘Hydro Projects’). The rates have been modified downward from the change
proposed at the July 26, 2011 meeting of the Trustees as a
result of the public
comment process. Such rates apply to the Authority’s hydroelectric sales to
forty-seven municipal electric systems and four rural electric cooperative
customers located in-state
(collectively, the ‘NY Munis & Coops’), the neighboring
states customers (‘NS Customers’)[*],
three upstate investor-owned utilities (for the benefit of their residential
customers) and the Niagara
Project relicensing customers.[†]
Under the 41-month final rate plan proposed by Authority staff, new rates would
commence December 1, 2011, with subsequent increases starting May 2012, 2013
and
2014, and concluding on April 30, 2015. The commencement of new rates
would be delayed one month from staff’s original proposal as a result of the
Authority’s decision to extend the end of the public
comment period from
October 3, 2011 to October 24, 2011. This proposal would increase rates for a
typical municipal system residential customer by less than 60 cents per month
for each year of the
phase-in period, which cost represents less than 1% of the
total bill, and by less than 5 cents per month for each year of the phase-in
period for a typical utility residential customer, which is also well
below 1%.
“The Trustees are also requested to authorize the Corporate Secretary to publish a Notice of Adoption in the New York State Register (‘State Register’) regarding the final rate plan.
BACKGROUND
“At their meeting
of July 26, 2011, the Trustees authorized publication in the State Register
of a Notice of Proposed Rulemaking (‘NOPR’) to increase the preference power
rates. The proposed rate
plan was prepared by Authority staff and explained in
its July 2011 report on ‘Preliminary Staff Report, Hydroelectric Production
Rates, Rate Modification Plan – Rate Years 2011-2014’ (referred to herein as
the ‘Preliminary Staff Report’ and included in Appendix ‘4-B’ to this report).
The proposed rate plan was based on the results of staff’s preliminary 2011
hydroelectric cost-of-service (‘Hydro CoS’ or ‘CoS’)
study. The July NOPR sought
to increase the effective rates to $11.42 per MWh for the 2011 rate year as
compared to the 2008 rate level of $10.71 per MWh at the time the rates were
frozen in April 2009, and
added gradual increases from the 2012 through 2014
rate years with a proposed final effective rate of $13.87 per MWh.
“The current
rates, which end on November 30, 2011, are based on the ratemaking
methodologies adopted by the Trustees at their meetings approving earlier
increases to the preference rate in 2003
and 2007, which are also reflective of
the same cost-of-service principles agreed to by the NY Munis & Coops, the
NS Customers and the Niagara Project relicensing customers through either
settlements or
in their purchase contracts with the Authority. Except as noted
below, those same CoS principles are continued in this Preliminary Staff
Report.
“The customers
were provided with written notice of the Preliminary Staff Report and notice of
three public forums shortly after July 26, 2011. The NOPR was published in the
State Register on
August 17, 2011 together with notices of public forums
on this rate proposal to be held for the purpose of obtaining the views of
interested parties.
“After issuing the
Preliminary Staff Report, Authority staff met with various customer groups and
elected officials and entertained extensive discovery regarding the proposed
rate plan. Staff
responded to 128 data requests from the following parties:
the Municipal Electric Utilities Association (‘MEUA,’ 35 requests), the New
York Association of Public Power (‘NYAPP,’ 64 requests) and the
NS Customers
(29 requests). Many requests were answered with work papers supporting the CoS
calculations, but several others required detailed explanations, sometimes with
attachments of financial
or Hydro Project data.
“Public forums
were held in Syracuse, Niagara Falls and Massena on September 19, 20 and 22,
respectively. The forums were conducted in accordance with the terms of the
‘Policy and
Procedures – Public Forum on Rate Proposals’ adopted by the
Authority’s Trustees at their meeting of November 27, 1990. Authority staff
spoke at the forums to explain the procedures and summarize
the results of the CoS and proposed rates. Representatives of various customers attended, as well
as elected officials and residents of New York State. Customers included
representatives from the NS
Customers, MEUA, NYAPP, Niagara Power Coalition,
Inc. (‘NPC,’ an organization representing the Niagara Relicensing host
communities), Jamestown Board of Public Utilities, Town of Massena Electric
Department and the Plattsburgh Municipal Lighting Department. Elected
officials included Assemblyman John D. Ceretto, William L. Ross, Chairman of
the Niagara County Legislature (and also NPC Chairman),
and Renae Kimble, Niagara
County Legislator. Mr. Charlie McGrath, a St. Lawrence Project-area citizen,
also commented. In addition to oral or written comments delivered at the
public forum, written comments
were received through October 24, 2011, the end
of an extended public comment period.
“The Authority received written comments from MEUA, NYAPP, the NS Customers, and NPC as well as numerous letters from elected officials and other parties concerning the rate proposal.[‡]
“All of the public
comments were evaluated by Authority staff. The Staff Analysis, a detailed
description of the issues raised and staff’s recommendations, is contained in
Appendix ‘4-A.’ A summary
of staff’s analysis of the major issues and final
recommendations are set forth below. (The transcript of the public forums and
all written comments are included in Appendix ‘4-C’ to this report.)
DISCUSSION
STAFF ANALYSIS OF PUBLIC COMMENTS
Requests
to Delay Implementation Date and Extend Review Period: There were several comments which requested that NYPA
delay implementation of the new rates until May 1, 2012. MEUA requested that
for future Authority rate proceedings, the review time be extended to allow for
at least four months between publication of the Notice and the comment due
date. Many parties cited the need for more time to
consider responses to data
requests and to file comments. As the Staff Analysis explains in more detail,
there was sufficient time to review the data supporting the pending rate
action, including the responses
to the significant amount of data requests
received. By operation of the extended due date that the Authority
granted for the filing of comments, the Authority has consented to delay the
implementation date
for new rates, which was originally scheduled to become effective
on November 1, 2011. Staff does not find convincing the arguments to delay
implementation of the new rates or to permanently alter the
review time which
is done in accordance with state law. The proposed rates should be implemented
one month later than originally proposed, to be effective December 1, 2011.
Proposed Preference Rates and
their Conformance With the ‘Lowest Possible Rate’ Standard: Many customers
argued that the proposed rates do not conform with the statutory standard that
preference
customers be served at the ‘lowest possible rate’ as set forth in
the Public Authorities Law. They claim that various adjustments are needed
including the enlargement of the demand charge allocator and several changes to NYPA’s calculation of unforced capacity (‘UCAP’) sales credits used in the CoS
and in the Rate Stabilization Reserve (‘RSR’) reconciliation mechanism,[§]
all to lower customers’ rates.
“The attached
Staff Analysis discusses the merits of these proposals in detail. However, as
amply explained in the Staff Analysis, staff finds there is no compelling
argument that any of these
adjustments are required to satisfy the
‘lowest possible rate’ standard. The rate methodologies used in the July 2011
Preliminary Staff Report are virtually identical to the methodologies adopted
by the
Trustees in 2003, which were later agreed to by all the preference
customers in contracts or settlement, and used again in 2007 when the Trustees
authorized the last preference rate increase. Further, MEUA,
NYAPP and the NS
Customers have ignored the provisions in their long-term hydropower contracts
or settlements that specifically permit NYPA to employ the rate methodologies
adopted by the Authority’s Trustees in 2003. In addition, as the courts have
recognized, the Authority possesses ‘broad discretion’ in determining what
comprises the ‘lowest possible rate’ pursuant to the Auer decisions and
the Auer Settlement, both of which have long-provided guidance on NYPA’s
preference power ratemaking. None of the customers has alleged, nor can they
allege, that NYPA has somehow abandoned its agreements
that set forth NYPA’s
rate methodologies.
Requests to Increase the Demand
Allocator: NYAPP argues that the denominator used to set the demand rate
should be based on the MW-months of NYPA’s contract demand plus the MW-months
of the Authority’s average UCAP sales from the Projects. MEUA makes a similar
claim, in that NYPA does not calculate the demand rate by spreading the cost
over ‘all users’ of Hydroelectric Projects’ capacity. The
NS Customers reach
the same conclusion.
“The billing
determinant methodology used for the proposed 2011-2014 hydroelectric
production rates is the same methodology used in both the 2003 and 2007
production rates proposals and is
entirely consistent with the contracts and
settlements reached with various preference power customers. According to
standard ratemaking principles, the firm power contract customers are
responsible for
the cost recovery of the assets developed to serve them. NYPA adheres
to this principle when it undertakes its cost recovery through production rates
that are developed by using the total firm demands of its hydroelectric
customers.
“As explained in
detail in the Staff Analysis, NYPA does not find compelling the argument to
increase the denominator used to calculate the demand charge. However, to
provide the preference
customers with the timing benefits of NYPA’s UCAP sales,
staff proposes to include a UCAP credit, based on projected ISO sales revenue,
into the annual rate development for each of the 2011-2014 rate years.
Any
differences in the estimated UCAP credit and actual UCAP sales would be
reconciled in future annual RSR computations. By making this adjustment, NYPA
would reduce the Hydro CoS by $1.6 million
in Rate Year (‘RY’) 2011, $3.7
million in RY 2012, $5.1 million in RY 2013 and $6.5 million in RY 2014.
Claims That the UCAP Credit be
Cost-Based and Applied Directly to the RSR Balance: The RSR contains a
UCAP Credit which is designed as a credit to the preference power rates to
account for sales of
UCAP
for the hydroelectric projects that is above the
needs of the contract hydro customers. Both NYAPP and MEUA request that prior
RSR annual calculations be revised to reflect a cost-based rate for
the UCAP.
NYAPP contends that NYPA is incorrectly crediting UCAP sales based on the lower
of market prices or costs and that a cost-based UCAP credit would be consistent
with applicable precedents
and its settlement with NYPA.
“As explained in
the Staff Analysis, consistent with staff’s determination not to expand the
billing determinants to include estimated short-term UCAP sales, staff finds
unconvincing NYAPP’s proposal
that the UCAP credits be re-valued at cost. As
these NYISO customers are not receiving the same product, service or benefits
as NYPA firm contract customers, staff affirms that it is unsound ratemaking to
apply the same cost of service rate to these transactions.
NYPA’s UCAP Credit Calculation
Applied to the RSR and Claims that Preference Customers Cross-Subsidize
Non-Preference Customers: NYAPP states that a flaw in NYPA’s UCAP
calculation used in the RSR causes actual capacity sales to be understated
because NYPA’s UCAP sales crediting methodology leaves the difference between
the forecasted demand and the actual demands out of the equation. Preference
customers are charged for the costs of those MW-months but cannot use them.
Nevertheless, preference customers are not granted a dollar credit when NYPA
sells these MW-months, either in the UCAP credit
to the RSR or in the
calculation of the demand rate. MEUA argues that cross-subsidization can occur
between the rates charged to preference customers and non-preference customers,
and has observed that the drop in demand of Reynolds Metals (i.e., now
ALCOA’s East Plant) over 2009-10 is a major factor in this regard.
“As explained in
the Staff Analysis, the comments concerning the cross-subsidization issue have
some merit and staff has reconsidered its UCAP sales credit methodology. Staff
recommends that the
actual UCAP sales be used in the annual RSR calculations
for 2005 through 2010. The dollar effect of the change is a reduction of $13.5
million in the RSR negative balance.
Treatment
of 455 MW Preference Power Redirected to the Recharge New York Power Program: NYAPP and NS Customers voiced concerns over the
withdrawal of 455 MW from preference power allocations
to the Recharge New York
Program, and its effect on the demand rate. Staff has continued to include the
455 MW withdrawn from the R&D customers in the total billing demands of the
hydroelectric project
CoS, which is consistent with the Customers’ view. Staff
also recognizes that the withdrawn power may no longer be classified as
preference power thus, its proportional share of the RSR balance should be
excluded. Staff recommends reducing the RSR balance by 30.17% or $10.5 million
to reflect this adjustment. This amount is expected to be recovered through
the sales made under the Recharge New York
Power Program.
Annual
RSR Report Procedures: MEUA points out
that the RSR is a ‘full, after the fact reconciliation of NYPA’s rate year
costs and revenues.’ MEUA requests the right to review the annual RSR
calculations
and the establishment of a public process, with an opportunity for
information sharing, discovery and comment. While
other customers did not provide written comments on the specific issue of RSR
review,
NYAPP and the NS Customers made this concern known to NYPA staff at
in-person meetings. NYPA staff agrees that transparency in the Hydro CoS
process, including the annual RSR computation, is a
worthwhile goal. NYPA
staff agrees to provide the preference customers with the annual reconciliation
to the RSR by June 1 of each year and to meet over the ensuing months to
discuss relevant issues and
provide needed data to customers, but does not
believe a public comment process is warranted as the RSR mechanism is provided
for in customer contracts.
Increased Credit for Ancillary
Services Production: NS Customers assert that its current ancillary
services credit is insufficient, as it only credits the costs associated with
the amount of regulation necessary for contract loads, and not the actual
regulation service sales. As explained in the Staff Analysis, the NS Customers’
claim is inconsistent with their Authority hydro contracts in which their
members agreed that
certain methodologies and principles adopted by the
Authority in 2003 would continue to be used without objection when the
Authority sets future hydro rates.
“However, staff
does recommend that the ancillary services credit for the 2011-14 be increased
by a total of $2.2 million from that shown in the preliminary CoS. This
change stems from an adjustment
to the 2009 test year billing determinants to reflect
average annual usage for the ALCOA East plant, which was shut down for much of
that year.
Request
for Credits Based on Authority Investment Income: NS Customers argue that they should receive a credit for
investment income in the CoS since much of the Authority’s investment income is
generated from the operations at the Hydro Projects. This argument runs
counter to the ratemaking principles established in the preference customer
contracts. As explained in the Staff Analysis, a
claim
for a share of the Authority’s investment income would produce preference
rates that are below cost and in violation of settled law and applicable
ratemaking principles. Staff recommends no credit be
provided for investment
income.
2009-2010 Deferred Rate
Increases: NYAPP asserts that Authority costs associated with 2009-10
increases at the hydroelectric projects should not be allocated to ratepayers,
due to the fact that the March
2009 rate increase proceeding was cancelled by
the Trustees. NYAPP claims that they had no ‘notice’ that 2009 and 2010 costs
would be deferred and that they expected those costs to be forgiven. NYAPP
also claims that the Authority’s proposal in this regard demonstrates a lack of
‘transparency.’ At the March, 2009 Trustee Meeting, the Trustees gave clear
notice that 2009 and 2010 costs ‘[would] be deferred
and recovered over
appropriate, subsequent years(s).’ All deferred amounts are being captured in
the contractually agreed-upon RSR reconciliation mechanism. Therefore, Staff
does not recommend any
changes to the RSR mechanism that would fail to
recognize the cost deferrals related to the 2009 and 2010 rate years.
Contributions to the New York
State Treasury: MEUA commented that NYPA’s expenditures used to make
contributions to the State Treasury have been ‘properly excluded’ from Hydro
CoS. However,
NYAPP noted the size of the voluntary transfers to the State and
requested that the Authority adopt ‘detailed metrics’ for measuring its
creditworthiness at the time it considers making voluntary contributions
to the
State, and registered its concern about the Authority’s future financial
strength. NPC commented that the Authority should use surplus funds pledged to
the State Treasury to offset the entire rate
increase. As the Staff Analysis
explains, staff has reviewed existing policies and concludes that the Authority
has developed an in-depth review process to ensure that these transfers are
‘feasible and
advisable’ and will not result in preference power rate increases
beyond those necessary to provide power at cost. There
is no cause to provide the relief requested by the NPC, as the inclusion of
such
‘surplus funds’ in the Hydro CoS would lower the preference rate below
cost. No changes are recommended.
Inclusion of Charitable
Contributions within the CoS: MEUA has requested that charitable
contributions and sponsorships not directly assigned to the hydroelectric
projects be removed from the cost of
service. Staff concurs with this request,
and recommends that all costs for such contributions and sponsorships be
removed from the preference customer CoS in the total amount of $483,000 over
the
41-month rate plan period.
Recovery
of Costs for Parks Neighboring the St. Lawrence Power Project: NYAPP seeks clarification concerning payments made to
the Robert Moses and Coles Creek State Parks (‘Parks’) located in the
direct
vicinity to the St Lawrence Power Project. The Federal Energy Regulatory
Commission license issued for the St. Lawrence Project on October 23, 2003 incorporates
these Parks as project recreational
facilities and, under the terms of the
license, the Authority has the ultimate responsibility to fund the O&M
costs of the Parks. However, as part of a 2009 Memorandum of Understanding
between the State
of New York and the Authority, the Authority was relieved of
these annual payments to the Office of Parks, Recreation and Historic
Preservation (‘OPRHP’) for the state fiscal years 2011 through 2017.
In
reviewing accounting data for past years, staff discovered that in 2008, $8
million charged to the Miscellaneous and General Expenses Account for the
Niagara and St. Lawrence Projects for Parks
reimbursement had not been backed
out of financial information used in the 2008 actual hydroelectric CoS.
The CoS did include a separate entry for $800,000 attributable to the
Parks. The removal of the
$8 million charge from the CoS resulted in
positive adjustment to the cumulative RSR of about $3 million. Staff
recommends that the $800,000 cost for the Parks not be included in the RSR
true-up and confirms
that it is not in the CoS for Rate Years 2011-14 covered
under this rate proceeding.
Shared
Services Expenses within the CoS: NYAPP
indicated that the Authority did not provide sufficient information as to what
it includes in Shared Services within the CoS, and generally requested
additional information describing what is included in this category of
expenses. Staff responded to several data requests regarding the allocation of
shared services costs. It was staff’s understanding
that the responses were
sufficient, as there was no receipt of any further requests for follow-up
information concerning shared services expenses. The final rate recommendation
reflects certain overhead
cost-cutting measures undertaken by staff in the last
few months including an approximate $5 million reduction for RY 2012-2014
resulting from the Trustees approval of a revised funding plan for the
Other
Post-Employment Benefits (‘OPEB’) Trust at their October 2011 meeting.
SUMMARY OF FINAL RATE PROPOSAL
“For the reasons
summarized above and described in detail in the Staff Analysis, Authority staff
recommends that the demand rates originally proposed in the July 2011
Preliminary Staff Report
be amended and approved as shown below. The proposed
final demand and energy rates and the overall effective rates at a typical 70%
load factor are shown below:
|
Rate Year[**] |
Demand Rate $/kW-month |
Energy Rate $/MW-hour |
RSR-related Surcharge $/MW-hour |
Effective Rate[††] $/MW-hour |
|
2011 |
3.26 |
4.92 |
- |
11.30 |
|
2012 |
3.57 |
4.92 |
- |
11.91 |
|
2013 |
3.91 |
4.92 |
- |
12.57 |
|
2014 |
4.07 |
4.92 |
up to 0.40 |
13.28 |
“Also, as noted
and recommended in the Staff Analysis of public comments, the RSR balance must
be altered and lowered from the -$51.3 million balance cited in the NOPR to
account for 1) $13.5
million in additional revenues tied to the total annual UCAP sales and internal transfers; 2) a reduction of $3 million in the 2008 RSR
calculation resulting from a correction of charges included in the 2008 CoS
related to payments to OPRHP; and 3) a 30.17%
reduction in the revised RSR balance to account for the withdrawing of 455 MW
of firm hydroelectric power formerly allocated to the upstate utilities for
their residential customers and which is now allocated to the Recharge New York
Power Program. The remaining RSR balance equals -$24.5 million.
“As a result, staff retracts its recommendation that a $0.50/MWh surcharge begin in 2014, but rather, should the RSR balance exceed the $25 million threshold the surcharge would be no greater than $0.40/MWh
FISCAL INFORMATION
“Implementation of the proposed schedule of rate increases would allow the Authority to recover its costs associated with serving the preference power customers. For the 2011 rate year, the estimated revenue increase would be about $2.1 million. For the 41-month period from December 2011 through April 30, 2015, the estimated cumulative base rate revenue increases would be about $45.8 million with the additional RSR surcharge of $2.7 million being collected from preference power customers for the period May 1, 2014 to April 30, 2015.
RECOMMENDATION
“The Vice
President – Financial Planning and Budgets recommends that the Trustees: (1)
adopt the conclusions of the Staff Analysis attached hereto as Appendix ‘4-A’;
(2) approve the hydroelectric preference rates for the 41-month plan commencing
December 1, 2011, as set forth above; and (3) include in the Authority’s
records the Preliminary Staff Report contained Appendix ‘4-B,’ and the
transcripts of
the public forums, written public comments and letters contained
in Appendix ‘4-C.’
“It is also
recommended that the Secretary be authorized to publish a Notice of Adoption of
the above-described preference rates in the State Register, including
notice of the availability of the Final
Rate Modification Plan and other
materials included in the record of these proceedings.
“It is also
recommended that the Senior Vice President – Marketing and Economic
Development, or his designee, be authorized to issue written notice of the
final action, including a copy of the revised
tariff leaves, as necessary, to
the affected customers.
“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”
Mr.
Thomas Davis presented highlights of staff’s recommendation to the Trustees.
In response to a question from Trustee Nicandri, Mr. Davis said that the
billing determinants associated with
the allocation of power to the RNY
customers will remain in the calculation of future hydropower Cost Of Service
rate actions.
Trustee
Dyson added that the Authority is required by law to "break even" and
that is why it has undertaken this process. After consideration of comments
from customers, the Authority has
agreed to lower the amount of the increase in
the rates, which will be phased-in over a number of years to lessen the impact
on the customers. The Authority was able to consider this further reduction in
rates because of the more than $3 million cut in spending, which the Authority
has undertaken as part of Governor Cuomo’s overall goal of 10% cuts in
spending. Trustee Dyson thanked staff for the
thorough and professional job
done in putting the elements of the recommendation together. Chairman Townsend
also thanked Trustee Dyson for his role in assisting staff in this effort.
The following
resolution, as submitted by the Acting President and Chief Executive Officer,
was unanimously adopted.
WHEREAS, on July 26, 2011, the Authority authorized the Secretary to file a Notice of Proposed Rulemaking for publication in the New York State Register of its intention to increase the hydroelectric preference power rates; and
WHEREAS, such notice was duly published in the New York State Register on August 17, 2011 and more than 45 days have elapsed since such publication; and
WHEREAS, Public Forums were held on September 19, 20 and 22 of 2011 and staff received and responded to both oral and written comments and data requests as set forth in the attached Final Rate Modification Plan; and
WHEREAS, the proposed rate action should be modified, in accordance with the changes contained in the foregoing report of the Acting President and Chief Executive Officer, and as explained in detail in the Staff Analysis contained in Appendix “4-A”;
NOW THEREFORE BE IT RESOLVED, That the rates for sale of power and energy to Authority customers receiving the preference power rate, as recommended in the foregoing report of the Acting President and Chief Executive Officer, are hereby approved effective December 1, 2011; and be it further
RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to issue written notice as required by contract with respect to the modification in rates, including applicable tariff leaves; and be it further
RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file a Notice of Adoption with the Secretary of State for publication in the New York State Register and to submit such other notice as may be required by statue or regulation; and be it further
RESOLVED, That the Chairman, the Vice Chairman, the Acting President and Chief Executive Officer, the Acting 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 Acting General Counsel.
The Acting President and Chief Executive Officer submitted the following report:
SUMMARY
“The Trustees are
requested to authorize capital expenditures in the amount of $4.4 million for
the engineering, design, procurement, installation and testing of a new 765/230
kV auto-transformer to
be used as a replacement of a failed 765/230 kV
autotransformer at the Massena Substation, Massena, NY. The Trustees are also
requested to approve the award of a multi-year contract in the amount of $3.1
million to Smit Transformers, Nijmegen, Netherlands, to furnish, deliver, and install
this autotransformer at the Massena Substation.
BACKGROUND
“Section 2879 of
the Public Authorities Law and the Authority’s Guidelines for Procurement
Contracts require the Trustees’ approval for procurement contracts involving
services to be rendered for
a period in excess of one year. In accordance with
the Authority’s Expenditure Authorization Procedures, the award of non-personal
services contracts exceeding $3,000,000 require the Trustees’ approval.
“The Massena
Autotransformers No. 1 and No. 2, consist of seven single-phase
autotransformers, three each for each bank and one designated as a spare to be
put into service in the event of a failure.
On July 8, 2008 Transformer 2A
from autotransformer bank No. 2 failed and it was replaced with the existing
spare autotransformer. This event left the Massena Substation without a spare
to handle a contingency failure in either of the autotransformer banks.
“The
autotransformers are critical long-lead time electrical components required for
successful operation and functioning of the substation. Failure of a single
autotransformer can result in loss of service.
A spare autotransformer is
essential to maintaining the operation of the substation and will mitigate the
impacts should one of the existing autotransformers fail. With the
installation of this new autotransformer,
the current spare would still be used
as the spare autotransformer for the facility.
DISCUSSION
“The scope-of-work under this contract includes the design, fabrication, delivery, installation, assembly and testing of one 765/230 kV single-phase autotransformer.
“The Authority
issued an advertisement to procure bids in the New York State Contract
Reporter and bid packages were available as of May 26, 2011. The bid
documents were downloaded by
68 potential bidders.
“The following seven proposals were received on July 26, 2011:
|
BIDDER |
LOCATION |
BID WITH OPTIONS |
EVALUATED BID |
|
Smit |
Nijemgen, Netherlands |
$3,068,912.00 |
$4,346,912.00 |
|
TBEA |
Shenyang, PR China |
$2,893,648.00 |
$4,409,648.00 |
|
Hyundai |
Ulsan, Korea |
$3,420,296.00 |
$4,495,296.00 |
|
ABB |
Varennes, QC, Canada |
$3,966,976.00 |
$4,808,976.00 |
|
BTW |
Hebei, China |
$3,870,000.00 |
$5,345,000.00 |
|
XD |
Jiangsu, China |
$4,574,315.00 |
$5,912,315.00 |
|
Alstom |
Stafford, England |
$4,800,000.00 |
$6,435,000.00 |
“The proposals
were reviewed by an evaluation committee comprising staff from Engineering,
Procurement, Project Site, Quality Assurance and Project Management. The
evaluated cost took into
account the technical and commercial evaluation
factors as detailed in the bid documents. Authority staff recommends the
contract award to Smit Transformers, the lowest evaluated price and technically
acceptable bidder. The evaluated bid price shown above also includes optional
prices for spare parts and extended warranty. The evaluated cost took into account operational
characteristics of the autotransformer: no load losses, load losses and
auxiliary losses.
“The project work will be performed over a three-year period with design and fabrication taking place during 2012 and 2013. Delivery, installation, and field testing would be completed in 2014.
“The total project cost to purchase and install this autotransformer is estimated at $4.4 million as follows:
Engineering $ 341,000.00
Procurement $ 3,225,000.00
Construction $ 230,000.00
Authority Direct and Indirect $ 631,000.00
Total: $ 4,427,000.00
FISCAL INFORMATION
“Payment associated with this project will be made from the Authority’s Capital Fund.
RECOMMENDATION
“The Executive Vice President and Chief Engineer – Power Supply, the Senior Vice President – Power Supply Support Services, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Procurement, the Project Manager and the Regional Manager – Northern New York recommend that the Trustees approve the award of a contract to Smit Transformers, in the amount of $3.1 million, to furnish a
765/230 kV autotransformer for Massena Substation and authorize the capital expenditure of $4.4 million for the project.
“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”
Mr.
John Canale presented highlights of staff’s recommendation to the Trustees. In
response to a question from Chairman Townsend, Mr. Canale said that the
replacement autotransformer is
being manufactured in the Netherlands; the
Authority did not receive any bids from firms in the United States. In
response to a question from Trustee Nicandri, Mr. Canale said that the
Authority has been operating without a back-up autotransformer for
approximately three years. In response to a question from Trustee O'Luck, Mr.
Canale said that the original equipment was purchased in 1977 and that the
Autotransformers, Nos. 1 and 2, (7 total: 3 in each bank and 1 designated
spare) at the Massena Substation are the same age as the one that failed. In
response to further question from Trustee O'Luck, Mr. Russak said that staff is
including costs for a series of autotransformer replacements at the facilities
in the 2012 budget. In response to a question from Chairman Townsend, Mr.
Canale said that the autotransformers are about 35 years old however, they
typically last for approximately 45 - 50 years, and the cause of the failure of
the autotransformer being replaced has not been determined. He said that staff
is also taking steps to ensure that the other autotransformers do not
experience a similar failure.
Acting President and Chief Executive Officer Quiniones added that an evaluation of a Life Extension and Modernization (“LEM”) program is currently being performed on the Authority’s entire transmission system; the Trustees will be provided with an update of the LEM condition assessment of the Authority’s transmission system in January.
In response to a question from Vice Chairman Foster, Mr. Canale said that staff is taking extra precautions by conducting weekly monitoring and analysis of the autotransformers. Mr. Antenucci added that it is not industry practice and has not been the Authority’s practice to have a spare autotransformer on every site; however, in order to reduce the Authority’s vulnerability to similar events, the Authority has initiated a program to reduce its vulnerability by selectively purchasing spares ahead of time.
The following resolution, as submitted by the Acting President and Chief Executive Officer, was unanimously adopted.
RESOLVED, That pursuant to the Authority’s Expenditure Authorization Procedures, additional capital expenditures in the amount of $4.4 million are hereby authorized as recommended in the foregoing report of the Acting President and Chief Executive Officer;
Capital Expenditure Approval
Engineering, Procurement, $4.4 million
Installation
Authority Direct & Indirect
AND BE IT
FURTHER RESOLVED, That pursuant to the Guidelines for Procurement Contracts
adopted by the Authority, approval is hereby granted to award a contract to
Smit Transformers, in the amount of $3.1 million to provide an autotransformer
for use at the Massena Substation, as recommended in the foregoing report of
the Acting President and Chief Executive Officer;
Contractor Contract Approval
Smit Transformers $3.1 million
Nijmegen, Netherlands
AND BE IT FURTHER RESOLVED, That the Chairman, the Vice Chairman, the Acting President and Chief Executive Officer, the Acting 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 Acting General Counsel.
6. Selection of President and Chief Executive Officer
The Chairman submitted the following report:
SUMMARY
“The Trustees are requested to consider the selection of Mr. Gil C. Quiniones of New York, New York as President and Chief Executive Officer of the Authority, effective as stated below.
BACKGROUND AND DISCUSSION
“Under the Public Authorities Law (‘PAL’) and the Authority’s By-Laws, the Trustees have the authority to select the President and Chief Executive Officer, subject to confirmation by the Senate.
Section 2852 of the PAL provides that the Senate shall vote to confirm any appointment within 60 days of its submission to the Senate during session. If submission is made when Senate is not in session,
confirmation shall be made within 7 days of the convening for session. If the Senate fails to vote to confirm any such appointment within the prescribed time, the appointment is deemed confirmed without
further Senate action. “On July 26, 2011, Mr. Richard M. Kessel resigned from his position as President and Chief Executive Officer of the Authority. At that time, the Trustees designated Mr. Gil C. Quiniones as Acting President
and Chief Executive Officer of the Authority, effective September 7, 2011. On October 31, 2011, Governor Andrew M. Cuomo recommended Mr. Gil C. Quiniones to be President and Chief Executive Officer of the
New York Power Authority. The Trustees, after due consideration, have elected to appoint Mr. Quiniones for the office of President and Chief Executive Officer.
RECOMMENDATION
Pursuant to Section 1004 of the Public
Authority Act and Article IV, Section 2 of the Authority’s By-Laws, ‘Election
of Non-Statutory Officers,’ adopted December 18, 1984 and last amended on July
26, 2011, the Trustees recommend that, based on his substantial knowledge of
Authority matters, management skills, strong expertise and record of exemplary
service to the Authority, Mr. Gil C. Quiniones be
elected as President and
Chief Executive Officer, subject to confirmation by the New York State Senate. The
Trustees further recommend that Article IV, Section 2 of the Authority’s
By-Laws be amended to
permit the election of the President and Chief Executive
Officer and all other non-statutory officers to occur at ‘any regular or
special meeting of the Trustees.’ The current version of this section reads as
if
such elections may only occur at the Trustees’ annual meeting.
“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”
Chairman
Townsend said that the Governor recommended that Mr. Gil C. Quiniones of New
York be nominated as President and Chief Executive Officer of the Authority.
On behalf of the
Trustees, he is pleased to present the motion today to appoint
Mr. Quiniones to the position. He added that the Governance Committee, which
met earlier, recommended that Mr. Quiniones be appointed
to the position. The
recommendation is subject to Senate confirmation. Vice Chairman Foster,
Trustees Nicandri, LeChase, Curley, Dyson and O’Luck endorsed the selection of
Mr. Quiniones as President and Chief Executive Officer of the Authority.
Mr. Quiniones expressed sincere thanks to the Governor for recommending him and to the Board of Trustees for appointing him for the position of President and Chief Executive Officer of the Authority, subject to approval by the New York State Senate. He felt honored by the Board’s confidence in him and was looking forward to working with the Trustees and staff to carry out the Authority’s mission to advance the state’s energy and economic development goals.
The following resolution, as submitted by the Chairman, was unanimously adopted.
RESOLVED, That pursuant to Article IX, Section 1, “Amendments,” of the Authority’s By-Laws, which give the Trustees the power to amend any provision of the By-Laws, Article IV, Section 2, “Election of Non-Statutory Officer,” of the Authority’s By-Laws, is hereby amended to permit the election of the President and Chief Executive Officer and all other non-statutory officers to occur at “any annual, regular or special meeting of the Trustees”; and be it further
RESOLVED, That pursuant to Section 1004 of the Public Authorities Law and amended Article IV, Section 2, “Election of Non-Statutory Officer,” of the Authority’s By-Laws, Mr. Gil C. Quiniones is hereby elected and appointed as President and Chief Executive Officer of the Authority, subject to confirmation by the New York State Senate, and shall hold such office pursuant to Article IV, Section 3 of the Authority’s By-Laws.
7. Election of Executive Vice President and General Counsel
The Chairman submitted the following report:
SUMMARY
“The Trustees are requested to consider the election of Ms. Judith C. McCarthy of Westchester County, New York as Executive Vice President and General Counsel of the Authority.
BACKGROUND AND DISCUSSION
“Article IV, Section 2 of the Authority’s
By-Laws provides for the election of certain non-statutory officers by the
Trustees. Ms. Judith C. McCarthy was appointed First Deputy General Counsel on
January 31, 2011 and serves as Acting General Counsel since that time. She has
rendered exceptional service to the staff and Board of Trustees of the
Authority.
RECOMMENDATION
“It is recommended that, pursuant to
Article IV of the By-Laws, adopted December 18, 1984, and last amended November
15, 2011, Ms. Judith C. McCarthy be elected as Executive Vice President and
General Counsel of the Authority effective immediately.
“For the reasons stated, I recommend the approval of the above-requested action by adoption of a resolution in the form of the attached draft resolution.”
Chairman
Townsend said that the Trustees are being asked to consider the election of Ms.
Judith McCarthy of Westchester, as Executive Vice President and General Counsel
of the Authority.
He said that Ms. McCarthy has performed admirably as Acting
General Counsel and will be a great asset to the Authority. He is confident
she will do a good job and look forward to working with her.
He added that the
Governance Committee also recommended the election of Ms. McCarthy to the
position. Trustee Nicandri said that, as Chair of the Governance Committee, he
worked with Ms. McCarthy and she was very helpful in providing legal counsel to
the Committee and will vote in favor of the motion to elect her. The other
Trustees endorsed the recommendation.
Ms.
McCarthy said that she appreciated the vote of confidence and also the support
given to her over the past ten months. She also thanked Mr. Quiniones for his
support and Governor Cuomo
for giving her the opportunity to work at the
Authority.
The following resolution, as submitted by the Chairman, was unanimously adopted.
RESOLVED, That pursuant to Article IV, Section 2 of the Authority’s By-Laws, Ms. Judith C. McCarthy is hereby elected as Executive Vice President and General Counsel of the Authority effective immediately.
8. Resolution – Paul F. Finnegan
WHEREAS, Paul F. Finnegan has been a highly valued employee at the New York Power Authority for more than 17 years, including his most recent position as senior vice president of Public, Governmental and Regulatory Affairs in which he spearheaded NYPA’s engagement with members of Congress, the executive and legislative branches of New York State government and local government entities; and
WHEREAS, Mr. Finnegan, who joined NYPA in 1994 as a state legislative liaison, has provided sage advice and counsel over the years to the NYPA Board of Trustees and senior management on countless matters of significance that reflect the Power Authority’s broad reach and influence on the state’s electric power system, economy, local communities and environment; and
WHEREAS, Mr. Finnegan’s impact on the Power Authority’s intergovernmental relations has included his major role in the Authority’s successful federal relicensing of its St. Lawrence-Franklin D. Roosevelt and Niagara power projects, in 2003 and 2007, respectively, and the attendant carrying out of wide ranging commitments under agreements that he helped make possible for major recreational, environmental and economic benefits in Northern and Western New York; and
WHEREAS, the practical good sense and judgment that Mr. Finnegan brought to bear on a wide range of matters have made him an influential voice, with those qualities exhibited every day in his contributions to the Power Authority’s sound decision-making; and
WHEREAS, Mr. Finnegan’s quick wit and marvelous sense of humor have advanced his ability to transcend partisan politics in reinforcing the Power Authority’s positive relations with federal, state and local elected officials, for the effective undertaking of the Authority’s programs and initiatives; and
WHEREAS, Mr. Finnegan’s warm and vibrant personality and self-effacing demeanor have furthered the admiration and affection that the NYPA Board of Trustees and his co-workers have for him and have made him a valued confidant of NYPA chairmen, presidents and other senior executives; and
WHEREAS, the wayfaring requirements of the positions held by Mr. Finnegan, including vice president of Intergovernmental and Community Relations, called for frequent travels to NYPA facilities and numerous communities around the state, at the expense of being away from his family, at great personal sacrifice; and
WHEREAS, Mr. Finnegan’s peripatetic ways will now be divided between his home in Lake Pleasant, in Adirondack Park, Hamilton County, and a new residency in the sun-splashed environs of Ventura, California;
NOW THEREFORE BE IT RESOLVED, that the Trustees of +the Power Authority of the State of New York extend their deepest appreciation to Paul Finnegan for his dedicated service and varied contributions to NYPA and wish him; his wife, Jeannie; their two beloved golden retrievers, Cedar and Riley; and the large extended Finnegan family of brothers, sisters, nieces and nephews much health, happiness and success.
November 15, 2011
Acting President and Chief Executive Officer Quiniones read the resolution honoring Mr. Paul Finnegan’s service to the Authority.
Mr.
Finnegan said that this is an opportunity for him to take on new challenges.
He said that he appreciated the support and opportunities granted to him by the
Authority. He will
always have fond memories of the Authority and will miss
everyone.
9. Motion to Conduct an Executive Session
Mr. Chairman, I move that the Authority conduct an executive session pursuant to the Public Officers Law of the State of New York section §105 to discuss matters leading to the appointment, employment, promotion, demotion, discipline, suspension, dismissal or removal of a particular person or corporation. On motion made and seconded, an Executive Session was held.
10. 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.
The next regular meeting of the Trustees will be held on Thursday, December 15, 2011, at 11:00 a.m., at the Clarence D. Rappleyea Building, White Plains, New York, unless otherwise designated by the Chairman with the concurrence of the Trustees.
