MINUTES OF THE REGULAR MEETING
OF THE
POWER AUTHORITY OF THE STATE OF NEW YORK

September 27, 2011

Table of Contents

                Subject                                                                                                                                 

    1.    Approval of the September 27, 2011 Meeting Agenda                                                             

    2.    Consent Agenda:                                                                                                                      

                a.    Minutes of the Regular Meeting held on July 26, 2011                                     

                b.    Procurement (Services) and other Contracts – Business Units and Facilities – Awards, Extensions and/or Additional Funding, Exhibit - “2b-A”; “2b-B”
                        Resolution

                c.    Astoria Site – New Astoria Infrastructure – Installation of New Electrical Infrastructure – Contract Award
                       Resolution   

           
    Discussion Agenda:

    3.         Reports from:

                    a.    Acting President and Chief Executive Officer, Exhibit - “3a-A” 
                            Resolution                 

                    b.    Acting Chief Operating Officer Exhibit - “3b-A”
                          
Resolution                            

c.    Acting Chief Financial Officer, Exhibit - “3c-A”
       Resolution
 

    4.        Procurement (Services) Contract – Blenheim-Gilboa  Pumped-Storage Project Relicensing – Lead
               Relicensing Consultant – Contract Award
              
Resolution 

    5.       Increase in New York City Governmental Customer Rates – Notice of Proposed Rulemaking, Exhibit - Appendix “5-A”
             
Resolution

    6.       Decrease in Westchester County Governmental Customer, Rates – Notice of Proposed Rulemaking, Exhibit - Appendix “6-A”
              
Resolution

    7.        Niagara Power Project – Lewiston Pump Generating Plant Life Extension and Modernization Program –
               Control System Integration – Contract Award
                Resolution             

    8.        Great Lakes Offshore Wind (“GLOW”) – Staff Report
                Resolution                                                                                                           

    9.        2011 Operations and Maintenance Budget – Increase in Approved Expenditures for Reinvestment in the Authority’s
               Critical Facilities – Power Supply Business Group
              
Resolution

   10.       Motion to Conduct an Executive Session                                                                           

   11.       Motion to Resume Meeting in Open Session                                                                      

   12.       Next Meeting                                                                                                                            

               Closing                                                                                                                                                     

               

                                                                                                                                                                                               

Minutes of the Regular Meeting of the Power Authority of the State of New York held via telephone conference at the following participating locations at approximately 11:20 a.m.

    1)    New York Power Authority, 123 Main Street, White Plains, NY

    2)    Harris Beach, PLLP, 99 Garnsey Road, Pittsford, NY

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 - excused from attending the meeting

----------------------------------------------------------------------------------------------------------------------------------------------------
Gil C. Quiniones                                   Acting President and Chief Executive Officer
Judith C. McCarthy                              Acting General Counsel
Edward Welz                                       Acting Chief Operating Officer / Executive Vice President and Chief Engineer –
Power Supply
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
John Canale                                         Vice President – Project Management
Thomas Davis                                      Vice President – Financial Planning and Budgets
Dennis Eccleston                                  Vice President – Information Technology/Chief Information Officer
Joseph Leary                                        Vice President – Community and Government Relations
Patricia Leto                                         Vice President – Procurement
Lesly Pardo                                          Vice President – Internal Audit
John Suloway                                       Vice President – Project Development, Licensing and Compliance
Lori Alesio                                            Assistant General Counsel – Human Resources and Labor Relations
Karen Delince                                      Corporate Secretary
Brian McElroy                                     Treasurer
Edward Alkiewicz                                Director – Relicensing and Implementation
Jill Anderson                                         Director – Business Integration
Mike Lupo                                            Director – Marketing Analysis and Administration
Mark O’Connor                                   Director – Real Estate
Michael Saltzman                                  Director – Media Relations
Kandapa Dolly Jinvit                             Manager – Asset Investment Planning
Mark Slade                                           Manager – Relicensing and Implementation
Dominick Luce                                      Program Manager – Energy Services
Rick Turner                                           Regional Manager Northern NY – Site Administration, STL
Bruce Fardanesh                                   Chief Technology Officer – Research and Technology Development
Lorna M. Johnson                                 Assistant Corporate Secretary
Sheila Baughman                                   Senior Secretary – Corporate Secretary’s Office
 


Trustee Dyson presided over the meeting.  Corporate Secretary Delince kept the Minutes.

Introduction
                Ms. Judith McCarthy said that Chairman Townsend and Trustee LeChase would be participating in the meeting by phone.  She added that they would not be able to vote; however, there is a quorum to conduct the meeting.  Trustee John Dyson acted as Chair for the meeting.

1.              Approval of the September 27, 2011 Meeting Agenda

                On motion made and seconded the Agenda for the Meeting was approved.
 

2.            Consent Agenda

               By motion made and seconded, the Consent Agenda was approved.

 a.           Approval of the Minutes

              The Minutes of the Regular Meeting held on July 26, 2011 were unanimously adopted.

b.            Procurement (Services) and other Contracts – Business Units and Facilities – Awards, Extensions and/or Additional Funding

                The Acting President and Chief Executive Officer submitted the following report:

    SUMMARY

            “The Trustees are requested to approve the award and funding of the multiyear procurement (services) and other contracts listed in Exhibit ‘2b-A,’ as well as the continuation and/or funding of the procurement (services) contracts listed in Exhibit ‘2b-B,’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the recommended awards and extensions, 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, or the reasons for extension, the additional funding required and the projected expiration dates, 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 $250,000 to $10 million. Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.
“The issuance of multiyear contracts is recommended from both cost and efficiency standpoints.  In many cases, reduced prices can be negotiated for these long-term contracts.  Since these services are typically required on a continuous basis, it is more efficient to award long-term contracts than to rebid these services annually.

    Extensions

            “Although the firms identified in Exhibit ‘2b-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 terms of these contracts will exceed one year including the extension, the term of extension of these contracts will exceed one year and/or because the cumulative change-order limits will exceed the levels authorized by the EAPs in forthcoming change orders. 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 ‘2b-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 rebidding 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 Services and Technology (‘ES&T’)

                                                                                           Energy Services

            “The Authority provides a variety of services to many of its customers to promote cost savings through energy efficiency, clean energy and improved system reliability projects, as part of the Energy Services Program (‘ESP’).  Such projects have become more complex and costly, resulting in an increased need for engineering and other support including, but not limited to, technical, schedule and cost reviews of projects at various stages, in order to mitigate risk and ensure contractor performance for the Authority and its customers.  The most cost-effective way for the Authority to provide adequate staffing resources needed to support such project work and to ensure a low level of risk is to retain such services on an ‘as needed’ basis.  To this end, staff developed a Request for Quotations (‘RFQ’ Q11-4995) and bid documents were downloaded electronically from the Authority’s Procurement website by 61 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Eleven proposals were received and evaluated.  A Post-Bid Addendum was issued to request pricing clarifications; responses were received from all eleven firms and were reviewed in greater detail.  The proposals were first evaluated on technical qualifications based on weighted criteria set forth in the RFQ.  The five highest-ranked firms were invited for an interview to further discuss their respective proposals; based on the results of the interviews, the five firms were ranked accordingly.  Staff then evaluated the ‘short list’ of five bidders on cost, using an estimated number of hours for a large energy services project.  Finally, a cumulative ranking of both the interviews and cost evaluations was performed.  Based on the foregoing, staff recommends award of contracts to four firms:  Arcadis US, Inc. (‘Arcadis’), Hill International, Inc. (‘Hill’), Nautilus Consulting, LLC (‘Nautilus’) and The Louis Berger Group, Inc. (‘Louis Berger’) (PO#s TBA), the most technically qualified bidders with reasonable and competitive pricing, which meet the bid requirements.  These contracts would provide for technical risk management services including, but not limited to, the review of contract and technical bid documents, schedules, estimates and change orders, as well as associated work to ensure a low level of risk for ESP projects in the Southeast New York (‘SENY’) region.  The award of contracts to four firms is recommended in order to ensure the availability of resources to accommodate the potential volume and/or scheduling of work that may be requested, as well as to address any potential conflict of interest or performance issues.  The contracts would become effective on or about October 1, 2011 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $5 million.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.  It should also be noted that all costs will be recovered by the Authority.

                                                                    Research and Technology Development

            “In September 2010, the Authority submitted a joint proposal with two other firms (The Valley Group, Inc. and New Electricity Transmission Software Solutions, Inc., ‘NETSS’) to the New York State Energy Research and Development Authority (‘NYSERDA’) for co-funding a project entitled ‘A demonstration project for increased reliability and efficiency [of the power grid] in New York state using combined Phasor Measurement Unit (‘PMU),’ Dynamic Line Rating (‘DLR’) and optimized equipment management technologies.’ NYSERDA selected the subject proposal for co-funding and implementation.  The main objectives of the proposed project are to demonstrate the potential of new computational tools that realistically allow the New York state transmission system to operate more efficiently, support deployment of clean power and accommodate demand-responsive load in an optimized, cost-effective manner.  This will be accomplished by obtaining more realistic values of the transmission line thermal limits in near real-time, and capturing and taking advantage of the variations of such limits due to changing weather conditions.  Furthermore, this project will investigate the utilization of such data in combination with real-time operational data in algorithms, aiming to improve the reliability and performance of both the Authority’s and the state’s transmission systems, as well as facilitating utilization of renewable generation.  During the last several years, the Authority has been investigating various alternative technologies for dynamic estimation of transmission line thermal limits, as well as evaluating the benefits of utilization of such technologies.  DLR is a relatively new technology that is emerging as a key feature of the smart power grid of the future, because it can have a significant impact on increasing the situational awareness of system operators by providing a better view of the capabilities and limitations of the transmission system in real-time.

            “The Valley Group is the only company in the United States that provides the equipment and technology for dynamic line rating utilizing tension measurement methodology.  It is, therefore, the only firm that can provide such technology for this demonstration project, and for this reason the Authority has partnered with The Valley Group in proposing this project and submitting the proposal to NYSERDA for co-funding.  The other collaborator, NETSS, has a unique optimal power flow routine that has a superior performance and can be utilized for voltage profile optimization and optimized dispatch computation.  The application of optimization methods to power system analysis is an advanced area of study and the robustness of the optimization tool is of paramount importance.  Each of these firms is uniquely qualified to provide such equipment and services.  Based on the foregoing, staff recommends award of non-procurement contracts to The Valley Group, Inc. and NETSS (PO#s TBA) on a sole-source basis to implement this co-funding project.  The contract with The Valley Group would provide for the design, engineering, fabrication, delivery and support for the installation of DLR equipment, which will be installed by Authority line crews on two Authority transmission lines (Niagara-Rochester ‘NR-2’ and Moses-Willis ‘MW-1’), as well as the required communications equipment.  The contract with NETSS would provide for the data analysis and decision support utilizing the collected DLR data in correlation with other system operational data provided by the Authority.  The Authority will also provide staff support for engineering, project management and craft labor.  In addition to improving system situational awareness, other significant benefits can also be achieved by using the proposed technologies for accurately determining line thermal limits and providing an optimization framework for improving the grid operation, as mentioned above.  It should be noted that at this stage, the project will consist of demonstration and evaluation and will not have any impact on actual system operation.  The contracts would become effective on or about January 1, 2012 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 amounts expected to be expended for the term of the contracts, $950,000 for The Valley Group and $650,000 for NETSS, respectively.  It should be noted that under the cost-sharing agreement with NYSERDA, 50% of the project costs will be reimbursed to the Authority.

ES&T - Energy Services + Power Supply – EH&S

            “The contract with Veolia ES Technical Solutions, LLC (‘Veolia’) (Q11-5075; PO# TBA) would provide for the recycling and disposal of lamps, light ballasts, mercury-containing equipment, batteries and small capacitors, as well as other related waste streams generated by the Authority’s Energy Services Program projects.  Services include, but are not limited to, furnishing, or arranging for furnishing, all labor, supervision, material, equipment, laboratory facilities, transportation including vehicles, fuel, tolls, highway use taxes, insurance (including environmental liability), spill prevention control and countermeasure equipment and materials and federal, state and local permits, licenses and other approvals necessary to manage the waste from its point(s) of generation within New York State to the point(s) of ultimate disposition.  Since the existing contract is expiring and the need for such services is ongoing, bid documents were prepared by staff and were downloaded electronically from the Authority’s Procurement website by 32 firms, including those that may have responded to a notice in the New York State Contract Reporter; two proposals were received and evaluated.  One of the two proposals was not fully compliant, did not meet all the bid requirements and was not considered further.  The other proposal was reviewed in greater detail.  Based on the foregoing, staff recommends award of a contract to Veolia, which is qualified to perform such services, fully 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 October 1, 2011 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Based on current waste generation trends and the increased number and scope of scheduled projects, as well as the regulatory costs associated with the management of new and existing waste streams, staff projects that up to $7.5 million may be required for the five-year term.  Approval is therefore requested for the total amount expected to be expended for the term of the contract, $7.5 million.  It should be noted that all costs associated with this work will be recovered by the Authority.

                                                                                       Enterprise Shared Services

                                                                                            Information Technology

            “In the past three years, the Authority’s Information Technology division (‘IT’) has undertaken major initiatives involving Customer Relationship Management (‘CRM’), Enhanced Data Management Business Warehouse and NERC CIP compliance.  During the next three years, IT will launch new initiatives, such as ERM Business Applications, MAXIMO and SAP initiatives.  IT will also continue to support and maintain the Authority’s current investment in its computer and network infrastructure, as well as its existing computer applications portfolio.  In order to meet the needs of this plan, the Authority uses contractors to augment its technical staff on a short-term basis, as necessary.

            “Since the existing contracts are expiring and the need for such services is ongoing, staff prepared a new Request for Proposals (Q11-5019).  Bid documents were downloaded electronically from the Authority’s Procurement website by 130 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Forty-five proposals were received and evaluated to identify a ‘short list’ of prequalified firms providing temporary programming personnel, based on the experience and capabilities of the bidders and the technical merits of their proposals.  The primary evaluation criteria included, but were not limited to:  experience in providing qualified programming / contract personnel in the tri-state area; infrastructure to provide both technical and managerial support for its contract personnel; financial stability; depth of contract personnel inventory and reasonable and competitive billing rates, as further set forth in the Award Recommendation documents.  Based on the foregoing, the following 16 firms were determined to be the most technically qualified bidders that met the bid requirements:  Carlyle Consulting Services, Inc., CompNova, Inc., Delphi Solutions, LLC d/b/a Rohn Rogers Associates, Eclaro International, Inc.*, Global IT Solutions USI, Inc.* (‘GITSUS’), Infotech Global, Inc.*, Kforce Inc., Manpower Professional Services, Mitchell Martin Inc., Monroe Staffing Services, Neotecra, Inc., PSI International, Inc.*, QED National*, RCG Global Services (formerly RCG Information Technology, Inc.), System Edge (USA), LLC* and Unique Comp Inc.*  (Nine of these firms have provided such services to the Authority under previous contracts in a timely and satisfactory manner.)  As specific positions are required, the Authority will request résumés of candidates based on the requirements and experience required for each position from all 16 prequalified firms.  The hiring supervisor will review the submitted résumés, interview candidates and select the most qualified individual for the required position at the contractual hourly rate, subject to successful completion of a required background check.  Contracts will be awarded only to those firms that successfully place a candidate, as each required position is bid among the entire prequalified group.  Such competition is expected to provide qualified talent from a variety of firms.  The new contracts would become effective on or after October 1, 2011 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  All contracts will expire on September 30, 2014, regardless of their duration.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $9 million.  Commitments will be made through individual purchase order releases against contracts (master outline agreements) with the successful firms, as positions are required.  Total commitments and expenditures for all awarded contracts will also be tracked against the approved aggregate total.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.  (It should be noted that seven of the aforementioned recommended firms are New York State-certified Minority/Woman-owned Business Enterprises, ‘M/WBEs,’ which are designated by an asterisk following their names.)

                                                                                                Law

             “The contract with Abrams & Abrams LLP (‘Abrams’) (Q11-5103; PO# TBA) would provide for legal services in connection with immigration matters.  Such services include, but are not limited to, preparation of temporary work permit filings, permanent residence applications, employment authorizations, labor certifications, ancillary applications for change of status, extension of stay, travel permits, and additional applications for family members, as well as filing of all such documents with the U.S. Government, and other immigration matters, as may be required.  Due to time constraints, staff conducted a formal competitive search, whereby seven firms were invited to submit proposals, including fees for the subject services, in a compressed time frame.  Seven proposals were received and evaluated.  A Post-Bid Addendum was issued to request pricing clarifications; responses were received from all seven firms and were evaluated in greater detail.  Based on the foregoing, staff recommends award of a contract to the Abrams firm, which is qualified to perform such services, meets the bid requirements, submitted the lowest-priced fee schedule and has provided satisfactory services under an existing contract for such work.  The Abrams firm specializes in immigration and nationality law and has extensive experience in the procurement of all immigrant and nonimmigrant visas, statuses and U.S. Citizenship.  Its expertise with immigrant visas extends through all categories of employment-based and family-based immigration.  The new contract would become effective on or about October 1, 2011 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, $250,000.

                                                                                            Power Supply

           “The contracts with Allstate Power Vac, Inc. (‘Allstate’) and Miller Environmental Group, Inc. (‘Miller’) (Q11-5093; PO#s TBA) would provide for general environmental services for the Authority’s SENY plants and facilities (including, but not limited to, the 500 MW, Flynn and Small Clean Power Plants), as well as for supporting the deconstruction of the decommissioned Poletti 825 MW plant site.  Such services would consist primarily of cleaning process equipment (such as tanks, oil/water separators, economizers, burners, etc.); transporting and disposing of hazardous materials generated by such cleaning and providing environmental and safety training to the Authority, as may be required, in compliance with all applicable federal, state and local laws, regulations, license and permit requirements.  Bid documents were downloaded electronically from the Authority’s Procurement website by 131 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Five proposals were received and evaluated on criteria that included, but were not limited to:  experience of staff; amount, type and availability of equipment and staff resources; range of projects that the bidder is able to handle; current licenses, permits and certifications; experience with power generation facilities; distance of equipment to the SENY facility to ensure adequate response time, etc.  Staff also calculated the cost of a typical task based on the hourly labor rates and equipment charges submitted by the bidders.  Based on the foregoing, staff recommends award of contracts to Allstate and Miller, the lowest-priced evaluated bidders, which are technically qualified to perform such services and meet the bid requirements.  Additionally, one of these firms has provided satisfactory services under an existing contract for such work.  The contracts would become effective on or about October 1, 2011 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $7.5 million, which includes funding for deconstruction-related environmental services for the Poletti site.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

        “The contracts with AECOM  Technical Corp. (‘AECOM’), Greenman-Pedersen, Inc. (‘GPI’), Stone & Webster Engineering New York, P.C. (‘S&W’) and TRC Engineers, Inc. (‘TRC’) (Q11-5061; PO#s TBA) would provide for on-call engineering, construction management and oversight services for Authority Projects and facilities located throughout the state.  Bid documents were downloaded electronically from the Authority’s Procurement website by 167 firms, including those that may have responded to a notice in the New York State Contract Reporter; 23 proposals were received and evaluated.  Proposals submitted by the seven firms with the highest pricing were not considered further.  Staff performed an extensive and comprehensive evaluation of the remaining 16 proposals based on experience and quality of services, hourly rates and location/proximity of staff to Authority locations, as further set forth in the Award Recommendation documents.  The overall ranking was established based on a weighted factor in each of the three categories.  Based on the foregoing, staff recommends award of a contract to AECOM, GPI, S&W and TRC, the most technically acceptable bidders, which are qualified to perform such work and meet the bid requirements.  The contracts would become effective on or about October 1, 2011 for an intended term of up to four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $10 million.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

     Contract Extensions and/or Additional Funding:

                                                                                                Power Supply

        “Since the installation and commissioning of the Small Clean Power Plants (‘SCPPs’), the LM6000 units have experienced unanticipated emergency failures that have not been covered by warranty.  In each case involving the power island equipment, the only source of emergency support has been GE Packaged Power, Inc. (‘GEPP’) and involved multiple emergency orders to GE for a lease engine, field technicians and the actual factory orders for repairs and other Service Bulletin upgrades, as necessary.  On several such occasions, the Authority investigated whether other firms were capable of providing these services, but the response was negative, due to the unavailability of parts, assets or the leasing of a gas turbine for use during repairs, leaving GEPP as the only resource to meet the Authority’s needs in time of emergency.  Staff therefore recommended entering into a long-term service agreement with GEPP to provide for emergency repair support services, as well as necessary maintenance that only GEPP was qualified to provide, for the LM6000 SCPPs.  Accordingly, at their meeting of March 27, 2007, the Trustees approved the award of a five-year sole-source contract to GEPP (4600001798), in the amount of $6 million, to provide for the aforementioned services.  Major repairs (e.g., hot section rotable exchange, high-pressure compressor repair, stage 2 blade repairs, oil leaks, etc.) were required to support the Hell Gate, Harlem River, Pouch, Vernon, Seymour, Brentwood and Kent SCPPs.  The extent of such repairs could not be anticipated at the time of contract award, since they were not readily evident from operational data and field inspections.  (It should be noted that such issues are not unique to the Authority and that GEPP established a task force to analyze the failures that the Authority and other LM6000 users have experienced.)  Due to an accelerated rate of expenditures necessitated by the aforementioned unanticipated emergency repairs, at their meeting of June 24, 2008, the Trustees approved an additional $5 million for the contract, increasing the compensation ceiling to $11 million.  The Authority has benefitted from GEPP’s expertise and quick responses.  GEPP is the original equipment manufacturer and, as such, is uniquely qualified to perform such services.  GEPP has the required engineering resources, parts and other assets available on a 24/7 basis.  GEPP also has engines for lease during repairs, so that the Authority can maintain its New York Independent System Operator (‘ISO’) UCAP.  GEPP will continue to provide all such required services under this one contract, enabling the Authority to receive discounts on GE’s published rates.  During the Fourth Quarter of 2011, two Gas Turbines (‘GTs’) will be sent to the GE depot for Service Bulletin upgrades and to repair any damaged Hot Section components.  Such upgrades and repairs are required to maintain the GTs in top performance to last through the next upgrade cycle (approximately three years).  Staff recommends a nine-month extension of the subject contract through December 31, 2012 in order to continue to provide coverage for such upcoming planned and unplanned maintenance / emergency repairs to ensure the reliability of the LM6000 fleet, as well as to allow sufficient time to either bid such services or negotiate the terms and conditions of a new long-term service agreement.  The current ‘Target Value’ is $11 million, of which approximately $9.8 million has been released to date.  The previously approved funding will be expended earlier than anticipated due to the emergency repairs required to support the recent transformer failures at both the Harlem River and Hell Gate SCPPs.  Staff currently estimates that an additional $5 million may be required to continue services through 2012.  The Trustees are therefore requested to approve an extension of the subject contract through December 31, 2012 and to approve additional funding in the amount of $5 million, thereby increasing the total approved contract amount to $16 million.

        “The contract with Mollenberg Betz Inc. (4500194884) provides for an upgrade of the CO2 ventilation system for 13 units at the Niagara Power Project – Robert Moses Niagara Power Plant.  Services include all labor, supervision, equipment and materials to perform the upgrade (excluding electrical work to be performed by Niagara craft labor).  The original award, which was competitively bid, became effective on October 13, 2010 for an intended term of less than one year, in the amount of $423,000.  An additional $83,028 was subsequently authorized in accordance with the Authority’s EAPs.  The work has consisted of replacing louvers, doors, door sweeps and ductwork.  Due to unanticipated field conditions requiring a redesign of the originally-specified doors, the lead time to procure and deliver them to the site, as well as extensive electrical modifications inside the unit control boards to be performed by Niagara staff, a six-month extension of the subject contract is required to complete the original scope of work.  The current contract amount is $506,028; staff anticipates that no additional funding will be required for the extended term.  The Trustees are requested to approve an extension of the subject contract through April 12, 2012, with no additional funding requested.

        “The contract with Premier Utility Services, LLC (‘Premier’) (4500195520) provides for locating and mark-out services for underground utilities (e.g., electrical, water, sewer, gas, fuels, communications, steam, etc.) at Authority-owned or operated facilities or property in the SENY region, in compliance with the New York City and Long Island one-call notification system (‘DigNet’) participation requirements.  Premier serves as the 24/7 contact and responder to all such calls or dig requests and provides trained and qualified utility locators or inspectors and all necessary equipment and materials to accurately identify / locate / inspect such underground utilities, as needed.  Services include, but are not limited to, site visits to mark or clear the property for excavation using supplied maps and records; office screening and resolution of calls, requiring no dispatch to the field; emergency response to after-hour requests; and private utility locating, where Premier technicians provide utility locating services for all tone able utilities on Authority property, as may be requested.  The original award became effective on October 26, 2010 for an intended term of less than one year and was subsequently extended to one year.  An additional extension of approximately two months is now requested in order to allow sufficient time to bid such services with an expanded scope to include all Authority facilities statewide for a multi-year term and to continue such services until a new contract can be awarded, in order to remain compliant with the NYC/LI one-call notification system requirements.  The current contract amount is $10,000; staff anticipates that no additional funding will be required for the extended term.  The Trustees are therefore requested to approve an extension of the subject contract through December 31, 2011, with no additional funding requested.

        “At their meeting of September 28, 2010, the Trustees approved the award of a contract to Quanta Technology, LLC (4500194644) to perform a condition assessment of the Authority’s existing Transmission System equipment and assets, in connection with the Life Extension and Modernization Program.  The original award, which was competitively bid, became effective on September 29, 2010 for an intended term of less than one year, in the approved amount of $2,047,733.  The original scope of work was comprised of performing a condition and life assessment study, risk of failure study and cost benefit analysis for nine transmission projects, including developing a preliminary implementation schedule for mitigating concerns and cost estimates for each task.  Due to budget constraints in FY2011, Quanta was notified to stop work on all projects in December 2010.  In response to new requirements mandated by a North American Electric Reliability Corporation (‘NERC’) Alert, Quanta was subsequently notified to re-start activities relating to the Clearance Remediation project.  The scope of work was revised accordingly, to evaluate all 1,400 miles of transmission lines, in compliance with the NERC-mandated requirements.  Available funding from the other projects is being used to offset the additional cost of this task and an additional $135,495 was authorized in accordance with the EAPs.  A six-month extension is now requested in order to complete the Clearance Remediation project.  The current contract amount is $2,183,228.  Staff anticipates that no additional funding will be required for the extended contract term.  The Trustees are therefore requested to approve an extension of the subject contract through March 31, 2012, with no additional funding requested.

FISCAL INFORMATION

        “Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2011 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 certain contracts in support of Energy Services Programs will be made from the Energy Conservation Effectuation and Construction Fund.

RECOMMENDATION

        “The Deputy General Counsel, the Senior Vice President – Power Supply Support Services, the Senior Vice President – Transmission, the Vice President – Energy Services, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Environment, Health and Safety, the Vice President – Procurement, the Vice President – Information Technology/Chief Information Officer, the Chief Technology Officer, the Regional Manager – Northern New York, the Regional Manager – Central New York, the Regional Manager – Western New York, the Regional Manager – Southeastern New York and the General Manager – Clark Energy Center recommend that the Trustees approve the award of multiyear procurement (services) and other contracts to the companies listed in Exhibit ‘2b-A’ and the extension and/or additional funding of the procurement (services) contracts listed in Exhibit ‘2b-B,’ for the purposes and in the amounts discussed within the item and/or listed in the respective exhibits.

        “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 pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award and funding of the multiyear procurement services and other contracts set forth in Exhibit “2b-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 Acting 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 “2b-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 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.


    c.        Astoria Site – New Astoria Infrastructure – Installation of New Electrical Infrastructure Contract Award   

              
The Acting President and Chief Executive Officer submitted the following report:

    SUMMARY

        “The Trustees are requested to approve the award of a one-year contract to Yonkers Electric in the amount of $3.2 million for the installation of new electrical infrastructure as part of the New Astoria Infrastructure Project (“Project”) at the Astoria Site.  This work is part of the $4.9 million Capital Expenditure Authorization Request (“CEAR”) for the New Astoria Infrastructure Program which was presented and approved at the June 28, 2011 Trustees’ meeting.

    BACKGROUND

        “In accordance with the Authority’s Expenditure Authorization Procedures, the award of contracts in excess of $3 million requires Trustees’ approval.

“The Authority’s 825 MW Charles Poletti Power Plant was decommissioned in January of 2011.  The Existing Building Substation (“EBS”) is presently powered from the Poletti Power Plant 6.9 kV distribution system.  Due to the future deconstruction of the Poletti Power Plant, a new EBS is required.  The new EBS will be re-powered from the 500 MW Combined Cycle Power Plant’s 5 kV distribution system to maintain the power feeds to existing site buildings and systems that are required to remain in operation.  These include: diesel fire pump house, foamite house, warehouse, security guard house, the new electric fire pump house and the demin storage building. 

DISCUSSION

        “In response to the Authority’s request for proposal advertised in the New York State Contract Reporter on June 7, 2011, 93 firms downloaded the bid document from the Authority’s website.  Following bid addenda, pre-award meetings and clarifications, and a post bid addenda, the final three proposals and revised pricing was received as follows:

Bidder

City, State

Base Bid
(Completed by Specified Date)

Delayed Completion Bid

Spare Section & CB’s

Yonkers Electric

Yonkers, NY

3,124,060

2,528,000

76,000

T. Moriarty & Son, Inc.

Brooklyn, NY

No bid

3,288,136

87,500

Hawkeye LLC

Hauppauge, NY

No bid

2,953,136

No bid

        “A bid walk-down was held on-site on June 14, 2011 and pre-award meetings were conducted on July 17, 2011 with the three bidders, Yonkers Electric, T. Moriarty & Son, Inc. (‘TMS’) and Hawkeye LLC, to review their approach to work and logistics and to confirm schedule compliance.  The proposals were reviewed by an Evaluation Committee consisting of Authority staff and the Authority’s Consultant, AECOM.

        “All firms had complete understanding of the work, however, only Yonkers Electric was able to meet the project schedule per the specifications.  Yonkers Electric is able to complete the project, as required, and submitted the lowest price for the spare breakers.

        “Yonkers Electric has been in business for 79 years and is incorporated in New York.  Yonkers Electric has performed similar projects in New York and is considered a reputable contractor.  The contractor is in good standing as confirmed by the Authority’s Procurement staff.  Yonkers Electric is financially secure; has adequate experience in executing this type of work and their bid is consistent with the Fair Cost Estimate (“FCE”).  The project is scheduled to commence September 2011 and be completed by December 2011.

     FISCAL INFORMATION

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

    RECOMMENDATION

       “The Acting Chief Operating Officer/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 and the Authority’s Regional Manager – SENY recommend that the Trustees approve the award of a one-year contract to Yonkers Electric of Yonkers, NY, in the amount of $3.2 million, for the installation of new electrical infrastructure as part of the New Astoria Infrastructure 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.”

        The following resolution, as submitted by the Acting 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 one-year contract to Yonkers     Electric of Yonkers, NY, in the amount of $3.2 million, for the installation of new electrical infrastructure as part of the New Astoria Infrastructure Project, as recommended in the foregoing report of the Acting President and Chief Executive Officer:

                        Contractor                                           Contract Approval

                        Yonkers Electric                                         $3.2 million

                        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.

               
Discussion Agenda

3.        a.             Report of the Acting President and Chief Executive Officer

                  Acting President and Chief Executive Officer, Mr. Gil Quiniones, provided an overview of the recent realignment of the Authority’s executive management; updates on the impact of hurricane Irene and tropical storm Lee on the Authority’s facilities and around the state; status of the Recharge New York Program; the Long Island/New York City Offshore Wind Project; and, the proposed Rate adjustment. 

                In response to a question from Vice Chairman Foster, Acting President Quiniones said that the HTP project is under construction and going according to plan.  However, on the commercial transaction side of the project, staff continues negotiations with the City of New York regarding the project’s Cost Recovery Agreement.

        Executive Management

            Acting President Quiniones said that he has streamlined the executive management team for a flexible organization in order to enhance the Authority’s business plan and in keeping with the Governor’s energy and economic development plan.

        Hurricane Irene and Tropical Strom Lee

            Acting President Quiniones said that the recent hurricane and tropical storm caused the Gilboa reservoir, which is owned by the City of New York, to overflow and spill into the lower reservoir at the Authority’s Blenheim-Gilboa Pumped-Storage Plant (“B-G”).  He said that in order for B-G’s dam not be compromised, Authority engineers performed extraordinarily well, in some instances working below water level, a threat to their lives, in order to stop the flooding into the dam.  He continued that, as a part of the Authority’s license, each year it enacts an action plan on how to protect the public in the event of an emergency.  This is the first time in the Authority’s history that staff had to implement this action plan and they showed tremendous calm under pressure during this crisis.  He said that the Authority’s transmission staff also assisted LIPA and NYSEG in the restoration of their transmission lines which were damaged during the storm.

            In response to a question from Vice Chairman Foster, Acting President Quiniones said that staff received the standard overtime pay and other compensation in keeping with the Authority’s policy.  Trustee Dyson said that he is very proud of what staff did in response to that crisis and suggested they receive an award of recognition for this service which was above the call of duty.  Vice Chairman Foster asked Ms. Joan Tursi to recommend a Trustee commendation award to be presented to the employees for their admirable performance at the October Board meeting.
 

    Recharge New York

           Acting President Quiniones said that the applications for Recharge New York, the new economic development program, will be available in the week.
In response to a question from Vice Chairman Foster, Acting President Quiniones said that the effective date of the program is July 1, 2012.  He added that the Authority expects to receive approximately 3,000 applications under this new program.

    Off-Shore Wind Study

           Acting President Quiniones said that the Authority has filed a lease to explore off-shore wind on Long Island in order to continue its study and analysis of such project.  Trustee Dyson pointed out that this filing is a reflection of the Authority’s interest in alternative sources of energy.

    Authority Rate Adjustment

          Acting President Quiniones said that public outreach with regards to the Authority’s rate adjustment continues.  Public forums were held on September 19, 20, and 22 in Syracuse, Niagara and Massena, respectively.  At the end of the public comment period, staff will make a recommendation to the Board for approval.

   Budget

        With regard to the cost reductions suggested by the Board at the last meeting, Acting President Quiniones said that staff continues to identify areas of savings in the Authority’s overhead which will be included in the 2012 budget.  Staff is also working on 2012 O&M and Capital budgets and business plan to be reviewed by the Trustees before formal presentation at the December Board meeting.

  Strategic Plan

        Acting President Quiniones said that Authority staff is in the process of redoing its 5-year strategic plan for Board for approval in March 2012.  In response to a request from Trustee Dyson, Acting President Quiniones said that staff will also prepare a 10-year business plan.  To this end, Authority staff will be reviewing business models and other strategic initiatives that the Authority could undertake to fulfill its mission and the Governor’s economic development plan.  In response to a suggestion from Vice Chairman Foster, Acting President Quiniones said that the Authority is planning a retreat to discuss its strategic plan.  Mr. Donald Russak added that the 5-year Strategic Plan is due to the ABO in March 2012.
In response to a question from Chairman Townsend, Acting President Quiniones said that Authority staff is conducting a condition assessment to prepare for the life extension and modernization program for its transmission system, to be completed in July 2012.  Staff is also looking at potential new transmission that will integrate renewable resources to the grid within the state and Canada to address potential retirement of plants in the state.

           
b.             Report of the Acting Chief Operating Officer

            Acting Chief Operating Officer, Mr. Edward Welz, provided highlights of the report to the Trustees.  In response to a question from Trustee Nicandri, Mr. Welz said that the life extension and modernization of the Authority’s transmission system includes upgrades to substations, transmission line and transmission towers.  He added that it is problematic for the Authority to upgrade only the portion of the transmission line which it owns.  Trustee Dyson suggested that, as part of the discussions at the strategic planning retreat, staff considers inquiring if the private utilities would like the Authority to upgrade their portion of the transmission line as well, at a reasonable price.

          Trustee Nicandri moved that the Board adopt a resolution congratulating the staff on their handling of the damage caused by the storm for which they did a very commendable job.   He recommended that this be done on behalf of the Board of Trustees to show the Board’s appreciation of their efforts.  Vice Chairman Foster seconded the motion, in addition to the award Ms. Tursi will be working on.  Trustee Curley added his support for the resolution saying that the employees should be recognized for putting themselves in harm’s way for an extended period of time on behalf of the Authority and the state.  Chairman Townsend and Trustee LeChase also supported the resolution.   The resolution was unanimously adopted.
 

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 and its liquidity position remains strong.  For the period ended August 31, 2011, Net Income was $172 million, which is $56 million above budget.  Lower interest rates have resulted in a positive mark-to-market position of the Authority’s investment portfolio.  Net income at the end of the year is projected to be approximately $225 million.   
Mr. Russak also reported the following activities for the month of August:

        In response to a question from Trustee Curley, Mr. Russak said that the Authority will be making discounts.  In response to further questions from Trustee Curley, Mr. Russak said residential consumers will not see a difference in their bills as a result of the discounts since the transaction for the discounts is a cash transaction instead of megawatts of energy being sold.

      In response to a suggestion from Trustee Dyson, Mr. Russak said that staff continually reviews and monitors its bonds and, if staff determines that a bond authorization is necessary, staff will seek Board authorization for a long-term bond issue.  Responding to a question from Trustee Dyson, Mr. Russak said that there is no immediate need for funding request for the life extension and modernization program at the Lewiston plant.

 4.       Procurement (Services) Contract – Blenheim-Gilboa Pumped-Storage Project Relicensing – Lead Relicensing Consultant – Contract Award
            
           
The Acting President and Chief Executive Officer submitted the following report:

    SUMMARY

           “The Trustees are requested to approve the award of a procurement contract to Kleinschmidt Associates, P.A., P.C. (‘KA’) to provide consulting services in support of the first phase of the relicensing of the Blenheim-Gilboa Pumped-Storage Project (‘B-G Project’).  The term of the contract will be for four years.  The amount for which authorization is requested is $1.03 million.

    BACKGROUND

           “On December 13, 2010, the Trustees authorized the capital expenditure of up to $8.7 million to conduct the first phase of the relicensing of the B-G Project.  This request seeks to award a multiyear contract for the Lead Consultant to assist the Authority in this effort.

           “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.

    DISCUSSION

          “In 1969, The Federal Power Commission (now the Federal Energy Regulatory Commission (‘FERC’)), issued a 50-year license for the B-G Project.  This license expires in April 2019.  Along with the St. Lawrence and Niagara projects, the B-G Project represents the core of the Authority’s generation system.  The Authority needs to obtain a new license for the B-G Project to continue to operate it after the original license expires.

         “The Authority has considerable experience with relicensing its large hydroelectric projects.  Relicensing of the St. Lawrence and Niagara Projects were successfully completed in 2003 and 2007, respectively; but the FERC relicensing process is long and complicated.  To assist the Authority in this important effort, the Authority is proposing to engage a Lead Relicensing Consultant who will provide a broad range of services through either its own resources, or, as appropriate, through the use of subcontractors.

        “To address this need, the Authority solicited proposals from qualified consultants to provide services as the Lead Relicensing Consultant for the B-G Project’s relicensing effort.  The services to be provided would include: providing strategic advice; project management and administration; assembling and researching information; preparation of documents and support for informal consultation with stakeholders.

          “Bids were received from the following companies:

        “Energy Initiatives Group (‘EIG’) is a company with staff that has substantial experience in the power engineering disciplines, but the company has, essentially, no experience with hydroelectric relicensing.  Therefore, EIG was not considered technically qualified for the subject work and its proposal was not given further consideration.

         “Both of the other bidders are known to the Authority, have extensive hydroelectric relicensing experience and are technically qualified.  KA presented a team approach which would combine the resources of Gomez & Sullivan Engineers and TRC Solutions with their own resources (similar to the team currently implementing the Niagara Project’s new license Compliance and Implementation
 program).  The Louis Berger Group’s (‘LBG’) proposal included resources from EDR of Syracuse, NY.

        “The evaluation team agreed that both bidders were capable of providing a quality work product.  They both presented teams of qualified professionals.  However, the KA team was judged superior in several technical areas.  KA has greater experience representing applicants of pumped-storage projects in relicensing.  KA has significantly more experience with the New York State regulatory agencies such as the New York State Department of Environmental Conservation that will play a pivotal role in the relicensing.  KA also has more extensive staff resources, which addresses the concern that the departure of key personnel would reduce the consultant’s ability to assist the Authority.  KA’s proposal and team demonstrated a clearer understanding of the tasks being undertaken in this project and for working with the Authority.  The evaluation team concluded that KA’s proposal and team were technically superior.

        “The proposed contract would be a time and materials contract.  The commercial terms and personnel rates were comparable between the two technically qualified bidders.  On balance, KA team’s proposal was considered to be superior because of its greater experience with pumped-storage project relicensing and New York’s regulatory agencies, as well as the extent of its staff resources.

  FISCAL INFORMATION

       “Since these expenditures are related to the relicensing of the B-G Project, it will be treated as a capital expense and payments will be made from the Capital Fund. 

    RECOMMENDATION

       “The Vice President – Project Development and Licensing, the Vice President – Procurement, the Regional Manager – Central New York and the Director – Relicensing and Implementation recommend that the Trustees authorize award of a contract to Kleinschmidt Associates P.A., P.C. for $1.03 million to provide consulting services in support of Phase I of the Blenheim-Gilboa Pumped-Storage Project relicensing.

      “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 pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a contract to Kleinschmidt Associates P.A., P.C. for four years, in an amount of $1.03 million, to provide consulting services in support of Phase I of the relicensing of the Blenheim-Gilboa Pumped-Storage Project, as recommended in the foregoing report of the Acting President and Chief Executive Officer;

                                Contractor                                           Contract Approval

                        Kleinschmidt Associates P.A., P.C.                $1,030,000
                               
                    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.

 

5.        Increase in New York City Governmental Customer Rates – Notice of Proposed Rulemaking

    SUMMARY

               The Acting President and Chief Executive Officer submitted the following report:

               “The Trustees are requested to authorize a Notice of Proposed Rulemaking (‘NOPR’) to increase the Fixed Costs component of the production rates by $3.4 million or 2.1%, not including Astoria Energy II (‘AE II’) plant expenses to be charged in 2012 to the New York City Governmental Customers (‘Customers’).  AE II plant expenses, although part of the Fixed Costs component, are unrelated to this NOPR proceeding.

                “In addition, the Trustees are requested to direct the Corporate Secretary to file the NOPR with the New York State Department of State for publication in the New York State Register in accordance with the requirements of the State Administrative Procedure Act (‘SAPA’).   

                “Further, since the proposed increase is greater than 2%, a public forum will be held in accordance with Authority policy.  Trustee authorization is also requested to direct the Corporate Secretary to provide all appropriate notice for such public forum.  Upon closure of the 45-day statutory comment period concerning this proposed rate action, Authority staff will take into consideration concerns that have been raised and return to the Trustees at their meeting on December 15, 2011, to seek final adoption of this proposal.

                “Authority staff also proposes minor technical corrections to the service tariff to clarify the production minimum billing provision and to correct a typographical error in Table of Contents.

    BACKGROUND

            “In 2005, the Authority and the Customers entered into supplemental agreements for the purchase of electric service through December 31, 2017.  These agreements (the 2005 ‘Long- Term Agreements,’ or ‘LTAs’) replaced prior agreements entered into during the mid-1990s with these Customers.  The LTAs established a new relationship between the Authority and the Customers that reflects the costs of procuring electricity in the marketplace managed by the New York Independent System Operator (‘NYISO’).  The LTAs define specific cost categories with respect to providing electric service, and prescribe a collaborative process for acquiring resources, managing risk and selecting a cost-recovery mechanism.

           “The LTAs separate all costs into two distinct categories: Fixed Costs and Variable Costs. Fixed Costs include Operation and Maintenance (‘O&M’), Shared Services, Capital Cost, Other Expenses (i.e., certain directly assignable costs) and a credit for investment and other income. Under the LTAs, the Authority must establish Fixed Costs based on Cost-of-Service (‘COS’) principles and make changes only under a rate case filing in accordance with SAPA requirements.  In addition, the LTAs contemplate that year-to-year changes in Fixed Costs will be reviewed by the Customers in advance of the filing made under SAPA; Authority staff must consider the Customers’ concerns before presenting any proposed changes to the Fixed Costs to the Trustees or issuing proposed changes for public comment.

            “Also, pursuant to the LTAs, the Authority develops the Variable Costs on an annual basis.  These are costs the Authority expects to incur to serve the Customers in the upcoming Rate Year--specifically for fuel and purchased power, risk management, NYISO ancillary services and O&M reserve, less a credit for NYISO revenues from generation dedicated to these Customers.  The Variable Costs are subject to the Customers’ review and comment.  The cost-recovery mechanisms for the upcoming year’s Variable Costs are selected by the Customers from among the choices set forth in the LTAs.  These cost-recovery mechanisms were previously approved by the Trustees and therefore do not require further approval.

            “In the rate-setting process for the 2012 Rate Year, the Customers selected an ‘Energy Charge Adjustment (‘ECA’) with Hedging – 20% Cap’ option as a cost-recovery mechanism.  Under this mechanism, all Variable Costs are passed on to the Customers (i.e., the charges for electric service during the Rate Year are subject to adjustment based on the difference between the Variable Costs actually incurred to serve the Customers and the Variable Costs recovered by the Authority under its tariffs in the Rate Year; costs associated with hedging instruments purchased for the purpose of reducing potential volatility are assigned to the base Variable Costs).  

            “On July 10, 2008, the Authority and the Customers entered into an agreement (‘Agreement’) that implemented Article XI of the LTAs concerning the acquisition of long-term resources under a request for proposal (‘RFP’) process.  The RFP resulted in the Authority contracting with Astoria Energy II LLC for the full product toll of a 500 MW combined-cycle unit over a twenty year period.  The full product toll allows the Authority to capture all energy, capacity and ancillary services output of the generating unit for the benefit of the Customers.  Under the Agreement, the costs incurred by the Authority are to be included as part of the COS-based rates, and in order to ensure full recovery of all costs related to the full product toll, NYPA shall use a true-up mechanism to assess charges for under-recovery and apply credits for over- recovery of costs.  The 2012 cash payment expected to be made to the AE II owners is $129 million and these have been included in the Fixed Costs component of the Preliminary 2012 COS.  The 2011 expenses associated with AE II, which commenced operations in July 2011, were similarly passed on to Customers through the Energy Charge Adjustment and not included in the 2011 base rates pursuant to the Customers’ request.    

             “In addition, the Authority reintroduced the production minimum billing provision in its service tariff as part of the recent production rate redesign rulemaking that the Trustees’ approved at their June 28, 2011 meeting.  Upon further review and discussion with Customers, Authority staff proposes a technical correction to clarify this provision.

    DISCUSSION

            I.   Fixed Costs Component

             “Based on the Preliminary 2012 COS, the increases in Fixed Costs are $132.4 million; with $129 million being a pass-through of the payments to the owners of the AE II project.  Remaining Fixed Costs are projected to increase by $3.4 million, or 2.1%, compared to the Final 2011 COS.

            “The expenses associated with AE II, which only commenced operations in July 2011, were not included in the base rates for 2011 pursuant to the Customers’ request but, rather, were collected monthly through the Energy Charge Adjustment.  Although such AE II costs are included in the Preliminary 2012 COS, they are not the subject of this NOPR.  Recovery of the Authority’s AE II costs was separately agreed to through contracts between the Authority and the Customers.  Non-AE II Fixed Costs, which are projected to increase by $3.4 million, or 2.1%, compared to the Final 2011 COS, is the subject for review under this SAPA proceeding. 

            “Contributors to the additional Fixed Costs are increases in O&M ($3.6 million) and Shared Services ($0.7 million) offset by a reduction in Other Expenses ($0.9 million).  The AE II capital lease payments will be $129.0 million in 2012.

            “Base Variable Costs are projected to decrease by a total of $41.2 million, or 6% compared to the Final 2011 COS and are subject to change depending on the selected hedging strategies.  Based on preliminary analyses, Authority staff projects that the 2012 production rate, combining the Fixed and Variable Costs, will increase by about 9.4%.

“Because this proposal would increase revenues to the Authority by more than 2%, a public forum under Authority procedures will be held on Thursday, November 17, 2011 at 11:00 a.m. at the Authority’s New York City office to solicit comments from interested parties.

           “Under the LTAs, any proposed increase in the Fixed Costs component of the Customers’ production rates must be done in accordance with a SAPA proceeding.  The Customers will have opportunity to file comments in accordance with SAPA after the issuance of the NOPR as well.  After closure of the 45-day statutory comment period concerning the proposed rate action, Authority staff will take into consideration concerns that have been raised and will return to the Trustees at their meeting on December 15, 2011 to seek final adoption of the Fixed Costs rate.  Subsequent to such final adoption, staff will incorporate the approved Fixed Costs and the final Variable Costs that are determined in the rate-setting process with the Customers into new production rates to become effective with the January 2012 billing period.

          “All of the Customers would be subject to this proposed increase in the Fixed Costs component of their production rates.  This proposed action does not affect Westchester County and other local governmental entities in Westchester County, which are the subject of a separate Trustees’ action.

                II.  Production Minimum Billing

                “The current version of the Authority’s Service Tariff No. 100 (‘ST-100’) applicable to the Customers reflected the results of the production and delivery rate structure redesign and improved the tariff’s format and organization.  As part of the rate redesign, the Trustees approved the activation of the production minimum bill provision.  In preparing to implement this provision effective January 1, 2012, staff learned that a technical correction to ST-100 was needed to make clear that the minimum bill provision applies to the demand portion of the bill only and that energy charges apply regardless of the minimum demand bill.  Authority staff proposes to insert the word ‘demand’ in certain places and add language regarding the continuing applicability of energy charges to make this clarification.  This will remove any ambiguities and permit the minimum bill provision to operate in the manner intended which is consistent with accepted cost-of-service principles.  These changes will ensure a properly functioning minimum bill provision and allow the Authority to achieve a more appropriate recovery of the Fixed Costs component through the customer production demand charges that will lower the estimated revenue shortfall and rate increase for 2012.  The proposed corrections, as well as the minimum bill provision itself, are revenue-neutral to the Authority. 

        In addition, staff proposes to correct a typographical error contained in the Table of Contents to make it consistent with the body of ST-100. 

        “Clean and redlined versions of the applicable tariff sheets are included in Appendix ‘5-A’ of this memorandum.

    FISCAL INFORMATION

                “The adoption of this proposal concerning the increase in Fixed Costs applicable to the Customers under the LTAs would result in the Authority continuing to recover all Fixed Costs associated with serving this Customer group.

                “The corrections to the production minimum bill provision are revenue-neutral to the Authority.

    RECOMMENDATION

                “The Director – Market Analysis and Administration recommends that the Trustees authorize the Corporate Secretary to file a Notice of Proposed Rulemaking in the New York State Register for the adoption of an increase in the Fixed Costs component of the production rates (comprising non-AE II costs) by $3.4 million to be charged in 2012 to the New York City Governmental Customers.

                “It is also recommended that the Senior Vice President – Marketing and Economic Development, or his designee, be authorized to issue written notice of the proposed action to the affected Customers under the provisions of the Authority’s tariffs.

                “For the reasons stated above, I recommend the approval of the above requested action by adoption of a resolution in the form of the attached draft resolution.”

            Mr. Mike Lupo presented highlights of staff’s recommendation to the Trustees.   Trustee John Dyson said that he had a very productive conversation with Deputy Mayor Holloway regarding this action and other Authority projects in New York City.

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

        RESOLVED, That the Authority projects an increase in the Fixed Costs of serving the New York City Governmental Customers when comparing those costs contained in current rates to 2012 projected costs; and be it further

         RESOLVED, That the Authority has entered into supplemental Long-Term Agreements with the New York City Governmental Customers and those agreements provide for the recovery of additional Fixed Costs through a rate filing under the State Administrative Procedure Act; and be it further

         RESOLVED, That the Authority on June 28, 2011 approved a rulemaking to effectuate production minimum billing in Service Tariff No. 100 which requires technical corrections through a rate filing under the State Administrative Procedure Act; 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 of this proposed action by the Trustees to the affected customers; and be it further

        RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file such notices as may be required with the Secretary of State for publication in the New York State Register and to submit such other notice as may be required by statute or regulation concerning the proposed rate increase; and be it further
               
        RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, authorized to schedule and provide all appropriate public notice of a public forum to be held on Thursday, November 17, 2011 at 11:00 a.m. at the Authority’s New York City office for the purpose of obtaining the views of interested persons concerning the Authority’s proposed action to adjust the rates for the New York City Governmental Customers; 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 certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Acting General Counsel.

 

6.         Decrease in Westchester County Governmental Customer Rates – Notice of Proposed Rulemaking

                The Acting President and Chief Executive Officer submitted the following report:

  SUMMARY

                “The Trustees are requested to approve a Notice of Proposed Rulemaking (‘NOPR’) to decrease the production rates by 2.71% as compared to 2011 rates for the Westchester County         Governmental Customers (‘Customers’).

                “In addition, the Trustees are requested to direct the Corporate Secretary to file the NOPR with the New York State Department of State for publication in the New York State Register in accordance with the requirements of the State Administrative Procedure Act (‘SAPA’).   

                “Authority staff also proposes minor technical corrections to the service tariff to clarify the production minimum billing provision.

BACKGROUND

            “The Authority provides electricity to 104 governmental customers in Westchester County, which includes the County of Westchester, school districts, housing authorities, cities, towns and villages.  The County of Westchester is the largest single customer, accounting for about one-third of sales.

            “The basis of providing service is contained in the Supplemental Electricity Agreements (‘Agreements’) with the Customers.  The Agreements were approved by the Trustees at their December 19, 2006 meeting, and were signed by each of the 104 Customers.  Among other things, the Agreements permit the Authority to modify the Customers’ rates (for Rate Years subsequent to 2007) at any time based on a fully supported pro forma cost-of-service (‘COS’) subject to customer review and comment and compliance with the SAPA process; permit the Customers to fully terminate service on one year’s written notice, to be effective no earlier than January 1, 2013 and allow the Authority to apply an Energy Charge Adjustment (‘ECA’) mechanism to the Customers’ bills.

            “The current 2011 base production rates were adopted by the Trustees at their January 25, 2011 meeting, when they approved a 16.37% decrease over 2010 rates.  Staff is now proposing a 2012 rate decrease which reflects the continuing reduction in the power supply costs as contained in the currently effective 2011 rates.  Through 2011, the power supply cost reductions have been reflected in monthly negative ECA and the 2011 rate decrease in base rates will reset the ECA to zero.

            “In addition, the Authority re-introduced the production minimum billing provision in its service tariff as part of the recent production rate redesign rulemaking that the Trustees’ approved at their June 28, 2011 meeting.  Upon further review, Authority staff proposes technical corrections to clarify this provision.

DISCUSSION

            I.  Production Rate Decrease

                “Consistent with the Authority’s past rate-making practices and with the rate-setting process set forth in the Agreements, the proposed production rate decrease is based on a pro forma COS for next year.  The Preliminary 2012 COS for the Westchester Customers is $36.93 million.  The primary cost element, energy purchases, is $32.81 million and accounts for 89% of the total production costs.  Because these Customers have no dedicated generation facility, energy requirements are purchased from the market (in New York Independent System Operator Zones ‘G’ (Hudson Valley) and ‘A’ (Western New York)).  The projected 2012 prices for these two zones are expected to be slightly lower than those that were projected for 2011 and incorporated into the rates that are currently in effect.   Further analysis shows that under current rates, combined with a forecast of Customer purchases in 2012, the projected revenues would be $37.96 million, resulting in an over-collection of $1.03 million from Customers. 

                “Therefore, staff is proposing a 2.71% reduction in base production rates to reflect the continued reduction in the power supply costs as contained in the currently effective 2011 rates.    However, it is important to note that, through the end of 2011, the power supply cost reductions will have been passed on to Customers via negative monthly Energy Charge Adjustments and the proposed 2012 base production rate decrease will effectively reset the ECA to zero.  In other words, Customers’ production portion of their electricity bill from the Authority is expected to remain virtually the same as that for 2011.

                “Under the Agreements, the Authority must provide at least 30 days’ notice to the Customers of any proposed modification of rates and the proposed modification is subject to their review and comment.  Notification of the rate action was transmitted to the Customers on August 25, 2011.  Subsequent to the approval of this proposed action by the Trustees, the Customers will be mailed the Staff Report containing the Preliminary 2012 COS.

                “Under SAPA, there will be a 45-day statutory comment period.  After written comments are filed, Authority staff will review them and address any concerns raised by the Westchester Customers and other interested parties.  Staff will make any necessary changes to the proposed rate decrease and return to the Trustees at their December 15, 2011 meeting to request approval of the final rate modification for 2012.      

            II.  Production Minimum Billing

                “The current version of NYPA Service Tariff No. 200 (‘ST-200’) applicable to the Customers reflected the results of the production and delivery rate structure redesign and improved the tariff’s format and organization.  As part of the rate redesign, the Trustees approved the activation of the production minimum bill provision.  In preparing to implement this provision effective January 1, 2012, staff learned that a technical correction to ST-200 was needed to make clear that the minimum bill provision applies to the demand portion of the bill only and that energy charges apply regardless of the minimum demand bill.  Authority staff proposes to insert the word ‘demand’ in certain places and add language regarding the continuing applicability of energy charges to make this clarification.  This will remove any ambiguities and permit the minimum bill provision to operate in the manner intended which is consistent with accepted cost-of-service principles.  These changes will ensure a properly functioning minimum bill provision and allow the Authority to achieve a more appropriate recovery of the fixed cost component through the customer production demand charges that will lower the estimated revenue shortfall and rate increase for 2012.  The proposed corrections, as well as the minimum bill provision itself, are revenue-neutral to the Authority. 

            “Clean and redlined versions of the applicable tariff sheets are included in Appendix ‘6-A’ of this memorandum.

FISCAL INFORMATION

                “The proposed rate decrease is expected to reduce revenues collected through the base production rates by $2.84 million from the Westchester Customers for 2012, which will in turn stabilize the negative ECA charge and will ultimately cover the energy serving costs. 

                “The corrections to the minimum bill provision are revenue-neutral to the Authority.

RECOMMENDATION

                “The Director – Market Analysis and Administration recommends that the Trustees authorize the Corporate Secretary to file a Notice of Proposed Rulemaking in the New York State Register for the adoption of a production rate decrease applicable to the Westchester County Governmental Customers.

                “It is also recommended that the Senior Vice President – Marketing and Economic Development, or his designee, be authorized to issue written notice of the proposed action to the affected Customers under the provisions of the Authority’s tariffs.

                “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. Mike Lupo presented highlights of staff recommendation to the Trustees.   In response to a question from Vice Chairman Foster, Mr. Lupo said that this action is possible as a result of market prices coming down.

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

            RESOLVED, That the Authority proposes a decrease in the production rates applicable to the Westchester County Governmental Customers as set forth in the foregoing report of the  Acting President and Chief Executive Officer; and be it further

            RESOLVED, That the Authority on June 28, 2011 approved a rulemaking to effectuate production minimum billing in Service Tariff No. 200 which requires technical corrections through a rate filing under the State Administrative Procedure Act; 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 of this proposed action to the affected Customers; and be it further

            RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file such notice as may be required with the New York State Department of State for publication in the New York State Register and to submit such other notice as may be required by statute or regulation concerning the proposed rate decrease and proposed tariff modification; 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 certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Acting General Counsel.


    7.        Niagara Power Project – Lewiston Pump Generating Plant Life Extension and Modernization Program – Control System Integration – Contract Award                

                The Acting President and Chief Executive Officer submitted the following report:

    SUMMARY

        “The Trustees are requested to approve the award of a nine-year contract to Eaton Corporation (‘Eaton’) of Leroy, NY in the amount of $10.9 million for the Design, Equipment Procurement and Installation of 12 Unit Control Boards (‘UCB’) and Governor Controls, under the Control System Integration project (‘CSI’) and associated items, as part of the Life Extension and Modernization (‘LEM’) Program at the Lewiston Pump Generating Plant (‘LPGP’).  

  BACKGROUND

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

        “At their June 29, 2010 meeting, the Trustees approved the Lewiston Pump Generating Plant Life Extension Program at the estimated cost of $460 million and authorized capital expenditures in the amount of $131 million.  This requested contract award is a part of the previous capital expenditure authorization.  

  DISCUSSION

                 “The scope-of-work under this contract includes the design, manufacturing, delivery, installation and commissioning of the UCBs.  Two UCBs are scheduled to be delivered prior to the first Unit outage in December 2012 and the remainder will be delivered prior to the third Unit outage.  The installation of the UCB will take place as per the Unit Outage schedule of the LPGP LEM Program.

                “The Authority issued an advertisement to procure bids in the New York State Contract Reporter and bid packages were available as of March 8, 2011.  On June 14, 2011 proposals were received from 5 bidders.  The proposal prices are shown below:

                Bidder                                                                           Location                                               Lump Sum

           Eaton Corporation                                                               Leroy, NY                                         $10,891,261

           Voith Hydro                                                                        York, PA                                            $11,646,079

           L&S Electric, Inc.                                                                Mosinee, WI                                       $12,681,083

           GE Energy                                                                           Longmont, CO                                    $16,314,336

           Emerson                                                                              Pittsburgh, PA                                      $17,729,186

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

                    “Eaton’s bid was the lowest-priced and was evaluated as technically acceptable.  Eaton, which has extensive experience in electrical construction and projects of this magnitude and demonstrated knowledge of the scope-of-work, is capable of completing this project in a timely manner.  Eaton has performed satisfactory work for the Authority on prior projects and will be using American Governor as a subcontractor for the governor upgrades.

                “The estimated cost of this work is within the authorization of this project which was approved by the Trustees at their June 29, 2010 meeting; this work is included in the 2011 approved Capital Budget.  Future funding will be included in the Capital Budget request for those years.

FISCAL INFORMATION

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

RECOMMENDATION

            “The Acting Chief Operating Officer/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 – Western New York recommend that the Trustees approve the award of a multi-year contract to Eaton Corporation of Leroy, NY, in the amount of $10.9 million.

            “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 provided highlights of staff’s recommendation to the Trustees.   In response to a question from Trustee Nicandri, Mr. Canale said that the original plant equipment, which is 50 years old, is being replaced.

            The following resolution, as submitted by the Acting 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 nine-year contract to Eaton Corporation of Leroy, NY, in the amount of $10.9 million, for the procurement of 12 Unit Control Boards and Governor Controls as part of the Life Extension and Modernization program to renovate and modernize the Lewiston Pump Generating Plant, as recommended in the foregoing report of the Acting President and Chief Executive Officer;

Contractor                                                   Contract Approval
Eaton Corporation                                           $10.9 million
Leroy, NY                                                           

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.
 

8.         Great Lakes Offshore Wind (‘GLOW’) – Staff Report

           The Acting President and Chief Executive Officer submitted the following report:

SUMMARY

           “The Trustees previously requested a Staff Report on Great Lakes Offshore Wind (‘GLOW’) project.  At this time, and based on the following information, staff recommends and requests Trustee authorization to close the GLOW competitive solicitation without making an award.  The Authority conducted a thorough review of proposals submitted in response to its December 2009 Request for Proposals to Provide Electric Capacity and Energy from a Great Lakes Offshore Wind Generating Project (‘GLOW RFP’).  Given the estimated annual cost of the proposals received and recognizing current economic conditions, it is not fiscally prudent for the Authority to commit its resources to the estimated annual subsidy required for the GLOW project.

BACKGROUND

        “On April 22, 2009, the Authority issued a Request for Expressions of Interest (‘RFEI’), its first step in the proposed GLOW initiative to develop offshore wind power in the New York State waters of Lake Erie and/or Lake Ontario.  Sixteen responses to the RFEI were received on June 15, 2009.  The responses, from the offshore wind industry and local stakeholders, provided relevant information for the development of the GLOW RFP, issued on December 1, 2009.
 
        “In June of 2009, Authority Trustees approved contract funding for technical consultants to support the GLOW and the Downstate LI-NYC Offshore wind projects.  For GLOW, the Authority and its consultants completed desktop studies assessing issues and potential impacts of Great Lakes offshore wind development.  Reports from the desktop studies included an initial site screening covering wind resource estimates, water depths and shipping lanes, geological desktop studies, assessment of turbine technology, potential impacts of lake ice conditions, fishery and wildlife impacts including avian and bat risks, port and vessel requirements, potential required transmission upgrades and economic development potential.  These preliminary investigations revealed no fatal flaws to development of an offshore wind development in the New York State waters of Lakes Erie and Ontario.
 
        “The GLOW RFP sought proposals to develop utility-scale offshore wind generating projects ranging from 120 megawatts (‘MW’) to 500 MW to be located in the New York waters of Lake Erie and/or Lake Ontario.  Goals of the GLOW RFP included helping to diversify the state’s energy resources, lessening dependence on carbon-based fuels for better air quality and helping to grow a clean energy economy with new jobs and industries, especially in the upstate region.  The RFP stated that the Authority would purchase the full output of the GLOW project under a long-term power purchase agreement (‘PPA’) with the selected developer(s).

        “On June 1, 2010, the Authority received five responses to the GLOW RFP.
“The GLOW project received both support and opposition. Under the Authority-sponsored ‘Get Listed’ process, approximately 300 New York businesses, and a number of out-of-state businesses registered on the Authority’s free-on-line GLOW Business Registry to indicate their ability and interest in participating in an offshore wind industry supply chain.  The GLOW Business Registry and ‘Get Listed’ outreach process was developed by the Authority in coordination with upstate economic development organizations to help facilitate potential relationships between New York businesses and offshore wind developers.
 
        “Local and national environmental groups expressed their support for the comprehensive evaluation process employed by the Authority.  Additionally, the Authority received hundreds of letters of support from upstate New York residents.  Despite this, legislatures in seven of the nine Great Lakes coastal counties and three municipalities either passed resolutions or issued statements opposing offshore wind projects, some specifically identifying GLOW, and citing visual, environmental and potential rate concerns.

DISCUSSION

        “The Authority’s Power Resource Planning and Acquisition business unit led a comprehensive multiphase, multidisciplinary evaluation process.  Prior to receipt of bids, complete evaluation criteria and scoring matrices were established by the Selection Committee along with internal and external subject matter experts.  The Selection Committee reviewed each of the GLOW proposals with respect to evaluating economic cost impacts, economic development potential, community outreach plans, construction plans, technical merits and viability, permitting and environmental assessment plans and development team experience. The Selection Committee’s review indicated the proposed projects were technically feasible to construct and operate.

        “The Selection Committee also thoroughly investigated cost recovery options, in particular the New York State Energy Research and Development Authority’s (‘NYSERDA’) program for renewable generation aimed at meeting state Renewable Portfolio Standard (‘RPS’) goals. Currently, the NYSERDA RPS competitive process does not differentiate among available renewable energy technologies.  Offshore wind is considerably more expensive than other renewable energy sources, such as land-based wind and biomass, and thus not competitive in the RPS auctions.  There are no expected plans to modify the RPS program to promote offshore wind.  Under these conditions, premiums over local market prices for the energy from a GLOW project would be solely an Authority responsibility.
 
        “In response to cost concerns, several options were evaluated for the development of GLOW, including phasing construction over several years, pursuing a smaller pilot-sized project, and the implementation of pre-development field studies to mitigate Authority cost and risks.  All options evaluated ultimately require a large financial subsidy from the Authority in order to proceed with the GLOW project.  Under current economic conditions, closing the GLOW solicitation without making an award would be fiscally prudent.

        “Regional organizations such as the international Great Lakes Commission and the Great Lakes Wind Collaborative are continuing to evaluate offshore wind development in the Great Lakes, working collaboratively across state borders in the United States and Provence borders in Canada.  These efforts look to understand and mitigate the environmental impact of offshore wind and to take advantage of economies of scale across the Great Lakes to maximize the economic development benefits.  The Authority plans to continue its participation in these regional efforts to facilitate the affordable and responsible development of offshore wind in the New York State waters of the Great Lakes in the future.
 
        “In addition to supporting regional Great Lakes offshore wind evaluation efforts, the Authority remains an active member of the Long Island – New York City Offshore Wind Collaborative with Consolidated Edison Company of New York and the Long Island Power Authority in the evaluation of offshore wind off the southern coast of Long Island in the Atlantic Ocean.  The Collaborative recently submitted an offshore property lease application with the federal government in order to continue to evaluate the potential for an offshore wind project in the Atlantic Ocean to supply electricity the New York City and Long Island region.

FISCAL INFORMATION

        “Closing the GLOW solicitation without award has no future financial impact on the Authority. Confidential information regarding the estimated annual subsidy is included under separate cover for limited distribution.

RECOMMENDATION

“The Director – Supply Acquisition and Renewable Energy recommends that the Trustees authorize the Acting President and Chief Executive Officer, or his designee, to close the Great Lakes Offshore Wind (‘GLOW’) Project’s competitive solicitation and notify bidders that no award will be made.

“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.”

                Ms. Jill Anderson provided highlights of staff’s recommendation to the Trustees.  Responding to a question from Vice Chairman Foster, Ms. Anderson said that some of the issues identified were impacts on property value; the fishing community; aesthetics; tourism and environmental concerns.

                In response to a question from Trustee LeChase, Ms. Anderson said that staff has drafted a press release regarding this action which will be announced after the meeting.  Staff will also conduct outreach to stakeholders by telephone and e-mails.  Trustee LeChase requested that the Trustees be given an opportunity to review the press release before it goes out.  Ms. McCarthy said she will e-mail the press release to the Trustees for their review.

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

WHEREAS, the Authority issued a Request for Proposals (“RFP”) for supply of electric capacity and energy from utility-scale offshore wind generating projects ranging from 120 megawatts (“MW”) to 500 MW to be located in the New York waters of Lake Erie and/or Lake Ontario; and

WHEREAS, as a result of evaluating proposals received in response to the RFP, the Authority determined it is not fiscally prudent to commit its resources to the estimated annual subsidy required for the Great Lakes Offshore Wind project (“GLOW”);

NOW, THEREFORE, BE IT RESOLVED, that the Acting Chief Executive Officer, or his designee, is hereby authorized on behalf of the Authority to close the GLOW competitive solicitation without award and notify bidders of this outcome; 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.
 

9.              2011 Operations and Maintenance Budget – Increase in Approved Expenditures for Reinvestment in the Authority’s                
                 Critical Facilities – Power Supply Business Group                                           

                The Acting President and Chief Executive Officer submitted the following report.

SUMMARY

        “The Trustees are requested to authorize investment in the amount of $9,612.6K, in the 2011 Operations and Maintenance Budget (‘O&M’) for the Power Supply Business Group, to fund critical deferred work at the Authority’s operating facilities.

BACKGROUND

        “As a result of the commitment to have a year-over-year flat budget in 2011, select items in Power Supply’s O&M budget were cut or deferred to future years.  After evaluating the status and performance of assets in the first half of the year, it was concluded that additional O&M funding would be required to continue safe, reliable and cost-effective operations of the assets. 

        “In April 2011, the Trustees were advised of the anticipated variance due to the emergence of unplanned equipment repairs and the need to fund critical, deferred work.  Strategic investment in these key areas is necessary to ensure the Authority’s assets remain safe and in a condition consistent with good utility practice.

        “The current request of $9,612.6K represents an increase from $222.9 million to $232.5 million, or 4.3% to the 2011 approved O&M Budget for Power Supply.

DISCUSSION

       “The items below, totaling approximately $9,612.6K, represent emerging tasks such as the partial replacement of a transformer at the Harlem River site which was severely damaged by fire or the completion of critical engineering work to assess transmission line clearance requirements set forth by the North American Electric Reliability Corporation.  The implementation of such tasks is consistent with good business practices, reliability and safety.

Emerging Equipment Repairs ($000’s) - Actual                                                                       

Pouch Small Clean Power Plant High Pressure Turbine Blade Repair                                      $1,470.6

Small Clean Power Plant Cable Restraints                                                                                  $351.4

Harlem River Transformer Repair                                                                                               $300.9

Small Clean Power Plant Transformer Trench Bushings                                                               $304.2

Kent Small Clean Power Plant Catalyst Repair                                                                            $261.1               

Blenheim Gilboa Unit #1 Starting Motor Repair                                                                           $346.5

Flynn Power Plant Low Voltage Bushing Replacement                                                                $177.9

Deferred Work ($000’s) – YE Projections                                                                                                   

Transmission Life Extension and Modernization                                                                         $2,200.0
(NERC Mandated Line Clearance)

Transmission Life Extension and Modernization Program                                                               $500.0
(Phase 1)

Small Clean Power Plant Maintenance Outage (2 Units)                                                            $3,000.0

Human Capital ($000’s) – YE Projections

Incremental Overtime Needed to Complete Key projects in 2011                                                 $700.0

___________________________________________________________________________________________________________________________________________
TOTAL (as of 8/31/11)                                                                                                            $9,612.6

FISCAL INFORMATION

              “Funding will be made available from the Authority’s Operating Fund.

RECOMMENDATION

            “The Acting Chief Operating Officer/Executive Vice President and Chief Engineer – Power Supply and the Senior Vice President – Power Supply Support Services, recommend that the Trustees authorize increased funding   in the amount of $9,612.6K in the Power Supply Operations and Maintenance budget for the 2011 fiscal year for reinvestment in the Authority’s facilities.

            “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.”

              Ms. Dolly Jinvit presented highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Dyson, Mr. Russak said that the Authority will be able to
 finance these projects.   Trustee Nicandri suggested and Trustee Dyson agreed that, in the future, staff should reduce the size of the list by making investments in the Authority’s facilities
 as an on-going process.

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

            RESOLVED, That pursuant to the Expenditure Authorization Procedures adopted by the Authority, approval is hereby granted to increase investment in the 2011 Power Supply Operations and Maintenance Budget, in the amount of $9,612.6K, for the funding of emergent repairs and currently deferred critical items, as recommended 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 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.
 

10.            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.
 

11.        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.
 

12.        Next Meeting

        The next regular meeting of the Trustees will be held on Tuesday, October 25, 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.

 


Closing

                On motion made and seconded, the meeting was adjourned by the Chairman at approximately 1:50 p.m.

 

Karen Delince
Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

SEPT MINS. 11