MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

July 23, 2013

 

Table of Contents

 

 

 

                Subject                                                                                                                                  Page No.               Exhibit

 

                Introduction                                                                                                                               2

1.                   Adoption of the July 23, 2013 Proposed Meeting Agenda                                                 3                                      

2.                   Consent Agenda:                                                                                                                       4

a.       Minutes of the Regular Meeting held on May 21, 2013                                     5

 

b.       Direct Sale Contracts for the Sale of Western New                                              6                       2b-A; 2b-A-1   

York Hydropower – Transmittal to the Governor and                                                                                 2b-A-7; 2b-B;

Notice of Public Hearing                                                                                                                    2b-C; 2b-C-1

 

c.        Extension of Hydropower Contracts with Upstate                                              9                       2c-A2c-D

Investor-Owned Utilities for the Benefit of Rural and

Domestic Consumers – Transmittal to the Governor

 

d.       Transmission Life Extension and Modernization Program –                           11

St. Lawrence/FDR Power Project – 115 kV and 230 kV SF6

Circuit Breakers – Contract Award

 

e.        Niagara Power Project – Robert Moses South Access Gate                              14

Security Enhancements – Capital Expenditure Authorization

Request

 

f.        Niagara Power Project – Niagara University Shared Campus                          17

Initiative – Contract Award

 

g.       Niagara Power Project – Design and Construction Support                              19

Services for New Tug Vessels – Contract Award

 

h.       MAXIMO Application Upgrade Project – Capital Expenditure                      22

Authorization and Contract Award

 

i.         Procurement (Construction) Contract – Danco Electrical                                 26

Contractor, Inc. – Installation of Standby/PLM Generators

 in Grand Central Terminal

 

j.         Procurement (Services) Contracts – Business Units and                                   28                      2j-A; 2j-B

Facilities – Awards and Extensions

 

k.       Procurement (Services) Contract – Request for Funding –                               36

Jackson, Lewis, LLP

 

l.         Annual Hydropower Allocation Job Compliance Review                                37                      2l-A; 2l-B

 

Resolution

 

                Subject                                                                                                                                  Page No.               Exhibit

 

Discussion Agenda:                                                                                                                                 45

 

3.                   Q&A on Reports from:

a.       President and Chief Executive Officer                                                                  45                      3a-A

 

b.       Chief Operating Officer                                                                                           47                      3b-A

 

c.        Chief Financial Officer                                                                                            49                      3c-A

 

d.       Chief Risk Officer                                                                                                     51                     

 

e.        Chief Strategic Planning Officer                                                                             52                      3e-A

 

4.                   Power Allocations:

a.       Power Allocations under the Recharge New York Program                              54                      4a-A – 4a-G

        Resolution

 

b.       Allocations of Hydropower and Notice of Public Hearing                                60                      4b-A  4b-A-2;

        Resolution                                                                                                                                             4b-B; 4b-B-1

 

5.                   Awards of Fund Benefits from the Western New York Economic                                  64                      5-A5-D

    Development Fund Recommended by the Western New York

    Power Proceeds Allocation Board

Resolution

 

6.                   Contribution of Funds to the State Treasury                                                                       70

Resolution

 

7.                   Informational Item: Authority Cyber Security Overview                                                73                      7-A

8.                   Motion to Conduct an Executive Session                                                                            75

9.                   Motion to Resume Meeting in Open Session                                                                       76

10.                Next Meeting                                                                                                                             77

Closing                                                                                                                                        78

 

 

 


                Minutes of the Regular Meeting of the Power Authority of the State of New York held at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York at approximately 10:40 a.m.

 

Members of the Board present were:

 

                                John R. Koelmel, Chairman

                                Eugene Nicandri, Trustee

                                R. Wayne LeChase, Trustee

                                Terrance P. Flynn, Trustee

                                Joanne M. Mahoney, Trustee

 

                                Trustee Jonathan Foster – excused

                                 

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Gil C. Quiniones                                   President and Chief Executive Officer

Judith C. McCarthy                            Executive Vice President and General Counsel

Edward Welz                                        Chief Operating Officer

Donald Russak                                    Chief Financial Officer

Jill Anderson                                         Chief of Staff and Director of Energy Policy

Robert Lurie                                         Senior Vice President – Strategic Planning

William Nadeau                                   Senior Vice President and Chief Risk Officer – Energy Risk Assessment and Control

James Pasquale                                   Senior Vice President – Economic Development and Energy Efficiency

Joan Tursi                                             Senior Vice President – Corporate Support Services

John Canale                                         Vice President – Project Manager

Dennis Eccleston                                 Vice President – Information Technology/Chief Information Officer

Michael Huvane                                  Vice President – Marketing – Business and Municipal Marketing

Joseph Leary                                        Vice President – Community and Government Relations

Karen Delince                                       Corporate Secretary

Brian McElroy                                     Treasurer

Frank Deaton                                       Director – Enterprise Risk Management – Energy Risk Assessment and Control

Michael Saltzman                               Director – Media Relations

Lena Smart                                           Chief Information Security Officer

Gary Schmid                                        Manager – Network Services Infrastructure

Ruth Colon                                           Senior Business Integration Project Manager

John Giumarra                                     Account Executive – Business Marketing and Economic Development

Lorna M. Johnson                               Associate Corporate Secretary

Sheila Baughman                                                Assistant Corporate Secretary

Scott Fein                                              Counsel, Whiteman Osterman

                                               

                               

Trustee Eugene Nicandri presided over the meeting.  Corporate Secretary Delince kept the Minutes.

 


Introduction

                At the request of Chairman John Koelmel, Trustee Eugene Nicandri presided over the meeting.  He welcomed the Trustees and staff members who were present at the meeting.  He said the meeting had been duly noticed as required by the Open Meetings Law and called the meeting to order pursuant to the Authority’s Bylaws, Article III, Section 3.


 

1.                   Adoption of the July 23, 2013 Proposed Meeting Agenda

                On motion made and seconded, the meeting Agenda was adopted. 

 


 

2.                   Consent Agenda:               

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

Trustee LeChase was recused from the vote on item 2j (Procurement (Services) Contracts – Business Units and Facilities – Awards and Extensions ) as it pertains to LiRo Engineers, Inc.; and Trustee Flynn from the vote on item #2l (Annual Hydropower Allocation Job Compliance Review) as it pertains to Ashland Advanced Materials, LLC and Saint-Cobain Structural Ceramics.

 

                 


 

a.       Approval of the Minutes

                The Minutes of the Regular Meeting held on May 21, 2013 were unanimously adopted.


 

b.       Direct Sale Contracts for the Sale of Western

New York Hydropower – Transmittal to the

Governor and Notice of Public Hearing           

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                The Trustees are requested to: (1) approve proposed final contracts for seven Expansion Power (‘EP’) and/or Replacement Power (‘RP’) customers; (2) authorize transmittal to the Governor of the proposed final contracts for his approval and authorization for the Authority to execute the contracts; and (3) authorize a public hearing on a proposed contract for the sale of hydropower to M&T Bank Corporation (‘M&T’) and transmittal of copies of such proposed contract to the Governor and legislative leaders pursuant to Public Authorities Law (‘PAL’) §1009.  A list of the seven EP and/or RP allocations and the proposed final contracts to each customer are attached as Exhibit ‘2b-A.’  The proposed contract with M&T is attached as Exhibit ‘2b-C.’

 

BACKGROUND

 

Under PAL §1005(13), the Authority may allocate and sell directly or by sale for resale, 250 MW of EP and 445 MW of RP to businesses located within 30 miles of the Niagara Power Project, provided that the amount of EP allocated to businesses in Chautauqua County on January 1, 1987 shall continue to be allocated in such county.

 

Since the late 1980s, the Authority’s sales of EP and RP have been handled almost exclusively under contracts that the Authority entered into with Niagara Mohawk Power Corporation d/b/a National Grid (‘National Grid’) and New York State Electric and Gas Corporation (‘NYSEG’), both of which facilitated the provision of Authority hydropower to end-use customers on a sale-for-resale basis.  These contractual arrangements expired on June 30, 2013, and the Authority now sells EP and RP through direct sales to customers. 

 

The first significant step in this direction was made in September 2010 after a public hearing process, when the Trustees approved long-term contract extensions that accommodated direct sales to customers for approximately 185 EP and RP allocations for the period July 1, 2013 through June 30, 2020.  The Trustees also approved a new Service Tariff No. WNY-1 (‘ST WNY-1’), governing all EP and RP sales commencing July 1, 2013, which modified the production rate for EP and RP by applying a three-year phase-in to a specified target rate based on the Authority’s Preservation Power rate.

 

The seven proposed final contracts before the Trustees are for Ceres Crystal Industries, Inc., Delaco AMTB LLC, Greenpac Mill, LLC, Hammond Manufacturing Co. Inc., Nulife Glass NY Inc., Welded Tube USA, Inc., and Yahoo! Inc., as described in Exhibit ‘2b-A.’  These customers have either been awarded allocations of hydropower in return for job creation and capital expansion commitments, or in the case of Ceres Crystal Industries Inc., Delaco AMTB, and Hammond Manufacturing Co., the companies have been approved for extensions of existing allocations in return for agreed-upon employment and annual capital spending levels.  With the aforementioned sale-for-resale contractual arrangements with the customers’ local utilities having expired June 30, 2013, the final proposed contracts would enable the Authority to sell these customers their allocations under a direct sale arrangement for the term of the allocations.  Transmission and delivery service for these allocations would continue to be provided by National Grid or NYSEG, as applicable, and in accordance with their filed service tariffs. 

 

                The following is a summary of some pertinent provisions of these contracts:

 

·         The contracts would provide for the direct billing of all production charges (i.e. demand and energy) as well as all New York Independent System Operator, Inc. (‘NYISO’) charges, plus taxes or any other required assessments, all as set forth in ST WNY-1. 

 

·         The contracts include each customer’s agreed-upon commitments with respect to employment, power utilization and capital investment.  The Authority would retain the right to reduce or terminate customers’ allocations if employment, power utilization, or capital investment commitments are not met. 

 

·         The contracts include the ability to award additional allocations of EP or RP to the customers at the same facility, which would be incorporated into Schedule A of the contracts.  The Trustees approved this convention in the 2010 long-term extension contracts, which simplifies contract administration.

 

·         To accommodate non-payment risk that could result from a direct billing arrangement with the Authority, the contracts include commercially reasonable provisions concerning, among other things, the ability to require deposits in the event of the customer’s failure to make payment for any two monthly bills.  This is consistent with recent Authority contracts that incorporate direct billing, including the Authority’s Recharge New York sales contracts.

 

The Authority has discussed each contract with the relevant customer and in each case has received the customer’s consent to the proposed contract.  The customers acknowledge that ST WNY-1 rates will apply to their allocations.  This is consistent with all allocations of EP and RP being served after July 1, 2013.

 

As required by PAL §1009, when the Authority has reached agreement with its co-party on such a contract, it is required to transmit the proposed contract to the Governor and other elected officials and hold a public hearing on the proposed contracts.  At least 30-days’ notice of the hearing must be given by publication once in each week during such period in each of six selected newspapers.  Following the public hearing, the contract may be modified, if advisable. 

 

Upon approval of the final proposed contract by the Authority, the Authority must ‘report’ the proposed contract, along with its recommendations and the public hearing records, to the Governor and other elected officials.  Upon approval by the Governor, the Authority may execute the contract.

 

DISCUSSION

 

At their March 21, 2013 meeting, the Trustees authorized the Corporate Secretary to transmit the proposed contracts to the Governor and legislative leaders and schedule a public hearing on the contracts.  A public hearing on the seven contracts was held on June 20, 2013 at the Niagara Power Project’s Power Vista Visitor Center in Lewiston.  There were no oral statements made at the public hearing and no written statements were submitted.  The official transcript of the public hearing is attached as Exhibit ‘2b-B.’

 

Regarding M&T, at their March 21, 2013 meeting, the Trustees were unable to adopt the resolution to authorize a public hearing on the proposed contract for the sale of 3,000 kW of EP because based on conflicts of interest they failed to attain the required number of votes necessary for its approval.  Staff is therefore bringing the proposed contract, attached as Exhibit ‘2b-C,’ back to the Trustees requesting the authorization necessary to initiate the PAL §1009 process after which staff will make additional recommendations regarding the proposed contract, as necessary, and report to the Trustees.

 

The proposed contract with M&T is in the same form as the final proposed contracts described above.  The Authority and M&T have agreed to the proposed contract and M&T acknowledges that ST WNY-1 rates will apply to its allocation. 

 

RECOMMENDATION

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the seven proposed contracts for the sale of Replacement Power and/or Expansion Power allocations that are attached as Exhibit ‘2b-A’ and authorize the transmittal of the contracts to the Governor for approval.  It is also recommended that the Trustees authorize the Corporate Secretary to convene a public hearing on the proposed contract for the sale of 3,000 kW of Expansion Power to M&T Bank Corporation and transmit copies of such proposed contract to the Governor and legislative leaders pursuant to Public Authorities Law §1009. 

 

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 President and Chief Executive Officer, was unanimously adopted.

                                                               

RESOLVED, That the contracts for the sale of Expansion Power (“EP”) and/or Replacement Power (“RP”) to Ceres Crystal Industries, Inc., Delaco AMTB LLC, Greenpac Mill, LLC, Hammond Manufacturing Co. Inc., Nulife Glass NY Inc., Welded Tube USA, Inc., and Yahoo! Inc., are in the public interest and should be submitted to the Governor for his approval and that copies of the contracts, along with the record of the public hearing thereon, be forwarded to the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Ways and Means Committee, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee; and be it further

 

RESOLVED, That the Chairman and the Corporate Secretary be authorized and directed to execute such contracts in the name of, and on behalf of, the Authority after the contracts have been approved by the Governor; and be it further

 

  RESOLVED, That the Trustees hereby authorize a public hearing on the terms of the proposed contract for the sale of Expansion Power by the Authority to M&T Bank Corporation, subject to rates previously approved by the Trustees; and be it further

 

  RESOLVED, That the Corporate Secretary be, and hereby is, authorized to transmit copies of the proposed contract for M&T Bank Corporation to the Governor, the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Committee on Ways and Means, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee, pursuant to Public Authorities Law §1009(1); and be it further

 

RESOLVED, That the Senior Vice President – Economic Development and Energy Efficiency, or his designee, be, and hereby is, authorized, subject to the approval of the form thereof by the Executive Vice President and General Counsel, to negotiate and execute any and all documents necessary or desirable to implement the contracts with the companies as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

 


 

c.        Extension of Hydropower Contracts with Upstate

Investor-Owned Utilities for the Benefit of Rural and

        Domestic Consumers – Transmittal to the Governor    

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize the proposed contract extensions for the sale to Niagara Mohawk Power Corporation d/b/a National Grid (‘National Grid’), New York State Electric and Gas Corporation (‘NYSEG’) and Rochester Gas and Electric Corporation (‘RGE’) (collectively, the ‘Utilities’) of firm peaking hydropower, totaling 360 MW and, in accordance with Public Authorities Law (‘PAL’) §1009, to authorize transmittal of the contracts to the Governor for his approval.  The form of each contract with National Grid, NYSEG and RGE is attached as Exhibit ‘2c-A,’ Exhibit ‘2c-B’ and Exhibit ‘2c-C,’ respectively.  This request follows the public hearing and comment period on the form of the contracts that was authorized by the Trustees at their December 18, 2012 meeting.  The public hearing was held on February 7, 2013.  The transcript of the public hearing is attached as Exhibit ‘2c-D.’

 

BACKGROUND

 

                Under the terms of the hydropower contracts signed with the Utilities in 1990 (‘1990 Hydro Contracts’) and subsequent annual contract extensions, the Utilities have purchased from the Authority both firm power and firm ‘peaking power’ generated by the St. Lawrence/FDR and Niagara Power Projects.

 

                The Utilities purchased such power and energy at the Authority’s cost-based hydropower rate, and the benefits were passed on to the Utilities’ residential and small farm customers (known as ‘rural and domestic’ or ‘R&D’ consumers) without markup, through the electric service provided by the Utilities under their retail tariffs.

 

                Anticipating the enactment of legislation creating a new hydropower-based economic development program, the Trustees approved only short-term extensions of the 1990 Hydro Contracts after the original expiration date of such contracts on August 31, 2007 to ensure that the underlying hydropower would be available for any new economic power program.

               

                The last extension of the 1990 Hydro Contracts provided for an expiration date of December 31, 2012.

 

The 1990 Hydro Contracts and all prior extensions thereof have been subject to the public hearing and gubernatorial approval process provided for in PAL §1009. 

 

Chapter 60 (Part CC) of the Laws of 2011 (‘Chapter 60’) created the Recharge New York Power Program (‘RNY Program’).  This law authorized the Authority to redeploy firm hydropower previously sold to the Utilities under the 1990 Hydro Contracts and extensions thereof for use in the RNY Program.

 

Effective August 1, 2011, the Authority withdrew the firm hydropower from the Utilities in accordance with Chapter 60 and terminated the firm power allocations of 189 MW for National Grid, 167 MW for NYSEG and 99 MW for RGE.  That left firm peaking power allocations of 175 MW, 150MW and 35 MW available for sale to National Grid, NYSEG and RGE, respectively.

 

DISCUSSION

 

                The Authority and each of the Utilities negotiated proposed contact extensions that would provide for the sale of the peaking power in the amounts indicated above through December 31, 2014.  Each of the contracts specifies the terms and conditions that would apply to the sale of the peaking power, including provisions providing for the cancellation of the contract/allocations. 

 

                At their meeting of December 18, 2012, the Trustees authorized a public hearing on the extensions.  To avoid an interruption of the financial benefits the peaking power provides to the R&D customers, the Trustees also authorized staff to execute the contract extensions on an interim basis pending the completion of the PAL §1009 process.  Accordingly, the contracts provide for their cancellation in the event that the Governor does not approve the contracts pursuant to PAL §1009.

 

In accordance with PAL §1009, a public hearing was held on the contract extensions on February 7, 2013, at Syracuse University in Syracuse, New York, from 3-7 p.m.  Following the Authority’s review of public comments, the Authority determined that no modifications to the contract extensions are required. 

 

FISCAL INFORMATION

 

The proposed 2012 contract extensions would provide that the Utilities continue to pay for firm peaking hydropower at the same rates they are currently charged, i.e., the cost-based rates that are currently charged to the Authority’s preference customers and determined in accordance with the Authority’s rate-setting methodologies and principles.  The Trustees approved four annual preference power rate increases at their November 2011 meeting, which became effective in the December 2011 billing period.  The rate increases for 2012 through 2014 occur on May 1st of each respective year.  The proposed 2012 contract extensions would incorporate the new preference power rates.  As such, there will be no fiscal impact to the Authority associated with these contract extensions.

 

RECOMMENDATION

 

                The Senior Vice President – Economic Development and Energy Efficiency and the Director – Marketing Analysis and Administration recommend that the Trustees approve: (1) the terms of the proposed contract extensions with Niagara Mohawk Power Corporation d/b/a National Grid, New York State Electric and Gas Corporation and Rochester Gas and Electric Corporation; and (2) authorize transmittal of the contract extensions to the Governor for his consideration in accordance with Public Authorities Law §1009.

 

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 President and Chief Executive Officer, was unanimously adopted.

 

RESOLVED, That the proposed contract extensions be submitted to the Governor for approval and that copies of the contract extensions be forwarded to the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Ways and Means Committee, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee, in accordance with Public Authorities Law §1009; and be it further

 

RESOLVED, That the Chairman and the Corporate Secretary be authorized and directed to execute such contract extensions in the name of, and on behalf of, the Authority provided that the contract extensions have been approved by the Governor; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them herby 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, certifications and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

d.       Transmission Life Extension and Modernization Program –

St. Lawrence/FDR Power Project – 115 kV and 230 kV SF6

Circuit Breakers – Contract Award                                               

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to award a six-year contract to Hitachi, HVB Inc. (‘HVB’) of Suwanee, GA in the amount of $3.5 million to furnish and deliver twenty-one 115 kV and ten 230 kV SF6 Circuit Breakers (‘STL Breakers’) to the St. Lawrence/FDR Power Project’s Switchyard (‘Switchyard’) for the Authority’s Transmission Life Extension and Modernization (‘T-LEM’) Program (‘Program’).

 

BACKGROUND

 

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

 

In accordance with the Authority’s Expenditure Authorization Procedures (‘EAPs’) for the award of non-personal services, construction, equipment purchase or non-procurement contracts in excess of $3 million require the Trustees’ approval.

T-LEM is a multiyear program that will upgrade the Authority’s existing transmission system to maintain availability, increase reliability and ensure regulatory compliance.  The Program encompasses Authority transmission assets in the Central, Northern and Western Regions and has been divided into several projects.  The Program is estimated to cost $726 million and includes:

 

-          Upgrades, refurbishments and replacements associated with switchyards and substations

-          Transmission line structures or towers and associated hardware, including tower painting

-          Replacement of the submarine cable on PV-20

-          Work along rights-of-way, including access roads

 

The scope is a result of internal and external assessments and recommendations.  Funding will be requested in a tiered approach for each project as the complete plan-of-work develops.

 

The STL Project’s electric power facilities are protected against faults by power circuit breakers which are designed to rapidly isolate affected lines and equipment in order to minimize damage to the equipment and to protect public health and safety.  Proper operation of these critical components of the protection system are crucial to minimizing adverse effects on the bulk power system and ultimately for preventing cascading system outages and wide-scale blackouts.  The Authority’s Engineering department evaluated the Oil Circuit Breakers (‘OCBs’) at the Switchyard and determined the scope and priority of the OCBs replacements.

 

It was determined that the OCBs are: 1) over-dutied; 2) beyond their useful life; 3) require increased maintenance; and 4) require replacement on an expedited basis.  Therefore, the twenty 115 kV and nine 230 kV existing OCBs will be replaced with SF6 gas breakers; one additional 115 kV and 230 kV SF6 spare gas circuit breakers will also be procured.

 

DISCUSSION

 

In response to the Authority’s request for proposals (‘RFP’), Q12-5389RH, advertised in the New York State Contract Reporter on December 26, 2012, thirty-four (34) firms downloaded the bid documents to furnish and provide commissioning support for the STL Breakers.  The Authority’s Fair Cost Estimate (‘FCE’) is $3.9 million. 


 

Three proposals were received on January 31, 2013 as noted below:

 

Bidder

Location

Base Bid

 

 

 

Hitachi, HVB Inc.*

Suwanee, GA

$3,172,660.00

 

Siemens Energy, Inc.**

 

Richland, MS

 

$3,174,700.00

 

Hitachi, HVB Inc.***

 

Suwanee, GA

 

$3,481,100.00

 

 

 

Siemens Energy, Inc.****

Richland, MS

$3,604,800.00

 

ABB, Inc.

 

Mount Pleasant, PA

 

$4,040,761.10

 

*              Proposal based on delivery in 2014 and 2015

**           Proposal based on delivery in 2014 

***         Assumes 5% annual increases for material delivery and services beyond 2015

****       Assumes 5% annual increases for material delivery and services beyond 2014

 

HVB, the lowest technically qualified bidder, has provided a material lead-time that allows for the SF6 Circuit Breaker installation schedule conformance with the current line-outage schedule.  HVB will furnish and deliver the STL Breakers, provide the STL Project staff with equipment training, technical assistance during installation, start-up and functional testing support.  Accordingly, staff recommends award of this contract to HVB, which submitted the lowest-priced and most technically acceptable bid.

 

Siemens Energy Inc. (‘Siemens’) has been awarded previous contracts with the Authority and took numerous technical exceptions to the Authority’s technical specification for the STL Breakers.  The Authority provided Siemens the opportunity to clarify and resolve the exceptions.  Based on Siemens’ responses to the Authority’s RFP, post-bid addendum and discussions; Siemens’ proposal was deemed technically unacceptable and did not meet the requirements of the specification.

 

ABB Inc. (‘ABB’) is considered the second lowest-priced technically qualified bidder.  ABB has been awarded previous contracts with the Authority, took minimal exceptions, demonstrated knowledge of the scope-of-work and is experienced in the manufacturing of high voltage equipment. 

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Transmission, the Vice President – Procurement, the Project Manager and the Regional Manager – Northern New York recommend that the Trustees approve the award of a six-year contract to Hitachi, HVB Inc. of Suwanee, GA in the amount of $3.5 million to furnish and deliver Circuit Breakers to the St. Lawrence/FDR Power Project’s Switchyard for the Authority’s Transmission Life Extension and Modernization Program.

 

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

 

               


 

The following resolution, as submitted by the 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 authorize the award of a six-year contract to Hitachi, HVB Inc. of Suwanee, GA in the amount of $3.5 million to furnish and deliver Circuit Breakers to the St. Lawrence/FDR Power Project’s Switchyard for the Authority’s Transmission Life Extension and Modernization Program, as recommended in the foregoing report of the President and Chief Executive Officer;

 

Contractor                                           Contract Approval

 

Hitachi, HVB Inc.                                     $3.5 Million

Suwanee, GA                                                                                      

 

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

 

 


 

e.        Niagara Power Project – Robert Moses South Access

Gate Security Enhancements – Capital Expenditure

                        Authorization Request                                                         

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize capital expenditures in the amount of $7,369,000 for the Robert Moses South Access Security Gate Enhancements at the Niagara Power Project.  On February 7, 2013, the President and Chief Executive Officer authorized funding in the amount of $400,000 for engineering and design.

 

BACKGROUND

 

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 South Access Road (‘Road’), a steep inclined road, serves as the main entrance into the Niagara Power Project.  The Road extends along the Niagara River leading to the security guardhouse and main gate at the base of the gorge.  Additionally, the Road provides public access to the fishing pier and associated parking lots, one at the top and another at the base of the Road. 

 

Over the last several years, there have been three incidents involving vehicles crashing through the main security gate.  As a result, the gate was modified and reinforced to prevent vehicle intrusion.  Additionally, a highway consultant was contracted to study and propose roadway modifications and enhancements for the Road as a result of its steep nature and critical security access into the Niagara Power Project.  Based on the consultant’s study, the proposed enhancements include:

 

·         An emergency stopping area at the base of the Road to assist drivers with stopping their vehicle in case of brake failure.

·         Realignment at the base of the Road to include an ‘S-curve’ to prevent vehicles  intentionally trying to breach the security gate at high speed;

·         Construction of a 400-ft. long retaining wall to accommodate the Road realignment;

·         Relocation of the lower public parking area near the fishing pier to improve security and public safety and to accommodate the road configuration;

·         Construction of a dedicated pedestrian path from the upper parking lot to the fishing pier;

·         Installation of radar speed signs and rumble strips to promote slower vehicle speeds; 

·         Construction of a vehicle ‘check-in’ point and turnaround area at the top of the Road to prevent unauthorized vehicles from continuing on the Road.

 

In addition to the Road enhancements, the existing security guardhouse structure, which is approximately 30 years old, has reached the end of its useful life.  Due to the deteriorated exterior siding which has caused water intrusion, asbestos-containing materials, and odor and rodent concerns, the building will be replaced and sited in the same location as the existing site.  The new guardhouse, which was recently approved by the New York State Historic Preservation Office, will include several improvements.  The structure will be elevated approximately 4 feet to improve visibility for the security staff of the surrounding area and will contain a lavatory.

 

Environmental, Health and Safety (‘EH&S’) reviewed this proposed action for its compliance with the State Environmental Quality Review Act (‘SEQRA’).  EH&S determined it was a Type 2 Action requiring no further SEQRA assessment.

 


 

DISCUSSION

 

In early July, interim approval was received to award a one-year contract to BVR Construction Company, Inc. in the amount of $618,700, for the replacement of the guardhouse.  Interim approval was requested to take advantage of the weather in order to complete construction of the guardhouse by December 2013.

 

The design for the Road enhancements was completed in June 2013 and the Authority issued an advertisement to procure bids in the New York State Contract Reporter.  Staff anticipates presenting a recommendation for contract award to the Trustees at their September 2013 meeting.  Construction is scheduled to commence in October 2013 and be completed in the fall of 2014.

 

The total project cost is estimated at $7,769,000 as follows:

                                                                                                                                                                               

Preliminary Engineering                                                                                     $   250,000

Final Engineering and Design, Construction Support                                   $   754,000

Construction/Installation

                -Guardhouse Replacement                                                                                $   747,500

                -Retaining Wall for Road Realignment                                           $2,300,000

                -South Access Road Replacement                                                   $2,875,000

                -Labor/Construction Support                                                            $   172,500

                Total Construction/Installation                                                        $6,095,000

 

Authority Indirect and Direct Expenses                                                          $   670,000

Previous Authorization                                                                                       $ (400,000)

                                                                                                TOTAL                  $7,369,000

 

Yearly expenditures are as follows:

 

2013

Guardhouse replacement & construction of retaining wall pile system.

$2,000,000

 

 

 

2014

Road realignment & construction completion

$5,579,000

 

Funding in the amount of $2,164,105 has been included in the 2013 approved Capital Budget.  Future funding for 2014 will be included in the Capital Budget request for that year.  The $400,000 that was previously authorized was expended for engineering documents and for bidding purposes.

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Project Management, the Vice President – Procurement, the Project Manager and the Regional Manager – Western New York recommend that the Trustees approve capital expenditures in the amount of $7,369,000 for the Robert Moses South Access Gate Security Enhancements at the Niagara Power 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 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 authorize capital expenditures in the amount of $7,369,000 for the Robert Moses South Access Security Gate Enhancements at the Niagara Power Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 

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

 


 

f.        Niagara Power Project – Niagara University

Shared Campus Initiative – Contract Award

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve the award of a two-year contract in the amount of $5.5 million to Edbauer Construction, Inc. (‘Edbauer’), of West Seneca, NY, for the Niagara Power Project – Niagara University Shared Campus Initiative Project (the ‘Project’).  In order to provide the additional time necessary to complete season-critical construction operations prior to winter, interim approval in the amount of $250,000 was authorized in June 2013 by the President and Chief Executive Officer in accordance with the Authority’s Guidelines for Procurement Contracts.

 

BACKGROUND

 

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

In accordance with the Authority’s Expenditure Authorization Procedures (‘EAPs’) approval for the award of non-personal services, construction, equipment purchase or non-procurement contracts in excess of $3 million require the Trustees’ approval.

The Niagara Power Project and Niagara University campuses adjoin each other and share facilities, including roadways and parking lots.  The Authority has agreed to undertake this project to improve the overall safety, security, mobility, and aesthetics of the shared campuses.  This work will include, but not be limited to, paving, striping, lighting, security cameras, modified intersections and access into the campuses.  The Project will provide an effective network to accommodate multiple modes of transportation while providing safe recreational opportunities.

 

The Authority’s Smart Growth Committee (‘SGC’) has determined that the project is a public infrastructure project (‘PIP’) subject to the Smart Growth Act.  The Authority’s SGC has conducted the required evaluation of the project, and the Chief Executive Officer of the Authority has issued the required Smart Growth Impact Statement.

 

DISCUSSION

 

The Authority issued an advertisement to procure bids in the New York State Contract Reporter and bid packages were available as of April 30, 2013.  The bid documents were downloaded by seventy-nine (79) potential bidders and eight (8) potential bidders participated in a site visit on May 9, 2013.

 

The following five proposals were received on June 6, 2013, as noted below:

 

                                Bidder                                           Location                                       Lump Sum

 

                Edbauer Construction, Inc.                       West Seneca, NY                         $5,481,281.22

 

                Mark Cerrone, Inc.                                      Niagara Falls, NY                        $5,978,126.10

 

                Accadia Site Contracting, Inc.                  Depew, NY                                    $6,412,311.99

 

                Yarussi Construction, Inc.                         Niagara Falls, NY                        $6,850,527.00

 

                Pinto Construction Services, Inc.              Buffalo, NY                                  $8,161,808.84

 

The proposals were reviewed by the evaluation committee comprising staff from the Niagara Power Project, Procurement, and Project Management.

 

Edbauer’s bid was the lowest in price and was also technically acceptable.  Edbauer, having extensive experience in general construction, has demonstrated knowledge of the scope-of-work, and is capable of completing this project in accordance with the required schedule.  In addition, Edbauer has performed to the Authority’s satisfaction on previous projects.

 

Edbauer took no commercial or technical exceptions to the contract terms.

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Project Management, the Vice President – Procurement, the Project Manager and the Regional Manager – Western New York recommend that the Trustees approve the award of a two-year contract to Edbauer Construction, Inc., of West Seneca, NY in the amount of $5.5 million for construction services for the Niagara Power Project – Niagara University Shared Campus Initiative 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 President and Chief Executive Officer, was unanimously adopted.

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority,  and the Authority’s Expenditure Authorization Procedures, approval is hereby granted to award a two-year contract to Edbauer Construction, Inc., of West Seneca, NY in the amount of $5.5 million for construction services for implementation of improvements to the Niagara Power Project and Niagara University Shared Campus Initiative Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 

                                    Contractor                                       Contract Approval

                         

                          Edbauer Construction, Inc.                          $5.5 million

                          West Seneca, NY

 

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

 


 

g.       Niagara Power Project – Design and Construction Support

                        Services for New Tug Vessels – Contract Award                      

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

The Trustees are requested to approve the award of a five-year contract in the amount of $234,700 to Bristol Harbor Group, Inc. (‘BHGI’) of Bristol, RI, for engineering, design and fabrication support services to replace two tug vessels associated with the Robert Moses Niagara Power Project Lake Erie Ice Boom.

 

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 existing tugboat vessels, the Daniel Joncaire and the B-1 Breaker, are used during the installation, removal and in-service maintenance of the Lake Erie Ice Boom on the Niagara River.  In 2012, a study was conducted to evaluate options to ensure the long-term service lives of the 30+ year-old Daniel Joncaire and 50+ year-old B-1 Breaker.  The study identified that the Joncaire, which has exceeded its service life for a towing vessel, has experienced severe corrosion and pitting to the hull plating.  Additionally, the study indicated that major upgrades will be required to ensure that the vessel will meet the new United States Coast Guard requirements that are expected to be in effect in 2015.  These upgrades would include a major overhaul of the vessel including, but not limited to, a complete replacement of the electrical system and replacement of the engines and gears.  Additionally, based on the analysis performed, the existing vessel will probably not meet the future stability requirements as a result of the vessel’s low freeboard, which would require a major redesign of the hull as well as structural modifications.

 

Both vessels, which are in similar condition, are critical to the Niagara Power Project and Ontario Power Generation's Sir Adam Beck Plant operations for winter ice boom deployment and ice breaking duties.  As such, new, reliable tug vessels, designed and built in accordance with the latest codes and standards regulated by the American Bureau of Shipping, the Code of Federal Regulations, the Environmental Protection Agency, and the United States Coast Guard, are required for the winter operations on Lake Erie and the Niagara River.

 

The intent of this contract is to procure the professional marine engineering and naval architecture services of BHGI for the design of the new vessels as well as support during the bidding and fabrication processes.  BHGI will assist the Authority in selecting a shipyard to construct the vessels by reviewing builders’ proposals and evaluating their qualifications.  Fabrication support will include oversight and inspection during the fabrication process, as well as necessary requirements to document the vessels with the United States Coast Guard.  Fabrication of the new vessels is planned for 2015 and 2017 under a separate contract.

 

DISCUSSION

The Authority issued an advertisement to procure bids in the New York State Contract Reporter and bid packages were available as of April 30, 2013.  The bid documents were downloaded by thirty-eight (38) potential bidders.

 

The following three proposals were received on May 30, 2013:

 

                        Bidder                                       Location                                       Bid

 

                Bristol Harbor Group, Inc.         Bristol, RI                                      $234,700

                C.R. Cushing & Co., Inc.            New York, NY                              $278,400

                Robert Allan Ltd.                         Vancouver, BC, Canada           $473,445

 

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

 

                BHGI’s bid was the lowest in price and was also technically acceptable.  BHGI, having extensive experience in the field of Naval Architecture, has demonstrated knowledge of the scope-of-work, and is capable of completing this project in accordance with the required schedule.  BHGI has performed to the Authority’s satisfaction on previous projects, including the design of the work barge, Havasu II, which is also used during ice boom activities.

 

In February 2013, the President and Chief Executive Officer authorized preliminary project funding in the amount of $76,370, which sum is included in the current contract award request, to begin engineering and design services in order to finalize the scope and cost estimate of the overall Vessel Replacement Project.  The Capital Expenditure Authorization Request will be presented for approval in 2014.  Future funding for 2014 through 2017 will be included in the Capital Budget requests for those years.

 

FISCAL INFORMATION

 

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

 

As this is a Joint Works Project, costs for this contract will be shared with Ontario Power Generation.

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Project Management, the Vice President – Procurement, the Project Manager, and the Regional Manager – Western New York recommend that the Trustees approve the award of a five-year contract to Bristol Harbor Group, Inc. of Bristol, RI in the amount of $234,700 for the engineering, design, and fabrication support services to replace the Joncaire and B-1 Breaker tug vessels used during critical ice boom operations associated with the Robert Moses Niagara Power 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 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 five-year contract to Bristol Harbor Group, Inc. of Bristol, RI, in the amount of $234,700, for engineering, design, and fabrication support services to replace the Daniel Joncaire and B-1 Breaker tug vessels used during critical ice boom operations associated with the Robert Moses Niagara Power Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 

                                Contractor                                           Contract Approval

               

                                Bristol Harbor Group, Inc.                                     $234,700

                                Bristol, RI

 


 

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

 

 


 

h.       MAXIMO Application Upgrade Project – Capital

                        Expenditure Authorization and Contract Award   

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to increase the expenditure authorization limit for the MAXIMO Application Upgrade Project from the previously authorized capital expenditure of $2,205,000 to $4,720,000.  In January 2012, the President and Chief Executive Officer authorized $2,205,000 for engineering and design services associated with the project.  This additional authorization will provide the balance of the funding necessary to complete the installation, testing and commissioning of the software.

 

The Trustees are also requested to approve the award of a contract for consulting services in the amount of $3 million to Starboard Consulting of Longwood, FL, (‘Starboard’) for the MAXIMO software upgrade tasks associated with application configurations, interfaces, data migration, report development, testing and training.  The contract work is scheduled to commence in September 2013 and be completed in February 2015.

 

BACKGROUND

 

In accordance with the Authority’s Expenditure Authorization Procedures, capital expenditure authorizations in excess of $3 million require the Trustees’ approval.

 

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 also require the Trustees’ approval for the award of personal services contracts in excess of $1 million if low bidder, or $500,000 if non-low bidder.

 

The Authority’s Operations Business Unit utilizes the MAXIMO Enterprise Asset Management (‘EAM’) system as its primary tool for managing generation and transmission asset maintenance activities associated with the Authority’s Maintenance Resource Management (‘MRM’) Program.  The Authority’s MRM Program is integral to the reliability and availability of the generation and transmission assets under the Authority’s purview.  The MRM Program includes systematic tracking of maintenance history at the equipment and system level.  In this regard, the MRM Program provides evidence to support the Authority’s compliance with regulatory requirements including the Federal Energy Regulatory Commission’s (‘FERC’) Dam Safety and the North American Electric Reliability Corporation’s (‘NERC’) Reliability Standards.  Additionally, the MRM Program is leveraged to ensure high-priority corrective work is performed timely, to track history, and for charging work crew costs.

 

The MAXIMO EAM system is the primary tool utilized to manage the capture and maintenance of the Authority’s assets.  The Authority’s Operations is the system owner and there are approximately 800 users throughout the Authority’s White Plains Office and six sites.

 

The system is available 24/7 for the facilities’ personnel to record events such as adding newly delivered equipment to asset inventory, creating work orders to request required maintenance on equipment, and creating work plans and job plans to schedule maintenance. 

 

The MAXIMO system is currently stable and meets the basic needs of the Authority’s business groups.  However, there are risks and deficiencies associated with this application due to the fact that the core product code has been customized extensively by the Authority over the years to enhance functionality to fulfill business requirements.  The Authority has not implemented a MAXIMO upgrade since 2006 as the effort would have required substantial time and resources to integrate these customizations into the new upgrades.  The difficulty with upgrading MAXIMO has also created lost opportunities for business users since the Authority cannot leverage the latest industry best practices provided in new vendor releases. 

 

The Authority is currently running MAXIMO version 5.2 which is three major versions behind the latest MAXIMO release, version 7.5.  In addition, as of September 2010, IBM dropped support for MAXIMO version 5.2.  To mitigate this risk the Authority contracted with an external consulting agency to provide additional support.

 

The decision to upgrade MAXIMO to the latest vendor release and retain the core functionality ‘as is’ was ultimately determined to be the most efficient solution for the near and distant future.  Based on this decision, a thorough GAP Analysis was conducted in 2012 to determine how to best perform this upgrade as well as to examine the Authority’s required business processes within the standard product.  The GAP analysis documented and made assessment recommendations in the following areas: Configurations, Data Migration, Interfaces, Reporting, Training, Upgrade Approach, Hardware, and Upgrade Proposed Schedule.

 

DISCUSSION

 

The Authority placed a notice, (‘RFQ Q12-5368DB’), to solicit bids in the New York State Contract Reporter on November 29, 2012 for MAXIMO version 7.5 Implementation Consulting Services.  A total of 83 companies requested copies of the original bid documents.  On February 5, 2013, eight (8) proposals were received by the Procurement Department and were subsequently reviewed by the MAXIMO 7.5 Implementation RFP Review Committee (‘Review Committee’) consisting of staff from Procurement, Information Technology, and Operations.  These Committee members were from the White Plains Office as well as from the Niagara, St. Lawrence, Clark Energy Center, and Blenheim-Gilboa facilities.

 

The proposals were evaluated based on:

 

·         Experience with MAXIMO versions 5, 6, and 7 and their interfaces

·         Experience with Upgrading MAXIMO

·         Utility Experience and Knowledge of Upgrade Challenges

·         References, Quality of Staff and Proposed Project Manager

·         Proposed Project Plan and Methodology

·         Competitive billing rates

·         Commercial exceptions

 

The eight bids were initially reviewed by the Review Committee for their technical capability to fulfill the requirements of the RFQ.  The eight bids were evaluated and ranked using evaluation criteria documented prior to return of the bids that included: completeness of the response, overall understanding of project objectives, project methodology, change management approach, and overall qualifications.  Four bidders – ABS Consulting, EMA Consulting, Interloc, and Rolta – were rejected for further consideration as they ranked lowest in Technical Qualifications, Past Performance Experience, and Resumes of Key Personnel.

 

The remaining four vendors – Starboard, Cohesive, Total Resource Management, and Tata Consulting Services – were asked to present their proposals in person to the Review Committee.  As part of the bid evaluation process, post bid addenda were issued for technical and commercial clarifications from bidders.

 

Starboard was the lowest evaluated bidder, ranked highest using the evaluation criteria, and was the most technically qualified.  They addressed all areas of the RFQ in their proposal and received favorable responses from their submitted references.  They included a MS Project Work Plan that explained the implementation of the requirements in a manner that matched with the Authority’s expectations.  Starboard re-affirmed that there were no limits on what/how configurations would be performed to meet the Authority’s defined requirements: deliverables, integrations, configurations, training, reports, data migration, testing, key personnel, etc.  Both reference interviews for Starboard were favorable and both indicated that they will continue to use them in the future.

 


 

Summary of Evaluated Bids

 

Bidder:

Total Evaluated Cost of Bid:

Starboard (Longwood, FL)

$2,855,000

Cohesive (Kennesaw, GA)

$3,171,600

Total Resource Management (Alexandria, VA)

$2,856,034

Bidder:

Total Evaluated Cost of Bid:

Tata Consulting Services (New York, NY)

$3,692,000

 

After technical and commercial evaluation of each proposal, the Review Committee recommended that the award of a contract for consulting services (RFQ Q12-5368DB) be made to Starboard Consulting, the lowest evaluated bidder, for a total value of $3,000,000.  This consists of $2,525,000 for consulting, $330,000 for travel, and a contingency of $145,000 to allow for potential configuration changes that may be identified during initial requirements analysis and business process reviews.  (An additional contingency of $200,000 for other project needs is also requested for a total of $345,000 for Contingencies).  The Review Committee agreed that Starboard has the experience, size, and a detailed plan necessary to obtain the deliverables outlined in the RFQ, most importantly, to provide a solid base on which to conduct the implementation of MAXIMO 7.5.

 

MAXIMO Requirements Analysis and Business Process Reviews for the MAXIMO Upgrade will begin in September 2013 and the ‘go-live’ of the new upgraded production environment will occur in February 2015 after training has been completed.

 

The total project cost is estimated to be $4,720,000 as follows:

 

Consulting & Travel

$3,455,000

(includes money already spent during GAP Analysis

Internal Labor

    700,000

Contingency

    345,000

Overhead

    220,000

Total

$4,720,000

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

The Senior Vice President – Enterprise Shared Services, the Vice President – Procurement and Vice President – Information Technology/Chief Information Officer recommend that the Trustees approve capital expenditures in the amount of $4,720,000 for the engineering, design, development and testing associated with an upgrade of the MAXIMO software application. 

 

It is also recommended that the Trustees approve the award of a contract for consulting services to Starboard Consulting of Longwood, FL, in the amount of $3 million for the MAXIMO software application upgrade tasks associated with application configurations, interfaces, data migration, report development, testing and training.

 

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

 

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

RESOLVED, That pursuant to the Authority’s Expenditure Authorization Procedures, capital expenditures in the amount of $4,720,000 are hereby authorized in accordance with and as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority and the Authority’s Expenditure Authorization Procedures, approval is hereby granted to award a contract for consulting services to Starboard Consulting in the amount of $3 million for upgrade tasks associated with application configurations, interfaces, data migration, report development, testing and training, as recommended in the foregoing report of the President and Chief Executive Officer:

 

      Contractor                     Contract Approval            Projected Completion

 

Starboard Consulting                 $3 million                          February 2015

Longwood, FL

 

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

 


 

i.         Procurement (Construction) Contract – Danco

Electrical Contractor, Inc. – Installation of Standby/

PLM Generators in Grand Central Terminal             

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

                In January 2011, the Trustees approved the award of a contract (Contract #4500199630), to the low bidder, Danco Electrical Contractor, Inc., a New York State certified minority-owned business, in the amount of $9,355,000, to install two 2-MW Standby/Peak Load Management (‘PLM’) Generators and associated equipment in Metro-North Railroad’s Grand Central Terminal.  The contract price was subsequently reduced to $9,075,000 to reflect value engineering.

                The contract stipulated a construction completion date of April 1, 2012.  Without modifying the contractual completion date, the Trustees are now requested to authorize staff to complete the contract and close-out the project through December 31, 2013.

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, and for the extension of such contracts when the cumulative term of the extensions is greater than 12 months.               

                In 2008, Metro-North Railroad (‘MNR’) authorized the Authority to proceed with design of two 2-MW standby generators for Grand Central Terminal.  The generators are available for standby power in the event of a grid power outage or for PLM during periods of peak demand on the grid.  In mid-2010, the Authority solicited bids for the installation of two 2-MW standby generators and associated equipment in Grand Central Terminal.

DISCUSSION

                As a result of the contractor’s failure to prosecute the work expeditiously, the original completion date for construction has been surpassed.  The generators have been placed into service but staff is working with the contractor to achieve the completion of final ‘punch list’ items and project close-out.  Staff is in the process of negotiating a final settlement with the contractor to resolve outstanding change order disputes and bring the project to a close.

                Nevertheless, the project is now more than 12 months beyond the original contract completion date and staff expects that final close-out will not occur before December 31, 2013.  

FISCAL INFORMATION

                Funding for this contract is being provided from the proceeds of the Authority’s Commercial Paper Notes and/or the Operating Fund.  All Authority costs, including Authority overheads and the costs of advancing funds, will be recovered consistent with other Energy Efficiency Programs.

RECOMMENDATION

                The Senior Vice President – Economic Development and Energy Efficiency, the Vice President – Energy Efficiency, the Vice President – Procurement and the Director – Engineering and Design recommend that the Trustees authorize staff to close-out Contract #4500199630 with Danco Electrical Contractor, Inc., for the installation of two 2-MW Standby/Peak Load Management Generators and associated equipment in Metro-North Railroad’s Grand Central Terminal on or about December 31, 2013. 

 

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

 

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

 

                RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the Trustees hereby authorize staff to close-out Contract #4500199630 with Danco Electrical Contractor, Inc., for the installation of two 2-MW Standby/Peak Load Management Generators and associated equipment in Metro-North Railroad’s Grand Central Terminal through December 31, 2013; and be it further

 

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

 


 

j.         Procurement (Services) Contracts –

                        Business Units and Facilities –

                        Awards and Extensions                         

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

The Trustees are requested to approve the award and funding of the multiyear procurement (services) contracts listed in Exhibit ‘2j-A,’ as well as the continuation and funding of the procurement (services) contracts listed in Exhibit ‘2j-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 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 $75,000 to $15 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 ‘2j-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 ‘2j-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:

Corporate Support Services / Enterprise Shared Services

 

                The contracts with Penda-Aiken, Inc. (‘Penda-Aiken’) and Reinhard-Madison Approach Staffing, Inc. dba Madison Approach Staffing (‘Reinhard-Madison’) (Q13-5440; PO#s TBA) would provide for the services of temporary administrative personnel to support various departments at the Authority’s White Plains Office, on an ‘as needed’ basis.  The firm/s will be notified by the Authority of its temporary assignment requirements for personnel (including, but not limited to, job classification, any special qualifications and experience that may be required, anticipated start date and duration of assignment) and will be requested to submit résumés for each specific personnel requisition.  Upon receipt and review of a responsive résumé, the prospective candidate will be interviewed by Authority staff (either in person or via telephone).  The firms will interface with the Authority on all matters relating to these contracts.  Fourteen Minority and Women-owned Business Enterprise firms (‘M/WBEs’) were invited to submit proposals for such services in response to the Request for Quotations.  Two bids were received and evaluated.  Based on their qualifications, experience and acceptable commercial evaluation, staff recommends the award of contracts to both firms, Penda-Aiken and Reinhard-Madison (PO#s TBA).  Additionally, one of these firms has provided satisfactory service under a prior contract for such work.  The contracts would become effective on or about August 1, 2013 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, $1 million.  Total commitments and expenditures for the 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 both firms are New York State-certified Woman-owned Business Enterprises (‘WBEs’) and Penda-Aiken is also a Minority-owned Business Enterprise (‘MBE’).

 

Human Resources

 

                The federal government’s Consolidated Omnibus Budget Reconciliation Act of 1985 (‘COBRA’), as amended by various acts since that date, mandates that employers continue to offer health coverage at group health plan rates to certain former employees and their eligible dependents upon termination of employment and other qualifying events.  New York State law  provides for additional continuation coverage, requiring the Authority to provide the opportunity for a temporary extension of health coverage in certain instances where coverage under the plan would otherwise end.  The contract with Total Administrative Services Corp. (‘TASC’) (Q13-5431; PO# TBA) would provide for comprehensive third-party administration services for the Authority’s continuation of benefits program in compliance with both federal and state COBRA requirements.  Services include, but are not limited to: issuing all mandated notices and notifications, enrollment, changes and terminations, billing and receipt of monthly premiums, follow-up, processing payments to various health insurance carriers and to the Authority; tracking of time and limitations imposed by law; record-keeping services and reporting to Authority management for the medical and dental plans, Employee Assistance Program, health care Flexible Spending Account, Vision and Hearing plans for the Authority’s approximately 1,650 salaried and bargaining unit employees.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 18 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommends the award of a contract to TASC, the lower-priced bidder, which is qualified to provide such services, offers optional additional services not provided by the other bidder, and has performed satisfactory services under the existing contract for such work.  The new contract would become effective on or about January 1, 2014 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, $75,000.

Economic Development and Energy EfficiencyEnergy Efficiency

and

Operations Support ServicesEH&S

 

As part of the Authority’s Energy Services programs to promote energy efficiency for its customers, the Authority provides for energy-related improvement work, which may require the abatement of asbestos- or lead-containing materials.  As part of the Authority’s environmental support services (specifically, asbestos and lead management) related to such activities, the services of asbestos/lead consultants are required to mitigate the risks associated with asbestos/lead abatement prior to undertaking construction.  Such services include, but are not limited to: asbestos and lead feasibility studies, inspections, abatement planning and design and project monitoring, as well as laboratory sample analysis.  Demand for these services is expected to increase significantly due to the Authority’s central role in supporting the Governor’s $450 million initiative to reduce energy usage in State facilities by 20% by 2020.  To that end, bid documents (Q12-5364) were developed by staff and were downloaded electronically from the Authority’s Procurement website by 76 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Eighteen proposals were received and evaluated.  Of this number, one bid was incomplete and was not considered further.  The remaining 17 firms were invited to make presentations to the evaluation team on their technical capabilities, which included specific project experiences, familiarity with state and city agency procedures, manpower, company structure, and office locations.  Based on the bidders’ proposals and their presentations, the team rated the bidders on technical capability and cost, and then calculated their combined technical and cost ranking in each of the five bid regions (Downstate, Capital, Central, Northern and Western New York).  Based on the foregoing, staff recommends the award of contracts to the following eight firms with the highest combined rankings in each region:  Adelaide Environmental Health Associates, Inc., Airtek Environmental Corp., CORE Environmental Consultants, Inc., Joseph C. Lu Engineering and Land Survey, P.C. dba Lu Engineers, KAM Consultants Corp., LiRo Engineers, Inc., TRC Environmental Corp. and Warren & Panzer Engineers, P.C. (PO#s TBA).  The number of firms selected for each region is based on the projected volume of work per region, as further set forth in Exhibit ‘2j-A.’  Several of these firms have provided quality services to the Authority under prior or existing contracts for such work.  The new contracts would become effective on or about August 1, 2013 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, $15 million, which will be allocated as specific projects are assigned, based on the firm’s ability to provide the necessary resources and performance.  It should be noted that all costs, including interest and Authority overheads, will be recovered by the Authority from customers participating in the Energy Services programs.  It should also be noted that the Adelaide and CORE firms are New York State-certified Woman-owned Business Enterprises (‘WBEs’).

Internal Audit

 

                The Authority has been providing low-cost power to business and non-profit groups under various Economic Development Power (‘EDP’) programs enacted by State legislation (e.g., Replacement Power, Expansion Power, Recharge New York).  The companies applying for and receiving this low-cost power agree to maintain and/or create jobs in New York State.  These customers are required to report their job levels annually to the Authority.  In past years, the Authority has engaged outside auditors to perform on-site verifications of the job commitments, based on a random sample of customers selected each year.  The customer’s place of business is visited and the customer is required to produce appropriate documents to support the job levels reported.  If the promised job levels are not maintained, the power allocations may be reduced entirely or in proportion to the job levels reported.  Staff has determined that continued use of an outside audit firm to perform such work would be both cost-effective and most efficient in order to audit an appropriate number of customer contracts (approximately 100) annually.  The contract with Dannible & McKee, LLP (Q13-5461; PO# TBA) would provide for the   additional resources and services to perform such customer compliance audits, in order to verify that job levels reported by customers participating in the various EDP programs are accurate and in compliance with contractual requirements.  To that end, bid documents were developed by staff and 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.  Three proposals were received and evaluated.  Staff recommends the award of a contract to Dannible & McKee, the lowest-priced bidder, which is qualified to perform such services, has demonstrated a thorough understanding of the required tasks, and has provided satisfactory service under a previous contract for such work.  The new contract would become effective on or about August 1, 2013 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $330,000.

 

Operations

 

                The contract with AAF-McQuay Inc. dba McQuay Factory Service (‘McQuay’) (RFQ 6000138865; PO# TBA) would provide for preventive maintenance and repair services for 11 centrifugal chillers at the Small Clean Power Plants (including Brentwood on Long Island) in the Southeastern New York (‘SENY’) region.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 27 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Based on its qualifications, experience and reasonable pricing, staff recommends the award of a contract to McQuay, the lowest-priced bidder, which is uniquely qualified to perform such services as the Original Equipment Manufacturer and has provided satisfactory service under the existing contract for such work.  The new contract would become effective on or about October 6, 2013 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $750,000.

 

The contract with Carrier Corporation (‘Carrier’) (Q13-5447; PO# TBA) would provide for heating, ventilation and air-conditioning (‘HVAC’) maintenance services for the 500 MW Combined Cycle and Small Clean Power Plants (‘SCPPs’), as well as the Flynn Plant and Brentwood SCPP on Long Island, in the Southeastern New York (‘SENY’) region.  Services include HVAC equipment and system preventative maintenance (including annual maintenance, seasonal start-up, shutdown, service call work and preventative maintenance of the equipment, as recommended by the equipment manufacturer and common industry practice), as well as on-call equipment maintenance and repairs, on an ‘as needed’ basis.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 56 firms, including those that may have responded to a notice in the New York State Contract Reporter; three proposals were received and evaluated.  The Request for Quotations gave bidders the option of submitting a proposal to provide services for some or all of the SENY plants (including the Flynn Plant and the Brentwood SCPP on Long Island, currently serviced by another contractor), enabling staff to evaluate and determine the feasibility and cost of combining coverage for all SENY plants under one new contract (as previously indicated to the Trustees in September 2012).  Staff recommends award of a contract to Carrier, the lowest-priced bidder for all plants, which is qualified to perform such work, meets the bid requirements and has provided satisfactory service for the SENY plants under an existing contract for such work.  The new contract would become effective on or about October 1, 2013 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, $2 million.

 

                The contract with Dresser-Rand Company (‘Dresser-Rand’) (Q13-5387; PO# TBA) would provide for service, maintenance and engineering support for 17 reciprocating and  centrifugal type gas compressors at the Authority’s power plant facilities in the Southeastern New York (‘SENY’) Region.  The contractor will furnish qualified service technicians / mechanics to perform the work, which includes, but is not limited to, annual inspections, scheduled maintenance, technical services and valve refurbishment (of rotating spares), as well as emergency repair support services on a ‘24/7’ basis for the three different gas compressor manufacturers at the various plants and locations (comprising the 500 MW Combined Cycle Plant and the Small Clean Power Plants (‘SCPPs’) in the New York City boroughs, as well as the Brentwood SCPP and the Flynn Plant on Long Island).  This contract will also cover the migration of the Dresser-Rand VIP controls to the DI-TRONICS control systems, which will be performed by qualified Instrumentation and Controls technicians.  To that end, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 22 firms, including those that may have responded to a notice in the New York State Contract Reporter; one proposal was received and evaluated.  In addition to furnishing the requisite technicians, Dresser-Rand also provides for a site service manager to plan all the maintenance service contract deliverables and activities in order to minimize disruptions and impact on plant operations and to coordinate the resolution of any technical issues that are identified.  Its service center provides product-specific repair capabilities and technical staffing.  Based on its qualifications, experience, resources, ability to perform such work and to provide replacement parts as needed, staff recommends the award of a contract to Dresser-Rand, which has also provided consistent, effective and satisfactory services under prior contracts for such work.  The new contract would become effective on or about January 1, 2014 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, $5 million.

 

                The contract with IsleChem, LLC (‘IsleChem’) (RFQ 6000139741; PO# TBA) would provide for State Pollutant Discharge Elimination System (‘SPDES’) environmental inspection, sampling, testing and analysis of wastewater, solid and hazardous waste for the Niagara Power Project.  Services include, but are not limited to, scheduled monthly collection of wastewater, waste oils, soil samples and hazardous waste, and analysis for various elements / contaminants, as well as unscheduled collection and analysis, on an ‘as needed’ basis, and submittal of a written report of the findings, in accordance with specified New York State Department of Environmental Conservation and Department of Health requirements.  Services also include benchmark monitoring to be performed at least once per year for the First Buffalo Marina and the ice boom storage site in Buffalo, in compliance with the permit requirements for water transportation facilities.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 69 firms, including those that may have responded to a notice in the New York State Contract Reporter; one additional firm obtained the bid documents from an alternate source.  Six proposals were received and evaluated.  Staff recommends the award of a contract to IsleChem, the lowest-priced evaluated bidder, which is qualified to perform such services and has provided satisfactory service under the existing contract for such work.  This laboratory is also certified by the New York State Department of Health Environmental Laboratory Approval Program (‘ELAP’), in accordance with the bid requirements.  The new contract would become effective on or about August 1, 2013 for an intended term of up to four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $300,000.

 

                The contract with Yaboo Fence Co., Inc. (‘Yaboo Fence’) (RFQ 6000139152; PO# TBA) would provide for the necessary qualified labor to perform repair services on fences, gates, hinges, barbed wire, etc. and/or new installations at the Authority’s power projects in the Southeastern New York (‘SENY’) region, as well as any and all associated hardware associated with the fencing and its repair, on an ‘an needed’ basis.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 53 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated.  Yaboo was also invited to meet with Authority staff to review its proposal and address any questions.  Based on the foregoing, as well as its qualifications, experience and reasonable pricing, staff recommends the award of a contract to Yaboo Fence, the lowest-priced bidder, which is qualified to perform such work and meets the bid requirements.  The contract would become effective on or about August 1, 2013 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $175,000.  It should be noted that Yaboo Fence is a New York State-certified Woman-owned Business Enterprise (‘WBE’).

 


Contract Extensions:

Corporate Support Services / Enterprise Shared Services  

Information Technology

                At their meeting of June 29, 2010, the Trustees approved the award of a three-year contract to Information Technology Corp. (‘ITC’) (4600002285) for maintenance as well as on-site and remote technical support of the Authority’s Apple / Macintosh computer hardware and software for the Communications & Marketing Services and Video Production Services groups.  The contract became effective on August 2, 2010; services include, but are not limited to, the following: individualized attention to the designated staff regarding hardware and software requirements, providing one point of contact, scheduled weekly visits to resolve open requests, Help Desk/Call Tracking process for unresolved issues, keeping the Apple software environment current and in-sync, supporting printers and servers, providing back-up and restoring MAC data files, identifying and recommending hardware and software solutions, as well as off-hour capability and response time of four to eight hours.  ITC’s performance has consistently demonstrated a high level of skill, technical expertise and in-depth understanding of the work to be performed. The firm has been very responsive and has provided quality services and work product in a timely manner.  Based on the individualized and exceptional services that ITC has provided to the Authority thus far, staff recommends a two-year extension of the subject contract to provide for continued maintenance and technical support services.  The current contract amount is $210,000; staff estimates that an additional $150,000 will be required for the extended term.  The Trustees are requested to approve extension of the subject contract through July 31, 2015, as well as the additional funding requested.

Economic Development & Energy Efficiency 

Energy Efficiency

                The Authority’s Statewide Energy Services Program (‘Statewide ESP’) is an energy efficiency program that provides a turnkey approach to identifying, procuring and implementing energy-saving solutions for program participants.  At their meeting of July 29, 2008, the Trustees approved the award of contracts to two firms, Parsons Brinckerhoff Americas, Inc. (4600001998, now Parsons Brinckerhoff, Inc.) and PRES Energy (4600001985; now PRES Services, LLC), to provide for program management and implementation services for the Statewide ESP, for a term of up to five years.  The Trustees also authorized increased funding in the amount of $200 million for the Statewide ESP, of which up to $180 million (in aggregate) would be allocated to the approved contracts, based on contractor performance and areas of specialization.  The contracts, which were competitively bid, became effective on August 1, 2008.  While many of the assigned projects have been completed successfully, a number of other projects have been delayed for various reasons.  Most project delays were due to customer delays in milestone approvals resulting from funding uncertainties (that are being resolved as a result of the Build Smart NY initiative).  Customers have now authorized the Authority to proceed to the next steps on most of these projects and other projects are expected to receive authorization to proceed shortly.  Examples of such projects that will require additional time for completion include, but are not limited to those for: State University of New York (‘SUNY’) campuses, the New York State Department of Corrections and Community Supervision (‘DOCCS’) correctional facilities, Office of General Services (‘OGS’) facilities and sites, municipal buildings, county systems, school districts, etc.  The scopes of work vary by customer and facility; they may include, but are not limited to: replacement of boilers, water heaters, chillers, HVAC systems and related controls, compressors; installation / upgrade of lighting and lighting controls, traffic signals, metering; recovery and re-use of building waste heat; thermal storage;  etc.  Since work is in progress on these projects, and these contractors have been performing well, it would not be practical or cost-effective to rebid these services or reassign these projects to a new contractor/s.  In order bring the remaining projects to successful completion, while maintaining the terms, conditions and pricing in the original contracts, staff recommends an extension of approximately four and one-half years of the existing contracts with Parsons and PRES.  Adequate funding is available to cover the estimated costs to complete the active project assignments under these contracts.  No new projects will be initiated or assigned to these contracts.  The current aggregate total amount released and allocated to the two contracts is $90 million (of the previously approved $180 million aggregate total).  Staff anticipates that no additional funding in excess of the previously approved aggregate $180 million will be required for the extended term.  The Trustees are requested to approve extension of the subject contracts with Parsons and PRES through December 31, 2017, and to approve the release and allocation of the $90 million remaining from the previously approved $180 million, as needed (with no additional funding requested).  Change Orders reflecting such allocations will be executed in accordance with the Authority’s Expenditure Authorization Procedures.  Total commitments and expenditures for these contracts will continue to 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 all costs will be recovered by the Authority from the program participants.

Law

                The contract with Duane Morris LLP (4500220355) provides for outside counsel services in connection with the design and drafting of construction contract models to support the Authority’s new Energy Efficiency initiatives.  The original contract, which was awarded as the result of a competitive search, became effective on August 1, 2012 for a term of up to one year, in the amount of $300,000.  During the past year, Duane Morris has provided templates for a proposed ‘design build’ construction agreement and a regular construction agreement; their counsel has been helpful.  A three-year extension is now requested, during which the law firm will continue to counsel the Authority in connection with the current Energy Efficiency initiatives, particularly providing assistance with the design and drafting of alternative methods of construction contracts and assistance with contract disputes on an ‘as needed’ basis.  The current contract amount is $300,000; staff anticipates that no additional funding will be required for the extended term.  The Trustees are requested to approve extension of the subject contract through July 31, 2016, with no additional funding requested at this time.

Operations Support Services on behalf of the Executive Offices

                The recent storms of 2011 and 2012, particularly Super Storm Sandy, highlighted a critical need for improvements and reinvestment in New York’s energy infrastructure.  Governor Cuomo assembled four Commissions in the fall of 2012 to develop recommendations for improvements.  The Authority was a key contributor to those Commissions and their resulting recommendations, and is now actively facilitating the implementation of such recommendations, which cut across the areas of power system hardening, operations improvement and future grid development.  To that end, in April 2013, the Authority awarded competitively bid contracts to the following five firms: ICF Resources, LLC (4600002662), KEMA, Inc. (4600002665), Quanta Technology, LLC (4600002661), Siemens Industry, Inc. / Siemens Power Technologies International (4600002663) and WorleyParsons of New York, Inc. (4600002669), to provide for consulting services in connection with the aforementioned power system hardening efforts.  The consultants will utilize their respective expertise to address specific tasks and scopes of work, on an ‘as needed’ basis.  These may include, but are not limited to: performing system assessments; recommending strategies, best practices, improvements; assisting in change management; advising on rate case justifications; evaluating new technologies and programs, etc.  The original aggregate total amount authorized for the five contracts was $995,000, which was expected to be expended during the contract term of up to one year.  Subsequently, several scopes of work were developed in consultation with the Long Island Power Authority (‘LIPA’) and the New York State Department of Public Service (‘NYS DPS’) and have been awarded to the respective consultants (specifically, for evaluations of the LIPA Summer Operating Report, the LIPA Power System Flood Protection, and the NYS DPS Power System Hardening Operations and Grid Improvement), as well as for an evaluation of the Authority’s transmission and generating facilities storm hardening and resiliency.  Staff anticipates that at least two additional scopes will be awarded: evaluation of the LIPA Management Service Agreement (‘MSA’) exit (expected to be awarded prior to the July Trustees’ meeting) and the forthcoming LIPA Power System Hardening, Operations and Grid Improvements, for which the scope of work has not yet been fully developed.  The current aggregate total for awarded contracts is $1,026,500, which has been authorized in accordance with the limits set forth in the Authority’s EAPs.  Based on the aggregate total value of contracts awarded to date and the anticipated additional work, staff recommends that these contracts be extended by one year and the aggregate total amount authorized for the five contracts be increased to $2 million.  The Trustees are requested to approve extension of the subject contracts through April 1, 2015, as well as the additional funding requested.  Total commitments and expenditures for these contracts will continue to be tracked against the approved aggregate total.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures, including travel and living expenses.


 

FISCAL INFORMATION

Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2013 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 Conservation Fund.

RECOMMENDATION

                The Senior Vice President – Operations Support Services and Chief Engineer, the Senior Vice President – Power  Generation, the Senior Vice President – Corporate Support Services, the Assistant General Counsel – Procurement and Contract Affairs, 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 and Chief Information Officer, the Vice President – Energy Efficiency, the Vice President – Human Resources, the Vice President – Internal Audit, the Regional Manager – Northern New York, the Regional Manager – Western New York, the Regional Manager – Central New York and the Regional Manager – Southeastern New York recommend that the Trustees approve the award of multiyear procurement (services) contracts to the companies listed in Exhibit ‘2j-A’ and the extension and/or funding of the procurement (services) contracts listed in Exhibit ‘2j-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 President and Chief Executive Officer, was 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 “2j-A,” attached hereto, are hereby approved for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

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


 

k.       Procurement (Services) Contract –

                        Request for Funding – Jackson, Lewis, LLP

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve funding in the amount of two hundred and fifty thousand ($250,000.00) dollars to fund a contract for legal services with the law firm of Jackson, Lewis, LLP of White Plains, New York, to represent the Authority in a potential employment matter.

 

BACKGROUND AND DISCUSSION

 

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

 

The Authority is facing the prospect of being involved in a lawsuit alleging workplace discrimination.  In response, the Authority conducted a competitive search for law firms that specialize in employment litigation.  This law firm has the appropriate expertise and resources to handle this employment matter, and maintains a local office. 

 

FISCAL INFORMATION

 

Payments to support this contract for legal services will be made from the Authority’s Operating Fund.

 

RECOMMENDATION

 

The Executive Vice President and General Counsel recommends that the Trustees approve the funding request for this contract.

 

  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 President and Chief Executive Officer, was unanimously adopted.

 

RESOLVED, that pursuant to the Guidelines for Procurement Contracts adopted by the Authority, funding for a legal services contract with the law firm of Jackson, Lewis. LLP of White Plains, New York for a two-year term with an option to renew for an additional year is hereby approved in the amount and for the purpose as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

           

 


 

l.         Annual Review of Hydropower Allocation Job Compliance

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

Staff has conducted its annual review of hydropower allocation job compliance covering the reporting period January through December 2012.  It is recommended that the Trustees take no action regarding 32 non-compliant allocations held by 24 companies reporting job levels below their commitment threshold, as set forth in Exhibit ‘2l-B.’ 

 

BACKGROUND

 

Each year staff performs a review of all in-service hydropower allocation contracts for compliance with agreed-upon job commitment levels.  The contracts contain a customer’s commitment to retain and add a specific number of jobs within a specified timeframe.  For compliance evaluation, customers are required by contract to report the monthly employment numbers for calendar year 2012 by February 28, 2013.    

 

If the reported twelve-month average employment level is below the compliance threshold of 90% of the job commitment (or below 80% of the 2-year average in the case of ‘vintage’ customers, i.e., those having allocations awarded prior to 1988), the Authority may reduce that customer’s power allocation proportionately. 

 

DISCUSSION

  

In 2012, the Authority had 112 hydropower customers holding 203 Replacement Power (‘RP’), Expansion Power (‘EP’), and Preservation Power (‘PP’) allocation contracts.  Of these, a total of 105 customers held 191 contracts that required the customers to report job levels for 2012.  One customer, Fairbanks Farms, went out of business in early 2013 and did not submit its reporting for the year 2012.  The remaining contracts and allocation commitments reviewed by staff represent total power allocations of 1,068 MW and total employment commitments of 29,858 jobs.  In the aggregate, these customers reported actual employment of 33,749 jobs.  This represents 113% of the total job commitment for hydropower customers reporting in 2012.   

 

For the year 2012, 144 of the 190 contracts reviewed were found to be compliant.  These compliant contracts are held by 86 companies.  Additionally, there were 12 companies with 13 contracts that, although reporting employment below their total commitment, contractually have more time to attain the commitment levels.  These companies are included for informational purposes only, and have allocations that are still within the timeframe allowed per contract to create the new jobs committed to when the allocations were awarded.  These 13 contracts together with the 144 compliant contracts  totaling 157 allocations, comprise 83% of the total allocations reviewed and are listed in Exhibit ‘2l-A.’

 

For the year 2012, a total of 24 customers with 32 contracts (or 23% of the 104 companies reviewed) reported actual 2012 job levels below the compliance threshold. 

 

Many of the non-compliant customers continue to cite the lingering effects of the past recession and continued lack of growth of the national and global economies.  Businesses that did not meet job commitment levels for 2012 cited continued challenges, including the loss of business stemming from decreased sales due to a slack economy, increased costs for raw materials, increased global competition, and difficulty finding qualified employees.  For many of these companies, reducing the low-cost power allocation will only increase business challenges and potentially hasten job losses.

 

Upon review, and similar to last year, staff is recommending that reductions in allocation amounts are not made to those non-compliant allocations in which the companies reported employment at or above 80% of job commitment levels.  These eight companies representing nine allocations are within reasonable distance of meeting the compliance threshold with a modest economic turn-around.  In addition, we are recommending no reductions for 3 companies representing four allocations having unique circumstances.  All these companies are detailed in Section I and listed in Exhibit ‘2l-B.’  

 

As requested by the Trustees at their July 2012 meeting, seven companies were part of a joint NYPA and Empire State Development Corporation (‘ESD’) review.  Working with ESD, staff conducted site visits and analyzed the resulting information to gain insight into the then-current business landscape and prospects for employment gains for these companies.  Results were presented at the December 18, 2012 Trustee meeting at which two allocations were permanently reduced and six companies’ employment commitments were reset to reflect the current and future employment level prospects of the companies.  Staff is recommending no action be taken for six of these companies, having just undergone extra scrutiny and to allow these companies time to live up to their new commitments.  These six companies representing nine allocations are also detailed in Section I and listed in Exhibit ‘2l-B.’

 

In addition, the Trustees approved job commitment reductions to six companies representing eight allocations, effective July 1, 2013, as part of the WNY contract extension initiative undertaken in 2010.  These companies are now meeting or exceeding the new job commitment levels and therefore staff requests the Trustee take no action with regard to these non-compliant allocations.  They are also detailed in Section I and listed in Exhibit ‘2l-B.’

 

Section I

 

Non-Compliant Allocations to Continue With No Change

 

Ashland Advanced Materials (Buffalo, Erie County)

Allocation:                            3,500 kW of RP

Job Commitment:               75 jobs

Jobs Reported:                     25 jobs, or 33% of commitment

 

Background:  Ashland Advanced Materials (‘Ashland’) is a privately-owned company and one of the primary suppliers of manufactured graphite products and ultra-high temperature heat treating services.  The company’s main business is providing products and servicing in renewable and green energy technologies.  This is the first year that the company was required to report its job compliance.  Ashland states the solar power industry faced issues which hindered its ability to hire any additional employees until recently.  The company has since obtained a 2-yearcontract with a large company and is now in the process of adding additional employees.

 

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

 

Ashton Potter USA Ltd (Williamsville, Erie County)

Allocation:                            450 kW of RP

Job Commitment:               48 jobs

Jobs Reported:                     38 jobs, or 80% of commitment

 

Background: Ashton Potter USA Ltd (Ashton Potter) is primarily a print manufacturing company that produces and sells secured documents. The majority of its business is a result of a long-term contract with the United States Postal Service.

 

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

 

Aurubis Buffalo, Inc. (Erie County)

Allocation:                            250 kW of RP

Job Commitment:               831 jobs

Jobs Reported:                     655 jobs, or 79% of commitment

 

Background:  Aurubis Buffalo Inc., (‘Aurubis’), formerly known as Luvata Buffalo, manufactures copper and brass sheets and rolls.  For the past year, the company averaged 655 jobs, i.e., 79% of its contractual commitment for this allocation.  This is an increase of 21 jobs from the previous year’s average.  Aurubis has two other allocations that met its employment commitments in 2012.  The company stated that business improved during 2012 and the trend is positive.   Although reporting slightly below 80%, this allocation is compliant when considered against the reduced commitment of 575 jobs, which is effective July 1, 2013, as approved by the Trustees as part of the WNY contract extension initiative. 

 

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

 

Bernzomatic – Worthington Cylinder (Medina, Orleans County)

Allocation:                            600 kW of Expansion Power (‘EP’)

Job Commitment:               210 jobs

Jobs Reported:                     179 jobs, or 85% of commitment

 

Background:  Bernzomatic – Worthington Cylinder (‘Bernzomatic’) manufactures handheld torches and components at its Medina plant.  The Bernzomatic operations were acquired by Worthington Cylinder Industries in July 2011.

 

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

 

Buffalo Newspress Inc. (Buffalo, Erie County)

Allocation:                            200 kW of EP

Job Commitment:               138 jobs

Jobs Reported:                     123 jobs, or 89% of commitment

 

Background:  Buffalo Newspress Inc. (‘Buffalo Newspress’), founded in 1979, prints advertising inserts, brochures and weekly newspapers.  The company reported that it has increased sales growth each year since 2010 and has forecasted growth in 2013 to exceed 15%.  The company reported an employment level just under the 90% commitment threshold.  It is important to note the company was selected for the 2012 joint NYPA/ESD review whereby the Trustees approved a reduction to its job commitment from 149 down to 138.

 

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

 

Coyne Textile Services (Buffalo, Erie County)

Allocation:                            350 kW of EP – reduced to 250 kW effective April 1, 2013

Job Commitment:                               52 jobs

Jobs Reported:                     41 jobs, or 79% of commitment

 

Background:  Coyne Textile Services, (‘CTS’) is a family-owned business that provides textiles rental products (work uniforms, shop floor mats, etc.) and laundering services.  CTS’ low employment levels were a result of low demand.  A large number of the company’s accounts have closed business or switched to other suppliers.  It is important to note that the company was selected for the 2012 joint NYPA/ESD review whereby the Trustees approved a reduction to its job commitment from 93 to 52 and a reduction to the allocation from 350 kW to 250 kW

 

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

 

EPCO Carbondioxide Products (Medina, Orleans County)

Allocation:                            1,000 kW of RP

Job Commitment:               20 jobs

Jobs Reported:                     8 jobs, or 40% of commitment

 

Background:  EPCO Carbondioxide Products Materials (‘EPCO’) was incorporated in 1987.  The company manufactures purified liquid carbon dioxide.  It sells its product to both wholesalers and end user of carbon dioxide.  EPCO continues to feel the impact of reduced demand on the delivery side of its operations in the New York region.  Much of the company’s business continues to be from customers who are willing to pick-up directly from the EPCO plant, thereby eliminating the need to hire additional drivers.  Recently, the company was acquired by Air Products and now anticipates a growth in business as result of the acquisition.  EPCO plans to hire four new drivers during the course of this year, and anticipates a total head count of 18 employees by year’s end.

 

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

Ford Motor Company (Buffalo, Erie County)

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

Job Commitments:             950 jobs

Jobs Reported:                     671 jobs, or 71% of commitment

 

Background: Ford Motor Company (‘Ford’) opened its Buffalo Stamping Plant in 1950, where it manufactures doors, floor pans, quarter panels and some inner body components.  The components then go to other Ford assembly plants and distributions center throughout the U.S and Canada.  In 2012, Ford averaged 671 jobs, or 71% of its contractual commitment.  This is a significant decrease from the previous year’s average of 773 jobs.  The automotive industry has undergone a dramatic transformation over the past several years.  The downturn in the economy forced significant changes in the way Ford does business, which has adversely affected employment levels at the Buffalo plant.  The Ford Buffalo Plant continues to compete internally for additional business, with NYPA low-cost power being a critical cost component.  This is expected to be a successful differentiator in attracting additional capital investment and business as the automotive industry continues to recover.

 

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

 

Hurtubise Tire, Inc. (North Tonawanda, Niagara County)

Allocation:                            180 kW of Replacement Power (‘RP’)

Jobs Commitment:             18 jobs

Jobs Reported:                     8 jobs, or 44% of commitment

 

                Background:  Hurtubise Tire, Inc. (‘Hurtubise’) is a family-owned business which provides truck tire re-capping and services.  The company has acquired two nationally based accounts that will purchase its retreaded tires, and have hired one additional salesman and deliveryman to help meet the demand for its products.  Hurtubise states it is in the process of purchasing a company based in Syracuse with the intentions to reach a broader service area.  The company has recently hired three additional employees which brings its current job levels to 11.

 

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

 

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

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

Job Commitments:             499 jobs and 393 jobs, respectively

Jobs Reported:                     342 jobs, or 69% of its EP commitment and 87% of its RP commitment

 

Background:  International Imaging Materials, Inc. (‘International Imaging’) manufactures thermal transfer ribbons.  For the past year, International Imaging reported an average of 342 jobs, i.e., 69% and 87% of its contractual commitments, respectively.  This is an increase from the previous year’s average of 337 jobs.  The company has been able to add additional employees and is optimistic about this year’s growth.  The company has two other allocations that are meeting job commitments.  Although the EP allocation is below 80% of its job commitment, it is compliant when considered against the reduced July 1, 2013 commitment of 310 jobs that was approved by the Trustees as part of the WNY contract extension initiative.

 

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

 

Lockheed Martin, Niagara Falls (Niagara County)

Allocation:                             250 kW of RP

Job Commitment:                               45 jobs

Jobs Reported:                     35 jobs, or 78% of commitment

 

Background:  Lockheed Martin (‘Lockheed’) is a manufacturer of gravity gradiometer technology for the U. S. Navy and commercial use.  Lockheed states that its employment numbers have remained low due to the state of the economy and restrictions on government defense spending.  The company managed to maintain about the same employment levels of jobs as the previous year and anticipates the same job levels throughout 2013.

 

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

Moldtech, Inc. (Lancaster, Erie County)

Allocation:                            250 kW of EP

Job Commitment:                               75 jobs

Jobs Reported:                     63 jobs, or 84% of commitment

 

Background: Moldtech, Inc. (‘Moldtech’) is an injection molded rubber manufacturer that produces injection molding machines in Western New York.  This is a decrease from the previous year of 68 jobs.  Although the EP allocation is below 80% of Moldtech’s job commitment, it is compliant when considered against the reduced July 1, 2013 commitment of 65 jobs that was approved by the Trustees as part of the WNY contract extension initiative.

 

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

 

Niagara Ceramics Corporation (Buffalo, Erie County)

Allocations:                          850 kW of RP & 250 kW of EP

Job Commitments:             140 jobs

Jobs Reported:                     86 jobs, or 62% of commitment

 

Background:  Niagara Ceramics Corporation (‘Niagara Ceramics’), founded in 2003, produces dinnerware.  The company continued to struggle in 2012 due to losses from a competitive import market which have resulted in a slowdown in its incoming order volume.  The company is looking to hire 15-20 additional employees in the near future; however, finding qualified staff is a challenge.  It is important to note that the company was selected for the year 2012 ESD review at the December 18, 2012 Trustee meeting.  The Trustees approved a reduction to Niagara Ceramics’ job commitment from 190 to 140.  Based on these reductions, staff would like to give Niagara Ceramics additional time to adjust to these changes.

 

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

 

Niagara LaSalle Corporation (Buffalo, Erie County)

Allocation:                            700 kW and 700 kW of RP respectively

Job Commitment:                               115 jobs

Jobs Reported:                     76 jobs, or 66% of commitment

 

Background:  Niagara LaSalle Corporation (‘Niagara LaSalle’) manufactures cold finished and thermal treated steel bars.  The Buffalo facility was not immune to corporate-wide staffing reductions at its facilities over the last several years.  It is important to note that the company was selected for the year 2012 ESD review at the December 18, 2012 Trustee meeting.  The Trustees approved a reduction to Buffalo Newspress’ job commitment from 164 to 115. The company is also part of the WNY contract extension initiative in effect as of July 1, 2013.

 

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

 

Nuttall Gear Company, Niagara Falls, Niagara County

Allocation:                            350 kW of EP

Jobs Commitment:             108 jobs

Jobs Reported:                     96 jobs, or 89% of commitment

 

Background:  Nuttall Gear Company (‘Nuttall’) manufactures enclosed gear drives for industrial, commercial, transportation and utility applications.  The company was forced to operate with fewer employees in 2012.  Nuttall Gear has added one employee to its head count in 2012; however, the company is currently looking to hire qualified machinists.  It is important to note that the company was selected for the year 2012 ESD review at the December 18, 2012 Trustee meeting.  The Trustees approved a job commitment reduction from 135 to 108.

 

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

 


 

PEMCO – Precision Electro Minerals Co., Inc. (Niagara Falls, Niagara County)

 

Allocation:                            800 kW of RP

Job Commitment:                               22 jobs

Jobs Reported:                     19 jobs, or 85% of commitment

 

Background:  PEMCO – Precision Electro Minerals Co., Inc. (‘PEMCO’) makes and sells fused silica for use in the foundry and refractory industry.  PEMCO awaits a turnaround in market conditions that will enable the comany to increase employment levels as business demand increases.

 

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

 

Rosina Food Products, Inc., Cheektowaga (Erie County)

Allocation:                            200 kW of EP

Jobs Commitment:             270 jobs

Jobs Reported:                     226 jobs, or 84% of commitment

 

Background:  Rosina Food Products Inc., (‘Rosina Food’) manufactures food products that are distributed nationally from its production facility in Buffalo.  In 2012, this facility operated less than a normal 5-day work.  As a result, the company participated in a shared work program with NYS Department of Labor.  The company also made operational improvements at this facility and as a result it has slightly reduced the need for manpower.  Rosina has two other allocations that are reporting well above commitment levels.  The Trustees previously approved a reduction to its job commitment to 235 jobs, commencing July 2013, as part of the WNY contract extension initiative.  Although the company reported jobs below its commitment level, this allocation is compliant when considered against the WNY job reduction in effect as of July 1, 2013.

 

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

 

RubberForm Recycled Products, LLC (Lockport, Niagara County)  

Allocation:                            500 kW of EP – reduced to 100 kW

Job Commitment:                               18 jobs

Jobs Reported:                     16 jobs, or 89% of commitment

 

Background:  RubberForm Recycled Products, LLC (‘RubberForm’) manufacturers products made from 100% New York recycled crumb rubber, such as traffic sign bases, parking lot wheel stops, speed bumps, dock bumpers, and various other products.  It is important to note that the company was selected for the year 2012 ESD review at the December 18, 2012 Trustee meeting.  The Trustees approved a job commitment reduction from 30 to 18 and an allocation reduction from 500kW to 100kW.  

 

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

 

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

Allocations:                          300kW, 100kW and 1400kW of RP

Job Commitments:             165, 186 and 169 job commitments respectively

Jobs Reported:                     138 jobs, or 84%, 74% and 82 % of commitments respectively

 

Background: Saint-Gobain Structural Ceramics produces a multitude of building products.   The company’s armor business is one of its main business sectors, and it expects to obtain government contracts in the near future.   In addition, the company has received quotes from numerous armor markets and expects to boost business.  Saint-Gobain has other allocations that are reporting well above commitment levels.

 

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

 


 

TAM Ceramics Group of New York, LLC (Niagara Falls, Niagara County)

Allocations:                          7,000 kW of RP & 500 kW of EP

Job Commitments:             100 jobs

Jobs Reported:                     69 jobs, or 69% of commitment

 

Background:  TAM Ceramics Group of New York, LLC (‘TAM’) is a supplier of dielectric powder to the passive electronic component industry and zirconia-based ceramic powders to industry.  These two allocations are ‘vintage’ contracts with an 80% job ratio based on a two-year average.  The company has expanded into further research and development and recently acquired grants from NYSERDA.  It is important to note that the company was selected for the year 2012 ESD review at the December 18, 2012 Trustee meeting.  The Trustees took no action on TAM’s job commitment or allocations.

 

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

 

The Carriage House Companies - Dunkirk Facility (Dunkirk, Chautauqua County)

Allocation:                            500 kW of EP

Job Commitment:                               199 jobs

Jobs Reported:                     151 jobs, or 76% of commitment

 

Background:  The Carriage House Companies (‘Carriage House/Lakeside’) is a storage facility for both raw materials and finished products associated with syrups.  The company operates a sister facility in nearby Fredonia, which also has a hydropower allocation.  Taken together, the company’s commitment is 639 jobs and actual jobs reported for both were 592 jobs for 2012, representing a combined average of 93%.   

 

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

 

Tulip Corporation (Niagara Falls, Niagara County)

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

Job Commitments:             110 jobs and 122 jobs respectively

Jobs Reported:                     85 jobs or 77% of its EP commitment and 70% if its RP commitment

 

Background:  Tulip Corporation (‘Tulip’) is an injection-molding company that recycles rubber and plastic and manufactures battery cases for the major battery manufacturers.  The RP allocation is a ‘vintage’ contract with an 80% ratio threshold.  Tulip stated that the company is continuing its aggressive pursuit of growth in the battery vent and industrial jar areas.  The company’s access to low-cost hydropower is a key factor in achieving employment growth and its future success in New York State.  Although reporting below its commitment level, Tulip’s allocations are compliant when considered against the reduced July 2013 commitment of 70 jobs that was approved by the Trustees as part of the WNY contract extension initiative.

 

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

 

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

Allocation:                            9,700 kW of RP

Job Commitment:                               171 jobs

Jobs Reported:                     106 jobs, or 62% of commitment

 

Background:  Washington Mills Electro Minerals Corp. (‘Washington Mills Electro’) manufactures abrasive grains for sandpaper and grinding wheels.  Washington Mills Electro has reported that the company has expended a significant amount of capital in streamlining and improving its production capabilities.  Although reporting below its compliant levels, the allocation is compliant when considered against the reduced July 1, 2013 commitment of 107 jobs that was approved by the Trustees as part of the WNY contract extension initiative.

 

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

 


 

Washington Mills Tonawanda (Tonawanda, Erie County)

Allocation:                            300 kW of RP

Job Commitment:                               70 jobs

Jobs Reported:                     38 jobs, or 55% of commitment

 

Background:  Washington Mills Tonawanda (‘Washington Mills Tonawanda’) has been in existence since 1914.  Washington Mills Tonawanda has not recovered since the downturn in economic conditions in 2009.  The company has seen some growth in certain market segments and plans to add employees as its needs increase.  Although reporting below the company’s compliance levels, the allocation is compliant when considered against the reduced July 1, 2013 commitment of 38 jobs that was approved by the Trustees as part of the WNY contract extension initiative.

 

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

 

RECOMMENDATION

 

The Vice President – Marketing and Economic Development recommends that the Trustees take no action on 24 customers holding 32 allocations, as described in Section I above, and as set forth in Exhibit ‘2l-B’ attached hereto. 

 

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 President and Chief Executive Officer, was adopted.

 

RESOLVED, That the Trustees hereby take no action with respect to companies and power allocations as set forth in Exhibit “2l-B,” and as described in the foregoing report of the President and Chief Executive Officer, and be it further

 

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

 

 

 


 

DISCUSSION AGENDA

 

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

 

President Quiniones reported that, based on the Performance Scorecard, the Authority is performing well, to date.   He said, based on a recommendation from the Enterprise Risk Management group, a “Risk Range” directional indicator will be added to the performance metrics.  This will report projected risk ranges “forward-looking” to the year 2014.  As of the fall, the Performance Scorecard will include not only the “Trend” directional arrows, but also a projection of where the Authority stands as it approaches the year 2014.  He continued that non-numerical key initiatives will also be added to the Performance Scorecard.

                Transmission

                President Quiniones said because of the failure of the Y-49 transmission line earlier this year, the transmission system reliability continues to reflect a downward trend.  Taking this into account, the Transmission Business Unit will adjust the system reliability threshold on the Balanced Scorecard within an overall acceptable performance range.

                Heat Wave

President Quiniones said that the previous week’s heat wave was record-breaking for peak demand in the state.  He said the Authority, however, instituted its demand response program whereby it asks its customers to lower their electricity usage in return for a rebate.  He said the utilities should be commended for their performance during the heat wave which was very wide in scope and resulted in extreme pressure on all the grids making it very difficult to sustain the load.  President Quiniones said the Authority also instituted a Peak Load Management Program.  President Quiniones said he wanted to commend Mr. Edward Welz and the Operations team for the astounding work performed during the heat wave.  He said the Authority’s assets played a crucial role in supporting the reliability of the Grid and were available to the New York Independent Systems Operator (“NYISO”).  He ended by saying that the Authority’s prudent investments in the maintenance of its assets allowed the Authority to be prepared for events such as this heat wave.

In response to a question from Trustee Mahoney, President Quiniones said the demand response program is not a voluntary program.  Customers are required to participate by contract; there are penalties if they do not comply, however, they receive rebates when they do.  Also, the Governor had issued a public appeal to reduce consumption during the heat wave.  Accordingly, working through the PSC, large utilities asked their largest customers to reduce consumption in order to keep the grid reliable and as safe as possible.

Responding to a question from Trustee Flynn, President Quiniones said the Authority’s Peak Load Management Program was instituted to request its largest governmental customers such as NYC, MTA and the Port Authority, to reduce their load during periods of critical heat waves.

NYS Energy Plan

President Quiniones said the Authority has been asked to take the lead and serve as Project Manager in putting together the state’s energy plan.  He said the State Energy Plan is required by statute and various energy agencies are involved in putting together a number of programs for this effort.  Ms. Jill Anderson, the Authority’s Chief of Staff and Director of Energy Policy, will serve as the Project Manager working with an interagency team from NYSERDA, DEC, PSC, DOT, et al., in formulating the Energy Plan.  The first draft is scheduled to be completed by the end of the year and, subject to legislation, final approval the first quarter of next year.  As required by law, public hearings will be held across the state in order to create the best Energy Plan.  He ended by saying that outreach to various stakeholder interest groups in the energy industry across the US has begun, also with the goal of producing the best energy plan the team can put together for the state.

 


 

b.             Report of the Chief Operating Officer

 

                Mr. John Canale, Vice President, Project Management, provided highlights of the Chief Operating Officer’s report to the Trustees. 

Performance Measures

 

Generation Market Readiness

·         Systemwide Net Generation was above projections.

·         Generation market readiness exceeded projection for June, 99.47%; target was 99.40%.

·         Year-to-date generation market readiness is 99.44%; this is above the target for the year, 99.4%. 

·         One significant generation event occurred in June:

-    Blade damage at Pouch Terminal Gas Turbine resulting in 124 hours out of service.

The failure occurred on June 6; Pouch Terminal was returned to Service on June 11.

 

Transmission Reliability

·         No significant transmission events occurred in June.

·         Transmission reliability for June was 98.88%; this is below the target of 99.65%.

·         Year-to-date transmission reliability is 95%; this is below the target of 95.81%.

The transmission reliability is below target because of the Y-49 failure which occurred earlier this year.  In order to ensure appropriate reporting of this measure, going forward, the Authority will track this measure taking this into account.  For the month of June this would result in transmission reliability of 97.49%.

 

Generation

·         St. Lawrence Unit 17 – Life Extension and Modernization (“LEM”) Automation Completed; Unit was returned to service on June 29th.

·         St Lawrence Unit 27 was removed from Service on July 1 for repairs; unit slated to return to service in April 2014.

·         Niagara Unit 13 Standardization Completed – Unit was returned to service on July 15th.

·         Lewiston Pump Generating Plant (“LPGP”) LEM Unit 11 Nears Completion – schedule to return to service on August 16th.

Safety

·         There were two DART recordable incidents for June.

·         The DART rate for June, the measure of the Authority’s safety performance, was 1.54%; the annual target is .78%. 

Environmental

·         There were eight reportable environmental incidents for June; monthly target is 3. 

·         Staff continues to strive for continuous improvement in this area.

 

Emergency Management – Storm Preparations

 

        During the period June – July, seven counties in the central region of the state were in a declared state of emergency due to flooding.  The Authority’s emergency management team maintained communication with all of the appropriate agencies during this time.  None of the Authority’s facilities experienced any operational impacts from the storms and subsequent flooding.

 

                In response to a question from Trustee Nicandri, Mr. Canale said the Authority’s work on the LEM project at the St. Lawrence Power Project is essentially completed; staff is in the process of closing-out the project.  Responding to further questioning from Trustee Nicandri, Mr. Canale said the St. Lawrence LEM Program was a 16-year project.

 

 


 

c.             Report of the Chief Financial Officer

 

Mr. Brian McElroy, Treasurer, provided highlights of the financial report to the Trustees.  He said the financial performance for the month of June and year-to-date shows a positive trend and remains very strong.

Net Income

·         Net Income for the month of June was $22 million.

·         Net income through June, prior to the recognition of the State contribution was $143.9 million, which was $25.0 million higher than the budget due to a higher net margin on sales ($37.1 million) and lower other operating expenses ($6.5 million) partially offset by lower non-operating income ($16 million).

-          Net income for the six months with the inclusion of the initial $40 million contribution was $103.9 million. 

-          The Authority budgeted $65 million for contribution to the state for 2013, $40 million of which was released in January following Trustee authorization.  At the request of the NYS Division of the Budget, the Authority has deferred the release of the remaining $25 million, which was originally schedule for June.  At this meeting, staff will be requesting Trustee authorization to release this remaining $25 million. 

·         Positive variances in net margins at the generating facilities ($31.2 million) were substantially attributable to higher capacity and energy prices on market-based sales.

·         Transmission facility results were also higher than budgeted ($8.7 million).

·         Non-operating income included a higher than anticipated mark-to-market loss ($16.5 million) on the Authority’s investment portfolio due to a sharp increase in market interest rates.

Cash losses will not be realized as long as investments are held to maturity, which is generally the case

Year-End Projection

·         Net Income is expected to remain at levels above budget for the year with firmer capacity and energy prices and higher hydro generation, partially offset by a decline in the mark-to-market value of the Authority’s investment portfolio.

·         Capacity Prices – With higher than expected capacity prices, Staff took steps to lock in these revenues by selling approximately half of the surplus capacity in the NYISO 6-month summer strip auction, thereby protecting these revenues from any potential downturn in the market

·         Energy Prices – Wholesale electricity prices have increased with a rise in natural gas prices.  Upstate prices are approximately 12% higher than the budget and New York City prices are up over 11%, having a positive effect on the Authority’s net income.

·         Hydro Flows After significant rainfall in June, precipitation over the Great Lakes is running slightly higher than average for the year.  The result is the combined net generation for the Niagara and St. Lawrence facilities currently projected to be 19.05 Twh, up from 18.45 Twh in the budget, positively impacting the Authority’s net income. 

·         Mark-to-Market Value – The current environment of rising interest rates is having a negative effect on the mark-to-market value of the Authority’s fixed rate investments in its portfolio, decreasing net income on an accrual basis. 

·         At the projected levels, the business requirements for cash flow and liquidity are expected to be met.

                Responding to a question from Chairman Koelmel, President Quiniones said although the Authority performed well financially, to date, the heat wave or hurricane season is not over as yet, therefore, the Authority continues to be in a state of readiness for any potential heat wave or storm events and also to assist other utilities in the state until the end of the season.  In terms of operations, the Authority will continue be on high alert.   He continued that because of strong capacity and energy prices, the Authority should continue to see strong financial performance up to the end of the year.  It is therefore prudent for the Authority to take this opportunity to strengthen its risk management as it embarks on its strategic planning process to ensure that it takes advantage of this trend in the energy and capacity markets.

 

 


 

d.             Report of the Chief Risk Officer

 

            President Quiniones said that based on a recommendation from Chairman Koelmel, going forward, Authority staff will provide an update on its enterprise risk and strategic planning process to the Trustees. 

                Mr. William Nadeau provided an update on the Authority’s Risk Management Activity, to date.  He said, as discussed at the Audit Committee meeting earlier, the risk management team currently has a number of ongoing activities in alignment with its goals for 2013.  The Team is actively engaged in a NYPA-wide Risk Assessment.  To that end, the Team will reassess the Authority’s risk profile by conducting a review of risks under a consistent and formal framework under which risks are constructed.  The objective of this reassessment is to refresh the entire NYPA risk inventory under a more rigorous framework and structured approach, with a common definition of Risk.  Eighteen (18) Risk workshops have been scheduled with all Authority business units.  To date, 16 workshops have been completed and it is expected that all 18 will be completed by the end of July. On completion of the workshops, the Audit Committee and Board of Trustees will be provided with an updated Enterprise Risk Report and a presentation of the results will be made at the September 24th meetings.  The Report will assist the Risk Group with facilitating the development of mitigation plans by Risk Owners in their respective business units scheduled to be completed by the end of the year.  The Report will also be available as an informational resource in the development of the Authority’s Strategic Plan.  In addition, Key Risk Indicators (“KRIs”) will be included in the Balance Scorecard of the Chief Executive Officer’s Report.  Concurrently, the Risk Management staff has engaged a consultant, Delloite & Touche, to assist in developing KRIs as leading indicators of risk.  Staff expects to report on the progress of the development of the KRIs in the fall of this year.

                In response to a question from Trustee Flynn regarding common themes of industry-wide risks, Mr. Nadeau said there is an emergence of cyber security risk for the Authority and other power utilities across the country.  Attempts are made to breach the Authority’s cyber security system on a daily basis.  While the Authority has been successful in preventing entry into its systems, this emergence is of great concern for the Authority.


 

                e.             Report of the Senior Vice President - Strategic Planning

 

                Mr. Robert Lurie provided an update on the Authority's strategic planning process.  He said the Strategic Planning staff is presently undertaking an outreach process to seek information from experts and stakeholders on trends in the energy industry that could be incorporated in the Authority’s Strategic Plan.  In developing the Plan, staff will look at the major uncertainties and drivers in the energy industry and marketplace that could present major risks that the Authority will be measuring or major opportunities for the Authority to expand the service it provides to its customers and the value it provides to the state.  This outreach will be coordinated with the State Energy Plan initiative led by President Quiniones and Ms. Jill Anderson, and include all the state agencies and the energy industry.

Outreach

 Along with staff from the Strategic Planning department, a strategy team comprising staffs of various levels from departments throughout the Authority have been assembled for this outreach which will be done throughout the summer. 

As part of the outreach, staff will be talking to experts from other agencies that develop planning and energy delivery in New York; some of the Authority’s major customers; the rating agencies at the major banks that finance energy projects in the state; renewables and environmental organizations of the utilities; and universities that have provided the Authority with ideas of the trends and drivers in the industry.

Strategy Drivers

·         Low Gas Prices:  Continued or expanded availability of low priced gas over the long term.

·         Technology Advances:  Increasing technical and financial viability of distributed generation, combined heat and power (“CHP”), smart grid, energy storage and microgrids.

·         Climate Change:  Significant climate changes will increase the need for hardening of infrastructure and may shift load patterns.

·         Changes in Policies and Environmental Regulations:  New legislation intended to lessen or reverse the change.

As part of the process, staff will be looking at risk and how the drivers might cause the Authority to make a decision to change course in the middle of that strategy.  Using the Authority’s mission and vision statements, staff will identify goals over a 3 – 5 year period and how those goals will be measured each year.

Outreach will be done during the months of September and October and preliminary results will be presented to the Trustees in November.  Following the outreach, staff will conduct management planning sessions.  The goal is to complete and release the Plan by the end of the year and use that Plan to cascade down to the Authority’s business units so that they can use it to develop their own business plans and performance reviews using those goals, strategies and metrics.

In response to a question from Trustee Mahoney, Mr. Lurie said the exercise will result in the implementation of major projects that will direct the Authority’s investments strategies in the future.  Responding to further questioning from Trustee Mahoney, Mr. Lurie said the Trustees will be provided with a written document that will include a list of capital projects to be implemented over the next several years.

Responding to a question from Chairman Koelmel, Mr. Lurie said he is comfortable with the sequence of the timeline for the Plan.  He said staff is cognizant of the challenges ahead, and he is working with the Risk Management, Operations and Finance staffs to ensure that the metrics and variables are consistent with the Plan and has concrete steps associated with them. 

Chairman Koelmel suggested that Mr. Lurie provide the Board with additional information on the preliminary Plan and allow an opportunity for dialogue with the Trustees at the September meeting.  Mr. Lurie said he would work with Mr. Nadeau and provide the Trustees with information indicating how the Plan will be integrated and give the Trustees an opportunity to review the Plan and provide feedback on it.

In response to a question from Trustee LeChase, Mr. Lurie said one of the key component of the Strategic Plan that will be addressed as part of the goals and strategies is workforce development and continuity to make sure that the Authority can retain people with the right skills needed to implement the Plan. 

 

 

 

 


 

4.                   a.             Power Allocations Under the Recharge New York Program

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

               

The Trustees are requested to:

 

  1. Approve allocations of Recharge New York (‘RNY’) Power available for ‘retention’ purposes to the businesses listed in Exhibit ‘4a-A;’

 

  1. Approve allocations of RNY Power available for ‘expansion’ purposes to the businesses listed in Exhibit ‘4a-B;’

 

  1. Approve the transfer of the RNY Power allocation identified in Exhibit ‘4a-E;’ and

 

  1. Approve the withdrawal of two RNY Power allocations identified in Exhibit ‘4a-F.’

 

These actions have been recommended by the Economic Development Power Allocation Board (‘EDPAB’) at its July 22, 2013 meeting.

               

BACKGROUND

 

        On April 14, 2011, Governor Andrew M. Cuomo signed into law the RNY Power Program as part of Chapter 60 (Part CC) of the Laws of 2011 (‘Chapter 60’).  The program makes available 910 megawatts (‘MW’) of ‘RNY Power,’ 50% of which will be provided by the Authority’s hydropower resources and 50% of which will be procured by the Authority from other sources.  RNY Power contracts can be for a term of up to seven years in exchange for job and capital investment commitments.

 

                RNY Power is available to businesses and not-for-profit corporations for job retention and business expansion and attraction purposes.  Specifically, Chapter 60 provides that at least 350 MW of RNY Power shall be dedicated to facilities in the service territories served by the New York State Electric and Gas, National Grid and Rochester Gas and Electric utility companies; at least 200 MW of RNY Power shall be dedicated to the purpose of attracting new businesses and encouraging expansion of existing businesses statewide; and up to 100 MW shall be dedicated for eligible not-for-profit corporations and eligible small businesses statewide.

 

Under the statute, ‘eligible applicant’ is defined to mean an eligible business, eligible small business, or eligible not-for-profit corporation; however, an eligible applicant shall not include retail businesses as defined by EDPAB, including, without limitation, sports venues, gaming or entertainment-related establishments or places of overnight accommodations. At its meeting on April 24, 2012, EDPAB defined a retail business as a business that is primarily used in making retail sales of goods or services to customers who personally visit such facilities to obtain goods or services, consistent with the rules previously promulgated by EDPAB for implementation of the Authority’s Economic Development Power program.

 

Prior to entering into a contract with an eligible applicant for the sale of RNY Power, and prior to the provision of electric service relating to a RNY Power allocation, the Authority must offer each eligible applicant that has received an award of RNY Power the option to decline to purchase the RNY Market Power component of such award.  If the applicant declines to purchase the RNY Market Power component from the Authority, the Authority has no responsibility for supplying RNY Market Power component of the award.

 

        As part of Governor Andrew M. Cuomo’s initiative to foster business activity and streamline economic development, applications for all statewide economic development programs, including the RNY Power Program, have been incorporated into a single on-line Consolidated Funding Application (‘CFA’) marking a fundamental shift in how State economic development resources are marketed and allocated.  Beginning in September 2011, the CFA was available to applicants.  The CFA continues to serve as an efficient and effective tool to streamline and expedite the State’s efforts to generate sustainable economic growth and employment opportunities.  All applications that are considered for an RNY Power allocation are submitted through the CFA process.

 

The basic application for the RNY Power Program was approved by EDPAB at its meeting on September 26, 2011.  Staff has gained valuable and practical experience through each evaluation period and as a result implemented question modifications to improve the efficiency of the application.  The revised application includes changes to simplify and clarify questions, particularly to help reduce potential double counting of jobs and/or capital investment figures.  Applications for RNY Power are subject to a competitive evaluation process and are evaluated based on the following criteria set forth in the statutes providing for the RNY Power Program (the ‘RNY Statutes’):

 

‘(i) the significance of the cost of electricity to the applicant's overall cost of doing business, and the impact that a recharge New York power allocation will have on the applicant's operating costs;

 

(ii) the extent to which a recharge New York power allocation will result in new capital investment in the state by the applicant;

 

(iii) the extent to which a recharge New York power allocation is consistent with any regional economic development council strategies and priorities;

 

(iv) the type and cost of buildings, equipment and facilities to be constructed, enlarged or installed if the applicant were to receive an allocation;

 

(v) the applicant's payroll, salaries, benefits and number of jobs at the facility for which a recharge New York power allocation is requested;

 

(vi) the number of jobs that will be created or retained within the state in relation to the requested recharge New York power allocation, and the extent to which the applicant will agree to commit  to  creating or  retaining such jobs as a condition to receiving a recharge New York power allocation;

 

(vii) whether the applicant, due to the cost  of  electricity, is at risk  of  closing  or  curtailing facilities or operations in the state, relocating facilities or operations out of the state, or losing a significant  number of jobs in the state, in the absence of a recharge New York power allocation;

 

(viii) the significance of the applicant's facility that would receive the recharge New York power allocation to the economy of the area in which such facility is located;

 

(ix)  the extent to which the applicant has invested in energy efficiency measures, will agree to participate in or perform energy audits of its facilities, will agree to participate in energy efficiency programs of the authority, or will commit to implement or otherwise make tangible investments in energy efficiency measures as a condition to receiving a recharge New York power allocation;

 

(x) whether the applicant receives a hydroelectric power allocation or benefits supported by the sale of hydroelectric power under another program administered in whole or in part by the authority;

 

(xi) the extent to which a recharge New York power allocation will result in an advantage for an applicant in relation to the applicant’s competitors within the state; and

 

(xii) in addition to the foregoing criteria, in the case of a not-for-profit corporation, whether the applicant provides critical services or substantial benefits to the local community in which the facility for which the allocation is requested is located.’

               

                Based on the evaluation of these criteria, the applications were scored and ranked. Evaluations also considered scores provided by the relevant Regional Economic Development Council under the third and eighth criteria. 

 

                In arriving at recommendations for RNY Power for EDPAB’s consideration, staff, among other things, attempted to maximize the economic benefits of low-cost NYPA hydropower, the critical state asset at the core of the RNY Power Program, while attempting to ensure that each recipient receives a meaningful RNY Power allocation.

 

Business applicants with relatively high scores were recommended for allocations of retention RNY Power of 50% of the requested amount or average historic demand, whichever was lower.  These allocations were capped at 10 MW for any recommended allocation.  Not-for-profit corporation applicants that scored relatively high were recommended for allocations of 33% of the requested amount or average historic demand, whichever was lower.  These allocations were capped at 5 MW.  Applicants currently receiving hydropower allocations under other Authority power programs were recommended for allocations of RNY Power of 25% of the requested amount, subject to the caps as stated above.

 

RNY Power allocations have been awarded by the Trustees on five prior occasions – in April, June, September and December of 2012, and March of this year.  There is currently 18.4 MW of unallocated RNY Power of the 710 MW available for business ‘retention’ purposes. Of that 710 MW retention block, 100 MW was set aside for not-for-profit corporations and small businesses, of which 4.3 MW is available to allocate to such entities.  Lastly, there is 152.1 MW of unallocated RNY Power of the 200 MW available for business ‘expansion’ purposes.  These figures include allocations that were awarded, modified, declined, and withdrawn prior to today’s recommendations.

 

DISCUSSION

 

  1. Retention-Based RNY Power Allocations – Action Item

 

The Trustees are asked to address applications submitted via the CFA process for RNY Power retention-based allocations. Consistent with the evaluation process as described above, EDPAB recommended at its July 22, 2013 meeting that RNY Power retention allocations be awarded to the businesses listed in Exhibit ‘4a-A.’ Each business has stated a willingness to create or retain jobs in New York State.  Additionally, these applicants will be committing to capital investments in exchange for the recommended RNY Power allocations.

 

The RNY Power ‘retention’ allocations identified in Exhibit ‘4a-A’ are each recommended for a term of seven years. An allocation recommended by EDPAB qualifies the subject applicant to enter into a contract with the Authority for the purchase of the RNY Power.  The Authority’s standard RNY Power contract template, approved by the Trustees at their March 27, 2012 meeting, contains provisions addressing such things as effective periodic audits of the recipient of an allocation for the purpose of determining contract and program compliance, and for the partial or complete withdrawal of an allocation if the recipient fails to maintain mutually agreed upon commitments, relating to among other things, employment levels, power utilization, and capital investments.  In addition, there is a requirement that a recipient of an allocation perform an energy efficiency audit at its facility not less than once during the first five years of the term of the allocation.

 

As noted in Exhibit ‘4a-A’, some of these applicants are also being recommended for expansion-based allocations, having satisfied the criteria for both components of the RNY Power Program. 

 

  1. Expansion-Based RNY Power Allocations– Action Item

 

The Trustees are asked to address applications submitted for RNY Power expansion-based allocations via the CFA process which request allocations from the 200 MW block of RNY Power dedicated by statute for for-profit businesses that propose to expand existing businesses or create new business in the State.  These applications sought a RNY Power allocation for either (i) expansion only, in the case of a new business or facility, or (ii) expansion and retention, in the case of an existing business.  EDPAB recommended at its July 22, 2013 meeting that RNY Power expansion-based allocations be made to the businesses listed in Exhibit ‘4a-B.’  Each such allocation would be for a term of seven years.

 


 

As with the evaluation process used for the retention recommendations described above, applications for the expansion-based RNY Power were scored based on the statutory criteria, albeit with a focus on information regarding each applicants’ specific project to expand or create their new facility or business (e.g., the expansion project’s cost, associated job creation, and new electric load due to the expansion).

 

                The respective amounts of the expansion-related allocations listed in Exhibit ‘4a-B’ are largely intended to provide approximately 70% of the individual expansion projects’ estimated new electric load.  Because these projects have estimated new electric load amounts, and to ensure that an applicant’s overestimation of the amount needed would not cause that applicant to receive a higher proportion of RNY Power to new load, the allocations in Exhibit ‘4a-B’ are recommended based on an ‘up to’ amount basis.  Each of these applicants would be required to, among other commitments, add the new electric load as stated in its application, and would be allowed to use up to the amount of their RNY Power allocation in the same proportion of the RNY Power allocation to requested load as stated in Exhibit ‘4a-B.’  The contracts for these allocations would also contain the standard provisions previously summarized in the last paragraph of Section 1 above.

 

  1. Ineligibility Determination – Informational Item

               

In the process of reviewing the current round of applications for RNY Power, EDPAB determined that the applicants listed on Exhibit ‘4a-C’ propose projects that constitute a retail business as defined by EDPAB, and therefore are ineligible for RNY Power.  No action by the Trustees is required on these applications.

 

  1. Applications Not Recommended or Not Considered – Informational Item

 

As indicated on Exhibit ‘4a-D,’ EDPAB decided not to recommend two applications for an expansion-based RNY Power allocation, and further decided not to consider other applications for an RNY Power allocation. 

 

The applications that were not recommended for an expansion-based RNY Power allocation proposed expansion projects that did not result in direct job growth, therefore not meeting the job creation requirement set internally by the Authority for RNY expansion-based Power allocations.  However, these companies are being recommended for a retention allocation.

 

EDPAB did not consider the other applications listed on Exhibit ‘4a-D’ for one or more of the following reasons: (i) the application was withdrawn; (ii) the application was not sufficiently complete to permit evaluation and/or applicants were unresponsive to requests from Authority staff for more information necessary to fully evaluate the applications; and in the case of expansion-based requests for RNY Power, the applicant had proposed projects that were too premature to enable the applicant to make commitments necessary for an allocation of RNY Power.  No action by the Trustees is required on these applications.

 

  1. Transfer of RNY Power – Action Item

 

                At its July 22, 2013 meeting, EDPAB approved and recommended that the Trustees approve a transfer of a RNY Power allocation due to a corporate restructuring and name change.  The transfer is described in Exhibit ‘4a-E.’   The new company will agree to the job and capital investment commitments of the original applicant.  The Trustees have previously authorized transfers of RNY Power and other Authority power products like Economic Development Power in similar circumstances.

 

6.       Request to Withdraw Allocations – Action Item

 

At its July 22, 2013 meeting, EDPAB recommended the withdrawal of two RNY Power allocations previously awarded by the Authority.  Upon the receipt of additional information, staff determined that one applicant (Hopshire Farms) was proposing a project that fell within the definition of retail business, and therefore was ineligible to receive RNY Power.  The second allocation was made to Hunts Point Cooperative Market.  However, it was subsequently determined that Hunts Point was already receiving Authority power through the Authority’s governmental service contract with New York City.  These two awards are described in Exhibit ‘4a-F.’  Accordingly, the Trustees are requested to approve the withdrawal of RNY Power awards previously made to the two businesses listed on Exhibit ‘4a-F.’

 

  1. Allocations Declined by Applicants– Informational Item

 

For various reasons, eighteen applicants have declined to accept all or part of the RNY Power allocations awarded to them, adding to the twenty-six applicants reported last year at the December 18, 2012 Trustee meeting.  These applicants are listed on Exhibit ‘4a-F.’  No action by the Trustees is required on these applications.

 

  1. Customers by Industry Classification – Informational Item

 

In response to an inquiry at the March 21, 2013 meeting of the Board of Trustees, staff has conducted a review of the types of businesses and organizations that have been awarded allocations of RNY Power.  Staff analyzed the distribution of customers in twenty different industry classifications based on the North American Industry Classification System.  The high-level breakout in Exhibit ‘4a-G’ shows where the types of customers are located among the ten Regional Economic Development Councils within the State.

 

Recommendation

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees (1) approve the allocations of Recharge New York  (‘RNY’) Power for retention purposes to the businesses listed in Exhibit ‘4a-A’ as indicated therein; (2) approve the allocations of RNY Power for expansion purposes to the businesses listed in Exhibit ‘4a-B’ as indicated therein; (3) authorize the transfer of the RNY Power allocation identified in Exhibit ‘4a-E’ and (4) approve the withdrawal of previously awarded RNY Power allocations to the two businesses listed in Exhibit ‘4a-F’ as indicated therein.

 

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. Michael Huvane provided highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Mahoney, Mr. Huvane said the original application from Hopshire Farms gave the impression that the proposed project qualified as “non-retail;” however, the specifics revealed that the majority of the benefits would go to the retail side of the business.  Since RNY allocations are not intended for retail businesses, the company was therefore ineligible to receive this benefit.

                The following resolution, as submitted by the President and Chief Executive Office was adopted with Trustee LeChase being recused from the vote as it relates to Garlock Sealing Technologies, Syracuse University and Billitier Electric, Inc.; Trustee Flynn as it relates to Albany International Corporation; Trustee Mahoney as it relates to Agrana Fruit US, Inc., Byrne Dairy, and Ultra Dairy LLC; and Trustees Flynn and LeChase as it relates to Corning Incorporated.

               

WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has recommended that the Authority approve the Recharge New York (“RNY”) Power allocations for retention purposes to the applicants listed in Exhibit “4a-A”; and

 

WHEREAS, EDPAB has recommended that the Authority approve the RNY Power allocations for expansion purposes to the applicants listed in Exhibit “4a-B”; and

               

WHEREAS, EDPAB has recommended that the Authority authorize the transfer of the RNY Power allocation identified in Exhibit “4a-E”; and

 

WHEREAS, EDBAB has recommended that the Authority approve the withdrawal of RNY Power allocations to the two applicants listed in Exhibit “4a-F”;

 

NOW THEREFORE BE IT RESOLVED, That the Authority hereby authorizes the allocations of RNY Power for retention purposes to the applicants listed on Exhibit “4a-A” in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Authority hereby authorizes the allocations of RNY Power for expansion purposes to the applicants listed on Exhibit “4a-B” in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Authority hereby authorizes transfer of allocation of RNY Power identified in Exhibit “4a-E” in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Authority hereby authorizes the withdrawal of the allocations of RNY Power to the two applicants listed on Exhibit “4a-F” in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

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


 

                b.             Allocations of Hydropower and Notice of Public Hearing    

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve an allocation of 600 kW of Replacement Power (‘RP’) to Republic Steel (‘Republic’) and an allocation of 700 kW of Expansion Power (‘EP’) to Saturn Petcare, Inc. (‘Saturn’) as further described herein and in Exhibit ‘4b-A.’  These allocations of available hydropower, totaling 1,300 kW, collectively will support capital expansion of $25.9 million and the creation of 106 jobs in Western New York (‘WNY’). 

 

The Trustees are also requested to authorize a public hearing pursuant to Public Authorities Law (‘PAL’) §1009 on the proposed direct sale contract for the allocation to Saturn, the current form of which is attached as Exhibit ‘4b-B.’

 

BACKGROUND

 

In summary, under PAL §1005(13), the Authority may contract to allocate up to 250 megawatts (‘MW’) of firm hydroelectric power as EP and up to 445 MW as RP to businesses in the State located within 30 miles of the Niagara Power Project, provided that the amount of power allocated to businesses in Chautauqua County on January 1, 1987 shall continue to be allocated in such county. 

 

Each application for an allocation of EP and RP must be evaluated under criteria that include, but need not be limited to, those set forth in PAL §1005(13)(a).  Among the factors to be considered when evaluating a request for an allocation of hydropower are the number of jobs created as a result of the allocation; the business’ long-term commitment to the region as evidenced by the current and/or planned capital investment in the business’ facilities in the region; the ratio of the number of jobs to be created to the amount of power requested; the types of jobs created, as measured by wage and benefit levels, security and stability of employment and the type and cost of buildings, equipment and facilities to be constructed, enlarged or installed.

 

The Authority works closely with business associations, local distribution companies and economic development entities to garner support for the projects to be recommended for allocations of Authority hydropower.  Discussions routinely occur with National Grid, Empire State Development Corporation (‘ESD’), the Buffalo Niagara Enterprise, the Niagara County Center for Economic Development and Erie County Industrial Development Agency (‘ECIDA’) to coordinate other economic development incentives that may help bring projects to New York State.  Staff confers with these entities to help maximize the value of hydropower to improve the economy of WNY and the State of New York.  The following recommendations have been discussed with each of these entities and each has indicated support for the proposed recommendation.

 

DISCUSSION

 

                At this time, there are 7,395 kW of unallocated EP and 37,853 kW of unallocated RP available for eligible businesses under the criteria set forth in PAL §1005(13)(a).  The following companies have submitted applications for hydropower to support proposed expansion projects as described below.

               

                Republic Steel

 

                The Republic Lackawanna, Erie County, facility dates back to 1906 and was once a part of the large Bethlehem Steel integrated steel plant located along Lake Erie.  Through several ownership changes beginning in the mid-1970s, the Republic’s bar mill complex has remained operational and is currently a wholly-owned subsidiary of Industrias CH, a Mexican steel company owned by Grupo Simec, a publicly traded corporation.  Aside from Lackawanna, Republic has facilities in Ohio, Indiana, and Ontario.

 

               


 

                Republic’s facility specializes in producing Special Bar Quality (‘SBQ’) steel bars, which refers to a set of physical, chemical and process standards for high performance steel.  The facility receives steel billets from its facilities in Ohio.  The billets are heated and rolled into rounds or hexagons in either straight bar or coil form.  A long-time Authority customer, Republic has 9,400 kW of hydropower under contract through June 30, 2020.  The company is job compliant in its most recent filing for 2012, and currently has 283 employees in Lackawanna.  Also, working with National Grid, Republic recently invested more than $500,000 in lighting upgrades and other energy efficiency measures within its facility.

 

                Republic has submitted a request for 800 kW of hydropower with plans to relocate an existing non-destructive testing line from Republic’s Ohio plant and add it to an existing testing line in Lackawanna, doubling its testing capacity.  The current testing line, operating since 1999, is capable of testing about 12,000 tons per month, thus currently forcing about 8,000 tons per month to be shipped to Ohio for testing.  The relocation would alleviate this issue and give Lackawanna the ability to test 20,000 tons per month.  The company expects to start operations of the second testing line this winter.

 

                Republic would commit to creating 26 new jobs at its facility as a result of the proposed project and invest $5 million to relocate, refurbish, construct and add material handling equipment relating to the testing line.  The calculated job creation/MW ratio for a 600 kW allocation is 43 new jobs per MW.  This ratio is above the historic average of 18 new jobs per MW over the last four years.  The total project investment of $5 million, which includes $1 million for the new material handling equipment, would result in a capital investment/MW ratio of $8.3 million per MW.  This ratio is below the four-year historic average of $20.8 million per MW.

 

                This additional hydropower allocation would ensure that Republic relocate the testing line to Lackawanna and reduce its operating costs at the Lackawanna facility, thus helping to add and preserve good manufacturing jobs in WNY.  

 

                Staff recommends an allocation of RP in the amount of 600 kW be awarded to Republic based on Republic’s commitments to make capital investments of approximately $5 million and create 26 jobs.

 

                Saturn Petcare, Inc.

 

Saturn was formed by Heristo, its parent, Germany-based, privately-held food manufacturing company, to produce pet care products.  After renovating an existing building formerly occupied by Fairbanks Farms in Ashville, Chautauqua County, the company plans to install machinery and equipment to begin production by this fall.

 

Saturn has submitted an application requesting 1.2 MW of hydropower.  Saturn’s initial plans are to produce wet dog and cat food.  Based on market trends, it could also venture into producing dry pet foods and treats.  At the start of production, the plant would operate one shift; however, Saturn plans to expand operations to accommodate three shifts and three production lines.

 

The company plans to invest $20.9 million in the first three years to renovate the existing structure, purchase and install new machinery and equipment, and upgrade the utilities to meet its production requirements.  Once fully operational, by the winter of 2014, the possibility exists to expand the existing structure by up to 20,000-square-feet as demand for the product increases. 

 

Saturn would commit to creating 80 positions at its new facility as a result of the proposed allocation.  The calculated job creation/MW ratio for a 700 kW allocation is 114 new jobs per MW.  This ratio is above the historic average of 18 new jobs per MW over the last four years.  The total project investment of $20.9 million proposed by Saturn would result in a capital investment/MW ratio of $29.85 million per MW.  This ratio is above the four-year historic average of $20.8 million per MW.

 

                Other locations considered by Saturn include Michigan, which has good access to raw materials, a suitable larger building with existing sterilization equipment that could be used for the production line, and a low-cost power incentive; and Missouri, which is centrally located for distribution purposes, and offers a low-cost power incentive, good access to raw materials and sited in a pet food industrial corridor.  The company stated that a low-cost power allocation will be a ‘major factor’ in not only locating this business in New York State, but in future plans to expand and be competitive in the pet food industry in the United States.

 

ESD, the Chautauqua County IDA and other state and local agencies are also working with Saturn in support of this project.

 

                As indicated above, Saturn intends to locate its operations in a recently-closed facility in Chautauqua County.  The impact of the closing on the local economy has been significant with potential long-lasting impacts.  The EP allocation would support a major initiative to alleviate the economic impact of the Fairbanks Farms closure, and will bring into full use the EP available to Chautauqua County under PAL §1005(13).

 

                Staff recommends an allocation of EP in the amount of 700 kW be awarded to Saturn based on Saturn’s commitments to make capital investments of approximately $20.9 million and create 80 jobs.

 

                In summary, staff recommends that an RP allocation be awarded to Republic (600 kW) and an EP allocation be awarded to Saturn (700 kW), in exchange for $25.9 million of capital investment and the creation of 106 new jobs at the proposed facilities.  The recommendations are described in Exhibit ‘4b-A’ showing, among other things, the amount of power requested by each applicant, the recommended allocation amounts, and each applicant’s proposed commitment to job creation and capital investment.  Additional information on the projects is contained in the application summaries attached as Exhibits ‘4b-A-1’ and ‘4b-A-2.’

 

CONTRACT INFORMATION

 

                The Authority is in the process of discussing the proposed contract with Saturn and anticipates receiving customer approval of a contract form substantially similar to Exhibit ‘4b-B.’  The Trustees are requested to authorize a public hearing pursuant to PAL §1009 on the negotiated direct sale contract for these recommended allocations.  A new contract is not necessary for the allocation to Republic which has a long-term contract with provisions for adding additional allocations, and terms and conditions similar to, and consistent with, the proposed contract to Saturn.

 

                As required by PAL §1009, when the Authority believes it has reached agreement with its co-party, it will transmit the proposed form of  the contract to the Governor and other elected officials, and hold a public hearing on the contract.  At least 30-days’ notice of the hearing must be given by publication once in each week during such period in each of six selected newspapers.  Following the public hearing, the form of contract may be modified, if advisable.  Upon approval of the final proposed contract by the Authority, the Authority must ‘report’ the proposed contract, along with its recommendations and the public hearing records, to the Governor and other elected officials.  Upon approval by the Governor, the Authority may execute the contract.

 

                The general form of the contract being proposed is consistent with recently approved contracts for the sale of EP and RP.  Some pertinent provisions of the proposed form of contract include the provision for direct billing of all production charges (i.e. demand and energy) as well as all New York Independent System Operator, Inc. (‘NYISO’) charges, plus taxes or any other required assessments, as set forth in the Authority’s Service Tariff No. WNY-1.  The proposed form of contract would also include (i) commercially reasonable provisions relating to financial security to reflect a direct billing arrangement between the Authority and its EP/RP customers, and (ii) provisions authorizing data transfers and addressing other utility-driven requirements which are necessary for efficient program implementation.  Such provisions have been used in other Authority contracts forms, including the Authority’s recent Recharge New York Power Program contracts.

 

In all cases of Authority hydropower allocations, the amounts are subject to enforceable employment and usage commitments.  The standard contract form includes annual job reporting requirements and a job compliance threshold of 90%.  Should Saturn’s actual jobs reported fall below the compliance threshold, the Authority has the right to reduce the allocation on a pro-rata basis.  The allocation would be sold to Saturn pursuant to the Authority’s Service Tariff No. WNY-1, which applies to all allocations of EP and RP commencing July 1, 2013.  Transmission and delivery service would be provided by National Grid or New York State Electric & Gas Corporation (‘NYSEG’), as applicable, and in accordance with each utility’s filed service tariffs.

               

RECOMMENDATION

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the allocation of 600 kW of Replacement Power to Republic Steel and an allocation of 700 kW of Expansion Power to Saturn Petcare, Inc., as detailed in Exhibit ‘4b-A.’  It is also recommended that the Trustees authorize the Corporate Secretary to convene a public hearing on the form of the proposed contract finally negotiated with Saturn, the current form of which is attached as Exhibit ‘4b-B,’ and transmit copies of such proposed form of contract to the Governor and legislative leaders pursuant to PAL §1009. 

 

                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 President and Chief Executive Officer, was unanimously adopted.

 

RESOLVED, That allocations totaling 1,300 kW of Authority hydropower to Saturn Petcare Inc. (“Saturn”) and Republic Steel (“Republic”) as detailed in Exhibit “4b-A,” be, and hereby are, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Trustees hereby authorize a public hearing on the terms of the proposed form of direct sale contract for the sale of hydropower and energy finally negotiated with Saturn  (the “Contract”), subject to rates previously approved by the Trustees; and be it further

 

RESOLVED, That the Corporate Secretary be, and hereby is, authorized to transmit copies of the proposed Contract to the Governor, the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Ways and Means Committee, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee pursuant to Public Authorities Law (“PAL”) §1009; and be it further

 

RESOLVED, That the Corporate Secretary be, and hereby is, authorized to arrange for the publication of a notice of public hearing in six newspapers throughout the State, all done in accordance with the provisions of PAL §1009 of the Public Authorities Law; and be it further

 

               

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

 


 

5.                   Awards of Fund Benefits from the Western New York

Economic Development Fund Recommended by the

Western New York Power Proceeds Allocation Board

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

               

The Trustees are requested to accept the recommendations of the Western New York Power Proceeds Allocation Board (‘WNYPPAB’) and approve the award of Fund Benefits from the Western New York Economic Development Fund to the eligible applicants, Ascension Industries, Inc. and 425 Michigan Avenue, LLC, listed in Exhibit ‘5-A,’ and authorize the other actions described herein with respect to such applicants and awards.

 

For informational purposes, Exhibit ‘5-B’ lists (1) projects and applicants the WNYPPAB has determined are ineligible for Fund Benefits; (2) projects the WNYPPAB has determined are not being recommended for an award of Fund Benefits; (3) applications for Fund Benefits that have been withdrawn and (4) applications that were deferred for future consideration.  No action by the Trustees is required on any of these matters.

               

BACKGROUND

 

1.       Western New York Power Proceeds Allocation Act

 

On March 30, 2012, Governor Cuomo signed into law the Western New York Power Proceeds Allocation Act (the ‘Act’).  The Act provides for the creation, by the Authority, of the Western New York Economic Development Fund.  The Fund consists of the aggregate excess of revenues received by the Authority from the sale of Expansion Power (‘EP’) and Replacement Power (‘RP’) produced at the Niagara Power Project that was sold in the wholesale energy market over what revenues would have been received had such energy been sold on a firm basis to an eligible EP or RP customer under the applicable tariff or contract.

 

                Under the Act, an ‘eligible applicant’ is a private business, including a not-for-profit corporation.  ‘Eligible projects’ is defined to mean ‘economic development projects by eligible applicants that are physically located within the State of New York within a thirty-mile radius of the Niagara power project located in Lewiston, New York that will support the growth of business in the state and thereby lead to the creation or maintenance of jobs and tax revenues for the state and local governments.’  Eligible projects include, for example, capital investments in buildings, equipment, and associated infrastructure owned by an eligible applicant for fund benefits; transportation projects under state or federally approved plans; the acquisition of land needed for infrastructure; research and development where the results of such research and development will directly benefit New York state; support for tourism and marketing and advertising efforts for western New York state tourism and business; and energy-related projects.

 

Eligible projects do not include public interest advertising or advocacy; lobbying; the support or opposition of any candidate for public office; the support or opposition to any public issue; legal fees related to litigation of any kind; expenses related to administrative proceedings before state or local agencies; or retail businesses as defined by the board, including without limitation, sports venues, gaming and gambling or entertainment-related establishments, residential properties, or places of overnight accommodation.

 

Fund Benefits will be provided to successful eligible applicants in the form of grants.  It is anticipated that Fund Benefits will be disbursed as reimbursement for expenses incurred by an Eligible Applicant for an Eligible Project.   

 

At least 15% percent of Fund Benefits must be dedicated to eligible projects which are ‘energy-related projects, programs and services,’ that are ‘energy efficiency projects and services, clean energy technology projects and services, and high performance and sustainable building programs and services, and the construction, installation and/or operation of facilities or equipment done in connection with any such projects, programs or services.’

 

Allocations of Fund Benefits may only be made on the basis of moneys that have been deposited in the Fund.  No award may encumber future funds that have been received but not deposited in the Fund.

 

2.       Western New York Power Proceeds Allocation Board

 

Under the Act, the WNYPPAB is charged with soliciting applications for Fund Benefits, reviewing applications, making eligibility determinations, and evaluating the merits of applications for Fund Benefits.  WNYPPAB uses the criteria applicable to EP, RP and Preservation Power (‘PP’), and for revitalization of industry as provided in Public Authorities Law §1005.  Additionally, WNYPPAB is authorized to consider the extent to which an award of Fund Benefits is consistent with the strategies and priorities of the Regional Economic Development Council having responsibility for the region in which an eligible project is proposed.  A copy of these criteria (collectively, ‘Program Criteria’), adapted from WNYPPAB’s ‘Procedures for the Review of Applications for Fund Benefits,’ is attached as Exhibit ‘5-C.’

 

The WNYPPAB met on March 4, 2013 and, in accordance with the Act, adopted by-laws, operating procedures, guidelines related to the application, and a form of application.  At that time, WNYPPAB defined ‘retail business’ to mean a business that is primarily used in making retail sales of goods or services to customers who personally visit such facilities to obtain goods or services.

 

WNYPPAB also designated the Western New York Regional Director of Empire State Development Corporation (‘ESD’) to be its designee (‘Designee’) to act on its behalf on all administrative matters.  Among other things, the Designee was authorized to preform analyses of the applications for Fund Benefits and make recommendations to WNYPPAB on the applications. 

 

3.       Application Process

 

                In an effort to provide for the efficient review of applications and disbursement of Fund Benefits, the WNYPPAB established a series of application due dates coupled with a schedule of dates through the end of 2013 on which the WNYPPAB would meet to consider applications.  In addition, the application process was promoted through a media release and with assistance from state and local entities, including the Western New York and Finger Lakes Regional Economic Development Councils, the Empire State Development Corporation and other local and regional economic development organizations within the State.  A webpage was created that is hosted on WWW.NYPA.GOV/WNYPPAB with application instructions, a link to the approved application form and other program details including a contact phone number and email address staffed by the Western New York Empire State Development regional office.  Additionally, ESD and the Authority hosted a meeting on June 25, 2013 in Buffalo with a plethora of Western NY economic development agencies to further educate them on the Fund and how they can continue to market the Fund to their constituents.

                               

As of May 7, 2013, the second application due date, the WNYPPAB had received 45 applications seeking over $100 million in Fund Benefits.  WNYPPAB’s staff analyzed the applications and made recommendations to WNYPPAB concerning each of the applications based on eligibility requirements and Program Criteria.  Copies of the recommendations from WNYPPAB staff to the WNYPPAB can be found in ‘Exhibit ‘5-D.’ 

 

At its June 26, 2013 meeting, the WNYPPAB took the following actions on applications for Fund Benefits:

 

1.        Recommendations for Awards of Fund Benefits

 

The WNYPPAB is recommending to the Trustees that the two applications listed on Exhibit ‘5-A,’ each receive an award of Fund Benefits in the amount indicated.  The applicants have indicated that the proposed projects would directly create or retain 146 jobs in Western New York.  The total to be expended on the proposed projects is expected to exceed $23 million.  These are the recommendations that are presently before the Trustees for consideration.

 


 

2.       Other Determinations

 

For your information, Exhibit ‘5-B’ lists those applications for which the WNYPPAB has determined will not receive a recommendation for Fund Benefits.  These applications fall into four categories: (1) applications that WNYPPAB has determined will not receive a recommendation of Fund Benefits based on the application of Program Criteria; (2) applications that WNYPPAB has determined propose a project that is not an eligible project because it is a retail business as defined by WNYPPAB; (3) applications that have been withdrawn; and (4) applications that have been deferred for future consideration.  This information is being provided to the Trustees for their information only.  No action by the Trustees is required with respect to these matters.

 

DISCUSSION

 

Under the Act, a recommendation for Fund Benefits by WNYPPAB is a prerequisite to an award of Fund Benefits by the Authority, and the Act authorizes the Authority to award Fund Benefits to an applicant upon a recommendation of the WNYPPAB.  Upon a showing of good cause, the Authority has discretion as to whether to adopt the WNYPPAB’s recommendation, or to award benefits in a different amount or on different terms and conditions than proposed by the WNYPPAB.  In addition, the Authority is authorized to include within the contract covering an award (‘Award Contract’) such other terms and conditions the Authority deems appropriate.

 

Given the nascent stage of the proposed projects, it was not possible at this time to identify all of the terms and conditions that would be applicable to each award and memorialized in an Award Contract.  With the Trustees’ authorization, it is anticipated that the Authority, in consultation with ESD, will negotiate final terms and conditions with successful applicants after receipt of more detailed information concerning the projects and proposed schedules.  In addition to appropriate business terms, staff anticipates that Award Contracts will contain provisions for periodic audits of the successful applicant for the purpose of determining contract and program compliance, and where appropriate, terms providing for the partial or complete recapture of Fund Benefits disbursements if the applicant fails to maintain agreed-upon commitments, relating to, among other things, employment levels and/or project element due dates. 

 

Recommendation

 

The Vice President – Marketing recommends that:

 

(1)     the Trustees accept the recommendations of the WNYPPAB and authorize the awards of Fund Benefits to the applicants and in the amounts listed in Exhibit ‘5-A,’ conditioned upon an agreement to be negotiated with each applicant on the final terms and conditions that would be applicable to each award to be contained in an Award Contract approved by the President and Chief Executive Officer and approved by the Executive Vice President and General Counsel as to form;

 

(2)     the Senior Vice President – Economic Development and Energy Efficiency, or his designee(s), in consultation with ESD, be authorized to negotiate with the applicants concerning such final terms and conditions; and

 

(3)     the Senior Vice President – Economic Development and Energy Efficiency, or his designee, be authorized to execute Award Contracts on behalf of the Authority for each of the awards listed on Exhibit ‘5-A’ subject to the forgoing conditions.

 

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 Giumarra provided highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Nicandri, Mr. Giumarra said 20% is the threshold used when evaluating projects.  The Authority is not providing 100% of project requirements; the companies usually receive capital from other resources.  Responding to further questioning from Trustee Nicandri, Mr. Giumarra said the Western New York Power Proceeds Allocation Board has approved the recommendations before the Board for consideration.

                In response to a question from Trustee Mahoney, Ms. Judith McCarthy said the Western New York Power Proceeds Allocation Board is separate from the Authority’s Board.  It has five members: three appointed by the Governor, one by the Senate and one by the Assembly.  There is also a requirement in the legislation that three of the Board members have to live within a 30-mile radius of the Niagara project.  The Board has designated the ESD as their staff to review the applications and make recommendations for fund award.  However, the Authority’s Trustees have to approve that Board’s recommendations before any funds can be disbursed.  Mr. Huvane added that the Authority’s Trustees have the right by legislation to modify the recommendations.  ESD serves as staff for the Proceeds Board, but NYPA has a representative, John Giumarra, who works with them on a daily basis looking out for the Authority's interest.  The NYPA representative oversees the Proceeds Board activities to ensure that the recommendations are consistent with the legislation.

Responding to a question from Trustee Mahoney, Mr. Huvane said the Trustees can only make a modification to what is being recommended by the Proceeds Board for approval and Ms. McCarthy added that, under the statute, the Trustees have the authority to make a modification to the award recommendation or refer it back to the Proceeds Board for further review.

                In response to a question from Trustee Nicandri, Mr. Huvane said the Regional Economic Development Council of Western New York works with the ESD which acts as staff to the Proceeds Board, during the review process of the applications.

                In response to a question from Trustee Mahoney, Mr. Giumarra said the Board members are privy to the principals of the companies being recommended for an award.  Ms. McCarthy added that the members do the same conflicts of interest check on the applicants.

                Responding to a question from Trustee LeChase, Mr. Huvane said members of the Proceeds Board take their responsibility very seriously and work closely with Authority staff to make sure their recommendations are in line with the requirements for allocating an award.  

Trustee Flynn added that Mr. Giumarra had briefed him and the other Trustee on the operations of the Proceeds Board and also the allocations that are being recommended today for the Trustees’ approval.  He said he met with the Chairman and other officers of the Proceeds Board.  The members are active in other development Boards, so they do understand the issues on hand.  They understand their custodial role and also that the Trustees have oversight of the Board from a fiduciary aspect.  He continued that, from another aspect, the legislature and the local Senate and Assembly are very interested in what this Board is doing and is expecting the Authority’s Trustees to do oversight on them.  Also, he has received positive feedback regarding the ESD staff managing the program.

Chairman Koelmel said, as evidenced by the fact that the Trustees are considering two recommendations as outlined by Mr. Huvane and Giumarra, the Trustees are proceeding slowly and cautiously to make sure they have a good process in place and we can work with ESD to address the process.  Ms. McCarthy added that Karen Delince and the Corporate Secretary’s office have been providing the Proceeds Board with Corporate Secretary support.  The Legal Department also provides assistance to the Board in evaluating and determining eligibility for awards.

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

 

                WHEREAS, the Western New York Power Proceeds Allocation Board (“WNYPPAB”) has recommended that the Authority make awards of Fund Benefits from the Western New York Economic Development Fund (“Fund”) to the eligible applicants listed in Exhibit “5-A”;

 

                NOW THEREFORE BE IT RESOLVED, That the Authority hereby accepts the recommendations of the WNYPPAB and authorizes the awards of Fund Benefits to the applicants and in the amounts listed in Exhibit “5-A,” conditioned upon an agreement between the Authority with each applicant on the final terms and conditions that would be applicable to each award and set forth in a written award contract (“Award Contract”) between the Authority and each applicant approved by the President and Chief Executive Officer and approved by the Executive Vice President and General Counsel as to form; and be it further

 

                RESOLVED, That the Senior Vice President – Economic Development and Energy Efficiency, or his designee, in consultation with the Empire State Development Corporation, is authorized to negotiate with successful applicants concerning such final terms and conditions; and be it further

 

                RESOLVED, That the Senior Vice President – Economic Development and Energy Efficiency, or his designee, is authorized to execute on behalf of the Authority Award Contracts for each of the awards listed on Exhibit “5-A” subject to the forgoing conditions; and be it further

 

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

 

 


 

6.                   Contribution of Funds to the State Treasury

 

                The President and Chief Executive Officer submitted the following report:

SUMMARY 

The Trustees are requested to approve a State contribution in the amount of $25 million with (i) $20 million being provided directly to the State’s general fund to support energy-related initiatives of the state or for economic development purposes and (ii) $5 million provided to the Empire State Development Corporation (‘ESD’) in further support of ESD’s Statewide economic development initiatives, as authorized by legislation approving the 2013-14 Budget of the State of New York (Chapter 57 of the Laws of 2013).

 

BACKGROUND

 

The Authority is requested, from time to time, to make financial contributions and transfers of funds to the State or to otherwise provide financial support for various State programs.  Any such contribution or transfer of funds must (1) be authorized by the law; (2) be approved by the Trustees ‘as feasible and advisable;’ and (3) satisfy the requirements of the Authority’s General Resolution Authorizing Revenue Obligations dated February 24, 1998, as amended and supplemented (‘Bond Resolution’).  In addition, as set forth in the Trustees’ Policy Statement dated May 24, 2011, a debt service coverage ratio of 2.0 is to be used as a reference point in considering any such payments or transfers.

 

The Bond Resolution’s requirements to withdraw monies ‘free and clear of the lien and pledge created by the [Bond] Resolution’ are such that (a) withdrawals must be for a ‘lawful corporate purpose as determined by the Authority,’ and (b) the Authority must determine, taking into account among other considerations anticipated future receipt of revenues or other moneys constituting part of the Trust Estate, that the funds to be so withdrawn are not needed for (i) payment of reasonable and necessary operating expenses, (ii) an Operating Fund reserve for working capital, emergency repairs or replacements, major renewals or for retirement from service, decommissioning or disposal of facilities, (iii) payment of, or accumulation of a reserve for payment of, interest and principal on senior debt or (iv) payment of interest and principal on subordinate debt.

 

DISCUSSION

 

The State’s fiscal year (‘SFY’) 2013-14 Budget legislation authorizes the Authority as deemed ‘feasible and advisable by its trustees’ to provide up to $90 million in contributions to the State’s general fund, or as otherwise directed in writing by the State’s director of the budget, whereupon such funds ‘will be utilized to support energy-related initiatives of the state or for economic development purposes.’  In addition, the Budget legislation specified that up to $25 million is to be considered for payment by June 30, 2013 and with the remainder of any such contribution considered for payment by March 31, 2014. 

 

  New York State Division of Budget representatives initially requested that the Authority defer its decision on the initial ‘up to $25 million’ amount.  More recently, the Director of the Budget formally requested that, with respect to the authorized $25 million amount, (i) $20 million be transferred to the State’s general fund and (ii) $5 million be transferred to ESD in furtherance of ESD’s statewide economic development initiatives, and (iii) that such transfers occur by September 2013.  With regard to the remaining amount contemplated in the SFY 2013-14 Budget ($65 million), staff is not recommending any action at this time, but will return to the Board by the end of the State’s fiscal year on March 31, 2014 with a recommendation as to that amount based on the financial circumstances of the Authority at the time such contribution is to be considered for payment. 

 

The low-cost power and other benefits the Authority makes available under its various programs are valuable economic development tools that the Authority desires to promote, and there exists significant amounts of unallocated power and other benefits available under these programs that can support economic development in the State.  Accordingly, the Authority has an interest in promoting the effectiveness of ESD’s statewide economic development initiatives, thereby increasing the number and quality of businesses that apply for available benefits under the Authority’s Programs. 

 

An example of the Authority’s previous support of EDS’s statewide economic development initiatives is the Open for Business campaign.  This campaign was initiated to market New York State as an ideal place for businesses to invest and create jobs and is being administered by the ESD.  A central component of this business development campaign is to promote the advantages of doing business in the State in order to retain and grow New York businesses as well as attract other businesses to New York from across the country and around the world.  The central tenet fits well with the Authority’s Mission to promote economic development and job creation based directly on its legislatively authorized Expansion Power, Replacement Power, Preservation Power, and Recharge New York Power Programs, among the other economic development programs in which the Authority is authorized and directed to engage.

 

Based on a recognition of the mutual goals of the Authority and ESD with respect to economic development, and based on discussions with staff from ESD and the Division of Budget, it has been suggested that the Authority consider using a portion of the $90 million authorized for a voluntary contribution to provide funding to directly support ESD’s statewide economic development initiatives.  The Authority and ESD can work collaboratively to support the initiatives and the parties can also monitor and evaluate them to determine their impact on the Authority’s low-cost power programs.

 

Staff has reviewed the effects of the release of $25 million in State contributions at this time on the Authority’s expected financial position and reserve requirements.  In addition, in accordance with the Board’s Policy Statement, staff calculated the impact of these transfer amounts on the Authority’s debt service coverage ratio and determined it would not fall below the 2.0 reference point level.  Given the current financial condition of the Authority, its estimated future revenues, operating expenses, debt service and reserve requirements, staff is of the view that it will be feasible for the Authority to release $25 million at this time.

 

FISCAL INFORMATION

 

Staff has determined that sufficient funds are available in the Operating Fund to transfer $25 million in State contributions at this time and that such Authority funds are not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s Bond Resolution.  Such transfers pursuant to the SFY 2013-14 Budget legislation was anticipated and is within the amount reflected in the Power Authority’s 2013 Operating Budget approved by the Trustees at their December 8, 2012 meeting. 

 

RECOMMENDATION

 

The Treasurer recommends that the Trustees affirm that the transfer to the State’s general fund of $20 million and the transfer to Empire State Development Corporation of $5 million is feasible and advisable and authorize such payments.

 

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. Brian McElroy provided highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Nicandri, Mr. McElroy said $20 million of the $25 million is going to the state general fund.  Responding to further questioning from Trustee Nicandri, Mr. McElroy said the $20 million contribution is slated for energy related initiatives and this is in keeping with the Authority’s mission statement, but he does not have any information on the  specific initiatives for which the state will use the $20 million.  Mr. Russak added that he spoke with personnel from the Budget Division on the intent of the legislation to use the funds for economic development and energy efficiency and they are mindful of this requirement.  Responding to further comment from Trustee Nicandri, Mr. Russak said the language in this year’s Budget Bill specifies the use of the Authority’s contribution for economic development and energy efficiency.

                Responding to a question from Chairman Koelmel, Mr. Russak said the total $25 million contribution amount is consistent with the 2013 operating budget.  There was a change in the timing of the release of the funds to the state because the State Budget Division requested it be postponed. 

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

                RESOLVED, That the Trustees hereby authorize payments to the State’s general fund in the amount of $20 million and to Empire State Development Corporation (“ESD”) in the amount of $5 million from the Operating Fund as authorized by Chapter 57 of the Laws of 2013 as discussed in the foregoing report of the President and Chief Executive Officer; and be it further

                RESOLVED, That the amount of $20 million to be used for the contributions to the State’s general fund and $5 million to ESD described in the foregoing resolution is not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

 

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

 

                RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Corporate Secretary, the Treasurer and all other officers of the Authority be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents that they, or any of them, may deem necessary or advisable to effectuate the foregoing resolution, subject to approval as to the form thereof by the Executive Vice President and General Counsel.


 

7.                   Informational Item:  Authority Cyber Security Overview

 

The Chief Information Security Officer submitted the following report:

 

SUMMARY

                This memorandum provides an informational item to the Trustees on the Authority’s cyber security activities. 

BACKGROUND

                At the request of the President and Chief Executive Officer, the Chief Information Security Officer is providing this update on the Authority’s cyber security activities. 

DISCUSSION

                 The PowerPoint presentation (Exhibit “A”) represents an informational update on the cyber security activities.” 

 

President Quiniones said last week he attended a classified briefing on cyber security risks with other CEOs of large Public power utilities in the US.  The briefing was led by the Department of Homeland Security along with the Department of Defense, FERC and the US Department of Energy.  As previously mentioned by Mr. Nadeau, this is an emerging risk, not only to NYPA but the entire utility industry.  It is very clear that perpetrators of cyber security are no longer focused on corporate networks but are starting to go after controlled networks, such as utility networks.  To that end, he has asked Ms. Lena Smart, Chief Information Security Officer, to give the Board a report on the current issues with cyber security and how the Authority is addressing these issues.

Ms. Smart provided a report on the Authority’s cyber Security.  She said she is the Energy Sector Chief for the FBI Infragard – a collaboration between public and private sectors – and the Cyber Security staff are all members of FBI Infragard.  The Authority’s cyber security group was created approximately ten years ago and is staffed by qualified cyber security subject matter experts in computer forensics, data recovery, data security and network security.  The cyber security staff and contractors are given mandatory annual cyber awareness training and work closely with the New York State cyber security staff.  The Cyber Security Team publishes monthly security bulletins for all staff. 

The group practices layered security.

Tools used for Layered Security:

 


 

8.                   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 (d)(e) and (f) to discuss matters leading to the promotion or demotion of a particular person.  Upon motion made and seconded an Executive Session was held.

 


 

9.                   Motion to Resume Meeting in Open Session

 

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


 

10.                  Next Meeting

 

The Regular Meeting of the Trustees will be held on September 24, 2013, at 11:00 a.m., at the Niagara Power Project, unless otherwise designated by the Chairman with the concurrence of the Trustees.

 

 


Closing

                Upon motion made and seconded, the meeting was adjourned by the Chairman at approximately 1:00 p.m.

 

 

Delince Signature

 

Karen Delince

Corporate Secretary