MINUTES OF THE ANNUAL MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

March 21, 2013

 

Table of Contents

 

 

 

                Subject                                                                                                                                  Page No.               Exhibit

 

            Introduction                                                                                                                                   3

1.             Adoption of the March 21, 2013 Proposed Meeting Agenda                                                4

2.             Consent Agenda:                                                                                                                           5

a.       Minutes of the Regular Meeting held on February 26, 2013                                 6                                      

b.       Proposed Direct Sale Contract for the Sale of Western                                           7                       “2b-A”; “2b-B”

New York Hydropower – Notice of Public Hearing

 

c.        Replacement Power Allocation Extensions and Proposed                                    10                      “2c-A”; “2c-B-1”

            Direct Sale Contracts – Notice of Public Hearing                                                                          “2c-B-2”

 

d.       Annual Review and Approval of Guidelines for the                                              15                      “2d-A”

            Investment of Funds and 2012 Annual Report on

            Investment of Authority Funds

 

e.        Annual Report of Procurement Contracts, Guidelines for                                    19                      “2e-A-1” – “2e-A-3”

            Procurement Contracts and Annual Review of Open

            Procurement Service Contracts

 

f.        Annual Review and Approval of Guidelines and Procedures                               21                      “2f-A” – “2f-C”;

            for the Disposal of Real Property, Guidelines and Procedures                                                    “2f-C-1”

            for the Acquisition of Real Property and Annual Report for

            the Disposal and Acquisition of Real Property

 

g.       Annual Review and Approval of Guidelines and Procedures                               24                      “2g-A”; “2g-A-1”

            for and Annual Report of the Disposal of Personal Property

 

h.       Approval of Revised Expenditure Authorization Procedures                               26                      “2h-A”

i.         Procurement (Services) Contracts – Business Units and                                       29                      “2i-A”; “2i-B”

        Facilities – Awards and Extensions

 

j.         Robert Moses Niagara Power Project – Dam Face and                                         39

            Transformer Bay Concrete Repair – Contract Award

 

k.       Charles Poletti Power Project – Fuel Oil Yard Dike Wall                                       41

            Demolition Project – Contract Award

 

l.         Renewal of the Holtsville and Setauket Storage Agreements                              43

 

m.     Corporate Policy – Risk Management and Executive Risk                                  45                      “2m-A” – “2m-C”

            Management Committee Charter


 

Subject                                                                                                                                  Page No.               Exhibit

n.       Annual Review and Approval of Certain Authority Policies                                47                      “2n-A” – “2n-N”

o.       Ethics and Compliance Program Documents                                                          49                      “2o-A” – “2o-C”

Resolution

Discussion Agenda:                                                                                                                                 51

 

3.                   Q&A on Reports from:

a.       President and Chief Executive Officer                                                                      51                      “3a-A”

 

b.       Chief Operating Officer                                                                                               53                      “3b-A”

 

c.        Chief Financial Officer                                                                                                55                      “3c-A”

 

4.                   Power Allocations under the Recharge New York Program                                              56                      “4-A” – “4-E”

Resolution

 

5.                   Allocations of Hydropower and Notice of Public Hearing                                                63                      “5-A”; “5-A-1” –Resolution                                                                                                                                                                        “5-A-4”; “5-B”

 

6.                   Allocation of Expansion Power to Yahoo! Inc. and Notice                                              69                      “6-A”; “6-B”

of Public Hearing  

Resolution

 

7.                   2012 Financial Reports Pursuant to Section 2800 of the                                                  73                      “7-A”; “7-B”

Public Authorities Law and Regulations of the Office

of the State Comptroller

Resolution

 

8.                   Request for Proposals – Indian Point Reliability                                                                76

Contingency Plan

Resolution

 

9.                   New York Power Authority’s Annual Strategic Plan                                                          79                      “9-A”

Resolution

 

10.                Motion to Conduct an Executive Session                                                                            82

11.                Motion to Resume Meeting in Open Session                                                                       83

12.                Next Meeting                                                                                                                             84

Closing                                                                                                                                        85

 

 

                                                                                                                                                                   

 


                Minutes of the Annual Meeting of the Power Authority of the State of New York held at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York at approximately 11:00 a.m.

 

Members of the Board present were:

 

                                John R. Koelmel, Chairman

                                R. Wayne LeChase, Trustee

                                Terrance P. Flynn, Trustee

                                Joanne M. Mahoney, Trustee

 

                                Trustee Jonathan Foster – excused

                                Trustee Eugene Nicandri – 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

Joseph Kessler                                      Senior Vice President – Power Generation, Power Supply

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

Paul Tartaglia                                       Senior Vice President – Energy Resource Management

Joan Tursi                                             Senior Vice President – Corporate Support Services

Bradford Van Auken                          Senior Vice President and Chief Engineer – Operations Support Services

John Canale                                         Vice President – Project Manager

Thomas Concadoro                            Vice President and Controller

Dennis Eccleston                                 Vice President – Information Technology/Chief Information Officer

Joseph Gryzlo                                       Vice President and Chief Ethics and Compliance Officer

Michael Huvane                                  Vice President – Marketing – Business and Municipal Marketing

John Kahabka                                     Vice President – Environmental, Health and Safety

Joseph Leary                                        Vice President – Community and Government Relations

Lesly Pardo                                           Vice President – Internal Audit

Patricia Leto                                         Vice President – Procurement

John Suloway                                       Vice President – Project Development Licensing and Compliance

Karen Delince                                       Corporate Secretary

Brian McElroy                                     Treasurer

Janis Archer                                          Director – Strategy Management – Strategic Management

Patrick Donnelly                                  Director – Site Purchasing, Materials Management – Real Estate / Purchasing

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

Mike Lupo                                            Director – Marketing Analysis and Administration

Mark Malone                                       Director – Project Development and Licensing

Rod Mullin                                            Director – Fuel Planning and Operations

Michael Saltzman                               Director – Media Relations

Gerard Vincitore                                  Director – Resource Planning and Project Analysis

Lloyd Kass                                            Director/Program Manager – Build Smart NY

Eric Alemany                                       Program Manager – Energy Efficiency

Timothy Muldoon                               Manager – Business Power Allocations and Compliance

Gary Schmid                                        Manager – Network Services Infrastructure

Andrea Luongo                                    Senior Project Engineer II – Facilities Modification

Ruth Colon                                           Senior Business Integration Project Manager


 

Mark Saracino                                     Generation and Market Specialist – Energy Resource Management

George Kogut                                       Energy Market Advisor – Market Issues Group

Lorna M. Johnson                               Associate Corporate Secretary

Sheila Baughman                                                Assistant Corporate Secretary

                               

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

 


Introduction

                Chairman Koelmel 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 March 21, 2013 Proposed Meeting Agenda

                On motion made and seconded, the meeting Agenda was adopted.  Chairman Koelmel stated that Item #4 (Power Allocations under the Recharge New York Program), was recommended for approval by the Economic Development Power Allocation Board at their meeting on March 20th.

 


 

2.                   Consent Agenda:               

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

                Before the vote on the Consent Agenda, Mr. Michael Huvane said staff wanted to make some clarifications to exhibit 2b (Proposed Direct Sale Contract for the Sale of Western New York Hydropower – Notice of Public Hearing).  The exhibit indicated that the sites for the expansion projects for BlackRock Inc. and Nulife Glass Processing Ltd. were “to be determined.”  Nulife Glass has recently located a site for its expansion project in Dunkirk, Chautauqua County; staff is requesting that the recommendation for the public hearing for the allocation to BlackRock Inc. be contingent on the company locating a site for its expansion project.  Staff is also requesting that the recommendation for a public hearing for the allocation to Yahoo!, Inc. be withdrawn.

                Also with respect to item #2b, Trustee LeChase said M&T Bank is his personal business bank; however, he will vote in favor of staff’s recommendation.  Since Trustee Flynn filed a conflict of interest with respect to M&T Bank, the Consent Agenda was approved with the exclusion of M&T Bank because the conflict resulted in a failure to attain the required number of votes necessary for its approval. 

                With respect to item 2j (Charles Poletti Power Project – Fuel Oil Yard Dike Wall Demolition Project – Contract Award), Trustee LeChase said he wanted to disclose that his company had subcontracted with Crane Hogan Structural System, Inc. in the past; however, he would vote in favor of staff’s recommendation.


 

a.       Approval of the Minutes

                The Minutes of the Regular Meeting held on February 26, 2013 were unanimously adopted.


 

b.       Proposed Direct Sale Contract for the

Sale of Western New York Hydropower –

                        Notice of Public Hearing                                

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize a public hearing, pursuant to Section 1009 of the New York Public Authorities Law (‘PAL’), to approve a proposed form of contract applicable to certain Expansion Power (‘EP’) and Replacement Power (‘RP’) customers requiring a direct sale contract for the sale of hydropower commencing on or after July 1, 2013.  These customers were previously awarded allocations, the terms of which will commence upon completion of the facility expansions they agreed to undertake.  The form of the proposed direct sale contract is attached as Exhibit ‘2b-A,’ and the list of the customers that require such contracts, along with the respective allocations and supplemental commitments applicable to the allocations, is attached as Exhibit ‘2b-B.’

 

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 expire on June 30, 2013, and the Authority has made arrangements to continue the sale of the EP and RP allocations under a direct sale contract with each of the 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 governing all EP and RP sales commencing July 1, 2013, Service Tariff No. WNY-1 (‘ST WNY-1’), which modified the production rate for EP and RP by applying a three-year phase-in to a specified target rate which is based on the Authority’s Preservation Power rate.

 

“The form of contract proposed in this item would apply to seven pending EP and RP allocations to seven companies.  These companies did not receive long-term contract extensions as part of the initiative identified above because the allocations were awarded after the period when the Authority offered long-term extensions.  As a result, these companies need a direct sale contract under which the Authority could sell their allocations of power and energy when they complete their expansion projects. 

 

“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. 

 

DISCUSSION

 

                “The following is a summary of some pertinent provisions of the proposed form of contract:

 

·         Consistent with other recent direct sale contracts that the Trustees have approved, this contract 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. 

 

·         Each contract would include each customer’s previously agreed-upon supplemental commitments (to be included in a schedule attached to each contract) with respect to employment, power utilization and capital investment.  The Authority would retain the right to reduce or terminate the customers’ allocations if employment, power utilization or capital investment commitments are not met, as provided for in these commitments. 

 

·         Another contract feature includes the ability to award additional allocations of EP or RP to the customer 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, and it is appropriate to be included here as it would simplify contract administration.

 

·         To accommodate non-payment risk that could result from a direct billing arrangement with the Authority, the contract includes commercially reasonable provisions concerning, among other things, the ability to require deposits in the event the customer fails 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 is in the process of discussing the proposed contract with the customers and anticipates receiving customer approval, especially given that each customer’s supplemental commitments will not change from that originally approved by the Trustees.  Notably, these customers’ service will commence on or after July 1, 2013 under ST WNY-1 rates consistent with all other EP and RP customers taking such service at such time.

 

“As required by PAL §1009, when the Authority believes it has reached an agreement with its co-party, it is required to transmit the proposed contract to the Governor and other elected officials, and hold a public hearing on the 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 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.

 

FISCAL INFORMATION

 

                “As stated above, the allocations associated with the proposed form of contract will be served commencing on or after July 1, 2013 in accordance with ST WNY-1, which specifies a three-year rate phase-in to a target rate that is based on the Authority’s Preservation Power rate.  The impact of the fully implemented phase-in, absent the effects of the annual adjustment factor, would produce additional annual revenues.

 

RECOMMENDATION

               

“The Manager – Business Power Allocations and Compliance recommends that the Trustees authorize the Corporate Secretary to convene a public hearing on the form of the proposed contract with Replacement Power and Expansion Power customers and transmit copies of such proposed form of contract to the Governor and legislative leaders pursuant to PAL §1009.  Staff will report to the Board of Trustees on the public hearing and the contracts and at that time make additional recommendations regarding the proposed contracts.

 

“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 Trustees hereby authorize a public hearing on the terms of the proposed form of direct sale contract for the sale of hydropower and energy generated by the New York Power Authority commencing on or after July 1, 2013 for certain Replacement Power and Expansion Power customers, 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 form of contract 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 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.        Replacement Power Allocation Extensions

and Proposed Direct Sale Contracts –

Notice of Public Hearing                                

 

The President and Chief Executive Officer submitted the following report:

 

Summary

 

“The Trustees are requested to approve extensions to the terms of service for five allocations of Replacement Power (‘RP’) totaling 4,950 kW to the three companies listed in Exhibit ‘2c-A,’ all of whom are existing customers, and to authorize a public hearing, pursuant to Section 1009 of the New York Public Authorities Law (‘PAL’), to approve a proposed form of direct sale contract applicable to these customers’ RP allocations, the form of which is attached as Exhibit ‘2c-B.’  In return for these allocation extensions, the companies will commit to capital investment in their facilities of $3.45 million over 5 years and the retention of 93 jobs in Western New York.  In addition, the Trustees are requested to approve the transfer of one of these allocations to a newly named corporate entity as described herein.

 

BACKGROUND

 

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

 

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

 

“PAL § 005(13)(a) was used as a guide in evaluating whether to recommend that extensions be approved for these allocations.  Staff looked at similar factors including the current and historical employment levels, capital investments made in the facilities over the recent past and planned future capital spending, the significance of electricity costs to the businesses’ cost of operations, and the companies’ demonstration of economic impact and long-term commitment to the region.

 

“The Trustees have approved extensions of hydropower allocations in the past, for both individual allocation term expirations as well as in large ‘en masse’ projects such as the 2010 Western New York long-term agreement process (‘WNY LTA’).  The WNY LTA resulted in 105 hydropower customers holding 185 allocations being extended from their existing term end dates in 2013 to, in most cases, 2020 (seven years).  During the process, the Trustees also approved the new Service Tariff WNY-1 (‘ST WNY-1’) effectuating the rates, terms and conditions under which all EP and RP allocations will be sold commencing July 1, 2013. 

 

“In exchange for the long-term allocation extensions, customers made commitments that were incorporated in a publicly noticed, Trustee and governor approved contract form.  Each company agreed, not only to maintain specified employment levels, but also to annual capital expenditures to ensure that the customers continue to invest in their Western New York facilities while receiving the benefits of the low-cost hydropower. 

 

“The companies being recommended were reviewed consistent with the 2010 WNY LTA process and will be held to similar contractual requirements as discussed herein.  The requested RP allocation extensions, as described below, will help maintain costs and enable these companies to remain competitive and further secure employment levels in Western New York.

 


 

DISCUSSION

 

Ceres Crystal Industries, Inc.

 

“Ceres Crystal Industries, Inc. (‘Ceres’), located in Niagara Falls (Niagara County), was founded in 1976. The company manufactures artificial gemstone rough for use in jewelry and optical devices.  Ceres manufactures Cubic Zirconia products using specialized knowledge in very high temperature crystal growth and has also developed and sells diamond and moissanite electronic testing instruments.  Ceres manufactures its products utilizing labor, local suppliers, services and contractors in New York State. These products are then sold throughout the world, with 95 percent being exported out of the United States.

 

“The company failed to request an extension for its three RP allocations totaling 4,600 kW during the WNY LTA process, which has caused the allocations’ original terms to lapse.  Service of the allocations are being made on a month-to-month basis under the terms of the existing third-party resale agreement with National Grid until a determination is made by the Trustees regarding the extension.

 

“Since 2008, Ceres has invested more than $8.5 million in facility expansion and new equipment purchases at its Liberty Drive facility, of which nearly 50% was sourced in New York State.  During the next two years, capital plans include further building expansion and equipment purchases as the company continues to develop new products and global markets.  Although impacted by the 2009 recession and lingering effects on the world economy, Ceres has been able to consistently increase employment, seeing a 31 percent increase from 2010 to 2011.  With continued support of low-cost power, the company anticipates further employment increases in the next few years. 

 

“The RP contract extension is considered a necessity for Ceres to remain viable.  Twenty percent of its operating expenses are dedicated to electric costs.  The loss of the hydropower allocations would reduce the company’s competitive position as it competes with low-cost labor in China and other Asian countries.  It could also have a negative impact on expansion, new equipment investment and employment growth potential.

 

“Staff recommends that the Trustees approve extensions of the terms of service for the three RP allocations totaling 4,600 kW until June 30, 2018.  In return, Ceres commits to maintain an employment level of 50 jobs and invest $200,000 annually in its Buffalo facility over the next 5 years.

 

Delaco AMTB, LLC (formerly DLWB, LLC)

 

                “Delaco AMTB, LLC (‘Delaco’), located in Tonawanda (Erie County), is a steel parts supplier of blanked material to the automotive industry.  A minority business enterprise, Delaco specializes in laser welding and provides 130,000 blanks per month, or more than one million parts per year, directly to the Ford Buffalo Stamping Plant in Hamburg, Erie County.

 

                “Formerly known as Noble Metal Processing, ownership of the facility was obtained by Delaco Steel Corporation in 2009 when Noble filed for bankruptcy.  In April 2009, a new subsidiary named DLWB, LLC was created for the acquisition and in December 2009, the Trustees authorized the transfer of the allocation to the new subsidiary – DLWB, LLC.  In June 2010, ArcelorMittal Tailored Blanks purchased a minority interest in DLWB, LLC.  The Tonawanda facility’s business name was changed once again to Delaco AMTB, LLC to accommodate this corporate restructuring which has since remained the same.

 

“Delaco failed to request an extension for its 250 kW RP allocation during the WNY LTA process, which occurred at the same time as the bankruptcy proceedings.  This failure caused the allocation’s original term to lapse and service of the allocation is suspended until a determination is made by the Trustees regarding the extension.  Delaco has requested that the Trustees approve transferring the allocation to the new corporate entity name in the event it is approved for an extension.  The company continues to make the same products at the same facility as was originally approved by the Trustees.

 

                “As a steel products supplier to the competitive automotive industry, Delaco has to invest heavily in capital equipment to maintain cost-efficient production.  In late 2009, the company purchased an additional laser system to support its growing business; investing $600,000.  By the end of 2010, an additional $100,000 investment was made to upgrade the current system to give the plant capacity to take on a new platform from Ford of more than 650,000 additional parts, providing new jobs and requiring three shifts of operation in the plant’s laser welding operation.  In December 2012, Delaco invested and installed a new fiber optic laser, a $500,000 investment made in new technology to attract longer term contracts with customers. 

 

“The hydro allocation is critical to Delaco, as power costs amount to a significant portion of total operating expenses and the hydropower allocation offers a critical advantage in keeping costs down versus their competitors.  The company also impacts its sister facility adjacent to the Tonawanda plant and is an important supplier to the nearby Ford stamping plant, highlighting the inter-related nature of the regional automotive supply chain and the significance of this allocation to Delaco’s continued success.

 

                “Staff recommends that the Trustees approve an extension of the term of service for the 250 kW RP allocation until June 30, 2018 and to formally approve transferring the allocation to Delaco AMTB, LLC.  In return, Delaco commits to maintain an employment level of 16 jobs and invest $485,000 annually in its Tonawanda facility over the next five years.

 

Hammond Manufacturing Company, Inc.

 

                “Hammond Manufacturing Company, Inc. (‘Hammond’) produces outlet strips and electronic transformers at its facility in Cheektowaga, Erie County.  The company was incorporated in New York State in 1982 and sells its products to direct customers and through a global network of distributors.  Hammond’s corporate offices are located in Ontario, Canada, and the company brought manufacturing from Ontario to the plant in Cheektowaga in 2007.

 

                “The company failed to request an extension of its 100 kW RP allocation during the WNY LTA process, which has caused the allocation’s original term to lapse.  Service of the allocation is being made on a month-to-month basis under the terms of the existing third-party resale agreement with National Grid until a determination is made by the Trustees regarding the extension.

 

                “Since opening the plant, Hammond has expanded its operations and purchased five new injection molding machines.  This expansion was commensurate with approximately 50% increase in employment.  The company has no more room to grow in this facility, which it is leasing through August 2015.  The company is considering options to move to, or build a larger facility that would enable future growth.  The low-cost hydropower allocation is an important factor as it considers future growth in Erie County.

 

“Staff recommends that the Trustees approve an extension of the term of service for the 100 kW RP allocation until June 30, 2018.  In return, Hammond commits to maintain an employment level of 27 jobs and to invest $5,000 annually in its Cheektowaga operations over the next 5 years.

 

CONTRACT INFORMATION

 

“The form of the proposed direct sale contract for the allocation extensions would be the same as the direct sale contracts for the sale of EP and RP recently approved by the Trustees.  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 the proposed form of contract:

 

• Consistent with other recent direct sale contracts that the Trustees have approved, this contract 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. 

 

• Each contract would include each customer’s agreed-upon supplemental commitments (to be included in a schedule attached to each contract) with respect to employment, power utilization and capital investment.  Because these contracts are for allocation extensions, the original expansion project capital investments have already been made.  Thus the companies are committing to annual capital expenditures to maintain their facilities and operations over the new term of the allocations, in a manner consistent with the WNY LTA agreements.  The Authority would retain the right to reduce or terminate customers’ allocations if employment, power utilization or capital investment commitments are not met, as provided for in these contracts. 

 

• Another contract feature includes the ability to award additional allocations of EP or RP to the customer at the same facility, which would be incorporated into modified or additional schedules of the contracts.  The Trustees approved this convention in the 2010 WNY LTA contracts, and it is appropriate to be included here as it would simplify contract administration.

 

• To accommodate non-payment risk that could result from a direct billing arrangement with the Authority, the contract includes commercially reasonable provisions concerning, among other things, the ability to require deposits in the event of customer 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 is in the process of discussing the proposed contract with these customers and anticipates receiving customer approval, especially given that each requires the new contract extension form in order to continue receiving the benefit of the hydropower allocations.  Notably, the contracts will allow these customers’ service to commence on or after July 1, 2013 under ST WNY-1 rates consistent with all other EP and RP customers taking such service at such time.

 

“As required by PAL §1009, when the Authority believes it has reached agreement with its co-party, it is required to transmit the proposed contract to the Governor and other elected officials, and hold a public hearing on the 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 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.

 

RECOMMENDATION

 

“The Manager – Business Power Allocations and Compliance recommends that the Trustees approve extensions to the terms of service for five allocations of Replacement Power totaling 4,950 kW to the three companies as described in Exhibit ‘2c-A’ and to approve the transfer of DLWB, LLC’s 250 kW allocation to the newly named corporate entity Delaco AMTB, LLC as described herein.  The Trustees are also requested to authorize the Corporate Secretary to convene a public hearing on the form of the proposed direct sale contract with these Replacement Power customers, and transmit copies of such proposed form of the contract to the Governor and legislative leaders pursuant to PAL §1009.  Staff will report to the Board of Trustees on the public hearing and the contracts and at that time make additional recommendations regarding the proposed contracts.

 

“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 Trustees find that staff’s review supports an extension to the terms of service for five allocations of Replacement Power, totaling 4,950 kW, to three companies as detailed in Exhibit “2c-A,” that is hereby approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further 

 


 

RESOLVED, That the Authority hereby authorizes the transfer of the 250 kW Replacement Power allocation formerly held by DLWB, LLC, to Delaco AMTB, LLC in accordance with the terms described 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 generated by the New York Power Authority to Ceres Crystal Industries, Inc., Delaco AMTB, LLC, and Hammond Manufacturing Company, Inc., 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 §1009 of the Public Authorities Law; 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 in accordance with the provisions of §1009 of the Public Authorities Law; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all 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.


 

d.       Annual Review and Approval of Guidelines

for the Investment of Funds and 2012 Annual

Report on Investment of Authority Funds        

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to review and approve the attached 2012 Annual Report on Investment of Authority Funds which includes the Guidelines for the Investment of Funds (Exhibit ‘2d-A’).

 

 BACKGROUND

 

                “Section 2925 of the Public Authorities Law requires the review and approval of an annual report on investments.  Pursuant to the statute, the attached report includes Investment Guidelines that set standards for the management and control of the Authority’s investments; total investment income; a statement of fees paid for investment management services; the results of an independent audit; a detailed inventory report for each of the Authority’s investment portfolios as of December 31, 2012; and a summary of transactions with brokers, dealers and banks.  The approved annual report is filed with the State Division of the Budget, with copies to the Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee.  The report is also available to the public upon written reasonable request. 

 

DISCUSSION

 

                “In 2012, the Authority’s investment portfolios, exclusive of the separately managed Other Post-Employment Benefits Trust Fund and Nuclear Decommissioning Trust Fund, averaged $1.31 billion with a December 31, 2012 cost of $1.391 billion and market value of $1.415 billion, representing a positive mark-to-market of $23.73 million.  At year-end, $1.35 billion in cash and investments was held in the Authority’s Operating Fund with the remainder held in construction funds and restricted funds.  The Operating Fund was created by the Authority’s General Resolution authorizing Revenue Obligations adopted on February 24, 1998.  A number of internal reserves have been established within the Operating Fund, as follows (year-end balances noted in parentheses):

 

·         Debt Service Reserve ($72 million) – The Debt Service Reserve is funded monthly to ensure that sufficient amounts are available to pay debt service obligations when due.  The Authority’s scheduled principal and interest payments presently total approximately $150 - $175 million per year.  

 

·         Energy Hedging/Fuel Reserve ($72 million) – This Reserve was established to have funds available for use as collateral that may be required to support the Authority’s authorized fuel and energy hedging transactions and to maintain funds to match a federal obligation to pay for the processing and final disposition of spent nuclear fuel burned by the Authority when it owned the Indian Point #3 and James A. FitzPatrick nuclear plants.  On February 3, 2009, the Trustees approved the temporary transfer to the State of New York (‘State’) of $215 million held in this Reserve for the spent fuel obligation to assist with the State’s budgetary deficits.  The temporary asset transfer was completed on February 25, 2009 and, in accordance with the terms and conditions of a Memorandum of Understanding between the NYS Director of the Division of Budget and the Authority, is due to be returned to the Authority no later than September 30, 2017.  The December 31, 2012 spent fuel obligation was $217 million.

 

·         Capital Project Reserve ($898 million) – This amount is being set aside to partially fund  major new investments in energy infrastructure by the Authority.  In order to minimize customer costs, maintain the Authority’s financial metrics and maintain ready access to the capital markets, it has been determined that the next major investment should be financed with a portion funded by debt and a portion funded by Authority cash or, in effect, its ‘equity.’  This Reserve has been established to provide this equity.  On February 3, 2009, the Trustees approved a temporary transfer of $103 million from the Capital Project Reserve to the State to assist with the State’s budgetary deficits and reaffirmed the transfer on July 28, 2009.   The temporary asset transfer was completed in September 2009, and in accordance with the terms and conditions of a Memorandum of Understanding between the NYS Director of the Division of Budget and the Authority, is due to be returned to the Authority no later than September 30, 2014.   

 

·         Western New York Economic Development Fund (‘WNYEDF’) ($20 million) – On March 30, 2012, Governor Cuomo signed into law the Western New York Power Proceeds Allocation Act (the ‘Act’), which directs net earnings from the sale of unallocated Expansion Power and Replacement Power from the Authority’s Niagara power project to be deposited into the WNYEDF.  At their meeting on June 26, 2012, the Trustees approved the funding of up to $20 million in support of WNYEDF benefits for the period August 31, 2010 through December 31, 2012.  The net earnings deposited into the WNYEDF will be utilized to fund economic development projects by private businesses, including not-for-profits, which are physically located within New York State and within a thirty-mile radius of the Niagara power project.  As of December 31, 2012, $18 million has been deposited into the fund with the additional $2 million that had been accrued deposited into the fund in January 2013.

 

·            Operating Reserve ($288 million) – The Operating Reserve includes a reserve for working capital and emergency repairs to the Authority’s projects.  The Authority’s Trustees have established a minimum reserve amount of $175 million for this purpose and funds cannot be released for ‘any lawful corporate purpose’ (pursuant to Section 503(1)(e) of the Bond Resolution) unless this minimum reserve level is satisfied.  The December 31, 2012 Operating Reserve of $288 million reflects this $175 million minimum, plus the amount staff deems prudent to provide for uncertainties in cash flows and commitments related to certain statewide economic development programs.   

 

“In addition to the Operating Fund, as of December 31, 2012, the Authority separately held a total of $80 million from the proceeds of bond and note issuances, and cash, in its Note Debt Reserve and Construction portfolios.  These funds are earmarked for construction projects currently under way, such as the St. Lawrence Life Extension and Modernization Project and improvements pursuant to the Niagara Relicensing Settlement Agreements.

 

“The Authority’s portfolios earned approximately $26 million in investment income in 2012, the same level of investment income as in 2011.  While the portfolios generated additional income in 2012 on net new cash invested, the prolonged low interest rate environment reduced the earning on maturing securities invested in lower yielding instruments.  In 2012, the Authority’s portfolios had an average yield of 1.84%, exceeding the Authority’s targeted performance by 15 basis points (15/100 of 1%).  Targeted performance for 2012 was the three-year rolling average yield of the two-year Treasury note with an average added spread of 112 basis points.

               

“As of December 31, 2012, the portfolio was comprised of United States treasury securities (1.2%), government-sponsored agency securities (85.5%), municipal securities (7.0%), mortgages guaranteed by the U. S. government (2.4%) and certificates of deposit and repurchase agreements (3.9%).

 

Other Post-Employment Benefits Trust

 

                “The Authority’s Other Post-Employment Benefits Trust (‘OPEB Trust’) was established in 2007 as authorized by the Authority’s Trustees at their December 19, 2006 meeting to provide for medical, prescription drug, life and other long-term care benefits offered by the Authority for retirees and eligible beneficiaries.  The OPEB Trust allows for investments in a diversified portfolio of assets, including domestic and international equity securities, domestic and international fixed-income securities, public Real Estate Investment Trusts and a U. S. Treasury Money Market fund.  During 2007 and 2008, the Authority deposited a total of $225 million into the OPEB Trust to partially fund its actuarial accrued liability which, at December 31, 2012, is estimated to be $544 million.  On October 25, 2011, the Authority’s Trustees approved on-going annual funding of the OPEB Trust in order to strengthen the Authority’s financial position.  A contribution of $40 million was made to the OPEB Trust in November, 2011 which represented the net obligation for the years 2009 through 2011.  An additional contribution of $22 million was made to the OPEB Trust in December, 2012 which represents the net obligation for that year.

 

                “As of December 31, 2012, the OPEB Trust’s market value was approximately $341 million, representing an annualized return of 13.60% for 2012.  The return performance was attributable to positive returns in all asset classes; however real estate and international equity were the largest contributors to performance.

 

                “Investment management and advisory fees associated with the OPEB Trust Fund totaled $1,323,953 in 2012 and were paid from such Trust Fund.  These fees and the firms paid are detailed in Section III (B) of the attached report.

 

Nuclear Decommissioning Trust

 

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

 

                “As of December 31, 2012, the Nuclear Decommissioning Trust’s (‘NDT’) market value was approximately $1.19 billion, representing an annualized return of 9.00% for 2012.  The return performance was primarily attributable to positive returns in the domestic equity asset class, which in accordance with the investment guidelines, has a target allocation of thirty-five percent of total assets.  The equity asset class outperformed the fixed income asset class in 2012, however both contributed to the NDT’s positive performance for the year.

 

                “Investment management and advisory fees associated with the Nuclear Decommissioning Trust Fund totaled $1,466,399 in 2012 and were paid from such Trust Fund.  These fees and the firms paid are detailed in Section III (C) of the attached report. 

 

                “In connection with its examination of the Authority’s financial statements, KPMG LLP (‘KPMG’) performed tests of the Authority’s compliance with certain provisions of the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.  Based on discussions with KPMG, staff is of the opinion that KPMG’s written report, which will be delivered upon approval of the financial statements by the Board, will state that the Authority complied, in all material respects, with the requirements during the year ended December 31, 2012.  Consequently, staff believes the Authority is in compliance with the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.

 

“The Investment Guidelines and procedures have not been amended since last presented to and approved by the Trustees at their meeting of March 27, 2012.  The Guidelines remain fundamentally sound and meet the requirements of the Authority.  Furthermore, these Guidelines continue to meet the requirements of Section 2824(1)(e) of the Public Authorities Law, which requires the Authority’s Trustees to establish written policies and procedures with respect to investments.

 

RECOMMENDATION

 

                “The Treasurer recommends that the Trustees approve the attached 2012 Annual Report on Investment of Authority Funds.

 

                “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 2012 Annual Report on Investment of Authority Funds be, and hereby is, approved; and be it further

 

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

 

 

 

 


 

e.        Annual Report of Procurement Contracts,

Guidelines for Procurement Contracts and Annual

Review of Open Procurement Service Contracts     

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve the 2012 Annual Report of Procurement Contracts (‘Annual Report’) (Exhibit ‘2e-A-3’) and the Guidelines for Procurement Contracts (‘Guidelines’) (Exhibit ‘2e-A-2’) and to review open service contracts exceeding one year that were active in 2012 as detailed in the Annual Report (Exhibit ‘2e-A-3’).  An Executive Summary is set forth in Exhibit ‘2e-A-1.’

 

BACKGROUND

 

                “Section 2879 of the Public Authorities Law (‘PAL’) governs the administration and award of procurement contracts equal to or greater than $5,000.  Section 2879 of the PAL requires public authorities to adopt comprehensive guidelines detailing their operative policy and instructions concerning the use, awarding, monitoring and reporting of procurement contracts.  The Authority’s Guidelines were adopted by the Trustees at their meeting of October 31, 1989 and were implemented as of January 1, 1990.  The Guidelines have been amended as deemed advisable and necessary, and reviewed and approved annually since that date, most recently on March 27, 2012.

 

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

 

[A] listing of all procurement contracts entered into [by the Authority], all contracts entered into with New York State business enterprises and the subject matter and value thereof, all contracts entered into with certified minority or women-owned business enterprises and the subject matter and value thereof, all referrals made and all penalties imposed pursuant to section three hundred sixteen of the executive law, all contracts entered into with foreign business enterprises, and the subject matter and value thereof, the selection process used to select such contractors, all procurement contracts which were exempt from the publication requirements of article four-C of the economic development law, the basis for any such exemption and the status of existing procurement contracts.

 

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

 

DISCUSSION

 

                “The 2012 Annual Report is attached for the Trustees’ review and approval (Exhibit ‘2e-A-3’).  The Annual Report reflects activity for all procurement contracts equal to or greater than $5,000, as identified by the Authority’s SAP computer system, that were open, closed or awarded in 2012, including contracts awarded in 1990 through 2012 that were completed in 2012 or were extended into 2013 and beyond.  In addition, fossil fuels transactions reported by the Fuels Planning and Operations group and financial-related services reported by Corporate Finance (of the Energy Resource Management and Business Services Business Units, respectively), are included in the Annual Report of Procurement Contracts.  All additional information required by the statute is also included.  The Trustees are requested to approve the attached Annual Report pursuant to §2879 of the PAL prior to submittal thereof to the Director of the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee, the Assembly Ways and Means Committee and the Authorities Budget Office.

 

                “A copy of the Guidelines, effective March 31, 2013, (Exhibit ‘2e-A-2’) is attached to the Annual Report.  These Guidelines are amended in accordance with Public Authorities Law §2987 and also with provisions of Chapter 399, Part A, Section 4 of the Laws of 2011,  as further set forth in Exhibit ‘2e-A-1.’

 

“The Guidelines generally describe the Authority’s process for soliciting proposals and awarding contracts.  Topics detailed in the Guidelines include solicitation requirements, evaluation criteria, contract award process, contract provisions, change orders, Minority/Women Business Enterprise (‘M/WBE’) requirements, employment of former officers and reporting requirements.

 

RECOMMENDATION

 

                “The Senior Vice President – Corporate Support Services and the Vice President – Procurement recommend that the Trustees approve the 2012 Annual Report of Procurement Contracts, the Guidelines for Procurement Contracts and the review of open service contracts as attached hereto in Exhibits ‘2e-A-1’ through ‘2e-A-3.’

 

“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 §2879 of the Public Authorities Law and the Authority’s Procurement Guidelines, the Annual Report of Procurement Contracts, as listed in Exhibit “2e-A-3,” and the Guidelines for the use, awarding, monitoring and reporting of Procurement Contracts (Exhibit “2e-A-2”), as amended and attached hereto, be, and hereby are, approved; and be it further

 

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

 

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

 

 


 

f.        Annual Review and Approval of Guidelines and

Procedures for the Disposal of Real Property,

Guidelines and Procedures for the Acquisition of

Real Property and Annual Reports for the

Disposal and Acquisition of Real Property            

                                               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

                “The Trustees are requested to review and approve the following, which comply with the requirements of the Public Authorities Accountability Act of 2005 (‘PAAA’) as amended by the Public Authorities Reform Act, Chapter 506 of the Laws of 2009: (1) 2013 Guidelines and Procedures for the Disposal of Real Property (‘Real Property Disposal Guidelines’) for transfers of land or interests in land; and (2) 2013 Guidelines and Procedures for the Acquisition of Real Property (‘Real Property Acquisition Guidelines’).  The Guidelines are set forth in Exhibits               ‘2f-A’ and ‘2f-B’ attached hereto.  In addition, the Trustees are also requested to review and approve the 2012 Annual Report of the Disposal of Real Property set forth in Exhibit ‘2f-C’ attached hereto, and the 2012 Annual Report of the Acquisition of Real Property set forth in Exhibit ‘2f-C-1’ attached hereto.

 

BACKGROUND

               

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

 

DISCUSSION

               

“The 2013 Real Property Disposal Guidelines and the 2013 Real Property Acquisition Guidelines set forth the methodology detailing the Authority’s policy regarding the use, award, monitoring and reporting of contracts for the disposal and acquisition of real property and designate a Contracting Officer responsible for the Authority’s compliance with, and enforcement of, such Guidelines.  At their meeting of March 27, 2012, the Trustees reviewed and approved the Authority’s 2012 Guidelines and Procedures for the Disposal of Real Property (Real Property Disposal Guidelines) and the 2012 Guidelines and Procedures for the Acquisition of Real Property (Real Property Acquisitions  Guidelines). 

 

                “There are no changes in the 2013 Real Property Acquisition Guidelines.  The 2013 Real Property Disposal Guidelines have been revised as follows: the definitions under Section II have been amended for clarity; paragraph 5.7 has been deleted and its material terms incorporated into paragraph 2.2.

 

                “The Real Property Disposal Report lists the real property disposal transactions conducted during the reporting period having an estimated fair market value in excess of $15,000, including a description of the property, the purchaser’s name and the price received by the Authority, as required by New York Public Authorities Law §2800.  The Real Property Acquisition Report lists the real property acquisition transactions conducted during the reporting period having an estimated fair market value in excess of $15,000, including a description of the property, the seller’s name and the price received by the Authority, as required by the New York Public Authorities Law §2800.  During this reporting period there were no acquisitions of real property with an estimated fair market value in excess of $15,000.00.  During this reporting period there were two disposals of real property with an estimated fair market value in excess of $15,000.00.

 

                “These acquisitions and dispositions were among those reviewed and approved by the Authority’s Governance Committee at their meeting of March 21, 2013.  The Trustees are now requested to review and approve the Authority’s 2013 Annual Report of the Disposal of Real Property and the Authority’s 2013 Annual Report of the Acquisition of Real Property. 

 

                “The 2013 Real Property Disposal Guidelines and the 2013 Real Property Acquisition Guidelines, if approved, will be posted on the Authority’s internet Web site.  On or before the 31st day of March, the  Real Property Disposal Guidelines, the Real Property Acquisition Guidelines and the corresponding 2012 Annual Reports, as reviewed and approved by the Trustees, will be filed with the State Comptroller, the Director of the Budget, the Commissioner of General Services, the State Legislature and the Authorities Budget Office.  The 2012 Annual Reports will also be posted on the Authority’s internet website.

 

FISCAL INFORMATION

 

                “There will be no financial impact on the Authority.

 

RECOMMENDATION

 

                “The Senior Vice President – Corporate Support Services and the Director of Real Estate recommend that the Trustees approve the amended Guidelines and Procedures for the Disposal of Real Property; the Guidelines and Procedures for the Acquisition of Real Property; the 2012 Annual Report of the Disposal of Real Property and 2012 Annual Report of the Acquisition of Real Property as set forth in the attached 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 unanimously adopted.

 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, as amended by the Public Authorities Reform Act, Chapter 506 of the Laws of 2009, the Authority hereby reviews and approves the 2013 Guidelines and Procedures for the Disposal of Real Property and the 2013 Guidelines and Procedures for the Acquisition of Real Property as set forth in Exhibits “2f-A” and “2f-B” attached hereto; and be it further

 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, as amended by the Public Authorities Reform Act, Chapter 506 of the Laws of 2009, the Authority hereby reviews and approves the 2012 Annual Report for the Disposal of Real Property and the 2012 Annual Report of the Acquisition of Real Property as set forth in Exhibit “2f-C” attached hereto; and be it further

 

RESOLVED, That Authority staff may take any and all steps necessary or convenient to implement such Guidelines; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officer 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.       Annual Review and Approval of Guidelines

and Procedures for and Annual Report of

                        the Disposal of Personal Property____        

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to review and approve the Guidelines and Procedures for the Disposal of Personal Property (‘Personal Property Guidelines’), which address the disposal of Authority-owned materials, tools, equipment and vehicles with a value in excess of $5,000, in compliance with Public Authorities Law §2896, enacted as part of the Public Authorities Accountability Act of 2005 (‘PAAA’) and amended by the Public Authorities Reform Act of 2009 (‘PARA’).  The Personal Property Guidelines are attached hereto as Exhibit ‘2g-A.’  The Trustees are also requested to review and approve the 2012 Annual Report of the Disposal of Personal Property, attached hereto as Exhibit ‘2g-A-1.’

 

BACKGROUND

 

“On January 13, 2006, the PAAA was enacted to codify model governance principles for New York State’s public authorities to further accountability and transparency.  Among its provisions, the PAAA, and as later amended by PARA, established requirements for the disposal of public authority personal property.  The law also required each authority to draft guidelines consistent with the legislation dealing with these issues, to review and approve such guidelines annually and to prepare an annual report of the disposal of personal property (including the full description, name of the purchaser and price received for all such property disposed of by the authority during such period).  Such Guidelines were initially approved by the Trustees at their meeting of March 28, 2006 and have been amended as deemed advisable and necessary, and reviewed and approved annually since that date, most recently on March 27, 2012.

 

DISCUSSION

 

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

 

“Staff has reviewed the Personal Property Guidelines and recommends no substantive changes.  Several non-substantive changes were made to the Guidelines to clarify a few points and to reflect titular or organizational changes in the Authority, as set forth in the redlined copy attached hereto as Exhibit ‘2g-A.’

 

“Upon annual review and approval by the Trustees, the Guidelines and corresponding Annual Report will be filed on or before the 31st day of March with the State Comptroller, the Director of the Division of the Budget, the Commissioner of General Services, the State Legislature and the Authorities Budget Office and posted on the Authority’s internet website, in compliance with applicable law and the Guidelines.

 

FISCAL INFORMATION

 

“There will be no financial impact on the Authority.

 

RECOMMENDATION

 

“The Senior Vice President – Corporate Support Services and the Vice President – Procurement recommend that the Trustees approve the Guidelines and Procedures for the Disposal of Personal Property for the disposition of Authority-owned materials, tools, equipment, and vehicles with a value in excess $5,000, and the corresponding 2012 Annual Report of the Disposal of Personal Property, as set forth in Exhibits ‘2g-A’ and ‘2g-A-1,’ respectively.

 

“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 provisions of the Public Authorities Law, the Authority hereby reviews and approves the Guidelines and Procedures for the Disposal of Personal Property, as set forth in Exhibit “2g-A” and attached hereto; and be it further

 

RESOLVED, That pursuant to the provisions of the Public Authorities Law, the Authority hereby reviews and approves the 2012 Annual Report for the Disposal of Personal Property, as set forth in Exhibit “2g-A-1” and attached hereto; and be it further

 

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

 


 

h.       Approval of Revised Expenditure Authorization Procedures

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve revised Expenditure Authorization Procedures (‘EAPs’) governing Procurement and Real Estate pursuant to Article VII, Section 5 of the Authority’s By-Laws. 

 

                “The Trustees are also requested to continue the delegation to the Chairman of the Authority to modify existing authorization and execution limits of the EAPs relating to commitments for the approval of, award of, and change orders to, contracts that do not require approval by the Trustees.

 

BACKGROUND

 

                “Article VII, Section 5 of the Authority’s By-Laws requires that the Trustees adopt expenditure authorization procedures which, among other things, govern contract approval authorizations and executions, delegation of approval for claims settlements and payment for real estate.

 

                “At a meeting held on December 19, 1991, the Trustees ‘delegated to the Chairman the authority to modify existing authorization and execution limits relating to the commitments for the approval of, award of, and change orders to contracts which do not require approval by the Trustees.’  At a meeting held on March 31, 2009, the Trustees approved the continuation of such authority, as well as certain modifications to the EAPs governing Procurement and Real Estate.

 

                “The EAPs were last revised in 2010 with the Chairman’s approval.

 

DISCUSSION

 

                “Since the full Board of Trustees has not adopted EAPs since March 2009, good governance dictates that these revised EAPs (attached as Exhibit ‘2h-A’) be presented for Board approval.  The Governance Committee, at its meeting held on March 21, 2013, reviewed the proposed modifications to the EAPs and recommended adoption by the full Board.

 

                “Staff has identified the need to authorize certain additional levels of personnel (titles) to approve commitments, as well as to increase the execution (signing) limits for certain purchasing and other personnel.  The recommended changes will rightly place responsibility with those employees already accountable for such functions and further streamline the procurement process, while, at the same time, maintaining appropriate controls on the process. 

 

                “This proposed revision to the EAPs: (1) incorporates the approval limits of additional titles (personnel) and/or titular changes for the approval of commitments per Attachments A and B and the signing of commitments per Attachment C; (2) provides additional clarification regarding Change Order limits and (3) sets new or revised approval and signatory limits for certain real estate transactions per Attachment D.

 

“The following summarizes the principles underlying the EAPs:

 

·         Section 2879 of the Public Authorities Law defines procurement contracts as contracts for the acquisition of goods or services in the actual or estimated amount of $5,000 or more.  Section 2879 also requires the Trustees’ approval for procurement contracts involving services (including personal and non-personal services and construction contracts) to be rendered for a period in excess of one year.

 

·         ‘Approval’ authority for contracts awards and change orders (as set forth in EAP Attachments A and B) is part of an internal Authority process, which ensures that the appropriate level/s of internal organizational review is secured for recommendation of contract award, extension and/or funding, but does not commit the Authority to any contractual obligations with the recommended vendor/s.

 

·         ‘Signatory’ authority and limits (as set forth in EAP Attachment C) designate and ensure that the appropriate level of authorized Authority personnel executes (signs) legally binding documents to enter into contract/s with or issue change orders to the recommended vendor/s – after the aforementioned internal approval process has been secured.

 

·         The Trustees’ approval is required: (i) for the award of non-personal services, construction, equipment or non-procurement contracts with an initial value over $3 million; (ii) for the award of personal services contracts exceeding $1 million, if awarded to the low bidder, or exceeding $500,000, if awarded to other than the low bidder or on a sole or single source basis and (iii) when the cumulative Change Order value of a personal services contract exceeds $500,000, or when the cumulative Change Order value of a  non-personal services, equipment purchase, construction or non-procurement contract exceeds $3 million or when the cumulative Change Order value exceeds the President’s, Chairman’s of Chief Operating Officer’s limits.

 

·         The aforementioned Change Order limits are subject to what is referred to as the ‘25% Rule’ (more fully described on page 4 of the EAPs), which requires rebidding of contracts (or approval of the President, Chairman or Chief Operating Officer, where rebidding is not feasible) when the total value of such contracts, including Change Orders, exceeds the original amount approved by senior management or the Trustees by more than 25% (and is within the specified not-to-exceed dollar limits).  Any funding in excess of 25% of the amount initially approved requires the approval of the President, Chairman or Chief Operating Officer, until either the Trustees’ approval is obtained or the contract is rebid.

 

“The following highlights the proposed revisions to the EAPs:

 

1.       The EAPs governing procurement have been amended to bring the EAPs in line with both current organizational structure and with certain employees’ functional responsibilities.  To that end, Directors and Program Managers in Energy Efficiency would be authorized to approve commitments per the same approval limits as Project Managers or Senior Project Managers (Attachments A and B) and the Fleet Clerk would be authorized to sign Purchase Orders to $5,000 (Attachment C).  Additional revisions include titular changes and clarifications regarding Change Order limits and the ‘25% Rule.’

 

2.       The EAPs for real estate transactions (Attachment D) have been amended as part of an ongoing effort to more accurately reflect the manner in which Authority real property is now acquired and disposed of and to streamline and clarify the authorization process.  Except as outlined below, the majority of these changes are to resolve potential ambiguities and do not affect present authorization levels.

 

The procedures have been materially revised to give expenditure authorization for permits and damage claims under $1,000 (including the majority of danger tree claims) to the Real Estate Administrators (or equivalent).  This is aimed at delegating greater authority to personnel on the ground and improving department efficiency and responsiveness to the public.  In addition, the authorization levels for the President and Chairman of the Board of Trustees have been combined.  In practice, expenditures exceeding the President’s current authorization level are customarily brought directly to the Board of Trustees for approval.

 

“In addition, the Trustees are requested to continue the delegation to the Chairman of the Authority to modify existing authorization and execution limits of the EAPs relating to commitments for the approval of, award of, and change orders to, contracts that do not require approval by the Trustees, as previously approved in December 1991 and most recently in March 2009.  This delegation of authority provides for a more efficient amendment process, eliminating the need to return to the Trustees each time circumstances dictate a necessary revision to the EAPs.

 


 

RECOMMENDATION

 

            “The Senior Vice President – Corporate Support Services, the Vice President – Procurement and I recommend that the Trustees approve the proposed modifications to the Expenditure Authorization Procedures.

 

                “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 revised Expenditure Authorization Procedures discussed in the foregoing report of the President and Chief Executive Officer, and attached hereto as Exhibit “2h-A,” be hereby adopted; and be it further

 

RESOLVED, That the Chairman be authorized to modify the authorization and execution limits of the Expenditure Authorization Procedures relating to contracts that do not require approval by the Trustees; 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 (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 ‘2i-A,’ as well as the continuation of the procurement (services) contracts listed in Exhibit ‘2i-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 $189,000 to $60 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 ‘2i-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 ‘2i-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 contract with Aclara Technologies LLC (‘Aclara’) (Q13-5404; PO# TBA) would provide for maintenance and other support services for Energy Vision Enterprise (‘EVE’) software used to support short-term load forecasting and long-term market forecasting by the Authority.  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.  One proposal was received and evaluated.  Staff recommends the award of a contract to Aclara, the sole responding bidder, which is uniquely qualified to provide such services as the original developer of this software and has provided quality services under the existing contract for such work.  (Reasons for the lack of other bids include: it was not their scope of work, they did not have the credentials to meet the specified requirements or they downloaded the bid documents for information purposes only.)  The new contract would become effective on or about April 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, $430,000.

 

                “The contract with CBRE, Inc. (‘CBRE’) (Q12-5384; PO# TBA) would provide for real estate brokerage services for potential leasing of space that is or may become available at the Authority’s Clarence D. Rappleyea building, a 17-story Class A Office Building with approximately 420,000 square feet of usable space, at 123 Main Street in White Plains, NY.  Currently the Authority occupies 67% and makes the remainder available to tenants; 18% of the remaining available space is currently leased or permitted and approximately 15% is vacant.  Since the existing contract for such services is expiring and the need for these services is ongoing, bid documents requesting qualification statements were developed by staff and were downloaded electronically from the Authority’s Procurement website by nine firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two firms responded with qualification statements.  The commercial aspects of the responses were essentially identical.  Both firms were invited to make presentations to further discuss their capabilities and to provide details on their marketing approach.  Based on a thorough review and evaluation of their qualifications, experience, key personnel, and especially their presentations, staff recommends award of a contract to CBRE, the firm whose team made the best presentation,  suggesting several promising marketing strategies, and therefore was deemed to be most responsive and best suited to meet the Authority’s needs.  It should be noted that the CBRE principal was the Authority’s broker under a prior contract and was responsible for most of the current long-term leases in the building.  Furthermore, since the commission structures for both firms are the same typical terms for brokerage services in the Westchester/White Plains area, the selection of CBRE as the exclusive listing agency for available Authority commercial space would have no additional financial impact on the Authority, nor would it preclude other entities from bringing tenants into the building as outside brokers.  The contract would become effective on or about April 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 estimated total amount that may be expended for the term of the contract, $1 million, subject to market conditions.  Commissions will only be paid in the event of actual leasing of space and will be recovered by the Authority from rental income to be paid by such tenants.

 

                “The contract with OpenText Corp. (‘OpenText’) (Q13-5402; PO# TBA) would provide for maintenance and other support services for OpenText StreamServe software used by the Authority for the customer billing function within the SAP environment.   Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 17 firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Staff recommends the award of a contract to OpenText, the sole responding bidder, which is uniquely qualified to provide such services since it acquired the firm that was the original software developer and has provided quality services under the existing contract.  (Reasons for the lack of other bids include: it was not their scope of work, they did not have the credentials to meet the specified requirements or they downloaded the bid documents for information purposes only.)  The new contract would become effective on or about May 11, 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, $190,000.

 

                “The contract with Pace University (‘Pace’) (Q12-5363; PO# TBA) would provide for the design and implementation of an on-site Masters of Business Administration (‘MBA’) program for the Authority leading to an MBA degree.  In an effort to attract and retain high performing employees, as well as to optimize employee potential and organizational success, the Authority’s Talent Development group sought proposals for an accredited college or university to develop and deliver an MBA curriculum, on-site, in-person, and within a compressed period of 18-30 months, for approximately15-20 high-performing Authority employees.  With the completion of all required elements, successful participants would be awarded an MBA degree that will not differentiate from any other MBA program the institution offers.  The college or university would provide a streamlined admission process, with the ability to customize curriculum, administrative support, and on-site class instruction at the Authority’s White Plains, NY office, including aggregated reporting upon completion of course work.  To that end, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 15 entities, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated, as further set forth in the Award Recommendation documents.  Staff recommends the award of a contract to Pace, the more technically qualified bidder, which offers a robust program that better meets the Authority’s current and future needs.  The contract would become effective on or about April 1, 2013 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Once predetermined measures of the program have been satisfied, the Authority would have the option to expand the program for additional employees, additional sites and/or additional Masters degrees (e.g., electrical, mechanical and/or computer engineering).  Approval is also requested for the total amount expected to be expended for the term of the contract, $1.4 million.

 

                “The contracts with PowerRunner, LLC and Oracle America, Inc. (‘Oracle’) (Q12-5354; PO#s TBA) would provide for consulting or maintenance and other support services, respectively, for the Energy and Distribution Rate Modeling and Comparison system (‘EDRMCS’) to be purchased and implemented under separate contracts with each firm (not included in this request).  The EDRMCS system would provide the Authority with the capability to model varying rate structures in order to evaluate the corresponding effect upon the Customer population.  The proposed contracts would become effective as follows: a five-year consulting and support contract with PowerRunner would commence on or about April 1, 2013 and a four-year maintenance contract with Oracle would commence on or about April 1, 2014, upon completion of the first year of maintenance included with the aforementioned software purchase.  Bid documents (which included providing a software solution and implementation services, as well as maintenance and other support services) were downloaded electronically from the Authority’s Procurement website by 44 firms, including those that may have responded to a notice in the New York State Contract Reporter; one joint proposal, submitted by a partnership of PowerRunner and Oracle, was received and evaluated, as further set forth in the Award Recommendation documents.  Based on the selection of both firms to provide their respective software / system and services, staff recommends award of corresponding multi-year consulting or maintenance and support services contracts to both PowerRunner and Oracle.  Each firm is uniquely qualified to perform the respective services to support its respective software / system.  The consulting or maintenance contracts would become effective per the aforementioned projected schedule for an intended term of up to five years for PowerRunner and up to four years for Oracle, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amounts expected to be expended for the term of the contracts, $200,000 for PowerRunner and $189,000 for Oracle, respectively.

 

Energy Resource Management

 

“At their special meeting of April 4, 2011, the Trustees authorized the Authority to enter into a contract with Hudson Transmission Partners, LLC (‘HTP’) for the purchase of 495 MW of transmission capacity on a new submarine/underground 660 MW high-voltage transmission line to be constructed by HTP (‘HTP Line’).  The purchase contract, the Firm Transmission Capacity Purchase Agreement (‘FTCPA’), was executed on April 15, 2011.  The HTP Line will establish an interconnection between Public Service Enterprise Group’s (‘PSEG’) Bergen substation in New Jersey and the Consolidated Edison Company of New York, Inc. (‘ConEd’) West 49th Street substation in Manhattan.  This new transmission line will accommodate energy transactions from the PJM Interconnection, LLC, (‘PJM’) transmission system to the New York Independent System Operator, Inc. (‘NYISO’) system.  Deliveries of test energy are expected to flow on or about April 12, 2013, while commercial operations are expected to commence in June 2013.   

 

“In order to find a suitable short-term business arrangement to manage the financial aspects of the Authority’s transmission capacity rights on the HTP Line, the Authority developed a Request for Proposal (‘RFP’) to seek bids to provide test energy services for April and May 2013 and to provide payment commencing June 2013 to the Authority for certain transmission capacity rights it has under the FTCPA.  The RFP bid documents issued by the Authority (Q12-5379) were downloaded electronically from the Authority’s Procurement website by 43 firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received from Consolidated Edison Energy, Inc. (‘CEE’), a subsidiary of Consolidated Edison Company of New York, Inc.  (CEE is a New York corporation that was incorporated in November 1997 to invest in, operate, and market the output of generation facilities in the Northeast United States and provide specialized wholesale energy services in the electric, power, natural gas markets.  Located in Valhalla, New York, CEE maintains a staff of approximately 40 energy professionals, serves approximately 4,000 MWs of wholesale and retail load,  provides fuel, power, regulatory, and logistical services to over 8,000 MWs of generation in New England, PJM and NYISO.)

 

“CEE submitted a responsive proposal for test energy to be delivered over the HTP Line during April and May 2013.  CEE proposed an administrative (fixed) set-up fee of $15,000, with an associated scheduling fee based on whether the spreads are positive or negative.  A fee of $0.50/MWh for hours where the Locational Marginal Pricing (‘LMP’) spread is positive (profitable to import power), and $0.20/MWh for hours where the LMP spread is negative.  Spreads will be determined based on the difference from the withdrawal node (W. 49th St. substation, NYC) and the injection node (Bergen, NJ bus).  The Authority will work with CEE to optimize the test energy schedule.  CEE will assume all settlement operational processing duties associated with test energy for both NYISO and PJM, and the Authority will assume payment of the financial market settlements.  During the test energy period, the Authority expects to incur costs of $100,000 to $200,000.  The Authority’s at-risk analysis estimations are $ (1.3) M for worst case and $1.2 M for best case.

 

“The CEE proposal also included three (3) potential options for the post-Commercial Operation Date (‘COD’) period, for a term lasting no longer than three years.  The three options are as follows:

 

1.         Base License Fee;

2.         Profit-Sharing Formula; and

3.         Scheduling Services.

 

“The Authority’s multidisciplinary bid evaluation team analyzed the merits of all three options.  Although the bid specifications expressed a preference for a base license fee (Option 1), the RFP permitted the consideration of other options to meet the objectives of the RFP, which is to effectively manage the financial aspects of the Authority’s transmission capacity rights on the HTP Line.  Based on the team’s preliminary analysis, Options 1 and 2 were considered potential viable business strategies.  Option 3, Scheduling Services, was removed from further consideration because it does not provide the necessary economic/financial benefit to the Authority. 

 

“Post-COD services - Option 1:  This option provides the Authority with a guaranteed payment/fee for its share of the HTP Line’s transmission capacity.  CEE, in its proposal, provides a payment structure for the opportunity to use the cable for transactions in accordance with the form of license agreement included in the HTP RFP.  CEE is proposing that the Authority receive a payment fee of $167/MW-month, which equates to an annual fee of $991,980.00.  CEE stated that the fee is representative of the value connected to the current functionality of the cable.  The fee payment does not provide any upward or upside revenue potential, rather, it is a flat monthly fee for access to the Authority’s transmission capacity on the HTP Line.  The evaluation team ultimately rejected Option 1 in favor of Option 2 (discussed below).   Although it guarantees the Authority a steady income stream, Option 1’s limited upside potential does not afford the Authority with an arrangement conducive for revenue growth above the fixed fee, and is extremely limited in terms of staff skill development.

 

“Under Post COD services - Option 2, CEE would schedule economic energy across HTP and share in the net profits with the Authority.  The arrangement would encompass the following structure:

 

      CEE would receive the first $25,000 as a service fee from net revenue (monthly threshold);

      The Authority would receive 85% of net revenue above the monthly threshold, subject to an annual true-up; 

      Net revenue would include: all revenue and costs of energy transactions, including out-service charges, such revenues would be net of Regional Transmission Expansion Planning (‘RTEP’) and Reliability Must Run (‘RMR’) charges assigned to the HTP Line by PJM, which would remain the Authority’s responsibility.

 

“The Authority’s evaluation team debated the merits and upside revenue potential of Option 2 versus the guaranteed monthly cash flow concept of Option 1.  Although there is an element of risk by choosing Option 2 due to the possibility of the Authority earning less than the guaranteed $991,980 under Option 1, the evaluation team concluded that, on balance, the ability to maximize the transmission revenue potential outweighs the approach of accepting a guaranteed monthly payment.  The following Table supports selecting Option 2 as the preferred method.

 

Comparison of CEE’s proposed Options 1 & 2

 

Illustrative Example - July 2013 to June 2014

 

 

 Option #1

Option #2

Cash Flow

 

Fixed Fee

Profit-Sharing 

NYPA Gross Revenue 

 

$  991,980

  $  1,500,000 

Less Service Charge (Con Ed)

 

 None

$     300,000

NYPA Net Revenue 

 

$  991,980

  $  1,200,000 

Exit Terms

 

3 months

3 months

“The Table provides a breakdown of the essential components associated with CEE’s Option 1 and Option 2 bids.  Although the Authority is guaranteed a monthly payment ($82,665/month equating to a $991,980 yearly figure) in Option 1, the expected value of Option 2 provides a greater potential gain in revenue over the illustrative time period July 2013 through June 2014[*].  In addition, the Authority has a one-time, no-cost option during the three-year term of the contract to switch from Option 2 to an Option 1 arrangement.  In both options, there is no associated cost to the Authority, due to the commercial fixed fee/revenue-sharing structure.

 

“To facilitate the Option 2 arrangement, Authority staff will coordinate monthly/quarterly discussion meetings with CEE in order to enhance and encourage the exchange of information concerning the economic/financial/engineering aspects associated with the HTP Line.  This open dialogue will afford Authority staff the ability to independently review and audit the information disseminated.

“Because the profit-sharing arrangement will give Authority staff the ability to review the details of CEE’s trading behavior, this will provide a valuable opportunity for staff to learn about the HTP Line’s marketability and acquire skills for the future.

 

“Based on the foregoing and as further set forth in the Award Recommendation documents, the evaluation team recommends entering into an agreement with Consolidated Edison Energy, Inc. (‘CEE’) (PO# TBA), that (1) includes provisions regarding test energy and (2) incorporates a profit-sharing formula (Option 2 of CEE’s proposal), as the selected strategy for managing the financial aspects of the Authority’s transmission capacity rights on the HTP Line post-COD.  This agreement would become effective on or about April 1, 2013, for a term of up to three years, subject to the Trustees’ approval, which is hereby requested.  During this time, staff will determine whether or not to rebid these services, perform them in-house, or proceed with another viable approach based upon the knowledge staff anticipates it will acquire about the economic aspects of this resource.

 

 

Executive Offices

 

“The Authority’s Executive Offices, comprising the Office of the President and Chief Executive Officer, Office of the Chief Operating Officer, and Office of Strategic Planning, expect to oversee high-level projects related to the Authority’s strategic initiatives, which include, but are not limited to, facilitation of a strategic planning process, implementation of a strategic plan, organizational review, asset optimization, financial analysis, program review, communications assessment, benchmarking studies and recommendations, succession planning, regulatory and energy policy analysis, as well as feedback and support on project execution, including assistance with financial planning, risk management and contract negotiations, and special assignments, as needed.  In order to support the successful implementation of such strategic objectives in keeping with its overall mission, the Authority intends to retain the consulting services of qualified firms with diverse expertise in management consulting for the electric utility sector.  To that end, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 203 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Twenty-five proposals were received and evaluated based on the following criteria: responsiveness and demonstrated understanding of the scope, composition of the Bidder’s Team (breadth, depth, experience and expertise), ability of the Bidder’s Team to complete the work and meet deadlines, overall quality and clarity of illustrative examples of work products submitted by the Bidders, and compensation, as further set forth in the Award Recommendation documents.  Based on the foregoing, staff recommends the award of contracts to the following nine most qualified firms:  Alexander Scott & Associates, Buro Happold Consulting Engineers, PC d/b/a Happold Consulting, Customer Care Network, Inc., ICF Resources, LLC, McKinsey & Company, Inc., M.J. Bradley & Associates, LLC, Navigant Consulting, Inc., PA Consulting Group, Inc., and UMS Group Inc. (Q12-5390; PO#s TBA).  The Authority’s evaluation team considers the proposed awardees to represent a pool of resources with the most diverse skill set and best qualified teams to respond to the various emergent work scopes that may develop over the next five years.  Additionally, several of these firms have provided quality services to the Authority under prior or existing contracts.  The new contracts would become effective on or about April 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 contract, $8 million.

 

Operations

 

“The contract with Siemens Energy, Inc. (Q12-5337; PO# TBA) would provide for outage support and operating plant services, including scheduled and unscheduled maintenance services, parts and repairs for the Siemens gas turbine, Mitsubishi/General Electric steam turbine, the associated starting/excitation systems and all associated controls, at the Authority’s Richard M. Flynn Plant in Holtsville, NY.  Scheduled work necessary to maintain the 20-year old turbines includes, but is not limited to, turbine and generator inspections, overhauls, turbine hot gas path inspections and borescope inspections.  Engineering support on issues with the turbine-generator findings, control system maintenance and trouble-shooting are also included.  To that end, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 36 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.  One proposal was received and evaluated.  Staff recommends the award of a contract to Siemens, which meets the bid requirements and is uniquely qualified to perform such work and to provide replacement parts, as the original equipment manufacturer of the gas turbine and other plant equipment; additionally, the plant control system is based on the Siemens T3000 platform.  Furthermore, as the current contractor for these services, Siemens has provided consistent, effective and satisfactory services under the existing contract.  Staff has negotiated a long-term Operating Plant Service Agreement (‘OPSA’) that includes fixed prices with fixed discounts for parts and services.  The parts price schedule will be escalated by a calculated amount each year using an agreed upon formula that accounts for material and labor inflation.  Discounts will range from 12 % on repairs to between 10% - 25% on parts and 4.9% on certain types of labor.  The new contract would become effective on or about April 1, 2013 for an intended term of up to twelve 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, $60 million.

 

“The contract with Weeds No More, Inc. (RFQ C12-10199687; PO# TBA) would provide for bare ground vegetation management (weed control) services at the Authority’s substations, switchyards, dikes, fence lines, pole yards, microwave tower sites, and various other sites in various locations throughout New York State designated for treatment in accordance with the Authority’s specifications.  Such vegetation will be controlled with application of various pre-emergent and post-emergent soil sterilants and selective chemical herbicide formulations by a New York State-certified Pesticide Applicator certified for the right-of-way category, for the purpose of removing or preventing the emergence of undesirable vegetation at the Authority’s electrical facilities.  Services include all labor, supervision, materials, chemicals, tools and equipment for execution of the work.  Since the existing contract for such services is expiring and the need for these services is ongoing, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 23 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Authority staff calculated the projected total cost of services based on the kinds of distinct locations to be treated using unit pricing quoted in each bidder’s proposal for the specific kind of herbicide formulation specified for a particular site or type of vegetation.  Based on the foregoing, as well as its qualifications and ability to perform the work, staff recommends the award of a contract to Weeds No More, the lower-priced evaluated bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory services under the existing contract for such work.  The contract would become effective on or about April 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 four contracts with Aerotek, Inc. (‘Aerotek’), LJ Gonzer Associates (‘Gonzer’), PEAK Technical Services, Inc. dba PEAK Technical Staffing USA (‘PEAK’) and Rotator Staffing Services, Inc. (‘Rotator’) (Q13-5392; PO#s TBA) would provide for temporary design and drafting personnel to support the Authority’s engineering disciplines on in-house O&M and capital projects, on an ‘as needed’ basis.  The Authority has an ongoing need for such personnel to support many long-term projects, such as Life Extension and Modernization, as well as various upgrade programs for the Niagara, St. Lawrence, Blenheim-Gilboa and 500 MW Projects and the Authority’s Transmission system.  Services include, but are not limited to: developing drawings, designs and calculations to support the Authority’s design and modification activities; performing field verification and drawing update activities; document control activities to support design document coordination and data acquisition and input activities to generate and maintain the Cable and Raceway systems, Bill of Materials, etc.  Job classifications include various levels of design engineers, designers, drafters/CAD operators and design document coordinators, as well as technical clerks and planners/schedulers.  Although such personnel will perform these services at the Authority’s White Plains Office under the direction and supervision of Authority staff, services may apply to any and all of the Authority’s facilities.  Bid documents were downloaded electronically from the Authority’s Procurement website by 92 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Seven proposals were received and evaluated, as further set forth in the Award Recommendation documents.  Staff recommends the award of contracts to four firms, Aerotek, Gonzer, PEAK and Rotator (PO#s TBA), the lowest-priced bidders based on mark-up rates, and which are technically qualified to perform such services and meet the bid requirements.  Two of these firms have also provided satisfactory services to the Authority under existing contracts for such work.  The new contracts would become effective on or about April 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, $9 million.  It should be noted that these firms have agreed to hold their mark-up rates firm for the duration of the contracts.  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.

 

Contract Extensions:

Economic Development & Energy Efficiency 

Energy Efficiency

“At their meeting of May 20, 2008, the Trustees approved the award of contracts to five firms (DMJM + Harris, Inc. now AECOM USA, Inc., Chu & Gassman Consulting Engineers, PC, Camp Dresser and McKee, Inc. now CDM Constructors, Inc., Fulcrum Facilities Group now Fulcrum Facilities Services, and RCM Technologies, Inc.) to provide for program management and implementation services for the Authority’s Governmental Customers Energy Services Program (‘GCESP’), for a term of up to five years.  The Trustees also authorized increased funding in the amount of $750 million for the GCESP, of which up to $700 million (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 June 1, 2008.  Projects have been assigned based upon project technology, size, expertise, Customer feedback and contractor performance, through an ongoing evaluation by the Authority’s Implementation Contractor Assignments Committee.  While many of the assigned projects have been completed successfully, a number of other projects authorized by the Authority’s Customers have estimated completion dates beyond the approved contract term.  Such work includes, but is not limited to, Riker’s Island Cogeneration, SUNY Purchase Chiller and Electric Service Upgrade, New York City Department of Environmental Protection 26th Ward Digester Upgrade, and Yonkers Waste Water Treatment Plant Anaerobic Digester Gas (‘ADG’) Generators.  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 up to four years of the existing contracts with AECOM USA, Inc. (4600001943), CDM Constructors, Inc. (4600001944), Fulcrum Facilities Services (4600001951) and RCM Technologies, Inc. (4600001946).  (Chu & Gassman completed its assigned projects and the contract has since been closed.)  The contractors have performed satisfactory work and adequate funding is still available to cover the estimated costs to complete the active project assignments under these contracts.  No new projects will be assigned under these contracts.  The current aggregate total amount allocated is $700 million.  Staff estimates that no additional funding above the current allocations will be required for the extended term.  The Trustees are requested to approve extension of the subject contracts through May 31, 2017, with no 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.  It should be noted that all costs will be recovered by the Authority.

 

 

Operations Support Services 

Project Development, Licensing & Compliance

“Pursuant to the New License for the St. Lawrence / FDR Power Project (‘Project’) issued by the Federal Energy Regulatory Commission (‘FERC’), the Authority is required to implement a number of environmental enhancement measures, to fulfill requirements in the Project license and related Authority commitments in the license application and relicensing settlement agreements.  To that end, Kleinschmidt Associates PA PC (‘Kleinschmidt’) has provided environmental study management services for implementation of and compliance with the aforementioned requirements and commitments initially under a competitively bid five-year contract completed in 2012 and has continued to provide such services under an existing competitively bid one-year contract (4600002514), which is due to expire.  While a significant number of implementation projects have been completed, consulting services support (including project management and administration, environmental studies and assistance, engineering design and support during construction, and Project liaison services) will be required until all such implementation work has been completed.  A six-month extension of the subject contract is now requested to provide for the uninterrupted continuation of such services, allowing sufficient time for the rebidding and approval process for a new multi-year contract award.  Kleinschmidt’s performance at the Project has consistently demonstrated a high level of skill and technical expertise and in-depth understanding of the work to be performed; the firm has provided quality services and work product in a timely manner.  The current contract amount is $350,000, staff estimates that an additional $175,000 may be required for the extended term.  The Trustees are requested to approve extension of the subject contract through September 30, 2013, as well as the additional funding requested.

 

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 Senior Vice President – Energy Resource Management, the Senior Vice President – Strategic Planning, 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 – Project Development, Licensing and Compliance, the Vice President – Energy Efficiency, the Vice President – Human Resources, the Acting Vice President – Transmission, 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 ‘2i-A’ and the extension and/or funding of the procurement (services) contracts listed in Exhibit ‘2i-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 unanimously adopted.

 

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


 

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

 


 

j.         Robert Moses Niagara Power Project – Dam Face and

                        Transformer Bay Concrete Repair – 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 $9,257,000 to Crane Hogan Structural System, Inc. (‘Crane Hogan’), of Rochester, N.Y., for the Dam Face and Transformer Bay 6 Concrete Repair work at the Robert Moses Niagara Power Project (‘RMNPP’).

 

BACKGROUND

 

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

 

“The RMNPP was designed and constructed in the late 1950’s and, over the years, normal aging has deteriorated the dam face as a result of water leaking through the concrete from the dam interior, road salts, deterioration of the expansion joint seals and weathering.  A comprehensive program was developed in a phased approach to repair the spalled, delaminated and deteriorated concrete at the slope and vertical section of the dam.  The first phases of repair were performed in 2004 through 2006 and again in 2010 in order to comply with funding restraints and required transmission line outages as determined by the New York Independent System Operator (‘NYISO’).  The remaining section in need of repair correlates to Units 9 and 10 (~15,000 ft2) of the dam face and this work is scheduled to commence in 2013.  The last section to be repaired correlates to Units 6, 7 & 8 (~15,000 ft2) and this work is scheduled to be completed in 2014.  Transmission line outages are not required for this work.

 

“The RMNPP generator step-up transformers (GSU’s) are located in individual containment bays located at the base of the power dam.  The containment bays consist of reinforced concrete walls that surround each GSU and provide fire separation from the adjacent GSUs.  Around the 1970 time frame, there was a fire in Transformer Bay #6 which caused damage to the containment bay surfaces, walls and overhead canopy.  Immediately after the fire, partially spalled and delaminated concrete was temporarily repaired.  A comprehensive concrete investigation was performed by SJB Inspection Services in September 2011 in order to quantify the scope-of-work and that survey revealed that ~1,800 ft2 of concrete is in need of permanent repair.  This work is also scheduled for 2013.

 

DISCUSSION

 

“The Authority issued an advertisement in the New York State Contract Reporter and bid packages were available as of December 6, 2012.  Eighty-Six (86) companies downloaded the bid documents via the Authority’s Web site.  A bid walk down at the Niagara Project was conducted on December 17, 2012 at which six companies were in attendance.

 

“Only one proposal was received on January 18, 2013 and the bidder pricing summary is as follows:

 

Crane Hogan                                                        $ 9,257,000

 

NYPA Fair Cost Estimate                                  $12,000,000

 

“The Crane Hogan bid was evaluated from a cost, technical, safety and similar work experience as the criterion and was reviewed by an evaluation committee comprised of staff from Engineering, Procurement and Project Management.

 

“Crane Hogan’s proposed schedule and scope-of-work meets the Authority’s requirements as described in the bid document.  Crane Hogan submitted a comprehensive work plan for the concrete repair and its proposed access system, manpower projection and health and safety program are in accordance with the New York State Department of Transportation (‘NYSDOT’) and Authority standards.

 

“Crane Hogan successfully completed the repair work of RMNPP’s dam face in the earlier phases in 2004 through 2006 and the ‘538 Gallery’ concrete repair work in 2010.

 

“The evaluation committee recommends that the contract be awarded to Crane Hogan for the total lump sum amount of $9,257,000.  Crane Hogan’s experience, safety record, resources, pricing and technical capabilities are sufficient to perform this work and Crane Hogan took no commercial exceptions to the bidding document.

 

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 – Engineering, 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 Crane Hogan Structural System, Inc. of Rochester, N.Y., in the amount of $9,257,000, for the concrete repair of the Dam Face and Transformer Bay 6 at 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 two-year contract to Crane Hogan Structural System Inc. of Rochester, N.Y., in the amount of $9,257,000 for the concrete repair of the Dam Face and Transformer Bay 6 at the Robert Moses Niagara Power Project as recommended in the foregoing report of the President and Chief Executive Officer;

 

                Contractor                                                Contract Approval

                Crane Hogan Structural System Inc.,            $ 9,257,000

                Rochester, N.Y.                                                  

 

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.

 


 

k.       Charles Poletti Power Project – Fuel Oil Yard

                        Dike Wall Demolition Project – Contract Award             

 

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

“The Trustees are requested to approve the award of an eighteen-month contract to The Franklin Company Contractors, Inc. (‘FCC’) of College Point, N.Y., in the amount of $6,925,765, for the Charles Poletti Power Project Fuel Oil Yard (‘FOY’) Dike Wall Demolition Project (the ‘Project’) at the Astoria Site. 

 

BACKGROUND

 

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

 

As a result of the Charles Poletti Power Plant ceasing operations on January 31, 2010 and prior to its planned deconstruction (2013/2014), modifications to existing infrastructure are required to retain support services for the Authority’s operating 500 MW Power Plant Site.  The Project scope includes: the demolition of the FOY dike wall, which formerly provided containment of the Poletti fuel tanks that were decommissioned in 2011; rerouting of the foamite and kerosene piping systems; modifications to the lighting and security systems; the removal of the abandoned septic tank and modifications to the oil water separator system.  This work is required to be completed prior to the deconstruction of the Poletti Power Plant powerhouse, currently scheduled for 2013/2014.

 

DISCUSSION

 

In response to the Authority’s Request for Proposal advertised in the New York State Contract Reporter on November 29, 2012, seventy (70) firms downloaded the bid document from the Authority’s Web site.  Following bid addenda, pre-award meetings and clarifications, the final three proposals and revised pricing were received as follows:

 


Bidder

City, State

Base Bid

Bids After Clarifications

The Franklin Company Contractors, Inc. (FCC)

College Point, N.Y.

$6,498,592

$6,925,765

T. Moriarty & Son, Inc. (TMS)

Brooklyn, N.Y.

$11,848,750

-

 


Bidder

City, State

Base Bid

Bids After Clarifications

Williams Specialty Services, LLC (WSS)

Tucker, GA

$12,690,600

-

Fair Cost Estimate

-

$7,184,400

-

 

Review of the submitted bid proposals established that all three bidders understand the project and are qualified to perform the work.  On January 31, 2013, a pre-award meeting was held with the low bidder, FCC, to review its approach to work, project logistics and schedule and to review the post-bid clarifications.  The Evaluation Committee, consisting of Authority staff and the Authority’s consultant, Greenman Pedersen Incorporated (‘GPI’), determined the FCC has a good understanding of the work and demonstrated comparable experience with similar work.  FCC was requested to reply to a post-bid clarification as a result of the pre-award interviews and, as such, submitted a revised bid on February 22, 2013, which has been deemed acceptable by the Evaluation Committee.

 

FCC has been in business for 81 years and its headquarters are in College Point, N.Y.  FCC has also previously worked with the Authority, successfully completing the Authority’s Poletti FOY Tank Demolition project in 2011, and is in good standing as confirmed by the Authority’s Procurement Department.  FCC is financially secure, has adequate experience in executing this type of work, and its bid is consistent with the Fair Cost Estimate.

FISCAL INFORMATION

 

“Payments 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 – Engineering, the Vice President – Procurement and the Regional Manager – SENY recommend that the Trustees approve the award of a one-year contract to The Franklin Company Contractors, Inc. of College Point, N.Y., in the amount of $6,925,765, for the Charles Poletti Power Project Fuel Oil Yard Dike Wall Demolition 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 contract to The Franklin Company Contractors, Inc. of College Point, N.Y., in the amount of $6,925,765, for the Charles Poletti Power Project Fuel Oil Yard Dike Wall Demolition Project as recommended in the foregoing report of the President and Chief Executive Officer;

 

Contractor                                                   Contract Approval

                        The Franklin Company

                        Contractors, Inc.                                                $6,925,765

                        College Point, N.Y.

 

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

 


 

l.         Renewal of the Holtsville and

Setauket Storage Agreements

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve the 5-year renewal of two agreements with Northville Industries Corp. (‘NIC’) of Melville, New York, that provide for oil storage and throughput services at Holtsville and Setauket, Long Island, in support of the Richard M. Flynn Power Plant (‘Flynn Facility’).  The estimated total cost of renewing the agreements through September 30, 2018 and March 31, 2019, respectively, is $3.76 million.

 

BACKGROUND

 

                “The Authority’s Expenditure Authorization Procedures require the Trustees’ approval when the cumulative Change Order value (the exercise of a renewal option) for a non-procurement contract is in excess of $1 million.

 

                “The Holtsville and Setauket Storage Agreements (‘Agreements’), dated March 27, 1990, were originally negotiated in 1989-90 by the New Generation Division which was tasked with bidding on the Long Island Lighting Company’s (‘LILCO’)  Request for Proposals for Purchases of Electric Capacity and Energy as mandated by the New York State Public Service Commission (‘PSC’).  The original Agreements were signed by the Authority’s then-current President, Phillip Bayne, and became effective on October 1, 1993 and April 1, 1994, respectively.  Distillate oil is used as an alternative fuel to operate the Flynn Facility primarily when National Grid (formerly KeySpan) invokes its contractual rights to call on the Authority’s natural gas supplies up to 30 days each winter and would continue to be used under any successor agreement with National Grid or other third-party.  Distillate oil is also used when oil is more economic than natural gas and/or when natural gas supplies are restricted due to gas system conditions or gas operational issues at the Flynn Facility.  Environmental regulations permit the Authority to use a maximum of 60 days’ worth of oil each year.  The Authority has a total of 21 days’ worth of usable storage capacity at the Holtsville and Setauket facilities.

 

DISCUSSION

 

                “The Agreements provide for 15-year initial terms with three 5-year renewal options, the first of which was exercised in 2008.  The second renewal option must be exercised in writing by the Authority on or before March 31, 2013 and September 30, 2013, respectively.  Competitive bidding was not used by the Authority in securing these agreements due to NIC’s unique ability to provide the requisite services, which are required on an ongoing basis in support of the Flynn Facility.  NIC’s rates are considered competitive and consistent with fair market value.    

 

FISCAL INFORMATION

 

                “Payment will be made from the Operating Fund (Fuel Reserve Account).

 

RECOMMENDATION

 

                “The Senior Vice President – Energy Resource Management and the Director – Fuel Planning and Operations recommend that the Trustees approve the renewal of the Holtsville and Setauket Storage Agreements dated March 27, 1990.

 

“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 Authority’s Expenditure Authorization Procedures for procurement contracts, approval is hereby granted to renew the Holtsville and Setauket Storage Agreements dated March 27, 1990 with Northville Industries Corp. through September 30, 2018 and March 31, 2019, respectively, for oil storage and throughput services, as recommended in the foregoing report of the President and Chief Executive Officer, in the amounts and for the purposes listed below:

 

                                                Fuel Reserve Account                       Contract               Projected

                                                  (Operating Fund)                             Approval              Closing Date

 

Oil Storage and Throughput Services:

 

                                                Holtsville Storage Agreement        $   750,000            September 30, 2018

 

                                                Setauket Storage Agreement           $3,010,000           March 31, 2019

                                                                                                                $3,760,000

 

AND BE IT FURTHER RESOLVED, That the Authority hereby ratifies and approves the Agreements and the exercise of the option to extend the Agreements for a period of up to five years; 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 documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

 


 

m.     Corporate Policy – Risk Management and

Executive Risk Management Committee Charter

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

 

“The Trustees are requested to approve the Corporate Policy – Risk Management (the ‘Policy’) and the Executive Risk Management Committee Charter (the ‘Charter’), which are attached hereto as Exhibits ‘2m-A’ and ‘2m-B.’  Together, the Policy and Charter will supersede the Governing Policy for Energy Risk Management (the ‘Governing Policy’), which was last approved by the Trustees at their meeting of January 31, 2012 and is attached hereto as Exhibit ‘2m-C.’

 

“In accordance with leading industry practice, the Trustees' approval of the governance materials is intended as an affirmation of the philosophy, framework and delegation of authority for the Authority’s risk management activities, including those related to energy commodity and credit risk.  The previously approved Governing Policy focused on energy commodity and credit risk management.  The proposed Policy and Charter expand and improve the governance structure and controls in the Governing Policy.  They align with the Authority’s corporate governance structure and establish accountabilities more broadly for all Authority risk management activities.  Previously established controls, including the delegation of authority to the Executive Risk Management Committee (the ‘ERMC’) for energy commodity transactions and credit risk management and the posting of any necessary collateral in support of such transactions, remain unchanged. 

 

“The members of the ERMC, the Executive Management Committee and the Audit Committee of the Board of Trustees reviewed the proposed Policy and Charter and recommend their approval to supersede the Governing Policy.   

BACKGROUND

 

“At their meeting of September 28, 2010, the Trustees approved the Governing Policy.  Subsequently on January 31, 2012, the Trustees approved modifications to the Governing Policy to clarify transaction types and authorities.  The Governing Policy outlines the philosophy, framework and delegation of authority for the Authority’s program for energy commodity and credit risk management.  The Governing Policy also provides the necessary authority to an appointed ERMC to oversee program implementation, including the authority to enter into forward hedging transactions and to post any necessary collateral in support of such transactions. 

 

“In addition, at their meeting of May 19, 2009, the Trustees approved the adoption of an Enterprise Risk Management Program (the ‘Program’).  At that time, it was acknowledged that risk management is a coordinated approach to identifying, assessing and managing risks across the enterprise.  The development of the proposed Policy and Charter are important to mature the Authority’s enterprise risk management activities. 

DISCUSSION

 

“The Policy and Charter are designed to broaden the Authority’s governance materials to appropriately reflect the enterprise view of risk management as adopted by the Trustees at their May 19, 2009 meeting.  In this regard, the ERMC’s current role of overseeing the Authority's risk management activities related to energy commodity and credit risk will expand to incorporate all enterprise risks.  In addition, the Policy and Charter aligns risk management governance materials with existing Authority governance documents including the Board of Trustees Charter of the Audit Committee.  The core philosophy and framework for risk management outlined within the Policy and Charter are consistent with the Program approved at the May 19, 2009 meeting as well as the predecessor Governing Policy approved at the January 31, 2012 meeting.  The Trustees will be asked annually to approve the Policy and Charter.

  

RECOMMENDATION

 

                “The Senior Vice President – Chief Risk Officer recommends that the Trustees approve the Corporate Policy – Risk Management and the Executive Risk Management Committee Charter as reflected in Exhibits ‘2m-A’ and ‘2m-B’ and discussed above.

 

                “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 Corporate Policy – Risk Management (the “Policy”) and the related Executive Risk Management Committee Charter (the “Charter”) establishing the philosophy, framework and delegation of authority necessary to govern the activities of the Authority related to risk management activities including the program for Energy Commodity and Credit Risk Management is hereby adopted in the form attached as Exhibits “2m-A” and “2m-B”; and be it further

 

RESOLVED, That the Executive Risk Management Committee consisting of five members including the Chief Financial Officer, who shall serve as Chair, plus four additional members as appointed by the President and Chief Executive Officer is hereby granted the authority, within the requirements established by the Policy and Charter, to enter into energy related commodity hedge transactions and to post any necessary collateral in support of such transactions, to meet the requirements of Authority customers or facilities for a transaction term not to exceed four years beyond the last day of the month the transaction is entered, with specific Trustee approval required prior to entering transactions, for energy and energy-related products of greater than a four-year term, or the issuance of competitive solicitations for same; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Executive Vice President and Chief Operating Officer, the Executive Vice President and Chief Financial Officer, the Senior Vice President and Chief Risk Officer and any other necessary Authority officers 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 necessary to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

n.       Annual Review and Approval of Certain Authority Policies        

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

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

 

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

 

                “This item also contains several policy changes that do not require Trustee approval, but are being provided for informational purposes.

 

BACKGROUND AND DISCUSSION

 

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

 

                “The Authority’s policies relating to salary, compensation, benefits and time and attendance of its employees, inclusive of the chief executive and all senior management, are attached as Exhibits ‘2n-A’ through ‘2n-L’ and respectively entitled:

 

A.    Recruitment and Job Posting (EP 1.2); last revised 3/21/13;

B.    Salary Administration Policy (EP 2.1); last revised 3/27/12;

C.    Salaried Non-Exempt and Facility-Based Exempt Overtime (EP 2.4), last revised 3/27/12;

D.    Variable Pay Plan (EP 2.6), Deleted 7/20/10;

E.    Employee Benefits Eligibility (EP 3.1), last revised 3/27/11;

F.     Reimbursement of Employee Meal Costs (CAP 1.5), last revised 3/27/12;

G.    Attendance & Flexible Hours (EP 4.6), last revised 3/27/12;

H.    Vacation (EP 3.2), last revised 3/27/12;

I.     FMLA (EP 3.3), last revised 5/19/10;

J.     Sick Time (EP 3.9), last revised 2/20/09;

K.    Relocation Benefits for New and Transferred Employees (EP 3.8); last revised 1/1/10; and

L.    Travel (CP 2-1); last revised 3/21/13

 

                “The following Authority policies do not require Trustee approval, but have been modified and are being provided for informational purposes.  Attached are Exhibits ‘2n-M’ through ‘2n-N’:

 

M.   Contributions and Sponsorships (CP 11-1), last revised 3/21/13

N.    Business Related Contributions (CP 2-16), 3/21/13

 

RECOMMENDATION

 

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

 

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

 

                                                A.    Recruitment and Job Posting (EP 1.2), last revised 3/21/13;

                                                B.    Salary Administration Policy (EP 2.1), last revised 3/27/12;

                                                C.    Salaried Non-Exempt and Facility-Based Exempt Overtime (EP 2.4),

                                                        last revised 3/27/12;

                                                D.    Variable Pay Plan (EP 2.6), Deleted 7/20/10;

                                                E.    Employee Benefits Eligibility (EP 3.1), last revised 3/27/12;

                                                F.    Reimbursement of Employee Meal Costs (CAP 1.5), last revised 3/27/12;

                                                G.    Attendance & Flexible Hours (EP 4.6), last revised 3/27/12;

                                                H.    Vacation (EP 3.2), last revised 3/27/12;

                                                I.     FMLA (EP 3.3), last revised 5/19/10;

                                                J.     Sick Time (EP 3.9), last revised 2/20/09;

                                                K.    Relocation Benefits for New and Transferred Employees (EP 3.8),

                                                        last revised 1/1/10; and

                                                L.    Travel (CP 2-1), last revised 3/21/13.

 

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

 

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

 


 

o.       Ethics and Compliance Program Documents

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to adopt:  (i) a new Ethics and Compliance Program corporate policy (Exhibit ‘2o-A’), (ii) revisions to the Authority’s Code of Conduct (Exhibit ‘2o-B’) and (iii) revisions to CP 1-7, ‘Anti-Retaliation Policy’ (Exhibit ‘2o-C’) which will conform with the applicable provisions contained within the NYS Public Authorities Law, NYS Public Officers Law and guidance provided by the NYS Joint Commission on Public Ethics (‘JCOPE’) and NYS Office of the Inspector General (‘IG’).

 

“The new Ethics and Compliance Program Policy and revised Code of Conduct and Anti-Retaliation Policy will cover all Authority Trustees, officers and employees.

 

BACKGROUND

 

“The Authority is committed to complying with all applicable legal, regulatory and other mandatory standards and maintaining the highest level of ethical conduct of its Trustees, officers and employees.  To meet these responsibilities, the Authority has created an Office of Ethics and Compliance which reports to the Executive Vice President and General Counsel and the Governance Committee of the Board of Trustees.  This Office assists the Authority in achieving its mission and business objectives by evaluating and enhancing the Authority’s legal and regulatory compliance posture and communicating and applying the required standards of ethical conduct to the Authority’s Trustees, officers and employees.

 

“The Trustees adopted a ‘Conflicts of Interest Policy’ in 1988 to address important aspects of ethical conduct.  The Trustees revised the policy in 1994 and renamed it the ‘Code of Conduct.’  The Code of Conduct was revisited again in 1998 and 2009 when the Trustees addressed conflicts of interest relating to employees’ trading in or acquiring the securities of utility companies operating in New York State and incorporated enhanced ethical standards for public employees contained in the amended NYS Public Officers Law.  The 2009 adopted Code of Conduct clarified prior legal and technical provisions and replaced them with clear and concise language to be utilized by a more diverse Authority workforce.

 

“In furthering its commitment to legal and regulatory compliance and ethical conduct, the Authority revised its ‘Anti-Retaliation Policy’ in 2010, which encourages Trustees, officers and employees to report and participate in the investigation of, among other things, wrongdoing and violations of the law, regulations, policies, procedures and the Code of Conduct.  This policy protects Trustees, officers and employees from discrimination, harassment or retaliation of any kind for ‘good faith’ reporting of, and participation in, the investigation of these events.

 

DISCUSSION

 

“The proposed Ethics and Compliance Program Policy (Exhibit ‘2o-A’) sets forth the Authority’s commitment to legal and regulatory compliance and the highest ethical conduct of its employees.  It contains the responsibilities expected of the Authority’s Trustees, officers and employees and clarifies the role of the Office of Ethics and Compliance in meeting the policy’s objectives.  It formalizes the establishment of the Authority’s Ethics and Compliance Program and represents its overarching governance document consistent with best practices for an effective ethics and compliance program.  The Authority’s Internal Audit Department had recommended the adoption of an Ethics Charter after conducting an audit of the Ethics Program.  The proposed policy was also developed to implement that recommendation and goes further by incorporating the Authority’s comprehensive Compliance commitments and resources.

 

“The NYS Public Authorities Law Section 2824(1)(d) requires board members of state authorities to ‘adopt a code of ethics applicable to each officer, director and employee, that, at a minimum, includes the standards established in section seventy-four of the public officers law.’  The proposed revisions to the Code of Conduct (Exhibit ‘2o-B’) clarify and update various provisions and conform with the requirements of the NYS Public Officers Law and guidance provided by the JCOPE and the IG.  They include the requirements that Trustees, officers and employees disclose any and all professional and personal conflicts of interest and subsequently recuse themselves from engaging in any Authority business activity where a conflict appears or exists.  In addition, Trustees, officers and employees will be prohibited from seeking or accepting a monetary loan from any employee under one’s supervisory authority or providing a monetary loan to one’s immediate supervisor and anyone to whom that individual reports, up to and including the Board of Trustees.  In response to recent JCOPE Advisory Opinions, the Code of Conduct is being further revised to include the requirement that the Office of Ethics and Compliance be consulted prior to the re-employment of any former Authority employee to conduct an evaluation of the post-employment restrictions contained in the NYS Public Officers Law.  All other standards and sections of the Code of Conduct have been preserved.

 

“The NYS Public Authorities Law Section 2824(1)(e) requires board members of state authorities to ‘establish written policies and procedures on personnel including policies protecting employees from retaliation for disclosing information concerning acts of wrongdoing, misconduct, malfeasance, or other inappropriate behavior by an employee or board member of the authority,….’  The Authority revised its initial Anti-Retaliation Policy and issued CP 1-7, ‘Anti-Retaliation Policy’ (Exhibit ‘2o-C’) in 2010, and is now seeking formal adoption of the policy in accordance with the NYS Public Authorities Law and a recent recommendation made by Internal Audit Department.  In addition, the policy is being revised to clarify certain reporting options and encourage employees to expeditiously report events covered within its scope.

 

RECOMMENDATION

 

“The Vice President and Chief Ethics and Compliance Officer recommends that the Trustees approve the proposed Ethics and Compliance Program Policy (Exhibit ‘2o-A’), the revised Code of Conduct (Exhibit ‘2o-B’) and the revised CP 1-7, ‘Anti-Retaliation Policy’ (Exhibit ‘2o-C’) based on the language and modifications discussed above and contained in Exhibits ‘2o-A,’ ‘2o-B’ and ‘2o-C’ 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 unanimously adopted.

RESOLVED, That the Ethics and Compliance Program Policy is adopted and the Code of Conduct and CP 1-7, “Anti-Retaliation Policy” are revised in accordance with the language set forth in Exhibits “2o-A,” “2o-B” and “2o-C,” respectively, with such modifications effective as of March 21, 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, 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 Gil Quiniones said that the Authority’s Performance Scorecard has been revised in that directional indicators for each of the performance metrics have been added to the scorecard.   For the month of February the Authority had performed well operationally and financially and energy efficiency measures are also doing well.  He continued that, based on feedback from the Trustees, staff has placed additional focus on safety and environmental measures and, to date, the Authority has performed well in those areas.

                In response to a question from Chairman Koelmel, Mr. Russak said, with respect to the financial trend the Authority’s operations are on budget for the year.  President Quiniones said, with respect to safety and environmental the Authority has set high goals and will continue this high level of vigilance of those measures.  He ended by saying that related to its performance scorecard, the Authority is performing well.

KEY INITIATIVES

Build Smart NY

                President Quiniones said, on December 27, 2012, Governor Cuomo issued Executive Order 88 directing state agencies to increase energy efficiency by 20% in seven years.  The Governor also directed that the agencies work with county and local governments to reduce their energy consumption and operating and maintenance costs; this will save taxpayers millions of dollars.  President Quiniones said this initiative will also support the New York Works Program, which includes investments in the repair of the State’s infrastructure; thereby creating jobs in the State.  He continued that the Authority has been designated the lead entity to implement this initiative and has hired a Director/Program Manager to lead this initiative.

Charge New York

                President Quiniones said that, in his 2013 State of the State address Governor Cuomo presented an ambitious plan to promote plug-in electric vehicles in New York State and the Authority is one of the agencies, along with NYSERDA as the lead agency, and the PSC, that will be working together to implement this initiative. The program is budgeted for $50 million over five years.  President Quiniones said the Authority will be responsible for developing infrastructures for charging stations for the program.

                In response to a question from Trustee Mahoney, President Quiniones said the $50 million budgeted will be comprised of the investment of each of the entities associated with the project.  Responding to a question from Chairman Koelmel, President Quiniones said the Authority will not be building infrastructures that will not be utilized.  He said, working with Authority customers, the project is slated to be implemented in phases, and will be based on competition and demand.

 


 

b.       Report of the Chief Operating Officer

 

                Mr. Bradford Van Auken, Senior Vice President of Operations Support Services and Chief Engineer, provided highlights of the Chief Operating Officer’ s report to the Trustees. 

Generation

     Systemwide Net Generation was above projections for February.

     Generation market readiness remains below projection at 99.2 percent; target for the year is 99.4 percent.  Target for the month of February (99.4 percent) was met.

     No significant events during January.

 

Transmission

     There were no significant unplanned transmission events in February.

     Transmission reliability in February was 96.43 percent; this was above the target of 95.17 percent.

     Year-to-date transmission reliability is 97.35 percent; this is above the target of 94.95 percent.

 

KEY ISSUES:

Generation

 

St. Lawrence Power Project - Unit 28

·         As reported last month, during an outage, maintenance issues were discovered on Unit 28 at the St. Lawrence Project.  The outage was extended and the unit repaired and put back in service on March 12th.

 

Blenheim-Gilboa Unit 2 Generator Step-Up Transformer

·         The original spare unit was put into service after the failure of the step-up transformer last year. 

·         The new generator step-up transformer for the unit will be delivered within the next 18 months. 

·         All four units at the project are available for service.

 

Safety and Environmental

 

Environmental

·         There were no reportable Environmental incidents for the month of February.  Target for the year is no more than 32 events.

Safety

·         There were no reportable safety incidents in February to impact the Authority’s Days Away, Restricted or Transferred (“DART”) rate.

·         Two minor incidents were recorded; however, these incidents did not impact the Authority’s DART rate.

Emergency Management

 

Mr. Van Auken said Operations demonstrated its system-wide preparedness for two recent significant winter weather events on February 8 and March 7, respectively.  Staff was proactive by following the Authority’s storm preparations such as preparing snow removal; securing the project from high winds; conducting safety discussions; providing status updates and communicating them externally.  Staff continues to refine this process and will be performing more drills in the future.  Staff will continue to place considerable emphasis on Corporate Emergency Management.

Dam Safety

 

As part of the Authority’s Dam Safety Program and tying it into Emergency Management, staff is being proactive with planning and executing a “Functional Exercise” in September at the St. Lawrence Facility with the Federal Energy Regulatory Commission (“FERC”) and the local emergency management agencies in Northern New York.  This event will simulate an emergency at the Authority’s Dam or water retaining structures and test the Authority’s readiness, and notification and communication protocols.  This event is being planned in conjunction with Ontario Power Generation and other outside Emergency Management agencies.

The practice of performing these exercises is a requirement for the Authority’s FERC licensed Dams at St. Lawrence, Niagara, Blenheim-Gilboa, Crescent/Vischer Ferry, and Jarvis projects and is a key component of the Authority-wide Dam Safety Program.

FERC has recognized the Authority as having an excellent Dam Safety Program; this is evident by the Authority continuously scoring high during other EAP functional exercises and Dam Safety Inspections.

Mr. Van Auken said, in the future, staff would like to give the Trustees a more in-depth look at the Authority’s Dam Safety Program and its key components in order to bring further awareness of NYPA’s responsibilities as dam owners and operators.

Mr. Van Auken continued that, staff will provide information to the Trustees regarding the Global Sourcing and Quality Assurance and Quality Control and discuss some of the challenges being faced, from a global sourcing perspective, and the measures staff has in place to manage them to ensure the Authority is getting quality products, going forward.  This information will be provided at the next meeting of the Board.

Personnel

Mr. Van Auken said on behalf of Mr. Welz he congratulated Mr. Toia on his promotion. 

 


 

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 February remains very strong.

Net Income

 

·         Net income through February, prior to the recognition of the contribution to the State for the “Open for Business” campaign, was $69.5 million, which is $32.8 million higher than the budget.

       With the recognition of the budgeted $40 million contribution, net income is positive at $29.5 million year-to-date compared to a budgeted net loss of $3.3 million

·         Positive variances at the generating facilities ($26.6 million) were substantially attributable to higher capacity and energy prices on market-based sales.         

       Higher capacity prices stemming from the closing of Dynegy’s Danskammer plant has resulted in a positive impact, primarily at Niagara and Blenheim-Gilboa

       Energy prices remained high in the downstate market during February

       While prices in Zone A were lower than budgeted, higher sales into the wholesale market from Niagara resulted in higher than budgeted energy sale revenues

·         Transmission facility results were also higher than budgeted ($7.8 million).

       Proportionally higher energy prices in the downstate markets increased congestion costs, which had a positive impact on revenues earned by the Authority’s Flexible, Alternating Current Transmission System (“FACTS”) project.

               

                In response to a question from Chairman Koelmel, Mr. Russak said although the Authority’s financial position is positive, to date, staff continues to monitor the structural issues within the marketplace, and the Authority has a number of measures in place in an effort to protect itself in the event of downward movements in the marketplace.  President Quiniones added that, as background information, with the restructuring of the utility industry, administered by the NYISO and the PSC, the energy market became more competitive; the Authority does not have a market position to influence prices, the structural dynamics of supply and demand is driving the positive results being reported.  In response to a further question from Chairman Koelmel, Mr. Russak said staff is examining measures to lock in some of these positive results over the long-term, ultimately, to deliver value to the Authority’s customers.

 


 

4.                   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 available ‘retention’ power under the Recharge New York (‘RNY’) Power Program to the businesses listed in Exhibit ‘4-A;’

 

  1. Approve allocations of available ‘expansion’ power under the RNY Power Program to the businesses listed in Exhibit ‘4-B;’

 

  1. Approve the transfer of the RNY Power allocations identified in Exhibit ‘4-E.’

 

“These actions have been recommended by the Economic Development Power Allocation Board (‘EDPAB’) at its March 20, 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 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 the RNY Market Power component of the award.

 

        “The basic application for the RNY Power Program was approved by EDPAB at its meeting on September 26, 2011.  Applications for RNY Power are subject to a competitive evaluation process and are evaluated based on the criteria set forth in the statutes providing for the RNY Power Program (the ‘RNY Statutes’). 

 

“As part of Governor Cuomo’s New York ‘Open for Business’ initiative, 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 Authority’s Power for Jobs (‘PFJ’) and Energy Cost Savings Benefit (‘ECSB’) programs expired on June 30, 2012.  Businesses that participated in these programs are required to apply for RNY Power in order to be considered for a RNY Power allocation.  Because the RNY Power Program is a new economic development program unrelated to the earlier PFJ and ECSB programs, all RNY Power applications, even those of former PFJ and ECSB participants, are considered on their merits under the criteria established by the RNY Power Program.

 

                “The applications were evaluated applying the following criteria as set forth in 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 (‘REDC’) 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.

 

“The following is the current program power status prior to the allocations currently proposed as part of this item: (1) allocations totaling 693.9 MW have been made out of 710 MW available for business ‘retention’ purposes, which, counting modifications to allocations recommended to, and accepted by the board, rescinded allocations (2.2 MW), and declined allocations (17.3 MW) leave 19.9 MW available to allocate; (2) of that 710 MW retention block, 100 MW was set aside for not-for-profit corporations and small businesses, of which 72.7 MW and 23.0 MW have been allocated to not-for-profit corporations and small businesses, respectively, which leaves 4.3 MW available to allocate to such entities; and (3) allocations totaling 39.0 MW were made out of 200 MW available for business ‘expansion’ purposes, leaving 161.0 MW available to allocate for such purposes.

 

DISCUSSION

 

  1. Retention-Based RNY Power Allocations

 

“The Trustees are asked to address applications submitted for RNY Power retention allocations via the CFA process.  Consistent with the evaluation process as described above, EDPAB has recommended, at its March 20, 2013 meeting, 18 RNY Power retention allocations to applicants.  The 18 businesses or not-for-profit corporations listed in Exhibit ‘4-A’ have stated on their applications a willingness to create or retain approximately 2,500 jobs in New York State.  Additionally, these applicants will be committing to capital investments totaling over $45 million over five years in exchange for the proposed RNY Power allocations.  Of these recommendations, 7 businesses are recommended for 4.3 MW, 10 small businesses are recommended for 0.6 MW, and one not-for-profit corporation is recommended for 0.10 MW.

 

“The RNY Power allocations identified in Exhibit ‘4-A’ are each recommended for a term of seven years. Consistent with legislation, each allocation recommended by EDPAB would qualify an applicant to enter into a contract with the Authority pursuant to the terms and conditions of the recommendation by EDPAB and on such other terms as the Authority determines to be appropriate. The Authority’s standard RNY Power contract template will have 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, capital investment and/or energy efficiency measures. In addition, there shall be a requirement that a recipient of an allocation make its facilities available at reasonable times and intervals for energy audits and related assessments that the Authority desires to perform.  At their March 27, 2012 meeting, the Trustees approved the form and substance of a retail contract template that incorporates these and other standard requirements.

 

  1. Expansion-Based RNY Power Allocations

 

“The Trustees are also asked to address applications submitted for RNY Power expansion allocations via the CFA process which request power 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. 

 

“Of the applications received, staff determined that six applications were sufficiently complete for review, and that each such application requested RNY Power for a proposed expansion of the applicant’s business.  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.

 

“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).

 

                “Consistent with the goals of the expansion-based RNY Power set-aside for ‘attracting new business to the state, creating new businesses within the state, or encouraging the expansion of existing businesses within the state,’ the Trustees are being asked to authorize RNY Power allocations to those applicants that have committed to (i) invest capital thereby creating new electrical load, and (ii) create new jobs. This focus on capital investment and job creation aligns with the RNY Statutes’ intention to maximize the economic development prospects for the State.

 

“Accordingly, EDPAB recommended that the Trustees approve six allocations listed on Exhibit ‘4-B’ for an expansion-based allocation up to the amounts indicated.  These allocations are made from available power within the 200 MW block of RNY Power set aside for business expansion and attraction.  These businesses have stated a willingness to create a total of 262 new jobs in New York State and to commit to capital investments totaling $113.4 million in exchange for the recommended RNY Power allocations.  The total amount of recommended RNY Power is 8.9 MW, with four businesses recommended for 8.8 MW and two small businesses recommended for 0.09 MW. 

 

“Three of these businesses were also recommended for retention allocations, having submitted an application that met the requirements for evaluating both retention and expansion awards by committing to distinct jobs and capital investment for each type of RNY Power.  Applicants recommended for both retention and expansion allocations are indicated in the corresponding Exhibits ‘4-A’ and ‘4-B.’ 

 

                “EDPAB has recommended the RNY Power allocations identified on Exhibit ‘4-B’ for a period of up to seven years.  Consistent with the RNY Statutes, each allocation recommended by EDPAB would qualify an applicant to enter into a contract with the Authority for the amount of the allocation pursuant to the terms and conditions of the recommendation by EDPAB, and on such other terms as the Authority determines to be appropriate.

 

                “The respective amounts of the expansion-related allocations listed in Exhibit ‘4-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 ‘4-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 ‘4-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

               

“In the process of reviewing the current round of applications for RNY Power, there were three applications by businesses that fit within the definition of a retail business as established by EDPAB.  At its March 20, 2013 meeting, EDPAB determined that these applicants, listed on Exhibit ‘4-C,’ are ineligible for an RNY Power allocation.

 


 

  1. No Recommendation of RNY Power Allocation

 

“The Trustees are advised that EDPAB determined at its March 20, 2013 meeting that the applications listed on Exhibit ‘4-D’ are not recommended or were not considered for an allocation of RNY Power.  The application that was not recommended for an RNY Power allocation had requested only a minimal amount of RNY Power which fell below the threshold established internally by the Authority for allocations.  Other applications were not considered for an allocation of RNY Power for various reasons, including that (i) the applications were withdrawn, (ii) the applications were not sufficiently complete to permit evaluation and/or applicants were unresponsive to requests from staff for more information which staff believed it needed to adequately evaluate the applications.  In the case of expansion-related requests for RNY Power, certain applicants had proposed projects that are too premature to enable those applicants to make commitments necessary for an allocation of RNY Power.  The applications not recommended by EDPAB for RNY Power allocations, along with the reasons for such determination, are listed on Exhibit ‘4-D.’  The Trustees are not being asked to take any action with respect to these applications; this part of the item is provided solely for the Trustees’ information.

 

  1. Transfer of RNY Power

 

                “Finally, at its March 20, 2013 meeting, EDPAB approved and recommended, in accordance with the RNY Statutes, that the Trustees approve a transfer of RNY Power allocation for the business listed on Exhibit ‘4-E.’  A current RNY Power recipient has requested a transfer of RNY Power allocation to a new facility in accordance with the timeline laid out in its CFA. The commitments to jobs and capital investment made in consideration of the RNY Power allocation awards remain the same as originally approved.  The Trustees have previously authorized transfers of RNY Power and other Authority power products like Economic Development Power in similar circumstances.

 

Recommendation

 

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

 

“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 said before presenting staff’s recommendation, he wanted to outline some changes to the materials provided to the Trustees prior to the meeting.

1.  Food Authority’s name has been changed to Air Stream Corporation; the recommended allocation has also been changed to 150 kW.

2. Nassau University Medical Center will not be recommended for an allocation because it does not meet the not-for-profit eligibility requirement as dictated by the statute.

3. Triad Recycling and Energy Corporation has withdrawn its application.

 

                Mr. Huvane then presented highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Flynn, Mr. Huvane said last year when the Recharge New York program was rolled out, staff found that many potential applicants did not fully understand the program; however, with improvements in the Consolidated Funding Application (“CFA”) process, the trend is more effective coordination at the state and local levels in bringing all the resources together to encourage more expansion projects.  Responding to further question from Trustee Flynn, Mr. Huvane said staff has reached out to the yogurt industry to encourage their participation in the program. 

                In response to a question from Chairman Koelmel, Mr. Huvane said by law, the Authority has to allocate 350 MW of RNY power to New York State Electric and Gas (“NYSEG”), Rochester Gas and Electric (“RG&E”) and National Grid.  To date, 494 MW of power has been allocated throughout New York State; therefore, the Authority has bypassed the intent of the legislation.  President Quiniones added that staff will prepare an analysis of the type of companies allocated RNY power for both retention and expansion purposes and include it in the chart provided to the Trustees.

                Trustee LeChase recused himself from the vote as it relates to Garlock Sealing Technologies, LLC; therefore staff’s recommendation was approved with the exclusion of Garlock Sealing Technologies because the recusal resulted in a failure to attain the required number of votes necessary for its approval. 

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

 

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

 

WHEREAS, the Economic Development Power Allocation Board has recommended that the Authority approve the Recharge New York Power Allocations for expansion purposes to the applicants listed in Exhibit “4-B”; and

               

WHEREAS, the Economic Development Power Allocation Board has recommended that the Authority authorize the transfers of Recharge New York Power Allocations identified in Exhibit “4-E”;

 

NOW THEREFORE BE IT RESOLVED, That the Authority hereby authorizes the allocations of Recharge New York  power for retention purposes to the applicants listed on Exhibit “4-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 Recharge New York power for expansion purposes to the applicants listed on Exhibit “4-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 Recharge New York power identified in Exhibit “4-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 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.                   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 allocations of available hydropower totaling 5,700 kilowatts (‘kW’) to Aurubis Buffalo, Inc., International Imaging Materials, Inc., Rubberform Recycled Products LLC, and SiGNa Chemistry, Inc. as described herein and detailed in Exhibit ‘5-A.’  The allocations of hydropower will support capital expansion of more than $23.7 million and the creation of 100 jobs in Western New York (‘WNY’).  The Trustees are also requested to authorize a public hearing pursuant to §1009 of the Public Authorities Law (‘PAL’) on a proposed direct sale contract for the allocation to SiGNa Chemistry, Inc., the form of which is attached as Exhibit ‘5-B.’

 

BACKGROUND

 

In summary, under Pubic Authorities Law (‘PAL’) §1005(13), the Authority may contract to allocate up to 250 megawatts (‘MW’) of firm hydroelectric power as Expansion Power (‘EP’) and up to 445 MW of Replacement Power (‘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), which details general eligibility requirements.  Among the factors to be considered when evaluating a request for an allocation of hydropower are the number of jobs created as a result of the allocation; the business’ long-term commitment to the region as evidenced by the current and/or planned capital investment in the business’ facilities in the region; the ratio of the number of jobs to be created to the amount of power requested; the types of jobs created, as measured by wage and benefit levels, security and stability of employment and the type and cost of buildings, equipment and facilities to be constructed, enlarged or installed.

 

“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, the Buffalo Niagara Enterprise, Niagara County Center for Economic Development, and Erie County Industrial Development Agency 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 entity above and each has indicated support for the proposed recommendation.

 

DISCUSSION

 

                 “At this time, there is 10,545 kW of unallocated EP and 26,818 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 business proposed expansion projects as described below.

               

Aurubis Buffalo, Inc.

 

                “Aurubis Buffalo, Inc. (‘Aurubis’) operates a copper and brass rolling mill which was founded at the current site in Buffalo in 1906.  The company, formerly Luvata Buffalo, Inc., was purchased in September 2011 by Aurubis AG, a Germany-based integrated copper processor and the world’s largest copper recycler, with 15 production facilities in Europe and one in the U.S. (Buffalo). 

 

“Aurubis is the largest manufacturing power user in Erie County and has several allocations of hydropower totaling 12,760 kW.  The allocations provide critical support to the copper and brass rolling mill, as the facility’s electric costs are a significant component of its overall cost of production.  Each of the allocations are job compliant except for a 250 kW RP allocation which recently reported 2012 employment levels at 79% of its contract commitment.  The allocation is compliant relative to the Trustee authorized reduced job commitment of 575 which commences July 2013, when the company’s long-term contract extension commences.

 

“Aurubis has submitted an application for hydropower requesting 3,750 kW to serve a new project geared toward potential new product sales that would result in a major sales expansion within the USA markets.  The competitors for this product line manufacture in other states as well as Germany.  Aurubis’ Buffalo management team believes that, with an allocation of hydropower to support this project, it can convince its corporate headquarters to invest in the facility to quickly enter and capture a significant part of this market.  The project is broken down into two inter-related capital investments: (1) an investment of $9.5 million for a continuous bright annealing furnace and (2) an investment of $2.4 million to refurbish, upgrade and restart a currently idle rolling mill.

 

“Aurubis currently has a headcount of 675 employees and commits to add 35 new jobs to its payroll as a result of this project. The company provides relatively high wage and benefits associated with the new jobs.  The job creation ratio for a recommended amount of 2,800 kW is 12.5 new jobs per MW. This ratio is below the recent historic average of 18.0 new jobs per MW.  The total project investment of $12.0 million results in a capital investment ratio of $4 million per MW.  This ratio is below the recent historic average of $22 million per MW.

 

“An allocation of hydropower is important for the Buffalo facility to garner support from its corporate management and enable the company to solidify its WNY operations, retaining its current employment levels and creating 35 new jobs.  Recognizing an increase in production ability in both rolling and annealing would result in entry into new markets supporting further sales growth, Aurubis hopes to be able to fast-track the expansion project to be installed by the end of 2013 and operational in the first half of 2014.

 

“Staff recommends an allocation of 2,800 kW of RP be awarded to Aurubis in return for an investment of $12 million and creation of 35 jobs at its Buffalo facility.

 

International Imaging Materials, Inc.

 

“International Imaging Materials, Inc. (‘IIMAK’) is an international business with its manufacturing headquarters located in Amherst (Erie County).  IIMAK manufactures thermal transfer ribbons, barcode ribbons, direct thermal films and fluid inks for the printing industry.  The more than 315,000-square feet Amherst location includes corporate offices for the executive management, sales, marketing, finance as well as direct manufacturing and distribution of its products.  IIMAK is a privately held company and has additional manufacturing sites in Brazil; Mexico and Belgium.  Forty-percent of its sales are currently in Europe.  IIMAK employs approximately 800 employees worldwide including 355 employees at its Amherst facility.

 

                “IIMAK has several allocations of hydropower totaling 3,200 kW.  Two of the older allocations were not job compliant with recently reported 2012 employment levels at 87% and 69% of job commitments.  The allocations are compliant relative to the Trustee authorized reduced job commitment of 310 which commences July 2013, when the company’s long-term contract extension commences.

 

“IIMAK has submitted a hydropower application requesting 400 kW to support a proposed project to install a toluene solvent recovery unit - utilizing carbon adsorption technology - on a 3,000-square-foot concrete pad outside and adjacent to its facility.  The system would operate 24/ 7 at a high electric load factor.  An allocation of hydropower would help make this a cost savings project allowing IIMAK to recapture 30 percent of its processes’ solvent laden air within this unit and re-use 2.7 million pounds of toluene annually. The process is also environmentally superior to the current ‘destructive’ method and will reduce greenhouse gas emissions by 3,000 metric tons.

 

“IIMAK’s highly competitive industry makes it imperative for the company to be cost-efficient.  IIMAK has made additional efforts over the years to reduce energy costs with a goal of being as ‘green’ as possible.  Some of the measures include: the installation of new, high-efficiency air compressors; lighting conversion to T8 lamps; the installation of exhaust fan variable drives throughout the site and the replacement of an oversized 200-ton chiller with a 100-ton unit and plate-frame heat exchanger.    

 

“The planned total investment for the project is $2 million, which includes the purchase and installation of a solvent recovery system, cooling tower, coater exhaust fans, room heating system and support equipment.

 

   “IIMAK commits to add three new jobs to its payroll as a result of this project, with relatively good wage and benefits associated with the new jobs.  The job creation ratio for a recommended amount of 200 kW is 15 new jobs per MW. This ratio is below the recent historic average of 18.0 new jobs per MW.  The total project investment of $2 million results in a capital investment ratio of $10 million per MW.  This ratio is below the recent historic average of $22 million per MW.

 

“Low-cost power is important to IIMAK, enabling it to manufacture materials at costs competitive with competitor sites around the world.  It supports continued investment and expansion at its Amherst facility rather than investing in its other manufacturing sites in Brazil, Mexico and Europe, which offer other manufacturing costs advantages.

 

“Staff recommends that an allocation of 200 kW of RP be awarded to IIMAK in return for an investment of $2 million and creation of three jobs.

 

RubberForm Recycled Products, LLC

 

                “RubberForm Recycled Products, LLC (‘Rubberform’) is a manufacturer of recycled rubber products located in Lockport (Niagara County).  Founded in 2006, RubberForm specializes in manufacturing traffic safety products, as well as home improvement, shipping, vehicle safety, HVAC, roofing and marine industry products.

 

“RubberForm currently receives an allocation 100 kW of EP, which was modified in December 2012 when the Board reduced the allocation from 500 kW to 100 kW.  The allocation was reduced because RubberForm could not meet the job commitments and was using only 100 kW during the past several years.  The Board also reduced RubberForm’s job commitment requirement from 30 to 18 jobs.

 

                “RubberForm is planning the addition of a new recycled material production line for making products out of recycled scrap tire rubber and plastic.  This expansion will enable RubberForm to increase production capacity, efficiencies and product offerings to meet market demand.  Some of the new products expected to be produced include a home garage wheel stop, an engineered rubber curb and mechanical roof mount base. 

 

“The planned investment to purchase the new equipment would be $500,000, with $250,000 of that amount funded by a grant from Empire State Development Corporation (‘ESD’).  RubberForm, which currently employs 15 employees at its Lockport facility, commits to add 12 new jobs to its payroll as a result of this project.  The job creation ratio for a recommended amount of 200 kW is 60 new jobs per MW.  This ratio is above the recent historic average of 18.0 new jobs per MW.  The total project investment of $250,000 (excluding the ESD funding) results in a capital investment ratio of $1.25 million per MW.  This ratio is below the recent historic average of $22 million per MW.

 

“Low-cost power plays an important role in the day-to-day operation of this facility, as a significant portion of the operations’ production cost is dedicated to electricity.  A hydropower allocation will put RubberForm in a much better position to compete with its largest competitor, GNR in Quebec, Canada.  Rubberform stated that without the support of the ESD grant and a hydropower allocation, it may be unable to proceed with this expansion project.  RubberForm has investigated moving operations to other states such as Florida, South Carolina, or Nevada.

 

“Staff recommends an allocation of 200 kW of RP be awarded to RubberForm Recycled Products, LLC in return for an investment of $250,000 and the creation of 12 jobs.

 

SiGNa Chemistry, Inc.

 

                “SiGNa Chemistry, Inc. (‘SiGNa’) is a chemical company with a growing green products portfolio, having offices with about 60 employees in California and New York City.  The company’s business model centers on the licensing and sale of its chemical products for use by OEMs, oil companies, fuel cell developers and product manufacturers.  SiGNa’s reactive metals products, particularly sodium silicide, have unlimited potential in a number of industrial processing applications.

 

                “SiGNa is proposing a new facility to bring manufacturing in-house and to focus efforts on two high-growth global markets: oil recovery technologies and portable hydrogen power.  SiGNa currently uses contract manufacturers located in other states, and is considering establishing operations in WNY, potentially in Wheatfield (Niagara County).  The company is also looking at expanding contract manufacturing relationships or to establish its own manufacturing sites in Tennessee, Wisconsin and Utah as potential locations for this operation.  Low-cost hydropower is an important factor as SIGNa indicates that the cost of electricity as a percentage of the production at the facility would be significant. 

 

                “SiGNa has requested 2,500 kW to support an ambitious $9.5 million three-phase project to start up manufacturing operations in New York State.  Phase I would include the installation of equipment and initial startup of 15,000-square-feet of manufacturing space by the last quarter of 2013.  The manufacturing space would ultimately grow to 30,000-square-feet and allow for powder production of 1,300 to 2,000 metric tons annually.

               

                “SiGNa commits to create 50 new jobs as a result of this project, with the ultimate potential for facility employment of 100 employees. The company proposes to provide good wages and benefits associated with the new jobs.  The job creation ratio for a recommended amount of 2,500 kW is 20 new jobs per MW.  This ratio is above the recent historic average of 18 new jobs per MW.  The total project investment of $9.5 million results in a capital investment ratio of $3.8 million per MW.  This ratio is below the recent historic average of $22 million per MW.

 

                “In 2008, SiGNa won the Presidential Green Chemistry Award and remains committed to a green sustainable manufacturing operation; the availability of a hydro allocation is central to its belief in providing green alternative projects in the energy markets.  The company is investigating working with NYSERDA and ESD for additional support.

 

                “Staff recommends an allocation of 2,500 kW of RP be awarded to SiGNa in return for an investment of $9.5 million and the creation of 50 jobs in WNY.

 

                Contract Information

 

                “The Trustees are requested to authorize a public hearing pursuant to PAL§1009 on a proposed direct sale contract for the recommended allocation to SiGNa, the current form of which is attached as Exhibit ‘5-B.’ 

 

                “The form of the contract 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, the allocation 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 SiGNa’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 SiGNa pursuant to the Authority’s Service Tariff No. WNY-1 (‘ST WNY-1’) which applies to all allocations of EP and RP, commencing July 1, 2013.  Transmission and delivery service for these allocations would be provided by National Grid or NYSEG, as applicable, and in accordance with each utility’s filed service tariffs.

 

                “The Authority is in the process of discussing the proposed contract with SiGNa and anticipates receiving customer approval of a contract form substantially similar to Exhibit ‘5-B.’ 

 

                “As required by PAL §1009, when the Authority believes it has reached agreement with its co-party, it will transmit the proposed form of 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.

 

                “Regarding contracts for the sale of the other recommended allocations to Aurubis, IIMAK, and Rubberform, as a current hydropower customer, each has received the Western New York contract extension (‘WNY LTA’), commencing July 1, 2013, for their previous allocation(s).  In 2010, following the public hearing process, the WNY LTA was approved by the Trustees and the governor, and, ultimately executed by the customer and the Authority.  The WNY LTA includes a provision for ‘additional allocations’ that allow the Authority, in its discretion, to provide supplemental or modified schedules to accommodate new allocations made to the companies.  The supplemental or modified schedules would include the individual job and capital investment commitments described herein.

 

                “Staff recommends hydropower allocations totaling 5,700 kW be awarded to Aurubis Buffalo, Inc., International Imaging Materials, Inc., Rubberform Recycled Products LLC, and SiGNa Chemistry, Inc. for a total of $23.75 million of capital expansion and the creation of 100 new jobs at these companies’ WNY facilities.  This recommendation is described in Exhibit ‘5-A’ showing, among other things, the amount of power requested by the applicant, the recommended allocation amounts and the applicant’s commitment to job creation and capital investment.  Additional information on the projects is contained in the application summaries attached as Exhibits ‘5-A-1’ – ‘5-A-4.’

 

RECOMMENDATION

 

“The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the allocations of hydropower totaling 5,700 kW to Aurubis Buffalo, Inc., International Imaging Materials, Inc., Rubberform Recycled Products LLC, and SiGNa Chemistry, Inc., as detailed in Exhibit ‘5-A.’  It is also recommended the Trustees authorize the Corporate Secretary to convene a public hearing on the form of the proposed contract with SiGNa Chemistry, Inc., attached as Exhibit ‘5-B,’ and transmit copies of such proposed form of contract to the Governor and legislative leaders pursuant to PAL §1009.  Staff will report to the Board of Trustees on the public hearing and the contract and at that time make additional recommendations regarding the proposed 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.”

 

Mr. Huvane presented highlights of staff’s recommendations to the Trustees.  He said Staff is requesting that the recommendation for a public hearing on the direct sale contract for Signa Chemistry, Inc. be withdrawn at this time and convene when a site has been chosen for its expansion project.  The request for the Trustees’ approval of staff’s recommendation for the allocations of hydropower still stands.

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

 

RESOLVED, That allocations totaling 5,700 kW of Authority hydropower to Aurubis Buffalo, Inc., International Imaging Materials, Inc., Rubberform Recycled Products LLC, and SiGNa Chemistry, Inc., as detailed in Exhibit “5-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 generated by the New York Power Authority to SiGNa Chemistry, Inc., 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 §1009 of the Public Authorities Law; 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, in accordance with the provisions of §1009 of the Public Authorities Law; and be it further

 

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

 


 

6.                   Allocation of Expansion Power to Yahoo! Inc.

                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 7,200 kilowatts (‘kW’) of available Expansion Power (‘EP’) to Yahoo! Inc. as described herein and detailed in Exhibit ‘6-A.’  The allocation of hydropower will support capital expansion of $170 million and the creation of 115 jobs in Western New York (‘WNY’).  The Trustees are also requested to authorize a public hearing pursuant to §1009 of the Public Authorities Law (‘PAL’) on a proposed direct sale contract for the allocation, the current form of which is attached as Exhibit ‘6-B.’

 

BACKGROUND

 

In summary, under Pubic Authorities Law (‘PAL’) § 1005(13), the Authority may contract to allocate up to 250 megawatts (‘MW’) of firm hydroelectric power as Expansion Power (‘EP’) and up to 445 MW of Replacement Power (‘RP’) to businesses in the State located within 30 miles of the Niagara Power Project. 

 

“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), which details general eligibility requirements.  Among the factors to be considered when evaluating a request for an allocation of hydropower are the number of jobs created as a result of the allocation; the business’ long-term commitment to the region as evidenced by the current and/or planned capital investment in the business’ facilities in the region; the ratio of the number of jobs to be created to the amount of power requested; the types of jobs created, as measured by wage and benefit levels, security and stability of employment and the type and cost of buildings, equipment and facilities to be constructed, enlarged or installed.

 

“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, the Buffalo Niagara Enterprise, Niagara County Center for Economic Development and Erie County Industrial Development Agency 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 recommendation has been discussed with each entity above and each has indicated support for the proposed recommendation.

 

DISCUSSION

 

                “At this time, there is 10,545 kW of unallocated EP and 26,818 kW of unallocated RP available for eligible businesses under the criteria set forth in PAL §1005(13)(a). 

 

                “Yahoo! Inc. (‘Yahoo’) owns and operates a large data center facility in Lockport (Niagara County), NY. As part of its corporate strategy, the Lockport facility incorporates cutting edge technology with best practices of green construction, which has been recognized domestically and internationally as setting the standard for building sustainable data centers.  In May 2009, Yahoo was awarded a 15,000 kW EP allocation in return for investing $150 million to build the first phase of the data center and to create 125 jobs.  The company celebrated the opening of that data center in September 2010.  In April 2011, Yahoo received an additional 1,000 kW to further build out a ‘second phase’ expansion of the data center including more investments in computer equipment (data servers, routers, storage devices and related hardware and software) and a commitment to add 15 new jobs.

 

                “Yahoo is proposing a $170 million investment in WNY that would create both a new data center (‘Supplemental Data Center’) and a call/contact center facility (‘Contact Center’) and will commit to add 115 total new jobs at these new facilities.  The project would increase Yahoo’s East Coast Regional data center footprint in Lockport with the construction of a new 100,000-square-foot data center on 14 acres of land adjacent to the current Yahoo Lockport facility.  Yahoo’s total East Coast data center footprint and user base are its largest worldwide.  Yahoo’s planned expansion would accommodate continued migration of its East Coast operations at other facilities to its Lockport footprint.  The migration to and continued growth of Lockport depend on the availability of low-cost power, with the data center’s cost of electricity >25% of the cost of production, making a hydropower allocation critical to achieving the necessary operational cost structure.  Yahoo would invest over $163 million into the Supplemental Data Center, with roughly $61 million in construction-related costs, $2.7 million for furniture, fixtures, and administrative equipment, and $100 million for server, network and equipment purchases.  Roughly half of the construction cost would be for labor for about 250 workers.

 

                “In addition to the Supplemental Data Center construction, Yahoo would build a $6.9 million 24-hour, seven-days-per-week Contact Center to be located either on its Lockport property or at a yet to be chosen site within the ‘hydro-zone’ (within the 30-mile radius of the Niagara Power Project).  Yahoo would commit to the creation of a combined 115 new jobs – 15 at the Supplemental Data Center and 100 at the Contact Center.  Yahoo has requested 7,200 kW to support operations at these facilities and anticipates starting construction in May 2013. 

 

                “Yahoo anticipates a 12-month construction timetable, followed by operations start-up and commencement of the investment in computer services and related equipment and software continuing until the 7,200 kW are consumed (a 36 to 40-month period). Yahoo also plans recurring annual investments of $25 to $33 million in new equipment purchases beginning in year four attributable largely to the replacement of dated servers and related equipment.

 

                “If Yahoo decides to move forward with this project, it would commit to creating 115 new, relatively good paying jobs.  The job ratio for a recommended 7,200 kW allocation is 16.0 new jobs per MW, which is below the recent historic average of 18.0 new jobs per MW.  The capital investment ratio for the allocation is $23.6 million per MW, which is above the recent historic average of $22 million per MW for hydropower allocations.

 

                “Supported by the requested allocation, Yahoo believes it can continue to strive to be an environmentally responsible company.  Siting data centers where renewable power is available combined with efficient data center design will help Yahoo minimize its carbon footprint.  Yahoo’s additional commitment to relocate a 100-person Contact Center to WNY enhances its investment in New York State.  Yahoo’s current total New York State employment level of 470, combined with the committed jobs for the proposed expansion, positions WNY and New York State for future investment and job growth opportunities particularly in the high tech arenas.

 

                “Staff recommends an allocation of 7,200 kW of EP be awarded to Yahoo in return for an investment of $170 million related to Supplemental Data Center construction, computer equipment and related purchases, the construction and operation of a Contact Center within a 30-mile radius of the Niagara Power Project and the creation of 115 jobs in WNY.

 

                Contract Information

 

                “The Trustees are requested to authorize a public hearing pursuant to PAL §1009 on a proposed direct sale contract for the recommended allocation to Yahoo, the current form of which is attached as Exhibit ‘6-B.’ 

 

                “The form of the contract 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, all 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 contract forms, including the Authority’s recent Recharge New York Power Program contracts.

 

                “In all cases of Authority hydropower, the allocation 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 Yahoo’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 Yahoo 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 for these allocations would be provided by National Grid or NYSEG, as applicable, and in accordance with each utility’s filed service tariffs.

 

                “The Authority is in the process of discussing the proposed contract with Yahoo and anticipates receiving customer approval of a contract form substantially similar to Exhibit ‘6-B.’ 

 

                “As required by PAL §1009, when the Authority believes it has reached agreement with its co-party, it will transmit the proposed form of 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.

 

                “Staff recommends that the Trustees approve an award of 7,200 kW of Expansion Power to Yahoo based on Yahoo’s commitment for a total of $170 million of capital expansion and the creation of 115 new jobs in WNY.  This recommendation is described in Exhibit ‘6-A’ showing, among other things, the amount of power requested by the applicant, the recommended allocation amount and the applicant’s commitment to job creation and capital investment.  Additional information on the project is contained in the application summary attached as Exhibit

‘6-A-1.’

 

RECOMMENDATION

 

“The Manager – Business Power Allocations and Compliance recommends that the Trustees approve an allocation of 7,200 kW of Expansion Power to Yahoo! Inc., as detailed in Exhibit ‘6-A.’  It is also recommended that the Trustees authorize the Corporate Secretary to (1) convene a public hearing on the form of the proposed contract finally negotiated with Yahoo! Inc., and (2) transmit copies of such proposed form of contract to the Governor and legislative leaders pursuant to PAL §1009. Staff will report to the Board of Trustees on the public hearing and the contract and at that time make additional recommendations regarding the proposed 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.”

 

            Mr. Huvane presented highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Mahoney, Mr. Huvane said before coming to the Trustees for action regarding an allocation such as this, staff confers with the Western New York Advisory Board, which is made up of the entities outlined in the request.  Based on the discussions with WNY Advisory Board, staff makes recommendations to the Trustees.  President Quiniones added that the initiatives being recommended by the WNY Advisory Board also has to be consistent with the priorities set forth by the Regional Economic Development Council.

                Responding to a question from Chairman Koelmel, Mr. Huvane said, Yahoo! has the funding and site for this project and plans to go forward with the project following the approval process. 

Also, if approved by the Trustees, Yahoo! will issue a press release to that effect.

               


 

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

 

RESOLVED, That an allocation of 7,200 kW of Authority Expansion Power to Yahoo! Inc., as detailed in Exhibit “6-A,” be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Trustees hereby authorize a public hearing on the terms of the proposed form of direct sale contract finally negotiated with Yahoo! Inc. for the sale of such Expansion Power to Yahoo! Inc. (the “NYPA-Yahoo 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 NYPA-Yahoo 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, in accordance with the provisions of PAL §1009; 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.

 

 


 

7.                   2012 Financial Reports Pursuant to

                Section 2800 of the Public Authorities Law and

Regulations of the Office of the State Comptroller

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the financial report for the year ended December 31, 2012 and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders, the State Comptroller and the Authorities Budget Office (‘ABO’) pursuant to Section 2800 of the Public Authorities Law, as amended by the Public Authorities Accountability Act of 2005 (‘PAAA’).  In accordance with regulations adopted by the Office of the State Comptroller (‘OSC’), the Trustees are also requested to approve and authorize posting of a report of actual versus budgeted results for the year 2012 on the Authority’s Web site.

 

BACKGROUND

 

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

 

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

 

DISCUSSION

 

“The Trustees are requested to approve the required financial report for the year ended December 31, 2012 (Exhibit ‘7-A’) and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders, the State Comptroller and the ABO pursuant to Section 2800 of the Public Authorities Law.  This report was reviewed by the Audit Committee at its meeting of March 21, 2013.  The Trustees are also requested to approve a report of actual versus budgeted results for the year 2012 (Exhibit ‘7-B’) and authorize posting it on the Authority’s Web site.

 

FISCAL INFORMATION

 

                “There is no anticipated fiscal impact.

 

RECOMMENDATION

 

                “The Vice President and Controller recommends that the Trustees approve and authorize submittal of the attached reports (Exhibits ‘7-A’ and ‘7-B’) as discussed herein.  The Audit Committee reviewed the financial report for the year ended December 31, 2012 at their meeting earlier today and is also recommending its approval.

 

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

 

               


 

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

 

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

 

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

 

WHEREAS, the Chief Executive Officer and Chief Financial Officer have so certified as to the financial information contained within the attached reports for the fiscal year ending December 31, 2012 as evidenced by a writing dated even date hereof;

 

NOW THEREFORE BE IT RESOLVED, That pursuant to Section 2800 of the Public Authorities Law, the financial reports attached hereto are adopted and the Corporate Secretary be, and hereby is, authorized to submit to the Governor, the Chairman and Ranking Minority Member of the Senate Finance Committee, the Chairman and Ranking Minority Member of the Assembly Ways and Means Committee, the State Comptroller, and the Authorities Budget Office the attached financial report for the year ending 2012 in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the attached report of actual vs. budgeted results for the year 2012 is approved in accordance with the foregoing report of the President and Chief Executive Officer; and the Corporate Secretary is authorized to post the report on the Authority’s Web site; and be it further               

 


 

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

 

 


 

8.                   Request for Proposals –

Indian Point Reliability Contingency Plan

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize the issuance of a Request for Proposals (‘RFP’) as part of the implementation of the Indian Point Reliability Contingency Plan as recommended by the Energy Highway Blueprint (‘Blueprint’).

 

BACKGROUND

Indian Point Energy Center (‘IPEC’) is a nuclear power plant station located in Westchester County and has two active units generating over 2000 MW.  The plant is owned and operated by a subsidiary of Entergy Corporation.  IPEC currently serves a significant portion of Southeast New York electric load and there is a concern over whether the two Indian Point reactors will continue to operate beyond 2013 and 2015, when their operating licenses are scheduled to expire.  The Nuclear Regulatory Commission is evaluating Entergy’s application for a 20-year license extension for each reactor.

“Governor Cuomo announced the Energy Highway Initiative in his January 2012 State of the State address.  The Energy Highway Initiative recognized a number of challenges to the state’s energy infrastructure including the potential retirement of several power plants.  The Blueprint, developed by the Energy Highway Task Force, was issued on October 22, 2012.  The Blueprint recommended that the Department of Public Service (‘DPS’) develop and implement a reliability contingency plan for the potential closure of IPEC.

“In a November 30, 2012 Order, the Public Service Commission (‘Commission’) directed Con Edison, with the assistance of NYPA, to develop a contingency plan for the potential closure of IPEC upon the expiration of its existing licenses.  The Order required that the plan include an RFP to procure the needed resources to address system reliability needs that would be caused by the closure of IPEC.

 

DISCUSSION

 

“On February 1, 2013, Con Edison and NYPA submitted the Indian Point Contingency Plan (‘Plan’) that analyzed the impact of the IPEC closure on the Bulk Power System.  Based on this analysis, the closure of IPEC would cause a deficiency of 1050 MW in June 2016.  The retirement of the Danskammer Power Plant was announced in January 2013 and will cause an additional estimated deficiency of 400 MW.  Accordingly, the overall deficiency would be approximately 1450 MW.

 

“To address the deficiency, the Plan includes a three-pronged approach.  First, Con Edison and NYPA will begin development of three transmission projects[†] (‘Transmission Projects’) that can be in service by June 2016 (the ‘In-Service Deadline’).  Second, a competitive solicitation process will be conducted in which NYPA will issue an RFP to solicit incremental generation and transmission proposals that could also be in service by the In-Service Deadline.  Third, Con Edison will develop a new 100 MW Energy Efficiency/Demand Response/Combined Heat and Power program.

 

“DPS staff will evaluate all of the proposed projects that respond to the RFP on a comparable basis to the Transmission Projects and recommend to the Commission which projects should move forward to completion.  The recommended projects could include the Transmission Projects proposed by Con Edison and NYPA and/or solutions resulting from the RFP.  Upon Commission approval and subject to cost recovery, the projects ultimately selected will move forward toward completion, unless halted by a Commission order.

 

“For the Plan to be successful and to ensure that solutions are in place by the In-Service Deadline, the Plan recommended that the Commission issue an Order in March 2013 requesting that NYPA issue an RFP for generation and transmission solutions.  That Order was issued on March 15, 2013 (the ‘March Order’).  The Plan also calls for a Commission Order in April 2013 that directs Con Edison and requests NYPA to begin the development of the three Transmission Projects and provides for guaranteed cost recovery, subject to a halting mechanism.  Finally, the Plan contemplates a September 2013 Commission Order that selects a final set of transmission and/or generation projects to move forward subject to the halting, cost allocation, and cost recovery mechanisms included in the Plan.

 

“If the Commission selects one or more generation projects, NYPA and the developer will negotiate and enter into a power purchase agreement (‘PPA’) as expeditiously as possible.  A form PPA will be included with the RFP.  The developer will be paid by NYPA pursuant to its PPA for which NYPA will be reimbursed through a PSC-approved cost recovery mechanism.  As a prerequisite for NYPA to enter into such an arrangement, the cost recovery mechanism must first be approved by the Commission.

 

“The March Order accepted the Plan’s approach to solicit generation and transmission proposals through a NYPA RFP.   Trustee authorization is required before NYPA may issue the RFP and effectuate the Plan.  If the Trustees so approve, NYPA will issue an RFP on or about March 29, 2013.  The key elements of the RFP include:

 

·         Resources need to be in-service by summer 2016;

 

·         After taking into account Con Edison’s Energy Efficiency /Demand Response/Combined Heat and Power program, the RFP should be issued to solicit 1350 MW from generation and transmission projects;

 

·         One of the evaluation criteria will be whether a project helps to achieve clean energy goals and other public policy goals of the Blueprint; and

 

·         The RFP will include halting provisions so that funding committed to a project can be stopped, if it is in ratepayers’ interest to do so.

 

“On July 26, 2011, the Trustees authorized the adoption of a procedure entitled ‘Competitive Solicitations for Power Supply Products,’ which established a requirement for Trustee approval prior to the issuance of competitive solicitations for purchases of energy, capacity, ancillary services and environmental attributes.  For NYPA staff to issue the RFP required in the Plan, the Trustees must approve the RFP issuance.  Therefore, it is recommended that the Trustees approve the issuance of this RFP.

 

FISCAL INFORMATION

 

“Costs related to the issuance and review of the RFP, estimated to be on the order of $1.4 to $1.7 million, will be paid from the Authority’s Operating Fund and is expected to be recovered under a new cost recovery mechanism to be finalized by the Commission in the summer of 2013.

 

RECOMMENDATION

 

“The Vice President – Project Development, Licensing and Compliance and the Director – Resource Planning and Project Analysis recommend that the Trustees authorize the issuance of a Request for Proposals for generation and transmission solutions as part of the Indian Point Contingency Plan.   

 

“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. Gerard Vincitore provided highlights of staff’s recommendation to the Trustees.  In response to a comment from Trustee Flynn, Mr. Vincitore said the Trustees can be assured that the Authority has a cost recovery mechanism in place to recover all costs related to the Plan.  Trustee Mahoney added that the Trustees were individually briefed on the project; however, she had concerns regarding the cost recovery mechanism.  Mr. Vincitore said a public record has been set up to give stakeholders an opportunity to document their concerns with the Plan, after which the Department of Public Service will address these issues and provide clarity to the stakeholders’ concerns.  Responding to a question from Chairman Koelmel, Mr. Vincitore said the Authority is not the respondent to the Request for Proposal; therefore it will not be the Authority’s decision on whether or not to proceed with the Plan.  President Quiniones added that this project was part of the recommendation from the Energy Highway Blueprint and is consistent with State policy.  He continued that, to date, the Authority has the capability of assisting with the Plan.  However, he will advise the Trustees of any constraints that arise as the Plan develops.  Mr. Vincitore added that on March 14, the Public Service Commission accepted the Request for Proposal.

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

 

RESOLVED, That pursuant to the Competitive Solicitations for Power Supply Products Procedure, which established the processes for the issuance of competitive solicitations for purchases of energy, capacity, ancillary services and environmental attributes adopted by the Authority, approval is hereby granted to issue a Request for Proposals for generation and transmission solutions as part of the Indian Point Contingency Plan, 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.

 


 

9.                   New York Power Authority’s Annual Strategic Plan 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are presented with the Authority’s proposed 2013 Strategic Plan, set forth in Exhibit ‘9-A’ attached hereto, and are requested to adopt the Strategic Plan and authorize the filing of the mission statement and performance measures with the Authorities Budget Office (‘ABO’) as required by Section 2824-a of the Public Authorities Law (‘PAL’).

                                                                                                                                             

BACKGROUND

 

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

 

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

 

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

 

DISCUSSION

 

                “In 2007, Authority staff undertook a wholesale review of its annual strategic planning process wherein the content of the Strategic Plan was redesigned to make the Authority’s role and intentions more clear so that stakeholders may form a better understanding of the driving forces behind the Authority’s direction and decisions.  In addition, the strategic planning process was reformed from the prior, shorter-term tactical view to a new, longer-term strategic view of the work plan.  Additional efforts by staff provided greater linkage between the Strategic Plan and each organizational unit and employee within the Authority through the annual development of business plans for each of the major functional areas within the Authority.  The Authority’s Strategic Plan, which is presented in Exhibit ‘9-A,’ is delineated in the following format: 

 

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

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

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

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

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

 

                “The Mission Statement, Vision Statement and Values remain unchanged from the prior year.  The supporting business plans, which are represented in the Strategic Goals and Balanced Scorecard performance measures, cover planned work and anticipated resource requirements for the period 2013 through 2017 and have been updated by each of the respective departments.  The business plans have been designed to both complement and translate the 2013 Strategic Plan goals into operational plans for each of the business units.  There is direct line-of-sight between the 2013 Strategic Plan goals and the strategic initiatives detailed in each business plan.  More importantly, the business plans are designed to describe all the responsibilities and functions carried out within each business unit, including the day-to-day baseline work, specific business unit initiatives required to improve the effectiveness or efficiency of the core business and the resources required to perform the Authority’s business activities.  By taking this holistic view, it is possible to gain a broad view of the total resource requirements – people, O&M dollars, and capital dollars – necessary to complete both the baseline work, as well as work associated with one-time initiatives.

 

RECOMMENDATION

 

                “The Director – Strategy Management recommends that the Trustees adopt the 2013 Strategic Plan presented herein and authorize the filing of the Authority’s mission statement and performance measures with the Authorities Budget Office as required by Section 2824-a of the Public Authorities Law.   

 

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

 

                Ms. Janis Archer provided highlights of staff’s recommendation to the Trustees.  In response to a question from Chairman Koelmel, Ms. Archer said the 2013 strategic plan applies to the period 2013 through 2017.  This five-year plan is updated each year and staff will consult with and provide updates to the Board throughout the strategic planning process.  Responding to a question from Trustee LeChase, Ms. Archer said the most extensive portion of the strategic planning process is during the second quarter when staff integrates it with the budgeting process, which process encompasses the implementation of all the directions set in the strategic plan.  In response to a question from Trustee Flynn, Ms. Archer said, going forward, an enterprise risk management forecast will be included in the Performance Scorecard.

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

                                                               

RESOLVED, That the Trustees hereby acknowledge that they have read, understand and adopt the Authority’s 2013 Strategic Plan attached hereto as Exhibit  “9-A” as discussed in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

               


 

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


 

10.                Motion to Conduct an Executive Session

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

 


 

11.                Motion to Resume Meeting in Open Session

 

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


 

12.                  Next Meeting

 

The Regular Meeting of the Trustees will be held on May 21, 2013, at 11:00 a.m., at the Albany Office, unless otherwise designated by the Chairman with the concurrence of the Trustees.

 

 


Closing

                On motion made and seconded, the meeting was adjourned by the Chairman at approximately 1:30 p.m.

 

 

Delince Signature

 

Karen Delince

Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                

 

 

 

 



[*] Based on NYPA at-risk analysis, the potential profit-sharing revenues are expected to fall in a range between $900,000 and $7 million, net of service charges (50th to 60th percentile values).

[†] NYPA’s Marcy South Series Compensation Project and Con Edison’s Ramapo-to-Rock Tavern and Staten Island Un-bottling Projects,