MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

May 21, 2013

 

Table of Contents

 

 

 

                Subject                                                                                                                  Page No.               Exhibit

 

                Introduction                                                                                                               3

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

2.                   Consent Agenda:                                                                                                       5

a.       Minutes of the Annual Meeting held on March 21, 2013                      6

b.       Firm Market Power Service Tariff and Western                                       7                       2b-A-1; 2b-B-1

                                New York Service Tariff Amendments – Notice

                                of Proposed Rulemaking

 

c.        Allocations of Hydropower and Notice of Public                                   10                      2c-A; 2c-A-12c-A-2;

                Hearing                                                                                                                                  2c-B; 2c-B-12c-B-2

 

d.       Direct Sale Contracts for the Sale of Western New York                      14                      2d-A; 2d-A-1 -

                                Hydropower – Transmittal to the Governor                                                                   2d-A-6; 2d-B; 2d-C

 

e.        Municipal and Rural Electric Cooperative Economic                           17

                                Development Program – Allocation to the Village

                                of Green

 

f.        Industrial Incentive Award Approval                                                       19

g.       Niagara Power Project – Administration Building                                  21

                                and Power Vista Reception Building Sidewalk

                                Replacement – Contract Award

 

h.       Transmission Life Extension and Modernization                                   24

                                Program – St. Lawrence – Massena Substation

                                765 kV Reactors Refurbishment – Contract Award

 

i.         Transmission Life Extension and Modernization                                   27

                                Program – Clark Energy Center   – Marcy 765 kV

                                Auto-Transformers and Reactors – Contract Award

 

j.         Alcoa Transmission Line Relocation Project – Capital                         29

                                Expenditure Authorization Request Resolution

 

k.       Moses-Willis Circuit Separation Project – Capital                                  31

                                Expenditure Authorization Request

 

l.         Central Region Small Hydro Control System and                                  33

                                Governor Upgrade – Capital Expenditure

                                Authorization and Contract Award

 

                Subject                                                                                                                  Page No.               Exhibit

 

m.     Blenheim-Gilboa Power Project – Generator Step-Up                           36

                                Transformers – Capital Expenditure Authorization

                                and Contract Award

 

n.       Transmission Rights-of -Way Vegetation Inventory                             39

                                Services – Contract Award

 

o.       Southeastern New York Air Program Support Services –                      41

                                Contract Award

 

p.       Gregory B. Jarvis Power Project and Niagara Power                              43

                                Project – Independent FERC Consultant’s Safety

                                Inspection and Follow-up Service – Contract Award

 

q.       Procurement (Construction) Contract – Niagara Power                        46

                                Project Relicensing, Compliance and Implementation

                                Frog Island Wetland Restoration Habitat Improvement

                                Project Dredging and Excavation Work – Contract Award

 

r.        Energy Efficiency Market Acceleration Program – Cities’                   49

                                Energy Master Plans Development – Contract Award

                                Authorization

 

Resolution

 

Discussion Agenda:                                                                                                                 52     

 

3.                   Q&A on Reports from:

 

a.       President and Chief Executive Officer                                                  52                      3a-A

 

b.       Chief Operating Officer                                                                           55                      3b-A

 

c.        Chief Financial Officer                                                                            58                      3c-A

 

4.                   Awards of Fund Benefits from the Western New York                                     60                      4-A 4-D

                    Economic Development Fund Recommended by the

                    Western New York Power Proceeds Allocation Board 

Resolution

 

5.                   Selection of Investment Managers for the Authority’s Other                          65                     

                    Post-Employment Benefits Trust Fund

Resolution

 

6.                   Energy Efficiency Market Acceleration Program – Contract                           69

            Awards

Resolution

 

7.                   Marcy-South Series Compensation Project – Request for                                73

                    Authorization to Proceed

Resolution

 

8.                   Informational Item: Risk Management Update                                               76                      8-A

 


 

Subject                                                                                                                  Page No.               Exhibit

 

9.                   Informational Item: Risk Mitigation Strategy –                                                78                      9-A        

                    Lewiston Pump-Generating Plant Life Extension

                    and Modernization Program

 

10.                Motion to Conduct an Executive Session                                                            79

 

11.                Motion to Resume Meeting in Open Session                                                       80

 

12.                Next Meeting                                                                                                             81

 

Closing                                                                                                                        82     

 

 

                                                                                                                                                                   

 


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

 

Members of the Board present were:

 

                                John R. Koelmel, Chairman

                                Eugene Nicandri, Trustee

                                Jonathan Foster, Trustee

                                Terrance P. Flynn, Trustee

                                Joanne M. Mahoney, Trustee

 

                                Trustee R. Wayne LeChase – 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

Paul Belnick                                         Vice President – Energy Efficiency

John Canale                                         Vice President – Project Manager

Thomas Davis                                      Vice President – Financial Planning and Budgets

Dennis Eccleston                                 Vice President – Information Technology/Chief Information Officer

Michael Huvane                                  Vice President – Marketing – Business and Municipal Marketing

John Kahabka                                     Vice President – Environmental, Health and Safety

Robert Knowlton                                 Vice President – Engineering

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

Phillip Toia                                            Vice President – Transmission

Harry Francois                                     Regional Manager – Western New York (Niagara)

Lynn Hait                                             Regional Manager – Central New York (B-G)

Arthur Cambouris                               Deputy General Counsel – Litigation

Lori Alesio                                             Assistant General Counsel – Human Resources and Labor Relations

Karen Delince                                       Corporate Secretary

Brian McElroy                                     Treasurer

Brian Liu                                               Deputy Treasurer

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

Carol Geiger-Wank                             Director – Labor and Special Projects

Mike Lupo                                            Director – Marketing Analysis and Administration

Mark Malone                                       Director – Project Development and Licensing

Michael Saltzman                               Director – Media Relations

Mark Slade                                           Director – Licensing, Relicensing and Implementation

Guy Sliker                                             Director – Clean Energy Technology

Ricardo DaSilva                                  Project Manager – Generation and Facility Improvements

Gary Schmid                                        Manager – Network Services Infrastructure

Steve Schoenwiesner                          Manager – Relicensing and Implementation

Joseph Crimi                                         Lead Project Engineer I – Energy Efficiency

Ruth Colon                                           Senior Business Integration Project Manager

Brian Wilkie                                          Rotational BI Project Manager – Special Projects and Business Integration

John Giumarra                                     Account Executive – Business Marketing and Economic Development

Vanessa Perez                                      Associate Account Executive – Business and Municipal Marketing

Lorna M. Johnson                               Associate Corporate Secretary

Sheila Baughman                                                Assistant Corporate Secretary

Lindsay Dean                                       Intern – Special Projects and Business Integration

Sheri Mooney                                      

                               

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 May 21, 2013 Proposed Meeting Agenda

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

 


 

2.                   Consent Agenda:               

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

            Trustee Flynn was recused from the votes on Items 2d (Direct Sale Contracts for the Sale of Western New York Hydropower – Transmittal to the Governor) as it relates to Klein Steel Service Inc. and 2r (Energy Efficiency Market Acceleration Program – Cities’ Energy Master Plans Development – Contract Award Authorization) as it relates to LaBella Associates, PC and Wendel Energy Services, LLC.  Trustee Mahoney was recused from the vote on Item 2r as it relates to Wendel Energy Services.

 

                 


 

a.       Approval of the Minutes

                The Minutes of the Annual Meeting held on March 21, 2013 were unanimously adopted.


 

b.       Firm Market Power Service Tariff and Western

New York Service Tariff Amendments –

                        Notice of Proposed Rulemaking                                 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize the Corporate Secretary to publish a Notice of Proposed Rulemaking (‘NOPR’) in the New York State Register, in accordance with the requirements of the State Administrative Procedure Act (‘SAPA’), to amend: (1) the Schedule of Rates for Sale of Firm Market Power (‘ST 1C’)’ to replace the Authority’s two current Direct Firm Power Service Tariffs applicable to its Market customers and (2) the Western New York tariff (‘ST WNY-1’) applicable to its Expansion and Replacement customers located in Western New York.  Drafts of ST 1C and ST WNY-1 are attached as Exhibit ‘2b-A-1’ and Exhibit ‘2b-B-1,’ respectively.  Authority staff will address any comments received during the 45-day public comment period and return to the Trustees at a later date to seek final action on the service tariffs set forth above.

 

BACKGROUND 

 

“The two current market tariffs, ‘Direct Firm Power Service Tariff No. 1B (‘ST-1B’)’ and ‘Direct Firm Power Service Tariff No. 1 (‘ST-1’)’, collectively serve four customers in contractual agreement for continued service with the Authority until December 31, 2020.  These customers include Brookhaven Science Associates, being served under ST-1B, and Air Products & Chemicals, Inc., Linde LLC and Reynolds Metal Company, being served under ST-1.

 

“Electricity for these four customers is sold under ‘direct sale’ contracts between the Authority and the customer.  The Authority serves as the Load Serving Entity (‘LSE’) for these customers in accordance with the requirements of the New York Independent System Operator (‘NYISO’).  To supply the Market customers with Firm Market Power, the Authority makes market-based purchases from the NYISO in either the day-ahead or real-time markets.

 

The Western New York customers currently consist of 106 business customers, located within 30 miles of the Niagara Power Project, who have received an allocation for Expansion Power (‘EP’) and/or Replacement Power (‘RP’) from the Authority.  Both of these power programs total 695 megawatts (‘MW’) with EP consisting of 250 MW and RP consisting of 445 MW.  The currently effective ST WNY-1 was developed in December 2010 with ‘sale for resale’ as the primary business model and an effective date of July 1, 2013.  The tariff, which was going to terminate on June 30, 2013, was developed well in advance of its effective date to coincide with the contract extension of almost all EP and RP customers.  Since that time, at the urging of the utilities that provide delivery service, the business model has changed to ‘direct sale,’ driving the need to amend the tariff.  The amended ST WNY-1 will remain effective July 1, 2013 and will replace the three existing Authority service tariffs that govern EP and RP and the currently effective ST WNY-1.

 

DISCUSSION

 

“A comprehensive review of the Authority’s current Market and Western New York tariffs was performed by Authority staff in an effort to update them.  The following proposed amendments would be applicable to both tariffs:

 

·         Format these tariffs to be consistent with the Authority’s other tariffs for easier reading, streamlining, and improved organization;

·         Clarify existing charges for which customers are responsible; and

·         Include certain standard provisions now applicable to all Authority service tariffs.

               

The amended Market tariff, as proposed, will consolidate, into one document, the two current Market tariffs and various tariff provisions that were adopted at different times.  The following is a summary of the proposed changes to the Market Power tariff:

 

·         Add specific abbreviations and terms and updated terminology;

·         Incorporate language on billing methodology, scheduling of firm market power and firm market energy, reconciliation of usage and billing between contracts and delivery of market power;

·         Include provisions to allow the Authority to recover all costs incurred on the customer’s behalf.

 

The amended Western New York tariff, as proposed, will specify how the Authority will render bills to the customer, depict what a bill should be based on and how the Authority shares energy with alternate suppliers.  The following is a summary of the proposed changes to the Western New York tariff:

 

·         Format the abbreviations and terms to be consistent with the other Authority tariffs and add necessary terms not previously defined;

·         Include provisions regarding Estimated Billing, Adjustments to Charges and Rendition and Payment of Bills;

·         Incorporate language on Billing Methodology;

·         Remove provisions that are no longer relevant as they pertain to delivery, which is not provided by the Authority, including Transformer Losses and Power Factor.

 

FISCAL INFORMATION

 

Adoption of both the proposed Market tariff and Western New York tariff will have no financial impact on the Authority.  The changes proposed are administrative in nature and have no effect on current production rates.

 

RECOMMENDATION

 

The Director – Market Analysis and Administration, recommends that the Trustees authorize the Corporate Secretary to file a Notice of Proposed Rulemaking for publication in the New York State Register for the revision of the service tariffs for the Authority’s Market customers, and Expansion and Replacement Power customers located in Western New York.

 

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

 

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

 

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

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file a Notice of Proposed Rulemaking for publication in the New York State Register in accordance with the State Administrative Procedure Act to amend the Authority’s current Market tariffs applicable to its Market customers and the Western New York tariff applicable to its Expansion and Replacement Power customers located in Western New York, as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Corporate Secretary of the Authority be, and herby is, directed to file such other notice(s) as may be required by statute or regulation concerning the proposed tariff amendments; and be it further

               

RESOLVED, That the Senior Vice President – Economic Development and Energy Efficiency, or his designee, be, and hereby is, authorized to take any further actions as may be necessary to effectuate the foregoing; and be it further

 

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

 


 

c.        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 5,600 kilowatts (‘kW’) to Advance 2000, Inc. (2,900 kW) and Niagara Refining LLC (2,700 kW), as further described herein and in Exhibit ‘2c-A.’  These allocations, collectively, will support capital expansion of more than $50.8 million and the creation of 117 jobs in Western New York (‘WNY’).  The Trustees are also requested to authorize a public hearing pursuant to Public Authorities Law (‘PAL’) §1009 on proposed direct sale contracts for these allocations, the current form of which is attached as Exhibit ‘2c-B.’

 

BACKGROUND

 

“In summary, 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 as 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).  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, the 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 of these entities and each has indicated support for the proposed recommendation.

 

DISCUSSION

 

                 At this time, there are 4,895 kW of unallocated EP and 40,453 kW of unallocated RP available for eligible businesses under the criteria set forth in PAL §1005(13)(a).  The following companies have submitted applications for hydropower to support proposed expansion projects as described below.

               

                Advance 2000, Inc.

 

Advance 2000, Inc. (‘Advance’) has been operating for more than 22 years, delivering information technology (“IT”) services to a variety of industries, including corporate health care and government agencies.  Headquartered in Williamsville, Erie County, NY, Advance has other locations in Boston, Philadelphia, Charlotte, Chicago, New York City, Toronto and Rochester.  Advance offers full-service IT solutions including private cloud computing, network design and implementation, integrated communications and IT consulting to small, medium and enterprise-size businesses including engineering, healthcare, and manufacturing firms.

 

Advance currently operates a data center at its headquarters on Wehrle Drive in Williamsville.  The company has applied for 5 megawatts (‘MW’) of hydropower to support a proposed expansion in a 74,000-square-foot manufacturing building on Pineview Drive in Amherst (an industrial park setting).  The additional location is needed to handle increased demand for hosted voice and data services and cloud computing for a variety of new companies nationwide.

 

The initial phase of the Pineview Drive expansion would occupy 30,000 square-feet of the facility and include the installation of 250 data center racks, along with a cooling system and seven air handling units.  The first phase investment of $7,250,000 would be broken out as follows: $2.4 million for building acquisition; $1 million for improvements; $2 million for cooling; $1 million for generators; and $850,000 for various equipment.  Advance expects the first phase to be fully operational by the end of the year.  The entire project build-out would span three years with a total capital investment commitment of $21,350,000.

 

Advance will agree to commit to create 67 positions within three years at its new facility with relatively high average wages and benefits.  It also plans to transfer at least 80 current employees from the Wehrle Drive headquarters to the new facility.  The existing site would remain as a disaster recovery location for the new site.  The company expressed confidence that if this expansion plan moves forward, more jobs would be created in subsequent years.

 

The calculated job creation/MW ratio for a 2.9 MW allocation is 23.1 jobs per MW.  This ratio is above the historic average of 17.9 new jobs per MW for the last four years.  The capital investment of $21.35 million proposed by Advance would result in a capital investment/MW ratio of $7.4 million per MW.  This ratio is below the four-year historic average of $21.3 million per MW.

 

Low-cost power is a critical component to the success of Advance’s expansion plans and will allow it to compete with other leading technology firms in the growing cloud computing arena.  As with any data center related project, power costs are a significant percentage of the cost of production at the facility.  A hydropower allocation would also support this ‘home-grown’ technology company’s mission of being a ‘green company.’

 

Staff recommends that an allocation of RP in the amount of 2,900 kW be awarded to Advance based on Advance’s commitments to make capital investments of approximately $21.35 million and create 67 jobs.

 

                Niagara Refining LLC

 

Niagara Refining LLC (‘NiRef’), headquartered in Depew, Erie County, NY was formed to create a tungsten refining plant in WNY.  The key purpose of the new plant is to provide its owners with an independent source of supply (tungsten) for production of tungsten carbide powders and other industrial materials.  Currently, 80% of the world’s supply of tungsten comes from China.  Historically, China has been reducing its exports of intermediary tungsten products in order to sell more finished goods.  The tungsten refinery would free the owners from potential interruptions in supply and reduce dependence on foreign tungsten sources.

 

NiRef has submitted an application requesting 5.4 MW of hydropower to develop the plant in 100,000 square feet of unused space at a ‘brownfield-site’ facility owned by one of its owners, Buffalo Tungsten Inc. (‘BTI’).  BTI is a current hydropower customer with two contractually compliant allocations of RP totaling 2,050 kW.  The project involves installation of new chemical process equipment, including tanks, piping and pumps.  Also, refurbishment of existing building infrastructure is necessary.  These improvements would include all new concrete floors, drains, dikes, metal platforms, and all new electrical infrastructure and controls.  Two small ancillary buildings would also be constructed.  The production output of the plant will be shared and fully utilized by the owners.

 

NiRef plans to invest approximately $29.583 million, including $9.9 million for building construction, modifications and upgrades; $1.2 million for engineering and office improvements; and $18.2 million for plant components and infrastructure at the Depew location.  The company hopes to be fully operational by the fourth quarter of 2013.

 

NiRef would commit to creating 50 positions at its new facility as a result of the proposed allocation.  The calculated job creation/MW ratio for a 2.7 MW allocation is 18.5 new jobs per MW.  This ratio is above the historic average of 17.9 new jobs per MW over the last four years.  The total project investment of $29.583 million proposed by NiRef would result in a capital investment/MW ratio of $11.0 million per MW.  This ratio is below the four-year historic average of $21.3 million per MW.

 

The availability of low-cost power is critical to NiRef’s decision to move forward with the project.  An allocation will enable NiRef to compete effectively with firms overseas, in particular, China, which hosts most of the world’s the tungsten supply production.  Additionally, through the project’s reuse and renovation of a facility located on a brownfield site, the allocation would help NiRef reduce the environmental impact of the otherwise unused and distressed facility.

 

Staff recommends that an allocation of RP in the amount of 2,700 kW be awarded to NiRef based on NiRef’s commitments to make capital investments of approximately $29.583 million and create 50 jobs.

 

                In summary, staff recommends that RP allocations totaling 5,600 kW be awarded to Advance (2,900 kW) and NiRef (2,700 kW) in exchange for a total of $50.8 million of capital investment and the creation of 117 new jobs at the proposed WNY facilities.  The recommendation is described in Exhibit ‘2c-A’ showing, among other things, the amount of power requested by the applicant, the recommended allocation amounts, and the applicant’s proposed commitment to job creation and capital investment.  Additional information on the projects is contained in the application summaries attached as Exhibits ‘2c-A-1’ and ‘2c-A-2.’

 

CONTRACT INFORMATION

 

                The Authority is in the process of discussing the proposed contract with these companies and anticipates receiving customer approval of a contract form substantially similar to Exhibit ‘2c-B.’  The Trustees are requested to authorize a public hearing pursuant to PAL §1009 on the negotiated direct sale contract for these recommended allocations, the current form of which is attached as Exhibit ‘2c-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.

 

                The general 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 Advance 2000, Inc. or Niagara Refining LLC’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 these companies 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.

               

RECOMMENDATION

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the allocations of Replacement Power totaling 5,600 kW to Advance 2000, Inc. (2,900 kW) and Niagara Refining LLC (2,700 kW) as detailed in Exhibit ‘2c-A.’  It is also recommended that the Trustees authorize the Corporate Secretary to convene a public hearing on the form of the proposed contracts finally negotiated with these companies, the current form of which is attached as Exhibit ‘2c-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.”

 

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

 

RESOLVED, That allocations totaling 5,600 kW of Authority hydropower to Advance 2000, Inc. (“Advance”) and Niagara Refining LLC (“NiRef”) as detailed in Exhibit “2c-A,” be, and hereby are, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

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

 

RESOLVED, That the Corporate Secretary be, and hereby is, authorized to arrange for the publication of a notice of public hearing in six newspapers throughout the State, 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.

 

 


 

d.       Direct Sale Contracts for the Sale of Western New York

                        Hydropower – Transmittal to the Governor                       

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to: (1) approve proposed final contracts for six existing Expansion Power (‘EP’) and/or Replacement Power (‘RP’) customers; and (2) authorize transmittal to the Governor of the proposed final proposed contracts for his approval and authorization for the Authority to execute the contracts.  The contracts are for the direct sale of EP and/or RP allocations and would commence on July 1, 2013 upon the expiration of these customers’ current sale-for-resale agreements.  Copies of the proposed final contracts are attached as Exhibit ‘2d-A.’  For your convenience, we have attached as Exhibit ‘2d-B’ a list of the customers along with the respective allocations and commitments that are provided for in the contracts.

 

BACKGROUND

 

“Under Public Authorities Law (‘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 the Authority’s 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 contracts before the Board would apply to six current EP and RP customers as described in Exhibit ‘2d-B.’  These customers did not receive long-term contract extensions as part of the initiative identified above because (i) the allocations at issue were awarded after the period when the Authority offered long-term extensions, (ii) delivery for these allocations commenced after such period, or (iii) the customers declined long-term extensions.  As a result, the allocations of these customers extend beyond the term of the soon-to-expire sale-for-resale contractual arrangements with the customers’ local utilities.  The contracts would enable the Authority to continue to sell these customers their allocations under a direct sale arrangement for the remaining term of the allocations.  Transmission and delivery service for these allocations would continue to be provided by National Grid or NYSEG, as applicable, and in accordance with their filed service tariffs. 

 

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

 

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

 

·         The contracts would include each customer’s previously agreed-upon supplemental commitments (to be included in a schedule attached to each individual 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. 

 

·         The contracts include the ability to award additional allocations of EP or RP to the customers at the same facility, which would be incorporated into Schedule A of the contracts.  The Trustees approved this convention in the 2010 long-term extension contracts, 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 contracts include commercially reasonable provisions concerning, among other things, the ability to require deposits in the event of a customer’s failure to make payment for any two monthly bills.  This is consistent with recent Authority contracts that incorporate direct billing, including the Authority’s Recharge New York sales contracts.

 

“The Authority has discussed each contract with the relevant customer, including the fact that each customer’s supplemental commitments will not change, and in each case has received customer consent to the proposed contract.  The customers acknowledge that ST WNY-1 rates will apply to their allocations effective July 1, 2013, as will be the case with all allocations of EP and RP being served at that time.

 

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

 

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

 

DISCUSSION

 

“At their February 21, 2013 meeting, the Trustees authorized the Corporate Secretary to transmit the proposed contract to the Governor and legislative leaders and schedule a public hearing on the contracts.  A public hearing on the contracts was held on April 25, 2013 at the Niagara Power Project’s Power Vista Visitors’ Center in Lewiston.  There was one oral statement made at the public hearing and no written statements were submitted.  The oral statement largely did not pertain to the contracts.  The official transcript of the public hearing is attached as Exhibit ‘2d-C.’

 

RECOMMENDATION

               

“The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the six contracts for the sale of RP and/or EP allocations that are attached as Exhibit ‘2d-A’ and authorize the transmittal of the contracts to the Governor for approval.

 

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

 

                The following resolution, as submitted by the President and Chief Executive Officer, was adopted with Trustee Flynn being recused from the vote as it relates to the aforementioned company.

 

RESOLVED, That the contracts for the sale of hydroelectric power and energy generated by the Authority for sale to certain Replacement Power and Expansion Power customers are in the public interest and should be submitted to the Governor for approval and that the contracts, along with the record of the public hearing thereon, be forwarded to the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Ways and Means Committee, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee; and be it further

 

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

 

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

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, 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.        Municipal and Rural Electric Cooperative

Economic Development Program –

                        Allocation to the Village of Greene____    

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

 

“The Trustees are requested to approve an allocation of 375 kW of hydropower under the Municipal and Rural Electric Cooperative Economic Development Program (‘Program’) to the Village of Greene (or ‘Greene’).

BACKGROUND

 

“The 1991 amendment to the power sales agreement between the Authority and the Municipal and Rural Electric Cooperative Systems set aside a block of 54 MW from the 752 MW of hydropower allocated to the systems for economic development in the systems’ service territories.  The total allocation was increased to 764.8 MW as a result of additional power resulting from the Niagara Project upgrade. 

 

“Power from this block can be allocated to individual systems to meet the increased electric load resulting from eligible new or expanding businesses in their service area.  Recommended allocations under the Program will now be made using guidelines that were approved by the Trustees at their meeting on September 23, 2008.  Under the revised program, the first 100 kW allocated will be from 100% hydropower and any additional kW at 50% hydropower and 50% incremental power. 

 

“To date, 32,345 kW of power has been allocated.  The Village of Greene has submitted an application for power under the Program for consideration by the Trustees.

 

DISCUSSION

 

“An application has been submitted by the Village of Greene to the Authority on behalf of Sunrise Family Farms (‘Sunrise’).  Sunrise is a fast growing specialty ‘Greek style’ yogurt manufacturer that started in 2004, primarily processing organic dairy products.  The company’s primary market is private label processing of strained ‘Greek Style’ yogurt, which is growing exponentially with major National brands such as Chobani and Oikos (Dannon).

 

 In order to meet present customer demands, Sunrise will expand its operations in the Village of Greene.  Sunrise also has an existing facility in Norwich NY.  The company has partially operated from its Greene, New York location for the past three years, having used the space primarily as a dry inventory storage facility.  The current 25,000 square feet facility in Greene will undergo an expansion of an additional 40,000 square feet and a 6000 square feet cooler expansion.

 

Sunrise is a company that began as a family farm and continues to embrace an entrepreneurial spirit.  The company is committed to the local New York State (‘NYS’) dairy farmers, in that, the business employs a business model that does not follow the federal milk pricing system when it comes to compensating farmers for milk.  The company pays its farmers a flat fixed price with a premium for their milk so that it falls above the federal milk pricing Order.  In addition to the stable fixed price offering, the company pays the farmers weekly, not bi-weekly, as is the norm in the industry.  Sunrise values the farmers’ financial stability and ensures that they obtain the economic return needed to secure milk, a benefit for both parties.

 

“Capital investment for the expansion project is approximately $3.4 – 4 million for the initial phase, with a total capital investment of $6 – 8 million by 2016.  The project will consist of site improvements, the construction of the new production facility and all related soft costs.  The company anticipates that the expansion will add approximately 560 kW to the existing monthly peak demand at the expanded facility.  This expansion will create 19 new full-time jobs at the expanded Greene Facility.  In addition, the company also plans to maintain its existing facility in Norwich, NY, which has a total of 50 local jobs.  The company had started to explore options to move manufacturing to other sites outside NYS.

 

Sunrise Farms has also received and accepted an Empire State Economic Development grant in the amount of $275,000.

 

“It is recommended that the Trustees approve an allocation of 375 kW of Economic Development Power for the Village of Greene on behalf of Sunrise Family Farms.  Expanding in Greene means the creation of 19 full-time jobs.

 

“In accordance with the Authority’s marketing arrangement with the municipal and cooperative customers, the hydropower will be added to the recipient system’s contract demand at the time the project becomes operational and the additional jobs and load commitments are reached.  The hydropower earmarked for this Program is presently sold to the municipal and rural electric cooperative customers on a withdrawable basis. 

 

RECOMMENDATION

 

“The Vice President – Marketing recommends that the Trustees approve the allocation of hydropower, totaling 375 kW, under the Municipal and Rural Electric Cooperative Economic Development Program, to the Village of Greene, in accordance with the discussion 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 allocation of power to the Village of Greene under the Municipal and Rural Electric Cooperative Economic Development Program is hereby approved as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Senior Vice President – Economic Development and Energy Efficiency or his designee be, and hereby is, authorized to execute any and all documents necessary or desirable to effectuate this allocation, subject to the approval of the form thereof by the Executive Vice President and General Counsel; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, 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.        Industrial Incentive Award Approval

 

The President and Chief Executive Officer submitted the following report:

                                                                                                                                                                                                               

SUMMARY

 

                “The Trustees are requested to approve an Industrial Incentive Award (‘IIA’) to Pratt Paper (NY), Inc. (‘Pratt’) in accordance with the existing IIA Economic Development Plan.

 

BACKGROUND

 

                “Public Authorities Law (‘PAL’) §1005 (eighth unnumbered paragraph) directs the Authority to identify ‘net revenues’ produced by the sale of Expansion Power (‘EP’) and, further, to identify an amount of such net revenues that will be used solely for IIAs.  The Authority is directed in PAL §1005 to identify net revenues available for IIAs no less often than annually.  Net revenues are defined as any excess of revenues properly allocated to the sales of EP over costs and expenses properly allocated to such sales. 

 

“IIAs are to be made in conformance with an Economic Development Plan (‘Plan’) covering all such ‘net revenues.’  The Authority submits a Plan to the Economic Development Power Allocation Board (‘EDPAB’) pursuant to Section 188 of the Economic Development Law (‘EDL’) which also provides for EDPAB’s approval of the Plan upon its determination that such Plan is consistent with, among other things, the economic development criteria provided for in EDL §§ 184 and 185 that evaluate applications for certain power.

               

“At its October 26, 2009 meeting, EDPAB approved a Plan that allows for the use of net revenues from the sale of EP for calendar years 2008 through, and including, 2016 to provide electric bill discounts to manufacturing companies located in New York State that are at identifiable risk of closing or relocating to another state.

               

DISCUSSION

 

“Economic conditions are placing financial burdens on many New York State manufacturing companies.  Among these companies is Pratt, which operates a paper mill, a corrugated box factory and a sorting facility in Staten Island. 

 

“Pratt’s Staten Island facility has been in operation since 1997.  Its facility is located in Con Edison’s service area and its typical energy usage is up to 150,000,000 kWh per year.  Manufacturing processes represents a substantial portion of Pratt’s total electricity consumption, and energy costs are a primary consideration for where Pratt will operate.

      

                “Pratt is currently facing difficult economic challenges.  In addition to being severely impacted by Super Storm Sandy and experiencing multi-million dollar losses not covered by insurance, Pratt has experienced significant increases in electricity costs.  As a result, the competiveness and long-term viability of its Staten Island facility is in jeopardy and it is considering relocating to a State offering substantial manufacturer incentives.  Pratt’s manufacturing plants include two sister facilities, one in Conyers, GA, and the other in Shreveport, LA.  Compared to these sites, Pratt’s Staten Island plant electricity cost per kWh is more than double the cost at Pratt’s Conyers site and more than 70% higher than the cost at its Shreveport site.  With such severe deterioration in the competitive position of the Staten Island mill, Pratt has indicated that it will be forced to scale back operations and ultimately relocate the mill.  Additionally, Pratt has established an in-house committee to study the phased relocation of the Staten Island campus out of New York State.

 

                “It is recommended that the Board of Trustees authorize an IIA to Pratt in an annual amount of up to $1 million per year for up to five years.  Authority staff has been communicating with Pratt about its situation and staff has determined that Pratt has demonstrated that it meets the qualifying criteria for an IIA.  This recommendation comes after careful consideration of Pratt’s business case.

 


 

“The proposed form of the IIA would be a cents per/kWh price discount applied to a level of annual electric consumption.  The IIA would be subject to, among other appropriate terms and conditions:

 

 

                “Accordingly, it is recommended that the Trustees approve an IIA to Pratt in an annual amount of up to $1 million per year for up to five (5) years, subject to the foregoing terms and conditions.  The Authority will report to the Trustees annually on the actual disbursement of funds. 

 

FISCAL INFORMATION

 

“Industrial Incentive Awards may only be paid if sufficient net revenues are produced by the sale of Expansion Power and since such net revenues and associated awards are anticipated in each year’s budget, it will not have a significant impact on the Authority’s finances.

 

RECOMMENDATION

 

“The Senior Vice President – Economic Development and Energy Efficiency recommends that the Trustees approve an Industrial Incentive Award to Pratt Paper (NY), Inc. in the amount proposed herein and subject to the aforementioned conditions.  

 

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


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

 

  RESOLVED, That the Authority hereby approves an Industrial Incentive Award (“IIA”) to Pratt Paper (NY), Inc., subject to the conditions provided for 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 all actions and execute and deliver any and all agreements, certificates and other documents, to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.    

 

 

 


 

g.       Niagara Power Project – Administration Building and

        Power Vista Reception Building Sidewalk Replacement –

        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 $571,400 to EdBauer Construction (‘EdBauer’), of Blasdell, NY, to replace and renovate various sidewalks and staircases surrounding the Robert Moses Niagara Power Plant’s (‘RMNPP’) Administration Building and Power Vista Reception Building at the Niagara Power Project (the ‘Project’).

 

BACKGROUND

 

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

 

“The existing sidewalks surrounding RMNPP’s Administration Building and Power Vista Reception Building consist of a combination of sidewalks poured during the initial construction of the Project in the 1950’s for public access.  A site inspection was performed in 2012 by Hatch Associates and a concrete condition survey report was developed to assess the general condition as well as useful available service life on the original concrete sidewalks.  Over the past 50+ years, frost heaved sections of the sidewalks have created numerous tripping hazards which is a safety concern.  Temporary repairs have been made on limited areas; however, based on heaving caused by freezing and thawing in cold weather seasons, the extensive damage is beyond repair.  As recommended in the Investigation Report Condition Survey, permanent sidewalk replacement is necessary in order to eliminate numerous tripping hazards.

 

“Overall replacement of the surrounding facility sidewalks is the most cost-effective method in achieving safe walking surfaces.  The scope-of-work under this contract includes:

 

i)         Improvements to the entrances of the Administration Building including structural concrete and structural crack repairs to the staircase structures and replacement of the sidewalks and granite curbing.

 

ii)       Replacement of the sidewalks and granite curbing from the Screen Well Building to the Power Vista Entrance portal along with the installation of new curb ramps which are compliant with the American with Disabilities Act.

 

iii)      Replacement of the Courtyard sidewalks in order to achieve a uniform appearance to the entrance of the Power Vista, a place commonly visited by thousands of tourists every year.

DISCUSSION

 

                “The Authority issued an advertisement to procure bids in the New York State Contract Reporter on March 5, 2013 and bid packages were available as of March 4, 2013.  The bid documents were downloaded by fifty eight (58) potential bidders and six (6) potential bidders participated in a site visit on March 12, 2013.

 

“The following three proposals were received on April 8, 2013:

               

Bidder

Location

Lump Sum Bid

 

EdBauer Construction

 

Blasdell, NY

 

$563,200.00

Sicoli & Massaro., Inc.

Niagara Falls, NY

$724,800.00

BVR Construction

Churchville, NY  

$1,057,000.00

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

 

                EdBauer’s bid was the lowest in price and was also technically acceptable.  EdBauer’s proposed schedule and scope-of-work meet the Authority’s requirements as described in the bid document.  EdBauer submitted a comprehensive work plan for the concrete repair and its proposed hazardous materials abatement program, manpower projection and health and safety program are in accordance with New York State Department of Transportation (‘NYSDOT’) and Authority standards.  EdBauer has performed satisfactorily on previous Authority projects, including the construction of the Niagara University Wall and Berm Project completed in 2009. 

 

                “The evaluation committee recommends that the contract be awarded to EdBauer for the total lump-sum amount of $571,400 which includes the cost of a performance bond.  EdBauer’s experience, safety record, resources, pricing and technical capabilities are sufficient to perform this work and EdBauer took no commercial exceptions to the bidding document         

 

“Funding for the first year of the two-year project has been included in the 2013 approved Operations Budget.  Future funding will be included in the Operations Budget requests for that year.

 

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 multi-year contract to EdBauer Construction of Blasdell, NY, in the amount of $571,400, to perform the Sidewalk Replacement work at the Power Vista and Administration Buildings located at the Niagara Power Project.

 

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

 

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a two-year contract to EdBauer Construction, of Blasdell, NY, in the amount of $571,400, to perform the Sidewalk Replacement work at the Power Vista and Administration Buildings located at the Niagara Power Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 

                                                Contractor                          Contract Approval

                               

                                                EdBauer Construction,                    $571,400

                                                Blasdell, NY                                        

 

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

 


 

h.       Transmission Life Extension and Modernization Program

                        St. Lawrence – Massena Substation

                        765 kV Reactors Refurbishment – Contract Award              

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award of a multi-year contract in the amount of $11.7 million to ABB, Inc. of St. Louis, MO to refurbish eight ASEA 765kV reactors at the Massena Substation. 

 

BACKGROUND

 

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.  In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment purchase contracts exceeding $3 million require the Trustees’ approval.

“The Transmission Life Extension and Modernization Program (‘Program’) is multiyear program that will upgrade the Authority’s existing transmission system to maintain availability, increase reliability, and ensure regulatory compliance.  The Program encompasses transmission assets in the Central, Northern, and Western Regions of the State and has been divided into several projects.  The Program is estimated to cost $726 million and includes:

 

-          Upgrades, refurbishments, and replacements associated with switchyards and substations

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

-          Replacement of the submarine cable on PV-20

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

 

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

 

                In 2007, ABB conducted a Life Assessment and Risk of Failure Study covering the ASEA Shunt Reactors.  The study centered on the operating condition, life assessment and risk of failure analysis and provided an extensive list of recommendations required to maintain reliability and extend the life of the reactors.  The recommendation indicated a need to refurbish the reactors at the Massena Substation.  Refurbishment efforts will be performed in a sequenced approached.  The current schedule calls for the refurbishment of one reactor this year, and two units per year for 2014 through 2016 and completion of the final unit in 2017.

 

“The Massena Substation is a 765 kV substation.  There are a total of eight reactors at the substation which were put into service in 1977.  The reactors are critical components of the 765 kV transmission system.  The refurbishment of the reactors will lengthen the service life of these assets to improve reliability and maintain a robust electrical grid while minimizing future losses which can result in a loss of a 765 kV transmission line and resulting in loss of revenue. 

 

DISCUSSION

 

“The scope-of-work under this contract includes the refurbishment of eight ASEA reactors.

 

“In response to the Authority’s request for proposal advertised in the New York State Contract Reporter on January 17, 2013, fifty (50) firms downloaded the bid documents.  The following three (3) proposals were received on January 18, 2013 as noted below:


 

Bidders:

Base Price

Evaluated Price

ABB, Inc.

St. Louis, MO

 $ 7,513,116

 $ 11,744,436

Eaton Corp

LeRoy, NY

 $ 12,639,616

 $ 14,435,610

GE Energy

Tonawanda, NY

 $ 7,275,200

 Non-Responsive

 Post Bid Addendum #1 was issued 4/3/2103.

 

In 2006, ABB conducted a Life Assessment and Risk of Failure Study, which indicated a need to refurbish the auto-transformers and reactors at the Marcy Substation.   Refurbishment efforts will be performed in a sequenced approached.   The current schedule calls for the refurbishment of one reactor this year with two units per year from 2014 through 2016 and completion of the final unit in 2017.

 

“In addition to the base proposal, $1.7 million will be added to the contract award for work associated with civil improvements and extended warranty of five years.  An initial release of $9.2 million will be issued.

 

“Optional pricing was also requested of ABB, Inc., based on projected future expenses.  These optional items, totaling $2.6 million, will be exercised based on condition of equipment following inspection.

 

“The project work will commence in 2013 with the refurbishment of one reactor, and two units per year for 2014 through 2016, and the final reactor will be completed in 2017.

 

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 – Transmission, the Vice President – Procurement, and the Project Manager recommend that the Trustees approved the award of a multi-year contract to ABB, Inc. in the amount of $11.7 million.

 

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

 

                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 ABB, Inc., in the amount of $11.7 million to provide refurbishment services to eight reactors for use at the Massena Substation, as recommended in the foregoing report of the President and Chief Executive Officer:

 

                                                Contractor                              Contract Approval

                                                ABB, Inc.

                                                St. Louis, MO                                  $11.7 million

                                               

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.         Transmission Life Extension and Modernization Program

        Clark Energy Center – Marcy 765kV

        Auto-Transformers and Reactors – Contract Award            

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award of a multi-year contract in the amount of $19.6 million to ABB, Inc. of St. Louis, MO to refurbish three ASEA 765 kV auto-transformers, four ASEA 765 kV reactors, and three Westinghouse 765 kV auto-transformers at the Clark Energy Center (‘CEC’).

 

BACKGROUND

 

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.  In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services, construction and equipment contracts exceeding $3 million require the Trustees’ approval.

“The Transmission Life Extension and Modernization is multiyear program that will upgrade the Authority’s existing transmission system to maintain availability, increase reliability, and ensure regulatory compliance.  The Program encompasses transmission assets in the Central, Northern, and Western Regions of the State and has been divided into several projects.  The Program is estimated to cost $726 million and includes:

 

-          Upgrades, refurbishments, and replacements associated with switchyards and substations

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

-          Replacement of the submarine cable on PV-20

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

 

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

 

“The CEC consists of a 765 kV and 345 kV substation.  There are a total of seven auto-transformers and four reactors at the substation which were put into service in 1978.  The refurbishment of auto-transformer (1B) is ongoing and scheduled to be completed this summer by ABB, Inc.

“The auto-transformers and reactors are critical components of the 765 kV transmission system.  The refurbishment of the auto-transformers and reactors will lengthen the service life of these assets to improve reliability and maintain a robust electrical grid while minimizing future losses which can result in the loss of a 765kV transmission line and revenue. 

 

DISCUSSION

 

“The scope-of-work under this contract includes the repair and refurbishment of three ASEA auto-transformers, four ASEA reactors, and three Westinghouse auto-transformers.

 

“In response to the Authority’s request for proposal advertised in the New York State Contract Reporter on January 24, 2013, forty-four (44) firms downloaded the bid documents.  The following proposal was received on January 25, 2013 as noted below:

 

Bidder:

Base Proposal

Evaluated Proposal

ABB Inc.

St. Louis, MO

 $11,557,832

 $19,556,074

 


 

In 2006, ABB conducted a Life Assessment and Risk of Failure Study, which indicated a need to refurbish the auto-transformers and reactors at the Marcy Substation.  Refurbishment efforts will be performed in a sequenced approached.  The current schedule calls for the refurbishment of one additional auto-transformer this year with two units per year from 2014 through 2017 and completion of the final unit in 2018.

 

“In addition to the base proposal, $3.4 million will be added to the contract award for work associated with wiring and extended warranty of five years.  An initial release of $15.0 million will be issued.

 

“During the ongoing refurbishment of auto-transformer (1B), there were unanticipated expenses due to the nature of the refurbishment project.  Optional pricing was requested of ABB, Inc., based on lessons learned and projected future expenses.  These optional items totaling $4.6 million will be exercised based on the condition of the equipment following inspection.

 

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 – Transmission, the Vice President – Procurement, and the Project Manager recommend that the Trustees approve the award of a multi-year contract to ABB, Inc. in the amount of $19.6 million.

 

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

 

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 ABB, Inc., in the amount of $19.6 million, to refurbish six auto-transformers and four reactors for use at the Marcy Substation, as recommended in the foregoing report of the President and Chief Executive Officer;

 

                                                Contractor                         Contract Approval

                                               

                                                ABB, Inc.                                      $19.6 million              

                                                St. Louis, MO                             

 

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.

 


 

j.         Alcoa Transmission Line Relocation Project

        Capital Expenditure Authorization Request

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize capital expenditures in the amount of $3,715,000 for the Alcoa Transmission Line Relocation Project (the ‘Project’).  This Project entails the relocation of the existing 115 kV Transmission Lines MRG1, MRG2 and MR3 in support of Alcoa’s Massena Modernization Project (‘MMP’).

 

“Alcoa will reimburse the Authority for 100% of the cost of the Project.

 

BACKGROUND

 

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

 

“At their meeting on December 16, 2008, the Trustees approved a new long-term agreement between the Authority and Alcoa, Inc. for the sale of 478 MW of hydroelectric power generated at the St. Lawrence/FDR Project.  The term of this agreement is for 30 years with a provision for a possible 10-year extension.  As part of the agreement, Alcoa, Inc. committed to protect a minimum of 900 jobs at the aluminum production facilities.  The agreement was contingent upon the Alcoa Board of Directors approving the investment of at least $600 million for the Alcoa Massena Modernization Project.

 

“In March of 2013 the Alcoa Board of Directors announced the Company’s decision to proceed with the next phase of the project. Alcoa is planning to invest $42 million for site preparation at the Massena East smelter and provide an additional $10 million toward a North Country Economic Development Fund (‘NCEDF’).  Before construction begins on the new smelter, certain projects must be completed, one being the Alcoa Transmission Line Relocation Project.

 

“The Alcoa Massena Modernization Project will install a new 115 kV Substation to feed the loads for the new Smelting Potline and the auxiliary 13.8 kV loads of Alcoa’s Massena East Plant. The proposed location of the new substation and new potline is currently encumbered by the present location of the Authority’s Transmission Lines MRG1, MRG2 and MR3. These lines currently feed Alcoa’s Reynolds Substation and other Customers (GM and Awkwesasne).

 

“The Authority and Alcoa executed an Agreement in January of 2011 to relocate Transmission Lines MRG1, MRG2 and MR3 around the proposed location of the new substation and potline while maintaining supply to the current plant.

 

“The Authority is responsible for the Preliminary Engineering, Detailed Engineering, and Construction scope of work associated with relocation of the transmission lines.

 

DISCUSSION

 

“Relocation of Transmission Lines MRG1, MRG2 and MR3 was structured to be performed in three (3) phases:

 

Phase 1: Preliminary Engineering (2009)

Phase 2: Detailed Engineering (2011 – 2012)

Phase 3: Construction (2013)

 

“The Authority issued contracts to Hatch Energy (‘Hatch’) for the Phase 1 and 2 scope of work.  Hatch completed the Preliminary Engineering in 2009 and Detail Engineering in 2012.

 

“The Authority issued a Request for Proposals (‘RFP’) for Phase 3 – Construction and has completed the bid evaluation to award an installation contract to Northline Utilities, LLC the lowest cost and technically acceptable bidder.

 

“This capital expenditure authorization is comprised of the following:

                                                                                               

                PHASE 1 – Preliminary Engineering                                                        $   125,000

               

                PHASE 2 – Engineering/Design                                                                $   420,000

 

                PHASE 3 – Procurement                                                                            $   100,000

 

                PHASE 4 – Construction/Installation                                                     $2,750,000

 

                PHASE 8A – NYPA Direct Expense                                                        $   175,000

                (Project Mngmt, Construction Mngmt)

 

                PHASE 8B – NYPA Indirect Expenses                                                   $   170,000

 

                                                                                                TOTAL                          $3,715,000  

 

FISCAL INFORMATION

 

“Payments associated with this project will be made from the Authority’s Capital Fund.  Alcoa will reimburse the Authority for 100% of the cost of the Project.

 

RECOMMENDATION

“The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Transmission, the Vice President – Procurement, the Project Manager, and the Regional Manager – Northern New York recommend that the Trustees approve capital expenditures in the amount of $3,715,000 for the Alcoa Transmission Line Relocation Project.

 

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

 

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to authorize capital expenditures in the amount of $3,715,000 for the Alcoa Transmission Line Relocation Project, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

k.       Moses-Willis Circuit Separation Project –

Capital Expenditure Authorization Request

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize capital expenditures in the amount of $6.1 million for the implementation of the Moses-Willis Circuit Separation Project (the ‘Project’).  The President and Chief Executive Officer has already approved $998,000 for preliminary engineering and acquisition of easements and transmission structures from Alcoa.

 

BACKGROUND

 

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

 

“This Project is needed to remove the double-circuit contingency identified by the New York Independent System Operator (‘NYISO’) on the Moses to Plattsburgh Facility.  This double-circuit contingency is a result of the Moses-Willis (‘MW’) 230 kV lines (MW-1 and MW-2) that are currently located on common structures for the first two miles from St. Lawrence (‘STL’) Moses-Switchyard and the only major transmission path east from STL.  If a tower failure should occur, both MW lines could be out of service.  As a result of the current configuration, the NYISO performs certain actions that affect system reliability.

 

“The Project involves the separation of the MW-1 and MW-2 circuits onto separate towers and the construction of five new tower structures in the Town of Massena, such that the loss of one structure does not disable the ability of both lines to transmit power. 

 

“The following activities were required to support the separation of the MW-1 and MW-2 circuits:

 

-          Acquire easements from private landowner by purchase or eminent domain

-          Acquire easements and transmission structures from Alcoa

-          File with the New York State Public Service Commission, an application to amend the existing MW Certificate of Environmental Compatibility and Public Need (‘Certificate’) to permit the Project.

 

“On April 18, 2013, the Public Service Commission approved the Authority’s application to amend the Certificate.

 

DISCUSSION

 

“In response to the Authority’s request for proposals  (Q13-5424FS) advertised in the New York State Contract Reporter on February 19, 2013, thirty-nine (39) firms downloaded the bid documents and two proposals were received on March 25, 2013 for the construction services of the Project.

 

“The proposals were evaluated based on:

 

-          Compliance with commercial, technical and quality assurance requirements

-          Safety record

-          Price

-          Past performance

 

Michels Power of Neenah, WI was determined to have submitted the lowest-cost and technically acceptable bid.  Michels Power demonstrated an understanding of the Project and the ability to successfully complete the Project as planned.  Additionally, Michels Power has a proven track record and familiarity with the Authority’s work practices.

                                                                                                                                                

“The work will be performed in 2013.  Construction will commence in July 2013 and will be completed by December 2013.

 

“The capital expenditure authorization request is compromised of the following:

 

                                Preliminary Engineering (previously authorized)                           $     998,000

               

                                Engineering and Design                                                                      $     243,000

               

                                Procurement                                                                                         $ 1, 034,000

               

                                Construction/Installation                                                                   $ 3,120,000

               

                                Authority Indirect and Direct Expenses                                          $     674,000

                                                                               

                                                                                                                TOTAL                  $ 6,069,000

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

“The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Transmission, the Vice President – Procurement, the Project Manager and the Regional Manager – Northern New York recommend that the Trustees authorize capital expenditures in the amount of $6.1 million for the implementation of the Moses-Willis Circuit Separation 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 Authority’s Expenditure Authorization Procedures, capital expenditures in the amount of $6.1 million for the implementation of the Moses-Willis Circuit Separation Project are hereby authorized in accordance with, and as recommended in, the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That 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.         Central Region Small Hydro Control System

and Governor Upgrade – Capital Expenditure

                        Authorization and Contract Award                   

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize capital expenditures in the amount of $5.2 million for the Central Region Small Hydro Control System and Governor Upgrade (the ‘Project’).  The work will occur at the Authority’s Ashokan ($1.4 million), Crescent ($2.1 million) and Vischer Ferry ($1.7 million) Small Hydro Facilities (total 10 generating units) and will include Engineering, Procurement, Construction, and Project Management.

 

“The President and Chief Executive Officer has approved the amount of $100,000 for preliminary engineering.

 

“The Trustees are also requested to approve the award of a multi-year value contract to L&S Electric Inc. of Rothschild, WI, in the amount of $3.7 million for the Project.  The contract work is scheduled to commence in 2013 and be completed in 2016.

 

BACKGROUND

 

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

 

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.  Also, in accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment purchase contract exceeding $3 million require the Trustees’ approval.

 

“The generating units that comprise the small hydro facilities were either installed or refurbished by the Authority during the 1980s and utilize a combination of electromechanical and programmable logic controller (‘PLC’) controls for unit operations.

 

“Basic operator control is currently provided via control switches and indicators.  The obsolete GE Series 6 PLC controls the operation of interlocks and unit auxiliaries.  The PLC also supports terminal type unit interfaces that are used for troubleshooting PLC inputs, outputs, and logic.  However, the existing unit interfaces are out of service due to lack of support and available parts that has resulted in reduced unit reliability. 

 

“The Ashokan units utilize hydraulic governor controls for both wicket gates and variable blade controls that were assembled from various parts not originally designed for hydroelectric use.  The parts include a belt driven speed increaser and cam operated blade position control.  With obsolete governor components that frequently fail, the Ashokan units are difficult to keep running.

 

“The inability to maintain and repair the equipment has resulted in increased maintenance cost and loss of revenues. 

 

DISCUSSION

 

The small hydro control system and governor upgrade project includes the followings:

 

1.       Replacement of the obsolete PLC with modern PLC of common architecture/platform that will standardize operations and control of the small hydro units.

2.       Replacement of obsolete unit interfaces with modern HMI systems for units and central plant monitoring/operation as well as troubleshooting the controls.

3.       Replacement of obsolete switches, meters, and indicators for unit controls.

4.       Replacement of the hydraulic governor/blade position equipment at Ashokan with equipment specifically designed for hydroelectric facilities.

5.       Replacement of MOOG gate/blade positioner controls at Unit 3 & Unit 4 of Crescent and Vischer Ferry with modern digital governors.

6.       Replacement of Woodward flyball governors at Unit 1 & Unit 2 of Crescent and Vischer Ferry with modern digital governors.

 

“The Authority placed a notice to procure bids in the New York State Contract Reporter on July 13, 2012 for the Central Region Small Hydro Control System and Governor Upgrade Project.  Five proposals were originally received on January 22, 2013.  After several post bid inquiries, the following revised bid was received and evaluated:

 

Bidder

Location

Lump Sum

L&S Electric, Inc.

Rothschild, WI

$3,713,930

 

“The proposals were reviewed by an evaluation committee comprised of the Authority’s staff from Blenheim-Gilboa, Engineering, Procurement, and Project Management.

 

“L&S Electric’s bid was technically acceptable and L&S Electric has extensive experience in projects of this type and magnitude and demonstrated knowledge of the scope-of-work, is capable of completing this project in a timely manner.  The Authority’s prior experience with L&S Electric has been satisfactory.

 

“The project work will be performed from 2013 to 2016.

 

“The total project cost is estimated to be $5.2 million as follows:

 

Task

      Total

Preliminary Engineering

$   100,000

Engineering

$   157,400

Procurement

$2,415,000

Construction

$2,070,000

Authority Direct & Indirect

$   457,600

Total:

$5,200,000

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

“The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Procurement, the Project Manager, and the Regional Manager – Central New York recommend that the Trustees approve capital expenditures in the amount of $5.2 million for the Central Region Small Hydro Control System and Governor Upgrade Project and a contract award to L&S Electric, Inc. in the amount of $3.7 million for the engineering, procurement and construction of this 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 Authority’s Expenditure Authorization Procedures, capital expenditures in the amount of $5.2 million are hereby authorized in accordance with, and as recommended in, the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, that pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a multi-year contract to L&S Electric Inc. of Rothschild, WI, in the amount of $3.7 million, for engineering, procurement, and construction of this project, as recommended in the foregoing report of the President and Chief Executive Officer:

 

Contractor                           Contract Approval

 

L&S Electric Inc.                       $3.7 million

Rothschild, WI

 

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.

 


 

m.     Blenheim Gilboa Power Project – Generator Step-Up

Transformers – Capital Expenditure Authorization

                        and Contract Award                                                             

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize capital expenditures in the amount of $6.9 million for the engineering, design, manufacture, shipment, assembly, installation, testing, and commissioning of two generator step-up transformers (the ‘Project’) for Blenheim-Gilboa Power Project (‘B-G’).  One of the new transformers will be installed at Unit #2 and the other will serve as a standby spare.

 

“The Trustees are also requested to approve the award of a value contract to Hyundai Heavy Industries Co. (‘HHI’) of South Korea, in the amount of $5.6 million to design, fabricate, test, deliver, assemble, install and commission the transformers.  The contract work is scheduled to commence in 2013 and be completed in 2014.

 

BACKGROUND

 

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

 

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.  Also, in accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services or equipment purchase contract exceeding $3 million requires Trustees’ approval.

 

“On August 26, 2012, the Unit #2 Generator Step-Up Transformer (‘GSUT’) at the B-G project had a significant internal failure which rendered the transformer unrepairable.  The damaged GSUT was removed from service and replaced with the existing spare transformer allowing unit operation to be restored.  The spare transformer, however, is undersized for long-term use with the turbine-generators that were upgraded during the recent B-G Life Extension and Modernization (‘LEM’) project.  As a result of the loss of one transformer and the undersized condition of the existing spare, two new 325 MVA GSUTs will be purchased to match the three remaining transformers replaced during the LEM program.

 

DISCUSSION

 

“The Authority placed a notice to procure bids in the New York State Contract Reporter on October 9, 2012 and bid packages for the Procurement of Two Generator Step-Up Transformer for B-G were available as of October 15, 2012.  Nine proposals were originally received on November 20, 2012. 

 

“All proposals were reviewed by an Evaluation Committee comprising the Authority’s staff from B-G, Engineering, Quality Assurance, Asset Management, Procurement, and Project Management.

 

“The proposals were evaluated based on:

·         Compliance with commercial, technical and quality assurance requirements

·         Price

·         Compatibility with the existing GSU transformers

·         Engineering and Quality Assurance support and travel associated with overseeing the design, fabrication, and testing.

 

“As part of the bid evaluation process, post bid addenda were issued for technical and commercial clarifications from all bidders.  

 

“The Evaluation Committee determined that HHI’s bid in the lump-sum price of $5,600,942 to be technically acceptable.

 

“HHI is the original manufacturer of the existing GSUTs at B-G.  HHI’s proposed design of the new GSUT will be identical to that of the three GSUTs purchased as part of the B-G/LEM project except for the tap changer.  The proposed tap changer will be of a newer design to avoid premature failure that was experienced and lessons learned from the failed Unit #2 GSUT. 

 

“Design and fabrication of the two new transformers will begin in 2013 and delivey and installation will occur in the third quarter of 2014.

 

“The total project cost is estimated to be $6.9 million as follows:

 

Task

Total

Engineering

$   157,500

Procurement

$5,880,000

Construction

$   379,500

Authority Direct & Indirect

$   464,000

Total:

$6,881,000

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

“The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Procurement, the Project Manager, and the Regional Manager – Central New York recommend that the Trustees approve capital expenditures in the amount of $6.9 million for two generator step-up transformers for Blenheim-Gilboa Power Project and a contract award to Hyundai Heavy Industries Co. in the amount of $5.6 million to design, fabricate, test, deliver, assemble, install and commission the transformers.

 

“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, capital expenditures in the amount of $6.9 million are hereby authorized in accordance with, and as recommended in, the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a value contract to Hyundai Heavy Industries Co. in the amount of $5.6 million to design, fabricate, test, deliver, assemble, install and commission the transformers, as recommended in the foregoing report of the President and Chief Executive Officer:

 

Contractor                                   Contract Approval

 

Hyundai Heavy Industries               $5.6 million

South Korea

 

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.

 


 

n.       Transmission Rights-of-Way Vegetation Inventory

                        Services – Contract Award                                             

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve the award and funding of a four-year contract in the amount of $1,250,000 to Gomez & Sullivan Engineers, P.C. of Williamsville, New York for the provision of Transmission Rights-of-Way Vegetation Inventory Services.

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.

DISCUSSION

“Since 1999, the Authority has developed a comprehensive Geographic Information System (‘GIS’) database for its overhead transmission line system.  Data on vegetation structure and composition, land use, foreign utilities, maintenance issues and other features have been collected along the Authority’s right-of-way corridors using pen-top computers and field portable GIS.  The Authority requires annual inventories for the portions of its transmission system that it plans to have treated for vegetation management the following year, as part of its Integrated Vegetation Management program which operates on a four-year treatment cycle.  Since the existing contract for such services is expiring, and the need for these services is ongoing, staff prepared a new Request for Proposals (Q13-5405JM).

 

“To that end, the Authority issued an advertisement in the New York State Contract Reporter and bid packages were available as of January 28, 2013.  Fifty-two (52) companies downloaded the bid documents via the Authority’s Web site.  Six proposals were received and were evaluated using technical expertise, experience, ability to prosecute the work, and cost as the criteria, as further set forth in the Award Recommendation documents.  This analysis was performed by an evaluation committee comprised of staff from Real Estate, Transmission, Environmental, and Procurement.  Based on its qualifications, experience, ability to perform such work and responsiveness to the Authority’s specifications, as well as pricing, staff recommends the award of a contract to the lowest bidder, Gomez & Sullivan Engineers, P.C. (‘G&S’), which was also determined to be the most technically qualified to perform such transmission line right-of-way vegetation inventory services and has provided satisfactory service under the existing contract for such work.  The contract would become effective on June 1, 2013 for an intended term of up to four years (to be released annually), subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $1,250,000.

 

“The term of this contract will be more than one year; therefore, the Trustees’ approval is required.  This contract contains 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.  This contract award does not obligate the Authority to a specific level of personnel resources or expenditures.


 

FISCAL INFORMATION

“Funds required to support this contract 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.

RECOMMENDATION

“The Senior Vice President – Corporate Support Services, the Vice President – Procurement, the Vice President – Transmission and the Director – Real Estate recommend that the Trustees approve the award and funding of a four-year contract in the amount of $1,250,000 to Gomez & Sullivan Engineers, P.C. of Williamsville, New York for the provision of Transmission Rights-of-Way Vegetation Inventory Services.

“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 four-year contract in the amount of $1,250,000 to Gomez & Sullivan Engineers, P.C. of Williamsville, New York for the provision of Transmission Rights-of-Way Vegetation Inventory Services, as recommended in the foregoing report of the President and Chief Executive Officer;

 

                                                                Contractor                            Contract Approval

 

                                                                Gomez & Sullivan                         $ 1,250,000

                                                                Engineers, P.C.                 

                                                Williamsville, 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, 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.       Southeastern New York Air Program Support Services –

        Contract Award                                                                             

               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award of a five-year procurement (services) contract in the amount of $1.3 million to TSI Turtle Services LLC (‘TSI Turtel’) of Linden, NJ for services in connection with the implementation of air program requirements for emission sources at the Authority’s Southeastern New York (‘SENY’) plants.

 

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.

 

DISCUSSION

 

                “The Authority’s SENY Region consists of nine (9) facilities, which contain fourteen combustion turbine generators.  Each SENY facility has a Title V Air Permit, which allows the Authority to operate the combustion turbine generators as long as their emissions conform to the limits set forth in the permit.  The Consultant would support the Authority’s efforts in the timely completion of reports as required by permitting agencies and would also provide an independent third-party review of all documents, ensuring conformance with permit requirements.  The firm’s competent personnel would also support the day-to-day duties of the SENY Environmental Coordinator on an ‘as needed’ basis.  Additionally, the Consultant would provide on-site services when new regulations or extensive revisions to existing regulations need to be implemented.

 

“In response to the Authority’s Request for Proposals (‘RFP’) advertised in the New York State Contract Reporter (Inquiry No. Q13-5430MR) on March 4, 2013, seventy-seven (77) companies downloaded the bid documents from the Authority’s Procurement website and eight (8) submitted proposals.  The bid pricing is summarized below.

 

 

Bidder

 

City, State

 

Section A Total

Section B Total

Contract Total

TSI Turtle

Linden, NJ

   $797,875

   $502,125

$1,300,000

Burns & Roe

Oradell, NJ

$1,019,024

   $937,500

$1,956,524

VIM Technologies

Glen Burnie, MD

   $975,000

$1,031,250

$2,006,250

Burns & McDonnell

Wallingford, CT

$1,533,023

   $937,097

$2,470,120

ESS Group

East Providence, RI

$1,678,800

   $947,475

$2,626,275

O’Brien & Gere

Hawthorne, NY

$1,832,000

   $835,227

$2667,227

CHA

Albany, NY

$1820,750

   $928,750

$2,749,500

NAES

Issaquah, WA

$2,416,960

$1,325,000

$3,741,960

 

                “Review of the submitted bid proposals established that all eight bidders understand the services required and are qualified to perform the work.  All of the bidders provided detailed corporate experience as well as the resumes of the key personnel that would be involved in the program.  The corporate work histories and the key personnel resumes were evaluated against the inquiry schedule of services and all of the bidders demonstrated adequate experience and, based on the resumes provided, are proposing to use adequately qualified personnel.

 

                “Therefore, the final decision came down to cost and past Authority experience.  Staff first reviewed the firm lump-sum pricing submitted by each bidder for data analysis, report preparation and compliance-related activities.  Staff then calculated the projected costs based on estimated hours and pricing submitted by each bidder, as further set forth in the award recommendation documents.  TSI Turtle, the current contract holder, is both the lowest-priced evaluated bidder and the most technically qualified for providing the SENY air program support services as outlined in the RFP.  The company has an expert understanding of the Authority’s Continuous Emission Monitoring Systems (‘CEMS’) equipment, the Babcock & Wilcox software, PLC interface, operating facilities, and the reporting process.  TSI Turtle reports have consistently been delivered on-time and with a high level of accuracy.

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

                “The Senior Vice President – Power Generation, the Vice President – Procurement,  the Vice President – Environment, Health and Safety and the Regional Manager – SENY recommend that the Trustees approve the award of a five-year contract to TSI Turtle Services LLC of Linden, NJ in the amount of $1.3 million to provide Air Program Support Services for the SENY power plants.

 

                “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 TSI Turtle Services LLC of Linden, NJ, in the amount of $1.3 million, for Southeastern New York (“SENY”) Air Program Support Services as recommended in the foregoing report of the President and Chief Executive Officer;

 

Contractor                               Contract Approval

                                                 

TSI Turtle Services LLC                      $1,300,000

Linden, NJ

 

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 approval of the form thereof by the Executive Vice President and General Counsel.

 


 

p.       Gregory B. Jarvis Power Project and Niagara

Power Project – Independent FERC Consultant’s

Part 12D Safety Inspection and Follow-up Service –

                        Contract Award                                                                   

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve the award of a procurement (services) contract (Q13-5425JDM) to the firm of Gomez and Sullivan Engineers, P.C. (‘Gomez and Sullivan’) located in Utica, NY for inspection and consulting services in support of an independent consultant’s inspection, report and follow-up service for the Gregory B. Jarvis Power Project and the Niagara Power Project, as mandated by the Federal Energy Regulatory Commission (‘FERC’).  The intended term of the contract is five years for the total projected amount of $512,000.

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.

DISCUSSION

“FERC regulations require the Authority to hire an independent consultant to perform an independent dam safety inspection and review at licensed projects every five years.  FERC issued two letters, one on January 7, 2013 indicating that the report for Niagara Power Project was due for submittal by December 1, 2013, and another on January 16, 2013 indicating that the report for the Gregory G. Jarvis Power Project was due for submittal by January 2, 2014.  In response to the Authority’s Request for Proposals (‘RFP’) advertised in the New York State Contract Reporter on February 22, 2013, seventy-seven (77) firms downloaded the bid documents from the Authority’s procurement website.

 

                “Bidders were required to submit a detailed proposal in accordance with the RFP and scope-of-work, with bidders permitted to bid on just one project or both projects combined.  Five bids were received and opened on March 21, 2013.  Of this number, one firm bid on just the Gregory B. Jarvis Power Project Part 12D independent consultant safety inspection and follow-up services.  All five bids were analyzed and evaluated in greater detail by a team of staff members from the Operations and the Procurement Department.

 

“The bid evaluation looked at the lump-sum contract price for the task of the first year (2013) for the dam safety inspection and report for the Gregory B. Jarvis Power Project and Niagara Power Project individually and both projects combined in addition to the cost for the work in the next four years (2014 thru 2017).  Staff calculated total projected costs based on estimated man-hours needed for projected tasks based upon prior experience to address continuing engineering services to respond to FERC questions in years 2-5 of the contract and corresponding hourly rates provided by each firm in their proposal. 

 

“Based on the foregoing, Gomez and Sullivan was the lowest-priced evaluated bidder of the five bids received and its proposal indicates a complete understanding of the FERC requirements for this work.  Based on the company’s qualifications and ability to perform such work, staff recommends awarding a contract to Gomez and Sullivan.  Its proposal is complete, competitive and fully responsive to the scope-of-work.  The company has allocated proper resources to complete this work thoroughly and on-time.  FERC’s new inspection report guidelines require the degree of staffing allocated by Gomez and Sullivan and the company has the knowledge and expertise to perform this work. 

 

“The award is for $69,000 for the first year of the contract including $600 for any additional unforeseen work.  FERC requires the independent consultant to be available to answer follow-up questions for a period of five years.  Therefore, based upon prior experience to address continuing engineering services to respond to FERC’s questions in years 2-5 of the contract, the value of the contract is estimated to include $110,750 in years 2-5 of the contract.  The total value of the contract is $512,000.

 

“FERC must approve the résumé of the specific independent consultants employed by Gomez and Sullivan to proceed with this work.  Historically, FERC has required the Authority to utilize the FERC-approved independent consultant to conduct follow-up work; therefore the intended term of the contract is five years.  This contract will permit the Authority to comply with the FERC mandate that the Authority conduct independent consultant inspections of its licensed hydropower project every five years.  Pursuant to FERC’s letter dated January 7, 2013, the Authority is required to submit a letter for the approval of the proposed Niagara Power Project independent consultant to FERC no later than June 1, 2013, six months before the Part 12D Safety Inspection Report is due.  Pursuant to FERC’s letter dated January 16, 2013, the Authority is required to submit a letter for the approval of the proposed Gregory B. Jarvis Power Project independent consultant to FERC no later than July 2, 2013, six months before the Part 12D Safety Inspection Report is due.

 

FISCAL INFORMATION

“Funds required to support the contract are 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.

RECOMMENDATION

“The Senior Vice President Operations Support Services and Chief Engineer, the Vice President  Engineering, the Vice President – Procurement, the Regional Manager – Central New York, the Regional Manager – Western New York and the General Manager – Clark Energy Center recommend that the Trustees approve the award of a five-year contract to Gomez and Sullivan Engineers, P.C. for inspection and consulting services as 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 pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award and funding of the five-year procurement contract to Gomez and Sullivan Engineers, P.C., in the amount of $512,000, is hereby approved, as recommended in the foregoing report of the President and Chief Executive Officer;

 

Contractor                           Contract Approval

 

Gomez and Sullivan                  $512,000

Engineers, P.C.

Utica, NY

 


 

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

 

 


 

q.       Procurement (Construction) Contract –

Niagara Power Project Relicensing, Compliance

and Implementation of the Frog Island Wetland

Restoration Habitat Improvement Project –

Dredging and Excavation Work – Contract Award

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

 

                “The Trustees are requested to approve the award of a procurement contract to L.D.C. Construction Co., Inc., (‘LDC’) for the Frog Island Wetland Restoration Habitat Improvement Project (‘HIP’) dredging and excavation work as part of the implementation of the Niagara Power Project (‘NIA’) new license and settlement commitments.  The term of the contract will be from May 2013 through the end of 2014.  The amount for which authorization is requested is $4,167,735. 

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 in excess of one year.  The Authority’s Guidelines for Procurement Contracts also require the Trustees’ approval for procurement contracts in excess of $3 million.

 

“The Federal Energy Regulatory Commission (‘FERC’) issued the New License for the Project on March 15, 2007.  The new license and associated Settlement Agreement and Section 401 Water Quality Certification (‘WQC’) from the New York State Department of Environmental Conservation require implementing the provisions of the Comprehensive Settlement Offer and the new License Terms and Conditions.  Article 9A of the WQC requires the New York Power Authority (‘the Authority’) to establish a fund for the design, construction, operation, maintenance, and monitoring of eight specified HIPs; Frog Island is one of these HIPs.

 

“The area once known as Frog Island is presently a submerged area within the upper Niagara River in Erie County, NY.  This shallow underwater area is owned by the People of the State of New York, under the jurisdiction of the Authority.  The dredging and excavation at this location is one of two major elements of the Frog Island Wetland HIP, the goal of which is to re-establish approximately 3.9 acres of historic fish and wildlife habitat in an area of the river that is presently barren of useful habitat.  This will be accomplished through reconfiguration of the river bottom by dredging to create channels and contours of varying depths, installing appropriate substrate materials to support growth of desirable submerged and emergent aquatic plants, installing logs and other features to attract a variety of aquatic and terrestrial species, and protecting these features from erosion by installing new stone berms.  The second element of the Frog Island HIP (to be addressed through a separate contract) will involve cultivation and installation of wetland and upland plants within the dredged and excavated area.  The Authority agreed to execute a project to restore this historic wetland during the relicensing of NIA.

DISCUSSION

 

                “On March 1, 2013, the Authority issued a Request for Quotation (‘RFQ’) for the dredging and excavation work at Frog Island, including a notice in the New York State Contract Reporter.  Three proposals were received on March 29, 2013 from BIDCO Marine Group of Buffalo, NY, Sevenson Environmental Services of Niagara Falls, NY, and L.D.C. Construction Co., Inc. of Grand Island, NY.  The RFQ requested pricing for dredging and excavation work using three different disposal scenarios for excess dredged material.  For the primary disposal scenario, one proposal price was within the Authority’s estimate for the project, while the other two were above the Authority’s estimate.  For the alternate disposal scenarios, all prices were within the Authority’s estimate.

 

“Staff from the Authority’s Relicensing and Implementation (‘R&I’) Division, the Environmental Health and Safety Division, and the Procurement Division evaluated the proposals for technical qualifications and pricing.  The Authority’s review team was assisted in the technical evaluation by staff from Kleinschmidt Associates, who was responsible for the biological design and engineered elements of the HIP, and the Authority’s Niagara Compliance Implementation Consultant, Gomez and Sullivan Engineers, who assist the Authority with project management of Niagara Project relicensing implementation projects.

 

“LDC was the lowest qualified bidder.  LDC’s proposal offers the lowest cost under each disposal scenario specified in the RFQ and the company has proposed a technically sound and more cost-effective alternate along with its base bid submittal.  LDC’s overall marine construction experience and successful performance on two river projects for NIA relicensing implementation supports the selection of that firm and its proposed alternate method for accomplishing the Frog Island dredging and excavation.  The company’s recent successful completion of the Little Beaver Island wetland restoration HIP and the Motor Island Shoreline Restoration HIP for the Authority amply demonstrated its capability to execute large earthwork projects in a marine environment.  In addition to operating safely and with appropriate quality control, LDC demonstrated considerable resourcefulness on the Beaver Island project in overcoming challenges that were not of its making, and worked very well in coordinating overlapping work with a planting contractor, similar to what is planned for the Frog Island HIP.  The company’s successful experience on two other non-Authority marine projects at the nearby East River Marsh and Strawberry Island in the upper Niagara River is further indicative of its capabilities.   LDC proposed no unacceptable deviations or exceptions for the Frog Island HIP dredging and excavation. 

 

“Therefore, it is recommended that the contract be awarded to LDC.  The contract term will be from May 2013 through the end of 2014, and the contract amount will be a lump-sum of $3,788,850.  In addition, it is recommended that an additional amount of $378,885 be included in the Trustee authorization for potential field adjustments to address unanticipated subsurface conditions, effects of river level variation, or other factors using LDC’s proposed contract unit prices.  Including this additional amount, the total recommended authorization is $4,167,735. 

FISCAL INFORMATION   

 

“Since these expenditures are related to implementing new project commitments in the New License and the Section 401 Water Quality Certificate issued by the New York State Department of Environmental Conservation, payments will be made from the Capital Fund. 

RECOMMENDATION

 

“The Vice President – Licensing, Project Development and Compliance, the Vice President – Procurement and the Director – Relicensing and Implementation recommend that the Trustees authorize the award of a construction contract to L.D.C. Construction Co., Inc. for the Frog Island Wetland Restoration Habitat Improvement Project dredging and excavation work at the Niagara Power Project.  

 

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

 

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a contract to L.D.C. Construction Co., Inc. from May 2013 through the end of 2014, in the amount of $4,167,735, for construction services for the Frog Island Wetland Restoration Habitat Improvement Project dredging and excavation work at the Niagara Power Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 


 

Contractor                                           Contract Approval

 

L.D.C. Construction Co., Inc.                                  $4,167,735

 

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.

 

 


 

r.        Energy Efficiency Market Acceleration Program –

                Cities’ Energy Master Plans Development –

                Contract Award Authorization                                     

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to authorize the award of contracts to three firms: Ove Arup & Partners PC, LaBella Associates, PC and Wendel Energy Services, LLC for the development of City Energy Master Plans (‘CEMP’) for four cities over a fifteen-month period.  The cumulative value of all four contracts is $1,751,900, which will be funded from the $30 million Energy Efficiency Market Acceleration Program (‘EE-MAP’) approved by the Trustees at their June 26, 2012 meeting.

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.

 

“On June 26, 2012, the Trustees authorized up to $30 million in funding over a five-year period to implement the EE-MAP, a program designed to grow the energy efficiency industry in New York and increase the efficiency and effectiveness of existing energy service programs in New York.  EE-MAP is comprised of, among other things, research and market development activities targeting energy efficiency products and systems and specifically includes the development of energy efficiency master plans.

“To meet the goal of increasing energy efficiency set forth in Executive Order 88, Governor Andrew Cuomo launched ‘Build Smart NY’ to strategically implement and accelerate improvements in energy performance.  The program contemplates cost-effective improvements for energy savings and supports the Governor’s economic development goals to accelerate projects that will create jobs and improve infrastructure within the State. 

“To accomplish the energy efficiency master plan objective under EE-MAP and to complement the objectives under Governor Cuomo’s ‘Build Smart NY’ program at the municipal level, the Authority is engaging the services of three engineering consulting firms to develop CEMPs for four major New York cities: Yonkers, Rochester, Syracuse, and Buffalo.

DISCUSSION

The CEMPs are intended to document current energy usage in four of New York’s largest cities and provide an actionable plan addressing short- and long-term goals toward sustainability and efficiency.  The CEMPs will address the following:

 

·         Urban Planning

·         Energy Delivery Infrastructure

·         Efficient Transportation Flow

·         Energy Efficiency in Buildings

              The award of contracts to the following three firms is recommended to develop CEMPs for each of the four cities, as noted: 

·         Ove Arup & Partners PC (‘Arup’) in the amount of $370,000 for the City of Yonkers;

·         LaBella Associates, PC (‘LaBella’) in the amount of $656,900 for the Cities of Rochester and Syracuse;

·         Wendel Energy Services, LLC (‘Wendel’) in the amount of $725,000 for the City of Buffalo.

               The Authority issued a Request for Proposals (‘RFP’) to Develop and/or Coordinate Energy Master Plans for Albany, Buffalo, Rochester, Syracuse and Yonkers on January 11, 2013.  Two hundred and thirty-three (233) firms downloaded the bid document.  On January 31, 2013, the Authority held a pre-bid video conference simultaneously in the cities of White Plains, Buffalo and Albany.  Thirty (30) companies attended the video conference.  On February 21, 2013, the Authority received eleven (11) proposals for the development of the CEMPs and five (5) proposals for the coordination of the CEMPs.

The Authority’s evaluation committee of eight employees reviewed the proposals and recommended awards based on the best combination of cost and qualifications.   In addition to the Authority’s committee members, each of the five cities designated an individual to serve as a committee member to score the proposal(s) relating to its respective city. 

 

                The criteria established to score each proposal was established prior to evaluation of the bids.  Scoring was weighted thirty percent (30%) on the cost of services.  Seventy percent (70%) of the score was based on the experience and qualifications of the consultants combined with the overall quality of the proposal.  The evaluation of the proposals included the review of the written proposals, confirmation of references and an interview of the most qualified consultants. 

 

                Upon the review of all proposals, it was determined that the scope of services for the development of the CEMP for the city of Albany would be further refined to encourage reduced costs through greater competition.  As a result, a contract will not be awarded for the city of Albany at this time, and the contract for these services will be re-bid.   The RFP envisioned an option to engage a consultant for coordinating the various deliverables for each CEMP.  Upon reviewing the individual CEMP proposals, the Authority was confident in the quality of those proposals and determined that a fixed price contract for coordination services was not in the Authority’s best interests. 

 

                A summary of each of the recommended firms follows:

 

Wendel submitted one proposal to develop an energy master plan for Buffalo.  Wendel proposes to support the project from its corporate office in Amherst, New York, a suburb of Buffalo.  Wendel submitted a high quality proposal and demonstrated especially strong industry experience with energy and water efficiency.  Wendel has strong project management and city planning personnel to support the project.  The evaluation committee recommended Wendel to develop the CEMP for Buffalo as the firm with the best aggregate score based on both qualifications and cost.

 

LaBella submitted two proposals to develop energy master plans for Rochester and Syracuse.  LaBella will develop the CEMP from its corporate headquarters in Rochester.  LaBella demonstrated excellent experience with alternate fuel fleet vehicles and good experience with zoning and ordinance.  The evaluation committee recommended LaBella to develop the CEMP for Rochester and Syracuse as the firm with the best aggregate score based on both qualifications and cost.

 

Arup submitted one proposal to develop an energy master plan for Yonkers.  Arup proposes to support the project from its New York City office.  Arup demonstrated especially strong project management and city planning capabilities.  Arup’s overall proposal quality was exemplary.  The evaluation committee recommended Arup to develop the CEMP for Yonkers as the firm with the best aggregate score based on both qualifications and cost.

 

The table below summarizes the Committee’s recommendation on award of each contract:

 

Contract

Recommended Consultant

Contract Value

CEMP for Buffalo

Wendel

$ 725,000

CEMP for Rochester

LaBella

$ 336,700

CEMP for Syracuse

LaBella

$ 320,200

CEMP for Yonkers

Arup

$ 370,000

Total CEMPs

$1,751,900

FISCAL INFORMATION

The CEMPs will be funded from the Operating Fund through the $30 million fund established under EE-MAP, which was authorized by the Trustees at their June 26, 2012 meeting.  

RECOMMENDATION

The Senior Vice President – Economic Development and Energy Efficiency, the Vice President – Energy Efficiency and the Vice President – Procurement recommend that the Trustees formally approve the four City Energy Master Plan Development contract awards as described above.

 

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

 

                The following resolution, as submitted by the President and Chief Executive Officer, was adopted with Trustees Flynn and Mahoney being recused as it relates to the aforementioned companies.

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority and the Authority’s Expenditure Authorization Procedures, the Trustees hereby authorize the award of contracts to Wendel Energy Services, LLC, LaBella Associates, PC, and Ove Arup & Partners PC to be used for the development of four separate energy master plans, with such funds being utilized over a fifteen-month period for the Cities’ Energy Master Plans as described in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That Operating Fund monies will be used to fund such City Energy Master Plans in the amount and for the purposes listed below:

 

                                     Expenditure

                                                                                   Authorization                   Authorizations        

Operating Funds                   (not to exceed)                         Expire____  

Wendel: Buffalo

$    725,000

      8/30/2014

LaBella: Rochester &

                Syracuse

$    656,900

      8/30/2014

Arup:     Yonkers

$    370,000

      8/30/2014

 

 

 

                            Total

$ 1,751,900

      8/30/2014

 

 

 

 

 

 

 

 

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

 


s.         

 

Discussion Agenda:

 

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

 

                President Quiniones said that before presenting his report he wanted to inform the Board that the Authority issued its Annual Report for the year 2012 on April 16th and he provided some highlights of the Report on the Authority’s performance during 2012 as follows:

·         more than $900 million in utility bill savings to customers in the state;

·         generation of 28.1 billion kilowatt hours of electricity from the Authority’s facilities, 71% of which came from low-cost hydropower;

·         Allocation of 700 megawatts of power to approximately 600 businesses and not-for-profit organizations under the Governor’s Recharge New York Power Program, providing support for a number of jobs.

·         Financing of $270 million in energy efficiency upgrades to state and local buildings across the state.

·         All of the rating agencies affirmed its AA rating; Standard & Poor’s raised the Authority's outlook from stable to positive. 

·         He ended by saying that the Authority had a great year in 2012, continues to have a solid financial position, and the credit goes to the staff that performed exceptionally well.

President Quiniones continued with his report for the period ending May 2013 saying that, based on the Performance Scorecard, the Authority is performing well, to date.   He said the Authority continues to closely monitor its costs.  At a recent meeting with the senior staff there was discussion on managing costs and staff was asked to be mindful of this by tracking costs, keeping it as closely as possible to the budget plan.  President Quiniones continued that the downward trend reflected in the Transmission System Reliability is the result of a failure experienced on the Y-49, Sound Cable transmission line that connects Westchester to Long Island.

                In response to a question from Trustee Foster, President Quiniones said in terms of the workforce management measure, although the Authority employs certain qualitative measures to retain employees, the goal to retain employees is milestone driven rather than a qualitative measure.


Key Initiatives

Build Smart NY

President Quiniones said Governor Cuomo instituted the Build Smart New York program under Executive Order 88, the goal of which is to reduce energy consumption in all state facilities by 20% over seven years.  He said at its first meeting, the Steering Committee responsible for this initiative, which comprises key agencies of the state and which the Authority Chairs as lead agency, identified best practices to address issues to reduce energy and operating costs for buildings in counties, cities, towns and villages across the state and to implement the program.

Energy Highway

President Quiniones said the Energy Highway Task Force issued an update to its Report submitted to the Governor in October 2012.  He said all 13 actions identified in the Blueprint are either underway or ahead of schedule.  He continued that on April 30th members of the Task Force attended the Advance Energy Conference at the Javits Center in New York City where they discussed the update to Energy Highway Blueprint. 

President Quiniones also said the US Department of Energy had invited him to a meeting to discuss lessons learned from Hurricane Sandy and preparations that are being made for the upcoming hurricane season.  He said President Obama attended the meeting, along with other executives from investor-owned and publicly-owned utilities.  He said President Obama was very engaging, asked probing questions, and wanted to know what the Federal Government could do to help the states in the event of another hurricane.  

In response to a question from Chairman Koelmel, President Quiniones said no major incidents have occurred that will cause the Authority to deviate from the Performance Scorecard. With respect to the unanticipated outage on the Y49 transmission line, it is scheduled to return to service on May 24th; this will ensure the supply of power to Long Island during the summer months.  He said the Authority focuses on cost management and cost containment as it tracks its budget as set forth in its Budget Plan last year.

In response to further questioning from Chairman Koelmel, President Quiniones said the Build Smart New York program will be implemented over the next seven years.  The target of the program is to reduce energy consumption by 20% in state buildings and subsequently extend it to include county and local jurisdictions.  He added that the Cities’ Energy Master Plans Development, approved by the Board, is an initiative in which the Authority will work with large cities in the state, e.g., Buffalo, Rochester, Syracuse and Yonkers, to help them create energy master plans and thereby extend the goals of the Build Smart NY program to reduce energy consumption by 20% over seven years.

Responding to a question from Trustee Nicandri, President Quiniones said the program will focus on publicly-owned buildings such as schools districts, colleges, universities and public housing.


 

b.       Report of the Chief Operating Officer

 

                 Mr. Paul Tartaglia, Senior Vice President of Energy Resource Management, provided highlights of the Chief Operating Officer’s report to the Trustees. 

Performance Measures

 

Generation Market Readiness

 

·         Systemwide Net Generation was above projections for April.

·         Generation market readiness exceeded projection for March, 99.9%; target is 99.4% and April, 99.8%; target is 99.4%.

·         Year-to-date generation market readiness is 99.42%; this is above the target for the year, 99.4%. 

·         No significant events during April.

 

Transmission Reliability

·         Transmission reliability for March was 95.38%; this was above the target of 94.92%.

·         Transmission reliability for April was 92.54%; this was slightly below the target of 94.59%.

·         Year-to-date transmission reliability is 95.64%; this is just above target of 94.85%.

 

Environmental Incidents

·         To date, there has been only one environmental incident.

·         The DART rate, the measure of the Authority’s safety performance, was .77%; the annual target is .78%.

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

 

              Responding to a question from Trustee Foster, Mr. Tartaglia said that he attributed the implementing of the use of leading measures to address issues proactively and instituting measures to mitigate issues before they occur, to the Authority exceeding its target for environmental incidents.

KEY ISSUES:

Generation

 

Blenheim-Gilboa Unit 2 Generator Step-Up Transformer

 

·         There was a transformer failure of one of the four transformers at B-G;

·         The original spare unit was put into service after the failure of the transformer;

·         Staff conducted a root cause analysis with the goal of avoiding additional failure in the near term; 

·         The Trustees will be asked to approve the award of contracts for replacement of the transformer and spear unit scheduled to be delivered next fall. 

 

Small Clean Power Plants (“SCPP”)

 

·         The scheduled engine overhaul of four of the eleven engines in the fleet at the SCPP has been completed.

 

LPGP LEM

 

·         An issue with the LPGP LEM project (Unit 11) will affect the return-to-service date of August 16th. 

·         Staff is working with the Legal Department and the Vendor to resolve the issue.

·         Staff is preparing the Authority’s operations assets to be ready for the summer.

 

Transmission

 

·         The Long island sound cable Y-49 tripped out of service on March 27th

·         The fault was on West Shore Road, Port Washington, Long Island, 3300 feet from the south transition station.

·         Repairs will soon be completed.

·         Scheduled to return to service on May 24th.

·         Root analysis efforts are continuing; staff is working with industry experts to pinpoint failure mechanism and identify preventive measures.

·         Summer readiness complete.  Staff filed required assessments with the New York State Department of Public Service.

 

In response to a question from Chairman Koelmel, Mr. Tartaglia said the Authority will not be able to meet its year-end target because of the time it takes to locate the fault of the Y49 transmission failure and do the repairs, which has to be done by hand and involves detailed work in a controlled environment.  He said the 60-day window from “shut-down” to “start-up” is not extensive; also, because the failure happened during an off-peak period, there is minimal impact to the Authority’s customers.  Mr. Welz added that the 60-day period is actually the fastest time the Authority has ever done repairs of that nature. 

                Responding to a question from Trustee Mahoney, Mr. Tartaglia said LIPA is responsible for the operations and maintenance of the feeder on the Nassau county side (South Transition Station); Con Edison for the North Transition Station and Sprain Brook Substation section and the Authority for the underwater section.  The Authority also provides oversight on all of the activities that are performed.

Safety and Environmental

 

Safety

·          The Authority is on target with its safety goals.

·         Authority-wide, the DART rate has shown some increase which includes two OSHA recordable injuries; these, however, did not result in time away from work.

·         The Authority is on track for favorable results on all of its level 2 safety measures which were designed to be leading safety measures and which drives a safety culture.

·         The Authority has also recognized the safety of the staff from random acts of violence in the work place.  To that end, an “Active Shooter” training has been rolled-out to all NYPA staff at all locations.  The Authority has also begun an assessment of all its facilities to identify measures to protect its employees.

·         The Authority has received a 2nd place award for safety from the American Public Power Association (“APPA”).

 

Environment

·         Leading measures, as designed, are working and the Authority has sustained best of class performance in this area.

·         One R-22, an ozone depleting gas, was released from an Air Conditioning unit at the Niagara Project.

·         The Authority has reviewed its R-22 assets and is revising plans for the elimination of R-22 from its system by 2020. 

 

 

“Active Shooter” Training

 

                Mr. Tartaglia said the Authority has put together a 45-minute presentation to educate employees on what their options are should someone enter a building armed with the intent of harming the staff.  He said one basically has three options, “run,” “hide,” or “fight.”   Mr. Tartaglia continued that in addition, the Authority has engaged the services of a consultant to do an assessment of its facilities with the goal of identifying proactive measures staff can take to prevent an “active shooter” occurrence and the means by which the Authority can improve the security of its facilities. In response to a question from Trustee Foster, Mr. Tartaglia said “Active Shooter” Training was conducted in order to prepare the Authority’s workforce in the event of danger to their lives in the workplace. 

 

Personnel

 

Mr. Tartaglia congratulated Mr. Phil Toia in his promotion to Vice President of Transmission. 

 

 


 

c.        Report of the Chief Financial Officer

 

Mr. Thomas Davis, Vice President of Financial Planning and Budgets, 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 April was $55.4 million, which was $27.0 million higher than the budget largely due to a higher net margin on sales ($28.9 million) partially offset by higher operations maintenance expenses ($2.3 million).

·         Positive variances in net margins at the generating facilities ($23.8 million) were substantially attributable to higher capacity and energy prices on market-based sales.

§  Higher capacity prices stemming from closing certain generating stations statewide has resulted in a positive impact, primarily at Niagara and Blenheim-Gilboa;

§  Energy prices remained higher than anticipated, particularly in the downstate market, resulting in higher margins at Flynn and the SCPPs.

·         Transmission facility results were also higher than budget ($5.1 million).

§  Proportionally higher energy prices in the downstate markets increased congestion costs, which had a positive impact on revenue earned by the Authority’s FACTS project.

·         Year-to-date operations and maintenance expenses were higher primarily due to increased spending at the SCPP’s (Brentwood combustion turbine and Gowanus bulkhead repairs.)

In response to a question from Chairman Koelmel, President Quiniones said the Authority is planning to embark on a strategic planning process to be headed by Mr. Robert Lurie and asked him to brief the Trustees on that process.  Mr. Lurie said, to that end, staff will begin the process with an outreach to seek information on investments from outside stakeholders, Authority management and the Trustees.  By the fall, the formal process of identifying aggressive goals, targets and strategies for the use of the Authority’s resources will be initiated, and by the end of the year a plan outlining the goals for use of the Authority’s investment funds, going forward, will be in place.

Responding to a question from Trustee Foster, Mr. Lurie said the process is designed to identify specific projects and the necessary funds to be allocated for those projects.  Major projects such as the transmission life extension and modernization project and the TransCo Transmission project have already been identified.  Mr. Russak said that the costs associated with the transmission LEM project, which is scheduled to be completed in 2015, is approximately $726 million.  He also said that the Authority has major investments in energy efficiency projects such as the Build Smart NY Program, and President Quiniones said that initiative is estimated at $800 million over the next seven years.  Mr. Russak added that the Authority’s core business is to invest in its infrastructure as well as energy efficiency investments for the benefit of its customers.

Chairman Koelmel asked that at the next meeting staff provide definitive projects and additional information on the Authority’s strategic plan.

 


 

4.                   Awards of Fund Benefits from the Western New York

Economic Development Fund Recommended by the

Western New York Power Proceeds Allocation Board

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

               

“The Trustees are requested to accept the recommendations of the Western New York Power Proceeds Allocation Board (‘WNYPPAB’) and approve the award of Fund Benefits from the Western New York Economic Development Fund to the eligible applicants listed in Exhibit ‘4-A,’ and authorize the other actions described herein with respect to such applicants and awards.

 

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

               

BACKGROUND

 

1.       Western New York Power Proceeds Allocation Act

 

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

 

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

 

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

 

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

 

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

 

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

 

2.       Western New York Power Proceeds Allocation Board

 

“Under the Act, the WNYPPAB is charged with soliciting applications for Fund Benefits, reviewing applications, making eligibility determinations, and evaluating the merits of applications for Fund Benefits.  WNYPPAB uses the criteria applicable to EP, RP and Preservation Power (‘PP’), and for revitalization of industry as provided in Public Authorities Law §1005.  Additionally, WNYPPAB is authorized to consider the extent to which an award of Fund Benefits is consistent with the strategies and priorities of the Regional Economic Development Council having responsibility for the region in which an eligible project is proposed.  A copy of these criteria (collectively, ‘Program Criteria’), adapted from WNYPPAB’s ‘Procedures for the Review of Applications for Fund Benefits,’ is attached as Exhibit ‘4-C.’

 

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

 

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

 

3.       Application Process

 

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

                               

“As of April 8, 2013, the first application due date, the WNYPPAB had received 18 applications seeking over $27 million in Fund Benefits.  WNYPPAB’s staff analyzed the applications and made recommendations to WNYPPAB concerning each of the applications based on eligibility requirements and Program Criteria.  Copies of the recommendations from WNYPPAB staff to the WNYPPAB can be found in Exhibit ‘4-D.’ 

 

“At its May 13, 2013 meeting, the WNYPPAB took the following actions on applications for Fund Benefits:

 

1.        Recommendations for Awards of Fund Benefits

 

“The WNYPPAB is recommending to the Trustees that the three applications listed on Exhibit ‘4-A,’ each receive an award of Fund Benefits in the amount indicated.  The applicants have indicated that the proposed projects would create or retain 152 jobs in Western New York.  The total to be expended on the proposed projects is expected to exceed $15 million.  These are the recommendations that are presently before the Trustees for consideration.

 

2.       Other Determinations

 

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

 

DISCUSSION

 

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

 

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

 

Recommendation

 

“The Vice President, Marketing recommends that:

 

(1)     the Trustees accept the recommendations of the WNYPPAB and authorize the awards of Fund Benefits to the applicants and in the amounts listed in Exhibit ‘4-A,’ conditioned upon an agreement to be negotiated with each applicant on the final terms and conditions that would be applicable to each award to be contained in an Award Contract approved by the President and Chief Executive Officer and approved by the Executive Vice President and General Counsel as to form;

 

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

 

(3)     the Senior Vice President – Economic Development and Energy Efficiency, or his designee, be authorized to execute on behalf of the Authority Award Contracts for each of the awards listed on Exhibit ‘4-A’ subject to the forgoing conditions.

 

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

 

Mr. Michael Huvane provided highlights of staff’s recommendation to the Trustees.  In response to a question from Chairman Koelmel, Mr. Huvane said this is the first round of the process and approximately $17 million is available in the fund for future rounds.  Also, the Western New York Power Proceeds Allocation Board (“Proceeds Board”) has received 27 applications for Round 2 of the process and staff will be working with the Empire State Development Corporation (“ESD”) during the process. 

                Responding to a question from Trustee Mahoney, Mr. Huvane said the source of the funding is from a block of Expansion and Replacement Power, not being utilized by customers in Western New York, which is sold into the ISO wholesale market. 

Responding to further questioning from Trustee Mahoney, Mr. Huvane said the Authority’s priority is to allocate the power for eligible projects in Western New York and staff works with ESD to identify eligible projects in Western New York for allocation of this power.

                Responding to a question from Trustee Nicandri, Mr. Huvane said eligible projects have to be exactly within the 30-mile radius of the Niagara Project as stated in the legislation.  Responding to further questioning from Trustee Nicandri, Mr. Huvane said Launch NY is connected to the University of Buffalo to help them get access to the capital and provide management expertise.

                In response to a question from Trustee Flynn, Mr. Huvane said staff uses several means to monitor the utilization of the funds; this includes, contract negotiation with the awardees; conducting audits of awardees’ records; and, if the award is associated with job allocation, awardees have to provide their job numbers.

In response to further questioning from Trustee Flynn, Mr. Huvane said a final decision has not yet been made on the form of the compliance audits; however, staff will seek initial input from the Internal Audit division as well as guidance from experts at the ESD.

In response to still further questioning from Trustee Flynn, Mr. Huvane said the Authority hosts the Web site for the Proceeds Board where potential applicants can view information regarding the program.  Also, if staff’s recommendation is approved by the Trustees a media release will be made to that effect.

Before asking the Trustees to vote on staff’s recommendation, Chairman Koelmel stated that it was brought to his attention that one of the members of the Proceeds Board who made the recommendation and voted for the Trustees to approve the allocations did not realize he had a conflict as it relates to Diversified Manufacturing.  The member is counsel for Harris Beach, LLC, and Diversified Manufacturing is a client of that firm.  The vote on the recommendation was unanimous, therefore the recommendation is passed.  Chairman Koelmel said that in the interest of transparency he wanted to provide that clarification for the record.

               


 

                The following resolution, as submitted by the President and Chief Executive Officer, was adopted with Trustee Flynn being recused from the vote as it relates to Diversified Manufacturing.

 

WHEREAS, the Western New York Power Proceeds Allocation Board (“WNYPPAB”) has recommended that the Authority make awards of Fund Benefits from the Western New York Economic Development Fund (“Fund”) to the eligible applicants listed in Exhibit “4-A”;

 

NOW THEREFORE BE IT RESOLVED, That the Authority hereby accepts the recommendations of the WNYPPAB and authorizes the awards of Fund Benefits to the applicants and in the amounts listed in Exhibit “4-A,” conditioned upon an agreement between the Authority with each applicant on the final terms and conditions that would be applicable to each award and set forth in a written award contract (“Award Contract”) between the Authority and each applicant approved by the President and Chief Executive Officer and approved by the Executive Vice President and General Counsel as to form; and be it further

 

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

 

RESOLVED, That the Senior Vice President – Economic Development and Energy Efficiency, or his designee, is authorized to execute on behalf of the Authority Award Contracts for each of the awards listed on Exhibit “4-A” subject to the forgoing conditions; and be it further

 

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

 

 


 

5.                   Selection of Investment Managers for the Authority’s

                Other Post-Employment Benefits Trust Fund               

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award of multiyear investment management service contracts to replace expiring agreements for professional investment management services in connection with the Authority’s Other Post-Employment Benefits Trust Fund to the following firms:  State Street Global Advisors (‘SSgA’), GAMCO Asset Management Inc. (‘GAMCO’), WCM Investment Management (‘WCM’), Urdang Securities Management Inc. (‘Urdang’), and Wells Capital Management, Inc. (‘WellsCap’).

 

“Due to the need to commence services, interim contract awards were issued to three of these firms, GAMCO, Urdang and WellsCap earlier in May 2013, in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures, subject to the Trustees’ approvals.

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.  Moreover, the Authority’s Expenditure Authorization Procedures require the Trustees’ approval for the award of personal services contracts in excess of $1 million if low bidder, or $500,000 if sole-source or non-low bidder.  The terms of the contracts considered herein are for more than one year and, in some cases estimated to exceed the dollar thresholds over the term of the agreement, therefore, the Trustees’ approval is required.

 

Certain Governmental Accounting Standards Board (‘GASB’) standards[*] issued in 2004 require governmental employers to account for other post-employment benefit (‘OPEB’) liabilities on an ‘accrual’ basis (i.e., as the benefits are earned during the working career of the employee) rather than on a ‘pay-as-you-go’ basis, where costs are recorded as the benefits are paid during the employee’s retirement years.  OPEBs may include medical, prescription drug, dental, vision, life and other long-term care benefits for retirees and eligible beneficiaries.  Similar GASB standards for pensions have existed since 1994.  The Authority began reporting its OPEB obligations in this manner in 2002. 

 

The GASB rules do not mandate funding of the accrued OPEB obligations, only a recognition of the accrued OPEB liability on the employer’s financial statements.  If left unfunded, however, the amount of the unfunded liability could significantly impact the employer’s overall financial condition and its credit rating with an attendant impact on the cost of debt financing. 

               

After an assessment by staff, it was determined that the establishment of a separately managed trust fund would be fiscally prudent.  Authority staff, with the support of its financial advisor, PFM Advisors (‘PFM’), then evaluated various portfolio strategies designed to meet the investment objectives of the Authority.  Reviews of different strategies were conducted based on projected assets class returns, correlations and risk tolerances to determine the optimal allocations.  The portfolio design considered to be most aligned with the Authority’s overall return objectives and risk tolerances was a diversified approach employing domestic and international equity assets, fixed income assets, as well as real estate investment trust asset classes to further enhance diversification.   

 

At their July 31, 2007 meeting, the Trustees: (1) approved the creation of the Power Authority of the State of New York Other Post-Employment Benefits Trust (the ‘Trust’); (2) adopted the Trust Investment Policy Statement; (3) appointed a Trustee Custodian and (4) approved an initial $225 million funding plan.  Subsequently, in October 2011, the Trustees approved an on-going annual funding plan for the OPEB Trust and certain amendments to the Investment Policy Statement clarifying diversification and credit quality standards.

                As of March 31, 2013, the market value of assets held in the OPEB Trust Fund totaled $361 million, of which $230 million were invested in equities, $110 million were invested in fixed income securities, and $21 million were invested in real estate investment trust securities.  When compared to the actuarial accrued liability of $544 million (as of December 31, 2012), this represents a funding level of 66%.

DISCUSSION

 

In September 2012, as the Authority prepared to issue a Request for Proposal to rebid six expiring investment management agreements, staff and PFM evaluated the current portfolio construction for potential improvements in risks and returns.  Based on this evaluation, an overall change is the allocation of assets amongst equities; fixed income and real estate is not being recommended; however, staff will be implementing the following strategies for the OPEB Trust:

 

1)       Portfolio Strategy

 

At the inception of the Trust in 2007, it was recognized that equity markets typically exhibit cycles of relative outperformance by value and growth stocks versus a core approach.  These cycles can last varying time periods from two years to much longer periods.  Since the timing of which style will be in favor is nearly impossible to predict, a way to capitalize on those periods of style outperformance is to allocate equal portions of the assets to both a value and growth oriented strategy.  Based on historical performance analysis over multiple trailing time periods, staff and PFM determined that returns for a balanced value/growth style allocation compared to returns for a full all cap core allocation was generally indistinguishable; however, the all cap core strategy exhibited lower risk.  As such, staff will be reallocating the value/growth assets to an all cap core manager to reduce future portfolio volatility and expected increased risk adjusted returns.         

 

2)       Diversification Strategy

 

a)       In accordance with the OPEB Investment Policy Statement dated October 25, 2011, the Trust may expand investments into international fixed income securities.  Staff will be allocating the intermediate fixed income assets to a core ‘plus’ (i.e. emerging markets, higher yield) strategy.  As a result in the shift from the Intermediate U.S. Government/ Credit exposure to an Aggregate exposure, and the flexibility to invest in ‘plus’ sectors, additional diversification benefits and an increase in expected returns will be realized.  The overall rating of the fixed income assets in the Trust will remain at least an ‘A’ in accordance with the Investment Policy Statement. 

 

b)       While the U.S. Real Estate Investment Trust (‘REIT’) strategy has performed well for the Authority in the past, assets are being re-allocated to a global REIT strategy.  A globally diversified portfolio is better positioned to benefit from a larger universe of potential investments, more attractive relative value of non-domestic REITs and greater prospects for future growth. 

 

On November 21, 2012, the Authority solicited proposals for professional equity, fixed-income, and alternative investment management services by notice to a number of firms providing such services and advertisement in the New York State Contract Reporter in order to determine qualified investment managers for the OPEB Trust Fund.  On or before December 20, 2012, the Authority received a total of 54 proposals from thirty-eight bidders.   After evaluating the 54 proposals, staff determined that the Authority received insufficient high quality responses for the REIT strategy and the All Cap strategies.  For the REIT rebid, staff solicited proposals on January 24, 2013, and received a total of 19 proposals from thirteen bidders on or before February 14, 2013.  For the All Cap equity strategy, staff solicited proposals on February 12, 2013, and received a total of 14 proposals from thirteen bidders on or before March 5, 2013.

 

“Authority staff, with the support of PFM, evaluated each proposal taking into consideration quantitative and qualitative criteria.  From a quantitative standpoint, staff evaluated historical performance, various risk metrics and the schedule of fees.  From a qualitative standpoint, firms were evaluated based on team duration and experience, investment style and research capabilities.  After conducting extensive reviews and analysis of each proposal, a total weighted score combining the quantitative and qualitative criteria assessed by PFM was calculated and examined by Authority staff.  The Authority, with the recommendation of PFM, invited sixteen firms with the highest relative rankings to give oral presentations.  Based on the above criteria and oral presentations, the following firms were identified to have the highest overall rankings to manage each of the respective asset classes in the OPEB Trust Fund: SSgA for Equity All Cap Core Passive; GAMCO for Equity All Cap Core Active; WCM for International Equity; Urdang for REIT; and WellsCap for Fixed Income Core Plus.  A summary of the rationale for each selection follows:     

 

SSgA was the passive Russell 3000 index fund manager that the Authority selected in 2008.  Due to its excellent customer support, being a product leader, and low fee structure, it is recommended that State Street continue to serve as a passive equity index fund manager of the OPEB Trust managing $86 million in assets.   Complementing the passive equity index strategy with an active overlay, staff is recommending that GAMCO, an all cap core manager with a unique investment process, rigorous approach in risk management, and perceived superior security selection expertise, be selected to manage $58 million in assets.  For the international large cap growth strategy, WCM, with a high conviction portfolio approach, a focus on higher quality companies and strong track record is recommended to manage $24 million in assets.

 

In respect to the REIT allocations, Urdang’s global strategy with a distinguished security valuation process, strong risk controls and depth of its research teams is recommended to serve as the global REIT portfolio manager of the OPEB Trust with $21 million in assets.  For the fixed income core plus strategy, the firm Wells Capital Management adopts a conservative investing approach in the high yield credit sectors.  While taking less risk, WellsCap has shown the ability to deliver strong performances, historically, through security selection from domestic and international markets.  It is recommended that Wells Capital Management manage this fund with $44 million in assets.   

 

The recommended firms will be awarded five-year contracts, with asset allocations as noted below, subject, however, to early termination at any time by the Authority on 60 days’ notice.  The allocation amounts are based on the assets ending market value as of March 31, 2013 and will be adjusted proportionally for the actual asset value on the transition date of the assets.

 

                                                                                                Asset Allocations

                                                                                                   (in $millions)           

 

State Street                                                                             86.0

GAMCO                                                                                  58.0

WCM                                                                                       24.0

Urdang                                                                                     21.0

Wells Capital Management                                                 44.0

Total                      233.0

 

FISCAL INFORMATION

The fees for the five recommended investment managers, which will be paid from OPEB Trust assets, are expected to average approximately 39 basis points per annum  (a basis point is equal to 1/100th of 1%, or 0.01%).  The fees should equal about $970,000 for the first year, growing in conjunction with the Fund’s growth.  Over the course of the recommended five-year term of the investment manager contracts, fees are estimated to total about $6.1 million assuming a normal growth rate in the Fund’s Assets. 

RECOMMENDATION

 

The Deputy Treasurer recommends the Trustees’ approval of the award of multiyear service contracts to State Street Global Advisors, GAMCO Asset Management Inc., WCM Investment Management, Urdang Securities Management Inc., and Wells Capital Management, Inc., for professional investment management services in connection with the Authority’s Other Post-Employment Benefits Trust Fund. 

 

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

               

                Mr. Brian Liu provided highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Foster, Mr. Liu said the idea is not to magnify performances on a past basis as an indication of how the firms will perform in the future.  PFM generally assigns a little higher weighting to people and investment processes; staff believes the talent of the investment team is where the value of picking these managers lies, as well as the investment processes.  If a firm has a unique process that will allow them to make better security selection decisions, this will further attribute to better future performances. 

                Responding to a question from Chairman Koelmel, Mr. Russak said the Authority had a very good selection of candidates to choose from and those selected by the Authority are ranked among the highest in their peer groups. The initial screening process considered the candidates’ past performance and the stability of the team.  He said PFM provided statistical background of the candidates and Authority staff also did their own due diligence before selecting the candidates.

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 of the multiyear investment management service contracts to State Street Global Advisors, GAMCO Asset Management Inc., WCM Investment Management, Urdang Securities Management Inc., and Wells Capital Management, Inc., for professional investment management services in connection with the Authority’s Other Post-Employment Benefits Trust Fund, as recommended in the foregoing report of the President and Chief Executive Officer, is hereby approved and the execution of such contracts by the Executive Vice President and Chief Financial Officer or the Treasurer, subject to the approval of the form thereof by the Executive Vice President and General Counsel, on behalf of the Authority is approved; and be it further

 

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

 


 

6.                   Energy Efficiency Market Acceleration Program –

                Contract Awards                                                               

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to ratify and approve the award of two contracts for services related to implementation of the Energy Efficiency Market Acceleration Program (‘EE-MAP’) each for a term of up to five years, in the aggregate amount of up to $20 million. The contracts are with Syracuse University (Syracuse Center of Excellence) of Syracuse, New York and the Institute for Building Technology and Safety (‘IBTS’) of Ashburn, Virginia. 

“Due to the need to commence services, interim contract awards were made in the initial aggregate amount of $1 million in April 2013 in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures, subject to the Trustees’ approval.

BACKGROUND

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

In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services, 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, requires the Trustees’ approval.

The Authority provides clean, low-cost, and reliable energy consistent with its commitment to the environment and safety, while promoting economic development, job development, energy efficiency, renewables and innovation, for the benefit of its customers and all New Yorkers.  Since the late 1980s, the Authority has provided energy services programs throughout New York State (‘NYS’).  In aggregate, the Authority’s energy services programs (‘ESP’) have achieved over $140 million in annual customer savings at about 3,800 public facilities, including schools, hospitals and municipal buildings, for a reduction of annual greenhouse gas emissions of more than 830,000 tons.

“In June 2012, Authority Trustees authorized $30 million to fund the EE-MAP program over a five-year period.  EE-MAP will include research and market development activities as well as demonstration projects targeting the deployment of commercial, but not as yet widely deployed energy efficiency products and services.  The program supports New York’s clean energy goals and will help increase economic development activity in the New York State energy efficiency industry. 

DISCUSSION

EE-MAP is designed to grow the energy efficiency industry in New York, help bring innovative energy saving technologies to market and advance New York’s technology leadership in this important industry.  EE-MAP will also increase the efficiency and effectiveness of existing energy service programs in New York through improved implementation processes and delivery methods.

The Authority advertised a Request for Proposals (‘RFP’) (Q12-5328MR) in the New York State Contract Reporter on September 18, 2012, soliciting firms and research institutions interested in providing EE-MAP implementation services.  Two hundred and one (201) companies downloaded the RFP.  Seven (7) proposals were received on November 20, 2012.

The proposals were evaluated by an evaluation committee consisting of staff members from Clean Energy Technology, Economic Development and Energy Efficiency, and Procurement.  Proposal evaluation was also conducted by the Electric Power Research Institute (‘EPRI’) and the New York State Energy Research and Development Authority (‘NYSERDA’) staff members who were non-voting members of the evaluation committee. 

The evaluation committee members reviewed the proposals and based their scores on pre-determined criteria and weighting factors.  These criteria included the firm’s understanding of the program objectives, relevant technical experience with energy efficiency technology and programs, project team organization and experience, project management and controls, knowledge of applicable codes, previously completed work, financial security, deviations and exceptions, proposal content and format and proposed costs.

Based on a thorough evaluation of the proposals, proposed costs, and subsequent interviews, and as further set forth in the award recommendation documents, Authority staff recommends the award of contracts to Syracuse University (Syracuse Center of Excellence) and the Institute for Building Technology and Safety.  

“The initial services provided by the awardees will be to work with the Authority to develop a detailed business plan for implementation of the EE-MAP program.  Follow-on services will include:

1.      Screen and select energy efficiency products and services capable of gaining additional market share and providing economic benefits to New York.

 

2.      Identify and implement energy efficiency demonstration projects at facilities of eligible participants of the Authority’s energy services programs to validate advanced and emerging energy efficiency technologies and equipment performance.  Demonstration sites may also serve as testing laboratories and centers for training and education.

 

3.      Develop new energy efficiency markets in coordination with state agencies and authorities and distribution utilities.  These efforts will assist in forming strategic alliances and economic development opportunities for energy efficiency technology companies.  Activities will include collaborating with research institutions, coordinating meetings between the technology companies, ESP eligible participants, and other state agencies, to improve industry access to efficiency investments made at public facilities.

 

4.      Attract technology companies with commercial, but not yet widely deployed energy efficiency products and systems to New York from other states.

 

5.      Create or facilitate market channels for emerging technology companies with commercial energy efficiency products and services.  The Authority is ideally positioned to accelerate the deployment of these products and services because of its very large annual energy efficiency business with public entities.

 

6.      Work closely and provide training to consulting engineers, architects, contractors and maintenance service providers to design, specify, install and maintain these commercial, but not yet widely deployed energy efficiency products and services. 

 

FISCAL INFORMATION

The aggregate award amount of up to $20 million will come from Operating Funds as authorized for the EE-MAP program by the Trustees in June, 2012.  The exact allocation of the funds between the two awardees will be determined during the business plan development phase of the program and will be based on each awardee’s roles and responsibilities for the program.  

 

RECOMMENDATION

The Senior Vice President – Strategic Planning recommends that the Trustees ratify and formally approve the award of contracts for services related to implementation of the Energy Efficiency Market Acceleration Program, including program development, Target Product selection and demonstration, and market development, for up to a five-year term, in the aggregate amount of up to $20 million, to Syracuse University (Syracuse Center of Excellence) of Syracuse, New York and the Institute for Building Technology and Safety of Ashburn, Virginia. 

 

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

 

                Mr. Guy Sliker provided highlights of staff’s recommendation to the Trustees.  In response to a question from Chairman Koelmel, Mr. Sliker said because the Institute of Building and Safety Technology has relationships with many of the municipal entities across the state, the company will be able to leverage the technology transfer lessons learned through this program to technology companies in an effort to accelerate the market potential for the products that will be targeted. 

                Responding to further questioning from Chairman Koelmel, Mr. Sliker said the Trustees had authorized $30 million to fund the EE-MAP Program; the contract award for approximately $20 million being recommended for approval is for one of the initiatives to implement the EE-MAP Program.

                The following resolution, as submitted by the President and Chief Executive Officer, was adopted with Trustee Flynn being recused from the vote as it relates to Syracuse University Center of Excellence.

 

RESOLVED, That in accordance with the Guidelines for Procurement Contracts adopted by the Authority and the Authority’s Expenditure Authorization Procedures, ratification and approval is hereby granted to award contracts in an aggregate amount of $20 million for Energy Efficiency Market Acceleration Program implementation services, including program development, Target Product selection and demonstration, and market development, to the firms listed below:

               

                                                    Consultant                        Contract Approval            Completion Date

 

Syracuse University                $20 million*                           4/10/2018

(Syracuse Center of                 (aggregate)                  

Excellence) and                                                                 

Institute for Building                                                                4/04/2018

Technology and Safety                                                                                                                      

 


 

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

 

 

 

 

 

 

 

 

 


 

7.                   Marcy-South Series Compensation Project –

                Request for Authorization to Proceed             

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize staff to proceed with engineering and licensing of the Marcy-South Series Compensation Project.  The President and Chief Executive Officer has approved $2.8 million for preliminary engineering and licensing and detailed engineering and design due to the aggressive schedule required for the project’s implementation.

 

BACKGROUND

 

“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 expanding transmission to move excess power from upstate and the need to address potential retirement of several power plants.  The Energy Highway Blueprint, developed by the Governor’s Energy Highway Task Force, recommended that the Public Service Commission (‘PSC’) 1) develop and implement a reliability contingency plan for the closure of the Indian Point Energy Center (‘IPEC’) and 2) invite developers and transmission owners to propose transmission projects to expand the capacity to move electricity from upstate/central New York to the Hudson Valley and New York City.

 

“On November 30, 2012, the PSC issued orders that 1) 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 by the end of 2015 and 2) solicited written public Statements of Intent from developers and transmission owners proposing projects that will increase transfer capacity through the congested transmission corridor described above. 

 

“On February 1, 2013, Con Edison and NYPA submitted their Indian Point Contingency Plan.  The Contingency Plan included a three-pronged approach including that Con Edison and NYPA begin development of three Transmission Owners Transmission Solutions Projects (‘TOTS’) including the Marcy-South Series Compensation project (Project).  NYPA, as part of the New York Transco, also submitted a Statement of Intent to propose construction of the Project to address congestion.

 

“On April 19, 2013, the PSC issued its Order authorizing Con Edison, New York State Electric and Gas, Central Hudson, and NYPA to move forward with the preliminary development activities for the TOTS, including the Project.  The TOTS will be compared to other projects that are proposed in response to the Request for Proposals that NYPA issued on April 3, 2013 at the request of the PSC.  In September, it is anticipated that the PSC will select which projects will move forward to address the IPEC issue. 

 

“The PSC agreed with NYPA and Con Edison that for the TOTS to meet the June 2016 in-service deadline, the TOTS needed to initiate preliminary development activities in May 2013.  The PSC imposed a spending cap of $10 million for the TOTS projects that may be incurred prior to September 30, 2013.  The individual cap applicable to the Project is $1.2 million for costs incurred by that date.  The PSC stated that a State rate recovery mechanism will be required to address the recovery of the preliminary development costs.  The PSC found, with respect to cost allocation (i.e., the methodology used to allocate costs between utility customers), that it had the authority to develop a retail rate recovery mechanism that provides for the jurisdictional utilities to collect payments from their ratepayers for reliability-related activities and also to support actions taken by NYPA in conjunction with the Indian Point Contingency Plan.  The PSC emphasized that it was not asserting jurisdiction over NYPA, the rates NYPA charges its customers, or wholesale transmission.

 


 

DISCUSSION

 

“The existing Marcy-South 345 kV lines originate in the Marcy Substation in Oneida County approximately 50 miles east of Syracuse.  From Marcy, the lines generally traverse in a south and southeastern direction and interconnect NYPA’s Marcy Substation with Edic Substation (Niagara Mohawk Power Corporation), Fraser Substation (New York State Electric & Gas), Rock Tavern (Central Hudson Gas & Electric), Roseton (Central Hudson Gas & Electric), and East Fishkill Substation (Consolidated Edison).  The line is a combination of single and double circuits carried on steel poles, steel lattice structures and wood pole structures.  At the Hudson River, the line transitions into six submarine pipe type cables. 

 

“The Project will add switchable series compensation to increase power transfer by reducing series impedance over the existing 345 kV Marcy-South lines.  Specifically, the Project will add 40% compensation to the Marcy-Coopers Corners 345 kV line by installing a series capacitor bank near the Marcy Substation.   In addition, the Project will add 25% compensation to the Edic-Fraser 345 kV line and the Fraser-Coopers Corners 345 kV line through the installation of two series capacitor banks near the Fraser Substation.  Finally, the Project will also involve replacing the conductor on approximately 21.8 miles of the NYSEG-owned Fraser-Coopers Corners 345 kV line using existing towers and will involve relay protection and communication upgrades at the Marcy, Fraser, and Coopers Corners 345 kV substations.  The Project will increase thermal transfer limits across the Total East interface and the UPNY/SENY interface and will contribute to solving reliability issues should the Indian Point Energy Center be retired.  NYPA will be responsible for installing the capacitors and NYSEG will be responsible for reconductoring the Fraser-Coopers Corners 345 kV line.

 

“If preliminary engineering and licensing are completed by the end of 2013 or early 2014, detailed engineering and design begins in June 2013 and there are no delays or complications in procurement or construction, the Project can be in service by summer 2016, as required for the IPEC Contingency Plan.  This is an aggressive schedule and to have all regulatory approvals in place by early next year, NYPA will have to complete several engineering and environmental studies to provide the information necessary for the applications for regulatory approvals.

 

“Based upon discussions with the Department of Public Service staff and previous experience with licensing transmission lines in New York, NYPA staff has developed a work plan for the required studies, environmental assessments and applications for regulatory approvals.  This work includes a system impact study, geotechnical investigations and natural resource assessments.  This work will form the basis for an application to the PSC for approval to install the series capacitors.

 

“To achieve the schedule, detailed engineering and design will begin in June.  This work will be performed by an engineering consultant through an existing general services agreement.  The scope-of-work will include preparation of engineering and design packages for installation of the series compensation capacitors and associated equipment at the identified locations.  Engineering will also be performed concurrently for modifications of the relay protection and communication systems.  The packages will include designs associated with electrical, civil and mechanical modifications and consist of drawings, equipment specifications and construction specifications.  Services associated with project management and procurement support will also be provided.

 

“It is estimated that Licensing and Detailed Engineering and Design will cost $ 2.8 million.  Staff currently estimate that by the end of September less than $1 million will be expended, which is under the cap of $1.2 million established by the PSC.

 

“The Trustees are requested to authorize staff to proceed with preliminary engineering and licensing and detailed engineering and design for the Project.  Staff will provide the Trustees with monthly progress reports on the project starting in June 2013.

FISCAL INFORMATION

 

“Costs related to the Project will be made from the Authority’s Capital Fund and are expected to be recovered under a new cost recovery mechanism to be finalized by the PSC in the summer of 2013.

 

RECOMMENDATION

 

“The Senior Vice President and Chief Engineer – Operations Support Services, the Senior Vice President – Strategic Planning, the Vice President – Project Development, Licensing and Compliance, the Director – Project Development and Licensing and the Director – Resource Planning and Project Analysis recommend that the Trustees authorize staff to proceed with the engineering and licensing of the Marcy-South Series Compensation Project.

 

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

 

Mr. Mark Malone provided highlights of staff’s recommendation to the Trustees.  President Quiniones added that the primary goal of this project is to relieve the congestion and bottleneck in the transmission corridor.  Responding to a question from Chairman Koelmel, President Quiniones said the project will result in significant improvements in the supply to upstate and downstate New York.

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

 

RESOLVED, That the Trustees authorize the Authority’s staff to proceed with preliminary engineering and  licensing and detailed engineering and design for the Marcy-South Series Compensation Project, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

 

 

 

 

 


 

8.                   Risk Management Update

 

Messrs. William Nadeau and Frank Deaton provided an update on current activities and near-term goals of the Authority’s Enterprise Risk Management (“ERM”).

Mr. Nadeau stated that risk management has been an activity at the Authority for the past decade, focusing initially on market risks associated with energy commodity and credit.  More recently, following the introduction of the concept of ERM in 2007, the Trustees authorized the formalization of ERM at the Authority in 2009.  That concept of ERM was for the coordinated approach of identifying, assessing and managing risks across the Authority.  The objective was to transition toward risk informed “top-down” decisions and a risk-based corporate planning process, aligning risks with strategies.  In 2010, the ERM group started a “bottoms-up” identification and assessment of the Authority’s risks and that effort continued through 2012.  A “top-down” and formal ERM structure that would enhance the quality and completeness of risk analysis and provide value was necessary.  The Authority needed to mature ERM beyond an exercise in risk categorization to an essential consideration and be a part of every decision.  To that end, in the past eight months, following the September 2012 Audit Committee meeting, the Authority began an aggressive effort to speedily mature its ERM activities.

Mr. Frank Deaton provided the following overview:  

Governance

·         The Board of Trustees, via the Audit Committee Charter, provides oversight of the Risk Management activities.  The Board needs assurance that the Authority’s management has implemented a system that is appropriate and in alignment with the Authority’s business model and strategy.

·         In order to manage, monitor and mitigate risk, the Enterprise Risk Management Committee (“ERMC”):  monitors on-going performance of Risk Management activities; aligns Risk Response to strategy; and coordinates decision-making activities.

·         The Risk Management Department: supports the ERMC, Executive Management and the Board; facilitates governance and policy decisions, assessment methods, framework, measurement, aggregation, reporting and models; monitors risk profile and reports to the Board; enhances risk culture in the short-term and enables risk informed decision-making in the long-term.


 

Enterprise Risk Report

-          Value Proposition for Enterprise Risk:

o    Management manages risks daily.

o    Enterprise Risk brings consistency, transparency and action to assist management.

o    Goal is for risk to be part of the fabric of the organization.

-          Upcoming assessment process:

o    Staff has been active in benchmarking with other entities including participation in an Enterprise Risk Roundtable with more than 30 utilities represented.

o    Top-Down approach – engages Executive Risk Management Committee as a compass.

o    Middle-Out approach – facilitates risk workshops with management personnel from across the organization to ensure consistency and quality of the risk inventory.

o    Bottom-Up approach – ensures risk is understood and identified from all corners of the organization to meet its business objective.

o    Staff will focus on response planning for top risks at the conclusion of the 2013 assessment.

-          Next Steps:

o    Engage ERMC as compass for risk management.

o    Ongoing 2013 project with Asset Investment Planning group to integrate risk into the capital/O&M project planning process.

o    Key Risk Indicator development – working with Strategic Planning on incorporating forward, risk-informed view to the Authority’s corporate goals as indicated on the Performance Scorecard.

o    Coordination with Audit, Compliance and Strategic Planning Departments is ongoing.

 

 


 

9.                   Risk Mitigation Strategy - Lewiston Pump Generating Plant

Life Extension and Modernization Program                            

 

                Mr. John Canale made a presentation on the Authority’s risk mitigation strategy for the Lewiston Pump Generating Plant (“LPGP”) Life Extension and Modernization (“LEM”) Program.  He discussed some of the risks associated with the Authority’s generating facilities; the strategies staff used to mitigate or reduce those risks; how those mitigation strategies were applied to the LPGP LEM Program; and how lessons learned were utilized on other projects such as the Transmission LEM.

Mr. Canale said over the last twenty years, the Authority has undertaken several LEM Programs at its Generation Facilities, engaging companies and manufacturers all over the world.  He continued that each LEM Program faces its own set of unique challenges; however, all had similar risks associated with maintaining schedule; global sourcing and shipping concerns; potential for force majeure; unforeseen field conditions; environmental issues and resource concerns.  He then provided an overview on how the Authority typically mitigates the risks associated with those challenges. 

In response to a question from Trustee Mahoney President Quiniones said because of the long “lead time” to procure spare parts, since most of the products are made abroad, the Authority is reviewing its spare parts inventory process.  He said the Authority is part of the Governor’s NYS 2100 Committee, made up of utilities with common types of equipment purchases, which is looking at spare parts policies and how utilities with common types of equipment can “pool” their spare parts resources.  In response to further questioning from Trustee Mahoney, Mr. Welz said that based on the quantities and size of the equipment the Authority purchases, it is better to deal with the original manufacturers of the equipment.

 


 

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 (d)(e) and (f) to discuss:

·         Matters leading to the promotion or demotion of a particular person;

·         Collective bargaining negotiations; and

·         Current litigation.

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 July 23, 2013, at 11:00 a.m., at the Niagara Power Project, unless otherwise designated by the Chairman with the concurrence of the Trustees.

 

 


Closing

                Upon motion made and seconded, the meeting was adjourned by the Chairman at approximately 2:00 p.m.

 

 

Delince Signature

 

Karen Delince

Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                

 

 

 

 



[*] These standards include Statement No. 43 – Financial Reporting for Post-employment Benefit Plans Other Than Pension Plans and Statement No.45 – Accounting and Financial Reporting by Employers for Post-employment Benefits Other than Pensions. 

* Drawn from $30 million authorized by the Trustees on 6/26/2012 for the EE-MAP Program