MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

December 17, 2013

 

Table of Contents

 

 

 

                Subject                                                                                                                                  Page No.               Exhibit

 

                Introduction                                                                                                                               2

1.                   Adoption of the December 17, 2013 Proposed Meeting Agenda                                      3                                      

2.                   Consent Agenda:                                                                                                                       4

a.       Minutes of the Regular Meeting held on September 24, 2013                          5

b.       500 MW Power Plant – Storage Facilities – Capital                                            6

Expenditure Authorization Request

 

c.        Request for Increased Funding – Municipal and Rural                                      8

                                    Cooperative Electric Utilities Electric-Drive Vehicle

                                    Program

 

d.       Procurement (Services) Contracts – Business Units and                                   10                      2d-A; 2d-B

    Facilities – Awards, Extensions and/or Additional

    Funding

 

e.        Plattsburgh to Vermont Transmission Facility (PV-20)                                  18                      2e-A

    Acquisition of Property – Map No. CL-1506,

    Parcel No. 1506

 

f.        St. Lawrence River Power Project – Conveyance of Surplus                           20                      2f-A

    Lands to the County of Franklin – Map No. CL-909,

    Parcel No. 951 and Map No. CL-910, Parcel No. 952

 

g.       Proposed Schedule of Trustees’ Meetings in 2014                                             22

 

h.       Transfer of Western New York Hydropower Allocations                                  23                      2h-A

                                    to Delphi  Automotive PLC and Proposed Contract –

                                    Notice of Public Hearing

 

i.         Direct Sale Contract for the Sale of Western New York                                    27                      2i-A; 2i-B

    Hydropower to M&T Bank – Transmittal to the Governor

 

Resolution

 

Discussion Agenda:                                                                                                                                 30

 

3.                   Q&A on Report from:

a.       President and Chief Executive Officer                                                                  30                      3a-A

 

b.       Chief Operating Officer                                                                                           31                      3b-A


 

Subject                                                                                                                                                  Page No.               Exhibit

 

c.        Chief Financial Officer                                                                                            33                      3c-A

 

d.       Chief Risk Officer                                                                                                     34                      3d-A

 

e.        Senior Vice President – Strategic Planning                                                           36                      3e-A

 

4.                   2014 Operating Budget and Filing of the 2014-2017 Four-Year                                     38                      4-A4-E

    Financial Plan Pursuant to Regulations of the Office of the

    State Comptroller

 

5.                   Power Allocations:                                                                                                                    43

 

a.       Power Allocations Under the Recharge New York Program                             43                      5a-A5a-E

b.        Allocations of Hydropower and Notice of Public Hearing                               49                      5b-A; 5b-A-1                                                                                                                                                                5b-A-3; 5b-B

6.                   Awards of Fund Benefits from the Western New York Economic                                  54                      6-A-1; 6-A-2;

                    Development Fund Recommended by the Western New York                                                              6-B; 6-C

                    Power Proceeds Allocation Board

 

7.                   Motion to Conduct an Executive Session                                                                            59

 

8.                   Motion to Resume Meeting in Open Session                                                                       60

 

9.                   Next Meeting                                                                                                                             61

 

10.                Closing                                                                                                                                        62                                                     

 

 

 


Minutes of the Regular Meeting of the Power Authority of the State of New York held via videoconference at the following participating locations at approximately 11:05 a.m.

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

2)       Video Conference Center: Acurate Court Reporting

247 West Fayette Avenue, Suite 202, Syracuse, NY 13202

 

Members of the Board present were:

 

                                John R. Koelmel, Chairman

                                Joanne M. Mahoney, Vice Chair – via video conference

                                Eugene Nicandri, Trustee

                                Jonathan Foster, Trustee

                                R. Wayne LeChase, Trustee

                                Terrance P. Flynn, Trustee (via telephone conference)

                                                                                       

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Gil C. Quiniones                                   President and Chief Executive Officer

Judith C. McCarthy                            Executive Vice President and General Counsel

Edward Welz                                        Chief Operating Officer

Donald Russak                                    Chief Financial Officer

Jill Anderson                                         Chief of Staff and Director of Energy Policy

Robert Lurie                                         Senior Vice President – Strategic Planning

William Nadeau                                   Senior Vice President and Chief Risk Officer

James Pasquale                                   Senior Vice President – Economic Development and Energy Efficiency

Joan Tursi                                             Senior Vice President – Corporate Support Services

John Canale                                         Vice President – Project Manager

Dennis Eccleston                                 Vice President – Information Tech/Chief Information Officer

Joseph Gryzlo                                       Vice President and Chief Ethics and Compliance Officer

Thomas Davis                                      Vice President – Financial Planning and Budgets

Michael Huvane                                  Vice President – Marketing – Business and Municipal Marketing

Joseph Leary                                        Vice President – Community and Government Relations

Lesy Pardo                                            Vice President – Internal Audit

Karen Delince                                       Corporate Secretary

Robert Hopkins                                   Director – Budgets

Michael Saltzman                               Director – Media Relations

Guy Sliker                                             Director – Clean Energy Technology – Renewable Energy

Gary Schmid                                        Manager – Network Services Infrastructure

Ruth Colon                                           Senior Business Integration Project Manager

Andrea Luongo                                    Senior Project Engineer II – Facilities Modification

John Markowitz                                   Lead Research & Technology Development Engineer II

John Giumarra                                     Account Executive – Business Marketing and Economic Development

Sean Doyle                                           Real Estate Administrator – Purchasing

Lorna M. Johnson                               Associate Corporate Secretary

Sheila Baughman                                                Assistant Corporate Secretary

Alex Southwell                                     Counsel – Gibson Dunn & Crutcher

                               

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

 


Introduction

                Chairman John 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 December 17, 2013 Proposed Meeting Agenda

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

 


 

2.                   Consent Agenda:               

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

 

Vice Chair Mahoney was recused from the vote on item #2d (Procurement (Services) Contracts – Business Units and Facilities – Awards, Extensions and/or Additional Funding) as it pertains to CHA Consulting, Inc. and Orrick Herrington & Sutcliffe LLP and Trustee LeChase as it pertains to CHA Consulting, Inc. and Nixon Peabody LLP.  Since Vice Chair Mahoney and Trustee LeChase were recused from the vote on CHA Consulting, it failed to meet the votes necessary for its approval.

 

Vice Chair Mahoney was also recused from the vote on item #2i (Direct Sale Contract for the Sale of Western New York Hydropower to M&T Bank – Transmittal to the Governor).

 

                 


 

a.       Approval of the Minutes

                The Minutes of the Regular Meeting held on September 24, 2013 were unanimously adopted.


 

b.       500 MW Power Plant – Storage Facilities –

Capital Expenditure Authorization Request

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                The Trustees are requested to approve a Capital Expenditure Authorization Request for the design and construction of storage facilities for the 500 MW Power Plant for the total amount of $4.7 million.  The storage buildings are required for hazardous materials and universal waste and a separate building to support Site Operations.

 

BACKGROUND

 

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.

 

As a result of the deconstruction of the Poletti Power Plant, the existing drum storage facility, which does not meet current state codes and standards, is being closed and other storage buildings are being demolished.  To replace these required facilities, a new hazardous materials and universal waste storage building will be constructed to meet current codes and standards.  A building for Site Operations to store trucks, boom lifts and other maintenance equipment will also be constructed.  The new facilities are scheduled to be completed by the end of 2014. 

 

The cost for the services and materials, including design, installation and all support labor is included in this Capital Expenditure Authorization Request.  The request for $4.7 million is to fund consultant services for engineering and design, permit expediting services, and construction management, and the construction of the facilities.    

 

                The total project cost over a two-year period is estimated at $4.7 million, as follows:

               

 

Engineering

$    294,000

Procurement

$               0

Construction/Installation

$ 3,944,000

Authority Direct/Indirect   

$    462,000

TOTAL  :

$ 4,700,000 

 

FISCAL INFORMATION

 

                Payment associated with this project will be made from the Authority’s Capital Fund and has been included in the 2014 budget.

 

RECOMMENDATION

 

The Senior Vice President – Operations Support Services and Chief Engineer, the Acting Vice President – Project Management, the Acting Vice President – Procurement and the Regional Manager – SENY recommend that the Trustees approve capital expenditures in the amount of $4.7 million for the installation of the 500 MW Storage Facilities at the Astoria Site.

 

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

               

               


 

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, approval is hereby granted to authorize capital expenditures in the amount of $4.7 million for the installation of  storage facilities at the 500 MW Power Plant at Astoria, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Chairman, the Vice Chair, 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.


 

c.        Request for Increased Funding – Municipal

and Rural Cooperative Electric Utilities

Electric-Drive Vehicle Program                       

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize $2 million in increased funding for the Municipal and Rural Cooperative Electric Utilities Electric-Drive Vehicle Program (‘Muni-Coop E-D Program or ‘Program’).  This amount is in addition to the $3 million approved by the Trustees at their May 2003 and February 2009 meetings.  This program enables the Authority’s Municipal (‘Munis’) and Rural Electric Cooperative (‘Coops’) utilities to purchase electric and hybrid-electric vehicles for use in their fleets.

 

BACKGROUND

 

                Since the 1980s, through its Energy Services Programs (‘ESP’), the Authority has offered various types of energy services and clean energy technologies programs to participants throughout the State to help them lower their energy usage and/or achieve a cleaner and more energy efficient use of energy and natural resources. 

 

At their May 20, 2003 meeting, the Trustees authorized $1.2 million to finance the Muni-Coop E-D Program, a new partnership program between NYPA and the Munis and Coops.  This program facilitated the purchase of electric and hybrid-electric vehicles for the Muni and Coop systems’ municipal fleets.  At their meeting on February 24, 2009, the Trustees authorized an additional $1.8 million to finance the program.  As of September 1, 2013, forty-six (46) such vehicles were placed with 21 municipal systems.

 

DISCUSSION

 

The current Muni-Coop E-D Program is available to all Muni and Coop utilities.  The Muni and Coop utilities apply to the Authority for funding to purchase on-road passenger vehicles; heavy-duty work vehicles; or off-road work vehicles.  The vehicles are used by the Muni and Coop utilities’ personnel and/or their affiliated municipal agencies to carry out their functions.  The funds made available to the Muni and Coop utilities for the purchase of these vehicles are recovered over three years through a monthly bill to the participating utility.  

 

In addition, the Trustees have authorized that the full-requirements Muni and Coop utility customers, regulated by the Authority, be permitted to recover from their retail customers all costs associated with the electric-drive vehicle finance program, as well as any other energy efficiency programs and initiatives that the Authority offers to the Muni and Coop Systems.  Recovery of these costs will be through the Purchased Power Adjustment Charge.  The partial-requirements systems, regulated by the New York Public Service Commission (‘PSC’), may request similar permission from the PSC to recover costs associated with the vehicle purchase and other energy efficiency programs from their customers.

 

If approved by the Trustees, the additional funding will enable the Authority to continue its successful partnership with the Munis and Coops to expand the integration of electric-drive vehicles into their municipal fleets.

 

FISCAL INFORMATION

 

The total Muni-Coop E-D Program cost is not to exceed $5 million.  These costs, including any financing costs, will be recovered directly from the Program participants.  Except for the Petroleum Overcharge Restitution (‘POCR’) funds, discussed below, the funds will be recovered over a period of up to three years through an electric bill surcharge.

 

The Program will be funded from Commercial Paper Notes proceeds and/or Operating Fund monies.  A small portion of the funding will be supplemented by POCR funds allocated to the Authority by the New York State legislature; the POCR funding will be used strictly to offset the internal NYPA interest charges. 

 

RECOMMENDATION

 

The Senior Vice President – Strategic Planning and the Senior Vice President – Economic Development and Energy Efficiency recommend that the Trustees authorize an additional $2 million in funding for the implementation of the Municipal and Rural Cooperative Electric Utilities Electric-Drive Vehicle Program and continue the use of the Purchased Power Adjustment Charge to allow the full-requirements municipal and rural cooperative electric utilities regulated by the Authority to recover their costs for the program.

 

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

               

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

 

                RESOLVED, That an Electric-Drive Vehicle Program, as described in the foregoing report of the President and Chief Executive Officer, is hereby authorized; and be it further

 

                RESOLVED, That the Electric-Drive Vehicle Program described above may be funded with the proceeds of Series 1, 2, or 3 Commercial Paper Notes, Series and Extendible Municipal Commercial Paper Notes, Operating Fund monies, and/or Petroleum Overcharge Restitution funds allocated to the Authority by New York State legislation, with such POCR funding being in amounts as deemed advisable by the Senior Vice President – Economic Development and Energy Efficiency; and be it further

 

                RESOLVED, That the Trustees hereby authorize the full-requirements Municipal and Rural Cooperative systems served by the Authority to recover costs for this, and other energy efficiency programs, through the Purchased Power Adjustment Charge; and be it further

 

                RESOLVED, That the Chairman, the Vice Chair, 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.       Procurement (Services) Contracts –

                        Business Units and Facilities –

                        Awards, Extensions and/or Additional Funding 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

The Trustees are requested to approve the award and funding of the multiyear procurement (services) contracts listed in Exhibit ‘2d-A,’ as well as the continuation and/or funding of the procurement (services) contracts listed in Exhibit ‘2d-B,’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the recommended awards and extensions, including the nature of such services, the bases for the new awards if other than to the lowest-priced bidders and the intended duration of such contracts, or the reasons for extension and the projected expiration dates, are set forth in the discussion below.

BACKGROUND

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

The Authority’s Expenditure Authorization Procedures (‘EAPs’) require the Trustees’ approval for the award of non-personal services, construction, equipment purchase or non-procurement contracts in excess of  $3 million, as well as personal services contracts in excess of $1 million if low bidder, or $500,000 if sole-source, single-source or non-low bidder.

The Authority’s EAPs also require the Trustees’ approval when the cumulative change- order value of a personal services contract exceeds $500,000, or when the cumulative change-order value of a non-personal services, construction, equipment purchase or non-procurement contract exceeds the greater of $1 million or 25% of the originally approved contract amount not to exceed $3 million.

DISCUSSION

Awards

The terms of these contracts will be more than one year; therefore, the Trustees’ approval is required.  Except as noted, all of these contracts contain provisions allowing the Authority to terminate the services for the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  Approval is also requested for funding all contracts, which range in estimated value from $500,000 to $6 million.  Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.

The issuance of multiyear contracts is recommended from both cost and efficiency standpoints.  In many cases, reduced prices can be negotiated for these long-term contracts.  Since these services are typically required on a continuous basis, it is more efficient to award long-term contracts than to rebid these services annually.

Extensions

Although the firms identified in Exhibit ‘2d-B’ have provided effective services, the issues or projects requiring these services have not been resolved or completed and the need exists for continuing these contracts.  The Trustees’ approval is required because the terms of these contracts will exceed one year including the extension, the term of extension of these contracts will exceed one year and/or because the cumulative change-order limits will exceed the levels authorized by the EAPs in forthcoming change orders.  The subject contracts contain provisions allowing the Authority to terminate the services at the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  These contract extensions do not obligate the Authority to a specific level of personnel resources or expenditures.

Extension of the contracts identified in Exhibit ‘2d-B’ is requested for one or more of the following reasons:  (1) additional time is required to complete the current contractual work scope or additional services related to the original work scope; (2) to accommodate an Authority or external regulatory agency schedule change that has delayed, reprioritized or otherwise suspended required services; (3) the original consultant is uniquely qualified to perform services and/or continue its presence and rebidding would not be practical or (4) the contractor provides a proprietary technology or specialized equipment, at reasonable negotiated rates, that the Authority needs to continue until a permanent system is put in place.

The following is a detailed summary of each recommended contract award and extension.

 

Contract Awards in Support of Business Units/Departments and Facilities:

 

Enterprise Shared Services

 

Corporate Support – Facility Management

 

The contracts with C.W. Brown, Inc. (‘CWB’), LLF Construction Services, Inc.  (‘LLF’), Royal Diamond Construction Corporation (‘Royal’) and Scully Construction LLC (‘Scully’) (Q13-5536; PO#s TBA) would provide for on-call general contracting services  for the Authority’s Clarence D. Rappleyea Building, garage and grounds in White Plains, NY.  Such services include, but are not limited to, plumbing, electrical, carpentry and masonry services, as well as build-outs, renovations and upgrades of Authority and tenant space, on an ‘as needed’ basis.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 56 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Five proposals were received and evaluated, as further set forth in the Award Recommendation documents.  Of this number, one bidder’s proposal quoted rates that were not in compliance with the New York State Prevailing Wage Rate requirements and was not considered further.  Staff recommends the award of contracts to the remaining four firms: CWB, LLF, Royal and Scully, which were responsive to the bid requirements.  Three of these firms have performed satisfactory services under existing contracts for such work; the fourth would offer additional competitive resources to augment the range of this pool of proposed awardees in order to fulfill the Authority’s forthcoming general contracting requirements.  The award of multiple contracts would also afford the Authority sufficient resources and flexibility to meet the Authority’s projected schedule of 2014 building management projects and the anticipated additional emergent projects for subsequent years in a timely, responsive and responsible manner, while keeping prices competitive.  The new contracts would become effective on or about January 1, 2014, for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $6 million.  Total commitments and expenditures for all four contracts will be tracked against the approved aggregate total.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.  It should be noted that CWB is a New York State-certified Woman-owned Business Enterprise (‘WBE’) and LLF is a New York State-certified Minority-owned Business Enterprise (‘MBE’).

Information Technology

The Authority uses contractors to augment its technical staff to support various IT efforts and initiatives related to the SAP enterprise-wide financial / business management (‘Enterprise Resource Planning’) system, as necessary.  In an effort to prequalify firms to provide the services of temporary programming personnel for specialized SAP-related tasks and projects to support human resources, business warehousing, financial accounting, materials management, sales and distribution, strategic enterprise management (for Business Planning and Simulation) and other areas / modules, bid documents (Q13-5484) were developed by staff and were downloaded electronically from the Authority’s Procurement website by 106 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Twenty proposals were received and evaluated to identify a ‘short list’ of prequalified firms providing specialized SAP temporary programming personnel.  The evaluation process included, but was not limited to, the following criteria as primary considerations: experience in providing qualified SAP programming/contract personnel in the tri-state area, strong infrastructure of bidders to provide technical support for their contract personnel, quality and relevance of submitted résumés and depth of contract personnel, as well as reasonable and competitive rates.  Based on a thorough review of the proposals, as further set forth in the Award Recommendation documents, the following 10 firms were identified as the most technically qualified bidders that met or exceeded the aforementioned evaluation criteria and bid requirements, as a result of the prequalification selection process:  BayForce Technology Solutions, Inc. (‘BayForce’), Carlyle Consulting Services, Inc. (‘Carlyle’), Eclaro International, Inc. (‘Eclaro’), Experis US, Inc. (‘Experis’), Grom Associates, Inc. (‘Grom’), Mitchell Martin, Inc., Sage Group Consulting, Inc. (‘Sage’), Sapta Global, Inc. dba Zen4IT (‘Sapta’), Sierra Infosys, Inc., (‘Sierra’), and Unique Comp, Inc. (‘Unique’) (PO#s TBA).  Four of these firms have provided satisfactory services under existing contracts for such work.  As specific positions are required, the Authority will request résumés of candidates based on the requirements and experience required for each position from all 10 prequalified firms.  Contracts will only be awarded to those firms that successfully place a candidate, as each required position is bid among the entire prequalified group and the best candidate is selected.  Competition among the group is expected to provide qualified talent from a wide variety of firms.  Contracts would become effective on or about January 1, 2014, for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  All contracts will expire on December 31, 2016, regardless of their duration.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $2.7 million.  Commitments will be made through individual purchase order releases against master outline agreements with the successful firms, as positions are required and filled.  Total commitments and expenditures for all such awarded contracts will also be tracked against the approved aggregate total.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures, including travel and living expenses, where applicable.  It should also be noted that five of these firms are New York State-certified M/WBEs: Eclaro, Sage, Sapta, Sierra and Unique.

 

Operations

 

Power Generation / Support Services

 

Historically, the Authority has used external resources to provide for ‘on-call, as required’ civil and geotechnical engineering and design services to support the operation and maintenance of the Authority’s hydroelectric, pumped storage and fossil power generation projects, as well as its transmission and other ancillary facilities throughout New York State, when engineering requirements are beyond the resources of existing Authority engineering staff, or during emergencies when special expertise is required or when Authority staff is not immediately available to support operational needs.  Furthermore, the Federal Energy Regulatory Commission (‘FERC’) requires that Licensees maintain the resources necessary to respond to unusual or changed conditions that may affect public safety.  Projects may involve civil, geotechnical, geophysical, dam safety instrumentation and monitoring, hydraulic and structural design of new or existing facilities at power generation and transmission projects.  Assignments may include, but are not limited to: site investigations, soil/rock drilling and laboratory testing, surveys, grading and drainage design, storm water management, erosion and sedimentation control, as well as inspections, feasibility studies, calculations, analyses, safety assessments and construction support for modifications and additions to the Authority’s Projects (including preparation of new design drawings and revisions to the Authority’s drawings, dam safety procedures and equipment manuals affected by each modification or addition to facilities).  Since the need for such services is ongoing, and the existing contracts are expiring, bid documents (Q13-5489) were developed by staff and were downloaded electronically from the Authority’s Procurement website by 118 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Twelve proposals were received and evaluated in detail, as further set forth in the Award Recommendation documents.  To summarize, all twelve firms were determined to be technically qualified; staff also performed a cost analysis, which resulted in a ranking of their respective evaluated costs.  Based on the foregoing, staff recommends the award of contracts to the following five firms: CHA Consulting, Inc. (‘CHA’), GEI Consultants, Inc. (a Delaware Corp.) dba GEI Consultants, Inc., P.C. in New York (‘GEI’), GZA GeoEnvironmental of New York (‘GZA’), Northeast Professional Engineering Consultants, LLC (‘NPE’) and Paul C. Rizzo Engineering – New York, PLLC (‘Rizzo’) (PO#s TBA), which are the lowest-priced evaluated bidders and are qualified to perform such services.  It should be noted that two of these firms have performed satisfactory services under existing contracts for such work.  The award of multiple contracts would provide a good mix of cost-competitive engineering firms, covering a broad spectrum of technical expertise, experience and services.  The new contracts would become effective on or about January 1, 2014, for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $5 million.  Total commitments and expenditures for all five contracts will be tracked against the approved aggregate total.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures, including travel and living expenses, where applicable.

The contract with DCB Elevator Co., Inc. (‘DCB’) (PO# TBA) would provide for monthly maintenance services for approximately 27 elevators, escalators and wheelchair lifts located in various buildings at the Niagara Project (including the Robert Moses Power Plant, the Lewiston Pump Generating Plant, Power Vista, the General Maintenance Building and the Administration/Warehouse Building), as well as for on-call repairs performed on a time-and-material basis.  Since the existing contract for these services expires at the end of the year, and the need for such services is ongoing, staff conducted a mini-bid among six pre-approved contractors for the geographic region, based on a New York State Office of General Services (‘OGS’) contract for such services.  Bid documents were sent to the six invited bidders (RFQ N13-20081116GJ).  Three proposals were received and evaluated, as further set forth in the Award Recommendation documents.  Staff recommends the award of a contract to DCB, the lowest-priced bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory services under an existing contract for such work.  All price escalations or de-escalations will be governed by the OGS contract.  It should be noted that the Authority reserves the right to solicit additional comparative costs for repairs, parts and materials that are not defined or covered by the Maintenance Specifications and that exceed a cumulative amount of $5,000 per occurrence.  The new contract would become effective on or about January 1, 2014, for an intended term of up to four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $500,000, based on the bidder’s quote, as well as historical and projected usage.  It should also be noted that DCB is a New York State-certified WBE.

The contract with General Electric International, Inc. (‘GEII’) (6000143507; PO# TBA) would provide for technical assistance services, on an ‘as needed’ basis, to support the Authority’s 500 MW Power Project.  Although GEII was the only bidder to submit a proposal for the existing contract, Authority staff attempted to identify other additional firms that would be able to perform such services.  To that end, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 36 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated in detail, as further set forth in the Award Recommendation documents.  As the original equipment manufacturer, GEII is uniquely qualified to perform such work.  GEII possesses all of the proprietary information pertaining to various systems and equipment (including, but not limited to, the Frame 7 Compressor and D-11 Steam Turbines, as well as the GE Bently Nevada instrumentation).  Based on the foregoing, as well as its level of expertise and resources, staff recommends award of a contract to GEII, the more technically qualified bidder, which fully meets or exceeds all the bid requirements and has provided satisfactory services under an existing contract for such work.  Additionally, a crucial component of the work scope is the ability to submit technical questions for engineering review to the Power Answer Center (‘PAC’) and execute the recommendations of such PAC cases, which are proprietary to GE.  The availability of this resource will be especially useful in resolving emergent issues during the next major five-year outage scheduled during the term of the new contract.  Rates for the field engineer and specialty rates will be based on GE’s published rates in effect at the time of service.  The new contract would become effective on or about January 1, 2014, for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $1.5 million.

The contract with Underground Systems, Inc. dba USi (Q13-5513; PO# TBA) would provide for monitoring and maintenance services for the Long Island Sound Y-49 345kV Feeder cable oil leak detection and uprate systems, as well as leak detection services for the Q-35 L&M cable (to commence one year after system installation, approximately June 2015).  Services would include, but are not limited to, continuous monitoring of the leak detection system on a 24/7/365 basis, as well as maintenance and repair of the installed systems, including annual calibration and leak testing, field maintenance and technical support, as needed, and an answering service that would notify the appropriate parties of calls regarding system alarms and operating issues in the event of a suspected or actual dielectric fluid leak.  Although the existing contract for such services was awarded on a sole source basis, staff attempted to identify any other firm/s that would be able to perform this work.  To that end, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 51 firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Reasons provided by some of the other firms that did not submit a proposal include, but are not limited to, it was not their scope of work or they downloaded the bid documents for information purposes only.  As the original system designer of the existing proprietary software and hardware configuration, USi is uniquely qualified to monitor and maintain these systems, provide replacement parts and on-site support services for these systems, in order to ensure the reliability of the Y-49 and Q-35 L&M cables and to fulfill the Authority’s regulatory licensing commitments.  Based on the foregoing, as well as its reasonable pricing, staff recommends the award of a contract to USi, which is technically qualified to perform these services and has provided excellent service under the existing contract for such work.  The new contract would become effective on or about January 1, 2014, for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $1,582,900.

 

Transmission

 

The contracts with Michels Power (A Division of Michels Corporation) and Northline Utilities, LLC (‘Northline’) (RFQ C13-20078249WS; PO#s TBA) would provide for transmission emergency response services for the Authority’s Transmission Facilities, as needed, when impacted by natural, environmental or other disasters.  Historically, the Authority’s Transmission Maintenance Organization (‘TMO’) has provided first response and evaluation services, primarily for weather-related events / emergencies that include structural failures to the line system and superstructures or infrastructure failures caused by rain, ice, wind and/or snow.  Other emergency responses may be for events caused by public intervention, purported acts of vandalism, contractor error or aging/deteriorating infrastructure.  The Authority has responded to incidental localized emergencies in New York State involving the Transmission System and larger regional events, such as Hurricane Sandy in 2012, Hurricane Irene in 2011 and the wind-related events of Hurricane Earl in 2010 to assist LIPA, the Buffalo Snowstorm of 2006, and the St. Lawrence County Ice Storm in 1998.  Responses in each circumstance were managed based on the breadth, scope and available resources for the event.  The Authority’s Transmission Emergency Restoration Plan (‘TERP’) outlines the strategy for the safe, efficient and orderly restoration of transmission lines after a facility failure.  The purpose of the proposed emergency response contracts would be to provide for additional resources and backup services, if necessary, for large scale events, those causing catastrophic failure of the transmission system and those outside the scope of the TMO.  To that end, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 46 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated by a multidisciplinary Evaluation Committee, as further set forth in the Award Recommendation documents.  Based on contractor qualifications, specified proposal requirements (e.g., construction and emergency response capabilities, available equipment, past emergency response activities, number and qualifications of response personnel, training procedures, etc.), environmental, health and safety requirements and available labor force / resources, staff recommends the award of contracts to two firms: Michels Power and Northline, the most technically acceptable bidders, which are qualified to perform such work and meet the bid requirements.  Both firms have provided satisfactory services under prior contracts for similar work.  The award of contracts to these two firms would put the Authority in the best position to respond to a large scale catastrophic event on its Transmission System, if necessary.  The new contracts would become effective on or about January 1, 2014, for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the aggregate total amount expected to be expended for the term of the contracts, $5 million.  Total commitments and expenditures for both contracts will be tracked against the approved aggregate total.  Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

 

Contract Extensions and/or Additional Funding:

 

Law

 

At their meeting of May 26, 2010, the Trustees approved the award of multiyear contracts for legal services in the categories of Bond, Underwriter and Disclosure Counsel in the aggregate amount of $3 million, Energy Services Counsel in the aggregate amount of $4 million and General Legal Services in the aggregate amount of $6 million.  Contracts for the General Legal Services and Energy Services categories were entered into with the designated law firms for an initial term of three years, with an option for two additional years.  Contracts for the Bond, Underwriter and Disclosure Counsel category were entered into with the designated law firms for an initial term of two years, with an option for three additional years.  In the three and one-half years since these approvals, there developed the need to add more work in the area of Energy Services.  By way of examples, the New York City Customer issues (Buyers’ Side Mitigation) and 100 MW Solar project required outside counsel assistance, with the result that it is anticipated that the funding for the Energy Services category will be expended in 2014.  At this time, there appears to be sufficient funding for the Bond, Underwriter and Disclosure Counsel and General Legal Services categories for the expected work through the end of those contracts.  Accordingly, staff proposes to consolidate funding for the three separate categories into a single authorized allocation in the Law Department budget for outside counsel, with the result that remaining funds in the three categories can be shifted between and among the categories, as long as they are consistent with the previously-approved aggregate total funding for the three categories.  The Trustees’ approval is therefore requested to authorize such proposed consolidation of aggregate funding for the contracts set forth in Exhibit ‘2d-B,’ to be allocated as necessary.  It should be noted that the Gonzalez Saggio firm is a New York State-certified MBE and the Schoeman Updike firm is a New York State-certified WBE.

 

Operations COO

Labor Relations

The contract with Joseph M. Bress (4500213229) provides for consulting services to assist the Authority in connection with labor negotiations, on an ‘as needed’ basis.  Such services include, but are not limited to: developing a labor strategy with Authority management prior to and during negotiations of labor contracts with the various unions; representing the Authority in all phases of negotiations of collective bargaining agreements with its various unions, including impasse proceedings and other related proceedings before the Public Employment Relations Board (‘PERB’); briefing Authority management and the Trustees on the status of labor negotiations and presenting the terms of the proposed Agreement to the Trustees and collaborating and participating in the Authority’s negotiation team.  The subject contract, which was awarded on a single-source basis, became effective on January 30, 2012 for an initial term of less than one year.  Subsequently, staff recommended a one-year extension of the subject contract, which was approved by the Trustees at their meeting of December 18, 2012.  Mr. Bress has been working with the Authority’s negotiating team on its expired contracts with the International Brotherhood of Electrical Workers (‘IBEW’) and the Utility Workers Union of America (‘UWUA’), including changes to wages, benefits and work rules.  Contract negotiations with both labor unions are still ongoing.  Mr. Bress’s services are also needed to negotiate a contract with a newly-created collective bargaining unit at the Authority’s Charles Poletti power generating site.  Mr. Bress is uniquely qualified to perform such services.  As a retired New York State employee, who was also retained by the Governor’s Office to negotiate the CSEA contract, Mr. Bress offers specialized expertise at very competitive rates.  He has provided valuable service to the Authority under the existing contract.  Since the process is still ongoing, it would not be prudent to bid this work midstream and there is no guarantee that it would result in the identification of another individual as qualified or as competitively priced as Mr. Bress.  The current contract amount is $450,000; total expenditures for 2012 – 2013 are well below the authorized contract limit and staff anticipates that sufficient funding will be available for the proposed extended term, including the optional year.  Since the need for such services is ongoing, the consultant has performed satisfactory work and adequate funding is still available under this contract, staff recommends a one-year extension of the subject contract through December 31, 2014, with an option to extend for an additional year, if necessary.  The Trustees are therefore requested to approve an extension of the subject contract through December 31, 2014 (with an option to extend for an additional year through December 31, 2015, if needed), with no additional funding requested.

Operations Support Services

Project Management

The contract with Quality Integrated Services, Inc. (‘QIS’) (4500223661) provides for testing and inspection services of various materials including, but not limited to, concrete samples, metals, surface coatings (paint), welds and soil for the Niagara Power Project, on an ‘as needed’ basis.  The independent testing laboratory performs such verification testing or inspection services related to work being performed at the Project, to ensure that a material conforms to all requisite standards and requirements.  The original award, which was competitively bid, became effective on October 31, 2012, for a term of less than one year.  Interim approval for a five-month extension through March 31, 2014, was authorized in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures, to provide for the continuation of such services on current projects, while allowing sufficient time for the re-bidding, evaluation and approval process for a new multiyear award.  The current contract amount is $237,750; adequate funding is available under this contract to cover services provided during the proposed extended term.  The Trustees are therefore requested to ratify the interim extension and to formally approve extension of the subject contract through March 31, 2014, with no additional funding requested.

FISCAL INFORMATION

Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2014 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  Payment will be made from the Operating Fund.

Funds required to support contract services for capital projects have been included as part of the approved capital expenditures for those projects and will be disbursed from the Capital Fund in accordance with the project’s Capital Expenditure Authorization Request.

RECOMMENDATION

The Senior Vice President – Enterprise Shared Services, the Senior Vice President – Operations Support Services and Chief Engineer, the Senior Vice President – Power  Generation,  the Acting Vice President – Project Management, the Vice President – Engineering, the Vice President – Environment, Health and Safety, the Acting Vice President – Procurement, the Vice President – Information Technology and Chief Information Officer, the Vice President – Transmission, the Director – Corporate Support Services, the Director – Asset and Maintenance Management, the Director – Labor & Special Projects, the Regional Manager – Northern New York, the Regional Manager – Western New York, the Regional Manager – Central New York and the Regional Manager – Southeastern New York recommend that the Trustees approve the award of multiyear procurement (services) contracts to the companies listed in Exhibit ‘2d-A’ and the extension and/or funding of the procurement (services) contracts listed in Exhibit ‘2d-B,’ for the purposes and in the amounts discussed within the item and/or listed in the respective exhibits.

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

 

The following resolution, as submitted by the President and Chief Executive Officer, was adopted with Vice Chair Mahoney being recused from the vote as it pertains to CHA Consulting, Inc. and Orrick Herrington & Sutcliffe LLP; and Trustee LeChase as it pertains to CHA Consulting, Inc. and Nixon Peabody LLP. 

 

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

 

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

 


 

RESOLVED, That the Chairman, the Vice Chair, 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.        Plattsburgh to Vermont Transmission

Facility (PV-20) – Acquisition of Property –

Map No. CL-1506, Parcel No. 1506               

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize the acquisition by purchase or eminent domain of a permanent easement over and across Cumberland Head Road in the Town of Plattsburgh, County of Clinton, as more particularly shown on the attached Exhibit ‘2e-A.’

 

BACKGROUND

 

The Plattsburgh to Vermont Transmission Facility (‘PV-20’) is an approximately 9-mile long 115 kV circuit that connects the Plattsburgh Substation in Beekmantown, New York, to the Vermont Electric Company substation in Milton, Vermont.  A single 115 kV circuit extends from the Plattsburgh Substation to the Cumberland Head Transition Station, where it transitions to submarine cables and enters Lake Champlain.  The existing submarine/subterranean cables consist of four 115 kV cables that were installed in 1958 and three 115 kV cables that were installed in 1971.  The 1958 cables have exceeded their projected 50-year useful life and the 1971 cables are approaching the end of their useful life.  The Authority has proposed replacing 4,800 feet of submarine/subterranean 115 kV design capacity cables in New York State with 230 kV design capacity cables.

 

DISCUSSION

               

The PV-20 line runs overland from the Plattsburgh substation for approximately 7.5 miles prior to entering Lake Champlain.  At the time of initial installation, the Authority secured easement rights over and across all lands necessary to connect to the submerged portion of the Project except for rights to a parcel, approximately 30 x 50 feet, at the point where the 1971 alignment crosses Cumberland Head Road, a public roadway purportedly owned and maintained by the County of Clinton.  The Authority is the fee owner of the adjoining lands on both sides of Cumberland Head Road.  This acquisition will perfect the Authority’s easement rights over and across Cumberland Head Road and extinguish any potential third-party rights which might impede the Authority’s use.  It is expected that the property will be appropriated under Section 402 (A)(4) of the New York State Eminent Domain Procedure Law, which  authorizes the immediate acquisition of lands in the bed or beds of any streams, lakes, streets, roads, highways, or rights-of-way by the filing of a map and description of the parcel and sets forth a streamlined procedure for the vesting of title.

 

FISCAL INFORMATION

 

It is not anticipated that there will be any financial consequences of this transaction.  Any costs or consideration incurred will be paid from the Real Estate O&M budget.

 

RECOMMENDATION

 

The Senior Vice President – Enterprise Shared Services, the Vice President – Transmission, the Acting Vice President – Project Management and the Director – Site Purchasing/Real Estate recommend that the Trustees approve the acquisition of permanent easement rights in and to the property shown and described on the map entitled ‘Power Authority of the State of New York, St. Lawrence River Project, Barnhart-Plattsburgh Transmission Line, County of Clinton, Town of Plattsburgh, Map No. CL-1506, Parcel No.1506.’

 

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

 


 

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

 

                RESOLVED, That pursuant to the provisions of Article 5, Title 1 of the Public Authorities Law, the Authority hereby finds it necessary to acquire by purchase or eminent domain the real properties shown and described on a map entitled “Power Authority of the State of New York, St. Lawrence River Project, Barnhart-Plattsburgh Transmission Line, County of Clinton, Town of Plattsburgh, Map No. CL-1506, Parcel No.1506,” and hereby finds and determines that such real property is required for public use and hereby determines that such real property is reasonably necessary for the Plattsburgh to Vermont Transmission Facility (“PV-20”) line, and be it further

 

                RESOLVED, That in the opinion of the Authority the acquisition of the real property shown and described on said Map No. CL-1506 is de minimis in nature so that the public interest will not be prejudiced by the acquisition of such real property without a public hearing; and be it further

 

                RESOLVED, That the Executive Vice President – Enterprise Shared Services and Administration be, and hereby is, authorized and directed to execute on behalf of the Authority such certificates, requests, and directions on terms and conditions substantially in accord with the foregoing report of the President and Chief Executive Officer, as are necessary or desirable for the acquisition of such real property; and be it further

 

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

 


 

f.        St. Lawrence River Power Project – Conveyance

of Surplus Lands to the County of Franklin

Map No. CL-909, Parcel No. 951 and

Map No. CL-910, Parcel No. 952                              

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize the conveyance of two adjoining parcels of surplus land improved by a communications tower, totaling approximately 3.91 acres, located in the Town of Ellenburg, Clinton County, to the County of Franklin.

 

DISCUSSION

 

The Ellenburg properties were acquired in 1958.  A 200-foot communications tower (the ‘tower’) was erected in 1975 in support of the Barnhart-Plattsburgh Transmission Line.  Recently, the Transmission Department determined that the tower was unsafe to climb and that major repairs and upgrades would be required to keep it operational.  Concurrently, staff determined that the equipment installed in Ellenburg could be moved to the Authority’s new communication tower at the Ryan Substation.  Staff therefore concluded that it was no longer economically feasible to incur the ongoing maintenance and repair costs associated with the tower and that the property was surplus to the Authority’s needs.  In consideration of these factors, the tower was scheduled for demolition.

 

The scheduled demolition was put on hold when Franklin County expressed interest in acquiring the property for use in support of its 911 emergency system (Franklin County Letter of intent attached as Exhibit ‘2f-A’).  The New York State Police also expressed interest in installing equipment on the tower and the Authority has been advised that these two entities intend to coordinate use of the site.  The Adirondack region lacks adequate communications infrastructure, and the Authority’s transfer of the Ellenburg property will provide significant benefit to the population of the North Country.  At present, Franklin County maintains 911equipment on the microwave tower located inside the fenced area of the Authority’s Willis substation.  Relocation of this equipment to the Ellenburg site will eliminate this third-party use of the Authority’s property.

 

The appraised value of the property is $60,000.00; however, in support of this significant public benefit, it is recommended that the property be transferred for consideration of $1.00, the payment of which shall be waived.

 

Title 5-A of Article 9 of the Public Authorities Law (the ‘Act’) and the Authority’s Guidelines for the Disposal of Real Property (the ‘Guidelines’) allow the Authority, with the approval of the Trustees, to dispose of Authority real property by negotiation and for less than fair market value when the transferee is a government or other public entity, and the terms and conditions of the transfer require that the ownership and use of the asset will remain with the government or any other public entity.

 

The County has inspected the property and has been made aware that the tower requires repair and upgrading prior to its continued use.  The transfer is to be conditioned upon the execution of an agreement between the Authority and the County of Franklin, to include language stating that the County takes the property ‘as is,’ that it indemnifies and holds the Authority harmless from any claims arising from its acquisition and use of the property and that use of the asset will remain with the government or other public entity.

               

FISCAL INFORMATION

 

In accordance with the foregoing, the Authority will transfer title to approximately 3.91 acres of real property located in the Town of Ellenburg to the County of Franklin without payment to the Authority.

 


 

RECOMMENDATION

 

                The Senior Vice President – Enterprise Shared Services, the Vice President – Transmission, the Acting Vice President – Project Management and the Director – Site Purchasing/Real Estate recommend that the Trustees approve the transfer of title to properties shown and described on the maps entitled Map No. CL-909, Parcel No. 951 and Map No. CL-910, Parcel No. 952 to the County of Franklin.

 

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

 

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

 

RESOLVED, That pursuant to the provisions of Article 5, Title 1 of the Public Authorities Law, the Authority hereby finds and determines that title to the real properties shown and described on the maps entitled “Power Authority of the State of New York, St. Lawrence River Power Project Map No. CL-909, Parcel No. 951” and “Power Authority of the State of New York, St. Lawrence River Power Project, Map No. CL-910, Parcel No. 952” may be transferred to the County of Franklin; and be it further

 

RESOLVED, That the Executive Vice President – Enterprise Support Services and Administration or designee, be, and hereby is, authorized and directed to execute on behalf of the Authority such deeds and supporting documents as are necessary or desirable for the transfer of such real property; and be it further

 

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

 


 

g.       Proposed Schedule of Trustees’ Meetings in 2014

 

The Corporate Secretary submitted the following report:

 

The following schedule of meetings for the year 2014 is recommended:

                Date                                                                       Location                                               Time

                January 28, 2014                                                WPO                                                       11:00 a.m.

                February 25, 2014                                               WPO                                                       11:00 a.m.

                March 25, 2014 – Annual                                 WPO                                                       11:00 a.m.

                April                                                   NO MEETING SCHEDULED                            

                May 20, 2014                                                      WPO                                                       11:00 a.m.

                June                                                    NO MEETING SCHEDULED

                July 29, 2014                                                        WPO                                                       11:00 a.m.

                August                                               NO MEETING SCHEDULED

                September 30, 2014                                            NIA                                                        11:00 a.m.

                October                                              NO MEETING SCHEDULED

                November                                         NO MEETING SCHEDULED

                December 16, 2014                                             WPO                                                       11:00 a.m.

RECOMMENDATION

The President and Chief Executive Officer and the Corporate Secretary support the proposed schedule for the Authority’s Trustees’ Meetings for the year 2014, as set forth in the foregoing report.

I recommend the approval of the proposed schedule by adoption of the resolution below.”

 

The following resolution, as submitted by the Corporate Secretary, was unanimously adopted.

 

RESOLVED, That the schedule of Trustees’ Meetings for the year 2014, as set forth in the foregoing report of the Corporate Secretary, be, and hereby is, approved.

 


 

h.       Transfer of Western New York Hydropower

Allocations to Delphi Automotive PLC and

Proposed Contract – Notice of Public Hearing

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                The Trustees are requested to: (1) approve the transfer of two Western New York hydropower allocations, 500 kilowatts (‘kW’) of Expansion Power (‘EP’) and 1,000 kW of Replacement Power (‘RP’), from GM Component Holdings LLC (‘GMCH’) to Delphi Automotive PLC (‘Delphi’); (2) establish the term of each such allocation to be five years starting from the date of commencement of electric service of any portion of the allocation in exchange for, among other things, Delphi’s commitment to maintain an employment level of 250 jobs and make a capital investment of $1.78 million at the Delphi facility, described herein, for the five-year term of the allocations; and (3) authorize the Corporate Secretary to convene a public hearing on the form of the proposed contract finally negotiated with Delphi, the current form of which is attached as Exhibit ‘2h-A,’ and transmit copies of such proposed form of contract to the Governor and legislative leaders pursuant to Public Authorities Law (‘PAL’) §1009.

 

BACKGROUND

 

GMCH, a subsidiary of General Motors LLC (‘GM’), operates a manufacturing facility in Lockport, Niagara County, which is a center of GM’s system component manufacturing with nearly 2.8 million square feet of manufacturing and office space across multiple buildings (the ‘Lockport Facility’).  GMCH acquired the Lockport Facility in October 2009 in connection with Delphi’s emergence from bankruptcy.  As part of the acquisition, GMCH agreed to lease ‘Building 6’ of the Lockport Facility, known as the Lockport Technical Center (‘LTC’), to Delphi and give Delphi an option to purchase the LTC. 

 

GMCH manufactures radiators, condensers, evaporators, HVAC modules and other automobile components at the Lockport Facility, while Delphi operated the LTC, a 270,000 square-foot facility, where 250 Delphi engineers provide laboratory and testing services of various automobile components and systems.

 

In December 2009, to support the continued operations of the Lockport Facility, the Trustees approved the transfer of four allocations of Authority hydropower from Delphi to GMCH.  These allocations included (i) two large in-service EP allocations, 14,300 kW and 10,000 kW (the ‘In-Service Allocations’), and (ii) two smaller allocations, 500 kW of EP and 1,000 kW of RP that had not yet been placed in service (the ‘Pending Allocations’).

 

In 2010, the Trustees approved the extension of GMCH’s In-Service Allocations (24,300 kW) during the Authority’s Western New York (‘WNY’) long-term contract extension initiative, in return for GMCH’s agreement to maintain 950 employees and invest $5.165 million annually in the Lockport Facility for the seven years of the extended term (through June 30, 2020). 

 

In connection with the consideration of the LTC purchase option, GMCH and Delphi determined that utility services used by each company at the Lockport Facility (e.g., water, sewer, gas and electricity) needed to be divided in order to make the two companies’ co-existence on the campus economically viable.  In order for Delphi to commit to the investment needed to purchase the LTC and make the necessary utility improvements, Delphi needed incentives to mitigate the costs of the improvements.  Empire State Development Corporation (‘ESD’), New York State Electric & Gas (‘NYSEG’) and Niagara County each supported the project to help secure Delphi’s continued WNY operations.

 

GMCH and Delphi ultimately reached agreement on the terms of the LTC purchase, and the process to separate utility services and perform the necessary infrastructure changes began in 2011.  Delphi completed the utility separation of the LTC facility from the larger GMCH campus in November 2013, and the LTC purchase is expected to be final in early in 2014.  Delphi has spent over $7.5 million in capital expenditures in the last three years to complete the utility separation project, including a new substation and stand-alone electric service to the building. 

DISCUSSION

 

A lingering option for Delphi to reduce costs is to move its WNY operations – its operations at the LTC and its operations at the Rochester Technical Center which provides environmental, emissions, and other testing services and employs over 200 engineers – to Troy, Michigan where it is headquartered. 

 

In an effort to support Delphi’s continued presence at the LTC, GMCH and Delphi have requested that the Pending Allocations be transferred from GMCH back to Delphi, their original recipient.  Delphi will commit to retain 250 jobs and spend at least $1.78 million dollars in capital improvements at the LTC facility over five years, with a majority of that spending being front-loaded ($1.5 million in 2014).  GMCH will continue to meet its commitment levels of 950 jobs and more than $5 million in spending yearly.

 

While the transfer of the Pending Allocations will not create new jobs, its purpose is to secure the retention of the existing 250 jobs and $1.78 million in capital investments for the term of the Pending Allocations.  With the continued presence of both GMCH and Delphi, the Lockport Facility would continue to be one of the largest and highest paying employment sources in Niagara County.  

 

Delphi’s commitments would be secured through a hydropower contract with the Authority.  The Authority is in the process of discussing the proposed contract with Delphi and anticipates receiving consent to a contract form substantially similar to Exhibit ‘2h-A.’

 

                As required by PAL §1009, when the Authority believes it has reached agreement with its co-party, it transmits the proposed form of contract to the Governor and other elected officials for their information, and holds a public hearing on the proposed contract.  At least 30-days’ notice of the hearing must be given by publication in each of six selected newspapers once per week during such period.  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 proposed Delphi contract is consistent with recently approved contracts for the sale of EP and RP.  Some pertinent provisions of the proposed form of the contract include:

 

·         The provision for direct billing of all production charges (i.e. demand and energy) as well as all New York Independent System Operator, Inc. (‘NYISO’) charges, plus taxes or any other required assessments, all as set forth in the Authority’s Service Tariff No. WNY-1.  

·         Commercially reasonable provisions relating to financial security to reflect a direct billing arrangement between the Authority and its EP/RP customers.

·         Provisions authorizing data transfers and addressing other utility-driven requirements which are necessary for efficient program implementation.

·         Enforceable employment and usage commitments. 

·         Annual job reporting requirements and a job compliance threshold of 90%.  Should Delphi’s actual jobs reported fall below the compliance threshold, the Authority has the right to reduce the allocation on a pro-rata basis. 

·         The allocations would be sold to Delphi pursuant to the Authority’s Service Tariff No. WNY-1, which applies to all allocations of EP and RP commencing July 1, 2013.

·         Transmission and delivery service would be provided by NYSEG in accordance with its Public Service Commission-approved delivery service tariff.

RECOMMENDATION

 

                The Manager – Business Power Allocations and Compliance recommends that the Trustees: (1) approve the transfer of the Pending Allocations, 500 kW of Expansion Power and 1,000 kW of Replacement Power, from GM Component Holdings LLC (‘GMCH’) to Delphi Automotive PLC (‘Delphi’); (2) establish the term of each Pending Allocation to be five years starting from the date of commencement of electric service of any portion of the Pending Allocation, in exchange for, among other things, Delphi’s commitment to maintain an employment level of 250 jobs and make a capital investment of $1.78 million at the Lockport Technical Center (‘LTC’),  for the five-year term of the Pending Allocations; and (3) authorize the Corporate Secretary to convene a public hearing on the form of the proposed contract finally negotiated with Delphi, the current form of which is attached as Exhibit ‘2h-A,’ and transmit copies of such proposed form of the contract to the Governor and legislative leaders pursuant to PAL §1009.

 

                Staff will report to the Board of Trustees on the public hearing and the 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 resolution below.”

 

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

 

                RESOLVED, That the transfer of allocations of Authority hydropower totaling 1,500 kilowatts (“kW”), comprised of 500 kW of Expansion Power and 1,000 kW of Replacement Power (the Pending Allocations”), from GM Components Holdings LLC to Delphi Automotive PLC (“Delphi”) be, and hereby is, approved subject to agreement on a direct sale contract between the Authority and Delphi which provides for Delphi’s employment and capital investment commitments as well as other terms and conditions which the Authority deems appropriate (the Contract”); and be it further

               

                RESOLVED, that the term of each of each Pending Allocation shall be five years starting from the date of commencement of electric service for any portion of the Pending Allocation; and be it further

                               

                RESOLVED, That the Trustees hereby authorize a public hearing on the terms of the proposed form of the Contract for the sale of the Pending Allocations; 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 PAL §1009; and be it further

               

                RESOLVED, That the Chairman, the Vice Chair, 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.

 


 

i.         Direct Sale Contract for the Sale of Western

New York Hydropower to M&T Bank –

Transmittal to the Governor                             

 

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

                The Trustees are requested to: (1) approve the proposed final contract for the sale of Expansion Power (‘EP’) to M&T Bank (‘M&T’); and (2) authorize transmittal of the proposed final contract to the Governor for his approval and authorization for the Authority to execute the contract pursuant to Public Authorities Law (‘PAL’) §1009.  The proposed final contract is attached as Exhibit ‘2i-A.’

 

BACKGROUND

 

Under PAL §1005(13), the Authority may allocate and sell directly or by sale for resale, 250 MW of EP and 445 MW of Replacement Power (‘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.

 

At their July 26, 2011 meeting, the Trustees awarded an allocation of 3,000 kW of EP to M&T in return for the creation of 124 jobs and capital expansion commitment of $51.625 million.  The contract would enable the Authority to sell the allocation to M&T under a direct sale arrangement for the approved five-year term of the allocation.  Transmission and delivery service would be provided by National Grid in accordance with its Public Service Commission-filed delivery service tariffs. 

 

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

 

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

 

·         The contract includes M&T’s agreed-upon commitments with respect to employment, power utilization and capital investment.  The Authority would retain the right to reduce or terminate customer’s allocation if employment, power utilization, or capital investment commitments are not met. 

 

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

 

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

 

The Authority has discussed the proposed contract with M&T and has received the customer’s consent to it. The customer acknowledges that ST WNY-1 rates will apply to its allocation consistent with all allocations of EP and RP as of July 1, 2013.

 

As required by PAL §1009, when the Authority has reached agreement with its co-party on such a contract, it is required to transmit the proposed contract to the Governor and other elected officials and hold a public hearing on the proposed 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 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 July 23, 2013 meeting, the Trustees authorized the Corporate Secretary to transmit the proposed contract for M&T to the Governor and legislative leaders and schedule a public hearing on the contract.  A public hearing was held on October 3, 2013 at the Niagara Power Project’s Power Vista Visitors’ Center in Lewiston, New York.  There were no oral statements made at the public hearing and no written statements were submitted.  The official transcript of the public hearing is attached as Exhibit ‘2i-B.’

 

RECOMMENDATION

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the proposed contract for the sale of Replacement Power to M&T Bank, as detailed in Exhibit ‘2i-A,’ and authorize the transmittal of the contract 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 resolution below.”

 

                The following resolution, as submitted by the President and Chief Executive Officer, was adopted with Trustee Mahoney recused from the vote.

 

RESOLVED, That the contract for the sale of Expansion Power (“EP”) to M&T Bank is in the public interest and in accordance with Public Authorities Law §1009 should be submitted to the Governor for his approval and that copies of the contract, 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 contract in the name of and on behalf of the Authority if the contract is 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 contract with M&T Bank as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 


 

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

 


 

Discussion Agenda:

 

3.                   Report of the President and Chief Executive Officer

 

a.                   Corporate Performance

President Quiniones stated that the reports by the Executive Management will cover the months of October and November and at the January meeting they will present a 2013 year-end report on the operations of the Authority.  He continued that based on the Performance Scorecard, the Authority performed very well during the months of October and November.  He said other than the effects of the forced outage earlier in the year due to the failure of the Y-49 transmission line that connects Westchester County and Long Island, he anticipates that the year-end report will indicate a very successful year of operations for the Authority during 2013.

 


 

b.                   Report of the Chief Operating Officer

                                Mr. Edward Welz provided highlights of the report to the Trustees. 

 

                Transmission Reliability

 

·         Two outages on the MA-2 transmission line in order to repair a broken cross arm;

·         Repairs were made to a pothead on the GL-3 line;

·         Repairs on the Y-49 Transmission line were completed.

Environmental/Safety

 

·         Environmental incidents for the year were below target of 32 incidents;

 

·         The DART rate for the year, the measure of the Authority’s safety performance, was .72%; the annual target is .78%.

St. Lawrence Power Project

 

·         The LEM program at STL has been completed;

·         Successful completion of table top functional exercise with FERC and the first responders at STL for the Authority’s emergency action plan.

Transmission

 

·         First phase of the Marcy Substation autotransformer bank and reactor refurbishment completed;

·         Replaced four motor operated disconnects at the Marcy Substation;

·         Working on the Alcoa new substation and new transmission line;

·          Work on the LPGP LEM program at Niagara continues;

·          Working with GE to plan and schedule an outage to repair the generator step-up transformer at the 500 MW plant;

·          Work on the replacement of the generator step-up transformers at the St. Lawrence facility to begin in 2014;

·         Started transmission line substation design work for the Authority’s T-LEM program.

Compliance

 

·         The new Bulk Electric System definition will be effective in 2014.  This will put some pressure on the Authority with new equipment and new transmission lines upcoming compliance review by NERC and FERC.

Personnel

 

·         Plans to restructure several departments within Operations in order to facilitate a more efficient operation underway;

·         Labor negotiations with IBEW and UWUA unions will resume soon.

Responding to a question from Trustee LeChase, Mr. Welz said that both unions will continue with the salaries and benefits they had before the contracts expire.


 

c.        Report of the Chief Financial Officer

                Mr. Donald Russak provided highlights of the financial report to the Trustees.  He said the state of the Authority’s financial position remains strong.  The Authority continues to improve on its projections and therefore expects to meet all its metrics and targets for the year. 

Net Inome

·         Net Income is expected to remain above budget ending the year at a level exceeding $200 million;

-          Drivers of Performance – As has been reported over the past few months, higher than forecast hydro generation and capacity prices largely contributed to this positive performance.

·         At these projected levels, the business requirements for cash flow and liquidity will be met for the year.

Revolving Credit Agreement

·         The $550 million Revolving Credit Agreement supporting NYPA’s Commercial Paper Program was successfully renegotiated for an additional year pursuant to its terms and prior Trustee authorization;

-          Significant Savings – Commitment Fees will be reduced from 65 basis points to 35 bps per annum for an annual savings of approximately $1.7 million

·         As part of this process, each of the three Ratings Agencies reaffirmed NYPA’s solid credit ratings.

 

 


 

d.       Chief Risk Officer’s Report

Mr. William Nadeau provided highlights of the report to the Trustees.

Enterprise Risk Report – Lessons Learned

The Enterprise Risk Report issued in September outlined nine enterprise risks which staff is now working on to begin development of mitigation plans.  Also, in looking at the lessons learned from the process, the Enterprise Risk team reviewed: how the team did in communicating the process, and NYPA’s overall understanding of the risk management philosophy in place.  Also, the Enterprise Risk team plans to conduct 19 sessions with various stakeholders throughout the Authority next month to aggregate and come up with lessons learned from the just completed NYPA- wide Risk Assessment process so that as the team goes forward with future assessment,  there will be the strongest opportunity for successful implementation.

Integration with Strategy

 The Enterprise Risk staff discussed the Report with Mr. Robert Lurie of Strategic Planning.  The discussions included areas which have been integrated into some of the initiatives that are currently in place, such as asset management and workforce planning, and which can be used to help develop business plans.

Risk Response and Key Rsk Indicator - Pilot

The Risk Department has retained the firm of Deloitte and Touche to assist in the  development of  mitigation plans  from the two pilot risks identified by the Executive Risk Management Committee (increasingly difficult to attract  and retain employees; and significant increase in nonrecurring O&M based upon some of the past policies and an aging infrastructure) the form of which will be presented to the Executive Risk Management Committee, the Executive Management Committee and thereafter, the Audit Committee in March. 

Integration with Internal Audit

The Enterprise Risk Management team had several meetings with Mr. Lesly Pardo and the Internal Audit staff pertaining to the development of the 2014 Audit Plan.  The discussions included the risks, at the enterprise level, that Internal Audit needs to be aware of in developing the Audit Plan; examining the risks associated with the audits and strengthening the processes associated with those risks within the Authority.

 


 

e.                    Report of the Senior Vice President of Strategic Planning

Mr. Robert Lurie provided highlights of the report to the Trustees.  He outlined the 2014 action plan for those initiatives related to the three major areas in NYPA Strategic Plan: 1) workforce planning – knowledge management and process efficiency;  2) Infrastructure Modernization –  Smart grid and Asset management; 3) Customer Value - Customer services. 

·         Teams have been set up to work on business cases for each of the initiatives including the scope, costs and benefits, and necessary resources.

·         An external plan describing the initiatives and how they will benefit the stakeholders is being drafted. The draft plan will be presented to the Board in January 2014.

·         Staff will also develop business plans showing how the initiatives will be achieved.  This will include communications; internal rollout across the organization; teams and organizational structure that will be necessary for each strategy; development of a detailed business plan for each strategy; and implementation.

·         Governance structure and process to ensure proper accountability as each initiative is being developed.

·          Outreach to external stakeholders in order to get feedback from them.

·         January 2014 the Board will be requested to approve the mission/vision goals.

·         The Board will be requested to approve capital allocation for specific detailed business plan for each one of the initiatives.

Responding to a question from Trustee LeChase, Mr. Lurie said the Authority will be communicating with potential customers in terms of getting market intelligence and feedback from them in terms of what they would like to see in the service bundle, after which the Authority to will develop its market plan.  This will take place early next year.

President Quiniones added that the Authority has a lot of experience in energy efficiency projects and renewable projects which include not only large governmental buildings, but also some private sector economic development customers and municipals electric systems.  He continued that, historically, the Authority implements programs that are effectuated through legislation, e.g., RNY or other hydro programs, Energy efficiency, Built Smart; however, the Authority is now taking a different approach, looking at the what customers indicate they would like from the Authority and making a determination if the Authority has skill-set that can be developed to address those needs its customers value.  After a screening process, the Authority will determine if it has the resources to assist the customers.


 

4.                   2014 Operating Budget and Filing of the 2014-2017

Four-Year Financial Plan Pursuant to Regulations

                of the Office of the State Comptroller                         

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

 

                The Trustees are requested to approve the 2014 Operating Budget, Operations and Maintenance (‘O&M’) Budget, Capital Budget and Energy Services Budget for the Power Authority.  The Operating Budget sets forth the expected revenues and expenses of the Authority  and includes the recommended 2014 O&M Budget, the Capital Budget and the Energy Services Budget (see attached Exhibits ‘4-A,’  ‘4-B,’ ‘4-C’ and ‘4-D,’ respectively) in the following amounts:

                                                                                                               

                                2014 Budget                                         ($ million)

                                O&M                                                         $ 379.3              

                                Capital                                                      $ 279.3

                                Energy Services                                       $ 222.3

 

Also, in accordance with regulations of the Office of the State Comptroller (‘OSC’), the Trustees are requested to approve the 2014-2017 Four-Year Financial Plan (‘Four-Year Financial Plan’ – see attached Exhibit ‘4-E’) and authorize: (i) submitting the approved Four-Year Financial Plan to OSC, (ii) posting the approved Four-Year Financial Plan on the Authority’s website and (iii) making the approved Four-Year Financial Plan available for public inspection at not less than five convenient public places throughout New York State.

BACKGROUND

 

                The Authority is committed to providing clean, low-cost and reliable energy consistent with its commitment to the environment and safety, while promoting economic development and job development, energy efficiency, renewables and innovation, for the benefit of our customers and all New Yorkers.  The 2014 Budgets are intended to provide the Authority’s operating facilities and support organizations with the resources needed to meet this overall mission and the Authority’s strategic objectives.

 

The OSC implemented regulations in March 2006 addressing the preparation of annual budgets and four-year financial plans by ‘covered’ public authorities, including the Authority.  (See 2 NYCRR Part 203 (‘Part 203’)).  These regulations establish various procedural and substantive requirements, discussed below, relating to the budgets and financial plans of public authorities.  The Budget and Four-Year Financial Plan have been prepared in accordance with these regulations.

 

In approving the 2014 O&M, Capital and Energy Services Budgets, the Trustees will be authorizing spending for 2014 operations, spending for capital projects and general plant purchases of $750,000 or less.  There are no requests for new positions in the 2014 Budget.  In accordance with the Authority’s Expenditure Authorization Procedures, the President and Chief Executive Officer may, during the course of the year, authorize an additional 1.0% in the O&M budget, up to 15 new positions, capital projects of $3 million or less, or an increase in spending of no more than $1 million to a capital project previously approved by the Trustees.  All other spending authorizations must be approved by the Trustees.

DISCUSSION

 

O&M Budget

 

                The base O&M budget of $379.3 million (Exhibit ‘4-B’) reflects a renewed focus on the effective operation and maintenance of the Authority’s critical investments in New York State’s electric infrastructure.

 

The 2014 O&M Budget for Operations provides $215 million for baseline, or recurring, work.  In addition to the baseline work, scheduled maintenance outages at the 500 MW plant and the Small Clean Power Plants (totaling $13 million) and planned enhancements in non-recurring maintenance work at the operating facilities (totaling $55 million) are designed to support high reliability goals.  Some of the major non-recurring projects include: Niagara Dam Face Repair, ($5.7 million); Marcy Substation Auto Transformer and Reactor Refurbishment, ($4.0 million); St. Lawrence Region Line Clearance Remediation ($3.5 million); Painting of Barnhart Island Bridge ($3.3 million); Massena Autobreakers 1&2 Reactor Banks Refurbishment ($3.2 million); Joint Works with Ontario-Hydro ($2.1 million); Flynn Water Storage Tanks Refurbishment ($1.7 million) and the St. Lawrence Control Room Asbestos Abatement ($1.6 million).

 

Most of the increase in the budget for the support functions ($4.0 million) consists of increases in fringe benefits (Other Post-Employment Benefits (‘OPEB’), New York State pension costs and medical benefits), consulting expenses for executive initiatives (includes funding for the Energy Management Control Center), the on-site Master's Program and hardware and software maintenance and license costs along with lost rental income in the White Plains Office.

 

Payroll costs, which include salaries, overtime and fringe benefits, account for $206.7 million, or 54.5% of the budget, down from 55.8% last year.  Overall, headcount at the Authority will not increase, as there are no requests for new positions in the 2014 Budget.

 

           The Astoria Energy II Budget totals $27.0 million and represents the contractual O&M costs for the plant, which was placed in commercial operations in New York City in July 2011.  These costs are being recovered from the Authority’s New York City Governmental customers, who are beneficiaries of the outputs of these projects, via a long-term contract. 

 

Capital Budget

 

The 2014 Capital Budget (Exhibit ‘4-C’) totals $279.3 million, an increase of $87.0 million from the 2013 Budget.  Of this amount, $187.5 million – or 67% of the total – represents planned investments in the Authority’s Upstate New York facilities at Niagara and St. Lawrence, as well as in its statewide Transmission network.  Significant capital projects for 2014 include the Lewiston Pump Generation Plant Life Extension and Modernization (‘LEM’), ($59.8 million); the Massena 765/230 kv Multi-Unit Autotransformer Replacement, ($18.9 million); the St. Lawrence Breaker and Relay Replacement, ($14.0 million); Marcy South Series Compensation, ($10.2 million); the Niagara 115 kv Outdoor Circuit Breaker Upgrade, ($10.0 million); the Coopers Corner Shunt Reactor, ($9.4 million); the St. Lawrence Generator Step-Up Transformer Replacement, ($6.8 million); and the St. Lawrence Nature Center ($6.3 million).

 

The Capital Budget includes $9.1 million of minor additions and general plant purchases that will be authorized by approval of this budget.

 

Energy Services Budget

 

The Budget for Energy Services and Technologies (Exhibit ‘4-D’) totals $222.3 million, an increase of $21.5 million over the 2013 budget.  These expenditures will be subsequently recovered over time from the benefiting customers.  The Budget includes increased funding for energy efficiency projects for Authority customers and other eligible entities as the Authority strives to support Governor Cuomo’s improved energy efficiency and clean, renewable energy goals.

 

Operating Budget

 

                The 2014 Operating Budget (Exhibit ‘4-A’) sets forth the expected revenues and expenses of the Authority on a Project/Market Area basis and serves as the basis for the Authority’s financial reporting during the year.  Expected revenues received from customers are based on contracts and tariffs that are approved by the Trustees.  Market-based sales of any surplus energy from the Authority’s generating facilities or purchases made on behalf of customers (except for those made through previously approved purchased power agreements) are assumed to be transacted at the market clearing price in the wholesale market.  Projected expenses for O&M are detailed above.  The Other Expenses category largely reflects various accruals (e.g., Other Post-Employment Benefit prior service obligations) and other miscellaneous expenses for which Trustee approval is sought on a case-by-case basis (e.g., Power for Jobs Transitional Payments, Recharge New York Residential Discount Program, etc.).  Also reflected in the 2014 Operating Budget is an assumed level of contributions to New York State totaling $90 million.  Any such contribution may only be made if authorized by the Legislature and upon a determination (not requested at this time) by the Trustees that the payment would be feasible and advisable at the time of such disbursement.

 

Four-Year Financial Plan

 

Under Part 203 of the OSC Regulations, the Trustees are required to adopt a 2014 Budget and Four-Year Financial Plan (Exhibit ‘4-E’).  The 2014 Budget, which is the first year of the Four-Year Financial Plan, is being brought to the Board for approval at this time.  The remaining three years are indicative forecasts.  The approved Four-Year Financial Plan must be available for public inspection not less than seven days before the commencement of the next fiscal year for a period of not less than 45 days and in not less than five convenient public places throughout the State.  The approved Four-Year Financial Plan must also be submitted to OSC, via electronic filing through the Public Authorities Reporting Information System maintained by OSC and the Authority Budget Office, within seven days of approval by the Trustees. The regulations also require the Authority to post the Four-Year Financial Plan on its Web site.

 

Under Part 203, each approved Four-Year Financial Plan must be shown on both an accrual and cash basis and be prepared in accordance with generally accepted accounting principles; be based on reasonable assumptions and methods of estimation; be organized in a manner consistent with the public authority’s programmatic and functional activities; include detailed estimates of projected operating revenues and sources of funding; contain detailed estimates of personal service expenses related to employees and outside contractors; list detailed estimates of non-personal service operating expenses and include estimates of projected debt service and capital project expenditures. 

               

Other key elements that must be incorporated in each approved budget and four-year financial plan are a description of the budget process and the principal assumptions, as well as a self-assessment of risks to the budget and financial plan.  Additionally, the approved Four-Year Financial Plan must include a certification by the Chief Operating Officer.

 

FISCAL INFORMATION

 

Payment of O&M expenses will be made from the Operating Fund.  Payment for Capital and Energy Services expenditures will be made from the Capital Fund and the Energy Conservation Construction and Effectuation Fund, respectively.  Monies of up to $332.2 million from the Operating Fund will be transferred to the Capital Fund for capital expenditures, provided that at the time of withdrawal of such amount or portions of such amount, the monies withdrawn are not then needed for any of the purposes specified in Sections 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.  The 2014 Operating Budget shows adequate earnings levels so that the Authority may maintain its financial goals for cash flow and reserve requirements.

 

The Four-Year Financial Plan net income estimates for each of the years 2015 through 2017 are indicative forecasts and the Trustees are not being asked to approve any revenue and expenditure amounts for those years at this time.

 

RECOMMENDATION

 

                The Director of Budgets and the Vice President of Financial Planning recommend the Trustees approve the 2014 Operation and Maintenance, Capital and Energy Services Budgets and the Operating Budget as discussed herein and authorize (i) submitting the approved Four-Year Financial Plan to the Office of the State Comptroller in the prescribed format, (ii) posting the approved Four-Year Financial Plan on the Authority’s Web site and (iii) making the approved Four-Year Financial Plan available for public inspection at not less than five convenient public locations throughout New York State.

 

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

 

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

 

RESOLVED, That the 2014 Operating Budget, specifically including the 2014 Budgets for Operation and Maintenance, Capital and Energy Services expenditures, as discussed in the foregoing report of the President and Chief Executive Officer, are hereby approved; and be it further

 

RESOLVED, That up to $332.2 million of monies in the Operating Fund are hereby authorized to be withdrawn from such Fund and deposited in the Capital Fund, provided that at the time of withdrawal of such amount or portions of such amount, the monies withdrawn are not then needed for any of the purposes specified in Sections 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations as amended and supplemented, with the satisfaction of such condition being evidenced by a certificate of the Treasurer or the Deputy Treasurer; and be it further

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the attached 2014-2017 Four-Year Financial Plan, including its certification by the Chief Operating Officer, is approved in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the Corporate Secretary be, and hereby is, authorized to submit the approved Four-Year Financial Plan to the Office of the State Comptroller in the prescribed format, post the approved Four-Year Financial Plan on the Authority’s website and make the approved Four-Year Financial Plan available for public inspection at not less than five convenient public places throughout New York State; and be it further              

               

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

 

 

Mr. Donald Russak provided highlights of staff’s recommendation to the Trustees.  In response to a question from chairman Koelmel, Mr. Russak said there are some positive indicators offsetting some of the negative drivers indicated in the Plan.  For example, the contract with Alcoa, negotiated with the expectation that Alcoa will be reinvesting in its smelter in Massena, NY, will result in an increase in energy revenues effective January 1, 2014; increased rates of previously-approved contracts will add additional revenues; and revenues from the hydro resources.  

Responding to further questioning from Chairman Koelmel, Mr. Russak said it will not be necessary for the Authority to pull back on investments on its facilities because of expenses related to the HTP project.  Responding to still further questioning from Chairman Koelmel, Mr. Russak said that investments in long-life assets such as the HTP project is typical in the utility business, e.g. the Authority’s reinvestment in its 51-year Lewiston Plant in order to keep it operational for the next 50 years.  He continued that the HTP project will add to the city’s reliability since it will have access to a greater array of energy resources; there are other opportunities that will be available to the Authority at the end of the purchase agreement; and, in the life of the agreement, the Authority will get its investment back.  Responding to comment from the Chairman, Mr. Russak agreed that this project will not deter the Authority from investing in its facilities and carrying out its charge in keeping with its mission.  Mr. Russak said in his opinion, the Authority is in a very strong position to finance its ongoing operations and strategic initiatives.  The Authority’s balance sheet is very strong at this time; it has borrowing capacity and, with the cash flows that it is generating, it will be able to finance this project without it having any detrimental effect on the Authority’s core business.

In response to a question from Trustee Foster, Mr. Russak said that the plan for the $726 million T- LEM program that was approved by the Board is to invest in the Authority’s facilities from now until the year 2023.  This will include work on the Authority’s substations and transmission lines which are 50 - 60 years old.

 


 

5.                   Power Allocations:

 

a.       Power Allocations Under the Recharge New York Program

 

                The President and Chief Executive Officer submitted the following report:

               

SUMMARY

               

The Trustees are requested to:

 

1.       Approve allocations of Recharge New York (‘RNY’) Power available for ‘retention’ purposes to the businesses listed in Exhibit ‘5a-A;’

 

2.       Approve allocations of RNY Power available for ‘expansion’ purposes to the businesses listed in Exhibit ‘5a-B;’ and

 

3.       Approve the transfer of the RNY Power allocation identified in Exhibit ‘5a-E.’

 

These actions have been recommended by the Economic Development Power Allocation Board (‘EDPAB’) at its December 17, 2013 meeting.

               

BACKGROUND

 

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

 

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

 

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

 

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

 

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

 

  Applications for RNY Power are subject to a competitive evaluation process and are evaluated based on the following criteria set forth in the statutes providing for the RNY Power Program (the ‘RNY Statutes’):

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

               

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

 

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

 

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

 

RNY Power allocations have been awarded by the Trustees on six prior occasions – in April, June, September and December of 2012, and March and July of this year.  There is currently 73 MW of unallocated RNY Power of the 710 MW block made available for business ‘retention’ purposes.  Of that 710 MW retention block, 100 MW was set aside for not-for-profit corporations and small businesses, of which 9.8 MW is available to allocate to such entities.  Lastly, there is 134.6 MW of unallocated RNY Power of the 200 MW block made available for business ‘expansion’ purposes.  These figures reflect Trustee actions on RNY Power applications taken prior to any actions the Trustees take today.

 

DISCUSSION

 

  1. Retention-Based RNY Power Allocations – Action Item

 

The Trustees are asked to address applications submitted via the CFA process for RNY Power retention-based allocations.  Consistent with the evaluation process as described above, EDPAB recommended at its December 17, 2013 meeting that RNY Power retention allocations be awarded to the businesses listed in Exhibit ‘5a-A.’  Each business has stated a willingness to create or retain jobs in New York State.  Additionally, these applicants will be committing to capital investments in exchange for the recommended RNY Power allocations.

 

The RNY Power ‘retention’ allocations identified in Exhibit ‘5a-A’ are each recommended for a term of seven years.  An allocation recommended by EDPAB qualifies the subject applicant to enter into a contract with the Authority for the purchase of the RNY Power.  The Authority’s standard RNY Power contract template, approved by the Trustees at their March 27, 2012 meeting, contains provisions addressing such things as effective periodic audits of the recipient of an allocation for the purpose of determining contract and program compliance, and for the partial or complete withdrawal of an allocation if the recipient fails to maintain mutually agreed-upon commitments, relating to, among other things, employment levels, power utilization, and capital investments.  In addition, there is a requirement that a recipient of an allocation perform an energy efficiency audit at its facility not less than once during the first five years of the term of the allocation.

 

As noted in Exhibit ‘5a-A,’ some of these applicants are also being recommended for expansion-based allocations, having satisfied the criteria for both components of the RNY Power Program. 

 

  1. Expansion-Based RNY Power Allocations – Action Item

 

The Trustees are asked to address applications submitted for RNY Power expansion-based allocations via the CFA process which request allocations from the 200 MW block of RNY Power dedicated by statute for for-profit businesses that propose to expand existing businesses or create new business in the State.  These applications sought a RNY Power allocation for either (i) expansion only, in the case of a new business or facility, or (ii) expansion and retention, in the case of an existing business.  EDPAB recommended at its December 17, 2013 meeting that RNY Power expansion-based allocations be made to the businesses listed in Exhibit ‘5a-B.’  Each such allocation would be for a term of seven years.

 

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

 

                The respective amounts of the expansion-related allocations listed in Exhibit ‘5a-B’ are largely intended to provide approximately 70% of the individual expansion projects’ estimated new electric load.  Because these projects have estimated new electric load amounts, and to ensure that an applicant’s overestimation of the amount needed would not cause that applicant to receive a higher proportion of RNY Power to new load, the allocations in Exhibit ‘5a-B’ are recommended based on an ‘up to’ amount basis.   Each of these applicants would be required to, among other commitments, add the new electric load as stated in its application, and would be allowed to use up to the amount of their RNY Power allocation in the same proportion of the RNY Power allocation to the requested load as stated in Exhibit ‘5a-B.’  The contracts for these allocations would also contain the standard provisions previously summarized in the last paragraph of Section 1 above.

 

  1. Ineligibility Determination – Informational Item

               

In the process of reviewing the current round of applications for RNY Power, EDPAB determined that the applicants listed on Exhibit ‘5a-C’ propose projects that constitute a retail business as defined by EDPAB, and therefore are ineligible for RNY Power.  No action by the Trustees is required on these applications.

 

  1. Applications Not Recommended or Not Considered – Informational Item

 

As indicated on Exhibit ‘5a-D’, EDPAB decided not to recommend two applicants for expansion-based RNY Power allocations, not to recommend two applicants for retention-based RNY Power allocations, and further decided not to consider other applications for an RNY Power allocation. 

 

Three applications were not recommended for an RNY Power allocation because the potential recommended amount, based on the applicant’s requested amount did not meet the 10 kW allocation amount requirement established by the Authority for RNY Power allocations.  Additionally, the other application not recommended for an expansion-based RNY Power allocation did not meet the requirement set by the Authority of creating new jobs as a result of the project.

 

EDPAB did not consider the other applications listed on Exhibit ‘5a-D’ for one or more of the following reasons: (i) the application was withdrawn; (ii) the application was not sufficiently complete to permit evaluation and/or applicants were unresponsive to requests from Authority staff for more information necessary to fully evaluate the applications; (iii) the application was submitted by a Transitional Electricity Discount (‘TED’) beneficiary; (iv) the applicant does not have a demand meter; and/or (v) in the case of expansion-based requests for RNY Power, the applicant proposed projects that were too premature to enable the applicant to make the commitments necessary for an allocation of RNY Power.  No action by the Trustees is required on these applications.

 

  1. Transfer of RNY Power – Action Item

 

                At its December 17, 2013 meeting, EDPAB approved and recommended that the Trustees approve the transfer of an RNY Power allocation for one company due to an acquisition.  The transfer is described in Exhibit ‘5a-E.’   The company will agree to the respective job and capital investment commitments made in the original applications.  The Trustees have previously authorized transfers of RNY Power and other Authority power programs like Economic Development Power in similar circumstances. 

 

  1. Allocations Declined or Rescinded – Informational Item

 

        EDPAB has recommended, and the Trustees have approved, hundreds of RNY Power allocations since the inception of the program.  Specifically, 801 allocations totaling 779 MW have been awarded to more than 750 businesses and not-for-profit organizations throughout the State.  In the course of reviewing the award and contract offered, many awardees have decided to decline the award or have not been responsive to the contract offering.

 

        Awardees have declined 65 allocations totaling 48.2 MW by not accepting all or part of the RNY Power allocations awarded to them.  The reasons for such decisions include an inability to gain corporate sign-off on an award’s agreed-upon commitments, a material change in the awardee’s business status after being approved for RNY, a reluctance to accept certain contractual conditions such as audit requirements, and potential minimal savings due to the particular operating characteristics of the awardee’s facility.

 

        In addition, 60 allocations totaling 28.5 MW have been rescinded by the Authority after a reasonable amount of time had elapsed since the time of award with no response from the awardees.  After multiple outreaches and transmittal of contract documents by NYPA staff, these awardees were non-responsive and the awards have been withdrawn.  The declined and rescinded awards are listed on Exhibit ‘5a-F.’   The result of the allocations being declined and rescinded positively affects the availability of MWs to allocate in future evaluation periods.  No action by the Trustees is required on these applications.

 

Recommendation

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees: (1) approve the allocations of RNY Power for retention purposes to the businesses listed in Exhibit ‘5a-A’ as indicated therein; (2) approve the allocations of RNY Power for expansion purposes to the businesses listed in Exhibit ‘5a-B’ as indicated therein; and (3) authorize the transfer of the RNY Power allocation identified in Exhibit ‘5a-E’ as indicated therein.

 

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

 

Mr. Michael Huvane provided highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Foster, Mr. Huvane said the statute does not prohibit the Authority from negotiating contracts for more than seven years; the Board of Trustees makes that determination.  Ms. McCarthy agreed and added that the earlier power programs were for shorter terms; however, based on feedback from businesses interested in the low-cost power for longer term contracts, the Authority revised it to seven years.  An exception can be made at the request of a company if the Board finds that the request is reasonable.

The following resolution, as submitted by the President and Chief Executive Officer, was adopted with Vice Chair Mahoney being recused from the vote as it pertains to G.C. Hanford Manufacturing Co., John Mezzalingua Associates LLC and Pathfinder Industries, Inc. and Trustee LeChase as it pertains to RED-Rochester, LLC.

 

                WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has recommended that the Authority approve the Recharge New York (“RNY”) Power allocations for retention purposes to the applicants listed in Exhibit “5a-A”; and

 

                WHEREAS, EDPAB has recommended that the Authority approve the RNY Power allocations for expansion purposes to the applicants listed in Exhibit “5a-B”; and

               

                WHEREAS, EDPAB has recommended that the Authority authorize the transfer of the RNY Power allocation identified in Exhibit “5a-E”;

 

                NOW THEREFORE BE IT RESOLVED, That the Authority hereby authorizes the allocations of RNY Power for retention purposes to the applicants listed on Exhibit “5a-A” in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

                RESOLVED, That the Authority hereby authorizes the allocations of RNY Power for expansion purposes to the applicants listed on Exhibit “5a-B” in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

                RESOLVED, That the Authority hereby authorizes transfer of allocation of RNY Power identified in Exhibit “5a-E” in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 


 

b.       Allocations of Hydropower and Notice of Public Hearing    

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                The Trustees are requested to approve allocations of available hydropower totaling 7,100 kilowatts (‘kW’) to Brunner International, Inc. (‘Brunner’) (2,400 kW), Gracious Living USA (‘Gracious Living’) (3,700 kW) and Ford Motor Company (‘Ford’) (1,000 kW), as further described herein and in Exhibit ‘5b-A.’  These allocations, collectively, will support capital expansion of nearly $207 million and the creation of 643 jobs in Western New York (‘WNY’).  The Trustees are also requested to authorize a public hearing pursuant to Public Authorities Law (‘PAL’) §1009 on the proposed direct sale contract for the allocation to Gracious Living, the current form of which is attached as Exhibit ‘5b-B.’

 

                The allocation of hydropower to Brunner will support a capital investment of $15 million and the creation of 43 new jobs in Medina (Orleans County).  The allocation of hydropower to Ford will support a capital investment of $150 million and the creation of 350 new jobs in Buffalo.  The allocation of hydropower to Gracious Living will support a capital investment of $41.975 million and the creation of 250 new jobs in Buffalo (Erie County).

 

BACKGROUND

 

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

 

Each application for an allocation of EP and RP must be evaluated under criteria that include but need not be limited to, those set forth in PAL §1005(13)(a), which details general eligibility requirements.  Among the factors to be considered when evaluating a request for an allocation of hydropower are the number of jobs created as a result of the allocation; the business’ long-term commitment to the region as evidenced by the current and/or planned capital investment in the business’ facilities in the region; the ratio of the number of jobs to be created to the amount of power requested; the types of jobs to be 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 and 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.  Each organization has expressed support for the following recommendations.

 

DISCUSSION

 

                At this time, 8,245 kW of unallocated EP and 35,228 kW of unallocated RP are available to be awarded to businesses under the criteria set forth in PAL Section 1005(13)(a). 

               

  1. BRUNNER INTERNATIONAL, INC.

 

Brunner International, Inc., located in Medina in Orleans County, submitted an application for hydropower requesting 4,800 kW in connection with the construction of a 45,000-square-foot addition to expand the production of machined axle forgings sold to large, heavy-duty truck and trailer suppliers.  A long-time Authority hydropower customer, Brunner currently receives four allocations totaling 5,500 kW.

 

Started in 1992, Brunner has built itself into a market/industry leader in the manufacturing of brake shoes, S-Cams and axles for heavy-duty trucks and trailers.  Brunner is the largest private sector employer in Orleans County, with 363 full-time employees (an employment level well above Brunner’s contractual commitment with NYPA).  It also has two facilities in Niagara Falls, Ontario, Canada.

 

Brunner’s project would expand axle shaft production, which began in Medina in 2007 with the help of a hydropower allocation.  The expansion project would help Brunner compete with low-cost manufacturers in India and China, significantly increase Brunner’s already considerable market share, and solidify the overall long term future of the Medina plant.  Brunner has also made a strong commitment to its facilities in Orleans County by investing over $6 million in capital purchases, upgrades and repair and maintenance of existing equipment during the past two years alone.

 

The company proposes an investment of $15 million with plans to begin production in the fall of 2014 and hire 43 new employees to support its expanded business operations.          

 

The job creation ratio for a recommended amount of 2,400 kW is 18 new jobs per MW.  This ratio is below the historic average of 19.2 new jobs per MW over the past four years.  The total project investment of $15 million results in a capital investment ratio of $6.25 million per MW.  This ratio is below the four-year historic average of $20.9 million per MW.

 

Both Kentucky and Tennessee are courting Brunner for this expansion.  Locating the new operations in that part of the country would provide certain advantages to Brunner, including significantly reduced shipping costs, as most of Brunner’s suppliers and customers are located in that region. An allocation of hydropower would help Brunner withstand increased competition from Asia and support the company’s decision to choose Medina rather than other suitable locations in the United States for this expansion.

 

ESD has offered an incentive package of $750,000 under the Excelsior Jobs Program.  In addition, the Orleans County Economic Development Agency is offering its standard PILOT tax incentives.

 

Staff recommends that a RP allocation of 2,400 kW be awarded to Brunner International, Inc. in order to help secure an investment of $15 million and creation of 43 new jobs at its facility in WNY, as detailed in Exhibit ‘5b-A-1.’ 

 

  1. FORD MOTOR COMPANY

 

Ford Motor Company has submitted an application for hydropower requesting 1,000 kW to design, build, upgrade several press lines and install ten new assembly lines to provide stamping and welded sheet metal assemblies for 2015 Ford vehicles.

 

Ford’s Buffalo Stamping Plant has been in operation for 63 years manufacturing various metal stampings and welded sub-assemblies for Ford’s automotive car and truck assembly plants in North America.  A long-time Authority hydropower customer, Ford currently receives three allocations totaling 8,700 kW.  According to Ford, the hydropower allocations provided to this plant have been critical in maintaining operations, preserving as many jobs as possible and positioning the Buffalo facility to compete internally for new investment and production.

 

Ford’s application for hydropower details its plans to invest $150 million to upgrade tooling and add ten new assembly lines to provide stampings and welded sheet metal assemblies for 2015 Ford vehicles at its Lakeshore Road location.  The project would consist of design, build and installation of automation and support for several press lines and new assembly lines, including line tools and manufacturing aids.  It will also include a tooling launch of the next generation of technologies including robots for material handling, welding and roll hemming; weld controllers with adaptive welding; and technologies to provide discrete drives, motion, process and safety control for automated sub-assembly equipment, servo driven pumps, and other systems.

 

Ford would commit to creating 350 new positions at its facility above its current employment of 640 as a result of this project, with a start-up of the new equipment and assembly lines in the fourth quarter of 2014.

 

The calculated job creation ratio for 350 new jobs and a 1 MW proposed allocation is 350 jobs per MW. This ratio is well above the historic average of 19.2 new jobs per MW for the last four years.  The total capital investment of $150 million committed by Ford would result in a capital investment ratio of $150 million per MW.  This ratio is well above the four-year historic average of $20.9 million per MW.

 

The automotive industry remains highly competitive in both North America and world-wide.  Ford’s Buffalo Stamping Plant is competing against the seven other Ford stamping plants in North America for this major expansion project.  The application states that this project will not only secure the future growth of the Buffalo Stamping Plant, but will position the facility to handle Ford’s next generation of business.

 

ESD has offered an incentive package of $5 million under the NY Works Fund Capital Grant, up to $2 million in tax credits under the Excelsior Jobs Program.  In addition, the WNY Power Proceeds Allocation Board has recommended that NYPA provide Ford with a $1 million grant from the Western New York Economic Development Fund.  

 

                Staff recommends that an EP allocation totaling 1,000 kW be awarded to Ford in exchange for a total of $150 million of capital investment and the creation of 350 well-paying new jobs, as detailed in Exhibit ‘5b-A-2.’

 

  1. GRACIOUS LIVING USA

 

Gracious Living USA (‘Gracious Living’) submitted an application for hydropower requesting 4,500 kW to renovate and refurbish four existing, abandoned buildings on 50 acres of property in Buffalo to open an injection molding manufacturing and warehouse facility.  An owner-operated business, the Gracious Living family of companies was established in 1980 and has become the largest injection molding company in Canada (outside the automotive industry).  The company manufacturers and imports resin-based outdoor furniture, accessories, tables, storage units, pools, housewares and a variety of other indoor and outdoor plastic products.

 

Currently based in Woodbridge, Ontario, Gracious Living is looking to establish a greater presence in the U.S. and is planning to renovate and refurbish nearly 50 acres of property on Fuhrmann Boulevard along Buffalo’s Outer Harbor.  It would be their first move into the U.S. in an attempt to expand its manufacturing and distribution business in this market while at the same time lower operating costs and growing its U.S. customer base.  Gracious Living is currently operating under a 120-day due diligence period to conduct environmental testing and other investigations at the property.  

 

Gracious Living plans to renovate the four existing buildings for manufacturing and warehouse purposes during most of 2014 and intends to begin operations next winter.  The company plans to install 40 injection molding machines over a three-year period with a total three-year investment of $41,975,000.  Gracious Living would hire 150 employees during the first year of operations and would commit to create a total of 250 jobs within three-years of operation.

 

The job creation ratio for a recommended amount of 3,700 kW is 68 new jobs per MW.  This ratio is well above the historic average of 19.2 new jobs per MW over the past four years.  The total project investment of $41.975 million results in a capital investment ratio of $11.34 million per MW.  This ratio is below the four-year historic average of $20.9 million per MW.

 

As a plastic injection molding manufacturer, Gracious Living operates in a highly competitive market with major competitors for its products located in China, as well as Georgia, Massachusetts, and Pennsylvania.  Additionally, the company’s major customers (e.g., big box retailers) are continually demanding lower-cost goods.  A hydropower allocation will support the company’s decision to move forward with this project, creating much-needed WNY-based jobs and using private investment to return a large parcel of land along the Buffalo Waterfront to productive use.

 

ESD has offered an incentive package of $2 million under the Excelsior Jobs Program.   

 

Staff recommends 3,700 kW of RP be awarded to Gracious Living in order to secure an investment of $41.975 million and the creation of 250 jobs in WNY, as detailed in Exhibit ‘5b-A-3.’ 

  1. CONTRACT INFORMATION

 

                The Authority is in the process of discussing a proposed hydropower sales contract with Gracious Living and anticipates receiving customer approval of a contract form substantially similar to that attached as Exhibit ‘5b-B.’  Accordingly, the Trustees are requested to authorize a public hearing pursuant to PAL §1009 on the contract form attached as Exhibit ‘5b-B.’  A public hearing is not needed for Brunner or Ford as they are existing hydropower customers each with the WNY contract form that allows additional allocations and associated commitments to be folded into the existing contract. 

 

                As required by PAL §1009, when the Authority believes it has reached agreement with its prospective co-party on a contract for the sale of EP or RP, 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 in each of six selected newspapers once per week during such period.  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 proposed contract is consistent with recently approved contracts for the sale of EP and RP.  Some pertinent provisions of the proposed form of contract include the provision for direct billing of all production charges (i.e., demand and energy) as well as all New York Independent System Operator, Inc. (‘NYISO’) charges, plus taxes or any other required assessments, all as set forth in the Authority’s Service Tariff No. WNY-1.  The proposed form of contract would also include (i) commercially reasonable provisions relating to financial security to reflect a direct billing arrangement between the Authority and its EP/RP customers, and (ii) provisions authorizing data transfers and addressing other utility-driven requirements which are necessary for efficient program implementation.  Such provisions have been used in other Authority contracts forms, including the Authority’s Recharge New York Power Program contracts.

 

                As is typical, the provision of electric service for this hydropower allocation is subject to enforceable employment and usage commitments.  The standard contract form includes annual job reporting requirements and a job compliance threshold of 90%.  Should Gracious Living’s actual jobs reported fall below the compliance threshold, the Authority has the right to reduce the allocation on a pro-rata basis.

 

                Each of the recommended allocations 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 would be provided by National Grid in accordance with its Public Service Commission-filed service tariffs.

               

RECOMMENDATION

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the allocations of Replacement Power to Brunner International, Inc. (2,400 kW) and to Gracious Living USA (3,700 kW), and 1,000 kW of Expansion Power to Ford Motor Company, as detailed in Exhibit ‘5b-A.’ 

 

Lastly, the Trustees are requested to authorize the Corporate Secretary to convene a public hearing on the form of the proposed contract finally negotiated with Gracious Living, the current form of which is attached as Exhibit ‘5b-B,’ and transmit copies of the proposed form of the contract to the Governor and legislative leaders pursuant to PAL §1009.

 

Staff will report to the Board of Trustees on the public hearing and the proposed contract and, at a later 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 resolution below.”

 


 

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

 

                RESOLVED, That allocations totaling 7,100 kW of Authority hydropower to Brunner International, Inc. (2,400 kW Replacement Power), Ford Motor Company (1,000 kW Expansion Power), and Gracious Living USA (3,700 kW Replacement Power), as detailed in Exhibit “5b-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 the direct sale contract for the sale of hydropower and energy finally negotiated with Gracious Living USA (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 Chair, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

 

 

 


 

6.                   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: (1) accept the recommendations of the Western New York Power Proceeds Allocation Board (‘WNYPPAB’) and make awards of Fund Benefits from the Western New York Economic Development Fund (‘Fund’) to the applicants listed in Exhibit ‘6-A-1’ (Visit Buffalo Niagara, Niagara University, Forest Lawn Heritage Foundation, CNC Technical Solutions, Inc., Washington Mills, Inc., Lineagen, Inc., and Ford Motor Company), and Exhibit ‘6-A-2’ (Niagara Label Company, Inc., OSC Manufacturing & Equipment Services, Inc. and Yancey’s Fancy, Inc./D&Y Cheeses, Inc.), in the amounts listed on such Exhibits.

 

For clarity, the three applicants listed in Exhibit ‘6-A-2’ were recommended for an award by the WNYPPAB at its meeting on September 10, 2013.  However, these applications were not forwarded to the Trustees for consideration at that time because Authority staff needed to review the proposed projects for compliance with the State Environmental Quality Review Act.  That review has been completed and the award recommendations for these projects are being presented to the Trustees for consideration at this time.

 

For informational purposes, Exhibit ‘6-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; and (3) applications that have been deferred for future consideration by the WNYPPAB.              

 

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, the monies in the Fund are available to support economic development in Western New York (‘WNY’) by eligible applicants for eligible projects as ‘Fund Benefits.’

 

                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 WNY state tourism and business; and energy-related projects.

 

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

 

Fund Benefits have been 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.       WNYPPAB

 

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. 

 

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

 

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

 

3.       Application Process

 

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

                               

In this fourth round, the WNYPPAB received 40 applications seeking more than $23 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 the WNYPPAB staff are attached as ‘Exhibit ‘6-C.’ 

 


 

At its November 18, 2013 meeting, the WNYPPAB took the following actions on applications for Fund Benefits:

 

4.        Recommendations for Awards of Fund Benefits

 

The WNYPPAB is recommending to the Trustees that the applicants listed on Exhibit ‘6-A-1’ each receive an award of Fund Benefits in the amounts indicated.  Based on the applications, these proposed projects would directly create or retain approximately 902 jobs in WNY.  The total investment to be expended on the proposed projects is expected to exceed $108M.   

 

The WNYPPAB is also recommending that the applicants listed on Exhibit ‘6-A-2’ each receive an award of Fund Benefits in the amounts indicated.  Based on these applications, the proposed projects would directly create or retain approximately 214 jobs in WNY.  The total amount to be expended on these proposed projects is expected to exceed $38M.

 

In total, based on the respective applications, the projects listed on Exhibits ‘6-A-1’ and ‘6-A-2’ are expected to create or retain approximately 1,116 jobs and result in an expenditure of project investment in the total amount of approximately $146M.

 

5.       Other Determinations

 

For the Trustees’ information, Exhibit ‘6-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; and (3) applications that have been deferred for future consideration.  This information is being provided for 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 is 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 Western New York Power Proceeds Allocation Board (‘WNYPPAB’) and make awards of Fund Benefits to the applicants listed in Exhibits ‘A-1’ and ‘A-2’ in the amounts indicated, 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 that is approved by the President and Chief Executive Officer and approved as to form by the Executive Vice President and General Counsel, or so approved by their designees;

 

(2)     the Senior Vice President – Economic Development and Energy Efficiency, or his designees, in consultation with the Empire State Development Corporation, be authorized to negotiate with the applicants concerning such final terms and conditions that will be applicable to the awards; and

 

(3)     the Senior Vice President – Economic Development and Energy Efficiency, or his designees, be authorized to execute, on behalf of the Authority, Award Contracts for each of the awards listed on Exhibit ‘6-A’ subject to the foregoing conditions.

 

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

 

Mr. John Giumarra provided highlights of staff’s recommendation to the Trustees. In response to a question from Chairman Koelmel, Mr. Russak said that since the program began, the Authority has accumulated approximately $26 million and the amounts deposited in the fund is based on the megawatts of unsold replacement power.  Responding to further questioning from Chairman Koelmel, Mr. Russak said deposits to the fund are made on a quarterly basis.

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

 

                WHEREAS, the Western New York Power Proceeds Allocation Board (“NYPPAB”) has recommended that the Authority make awards of Fund Benefits from the Western New York Economic Development Fund (“Fund”) to the applicants listed in Exhibits “6-A-1” and “6-A-2”;

 

                NOW THEREFORE BE IT RESOLVED, That the Authority hereby accepts the recommendations of the WNYPPAB and authorizes awards of Fund Benefits to the applicants listed on Exhibits “6-A-1” and Exhibit “6-A-2” in the amounts identified in such Exhibits, conditioned upon an agreement between the Authority and 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 that is approved by the President and Chief Executive Officer and approved as to form by the Executive Vice President and General Counsel, or so approved by their designees; 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 that will be applicable to the awards; 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

“6-A” subject to the foregoing conditions; and be it further

 

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

 


 

7.                   Motion to Conduct an Executive Session

 

Mr. Chairman, I move that the Authority conduct an executive session to consult with counsel.  Upon motion made and seconded an Executive Session was held.

 


 

8.                   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.


 

9.                     Next Meeting

 

The Regular Meeting of the Trustees will be held on January 28, 2014, at 11:00 a.m., at the Clarence D. Rappleyea Building, White Plains, New York, unless otherwise designated by the Chairman with the concurrence of the Trustees.

 

 


Closing

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

 

 

Delince Signature

 

Karen Delince

Corporate Secretary