MINUTES OF THE ANNUAL MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

March 25, 2014

 

Table of Contents

 

 

 

                Subject                                                                                                                                  Page No.               Exhibit

 

            Introduction                                                                                                                                   2

1.             Adoption of the March 25, 2014 Proposed Meeting Agenda                                                3                                      

2.             Consent Agenda:                                                                                                                           4

a.       Minutes of the Regular Meeting held on January 28, 2014                               5

b.       Annual Review and Approval of Guidelines for the                                            6                       2b-A

    Investment of Funds and 2013 Annual Report on

    Investment of Authority Funds 

Resolution

 

c.        Annual Report of Procurement Contracts, Guidelines                                       10                      2c-A-12c-A-3

    for Procurement Contracts and Annual Review of

    Open Procurement Service Contracts

Resolution

 

d.       Annual Review and Approval of Guidelines and                                               12                      2d-A; 2d-A-1

    Procedures for and Annual Report of the Disposal

    of Personal Property

Resolution

 

e.        Annual Review and Approval of Guidelines and                                               14                      2e-A – 2e-C;

    Procedures for the Disposal of Real Property,                                                                           2e-C-1

    Guidelines and Procedures for the Acquisition

    of Real Property and Annual Reports for the

    Disposal and Acquisition of Real Property

Resolution            

 

f.        Niagara Power Project Robert Moses Generator                                                 17

    Step-Up Transformer Replacement – Capital

    Expenditure Authorization Request 

Resolution

 

g.       Procurement (Services) Contract – St. Lawrence/FDR                                      19

    Power Project – Massena Substation Auto-Transformer

    Removal and Site Preparation – Contract Extension 

Resolution

 

h.       Procurement (Services) Contract – Niagara Power                                             21

    Project – On-Call Testing and Inspection Services –

                                    Contract Award

Resolution

 


 

                Subject                                                                                                                                  Page No.               Exhibit

 

i.         Procurement (Services) Contract – Niagara Power                                             23

    Project – Lewiston Pumped Generating Plant Life

    Extension and Modernization Program – Installation

    of Auxiliary Equipment Phase II – Contract Award

Resolution

 

j.         Procurement (Services) Contract – Environmental                                            26

    Health and Safety Oversight Services for the

    South East New York Region – Contract Awards

Resolution

 

k.       Procurement (Services) Contract –  St. Lawrence-FDR                                     28

    Power Project – Independent FERC Consultant's

    Part 12D Safety Inspection and Follow-up Services –

    Contract Award

Resolution 

 

l.         Procurement (Services) Contract – Information                                                 30

    Technology Operations Network – Time Warner

    Cable Inc. – Contract Award

Resolution

 

m.     Procurement (Services) Contracts – Business Units                                           32                      2m-A; 2m-B

    and Facilities – Awards, Extensions and/or

    Additional Funding

Resolution

 

n.       Revisions to Expenditure Authorization Limits Table                                       40                      2n-A

    for Non-Hedge Physical Fuel-Related Transactions

Resolution  

 

o.       Membership in Electric Power Research Institute –                                           42

    Renewal

Resolution

 

p.       Selection of Investment Manager for the Authority’s                                       45

    Other Post-Employment Benefits Trust Fund

Resolution

 

q.       Annual Review and Approval of Certain Authority Policies                            48                      2q-A – 2q-N

Resolution

r.        Release of Funds in Support of the Western New York                                     50

    Power Proceeds Allocation Act

                                Resolution

 

s.        Procurement (Services) Contract – Richard M. Flynn Plant –                          53

    Well Water Pump Replacement – Contract Extension

                                Resolution

 

t.         Committee Appointments                                                                                       55

Resolution

 

                Subject                                                                                                                                  Page No.               Exhibit

 

u.       Awards of Fund Benefits from the Western New York                                     56                      2u-A – 2u-D

    Economic Development Fund Recommended by the

    Western New York Power Proceeds Allocation Board

Resolution

 

Discussion Agenda:                                                                                                                                 60

 

3.             Q&A on Report from:

a.       President and Chief Executive Officer                                                                  60                      3a-A

b.       Chief Operating Officer                                                                                           62                      3b-A

c.        Chief Financial Officer                                                                                            64                      3c-A

d.       Chief Risk Officer                                                                                                     66                      3d-A

 

4.                   Power Allocations:                                                                                                                    67

 

a.       Power Allocations Under the Recharge New York                                              67                      4a-A – 4a-E

    Program

Resolution            

 

b.       Allocation of Hydropower and Notice of Public Hearing                                 72                      4b-A; 4b-A-1;

Resolution                                                                                                                                                   

                4b-B

5.                   2013 Financial Reports Pursuant to Section 2800 of the Public                                      76                      5-A; 5-B

    Authorities Law and Regulations of the Office of the State

    Comptroller

Resolution

 

6.                   Contribution of Funds to the State Treasury                                                                       79

Resolution

 

7.                   New York Power Authority’s 2014 Strategic Plan                                                              82                      7-A

Resolution

 

8.                   Appointment of Acting Executive Vice President and                                                       86

    General Counsel

Resolution

 

9.                   Motion to Conduct an Executive Session                                                                            90

10.                Motion to Resume Meeting in Open Session                                                                       91

11.                Next Meeting                                                                                                                             92

Closing                                                                                                                                        93                                                     

 

 

 


Minutes of the Annual Meeting of the Power Authority of the State of New York held via videoconference at the following participating locations at approximately 10:35 a.m.

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

2)       Video Conference Center: Accurate Court Reporting,

247 West Fayette Avenue, Suite 202, Syracuse, NY

 

Members of the Board present were:

 

                                John R. Koelmel, Chairman

                                Joanne M. Mahoney, Vice Chair – via videoconference

                                Eugene Nicandri, Trustee

                                Jonathan Foster, Trustee

                                R. Wayne LeChase, Trustee

                                Terrance P. Flynn, Trustee

                                                                                       

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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

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

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

Jill Anderson                                         Vice President – Public and Regulatory Affairs and Chief of Staff

John Canale                                         Vice President – Project Manager

Thomas Concadoro                            Vice President and Controller

Dennis Eccleston                                 Vice President – Information Tech/Chief Information Officer

Joseph Gryzlo                                       Vice President and Chief Ethics and Compliance Officer

Michael Huvane                                  Vice President – Marketing – Business and Municipal Marketing

Joseph Leary                                        Vice President – Community and Government Relations

Lesly Pardo                                           Vice President – Internal Audit

Phillip Toia                                            Vice President – Transmission

Karen Delince                                       Corporate Secretary

Brian McElroy                                     Treasurer

Brian Liu                                               Deputy Treasurer

Frank Deaton                                       Director – Enterprise Risk Management

Michael Saltzman                               Director – Media Relations

Peter Prunty                                          Acting Director – Infrastructure

Silvia Louie                                           Senior Project Manager – Executive Office/Public & Regulatory Affairs

Timothy Muldoon                               Manager – Business Power Allocations and Compliance

Gary Schmid                                        Principal IT Project Manager – Strategy and Governance

Gregory Jablonsky                              Lead Network Analyst – Infrastructure

John Giumarra                                     Account Executive – Business Marketing and Economic Development

Sheila Baughman                                                Assistant Corporate Secretary

Brittney Frazier                                    Project Coordinator – Community Relations

                               

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

 


Introduction

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

 

 

 

 


 

1.                   Adoption of the March 25, 2014 Proposed Meeting Agenda

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

                Conflicts of Interest

The following Trustees declared conflicts of interest as indicated below and said they will not participate in the discussions or votes as it relate those matters:

Vice Chair Mahoney – Greater Syracuse Moving & Storage, CH2M Hill, CHA Consulting, CRA International, Navigant Consulting (Item 2m)

Trustee Flynn – Time Warner Cable, Inc. (Item 2l); JP Morgan Chase (Item 4a)

Trustee LeChase – Time Warner Cable, Inc. (Item 2l); CH2M Hill, CHA Consulting (Item 2m)

Chairman Koelmel and Trustees Nicandri and Foster declared no conflicts.

 

 


 

2.                   Consent Agenda:               

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

                 

 

                             


 

a.       Approval of the Minutes

                The Minutes of the Regular Meeting held on December 17, 2013 were unanimously adopted.


 

b.       Annual Review and Approval of Guidelines

for the Investment of Funds and 2013 Annual

Report on Investment of Authority Funds        

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                The Trustees are requested to review and approve the attached 2013 Annual Report on Investment of Authority Funds, which includes the Guidelines for the Investment of Funds (Exhibit ‘2b-A’).

 

 BACKGROUND

 

                Section 2925 of the Public Authorities Law requires the review and approval of an annual report on investments.  Pursuant to the statute, the attached report includes Investment Guidelines that set standards for the management and control of the Authority’s investments; total investment income; a statement of fees paid for investment management services; the results of an independent audit; a detailed inventory report for each of the Authority’s investment portfolios as of December 31, 2013; and a summary of transactions with brokers, dealers and banks.  The approved annual report is filed with the State Division of the Budget, with copies to the Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee.  The report is also available to the public upon written request. 

 

DISCUSSION

 

                In 2013, the Authority’s investment portfolios, exclusive of the separately managed Other Post-Employment Benefits Trust Fund and Nuclear Decommissioning Trust Fund, averaged $1.37 billion with a December 31, 2013 cost of $1.373 billion and market value of $1.375 billion, representing a positive mark-to-market of $2 million.  At year-end, $1.33 billion in cash and investments was held in the Authority’s Operating Fund with the remainder held in construction funds and restricted funds.  The Operating Fund was created by the Authority’s General Resolution authorizing Revenue Obligations adopted on February 24, 1998.  A number of internal reserves have been established within the Operating Fund, as follows (year-end balances noted in parentheses):

 

·         Debt Service Reserve ($71 million) – The Debt Service Reserve is funded monthly to ensure that sufficient amounts are available to pay debt service obligations when due.  The Authority’s scheduled principal and interest payments presently total approximately $150 - $170 million per year.  

 

·         Energy Hedging/Fuel Reserve ($70 million) – This Reserve was established to have funds available for use as collateral that may be required to support the Authority’s authorized fuel and energy hedging transactions and to maintain funds to match a federal obligation to pay for the processing and final disposition of spent nuclear fuel burned by the Authority when it owned the Indian Point #3 and James A. FitzPatrick nuclear plants.  On February 3, 2009, the Trustees approved the temporary transfer to the State of New York (‘State’) of $215 million held in this Reserve for the spent fuel obligation to assist with the State’s budgetary deficits.  The temporary asset transfer was completed on February 25, 2009 and, in accordance with the terms and conditions of a Memorandum of Understanding between the NYS Director of the Division of Budget and the Authority, is due to be returned to the Authority no later than September 30, 2017.  The December 31, 2013 spent fuel obligation was $217 million.

 

·         Capital Project Reserve ($840 million) – This amount is being set aside to partially fund major new investments in energy infrastructure by the Authority.  In order to minimize customer costs, maintain the Authority’s financial metrics and maintain ready access to the capital markets, it has been determined that the major investments should be financed with a portion funded by debt and a portion funded by Authority cash or, in effect, its ‘equity.’  This Reserve has been established to provide this equity.  On February 3, 2009, the Trustees approved a temporary transfer of $103 million from the Capital Project Reserve to the State to assist with the State’s budgetary deficits and reaffirmed the transfer on July 28, 2009.   The temporary asset transfer was completed in September 2009 and, in accordance with the terms and conditions of a Memorandum of Understanding between the NYS Director of the Division of Budget and the Authority, is due to be returned to the Authority no later than September 30, 2014.  On January 28, 2014, the Authority’s Trustees approved the dedication of $800 million presently held in the Capital Project Reserve to meet a portion of the costs of major renewals, replacements, repairs, additions, betterments and other investments associated with the Authority’s strategic initiatives, capital plan and energy efficiency investments.

 

·         Other Reserves ($44 million)

 

o    Western New York Economic Development Fund ($27 million) – On March 30, 2012, Governor Cuomo signed into law the Western New York Power Proceeds Allocation Act (the ‘Act’), which authorizes net earnings from the sale of unallocated Expansion Power and Replacement Power from the Authority’s Niagara power project, as deemed feasible and advisable by the Trustees, to be deposited into the Western New York Economic Development Fund (‘WNYEDF’).  The net earnings deposited into the WNYEDF will be utilized to fund economic development projects by private businesses, including not-for-profits, which are physically located within New York State and within a thirty-mile radius of the Niagara power project. 

 

o    North Country Economic Development Fund ($10 million) - In accordance with provisions in the 2009 contract between ALCOA and the Authority, ALCOA agreed to capitalize a $10 million North County Economic Development Fund (‘NCEDF’).  The NCEDF will be used for economic development purposes in St. Lawrence County, Clinton County, Franklin County, Essex County, Jefferson County, Lewis County, Hamilton County, Herkimer County and the Akwasasne Mohawk Reservation.  To date, no funds have been disbursed from the NCEDF. 

 

o    State Parks Greenway Fund ($7 million) - In November 2012, the Authority’s Trustees authorized the issuance of Subordinated Notes, Series 2012 (‘Subordinated Notes’), in a principal amount not to exceed $30 million for the purpose of accelerating the funding for the State Parks Greenway Fund (‘SPGF’), which was established pursuant to the Niagara Relicensing Settlement entered into the by the Authority and the New York State Office of Parks, Recreation & Historic Preservation.  The SPGF was established to support the construction and/or rehabilitation of parks, recreation and related facilities in and around the Niagara River Greenway.  The Authority issued the Subordinated Notes on December 18, 2012 in the amount of $25 million.  To date, $17.5 million has been disbursed from the SPGF.

 

·            Operating Reserve ($300 million) – The Operating Reserve includes a reserve for working capital and emergency repairs to the Authority’s projects.  The Authority’s Trustees have established a minimum reserve amount of $175 million for this purpose and funds cannot be released for ‘any lawful corporate purpose’ (pursuant to Section 503(1)(e) of the Bond Resolution) unless this minimum reserve level is satisfied.  The December 31, 2013 Operating Reserve of $300 million reflects this $175 million minimum, plus the amount staff deems prudent to provide for uncertainties in cash flows and commitments related to certain statewide economic development programs.   

 

In addition to the Operating Fund, as of December 31, 2013, the Authority separately held a total of $72 million from the proceeds of bond and note issuances, and cash, in its Note Debt Reserve and Construction portfolios.  These funds are earmarked for construction projects currently under way, such as the St. Lawrence Life Extension and Modernization Project and improvements pursuant to the Niagara Relicensing Settlement Agreements.

 

The Authority’s portfolios earned approximately $21 million in investment income in 2013, $5 million less than investment income earned in 2012. While the portfolios generated additional income in 2013 on net new cash invested, the prolonged low interest rate environment reduced the earning on maturing securities invested in lower yielding instruments.  In 2013, the Authority’s portfolios had an average yield of 1.46%, exceeding the Authority’s targeted performance by 14 basis points (14/100 of 1%).  Targeted performance for 2013 was the three-year rolling average yield of the two-year Treasury note with an average added spread of 95 basis points.

               

As of December 31, 2013, the portfolio was comprised of United States treasury securities (0.6%), government-sponsored agency securities (88.7%), municipal securities (9.5%), mortgages guaranteed by the U. S. government (1.0%) and certificates of deposit and repurchase agreements (0.2%). 

 

Other Post-Employment Benefits Trust ($422 million)

 

                The Authority’s Other Post-Employment Benefits Trust (‘OPEB Trust’) was established in 2007 as authorized by the Authority’s Trustees at their December 19, 2006 meeting to provide for medical, prescription drug, life and other long-term care benefits offered by the Authority for retirees and eligible beneficiaries.  The OPEB Trust allows for investments in a diversified portfolio of assets, including domestic and international equity securities, domestic and international fixed-income securities, public Real Estate Investment Trusts and a U. S. Treasury Money Market fund.  During 2007 and 2008, the Authority deposited a total of $225 million into the OPEB Trust to partially fund its actuarial accrued liability. On October 25, 2011, the Authority’s Trustees approved on-going annual funding of the OPEB Trust in order to strengthen the Authority’s financial position.  Contributions totaling $83.7, which represented the net obligation for the years 2009 through 2013, were made to the OPEB Trust in accordance with the Trustees authorization.  The accrued liability as of December 31, 2013 was estimated to be $573 million.

 

                As of December 31, 2013, the OPEB Trust’s market value was approximately $422 million, representing an annualized return of 17.79% for 2013.  The return performance was attributable to positive returns in both the equity (domestic and international) and real estate asset classes with the fixed income asset class realizing slightly negative performance in 2013.

 

                Investment management and advisory fees associated with the OPEB Trust Fund totaled $1,629,846 in 2013 and were paid from such Trust Fund.  These fees and the firms paid are detailed in Section III (B) of the attached report.

 

Nuclear Decommissioning Trust ($1.3 billion)

 

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

 

                As of December 31, 2013, the Nuclear Decommissioning Trust’s (‘NDT’) market value was approximately $1.30 billion, representing an annualized return of 9.73% for 2013.  The return performance was primarily attributable to positive returns in the domestic equity asset class, which in accordance with the investment guidelines, has a target allocation of thirty-five percent of total assets.  The fixed income asset class realized slightly negative performance in 2013.

 

                Investment management and advisory fees associated with the Nuclear Decommissioning Trust Fund totaled $1,412,440 in 2013 and were paid from such Trust Fund.  These fees and the firms paid are detailed in Section III (C) of the attached report. 

 

                In connection with its examination of the Authority’s financial statements, KPMG LLP (‘KPMG’) performed tests of the Authority’s compliance with certain provisions of the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.  Based on discussions with KPMG, Staff is of the opinion that KPMG’s written report, which will be delivered upon approval of the financial statements by the Board, will state that the Authority complied, in all material respects, with the requirements during the year ended December 31, 2013.  Consequently, staff believes the Authority is in compliance with the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.

 

The Investment Guidelines and procedures have not been amended since it was last presented to, and approved by the Trustees at their meeting of March 21, 2013.  The Guidelines remain fundamentally sound and meet the requirements of the Authority.  Furthermore, these Guidelines continue to meet the requirements of Section 2824(1)(e) of the Public Authorities Law, which requires the Authority’s Trustees to establish written policies and procedures with respect to investments.

 

RECOMMENDATION

 

                The Treasurer recommends that the Trustees approve the attached 2013 Annual Report on Investment of Authority Funds.

 

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

 

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

 

                RESOLVED, That the 2013 Annual Report on Investment of Authority Funds be, and hereby is, approved; 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.

 

 

 


 

c.        Annual Report of Procurement Contracts,

Guidelines for Procurement Contracts and Annual

                        Review of Open Procurement Service Contracts     

 

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

                The Trustees are requested to approve the 2013 Annual Report of Procurement Contracts (‘Annual Report’) (Exhibit ‘2c-A-3’) and the Guidelines for Procurement Contracts (‘Guidelines’) (Exhibit ‘2c-A-2’) and to review open service contracts exceeding one year that were active in 2013 as detailed in the Annual Report (Exhibit ‘2c-A-3’).  An Executive Summary is set forth in Exhibit ‘2c-A-1.’

 

BACKGROUND

 

                Section 2879 of the Public Authorities Law (‘PAL’) governs the administration and award of procurement contracts equal to or greater than $5,000.  Section 2879 of the PAL requires public authorities to adopt comprehensive guidelines detailing their operative policy and instructions concerning the use, awarding, monitoring and reporting of procurement contracts.  The Authority’s Guidelines were adopted by the Trustees at their meeting of October 31, 1989 and were implemented as of January 1, 1990.  The Guidelines have been amended as deemed advisable and necessary, and reviewed and approved annually by the Board since that date, most recently on March 21, 2013.

 

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

 

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

 

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

 

DISCUSSION

 

                The 2013 Annual Report is attached for the Trustees’ review and approval (Exhibit ‘2c-A-3’).  The Annual Report reflects activity for all procurement contracts equal to or greater than $5,000, as identified by the Authority’s SAP computer system, that were open, closed or awarded in 2013, including contracts awarded since January 1, 1990 that were completed in 2013 or were extended into 2014 or beyond.  In addition, fossil fuels transactions reported by the Fuels Planning and Operations group and financial-related services reported by Corporate Finance (of the Energy Resource Management and Business Services Business Units, respectively), are included in the Annual Report of Procurement Contracts.  All additional information required by the statute is also included.  The Trustees are requested to approve the attached Annual Report pursuant to § 2879 of the PAL prior to submittal thereof to the Director of the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee, the Assembly Ways and Means Committee and the Authorities Budget Office.

 

                A copy of the Guidelines effective March 31, 2014 (Exhibit ‘2c-A-2’) is attached to the Annual Report.  These Guidelines are amended in accordance with Article 4-C of the Economic Development Law and also with provisions of State Finance Law § 163.6, and as further set forth in Exhibit ‘2c-A-1.’

 

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

 

RECOMMENDATION

 

                The Executive Vice President and Chief Financial Officer and the Acting Vice President – Procurement recommend that the Trustees approve the 2013 Annual Report of Procurement Contracts, the Guidelines for Procurement Contracts and the review of open service contracts as attached hereto in Exhibits ‘2c-A-1’ through

‘2c-A-3.’

 

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

                                               

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

 

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

 

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

 

RESOLVED, That the Chairman, the Vice 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.       Annual Review and Approval of Guidelines

and Procedures for and Annual Report of

                        the Disposal of Personal Property____        

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to review and approve the Guidelines and Procedures for the Disposal of Authority Personal Property (‘Personal Property Guidelines’), which address the disposal of Authority-owned materials, tools, equipment and vehicles with a value in excess of $5,000, in compliance with Public Authorities Law § 2896, enacted as part of the Public Authorities Accountability Act of 2005 (‘PAAA’) and amended by the Public Authorities Reform Act of 2009 (‘PARA’).  The Personal Property Guidelines are attached hereto as Exhibit ‘2d-A.’  The Trustees are also requested to review and approve the 2013 Annual Report of the Disposal of Personal Property, attached hereto as Exhibit ‘2d-A-1.’

 

BACKGROUND

 

On January 13, 2006, the PAAA was enacted to codify model governance principles for New York State’s public authorities to further accountability and transparency.  Among its provisions, the PAAA, and as later amended by PARA, established requirements for the disposal of public authority personal property.  The law also required each authority to draft guidelines consistent with the legislation dealing with these issues, to review and approve such guidelines annually and to prepare an annual report of the disposal of personal property (including the full description, name of the purchaser and price received for all such property disposed of by the authority during such period).  Such Guidelines were initially approved by the Trustees at their meeting of March 28, 2006 and have been amended as deemed advisable and necessary, and reviewed and approved annually since that date, most recently on March 21, 2013.

 

DISCUSSION

 

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

 

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

 

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

 

FISCAL INFORMATION

 

There will be no financial impact on the Authority.

 

RECOMMENDATION

 

The Executive Vice President and Chief Financial Officer and the Acting Vice President – Procurement recommend that the Trustees approve the Guidelines and Procedures for the Disposal of Authority Personal Property for the disposition of Authority-owned materials, tools, equipment, and vehicles with a value in excess $5,000, and the corresponding 2013 Annual Report of the Disposal of Personal Property, as set forth in Exhibits ‘2d-A’ and ‘2d-A-1,’ respectively.

 

For the reasons stated, I recommend the approval of the above-requested action by adoption 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 the Public Authorities Law, the Authority hereby reviews and approves the Guidelines and Procedures for the Disposal of Authority Personal Property, as set forth in Exhibit “2d-A” and attached hereto; and be it further

 

RESOLVED, That pursuant to the provisions of the Public Authorities Law, the Authority hereby reviews and approves the 2013 Annual Report for the Disposal of Personal Property, as set forth in Exhibit “2d-A-1” and attached hereto; 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.        Annual Review and Approval of Guidelines and

Procedures for the Disposal of Real Property,

Guidelines and Procedures for the Acquisition of

Real Property and Annual Reports for the

Disposal and Acquisition of Real Property            

                               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

The Trustees are requested to review and approve the following, which comply with the requirements of the Public Authorities Accountability Act of 2005 (‘PAAA’) as amended by the Public Authorities Reform Act, Chapter 506 of the Laws of 2009:  (1) 2014 Guidelines and Procedures for the Disposal of Real Property (‘Real Property Disposal Guidelines’) for transfers of land or interests in land; and (2) 2014 Guidelines and Procedures for the Acquisition of Real Property (‘Real Property Acquisition Guidelines’).  The Guidelines are set forth in Exhibits ‘2e-A’ and ‘2e-B’, respectively, attached hereto.  In addition, the Trustees are also requested to review and approve the 2013 Annual Report of the Disposal of Real Property set forth in Exhibit ‘2e-C’, and the 2013 Annual Report of the Acquisition of Real Property set forth in Exhibit ‘2e-C-1’, attached hereto.

 

BACKGROUND

 

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

DISCUSSION

The 2014 Real Property Disposal Guidelines and the 2014 Real Property Acquisition Guidelines set forth the methodology detailing the Authority’s policy regarding the use, award, monitoring and reporting of contracts for the disposal and acquisition of real property and designate a Contracting Officer responsible for the Authority’s compliance with, and enforcement of, such Guidelines.  At their meeting of March 21, 2013, the Trustees reviewed and approved the Authority’s 2013 Real Property Disposal Guidelines and Real Property Acquisition Guidelines.  The only significant change in the 2014 Guidelines is an amendment to the Disposal Guidelines to more accurately reflect New York Public Authorities Law §2896(2)(b), which requires that the Authority periodically inventory its real property to determine which property shall be disposed of.  There are additional minor changes for form and to reflect organizational changes.  The Acquisition Guidelines have been amended to reflect organizational changes only.

The Real Property Disposal Report lists the real property disposal transactions conducted during the reporting period having an estimated fair market value in excess of $15,000, including a description of the property, the purchaser’s name and the price received by the Authority, as required by New York Public Authorities Law §2800.  The Real Property Acquisition Report lists the real property acquisition transactions conducted during the reporting period having an estimated fair market value in excess of $15,000, including a description of the property, the seller’s name and the price received by the Authority, as required by New York Public Authorities Law §2800.  During this reporting period there was one (1) acquisition of real property with an estimated fair market value in excess of $15,000.00.  In addition, there was one (1) acquisition, previously approved by the Trustees, for which the Authority paid in excess of the fair market value.  During this reporting period there were no disposals of real property with an estimated fair market value in excess of $15,000.00.

 

These acquisitions and dispositions were among those reviewed and approved by the Authority’s Governance Committee at their meeting of March 25, 2014.  The Trustees are now requested to review and approve the Authority’s 2013 Annual Report of the Disposal of Real Property and the Authority’s 2013 Annual Report of the Acquisition of Real Property.

 

 The 2014 Real Property Disposal Guidelines and the 2014 Real Property Acquisition Guidelines, if approved, will be posted on the Authority’s internet website.  On or before the 31st day of March, the Real Property Disposal Guidelines, the Real Property Acquisition Guidelines and the corresponding 2013 Annual Reports, as reviewed and approved by the Trustees, will be filed with the State Comptroller, the Director of the Budget, the Commissioner of General Services, the State Legislature and the Authorities Budget Office.  The 2013 Annual Reports will also be posted on the Authority’s internet website.

 

FISCAL INFORMATION

 

There will be no financial impact on the Authority.

 

RECOMMENDATION

The Acting Vice President – Procurement and the Director of Site Purchasing, Materials Management and Real Estate recommend that the Trustees approve the amended Guidelines and Procedures for the Disposal of Real Property, the amended Guidelines and Procedures for the Acquisition of Real Property, the 2013 Annual Report of the Disposal of Real Property and the 2013 Annual Report of the Acquisition of Real Property as set forth in the attached Exhibits.

For the reasons stated, I recommend the approval of the above-requested action by adoption of 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 the Public Authorities Accountability Act of 2005, as amended by the Public Authorities Reform Act, Chapter 506 of the Laws of 2009, the Authority hereby reviews and approves the 2014 Guidelines and Procedures for the Disposal of Real Property and the 2014 Guidelines and Procedures for the Acquisition of Real Property as set forth in Exhibits “2e-A” and “2e-B”, respectively, attached hereto; and be it further

 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, as amended by the Public Authorities Reform Act, Chapter 506 of the Laws of 2009, the Authority hereby reviews and approves the 2013 Annual Report for the Disposal of Real Property and the 2013 Annual Report of the Acquisition of Real Property as set forth in Exhibits “2e-C” and “2e-C-1”, respectively, attached hereto; and be it further

 

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

 

RESOLVED, That the Chairman, the Vice 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.        Niagara Power Project – Robert Moses Generator

Step-Up Transformer Replacement –

                        Capital Expenditure Authorization Request              

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve capital expenditures in the amount of $5,500,000 for the replacement of the Robert Moses Generator Step-Up Transformer (‘GSU’) at the Niagara Power Project. 

 

BACKGROUND

 

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

After a bushing failed on Robert Moses GSU 3 in the fall of 2012, the spare GSU was placed in service.  Several options for repair of the failed unit were evaluated.  However, due to the cost, uncertainty of the success of the repair, and critical nature of the GSUs, a new replacement transformer will be procured and installed in 2015.  

 

DISCUSSION

The scope-of-work for this project includes the design, fabrication, delivery, assembly, testing, and installation of one 115kV wye-reactance-grounded / 13.8kV delta GSU. 

 

                After issuance of a Request for Proposal (‘RFP’) and a competitive bidding process, an equipment procurement contract for the GSU was awarded to ABB, Inc. in the amount of $2,531,168 in March 2014.  ABB has extensive experience in design and fabrication of large power transformers, has demonstrated knowledge of the scope-of-work and is capable of completing the project.  ABB has also performed successfully on other Authority projects and has demonstrated its ability to adhere to schedule and budget.  Pending approval of these capital expenditures, the contract award has been limited to $200,000.  Preliminary funding in the amount of $1,030,914 was previously authorized for the procurement of long-lead equipment and for the detailed design of the GSU installation. 

 

This fall staff anticipates issuing an RFP for the installation of the new GSU, which will occur during a scheduled outage in 2015.  The anticipated scope-of-work for the installation contract will include the removal and disposal of the failed GSU; demolition and replacement of the deluge fire suppression system; connections to the low voltage Iso-Phase bus and overhead high voltage strain bus; and structural repairs to the GSU containment bays, as required.

 

The total Project cost is estimated at $5,500,000, as follows:

 

Preliminary Engineering and Design

$     50,000

 

Detailed Engineering and Design

 

$   186,800

 

GSU Procurement

 

$2,600,000

 

GSU Installation and Niagara Site Support

 

$2,124,000

 

Authority Indirect and Direct Expenses

 

$  539,200

 

                                                          TOTAL

 

$5,500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Future-year funding will be included in the Capital Budget request for that year.

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Acting Vice President – Project Management, the Acting Vice President – Procurement, the Regional Manager – Western New York, and the Project Manager recommend that the Trustees authorize capital expenditures in the amount of $5,500,000, for the replacement of the Robert Moses Generator Step-Up Transformer at the Niagara Power Project. 

 

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

 

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

 

                RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, capital expenditures are hereby approved in the amount of $5,500,000, for the replacement of the Robert Moses Generator Step-Up Transformer at the Niagara Power Project, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

                        St. Lawrence/FDR Power Project – Massena Substation –

                        Auto-Transformer Removal and Site Preparation –

                        Contract Extension                                                                           

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve a one-year extension until December 31, 2014 to Purchase Order #4500226992 (the ‘Contract’) for Northline Utilities LLC of Ausable Forks, New York for the Auto-Transformer Removal and Site Preparation for Installation of the new SMIT 765 kV Auto-Transformer at the Massena Substation.

 

BACKGROUND

 

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

Northline Utilities was awarded the Contract for the removal of the failed spare 765kV/ 230kV auto-transformer; the removal of damaged power and control cables, conduits and grounding; removal of the squelching stone; inspection and repair of the containment; installation of a new liner; installation of new power and control cables, conduits and grounding; and preparation of the site for the delivery of the new auto-transformer from SMIT.

DISCUSSION

At the time of the Contract award, the new transformer from SMIT was expected to be delivered on site in October, 2013.  Northline Utilities’ work on this Contract was expected to be completed by December 2013.

As a result of fabrication and transportation issues, the transformer shipment was delayed considerably.  Assembly and testing of the transformer by SMIT is expected to be completed by late April, 2014.  Once SMIT’s commissioning is complete, Northline Utilities must return to perform the balance of the required work.  The Northline Contract, originally anticipated to be less than 12 months in duration, reached the one-year mark in January, 2014.

 

FISCAL INFORMATION

 

Payment associated with this project will be made from the Authority’s Capital Fund.  Any additional funding to support this contract extension will be handled in accordance with the Authority’s Expenditure Authorization Procedures.

 

RECOMMENDATION

 

The Senior Vice President – Operations Support Services and Chief Engineer, the Acting Vice President – Project Management, the Vice President – Engineering, the Acting Vice President – Procurement, the Project Manager, and the Regional Manager – Northern New York recommend that the Trustees approve the contract extension to Northline Utilities LLC.

 

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

 


 

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

 

                RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a one-year contract extension to Northline Utilities LLC of Ausable Forks, New York to complete the scope-of-work in support of the installation of the spare auto-transformer for use at the Massena Substation, as recommended in the foregoing report of the President and Chief Executive Officer.

 

                                        Contractor                                           Contract Approval

Northline Utilities                              One-Year Contract Extension

Ausable Forks, NY                             to December 31, 2014

PO# 4500226992                                              

Final Est. Cost:   $554,041

 

                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.

 

 


 

h.       Procurement (Services) Contract –

                        Niagara Power Project – On-Call Testing

                        and Inspection Services – Contract Award

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve the award of a five-year contract, to Quality Inspection Services, Inc. of Buffalo, NY (‘QISI’), for a not-to-exceed amount of $1.25 million, for the On-Call Testing and Inspection Services work at the Niagara Power Project.

 

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.

               

An On-Call Testing and Inspection Services contract is required for the Authority to acquire necessary independent third-party inspections to ensure constant quality assurance for on-going construction projects.  The Authority does not have the necessary equipment or laboratory testing facilities to meet the required code compliance and quality standards in a manner that is in keeping with the pace of project schedules. 

 

DISCUSSION

 

The Authority first placed an advertisement in the New York State Contract Reporter on September 12, 2013 and proposals were received on October 3, 2013.  After reviewing the proposals, the Evaluation Committee, which was comprised of Authority staff, determined that the original proposals had many inconsistencies and disparities between unit prices and the Bid was cancelled. 

 

The Authority rebid for the contract and placed an advertisement in the New York State Contract Reporter on December 10, 2013.  Ninety-one (91) companies ‘downloaded’ the bid documents via the Authority’s website. 

 

The following three bidders submitted proposals on January 7, 2014:

 

Bidder                                                                                    Location               

SJB Services, Inc.                                                                Buffalo, NY

Quality Inspection Services, Inc.                                      Buffalo, NY

CME Associates, Inc.                                                         Syracuse, NY

 

                    The bids were evaluated from a cost, technical, safety and similar work experience standpoint, by the Evaluation Committee.  The evaluation focused on those pricing items considered most likely to be used based on upcoming work at the Niagara Power Project plus consideration of historic usage of these services.

                    QISI’s experience, resources and capabilities meet the Authority’s requirements as described in the bid document.  QISI provided the lowest unit pricing for the majority of the most frequently used services.  Additionally, QISI has provided satisfactory work at the Niagara Power Project recently, including concrete testing and inspection of the Robert Moses Dam Face, Switchyard Structure Foundation repairs and the South Access Guardhouse, as well as weld inspections for the South Access Roadway retaining wall.

 

FISCAL INFORMATION

 

Funds required to support contract services for O&M projects will be included as part of the approved Operating Fund for those projects and will be disbursed from the Operating Fund.

 

Funds required to support contract services for capital projects will be 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 and Chief Engineer – Operations Support Services, the Acting Vice President – Project Management, the Vice President – Engineering, the Acting Vice President – Procurement, the Project Manager and the Regional Manager – Western New York recommend that the Trustees approve the award of a five-year contract to Quality Inspection Services, Inc. of Buffalo, NY (‘QISI’) for a not-to-exceed amount of $1.25 million, for the On-Call Testing and Inspection Services work at the Niagara Power Project.

 

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

 

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a five-year contract to Quality Inspection Services, Inc. of Buffalo, NY, for a not-to-exceed amount of $1.25 million, for the On-Call Testing and Inspection Services contract at the Niagara Power Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 

                                        Contractor                                           Contract Approval

 

                                Quality Inspection Services, Inc.                    $1.25 million

                                Buffalo, NY

                                (Q13-5559AT)

 

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.

 

 


 

i.         Procurement (Services) Contract – Niagara Power Project –

                        Lewiston Pump Generating Plant Life Extension and

                        Modernization Program – Installation of Auxiliary

                        Equipment Phase II – Contract Award                                         

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve the award of a seven-year contract to Ferguson Electric Construction Co. Inc. of Buffalo, NY (‘Ferguson’) in the amount of $19,046,700 for the installation of auxiliary equipment for the remaining ten unit upgrades as part of the Life Extension and Modernization (‘LEM’) Program at the Niagara Power Project, Lewiston Pump Generating Plant (‘LPGP’).  

 

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 require the Trustee’s approval for non-personal services contracts with a value in excess of $3 million.

 

                At their June 29, 2010 meeting, the Trustees approved the LPGP Life Extension Program at the estimated cost of $460 million.  At their November 12, 2012 meeting, the Trustees increased the authorized capital expenditures amount from $131 million to $252 million.  This requested contract award is a part of the previous capital expenditure authorization.

 

In accordance with the Authority’s Guidelines for Procurement Contracts, an interim contract not to exceed $90,000 was approved by the President and Chief Executive Officer in February 2014.  This interim contract award will avoid Ferguson’s demobilization cost, under the existing contract, and mobilization cost, under this contract, which will save the Authority $30,000 and $96,000 respectively.

 

The principal reason for the life extension work at LPGP is the condition and age of the generating equipment, including the original Generator Step-Up Transformers, Motor-Generators, Pump-Turbines, Exciters and Unit Controls, Potheads and High Pressure Fluid-Filled plants.  Failure to maintain the LPGP would result in significant loss of peaking and firm capacity from the Niagara Power Project, preventing the Project from being able to meet power contracts with the Authority’s customers.

 

The Trustees approved the award of a contract on at their meeting on July 31, 2012 for the installation of the auxiliary equipment for the first two of the twelve unit upgrades.  This contract award is for installation of auxiliary equipment for the remaining ten units.  The contacts were separated in order to incorporate ‘lessons learned’ during the first two unit upgrades and to mitigate additional scope-of-work changes.

 

                The scope-of-work under this contract includes the installation of the following equipment furnished by other vendors under separate contracts: static exciters, generator circuit breakers, cable and unit instrumentation.  The scope-of-work also includes i) furnishing and installation of conduits and cable; ii) furnishing and replacing the AC and DC distribution systems equipment for the remaining ten units; iii) removal of existing associated cables and conduits; and iv) assistance with testing and commissioning of the remaining ten units.

 

DISCUSSION

 

An advertisement to solicit bids (Q13-5539AT) was issued and appeared in the New York State Contract Reporter on October 4, 2013.  A single proposal was received on December 3, 2013 from Ferguson.  In addition, Post-Bid Addendum No. 1 was issued to clarify the bidder’s proposal; Ferguson’s final prices, indicated below, were received on January 24, 2014.  The NYPA Fair Cost Estimate for this project is $20,028,552 inclusive of options and bonds.

 

Bidder

Bid

Ferguson Electric Construction Co. Inc.

$19,046,700

 

                The proposal was reviewed by an Evaluation Committee (‘Committee’) with representatives from Procurement, Engineering, Niagara Project and Project Management. 

 

                Several clarifications were sent to Ferguson to clarify their proposal and to provide an opportunity to explain how they arrived at their work plan, guaranteed characteristics and pricing.  Ferguson’s responses were acceptable to the Committee.

 

                In the recent past, Ferguson successfully completed several projects at the Niagara Power Project which include upgrade of the first LPGP LEM unit (work on the second is well underway), replacement of the 115 kV oil circuit breakers with SF6 type in the switchyard and the replacement of the four generator step-up transformers at LPGP. 

 

Ferguson has broad experience in projects of this magnitude, has demonstrated knowledge of the scope-of-work and is capable of completing this project in a timely manner.  The Committee recommends that a contract for the work described above be awarded to Ferguson whose bid is technically and commercially acceptable.

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Acting Vice President – Project Management, the Vice President – Engineering, the Acting Vice President – Procurement, the Project Manager and the Regional Manager – Western New York recommend that the Trustees approve the award of a seven-year contract to Ferguson Electric Construction Co. Inc. of Buffalo, NY, in the amount of $19,046,700, for the installation of auxiliary equipment for the remaining ten unit upgrades as part of the Life Extension and Modernization Program to renovate and modernize the Lewiston Pump Generating Plant.

 

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

 

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a seven-year contract to Ferguson Electric Construction Co. Inc. of Buffalo, NY, in the amount of $19,046,700, for the Installation of Auxiliary Equipment for Unit Upgrade as part of the Life Extension and Modernization program to renovate and modernize the Lewiston Pump Generating Plant, as recommended in the foregoing report of the President and Chief Executive Officer;

 

                                        Contractor                                           Contract Approval

                               

                                        Ferguson Electric                                      $19,046,700

                                        Construction Co. Inc.

                                        Buffalo, NY

                                        (Q13-5339AT)

 

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.

 

 


 

j.         Procurement (Services) Contract – Environmental

Health and Safety Oversight Services for the

                        South East New York Region –Contract Awards    

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve the award of contracts to TSI-Turtle Services (‘TSI’) of Linden, NJ and TRC Engineers (‘TRC’), Inc., of New York, NY for Environmental Health and Safety (‘EHS’) Oversight Services to cover all nine sites in the South East New York Region (‘SENY’), for a term of up to five years and an aggregate total of $3million.

 

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 personal services contracts in excess of $1million if low bidder, or $500,000 if sole-source, single-source or non-low bidder.

 

In order to supplement existing resources and ensure the proper implementation of planned, emergent and on-going projects, EHS oversight services are required to provide support for non-recurring O&M and Capital project activities.  EHS services will include providing project oversight for enforcement, compliance with the Authority’s EHS guidelines and Occupational Safety and Health Administration (‘OSHA’) standards.  The Authority awarded a one-year contract in 2012 for EHS Oversight services which expired in June 2013.  As such, a new contract is required to supplement this need and to ensure that the SENY sites have adequate coverage.  Past experience has shown that an award to multiple firms allows for a broader selection and availability of skilled personnel to support multiple projects and it is also effective to award them as multi-year contracts.

 

EVALUATION

 

In response to the Authority’s Request for Proposals (Q13-5552MC) advertised in the New York State Contract Reporter on November 20, 2013, ten proposals were received on December 11, 2013.

 

A complete bid review and analysis was conducted by the Authority’s Project Management, Environmental Health and Safety, and Procurement staff.  Six evaluation categories were established and scored: compensation hourly rate, qualifications, experience, proposal execution and Authority experience.  Based on the evaluation criteria, TSI and TRC were the top two evaluated firms.  Additionally, both firms are within reasonable location/proximity to support all SENY sites.

 

                TSI and TRC have relevant and good experience in the power and utility industry; successful track records implementing projects of various dollar value, duration and complexity; experience working with all levels of government; and a successful track record with the Authority.  TSI and TRC have been in business for 23 and 43 years, respectively.  Both firms are in good financial standing as confirmed by the Authority’s Procurement Department and reported by the verified references.

 

Based on the review of the proposals, evaluation criteria and reference checks, staff recommends that the contract for EHS services be awarded to TSI and TRC.  Services under these contracts will be provided on an as-needed basis and/or availability, using the hourly rates for a term of up to five years. 

 


 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Engineering, the Acting Vice President – Project Management, the Acting Vice President – Procurement and the Regional Manager – SENY recommend that the Trustees approve the award of five-year contracts to TSI-Turtle Services of Linden, NJ and TRC Engineers, Inc., of New York, NY for an aggregate total of $3million to provide Environmental Health and Safety Oversight Services for the Authority’s Southeast New York Region.

 

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

 

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award contracts to TSI-Turtle Services of Linden, New Jersey and TRC Engineers, Inc. of New York, New York, for a term of up to five years and the aggregate total amount of $3million for Environmental Health and Safety Oversight Services for the Authority’s Southeast New York Region as recommended in the foregoing report of the President and Chief Executive Officer and set forth below:

 

                                        Contractor                           Contract Approval

                       

                                TSI-Turtle Services                           $3,000,000

Linden, New Jersey                       (aggregate total)

(Q13-5552MC)

 

TRC Engineers, Inc. 

New York, New York

(Q13-5552MC)

 

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.

 

 


 

k.       Procurement (Services) Contract) –

St. Lawrence-FDR Power Project –

Independent FERC Consultant’s Part 12D

Safety Inspection and Follow-up Service –

Contract Award                                                 

 

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

The Trustees are requested to approve the award of a contract to Parsons Brinkerhoff, Inc., New York, NY, for inspection and consulting services in support of an independent consultant’s inspection, report and follow-up service for the St. Lawrence-FDR Power Project (‘STL Project’), as mandated by the Federal Energy Regulatory Commission (‘FERC’).  The intended term of the contract is five years for the total projected amount of $300,000.

BACKGROUND

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

DISCUSSION

FERC regulations require the Authority to hire an independent consultant to perform an independent dam safety inspection and review at licensed projects every five years.  FERC issued a letter on October 29, 2013 indicating that the report for the STL Project was due by January 2, 2015.  In response to the Authority’s Request for Proposals (‘RFP’) advertised in the New York State Contract Reporter on January 16, 2014, sixty-five (65) firms downloaded the bid documents from the Authority’s procurement website.

 

                Bidders were required to submit a detailed proposal in accordance with the RFP and scope-of-work (Q14-5578JF).  Eight bids were received and opened on February 11, 2014.  All eight bids were evaluated by a team of staff members from the Operations and Procurement Departments.

 

The bid evaluation looked at the lump-sum contract price for the dam safety inspection and report for the STL Project for the task of the first year (2014) in addition to the cost for the work in the next four years (2015 thru 2018).  Staff calculated total projected costs based on estimated man-hours needed for projected tasks based upon prior experience to address continuing engineering services, to respond to FERC questions in years 2-5 of the contract and corresponding hourly rates provided by each firm in their proposal. 

 

Based on the foregoing, Parsons Brinkerhoff was the lowest-priced evaluated bidder and its proposal indicates a complete understanding of FERC’s requirements.  Staff recommends awarding a contract to Parsons Brinkerhoff as its proposal is complete, competitive and responsive to the scope-of-work.  Parsons Brinkerhoff has allocated proper resources to complete this work thoroughly and on-time.  FERC’s new inspection report guidelines require the degree of staffing allocated by Parsons Brinkerhoff and the company has the requisite knowledge and expertise to perform the work. 

 

The award is for $58,000 for the first year of the contract including $300 for any additional unforeseen work.  FERC requires the independent consultant to be available to answer follow-up questions for a period of five years.  Therefore, based upon prior experience to address continuing engineering services to respond to FERC questions in years 2-5, the value of the contract is estimated to include $60,500 in years 2-5 of the contract.  Total value of the contract is $300,000.

 

FERC must approve the résumé of the specific independent consultants employed by Parsons Brinkerhoff to proceed with this work.  Historically, FERC has required the Authority to utilize the FERC-approved independent consultants to conduct follow-up work; therefore the intended term of the contract is five years.  Pursuant to FERC’s letter dated October 29, 2013, the Authority is required to submit a letter for the approval of the proposed Niagara Power Project independent consultant to FERC no later than July 2, 2014, six months prior to the due date for the Part 12D Safety Inspection Report.

 

FISCAL INFORMATION

Funds required to support the contract are included in the 2014 Approved Operations Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  Payment will be made from the Operating Fund.

RECOMMENDATION

The Senior Vice President – Operations Support Services and Chief Engineer, the Vice President – Engineering, the Acting Vice President – Procurement and the Regional Manager – Northern New York recommend that the Trustees approve the award of a five-year contract to Parsons Brinkerhoff, Inc. for inspection and consulting services as discussed above.

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

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

 

                RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award and funding of a five-year contract to Parsons Brinkerhoff, Inc., in the amount of $300,000, is hereby approved, as recommended in the foregoing report of the President and Chief Executive Officer;

 

Contractor                           Contract Approval

                                                        Parsons Brinkerhoff, Inc.                        $300,000

        New York, NY

 

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.

 

 


 

l.         Procurement (Services) Contract –

Information Technology Operations Network –

                        Time Warner Cable Inc. – Contract Award        

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize award of a contract to Time Warner Cable Inc. in the amount of $3,780,000 for a term of five years in order to implement a new Operations Network.  These expenditures have been previously approved by the Trustees in the 2013 Operations Network and Fiber Network Capital Expenditure Authorization Request (‘CEAR’).

 

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.

Time Warner Cable is under the New York State Office of General Services (‘OGS’) State Contract for telecommunications services and currently provides the Operational and Business Network backbone communications service between NYPA’s major locations.  This contract with Time Warner would provide new communications infrastructure to connect the Authority’s sixty (60) operational locations to the existing Time Warner Operational Network.  These new locations include NYPA offsite operational facilities, the New York Independent System Operator (‘NYISO’) and other utilities. 

Services include, but are not limited to, providing high-speed network connectivity over a secured switch network based on fiber optics to support all operational communications including SCADA, Telemetry, Protective Relay, Security and Control Room communications. The system will have the ability to prioritize traffic by quality and class of service.

This five-year contract will include capital expenses in the amount of $2.4 million and O&M expenses in the amount of $1.38 million.

DISCUSSION  

 

Time Warner Cable Inc. will build and maintain this Operations Network in parallel with the NYPA Business Network.  This new environment will have security and monitoring built in from the ground up in order to meet and exceed current North American Electric Reliability Corporation (‘NERC’) Critical Infrastructure Protection (‘CIP’) compliance and audit requirements.

The establishment of this new infrastructure will provide the following:

 

 

This contract is a multi-year effort with implementation beginning in 2014 and all locations scheduled to be operational by year end 2015.  Services will be billed as locations are activated with the contract termination in December 2019.

 

FISCAL INFORMATION

 

Implementation costs associated with this project will be made from the Capital Fund, while monthly recurring services will be charged to O&M.

 

RECOMMENDATION

 

                The Senior Vice President – Enterprise Shared Services, the Chief Information Officer – Informational Technology and the Acting Vice President –  Procurement recommend that the Trustees approve the award of a five-year contract to Time Warner Cable Inc. in the amount of $3,780,000.

 

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

 

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

 

RESOLVED, That in accordance with the Authority’s Expenditure Authorization Procedures, capital expenditures are hereby approved as recommended in the foregoing report of the President and Chief Executive Officer, in the amount and for the purpose listed below:

 

                                                                                                                                 Expenditure

                                                                Capital                                                  Authorization

 

Time Warner Cable Inc.                                  $3,780,000

Request for Contract Approval

 

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.

 

 


 

m.     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 ‘2m-A,’ as well as the continuation and/or funding of the procurement (services) contracts listed in Exhibit ‘2m-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 $60,000 to $3.15 million.  Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.

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

Extensions

Although the firms identified in Exhibit ‘2m-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 ‘2m-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:

Economic  Development & Energy Efficiency

 

Energy Efficiency

 

                The contract with Mid-Island Electrical Supply (‘Mid-Island’) (Q14-5567; PO# TBA) would provide for the furnishing and delivery of light emitting diode (‘LED’) bank lighting equipment for the New York City Transit subway tunnel project.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 50 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated, as further set forth in the Award Recommendation documents.  Staff recommends the award of a contract to Mid-Island, the lowest-priced evaluated bidder, which is qualified to provide such equipment and meets the bid requirements.  The contract would become effective on or about April 1, 2014, for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  (The initial award will be issued for a one-year term, with an option to extend for up to two additional years.)  Approval is also requested for the total amount expected to be expended for the term of the contract, $3,147,414.

 

Enterprise Shared Services

 

Human Resources – Employee Benefits

 

                The Authority offers relocation benefits to eligible newly-hired and transferring employees, pursuant to Employee Policy 3.8.  One component of the relocation policy relates to the movement of household goods.  The contracts with A-1 First Class – Viking Moving & Storage, Inc. (‘A-1’) and Greater Syracuse Moving & Storage (‘Greater Syracuse’) (Q14-5572) would provide for such corporate relocation moving services to the Authority on an ‘as needed’ basis.  Services include coordinating and managing the move of all household goods for Authority employees who have been transferred to a new work assignment / location on a non-temporary basis or new employees who must relocate to work at an Authority location.  Approximately 20 moves are anticipated (but not guaranteed) per year, of which one-third are expected to originate outside New York State.  Since the existing contracts for such services are expiring and the need is ongoing, bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 40 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated, as further set forth in the Award Recommendation documents.  Based on a pricing comparison drawn from fee worksheets, which indicate the estimated moving costs submitted by each bidder for two sample moves (one interstate and one intrastate), as well as discounts and reductions on tariff rates, and services offered, staff recommends the award of contracts to A-1 and Greater Syracuse, the two lowest-priced bidders.  Both firms offer comparable and competitive rates, are qualified to perform such work and meet the bid requirements; both are managed locally and are also agents of larger, national van lines, and both agreed to waive the peak-season transportation rates and use non-peak season transportation rates throughout the calendar year.  It should be noted that A-1 has provided excellent service to the Authority under an existing contract for such work.  The award of contracts to two firms would afford the Authority additional flexibility in cases where a van line is unavailable in a specific geographic area or during its busy season, or in the event of a billing dispute with or poor service by one company.  This arrangement would benefit the Authority by better accommodating the Authority’s needs and scheduling requirements (e.g., on short notice) and by taking advantage of the best pricing for intrastate and interstate moves.  The contracts would become effective on or about July 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, $350,000.

 

Law

 

                The contract with Manatt, Phelps & Phillips, LLP (‘Manatt’) (PO# TBA) would provide for the continuation of legal services related to the ongoing St. Regis Mohawk Indian land claim.  At their meeting of March 31, 2009, the Trustees approved the award of a five-year contract to provide legal services in connection with the pending actions, which were initiated by three groups of St. Regis Mohawks asserting claims to land owned and occupied by the Authority (including Barnhart Island, the site, the Authority’s St. Lawrence/FDR Power Project).  With the dismissal of all claims against the Authority by the federal District Court, the Authority’s role in what remains of this litigation against the State and others is diminished.  Nevertheless, developments in this litigation must be watched closely and appeals may be filed.  Moreover, settlement discussions between the State and the St. Regis are ongoing, and will involve the Authority.  The Manatt firm is needed to continue to monitor this litigation and to assist the Authority with any issues that may arise from the current settlement negotiations.  Having represented the Authority in this case since 2004, Manatt has the requisite experience, is uniquely qualified and well positioned to continue its representation of the Authority in this complex, decades-old matter.  The firm, and particularly the partner in charge, did an excellent job in writing the papers, which led to the dismissal of all claims against the Authority.  It would not be practicable or prudent to retain a new firm at this juncture in the litigation; furthermore, to bring a new firm up-to-date on this long-standing dispute and the esoteric underlying legal doctrines would involve considerable additional expense without any commensurate benefit to the Authority.  Based on the foregoing, staff recommends the award of a new contract to the Manatt firm on a single-source basis.  Such contract would become effective on or about April 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, $250,000.

 

Operations

 

Power Generation / Support Services

 

                The contract with Anderson Medical, PC dba Emergency One Urgent Care & Diagnostic Center (‘Emergency One’) (6000144301; PO# TBA) would provide for on-site annual physical examinations for approximately 50 employees at the 500 MW Power Project.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 18 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated in detail, as further set forth in the Award Recommendation documents.  All three bidders were deemed technically qualified to perform the services.  Given the nominal differential of $5 per physical (which is less than 2%) between the lowest-priced bidder and Emergency One, as well as the Authority’s strong commitment to provide opportunities for New York State-certified Minority and Women-owned Business Enterprises (‘M/WBEs’) in accordance with our Supplier Diversity Program goals and Guidelines for Procurement Contracts, staff recommends award of a contract to Emergency One, which meets the bid requirements, is a NYS-certified MBE, and has provided satisfactory services under an existing contract for such services at another Authority facility.  The contract would become effective on or about April 1, 2014, for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $150,000.  Rates will remain firm for the duration of the contract.

 

 

                The contract with BIDCO Marine Group, Inc. (‘BIDCO’) (6000146383; PO# TBA) would provide for penstock inspections of generating units at the Robert Moses Niagara Power Plant (‘RMNPP’).  Services include, but are not limited to, all labor, supervision, technical expertise, equipment, tools and materials to perform all operations and activities associated with such inspections and services, including supplying videotapes / DVDs and inspection reports.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 47 firms, including those that may have responded to a notice in the New York State Contract Reporter; one additional firm obtained the bid documents from an alternate source.  Three proposals were received and evaluated.  The two lowest-priced bids were equal in pricing, but the methodology proposed by one was more technically acceptable, as further set forth in the Award Recommendation documents.  Based on the foregoing, staff recommends the award of a contract to BIDCO, which is better qualified to perform such services, meets the bid requirements and has provided satisfactory services under the previous contract for such work, demonstrating proven methods and ability to meet schedules, proximity to the site and familiarity with the work area.  The new contract would become effective on or about March 26, 2014, for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $112,500.

 

                The contract with Upstate Metrology, Inc. (6000146202; PO# TBA) would provide for all labor, supervision, equipment, supplies, pickup and delivery service for the calibration, repair and certification of Instrumentation & Control (‘I&C’) test and measurement equipment for the Niagara Power Project.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 34 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated, as further set forth in the Award Recommendation documents.  Staff recommends the award of a contract to Upstate Metrology, the lowest-priced evaluated bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory services under the previous contract for such work.  The new contract would become effective on or about March 26, 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, $60,000 (based on staff calculations using the bidder’s unit pricing, as well as historical and projected usage, and an additional $8,000 to cover emergent work including, but not limited to, repairs, parts and materials that are not covered by maintenance specifications).  Rates will remain firm for the duration of the contract.

 

Contract Extensions and/or Additional Funding:

 

Economic Development & Energy Efficiency

Energy Efficiency

                The contract with Airmatic Compressor Systems, Inc. (4500228250) provides for the services, materials, labor and equipment to furnish, install and make fully operational gas-fired infrared heating systems for New York City Transit at the Jamaica and Pitkin Maintenance Shops located in Forest Hills (Queens) and Brooklyn, New York, respectively.  The original award, which was competitively bid, became effective on February 13, 2013, for a one-year term, in the amount of $1,931,228.  Initial testing and sampling was followed by a period of installation inactivity (from May – October 2013), caused by delays in reviews and approvals for the next phase of installation, lead time on equipment and multiple revisions to construction drawings requested by the Customer, resulting in an overall project completion delay.  Interim approval to extend the contract through March 31, 2014 was subsequently authorized in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures, to provide for the continuation of such services.  An additional nine-month extension is now requested in order to complete the work, while maintaining the original terms, conditions and pricing.  The current contract amount is $1,931,228; adequate funding is available under this contract to cover services to be provided during the proposed extended term through project completion.  The Trustees are requested to ratify the interim extension and to approve an additional extension of the subject contract through December 31, 2014, with no additional funding requested.

                At their meeting of June 30, 2009, the Trustees approved the award of contracts to five firms (Applied Energy Management (‘AEM’), The Fulcrum Group, PB Americas (now Parsons Brinckerhoff), RCM Technologies and Wendel Energy Services) to provide for program management and implementation services for the Authority’s Governmental Customers Energy Services Program (‘GCESP’), for a term of up to five years and an aggregate total amount of $300 million.  The contracts, which were competitively bid, became effective on July 1, 2009.  Projects have been assigned based upon project technology, size, expertise, Customer feedback and contractor performance, through an ongoing evaluation by the Authority’s Implementation Contractor Assignments Committee.  While many of the assigned projects have been completed successfully, a number of other projects authorized by the Authority’s Customers have projected completion dates beyond the approved contract term, specifically, those with Parsons Brinckerhoff, Inc. (‘Parsons’) (4600002135).  Such work includes, but is not limited to: lighting and building controls at One Police Plaza; new boilers and controls at Metropolitan Hospital and Elmhurst Hospital; new chillers and building management system upgrade at the Brooklyn Supreme Court; and lighting and occupancy sensors at several New York City Public Schools.  In order to bring the remaining projects to successful completion, while maintaining the terms, conditions and pricing in the original contract, staff recommends an extension of up to three years of the existing contract with Parsons.  Adequate funding is still available to cover the estimated costs to complete the active project assignments under the subject contract.  No new projects will be assigned to Parsons under this contract.  (It should be noted that current project assignments that will not be completed within the approved contract term of existing contracts with Fulcrum, RCM and Wendel will be re-assigned to these firms under newer competitively bid contracts, as design milestones are met; and the contract with AEM has been closed.)  The current aggregate total amount allocated to all five firms is $170 million.  No additional funding above the originally approved aggregate total will be required for the extended term; allocations will be made to the Parsons contract, as needed.  The Trustees are requested to approve extension of the subject contract through June 30, 2017, with no additional funding requested.  Total commitments and expenditures for the contract will continue to be tracked against the approved aggregate total and will be closely monitored for utilization levels, available approved funding and combined total expenditures.  It should be noted that all costs will be recovered by the Authority.

Executive Offices

                The contract with Susan P. Tolchin (4500228343) provides for strategic communications consulting services that include, but are not limited to, performing a comprehensive evaluation of the Authority’s existing Corporate Communications organization and making recommendations for improving its effectiveness; evaluating existing external and internal communications business processes and making recommendations for improvements to better convey a consistent message, align with the Governor’s office policies and messages, reach Authority customers and stakeholders, and communicate with our employees; and providing strategic communications consulting services to the President and CEO and the Executive Management Committee, as needed.  The original award, which was competitively bid, became effective on February 15, 2013, for a term of up to one year, in the amount of $80,000.  The consultant has performed a number of the aforementioned tasks, resulting in recommendations for reorganization and process improvements.  Additional funding in the amount of $12,000 and interim approval to extend the contract through March 31, 2014 were subsequently authorized in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures, in order to provide for the continuation of such services.  Ms. Tolchin continues to consult on these matters and to assist with process improvements in the newly formed Public and Regulatory Affairs Department.  It would not be prudent or practicable to rebid these services at this time.  An additional one-year extension is now requested in order to facilitate implementation of the recommended improvements and to complete the work that Ms. Tolchin started.  The current contract amount is $92,000; staff estimates that an additional $80,000 may be required for services to be provided during the proposed extended term.  The Trustees are requested to ratify the interim extension and to approve an additional extension of the subject contract through March 31, 2015, as well as the additional funding requested.

Operations Support Services

Project Management

                The contract with Linita Design and Manufacturing Corp. (‘Linita’) (4500232204) provides for the upgrade of two existing 7.5-ton overhead cranes at the Robert Moses Niagara Power Plant (‘RMNPP’).  The original award, which was competitively bid, became effective on May 28, 2013, for a term of less than one year and in the amount of $671,607.  Unforeseen field conditions required that additional work (relating to runway girder alignment) be performed. Additional funding for such emergent work was subsequently authorized in accordance with the Authority’s Expenditure Authorization Procedures.  The additional time required to complete such work, coupled with the scheduling, coordination and priority of ongoing and planned work in the RMNPP Assembly Bay, will result in the delay of project completion.  A four-month extension is now requested in order to complete the work.  The current contract amount is $933,562; adequate funding is available under this contract to cover services to be provided during the proposed extended term.  The Trustees are therefore requested to approve extension of the subject contract through September 27, 2014, with no additional funding requested.  It should be noted that Linita is a New York State-certified Minority-owned Business Enterprise (‘MBE’).

Project Development and Licensing

                At their meeting of June 26, 2012, the Trustees approved the award of contracts to 11 firms (CAI Services P.C., CH2M Hill Engineering P.A., CHA Consulting Inc., CRA International Inc., Navigant Consulting Inc., Northeast Professional Engineering Consultants LLC, Power GEM LLC, Quanta Technology LLC, Shaw Consultants International Inc., Siemens Industry Inc. and Tetra Tech Inc.) to provide for consulting services to support Authority initiatives in connection with new generation facilities, new transmission facilities, fuel supply services, and energy policy and regulatory activities, on an ‘as needed’ basis, for a term of up to five years, and an aggregate total amount of $5 million.  Based on the Governor’s Energy Highway Initiative, the Marcy South Series Compensation (‘MSSC’) Project was earmarked for construction on an accelerated schedule, with a targeted commercial operation date of June 1, 2016.  (Such project was selected by the Public Service Commission, as part of the Generation Retirement Contingency Plans Proceeding.)  At the time of original award and funding of these contracts, the development of the MSSC in such an expeditious manner was not anticipated.  To meet this ambitious schedule, the engineering, licensing and environmental studies are proceeding at an aggressive pace and have consumed most of the allocated funds.  Staff anticipates that a number of additional studies will be required in connection with the MSSC Project and it would not be prudent or practicable to rebid such services, especially in view of the tight schedule.  Services involving such licensing activities and environmental studies to support other major transmission projects and/or new generation facilities will be rebid, as needed.  The current aggregate total of Purchase Orders released to date is $4,670,340.  Staff estimates that an additional $2 million will be required to provide such services through the original contract term, June 30, 2017.  The Trustees are therefore requested to approve an additional $2 million, thereby increasing the approved aggregate total amount to $7 million, to be released and allocated to the subject contracts as needed.

Strategic Planning

Renewable Energy / Clean Energy Technology

                The contract with Antares Group, Inc. (‘Antares’) (4600002652) provides for biomass consulting services, enabling the Authority to expand its ability to evaluate and implement potential renewable energy projects, including anaerobic digesters (‘ADs’), and supporting related activities, such as preparation of bid documents, bid evaluation, engineering review, biomass market assessment, emissions technology and regulation tracking, biomass fuel supply analysis, technology assessment, etc.  The original award, which was competitively bid, was made to two firms and became effective on March 1, 2013, for a term of up to one year and an aggregate amount of $500,000; only the Antares contract has been active.  In support of the Governor’s goal to increase the number of ADs on dairy farms in New York State, the Authority has been assisting the New York State Energy Research and Development Authority (‘NYSERDA’) in its efforts to increase the number and quality of such implementation projects by establishing a NYS Anaerobic Digester Ombudsman (‘ADO’) program, responsible for reviewing the feasibility of proposed AD projects and advising prospective project developers.  Under the subject contract, the Authority has provided for consulting services in connection with this and other such efforts, including a new whey-to-energy (‘WTE’) AD facility proposed by the Chobani (yogurt) firm.  Interim approval to extend the subject contract through March 31, 2014 was subsequently authorized in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures, to provide for the continuation of such services.  NYSERDA is expected to assume responsibility for the ADO program and to award its own competitively bid contract for such work.  An additional eight-month extension of the Antares contract is now requested in order to continue these services until such time as the new NYSERDA contract is in place (which may not be until the Fourth Quarter of 2014), as well as to provide continued support for the Chobani WTE project through 2014.  The current aggregate ‘Target Value’ is $500,000; adequate funding is available to cover services to be provided during the proposed extended term and may be reallocated, as needed.  The Trustees are therefore requested to ratify the interim extension and to approve an additional eight-month extension of the subject contract through December 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.  Payment for certain contracts in support of Energy Efficiency programs will be made from the Energy Conservation Effectuation and Construction Fund.

RECOMMENDATION

                The Deputy General Counsel, the Senior Vice President – Operations Support Services and Chief Engineer, the Senior Vice President – Power  Generation, the Vice President – Energy Efficiency, the Vice President – Project Development, Licensing and Compliance, the Vice President – Engineering, the Acting Vice President – Project Management, the Acting Vice President – Procurement, the Acting Vice President – Public and Regulatory Affairs, the Vice President – Transmission, the Vice President – Human Resources, the Director – Clean Energy Technology, the Regional Manager – Western 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 ‘2m-A’ and the extension and/or funding of the procurement (services) contracts listed in Exhibit ‘2m-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 the resolution below.”

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

 

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

 


 

n.       Revisions to Expenditure Authorization Limits Table

        for Non-Hedge Physical Fuel-Related Transactions   

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve the revised Expenditure Authorization Limits

Table (‘Table’) for transactions covering physical, non-hedge related, fuel purchases, sales and transportation required for the operation of the Authority’s fossil-fueled generating facilities (‘Operational Transactions’) as set forth in Exhibit ‘2n-A’ attached hereto.  Originally, the Table for expenditure limits for both hedging and non-hedging related transactions was authorized under the same Trustee Item dated February 26, 2008.  Financial and physical transactions used for hedging energy-related commodity risk (‘Hedging Transactions’) are currently covered separately under the Trustee-approved action of September 28, 2010. 

 

The proposed revisions to the Table are primarily administrative in nature and do not change currently existing transaction authorization limits for Operational Transactions as set forth in the  original Table to the February 26, 2008 Trustee Item.  Revisions include:  (a) updates to titles of authorized corporate officers, where appropriate; (b) elimination of titles/positions which no longer exist or do not apply to Operational Transactions and; (c) modifications to supporting footnotes to accurately reflect changes to the Table consistent with the delineation of responsibility between Operational Transactions and Hedging Transactions.

 

BACKGROUND

 

At their meeting of September 28, 2010, the Trustees approved the Governing Policy for Energy Risk Management (‘the Policy’) as subsequently amended on January 31, 2012 and March 21, 2013.  The Policy outlines the philosophy, framework and delegation of authority for the Authority’s Energy Risk Management Program (‘the Program’) and provides the necessary authority to an appointed Executive Risk Management Committee (‘ERMC’) to oversee implementation of the Program, including the authority to enter into financial hedging transactions and to establish appropriate procedures and controls. 

 

In addition to revising authorization limits for  Hedging Transactions, the September 28, 2010 Trustee authorization and subsequent ERMC actions resulted in the delineation of functions and segregation of duties among Authority staff, establishing a separation between Operational  Transactions for fuel supply purposes and Hedging Transactions for risk management objectives.  In accordance with this separation of functions, it is necessary to revise and update the Table and supporting footnotes as contained in the February 26, 2008 Trustee Item for Operational Transactions as recommended by the Authority’s Internal Audit Department. 

 

Operational Transactions refer primarily to natural gas purchases that are effectuated on a day-to-day and intraday basis in support of the New York Independent System Operator (‘NYISO’) Day-Ahead (‘DAM’) Market and Hour-Ahead (‘HAM’) Market selections for electric output from each of the Authority’s downstate fossil-fired power plants.  In order to secure a reliable supply of natural gas, Operational Transactions may also include longer term gas supply arrangements at market indexed prices.  Because gas indexed price transactions are highly correlated to electric market prices, they present minimal risk to the Authority compared to fixed price gas transactions.

 

DISCUSSION

 

The requested revisions to expenditure authorizations apply exclusively to physical, short-term (‘spot’) and longer-term forward (‘term’) transactions as required for the operation of the Authority’s fossil-fueled generating facilities.  A spot transaction is defined as having a period or duration less than or equal to 40 days in contrast to a term transaction which is defined as having a period or duration of greater than 40 days up to 48 months.  Consistent with the original February 26, 2008 Trustee authorization, trading limits may be delegated to subordinate level managers and staff (in writing) by respective department executives at their discretion within established limits on a short or extended term basis.   

 

For internal control purposes, extended term delegations must be signed by the individual receiving the delegation and co-signed by the immediate supervisor, accompanied by the individual’s written certification of his or her understanding of all applicable Authority policies and procedures and re-certified annually.  In addition to specified transaction dollar and term limits, the cumulative volume for an authorized individual for an Authority generating facility, for a particular period, may not exceed the maximum volume of fuel that could be used at such generating facility during that period.     

 

The specified transaction limits and delegation of authority will ensure the necessary level of transaction capability for operational purposes while maintaining proper internal controls.  Spot and term transactions result in minimal risk exposure to the Authority due to the fact that they: (a) are typically short-term in nature; (b) utilize indexed (market-related) pricing for longer-term transactions; (c) provide for payment after-the-fact following fuel deliveries and; (d) contain contractual provisions which provide some level of protection in the event of a vendor default.  

 

RECOMMENDATION

 

The Senior Vice President – Energy Resource Management and the Director – Fuel Planning and Operations recommend that the Trustees approve the revised Expenditure Authorization Limits Table as discussed above and specifically reflected in Exhibit ‘2n-A’ attached hereto.

 

                For the reasons stated, I recommend the approval of the above-requested action by adoption of the following resolution.”       

 

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

 

                RESOLVED, That the revised Expenditure Authorization Limits Table for non-hedge, physical, fuel-related Operational Transactions be adopted as discussed above and specifically reflected in Exhibit “2n-A” attached hereto; 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 documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

o.       Membership in Electric Power Research Institute – Renewal

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize the renewal of the Authority’s membership in the Electric Power Research Institute (‘EPRI’) effective January 1, 2015 for a five-year term.  While the current membership term does not expire until December 31, 2014, authorization for renewal is being sought at this time to enable the Authority to participate in certain multi-year supplemental EPRI projects commencing during calendar year 2014.  The total membership dues for this five-year renewal are $13.43 million and are payable in annual installments. 

 

BACKGROUND

 

EPRI is a non-profit corporation organized to promote, conduct and sponsor scientific research, development and demonstration (‘RD&D’) relating to the generation, delivery and use of electricity for the benefit of the public.  It is considered the premier electric utility research organization, bringing together scientists and engineers as well as experts from academia and the industry to help address challenges in electricity.  

 

EPRI’s current worldwide membership base in excess of 1,000 organizations consists of electric utilities, government agencies, corporations and other energy enterprise organizations that are engaged in some aspect of the generation, delivery or use of electricity.  EPRI’s large membership enables its members to collaboratively support and leverage a broad array of large-scale research and demonstration projects of mutual interest, some of which could not be funded by an individual entity. 

               

The EPRI organization is aligned with various segments of the electric market in developing technologies, information and methods related to generation, delivery and use of electricity, with special attention to cost reduction, cost-effectiveness, environmental concerns and customer retention.  Its programs are planned, developed and implemented by market segments guided by an Industry Committee Structure, consisting of member representatives selected for expertise in their particular fields.

 

DISCUSSION

 

Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for financial obligations in excess of $3,000,000 that occur over a period in excess of one year. 

 

The Authority has been a member of EPRI since July 1, 1987.  The Authority’s Chief Executive Officer currently serves on the EPRI board and the Authority is represented at all levels of the EPRI advisory structure -- the Research Advisory Council, and the Generation, Power Delivery and Environmental Councils, including their associated work groups.

 

EPRI members realize the value of their membership through successful applications of the more than 1,200 research products annually that range from white papers, project updates and newsletters, to comprehensive reports, field guides and software that inform its members and the public on their efforts to help shape the future of electricity.  EPRI’s portfolio of research programs is defined and guided by advisors from both industry and public stakeholders. 

 

The Authority derives benefit from using EPRI’s products and services by participation in a research program that affords the Authority a degree of control over the nature and scope of a particular research project within the program; through participation in supplemental projects; and from an EPRI platform that allows direct access to member utilities facing similar technology challenges.  Financial benefit is derived from a co-funding program where a group of interested utilities fund a program or project allowing the contributing members access to the results generated for a fraction of the cost had the program or project been funded independently.  

 

Over the last few years, the Authority has been effective in obtaining several million dollars of EPRI co-funding for projects of interest to the Authority and has worked closely with EPRI to develop and implement technologies at the Authority’s facilities.  Examples include developing the plan for a state-of-the-art Advanced Grid Innovation Lab (‘AGILe’), a robotic concrete inspection crawler that can scale vertical walls such as those at our large hydro facilities, online infrared inspection monitoring techniques, a transmission line right-of-way stewardship accreditation program, personal EMF monitors for Authority workers working under high voltage transmission lines, and an ultra-high tech nano-technology process of coating equipment with a hydrophobic polymer to prevent icing.

 

Membership dues are collected by EPRI based on a formula that takes into account generation assets and transmission system peak capacity in megawatts (‘MW’).  Membership dues are pooled by EPRI to fund RD&D programs.  Members may access programs in the annual research portfolio and/or select specific EPRI programs or projects for participation. A portion of membership dues is allocated to focus on longer-term research opportunities, and to look for breakthrough technologies and innovations that can be applied in the electricity industry.

 

EPRI allows its members to set aside 25 percent of their membership dues for participation in supplemental research projects with other member utilities.  These ‘Tailored Collaboration’ (‘TC’) funds enable the Authority to design or join projects that address specific research priorities.  Such projects are approved by the Trustees as part of the Authority’s annual budget process.  In the past, the Authority has participated in numerous EPRI collaborative projects through the use of its TC funds.  Since the existing five-year membership contract with EPRI will expire on December 31, 2014, and new supplemental projects need to be initiated that will carry past this date, early approval of a new five-year membership contract is being requested.  This will ensure that a contract is in place for the entire length of these projects.  Examples of projects of interest that will be initiated under the current EPRI contract that will carry into the new EPRI contract are the Physical Security – Transmission project and continuing work with AGILe.  Under the current EPRI membership contract, expiring on December 31, 2014, the Authority would be unable to enter into a contract for these projects because they extend past the current contract expiration date.

 

On an annual basis, the Authority’s Research and Development Department works closely with other departments to target EPRI programs from which the Authority and its customers would derive benefits from EPRI products and services.  For 2014, staff selected approximately 32 programs and 8 sub-programs in the areas of power generation, transmission, environment, distributed resources, power quality and end-use customer energy efficiency. 

 

FISCAL INFORMATION

 

Funds required for the Authority’s 2015 EPRI membership will be included in the 2015 O&M Budget Plan.  Dues associated with future years will be included in the budget submittals for those years.  Payments will be made from the Operating Fund.

 

RECOMMENDATION

 

The Senior Vice President – Strategic Planning, the Director – Clean Energy Technology, and the Manager – Research and Development recommend that the Trustees authorize the President and Chief Executive Officer to enter into a five-year extension of the Authority’s existing membership in the Electric Power Research Institute effective January 1, 2015 for an estimated total increase of $13.43 million.

 

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

 

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

                               

RESOLVED, That the Trustees authorize the President and Chief Executive Officer, or such officer designated by the President and Chief Executive Officer, to execute a five-year extension of the Authority’s existing membership agreement in the Electric Power Research Institute (“EPRI”) effective January 1, 2015, in the amounts and for the purpose listed below:

 

                                                                                                                                Expenditure

                                                Operating Fund                                                     Approval  

 

                                                Electric Power Research Institute                 $ 2.63 million – 2015

                                                                                                                                $ 2.67 million – 2016

                                                                                                                                $ 2.69 million – 2017

                                                                                                                                $ 2.71 million – 2018

                                                                                                                                $ 2.73 million – 2019

                                                                                                    TOTAL             $13.43 million

 

 

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.

 

 


 

p.       Selection of Investment Manager for the Authority’s

                        Other Post-Employment Benefits Trust Fund             

 

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

The Trustees are requested to approve the award of a multiyear investment management service contract to replace an expiring agreement for professional investment management services in connection with the Authority’s Other Post-Employment Benefits Trust Fund to New Amsterdam Partners, LLC.

 

BACKGROUND

 

Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.  Moreover, the Authority’s Expenditure Authorization Procedures require the Trustees’ approval for the award of personal services contracts in excess of $1 million if low bidder, or $500,000 if sole-source or non-low bidder. The terms of the contracts considered herein are for more than one year and therefore, the Trustees’ approval is required.

 

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

 

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

               

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

 

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

 

                As of December 31, 2013, the market value of assets held in the OPEB Trust Fund totaled $422 million, of which $289 million were invested in equities, $112 million were invested in fixed income securities, and $21 million were invested in real estate investment trust securities.  When compared to the actuarial accrued liability of $573 million (as of December 31, 2013), this represents a funding level of 74%.

DISCUSSION

 

On November 6, 2013, the Authority solicited proposals for professional domestic equity small-capitalization investment management services by notice to a number of firms providing such services and advertisement in the New York State Contract Reporter in order to determine qualified domestic equity small-capitalization portfolio managers for the OPEB Trust Fund. On or before December 12, 2013, the Authority received a total of 72 proposals.

 

Authority staff, with the support of PFM, evaluated each proposal taking into consideration quantitative and qualitative factors.  From a quantitative standpoint, staff evaluated historical performance, various risk metrics and the schedule of fees. From a qualitative standpoint, firms were evaluated based on team duration and experience, investment style and research capabilities.  In evaluating the proposals, 54 different factors are considered to provide a comprehensive overview of a firm’s organizational background, team depth and stability, investment process, fees, and past performances, with weightings of 15%, 20%, 30%, 15% and 20% respectively.  Combined, a firm’s team depth and stability, investment process consistency, and past performance make up 70% of the total scoring weight, as replication of past performance is largely contingent on a stable, experienced team implementing a consistent investment process over time.  After conducting extensive reviews and analysis of each proposal, a total weighted score combining the quantitative and qualitative factors assessed by PFM was calculated, and examined by the Authority staff for conducting their own independent analysis.   The Authority, with the recommendation of PFM, invited five firms on site to give oral presentations.  Based on the above factors and oral presentations, New Amsterdam Partners, LLC, a New York State Woman Owned Business, was identified to be best qualified to manage the domestic equity small-capitalization portion of the OPEB assets for up to $25 million.  The rational for this selection was based on the firm’s concentrated portfolio construction approach supported by a thoughtful combination of quantitative and fundamental models, consistency in its investment philosophy, stability of its core investment team, and a very strong past performance.    

     

The recommended firm will be awarded five-year contract, subject, however, to early termination at any time by the Authority on 60 days’ notice. 

 

FISCAL INFORMATION

 

The fees for the recommended investment manager, which will be paid from OPEB Trust assets, are expected to average approximately 43 basis points per annum  (a basis point is equal to 1/100th of 1%, or 0.01%).  The fees should equal about $107,500 for the first year, growing in conjunction with the Fund’s growth.  Over the course of the recommended five-year term of the investment manage contracts, fees are estimated to total about $600,000 assuming a normal growth rate in the Fund’s Assets. 

 

RECOMMENDATION

 

The Deputy Treasurer recommends the Trustees’ approval of the award of multiyear service contracts to New Amsterdam Partners, LLC. 

 

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

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

 

                RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award of the multiyear investment management service contract to New Amsterdam Partners, LLC for professional investment management services in connection with the Authority’s Other Post-Employment Benefits Trust Fund, as recommended in the foregoing  report of the President and Chief Executive Officer, is hereby approved and the execution of such contracts by the Executive Vice President and Chief Financial Officer or the Treasurer, subject to the approval of the form thereof by the Executive Vice President and General Counsel, on behalf of the Authority is approved; and be it further

 

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

 

 

 


 

q.       Annual Review and Approval of Certain Authority Policies        

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

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

 

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

 

BACKGROUND AND DISCUSSION

 

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

(ii) compensation; (iii) benefits and (iv) time and attendance of the chief executive and senior management.

 

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

 

A.      Recruitment and Job Posting (EP 1.2); last revised 7/12/13;

B.      Transfer or Re-Employment in Public Service (EP 1.9), last revised 3/1/14

C.      Salary Administration Policy (EP 2.1); last revised 3/1/14;

D.      Salaried Non-Exempt and Facility-Based Exempt Overtime (EP 2.4), last revised 3/1/14;

E.       Employee Benefits Eligibility (EP 3.1), last revised 3/29/12;

F.       Vacation (EP 3.2), last revised 3/29/12;

G.      FMLA (EP 3.3), last revised 1/10/14;

H.      Leaves of Absence (EP 3.4), last revised 7/29/13

I.        Educational Assistance Program (EP 3.6), last revised 12/18/12

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

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

L.       Attendance & Flexible Hours (EP 4.6), last revised 7/29/13;

M.     Reimbursement of Employee Meal Costs (CP 1.5), last revised 3/31/12;

N.      Travel (CP2-1); last revised 3/21/13

 

RECOMMENDATION

 

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

 

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

 


 

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

 

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

 

A.Recruitment and Job Posting (EP 1.2), last revised 7/12/13;

B.Transfer or Re-Employment in Public Service (EP 1.9),

                    last revised 3/1/14;

C.Salary Administration Policy (EP 2.1), last revised 3/1/14;

D.Salaried Non-Exempt and Facility-Based Exempt Overtime

                    (EP 2.4), last revised 3/1/14;

E.Employee Benefits Eligibility (EP 3.1), last revised 3/29/12;

F.       Vacation (EP 3.2), last revised 3/29/12;

G.      FMLA (EP 3.3), last revised 1/10/14;

H.      Leaves of Absence (EP 3.4), last revised 7/29/13;

I.        Educational Assistance Program (EP 3.6), last revised 12/18/12;

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

                                                    last revised 1/1/10;

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

L.Attendance & Flexible Hours (EP 4.6), last revised 7/29/13;

M.     Reimbursement of Employee Meal Costs (CP 1.5),

                    last revised 3/31/12;

N.Travel (CP2-1); last revised 3/21/13.

 

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

 

RESOLVED, That the Chairman, the Vice 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.

 


 

r.        Release of Funds in Support of the Western

                        New York Power Proceeds Allocation Act   

 

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

The Trustees are requested to approve the release of funds into the Western New York Economic Development Fund (‘WNYEDF’) representing the net earnings from unallocated Expansion Power and Replacement Power sold into the wholesale energy market for the period through December 31, 2014 as set forth in Chapter 58 of the Laws of 2012.     

 

BACKGROUND

 

On March 30, 2012, Governor Cuomo signed into law the Western New York Power Proceeds Allocation Act (the ‘Act’) which authorizes the Authority, as deemed feasible and advisable by the Trustees, to deposit into the WNYEDF net earnings from the sale of unallocated Expansion Power and Replacement Power from the Authority’s Niagara power project.  The Act repealed Chapter 436 of the Laws of 2010, which had amended the Public Authorities Law and the Economic Development Law, to create a somewhat similar program authorizing unallocated Expansion Power and Replacement Power to be utilized for WNYEDF benefits.

 

The effective date for calculating the net earnings is August 30, 2010, the original effective date of Chapter 436 of the Laws of 2010.  Net earnings are defined as ‘the aggregate excess of revenues received by the power authority of the state of New York from the sale of expansion and replacement power and energy produced at the Niagara 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 expansion power or replacement power customer under the applicable tariff or contract.’ 

 

The net earnings deposited into the WNYEDF will be utilized to fund economic development projects (‘eligible projects’) by private businesses, including not-for-profits, which are physically located within New York State and within a thirty-mile radius of the Niagara power project.  Eligible projects are to support the growth of business in the state and thereby lead to increased tax revenues and job creation or retention.  Eligible projects may include capital investment in buildings, equipment and associated infrastructure; research and development that benefits New York State; support for tourism and marketing and advertising for Western New York State tourism and business; and energy related projects as authorized under §1005(17) of Public Authorities Law.

 

The Act also established the Western New York Power Proceeds Allocation Board (‘Allocation Board’) which consists of five members appointed by the Governor.  The Allocation Board’s responsibilities include establishing written procedures for reviewing applications and making recommendations to the Authority for the allocation of fund benefits to eligible projects.  In reviewing applications for benefits, the Allocation Board shall employ the same criteria used for determining eligibility for Expansion, Replacement and Preservation Power allocations as provided in §1005 of Public Authorities Law including, but not limited to, the number of jobs and type of jobs created as measured by wage and benefit levels; business’ long-term commitment to the region; amount of capital investment; and impact on competitiveness in the region.  Upon recommendation of the Allocation Board, the Authority shall award fund benefits to an applicant, provided however, that upon a showing of good cause, the Authority shall have the discretion as to whether to adopt the Allocation Board’s recommendation, or to award benefits in a different amount or on different terms and conditions.

 

DISCUSSION

 

The Authority is requested, from time to time, to provide financial support to the State or for various other State programs.  Any such transfer of funds must (1) be authorized by the Legislature; (2) be approved by the Trustees ‘as feasible and advisable,’ (3) satisfy the requirements of the Authority’s General Resolution Authorizing Revenue Obligations dated February 24, 1998, as amended and supplemented (‘Bond Resolution’) and (4) as set forth in the Trustees’ Policy Statement dated May 24, 2011, a debt service coverage ratio of 2.0 shall be used as a reference point in considering any such payments or transfers.

 

The Bond Resolution’s requirements to withdraw monies ‘free and clear of the lien and pledge created by the Bond Resolution’ are such that withdrawals (a) must be for a ‘lawful corporate purpose as determined by the Authority,’ and (b) the Authority must determine, taking into account, among other considerations, anticipated future receipt of revenues or other moneys constituting part of the Trust Estate, that the funds to be so withdrawn are not needed for (i) payment of reasonable and necessary operating expenses, (ii) an Operating Fund reserve for

working capital, emergency repairs or replacements, major renewals or for retirement from service, decommissioning or disposal of facilities, (iii) payment of, or accumulation of a reserve for payment of, interest and principal on senior debt or (iv) payment of interest and principal on subordinate debt.

 

The Trustees have already authorized the release of up to $35 million in net earnings from the Operating Fund to the WNYEDF representing the then-estimated net earnings from inception through December 31, 2013.  Actual net earnings deposited into the WNYEDF through this period totaled $27.586 million.

 

Staff is seeking authorization to deposit into the WNYEDF all additional net earnings through December 31, 2014 up to a total of $15 million.  While it is estimated that approximately $10 million in net earnings will be generated based upon current levels of unused Expansion Power and Replacement Power and presently projected wholesale energy prices, the recommendation for up to $15 million reflects the potential volatility in market prices.  If authorized by the Trustees, such net earnings would be deposited into the WNYEDF on at least a quarterly basis. 

 

Staff has reviewed the effects of the transfer of up to $15 million into the WNYEDF on the Authority’s projected financial position and reserve requirements. In addition, in accordance with the Board’s Policy Statement, staff calculated the impact of this transfer on the Authority’s debt service coverage ratio and determined it would not fall below the 2.0 reference point level. Given the current financial condition of the Authority, its estimated future revenues, operating expenses, debt service and reserve requirements, staff is of the view that it will be feasible for the Authority to make the deposit of up to $15 million at this time.

 

FISCAL INFORMATION

 

Since the passage of the initial legislation related to the WNYEDF (Chapter 436 of the Laws of 2010), the Authority has been accruing for this liability on a monthly basis.  Provisions for the Authority’s fiscal year 2014 deposits for this program were also included in the 2014 Operating Forecast approved by the Trustees in December 2013.

 

Staff has determined that sufficient funds are available to provide up to an additional $15 million in support for WNYEDF benefits for the period ending December 31, 2014 and that such Authority funds are not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s Bond Resolution.  Net earnings to be deposited into the WNYEDF for periods beyond December 31, 2014 will be requested of the Trustees at a later date. 

 

RECOMMENDATION

 

The Treasurer recommends that the Trustees affirm the deposit of up to $15 million into the Western New York Economic Development Fund is feasible and advisable and to authorize such deposit through December 31, 2014.

 

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

 

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

 

RESOLVED, That the Trustees hereby authorize the release of up to $15 million from the Operating Fund to the Western New York Economic Development Fund as authorized by Chapter 58 of the Laws of 2012 and as discussed in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the amount of up to $15 million to be used for the Western New York Economic Development Fund benefits described in the foregoing resolution is not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

 

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

 

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

 

 

 

 


 

s.        Procurement (Services) Contract –

Richard M. Flynn Plant – Well Water Pump

                        Replacement – Contract Extension                  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve a six-month contract extension, at no additional funding, for Purchase Order #4500226563 with Layne Christensen Co. of Holbrook, New York, for the Richard M. Flynn CCPP (‘Flynn’) Well Water Pump Replacement Project.

 

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 Flynn plant has two well water pumps that are 15 years old which the plant’s availability depends.  These pumps are reaching their end-of-life and require replacement.  A contract was awarded to Layne Christensen, through competitive bidding, effective January 8, 2013, for a term of up to one year and for the initially authorized amount of $142,400.  Subsequently, the contract was increased by an additional $34,152 for a current total contract amount of $176,552.

 

DISCUSSION

 

The original delivery schedule for the replacement pumps was March 2013, with installation scheduled for completion by the end of May.  Due to a manufacturing delay, the pumps were not delivered until May 2013 and the Site Operations staff requested that the work be postponed until after the summer peak demand period.  The contractor remobilized in November 2013, at no additional cost to the Authority, and completed the work in January 2014. The work entailed replacement of the two pumps, their respective wiring, associated drain pipes, and coating of the motor control panels.

 

Upon final project acceptance and turnover, staff from Engineering and the Site agreed that it was prudent to replace the existing insulation which is over 15 years old and provides a vital protection against the northeast weather.  This was not part of the original project scope-of-work; however, in order to not affect the new installation warranty, the contractor will need to perform the additional work at this time.  The cost for this additional work is $6,000; the existing contract has approximately $20,000 remaining. No additional funding is requested to perform this additional work; however, a contract date extension is required and the work is expected to be completed by July 1, 2014.

 

FISCAL INFORMATION

 

Payments associated with this Project will be made from the Authority’s Operating Fund.

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Vice President – Engineering, the Acting Vice President – Project Management, the Acting Vice President – Procurement and the Regional Manager – SENY recommend that the Trustees approve a six-month contract extension, at no change in contract value, to Layne Christensen Co. of Holbrook, NY for the Flynn Well Water Pump Replacement Project.

 

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

 

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

 

RESOLVED, that pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a six-month contract extension, at no change in contract value, to Layne Christensen Co. of Holbrook, New York for the Richard M. Flynn Plant’s Well Water Pump Replacement Project as recommended in the foregoing report of the President and Chief Executive Officer and indicated below:

 

        Contractor                                           Contract Approval

                               

                                Layne Christensen Co.                      Six-Month Contract Extension

                                                Holbrook, NY                                      July 1, 2014

                                                PO# 4500226563

 

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.

 

 

 


 

t.         Committee Appointments

 

The Chairman submitted the following report:

 

SUMMARY

 

In accordance with Article V the By-Laws of the Power Authority of the State of New York, as amended March 27, 2012 (‘By-Laws’), the Trustees are requested to approve the following committee appointments effective immediately.

 

BACKGROUND

The following changes in committee composition are recommended in order to achieve an even distribution of assignments for each Trustee. (Changes indicated in bold.)  

Audit Committee

Eugene L. Nicandri (Chair), Terrance P. Flynn, Jonathan F. Foster

 

Finance Committee

Jonathan F. Foster (Chair), John R. Koelmel, Terrance P. Flynn

 

Governance Committee

R. Wayne LeChase (Chair), Eugene L. Nicandri, Joanne M. Mahoney, John R. Koelmel

 

Strategic Planning and Energy Policy Committee

Joanne M. Mahoney (Chair), R. Wayne LeChase, John R. Koelmel

RECOMMENDATION

 

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

                                                                                                               

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

 

RESOLVED, That the members of the Audit Committee shall be: Eugene L. Nicandri (Chair), Terrance P. Flynn, Jonathan F. Foster, effective immediately; and be it further

 

RESOLVED, That the members of the Finance Committee shall be: Jonathan F. Foster (Chair), John R. Koelmel, Terrance P. Flynn, effective immediately; and be it further

 

RESOLVED, That the members of the Governance Committee shall be: R. Wayne LeChase (Chair), Eugene L. Nicandri, Joanne M. Mahoney, John R. Koelmel, effective immediately; and be it further

 

RESOLVED, That the members of the Strategic Planning and Energy Policy Committee shall be: Joanne M. Mahoney (Chair), R. Wayne LeChase, John R. Koelmel, effective immediately.

 

 

u.       Awards of Fund Benefits from the Western New York

Economic Development Fund Recommended by the

Western New York Power Proceeds Allocation Board

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

               

The Trustees are requested to accept the recommendations of the Western New York Power Proceeds Allocation Board (‘WNYPPAB’) and approve the awards of Fund Benefits from the Western New York Economic Development Fund to Eden Valley Growers and Living Green Insulation Products and Services, LLC, the eligible applicants listed in Exhibit ‘2u-A,’ and authorize the other actions described herein with respect to such applicant and award.

 

For informational purposes, Exhibit ‘2u-B’ lists: (1) projects the WNYPPAB has determined are not being recommended for an award of Fund Benefits; (2) applications that have been withdrawn; and (3) applications that were deferred for future consideration.

               

BACKGROUND

 

1.       Western New York Power Proceeds Allocation Act

 

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

 

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

 

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

 

Fund Benefits 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.       Western New York Power Proceeds Allocation Board

 

Under the Act, the WNYPPAB is charged with soliciting applications for Fund Benefits, reviewing applications, making eligibility determinations, and evaluating the merits of applications for Fund Benefits.  WNYPPAB uses the criteria applicable to EP, RP and PP, and for revitalization of industry as provided in Public Authorities Law §1005.  Additionally, WNYPPAB is authorized to consider the extent to which an award of Fund Benefits is consistent with the strategies and priorities of the Regional Economic Development Council having responsibility for the region in which an eligible project is proposed.  A copy of these criteria (collectively, ‘Program Criteria’), adapted from WNYPPAB’s ‘Procedures for the Review of Applications for Fund Benefits,’ is attached as Exhibit ‘2u-C.’

 

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

 

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

 

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.

 

3.       Application Process

 

                In an effort to provide for the efficient review of applications and disbursement of Fund Benefits, the WNYPPAB established a schedule of dates through the end of 2014 on which the WNYPPAB would meet to consider applications.  At this time, applications are being accepted on a rolling basis.  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. 

               

DISCUSSION

 

For this fifth round of WNYPPAB action, the WNYPPAB considered 18 applications seeking over $12 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 staff to the WNYPPAB regarding recommended awards of Fund Benefits can be found in ‘Exhibit ‘2u-D.’ 

 


 

At its February 3, 2014 meeting, the WNYPPAB took the following actions on applications for Fund Benefits:

 

1.        Recommendations for Awards of Fund Benefits

 

The WNYPPAB is recommending to the Trustees that the applications listed on Exhibit ‘2u-A’ receive an award of Fund Benefits in the amounts indicated.  The applicants have indicated that the proposed projects would directly create or retain approximately 58 jobs in Western New York.  The total to be expended on the proposed projects is expected to exceed $1.2 million. These two recommendations are presently before the Trustees for consideration.

 

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

 

2.       Other WNYPPAB Determinations

 

The following information is being provided to the Trustees for their information only.  No action by the Trustees is required with respect to these matters. 

 

Exhibit ‘2u-B’ lists: (1) projects the WNYPPAB has determined are not being recommended for an award of Fund Benefits; (2) applications that have been withdrawn; and (3) applications that were deferred for future consideration.

 

Recommendation

 

The Vice President, Marketing recommends that:

 

(1)     the Trustees accept the recommendations of the WNYPPAB and make awards of Fund Benefits to the applicants and in the amounts identified in Exhibit ‘2u-A,’ conditioned upon an agreement to be negotiated with each applicant on the final terms and conditions that would be applicable to each award to be contained in an Award Contract approved by the President and Chief Executive Officer and approved by the Executive Vice President and General Counsel as to form;

 

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

 

(3)     the Senior Vice President – Economic Development and Energy Efficiency, or his designee, be authorized to execute on behalf of the Authority Award Contracts for the award listed on Exhibit

‘2u-A’ subject to the forgoing conditions.

 

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

 

               


 

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

 

                WHEREAS, the Western New York Power Proceeds Allocation Board (“WNYPPAB”) has recommended that the Authority make awards of Fund Benefits from the Western New York Economic Development Fund (“Fund”) to the eligible applicants listed in Exhibit “2u-A”;

 

                NOW THEREFORE BE IT RESOLVED, That the Authority hereby accepts the recommendation of the WNYPPAB and authorizes the awards of Fund Benefits to the applicants and in the amounts listed in Exhibit “2u-A,” 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 approved by the President and Chief Executive Officer and approved by the Executive Vice President and General Counsel as to form; and be it further

 

                RESOLVED, That the Senior Vice President – Economic Development and Energy Efficiency, or his designee, in consultation with the Empire State Development Corporation, is authorized to negotiate with successful applicants concerning such final terms and conditions 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 the awards listed on Exhibit “2u-A” subject to the forgoing 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.

 

 

               


 

DISCUSSION AGENDA:

 

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

 

President Quiniones said at the meeting today the Trustees would be asked to review and affirm the Authority’s audited financial statements, corporate policies and procedures. He said the executive management would be unveiling the Authority’s Strategic Plan which was initiated last summer with Authority staff and extensive outreach to various external stakeholders. 

Performance Scorecard

President Quiniones said, based on the Performance Scorecard, 2013 was a banner year for the Authority.  He said in the history of the Authority’s rating its performance by using scorecards, last year was the first time it met and exceeded all of its Key Performance Indicators.  He continued that, to date, because of some challenges in January there was decline in Safety.  However, there were no incidents reported in the month of February. He ended by saying that Mr. Philip Toia, Vice President of Transmission will further report on this in his report to the Board.

Responding to a question from Chairman Koelmel, President Quiniones said there were some icing issues during the first month of the year, which were reportable and staff responded well to those issues.  He said there were no reportable incidents in February and management plans to closely monitor the safety performance measure.  President Quiniones said, in terms of all the other metrics listed in the Performance Scorecard, there were no "red flags" to date.

Responding to further questioning from Chairman Koelmel, President Quiniones said, based on the scorecard, from a trend perspective, he expects the Authority will remain in the “green,” and this is the goal of the Authority.

Responding to a question from Trustee Foster, President Quiniones said that the targets for 2013 and 2014 are the same.  He said the metrics established by the Authority are benchmarked with industry standard and reviewed every year to make sure that they are calibrated with the “best in class” in the utility sector. 

Responding to a question from Chairman Koelmel, President Quiniones said he is confident that the Authority is well-positioned and have a very good foundation in terms of leadership, operations and finances, to implement the Strategic Plan.  He added that there will be changes to the Authority’s scorecard as new initiatives are implemented, and as the Authority enters new lines of businesses, products or services based on the new Strategic Plan. He said the Performance metrics will reflect any additional scope-of-work. Staff will be coming before the Board with very specific business plans for the new initiatives that the Authority plans to undertake as a result of the Strategic Plan.  He said Mr. Robert Lurie will outline the process when he presents the Strategic Plan and the strategic vision of the Authority to the Board.

Responding to further questioning from Chairman Koelmel, President Quiniones said staff of the Authority, who have been part of the strategic planning process since last year, are ready to implement the initiatives and, as President and CEO of the Authority, he is very excited about what lies ahead as a result of the new Strategic Plan.

 


 

b.     Report of the Chief Operating Officer

 

                Mr. Philip Toia, Vice President of Transmission, provided highlights of the Chief Operating Officer’s report to the Trustees. 

Performance Summary

Mr. Toia said to date, the operations of the Authority continues to be very strong.   The Authority has exceeded the generation readiness and transmission reliability metrics, both for the month of February and year- to-date.  Although the metrics indicate environmental incidents below target, the year-to- date DART rate, the measure of the Authority’s safety performance, is above target (0.82 vs. a target of 0.278).   There were two safety incidents in January because of slips and injuries and none in February, continuing the downward trends of previous years.

Y-49 Transmission Line

Mr. Toia said as previously reported, the Y-49 transmission cable failed on January 6th.  This failure was due to an anchor drag on the cable.  The cable was replaced with a spare cable and put back in service, so there were no system impacts due to this event.  The cable damage was located by divers; it was then repaired and pressure tested to make sure there were no further damages or additional dielectric fluid leaking from the cable.   This was completed on February 27.  The next phase related to this event is developing a budget plan and repairing and testing the damaged section of the cable and put that back in service.

In response to a question from Chairman Koelmel, Mr. Toia said the cable locations are identified on Coast Guard maps; therefore ships should not drop anchor in that area.  Because of a previous failure approximately 12 years ago, the Authority ordered a spare cable for instances such as this. Staff will however work with the Coast Guard as to any additional measures that can be taken to avoid events such as this.  Mr. Welz added that the cable in question is buried 15 feet below the seabed, and as a precaution this information is marked on the Coast Guard maps; therefore an anchor should not have been dropped at that location. President Quiniones added that the Authority is also taking legal action regarding this incident.

Responding to a question from Trustee LeChase, Ms. McCarthy said that since issues related to recovery deal with legal strategies, a response will be provided in the private session.


 

Niagara Project – Unit 5 Transformer

Mr. Toia said that on March 19 at approximately 7:10 p.m. the Unit 5 transformer at the Niagara Project had a bushing failure resulting in a fire.  Staff is working to determine the extent of the damage before proceeding with the necessary repairs to return the Unit to service.  Staff is also conducting a TapRoot investigation to determine the root cause of the failure before proceeding with any repairs.

In response to a question from Chairman Koelmel, Mr. Welz said the transformer will be removed from Unit 3, which is currently undergoing maintenance, and placed in the Unit 5 slot making it operational.  Therefore, this incident will not impact the Authority’s ability to generate electricity; the Authority remains in a good position operationally.

                Responding to a question from Trustee Nicandri, Mr. Welz said although the bushings were the original bushings that came with the transformers, there was a concern on their viability after an incident 15 months ago.  The Authority subsequently purchased ten bushings and is in the process of replacing them based on test data.  Also, based on the result of the TapRoot investigation, the Authority may decide to purchase another transformer.

                Responding to further questioning from Chairman Koelmel, Mr. Welz said the Authority believes the failures on the bushings is due to the manufacturers; therefore the Authority is replacing the bushings with a different type of bushing.

                Responding to a question from Trustee Nicandri, Mr. Welz said although the fire at the STL switchyard was on 50- year old bushing on an oil circuit breaker, this is different from the failure that is on the transformer at the Niagara Project.  The failure at Niagara is premature since the transformer is only 10 years old, hence the concern by Authority staff.

Responding to still further questioning from Chairman Koelmel, Mr. Welz said the TapRoot investigation will take approximately 30 days and staff will provide preliminary results of the investigation to the Trustees at the next meeting.

 


 

c.     Report of the Chief Financial Officer

 

                Mr. Donald Russak provided highlights of the financial report to the Trustees.  He said that the Authority performed very well financially, to date.   He said in January 2014 market prices topped $100/MWH; market prices were also very high in the months of February and March.

Net Income

n  Net income through February 2014, prior to the recognition of the voluntary contribution to New York State, was a positive $96.4 million, which was $48.0 million higher than the budget.

n  With the inclusion of the budgeted $50 million voluntary contribution, the Authority had net income of $46.4 million year-to-date compared to a budgeted net loss of $1.6 million.

n  The severe weather in January and February, and its resulting impact on market prices, were significant drivers of the year-to-date results.   With energy prices more than double those of a year ago, NYPA saw higher net margins on sales ($31.9 million).  Higher investment income ($6.9 million) and insurance reimbursements ($6.3 million) not reflected in the budget also contributed to the variance.  In sum:

n  Margins on market-based sales were higher than budgeted due to the spike in energy prices. Positive variances were significant at St. Lawrence, Blenheim-Gilboa and Flynn.

n  Investment income included a mark-to-market gain on the Authority’s investment portfolio ($5.6 million) due to lower market interest rates.

n  Reimbursements related to Hurricane Irene and a prior year transformer failure were received during January and February.

 

In response to a question from Trustee Foster, Mr. Russak said the average market price for March was approximately $90/MWH and added that these prices was as a result of the severe weather conditions over the past three months.  The end result is that the Authority is operating well above budget, to date.

Responding to a question from Chairman Koelmel, Mr. Russak said the predictions are that as soon as the weather gets warmer, the Authority expects its operations to be in line with its budget.  With respect to hydro flows, the Authority is on target as far as its hydro generation forecast for the rest of the year and therefore on budget target.

Responding to a question from Chairman Koelmel, Mr. Russak said even though the bulk of the Authority’s power is sold at contractual rates the Authority also purchases energy for some of its customer groups.  With respect to the Recharge New York, full requirements municipal and New York City customers, the Authority assists them with either spreading out the cost recovery or by recommending hedging positions that can be taken in the marketplace.

Responding to still further questioning from Chairman Koelmel, Mr. Russak said contributions available for Western New York proceeds fund for the months of January and February was $6 million, well above the amount budgeted.

Responding to another question from Chairman Koelmel, Mr. Russak said looking ahead, he expects the Authority to end its operations above budget for the end of the year.  The trajectory is positive and he did not foresee any major red flags.  He continued that as reported to the Trustees at the last meeting, the Authority’s capital plan indicates a 40% increase over prior year spending levels.  The Authority will have the resources available for its transmission Life Extension and Modernization (“LEM”) project, the Lewiston pumped generation LEM as well as the BuildSmart New York program.

 

 


 

d.     Report of the Chief Risk Officer

 

                Mr. William Nadeau, Chief Risk Officer, provided highlights of the Report to the Trustees.

Risk Pilot Project

Mr. Nadeau said, as previously reported to the Audit Committee and the Trustees, the Enterprise Risk group has now completed the pilot project to establish the framework for formal risk response plans and key risk indicators associated with the top risks of the Authority. The pilot risks utilized for this endeavor were:  Increasingly Difficult to Attract and Retain Workforce – SENY Region; and Significant Increases in Non-Recurring O&M Expenditures.  Staff worked with Deloitte & Touché regarding the framework for the pilot risk project and has reviewed it with the Executive Risk Management Committee as well as the Authority’s Executive Management Committee.  Staff has developed a risk dashboard outlining precise information with respect to the risks such as Authority exposures, response and mitigation plans and specific actions that will be undertaken by staff. The dashboard will also provide the Trustees with summary information associated with the responsibilities for actions and the status of these commitments.  The risk dashboard will be presented to Trustees at subsequent meetings.

 


 

4.                   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 ‘4a-A;’

 

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

 

3.       Approve the transfer and/or redistribution of RNY Power identified in Exhibit ‘4a-E.’

 

These actions have been recommended and/or approved by the Economic Development Power Allocation Board (‘EDPAB’) at its March 24, 2014 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 seven prior occasions spanning from April 2012 through December 2013.  There is currently 53.4 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 6.1 MW is available to allocate to such entities.  Lastly, there is 122.4 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 March 24, 2014 meeting that RNY Power retention allocations be awarded to the businesses listed in Exhibit ‘4a-A.’  Each business has committed to create or retain jobs in New York State and to make capital investments in exchange for the recommended RNY Power allocations.

 

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

 

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

 

  1. Expansion-Based RNY Power Allocations – Action Item

 

The Trustees are also 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 March 24, 2014 meeting that RNY Power expansion-based allocations be made to the businesses listed in Exhibit ‘4a-B.’  Each such allocation would be for a term of seven years.

 

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

 

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

 

  1. Ineligibility Determination – Informational Item

               

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

 

  1. Applications Not Recommended or Not Considered – Informational Item

 

As indicated on Exhibit ‘4a-D’, EDPAB decided not to recommend one applicant for a retention-based RNY Power allocation, and further decided not to consider three applications for RNY Power allocations.  The first application was not recommended because the potential recommended amount did not meet the 10 kW minimum allocation requirement established by the Authority for RNY Power allocations.  The other three applications were not considered for one or more of the following reasons: (i) the application was withdrawn; and/or (ii) the applicant does not have a demand meter.  No action by the Trustees is required on these applications.

 

  1. Transfer of RNY Power  – Action Item

 

                At its March 24, 2014 meeting, EDPAB approved and recommended that the Trustees approve the transfer and redistribution of three allocations to the customer identified on Exhibit ‘4a-E,’ which would also involve a redistribution of employment and capital investment commitments between the facilities.  The customer’s total facility job and capital investment commitments would not change.  The Trustees have previously authorized transfers of RNY Power and other Authority power products like Economic Development Power in similar circumstances.

 

Recommendation

 

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

 

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

 

                        Mr. Timothy Muldoon provided highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Foster, Mr. Muldoon said the Authority has a scoring system in place for allocations under the Recharge New York program and the metrics for the allocations being recommended are consistent with that methodology.

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

 

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

 

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

               

                WHEREAS, EDPAB has approved and recommended that the Authority authorize the transfer and/or redistribution of the RNY Power allocations identified in Exhibit “4a-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 “4a-A” in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

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

 

                RESOLVED, That the 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.       Allocation of Hydropower and Notice of Public Hearing

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                The Trustees are requested to approve a 200 kilowatt (‘kW’) allocation of available Replacement Power (‘RP’) to Trinity Packaging Corporation in Cheektowaga (Erie County), as further described herein and in Exhibits ‘4b-A’ and ‘4b-A-1.’  This allocation will support capital expansion of $6.5 million and the creation of 21 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, the current form of which is attached as Exhibit ‘4b-B.’

               

BACKGROUND

 

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

 

Each application for an allocation of EP and RP must be evaluated under criteria that include but need not be limited to, those set forth in PAL §1005(13)(a), which details general eligibility requirements.  Among the factors to be considered when evaluating a request for an allocation of hydropower are the number of jobs created as a result of the allocation; the business’ long-term commitment to the region as evidenced by the current and/or planned capital investment in the business’ facilities in the region; the ratio of the number of jobs to be created to the amount of power requested; the types of jobs 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 (‘ESD’), the Buffalo Niagara Enterprise and Niagara County Center for Economic Development and Erie County Industrial Development Agency (‘IDA’) 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 recommended allocation.

 

DISCUSSION

 

                At this time, 8,615 kW of unallocated EP and 32,663 kW of unallocated RP are available to be awarded to businesses under the criteria set forth in PAL §1005(13)(a). 

               

Trinity Packaging Corporation

 

Trinity Packaging Corporation (‘Trinity’), located in Cheektowaga, submitted an application for hydropower requesting 250 kW in connection with a proposed expansion project to reconfigure its facility and add additional production and manufacturing equipment and machinery with the goal of increasing flexible packaging production by 25 percent. 

 

Headquartered in Armonk, New York, Trinity is an industry leader in heavy duty industrial films, all types of bags (including low density supermarket carry-out bags), roll stock, poly-liners and premium plastic wrap. Trinity manufactures its products for a broad base of national customers within a variety of industries.  In December 2012, Trinity acquired Cello-Pack, a company with Western New York operations since 1948, the last 25 years at its 77,500-square-foot Cheektowaga plant.

 

As recently as July 2013, the corporation divested of two of its other three U.S. facilities, all located outside of New York.  This leaves the Cheektowaga plant in direct competition with its sister facility located in Rocky Mount, Virginia, for this project.

 

Described as Phase 1, Trinity’s expansion project includes plans to relocate inventories to leased and vendor-provided storage facilities (creating more manufacturing space), thus allowing for a reconfiguration of the plant layout and the addition of printing, printing support equipment and converting equipment.  The total investment would be $6.5 million.  Project completion would be finished by December 2014, with partial operations beginning in the summer of this year.

 

Trinity currently employs 129 full-time workers working three shifts, five to six days per week. The proposed expansion would result in twenty-one (21) new jobs.

 

The job creation ratio for the proposed allocation of 200 kW is 105 new jobs per MW.  This ratio is above the historic average of 22.6 new jobs per MW based on allocations made over the past four years.  The total project investment of $6.5 million would result in a capital investment ratio of $32.5 million per MW.  This ratio is above the four-year historic average of $21.3 million per MW.

 

ESD has offered an incentive package of up to $566,240 under the Excelsior Jobs Program in support of Trinity’s plan.  In addition, the Erie County IDA has offered $73,500 in sales tax savings and the New York State Electric & Gas (‘NYSEG’) has offered up to $400,000 in electric infrastructure assistance.

 

The hydropower allocation along with these multi-agency incentives may put Trinity’s Cheektowaga facility in a position to secure this expansion project for its WNY operations rather than at its Virginia plant.  The company has further described a potential ‘Phase 2,’ whereby a suitable larger facility would be located to accommodate Trinity’s future growth plans.  The recommended hydropower allocation will help secure the addition of 21 jobs, solidify the current employment of 129 people, and position Trinity’s Cheektowaga facility for further expansion in years to come.

 

Staff recommends that an allocation of 200 kW of RP be awarded to Trinity Packaging Corporation in order to help secure an investment of $6.5 million and creation of 21 new jobs at its facility in Erie County, as detailed in Exhibits ‘4b-A’ and ‘4b-A-1.’ 

 

Contract Information

 

                The Authority is in the process of discussing a proposed hydropower sales contract with Trinity and anticipates receiving customer approval of a contract substantially similar to the form attached as Exhibit ‘4b-B.’  Accordingly, the Trustees are requested to authorize a public hearing pursuant to PAL §1009 on the contract form attached as Exhibit ‘4b-B.’ 

 

                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 once in each week during such period in each of six selected newspapers.  Following the public hearing, the form of contract may be modified, if advisable.  Upon approval of the final proposed contract by the Authority, the Authority must ‘report’ the proposed contract, along with its recommendations and the public hearing records, to the Governor and other elected officials.  Upon approval by the Governor, the Authority may execute the contract.

 

                The general form of the 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 Trinity’s actual jobs reported fall below the compliance threshold, the Authority has the right to reduce the allocation on a pro-rata basis.

 

                The recommended allocation would be sold to the company pursuant to the Authority’s Service Tariff No. WNY-1, which applies to all allocations of EP and RP.  Transmission and delivery service would be provided by NYSEG in accordance with its Public Service Commission-filed service tariffs.

 

RECOMMENDATION

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the allocation of 200 kW of RP to Trinity Packaging Corporation, as detailed in Exhibit ‘4b-A.’

 

The Trustees are also requested to authorize the Corporate Secretary to convene a public hearing on the form of the proposed contract finally negotiated with Trinity Packaging, the current form of which is attached as Exhibit ‘4b-B,’ and transmit copies of the proposed form of contract to the Governor and legislative leaders pursuant to PAL §1009.

 

Staff will report to the Board of Trustees on the public hearing and the proposed contract at a later time and make additional recommendations regarding the proposed contract.

 

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

 

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

 

                RESOLVED, That an allocation totaling 200 kW of Authority hydropower to Trinity Packaging Corporation as detailed in Exhibit “4b-A,” be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

                RESOLVED, That the Trustees hereby authorize a public hearing pursuant to Public Authorities Law (“PAL”) §1009 on the terms of the proposed form of direct sale contract for the sale of hydropower and energy finally negotiated with Trinity Packaging Corporation (the “Contract”), the current form of which is attached as Exhibit “4b-B,” 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 PAL §1009; and be it further

 

               


 

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

 


 

5.                   2013 Financial Reports Pursuant to

                Section 2800 of the Public Authorities Law and

                Regulations of the Office of the State Comptroller

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve the financial report for the year ended December 31, 2013 and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders, the State Comptroller and the Authorities Budget Office (‘ABO’) pursuant to Section 2800 of the Public Authorities Law, as amended by the Public Authorities Accountability Act of 2005 (‘PAAA’).  In accordance with regulations adopted by the Office of the State Comptroller (‘OSC’), the Trustees are also requested to approve and authorize posting of a report of actual versus budgeted results for the year 2013 on the Authority’s web site.

 

BACKGROUND

 

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

 

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

 

DISCUSSION

 

The Trustees are requested to approve the required financial report for the year ended December 31, 2013 (Exhibit ‘5-A’) and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders, the State Comptroller and the ABO pursuant to Section 2800 of the Public Authorities Law.  This report was reviewed by the Audit Committee at its meeting of March 25, 2014.  The Trustees are also requested to approve a report of actual versus budgeted results for the year 2012 (Exhibit ‘5-B’) and authorize posting it on the Authority’s website.

 

FISCAL INFORMATION

 

                There is no anticipated fiscal impact.

 

RECOMMENDATION

 

                The Vice President and Controller recommends that the Trustees approve and authorize submittal of the attached reports (Exhibits ‘5-A’ and ‘5-B’) as discussed herein. The Audit Committee reviewed the financial report for the year ended December 31, 2013 at their meeting earlier today and is also recommending its approval.

 

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

 

               


 

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

               

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

 

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

 

WHEREAS, on the date hereof, the Chief Executive Officer and Chief Financial Officer have so certified as to the financial information contained within the attached reports for the fiscal year ending December 31, 2013;

 

                NOW THEREFORE BE IT RESOLVED, That pursuant to Section 2800 of the Public Authorities Law, the financial reports attached hereto are adopted and the Corporate Secretary be, and hereby is, authorized to submit to the Governor, the Chairman and Ranking Minority Member of the Senate Finance Committee, the Chairman and Ranking Minority Member of the Assembly Ways and Means Committee, the State Comptroller, and the Authorities Budget Office the attached financial report for the year ending 2013 in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

                RESOLVED, That pursuant to 2 NYCRR Part 203, the attached report of actual vs. budgeted results for the year 2013 is approved in accordance with the foregoing report of the President and Chief Executive Officer; and the Corporate Secretary is authorized to post the report on the Authority’s website; and be it further

 

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

 

 

 


 

6.                   Contribution of Funds to the State Treasury 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY 

The Trustees are requested to authorize the release of $15 million in funds to the Empire State Development Corporation (‘ESD’) in furtherance of ESD’s statewide economic development initiatives, as authorized by legislation approving the 2013-14 Budget of the State of New York (Chapter 57 of the Laws of 2013).

 

BACKGROUND

 

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

 

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

               

The State’s fiscal year (‘SFY’) 2013-14 Budget legislation authorizes the Authority as deemed ‘feasible and advisable by its trustees’ to provide up to $90 million in contributions to the State’s general fund, or as otherwise directed in writing by the State’s director of the budget, whereupon such funds ‘will be utilized to support energy-related initiatives of the state or for economic development purposes.’  To date, the Trustees have approved, and the Authority has transferred, a total of $75 million of such $90 million included in the Budget legislation; $20 million was provided to the State’s general fund and $55 million was provided to ESD in furtherance of ESD’s statewide economic development initiatives.   

DISCUSSION

 

In accordance with Section 17 of Part HH of Chapter 57 of the Laws of 2013, the State’s director of the budget has formally requested that the Authority transfer on or before March 31, 2014 the sum of $15 million to the credit of ESD in furtherance of ESD’s Statewide economic development initiatives, principally the Open for Business and the Innovation Venture Capital Fund initiatives, as more fully described below.  The $15 million, together with the $75 million already approved and transferred, totals the $90 million considered in the legislation.

 

  The New York State Open for Business (‘Open for Business’) campaign was initiated to market New York State as an ideal place for businesses to invest and create jobs.  A central component of this business development campaign is to promote the advantages of doing business in the State in order to retain and grow New York businesses as well as attract other businesses to New York from across the country and around the world.  The New York State Innovation Venture Capital Fund (‘IVCF’) is a newly designed program to provide critical seed and early-stage funding to incentivize new business formation and growth in New York State and facilitate the transition from ideas and research to marketable products.  The goal is to help nascent businesses develop to a stage where they can attract private sector financing.  Both the Open for Business and IVCF are being administered by ESD.  The central tenet fits well with the Authority’s Mission to promote economic development and job creation based directly on its legislatively authorized Expansion Power, Replacement Power, Preservation Power, and Recharge New York Power Programs, among the other economic development programs in which the Authority is authorized and directed to engage. 

 

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

 

Staff has reviewed the effects of the release of $15 million in State contributions at this time on the Authority’s expected financial position and reserve requirements.  In addition, in accordance with the Board’s Policy Statement, staff calculated the impact of these transfer amounts on the Authority’s debt service coverage ratio and determined it would not fall below the 2.0 reference point level.  Given the current financial condition of the Authority, its estimated future revenues, operating expenses, debt service and reserve requirements, staff is of the view that it will be feasible for the Authority to release $15 million at this time.

 

FISCAL INFORMATION

 

Staff has determined that sufficient funds are available in the Operating Fund to transfer $15 million in contributions at this time and that such Authority funds are not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s Bond Resolution.  Such transfer pursuant to the SFY 2013-14 Budget legislation was anticipated and is within the amount reflected in the Power Authority’s 2014 Operating Budget approved by the Trustees at their December 17, 2013 meeting. 

 

RECOMMENDATION

 

The Treasurer recommends that the Trustees affirm that the transfer of $15 million to the Empire State Development Corporation is feasible and advisable and authorize such payment.

 

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

 

            Mr. Brian McElroy provided highlights of staff’s recommendation to the Trustees.  In response to a question from Chairman Koelmel, Mr. McElroy said the contribution from the 2013/14 budget is the final instalment to the state treasury for a total of $90 million.

                Responding to questions from Trustee Nicandri, Mr. Russak said in relation to the 2014/15 budget discussions with Division of Budget, the budget proposed for contribution to the state is identical to that of the 2014 budget, $90 million.  And with respect to the return of the temporary asset transfer monies, it is also in the Governor’s budget proposal, as discussed with the Authority.

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

                RESOLVED, That the Trustees hereby authorize a payment to the Empire State Development Corporation (“ESD”) in the amount of $15 million from the Operating Fund as authorized by Chapter 57 of the Laws of 2013 as discussed in the foregoing report of the President and Chief Executive Officer; and be it further

                RESOLVED, That the amount of $15 million to ESD described in the foregoing resolution is not needed for any of the purposes specified in Section 503(1)(a)-(c) of the Authority’s General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further

 

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

 

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

 

 

               


 

7.                   New York Power Authority’s 2014 Strategic Plan 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                The Trustees are presented with the Authority’s proposed 2014 Strategic Plan for adoption, as set forth in Exhibit ‘7-A’ attached hereto. 

                                                                                                                                             

BACKGROUND

 

                The Authority’s By-Laws state that ‘the Trustees shall annually review a Strategic Plan developed by the Executive Management Committee, under the supervision of the Strategic Planning and Energy Policy Committee, which shall become the basis for the development of departmental plans, the annual budget and the capital expenditure plan’  (By-Laws, Article VII – Fiscal Management , Section 2 – Strategic Plan).  In addition, Public Authorities Law §2824-a requires state authorities to develop and adopt a mission statement.

 

                The Authority has for many years annually reviewed, and updated as necessary, its mission statement and strategic plan.  In late 2013, the Authority drafted a new strategic plan containing a revised mission statement to advance alignment with the changing needs of its customers and to support the future energy structure of New York. 

 

DISCUSSION

 

                In 2013, Authority staff undertook an examination of its corporate strategy in the context of a rapidly changing energy environment. This effort mainly consisted of three phases, each lasting several months. 

 

·         During the spring and summer of 2013, Authority staff met with more than thirty external stakeholders to discuss customer needs, key trends and other opportunities in the energy industry.  These interviews included discussions with customers, energy leaders, government officials, financial organizations, universities, and others to ensure a diverse pool of thinking. 

 

·         In the fall of 2013, a thirty-two member strategy team convened several times to discuss how the Authority could proceed, boldly and innovatively, as the energy industry continues its evolution from a traditional, centralized model to a more innovative, customer-centric model.  Three key drivers emerged from our research: (1) customer value, (2) stewardship for the future, and (3) flexibility of infrastructure and organizations.

 

·         In the November and December timeframe, several discussions were held with the Trustees to share findings and discuss the proposed direction to ensure that it is consistent with the Board’s vision for the Authority.   

 

The Authority’s mission and vision statements were redrafted as a result of this effort.  In addition, new strategic goals were identified and new strategic initiatives were created to focus on achieving those goals.

 

The new Mission Statement and Strategic Plan (Exhibit ‘7-A’) will serve to inspire and provide direction as the Authority embraces an evolving energy industry in New York State.   

                                 

RECOMMENDATION

 

                The Senior Vice President – Strategic Planning recommends that the Trustees adopt the 2014 Strategic Plan presented herein.   

 

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

                                                                                                               


 

Mr. Robert Lurie presented highlights of staff’s recommendation to the Trustees.

 

In response to a question from Chairman Koelmel, Mr. Lurie said a team has been set up for each of the six initiatives outlined in the Strategic Plan and they will be responsible for developing a business plan for each initiative.  In developing the business plans the teams would consider:

i)         how the Authority will get customers, if it is a customer initiative;

ii)      how the Authority is going to request funding;

iii)    the value of the investments that the Authority is going to make;

iv)    what the financial returns would be on any of the investments and how they would be implemented and integrated into the business and operations of the Authority;

v)      Staffing; and

vi)     marketing issues, e.g. competition 

Mr. Lurie said that business plans would be presented to Trustees for approval as they are completed.  Staff expects the first plan to be presented to the Board in May and the others in July and September.  He added that, in parallel, as the business plans are developed they will evolve and become a part of the budget process, operating plans, and performance metrics.

Responding to further questioning from Chairman Koelmel, Mr. Lurie said staff is in the research process in the development of the business plans – some are at an advanced stage – and will be driven towards how the Authority will implement the initiatives. He reiterated that staff would be presenting at least one of the plans to the Board for approval at the next meeting.

Responding to still further questioning from Chairman Koelmel, Mr. Lurie said each team is assigned a member of the Authority’s executive team as sponsor; a project manager that is responsible for adherence to the time line; and a Consultant acting as an advisor to work with them as they develop the business plans so that the plans will be completed and presented to the Board within the time frame established for the implementation of each initiative.

Responding to another question from Chairman Koelmel, President Quiniones said the goal of the teams is to develop a tangible business plan for each of the individual initiatives with the assistance of the executive sponsors and project managers.  He then outlined examples of specific projects that would be proposed to the Board:

1)       In collaboration with upstate utilities and under the Knowledge Workforce Planning initiative, it was proposed that a workforce development center be built to address retirement issues of the Authority and utilities in upstate New York.  To that end, staff will be recommending that the Trustees approve a request for funds to build a workforce development center in Western New York.

2)       Under the Smart Generation and Transmission initiative, the Authority and other utilities in New York State installed phaser measurement units in the state’s transmission grid.  Staff will be recommending that the Trustees approve funding to build an “Advance Grid Innovation Research Laboratory for Energy” in order to develop the data from the smart boxes that were installed in the transmission grid.

3)        Under the BuildSmart New York Initiative, of which the Authority is the lead agency, the measures that can be undertaken to make state and other public buildings energy efficient were proposed.  As part of that initiative, it has been recommended that meters be placed in those buildings. To that end, staff will be recommending that the Trustees approve funding for the creation of the New York Energy Manager Center to analyze the data from the smart meters with the goal to optimize energy consumption in public buildings across the state on an ongoing basis.

President Quiniones said in addition to the above, the teams are working on business plans for other projects and will be coming before the Board for their approval.

In response to a question from Trustee Nicandri, President Quiniones said there will be checks on the Authority investments.  Authority staff will perform due diligence, working with the Risk Management and Finance groups before recommending that the Board fund any of the ventures in the Authority’s “investment grade business plans.” 

Responding to further questioning from Trustee Nicandri, Mr. Lurie said EPRI is assisting, advising the Authority on some of these initiatives; the Authority will receive the full benefit of their wisdom and experience in research and development on any venture it proposes.

In response to a request from Chairman Koelmel, President Quiniones said, to ensure continuing dialogue with the Trustees as the Business Plans are developed, he will provide the Board with a report on the progress of each of the six initiatives.

In response to a question from Trustee LeChase, Mr. Russak said staff earmarked capital project dollars in the Authority’s operating fund in the amount of $150 million for strategic initiatives; these monies, however, have not been committed to any specific project as yet.  Staff will have to come before the Board with the business case and plan and request the Board’s authorization for the funding at that time. 

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

 

                RESOLVED, That the Trustees hereby acknowledge that they have read, understand and adopt the Authority’s 2014 Strategic Plan attached hereto as Exhibit “7-A” as discussed 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.

 

 


 

8.                   Appointment of Acting Executive Vice President and General Counsel

 

The Chairman submitted the following report:

 

SUMMARY

 

The Trustees are requested to consider the appointment of Arthur T. Cambouris of New York, New York as Acting Executive Vice President and General Counsel, effective once the office is vacant.

 

BACKGROUND AND DISCUSSION

 

Article IV of the Authority’s By-laws provides for the election of certain non-statutory officers by the Trustees.  The same Article provides that Trustees may leave unfilled any office except those of Chair, Vice Chair, President and Chief Executive Officer, Chief Operating Officer, Executive Vice President and General Counsel or Corporate Secretary.  In addition, this section permits the Trustees to fill these positions with an acting or interim appointment until such time as a permanent replacement is elected.

 

RECOMMENDATION

It is recommended that, pursuant to Article IV of the By-Laws, adopted December 18, 1984, and last amended on March 27, 2012, Arthur Cambouris be appointed as Acting Executive Vice President and General Counsel, effective once the office is vacant, to hold such office until the Executive Vice President and General Counsel is elected by the Trustees.

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

 

                President Quiniones said before voting on the resolution for the Acting Executive Vice President and General Counsel he wanted to say a few words to Ms. Judith McCarthy, who was vacating the position. He made the following remarks:

Today marks the last Trustees meeting for Judith McCarthy, our Executive Vice President and General Counsel, who is leaving us after more than three years of exemplary service as the Authority’s chief legal officer.

Judith, as I’m sure many of you know, will become a Magistrate Judge of the U.S. District Court for the Southern District of New York – long recognized as one of the most prestigious courts in the nation. She will join a select group of Federal Magistrate Judges, who generally work closely with the District Judges and, in fact, handle some of the same duties.

At NYPA, Judith has been a consistent source of sound legal advice for this Board and for me and our senior management team. Her skills as a lawyer – along with her keen insights into the policy and business aspects of the issues – have been invaluable at a time of immense challenge for the Authority and our industry.

It was largely thanks to Judith that we concluded the complex agreement that averted the shutdown of the Maid of the Mist tour boats at Niagara Falls, and won the lawsuit that followed.

She played a pivotal role in the enactment of the legislation that established our Western New York Power Proceeds program and in the program’s successful implementation last year.

And as part of Governor Cuomo’s Energy Highway program, she was at the heart of our effort to define NYPA’s role in developing the Indian Point Contingency Plan with Con Edison and issuing the related RFP.

In addition to her work on these and countless other critical matters, Judith heightened the Law Department’s focus on ethics and compliance functions. And she led a restructuring of the department that has made it more responsive to its clients – who are, of course, mainly NYPA’s other Business Units.

Through all this, Judith’s trademark energy and commitment and dedication were always on full display. If I had one word to describe her, it would be indefatigable.

Now, the Southern District Court is about to acquire its own Judge Judy–along with a superb legal mind and someone who’s absolutely passionate about her work.

Thank you, Judith, for your many contributions to the Power Authority. We will miss you. And we wish you and your family all the best as you take this next–very significant–step in your career.

 


 

Trustee Flynn said on behalf of the Board he wanted to add to Gill comments and made the following remarks: 

The District Judge is appointed by the President of the United States and confirmed by the Senate. But the Magistrate Judge is a very different process.  The Magistrate Judge is specifically interviewed and appointed and selected by the judges themselves.  Neither the Governor nor the President plays a role in that decision, so politics is removed.  So when you select a Magistrate Judge you truly are selected by your credentials.  The judges are not going to pick somebody who doesn't understand the issues.  They need people that make sound legal decisions both civilly and criminally, they have to have a broad perspective to know what they are doing because the District Judges greatly rely upon the Magistrate Judges to do their work -- to make their jobs easier -- so that their sound decisions are affirmed.  So I think we should all be very proud today to have somebody like Judith -- she truly is an exemplary public servant, there is no better way to describe her, and I think we are all better Trustees and a much better Authority from her sound counsel and support. We are very proud of her.   Congratulations.

Chairman Kolmel said he echoed Trustee Flynn’s remarks, and thanked Judith for all she has done for the Trustees and wished her every success.

Ms. McCarthy thanked them for their kind words and said it was very much appreciated.  She continued that it has been an honor and privilege to serve the Authority and the State of New York.  She said it is difficult to leave her work in state government, but she is thrilled for the opportunity to serve as Magistrate Judge.  She said she has been very proud over the last three years to lead the Law Department at the Power Authority, and leaves the Authority with a talented and dedicated group of attorneys that will continue to do the work of the Power Authority going forward; she is assured that the Authority is in good hands and thanked them again for their kind words. 

                Chairman Koelmel presented highlights of the recommendation to the Trustees. 


 

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

 

                RESOLVED, That pursuant to Article IV of the Authority’s By-Laws, adopted December 18, 1984, and last amended on March 27, 2012, Arthur T. Cambouris is hereby appointed as Acting Executive Vice President and General Counsel, effective once the office is vacant, to hold such office until the Executive Vice President and General Counsel is elected by the Trustees.

 

 


 

9.                   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.

 


 

10.                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.


 

11.                 Next Meeting

 

The Regular Meeting of the Trustees will be held on May 20, 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 12:10 p.m.

 

 

Delince Signature

 

Karen Delince

Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                

 

 

 



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