MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

May 22, 2014

 

Table of Contents

 

 

 

                Subject                                                                                                                                  Page No.               Exhibit

 

            Introduction                                                                                                                                   2

1.             Adoption of the May 22, 2014 Proposed Meeting Agenda                                                   3

2.             Consent Agenda:                                                                                                                           4

a.       Minutes of the Annual Meeting held on March 25, 2014                                          5

b.       Contracts for the Sale of Western New York Hydropower –                                     6                       2b-A-12b-A-3;

Transmittal to the Governor                                                                                                                  2b-B; 2b-C

                        Resolution

 

c.        Municipal and Rural Electric Cooperative Economic                                                 9

Development Program – Allocations to Villages of

Castile and Bergen

                        Resolution

 

d.       Allocations of Hydropower and Notice of Public Hearing                                        12                      2d-A; 2d-A-1;

Resolution                                                                                                                                                 2d-A-2; 2d-B

 

e.        Awards of Fund Benefits from the Western New York                                             17                      2e-A2e-E

Economic Development Fund Recommended by the

Western New York Power Proceeds Allocation Board

                        Resolution

 

f.        Corporate Policy - Risk Management and Executive Risk                                       22                      2f-A-1; 2f-A-2;

Management Committee Charter                                                                                                        2f-B-1; 2f-B-2

                        Resolution

 

g.       Committee Appointments                                                                                               24

                        Resolution

 

h.       Procurement (Services) Contract – Coopers Corners Shunt                                     25

Reactor Project Capital Expenditure Authorization

Request and Contract Award

                        Resolution

 

i.         Procurement (Services) Contract – Niagara Switchyard –                                        28

                            Transmission Life Extension and Modernization

                            Program – Capital Expenditure Authorization Request

                            and Contract Award

                        Resolution

 


 

               

Subject                                                                                                                                          Page No.               Exhibit

 

j.         Procurement (Services) Contract –Niagara, St. Lawrence                                        31

                            and Blenheim-Gilboa Pumped Storage Projects –

                            Visitors’ Centers Upgrade – Capital Expenditure

            Authorization Requests and Contract Award

                        Resolution

 

k.       STL-CEC Microwave System Upgrade Project –                                                       34

Capital Expenditure Authorization Request –

Increase in Authorized Funding –

                        Resolution

 

l.         Procurement (Services) Contracts – Business Units and                                           36                      2l-A; 2l-B

Facilities – Awards, Extensions and/or Additional

Funding

                        Resolution

 

Discussion Agenda:                                                                                                                                 43

 

3.             Q&A on Report from the President and Chief Executive Officer                                        43                      3-A; 3-B

4.             Contribution of Funds to the State Treasury                                                                           44

Resolution

 

5.             Election of Executive Vice President and Chief Financial Officer                                      47

Resolution

 

6.             Retirement Resolutions                                                                                                                48

Resolution

 

7.             Next Meeting                                                                                                                                 56

8.             Closing                                                                                                                                            57                                                                     

 

 

 


Minutes of the Regular Meeting of the Power Authority of the State of New York held via videoconference at the following participating locations at approximately 9:19 a.m.

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

2)       Metschl & Associates - AKA EyeNetworks, 295 Main Street, Ellicott Square Building

Suite 1098, Buffalo, NY

3)       VC Rooms, 247 West Fayette Ave., Suite 202, Syracuse, NY  

4)       Eyenetwork@Alliance Court Reporting,183 E Main Street, Suite 1500, Rochester, NY

 

Members of the Board present were:

 

                                John R. Koelmel, Chairman

                                Joanne M. Mahoney, Vice Chair

                                Eugene Nicandri, Trustee

                                R. Wayne LeChase, Trustee

                                                                                               

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Gil Quiniones                                        President and Chief Executive Officer

Edward Welz                                        Chief Operating Officer

Donald Russak                                    Executive Vice President and Chief Financial Officer

Arthur Cambouris                               Acting Executive Vice President and General Counsel

Robert Lurie                                         Senior Vice President – Strategic Planning

James Pasquale                                   Senior Vice President – Economic Development & Energy Efficiency    

Joan Tursi                                             Senior Vice President – Corporate Support Services

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

Joseph Leary                                        Vice President – Community & Government Relations

Karen Delince                                       Corporate Secretary

Brian McElroy                                     Treasurer

Michael Saltzman                               Director Communications & Media Relations

Peter Prunty                                          Director Infrastructure – Infrastructure

Gregory Jablonsky                              Manager Network Services – Infrastructure

Silvia Louie                                           Senior Project Manager – Executive Office, Public and Regulatory Affairs/Chief of Staff

Glenn Martinez                                    Senior Network Analyst – Infrastructure

Lorna Johnson                                     Associate Corporate Secretary

Sheila Baughman                                                Assistant Corporate Secretary

Joseph Rivera                                       Contractor – Infrastructure

                               

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

 


Introduction

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

 

 

 

 

 


 

1.                   Adoption of the May 22, 2014 Proposed Meeting Agenda

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

                                Conflicts of Interest

Vice Chair Mahoney declared the following conflicts and indicated that she would not be participating in the discussion or voting on the matters:

– Op-Tech Environmental Services, Inc. and Arcadis of New York, Inc. (Item 2l)

 

Trustee LeChase stated for the record that his company does business with some of the companies either as subcontractors, suppliers or, in one instance, owner. However, since he has no personal dealings with them, he believes no conflicts of interest exist that would prevent him from voting on those items.

 

Chairman Koelmel and Trustee Nicandri declared no conflicts.


2.                   Consent Agenda:               

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

 

Since Vice Chair Mahoney declared conflicts of interest pertaining to Op-Tech Environmental Services, Inc. and Arcadis of New York, Inc. (Item 2l), the Consent Agenda was approved with the exclusion of those firms because the conflicts resulted in a failure to attain the required number of votes necessary for their approval.

 

            In response to a question from Trustee Nicandri, Mr. Welz said with respect to item #2k (STL-CEC Microwave System Upgrade Project Capital Expenditure Authorization Request – Increase in Authorized Funding), staff’s request for an increase in funding was as a result of increases in cost as well as delays due to weather conditions.

 

 

               

                             


 

a.       Approval of the Minutes

                The Minutes of the Annual Meeting held on March 25, 2014 were unanimously adopted.


 

b.       Contracts for the Sale of Western New York

Hydropower – Transmittal to the Governor 

                       

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

                The Trustees are requested to: (1) approve proposed final contracts for the sale of Expansion Power (‘EP’) and/or Replacement Power (‘RP’) allocations to the three businesses described in Exhibit ‘2b-B’; and (2) authorize transmittal of the proposed final contracts to the Governor for his review and requested authorization for the Authority to execute the contracts pursuant to Public Authorities Law (‘PAL’) §1009.  The three proposed final contracts are attached as Exhibit ‘2b-A-1,’ ‘2b-A-2’ and ‘A-3.’

 

BACKGROUND

 

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

 

The contracts before the Board pertain to the sale of EP and/or RP to three businesses as described in Exhibit ‘2b-B.’  The contracts would provide for the sale by the Authority of the allocations to each business under a direct sale arrangement for the approved term of the allocation.  Transmission and delivery service would be provided by each company’s local utility, either National Grid or New York State Electric and Gas, in accordance with the respective utilities’ Public Service Commission-filed delivery service tariffs.  The following is a summary of some pertinent provisions of the contracts:

 

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

 

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

 

·         The contract provides for the sale of additional allocations of EP and/or RP to the customers in appropriate circumstances under the contract by incorporating new allocations into Schedule A of the contract.  The Trustees approved this convention in the 2010 long-term extension contract, which simplifies contract administration.

 

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

 

·         The contract requires that the companies perform an energy efficiency audit at least once within five years at the facility receiving the low-cost power to help ensure the hydropower is utilized as effectively as possible.

 

The Authority has discussed each contract with the relevant business and in each case has received the consent of the business to the proposed contract. Each prospective customer has acknowledged that ST WNY-1 rates will apply to its allocation consistent with all allocations of EP and RP as of July 1, 2013.

 

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

 

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

 

DISCUSSION

 

At their March 21, 2013 meeting, the Trustees authorized the Corporate Secretary to transmit the proposed contract for SiGNa Chemistry, Inc. (‘SiGNa’) to the Governor and legislative leaders and to schedule a public hearing on the contract, contingent upon the company finding a location for its proposed new facility.  Subsequently, SiGNa firmed up plans to construct the facility on Buffalo Avenue in Niagara Falls with manufacturing operations to commence mid-to-late 2014. 

 

At their December 17, 2013 meeting, the Trustees authorized the Corporate Secretary to transmit the proposed contract for Delphi Automotive PLC to the Governor and legislative leaders and to schedule a public hearing on the contract.

 

At their March 25, 2014 meeting, the Trustees authorized the Corporate Secretary to transmit the proposed contract for Trinity Packaging Corporation to the Governor and legislative leaders and to schedule a public hearing on the contract.

 

A public hearing for each of the contracts was held on April 10, 2014 at the Niagara Power Project’s Power Vista Visitors’ Center in Lewiston, New York.  There were no oral statements made at the public hearing and no written statements were submitted.  The official transcript of the public hearing is attached as Exhibit ‘2b-C.’

 

Delphi has notified staff that the Lockport facility where the allocation would be used would be operated by Delphi Automotive Systems, LLC, a wholly-owned subsidiary of Delphi Automotive PLC.  The proposed final contract has been updated to reflect this information.

 

RECOMMENDATION

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the proposed contracts for the sale of Replacement Power and/or Expansion Power allocations that are attached as Exhibits ‘2b-A-1,’ ‘2b-A-2’ and ‘2b-A-3’ and authorize the transmittal of the contracts to the Governor for approval. 

 

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

 

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

                               

RESOLVED, That the contracts for the sale of (1) Expansion Power (“EP”) and Replacement Power (“RP”) to Delphi Automotive Systems, LLC, (2) RP to SiGNa Chemistry, Inc., and (3) RP to Trinity Packaging Corporation (collectively, the “Contracts”), are in the public interest and, in accordance with Public Authorities Law §1009, should be submitted to the Governor for his review and that copies of the Contracts, along with the record of the public hearing thereon, be forwarded to the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Ways and Means Committee, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee; and be it further

 

RESOLVED, That the Chairman and the Corporate Secretary be authorized and directed to execute such Contracts in the name of, and on behalf of, the Authority if the Contracts are approved by the Governor; and be it further

 

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

 

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


 

c.        Municipal and Rural Electric Cooperative

Economic Development Program –

Allocations to Villages of Castile and Bergen

               

                The President and Chief Executive Officer submitted the following report:

SUMMARY

 

The Trustees are requested to approve two allocations, 210 kW and 450 kW, of hydropower under the Municipal and Rural Electric Cooperative Economic Development Program (‘EDP’) to the Village of Castile and the Village of Bergen, respectively.

 

BACKGROUND

 

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

 

Power from this block can be allocated to individual systems to meet the increased electric load resulting from eligible new or expanding businesses in their service area.  Recommended allocations under the EDP are made using guidelines that were approved by the Trustees on September 23, 2008. 

 

As of January 28, 2014, 31.3 MW have been allocated.  The Villages of Castile and Bergen have submitted applications for power under the Program for consideration by the Trustees.

 

DISCUSSION

Village of Castile

An application has been submitted by the Village of Castile to the Authority on behalf of Upstate Door Inc.  Upstate Door, Inc. is dedicated to offering uniquely crafted doors and woodwork in the region.  The company was founded in 1995 and manufactures custom hardwood doors.  The company acquired Sun Dor Classics in 2011, relocating the company from Kansas to Castile, New York.  It is a fast growing enterprise and the company plans to expand the manufacturing capacity in Castile while retaining its other factory in Warsaw, NY.  The employees of Upstate Door produce custom-made high-quality hardwood doors in their Warsaw and Castile, NY facilities.

The expansion at the Castile factory will provide increased capacity needed for meeting its rapidly growing demand.  The goal of the 30,000-ft. expansion is to increase the facility and equipment to match the output capacity of the Warsaw factory which averages 60,000 kWh and 320 kW.  The expansion is estimated to add an additional 22 new full-time jobs to the existing ten full-time jobs, making the total job commitment at Castile 32 jobs.  The 54 jobs at Warsaw will remain in Warsaw and will not be relocated due to this expansion.  The expanded facility in Castile is expected to be fully operational by the second quarter of 2018.

The expansion is expected to include a capital expenditure of approximately $2.2 million as well as add approximately 320 kW of new incremental load to the Village of Castile’s service territory.  The current base load is approximately 267 kW, making this a total load commitment of 587 kW.

 

NYPA’s EDP guidelines classify this as an eligible business expansion because it is categorized as a manufacturer whose purpose is to construct products for residential and commercial application.  Under the  program, the first 100 kW allocated will be 100 % hydropower and any additional kW at 50% hydropower and 50% incremental power, making this EDP allocation award equal to 210 kW.

 

It is recommended that the Trustees approve an allocation of 210 kW of Municipal and Rural Electric Cooperative Economic Development Power to the Village of Castile on behalf of Upstate Door, Inc.  The EDP guidelines require that a minimum of 50 jobs per MW of allocated hydropower should be attained; this allocation exceeds the aforementioned guidelines.

 

Village of Bergen

An application has been submitted by the Village of Bergen to the Authority on behalf of Liberty Pumps.  Headquartered in Bergen, NY, Liberty Pumps was founded in 1965 and is a leading manufacturer of pumping products for ground water and wastewater removal in residential and commercial applications.  As a privately held and family-owned company, it has been an important employer in the Bergen area, employing a significant amount of people in this small community.

Liberty Pumps is experiencing significant business growth and requires additional space to expand its offerings.  Liberty Pumps will be expanding within the Village of Bergen and has purchased 3.75 acres of land adjacent to its existing property.  The land will be used for production, warehouse, research and development, testing, sales, marketing and presentation.

 

The expansion is estimated to add 26 new full-time jobs to the existing 134 full-time jobs, making the total job commitment in Bergen 160 jobs.  The expansion will also add approximately 800 kW of new incremental load to the Village of Bergen’s service territory (with the current base load of approximately 531 kW) making the Village’s new total load commitment 1,331 kW.

 

The expansion is expected to include a capital expenditure of approximately $7.5 million.  Liberty Pumps has accepted local government support in the form of property tax abatement and other exemptions.  In March 2014, the company was approved for $1,334,927 in financial assistance from the Genesee County Economic Development Center (‘GCEDC’).

 

NYPA’s EDP guidelines classify this as an eligible business expansion because it is categorized as a manufacturer whose purpose is to construct products for residential and commercial application. Under the  program, the first 100 kW allocated will be 100 % hydropower and any additional kW at 50% hydropower and 50% incremental power, making this EDP allocation award equal to 450 kW.

 

It is recommended that the Trustees approve an allocation of 450 kW of Municipal and Rural Electric Cooperative Economic Development power to the Village of Bergen on behalf of Liberty Pumps.  The EDP guidelines require that a minimum of 50 jobs per MW of allocated hydropower should be attained; this allocation exceeds the aforementioned guidelines.

RECOMMENDATION

 

The Vice President of Marketing recommends that the Trustees approve the allocations of 210 kW and 450 kW, respectively, under the Municipal and Rural Electric Cooperative Economic Development Program to the Village of Castile and the Village of Bergen, in accordance with the above discussion.

 

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 allocations of hydropower to the Village of Castile and the Village of Bergen under the Municipal and Rural Electric Cooperative Economic Development Program  are hereby approved as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

 

 


 

d.       Allocations of Hydropower and Notice of Public Hearing

 

                The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

                The Trustees are requested to approve a 500 kilowatt (‘kW’) allocation of available Expansion Power (‘EP’) to Captive Plastics, LLC (dba Berry Plastics) in Dunkirk (Chautauqua County), and a 100 kW allocation of available Replacement Power (‘RP’) to Durez Corporation in Niagara Falls (Niagara County), as further described herein and in Exhibits ‘2d-A,’ ‘2d-A-1’ and ‘2d-A-2.’  These allocations will support capital expansion of $18.6 million and the creation of 16 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 contracts, the current form of which is attached as Exhibit ‘2d-B.’

               

BACKGROUND

 

Under PAL §1005(13), the Authority may contract to allocate 250 megawatts (‘MW’) of firm hydroelectric power as EP and up to 445 MW of 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 today’s recommended allocations.

 

DISCUSSION

 

                At this time, 9,115 kW of unallocated EP and 32,463 kW of unallocated RP is available to be awarded to businesses under the criteria set forth in PAL §1005(13)(a). 

               

Captive Plastics, LLC (dba Berry Plastics)

 

Captive Plastics, LLC (dba Berry Plastics) , located in Dunkirk (Chautauqua County), submitted an application for hydropower requesting 920 kW in connection with an expansion project to enlarge its existing facility by 20,000 square-feet in order to accommodate increased bottle production for a potential new, long-term contract.

 

Berry Plastics Group, Inc., the parent of Captive Plastics, LLC, is a leading global manufacturer and marketer of plastic consumer packaging and engineered materials.  Headquartered in Evansville, Indiana, Berry Plastics serves more than 13,000 customers ranging from large multinational corporations to small local businesses.  Its products include open top and closed top packaging, plastic containers, polyethylene-based plastic films, industrial tapes, medical specialties, flexible packaging, heat-shrinkable coatings, specialty laminates and bulk bags.

 

Captive Plastics’ Dunkirk facility is one of three locations in New York State (the other facilities are located in Syracuse and Macedon), has been in operation for 12 years and was acquired by Berry Plastics five years ago. 

 

 Captive Plastics is currently in competition with two other out-of-state bottling companies looking to secure a major new, long-term contract to produce polyethylene blend food bottles.  Production would increase by 186 million bottles annually.  The expansion includes a capital investment of $17.8 million and the creation of 10 new, well-paying jobs.

 

Captive Plastics was awarded a 1,296 kW retention allocation under Recharge New York (‘RNY’) in December 2013, with a commitment to create 15 new jobs above a base employment of 56 for a total job commitment of 71.  The 10 new jobs related to this expansion project would be in addition to the 71 jobs committed to under the RNY program.

 

The company’s expansion plan (including purchasing new machinery and leasing a 40,000-square-foot warehouse building across the street) would begin in June 2014 with full-scale production beginning March 2015.

 

Captive Plastics has indicated it will experience a reduction in production due to the recent announcement by ConAgra, one of its customers, to close two Chautauqua County plants.  However, if Captive Plastics is able to secure the subject new contract with the help of a hydropower allocation, the new production would not only offset the loss of business from ConAgra, but would result in higher production levels at the facility.   

 

The job creation ratio for the proposed allocation of 500 kW is 20 new jobs per MW.  This ratio is below the historic average of 27 new jobs per MW based on allocations made over the past four years.  The total project investment of $17.8 million would result in a capital investment ratio of $35.6 million per MW.  This ratio is above the four-year historic average of $24.9 million per MW.

 

Additional state support includes $979,003 in Excelsior Tax Credits from ESD.  Captive Plastics is also in discussions with the Chautauqua County IDA for additional incentives.   

 

Staff recommends that an allocation of 500 kW of EP be awarded to Captive Plastics in order to help secure an investment of $17.8 million and creation of 10 new jobs at its facility in Chautauqua County, as detailed in Exhibits ‘2d-A’ and ‘2d-A-1.’

 

Durez Corporation

 

Durez Corporation (‘Durez’), located on Packard Road in Niagara Falls, submitted an application for hydropower requesting 150 kW in connection with a proposed expansion project to repurpose existing unused production equipment at its facility in order to begin production of a new product. 

 

Durez (a subsidiary of Sumitomo Bakelite Co., Ltd.) is the worldwide leader in engineering thermoset resins and molding compounds.  It has nearly a 100-year history in the thermoset industry as one of the original licensees of phenolic technology.  Durez has thermoset material production facilities in North America (Ontario, Connecticut, California, Ohio and Niagara Falls) Europe and Asia, serving a wide range of industries, including automotive, aerospace and electrical systems.

 

The Niagara Falls facility has been operating under various owners for nearly 80 years.  Sumitomo acquired Durez from Occidental Chemical in 2000.  The facility produces phenolic resin, which primarily services the coatings, abrasives, automotive and aerospace markets.

 

The proposed facility expansion at Niagara Falls is in direct competition with the Durez facility in Kenton, Ohio, which also produces resin.  Durez anticipates entering into this new market would increase total sales from the Niagara Falls facility by 30%.  The company believes that a hydropower allocation would help secure this expansion at the Niagara Falls facility enabling the creation of 6 new, well-paying jobs and solidifying the current employment level of 56.

 

The expansion includes a total capital investment of $800,000, of which the majority – $710,000 – is dedicated to repurposing and restarting unused production equipment.  An agitator and transfer pumps would be purchased and installed as part of the project.

 

The job creation ratio for the proposed allocation of 100 kW is 60 new jobs per MW.  This ratio is above the historic average of 27 new jobs per MW based on allocations made over the past four years.  The total project investment of $800,000 would result in a capital investment ratio of $8 million per MW.  This ratio is below the four-year historic average of $24.9 million per MW.

 

Durez also indicated that if its expansion proves successful, it would help demonstrate to the parent company that New York State is a competitive place to do business, increasing the potential for future expansion and investment in the Niagara Falls facility.  The company has also submitted an application for RNY Power for its existing load.  The application has yet to be reviewed.        

 

Staff recommends that an allocation of 100 kW of RP be awarded to Durez in order to help secure an investment of $800,000 and creation of six new jobs at its facility in Niagara County, as detailed in Exhibits ‘2d-A’ and ‘2d-A-2.’ 

 

  Contract Information

 

                The Authority is in the process of discussing a proposed hydropower sales contract with Captive Plastics and Durez, respectively, and anticipates receiving customer approval of a contract substantially similar to the form attached as Exhibit ‘2d-B.’  Accordingly, the Trustees are requested to authorize a public hearing pursuant to PAL §1009 on the contract form attached as Exhibit ‘2d-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, as set forth in the Authority’s Service Tariff No. WNY-1.  The proposed form of contract would also include (i) commercially reasonable provisions relating to financial security to reflect a direct billing arrangement between the Authority and its EP/RP customers, and (ii) provisions authorizing data transfers and addressing other utility-driven requirements which are necessary for efficient program implementation.  Such provisions have been used in other Authority contract forms, including the Authority’s Recharge New York Power Program contracts.

 

                As is typical, the provision of electric service for these hydropower allocations 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 Captive Plastics’ or Durez’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 National Grid in accordance with its Public Service Commission-filed service tariffs.

 


 

RECOMMENDATION

 

The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the allocation of 500 kW of EP to Captive Plastics, LLC (dba Berry Plastics), and 100 kW of RP to Durez Corporation, as detailed in Exhibits ‘2d-A,’ ‘2d-A-1’ and ‘2d-A-2.’

 

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 Captive Plastics and Durez, respectively, the current form of which is attached as Exhibit ‘2d-B,’ and transmit copies of the proposed form of the contracts 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 contracts at a later time and make additional recommendations regarding the proposed contracts.

 

                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 allocations of 500 kilowatts (‘kW’) of Authority hydropower (Expansion Power) to Captive Plastics, LLC (dba Berry Plastics) and 100 kW of Authority hydropower (Replacement Power) to Durez Corporation as detailed in Exhibit “2d-A,” “2d-A-1” and “2d-A-2” 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 contracts for the sale of hydropower and energy finally negotiated with Captive Plastics, LLC and Durez Corporation (the ‘Contracts’), the current form of which is attached as Exhibit “2d-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 Contracts 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, 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 Acting Executive Vice President and General Counsel.

 

 


 

e.        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 Innomotive Solutions Group LLC and Nexus Natural Gas LLC, the eligible applicants listed in Exhibit ‘2e-A,’ and authorize the other actions described herein with respect to such applicants and awards. 

 

The Trustees are also requested to authorize the withdrawal of the award listed in Exhibit ‘2e-B’ since the applicant has declined the award and withdrawn its application.

 

For informational purposes, Exhibit ‘2e-C’ lists: (1) projects the WNYPPAB has determined are not being recommended for an award of Fund Benefits; (2) applications that have been withdrawn by the applicant; (3) applications that were deferred for future consideration; (4) an application which failed to receive an affirmative vote for a recommendation of Fund Benefits due to lack of a quorum resulting from the recusal of certain WNYPPAB members; and (5) a project that has been preliminarily recommended for an award of Fund Benefits but which is not being forwarded to the Trustees at this time pending completion of legal requirements, including review under the State Environmental Quality Review Act (‘SEQRA’).

               

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 ‘2e-D.’

 

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

 

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

 

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 sixth round of WNYPPAB action, the WNYPPAB considered 12 applications seeking over $8.1 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 ‘2e-E.’ 

At its April 28, 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 ‘2e-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 28 jobs in Western New York.  The total to be expended on the proposed projects is expected to exceed $8 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.       Recommendation for Withdrawal of Award of Fund Benefits

 

On September 24, 2013, the Trustees approved an award of Fund Benefits to the applicant listed on Exhibit ‘2e-B’ in the amount indicated therein.  The applicant has informed WNYPPAB staff of its decision to decline the award and has withdrawn its application.  Accordingly, the Trustees are requested to withdraw this award so that the amount of the award can be restored to the Fund for accounting purposes.  

 

3.       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 ‘2e-C’ lists: (1) projects the WNYPPAB has determined are not being recommended for an award of Fund Benefits; (2) applications that have been withdrawn by the applicant; (3) applications that were deferred for future consideration; (4) one application which failed to receive an affirmative vote for a recommendation of Fund Benefits due to lack of a quorum resulting from the recusal of certain WNYPPAB members; and (5) a project that has been preliminarily recommended for an award of Fund Benefits but which is not being forwarded to the Trustees at this time pending completion of legal requirements, including review under SEQRA.

 

Recommendation

 

The Vice President, Marketing recommends that:

 

(1)     the Trustees accept the recommendations of the Western New York Power Proceeds Allocation Board and make awards of Fund Benefits to the applicants and in the amounts identified in Exhibit ‘2e-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 Acting 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 Empire State Development Corporation, be authorized to negotiate with the applicants concerning such final terms and conditions that will be applicable to the awards;

 

(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 ‘2e-A’ subject to the foregoing conditions; and

 

(4)     the Trustees authorize the withdrawal of the award of Fund Benefits to the applicant listed on Exhibit ‘2e-B’ in the amount indicated therein.

 

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 “2e-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 “2e-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 Acting 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 “2e-A” subject to the foregoing conditions; and be it further

 

                RESOLVED, That the Authority hereby authorizes the withdrawal of the award of Fund Benefits to the applicant listed on Exhibit “2e-B” in the amount indicated therein; 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 Acting Executive Vice President and General Counsel.

 


 

f.        Corporate Policy - Risk Management and

Executive Risk Management Committee Charter

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to approve the 2014 Corporate Policy – Risk Management (the ‘Policy’) and the 2014 Executive Risk Management Committee Charter (the ‘Charter’), which are attached hereto as Exhibits ‘2f-A-1’ and ‘2f-B-1.’

 

In accordance with leading industry practice, the Trustees' approval of the governance materials is intended as an affirmation of the philosophy, framework and delegation of authority for the Authority's risk management activities, including those related to energy commodity and credit risk.

   

The members of the Executive Risk Management Committee (‘ERMC’) reviewed the proposed Policy and Charter and recommend their approval.   

BACKGROUND

 

At their meeting of March 21, 2013, the Trustees approved the 2013 Policy and Charter that are to be updated and submitted for Trustee approval annually.

 

DISCUSSION

 

The Policy and Charter establish the Authority’s governance related to the enterprise view of risk management.  The Policy and Charter align risk management governance materials with existing Authority governance documents including the Board of Trustees Charter of the Audit Committee.

 

Proposed changes include certain points of clarification including an update to the ‘2.0 Definitions’ section that better represents terms that apply to the Authority’s present risk management practice.  Also proposed is the removal of the paragraph in section ‘6.2.1 - Delegation of Authority’ as no specific delegation is granted in the paragraph nor is any delegation deemed necessary.  These changes are reflected in the redline versions as Exhibits ‘2f-A-2’ and ‘2f-B-2,’ respectively.

 

RECOMMENDATION

 

                The Senior Vice President – Chief Risk Officer recommends that the Trustees approve the 2014 Corporate Policy – Risk Management and the 2014 Executive Risk Management Committee Charter as reflected in Exhibits ‘2f-A-1’ and ‘2f-B-1’ and 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 the Corporate Policy – Risk Management (the “Policy”) and the related Executive Risk Management Committee Charter (the “Charter”) establishing the philosophy, framework and delegation of authority necessary to govern the activities of the Authority related to risk management activities including the program for Energy Commodity and Credit Risk Management is hereby adopted in the form attached as Exhibits “2f-A” and “2f-B”; and be it further

 

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

 

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

 

 


 

g.       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.)  

Governance Committee

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

 

Strategic Planning and Energy Policy Committee

Joanne M. Mahoney (Chair), Jonathan F. Foster, 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 Governance Committee shall be Eugene L.  Nicandri (Chair), 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), Jonathan F. Foster, John R. Koelmel, effective immediately.

 

 

 


 

h.       Procurement (Services) Contract –

Coopers Corners Shunt Reactor Project

                        Capital Expenditure Authorization

                        Request and Contract Award                     

               

The President and Chief Executive Officer submitted the following report:

                                           

SUMMARY

 

The Trustees are requested to authorize additional capital expenditures in the amount of $4,685,000 for construction and installation associated with Phase 2 of the Coopers Corners Shunt Reactor Project (‘Project’).  This Project (estimated installed cost of $9.8 million) entails the installation of a 200 MVAR Shunt Reactor at the 345 kV Coopers Corners Substation, located in the Town of Thompson, NY, owned and operated by the New York State Electric & Gas Corporation (‘NYSEG’).  For Phase 1 of the Project, the Trustees approved the amount of $4.9 million in capital expenditures at their November 9, 2012 meeting.  The Project will eliminate the need for the Authority to perform undesirable switching operations to mitigate high voltages observed at Coopers Corners during light load operating conditions.

 

The Trustees are also requested to approve the award of a construction contract in the amount of $3.8 million to O’Connell Electric Company, Inc. (‘O’Connell’) of Victor, NY to provide materials, installation and testing services for the 345 kV Shunt Reactor at the Coopers Corners Substation.  An interim contract award to O’Connell in the amount of $400,000 has been issued to cover initial material procurement and mobilization costs.

 

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 contracts in excess of $3 million.

 

During months when there is less electric demand on the system, the New York Independent System Operator (‘NYISO’) load can reach very low levels (below 11,000 MW).  While this results in lightly loaded transmission lines, the resulting voltages are above acceptable operating limits.  Historically, high voltages have been observed at the Coopers Corners 345 kV Substation and surrounding area.  These voltage problems may be worsened if other transmission equipment is also out-of-service (e.g. Fraser Static VAR Compensator and/or UE1-7 345 kV transmission line).

 

The current NYISO mode of operation to reduce the high voltage problem is to request the Authority to perform undesirable/non-best practice switching operations such as:

 

-          Setting the Bleheim-Gilboa units in speed-no-load or spin-pump mode.

-          Operating the Marcy STATCOM fully inductive.

-          Tripping the Marcy–Coopers Corners and/or the Coopers Corners–Rock Tavern 345 kV transmission lines.

 

The above switching operations are unacceptable methods of operating the Authority’s assets.  The Authority and the NYISO met in November of 2011 to discuss implementation of an improved operating protocol and agreed that installation of a shunt reactor would avoid the need for line switching and provide a ‘best practice’ long-term solution. 

 

The NYISO performed a System Impact Study (‘SIS’) to evaluate the impact of the Project on the reliability of the New York State Transmission System.  The SIS results show that installation of a 200 MVAR shunt reactor is the ideal solution for high voltage issues during light load conditions.

 

The Authority and NYSEG executed an Engineering and Procurement Agreement in July 2012 for the installation of a 200 MVAR shunt reactor at the Coopers Corners 345 kV Substation.  The Authority will own the shunt reactor and associated equipment; NYSEG will operate and maintain the equipment subject to an Operations and Maintenance Agreement that is being developed.

 

DISCUSSION

 

The Project is structured to be performed in two phases:

 

Phase 1 (previously approved):        Engineering, Procurement, Project Management (2012–2013)

 

                Phase 2:                                                 Construction (2014)

 

The Phase 1 scope-of-work (preliminary engineering, detailed design engineering and major equipment procurement) was completed in 2013.

 

The Authority issued a Request for Proposals (‘RFP’) for installation, testing, and commissioning of the 200 MVAR shunt reactor and associated structures and components.  The RFP was advertised in the New York State Contract Reporter on November 21, 2013 (RFP No. Q13-5554JF) and three proposals were received on February 20, 2014.  The bid evaluation has been completed with the award of a Contract to O’Connell Electric, Inc., the lowest cost and technically acceptable bidder to perform the construction work.

 

                The Trustees previously authorized capital expenditures in the amount of $4.9 million for the Phase 1 scope-of-work.  This additional capital expenditure authorization for Phase 2 is comprised of the following:

                                                                                               

                              Engineering/ Design                                               $  170,000            

 

                              Construction/ Installation                                    $4,515,000

                                                                                    TOTAL:             $4,685,000

               

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Acting Vice President – Project Management, the Vice President – Engineering, the Vice President – Transmission, the Acting Vice President – Procurement, the Project Manager, and the Regional Manager – Central New York recommend that the Trustees approve additional capital expenditures in the amount of $4,685,000 for the Coopers Corners 200 MVAR Shunt Reactor Project and award a $3.8 million contract to O’Connell Electric of Victor, NY.

 

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 Authority’s Expenditure Authorization Procedures, additional capital expenditures in the amount of $4,685,000 are hereby authorized for the Coopers Corners Shunt Reactor Project (“Project”) as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 


 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to authorize the award of a contract to O’Connell Electric Company, Inc. in the amount of $3.8 million to provide material, installation and testing services for the Project, as recommended in the foregoing report of the President and Chief Executive Officer and as set forth below:

 

            Contractor                               Contract Approval

                                        O’Connell Electric                             $3.8 million

        Company, Inc.

        (Victor, NY)

 

AND BE IT FURTHER RESOLVED, That the Authority, in accordance with Treasury Regulation Section 1.150-2, hereby declares its official intent to finance as follows: The Authority intends to reimburse to the maximum extent permitted by law, with the process of tax-exempt obligation to be used by the Authority, all expenditure made and which may be made in accordance with the Project described in the foregoing report of the President and Chief Executive Officer, with the maximum principal amount of obligations to be used for such project expected to be $9.8 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 Acting Executive Vice President and General Counsel.

 

 

 


 

i.         Procurement (Services) Contract –

Niagara Switchyard – Transmission Life Extension

and Modernization Program – Capital Expenditure

Authorization Request and Contract Award                

 

                The President and Chief Executive Officer submitted the following report:

                       

SUMMARY

 

The Trustees are requested to authorize capital expenditures in the amount of $154.7 million for Phase 1 of the Niagara Switchyard Life Extension and Modernization (‘Project’).  The Project (estimated total phase 1 and phase 2 installed cost of $266.9 million) is part of the Transmission Life Extension and Modernization Program and will be presented for Trustee funding authorization in two phases as explained below.

 

The Trustees are also requested to approve the  award of a contract in the amount of $5.3 million to ABB, Inc. Power Transformer Division, Raleigh, NC for the engineering, manufacturing, assembly, and testing of one 800 MVA auto-transformer to replace the existing auto-transformer #4 at the Niagara Switchyard in Lewiston, NY.  The President and Chief Executive Officer has, in accordance with the Authority’s Expenditure Authorization Procedures, approved the amount of $750,000 for preliminary Project engineering.

 

BACKGROUND

 

                Section 2879 of the New York State Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for non-personal services contracts in excess of $3 million and contracts involving services to be rendered for a period in excess of one year.  The Authority’s Expenditure Authorization Procedures require the Trustees’ approval for construction contracts with a value in excess of $3 million.

 

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

 

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

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

-          Replacement of the submarine cable on PV-20

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

 

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

 

This Project is divided into two phases:

 

Phase 1 of the Project which is presented today for authorization will replace:

 

1.       Thirty-three oil circuit breakers (OCBs), insulators and miscellaneous hardware

2.       Twenty-one motor operated disconnects (MODs) and seventy-one manual disconnect switches

3.       Three auto-transformers

4.       Metering, instrument transformers and grounding

5.       Switchgear, 13.8 kV transformers, motor control centers (MCCs) and cables

 

Phase 2 of the Project which will be presented at a later date for authorization will replace:

 

1.       Twenty-nine OCBs, insulators and miscellaneous hardware

2.       Twenty-three MODs and seventy-seven manual disconnect switches

3.       Two auto-transformers

4.       Grounding, fence, gate, and roadways

 

In response to the Authority’s Request for Proposal advertised in the New York State Contract Reporter on June 25, 2013 (RFQ No. Q135496AT), nine proposals were received on August 9, 2013 from Jiangsu Huapeng Transformer Ltd., Hico America, Inc., Kenny Construction Company, GE Prolec Transformers Inc., SPX Transformer Solutions, Inc., Smit Transformer Sales Inc., ABB Inc., Mitsubishi Electric, and Toshiba International Corporation.  The bids were evaluated from a cost, delivery schedule, and technical standpoint and ABB Inc.’s proposal is deemed lowest in cost and technically acceptable.

 

DISCUSSION

 

The Project has been structured in a manner to prioritize the replacement of poor performing and aged equipment.  Replacement of listed equipment will be sequenced in conjunction with planned equipment replacements, outages, internal resource availability, and external utility upgrades, as follows:

 

Phase 1:                 2014 – 2019

Phase 2:                 2020 – 2025

               

This initial capital expenditure authorization for Phase 1 is comprised of the following:

                                                                                                                                                                           

                                Preliminary Engineering (Previously Approved)                            $       750,000

 

                                Engineering and Design                                                                      $    7,467,000

 

                                Procurement                                                                                         $  64,021,000

 

                                Construction/Installation                                                                   $  64,371,000  

                               

                                Authority Indirect and Direct Expenses                                          $  18,123,000  

 

                                                                                                                TOTAL:                 $154,732,000  

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

The Senior Vice President and Chief Engineer – Operations Support Services, the Acting Vice President – Project Management, the Vice President – Engineering, the Vice President – Transmission, the Acting Vice President – Procurement, the Project Manager, and the Regional Manager – Western New York recommend that the Trustees approve capital expenditures in the amount of $154.7 million and award of a contract in the amount of $5.3 million to ABB, Inc. Power Transformer Division, Raleigh, NC for the Niagara Switchyard Life Extension and Modernization 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 in pursuant to the Authority’s Expenditure Authorization Procedures, capital expenditures in the amount of $154.7 million are hereby authorized for the Niagara Switchyard Life Extension and Modernization Project as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

 RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a contract to ABB, Inc. Power Transformer Division, Raleigh, NC in the amount of $5.3 million to engineer, manufacture, assemble and test one 800 MVA Auto-Transformer as part of the Niagara Switchyard Life Extension and Modernization Project, as recommended in the foregoing report of the President and Chief Executive Officer and set forth below:

 

Contractor                                                   Contract Approval

                                               

                                        ABB, Inc. Power                                                 $5.3 million

                                                        Transformer Division

        Raleigh, NC

 

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 Acting Executive Vice President and General Counsel.


 

j.         Procurement (Services) Contract –Niagara,

St. Lawrence and Blenheim-Gilboa Pumped

Storage Projects – Visitors’ Centers Upgrade –

Capital Expenditure Authorization Requests

and Contract Award                                                 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize additional capital expenditures in the aggregate amount of $12,652,100 and approve the award of a five-year contract to Hadley Exhibits, Inc. of Buffalo, NY (‘Hadley’), in the amount of $9,020,899, to perform improvements and comprehensive upgrades to the exhibits and facilities at the Authority’s Visitors Centers (herein referred to as the ‘Project’).  The Visitors Centers include the Power Vista Visitors Center located at the Robert Moses Niagara Power Project, the Frank S. McCullough, Jr. Hawkins Point Visitors Center and Boat Launch located at the St. Lawrence/FDR Power Project, and the Blenheim-Gilboa Visitors Center located at the Blenheim-Gilboa Pumped Storage Project (herein referred to as the ‘Facilities’).

 

BACKGROUND

 

Section 2879 of the New York State Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for non-personal services contracts in excess of $3 million and 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 contracts in excess of $3 million.

 

Many of the exhibits at the Facilities are no longer functional, displaying signs of wear, irrelevant to present-day topics and programs, and cannot be easily updated and maintained.  As these Facilities are open to the public, the exhibits need to be upgraded to include present-day technologies and represent the Authority’s current programs and customers.  Additionally, the Facilities are a significant component in fulfilling the Authority’s Federal Energy Regulatory Commission (‘FERC’) obligation to provide public recreational opportunities at its hydro facilities, and are included in each site’s FERC-approved Recreation Plan.

 

In 2013, the Authority awarded a contract to Crystal McKenzie, Inc. to perform Benefit Analysis Studies for the Facilities to evaluate the condition and recommend upgrades to the existing exhibits, provide recommendations for new exhibits, as well as other additions and modifications necessary to modernize the Facilities.

 

DISCUSSION

 

The scope-of-work under this contract includes content development, detailed design, fabrication, and installation of exhibits that will feature new hands-on interactive elements, wall-mounted exploration stations, wall- and table-mounted touch-screen technologies, and other interactive exhibits.  The scope also includes: the addition of a local area communication network to support exhibit connectivity, improvements to the overall floor plan layout, signage, lighting and electrical infrastructure, the removal of the existing chair-lifts, addition of a handicapped-accessible ramp and an elevator at the Niagara Power Vista, and a three-year term for as-needed maintenance at each of the Facilities.  The design and construction work will be performed in four phases as follows:

 

1.    Niagara Power Vista Visitors Center Upgrades                                          Summer 2014 - Spring 2016

2.    Niagara Power Vista Elevator Installation                                                 Summer 2014 - Spring 2015

3.    St. Lawrence Hawkins Point Visitors Center Upgrades                            Fall 2015 - Spring 2017

4.    Blenheim-Gilboa Visitors Center Upgrades                                                Fall 2015 - Spring 2017

 

In addition, the contract with Hadley includes an option for a three-year maintenance agreement if selected, which spans from 2016 through 2019.  This maintenance is not included as part of the capital project.

 

The Authority issued a Request for Information in the New York State Contract Reporter on December 20, 2013, seeking pre-qualification statements from experienced firms.  On January 14, 2014, the following four responses were received:

 

                Firms                                                                                      Location

                Cannon Design-Build, Inc.                                                Chicago, IL

                Crystal McKenzie, Inc.                                                       New York City, NY

                Hadley Exhibits, Inc.                                                          Buffalo, NY

                Thinking Outside the Square                                             Buffalo, NY

 

Based on the review of those submissions, a Request for Quotation was issued to all four firms on February 21, 2014.  Subsequently, on April 3, 2014, the following two proposals were received:

 

Bidder                                                                                    Lump Sum with Options

Hadley Exhibits, Inc.                                                          $9,020,899

Cannon Design-Build, Inc.                                                $11,133,102

 

The proposals were evaluated from a cost, technical, safety and similar work experience standpoint, by an Evaluation Committee.

 

Hadley’s proposal was the lowest in price and was also technically acceptable.  The company has extensive experience in exhibit design and construction, has demonstrated knowledge of the scope-of-work, and is capable of completing this project in a timely manner.

 

Hadley’s experience, resources and capabilities meet the Authority’s requirements as described in the bid document.

 

Of the total contract amount, approximately $8,700,000 is associated with the upgrades to the Facilities, with the balance of approximately $300,000 for the as-needed maintenance option.

 

The following table summarizes the capital expenditure estimate by facility, with the previously-approved authorizations by the President and Chief Executive Officer and the current authorization request:

 

Facility

Project Estimate

Previous Authorization

Current Authorization

Robert Moses Niagara Power Project – Power Vista

$8,925,000

$260,700

$8,664,300

St. Lawrence/FDR Power Project – Frank S. McCullough, Jr. Hawkins Point Visitors Center and Boat Launch

$2,410,000

$249,600

$2,160,400

Blenheim-Gilboa Pumped Storage Project - Visitors Center

$2,100,500

$273,100

$1,827,400

TOTAL

$13,435,500

$783,400

$12,652,100

 

Future-year funding for design and construction will be included in the Capital Budget request for that year.  Future long-term maintenance will be budgeted, as necessary, in the Operating Budget request for that year.

 

FISCAL INFORMATION

 

Payment associated with this project will be made from the Authority’s Capital Fund.  Payments associated with future long-term maintenance will be made from the Authority’s Operating Fund.

 


 

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 Managers of Central, Northern, and Western New York recommend that the Trustees authorize capital expenditures in the amount of $12,652,100 and approve the award of a five-year contract to Hadley Exhibits, Inc. of Buffalo, NY in the amount of $9,020,899, to perform improvements and comprehensive upgrades to the exhibits and facilities at the Authority’s Power Vista Visitors Center located at the Robert Moses Niagara Power Project, the Frank S. McCullough, Jr. Hawkins Point Visitors Center and Boat Launch located at the St. Lawrence/FDR Power Project, and the Blenheim-Gilboa Visitors Center located at the Blenheim-Gilboa Pumped Storage 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 Authority’s Expenditure Authorization Procedures, capital expenditures are hereby approved in the aggregate amount of $12,652,100, for the Niagara Power Project, St. Lawrence Power Project, and Blenheim-Gilboa Pumped Storage Project Visitors Centers Upgrade Project, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, approval is hereby granted to award a five-year contract to Hadley Exhibits, Inc. of Buffalo, NY, in the amount of $9,020,899, for the Niagara Power Project, St. Lawrence Power Project, and Blenheim-Gilboa Pumped Storage Project Visitors Centers Upgrade Project, as recommended in the foregoing report of the President and Chief Executive Officer and set forth below:

 

                                                        Contractor                                       Contract Approval

 

                                                        Hadley Exhibits, Inc.                             $9,020,899

                                                        Buffalo, NY

                                                        (Q14-5598FS)

 

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 Acting Executive Vice President and General Counsel.


 

k.       STL-CEC Microwave System Upgrade Project –

Capital Expenditure Authorization Request –      

                        Increase in Authorized Funding                                  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to authorize an increase to the Capital Expenditure Authorization Request (‘CEAR’) in the amount of $701,000 to complete the upgrade of the Microwave Communication System, from analog to digital, from the St. Lawrence/FDR Power Project (‘STL’) to the Frederick R. Clark Energy Center (‘CEC’), (the ‘Project’).  The Project completion is expected during the summer of 2014. 

 

In March 2013, based on increased Project scope-of-work, additional funding in the amount of $866,000 was authorized by the President and Chief Executive.  This additional authorization was within the $1.0 million limit that the President and Chief Executive Officer can authorized for projects previously authorized by the Trustees.  This request will result in a total increase of $1,567,000. 

 

BACKGROUND

 

In accordance with the Authority’s Expenditure Authorization Procedures, requests for an increase in expenditure authorization that exceed $1 million require the Trustees’ approval.

 

At their meeting of March 29, 2011, the Trustees approved the Project CEAR in the amount of $5.8 million and the award of a competitively bid contract to Aviat U.S., Inc. to upgrade the STL-CEC Microwave Communication System.  The Project includes the replacement of all existing electronic equipment with ‘state-of-the-art’ hierarchical digital electronic equipment at STL, CEC and four remote repeater facilities. 

 

DISCUSSION

 

The requested funds will cover the costs associated with Project contracting delays, increased construction management costs, increased scope and engineering.  With the addition of the requested funds, the total Project budget will be $7,367,000.

 

Initial Approval                                                   $5,800,000

Previous Request (March 2013)                            866,000

Current Request                                                        701,000

Total:     $7,367,000

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

The Senior Vice President and Chief Engineer – Operations Support Services, the Acting Vice President – Project Management, the Vice President – Engineering, the Vice President – Transmission, the Acting Vice President – Procurement, the Project Manager and the Regional Manager – Northern New York recommend that the Trustees authorize additional capital expenditures in the amount of $701,000 to complete the upgrade of the Microwave Communication System from the St. Lawrence/FDR Power Project to the Frederick R. Clark Energy Center. 

 


 

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 Authority’s Expenditure Authorization Procedures, additional capital expenditures in the amount of $701,000 are hereby authorized to complete the upgrade of the new Microwave Communication System from the St. Lawrence/FDR Power Project (“STL”) to the Frederick R. Clark Energy Center (“CEC”), 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 Acting Executive Vice President and General Counsel.

 


 

l.         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 ‘2l-A,’ as well as the continuation and/or funding of the procurement (services) contracts listed in Exhibit ‘2l-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 $663,500 to $15 million.  Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.

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

Extensions

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

Operations Support Services

 

 

Project Management

 

Due to the need to commence services, the contract with Greenman-Pedersen, Inc. (‘GPI’) (4600002789) became effective on April 30, 2014, for the initial interim award amount of $100,000, subject to the Trustees’ approval as soon as practicable, in accordance with the Authority’s Guidelines for Procurement Contracts and EAPs.   Such contract would provide for consulting and inspection services related to the application of paints and other coatings on equipment, structures and infrastructure surfaces, per the National Association of Corrosion Engineers (‘NACE’) certified coating system, in support of the Authority’s Transmission Life Extension and Modernization Program and other Authority projects.  Services include field and home office technical support, on an ‘as needed’ basis, and involve, but are not limited to, inspections of Authority buildings, bridges, roadways, tunnels and transmission towers located throughout New York State, in compliance with NACE certification requirements; laboratory testing and analysis; development and/or review of coating specifications and inspection plans; preparation of detailed reports and recommendations for various applications, etc.  This interim award allows GPI to perform coating inspection services related to the application of paints and other coatings in support of the ongoing Barnhart Island Bridge Rehabilitation Project.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 58 firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Reasons why other firms did not submit a bid include, but are not limited to, this was not their scope of work, they could not meet the delivery or schedule requirements, or they downloaded the documents for information purposes only.  Staff recommends the award of a contract to GPI, which is qualified to perform such services, meets the bid requirements and has provided satisfactory services under the existing contract for such work.  The intended term of the new contract is five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $5 million.

 

Due to the need to commence services, the contract with O’Connell Electric Company, Inc. (‘O’Connell’) (4500244895) became effective on May 1, 2014, for the initial interim award amount of $500,000, subject to the Trustees’ approval as soon as practicable, in accordance with the Authority’s Guidelines for Procurement Contracts and EAPs.  Such contract would provide for the installation of sixteen 115 kV power circuit breakers, one 100 MVAR capacitor bank and demolition of existing synchronous condensers and associated equipment at the St. Lawrence/FDR Project’s Robert Moses Switchyard, as part of the Transmission Life Extension and Modernization Program.  This interim award allows O’Connell to mobilize its resources and procure long-lead items, maximizing the amount of work that can be completed during the warmer weather months and facilitating coordination between construction and delivery of equipment.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 87 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 O’Connell, the lower-priced bidder, which is qualified to perform such services and meets the bid requirements.  Furthermore, O’Connell is a full-service regional electrical, power line, utilities and communication contractor with more than 100 years of experience and possesses the resources to complete this work.  The intended term of the subject contract is 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, $10,818,950 (including the initial interim award amount of $500,000, as well as $920,000 for any emergent site environmental conditions involving the disposal of oil, concrete and soil, and the provision of clean fill).

 

Due to the need to commence services, the contract with O’Connell Electric Company, Inc. (‘O’Connell’) (4500245184) became effective on May 9, 2014, for the initial interim award amount of $250,000, subject to the Trustees’ approval as soon as practicable, in accordance with the Authority’s Guidelines for Procurement Contracts and EAPs.  Such contract provides for site preparation and related work in connection with the 765 kV Auto-Transformer Replacement Project at the Massena Substation, as part of the Transmission Life Extension and Modernization Program.  This interim award allows O’Connell to commence mobilization activities.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 124 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 O’Connell, the lower-priced evaluated bidder, which is qualified to perform such work and meets the bid requirements.  O’Connell’s proposal presented a detailed technical approach to the proposed scope of work.  Furthermore, the firm possesses the necessary resources to perform this work.  The intended term of the subject contract is up to two years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $5,190,480.

 

 

Environment, Health & Safety

 

The contract with TRC Environmental Corp. (‘TRC’) (Q14-5615; PO# TBA) would provide for Relative Accuracy Test Audits (‘RATA’ Testing) of the Continuous Emissions Monitoring Systems (‘CEMS’) at the Authority’s power plant sites in the Southeastern New York (‘SENY’) Region, in compliance with all applicable regulatory requirements and performance specifications.  Services include, but are not limited to, testing for nitrous oxide, carbon monoxide, ammonia and oxygen to demonstrate the accuracy, precision and reliability of the CEMS system, required by the New York State Department of Environmental Conservation (‘NYS DEC’) to maintain each plant’s Title V Air Permit.  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 19 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 TRC, the lower-priced evaluated bidder, which is qualified to perform such services and meets the bid requirements.  The contract 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 total amount expected to be expended for the term of the contract, $663,500.

 

The Authority’s operating facilities, substations, electrical transmission facilities, and maintenance and support facilities store and use various types of oils and hazardous materials in their normal operating practices.  Government regulations require that owners and operators of facilities that store oil and have the potential to spill oil on land or in waters of the United States or adjoining shorelines prepare Spill Prevention Control and Countermeasure (‘SPCC’) Plans.  In addition, government regulations require that a strong spill contingency plan be included in the SPCC plan, which provides a written commitment of manpower, equipment and materials required to expeditiously control and remove any harmful quantity of oil discharged.  In compliance with such federal, state and local requirements, the Authority maintains contracts with emergency spill response contractors.  Since the existing contracts for such services are expiring and the need is ongoing, bid documents (Q14-5581) were developed by staff and were downloaded electronically from the Authority’s Procurement website by 64 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Seven proposals were received, evaluated and rated based on weighted criteria including, but not limited to: contractor response time of two hours or less with sufficient resources to contain, control and clean up discharged oil; U.S. Coast Guard certification, which establishes response capability guidelines in a marine environment, for those facilities that have the potential to discharge oil to surface waters; completeness / responsiveness of the proposal; amount and type of equipment at the contractor’s staging facility; and calculated costs for typical land and surface water spill scenarios.  This process determined the most qualified and cost-effective contractor/s for each facility, as further set forth in the Award Recommendation documents.  Staff recommends the award of contracts to six firms: Allstate Power Vac, Inc. (‘Allstate’), Environmental Products & Services of Vermont, Inc. (‘EP&S’), Miller Environmental Group, Inc. (‘Miller’), National Vacuum Corp. (‘NVC’), OP-TECH Environmental Services, Inc. (‘OP-TECH’) and WRS Environmental Services, Inc. (‘WRS’), which are qualified to perform such work and meet the bid requirements.  The one remaining firm was not selected based on its low technical score and not fully meeting the bid requirements.  It should be noted that several of the recommended firms have provided satisfactory service to the Authority under existing contracts for such work.  The award of contracts to multiple firms would ensure that each Authority facility will be able to obtain sufficient resources to respond to a spill within two hours of contractor notification and that each site also has one back-up contractor for emergency situations.  The new contracts would become effective on or about June 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, $15 million.  Such contracts will be monitored for utilization levels, available approved funding and combined total expenditures.

 

                The contracts with AECOM Technical Services, Inc. (‘AECOM’), ARCADIS of New York, Inc. (‘ARCADIS’), Kleinfelder East, Inc. (‘Kleinfelder’), Kleinschmidt Associates, PA, PC (‘Kleinschmidt’), Louis Berger & Associates, PC (‘Berger’) and TRC Environmental Corp. (‘TRC’) (Q13-5541) would provide for on-call general environmental services to the Authority, as needed.  Services to be provided by these engineering / environmental consulting firms include, but are not limited to, providing technical expertise and assistance on projects and tasks in the following two areas: 1) Environmental Operations (e.g., hazardous waste management plans, site investigations, spill prevention, control and countermeasure plans, State Pollutant Discharge Elimination System (‘SPDES’) permits, notices of termination, notices of intent, storm water pollution preventions plans, etc.) and 2) Studies (e.g., fisheries studies, wetland delineation and design, rare-threatened and endangered species considerations, etc.).  Bid documents were developed by staff and were downloaded electronically from the Authority’s Procurement website by 210 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Thirty-five proposals were received and evaluated; of this number, seven did not meet the bid requirements and were not considered further.  The remaining 28 proposals were evaluated in greater detail; each proposal was rated by the evaluation team based on weighted criteria, as further set forth in the Award Recommendation documents.  Staff recommends the award of contracts to the six aforementioned firms, which were the highest scoring, most qualified bidders based primarily on their technical capability, experience in specific technical areas defined in the bid documents, pricing and responsiveness / quality of the proposal.  The award of multiple contracts will provide the Authority with a vehicle for rapid response to a wide variety of emergent tasks and will ensure that adequate specialty environmental expertise is available, as needed.  Work will be assigned to the firm possessing the most capability in the area required and the ability to meet the Authority’s schedule and budget considerations.  The contracts would become effective on or about June 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, $4 million.  Such contracts will be monitored for utilization levels, available approved funding and combined total expenditures.

 

Contract Extensions and/or Additional Funding:

 

Executive Offices

The contract with Ernst & Young LLP (‘EY’) (4500231450) provides for consulting and auditing services.  The Authority’s Board of Trustees and Executive Management Committee requested a management audit of the Authority’s Procurement and Internal Audit Departments, including an assessment of the Authority’s procurement policies and practices, as well as the Authority’s internal audit methodology, procedures and resources for conducting internal audits.  After a competitive search, the firm of Ernst & Young was awarded a contract, which became effective on May 2, 2013, for a term of less than one year, in the lump sum amount of $365,000.  It was anticipated that EY would conclude its work by October 2013.  However, the EY audits were suspended from June 2013 until January 2014, when EY was requested to resume the work.  Administratively, the contract term was extended through April 30, 2014.  EY provided its assessments and recommendations to the Trustees in February 2014.  Based on this report, EY was requested to undertake additional assessments regarding the Authority’s competitive bidding processes and the Authority’s internal audit function.  In order to provide for the continuation of services under the existing contract, which would extend beyond one year, the President and Chief Executive Officer authorized a three-month interim extension of the subject contract through July 31, 2014 and also authorized additional funding in the amount of $392,000, in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures, subject to the Trustees ratifying such actions as soon as practicable.  The current contract amount is $757,000; staff estimates that no additional funding will be required for services to be provided during the extended term.  The Trustees are requested to ratify and approve the three-month interim extension of the subject contract through July 31, 2014, as well as the additional funding previously authorized in accordance with the EAPs.

 

Operations Support Services

Project Management

                At their meeting of September 26, 2006, the Trustees approved the award of a contract to NAES Corp. (formerly North American Energy Services) (4500133069) to provide for the operation and maintenance (‘O&M’) of the New York City Department of Environmental Protection’s (‘NYC DEP’) East Delaware and Neversink hydroelectric facilities (‘Facilities’).  The original award, which was competitively bid, became effective on November 29, 2006 for an initial term of 19 months, with an option to extend for two additional years.  (There are provisions in the contract to extend the contract term for additional periods of time, to a maximum of nine additional years; requests to exercise any such further renewal options and approval of additional funding beyond the current levels will be presented to the Trustees for review and approval as needs arise.)  Several incremental additional funding increases, as well as contract term extensions, were subsequently authorized by the Trustees, most recently at their meeting of June 26, 2012, when the approved compensation limit was increased to $17,959,957.  Since the need for such services is ongoing and the contract provides the aforementioned option for additional extension(s), a two-year extension is now requested to provide for the continuation of such services through June 30, 2016.  The current contract amount is $17,910,956; staff projects that an additional $3,960,000 will be required for the extended term ($2,248,860 for O&M services and $1,711,140 to support new and/or ongoing capital projects that have been identified and agreed to by the NYC DEP for the extended term).  The Trustees are requested to approve extension of the subject contract through June 30, 2016, as well as the additional funding requested, thereby increasing the approved contract value to 21,919,957.  All contract renewals between the Authority and NAES are subject to the Operating Agreement between the Authority and NYC DEP.  The City of New York, acting through NYC DEP, will reimburse the Authority for all direct and administrative costs.

The contract with Northline Utilities LLC (‘Northline’) (4500232210) provides for construction services in connection with Phase 3 of the Alcoa Transmission Line Relocation Project, which entails the relocation of the existing 115 kV Transmission Lines MRG1, MRG2 and MR3 in support of Alcoa’s Massena Modernization Project.  At their meeting of May 21, 2013, the Trustees approved capital expenditures in the amount of $3,715,000 for the project, which included funding for Phase 3 construction / installation.  The original award for Phase 3, which was competitively bid, became effective on May 21, 2013, for a term of less than one year and an award amount of $2,135,916; an additional $362,812 was subsequently authorized in accordance with the Authority’s EAPs.  Delays in completing Phase 3 construction work are the result of additional work being required and long lead-times for transmission material delivery due to Hurricane Sandy.  A three-month extension is now requested in order to complete the work.  The current contract amount is $2,498,728; staff anticipates that no additional funding will be required for the extended term.  The Trustees are requested to approve extension of the subject contract through August 31, 2014, with no additional funding requested.  It should be noted that Alcoa will reimburse the Authority for 100 percent of the cost of the project.

The contract with Power Engineering, Inc. (4500232540) provides for post-upgrade mechanical testing and analysis for Unit 11 of the Lewiston Pump Generating Plant (‘LPGP’) at the Niagara Power Project, as part of the Authority’s Life Extension and Modernization (‘LEM’) Program.  The original award, which was competitively bid, became effective on June 7, 2013, for a term of less than one year and an award amount of $722,648 (from the approved total of $774,098).  Several equipment performance anomalies identified subsequent to the Unit’s upgrade and return to service in 2013 prevented the completion of the original scope of work.  Additional testing, instrumentation and investigation were required in order to determine the root cause of the anomalies and to implement short-term repairs.  Additional testing and analysis needs to be performed to provide the information required to determine and implement the appropriate long-term remedial measures for this Unit and for all other such Units to be upgraded during the LEM Program, and to complete the original contract scope.  A one-year extension is therefore requested in order to resolve these issues and perform this work.  The current contract amount is $722,648; staff anticipates that an additional $509,346 will be required for the proposed extended term.  The Trustees are requested to approve extension of the subject contract through June 6, 2015, as well as the additional funding requested.

FISCAL INFORMATION

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

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

RECOMMENDATION

The Vice President – Public and Regulatory Affairs and Chief of Staff, the Vice President – Environment, Health and Safety, the Acting Vice President – Project Management, the Acting Vice President – Procurement, the Vice President – Transmission, the Regional Manager – Western New York, the Regional Manager – Northern New York, the Regional Manager – Central New York and the Regional Manager – Southeastern New York recommend that the Trustees approve the award of multiyear procurement (services) contracts to the companies listed in Exhibit ‘2l-A’ and the extension and/or funding of the procurement (services) contracts listed in Exhibit ‘2l-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 with Vice Chair Mahoney being recused from the vote as it relates to Op-Tech Environmental Services, Inc. and Arcadis of New York, Inc.

 

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 “2l-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 “2l-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 Acting Executive Vice President and General Counsel.

 

 


                                                                          i.       

Discussion Agenda:

 

3.                   Report of the President and Chief Executive Officer

 

Performance Scorecard

President Quiniones said he was pleased to report that, based on the Performance Scorecard, the Authority was doing very well, exceeding most of the goals outlined in the Scorecard.  He then asked Mr. Welz to brief the Trustees on environmental and safety which was below target.  Mr. Welz said that to date, there has been seven DART (the measure of the Authority’s safety performance) related issues.  There were some incidents at the 500 MW and Blenheim-Gilboa plants, and a reclassification of “injury.”  And since the individual employees were placed on medical leave, it had to be counted as DART incidents.  However, with better weather conditions expected in the months ahead, the DART rate will adjust to the target as outlined in the Performance Scorecard.

Responding to a question from Chairman Koelmel, President Quiniones said despite the weather conditions at the beginning of the year, the Authority is performing well financially. Notwithstanding the DART rate, from a reliability, generation and transmission perspective, the Authority is operating extremely well.  In addition, the Y-49 transmission cable repairs and the implementation of the Authority’s Strategic Plan are going according to plan.  There are no cautionary “flags” at this time to report.  President Quiniones ended by saying that the trajectory for the balance of the year is very positive.  However, he will continue to be vigilant and focused in executing the Authority’s plans.

 

 


 

4.                   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 $25 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 2014-15 Budget of the State of New York (Chapter 55 of the Laws of 2014).

 

BACKGROUND

 

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

 

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

 

DISCUSSION

 

                    The State’s fiscal year (‘SFY’) 2014-15 Budget legislation authorizes the Authority as deemed ‘feasible and advisable by its trustees’ to provide up to $90 million in contributions to the State’s general fund, or as otherwise directed in writing by the State’s director of the budget, whereupon such funds ‘will be utilized to support energy-related initiatives of the state or for economic development purposes.’  In addition, the Budget legislation specified that up to $25 million is to be considered for payment by June 30, 2014 and the remainder of any such contribution considered for payment by March 31, 2015.  The legislation specifies that such economic development purposes may include, but shall not be limited to, efforts to attract and expand business investment and job creation in New York state through the Open for Business program, provided that in the event any contributed funds are used by a state agency or public authority for the purpose of advertising and promoting the benefits of the START-UP NY program,  no  less than sixty percent of the contributed funds used for such purpose shall be used for advertising and promotion outside the state of New York.

 

  In accordance with Section 19 of Part I of Chapter 55 of the Laws of 2014, the State’s director of the budget has formally requested that the Authority transfer on or before June 30, 2014 the sum of $25 million to the credit of ESD in furtherance of ESD’s Statewide economic development initiatives.  With regard to the remaining amount contemplated in the SFY 2014-15 Budget ($65 million), staff is not recommending any action at this time, but will return to the Board with a recommendation as to that amount based on the financial circumstances of the Authority at the time such contribution is to be considered for payment.   

 

In the first quarter of 2014, the Trustees approved and the Authority released contributions totaling $65 million, pursuant to the last year’s SFY 2013-14 Budget legislation.  Last fiscal year’s $65 million amount, together with the up to $25 million considered herein, totals to $90 million for the Authority’s calendar year 2014 operations, which is the amount the Authority budgeted for in its 2014 Operating Budget.

 

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

 

FISCAL INFORMATION

 

Staff has determined that sufficient funds are available in the Operating Fund to transfer $25 million in 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 2014-15 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 $25 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 presented highlights of staff’s recommendation to the Trustees.  In response to a question from Trustee Nicandri, Mr. McElroy said the debt service coverage ratio in relation to the transfer is 3.5 times.  Responding to further questioning from Trustee Nicandri, Mr. McElroy said the ratio has been increasing over the years and he will provide the actual calculations to the Board.  Responding to still further questioning from Trustee Nicandri, Mr. Russak said the Authority is at a steady state with respect to its earnings level.  The capital investments that the Authority will be making will not directly affect the coverage calculation and therefore, going forward, will not have a direct effect as money is spent on the transmission investments. 

Responding to a question from Chairman Koelmel, Mr. Russak said the coverage calculation takes into account any capital additions and that is why it is not going to have a direct effect right away.  The Authority is in a good place financially and is prepared to meet the challenge of the significant increase in investments that it will be making over the next several years, namely, the Transmission Life Extension and Modernization (LEM); Lewiston Pumped-Generation LEM and the Build Smart NY Programs.


 

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 $25 million from the Operating Fund as authorized by Chapter 55 of the Laws of 2014 as discussed in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the amount of $25 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 Acting 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 Acting Executive Vice President and General Counsel.

 

 

 

               


 

5.                   Election of Executive Vice President and Chief Financial Officer

 

The Chairman of the Governance Committee submitted the following report:

SUMMARY

The Trustees are requested to consider the election of Robert F. Lurie of Morristown, New Jersey as Executive Vice President and Chief Financial Officer of the Authority effective May 31, 2014.

BACKGROUND AND DISCUSSION

The election of non-statutory officers is governed by the Authority’s By-laws.  Article V, Section 3, requires the Governance Committee to make recommendations to the Board of Trustees on the election of non-statutory officers and their compensation.  Article IV, Section 2, provides that non-statutory officers shall be elected by the Trustees upon the recommendation of the Governance Committee.  Section 3 of the same Article provides that such non-statutory officers shall hold office until his successor is chosen and qualified or his earlier removal, resignation or death.

RECOMMENDATION

It is recommended by the Governance Committee that, pursuant to the Authority’s By-laws, originally adopted in April 9, 1954 and last amended on March 27, 2012, Robert F. Lurie be elected as Executive Vice President and Chief Financial Officer, effective May 31, 2014, to hold such office until his successor is chosen and qualified or his earlier removal, resignation or death.

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

 

            Trustee LeChase presented the recommendation for the election of the new Chief Financial Officer to the Board.  He said the Governance Committee met in special session prior to this meeting and on President Quiniones’ recommendation and information, it approves and recommends to the full Board the appointment of Robert Lurie as Executive Vice President and Chief Financial Officer.

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

 

                RESOLVED, That pursuant to Article IV, Section 2 of the Authority’s By-Laws, Robert F. Lurie is hereby elected as Executive Vice President and Chief Financial Officer, effective May 31, 2014, to hold office until his successor is chosen and qualified or his earlier removal, resignation or death.

 

               

 

 


 

6.                   Retirement Resolutions

 

Chairman Koelmel said on behalf of the Trustees and Executive Management, he wanted to recognize Donald Russak and Joan Tursi who are retiring and asked President Quiniones to provide a few remarks.

President Quiniones made the following remarks:

 

“Don will be leaving his position as Executive Vice President and Chief Financial Officer knowing that he leaves the Authority with its financial house in order and stronger than it has ever been in its history.  I can’t overstate the role that he has played in our successes that have helped to maintain NYPA’s strong financial position.  And, in fact, as recent as last year, Standard & Poor’s upgraded our credit rating from “stable” to “positive”--- what a legacy Don is leaving for the Power Authority.

 

During his tenure as Chief Financial Officer, NYPA decisively surpassed its goals in such critical areas as net income, debt service coverage ratio, leverage and liquidity, while meeting our stringent budget requirements and targets. These elements have been essential for the major contributions that our organization makes to the state’s electric power system and economy. 

 

Don’s institutional knowledge and thorough comprehension and command of the issues affecting NYPA and our industry have been of tremendous help to me, the executive management team and to this Board’s decision-making.  But if I had to characterize Don in one word, it would be “commitment,” i.e., commitment to the Power Authority. He exudes this quality, and I thank him for his steadfastness and professionalism throughout his nearly 35 years of service.  Don, we wish you all the best in your retirement.” 

 

 

                Chairman Koelmel added that Mr. Russak has been terrific, brilliant, and wonderful to work with.  He said Don has provided the Trustees with incredible counseling and confidence.  He thanked him on behalf of the entire state and the organization for his incredible service and many contributions through the years.

In response, Mr. Russak said it has been a long run and he has been very proud to help serve the Power Authority through the years.  He said he looks forward to its continued success and wished the organization all the best.

Chairman Koelmel said Ms. Joan Tursi was also retiring and asked President Quiniones to provide a few remarks on her many contributions.

President Quiniones made the following remarks:

 

“NYPA employees owe a debt of gratitude to Joan, our Senior Vice President for Enterprise Shared Services, who is also retiring after more than 30 years at NYPA. She has been a tireless advocate for the workforce, instituting programs that have given employees many opportunities to succeed in their careers. This has enhanced our efforts to attract and retain employees in a highly competitive environment.  Most recently, Joan was instrumental in the implementation of an innovative on-site MBA program, in conjunction with Pace University. She has always understood that an inspired and talented workforce is our greatest asset. Many of the endeavors spearheaded by Joan have been forward-looking.  Because of her leadership and dedicated efforts, NYPA is ready for the industry challenges that lie ahead.  Joan has helped to reinvigorate our corporate culture and make NYPA a place where people look forward to coming to work.

 

Joan, thank you for all that you’ve accomplished.  You’re the consummate professional and I wish you the very best.”     

 

 

Chairman Koelmel said on behalf of the Board, he wanted to thank Joan for her valuable service and many contributions.  He said she has been sage in steering the Authority through many challenging issues.   He continued that every organization’s success is a function of its talent and the Board appreciates her leadership which, not only put the Authority in a better place, but helped to make sure it was well-positioned to move forward as it pursues new opportunities. 

                In response, Ms. Tursi thanked the Chairman for his kind words and said it had been wonderful working at the Power Authority.

                Chairman Koelmel said in addition to Don and Joan, this is also Trustee LeChase’s last meeting, another bittersweet moment for all of us.  He said Trustee LeChase has been at the table through some of the Authority’s recent transitions - leadership and organizational - and contributed significantly to those changes. 

 

                He then made the following remarks.

 

“As an attorney, and Chief Executive Officer of a highly successful construction company, and advocate for upstate businesses, Trustee LeChase brought invaluable private-sector experience and knowledge of economic development to his duties as a Trustee of the Power Authority. This supported our rollout of the hugely successful ReCharge NY program, with Wayne being a strong advocate for the hundreds of allocations that we’ve made in support of nearly 400 thousand jobs. Further, his background in building construction and energy efficiency has been of great help in NYPA’s administering of Build Smart NY, another initiative of the Governor’s. Beyond this, his practical common-sense approach has helped us navigate many complex issues.   

 

Wayne, it’s been a pleasure serving with you on this Board, and we wish you all the best.      

 

Wayne, on behalf of the members of the Board, I want to thank you for your tremendous service, your invaluable guidance and wisdom and be assured, you will be missed.  Thanks also for your incredible commitment, time and energy that you have brought for the benefit of the Power Authority and the State of New York during your years on the Board.”

 

 

Trustee Nicandri said he wanted to express his appreciation to Trustee LeChase.  He said he has been a great friend and person to work with. He enjoyed their time together and he is going to miss them.

Trustee Mahoney said she wanted to echo the Chairman’s and Trustee Nicandri’s words and added that on a personal level it's been a pleasure to get to know him.  She said she enjoyed being able to work with him, that it's been comforting to have someone of his stature sitting on the NYPA Board with them and she wished him all the best in the future.

Trustee LeChase thanked the Chairman and Trustees for their comments.  He said he was going to miss a great team.  He enjoyed his tenure with the Power Authority which rounds out about ten years of civic duty that he felt very strongly about.  He is sad that it is time to end it and get on with the next stage of his life; however, he thinks that the Power Authority is properly positioned; it's an exciting and vibrant place – it is helping the State get back on track and he is very proud to have served with such a great team and with such a great Board.

The following resolutions, as submitted by the Chairman, were unanimously adopted.

 

 

Resolution – R. Wayne LeChase

 

 

WHEREAS, R. Wayne LeChase, successful businessman, accomplished attorney and community leader, has provided exemplary public service on behalf of the citizenry of New York State in carrying out his statutory duties over the last three years as a New York Power Authority (NYPA) Trustee; and

 

WHEREAS, Mr. LeChase contributed greatly to the NYPA Board of Trustees’ oversight role of executive management in the operation of the Power Authority’s generation and transmission facilities, as well as in carrying out programs of Governor Andrew M. Cuomo to modernize the state’s electric power system, spur economic development and advance energy efficiency; and

 

WHEREAS, as the chairman of a full-service construction management company in Rochester, Mr. LeChase brought wide expertise and knowledge of best business  practices to his trustee role, including a focus on the Power Authority embodying the highest standards of integrity, safety and robust financial and operational performance; and

 

WHEREAS, the dedication of Mr. LeChase for reinvigorating the state’s economy was reflected by his voting affirmatively for hundreds of lower-cost power allocations under the Governor’s Recharge New York program, which is linked to nearly 400,000 jobs throughout the state, including more than 15,000 in Mr. LeChase’s beloved Finger Lakes region; and

 

WHEREAS, as a member of the Trustees’ Audit and Strategic Planning and Energy Policy Committees, Mr. LeChase provided insightful guidance to the Power Authority’s Office of Internal Audit to ensure NYPA’s continued solid financial performance and for the drafting of its new multiyear Strategic Vision document for encapsulating its priorities; and

 


 

WHEREAS, Mr. LeChase provided expertise in articulating the economic development, energy technology, electric market and environmental imperatives of a rapidly changing electric power industry and for aggressively building on NYPA’s strengths going forward; and

 

WHEREAS, Mr. LeChase’s lifelong commitment to environmental protection and sustainability, and actions on the NYPA board were in unison with Governor Cuomo’s policies for managing finite resources, improving energy efficiency and reducing climate-changing carbon emissions;

 

NOW THEREFORE BE IT RESOLVED, That the Trustees of the Power Authority of the State of New York express their gratitude to R. Wayne LeChase for his dedicated public service as a fellow trustee and their highest regard and admiration for his steadfast contributions to the State of New York, including philanthropic activities for the public’s well-being.  The Trustees extend their best wishes to Wayne and his family for good health and great success in all their future endeavors in the decades ahead.   

 

May 22, 2014

 

 

 


 

Resolution – Donald A. Russak

 

 

WHEREAS, Donald A. Russak has forged a unique, multi-faceted and enduring record of accomplishment during a stellar career of nearly 35 years at the New York Power Authority in which he has played an indispensable role in ensuring NYPA’s financial strength; and

 

WHEREAS, to an extent all but unparalleled in the Authority’s history, Mr. Russak has combined financial and economics expertise with a deep understanding of power rates and contracts, customer relations, law and public policy; and

 

WHEREAS, as Executive Vice President and Chief Financial Officer since March 2012, and in other senior financial positions, Mr. Russak has spearheaded numerous initiatives and successes that have helped to maintain the Power Authority’s coveted AA bond ratings and led Standard & Poor’s to upgrade the Authority’s credit outlook to “Positive,” enhancing access to the financial resources that will enable NYPA to fulfill its ambitious strategic objectives; and

 

WHEREAS, Mr. Russak’s tenure as CFO has also seen NYPA decisively surpass its goals in such critical areas as net income, debt service coverage, leverage and liquidity while meeting stringent budget targets; and

 

WHEREAS, Mr. Russak helped to lay the groundwork for this solid performance through his involvement in implementing a landmark debt restructuring plan that has enabled the Authority to reduce its net debt by $1.3 billion, or more than 40 percent, since the late 1990s; and

 

WHEREAS, he has contributed immeasurably to the well-being of NYPA employees, past and present, by conceiving and leading an effort to establish a dedicated trust fund to meet the costs of future retiree health and life insurance benefits; and

 

WHEREAS, Mr. Russak was an essential participant in negotiations and analysis concerning such vital matters as the Authority’s sale of its two nuclear power plants and an agreement for NYPA to share in their value; power-supply contracts with the New York City government customers and Alcoa; the Power for Jobs and Recharge New York programs; and the Authority’s financial relationship with the state; and

 

WHEREAS, to these and varied other assignments, including dealings with rating agencies and auditors and supervision of NYPA’s risk management and strategic planning functions, Mr. Russak has brought the skills and insight that have been evident since his earliest days as a power analyst; an unfailing equanimity; and an uncommon ability to earn the trust of his colleagues and counterparts; and

 

WHEREAS, having burnished his legacy by serving-- trademark diagrams often  in hand-- as a respected mentor to countless staff members, and with NYPA’s financial outlook secure, Mr. Russak has announced his retirement;

 


 

NOW THEREFORE BE IT RESOLVED, That the Trustees of the Power Authority of the State of New York salute Don Russak for his many contributions to the Authority and the people of the state; thank him for the invaluable counsel he has provided to this Board; and wish him; his wife, Roseann, and their growing family a future of health, happiness and continued success.

 

May 22, 2014

 

 

 

 


 

Resolution – Joan Tursi

 

 

WHEREAS, Joan Tursi has worked with singular professionalism and purpose to advance the interests of the New York Power Authority and those of its employees at a time of profound change in the electric power industry and unprecedented challenges for the Authority; and

 

 WHEREAS, throughout an extraordinary career of more than 30 years at NYPA, Ms. Tursi has demonstrated a keen intelligence, superb analytical skills and a superior gift for constructive collaboration, helping her to rise from the position of budget analyst to that of Senior Vice President for Enterprise Shared Services; and

 

WHEREAS, as a senior vice president since 2008, Ms. Tursi has with great effectiveness and lasting impact overseen NYPA-wide activities in areas as diverse as human resources and information technology, corporate travel and fleet operations and facilities management and real estate; and

 

WHEREAS, as the executive sponsor of NYPA’s Investing in Employees strategic initiative and related workforce retention programs, Ms. Tursi has resolutely sought to balance employees’ personal and professional needs by spearheading such innovations as an MBA degree curriculum at the Authority offices; a program enabling staff members to earn their NYPA salaries while performing volunteer work; and an online Employee Community Forum and other communications vehicles; and

 

WHEREAS, she has further strengthened NYPA’s efforts to attract and retain qualified employees in a highly competitive environment by playing key roles in expanding the Authority’s diversity, training and mentoring activities and in implementing a restructured and refined compensation program; and 

 

WHEREAS, she has provided invaluable leadership and guidance for such other vital endeavors as rebuilding and modernizing the Authority’s computerized operations network and launching an initiative to better manage and share knowledge throughout the organization; and

 

WHEREAS, Ms. Tursi’s exemplary work in budgeting and accounting positions, and then as Director of Budgets for almost 10 years, not only honed her talents and prepared her for her current responsibilities, but also led to her recognition in 2000 as NYPA’s Woman Leader of the Year; and

 

WHEREAS, the patience, empathy and candor that she has displayed throughout her NYPA career have earned her the abiding admiration, respect and loyalty of those who have worked with and for her-- along with their gratitude for the cakes and cards with which she has marked their birthdays and other milestones; and

 

WHEREAS, Ms. Tursi is retiring from the Authority, having contributed immensely to its past successes and done much to lay the groundwork for the fulfillment of its new Strategic Vision;

 


 

NOW THEREFORE BE IT RESOLVED, That the Trustees of the Power Authority of the State of New York convey their deepest thanks and appreciation to Joan Tursi for her service to NYPA and the people of the state and that they wish her; her husband, Bill, and their son and daughter a happy, healthy and rewarding future.

 

May 22, 2014

 


 

7.                   Next Meeting

 

The Regular Meeting of the Trustees will be held on July 29, 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 9:50 p.m.

 

 

Delince Signature

 

Karen Delince

Corporate Secretary