MINUTES OF THE MEETING
OF
THE GOVERNANCE
COMMITTEE
July
27, 2009
A meeting of the
Governance Committee was held at the Authority’s office at the
The following Members of the Governance Committee were present:
Trustee Eugene L. Nicandri, Chairperson
Trustee Elise M. Cusack
Also in attendance were:
Richard Kessel President and Chief Executive Officer
Gil Quiniones Chief Operating Officer
Terryl Brown Clemons Executive Vice President and General Counsel
Joseph Del Sindaco Executive Vice President and Chief Financial Officer
Edward Welz Executive Vice President and Chief Engineer – Power Supply
Bert Cunningham Senior Vice President – Corporate Communications
Paul Finnegan Senior Vice President – Government and Regulatory Affairs
Joan Tursi Senior
Vice President –
Agnes Harris Vice President – Human Resources
Patricia Leto Vice President - Procurement
Lesly Pardo Vice President – Internal Audit
Karen Delince Corporate Secretary
Angela Graves Deputy Corporate Secretary
Brian McElroy Treasurer
Dennis Eccleston Chief Information Officer
Joseph Gryzlo Chief Ethics and Compliance Officer
Jacqueline Carmody Attorney I
Gerard Mullin Director – Fuel Planning and Operations
Mark O’Connor Director – Real Estate
Mary Jean Frank Associate Corporate Secretary
Lorna Johnson Assistant Corporate Secretary
Chuck Haddon Managing Director, Navigant Consulting
Khai Nguyen Director, Navigant Consulting
1.
Minutes of the Regular
Meeting of February 24, 2009
The minutes of the Committee’s
meeting of February 24, 2009 were adopted.
2.
Procurement
and Real Estate Division Report
Ms. Patricia Leto presented an overview of the Authority’s
Procurement activities, with Mr. Gerard Mullin, Mr. Brian McElroy and Mr. Mark
O’Connor reporting on fossil fuel purchases, corporate finance activity and
acquisition and disposal of real property, respectively.
Procurement Contract Activity through June 30, 2009
·
1,571 contracts (excluding fossil fuel) greater than $5,000
in value were active.
·
The overall value of these contracts is more than $1.16 billion,
with more than $129 million in contract expenditures for the first half of the
year.
·
More than 41% of the contracts are for the purchase of
equipment and commodities.
·
Services such as technician work and contracted personnel
accounted for 35% of the contracts.
·
More than 15% of the contracts are for consulting services
(e.g., engineering, design, and specialized analysis).
·
Approximately 9% of the contracts are for construction
work.
·
Based on the total value of the contracts included in the
summary, approximately 94% of the total dollars expended (excluding fuels and
corporate finances) were for contracts that were competitively bid
·
In terms of the number of contracts processed, 69% of the
contracts were competitively bid, while 31% were sole-source awards, including
the purchase of highly specialized spare parts and services from original
equipment manufacturers and procurement of services on an emergency basis and
from proprietary sources.
·
While approximately 60% of the total number of non-fuel
contracts thus far in 2009 exceeded $25,000 in value, the total value of those contracts
was approximately 99.8% of the total non-fuel expenditures.
·
On May 20, 2009, the “2008 Annual Report of Procurement
Contracts” was certified by the Authority’s Chief Financial Officer for submission
to the New York State Comptroller’s Public Authorities Reporting Information
System in accordance with Section 2879 of the New York State Public Authorities
Law.
Fuel Purchases
·
In the first half of 2009, a total of $134 million was spent
on fuel purchases -- $125 million for natural gas and related costs and $9
million for fuel oil. These fuel
purchases were carried out through 47 contracts for natural gas and fuel oil,
as well as pipeline transportation and related services.
·
The price of natural gas for the
·
The price of #6 residual fuel oil used at Poletti is
currently $65 a barrel, the #2 fuel oil used at Flynn costs $75 a barrel and
the jet/kero used at the 500 MW plant is at $85 a barrel.
·
Staff expects continued softness in fuel prices for the near
term, with prices increasing going into 2010.
Corporate Finance Activity
In the first half of 2009, $1.2 million was paid for
non-procurement unique and specialized services requiring a broad depth of
knowledge and expertise that are provided by a limited group of firms. The non-procurement items include trustees
and paying agent services, commercial paper remarketing services, escrow agent
services and fees paid for revolving credit agreements supporting the
Authority’s Commercial Paper Programs and Adjustable Rate Tender (“ART”)
Notes. In response to a question from
Chairman Nicandri, Mr. McElroy said that the total amount spent for the whole
year would be roughly double the amount spent in the first half of the
year. Responding to a question from Mr.
Quiniones, Mr. McElroy said that the auction rate security market is
disappearing and that the Authority had refunded two of its programs in this
market, switching to commercial paper instead.
Supplier Diversity Program
·
Through the first half of the year, the Authority awarded $21.9
million (or 21.8% of its reportable expenditures) on contracts with certified
M/WBEs, representing both direct contracts and subcontracts and including
construction-related work.
·
The Authority’s annual goal for the use of New York State
Certified Minority/Women-Owned Businesses (“M/WBEs”) is 6% of its non-specialty
procurements. The Authority does not
include specialty procurements such as turbine runners, transformers, circuit
breakers, other large electrical equipment, natural gas and other specialized
goods and services since there are no M/WBEs available to provide these goods
and services.
·
The Authority continues an active outreach program with
various M/WBE organizations and trade associations. The Authority hosted its Annual Purchasing
Exchange on June 18th in the White Plains Office. More than 260 representatives of M/WBEs
attended and met with representatives of about 36 New York State, federal, New
York City and local government entities, as well as private companies. The venue will most likely be changed next
year due to the overwhelming success of the event.
In response to a question from Governance Committee
Chairman Eugene Nicandri, Ms. Leto said that the M/WBE expenditures were
significantly higher than at the midpoint of previous years because many of the
vendors for the Authority’s energy efficiency work had finally submitted invoices
for their work. Mr. Gil Quiniones said
that the Procurement team does a great job in the M/WBE area and Mr. Joseph Del
Sindaco said that staff has done a lot of outreach to M/WBE firms. Ms. Leto cited Ms. Debra White, the Manager
of the Authority’s Supplier Diversity Program, as the person responsible for
much of the Program’s success. In
response to a question from Trustee
Disposal of Personal Property
In the first half of 2009, the Authority received nearly
$339,550 for all reportable personal property disposed of that had a value of
more than $5,000. There was only one
non-fleet-related reportable personal property disposal from January through
June, the sale of scrap material from the Niagara Project for approximately
$156,532. The Authority participated in one
fleet-related auction during this period, which was conducted by JJ Kane
Auctioneers. Such auction resulted in the
sale of 48 units (including one lot of 12 trailer hitches) comprising
light-duty vehicles, heavy-duty trucks and special equipment, of which 25 were
greater than $5,000 in value. The gross
sale price for these 45 units was $197,750; the net price (after commission and
transportation costs were deducted) was approximately $183,017.
In June, the Authority solicited proposals for disposal
of the fourth Generator Step-Up transformer at the Blenheim-Gilboa Project;
proposals were due by July 9th.
Although the value of copper is significantly lower than last year due
to the change in market conditions, the Authority still expects the
reclamation/salvage value of the scrap copper and steel to exceed the cost of
recycling/disposal.
The 2008 Public Authorities Reporting Information System
report of Personal Property Disposal was successfully completed by the March
31, 2009 deadline.
Acquisition and Disposal of Real
Property
·
During the first half of the year, the Authority acquired 102
danger-tree permits for its Niagara-Adirondack, Fitz-Edic, Willis-Plattsburgh,
Plattsburgh-Vermont, Gilboa-New Scotland and Moses-Willis-Plattsburgh lines to
eliminate dangerous vegetation. In
addition, the Authority acquired an easement along the
·
The available space in the Authority’s Clarence D. Rappleyea
headquarters office building in
·
As part of the St. Lawrence Project relicensing Settlement
Agreement in 2003, the Authority agreed to several changes in the Project
boundary that would remove approximately 1,340 acres from the Project. Approximately 599 acres of the removed lands
are in the process of being conveyed either to the affected local municipality
or to adjoining landowners, if interested.
To date, 480 of the 599 acres have been conveyed; during this reporting
period, 336 acres were conveyed at no cost to the municipalities and 37 acres
were conveyed in separate transactions to private landowners in 30 separate
parcels. To date, the Authority has
received nearly $477,083 from the sales of properties. The monies taken in by the Authority for the
private land conveyances will be returned to the affected local municipalities
to fund local public projects. The
Authority has paid out $162,610 to the Town of
·
As part of the Niagara Relicensing Settlement Agreement, the
Authority was obligated to convey certain properties to various entities. Transactions moving toward completion include
a 53-acre parcel to be conveyed to the Tuscarora Nation, a 24-acre parcel to
Inventory
As of June 30, 2009, overall inventory levels at all of
the Authority’s operating facilities totaled $85.74 million, compared to a
year-end total in 2008 of $87.71 million.
The current inventory level includes $1.7 million for field poles issued
to the Niagara Rotor Poles Replacement project in February.
The design of the new Niagara Warehouse and Office Space
was completed in June. The warehouse
will optimize the use of volume with modern racking and an automatic retrieval
system whenever possible. A Request for
Proposals for construction of the new building was issued this month, with construction
expected to begin in the last quarter of the year.
3. Recent Developments and Status of Authority’s Ethics Programs
Mr. Joseph Gryzlo provided an overview of the Ethics
Office’s key initiatives, saying that the principal substantive issues arising
under the Ethics Law and/or the Authority’s Code of Conduct since his last
report to the Governance Committee on February 24, 2009, included the
following:
Allegations
1
Appearance of impropriety 12
Conflicts of interest
6
Gifts 8
Outside activities 4
Outside employment 10
Post employment 6
Research projects 1
Mr. Gryzlo said that the number of annual cases in the
past several years has been increasing with 55 cases to date in 2009 (the
year-end total for 2008 was 80). He sees
this increase as a positive sign and attributes it to enhanced communications
and employees’ willingness to raise issues and seek guidance relating to ethics
laws and the Authority’s Code of Conduct.
Financial disclosure forms were due at the New York State
Commission on Public Integrity (“CPI”) by May 15th. The Ethics Office facilitated required
filers’ ability to meet this obligation.
The Authority submitted its annual honoraria filing with CPI before the
June 1st deadline. This
report highlights any payments to employees for outside speaking events,
published written materials or travel expenses paid by an outside party for an
Authority employee to attend an event unrelated to their Authority duties. During this reporting period, there was only
one honorarium to report.
The Governance Committee has been asked to review and
recommend for the Trustees’ approval the draft revised Code of Conduct. The revised Code has been approved by
executive management and is applicable to all Authority Trustees and
employees. Mr. Gryzlo conducted impact
bargaining with the Authority’s in-house unions (IBEW Locals 2032 and 2104 and
UWUA Local 1-2), which did not object to the inclusion of the Authority’s
bargaining unit employees as covered individuals under the revised Code. The revised Code is more user friendly than
the previous version. All Trustees and
employees will be required to certify on an annual basis that they have read
and are in compliance with the Code’s provisions. On motion duly made and seconded, the
Governance Committee voted unanimously to recommend the revised Code be
reviewed and approved by the full Board of Trustees.
The Ethics Office will deliver its 2009 training in the
fourth quarter. The training will focus
on the revised Code of Conduct and will be delivered online. Senior executives, Trustees and employees
without dedicated computer access will receive paper copies of the training, in
addition to the computer-based format.
Once they have completed the training, Trustees and staff will be asked
to certify that they have completed the program and the completed training will
be included in their centralized training profiles. President Kessel asked Mr. Gryzlo to make a
short presentation on the revised Code of Conduct to the Trustees this
fall.
Earlier this year, the Ethics Office was transferred to
the Law Department and its name was changed to the Ethics and Compliance
Office. Mr. Gryzlo was named the
Authority’s Chief Ethics and Compliance Officer.
The Ethics and Compliance Office’s second-quarter
customer survey yielded a satisfaction rating of 1.21 on the 1-4 scale (with
“1” being the best score), with several positive comments included. These results will be incorporated into the
Law Department’s overall customer satisfaction performance measure report.
4.
Motion to
Conduct an Executive Session
“Mr.
Chairman, I move that the Governance Committee conduct an executive session
pursuant to Section 105 of the Public Officers Law of the State of New York to
discuss matters leading to the appointment, employment, promotion, discipline,
suspension, dismissal or removal of a particular person or corporation.” Upon motion made and seconded, an
Executive Session was held.
5.
Motion
to Resume Meeting in Open Session
“Mr. Chairman, I move to resume the
meeting in Open Session.” Upon
motion made and seconded, the meeting resumed in Open Session.
6. Next
Meeting
The next regular meeting of the
Governance Committee will be held on a date to be determined.