MINUTES OF THE MEETING

OF THE

GOVERNANCE COMMITTEE

 

July 23, 2013

 

 


Table of Contents

 

                Subject                                                                                                                                  Page No.               Exhibit

 

Introduction                                                                                                                                        2

1.       Adoption of the July 23, 2013 Proposed Meeting Agenda                                                         2      

2.       CONSENT AGENDA:                                                                                                                      2

a.       Minutes of the Regular Meeting held on March 21, 2013                                  2

b.       Procurement and Real Estate Reports                                                                            2

c.        Recent Developments and Status of NYPA’s Ethics and                                   3      

    Compliance Program

 

DISCUSSION AGENDA:                                                                                                                         8

3.       Minority and Women-Owned Business Enterprise Statistics                                                     8

 

4.       Motion to Conduct an Executive Session                                                                                    10

5.       Motion to Resume Meeting in Open Session                                                                               10

6.       Next Meeting                                                                                                                                     10

Closing                                                                                                                                                11

 

                                                                                                                                                               

 


Minutes of the regular meeting of the New York Power Authority’s Governance Committee held at the Authority’s offices at 123 Main Street, White Plains, New York at approximately 8:30 a.m.

 

                The following Members of the Governance Committee were present:

 

Eugene L. Nicandri, Chairperson

Chairman John R. Koelmel

Trustee Terrance P. Flynn

Trustee Joanne M. Mahoney

 

 

Also in attendance were:

 

                Gil Quiniones                                        President and Chief Executive Officer

                Judith McCarthy                                 Executive Vice President and General Counsel

                Edward Welz                                        Chief Operating Officer

                Joan Tursi                                             Senior Vice President – Corporate Support Services

                Patricia Leto                                         Vice President – Procurement

                Joseph Gryzlo                                       Vice President and Chief Ethics and Compliance Officer

                Karen Delince                                       Corporate Secretary

                Dennis Eccleston                                 Chief Information Officer

                Debra White                                         Director – Supplier Diversity Program

                Gary Schmid                                        Manager – Network Services

                Lorna Johnson                                     Associate Corporate Secretary

                Sheila Baughman                                                Assistant Corporate Secretary

 

 

Chairman Eugene Nicandri presided over the meeting.  Corporate Secretary Delince kept the Minutes.


Introduction

 

                Chairman Eugene Nicandri welcomed committee members and Authority senior staff to 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 Section B(4) of the Governance Committee Charter.

                                         

 

1.                   Adoption of the Proposed Meeting Agenda

 

Upon motion made and seconded the agenda for the meeting was adopted.

 

 

2.                   CONSENT AGENDA:

 

Upon motion made and seconded, the Consent Agenda and Reports provided to members of the Governance Committee were approved.

 

 

a.       Approval of the Minutes 

 

The Minutes of the Committee’s Regular Meeting of March 21, 2013 were approved.

 

 

 

b.       Procurement and Real Estate Reports

 

The Senior Vice President of Corporate Support Services submitted the following report:

 

SUMMARY

 

            This memorandum is to advise the Governance Committee of certain 2013 YTD activities of the Corporate Support Services/Enterprise Shared Services (‘CSS/ESS’) Business Unit, including: procurement contract activity, disposal of personal property, acquisition and disposal of real property, Supplier Diversity Program activities and plant inventory statistics, as well as fossil fuels and corporate finance activities of the Energy Resource Management and Business Services Business Units, respectively.

 

BACKGROUND

 

            Pursuant to Subsection C.5 of the Authority’s Governance Committee Charter relating to Reports, the Vice President –Procurement and the Director – Real Estate are required to report to the Committee at all regularly scheduled meetings and the Committee has the authority to require Procurement and Real Estate staff to prepare additional reports and to produce documents for Committee review.

 

            The reported activities are governed by various State laws and regulations and are set forth in the attached Reports.

 

DISCUSSION

 

            As more fully described in the individual reports attached hereto as Exhibits

‘2b-A’ thru ‘2b-G,’ the Procurement Contract Report summarizes activity for procurements of $5,000 or greater awarded since January 1, 1990 that were active in 2013, as identified by the Authority’s SAP computer system.  The Disposal of Personal Property Report lists all personal property disposal transactions over $5,000 conducted during 2013.  The Real Estate Report includes all transactions over $15,000 for the acquisition or disposal of real property by the Authority.  The Supplier Diversity Program Activity Report summarizes dollars awarded to New York State-certified Minority and Women-owned Business Enterprises (‘MWBEs’) based on reportable expenditures.  The Plant Inventory Analysis lists current stock value and compares it to that of the previous year, with a brief explanation for any significant increase or decrease, where applicable.  The Fossil Fuels and Corporate Finance Reports list the fuel- and finance-related transactions conducted by the Fuel Operations and Treasury work groups, respectively.”

               

 

 

c.        Recent Developments and Status of NYPA’s Ethics and Compliance Program

 

The Vice President and Chief Ethics and Compliance Officer submitted the following report:

 

ETHICS and COMPLIANCE

 

SUMMARY

 

The Office of Ethics and Compliance advises NYPA’s trustees, officers and employees on the legal, regulatory and NYPA Code of Conduct ethics and compliance standards relating to NYPA’s employees and operations.  It coordinates the investigation of allegations and concerns involving NYPA’s assets and employees.  This report highlights significant developments in NYPA’s ethics and compliance program for the period March 1, 2013 to July 1, 2013.

 

BACKGROUND

 

                The principal substantive issues arising under the NYS ethics laws and NYPA’s Code of Conduct investigated or researched since the most recent Governance Committee report on March 21, 2013 include various requests to engage in outside activities and employment and issues concerning conflicts of interest, gifts inquiries, post-employment restrictions and re-hire reviews related to former employees. 

 

The Office of Ethics and Compliance provides annual training to all trustees, officers and employees to reaffirm NYPA’s commitment to prevailing ethics principles and raise awareness of the laws and regulations with which all NYS public employees are required to comply.  Annual review of and certification to the NYPA Ethics Code of Conduct is implemented as an additional measure to reinforce acceptable business and professional conduct.  The Office also coordinates required training for designated employees to comply with the Federal Energy Regulatory Commission’s (‘FERC’) Standards of Conduct relating to its transmission and energy marketing functions and FERC Rules designed to prevent manipulation of energy markets.

 


 

DISCUSSION

               

Ethics Caseload

 

The Ethics and Compliance Office reviewed 61 cases since the last report to the Governance Committee.  This level of activity represents an upward trend in case volume and included reviews in the following categories: 3 appearances of impropriety; 1 conflict of interest; 2 general inquiries; 2 Financial Disclosure questions; 9 gifts questions; 12 outside activities and 12 outside employment reviews; 1 political activity inquiry; 11 post-employment questions; 6 issues related to unwarranted privilege and 2 assessments relating to appropriate use of NYPA assets.  These cases originated from all NYPA facilities, with a concentration from the White Plains Office.  There has been a steady increase in ethics inquiries from employees at the operations’ facilities, including those represented by bargaining units.

 

Cases of interest since the last report to the Governance Committee include the re-hire on a temporary basis of several former NYPA employees in the Operations business unit to support major capital work at the projects, including the Transmission Life Extension and Modernization initiatives.  The Office evaluates these employment recommendations to ensure compliance with the NYS and NYPA Code of Conduct post-employment restrictions, as well as the statutory limits on earnings contained in the NYS Retirement & Social Security Law.  In all instances, the re-hiring of former NYPA employees is justified by those individuals’ unique expertise, knowledge and skills, as well as the short term duration of their specialized engagement.

 

The Office facilitated an outside employment request with the NYS Joint Commission on Public Ethics (‘JCOPE’) for a designated policy maker who serves as an adjunct professor at Columbia University.

 

In recent months, NYPA has undertaken several new initiatives regarding social media, including an internal blog, Facebook and Twitter accounts.  The Office has required that certain disclaimers be added to the internal employee blog to ensure that employees are aware of the rules regarding not providing unwarranted privileges to any parties through endorsements of their products or services.  NYPA employees who are authorized to engage in social media forums should remain cautious in the manner in which they utilize social media to avoid any conflicts with the Public Officers Law and restrict their communications to official NYPA business.

 

Collaboration with the New York State Inspector General’s Office

 

The Office of Ethics and Compliance continues to collaborate with the NYS Inspector General’s Office on investigations of allegations and complaints involving NYPA employees and business partners.  Issues of corruption, fraud, criminal activity, conflicts of interest or abuse by state officers and employees relating to their office or employment, or by anyone having business dealings with covered agencies, are included within the Inspector General’s Office jurisdiction.  Details of pending cases will be provided during the Governance Committee Executive Session upon request.

 

Training and Outreach

 

                The Public Integrity Reform Act of 2011 requires that all Trustees and employees who participate in the Financial Disclosure Program administered by the JCOPE receive a live, two-hour comprehensive ethics training by August 15, 2013.  NYPA’s Chief Ethics and Compliance Officer, Joseph Gryzlo, was certified to conduct the training for the approximately 400 NYPA trainees.  Multiple training sessions have been held and others are scheduled, which will ensure compliance with the August 15 deadline.  NYPA will submit a compliance training report to JCOPE listing all NYPA required trainees and their training completion dates.

 

               

In addition to fulfilling this compliance training requirement, the Office will provide this ethics training to all NYPA employees to satisfy the NYPA annual ethics training commitment.  Non-Financial Disclosure filers will be invited to attend the live training sessions and will also have the option to complete the training electronically.

 

                The Office is also using these training sessions to facilitate the annual Code of Conduct Certification process. In recent years, the Code Certification process has been completed electronically.  NYPA has been encouraged to return to a paper process which includes employees’ signatures.  Employees have been asked to read the newly amended Code of Conduct and submit their signed certification acknowledging their understanding of the Code’s provisions and commitment to comply with them.    

 

Financial Disclosure

 

                Annual Financial Disclosure Forms were due at JCOPE on May 15, 2013.  On several occasions, the Office facilitated the resolution of questions between employees and Commission staff. 

 

Compliance with this requirement is the responsibility of the individual required to file the form.   Employees who knowingly fail to file the Financial Disclosure Form shall be subject to a hearing and escalating fines not to exceed $40,000. 

 

Honoraria

 

                NYPA filed its annual report on Honoraria with JCOPE on May 31, 2013.  There were no instances of Honoraria reported.

 

‘Project Sunlight’ Update

 

                Project Sunlight is a component of the Governor’s 2011 Public Integrity Reform Act.  Effective January 1, 2013, it requires NYPA to record in a database maintained by the NYS Office of General Services (‘OGS’) all individuals, firms or other entities (excluding other State and local governmental agencies and elected officials) that appear before NYPA on their own behalf or in a representative capacity on behalf of a client or customer for certain purposes.

 

The covered ‘appearances’ category was altered in the second quarter to eliminate telephone calls from the reporting requirement.  Current covered appearances include live, in-person meetings and video conferences.  E-mails, letters and other written communications remain excluded from reporting. The removal of telephone calls from the database reduced NYPA’s entries from approximately 200 to 137.  NYPA had submitted various clarification and exception requests to the Governor’s Counsel’s Office and received favorable determinations which will enable it to continue to efficiently conduct its business while complying with the purpose and expectations for Project Sunlight.

 

RELIABILITY STANDARDS COMPLIANCE

 

SUMMARY

 

This report highlights important aspects of NYPA’s reliability standards compliance program for the period March 04, 2013 to July 23, 2013.   A brief background statement is followed by discussion of specific reliability standards-related topics affecting the enterprise. 

 


 

BACKGROUND

 

Following the 2003 Northeast blackout, the Energy Policy Act of 2005 was passed and gave the Federal Energy Regulatory Commission (‘FERC’) the power to establish mandatory standards for electric reliability.  FERC named the North American Electric Reliability Corporation (‘NERC’) as its Electric Reliability Organization (‘ERO’) and charged it with developing and enforcing reliability standards.  The Northeast Power Coordinating Council (‘NPCC’) is NERC’s enforcement agent for the Northeast U.S.  NERC established an organization and processes for developing, implementing and enforcing standards.  The initial set of standards became enforceable on June 18, 2007.  Since then, the standards have continued to be expanded and revised to address known gaps in the standards or gaps discovered from lessons learned from analyses of more recent system disturbances and blackout events. 

 

NYPA is currently registered, under the NERC functional registration model, as a Transmission Owner, Generator Owner, Generator Operator, Purchasing and Selling Entity, and Load Serving Entity.  Recently, NYPA requested de-registration as a Load Serving Entity.  Under these registrations, NYPA is subject to 115 standards containing 379 requirements.  The standards cover a wide range of NYPA’s operation and maintenance activities and processes.  In addition, NYPA is subject to some more stringent standards and reliability requirements established by NPCC.   

 

DISCUSSION

 

NERC Reliability Standards Compliance Enforcement Actions

 

During the reporting period, NYPA staff managed compliance enforcement actions related to several of the NERC Reliability Standards that are applicable to NYPA’s NERC registrations.  There are currently nine (9) active enforcement actions related to self-report of possible violations of the standards.  One of these was submitted to the Northeast Power Coordination Council (‘NPPC’) in 2011, one in 2012, four (4) in January 2013, two (2) in February 2013 and one (1) in June 2013.  For those submitted in 2011, 2012 and June 2013, NYPA reached favorable settlement agreements with NPCC with final closure anticipated within the next few months.   For the remaining self-reports submitted in 2013, three (3) mitigation plans have been completed and are currently under review by NPCC, and three (3) mitigation plans are in progress.

 

Possible Violation Concern Investigations

 

During the reporting period, Technical Compliance initiated investigations of seven (7) possible NERC Reliability Standards compliance concerns identified by the staff pursuant to an internal procedure entitled ‘Possible NERC Reliability Standards Compliance Violation.’   Five (5) of the investigations are still ongoing; one (1) was reported as a possible violation and processed by NPCC via its Find, Fix, and Track (‘FFT’) process with no penalty; and one (1) resulted in a recommended possible violation self-report.  These compliance concerns were associated with the Voltage and Reactive (‘VAR’), Critical Information Protection (‘CIP’), and Protection and Control (‘PRC’) NERC Reliability Standards.  This internal process is viewed by the regulator as evidence that NYPA has a strong internal compliance program.

 

Self-Certifications of Compliance

         

During the reporting period, NYPA successfully completed three (3) self-certifications of compliance for the Communications (‘COM’) and PRC NERC Reliability Standards pursuant to NYPA’s NERC registrations.  Technical Compliance has established a rigorous process to ensure that compliance evidence is updated before NYPA self certifies compliance. 

 


 

BULK ELECTRIC SYSTEM DEFINITION (BES)

               

The relevant background on this topic is contained in the July 31, 2012 report to the Governance Committee. 

  

FERC approved the new Bulk Electric System (‘BES’) definition on December 20, 2012.  The new definition will provide greater clarity and ensure consistency in identifying system elements across the nation’s reliability regions and will require transmission assets above 100kV to be subject to the NERC Reliability Standards.  NYPA staff continued to work to identify any compliance gaps for 40 newly identified BES elements under NYPA’s current NERC registrations. 

 

                As stated in the last report, the adoption of the new BES definition may require NYPA to register as a Transmission Operator (‘TOP’) and/or a Transmission Planner (‘TP’), which would require NYPA to demonstrate compliance with additional reliability standards.  During the reporting period, NYPA continued to participate in meetings with the NYISO and the other NY Transmission Owners to assess new state-wide functional registration and compliance management impacts and actions pursuant to the new BES definition.  NYPA staff having knowledge of these matters also met several times internally during the reporting period to further clarify the impacts on NYPA with respect to functional responsibility and compliance accountability for the TOP and TP Standards.   

 

In addition, NYPA staff continued to assess and resolve identified Transmission Owner (‘TO’) registration compliance gaps for its 40 newly identified BES elements.  During the reporting period, NYPA held bi-lateral meetings with National Grid and New York State Electric and Gas to address projected gaps in compliance for the TO standards for newly identified NYPA BES assets located within their substations.  Similar meetings with Consolidated Edison and LIPA were held.  In addition, NYPA engaged in bi-lateral discussions with other Transmission Owners to discuss the TOP and Transmission Planning (‘TP’) responsibilities and the impacts of Version 5 of NERC’s Critical Infrastructure Protection (‘CIP’) reliability standards on NYPA’s newly identified BES assets located within their substations. 

 

NERC RECOMMENDATIONS TO INDUSTRY – Facility Ratings for Transmission Lines

               

During the reporting period, NYPA continued to implement its work plan for responding to NERC’s October 7, 2010 ‘NERC Alert – Recommendation to Industry’  requiring NYPA to review its current Facility Ratings Methodology for its solely- and jointly-owned transmission lines to verify that the methodology is based on actual field conditions (in particular, line clearances).   As stated in the last Governance Committee report, the assessment discovered about 260 line clearance discrepancies in NYPA’s 1,400 miles of transmission lines; about 50 of which are on lines rated as high priority.  All of the discrepancies on the high priority lines have been corrected. The remediation of discrepancies on the medium priority lines is planned for completion in 2013.  Design packages are being finalized by Quanta Technology / Realtime Utility Engineers and CT Main for mitigating the discrepancies on the medium and low priority transmission lines.  A status update was submitted to NERC in July 2013.

 

CYBER SECURITY DEVELOPMENTS

 

During the reporting period, NYPA staff continued to monitor the progress toward implementation of Version 5 of NERC’s CIP reliability standards.  NERC filed the CIP Version 5 Reliability Standards with FERC for approval on January 31, 2013.  FERC issued a Notice of Proposed Rule (‘NOPR’) regarding CIP Version 5 standards on April 18, 2013 with industry comments due in June 2013.  Based on the NOPR, Version 4 of the CIP standards will not be enforced.   Version 3 will be replaced with Version 5, which will become effective July 1, 2015.  The pending approval and adoption of Version 5 of the CIP standards will have substantive impacts on NYPA’s CIP compliance program.  Staff is in the process of performing a classification assessment of those assets that will be affected by the revised standards to determine the scope and costs of the implementation plan that will ensure NYPA’s compliance with the revised standards.  Expenditure estimates for implementation of Version 5 have been included in the Operations budget plan for 2014-2015.”

 

 

 

DISCUSSION AGENDA

 

3.                   Minority and Women-Owned Business Enterprise Statistics

 

Ms. Debra White, Director of Supplier Diversity Program, provided an overview of the Authority’s supply diversity efforts.  She said as of the quarter ended June 30, the Authority awarded approximately $16 million or 22.27% of its expenditures to New York State Certified Minority and Women-Owned Business Enterprises (“MWBEs”); from the beginning of the year through June, expenditures totaled $38.9M or 23.8%.  Overall, the Authority remains on track to meet the NYS mandated goal of 20% expenditures to MWBEs.  She said the goals have been aggressive but the Authority continues to meet them.  Also, to date, the Authority has tripled its original goals over the last 18 months. She ended by saying that because the Authority achieved 20.87% expenditures to MWBEs, it will be included in the 2012-2013 publication which reports to the Governor the achievements of all state agencies and authorities MWBEs expenditures.

In response to a question from Chairman Nicandri, Ms. White said prior to the NYS mandate of 20% expenditures to MWBEs, the Authority’s goal was 6% expenditures to MWBEs; however, it usually surpasses that goal. 

In response to a question from Authority Chairman Koelmel, Ms. White said the majority of the MWBEs compliance activities are from the Authority’s energy efficiency initiatives, for which a significant amount of Authority funds are expended .  She said staff has been working with the Energy Efficiency staff to develop additional compliance measures and tracking procedures and this has yielded significant results in achieving the Authority’s MWBE goals.

                Responding to a question from Chairman Nicandri, Ms. White said the Implementation Contractors, which are the prime contractors, work with subcontractors who may further subcontract the jobs, and it is at that level MWBEs are utilized.  She said the larger MWBEs have worked with other agencies and authorities such as the Port Authority, and therefore have the experience necessary to do the type of jobs the Authority offers.  Also, as a form of introduction, Authority staff invites the MWBEs to meetings with the Implementation Contractors and follow-up with the Implementation Contractors to make sure the connections are made.  She said these activities also yield positive results in achieving the Authority’s MWBEs goals.

President Quiniones added that the type of work available include lighting, retrofitting, HVAC, boilers and chillers, the types of projects which can benefit MWBEs.  He said the Authority’s energy efficiency programs have been growing – last year the Authority set another record of $179 million in expenditures, and projects a growth of up to $250 million in expenditures to contractors and sub-contractors over the next few years.  Therefore, energy efficiency projects have been its focus in terms of volume of work to MWBEs, and the Authority has been very successful in getting technically-qualified MWBE firms to participate.

Responding to a question from Trustee Flynn, Ms. White said the larger MWBEs are aware of the compliance concerns since many of them have worked with other state agencies and are familiar with the program.  They are, however, not aware of the opportunities for projects, since projects at their level are not advertised in the Contract Reporter.  Staff therefore tries to introduce them to the Implementation Contractors and sub-contractors through different means in order to let them know of the job opportunities available for their skill-set.

Responding to further questioning from Trustee Flynn, Ms. White said since she is aware of the projects as they become available and meet with the Implementation Contractors on a regular basis, she work with them to extend opportunities to MWBEs to participate in the program.

Responding to a question from Authority Chairman Koelmel, Ms. White said it is a challenge to maintain the mandated 20% goal for MWBEs expenditures because there are not many MWBEs capable of performing that type of jobs required in the contracts, and they are also in demand by other state agencies and authorities.  She said NYS has a mentoring program to help MWBEs develop the capacity to participate in these projects.  The Authority anticipates that, as opportunities present themselves, other MWBEs capable of providing the type of services that the Authority requires, will join in the program.

 

Responding to further questioning from Authority Chairman Koelmel, Ms. White said the MTA has a very strong mentoring program and the Authority plans to work with them to develop a similar program to stimulate the development of MWBEs capable of participating in its projects.  This will be discussed with them in the near future.

 

 

4.                   Motion to Conduct an Executive Session

Mr. Chairman, I move that the Authority conduct an executive session pursuant to the Public Officers Law of the State of New York section §105 to discuss matters leading to the appointment, employment, promotion, demotion, 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

 

Chairman Nicandri said the next regular meeting of the Governance Committee will be held on Tuesday, December 17, 2013, at the Authority’s White Plains Office.

 


 

Closing

 

Upon motion made and seconded, the meeting was adjourned by the Chairman at approximately

9:12 a.m.

 

 

 

Description: Delince Signature

 

Karen Delince

Corporate Secretary