ECONOMIC DEVELOPMENT POWER

ALLOCATION BOARD

MINUTES

November 21, 2005

Video Conference – 10:00 a.m.

                New York Power Authority Offices:

30 South Pearl Street, 10^th Floor, Albany, NY

123 Main Street, 16^th Floor, White Plains, NY

Niagara Power Project, 5777 Lewiston Road, Administration Building, Lewiston, NY

Empire State Development Corporation, 633 Third Avenue, New York, NY

1.             Approval of the Minutes of the Meeting of October 18, 2005

2.             Power for Jobs Extended Benefits

                Recommendations for Contract Extensions

                A.            Companies in Job Compliance

                B.            Companies Not in Job Compliance

3.             Power for Jobs Extended Benefits Recommendations

                for Electricity Savings Reimbursements                          

4.             Recommendation to Extend Existing

                Economic Development Power Contract

5.             Energy Cost Savings Benefits Recommendations

                A.            Companies in Job Compliance

B.                   Companies Not in Job Compliance

6.             Other Business

7.             Next Meeting

            A regular meeting of the Economic Development Power Allocation Board was held via video conference at the following participating locations:

1)       New York Power Authority, 30 South Pearl Street, Albany NY

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

3)       Niagara Power Project, 5777 Lewiston Road, Lewiston, NY

4)       Empire State Development Corp. 633 Third Avenue, NY

The following Members of the Board were present at the following locations:

Frank S. McCullough, Jr., Chairman (White Plains, NY)

James A. Duncan, Member (Lewiston, NY)

Bernard P. McGarry, Member (Albany, NY)

Kevin S. Corbett, Member (New York, NY)

Also in attendance were:

Eugene W. Zeltmann                           President and Chief Executive Officer

David E. Blabey                                    Executive Vice President, Secretary and General Counsel, NYPA

Louise M. Morman                              Senior Vice President – Marketing, Economic Development
& Supply Planning, NYPA

Thomas Warmath                                Vice President and Chief Risk Officer, NYPA

Angela D. Graves                                 Deputy Secretary, NYPA

Joseph J. Carline                                  Assistant General Counsel – Power & Transmission, NYPA

John B. Hamor                                      Executive Director – State Governmental Relations, NYPA

Niko Ladopoulos                                 Legislative Liaison – Public & Governmental Affairs, NYPA

James F. Pasquale                                Director – Business Power Allocations, Regulation and Billing, NYPA

Michael A. Saltzman                            Director – Public Relations, NYPA

Anthony C. Savino                              Manager – Business Power Allocations & Compliance, NYPA

Bonnie Fahey                                       Executive Administrative Assistant, NYPA

Mary Jean Frank                                  Associate Secretary, NYPA

Lorna M. Johnson                               Assistant Secretary, NYPA

Shirley J. Hamilton                               Journeyman Operator, NYPA

Ken Hamilton                                        Reporter, Politics Western NY Magazine

Michael J. Santarcangelo                    Director – Energy Policy, ESDC

1.                   Adoption of Minutes

The minutes of the meeting of October 18, 2005, were unanimously adopted.

Chairman McCullough said that staff had not yet received the transcript of the Assembly Energy Committee hearing held in Syracuse in October, but that when the transcript was received, staff would prepare the précis requested at the October meeting, hopefully before the December meeting.

2.                   Power for Jobs Extended Benefits

        Recommendations for Contract Extensions

The members of the Board considered the 13 applications for extended benefits recommendations for contract extensions for companies in job compliance and 14 applications for companies not in job compliance listed below for Power for Jobs.  Mr. Pasquale explained that some 8,846 jobs would be impacted.  See Exhibits “2-A1” and “2-A2.”

In response to a question from Mr. Corbett, Chairman McCullough said that the criteria for the reconsideration process would be discussed as the last item at today’s meeting.

The following resolution was unanimously adopted by members of the Board present.

WHEREAS, the following entities have applied for extended benefits recommendations for contract extensions under the Power for Jobs program:

COMPANIES IN JOB COMPLIANCE

COMPANIES NOT IN JOB COMPLIANCE

NOW THEREFORE BE IT RESOLVED, That the Board hereby finds and determines that such applications meet the requirements of the Power for Jobs legislation contained in Chapter 316 of the Laws of 1997; Chapter 386 of the Laws of 1998; Chapter 63 of the Laws of 2000; Chapter 226 of the Laws of 2002; Chapter 59 of the Laws of 2004; and Chapter 313 of the Laws of 2005, would advance the public policy set forth in Section 189(i) of the Economic Development Law to provide effective incentives to promote economic development, maintain and develop jobs, and encourage new capital investment throughout New York State; and be it further

RESOLVED, That the Board recommends to the Power Authority of the State of New York the 27 applications for extended benefits recommendations for contract extensions discussed herein totaling
9,410 kW until December 31, 2006.

3.                   Power for Jobs Extended Benefits

        Recommendations for Electricity Savings Reimbursements

The members of the Board considered the 32 applications for extended benefits recommendations for electricity savings reimbursements listed below for Power for Jobs.  Mr. Pasquale explained that some 70,403 jobs would be impacted.  See Exhibit “3-A.”

The following resolution was unanimously adopted by members of the Board present.

WHEREAS, the following entities have applied for extended benefits recommendations for electricity savings reimbursements under the Power for Jobs program:

NOW THEREFORE BE IT RESOLVED, That the Board hereby finds and determines that such applications meet the requirements of the extended benefits provisions of the Power for Jobs legislation contained in Article 6 of the Economic Development Law as amended by Chapter 313 of the Laws of 2005; and be it further

RESOLVED, That the Board recommends to the Power Authority of the State of New York the 32 applications for extended benefits recommendations for electricity savings reimbursements discussed herein totaling 42,975 kW until December 31, 2006.

4.                   Recommendations to Extend Existing

Economic Development Power Contract

Summary

The members of the Economic Development Power Allocation Board (Power Allocation Board) are requested to recommend approval of an extension to the term of service to December 31, 2006 for one existing economic development power program customer, as listed in Exhibit “4-A.”

BACKGROUND

The New York Power Authority sells electricity to businesses under several state-authorized economic development programs.  These power sales are made through the Economic Development Power program, High Load Factor Manufacturer program, Municipal Distribution Agency Industrial Power program and other power sales programs.  The capacity and energy for these sales are provided by market purchases and supported by other Authority sources as needed.  In some instances, these customers are served directly by the Authority and in other cases, the customers receive Authority power through resale arrangements with municipal distribution agencies or investor-owned utilities.  Contracts range in length from five to more than 20 years.

DISCUSSION

Chapter 313 of the Laws of 2005 was signed into law by Governor George E. Pataki on July 26, 2005.  The new law allows certain Authority power program customers who would be exposed to price increases before December 31, 2006 to apply for an Energy Cost Savings Benefit.  Under the new law, businesses eligible to receive Energy Cost Savings Benefits are limited to Authority customers currently supplied power under the Economic Development Power, Municipal Distribution Agency and High Load Factor programs.  The Energy Cost Savings Benefit will be available for the period November 1, 2005 through December 31, 2006.

The customer detailed in Exhibit “4-A” has an allocation contract, previously recommended by the Power Allocation Board and approved by the Power Authority Trustees, which expires prior to December 31, 2006.  We are requesting the Power Allocation Board to recommend that the Trustees extend this agreement until December 31, 2006 so that the customer may receive the benefits associated with the recently passed law.  The extension will help maintain costs and enable this customer to compete more effectively.  In addition, it will further secure employment levels in New York State.

RECOMMENDATION

It is requested that the Power Allocation Board recommend extension to the term of service to December 31, 2006 for the one existing economic development power program customer, as listed in Exhibit “4-A.”

Following consideration of such application, the Members of the Board present voted unanimously to extend the contract.

WHEREAS, one customer has applied for an extension to its existing Economic Development Power contract;

Fiber Conversion, Inc., Broadalbin – Fulton County

NOW THEREFORE BE IT RESOLVED, That the Board hereby finds and determines that such application meets the requirements of Section 184 of the Economic Development Law; and be it further

RESOLVED, That the Board hereby recommends to the Power Authority of the State of New York the total allocation of 1,000 kW to extend the existing contract of the business listed on Exhibit “4-A” to December 31, 2006, and that the terms set forth on such Exhibit be incorporated into the Power Authority’s contract for Economic Development Power.
5.             Economic Development Programs – Energy

                Cost Savings Benefits Recommendations     

SUMMARY

The Members of the Economic Development Power Allocation Board (Power Allocation Board) are requested to recommend approval of Energy Cost Savings Benefits for six companies as listed in Exhibits “5-A1” and “5-A2.”

BACKGROUND

Chapter 313 of the Laws of 2005 was signed into law by Governor George E. Pataki on July 26, 2005.  The new law allows certain New York Power Authority power program customers who would be exposed to bill increases as a result of higher market prices before December 31, 2006 to apply for an Energy Cost Savings Benefit.  Under the new law, businesses eligible to receive Energy Cost Savings Benefits are limited to Authority customers currently being supplied power under the Economic Development Power, Municipal Distribution Agency and High Load Factor programs. 

The Energy Cost Savings Benefit will be available for the period November 1, 2005 through December 31, 2006.  Each application will be evaluated under criteria adopted by the Power Allocation Board in consultation with the Power Authority.  The new law states that such criteria shall include:

·         overall economic impact of the company in terms of jobs created or retained, payroll, capital investment and the use of in-state suppliers;

·         the likelihood that absent approval a company would close, contract or relocate outside of New York State;

·         the company’s compliance with prior contractual commitments to retain and/or create jobs and

·         the extent to which a benefit would affect the overall productivity or competitiveness of the company and its existing in-State employment.

The Power Allocation Board can recommend a partial or complete withdrawal of the Energy Cost Savings Benefit if the company fails to maintain mutually agreed-upon commitments including jobs, capital investment and power utilization.

The legislation also authorizes the sale of Authority power into the wholesale market with net earnings from such sales (and other funds deemed feasible and advisable by the Trustees) to be used for the Energy Cost Savings Benefits.  Power available to fund Energy Cost Savings Benefits includes:

·         up to 70 MW of unallocated replacement power;

·         up to 38.6 MW of preservation power relinquished or withdrawn after the effective date of the new legislation and

·         up to 20 MW of power from the St. Lawrence/FDR project for the period ending December 31, 2006.

DISCUSSION

The six organizations listed in Exhibits “5-A1” and “5-A2” have agreed to retain more than 870 jobs in New York State in exchange for these benefits.  The companies will be eligible to receive these benefits until December 31, 2006. 

FISCAL INFORMATION

Funding of Energy Cost Savings Benefits for the all the companies participating in the program is not expected to exceed $7,500,000. 

RECOMMENDATION

The Power Allocation Board is requested to recommend that the Authority’s Trustees approve Energy Cost Savings Benefits to the six businesses listed in Exhibits “5-A1. and “5-A2.” 

Following consideration of such applications, the Members of the Board present voted unanimously to adopt the following resolution:

NOW THEREFORE BE IT RESOLVED, That the Board hereby finds and determines that such applications meet the requirements of the energy cost savings benefits under the Power for Jobs legislation contained in Article 6 of the Economic Development Law as amended by Chapter 313 of the Laws of 2005; and be it further

RESOLVED, That the Board recommends to the Power Authority of the State of New York the six applications for energy cost savings benefits discussed herein totaling 4,325 kW until December 31, 2006.

6.             Other Business

Chairman McCullough asked Mr. Pasquale to provide an update on the reconsideration process.  Mr. Pasquale said that after the Board had approved the reconsideration criteria and process at its October meeting, staff sent out letters informing the 118 customers whose allocations had been reduced in September and October about the reconsideration process, giving them 30 days to respond.  To date, 41 responses have been received from these customers and staff has just begun to review them, with the goal of presenting their recommendations to the Board at the December meeting.  He said that the companies whose allocations were being reduced today would receive the same letter.  Chairman McCullough added that he hoped the Board would have the précis of the October public hearing before that meeting.

7.             Next Meeting

                The next meeting of the Board is to be determined.

11-05MINS