ECONOMIC DEVELOPMENT POWER
ALLOCATION BOARD
MINUTES
May 18, 2009
Videoconference – 10:00 a.m.
New York Power Authority Offices:
123 Main Street, 16th Floor, White Plains, NY
30 South Pearl Street, 10th Floor, Albany, NY
St. Lawrence/FDR Power Plant, 830 Barnhart Island, Massena, NY
Empire State Development Corp., 95 Perry Street, Suite 500, Buffalo, NY
1. Approval of the Minutes of the Meeting of March 30, 2009.
2. Power for Jobs Extended Benefits Recommendations for Electricity Savings Reimbursements
A. COMPANIES IN JOB COMPLIANCE
Central Hudson Gas & Electric – Service Territory
Northeast Solite Corp.
Mount Marion - Ulster County
Con Edison - Service Territory
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American Ballet Theater New York - New York County
Belmont Metals, Inc. Brooklyn - Kings County
Continental Food Products, Inc. Flushing - Queens County
IBM – Westchester Armonk - Westchester County
Kingsbrook Jewish Medical Center Brooklyn - Kings County
Long Island Jewish Medical Center Manhasset - Nassau County |
Memorial Sloan-Kettering Cancer Center New York - New York County
New York University New York - New York County
S. R. Guggenheim Museum New York - New York County
Streamline Plastics Co., Inc. Bronx - Bronx County
The Museum of Modern Art New York - New York County
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Long Island Power Authority - Service Territory
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Ametek Hughes-Treitler Garden City - Nassau County
Kleer-Fax Inc. Amityville - Suffolk County |
Silver Lake Cookie Co. Islip - Suffolk County
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National Grid - Service Territory
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Applied Energy Solutions Caledonia - Livingston County
Beechnut Nutrition Corp. Canajoharie - Montgomery County
Burrows Paper Corp. Little Falls - Herkimer County
Carville National Leather Corp. Johnstown - Fulton County
Climax Manufacturing Co. Carthage - Jefferson County
Cooper Industries Syracuse - Onondaga County
Corning, Inc. Canton - St. Lawrence County
Cortland Line Co., Inc. Cortland - Cortland County
CWM Chemical Services, LLC Model City - Niagara County
Dielectric Laboratories, Inc. Cazenovia - Madison County
Diemolding Corporation Canastota - Madison County
Edward John Noble Hospital Gouverneur - St. Lawrence County
Finch Pruyn & Company Inc. Glen Falls - Warren County
Fitzpatrick & Weller, Inc. Ellicottville - Cattaraugus County
Ford Motor Company Buffalo - Erie County
G L & V Sandy Hill Inc. Hudson Falls - Washington County
Interface Solutions, Inc. Fulton - Oswego County
Keystone Corporation Buffalo - Erie County
Kilian Manufacturing Corporation Syracuse - Onondaga County |
Lewis County General Hospital Lowville - Lewis County
Lydall Manning Green Island - Albany County
Mayer Brothers Apple Products Buffalo - Erie County
Mohawk Paper Mills Cohoes - Albany County
Paul Bunyan Products, Inc. Preble - Cortland County
Queensboro Farm Products, Inc. Canastota - Madison County
Revere Copper Products Rome - Oneida County
Rich Plan Food Service, Inc. Clark Mills - Oneida County
Robison & Smith, Inc. Gloversville - Fulton County
RSA Solutions Inc. Amherst - Erie County
Schenectady International, Inc. Schenectady - Schenectady County
Schneider Packaging Equipment Brewerton - Onondaga County
Sorrento Lactalis, Inc. Buffalo - Erie County
Specialized Packaging Radisson, Inc. Baldwinsville - Onondaga County
Spray Nine Corporation Johnstown - Fulton County
Syracuse China Company Syracuse - Onondaga County
Syracuse Label Co., Inc. Liverpool - Onondaga County
Vicks Lithograph & Printing Yorkville - Oneida County
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New York State Electric & Gas – Service Territory
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A. T. Reynolds & Sons, Inc. Kiamesha Lake - Sullivan County
Agri-Mark, Inc. Chateaugay - Franklin County
Air-Flo Manufacturing Prattsburgh - Steuben County
Bison Foods - Div. of Upstate Farms Buffalo - Erie County
Caron Fine Wood Products, Inc. Champlain - Clinton County
Corning, Inc. Corning - Steuben County
Corning, Inc. Oneonta - Otsego County |
Manitoba Corporation Lancaster - Erie County
Mayer Brothers Products, Inc. West Seneca - Erie County
Merritt Machinery, LLC Lockport - Niagara County
Quebecor World Buffalo, Inc. Depew - Erie County
Upstate Niagara Cooperative, Inc. Buffalo - Erie County
Vail Ballou Press, Inc. Binghamton - Broome County
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Orange and Rockland – Service Territory
IBM – Sterling Forest
Sterling – Orange County
Rochester Gas & Electric – Service Territory
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IBM – Rochester Rochester – Monroe County |
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B. COMPANIES NOT IN JOB COMPLIANCE
Con Edison – Service Territory
Display Producers, Inc.
Bronx - Bronx County
Edison Price Lighting, Inc.
New York - New York County
Long Island Power Authority – Service Territory
Commercial Envelope Manufacturing Corp.
Deer Park - Suffolk County
National Grid – Service Territory
Standard Manufacturing Co., Inc.
Troy - Rensselaer County
3. Economic Development Plan – Use of Net Revenues Produced by Sale of Expansion Power as Industrial Incentive Awards
4. 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, 123 Main Street, White Plains, NY
2) New York Power Authority, 30 South Pearl Street, Albany NY
3) St. Lawrence/FDR Power Plant, 830 Barnhart Island, Massena, NY
4) Empire State Development corp., 95 Perry Street, Suite 500, Buffalo, NY
The following Members of the Board were present at the following locations:
Kenneth Schoetz, Chairman (Buffalo, NY)
Bernard P. McGarry, Member (Albany, NY)
Eugene L. Nicandri, Member, (Massena, NY)
Also in attendance were:
Terryl Brown Clemons Executive Vice President & General Counsel, NYPA
Karen Delince Corporate Secretary, NYPA
Joseph Carline Temp. Assistant General Counsel, NYPA
James H. Yates Senior Vice President - Marketing & Economic Development, NYPA
Paul Finnegan Senior Vice President - Public & Government Affairs, NYPA
James F. Pasquale Director – Marketing Analysis and Administration, NYPA
Michael Saltzman Director – Media Relations, NYPA
Anthony C. Savino Manager – Business Power Allocations and Compliance, NYPA
Mary Jean Frank Associate Corporate Secretary, NYPA
1. Adoption of Minutes
The minutes of the meeting of March 30, 2009 were unanimously adopted.
2. Power for Jobs Extended Benefits
SUMMARY
The Members of the Economic Development Power Allocation Board (“EDPAB”) are requested to recommend that the Power Authority’s Trustees (“Trustees’) approve extended benefits for 71 Power for Jobs (“PFJ”) customers as listed in Exhibit “A” and “B”.
BACKGROUND
In July 1997, the New York State Legislature approved a program to provide low-cost power to businesses and not-for-profit corporations that agree to retain or create jobs in New York State. In return for commitments to create or retain jobs, successful applicants received three-year contracts for PFJ electricity.
The PFJ program originally made 400 megawatts (“MW”) of power available and was to be phased in over three years. As a result of the initial success of the program, the Legislature amended the PFJ statute to accelerate the distribution of the power and increase the size of the program to 450 MW. In May 2000, legislation was enacted that authorized additional power to be allocated under the program. Legislation further amended the program in July 2002.
Chapter 59 of the Laws of 2004 extended the benefits for PFJ customers whose contracts expired before the end of the program in 2005. Such customers had to choose to receive an “electricity savings reimbursement” rebate and/or a power contract extension. The Authority was also authorized to voluntarily fund the rebates, if deemed feasible and advisable by the Trustees.
PFJ customers whose contracts expired on or prior to November 30, 2004 were eligible for a rebate to the extent funded by the Authority from the date their contract expired through December 31, 2005. Customers whose contracts expired after November 30, 2004 were eligible for rebate or contract extension, assuming funding by the Authority, from the date their contracts expired through December 31, 2005.
Approved contract extensions entitled customers to receive the power from the Authority pursuant to a sale-for-resale agreement with the customer’s local utility. Separate allocation contracts between customers and the Authority contained job commitments enforceable by the Authority.
In 2005, provisions of the approved State budget extended the period PFJ customers could receive benefits until December 31, 2006. Chapter 645 of the Laws of 2006 included provisions extending program benefits until June 30, 2007. Chapter 89 of the Laws of 2007 included provisions extending program benefits until June 30, 2008. Chapter 59 of the Laws of 2008 included provisions extending the program benefits until June 30, 2009.
At its meeting of October 18, 2005, EDPAB approved criteria under which applicants whose extended benefits EDPAB had reduced for non-compliance with their job commitments could apply to have their PFJ benefits reinstated in whole or in part. EDPAB authorized staff to create a short-form application, notify customers of the process, send customers the application and evaluate reconsideration requests based on the approved criteria.
DISCUSSION
EDPAB is requested to recommend that the Authority Trustees approve electricity savings reimbursement rebates to the 71 PFJ customers, 67 of which are meeting their current job commitment and are listed in Exhibit “A”. However, four customers reported actual job numbers below their contractual commitment we are recommending that these customers have their allocation reduced proportionately to their job shortfall where appropriate. These customers are listed in Exhibit “B”. Collectively, these organizations have agreed to retain more than 44,000 jobs in New York State in exchange for rebates. The rebate program will be in effect until June 30, 2009, the programs’ sunset.
RECOMMENDATION
It is requested that the Economic Development Power Allocation Board recommend that the Authority Trustees approve the payment of electricity savings reimbursements to the 71 business listed in Exhibits “A” and “B”.
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:
Central Hudson Gas & Electric – Service Territory
Northeast Solite Corp.
Mount Marion - Ulster County
Con Edison - Service Territory
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American Ballet Theater New York - New York County
Belmont Metals, Inc. Brooklyn - Kings County
Continental Food Products, Inc. Flushing - Queens County
IBM – Westchester Armonk - Westchester County
Kingsbrook Jewish Medical Center Brooklyn - Kings County
Long Island Jewish Medical Center Manhasset - Nassau County |
Memorial Sloan-Kettering Cancer Center New York - New York County
New York University New York - New York County
S. R. Guggenheim Museum New York - New York County
Streamline Plastics Co., Inc. Bronx - Bronx County
The Museum of Modern Art New York - New York County
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Long Island Power Authority - Service Territory
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Ametek Hughes-Treitler Garden City - Nassau County
Kleer-Fax Inc. Amityville - Suffolk County |
Silver Lake Cookie Co. Islip - Suffolk County
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National Grid - Service Territory
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Applied Energy Solutions Caledonia - Livingston County
Beechnut Nutrition Corp. Canajoharie - Montgomery County
Burrows Paper Corp. Little Falls - Herkimer County
Carville National Leather Corp. Johnstown - Fulton County
Climax Manufacturing Co. Carthage - Jefferson County
Cooper Industries Syracuse - Onondaga County
Corning, Inc. Canton - St. Lawrence County
Cortland Line Co., Inc. Cortland - Cortland County
CWM Chemical Services, LLC Model City - Niagara County
Dielectric Laboratories, Inc. Cazenovia - Madison County
Diemolding Corporation Canastota - Madison County
Edward John Noble Hospital Gouverneur - St. Lawrence County
Finch Pruyn & Company Inc. Glen Falls - Warren County
Fitzpatrick & Weller, Inc. Ellicottville - Cattaraugus County
Ford Motor Company Buffalo - Erie County
G L & V Sandy Hill Inc. Hudson Falls - Washington County
Interface Solutions, Inc. Fulton - Oswego County
Keystone Corporation Buffalo - Erie County
Kilian Manufacturing Corporation Syracuse - Onondaga County |
Lewis County General Hospital Lowville - Lewis County
Lydall Manning Green Island - Albany County
Mayer Brothers Apple Products Buffalo - Erie County
Mohawk Paper Mills Cohoes - Albany County
Paul Bunyan Products, Inc. Preble - Cortland County
Queensboro Farm Products, Inc. Canastota - Madison County
Revere Copper Products Rome - Oneida County
Rich Plan Food Service, Inc. Clark Mills - Oneida County
Robison & Smith, Inc. Gloversville - Fulton County
RSA Solutions Inc. Amherst - Erie County
Schenectady International, Inc. Schenectady - Schenectady County
Schneider Packaging Equipment Brewerton - Onondaga County
Sorrento Lactalis, Inc. Buffalo - Erie County
Specialized Packaging Radisson, Inc. Baldwinsville - Onondaga County
Spray Nine Corporation Johnstown - Fulton County
Syracuse China Company Syracuse - Onondaga County
Syracuse Label Co., Inc. Liverpool - Onondaga County
Vicks Lithograph & Printing Yorkville - Oneida County
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New York State Electric & Gas – Service Territory
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A. T. Reynolds & Sons, Inc. Kiamesha Lake - Sullivan County
Agri-Mark, Inc. Chateaugay - Franklin County
Air-Flo Manufacturing Prattsburgh - Steuben County
Bison Foods - Div. of Upstate Farms Buffalo - Erie County
Caron Fine Wood Products, Inc. Champlain - Clinton County
Corning, Inc. Corning - Steuben County
Corning, Inc. Oneonta - Otsego County |
Manitoba Corporation Lancaster - Erie County
Mayer Brothers Products, Inc. West Seneca - Erie County
Merritt Machinery, LLC Lockport - Niagara County
Quebecor World Buffalo, Inc. Depew - Erie County
Upstate Niagara Cooperative, Inc. Buffalo - Erie County
Vail Ballou Press, Inc. Binghamton - Broome County
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Orange and Rockland – Service Territory
IBM – Sterling Forest
Sterling – Orange County
Rochester Gas & Electric – Service Territory
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IBM – Rochester Rochester – Monroe County |
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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 59 of the Laws of 2008; and be it further
RESOLVED, That the Board recommends to the Power Authority of the State of New York the 71 applications for extended benefits recommendations for electricity savings reimbursements discussed herein totaling 63,583 kW until June 30, 2009.
Mr. James Pasquale presented the highlights of staff’s recommendations to the Board. In response to questions from Power Authority Trustee Eugene Nicandri, Mr. Pasquale said that the Power for Jobs program is slated to expire on June 30, 2009, but that it was likely that a new law will be enacted before then extending the program for an additional year. Responding to a question from Chairman Kenneth Schoetz, Mr. Pasquale said that the Authority had drafted legislation that would have allowed it to reallocate MW to new customers. In response to another question from Trustee Nicandri, Mr. Pasquale said that the four companies whose allocations were being reduced for noncompliance with their job commitments were aware of the fact that these reductions were being recommended. He said that three of the four customers did not submit applications for reconsideration and that the one customer who had submitted such an application did not meet the criteria for reinstating its allocation in full.
3. Economic Development Plan – Use of Net Revenues Produced by Sale of Expansion Power as Industrial Incentive Awards
SUMMARY
The Economic Development Power Allocation Board (“EDPAB”) is requested to approve an Economic Development Plan (“Plan”) for 2008-2010 submitted by the New York Power Authority (Authority”) for use of industrial incentive awards pursuant to Section 188 of the Economic Development Law (“EDL”).
BACKGROUND
Section 1005 of the Public Authorities Law (“PAL”), as amended by Chapter 32 of 1987, directs the Authority to identify net revenues produced by the sale of Expansion Power (“EP”) and, further, to identify an amount of such net revenues to be used solely for Industrial Incentive Awards. These awards are to be made in conformance with a Plan, covering all such net revenues. The Authority is to submit Plans annually to EDPAB and approved by EDPAB pursuant to EDL.
Net revenues are defined by Section 1005 as any excess of revenues properly allocated to the sales of EP over costs and expenses properly allocated to such sales.
In connection with approval of an application for power submitted on behalf of Chase Manhattan Bank, EDPAB approved a resolution on December 1, 1988 which concluded that the available industrial incentive awards be used for the purpose of assisting Power Authority efforts to limit future Fitzpatrick production rate increases for all industrial, business, and Economic Development Power customers of the plant. Further, the Board recommended that future Boards act affirmatively on any economic development plan submitted to it subsequently by the Authority to the extent it provides for such use of industrial incentive awards.
The Authority approved five-year programs in 1990, 1996 and 2001 and a one-year program in 2006 and 2007 under which EP net revenues were to be dedicated to helping maintain stable industrial rates.
At their meeting of December 16, 2008, the Trustees of the Authority approved a one year plan that provides for the use of 2007 net revenues from the sale of Expansion Power which support the rates of the business customers in 2008 served under power programs associated with the Power Authority’s former James A. Fitzpatrick Nuclear Power Plant (the "Fitzpatrick Power Programs"). These programs include the High Load Factor, Economic Development, and Municipal Distribution Agency power programs. The EDPAB previously approved Plans submitted annually by the Authority for 1996 through 2006 that provided for such use of the net revenues. Through calendar year 2006, the Authority has reported net revenues cumulating to $128.54 million.
DISCUSSION
The condition of the current economy is placing added strain on many New York State manufacturing companies. Consumer demand has declined for many end products and product components produced in New York. This leads to added cost pressure as companies assess each production location for continued operation or relocation.
Electricity costs can be a significant cost component for many manufacturing companies. Now is an appropriate time to deploy the Authority’s Industrial Incentive Awards in a new and different manner. Consequently, it is proposed that the Authority authorize Industrial Incentive Awards to individual manufacturing companies that provide explicit data demonstrating their risk of closure or relocation out of New York State.
The form of the Award will be a ¢/kWh price discount on an agreed to level of electricity consumption over a year. For example, a 1¢/kWh Award on annual usage of 10,000 kW and 60,000,000 kWh would become a monetary Award of $600,000. Awards would normally be for one year with the ability to renew for one or two additional years provided the company continues to meet an agreed to job commitment for New York. Additionally, participating companies could opt out should any new long term economic development program be approved by the State that offers similar or greater value.
Authority Staff is presently working with three manufacturing companies that would qualify for such Industrial Incentive Awards. The companies are located in Auburn, Camden & Rome, and Hauppauge, New York (Attachment A). The combined annual Awards to the three companies at a total of six locations is up to $3.982 million, leaving a substantial amount of the 2008 EP net revenues for additional Awards.
It is therefore proposed that the Authority’s Chairman be authorized to submit the Authority’s Plan to EDPAB for the ensuing three-year period providing for the use of 2008-2009-2010 EP net revenues ($7.9 million for 2008). The Authority will annually report to EDPAB the actual disbursement of these funds.
It is recommended the Power Allocation Board approve the Economic Development Plan submitted by the Authority, which provides for the use of net revenues produced in 2008-2010 from the sale of Expansion Power to provide Industrial Incentive Awards in the form of ¢/kWh electric discounts for qualifying industrial companies in New York State.
The attached resolution is recommended for adoption.
RESOLVED, That the members of the Economic Development Power Allocation Board hereby approves an Economic Development Plan that provides for the use of net revenues from the sale of Expansion Power (calendar years 2008, 2009 and 2010) to provide electric bill discounts to manufacturing companies in New York State that are at identifiable risk of closure or relocation to another state.
Mr. James Yates presented the highlights of staff’s recommendations to the Board. In response to a question from Trustee Nicandri, Mr. Yates said that the three companies would not be locked into the Industrial Incentive Awards program if a more beneficial power program is authorized within the next few years. Responding to a question from Chairman Schoetz, Mr. Yates said that the companies would submit their monthly utility bills on a quarterly basis to the Authority, which would then issue a check in the amount of the Industrial Incentive Award. In response to another question from Chairman Schoetz, Mr. Yates said that staff would encourage the companies to apply for any new power programs that may be authorized and that the second-and third-year awards would be based both on whether there was a rebound in the demand for the company’s product and whether future economic conditions were looking better for the company. Mr. Bernard McGarry said that he thought the Industrial Incentive Award program was a great idea but, because of the limited amount of money available for it, he suggested that staff look at criteria in addition to whether the company is in danger of closing or relocating when deciding which companies to recommend for the Awards. He said that those additional criteria could include the effect that a closure or relocation would have on the particular community involved and the quality of the jobs being saved. In response to a question from Trustee Nicandri, Mr. Yates said that the investor-owned utilities have historically had special contracts with these companies, but that the rates negotiated in those contracts had expired, and that any new tariffs would be subject to the approval of the New York State Public Service Commission. Trustee Nicandri said that it seemed to him that keeping these manufacturers in their service areas would be in the investor-owned utilities’ best interests and that they should have a role here. Mr. Yates said that this was not an option for the utilities at this time.
Attachment A
Industrial Incentive Awards IIA (2008 value $7.9 million)
NUCOR
· Auburn (Cayuga County) – 293 jobs
· NYSEG service area – 300 million kWh per year
· Target rate ~5.3 ¢/kWh against NYSEG rate of ~6.0 ¢/kWh
· IIA of 0.7 ¢/kWh variable up to max of $2 million/year
· 1 year plus 1 year plus 1 year
· IIA flexible to allow NUCOR to participate in any new NYPA power program
International Wire Group (IWG)
· Camden (Oneida County) (3 plants) – 67 jobs (plus 241 corporate jobs)
· Rome (Oneida County) (1 plant) – 42 jobs
· Total jobs – 107 (up to 348 with corporate)
· National Grid service area – 58 million kWh per year (2008)
· Target rate of 8 ¢/kWh
· IIA of 3.00 ¢/kWh or $1.882 million/year evenly distributed over 4 plants
· IIA of 2.1 ¢/kWh to 4.3 ¢/kWh (each plant varies to get 8¢ total), still $1.882 million/year
· 1 year plus 1 year plus 1 year
· IIA flexible to allow IWG to participate in any new NYPA power program
Positive Promotions
· Hauppauge (Suffolk County) – 600 to 800 jobs (seasonal)
· Long Island Power Authority (LIPA) – 3 million kWh per year, current rate 17.36 ¢/kWh
· LIPA offering special rate discount of 14.1% or $75,400 or 2.45 ¢/kWh discount
· IIA of 3.00 ¢/kWh for a maximum of $100,000
· Combined NYPA/LIPA package $175,000 or 5.45 ¢/kWh or 31% discount
· 1 year plus 1 year plus 1 year
· IIA flexible to allow Positive Promotions to participate in any new NYPA power program
Total recommended Industrial Incentive Awards = $3.982 million
$3.918 million remaining
4. Next Meeting
The next meeting of the Board is to be determined.