ECONOMIC DEVELOPMENT POWER
September 24, 2012
Clarence D. Rappleyea Building, White Plains, New York – 9:00 a.m.
New York Power Authority Offices:
123 Main Street, 16th Floor, White Plains, NY
30 South Pearl Street – 10th Floor, Albany, NY
Empire State Development Corporation, 95 Perry St., Suite 500, Buffalo, NY
1. Approval of the September 24, 2012 Proposed Meeting Agenda
2. Approval of the Minutes of the Meeting of June 25, 2012
3. Recharge New York Power Program
4. Other Business
5. Next Meeting
A regular meeting of the Economic Development Power Allocation Board was held via videoconference 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 – 10th Floor, Albany, NY
3) Empire State Development Corporation, 95 Perry Street, Suite 500, Buffalo, NY
The following Members of the Board were present:
Samuel Hoyt, Chairman
Eugene L. Nicandri, Member
Bernard McGarry, Member
Robert B. Catell, Member (Excused from Meeting)
Also in attendance were:
John R. Koelmel Chairman, NYPA
Terrance P. Flynn Trustee, NYPA
R. Wayne LeChase Trustee, NYPA
Gil Quiniones President and Chief Executive Officer, NYPA
Judith McCarthy Executive Vice President and General Counsel, NYPA
James F. Pasquale Senior Vice President – Economic Development & Energy Efficiency, NYPA
Michael Saltzman Director, Media Relations, NYPA
Michael Huvane Vice President Marketing, Marketing & Economic Development, NYPA
Dennis Eccleston Vice President Information Technology/Chief Information Officer – Information
Timothy Muldoon Manager – Business Power Allocations and Compliance, NYPA
Gary Schmid Manager, Network Services, NYPA
Lorna Johnson Assistant Secretary, NYPA
Sheila Baughman Senior Secretary, NYPA
Chairman Hoyt welcomed Board members present, Power Authority Chairman, John Koelmel, President Quiniones and staff to the meeting. He said the meeting has been duly noticed as required by the Open Meetings Law and called the meeting to order pursuant to the EDPAB Bylaws, Article III, Section 2.
1. Adoption of the Proposed Meeting Agenda
The agenda for the September 24, 2012 meeting was unanimously adopted.
2. Adoption of the Minutes
The Minutes of the Regular Meeting of June 25, 2012 were unanimously adopted.
3. Recharge New York Power Program
The Economic Development Power Allocation Board (“EDPAB” or “Board”) is requested to:
On April 14, 2011, Governor Andrew M. Cuomo signed into law the RNY Power Program as part of Chapter 60 (Part CC) of the Laws of 2011. The Program makes available 910 MW of “RNY Power,” 50% of which will be provided by the Authority’s hydropower resources and 50% of which will be procured by the Authority from other sources. RNY Power contracts can be for a term of up to seven years in exchange for job and capital investment commitments.
The RNY Program is available to businesses and not-for-profit corporations for job retention, business expansion and attraction purposes. Specifically, the RNY legislation provides that at least 350 MW of RNY Power is dedicated to facilities in the service territories served by the New York State Electric and Gas, National Grid and Rochester Gas and Electric utility companies; at least 200 MW of RNY Power is dedicated to the purpose of attracting new businesses and encouraging expansion of existing businesses statewide; and up to 100 MW may be dedicated for eligible not-for-profit corporations and eligible small businesses statewide.
Under the statute, “eligible applicant” is defined to mean an eligible business, eligible small business, or eligible not-for-profit corporation, however, an eligible applicant shall not include retail businesses as defined by EDPAB, including, without limitation, sports venues, gaming or entertainment-related establishments or places of overnight accommodations. At its meeting on April 24, 2012, EDPAB defined a retail business as 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, consistent with the rules previously promulgated by EDPAB for implementation of the Authority’s Economic Development Power program.
RNY Power allocation awards are comprised of 50% hydropower (“RNY Hydropower”) and 50% of other power procured by the Authority through a competitive procurement process, authority sources (other than the Niagara and Saint Lawrence projects) or through an alternate method (collectively, “RNY Market Power”).
Prior to entering into a contract with an eligible applicant for the sale of RNY Power, and prior to the provision of electric service relating to a RNY Power allocation, the Authority must offer each eligible applicant that has received an award of RNY Power the option to decline to purchase the RNY Market Power component of such award. If the applicant declines to purchase the RNY Market Power component from the Authority, the Authority has no responsibility for supplying RNY Market Power component of the award.
The Authority worked cooperatively with the Department of Public Service to recommend to the NYS Public Service Commission (“PSC”) reduced rates by utility corporations of RNY Power Program allocations. Pursuant to Chapter 60 and PSC order, State utilities are required to deliver RNY Power using discounted delivery rates. The discount derives from exempting RNY Power from the Renewable Portfolio Surcharge, the Systems Benefits Charge and the Energy Efficiency Portfolio Standard Surcharge. The delivery discount will apply to an eligible applicant’s total RNY Power allocation even if the applicant decides to purchase the RNY Market Power component from a non-Authority source.
The application for the RNY Power Program was approved by EDPAB at its meeting on September 26, 2011. Applications for RNY Power are subject to a competitive evaluation process and are evaluated based on the criteria set forth in the statutes providing for the RNY Power Program (the “RNY Statutes”).
In an effort effectively market the RNY Power Program, advertisements were placed in major newspapers and business publications statewide, website postings were issued, mass emails were distributed, and regional meetings were hosted by the Authority throughout the State. In addition, the RNY Power Program was promoted with assistance from State and local entities, including the Regional Economic Development Councils (“REDCs”), Empire State Development and other local and regional economic development organizations within the State such as the Manufacturers Association of Central New York. Further, a RNY Call Center was established to assist prospective applicants and to disseminate information regarding the RNY Power Program. The RNY Call Center remains in operation. Finally, a targeted postal mailing to business customers utilizing a list of ten thousand businesses in State was made to foster interest in the Program.
As part of Governor Andrew M. Cuomo’s New York “Open for Business” initiative, requests for all statewide economic development programs, including RNY, have been incorporated into a single on-line Consolidated Funding Application (“CFA”). Beginning in September 2011, the CFA was available to applicants, marking a fundamental shift in how State economic development resources are marketed and allocated. The CFA continues to serve as an efficient and effective tool to streamline and expedite the State’s efforts to generate sustainable economic growth and employment opportunities. All applications that are considered for an RNY Power allocation are submitted through the CFA process.
To support the Governor’s plans to
improve New York’s business climate and stimulate economic growth, ten REDCs
were created. Through a performance-based, community-driven approach, each REDC
has designed a strategic economic development model for its area and use the
CFA as the primary support mechanism to work with businesses to advance
projects that demonstrate potential for job creation and economic growth.
The Power for Jobs (“PFJ”) and Energy Cost Savings Benefit (“ECSB”) programs expired on June 30, 2012. Businesses that participated in these programs are required to apply for RNY in order to be considered for a RNY Power allocation. Because RNY is a new economic development program unrelated to the earlier PFJ and ECSB programs, all RNY Power applications, even those of former PFJ and ECSB participants, are considered solely on their merits under the criteria established by the RNY Power Program.
PFJ and ECSB customers of record June 30, 2012 who submit applications and but do not receive a RNY Power will be considered for a transitional electricity discount (“TED”) provided for by Chapter 60. Under this enactment law, the Authority is authorized, as deemed feasible and advisable by the Trustees, to provide TEDs as recommended by EDPAB. The amount of the TED authorized by Chapter 60 for the period of July 1, 2012 through June 30, 2014 is an amount equivalent to 66% of the unit (per kilowatt-hour) value of the savings received by the applicant under the PFJ or ECSB program during the 12 months ending on December 31, 2010. The amount of the TED authorized for the period July 1, 2014 through June 30, 2016 is equivalent to 33% of the unit (per kilowatt-hour) value of the savings received by the applicant under the PFJ or ECSB program during the 12 months ending on December 31, 2010. Of the applications received as of January 27, 2012, 410 PFJ and ECSB customers have applied for an RNY allocation.
As of January 27, 2012, 1,009 RNY applications had been submitted via the CFA process, requesting over 2,100 MW of RNY Power – more than twice the total amount available under the RNY Power Program. The applications were evaluated applying the following criteria as set forth in the RNY Statutes:
“(i) the significance of the cost of electricity to the applicant's overall cost of doing business, and the impact that a recharge New York power allocation will have on the applicant's operating costs;
(ii) the extent to which a recharge New York power allocation will result in new capital investment in the state by the applicant;
(iii) the extent to which a recharge New York power allocation is consistent with any regional economic development council strategies and priorities;
(iv) the type and cost of buildings, equipment and facilities to be constructed, enlarged or installed if the applicant were to receive an allocation;
(v) the applicant's payroll, salaries, benefits and number of jobs at the facility for which a recharge New York power allocation is requested;
(vi) the number of jobs that will be created or retained within the state in relation to the requested recharge New York power allocation, and the extent to which the applicant will agree to commit to creating or retaining such jobs as a condition to receiving a recharge New York power allocation;
(vii) whether the applicant, due to the cost of electricity, is at risk of closing or curtailing facilities or operations in the state, relocating facilities or operations out of the state, or losing a significant number of jobs in the state, in the absence of a recharge New York power allocation;
(viii) the significance of the applicant's facility that would receive the recharge New York power allocation to the economy of the area in which such facility is located;
(ix) the extent to which the applicant has invested in energy efficiency measures, will agree to participate in or perform energy audits of its facilities, will agree to participate in energy efficiency programs of the authority, or will commit to implement or otherwise make tangible investments in energy efficiency measures as a condition to receiving a recharge New York power allocation;
(x) whether the applicant receives a hydroelectric power allocation or benefits supported by the sale of hydroelectric power under another program administered in whole or in part by the authority;
(xi) the extent to which a recharge New York power allocation will result in an advantage for an applicant in relation to the applicant’s competitors within the state; and
(xii) in addition to the foregoing criteria, in the case of a not-for-profit corporation, whether the applicant provides critical services or substantial benefits to the local community in which the facility for which the allocation is requested is located.”
Based on the evaluation of these criteria, the applications were scored and ranked. Evaluations also considered scores provided by the relevant REDC under the third and eighth criteria.
In arriving at recommendations for RNY Power for EDPAB’s consideration, staff, among other things, attempted to maximize the economic benefits of low cost NYPA hydropower, the critical state asset at the core of the RNY Power Program, while attempting to assure that each recipient receives a meaningful RNY Power allocation.
Business applicants with relatively high scores were recommended for allocations of RNY Power of 50% of the requested amount or average historic demand, whichever was lower. These allocations were capped at 10 MW for any recommended allocation. Not-for-profit applicants that scored relatively high were recommended for allocations of 33% of the requested amount or average historic demand, whichever was lower. These allocations were capped at 5 MW. Applicants currently receiving hydropower allocations under other Authority power programs were recommended for allocations of RNY power of 25% of the requested amount, subject to the caps as stated above.
Based on this evaluation process, its April 24, 2012 and June 25, 2012 meetings EDPAB recommended 678 RNY Power allocations for Trustee approval. The recommendations, all of which were approved by the Trustees, were made to 423 businesses recommended for 591 MW, 179 small businesses recommended for 21 MW, and 76 not-for-profit corporations recommended for 74.8 MW. The Board also deemed 4 applicants ineligible and determined that 255 applicants would not be recommended for an award of RNY based on relatively low scores in the competitive evaluation process.
Previous allocations focused on applicants that sought RNY Power primarily for the purpose of retaining jobs in the State.
The Board is now being asked to address for the first time applications for the 200 MW block of RNY Power dedicated by statute for for-profit businesses that propose to expand existing businesses or create new business in the State.
Of the applications received through January 27, 2012, staff determined that 95 applications were sufficiently complete for review, and that such applications in fact proposed an expansion. These applications sought a RNY Power allocation for either (i) expansion only, in the case of a new business or facility, or (ii) expansion and retention, in the case of an existing business.
As with the evaluation process used for the retention recommendations described above, applications for the expansion-based RNY Power were scored based on the statutory criteria, albeit with a focus on information regarding each applicants’ specific project to expand or create their new facility or business (e.g., the expansion project’s cost, associated job creation, and new electric load due to the expansion).
Consistent with the goals of the expansion-based RNY power set-aside for “attracting new business to the state, creating new businesses within the state, or encouraging the expansion of existing businesses within the state,” EDPAB is being asked to recommend RNY Power allocations to those applicants that have pledged to (i) invest capital thereby creating new electrical load, and (ii) commit to create new jobs. This focus on capital investment and job creation aligns with the RNY Statute’s intention to maximize the economic development prospects for the State.
Accordingly, staff is recommending that of the 39 applications listed on Exhibit “A” be recommended by the Board to the Trustees for an expansion-based allocation from the 200 MW block of RNY Power in the amounts indicated. These businesses have stated a willingness to create a total of 3,587 new jobs in New York State and to commit to capital investments totaling $7,233 million in exchange for the recommended RNY Power allocations. The expansion projects would additionally support the businesses’ existing employment of over 7,400 people. The total recommended amount is 32,018 kW, with 31 businesses recommended for 31,014 kW and 8 small businesses recommended for 1,004 kW.
Staff is asking the Board to recommend the RNY Power allocations identified on Exhibit “A” for a period of up to seven years. Consistent with the RNY Statutes, each allocation recommended by EDPAB would qualify an applicant to enter into a contract with the Authority for the amount of the allocation pursuant to the terms and conditions of the recommendation by EDPAB, and on such other terms as the Authority determines to be appropriate.
The respective amounts of the expansion-related allocations listed in Exhibit “A” is largely intended to provide approximately 70% of the individual expansion projects’ estimated new electric load. Because these projects have estimated new electric load amounts, and to ensure that an applicant’s overestimation of the amount needed would not cause that applicant to receive a higher proportion of RNY power to new load, the allocations in Exhibit “A” are recommended based on an “up to” amount basis. Each of these applicants would be required to, among other commitments, add the new electric load as stated in its application, and would be allowed to use up to the amount of their RNY Power allocation in the same proportion of the RNY Power allocation to requested load as stated in Exhibit “A.”
As with the previously recommended retention allocations, the contract would have provisions for effective periodic audits of the recipient of an allocation for the purpose of determining contract and program compliance, and for the partial or complete withdrawal of an allocation if the recipient fails to maintain mutually agreed upon commitments, relating to among other things, employment levels, power utilization, capital investment and/or energy efficiency measures. In addition, there shall be a requirement that a recipient of an allocation make its facilities available at reasonable times and intervals for energy audits and related assessments that the Authority desires to perform. At their March 27, 2012 meeting, Authority Trustees approved the form and substance of a retail contract that incorporates these requirements.
The eight applications listed on Exhibit “B,” which were previously recommended for a RNY Power allocation at EDPAB’s April or June 2012 meetings, require a modification based on evaluation data discrepancies discovered after the June EDPAB meeting. The discrepancies involve the applicant’s commitment relating to jobs or capital investment as noted in Exhibit “B.” For example, an applicant may have mistakenly provided a 5 year historic capital spending amount instead of an amount it would be committing to spend over the next 5 years. Because each application was evaluated and scored based on the applicable criteria, these applications had to be re-evaluated using corrected information. In six cases, applicants still scored high enough to warrant a recommendation from staff for an allocation. In each of the other two cases, the applicant’s revised score is not high enough to receive a recommendation for an allocation. Accordingly, staff is recommending that the Board recommend modified allocations for these applications as detailed in Exhibit “B.”
In the process of reviewing the expansion-related applications for RNY Power, there was one application by a business listed on Exhibit “C” that fit within the definition of a retail business as established by EDPAB. Staff recommends that the Board determine this applicant to be ineligible for an RNY Power allocation for this reason.
Based on its review of the 56 applications listed on Exhibit “D,” staff determined that these applicants have (i) deferred or canceled the expansion project described in the application, (ii) proposed projects that are too premature to enable applicants to make commitments necessary for an allocation of RNY Power, (iii) proposed plans that do not include a commitment to increase employment, or (iv) been unresponsive to requests by staff for more information needed to adequately evaluate their respective applications. Accordingly, EDPAB is requested to determine that these applications are not recommended for an allocation of RNY Power from the 200 MW block of expansion-based RNY Power described above.
As noted above, PFJ and ECSB benefit recipients who applied for RNY Power but were not awarded an allocation may be considered for a TED under Chapter 60. At its June 2012 meeting, EDPAB recommended and the Trustees approve TEDs for 95 applicants.
Staff has identified five additional applicants, listed in Exhibit “E.” that should be considered for a TED. Accordingly, EDPAB is requested to recommend to the Trustees that these five applicants be provided with a TED. In accordance with Chapter 60, the Trustees will determine and advise EDPAB whether sufficient funds are available for the funding of such TEDs through June 30, 2016.
Finally, EDPAB is requested to approve and recommend in accordance with the RNY Statutes that the Trustees approve transfers of RNY Power allocations for the businesses listed on Exhibit “F.” Several RNY Power recipients have requested transfers of their RNY Power allocations to new or different business entities to accommodate various corporate changes since the time of application submittal late last year. Transfers are being requested for a variety of reasons including a business acquisition, corporate restructuring/name change, a new business affiliation, and a change to the plan to relocate from one part of New York State to a different part. One recipient instead decided to invest and retain its employment at its current location. In all cases, the commitments to jobs and capital investment made in consideration of the RNY Power allocation awards remain the same as originally approved. The Board has previously recommended transfers of other Authority power products like Economic Development Power in similar circumstances.
For the reasons stated above, it is requested that EDPAB: (1) recommend that the Trustees approve the allocations of RNY Power to the businesses listed in Exhibit “A” in the amounts indicated therein; (2) recommend that the Trustees approve modifications of existing RNY Power allocations to the businesses and not-for-profit corporations identified in Exhibit “B” as indicated therein; (3) determine that the business identified in Exhibit “C” is ineligible to receive a RNY Power allocation for the reasons discussed above; (4) determine that the applications by the businesses listed in Exhibit “D” are not recommended for an allocation from the 200 MW block of expansion-based RNY Power for the reasons discussed above; (5) recommend to the Trustees that the businesses listed in Exhibit “E” receive a transitional electricity discount; and (6) approve and recommend that the Trustees authorize the transfer of the RNY Power allocations identified in Exhibit “F.”
Chairman Hoyt asked Mr. James Pasquale, Senior Vice President of Economic Development and Energy Efficiency, to present the item for consideration by the Board. Mr. Pasquale said staff would be recommending that the Board approve allocations under the Recharge New York (“RNY”) Power Program. He said that at the meetings held in April and June the Board approved more than 600 allocations to businesses and not-for-profit organizations for “business retention.” The Board is now being asked to approve allocations to businesses and not-for-profit organizations for “expansion and attraction” in the state. Mr. Pasquale added that the legislation stipulated that a block of megawatts be set aside for this purpose. All of the applications were reviewed and scored based on the very prescriptive criteria contained in the RNY legislation. Mr. Pasquale then asked Mr. Michael Huvane, Vice President of Marketing, to formally present the item and provide an update on staff’s recommendations.
Mr. Huvane presented highlights of staff’s recommendations to the Board. In addition, Mr. Huvane said staff was requesting that, before the Board’s approval, a modification be made to Exhibit “A” -- removing BlueGreen Farms Inc. of Yaphank, Long Island, from consideration for an allocation, since its project is premature at this time.
Trustee Nicandri suggested, and it was agreed, the record reflects that, as required by statute, the Board give reasons for their approval of the allocation or non-allocation. The exhibits meet this requirement since it states the reasons for the recommendations which the Board is adopting.
By motion made and seconded the Board approved staff’s recommendations under the Recharge New York Power Program, as amended.
The following resolution was unanimously adopted by members of the Board present.
RESOLVED, That the Economic Development Power Allocation Board hereby recommends that the New York Power Authority’s Trustees (1) approve the allocations of power under the Recharge New York Power Program to the businesses listed in Exhibit “A”; (2) approve modifications of existing RNY Power allocations to the businesses and not-for-profit corporations identified in Exhibit “B”; (3) determine that the business identified in Exhibit “C” is ineligible to receive a RNY Power allocation; (4) determine that the applications by the businesses listed in Exhibit “D” are not recommended for an allocation from the 200 MW block of expansion-based RNY Power; (5) approve transitional electricity discounts for businesses listed in Exhibit “E”; and (6) authorize the transfer of the RNY Power allocations identified in Exhibit “F.”
New York Power Authority Exhibit “F”
Recharge New York Program September 24, 2012
Requests for Transfers of Recharge New York Power Allocations
Kozy Shack Enterprises Inc. (“Kozy Shack”), located in Hicksville, Nassau County, was recommended for and awarded a 950 kilowatts (“kW”) Recharge New York (“RNY”) Power allocation by the Economic Development Power Allocation Board (“EDPAB”) and New York Power Authority (“Trustees”), respectively, at the meetings of these boards held on April 24, 2012. On July 31, 2012, Kozy Shack was purchased by Land O’Lakes Inc. Land O’Lakes has stated it will continue to honor all of the terms and conditions of its RNY contract with the Authority including commitments related to jobs and capital investment.
Kraft Foods Inc. (“Kraft Foods”) and Kraft Foods Global, Inc. (“Kraft Foods Global”), with facilities located in the four towns of Campbell, Lowville, Walton and Avon, New York, were recommended for and awarded 2,486 kW, 2,476 kW, 1,210 kW and 2,670 kW RNY Power allocations by EDPAB and the Trustees, respectively, at meetings of these boards held on April 24, 2012, June 25, 2012, and June 26, 2012. Due to a corporate restructuring, the two companies with 4 allocations between them are now named Kraft Foods Group, Inc. The companies that were originally awarded the allocations have requested that all of the allocations be transferred to a new corporate entity named “Kraft Foods Group, Inc.” and have indicated that the new entity will commit to honor all of the terms and conditions of the companies’ existing RNY Power contracts including commitments related to jobs and capital investment.
Infotonics Technology Center, Inc. (“Infotonics”), a not-for-profit nanotechnology research and development organization located in Canandaigua, Ontario County, was recommended and approved for a 1,000 kW Recharge New York allocation by EDPAB and the Authority at their respective board meetings on April 24, 2012. Infotonics has consolidated with The Research Foundation of SUNY and is now doing business as Smart System Technology and Commercialization Center as part of the College of Nanoscale Science and Engineering. To more accurately reflect the new operating structure of the organization, they have requested a transfer of the allocation to “The Research Foundation of SUNY on behalf of Smart Systems Technology and Commercialization Center (STC), College of Nanoscale Science and Engineering.” The Authority has not yet executed a contract with Infotonics. The Authority has been advised that the transferee will commit to honor all of the terms and conditions that pertain to the RNY Power allocation including commitments related to jobs and capital investment.
Watt Fuel Cell Corporation (“Watt”), located in Port Washington, Nassau County, was recommended for a 1,000 kW RNY Power allocation for an undesignated location in Erie County at the June 25, 2012 EDPAB meeting which was approved by the Trustees at its June 26, 2012 meeting. The company’s application for RNY Power proposed a plan to relocate to Western New York in the near term. Due to changes in business conditions, the firm’s plans for relocation have been suspended, and the business conducted by the company will remain at its Port Washington location. The Authority has not yet executed a contract with Watt. The Authority has been advised that Watt will honor all of the terms and conditions that would pertain to the RNY Power allocation, including commitments related to jobs and capital investment, but at its Port Washington facility.
4. Other Business
No other business to report.
5. Next Meeting
The next meeting of the Board will be held via videoconference on Monday, October 29, 2012 at 10:00 a.m.