ECONOMIC DEVELOPMENT POWER ALLOCATION BOARD
July 22, 2013
Clarence D. Rappleyea Building, White Plains, New York – 10:00 a.m.
New York Power Authority Offices:
123 Main Street, 16th Floor, White Plains, NY
St. Lawrence/FDR Power Plant, 830 Barnhart Island, Massena, NY
Empire State Development Corporation, 95 Perry Street, Buffalo, NY
1. Approval of the July 22, 2013 Proposed Meeting Agenda
2. Approval of the Minutes of the Meeting of March 20, 2013
3. Recharge New York Power Program
4. 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, 830 Barnhart Road, Massena, NY
3) Empire State Development Corp., 95 Perry Street, Buffalo, NY
The following Members of the Board were present:
Samuel Hoyt, Chairman
Eugene L. Nicandri, Member
Robert B. Catell, Member
Bernard P. McGarry, Member (Excused)
Also in attendance were:
James F. Pasquale Senior Vice President – Economic Development & Energy Efficiency, NYPA
Karen Delince Corporate Secretary, NYPA
Michael Huvane Vice President Marketing, Marketing & Economic Development, NYPA
Timothy Muldoon Manager – Business Power Allocations and Compliance, NYPA
Emily Alkiewicz Business Power Allocations & Compliance, Analyst II, NYPA
Gary Schmid Manager, Network Services, NYPA
Lorna Johnson Associate Secretary, NYPA
Sheila Baughman Assistant Secretary, NYPA
Chairman Hoyt welcomed the Board members and Authority 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 the EDPAB Bylaws, Article III, Section 2.
1. Adoption of the Proposed Meeting Agenda
Chairman Hoyt asked if any member had a conflict of interest based on the list of applicants being considered for power allocations which was provided by Authority staff.
Upon motion made and seconded, the Agenda for the July 22, 2013 meeting was approved.
2. Adoption of the Minutes
Upon motion made and seconded, the Minutes of the Meeting held on March 20, 2013 were approved.
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 (“Chapter 60”). The program makes available 910 megawatts (“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.
RNY Power is available to businesses and not-for-profit corporations for job retention and business expansion and attraction purposes. Specifically, Chapter 60 provides that at least 350 MW of RNY Power shall be 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 shall be dedicated to the purpose of attracting new businesses and encouraging expansion of existing businesses statewide; and up to 100 MW shall 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.
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.
As part of Governor Andrew M. Cuomo’s initiative to foster business activity and streamline economic development, applications for all statewide economic development programs, including the RNY Power Program, have been incorporated into a single on-line Consolidated Funding Application (“CFA”) marking a fundamental shift in how State economic development resources are marketed and allocated. Beginning in September 2011, the CFA was available to applicants. 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.
The basic application for the RNY Power Program was approved by EDPAB at its meeting on September 26, 2011. Staff has gained valuable and practical experience through each evaluation period and as a result implemented question modifications to improve the efficiency of the application. The revised application includes changes to simplify and clarify questions, particularly to help reduce potential double counting of jobs and/or capital investment figures. Applications for RNY Power are subject to a competitive evaluation process and are evaluated based on the following criteria set forth in the statutes providing for the RNY Power Program (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 Regional Economic Development Council 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 ensure that each recipient receives a meaningful RNY Power allocation.
Business applicants with relatively high scores were recommended for allocations of retention 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 corporation 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.
RNY Power allocations have been awarded by EDPAB and the Trustees on five prior occasions – in April, June, September and December of 2012, and March of this year. There is currently 18.4 MW of unallocated RNY Power of the 710 MW available for business “retention” purposes. Of that 710 MW retention block, 100 MW was set aside for not-for-profit corporations and small businesses, of which 4.3 MW is available to allocate to such entities. Lastly, there is 152.1 MW of unallocated RNY Power of the 200 MW available for business “expansion” purposes. These figures include allocations that were awarded, modified, declined, and withdrawn prior to today’s recommendations.
The Board is asked to address applications submitted via the CFA process for RNY Power retention-based allocations. Consistent with the evaluation process as described above, EDPAB is requested to award RNY Power retention allocations to the businesses listed in Exhibit “A.” Each business has stated a willingness to create or retain jobs in New York State. Additionally, these applicants will be committing to capital investments in exchange for the recommended RNY Power allocations.
The RNY Power “retention” allocations identified in Exhibit “A” are each recommended for a term of seven years. An allocation recommended by EDPAB qualifies the subject applicant to enter into a contract with the Authority for the purchase of the RNY Power. The Authority’s standard RNY Power contract template, approved by the Trustees at their March 27, 2012 meeting, contains provisions addressing such things as 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, and capital investments. In addition, there is a requirement that a recipient of an allocation perform an energy efficiency audit at its facility not less than once during the first five years of the term of the allocation.
As noted in Exhibit “A”, some of these applicants are also being recommended for expansion-based allocations, having satisfied the criteria for both components of the RNY Power Program.
The Board is asked to address applications submitted for RNY Power expansion-based allocations via the CFA process which request allocations from 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. 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. EDPAB is requested to approve RNY Power expansion-based allocations for the businesses listed in Exhibit “B”. Each such allocation would be for a term of seven years.
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).
The respective amounts of the expansion-related allocations listed in Exhibit “B” are 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 “B” 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 “B.” The contracts for these allocations would also contain the standard provisions previously summarized in the last paragraph of Section 1 above.
In the process of reviewing the current round of applications for RNY Power, there were three applications by businesses that fit within the definition of a retail business as established by EDPAB. Staff recommends that the Board determine these applicants, listed on Exhibit “C,” to be ineligible for an RNY Power allocation for this reason.
As indicated on Exhibit “D”, staff recommends that the Board not recommend allocations to two applications for an expansion-based RNY Power allocation, and further requests the Board to not consider the other applications for an RNY Power allocation as described in Exhibit “D”.
The applications that are not recommended for an expansion-based RNY Power allocation propose projects that do not result in direct job growth, therefore do not meet the job creation requirement set internally by the Authority for RNY Expansion Power allocations. However, both companies are being recommended for a retention allocation.
Staff recommends that EDPAB not consider the other applications listed on Exhibit “D” for one or more of the following reasons: (i) the application was withdrawn; (ii) the application was not sufficiently complete to permit evaluation and/or applicants were unresponsive to requests from Authority staff for more information necessary to fully evaluate the applications; and in the case of expansion-based requests for RNY Power, the applicant had proposed projects that were too premature to enable the applicant to make commitments necessary for an allocation of RNY Power.
EDPAB is requested to approve and recommend a transfer of a RNY Power allocation due to a corporate restructuring and name change. The transfer is described in Exhibit “E”. The new company will agree to the job and capital investment commitments of the original applicant. The Board has previously authorized transfers of RNY Power and other Authority power products like Economic Development Power in similar circumstances.
Staff recommends that EDPAB approve and recommend the withdrawal by the Authority of two RNY Power allocations previously approved and recommended by the Board and awarded by the Authority. Upon the receipt of additional information, staff determined that one applicant (Hopshire Farms) was proposing a project that fell within the definition of retail business, and therefore was ineligible to receive RNY Power. The second allocation was made to Hunts Point Cooperative Market. However, it was subsequently determined that Hunts Point was already receiving Authority power through the Authority’s governmental service contract with New York City. These two awards are described in Exhibit “F”. Accordingly, the Board is requested to approve and recommend the withdrawal of RNY Power awards previously made to the two businesses listed on Exhibit “F”.
For various reasons, eighteen applicants have declined to accept all or part of the RNY Power allocations awarded to them, adding to the twenty-six applicants reported last year at the December 18, 2012, Trustee meeting. These applicants are listed on Exhibit “F”. No action by the Board is required on these applications.
In response to an inquiry at the March 21, 2013 meeting of the Board of Trustees, staff has conducted a review of the types of businesses and organizations that have been awarded allocations of RNY Power. Staff analyzed the distribution of customers in twenty different industry classifications based on the North American Industry Classification System. The high-level breakout in Exhibit “G” shows where the types of customers are located among the ten Regional Economic Development Councils within the State.
For the reasons stated above, it is requested that EDPAB: (1) approve and recommend that the Trustees approve the allocations of RNY Power for retention purposes to the businesses listed in Exhibit “A” as indicated therein; (2) approve and recommend that the Trustees approve the allocations of RNY Power for expansion purposes to the businesses listed in Exhibit “B” as indicated therein; (3) determine that the businesses identified in Exhibit “C” are 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 or not considered for an allocation of RNY Power; (5) approve and recommend that the Trustees authorize the transfer of the RNY Power allocation identified in Exhibit “E;” and (6) approve and recommend the withdrawal of previously awarded RNY Power allocations to the two businesses listed in Exhibit “F” as indicated therein.
Mr. Michael Huvane provided highlights of staff’s recommendation to the Board. He said for this Round, 29 applications for RNY power were submitted through the Consolidating Funding Application (“CFA”) process for both retention and expansion power allocations. Of the amounts set aside, 18.4 MW is available for “retention” purposes, 4.4 MW for not-for-profit corporations and small businesses and 152 MW for “expansion” purposes.
In response to a question from Mr. Catell, Mr. Huvane said a commercial landlord cannot apply for power on behalf of a tenant; the tenants have to apply individually. In cases such as this, the Authority includes a special metering clause in the tenant’s contract. Staff would work with the landlord and the tenant to ensure that the applicant/tenant receives the benefit of the low-cost power. In response to further questioning from Mr. Catell, Mr. Huvane said that the power is allocated to the specific company that is creating the jobs and/or capital investment; the landlord does not receive the advantage of the low-cost power and then relied on to pass the benefit to the tenant. Mr. Pasquale added that only the individual business can actually commit to the jobs and capital investments requirement of the statute, not a commercial landlord.
In response to a question from Trustee Nicandri, Mr. Huvane said regardless of the arrangements between the commercial landlord and the tenant/applicant, staff would work with the individual applicant to ensure that the applicant receives the full benefit of the discounted electricity. This is typically done by a Letter Agreement with the applicant’s landlord stating that the landlord would pass on the electricity discount to the tenant/applicant.
In response to further questioning from Trustee Nicandri, Mr. Huvane said the requirement on the Application Form to indicate whether an investment is for a short- or long-term period is to enable staff to note that those applicants indicating short-term investments do not have five years, the timeframe for most applicants, to fulfill their capital investment commitment.
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 allocations of Recharge New York Power available for “retention purposes to the businesses listed in Exhibit “A” in the amounts indicated therein; (2) approve allocations of RNY Power for “expansion” purposes to the businesses listed in Exhibit “B”.; (3) determine that the businesses identified in Exhibit “C” are ineligible to receive a RNY Power allocation; (4) determine that the applications by the businesses listed in Exhibit “D” are not recommended or not considered for an allocation of RNY Power; (5) authorize the transfer of the RNY Power allocation identified in Exhibit “E” and; (6) approve the withdrawal of two RNY Power allocations identified in Exhibit F.
Requests for Transfers of Recharge New York Power Allocations
Metro Terminals Corporation (“MTC”), with facilities located in Brooklyn, NY, received a 176 kW RNY Power allocation on June 26, 2012. Due to a corporate restructuring and name change, MTC is now called United Metro Energy Corporation (“UMEC”). MTC has requested that the 176 kW RNY Power allocation be transferred to UMEC.
No other business to report.
4. Next Meeting
The next meeting of the Board will be held via videoconference on Tuesday, May 21, 2013 at 10:00 a.m.