ECONOMIC DEVELOPMENT POWER ALLOCATION BOARD
March 20, 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
30 South Pearl Street – 10th Floor, Albany, NY
ComCenters – 9040 Town Center Parkway, Lakewood Ranch, FL
Expedite VCS – 325 Duffy Avenue, Hicksville, NY
1. Approval of the March 20, 2013 Proposed Meeting Agenda
2. Approval of the Minutes of the Meeting of December 18, 2012
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, 30 South Pearl Street – 10th Floor, Albany, NY
3) ComCenters, 9040 Town Center Parkway, Lakewood Ranch, FL
4) Expedite VCS, 325 Duffy Avenue, Hicksville NY
The following Members of the Board were present:
Samuel Hoyt, Chairman
Bernard McGarry, Member
Robert B. Catell, Member
Eugene L. Nicandri, Member (Excused)
Also in attendance were:
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
Karen Delince Corporate Secretary, NYPA
Michael Huvane Vice President Marketing, Marketing & Economic Development, NYPA
Timothy Muldoon Manager – Business Power Allocations and Compliance, NYPA
Gary Schmid Manager, Network Services, NYPA
Lorna Johnson Associate Secretary, NYPA
Chairman Hoyt welcomed Board members Robert Catell and Bernard McGarry, also NYPA President, Gil Quiniones and 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
The agenda for the March 20, 2013 meeting was unanimously adopted.
2. Adoption of the Minutes
The Minutes of the Regular Meeting of December 18, 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 (“Chapter 60”). 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 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 an 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 the RNY Market Power component of the award.
The basic 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”).
As part of Governor Andrew M. Cuomo’s New York “Open for Business” initiative, 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 Authority’s 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 Power in order to be considered for an RNY Power allocation. Because the RNY Power Program 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 on their merits under the criteria established by 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 Regional Economic Development Council (“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 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.
The following is the current program power status prior to the allocations currently proposed as part of this item: (1) allocations totaling 693.9 MW have been made out of 710 MW available for business “retention” purposes, which, counting modifications to allocations recommended to and accepted by the board, rescinded allocations (2.2 MW), and declined allocations (17.3 MW) leaving 19.9 MW available to allocate; (2) of that 710 MW retention block, 100 MW was set aside for not-for-profit corporations and small businesses, of which 72.7 MW and 23.0 MW have been allocated to not-for-profit corporations and small businesses, respectively, which leaves 4.3 MW available to allocate to such entities; and (3) allocations totaling 39.0 MW were made out of 200 MW available for business “expansion” purposes, leaving 161.0 MW available to allocate for such purposes.
The Board is asked to address applications submitted for RNY Power retention allocations via the CFA process.
Consistent with the evaluation process used as described above, EDPAB is asked to recommend RNY Power retention allocations to the 18 businesses or not-for-profit corporations listed in Exhibit “A” that have stated on their applications a willingness to create or retain approximately 2,500 jobs in New York State. Additionally, these applicants will be committing to capital investments totaling more than $45 million over five years in exchange for the proposed RNY Power allocations. Of these recommendations, 7 businesses are recommended for 4.3 MW MW, 10 small businesses are recommended for 0.6 MW, and one not-for-profit corporation is recommended for 0.10 MW.
The RNY Power allocations identified in Exhibit “A” are each recommended for a term of seven years. Consistent with legislation, each allocation recommended by EDPAB would qualify an applicant to enter into a contract with the Authority pursuant to the terms and conditions of the recommendation by EDPAB and on such other terms as the Authority determines to be appropriate. The Authority’s standard RNY Power contract template will have 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, 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, the Trustees approved the form and substance of a retail contract template that incorporates these and other standard requirements.
The Board is asked to address 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, staff determined that 6 applications were sufficiently complete for review, and that each such application requested RNY Power for a proposed expansion of the applicant’s business. These applications sought an 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, EDPAB is requested to recommend to the Trustees that they approve the six allocations listed in Exhibit “B” for an expansion-based allocation up to the amounts indicated. These allocations are made from available power within the 200 MW block of RNY Power set aside for business expansion and attraction. These businesses have stated a willingness to create a total of 262 new jobs in New York State and to commit to capital investments totaling $113.4 million in exchange for the recommended RNY Power allocations. The expansion projects would additionally support the businesses’ existing employment of nearly 400 people. The total amount of recommended RNY Power is 8.9 MW, with 4 businesses recommended for 8.8 MW and 2 small businesses recommended for 0.09 MW.
Three of these businesses were also recommended for retention allocations, having submitted an application that met the requirements for evaluating both retention and expansion awards by committing to distinct jobs and capital investment for each type of RNY Power. Applicants recommended for both retention and expansion allocations are indicated in the corresponding Exhibits “A” and “B.”
Staff is asking the Board to recommend the RNY Power allocations identified on Exhibit “B” 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 “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 in Exhibit “C,” to be ineligible for an RNY Power allocation for this reason.
Based on its review of the 8 applications listed in Exhibit “D,” staff determined that these applicants are not recommended or were not considered for an allocation of RNY Power. The application that is not recommended for an RNY Power allocation has requested a minimal amount of RNY Power. Other applications that are not considered for an allocation of RNY Power are for various reasons, including (i) the application was withdrawn, (ii) the application was not sufficiently complete to permit evaluation and/or applicants were unresponsive to requests from staff for more information which staff believed was needed to adequately evaluate the applications. In the case of expansion-related requests for RNY Power, certain applicants have proposed projects that are too premature to enable those applicants to make commitments necessary for an allocation of RNY Power. Accordingly, EDPAB is requested to determine that these applications are not recommended for an allocation of RNY Power.
EDPAB is requested to approve and recommend, in accordance with the RNY Statutes, that the Trustees approve the transfer of an RNY Power allocation for the business listed on Exhibit “E.” An RNY Power recipient has requested a transfer of RNY Power allocation to a new facility in accordance with the timeline laid out in its CFA. The commitments to jobs and capital investment made in consideration of the RNY Power allocation award remains the same as originally approved. The Board has previously recommended transfers of other Authority power products, such as 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 the allocations of RNY Power to the businesses listed in Exhibit “B” in the amounts indicated therein; (3) determine that the businesses identified in Exhibit “C” are ineligible to receive an 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; and (5) approve and recommend that the Trustees authorize the transfer of the RNY Power allocation identified in Exhibit “E.”
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 new allocations of retention and expansion power under the Recharge New York (“RNY”) Power Program. He said these allocations would result in the retention of jobs and the creation of new jobs in the State. 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 said that before his presentation he was requesting that the following modifications be made to the materials sent to the Board:
1. Food Authority’s name has been changed to Air Stream Corporation; the recommended allocation has also been changed to 150 kW.
2. Nassau University Medical Center will not be recommended for an allocation because it does not meet the not-for-profit eligibility requirement under the statute.
3. Triad Recycling and Energy Corporation has withdrawn its application.
4. Cives Steele Company has been removed from Exhibit “A” because the company’s allocation was approved by EDPAB at its December 2012 meeting; however, it has to go back to the Authority’s Board of Trustees for approval because of recusals by some of the Board members which resulted in a failure to attain the required number of votes necessary for its approval.
Mr. Huvane then presented the highlights of staff’s recommendations to the Board. Responding to a question from Chairman Hoyt, Mr. Huvane said although there were some challenges with the Consolidated Funding Application (“CFA”) process initially, those issues have been worked out by the technicians and the CFA process is now operating efficiently. Mr. Huvane added that the Authority also has a Call Center to assist applicants with any questions they may have when completing the application form.
In response to a question from Mr. Catell, Mr. Huvane said that the Nassau University Medical Center is a public benefit corporation, and, as such, does not meet the criteria as dictated in the Recharge New York law. Ms. Judith McCarthy added that under Recharge New York Law, public benefit corporations do not meet the definition of eligibility for not-for-profit corporations.
In response to a question from Chairman Hoyt, Mr. Huvane said that after approval of staff’s recommendation, 152 MW of RNY power will be available for allocation.
On motion made and seconded the Board approved staff’s recommendations, as amended, under the Recharge New York Power Program.
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 RNY Power to the businesses listed in Exhibit “A” in the amounts indicated therein; (2) recommend that the Trustees approve all the allocations of RNY Power to the businesses listed in Exhibit “B” in the amounts indicated therein; (3) determine that the businesses identified in Exhibit “C” are ineligible to receive an 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; and (5) approve and recommend that the Trustees authorize the transfer of the RNY Power allocation identified in Exhibit “E.”
Requests for Transfers of Recharge New York Power Allocations
Canon USA Inc., (“Canon”) with facilities located in Lake Success, Nassau County and Melville, Suffolk County was recommended for and awarded a 3,990 kW RNY Power allocation by EDPAB and the Trustees at meetings of these boards held on April 24, 2012. The company is moving the bulk of its operations from the Lake Success location to the Melville location in accordance with its Consolidated Funding Application under which the allocation was awarded. The company requests that the Trustees transfer the allocation, including its employment commitment of 2,059 and capital investment commitment of $496 million over five years, to the Melville location. Canon has not yet executed a contract with the Authority, waiting instead to undergo the relocation as described in its application. The Authority has been advised that Canon will execute the contract thus committing to honor all of the terms and conditions that pertain to the RNY Power allocation, including commitments related to jobs and capital investment.
4. Other Business
Western New York Power Proceeds Allocation Board
Chairman Hoyt said the Governor signed the Western New York (“WNY”) Power Proceeds legislation into law which establishes a mechanism and an entity, the Western New York Power Proceeds Allocation Board, to review applications and make recommendations to the NYPA Board for the distribution of funds from unallocated power for use in WNY. He said he wanted to let the Board know that the WNY Power Proceeds Allocation Board held its first meeting and Authority staff had been extremely resourceful in working with the Empire State Development Corporation (“ESDC”) and WNY to make sure that the process went smoothly. He thanked Authority staff for their efforts in getting the job done.
5. Next Meeting
The next meeting of the Board will be held via videoconference on Tuesday, May 21, 2013 at 10:00 a.m.