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N.Y. Power Authority Comments on State Comptroller Audit Report on Niagara Power Project

Contact:
Michael Saltzman
914-390-8181
michael.saltzman@nypa.gov

October 30, 2006

The Comptroller’s audit of the Niagara Power Project, owned and operated by the New York Power Authority, found that “all Niagara revenue and expense items were properly accounted for” during the two-year, examined period (January 1, 2004 through December 31, 2005). The report also recognized that for each of the two years included in the audit period, an independent audit firm “confirmed that NYPA’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States.”

The findings affirm NYPA’s sound and responsible management of the Niagara Project. NYPA’s finances are an open record, with detailed financial reports part of each monthly public meeting of our Board of Trustees. Its operations are subject to full-scale management audits by the state comptroller every five years, under state law.

The Power Authority appreciates the audit’s recognition of NYPA’s cooperation and will certainly consider integrating the audit report’s sole recommendation to “present expense and revenue information by power project in future NYPA Annual Reports.” The Authority’s Annual Reports have, to date, presented aggregate data for the Authority’s major hydropower projects, the Niagara and St. Lawrence-FDR projects.

It should be noted that the Niagara project’s revenues for 2004 and 2005, highlighted in the report, are not representative of historic operating trends. The 2004-2005 period experienced higher fuel and energy costs as a result of various factors, including the Gulf Coast Hurricanes Katrina and Rita in 2005, that increased the market value of the project’s power. There is no reasonable expectation that project revenues will remain at such levels. As every financial analyst warns, "Past performance is no guarantee of future results."

Niagara hydropower is supplied, under requirements of state and federal laws, to industry in Western New York supporting 44,000 jobs in the region, upstate investor-owned utilities for resale – without markup – to their residential customers and municipal electric systems and rural cooperatives in New York and neighboring states.

 About NYPA:

■    NYPA uses no tax money or state credit.  It finances its operations through the sale of bonds and revenues earned in large part through sales of electricity.  ■    NYPA is a leader in promoting energy-efficiency, new energy technologies and electric transportation initiatives.  ■    It is the nation’s largest state-owned electric utility, with 18 generating facilities in various parts of the state and more than 1,400 circuit-miles of transmission lines.

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