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New York Power Authority Trustees Approve 2009 Budget
Operating Budget Holds to Inflationary Increases and Invests in Clean Energy Initiatives

Contact:
Christine Pritchard
518-322-9143
christine.pritchard@nypa.gov

December 18, 2008

FOR IMMEDIATE RELEASE                                                 

WHITE PLAINS – The New York Power Authority (NYPA) today released its 2009 budget which holds operational spending in line with inflation, controls operating expenses through prudent financial management, invests in infrastructure and energy efficiency initiatives that will benefit taxpayers with lower energy costs and a cleaner, healthier environment and cuts discretionary expenditures by ten percent in line with Governor Paterson’s directive to state agencies to reduce costs.

“The 2009 Power Authority budget demonstrates our commitment to maintaining a lean operating organization while investing in our energy future with funding for critical infrastructure improvements and clean energy initiatives that will spur green collar jobs across the state,” said Richard M. Kessel, NYPA president and chief executive officer.

The Power Authority, which is the nation’s largest state-owned power organization, operates 18 generating facilities and more than 1,400 circuit-miles of transmission lines. It generates more than 20 percent of the total power produced in New York State and does so without use of any tax revenue or state credit. 

At its monthly meeting, which was held Tuesday in Utica, the NYPA Board of Trustees voted to approve the Power Authority’s 2009 annual budget, which includes outlays for operation and maintenance (O&M); capital spending; energy services funding; and fuel costs.  In addition, the trustees approved a four-year financial plan that forecasts $173 million in expected net revenues for 2009 for the Power Authority.

Holding the Line on Operating Increases:

Notably, due to NYPA’s continuing commitment to controlled operational growth and disciplined financial oversight, funding for O&M will be held to a 3.2 percent increase above 2008 levels. 

The increase is necessary and crucial in addressing required investments to maintain reliability including:  additional planned maintenance outage expenses for NYPA’s small clean power plants in New York City; targeted budget increases in other NYPA operating and transmission facilities across the state; and wage and benefits cost of living adjustments.

These increases will be offset by the commitment by NYPA to cut by 10 percent all discretionary  spending, including travel, books and publications, seminars and conferences, office supplies, blackberries and cell phones and consultants.

Investing in Critical Infrastructure:

The 2009 NYPA budget reflects an increase in NYPA’s financial commitment to improving and extending the life of critical infrastructure at its facilities in Niagara, St. Lawrence, Blenheim-Gilboa and other essential transmission improvements. These Life Extension and Modernization (LEM) projects will improve efficiency and ensure abundant supplies of clean, low-cost electricity well into the 21st century.

Specifically, the capital budget, which reflects a $42.1 million increase, includes $20.5 million and $19.5 million, respectively, for the Blenheim-Gilboa Pumped Storage Facility and the St. Lawrence-Franklin D. Roosevelt Power Project’s life extension projects and $21.4 million for commitments made in previous years related to the federal relicensing agreements for the Niagara and St. Lawrence plants.

“Reliable and abundant electricity is the backbone of the state’s economy,” Kessel said. “As the owner of nearly one-third of the state’s transmission system and the generator of much of the state electrical power, it is critical that we maintain and improve the infrastructure to support and grow our economy.”

Commitment to Clean Energy:

In addition, the NYPA 2009 budget underscores its commitment to expanding its energy efficiency and clean energy initiatives.  NYPA will invest up to $120.6 million in 2009 in clean energy projects, an increase of $15.8 million or 15.1 percent over last year’s level.

Kessel noted that this significant financial commitment is in line with Governor Paterson’s 15 by 15 initiative to cut electricity use by 15 percent by 2015 and his commitment to a Renewable Portfolio Standard, with a goal of increasing the proportion of renewable electricity used by New York consumers to at least 25 percent by 2013.

To date, NYPA’s energy efficiency projects save New York taxpayers over $110 million every year by cutting energy costs at thousands of public facilities, including local, county and state government facilities, public schools and state university campuses.

Leveling Fuel Expenditures:

The 2009 NYPA budget provides $543.5 million for fuel expenses, a decrease of $1.7 million (0.3 percent) from 2008.  This is a cash budget reflecting planned fossil-fuel purchases in 2009 for NYPA facilities at the Charles Poletti Power Project in Queens, the Richard M. Flynn Power Project in Suffolk County, the Small Clean Power Plants, and the 500 Megawatt plant in Queens.

Due to projected lower commodity prices and the reduction in planned consumption from slightly lower generation at NYPA’s fossil-fuel facilities, the 2009 NYPA budget anticipates a decrease in natural gas expenditures of $10.2 million.  A decrease of $24.1 million in oil expenditures primarily reflects the projected 2010 shutdown of the Poletti Project in Astoria.

These savings will be offset by new costs associated with the implementation of the Regional Greenhouse Gas initiative (RGGI).  The 2009 Budget projects spending of up to $32.6 million for the cost of emission credits NYPA will purchase given the 2009 forecasted generation.

RGGI is a ten-state agreement to reduce greenhouse gas emissions from power plants by means of a cap and trade system. Carbon dioxide, or CO2, is the principal greenhouse gas emitted by electric power generation and any other activity involving fossil fuel combustion. Proceeds from the purchase of emissions credits will fund additional renewable energy and greenhouse gas reduction programs throughout New York State.

Four-Year Financial Plan:

In addition to the expenditure budget, NYPA trustees approved a four-year financial plan that forecasts expected net revenues of $173 million for 2009 and expected average net revenues of $234 million for the entire four-year period 2009 through 2012.  NYPA revenues include: receipts from customers; sales by the Authority’s projects into the New York Independent System Operator market; and income from other sources including the Authority’s investments.

Trustee Item: Approved Budget and Financial Plan Information Pursuant to Regulations of the Office of the State Comptroller

Trustee Item: 2009 Operation and Maintenance, Capital, Energy Services and Fuel Expenditure Budgets

Additional financial information regarding NYPA is available on its website www.nypa.gov.

 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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