MINUTES OF THE ANNUAL MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

March 31, 2009

 

 

 

 

                Subject                                                                                                                                               

 

1.             Motion to Conduct an Executive Session                                                                                                                     

2.             Motion to Resume Meeting in Open Session                                                                                                                  

3.             Alcoa – Temporary Modifications to Existing Power Sales Agreements 

            Resolution

4.             Consent Agenda:                                                                                                                                                               

a.        Minutes of the Regular Meeting held on February 24, 2009                              

b.        Power for Jobs Program – Extended Benefits - Exhibit ‘4b-A’

        Resolution

 

c.        Allocation of 650 kW of Hydropower - Exhibit ‘4c-A’ & ‘4c-A-1’

        Resolution                                                                                                                                                                                     

 

d.        Transfers of Industrial Power                                                                                 

       

e.        Niagara Relicensing Customers, Niagara Frontier - Exhibit ‘4e-A’ -

        Resolution

        Transportation Authority and Metropolitan - Exhibit ‘4e-E’

        Resolution

           

         Transportation Authority – Service Tariff Amendments – Notice of Proposed Rulemaking

         

f.         Energy Efficiency and Clean Energy Improvements – Authority Facilities Program

        

g.       Niagara Power Project – Lewiston Pump Generating Plant – Gantry Crane Upgrade – Capital Expenditure

        Authorization and Contract Award

        

h.       Niagara Power Project – River Intake Structures Rehabilitation – Capital Expenditure Authorization and Contract Award

         

i.         Acquisition of Real Property - Exhibit ‘4i-A’

        Resolution

        

j.         St. Lawrence Transmission – PV-20 Easement Across Lake Champlain - Exhibit ‘4j-A’       

        Resolution

      

k.       Procurement (Services) and Other Contracts – Business Units and Facilities – Awards and Extensions - Exhibit ‘4k-A’ & ‘4k-B’

         Resolution                                                                            


 

Subject                                                                                                                                 

 

l.         2008 Annual Report of Procurement Contracts,  Guidelines for Procurement Contracts and Annual

         Review of Open Procurement Service Contracts - Exhibit ‘4l-A1’ -  ‘4l-A3’

         Resolution                                   

                     

m.      Annual Review and Approval of Guidelines and  Procedures for and Annual Report of the Disposal

        of Personal Property - Exhibit ‘4m-A’ & ‘4m-A1’ 

        Resolution    

       

n.       Annual Review and Approval of Guidelines and  Procedures for the Disposal of Real Property, Guidelines and Procedures

        for the Acquisition of  Real Property and Annual Report of the Disposal of Real Property - Exhibit ‘4n-A’ - ‘4n-C’ 

        Resolution             

                

o.        Annual Review and Approval of Certain Authority Policies -  Exhibit ‘4o-A’ - ‘4o-H’

        Resolution                                                                                                                                                                    

 

                 

Discussion Agenda:                                                                                                                                 

5.             Q&A on Reports from:

a.        President and Chief Executive Officer                                                                   

b.        Chief Operating Officer                                                                                            

c.        Chief Financial Officer - Exhibit ‘5c-A’

        Resolution             

6.             2008 Financial Reports Pursuant to Section 2800 of the Public Authorities Law and Regulations of the Office of the

            State Comptroller- Exhibit ‘6-A’ & ‘6-B’

            Resolution                                                                                     

                            

7.             Annual Review and Approval of Guidelines for the Investment of Funds and 2008 Annual Report on

            Investment of Authority Funds - Exhibit ‘7-A’& ‘7-B’      

            Resolution

 

8.             Approval of Revised Expenditure Authorization Procedures - Exhibit ‘8-A’

            Resolution

 

9.             Informational Item:  Regional Greenhouse Gas Initiative –  PowerPoint Presentation - Exhibit ‘9-A’

           

10.          Motion to Conduct an Executive Session                                                                               

11.          Motion to Resume Meeting in Open Session                                                                          

12.          Annual Election of Non-Statutory Officers                                                                             

            Resolution

 

 

Subject                                                                                                                                 

 

13.          Withdrawal of Notice of Proposed Rulemaking for  Hydroelectric Preference Power Rates and  Extension of Current Industrial Power Rates

             Resolution  

                           

14.          Next Meeting                                                                                                                                

Closing                                                                                                                                          

           

 

Minutes of the Annual Meeting of the Power Authority of the State of New York held at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York at 11:15 a.m.:

                Members of the Board present were:

 

                                Michael J. Townsend, Chairman

                                Jonathan F. Foster, Vice Chairman

                                D. Patrick Curley, Trustee

                                Elise M. Cusack, Trustee

                                Eugene L. Nicandri, Trustee

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Richard M. Kessel                               President and Chief Executive Officer

Gil C. Quiniones                                   Chief Operating Officer

Terryl Brown Clemons                        Executive Vice President and General Counsel

Joseph Del Sindaco                             Executive Vice President and Chief Financial Officer

Edward A. Welz                                   Executive Vice President and Chief Engineer – Power Supply

Steven J. DeCarlo                                 Senior Vice President – Transmission

Angelo S. Esposito                              Senior Vice President – Energy Services and Technology

Paul F. Finnegan                                  Senior Vice President – Public and Governmental Affairs

William J. Nadeau                                Senior Vice President – ERM and Strategic Planning

Donald A. Russak                                Senior Vice President – Corporate Planning and Finance

Joan Tursi                                             Senior Vice President – Enterprise Shared Services

James H. Yates                                     Senior Vice President – Marketing and Economic Development

Thomas P. Antenucci                          Vice President – Project Management

Arnold M. Bellis                                   Vice President and Controller

Thomas A. Davis                                 Vice President – Energy Risk Assessment and Control

Thomas P. DeJesu                               Vice President – Government Relations

Agnes Harris-Mattos                          Vice President – Human Resources

Patricia A. Leto                                     Vice President – Procurement

Lesly Y. Pardo                                      Vice President – Internal Audit

John J. Suloway                                   Vice President – Project Development, Licensing and Compliance

Dennis T. Eccleston                            Chief Information Officer

Joseph J. Carline                                  Assistant General Counsel – Power and Transmission

Brian C. McElroy                                  Treasurer

Karen Delince                                       Corporate Secretary

Angela D. Graves                                 Deputy Corporate Secretary

Joseph Leary                                        Executive Director – Corporate Community Affairs

Lisa A. Cole                                          Director – Financial Planning

Thomas J. Concadoro                         Director – Accounting

Michael Nash                                       Director – Engineering and Design

Mark D. O’Connor                               Director – Real Estate

James F. Pasquale                                Director – Marketing Analysis and Administration

Michael A. Saltzman                            Director – Media Relations

Marilyn J. Brown                                  Manager – Market Analysis and Tariff Administration

John L. Canale                                      Project Manager – Project Management

Anne B. Cahill                                      Principal Attorney II

Francine Evans                                     Special Advisor – President’s Office

Mary Jean Frank                                  Associate Corporate Secretary
Lorna M. Johnson                               Assistant Corporate Secretary


 

Kerry-Jane King                                   Senior Electrical Transportation Specialist – Research and Development

Oksana U. Karaczewsky                     Senior Procurement Compliance Coordinator

Diane Gil                                                Senior Procurement and Material Management System Analyst

 

 


 

Chairman Townsend presided over the meeting.  Corporate Secretary Delince kept the Minutes.


 

1.                     Motion to Conduct an Executive Session

 

                “Mr. Chairman, I move that the Authority conduct an executive session pursuant to Section 105(1)(f) of the Public Officers Law of the State of New York to discuss matters leading to the appointment, employment, promotion, discipline, suspension, dismissal or removal of a particular person or corporation.”  Upon motion made and seconded, an Executive Session was held. 


 

2.                     Motion to Resume Meeting in Open Session

 

                “Mr. Chairman, I move to resume the meeting in Open Session.”  Upon motion made and seconded, the meeting resumed in Open Session.


 

3.                     Alcoa – Temporary Modifications to Existing Power Sales Agreements  

                 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize the execution of an agreement providing for certain temporary modifications to Alcoa’s existing power contracts and an agreement concerning Alcoa’s subscription of power into the New York Independent System Operator’s (‘NYISO’) Special Case Resource Program.  These agreements will assist Alcoa in dealing with the effects of the economic recession and assure that the company will be able to perform its obligations under its new contract with the Authority, which is slated to begin in 2013.

 

BACKGROUND

 

                “Alcoa, Inc. and its wholly owned subsidiary Reynolds Metals Company (together, ‘Alcoa’) and the Authority have two existing Contracts for the Sale of Firm and Interruptible Power and Energy, dated August 24, 1981, for Alcoa’s Massena West and Massena East operations, respectively (‘Existing Contracts’).  In February 2009, Alcoa and the Authority executed an Agreement for the Sale of Firm and Interruptible Hydroelectric Power and Energy from the St. Lawrence/FDR Power Project to Alcoa Inc. (‘New Contract’), under which the Authority will supply power and energy to the Massena East and West operations upon the termination of the Existing Contracts in 2013, conditioned on Alcoa proceeding with rebuilding its outdated East Plant.              

 

                “As a result of the severe economic crises in the U. S. and worldwide markets, the price of primary aluminum, which the Massena West and East operations produce, has decreased from $3,000 to $3,200 per metric ton (‘MT’) in mid-2008 to $1,200 to $1,400 per MT in the first quarter of 2009.  Due to these extraordinary market conditions, Alcoa will temporarily curtail its Massena East operations beginning in May 2009.  As a consequence, Alcoa has requested that the Authority provide temporary relief from certain provisions of its existing contracts in order to reduce its cost of operations, and also allow the company additional time to meet its commitment to rebuild the East Plant.  In addition, the Authority can assist Alcoa by facilitating the company’s subscription of power used at the East Plant into NYISO’s Special Case Resource Program.  Lastly, Alcoa has agreed to provide a portion of the funds for the North Country Economic Development Fund (‘NCEDF’) prior to making a commitment to proceed with rebuilding the East Plant.

 

DISCUSSION

 

I. Temporary Modification of Existing Contracts

 

                “In connection with temporarily curtailing operations at the East Plant, Alcoa requests that the Authority waive certain minimum bill obligations and grant the company flexibility to use a portion of the East Plant’s firm power allocation at the West Plan during the curtailment.  Specifically Alcoa will temporarily release back to the Authority 200 MW of firm hydropower and 39 MW of interruptible hydropower.  Alcoa requests that the Authority waive the minimum monthly charge under the East Contract for during the curtailment.  In addition, during the curtailment, Alcoa will release back to the Authority 17 MW of firm power under Contract FD-4 (formerly served from the FitzPatrick Nuclear Plant, but now supplied through market purchases under the Energy Cost Savings Benefits Program) dated October 6, 1975, and likewise requests the Authority to waive the minimum monthly charge under that contract. 

 

                “During the temporary curtailment at Massena East, Alcoa will release back to the Authority 65 MW of interruptible hydropower provided to Massena West under the West Contract. In this regard, Alcoa requests that the Authority allow Alcoa to use at the West Plant firm power that under the Existing Contracts is limited to the East Plant.  This would increase the quantity of firm hydropower available to Massena West from 174 MW to 241 MW.  To accomplish this, the Authority would waive Special Provision C of the East Contract to permit such increase in the supply of firm hydropower at Massena West.  A maximum of 239 MW of firm power will be supplied for Massena West operations and a maximum of 2 MW of the firm power supplied under the West Contract will be delivered to Massena East, which will require this small amount of power during the curtailment to maintain the facility. 

 

                “Alcoa will provide the Authority with at least 30 days’ notice of its intent to restart Massena East.  Upon cessation of the temporary contract modifications, the firm and interruptible power allocations will revert to their original standing and normal billing under the Existing Contracts will resume.

 

II.  Agreements on Special Case Resources and Unforced Capacity

               

“In order to assist Alcoa during this period, Alcoa requests that the Authority offer into the relevant NYISO markets certain resources made available as a result of the temporary curtailment at the East Plant.  Therefore, it is proposed that, beginning May 1, 2009 and continuing through April 30, 2011, Alcoa will subscribe 220 MW from Massena West and 254 MW from Massena East into a Special Case Resource Agreement with the Authority.  A Special Case Resource is an end-use electric load that has the capability to go off-line on short notice at the direction of the NYISO, thus providing operational flexibility to the electric grid.  Special Case Resource is a load-provided service that is compensated under NYISO rules.  The Authority will pay Alcoa for the 254 MW and 220 MW at prices that the parties have deemed reasonable based on recent market activity plus the Unforced Capacity (‘UCAP’) strip auction price associated with the 220 MW for the applicable capability period.   In addition, for a one-year period following cessation of the temporary curtailment, Alcoa agrees to subscribe 232 MW into a Special Case Resource Agreement with the Authority covering the Massena East smelter.  The monthly price per MW will be equal to the actual UCAP strip auction prices during the summer of 2009 and the winter of 2009-10.  The Authority will bid the 220 MW of Massena West load into the NYISO UCAP market and Alcoa will be obligated to perform in accordance with NYISO rules.  In addition, from May 1, 2009 through April 20, 2010, the Authority will bid 254 MW associated with Massena East into the NYISO UCAP market.

 

III.  Agreements on New Contract.

 

                “During the temporary curtailment of the East Plant, Alcoa requests that the Authority temporarily change the threshold in the New Contract used to determine if Alcoa has met its Employment Commitment from 95% to 90% of the 1,065 jobs commitment for the relevant period specified in the New Contract.  The Authority will retain all of its rights under the New Contract to reduce Alcoa’s contract demand (which may include a reduction to zero) for failure to meet the 90% threshold during the term of these temporary arrangements. 

 

“Because of the current economic downturn, Alcoa requests that the performance dates associated with rebuilding the East Plant be temporarily suspended.  Alcoa and the Authority will meet quarterly to review Alcoa’s progress toward its commitments in the context of global aluminum markets and prices.  The parties will establish a revised schedule that results in rebuilding the East Plant as soon as global aluminum market conditions have recovered.

 

                “In recognition of the ongoing commitment reflected in the New Contract, Alcoa will provide $100,000 to NCEDF on May 1, 2010 to assist in initial NCEDF organizational efforts.  In addition, Alcoa will provide up to $400,000 in additional funding to support approved projects that NCEDF approves.  The balance of the $10 million Alcoa undertaking in the New Contract will be made to NCEDF within 90 days of approval by Alcoa’s Board of Directors of rebuilding the East Plant. 

IV. Term

               

“The arrangements outlined above will be for a term of two years from the effective date, absent an agreement otherwise.

               

“The temporary arrangements set forth above are appropriate in light of the extraordinary economic downturn that has severely affected Alcoa and its operations in Massena.  These measures by the Authority will greatly assist Alcoa in maximizing the number of employees that can be kept on the payroll during the period when operations at the East Plant are curtailed.  Moreover, these arrangements will give Alcoa the necessary additional time to work toward eventually rebuilding the East Plant.  Authority staff recommends that these agreements be approved.

 

FISCAL INFORMATION

 

                “The proposed waiver of the minimum billing provisions and any potential net costs associated with the subscription of power into the Special Case Resource Program are expected to be more than offset by the Authority’s sale of the temporarily relinquished power and energy into the wholesale market.

 

RECOMMENDATION

 

                “The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the  Senior Vice President – Corporate Planning and Finance, the Senior Vice President – Marketing and Economic Development recommend that the Trustees authorize the President and Chief Executive Officer to execute such documents as are necessary and appropriate to effectuate the agreements with Alcoa, Inc. outlined above.

 

                “The Chief Operating Officer and I concur in the recommendation.”

 

                President Richard Kessel presented the highlights of staff’s recommendations to the Trustees.  He said that he had worked very closely with Trustee Eugene Nicandri to develop this Memorandum of Understanding (“MOU”) and that Mr. Gil Quiniones, Ms. Terryl Brown Clemons, Mr. Joseph Del Sindaco, Mr. Donald Russak, Mr. James Yates and Mr. Joseph Carline deserved enormous credit for making it happen.  Chairman Michael Townsend added his thanks to the staff listed above and said that while he was disappointed that world events had led to the necessity for this MOU, he was glad that the Authority could step up to help save North Country jobs.  He pointed out that the Alcoa plant was the only aluminum smelting plant left in the U. S.  Trustee Nicandri said that this MOU was critical for maintaining the economic viability of the area of New York State that is north of the New York State Thruway.

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

 

RESOLVED, That the President and Chief Executive Officer be, and hereby is, authorized to execute such documents as are necessary and appropriate to effectuate the agreements with Alcoa, Inc. substantially on the terms outlined in the foregoing report of the President and Chief Executive Officer, and that he and his designees be and hereby are authorized to execute such documents, subject to the approval of the form thereof by the Executive Vice President and General Counsel, and to take any and all such actions as are necessary and appropriate to effectuate the foregoing; and be it further

 


 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

  

 

4.                     Consent Agenda

 

Chairman Michael Townsend said that the Economic Development Power Allocation Board had recommended that the Authority’s Trustees approve item 1b (Power for Jobs Program – Extended Benefits) at their meeting of March 30, 2009.

Vice Chairman Jonathan Foster reiterated his request that, going forward, additional detail be provided in the justifications for many of the items on the Consent Agenda, citing items 1c (Allocation of 650 kW of Hydropower), 1d (Transfers of Industrial Power), 1g (Energy Efficiency and Clean Energy Improvements – Authority Facilities Program) and 1j (Acquisition of Real Property) as examples. 

Chairman Townsend and Trustee Elise Cusack also expressed their concern about item 1j, stating that it would have been helpful if additional historical background had been included in the item.  President Kessel said that the plan to purchase real property for storage and maintenance of the Niagara ice boom had been thoroughly vetted with the local community.  Trustee D. Patrick Curley said that he had visited the site under discussion and that local officials were very pleased with the work that Mr. Paul Finnegan and other Authority staff had done in connection with it.  Mr. Finnegan explained that relocation of the ice boom had been negotiated in the Niagara relicensing process.  He said that he and Mr. John Canale and his staff had looked at close to 30 potential sites and worked with the local Congressman, Assemblyman, Buffalo Mayor Byron Brown and community groups during the process.  Two public meetings, one for community leaders and the other for the general public, were held.  He said that he wanted to acknowledge Mr. Canale’s role, in particular, in the success of this vetting process. 

Chairman Townsend said that he had spoken with President Kessel and Vice Chairman Foster about the variable pay issue and that the Trustees are going to look at the Authority’s entire pay structure.  He anticipates that a proposed solution will come before the Trustees for consideration in July or August of this year. 


 

4a.           Approval of the Minutes

 

                The Minutes of the Regular Meeting held on February 24, 2009 were unanimously adopted.


 

b.             Power for Jobs Program – Extended Benefits

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve electricity savings reimbursement rebates for 50 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘4b-A.’  This request is to approve rebate dollars only.  The decision to allow these customers to receive extended benefits was made at past Trustee meetings.  These customers have been recommended to receive such rebates by the Economic Development Power Allocation Board (‘EDPAB’). 

 

BACKGROUND

 

                “In July 1997, the New York State Legislature approved a program to provide low-cost power to businesses and not-for-profit corporations that agree to retain or create jobs in New York State.  In return for commitments to create or retain jobs, successful applicants received three-year contracts for PFJ electricity.

 

“The PFJ program originally made 400 megawatts (‘MW’) of power available and was to be phased in over three years.  As a result of the initial success of the program, the Legislature amended the PFJ statute to accelerate the distribution of the power and increase the size of the program to 450 MW.  In May 2000, legislation was enacted that authorized additional power to be allocated under the program.  Legislation further amended the program in July 2002.

 

                “Chapter 59 of the Laws of 2004 extended the benefits for PFJ customers whose contracts expired before the end of the program in 2005.  Such customers had to choose to receive an ‘electricity savings reimbursement’ rebate and/or a power contract extension.  The Authority was also authorized to voluntarily fund the rebates, if deemed feasible and advisable by the Trustees.

 

“PFJ customers whose contracts expired on or prior to November 30, 2004 were eligible for a rebate to the extent funded by the Authority from the date their contract expired through December 31, 2005.  Customers whose contracts expired after November 30, 2004 were eligible for rebate or contract extension, assuming funding by the Authority, from the date their contracts expired through December 31, 2005.

 

“Approved contract extensions entitled customers to receive the power from the Authority pursuant to a sale-for-resale agreement with the customer’s local utility.  Separate allocation contracts between customers and the Authority contained job commitments enforceable by the Authority.

 

“In 2005, provisions of the approved State budget extended the period PFJ customers could receive benefits until December 31, 2006.  Chapter 645 of the Laws of 2006 included provisions extending program benefits until June 30, 2007.  Chapter 89 of the Laws of 2007 included provisions extending program benefits until June 30, 2008.  Chapter 59 of the Laws of 2008 included provisions extending the program benefits until June 30, 2009.

 

“At its meeting of October 18, 2005, EDPAB approved criteria under which applicants whose extended benefits EDPAB had reduced for non-compliance with their job commitments could apply to have their PFJ benefits reinstated in whole or in part.  EDPAB authorized staff to create a short-form application, notify customers of the process, send customers the application and evaluate reconsideration requests based on the approved criteria. 

 

DISCUSSION

 

“At its meeting on March 30, 2009, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 50 businesses listed in Exhibit ‘4b-A.’  Collectively, these organizations have agreed to retain more than 37,000 jobs in New York State in exchange for the rebates.  The rebate program will be in effect until June 30, 2009, the program’s sunset.

 

                  “The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘4b-A’ in a total amount currently not expected to exceed $5.0 million.  Staff recommends that the Trustees authorize a withdrawal of monies from the Operating Fund for the payment of such amount, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.  Staff expects to present the Trustees with requests for additional funding for rebates to the companies listed in the Exhibit in the future for other rebate months.

 

FISCAL INFORMATION

 

“Funding of rebates for the companies listed on Exhibit ‘4b-A’ is not expected to exceed $5.0 million.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $168.4 million in rebates.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer and the Director – Marketing Analysis and Administration recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibit ‘4b-A.’

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

 

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

 

WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has recommended that the Authority approve electricity savings reimbursements to the Power for Jobs (“PFJ”) customers listed in Exhibit “4b-A”;

 

NOW THEREFORE BE IT RESOLVED, That to implement such EDPAB recommendations, the Authority hereby approves the payment of electricity savings reimbursements to the companies listed in Exhibit “4b-A”and that the Authority finds that such payments for electricity savings reimbursements are in all respects reasonable, consistent with the requirements of the PFJ program and in the public interest; and be it further

 

RESOLVED, That based on staff’s recommendation, it is hereby authorized that payments be made for electricity savings reimbursements as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $5.0 million, and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

 

RESOLVED, That such monies may be withdrawn pursuant to the foregoing resolution upon the certification on the date of such withdrawal by the Vice President – Finance or the Treasurer that the amount to be withdrawn is not then needed for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented; and be it further


 

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to negotiate and execute any and all documents necessary or desirable to effectuate the foregoing, subject to the approval of the form thereof by the Executive Vice President and General Counsel; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 


 

 


 

c.             Allocation of 650 kW of Hydropower  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve an allocation of available Expansion Power (‘EP’) totaling 650 kW to Precision Electro Minerals Company (‘PEMCO’).

 

BACKGROUND

 

“Under Section 1005(13) of the Power Authority Act, as amended by Chapter 313 of the Laws of 2005, the Authority may contract to allocate or reallocate directly, or by sale for resale, 250 MW of firm hydroelectric power as Expansion Power (‘EP’) and up to 445 MW of Replacement Power (‘RP’) to businesses in the State located within 30 miles of the Niagara Power Project, provided that the amount of power allocated to businesses in Chautauqua County on January 1, 1987 shall continue to be allocated in such county. 

 

“Each application for an allocation of EP or RP must be evaluated under criteria that include, but need not be limited to, those set forth in Public Authorities Law Section 1005(13)(a), which sets forth general eligibility requirements.

 

“Among the factors to be considered when evaluating a request for an allocation of hydropower are the number of jobs created as a result of the allocation; the business’ long-term commitment to the region as evidenced by the current and/or planned capital investment in the business’ facilities in the region; the ratio of the number of jobs to be created to the amount of power requested; the types of jobs created, as measured by wage and benefit levels, security and stability of employment and the type and cost of buildings, equipment and facilities to be constructed, enlarged or installed.

 

“On October 22, 2003, the Authority, National Grid, Empire State Development Corporation and the Buffalo Niagara Enterprise signed a Memorandum of Understanding (‘MOU’) that outlines the process to coordinate marketing and allocating Authority hydropower.  The entities noted above have formed the Western New York Advisory Group (‘Advisory Group’) with the intent of better using the value of this resource to improve the economy of Western New York and the State of New York.  Nothing in the MOU changes the legal requirements applicable to the allocation of hydropower. 

 

DISCUSSION

 

                “Staff recommends and the Advisory Group supports the available power being allocated to PEMCO as set forth in Exhibit ‘4c-A.’  The Exhibit shows, among other things, the amount of power requested, the recommended allocation and additional employment and capital investment information.  This project will help maintain and diversify the industrial base of Western New York and provide new employment opportunities.  It is projected to result in the creation of 13 jobs.

 

RECOMMENDATION

 

“The Director – Marketing Analysis and Administration recommends that the Trustees approve the allocation of 650 kW of hydropower to the company listed in Exhibit ‘4c-A.’

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

 


 

The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

 

                RESOLVED, That the allocation of 650 kW of Expansion Power, as detailed in Exhibit “4c-A,”  be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

                RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

 


 

               March 31, 2009

Exhibit “4c-A-1”

APPLICATION SUMMARY

Expansion Power

 

Company: Precision Electro Minerals Company (“PEMCO”) 

 

Location:                                                  Niagara Falls

                  

County:                                                     Niagara County

 

IOU:                                                           National Grid

 

Business Activity:                                  Manufactures fused silica

 

Project Description:                               The project plan includes putting two idle furnaces back on line.  This includes refurbishing and upgrading furnaces and all components.  Additional work will include refurbishing and upgrading the substation, changing the dust collector equipment to a newer model and upgrading the water cooling system.

 

Existing Allocation:                               800 kW of Replacement Power

 

Power Request:                                       750 kW

                                                                  

                                                                  

Power Recommended:                            650 kW

 

Job Commitment:     

                   Existing:                                21 jobs

                   New:                                       13  jobs

                                                                           

New Jobs/Power Ratio:                          20 jobs/MW

New Jobs -

Avg. Wage and Benefits:                       $30,000

 

Capital Investment:                                $340,000

 

Capital Investment per MW:                $0.523 million/MW

 

Summary:                                                 PEMCO was incorporated in Niagara Falls in 1987 to produce fused silica.  The company has several new opportunities to expand its operations and increase its production in response to growing demand for its product.  This new demand includes requests for its product from the solar panel industry.  PEMCO’s product is used to transform metallurgical-grade silicon to solar- grade silicon.  Without an additional allocation of hydropower, PEMCO cannot compete effectively.  Over the last five years, the company has invested $1 million in capital equipment.  This expansion project has been supported by the City of Niagara Falls and the Niagara County Center for Economic Development.

                                                  

 


 

                d.             Transfers of Industrial Power

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

 

                “The Trustees are requested to approve the transfer of power allocations for four existing customers that have either changed their names for various business reasons and/or moved the location of their business.

 

BACKGROUND

 

                “Two companies have requested that the Authority grant approval of their requests for the continued delivery of Authority power allocations to facilities that have all gained prior approval for an allocation with pre-existing company names and/or ownership.  One company requested to transfer its allocation to other existing facilities.  One company changed only its official corporate name.  The reasons for such transfers are described below.  The Trustees have approved transfers of this nature at past meetings.

DISCUSSION

 

                “The proposed transferees are as follows:

 

Citigroup, Inc. (‘Citigroup’), in New York, New York County, is one of the world’s largest brokerage houses and banking institutions.  At their June 26, 2001 meeting, the Trustees approved a 5 MW Power for Jobs (‘PFJ’) allocation for Citigroup for various New York City facilities.  The 5 MW allocation was extended through June 30, 2009.  Of this allocation, 1.5 MW is currently allotted to 333 W. 34th Street, 1.5 MW to 388 Greenwich Street and 2 MW to 111 Wall Street.  Citigroup requests that 333 W. 34th Street’s 1.5 MW portion of the 5 MW allocation be moved to 111 Wall Street.  The company also requests that 500 kW of 388 Greenwich Street’s 1.5 MW portion of the 5 MW allocation be moved to 111 Wall Street.  This transfer would result in 1 MW of PFJ power at 388 Greenwich Street and 4 MW of PFJ power at 111 Wall Street.  Citigroup will continue to honor all of the terms and commitments associated with this allocation.

 

Lockport Memorial Hospital (‘LMH’), in Lockport, Niagara County, is the only hospital in the Lockport area that provides full 24-hour acute care services. In addition, the hospital provides many wellness classes for the community.  At their February 24, 1999 meeting, the Trustees approved a 350 kW PFJ allocation with 363 jobs for LMH.  At their June 24, 2008 meeting, the Trustees approved an extension of LMH’s 350 kW PFJ allocation for 380 jobs through June 30, 2009.  As of February 2009, the hospital has a new name.  This is a change of name only, with no change in ownership.  LMH is now Eastern Niagara Hospital, Inc.  The hospital will continue to honor all of the terms and commitments associated with this allocation.

 

Met Weld, Inc. (‘Met Weld’), in Altamont, Albany County, has been in business since 1971.  Met Weld manufactures fabricated industrial equipment and fluid process control systems for the power generation industry, petrochemical industry, water treatment, heavy manufacturing, food processing and papermaking.  Met Weld was awarded a 200 kW PFJ allocation by the Trustees at their meeting of June 26, 2001.  The allocation was extended through June 30, 2009 with a switch to rebate.  Met Weld is now a PFJ rebate customer with an allocation of 100 kW and a commitment to retain 40 jobs.  Met Weld International LLC has purchased the assets of Met Weld.  The business conducted by the company and its location remain unchanged.  The company is now named Met Weld International LLC.  The company will continue to honor all of the terms and commitments of its contract with the Authority. 

 

Tyco Plastics - World Class Film Group (‘WCF’), in Yonkers, Westchester County, in business since 1992, manufactures extruded polyethylene film rolls, sheeting and bags.  The Trustees originally approved a 2,200 kW Municipal Distribution Agency (‘MDA’) power allocation in return for 130 jobs at their meeting of April 26, 1994.  In 2001, Tyco Plastics and Adhesives acquired WCF and became known as Tyco Plastics – World Class Film Group, which was acknowledged by the Trustees at their September 17, 2002 meeting.  The company currently receives Energy Cost Savings Benefits on 835 kW with a commitment of 40 jobs.  In 2008, Excelsior Packaging Group Corp., WCF’s landlord, purchased a substantial portion of WCF’s assets and in August 2008 reacquired the building.  The company will become a division of Excelsior Packaging Group Corp., known as Excelsior Extrusion, remain at the same location, continue to manufacture the same or similar products and honor all commitments associated with the MDA allocation.  This transfer is supported by the County of Westchester Public Utility Service Agency.

 

RECOMMENDATION

 

                “The Director – Marketing Analysis and Administration recommends that the Trustees approve the transfer of power allocations for three existing customers that have changed their names or transferred their allocations for various business reasons and approve the transfer of one customer’s existing allocation to other existing facilities while maintaining the current business operation and committing to the existing terms of the contracts.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development and I concur in the recommendation.”

 

                The following resolution, as submitted by the President and Chief Executive Officer, was unanimously adopted.

 

                                                                RESOLVED, That the Authority hereby authorizes the transfers of four industrial power allocations in accordance with the terms described in the foregoing report of the President and Chief Executive Officer; and be it further

 

                                                                RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

e.             Niagara Relicensing Customers, Niagara Frontier Transportation Authority and Metropolitan Transportation Authority -

                Service Tariff Amendments - Notice of Proposed Rulemaking  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to authorize the Corporate Secretary to publish a Notice of Proposed Rulemaking (‘NOPR’) in the New York State Register, in accordance with the requirements of the State Administrative Procedure Act (‘SAPA’), to amend the Authority’s current production service tariffs applicable to its: (1) Niagara Relicensing, (2) Niagara Frontier Transportation Authority (‘NFTA’) and (3) Metropolitan Transportation Authority (‘MTA’) customers.  Authority staff will address any comments received during the 45-day public comment period and return to the Trustees at a later date to seek final action on all service tariffs set forth above.

“A comprehensive review of the Authority’s current Niagara Relicensing, NFTA and MTA service tariffs was performed by Authority staff in an effort to update them and make them consistent with those of other utilities.  The proposed amendments would:

·         add abbreviations and terms.

 

BACKGROUND

“The Niagara Relicensing customers consist of seven Host Communities (City of Niagara Falls, Lewiston Porter Central School District, Niagara County, Niagara Falls Central School District, Niagara Wheatfield Central School District, Town of Lewiston and Town of Niagara), the Tuscarora Nation and Niagara University.

“The Niagara Relicensing customers receive firm hydroelectric power and energy from the Authority’s Niagara Power Project under Service Tariff Nos. HC-1, TN-1 or NP-1, as appropriate, and in accordance with these customers’ respective agreements for the Sale of Power and Energy with the Authority.

 

“The NFTA receives firm hydroelectric power and energy from the Authority’s Niagara and St. Lawrence/FDR Power Projects under Service Tariff No. 37 and in accordance with the Application for Electric Service between the Authority and the NFTA.

“The MTA receives 10 MW of firm hydroelectric power and energy from the Authority’s St. Lawrence/FDR Power Project under Service Tariff No. 8 and in accordance with the Application for Electric Service between the Authority and the MTA.

DISCUSSION

“The amended Niagara Relicensing, NFTA and MTA service tariffs, as proposed, will improve upon the existing tariffs, since they will include updated terminology and more streamlined organization and formatting.

 

“In addition, the proposed changes will make the tariffs more consistent with other utilities’ tariffs and more readable and understandable for the Authority and its Niagara Relicensing, NFTA and MTA customers.

 

“The proposed revised Niagara Relicensing service tariffs for the Host Communities, Tuscarora Nation and Niagara University for firm power and energy from the Niagara Power Project are attached as Exhibits ‘4e-A’, ‘4e-B’ and ‘4e-C’, respectively.  The NFTA service tariff for firm power and energy from the Niagara and St. Lawrence Power Projects is attached as Exhibit ‘4e-D.’  The MTA service tariff for firm power and energy from the St. Lawrence/FDR Power Project is attached as Exhibit ‘4e-E.’

 

FISCAL INFORMATION

“Adoption of the proposed revisions to the Niagara Relicensing, NFTA and MTA service tariffs will have no financial impact.  The changes proposed are administrative in nature and have no effect on current production rates.

 

RECOMMENDATION

“The Manager – Market Analysis and Tariff Administration recommends that the Trustees authorize the Corporate Secretary to file a Notice of Proposed Rulemaking in the New York State Register for the revision of service tariffs for the Authority’s Niagara Relicensing, Niagara Frontier Transportation Authority and Metropolitan Transportation Authority customers.

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Director – Marketing Analysis and Administration and I concur in the recommendation.”

The following resolution, as recommended by the President and Chief Executive officer, was unanimously adopted.

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file a Notice of Proposed Rulemaking for publication in the New York State Register in accordance with the State Administrative Procedure Act to amend the Authority’s current production service tariffs applicable to its Niagara Relicensing, Niagara Frontier Transportation Authority and Metropolitan Transportation Authority customers, as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file such other notice(s) as may be required by statute or regulation concerning the proposed tariff amendments; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

 

                f.              Energy Efficiency and Clean Energy  Improvements – Authority Facilities Program

                               

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

               

               “The Trustees are requested to authorize capital expenditures in the amount of $5 million for the implementation of energy efficiency and clean energy improvements at various Authority facilities under the Authority Facilities Program (‘Program’).  This amount will be in addition to $11 million in funding previously approved by the Trustees for this program.

 

BACKGROUND

 

                “The Authority has been implementing energy services programs since the 1990s as part of its overall mission to provide clean, economic and reliable energy for the benefit of its customers and the people of New York State.  In 1992, the Authority determined that, given the success of its High Efficiency Lighting Program for its governmental customers, it should ‘practice what it preaches’ and implement energy efficiency measures at the Authority’s facilities and headquarters buildings.  At their March 31, 1992 meeting, the Trustees authorized capital expenditures of $4.7 million over a two-year period for the installation of energy-efficient lighting measures at Authority facilities, including the corporate headquarters offices in New York City and White Plains.  At their February 26, 2002 meeting, the Trustees authorized capital expenditures of $3.5 million for the installation of energy efficiency improvements at the Authority’s Clarence D. Rappleyea Office Building (‘Rappleyea Building’) (White Plains headquarters).  At their February 27, 2007 meeting, the Trustees authorized $2.5 million for energy efficiency improvements at various Authority facilities.

 

                “Thus far, more than $7 million in energy efficiency projects have been completed at the Authority’s own facilities and headquarters sites under the Program.

 

                To date, the Trustees have approved almost $2.9 billion in financing for energy services programs throughout the State.  In 2008 alone, the Authority invested more than $116 million in projects throughout the State.  Since the Authority began its energy services work, the Authority’s programs have reduced the demand for electricity by approximately 215 MW, resulting in savings of nearly $111 million annually.

 

DISCUSSION

 

                “Projects already implemented under the Program include energy efficiency upgrades at the Poletti, Blenheim-Gilboa (‘B-G’), St. Lawrence and Niagara projects.  In addition, several projects were completed at the Authority’s headquarters offices in Albany and White Plains. 

 

“In 2006, due to energy efficiency and clean energy initiatives, the Rappleyea Building was awarded a Gold Leadership in Energy and Environmental Design (‘LEED’) Certification from the U. S. Green Building Council.

 

                “If approved by the Trustees, the additional funding will be used to install a new fuel cell at the Rappleyea Building and to implement energy efficiency and clean energy projects at the Authority’s facilities.  Projects will include a heating, ventilation and air-conditioning (‘HVAC’) upgrade at Niagara, and continuing work on a chiller-replacement installation and energy efficiency upgrades at B-G.  To the extent that there are energy savings, upgrades will be made to the brick facade at St. Lawrence and the roofing at the Poletti Administration Building; staff is also developing plans to implement other energy efficiency improvements at the Poletti Administration Building.  The additional funding will also be used for energy efficiency and sustainability projects that may be identified and developed in the future.                             

 

FISCAL INFORMATION

 

                “Funding for this program will be paid from the Capital Fund.

 

RECOMMENDATION

 

               “The Senior Vice President – Energy Services and Technology recommends that the Trustees authorize additional funding of $5 million for the Authority Facilities Program to complete energy efficiency upgrades and improvements at the Authority’s facilities and headquarters offices.

 

               “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Executive Vice President and Chief Engineer – Power Supply, the Senior Vice President – Public and Governmental Affairs and I concur in the recommendation.”

 

               The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

                 RESOLVED, That pursuant to the Authority’s Expenditure Authorization Procedures, approval is hereby granted for the expenditure of up to $5 million to finance the cost of energy efficiency and clean energy measures at the Authority’s facilities and headquarters offices as recommended in the foregoing report of the President and Chief Executive Officer, in the amount listed below:

 

Capital Funds                                                             Expenditure

 

Previously authorized                                                         $11 million

Additional funding                                                               $  5 million

Total amount authorized                                                     $16 million

 

AND BE IT FURTHER RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

 

 

               g.             Niagara Power Project – Lewiston Pump Generating Plant – Gantry Crane Upgrade – Capital Expenditure Authorization and Contract Award  

                               

                               

The President and Chief Executive Officer submitted the following report:

 

 SUMMARY

 

                “The Trustees are requested to authorize capital expenditures in the amount of $4.4 million and to approve the award of a two-year contract to Simmers Crane Design & Services Company (‘Simmers’) of Salem, Ohio, in the amount of $3,550,815 for the refurbishment and upgrade of the Lewiston Pump Generating Plant (‘LPGP’) 65-Ton Gantry Crane at the Niagara Power Project.

 

BACKGROUND

 

                “In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services contracts in excess of $3 million and contracts exceeding a one-year term require Trustees approval.

 

                “The 65-Ton Gantry Crane, located on the intake deck at the LPGP, is primarily used for removal and installation of the intake gates, gate hoists, trash racks, stop logs and hatch covers at each of the 12 unit intake blocks. 

 

                “The crane was originally manufactured by Milwaukee Crane, a division of Industrial Enterprises in Cudahy, Wisconsin, circa 1960.  Many of the components are exhibiting signs of wear and approaching the end of their useful life and replacement and spare parts are no longer available.  In addition, in 2004, a comprehensive mechanical and structural analysis of the crane determined that many components are in need of repair and modification based on current crane codes and standards.  An Occupational Safety and Health Administration Compliance Inspection also determined that several components need to be added and/or modified to meet current codes. 

 

DISCUSSION

 

                “The Authority issued an advertisement in the Contract Reporter and bid packages were available as of November 10, 2008.  Twenty-three potential bidders downloaded the bid documents and three contracting firms attended the site visit on December 11, 2008.

               

“Two proposals were received on January 5, 2009, as noted below:

 

                Bidder                                                                    Location                                                Lump Sum

 

                Simmers Crane Design & Services Co.             Salem, Ohio                                           $3,110,815

 

                Han-Tek Inc.                                                         Victor, New York                  $3,235,427

 

                “The two proposals were reviewed by an evaluation committee comprising staff from Engineering, Procurement and Project Management.  Following an extensive review process, the committee recommends award of this contract to Simmers, which submitted the lower-cost, and a technically acceptable, bid.

 

                “Simmers has experience in design, fabrication and installation of crane upgrade equipment, has demonstrated knowledge of the scope of work and is capable of completing the project.  Simmers has also performed successfully on other Authority projects and has demonstrated its ability to adhere to schedule and budget.

 

                “Simmers will complete engineering and design work in 2009 and refurbishment activities in 2010.  This two-phase approach allows adequate time for Simmers to properly assess the existing condition of the crane, design appropriate repairs with Authority approval and deliver long-lead material and equipment.

                “An additional $440,000 above the bid amount is requested to repair the bending and welding deficiencies in the Girder Web Splice Weld Connection, Intermediate Diaphragm, Girder to Upper End Tie Connection and Lower End Tie Connection should further engineering analysis deem a repair necessary on the LPGP 65-Ton Gantry Crane.

 

                “Expenditures in the amount of $841,000 have already been included in the 2009 Capital Budget.

 

FISCAL INFORMATION

 

                “Payment associated with this project will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

“The Vice President – Project Management, the Vice President – Procurement, the Vice President – Engineering, the Regional Manager – Western New York and the Project Manager recommend that the Trustees authorize capital expenditures of $4.4 million and award of a contract to Simmers Crane Design & Services Company in Salem, Ohio, for $3,550,815 to refurbish and upgrade the Lewiston Pump Generating Plant 65-Ton Gantry Crane at the Niagara Power Project.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Engineer – Power Supply and I concur in the recommendation.”

 

The following resolution, as recommended by the President and Chief Executive officer, was unanimously adopted.

 

RESOLVED, That, in accordance with the Authority’s Expenditure Authorization Procedures, the Trustees hereby approve capital expenditures in the amount of $4.4 million and a two-year contract award to Simmers Crane Design & Services Company in Salem, Ohio for $3,550,815 to refurbish and upgrade the Lewiston Pump Generating Plant 65-Ton Gantry Crane at the Niagara Power Project; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

                h.             Niagara Power Project – River Intake Structures Rehabilitation – Capital Expenditure Authorization and Contract Award

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize capital expenditures in the amount of $8.84 million, and to approve the award of a two-year contract to Scrufari Construction Co., Inc. (‘Scrufari’) of Niagara Falls, New York, for $6,665,674 to replace the exterior curtain walls, roof and critical structural connections on both River Intake Structures at the Niagara Power Project. 

 

BACKGROUND

 

                “In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services contracts in excess of $3 million for contracts exceeding a one-year term requires Trustees approval.

 

                “The 100-foot tall River Intake Structures house the intake gates used for cutting off flow in the two tunnels that convey water from the Upper Niagara River to the Niagara Power Project.  In 2007, detailed inspections of the two Niagara River intake gate enclosure structures were conducted.  These inspections revealed that over the life of the structures, water intrusion through failed caulk joints has caused excessive corrosion/breakage of many steel connections that attach the exterior wall and roof panels to the structural frame.  Furthermore, several of the wall panels had completely failed and severe corrosion of some of the bolts in the structural frames was discovered.  Protective netting and new replacement bolts were installed during 2008.  An engineering and design services contract for the rehabilitation of the structures was awarded to Stantec Consulting Services, which completed the design in November 2008.  The final project scope was approved by the New York State Office of Parks, Recreation and Historic Preservation since the Niagara River Intake Structures are eligible for listing on the National Register of Historic Places.

 

DISCUSSION

 

                “The Authority issued an advertisement in the Contract Reporter and bid packages were available as of December 22, 2008.  Ninety-seven potential bidders downloaded the bid documents.

 

“Four proposals were received on February 4, 2009, as noted below:

 

                    Bidder                                                                Location                                                Lump Sum

 

                Scrufari Construction Co., Inc.                          Niagara Falls, NY                 $6,365,674                             

                Sicoli & Massaro                                                 Niagara Falls, NY                 $6,513,150

                Hohl Industrial Services                                     Tonawanda, NY                                   $6,811,936

                Resetarits Construction Corp.                           Buffalo, NY                                           $8,348,000

               

“The four proposals were reviewed by an evaluation committee comprising staff from Engineering, Procurement and Project Management, as well as the Authority’s consultant, Stantec Consulting Services.  Accordingly, staff recommends award of this contract to Scrufari, which submitted the lowest-priced, and a technically acceptable, bid.

 

                “Scrufari has demonstrated knowledge of the scope of work and is capable of completing the project.  Scrufari has also performed successfully on other Authority projects and has demonstrated its ability to adhere to schedule and budget.

 

                “Scrufari will undertake this project in two phases, completing one structure per year.  Work is scheduled to commence in April 2009 and be completed by December 2010.

                “An additional $300,000 above the bid amount is requested for additional structural repairs that may be necessary during replacement of the curtain wall on both River Intake Structures.

 

                “Expenditures in the amount of $2.995 million have already been included in the 2009 Capital Budget.

 

FISCAL INFORMATION

 

                “Payment associated with this project will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

“The Vice President – Project Management, the Vice President – Procurement, the Vice President – Engineering, the Regional Manager – Western New York and the Project Manager recommend that the Trustees authorize capital expenditures of $8.84 million and an award of a contract to Scrufari Construction Co., Inc. in Niagara Falls, New York for $6,665,674 to rehabilitate the River Intake Structures at the Niagara Power Project.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Engineer – Power Supply and I concur in the recommendation.”

 

The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

 

RESOLVED, That, in accordance with the Authority’s Expenditure Authorization Procedures, the Trustees hereby approve capital expenditures in the amount of $8.84 million and a two-year contract award to Scrufari Construction Co., Inc. of Niagara Falls, New York for $6,665,674, to replace the exterior curtain walls, roof and critical structural connections on both River Intake Structures at the Niagara Power Project; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

i.              Acquisition of Real Property

                                               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize the acquisition in fee simple by purchase, eminent domain or transfer of jurisdiction of a real property parcel located in the City of Buffalo, Erie County, New York.

 

“This proposed parcel is generally set out in Exhibit ‘A’ and consists of approximately 10.3± acres.  The purpose of this acquisition is for storage of the Authority’s ice boom during the summer months.

 

BACKGROUND

“In 1975, the Authority acquired approximately 14 acres of property in the Outer Buffalo Harbor for storage and as a repair yard for the Authority’s ice boom.  The property was acquired from the State of New York, the Penn Central Transportation Company and the Penndel Company for approximately $79,000. 

 

“The ice boom is used to facilitate the formation of a natural ice arch across the end of Lake Erie, thus reducing the frequency and duration of the ice runs from Lake Erie into the Niagara River.  Historically, the ice running in the Niagara River has caused ice jams, resulting in the loss of generating power, shoreline flooding and significant damage to shoreline structures.  The Ontario Power Corporation and the Authority share equally the cost of the boom operation.  However, Niagara Project personnel perform all of the work associated with the ice boom.

 

“As a part of the June 27, 2006 City of Buffalo and Erie County Relicensing Agreement with the Authority, the Authority agreed to ‘commission a consultant to produce a feasibility study’ regarding relocation of its ice boom and to ‘diligently seek to relocate the ice boom to an alternate site.’ 

 

DISCUSSION

“Authority staff has identified and reviewed more than 25 potential sites for the placement of the ice boom along both Lake Erie and its tributaries.  Central to the usability of these potential sites is size and water access.  Staff has identified a 10.3± acre site located at 41 Hamburg Street, City of Buffalo, Erie County, New York.  This site, adjacent to the Buffalo River, is of sufficient size to house the ice boom.  It also allows for easy water access so that the boom can be easily towed into and out of this location.  In addition, the site has a sufficiently long bulkhead to allow for boat docking.

FISCAL INFORMATION

“Payment for any acquisition will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

“The Director – Real Estate recommends that the Trustees approve the Acquisition of Real Property as set forth in Exhibit ‘4i-A.’

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Engineer – Power Supply, the Senior Vice President – Enterprise Shared Services, the Vice President – Environment, Health and Safety and I concur in the recommendation.”


 

The following resolution, as recommended by the President and Chief Executive officer, was unanimously adopted.

 

                 RESOLVED, That pursuant to the provisions of Article 5, Title 1 of the  Public Authorities Law, the Authority hereby finds and determines that it is necessary or convenient to acquire in fee the real property generally shown on Exhibit “4i-A” attached hereto, and that such real property is required for public use; and it is hereby determined that such real property is reasonably necessary for securing, maintaining and operating the Authority’s ice boom, which is essential for the safe and efficient operation of the Niagara Power Project; and be it further

 

RESOLVED, That the Senior Vice President – Enterprise Shared Services be, and hereby is, authorized to take all necessary steps to acquire in fee the real property as generally shown in Exhibit “4i-A,” together with any easements and/or other interests necessary or convenient for the full enjoyment of the ice boom property; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

j.              St. Lawrence Transmission – PV-20 Easement Across Lake Champlain   

                                                 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize the acquisition of a 40-year grant of easement in 14.40 acres of unappropriated lands of the State of New York located in the bed of Lake Champlain, as shown and described on Map No. CL-1503 from the New York State Office of General Services (‘OGS’), in consideration of payment to the State of approximately $400,000.

 

BACKGROUND

 

                “The Authority operates and maintains the PV-20 Transmission Line, which runs from Plattsburgh, New York into Vermont, providing power to Vermont Electric Power Company.  A portion of this transmission line sits on the floor of Lake Champlain from Cumberland Head, New York to Grand Isle, Vermont.  This transmission facility was constructed pursuant to a permit issued by the U. S. Army Corps of Engineers (‘U. S. Army Corps’) dated April 1, 1958.  The Authority owns the portion of the cables, appurtenances and accessories located in the State of New York, while the Vermont Electric Power Company owns the portion of the cables, appurtenances and accessories located in the State of Vermont.

 

DISCUSSION

 

                “Pursuant to New York State Public Lands Law, the underwater lands located on the New York side of Lake Champlain are under the control of OGS.  A review of the Authority’s and OGS’ records reveal that no rights were obtained from OGS or any predecessor agency for the installation of the cables and accessories on these underwater lands.  Further, pursuant to State law and policy, OGS may grant rights and easements ‘. . . in and to all state lands including lands under water at a price to be determined by the Commissioner.’  Grants of easements for underwater lands are limited by OGS policy to a 40-year period.  Therefore, the Authority does not currently have a valid permit from OGS for the portions of cable and appurtenances on the New York side of Lake Champlain.  There is apparently no such requirement for a State-issued permit for the cable and appurtenances on the Vermont side of Lake Champlain, as the U. S. Army Corps permit suffices.  OGS is willing to issue a 40-year right to place and maintain the cable and accessories to the Authority.  The price currently established for this use is $18.45 per linear foot per 30-foot-wide swath.

 

“As-built mapping of Map No. CL-1503 that includes the underwater segment of the facilities shows an acreage of 14.40 acres.  Based on current statutory rates of $18.45, the final as-built price of the grant of easement from OGS is computed at approximately $400,000.

 

FISCAL INFORMATION

 

“Payment will be made from the Capital Fund.

 

RECOMMENDATION

 

                “The Senior Vice President – Enterprise Shared Services and the Senior Vice President – Transmission recommends that the Trustees approve the acquisition by purchase or transfer of jurisdiction of the 14.40-acre grant of easement shown and described on Map No. CL-1503 on the terms generally described above.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Engineer – Power Supply and I concur in the recommendation.”

 

               


 

The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.                   

 

RESOLVED, That pursuant to the provisions of Article 5, Title 1 of the Public Authorities Law, the Authority hereby finds it necessary to acquire the real property shown and described on Power Authority of the State of New York Map No. CL-1503 encompassing 14.40 acres and hereby finds and determines that such real property is required for a public use and hereby determines that such easement is reasonably necessary or desirable for the operation of the PV-20 facility; and be it further

 

RESOLVED, That the Senior Vice President – Enterprise Shared Services or the Director – Real Estate be, and hereby is, authorized on behalf of the Authority to execute any and all other agreements, papers or instruments that may be deemed necessary or desirable to carry out the foregoing, subject to the approval of the Executive Vice President and General Counsel; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

k.            Procurement (Services) and Other Contracts – Business Units and Facilities – Awards and Extensions  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award and funding of the multiyear procurement contracts listed in Exhibit ‘4k-A,’ as well as the continuation and funding of the procurement contracts listed in Exhibit ‘4k-B,’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the recommended awards, including the nature of such services, the bases for the new awards if other than to the lowest-priced bidders and the intended duration of such contracts, are set forth in the discussion below.

BACKGROUND

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts involving services to be rendered for a period in excess of one year.

“The Authority’s Expenditure Authorization Procedures (‘EAPs’) require the Trustees’ approval for the award of non-personal services, construction, equipment purchase or non-procurement contracts in excess of  $3 million, as well as personal services contracts in excess of $1 million if low bidder, or $500,000 if sole source or non-low bidder.

“The Authority’s EAPs also require the Trustees’ approval when the cumulative change- order value of a personal services contract exceeds the greater of $250,000 or 35% of the originally approved contract amount not to exceed $500,000, or when the cumulative change- order value of a non-personal services, construction, equipment purchase or non-procurement contract exceeds the greater of $500,000 or 35% of the originally approved contract amount not to exceed $1 million.

DISCUSSION

Awards

“The terms of these contracts will be more than one year; therefore, the Trustees’ approval is required.  Except as noted, all of these contracts contain provisions allowing the Authority to terminate the services for the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  Approval is also requested for funding all contracts, which range in estimated value from $20,000 to $10.5 million.  Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.

“The issuance of multiyear contracts is recommended from both cost and efficiency standpoints.  In many cases, reduced prices can be negotiated for these long-term contracts.  Since these services are typically required on a continuous basis, it is more efficient to award long-term contracts than to rebid these services annually.

Extensions

                Although the firms identified in Exhibit ‘4k-B’ have provided effective services, the issues or projects requiring these services have not been resolved or completed and the need exists for continuing these contracts.  The Trustees’ approval is required because the term of extension of these contracts will exceed one year.  The subject contracts contain provisions allowing the Authority to terminate the services at the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  These contract extensions do not obligate the Authority to a specific level of personnel resources or expenditures.

                “Extension of the contracts identified in Exhibit ‘4k-B’ is requested for one or more of the following reasons:  (1) additional time is required to complete the current contractual work scope or additional services related to the original work scope; (2) to accommodate an Authority or external regulatory agency schedule change that has delayed, reprioritized or otherwise suspended required services; (3) the original consultant is uniquely qualified to perform services and/or continue its presence and re-bidding would not be practical or (4) the contractor provides a proprietary technology or specialized equipment, at reasonable negotiated rates, that the Authority needs to continue until a permanent system is put in place.

 

The following is a detailed summary of each recommended contract award and extension.

Contract Awards in Support of Business Units/Departments and Facilities:

Energy Marketing and Business Development

Marketing and Economic Development

“The Authority will be implementing a multiphase End-Use Metering and Monitoring Project (‘Project’) that will provide for continuous near-real-time monitoring and end-use metering of its governmental customers in the Southeastern New York (‘SENY’) region.  The Project will secure, at a minimum, hourly information on key end uses and/or processes that are significant contributors to the overall energy profile of selected customer facilities.  Studies indicate that customers have demonstrated savings of 5-8% by simply closely monitoring the energy usage at their facilities.  One of the goals of this Project is to provide more substantive information to help quantify the potential energy savings that can be attributed to providing continuous review of facility end-use performance in order to improve efficiencies of the selected customer facilities.  Bid documents were downloaded electronically from the Authority’s Procurement website by 23 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated.  Based on the strength and responsiveness of its proposal, the contractor team’s experience and level of customer service, resources, range of available tools and methodologies and competitive rates, staff recommends award of a contract to EnergyICT, Inc. (Q08-4409; PO# TBA), the lowest-priced bidder, which meets all the bid requirements, was determined to be the most qualified to perform the work and would best serve the Authority’s and its customers’ needs.  The contract with EnergyICT would provide for equipment and services in connection with the End-Use Metering and Monitoring Project for the SENY region, including, but not limited to, furnishing, delivering and installing metering equipment, system software and maintenance, site surveys, training, etc.  The contract would become effective on or about April 1, 2009, for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $5 million.

Energy Services and Technology – Research and Technology Development

“The contract with M. J. Bradley & Associates, LLC (‘MJB&A’) (Q09-4467; PO# TBA) would provide for consulting services related to calculating emissions reductions and fuel savings resulting from implementation of the Authority’s Electric Transportation Program.  Services include, but are not limited to, calculating emissions from vehicles (including conventional, battery-powered electric and hybrid-electric) and electric utility power plants.  Bid documents were downloaded electronically from the Authority’s Procurement website by 29 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated.  Staff recommends award of a contract to MJB&A, the lowest-priced bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory service under a prior contract for such work.  The contract would become effective on April 1, 2009 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $35,000.


 

Energy Services and Technology – Energy Services

                 “The Authority intends to implement a Wireless Control of Rail Heaters Project (‘Project’) for the Metropolitan Transit Authority (‘MTA’) – New York City Transit (‘NYCT’) for third-rail applications at Rockaway and in the Jamaica and Pitkin Yards, in an effort to reduce energy usage under the Governmental Customers Energy Services Program (‘GCESP’). The Project would entail installing a wireless network to remotely control the heaters in both the yards and on the third rail through a Supervisory Control and Data Acquisition System (‘SCADA’).  In addition to providing energy savings, the system would greatly assist NYCT with maintenance and system performance.  To this end, bid documents were downloaded electronically from the Authority’s Procurement website by 32 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Five proposals were received and evaluated.  Staff recommends award of a contract to Transdyn, Inc. (Q08-4453; PO# TBA), the lowest-priced bidder, which meets the bid requirements and is also the most technically qualified.  Transdyn, Inc. has extensive experience in control systems in the transportation industry, as well as in wastewater treatment and storm water mitigation.  The firm is currently working with NYCT in the Power SCADA Modernization Project to control and monitor the NYCT substations.  Work would include the design, engineering, fabrication, furnishing and delivery, supervision of installation and commissioning of the system for the MTA-NYCT.  (The actual installation of supplied equipment would be performed by NYCT personnel.)  The Trustees are requested to approve award of this contract, which would become effective on or about April 1, 2009; although staff anticipates that this project will be completed within one year, it may take up to two years,   vb which would allow for any unanticipated delays that may be encountered.  Approval is also requested for the total amount expected to be expended for the term of the contract, $4.85 million.  All costs will be recovered by the Authority.

 

Law Department

 

“At their meeting of March 30, 2004, the Trustees approved the award of a contract to Manatt, Phelps & Phillips, LLP (‘Manatt’) to provide legal services in connection with the ongoing St. Regis Indian land claim, including settlement negotiations and preparation of motions to dismiss the complaints, responsive pleadings and oppositions to plaintiffs’ motions to strike or dismiss the defendants’ affirmative defenses and counterclaims.  In the five years since the Manatt firm was retained, its attorneys have studied the many historical facts and Authority documents (some dating back nearly 400 years) relevant to understanding this case, as well as the lengthy procedural history of this land claim and all the papers filed since its inception 20 years ago.  In addition, Manatt is knowledgeable about the complexities of Indian law generally, as well as other related New York State land claim cases that continue to have a direct bearing on the St. Regis matter.  Furthermore, Manatt is also familiar with the ongoing efforts to settle this matter and the political realities that must be dealt with if any such resolution is to receive necessary legislative approvals.  Sometime in early or mid-2009, the pending defense motions for dismissal, prepared by Manatt about a year ago, will be argued and decided.  An appeal of that decision or the lengthy pretrial discovery process would then follow, unless the parties agree to resume settlement talks.  In either case, it would not be practicable or prudent to retain a new firm at considerable additional expense.  Manatt has the requisite experience and is well positioned to continue its representation of the Authority.  Since the existing contract is expiring and the need for such services is ongoing, staff recommends the award of a new contract to Manatt (PO# TBA) on a sole-source basis, based on the foregoing reasons, to provide for the continuation of such legal representation services.  The new contract would become effective on April 1, 2009, for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $750,000.

 

“At their meeting of March 30, 2004, the Trustees approved the award of a three-year contract to Shaw Pittman (now Pillsbury Winthrop Shaw Pittman, LLP, ‘Pillsbury’) to provide for legal representation in ongoing high-level radioactive waste litigation against the U.S. Department of Energy.  At their meeting of March 27, 2007, the Trustees approved a two-year extension of the subject contract through March 31, 2009.  The firm currently represents the Authority in its claim in the Court of Federal Claims seeking monetary damages caused by the government’s breach of contractual promise to start accepting for disposal by January 31, 1998 spent nuclear fuel and high-level radioactive waste from the Indian Point 3 and James A. FitzPatrick nuclear power plants, formerly owned by the Authority.  The federal government, whose liability for breach of contract has previously been established in other similar cases and last month in the Authority’s case, is vigorously defending damage claims.  Additionally, Pillsbury is actively pursuing and responding to disclosure in preparation for a trial scheduled for June 2010 and has appeared for the Authority before the presiding judge and discovery judge to make applications, respond to motions and negotiate discovery matters.  On behalf of the Authority, Pillsbury retained consultants and experts to assist with preparing the Authority’s claims and testify at trial.  It would not be practicable or prudent to retain another law firm to litigate this matter at this advanced point in the litigation.  Pillsbury represents numerous utilities in similar claims against the federal government and has developed an extensive database of information and contacts to support these claims against the government.  The firm’s expertise and experience in the subject matter are required to extend and build on prior work performed by the firm’s attorneys, who are uniquely qualified in this highly specialized field and are knowledgeable about the law and the Authority’s facts, which would be difficult for another firm to replicate and would take such firm hundreds of man-hours to become familiar with these complex proceedings.  The Authority’s interests are best served by continued representation by Pillsbury.  Since the existing contract is expiring and the need for such services is ongoing, staff recommends award of a new contract to Pillsbury on a sole-source basis, based on the foregoing reasons, to provide for continuation of such legal representation.  The new contract would become effective on April 1, 2009, for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $700,000.

Power Supply

“The contract with Bay Crane Service, Inc. (‘Bay Crane’) (Q09-4462; PO# TBA) would provide for crane rental with operator services for the Authority’s Poletti, 500 MW and Small Clean Power Plants (excluding Brentwood).  Bid documents were downloaded electronically from the Authority’s Procurement website by 12 firms, including those that may have responded to a notice in the New York State Contract Reporter; one additional firm expressed an interest in providing such services and was invited to bid.  Four proposals were received and evaluated.  Staff recommends award of a contract to Bay Crane, the lowest-priced bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory service under an existing contract for such work.  The new contract would become effective on April 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $650,000.

“The Lake Erie Ice Boom Work Barge Project (‘Project’) includes the professional engineering services of a marine architect to design a new work barge in 2009, as well as construction support services, including oversight and inspection during the fabrication process in 2010 and preparation of all requisite documentation pertaining to the vessel for submittal to the U. S. Coast Guard.  The existing work barge is used during installation, removal and in-service maintenance of the Lake Erie Ice Boom on the Niagara River.  In 2007, severe corrosion and pitting of its steel hull and interior members were identified on the vessel, which is more than 40 years old.  Temporary repairs were performed at the time, but a new barge, designed and built in accordance with the latest American Bureau of Shipping standards, is needed for critical winter operations on the Niagara River.  Bid documents were downloaded electronically from the Authority’s Procurement website by 67 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Six proposals were received and evaluated.  Staff recommends award of a contract to Bristol Harbor Group, Inc. (‘Bristol’) (Q09-4470; PO# TBA), the lowest-priced bidder, which is qualified to perform such work and meets the bid requirements.  The contract with Bristol would provide for engineering, design and associated construction support for fabrication of the new work barge.  The contract would become effective on April 1, 2009 for an intended term of up to two years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $118,494 (including contingency).  It should be noted that costs associated with this work will be shared equally with Ontario Power Generation as part of the Niagara Joint Works.

“The contract with DeAngelo Brothers, Inc. (P08-98697; PO# TBA) would provide for herbicide treatment services for the grounds of the Poletti and 500 MW plants.  Bid documents were downloaded electronically from the Authority’s Procurement website by 10 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Staff recommends award of a contract to DeAngelo Brothers, the lowest-priced bidder, which is qualified to perform such services and has provided satisfactory service under an existing contract for such work.  The new contract would become effective on May 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $50,000.

“The contract with Feedwater Treatment Systems, Inc. (‘Feedwater’) (20037359; PO# TBA) would provide for cooling tower monitoring and maintenance services for the Niagara Project.  Services also include furnishing, delivering and installing/applying materials, replacement parts and chemicals on an ‘as needed’ basis.  Bid documents were downloaded electronically from the Authority’s Procurement website by 14 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated; a third proposal was received late and was not considered further.  Staff recommends award of a contract to Feedwater, the lower-priced evaluated bidder, which is qualified to perform such services and meets the bid requirements.  The contract would become effective on April 1, 2009 for an intended term of up to four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $20,000.

“Since 1999, the Authority has developed a comprehensive Geographic Information System (‘GIS’) database for its overhead transmission line system.  Data on vegetation structure and composition, land use, foreign utilities, maintenance issues and other features have been collected along the Authority’s right-of-way corridors using pen-top computers and field-portable GIS.  The Authority requires annual inventories for the portions of its transmission system that it plans to have treated for vegetation management the following year, as part of its Integrated Vegetation Management program, which operates on a four-year treatment cycle. Since the existing contract for such services is expiring, and the need for such services is ongoing, staff prepared a new Request for Proposals.  Bid documents were downloaded electronically from the Authority’s Procurement website by 37 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Six proposals were received and evaluated by a multi-disciplinary Evaluation Committee.  The apparent high bidder discovered significant errors in its proposal and withdrew its bid.  Of the five remaining proposals, clarifications sought from the initial apparent low bidder resulted in a revised / higher bid.  A technical analysis of the five proposals was performed.  Based on its qualifications, experience, ability to perform such work and responsiveness to the Authority’s specifications, as well as reasonable pricing, staff recommends the award of a contract to Gomez & Sullivan Engineers, P.C. (‘G&S’) (Q08-4468; PO# TBA), the lowest-priced bidder, which was also determined to be the most technically qualified to perform such transmission line right-of-way vegetation inventory services and has provided satisfactory service under the existing contract for such work.  The contract would become effective on April 1, 2009 for an intended term of up to four years (to be released annually), subject the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $950,000.

 

“The contract with International Chimney Corp. (‘ICC’) (Q09-4464; PO# TBA) would provide for all labor, supervision, materials and equipment for the abutment seepage drain rehabilitation project at the Niagara Power Project.  Work includes removing concrete debris and rock in the south and north abutments, as well as remediating the drainage system to prevent buildup of groundwater behind the concrete façade and structure in these areas.  The debris found in these structural cells causes water to accumulate behind the concrete façade, which, in turn, results in spalling on the face of the dam.  Between 2006 and 2008, debris from 14 of the south abutment cells was removed successfully. Debris removal from 11 additional cells (1 in the south abutment and 10 in the north abutment) is planned between 2009 and 2011.  Bid documents were downloaded electronically from the Authority’s Procurement website by 34 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Staff recommends award of a contract to ICC, the lowest-priced bidder, which is qualified to perform such services and meets the bid requirements.  The contract would become effective on or about April 1, 2009 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $1,412,065 (including contingency).

“The single largest cause of electric power outages is trees growing into or falling onto overhead power lines, as illustrated by the massive Northeast power blackout of August 14, 2003, which was attributed to allowing trees to grow too tall on three separate 345 kV transmission lines in Ohio.  The Federal Energy Regulatory Commission (‘FERC’), the National Electric Reliability Council (‘NERC’) and the New York State Public Service Commission (‘PSC’) have taken proactive steps to ensure that all utilities have a strong Integrated Vegetation Maintenance (‘IVM’) program in place.  Accordingly, the Authority is about to begin the third four-year treatment cycle of its vegetation management program. (It should be noted that the Authority was awarded the Pesticide Environmental Stewardship Award by the U. S. Environmental Protection Agency in 2004 in recognition of its right-of-way (‘ROW’) vegetation management program and the Quality Vegetation Management Project Habitat Award by BASF, a major international chemical company, in 2007 and 2008 to honor the highest quality vegetation management projects.)  Continuation of the four-year treatment cycle will ensure that the Authority continues to be a leader in this now widely scrutinized and sensitive aspect of the utility industry.  To this end, bid documents were downloaded electronically from the Authority’s Procurement website by 25 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Staff recommends award of a contract to Lewis Tree Service, Inc. (‘Lewis Tree’) (Q08-4423; PO# TBA), the lowest-priced qualified bidder, which meets the bid requirements and has provided satisfactory service under an existing contract for such work.  Lewis Tree, a licensed pesticide applicator in New York State and a line clearance contractor, will perform all work in compliance with all appropriate, applicable and relevant Occupational Safety and Health Administration and American National Standards Institute requirements.  The new contract with Lewis Tree would continue to provide for ROW vegetation management services, including various chemical and mechanical/manual treatments, over a range of vegetation sites within the ROW of high-voltage transmission lines under the Authority’s maintenance jurisdiction, covering approximately 16,000 managed acres.  The contractor will supply all necessary labor, supervision, materials, chemicals, tools and equipment to control undesirable target trees along more than 1,400 miles of high-voltage transmission lines.  The Authority is committed to a four-year treatment cycle; approximately 4,000 acres per year will be subject to vegetation management.  Although the majority of the ROW vegetation management work will occur during the normal April-December treatment season, 10% of the contract price will be withheld to ensure complete treatment, which will be determined during the following growing season.  The ROWs are to be maintained to the full widths of each previously legally cleared ROW easement.  In some locations, and to various extents, encroachment of the bordering forest has resulted in the growth of offending limbs into the active right-of-way by substantially sized trees located just off the cleared, legally defined ROW; these tree limbs must be removed and disposed of.  On occasion, certain ROW sites on other Authority transmission lines may require some limited ‘hotspot’ treatments, as needed.  The new contract would become effective on April 1, 2009 for an intended term of up to 4-1/2 years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $10.5 million.

“The contract with Siemens Energy, Inc. (‘Siemens’) (Q08-4447; PO# TBA) would provide for enhancements to the security and functionality of the Siemens Energy Management System (‘EMS’) at the Energy Control Center in Marcy, NY.  The enhancements include Independent Health Monitor (‘IHM’) software and the Spectrum Power3 v3.9 Package 2 release.  The IHM is an independent software suite designed to monitor EMS functionality and configured to alert support staff if critical applications cease to function as designed.  This software became available as a result of the 2003 blackout report, which recommended that EMS/SCADA systems be monitored by external software.  The Spectrum Power3 v3.9 Package 2 release adds security enhancements to the existing Package 1 release of the software already in production, and provides base software corrections to more than 1,600 reported defects.  The proposed award is made on a sole-source basis, since Siemens is the original equipment manufacturer and the developer of the Spectrum software installed at the ECC; as such, Siemens is uniquely qualified to provide such software and services.  There were no respondents to a notice of the Authority’s intent to enter into a sole-source agreement with Siemens posted in the New York State Contract Reporter.  The Trustees are therefore requested to approve award of this contract, which would become effective on or about April 1, 2009 for an intended term of up to one year, and for the total amount expected to be expended for the term of the contract, $715,000 (comprising $165,000 for the IHM software and $550,000 for the Spectrum Power3 v3.9 Package 2 release).

“The contract with Weeds No More, Inc. (Q08-4427; PO# TBA) would provide for bare- ground vegetation management (weed control) services at the Authority’s substations, switchyards, pole yards, dikes, fence lines and other areas throughout New York State designated for treatment in accordance with the Authority’s specifications.  Such vegetation will be controlled with application of various pre-emergent and post-emergent chemical herbicide formulations by a New York State-certified Pesticide Applicator, for the purpose of removing or preventing the emergence of undesirable vegetation at the Authority’s electrical facilities.  Services include all labor, supervision, materials, chemicals, tools and equipment for execution of the work.  Bid documents were downloaded electronically from the Authority’s Procurement website by 11 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Staff recommends award of a contract to Weeds No More, the lowest-priced bidder, which is qualified to perform such services and meets the bid requirements.  The contract would become effective on or about April 1, 2009 for an intended term of up to four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $300,000.

Contract Extensions:

Energy Marketing and Business Development

Energy Services and Technology

“At their meeting of July 27, 2004, the Trustees approved the award of contracts to five firms, Chu & Gassman Consulting Engineers, PC (a New York State-certified Minority Business Enterprise) (4600001303), CDM Constructors Inc. (a wholly owned subsidiary of Camp, Dresser & McKee Inc.) (4600001308), Consolidated Edison Solutions (4600001338), AECOM USA, Inc. (formerly DMJM + Harris, Inc.) (4600001307) and PB Power, Inc. (4600001309), and funding in the initial aggregate amount of $150 million, to provide for program management and implementation services in connection with the Southeastern New York Energy Services Programs (‘SENY ESPs’) for Governmental Customers.  The contracts, which were competitively bid, became effective on August 1, 2004 for an initial term of three years, with an option to extend for two additional years.  Such option was subsequently exercised for four of the subject contracts, with the exception of Con Ed Solutions (which was not extended by mutual agreement).  The aforementioned Trustee item also advised the Trustees that additional funding of up to $100 million might be needed to complete the work assigned under these contracts, based on program participation, and the Trustees’ authorization for the release and allocation of such additional funding would be requested as such needs were identified.  At their meeting of September 25, 2007, the Trustees authorized the release and allocation of the additional $100 million, thereby increasing the aggregate compensation ceiling to $250 million for these contracts.  New York City fiscal constraints, multiple levels of customer review and approval and the execution of new program agreements with the City University of New York (‘CUNY’) and the New York City Department of Environmental Protection have delayed the progress of various projects previously assigned under these contracts.  In recent months, a number of projects have received approvals and are moving forward from feasibility study through engineering design to construction.  These projects include:  College of Staten Island – Heating System ($17.5 million), New York City College of Technology – Heating and Cooling System ($51 million), Peekskill Waste Water Treatment Plant (‘WWTP’) – Aeration System ($3 million), Yonkers WWTP – Anaerobic Digester Gas Generator ($6 million) and State University of New York (‘SUNY’) Downstate - Boilers ($1.3 million).  Projects already in construction include:  New York City Housing Authority (‘NYCHA’) Castle Hill – Heating System Upgrade ($11 million), NYCHA Rutgers Houses – Heating System Upgrade ($10.7 million), SUNY Purchase College – Thermal Storage ($11.7 million), NYCHA Castle Hill – Lighting and Heating Controls Upgrade ($18 million), Red Hook WWTP – Peak Load Management ($18 million), NYCHA Hot Water Storage Tank Replacements – Release 8 ($9.5 million) and CUNY Brooklyn College – Steam Traps ($6.5 million).  The lack of timely review and approval by multiple agencies has been the major contributing factor to the delays.  A four-year extension of the three contracts with AECOM USA, Chu & Gassman and CDM Constructors is now requested in order to continue and complete services in support of such projects, which are in various stages of implementation or development.  The contract with PB Power will not be extended because projects assigned to this firm have been completed. The current ‘Target Values’ total $250 million; the current ‘Released Amounts’ total $157,916,241.  Staff anticipates that no additional funding will be required for the extended term and all work will be completed within the previously approved $250 million aggregate cap.  The Trustees are requested to approve the extension of the subject contracts through July 31, 2013, with no additional funding requested.  It should be noted that all costs associated with this work will be recovered by the Authority from program participants.

“At their meeting of January 29, 2002, the Trustees approved the award of contracts to two firms, Ameresco Select, Inc. (formerly Select Energy Services, Inc.) (4600000761) and PB Power, Inc. (4600000758), to provide for program management and implementation services in support of the previously approved Statewide Energy Services Program (‘ESP’).  The Trustees also approved the allocation of previously approved ESP funding, totaling $100 million, to these two contracts as projects are assigned. The contracts, which were competitively bid, became effective on February 1, 2002 for an initial term of three years, with an option to extend for up to two additional years with the approval of the President and Chief Executive Officer, which was subsequently exercised.  At their meeting of December 19, 2006, the Trustees approved the extension of both contracts for two years and five months through June 30, 2009.  While many projects have been completed successfully, the progress of other projects previously assigned under these contracts has been delayed due to deferred approval by customers and the addition of additional scope after construction was under way.  Most of these projects are expected to be completed in 2009 (e.g., Nassau County Energy Management System – Phase I and II; Suffolk County Department of Public Works Buildings; Office of General Services (‘OGS’) Suffolk State Office Building – Atrium and Outdoor Lighting and OGS Web-based Enabled Metering). However, PB Power requires additional time to complete the State University of New York (‘SUNY’) Brockport – Phase 3A and 3B projects.  Phase 3A includes, but is not limited to: installing air conditioning (based on work performed during Phase 2), replacing windows, rooftop units, toilet exhaust, steam traps, enclosing loading docks, installing CO2 sensors, variable-frequency drives for motors, chiller replacements, air balancing, etc.  Phase 3B includes, but is not limited to:  complete HVAC replacement (convert steam system to hot water, install variable-speed drives, replace chillers and air-handling units), rooftop replacements, cooling and exhaust improvements, ventilation improvements, etc.  Both of these projects were delayed due to unforeseen existing conditions encountered during construction and additional troubleshooting required for the newly installed equipment.  Similarly, Ameresco Select requires additional time to complete the Suffolk County – Bergen Point Waste Water Treatment Plant project.  The project was originally assigned to Ameresco in 2003.  The customer requested several revisions to the scope of work prior to approving the Customer Installation Commitment document and construction did not begin until 2008.  This work includes:  upgrade of lighting system, installation of lighting controls, energy-efficient motors, energy management system, replacement of reciprocating air compressors with efficient rotary screw compressors and replacement of heating coils.  A one-year extension of the contract with PB Power and a three-year extension of the contract with Ameresco Select are now requested in order to complete all previously assigned projects.  The current ‘Target Values’ total $89 million; the ‘Released Amounts’ total $80,041,609.  Staff anticipates that no additional funding in excess of the previously approved $100 million aggregate will be required for the extended terms.  The Trustees are requested to approve the additional extension of the subject contract with Ameresco Select through June 30, 2012 and of the subject contract with PB Power through June 30, 2010, with no additional funding requested.  It should be noted that all costs will be recovered by the Authority.

Marketing and Economic Development

“The contract with The Cadmus Group, Inc. (‘Cadmus’; 4500155756) provides for consulting services in connection with the Consolidated Edison Company of New York, Inc. (‘Con Ed’) current delivery service rate case.  At their meeting of March 25, 2008, the Trustees approved the award of a two-year contract for such services to the firm Quantec LLC (which subsequently merged with Cadmus) and funding in the amount of $400,000.  The contract became effective on April 7, 2008; the current Con Ed delivery service rate case is nearing conclusion and a decision by the Public Service Commission (‘PSC’) is expected shortly.  Settlement negotiations for a multiyear plan have stalled; therefore the PSC is expected to grant Con Ed a one-year rate increase. Consequently, Con Ed is expected to file a new rate plan in May 2009.  The Authority is obligated to actively intervene in all Con Ed rate cases on behalf of its governmental customers.  The next rate case will be built on the unresolved issues of the current case and will be, in effect, its continuation.  Staff anticipates that many, if not most, of Con Ed’s arguments and positions will be the same in the next case as they were in this case.  Cadmus has spent the past 11 months as the Authority’s consultant on the current case; the firm has been integral to development of the Authority’s strategy and position.  It would not be practical or cost effective to hire a new consultant, since the next case will rely heavily on the facts and circumstances of the case soon to be concluded.  Based on the foregoing reasons, staff recommends extending the existing contract with Cadmus for approximately one year, through April 30, 2011, to provide for the continuation and successful completion of such work on behalf of the Authority and its governmental customers in the most cost-effective manner.  The current contract amount is $400,000; staff anticipates that an additional $400,000 may be required for the next rate case and the extended term.  The Trustees are therefore requested to approve the extension of the subject contract through April 30, 2011, as well as the additional funding requested, thereby increasing the total approved contract amount to $800,000.  If additional funding should be required to support rate case work that cannot be projected at this time, approval of such additional funding will be in accordance with the Authority’s EAPs.

 

Law Department

“At their meeting of June 27, 2006, the Trustees approved a three-year agreement with Burgio, Kita & Curvin (4500122768) to provide for legal representation services for the Authority’s indemnitee, First Buffalo River Marina, in connection with a pending action in Erie County (Notaro v. Power Authority of the State of New York and First Buffalo River Marina).  The Trustees also approved funding in the total amount of $50,000.  The agreement was effective February 1, 2006 and was subsequently extended to March 27, 2009.  Since the Authority will have an ongoing need for such services until this matter is resolved either through settlement or litigation, a two-year extension is now requested.  The current contract amount is $25,000; staff anticipates that no additional funding in excess of the previously approved $50,000 will be required for the extended term.  The Trustees are therefore requested to approve the extension of the subject contract through January 31, 2011, with no additional funding requested at this time.

 FISCAL INFORMATION

“Funds required to support contract services for various Business Units/ Departments and Facilities have been included in the 2009 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  Payment will be made from the Operating Fund.

“Funds required to support contract services for capital projects have been included as part of the approved capital expenditures for those projects and will be disbursed from the Capital Fund in accordance with the project’s Capital Expenditure Authorization Request.  Payment for the contracts in support of Energy Services Programs will be made from the Energy Conservation Effectuation and Construction Fund.  All costs, including Authority overheads and the cost of advancing funds, will be recovered by the Authority consistent with other Energy Services and Technology Programs.

RECOMMENDATION

“The Deputy General Counsel, the Vice President – Project Management, the Vice President – Engineering, the Vice President – Project Development and Management, the Vice President – Environment, Health and Safety, the Vice President – Procurement, the Chief Technology Development Officer, the Director – Marketing Analysis and Administration, the Director – Customer Load Forecasting, the Manager – Energy Management Services, the ROW/Environmental Supervisor, the Regional Manager – Northern New York, the Regional Manager – Western New York, the Regional Manager – Central New York and the Regional Manager – Southeastern New York recommend that the Trustees approve the award of multiyear procurement contracts to the companies listed in Exhibit ‘4k-A,’ and the extension (with additional funding, where applicable) of the procurement contracts listed in Exhibit ‘4k-B,’ for the purposes and in the amounts discussed within the item and/or listed in the respective Exhibits.

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Executive Vice President and Chief Engineer – Power Supply, the Senior Vice President – Enterprise Shared Services, the Senior Vice President – Energy Services and Technology, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Transmission and I concur in the recommendation.”

The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award and funding of the multiyear procurement services contracts set forth in Exhibit “4k-A,” attached hereto, are hereby approved for the periods of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the contracts listed in Exhibit “4k-B,” attached hereto, are hereby approved and extended for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

l.              2008 Annual Report of Procurement Contracts, Guidelines for Procurement Contracts and

                                 Annual Review of Open Procurement Service Contracts

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve the 2008 Annual Report of Procurement Contracts (‘Annual Report’) (Exhibit ‘4l-A3’) and the Guidelines for Procurement Contracts (‘Guidelines’) (Exhibit ‘4l-A2’) and to review open service contracts exceeding one year that were active in 2008 as detailed in the Annual Report (Exhibit ‘4l-A3’).  An Executive Summary is set forth in Exhibit ‘4l-A1.’

 

BACKGROUND

 

                “Section 2879 of the Public Authorities Law (‘PAL’) governs the administration and award of procurement contracts equal to or greater than $5,000.  Section 2879 of the PAL requires public authorities to adopt comprehensive guidelines detailing their operative policy and instructions concerning the use, awarding, monitoring and reporting of procurement contracts.  The Authority’s Guidelines were adopted by the Trustees at their meeting of October 31, 1989 and were implemented as of January 1, 1990.  The Guidelines have been amended as required and reviewed and approved annually since that date.  The current Guidelines were approved by the Trustees at their meeting of March 24, 2008.

 

“Section 2879 of the PAL also requires authorities to review and approve such guidelines annually and to file a report regarding procurement contracts with the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee and the Assembly Ways and Means Committee.  The Annual Report must include a copy of the Authority’s current Guidelines, details concerning any changes to the Guidelines during the year and particular information concerning procurement contracts.  For each procurement contract included in the report, the following information must be identified:

 

[A] listing of all procurement contracts entered into [by the Authority], all contracts entered into with New York State business enterprises and the subject matter and value thereof, all contracts entered into with foreign business enterprises, and the subject matter and value thereof, the selection process used to select such contractors, all procurement contracts which were exempt from the publication requirements of article four-C of the economic development law, the basis for any such exemption and the status of existing procurement contracts.

 

                “Lastly, Section 2879 of the PAL requires an annual review by the Trustees of open service contracts exceeding one year.  Those long-term service contracts exceeding one year and awarded after January 1, 1990 are also included in the Annual Report.

 

DISCUSSION

 

                “The 2008 Annual Report is attached for the Trustees’ review and approval (Exhibit ‘4l-A3’).  The Annual Report reflects activity for all procurement contracts equal to or greater than $5,000, as identified by the Authority’s SAP computer system, that were open, closed or awarded in 2008, including contracts awarded in 1990 through 2008 that were completed in 2008 or were extended into 2008 and beyond.  In addition, fossil fuels transactions reported by the Fuels Planning and Operations group and financial-related services reported by Corporate Finance, both part of the Business Services Business Unit, are included in the Annual Report of Procurement Contracts.  All additional information required by the statute is also included.  The Trustees are requested to approve the attached Annual Report pursuant to Section 2879 of the PAL prior to submittal thereof to the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee and the Assembly Ways and Means Committee.

                “A copy of the Guidelines effective March 31, 2009 (Exhibit ‘4l-A2’) is attached to the Annual Report.  These Guidelines are amended in accordance with recently enacted Executive Orders, as set forth in Exhibit ‘4l-A1.’

 

“The Guidelines generally describe the Authority’s process for soliciting proposals and awarding contracts.  Topics detailed in the Guidelines include solicitation requirements, evaluation criteria, contract award process, contract provisions, change orders, Minority/Women Business Enterprise (‘M/WBE’) requirements, employment of former officers and reporting requirements.  The Guidelines have been designed to be self explanatory.

 

RECOMMENDATION

 

                “The Vice President – Procurement recommends that the Trustees approve the 2008 Annual Report of Procurement Contracts, the Guidelines for Procurement Contracts and the review of open service contracts as attached hereto in Exhibits ‘4l-A1’ through ‘4l-A3.’

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – Chief Financial Officer, the Executive Vice President and Chief Engineer – Power Supply, the Senior Vice President – Enterprise Shared Services and I concur in the recommendation.”

               

The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

                RESOLVED, That pursuant to Section 2879 of the Public Authorities Law and the Authority’s Procurement Guidelines, the Annual Report of Procurement Contracts, as listed in Exhibit “4l-A3,” and the Guidelines for the use, awarding, monitoring and reporting of Procurement Contracts (Exhibit “4l-A2”), as amended and attached hereto, be, and hereby are, approved; and be it further

 

                RESOLVED, That the open service contracts exceeding one year be, and hereby are, reviewed and approved; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

m.            Annual Review and Approval of Guidelines and Procedures for and Annual Report of  the Disposal of Personal Property

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to review and approve the Guidelines and Procedures for the Disposal of Personal Property (‘Personal Property Guidelines’), which address the disposal of surplus or obsolete material, equipment and supplies, in compliance with the Public Authorities Accountability Act (‘PAAA’) of 2005, as set forth in Exhibit ‘4m-A’ and attached hereto.  The Trustees are also requested to review and approve the 2008 Annual Report of the Disposal of Personal Property, as set forth in Exhibit ‘4m-A1’ and attached hereto.

 

BACKGROUND

 

“On January 13, 2006, Governor Pataki signed the PAAA into law, codifying the Model Governance Principles established for public authorities in 2004 by the Governor’s Advisory Committee on Authority Governance.  Among its provisions, the PAAA established rules for the disposal of public authority personal property.  The law also required each authority to draft guidelines consistent with the legislation dealing with these issues, to review and approve such guidelines annually and to prepare an annual report of the disposal of personal property (including the full description, name of the purchaser and price received for all such property disposed of by the authority during such period).  Such Guidelines were initially approved by the Trustees at their meeting of March 28, 2006.

 

“At their meeting of March 27, 2007, the Trustees reviewed and approved the amended Personal Property Guidelines in accordance with the above and Executive Orders issued by Governor Eliot Spitzer providing for restrictions on politics and nepotism in contracting.  At their meeting of April 24, 2007, the Trustees reviewed and approved further amendments to the Guidelines necessitated by the Public Employee Ethics Reform Act (‘PEERA’) of 2007, which became effective on April 25, 2007 and included modified versions of the restrictions contained in the prior Executive Orders.  At their meeting of March 25, 2008, the Trustees reviewed and approved the Guidelines with no substantive changes.

 

DISCUSSION

 

“The Personal Property Guidelines set forth the methodology detailing the Authority’s policy regarding the use, award, monitoring and reporting of contracts for the disposal of personal property and designate a Contracting Officer responsible for the Authority’s compliance with, and enforcement of, such Guidelines.

 

“Staff has reviewed the Personal Property Guidelines and recommends the following changes:

 

·         Modify Section II.A (and throughout the document):  CHANGE the designated ‘Contracting Officer’ from ‘VP – Procurement & Real Estate’ to ‘Senior Vice President – Enterprise Shared Services’ to account for organizational changes in the Authority.

 

·         Modify Section II.D:  ADD ‘public auction’ as an additional method of determining ‘Fair Market Value’ of Personal Property to be disposed of AND as a means of Centralized Disposal in Subsection VII.A.3, ‘provided the advertisement for bids through such methods permits full and free competition consistent with the value and nature of the property.’  Such changes are consistent with the spirit of the PAAA and promote proper notice and competition in the public auction arena.

 

·         Modify Subsection IV.3:  DELETE ‘Disposal of rubbish or scrap materials, contracts for which are subject to the Authority’s Guidelines for Procurement Contracts’ from the transactions not covered by these Guidelines.  This revision is included to be consistent with the PAAA and related guidance from the Authority Budget Office.

 

·        Modify Section V.E:  ADD ‘The Director of Fleet Operations (‘DFO’) or equivalent(s) or designee is responsible for the disposal of vehicles and rolling equipment.  The DFO reports directly to the Contracting Officer.’ to the list of designated Property Disposal Coordinators.  Such addition accounts for an organizational change in the Authority affecting both the Procurement Department and Fleet Operations, which now report to the Senior Vice President – Enterprise Shared Services.

 

·        Modify Article VI:  CHANGE the recommended number of proposals to be solicited from ‘at least 5’ to ‘at least 3’ bidders to reflect realistic market conditions while still encouraging full and adequate competition.

 

·        Modify Section VI.B:  CHANGE threshold for Bidding Procedures and Disposal Methods for Personal Property from ‘in excess of $15,000’ to ‘in excess of $5,000’ to be consistent with the PAAA.

 

·        Modify Article XI. Authorization Levels:  ADD to HEADING:  ‘and signing authority.’  ADD new Section XI.B that states, ‘For public auctions or similar centralized disposals, such authorization should be obtained prior to submitting Property to auction based on the estimated fair market value of the Property. 1. For purposes of these Guidelines, the Director – Fleet Operations (‘DFO’) or equivalent(s) and FMS are authorized to sign Disposal Sales Agreements based upon the provisions of Section XI.A above whereby the DFO is authorized to sign fleet-related sales agreements and the FMS may sign both fleet and non-fleet sales agreements’; and also ADD new Section XI.C that states, ‘For decentralized disposals, such authorization should be obtained prior to signing of Sales Agreement or award of contract, in accordance with the Authorization Levels set forth in Section XI.A.  Sales Agreements for individual disposal transactions through a decentralized sale should be signed in accordance with the limits set forth in the Authority’s Expenditure Authorization Procedures – Attachment C.’  Such changes clarify the procedures regarding the authorization of disposals and signing authority to ensure a prudent practice of checks and balances regarding disposals.

 

·        Modify Subsection XI.A.3: ADD:  ‘Senior Vice President – Enterprise Shared Services or’ to the Executive Vice President – Chief Administrative Officer [formerly EVP – Corporate Services and Administration] for approval of transactions ‘up to’ $500,000 to account for an organizational change affecting both the Procurement Department and Fleet Operations, which now report to the Senior Vice President – Enterprise Shared Services.

 

·        Modify Section XII.B:  Modify last sentence to state, ‘Approval of all such returns to the OEM or the source when a re-stocking fee is charged, must be in accordance with the Authorization Levels delineated in Section XI.A.’  Such modification clarifies that authorizations regarding re-stocking fees under such circumstances should comply with the Authorization Levels in the Guidelines for Disposal of Personal Property.

 

·        Modify Attachment C, Sales Agreement: ADD language on Privacy Law Notification for the collection of personal information in connection with a Sales Agreement as required by the Personal Privacy Protection Law.

 

“Such changes, as well as a number of editorial or non-substantive changes, were made to the Guidelines, as set forth in the redlined copy attached hereto as Exhibit ‘4m-A.’

 

“After being reviewed and approved annually by the Trustees on or before the 31st day of March, the Guidelines and corresponding Annual Report must be filed with the State Comptroller, the Director of the Budget, the Commissioner of General Services and the State Legislature and posted on the Authority’s website.

FISCAL INFORMATION

 

“There will be no financial impact on the Authority.

 

RECOMMENDATION

 

“The Vice President – Procurement and the Vice President – Internal Audits recommend that the Trustees approve the Guidelines and Procedures for the Disposal of Personal  Property for the disposition of surplus or obsolete material, equipment and supplies, and the corresponding 2008 Annual Report of the Disposal of Personal Property, as set forth in Exhibits ‘4m-A’ and ‘4m-A1,’ respectively.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – Chief Financial Officer, the Senior Vice President – Enterprise Shared Services and I concur in the recommendation.”

 

The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, the Authority hereby reviews and approves the Guidelines and Procedures for the Disposal of Personal Property, as set forth in Exhibit “4m-A” and attached hereto; and be it further

 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, the Authority hereby reviews and approves the 2008 Annual Report of the Disposal of Personal Property, as set forth in Exhibit “4m-A1” and attached hereto; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

n.             Annual Review and Approval of Guidelines and Procedures for the Disposal of Real Property, Guidelines and Procedures for the Acquisition of Real

Property and Annual Report of the Disposal of Real Property

                                               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to review and approve the following, which comply with the requirements of the Public Authorities Accountability Act of 2005 (‘PAAA’):  (1) Guidelines and Procedures for the Disposal of Real Property (‘Real Property Disposal Guidelines’) for transfers of land or interests in land; and (2) Guidelines and Procedures for the Acquisition of Real Property (‘Real Property Acquisition Guidelines’).  The Guidelines are set forth in Exhibits ‘4n-A’ and ‘4n-B’ attached hereto.  The Trustees are also requested to review and approve the 2008 Annual Report of the Disposal of Real Property set forth in Exhibit ‘4n-C’ attached hereto.

BACKGROUND

“On January 13, 2006, Governor Pataki signed the PAAA into law, codifying the Model Governance Principles established for public authorities in 2004 by the Governor’s Advisory Committee on Authority Governance.  Among its provisions, the PAAA established restrictions on the disposal of real property and required public authority board members to establish written policies and procedures for the disposal and acquisition of real property.

“At their meeting of March 27, 2007, the Trustees reviewed and approved the amended Real Property Disposal Guidelines in accordance with the above and Executive Orders issued by Governor Spitzer providing for restrictions on politics and nepotism in contracting.  At their meeting of April 24, 2007, the Trustees reviewed and approved further amendments to the Real Property Disposal Guidelines necessitated by the Public Employee Ethics Reform Act (‘PEERA’) of 2007, which became effective on April 25, 2007 and included modified versions of the restrictions contained in the prior Executive Orders.  At their meeting of March 25, 2008, the Trustees reviewed and approved the Real Property Disposal Guidelines with no substantive changes.

 

“Section 2824 of the PAAA requires Authority board members to establish written policies regarding the acquisition of real property.  At their meeting of March 25, 2008, the Trustees established and approved the Real Property Acquisition Guidelines.

 

DISCUSSION

Real Property Disposal Guidelines

“In compliance with the PAAA, the Authority established and is required to annually review and approve Real Property Disposal Guidelines, which guidelines are set forth in Exhibit ‘4n-B.’  The Real Property Disposal Guidelines set forth the methodology the Authority uses in the following areas:

·         Maintaining an inventory of real property interests owned or under the jurisdiction of the Authority;

·         Disposal of such interests when they become surplus to the Authority’s needs;

·         Making annual reports of such transactions; and

·         Designating a Contracting Officer responsible for implementing such Guidelines.

 

“Staff has reviewed the Real Property Disposal Guidelines and recommends the following changes:

 

·         MODIFY Section 2.1 (and throughout the document):  CHANGE the designated ‘Contracting Officer’ from ‘VP – Procurement & Real Estate’ to ‘Senior Vice President – Enterprise Shared Services’ to account for organizational changes in the Authority, and specify that the role of the Contracting Officer is to enforce the Real Property Disposal Guidelines.

·         ADD ‘tenements and hereditaments’ to Section 2.3 to further specify the definition of Real Property pursuant to the New York Real Property Law and the PAAA.

·         MOVE definition of ‘Relative’ from Subsection 5.11.1 to Section 2.4 in the Definitions section of the Guidelines for clarity.

·         ADD language to Section 2.2 clarifying that a release of an easement is not within the definition of a ‘Disposal.’

·         ADD the phrase ‘independent appraisal as appropriate and consistent with the intent of the PAAA’ to Section 5.1 to provide for the appraisal of Real Property when a formal outside appraisal would not be cost effective or consistent with the intent of the PAAA given the nature of the Real Property.

·         DELETE Section 5.12, as such restrictions do not apply in the same manner to all Guidelines.

·         ADD ‘including such Real Property disposed of’ to clarify what the report prepared pursuant to Section 2896 of the PAAA should include.

·         ADD Section 6.2 to note reports provided to such entities as the Authority Budget Office and other organizations that may regulate Real Property.  Such reporting includes reports submitted to the Public Authorities Reporting System (‘PARIS’).

·         ADD Section 6.3 to enable staff from Enterprise Shared Services – Real Estate to present and/or submit reports regarding the Disposal of Real Property at Authority Governance Committee meetings.

·         MODIFY Sections 2.1, 4.1-4.4, 5.8 and 6.1 to account for Authority organizational changes and title changes.

·          MODIFY Sections 1.1, 2.1, 2.4, 4.3-4.4, 5.1, 5.9, 5.11 and Subsection 6.1.2 to reflect ancillary and incidental corrections to the Guidelines.

·          MODIFY Sections 5.1 and 5.2 to reflect revisions made to be consistent with the PAAA.

 

Real Property Acquisition Guidelines

“In compliance with the PAAA, the Authority established and annually reviews Real Property Acquisition Guidelines, which are set forth in Exhibit ‘4n-A.’  The Real Property Acquisition Guidelines set forth the methodology the Authority will use in the following specific areas:

·             Acquisition and evaluation of Real Property;

·             Duties of the Director of Real Estate;

·             Environmental compliance;

·             Ethical considerations; and

·             Annual reporting.

 

“Staff has reviewed the Real Property Disposal Guidelines and recommends the following changes:

 

·         MODIFY Sections 2.1 and 2.3 to update the role of Contracting Officer to be consistent with the PAAA.

·         MOVE the definition of ‘Relative’ from Subsection 5.2.1 to Section 2.4 in the Definitions section for clarity.

·         ADD ‘purchaser, grantor lessor’ to Section 5.1 to clarify that the restrictions apply in the event the Authority acquires the Real Property from an individual rather than an organization.

·         DELETE Section 6.1 in its entirety and ADD new Section 6.2 to be more consistent with the PAAA.

·         ADD new Section 6.1 to note reports provided to such entities as the Authority Budget Office and other organizations that may regulate the Acquisition of Real Property.  Such reporting includes reports submitted to PARIS.

·         ADD Section 6.2 to enable staff from Enterprise Shared Services – Real Estate to present and/or submit reports regarding the Acquisition of Real Property at Authority Governance Committee meetings.

·         MODIFY Sections 2.1, 4.1, 4.2, 4.4, 4.5 and 6.1 to account for Authority organizational changes and title changes.

·         MODIFY Sections 1.1, 2.3, 3.2, 4.2 and Subsection 5.2.1 to reflect ancillary and incidental corrections to the Real Property Acquisition Guidelines.

·         MODIFY Sections 2.1, 6.3, former 4.4 and former Article 7 to reflect revisions made to be consistent with the PAAA.

FISCAL INFORMATION

“There will be no financial impact on the Authority.

 

RECOMMENDATION

“The Senior Vice President – Enterprise Shared Services and the Director of Real Estate recommend that the Trustees approve the amended Guidelines and Procedures for the Disposal of Real Property, the amended Guidelines and Procedures for the Acquisition of Real Property and the 2008 Annual Report of the Disposal of Real Property as set forth in the attached Exhibits.

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – Chief Financial Officer, the Vice President – Internal Audits and I concur in the recommendation.”

                The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

            RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, the Authority hereby reviews and approves the Guidelines and Procedures for the Disposal of Real Property and the Guidelines and Procedures for the Acquisition of Real Property as set forth in Exhibits “4n-A” and “4n-B” attached hereto; and be it further

 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, the Authority hereby reviews and approves the 2008 Annual Report for the Disposal of Real Property as set forth in Exhibit “4n-C” attached hereto; and be it further

 

RESOLVED, That Authority staff may take any and all steps necessary or convenient to implement such Guidelines; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General


 

o.             Annual Review and Approval of  Certain Authority Policies    

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve certain Authority policies as required by Section 2824 of the Public Authorities Law and Section 2 of Article II of the Authority’s By-laws.

 

                “The Trustees are also requested to delegate to the President and Chief Executive Officer the authority to modify these policies, as necessary, except in the event that any powers, duties or obligations of the Trustees would be affected by such modification.

 

BACKGROUND AND DISCUSSION

 

                “Section 2824 of the Public Authorities Law requires the Authority’s Trustees to, among other things, establish policies regarding the payment of salary, compensation and reimbursements to, and establish rules for the time and attendance of, the chief executive and senior management; and Section 2 of the Authority’s By-laws requires the Authority’s Trustees to review and approve annually the policies and procedures governing: (i) the salary, (ii) compensation, (iii) benefits and (iv) time and attendance of the chief executive and senior management.

 

                “The Authority’s policies relating to salary, compensation, benefits and time and attendance of its employees, inclusive of the chief executive and all senior management, are attached as Exhibits “4o-A” through “4o-H” and respectively entitled:

 

A.      Salary Administration Policy  (EP 2.1), last revised 8/15/08;

B.       Variable Pay Plan (EP 2.6), last revised 1/2/08;

C.      Employee Benefits Eligibility (EP 3.1), last revised 2/20/09;

D.     Reimbursement of Employee Meal Costs (CAP 1.5), last revised 4/06/07;

E.      Attendance & Flexible Hours (EP 4.6), last revised 8/15/08;

F.      Vacation (EP 3.2), last revised 1/1/08;

G.      Sick Time and FMLA (EP 3.3), last revised 1/15/09; and

H.     Travel (CP 2-1), last revised 3/16/09.

 

RECOMMENDATION

 

                “It is recommended that the Trustees approve the Authority’s policies related to salary, compensation, benefits and time and attendance, which are applicable to all Authority employees, including the chief executive and senior management.  It is further recommended that the Trustees delegate to the President and Chief Executive Officer the authority to modify these policies, as necessary, except in the event that any powers, duties or obligations of the Trustees would be affected by such modification.

 

The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

                          RESOLVED, That pursuant to Section 2824 of the Public Authorities Law and Section 2 of Article II of the Authority’s By-laws, the below-listed policies of the Authority relating to salary, compensation, benefits and time and attendance of its employees, including the chief executive and senior management, are hereby approved:

 


 

A.  Salary Administration Policy (EP 2.1), last revised 8/15/08;

B.  Variable Pay Plan (EP 2.6), last revised 1/2/08;

C.  Employee Benefits Eligibility (EP 3.1), last revised 2/20/09;

D.  Reimbursement of Employee Meal Costs (CAP 1.5), last revised 4/6/07;

E.   Attendance & Flexible Hours (EP 4.6), last revised 8/15/08;

F.   Vacation (EP 3.2), last revised 1/1/08;

G.  Sick Time and FMLA (EP 3.3), last revised 1/15/09; and

H.  Travel (CP 2-1), last revised 3/16/09.

 

                 AND BE IT FURTHER RESOLVED, That the President and Chief Executive Officer is authorized to modify the foregoing policies, as necessary, except in the event that any powers, duties or obligations of the Trustees would be affected by such modification; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

5.                   Discussion Agenda

 

                Chairman Townsend thanked President Kessel and Authority staff for representing the Authority in the recent controversy about hydropower rate increases.  He said that, in particular, President Kessel had done a great job in his conversation with the editorial board of the Buffalo News.  President Kessel thanked Trustees Curley and Cusack for their guidance in this regard.

 

 


 

5a.           Report of the President and Chief Executive Officer

 

President Kessel provided the Trustees with updates on the following:

Hydro Rates:  President Kessel said that the March 19th public forum in Albany on the proposed rate increase demonstrated that people in Western New York and the North Country had strong objections to the proposed rate increases.  He said that staff worked very hard to address those concerns and singled out Mr. Del Sindaco and Mr. Russak and their staffs for their hard work.  He said that the Authority would be improving its public notice and outreach process connected with future rate increases.  President Kessel said that the economic devastation in Niagara Falls, Buffalo and throughout Western New York is stunning and that any rate increase would have had a negative impact on that area of the State.  He also said that he thought that Trustees Curley and Cusack had been treated very unfairly by certain elected officials, pointing out that the Trustees serve without pay and without benefits.  However, President Kessel said that Trustees Curley and Cusack had done a great job of responding to the media inquiries about the rate hike issue.  He thanked both Trustees on behalf of the Authority, the community and the public for the great job they do.

Compensation:  President Kessel said it had been a difficult decision to cancel the variable pay for Authority employees and recognized that this decision was unfair to Authority staff, especially since Niagara had its best year ever in terms of performance in 2008.  However, he said that canceling this year’s variable pay was the right decision to make and that the damage to the Authority had variable pay gone forward would have been incalculable.  President Kessel said that Authority management will be working with the Trustees to develop a new, fair compensation plan that can be implemented on a routine basis each year. 

Alcoa:  President Kessel said that the Memorandum of Understanding with Alcoa is the most important thing the Authority has ever done for the North Country.

Community Outreach:  President Kessel said that, since becoming President and Chief Executive Officer in October 2008, he had:

·         Visited Albany 9 times for executive meetings and press events;

·         Taken 5 trips to Buffalo, spending 8 days there in meetings with staff, editorial board, elected officials and community leaders and at press events;

·         Traveled to Massena 5 times;

·         Traveled to Niagara 4 times;

·         Visited Rochester, Syracuse, Solvay, Fairport, Schenectady, Utica and Montreal;

·         Just last week attended a Buffalo-Niagara Partnership meeting to speak to members about Authority activities in Western New York, met with Buffalo Mayor Byron Brown, met with the Buffalo News and Niagara Gazette editorial boards and held a news conference on the hydro preference power rates; and

·         Participated in events on Long Island that included an announcement of a low-cost power agreement with Brookhaven National Lab, an announcement at the Bergen Point Wastewater Treatment Plant of initiatives to reduce electricity costs for wastewater treatment facilities throughout the State, a Hofstra University Energy Conference and a meeting at Nassau Community College.

President Kessel said that he is working with the Authority’s unions on new hiring, retention and contractor policies.  He has also met with the chief of the Mohawk Tribe and will be visiting the Mohawk reservation this summer.

Transmission Projects

Hydro Quebec:  The preliminary results of the Phase II Study indicate that the potential exists to increase imports by approximately 1,300 MW from Hydro Quebec from a system perspective.  The analyses identified voltage and thermal issues that require additional study.  Study work is on schedule and a draft report is due on April 15th.  President Kessel said that the Authority has reached out to National Grid regarding this project to see if there is a good match of interests for National Grid and the Authority.  He said that Mr. John Suloway, Mr. Steven DiCarlo and staff from the Transmission and Finance groups at the Authority have been hard at work on the project.  

Hudson Transmission Partners (“HTP”):  President Kessel commended Mr. Quiniones and the entire team who have been working on this project.  He said that talks have begun with Con Edison and that it appears the project is becoming more and more economically feasible.  If it is found to be feasible, the permitting process could be under way by this summer, with construction beginning before the end of 2009.

Off-shore Wind:  President Kessel said that Authority staff is investigating the feasibility of building off-shore wind turbines in the waters off Long Island and in the Great Lakes in collaboration with the investor-owned utilities and the Authority’s municipal customers.

Federal Stimulus Plan: The Authority’s internal Stimulus Task Force, headed by Ms. Brown Clemons, is identifying potential projects eligible for funding through the State Energy Program.  The Authority has established a hotline and e-mail address for customers interested in learning more about the stimulus package and how the Authority can provide support.  Mr. Thomas DeJesu and Mr. Finnegan have reached out to New York State’s Congressional delegation, the U. S. Department of Energy and other public officials about the Authority’s projects and role.  Congressman Gary Ackerman is going to sponsor a breakfast to which the entire New York State Congressional delegation will be invited in order to enable Authority staff to talk to them about the Authority’s work on issues related to the stimulus.  The Authority is also actively involved in the Governor’s Economic Recovery and Reinvestment Cabinet and various sub-teams.

President Kessel said that the Authority has great staff and that he sees the Authority being the leading entity in the U. S. on transmission and renewables.

Responding to a question from Vice Chairman Foster, Ms. Brown Clemons said that it is unclear when the stimulus money will start getting spent.  She said that everyone is now in “get ready” mode and analyzing the bill.  In response to a question from Trustee Nicandri, Ms. Brown Clemons said that she thought the money would begin to flow within the next couple of months. 

 


 

5b.           Report of the Chief Operating Officer

 

The Authority’s overall net generation for February exceeded the projected total, while the transmission facilities completed the month with no forced, or unplanned, outages.1,2  The past month was also marked by progress on a number of energy efficiency and clean energy projects, efforts to ensure stable electricity prices for the Authority’s governmental customers in New York City and Westchester County in coming years and the initial implementation of recommendations from the Authority’s Human Resources study.

Key Activities and Accomplishments of the Past Month

POWER SUPPLY

Plant Performance:  February net generation was 1,930,728 megawatt hours (MWh), surpassing the projection of 1,912,567 MWh.3  The Authority’s plants were available to produce electricity 85.7% of the time.  The February performance brought year-to-date generation to 4,198,175 MWh, compared with the projected 4,110,481 MWh.  The unforced capacity rating for the month was 98.3%, slightly below the target of 98.5%.4   This brought the annual rating to 97.2%, compared with the 98.5% target.  February river flows at the Niagara Power Project were at the historical average and slightly below normal compared with long- and short-term forecasts.  Flows at the St. Lawrence-FDR Power Project were slightly above the historical average and consistent with the forecasts.

Outages:  There were no significant forced outages at the generating plants in February. However, several forced outages and forced derates of short duration resulted in the equivalent of about 67 forced outage hours.5

Transmission Performance:  While there were no forced transmission outages during February, 13 scheduled outages accounted for a total of 437 hours.  The monthly transmission reliability rating was 99.93%, exceeding the projection of 99.90%.6  The overall reliability rating for January and February was 99.96%, compared with the projection of 99.95%.

American Public Power Association (“APPA”) Safety Award:  The Authority received a first-place award in its category in APPA’s annual electric utility safety contest.7  John Kahabka, Vice President – Environment, Health and Safety, accepted a plaque at APPA’s Engineering and Operations Technical conference on March 23 in Austin, Texas.  The award, reflecting 2008 performance, was based on the number of work-related reported injuries or illnesses and the number of worker hours during the year, as defined by the federal Occupational Safety and Health Administration.  The Authority was entered in the second-largest category, for systems with 1 million to 3.99 million worker-hours.  More than 200 utilities competed in the various classes.  The Authority, which also won top honors in last year’s competition, has placed first in its category 11 times and second in the other four years since 1994.

Organizational Review:  An organizational review of the Power Supply Business Group began in March.  The focus will be on processes, organizational structure and the synergies created through combining the Transmission unit and Project Development, Licensing and Compliance staff with Power Generation to form the new group.  Scott Madden, the consultant conducting the review, is expected to submit recommendations in early June.

ENERGY SERVICES AND TECHNOLOGY

Energy Efficiency Investment:  The Authority invested $8.6 million in energy efficiency projects during February, bringing the total for the year to $13 million.  Overhead cost recovery for the month was 68%, slightly above the January figure.  Achieving the year-end target of 104% will enable the Authority to recover its costs of administering the program.

Clean Energy Benefits:  The Authority provided 27,678 MWh of clean energy benefits in February, with 10,678 MWh from energy efficiency and 17,000 MWh from renewable energy projects and purchases of renewable energy attributes.8  With a year-to-date total of 49,400 MWh, the Authority remained on track to surpass the annual clean energy target of 234,000 MWh.

ENGINEERING AND CONSTRUCTION

Metro-North Railroad: Grand Central Terminal Generator Coolers:  A $293,000 project to modify the standby generator coolers at Grand Central Terminal in Manhattan was completed.  The initiative entailed replacing the once-through generator cooling system, which used New York City water, with a closed-loop, air-cooled radiator

system.9,10  Authority staff designed and installed the new equipment. 

Metropolitan Transportation Authority (“MTA”):  Solar Power Purchase Agreement:  Authority staff met in February with MTA representatives to review the results of a Request for Information (“RFI”) concerning a 6 MW solar power purchase agreement associated with installing solar panels at MTA facilities.11  More than 30 firms responded to the RFI, which produced considerable information on technical and contractual issues that will assist staff in writing a Request for Proposals (“RFP”).12  Authority staff will meet with MTA representatives in April to review a draft RFP.

New York City Housing Authority:  Rutgers Houses Boilers:  The Authority is managing construction of a $10 million project to install five new natural-gas-fired boilers and associated piping and equipment at the Rutgers public housing complex, which has used steam for heating.  The improvements will save about $650,000 annually.

New York City Department of Environmental Protection (“DEP”): Coney Island Electrical Substation Upgrade:  Construction continues on this $21 million project to upgrade the electric service at the Coney Island Wastewater Treatment Plant. The project includes replacing the four existing Con Edison electric feeders with five new feeders and transformers and installing associated switchgear and a new switchgear house.13,14,15  Authority staff has worked with Con Edison to energize two of the new feeders, which have been transferred to DEP.  Work is proceeding on the other three feeders.

ADVANCING NEW TECHNOLOGIES

Long Island Rail Road (“LIRR”): Flywheel Energy Storage System:  The Authority is providing financial and technical support for a flywheel energy storage system (“FESS”) to eliminate a voltage sag problem that forces trains to operate at low speed, causing service delays.16  The FESS will enable the LIRR to avoid construction of an expensive new substation at its Malverne station.  Authority personnel are meeting with LIRR staff members and the FESS manufacturer to plan the installation.

New York City Transit: Subway Regenerative Braking System:  Staff prepared a scope of work for an engineering firm to study ways to improve the regenerative braking energy output on New York City subway trains.17  After the design phase is complete, the enhanced trains will be tested under controlled conditions and then placed into regular service and monitored.  Plans call for the majority of the City’s subway trains to be included in the two-year program, in which the technical and economic feasibility of adding energy storage systems will also be studied.

Distributed Wind Generation:  The Authority has evaluated the feasibility of several wastewater treatment plants and college campuses in New York State as potential sites for distributed wind generation projects.18  A single wind turbine of between 100 kW and 1.5 MW of capacity would be located at each site.  Staff has prepared an RFI for distribution to wind developers.

 Offshore Wind Review:  A staff committee has begun reviewing the feasibility of developing offshore wind farms in the Atlantic Ocean and the Great Lakes.  The committee is drafting an RFI that will be released to wind developers on Earth Day, April 22.

MARKETING AND ECONOMIC DEVELOPMENT

Westchester County Issues:  In March, the Authority implemented electric supply hedges for its Westchester County governmental customers for summer 2009.19,20  The hedges cover about half of the on-peak usage for this customer group.  The hedge prices remain below levels that were forecast in 2008 for this year and are thus helping to preserve the customers’ 2009 budget plans.  Separately, the Authority is collaborating with Westchester County to develop an RFP for 2010-12 electricity supply at low, stable prices.  If a new supply arrangement is achieved through the RFP, the Authority’s current contract with the Westchester customers will have to be modified to cover the period of new supply.

New York City Hedge/Supply Plan:  The Authority is working with its New York City governmental customers to purchase electricity supply or hedges for up to three years (2010-12).  The supply may be as large as 500 MW on peak and 400 MW off peak.  This procurement strategy is referred to as a “laddering” plan, in which each supply component has a different length, with one-third of the total expiring and being replaced each year.

Peak Load Management Program:  The Authority held its annual kickoff and orientation session on March 26 for customers participating in its Peak Load Management Program and various load-reduction programs of the New York Independent System Operator (“ISO”).21 About 100 customer locations in New York City and on Long Island typically enroll in the Authority’s targeted Summer Period load-reduction program, implemented on peak usage days or in electrical system emergencies.  Overall, Authority customers provide about 200 MW of load curtailment when notified by the Authority or the ISO.

Industrial Rate Relief:  The Authority is working closely with staff of the State Public Service Commission to create a formal process in which the Authority could provide financial assistance to industrial firms that are experiencing sudden increases in electricity prices because of the expiration of long-term special contracts with upstate utilities.  The Authority is exploring the use of Industrial Incentive Awards, derived from net revenues from Expansion Power sales to industries in Western New York.22  These awards, provided for in State law, typically amount to about $8 million a year.   The Authority is currently focused on two upstate heavy manufacturing firms at risk of closing or relocating to another state.

Economic Development Legislation:  Legislation is being drafted to reflect the Authority’s economic development program reform proposal, which has been shared with the Trustees and members of the Governor’s staff.  Representatives of three large business groups (the Business Council of New York State, the Manufacturers Association of Central New York and Multiple Intervenors) have been apprised of the proposal’s main elements and have indicated a strong willingness to support the plan.

CORPORATE SERVICES AND ADMINISTRATION

Human Resources Study:  Phase 4 of the Authority’s Human Resources study, focused on implementing recommendations from the three completed phases, has begun.  Organizational changes are in progress, along with recruitment for new positions.  (The completed phases dealt with organizational design, business practices and succession planning.)

Corporate Support Services/Real Estate:  Staff completed negotiations with JP Morgan Chase for a partial lease termination of the fifth floor of the White Plains office building.  Plans are under way to renovate this space for Authority use.  Numerous other projects involving renovations and new office construction are in progress in the building.

Employee Events:  The Employee Recognition Luncheon for White Plains and Albany employees was held on March 6 and attended by more than 100 staff members.  President Kessel spoke at the event, at which Employees of the Quarter and Employees of the Year for 2008 were honored.  Similar events are planned for other Authority sites.  The Authority is reevaluating the current employee recognition program to determine if it should be replaced by other ways of recognizing employees.  The Authority sponsored an Employee Art Show in the White Plains Building on March 26 and 27.  More than 20 employees exhibited their artwork at the event, which was attended by numerous staff members.

 ANTICIPATED DEVELOPMENTS OVER THE NEXT SIX MONTHS

Federal Stimulus Package:  The Authority anticipates significant developments concerning distribution of federal stimulus funds in the coming months.  The Authority’s Internal Stimulus Task Force is identifying potential projects that will be eligible for funding, and the Authority has established a hotline and e-mail address for customers interested in learning more about the stimulus package and how the Authority can support them in obtaining funds.  The Authority is actively involved as a member of Governor Paterson’s New York State Economic Recovery and Reinvestment Cabinet and its various sub-teams.

Corporate Emergency Management Plan:  At President Kessel’s request, the Authority is developing a Corporate Emergency Management Plan, with efforts expected to intensify in the period ahead.  An internal team has been assigned to this project, and a consultant (Beck DR) has been hired to provide assistance.  The project entails assessing the Authority’s current disaster recovery and emergency management plans; determining and prioritizing the major risks facing the Authority;  identifying best emergency management practices in the electric utility industry and critical processes, resources and personnel needed to maintain high-priority operations at all Authority locations and recommending improvements as warranted.  The team’s first meeting was held on March 27, and the project is expected to be completed by the end of November.

ENERGY SERVICES AND TECHNOLOGY

Renewable Energy Attributes:  Plans are under way for the Authority’s purchase of 3,000 MWh of renewable energy attributes for the White Plains building over the next two years.  The purchase will help to maintain the building’s Gold certification under the U. S. Green Building Council’s Leadership in Energy and Environmental Design (“LEED”) program, and will ensure the Authority’s compliance with Executive Order 111, which requires that State entities meet at least 20% of their electricity needs from renewable sources by 2010.  In addition, the Authority plans to obtain 23,000 MWh of renewable energy attributes from sources such as landfill gas and biomass facilities for use by the Authority and its New York City governmental customers.

PlaNYC Projects:  Because of increased activity for the City of New York in line with PlaNYC, the Authority will issue an RFP for additional project implementation resources.23  This will enable the Authority to assist the City in carrying out PlaNYC and federal economic stimulus projects.

 


 

Glossary

 

1 Net generation:  Energy generated in given time period by power plant or group of plants, less amount used at plants themselves (station service) or for pumping in pumped storage facility.

 

2 Outage:  Removal of power plant or transmission line from service.  Outages may be scheduled for purposes such as anticipated maintenance, or forced by unexpected events.

 

3 Megawatt hour:  Amount of electricity needed to light 10,000 l00-watt light bulbs for 1 hour.  Megawatt is equal to 1,000 kilowatts and can power about 800 homes, based on national averages.

 

4 Unforced capacity rating:  All power plants have an installed capacity (“ICAP”), meaning amount of power they could generate under perfect conditions.  Since conditions are not always perfect and plants are shut down, second measurement, called unforced capacity (“UCAP”) indicates how much power plant actually can produce.  For New York State power plants, this measurement is influenced by amount of time plant is forced out of service when it is called into service through New York Independent System Operator (“ISO”) to provide energy.

 

5 Equivalent outage hours:  Measurement reflecting both full-scale outages and plant deratings.  Includes actual total hours of outages as well as figure adjusted to account for effect of deratings on facility’s output.

 

6 Transmission reliability rating:  Measurement of impact of forced and scheduled outages on statewide system’s ability to transmit power.

 

7 American Public Power Association:  National organization of about 2,000 state- and community-owned electric utilities, with headquarters in Washington, DC.

 

8 Renewable energy attributes:  Environmental, social and economic features of renewable energy that may be sold separately from energy itself; Authority obtains such attributes on behalf of its New York City governmental customers.

 

9 Once-through cooling system:  System in which cooling water is discharged to drain after passing through engine rather than being cooled and recirculated in closed loop.

 

10 Closed-loop, air-cooled cooling system:  System in which cooling water is passed through radiator (typically separate from equipment being cooled) and then recirculated to engine or other equipment. 

 

11 Request for Information:  Document issued to prospective vendors and contractors in early phases of project to obtain preliminary information on nature and cost of services they can provide.

 

12 Request for Proposals:  Formal solicitation of bids for project; may or may not be preceded by Request for Information.

 

13 Electric feeders:  Low-voltage utility service lines or cables that carry energy to utility’s customers. 

 

14 Transformer:  Device that receives electrical power at one voltage and delivers it at higher voltage.  (Voltage is measurement of force that pushes electricity through transmission line, much as water is forced through hose.)

 

15 Switchgear:  Large electric breakers or switches.  (Breaker is mechanical switching device capable of carrying electric current under normal conditions and quickly interrupting current in abnormal conditions.)

 

16 Flywheel energy storage system:  Heavy rimmed wheel or disc used for storing kinetic energy that can be used to generate electricity to offset temporary voltage drops. Flywheels have rapid charge/discharge cycles that allow high-power/short-duration applications.

 

17 Regenerative braking:  Process in which energy produced in braking process is captured to produce electricity.

 

18 Distributed generation:  Power source located at or near user’s facility that may or may not be connected to electric grid.

 

19 Hedges:  Transactions that reduce risk of existing supply prices that are subject to volatility.  Purchasing fixed-price hedge against otherwise floating price reduces risk of high prices, but also reduces opportunity for lower prices. Hedge provides price certainty and usually includes risk premium to compensate party providing hedge and ultimately absorbs price fluctuation risk.

 

20 Summer 2009 Period:  As defined by ISO, electricity supply period from May to October 2009.

 

21 New York Independent System Operator:  Not-for-profit organization that operates New York State’s transmission system, administers State’s wholesale electricity markets and engages in planning to ensure future reliability of statewide power system.


 

5c.           Report of the Chief Financial Officer

 

Mr. Del Sindaco said that the $34 million loss at the end of February was in large part due to the $500 million “sweep” of Authority funds.  He said that he expected net revenues to be on the positive side by the end of May.  Mr. Del Sindaco also said that because 2009 was going to be a very volatile year, staff is updating the revenue forecast every month.  He said that just last week the New York State Division of the Budget had asked the Authority to accelerate the $215 million payment to the State that was to have been made by March 27 and that the Authority had accommodated that request. 

                In response to a question from Mr. Quiniones, Mr. Yates said that within the next 30-60 days, staff expected to have a written proposal for an Industrial Incentive Awards program ready to present to the Trustees.


 

6.             2008 Financial Reports Pursuant to Section 2800 of the Public Authorities Law and Regulations of the Office of the State Comptroller  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the financial report for the year ended December 31, 2008 and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders and the State Comptroller pursuant to Section 2800 of the Public Authorities Law, as amended by the Public Authorities Accountability Act of 2005 (‘PAAA’).  In accordance with regulations adopted by the Office of the State Comptroller (‘OSC’), the Trustees are also requested to approve a report of actual vs. budgeted results for the year 2008 and authorize posting it on the Authority’s website.

 

BACKGROUND

 

               “The PAAA reflects the State’s commitment to maintaining public confidence in public authorities by ensuring that the essential governance principles of accountability, transparency and integrity are followed at all times.  To facilitate these objectives, the PAAA established an Authority Budget Office (‘ABO’) that monitors and evaluates the compliance of State authorities with the requirements of the Act.  The PAAA became effective with the Authority’s fiscal year beginning January 1, 2006.  The PAAA amended Section 2800 of the Public Authorities Law to require that financial reports submitted by a State authority under Section 2800 be certified by the chief executive officer and chief financial officer and approved by the authority’s board.

 

“Following rulemaking proceedings undertaken pursuant to the State Administrative Procedure Act, OSC implemented regulations on March 29, 2006 that address the preparation of annual budgets and related reporting requirements by ‘covered’ public authorities, including the Authority.  These regulations establish various procedural and substantive requirements relating to the budgets and require the chief financial officer to report publicly not later than 90 days after the close of each fiscal year on actual versus budgeted results. 

 

DISCUSSION

 

“The Trustees are requested to approve the required financial report for the year ended December 31, 2008 (Exhibit ‘6-A’) and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders and the State Comptroller pursuant to Section 2800 of the Public Authorities Law, as amended by the PAAA.  This report was reviewed by the Audit Committee at its meeting of February 24, 2009.  The Trustees are also requested to approve a report of actual vs. budgeted results for the year 2008 (Exhibit ‘6-B’) and authorize posting it on the Authority’s website.

 

FISCAL INFORMATION

 

                “There is no anticipated fiscal impact.

 

RECOMMENDATION

 

                “The Vice President – Controller recommends that the Trustees approve and authorize submittal of the attached reports (Exhibits ‘6-A’ and ‘6-B’) as discussed herein.

 

                “The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and I concur in this recommendation.”

 

               

 

The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

WHEREAS, pursuant to Section 2800(1) of the Public Authorities Law, the Authority is required to annually submit to the Governor, the Chairman and Ranking Minority Member of the Senate Finance Committee, the Chairman and Ranking Minority Member of the Assembly Ways and Means Committee and the State Comptroller, within 90 days after the end of its fiscal year, a complete and detailed report or reports setting forth certain information regarding, among other things, certain financial information; and

 

WHEREAS, pursuant to Section 2800(3), financial information submitted under Section 2800 shall be approved by the Authority’s Board of Trustees and the Chief Executive Officer and the Chief Financial Officer of the Authority shall certify in writing that, based on the officer’s knowledge, the information provided therein (a) is accurate, correct and does not contain any untrue statement of material fact; (b) does not omit any material fact which, if omitted, would cause the financial statements to be misleading in light of the circumstances under which such statements are made and (c) fairly presents in all material respects the financial condition and results of operations of the Authority as of, and for, the periods presented in the financial statements; and

 

WHEREAS, the Chief Executive Officer and the Chief Financial Officer have so certified as to the financial information contained within the attached reports for the fiscal year ending December 31, 2008 as evidenced by a writing dated even date hereof;

 

NOW THEREFORE BE IT RESOLVED, That pursuant to Section 2800 of the Public Authorities Law, the financial reports attached hereto are adopted and the Corporate Secretary is authorized to submit to the Governor, the Chairman and Ranking Minority Member of the Senate Finance Committee, the Chairman and Ranking Minority Member of the Assembly Ways and Means Committee, the State Comptroller, the Division of the Budget and the Authority Budget Office the attached financial report for the year ending 2008 in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the attached report of actual vs. budgeted results for the year 2008 is approved in accordance with the foregoing report of the President and Chief Executive Officer; and the Corporate Secretary is authorized to post the report on the Authority’s website; and be it further        

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer, the Executive Vice President and Chief Financial Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 

7.             Annual Review and Approval of Guidelines for the Investment of Funds and 2008 Annual Report on Investment of Authority Funds 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to: (i) review and approve the attached 2008 Annual Report on Investment of Authority Funds (Exhibit ‘7-A’) and (ii) amend the Authority’s Investment Guidelines to reflect the change in title from Vice President – Finance to Senior Vice President – Corporate Planning and Finance.

 

 BACKGROUND

 

                “Section 2925 of the Public Authorities Law requires the review and approval of an annual report on investments.  Pursuant to the statute, the attached report includes Investment Guidelines that set standards for the management and control of the Authority’s investments, a summary of the Guidelines, the total investment income earned in 2008, a statement on fees paid for investment services, the results of an independent audit, a detailed inventory report for each of the Authority’s seven portfolios at December 31, 2008 and a summary of purchases from dealers and banks.  The approved annual report is filed with the State Division of the Budget, with copies to the Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee.  The report is also available to the public upon written reasonable request. 

 

DISCUSSION

 

                “In 2008, the Authority’s investment portfolios, exclusive of the separately managed Other Post-Employment Benefits Trust Fund and Nuclear Decommissioning Trust Fund, averaged $1.10 billion and ended the year at $1.17 billion.  Of this amount, $931 million was held in the Authority’s Operating Fund.  The Operating Fund was created by the Authority’s Bond Resolution (General Resolution Authorizing Revenue Obligations dated February 24, 1998).  A number of reserves have been established within the Operating Fund.  As of December 31, 2008, the Authority reported $933 million in the Operating Fund, as follows:

·        Debt Service Reserve ($78 million) – The Debt Service Reserve is funded monthly to have sufficient amounts available to pay debt service obligations when due.  The Authority’s scheduled principal and interest payments typically total about $200-$250 million per year, with payment dates set each February, May, August and November.  

 

·        Fuel Reserve ($227 million) – The Fuel Reserve is a separate reserve, the majority of which ($215 million) is matched to a federal obligation to pay for the processing and final disposition of spent nuclear fuel burned by the Authority when it owned nuclear plants.  This amount is the subject of the recently signed Memorandum of Understanding (MOU) providing for the temporary transfer of these assets to the State.  The remainder is available for collateral requirements for the Authority’s NYMEX-based fuel purchases.  The NYMEX portion of this reserve will total up to $70 million; at year end, $58 million is out as collateral with the remaining $12 million held within this reserve.

 

·        Capital Project Reserve ($281 million) – This amount is being set aside to help fund any major new investments in energy infrastructure by the Authority.  In order to minimize customer costs, maintain the Authority’s financial metrics and maintain ready access to the capital markets, it has been determined that the next major investment should be financed with a portion funded by debt and a portion funded by Authority cash or, in effect, its equity.  This Reserve has been established to provide this equity.  These funds are also the subject of the recently signed MOU providing for the temporary transfer of $103 million of these assets to the State.

 

·        Operating Reserve ($347 million) – The Operating Reserve includes a reserve for working capital and its emergency repair fund.  The Authority Trustees have established a minimum amount of $175 million for this purpose and funds cannot be released for any lawful corporate purpose (pursuant to Section 503(1)(e) of the Bond Resolution) unless this minimum is satisfied.  The current level of $347 million reflects this $175 million minimum, plus the retention of funds anticipated for various economic development programs and other voluntary contributions to the State.  On January 30, 2009, $119 million of these funds were provided as a voluntary contribution to the State pursuant to Trustee authorization.

 

“In addition to the Operating Fund portfolio, the Authority separately held on December 31, 2008 a total of $239 million from the proceeds of a number of bond and note issuances in its Energy Conservation, Note Debt Reserve and Construction portfolios.  These funds are earmarked for construction projects currently under way, such as the St. Lawrence Life Extension and Modernization and various energy services projects.

 

“The Authority’s portfolios earned approximately $48 million in investment income during the year.  This level of earnings is $4 million less than in 2007.  The decrease in investment earnings is due to the investment of additional cash provided by operating activities and the reinvestment of maturities in a declining interest-rate environment.  Income for the year from the Authority’s portfolios had an average yield of 4.05%, trailing the Authority’s established performance measure by 1 basis point (1/100 of 1%).  The performance benchmark for 2008 was the three-year rolling average yield of the two-year Treasury note. 

 

“At December 31, 2008, the portfolio consisted of 7.6% in mortgages guaranteed by the U.S. government, 81.5% in agencies (government-sponsored enterprises), 0.3% in Certificates of Deposit and Repurchase Agreements and 10.6% in Municipal Bonds.

Other Post-Employment Benefits Trust

                “The Authority’s Other Post-Employment Benefits Trust (‘OPEB Trust’) was established in 2007 as authorized by the Authority’s Board of Trustees at their December 19, 2006 meeting to provide for medical, prescription drug, life and other long-term care benefits offered by the Authority for retirees and eligible beneficiaries.  The OPEB Trust allows for investments in a diversified portfolio of assets, including domestic and international equity securities, fixed- income securities, Public Real Estate Investment Trusts and a U. S. Treasury Money Market fund.  During 2007 and 2008, the Authority deposited a total of $225 million into the OPEB Trust to partially fund its actuarial accrued liability which, at December 31, 2008, was $351 million. 

 

                “As of December 31, 2008, the OPEB Trust’s market value was approximately $191 million, representing a decline of 15.1%.  While equity indexes have been severely negatively impacted by the global recession (Standard & Poor’s 500 Index and Dow Industrial Index down 37.0% and 31.9%, respectively, in 2008), the OPEB Trust’s performance was partially buffered by its diversification requirements, including fixed-income and money-market asset classes.  Additionally, the OPEB Trust benefited from a strategic decision to maintain approximately 28% of assets in cash due to the weakening global economy. 

 

                “The OPEB Trust account paid $175,521 in fees to a diversified group of professional investment management firms selected to manage the OPEB Trust’s assets.  These fees and the firms paid are detailed in Section III (B) of the attached report. 

 

Nuclear Decommissioning Trust

 

“On November 21, 2000, the Authority completed the sale of its Indian Point #3 and James A. FitzPatrick nuclear plants to two subsidiaries of Entergy Corporation pursuant to a purchase-and-sale agreement dated March 28, 2000.  In accordance with the Decommissioning Agreements, the Authority retains contractual decommissioning liability until license expiration, a change in the tax status of the fund or any early dismantlement of the plants, at which time the Authority will have the option to terminate its decommissioning responsibility and transfer the plant’s fund to the Entergy subsidiary owning the plant.  At that time, the Authority will be entitled to be paid an amount equal to the excess of the amount in the fund over the Inflation Adjusted Cost Amount (a fixed estimated decommissioning cost amount adjusted in accordance with the effect of increases and decreases in the U. S. Nuclear Regulatory Commission minimum cost-estimate amounts applicable to the plant), if any.  The Authority’s decommissioning liability is limited to the lesser of the Inflation Adjusted Cost Amount or the amount of the plant’s fund, guaranteeing that no additional cost burdens may be placed on the Authority. 

 

                “As of December 31, 2008, the Nuclear Decommissioning Trust’s market value was approximately $812 million, representing a decline of 17.1%.  The equity portion of the Trust experienced a negative return of 36.9% while the fixed-income portion of the Trust experienced a negative return of 5.2%.  This compares with a negative return of 37.0% for Standard & Poor’s 500 Index and a positive return of 5.2% for Barclay’s Capital Aggregate Bond Index.

 

               “Investment management fees associated with the Nuclear Decommissioning Trust Fund totaled $753,024 in 2008 and were paid from such Trust Fund.  These fees and the firms paid are detailed in Section III (C) of the attached report. 

                “In connection with its examination of the Authority’s financial statements, Ernst & Young LLP (‘E&Y’) performed tests of the Authority’s compliance with certain provisions of the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.  E&Y’s report, a copy of which is attached as Exhibit ‘7-B,’ states that the results of its examination disclosed no instances of noncompliance by the Authority.  Consequently, staff believes the Authority is in compliance with the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.

 

“Staff also is recommending that the Investment Guidelines be amended to reflect the change in title from Vice President – Finance to Senior Vice President – Corporate Planning and Finance in Paragraph B.4 of Section VII of the Investment Guidelines, dealing with authority to waive certain restriction relating to Repurchase Agreements.

 

“The Investment Guidelines and procedures have not been amended since last presented and approved by the Trustees at their meeting of March 25, 2008.  They remain fundamentally sound and meet the requirements of the Authority.  Furthermore, these Guidelines continue to meet the requirements of Section 2824 (1)(e) of the Public Authorities Accountability Act of 2005, which requires the Authority’s Trustees to establish written policies and procedures with respect to investments.

 

RECOMMENDATION

 

                “The Treasurer recommends that the Trustees approve the attached 2008 Annual Report on Investment of Authority Funds.

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Corporate Planning and Finance and I concur in the recommendation.”

 

Mr. Brian McElroy presented an overview of staff’s recommendations to the Trustees. 

                In response to a question from Vice Chairman Foster, Mr. McElroy said that the AA-rated (and sometimes A-rated) securities in which the Authority invests are generally in the municipal market. 

                Responding to a question from Trustee Townsend, Mr. McElroy said that the Authority’s financial advisor, PFM, had helped the Authority choose the manager for the Other Post-Employment Benefits Trust Fund.  In response to another question from Chairman Townsend, Mr. McElroy said that the Authority has no financial obligation to the federal government under the Nuclear Decommissioning Trust Fund.

                The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

               RESOLVED, That the 2008 Annual Report on Investment of Authority Funds be, and hereby is, approved; and be it further

 

RESOLVED, That Paragraph B.4 of Section VII of the Investment Guidelines be amended to reflect the change in title from Vice President – Finance to Senior Vice President – Corporate Planning and Finance; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

Exhibit “7-A”

March 31, 2009

 

 

 

 

 

                                                                                   2008 Annual Report on

                                                                             Investment of Authority Funds

 

 

                                                                                        Table of Contents

 

 

Section I                                                Guidelines for the Investment of Funds

 

Section II                               Explanation of the Investment Guidelines

 

Section III                              A.            Investment Income Record

                                                B.            Fees Paid for Other Post-Employment Trust Fund

                                                C.            Fees Paid for Nuclear Decommissioning Trust Fund

                                                D.            Results of the Annual Independent Audit

 

Section IV                              Inventory of Investments Held on December 31, 2008

 

Section V                               Summary of Dealers and Banks from Which Securities Were Purchased

 

 

 

 

 

                                                                                                       

Section I

 

                                                                                New York Power Authority Guidelines for the Investment of Funds

                                                                    

 

 

I.              General

 

        These Guidelines for the Investment of Funds (the “Guidelines”) are intended to effectuate the applicable provisions of the General Resolution Authorizing Revenue Obligations, adopted February 24, 1998 (the “Resolution”), the lien and pledge of which covers all accounts and funds of the Authority and that governs the Authority's existing policies and procedures concerning the investment of funds as contained in these Guidelines.  In a conflict between the Guidelines and the Resolution, the latter shall prevail.  In addition, these Guidelines are intended to effectuate the provisions of Section 2925 of the New York State Public Authorities Law.

II.            Responsibility for Investments

 

        The Treasurer and Deputy Treasurer have the responsibility for the investment of Authority funds under the general supervision of the Executive Vice President and Chief Financial Officer.  The Treasurer shall ensure that an operating manual is maintained that provides a detailed description of procedures for maintaining records of investment transactions and related information.

III.           Investment Goals

 

         The Treasurer and Deputy Treasurer are responsible for maximizing the yield on investments consistent with requirements for safety, liquidity and minimization of risk. Monies will not be invested for terms in excess of the projected use of funds.

 

IV.           Authorized Investments

 

                A.            Monies in funds established pursuant to the Resolution shall be invested in Authorized Investments or Authorized Certificates of Deposit, defined as follows:

 

                                “Authorized Investments” shall mean:

 

 

                                1.             Direct obligations of or obligations guaranteed by the United States of America or the State of New York;

 

2.             Bonds, debentures, notes or other obligations issued or guaranteed by any of the following: Federal National Mortgage Association (including Participation Certificates), Government National Mortgage Association, Federal Financing Bank, Federal Home Loan Mortgage Corporation and Federal Home Loan Banks, Federal Housing Administration, Federal Farm Credit Banks Funding Corporation, Federal Farm Credit Banks, Federal Intermediate Credit Banks, Federal Banks for Cooperatives, Federal Land Banks or any other agency controlled or supervised by and acting as an instrumentality of the United States government;

 

3.                    Obligations of any state of the United States of America or any political subdivision thereof or any agency, instrumentality or local government unit of any such state or political subdivision that shall be rated at the time of the investment in any of the three highest long-term Rating Categories, as such term is defined in the Resolution, or the highest short-term Rating Category by a Rating Agency, as such term is defined in the Resolution.

 

4.                    Public Housing Bonds issued by Public Housing Authorities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an Annual Contributions Contract with the United States of America; or Project Notes issued by Local Public Agencies, in each case, fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; provided that such Bonds or Notes are guaranteed by the United States of America.

 

“Authorized Certificate of Deposit” shall mean a certificate of deposit authorized by the Resolution as an “Authorized Investment.”

 

                B.            The Authority, as an issuer of tax-exempt obligations, must not engage in any arbitrage practice prohibited by the arbitrage regulations promulgated under the Internal Revenue Code.  In no event shall Authority funds be invested in a manner that would violate the provisions of such arbitrage regulations.

 

V.            Provisions Relating to Qualifications of Dealers and Banks

 

                A.1.         The purchase and/or sale of Authorized Investments shall be transacted only through banks, trust companies or national banking associations (herein collectively termed “Banks”) that are members of the Federal Reserve System and government security dealers (herein termed “Dealers”), which are Banks and Dealers reporting to, trading with and recognized as primary dealers by the Federal Reserve Bank of New York.  A list of authorized Banks and Dealers shall be maintained.  Banks and Dealers shall have demonstrated an ability to:

 

                                                a)         offer superior rates or prices on the types and amounts of securities required;

                                                b)         provide a high degree of attention to the Authority's investment objectives; and

                                                c)         execute trades in a timely and accurate manner.

 

                A.2.         Authorized Investments may also be purchased or sold through minority- and women-owned firms authorized to transact business in the U.S. government and municipal securities markets.  Such qualified firms shall demonstrate the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

                A.3.A.    Municipal securities qualifying as Authorized Investments may also be purchased or sold through any municipal bond dealer registered in the State of New York that demonstrates the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

B.                   Authorized Certificates of Deposit and time deposits (“Time Deposits”) shall be purchased directly from Banks that:

                                     (1)       are members of the Federal Reserve System transacting business in the State of New York;

                                     (2)       have capital and surplus aggregating at least $50 million; and

                                     (3)       demonstrate all the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

                C.            Authorized Investments purchased by the Authority or collateral securing its investments shall be deposited only with custodians designated by the Authority. Such custodians shall be Banks that are members of the Federal Reserve System transacting business in the State of New York.

 

                D.            The Authority shall file with each qualified dealer a letter agreement that designates the (1) type of authorized investments, (2) Authority employees who are authorized to transact business and (3) delivery instructions for the safekeeping of investments.

 

                E.             The Authority shall enter into a written contract with any (1) Dealer from which Authorized Investments are purchased subject to a repurchase agreement and (2) Bank from which Authorized Certificates of Deposit are purchased.

 

VI.           General Policies Governing Investment Transactions

 

                A.            Competitive quotations or negotiated prices shall be obtained except in the purchase of government securities at their initial auction or upon initial offering. A minimum of three quotes shall be obtained and documented from Dealers and/ or Banks, except as indicated above, and the most favorable quote accepted.  The Treasurer or Deputy Treasurer may waive this requirement on a single-transaction basis only if warranted by market conditions and documented in writing.

 

                B.            Authorized Investments purchased shall be either delivered to the Authority's designated custodian or, in the case of securities held in a book-entry account maintained at the Federal Reserve Bank of New York or the Depository Trust Company, recorded in the Authority's name or in the name of a nominee agent or custodian designated by the Authority on the books of the Federal Reserve Bank of New York or the Depository Trust Company.  Payment shall be made to the Dealer or Bank only upon receipt by the Authority's custodian of (1) the securities or (2) in the case of securities held in a book-entry account, written advice or wire confirmation from the Federal Reserve Bank of New York or the Depository Trust Company that the necessary book entry has been made.

 

                C.            Each purchase or sale of Authorized Investments or Authorized Certificates of Deposit shall be authorized by the Treasurer or Deputy Treasurer.  Investment orders may be placed by Authority employees as designated by the Treasurer.  The custodian shall have standing instructions to send a transaction advice to the Authority's Controller for purposes of comparison with internal records.  The Controller shall advise the Treasurer of any variances, and the Treasurer shall ensure appropriate corrections are provided.

 

VII.         Policies Concerning Certain Types of Investment Diversification Standards Required

 

                A.            Authorized Certificates of Deposit and Time Deposits

 

                                1.             Authorized Certificates of Deposit and Time Deposits shall be purchased directly from a Bank in the primary market.

 

                                2.             Authorized Certificates of Deposit and Time Deposits shall be continuously secured/collateralized by Authorized Investments defined in subsection (1) or (2) of Section IV.A., having a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such Certificates of Deposit or Time Deposits.  Such Authorized Investments shall be segregated in a separate custodian account on behalf of the Authority.  Collateral pledged for Certificates of Deposit or Time Deposits held as investments shall be market valued (marked to market) not less than once per week.

 

                                3.             Investments in Authorized Certificates of Deposit or Time Deposits shall not exceed 25% of the Authority's invested funds.  The par value of Authorized Certificates of Deposit purchased from any one Bank shall not exceed $25 million.

 

                B.            Repurchase Agreements

 

                                The Authority may from time to time elect to enter into arrangements for the purchase and resale of Authorized Investments (known as “Repurchase Agreements”).  This type of investment transaction shall be used only when there is no other viable, short-term investment alternative.

 

                                1.             A Repurchase Agreement shall be transacted only with a Dealer or Bank qualified to sell Authorized Investments to the Authority that is recognized by the Federal Reserve Bank as a primary dealer.

 

                                2.             Authorized Investments purchased subject to a Repurchase Agreement shall be marked to market daily to ensure their value equals or exceeds the purchase price.

 

                                3.             A Repurchase Agreement shall be limited to a maximum fixed term of five business days.  Payment for the purchased securities shall be made against delivery to the Authority's designated custodian (which shall not be a party to the transaction as seller or seller's agent) or, in the case of securities held in a book-entry account maintained at the Federal Reserve Bank of New York or the Depository Trust Company, written advice that the securities are recorded in the Authority's name or in the name of a nominee, agent or custodian designated by the Authority on the books of the Federal Reserve Bank or the Depository Trust Company.

 

                                4.             No more than $50 million of Authorized Investments shall be purchased under a Repurchase Agreement with any one Dealer or Bank.  This requirement may be waived by the Senior Vice President – Corporate Planning and Finance on a single- transaction basis only if warranted by special circumstances and documented in writing.

 

                                5.             The aggregate amount invested in Repurchase Agreements may not exceed the greater of 5% of the investment portfolio or $100 million.  The Executive Vice President and Chief Financial Officer may waive this requirement on a single-transaction basis only if warranted by cash-flow requirements and documented in writing.

 

                                6.             The Authority may not enter into arrangements (known as Reverse Repurchase Agreements) for the purpose of borrowing monies by pledging Authorized Investments owned by the Authority.

 

VIII.  Review

 

                      These Guidelines and any proposed amendments shall be submitted for Trustee review and approval at least once a year.

 

                      In addition to the Authority's periodic review, the Authority's independent auditors, in connection with their examination of the Authority, shall perform an annual audit of the investment portfolio, review investment procedures and prepare a report, the results of which will be made available to the Trustees.

 

IX.           Reports

 

                A.            The Treasurer shall submit an investment report to the Trustees, at least quarterly.  Such report shall contain a (1) detailed description of each investment; (2) summary of the dealers and banks from which such securities were purchased and (3) a list of fees, commissions or other charges, if any, paid to advisors or other entities rendering investment services.

 

                B.            The Treasurer shall submit an annual report for approval by the Trustees.  In addition to the information provided quarterly, the Annual Report shall include

                                (i) a copy of the Guidelines; (ii) an explanation of the Guidelines and any amendments thereto since the last annual report; (iii) the results of an annual independent audit of investment inventory and procedures and (iv) a record of income earned on invested funds.  The approved report shall be submitted to the State Division of the Budget with copies distributed to the Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee.  Copies shall be made available to the public upon written reasonable request.

 

                C.            Any waivers that occurred during the prior month shall be reported to the Executive Vice President and Chief Financial Officer.

 

X.  Miscellaneous

 

                A.    These Guidelines are intended for guidance of officers and employees of the Authority only, and nothing contained herein is intended or shall be construed to confer upon any person, firm or corporation any right, remedy, claim or benefit under, or by reason of, any requirement or provision thereof.

 

                B.    Nothing contained in these Guidelines shall be deemed to alter, affect the validity of, modify the terms of or impair any contract, agreement or investment of funds made or entered into in violation of, or without compliance with, the provisions of these Guidelines.

 

                C.    No provisions in these Guidelines shall be the basis of any claim against any Trustee, officer or employee of the Authority in his or her individual or official capacity or against the Authority itself.

 

 

Section II

 

 

 

                                                           EXPLANATION OF INVESTMENT GUIDELINES

 

 

Section II Responsibility for Investments

 

                Establishes responsibility for the Investment of Authority Funds and limits the number of individuals authorized to place investment orders.

 

Section III Investment Goal

 

                Establishes the policy that earning a reasonable return on investments must be consistent with standards set for minimization of risk and availability of funds when needed.

 

Section IV Authorized Investments

 

                Details the types of investments the Authority can undertake as prescribed in Section 101 of the Resolution.

 

      This section also requires that investments made in each of the Funds established under the Resolution be invested for a term commensurate with cash-flow expectations and that such investments not violate the arbitrage regulations of the Internal Revenue Code.

Section V Provisions Relating to Qualifications of Dealers and Banks

 

                Establishes criteria for the selection of banks and dealers from which the Authority may buy or sell investments.  Business is transacted with firms that have demonstrated financial strength and a high degree of reliability with respect to servicing the Authority's needs.  This section also directs that custody of Authority investments be maintained by banks that are members of the Federal Reserve System transacting business in the State of New York.

 

                This section also addresses the subject of contracts with banks and dealers for the purchase or sale of Authorized Investments.  The Authority has written Letters of Agreement with authorized dealers that specify the types of securities in which the Authority may invest and identify those Authority individuals authorized to give instructions related to the purchase and sale of securities.  In addition, the Authority shall have a written form of agreement for use in repurchase transactions with any authorized dealer with which the Authority may transact this type of investment.

 

Section VI General Policies Governing Investment Transactions

 

                Requires that the Authority solicit no less than three bids for the purchase or sale of securities in order to ensure the most favorable rate except when securities are purchased at their initial auction, upon new issue or through negotiated prices.

 

                Requires that the Authority or its custodian, prior to payment, take possession of such securities, or in the case of book-entry securities, obtain written advice or wire confirmation that transfer or ownership has been recorded.

 

                Establishes authorized employees to approve the purchase or sale of securities.

 

                Establishes control procedures whereby the Controller shall compare the custodian's confirmation to Authority records.

 

Section VII Policy Concerning Certain Types of Investment Diversification Standards Required

 

                Establishes a policy concerning the purchase of Authorized Certificates of Deposit and Time Deposits intended to minimize the risk associated with such transactions.  Authorized Certificates of Deposit or Time Deposits may be purchased directly from a bank that is a member of the Federal Reserve System transacting business in the State of New York.  Such deposits shall be continuously secured by Authorized Investments as outlined in subsection (1) or (2) of Section IV.A.  This collateral shall be regularly priced to current market to assure the Authority's security interest is continuously protected.  Aggregate holdings of Authorized Certificates of Deposit shall not exceed 25% of the Authority's total investment.  Authorized Certificates of Deposit purchased from any one bank shall not exceed $25 million.

               

                Establishes a policy intended to minimize the risk associated with arrangements for the purchase and resale of Authorized Investments known as Repurchase Agreements (“Repos”).  Repos purchased from any one qualified dealer or bank shall not exceed $50 million and shall be limited to a maximum fixed term of five business days.  Aggregate investments in Repos shall not exceed the greater of 5% of the Authority's total investments or $100 million.  All securities purchased under the terms of a Repo shall be held in safekeeping by a designated custodian for the Authority.  Such securities shall be priced to market on a daily basis to assure the Authority's security interest.  Reverse Repurchase Agreements are not authorized transactions.

 

Section VIII Review

 

                Establishes policy requiring review of the Guidelines at least once a year.  Requires an annual audit by the Authority's independent auditors of the Authority's investment portfolio and compliance with the guidelines established by the Authority and the State Comptroller.

 

Section IX Reports

 

                Establishes policy requiring submission of reports to the Authority's Trustees concerning the management and performance of the Authority's portfolio.

 

                This Section also requires that an annual report be submitted for approval by the Authority's Trustees.  Copies of the approved report shall be sent to the State Division of the Budget, Office of the State Comptroller, Senate Finance Committee and Assembly Way and Means Committee.

 

 

                                                                                                       
 

Section III

 

A.            Investment Income Record

 

                During 2008, the Authority's investment portfolio averaged approximately $1.10 billion and earned approximately $48 million.

 

                The earnings, by fund, were as follows (dollars in millions):

                                                                                               

                      Operating Fund                                                                                           $38

                      Capital/Construction Funds                                                                           9

                      Other (Energy Con./Note Res.)                                                                       1 

                                                                                                                 Total                      $48    

 

                The 2008 investment income is $4 million less than in 2007.    The decrease in investment earnings is due to the investing of additional cash provided by operating activities and the re-investing of maturities in a declining interest rate environment.

 

B.            Fees Paid for Other Post Employment Benefit Trust Fund Investment Services

 

                               $  35,866                  Baring Asset Management

                               $  36,040                  Brandywine Global Investment Management

                               $  24,708                  C.S. McKee

                               $    3,860                  Evergreen Investment Management Company

                               $  40,108                  Global Currents Investment Management

                               $      747                                   State Street Global Advisors

                               $  34,192                  Urdang Securities Management, Inc.

                               $175,521                  Total

 

                Investment management fees were paid by the OPEB Trust Fund.

 

C.            Fees Paid for Nuclear Decommissioning Trust Fund Investment Services

 

                                $359,266                 Blackrock Financial Management, Inc.

                                $357,640                 Tattersall Advisory Group, Inc.

                                $  36,118                 The Bank of New York Mellon

                                $753,024                 Total

               

                Investment management fees were paid by the Nuclear Decommissioning Trust Fund. 

 

D.            Results of the Annual Independent Audit

 

In connection with its examination of the Authority’s financial statements, Ernst & Young, LLP, performed tests of the Authority’s compliance with certain provisions of the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.  Ernst & Young LLP’s report, a copy of which is attached as Exhibit “B,” states that the results of its examination disclosed no instances of noncompliance by the Authority.  Consequently, staff believes the Authority is in compliance with the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.

 


 

8.             Approval of Revised Expenditure Authorization Procedures

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve revised Expenditure Authorization Procedures (‘EAPs’) pursuant to Article VII, Section 5 of the Authority’s By-Laws. 

 

                “The Trustees are also requested to continue the delegation to the Chairman of the authority to modify existing authorization and execution limits of the EAPs relating to commitments for the approval of, award of and change orders to contracts that do not require approval by the Trustees.

 

BACKGROUND

 

                “Article VII, Section 5 of the Authority’s By-Laws requires that the Trustees adopt expenditure authorization procedures which, among other things, govern contract approval authorizations and executions, delegation of approval for claims settlements and payment for real estate.

 

                “At a meeting held on December 19, 1991, the Trustees approved modifications to the EAPs that ‘…delegated to the Chairman the authority to modify existing authorization and execution limits relating to the commitments for the approval of, award of, and change orders to contracts which do not require approval by the Trustees.’

 

DISCUSSION

 

                “Since the full Board of Trustees has not adopted EAPs since that time, good governance dictates that these revised EAPs (attached as Exhibit ‘8-A’) be presented for Board approval.  The Governance Committee, at its meeting held on February 24, 2009, reviewed the proposed revisions to the EAPs and recommended adoption by the full Board. 

 

                “This proposed revision to the EAPs: (1) addresses issues raised by Deloitte & Touche’s assessment of the Authority’s equipment procurement process; (2) incorporates the approval limits of additional titles and/or title changes for the signing of commitments per Attachment C and (3) sets revised limits for real estate transactions.

 

“The following summarizes the principles underlying the EAPs:

 

                1.             Section 2879 of the Public Authorities Law defines procurement contracts as contracts for the acquisition of goods or services in the actual or estimated amount of $5,000 or more.  Section 2879 also requires the Trustees’ approval for procurement contracts involving services (including personal and non-personal services and construction contracts) to be rendered for a period in excess of one year.

 

Attachments A and B set forth approval levels and dollar limits required for contract awards and change orders.  Dollar limits for awards are determined by the method of award (e.g., a contract awarded to the low bidder can be approved for a higher dollar limit than a contract awarded to the non-low bidder or a sole source).

 

                2.             Attachment A applies to non-personal services, construction, equipment purchases and non-procurement contracts. 

 

                3.             Attachment B applies to personal services only.

 

                4.             The Trustees’ approval is required: (i) for the award of non-personal services, construction, equipment or non-procurement contracts with an initial value of $3 million or more; (ii) for the award of personal services contracts exceeding $1 million, if awarded to the low bidder, or exceeding $500,000, if awarded to the non-low bidder or a sole source and (iii) when the cumulative change-order value of a personal services contract exceeds $500,000, or when the cumulative change-order value of a  non-personal services, equipment purchase or construction contract exceeds $3 million.

 

“The following highlights the proposed revisions to the EAPs:

 

                1.             The aforementioned change-order limits are subject to what is referred to as the ‘25% Rule’ (more fully described on page 4 of the EAPs), which requires rebidding of contracts (or approval of the President and Chief Executive Officer or the Chief Operating Officer, where rebidding is not feasible) when the total value of such contracts, including change orders, exceeds the original amount approved by senior management or the Trustees by more than 25%, with a maximum cumulative cap of $1 million for non-personal services, equipment, construction and non-procurement contracts and $500,000 for personal services contracts.  Any funding in excess of 25% of the amount initially approved requires the approval of the President and Chief Executive Officer or the Chief Operating Officer, until either the Trustees’ approval is obtained or the contract is rebid.

 

                2.             The revisions made to the EAPs for real estate increase the settlement amount for claims, annual rental for leases, options to purchase real property and permits for the use of real property.  These amounts have not been revised since 1987 and reflect more current values in real property and delegation of approval to the noted position levels.

 

“In addition, the Trustees are requested to continue the delegation to the Chairman of the authority to modify existing authorization and execution limits of the EAPs relating to commitments for the approval of, award of and change orders to contracts that do not require approval by the Trustees, as previously approved in December 1991.  This delegation of authority would provide for a more efficient amendment process, eliminating the need to return to the Trustees each time circumstances dictate a necessary revision to the EAPs.

 

RECOMMENDATION

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Enterprise Shared Services, the Vice President – Procurement and I recommend that the Trustees approve the proposed revised Expenditure Authorization Procedures.”

 

Ms. Patricia Leto presented an overview of staff’s recommendations to the Trustees. 

                In response to a question from Trustee Nicandri, Mr. Mark O’Connor said that the Trustees approve the acquisition of real property but not the amount paid for that real property.  Mr. O’Connor said that in the case of the ice boom storage area, the Authority had paid for three different appraisals and that the dollar amount it would pay for the parcel would be within the range of prices in those appraisals.

                The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

RESOLVED, That the revised Expenditure Authorization Procedures discussed in the foregoing report of the President and Chief Executive Officer, and attached hereto as Exhibit “8-A,” be hereby adopted; and be it further

 

RESOLVED, That the Chairman be authorized to modify the authorization and execution limits of the Expenditure Authorization Procedures relating to contracts that do not require approval by the Trustees; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

9.             INFORMATIONAL ITEM – Regional Greenhouse Gas Initiative

 

Mr. William Nadeau made a presentation on the Authority’s role in the RGGI.  He commended Mr. John Kahabka, Mr. Kolli Rao, Mr. Yates, Ms. Helle Maide, Mr. McElroy, Ms. Lisa Cole, Mr. Michael Carey and Mr. Paul Rougeux for their efforts on the Authority’s behalf.  Mr. Nadeau said that the Authority accounts for 5% of New York State’s total tons of carbon dioxide (“CO2”) emissions. 

                In response to a question from Mr. Quiniones, Mr. Nadeau said that the New York City governmental customers account for 70% of the Authority’s CO2 emissions.  He said that the 2009 cost-of-service study budgeted $6-7 million to pay for the New York City governmental customers’ CO2 allowances.  Responding to a question from Trustee Curley, Mr. Nadeau said that the Small Clean Power Plants and the Brentwood and Flynn plants accounted for the other 30% of the Authority’s CO2 emissions.

 


 

10.          Motion to Conduct an Executive Session

               

                “Mr. Chairman, I move that the Authority conduct an executive session pursuant to Section 105(1)(f) of the Public Officers Law of the State of New York to discuss matters leading to the appointment, employment, promotion, discipline, suspension, dismissal or removal of a particular person or corporation.”  Upon motion made and seconded, an Executive Session was held.


 

11.        Motion to Resume Meeting in Open Session

“Mr. Chairman, I move to resume the meeting in Open Session.”  Upon motion made and seconded, the meeting resumed in Open Session.


 

12.               Annual Election of Non-Statutory Officers

 

                The Chairman submitted the following report:

SUMMARY

“The Trustees are requested to consider the election of certain non-statutory officers of the Authority.

BACKGROUND AND DISCUSSION

“Article IV, Section 2 of the Authority’s By-laws provides for the election of certain non-statutory officers by the Trustees.  Section 3 of the same Article provides that such non-statutory officers shall hold office for a term expiring at the Trustees’ next Annual Meeting, or until their successor is elected. 

RECOMMENDATION

“It is recommended that the below-named non-statutory officers provided for in Article IV of the By-laws, adopted December 18, 1984, and last amended on February 24, 2009, be elected by the Trustees to hold office for terms expiring at the next annual meeting of the Trustees in 2010, or until their successor is elected.  In addition, the current salary of each below named officer, as approved by the Compensation Committee, is hereby approved and shall be subject to adjustment during such term in accordance with applicable Authority policies, as amended.”

Richard M. Kessel                                President and Chief Executive Officer

Gil C. Quiniones                                    Chief Operating Officer

Joseph M. Del Sindaco                        Executive Vice President – Chief Financial Officer

Terryl Brown Clemons                         Executive Vice President and General Counsel

Edward Welz                                          Executive Vice President and Chief Engineer – Power Supply

Karen Delince                                        Corporate Secretary

 

Chairman Townsend presented an overview of this item.

                Following the Trustees’ unanimous vote in favor of electing the non-statutory officers, President Kessel thanked the Trustees for showing their confidence in staff.  He said that the Authority has great staff and a great Board of Trustees.  He said that in his first five months at the Authority, he had learned a lot from the Trustees and that he appreciated their input and suggestions.  President Kessel said that he considered the Trustees to be his friends and thanked them for their support, saying that the more input staff gets from the Trustees, the better staff is able to do their job.

The following resolution, as recommended by the Chairman, was unanimously adopted.

 

RESOLVED, That  pursuant to Article IV, Section 2 of the Authority’s By-laws, the following individuals are hereby appointed to the position listed next to their name for terms expiring at the next annual meeting of the Trustees in 2010, or until their successor is elected:

 

Richard M. Kessel                      President and Chief Executive Officer

                                                         Gil C. Quiniones                         Chief Operating Officer

Joseph M. Del Sindaco               Executive Vice President – Chief   Financial Officer

Terryl Brown Clemons              Executive Vice President and General
Counsel

Edward Welz                                Executive Vice President and Chief Engineer – Power Supply

Karen Delince                              Corporate Secretary

 

AND BE IT FURTHER RESOLVED, That the current salary of each above-named officer is hereby approved and shall be subject to adjustment during such term in accordance with applicable Authority policies, as amended.


 

13.          Withdrawal of Notice of Proposed Rulemaking for Hydroelectric Preference Power Rates and Extension of Current Industrial Power Rates  

 

                 The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve a withdrawal of January’s Notice of Proposed Rulemaking (‘NOPR’) affecting hydroelectric preference power rates and to suspend the scheduled production rate increase for industrial customers receiving hydroelectric power.  As a result of these actions, existing rates for power supplied from the Niagara and St. Lawrence/FDR Hydroelectric Projects will remain in effect for the 2009 Rate Year, which extends from May 1, 2009 to April 30, 2010.  The major customers that purchase electricity at preference power rates are the municipal electric systems and rural electric cooperatives (‘munis and coops’), neighboring states municipal customers (‘NS customers’), upstate investor-owned utilities (‘IOUs’) and Niagara Relicensing customers.  The industrial customers include the Replacement Power (‘RP’) and Expansion Power (‘EP’) customers, General Motors (‘GM’) and Alcoa/Reynolds. 

 

                “Under ordinary economic circumstances, the affected customers’ rates would have increased as permitted under statutory or contractual authorization effective with the 2009 Rate Year.  However, given the overall economic conditions and the adverse consequences of a cost increase as expressed by certain customers and other interested parties, the Trustees are requested to adopt such actions in order to extend current rates for another rate year.

                 

BACKGROUND

 

“At their meeting of January 27, 2009, the Trustees authorized publication in the New York State Register of a Notice of Proposed Rulemaking (‘NOPR’) to increase the hydroelectric preference power rates.  The proposed rate plan was prepared by Authority staff and explained in its January 2009 report on ‘Hydroelectric Production Rates, Rate Modification Plan – 2009 and 2010 Rate Years.’  The two-year Rate Modification Plan was based on the results of a preliminary 2009-10 Cost-of-Service study.  The NOPR would have increased hydroelectric production rates for typical preference power customers by 8.2% in the first rate year and 3.9% in the second rate year.  The NOPR was published in the New York State Register on February 11, 2009 and a public forum was held on March 19, 2009 for the purpose of obtaining the views of customers and other interested parties.  In addition, the Authority responded to numerous data requests submitted by the New York Association of Public Power (‘NYAPP’) and the NS Customers.

 

“The tariffs applicable to the RP, EP and GM industrial customers specify that effective on May 1st of each year, the base production rates will be adjusted by the values of three indices.  The three indices include the Producer Price Index (‘PPI’) for Industrial Commodities, a measure for inflation (Gross National Product Deflator) and PPI for Industrial Power.  The industrial customers are notified of the base rate adjustment by about the first week in April of each year.  In the absence of a rate extension, the expected 2009 adjustment would have been a 5.9% increase in production rates.

 

“Similarly, for Alcoa/Reynolds, the applicable tariffs specify that the base rates are adjusted on May 1, 2009.  The relevant indices are two measures of Electric Power and an index for Industrial Commodities.  In the absence of a rate extension, Alcoa/Reynolds’ production rates would have increased by 2%. 

 

DISCUSSION

 

                “On March 19, 2009, a public forum was held in Albany.  The forum was conducted in accordance with the terms of the Policy and Procedures – Public Forum on Rate Proposals adopted by the Authority’s Trustees at their meeting of November 27, 1990.  Authority staff spoke at the forum to explain the procedures and summarize the results of the Cost-of-Service Study and proposed preference rates.  Aside from Authority staff, 14 individuals attended the forum, five of whom spoke, including New York State Senators George Maziarz and Joseph Griffo; William Ross, the Chairman of the Niagara County Legislature; counsel for NYAPP; and a representative from the Allegheny Electric Cooperative speaking for the NS Customers.  One theme consistently mentioned was the timing of the increase.  One commentator stated that, ‘The rate hike…could not have come at a worse time for the communities I represent.’  Similarly, another wrote asking the Trustees to ‘…consider providing the citizen rate payers of its hydroelectric customers with some financial relief from the proposed rate increases … until the economy has made a turn-around.’  

 

                “In consideration of the national economic downturn and in recognition of the extent to which the downturn has adversely affected the region’s customers, withdrawal of the NOPR would extend the current rates for the hydroelectric preference power customers for the 2009 Rate Year (May 1, 2009 through April 30, 2010).[1]   In addition, this action will include a suspension of the rate surcharge of the Revenue Stabilization Reserve for the preference rate customers.  Similarly, the suspension of the production rate increase for industrial customers will extend their current rates through April 30, 2010.

 

                “Under federal and State statutes and court precedents governing preference power sales, the preference rate must be at the lowest possible rate but not lower than cost.  Furthermore, with the conclusion of the 2003 rate case and subsequent settlement, the methodologies used to determine cost-based rates are firmly established and were reflected in the proposed rates contained in the Rate Modification Plan proposed in January 2009.  The expected revenue increase resulting from the 2009 Rate Year increase was nearly $10 million.  Those revenues will be deferred and recovered over appropriate, subsequent year(s).  By deferring the collection of these revenues, the Authority will comply with the requirement that preference rates be established on the basis of costs.  Industrial rates, which are not cost based but contractually determined, are significantly greater than costs.  Accordingly, there will be no revenue deferral for the industrial customers.

 

                “A summary of the affected customers’ current rates and composite rates at typical load factors are shown below.

 

                                Demand Rate            Energy Rate     Composite Rate    Typical  

Customer               $/kW-month                $/MWh                  $/MWh                      Load Factor

                Preference             2.96                              4.92                          10.7                  70%        

RP/EP/GM              5.17                              8.84                          17.7                                  80%

Alcoa                      4.311                            8.519        14.5                                  98%       

Reynolds               4.383                            8.666        14.8                                  98%

 

“Staff recommends that the Trustees authorize the extension of these rates, and the withdrawal of monies from the Operating Fund to cover any shortfall, provided that such action does not conflict with any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.        

 

FISCAL INFORMATION

 

                “Extending the current rates for another rate year and foregoing the contractual rate increases would mean foregoing $5.3 million in revenues for the industrial customers and deferring $10 million in revenues for the preference customers.

 

RECOMMENDATION

 

                “The Manager – Market Analysis and Tariff Administration recommends that the Trustees approve the withdrawal of the Authority’s Notice of Proposed Rulemaking regarding hydroelectric preference power rates and permit the extension of such rates and of current industrial rates for the 2009 Rate Year, commencing May 1, 2009.

                “It is also recommended that the Corporate Secretary be authorized to publish a Notice of Withdrawal of the Notice of Proposed Rulemaking in the New York State Register.

 

                “It is also recommended that the Senior Vice President – Marketing and Economic Development, or his designee, be authorized to issue revised tariff leaves, as necessary, to the affected customers.

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Corporate Planning and Finance, the Senior Vice President – Marketing and Economic Development, the Vice President – Controller, the Director – Marketing Analysis and Administration and I concur in the recommendation.”

 

Trustee Cusack said that she wanted to speak on behalf of all of the Trustees.  She said that she and Trustee Curley knew that the rate increase was not something their community could tolerate and that she was glad to be voting on this item.  Trustee Curley said that his feelings were very similar to Trustee Cusack’s and that he felt the brunt of the rate increase would have been felt by Western New York.  He said that he was delighted to be able to vote on withdrawing this proposed rate increase. 

                President Kessel said that it had been very clear to him from the start that Western New York’s representatives on the Board of Trustees were very concerned about this increase. 

                Chairman Townsend said that he appreciated the positive manner in which Governor David Paterson had reached out to President Kessel and the Trustees to ask them to reconsider the rate increase.  President Kessel added that a number of legislators also approached this in a very positive way. 

                The following resolution, as recommended by the President and Chief Executive Officer, was unanimously adopted.

 

WHEREAS, on January 30, 2009, the Trustees authorized the Corporate Secretary to file a Notice of Proposed Rulemaking for publication in the New York State Register of the Authority’s intention to increase the hydroelectric Preference Power rates; and

 

WHEREAS, such notice was duly published in the New York State Register on February 11, 2009; and

 

WHEREAS, Authority staff has received and responded to numerous data requests, and conducted a public forum on March 19, 2009 in accordance with Authority rules, at which forum interested parties were heard; and

 

WHEREAS, Authority staff recommend that the proposed rate action be withdrawn;

 

NOW THEREFORE BE IT RESOLVED, That the current rates for the sale of power and energy to hydroelectric preference and industrial (RP/EP/GM/Alcoa/Reynolds) power customers are hereby extended effective May 1, 2009; and be it further

 

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to issue written notice as required by contract with respect to the modification in rates, including applicable tariff leaves; and be it further

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file a Notice of Withdrawal for publication in the New York State Register of the Authority’s Notice of Proposed Rulemaking indicating the Authority’s intention not to adopt new preference power rates for the period May 1, 2009 through April 30, 2010 and to submit such other notice as may be required by statute or regulation; and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

14.          Next Meeting

 

The next Regular Meeting of the Trustees will be held on Tuesday, May 19, 2009, at 11:00 a.m., at a location to be determined, unless otherwise designated by the Chairman with the concurrence of the Trustees.

President Kessel said that Alcoa had been informing the union leaders and employees at its plants of the planned curtailments and that the Authority had just issued its news release concerning the MOU with Alcoa. 

                Vice Chairman Foster asked staff to arrange for the Trustees to visit the Alcoa plant when they are in Massena for the May 19 Trustees Meeting, saying that the Trustees would be happy to come up to Massena the night before the meeting in order to do so.  President Kessel said that the management and staff at Alcoa would very much appreciate such a visit.

 

 

Closing

                On motion made and seconded, the meeting was adjourned by the Chairman at approximately

2:48 p.m.

 

 

 

Karen Delince

Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                

 

 

 

MARMINS.09


 

[1]   Under the State Administrative Procedure Act, written comments on the NOPR were to have been received by March 30, 2009, but in light of the instant withdrawal of the NOPR, the Authority has requested that customers wait to submit any such comments until after the Trustees consider this action.  The Authority reserves the right to provide a reasoned analysis of all such comments and to provide any necessary clarifications regarding the extension of current rates at a subsequent meeting of the Trustees.