MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

February 23, 2010

 

 

Table of Contents

 

                Subject                                                                                                                                               

 

1.             Consent Agenda:                                                                                                                          

a.       Minutes of the Regular Meeting held on January 26, 2010                                                    

 

b.       Power for Jobs Program – Extended Benefits, Exhibition - “1b“1b-B-1”; “1b-B-2”-A”;

Resolution                                                                                                                                      

c.        Allocation of 1,600 kW of Hydropower, Exhibit - “1c-A”; “1c-A-1”; “1c-A-2”

Resolution                                                                                                                                      

d.       Municipal and Rural Electric Cooperative Economic Development Program – Jamestown Board of  Public Utilities 

Resolution

e.        Lease of Office Space – Albany Office, 30 South Pearl Street – KeyCorp Tower, Exhibit - “1e-A”; “1e-B”   

Resolution

         Discussion Agenda:

2.             Q&A on Reports from:

a.       President and Chief Executive Officer                                                                 

b.       Chief Operating Officer                                                                                          

c.        Chief Financial Officer, Exhibit - “2c-A”
Resolution

3.                   Contract for Sale of Hydropower to Long Island Power Authority to Benefit Brookhaven National Laboratory –
Approval Following Public Hearing, Exhibit - “3-A”; “3-A-1”; “3-B”

Resolution

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

Procedures for the Acquisition of Real Property – Exhibition - “4-A”; “4-A-1”;  “4-B”; “4-B-1”

Resolution

5.                   Annual Review and Approval of the Authority’s Amended, Guidelines and Procedures for the Disposal of Personal, 

                Property and Guidelines for Procurement Contracts – Exhibit - “5-A”; “5-A-1” “5-B”; “5-B-1”

                Resolution

                                                                                                                                                   

6.                   Amendments  to the Authority’s Governance Committee and Audit Committee Charters, Exhibition - “6-A”; “6-A-1”; “6-B”; “6-B-1” 

                Resolution     

   

7.                   Adoption of Finance Committee Charter, Exhibit - “7-A”

Resolution

 

8.                   Committee Appointments                                                                                                      

Resolution

9.                   Motion to Conduct an Executive Session                                                                           

10.                Motion to Resume Meeting in Open Session                                                                      

11.                Procurement (Services) Contract – Law Department – Competitive Search – Award

Resolution

12.                Next Meeting                                                                                                                                                                 

Closing                                                                                                                                        

 


 

Minutes of the Regular Meeting of the Power Authority of the State of New York held via videoconference at the following locations:  501 7th Ave., New York, NY; 95 Perry St., Buffalo, NY and Harris Beach, LLP, 99 Garnsey Rd., Pittsford, NY.

Members of the Board present were at the follow locations:

                                Michael J. Townsend, Chairman –Pittsford, NY

                                Jonathan F. Foster, Vice Chairman – New York, NY

                                D. Patrick Curley, Trustee – Buffalo, NY

                                Elise M. Cusack, Trustee – Buffalo, NY

                                Eugene L. Nicandri, Trustee – New York, NY

                                 

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Richard M. Kessel                               President and Chief Executive Officer

Gil C. Quiniones                                   Chief Operating Officer

Terryl Brown                                        Executive Vice President and General Counsel

Elizabeth McCarthy                           Executive Vice President and Chief Financial Officer

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

Bert J. Cunningham                            Senior Vice President – Corporate Communications

Steve DeCarlo                                      Senior Vice President – Transmission – WPO

Angelo Esposito                                   Senior Vice President – Energy Services and Technology

Paul Finnegan                                      Senior Vice President – Public, Governmental and Regulatory Affairs

James F. Pasquale                               Senior Vice President – Marketing and Economic Development

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

Joan Tursi                                             Senior Vice President – Enterprise Shared Services

John L. Canale                                     Vice President – Project Management

Thomas Davis                                      Vice President – Energy Risk and Assessment – WPO

Thomas DeJesu                                   Vice President – Public and Governmental Affairs, SENY

Rocco Iannarelli                                  Vice President – Human Resources

John Kahabka                                     Vice President – Environment, Health and Safety – WPO

Lesly Pardo                                           Vice President – Internal Audits

Francis Ryan                                        Vice President – Emergency Management – WPO

Bradford Van Auken                          Vice President – Engineering

Dennis Eccleston                                 Chief Information Officer

Francine Evans                                    Chief of Staff – President’s Office

Sarah Barish Straus                            Special Assistant – Project Development, President's Office – WPO

Ronni Epstein                                       Counsel for Legislative and Regulatory Affairs

Karen Delince                                      Corporate Secretary

Thomas Concadoro                            Director – Accounting

Michael Huvane                                  Director – Business, Muni and Coop Marketing and Economic

                                                                     Development

Peter Ludewig                                       Director – Hydro Engineering

Mark O’Connor                                   Director – Real Estate

Michael Saltzman                               Director – Media Relations – WPO

Angela D. Graves                                 Deputy Corporate Secretary

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

 


 

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


 

1.                     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 the previous day.  President Richard Kessel said that in the interest of full disclosure he wanted to mention that he had dealt with a number of the Power for Jobs (“PFJ”) customers when he worked at the Long Island Power Authority (“LIPA”), but that he had no conflicts with respect to any of them.

 

 

a.       Approval of the Minutes

 

                                The Minutes of the Regular Meeting held on January 26, 2010 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 payments (rebates) for 39 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘1b-A.’  The rebates are calculated for historical periods only.  These customers have been recommended to receive such rebates by the Economic Development Power Allocation Board (‘EDPAB’).  In addition, the Trustees are requested to approve payment for PFJ Restitution to the three companies listed in Exhibit ‘1b-B-1.’  These companies have been evaluated for Restitution and are due a payment.  The Trustees have approved similar extended benefit payments at past Trustees’ meetings. 

 

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.  Chapter 217 of the Laws of 2009 included provisions extending the program benefits until May 15, 2010.

 

“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. 

 

                                “PFJ Restitution was created by Chapter 645 of the Laws of 2006 that extended the PFJ program for six months to June 2007; the law states: ‘for the period beginning January 1, 2006, for recipients who choose to elect a contract extension, and whose unit cost of electricity under the contract extension exceeds the unit cost of electricity of the electric corporation, the Power Authority shall reimburse the recipient for all dollars paid in excess of the unit cost of electricity of the electric corporation.’  Customers eligible to apply for restitution are those who chose to extend their PFJ electric service contract beyond January 1, 2007 but terminated their service on June 30, 2007, June 30, 2008 or on or after June 30, 2009.

 

DISCUSSION

 

“At its meeting on February 22, 2010, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 39 businesses listed in Exhibit ‘1b-A.’  Collectively, these organizations have agreed to retain more than 51,000 jobs in New York State in exchange for the rebates.  The rebate program will be in effect until May 15, 2010, the program’s sunset.

 

                 “The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘1b-A’ in a total amount currently not expected to exceed $4.5 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 Exhibit ‘1b-A’ in the future for other rebate months.

 

                    “Restitution is based on whether the net amount paid by the customer for PFJ service exceeded the ‘unit cost of electricity’ of the host utility over the measurement period for the same quantity of electricity.  Under current law, the measurement period begins January 1, 2006 and ends with the date that the eligible customer ceases to be in the PFJ electricity program.

 

                                “The host utilities, in conjunction with the Authority and the Public Service Commission, determine what the otherwise applicable full-service electric rates of the host utility would have been for service throughout the measurement period, calculate what the customer charges would have been under those rates, compare that total to the total actual charges paid by the customer for PFJ and determine whether the customer had net savings overall in the PFJ program or is due a Restitution payment.

 

                                “Staff has evaluated an additional five customers for Restitution.  Three customers are eligible for Restitution payment and are presented for approval on Exhibit ‘1b-B-1.’  Two customers listed in Exhibit ‘1b-B-2’ had overall PFJ program savings; therefore no payment is required.

 

FISCAL INFORMATION

 

“Funding of rebates for the companies listed in Exhibit ‘1b-A’ is not expected to exceed $4.5 million.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $206.7 million in rebates.

 

“Funding of restitution payments for the companies listed on Exhibit ‘1b-B-1’ is not expected to exceed $1 million.  Payments will be made from the Operating Fund.  This is the fourth payment request to date, which will bring the total approved for PFJ Restitution payments to $5.71 million. Additional requests will follow based on subsequent evaluation of other restitution eligible customers.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer, the Senior Vice President – Marketing and Economic Development and the Director of Marketing recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibit ‘1b-A’ and payment of PFJ Restitution for the customers listed in Exhibit ‘1b-B-1.’

 

“The Executive Vice President and General Counsel 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 “1b-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 “1b-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 $4.5 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 based on staff’s recommendation, it is hereby authorized that payments be made for PFJ Restitution payments as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $1 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 Senior Vice President – Corporate Planning and 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 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 1,600 kW of Hydropower  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

        “The Trustees are requested to approve an allocation of available Replacement Power (‘RP’) totaling 1,600 kW to two industrial companies.

 

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 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.

 

“Since 2003, the Authority, National Grid, Empire State Development Corporation, Niagara County, Erie County and the Buffalo Niagara Enterprise worked together in coordinating the marketing and allocating Authority hydropower.  The entities noted above 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. 

 

DISCUSSION

 

        “Staff recommends and the Advisory Group supports the available power being allocated to the two companies set forth in Exhibit ‘1c-A.’  The Exhibit shows, among other things, the amount of power requested the recommended allocation and additional employment and capital investment information.  These projects will help maintain and diversify the industrial base of Western New York and provide new employment opportunities.  They are projected to result in the creation of 62 jobs.

 

        “The Continental Carbonic Products, Inc project will result in the creation of 35 jobs.  The associated jobs-per-MW ratio of 44 is 25% higher than the average ratio for allocations since the formation of the Advisory Group.  The project will also require a capital investment of $5.95 million that will result in a capital investment-per-MW ratio of $7.44 million. The Sweeney Steel Service Corporation expansion project is projected to result in the creation of 27 jobs with a related jobs-per-MW ratio of 34.  This is more than 13% higher than the average ratio for allocations since the formation of the Advisory Group.  Additional information on each project is contained in the application summaries attached as Exhibits ‘1c-A-1’ and ‘1c-A-2.’ 

 

RECOMMENDATION

 

“The Manager of Business Power Allocations and Compliance recommends that the Trustees approve the allocation of 1,600 kW of hydropower to the companies listed in Exhibit ‘1c-A.’

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Director of Marketing 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 1,600 kW of Replacement Power, as detailed in Exhibit “1c-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.

 


 


 

 

APPLICATION SUMMARY

Replacement Power

 

Company:                                 Continental Carbonic Products, Inc. 

 

Location:                                   Medina

 

County:                                    Orleans County

 

IOU:                                          National Grid

 

Business Activity:                      Dry ice manufacturing

 

Project Description:                  The project involves building a 115-ton-per-day dry ice manufacturing facility.  The company would purchase land in Medina, construct a 25,000-sq.-ft. building, install manufacturing equipment and build necessary infrastructure to pipe liquid CO2 to the plant.  The project has an estimated 16-month timeline culminating in a total capital investment of $5.95 million with 35 new jobs.  Dry ice products would be sold to a wide variety of industries, including food processing, meat packaging, laboratory and research, blood/plasma services, etc. 

 

Existing Allocation:                  N/A

 

Power Request:                         1,000 kW

                                                            

Power Recommended:              800 kW

 

Job Commitment:     

               Existing:                      0 jobs

               New:                            35 jobs

                                                         

New Jobs/Power Ratio:            44 jobs/MW

 

New Jobs -

Avg. Wage and Benefits:          $49,500

 

Capital Investment:                  $5.95 million

 

Capital Investment/MW:          $7.44 million/MW

 

Summary:                                  Continental Carbonic Products is looking to site a dry ice manufacturing facility to service the Northeast.  The company is scouting several locations, including Pennsylvania.  Electricity cost is a significant percentage of production costs.  The decision to locate the project in Western New York depends on the company’s receiving a hydropower allocation.  The company is working with the Orleans County Economic Development Agency and others for additional support.


 

 

 

APPLICATION SUMMARY

Replacement Power

 

Company:                                 Sweeney Steel Service Corporation 

 

Location:                                   Buffalo

 

County:                                            Erie

 

IOU:                                          National Grid

 

Business Activity:                      Steel strapping

 

Project Description:                  The company plans to remodel its existing facility to accommodate installation of steel strapping production lines.  This will allow it to expand from one customer to a wider customer base, both domestically and internationally.  Steel strapping is used primarily in the packaging industry to secure and attach items to pallets, skids and crating.  The company would be installing a heat-treating line and 12 strand slitters.

 

Existing Allocation:                  N/A

              

Power Request:                         1,125 kW

                                                  

                                                  

Power Recommended:              800 kW

 

Job Commitment:     

               Existing:                      23 jobs

               New:                            27 jobs

                                                         

New Jobs/Power Ratio:            34 jobs/MW

 

New Jobs -

Avg. Wage and Benefits:          $38,000

 

Capital Investment:                  $1.3 million

 

Capital Investment/MW:          $1.63 million/MW

 

Summary:                                 Sweeney Steel is a metal service center specializing in flat-rolled products, primarily for the auto industry.  This allocation would allow the company to develop new strapping production lines to compete domestically and internationally for business in the highly competitive packaging industry.  Without this allocation, the company will not be able to develop this project to increase employment and current employment would also be at risk. 

              


 

d.                   Municipal and Rural Electric Cooperative Economic Development Program – Jamestown Board of Public Utilities

 

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve two allocations of hydropower under the Municipal and Rural Electric Cooperative Economic Development Program (‘Program’) to the Jamestown Board of Public Utilities (‘JBPU’).

 

BACKGROUND

 

“The 1991 amendment to the power sales agreement between the Authority and the Municipal and Rural Electric Cooperative Systems set aside a block of 54 MW from the 752 MW of hydropower allocated to the systems for economic development in the systems’ service territories.  The total allocation was increased to 764.8 MW as a result of additional power from the Niagara Power Project upgrade. 

 

“Power from this block can be allocated to individual systems to meet the increased electric load resulting from eligible new or expanding businesses in their service area.  Recommended allocations under the Program will now be made using guidelines that were approved by the Trustees on September 23, 2008.  Under the revised program, the first 100 kW allocated will be 100 % hydropower and any additional kW allocated will be 50% hydropower and 50% incremental power. 

 

“As of January 30, 2009, 21,185 kW have been allocated.  JBPU has submitted two applications for Economic Development power under the Program amounting to 5 MW of hydropower for consideration by the Trustees.

 

DISCUSSION

 

SKF Aeroengine North America

 

JBPU has submitted an application on behalf of SKF Aeroengine (‘SKF’), a unit of SKF Industrial Division.  SKF, which was founded in 1903 as Gurney Ball Bearing Company, continued to expand and in 1924 merged with Standard Steel and Bearings, a division of Marlin Rockwell Corporation.  A year later, the company grew again with the purchase of Strom Ball Bearings in Chicago and established its headquarters in Jamestown.

 

The aerospace business manufactures ball and roller bearings for helicopters, main-shafts and gear-boxes for jet engines and all types of aircraft power assemblies.  Today, it continues to be a leader in high-precision, custom-engineered ball and roller bearings for critical aeroengine and specialty applications.  In 2003, SKF concluded that the useful life of the Jamestown facility for bearing production had been exceeded and announced that the plant would be closed and the work transferred to the SKF plants in Falconer, New York and Charleston, South Carolina.  In February 2008, 30% of the bearing operations were transferred to Charleston and approximately 70% were transferred to Falconer.  The heat-treatment process in bearing manufacturing is viewed as most critical to SKF not only from the operational point of view but also from the financial, since the aerospace bearing market is very competitive.  The company is under constant pressure to reduce operating costs and increase productivity.  In order to meet competitive challenges, SKF’s management is interested in taking advantage of the low electricity cost of JBPU to run a low-cost manufacturing operation in Falconer.

 

The company’s investment associated with the new heat-treatment facility and equipment total approximately $18 million.  The project could also bring about 40 new hourly and salaried jobs in the near future to New York, but, more importantly, keep the 691 existing jobs currently working on three shifts in the Jamestown area for many years to come.  Furthermore, additional projects would probably follow, requiring the revamp of some office space into manufacturing space, purchase of new equipment and the construction of a new shipping and office building area, requiring an additional capital investment amounting to $23 million.  An additional 2 MW of monthly peak demand will be needed to support the project and comply with the Empire State Development Corporation (‘ESDC’) incentive proposal, in exchange for protecting 691 jobs and a commitment for 731 jobs in Jamestown.  The Trustees are requested to approve an allocation of 2 MW of hydropower to JBPU on behalf of SKF Aeroengine North America.  The requested allocation is the equivalent to 366 jobs per MW of hydropower. 

 

Plasticware LLC

 

JBPU has submitted an application on behalf of Plasticware LLC (‘Plasticware’).  The company commenced operations in August 2007 following its acquisition of the former Alcoa Reynolds Food Packaging facility in Mount Vernon, Kentucky.  The company is doing business as MVP Food Packaging at the Kentucky plant and is owned equally by Shefa Industries LLC, Shifra LLC and Adel LLC.

 

MVP Food Packaging is fully operational and supplying product to existing customers.  However, while the business is growing, the company cannot expand in Kentucky without a major facility expansion.  This has led the company to explore alternative locations that are also closer to the northeast market and Plasticware’s headquarters in Rockland County,New York.  The company has identified the former Sysco facility in Falconer as viable; that it is in a muni-electric district is key, due to projected energy costs.  Plasticware has financing in place to purchase the facility, construct an on-site silo for pellet storage, make certain renovations and infrastructure improvements and buy additional machinery and equipment.  However, Plasticware does not have the funds needed to relocate existing machinery and equipment and other items from Kentucky to New York State or to make certain production-related infrastructure improvements to itsr manufacturing process at this former food warehouse-distribution facility.

 

The total estimated investment associated with the relocation/expansion in New York is about $25 million, of which $18 million is for the purchase of machinery and equipment and $7 million is to create office space.  Without adequate assistance, the company is likely to remain in Kentucky and expand there.  Therefore, to make this project work in New York State the delta of start-up costs to financing, estimated at $4 million, will be aided by $2 million in grant assistance from ESDC and the New York State Office of Community Renewal, as well as Empire Zone benefits.  To make this project work in New York State, however, low-cost electricity is key.

 

“The company is estimating that monthly electric usage will peak at 16 MW.  Plasticware will be creating 250 full-time jobs, with an annual estimated payroll of $7.3 million.  The company qualified for 8.1 MW, but after allocating 2 MW to SKF, only 3 MW is available for Plasticware.  The Trustees are requested to approve an allocation of 3 MW of hydropower, or 83 jobs per MW, on behalf of Plasticware LLC to JBPU.

 

“With the approval of the two allocations, JBPU has reached 5 MW, the maximum total hydro allocation available to any one system under the Municipal and Cooperative Economic Development Program.

 

“In accordance with the Authority’s marketing arrangement with its municipal and cooperative customers, the hydropower will be added to JBPU’s contract demand at the time the project becomes operational and the additional jobs and load commitments are reached.  The hydropower earmarked for the Program is presently sold to the municipal and rural electric cooperative customers on a withdrawable basis. 

 

RECOMMENDATION

 

“The Director – Marketing Analysis and Administration recommends that the Trustees approve the allocation of power under the Municipal and Rural Electric Cooperative Economic Development Program to the Jamestown Board of Public Utilities in accordance with the above.

 

“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 power to the Jamestown Board of Public Utilities under the Municipal and Rural Electric Cooperative Economic Development Program is hereby approved as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized to execute any and all documents necessary or desirable to effectuate this allocation, 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, 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.                    Lease of Office Space – Albany Office, KeyCorp Tower, 30 South Pearl Street

                               

                                                 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize the execution of a Second Amendment of Lease with PS Associates (‘Landlord’) for office space on the 10th floor of the KeyCorp Tower (‘Building’), 30 South Pearl Street, Albany, New York.  The proposed second amendment of lease would increase the square footage from approximately 8,760 rsf currently to 12,620 rsf, adding an additional 3,860 rsf as shown on Exhibit ‘1e-A’ attached hereto, along with extending the term of the lease an additional year to terminate on February 28, 2015. The proposed second amendment of lease would hold the current base rent of $20.00 per square foot plus electricity and adjustments for taxes and operating expenses over a base year as discussed in Exhibit ‘1e-B’ attached hereto.

 

BACKGROUND

 

                “At their meeting of December 15, 1998, the Trustees approved the execution of a lease for approximately 16,035 rsf of office space at 30 South Pearl Street, Albany, New York as the new site for the Authority’s Albany office.  The term of that lease was for 10 years expiring on February 28, 2009, with the option to renew for one additional five-year term.  At their meeting of January 29, 2008, the Trustees approved the execution of an amendment of lease that reduced the square footage of the earlier approved lease to contain approximately 8,760 rsf.  The term was extended for five years from March 1, 2009 through February 28, 2014.

 

DISCUSSION

 

                “The earlier approved reduction of space recognized the diminished space needs of the Authority’s staff for the Albany office.  The reduction was also predicated on a request by the Office of General Services/Cyber Securities to occupy the remainder of the 10th floor at 30 South Pearl, Albany, New York.  Due to their changing needs, OGS/Cyber Securities is no longer interested in leasing the currently unoccupied portion of the 10th floor. Having recognized the need for a slight expansion in the Albany office, Authority staff contacted PS Associates, which is amenable to leasing an additional 3,860 rsf to the Authority on the terms set out in Exhibit ‘1e-B.’

 

FISCAL INFORMATION

 

“The Authority currently pays its lease obligations out of the operating fund.  By increasing the area of the premises to 12,620 rsf, the Authority’s base annual rent without electricity, taxes and operating expenses will be $252,400.

 

RECOMMENDATION

 

                “The Director – Real Estate and the Director – Corporate Support Services recommend that the Trustees approve entering into a second amendment of lease agreement with PS Associates for commercial office space in the KeyCorp Tower at 30 South Pearl Street, Albany, New York on terms substantially in accordance with the foregoing and with Exhibit ‘1e-B’ attached hereto.

 

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

 

               


 

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

 

RESOLVED, That the President and Chief Executive Officer or the Senior Vice President – Enterprise Shared Services be, and hereby is, authorized on behalf of the Authority to enter into a second amendment of lease for office space in the KeyCorp Tower with PS Associates on substantially the terms set forth in the foregoing report of the President and Chief Executive Officer and Exhibit ‘1e-B,’ subject to the approval of the second amendment of lease documents by the Executive Vice President and General Counsel or her designee; 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 form thereof by the Executive Vice President and General Counsel or her designee; 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 or her designee.

 

 


 

                                               

Basic Lease Terms                                                                                       

 

Landlord:                                                        PS Associates

 

Tenant:                                                            New York Power Authority

 

Premises:                                                         Approximately 8,760 rsf currently

+            3,860 rsf additional space

    12,620 rsf total

 

Term:                                                               Commencing upon the substantial completion date estimated to be March 1, 2010 and terminating on February 28, 2015.

 

Fixed Rent:                                                     Rent will be $252,400 annually or $20.00 per square foot.

 

Renewal Option:                                             One five-year option to renew with one year’s notice.

 

Electric:                                                           Actual electric usage based on sub-metering.

 

Operating Escalation:                                      Pro-rata share of increases in operating expenses over a base year of 1999.

 

Real Estate Tax Escalation:                            Pro-rata share of increases in real estate taxes over a base year of 1999 for City/County/BID and July 1, 1998 – June 30, 1999 for school.

 

Parking:                                                           Offsite parking.

 

Tenant Improvement:                                      Standard office build-out at Landlord’s cost.

 

Brokerage Commissions:                                Any brokerage commission associated with this second amendment will be paid by Landlord.

 

                                                                       

  


 

2.                   Discussion Agenda

 

a.       Report of the President and Chief Executive Officer

 

            President Richard Kessel welcomed the Trustees to the Authority’s New York City office.  He said that next month staff would recommend to the Trustees that the New York City office lease be extended for a year while a study is conducted to determine the economics and feasibility of relocating the New York City office to the existing office space at the recently closed Poletti plant in Queens.  He said that staff would report back to the Trustees in the fall as to their findings. 

                President Kessel said that last month’s presentation on the Energy Services and Technology program drew rave reviews and that staff is working on a number of press conferences around the State at some of the highlighted projects.  In New York City, those projects included work with the Police Department, the Port Authority and the Metropolitan Transportation Authority.  He said that the Marketing and Economic Development program would be highlighted in a presentation at the March Trustees’ Meeting. 

President Kessel said that a month ago Governor Paterson, the new Mayor of Syracuse and other elected officials participated with him in a press conference about the Authority’s 100 MW solar program. He said that a Request for Proposals (“RFP”) seeking public-private partnerships to install up to 100 MW of solar photovoltaic (“PV”) systems across the State had been issued on January 27 and that as of February 18 there had been 487 registrations on the RFP website and 130 registrations to attend the bidders’ conference on March 2 at the State University of New York at Purchase.  When fully implemented by the end of 2014, the initiative will reduce greenhouse emissions by an estimated 45,000 tons per year, quintuple the amount of solar energy currently produced in New York State, generate enough electricity to power approximately 15,000 homes and be the largest solar initiative in New York State history.  The proposal due date is April 22, preliminary selections will be made by July 16 and staff plans to recommend contract awards to the Trustees at their September 29 meeting.  The RFP is for proposals from developers to install, own and operate PV arrays and to sell all the energy and environmental attributes to the Authority subject to a 20-year power purchase agreement.  The Authority will then enter into contracts with the project hosts, such as the school where the PV array is located, for the distribution of green power.  Bid categories include government facilities; public and private K-12 schools; parking lot canopies at any governmental or educational facilities and systems tied into the Authority’s municipal utilities and rural electric cooperative distribution systems.  Bid regions include Western New York, Northern New York, Central New York, Southeastern New York and New York City.  President Kessel said that he would report back to the Trustees at their May meeting about the number and kinds of proposals received and that the Trustees would be actively involved in the process. 

                President Kessel mentioned the following upstate/downstate community outreach activities since the last Trustees’ Meeting:

Queens – Tour of 500 MW project and news conference on ceasing operations at the Poletti plant.  President Kessel said that the Authority’s employees at the Poletti plant were granted job security through the end of this year and the guarantee of a job somewhere at the Authority in 2011.  He said that he has mixed feelings about the Plant’s closing, since in doing so the Authority had lived up to its commitments, but had closed a robust operating plant that may be needed some day.  He doesn’t want to see the mistakes of the late 1990s and early 2000s repeated, especially since building a major facility is a six- or seven-year process at best. 

President Kessel said that he was returning to Western New York the following day to meet with a number of elected officials and that he was going to talk to Senator Maziarz today.  In addition, later this week he will be meeting with the Newsday editorial board and giving a speech along with Robert Catell.  Next week, he’ll be going to Watertown and the week after that back to Buffalo.  In March or April, he’ll be meeting with the Jefferson County Legislature about the Great Lakes Wind Project.  

                Chairman Townsend thanked President Kessel for his report, saying that it demonstrates how active he is as he continues to work on the Authority’s behalf.   

 

 

b.                   Report of the Chief Operating Officer

Mr. Gil Quiniones provided the following report:

Systemwide generation and transmission performance surpassed monthly target projections in January.  The strategic organizational realignment in the Power Authority’s Operations Business Organization continues; the Transmission Business Group will assume responsibility for all NYPA transmission infrastructure, including assets in southeast New York that were previously managed by Power Supply’s Engineering department. 

 

Power Supply

 

Plant Performance

 

In January, systemwide net generation1 was 2,243,554 megawatts (MWh),2 exceeding the projected net generation of 2,238,709 MWh.

The plants were available to produce electricity 93.6 percent of the time during January, while the generation market readiness factor3 was 99.9 percent, compared to a target of 99.4 percent.

While there were no significant unplanned generation events4 in January, a few unscheduled outages5 did occur.  The total lost opportunity cost of all unscheduled outages in January was $0.04 million, compared with generation revenue of $27.5 million.

River flows for the month at the Niagara project were at historical averages and slightly above normal against long- and short-term forecasts.  At St. Lawrence-FDR, flows were consistent with forecast and slightly above historical average. 

Transmission Performance

 

                The transmission reliability6 for January was 93.4 percent, exceeding the target of 93.01 percent. 

               

The two significant unplanned transmission events7 from December continued into January, totaling 771 hours.  The forced outage caused by a cable fault on the 345-kv Long Island Sound Cable8 continues this month but the line is expected to return to service in February.  Parts of the damaged equipment will be sent to Detroit Edison for testing to determine the as-yet unknown cause of the outage.  A forced outage occurred at the Marcy Capacitor Bank#19 due to 12 blown fuses10, all of which will be replaced to restore the unit to operation.  The cause of the outage is still unknown but event data will be evaluated.


 

Life Extension and Modernization Programs

 

                Work on the 13th of the 16 units at the St. Lawrence-FDR project was started on schedule as part of the project’s Life Extension and Modernization11 (LEM) program on December 19, 2009.  The unit is scheduled to return to service in late July following its refurbishment.  The overall LEM project is scheduled for completion in 2013.

                Work on the fourth and final unit at Blenheim-Gilboa remains on course for completion in June 2010.  Refurbishment of the third unit was completed in May.

                Planning for a LEM program at the Niagara project’s Lewiston Pump-Generating Plant continued in January.  A presentation will be made to senior management in the first quarter of this year.

Transmission Initiatives

We continue to meet with staff members from National Grid, Con Edison, and the Long Island Power Authority (LIPA), regarding a proposed transmission line that would deliver power from Canada and upstate renewable energy projects to New York City.  As previously reported, a combined system planning study by NYPA and National Grid has identified three options for the new transmission line, with the potential for an additional 1,500 megawatts in transfer capability.  More-detailed system planning studies with Con Edison and LIPA will be conducted after the project economics have been investigated further.

On January 27, Con Edison, LIPA, National Grid, and NYPA held a conference call to discuss the NYPA-National Grid proposed scope for additional economic studies.  Con Edison and LIPA submitted written comments, which were subsequently integrated into the scope and on February 8, Con Edison and LIPA gave final approval of the scope.  This final scope was sent to the consultants in a request for proposals to perform the economic studies and to estimate the studies’ cost.

Additionally, NYPA held a multi-disciplinary internal meeting with our consultants at Navigant on February 2, to explore commercial arrangements to present to Con Edison and LIPA.  Follow-up meetings of this group to craft several commercial scenarios will be necessary.

Finally, NYPA and National Grid are close to completing a non-disclosure agreement with Hydro-Quebec Trans Energie (HQTE), which operates the Quebec transmission system and markets system capacity.  A conference call among the parties was held on February 8, to resolve the issue of the duration of the agreement and confidentiality obligations.  The agreement will assist in carrying out further studies with HQTE.

Organizational Realignment

                The assessment of potential operational interfaces between the Power Generation and Transmission groups is continuing, with completion anticipated in the first quarter of this year.  The Transmission Business Group will assume responsibility for all NYPA transmission infrastructure, including infrastructure in southeast New York.  Previously, Power Supply’s Engineering department managed some of the southeast New York infrastructure.  The new organization will better align transmission responsibilities in one area.

We are also reviewing potential organizational synergies between the Energy Control Center, Energy Resource Management (ERM) and Power Generation operations.

Environmental

                There was one recordable environmental incident in January, a release of approximately two gallons of 50 percent ethylene glycol12 in the Flexible Alternating Current Transmission Systems (FACTS)13 building at the Clark Energy Center.  The 2010 target for recordable environmental incidents is 25.

 

Energy Resource Management

In January, ERM bid more than 2,094,280 MWh of NYPA generation into the New York Independent System Operator (NYISO)14 markets, netting $57.7 million in power supplier payments to the Authority. 

The average differential for January in Zone A15 day-ahead prices was $9 per MWh, compared with a five year average of $16 per MWh.

In January NYPA’s Fuels Group transacted $35 million in natural gas and oil purchases, compared with $41 million in January 2009.

The intakes at Niagara experienced a significant ice blockage from January 27 through February 1.  ERM reduced energy delivery on the 27th to ensure Niagara could meet its NYISO commitments on the 28th when loads were much higher. The remaining days were scheduled at reduced levels consistent with the amount of available water.

At Poletti, ERM effectively managed the remaining usable oil in inventory beginning December 18 with the expectation of depletion by mid-January.  The last oil burn was January 18, where the inventory oil value was $5.1 million. Gas prices on average were lower than inventory oil, but ERM recovered oil at cost or better.


 

Office of the Chief Operating Officer

ClimAID

                The New York State Energy Research & Development Authority is coordinating with researchers at several major universities in an effort to provide New York State with cutting-edge information on its vulnerability to climate change and to facilitate climate change adaptation strategies.  The final ClimAID report, scheduled to be completed this spring, covers several sectors of New York State’s infrastructure and economy, including a chapter on impacts and adaption strategies in the Energy sector. 

NYPA has been providing feedback and input on the Energy chapter, in particular on the impact that climate change may have at our hydropower facilities. 

 

               

 

GLOSSARY

 

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

 

Megawatt hour (MWh) – The amount of electricity needed to light ten thousand l00-watt light bulbs for one hour.  A megawatt is equal to 1,000 kilowatts and can power about 800 homes, based on national averages.

 

Generation Market Readiness – The availability of generating facilities for bidding into the NYISO market.  It factors in available hours and forced outage hours which drive the results.

 

Significant Unplanned Generation Events – Forced or emergency outages of individual generator units of duration greater than 72 hours, or with a total repair cost of greater than $75,000, or resulting in greater than $50,000 of lost revenues.

 

Outage – The removal of a power plant or transmission line from service.  Outages may be scheduled for purposes such as anticipated maintenance, or forced by unexpected events.  A significant forced or emergency outage of an individual generating unit is an event of more than 72 hours in duration, entailing a repair cost of more than $75,000 or resulting in more than $50,000 of lost revenues.  A significant forced or emergency outage of an individual transmission line is an event that directly affects the reliability of the state’s transmission network, or the availability of any component of the network, for more than eight hours or has a repair cost of more than $75,000.

 

Transmission reliability – A measurement of the impact of forced and scheduled outages on the statewide system’s ability to transmit power.

 

7  Significant Unplanned Transmission Events –Forced or emergency outages of individual transmission lines which directly affect the reliability of the state’s transmission network, or affect the availability of any component of the state’s transmission network for greater than 8 hours, or that have a repair cost greater than $75,000.

 

8   Long Island Sound Cable – The Sound Cable Project, designated as Feeder Y49, is a 345 kV AC transmission circuit connecting the Consolidated Edison Company of New York, Inc. Sprain Brook Substation in Westchester County with the LIPA East Garden City Substation in Nassau County.  The project is approximately 26.3 mile long, including 18.4 miles of underground high pressure fluid filled pipe-type cable and 7.9 miles of underwater self-contained fluid filled cable submarine crossing in the Long Island Sound.

 

9  Capacitor Bank – A collection of individual capacitor units, which can store an electrical charge and are used to support system voltage.

 

10  Blown fuse – A fuse is a component of an electrical circuit that protects against excessive current.  Fuses include a metal wire or strip, and when the fuse “blows”, that metal melts under excessive current, interrupting the circuit and preventing further damage from overheating or potential fire.

 

11  Life Extension and Modernization programs—Major undertakings in which all the turbines at the St. Lawrence-Franklin D. Roosevelt and Blenheim-Gilboa projects are being replaced and the generators and other components significantly refurbished.  The programs are intended to ensure that the projects operate at maximum efficiency far into the future.

 

12  Ethylene Glycol – This compound is used to cool transformers.

 

13   Flexible Alternating Current Transmission Systems (FACTS) – A sophisticated device for controlling voltage and power flows on transmission lines to increase the capability of an existing transmission system.  In a pioneering effort, NYPA completed installation of the $54 million convertible static compensator in 2004 at the Clark Energy Center’s Marcy Substation as the most advanced of a series of technologies known as FACTS, for Flexible Alternating Current Transmission Systems.  The project, which also included the addition of conventional equipment at other substations, boosted the capability of the New York State system by nearly 200 megawatts without the need to build new lines.  NYPA’s convertible static compensator was the first transmission control device in the world to permit the instantaneous transfer of power between two lines in the same substation.

 

14  New York Independent System Operator (NYISO) – A not-for-profit organization that operates New York State’s transmission system, administers the state’s wholesale electricity markets and engages in planning and forecasting to ensure the future reliability of the statewide power system.

 

15   Zone A – The West zone of the NYISO market that covers Western New York, including Niagara, Erie, Chautauqua, Cattaraugus, Orleans, and Genesee counties, and parts of Wyoming  Monroe, Livingston, Ontario, and Allegany counties.

 

In response to a question from Chairman Townsend, Mr. Gil Quiniones said that the Authority is currently working with National Grid, Con Edison and LIPA to determine the feasibility of bringing Canadian hydropower, as well as wind power, to the SENY region.  The technical feasibility study is complete and the economic analysis is in progress, with preliminary results expected in April, after which the next steps will be mapped out.

 

 

c.                    Report of the Chief Financial Officer

                Ms. Elizabeth McCarthy provided the financial report to the Board.

In response to a question from Chairman Townsend, Ms. Elizabeth McCarthy said that $25 million of the $42 million downward adjustment in net revenues for the end of 2009 was primarily due to the Authority’s having less power to sell than was projected.  This, in turn, was caused by lower-than-expected lake levels resulting from lower-than-normal precipitation levels.  Approximately $15 million of the $42 million was the result of lower current prices for power and energy than at the beginning of 2009.  She said that Authority staff does not see any issues with the Authority’s PFJ commitments, but that they would take a look at these again in March with updated data.  Mr. Donald Russak said that the last of the four payments to New York State would be coming up in March as well.  Responding to a question from Vice Chairman Jonathan Foster, Mr. Russak said that Philadelphia and Washington had seen more snow this winter than had New York State, but that weather patterns for the rest of the year are expected to be normal, although slightly below the long-term average.  He said that while this would result in the Authority’s net revenues being a little bit below budget, the Authority would still be on target to meet is financial obligations.  Responding to another question from Vice Chairman Foster, Ms. McCarthy said that the Authority’s Enterprise Risk program was in start-up mode.  She said that the new Enterprise Risk group was working with Compliance and Internal Audit to develop a system for monitoring and tracking risk mitigation measures. 


 

3.                     Contract for Sale of Hydropower to Long Island Power Authority to Benefit Brookhaven National Laboratory – Approval Following Public Hearing

 

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize the proposed contract with the Long Island Power Authority (‘LIPA’) for the sale of 15 MW of New York Power Authority (‘NYPA’) hydropower to LIPA to be resold exclusively to the U. S. Department of Energy as owner of Brookhaven National Laboratory (‘BNL’ or ‘Brookhaven’ or ‘the Lab’).  The form of the contract with LIPA, as well as the accompanying proposed Service Tariff No. 2B, is attached as Exhibit ‘3-A.’  This request follows the public hearing and comment period authorized by the Trustees at their December 15, 2009 meeting.  The public hearing was held on January 19, 2010.

 

BACKGROUND

 

“BNL has been receiving power from NYPA since 1982.  The current contract provides for the sale of up to 77 MW of power and associated energy.  According to BNL, the power provided by NYPA has saved the Lab more than $247 million over the course of the contract, which has allowed new cutting-edge research projects to be developed.  Such projects include the National Synchrotron Light Source, a world-class particle accelerator instrumental to developments in the nanotechnology and medical research fields, plus two other particle accelerators involved in high-energy physics research and space exploration studies, the Relativistic Heavy Ion Collider and the Alternate Gradient Synchrotron, respectively.

 

“BNL, a major employer on Long Island, provides jobs for more than 3,000 employees and has an annual budget of $500 million.  The facility attracts scientists from all over the world, including many from New York research institutions and high-technology corporations.  The Lab is an important component of New York State’s economy and is key to future technology growth and high-technology infrastructure in New York.

 

“Based on NYPA’s commitment of 15 MW of hydropower, BNL has begun construction of a new cutting-edge synchrotron light source to be known as the National Synchrotron Light Source II (‘NSLS-II’).  The design and engineering for NSLS-II is currently proceeding.  NSLS-II is slated to be operational by 2015 and to be staffed by several hundred new Brookhaven employees.  As was previously explained to the Trustees, the research produced at Brookhaven will continue to provide substantial benefits to industries within New York State that rely on high technology.

 

“The 15 MW of power and energy under this contract comprises 14 MW of unallocated St. Lawrence/FDR Project power recaptured by NYPA in 2003 from the block sold to the Neighboring States as part of the St. Lawrence/FDR hydroelectric relicensing proceeding, and 1 MW of unallocated Niagara Project power.  None of the megawatts allocated to BNL would harm any other NYPA customer or upstate consumers.  The allocation is approved for a 15-year term.

 

“In order to effectuate Brookhaven’s receipt of hydropower, the allocation will be made via a sale to LIPA for Brookhaven’s exclusive use.  LIPA is a political subdivision of the State authorized to resell such power.  This arrangement requires the Trustees’ approval to initiate the formal contract approval process as set forth in Section 1009 of the Public Authorities Law.

 

DISCUSSION

 

“At their meeting of January 27, 2009, the Trustees approved commencement of negotiation of a contract with LIPA to allocate 15 MW of NYPA hydropower for BNL’s exclusive use.

 

“The proposed contract for the sale of 15 MW of NYPA hydropower to LIPA exclusively for resale to BNL, including proposed Service Tariff No. 2B, has been drafted as a result of extensive negotiations with LIPA.  The 15 MW allocation would be blended with market resources to meet BNL’s requirements up to 77 MW.  In order for BNL to receive the greatest benefit from the 15 MW allocation, NYPA will partially assign and transfer its power sales obligations under the current BNL contract to LIPA.  NYPA will function as the Load Serving Entity (‘LSE’) for the entire BNL retail load.  As LSE, NYPA is responsible for all New York Independent System Operator (‘NYISO’) charges arising under the NYPA/LIPA agreement.  However, NYPA will recover all NYISO charges incurred related to sales under the NYPA/LIPA agreement directly from BNL under a separate NYPA/BNL agreement.

 

“Due to BNL’s internal policy limiting energy purchase contracts to terms of no more than 10 years, the proposed contract is for 10 years with an option for NYPA to extend the Agreement for an additional five years provided NYPA and LIPA receive prior authorization from BNL.  LIPA will make the necessary arrangements to resell this hydropower allocation to the Lab in accordance with the NYPA/LIPA contract.  In the event that BNL ceases to take the hydro allocation, the sale-for-resale agreement would terminate.  In addition, should NYPA attain the ability to sell hydropower directly to BNL, the sale-for-resale agreement would terminate, to be substituted by a direct sale contract.  The NYPA/LIPA contract is subject to a public hearing and approval by the Governor, as set forth in Section 1009 of the Public Authorities Law.  The NYPA/LIPA contract is also subject to approval by the State Comptroller pursuant to LIPA’s authorizing statute.

 

“A public hearing was held in accordance with Section 1009 of the Public Authorities Law on January 19, 2010, at the Brookhaven Town Hall from 2-4 p.m. and 7-9 p.m.  Following review of the comments on the public record, which is attached as Exhibit ‘3-B,’ it has been determined that no additional items require addressing.

 

RECOMMENDATION

 

                “The Director – Market Analysis and Administration recommends that the Trustees approve the terms of the proposed contract with the Long Island Power Authority.  It is further recommended that, pursuant to Section 1009 of the Public Authorities Law, the Corporate Secretary be authorized to transmit copies of the contract to the Governor for approval.

 

“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.”

 

Ms. Karen Delince explained that at their December 2009 meeting, the Trustees had approved the public hearing that was held on January 19.  Today, the Trustees were being asked to reconsider the proposed contract in light of the record of the public hearing.  Mr. James Pasquale presented the highlights of staff’s recommendations to the Trustees.  President Kessel said that this allocation of low-cost hydropower was critically important to Brookhaven National Laboratory (“BNL”) and was one of the reasons that the U. S. Department of Energy had awarded the Synchrotron II project to BNL.  He said that after the record of the public hearing was closed, he had received a letter from Senators Maziarz and Griffo, who would have liked public hearings on this matter to have been held in Niagara and St. Lawrence counties.  He said that in the future, the Authority would consider holding such public hearings in the areas where the hydropower is produced.  In response to a question from Vice Chairman Foster, Mr. Pasquale said that BNL would be paying about 7 cents per kilowatt-hour for the electricity, compared to approximately 17 cents per kilowatt-hour it would have paid LIPA.  He said that this is the standard Authority rate for hydropower, including the cost of transmitting the power from Niagara and St. Lawrence to Long Island.  Chairman Townsend said that he was glad that future hearings for such hydropower allocations would be held near the St. Lawrence and Niagara plants.  He also said that this type of project is the kind that the Authority should be doing.  In response to a question from Trustee D. Patrick Curley, Mr. Pasquale said that BNL’s load factor is more than 80%.  Trustee Eugene Nicandri said that it was his understanding that the 15 MW for this contract is coming from hydropower that was withdrawn from out-of-state entities and that he was pleased to see the hydropower being reallocated within New York State. 

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

 

RESOLVED, That the Trustees hereby authorize for transmittal to the Governor the proposed contract for the sale of hydropower and energy generated by the New York Power Authority to the Long Island Power Authority for exclusive resale to Brookhaven National Laboratory; and be it further

 

RESOLVED, That the Corporate Secretary be, and hereby is, authorized to transmit copies of the proposed contract to the Governor, the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Committee on Ways and Means, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee, pursuant to Section 1009 of the Public Authorities Law; and be it further

 

RESOLVED, That the President and Chief Executive Officer or his designee be, and hereby is, authorized, subject to the approval of the form therof by the Chief Operating Officer and the Executive Vice President and General Counsel, to enter into such other agreements and to do such other things as may be necessary or desirable to implement the contract with the Long Island Power Authority as 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.

 

 

 

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

                Procedures for the Acquisition  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’), as amended by Chapter 506 of the Laws of 2009, effective as of March 1, 2010:  (1) Guidelines and Procedures for the Disposal of New York Power Authority 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 by the New York Power Authority (‘Real Property Acquisition Guidelines’).  The Guidelines are set forth in Exhibits ‘4-A’ and ‘4-B’ 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.  This statute was subsequently amended by Chapter 506 of the Laws of 2009 signed into law by Governor Paterson on December 11, 2009.   Among its provisions, the PAAA, as subsequently amended, 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.  Additionally, at their meeting of March 31, 2009, the Trustees reviewed and approved the Real Property Disposal Guidelines and the Procedure for Acquisition of Real Property with no substantive changes.

 

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 ‘4-A.’  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.

 

“Chapter 506 of the Laws of 2009 made substantial amendments to the Public Authorities Law (‘PAL’), including changes to certain procedures governing the disposal of Real Property.  In order to make the Real Property Disposal Guidelines compliant with the law, staff recommends the following changes, which are more fully set forth in the attached redlined version of Exhibit ‘4-A.’  The more significant of the statutory changes are highlighted below:

 

 

 

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 ‘4-B.’  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.

 

“Chapter 506 of the Laws of 2009 made substantial amendments to the Public Authorities Law (‘PAL’), including changes to certain procedures governing the acquisition of Real Property.  In order to make the Real Property Acquisition Guidelines compliant with the law, staff recommends the following changes, which are more fully set forth in the attached redlined version of Exhibit ‘4-B.’  The more significant of the statutory changes are highlighted below:

 

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 New York Power Authority Real Property, the amended Guidelines and Procedures for the Acquisition of Real Property by the New York Power Authority 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.”

            Ms. Karen Delince said that the amendments to the real property disposal and acquisition guidelines were made pursuant to Chapter 506 of the Laws of 2009.  Mr. Mark O’Connor presented the highlights of staff’s recommendations to the Trustees.  He said that the Authority has very little surplus real property.

                The following resolution, as submitted 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 “4-A” and “4-B” 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 Counsel.

 

  
 

5.                   Annual Review and Approval of the Authority’s Amended Guidelines and Procedures for the Disposal of Personal

                Property and Guidelines for Procurement Contracts  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to review and approve the following two Guidelines, which comply with the requirements of the Public Authorities Accountability Act (‘PAAA’) of 2005 and Section 2879 of the Public Authorities Law, respectively, and which are now amended to comply with Chapter 506 of the Laws of 2009, effective as of March 1, 2010:  (1) Guidelines and Procedures for the Disposal of Personal Property (hereinafter ‘Personal Property Guidelines’) and (2) Guidelines for Procurement Contracts (hereinafter ‘Procurement Guidelines’).  Such Guidelines are set forth in Exhibits ‘5-A’ and ‘5-B,’ respectively, as attached hereto.

 

BACKGROUND

 

“On January 13, 2006, Governor Pataki signed the PAAA into law.  The subject law codified the Model Governance Principles established for public authorities in 2004 by the Governor’s Advisory Committee on Authority Governance, which was chaired by Ira Millstein.  Among its provisions, the PAAA established new rules for the disposal of personal property owned by public authorities.  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, price received and name of the purchaser for all such property disposed of by the Authority during such period. (Such Report will be presented to the Trustees at the March 23, 2010 meeting.)

 

In order to comply with the PAAA, staff drafted the Personal Property Guidelines set forth in Exhibit ‘5-A,’ which were adopted by the Authority’s Trustees at their meeting of March 28, 2006 and have been amended as necessary and reviewed and approved annually since that date.  The current Personal Property Guidelines were approved by the Trustees at their meeting of March 31, 2009.

 

“The Personal Property Guidelines set forth the methodology detailing the Authority’s policy and procedures 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.

 

“Section 2879 of the PAL governs the administration and award of procurement contracts equal to or greater than $5,000.  In compliance with the applicable provisions of Section 2879 of the PAL, as amended, the Authority established comprehensive guidelines detailing its operative policy and instructions concerning the use, awarding, monitoring and reporting of procurement contracts.

 

“The Authority’s Procurement Guidelines were adopted by the Trustees at their meeting of October 31, 1989 and were implemented as of January 1, 1990.  The Procurement Guidelines have been reviewed and amended annually as deemed advisable and necessary since that date. The current Procurement Guidelines were approved by the Trustees at their meeting of March 31, 2009.

 

“The Procurement Guidelines 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 / Woman-Owned Business Enterprise (‘M/WBE’) requirements, employment of former officers and reporting requirements.

 


 

DISCUSSION

 

Personal Property Guidelines

 

“Chapter 506 of the Laws of 2009 made substantial amendments to the Public Authorities Law (‘PAL’), including changes to certain procedures governing the disposal of Personal Property.  In order to make the Personal Property Guidelines compliant with the law, staff recommends the following changes, which are more fully set forth in the attached redlined version of Exhibit ‘5-A.’  The more significant of the statutory changes are highlighted below:

 

 

 

 

 

Procurement Guidelines

 

“Chapter 506 of the Laws of 2009 made substantial amendments to the Public Authorities Law (‘PAL’) with several changes governing procurement contracts.  In order to make the Procurement Guidelines compliant with the law, staff recommends the following changes, which are more fully set forth in the attached redlined version of Exhibit ‘5-B.’  The more significant of the statutory changes are highlighted below:

 

 

 

 

Additionally, the more significant changes not related to Chapter 506 are highlighted below:

 

 

 

 

“Both Guidelines will become effective as of March 1, 2010 and will be posted on the Authority’s website.  On or before the 31st day of March, the Personal Property Guidelines, as approved by the Trustees, will be filed with the State Comptroller, the Director of the Budget, the Commissioner of General Services, the State Legislature and the Authorities Budget Office;  the Procurement Guidelines will be filed with the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee, the Assembly Ways and Means Committee and the Authorities Budget Office, with the respective 2009 Annual Reports.

 

FISCAL INFORMATION

 

“There will be no financial impact on the Authority.

 

RECOMMENDATION

 

“The Vice President – Procurement and the Facilities Materials Superintendent recommend that the Trustees approve the revisions to the Guidelines and Procedures for the Disposal of Personal Property and the Guidelines for Procurement Contracts, as set forth in Exhibits ‘5-A’ and ‘5-B,’ respectively.

 

“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 – Internal Audit and I concur in the recommendation.”

 

                Ms. Delince said that the amendments to the personal property disposal and procurement guidelines were made pursuant to Chapter 506 of the Laws of 2009.  Ms. Patricia Leto presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Townsend, Ms. Terryl Brown said that Authority staff are in discussions with the Office of the State Comptroller (“OSC”) about which Authority contracts may be subject to OSC review.  President Kessel said that the reporting requirements have been extended to the end of this month and that he had asked Ms. Brown and Mr. Vincent Esposito to work cooperatively with OSC and then report back to the Trustees.  Trustee Nicandri said that the guidelines had been presented to the Governance Committee at their meeting earlier in the morning. 

The following resolution, as submitted 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 and the Guidelines for Procurement Contracts, as amended and set forth in Exhibits “5-A” and “5-B,” respectively, and attached hereto, in order to comply with Chapter 506 of the Laws of 2009; 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.

 


 

6.                   Amendments to the Authority’s Governance Committee and Audit Committee Charters  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMRY

 

“The Trustees are requested to approve amended Charters for both the Governance Committee and the Audit Committee set forth in Exhibits ‘6-A’ and ‘6-B’ of this item.  The most significant amendments are discussed below.

 

BACKGROUND

 

“Recent amendments to the Public Authorities Law made by Chapter 506 of the Laws of 2009 (‘Chapter 506’), which prompted the January 2010 changes to the Authority By-Laws, also require changes to the Audit Committee and Governance Committee Charters. The Charters, which were in the process of being reviewed by the Authority and a consultant, were, therefore, reconsidered in light of the requirements of Chapter 506.  The revisions reflect: (1) the requirements of Chapter 506; and (2) certain changes recommended by the Authority’s consultant that were approved by the Authority’s senior management.  The proposed amended Audit Committee Charter is attached as Exhibit ‘6-A,’ and the proposed amended Governance Committee Charter is attached as Exhibit ‘6-B.’

 

DISCUSSION

 

Audit Committee Charter

 

“Article V(2) of the Authority’s By-Laws as amended on January 26, 2010 requires an Audit Committee that consists of three eligible Trustees who are independent members, who possess the necessary skills to understand the duties and functions of the Audit Committee, and who are familiar with corporate financial and accounting practices.  It specifies that the Audit Committee is responsible for: recommending to the Trustees the hiring of a certified independent accounting firm for the Authority; establishing the compensation to be paid to the accounting firm; providing direct oversight of the performance of the independent audit performed by the accounting firm hired for such purposes; and performing such other responsibilities as the Trustees shall from time to time assign to it.

 

“Accordingly, amendments to the Audit Committee Charter would implement the following changes:

 

·         Reference to the Inspector General has been eliminated.

 

·         Committee membership is determined by the Board of Trustees.

 

·         Committee member terms have been changed from 4 to 5 years to coincide with the Trustee term of office.

 

·         A Committee member must be familiar with corporate financial and accounting practices and understand the duties and function of the Audit Committee.

 

·         In addition to advising the Trustees on the selection of the certified independent accountant, the Committee must now establish the compensation to be paid to the accounting firm.

 

·         The Committee is charged with direct oversight of the performance of the independent audit firm.

 

·         Language regarding risk management has been added.

 

 

 

Governance Committee Charter

 

“Article V(3) of the Authority’s By-Laws as amended on January 26, 2010 requires the Governance Committee to consist of three eligible Trustees who are independent members and who possess the necessary skills to understand the duties and functions of the Governance Committee.  It charges the Committee with the responsibility of the keeping the Trustees informed of current best governance practices; reviewing corporate governance trends; recommending updates to the Authority's corporate governance principles; advising appointing authorities on the skills and experiences required of potential Trustees; examining ethical and conflict of interest issues; performing Trustee self-evaluations; recommending by-laws which include rules and procedures for conduct of Trustee business; and performing such other responsibilities as the Trustees shall from time to time assign to it.

 

“Accordingly, amendments to the Governance Committee Charter would implement the following changes:

 

 

 

 

·         The Committee must review the Code of Conduct at least annually.  (The interval for this responsibility was previously unspecified.)

 

·         Committee members are required to possess the necessary skills to understand the duties of and functions of the Committee.

 

·         The Committee must examine ethical and conflict of interest issues.

 

·         The Committee must perform board self-evaluations.

 

·         The Committee may recommend by-laws which include rules and procedures for conduct of board business.

 

·         The Committee is now responsible for the review and approval of non-statutory officers hiring.

 

FISCAL IMPLICATIONS

 

                “None.

 

RECOMMENDATION

 

                “The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and I recommend that the Trustees approve the proposed amendments to the Governance Committee Charter and the Audit Committee Charter.”

 

Ms. Delince said that the Audit and Governance Committee charters were amended pursuant to Chapter 506 of the Laws of 2009.  Ms. Brown presented the highlights of staff’s recommendations to the Trustees.  She said that the Governance and Audit Committees had reviewed and approved the amendments to their charters.

 

 

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

 

RESOLVED, That the attached Audit Committee Charter and Governance Committee Charter be adopted in the form proposed in Exhibits “6-A” and “6-B.”

 


 

7.                   Adoption of Finance Committee Charter

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to review and adopt the Finance Committee Charter (Exhibit ‘7-A’). 

 

BACKGROUND

 

“Recent amendments to the Public Authorities Law made by Chapter 506 of the Laws of 2009 (‘Chapter 506’), which prompted the January 2010 changes to the NYPA By-Laws, also require also require public authorities to establish a Finance Committee to review proposals for the issuance of debt. The By-Laws (Article V, Section 2), as amended, provide that the Finance Committee shall consist of three eligible Trustees who shall be independent members; that members of the Finance Committee must possess the necessary skills to understand the duties and functions of the Committee; and the Finance Committee must review proposals for the issuance of debt by the Authority and perform such other responsibilities as the Trustees shall from time to time assign to it.

 

DISCUSSION

 

                “Consistent with the form of NYPA’s other committee charters, the proposed Finance Committee Charter sets forth the purpose, composition, term, removal, meeting, quorum, and functions and powers of the Committee.  Specifically, the proposed Charter provides:

 

·         Committee composition: three independent members of the Board with necessary skills.

 

·         Term: five years.

 

·         Removal: for cause subject to Public Authorities Law § 2827.

 

·         Meetings: at least once per year.

 

·         Quorum: two members.

 

·         Functions and Powers: provide guidance to Trustees and management on capital structure, debt issuance, interest rate risk management and such other matters as the Board shall assign, and make recommendations regarding proposals for the issuance of debt.

 

FISCAL IMPLICATIONS

 

                “None.

 

RECOMMENDATION

 

                “The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer and I recommend that the Trustees approve the new Finance Committee Charter.”

               

                Ms. Delince said that the Finance Committee charter had been drafted pursuant to Chapter 506 of the Laws of 2009.  Ms. Brown presented the highlights of staff’s recommendations to the Trustees.

            

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

 

RESOLVED, That the attached Finance Committee Charter be adopted in the form proposed.

 

 

 

8.                   Committee Appointments 

 

The Chairman submitted the following report:

 

SUMMARY

“In accordance with Article V the By-Laws of the Power Authority of the State of New York, as amended January 26, 2010 (‘By-Laws’), and in accordance with the Charters of the Audit Committee and the Governance Committee, the Trustees are requested to appoint Eugene L. Nicandri to the Audit Committee and Jonathan F. Foster to the Governance Committee effective February 23, 2010.

 

“In addition, in accordance with Article V the By-Laws, and in accordance with the Charter of the Finance Committee, the Trustees are requested to appoint Michael J. Townsend (Chair), Jonathan F. Foster and Eugene L. Nicandri to the new Finance Committee.

 

BACKGROUND

 

“The Public Authorities Law and the By-Laws require that three independent Trustees sit on each of the Audit, Governance and Finance Committees, and it is desirable for the Board of Trustees to fill those vacancies as soon as possible.

RECOMMENDATION

 

                “I recommend that the Trustees approve the Committee appointments as submitted herein.”

 

Ms. Delince said that the Committee appointments were recommended pursuant to Chapter 506 of the Laws of 2009.  Chairman Townsend presented his recommendations for the Committee appointments.

 The following resolution, as submitted by the Chairman, is recommended for adoption.

               

RESOLVED, That Eugene L. Nicandri is hereby selected as a member of the Audit Committee effective February 23, 2010.

 

RESOLVED, That Jonathan F. Foster is hereby selected as a member of the Governance Committee effective February 23, 2010.

 

RESOLVED, That Michael J. Townsend (Chair), Jonathan F. Foster and Eugene L. Nicandri are selected as members of the Finance Committee effective February 23, 2010.

 


 

9.                Motion to Conduct an Executive Session

 

Mr. Chairman, I move that the Authority conduct an executive session pursuant to Sections 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.  On motion made and seconded, an Executive Session was held.

 


 

10.                Motion to Resume Meeting in Open Session

 

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


 

11.                Procurement (Services) Contract – Law Department – Competitive Search – Award

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award of a contract pursuant to a competitive search in accord with the Authority’s Procurement Guidelines for a three year term to the law firm of Ward Norris Heller & Reidy LLP (‘Ward’) in Rochester, New York in order for them to represent the Authority and its six named current and former Trustees in the action initiated against them by Niagara County and four individual residents currently pending in Niagara County Supreme Court and the Appellate Division, Fourth Department.  The Trustees are also requested to approve funding in the amount $300,000. 

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.

 

“An Article 78 proceeding was filed on May 26, 2009 in Niagara County Supreme Court by Niagara County ‘on behalf of its residents’ as lead petitioner along with four named individuals who purchase Niagara Project power through their local electric utility.  Justice Ralph A. Boniello was assigned to the case. 

 

“The basic allegations focus on two points.  First, except for Authority contributions made to the State in connection with the PFJ program, petitioners allege that the Authority had no legal authority to make any contributions to the State, whether a straight cash payment or a temporary asset transfer.  Their second critical allegation is that the funds paid to the State (and which should now be returned to the Authority) can only be used by the Authority for limited purposes such as reducing the cost-based rate, reducing Authority debt, funding capital projects, or maintaining and expanding industry in Western New York pursuant to both federal and state law. 

 

“The Authority and the State made a motion to dismiss the petition in its entirety on September 2, 2009.  Petitioners served a motion seeking the Court’s permission to file a complaint and discovery demands on October 7, 2009.  Both motions were fully briefed by all parties and argued before Justice Boniello on October 28, 2009. 

 

“On December 23, 2009, Justice Boniello issued a decision and order denying NYPA’s and the State’s motions to dismiss.  The Court found petitioners had standing and they stated a cause of action under state and federal law.   The Court granted petitioners’ motion to serve a complaint.

 

“On December 29, 2009, petitioners served Notice of Entry of that decision.  NYPA and the State have moved for permission to appeal to the Appellate Division, Fourth Department.  That motion is returnable February 16, 2010.  A decision is expected shortly thereafter.

 

“On February 1, 2010, the Authority received petitioners’ complaint, filed January 25, 2010.  Petitioners also served various discovery demands through which petitioners seek documents, interrogatory responses, and depositions.  Specifically, petitioners requested the depositions of the six named current and former Authority Trustees and the Authority’s President and Chief Executive Officer, Richard Kessel. 

 

DISCUSSION

 

“Due to the (1) short timeframe in which discovery responses are due; (2) voluminous discovery demands; (3) the deposition requests; and (4) the possibility of a request to depose certain members of the Authority’s litigation team due to their involvement in the transactions at issue, the Executive Vice President and General Counsel felt it prudent to engage outside counsel to handle this litigation.  A competitive search was thereafter conducted pursuant to the Authority’s Procurement Guidelines.

 

“Two law firms, with pre-existing Authority contracts, were contacted, but each had a conflict or an appearance of one.  Harris Beach, which lists the Authority’s Chairman Michael J. Townsend, as one of its members, advised the State concerning some of the disputed transactions.  The second firm, Nixon Peabody, represented Niagara County during the relicensing process. 

 

“A third firm, Ward Norris Heller & Reidy LLP, located in Rochester, was contacted.  A fourth firm, Greenberg Traurig, LLP, located in Albany, was also contacted.  The Ward Norris firm was recommended for the following reasons:

 

(1)     Harold A. Kurland, one of its partners, has extensive litigation experience at both the trial and appellate levels and is highly respected in the Rochester/Western New York area where this case is currently pending;

 

(2)     Sharon Porcellio, also a member of Ward Norris, represented the Authority during a protracted rate litigation in the past ten years and brings a wealth of knowledge about the Authority to this proposed Authority defense team; and

 

(3)     The rates the firm would charge are reasonable.  Partner time would be billed at $290 per hour, other attorney time would be billed anywhere from $180 to $270 per hour, and paralegals from $120 to $140 per hour.

 

“In order for the services of the firm to be used prior to the February Trustees’ meeting, the Executive Vice President and General Counsel authorized the approval of this contract on an interim basis subject to final approval by the Trustees.  The Trustees’ authorization is necessary because it is likely that this matter will continue for longer than one year.  Staff recommends a contract term of up to three years, at a cost of no more than $300,000.

 

FISCAL INFORMATION

                “The fiscal impact will be limited to no more than $300,000.

RECOMMENDATION

“The Executive Vice President and General Counsel recommends that the Trustees approve of the award of contract to the law firm of Ward Norris Heller & Reidy LLP for the reasons discussed above.

 

“I concur with the recommendation.”

 

The following resolution, as submitted 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 a procurement services contract with the law firm of Ward Norris Heller & Reidy LLP for a term of three years is hereby approved for the period of time so indicated, in the amount of $300,000 or less and for the purposes listed, 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 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.


 

12.                Next Meeting

 

The Annual Meeting of the Trustees will be held on Tuesday, March 23, 2010, at 11:00 a.m. at the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York, unless otherwise designated by the Chairman with the concurrence of the Trustees.

 


 

Closing

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

2:00 p.m.

 

 

 

Karen Delince

Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEBRUARY MINS.10