MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

May 26, 2010

 

 

Table of Contents

 

                Subject                                                                                                                                             

 

1.             Consent Agenda:                                                                                                                          

a.       Minutes of the Annual Meeting held on March 23, 2010                                                                      

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

        Resolution                                                                                                                                                               

 

c.        Proposed Long-Term Contract Extensions for the Sale of Western New York Hydropower – Notice of  Public Hearing

         Exhibit - “1c-A”; “1c-A-1”; “1c-B”

         Resolution                                                       

 

d.       Procurement (Services) Contract – Blenheim-Gilboa Pumped Storage Project – Award of Contract                                   

   

e.        Request for Proposal for Legal Services, Exhibit - “1e-A”

                                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.                   Charles Poletti Power Project – Program Management  and Design Engineering Services for Decommissioning – Contract Award                                        

Resolution

 

4.                   Niagara Power Project – Robert Moses Power Plant –  Stator Cores and Windings Replacement – Capital  Expenditure Authorization and Contract Award   

Resolution

5.                   Niagara Power Project – Lewiston Pump Generating  Plant Life Extension and Modernization Program –  Contract Award

                Resolution

 

6.                   Authorization to Fund Statewide Energy Services Contract Awards

                Resolution

 

7.                   Agreement for Economic Development Funds in  St. Lawrence County and Proposed Power ContrFact with the Town of Massena – Massena                                                                         

Electric Department, Exhibit -  “7-A” & “7-B”

Resolution

 

8.                   Motion to Conduct an Executive Session                                                                           

9.                   Motion to Resume Meeting in Open Session                                                                      

10.                Next Meeting                                                                                                                            

                Closing                                                                                                                                     


 

Minutes of the Regular Meeting of the Power Authority of the State of New York held via telephone conference at the Hilton Garden Inn, 51 Arnot Road, Elmira, New York,
                 at approximately 11:05 a.m.

 

Members of the Board present were:

                                Michael J. Townsend, Chairman

                                Jonathan F. Foster, Vice Chairman

                                D. Patrick Curley, Trustee

                                Eugene L. Nicandri, Trustee

                                Mark O’Luck, Trustee

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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

Francine Evans                                    Executive Vice President, Chief Administrative Officer

                                                               and Chief of Staff – President’s Office – WPO

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

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 – WPO

Paul Belnick                                         Vice President – Energy Services

John L. Canale                                     Vice President – Project Management

Michael Huvane                                  Vice President – Marketing

Patricia Leto                                         Vice President – Procurement – WPO

Karen Delince                                      Corporate Secretary

Joseph Leary                                        Executive Director – Corporate Community Affairs

Michael Saltzman                                 Director – Media Relations – WPO

Timothy Muldoon                               Manager – Business Power Allocations and Compliance – WPO

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

John Briggs                                           Manager – Purchase and Warehouse – Niagara

Mike Flynn                                           Photographer – Video and Photographic Services

Chris Isca                                              Contractor – Corporate Communications

Barbara Brenner                                  Attorney – White Brenner Group

Earl Wells                                              Public Relations Counsel – EZ Communications

Eric J. Gustavson                                 Attorney – Local Government Task Force

Robert McNeil                                      Member – Local Government Task Force

Andy McMahon                                  Massena Electric Department

Mark Scott                                            Supervisor – Town of Waddington

 


 

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 week.

President Richard Kessel said that, in the interest of full disclosure, several of the law firms being recommended for contracts in item 1e (Request for Proposal for Legal Services) had done work for the Long Island Power Authority (“LIPA”) when he had been there.  In addition, several Power for Jobs customers were also customers

  

a.       Approval of the Minutes

 

                The Minutes of the Annual Meeting held on March 23, 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 46 Power for Jobs (‘PFJ’) customers 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 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 May 17, 2010, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 46 businesses listed in Exhibit ‘1b-A.’  Collectively, these organizations have agreed to retain more than 25,000 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 $3.9 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 14 additional customers for Restitution.  Of those, 4 customers are eligible for Restitution payment and are presented for approval as listed in Exhibit ‘1b-B-1.’  The 10 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 $3.9 million.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $216.4 million in rebates.

 

“Funding of restitution payments for the companies listed in Exhibit ‘1b-B-1’ is not expected to exceed $850,000.  Payments will be made from the Operating Fund.  This is the seventh payment request to date, which will bring the total approved for PFJ Restitution payments to $6.6 million. Additional requests will follow based on subsequent evaluation of other restitution-eligible customers.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer and the Senior Vice President – Marketing and Economic Development recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibit ‘1b-A’ and PFJ Restitution to 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 $3.9 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 $850,000 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.    Proposed Long-Term Contract Extensions for the Sale of Western New York Hydropower –  Notice of Public Hearing

 

                               

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize a public hearing, pursuant to Section 1009 of the New York Public Authorities Law (‘PAL’), on the proposed agreements to extend the contracts applicable to the Western New York Replacement Power (‘RP’) and Expansion Power (‘EP’) customers (‘Customers’).  The form of the proposed agreements with the Customers, as well as the accompanying proposed Service Tariff No. WNY-1, are attached as Exhibit ‘1c-A.’

 

BACKGROUND

 

“Under PAL §1005(13), the New York Power Authority (‘NYPA’ or ‘Authority’) may allocate and sell directly or by sale for resale, 250 MW of EP and up to 445 MW of RP to businesses located within 30 miles of the Niagara Power Project, provided that the amount of EP allocated to businesses in Chautauqua County on January 1, 1987 shall continue to be allocated in such county.

 

“Currently, the majority of existing RP and EP allocations will expire in the 2012-2013 time frame.  These allocations’ expiration dates resulted from Trustee actions taken over the past several years.

 

“At their December 13, 2005 meeting, the Trustees approved Customer contract extensions in compliance with Chapter 313 of the Laws of 2005, which amended the PAL to require extensions of at least five years to existing RP customers.  This Trustee action resulted in the extension of 101 RP contracts, totaling 366 MW, through December 31, 2012. 

 

                “On May 19, 2009, the Trustees extended, through June 30, 2013, 13 EP allocations that were due to expire in 2009, the expiration date of the EP sale-for-resale agreements with Niagara Mohawk Power Corporation d/b/a National Grid (‘National Grid’) and New York State Electric and Gas Corporation (‘NYSEG’).

 

                “Lastly, in anticipation of the longer-term contract extension offering that is now before the Trustees, on December 15, 2009, contract extensions for 51 RP and EP allocations totaling 69.75 MW were approved.  Allocations were extended to bridge from their current expiration dates through December 31, 2012 for RP allocations and June 30, 2013 for EP allocations. By approving the extensions, the Trustees facilitated the potential longer-term contract offering.  As a result of the December 15, 2009 extension, virtually all in-service RP allocations have a termination date of December 31, 2012 and virtually all in-service EP allocations have a termination date of June 30, 2013.

 

DISCUSSION

 

                “An initiative to provide contract extensions for Western New York businesses began in early 2009 in response to Customers’ recurring requests for long-term supply commitments beyond the current terms of their contracts.  The initiative culminated in the development of a contract extension offer by the Authority to provide a long-term supply commitment to facilitate the Customers’ long-term planning and investment strategies for their Western New York facilities.

 

“In addition to providing long-term contract extensions, the Authority will be adopting, starting July 1, 2013, a direct billing relationship with Customers for the sale of RP and EP electric service, exclusive of delivery services.  This will occur because, with respect to EP, the resale agreements with National Grid and NYSEG are set to expire on June 30, 2013.  With respect to RP, the existing resale agreements with National Grid (there are none with NYSEG) are scheduled to expire December 31, 2011, and both the Authority and National Grid share the expectation that resale arrangements will cease and that direct NYPA electricity sales will commence on July 1, 2013 for all RP recipients.  Under the proposed direct-sale agreements, NYPA provides and bills the Customers for production (capacity and energy) and New York Independent System Operator (‘NYISO’) costs, while the applicable utility will continue to bill the Customers for delivery services.  Under current resale agreements, NYPA bills the utility for production services, and in turn, National Grid and NYSEG bill the Customers for production and delivery services.  NYISO charges are, and will continue to be, direct-billed to the Customers by the Authority.

 

“In addition, for RP Customers whose current allocation contracts end on or about January 1, 2013, the proposed agreement effectuates an interim extension of their existing RP allocations through June 30, 2013.  Thus, both RP and EP Customers will be subject to the new direct-sale arrangements at the same time.

 

“NYPA staff evaluated all existing RP and EP contract allocations with the intent of offering customers extended terms of service beyond their current expiration dates.  NYPA, with the assistance of the Empire State Development Corporation (‘ESD’) developed a Hydropower Contract Extension Request Form (‘Request Form’), soliciting information from each Customer regarding jobs, wages and benefits, current and future capital investment plans, contracts with New York State vendors and other relevant considerations.   All Customers were required to complete the Request Form in order to be considered for a contract extension.  ESD’s Cost Benefits Model was used as one component of the evaluation process.  NYPA staff also used the Center for Governmental Research as a consultant to assist with the evaluation.  Additionally, NYPA worked closely with the Customers throughout the process to ensure their needs were being met.  Specifically, NYPA staff communicated regularly with the Power for Economic Prosperity group, a business consortium comprised of twenty of the largest hydropower customers.  NYPA briefed this group as well as ESD on several occasions throughout the process.

 

“NYPA staff’s evaluation focused on three general criteria: jobs, public benefit and private benefit.  Within each general criterion, there were several specific measures, such as jobs per MW allocated, net public benefit per job and the importance of power to a company’s decision to be located in Western New York.  NYPA staff used ESD’s model outputs and CGR’s expertise to develop a weighted ranking method across measures.  The results showed that the Customers, which represent a diverse spectrum of industries, bring valuable benefits to New York State in return for the hydropower allocations.

 

“Among the major features of the proposed contract extensions are the additional commitments and enhanced compliance criteria.  For the first time, the proposed agreements include annual capital investment commitments during the life of the contract.  Specifically, Customers will commit to investing at least 90% of historic average capital spending each year, or risk reduction to their allocation, thus ensuring the Customers are investing in their facilities.  The Authority will continue to have the right to reduce or terminate Customers’ allocations if their employment or power utilization commitments are not met.  Also, the job commitment threshold will be standardized to 90% of base employment levels for all allocations, from 80% for certain older allocations.  Lastly, the agreements require the Customers to undergo energy efficiency audits on a periodic basis.

 

“Other features of the proposed agreement are streamlined contract administration and compliance procedures.  For example, there will be one contract per Customer facility.  Thus, if a Customer receives an additional allocation, a schedule in the agreement would be updated, rather than an entirely new contract being issued.  Also, there will be one job commitment per Customer facility, obviating the need to administer multiple job commitments for a Customer with multiple allocations.   

 

“Accompanying the new agreement in Exhibit ‘1c-A’ is the attached proposed Service Tariff No. WNY-1 (‘ST WNY-1’).  Consistent with the discussion above, the terms and conditions of ST WNY-1 reflect the direct sale nature of the proposed agreement, incorporating only the aspects of production related transactions, plus all applicable charges of the NYISO, since NYPA will continue its role as Load Serving Entity for these Customers with respect to the NYISO.  ST WNY-1 will become effective for all RP and EP sales commencing July 1, 2013, and will replace the three NYPA service tariffs that currently govern RP and EP electric rates.    

 

“ST WNY-1 attains a measure of consistency with NYPA’s other proposed hydropower tariff generally applicable to businesses (Preservation Power), in that it establishes a new base rate and contains the same Annual Adjustment Factor (‘AAF’).  The AAF comprises three measures, including two indices of industrial electric power and one relating to industrial commodities, as described in leaf No. 13 of the proposed tariff contained in Exhibit ‘1c-A.’  In response to Customers’ concerns, the new base rate under ST WNY-1 will be achieved through a phased-in adjustment over a three-year period beginning July 2013.  Thereafter, the rates will be subject to the AAF, as is the case under the proposed Preservation Power tariff. 

 

“Authority staff sent the proposed contract extensions to each Customer for their review in March.  The Customers were also provided with and asked to sign a Letter of Acknowledgement, indicating that they agree and understand (1) the rates, terms and conditions of the contract extensions; (2) the contracts are subject to NYPA’s statutory public hearing process and (3) the Customers will execute a contract extension in substantially similar form at the conclusion of the public hearing process and upon final approval by the Governor. 

 

“On March 25, 2010, the Authority’s Vice President – Marketing gave presentations on the proposed contract extensions at the Niagara Project Power Vista Visitors’ Center and in Chautauqua County.  The presentation included a review of the contract terms, the rate phase-in, the public hearing process and the importance of the Customers providing their historic capital investments.  Subsequent to the meetings, NYPA’s account executives met individually with each Customer to discuss the terms of their proposed contract extension offer.  Of the 108 Customers that were offered an extension, 106 Customers have signed the Letter of Acknowledgement.  The two Customers that did not sign the letter, Cameron Compression Systems and Citigroup, have decided for various business reasons not to accept the extension offer and their allocations will expire on their original expiration dates.

 

“NYPA staff proposes 185 allocations to be extended, comprised of 85 EP allocations totaling 205,775 kW, and 100 RP allocations totaling 369,397 kW, as detailed in Exhibit ‘1c-B.’  Because some Customers have multiple allocations, NYPA’s contract extension offer will be made to 106 Customers.  Of these 106 Customers, 104 Customers have been offered an extension of 7 years.  Two Customers, General Motors (‘GM’) and Steuben Foods, have been offered an extension of 15 years in light of their commitment to make extraordinary additional capital investment.  GM has committed to invest $825 million at its Tonawanda Engine Plant to produce the next-generation fuel-efficient Ecotec engine and the latest ‘Generation V’ engine lines ensuring the plant’s long- term viability in Western New York.  Steuben Foods will commit to spending no less than $52 million for a new capital expansion project, as well as creating new jobs.

 

“In total, the Customers agreeing to accept NYPA’s contract extension have committed to retain and/or create 28,472 jobs in the State of New York.  As noted above, the contract requires that each Customer meet an historic baseline of capital investment spending that will ensure they are doing what is necessary to improve and maintain their facilities in New York State from 2013 through the extension period.  Under this new capital expenditure commitment, Customers have agreed to spend approximately $150 million of on-going capital investment each year.  Prior to this contract extension, the commitment to capital investment was only necessary when the allocation was first awarded.  This new capital investment commitment, along with job commitments, provides a major benefit to New York State in return for the hydropower.

 

FISCAL INFORMATION

 

                “As stated above, ST WNY-1, applicable beginning July 1, 2013, specifies a three-year rate phase-in to a target rate, which is based on the proposed Preservation Power rate.  The impact of the fully implemented phase-in, absent the effects of the AAF, would produce additional annual revenues of approximately $38.7 million.

 

RECOMMENDATION

 

                “The Manager – Business Power Allocations and Compliance recommends that the Trustees authorize a public hearing on the terms of the proposed contract with the Replacement Power and Expansion Power Customers to be held on July 15, 2010 at 2:00 p.m. and 7:00 p.m. at the Niagara Power Project’s Power Vista Visitors’ Center.  It is further recommended that, pursuant to Public Authorities Law §1009, the Corporate Secretary be authorized to transmit copies of the proposed contract to the Governor and legislative leaders.

 

“The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Corporate Planning and Finance, the Senior Vice President – Marketing and Economic Development, the Vice President – 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 Trustees hereby authorize a public hearing on the terms of the proposed contract for the sale of hydropower and energy generated by the New York Power Authority to the Replacement Power and Expansion Power Customers, to be held at the Niagara Power Project’s Power Vista Visitors’ Center at 2:00 p.m. and 7:00 p.m. on July 15, 2010; 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 Public Authorities Law §1009; 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.

 

 


 

d.                   Procurement (Services) Contract – Blenheim-Gilboa Pumped Storage Project – Award of Contract  

            

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

                “The Trustees are requested to approve the award of a contract to Gomez and Sullivan Engineers, P. C.  (‘GSE’) in Utica, New York for inspection and consulting services in support of an independent consultant’s inspection, report and follow-up service for the Blenheim-Gilboa Pumped Storage Project (‘B-G’), as mandated by the Federal Energy Regulatory Commission (‘FERC’).  The intended term of the contract is five years for a total projected amount of $230,000. 

 

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.

 

DISCUSSION

 

                “FERC regulations require the Authority to hire an independent consultant to perform an independent dam safety inspection and review at licensed projects every five years.  FERC issued a letter on December 10, 2009 to the Authority indicating that the report for B-G was due for submittal on December 1, 2010.  In January 2010, staff solicited bids from 55 consulting and engineering firms, including nine firms recognized for their experience in providing dam safety and inspection services at FERC-licensed projects.

 

                “Bidders were required to submit a detailed proposal in accordance with the Request for Proposals and scope of work.  Six bids were received and opened on February 17, 2010; one firm later withdrew its bid.  The remaining five bids were analyzed and evaluated by a team of staff members from Engineering, BG and Procurement. 

 

“GSE’s proposal is complete, competitive and fully responsive to the scope of work.  GSE has allocated proper resources to complete this work thoroughly and on time.  FERC’s new inspection report guidelines require the degree of staffing allocated by GSE and the firm has the knowledge and expertise to perform the work. 

 

“GSE was the lowest-priced bidder and its proposal indicates a complete understanding of the FERC requirements for this work.  Based on its qualifications and ability to perform such work, staff recommends awarding a contract to GSE.

 

“The award is for $30,000 for the first year of the contract, including $1,100 for any additional unforeseen work.  FERC requires the independent consultant to be available to answer follow-up questions for a period of five years.  Therefore, based on prior experience, $50,000 has been included to respond to FERC questions in years 2-5 of the contract.  The total contract value is $230,000.

 

“FERC must approve the résumés of the specific independent consultants employed by GSE to proceed with this work.  Historically, FERC has required the Authority to use the FERC-approved independent consultant to conduct follow-up work; therefore, the intended term of the contract is five years.  This contract will permit the Authority to comply with the FERC mandate that the Authority conduct independent consultant inspections of its licensed hydropower project every five years.

 

“In FERC’s letter dated December 10, 2009, the Authority is required to submit a letter for the approval of the proposed independent consultant to FERC no later than June 1, 2010, six months before the Part 12D Safety Inspection Report is due.

 

FISCAL INFORMATION

“Funds required to support this contract are included in the 2010 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in budget submittals for those years.  Payment will be made from the Operating Fund.

 

RECOMMENDATION

                “The Senior Vice President – Power Supply Support Services, the Vice President – Engineering, the Vice President – Procurement and the Regional Manager – Central New York recommend that the Trustees approve the award of a multiyear contract to Gomez and Sullivan Engineers, P. C. for inspection and consulting services as discussed above. 

 

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

 

                The following resolution, as 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 five-year procurement contract to Gomez and Sullivan Engineers, P. C., in the amount of $230,000, is hereby approved, 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.

 

 

 

e.                     Law Department Contracts

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award and funding of multiyear procurement contracts for legal services to be utilized by the Law Department, as may be required.

 

BACKGROUND

 

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

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

“The last Law Department Request for Proposals (‘RFP’) for legal services was in 2006. 

DISCUSSION

 

                “The terms of the anticipated contracts will be more than one year; therefore, the Trustees’ approval is required.  All of the contracts will allow the Authority, in its sole discretion, to terminate services without liability other than paying for acceptable services rendered to the effective date of termination. 

 

                “The issuance of multiyear contracts is necessitated by both cost and efficiency considerations.  In many cases, fixed prices for the terms of the contracts can be negotiated.  Since an assigned legal matter may extend longer than a year and require consistency in service, it is more efficient to award long-term contracts than to rebid annually. 

 

“On September 7, 2009, RFP Inquiry No. Q09-4587LW was published seeking responses from law firms interested in providing bond, underwriter and disclosure counsel services to the Authority for a period of two years, with an option for an annual renewal for up to three additional years.  On February 4, 2010, RFP Inquiry Nos. Q10-4699LW and Q10-4717LW were published seeking qualification statements from law firms interested in providing energy and general legal services.

 

“An aggregate amount of $6 million is requested for the general services contracts, $4 million for the energy services contracts and $3 million for the bond, underwriter and disclosure counsel.  Aggregate amounts, rather than an amount per contract, are requested since it is not at this time known what contracts will be used or in what amounts.  Accordingly, these contracts do not obligate the Authority to a specific level of services or expenditures.

 

I.                    Bond, Underwriter and Disclosure Counsel

 

                “A total of 12 firms responded to the RFP.  The responses were reviewed by an Evaluation Committee of Authority staff.  The evaluation took into consideration costs, background and experience of the bidders with public finance, experience with public power entities and proposal quality, as well as hiring minorities or status as a Minority or Women’s Business Enterprise (‘M/WBE’).  For bond issuances, there are three distinct roles for counsel:  bond, disclosure and underwriter counsel representation.  Both bond and disclosure counsels represent the interests of the issuer, the Authority; however, it is industry and Authority practice to have separate entities serve in these roles.  While underwriter counsel is to represent the interests of the underwriters, it is common practice for bond issuers to recommend reputable firms for this role.  The Authority will finance the services for all three roles but will only enter into contracts with the bond and disclosure counsel firms.  Prequalification of multiple firms for these contracts allows the Authority flexibility in the ultimate selection of counsel depending on the Authority’s needs for public finance, tax or energy experience, a bidder’s conflict of interest or other unforeseen circumstances without having to rebid for each individual bond issuance.  Prequalification of multiple firms also allows for the Authority to increase the number of firms familiar with its statutory framework and bond issuance characteristics.

 

“Of the 12 firms that responded, the following 5 firms exhibited exemplary qualifications for providing legal services relating to bond issuances: 

 

·         Fulbright & Jaworski LLP (‘Fulbright & Jaworski’)

·         Gonzalez Saggio & Harlan LLP (‘Gonzalez’) [New York State-certified M/WBE]

·         Hawkins Delafield & Wood LLP (‘Hawkins’)

·         Nixon Peabody LLP (‘Nixon Peabody’)

·         Orrick Herrington & Sutcliffe LLP (‘Orrick’)

“These firms all have significant experience and expertise in public finance and public power.  In addition, Gonzalez is a New York State-certified M/WBE firm, and all of the other firms indicated a willingness to partner with certified firms as part of their work for the Authority.  Given the overall quality of services that these firms are able to provide, and using the criteria previously noted, the Evaluation Committee recommends that these firms be prequalified to provide bond issuance services on an ‘as needed’ basis for legal services as follows:

 

1.       Bond Counsel

 

·         Gonzalez

·         Hawkins

 

2.       Disclosure Counsel

 

·         Nixon Peabody

·         Orrick

 

3.       Underwriter Counsel

 

·         Fulbright & Jaworski

·         Gonzalez

·         Orrick

                “It is recommended that Hawkins and Gonzalez be selected for bond counsel.  Hawkins has served as bond counsel to the Authority for over 55 years.  Gonzalez is also recommended, and is a MWBE certified law firm.  Industry practice is to have disclosure counsel separate from bond counsel and Nixon Peabody and Orrick are recommended for that purpose.  Underwriter counsel is retained by the underwriter, usually upon recommendation of the issuer, but paid by the issuer (the Authority).  Gonzalez, Orrick and Fulbright & Jaworski are recommended for the pool of prequalified underwriter’s counsel.  All recommended firms have a vast array of public finance and tax experience and have exposure to numerous high-value bond issuances. 

 

“The new contracts would become effective on or about June 1, 2010 for an initial term of two years with an option for an annual renewal for an additional three years, subject to the Trustees’ approval, which is hereby requested.

 

II.                  Energy Services Counsel

 

                “A total of 19 law firms submitted proposals in response to RFP Q10-4699LW to provide legal services related to energy services matters.  These responses were reviewed and evaluated by Authority staff.  Staff considered the experience of the bidders with energy services matters, expertise of the firm’s attorneys, proposal quality, hourly rates, past Authority experience with the firm and the firm’s record of hiring minorities and status as, or interest in working with, M/WBE law firms.  All of the selected firms indicated a willingness to partner with New York State-certified M/WBE firms as part of their work for the Authority.  As a result of this evaluation, the following firms are recommended to be retained for energy services work:

 

                        Nixon Peabody

                        Ruskin Moscou Faltischeck PC (‘Ruskin’)

                        Holland & Knight LLP (‘Holland & Knight’)

                        Van Ness Feldman, PC (‘Van Ness Feldman’)

                        Troutman Sanders LLP (‘Troutman Sanders’)

                        Mercer Thompson LLC (‘Mercer Thompson’)

                        Fulbright & Jaworski

 

                “The new contracts would become effective on or about June 1, 2010 for an initial term of three years, with an option for an annual renewal for an additional two years, subject to the Trustees’ approval, which is hereby requested.

 

III.               General Services Counsel          

 

                “A total of 32 law firms submitted proposals in response to RFP Q10-4717LW for general legal services. This proposal sought information on the applicant’s ability to provide support in a variety of legal areas (i.e., environmental, real estate, tax, employment, intellectual property, etc) relevant to the business of the Authority.  Staff reviewed the qualification statements, taking into account the background and experience of the bidders, expertise and reputation in the various subject matters, hourly rates and billing practices and any past Authority experience with the firm, as well as their minority hiring record and qualification as, or interest in working with, M/WBE firms.  In addition, the firms’ locations were considered. Having outside counsel familiar with local courts in areas of the State where the Authority’s facilities and offices are located is important, as the Authority may be sued or may choose to sue in such local courts.  Finally, there is also a need to have firms with sufficient personnel and resources available to provide legal support in any of the varied specialized areas in which the Authority may require legal advice.  Schoeman Updike & Kaufman LLP (‘Schoeman’) is a New York State-certified M/WBE firm, and all of the other selected firms indicated a willingness to partner with certified firms as part of their work for the Authority.  As a result of the review of the proposals, the recommendation is that new contracts be entered into with the following firms for generic legal services on an ‘as needed’ basis:

 

                        Holland & Knight

                        Carter Ledyard & Milburn LLP (‘Carter Ledyard’)

                        Whiteman Osterman & Hanna LLP (‘Whiteman’)

        Schoeman

                        Nixon Peabody

                        Ruskin

                        Rivkin Radler LLP (‘Rivkin Radler’)

                        Hiscock & Barclay LLP (‘Hiscock & Barclay’)

                        Reisman, Peirez & Reisman LLP (‘Reisman’)

 

“The new contracts would become effective on or about June 1, 2010 for an initial term of three years, with an option for an annual extension for an additional two years, subject to the Trustees’ approval, which is hereby requested. 

 

FISCAL INFORMATION

 

“Funds required to support contract services are available through the Legal Department Outside Counsel budget, which has been included in the 2010 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years, as well as from capital funding (where appropriate) as tasks are assigned.  Payment will be made from the Operating Fund.

 

 

RECOMMENDATION

 

“The Executive Vice President and General Counsel and the Vice President – Procurement  recommend the Trustees’ approval of the award of multiyear procurement contracts to the law firms referenced in Exhibit ‘1e-A’ (attached) for the purposes and in the aggregate amounts set forth above.

 

“The Executive Vice President and Chief Financial Officer and I concur in 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 the multiyear procurement services contracts set forth in Exhibit “1e-A,” attached hereto, are hereby approved for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

 

 

I.          Bond, Underwriter and Disclosure Counsel    RFP Q09-4587LW

 

1.      Bond Counsel

Gonzalez Saggio & Harlan LLP

            The Empire State Building

            350 Fifth Avenue, 59th Floor

New York, NY 10118

 

Hawkins Delafield & Wood LLP

One Chase Manhattan Plaza
42nd Floor
New York, NY 10005-1401

 

2.      Disclosure Counsel

Nixon Peabody LLP
               
677 Broadway, 10th Floor
                Albany, NY 12207    

 

Orrick Herrington & Sutcliffe LLP

51 West 52nd Street
New York, NY 10019-6142

 

3.      Underwriter Counsel

Fulbright & Jaworski LLP
                666 Fifth Avenue
                New York, NY 10103-3198

 

Gonzalez Saggio & Harlan LLP

           The Empire State Building

           350 Fifth Avenue, 59th Floor

New York, NY 10118

 

Orrick Herrington & Sutcliffe LLP

51 West 52nd Street
New York, NY 10019-6142


 

 

II.        Energy Services Counsel     RFP Q10-4699LW

 

Nixon Peabody LLP

 677 Broadway, 10th Floor
 Albany, NY 12207    

 

            Ruskin Moscou Faltischeck PC

                        East Tower, 15th Floor

                        1425 RXR Plaza

                        Uniondale, NY 11556-1425

                       

            Holland & Knight LLP

31 West 52nd Street
New York, NY 10019

 

            Van Ness Feldman, PC

1050 Thomas Jefferson Street, N.W.
Seventh Floor
Washington, DC 20007

 

            Troutman Sanders LLP

The Chrysler Building
405 Lexington Avenue
New York, NY 10174-0700

 

            Mercer Thompson LLC

                        191 Peachtree Street, N.E.

Suite 4410

Atlanta, GA 30303

 

 

III.       General Services Counsel     RFP Q10-4717LW

 

Holland & Knight LLP

31 West 52nd Street
New York, NY 10019

           

Carter Ledyard & Milburn LLP

                        2 Wall Street

                        New York, NY 10005

           

Whiteman Osterman & Hanna LLP

One Commerce Plaza
Albany, NY 12260

           

Nixon Peabody LLP

677 Broadway, 10th Floor
Albany, NY 12207    

           

Ruskin Moscou Faltischeck PC

                        East Tower, 15th Floor

                        1425 RXR Plaza

                        Uniondale, NY 11556-1425

 

            Rivkin Radler LLP

926 RXR Plaza
Uniondale, NY 11556-0926

           

Hiscock & Barclay LLP

50 Beaver Street
Albany, NY 12207

           

Reisman, Peirez & Reisman LLP

                        1305 Franklin Avenue

P.O. Box 119

Garden City, NY 11530

 

            Schoeman Updike & Kaufman LLP

60    ast 42nd Street
New York, New York 10165-0006         

 


 

2.                   Discussion Agenda

 

a.                   Report of the President and Chief Executive Officer

 

            President Kessel said that the Power for Jobs (“PFJ”) program expired on May 15, 2010, but that a few days later it was extended through June 2.  He said that the Governor and Senate had agreed on a bill, also supported by the Authority, creating a new economic development power program, but that the Assembly’s bill was the polar opposite. 

                Staff expects to present its recommendations on the awards for the 100 MW solar initiative to the Trustees in the fall.

                The proposals for the Great Lakes Offshore Wind project are due by June 1.  It will take staff six to eight months to evaluate the proposals, so they will present their recommendations to the Trustees late this year or early next year. 

                A feasibility study is being conducted for the Long Island Offshore Wind project.  The participants in the project (the Authority, the Long Island Power Authority, the City of New York and Consolidated Edison Company of New York, Inc.) had hoped to be able to issue an RFP for the project in June, but had decided to proceed with the feasibility study first.  Staff expects to come back to the Trustees at their June meeting with a proposal for signing the leases needed for the project, at a cost of approximately $100,000, since the Authority is the only entity that can hold such leases.  Staff has met with the U. S. Department of the Interior about the leases.  Mayor Bloomberg is very supportive of the project. 

                The Authority is in negotiations with New York City with regard to the Hudson Transmission Partners project and expects to have worked out the preliminary terms within the next couple of weeks.  The Federal Energy Regulatory Commission has issued a waiver granting additional time for the project to proceed.  Staff expects to present the project to the Trustees at their June or September meeting. 

                President Kessel’s community outreach activities since the last Trustees’ Meeting in March have included:

 


 

b.                    Report of the Chief Operating Officer

 

Mr. Gil Quiniones provided the following report: 

This report includes highlights from the Operations Group over March and April.  NYPA received two awards from the American Public Power Association for its work related to the relicensing of the Niagara Power Project and for its outstanding safety record.  Below-average flows on the Niagara and St. Lawrence Rivers and below-average energy prices continued to negatively affect systemwide net generation and revenues through April. 

 

POWER SUPPLY

 

Plant Performance

 

Systemwide net generation1 in March and April was below projections.  Net generation was 2,169,272 megawatts2 (MWh) in March, compared to projected net generation of 2,332,382 MWh and net generation was 1,976,301 megawatts (MWh), compared to projected net generation of 2,075,873 MWh in April.  For the year, actual net generation is 8,243,235 MWh, below the year-to-date net generation target of 8,546,097 MWh.

The fleet availability factor3 was 90.8 percent during March, 87.6 percent in April, and is 89.0 percent for the year through April.  The generation market readiness factor4 in March was 99.8 percent and 99.6 percent in April, above the monthly targets of 99.4 percent.  For the year, generation market readiness is 99.8 percent.

While there were no significant unplanned generation events5 in March or April, a few unscheduled outages6 did occur.  The total lost opportunity cost of all unscheduled outages in March was $0.09 million, compared with generation revenue of $143 million.  The total lost opportunity cost of all unscheduled outages in April was $0.03 million, compared with generation revenue of $134 million. The year-to-date lost opportunity cost is $0.23 million compared to generation revenue of $596 million.

River flows at the Niagara project were below historical averages in both March and April, and are forecasted to be well below normal for the next several months due to low precipitation in the Great Lakes Basin that has continued since December 2009.  At St. Lawrence-FDR, flows were below forecast and are expected to be below historical averages for the rest of the year. 

Transmission Performance

 

                Transmission reliability7 in March was 96.18 percent, which was above the target of 95.78 percent.  The transmission reliability for April was 97.70 percent, which was below the target of 98.95 percent.  The year-to-date actual reliability is 95.33 percent, below the target of 96.57 percent.  This is primarily due the Long Island Sound Cable outage described in the February and March COO reports.

                There were no significant unplanned transmission events8 in March or April. 

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 Modernization9 (LEM) program on December 19, 2009.  The unit is currently scheduled to return to service in late July following its refurbishment.  Recent inspections of the unit revealed that significant repairs will be required that could extend the outage.  Staff is evaluating these findings and their impact to the overall LEM schedule.  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. 

Transmission Initiative

               

NYPA staff is continuing to work with 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. 

After being selected by NYPA and National Grid in March, PA Consulting continues to work on the Economic Benefits Analysis.  In late April, Con Edison and LIPA approved the emissions assumptions to use in the analysis, and PA Consulting began modeling the base case scenario.  Draft results are expected in late May. 

Moses-Adirondack Replacement

Due to the age and decline of the infrastructure on the Moses-Adirondack10 (MA1 and MA2) line, NYPA has been exploring the replacement of this section of the transmission system.  As part of that effort, NYPA engaged Navigant Consulting to perform the economic analysis related to that replacement.  Data for base case and contingency modeling have been provided to Navigant that will allow them to model scenarios through 2018.  Navigant will use these data in the Moses-Adirondack economic analysis.  NYPA staff continues to gather internal data relating to the condition assessment of MA1 and MA2. 

SUNY-Canton Project

The State University of New York at Canton is working with NYPA to assess options to relocate the section of MA1 and MA2 on their campus to accommodate athletic fields.  A draft interim report was presented to SUNY-Canton for discussion of potential routing options.  SUNY-Canton recognized that utilizing the existing corridor is the least cost option and may have the shortest lead time, but they prefer using a new corridor around the athletic fields or a new corridor paralleling the Massena-Marcy11 line.  NYPA engaged Commonwealth Associates for a detailed study of these options and expects to have draft results prepared in the last week of May 2010.

Organizational Realignment

                Preliminary results of the assessment of potential operational interfaces between the Power Generation and Transmission groups have moved to third quarter of 2010.  The consultants and NYPA staff met with Ontario Power Generation to discuss their organizational structure related to plant marketing.  This meeting was directly related to the review of potential organizational synergies between NYPA’s Energy Control Center, Energy Resource Management, and Power Generation operations.        

Relicensing and Implementation

At its annual conference in April, the National Hydropower Association12 (NHA) awarded NYPA its Outstanding Steward of America’s Waters award for the Common Tern Habitat Improvement Project installed as part of NYPA’s relicensing commitments at the Niagara Power Project.  The project enhances nesting habitat for a bird species endangered in New York State on US Army Corps of Engineers concrete breakwaters13 located in Buffalo Harbor.  A state-of-the art mobile installation consisting of a movable barge was designed to create nesting habitat which resulted in the hatching of 1,000 young birds.  The population of common terns has been in decline since the 1980’s and this project added significantly to the success of the bird population in the area.

Environmental

                There were two environmental events in March.  At the Astoria 500 MW Combined Cycle Plant, a loss of approximately 10,000 pounds of refrigerant from the chiller units14 was discovered while preparing for annual maintenance.  At the St. Lawrence-FDR Power Project, a State Pollutant Discharge Elimination System15 (SPDES) permit excursion was assessed for failure to conduct a visual observation for oil sheens at three outfalls.16

                There was one environmental event in April.  A leak was discovered in a pole-mounted transformer at the St. Lawrence-FDR Visitors Center.  The transformer was de-energized and the contaminated material was removed.

                The total year-to date number of recordable environmental incidents is five.  The 2010 maximum target for recordable environmental incidents is 25.

                NYPA was honored by the American Public Power Association17 (APPA) 2009 Safety Awards of Excellence.  NYPA took second place in APPA’s Group G, which includes systems that have recorded between one million and four million man hours for the year.

Technical Compliance – NERC Reliability Standards

As discussed in the March COO Report, NYPA reported potential non-compliance and submitted mitigation plans to the Northeast Power Coordinating Council18 (NPCC) for two standards that apply to facility ratings methodology19 and data for NYPA’s generation and transmission assets, and one standard that applies to NYPA’s Critical Infrastructure Protection20 program.  All three of these standards are in the North American Electric Reliability Corporation’s21 (NERC) top ten of the most violated standards in the industry.  NYPA engaged with NPCC in March and April regarding the content of the five mitigation plans associated with these self reports.  NPCC is expected to approve the mitigation plans and submit them to NERC in May.  They will then be submitted to the Federal Energy Regulatory Commission.22

Also discussed in the March report, NYPA responded to a Compliance Inquiry letter from the NPCC in late February requesting information and documentation regarding a system event that occurred at the Niagara Power Project on February 1 that took a 345 kV transmission line to Ontario, Canada, out of service.  In late April, NYPA submitted the last response to two subsequent requests for clarification that were received from the NPCC.

In April, Power Supply initiated an assessment of the organizational and staffing requirements for managing compliance to NERC’s Reliability Standards.  Power Supply also initiated an assessment and update of the policies, procedures, and technical manuals that are required to demonstrate compliance to the standards.  These assessments will be completed in 2010.  The objective of this initiative is to enhance NYPA’s NERC reliability standards compliance posture.

                Stimulus-funded Smart Grid Projects

 

                In May, the New York Independent System Operator23 (NYISO) signed a Subaward Agreement with NYPA and the other New York Transmission Owners to initiate its $75.7 million Smart Grid project in New York State.  The project is supported by a $37.4 million grant from the US Department of Energy (DOE).  The New York Transmission Owners will receive subawards to install phasor measurement units24 and capacitor banks25 that will enhance the reliability of the bulk electricity grid.  NYPA will receive a $200,000 subaward to add to its already extensive network of phasor measurement units.

                NYPA is also participating in the stimulus-funded Eastern Interconnection Planning Collaborative (EIPC), a group of transmission and generation utilities, regional transmission organizations, state representatives, and other power suppliers.  The EIPC received $16 million in funding from the DOE to fund interconnection-level transmission expansion studies, and the Eastern Interconnection States’ Planning Council, a sister group of the EIPC, received $14 million to identify renewable resources and other policy options to be considered by the EIPC.  NYPA is participating in the formulation of the EIPC Stakeholder Steering Committee, the structure of which is expected to be finalized in May and membership selected in June.  Steering Committee members will represent different sectors in the Eastern Interconnection – rather than individual company positions – so there will be significant collaboration among sector representatives prior to Steering Committee meetings.  NYPA is also participating in an informal Transmission Owner Caucus, which has established a regular dialog with the EIPC Executive Committee.

 

ENERGY RESOURCE MANAGEMENT

 

NYISO Markets

 

For March, ERM bid more than 2,071,692 MWh of NYPA generation into the NYISO markets, netting $31.0 million in power supplier payments to the Authority.  For April, ERM bid more than 1,881,915 MWh of NYPA generation, netting $29.0 million in power supplier payments to the Authority.  ERM has bid more than 7,794,643 MWh year-to-date netting $145.3 million in power supplier payments.

  Energy markets continue to be significantly lower than five-year historical averages.  NYPA’s income is expected to be below target due to these lower energy prices, and also due to lower than expected flows on the St. Lawrence River and Niagara River.

Numerous storms and heavy rains in March affected market value recovery at St Lawrence-FDR and Blenheim-Gilboa.  ERM managed the upper reservoir at Blenheim-Gilboa to limit potential downstream flooding, resulting in under recovery.

The in-city capacity markets26 continued to trend higher than historical average.  Summer capacity prices were at $13/kW-mo27 compared to last summer at $7/kW-mo, in part due to Poletti’s retirement.  NYPA’s in-city capacity revenues will be on target while rest-of-state capacity revenues will be lower.

Fuel Planning & Operations

In March, NYPA’s Fuels Group transacted $14 million in natural gas and oil purchases, compared with $34 million in March 2009.  In April, NYPA’s Fuels Group transacted $14 million in natural gas and oil purchases, compared with $27 million in April 2009.  Year-to-date natural gas and oil purchases are $88 million compared with $132 million year-to-date in April 2009.  The reduction is mainly attributed to the retirement of the Poletti unit. 

Market Issues

On April 15, FERC issued an order that preserved a very valuable hedge against transmission congestion for our southeast New York customers.  Last fall, ERM and Legal staff worked closely with the NYISO to formulate a FERC filing strategy to proactively ensure this hedge was retained until 2017.  This joint NYISO/NYPA effort and the resulting FERC order resulted in savings to our customers of $40 million annually through 2017.

Regional Greenhouse Gas Initiative

On March 10, NYPA participated in Auction 7 of the Regional Greenhouse Gas Initiative28 (RGGI) CO2 Budget Trading Program.  The price of RGGI allowances cleared at $2.07/ton in Auction 7, near the clearing price of $2.05/ton in Auction 6 held in December 2009 and well below the peak clearing price of $3.51/ton in Auction 3 held in March 2009.   NYPA is currently preparing for Auction 8, to be conducted on June 9.  The ten-state RGGI cooperative has preliminarily reviewed our application package and deemed it complete.  Although qualification status will not be finalized until May 25, no issues are anticipated given NYPA’s prior participation.

 

OFFICE OF THE CHIEF OPERATING OFFICER

Sustainability Action Plan

NYPA employees continue to make progress on implementing the 41 action items laid out in the Sustainability Action Plan.  Recent advancements include the posting of our community contribution recipients on NYPA’s website and establishment of a clean energy procurement policy.  In addition, a White Plains Office Green Team has been created to help organize events and activities to raise employee awareness about sustainability topics.  The first two events, a green building documentary screening and an Earth Day Fair featuring twenty vendors and a battery recycling drive were well attended and positively received. 

Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking on March 18 regarding the definition of the Bulk Electric System (BES).  The new proposed definition will include all electric transmission facilities with a rating of 100kV or higher.  This proposed change in the BES definition would require NERC registration of additional entities that would be subject to the NERC Reliability Standards.  NYPA participated in comments submitted to FERC on May 10 by the Large Public Power Council29 (LPPC) and the American Public Power Association (APPA), two industry groups in which we are members. 

FERC also solicited comments on two Notices of Inquiry (NOI), which is a procedure used to gather information on a specific industry issue.  In March, NYPA participated in comments made by LPPC on FERC’s request to assess the impact of requiring wholesale power market participants that are not under FERC jurisdiction – which includes public power entities – to file Electric Quarterly Reports, including information about market-based power sales.  LPPC requested that any proposed rulemaking exclude long-term agreements between non-jurisdictional entities, and that FERC create a waiver process for specific transactions or categories of transactions, including sales in connection with statutorily mandated rates for economic development purposes.

In April, NYPA participated in LPPC’s comments to a FERC NOI for information on the impact of using wholesale electricity tariff reforms or other reforms to ensure that variable energy resources30 have non-discriminatory access to the market, and can be efficiently and reliably integrated into the power grid.  LPPC asked that FERC consider holding regional technical conferences to identify current best practices prior to any rulemaking.  On May 7, FERC announced a series of technical conferences aimed at improving integration of variable resources, demand resources, and other technologies through improved power system and market modeling software.

GLOSSARY

 

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.

 

Availability Factor – The Available Hours of a generating unit over the Period Hours (hours in a reporting period when the unit was in an active state).  Available Hours are the sum of Service Hours (hours of generation), Reserve Shutdown Hours (hours a unit was not running but was available) and Pump Hours (hours a pump storage unit was pumping water instead of generating power).

 

4 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.

 

8  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.

 

9  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.

 

10  Moses-Adirondack line – Two 230 kV circuits, MA1 and MA2, that connect the Robert Moses Power Dam at the St. Lawrence-FDR Power Project in Massea, NY, to the Adirondack substation in Lewis County.

 

11  Massena-Marcy line – A 165-mile 765 kV single circuit that connects the St. Lawrence-FDR Power Project to Central New York.  The line mostly parallels the Moses-Adirondack line on its way south.  This line is New York’s only 765 kv line and is essential to NYPA’s transmission system. 

 

12  National Hydropower Association – The U.S. hydropower industry’s national trade organization, with approximately 140 members, including NYPA.  Its mission is to protect and promote hydropower development through legislative, regulatory, technical and public communication activities.

 

13  Breakwaters - A barrier that protects a harbor or shore from the full impact of waves.

 

14  Chiller units – At the 500-MW Combined Cycle Plant, chiller units are used to cool air as it is taken into the combustion turbine.  This process optimizes performance of the units.

 

15  State Pollution Discharge Elimination System (SPDES) Permit –A permit required by the New York State Department of Environmental Conservation to regulate the point source discharge of pollutants contained in process water and storm water to surface water and ground water in New York State.

 

16   Outfall - The end of a river, sewer, drain, etc., from which it discharges.

 

17  American Public Power Association (APPA) – A service organization for the nation's more than 2,000 community-owned electric utilities that serve more than 45 million Americans.  It was created in 1940 as a non-profit, non-partisan organization.  Its purpose is to advance the public policy interests of its members and their consumers, and provide member services to ensure adequate, reliable electricity at a reasonable price with the proper protection of the environment.

 

18  Northeast Power Coordinating Council (NPCC) - The Northeast Power Coordinating Council, Inc. (NPCC) is the cross-border regional entity and criteria services corporation for Northeastern North America.  NPCC’s mission is to promote and enhance the reliable and efficient operation of the international, interconnected bulk power system in Northeastern North America pursuant to an agreement with the Electric Reliability Organization (ERO) which designates NPCC as a regional entity and delegates authority from the U.S. Federal Energy Regulatory Commission (FERC), and by Memoranda of Understanding with applicable Canadian Provincial regulatory and/or governmental authorities.  The ERO to which NPCC reports is the North American Electric Reliability Corporation (NERC).

 

19  Facilities ratings methodology – NERC standard FAC-008-1, titled “Facilities Ratings Methodology”, ensures that Facility Ratings used in the reliable planning and operation of the Bulk Electric System are determined based on an established methodology or methodologies.  The Transmission or Generator owner must document its methodology or methodologies for developing facility ratings according to NERC requirements, make these documents available to transmission operators and planners, reliability coordinators, and planning authorities, and respond to any written comments on the documents..

 

20   Critical Infrastructure Protection (CIP) – The Critical Infrastructure Protection (CIP) program coordinates all of the North American Electricity Reliability Corporation’s (NERC) efforts to improve physical and cyber security for the bulk power system of North America, as it relates to reliability.  These efforts include standards development, compliance enforcement, assessments of risk and preparedness, disseminating critical information via alerts to industry, and raising awareness of key issues.  

 

21  North American Electric Reliability Corporation (NERC) – The organization that develops and enforces mandatory reliability standards for the bulk power system in the United States, issues long-term and seasonal reliability forecasts and monitors the power system.  (NERC standards are also mandatory and enforceable in parts of Canada.) 

 

22  Federal Energy Regulatory Commission (FERC) – An independent agency that regulates the interstate transmission of electricity, natural gas, and oil. FERC also reviews proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines as well as licensing hydropower projects.

 

23  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.

 

24  Phasor measurement unit—A component that measures the electrical waves on the electric grid to determine the health of the system.

 

25  Capacitor bank—A collection of individual capacitor units, which can store an electrical charge and are used to support system voltage.

 

26  In-City Capacity Markets – The New York Independent System Operator (NYISO) must ensure that sufficient resources are available to meet projected load on a long-term basis. In order to facilitate this, the NYISO administers a capacity market. This market matches buyers and sellers of capacity using the clearing price methodology.  Given the constrained nature of the transmission system, the New York State Reliability Council (NYSRC) requires loads in New York City and Long Island to buy a certain percentage of their capacity from suppliers physically located in those areas.

 

27  Dollars per Kilowatts-months ($/kW-mo) – The unit of sale in capacity markets.  A kilowatt-month is roughly equivalent to the capacity needed to generate one kilowatt for one month.

 

28  Regional Greenhouse Gas Initiative (RGGI) – A cooperative effort by Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.  These ten states have capped CO2 emissions from the power sector, and will require a 10 percent reduction in these emissions by 2018.  RGGI is composed of individual CO2 Budget Trading Programs in each of the ten participating states.  Regulated power plants can use a CO2 allowance issued by any of the ten participating states to demonstrate compliance with the state program governing their facility. Taken together, the ten individual state programs function as a single regional compliance market for carbon emissions, the first mandatory, market-based CO2 emissions reduction program in the United States. 

 

29  Large Public Power Council (LPPC) – An organization comprised of 23 of the nation's largest locally owned and controlled, not-for-profit power systems. LPPC works to develop and advance consumer-oriented positions on national energy issues.

 

30    Variable Energy Resources – In FERC’s definition, renewable energy resources that are characterized by variability in the fuel source that is beyond the control of the resource operator. This includes wind and solar generation facilities and certain hydroelectric resources.

 


 

c.                    Report of the Chief Financial Officer

 

In response to a question from Vice Chairman Jonathan Foster, Ms. Elizabeth McCarthy said that the Authority’s revenues are projected to be $106 million below budget at the end of the year due to lower-than-anticipated lake levels and sales and the effect of lower energy prices.  She said that $67 million of that amount is attributable to the lower lake levels and sales from the hydro plants, while $39 million is due to lower energy prices.  Ms. McCarthy added that an estimated 12- to 14-week outage at the Flynn Plant is projected to cost $6.3 million.  She said that the Authority’s hydro rates will remain the same, partially offset by lower operating expenses.  Responding to another question from Vice Chairman Foster, Ms. McCarthy said that the hydro flow estimates are reasonable, but that it is possible that they could get worse.  Mr. Donald Russak said that the hydro water levels were 7% below budget projections and 5% below the long-term average.  He said that the first half of the year has been very dry and that if precipitation over the Great Lakes remains well below average for the second half of the year as well, another $30 million effect on the bottom line could be expected.  President Kessel said that the Authority needs to take a hard look at its net revenues for the long term, especially with the spate of recent requests from New York State to contribute to the State’s general fund.  He said that the Authority must be vigilant about protecting its financial stability.

                Ms. McCarthy said that finance staff are expanding the Authority’s four-year financial projections to a 10-year horizon, layering in various ongoing and planned Authority initiatives and ranking them in terms of value in terms of how the Authority’s capital is deployed.  These projects the upstate transmission lines, the Hudson Transmission Partners PJM interconnection, the major solar and wind RFPs and the Power for Jobs and other economic development power programs.

                Responding to a question from Trustee Nicandri, Ms. McCarthy said that the Authority is facing lower revenues for the second year in a row for those hydropower customers whose rates were temporarily frozen last year.  She said that the resulting revenue shortfall is manageable but needs to be addressed.  President Kessel added that Authority staff and management are looking very closely at the hydropower rate issue, which is complicated by financial, political and governmental considerations.  He noted that at some point, the Authority will have to raise these rates.  Mr. Russak added that the costs deferred last March when the rates were frozen are to be recouped over a period of time. 

                Chairman Townsend said that the Authority needs to have an active dialog with the Governor and the Legislature with regard to the financial requests that are made of the Authority.  He said that it is incumbent upon the Trustees to be more involved in these matters because of their increased fiduciary responsibilities, especially since many of the Authority’s plans for capital projects are being jeopardized by the trend of increasing contributions to the State’s coffers.  President Kessel said that he is very engaged with Governor’s Office staff but that it is hard to get an audience with them right now because of the ongoing budget crisis.  He said that he, too, is increasingly concerned about everyone in government looking to the Authority first when considering options for ameliorating the State’s financial crisis; in fact, someone in the Assembly had been quoted as saying that the Authority could provide $1 billion toward this end.  President Kessel said that many in the Governor’s Office and the Legislature do not understand the Authority’s finances.  He said that they cannot continue along this path.  Vice Chairman Foster said that he hoped the Governor’s Office and Legislature realize that the Authority’s Trustees have a fiduciary duty when it comes to approving Power for Jobs expenditures, as reflected in the language of the resolution, which says that the Trustees must find such expenditures “feasible and advisable.”  Trustee Curley said that the Trustees had conducted considerable due diligence last year with regard to the requests for contributions to the State’s treasury, even bringing in nationally recognized outside experts to assist with their deliberations.  He said that he does not want to be rushed when it comes to these decisions and that due diligence requires time.  President Kessel said that this was a point well taken and that staff agreed, which is why there is no contribution item on today’s meeting agenda.  

                In response to a question from Trustee Mark O’Luck, Ms. McCarthy said that the Authority is conducting a search for a Chief Risk Officer. 


 

3.                   Charles Poletti Power Project – Program Management   and Design Engineering Services for Decommissioning – Contract Award

              

                 

                                                                                                                                                                                               

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award of a three-year contract to TRC Engineers, Inc. (‘TRC’) of New York City in the amount of $1.5 million for Program Management and Design Engineering Services (the ‘Program’) for the decommissioning of the Charles Poletti Power Project (‘Poletti’).  This requested action will authorize TRC to provide the required consulting and engineering services to assess and design potential future decommissioning activities as well as design infrastructure modifications to the 500MW and Administration Building, in anticipation of the future Poletti Decommissioning.

BACKGROUND

 

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of personal services contracts in excess of $500,000 if awarded as a sole source or to the non-low bidder requires Trustee approval.

 

“In order to construct the new 500 MW Combined Cycle Power Plant near Poletti, the Authority entered into a joint Stipulation Agreement (‘Agreement’) with the New York State (‘NYS’) Department of Environmental Conservation, the NYS Department of Public Service, the NYS Department of Health, the City of New York, the New York Public Interest Research Group, Inc., the Natural Resources Defense Council, Citizens Helping to Organize a Kleaner Environment and the Queens Borough President’s Office to cease generation at Poletti no later than January 31, 2010.  This requested Trustee action will authorize a contract for consulting and engineering services to assess and design potential future decommissioning activities for Poletti.

DISCUSSION

 

“The Authority issued an advertisement in the New York State Contract Reporter for Program Management and Design Engineering Services to perform consulting and engineering relating to the assessment and design of future potential decommissioning activities for Poletti.  Bids were available as of November 16, 2009 and documents were downloaded by 26 firms.  The following eight proposals were received on December 15, 2009:

 



 

Bidder

Location

Base Bid

Option 1

Option 2

LiRo Engineering, Inc.

Syosset, NY

$   276,526

 $ 100,285

$ 376,811

Edwards + Zuck

New York, NY

$   672,850

 $ 672,850

$ 134,700

CH2M HILL

Atlanta, GA

$   952,300

 not provided

not provided

TRC Engineers

New York, NY

$   963,701

 $   25,000

$250,000

Worley Parsons

Reading, PA

$1,962,000

 included in base

not provided

AECOM

New York, NY

$2,695,518

 $ 148,120

 $ 234,864

RCM Technologies

Parsippany, NJ

$2,760,500

 $   10,000

 $ 305,000

Altran Solutions

E. Cranbury, NJ

$2,825,000

 $ 300,000

 $ 400,000

 

“The eight proposals were reviewed by an evaluation committee comprising staff from Procurement, Project Management, Engineering and Environmental Health and Safety, and Poletti site personnel. 

 

“Based on staff’s review of the proposals, it was determined that the bids from Edwards & Zuck (‘E&Z’) and CH2M HILL were not responsive and both took numerous technical and commercial exceptions.  The apparent low bidder, LiRo Engineering, Inc. (‘LiRo’), man-hour estimates were significantly lower than the other bidders and LiRo did not demonstrate a full understanding and knowledge of the complexity of this Program.  Worley Parsons’ proposal was not well presented, took exception to the commercial terms and included two pages of deviations to the requested work scope.  The final three highest-priced bidders (AECOM, RCM Technologies and Altran Solutions) all had acceptable project approaches but their costs were not competitive. 

 

“TRC, the fourth lowest-priced bidder, has experience with power plant deconstruction and large abatement projects.  TRC provided an overview of several deconstruction and environmental abatement projects, most recently the Con Edison East Side power plant.  Since the Con Edison project was very similar to the Authority’s Program, TRC proposed staffing the Program with the same decommissioning team.  TRC proposed a full-time Project Manager from start to finish and had adequate manpower to implement the Program (a total of 8,292 hours).  TRC has been in business for more than 40 years and has successfully worked with the Authority on multiple environmental assessment projects.  TRC did not have any commercial exceptions.  Based on its bid, cost, experience, pre-award interview and references, TRC was determined to have the most responsive bid.

 

“It is recommended that the Trustees approve award of a contract for consulting and engineering services of potential future decommissioning activities for the Program to TRC for the total amount of $1.5 million.  The base contract will be in the amount of $1,238,701; the balance of funding is requested to accommodate the timely approval of any required modifications to the work scope that may develop as work is performed.

 

FISCAL INFORMATION

 

“As part of the Southeastern New York Government Customer Agreement, beginning in 2005, a cost-of-service fee of $3.9 million has been assessed annually to customers for anticipated decommissioning activities. 

“Payment associated with this contract will be made from the Authority’s Operating Fund.

 

RECOMMENDATION

 

“The Senior Vice President – Power Supply Support Services, Vice President – Project Management, the Vice President – Procurement, the Vice President – Engineering, and the Regional Manager – Southeastern New York recommend that the Trustees approve the award of a three year contract to TRC Engineers, Inc. in the amount of $1.5 million to perform consulting and engineering services relating to the assessment and design of potential future decommissioning activities for the Charles Poletti Power Project.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer,  the Executive Vice President and Chief Engineer – Power Supply and I concur in 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, approval is hereby granted to award a three year contract to TRC Engineers, Inc. of New York City in the amount of $1.5 million to perform consulting and engineering services to assess and design potential future decommissioning activities for the Charles Poletti Power Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 

Contractor                           Contract Approval                                           

TRC Engineers                   $1.5 million                                                        

 


 

AND BE IT FURTHER RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all 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.             Niagara Power Project – Robert Moses Power Plant Stator Cores and Windings Replacement Capital Expenditure Authorization and Contract Award

    

        

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize a Capital Expenditure Authorization Request (‘CEAR’) in the amount of $30.2 million and approve the award of a three-year contract to Voith Hydro, Inc. (‘Voith’) of York, Pennsylvania, in the amount of $22.3 million for the replacement of the stator cores and windings of the Robert Moses Power Plant (‘RM’) Units 1, 2 and 3 at the Niagara Power Project.

 

BACKGROUND

 

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

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

 

                “On September 24, 2001, an electrical failure occurred in RM Unit No. 11, which resulted in severe damage to the generator stator.  This failure necessitated the total replacement of the stator’s iron core assembly.

 

“Upon disassembly of Unit No. 11, undamaged winding sections removed from the Unit were sent to the Electric Power Research Institute (‘EPRI’) for testing to determine the cause of failure.  EPRI’s report concluded that the electrical insulation resistance of the stator windings was extremely low due to aging of the insulation.  The tests also concluded that the windings were near the end of their reliable life.  In addition, in 2002, Unit No. 2 failed a maintenance high-potential test.  Fortunately, the stator winding was reparable and the Unit was returned to service. 

 

“These incidents triggered the Authority’s embarking on a restack and rewind program for the RM Units. 

 

“Accordingly, between June 2002 and May 2004, the Authority awarded two, competitively bid contracts to Voith for the restack and rewind of all the stators at Niagara (13 in service and 1 spare).  By February 2007, four stators had been restacked and rewound, at which time one of the rehabilitated units failed.  Repairs and extended warranties were negotiated with Voith and effectuated at no additional cost to the Authority.  However, the remainder of the work under the original contracts was terminated to allow the Authority to rebid the last three units for competitive pricing and a new design based on current industry standards.

 

“This contract and CEAR are for the rewind and restack of the three remaining units with windings manufactured by National Electrical Coil.  These units will be worked on sequentially from 2010 through 2013.

 

 

DISCUSSION

 

                “The Authority issued an advertisement to procure bids in the New York State Contract Reporter and bid packages were available as of November 9, 2009.  The bid documents were downloaded by 42 potential bidders and 9 potential bidders participated in a site visit on December 10, 2009.

               


 

“The following four proposals were received on January 5, 2010:

 

                                Bidder                                                 Location                                         Lump Sum

 

Voith Hydro, Inc.                              York, Pennsylvania                       $21,799,000

GE Energy Services                           Medford, Massachusetts             $22,805,043

Alstom Hydro Canada, Inc.            Littleton, Colorado                        $24,773,593

National Electric Coil Co.                Columbus, Ohio                             $25,133,632

 

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

 

                “An additional $200,000 above the bid amount is requested to allow for escalation in site labor based on New York State Department of Labor Rates over the term of the contract.  An additional $300,000 is requested for escalation of material based on the Brazilian Real to U. S. dollar at the time of award. 

 

                “Funding in the amount of $2.1 million has been included in the 2010 approved Capital Budget.  Future-year funding will be included in the Capital Budget requests for those years.

 

“The total Project cost is estimated at $30.2 million, as follows:

 

                            Vendor Engineering and Design and Authority

                                Engineering Support                                                                            $  3,900,000

 

                                Procurement and Installation                                                           $18,800,000

 

                                Authority Plant Support                                                                     $  4,645,000

 

                                Authority Indirect and Direct Expenses                                          $  2,855,000

 

                            TOTAL                                                                                                      $30,200,000

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

“The Senior Vice President – Power Supply Support Services, the Vice President – Procurement, the Vice President – Engineering, the Regional Manager – Western New York and the Vice President – Project Management recommend that the Trustees authorize capital expenditures in the amount of $30.2 million and award of a three-year contract to Voith Hydro, Inc. of York, Pennsylvania for $22.3 million for the replacement of the stator cores and windings of the Robert Moses Power Plant (‘RM’) Units 1, 2 and 3 at the Niagara Power Project.

 

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

 

                Mr. John Canale presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Mark O’Luck, Mr. Canale said that Minority/Women-Owned Business Enterprise (“M/WBE”) goals were included in this project.

 


 

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

 

RESOLVED, That expenditures are hereby approved in accordance with the Authority’s Expenditure Authorization Procedures for capital expenditures in the amount of $30.2 million and a three-year contract award to Voith Hydro, Inc. of York, Pennsylvania for $22.3 million for the replacement of the stator cores and windings of the Robert Moses Power Plant Units 1, 2 and 3 at the Niagara Power Project; and be it further

 

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

 

 


 

5.                   Niagara Power Project – Lewiston Pump Generating Plant Life Extension and Modernization Program Contract Award

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve a four-year contract to Jiangsu Huapeng Transformer Company LTD (‘JSHP’), China, in the amount of $6.5 million to design and supply five generator step-up transformers (‘GSU’) for the Niagara Power Project’s Lewiston Pump Generating Plant (‘LPGP’).

 

BACKGROUND

 

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

 

“On February 23, 2010, staff advised the Trustees regarding the LPGP Life Extension and Modernization (‘LEM’) Program and anticipated award of a contract for the procurement of the GSUs in May 2010.  The LPGP LEM Program and Capital Expenditure Authorization Request (‘CEAR’) will be presented for the Trustees’ approval at their meeting on June 29, 2010.

 

“Included in the scope of work for the LPGP LEM is the modernization and upgrade for the LPGP pump turbines (‘Units’).  The result of the Unit upgrades necessitates a rating increase for the GSUs.  Additionally, the Authority’s Engineering department recommends replacement of the original GSUs due to the end of their useful lives.  In order to support the schedule for the LEM program and because of an eight-month material lead-time, the GSU procurement is required at this time.

 

DISCUSSION

 

“In March 2010, the President and Chief Executive Officer authorized preliminary project funding in the amount of $900,000 to begin engineering and design services in order to finalize the scope and cost estimate of the LEM Program.  Capital expenditures for the GSU procurement contract will not exceed $250,000 until program approval is formally requested at the June 29, 2010 Trustees’ meeting, when the LPGP LEM Program and a CEAR will be presented.

 

GSU PROCUREMENT

 

“The Authority issued an advertisement for procurement of services to furnish, deliver, assemble and commission the GSUs in the New York State Contract Reporter and bid packages were available as of January 25, 2010.  The bid documents were downloaded by 40 parties and 7 potential bidders participated in a site visit on February 4, 2010.

 

“The following proposals were received on February 25, 2010:

 

Bidder

Location

Lump Sum

 

Jiangsu Huapeng Transformer Co. LTD. 

Jiangsu, China

$6,291,000

 

Hyundai Heavy Industries Co. LTD.

Ulsan, Korea

$6,872,692

 

GE/Prolec Inc.

Apodaca, Mexico

$6,956,409

 

Bidder

Location

Lump Sum

 

ABB Inc.

Saint Louis, MO

$6,994,632

 

Wesco Distribution Inc.

Hsin-Chu, Taiwan

$7,219,720

 

SEC Areva Shanghai Baoshan Transformers Co. LTD.

Shanghai, China

$7,754,478

 

Delta Star Inc.

Lynchburg, VA

$8,375,487

 

HICO America Inc.

Changwon, Korea

$9,054,075

 

“The proposals were reviewed by an evaluation committee comprising staff from Engineering, Niagara, Procurement and Project Management.

 

                “JSHP’s bid was the lowest in price and was technically acceptable.  JSHP has performed successfully on previous Authority projects, has demonstrated knowledge of the scope of work and is capable of completing the Project in accordance with the Authority’s schedule.

 

“JSHP will design, furnish, deliver, assemble and commission four GSUs and one spare and provide Niagara staff with equipment training, technical assistance during installation and start-up and functional testing support.

 

“The evaluation committee recommends including $100,000 for additional site personnel training and $100,000 for supplemental field engineer assistance in the award to JSHP, for a total of $200,000 above the bid amount.

 

“The installation contract for the GSUs will be presented for the Trustees’ approval (if required by the EAPs) after contractor proposals are received and evaluated in the first quarter of 2011.

 

“Funding in the amount of $4.24 million has been included in the 2010 Capital Budget for the LPGP LEM program.  Expenditures for subsequent years will be budgeted in those years.

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

“The Senior Vice President – Power Supply Support Services, the Vice President – Procurement, the Vice President – Engineering, the Regional Manager – Western New York and the Vice President – Project Management recommend that the Trustees approve the award of a four-year contract to Jiangsu Huapeng Transformer Company LTD. of Liyang City, Jiangsu, P.R. China, in the amount of $6.5 million for services to design, furnish, deliver, assemble and commission five generator step-up transformers.

 

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

               

Mr. Canale presented the highlights of staff’s recommendations to the Trustees.  Trustee O’Luck said that he is very concerned about the inclusion of opportunities for small businesses and M/WBEs in large capital projects such as this one, so it would be helpful to see a list of the subcontractors.  Responding to a question from Vice Chairman Foster, Ms. Terryl Brown said that the Authority is obliged to see that M/WBEs are included in the procurement process, citing the Authority’s considerable outreach efforts in this regard.  Ms. Patricia Leto added that M/WBE goals are included in every single Authority contract, but that the contractors often decide on who the subcontractors will be after the Trustees approve the contract.  President Kessel said that at that point staff could provide information on the subcontractors to the Trustees.  Trustee Nicandri said that it was his recollection that the Authority is achieving its M/WBE goals.  President Kessel said that the Authority is one of the leading State authorities in terms of doing business with M/WBEs.  He said that among the criteria being looked at in evaluating responses to its major solar and wind RFPs was the bidder’s plan to use New York State businesses, including M/WBEs, as subcontractors on the projects.  He suggested that a memo to the Trustees be prepared that outlines the factors that are considered in the Authority’s procurement process.  Trustee O’Luck said that he wants to see the Authority’s economic development programs spread out much more widely.  Vice Chairman Foster pointed out that economic development was not included in the Authority’s mission statement.  President Kessel thanked Trustee O’Luck for his suggestions.

                In response to a question from Trustee Nicandri, Mr. Gil Quiniones said that the Blenheim-Gilboa Life Extension and Modernization (“LEM”) program had been completed ahead of schedule and under budget, thanking Mr. Edward Welz, Mr. Lynn Hait, Mr. Ben Wong and others from their staffs for their efforts in this regard.  President Kessel said that the Authority’s LEM programs were aimed at further the Authority’s original mission, the production of electricity. 

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, approval is hereby granted to award a four-year contract to Jiangsu Huapeng Transformer Company LTD., China, in the amount of $6.5 million to design and supply five generator step-up transformers for the Niagara Power Project’s Lewiston Pump Generating Plant, 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.


 

6.                   Authorization to Fund Statewide Energy Services Program and Implementation Contractors  Contract Awards

                 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to authorize increased funding of $200 million for the Authority’s Statewide Energy Services Program (‘Statewide ESP’), with an emphasis on projects in upstate and Long Island communities, in support of wide-ranging energy efficiency measures that have resulted in substantial savings for public facilities from reduced electricity use and enhanced air quality.  The increased funding would be in addition to the $633 million previously approved by the Trustees.

 

“If the increase in funding is approved, the Trustees are requested to approve contracts with the firms of Guth-DeConzo Consulting Engineers, P.C. (‘Guth-DeConzo’), AECOM USA, Inc. (‘AECOM’), Wendel Energy Services, LLC (‘Wendel’) and Einhorn Yaffee Prescott Architecture & Engineering, P.C. (‘EYP’) in the amount of $180 million, in aggregate, for Implementation Contractor services, Master Planning and Retro-commissioning in connection with the Statewide ESP.  The terms of these contracts will be five years.  All costs will be recovered from program participants. 

 

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.

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personnel services or equipment contracts in excess of $3 million, as well as personnel services contracts in excess of $1 million if low bidder, or $500,000 if sole source or non-low bidder, requires the Trustees’ approval.

“The Authority’s mission is to provide clean, economical and reliable energy consistent with its commitment to safety, while promoting energy efficiency and innovation for the benefit of its customers and all New Yorkers.  In that regard, since the late 1980s, the Authority has provided energy services programs throughout New York State (‘NYS’).  In aggregate, the Authority’s energy services programs have been very successful and, to date, the Authority has achieved nearly $120 million in annual customer savings at about 3,315 public facilities, including schools, hospitals and municipal buildings, for a reduction of annual greenhouse gas emissions of more than 766,000 tons.

“As an outgrowth of the State’s continuing efforts in the areas of energy efficiency and clean energy technologies (e.g., its 45x15 goal to meet 45% of the State’s electricity needs through improved energy efficiency and renewable sources by 2015 and Executive Order No. 111, which requires agencies to reduce energy consumption while transitioning to renewable energy sources), Governor Paterson signed into law Chapter 477 of the Laws of 2009 on September 16, 2009.  This new legislation amended Section 1005 of the Public Authorities Law by adding a new subsection 16 to enhance the Authority’s ability to provide energy efficiency, clean energy and green building programs and services to reduce energy consumption and mitigate environmental impacts from energy usage, consistent with the State’s energy and environmental policies.  The legislation took effect immediately upon signature by the Governor. 

“The recently enacted legislation builds on the Authority’s successful energy and resource conservation programs.  The amendment clarifies and expands the Authority’s mandate to administer programs to reduce energy usage and air pollution, conserve scarce natural resources and facilitate the use of clean energy sources.  It also provides a streamlined process for public entities and the Authority’s economic development customers to access the Authority’s programs, technical expertise and available low-cost financing.

“With the increased focus on energy efficiency initiatives and the ability for the Authority to offer these new services, there is a need for increased funding to implement these programs. An estimated total investment of $1.4 billion by the Authority statewide will be required to help meet the State’s goals by 2015.

“The Authority provides services that include feasibility studies and energy master plans, engineering designs, life-cycle cost analyses, procuring equipment, contractor labor, hazardous waste disposal, managing projects/construction and financing projects.  Measures include, but are not limited to: energy-efficient lighting and controls; building envelope-related improvements; heating ventilation and air-conditioning modernization, including energy-efficient chillers, boilers and controls; high-efficiency motors; variable-speed drives; energy management systems (‘EMS’); process controls and distributed generation and a variety of beneficial electrification technologies.

DISCUSSION

“As the general contractor for the Statewide ESP, the Authority contracts for the installation of ESP measures with Implementation Contractors (‘ICs’).  The services provided by the ICs complement the Authority’s headquarters and field office resources.  The IC’s scope of work generally consists of the following:

·         On-site screenings of customers’ facilities to determine which ones are likely candidates for clean energy technologies projects and/or for realizing significant energy and operational cost savings from energy efficiency measures.

·         On-site surveys, energy audits, technical feasibility studies and energy master plans to identify potential applications for clean energy or energy efficiency measures approved for the Statewide ESP.

·         Detailed engineering studies and analyses of specific ESP measures or systems.

·         Design of proposed systems and/or measures.

·         Preparation of project proposal documents and solicitation of competitive bids.

·         Procurement of equipment and installation services.

·         Construction management and oversight of proposed system and/or equipment installation and project closeout (including waste management).

 

“In addition, ICs are required to work directly with the customer/program participants, from facility audit to final acceptance of equipment installation.  Procurement of materials and installation of the recommended ESP measures are competitively bid by the ICs, and the ICs are required to guarantee the quality of all work performed.

“In November 2009, the Authority advertised a Request for Proposals (‘RFP’) in the New York State Contract Reporter soliciting firms interested in providing implementation services for the Statewide ESP.  As a result of that advertisement and invitation to bid, 144 firms received the RFP packages.  A mandatory pre-bid conference was held on December 10, 2009 to explain the proposed scope of work and provide an opportunity for potential bidders to ask questions and seek clarification.  Representatives of 15 firms attended the pre-bid conference.  The RFP was divided into three ‘all or nothing’ solicitations:  (i) Engineering, Design and Construction Services; (ii) Comprehensive Audit/Energy Master Planning and (iii) Retro-commissioning.  The bidders could not elect to submit a proposal for only one of the services.  Bidders were allowed to bid varying rates, or elect not to bid, in each of three geographic regions in NYS, broadly defined as Downstate, Northeast NYS and Western NYS (county list for each region was provided).

“On January 22, 2010, 11 firms submitted bids for the aforementioned services.  The bid evaluation committee reviewed the 11 proposals and, based on the evaluation of the firms’ relevant experience and fees, staff recommends that contracts for Engineering, Design and Construction Services, Comprehensive Audit/Energy Master Planning and Retro-commissioning be awarded to the three overall lowest-cost bidders in the Downstate and Western NYS regions:  Guth-DeConzo, AECOM and Wendel Energy Services. 

“The bid evaluation committee recommends that contracts for Engineering, Design and Construction Services, Comprehensive Audit/Energy Master Planning and Retro-commissioning be awarded to the four overall lowest-cost bidders in the Northeast NYS region:  Guth-DeConzo, AECOM, Wendel and EYP.  Four contracts are recommended for this region based on the anticipated level of program activity and to ensure the availability of qualified resources in the event that the performance of a contractor does not meet the Authority’s expectations.

 

Guth-DeConzo

                “The proposal submitted by Guth-DeConzo demonstrated relevant experience in the design and construction management of energy measures as described in the RFP in the Engineering, Design and Construction Services section of the Schedule of Services.  Guth-DeConzo also provided the lowest overall pricing matrix over all disciplines, including Engineering and Design, Master Planning and especially, Retro-Commissioning.  However, Guth-DeConzo is new to Authority programs, although certain staff has experience with the Authority.  As such, the Committee decided to continue the evaluation with a conference with Guth-DeConzo.  Guth-DeConzo was able to clearly and successfully demonstrate its ability to satisfy the requirements of Statewide ESP. Guth-DeConzo has offices in New York City and Albany.

 

AECOM

 

                “The proposal submitted by AECOM demonstrated relevant experience in the design and construction management of energy measures as described in the Schedule of Services.  AECOM, previously known as DMJM Harris, had curtailed its involvement with the Statewide ESP in 2005 so it could focus on the SENY market.  The Committee met with AECOM to discuss its program implementation plan.  AECOM has demonstrated its ability to implement projects through its successful work on contracts with the Authority in the SENY territory.  With offices established in Albany and Syracuse, the Committee believes AECOM’s work plan and management changes will enable AECOM to be effective in all three regions.  AECOM has offices in Albany, Syracuse and New York City.

 

Wendel Energy Services (‘Wendel’)

 

                “Wendel is currently under contract for design and implementation services for Statewide ESP, and, as such, its proposal clearly showcased relevant experience in design and construction management as described in the RFP.  Wendel fully understands the Authority’s processes and has proven program experience.  Wendel’s staffing and work plan are the same as those under its current contract.  The evaluation committee reviewed Wendel’s performance history; Wendel has demonstrated its ability to meet the requirements of the ESP and has proven program experience.  Wendel has offices in Buffalo and Smithtown.

 

Einhorn Yaffee Prescott (‘EYP’)

 

                “EYP submitted a bid for the Downstate and the Northeast NYS regions.  However, EYP is recommended for only the Northeast region because that is the only region where the need for additional resources is anticipated.  EYP was less competitive for the Downstate region and Nassau and Suffolk Counties were excluded from EYP’s bid.  EYP’s staffing and work plan are the same as those in its current contract.  EYP is currently under contract for design and implementation services for Statewide ESP, and as such, its proposal also highlights relevant experience in the design and construction management described in the RFP.  The evaluation committee reviewed EYP’s performance history; EYP has demonstrated its ability to meet ESP requirements and has proven program experience.  EYP has offices in Albany, New York City and Boston.

 

FISCAL INFORMATION

 

“Additional funding of $200 million is requested to implement the Authority’s energy services offered under the Statewide ESP.  The funding will be provided from the proceeds of the Authority’s Commercial Paper Notes and/or the Operating Fund.  In addition, projects may be funded, in part, with monies from Petroleum Overcharge Restitution (‘POCR’) funds.  An initial allocation of $20 million will be made to Guth-DeConzo, AECOM and Wendel and a $10 million allocation will be made to EYP.  Additional allocations will be based on each firm’s performance and subject to the approval limits for execution of commitments in the Authority’s then-current Expenditure Authorization Procedures (or equivalent limits set forth in any successor procedures).  All Authority costs, including Authority overheads and the costs of advancing funds, but excluding the POCR grants, will be recovered consistent with other Energy Services and Technology programs.

RECOMMENDATION

“The Senior Vice President – Energy Services and Technology and the Vice President – Energy Services recommend that the authorized funding for the Statewide Energy Services Program be increased by $200 million and that implementation contracts be awarded to Guth-DeConzo Consulting Engineers, P.C., AECOM USA, Inc., Wendel Energy Services, LLC and Einhorn Yaffee Prescott Architecture & Engineering, P.C. for $180 million, in aggregate, for a five-year term.

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

                Mr. Paul Belnick presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Townsend, Mr. Belnick said that language in the implementation contracts includes M/WBE goals and that the Authority reviews the subcontractor bids.  He said that the Authority also works with the New York City Housing Authority (“NYCHA”) to employ residents on its NYCHA energy services projects.  In response to a question from Vice Chairman Foster, Mr. Angelo Esposito said that every dollar invested in the energy services programs (including money spent on Authority direct and indirect overheads) is returned to the Authority for reinvestment in the programs.  He said that there had been no defaults on any of the $1.2 billion invested in 3,400 energy services projects to date.  Chairman Townsend said that he believed the Authority’s energy services programs go to the core of the Authority’s mission and that the best possible program is one that reduces the use of energy.  Responding to a question from Trustee O’Luck, Mr. Kessel said that the Authority has been very successful in publicizing its upstate energy services projects, but that it is much harder to get media coverage in the New York City area. 

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

 

RESOLVED, That the Trustees authorize the President and Chief Executive Officer, the Chief Operating Officer, the Senior Vice President – Energy Services and Technology or such other officer designated by the President and Chief Executive Officer to execute agreements and other documents between the Authority and Statewide Energy Services Program (“Statewide ESP”) participants and to execute agreements and other documents with Implementation Contractors, such agreements having such terms and conditions as the executing officer may approve, subject to the approval of the form thereof by the Executive Vice President and General Counsel, to facilitate the development of the Statewide ESP, and that the authorized funding level for the Statewide ESP be raised to $833 million from the  $633 million previously authorized, as listed below:

 

                               
 

Commercial Paper Program/                        Statewide ESP

                                Operating Fund/ POCR                                    Authorization

                                                                                                               

                                                Previously Authorized                                     $633 million

                                                Additional Funding                                           $200 million

                                                Total Amount Authorized                                $833 million

 

AND BE IT FURTHER RESOLVED, That in accordance with the Guidelines for Procurement Contracts adopted by the Authority and the approved limits for execution of commitments in the Authority’s then-current Expenditure Authorization Procedures (or equivalent limits set forth in any successor procedures), $180 million of the foregoing amount be allocated in aggregate to the approved contracts with Guth-DeConzo Consulting Engineers, P.C., AECOM USA, Inc., Wendel Energy Services, LLC and Einhorn Yaffee Prescott Architecture & Engineering, P.C. for a five-year term in the amount and for the purpose listed below:

 

 

Commercial Paper Program/

Operating Fund/ POCR                    Ceiling                                                  Date      

                                                                                                Up to

Guth-Deconzo                                     $180 million (aggregate)*               5/25/2015

AECOM                                                *Funds will be allocated

Wendel Energy Services                  based on contractor

Einhorn Yaffe Prescott                    performance and areas

of specialization.  Initial

allocations of $20 million

each will be made to

Guth-DeConzo, AECOM

and Wendel and $10 million

will be allocated to EYP

 

AND BE IT FURTHER RESOLVED, That the Authority’s Commercial Paper Notes, Series 1, Series 2 and Series 3, may be issued and Operating Fund monies may be used to finance Statewide ESP costs; and be it further

 

RESOLVED, That the Senior Vice President – Energy Services and Technology is authorized to determine which projects in the Statewide ESP will be deemed to be energy services projects within the meaning of Section (7) of Part P of Chapter 84 of the Laws of 2002 (the “Section (7) POCR Legislation”) to be funded in part with Petroleum Overcharge Restitution (“POCR”) Funds allocated pursuant to the Section (7) POCR Legislation; and be it further

 

RESOLVED, That POCR funds allocated to the Authority by the Section (7) POCR Legislation may be used to the extent authorized by such legislation, in such amounts as may be deemed necessary or desirable by the Senior Vice President – Energy Services and Technology to finance Statewide ESP projects; and be it further

 

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

 


 

7.                   Agreement  for Economic Development Funds in St. Lawrence County and Proposed Power Contract with the Town of Massena Massena Electric Department

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY:

 

                “The Trustees are requested to authorize (1) the President and Chief Executive Officer, and his designees, to enter into an agreement with the St. Lawrence River Valley Redevelopment Agency (‘Board’) and the St. Lawrence County Industrial Development Agency Local Development Corporation (‘LDC’) whereby the Authority will provide $16 million (the ‘Fund’) to the Board and LDC and certain other monies to be used for economic development purposes in St. Lawrence County; and (2) a public hearing, pursuant to Section 1009 of the Public Authorities Law, on a contract (‘Power Contract’) for the sale of 20 MW of hydropower to the  Town of Massena, Massena Electric Department.

 

BACKGROUND

 

                “As part of the St. Lawrence/FDR Project relicensing, the Authority in 2001 entered into a funding agreement with the St. Lawrence Aquarium and Ecological Center (‘SLAEC’) by which it agreed to invest approximately $20 million (plus certain interest) in the construction of an aquarium and other facilities so long as SLAEC raised a specified amount of matching funds.  Because SLAEC failed to raise the matching funds to meet this condition, the agreement with SLAEC was cancelled on July 1, 2005.  However, the Authority made clear at that time that the $20 million (which, with the accrued interest through June 30, 2005, amounted to approximately $26 million) would be made available in that area for economic development purposes.

 

                “In September 2005, the Trustees approved the Authority’s entering into an agreement with a non-profit, local development corporation (now named Seaway Private Equity Corporation) pursuant to which the Authority agreed to provide $10 million of the $26 million for investment in new technology businesses in St. Lawrence County.  The remaining $16 million is the subject of the Agreement currently under consideration.         

 

                “Also as part of the St. Lawrence/FDR Project relicensing, the Authority successfully negotiated a return to New York State of 33.5 MW of the 68 MW of the Project power that under the prior license had been sold to Neighboring States.  The Authority has since the conclusion of relicensing supported the use of some of this ‘recaptured’ power to provide 20 MW of hydropower for economic development purposes in the vicinity of the Project; 17.2 MW of the ‘recaptured’ power is available for this purpose.  With 2.8 MW of St. Lawrence/FDR power available for withdrawal from the three upstate investor-owned utilities, the Authority can provide the promised 20 MW to the North Country to be used for economic development under the Power Contract.

 

DISCUSSION

 

                “The Board comprises St. Lawrence County; the towns of Lisbon, Waddington, Louisville and Massena, and the villages of Waddington and Massena, with the Authority serving as a non-voting member.  The LDC is an existing economic development agency in St. Lawrence County with extensive experience in administering economic development programs.

 

                “The Board and the LDC are in the process of finalizing a separate agreement between them (‘Board-LDC Agreement’) pursuant to which the $16 million to be provided by the Authority will be administered and used.  Under the Board-LDC Agreement, the monies to be provided by the Authority will be used for economic development purposes, including, for example, loans or grants to businesses in St. Lawrence County as determined by the Board and the LDC, payment of related administrative expenses and providing up to 5% on an annual basis of the unrestricted fund balance for community development and improvement projects in St. Lawrence County, including environment-related projects.  The Board-LDC Agreement also sets forth project eligibility criteria, application and approval procedures, project documentation and monitoring procedures and the administrative and financial services to be performed by the LDC on behalf of the Board in administering the Fund.

 

                “In addition to providing for the transfer of $16 million to the Board and the LDC to establish the Fund for economic development purposes, the Agreement under consideration (a draft of which is attached as Exhibit ‘7-A’) requires the Board and the LDC to have performed annually a financial audit of the Fund and to prepare an annual report concerning the use and disposition of the monies in the Fund.  These audits and annual reports will be available to the public. 

 

                “The Agreement also provides that the Authority will maintain a non-interest-bearing internal account to accrue the net value of power available under the Power Contract that is not yet sold to ultimate users.  The net value will be based on the difference between the Authority’s cost-based rate for St. Lawrence/FDR hydropower and the higher, prevailing wholesale market prices in the electric energy market administered by the New York Independent System Operator.  The accruals in this account will apply to up to 20 MW of any unallocated power for the first five years of the Power Contract term; after five years, the accruals will be based on no more than 10 MW of any unallocated power.  This account will exist for the term of the initial Power Contract through 2025, and thereafter under a successor Power Contract through the remaining term of the current St. Lawrence/FDR license, which ends in 2053.

 

                “The Agreement authorizes the Board and the LDC jointly or the Board separately to request disbursements from the account for the purpose of funding economic development projects and activities within St. Lawrence County.  The annual reports to be filed by the Board and the LDC with the Authority will contain a detailed reconciliation of all disbursements from the account for the preceding year.  The Authority will not execute a final version of the Agreement until such time as the Board-LDC Agreement has been finalized and executed by those parties.

 

                “The proposed Power Contract is in a standard form and is attached as Exhibit ‘7-B,’ along with the accompanying proposed Service Tariff No. HC-2.  The Power Contract provides for the sale of up to 20 MW of hydropower at the Authority’s cost-based rate to the Town of Massena, Massena Electric Department, which is authorized by New York law to engage in the purchase from the Authority and resale of St. Lawrence/FDR power for economic development purposes.  The Town of Massena, Massena Electric Department currently purchases Niagara Project preference hydropower to serve all classes of retail customers in the Town of Massena and surrounding areas comprising its service area.  Under the Power Contract, the Town of Massena, Massena Electric Department will separately purchase and distribute the 20 MW of power for economic development purposes within its service area and, through means to be determined, to businesses outside its service area but within St. Lawrence County.  The initial term of the Power Contract is through 2025 with a commitment to negotiate a new contract with a term through the end of the current St. Lawrence/FDR license in 2053.

 

FISCAL INFORMATION

 

                “A portion of the proceeds of the Authority’s Series 2003A Revenue Bonds, which were issued principally to finance costs associated with the relicensing and modernization of the St. Lawrence/FDR Project, was set aside in the St. Lawrence Construction Fund for the SLAEC pledge.  Accordingly, the $16 million will be provided from the Authority’s St. Lawrence Construction Fund.  The power sale will be at the Authority’s cost-based rates and thus will recover the Authority’s cost of production.

 

RECOMMENDATION

 

                “The Senior Vice President – Public, Government and Regulatory Affairs, recommends that the President and Chief Executive Officer be authorized to execute an agreement with the St. Lawrence River Valley Redevelopment Agency and the St. Lawrence County Industrial Development Agency Local Development Corporation as discussed above.  The Senior Vice President – Marketing and Economic Development recommends that the Trustees approve a public hearing on the Power Contract with the Town of Massena, Massena Electric Department.  It is further recommended that, pursuant to Section 1009 of the Public Authorities Law, the Corporate Secretary be authorized to transmit copies of the proposed contract to the Governor and legislative leaders, and to arrange for the publication of a notice of public hearing in six newspapers throughout the State in accordance with the Public Authorities Law.

 

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

 

Trustee Nicandri presented the highlights of staff’s recommendations to the other Trustees.  He said that some people in the North Country were not happy with what had been negotiated, but that they were prepared to move forward in spite of that fact.  President Kessel thanked Trustee Nicandri, Ms. Brown and the legal team and Mr. Paul Finnegan for their efforts to negotiate this agreement.

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

 

RESOLVED, That the President and Chief Executive Officer and his designees are authorized to execute the final version of the agreement between the Authority, the St. Lawrence River Valley Redevelopment Agency and the St. Lawrence County Industrial Development Agency Local Development Corporation discussed in the foregoing report of the President and Chief Executive Officer, subject to the approval of the form thereof by the Executive Vice President and General Counsel; and be it further

 

RESOLVED, That the Trustees hereby authorize a public hearing on the terms of the proposed contract for the sale of hydropower to the Town of Massena, Massena Electric Department; 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 Ways and Means Committee, 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 Corporate Secretary be, and hereby is, authorized to arrange for the publication of a notice of public hearing in six newspapers throughout the State, all done in accordance with the provisions of Section 1009 of the Public Authorities Law; and be it further

 

RESOLVED, That the President and Chief Executive Officer and the Chief Operating Officer or their designees are, and each of them hereby is, authorized, subject to the approval of the form thereof by the Executive Vice President and General Counsel, to enter into such agreements, and to do such other things, as may be necessary or desirable to implement the contract with the Town of Massena, Massena Electric Department 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 resolutions, subject to the approval of the form thereof by the Executive Vice President and General Counsel.


 

8.                   Motion to Conduct an Executive Session

 

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

 

 

9.                   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.

 
 

10.                Next Meeting

 

                Chairman Townsend said that the next meeting of the Trustees would be held at a location to be determined in Buffalo on Tuesday, June 29, 2010. 

 


Closing

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

1:40 p.m.

 

 

 

Karen Delince

Corporate Secretary

 

 

 

                                                                

 

 

 

 

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