MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

October 26, 2010

 

 

Table of Contents

 

                Subject                                                                                                                                                Exhibit

 

1.                   Consent Agenda:                                                                                                                                           

a.       Minutes of the Regular Meeting held on September 28, 2010                         

b.       Annual Review of Hydropower Allocation Job Commitments, Exhibition - “1b-A” 
Resolution
                                                                                                                                   

c.        Power for Jobs and Energy Cost Savings Benefits  Programs – Compliance Review, Exhibition - “1c-A1” – “1c-A2”;  “1c-B1” – “1c-B2”
Resolution

                                                                                                   

d.       Municipal and Rural Electric Cooperative Economic Development Program – Delaware County Electric Cooperative
 

e.        Municipal and Rural Electric Cooperative Systems –   Service Tariff Amendments – Notice of Adoption, Exhibition - “1e-A” – “1e-E”
Resolution   

 

f.        Procurement (Services) Contract – Blenheim-Gilboa Pumped Storage Project Relicensing – Information  Management System – Award 

 

g.       Amendments to the Authority’s By-laws, Exhibition - “1g-A” & “1g-B”
Resolution

h.       Amendments to the Authority’s Finance Committee and Governance Committee Charters, Exhibition - “1h-A”; “1h-A1”; “1h-B”; “1h-B1”
Resolution 

                                                                                                                                         

 

Discussion Agenda:

2.                   Q&A on Reports from:

a.       President and Chief Executive Officer Exhibition - “2a-A”
Resolution

b.       Chief Operating Officer, Exhibition - “2b-A”
Resolution          

c.        Chief Financial Officer, Exhibition - “2c-A”
Exhibition

3.                   Allocation of  25,000 kW of Hydropower to Verizon CCC LLC, Exhibition - “3-A”; “3-A-1”

Resolution

4.                   St. Lawrence/FDR Power Project – Cleaning/Abatement of Life Extension and Modernization Components –  Contract Award
Resolution

                                                                                                                          

5.                   Issuance of Series 2010 Revenue Bonds, Exhibition - “5-A-1” – “5-A-3”

Resolution                                                                                                                                                            

6.                   Purchase of Interest Rate Cap Relating to Series 1 Commercial Paper Notes
Resolution                                                  

 

7.                   Committee Appointments                                                                                                      

                Resolution

8.                   Motion to Conduct an Executive Session                                                                           

9.                   Motion to Resume Meeting in Open Session                                                                      

10.                Hudson Transmission Partners, LLC – Authorization to Post Additional Security
Resolution                                               

                  

11.                Cost Share Agreement for Shore Power with the City of New York of New York    

Resolution

12.                Next Meeting                                                                                                                                                

13.          Closing                                                                                                                                                                                


 

Minutes of the Regular Meeting of the Power Authority of the State of New York held via videoconference at Niagara Power Project, Lewiston, New York, at approximately 11:30 a.m.

Members of the Board present were at the following locations:

                                Michael J. Townsend, Chairman – Niagara, NY

                                Jonathan F. Foster, Vice Chairman – Creve Coeur, MO

                                D. Patrick Curley, Trustee – Niagara, NY

                                Eugene L. Nicandri, Trustee – Niagara, NY

                                Mark O’Luck, Trustee – Niagara, NY

 

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Richard M. Kessel                               President and Chief Executive Officer

Gil C. Quiniones                                   Chief Operating Officer

Terryl Brown                                        Executive Vice President and General Counsel

Francine Evans                                    Executive Vice President, Chief Administrative Officer

                                                                    and Chief of Staff

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

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 – Corporate Support Services – WPO

Jordan Brandeis                                   Vice President – Power Resource Planning and Acquisition – WPO

John L. Canale                                     Vice President – Project Management

Thomas Concadoro                            Vice President and Controller

Dennis Eccleston                                 Vice President – Information Technology/Chief Information Officer – WPO

Michael Huvane                                  Vice President – Marketing

Joseph Leary                                        Vice President – Community and Governmental Relations

Lesly Pardo                                           Vice President – Internal Audit

Scott Scholten                                      Vice President and Chief Risk Officer

John Suloway                                       Vice President – Project Development, Licensing and Compliance

Brian McElroy                                     Treasurer

Timothy Sheehan                                                Special Counsel – General Counsel

Karen Delince                                      Corporate Secretary

Michael Saltzman                               Director – Media Relations

Joseph Kessler                                      Regional Manager WNY – Niagara

Elise Cusack                                         Community Liaison Erie Harbor and Special Projects – President’s Office

Lorna M. Johnson                               Assistant Corporate Secretary

Shirley Hamilton                                 Senior Operator – Niagara

Sheila Baughman                                                Senior Secretary – Corporate Secretary’s Office

Cynthia Chaney                                  Journeyperson Electrician - Niagara

Larry Green                                          Building and Grounds Attendant – Niagara

Venetia Alston                                     Building and Grounds Attendant – Niagara

George D. Maziarz                              Senator

Jim Ward                                               Senator Maziarz’s Offfice

Renae Kimble                                      Legislator – Niagara County

Nick Melson                                         Legislative Director - NYS Assembly

Lorrie Abounader                                                Business Development Manager – BNE

Kory Schuler                                        Director of Governmental Affairs – Niagara USA Chamber

Dean Walker                                        President/Business Manager – IBEW Local 2101

 


 

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


 

1.                     Consent Agenda

               

                Chairman Michael Townsend welcomed the Board members, Senator George Maziarz and Legislator Renae Kimble to the meeting.  He said that the Trustees were briefed on various items and thanked Elizabeth McCarthy and Brian McElroy for briefing them prior to the meeting. 

Chairman Townsend said that the Economic Development Power Allocation Board had recommended that the Authority’s Trustees approve item 1c (Power for Jobs and Energy Cost Savings Benefits Programs – Compliance Review) at their meeting held on October 25, 2010.

Trustee Mark O’Luck said that with regard to the Hydropower Annual Compliance Review, he was glad that the Trustees were in support of continuing the Authority’s commitment to those businesses that are not in compliance, because things are very difficult for businesses in upstate New York at this time.

Trustee D. Patrick Curley recused himself from the vote on item 1b (Annual Review of Hydropower Allocation  Job Commitments) with respect to International Imaging Materials, Inc. and item 1c (Power for Jobs and Energy Cost Savings Benefits Programs – Compliance Review) with respect to  Mayer Bros. Apple Products, Inc.; St. Lawrence University; Mayer Brothers Products; and Quebecor World Buffalo, Inc.


 

a.       Approval of the Minutes

 

                The Minutes of the Regular Meeting held on September 28, 2010 were unanimously adopted.


 

b.                   Annual Review of  Hydropower Allocation Job Commitments

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“Staff conducted the annual review of hydropower allocation job commitments covering the reporting period January through December 2009.  It is recommended that the Trustees take no action on 32 customers holding 39 allocations whose reported job levels did not meet the contracted job commitments, as set forth in Exhibit ‘1b-A,’ Section I.  Additionally, the Trustees are requested to approve reductions to power allocations and/or job commitments for four customers with seven allocations, as set forth in Exhibit ‘1b-A,’ Section II.

 

BACKGROUND

 

Each year, staff performs a review of all in-service hydropower allocation contracts for compliance with agreed-upon job commitment levels.  The contracts contain a customer commitment to retain and/or add a specific number of jobs.  For compliance evaluation, customers were required by contract to report their monthly employment numbers for calendar year 2009 by February 28, 2010.    

 

If the reported 12-month average employment level fell below 90% of that total job commitment (80% for ‘vintage’ customers, i.e., those having contract allocations prior to 1988), the Authority may reduce that customer’s power allocation proportionately.  Contract permitting, the customer may request a productivity review to have its job commitment reduced if the reduction in employment is due to increased efficiency or improved technology.

 

DISCUSSION    

 

In 2009, the Authority had 122 hydropower customers holding 216 Replacement Power (‘RP’) and Expansion Power (‘EP’) allocation contracts.  Of these, a total of 103customers held 187 contracts that required the customers to report job levels for 2009.  The 187 contracts and allocation commitments reviewed by staff represent total power allocations of 533,428 kW and total employment commitments of 27,416 jobs.  In the aggregate, these customers reported actual employment of 30,792 jobs.  This represents 112% of the total job commitment for hydropower customers reporting in 2009.   

 

Nevertheless, roughly one-third of the customers had difficulties meeting job commitments. Specifically, 36 customers with 46 contracts reported actual job levels below the minimum threshold.  The main cause of this under-performance, as described by nearly every customer, was the economic downturn that began in 2008 and continued throughout 2009.  This review of customers’ job commitments was conducted against the backdrop of an economic recession that hit the State of New York particularly hard.

 

During 2009, many customers were faced with the difficulty of meeting their commitments while trying to cope with the global financial crisis and the rapid onset of the national recession.  For many, the year was one spent trying to stem the effects of the downturn and struggling for survival.  Given the complex mix of cyclical and structural employment adjustments occurring during this period, it was a difficult process to review and assess the nature of the under-performance.  Some customers resorted to alternative methods to weather the downturn until the economy improves, such as furloughs or temporary job cuts.  Companies had to make extremely difficult choices due to severe loss of business stemming from decreased sales and demand, as well as, in some cases, increased costs for raw materials, labor and regulatory requirements.  Nearly a quarter of these customers have requested some relief in terms of reductions to job commitments, which gives some indication of the overall health and prosperity of their businesses.

 

Because the jobs reported are from 2009, staff has recently reached out to customers to provide an updated status of their employment and business prospects.  Information from these responses is included with the customer summaries that follow.  Customers that reported job shortfalls have been segmented into two sections:  (1) allocations for which staff recommend no action; and (2) allocations for which staff recommend a reduction to kW allocations and/or job commitments.

 

Staff recommends the Trustees take no action on 32 customers holding 39 allocations, as described in the following Section I below, and set forth in Exhibit ‘1b-A,’ Section I.  Additionally, the Trustees are requested to approve reductions to power allocations and/or job commitments for four customers with seven allocations, as described in Section II below, and set forth in Exhibit ‘1b-A,’ Section II.

 

 

Section I

Allocations to Continue with No Change

 

 

Ashland Advanced Materials, Inc.   Niagara Falls, Niagara County

Allocations:                         3,500 kW Expansion Power (‘EP) – 2009 takedown of 500 kW

Jobs Commitment:            75 new jobs

 

Background:  Ashland Advanced Materials, Inc. (‘Ashland’) is a primary supplier of manufactured graphite products and ultra-high-temperature heat-treating services. This customer started taking down power in January 2009 and has 3 years to create 75 new jobs.  This is the first time it was asked to report job numbers and for 2009, it averaged 7.2 jobs, i.e., 9.5% of its commitment.  The company began production in 2009, but due to a sharp drop in demand for its products, the facility was unable to fully ramp up its project and associated employment. It also lost several customers, which affected its production levels and hiring ability in 2009.  Ashland has seen increased production and sales in 2010.  The company has taken down additional power (current takedown is 1,550 kW) and employment has trended up to 21 employees.

 

BMP America, Inc., Medina, Orleans County

Allocation:                           100 kW of Replacement Power (‘RP’)

Jobs Commitment:            130 base jobs

 

Background:  BMP America, Inc. (‘BMP’), incorporated in 1982, specializes in the design and manufacture of textile-related components used in business machines, with customers such as Xerox, Kodak, Hewlett-Packard, IBM and Heidelberg.  For 2009, BMP averaged 76 jobs, i.e., 58.5% of its commitment.  BMP was also not in compliance in 2008.  Due to the economic recession, demand for BMP components has been significantly down, which has led to lay-offs.  Additionally, demand for its products in the business machine market has been extremely low as well.  BMP is optimistic that it is poised to do well once the economy turns around, but until that time, it cannot begin rehiring. 

 

Buffalo Newspress Inc., Buffalo, Erie County

Allocation:                           200 kW of EP

Jobs Commitment:            149 jobs

 

Background:  Buffalo Newspress Inc. (‘Buffalo Newspress’), founded in 1979, prints advertising inserts, brochures and weekly newspapers.  For the past year, Buffalo Newspress averaged 118.3 jobs, i.e., 79.4% of its contractual commitment.   In 2009, competitive industry pressures and skyrocketing paper prices landed a serious blow to its bottom line, forcing the company to trim its workforce by 25 jobs.  The company has also been faced with the volatile economy while attempting to replace lost business.  Although Buffalo Newspress continues to invest in its business and search for new business opportunities, it has not been able to increase its job levels in 2010. 

 

Caplugs, LLC. Buffalo, Erie County  

Allocation:                           250 kW of EP

Jobs Commitment:            310 jobs

 

Background:  Caplugs LLC (‘Caplugs’) has been in business since 1948, manufacturing plastic caps, plugs and temperature-control equipment through plastic injection molding and vinyl dip molding and extrusion.   For 2009, Caplugs averaged 234 jobs, i.e., 75.5% of its contractual commitment.  Due to distressed economic conditions, the company found it necessary to reduce its workforce.  It went from 268 jobs in January 2009 to 234 jobs by December 2009 due to negative effects of the poor economy.  Its business has improved in 2010 and the company has reached a current head count of 273 jobs, or 88.1%.  Employment is expected to increase gradually as the economy improves.

 

Contract Pharmaceuticals Limited Niagara, Buffalo, Erie County

Allocation:                           250 kW of RP

Jobs Commitment:            329 jobs

 

Background:  Contract Pharmaceuticals Limited Niagara (‘CPL’), a Canadian company, purchased Bristol-Myers Squibb’s facility in 2005 and manufactures dry skin, anti-inflammatory and anti-fungal dermatological products, in addition to various cold medicines under contract for other companies.  For 2009, CPL averaged 279.8 jobs, i.e., 85.1% of its contractual commitment for its 250 kW RP allocation.  CPL also has a 750 kW EP allocation that has maintained the 265 job commitment (105.6%).  CPL has embarked on a lean manufacturing strategy to help reduce lead time and waste.  Current employment at its Buffalo facility is 260 jobs, which is down from the 2009 average.

 

Coyne Textile Services, Buffalo, Erie County

Allocation:                           350 kW of EP

Jobs Commitment:            93 jobs

 

Background:  Coyne Textile Services (‘CTS’) is a family-owned business incorporated in 1929 that provides textile rental products and laundering services.  The textile rentals range from work uniforms and protective clothing to shop towels and floor mats.  CTS specialize in environmentally safe cleaning of heavily soiled garments that require special processing due to the nature of the stain (petroleum, printing dyes, etc.).  For the past year, CTS averaged 42.2 jobs, i.e., 45.3% of its contractual commitment.  CTS has not seen a great deal of growth due to the economy and shrinkage in its current customer base. The company depends on the stability and vibrancy of its customers, and has therefore lost business due to the high level of business downsizings and closures in Western New York in recent years.  However, the company has focused on expanding into new sales and servicing its current customer base as economically as possible by investing in the highest-efficiency equipment possible. Its current employment levels have remained the same as 2009 but the company remains optimistic about future growth.

 

C & S Wholesale Grocers, Inc., Lancaster, Erie County

Allocation:                           550 kW of EP

Jobs Commitment:            682 jobs

 

Background:  C & S Wholesale Grocers, Inc. (‘CSWG’) has provided warehousing and distribution services to supermarket chains, independent grocers and military facilities across the nation for more than 85 years.  CSWG entered Western New York in 2002, when it entered into an agreement with Tops Markets, Martins and other local grocery stores.  In 2009, CSWG averaged 526.9 jobs, i.e., 77.3% of its contractual commitment.  CSWG fell below its job commitment due to business and economic conditions.  However, the company also operates a nearby facility in Cheektowaga that also has hydropower service.  While the company is below at the Lancaster facility, its job levels were at102.3% of its commitment at the Cheektowaga facility.  One of its major customers, Tops Markets (“Tops”), is also suffering from the recession, with reduced employment levels in 2009.  Tops did manage to purchase additional store locations and CSWG is optimistic that as the economy improves, Tops’ sales and growth will improve.  CSWG is trending upward toward their contractual commitment with a current job count of 617, right at the 90% threshold.

 

Dunkirk Specialty Steel, LLC, Dunkirk, Chautauqua County

Allocation:                           5,800 kW of EP

Jobs Commitment:            180 jobs

 

Background:  Dunkirk Specialty Steel, LLC (‘Dunkirk’) purchased the assets of Empire Steel in 2002 and manufactures stainless steel and alloys, primarily for the tool industry.  For the past year, Dunkirk averaged 150 jobs, i.e., 83.3% of its contractual commitment.  By February 2008, the business had grown to its commitment level of 180 employees.  In 2009, however, the employment level hit a low of 144 jobs, mirroring the dismal state of the overall economy.  Since early 2010, the company has begun to see a steady increase in sales growth, which has required hiring several employees.   Additionally, capital investments in operations have been targeted to increase overall production capacity.  The company currently has 164 positions, which is 1% above the compliance threshold.

 

EPCO Carbon Dioxide Products Inc, Medina, Orleans County

Allocation:                           1,000 kW of RP

Jobs Commitment:            20 new jobs

 

Background:  EPCO Carbon Dioxide Products (‘EPCO’) manufactures purified liquid carbon dioxide (CO2).  The company purchases CO2 gas from various ammonia and ethanol plants and gas wells.  Upon completion of various processes, EPCO sells the liquid CO2 to both wholesale and end users of CO2 . For the past year, EPCO averaged 6.3 jobs, i.e., 31.5% of its contractual commitment.  Service commenced in September 2008, giving the company time to ramp up to its contractual commitment to create 20 new jobs.  EPCO has had problems with the stalled economy.  Demand for its roduct is down significantly, and, as such, truck drivers included in the commitment are not needed to deliver goods.  The main factor affecting the company’s growth is the lack of bidding opportunities in 2009.  The business climate has improved a bit this year, and there is cautious optimism for 2011.  The company has hired sales personnel to address solicited business in various regions, allowing them to continue to hire new employees. Earlier this year, the company filled two new positions and most recently it is trending up toward the commitment level at 10 jobs.  

 

Goodyear Dunlop Tires North American Ltd., Tonawanda, Erie County

Allocation:                           800 kW of RP and 850 kW of RP

Jobs Commitment:            1449 jobs and 1422 jobs

 

Background:  Goodyear Dunlop Tire Company N.A. (‘Goodyear Dunlop’) manufactures tires for automobiles, motorcycles and all-terrain vehicles at its Tonawanda facilities.  For the past year, Goodyear averaged 1240.2 jobs, i.e., 85.6% of its contractual commitment.  The economic downturn led the company to reduce staff in 2009.  However, Goodyear Dunlop’s two ‘vintage’ RP contracts (4,191 kW and 250 kW) are reporting well above their 80% ratio commitment level.  The two-year average for the vintage allocations as reported is 1353.5 jobs, i.e., 95.2% of the company’s commitment.  While these two allocations were below by 64 jobs, employment numbers have trended up thus far in 2010.

 

Habasit Belting, LLC., Buffalo, Erie County

Allocation:                           200 kW of RP

Jobs Commitment:            80 jobs

 

Background:  Habasit Belting LLC (‘Habasit’), in business since 1916, manufactures conveyor belts, primarily for the food industry.  The company uses a non-rubber, non-woven specially treated fabric that is lighter, stronger and easier to clean than rubber.  For the past year, Habasit averaged 65 jobs, i.e. 81.2% of its contractual commitment.  In 2009, production was down due to slow order volumes from customers.  In spite of the slowdown, the company was successful in maintaining steady headcounts in 2009.  Habasit is encouraged by the recent business climate and has added five jobs in the past two months, bringing it up to 65 jobs.  Its business is closely tied to manufacturing industries (conveyor belts) and as other companies rebound, it expects business and employment to improve.

 

Honeywell International, Buffalo, Erie County

Allocation:                           300 kW of RP

Jobs Commitment:            168 jobs

 

Background:  Honeywell International (‘Honeywell’), formerly Allied-Signal Inc., is a research and development lab founded in the early 1900s.  Honeywell develops and produces atmospherically safe fluorocarbons at its Buffalo facility.  For the past year, Honeywell averaged 134.4 jobs, i.e., 80% of its contractual commitment.  The site experienced small reductions in jobs due to the recession.  However, toward the end of 2009 it regained some positions, and has continued to do so throughout 2010.  This year the company is trending up toward its commitment level, with a current head count of 153.6 jobs, or 91%, above the compliance threshold. 

 

Hurtubise Tire, Inc., North Tonawanda, Niagara County

 Allocation:                          180 kW of Replacement Power (“RP”)

Jobs Commitment:            18 jobs

 

Background:  Hurtubise Tire, Inc. (“Hurtubise”) is a family-owned business, providing truck tire re-capping and services for the area.  In 2009, the first required reporting year, the company averaged 8 jobs, i.e., 44.4% of its job commitment.  The company’s initial takedown began March 2008, which, for compliance purposes, means it has more time to ramp up to its full commitment.  Hurtubise stressed that the economy in 2009 hurt the company’s ability to add jobs.  Nearly all of its existing customers cut back during the down economy.  Hurtubise is also fighting serious competition from businesses in Pennsylvania and Ohio which are intercepting the company’s growth and sales revenue by selling under cost.  Currently, the company is planning to acquire another business to expand sales out of the area, with the hope of eventually increasing its employment base as the economy turns around.

 

Ingram Micro Corporation, Williamsville, Erie County

Allocation:                           900 kW of EP

Jobs Commitment:            1,525 jobs

 

Background:  Ingram Micro Corporation (‘Ingram’) is a leading wholesale distributor of microcomputer products worldwide, including hardware, software and networking equipment.  For the past year, Ingram averaged 1,177.5 jobs, i.e., 77.2% of its job commitment.  In 2009, Ingram experienced a reduction in sales revenue due to the global economic downturn. As a result, it reduced staff by more than 100 positions.  Ingram continued to invest heavily in its state-of-the-art facility to remain competitive.  The company reports that business has improved throughout 2010.  This year, the company is trending up toward its commitment level, with a current head count of 1,232 jobs.  The Trustees recently approved a reduction in Ingram’s job commitment to 1,293 jobs for the extended term (2013-2020) of its contract.

 

International Imaging Materials, Inc., Amherst, Erie County

Allocations:                         1,000 kW of EP and 250 kW of RP

Jobs Commitments:           499 jobs and 393 jobs, respectively

 

Background:  International Imaging Materials, Inc. (‘International Imaging’), in business since the mid-1980s, manufactures thermal transfer ribbons.  For the past year, International Imaging averaged 314 jobs, i.e., 62.9% and 79.9% of its contractual commitments, respectively.  In 2009, International Imaging saw employment levels fall due to rising costs and a decrease in sales revenue.  While previous productivity improvements have allowed the company to exert cost control, it has seen a significant downturn in business as a result of the economic crisis.  However, the company has recently been able to add an additional 10 employees.  The Trustees recently approved a reduction in the company’s job commitment to 310 jobs for the extended term (2013–2020) of its contract.

 

Lockheed Martin, Niagara Falls, Niagara County

Allocation:                   250 kW of RP

Jobs Commitment:            45 jobs

 

Background:  Lockheed Martin (‘Lockheed’) manufactures gravity gradiometer technology for the U. S. Navy and commercial use.  For the past year, Lockheed averaged 35.9 jobs, i.e., 79.8% of its contractual commitment.  Lockheed expected to grow in 2009, however due to the state of the economy and its impact on orders, the company fell below its contractual commitment.  The company managed to maintain about the same employment levels as the year before.  Lockheed is optimistic and is currently in the process of hiring an additional four to six employees, which would bring it into compliance. 

 

Luvata  Buffalo, Inc., Buffalo, Erie County

Allocation:                            250 kW of RP

Jobs Commitment:             831 jobs

 

Background:  Luvata Buffalo, Inc. (‘Luvata’), formerly Outokumpu American Brass or OAB Holdings, Inc., in business since 1906, manufactures copper and brass sheets and rolls.  For the past year, Luvata averaged 545 jobs, i.e., 65.6% of its contractual commitment. As this time, Luvata is meeting all employment commitments for several allocations totaling 11,310 kW, with the exception of this 250 kW allocation.  The company is requesting a reduction in job commitments for its 250 kW allocation to 575 jobs.  Business has improved slowly in 2010 and the trend is positive.  Current employment is just over 600 jobs. The Trustees recently approved a reduction in the company’s job commitment to 575 jobs for the extended term (2013–2020) of its contract.

 

Metaullics Division of Pyrotek, Inc Sanborn, Niagara County

Allocation:                           500 kW of RP

Jobs Commitment:            8 jobs

 

Background:  Metaullics Division of Pyrotek, Inc. (‘Metaullics’) is a privately owned international organization specializing in the development, manufacture and sale of high-temperature materials for industrial applications. The company has expanded its operations by including this neighboring site adjacent to its original site. This location is reporting for the first time and for 2009 Metaullics averaged 4.8 jobs, i.e., 60.4% of its contractual commitment at this location.  While its initial takedown began in 2008, it will allow for some time to ramp up to its full commitment.  Due to the nature of this business, the company decided to apply for government stimulus funding that should result in both power usage and job commitment levels to be met by the end of 2010.  Currently the company is expanding a new project along with a new allocation.  It is experiencing solid business growth and its new project is on track for an April 2011 start-up.

 

Niagara Ceramics Corporation, Buffalo, Erie County

Allocations:                         250 kW and 600 kW of RP and 250 kW of EP

Jobs Commitments:           190 jobs

 

Background:  Niagara Ceramics Corporation (‘Niagara Ceramics’), founded in 2003, purchased the majority of Buffalo China’s manufacturing assets and produces dinnerware.  For the past year, Niagara Ceramics averaged 105 jobs, i.e., 55.3% of its contractual commitments.  In 2009, the company gained national restaurant chain business (i.e., Outback, Carabba, Olive Garden), resulting in an increase in sales volume.  This sales increase was attributed to an increase from 91 jobs to 116 jobs by December 2009.  Niagara Ceramics has been hit hard by the recession; however, the company is focusing growth efforts on restaurant chains and has had some success. It is currently at 140 jobs, indicating a trend upward toward its contractual commitment. The Trustees recently approved a reduction in the company’s job commitment to 140 jobs for the extended term (2013–2020) of its contract.

 

 Niagara LaSalle Corporation, Buffalo, Erie County

Allocation:                           700 kW and 700 kW of RP, respectively

Jobs Commitment:            152 jobs and 92 jobs, respectively

 

Background:  Niagara LaSalle Corporation (‘Niagara LaSalle’),which began operating in 1986 under the name Niagara Cold Drawn Corp., manufactures cold-finished steel bars, and has expanded to include manufacturing thermal-treated steel bars.  Niagara LaSalle averaged 78 jobs, i.e., 51.3% and 84.8%, respectively, of its contractual commitment.  As of December 31, 2009, the total business volume of shipment for the company declined 44%.  When its Buffalo facility registered a 38% sales decline from the prior year, Niagara LaSalle was forced to reduce staffing levels at all facilities. The company is optimistic that sales volume will increase to the point where it will be able to reach its contractual employment levels in the near future.

 

Nuttall Gear Company, Niagara Falls, Niagara County

Allocation:                           350 kW of EP

Jobs Commitment:            135 jobs

 

Background:  Nuttall Gear Company (‘Nuttall’), began in 1983 from a leveraged buyout of Westinghouse’s Electric Gear division and manufactures enclosed gear drives for industrial, commercial, transportation and utility applications.  In 2009, Nuttall averaged 88.1 jobs, i.e., 65.3% of its contractual commitment. The company was forced to operate with fewer employees in 2009 due to the current economic conditions. In 2008, Nuttall completed a large order for a major customer but has not been able to retain any additional orders of that magnitude during the downturn.  As the economy rebounds and sales increase, the company plans to increase its workforce.

 

PEMCO – Precision Electro Minerals Co., Inc., Niagara Falls, Niagara County

Allocation:                           800 kW of RP

Jobs Commitment:            22 jobs

 

Background:  PEMCO – Precision Electro Minerals Co., Inc. (‘PEMCO’), incorporated in 1987, makes and sells fused silica for use in the foundry and refractory industry.  For 2009, PEMCO averaged 14.2 jobs, i.e., 64.49% of its contractual commitment.  The company went from 21 jobs in January down to 14 jobs as of December 2009, a drop of 33%.  PEMCO attributes this decline to the recent recession.  PEMCO's business is also tied to the appliance and automotive industries, which have suffered severe downturns in the recession.  PEMCO sees gradual improvements in its traditional business and is working to transition to clean energy materials for future growth.  Jobs have increased to 16 recently and the company expects the trend to continue into 2011.

 

Precious Plate, Inc., Niagara Falls, Niagara County

Allocation:                           800 kW of RP

Jobs Commitment:            145 jobs

 

Background:  Precious Plate, Inc. (‘Precious’), established in 1973, provides leading-edge electroplating services to high-tech companies, primarily for computers, cell phones and phone-switching gear.  These industries are slowly recovering from the recent economic downturn.  In 2009, Precious averaged 80.8 jobs, i.e., 55.7% of its commitment.  The economic downturn initially resulted in a reduction in its workforce toward the end of 2008 through early 2009.  In January 2009, it had 69 jobs and by December 2009 it had reached 103 jobs.   In 2010, business improved dramatically and the company is currently working extra shifts to keep up with orders.  During the first quarter of 2010, additional employees brought the job count to 121.  Currently, Precious is trending up toward its commitment level and the company anticipates having 131 employees (90% of its commitment) by the end of the year after fulfilling the current backlog.   

 

Quebecor World Buffalo, Inc., Depew, Erie County

Allocation:                           4,000 kW and 1,000 kW of EP

Jobs Commitment:            810 jobs and 1,012, respectively

 

Background:  Quebecor World Buffalo, Inc. (‘Quebecor’) manufactures paperback books, magazines and tab-size inserts.  For the past year, Quebecor averaged 584 jobs.  However, the EP allocations are both ‘vintage’ contracts with an 80% job ratio and a two-year job average.  The two-year average is 629.7 jobs, i.e. 77.7% of its 810 job commitment and 62.2% of its 1,012 job commitment.  In 2009, Quebecor’s customer base dropped significantly (and resulting employment levels decreased) due to a decrease in Gravure printing volume and book-binding sales volume.  The company states it is trending upward currently, and is at 586 jobs.

 

Republic Engineered Products, LLC. Buffalo-Blasdell, Erie County 

 

Allocation:                           7,400 kW of EP

Jobs Commitment:            276 jobs

 

Background:  Republic Engineered Products, LLC (‘REP’) manufactures cold-finished steel bars for companies in the automotive industry.  In 1998, the company emerged through a joint venture with Bar Technologies in partnership with Blackstone Partnership LP to form what is now REP.  In 2009, REP averaged 247 jobs, i.e., 89.5% of its contractual commitment.  In 2008, it was in excess of its commitment levels, reporting at 104.8 %.  However, in 2009, REP experienced poor sales as a result of the economic downturn.  The effect on employment levels reduced its job average by 42 jobs.  Nevertheless, the company was just below the 90% threshold level and it expects to meet its jobs commitment in 2010.

 


 

Rubber Form Recycled Products, LLC, Lockport, Niagara County 

Allocation:                           500 kW of EP – actual take down 100 kW

Jobs Commitment:            30 jobs

 

Background:  RubberForm Recycled Products, LLC (‘RubberForm’) is a start-up company manufacturing products from 100% New York recycled crumb rubber. It produces such products as traffic sign bases, parking lot wheel stops, speed bumps, dock bumpers, curb and hose ramps, patio blocks and tiles, swimming pools and various other products.   For the past year, RubberForm averaged 7 jobs, i.e. 23.3% of its contractual commitment.  Due to the recession, RubberForm did not put other presses or molds in place, and hiring was put on hold in 2009.  Economic conditions have improved in 2010, the company was awarded a multiyear contract and it has recently hired four new staff members, bringing it up to 12 jobs.

 

Saint-Gobain  Corporation Boron Nitride Division, Amherst, Niagara County

Allocation:                           570 kW of RP

Jobs Commitment:            63 jobs

 

Background:  Saint-Gobain Corporation – Boron Nitride Division (‘SGC’) is part of the Advanced Ceramics Group of Saint-Gobain Corporation.  The boron nitride manufacturing facility was located in Niagara Falls for 29 years and moved to Amherst in 1987.  The plant manufactures boron nitride powder and solids used in a multitude of varied applications, e.g. cosmetics, semi-conductor, lubricants, plastics and refractories.  In 2009, SGC averaged 55.8 jobs, i.e. 88.6% of its contractual commitment.  This Amherst facility is just one job short of its 90% threshold level. The company has increased production and employment in 2010 and currently is in compliance at 62 jobs.

 

The Carriage House Companies - Dunkirk Facility, Dunkirk, Chautauqua County

Allocation:                           500 kW of EP

Jobs Commitment:            199 jobs

 

Background:  The Carriage House Companies (‘Carriage House/Lakeside’), in business since 1988, is a storage facility for both raw materials and finished products associated with syrups.  For the past year, Lakeside averaged 156.7 jobs, i.e., 78.9% of its contractual commitment.  The Lakeside facility in Dunkirk is very close (five miles) to a sister facility (Red Wing) in Fredonia that also has a hydropower allocation but reported compliant 2009 job levels. Carriage House considers the Dunkirk and Fredonia facilities one entity for employment purposes, frequently shifting employees from one facility to the other.  Because of this, employment numbers may be skewed at one facility.  As specific needs arise, the manufacturing capabilities of each facility determine its employment levels.  The employment level is reported where personnel spend the majority of their time.  To illustrate this, the combined commitment for both Dunkirk and Fredonia facilities would be 639 jobs, and the company’s actual jobs reported for both was 642 jobs for 2009.

 

TitanX Engine Cooling, Inc., Jamestown, Chautauqua County

Allocation:                           1,000 kW of EP

Jobs Commitment:            310 jobs

 

Background:  TitanX Engine Cooling, Inc. (‘TitanX’) manufactures engine-cooling parts for the trucking industry.  For the past year, TitanX averaged 266 jobs, i.e., 85.8% of its contractual commitment.  With new customers such as Navistar Truck, Titan X business has picked up significantly in 2010.  Currently, its job count is in compliance at 337 jobs (108.7%).

 

Tulip Corporation, Niagara Falls, Niagara County

Allocations:                         300 kW of EP and 1,200 kW of RP

Jobs Commitments:           110 jobs and 122 jobs, respectively

 

Background:  Tulip Corporation (‘Tulip’), an injection-molding company, recycles rubber and plastic and manufactures battery cases for major battery manufacturers.   For the past year, Tulip averaged 54.8 jobs, i.e., 49.8% of its EP allocation commitment.  The RP allocation is a ‘vintage’ contract, with an 80% job ratio and two-year job average.  The two-year average is 69 jobs, i.e., 56.6% of the company’s commitment.  The company had little growth and employment decreased significantly from 2008 to 2009.  Tulip is aggressively pursuing growth in its reprocessed material line, emerging industrial jar market and the plastic lumber business.  The company stated that continued hydro availability is vital to its recovery effort and increased employment.   It has recently hired eight additional employees and anticipates adding approximately 16 employees over the next two months.  It is trending up toward its contractual commitment, with a current count of 75 jobs.

 

Washington Mills Electro Minerals Corp., Niagara Falls, Niagara County

Allocation:                           9,700 kW of RP

Jobs Commitment:            171 jobs

 

Background:  Washington Mills Electro Minerals Corp. (‘Washington Mills’) manufactures abrasive grains for sandpaper and grinding wheels.  For the past year, Washington Mills averaged 123.5 jobs, i.e., 72.2% of its commitment.   Market conditions in most of its businesses have been unfavorable and this decline in volume has affected its workforce.  Washington Mills has realigned facilities and employment levels to remain competitive in a decreasing market for abrasive products.  Declines in the housing and manufacturing industries have had a severe impact on its business.  Currently, it is at 115 jobs and it does not expect to increase employment by year’s end. The Trustees recently approved a reduction in the company’s job commitment to 107 jobs for the extended term (2013–2020) of its contract.

 

Western New York Energy, LLC, Medina-Shelby, Orleans

Allocation:                           5,000 kW of RP

Jobs Commitment:            50 new jobs

 

Background:  Western New York Energy, LLC (‘Western NY’) is a 55-million-gallon-per-year dry mill ethanol manufacturing plant.  Ethanol for use in New York markets is a primary product, with DDGS (distiller dry grain with soluble, a high-quality livestock feed) and carbon dioxide as principal by-products.  For the past year, Western NY averaged 39 jobs, i.e., 78% of its commitment.  The company began operations in December 2007, and has not yet fully ramped up to its commitment levels.  The overall economy has affected sales revenue, and demand for its product has gone down due to softened oil prices, making it difficult to hire additional employees.  The company stated that it would be very difficult to reach its job commitment of 50.  In 2010, employment has remained roughly the same, with a very small increase of an additional one or two employees.  The Trustees recently approved a reduction in the company’s job commitment to 40 jobs for the extended term (2013–2020) of its contract.

 

 

Section II

Allocations and/or Job Commitments to be Reduced

 

Bernzomatic/IRWIN Industrial Tool Company, Medina, Orleans County

Allocation:                           750 kW of EP

Jobs Commitment:            247 jobs

 

Background:  Bernzomatic/IRWIN Industrial Tool Company (‘Bernzomatic’) manufactures torches and distributes torches and gas.  Additionally, the company sells gas matches, patio heaters and gas.  In 2009, Bernzomatic averaged 209.9 jobs, i.e., 85.0% of its commitment.  The current conditions of the global and national economies and increased worldwide competition have affected the company’s ability to sustain its 247-job commitment level.  Bernzomatic has continued to invest in the facility, implementing technology enhancements to improve certain manufacturing processes while minimizing the use of assembly labor.  It has also implemented a new SAP ERP system which allows better utilization of salaried and factory employees. As a result, the company has requested a reduction in both allocation and job commitment by 20% to reflect a more accurate commitment.

 

Recommendation:  Staff recommends that the Trustees approve a 20% reduction to Bernzomatics' 750 kW EP allocation, reducing it by 150 kW down to 600 kW.  Staff also recommends that the Trustees approve a reduction in its employment commitment by 37 jobs down to 210 jobs.

 

Certain Teed, Buffalo, Erie County  

Allocation:                           3,100 kW of EP  

Jobs Commitment:            178 jobs

 

Background:  Certain Teed, Corporation (‘Certain Teed’) is a wholly-owned subsidiary of Saint-Gobain Delaware Corporation and is the premiere vinyl fence, deck and railing manufacturer.  It is a leading North American manufacturer of building materials, including roofing, siding, insulation, windows, patio doors, foundations and pipe.  In 2009, Certain Teed averaged 139.7 jobs, i.e., 78.2% of its contractual commitment. The financial crisis caused a decline in the housing market, significantly affecting the building industry.  As such, Certain Teed has experienced a reduction in demand for its products.  It was previously granted a permanent reduction in its allocation from 3,500 kW to 3,100 kW in June 2009 and recently requested a reduction in its employment commitment to 157 jobs.

 

Recommendation:  Staff recommends that the Trustees reduce CertainTeed’s 3,100 kW EP allocation employment commitment by 21 jobs to 157 jobs.

 

Malyn Industrial Ceramics, Inc., Clarence, Erie County

Allocation:                            150 kW of EP

Jobs Commitment:             27 jobs

 

Background:  Malyn Industrial Ceramics (‘MICI’), formed in 1986, has become a low-cost producer of advanced ceramic components.  Some of its products included sand-blasting nozzles, boron carbide armor, high-temperature furnacing and hot-pressing services.  For the past year Malyn averaged 10.9 jobs, i.e. 40.37% of its contractual commitment.  In mid-2009, the company gave back 175 kW of its original 325 kW EP allocation.  This represents a 54% reduction in its contract allocation. Malyn has requested a job commitment reduction based proportionally on the reduced contract demand.   Due to the state of the current economy, Malyn continues to struggle.  If its current commitment remains, it is very likely that it will not meet its employment obligations.  It has requested a reduction in commitment level proportionate to its allocation give-back and more in line with its current employment numbers.

 

Recommendation:  Staff recommends that the Trustees reduce Malyn’s150 kW EP allocation job commitment by 14 jobs to 13 jobs.

 

TAM Ceramics Group of New York, LLC, Niagara Falls, Niagara County

Allocations:                         7,000 kW, 1,700 kW and 600 kW of RP and 2,100 kW of EP

Jobs Commitments:           147 jobs, then 152 jobs each

 

Background:  TAM Ceramics Group of New York, LLC (‘TAM’) is a supplier of dielectric powder to the passive electronic component industry and zirconia-based ceramic powders to industry.  In 2009, TAM averaged 42.5 jobs, which is 28% of the job commitment associated with its 1,700 kW and 600 kW allocations.  However, the 7,000 kW and 2,100 kW allocations are ‘vintage’ contracts with an 80% job ratio and a two-year job average.  The two-year average is 47.1 jobs, which is 31.0% and 32.1%, respectively, of the company’s job commitments for the vintage allocations.  Since April 2010, TAM has been under new ownership and for all intents and purposes is operating in start-up mode.  Since the company has pulled away from the auspices of previous ownership, it is beginning to see business improvements. It is working to restructure the company for growth while targeting new markets (i.e. solar power).  It has significantly advanced its technology depth and is working to unveil some novel materials by year end.  Additionally, TAM has identified growth opportunities with its existing organic business, adding a new product expected to add significant sales revenue by year end and hopefully leading to additional business opportunities in 2011.  In light of non-compliance in 2009, TAM has offered to return 3,900 kW in return for a proportionate reduction (approximately 34.2%) of its job commitment level.  The company stated that continued hydropower availability is critical to its restructuring plans and future success. It is optimistic that with projected sales growth over the next one-two years, it will be hiring employees and be able to meet a reset job commitment level. The company is currently at 50 jobs.

 

Recommendation:  Staff recommends that the Trustees reduce TAM Ceramics’ 2,100 kW down to 500 kW; 1,700 kW down to 0 and 600 kW down to 0.  Staff also recommends that the Trustees reduce the job commitments associated with the remaining allocations from 147 and 152 jobs down to 100 jobs.  Lastly, staff recommends that the Trustees approve modifications to the long-term contract extension, recently approved by the Trustees, to reflect these changes.

 

RECOMMENDATION

 

                The Vice President – Marketing recommends that the Trustees take no action on 32 customers with 39 contracts and reduce the power allocations and/or job commitments for four customers with seven contracts, as set forth in Exhibit ‘1b-A’ Sections I and II, attached hereto. 

 

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

 

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

 

RESOLVED, That the Trustees hereby take no action with respect to 32 companies as set forth in Exhibit “1b-A” – Section I and reduce the power allocations and/or job commitments for four customers as set forth in Exhibit “1b-A” – Section II and as described in the foregoing report of the President and Chief Executive Officer, and be it further

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things 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. ALLOCATIONS TO CONTINUE WITH NO CHANGE                                 

 

 

 

Company

 

 

Location

Date of Trustee Approval

 

Type of Power

 

Allocation kW

Employment Commitment  (# of jobs)

Average

2009

Jobs

Average Annual %

Achieved

Ashland Advanced Materials, Inc

Niagara Falls

May 08

EP

3500

75

7.17

9.50

BMP America, Inc.

Medina

Mar 05

RP

100

130

76.00

58.46

Buffalo Newspress Inc.

Buffalo

Jan 94

EP

200

149

118.33

79.42

Caplugs, LLC

Buffalo

Mar 04

EP

250

310

234.00

75.50

Contract Pharmaceuticals Limited Niagara

Buffalo

Apr 91

RP

250

329

279.80

85.05

Coyne Textiles Services

Buffalo

Mar 95

EP

350

93

42.17

45.34

EPCO Carbon Dioxide Products, Inc.

Medina

Dec 06

RP

1000

20

6.30

31.50

Goodyear Dunlop Tires N. America Ltd.

Tonawanda

Jan 06

RP

850

1422

1240.20

87.20

Goodyear Dunlop Tires N. America Ltd.

Tonawanda

Jan 06

RP

800

1449

1240.20

85.59

Habasit Belting, LLC.

Buffalo

Jul 86

RP

200

80

64.95

81.20

Honeywell International

Buffalo

Apr 89

RP

300

168

134.40

80.00

Hurtubise Tire Inc.

North

Tonawanda

Oct 07

RP

180

18

8

44.44

Ingram Micro Corp.

Williamsville

Sep 87

EP

900

1525

1177.50

77.21

International Imaging Materials, Inc.

Amherst

Jan 89

RP

250

393

314.00

79.89

International Imaging Materials, Inc.

Amherst

Mar 85

EP

1000

499

314.00

62.92

The Carriage House Companies, Inc. - Dunkirk Facility

Dunkirk

May 99

EP

500

199

156.67

78.87

Lockheed Martin

Niagara Falls

Feb 93

RP

250

45

35.90

79.78

Luvata Buffalo, Inc.

Buffalo

Apr 94

RP

250

831

545.00

65.58

Metaullics Div of Pyrotek Inc.

Sanborn

Apr 06

RP

500

8

4.83

60.38

Niagara Ceramics Corporation

Buffalo

Jan 89

EP

250

190

105.00

55.26

Niagara Ceramics Corporation

Buffalo

Mar 04

RP

250

190

105.00

55.26

Niagara Ceramics Corporation

Buffalo

Jan 94

RP

600

190

105.00

55.26

  Niagara LaSalle Corporation

Buffalo

Jan 04

RP

700

152

78.00

51.31

Niagara LaSalle Corporation

Buffalo

Jan 04

RP

700

92

78.00

84.80

Nuttall Gear Company

Niagara Falls

Feb 93

EP

350

135

88.08

65.25

PEMCO-Precision Electro Minerals Co., Inc.

Niagara Falls

Aug 89

RP

800

22

14.17

64.39

Precious Plate, Inc.

Niagara Falls

Jun 02

RP

800

145

80.75

55.69

Quebecor World Buffalo, Inc.

Depew

Jul 00

EP - vintage

4000

810

629.66

77.72

Quebecor World Buffalo, Inc.

Depew

Jul 00

EP - vintage

1000

1012

629.66

62.20

Republic Engineered Products, Inc.

Blasdell

Jun 00

EP

7400

276

247.00

89.49

Rubber Form Recycled Products, LLC

Lockport

Apr 06

EP

500

30

7.00

23.33

Saint Gobain - Boron Nitride Division

Amherst

Jan  07

RP

570

63

55.80

88.57

TitanX Engine Cooling, Inc.

Jamestown

May 99

EP

1000

310

266.00

85.81

Tulip Corporation

Niagara Falls

Oct 90

EP - vintage

300

110

69.04

49.84

Tulip Corporation

Niagara Falls

May 61

RP - vintage

1200

122

69.04

56.59

Washington Mills Electro Minerals Corp.

Niagara Falls

Dec 86

RP

9700

171

123.50

72.22

Western New York Energy, LLC

Medina

Jun 05

RP

5000

50

39.00

78.00

EP = Expansion Power                       RP = Replacement Power

 

 


 

 

II. ALLOCATIONS AND/OR JOB COMMITMENTS TO BE REDUCED

 

 

Company

 

 

Location

 

Date of Trustee Approval

 

Type of Power

 

Allocation

kW

Employment Commitment

(# of jobs)

Average

2009

Jobs

Average Annual %

Achieved

 

Revised Allocation

 

 

Revised Jobs

Bernzomatic / Irwin Inds. Tools

Medina

Nov 06

EP

750

247

209.91

84.98

600

210

CertainTeed Corporation

Buffalo

Jan 04

EP

3100

178

139.67

78.20

3100

157

 

Malyn Industrial Ceramics, Inc

Clarence

Oct 05

EP

150

27

10.9

40.37

150

13

TAM Ceramics/ TAM Ceramics Group of New York

Niagara Falls

Jan 89

RP

600

152

42.50

27.96

0

0

TAM Ceramics/ TAM Ceramics Group of New York LLC

Niagara Falls

Apr 94

RP

1700

152

42.50

27.96

0

0

TAM Ceramics/ TAM Ceramics Group of New York LLC

Niagara Falls

Oct 59

RP - vintage

7000

147

47.13

31.00

7000

100

TAM Ceramics/ TAM Ceramics Group of New York LLC

Niagara Falls

Dec 88

EP – vintage

2100

152

47.13

31.00

500

100

 

EP = Expansion Power                       RP = Replacement Power

 

               

 

 

 


 

c.                    Power for Jobs and Energy Cost Savings  Benefits Programs -Compliance Review

 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“Staff conducted a job compliance review of Power for Jobs (‘PFJ’) and Energy Cost Savings Benefit (‘ECSB’) program customers focusing on current jobs reported compared to contractual job commitments.  Seventy-nine percent of customers continuing in the program are in compliance.  Of 514 customers, 406 are compliant and 108 are non-compliant.   

 

“After a review of the job commitments from all customers continuing in the programs, staff recommends that the Trustees take no action for the PFJ customers and ECSB customers detailed in the attached Exhibits.

 

BACKGROUND

 

                “PFJ provides either power or electricity savings reimbursements to businesses, manufacturers and not-for-profit corporations that have agreed to retain or create jobs in New York State.  Under the requirements of each program, businesses could have their benefits reduced if they fail to meet their contractual commitments.

 

“The ECSB program protects customers enrolled in the Economic Development Power, High Load Factor and Municipal Distribution Agency power programs from utility bill increases that result from higher market prices.  These businesses may also have their benefits reduced if they fail to meet their contractual commitments.

 

“On August 9, 2010, Governor David Paterson signed legislation extending the PFJ and ECSB programs until May 15, 2011.  Due to the retroactive nature of the legislation and in light of the need to minimize disruption in receipt of program benefits, the legislation required the expedited extensions of PFJ and ECSB benefits and deferral of the job compliance review until after the applicant has been awarded extended benefits.

 

At its meeting on August 17, 2010, the Economic Development Power Allocation Board (‘EDPAB’) recommended that the Authority’s Trustees approve the extension of benefits for 443 PFJ and 90 ECSB program customers through May 15, 2011, including a recommendation to defer job compliance review until on or before October 26, 2010.

 

“The Trustees approved the extension of both the PFJ and ECSB programs at their August 30, 2010 meeting.  In addition, the Trustees also supported EDPAB’s recommendation to defer the job compliance review until on or before October 26, 2010.

 

DISCUSSION

 

“On August 10, 2010, applications were sent to the 443 existing PFJ customers.  Four hundred and twenty eight customers submitted applications to the Authority requesting extension of their contracts.  Ten customers chose to opt out of the program.  The customers continuing in the program reported a total of 231,863 jobs as compared to 234,522 jobs, an aggregate of its commitments.  Job compliance is 99% for the PFJ program in its entirety.

 

“Also, on August 10, 2010, applications were sent to the 90 existing ECSB customers.  Eighty-six customers submitted applications to the Authority requesting extension of its contracts.  Three customers chose to opt out of the program.  The customers continuing in the program reported a total of 78,919 jobs as compared to 80,761 jobs, an aggregate of its commitments.  Job compliance is 98% for the ECSB program in its entirety.

 

“There were five PFJ customers and one ECSB customer that did not respond and have yet to submit an application for extended benefits.  Two follow-up communications have been sent to these customers, along with numerous individual outreaches by staff.  A final certified letter was sent on October 11, 2010 advising that eligibility for extended benefits requires the submittal of an application and that their non-responsiveness effectively precludes them from participating in the programs.

 

“Seventy-nine percent of the customers in the PFJ and ECSB programs are compliant as detailed in Exhibits ‘1c-A1’ and ‘1c-A2.’ 

 

“At its meeting on October 25, 2010, EDPAB recommended the Trustees take no action for compliance with the customer’s job commitments.

 

“Based on EDPAB’s recommendation, and given the current state of the economy, along with the short term of these extended benefits, staff recommends that the Trustees take no action on the companies that were non-compliant, as detailed in Exhibits ‘1c-B1’ and ‘1c-B2.’  If a new economic development program is created next year, these companies will be evaluated based on the new program criteria, with a detailed application process.  Resulting new program benefit levels, if any, would effectively be reset.

 

RECOMMENDATION

 

“The Manager – Business Power Allocations and Compliance recommends that the Trustees take no action on Power For Jobs and Energy Cost Savings Benefit customers that are non-compliant, as detailed in Exhibits ‘1c-B1’ and ‘1c-B2.’

 

                “The Executive Vice President and General Counsel, 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.

 

WHEREAS, the Economic Development Power Allocation Board (“EDPAB”) has recommended that the Authority Trustees take no action on Power for Jobs (“PFJ”) customers and  Energy Cost Savings Benefit (“ECSB”) customers that are non-compliant, as detailed in Exhibits “1c-B1” and “1c-B2”;

 

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

 

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

 


 


 

 


 


 


 


 


 


 

d.                   Municipal and Rural Electric Cooperative Economic Development Program Delaware County Electric Cooperative

                

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve an allocation of hydropower under the Municipal and Rural Electric Cooperative Economic Development Program (‘Program’) to the Delaware County Electric Cooperative (‘DCEC’).

 

BACKGROUND

 

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

 

“Power from this block can be allocated to individual systems to meet the increased electric load resulting from eligible new or expanding businesses in their service area.  In limited situations where businesses are at risk of closing or moving out of state, consideration is also given on a case by case basis for the retention of the business in New York (‘NY’).  Recommended allocations under the Program are now made using guidelines that were approved by the Trustees on September 23, 2008.  Under the revised program, the first 100 kW allocated will be from 100% hydropower and any additional kW at 50% hydropower and 50% incremental power. 

 

“As of February 2010, 26,185 kW have been allocated.  The DCEC has submitted an application for economic development power under the Program, for consideration by the Trustees.

 

DISCUSSION

 

“An application has been submitted by the DCEC on behalf of Royal FrieslandCampina, an $11.5 billion global dairy cooperative headquartered in Amersfoort, The Netherlands.  The Business is owned by 16,000 dairy farmers – owners located throughout Europe – and has four business groups serving consumer products, cheese and butter and the ingredients markets.  FrieslandCampina Domo (‘Domo Americas’) focuses on infant ingredients, globally.  Domo Americas markets infant ingredients in the United States, but is the sole-source global supplier of hydrolysate ingredients which are critical components used in infant formula, bio-medical research, dietary supplements, sports drinks and pharmaceutical applications. The company’s products are sold in more than 100 countries; key regions are Europe, Asia, and Africa.

 

“The company is under pressure to both reduce operating costs and increase productivity.  In order to meet competitive challenges, FrieslandCampina’s management is interested in taking advantage of the low electricity cost of DCEC to expand its manufacturing operation in Delhi, NY.

 

“Friesland Campina’s Delhi, NY facility currently produces 2,000 metric tons of hydrolysate products each year for use in infant formula, food addictives and cell nutrition (medical research).  The company anticipates strong future demand for these products over the next five years and to accommodate this growth, it is planning a capital investment in the U.S. to double production capacity in either the existing Delhi location or possible alternative sites in North Carolina or Virginia.

 

“The FrieslandCampina Netherlands based Board expects to make a determination on a selected location for the proposed expansion by year end 2010.  The overall project investment is estimated to be approximately $40 million including, engineering, construction and procurement/equipment cost.  The proposed expansion would add 150,000 square feet to the existing facility and add 19 new jobs.  The proposed expansion would double the existing production capacity of the facility.  The company has advised that completion of the proposed expansion in its current location is critical for the Delhi facility to remain in New York.  The Delaware Industrial Development Authority Agency (‘IDA’) and the Regional Director of Empire State Development (‘ESD’) are diligently working with the company to provide an economic development package to support the capital investment at its current location and the retention of the company and associated jobs in Delhi.  The IDA and ESD are investigating all major cost issues represented by the company such as natural gas availability, waste water disposal capacity, solid waste management and direct ESD support to develop an economic development proposal.

 

“In the new expansion project, FrieslandCampina plans to deploy the three standard approaches to energy efficiency and reduction activities: (1) Good operating practices (de-energizing equipment when not in-use and increasing batch sizes); (2) Installation of high-efficiency production equipment (e.g pumps, heat exchangers, etc.); (3) Use of innovative manufacturing design practices and automated energy efficient operational processes.

 

“DCEC has requested an allocation to meet the total estimated expanded load of 1700 kW.  The proposed expansion will add 19 new jobs to the existing 104 jobs in Delhi, NY.  While the program guidelines seek 100 jobs per megawatt for a company with 104 existing jobs, it also provide for consideration of high levels of capital investment when the jobs per megawatt ratio is lower.  Due to the substantial investment of $40 million, it is recommended that the Trustees approve an allocation of ­­­400 kW of Municipal/Cooperative Economic Development Power to DCEC on behalf of Royal FrieslandCampina, which is equivalent to 50 jobs per MW of hydropower. 

 

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

 

RECOMMENDATION

 

“The Vice President – Marketing recommends that the Trustees approve the allocation of power under the Municipal and Rural Electric Cooperative Economic Development Program to the Delaware County Electric Cooperative in accordance with the above.

 

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

 

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

 

RESOLVED, That the allocation of power to the Delaware County Electric Cooperative under the Municipal and Rural Electric Cooperative Economic Development Program is hereby approved as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

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

e.                    Municipal and Rural Electric Cooperative Systems Service Tariff Amendments – Notice of Adoption

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve amendments to the Authority’s current production service tariffs to its Municipal and Rural Electric Cooperative systems (collectively, ‘Muni and Coop’) customers.  Staff recommends that changes be adopted for inclusion in the Authority’s tariffs for full and partial requirement Muni and Coop customers receiving hydroelectric power and energy under Service Tariff Nos. 38A and 39A (‘ST-38A’ and ‘ST-39A’), respectively, and full-requirement Muni and Coop customers receiving incremental energy under Service Tariff No. 38B (‘ST-38B’).  These service tariffs are attached as Exhibits ‘1e-A,’ ‘1e-B’ and ‘1e-C,’ respectively.  The new tariffs would become effective November 1, 2010.

BACKGROUND

“At their meeting of January 27, 2009, the Trustees authorized the Corporate Secretary to file a Notice of Proposed Rulemaking (‘NOPR’) with the New York State Department of State for publication in the New York State Register, indicating that the Authority proposed to amend service tariffs applicable to its Muni and Coop customers.  These amendments, which would involve no increase in Authority’s production rates, were needed to eliminate obsolete, pre-New York Independent System Operator (‘NYISO’) provisions; include updated provisions and terminology to reflect the restructured energy market-place and current contracts; and improve the tariffs’ organization and formatting.  The Authority has made similar updates to many of its production service tariffs over the past two years.

 

“The NOPR was published in the New York State Register on February 11, 2009.  In addition, Muni and Coop customers were notified of the proposed service tariff amendments and invited to review the tariff materials and submit comments.  In accordance with the State Administrative Procedure Act (‘SAPA’), interested parties were afforded a 60-day comment period.  The public comment period closed on April 13, 2009.

DISCUSSION

“Timely written comments submitted by Municipal Electric Utility Association of New York State (‘MEUA’) and the New York Association of Public Power (‘NYAPP’) are attached as Exhibits ‘1e-D’ and ‘1e-E,’ respectively.  Staff reviewed these comments and held numerous discussions with the MEUA and NYAPP through 2010 in order to understand the concerns raised.  A summary of the comments along with staff’s analysis and recommendations are set forth below.  Revisions consistent with such recommendations are incorporated in the service tariffs for which approval is requested today. 

Issue 1:  Definition of ‘Contract’ and the Effect of Contract Amendments

“NYAPP commented that the proposed definition of Contract in the tariff revisions for ST-38A and ST-39A is unclear, while MEUA commented that the phase ‘other contract documents’ used in the definition of ‘Firm Hydroelectric Wholesale Power’ is ambiguous.  In addition, NYAPP expressed concern that the proposed tariff revisions recognize certain contract changes from Riders A and B, but omit recognition of the 2003 ‘Global Settlement’ between the Authority and the Muni and Coop customers.  NYAPP also expressed the concern that ST-38B uses the term ‘Agreement’ instead of Contract.  Finally, MEUA commented that these proposed tariff revisions should have no effect on Rider B, a contractual amendment, and furthermore stated that the Authority needs to memorialize its agreements reached with its partial-requirements customers on a working definition of Contract Demand and the application of UCAP credits. 


 

Staff Analysis

“Staff has clarified the proposed definition of Contract in ST-38A and ST-39A.  Rather than referring to a ‘contract for the Sale of Firm Hydroelectric Wholesale Power and Energy,’ the definition would refer to the ‘Application for Electric Service,’ the actual name of the 1986-era Authority contracts with the Muni and Coop customers.  To further improve clarity, staff has changed the definition so that it includes any ‘amendments, extensions or settlement agreements entered into between Customer and Authority.’

                “Staff also eliminated the phrase ‘other contract documents’ from the definition of Firm Hydroelectric Power given that the tariffs would now provide a comprehensive definition of Contract.

                “With respect to NYAPP’s comments about Riders A and B, Authority staff notes that Rider A was previously included as part of Service Tariff Nos. 38A and 38B and Rider B was previously included as part of Service Tariff No. 39A.  The proposed tariff revisions incorporate those riders into the body of the tariffs rather than having the riders stand as tariff attachments.  These riders concern generally applicable billing provisions and incorporating them into the body improves the tariffs’ completeness, clarity and organization.[1]  The 2003 Global Settlement, however, concerned a long-term contract extension covering numerous contractual commitments made by the parties for a defined term that are not appropriate for inclusion in production tariffs.  Moreover, the 2003 Global Settlement, as well as any other settlement, is recognized in the revised definition of Contract discussed above, and nothing in these tariffs nullifies any settling party’s rights under the 2003 Global Settlement.

                “In light of the clarifications to the definition of Contract in ST-38A and ST-39A described above, there should be no confusion in continuing to use the term ‘Agreement’ rather than Contract in ST-38B.  That term is defined as a tariff customer’s ‘Incremental Power Supply Agreement,’ and those very agreements indicate that they are a supplement to the customer’s Application for Electric Service.  For clarity’s sake, staff has modified the tariff to note that such Agreement is a supplement to the Customer’s Application for Electric Service. 

                “Finally, staff notes that these tariff amendments make no unilateral change to any agreements with partial-requirements customers.  As MEUA noted, the definition of Contract Demand is drawn from Rider B, which would be incorporated into ST-39A as proposed, so there is no need to further memorialize this concept.  In addition, MEUA’s concerns regarding UCAP credits are outside the scope of these production tariffs.  The Authority will continue to provide UCAP associated with its hydropower allocations in the same manner as it has always done.  To the extent MEUA wants to address matters that are the subject of a separate contract, the Authority staff will address this with customers in the normal course of business.

Issue 2:  Conflicts Provision and NYISO Charges

“NYAPP commented that the provision addressing NYISO transmission and related charges in all three tariffs is confusing because that provision states that conflicts between the tariff and the Contract will be resolved in favor of the Contract when it is NYAPP’s view that any conflict between the tariff and the Contract should be resolved in favor of the Contract.   NYAPP further commented that the Authority is not the Load Serving Entity (‘LSE’) for partial-requirements customers and that the tariff provision proposing to charge customers for LSE-related charges is incorrect. 

Staff Analysis

“NYAPP correctly noted in that every Application for Electric Service entered into between the Authority and the Muni and Coop customers states that the Application for Electric Service prevails in cases of such conflict, rendering the disputed tariff provision superfluous.  Because this provision focuses narrowly on the issue of NYISO charges, staff has deleted it from the proposed final version of the tariffs.  To further address the concerns of the Muni and Coop customers with respect to potential conflicts, staff has included a revised ‘Conflicts’ provision which states that inconsistencies, conflicts or differences between the Contract and the service tariff will be resolved in favor of the Contract. 

“On NYISO charges issues, staff has amended the NYISO transmission and related charges sections in ST-38A and ST-39A to indicate that unless otherwise stated in the Customer’s Contract, such charges shall be assessed if incurred by the Authority.  Staff also has amended ST-39A further to clarify that no NYISO charges would be imposed on a partial-requirements customer so long as such customer is its own LSE or has made its own LSE arrangements.  For ST-38B, which concerns incremental power sales, the analogous NYISO charges provision is modified to state unequivocally that the Customer will be subject to such charges, as there is no contractual provision that otherwise addresses NYISO charges associated with incremental power sales.

Issue 3:  Flow Adjustment Computation (‘FAC’)

 

MEUA commented that the last paragraph of the provision in both ST-38A and ST-39A regarding the FAC and the Rate Stabilization Reserve (‘RSR’) is confusing and questions what ‘balances’ and ‘prior agreements’ are being referred to, and which customers would be affected. 

Staff Analysis

“Under this provision, if a new Contract for the sale of preference hydropower arises, the existing RSR balances will apply and the Customer under such new Contract will be subject to the associated FAC charges/credits, if any.  Staff believes that the FAC is equally applicable to all preference Customers whether they take full or partial requirements service.  Additionally, this provision requires any new Customer to assume its pro rata share of the FAC without regard to the fact that it previously took no Authority service.  Authority staff has made some minor changes in terminology since reference to the term ‘Agreement’ may be confusing in light of other tariff terms.  In recognition of the Authority foregoing preference hydropower rate increases in both 2009 and 2010, the FAC provisions indicate that they are suspended until further notice provided by the Authority.   

Issue 4:  Partial Requirements Definition: 

MEUA commented that the definition of ‘Partial Requirements’ in ST-39A includes within it the phrase ‘incremental power and energy,’ which is not defined, and recommends that the term be defined or explained for clarity. 

Staff Analysis

“Staff has changed the tariff so that the phrase ‘incremental power and energy’ is eliminated and the definition simplified to indicate that Partial Requirements means that the customer does not purchase all of its electricity needs from the Authority. 

Issue 5:  NYISO Comprehensive System Planning Process Charges

NYAPP objected to the Authority’s proposal to include a provision in all three tariffs that would have customers compensate the Authority for transmission costs that the Authority incurs on behalf of customers that arise out of the NYISO’s Comprehensive System Planning Process (‘CSPP’).  NYAPP asserted that such assessments are not an existing tariff obligation and do not address the Authority’s avowed goal of ‘reformatting’ the tariffs. 

                Staff Analysis

It is staff’s position that in its Notice of Proposed Rulemaking, the Authority sought to ‘update’ as well as reformat and improve the organization of the tariffs.  Under the Muni and Coop customers’ contracts, the Authority is not precluded from implementing a tariff provision that would permit recovery of new NYISO-related charges such as those emanating from the CSPP.  Such charges may need to be allocated to the Muni and Coop customers depending on, among other things, which customers benefit from the generation or transmission upgrades in question. 

                In addition, this provision has been further modified to permit the recovery of the cost of facilities under the CSPP resulting from economic, as well as reliability, upgrades.  To date, the NYISO’s CSPP has not triggered any upgrades. 

Issue 6:  Partial-Requirement Scheduling and Dispatch Procedures

MEUA commented that the scheduling and dispatch ‘Procedures’ discussed in ST-39A are of the utmost importance to the Authority and its partial-requirements customers.  MEUA also states that the Procedures should be memorialized in a written form that is clear, mutually acceptable and readily available to all parties. 

Staff Analysis

Staff has worked with the Authority’s Scheduling and Settlement Division and finalized the procedures, which will be available to all parties after the conclusion of this final rulemaking.

Issue 7:  Other Changes

MEUA observed that the ‘minimum monthly energy charge’ is described in ST-38A and ST-39A as the amount of energy ‘allocated,’ but prefers the word ‘provided.’  

With respect to the NYISO charges section, MEUA contended that the provisions of subsection 6 concerning CSPP-related charges are ambiguous and unduly broad.  MEUA also opines that as drafted, the section could be construed to sanction charges to customers for costs unrelated to specific Customers’ service.  It suggested that, after the capitalized word ‘Customers,’ the phrase ‘under this tariff’ be inserted and that after ‘reliability,’ the phrase ‘of service to Customers under this tariff’ be inserted. 

Staff Analysis:

The Authority has accepted MEUA’s proposed word changes to ST-38A and ST-39A. 

Authority staff agrees that certain changes would improve the tariffs’ clarity, and in this regard has added the phrase ‘with respect to power service to Customer under this Service Tariff’ in the first paragraph of the NYISO charges section so that it is clear that all NYISO charges listed (including those arising from the CSPP) relate to the service received by the Customer from the Authority. 

In addition, Authority staff added numerous defined terms and clarified the definition of Firm Hydroelectric Power in ST-38A and ST-39A to include the capacity necessary to meet the Installed Reserve Margin set by the New York State Reliability Council, which is consistent with NYISO rules. 

Conclusion

                “Staff recommends the adoption of the proposed service tariffs, with changes to the tariffs conforming to the analysis discussed above.  Staff further recommends that these proposed service tariffs become effective at the start of the first billing period subsequent to the Trustees’ approval, which is November 1, 2010.

FISCAL INFORMATION

 

“Adoption of the proposed Muni and Coop service tariffs will have no financial impact.  The changes proposed are administrative in nature and have no effect on current production rates. 

 


 

RECOMMENDATION

The Director – Market Analysis and Administration recommends that the attached amended service tariffs for the Authority’s Municipal and Rural Electric Cooperative system customers be approved and that the Trustees authorize the Corporate Secretary to file a Notice of Adoption with the New York State Department of State for publication in the New York State Register in accordance with the State Administrative Procedure Act.  The requested effective date of these tariffs is November 1, 2010.

“It is also recommended that the Senior Vice President – Marketing and Economic Development, or his designee, be authorized to issue a notice of final action to the affected customers.

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

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

 

 RESOLVED, That the Trustees adopt the Authority’s amendments to the service tariffs applicable to the Authority’s Municipal and Rural Electric Cooperative systems customers, as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That the Corporate Secretary of the Authority be, and hereby is, directed to file a Notice of Adoption for publication in the New York State Register in accordance with the State Administrative Procedure Act; and be it further

 

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

 

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


 

f.                     Procurement  (Services) Contract – Blenheim-Gilboa Pumped Storage Project Relicensing – Information Management System – Award  

 

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

“The Trustees are requested to approve the award of a procurement contract to Gomez and Sullivan Engineers, PC (‘GSE’) for the implementation and support of an information management system that will be used to support the Relicensing of the Blenheim-Gilboa Pumped Storage Project (the ‘B-G Project’).  The term of the contract will be for five years.  The amount for which authorization is requested is $802,934.

 

BACKGROUND

 

“Section 2879 of the Public Authorities Law and the Authority’s Guidelines for Procurement Contracts require the Trustees’ approval for procurement contracts in excess of one year.

 

DISCUSSION

 

                “In 1969, The Federal Power Commission (now the Federal Energy Regulatory Commission, (‘FERC’)), issued a 50-year license for the B-G Project.  This license expires in April 2019.  Along with the St. Lawrence/FDR Power (‘St. Lawrence) and Niagara Power (‘Niagara’) Projects, the B-G Project represents the core of the Authority’s generation system.  The Authority needs to obtain a new license for the B-G Project to continue its operation.

 

                “The Authority has considerable experience with relicensing its large hydroelectric projects.  Relicensing of the St. Lawrence and Niagara Projects were successfully completed in 2003 and 2007, respectively.  The FERC relicensing process is long and complicated.  These multiyear, multifaceted proceedings involve the creation and management of numerous documents, plans, diagrams and other information.  The Niagara relicensing effort made very successful use of a computer-based information management system (NIS, later NCIS).  As the Authority approaches the relicensing of the B-G Project, experience has shown that having a quality information management system designed for relicensing will make certain aspects of the process easier to manage.

 

“To address this need, the Authority solicited proposals from qualified vendors for SharePoint Hosting Services (including hosting, development, support services and consulting) to aid the Authority’s relicensing effort for the B-G Project (collectively the ‘BGIS’ system).  These services involve SharePoint development, hosting and support of system(s) that will capture, manage, store, preserve and deliver content related to the Authority’s B-G relicensing initiative, as well as support services to address system support needs including administration, document management and operation.  The BGIS will enable the Authority to securely collaborate and exchange information with entities (e.g., consultants) external to the Authority’s information technology infrastructure

 

                “The Authority solicited proposals through an RFQ (Q10-4810TB) issued in the New York State Contract Reporter on July 7, 2010.  Five companies submitted proposals by August 3, 2010.  These proposals were received and reviewed by the evaluation team which included representatives from Procurement, Relicensing and Implementation and Information Technology. 

 

Technical evaluation of the proposals was based on the following criteria:

 

·         Proposed deliverables including the  system(s), support and services (developmental and hosting) ;

·         Experience of proposed staff including hydroelectric relicensing experience and similar solutions;

·         Description of proposed implementation including depth and experience of staff and project plan;

·         Company qualifications including staffing, location, compliance/certification for system security and reliability and expertise;

·         Responsiveness to the RFP including understanding of the scope/requirements and quality of proposal.

 

One bidder, 724 Inc, of Lompoc, CA, submitted a proposal that was judged unresponsive as it consisted of a simple form containing little specific information and proposed only hosting services. The proposal did not address, in a meaningful way, the development and implementation of the information management system.  This proposal was not considered further.

 

The proposals from the remaining four bidders, listed below, met the above criteria and the evaluation team determined that they were technically qualified:

 

·         Bird Hosting (Princeton, NJ)

·         Gomez  and Sullivan Engineers (‘GSE’) (Williamsville, NY)

·         Tailwind Associates (Schenectady, NY)

·         Vinoleo Solutions & Services, Corp (Brooklyn, NY)            

 

GSE’s proposal received the highest score.  This high-quality proposal demonstrated a very thorough understanding of the tasks requested.  The company’s experience with providing similar services has been demonstrated to the Authority during the relicensing and compliance/implementation work for the Niagara Project.  Generally, the company’s service history on the Niagara Project has been excellent. 

 

The other three proposals demonstrated qualifications and capabilities in some areas but, overall, these proposals were not nearly as detailed or on point as the GSE proposal.  None of these proposals demonstrated an understanding of the complex relicensing process.

 

The Bidders were asked to provide fixed cost estimates for development of an assessment plan, implementation cost for the BGIS, including hosting services and system support.  Of the four responsive bids, GSE was the lowest cost.

 

FISCAL INFORMATION

 

“Since these expenditures are related to preparing for the relicensing of the B-G Project, they will be treated as a capital expense and payments will be made from the Capital Fund. 

 

RECOMMENDATION

 

“The Vice President – Project Development, Licensing and Compliance, the Vice President – Procurement and the Director – Relicensing and Implementation recommend that the Trustees authorize award of a contract to Gomez and Sullivan Engineers, PC in the amount of $802,934 for the implementation and support of an information management system that will be used to support the relicensing of the Blenheim-Gilboa Pumped Storage Project.

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President – 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 contract to Gomez and Sullivan Engineers, PC for five years, in an amount of $802,934, for the implementation and support of an information management system to support the relicensing of the Blenheim-Gilboa Pumped Storage Project, as recommended in the foregoing report of the President and Chief Executive Officer;

 

Contractor                                                           Contract Approval

Gomez and Sullivan Engineers, PC                                          $802,934

                               

 

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.

 

 

g.                   Amendments to the Authority’s By-laws

 

The President and Chief Executive Officer submitted the following report:

                        

“The Trustees are requested to amend the Authority’s By-laws for the purpose of amending the committee membership requirement. Currently, the Audit, Governance and Finance Committees may have up to three members each. The amendments would increase Trustee participation by permitting not less than three or more than five trustees to serve on each committee.

 

                        “The By-laws are also being updated to reflect a change in a non-statutory officer position. The Executive Vice President – Chief Administrative Officer position has been expanded to include the title ‘Chief of Staff’ and the description of the non-statutory officer’s duties has been augmented.  

 

                            “A redlined version of the proposed amended By-laws is attached as Exhibit ‘1g-B.’ Deletions are shown by strikethroughs in brackets; additions are shown by bolded and underscored text.  The final version of the proposed amended By-laws is attached as Exhibit ‘1g-A.’

 

                “The Chief Operating Officer, the Executive Vice President and General Counsel and I recommend that the Trustees approve the proposed By-laws amendments.”

 

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

 

                                RESOLVED, That the revisions to the By-laws (originally adopted on April 9, 1954, and last amended on January 26, 2010) discussed in the foregoing report of the President and Chief Executive Officer and attached hereto as Exhibit “1g-A,” be hereby adopted; and be it further

 

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

 


 

h.                   Amendments to the Authority’s Finance Committee and Governance Committee Charters

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to amend the Finance Committee and Governance Committee Charters, as set forth in Exhibits ‘1h-A’ and ‘1h-B’ of this item for the purpose of facilitating an increase in Trustee member participation on the Committees.  The Trustees are also requested to amend the quorum provisions of these Charters in light of the change to the membership composition provisions.

 

BACKGROUND & DISCUSSION

 

Finance Committee  and Governance Committee Charters

 

                “The Governance Committee Charter, which was last amended in February of 2010, and the Finance Committee Charter, which was initially adopted in February 2010, currently limit membership to on the respective Committees to three members and provides that a majority of those present but no less than two members constitute a quorum. The amendments to each charter changes those provisions as follows:

 

·         Section B(1) would be amended to provide that the Committee shall be comprised of not less than three nor more than five members.

 

·         Section B(4) would be amended to provide that a majority of the total Committee composition constitutes a quorum.

 

FISCAL IMPLICATIONS

 

                “None.

 

RECOMMENDATION

 

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

 

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

 

RESOLVED, That the attached Finance Committee Charter and Governance Committee Charter be adopted in the form proposed in Exhibits “1h-A” – “1h-B.”

 


 

2.                   Discussion Agenda

 

a.                   Report of the President and Chief Executive Officer

 

President Kessel presented his two-year report to the Board.  He said that he had reorganized the business units with new leaders.  He outlined four priorities the Authority should focus on for its improvement:

1.       Restoring its integrity and reputation;

2.       Upstate New York and its economic challenges;

3.       Upgrading the state’s transmission system, including the possibility of constructing a major north-south transmission line; and

4.       Pursuing ambitious energy efficiency and renewable energy goals.

President Kessel thanked Gil Quiniones, Ed Welz, Steve DeCarlo, Joe Kessler and the Regional Managers for the extraordinary job they did in restoring the relationship between management and the unions.  He said that Niagara had its best operating year because of the work done by the Regional Manager and his staff and the union workers at the facility.

President Kessel said that the Authority has improved its relationships with the business community and elected officials in upstate New York.  He added that holding the Board meetings in upstate New York is very important to the Authority’s future and it’s also an opportunity for the Board to reach out to stakeholders and allow them to participate in the meetings.

President Kessel said that more than 7000 jobs have been created or retained over the last two years in upstate New York, for example, Yahoo!, Steuben Foods, Alcoa and the Verizon Data Center, and he thanked the Board for their support of these projects.

President Kessel reported that the Authority is in the evaluation stage of a 100 MW solar initiative; recommendation for a contract award will be presented to the Board the first quarter of next year.  The Authority has also supported other solar projects around the state including the Niagara Transportation Frontier Authority.

President Kessel also reported that the Authority is in the evaluation stage of the Great Lakes Off-Shore Wind initiative; recommendation for a contract award will be presented to the Board the first quarter of next year. 

                A feasibility study to import hydropower from Canada to New York State has been conducted with a group from the Authority, Con Edison, National Grid and Long Island Power Authority.  This project will generate numerous construction jobs.

In conclusion, President Kessel thanked the Governor, state legislators, Senator Maziarz, Rene Kimble and other County legislators and state and local officials who partnered with the Authority on its projects.    He also thanked the Board for their support and confidence in him as he looks forward to another successful two years working with the Board and the new administration.

In response to a question from Vice Chairman Jonathan Foster, President Kessel said that over the next few years the Authority will continue to make capital investments in its operations.  Life extension and modernization work was done at the facilities and he thanked Gil Quiniones, Ed Welz and their team for the work done on these projects.  He continued that he was concerned with the Authority’s transmission infrastructure, a large portion of which needs to be replaced.

With regard to the Authority’s operations, he said that it has a good safety record.  Compared to other utilities around the state, the Authority is doing well financially.  President Kessel said that although the Authority would like to help with the state’s budget, it has to take into consideration upcoming projects to maintain and upgrade its facilities. 

In response to a question from Trustee Eugene Nicandri, President Kessel said that because of the downturn in the economy and input from the public and elected officials, a decision was made to freeze electric rates to the end of this year in order to help the upstate economy to survive.  He understands that the Authority has to recover its costs, so staff is working on making a recommendation to the Board in this regard in December or January of next year.

Chairman Townsend thanked President Kessel for his report and said that he was proud of his accomplishments.  He opined, however, that the Authority will not be able to fund its capital plans and continue to make a contribution to the state’s budget.  He concluded that he was happy with the Board’s support of the Verizon and Yahoo! projects and also the other smaller projects in Niagara and Western New York.  The Board will continue to support projects to carry out the mission of the Authority.


 

b.                   Report of the Chief Operating Officer

 

                Mr. Gil Quiniones provided highlights of the report to the Trustees.

 

                In response to a question from Trustee Nicandri, Mr. Quiniones said that a condition assessment of the Authority’s entire transmission system will be performed with the intent to implement a life extension and modernization program.  The other operations have met or exceeded their performance matrix.


 

c.                    Report of the Chief Financial Officer

 

                Ms. Elizabeth McCarthy provided highlights of the financial report to the Trustees.

 

                In response to a question from Chairman Townsend, President Kessel said that the Authority instituted an apprenticeship program with the goal to encourage young people to seek job opportunities with the Authority.  President Kessel said that he is encouraging more diversity in the Authority’s hiring practices with the assistance of the new head of Human Resources, Rocco Iannarelli.  The Authority is also reviewing its succession planning program.

                 Trustee O’Luck thanked President Kessel for developing a diversity plan and for looking at opportunities to bring young people into the Authority.


 

3.                   Allocation of 25,000 kW of Hydropower to Verizon CCC LLC

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve allocations of available Expansion Power (‘EP’) and Replacement Power (‘RP’) totaling 25,000 kW to Verizon CCC LLC (‘Verizon’), as described herein and in Exhibit ‘3-A.’

 

BACKGROUND

 

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

 

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

 

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

 

“The Western New York Advisory Group (‘Advisory Group’) is comprised of the Authority, National Grid, Empire State Development Corporation, the Buffalo Niagara Enterprise, Niagara County Center for Economic Development and Erie County Industrial Development Agency.  The Advisory Group’s goal is to better coordinate the marketing of allocations of Authority hydropower and other economic development incentives.  The Advisory Group provides advice to support the hydropower allocation process with the intent of helping to maximize the value of this resource to improve the economy of Western New York and the State of New York.

 

DISCUSSION

 

                “Verizon is planning to build a large data center to expand its existing data center infrastructure in support of the company’s global communications business.  The proposed plan is to construct a $500-million, 500,000 square-foot building(s) on 150 acres of purchased property in Somerset, New York.  If the project moves forward, the company would invest $1.459 billion over a four-year horizon to construct and equip the brand new facility with computers, communications and associated equipment, generators and chillers, etc.

 

                “The company’s anticipated load requirement is 35 MW by the end of the third year of operation, which, based on the project plan, would be the end of year 2014.  Verizon indicated the project’s load requirements would incrementally increase thereafter by 10 MW to, ultimately, 75 MW when fully built by the end of 2018.  The application’s request for power is 30 MW.

 

                “Verizon will commit to creating 145 new, permanent, high-paying jobs by the end of the third year of hydropower service.  The ratio of jobs per MW for the recommended total allocation amount of 25 MW is 5.8 new jobs/MW.  This ratio is below the historic average of 14.0 new jobs/MW for hydropower allocations approved by the Trustees over the last two years.  Additionally, the project is anticipated to provide anywhere from 300 to 500 short-term construction jobs to build the data center.

               

“The total planned capital investment would be $1.459 billion over a four-year horizon.  The plan includes roughly one year for building construction costing approximately $500 million. The remaining capital investment would be for infrastructure, machinery and equipment over the four-year horizon as the data center’s capacity is built.  This investment would be the largest of any hydropower applicant in terms of total dollars spent, as well as on a per MW basis.  The capital investment ratio is $58 million/MW which is larger than the historic average of $14.7 million/MW for hydropower allocations approved by the Trustees over the last two years.

 

                “A significant focus for Verizon in building this facility will be the efficient use of energy, as well as attention to sustainability issues.  The power and cooling systems will be designed by industry leading engineering teams with a mission to use a combination of environmentally friendly systems and efficient natural resources to meet the energy needs of the data center.

 

                “Staff recommends that the Trustees approve the allocation of 12,425 kW of available EP and 12,575 kW of available RP to Verizon for a term of 15 years, as set forth in Exhibit ‘3-A.’  The Advisory Group supports the recommendation.  Exhibit ‘3-A’ shows, among other things, the amount of power requested and the recommended allocations, along with additional employment and capital investment information.  This project will help grow and diversify the economy of Western New York and provide new employment opportunities in the region.  It is projected to result in the creation of 145 jobs within three years of hydropower service.

               

RECOMMENDATION

 

“The Manager - Business Power Allocations and Compliance recommends that the Trustees approve the allocations of 12,425 kW of Expansion Power and 12,575 kW of Replacement Power to Verizon CCC LLC as set forth in Exhibit ‘3-A.’

 

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

 

Mr. Pasquale said that the deal with Verizon had been modified and Mr. Huvane would provide the Board with the details of the modification.

In response to a question from Vice Chairman Foster, Chairman Townsend said that the Authority is helping to revitalize the economy in Western New York and Niagara County.  To be competitive, the job/Mw matrix is not necessarily the best matrix to apply; given the present state of the economy, the number of jobs to power is magnified above and beyond the matrix.

Trustee O’Luck said that Western New York is hurting because of the state of the economy and it is critical that the Board move forward with the recommendation to provide a means for economic development to Western New York.  The Board should not focus on the number of jobs in this deal, but on what the deal will do to bring in additional jobs to Western New York and the long term vision of it attracting other companies to bring or create jobs in Western New York.

Mr. Michael Huvane presented highlights of staff recommendation to the Trustees.   In response to a questions  from Trustee O’Luck and Trustee Foster regarding the jobs/MW for the proposed Verizon transaction, Mr. Huvane said that 145 jobs would be created as a result of the project.

 

Chairman Townsend pointed out that the Advisory Group comprises the Authority, National Grid, Empire State Development Corporation, Buffalo Niagara Center for Economic Development Agency, which shows a broad base in Western New York for support of the project at the local level.

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

 

                                RESOLVED, That the allocation of 12,425 kW of Expansion Power and 12,575 kW of Replacement Power, as detailed in Exhibit “3-A,” be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 


 


 

APPLICATION SUMMARY

Expansion and Replacement Power

 

Company:                                            Verizon CCC LLC 

 

Location:                                              Somerset, New York

                  

County:                                                 Niagara County

 

IOU:                                                       National Grid

 

Business Activity:                               Data Center Operations

 

Project Description:                          Verizon plans to build, own and operate a data center to extend its existing data center infrastructure to support its global communications business.  The project plan includes acquiring 150 acres of land and building and equipping a large data center.  The project entails building 500,000 sq. ft. facilities comprising of 20,000 sq. ft. operations center and 3 long buildings to house the data center equipment.  The buildings would be equipped with electrical and mechanical infrastructure, computers, communications and associated equipment, generators and chillers, etc.

 

Existing Allocation:                                          None

 

Power Requested:                                               30,000 kW           

 

Power Recommended:                      25,000 kW total, comprised of         12,425 kW Expansion Power

                                                                                                                                12,575 kW Replacement Power

 

Job Commitment:                              145 jobs total (0 existing + 145 new jobs)

 

New Jobs/ Power Ratio:                   5.8 jobs/MW

 

New Jobs Avg. Wages:                      $79,000 (excluding benefits)

 

Capital Investment:                           $1.459 billion

 

Capital Investment / MW:               $58 million/MW

 

Summary:                                            Verizon plans to build, own and operate a data center to add to its existing data center infrastructure in support of its global communications business.  The project plans include a focus on efficiency and sustainability in construction design, equipment and implementation.  The company is working with Empire State Development, Niagara County IDA and other local development agencies for additional incentives.  Other locations being considered for this expansion are in Idaho, Utah, Washington and Wyoming.  Electricity is a significant cost of operating the facility (a third or more of total annual operating costs).  A low-cost hydropower allocation is a critical incentive for Verizon to build this project, creating 145 new jobs in western New York.

 

 


 

4.                   St. Lawrence/FDR Power Project – Cleaning/Abatement of Life Extension and Modernization Components – Contract Award   

          

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the award of a multiyear contract to Tri-State Painting, Inc. (‘Tri-State’) of Tilton, New Hampshire for $1,194,423 to provide off-site cleaning/painting abatement services for the St. Lawrence/FDR Power Project Life Extension and Modernization (‘LEM’) Program.

 

BACKGROUND

 

“In accordance with the Authority’s Expenditure Authorization Procedures, the award of non-personal services contracts exceeding a one-year term requires Trustee approval.  New regulations governing removal of potential environmental contaminants have necessitated additional cleaning of contaminating components.  In order to support the St. Lawrence LEM schedule, interim approval to proceed with the award of this contract was obtained from the President and Chief Executive Officer in September 2010, subject to the Trustees’ approval at their meeting of October 26, 2010.

 

“The Authority is presently undergoing a major LEM Program for the entire St. Lawrence facility.  LEM activities include refurbishment and replacement of the 16 Generator Units’ components.  Presently, the 14th unit is being upgraded.  As part of the LEM Program, the Authority will be conducting cleaning/paint lead/PCB abatement of the St. Lawrence plant components.

 

DISCUSSION

 

“The contract with Tri-State (Q!)-4825; PO#TBA) will provide off-site cleaning and abatement services for lead and PCB-containing paint on plant turbine components, including the outer head cover, intermediate head cover and servo motor.  These components are coated with lead-based paints with PCBs, which will be removed and disposed of at an Authority-approved site.  Contract services will include all labor, supervision, materials and equipment (except those specified in the contract documents to be provided by others), insurance, permits and any other services necessary to perform all operations required for the abatement and cleaning of lead/PCBs, as further set forth in the specifications.  Bid documents were downloaded electronically from the Authority’s Procurement Web site by 50 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Five proposals were received and evaluated, of which two were non-responsive and were not considered further.   Based on the contractor’s qualifications, experience and competitive pricing, staff recommends the award of a contract to Tri-State, the lowest-priced bidder, which is technically qualified to perform such services and meets the bid requirements.

 

“The Trustees are requested to ratify and approve the subject contract for an intended term up to two years.  Approval is also requested for the total amount to be expended for the term of the contract, $1,194,423.

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

“The Vice President – Project Management, the Vice President – Engineering, the Regional Manager – Northern New York, the Senior Vice President – Power Supply Support Services and the Project Manager – Project Management recommend that the Trustees approve the contract with Tri-State Painting, Inc. for $1,194,423 to provide off-site cleaning/paint lead/PCB abatement services.

 

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

 

Mr. John Canale presented highlights of staff recommendation to the Trustees.  In response to a question from Trustee Nicandri, Mr. Canale said that the structures are the original construction over 50 years ago and that the work will take care of any environmental issues associated with the original paint job.

In response to a question from Chairman Townsend, Mr. Canale said that the Authority does not have any direct experience with Tri-State, however, staff has worked with the Project Manager who has assured them that the work would be done in accordance with the required standard.  Staff is confident that they can perform the job.

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

 

RESOLVED, That in accordance with the Authority’s Expenditure Authorization Procedures, the award of a contract to Tri-State Painting, Inc. is hereby approved in accordance with and as recommended in the foregoing report of the President and Chief Executive Officer, in the amount and for the purpose listed below:

 

Contractor                                           Contract Approval

                                               

Tri-State Painting, Inc.                            $1,194,423                                                                   

 

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.                   Issuance of Series 2010 Revenue Bonds

 

                Mr. Brian McElroy presented the highlights of staff’s recommendations to the Trustees and Mr. Timothy Sheehan provided an overview of the resolutions the Trustees were being
 asked to vote on.
   

                Chairman Townsend said that the Board was extensively briefed on this item by Ms. Elizabeth McCarthy and Mr. McElroy prior to the meeting.


 

6.                   Purchase of Interest Rate Cap Relating to Series 1 Commercial Paper Notes

 

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

 

                “The Trustees are requested to approve the Authority’s entry into one or more interest rate cap agreements with the objective of limiting exposure to rising interest rates relating to the Series 1 Commercial Paper Notes issued to support the Energy Services program.  The interest rate cap agreements would replace the cap agreement that expired August 15, 2010 and would be in an aggregate notional amount not to exceed $400 million, with such caps having terms of no more than five years.  The interest rate on the cap agreements would be at or below 5.90% (the ‘cap rate’).

BACKGROUND

 

                “The Authority currently finances Energy Services projects with the issuance of Series 1 Commercial Paper Notes.  Presently, the borrowings under the program total approximately $313 million.  The Series 1 Commercial Paper Program allows the Authority to borrow up to $400 million for Energy Services projects.

 

“The Commercial Paper borrowings finance Energy Services projects, with the cost of such projects scheduled to be recovered from program participants typically over a period of up to ten years, and in certain limited circumstances, up to a 20-year period.  Due to pre-payments (‘lump sum payments’) from some program participants, the average outstanding period for a tranche of notes has been approximately three and one-half years.  By regularly entering into interest rate caps, interest rate risk related to the Series 1 Commercial Paper Notes has been mitigated for the Authority, as well as for the program participants. 

DISCUSSION

 

                “Staff has projected that the current receivables from Energy Services program participants that support the Authority’s borrowings of approximately $313 million under the Series 1 Commercial Paper Program will be repaid over the next three and one-half years.  Based on this estimate, staff is recommending that the Authority enter into one or more interest rate cap agreements relating to the Series 1 Commercial Paper Notes.  Under such an agreement, the Authority would pay a fixed premium to the counterparty in return for which the counterparty would be obligated to pay to the Authority a sum of money if the Securities Industry and Financial Markets Association Municipal Swap Index (‘SIFMA Index’) rose above the cap rate, as described further below.  The sum to be paid to the Authority would equal the excess of the SIFMA Index over the cap rate.  The result of this would be to effectively ‘cap’ the Authority’s exposure under the Series 1 Commercial Paper Notes at the cap rate, or a rate very close to the cap rate, depending on how closely the SIFMA Index corresponds to the actual Series 1 Commercial Paper Note rate.  Presently, the Series 1 Commercial Paper Note rate is approximately five basis points above the SIFMA Index.

 

                “The risks involved in this type of transaction generally are twofold:  (1) the counterparty fails to provide the payment promised under the agreement, and (2) as noted above, market conditions develop in which the SIFMA Index is lower than the actual Series 1 Commercial Paper Note rate.  This latter risk, referred to as basis risk, would involve circumstances where the Series 1 Commercial Paper Note rate rises above the cap rate and the SIFMA Index stays below the cap rate.  Under that scenario, no sums would be paid to the Authority.  By selecting creditworthy counterparties, the risk associated with failed payment to the Authority is minimal.  In addition, due to the close historical trading relationship between the SIFMA Index and the Series 1 Commercial Paper Note rate, staff believes that basis risk is minimal.  Accordingly, staff believes that both risks are manageable and acceptable given the benefits to be derived from this type of transaction.

 

                “The interest rate cap agreements would have terms of between three and five years with an aggregate notional amount not to exceed $400 million.  The total cost of such agreements would not exceed five basis points per year ($200,000 per year on a notional amount of $400 million).  The interest rate caps would be competitively bid among the Authority’s qualified swap providers and entered into under existing Master ISDA Agreements.  The caps will limit the Authority’s borrowing cost under this program to no more than the cap rate in any time period as the cap provider will pay the Authority any time the monthly average for the SIFMA Index exceeds the cap rate in return for the cost of the cap (the premium of no more than five basis points) paid by the Authority to the provider.

 

                “Staff believes that, in light of current interest rates, these agreements will limit the Authority’s exposure to possible rising interest rates at a very reasonable cost.  In addition, the Authority currently has approximately $800 million of variable-rate debt, representing about approximately 40% of total debt.  A cap would serve to fix a portion of this variable-rate debt and lessen the Authority’s exposure to rising rates.  The cap, coupled with other existing hedging instruments used to limit interest rate exposure, would reduce the Authority’s overall level of variable rate exposure to approximately 10%. 

 

FISCAL INFORMATION

 

                “The annual cost of the proposed caps would not exceed $200,000; it will initially be paid from the Operating Fund either on an annual basis or as an upfront premium and it will be recovered from Energy Services program participants.

RECOMMENDATION

 

“The Treasurer recommends that the Trustees approve the Authority’s execution of one or more interest rate cap agreements, based on a cap rate of no more than 5.9% on an aggregate notional amount of Series 1 Commercial Paper Notes not to exceed $400 million, having a term not to exceed five years and at an aggregate cost not to exceed five basis points annually.

 

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

 

            Mr. Brian McElroy presented highlights of staff recommendation to the Trustees.  Chairman Townsend said that the Board was extensively briefed on this item by Ms. McCarthy and Mr. McElroy prior to the meeting.

                In response to a question from Trustee O’Luck, Mr. McElroy said that staff is planning to secure an interest rate cap agreement based on a cap rate not to exceed 5.9%.

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

 

RESOLVED, That the Trustees authorize the execution by the Executive Vice President and Chief Financial Officer, the Senior Vice President – Corporate Planning and Finance or the Treasurer, subject to approval of the form thereof by the Executive Vice President and General Counsel, on behalf of the Authority, of one or more interest rate cap agreements provided that: (1) such agreements shall be entered into as a result of a competitive bidding procedure; (2) the aggregate notional amount of Series 1 Commercial Paper Notes that such agreements apply to shall not exceed $400 million; (3) the interest rate cap in such agreements shall be no more than 5.9%; (4) the term of each such agreement shall not exceed five years; (5) the annual cost to the Authority under each such agreement shall not exceed five basis points annually based on the amount to which such agreement applies and (6) each agreement shall have such terms and conditions, not inconsistent with those set forth in clauses (1) – (5) above, as the executing officer deems necessary or advisable, such execution to be conclusive evidence of such approval; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, the Senior Vice President – Corporate Planning and Finance, the Treasurer and the Deputy Treasurer, are, and each hereby is, authorized to do and perform or cause to be done and performed in the name and on behalf of the Authority, all other acts; to execute and deliver or cause to be executed and delivered all other notices, requests, directions, consents, approvals, orders, applications, agreements, certificates and further documents or other communications of any kind under the corporate seal of the Authority or otherwise as he, she or they may deem necessary, advisable or appropriate to effect the intent of the foregoing resolution; 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.

 

 

7.                   Committee Appointments

 

                The Chairman submitted the following report:

 

SUMMARY

“In accordance with the By-Laws of the Power Authority of the State of New York, and in accordance with the Charters of the Finance and Governance Committees, the Trustees are requested to formally increase the number of members on the Finance and Governance Committees from three to four.  The Trustees are further requested to appoint Mark O’Luck to serve as a member of the Finance and Governance Committees effective October 26, 2010.

 

BACKGROUND

 

“Today the Trustees of the Power Authority were requested to amend the By-laws of the Power Authority and the Finance and Governance Charters, which limited membership on the respective Committees to three members and provided that a majority of those present but no less than two members constitute a quorum, for the purpose of facilitating an increase in Trustee member participation on the Committees.  The Trustees were also requested to amend the quorum provisions of these Charters in light of the change to the membership composition provisions.

 

“The Trustees are now requested to set membership on the Finance and Governance Committee at four members and to add Mark O’Luck to the Finance and Governance Committees. 

RECOMMENDATION

 

“The following resolution is recommended for adoption.”

 

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

 

RESOLVED, That the Finance Committee shall be comprised of four members effective October 26, 2010; and be it further

 

RESOLVED, That the Governance Committee shall be comprised of four members effective October 26, 2010; and be it further

 

RESOLVED, That Mark O’Luck shall be a member of the Finance Committee effective October 26, 2010; and be it further

 

RESOLVED, That Mark O’Luck shall be a member of the Governance Committee effective October 26, 2010.

 


 

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.                Hudson Transmission Partners, LLC –

Authorization to Post Additional Security

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“It is anticipated that at some time in the near future the Trustees will be requested to authorize the execution of a twenty-year agreement between the Authority and Hudson Transmission Partners, LLC (‘HTP’) (the ‘Firm Transmission Capacity Purchase Agreement’ or ‘FTCPA’), for the purchase by the Authority of firm transmission capacity through a to-be-constructed undersea/underground high voltage direct current transmission cable from Bergen County, New Jersey to Manhattan (the ‘Line’ or ‘Project’) for the benefit of , among others, the Authority’s New York City governmental customers (‘NYCGC’).  The Project is targeted to commence operations in late 2012/early 2013.

 

                “Pending finalization of negotiations with the NYCGCs, the Trustees are requested to authorize the Authority to post an additional corporate guaranty in the amount of $166,410,350 with PJM Interconnection, LLC (‘PJM’) by October 31, 2010.  This posting would guarantee the payment by HTP of interconnection and upgrades which are necessary to accommodate the HTP Project.  HTP, however, has filed notice, pursuant to its rights under the PJM tariff, to suspend all interconnection and upgrade work in New Jersey to be done by Public Service Electric and Gas (‘PSEG’) and Jersey Central Power and Light (‘JCPL’).  The suspension will not be lifted without the Authority’s written consent, which will not be given until the FTCPA is executed with related customer agreements in place, all requisite approvals for the Project are received, and the HTP Project’s financial closing has occurred, or the Authority’s guaranties have been replaced by alternate security posted by HTP.  The guaranty shall be effective only so long as the suspension remains effectual.  In addition, all draws against prior posted security for work done by the interconnecting utilities are current.  Therefore, the risk of any draw against the guaranty during its effective dates is mitigated. 

 

BACKGROUND

 

“At their November 2006 meeting, the Trustees authorized Authority staff to begin negotiations with HTP, the winning transmission line bidder in response to the Authority’s March 11, 2005 Request for Proposals (‘RFP’) for Long-Term Supply of In-City Unforced Capacity and Optional Energy.[2]  This RFP was a competitive solicitation for the benefit of the NYC Governmental Customers, with whom Authority staff collaborated during the RFP process. 

 

“The Line would be a long-term asset, having a useful life of 40 to 60 years.  With the Line in service, the Authority would acquire certain non-equity rights in the project that would enable it to, among other things, import energy from the PJM market into the New York Independent System Operator’s (‘NYISO’) market.  Under the proposed FTCPA, the Authority would acquire the right to 495 MW, or 75% of the Line’s 660 MW capacity.  HTP would retain a 25% share, a portion of which it may transfer to a third party.

 

“Operation of the Project would contribute to a reduction in the energy prices for the NYC Governmental Customers and other electricity consumers in New York City and New York State and enhance both the fuel and geographic diversity of electric supply for the New York City region.

 

 

DISCUSSION

 

“The Authority has completed negotiations with HTP on the terms of the FTCPA and has had substantive talks with its NYCGCs about the terms of an agreement under which the Customers would agree to make monthly payments to the Authority for the duration of the FTCPA.

 

“Discussions are underway to obtain acceptance of Customer Term Sheets from the major NYCGCs.  These Term Sheets, which are non-binding, will differ only in the relative shares of the Customers’ obligations to the Authority with respect to the HTP Line.  The Authority’s obligations to HTP under the FTCPA will be contingent on the execution and effectiveness of formal Customer agreements consistent with the Term Sheets.

 

“Staff will come back to the Trustees with the full terms of the transaction and its benefits for the NYC Customers and other consumers.  At that time, staff will seek Trustee approval for the execution of all agreements relevant to the Project.

 

                “In the meantime, for HTP to maintain its interconnection priority positions in PJM and the NYISO, certain financial security postings are required under the respective rules of both transmission system operators.  The security is to ensure transmission owners are paid for the work they do on interconnection and transmission system upgrades, which are necessary to accommodate the HTP Project.

 

                “Thus far, the Authority has posted a guaranty for $16.471 million on January 11, 2010 as security for interconnection and upgrade work to be performed by Consolidated Edison Company of New York, Inc. (“Con Edison”) in New York City.  That guaranty is required under NYISO rules so that the HTP Line will maintain its priority for interconnection to Con Edison’s West 49th Street Substation.  The guaranty was given on the condition that Con Edison will spend no money on and expend no resources toward the system upgrade facilities needed to accommodate the HTP Line unless authorized by the Authority.  Thus, if HTP does not proceed with the Project, Con Edison will not spend money on these upgrades and there will be no call on the Authority’s guaranty. 

               

                “As discussed and authorized at its July 22, 2010 meeting, the Authority has also posted a guaranty in the aggregate amount of $5.75 million with HTP supplying a letter of credit or other security for the remaining balance of $360,000. 

 

                “On June 30, 2010 HTP issued a directive to suspend all work by PSEG and JCPL associated with the construction and installation of interconnection facilities and network upgrades for the HTP Project.  It is estimated that this suspension directive will remain in effect until the Project’s financial closing in early 2011.  Further, HTP agreed not to release, rescind, withdraw or modify the suspension directive without the Authority’s express written consent.  Because all work in PJM has been suspended and will not be resumed without the Authority’s consent, the Authority has reasonable protection against liability for interconnection and upgrade costs which would otherwise be ongoing.  These costs would be owed in the first instance by HTP, but would be backstopped by the Authority’s guaranty. 

 

                “After appropriate adjustments, PJM currently requires a total security deposit of $172,520,350 (less any previous postings) to be posted by October 31, 2010.  Accordingly, to allow the Authority to complete its negotiations with the NYCGCs concerning the HTP Project, the Trustees are requested to authorize the posting of an additional corporate guaranty to provide this security.  The amount of the posting is $166,410,350.  This additional guaranty is subject to the same suspension directives which applied to all previous Authority postings and would remain in force until the earlier of: a) the date the suspension directive ceases to be in effect; or b) December 31, 2010, unless the parties agree in writing to extend.

 

“Upon Seller’s financial close or certain earlier specified dates, all guaranties posted by the Authority to secure HTP's obligations under the PJM requirements will be terminated and replaced by one or more letters of credit or other forms of acceptable security posted by or on behalf of HTP.  Under the proposed FTCPA, the Authority would be responsible to reimburse HTP for all interconnection and upgrade costs once the Project commences operations.

 

FISCAL INFORMATION

 

                “As explained above, it is expected that no call will be made on the Authority’s guaranties prior to the start of the interconnection work which is currently suspended and will not commence unless the Trustees at a later meeting approve the requisite agreements and all conditions precedent are met.  Consequently, there is expected to be no cost to the Authority in providing these guaranties.

 

RECOMMENDATION

 

                “It is recommended that the Trustees authorize the President and Chief Executive Officer or the Executive Vice President and Chief Financial Officer to post the above described security in furtherance of the Hudson Transmission Partners, LLC Project’s obligations with respect to upgrades or interconnecting to the PJM Interconnection, LLC system, as outlined above. 

 

“The Chief Operating Officer, the Executive Vice President and General Counsel, the Senior Vice President and Chief Engineer – Power Generation, the Senior Vice President – Marketing and Economic Development, the Senior Vice President – Corporate Planning and Finance, the Senior Vice President – Power Resource Planning and Acquisition, the Vice President – Energy Risk Assessment and Control and I concur in the recommendation.”

 

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

 

RESOLVED, That the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer are hereby authorized on behalf of the Authority to post on or before October 31, 2010, security in the form of a corporate guaranty in the amount of $166,410,350 as described in foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That should the New York City Economic Development Corporation (“NYCEDC”) fail to reach agreement on terms acceptable to the Authority by November 15, 2010, the Authority will take immediate steps to withdrawal all guarantees posted in connection with this project, which include the August 15, 2010 guaranty in the maximum amount of $5,750,000 and the October 31, 2010 guaranty in the amount of $166,410,350; and be it further

 

RESOLVED, That the November 15, 2010 date is the last extension that the Authority’s Board of Trustees are willing to approve; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer, the Chief Operating Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer 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 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.

 

 

11.                Cost Share Agreement for Shore Power with the City of New York 

 

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to authorize the President and Chief Executive Officer, and his designees, to enter into an agreement with the City of New York (‘City’) whereby the Authority will enter into a Cost Share Agreement with the City for service at the Brooklyn Cruise Terminal (“Terminal”).

 

BACKGROUND

 

                “Since early 2007, the Authority has been in discussions with the City, the New York City Economic Development Corporation (‘NYCEDC’) and the Port Authority of New York and New Jersey (‘Port Authority’) regarding a proposal to install shore power capability at the Terminal. The goal of this project is to have cruise ships that call at the Terminal shut down their diesel powered generators when berthed by enabling them to plug into a land-based power source.   The resulting reduction in pollutants and emissions would improve air quality in the area surrounding the Terminal, a densely populated community, as well as in the region, which is considered a non-attainment zone for certain emissions.

 

                “The shore power proposal is multi-faceted and involves several organizations.  The Port Authority owns the Terminal which is located at Pier 12 in the Red Hook section of Brooklyn.  NYCEDC leases Pier 12 from the Port Authority, who also jointly manages the Terminal with NYCEDC.   Electricity for the Terminal is provided by the Authority through its long-term electricity supply contract with the City.

 

“The Port Authority is willing to invest several million dollars to install the shore power infrastructure, in addition to an award of $2.85 million in stimulus grant funding by the U.S. Environmental Protection Agency (‘EPA’).  The EPA monies must be spent by September 30, 2011; otherwise the Port Authority will lose them.

 

                “Carnival Corporation & plc (‘Carnival’), a global cruise company, has agreed to retrofit its two primary ships berthing at the Terminal with equipment that would enable these ships to connect to shore power (approximately $1 million per ship).  However, in order to make this investment and to economically justify shutting down the on-board diesel engines, Carnival has stated that it requires a maximum rate for electricity that is lower than the standard rate charged by the Authority at the Terminal.

 

DISCUSSION

 

                “In order to obtain the environmental benefits noted above, the Port Authority, the City and NYCEDC requested that the Authority develop  a cost share agreement for electricity for shore power, pointing out that special shore power rates are offered at port facilities in Los Angeles, Long Beach, San Diego, Seattle and Juneau (no such option exists on the East Coast). 

 

                “After review of the expected demand for power as a result of this change in infrastructure at the Terminal and negotiations with NYCEDC, Authority staff believes it is appropriate to offer a transitional, five-year cost share agreement with the City for Shore Power.  This cost share arrangement between the Authority and the City will apply only to usage resulting from the connection of two specific ships at the Terminal - the Queen Mary 2 and the Caribbean Princess.  The cost sharing will be determined as 50% of the difference between the maximum rate to be charged by NYCEDC to Carnival and the Authority’s tariff rate otherwise applicable to the Terminal.

 

                “Public Authorities Law §1005(16)(a) authorizes the Authority, as deemed feasible and advisable by the trustees, to develop, implement, provide and administer clean energy technology projects for any public entity.  As the premise of the Shore Power Project is to reduce harmful emissions from diesel powered cruise ship generators by using a land-based power source, this Cost Share agreement is consistent with the powers and duties of the Authority.

 

FISCAL INFORMATION

“It is estimated that this cost share agreement will aggregate approximately $5 million over the five year term of the Agreement.  This cost share agreement would be funded by Operating Revenues.

 

RECOMMENDATION

 

“The Senior Vice President – Marketing and Economic Development recommends that the President and Chief Executive Officer, or his designees, be authorized to execute an Agreement with the City of New York in order to provide cost share agreement with the City of New York for the Brooklyn Cruise Terminal as discussed above. 

 

“The Executive Vice President and General Counsel, 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.

 

WHEREAS, at the request of, and in cooperation with, the City of New York (“City”), the New York City Economic Development Corporation (“NYCEDC”) and the Port Authority of New York and New Jersey (“Port Authority”), the Authority has been requested to provide a Cost Share Agreement with the City for Shore Power at the Brooklyn Cruise Terminal; and 

 

WHEREAS, installation of shore power capability at the Brooklyn Cruise Terminal will result in improved air quality in the region and positive health benefits for the residents in the vicinity of the Terminal; and

 

WHEREAS, provision by the Authority of a Cost Share Agreement with the City is a critical element of the completion of the shore power project;  

 

                                NOW, THEREFORE, BE IT RESOLVED, that the President and Chief Executive Officer, or his designees, is hereby authorized on behalf of the Authority to execute (a) agreements between the Authority and the City of New York, as described in the foregoing report of the President and Chief Executive Officer and (b) any other consents, agreements or other transactions as are necessary or ancillary to such agreement; 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 necessary or advisable to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

12.                Next Meeting

 

                Chairman Townsend said that the next meeting of the Trustees would be held at the Clarence D. Rappleyea Building, White Plains, New York, on Monday, December 13, 2010. 

 

 

Closing

                On motion made and seconded, the meeting was adjourned by the Chairman at approximately 2:10 p.m.

 

 

 

Karen Delince

Corporate Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                

 

 

 

 

 

 

OCT MINS.10


 

[1]   At the same time, nothing in these tariff amendments would diminish the customers’ contractual rights with respect to Riders A and B, and any conflicts between the riders and the tariffs are resolved in favor of the riders, as each rider so states.  Authority staff maintains that the incorporation of the Rider A and B provisions into the body of the tariffs does not amend the riders, but improves the transparency and organization of the Authority’s tariff offering of preference hydropower.

[2] A load serving entity, such as the Authority, must demonstrate that it has acquired sufficient generation capacity to serve its load under the rules of the New York Independent System Operator, Inc. (‘NYISO’).  Unforced Capacity or ‘UCAP’ is a capacity measure that accounts for required reserves and forced outage rates.  NYISO rules further require that a proportion of the load within the five boroughs of New York City be served by UCAP that is recognized as being electrically located within that locality (‘In-City UCAP’).