MINUTES OF THE REGULAR MEETING OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

October 24, 2006

 

 

Table of Contents

 

            Subject                                                                                                                                                             

 

            Special Note from Chairman Frank S. McCullough                                                   

 

1.              Minutes of the Regular Meeting held on September 26, 2006                                 

2.              Financial Reports for the Nine Months Ending September 30, 2006, Exhibit ‘2-A’

3.              Report from the President and Chief Executive Officer                                             

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

5.              Power for Jobs Program – Extended Benefits – 2007 Resolution, Exhibit ‘5-A’ & ‘5-B’

6.              Economic Development Power Programs – Extensions to Terms of Service, Energy Cost Saving Benefits and Related Tariffs Resolution, Exhibit ‘6-A’ 6-C1, 6C-2, 6C-3, 6C-4, 6C-5

7.              Allocation of 300 kW of Hydro Power Resolution, Exhibit ‘7-A’

8.              Transfers of Industrial Power Resolution

9.              Municipal and Rural Cooperative Economic Development Program Allocations to the Villages of Boonville and Greene Resolution

10.           Niagara Power Project Relicensing – Additional Capital Expenditure Authorization Request – Compliance with Anticipated New License Resolution

11.           Tri-Lakes Reliability Project – Revised Agreement Resolution

12.           Budget and Financial Plan Information Pursuant to New Regulations of the Office of the State Comptroller Resolution, Exhibit ’12-A’ & ’12-B’

 

13.       Revisions of Authority’s Energy Services Programs – Customer-Implemented Work Resolution

                                                                                                                                                                                       

14.       Motion to Conduct an Executive Session                                                                  

15.       Motion to Resume Meeting in Open Session                                                            

16.           Next Meeting                                                                                                                   

Closing                                                                                                                             

 

                Minutes of the Regular Meeting of the Power Authority of the State of New York held at the Blenheim-Gilboa Visitors’ Center, Gilboa, New York, at 11:00 a.m.

 

Present:                  Frank S. McCullough, Jr., Chairman

                                Michael J. Townsend, Vice Chairman

                                Robert E. Moses, Trustee

                                Thomas W. Scozzafava, Trustee

                                Leonard N. Spano, Trustee

 

                                Elise M. Cusack, Trustee – Excused

                                Joseph J. Seymour, Trustee – Excused

 

------------------------------------------------------------------------------------------------------------------------

Timothy S. Carey                                 President and Chief Executive Officer

Joseph Del Sindaco                             Executive Vice President and Chief Financial Officer

Thomas J. Kelly                                    Executive Vice President and General Counsel

Vincent C. Vesce                                  Executive Vice President – Corporate Services and Administration

Robert J. Deasy                                    Senior Vice President – Energy Resource Management

Steven J. DeCarlo                                 Senior Vice President – Transmission

William J. Nadeau                                Senior Vice President – Energy Resource Management and Strategic Planning

Brian Vattimo                                        Senior Vice President – Public and Governmental Affairs

Edward A. Welz                                   Senior Vice President and Chief Engineer – Power Generation

Anne B. Cahill                                      Corporate Secretary

Arnold M. Bellis                                   Vice President – Controller

John M. Hoff                                        Vice President – Procurement and Real Estate

Donald A. Russak                                Vice President – Finance

Tom H. Warmath                                  Vice President and Chief Risk Officer

James H. Yates                                     Vice President – Major Account Marketing and Economic Development

Angela D. Graves                                 Deputy Corporate Secretary

Frederick E. Chase                      Executive Director – Hydro Relicensing

Paul F. Finnegan                         Executive Director – Public and Governmental Affairs

John J. Suloway                           Executive Director – Licensing, Implementation and Compliance

Thomas A. Davis                         Director – Financial Planning

James F. Pasquale                        Director – Business Power Allocations, Regulations and Billing

Keith G. Silliman                        Director – Niagara Relicensing

Daniel Wiese                              Inspector General and Director – Corporate Security

Allen Schriver                                       Regional Manager – Central New York

Stephen M. Ramsey                            Manager – Community Relations – Blenheim-Gilboa Power Project

Mary Jean Frank                                  Associate Corporate Secretary

Lorna M. Johnson                               Assistant Corporate Secretary

Jeffrey Carey                                         Special Assistant to President and Chief Executive Officer

William Helmer                                     Special Licensing Counsel

 

 

Chairman McCullough presided over the meeting.  Secretary Cahill kept the Minutes.

 

 

                Special Note from Chairman Frank S. McCullough, Jr.

 

Chairman McCullough welcomed the other Trustees and staff to Blenheim-Gilboa (“B-G”).  He said that this was a wonderful facility and thanked all of the staff at B-G for the hospitality they had displayed yesterday and today.  Chairman McCullough extended greetings from Trustee Cusack, who is still coping with the aftermath of the snowstorm in Buffalo, and Trustee Seymour, who is traveling.


 

1.             Approval of the Minutes

 

The Minutes of the Regular Meeting of September 26, 2006 were unanimously adopted.

 

 

2.             Financial Reports for the Nine Months Ending September 30, 2006

 

Mr. Bellis presented an overview of the reports to the Trustees. 


3.             Report from the President and Chief Executive Officer

               

                President Carey said that the Governor’s Office had called on the Authority to assist with cleanup from the Buffalo storm.  He said that Mr. DeCarlo had assembled a team of Authority employees from the St. Lawrence, B-G, Clark Energy Center and Niagara facilities who had expertise in brush cutting to help out in the Buffalo region.  President Carey said that Mr. DeCarlo’s team had done such a terrific job that Assemblyman Hoyt had called to thank the Authority.  The team will continue to assist with the cleanup for another week.  He thanked Mr. DeCarlo for the exemplary job he had done in representing the Authority with local officials and the media and asked everyone to join with him in giving Mr. DeCarlo a hand.        

 

 

4.             Power for Jobs Program – Extended Benefits

 

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve extended benefits for 68 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘4-A.’  These customers have been recommended to receive such extended benefits by the Economic Development Power Allocation Board (‘EDPAB’). 

 

BACKGROUND

 

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

 

“The PFJ program originally made 400 megawatts (‘MW’) of power available.  The program was to be phased in over three years, with approximately 133 MW made available each year.  In July 1998, as a result of the initial success of the program, the Legislature and Governor Pataki amended the PFJ statute to accelerate the distribution of the power, making a total of 267 MW available in Year One.  The 1998 amendments also increased the size of the program to 450 MW, with 50 MW to become available in Year Three.

 

                “In May 2000, legislation was enacted that authorized another 300 MW of power to be allocated under the PFJ program.  The additional MW were described in the statute as ‘phase four’ of the program.  Customers that received allocations in Year One were authorized to apply for reallocations; more than 95% reapplied.  The balance of the power was awarded to new applicants.

 

                “In July 2002, legislation was signed into law by Governor Pataki that authorized another 183 MW of power to be allocated under the program.  The additional MW were described in the statute as ‘phase five’ of the program.  Customers that received allocations in Year Two or Year Three were given priority to reapply for the program.  Any remaining power was made available to new applicants. 

 

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

 

“PFJ customers whose contracts expired on or prior to November 30, 2004 were eligible for a rebate to the extent funded by the Authority from the date their contract expired through December 31, 2005.  As an alternative, such customers could choose to receive a rebate to the extent funded by the Authority from the date their contract expired as a bridge to a new contract extension, with the contract extension commencing December 1, 2004.  The new contract would be in effect from a period no earlier than December 1, 2004 through the end of the PFJ program on December 31, 2005.

 

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

 

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

 

“In 2005, provisions of the approved State budget extended the period PFJ customers could receive benefits until December 31, 2006.  In 2006, a new law (Chapter 645 of the Laws of 2006) included provisions extending program benefits until June 30, 2007.

 

“Section 189 of the New York State Economic Development Law, which was amended by Chapter 59 of the Laws of 2004, provided the statutory authorization for the extended benefits that could be provided to PFJ customers.  The statute stated that an applicant could receive extended benefits ‘only if it is in compliance with and agrees to continue to meet the job retention and creation commitments set forth in its prior power for jobs contract.’

 

“Chapter 313 of the Laws of 2005 amended the above language to allow EDPAB to consider continuation of benefits on such terms as it deems reasonable.  The statutory language now reads as follows:

 

An applicant shall be eligible for such reimbursements and/or extensions only if it is in compliance with and agrees to continue to meet the job retention and creation commitments set forth in its prior power for jobs contract, or such other commitments as the board deems reasonable. (emphasis supplied)

 

“At its meeting of October 18, 2005, EDPAB approved criteria under which applicants whose extended benefits EDPAB had reduced for non-compliance with their job commitments could apply to have their PFJ benefits reinstated in whole or in part.  EDPAB authorized staff to create a short-form application, notify customers of the process, send customers the application and evaluate reconsideration requests based on the approved criteria.  To date, staff has mailed 200 applications, received 109 and completed review of 108.

 

DISCUSSION

 

“At its meeting on October 23, 2006, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 68 businesses listed in Exhibit ‘4-A.’  Collectively, these organizations have agreed to retain more than 68,000 jobs in New York State in exchange for rebates.  The rebate program will be in effect until June 30, 2007, the program’s sunset. 

 

                “The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘4-A’ in a total amount currently not expected to exceed $5,000,000.  Staff recommends that the Trustees authorize a withdrawal of monies from the Operating Fund for the payment of such amount, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.  Staff expects to present the Trustees with requests for additional funding for rebates to the companies listed in the Exhibits in the future.

 

FISCAL INFORMATION

 

“Funding of rebates for the companies listed on Exhibit ‘4-A’ is not expected to exceed $5,000,000.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $53.3 million in rebates.

 

RECOMMENDATION

 

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

 

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

 

Mr. Pasquale presented the highlights of staff’s recommendations to the Trustees.  Chairman McCullough added that the extended benefits had been approved by the Economic Development Power Allocation Board.

               

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

 

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

 

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

 

RESOLVED, That based on staff’s recommendation, it is hereby authorized that payments be made for electricity savings reimbursements as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $5 million, and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

 

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

 

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


 

5.             Power for Jobs Program – Extended Benefits – 2007

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve extended benefits for 121 Power for Jobs (‘PFJ’) customers as listed in Exhibits ‘5-A’ and ‘5-B’ until June 30, 2007 to reflect recently enacted changes in law.  These customers have been recommended to receive such extended benefits by the Economic Development Power Allocation Board (‘EDPAB’). 

 

BACKGROUND

 

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

 

“The PFJ program originally made 400 megawatts (‘MW’) of power available.  The program was to be phased in over three years, with approximately 133 MW made available each year.  In July 1998, as a result of the initial success of the program, the Legislature and Governor Pataki amended the PFJ statute to accelerate the distribution of the power, making a total of 267 MW available in Year One.  The 1998 amendments also increased the size of the program to 450 MW, with 50 MW to become available in Year Three.

 

                “In May 2000, legislation was enacted that authorized another 300 MW of power to be allocated under the PFJ program.  The additional MW were described in the statute as ‘phase four’ of the program.  Customers that received allocations in Year One were authorized to apply for reallocations; more than 95% reapplied.  The balance of the power was awarded to new applicants.

 

                “In July 2002, legislation was signed into law by Governor Pataki that authorized another 183 MW of power to be allocated under the program.  The additional MW were described in the statute as ‘phase five’ of the program.  Customers that received allocations in Year Two or Year Three were given priority to reapply for the program.  Any remaining power was made available to new applicants. 

 

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

 

“PFJ customers whose contracts expired on or prior to November 30, 2004 were eligible for a rebate to the extent funded by the Authority from the date their contract expired through December 31, 2005.  As an alternative, such customers could choose to receive a rebate to the extent funded by the Authority from the date their contract expired as a bridge to a new contract extension, with the contract extension commencing December 1, 2004.  The new contract would be in effect from a period no earlier than December 1, 2004 through the end of the PFJ program on December 31, 2005.

 

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

 

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

 

“In 2005, provisions of the approved State budget extended the period PFJ customers could receive benefits until December 31, 2006.

 

“Section 189 of the New York State Economic Development Law, which was amended by Chapter 59 of the Laws of 2004, provided the statutory authorization for the extended benefits that could be provided to PFJ customers.  The statute stated that an applicant could receive extended benefits ‘only if it is in compliance with and agrees to continue to meet the job retention and creation commitments set forth in its prior power for jobs contract.’

 

“Chapter 313 of the Laws of 2005 amended the above language to allow EDPAB to consider continuation of benefits on such terms as it deems reasonable.  The statutory language now reads as follows:

 

An applicant shall be eligible for such reimbursements and/or extensions  only  if  it  is  in compliance  with  and  agrees  to continue to meet the job retention and creation commitments set forth in its prior power for jobs contract, or such other commitments as the board deems reasonable. (emphasis supplied)

 

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

 

“In 2006, a new law (Chapter 645 of the Laws of 2006) included provisions extending program benefits until June 30, 2007.

 

DISCUSSION

 

“At its meeting on October 23, 2006, EDPAB recommended that the Authority’s Trustees approve contract extensions to the 76 businesses listed in Exhibit ‘5-A.’  Exhibit ‘5-B’ lists those businesses that EDPAB is recommending to continue to receive electricity savings reimbursements.  Collectively, these organizations have agreed to retain more than 64,000 jobs in New York State in exchange for the contract extensions or rebates.  The contracts will be extended and the rebate program will be in effect until June 30, 2007, the program’s newly enacted sunset date.  The power will be wheeled by the investor-owned utilities as indicated in the Exhibits. 

 

FISCAL INFORMATION

 

“The cost of rebates to these customers will not be known until 2007.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $53.3 million in rebates.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer and the Director – Business Power Allocations and Regulation recommend that the Trustees approve the contract extensions for, and the extension of eligibility to receive electricity savings reimbursements to, the Power for Jobs customers listed in Exhibits ‘5-A’ and ‘5-B.’

 

                “The Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Vice President – Major Account Marketing and Economic Development, the Senior Vice President – Public and Governmental Affairs 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 has recommended that the Authority approve contract extensions and electricity savings reimbursements to the Power for Jobs customers listed in Exhibit “5-A”;

 

NOW THEREFORE BE IT RESOLVED, That to implement such Economic Development Power Allocation Board recommendations, the Authority hereby approves contract extensions for those companies listed in Exhibit “5-A,” and the extension of eligibility to receive electricity savings reimbursements to the companies listed in Exhibit “5-B,” and be it further

 

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


 

6.             Economic Development Power Programs –Extensions to Terms of Service,  Energy Cost Savings Benefits and Related Tariffs

 

The President and Chief Executive Officer submitted the following report:

 

Summary

 

                “The Trustees are requested to approve an extension to the term of service to June 30, 2007 for 14 existing economic development power program customers listed on Exhibit ‘6-A,’ and Energy Cost Savings Benefits (‘ECSB’) for 32 customers listed on Exhibit ‘6-B.’  These customers have been recommended to receive such benefits by the Economic Development Power Allocation Board (‘EDPAB’).  In addition, the Trustees are requested to amend the four applicable service tariffs to reflect the June 30, 2007 ECSB expiration date (Exhibit ‘6-C’).

 

Request to Approve Extension to the Terms of Service for 14 Existing Economic Development Power Program Customers

 

BACKGROUND

 

                “The New York Power Authority (‘Authority’) sells electricity to businesses under several State-authorized economic development programs.  These power sales are made through the Economic Development Power Program, High Load Factor Manufacturer Program, Municipal Distribution Agency Industrial Power Program and other power sales programs.  The capacity and energy for these sales are provided by market purchases and supported by other Authority sources as needed.  In some instances, these customers are served directly by the Authority and in other cases the customers receive Authority power through resale arrangements with municipal distribution agencies or investor-owned utilities.  Contracts range in length from 5 to more than 20 years.

 

DISCUSSION

               

                “The customers detailed on Exhibit ‘6-A’ have allocation contracts previously approved by the Trustees that expire on December 31, 2006.  Staff is requesting that the Trustees extend these agreements until June 30, 2007 so these customers may continue to receive the benefits associated with the newly enacted law.  The extensions will help maintain costs and enable the customers to compete more effectively.  In addition, the customers will further secure employment levels in New York State.

 

                “EDPAB recommended that the contracts be extended at its meeting on October 23, 2006.

 

Energy Cost Savings Benefits

 

BACKGROUND

 

“Chapter 313 of the Laws of 2005 was signed into law by Governor George E. Pataki on July 26, 2005.  The new law allowed certain Authority power program customers that would be exposed to bill increases as a result of higher market prices before December 31, 2006 to apply for an ECSB.  Under this law, businesses eligible to receive ECSBs are limited to Authority customers currently supplied power under the Economic Development Power, Municipal Distribution Agency and High Load Factor programs.  The ECSB was made available for the period November 1, 2005 through December 31, 2006.  In 2006, a new law (Chapter 645 of the Laws of 2006) included provisions extending these benefits until June 30, 2007.

 

“EDPAB can recommend a partial or complete withdrawal of the ECSB if the company fails to maintain mutually agreed-upon commitments, including jobs, capital investment and power utilization.

 

DISCUSSION

 

“At its meeting of October 23, 2006, EDPAB recommended that the Authority’s Trustees approve the payment of ECSBs to the 32 businesses listed on Exhibit ‘6-B.’  Collectively, these organizations have agreed to retain more than 14,000 jobs in New York State in exchange for these benefits.  The companies will be eligible to receive these benefits until June 30, 2007. 

 

“Staff recommends that the Trustees authorize a withdrawal of monies from the Operating Fund for the payment of the ECSBs, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.  Staff expects to present the Trustees with requests for additional funding for rebates for the companies listed on the Exhibits in the future.

 

“Completed amendments were reviewed by EDPAB and recommendations were made at its meeting on October 23, 2006.

 

FISCAL INFORMATION

 

“Funding of ECSBs for all the companies participating in the program is not expected to exceed $5.0 million.  Payments will be made from the Operating Fund.

 

RECOMMENDATION

 

                “The Executive Vice President and Chief Financial Officer and the Director – Business Power Allocations and Regulation recommend that the Trustees approve extensions to the terms of service to June 30, 2007 for the existing economic development power program customers listed on Exhibit ‘6-A.’  In addition, it is recommended that the Trustees approve the payment of Energy Cost Savings Benefits to the customers listed on Exhibit ‘6-B.’  Finally, the Trustees are requested to amend the service tariffs’ Energy Cost Savings Benefits expiration date from December 31, 2006 to June 30, 2007.

 

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

 

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

 

WHEREAS, the Trustees find that staff's review supports an extension of allocations from Authority economic development power programs for 14 existing customers listed on Exhibit “6-A” until June 30, 2007 and that such extension be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and  

 

WHEREAS, the Economic Development Power Allocation Board has recommended that the Authority approve the payment of Energy Cost Savings Benefits to the 32 customers listed on Exhibit “6-B”;

 

NOW THEREFORE BE IT RESOLVED, That to implement such Economic Development Power Allocation Board recommendations, the Authority hereby approves the payment of Energy Cost Savings Benefits to the companies listed in Exhibit “6-B” as submitted to this meeting, and that the Authority finds that such payments for Energy Cost Savings Benefits are in all respects reasonable, consistent with the requirements of the Authority’s economic development programs and in the public interest; and be it further

 

RESOLVED, That the customers’ service tariffs be modified accordingly to reflect the extension of the program as shown on Exhibit
“6-C”; and be it further

 

RESOLVED, That based on staff’s recommendation, it is hereby authorized that payments be made for Energy Cost Savings Benefits as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $5.0 million for all companies participating in the program, including those in Exhibit “6-B,” and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

 

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

 

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


 

7.             Allocation of 300 kW of Hydro Power  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve one allocation of available Replacement Power (‘RP’) totaling 300 kW to one industrial company.

 

BACKGROUND

 

“Under the RP Settlement Agreement, National Grid (‘Grid’) (formerly Niagara Mohawk Power Corporation), with the approval of the Authority, identifies and selects certain qualified industrial companies to receive delivery of RP.  Qualified companies are current or future industrial customers of Grid that have or propose to have manufacturing facilities for the receipt of RP within 30 miles of the Authority’s Niagara Switchyard.  RP is up to 445,000 kW of firm hydro power generated by the Authority at its Niagara Power Project that has been made available to Grid, pursuant to the Niagara Redevelopment Act (through December 2005) and Chapter 313 of the 2005 Laws of the State of New York.

 

“Under Section 1005 (13) of the Power Authority Act, as amended by Chapter 313 of the Laws of 2005, the Authority may contract to allocate or reallocate directly, or by sale for resale, 250 MW of firm hydroelectric power as Expansion Power 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 (19,732 MW) shall continue to be allocated in such County.

 

DISCUSSION

 

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

 

                “Based on the Advisory Group’s discussions, staff recommends that the available power be allocated to the company set forth in Exhibit ‘7-A.’  The Exhibit shows, among other things, the amount of power requested by the company, the recommended allocation and additional employment and capital investment information.  This project will help maintain and diversify the industrial base of Western New York and provide new employment opportunities.  The project is expected to result in the creation of eight jobs.

 

RECOMMENDATION

 

“The Director – Business Power Allocations and Regulation recommends that the Trustees approve the allocation of 300 kW of hydro power to the company listed

 in Exhibit ‘7-A.’

 

“The Executive Vice President and General Counsel, the Senior Vice President – Marketing and Economic Development, the Vice President – Major Accounts 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 300 kW of Replacement Power, as detailed in Exhibit “7-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 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.


 

8.             Transfers of Industrial Power

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve the transfer of power allocations for eight existing customers that have either changed their names for various business reasons or moved the location of their business.  Additionally, the Trustees are requested to approve a transfer of 300 kW between two companies currently receiving Municipal Distribution Agency (‘MDA’) power through the Suffolk County Electrical Agency (‘SCEA’).

 

BACKGROUND

“Seven companies have requested that the Authority grant approval of their requests for the continued delivery of Authority power allocations to facilities that have all gained prior approval for an allocation with pre-existing company names and/or ownership.  The present owners of these same facilities are now requesting that the Authority authorize the continuation of the power allocations granted to the previous company names and ownership associated with these facilities.

 

“One company has requested that the Authority grant approval of its request to transfer its Power for Jobs (‘PFJ’) benefits to a newly purchased facility for the reasons indicated below.

 

“In addition, the Authority sells industrial power to downstate municipal distribution agencies, including 5,000 kW to SCEA.  This power is resold by SCEA to industrial customers so designated by SCEA and approved by the Authority.  SCEA has proposed that a portion of an existing customer’s allocation be transferred to another existing customer.  SCEA has requested that the Authority grant approval of the transfer for the reasons indicated below.

 

“The Trustees have approved transfers of this nature at past meetings.

 

DISCUSSION

                “The proposed transferees are as follows:

 

Beaverite Corporation (‘Beaverite’), a leading manufacturer of die-cut solutions for various industrial and commercial applications, is located in Croghan.  At their April 29, 2003 meeting, the Trustees approved a 250 kW PFJ allocation in return for the company maintaining 60 jobs.  The Trustees subsequently approved an extension of PFJ benefits at their September 20, 2005 meeting.  Beaverite is in job compliance and requests that its allocation be transferred to Beaver Falls Sealing Products Inc., a new company that made a full-asset purchase of Beaverite.  The new company will honor all contract terms and conditions, including job commitments.

 

Duraline Pres-On Abrasives, LLC (‘Duraline’) is a manufacturer of coated abrasive products for the metal and woodworking industries.  At their July 24, 2004 meeting, the Trustees approved Duraline for a 150 kW Expansion Power (‘EP’) allocation.  The allocation was awarded in return for the company creating 25 new jobs at a facility purchased in Lockport.  The company recently merged with a Georgia concern called Future Abrasives Co. and has renamed the new entity Global Abrasive Products, Inc.  The merger has allowed the company to increase employment and expand its product offerings.  Global Abrasive Products will continue to operate at the Lockport facility and make the same products.  It will honor all terms and conditions in its power contract, including job commitments.

 

ISG Lackawanna Inc., a subsidiary of International Steel Group, Inc. (‘ISG’), is a finishing and coating operation for sheet steel in Lackawanna.  At their June 24, 2003 meeting, the Trustees approved a transfer of 25,750 kW of Replacement Power (‘RP’) and 10,400 kW of EP from the Bethlehem Steel Group to ISG for continued use at the ISG Lackawanna facility.  ISG committed to an employment level of 350 jobs as part of the company’s acquisition of all of Bethlehem Steel’s steel-making and related assets.  ISG subsequently created ISG Lackawanna LLC as a legal entity for business purposes.  All of ISG was acquired in 2005 by the Mittal Steel Company N.V. and is known as Mittal Steel USA, Inc.  The Lackawanna facility is doing business as Mittal Steel USA – Lackawanna, although the legal entity remains ISG Lackawanna LLC.  The company is in job compliance and will continue to produce the same products and honor all terms and conditions of its existing contracts.

 

Motorola, Inc., a leading manufacturer of electronic equipment and components, has a facility in Elma that produces automotive electronics.  At their August 29, 1989 and April 24, 1990 meetings, the Trustees approved Motorola for 3,000 kW and 1,600 kW allocations of EP, respectively, for a total of 4,600 kW, in return for a total of 600 jobs.  The Trustees subsequently approved a five-year power contract extension along with a 1,000 kW reduction of the allocation to 3,600 kW and a job commitment reduction from 600 to 400 jobs at their March 30, 2004 meeting.  Motorola’s Elma facility has been purchased by Temic Automotive of North America, Inc. (‘Temic Automotive’) in an asset-and-liability acquisition.   Temic Automotive, which is owned by Continental AG, will continue to operate the plant as an automotive electronics manufacturing site.  Temic Automotive will honor all contract terms and conditions, including job commitments.

 

Snyder Industries, Inc., a contracted supplier of machined components for the mining and other heavy equipment industries, is located in North Tonawanda.  At their December 16, 1997 meeting, the Trustees approved Snyder Industries for a 500 kW PFJ allocation in return for a total of 106 jobs.  The Trustees approved an extension of the company’s PFJ contract, including a reduction to 350 kW and job commitment reduction to 70 jobs, at their November 28, 2000 meeting.  Under the PFJ Extended Benefits legislation of 2004 and 2005, Snyder Industries chose the rebate option and has remained in job compliance with more than 100 full-time employees.  The company wishes to transfer its PFJ extended benefits to a new manufacturing facility recently purchased in the City of Tonawanda.  The company has invested more than $5 million in building modifications and new manufacturing equipment.  There is no change in ownership of the company and it will continue to honor all commitments made in return for PFJ extended benefits.

 

Special Metals Corporation (‘SMC’), a leading manufacturer of high-performance nickel-based alloys and super alloys, is located in Dunkirk.  At their May 29, 1991 meeting, the Trustees approved SMC for a 1,000 kW EP allocation.  The allocation was awarded in return for the company maintaining 59 existing jobs and adding 22 new jobs.  The company is being acquired by Precision Castparts Corporation in an asset-and-liabilities purchase; however, it will continue to operate under the name Special Metals Corporation.  The new ownership represents a two-phased investment of more than $30 million at the existing site.  SMC will continue to make the same products and expects to increase its employment level due to the new investment of capital.  SMC will continue to honor all terms of its existing EP contract.

 

Stella D’oro Biscuit Co., Inc. is a commercial baked goods company operated as a division of Kraft Foods in the Bronx.  At their June 26, 2001 meeting, the Trustees approved Stella D’oro for a 500 kW PFJ allocation in return for a total of 375 jobs.  The Trustees approved an extension of the company’s PFJ benefits under the 2005 Extended Benefits legislation, including a reduction to 250 kW and job commitment reduction to 170 jobs, at their September 20, 2005 meeting.  Kraft Foods sold its stock in the company to an investment firm called Brynwood Partners and is no longer affiliated with Stella D’oro.  There is no change in operation of the facility and the company continues as the legal business entity Stella D’oro Biscuit Co., Inc.  It will continue to honor all terms and conditions, including job commitments, in return for PFJ extended benefits.

 

Stellex Monitor Aerospace Corp. (‘Stellex’), located in Amityville, is a supplier of complex titanium and aluminum airframe components and assemblies for the aerospace industry.  Stellex currently receives an allocation of 1,250 kW of Municipal Distribution Agency (‘MDA’) power it receives via resale from the Suffolk County Electrical Agency (‘SCEA’) in return for 225 jobs.  Additionally, at their June 30, 1992 meeting, the Trustees approved a 2,000 kW allocation of Economic Development Power (‘EDP’) for the company.  In September, Stellex was acquired by GKN Aerospace, a subsidiary of GKN PLC in a total-asset sale.  The new company will be known as GKN Aerospace Monitor Inc. (‘GKN’).  The company will continue to produce the same products and operate at the same plant in Amityville.  Additionally, GKN has endeavored to invest more than $8 million in new, state-of-the-art machinery to enhance competitiveness with U.S. as well as global competitors.  This investment in plant will be completed in the first quarter of 2007.  GKN has requested and SCEA has proposed that an additional 300 kW of MDA power be transferred to GKN in order to support this new capital investment.  Castella Imports Inc. currently receives an allocation of 500 kW of MDA power via resale from SCEA in return for 73 jobs.  SCEA would reduce Castella's current allocation by 300 kW to a total of 200 kW, and increase GKN’s allocation from 1,250 kW to a total of 1,550 kW.  GKN will honor the job commitment levels currently in place through its MDA contract. 

 

RECOMMENDATION

                “The Director – Business Power Allocations and Regulation recommends that the Trustees approve the transfer of power allocations for eight existing customers that have either changed their names for various business reasons or moved the location of their business. 

 

                “Additionally, the Director – Business Power Allocations and Regulation recommends that the Trustees approve the transfer of 300 kW between two companies currently receiving Municipal Distribution Agency power through the Suffolk County Electrical Agency.

 

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

 

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

 

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

 

RESOLVED, That the Chairman, the 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. 


 

9.          Municipal and Rural Cooperative Economic Development Program Allocations to the Villages of Boonville and Greene

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve allocations of power under the Municipal and Rural Cooperative Economic Development Program (‘Program’) to the Villages of Boonville and Greene.

 

BACKGROUND

“The 1991 amendment to the power sales agreement between the Authority and the Municipal and Rural Cooperative Systems reserved 108,000 kW of power for economic development in the systems.  As of May 24, 2005, 33,250 kW had been allocated.

 

“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.  The recommended allocations under the Program are 50% hydro power and 50% incremental power.  Under the guidelines established for the Program, an allocation to a system should meet a target number of new jobs per MW.  The guidelines provide that for businesses new to a system, the jobs-per-MW ratio is considered on a case-by-case basis.  For projects involving existing businesses, the number of jobs per MW is the number of new jobs compared to the level of employment prior to the expansion.  Specifically, for companies employing 100 or less, the target ratio is 25 jobs per MW; for companies employing between 101 and 250, the ratio is 50; for companies employing between 251 and 500, the ratio is 75 and for companies employing more than 500, the ratio is 100 jobs per MW.

 

“The Villages of Boonville and Greene have submitted applications for power under the Program for consideration by the Trustees.

 

DISCUSSION

Village of Boonville

 

                “An application has been submitted by the Village of Boonville on behalf of Owl Wire & Cable, Inc.  Owl Wire & Cable, incorporated in 1954 by the Kemper family, continued to be a family-owned business until 1988, when the company was purchased by the Marmon Group of Companies.  Owl Wire & Cable is the U.S.’s second largest non-integrated bare copper wire fabricator for the building and construction, energy and industrial, electronics and telecommunications, consumer products and transportation markets.  The potential advantages of reduced power costs and a more efficient plant layout for the new Boonville facility will allow the company to compete domestically and internationally.  Seven production lines will be relocated from the Canastota facility to relieve the current congestion at that location and two production lines will be added to the new Boonville facility.

 

“Owl Wire & Cable proposes to construct a 61,000-square-foot facility on 10.6 acres of land within the Village of Boonville.  The total initial investment will be approximately $7 million.  The new facility will provide for approximately 34 full-time jobs, working all three shifts, over the next three years, adding revenue to the local economy and resulting in 32 jobs per MW of hydro power.  The estimated electrical monthly peak load for the facility is 1,880 kW.  It is recommended that the Trustees approve an allocation of 1,880 kW, of which 50% will be hydro power, for Owl Wire & Cable, Inc.

 

Village of Greene

 

“The Village of Greene has submitted an application for expansion on behalf of The Raymond Corporation (‘Raymond’).  Raymond, in business since 1839, is a wholly owned subsidiary of Toyota Industries Corporation.  The facility in the Village of Greene manufactures electric counterbalanced forklift trucks, swing-reach trucks and order-picker trucks that are distributed business-to-business through a dealer network in the U. S., Canada and Mexico.  Custom orders with high-level quality requirements represent 40% of the units manufactured in Greene.  The facility’s manufacturing processes include state-of-the-art machining, fabrication (including laser and high-definition plasma profiling), robotic welding, painting and just-in-time mixed-model assembly lines.  

 

“The proposed expansion project entails expanding the 425,000-square-foot footprint of the building by 68,000 square feet.  This is needed to meet demand projections, save costs by centralizing to take advantage of volume, enhance the paint-application process and ensure a solid foundation for continuous improvement activities.  The total investment associated with the expansion will be approximately $20 million.  Raymond currently employs 910 people on a full-time basis.  The expansion will provide for 24 new jobs over the next three years, adding revenue to the local economy and resulting in 240 jobs per MW of hydro power.  The existing electrical load is approximately 2,600 kW and is expected to increase to 3,400 kW after the expansion.  It is recommended that the Trustees approve an allocation of 200 kW, of which 50% is hydro power, to the Village of Greene on behalf of The Raymond Corporation.

 

“The Municipal Electric Utilities Association Executive Committee supports the recommended allocations to the Villages of Boonville and Greene.

 

“In accordance with the Authority’s marketing arrangement with the municipal and cooperative customers, the hydro power will be added to the recipient system’s contract demand at the time a project becomes operational.  The hydro power earmarked for this Program is presently sold to the municipal and cooperative customers on a withdrawable basis.  As partial-requirements customers, the Villages of Boonville and Greene may purchase the incremental power from the Authority or an alternate supplier.

 

RECOMMENDATION

“The Director – Business Power Allocations and Regulation recommends that the Trustees approve the allocations of power under the Municipal and Rural Cooperative Economic Development Program to the Villages of Boonville and Greene as described 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 allocations of power to the Villages of Boonville and Greene under the Municipal and Rural Cooperative Economic Development Program are 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 her designee be, and hereby is, authorized to execute any and all documents necessary or desirable to effectuate such allocations; and be it further

 

RESOLVED, That the 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 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.

 
 

10.          Niagara Power Project Relicensing – Additional Capital Expenditure Authorization Request – Compliance with Anticipated New License and
Implementation of Settlement Agreements

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to authorize $443.9 million in capital expenditures for costs related to compliance with the anticipated new License for the Niagara Power Project (‘Project’) and for costs associated with implementing settlement obligations associated with relicensing the Project for the period 2007-2057.  Included in this Capital Expenditure Authorization Request (‘CEAR’) is $16.7 million for compliance and implementation activities and settlement agreements approved by the Trustees in 2005 and 2006.

 

BACKGROUND

 

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

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

“At their meeting of June 28, 2005, the Trustees approved the filing of an Application for a New License (‘Application’) for the Project and an Offer of Settlement with the Federal Energy Regulatory Commission (‘FERC’).

 

“On August 18, 2005, the Authority filed the Application with FERC and also filed related applications with the New York State Department of State (‘DOS’) and the New York State Department of Environmental Conservation (‘DEC).  On August 19, 2005, the Authority filed the Offer of Settlement with FERC, which consisted of four separate agreements:

 

 

“Since its filing, the Offer of Settlement has been supplemented twice with the Niagara University Relicensing Settlement Agreement and the Erie County/City of Buffalo Relicensing Settlement Agreement ($2 million per year for projects related to the Niagara River Greenway within Buffalo and Erie County and $3.5 million per year to the Erie Canal Harbor Development Corporation for waterfront development).  These Agreements were filed with FERC on May 26, 2006 and June 30, 2006, respectively, after being approved by the Trustees at their meetings of May 23, 2006 and June 27, 2006, respectively.

 

“All Settlement Agreements are expressly conditioned on the issuance by FERC of a new 50-year license that is consistent with the terms contemplated by the Application and the Offer of Settlement, including the proposed license articles attached to the ‘Relicensing Settlement Agreement Addressing New License Terms and Conditions.’

 

“DEC issued its Water Quality Certification on January 31, 2006 and DOS issued its Coastal Zone Consistency Determination on February 17, 2006.

 

“FERC has published a schedule for the review of the Authority’s Application that would result in the issuance of a new license for the Niagara Power Project in February 2007 (effective upon the expiration of the current license in August 2007).  On July 14, 2006, FERC issued its draft Environmental Impact Statement (‘EIS’) in the context of relicensing the Project.  The draft EIS recommends, in all material respects, adoption of the Authority’s license proposal and settlements and proposes only minor modifications to the terms contained therein.

 

“The Trustees have previously approved the License Application, Offer of Settlement and the two additional Settlement Agreements for this CEAR.  This current CEAR would permit the Authority to meet its obligations under the new license and the Settlement Agreements through the new license term.

 

DISCUSSION

 

“This CEAR is submitted for approval in advance of receiving the new License because several compliance and implementation activities have commenced, as has the planning for other obligations with short completion timeframes once the new License becomes effective.  Specifically, work has commenced on three regulatory plans, the Ecological Standing Committee has begun meeting and conceptual design has started on the Habitat Improvement Projects and Recreation Enhancement Projects.  The structure of the Niagara River Greenway fund committees must be established and a second advance payment of $2 million will be made to the Erie Canal Harbor Development Corporation by the end of July 2007.  Contractual arrangements for the sale of power to the Tuscarora Nation, Host Communities and Niagara University are also being negotiated. 

 

“Staff’s projected capital expenditures for implementing the anticipated terms and conditions of the new License and for meeting settlement commitments from 2005 through 2057 include $52.7 million for fish and wildlife habitat and recreation enhancements; $145.6 million for Niagara River Greenway funding; $168.5 million in community funding; $33.9 million for the Tuscarora Nation and Niagara University and $43.2 million for compliance and implementation activities of Hydropower Relicensing and other Authority divisions.  The Trustees are requested to approve $443.9 million in capital expenditures for all compliance-, implementation- and settlement-related activities.

 

“Included in the foregoing are Trustee-approved compliance and implementation expenditures in 2005 and 2006 in the amount of $16.7 million.  In December 2005, payments to the Tuscarora Nation and Host Communities totaling $13 million were made consistent with the Authority’s obligations under the Settlement Agreements approved by the Trustees at their meeting of June 28, 2005.   On July 27, 2006, a payment in the amount of $2 million was made to the Erie Canal Harbor Development Corporation consistent with the Authority’s obligations under the Settlement Agreement with Erie County and the City of Buffalo as approved by the Trustees at their meeting of June 27, 2006.  Additionally, in February 2006, the Trustees approved a six-year $15.4 million contract with Gomez and Sullivan Engineers, PC (‘G&SE’) to provide assistance during the compliance and implementation phase of Niagara relicensing, of which $1.7 million was allocated to FY 2006. 

 

“In total, approval of this CEAR, along with the previously authorized CEAR that included payment for process costs of $50.4 million, would bring the total authorization for Niagara Project Relicensing to $494.3 million for both process and compliance and implementation.

 

“Please note that the Authority will also incur $14.8 million in operational and maintenance (‘O&M’) expenses associated with both the Habitat Improvement Projects and the Recreation Enhancement Projects; this O&M expense is not included in this request.  O&M expenses will be budgeted in the fiscal year during which the expense is incurred. 

 

“In addition to the foregoing, the relicensing settlement also provides for the sale of 26 MW of firm power and associated energy to the Host Communities and the Tuscarora Nation at the preference rate.  Niagara University will receive 3 MW of power at the Authority’s business customer rate.  The value of these power allocations is not incorporated in this request.

 

 

 

FISCAL INFORMATION

 

“Payments will be made from a combination of Bond proceeds, Commercial Paper proceeds and Operating Revenues. 

 

RECOMMENDATION

 

                “The Executive Director – Hydropower Relicensing and the Director – Niagara Relicensing recommend that the Trustees approve capital expenditures of $443.9 million for compliance, implementation and settlement activities associated with the Niagara Power Project Relicensing effort.

 

                “The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President and Chief Financial Officer, the Senior Vice President and Chief Engineer – Power Generation, the Senior Vice President – Public and Government Affairs, the Vice President – Environmental Management and I concur in the recommendation.”

 

Mr. Silliman presented the highlights of staff’s recommendations to the Trustees.  In response to questions from Chairman McCullough concerning the implementation of the various settlement agreements cited in the item, Mr. Silliman stated that the Authority’s obligations under each settlement were conditioned upon the Federal Energy Regulatory Commission’s approval and issuance of a new license for the operation of the Niagara facility.

 

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

 

RESOLVED, That capital expenditures be, and hereby are, approved in accordance with the Authority's Expenditure Authorization Procedures to facilitate and accomplish implementation of and compliance with the new License to be issued by the Federal Energy Regulatory Commission for the Niagara Power Project, as well as the settlement agreements associated therewith, in the amounts and for the purposes as follows: $52.7 million for fish and wildlife habitat and recreation enhancements; $145.6 million for Niagara River Greenway funding; $168.5 million in community funding; $33.9 million for the Tuscarora Nation and Niagara University and $43.2 million for compliance and implementation activities of Hydropower Relicensing and other Authority Divisions.  The Trustees are requested to approve $443.9 million in capital expenditures for all compliance-, implementation- and settlement-related activities; and be it further

 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority be, 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.


 

11.          Tri-Lakes Reliability Project – Revised Agreement

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve the execution of a Revised Agreement among the Authority, Niagara Mohawk Power Corporation (‘Niagara Mohawk’) (a National Grid company) and the Villages of Tupper Lake and Lake Placid (‘Villages’).  The execution of the original Agreement (‘Agreement’), which provided for the construction of substation equipment, a new overhead line and ancillary equipment (collectively, the ‘Project’) was approved by the Trustees at their meeting of October 26, 2004.  In implementing the agreement, Niagara Mohawk and the Authority realized that some of the assumptions in the Agreement were not workable, and that it would be beneficial to clarify several additional issues.  Authority and Niagara Mohawk staffs negotiated modifications to the Agreement to resolve these matters without adversely affecting the rights and responsibilities of the Villages.  If approved by the Trustees, the Revised Agreement, like the Agreement, must be signed by all four parties and filed with the Federal Energy Regulatory Commission (‘FERC’).

 

BACKGROUND

 

                “The Authority provides for the full electric requirements of the Villages and, consistent with the requirements of the Niagara Redevelopment Act and the Niagara Project FERC license, arranges for the transmission and delivery of Authority power to the Villages.  For many years, there has been insufficient generation and transmission capacity to provide reliable electric service to the Villages and surrounding Niagara Mohawk service area (the ‘Tri-Lakes Region’) in the cold winter months.  The parties disputed who should be responsible for the cost of upgrading the transmission system to cure the deficiencies.  Following a mediation effort by the New York State Public Service Commission (‘PSC’), and subsequent negotiations involving Niagara Mohawk, the Authority, the Villages, the staff of the PSC and the Governor’s Office, the parties agreed to a settlement that would significantly improve the transmission infrastructure in the Tri-Lakes area.  The Authority’s Trustees authorized the execution of the Agreement memorializing such settlement at their meeting of October 26, 2004.  The settlement Agreement addresses short- and long-term solutions to the transmission problem and forges a compromise on the key cost-allocation issues.

 

“The long-term solutions included the installation of two static var compensators (‘SVCs’) and the construction of a 46 kV line to alleviate voltage problems and to provide more reliability to the Tri-Lakes Region.  The Agreement outlined the responsibilities for Niagara Mohawk and the Authority during the implementation of this work, including licensing, design, engineering, procurement, construction, installation and overall project management. 

 

“Under the Agreement, the Authority would own and finance the Project prior to January 1, 2012, at which time the Project would be transferred to Niagara Mohawk upon payment of the cost of the Project.  The Authority would acquire any personal or real property required for the Project and would hold title until the Project was transferred to Niagara Mohawk.

 

“The Agreement also included a cost estimate for the 46 kV line ($15.8 million) and stated that the Authority and Niagara Mohawk will share equally in any cost increases above the estimated cost of the 46 kV line. The costs for the SVCs were estimated at $4.3 million for the SVC at Tupper Lake and $8.9 million for the SVC at Lake Colby.  Any cost increases above these estimates would be borne by Niagara Mohawk.

  

DISCUSSION

 

“If the Trustees approve the Revised Agreement, the following changes from the Agreement would be made:

 

·                 Niagara Mohawk, rather than the Authority, would acquire rights to the land on which Authority-owned transmission equipment will be installed.  In implementing the Agreement, the Authority and Niagara Mohawk determined that there would be no added efficiency or advantage for the Authority to acquire the property since it will ultimately be transferred to Niagara Mohawk (on January 1, 2012) along with the SVCs and the 46 kV line.

 

·         Niagara Mohawk and the Authority agree to cooperate with each other in obtaining all necessary property rights and all necessary permits and to grant each other, without charge, rights to use each other’s property for purposes of building and operating the SVCs and the 46 kV line.  Additionally, if requested by Niagara Mohawk, the Authority may undertake some of the procurement for the 46 kV line.

 

·         The risk-of-loss provision was substantially revised and now details and clarifies the responsibilities of Niagara Mohawk and the Authority for losses.  During construction, risk of loss is borne by the contractor doing the construction.  From completion of construction until the transfer of the Project to Niagara Mohawk in 2012, Niagara Mohawk will be responsible for Project repair/replacement and the Authority will carry property insurance on the SVCs (subject to $1 million deductible).  The cost of this insurance is a Project cost for which the Authority will be reimbursed when the Project is transferred to Niagara Mohawk in 2012.  There is no insurance coverage obligation for the New Line. 

 

·         The Authority’s oversight rights with respect to Niagara Mohawk’s design and construction are specified.

 

·         Review of invoices and payment protocols are specified.

 

·         Niagara Mohawk and the Authority are given mutual audit rights.

 

·         There is a provision for the relocation of transmission poles in which Verizon has an interest.

 

·         In the event delays concerning construction or operation of the Tupper Lake SVC make it necessary to place 3 MW of distributed generation into operation during the 2006-07 winter period, Niagara Mohawk will bear the costs of installation and operation of such generators.  

 

“None of the above changes alter the rights and responsibilities of the Villages, including the Villages’ cost obligations for the upgrades.  The original cost estimate and cost-sharing provisions have not been changed.

 

FISCAL INFORMATION

 

                “There is no change from the original Agreement.  The Authority will be reimbursed by Niagara Mohawk and the Villages for all Project costs, except for one-half of any costs associated with the New Line over the current estimate of $15.8 million.

 

RECOMMENDATION

 

                “The Executive Vice President and General Counsel, the Senior Vice President – Public and Governmental Affairs and the Executive Director – Licensing, Implementation and Compliance recommend that the Trustees authorize the execution of the Revised Agreement.

 

                “The Executive Vice President – Corporate Services and Administration, the Executive Vice President and Chief Financial Officer and I concur in the recommendation.”

 

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

 

RESOLVED, That for the reasons set forth in the foregoing report, the Executive Vice President and General Counsel is authorized to execute a Revised Agreement for the Tri-Lakes Reliability Project on behalf of the Authority, having such terms and conditions as are set forth in the foregoing report; and be it further

RESOLVED, That the Executive Vice President and General Counsel, or his designee, be authorized to execute all further documents and do such other things as may be necessary to effectuate the foregoing; and be it further

 

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


 

12.          Budget and Financial Plan Information Pursuant to New Regulations of the Office of the State Comptroller

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“In accordance with new regulations adopted by the Office of the State Comptroller (‘OSC’), the Trustees are requested to approve for public release a proposed 2007 budget and four-year financial plan; authorize making the proposed budget and four-year financial plan available for public inspection at not less than five convenient public places throughout New York State and authorize posting of the proposed budget and four-year financial plan on the Authority’s web site.

 

BACKGROUND

 

“Following rulemaking proceedings undertaken pursuant to the State Administrative Procedure Act, OSC implemented new regulations on March 29, 2006 that address the preparation of annual budgets and four-year financial plans by ‘covered’ public authorities, including the Authority.  See 2 NYCRR Part 203 (‘Part 203’ attached as Exhibit ‘12-A’).  As illustrated below, these regulations establish various new procedural and substantive requirements relating to the budgets and financial plans of public authorities.

 

DISCUSSION

 

                “Part 203 sets forth specific requirements in connection with the submission and format of, the preparation of supporting documentation for and the monitoring of annual budgets and financial plans of public authorities.

 

“Under Part 203, the Authority’s proposed budget and four-year financial plan (Exhibit ‘12-B’) must be made available for public inspection at least 30 days before approval by the Trustees of a final budget and financial plan and not less than 60 days before commencement of the next fiscal year.  The availability for public inspection must be for a period of not less than 45 days and in not less than five convenient public places throughout the State.  The regulations also require the Authority to post the proposed budget and four-year financial plan on its web site.

 

                “Under Part 203, each proposed budget and four-year financial plan must be shown on both an accrual and a cash basis and be prepared in accordance with generally accepted accounting principles; be based on reasonable assumptions and methods of estimation; be organized in a manner consistent with the public authority’s programmatic and functional activities; include detailed estimates of projected operating revenues and sources of funding; contain detailed estimates of personal service expenses related to employees and outside contractors; list detailed estimates of non-personal service operating expenses and include estimates of projected debt service and capital project expenditures. 

               

“Other key elements that must be incorporated in each proposed budget and four-year financial plan are a description of the budget process and the principal assumptions, as well as a self-assessment of risks to the budget and financial plan.  Additionally, the proposed budget and financial plan must include a certification by the chief operating officer (defined as the executive officer responsible for overseeing the day-to-day activities of an authority) that, to the best of his or her knowledge and belief after reasonable inquiry, the proposed budget and financial plan are based on reasonable assumptions and methods of estimation and that the Part 203 regulations have been satisfied.

 

“The Trustees will be asked to approve the Authority’s final budget and four-year financial plan, including any modifications and amendments, at their December 19, 2006 meeting. 

 

FISCAL INFORMATION

 

                “There is no anticipated fiscal impact.

 

 

RECOMMENDATION

 

                “The Vice President – Controller recommends that the Trustees approve for public release the proposed 2007 budget and four-year financial plan; authorize making the proposed budget and four-year financial plan available for public inspection at no less than five convenient public locations and authorize posting of the proposed budget and four-year financial plan on the Authority’s web site.

 

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

 

Mr. Davis presented the highlights of staff’s recommendations to the Trustees.  Chairman McCullough thanked Mr. Davis and everyone else who worked on this for doing such a terrific job, saying that the proposed budget and financial plan presented a great snapshot of where the Authority stands and what it is facing in terms of its financial future.  President Carey said he wanted to echo those sentiments and thanked Mr. Davis, Mr. Bellis, Mr. Del Sindaco and all of their staffs for their efforts, in addition to Mr. Kelly and the legal staff.  He also praised them for completing this document on time and within budget.  Mr. Davis said that the staff of the Energy Resource Management, Energy Risk Assessment and Control and Marketing and Economic Development departments had also contributed to this effort.  Vice Chairman Townsend said that he agreed with Chairman McCullough and President Carey as to the value of this document.

 

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

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the proposed budget and four-year financial plan, including certification by the President and Chief Executive Officer, is approved for public release in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the Corporate Secretary be, and hereby is, authorized to make the proposed budget and four-year financial plan available for public inspection at not less than five convenient public places throughout New York State, to notify the Office of the State Comptroller of said locations and to post the proposed budget and four-year financial plan on the Authority’s web site; and be it further           

 

RESOLVED, That the 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. 


 

13.          Revisions of Authority’s Energy Services Programs – Customer-Implemented Work 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to delegate authority to the President and Chief Executive Officer to approve funding for Energy Efficiency and/or Clean Energy Technology Projects with a cumulative value exceeding $3 million.  These projects will be performed by participants in the Authority’s Energy Services Programs, subject to approval by the Authority.

 

BACKGROUND

 

                “The Authority’s mission is to provide clean, economical and reliable energy consistent with its commitment to safety while promoting energy efficiency and innovation for the benefit of its customers and all New Yorkers.  In that regard, the Authority has provided energy services programs across the State to reduce energy consumption and peak demand.  To date, the Authority’s programs have reduced the demand for electricity by approximately 190 MW, resulting in savings of nearly $90 million annually.

 

                “At their meeting of December 16, 1997, the Trustees approved a single program available to all public entities served by investor-owned utilities outside the Southeastern New York (‘SENY’) service territory.  This Statewide Energy Services Program (‘ESP’) is an energy efficiency and clean energy technology program that has traditionally provided a turn-key approach to identify, procure and implement energy-saving solutions for participants outside the SENY territory.  Under this approach, Energy Services and Technology (‘ES&T’) staff oversees Authority contracts with installation contractors for the implementation of energy service/clean energy projects.

 

                “Customer-Implemented Work (‘CIW’) for Statewide ESP is essentially the same program offered to the Authority’s SENY governmental customers.  The SENY CIW program is derived from the supplemental long-term power purchase agreements executed in early 2005.  In Article IX subsection B of such agreements, the SENY governmental customers were given the option of contracting with outside service providers while retaining access to the Authority’s financing.

 

                “Some program participants have requested the Authority’s assistance on a limited-work-plus-financing basis (i.e., ‘Customer-Implemented Work’) instead of the traditional turn-key work usually provided by the ES&T staff.  By revising the scope of ESP and offering the CIW option, the Authority will expand its reach to help its customers achieve significant energy savings and promote clean energy technologies throughout the State. 

 

                “At their meeting of July 26, 2005, the Trustees approved expanding the Statewide ESP to offer eligible ESP customers a new opportunity to work with the Authority through the ESP CIW option.  This option is an alternative to the Authority’s general, full-service ESP.  While the full-service program offers turn-key projects fully implemented by the Authority, under the CIW option, the Authority will offer full project financing to customers while also serving in certain defined roles agreed to by the Authority and its customers with respect to implementation of the customers’ energy-related projects.  Under the CIW option, the Authority will work with the customer from design through construction.  The Authority will use its expertise in energy efficiency and project implementation to help customers make the most cost-effective equipment choices and realize the greatest greenhouse gas reductions.

 

DISCUSSION

 

                “The Authority’s Expenditure Authorization Procedures require Trustee approval for all Non-Personal Services and Non-Procurement Contracts over $3 million in value.  Non-Procurement Contracts are defined as contracts where competitive bidding is not feasible and includes funding agreements such as those contemplated by SENY ESP and the expansion of Statewide ESP to include CIW previously discussed.  Since some CIW projects are contemplated to exceed $3 million, and since the Authority will only be providing financing and potential project management services to support CIW, it would be more efficient to delegate authority to the President and Chief Executive Officer to authorize such funding agreements, in lieu of seeking separate Trustee approvals for each transaction.  A quarterly report of any such funding agreements will be provided to the Trustees.

 

FISCAL INFORMATION

 

                “Funding will be provided through the previously approved funding of the ESP programs.  The funding will be provided from the proceeds of the Authority’s Commercial Paper Notes and/or the Operating Fund.  In addition, projects will be funded, in part, with monies from Petroleum Overcharge Restitution (‘POCR’) funds.  All Authority costs, including Authority overheads and the costs of advancing funds, but excluding any grant of POCR funds, will be recovered consistent with other ES&T programs.

 

RECOMMENDATION

 

                “The Senior Vice President – Energy Services and Technology, the Vice President – Procurement and Real Estate and the Director – Energy Services recommend that the Trustees approve the revision of the Statewide Energy Services Program to include authorizing the President and Chief Executive Officer to approve funding agreements for approved Customer-Implemented Work.

 

                “The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President – Chief Financial Officer, the Senior Vice President – Marketing and Economic Development, the Senior Vice President and Chief Engineer – Power Generation and I concur in the recommendation.”

 

Mr. Hoff presented the highlights of staff’s recommendations to the Trustees.  He said that two projects were already in process under this program, one with the County of Monroe for a landfill gas extraction project estimated to cost $9.5 million, and the other with the Olympic Regional Development Authority for air compressors for snowmaking equipment at Whiteface and Gore Mountains, at a cost of $5.6 million.  Chairman McCullough asked that the Trustees be provided with reports on this program on a quarterly, rather than a semiannual, basis.  Mr. Kelly advised that the proposed resolution required amendment to reflect the quarterly reporting requirement.

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

 

RESOLVED, That the Trustees authorize the President and Chief Executive Officer to approve funding for Energy Efficiency and Clean Energy Technology Projects (Customer-Implemented Work) with a cumulative value exceeding $3 million and performed by Authority customers as part of the Authority’s Energy Services Program; such projects to be approved by the Authority, with quarterly reports provided to the Trustees of any such funding agreements approved by the President and Chief Executive Officer; and be it further

 
 

RESOLVED, That the 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. 


 

14.          Motion to Conduct an Executive Session

               

“Mr. Chairman, I move that the Authority conduct an Executive Session for the purpose of discussing matters relating to litigation and potential litigation.”  Upon motion moved and seconded, an Executive Session was held.
 

15.          Motion to Resume Meeting in Open Session

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

16.          Next Meeting

The next meeting of the Trustees will be held on Tuesday, November 28, 2006, at 11:00 a.m., at the Clarence D. Rappleyea Building, White Plains, New York, unless otherwise designated by the Chairman with the concurrence of the Trustees.

Text Box: OCTMINS.06

 

Closing

 

On motion duly made and seconded, the meeting was adjourned by the Chairman at approximately
11:55 a.m.

 

 

 

 

Anne B. Cahill

Corporate Secretary