MINUTES OF THE REGULAR MEETING

OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

December 13, 2010

 

 

Table of Contents

 

                Subject                                                                                                                                               

 

1.                   Motion to Conduct an Executive Session                                                                           

 

2.                   Motion to Resume Meeting in Open Session                                                                      

                                                                                                                                                                      

3.                   Consent Agenda:                                                                                                                     

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

 

b.       Hydropower Contracts with Upstate Investor-Owned Utilities for the Benefit of Rural and Domestic Utilities for the Benefit of Rural and Domestic

        Consumers – Transmittal to the Governor, Exhibit - “3b-A” –  “3b-C”; “3b-D1” & “3b-D2”; “3b-E”
Resolution
 

c.        Transfers of Industrial Power                                                                               

 

d.       Extension of Contract FD-13 – Brookhaven National Laboratory                                  

                        

e.        Proposed  Expansion and Replacement Power  Contract with ITT Enidine, Inc. and Moog, Inc. – Notice of Public Hearing, Exhibit -  “3e-A;” “3e-B”                                                                    

Resolution

 

f.        Procurement (Services) and Other Contracts – Business Units and Facilities – Awards, Exhibit - “3f-A”

Resolution

               

               

 

Discussion Agenda:

4.                   Q&A on Reports from:

a.       President and Chief Executive Officer, Exhibit - “4-A”
Resolution

b.       Chief Operating Officer, Exhibit - “4-B”
Resolution

c.        Chief Financial Officer Exhibit - “4-C”
Resolution

5.                   Moses-Adirondack and Moses-Willis-Plattsburgh Structure Replacements – Capital Expenditure Authorization Request
Resolution
 

6.                   Blenheim-Gilboa Pumped Storage Project Relicensing –  Capital Expenditure Authorization
Resolution 

 

7.                   2011 Revolving Credit Agreement                                                                                      

Resolution

                                                                                                                                  

8.                   2011 Operating Budget and Operation and Maintenance, Capital and Energy Services Budgets, Exhibit -  “8-A” – “8-D”
Resolution   

 

9.                   Filing of the 2011-2014 Four-Year Financial Plan Pursuant  to Regulations of the Office of the State Comptroller, Exhibit -  “9-A” & “9-B”
Resolution    

 

10.                Next Meeting                                                                                                                                               

11.          Closing                                                                                                                                                                              


 

Minutes of the Regular Meeting of the Power Authority of the State of New York held via videoconference at the following participating locations at approximately 12:00 noon.

New York Power Authority, 123 Main Street, 16th Floor, White Plains, NY

New York Power Authority, 501 Seventh Avenue, 9th Floor, New York, NY

New York Power Authority, 95 Perry Street, 5th Floor, Buffalo, New York

New York Power Authority, 30 South Pearl Street, 10th Floor, Albany, NY

Harris Beach, LLP, 99 Garnsey Road, Pittsford, NY 14534

St. Lawrence-FDR Power Project, 830 Barnhart Island Rd., Massena, NY

 

Members of the Board present were at the following locations:

                                Michael J. Townsend, Chairman – Pittsford, NY

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

                                D. Patrick Curley, Trustee – Buffalo, NY

                                Eugene L. Nicandri, Trustee – Massena, NY

                                Mark O’Luck, Trustee – New York, NY

 

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Richard M. Kessel                               President and Chief Executive Officer (NYO)

Gil C. Quiniones                                   Chief Operating Officer (NYO)

Terryl Brown                                        Executive Vice President and General Counsel (NYO)

Francine Evans                                    Executive Vice President, Chief Administrative Officer (WPO)

                                                                    and Chief of Staff

Elizabeth McCarthy                           Executive Vice President and Chief Financial Officer (NYO)

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

Thomas Antenucci                              Senior Vice President – Power Supply Support Services (WPO)

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

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

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

Paul Belnick                                         Acting Senior Vice President – Energy Services and Technology (WPO)

John L. Canale                                     Vice President – Project Management (WPO)

Thomas Davis                                      Vice President – Financial Planning & Budgets (WPO)

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

Michael Huvane                                  Vice President – Marketing (WPO)

John Kahabka                                     Vice President – Environmental, Health and Safety (WPO)

Patricia Leto                                         Vice President – Procurement (WPO)

Christine Pritchard                               Vice President – Media Relations and Corporate Communications (ALB)

Francis Ryan                                        Vice President – Emergency Management (WPO)

Scott Scholten                                      Vice President and Chief Risk Officer (WPO)

John Suloway                                       Vice President – Project Development, Licensing and Compliance (WPO)

Bradford Van Auken                          Vice President – Engineering (WPO)

Brian McElroy                                     Treasurer (WPO)

Robert Hopkins                                   Director – Budgets (WPO)

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

Andy Cline                                            General Manager – Transmission Maintenance (WPO)

Timothy Muldoon                               Manager – Business Power Allocations and Compliance (WPO)

Karen Delince                                      Corporate Secretary (NYO)

Lorna M. Johnson                               Assistant Corporate Secretary (WPO)

Linda Payne                                         Senior Pricing and Power Contracts AnalystMarketing (WPO)

Sheila Baughman                                                Senior Secretary – Corporate Secretary’s Office (WPO)

 

 


 

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


 

1.                   Motion to Conduct an Executive Session

               

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


 

2.                   Motion to Resume Meeting in Open Session

 

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

 

3.                     Consent Agenda

               

                Chairman Michael Townsend said that the Economic Development Power Allocation Board had recommended that the Authority’s Trustees approve item 3c (Transfers of Industrial Power) at their meeting held on December 13, 2010.

Trustee D. Patrick Curley said that he may have a conflict of interest with respect to Moog, Inc. and abstained from the vote on item 3e (Proposed Expansion and Replacement Power Contract with ITT Enidine, Inc. and Moog, Inc. – Notice of Public Hearing).

President Richard Kessel said that, in the interest of full disclosure, Long Island Power Authority (“LIPA”) had an association with Brookhaven National Lab and Newsday when he had been there.  


 

a.       Approval of the Minutes

 

                The Minutes of the Regular Meeting held on October 26, 2010 were unanimously adopted.


 

b.       Hydropower Contracts with Upstate Investor-Owned Utilities for the Benefit of Rural and Domestic Consumers – Transmittal to the Governor
 

       The President and Chief Executive Officer submitted the following report:


 

                 

SUMMARY

 

                “The Trustees are requested to approve the attached contract extensions for sale to National Grid (formerly Niagara Mohawk Power Corporation), New York State Electric and Gas Corporation (‘NYSEG’) and Rochester Gas and Electric Corporation (‘RGE’) (hereinafter referred to collectively as the ‘Utilities’) of a total of 455 MW of firm and 360 MW of firm peaking hydropower and authorize their transmittal to the Governor for his approval.  The proposed contract extensions with the Utilities are attached as Exhibit ‘3b-A’ (National Grid), Exhibit ‘3b-B’ (NYSEG) and Exhibit ‘3b-C’ (RGE), respectively.

 

BACKGROUND

 

                “The Utilities had been receiving firm power from the St. Lawrence/FDR and Niagara Power Projects and firm peaking hydropower from the Niagara Project for resale to rural and domestic consumers under contracts signed in 1990 that expired on August 31, 2007 (the ‘1990 Hydro Contracts’).  The power is purchased at the cost-based hydropower rate and the benefits are passed on to the Utilities’ residential and small farm customers (the rural and domestic, or ‘R&D’, customers) without markup, under Public Service Commission tariffs.

 

“At their meeting of July 31, 2007, the Trustees approved an extension of the Hydro Contracts (the ‘2007 Contract Extensions’).  The 2007 Contract Extensions expired on June 30, 2008.  At their meeting of June 24, 2008, the Trustees approved an extension of the 2007 Contract Extensions (the ‘2008 Contract Extensions’).  The 2008 Contract Extensions expired on December 31, 2009.  At their meeting of July 28, 2009, the Trustees authorized the holding of two public hearings, pursuant to Section 1009 of the Public Authorities Law, on the 2009 Contract Extensions.  Public hearings were held on September 1, 2009 at the Niagara Power Project and on September 2, 2009 at Syracuse City Hall.  At their meeting of September 29, 2009, the Trustees approved transmitting the 2009 Contract Extensions to the Governor with the recommendation that they be approved.  The Governor approved the 2009 Contract Extensions on December 14, 2009.  The 2009 Contract Extensions will expire on December 31, 2010. 

 

                “Chapter 59 of the Laws of 2006 (Part U) authorized the creation by the Governor of a ‘Temporary State Commission on the Future of New York State Power Programs for Economic Development’ (‘Commission’).  The charge to the Commission was to recommend to the Governor and the Legislature on or before December 1, 2006 ‘whether to continue, modify, expand or replace the state’s economic development power programs, including but not limited to the power for jobs program and the energy cost savings benefit program. . . .’ 

 

                “On December 1, 2006, the Commission issued its report, which included an array of findings and recommendations.  A key recommendation of the report was that, among other things, hydropower now sold to the Utilities be ‘redeployed’ for economic development purposes.

 

DISCUSSION

 

                “In 2007 and 2008, the Power for Jobs (‘PFJ’) and Energy Cost Savings Benefits (‘ECSB’) programs were extended through June 30, 2008 and June 30, 2009, respectively, with the understanding that a reformation of the State’s economic development power programs was necessary to create a long-term power resource with price stability for business, whether based on the recommendations of the Commission or some other approach.  In 2009, the PFJ and ECSB programs were extended through May 15, 2010.  In August 2010, the PFJ and ECSB programs were extended through May 15, 2011 by Chapter 311 of the Laws of 2010.

 

                “Since the 2009 Contract Extensions are scheduled to expire on December 31, 2010, new contract extensions with the Utilities are necessary so that the benefits of low-cost hydropower can continue to flow to the Utilities’ R&D customers until such time as new legislation is enacted that redeploys this hydropower for other purposes.  The new contract extensions (the ‘2010 Contract Extensions’) have a provision that will permit service to continue on a month-to-month basis until the Governor approves them.  Should the Governor reject the 2010 Contract Extensions, they will terminate on the last day of the month following the month during which the Governor disapproved them.

 

“The 2010 Contract Extensions would continue the sale of firm and firm peaking hydropower to the Utilities in the amounts approved by the Trustees at their September 29, 2009 meeting, specifically, for National Grid, 189 MW of firm and 175 MW of firm peaking; for NYSEG, 167 MW of firm and 150 MW of firm peaking and for RGE, 99 MW of firm and 35 MW of firm peaking.  The 2010 Contract Extensions would have a term of 12 months to December 31, 2011, subject to earlier termination by the Authority on 30 days’ advance written notice.

 

                “In addition to the termination provisions specified above, the Authority may reduce or terminate service if it is determined to be necessary to comply with any ruling, order or decision by a regulatory or judicial body or the Trustees relating to hydropower and energy allocated under the proposed contracts.                        

 

“At their meeting of September 28, 2010, the Trustees authorized the holding of a public hearing, pursuant to Section 1009 of the Public Authorities Law, on the 2010 Contract Extensions.  Copies of the proposed form of the contracts were transmitted to the Governor and the leaders of the State Legislature.  In accordance with Section 1009, notice of such public hearing was published once each week for at least 30 days in at least six newspapers throughout the State.  During that period, copies of the form of the contracts were made available for public inspection in the offices of the Authority and at other places throughout the State designated by the Authority, as well as on the Authority’s website.

 

“Public hearings were held on November 3, 2010 at the Niagara Power Project and on November 4, 2010 at Syracuse City Hall. The final transcripts of the hearings are attached hereto as Exhibits ‘3b-D’ and ‘3b-E.’ Staff has reviewed the transcript of the hearings which include three oral statements, five written statements and sixteen emails submitted in a timely fashion for inclusion in the record.

 

There were three attendees but no speakers at the Niagara Power Project hearing.

 

There were five attendees and three speakers at the Syracuse hearing. The three speakers at the Syracuse hearing were:  Brian O’Shaughnessy, Chairman Revere Copper Products, Inc., a mid-state New York 350 employee owned manufacturer, Karyn Burns, Vice President, Communications & Government Relations, Manufacturers Association of Central New York (MACNY) representing 330 companies in Upstate New York and Steven Penn, Syracuse, NY resident.  Also present but did not speak Jerry Eisenhart, President of Bartell Machinery Systems, Rome, NY.

 

Two of the speakers and three of the written statements represented organizations and/or advocacy groups for organizations (Business Entities) that currently receive Authority power through one or more of its economic development programs.  All were unison in their expressed concern for the future of the Authority’s economic development programs, stating how challenging it is for them and/or those whose business interest they represent to do business in New York State and how critical the Authority’s Economic Development programs are to their survival and controlling some of their costs.  All expressed frustration with New York’s high electricity costs and emphasized how urgent it is for the State to do something for the long term in order to support economic development and the creation and retention of jobs in New York State.  All believe that the hydropower now being sold to the three upstate IOUs should be an integral part of a long term solution.  However, in the interim the Business Entities support both the ‘R&D’ contract extension to December 31, 2011 and the 30-day withdrawal notice provision.

 

The third speaker, Syracuse, NY resident provided an oral statement at the public hearing and provided a written statement by email for The Central New York Public Power Coalition.  The Power Coalition opposes the proposed hydro power contract extensions to the IOUs because it objects to such power going to ‘private hands’ (even though it is resold to domestic and rural consumers).  They believe that the Authority should, instead, allocate this hydropower to Municipal Utilities. 

 

With respect to CNY Public Power Coalition statement, the Authority’s hydropower allocations are made to domestic and rural consumers and to businesses in accordance with the Authority’s statues.   The Authority’s sales to IOUs that are resold to domestic and rural consumers help fulfill the Authority’s statutory mandate to secure a wider distribution of such power to benefit the general public Allocations to municipally-owned utilities make up a significant segment of the Authority’s hydropower sales.  It is important to note that on a statewide basis municipal utilities serve only a small fraction of electric consumers in Upstate New York.  The sales to the IOUs help distribute the benefits of Authority hydropower more widely.  As previously mentioned, the proposed contract extension does include a thirty-day withdrawal notice provision. 

 

A joint written statement submitted by NYSEG and RG&E stressed the value of this hydropower to their residential customers and expressed strong support for the extension of these contracts through December 31, 2011.  A residential couple submitted an email request for continued allocation of the power for residential use. 

 

Fifteen private individuals that appear to be affiliated with ARISE, an advocacy group supporting independent living for persons with disabilities commented by e-mail. Generally, these comments state that the Authority’s hydropower should not be sold to businesses but should, instead, support New York families.  The Authority notes that the hydropower in question is used by the utilities to reduce the electricity costs of rural and domestic consumers who are served by these utilities.  Thus, New York families are beneficiaries of the Authority’s hydropower sold under the proposed contracts.

 

While the parties presenting oral, written statements and comments have contrasting views on the proposed Upstate Hydro Contract Extensions, on balance, the parties objecting did not provide a compelling basis to halt approval of the proposed contract extensions through December 2011.

 

FISCAL INFORMATION

 

                “The 2010 Contract Extensions provide that the Utilities continue to pay for hydropower at the same rates they are currently charged that is determined in accordance with the ratemaking principles incorporated in the Auer Settlement and subsequent rate settlements.  Accordingly, there will be no fiscal impact associated with these contract extensions.

 

RECOMMENDATION

 

“The Director – Marketing Analysis and Administration recommends that the Trustees authorize the transmittal of the 2010 Contract Extensions to the Governor for his approval.

 

“The Executive Vice President and General Counsel, the Executive Vice President and Chief Financial Officer, 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 contract extensions for the sale of hydroelectric power and energy generated by the Authority for sale to National Grid, New York State Electric and Gas Corporation and Rochester Gas and Electric Corporation are in the public interest and should be forwarded with a recommendation that they be approved, along with the record of the public hearings thereon, to the Governor, the Speaker of the Assembly, the Minority Leader of the Assembly, the Chairman of the Assembly Ways and Means Committee, the Temporary President of the Senate, the Minority Leader of the Senate and the Chairman of the Senate Finance Committee; and be it further

 

 

RESOLVED, That the Chairman and the Corporate Secretary be authorized and directed to execute such contract extensions in the name of and on behalf of the Authority after the agreements have been approved by the Governor; and be it further

 

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized, subject to approval of the form thereof by  the Executive Vice President and General Counsel, to negotiate and execute any and all documents necessary or desirable to implement the contract extensions with National Grid, New York State Electric and Gas Corporation and Rochester Gas and Electric Corporation as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

 
 

c.                    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 nine existing customers that have either changed their corporate name for various business reasons or relocated their business operations to a different facility.

 

BACKGROUND

 

                “This is an administrative item brought to the Board at regular intervals.  Nine companies are requesting the Board approve a transfer of their existing power allocation to a new corporate entity or approve a transfer of their allocation because of a business location change.  For most companies involved in this transfer item, the power allocation will be delivered to the same location.  Two customers are requesting a transfer of their power allocation to a new location because of a consolidation.  All of the transfers are for allocations previously approved by the Trustees, and each company will be maintaining similar business operations.  The reasons for such transfers are described below.    

 

                “Five of the transfers, specifically those involving Power for Jobs allocations, Economic Development Power (‘EDP’) allocations and associated Energy Cost Savings Benefits, were approved by the Economic Development Allocation Board (‘EDPAB’) at their December 13, 2010 meeting, as required under Economic Development Law Section 186. 

 

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

DISCUSSION

 

                “The proposed transferees are as follows:

 

Alcan Packaging Food & Tobacco, Inc. (‘Alcan’), located in Edgewood, NY, produces flexible packaging for consumer products.  Bemis Company, Inc. acquired Alcan on March 1st, 2010.  Alcan is requesting to transfer its 850 kW EDP allocation to Bemis Company, Inc.  The customer will meet all contractual commitments in the existing contract with the Authority.

 

Beaver Falls Sealing Products, located in Croghan, NY, specializes in gaskets, packing, and sealing products.  With no change of ownership involved or any change in control of the facility, the company has changed the name of their company to Interface Sealing Solutions, Inc.  The company will continue to honor all the contract terms and commitments of its 250 kW Power for Jobs (‘PFJ’) allocation.

 

Birds Eye Foods Inc. (Birds Eye Group Inc. Delaware) located in Fulton, NY, a food processing and marketing company has filed a certificate of conversion to the company name Birds Eye Foods LLC on December 24, 2009The company will honor all of the terms and commitments of its 1,500 kW PFJ Extended Benefits contract with the Authority in order to receive Electricity Savings Reimbursements (‘rebates’) until the expiration date of the program.

 

Cliffstar Corporation (‘Cliffstar’), operating in Dunkirk, NY, has been producing juices, drinks, and fitness waters for over 30 years.  Cliffstar until now was privately-owned by the Star Family. Cott Corporation purchased all assets of Cliffstar on July 7, 2010.  Cliffstar will be operating in the same location under the newly formed limited liability company Cliffstar LLC.  The company  is requesting to transfer its 500 kW Replacement Power (‘RP’) allocation to Cliffstar LLC.  Going forward it will continue to honor all contractual commitments with the Authority.

 

Graphic Controls LLC, located in Buffalo, NY, throughout 60 years has produced ink jet fluids, POS papers, tickets, PVC cards, and security goods.  Graphic Controls Acquisition Corp. a Delaware corporation intends to acquire all the assets of Graphic Controls LLC.  With the acquisition, the company wishes to transfer their 250 kW RP allocation to the new entity.  The new company agrees to honor all the Authority’s contract terms and commitments.

 

Habasit Belting LLC, operating in Buffalo, NY, produces power transmission, conveyor and processing belts, gears and motors.  The customer wishes to transfer their 200 kW RP allocation to their new corporate name Habasit America, Inc.  There is no change of ownership, no change in operations or products produced, nor location of the facility.  The customer agrees to meet all contract commitments with the Authority.

 

Liz Claiborne, Inc., located in Manhattan, NY, is a clothing and accessories manufacturer.  Due to significant changes in the organizational strategy at its current location, Liz Claiborne Inc. wishes to allocate its commitment to three additional locations.  The existing location associated with the allocation is 1441 Broadway.  The company wishes to transfer their 1,500 kW PFJ Extended Benefits contract with the Authority in order to receive rebates until the expiration date of the program.  In its entirety, the four locations to receive the allocation will be 1440 Broadway, 1441 Broadway, 240 West 40th Street, and Kate Spade at 25th Street.  The customer continues to honor all contract commitments with the Authority.    

 

Newsday, located in Melville, NY, produces a daily news publication serving Long Island since 1940.  The company is requesting to transfer its 850 kW EDP allocation from 25 Deshon Road, Melville, NY, to another one of their facilities on 235 Pinelawn Road, Melville, NY.  All existing contract commitments will remain in effect.        

 

PortCoat LLC, located in Lackawanna, NY, plans to build and operate a hot-dip galvanizing line.  In April 2008, the Trustees awarded the company 2,000 kW of RP as an incentive to pursue this business plan.  The allocation is still pending takedown at this time while the company moves forward with the project.  With no change of ownership involved, PortCoat LLC is now known as Galvstar LLC.  The company wishes to transfer its 2,000 kW RP allocation to the new company name.  There is no change in the scope of the project and the company’s contract commitments will not change.

 

RECOMMENDATION

 

                “The Manager – Business Power Allocations and Compliance recommends that the Trustees approve the transfer of power allocations for nine existing customers that have either changed their corporate name for various business reasons or relocated their business to a different facility while maintaining similar business operations and contract commitments.

 

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

 

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

 

 

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

 

 

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


 

d.                    Extension of Contract FD-13 - Brookhaven National Laboratory

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve an extension of the contract (‘Contract FD- 13’) to provide firm power service to the United States Department of Energy (‘DOE’) for use by Brookhaven National Laboratory (‘Brookhaven’ or ‘BNL’) for a period of ten years (January 1, 2011 through December 31, 2020) with an option for DOE to extend the contract period for an additional five years (through December 31, 2025).  This contract extension, when combined with the Authority’s recently approved hydropower allocation for the benefit of BNL, will enable this important scientific laboratory to continue its ground-breaking research which provides long-term economic benefits to New York State.

 

BACKGROUND

 

                “The Authority has been serving Brookhaven since November 1982.  The Contract FD-13 permits Brookhaven to receive 77 megawatts (‘MW’) of firm power and energy.  The electricity provided by the Authority has saved the laboratory in excess of $316 million over the life of the contract while, at the same time, giving Brookhaven the ability to attract new, cutting-edge science projects to Long Island.  These projects include the Alternate Gradient Synchrotron, the National Synchrotron Light Source (‘NSLS’) and the Relativistic Heavy Ion Collider (‘RHIC’).  In anticipation of a proposed 15 MW hydropower contract between the Authority and Long Island Power Authority (‘LIPA’) for resale exclusively to Brookhaven (the ‘Hydropower Resale Contract,’ which has been executed by the parties and has received all necessary state approvals)[1] and this proposed contract extension, construction of a $900 million upgrade to the NSLS known as National Synchrotron Light Source-II (‘NSLS-II’) began this year, creating hundreds of construction jobs.  NSLS-II is expected to support up to 300 additional scientists performing advanced research when completed in 2015.

 

“With more than 3,000 employees and a $500 million annual budget, Brookhaven is a major employer on Long Island, attracting members of the scientific community from New York, other states and around the world.  In addition, more than 3,000 visiting researchers from universities, industry and other research institutions use the laboratory’s advanced science facilities annually, with approximately one-third from New York institutions and businesses from various parts of the state.  Among the institutions are the State University of New York at Plattsburgh, Cornell University and Rensselaer Polytechnic Institute.   Business organizations making use of BNL facilities include Corning, General Electric and IBM.  BNL’s annual impact on New York State’s economy is estimated at nearly $1 billion, with hundreds of millions of dollars linked to direct spending in the state by the laboratory’s employees.

 

DISCUSSION

 

“The extension of Contract FD-13 and the Hydropower Resale Contract are intended to work in concert to provide economically viable power and energy to BNL.

 

“The 15 MW allocation provided under the Hydropower Resale Contract would be blended with the market energy purchases of up to 77 MW under Contract FD-13 to meet BNL’s requirements.  As staff explained in its December 15, 2009 memorandum to the Trustees, the partial assignment of the Authority’s Contract FD-13 power sales obligations to LIPA under the Hydropower Resale Contract will allow the Authority to continue to provide BNL with the economic benefits associated with certain ‘grandfathered’ transmission agreements under Contract FD-13.  This is expected to provide stable transmission service rates and hedges against congestion.

 

“As noted, the Authority and LIPA have recently executed and received all required approvals for the Hydropower Resale Contract, which provides for the sale of 15 MW of Authority hydropower and energy to LIPA for resale to, and exclusive use of, BNL.

 

“Due to DOE’s internal policy limiting energy purchase contracts to terms of no more than ten years, the proposed contract modification is for ten years with an option for the parties to extend the Agreement for an additional five years provided the Authority receives prior authorization from DOE.  This ten-year term with a five-year extension option is consistent with the terms of service set forth in the Hydropower Resale Contract.

 

“The contract extension will continue to provide for a flow-through of market prices for that portion of Brookhaven’s electricity requirements in excess of the 15 MW allocation under the Hydropower Resale Contract.  The goal is to offer an effective price of electricity for Brookhaven that is substantially lower than the full market price for electricity on Long Island and allow Brookhaven to compete within the National Laboratory System for world-class science projects.  Brookhaven’s continued success is directly tied to its ability to build and operate large, complex, one-of-a-kind scientific facilities that draw researchers from around the world.  If Brookhaven were not able to obtain a stable source of power priced at nationally competitive rates for the long term, it would suffer future loss of jobs, reduced or eliminated technology-transfer opportunities and the eventual closure of the facility.

 

“The contract extension establishes a total ‘all in’ cost cap of $375 million for power and energy provided during the  term of the contract, inclusive of the power and energy BNL will receive under the Hydropower Resale Contract.  If the total ‘all in’ cost cap is estimated by the Authority to be exceeded, the Authority will notify DOE in order to receive authorization to exceed the cap in accordance with the terms of the extended contract.  Upon receiving such authorization, the Authority will continue performance and DOE will be obligated to compensate the Authority for costs incurred in excess of the total ‘all in’ cost cap.  Absent receiving such authorization, the Authority is not obligated to continue performance under the extended contract.  Authority staff will monitor the total costs paid to serve BNL in order to ensure that it makes the necessary notifications to DOE.

 

“Power service under both the extended Contract FD-13 and the Hydropower Resale Contract is expected to commence January 1, 2011.

 

FISCAL INFORMATION 

 

                “Brookhaven will pay the full cost of power and energy provided under this contract extension.

 

RECOMMENDATION

 

                “The Vice President – Marketing recommends that Brookhaven National Laboratory’s contract be extended as described herein and the terms of service for the sale of power to Brookhaven be modified in accordance with the foregoing.

 

“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 extension of Contract FD-13 for a period of ten years (January 1, 2011 through December 31, 2020) with a customer option to extend for an additional five years (to December 31, 2025), be approved on the terms 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 negotiate and execute any and all documents necessary or desirable to effectuate the foregoing; and be it further

 

 

RESOLVED, That the Chairman, the Vice Chairman, the President and Chief Executive Officer, the Chief Operating Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things, take any and all actions and execute and deliver any and all 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.

 

 
 

e.                    Proposed Expansion and Replacement Power Contracts with  ITT Enidine Inc., and Moog Inc. – Notice of Public Hearing

               

                The President and Chief Executive Officer submitted the following report:

 

 

SUMMARY

 

                “The Trustees are requested to authorize a public hearing pursuant to §1009 of the Public Authorities Law (‘PAL §1009’) on proposed contracts (‘Contracts’) for allocations of Expansion Power (‘EP’) and Replacement Power (‘RP’) to ITT Enidine Inc. (‘ITT’) and Moog, Inc. (Moog’), respectively (Collectively referred to as the ‘Customers’).  The proposed Contracts are attached as Exhibits ‘3e-A’ and ‘3e-B.’

 

BACKGROUND

 

Under §1005(13) of the PAL, as amended by Chapter 313 of the Laws of 2005, the Authority may contract to allocate 250 megawatts (‘MW’) of firm hydroelectric power as EP and up to 445 MW of RP to businesses in the New York 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 countyEach application for an allocation of EP and RP must be evaluated under criteria that include, but need not be limited to, those set forth in PAL Section 1005(13)(a), which details general eligibility requirements.  Among the factors used for evaluating a request for an allocation of hydropower are the number of jobs created, the capital investment in the business’ facilities, the types of jobs created and the associated wages and benefits. 

 

At their meeting of May 22, 2007, the Trustees approved an allocation of 200 kW of EP to ITT for a term of five years.  Approval of the allocation was based on an evaluation of ITT’s application for hydropower in which the company proposed to expand its facilities.  ITT committed to invest $2.5 million to expand the facility and install new production machinery and equipment.  The project would create 20 new jobs in addition to the existing 200 jobs. 

 

Regarding Moog, on July 31, 2007, the Trustees approved an allocation of 1,200 kW of RP for a term of five years.  The allocation was based on an evaluation of Moog’s application for hydropower in which the company proposed adding nearly 70,000 square feet of manufacturing and office space.  Moog committed to invest $16.8 million in expanding the facility, along with installing new production machinery and equipment.  The project would create 140 new jobs in addition to the existing 2,306 jobs.

 

Staff has verified that both projects have been completed and each Customer has requested to start using its respective allocations as early as January 1, 2011. 

 

“As required by PAL §1009, when agreement has been reached by an authority and its co-parties (the Customers), the authority shall transmit the proposed contract to the governor and other elected officials.  Subsequent to the transmittal, a public hearing shall be held, upon a 30-day notice provision and publication of the hearing in six selected newspapers.  Following the public hearing, the contracts maybe modified, if advisable.  Upon approval of the contract by the authority and the Customers, the authority will submit the contracts, its recommendations and the public hearing records to the governor and other elected officials.  Upon approval by the governor, the contracts will be executed by the chairman and secretary of the authority to become fully effective.  Procedures to satisfy the requirements of PAL §1009 can take several months to administer when factoring in Board schedules, public hearing notification requirements and time needed for approval by the governor.

 

DISCUSSION

 

                “The Authority and each Customer anticipate signing an agreement (‘Interim Agreement’) to enable the Customers to accept delivery of their allocations on the desired commencement date, January 1, 2011.  Without an Interim Agreement, electric service would be delayed while awaiting the PAL §1009 process, even though both Customers have completed its projects and fulfilled their obligations associated with the allocations awarded to them.  The Interim Agreements would be wholly consistent with the long-term Contracts that are the subject of this item, and they would be set to expire the earlier of June 30, 2011, or the date the Contracts become effective.  It is anticipated that the long-term Contracts will become effective prior to June 30, 2011, after the anticipated completion of the approval process required by PAL §1009.  The five year term of the allocation would commence upon first use of the power regardless of whether started under the Interim Agreement, as anticipated, or under the long-term Contracts after satisfaction of PAL §1009 requirements and approval by the governor.

 

“The proposed Contracts follow the format of the Western New York contract extensions recently transmitted to the Governor after approval by the Trustees at their September 28, 2010 meeting.  As with the Western New York contracts, the Authority will directly sell firm electric service from the Niagara plant, consisting of firm power (capacity) and energy service.  Power service is subject to pro-rata curtailment when there is insufficient generation at the Niagara and St. Lawrence/FDR facilities.  Delivery will be provided and billed directly to the Customers by the local utility, New York State Electric and Gas (‘NYSEG’).  Arrangements for the delivery will be agreed to by the Authority, the Customers and NYSEG prior to any delivery under the proposed Contracts.  The Authority will continue to act as the Load Serving Entity and will bill the Customers for all ISO charges, as it currently does for both direct sale and sale-for resale billing procedures.

 

“Regarding compliance requirements of the Contracts, the allocation amount will be subject to an enforceable employment commitment of 220 jobs in the case of ITT and 2,446 jobs in the case of Moog and includes an annual job reporting requirement and a job compliance threshold of 90%.  Should the Customer’s actual jobs reported fall below the compliance threshold, the Authority has the right to reduce the allocation on a pro-rata basis.  The rates, terms and conditions for the sale are contained in service tariffs applicable to all EP/RP allocations.  Specifically, Service Tariffs EP-1 (EP) and NP-F1 (RP) are effective through June 30, 2013.  Thereafter, Service Tariff No. WNY-1 is effective from July 1, 2013 until the expiration of the Customers’ Contracts for both EP and RP service. 

               

RECOMMENDATION

 

“The Manager – Business Power Allocations and Compliance recommends that the Trustees authorize a public hearing on the terms of the proposed contracts to be held early in 2011, on a date to be determined, at the Niagara Power Project’s Power Vista Visitors’ Center.  It is further recommended that, pursuant to §1009 of the Public Authorities Law, the Corporate Secretary be authorized to transmit copies of the proposed contract to the Governor and legislative leaders and to arrange for the publication of a notice of public hearing in six newspapers throughout the State in accordance with the Public Authorities Law.

 

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

 

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

 

RESOLVED, That the Trustees hereby authorize a public hearing on the terms of the proposed contracts for the sale of Expansion and Replacement Power to ITT Enidine and Moog Inc. to be held at the Niagara Power Project’s Power Vista Visitors’ Center; and be it further

 

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

 

RESOLVED, That the Corporate Secretary  be, and hereby is, authorized to arrange for the publication of a notice of public hearing in six newspapers throughout the State, all done in accordance with the provisions of §1009 of the Public Authorities Law; and be it further

 

RESOLVED, That the Senior Vice President – Marketing and Economic Development or his designee be, and hereby is, authorized, subject to the approval of the form thereof by the Executive Vice President and General Counsel, to enter into such agreements, and to do such other things, as may be necessary or desirable to implement the Contracts as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

  

 

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

                                                            

                The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve the award and funding of the multiyear procurement contracts listed in Exhibit ‘3f-A,’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the recommended awards, including the nature of such services, the bases for the new awards if other than to the lowest-priced bidders and the intended duration of such contracts, are set forth in the discussion below.

BACKGROUND

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

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

DISCUSSION

“The terms of these contracts will be more than one year; therefore, the Trustees’ approval is required.  Except as noted, all of these contracts contain provisions allowing the Authority to terminate the services for the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  Approval is also requested for funding all contracts, which range in estimated value from $19,450 to $15 million.  Except as noted, these contract awards do not obligate the Authority to a specific level of personnel resources or expenditures.

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

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

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

 

Business Services

Energy Risk Assessment & Control

“The deregulation of energy markets has introduced uncertainty in the prices of electricity, natural gas and oil commodities.  In response, the Authority has increasingly entered into various types of physical and financial energy derivatives via exchange and over-the-counter transactions to reduce its exposure to price uncertainty.  To support its participation in commodity hedging, the Authority has implemented various models to quantify and report the impact of energy market price uncertainty on company financials, using such tools as the Energy Book System developed by the Electric Power Research Institute, as well as SQL, Excel and Access-based models custom-developed by external consultants and internal staff.  The Authority is currently in the process of implementing an Enterprise Risk Management program that provides a coordinated approach to identifying, assessing and managing risks across the organization.  To that end, the Authority has enlisted the services of risk management consultants to advise staff on various risk-related matters and to assist with such implementation, as needed. Since the existing contracts for such services are expiring, and the need for such services is ongoing, staff prepared a new Request for Quotations (‘RFQ’ No. Q10-4831).  Bid documents were downloaded electronically from the Authority’s Procurement Web site by 79 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Bidders were requested to respond to any or all of four specialized risk-related areas set forth in the RFQ:  energy risk modeling, counterparty credit evaluation, fair market energy derivative valuation and/or validation and enterprise risk management program support.  A total of nine proposals were received and evaluated. The evaluation process considered each bidder’s demonstrated expertise, experience, ability to advise on risk-related issues and experience within the commodity markets for natural gas and power.  Personnel rates were also evaluated within the job classifications considered most applicable to the anticipated work tasks.  A thorough technical review of the proposals, as more fully discussed in the Recommendation memorandum, indicated that no single firm was fully responsive to all requirements set forth in the RFQ.  A number of firms demonstrated specific expertise, experience, skills, strengths and qualifications in different areas that complement each other and, which taken as a whole, would provide the Authority with the ability to award specific well-defined tasks to the best-qualified firm that can complete each task within the applicable specialized area most efficiently and at competitive rates.  Based on the foregoing, staff recommends the award of contracts to the following five firms: The Brattle Group (‘Brattle’), PA Consulting Group, Inc. (‘PACG’), Pace Global Energy Risk Management, LLC (‘Pace’), RiskCentrix, LLC (‘RiskCentrix’) and RMG Financial Consulting, Inc. (‘RMG’) (PO#s TBA), which meet the bid requirements and are qualified to provide such risk management consulting services, on an ‘as needed’ basis. The proposed awards by areas of specialization are as follows:  A) Energy Risk Modeling:  two awards to Brattle and RiskCentrix; B) Counterparty Credit Evaluation: one award to RMG; C) Fair Market Energy Derivative Valuation and/or Validation: one award to PACG and D) Enterprise Risk Management Program Support: two awards to Pace and RiskCentrix.  Additionally, three of these firms have provided satisfactory services under existing contracts for such work.  The new contracts would become effective on or about January 1, 2011 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $3 million. Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

Corporate Communications

Communications and Marketing Services

“The demand for production of printed and digital materials to support and convey the Authority’s mission and message has increased significantly during the past ten years.  In order to successfully accommodate the volume of such projects and to meet tight production deadlines, the Authority’s Graphic Communications Group augments its staff with computer design and production services contractors, on an ‘as needed’ basis.  To that end, staff prepared a new Request for Proposals (‘RFP’) and bid documents were downloaded electronically from the Authority’s Procurement Web site by 62 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Bidders were requested to respond to not more than one of three service categories: (A) On-premises - Print Design, (B) On-premises – Special Design or (C) Project-by-Project. The RFP also specified that only bids from individual/ freelance designers (and not design firms or staffing agencies) would be accepted for Categories A and B, which would result in potential contract awards; responses from both individuals and firms would be accepted for Category C, which would result in the identification of pre-qualified firms among which projects would be bid and awarded later, as needed.  Twelve responses were received and evaluated.  Of this number, two were eliminated based upon a review of their respective proposals, which did not meet the requirements set forth in the RFP.  Of the remaining ten responses, four were from freelance graphic designers for Category A and six were from design firms for Category C.  Based on a thorough review and assessment of their respective qualifications, experience and hourly rates, staff recommends award of four contracts for Category A services to: Angela McRae (‘McRae’), Eileen Burtoff (‘Burtoff’), Harrison Getz (‘Getz’) and Russell Brod (‘Brod’) (Q10-4871; PO# TBA), who are qualified to perform such services, meet the bid requirements and have provided satisfactory services under existing contracts for such work.  Such contracts would provide for the services of freelance graphic designers to perform computer design and production services for print materials including, but not limited to, annual reports, corporate collateral materials, marketing and promotional brochures, newsletters, posters, advertising materials, presentations and exhibits, as well as to create graphics for the Authority’s internal and external Web sites.  Such services will be performed on-premises at the Authority’s White Plains Office, under the direction and supervision of Authority staff.  The award of a contract/s for services solicited for Category B has been deferred and approval for such award/s is not sought at this time. Based on the qualifications and samples of materials submitted by each of the six firms responding to Category C, staff recommends that all six firms be placed on a ‘short list’ of qualified design firms: A.J. Rodrigues Group, Inc. ♦, Creative Source, Inc. ♦, Kass Uehling, Inc., Skeggs Design, Sundberg & Associates, Inc. and Thinkersdesign ♦.  It should be noted that the three firms whose names are followed by the ♦ symbol are New York State-certified Minority/ Women-owned Business Enterprises.  Contracts for Category C services will only be awarded to those firms that are the successful bidders for specific projects, as each such project is required and bid among the pre-qualified group, and the best candidate is selected.  The new contracts would become effective on or about January 1, 2011 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contract, $1.77 million. Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.

Energy Resource Management (‘ERM’)

        Fuel Operations

“The contract with Saybolt LP (‘Saybolt’) (PO# TBA) would provide for independent petroleum inspection and other services in connection with the delivery, transfer and storage of No. 2 fuel oil, low sulfur aviation kerosene and ultra low sulfur diesel fuel within the New York Harbor and Long Island areas.  Such services include, but are not limited to, the inspection, measurement and testing of bulk oil deliveries made via barge, tanker, pipeline or truck to the Authority’s electric generating stations and/or storage facilities situated within the aforementioned areas for the Richard M. Flynn and 500 MW power plants, as well as the Astoria Energy II power plant (currently under construction).  The resulting data on oil quantity and quality provides the basis for both paying for oil delivered and assessing penalties for non-conforming oil, including evidence of compliance with environmental quality regulations.  Since the existing contracts for such services expire at the end of the year, and the need for such services is ongoing, staff prepared a new Request for Proposals (QFS-2010-02).  Bids were solicited from eight firms, including those that may have responded to a notice in the New York State Contract Reporter. Seven proposals were received and evaluated; of this number, two proposals were deemed non-responsive and were not considered further.  Based on each firm’s unit pricing for the required services/delivery modes/activities and forecasted demand/projected usage, staff calculated the total evaluated costs for providing such services.  Since such costs are typically shared equally between the supplier of the petroleum product and the purchaser, the Authority’s share of the lowest total estimated cost is $19,450.  Based on the foregoing, staff recommends the award of a contract to Saybolt, the lowest-priced evaluated bidder, which is qualified to perform the services, is responsive to the Authority’s bid requirements and has provided satisfactory services under an existing contract for such work.  The new contract would become effective on or about January 1, 2011 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $19,450.

Energy Services and Technology (‘ES&T’)

        Energy Services

“New York City Transit (‘NYCT’), an affiliate of the Metropolitan Transportation Authority (‘MTA’), currently has 842 miles of subway tracks in active use, most of which rely on pneumatic signal and switching equipment to operate.  Such equipment runs on compressed air supplied from a network of compressed air systems located by the trackside throughout the subway system.  A large number of the existing compressed air systems have reached the end of their useful life and need to be replaced for more efficient, reliable and safe operation, as well as to reduce operating and maintenance costs.  The contract with Airmatic Compressor Systems, Inc. (‘Airmatic’) (Q10-4869; PO# TBA) would provide for the furnishing, delivery and installation of energy efficient compressed air systems at twelve NYCT subway signal sites located in the New York City Boroughs of Manhattan, Brooklyn and the Bronx, as part of the Authority’s Energy Services Program.  To that end, bid documents were downloaded electronically from the Authority’s Procurement Web site by 42 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated by both Authority and NYCT staff.  Both bidders have extensive experience in supplying and installing air compressor systems for various industrial customers, including the MTA.  Based on a thorough evaluation of both proposals, staff recommends the award of a contract to Airmatic, the lower-priced bidder, which is qualified to perform the work and meets the bid requirements.  The contract would become effective on or about January 1, 2011 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  A ten-year equipment warranty is included by the vendor.  Approval is also requested for the total amount expected to be expended for the term of the contract, $4 million.  This project is subject to a Customer Installation Commitment (‘CIC’) agreement between the Authority and NYCT, which must be fully authorized prior to award of the contract to Airmatic for the subject services.  All costs will be recovered by the Authority.

“The contract with Applied Energy Group, Inc. (‘AEG’) (Q10-4841; PO# TBA) would provide for consulting services to conduct a program impact and process evaluation of the Authority’s energy efficiency program, focusing on the Authority’s Governmental Customer projects in New York City and Westchester County.  The intent of the evaluation is to measure and verify program and portfolio impacts and, where needed, to identify program design and process or implementation improvements.  This effort reinforces the Authority’s commitment to support the New York State Energy Plan, which seeks to reduce energy consumption, as well as to participate in the continuing development of the NYS Energy Efficiency Portfolio Standards, which seeks to ensure the transparent and consistent reporting of program savings.  The evaluation effort will determine the cost-effectiveness and impacts of the Authority’s energy efficiency programs and projects.  This review will not only support regional and statewide energy efficiency efforts, but will also assist the Authority in refining and enhancing its own energy efficiency program for its customers.  To that end, staff prepared a Request for Proposals (‘RFP’) and bid documents were downloaded electronically from the Authority’s Procurement Web site by 80 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated based on cost and qualifications.  After thorough initial review, the two highest-priced proposals were not considered further based on cost.  The remaining two proposals were reviewed in greater detail in a team assessment process based on weighted qualifications criteria that included, but were not limited to, experience and qualifications of the firm and staff, methodology, resources, understanding of and responsiveness to the RFP, as well as cost.  Based on the foregoing, staff recommends the award of a contract to AEG, the lowest-priced bidder, which is eminently qualified to perform the work and meets the bid requirements. The contract would become effective on or about January 1, 2011 for an intended term of up to two years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $446,000.

“The contract with Knorr Brake Corporation (‘Knorr’) (Q10-4758; PO# TBA) would provide for the furnishing and delivery of 332 oil-less air compressors for use on board MTA - New York City Transit (‘NYCT’) subway railcars, as part of the Authority’s Energy Services program.  This proposed project would result in increased energy efficiency and reliability, reduced operating costs and environmental benefits.  (Unlike the aforementioned turnkey project with Airmatic to furnish, deliver and install air compressors for subway signal sites, this proposed contract award would only furnish and deliver equipment that would be installed later by NYCT personnel;  additionally, such equipment (oil-less air compressors) is based on  different technology / specifications and is for use on board subway railcars.)  Bid documents were downloaded electronically from the Authority’s Procurement Web site by 22 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated jointly by Authority and NYCT staff.  An extensive review and evaluation of the submitted proposals was based on criteria that included, but were not limited to, conformity to specifications, performance, overall construction and packaging, component quality and functionality, equipment and component durability, ease of maintenance and operational/ maintenance costs, warranty, service and performance records, references, ability to provide extended technical support and after-sale service, as well as bid review meetings with each of the two bidders.  Based on its technical merits with respect to the foregoing criteria, staff recommends the award of a contract to Knorr, the lower-priced qualified bidder, which meets all the technical requirements set forth in the bid specification.  It should also be noted that some of the air compressor components will be supplied by a Knorr subsidiary located in upstate New York.  (Airmatic’s proposal, although 3% lower in price, failed to meet the specification requirements in several key areas and therefore was found unacceptable by the Joint Review Committee.)  The contract with Knorr would become effective on or about January 1, 2011 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  A five-year warranty is also included by the vendor. Approval is also requested for the total amount expected to be expended for the term of the contract, $15 million.  This project is subject to a Customer Installation Commitment (‘CIC’) agreement between the Authority and NYCT, which must be fully authorized prior to award of the contract to Knorr for the subject services.  All costs will be recovered by the Authority.

Engineering and Design

“The contracts with Altran Solutions (‘Altran’), BGA, LLC (‘BGA’), RCM Technologies, Inc. (‘RCM’), Rudell & Associates, Inc. (‘Rudell;’ a New York State-certified Minority/Women-owned Business Enterprise) and WM Group Engineers, P.C. (‘WM Group’) (Q10-4874; PO# TBA) would provide for engineering and design services and/or specialty engineering consulting services to support Energy Services and Distributed Generation projects in Authority Customer facilities statewide, on an ‘as needed’ basis.  The projected volume of energy-saving implementation project work has increased steadily in recent years.  Staff expects this trend to continue and anticipates that such firms and services will be used more heavily in the next several years to supplement the Authority’s in-house engineering staff to provide engineering and design and/or consultation services.  To that end, bid documents were downloaded electronically from the Authority’s Procurement Web site by 184 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Twenty-nine proposals were received and evaluated.  Staff also calculated the costs for a typical task / scenario based on the hourly rates submitted by the bidders, in order to develop a more accurate cost analysis.  Based on the foregoing, staff recommends award of contracts to five firms: Altran, BGA, RCM, Rudell and WM Group, the lowest-priced evaluated bidders, all of which are qualified to perform such work and meet the bid requirements (and of which two have provided satisfactory services under existing contracts for such work).  The new contracts would become effective on or about January 1, 2011 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $2 million. Such contracts will be closely monitored for utilization levels, available approved funding and combined total expenditures.  All costs will be recovered by the Authority.

 

Enterprise Shared Services (‘ESS’)

Information Technology

“In 2003, the Authority implemented a program of network monitoring security services, in response to mandates by the North American Electric Reliability Council (‘NERC’) and the Federal Energy Regulatory Commission (‘FERC’), as well as an internal study on network security vulnerability.  Such services include, but are not limited to, providing security monitoring of the Authority’s essential computer network assets on a 24x7x365 basis and implementing a system to monitor, diagnose, notify, interpret and report important system events throughout the network.  The Monitoring Service Provider (‘MSP’) is responsible for monitoring and correlating system, audit and event logs and alerts to detect irregular or suspicious activity and identify unauthorized or harmful behavior, malicious hacks and denials of service, including insider attacks and anomalies and trend analyses.  Since the existing contract for such services is expiring, and the need for such services is ongoing, staff prepared a new Request for Proposals (Q10-4832).  Bid documents were downloaded electronically from the Authority’s Procurement Web site by 67 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Based on the firm’s experience, qualifications and reasonable pricing, staff recommends the award of a contract to SecureWorks, Inc. (‘SecureWorks’; PO# TBA), the lower-priced bidder, which is qualified to perform the work, meets the bid requirements and has provided satisfactory service under an existing contract for such work.  The firm’s Security Operations Center (‘SOC’) provides excellent service, ensuring that our perimeter network and internal Critical Cyber Assets are monitored on a 24x7x365 basis.  The SecureWorks automated processes for cyber security event monitoring and alerting, logging and reporting capabilities will enable the Authority to continue to maintain compliance with the NERC Critical Infrastructure Protection (‘CIP’) standards.  Additionally, the SecureWorks SOC is staffed with specialists who are very knowledgeable with respect to SCADA and EMS vulnerabilities.  The new contract would become effective on or about January 1, 2011 for an intended term of up to seven years, subject to the Trustees’ approval, which is hereby requested.  The extended term would benefit the Authority by providing uninterrupted high-quality, reliable service without the potential disruption or vulnerability associated with changing service providers, as well as affording the Authority a firm 7-year discount, subject to volume adjustments.  Approval is also requested for the total amount expected to be expended for the term of the contract, $1.95 million.

Power Supply

“The contracts with BIDCO Marine Group (‘BIDCO’) and McLaren Engineering Group (‘McLaren’) (Q10-4786; PO# TBA) would provide for underwater inspection services to support the operation and maintenance of Authority facilities located throughout New York State.  Such services include routine outage underwater inspections, debris management and minor underwater equipment / structural repairs, on an ‘as needed’ basis.  Bid documents were downloaded electronically from the Authority’s Procurement Web site by 28 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Ten proposals were received and evaluated.  A Post-Bid Addendum was issued to the ten bidders requesting pricing clarifications, as well as cost proposals for a typical three-day inspection in 20-30 feet of water at each site, including mobilization, travel and living, equipment, field and office personnel, and preparation of the inspection report.  Three of the ten original bidders did not respond and were not evaluated further.  The proposals submitted by the seven responding bidders were evaluated in greater detail.  Based on the professional qualifications and experience of key personnel and support staff, the size and depth of the organization and its resources, competitive rates and proximity to Authority facilities, staff recommends award of contracts to two firms.  BIDCO and McLaren, the lowest-priced evaluated bidders, which are qualified to perform such services and meet the bid requirements.  Both firms have dam inspection experience and provide a good range of capabilities and complementary skills.  In addition to providing underwater inspection services, BIDCO has the ability to perform underwater construction work and McLaren can perform design engineering services, if needed.  BIDCO is located in the Buffalo area and McLaren is located downstate in Rockland County, thereby providing sufficient geographic coverage for all Authority facilities.  Both companies have ample depth of resources to serve the Authority’s underwater inspection needs and each can provide up to three fully-equipped inspection teams.  The award of contracts to two firms will provide a good range of capabilities and will offer the Authority the best value by affording the opportunity to solicit two cost estimates for specific tasks and/or underwater repair recommendations.  The contracts would become effective on or about January 1, 2011 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total aggregate amount expected to be expended for the term of the contracts, $2 million.

“The contract with Brockway Sanitation Service (‘Brockway’) (RFQ 6000117071; PO# TBA) would provide for sewage removal and disposal services for the St. Lawrence/FDR Power Project.  Services include annual pumping of septic tanks and several other septic / holding tanks on an ‘as needed’ basis, transportation and sewage disposal at a New York State Department of Environmental Conservation State Pollution Discharge Elimination System (‘NYSDEC SPDES’) permitted wastewater treatment facility (sewage plant).  Bid documents were downloaded electronically from the Authority’s Procurement Web site by 16 firms, including those that may have responded to a notice in the New York State Contract Reporter. One proposal was received and evaluated. (Reasons for the lack of other responses include, but are not limited to, the work was not in the scope of their services or was too small / large, lack of geographic proximity or the bid documents were downloaded for information purposes only.)  Based on its experience and reasonable pricing, staff recommends award of a contract to Brockway, the sole responding bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory service under the current contract for such work.  The new contract would become effective on or about January 1, 2011 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $85,000.

“The contract with E-J Electric Installation Co. (‘E-J Electric’) (RFQ 6000116300; PO# TBA) would provide for general electrical maintenance services for the 500 MW Plant.  Bid documents were downloaded electronically from the Authority’s Procurement Web site by 34 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated.  Based on the hourly rate for Journeyman Electricians that will perform the majority of the work, staff recommends award of a contract to E-J Electric, the lowest-priced bidder, which is qualified to perform the services, meets the bid requirements and has provided satisfactory services under an existing contract for such work.  The new contract would become effective on or about January 1, 2011 for an intended term of up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $300,000.

“The contract with Fox Fence Inc. (‘Fox Fence’) (RFQ 6000115247; PO# TBA) would provide for on-call emergency repair services for security gates (mechanized and manual) and fences at the Niagara Power Project, on an ‘as needed’ basis.  Services include all labor, supervision, equipment, materials and technical support on a ‘24/7’ basis and response time within four hours of the call for service.  Bid documents were downloaded electronically from the Authority’s Procurement Web site by 35 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommends award of a contract to Fox Fence, the lowest-priced bidder, which is qualified to perform such services, meets the bid requirements and has provided satisfactory service under the current contract for such work.  The new contract would become effective on or about January 1, 2011 for an intended term of up to four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $100,000.

“The contract with General Physics Corporation (‘GP’) (GP Proposal No. GP-139-10-128; PO# TBA) would provide for the continuation of maintenance of proprietary General Physics EtaPRO online thermal performance monitoring software at the Authority’s Virtual Monitoring and Diagnostic Center (relocated from Poletti to the White Plains Office) and the 500 MW, Flynn and Small Clean Power Plants, as well as for the maintenance of OSI PI/ECHO ‘data historian’ software for the 500 MW plant.  Such software allows the Authority to monitor the plant’s thermal efficiency and provides data to the Authority’s Energy Resource Management (‘ERM’) group for selling power into the ISO market and to the Fuels group for fuel purchasing and billing reconciliation. This contract for a technical support agreement is awarded on a sole source basis, since GP is the developer and sole provider of EtaPRO software and, as such, is uniquely qualified to provide such service.  The intended term of this contract is five years, subject to the Trustees’ approval, which is hereby requested.  A five-year agreement will afford the Authority a 15% discount and protect against inflation by locking in 2011 pricing levels for the term of the contract.  The Authority will be invoiced annually, based on the number of EtaPRO systems in service at the time.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $140,250.

“The contract with Lucius Pitkin Inc. (‘Lucius Pitkin’) (Q10-4802; PO# TBA) would provide for failure analysis and metallurgical examination and testing services in support of the Authority’s plants/ projects/ facilities and transmission lines.  Technical services include providing all engineering, supervision, labor, materials and equipment required to sample, test and analyze metallic and other elements used in power plant equipment and components, in order to support failure analysis, material composition analysis, integrity of equipment element analysis and evaluation, chemical analysis of toxic materials and testing and verification of the Authority’s suppliers’ products to confirm that they meet their respective technical specifications.  The work will be performed at the Authority’s facilities, construction sites, manufacturer’s plants or in the consultant’s laboratory, as needed.   Bid documents were downloaded electronically from the Authority’s Procurement Web site by 31 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  The critical nature of the work requires a high level of competency, consistency and technical expertise in order to develop confidence in the results. Based on the qualifications, experience and size of its technical staff, ability to perform all requisite tasks, resources, location of the laboratory / office, accessibility from Authority sites and the White Plains Office, and reasonable pricing, staff recommends award of a contract to Lucius Pitkin, the most technically qualified bidder, which meets all the bid requirements and has provided satisfactory service under the existing contract for such work.  The other two bidders took numerous exceptions and indicated in their proposals that they were unable to perform some of the tests required in the RFP, which are important to the Authority’s day-to-day operations and are required for root cause analysis.  The new contract would become effective on or about January 1, 2011 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $550,000.

“The contract with OSIsoft, LLC (‘OSIsoft’) (OSIsoft Proposal No. 4100013138; PO# TBA) would provide for the continuation of maintenance of proprietary OSI PI ‘data historian’ software, which is integral to online thermal performance monitoring systems installed at the Authority’s Virtual Monitoring and Diagnostic Center (relocated from Poletti to the White Plains Office) and the 500 MW, Flynn and Small Clean Power Plants, with database replicating capability at the White Plains Office.  The software also enables the Authority to link data from these online systems to the MAXIMO maintenance management system.  It also provides information to support gas purchases for the Authority’s thermal plants.  This contract for Software Reliance Program services is awarded on a sole source basis, since OSI is the developer and sole provider of the PI software and, as such, is uniquely qualified to provide such service.  The intended term of this contract is five years, subject to the Trustees’ approval, which is hereby requested.  A five-year agreement will enable the Authority to lock in current pricing, avoiding potential price increases over the next five years.  The Authority will be invoiced annually, based on the number of PI systems or components in service at the time.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $210,218.

“The contract with SJB Services, Inc. (‘SJB’) (Q10-4845; PO# TBA) would provide for on-call laboratory testing and inspection services of various materials including, but not limited to, concrete samples, metals, surface coatings (paint), welds and soil for the Niagara Power Project, on an ‘as needed’ basis.  The independent testing laboratory would perform such verification testing or inspection services related to work being performed at the Project, to ensure that a material conforms to all requisite standards and requirements. Bid documents were downloaded electronically from the Authority’s Procurement Web site by 109 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated; all four were deemed technically qualified.  Staff also performed a cost analysis, which compared the unit pricing submitted by the bidders for each of 91 line items and then calculated the extended price for those line items considered most likely to be used for planned work at the Niagara Project based on projected and  historical usage of such services.  Based on the foregoing, as well as the firm’s qualifications, experience, resources and competitive pricing, staff recommends award of a contract to SJB, the lowest-priced evaluated bidder, which is qualified to perform such services and meets the bid requirements.  The contract would become effective on or about January 1, 2011 for an intended term of up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $400,000.

FISCAL INFORMATION

“Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2011 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  Payment will be made from the Operating Fund.

 

“Funds required to support contract services for capital projects have been included as part of the approved capital expenditures for those projects and will be disbursed from the Capital Fund in accordance with the project’s Capital Expenditure Authorization Request.  Payment for certain contracts in support of Energy Services Programs will be made from the Energy Conservation Effectuation and Construction Fund.

 

RECOMMENDATION

“The Vice President – Project Management, the Vice President – Engineering, the Vice President – Environment, Health and Safety, the Vice President – Energy Services, the Vice President – Procurement, the Vice President and Chief Information Officer, the Director – Engineering and Design (ES&T), the Director – Fuel Planning and Operations, the Director – Asset & Maintenance Management, the Director – Communications and Marketing Services, the Manager – Risk Reporting, the Regional Manager – Northern New York, the Regional Manager – Central New York, the Regional Manager – Western New York and the Regional Manager – Southeastern New York recommend that the Trustees approve the award of multiyear procurement contracts to the companies listed in Exhibit ‘3f-A,’ for the purposes and in the amounts discussed within the item and/or listed in the Exhibit.

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

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

 

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, the award and funding of the multiyear procurement services and other contracts set forth in Exhibit “3f-A,” attached hereto, are hereby approved for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

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


 

4.                   Reports

 

a.                   Report of the President and Chief Executive Officer

 

President Kessel thanked the Board members and staff for their cooperation with the change of meeting location due to inclement weather.

100 MW Solar Initiative

President Kessel said that the 100 MW solar initiative, the largest solar initiative in the history of the state, is progressing on track; discussions with prospective developers are continuing and staff will submit a recommendation to the Board for approval of the projects for this initiative by the first quarter of next year.  The completion goal for this initiative is 2014.

Great Lakes Off-Shore Wind Project

                President Kessel said that the Authority is in the final stage of discussions with the developers regarding the Great Lakes Off-Shore Wind project and that staff will submit a recommendation to the Board for approval of the winning developer(s) the first quarter of next year.  The completion goal for this project is 2015 or 2016.

                Long Island / NYC Off- Shore Wind Project

                President Kessel said that staff is continuing discussions with Long Island Power Authority (“LIPA”), Con Edison and the City of New York regarding the Long Island/New York City Off-Shore Wind project.   He said that the project is not ready for formal solicitation and he will keep the Board informed on its progress.

                Hydro Quebec

                President Kessel reported that the feasibility study for the new transmission line from Canada through Massena has been completed.  He will provide further report on this to the Board early next year. 

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

·         Moog Tour (10/26)

·         Massena:  trip to Florelle Tissue News Conference; Watertown Daily Times Editorial Board meeting (10/28)

·         Long Island Press conference with Steve Isreas re: solar projects at firehouses, Connection Day panelist (10/29)

·         AERTC Press Conference and lunch speech; TDI meeting (11/8)

·         AERTC Governor’s lunch speech – HQ/LIPA/NYPA meeting (11/9)

·         Buffalo:  Lewiston Mayor Collesano; Reservation State Park groundbreaking; Tour of Genesee County IDA/STAMP site (11/10)

·         NYC Peak Load Management luncheon (11/17)

·         Vision Long Island panel (11/19)

·         Toronto forum; speaker at Global Cities Conference; meeting with Pierre Gadonneix, Chair, World Energy Council; interview on BNN’s SqueezePlay (11/22)

·         Offshore wind meeting

·         AERTC Building tour (12/2)

·         AERTC plant tour; meeting with Citygroup (12/3)

·         Buffalo News Editorial Board; ECHDC (12/7)

·         Meeting with Newsday’s new publisher

 

In response to a question from Trustee Mark O’Luck, President Kessel said that the lawsuit against Verizon with regards to the power allocation will be argued in the courts on Wednesday, December 22, 2010.

 


 

b.                Report of the Chief Operating Officer

 

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


 

c.                    Report of the Chief Financial Officer

 

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


 

5.                   Moses-Adirondack and Moses-Willis-Plattsburgh  Structure Replacements – Capital Expenditure Authorization Request

                              

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to authorize a Capital Expenditure Authorization Request (‘CEAR’) in the amount of $4.2 million for the replacement of approximately one hundred 230 kV H-frame wood-pole structures on the Moses-Adirondack (‘M-A’) 1 & 2 Lines and the Moses-Willis-Plattsburgh (‘M-W-P’) 1 & 2 Lines over the next five years.

 

BACKGROUND

 

                “In accordance with the Authority’s Expenditure Authorization Procedures, Trustees’ approval is required for capital expenditures in excess of $3 million.

               

“Wood-pole structures on the M-A 1 & 2 Lines and the M-W-P 1 & 2 Lines are approaching the end of their useful life.

 

The M-A transmission line comprises of two 230 kV lines originating at the Moses Switchyard (St. Lawrence) and terminating 85 miles from the Authority’s Adirondack Substation (170 circuit miles).  The transmission line, as it now exists, was constructed in three segments.  The original wood-pole line was energized in 1942 at 115 kV.  Following the addition of the Adirondack Substation, the line was energized at 230 kV in 1958.

 

                “The M-W-P transmission line comprises of two 230 kV transmission lines operating between the Moses Switchyard (St. Lawrence) and its substations at Willis (near Malone) and Plattsburgh.  This represents a total distance of approximately 75 miles, or 150 circuit miles.  The first circuit was put into service in the late 1950s and the second circuit was put into service in the late 1970s, concurrent with the construction of the Willis Substation.  The transmission lines are supported on wood poles and are centered on a 200-foot-wide right-of-way.  In 2008, a wind farm was constructed by Noble Environmental Power, LLC, adding an additional 200 MW to the lines at the Ryan and Duley Substations.

 

“This CEAR is for the replacement of approximately 100 deteriorated wood-pole structures which will be based on field inspections to be carried out for a period from 2011 to 2015.  

 

DISCUSSION

 

“The M-A transmission lines are an integral component of the New York Independent System Operator’s (‘NYISO’) System Restoration Plan (‘SRP’) and both the M-A and M-W-P transmission lines are critical outlets for renewable energy.  The conductors that comprise these transmission lines are secured using wood-pole structures, many of which are approaching the end of their useful life.

 

“Inspections and risk assessment of the Authority’s transmission assets are performed on a routine basis in order to protect the integrity and reliability of the system.  Given the age and criticality of the M-A and M-W-P transmission lines, these inspections have been more frequent and have revealed degradation of certain H-frame wood-pole structures.

 

“Based on the inspections performed, staff anticipates replacing approximately 20 structures annually.  This CEAR is for a five-year period from 2011 to 2015.  The result of any Transmission Initiatives may affect the necessity to continue replacement of the wood-pole structures on the M-A transmission lines.

 

               
 

“The total project cost over the five-year period is estimated at $4.2 million, as follows:

 

                                Procurement                                                         $   720,000

 

                                Construction/Installation                                   $3,280,000

 

                                Authority Indirect Expenses                              $   200,000

                               

                                                                                TOTAL                  $4,200,000

 

FISCAL INFORMATION

 

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

 

RECOMMENDATION

 

“The Senior Vice President – Power Supply Support Services, the Senior Vice President – Transmission, the Vice President – Project Management and the Vice President – Procurement recommend that the Trustees authorize capital expenditures of $4.2 million for the replacement of 230kV wood-pole structures on the Moses-Adirondack 1 & 2 Lines and the Moses-Willis-Plattsburgh 1 & 2 Lines.

 

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

 

                Mr. Steve DeCarlo provided highlights of staff’s recommendations to the Trustees.   In response to a question from Vice Chairman Foster, Mr. DeCarlo said that although other materials are available, the frames would be replaced with wood-pole structures.  He said that since staff is unsure of the future of the transmission initiative and its impact on the Moses-Adirondack transmission lines at the present time, staff has decided to replace the structures with wood-poles as is presently used. 

                In response to a question from Trustee Eugene Nicandri, Mr. DeCarlo said that 20 structures would be replaced per year and that Authority staff would be performing the work.  In response to further questions from Trustee Nicandri, Mr. DeCarlo said that the transmission initiative would not have an impact on the wood-pole structure replacements and that if the Authority proceeds with a transmission initiative, staff would minimize the number of structures being replaced on the Moses-Adirondack line.

                In response to a question from Trustee Mark O’Luck, President Kessel said that most of the wood-pole structures, which are 50 – 60 years old, will have to be replaced.


 

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

 

RESOLVED, That expenditures are hereby approved in accordance with the Authority’s Expenditure Authorization Procedures, for capital expenditures in the amount of $4.2 million for the replacement of 230 kV wood-pole structures on the Moses-Adirondack (‘M-A’) 1 & 2 Lines and the Moses-Willis-Plattsburgh (‘M-W-P’) 1 & 2 Lines, as recommended in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 


 

6.                   Blenheim-Gilboa Pumped Storage Project Relicensing – Capital Expenditure Authorization

               

The President and Chief Executive Officer submitted the following report:

               

SUMMARY

 

                “The Trustees are requested to authorize $8.7 million in capital expenditures for the first phase of the relicensing of the Blenheim-Gilboa Pumped Storage Project (‘B-G Project’).  The anticipated tasks related to the first phase involve: (1) development and implementation of a comprehensive information management system; (2) compilation of available information; (3) collection of additional information; (4) identification of, and informal consultation with potential stakeholders and (5) preparation of the documents necessary to begin the formal relicensing of the B-G Project in 2014.  Annual expenditure of these funds will be subject to Trustees’ approval of the annual budget.

 

BACKGROUND

 

“In accordance with the Authority’s Expenditure Authorization Procedures, Trustees’ approval is required for capital expenditures in excess of $3 million.

“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 Project (‘St. Lawrence’) and the Niagara Power Project (‘Niagara’), 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 of its large hydroelectric projects through the long and complicated FERC process.  Relicensing of the St. Lawrence and Niagara Projects were successfully completed in 2003 and 2007, respectively.  The relicensing process required seven and nine years for the Niagara and St. Lawrence Projects, respectively.

 

DISCUSSION

 

“As with the St. Lawrence and Niagara projects, it is envisioned that there will be two phases of work for obtaining a new license.  The first phase involves preparation for relicensing and the second phase is the formal FERC relicensing process.  Preparation for relicensing will begin in 2010 and end in 2013 when the necessary relicensing documents to begin the formal process have been prepared.  This initial phase will involve development and implementation of a comprehensive information management system; compilation of available information; studies to collect additional information; identification of, and informal consultation with potential stakeholders and preparation of the Preliminary Application Document (‘PAD’). 

 

“The formal relicensing process will begin in 2014 with the submittal of the Notice of Intent and PAD to FERC.  Subsequently, there will be a formal consultation process with stakeholders; additional studies will be performed, as needed, and settlement discussions will take place.  Following this work, an application for a new license will be prepared and submitted to FERC by April 2017; FERC has two years during which to act on the application.  

 

                “By preparing for the relicensing now, the Authority can fully develop the issues and perform the appropriate work at a pace and level of effort that optimizes the use of its resources.  It is expected that the Authority will be able to develop persuasive arguments regarding contentious issues and will have increased flexibility to address unanticipated developments.  In general, the better informed the Authority is concerning the crucial issues, the greater the probability its positions will prevail with FERC.  Also, the Authority may be able to resolve or eliminate some issues before the formal process begins in 2014.  The narrowing of issues to be considered during the relicensing process will allow the Authority to concentrate its efforts and resources during formal consultation rather than having to address all issues at that time.  With an earlier and more thorough understanding of the issues and potential solutions, the Authority will be in a better position to manage the costs and results of the relicensing process, while appropriately addressing the interest of stakeholders. 

 

FISCAL INFORMATION

 

                “To support the first phase of relicensing activities for the B-G Project the Relicensing and Implementation Division requests authorization of capital expenditures of $8.7 million.  It is anticipated that these funds will cover expenses through the end of 2013.  Funds for 2011 were included in the 2011 Capital Budget; funds for 2012 and 2013 will be included in future budget submittals.  Payments will be made from the Authority’s Capital Fund.

 

RECOMMENDATION

 

                “The Senior Vice President – Corporate Planning and Finance, the Vice President – Project Development, Licensing and Compliance and the Director – Relicensing and Implementation recommend that the Trustees authorize the expenditure of $8.7 million for the first phase of the relicensing of the Blenheim-Gilboa Pumped Storage Project. 

 

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

 

                Mr. John Suloway presented highlights of staff’s recommendations to the Trustees.  In response to questions from Vice Chairman Foster, Mr. Suloway said that the main product of the planning phase of relicensing is the generation of the pre-application document.  This phase will also include working with stakeholders to identify their issues, gathering information and conducting several studies, e.g. fisheries study, to start the licensing process.

                In response to questions from Trustee Nicandri, Mr. Suloway said that information gathering is a part of the initial relicensing process to complete the pre-application document and that the budget is in line with other Authority relicensing projects.

                In response to a question from Trustee O’Luck, Mr. Suloway said that staff is recommending that the Trustees approve the overall budget for the first phase of the relicensing process at this meeting; for the subsequent years, staff will recommend that the Board approve the annual expenses for that year.  In response to further question from Trustee O’Luck, Mr. Suloway said that staff estimates the total cost of the relicensing process to be $40 million – $8.7 million for the first phase and approximately $31 million for the second phase.

                President Kessel added that information gathering is required for the relicensing of the project; he will monitor the expenditures with the intent to keep it at a minimum.  He will also be visiting with stakeholders and local officials to discuss their concerns.

 

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

 

RESOLVED, That capital expenditures in the amount of $8.7 million for the purpose of conducting the first phase of the relicensing of the Blenheim-Gilboa Pumped Storage Project are hereby approved in accordance with the Authority’s Expenditure Authorization Procedures, as recommended in the attached memorandum 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.

 

  
 

7.                2011 Revolving Credit Agreement

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve a $550 million Revolving Credit Agreement (‘RCA’) with a syndicate of five banks led by JPMorgan Chase Bank, N.A. (‘JPMorgan’) for an initial term extending to no later than February 1, 2014, to replace an expiring agreement that provides liquidity support for the Authority’s Series 1, 2 and 3 Commercial Paper Notes, and to authorize an extension of such RCA not to exceed February 1, 2015.

 

BACKGROUND

 

                “The Authority currently has $508 million of Series 1, 2 and 3 Commercial Paper Notes outstanding supporting numerous projects and programs including the Energy Services program.   In accordance with the ‘Resolution Authorizing Commercial Paper Notes’ adopted by the Authority on June 28, 1994, as amended, supplemented, and restated, the Authority is required to maintain in full force and effect a Credit Agreement while the Notes are outstanding.  The current RCA will expire on January 31, 2011. 

 

DISCUSSION

 

                “On November 4, 2010 the Authority invited 14 banks having minimum ‘A’ or comparable long-term credit ratings from Moody’s Investors Service (‘Moody’s’), Standard & Poor’s (‘S&P’), and Fitch Ratings (‘Fitch’) to submit proposals for a $550 million liquidity facility.  On or before November 30, 2010 the Authority received six proposals: one from JPMorgan on behalf of a syndicate of five banks for the entire $550 million facility; and others for lesser amounts from Bank of America, N.A., Barclay’s Bank PLC, Citibank, N.A., US Bank and Morgan Stanley Bank, N.A. responding on their own behalf. 

 

“The review of the six proposals considered: 1) pricing to provide commitments and borrowings, 2) credit quality of the banks, 3) trading differential on the Commercial Paper Notes based on the bank(s) providing the liquidity, and 4) investors’ capacity for holding additional paper supported by the bank(s).  Based on this review, staff is recommending the award of the liquidity facility to the JPMorgan-led syndicate.  On an overall basis, the JPMorgan syndicate proposal provided favorable all-in price and terms, contained banks with strong credit ratings and is expected to give the Authority broad and liquid access to the markets. 

 

“Bank commitments and current ratings from Moody’s, S&P, and Fitch are as follows:

 

                                                                                                Commitment                        Current Rating                                                                                    

JPMorgan Chase Bank, N.A                                             $157,500,000                       Aa1 / AA- / AA-  

The Bank of Nova Scotia                                                  $157,500,000                       Aa1 / AA- / AA-

State Street Bank and Trust Company                           $100,000,000                       Aa2 / AA- / A+

Wells Fargo Bank, N.A.                                                      $  85,000,000                       Aa2 / AA / AA-

The Bank of New York Mellon                                        $  50,000,000                       Aaa / AA / AA-

                                                                Total                      $550,000,000

 

 “The JPMorgan-led syndicate would provide the credit facility for an annual commitment fee payable on the unused amount of the facility and annual administrative fees totaling approximately $3.6 million.  In the event the Authority has to draw on the line, the interest rate (the ‘Base Rate’) would be the higher of the JPMorgan Prime Rate plus 1.5%, the Federal Funds rate plus 2.0%, or 7.5% for the first 180 days.  After 180 days, the loan would convert to a two year term loan at the Base Rate plus 1.0%.

 

“JPMorgan’s legal fees for execution of the Revolving Credit Agreement are not expected to exceed $33,000. 

 

FISCAL INFORMATION

 

“The annual cost of the proposed line along with the Administrative Agent and legal fees will be paid from the Operating Fund.  A portion of fees commensurate with the percentage of Commercial Paper Notes issued in support of the Energy Services program will be recovered from Energy Services program participants.

RECOMMENDATION

 

“The Treasurer recommends that the Trustees:  (1) approve the execution of the 2011 Revolving Credit Agreement with the bank syndicate led by JPMorgan Chase Bank, N.A. with a borrowing capacity not to exceed $550 million and for an initial term not to exceed February 1, 2014, and (2) authorize an extension of such agreement not to exceed February 1, 2015.

 

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

               

                “Mr. Brian McElroy presented highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Patrick Curley, Mr. McElroy said that there is no collateral associated with the revolving credit agreement.  The agreement is a backing for the Authority’s commercial note.

                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 the approval of the form thereof by the Executive Vice President and General Counsel, on behalf of the Authority, of the 2011 Revolving Credit Agreement between the Authority and JPMorgan Chase Bank, N.A. as Administrative Agent and the banks listed in the foregoing report of the President and Chief Executive Officer, with such Agreement having such terms and conditions as the executing officer deems necessary or advisable, such execution to be conclusive evidence of such determinations, provided that such Agreement shall have an initial term not exceeding February 1, 2014 and shall not exceed $550 million in borrowing capacity; and be it further

 

RESOLVED, That the Executive Vice President and Chief Financial Officer, the Senior Vice President – Corporate Planning and Finance or the Treasurer are, and each hereby is, authorized to execute an extension of the 2011 Revolving Credit Agreement, provided that such extension shall not in the aggregate extend the Agreement beyond February 1, 2015; 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.

 

 

8.               2011 Operating Budget and Operation and Maintenance, Capital and Energy Services Budgets

              

          The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve the 2011 Operating Budget, Operations and Maintenance Budget (‘O&M’), Capital Budget and Energy Services Budget for the Authority.  The Operating Budget sets forth the expected revenues and expenses of the Authority (see attached Exhibit ‘8-A’) and includes the recommended 2011 O&M Budget, the Capital Budget and the Energy Services Budget (see Attached Exhibits ‘8-B,’ ‘8-C’ and ‘8-D,’ respectively) in the following amounts:

                                                                                                                2011 Budget

                                                                                                                 ($ million)

                                                O&M                                                         $ 312.3              

                                                Capital                                                      $ 177.8

                                                Energy Services                                       $ 150.3

 

“For reference, a variance analysis comparing the current 2010 Forecast to the 2011 Operating Budget is detailed in Exhibit ‘8-A.’

 

BACKGROUND

 

                “The Authority is committed to providing clean, low-cost and reliable energy consistent with its commitment to the environment and safety, while promoting economic development and job development, energy efficiency, renewables and innovation, for the benefit of its customers and all New Yorkers.  The 2011 budgets are intended to provide the Authority’s operating facilities and support organizations with the resources needed to meet this overall mission and the Authority’s strategic objectives.

 

                “In approving the 2011 O&M, Capital and Energy Services budgets, the Trustees will be authorizing spending for 2011 operations, spending for capital projects and general plant purchases of $750,000 or less and the addition of 20 new succession planning positions.  During the year, the President and Chief Executive Officer may authorize an additional 1% in the O&M budget, up to 15 new positions, capital projects of $3 million or less, or an increase in spending of no more than $1 million to a capital project previously approved by the Trustees.   All other authorizations must be approved by the Trustees.

 

DISCUSSION

 

O&M Budget

 

“The base O&M budget of $312.3 million is unchanged from the 2010 budget with increases in pension and medical benefits, new succession planning positions and an additional scheduled maintenance outage offset by reductions throughout the organization.

 

“Payroll costs, which include salaries, overtime, and fringe benefits, account for $181.1 million, or approximately 58% of the budget.  This represents an increase of $5.5 million over the 2010 budget of $175.6 million.  The major factor contributing to the increase is the cost of benefits, mostly associated with greater pension contributions.  The addition of 20 new succession planning positions is essentially offset by elimination of positions during 2010 and reductions in funding for temporary and seasonal personnel.  The offsetting decrease of $5.5 million in non-payroll expenses for 2011 reflects reductions to routine expenditures, non-recurring work at the facilities and the R&D program.

 

“The Power Supply 2011 O&M budget is $1.8 million below the 2010 level primarily due to a reduction of non-recurring projects at the facilities.  These decreased costs are mostly offset by an increase in scheduled plant outages.  During 2011, the outage budget of $15.1 million includes $8.0 million for combustion turbine inspections and related work at the 500MW plant, and $7.1 million for a combustion turbine generator overhaul at Flynn.  Major non-recurring projects include Heat Recovery Steam Generator (HRSG) repairs at Flynn ($1.4 million), Niagara’s Unit #2 Standardization ($1.4 million), RMNPP Headgate Refurbishment ($1.2 million) and CTG Air Duct Inlet Duct Rework at Flynn ($1.0 million).

 

“The Headquarters support and Research & Development budgets total $1.8 million above 2010 level due to increased fringe benefits, implementation of a new Energy Commodity Risk Software System and an increase in Energy Efficiency studies and analyses.

 

“The Astoria Energy budget totals $14.9 million and represents the contractual O&M costs for the plant, located in New York City, which is expected to be in commercial operations in June 2011.  These costs will be recovered from NYPA’s New York City Governmental customers via a long term contract.

 

Capital Budget

 

“The 2011 Capital budget totals $177.8 million, a decrease of $18.8 million from 2010. 

 

“Significant capital projects for 2011 include the St. Lawrence Life Extension and Modernization (‘LEM’) ($24.2 million), the Robert Moses Restacking ($16.6 million), Niagara/St. Lawrence Relicensing Implementation ($14.6 million), Lewiston Pump Generating Plant LEM ($13.6 million), and the Robert Moses Power Project Unit Standardization ($9.2 million).

 

                “The Capital budget includes $14.0 million of minor additions and general plant purchases that will be authorized by approval of this budget.

 

Energy Services Budget

 

“The Energy Conservation/Renewable projects total $150.3 million, an increase of $20.0 million over the 2010 budget. These expenditures will be subsequently recovered over time from the benefitted customers. The budget includes increased funding for energy efficiency projects for NYPA customers and other eligible entities as the Authority strives to support Governor Paterson’s 45x15 plan, which calls for New York State to meet 45 percent of its electricity needs through improved energy efficiency and clean, renewable energy by 2015.

 

Operating Budget

 

                “The 2011 Operating Budget sets forth the expected revenues and expenses of the Authority on a Project/Market Area basis and serves as the basis for the Authority’s financial reporting during the year.  Expected revenues received from customers are based on contracts and tariffs that are approved by the Trustees.  Market-based sales of any surplus energy from the Authority’s generating facilities or purchases made on behalf of customers (except for those made through previously approved purchased power agreements) are assumed to be transacted at the market clearing price in the wholesale market. Projected expenses for O&M are detailed above.  The Other Expenses category largely reflects various accruals (e.g., Other Post-Employment Benefit prior service obligations) and other miscellaneous expenses for which Trustee approval is sought on a case-by-case basis (e.g., Power for Jobs Rebates, North Country Power Discount Program, etc.).  Also reflected in the 2011 Operating Budget are continuing contributions to New York State of $65 million, which are the same level as the Legislature authorized for State Fiscal Year 2010-2011.  Such contribution will only be made if authorized by the Legislature and upon a determination (not requested at this time) by the Trustees that the payment would be feasible and advisable at the time of such disbursement.

   

FISCAL INFORMATION

 

“Payment of O&M expenses will be made from the Operating Fund.  Payment for Capital and Energy Services expenditures will be made from the Capital Fund and the Energy Conservation Construction and Effectuation Fund, respectively.  Monies of up to $116.8 million from the Operating Fund will be transferred to the Capital Fund for capital expenditures, provided that at the time of withdrawal of such amount or portions of such amount, the monies withdrawn are not then needed for any of the purposes specified in Sections 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.  The 2011 Operating Budget shows adequate earnings levels so that the Authority may maintain its financial goals for cash flow and reserve requirements.

 

RECOMMENDATION

 

                “The Vice President – Financial Planning and Budgets and the Director - Budgets recommend approval of the 2011 Operation and Maintenance, Capital and Energy Services budgets and the Operating Budget as discussed herein.

 

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

 

                Before the presentation of staff’s recommendations, President Kessel said that he wanted provide a synopsis of the Budget to the Board.  He briefly outlined the budget and said that it was important to note that the Authority’s O&M budget is flat as compared to last year’s.  He added that even though the budget is the same amount that is currently budgeted for fiscal year 2010, in preparing the budget, staff did not eliminate any critical projects and took into consideration the Authority’s goal to maintain and operate its facilities at a high level of efficiency and continue its major capital improvements, including the Life Extension and Modernization programs.  President Kessel will be working closely with Ms. McCarthy and Messrs. Quiniones, Russak and Hopkins to manage the budget.  President Kessel said that he highly recommend that the Board approved the Budget.

                President Kessel then asked Mr. Quiniones to address the Board.  Mr. Quiniones said that he had several discussions with President Kessel regarding the budget.  He said that the Authority would continue to invest in its infrastructure and he would also be monitoring the budget closely.  He opined that if the Authority continues to be creative and innovative, work smarter and make adjustments, as necessary, it will be able to manage its assets safely and reliably.  

                Mr. Russak presented highlights of staff’s recommendations to the Trustees.  Trustee Nicandri said that although rate increases were deferred because of the state of the economy, the proposed budget would not impact the Authority’s ability to maintain its current level of investment and capital projects and, therefore, he was in favor of voting for it.  Trustee O’Luck noted that the Authority will be key to the state’s coming out of the economic downturn.  He will support staff’s recommendation.  Trustee Curley said that he supports the budget.  Chairman Townsend said that they also support staff’s recommendation.   

                On behalf of the Trustees, Chairman Townsend wished staff happy holidays.

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

 

               RESOLVED, That the 2011 Operating Budget, specifically including the 2011 budgets for Operation and Maintenance, Capital and Energy Services expenditures, as discussed in the foregoing report of the President and Chief Executive Officer, are hereby approved; and be it further

              

RESOLVED, That up to $116.8 million of monies in the Operating Fund are hereby authorized to be withdrawn from such Fund and deposited in the Capital Fund, provided that at the time of withdrawal of such amount or portions of such amount, the monies withdrawn are not then needed for any of the purposes specified in Sections 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations as amended and supplemented, with the satisfaction of such condition being evidenced by a certificate of the Treasurer or the Deputy Treasurer; and be it further

 

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

 


 

 

2011 Operating Budget                   Exhibit “8-A”                                      ($ Millions)                                    December 13, 2010                                                                Page 1 of 3

 

 

Operating Budget

 

 

2011

Operating Revenues:

 

 

 

Customer Revenues

2,068.7

 

 

NYISO Market Revenues

620.9

 

 Total Operating Revenues

2,689.6

 

 

 

 

 

Operating Expenses:

 

 

 

 Purchased Power

923.1

 

 

 Fuel oil and gas

295.6

 

 

 Wheeling Expenses

543.4

 

 

 O&M Expenses

316.3

 

 

 Other Expenses

135.5

 

 

 Depreciation and Amortization

194.9

 

Total Operating Expenses

2,408.7

 

 

 

 

 

NET OPERATING REVENUES

280.9

 

 

 

 

 

Other Income:

 

 

 

 Investment Income

32.4

 

 

 Other Income

88.4

 

Total Other Income

120.9

 

 

 

 

 

Non-Operating Expenses

 

 

 

 Interest & Other Expenses

157.5

 

 

 Contributions to State

65.0

 

Total Non-Operating Expense

222.5

 

 

 

 

 

NET INCOME

179.3

 


 

2010 – 2011 Plan Variance              Exhibit “8-A”                                              ($ Millions)                       December 13, 2010                                                             Page 2 of 3

 

 

 

 

 

 

Original Budget

Forecast

Budget

2010 Forecast
vs. 2011 Budget

 

2010

2010

2011

Variance

Operating Revenues:

 

 

 

 

     Customer Revenues

$2,062.1

$1,963.2

$2,068.7

$105.5

     NYISO Market Revenues

$749.0

$592.6

$620.9

$28.3

 Total Operating Revenues

$2,811.1

$2,555.8

$2,689.6

$133.8

 

 

 

 

 

Operating Expenses:

 

 

 

 

      Purchased Power

$955.7

$934.3

$923.1

($11.2)

      Fuel oil and gas

$340.8

$221.1

$295.6

$74.5

      Wheeling Expenses

$519.9

$522.1

$543.4

$21.3

      O&M Expenses

$301.5

$295.6

$316.3

$20.7

      Other Expenses

$141.7

$132.0

$135.5

$3.5

      Depreciation and Amortization

$160.3

$164.0

$194.9

$30.9

Total Operating Expenses

$2,419.9

$2,269.1

$2,408.7

$139.6

 

 

 

 

 

NET OPERATING REVENUES

$391.2

$286.7

$280.9

($5.8)

 

 

 

 

 

Other Income:

 

 

 

 

      Investment Income

$34.5

$51.1

$32.4

($18.7)

      Other Income

$101.7

$88.9

$88.4

($0.5)

Total Other Income

$136.2

$140.0

$120.9

($19.1)

 

 

 

 

 

Non-Operating Expenses

 

 

 

 

      Interest & Other Expenses

$112.3

$99.1

$157.5

$58.4

      Contributions to State

$107.0

$147.0

$65.0

($82.0)

Total Non-Operating Expense

$219.3

$246.1

$222.5

($23.6)

 

 

 

 

 

NET INCOME

$308.1

$180.6

$179.3

($1.3)


 


 

                        Exhibit “8-B”

December 13, 2010

Page 1 of 6

O&M

2011 BUDGET

($ THOUSANDS)

 

 

2010

2011

INCREASE /

(DECREASE)

 

Budget

Budget

$'s

%

EXECUTIVE OFFICE

 

 

 

 

Executive

3,094

3,062

(31)

(1.0%)

Law

7,928

8,000

71

0.9%

Internal Audit

1,747

1,936

189

10.8%

Public & Governmental Affairs

423

225

(198)

(46.8%)

Public, Governmental & Regulatory Affairs

1,713

1,605

(108)

(6.3%)

Corporate Communications

3,853

4,222

369

9.6%

Human Resources

5,519

5,224

(295)

0.0%

Office Total

24,277

24,274

(2)

(0.0%)

 

 

 

 

 

BUSINESS SERVICES

 

 

 

 

EVP Business Services

572

762

189

33.1%

Controller

4,673

4,960

287

6.2%

Finance

4,987

4,556

(431)

(8.6%)

Treasury

1,418

1,321

(97)

(6.8%)

Energy Risk Assessment & Control

62

351

290

470.6%

Office Total

11,712

11,950

239

2.0%

 

 

 

 

 

ENTERPRISE SHARED SERVICES

 

 

 

 

VP Enterprise Shared Services

0

230

230

N/A 

Procurement

2,600

2,785

185

7.1%

Real Estate

521

442

(79)

(15.2%)

Information Technology

19,171

21,148

1,977

10.3%

Office Total

22,292

24,605

2,313

10.4%

 

 

 

 

 

CORPORATE SUPPORT SERVICES

 

 

 

 

SVP Corporate Support Services

505

422

(83)

(16.4%)

Corporate Support

8,028

7,864

(164)

(2.0%)

Fleet Management

1,167

915

(252)

(21.6%)

Office Total

9,700

9,202

(498)

(5.1%)


 

 

                        Exhibit “8-B”

December 13, 2010

Page 2 of 6

 

 

 

 

2010 Budget

 

2011 Budget

INCREASE / (DECREASE)

$’S                %

ENERGY MARKETING &

BUSINESS DEVELOPMENT

 

 

 

EVP EM & BD

209

0

(209)

(100.0%)

Energy Services

5,083

5,969

886

17.4%

Marketing

3,299

4,022

723

21.9%

Power Resource Planning & Acq.

2,058

1,860

(199)

(9.7%)

Office Total

10,650

11,851

1,201

11.3%

 

 

 

 

 

ENERGY RESOURCE MANAGEMENT

1,409

1,357

(52)

(3.7%)

 

 

 

 

 

POWER SUPPLY

 

 

 

 

Operations Shared Services

16,446

18,855

2,409

14.6%

Clark

14,978

12,638

(2,339)

(15.6%)

Blenheim-Gilboa

18,993

17,584

(1,409)

(7.4%)

Poletti

6,000

1,577

(4,423)

(73.7%)

500MW

21,968

27,204

5,237

23.8%

Flynn

7,919

15,770

7,851

99.1%

SENY

5,753

5,723

(30)

(0.5%)

SCPP

14,281

12,513

(1,768)

(12.4%)

Niagara

48,829

50,800

1,971

4.0%

St. Lawrence

27,563

20,962

(6,601)

(23.9%)

Small Hydros

4,729

5,133

404

8.5%

Transmission Lines

37,214

34,188

(3,026)

(8.1%)

Office Total

224,672

222,948

(1,724)

(0.8%)

 

 

 

 

 

RESEARCH & DEVELOPMENT

7,571

6,095

(1,476)

(19.5%)

 

 

 

 

 

TOTAL NYPA

312,282

312,282

(0)

(0.0%)

 

 


 


 

EXHIBIT “8-C”

December 13, 2010

Page 1 of 3

CAPITAL

2011 BUDGET

($ THOUSANDS)

 LINK Excel.Sheet.8 "\\\\wpofp003a\\financial planning$\\Financial Planning\\State Comptroller\\Operating Budget Book- Blue Book\\2010 - 2014\\CAPITAL BUDGET PAGE FOR TRUSTEE ITEM.xlsx" Sheet1!R2C3:R24C6 \a \f 4 \h

 

 

 

2010 CAPITAL BUDGET

2011 CAPITAL BUDGET

INCREASE /

(DECREASE)

          $’s                     %

TRANSMISSION INITIATIVE

9,716

2,484

(7,232)

-74.44%

 

 

 

 

 

 

POWER SUPPLY

 

 

 

 

 

 

 

 

 

 

 

TRANSMISSION

21,677

24,147

2,470

11.39%

 

 

 

 

 

 

 

NIAGARA*

62,126

62,818

692

1.11%

 

 

 

 

 

 

 

ST. LAWRENCE*

44,477

40,702

(3,775)

-8.49%

 

 

 

 

 

 

 

BLENHEIM- GILBOA

23,386

11,367

(12,019)

-51.39%

 

 

 

 

 

 

 

500 MW

7,143

7,350

207

2.90%

 

 

 

 

 

 

 

SCPP

3,195

228

(2,967)

-92.88%

 

 

 

 

 

 

 

FLYNN

5,026

5,378

352

7.00%

 

 

 

 

 

 

 

SMALL HYDRO PLANTS

254

7,807

7,553

>100%

 

 

 

 

 

 

 

SUB-TOTAL

176,999

162,280

(14,718)

-8.32%

 

 

 

 

 

 

 

 

 

 

 

 

 

HEADQUARTERS

19,650

15,551

(4,099)

-20.86%

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CAPITAL

196,648

177,831

(18,817)

-9.57%

 

 

 

 

 

 

*  Includes Relicensing and Compliance Implementation Expense


 


 

 

 

 

EXHIBIT “8-D”

December 13, 2010

Page 1 of 4

ENERGY SERVICES

2011 BUDGET

($ THOUSANDS)

 

 

2010

2011

     INCREASE /

     (DECREASE)

            $’S                    %

LONG TERM SENY GOVERNMENTAL CUSTOMERS PROGRAM

83,292

98,306

15,015

18.03%

OTHER NYPA FUNDED PROGRAMS

41,134

46,057

4,922

 

11.97%

POCR FUNDED PROGRAMS

2,494

2,499

6

 

   0.24%

LOWER MANHATTAN ENERGY  

INITIATIVE

3,300

3,420.0

120.0

 

 

  3.64%

ADMINISTRATION

70

0

(70)

-100.00%

TOTAL ENERGY SERVICES

130,290

150,283

 

19,993

 

15.35%

 

 


 


 

9.                   Filing of the 2011-2014 Four-Year Financial Plan Pursuant to Regulations of the Office of the State Comptroller

                           

                 The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“In accordance with regulations of the Office of the State Comptroller (‘OSC’), the Trustees are requested to approve the 2011-2014 Four-Year Financial Plan (‘Four-Year Financial Plan’) and authorize: (i) submitting the approved Four-Year Financial Plan to OSC, (ii) posting the approved Four-Year Financial Plan on the Authority’s website and (iii) making the approved Four-Year Financial Plan available for public inspection at not less than five convenient public places throughout New York State.

 

BACKGROUND

 

                            “OSC implemented regulations in March 2006 addressing the preparation of annual budgets and four-year financial plans by ‘covered’ public authorities, including the Authority.  (See 2 NYCRR Part 203 (‘Part 203’)).  These regulations establish various procedural and substantive requirements, discussed below, relating to the budgets and financial plans of public authorities.

 

DISCUSSION

 

“Part 203 sets forth specific requirements in connection with submitting, formatting, preparing supporting documentation for and monitoring annual budgets and financial plans of public authorities. 

 

“Under Part 203, the Trustees are required to adopt a 2011 Budget and Four-Year Financial Plan (attached as Exhibit ‘9-A’).  The 2011 Budget, which is the first year of the Four-Year Financial Plan, has been brought to the Board for approval in a companion item this month.  The remaining three years are indicative forecasts.  The approved Four-Year Financial Plan must be available for public inspection not less than seven days before the commencement of the next fiscal year for a period of not less than 45 days and in not less than five convenient public places throughout the State.  The approved Four-Year Financial Plan must also be submitted to OSC, via electronic filing through the Public Authorities Reporting Information System maintained by OSC and the Authority Budget Office, within seven days of approval by the Trustees.  The regulations also require the Authority to post the Four-Year Financial Plan on its website.

 

“Under Part 203, each approved Four-Year Financial Plan must be shown on both an accrual and 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 approved 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 approved Four-Year Financial Plan must include a certification (Exhibit ‘9-B’) by the Chief Operating Officer.

 

FISCAL INFORMATION

 

                “In an accompanying item dealing with the 2011 Operating Budget, the Trustees are asked to approve the 2011 Operating Budget, which is the first year of the Four-Year Financial Plan and serves as the basis for the Authority’s financial reporting during the year.  Conversely, the Four-Year Financial Plan net income estimates for each of the years 2012 through 2014, are indicative forecasts and the Trustees are not being asked to approve any revenue and expenditure amounts for those years at this time.

 

RECOMMENDATION

 

“The Vice President – Financial Planning and Budgets and the Director – Financial Planning recommend that the Trustees approve the Four-Year Financial Plan and authorize: (i) submitting the approved Four-Year Financial Plan to the Office of the State Comptroller in the prescribed format; (ii) posting the approved Four-Year Financial Plan on the Authority’s website and (iii) making the approved Four-Year Financial Plan available for public inspection at not less than five convenient public locations throughout New York State.

 

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

 

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

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the attached 2011-2014 Four-Year Financial Plan, including its certification by the Chief Operating Officer, is approved 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 submit the approved Four-Year Financial Plan to the Office of the State Comptroller in the prescribed format, post the approved Four-Year Financial Plan on the Authority’s website and make the approved Four-Year Financial Plan available for public inspection at not less than five convenient public places throughout New York State; 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.


 

10.                Next Meeting

 

                The next Regular Meeting of the Trustees will be held on Tuesday, January 25, 2011 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.

 

 


 

Closing

                On motion made and seconded, the meeting was adjourned by the Chairman at approximately 2:25p.m.

 

 

 

Karen Delince

Corporate Secretary

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                

 

 

 

 

 

DEC MINS.10


 

[1]   NYPA and LIPA executed the Hydropower Resale Contract in June 2010, which later received the approvals required under LIPA’s statutes from the Office of the State Comptroller and the New York State Attorney General in July 2010.