MINUTES OF THE REGULAR MEETING OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

September 20, 2005

 

Table of Contents

 

                Subject                                                                                                                      

 

1.                    Minutes of the Regular Meeting held on July 26, 2005                           

2.                    Financial Reports for the Eight Months Ended August 31, 2005, Exhibit  ‘2-A’

3.                    Report from the President and Chief Executive Officer                       

4..                   Allocation of 1,025 kW of Hydro Power Resolution, Exhibits ‘4A & 4A1’ ,‘4B & 4-B1’

5.                    Power for Jobs Program – Extended Benefits Resolution Exhibits  ‘5-A1 & 5-A2’,  ‘5-B’

6.                    Request to Approve Extensions to the Term of Service for 27 Existing Economic Development Power Program Customers Resolution ‘6-A’

 

7.                    Economic Development Programs – Energy Cost Savings  Benefits Resolution Exhibits ‘7-A1 & 7-A2’
 

8.                    Increase in Government Customer Rates – Notice of  Proposed Rule Making  Resolution ‘8-A’
 

9.                    Proposed Neighboring States Hydropower Contracts  Notice of Public Hearing Resolution ‘9-A

10.                 Issuance of Series 2005 A and Series 2005 B Revenue  Bonds and Commercial Paper Notes, Series 3 Resolution  

11.                 Procurement (Services) Contract – St. Lawrence/FDR Power Project Life Extension and Modernization Program – Increase in Compensation Limits Resolution                                                                                                        

12.                 Lease of Office Space in the Clarence D. Rappleyea Building to Danziger & Markhoff, LLP and Federal Bar Council
Resolution
Exhibits‘12-A – 12-D’

13.                 Procurement (Services) Contracts – Business Units and  Resolution  ‘13-A’

        

14.                 Procurement (Services) and other Contracts – Business Units and Facilities – Extensions, Approval of Additional
Funding and Increases in Compensation Ceilings Resolution 
  ‘14-A’

               

15.                 New York Power Authority’s Annual Strategic Plan Informational Item 15-A

16.                 Revision to May 24, 2005 Resolution for Execution Approval for Hedge Transactions to Satisfy Long-Term Agreement
 Obligations for Governmental Customers Resolution

17.                 Agreement with Private Equity Fund Consortium  Exhibits  '17-A, 17-B1, 17-B2, 17-B3 17-C’

18.                 Other Business

19.                 Next Meeting 

Closing 


 

Minutes of the Regular Meeting of the Power Authority of the State of New York held at the Albany Office at 11:00 a.m.

 

 

Present:                  Joseph J. Seymour, Chairman

                                Frank S. McCullough, Jr., Vice Chairman

                                Elise M. Cusack, Trustee

                                Michael J. Townsend, Trustee

 

 

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Eugene W. Zeltmann                           President and Chief Executive Officer

David E. Blabey                                    Executive Vice President, Secretary and General Counsel

Robert A. Hiney                                   Executive Vice President – Power Generation

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

Steven DeCarlo                                    Senior Vice President – Transmission

Joseph Del Sindaco                             Senior Vice President and Chief Financial Officer

Angelo S. Esposito                              Senior Vice President – Energy Services and Technology

Louise M. Morman                              Senior Vice President – Marketing, Economic Development
and Supply Planning

Brian Vattimo                                        Senior Vice President – Public and Governmental Affairs

Joseph J. Carline                                  Assistant General Counsel – Power and Transmission

Thomas P. Antenucci                          Vice President – Project Management

Arnold M. Bellis                                   Vice President – Controller

John M. Hoff                                        Vice President – Procurement and Real Estate

Gary Paslow                                          Vice President – Government Affairs and Policy Development

Donald A. Russak                                Vice President – Finance

William V. Slade                                   Vice President – Environmental Management

Thomas A. Warmath                           Vice President and Chief Risk Officer

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

Michael E. Brady                                  Treasurer

Dennis T. Eccleston                            Chief Information Officer

Angela D. Graves                                 Deputy Secretary

Timothy Sheehan                                 Principal Attorney II – Managing Counsel

Denise D’Ambrosio                             Principal Attorney I – Finance and Risk Management

John B. Hamor                                      Executive Director – State Governmental Relations

Paul W. Belnick                                    Director – Energy Services

Jordan Brandeis                                   Director – Supply Planning, Pricing and Power Contracts

Arthur M. Brennan                              Director – Internal Audit

James F. Pasquale                                Director – Business Power Allocation, Regulation and Billing

Michael A. Saltzman                            Director – Public Relations

Daniel Wiese                                        Director – Corporate Security and Inspector General

Daniel J. Cappiello                               Manager – Performance Planning

Steven Lockfort                                    Manager – Risk Reporting

Anthony C. Savino                              Manager – Business Power Allocations and Compliance

Edward A. Welz                                   Project Manager – Project Management

Mary Jean Frank                                  Associate Secretary

Lorna M. Johnson                               Assistant Secretary

Bonnie Fahey                                       Executive Administrative Assistant

Niko P. Ladopolous                             Legislative Liason

Joann M. Duffy                                    Strategic Change Consultant

 John Cashin                                          Executive Administrator, Battery Park City Authority

Tony Collins                                         President, Clarkson University

Robert A. Wood, Jr.                            Director – Government Relations, Clarkson University

John Connorton                                   Partner, Hawkins, Delafield & Wood

Thorne Clark                                         Associate, Hawkins, Delafield & Wood

Patrick McCarthy                                 Lobbyist, PLA Associates

 

 


 

Chairman Seymour presided over the meeting.  Executive Vice President, Secretary and General Counsel Blabey kept the Minutes.

 

 


 

1.     Approval of the Minutes

The minutes of the Regular Meeting of July 26, 2005 were unanimously adopted.

 


 

2.     Financial Reports for the Eight Months Ended August 31, 2005

Mr. Bellis presented an overview of the reports to the Trustees.  In response to a question from Chairman Seymour, Mr. Bellis said that the new SENY rates would not go into effect until January 2006 and that the estimated $100 million loss in SENY revenues for 2005 was projected to occur due to the high cost of purchased power.  The cost budgeted for market power was $55/MWH, while the actual market cost in August was $88/MWH, and September’s market cost is expected to be equally high.  Responding to another question from Chairman Seymour, Mr. Bellis said that next year the Authority’s agreements with the SENY customers would take into account variable costs for purchased power.


 

3.     Report from the President and Chief Executive Officer

President Zeltmann asked Mr. Hiney to present a report on the progress of the 500 MW combined cycle construction project.  Mr. Hiney said that all critical milestones had been met and that the project has now shifted from construction work to commissioning activities.  First fire was accomplished with the expected results, producing 35 MW used to clean out the air-cooled condenser.  The turbine has not been fired with natural gas yet.  Mr. Hiney concluded that he is very encouraged by the project’s progress and, barring any significant setbacks, the plant should be in full commercial operation by the end of the year.  Responding to questions from Chairman Seymour, Mr. Hiney said that the project is still within the new budget set for it.  He also noted that next spring the New York Independent System Operator will be asked if reliability criteria will be met with the Poletti plant not in service.  If the answer is yes, the Poletti plant will be closed down in February 2008.  In the meantime, the Authority continues to operate and maintain the plant to assure reliable service.


 

4.     Allocation of 1,025 kW of Hyrdo Power

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve one allocation of available Replacement Power (‘RP’) and one allocation of available Expansion Power (‘EP’), totaling 1,025 kW, to two industrial companies.

BACKGROUND

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

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

DISCUSSION

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

“Based on the Advisory Group’s discussions, staff recommends that the available power be allocated between two companies, as set forth in Exhibits ‘4-A’ and ‘4-B.’  The Exhibits show, among other things, the amount of power requested by each company, the recommended allocation and additional employment and capital investment information.  These projects will help to maintain and diversify the industrial base of Western New York and will provide new employment opportunities.  They are projected to result in the creation of 53 jobs.   

RECOMMENDATION

“The Director – Business Power Allocations, Regulation and Billing recommends that the Trustees approve the allocation of 1,025 kW of hydro power to the companies as detailed in Exhibits ‘4-A’ and ‘4-B.’

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

Mr. Pasquale presented the highlights of staff’s recommendations to the Trustees.  Trustee Townsend requested that he be provided with background information on the membership and function of the Western New York Advisory Group.

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

RESOLVED, That the allocation of 375 kW of Replacement Power and 650 kW of Expansion Power, as detailed in Exhibits “4-A” and “4-B,” be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things 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, Secretary and General Counsel.

 

 


 

 

 

APPLICATION SUMMARY

Replacement Power

Company: Invitrogen Corporation

Location:                                                  Grand Island, New York

County:                                                     Erie

IOU:                                                           Niagara Mohawk

Business Activity:                                  Manufacturer of pharmaceutical and biotech products

Project Description:                               Proposed project is an internal expansion of space within the company’s existing building. About 2,700 sq. ft. of existing area would be developed into manufacturing space. Invitrogen will be adding equipment to expand the capacity of its existing product lines and manufacturing capability for new and innovative products.  

Prior Application:                                  Yes

Existing Allocation:                               400 kW RP allocation

Power Request:                                       375 kW

Power Recommended:                            375 kW

Job Commitment:

                   Existing:                                452 jobs

                   New                                        36 jobs

New Jobs/Power Ratio:                          96 jobs/MW

New Jobs -

Avg. Wage and Benefits:                       $63,000

Capital Investment:                                $5,500,000

Capital Investment                                  $14,666,666/MW

Per MW

Summary:                                                Invitrogen provides products and services that support academic and government research institutions and pharmaceutical and biotech companies in the U.S. and Europe.  It operates two divisions:  Biodiscovery and Bioproduction.  Biodiscovery includes functional genomics, cell biology and drug discovery product lines; Bioproduction includes various cell culture products and biological testing services.  Erie County is also providing incentives for this project.

 


 

 

 

APPLICATION SUMMARY

Expansion Power

Company: American Axle & Manufacturing, Inc.

Location:                                                  Cheektowaga, New York

County:                                                     Erie

IOU:                                                           New York State Electric and Gas Corporation

Business Activity:                                  Manufacturer of axle assemblies and steering linkages

Project Description:                               Building addition of approximately 6,200 sq. ft. will expand production floor space and add a training center and additional office space.  The company will also install new equipment and machinery, including lathes, induction hardeners and test and part- washing equipment. 

Prior Application                                    Yes

Existing Allocation:                               250 kW EP allocation at this site

Power Request:                                       650 kW

Power Recommended:                            650 kW

Job Commitment:     

                   Existing:                                142 jobs

                   New                                        17 jobs

New Jobs/Power Ratio:                          26 jobs/MW

New Jobs -

Avg. Wage and Benefits:                       $78,000

Capital Investment:                                $8,600,000

Capital Investment                                  $13,230,000/MW

Per MW

Summary:                                                The company is a premier manufacturer of automotive driveline and chassis systems and components including axles and drive shafts for light trucks and SUVs.  The company also designs, engineers, validates and tests complete drive systems and chassis suspension modules.

 

 

 


 

5.     Power for Jobs Program – Extended Benefits

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve extended benefits for 379 Power for Jobs (‘PFJ’) customers as listed in Exhibits ‘5-A’ and ‘5-B.’  These customers have been recommended to receive such extended benefits by the Economic Development Power Allocation Board (‘EDPAB’).

BACKGROUND

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

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

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

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

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

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

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

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

“In 2005, provisions of the approved state budget extended the period during which PFJ customers could receive benefits until December 31, 2006, the program’s new sunset date.   

DISCUSSION

“As a result of its meeting, EDPAB recommended that the Authority’s Trustees approve the allocations and/or electricity savings reimbursement rebates to the 379 businesses listed in Exhibits ‘5-A’ and ‘5-B.’  Exhibit ‘5-A’ lists businesses that have requested and are being recommended for contract extensions, while Exhibit ‘5-B’ lists those businesses that have requested and are being recommended for electricity savings reimbursements.  Collectively, these organizations have agreed to retain more than 157,000 jobs in New York State in exchange for the contract extension or rebate.  The contracts will be extended and the rebate program will be in effect until December 31, 2006, the program’s sunset.  The power will be wheeled by the investor-owned utilities as indicated in the Exhibits. 

“The Trustees are requested to approve contract extensions for the companies listed in Exhibit ‘5-A,’ and the payment and funding of rebates for the companies listed in Exhibit ‘5-B’ in a total amount currently not expected to exceed $6,500,000.  Staff recommends that the Trustees authorize a withdrawal of monies from the Operating Fund for the payment of such amount, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.  Staff expects to present the Trustees with requests for additional funding for rebates for the companies listed on the Exhibits in the future.

“Completed applications were reviewed by EDPAB and recommendations were made at their meeting on September 19, 2005.

FISCAL INFORMATION

“Funding of rebates for the companies listed in Exhibit ‘5-B’ is not expected to exceed $6,500,000.  Payments will be from the Operating Fund.  

RECOMMENDATION

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

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

Mr. Pasquale presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Seymour, Mr. Paslow said that the pro rata electricity allocation reduction for Power for Jobs customers not meeting their job commitments was what Assemblyman Tonko had been referring to in his recent correspondence.  Vice Chairman McCullough, who is also Chairman of the Economic Development Power Allocation Board (“EDPAB”), said that this was the first time that EDPAB had recommended such a reduction since September 11, 2001, and that Authority staff will be working to develop the criteria for an appeal process for those companies whose allocations are reduced.  Responding to a question from Chairman Seymour, Vice Chairman McCullough said that the criteria will be specific and tough and might include such things as capital commitment, the company’s wage rates and any extenuating circumstances.

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

WHEREAS, the Economic Development Power Allocation Board has recommended that the Authority approve contract extensions and electricity savings reimbursements to the Power for Jobs customers listed in Exhibits “5-A and “5-B,” respectively;

NOW THEREFORE BE IT RESOLVED, That to implement such Economic Development Power Allocation Board recommendations, the Authority hereby approves contract extensions for those companies listed in Exhibit “5-A,” and the payment of  electricity savings reimbursements to the companies listed in Exhibit “5-B,” as submitted to this meeting, and that the Authority finds that such extensions and  payments for electricity savings reimbursements are in all respects reasonable, consistent with the requirements of the Power for Jobs program and in the public interest; and be it further

RESOLVED, That based on staff’s recommendation, it is hereby authorized that payments be made for electricity savings reimbursements as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $6,500,000 and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

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

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

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


 

6.     Request to Approve Extensions to the Term of Service for 27 Existing Economic Development Power Program Customers                                  

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve an extension to the term of service to December 31, 2006 for 27 existing economic development power program customers, as listed in Exhibit ‘6-A.’

BACKGROUND

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

DISCUSSION

“Chapter 313 of the Laws of 2005 was signed into law by Governor George E. Pataki on July 26, 2005.  The new law allows certain Authority power program customers who would be exposed to price increases before December 31, 2006 to apply for an Energy Cost Savings Benefit.  Under the new law, businesses eligible to receive Energy Cost Savings Benefits are limited to Authority customers currently supplied power under the Economic Development Power, Municipal Distribution Agency and High Load Factor programs.  The Energy Cost Savings Benefit will be available for the period November 1, 2005 through December 31, 2006.

“The 27 customers mentioned above have allocation contracts, previously approved by the Trustees, which expire at various times before December 31, 2006.  We are requesting the Trustees to extend each of these agreements until December 31, 2006 so that the customers may receive the benefits associated with the recently passed law.  The extensions will help maintain costs and enable these customers to compete more effectively.  In addition, they will further secure employment levels in New York State.

“The Economic Development Power Allocation Board recommended that the contracts be extended at their meeting on September 19, 2005 and the Municipal Distribution Agencies have requested in writing that their customers also be granted contract extensions.   

RECOMMENDATION

“The Director – Business Power Allocations, Regulation and Billing recommends that the Trustees approve extensions to the term of service to December 31, 2006 for 27 existing economic development power program customers, as listed in Exhibit ‘6-A.’

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

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

RESOLVED, That the Trustees find that staff’s review supports an extension of allocations from Authority economic development power programs for 27 existing customers until December 31, 2006 and that such extensions be, and hereby are, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further 

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things 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 approval of the form thereof by the Executive Vice President, Secretary and General Counsel.

 

7.     Economic Development Programs – Energy Cost Savings Benefits

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve Energy Cost Savings Benefits for 59 customers as listed in Exhibit ‘7-A.’  These customers have been recommended to receive such benefits by the Economic Development Power Allocation Board (‘EDPAB’).

BACKGROUND

“Chapter 313 of the Laws of 2005 was signed into law by Governor George E. Pataki on July 26, 2005.  The new law allows certain Authority power program customers who would be exposed to price increases before December 31, 2006 to apply for an Energy Cost Savings Benefit.  Under the new law, businesses eligible to receive Energy Cost Savings Benefits are limited to Authority customers currently being supplied power under the Economic Development Power, Municipal Distribution Agency and High Load Factor programs. 

“The Energy Cost Savings Benefit will be available for the period November 1, 2005 through December 31, 2006.  Each application will be evaluated under criteria adopted by EDPAB in consultation with the Authority.  The new law states that such criteria shall include:

·         overall economic impact of the company in terms of jobs created or retained, payroll, capital investment and the use of in-state suppliers;

·         the likelihood that absent approval a company would close, contract or relocate outside of New York State;

·         the company’s compliance with prior contractual commitments to retain and/or create jobs and

·         the extent to which a benefit would affect the overall productivity or competitiveness of the company and its existing in-State employment.

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

“The legislation also authorizes the sale of Authority power into the wholesale market with net earnings from such sales (and other funds deemed feasible and advisable by the Trustees) to be used for the Energy Cost Savings Benefits.  Power available to fund Energy Cost Savings Benefits includes:

·         up to 70 MW of unallocated replacement power;

·         up to 38.6 MW of preservation power relinquished or withdrawn after the effective date of the new legislation and

·         up to 20 MW of power from the St. Lawrence/FDR project for the period ending December 31, 2006.

DISCUSSION

“As a result of its meeting, EDPAB recommended that the Authority’s Trustees approve Energy Cost Savings Benefits to the 59 businesses listed in Exhibit ‘7-A.’  Collectively, these organizations have agreed to retain more than 74,000 jobs in New York State in exchange for these benefits.  The companies will be eligible to receive these benefits until December 31, 2006. 

“The Trustees are requested to approve the funding of Energy Cost Savings Benefits for the companies listed in Exhibit ‘7-A’ in a total amount currently not expected to exceed $36,000,000.  Staff recommends that the Trustees authorize a withdrawal of monies from the Operating Fund for the payment of  such amount, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented. 

“Completed applications were reviewed by EDPAB and recommendations were made at their meeting on September 19, 2005.

FISCAL INFORMATION

“Funding of Energy Cost Savings Benefits for the companies listed in Exhibit ‘7-A’ is not expected to exceed $36,000,000.  Payments will be made from the Operating Fund.

RECOMMENDATION

“The Senior Vice President and Chief Financial Officer and the Director – Business Power Allocations, Regulation and Billing recommend that the Trustees approve the payment of Energy Cost Savings Benefits to the customers listed in Exhibit ‘7-A.’

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

Mr. Pasquale presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Seymour, Mr. Pasquale said that these benefits would be provided only until December 31, 2006, in accordance with the legislation that created them.  Responding to a question from Trustee Townsend, Mr. Pasquale said that the Authority’s costs for these benefits are estimated at $36 million.

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

WHEREAS, the Economic Development Power Allocation Board has recommended that the Authority approve the payment of Energy Cost Savings Benefits to the customers listed in Exhibit “7-A”;

NOW THEREFORE BE IT RESOLVED, That to implement such Economic Development Power Allocation Board recommendations, the Authority hereby approves the payment of Energy Cost Savings Benefits to the companies listed in Exhibit “7-A” as submitted to this meeting, and that the Authority finds that such payments for Energy Cost Savings Benefits are in all respects reasonable, consistent with the requirements of the Authority’s economic development programs and in the public interest; and be it further

RESOLVED, That based on staff’s recommendation, it is hereby authorized that payments be made for Energy Cost Savings Benefits as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $36,000,000 and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

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

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

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


 

8.     Increase in Government Customer Rates – Notice of Proposed Rule Making

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve a Notice of Proposed Rule Making (‘NOPR’) to increase the rates to be charged in 2006 to the New York City Governmental Customers (‘NYC Governmental Customers’ or ‘Customers’).  This proposed action would increase the Customers’ estimated total billed revenues by 1.1 % on average as compared to 2005 rates.  The Trustees are also requested to direct the Secretary to publish a NOPR in the State Register in accordance with the requirements of the State Administrative Procedures Act (‘SAPA’). 

“This proposed rate action has two parts.  First, the Authority staff seeks to increase the Fixed Costs component of the production rates to be charged under the new supplemental Long Term Agreements (‘LTAs’) that most of the Customers executed earlier this year.  Under the LTAs, any increase in the Fixed Costs component of the production rates must be done in accordance with SAPA.  Changes in the Variable Costs component are determined in collaboration with the Customers in accordance with the LTAs.  Recovery of the expected Variable Costs through an annual reset mechanism in the LTAs has been previously approved by the Trustees.

“Second, staff seeks to increase the production rates applicable to any Customer that has not signed the new LTAs (‘Non-Signatory Rates’).  Any such Customer, under the terms of earlier long-term contracts set to expire at the end 2006, would be entitled to a fixed rate that the Authority may modify to recover its full cost of serving such Customer.  Thus, the Non-Signatory Rate must reflect the higher risk of providing electricity at a fixed rate and the short-term nature of this service. 

“After comments are received concerning this proposed rate action in accordance with SAPA, Authority staff will return to the Trustees at their December 2005 meeting to seek final adoption of this proposal.

BACKGROUND

“In 2005, the Authority and the NYC Governmental Customers, representing more than 90% of the load in this customer class, entered into the LTAs for the purchase of full-requirements production electric service (with narrow exceptions for distributed generation and renewable resources) through December 31, 2017.  The LTAs replaced prior agreements entered into during the mid-1990s with most of these same Customers.  The LTAs also established a new relationship between the Authority and the Customers that reflects the costs of procuring electricity in the restructured marketplace managed by the New York Independent System Operator (‘NYISO’).  The LTAs define specific cost categories with respect to providing electric service, and establish new methods for procuring resources and managing risk and a collaborative process with the Customers for selecting a cost-recovery mechanism.

“The LTAs separate all costs into two distinct categories:  Fixed Costs and Variable Costs.  Fixed Costs include operation and maintenance (‘O&M’), shared services, debt service, other expenses (i.e., certain directly assignable costs) and a credit for investment and other income.  Under the LTAs, the Authority must establish Fixed Costs based on Cost of Service (‘COS’) principles and make changes only under a SAPA proceeding.  In addition, the LTAs contemplate that year-to-year changes in Fixed Costs will be reviewed by the Customers in advance of a filing made under SAPA.  On August 24, 2005, Authority staff met with the Customers to inform them of the proposed Fixed Costs increase and to solicit their views.  Under the LTAs, the Customers’ concerns must be considered prior to presenting any proposed changes to the Fixed Costs to the Trustees or issuing them for public comment.  Customers will also have the opportunity to submit comments in accordance with SAPA procedures. 

“Staff is not requesting the Trustees’ approval of the Variable Costs (i.e. fuel and purchased-power expense, risk management, NYISO ancillary services and O&M reserve, less a credit for NYISO revenues from Customer-dedicated generation) includable in the final 2006 production rates applicable to the Customers subject to the LTAs.  Under the LTAs approved by the Trustees, the Authority develops the Variable Costs, which generally are subject to the Customers’ review and comment.  Subsequently, staff will incorporate these Variable Costs and the Trustee-approved Fixed Costs into new tariff rates for service commencing in 2006.  In accordance with the LTAs and outside the Trustees’ approval process, the Authority will issue revised tariffs reflecting the new 2006 rates.

“For those Customers subject to Non-Signatory Rates, no separate treatment for Fixed Costs and Variable Costs (as is required under the LTAs to establish production rates) will apply.  Instead, subject to SAPA notice and comment procedures, staff has developed an adjusted COS to account for the higher risks and costs attributable to providing electric service to such non-signatory Customers.  Staff will propose to apply these higher costs to such Customers’ existing demand and energy rates in an across-the-board fashion.

“This action does not affect Westchester County and the local governmental entities in the County that have a different arrangement with the Authority that does not provide for COS-based rates until 2007.

DISCUSSION

A.            Fixed Costs Increase under LTAs

 “A proposed increase in Fixed Costs was first presented to the Customers on June 1, 2005 for their review and comment.  As part of the annual process set forth in the LTAs, Authority staff provided its pro forma 2006 COS, 2006 revenue projections (at current standard tariff offering rates), a comparison with pro forma 2005 costs and revenues and the cost of different risk management and cost-recovery options affecting Variable Costs that are not part of this proposed rate action.

“Since June 1, staff has made refinements to its proposal concerning an increase in Fixed Costs, and now projects a Fixed Costs increase of $9.4 million applicable only to the Customers subject to the LTAs.  This proposed increase in Fixed Costs would result in a 1.5% increase in production rates as compared to 2005 rates, representing a 1.1% increase in estimated total billed revenues.  Staff proposes to apply this increase equally to both the demand and energy rates.

“Staff will recommend for consideration at the December meeting final adoption of a Fixed Costs increase based on this analysis and comments from the Customers and the public.  If this is adopted, staff will incorporate the approved Fixed Costs and the final Variable Costs that are determined in the annual process with the Customers into new tariff rates to become effective in January 2006. 

B.            Non-Signatory Rates

“As of the date of this proposed action, there is only one non-signatory Customer, the New York Convention Center Operating Corporation (‘Convention Center’)(see Exhibit ‘8-A’).  If the Convention Center retains that status or if new Customers materialize that do not become signatories to the LTA, the Authority must offer such Customers Non-Signatory Rates based on an adjusted 2006 COS. 

“Such rates would be higher than the rates offered under the LTA to reflect additional risk management costs inherent in providing electricity to such Customers at a fixed rate as prescribed in their contracts.  Non-Signatory Rates, which are short-term rates not offered to long-term contract customers (i.e., those under the LTA), are higher because they exclude the benefits of certain long-term resources such as the Authority’s new 500 MW Combined Cycle plant. 

“Thus, the proposed Non-Signatory Rates that would be noticed reflect a 14.1% increase in production rates, representing a 9.2% increase in total billed revenues.  Staff proposes to apply this increase equally to both demand and energy components of the Non-Signatory Rates.

FISCAL INFORMATION

“The adoption of this proposal concerning the increase in Fixed Costs applicable to the Customers under the LTAs and an overall increase in Non-Signatory Rates would result in the combined recovery of approximately $9.8 million in additional revenues to the Authority over current rates.  These new revenues are offset by corresponding increases in the costs of serving the Customers.   

RECOMMENDATION

“The Director – Supply Planning, Pricing and Power Contracts recommends that the Trustees authorize the Secretary to file a Notice of Proposed Rule Making in the New York State Register for the adoption of: (1) an increase in Fixed Costs applicable to the New York City Governmental Customers under the Long Term Agreements, and (2) an increase in the production rates applicable to New York City Governmental Customers who are non-signatories to the Long Term Agreements, both as described above.

“It is also recommended that the Senior Vice President – Marketing, Economic Development and Supply Planning, or her designee, be authorized to issue written notice of proposed action to the affected customers.

“The Executive Vice President, Secretary and General Counsel, the Senior Vice President and Chief Financial Officer, the Senior Vice President – Marketing, Economic Development and Supply Planning, the Vice President – Controller, the Vice President – Major Accounts Marketing and Economic Development, the Vice President – Finance, the Assistant General Counsel – Power and Transmission 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 projects an increase in the Fixed Costs of serving the New York City Governmental Customers when comparing those costs contained in current rates to 2006 projected costs; and be it further

RESOLVED, That the Authority has entered into new supplemental Long Term Agreements with the New York City Governmental Customers and those agreements provide for the recovery of additional Fixed Costs through a rate filing under the State Administrative Procedure Act; and be it further

RESOLVED, That the Authority has other New York City Governmental Customers who have not signed the new form of Long Term Agreement from whom the Authority must recover the cost of providing service under fixed rates; and be it further

RESOLVED, That the Senior Vice President – Marketing, Economic Development and Supply Planning or her designee, be and hereby is, authorized to issue to the affected customers written notice of proposed action by the Trustees as described in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Secretary of the Authority be, and hereby is, directed to file such notices as may be required with the Secretary of State for publication in the State Register and to submit such other notice as may be required by statute or regulation concerning the proposed rate increase described in the foregoing report of the President and Chief Executive Officer; and be it further

 

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


 

 

Signatories

Battery Park City Authority

Empire State Development Corporation

Hudson River Park Trust

Metropolitan Transportation Authority

New York City Housing Authority

City of New York

New York State Office of General Services

The Port Authority of New York & New Jersey

Roosevelt Island Operating Corporation*

United Nations Development Corporation*

 

Non-Signatories

New York Convention Center Operating Corporation

 

Non-Applicable Group

                Westchester County and local governmental entities in the County

  

*  These entities have indicated to the Authority their intention to execute the LTA, pending appropriate formal approvals.

 

 

 


 

9.     Proposed Neighboring States Hydropower Contracts – Notice of Public Hearing

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to authorize a public hearing, pursuant to Section 1009 of the Public Authorities Law, on proposed contracts with seven neighboring states (herein collectively referred to as ‘the Bargaining Agents’ or ‘the Neighboring States’).  The proposed contracts continue existing contractual arrangements with the Neighboring States for sale of Niagara power and energy.  The only significant change from the existing contract is that the term has been extended to 2025.

“The Niagara Redevelopment Act (‘NRA’) and the Federal Energy Regulatory Commission (‘FERC’) license for the Niagara Project mandate these sales to the Neighboring States.  These contracts are modeled on the St. Lawrence contracts with the Neighboring States that were approved by the Trustees at their meeting of February 24, 2004.  The Neighboring States and the amounts of firm and peaking power allocated to each are listed in Exhibit
‘9-A.’

BACKGROUND

“The NRA requires the Authority to make available at least 50% of the Niagara Project’s power to ‘preference customers’(i.e., public bodies and non-profit cooperatives within economic transmission distance).  It further requires the Authority to make available a ‘reasonable’ portion of such preference power, but not more than 10% of total Niagara Project power, to preference customers in neighboring states.

“Pursuant to the foregoing statutory and license conditions, the Authority has been selling hydropower from the Niagara Project since 1961 to neighboring states.  Initially, hydropower was sold only to Vermont and subsequently to Ohio and Pennsylvania.  Since 1985, power has been sold to the current seven Neighboring States (Connecticut, Massachusetts, New Jersey, Ohio, Pennsylvania, Rhode Island and Vermont) to comply with FERC’s rulings on this matter.

“Under the current contracts with the seven Neighboring States which had been extended to August 31, 2007, the termination date of the current Niagara Project license, the Authority sells 188 MW of firm Niagara hydropower, 40 MW of peaking Niagara hydropower and 10% of interruptible energy from the Niagara Project to all seven Neighboring State customers.

“On August 18, 2005, the Authority filed its relicensing application for the Niagara Project with FERC.  As part of a settlement agreement, all seven Neighboring States agreed to support the Authority’s entire offer of settlement, including our request for a 50-year license and, as required by FERC rulings under the NRA, the Authority agreed to continue to sell 188 MW of firm Niagara hydropower, 40 MW of peaking Niagara hydropower and 10% of interruptible energy from the Niagara Project to all seven Neighboring State customers.  The proposed new license for the Project will contain articles implementing the NRA’s requirements concerning neighboring state sales.  A proposed form of contract to take effect when the current contracts expire was filed with FERC as part of the settlement agreement.

DISCUSSION

“The proposed contracts with the Neighboring States implement the requirements of the proposed Niagara Project license and represent the minimum sales to neighboring states required under existing FERC rulings.  They contain detailed principles governing the establishment of cost-based rates over the contract term that parallel those in the St. Lawrence contracts with the Neighboring States previously approved by the Trustees.  Under the proposed contracts, the Authority may seek FERC approval to reduce the allocations to the Neighboring States from 10% to 7.5%; however, the Neighboring States would then be free to challenge any of the Authority’s ratemaking principles established by the Trustees at their April 29, 2003 meeting.

“To the extent that sales of hydropower from Niagara could be deemed to have renewable attributes, the Neighboring States would have the right to acquire such attributes under terms and conditions negotiated among the parties.  The proposed contracts have a term that commences on the later of the effective date of the new FERC License or the date of the contracts’ execution and runs through September 1, 2025, the same as the current Niagara contracts with the municipal and rural electric cooperative customers.  The form of the Niagara contract that is part of the proposed license is attached as Exhibit ‘9-B.’

“The Authority agreed to commence the statutory contract approval process for the new proposed contracts now with the expectation that the process would be concluded in early 2006, to take effect as stated above.  If the license is not granted to the Authority, the contracts would be of no force and effect.  If the new license is not issued by September 1, 2007, the new contracts, if approved by the Governor, would take effect only on a month-to-month basis until a new license is issued.

FISCAL INFORMATION

“The 228 MW of Niagara Project power and energy that will continue to be sold to the Neighboring States under the proposed contracts will be sold at the same rates that currently apply to such sales.  Thus, the proposed contracts will have no revenue impact on the Authority.

RECOMMENDATION

“The Director – Supply Planning, Pricing and Power Contracts and the Executive Director – Hydro Relicensing recommend that the Trustees authorize a public hearing on the proposed contracts with the Neighboring States to be held in the New York Office at a time and date authorized by the Chairman.  It is further recommended that, pursuant to Section 1009 of the Public Authorities Law, the Executive Vice President, Secretary and General Counsel be authorized to transmit copies of the proposed contracts to the Governor and the legislative leaders.

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

Mr. Brandeis presented the highlights of staff’s recommendations to the Trustees.  In response to questions from Chairman Seymour and Vice Chairman McCullough, Mr. Brandeis said that up to 10% of the Niagara Project’s power was mandated to be provided to neighboring states.  Responding to a question from Trustee Cusack, Mr. Blabey said that the 10% would be open to an increase if the other states got involved in attempting to amend the Niagara Redevelopment Act, which provides for out-of-state sales.  In response to a question from Chairman Seymour, Mr. Brandeis said that the Authority would have to seek approval to reduce the amount of power allocated to the Neighboring States from the Federal Energy Regulatory Commission (“FERC”), but that FERC might also see fit to leave the amount allotted to them at the 10% level.  Mr. Carline added that, in its contracts with the Neighboring States, the Authority reserved the right to request FERC to bring the amount down to 7.5%, but that by doing so it ran the risk of opening up the issue of the rates paid for the power.

 

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

RESOLVED, That the Authority hereby authorizes a public hearing on the terms of the proposed contracts for the sale of hydroelectric power and energy generated by the Authority to the Neighboring States substantially in the form attached hereto, to be held at a subsequent time and date authorized by the Chairman; and be it further

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

RESOLVED, That the Senior Vice President – Marketing, Economic Development and Supply Planning or her designee be, and hereby is, authorized, subject to approval of the form thereof by the Executive Vice President, Secretary and General Counsel, to enter into such other agreements with the Bargaining Agents, and to do such other things as may be necessary or desirable to implement sales to the Neighboring States as required by the proposed new Federal Energy Regulatory Commission Niagara Project license and as set forth in the foregoing report of the President and Chief Executive Officer; and be it further

RESOLVED, That the Chairman, the President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things 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, Secretary and General Counsel.

 


 

 

 

NEIGHBORING STATE HYDROPOWER ALLOCATIONS

(kW)

 

 

 

 

Niagara

Niagara

State

Firm

Peaking

Connecticut

8,700

1,800

Massachusetts

43,700

9,300

New Jersey

7,900

1,700

Ohio

86,100

18,300

Pennsylvania

31,900

6,800

Rhode Island

500

100

Vermont

9,200

2,000

 

Totals 

 

188,000

 

40,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

10.  Issuance of Series 2005 A and Series 2005 B Revenue Bonds and Commercial Paper Notes, Series 3                                   

POWER AUTHORITY OF THE STATE OF NEW YORK

Excerpts from the minutes of a regular meeting of the Power Authority of the State of New York (the “Authority”) held at the Authority’s offices at 30 South Pearl Street, Albany, New York 12207-3425, on Tuesday, September 20, 2005, at 11:00 A.M.

There were present:

Joseph J. Seymour, Chairman
Frank S. McCullough, Jr., Vice Chairman
Elise M. Cusak
Michael J. Townsend

constituting a majority of the trustees and a quorum.

Eugene W. Zeltmann, President and Chief Executive Officer

David E. Blabey, Executive Vice President, Secretary and General Counsel

Robert A. Hiney, Executive Vice President -- Power Generation

Joseph M. Del Sindaco, Senior Vice President and Chief Financial Officer

Donald A. Russak, Vice President -- Finance

Michael E. Brady, Treasurer

Timothy P. Sheehan, Managing Counsel

Brett Matteo, The PFM Group, Financial Advisor to the Authority

John V. Connorton, Jr. and Thorne Clark, of Hawkins Delafield & Wood LLP, Bond Counsel to the Authority

Mr. Seymour, Chairman, presided and Mr. Blabey, Secretary, kept the minutes.

PLAN OF FINANCE IN CONNECTION WITH THE ISSUANCE OF DEBT

The Chairman stated that a matter to be presented at the meeting was consideration of a plan of finance comprised of two unrelated bond financing transactions: (1) a current refunding of a portion of the Authority’s outstanding Series 2000 A Bonds; and (2) a current refunding of the Authority’s outstanding Commercial Paper Notes, Series 2, and the concomitant termination of related interest rate swaps and the payment of swap termination fees from the proceeds of commercial paper notes.

Proposed Issuance of Series 2005 A Bonds to Current Refund Series 2000 A Bonds

The Authority issued $300,000,000 Series 2000 A Revenue Bonds (the “2000 A Bonds”) to refund certain commercial paper notes and to pay costs related to the upgrade and re-licensing of the Niagara hydroelectric project. The proposed transaction contemplates refunding $186,870,000 principal amount of the outstanding $195,180,000 principal amount of serial 2000 A Bonds. Such bonds are callable at par on December 15, 2005. $77,215,000 aggregate principal amount of 2000 A term bonds will not be refunded as part of this transaction and will remain outstanding.

 

To effect the refunding, the Authority expects to issue not more than $195,000,000 principal amount of Series 2005 A Revenue Bonds (the “2005 A Bonds”) in a fixed interest rate mode. The Authority’s senior Finance staff do not intend to issue the 2005 A Bonds unless present value savings realized by the Authority meets or exceeds 5% of the principal amount of the 2000 A Bonds being refunded. Furthermore, the 2000 A Bonds will not be refunded unless individual maturities of the 2000 A Bonds so refunded generate positive present value savings as determined by Authority Finance staff in consultation with The PFM Group (the ”Financial Advisor”).  It is


intended, however, that the execution of the Contract of Purchase relating to the 2005 A Bonds by authorized Authority officers be conclusive evidence that any savings requirements or other conditions imposed by the Trustees have been satisfied and the sale and issuance of the 2005 A Bonds has been authorized by the Authority’s Board of Trustees.

 

It is anticipated that the proposed refunding will be an economic defeasance and not a legal defeasance, meaning that for the limited period of time between the date of delivery of the 2005 A Bonds until the redemption of the 2000 A Bonds on December 15, 2005, the Authority will have two series of bonds outstanding related to the same project.

The proceeds of 2005 A Bonds will be used to purchase Authorized Investments (as defined in the General Resolution), to be held in escrow and to be sufficient in timing and amount to pay the redemption price of the refunded 2000 A Bonds on December 15, 2005. As a result, the Authority need only accrue and pay debt service on the 2005 A Bonds. Authority Revenues (as defined in the General Resolution) will continue to secure both outstanding series of bonds for a limited period of time.

The proceeds of the 2005 A Bonds will also be used to pay financing costs related to the issuance of the 2005 A Bonds, including underwriters’ discount, any insurance premiums related to the purchase of any municipal bond insurance policy determined to be necessary or desirable and other costs incurred by the Authority.

Proposed Issuance of Series 2005 B Bonds to Current Refund Commercial Paper Notes, Series 2

                The Authority proposes to issue not more than $235,000,000 principal amount of Series 2005 B Revenue Bonds (the “2005 B Bonds”) in a fixed interest rate mode to (i) current refund $238,255,000 outstanding principal amount of its tax-exempt Commercial Paper Notes, Series 2 (the “Series 2 CP Notes”) and (ii) pay financing costs related to the issuance of the 2005 B Bonds, including underwriters’ discount, structuring fees, any insurance premiums related to the purchase of any municipal bond insurance policy determined to be necessary or desirable and other costs incurred by the Authority.

It is anticipated that the proposed refunding will be an economic defeasance and not a legal defeasance, meaning that for the limited period of time between the date of delivery of the 2005 B Bonds until the redemption of the Series 2 CP Notes at their maturity dates the Authority will have both the Series 2 CP Notes and the 2005 B Bonds outstanding.

The proceeds of 2005 B Bonds will be used to purchase Authorized Investments (as defined in the General Resolution), to be held in escrow and to be sufficient in timing and amount to pay the redemption price of the refunded Series 2 CP Notes on their maturity dates. Authority Revenues (as defined in the General Resolution) will continue to secure the Series 2 CP Notes until their redemption at their maturity dates.

Proposed Issuance of Taxable Commercial Paper Notes, Series 3 to Fund Certain Swap Termination Payments

The Authority also intends to terminate the remaining portions of three separate fixed-payer interest rate swap agreements dated March 13, 1998, in the aggregate notional amount of $268,135,000 with (i) Citigroup (fka Salomon Brothers) Ref. N11708, (ii) Goldman Sachs Mitsui Marine Derivative Products, L.P.(Swaps Transaction NUUS803640 (090000AC0) ) and (iii) Merrill Lynch Capital Services, Inc. Transaction-Reference 98MU0191 (the “1998 Swap Agreements”).  The Authority entered into the 1998 Swap Agreements to hedge the possibility of interest rates increasing to unacceptable levels at the time of the mandatory tenders relating to its $499,410,000 principal amount of Series 1998 B Bonds. In 2002 and 2003, the Authority also issued commercial paper notes to refund a portion of the Series 1998 B Bonds and hedged the commercial paper notes with the 1998 Swap Agreements.

In order to effect the termination of the 1998 Swap Agreements, the Authority will be required to make termination payments which will be funded from the proceeds of a new issuance of taxable Series 3 Commercial Paper (“CP”) Notes. The principal amount of the newly issued Series 3 CP Notes issued for such purpose will not exceed $35,000,000.

The 2005 B Bonds will not be issued, the 1998 Swap Agreements will not be terminated, and the additional Series 3 CP Notes will not be issued, unless the debt service on the Series 2005 B Bonds and the estimated debt service on the newly issued Series 3 CP Notes is equal to or less, on a present value basis, than the synthetic fixed-rate debt service currently payable on the Series 2 CP Notes, after taking into consideration the net swap payments currently exchanged under the 1998 Swap Agreements and ancillary variable-rate costs. It is intended, however, that the issuance of the additional Series 3 CP Notes, the termination of the 1998 Swap Agreements and the execution by authorized Authority officers of the Contract of Purchase relating to the 2005 B Bonds each be conclusive evidence that any savings requirements or other conditions discussed or imposed by the Trustees have been satisfied and the sale and issuance of such Series 3 CP Notes, the 2005 B Bonds and the termination of the 1998 Swap Agreements have each been authorized by the Authority’s Board of Trustees.

As a result of this transaction, the Authority will (i) reduce its outstanding variable-rate debt, (ii) eliminate credit exposure to the counterparties of the 1998 Swap Agreements, and (iii) avoid the risk of increased bank liquidity fees related to the Series 2 CP Notes.

“Buy on the Wire”

In order to achieve its financial objectives, the Authority must both issue its 2005 B Bonds and terminate or unwind the 1998 Swap Agreements. In the Authority’s recent experience, however, its traditional fixed rate marketing periods have been too lengthy to permit the Authority to take advantage of fast-moving markets and achieve the desired results. Accordingly, the Authority’s staff, in consultation with its Financial Adviser, has recommended that Authority Trustees also approve the option of using the structure known as “buy on the wire” in order to give the Authority additional flexibility to achieve its financial goals.

Such option would authorize the Authority, if deemed necessary or desirable by the Authority’s staff, in consultation with its Financial Adviser, to enter into an Agreement to Purchase the 2005 B Bonds (the “Agreement to Purchase Bonds”) with Citigroup pursuant to which the Authority and Citigroup agree to enter into the Authority’s customary and usual Contract of Purchase at a future date.  The Agreement to Purchase Bonds, which is intended to be a legally enforceable agreement, would establish, among other things, the price, maturities, call provisions (if any), coupons, principal amounts, and interest payment dates of the 2005 B Bonds.  The Agreement to Purchase Bonds would also require that the 2005 B Bonds be rated and be tax-exempt, not subject to the alternative minimum tax.

 The mechanics of the simultaneous sale of the 2005 B Bonds and the unwinding or termination of the 1998 Swap Agreements with three separate swap dealers may require the Authority to assign those swaps on which Citigroup is not a counterparty to Citigroup for termination.

AUTHORIZATION OF SERIES 2005 A REVENUE BONDS
AND SERIES 2005 B REVENUE BONDS

The Chairman stated that a matter to be presented at the meeting was consideration of the advisability of adopting the Seventh Supplemental Resolution Authorizing Series 2005 A Revenue Bonds and Series 2005 B Revenue Bonds (the “Seventh Supplemental Resolution”), which authorizes the issuance of the Series 2005 A Bonds in an aggregate principal amount not to exceed $195,000,000 and the Series 2005 B Bonds in an aggregate principal amount not to exceed $235,000,000 in order to (i) provide moneys to redeem the Authority’s Series 2000 A Revenue Bonds maturing on November 15 in the years 2006 through 2020 inclusive, including the redemption price of, and accrued interest to the date of redemption on, such bonds; (ii) provide moneys to refund $238,255,000 in aggregate principal amount of the Authority’s Series 2 Commercial Paper Notes; and (iii) pay certain costs and expenses associated with the issuance of the Bonds, including underwriters’ discount, structuring fees, municipal bond insurance premium costs and reimbursement of costs and expenses expended by the Authority in connection therewith.

On motion duly made and seconded, the Seventh Supplemental Resolution (attached hereto as Exhibit 1), together with such changes, insertions, deletions and amendments thereto as the Chairman or President and Chief Executive Officer of the Authority may approve, which shall be deemed to be part of such resolutions as adopted, was unanimously adopted.

CONTRACT OF PURCHASE, PRELIMINARY OFFICIAL STATEMENT AND OFFICIAL STATEMENT FOR SERIES 2005 A BONDS

The Chairman presented a copy of a form of Contract of Purchase proposed to be entered into with Morgan Stanley & Co. Incorporated, UBS Financial Services Inc., Bear, Stearns & Co. Inc. and Lehman Brothers, providing for the sale of the Series 2005 A Bonds to said purchasers.  The Chairman also presented a draft form of the Preliminary Official Statement relating to the Series 2005 A Bonds (attached hereto as Exhibit 2). Said proposed Contract of Purchase and draft form of the Preliminary Official Statement were considered by the Trustees, and thereupon, on motion duly made and seconded, the following resolutions were unanimously adopted:

RESOLVED, that all the Series 2005 A Bonds shall be sold, subject to the limitations described below, to Morgan Stanley & Co. Incorporated, UBS Financial Services Inc., Bear, Stearns & Co. Inc. and Lehman Brothers, or such other purchasers that may be approved by the Chairman or President and Chief Executive Officer (collectively, the “2005 A Underwriters”), at such prices, with accrued interest, if any, on such Series 2005 A Bonds from the date of issue of said Series 2005 A Bonds to the date of delivery and payment for said Bonds, as the Chairman or President and Chief Executive Officer may accept and as will be in compliance with the requirements of the Seventh Supplemental Resolution, pursuant to a Contract of Purchase, in substantially the form of the Contract of Purchase relating to the Series 2005 A Bonds submitted at this meeting (attached hereto as Exhibit 3), as such Contract may be modified as hereinafter provided, and upon the basis of the representations therein set forth; and

FURTHER RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer and Deputy Treasurer be, and each of them hereby is, authorized on behalf of the Authority, subject to the limitations described below, to execute a Contract of Purchase substantially in the form submitted at this meeting, providing for the sale of the Series 2005 A Bonds to said purchasers, with such changes, insertions, deletions, amendments and supplements as the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer or Deputy Treasurer may approve, subject to the requirements of the Seventh Supplemental Resolution, and to deliver it to said purchasers; and that said officers and all other officers of the Authority are hereby authorized and directed to carry out or cause to be carried out all obligations of the Authority set forth in said Contract of Purchase upon execution thereof; and

FURTHER RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer, and Deputy Treasurer be, and each of them hereby is, authorized to make such changes, insertions, deletions, amendments and supplements, to or from the draft form of the Preliminary Official Statement relating to the Series 2005 A Bonds as may be approved by such officer, and upon the completion of any such modifications, such officer is authorized to execute such certificates as may be requested by the 2005 A Underwriters to certify on behalf of the Authority that such Preliminary Official Statement is “deemed final” for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934, subject to the omission of such information as is permitted by the Rule, and the distribution of the Preliminary Official Statement relating to the Series 2005 A Bonds of the Authority is hereby approved to all interested persons in connection with the sale of such Bonds; and

FURTHER RESOLVED, that the Chairman or President and Chief Executive Officer be, and each of them hereby is, authorized to adopt and execute on behalf of the Authority a final Official Statement of the Authority relating to Series 2005 A Bonds, in such form and substance as the Chairman or President and Chief Executive Officer deems necessary or desirable, and the delivery of said Official Statement to the purchasers of said Series 2005 A Bonds is hereby authorized, and the Authority hereby authorizes said Official Statement and the information contained therein to be used in connection with the sale and delivery of the Authority’s Series 2005 A Bonds; and

FURTHER RESOLVED, that, if it is determined to be necessary or advisable,  the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Executive Vice President, Secretary and General Counsel, Treasurer, Deputy Treasurer and all other officers of the Authority be, and each of them hereby is, authorized on behalf of the Authority to obtain a commitment letter and municipal bond insurance policy for the Series 2005 A Bonds with such terms and conditions as such officer deems necessary or advisable from such municipal bond insurance issuer as the President and Chief Executive Officer or Chairman may select, covering scheduled payments of principal of and interest on such Bonds, including mandatory sinking fund redemption payments; and

FURTHER RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Executive Vice President, Secretary and General Counsel, Treasurer, Deputy Treasurer, and all other officers of the Authority be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents, including but not limited to those actions, certificates, agreements and other documents described in the Seventh Supplemental Resolution, the Contract of Purchase and the other documents approved today or required in connection with the obtaining of a municipal bond insurance policy, which they, or any of them, may deem necessary or advisable in order to (i) consummate the lawful sale, issuance and delivery of the Series 2005 A Bonds, (ii) implement any action permitted to be taken by the Authority under the Seventh Supplemental Resolution, the Contract of Purchase relating to the Series 2005 A Bonds and the other agreements and documents approved today following the issuance of the Series 2005 A Bonds, and (iii) effectuate the purposes of the transactions and documents approved today.

CONTRACT OF PURCHASE, PRELIMINARY OFFICIAL STATEMENT AND OFFICIAL STATEMENT FOR SERIES 2005 B BONDS

The Chairman stated that the form of Contract of Purchase proposed to be entered into with Citigroup Global Markets Inc., and such other purchasers as may be approved by the Chairman or President and Chief Executive Officer, including, without limitation, J.P. Morgan Securities Inc., Goldman, Sachs & Co. and Merrill Lynch & Co., Inc., providing for the sale of the Series 2005 B Bonds to said purchasers would be substantially the same as the form of the Contract of Purchase relating to the Series 2005 A Bonds.  The Chairman also presented a draft form of the Preliminary Official Statement relating to the Series 2005 B Bonds (attached hereto as Exhibit 4).  Said proposed Contract of Purchase and draft form of the Preliminary Official Statement were considered by the Trustees, and thereupon, on motion duly made and seconded, the following resolutions were unanimously adopted:

RESOLVED, that all the Series 2005 B Bonds shall, subject to the limitations described below, be sold to Citigroup Global Markets Inc. (“Citigroup”), and such other purchasers as may be approved by the Chairman or President and Chief Executive Officer, including, without limitation, J.P. Morgan Securities, Inc., Goldman, Sachs & Co. and Merrill Lynch & Co., Inc., at such prices, with accrued interest, if any, on such Series 2005 B Bonds from the date of said Series 2005 B Bonds to the date of delivery and payment for said Bonds, as the Chairman or President and Chief Executive Officer may accept and as will be in compliance with the requirements of the Seventh Supplemental Resolution, pursuant to a Contract of Purchase, in substantially the form of the Contract of Purchase relating to the Series 2005 A Bonds submitted at this meeting (attached hereto as Exhibit 3), as such Contract may be modified as hereinafter provided, and upon the basis of the representations therein set forth; and

FURTHER RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer, and Deputy Treasurer be, and each of them hereby is, authorized on behalf of the Authority, subject to the limitations described below, to execute an Agreement to Purchase the 2005 B Bonds (the “Agreement to Purchase Bonds”) with Citigroup substantially in the form submitted at this meeting (attached hereto as Exhibit 5), with such changes, insertions, deletions, amendments and supplements as the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer or Deputy Treasurer may approve, subject to the requirements of the Seventh Supplemental Resolution, and to deliver it to Citigroup, and that said officers and all other officers of the Authority are hereby authorized and directed to carry out or cause to be carried out all obligations of the Authority set forth in said Agreement to Purchase Bonds upon execution thereof; provided that such agreement (i) establishes that the Authority and Citigroup will enter into the Authority’s customary and usual Contract of Purchase substantially in the form submitted at this meeting; (ii) establishes the price, maturities, call provisions (if any), coupons, principal amounts, and interest payment dates of the 2005 B Bonds, among other things; and (iii) specifies that the 2005 B Bonds be rated, tax-exempt and non-AMT; and

FURTHER RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer, and Deputy Treasurer be, and each of them hereby is, authorized on behalf of the Authority, subject to the limitations described below, to execute a Contract of Purchase substantially in the form submitted at this meeting, providing for the sale of the Series 2005 B Bonds to said purchasers, with such changes, insertions, deletions, amendments and supplements as the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer or Deputy Treasurer may approve, subject to the requirements of the Seventh Supplemental Resolution, and to deliver it to said purchasers; and that said officers and all other officers of the Authority are hereby authorized and directed to carry out or cause to be carried out all obligations of the Authority set forth in said Contract of Purchase upon execution thereof; and

FURTHER RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer and Deputy Treasurer be, and each of them hereby is, authorized to make such changes, insertions, deletions, amendments and supplements, to or from the draft form of the Preliminary Official Statement relating to the Series 2005 B Bonds which was presented at this meeting, as may be approved by such officer, and upon the completion of any such modifications, such officer is authorized to execute such certificates as may be requested by Citigroup or any underwriters of the Series 2005 B Bonds to certify on behalf of the Authority that such Preliminary Official Statement is “deemed final” for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934, subject to the omission of such information as is permitted by the Rule, and the distribution of the Preliminary Official Statement relating to the Series 2005 B Bonds of the Authority is hereby approved to all interested persons in connection with the sale of such Bonds; and

FURTHER RESOLVED, that the Chairman or President and Chief Executive Officer be, and each of them hereby is, authorized to adopt and execute on behalf of the Authority a final Official Statement of the Authority relating to Series 2005 B Bonds, in such form and substance as the Chairman or President and Chief Executive Officer deems necessary or desirable, and the delivery of said Official Statement to the purchasers of said Series 2005 B Bonds is hereby authorized, and the Authority hereby authorizes said Official Statement and the information contained therein to be used in connection with the sale and delivery of the Authority’s Series 2005 B Bonds; and

FURTHER RESOLVED, that, if it is determined to be necessary or advisable,  the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Executive Vice President, Secretary and General Counsel, Treasurer, Deputy Treasurer and all other officers of the Authority be, and each of them hereby is, authorized on behalf of the Authority to obtain a commitment letter and municipal bond insurance policy for the Series 2005 B Bonds with such terms and conditions as such officer deems necessary or advisable from such municipal bond insurance issuer as the President and Chief Executive Officer or Chairman may select, covering scheduled payments of principal of and interest on such Bonds, including mandatory sinking fund redemption payments; and

FURTHER RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Executive Vice President, Secretary and General Counsel, Treasurer, Deputy Treasurer and all other officers of the Authority be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents, including but not limited to those actions, certificates, agreements and other documents described in the Seventh Supplemental Resolution, the Agreement to Purchase Bonds, the Contract of Purchase and the other documents approved today or required in connection with the obtaining of a municipal bond insurance policy, which they, or any of them, may deem necessary or advisable in order to (i) consummate the lawful sale, issuance and delivery of the Series 2005 B Bonds, (ii) implement any action permitted to be taken by the Authority under the Seventh Supplemental Resolution, the Agreement to Purchase Bonds, the Contract of Purchase relating to the Series 2005 B Bonds and the other agreements and documents approved today following the issuance of the Series 2005 B Bonds, and (iii) effectuate the purposes of the transactions and documents approved today.

APPOINTMENT OF REGISTRAR,
PAYING AGENT AND ESCROW AGENT UNDER GENERAL RESOLUTION

RESOLVED, that JPMorgan Chase Bank, N.A. is hereby appointed as Registrar, Paying Agent and Escrow Agent for the Series 2005 A Bonds and the Series 2005 B Bonds under the General Resolution.

AUTHORIZATION OF CONTINUING DISCLOSURE AGREEMENTS

RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer, and Deputy Treasurer be, and each of them hereby is, authorized to execute a Continuing Disclosure Agreement relating to the Series 2005 A Bonds, between the Authority and JPMorgan Chase Bank, N.A., as Trustee under the General Resolution, and a Continuing Disclosure Agreement relating to the Series 2005 B Bonds, between the Authority and JPMorgan Chase Bank, N.A., as Trustee under the General Resolution, each in substantially the form set forth in Appendix C to Part 1 of the draft Preliminary Official Statement to be issued in connection with the sale of the Series 2005 A Bonds and the Series 2005 B Bonds, respectively, submitted at this meeting, each with such changes, insertions, deletions, and supplements, as such authorized executing officer deems in his discretion to be necessary or appropriate, such execution to be conclusive evidence of such approval.

1998 Swap Agreements

RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Executive Vice President, Secretary and General Counsel, Treasurer, and Deputy Treasurer be, and each of them hereby is, authorized to terminate the Authority’s three separate interest rate swap agreements dated March 13, 1998 with (i) Citigroup (fka Salomon Brothers) Ref. N11708, (ii) Goldman Sachs Mitsui Marine Derivative Products, L.P.(Swaps Transaction NUUS803640 (090000AC0) ) and (iii) Merrill Lynch Capital Services, Inc. Transaction-Reference 98MU0191 in the aggregate notional amount of $268,135,000 (the “1998 Swap Agreements”) and pay any termination fees in an amount not to exceed in the aggregate $35,000,000.

COMMERCIAL PAPER NOTES, SERIES 3

RESOLVED, the Trustees hereby authorize the issuance of taxable Series 3 CP Notes of the Authority in an amount not to exceed $35,000,000 and the application of proceeds of sale therefrom for the purpose of paying any termination or other payments in connection with the termination of the 1998 Swap Agreements; and

FURTHER RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer, and Deputy Treasurer be, and each of them hereby is, authorized on behalf of the Authority, subject to the limitations described below, to execute an Assignment Agreement, providing for the assignment of its position in the relevant portions of certain swaps to Citigroup, with such changes, insertions, deletions, amendments and supplements as the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Treasurer or Deputy Treasurer may approve and to deliver it to Citigroup; and that said officers and all other officers of the Authority are hereby authorized and directed to carry out or cause to be carried out all obligations of the Authority set forth in said Assignment Agreement upon execution thereof; and

FURTHER RESOLVED, that Operating Fund monies are authorized to be used in an amount not to exceed $4,000,000 for the payment of certain fees relating to the termination of the 1998 Swap Agreements; provided, however, the payment of such termination fees shall not exceed in the aggregate $35,000,000.

AGREEMENTS FOR BOND AND SPECIAL COUNSEL SERVICES

RESOLVED, that the Executive Vice President, Secretary and General Counsel be, and hereby is, authorized on behalf of the Authority to execute letter agreements between the Authority and the law firm of Hawkins Delafield & Wood LLP, for the provision by such firm of bond counsel services to the Authority, and with the law firm of Nixon Peabody LLP for the provision by such firm of special counsel services to the Authority, all in connection with the Series 2005 A Bonds and the Series 2005 B Bonds and the related transactions authorized hereby, with such agreements having such terms and conditions as the Executive Vice President, Secretary and General Counsel may approve.

ADDITIONAL AUTHORIZATION

RESOLVED, that the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Executive Vice President, Secretary and Executive Vice President, Secretary and General Counsel, Treasurer, Deputy Treasurer, Deputy Secretary, and all other officers of the Authority be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to effectuate the foregoing resolutions.

EXHIBITS

Exhibit 1:

Seventh Supplemental Resolution Authorizing Series 2005 A Revenue Bonds and Series 2005 B Revenue Bonds

Exhibit 2:

Draft of Preliminary Official Statement relating to the Series 2005 A Bonds

Exhibit 3:

Draft of Contract of Purchase relating to the Series 2005 A Bonds

Exhibit 4:

Draft of Preliminary Official Statement relating to the Series 2005 B Bonds

Exhibit 5:

Draft of Agreement to Purchase the Series 2005 B Bonds

 

Mr. Brady presented the highlights of staff’s recommendations to the Trustees and Mr. Sheehan presented the resolutions recommended for adoption.  In response to a question from Chairman Seymour, Mr. Sheehan said that the Series 2005A bond sale would not proceed until bond counsel has provided the Authority with its opinion that the Authority could issue tax-exempt bonds for the transaction which relates to the financing of the Long Island Sound Cable that is utilized by the Long Island Power Authority (“LIPA”).  Responding to a question from Vice Chairman McCullough, Mr. Brady said that the Authority was aware that LIPA is considering privatization, and that if that were to occur, it would potentially adversely affect the tax-exempt status of the bonds.  Responding to questions from Vice Chairman McCullough, Mr. Brady said that in the event the 2005 A Bonds are issued, the balance of the 2000A Revenue Bonds that would be outstanding until December of this year would be $187 million.  Mr. Brady went on to say that in addition to refunding the 2000A bonds, proceeds from the 2005A bonds would cover the cost of issuance.

Regarding the 2005 B Revenue Bonds, Mr. Brady said that,  while the Authority has never carried out a “buy on a wire” transaction before, the Authority’s  financial advisor agrees that it is an advisable course of action and the transaction has passed bond counsel review.  In response to another question from Vice Chairman McCullough, Mr. Brady said that the advantages to the Authority of issuing the 2005B Revenue Bonds  are that it would reduce variable-rate debt and eliminate counterparty risk associated with  the swap agreements, while offering the Authority more flexibility to utilize variable-rate debt for other purposes.     Mr. Brady added that a “buy on the wire” arrangement would allow the Authority  to move quickly if there is an opportunity in the next few months to successfully execute the transaction since the objective is to have municipal rates low and swap rates high.  Chairman Seymour said that using “buy on a wire” transactions was acceptable as long as they were monitored and Mr. Brady assured him that staff, the Authority’s financial advisor and the bond underwriters would all be doing so.


 

POWER AUTHORITY OF THE STATE
OF NEW YORK



_________________________________________

SEVENTH SUPPLEMENTAL RESOLUTION

authorizing

SERIES 2005 A REVENUE BONDS AND SERIES 2005 B REVENUE BONDS


_________________________________________


Adopted on September 20, 2005


 

TABLE OF CONTENTS

Page

 TOC \t "Heading 1,1, Heading 2,2" \* MERGEFORMAT ARTICLE I

DEFINITIONS AND STATUTORY AUTHORITY

101.                                Supplemental Resolution; Authority.................................................................................... PAGEREF _Toc56481224 \h 1

102.                                Definitions................................................................................................................................. PAGEREF _Toc56481225 \h 1

ARTICLE II

AUTHORIZATION OF BONDS

201.                                Principal Amount, Designation and Series........................................................................ PAGEREF _Toc56481227 \h 3

202.                                Purposes.................................................................................................................................... PAGEREF _Toc56481228 \h 3

203.                                Details of the Bonds................................................................................................................. PAGEREF _Toc56481229 \h 3

204.                                Delegation of Authority.......................................................................................................... PAGEREF _Toc56481230 \h 6

205.                                Form of Bonds and Trustee’s Authentication Certificate................................................ PAGEREF _Toc56481231 \h 7

206.                                Execution and Authentication of Bonds............................................................................... PAGEREF _Toc56481232 \h 7

ARTICLE III

SERIES 2005 A AND SERIES 2005 B CREDIT FACILITIES

301.                                Series 2005 A Credit Facility............................................................................................... PAGEREF _Toc56481234 \h 8
302.                                Series 2005 B Credit Facility............................................................................................... PAGEREF _Toc56481234 \h 8

ARTICLE IV

ADDITIONAL AUTHORIZATIONS; MISCELLANEOUS

401.                                Tax Covenant............................................................................................................................. PAGEREF _Toc56481236 \h 9

402.                                Certain Findings and Determinations................................................................................. PAGEREF _Toc56481236 \h 9

403.                                Notice to Owners upon Event of Default............................................................................. PAGEREF _Toc56481237 \h 10

404.                                Further Authority.................................................................................................................. PAGEREF _Toc56481238 \h 10

405.                                Effective Date.......................................................................................................................... PAGEREF _Toc56481239 \h 10

 

 


 

SEVENTH SUPPLEMENTAL RESOLUTION

authorizing

SERIES 2005 A REVENUE BONDS and SERIES 2005 B REVENUE BONDS

BE IT RESOLVED by the Trustees of the Power Authority of the State of New York as follows:



DEFINITIONS AND STATUTORY AUTHORITY

Supplemental Resolution; Authority.  This resolution (“Seventh Supplemental Resolution”) is supplemental to, and is adopted in accordance with Article VIII of a resolution adopted by the Authority on February 24, 1998 entitled “General Resolution Authorizing Revenue Obligations” (“General Resolution”, and as heretofore amended and supplemented and collectively with the Seventh Supplemental Resolution, the “Resolution”), and is adopted pursuant to the provisions of the Act.

Definitions.   LISTNUM ·  All terms which are defined in Section 101 of the General Resolution shall have the same meanings for purposes of this Seventh Supplemental Resolution.

In this Seventh Supplemental Resolution:

Beneficial Owner” means, for any Bond which is held by a nominee, the beneficial owner of such Bond.

“Bonds” or “Bonds of a Series” and words of like import shall mean the Series 2005 A Revenue Bonds and the Series 2005 B Revenue Bonds authorized by Section 201 hereof, or such two Series collectively, as the context may require.

“Depository Participant” means any Person for which the Securities Depository holds Bonds as securities depository.

DTC” shall mean The Depository Trust Company, New York, New York, or its successors.

Securities Depository” shall mean DTC as the Securities Depository appointed pursuant to Section 203(f) hereof, or any substitute Securities Depository, or any successor to DTC or any substitute Securities Depository.

“Series 2005 A Bonds” shall mean the Series 2005 A Revenue Bonds authorized by Section 201 hereof.

Series 2005 A Credit Facility” means, with respect to the Series 2005 A Bonds, a Credit Facility (as defined in the Resolution) issued in the form of a municipal bond insurance policy by the Series 2005 A Credit Facility Issuer, dated the Closing Date, which guarantees the payment of scheduled principal of and interest on the Series 2005 A Bonds when due (including mandatory sinking fund installments).

Series 2005 A Credit Facility Issuer” means the issuer of the Series 2005 A Credit Facility specified in Section 301 hereof.

“Series 2005 B Bonds” shall mean the Series 2005 B Revenue Bonds authorized by Section 201 hereof.

Series 2005 B Credit Facility” means, with respect to the Series 2005 B Bonds, a Credit Facility (as defined in the Resolution) issued in the form of a municipal bond insurance policy by the Series 2005 B Credit Facility Issuer, dated the Closing Date, which guarantees the payment of scheduled principal of and interest on the Series 2005 B Bonds when due (including mandatory sinking fund installments).

Series 2005 B Credit Facility Issuer” means the issuer of the Series 2005 B Credit Facility specified in Section 302 hereof.

2003 Revolving Credit Agreement” shall mean the 2003 Revolving Credit Agreement dated as of August 12, 2003 among the Authority, Dexia Credit Local, acting through its New York Agency, as Administrative Agent, and the banks named in such Agreement.

Certificate of Determination” shall mean any certificate of the President and Chief Executive Officer of the Authority or the Chairman of the Authority delivered pursuant to Section 204 of this Seventh Supplemental Resolution, setting forth certain terms and provisions of the Bonds.


AUTHORIZATION OF BONDS

Principal Amount, Designation and Series.  Pursuant to the provisions of the General Resolution, two Series of Obligations entitled to the benefit, protection and security of such provisions is hereby authorized with the following designations: the Series 2005 A Revenue Bonds and the Series 2005 B Revenue Bonds.  The aggregate principal amount of each of the Series 2005 A Revenue Bonds and the Series 2005 B Revenue Bonds shall be set forth in the Certificate of Determination relating to the respective Bonds; provided that the aggregate principal amount of Series 2005 A Bonds to be issued shall not exceed $195,000,000 and the aggregate principal amount of Series 2005 B Bonds to be issued shall not exceed $235,000,000. Individual maturities of the Bonds or portions thereof may bear such additional designations, if any, as may be set forth in the related Certificate of Determination. In the event that any Bonds are not issued until 2006, the applicable Certificate of Determination may (i) redesignate such Bonds and (ii) make any other conforming changes deemed necessary or appropriate to reflect the year of issuance.

Purposes.  (a)  The purposes for which the Bonds are to be issued shall include such of the following as shall be specified in the applicable Certificate of Determination:

to provide moneys to redeem the Authority’s Series 2000 A Revenue Bonds maturing on November 15 in the years 2006 through 2020 inclusive, including the redemption price of, and accrued interest to the date of redemption on, such bonds;
to provide moneys to refund $238,255,000 in aggregate principal amount of the Authority’s Series 2 Commercial Paper Notes; and
to pay certain costs and expenses associated with the issuance of the Bonds, including underwriters’ discount, structuring fees, municipal bond insurance premium costs and reimbursement of costs and expenses incurred by the Authority in connection therewith.

Such portion of the proceeds of the Bonds as may be specified in the applicable Certificate of Determination shall be applied for the purposes specified in subsection (a) above.  Such proceeds shall be deposited and applied in accordance with the applicable Certificate of Determination.

Details of the Bonds.  The following provisions set forth the details of the Bonds.

Dates, Maturities and Interest.  The Bonds shall be dated and shall bear interest from the date as may be specified by the President and Chief Executive Officer or the Chairman pursuant to Section 204 hereof.  The Bonds shall mature on the dates and in the principal amounts, and bear interest, as the President and Chief Executive Officer or the Chairman shall specify in the applicable Certificate of Determination.  Interest on the Bonds shall be payable semiannually on the interest payment dates and at the respective rates per annum specified in the applicable Certificate of Determination.  The Bonds shall be Tax-Exempt Obligations.

Denominations.  The Bonds shall be issued in the form of fully registered Bonds in the denomination of $5,000 or any integral multiple of $5,000.

Designations.  Unless the Authority shall otherwise direct, the Series 2005 A Bonds shall be lettered “2005A‑” and numbered consecutively from one upward, and the Series 2005 B Bonds shall be lettered “2005B‑” and numbered consecutively from one upward.

Payment of Principal and Interest.  Principal and Redemption Price of each Bond shall be payable at the Principal Office of the Trustee upon presentation and surrender of such Bond.

The Trustee shall indicate on the Bonds the date of their authentication as provided in Section 205 hereof.  Interest on the Bonds shall be payable from the interest payment date next preceding the date of authentication to which interest shall have been paid, unless such date of authentication is an interest payment date, in which case from such date if interest has been paid to such date; provided, however, that interest shall be payable on the Bonds from such date as may be specified by the President and Chief Executive Officer or the Chairman pursuant to Section 204 hereof, if the date of authentication is prior to the first interest payment date therefor.  Interest on the Bonds shall be payable on the interest payment dates specified in the applicable Certificate of Determination to the registered owner as of the close of business on the first day (whether or not a Business Day) of the calendar month in which the interest payment date occurs, such interest to be paid by the Trustee by check mailed to the registered owner at his address as it appears on the books of registry; provided, however, that upon redemption of any Bond, the accrued interest payable upon redemption shall be payable at the Principal Office of the Trustee upon presentation and surrender of such Bond, unless the redemption date is an interest payment date, in which event the interest on such Bond so redeemed shall be paid by the Trustee by check mailed to the registered owner at his address as it appears on the books of registry.

The principal or Redemption Price of and interest on the Bonds shall also be payable at any other place which may be provided for such payment by the appointment of any other Paying Agent or Paying Agents as permitted by the General Resolution.

The foregoing provisions of this subsection (d) shall be subject to the provisions of subsection (f) of this Section.

The principal of and premium, if any, and interest on the Bonds shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts.

Trustee, Registrar, and Paying Agent.  JPMorgan Chase Bank has been appointed as Trustee for the Obligations.  The Trustee is also hereby appointed as the Registrar and Paying Agent for the Bonds.

Securities Depository.  The Bonds when initially issued shall be registered in the name of Cede & Co., as nominee of DTC, in the form of a single fully registered Bond for each maturity of the Bonds with a different interest rate applicable thereto.  DTC is hereby appointed initial Securities Depository for the Bonds, subject to the provisions of subsection (g) of this Section.  So long as DTC or its nominee, as Securities Depository, is the registered owner of Bonds, individual purchases of beneficial ownership interests in Bonds may be made only in book-entry form by or through DTC participants, and purchasers of such beneficial ownership interests in Bonds will not receive physical delivery of bond certificates representing the beneficial ownership interests purchased.

So long as DTC or its nominee, as Securities Depository, is the registered owner of Bonds, payments of principal of and premium, if any, and interest on such Bonds will be made by wire transfer to DTC or its nominee, or otherwise as may be agreed upon by the Authority, the Trustee and DTC.  Transfers of principal, premium, if any, and interest payments to DTC participants will be the responsibility of DTC.  Transfers of such payments to beneficial owners of Bonds by DTC participants will be the responsibility of such participants and other nominees of such beneficial owners.

So long as DTC or its nominee, as Securities Depository, is the registered owner of Bonds, the Authority shall send, or cause the Trustee to send, or take timely action to permit the Trustee to send, to DTC notice of redemption of such Bonds and any other notice required to be given to registered owners of such Bonds pursuant to the Resolution, in the manner and at the times prescribed by the Resolution, except as may be agreed upon by the Authority, the Trustee (if applicable) and DTC.

Neither the Authority nor any Fiduciary shall have any responsibility or obligation to the DTC participants, beneficial owners or other nominees of such beneficial owners for (1) sending transaction statements; (2) maintaining, supervising or reviewing the accuracy of, any records maintained by DTC or any DTC participant or other nominees of such beneficial owners; (3) payment or the timeliness of payment by DTC to any DTC participant, or by any DTC participant or other nominees of beneficial owners to any beneficial owner, of any amount due in respect of the principal of or redemption premium, if any, or interest on Bonds; (4) delivery or timely delivery by DTC to any DTC participant, or by any DTC participant or other nominees of beneficial owners to any beneficial owners, of any notice (including notice of redemption) or other communication which is required or permitted under the terms of the Resolution to be given to holders or owners of Bonds; (5) the selection of the beneficial owners to receive payment in the event of any partial redemption of Bonds; or (6) any action taken by DTC or its nominee as the registered owner of the Bonds.

Notwithstanding any other provisions of this Seventh Supplemental Resolution to the contrary, the Authority, the Registrar and Paying Agent, and the Trustee shall be entitled to treat and consider the person in whose name each Bond is registered in the books of registry as the absolute owner of such Bond for the purpose of payment of principal, Redemption Price, and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever.  The Trustee shall pay all principal and Redemption Price of and interest on the Bonds only to or upon the order of the respective Owners, as shown in the books of registry as provided in this Seventh Supplemental Resolution, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Authority’s obligations with respect to payment of principal and Redemption Price of and interest on such Bonds to the extent of the sum or sums so paid.

Notwithstanding any other provisions of this Seventh Supplemental Resolution to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal and Redemption Price of, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, pursuant to DTC’s rules and procedures.

Payments by the DTC participants to beneficial owners will be governed by standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such DTC participant and not of DTC, the Trustee or the Authority, subject to any statutory and regulatory requirements as may be in effect from time to time.

Provisions similar to those contained in this subsection (f) may be made by the Authority in connection with the appointment by the Authority of a substitute Securities Depository, or in the event of a successor to any Securities Depository.

Authorized Officers are hereby authorized to enter into such representations and agreements as they deem necessary and appropriate in furtherance of the provisions of this subsection (f).

Replacement Bonds.  The Authority shall issue Bond certificates (the “Replacement Bonds”) directly to the beneficial owners of the Bonds, or their nominees, in the event that DTC determines to discontinue providing its services with respect to the Bonds, at any time by giving notice to the Authority, and the Authority fails to appoint another qualified Securities Depository to replace DTC.  In addition, the Authority also shall issue Replacement Bonds directly to the beneficial owners of the Bonds, or their nominees, in the event the Authority discontinues use of DTC as Securities Depository at any time upon determination by the Authority, in its sole discretion and without the consent of any other person, that beneficial owners of the Bonds shall be able to obtain certificated Bonds.

Notices.  In connection with any notice of redemption provided in accordance with Section 405 of the General Resolution, notice of such redemption shall also be sent by the Trustee by first class mail, overnight delivery service or other secure overnight means, postage prepaid, to the appropriate Credit Facility Issuer, to any Rating Agency and to at least two (2) of the national Information Services (described below) that disseminate securities redemption notices, in each case not later than the mailing of notice required by the Resolution.

Information Services include: Bloomberg Municipal Repository, 100 Business Park Drive, Skillman, New Jersey  08558; DPC Data Inc., One Executive Drive, Fort Lee, New Jersey  07024; FT Interactive Data, Attn: NRMSIR, 100 William Street, 15th Floor, New York, New York  10038; and Standard and Poor’s J.J. Kenny Repository, Attn: Kenny Repository Service, 55 Water Street, 45th Floor, New York, New York  10041; or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, or any other such services as the Authority may designate in writing to the Trustee.

Delegation of Authority.  There is hereby delegated to the President and Chief Executive Officer of the Authority and the Chairman of the Authority, subject to the limitations contained herein, the power with respect to the Bonds to determine and effectuate the following:

the principal amount of the Bonds to be issued, provided that the aggregate principal amount of Series 2005 A Bonds to be issued shall not exceed $195,000,000 and the aggregate principal amount of Series 2005 B Bonds to be issued shall not exceed $235,000,000;

the date or dates, maturity date or dates and principal amount of each maturity of the Bonds, the first interest payment date or dates of the Bonds, and the date or dates from which the Bonds shall bear interest;

the interest rate or rates of the Bonds, provided, however, that such interest rate or rates shall result in a true interest cost (i.e., the rate, compounded semi-annually, necessary to discount the amounts payable on the respective principal and interest payment dates of such Bonds to the purchase price received therefor) to the Authority, based on the purchase price for which the Bonds are sold, not in excess of seven and a half percent (7.5%) per annum;

the Sinking Fund Installments for any term Bond and the methodology to be applied to reduce such installments upon redemption by the Authority, if any, of any such term Bond;

the portions of the proceeds of the Bonds and the amounts to be deposited and applied in accordance with Section 202 hereof;

the redemption provisions of the Bonds;

the definitive form or forms of the Bonds and the definitive form or forms of the Trustee’s certificate of authentication thereon;

additional or different designations, if any, for particular maturities of Bonds or portions thereof intended to distinguish such maturities or portions thereof from other Bonds; and

provisions that are deemed necessary or advisable by the President and Chief Executive Officer or the Chairman of the Authority in connection with the implementation and delivery to the Trustee of a Credit Facility; and

any other provisions deemed advisable by the President and Chief Executive Officer of the Authority or the Chairman of the Authority, not in conflict with the provisions hereof or of the General Resolution.

The President and Chief Executive Officer of the Authority or the Chairman of the Authority shall execute one or more certificates evidencing determinations or other actions taken pursuant to the authority granted herein, an executed copy of which shall be delivered to the Trustee.  Each such certificate shall be deemed a Certificate of Determination and shall be conclusive evidence of the action or determination of such officer as to the matters stated therein.  The provisions of each Certificate of Determination shall be deemed to be incorporated in Article II hereof.  No such Certificate of Determination shall, nor shall any amendment to this Seventh Supplemental Resolution, change or modify any of the rights or obligations of the Series 2005 A Credit Facility Issuer or the Series 2005 B  Credit Facility Issuer without their written assent thereto.

Form of Bonds and Trustee’s Authentication Certificate.  Subject to the provisions of the General Resolution and to any amendment or modifications thereto or insertions therein as may be approved by the President and Chief Executive Officer of the Authority or the Chairman of the Authority pursuant to Section 204 hereof, the form of the Bonds, form of assignment, and the Trustee’s Certificate of Authentication shall be in substantially the form set forth in Appendix A hereto, with necessary or appropriate variations, omissions and insertions as are incidental to their series, numbers, denominations, maturities, interest rate or rates, registration provisions, redemption provisions, status of interest to owners thereof for Federal income tax purposes, and other details thereof and of their form or as are otherwise permitted or required by law or by the Resolution, including this Seventh Supplemental Resolution.  Any portion of the text of any Bond may be set forth on the reverse thereof, with an appropriate reference thereto on the face of such Bond.  Bonds may be typewritten, printed, engraved, lithographed or otherwise reproduced.

Execution and Authentication of BondsNotwithstanding the first sentence of paragraph 1 of Section 303 of the General Resolution, the Bonds shall be executed in the name of the Authority by the manual or facsimile signature of its Chairman, its Vice Chairman or its President and Chief Executive Officer and its corporate seal (or a facsimile thereof) shall be affixed, imprinted, engraved or otherwise reproduced, and attested by the manual or facsimile signature of its Secretary, a Deputy Secretary, or an Assistant Secretary, or in such other manner as may be required by law.


SERIES 2005 A AND SERIES 2005 B CREDIT FACILIT
IES

Series 2005 A Credit Facility.  The Authority may obtain the Series 2005 A Credit Facility issued in the form of a municipal bond insurance policy from such municipal bond insurance issuer as may be selected by the President and Chief Executive Officer or Chairman of the Authority and specified in the applicable Certificate of Determination with respect to the Series 2005 A Bonds, dated the Closing Date.

Series 2005 B Credit Facility.  The Authority may obtain the Series 2005 B Credit Facility issued in the form of a municipal bond insurance policy from such municipal bond insurance issuer as may be selected by the President and Chief Executive Officer or Chairman of the Authority and specified in the applicable Certificate of Determination with respect to the Series 2005 B Bonds, dated the Closing Date.


ADDITIONAL AUTHORIZATIONS; MISCELLANEOUS

Tax Covenant.  (a)  The Authority shall not take or omit to take any action which would cause interest on any Bond to be included in the gross income of any Owner thereof for Federal income tax purposes by reason of subsection (b) of Section 103 of the Internal Revenue Code of 1986 [Title 26 of the United States Code] as in effect on the date of original issuance of such Obligations.  Without limiting the generality of the foregoing, no part of the proceeds of the Bonds or any other funds of the Authority shall be used directly or indirectly to acquire any securities or obligations the acquisition of which would cause any Bond to be an “arbitrage bond” as defined in section 148 of the Internal Revenue Code of 1986 [Title 26 of the United States Code] as then in effect and to be subject to treatment under subsection (b)(2) of Section 103 of the Code as an obligation not described in subsection (a) of said section.  The Authority shall pay to the United States any amounts that are necessary for the purpose of compliance with the provisions of Section 148 of the Code.

(b)  Notwithstanding any other provision of the Resolution to the contrary, upon the Authority’s failure to observe, or refusal to comply with, the above covenant in paragraph (a), the Owners, or the Trustee acting on their behalf, shall be entitled only to the right of specific performance of such covenant, and shall not be entitled to any of the other rights and remedies provided under Article X of the General Resolution.

Certain Findings and Determinations.  The Trustees hereby find and determine:

The General Resolution has not been amended, supplemented, or repealed since the adoption thereof except by the resolution of the Authority entitled “First Supplemental Resolution Authorizing Series 1998 Revenue Bonds” adopted February 24, 1998, by the resolution of the Authority entitled “Second Supplemental Resolution Authorizing Series 2000 A Revenue Bonds” adopted October 31, 2000, by the resolution of the Authority entitled “Third Supplemental Resolution Amending the General Resolution” adopted June 26, 2001, by the resolution of the Authority entitled “Fourth Supplemental Resolution Authorizing Series 2001 A Revenue Bonds and Series 2002 A Revenue Bonds” adopted September 25, 2001, by the resolution of the Authority entitled “Fifth Supplemental Resolution Authorizing Series 2002 A Revenue Bonds” adopted September 17, 2002, and by the resolution of the Authority entitled “Sixth Supplemental Resolution Authorizing Series 2003 A Revenue Bonds” adopted November 25, 2003.  This Seventh Supplemental Resolution supplements the General Resolution as heretofore amended and supplemented, constitutes and is a “Supplemental Resolution” within the meaning of such quoted term as defined and used in the General Resolution, and is adopted under and pursuant to the General Resolution.

The Bonds constitute and are “Obligations” within the meaning of the quoted word as defined and used in the Resolution.

Any municipal bond insurance policy issued by such municipal bond insurance issuer as may be selected by the President and Chief Executive Officer or Chairman of the Authority and specified in the applicable Certificate of Determination, dated the Closing Date, shall constitute and shall be required to be a “Credit Facility” within the meaning of the quoted words as defined and used in the Resolution.  Furthermore, any such municipal bond insurance policy, including any charges, fees, costs and expenses that the Series 2005 A or Series 2005 B Credit Facility Issuer may reasonably incur in the administration of the Series 2005 A or Series 2005 B Credit Facility, respectively, or in the pursuit of any remedies under the Resolution or otherwise afforded by law or equity, shall constitute and shall be required to be a “Subordinated Contract Obligation” within the meaning of the quoted words as defined and used in the Resolution, provided, however, each of the Series 2005 A and Series 2005 B Credit Facility Issuer shall, to the extent it makes any payment of principal of or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Series 2005 A and Series 2005 B Credit Facility, respectively.

The Trust Estate is not encumbered by any lien or charge thereon or pledge thereof, other than the parity lien and charge thereon and pledge thereof securing the outstanding 1985 Notes, the notes issued pursuant to the 2003 Revolving Credit Agreement, and certain payments required to be made in connection with the Parity Swap Obligations entered into by the Authority in 1998, 2000, 2001 and 2002,  and the subordinate liens and charges thereon and subordinated pledge thereof created by the existing Subordinated Indebtedness and Subordinated Contract Obligations.

There does not exist an “Event of Default” within the meaning of such quoted term as defined in Section 1001 of the Resolution, nor does there exist any condition which, after the giving of notice or the passage of time, or both, would constitute such an “Event of Default.”

Notice to Owners upon Event of Default.   LISTNUM ·  If an Event of Default occurs of which the Trustee has or is deemed to have notice under Section 702(c)(6) of the General Resolution, the Trustee shall give by telecopier or other electronic means or by telephone (promptly confirmed in writing)  notice thereof to the Authority.  Within two Business Days thereafter (unless such Event of Default has been cured or waived), the Trustee shall give notice of such Event of Default to each Owner, provided, however, that except in the instance of an Event of Default under Section 1001(i) or (ii)of the General Resolution, the Trustee may withhold such notice to Owners if and so long as the Trustee in good faith determines that the withholding of such notice is in the interests of Owners, and provided, further, that notice to Owners of any Event of Default under Section 1001(ii) or (iii) of the General Resolution shall not be given until the grace period has expired.

For so long as the Bonds are registered solely in the name of the Securities Depository or its nominee, where the General Resolution provides for notice to the Owners of the Bonds of the existence of, or during the continuance of, any Event of Default, the Trustee shall:  (i) establish a record date (the “Record Date”) for determining the identity of the Persons entitled to receive such notice; (ii) request a securities position listing from the Securities Depository showing the Depository Participants holding positions in the Bonds affected by such notice as of the Record Date for such notice; (iii) send by first-class, postage prepaid mail, copies of the notice as provided above to each Depository Participant identified in the securities position listing as holding a position in the Bonds as of the Record Date for the notice, to each nationally recognized municipal securities information repository and state information depository (within the meaning of Rule 15c2‑12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934), and to any Person identified to the Trustee as a non-objecting Beneficial Owner (a non-objecting Beneficial Owner is a Person for whom a Depository Participant acts as nominee, and who has not objected to the disclosure of his or her name and security position) pursuant to the immediately following clause; (iv) request that the Depository Participant retransmit the notice to all Persons for which it served as nominee on the Record Date, including non-objecting Beneficial Owners, or retransmit the notice to objecting Beneficial Owners and provide a listing of non-objecting Beneficial Owners for whom the Depository Participant served as nominee on the Record Date to the Trustee and (v) provide as many copies of the notice as may be requested by any nominee owner of the Bonds.  Any default in performance of the duties required by this paragraph shall not affect the sufficiency of notice to Owners given in accordance with the provisions of the General Resolution, nor the validity of any action taken under the General Resolution in reliance on such notice to Owners.

Further Authority.  The Chairman, Vice Chairman, President and Chief Executive Officer, Executive Vice President, Secretary and General Counsel, Senior Vice President and Chief Financial Officer, Vice President-Finance, Treasurer, or Deputy Secretary of the Authority, or any Authorized Officer (as defined in the General Resolution) are each hereby authorized to execute and deliver to the Trustee appointed pursuant to the General Resolution such documents and certifications as may be necessary to give effect to this Seventh Supplemental Resolution and the transactions contemplated hereby.

Effective Date.  This Seventh Supplemental Resolution shall be fully effective in accordance with its terms upon the filing with the Trustee of a copy hereof certified by an Authorized Officer.

 


 

APPENDIX A

[FORM OF BONDS]

No. 2005 [A][B]- ______

 

$_______________

POWER AUTHORITY OF THE STATE OF NEW YORK

Revenue Bonds, Series 2005 [A][B]

Interest Rate

Maturity Date

CUSIP

Registered Owner:

CEDE & CO.

Principal Amount:

_______________________________ Dollars

       

POWER AUTHORITY OF THE STATE OF NEW YORK (herein called the “Authority”), a body corporate and politic, a political subdivision and a corporate municipal instrumentality of the State of New York, organized and existing under and by virtue of the laws of the State of New York, acknowledges itself indebted to, and for value received hereby promises to pay, but solely from the Trust Estate and not otherwise, to the registered owner specified above or registered assigns, the Principal Amount specified above on the Maturity Date specified above (subject to the right of prior redemption hereinafter mentioned) in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts, and to pay to the registered owner hereof interest on such principal sum in like coin or currency and at the rate of interest per annum specified above.  This Bond is dated as of _____ __, 200_, interest on this Bond shall be payable from the______ __or ______ __ next preceding the date of authentication to which interest shall have been paid, unless such date of authentication is a _____ __ or ______ __, in which case from such date if interest has been paid to such date; provided, however, that such interest shall be payable on this Bond from _____ _, 200_, if the date of authentication is prior to the first interest payment date therefor.  Interest on this Bond shall be payable on _____ __, 200_ and semi-annually thereafter on ______ __ and ______ __, in each case to the registered owner as of the close of business on the first day (whether or not a Business Day) of the calendar month in which the interest payment date occurs, such interest to be paid by the Trustee by check mailed to the registered owner at his address as it appears on the books of registry; provided, however, that upon redemption of this Bond, the accrued interest payable upon redemption shall be payable at the Principal Office of the Trustee upon presentation and surrender of this Bond, unless the redemption date is an interest payment date, in which event the interest on this Bond so redeemed shall be paid by the Trustee by check mailed to the registered owner at his address as it appears on the books of registry.

This Bond is one of a duly authorized issue of obligations of the Authority designated as its “Obligations” issued and to be issued in various series under and pursuant to the Power Authority Act, Title 1 of Article 5 of the Public Authorities Law, Chapter 43‑A of the Consolidated Laws of the State of New York, as amended (herein called the “Act”), and under and pursuant to a resolution of the Authority adopted on February 24, 1998, entitled “General Resolution Authorizing Revenue Obligations”, and a supplemental resolution of the Authority adopted on September 20, 2005, and entitled “Seventh Supplemental Resolution Authorizing Series 2005 A Revenue Bonds and Series 2005 B Revenue Bonds” (herein called the “Seventh Supplemental Resolution”).  Said resolutions are herein collectively called the “Resolution”.  Capitalized terms used herein and not otherwise defined herein shall have the meanings provided in the Resolution.

This Bond is one of a series of Obligations of various maturities designated as “Revenue Bonds, Series 2005 [A][B]” (herein called the “Bonds”) issued in the aggregate principal amount of $__________ under the Resolution.  Copies of the Resolution are on file at the office of the Authority and at the Principal Office of JPMorgan Chase Bank, as Trustee under the Resolution, or its successor as Trustee (herein called the “Trustee”), in the Borough of Manhattan, City and State of New York.  The Trustee is also the Registrar and Paying Agent for the Bonds.

The Obligations are payable as to principal, Redemption Price, and interest solely from and are equally and ratably secured solely by the Trust Estate, subject to the provisions of the Resolution permitting the application of such Trust Estate to the purposes and on the terms and conditions set forth in the Resolution, including, without limitation, the prior application of Revenues to the payment of Operating Expenses.  The principal and Redemption Price of, and interest on, the Obligations shall not be payable from the general funds of the Authority nor shall the Obligations constitute a legal or equitable pledge, charge, lien, or encumbrance upon any of the property or upon any of the income, receipts, or revenues of the Authority, except the Trust Estate.

Reference is hereby made to the Resolution, copies of which are on file in the Principal Office of the Trustee, and to all of the provisions of which any holder of this Bond by his acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the pledge and covenants securing the Obligations, including this Bond; the Revenues and other moneys and securities constituting the Trust Estate pledged to the payment of the principal of and interest on the Obligations issued thereunder; the nature and extent and manner of enforcement of the pledge; the conditions upon which Obligations may hereafter be issued thereunder, payable on a parity from the Trust Estate and equally and ratably secured therewith; the conditions upon which the Resolution may be amended or supplemented with or without the consent of the Owners of the Obligations; the rights and remedies of the Owner hereof with respect hereto and thereto, including the limitations therein contained upon the right of an Owner hereof to institute any suit, action or proceeding in equity or at law with respect hereto and thereto; the rights, duties and obligations of the Authority and the Trustee thereunder; the terms and provisions upon which the pledges and covenants made therein may be discharged at or prior to the maturity or redemption of this Bond, and the Bond thereafter no longer be secured by the Resolution or be deemed to be Outstanding thereunder, if moneys or certain specified securities shall have been deposited with the Trustee sufficient and held in trust solely for the payment hereof; and for the other terms and provisions thereof.

As provided in the Resolution, Obligations may be issued from time to time pursuant to supplemental resolutions in one or more series, in various principal amounts, may mature at different times, may bear interest at different rates and may otherwise vary as in the Resolution provided.  The aggregate principal amount of Obligations which may be issued under the Resolution is not limited except as provided in the Resolution, and all Obligations issued and to be issued under the Resolution are and will be equally secured by the pledge and covenants made therein, except as otherwise expressly provided or permitted in the Resolution.

To the extent and in the manner permitted by the terms of the Resolution, the provisions of the Resolution or any resolution amendatory thereof or supplemental thereto may be modified or amended by the Authority, with the written consent of the Owners of a majority in principal amount of the Obligations then Outstanding, and, in case less than all of the Obligations will be affected thereby, with such consent of the Owners of at least a majority in principal amount of the Obligations so affected then Outstanding, at the time such consent is given; provided, however, that if such modification or amendment will, by its terms, not take effect so long as particular Obligations remain Outstanding, the consent of the Owners of such Obligations shall not be required and such Obligations shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Obligations under the Resolution.

This Bond is transferable, as provided in the Resolution, only upon the books of the Authority kept for that purpose at the above-mentioned office of the Registrar by the Owner hereof in person, or by his attorney duly authorized in writing, upon surrender of the Bond together with a written instrument of transfer satisfactory to the Registrar duly executed by the Owner or his duly authorized attorney, and thereupon a new registered Bond or Bonds, and in the same aggregate principal amount, Series, maturity and interest rate shall be issued to the transferee in exchange therefor as provided in the Resolution, and upon payment of the charges therein prescribed.  The Authority and each Fiduciary may deem and treat the Person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal or Redemption Price hereof and interest due hereon and for all other purposes, and all such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the Authority nor any Fiduciary shall be affected by any notice to the contrary.

[Description of the applicable redemption provisions, as specified in the applicable Certificate of Determination, to be inserted here]

When the Trustee shall receive notice from the Authority of its election to redeem Obligations pursuant to the Resolution, and when redemption of Obligations is required by the Resolution, the Trustee shall give notice, in the name of the Authority, of the redemption of such Obligations, which notice shall specify the Series, maturities and, if any maturity shall include Obligations bearing different interest rates and all Obligations of such maturity are not being redeemed, interest rate of the Obligations to be redeemed, the redemption date and the place or places where amounts due upon such redemption will be payable and, if less than all of the Obligations of any like Series, maturity and interest rate are to be redeemed, the letters and numbers or other distinguishing marks of such Obligations so to be redeemed, and, in the case of Obligations to be redeemed in part only, such notice shall also specify the respective portions of the principal amount thereof to be redeemed, and, if applicable, that such notice is conditional and the conditions that must be satisfied.  Such notice shall further state that on such date there shall become due and payable upon each Obligation to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portions of the principal thereof in the case of Obligations to be redeemed in part only, together with interest accrued to the redemption date, and that from and after such date interest thereon shall cease to accrue and be payable.  Such notice shall be given by first class mail, postage prepaid, not less than 30 days nor more than 45 days before the redemption date, to the Owners of any Obligations or portions of Obligations which are to be redeemed, at their last addresses, if any, appearing upon the registry books. Failure so to mail any such notice to any particular Owner shall not affect the validity of the proceedings for the redemption of Obligations not owned by such Owner and failure of any Owner to receive such notice shall not affect the validity of the proposed redemption of Obligations.

Any notice of optional redemption may state that it is conditional upon receipt by the Trustee of moneys sufficient to pay the Redemption Price of such Obligations or upon the satisfaction of any other condition, or that it may be rescinded upon the occurrence of any other event, and any conditional notice so given may be rescinded at any time before payment of such Redemption Price if any such condition so specified is not satisfied or if any such other event occurs.  Notice of such rescission shall be given by the Trustee to affected Owners of Obligations as promptly as practicable upon the failure of such condition or the occurrence of such other event.

The principal of the Bonds may be declared due and payable before the maturity thereof, and such declaration may be annulled, as provided in the Resolution.

The Act provides that neither the members of the Authority nor any person executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

Pursuant to Section 1011 of the Act, the Authority, as agent for the State of New York, does hereby pledge to and agree with the holder of this Bond that the State of New York will not limit or alter the rights vested in the Authority by the Act, as amended, until this Bond and each of the other Bonds, together with the interest hereon and thereon, have been fully met and discharged or adequate provisions have been made by law for protection of the holders of all such Bonds.

The Bonds shall not be a debt of the State of New York, and the State shall not be liable thereon.

It is hereby certified and recited that all conditions, acts and things required by law and the Resolution to exist, to have happened and to have been performed precedent to and in the issuance of this Bond, exist, have happened and have been performed and that the issuance of the Bonds, together with all other indebtedness of the Authority, is within every debt and other limit prescribed by the laws of the State of New York.

This Bond shall not be entitled to any benefit under the Resolution or be valid or become obligatory for any purpose until this Bond shall have been authenticated by the execution by the Trustee of the Trustee’s Certificate hereon.

IN WITNESS WHEREOF, POWER AUTHORITY OF THE STATE OF NEW YORK has caused this Bond to be signed in its name and on its behalf by the facsimile signature of its President and Chief Executive Officer, and its corporate seal (or facsimile thereof) to be hereunto affixed, imprinted, engraved or otherwise reproduced and attested by the facsimile signature of its Secretary, a Deputy Secretary, or an Assistant Secretary.

POWER AUTHORITY OF THE
STATE OF NEW YORK


By:________________________________________
      President and Chief Executive Officer

[SEAL]

Attest:

_________________________

          Secretary


 

[FORM OF CERTIFICATE OF AUTHENTICATION FOR BONDS]

 

AUTHENTICATION DATE:

Trustee’s Certificate

The Bond is one of the bonds, of the series designated therein, described in the within-mentioned Resolution.

JPMORGAN CHASE BANK
   Trustee



By:___________________________
                Authorized Officer


 

FORM OF ASSIGNMENT

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 _________________________________________________________________________________

(Please insert Social Security or Taxpayer Identification Number of Transferee)
____________________________

/___________________________/

_________________________________________________________________________________
(Please print or typewrite name and address, including zip code of Transferee)

_________________________________________________________________________________

the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints

_________________________________________________________________________________

attorney to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated: ______________

Signature Guaranteed:

_______________________________
NOTICE: Signature(s) must be guaranteed by a member or participant of a signature guarantee program.

 

_______________________________
NOTICE: The signature above must correspond with the name of the Owner as it appears upon the front of this Bond in every particular, without alteration or enlargement or change whatsoever.

 


 

STATEMENT OF INSURANCE  [if any]

_________________________________ New York, New York, has delivered its municipal bond insurance policy (the “Policy”) with respect to the scheduled payments due of principal of and interest, including principal and interest due by operation of scheduled mandatory sinking fund redemption, on this Bond to JPMorgan Chase Bank, New York, New York, or its successor, as paying agent for the Bonds (the “Paying Agent”).  Said Policy is on file and available for inspection at the principal office of the Paying Agent and a copy thereof may be obtained from ___________or the Paying Agent.

 

 


 

11.  Procurement (Services) Contract – St. Lawrence/FDR Power Project Life Extension and Modernization Program – Increase in Compensation Limits

The Executive Vice President – Power Generation submitted the following report:

SUMMARY

“The Trustees are requested to increase the compensation limits for previously awarded contracts to Alstom Power, Inc. (‘Alstom’) to provide the second set of eight turbines; General Electric International, Inc. (‘GE)’ for the rehabilitation of the remaining Generator Rotor Poles and Voith Siemens Power Generation, Inc. (‘VSY’) for the design and manufacture of the remaining eight sets of the Generation Control System.  The total estimated cost of the St. Lawrence Life Extension and Modernization Program (‘LEM’) is unchanged at $281,400,000.

BACKGROUND

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

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

“At their meeting of November 25, 1997, the Trustees approved the initiation of a program, estimated to cost $254,139,000, to renew the generation assets of St. Lawrence and were informed that the LEM program would begin in 1998 and would require about 15 years to complete.

“At their meeting of July 28, 1998, the Trustees authorized additional expenditures and approved an award of a contract to Alstom for modernization of the first set of eight turbines and replacements for the Baldwin Lima Hamilton machines.

“At subsequent meetings in March 2001, January 2002, June 2002, April 2003 and October 2003, additional expenditure authorizations were approved.

“At their meeting of February 24, 2004, the Trustees approved an increase in the project’s budget to $281,000,000, approved an increase in the expenditure authorization limit to $158,800,000 and also approved the award of a second contract to Alstom to provide the second set of eight turbines and replacements for the Allis Chalmers (‘AC’) machines.

DISCUSSION

“The LEM program is proceeding on schedule, achieving three units completed every two years as planned.  The current schedule for the first AC replacement turbine is six months ahead of the original schedule.  The release of the AC turbines, as well as the generator rotor poles and generator control systems is critical to maintaining the Authority’s schedule and controlling costs.

Replacement Turbines and Associated Work – Alstom Power, Inc. (‘Alstom’)

“As noted above, on February 24, 2004, the Trustees approved an award of a second contract to Alstom for the supply of the second set of eight turbines and associated work for $25,200,000 and authorized $6,000,000 for the release and manufacture of the prototype turbine.

“Upon award of the contract to Alstom, model testing commenced to evaluate different turbine designs.  The model developed by Alstom as the replacement turbine for the AC units exceeds its proposed guarantees and initial efficiency estimates.  It is expected that these units will provide the Authority with many years of trouble-free operation, while maximizing the available power from the St. Lawrence Plant.

“We are requesting that the Trustees release the remaining $19,200,000 for the manufacture of the seven other turbines and associated work.

Generator Rotor Pole Modifications – General Electric International, Inc. (‘GE’)

“At their meeting of July 28, 2000, the Trustees approved the award of a $6,300,000 contract to GE for furnishing material and refurbishing 16 generator rotors.  Subsequently, the contract amount was increased to $6,856,000 and the Trustees approved release of $3,816,000.  We are requesting that the Trustees release the remaining $3,040,000 for the remaining units.

Generation Control System – Voith Siemens Power Generation (‘VSY’)

“At their meeting of October 26, 1999, the Trustees approved a contract award in the amount of $11,500,000 to Voith Siemens Power Generation.  Subsequently, the contract amount was increased to $21,500,000 and the Trustees approved releases totaling $13,900,000, to date, for engineering, design and manufacture for the first eight units of the Generation Control System.

“We are requesting that the Trustees release the remaining $7,600,000 for the engineering, design and manufacture of the last eight units of the Generation Control System.

“The current expenditure authorization limit of $158,000,000 is sufficient to carry the project work into 2006.  However, as noted above, the specified increases in compensation limits are necessary for the timely and orderly prosecution of the work.

FISCAL INFORMATION

“Payments will be made from the St. Lawrence Capital Fund.   

RECOMMENDATION

“The Vice President – Project Management, the Vice President – Procurement and Real Estate, the Vice President and Chief Engineer – Power Generation, the Regional Manager – Northern New York and the Project Manager recommend that the Trustees approve increases in the compensation limits to Alstom Power, Inc. in the amount of $19,200,000 for the manufacture of the remaining seven turbines and related components, $3,040,000 to General Electric International, Inc. for rehabilitation of the remaining generator rotor poles and $7,600,000 to Voith Siemens for the manufacture of the last eight sets of the Generation Control System.

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

Mr. Welz presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Seymour, Mr. Welz said that there would be significant efficiency gains as a result of the St. Lawrence Life Extension and Modernization (“LEM”) Program.

 

 

The following resolution, as submitted by the Executive Vice President – Power Generation, was unanimously adopted.

RESOLVED, That approval is hereby granted under the existing contract with Alstom Power, Inc. to commit funds for the manufacturing of turbine runners and associated work for the Life Extension and Modernization of the St Lawrence/FDR Power Project, in the amounts listed below:

                                                Capital                                                              Contract Award

                                Alstom Power, Inc.

                                Current contract award amount                        $25,200,000

                                Value of releases authorized to date                 $  6,000,000

                                Current release authorization request            $19,200,000

AND BE IT FURTHER RESOLVED, That approval is hereby granted under the existing contract with General Electric International, Inc. to commit funds for the refurbishment of Generator Rotor Poles and associated work for the Life Extension and Modernization of the St. Lawrence/FDR Power Project, in the amounts listed below:

                                                Capital                                                              Contract Award

                                                General Electric International, Inc.

                                                Current contract award amount                          $6,856,000

                                                Value of releases authorized to date                   $3,816,000

                                                Current release authorization request              $3,040,000

AND BE IT FURTHER RESOLVED, That approval is hereby granted under the existing contract with Voith Siemens Power Generation, Inc. to commit funds for the engineering, design and manufacture of the Generation Control System for the Life Extension and Modernization of the St. Lawrence/FDR Power Project, in the amounts listed below:

                                                Capital                                                              Contract Award

                                                General Electric International, Inc.

                                                Current contract award amount                        $21,500,000

                                                Value of releases authorized to date                 $13,900,000

                                                Current release authorization request            $  7,600,000

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


 

12.  Lease of Office Space in the Clarence D. Rappleyea Building to Danziger & Markhoff, LLP and Federal Bar Council       

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to authorize two separate lease transactions.  The first is a Lease Amendment with an existing tenant, Danziger & Markhoff, LLP (‘Danziger’) on the 9th floor of the Clarence D. Rappleyea Building (‘Building’) in White Plains, New York.  This Lease Amendment would add approximately 2,024 square feet of office space as shown on Exhibit ‘12-A’ attached hereto.  Further, this lease amendment would extend the term of Danziger’s current lease for an additional five years to March 31, 2017.  The proposed lease extension is to commence upon the substantial completion of the build-out of the additional premises at an average annual base rent of $27.25 per square foot plus electricity at an average annual rate of $2.50 per square foot and adjustments to recover increases in taxes and operating expenses over a base year, as more specifically discussed in Exhibit ‘12-B’ attached hereto.

“The second transaction is to lease approximately 2,150 square feet of office space on the Lobby floor of the Building to the Federal Bar Council (‘Federal Bar’) as shown on Exhibit ‘12-C’ attached hereto.  The term of this lease is for 10 years commencing upon the substantial completion of the build-out at an average annual base rent of $24.45 plus electricity at $2.75 per square foot and adjustments to recover increases in taxes and operating expenses over a base year as more specifically described in Exhibit ‘12-D’ attached hereto.

BACKGROUND

“By deed dated July 10, 1991, the Authority acquired the Building, a commercial office building containing approximately 420,195 rentable square feet (‘rsf’).  Currently, the Authority is leasing approximately 155,321 rsf of the Building to various tenants.  Danziger, which had a lease with the Authority’s predecessor in title that the Authority acquired when it purchased the building, has been a Building tenant continuously since November 1981.  Danziger currently leases approximately 12,317 square feet of office space on the 9th floor.  The existing lease runs through March 31, 2012.  The space on the Lobby floor to be leased to Federal Bar was previously leased to Integrated Data Consulting Services, which executed a termination of lease as of July 8, 2005.

DISCUSSION

“Danziger, a long-established law firm with a primary focus on pension and estate planning issues, has requested to lease approximately 2,024 rsf of additional space contiguous to its existing space.  The total space to be leased to Danziger would be approximately 14,341 rsf.  The base rent for the additional space would be consistent with the terms of the existing lease.  Danziger also wishes to extend the term of the lease to March 31, 2017.  Preliminary negotiations have resulted in the basic lease terms set forth in Exhibit ‘12-B.’

“Federal Bar, currently in New York City, is an organization of lawyers who practice in the courts within the Second Circuit.  Federal Bar has requested that the Authority lease to it approximately 2,150 square feet of office space on the Lobby floor.  Preliminary negotiations have resulted in the basic lease terms set forth in Exhibit ‘12-D.’

“A review of local market conditions indicate that both these transactions compare favorably with other commensurate space being offered in downtown White Plains and the Building.

FISCAL INFORMATION

“Payment for tenant improvements and architectural and engineering fees as set forth in Exhibits ‘12-B’ and ‘12-D’ will be made from the Operating Fund.

 

RECOMMENDATION

“The Vice President – Procurement and Real Estate, the Director – Real Estate and the Director – Corporate Support Services recommend that the Trustees approve entering into a lease amendment with Danziger & Markhoff, LLP for additional office space in the Clarence D. Rappleyea Building and a five-year lease extension on terms substantially in accordance with the foregoing and with Exhibit ‘12-B’ attached hereto.

“The Vice President – Procurement and Real Estate, the Director – Real Estate and the Director – Corporate Support Services recommend that the Trustees approve entering into a lease with the Federal Bar Council in the Clarence D. Rappleyea Building on terms substantially in accordance with the foregoing and with Exhibit
‘12-D’ attached hereto.

“The Executive Vice President, Secretary, and General Counsel, the Executive Vice President – Corporate Services and Administration and I concur in the recommendation.”

Vice Chairman McCullough recused himself from voting on this item because of his firm’s business relations with Danziger & Markhoff, LLP.

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

RESOLVED, That the President and Chief Executive Officer, the Executive Vice President – Corporate Services and Administration or the Vice President – Procurement and Real Estate be, and hereby is, authorized to enter into a lease amendment for office space in the Clarence D. Rappleyea Building with Danziger & Markhoff, LLP on substantially the terms set forth in the foregoing report of the President and Chief Executive Officer and the attached Exhibit “12-B” and subject to approval of the lease documents by the Executive Vice President, Secretary and General Counsel; and be it further

RESOLVED, That the President and Chief Executive Officer, the Executive Vice President – Corporate Services and Administration or the Vice President – Procurement and Real Estate be, and hereby is, authorized to enter into a lease for office space in the Clarence D. Rappleyea Building with the Federal Bar Council on substantially the terms set forth in the foregoing report of the President and Chief Executive Officer and the attached Exhibit “12-D” and subject to approval of the lease documents by the Executive Vice President, Secretary and General Counsel; and be it further

RESOLVED, That the Executive Vice President – Corporate Services and Administration, the Vice President – Procurement and Real Estate or the Director – Real Estate be, and hereby is, authorized on behalf of the Authority to execute any and all other agreements, papers or instruments that may be deemed necessary or desirable to carry out the foregoing, subject to approval by the Executive Vice President, Secretary and General Counsel; and be it further

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


 

 

 

BASIC LEASE TERMS – Authority to Danziger & Markhoff, LLP

 

PREMISES:                             12,317 rsf presently occupied

                                                  2,024 rsf additional

                                                14,341 rsf total (approximately)

 

TERM:                                     Existing lease expires March 31, 2012.  Additional premises to extend lease additional five years to March 31, 2017.

 

ELECTRIC:                             To March 31, 2012, consistent with current lease.  From April 1, 2012 to lease termination $2.75/s.f.

 

BASE ANNUAL

RENTAL RATE[1]:                    4/1/05 to 3/31/07         $26.50/s.f. or $380,036.50 per annum

                                                4/1/07 to 3/31/09         $27.00/s.f. or $387.207.00 per annum

                                                4/1/09 to 3/31/17         $27.50/s.f. or $394,377.50 per annum

 

ADDITIONAL SPACE –

TERM COMMENCEMENT: Upon substantial completion of additional space.

 

ADDITIONAL SPACE –

RENT COMMENCEMENT:  Upon substantial completion of additional space.

 

LANDLORD’S CONTRIBUTION

TO TENANT’S WORK:         Construction of planned additional space including architectural and engineering fees.  Any costs that exceed Landlord’s Contribution to be paid for by Tenant.  Landlord will also provide Tenant additional 50% of cost, up to maximum of $50,000, toward ceiling replacement in existing premises.  Tenant may elect to borrow from Landlord remaining costs towards ceiling replacement (Tenant’s Contribution) as additional rent. Amount borrowed by Tenant plus compound interest at rate of 6% per annum will be amortized over Lease term.

 

ESCALATIONS:                     Proportionate share of increases in real estate taxes over a base year of 2005.  Proportionate share of increases in operating expenses over a base year of 2005.

 

PARKING:                              Consistent with the existing lease terms.

 

BROKERAGE                         There will be no brokerage commissions associated with

COMMISSIONS:                   this transaction.


 

 

 

BASIC LEASE TERMS – Authority to Federal Bar Council

 

PREMISES:                             2,150 rsf

 

TERM:                                     10 years.

 

ELECTRIC:                             $2.75/sf

 

BASE ANNUAL

RENTAL RATE[2]:                    Rent commencement to 3rd anniversary – $22.25/sf or $47,837.50/annum

                                                3rd anniversary to 6th anniversary – $24.25/sf or

$52,137.50/annum

                                                6th anniversary to 10th anniversary – $26.25/sf or $56,437.50/annum

 

TERM COMMENCEMENT:  Upon substantial completion.

 

RENT COMMENCEMENT:  Upon substantial completion.

 

LANDLORD’S CONTRIBUTION

TO TENANT’S WORK:         Construction of planned additional space including architectural and engineering fees not to exceed $10,000.  Any costs that exceed Landlord’s Contribution to be paid for by Tenant.  In addition, Landlord will recarpet and repaint demised premises with building standard materials.

 

ESCALATIONS:                     Proportionate share of increases in real estate taxes over base year of 2006.  Proportionate share of increases in operating expenses over base year of 2006.

 

PARKING:                              Parking to be paid separate of base rent.

 

BROKERAGE

COMMISSIONS:                   Per separate agreement.

 

 


 

13.          Procurement (Services) Contracts – Business Units and the 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 ‘13-A’ for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the nature of such services, the bases for the new awards 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 require the Trustees’ approval for the award of non-personal services, construction or equipment purchase contracts in excess of  $3,000,000, as well as personal services contracts in excess of $1,000,000 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 $15,000 to $6,000,000.  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.

Contracts in Support of Business Units/Departments and the Facilities:

Business Services

“Pursuant to Nuclear Regulatory Commission (‘NRC’) ruling NUR-0584, the Authority established an external Nuclear Decommissioning Trust (‘NDT’) fund in 1990.  Under the Purchase and Sale Agreement for the sale of its Indian Point 3 and James A. FitzPatrick Nuclear Power Plants to subsidiaries of the Entergy Corporation in November 2000, the Authority retained contractual decommissioning liability until license expiration (or until a change in tax status of the fund or any early dismantlement of the plants occurred), as well as responsibility for management of the NDT fund.  The Authority selected professional investment management firms, as a result of competitive bidding, to manage the fixed-income portion of the NDT fund.  Such funds have been actively managed, with the objective of preserving principal and maximizing earnings on the funds.  As of June 30, 2005, the balance in the NDT fund was $834 million; of this amount, $543 million was invested in high-quality fixed-income securities.  Since the current contracts for such investment management services expire in October, the Authority solicited proposals from 14 firms known to provide such services, including any that may have responded to a notice in the New York State Contract Reporter.  Seven proposals were received and evaluated by the Authority’s Treasury staff.  Each investment management firm was ranked according to various criteria, including, but not limited to: performance (2001-2004), performance consistency, schedule of fees and support/reporting capabilities.  Tattersall Advisory Group, a division of Evergreen Investments (‘Tattersall’) and BlackRock Financial Management (‘BlackRock’) were ranked first and second, respectively, among the responding bidders.  Based on return performance, these two firms have consistently outperformed the other bidders (each exceeding the industry benchmark for three of the last four years).  In addition, their respective fees are by far the lowest of the submitted proposals.  Finally, qualitative factors, including caliber and depth of the firm’s personnel, technological support and credit research capabilities, were also considered; Tattersall and BlackRock prove to be quite satisfactory in these areas.  Based on an analysis of their performance, consistency, fees and support/reporting capabilities, staff recommends the award of new contracts to both Tattersall and BlackRock, the most qualified and lowest-priced bidders.  The two contracts with BlackRock Financial Management and Tattersall Advisory Group (Q-02-3621; PO #s TBA) would become effective on November 1, 2005; the intended term of these contracts is five years, subject to the Trustees’ approval, which is hereby requested.  The projected five-year investment management fees for the fixed-income portion of the NDT fund are $3.8 million.  This assumes a starting balance of $280 million for each firm, with an annual growth rate of 6%.  Approval is also hereby requested to have such fees paid directly from the NDT fund.

“The Authority has been self-insured for Workers’ Compensation since 1995.  As a result of competitive bidding, the Authority has selected professional firms to provide third-party administrative (‘TPA’) services for the Authority’s self-insured Workers’ Compensation program.  Since the current contract for such services expires in December 2005, the Authority solicited proposals from 16 firms known to provide such services, including any that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated by Risk Management staff.  Based on its qualifications, experience of personnel and reasonable pricing, staff recommends the award of the subject contract to Helmsman Management Services, Inc., a wholly owned subsidiary of Liberty Mutual Insurance Company (‘Helmsman’; Q-02-3587; PO # TBA), the only qualified bidder.  Helmsman is highly service oriented, providing many features (including in-house medical case management personnel and legal counsel); its electronic and reporting capabilities are comprehensive and versatile and its medical review savings and special funds recovery are good.  The new contract with Helmsman would become effective on January 1, 2006, subject to the Trustees’ approval.  The intended term of this contract is three years, with an option to extend for two additional years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $762,000 (including the option years).  It should be noted that this figure does not include actual claims funding.

Corporate Services & Administration

“The contract with Management Resources Group, Inc. (‘MRG’; PO # TBA) would become effective on October 1, 2005, subject to the Trustees’ approval.  The purpose of this contract is to provide for the continued standardization, refinement and maintenance of nomenclature and related data records for the Authority’s stock item inventory classification used in the Authority’s MAXIMO and SAP systems.  In 2002, the Authority awarded the original contract to MRG, as a result of competitive bidding, for the analysis and standardization of such nomenclature and the initial cleansing of stock-item data records.  Services included the review, reclassification and renaming of approximately 80,000 stock items at all Authority facilities and reformatting such data by applying uniform methodology and proprietary MRG technology.  The Authority has adopted the MRG methodology and has applied it to new stock items entered by Authority users; MRG reviews the Authority data, advises of duplicates and researches databases and catalogs to provide more complete information for the Authority’s inventory system.  This has resulted in improved descriptions, elimination of duplicates and multiple variants, data verification and quality assurance processes.  Two purchase orders were subsequently issued for annual maintenance services needed to sustain data integrity.  Since there are no available in-house resources to provide such services, which are reasonably priced and meet the ongoing needs of the Authority, staff therefore recommends the award of a new multiyear contract to MRG, on a sole-source basis, to provide for the continuation of such services, as needed.  (It should be noted that a notice was published in the New York State Contract Reporter regarding the Authority’s intent to award the subject contract to MRG.)  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $105,000.

“The contract with Stuart Dean Co., Inc. (Q-02-3572; 4500110171) would become effective on October 1, 2005, subject to the Trustees’ approval.  The purpose of this contract is to provide for maintenance of the metallic entrances and lobby area of the Authority’s White Plains Office (Clarence D. Rappleyea Building), which are finished in a variety of stainless steel and aluminum surfaces.  Services include cleaning, washing/waxing and/or refurbishing metal surfaces on the building exterior and lobby interior (e.g., doors, window frames, panels, elevator, mailbox, hardware, etc.), as well as bi-annual inspection/maintenance of the revolving and swing doors on the lobby level and recommendations for repairs and system enhancements.  Bid packages were sent to five firms, including any that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Based on its qualifications, experience and reasonable pricing, staff recommends the award of the subject contract to Stuart Dean, the lowest qualified bidder.  The intended term of this contract is three years, with an option to extend for two additional years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $100,000.

Law Department

“On June 28, 2004, Consulting Solicitation Q-02-3446 appeared in the New York State Contract Reporter, advising potential bidders that the Authority was seeking responses from parties interested in entering into continuous service agreements for legal services. After receiving the responses, the Law Department conducted a review of the need for the assistance of outside counsel and consulting services and the availability of resources to meet that need in the form of both existing firms providing legal services and prospective firms responding to the solicitation.  The committee conducting this review (the ‘Evaluation Committee’) offered its final recommendation in a memorandum dated February 11, 2005.  The General Counsel and his Deputy have reviewed the memorandum and are prepared at this time to enter into new continuous service agreements for general legal services with the following four  firms:  Dickstein Shapiro Morin & Oshinsky LLP; Kaplan, von Ohlen & Massamillo, LLC; Nixon Peabody LLP and Stuntz, Davis & Staffier, PC.  The Authority requires legal advice and counsel regarding various regulatory issues and activities before the Federal Energy Regulatory Commission (‘FERC’) and other regulatory bodies.  Such issues include New York State Independent System Operator (‘NYISO’) rulings and activities, electricity regulation, anti-trust matters and other rate matters.  The contract with Dickstein Shapiro Morin & Oshinsky would provide special expertise not available in house to represent the Authority in FERC proceedings regarding the NYISO rules for power plant station service, as well as to handle requests from the General Counsel on matters relating to federal regulations and other requirements affecting the Authority’s energy efficiency programs.  The Authority also requires counsel experienced in Federal Aviation Administration (‘FAA’) regulatory matters, various industry issues and certain methods of operation, or prospective operation, of aircraft owned or leased by the Authority.  The contract with Kaplan, von Ohlen & Massamillo would provide for such legal services in connection with aviation and other matters, as necessary.  The Authority requires legal advice and services relating to labor and employment matters, including but not limited to, assistance in evaluating discrimination claims pending before administrative agencies or complex internal personnel and performance issues, arbitrations or Public Employment Relations Board (‘PERB’) cases, and opinions in connection with the Authority’s variable pay and salary administration policies, as well as public sector labor law advice.  The Authority also requires the services of disclosure counsel in connection with the preparation of its Official Statements for each Revenue Bond Series.  The contract with Nixon Peabody would provide the required depth of experience for services in connection with such labor and employment matters, as well as disclosure counsel, as needed.  The Authority requires strategic advice and counsel in connection with its long-range planning efforts.  The contract with Stuntz, Davis & Staffier would provide for such services on an intermittent basis as various strategic legal questions arise. The intended term of the new contracts is three years, with an option to extend for two additional years.  The Trustees’ approval is hereby requested for the procurement of services under the new contracts for the full five-year period (including option years).  Approval is also requested for the release and allocation of funding to these contracts with the subject firms, from an aggregate total of $625,000 for the three-year period ending September 30, 2008, to be drawn from Legal Outside Counsel Budget funds, as assignments are made by the Executive Vice President, Secretary and General Counsel and the Deputy General Counsel.

Power Generation

“The contract with Buffalo Industrial Chemicals Inc. (4600001470) would become effective on October 1, 2005, subject to the Trustees’ approval.  The purpose of this contract is to provide for a cooling tower system treatment program at the Niagara Project, in compliance with all Authority requirements and New York State Department of Environmental Conservation regulations.  Services include all material, labor, supervision and equipment for weekly testing and reporting of the biological, chemical and functional condition of three cooling tower systems during the cooling season; chemical regulation of the systems is also included, as needed.  Bid packages were sent to three firms, including any that may have responded to a notice in the New York State Contract Reporter; one proposal was received and evaluated.  Based on its qualifications, experience and reasonable pricing, staff recommends the award of the subject contract to Buffalo Industrial Chemicals, the sole responding qualified bidder.  The intended term of this contract is three years and three months, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $20,000.

“The contract with DCB Elevator Co., Inc. (4600001471) would become effective on October 1, 2005, subject to the Trustees’ approval.  The purpose of this contract is to provide for monthly maintenance services for approximately 25 elevators, escalators and wheelchair lifts located in various buildings at the Niagara Power Project (including the Robert Moses Power Plant, the Lewiston Pump Generating Plant, the Power Vista, the General Maintenance building and other support facilities), as well as for on-call repairs performed on a time-and-material basis. Bid packages were sent to four firms, including any that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Based on its responsiveness to the requirements of the Authority’s specification, as well as the firm’s qualifications and reasonable pricing, staff recommends award of the subject contract to DCB Elevator Co., Inc., the lowest qualified bidder.  The intended term of this contract is four years, subject to the Trustees’ approval, which is hereby requested.  Pricing will be in accordance with the New York State Office of General Services contract for such services.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $280,000.

“The contract with Exhibits & More (4600001475) would become effective on October 1, 2005, subject to the Trustees’ approval.  The purpose of this contract is to provide for maintenance and repair services for displays and exhibits at the Niagara Power Project’s Visitors’ Center, as needed.  Services include, but are not limited to maintaining and repairing display lighting and audio, carpentry, electrical and mechanical repairs.  Bid packages were sent to three firms, including any that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Based on its qualifications, experience and reasonable pricing, staff recommends the award of the subject contract to Exhibits & More, the lowest qualified bidder.  The intended term of this contract is four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $28,000.

“Since 1999, the Authority has developed a comprehensive Geographic Information System (‘GIS’) database for its overhead transmission line system.  Data on vegetation structure and composition, land use, foreign utilities, maintenance issues and other features have been collected along the Authority’s right-of-way corridors using pen top computers and field-portable GIS.  The Authority requires annual inventories for the portions of its transmission system that it plans to have treated for vegetation management the following year, as part of its Integrated Vegetation Management program, which operates on a four-year treatment cycle.  Since the existing contract for such services was expiring, the Authority solicited proposals from 21 firms known to provide such services, including any that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated by a multi-disciplinary Evaluation Committee.  The initial apparent low bidder was considered to be non-responsive since its approach deviated from the requirements of the Authority’s specification and a significant post-processing effort would be required to render its field inventory data GIS-compatible.  Based on its qualifications, experience, ability to perform such work and responsiveness to the Authority’s specification, as well as reasonable pricing, staff recommends the award of a contract to Gomez & Sullivan Engineers, P.C. (‘G&S’; 4600001460), the lowest qualified bidder, to provide for transmission line right-of-way vegetation inventory services.  Due to scheduling requirements, the appropriate interim authorization to award the subject contract was obtained in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures; the contract became effective on July 1, 2005, subject to the Trustees’ subsequent ratification and approval as soon as practicable.  The intended term of this contract is four years (to be released annually), subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $740,000.

“Due to scheduling requirements, the contract with Hi Tech Air Conditioning Service, Inc. (‘Hi Tech’; 4600001493) became effective on September 1, 2005, subject to the Trustees’ subsequent ratification and approval as soon as practicable.  The purpose of this contract is to provide for HVAC maintenance services for the Authority’s Flynn Plant and Brentwood Station, including inspection services, seasonal start-up and preventive maintenance. Bid packages were sent to nine firms, including any that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Based on its ability to perform the services and reasonable pricing, staff recommends the award of the subject contract to Hi Tech, the low bidder; the other proposal received was incomplete.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $100,000.

 “The contract with Modern Disposal Service Inc. (4600001477) would become effective on October 1, 2005, subject to the Trustees’ approval.  The purpose of this contract is to provide for asbestos-containing waste removal services for the St. Lawrence/FDR Project.  Services also include providing specialized waste containers, transportation to and disposal of such asbestos waste at its landfill, in accordance with all current Authority, New York State Department of Environmental Conservation and U.S. Environmental Protection Agency regulations.  Bid packages were sent to three firms, including any that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Based on its qualifications, experience and reasonable pricing, staff recommends the award of the subject contract to Modern Disposal Service, the lower qualified bidder.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $100,000.

“The contract with Nate’s Typewriters and Computers, Inc., a New York State certified Minority Business Enterprise (4600001482), became effective on September 1, 2005, subject to the Trustees’ subsequent approval as soon as practicable.  The purpose of this contract is to provide for maintenance and repair services for approximately 16 fax machines located at the Niagara Power Project.  Services include all labor, material, equipment and supervision to provide scheduled and emergency on-site service of various Xerox and HP fax machines, as needed.  Bid packages were sent to five firms, including any that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Based on its ability to perform the work and reasonable pricing, staff recommends the award of the subject contract to Nate’s Typewriters and Computers, the lower qualified bidder.  The intended term of this contract is four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $15,000.

“The contract with Northeast Metrology Corp. (4600001468) would become effective on October 1, 2005, subject to the Trustees’ approval.  The purpose of this contract is to provide for calibration services of mechanical maintenance instruments (such as micrometers, calipers and torque wrenches) at the Niagara Power Project, as required and in accordance with all applicable standards and quality assurance requirements.  Services will be performed primarily on site, but some tools may require servicing at the vendor’s facility.  Bid packages were sent to five firms, including any that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Based on its qualifications, experience of personnel, quality assurance and reasonable pricing, staff recommends the award of the subject contract to Northeast Metrology Corp., the lower qualified bidder.  The intended term of this contract is four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the term of the contract, $25,000.

“The three contracts with Rotator Staffing Services, Inc. (‘Rotator’), L.J. Gonzer Associates (‘Gonzer’) and SUN Technical Services, Inc. (‘SUN’) (Q-02-3663; PO #s TBA) would become effective on October 9, 2005, subject to the Trustees’ approval.  The purpose of these contracts is to provide the services of temporary engineering personnel to support the Authority’s facilities, as needed.  Services may include engineers and technicians in the following disciplines: electrical, mechanical, structural/civil, licensing, environmental, facility (HVAC, plumbing), fire protection, chemical, construction and construction management, cost and scheduling, instrumentation and control, estimating, quality assurance/quality control and code compliance; as well as engineering aides and clerical aides.  Currently, there are approximately 12 such temporary engineering personnel working under three active contracts on several long-term capital projects. These include the Life Extension and Modernization and upgrade programs for the St. Lawrence/FDR, Niagara and Blenheim-Gilboa Projects, as well as the 500 MW Combined Cycle Plant.  Since the existing contracts were expiring and, based on current and anticipated staffing needs, as well as the need to continue services to support the aforementioned efforts, services were rebid.  Bid packages were sent to 38 firms, including any that may have responded to a notice in the New York State Contract Reporter.  Thirteen proposals were received and evaluated.  Based on their mark-up rates for existing and new personnel, staff recommends the award of contracts to the Rotator, Gonzer and SUN firms, the low bidders who are qualified to provide such services.  It should be noted that the contracting firms have agreed to hold their mark-up rates firm for the initial contract term.  These mark-up rates (which include Federal and State unemployment taxes, FICA, Workers’ Compensation insurance, overhead and fee) are among the lowest in the industry, at less than 20% for existing contractor personnel.  The intended term of these contracts is three years and three months, with an option to extend for one additional year, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total estimated amount expected to be expended for the initial three-year term of the contracts, $6,000,000.  Such contracts will be closely monitored for utilization levels, available approved funding, and combined total expenditures.

FISCAL INFORMATION

“Funds required to support contract services for various Business Units/Departments and the Facilities have been included in the 2005 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.   

RECOMMENDATION

“The Deputy Secretary and Deputy General Counsel, the Vice President – Procurement and Real Estate, the Vice President and Chief Engineer, the Vice President – Project Management, the Vice President – Finance, the Vice President – Environmental Management, the Director – Corporate Support Services, the Regional Manager – Northern New York, the Regional Manager – Western New York, the Regional Manager – Central New York and the Regional Manager – Southeastern New York recommend the Trustees’ approval of the award of multiyear procurement contracts to the companies listed in Exhibit ‘13-A’ and as discussed above, for the purposes and in the amounts set forth above.

“The Executive Vice President – Power Generation, the Executive Vice President, Secretary and General Counsel, the Executive Vice President – Corporate Services and Administration, the Senior Vice President and Chief Financial Officer, the Senior Vice President – Transmission 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 “13-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 President and Chief Executive Officer and all other officers of the Authority are, and each of them hereby is, authorized on behalf of the Authority to do any and all things and take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President, Secretary and General Counsel.

 

14.          Procurement (Services) and other Contracts – Business Units and Facilities – Extensions, Approval of Additional Funding
and Increases in Compensation Ceilings                                    

The Executive Vice President – Power Generation submitted the following report:

SUMMARY

“The Trustees are requested to approve the continuation and funding of the procurement contracts listed in Exhibit ‘14-A’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities.  In addition, the Trustees are requested to approve an increase in the compensation ceilings of the contracts with the following firms: General Electric International Inc., the Board of Education of the City School District of the City of New York (the ‘BOE’ and dba the New York City Department of Education), Slattery Skanska, Inc., and The NorthBridge Group and Portal Solutions.  Detailed explanations of the nature of such services, the reasons for extension, the additional funding required and the projected expiration dates are set forth 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 revised Expenditure Authorization Procedures require the Trustees’ approval when the cumulative change order value of a personal services contract exceeds the greater of $250,000 or 35% of the originally approved contract amount not to exceed $500,000, or when the cumulative change order value of a non-personal services, construction, equipment purchase or non-procurement contract exceeds the greater of $500,000 or 35% of the originally approved contract amount not to exceed $1,000,000.

DISCUSSION

“Although the firms identified in Exhibit ‘14-A’ have provided effective services, the issues or projects requiring these services have not been resolved or completed, and the need exists for continuing these contracts.  The Trustees’ approval is required because the terms of these contracts exceed one year and/or because the cumulative change order limits will exceed the levels authorized by the Expenditure Authorization Procedures in forthcoming change orders.  All of the subject contracts contain provisions allowing the Authority to terminate the services at the Authority’s convenience, without liability other than paying for acceptable services rendered to the effective date of termination.  These contract extensions do not obligate the Authority to a specific level of personnel resources or expenditures.

“Extension of each of the contracts identified in Exhibit ‘14-A’ is requested for one or more of the following reasons: (1) additional time is required to complete the current contractual work scope or additional services related to the original work scope; (2) to accommodate an Authority or external regulatory agency schedule change that has delayed, reprioritized or otherwise suspended required services; (3) the original consultant is uniquely qualified to perform services and/or continue its presence and rebidding would not be practical or (4) the contractor provides a proprietary technology or specialized equipment, at reasonably negotiated rates, that the Authority needs to continue until a permanent system is put in place.

Contracts in Support of Business Units/Departments and Facilities:

Energy Services & Technology

“The contract with Verde Electric Maintenance Corp. (4500098393) provides for the installation of light-emitting diode (‘LED’) traffic and pedestrian signals at various sites in Westchester County (including New Rochelle, Peekskill, Mount Vernon, Croton-on-Hudson and Port Chester), as part of the Authority’s SENY High Efficiency Lighting Program (‘HELP’).  Such projects employ the latest technologies to enhance the energy efficiency of tax-supported public facilities, lower municipal electric bills and improve air quality by lessening the demand on power plants, as well as contribute to traffic safety by providing better illumination.  The original award, which was competitively bid, became effective on November 5, 2004 for an initial term of less than one year.  Due to delays in the approval processes of two customers, a six-month extension is now requested in order to complete the original scope of work.  The current contract amount is $292,809; it is anticipated that no additional funding will be required for the extended term.  The Trustees’ approval is requested to extend the subject contract through May 4, 2006, with no additional funding requested.  It should be noted that all costs will be recovered by the Authority.

Increase in Compensation Ceiling

“In 2001, the Authority built the Small Clean Power Plants to meet the urgent need for electricity in New York City and has launched a $6 million Clean School Bus Program as part of a larger $23 million program to protect air quality in the communities associated with the power plants.  One method of reducing emissions is by using Ultra Low Sulfur Diesel (‘ULSD’) fuel in lieu of the current low sulfur diesel (‘LSD’) fuel used by certain New York City school bus operators.  The contract with the Board of Education of the City School District of the City of New York (the ‘BOE’ and dba the New York City Department of Education; 4500082416) provides reimbursement to the BOE for the incremental cost of the ULSD fuel, as well as a fuel additive to the ULSD (purchased by the BOE for certain school bus operating companies) as part of the Authority’s Clean School Bus Program.  The use of ULSD, combined with the installation of advanced diesel exhaust after-treatment devices, results in a 35-40% reduction in particulate matter emissions, as well as a significant reduction in carbon monoxide and hydrocarbon emissions.  The use of the fuel additive to the ULSD offers additional benefits, such as lubricity enhancement, water emulsification, detergent action and protection against corrosion and microbial contamination.  The original award became effective on January 1, 2004 for an initial term of 19 months, with an option to extend through May 31, 2006, contingent on renewal of the BOE’s contract with its fuel supplier; such renewal has been confirmed.  An eight-month extension is now requested in order to exercise the previously anticipated option.  (It should be noted that the U.S. Environmental Protection Agency will mandate the use of ULSD fuel as of June 1, 2006; the Authority will no longer reimburse such incremental fuel costs as of that date.) The originally approved contract amount was $940,500; an additional $500,000 and a two-month extension were subsequently authorized in accordance with the Authority’s Guidelines for Procurement Contracts and Expenditure Authorization Procedures.  The current contract amount is $1,440,500; staff projects that an additional $1,200,000 will be required for the extended term. Due to the recent revision of the Authority’s Expenditure Authorization Procedures, the Trustees’ approval is required when the cumulative change order value of a Non-Procurement contract exceeds the greater of $500,000 or 35% of the originally approved contract amount not to exceed $1,000,000.  The Trustees’ approval is therefore requested to extend the subject contract through May 31, 2006 and to approve the additional funding requested, thereby increasing the compensation ceiling to $2,640,500.

Power Generation

Increase in Compensation Ceiling

“At their meeting of February 26, 2002, the Trustees last approved an increase in the compensation ceiling of the contract with General Electric International Inc. (‘GE’) (4500013941), which provides for the engineering, procurement and delivery of the 500 MW Combined Cycle Plant, to $238,639,000.  An additional $2,879,140 was subsequently authorized in accordance with the Authority’s Expenditure Authorization Procedures (‘EAPs’); such funding is included in the current 500 MW Capital Expenditure Authorization Request (‘CEAR’).  The additional funding comprises $1,401,790, authorized under the previous version of the EAPs and $1,477,350 for the three most recent Change Orders, authorized under the revised version.  The latter amount includes Change Order No. 10 for $193,350 for procuring dual feedwater suction strainers and No. 11 for $165,000 for treating construction-generated wastewater resulting from flushing and cleanup of the Air-Cooled Condenser (‘ACC’), which were critical to achieving ‘first fire’ of the plant, as well as Change Order No. 12 for $1,119,000 for an extension (of one year from the date of commercial operation) of the warranty period for the gas turbines/generators and the steam turbine/generator.  Due to the recent revision of the Authority’s Expenditure Authorization Procedures, the Trustees’ approval is required when the cumulative change order value of an equipment purchase contract exceeds the greater of $500,000 or 35% of the originally approved contract amount not to exceed $1,000,000.  However, since the Trustees did not meet in August and both the strainers and ACC effluent cleanup were critical to achieving ‘first fire’ of the plant, and the warranty extension also required immediate action,  the President and Chief Executive Officer’s interim approval was required, pending subsequent ratification and approval by the Trustees as soon as practicable.  (Since the President and Chief Executive Officer delegates all such approvals involving GE to the Executive Vice President – Power Generation, the latter’s approval was obtained.)  The Trustees are therefore requested to ratify and approve the aforementioned Change Orders totaling $1,477,350, which increased the compensation ceiling to $241,518,140, the current contract amount.

 “At their meeting of July 26, 2005, the Trustees last approved an increase in the compensation ceiling of the contract with Slattery Skanska Inc. (4500064161), which provides for the construction of the 500 MW Combined Cycle Plant, to $330,310,000.  Additional funding in the amount of $2,000,000 is now requested for the completion of extra work that was not identified until after the July 2005 Trustees’ meeting.  Such work includes electrical wiring updates, support for commissioning and start-up, the Safety Incentive Program, certain requirements imposed by the Fire Department of New York (‘FDNY’), and final design refinements needed for safe plant operation.  This additional amount is included in the current 500 MW Capital Expenditure Authorization Request (‘CEAR’).  Due to the recent revision of the Authority’s Expenditure Authorization Procedures, the Trustees’ approval is required when the cumulative change order value of a construction contract exceeds the greater of $500,000 or 35% of the originally approved contract amount not to exceed $1,000,000.  The Trustees are therefore requested to approve the additional funding requested, thereby increasing the compensation ceiling to $332,310,000.

Energy Risk Assessment and Control

Increase in Compensation Ceiling

“At their meeting of September 17, 2002, the Trustees approved the award of two new sole source contracts to The NorthBridge Group (4600000938) and Portal Solutions (4600000969), which provided for the continuation of energy risk management consulting services to support various ERAC initiatives (including, but not limited to, SENY supply and rate options), as well as for the proprietary probabilistic software tools to develop a statistical and analytical platform for projecting regional forward electric prices and asset valuations needed to support such activities.  The Trustees also approved an aggregate amount of $480,000 for services to be performed under such contracts.  Due to the increased volume and complexity of tasks requiring the application of the NorthBridge process, which, in turn, increased the Authority’s use of the subject contracts and resulted in an accelerated rate of expenditures, an additional $500,000 was subsequently authorized in accordance with the Authority’s Expenditure Authorization Procedures.  In 2004, the Authority engaged NorthBridge to support the SENY rate case by 1) assisting the Authority with the design of a) a new Cost of Service structure that would recognize the Authority’s risk exposure associated with its governmental customers; b) a new methodology that would take into account many complex factors (such as the Stipulation Agreement) for its 2005 new rate filing; and c) a risk protection structure that would shield the Authority from adverse changes to the market price of energy commodities; as well as 2) by supporting Authority staff during protracted rate case discussions with the customers’ representatives.  Significant invoicing delays resulted in the late preparation of the final closeout Change Order amount for services performed under the subject contracts through March 31, 2005.  (Services provided after that date will be performed under two new sole source contracts, which were approved by the Trustees at their meeting of March 29, 2005.)  The current combined ‘target value’ is $980,000.  An additional $397,445 is now requested to process the final closeout Change Order.  The Trustees’ approval is therefore requested to approve the additional funding requested, thereby increasing the combined compensation ceiling to $1,377,445.

FISCAL INFORMATION

“Funds required to support contract services for various Headquarters Office Business Units/Departments and the Facilities have been included in the 2005 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 CEAR.  Payment for the contract in support of the Energy Services HELP Program will be made from the Energy Conservation Effectuation and Construction Fund.  All costs, including Authority overheads and the cost of advancing funds, will be recovered by the Authority.

RECOMMENDATION

“The Deputy Secretary and Deputy General Counsel, the Vice President – Procurement and Real Estate, the Vice President – Project Management, the Vice President and Chief Risk Officer, the Director – Energy Services, the Director – Cost Control and Electric Transportation and the Regional Manager – Southeastern New York recommend the Trustees’ approval of the extensions, additional funding and increases in the compensation ceilings of the procurement contracts listed in Exhibit ‘14-A.’

“The Executive Vice President, Secretary and General Counsel, the Executive Vice President – Corporate Services and Administration, the Senior Vice President and Chief Financial Officer, the Senior Vice President – Energy Services and Technology and I concur in the recommendation.”

Mr. Hoff presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Seymour, Mr. Hiney said that both General Electric and Slattery Skanska, Inc. were included in the original Capital Expenditure Authorization Request (“CEAR”) and that the amounts requested are well within the CEAR limits, but that individual contracts have threshold levels beyond which Trustee approval is required.

The following resolution, as submitted by the Executive Vice President – Power Generation, was unanimously adopted.

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, each of the contracts listed in Exhibit “14-A,” attached hereto, is hereby approved and extended for the period of time indicated, in the amounts and for the purposes listed therein, as recommended in the foregoing report of the Executive Vice President – Power Generation; and be it further

RESOLVED, That pursuant to the Authority’s Expenditure Authorization Procedures, an increase in the compensation ceiling of the contracts with General Electric International Inc., the Board of Education of the City School District of the City of New York (the “BOE” and dba the New York City Department of Education), Slattery Skanska Inc., and The NorthBridge Group and Portal Solutions, are hereby approved, as recommended in the foregoing report of the Executive Vice President – Power Generation, in the amount and for the purpose listed below:

                                                                                        Contract Approval               Projected

                                                                                             (Increase in                      Closing

Capital                                                                  Compensation Ceiling)           Date        

 

Provide for engineering, procurement

& delivery of the 500 MW plant:

 

General Electric International4500013941

 

Previously approved amount                                      $238,639,000              12/31/05

Additional amount authorized per EAPs                     $2,879,140*

 

        REVISED COMPENSATION CEILING                  $241,518,140

 

*   Includes $1,401,790 authorized under the previous version of the EAPs and $1,477,350 authorized under the revised version.  The latter amount is comprised of the three most recent Change Orders (Nos. 10 – 12), for which the Trustees’ ratification and approval is now sought.  Change Order No. 10 = $193,350 (for dual feedwater suction strainers); No. 11 = $165,000 (for treating construction-generated wastewater resulting from flushing the ACC); and No. 12 = $1,119,000 (for an extension -- of one year from the date of commercial operation -- of the warranty period for the gas turbines/generators and the steam turbine/generator).

 

                                                                                    Contract Approval               Projected

                                                                                         (Increase in                      Closing

Capital                                                                      Compensation Ceiling)           Date        

 

Provide for the construction of

the 500 MW plant:

 

Slattery Skanska Inc.

4500064161

 

Previously approved amount                                    $330,310,000                12/31/05

Additional amount requested                                        $2,000,000

 

REVISED COMPENSATION CEILING                  $332,310,000

 

 

                                                                                        Contract Approval           Projected

                                                                                             (Increase in                  Closing

O & M                                                                       Compensation Ceiling)           Date        

 

Provide for energy risk manage-

ment consulting services

(to support SENY rate case

and other matters):

 

The NorthBridge Group

4600000938

 

Portal Solutions

4600000969

 

Additional amount requested                                  $     397,445

 

Previously approved amount                                           480,000                        03/31/05

 

Additional amount authorized per EAPs                      500,000

 

REVISED COMPENSATION CEILING                 $1,377,445


 

                                                                                Contract Approval               Projected

                                                                                     (Increase in                      Closing

Capital                                                              Compensation Ceiling)               Date        

 

Provide reimbursement for

incremental cost of Ultra

Low Sulfur Diesel (“ULSD”) fuel

purchased by the BOE for

the Clean School Bus Program,

as well as fuel additive to ULSD

delivered to certain school bus

operating companies

 

Board of Education of the

City School District of the

City of New York (the “BOE”

and dba NYC Dept. of Education)

4500082416

 

Additional amount requested                                    $1,200,000                        05/31/06

 

Originally approved amount                                     $   940,500

 

Additional amount authorized per EAPs                $   500,000

 

REVISED COMPENSATION CEILING                 $2,640,500

 

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


 

15.          New York Power Authority’s Annual Strategic Plan – Informational Item

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are presented with the 2006-08 Strategic Plan as set forth in Exhibit ‘15-A’ attached hereto.

BACKGROUND

“Article VII – Fiscal Management of the Authority By-Laws states in Section 2 – Strategic Plan that the Trustees shall annually review a strategic plan that shall become the basis for the development of departmental plans, the annual budget and the capital expenditure plan.  The Authority has been updating its strategic planning document in its current format since 1995.  As part of the Authority’s annual review and planning process, it was decided to expand the content of the Strategic Plan to make clear and specific the Authority’s role and intentions as to Generation, Transmission, Economic Development, Energy Efficiency and New Technology so that all stakeholders have a clear understanding of the driving forces behind the Authority’s policy and decisions.

DISCUSSION

“This annual review of the overall Strategic Plan begins early each year with the Authority’s annual strategic planning conference at which Authority executives hear from a variety of issue leaders, proponents and influencers and debate issues and priorities.  In preparation for the conference, a number of preliminary steps are taken to ensure that the agenda is structured so that those issues of most concern to both internal and external stakeholders are addressed.  The process begins with a series of one-on-one interviews with government and industry thought leaders, customer visionaries, Authority employees, stakeholders and business partners.  In addition, market data, industry press and academic material are reviewed.  Inputs from data and interviews generate an issue listing of topics that clearly articulate a fact-based hypothesis.  Whenever possible, employee teams prepare presentations that will generate open discussion at the conference and recommend speakers/participants.  As an output of the conference, action plans are developed with specific initiatives and assignments.  Recommendations based on these initiatives and assignments and/or initiative/assignment updates are then presented throughout the year at monthly Executive Management Committee meetings.

“Concurrently, the Strategic Plan document is updated to reflect any changes in the Authority’s Mission, Decision Drivers, Strategic Result Areas and Balanced Scorecard metrics and targets over the next three years.

·         MISSION STATEMENT - A Mission Statement is a clear definition of the Authority’s aims, focus and emphasis for a specified time frame.

·         DECISION DRIVERS - Underlying this Mission Statement is a set of core drivers that define the Authority’s priorities.  Drivers determine how decisions are made, work is performed and outside stakeholders are dealt with.  By understanding the driving forces behind its mission, the Authority’s executive management can make decisions that support its goals.

·         STRATEGIC RESULT AREAS - If the Authority is to succeed in its mission, it needs to articulate its vision and make its intentions clear in specific areas.  In order to do that for both internal and external stakeholders, the Authority needs to define its goals and objectives, as well as identify the specific actions it is taking to support that vision.  (The Balanced Scorecard then translates mission and strategy into objectives and measures with specific targeted performance, organized according to different perspectives.)

 “The attached Strategic Plan reflects the results of the planning process.”

 

16.          Revision to May 24, 2005 Resolution for Execution Approval for Hedge Transactions to Satisfy Long-Term Agreement
Obligations for Governmental Customers                                

The President and Chief Executive Officer submitted the following report:

SUMMARY

“Since May 2005, energy prices have increased significantly for calendar year 2006.  The NYMEX quote for natural gas has increased from $7.20 to $10.26/dth, representing an increase of $3.06, or 42%.  Corresponding electric prices for zone A peak, as reported in Platts Energy Trader, have increased from $64.75/MW-hr (5-24-05 quote) to $81.85/MW-hr (9-6-05 quote), representing an increase of $17.10/MW-hr, or 26%.

“As a result of the 42% increase in the commodity price of natural gas and 26% increase in zone A peak electric prices, the Trustees are requested to approve a revision to the May 24, 2005 Trustee resolution (see Exhibit ‘16-A’) authorizing the Vice President – Energy Resource Management, with the concurrence of the Executive Vice President – Power Generation and the Vice President and Chief Risk Officer, to approve the execution of fuel-price and energy-price financial hedging contracts and fuel-supply contracts (collectively, the ‘Hedging Contracts’) to satisfy the Authority’s hedging strategy obligations under the recently executed long-term agreements with the Authority’s four major southeastern New York governmental customers (‘Governmental Customers’).  The revision would increase the aggregate nominal value of all Hedging Contracts from an amount not to exceed $195 million to an amount not to exceed $300 million.  The May 24, 2005 resolution would, in all other respects, remain the same.   Particularly, the increased grant of authority will only extend to the Governmental Customers’ 2006 rate year, and the costs incurred for the Hedging Contracts, having been approved by the Governmental Customers, will be recovered from rates for the 2006 rate year.

BACKGROUND

“At their meeting on May 24, 2005, the Trustees authorized the Vice President – Energy Resource Management, with the concurrence of the Executive Vice President – Power Generation and the Vice President and Chief Risk Officer, to approve the execution of Hedging Contracts in an aggregate nominal value not to exceed $195 million for the limited purpose of satisfying the Authority’s hedging strategy obligations for the 2006 rate year under the recently executed Long-Term Agreements (‘LTAs’) with the Authority’s Governmental Customers.  The May 25, 2005 grant of authority for Hedging Contracts in the aggregate nominal value in an amount not to exceed $195 million was predicated on numerous factors, including the amount of fuel and energy purchases required in prior years to meet Governmental Customers’ needs, anticipated increased fuel requirements associated with the 500 MW Combined Cycle Plant and increasing per-unit fuel costs.  Now, as a result of Hurricane Katrina and other factors, production facilities and the delivery systems for oil and natural gas have suffered damage and disruption.  A portion of Gulf Coast production and delivery of both oil and gas has been temporarily lost, with an indeterminable recovery time. 

DISCUSSION

“Under the terms of the SENY Governmental Customers’ LTAs, a total of four hedging strategies were made available for consideration by the Governmental Customers for the acquisition of fuel and energy necessary to meet their load requirements and the Authority’s obligations under the Agreements.  The consideration and, ultimately, election of one strategy (‘Hedging Plan’) by the Governmental Customers was to occur within a given time frame for each rate year.  In or about July 2005, the four major SENY Governmental Customers advised the Authority of their determination with respect to a Hedging Plan for 2006.  The Hedging Plan, which is essentially a dollar-cost-averaging approach, is currently being implemented and is planned for completion by the end of October 2005.  To date, numerous Hedging Contracts have been executed by Energy Resource Management, and many will continue to be acquired. 

“The damage to production and delivery systems of oil and natural gas, the lack of certainty as to the extent of the damage or time frame for repair and the immediate and possibly extended loss of oil and natural gas supply have introduced apprehension into the market and propelled prices of oil and natural gas to unanticipated and unprecedented levels.  At the time of the May 24, 2005 Trustees meeting, it was anticipated that a cap of $195 million would provide sufficient flexibility to secure the Hedging Contracts needed to satisfy Governmental Customers’ load requirements.  However, with the turmoil that Hurricane Katrina has caused in the market, this is no longer the case.  It is estimated that, at current market prices, costs could exceed $260 million.

“Consistent with the May 24, 2005 Trustee Resolution, upon final completion of the execution of all transactions comprising the elements of the Hedging Plan selected by the  Governmental Customers, the Vice President – Energy Resource Management will report the results to the Trustees. 

FISCAL INFORMATION

“All of the costs to the Authority associated with the Governmental Customer-approved Hedging Plan will be recovered in the 2006 rates.

RECOMMENDATION

“The Vice President and Chief Risk Officer recommends that the Trustees authorize an increase in the aggregate nominal value of all Hedging Contracts from $195 million to an amount not to exceed $300 million. 

“The Executive Vice President – Power Generation, the Executive Vice President, Secretary and General Counsel, the Senior Vice President and Chief Financial Officer and I concur in the recommendation.”

Mr. Warmath presented the highlights of staff’s recommendations to the Trustees.  In response to questions from Chairman Seymour, Mr. Warmath said that the Authority has been communicating with the governmental customers about this matter and Ms. Morman added that while there is one lead negotiator representing New York City, the Authority has individual contracts with each entity.  Chairman Seymour said that he was concerned about the process for informing the customers and Ms. Morman said that the customers had agreed with the overall hedging plan and would be provided weekly updates due to the drastic changes in energy prices.

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

RESOLVED, That the authorizations approved by the Trustees in their resolution adopted May 24, 2005 authorizing the Vice President – Energy Resource Management, with the concurrence of the Executive Vice President – Power Generation and the Vice President and Chief Risk Officer (or in either of their absences, the Senior Vice President and Chief Financial Officer), to enter into transactions on behalf of the Authority, in connection with the Authority’s obligations under the SENY Governmental Customers’ Long-Term Agreements, is revised only to the extent that the aggregate nominal value of all such transactions outstanding at any one time shall be increased from an aggregate nominal amount not to exceed $195 million to an aggregate nominal amount not to exceed $300 million.  The May 25, 2005 resolution shall in all other respects remain the same; and be it further

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

17.          Agreement with Private Equity Fund Consortium

The President and Chief Executive Officer submitted the following report:

SUMMARY

“The Trustees are requested to approve an agreement (‘Agreement’) under which a grant of $10 million will be made by the Authority to a newly formed not-for-profit entity known as the Private Equity Fund Consortium (‘PEFC’), which will be located in St. Lawrence County.  Under the proposed Agreement, Authority funds would be invested by PEFC in Golden Technology Management, LLC (‘Golden’), which would raise an additional $20 million in private equity funds for the purpose of establishing a pool for investments in technology businesses that will promote economic development, employment and the tax base in St. Lawrence County and extend Clarkson University’s technology commercialization efforts.  All such investments would have to be consistent with local and state environmental rules, regulations and policies.

BACKGROUND

“As part of the St. Lawrence relicensing proceedings, the Authority entered into a funding agreement with the St. Lawrence Aquarium & Ecological Center (‘SLAEC’) by which it agreed to invest approximately $26 million in the construction of an aquarium and other facilities so long as the SLAEC, by June 30, 2004, raised approximately $14 million in matching funds.  By subsequent agreement, the date by which SLAEC was required to raise the full matching funds was extended to June 30, 2005.  Because SLAEC failed to raise the necessary funds and meet this condition, the Authority cancelled the agreement by letter of July 1, 2005.  However, the Authority also made it clear that the approximately $26 million in assistance it had pledged to the North Country would survive cancellation of the SLAEC agreement.

“Subsequent to the cancellation of that agreement, President Anthony Collins of Clarkson University and a board member of SLAEC proposed that the Authority use $10 million of the pledged funds for an investment in PEFC.  This entity would in turn invest the money in Golden, which would invest in technology businesses willing to locate their headquarters in St. Lawrence County.  Under the proposal, the Authority’s monies would be matched on a $2 to $1 basis by approximately $20 million to be raised by Golden from private equity investors.  The proposal would also require that all investments by Golden would be made in businesses related to energy independence and environmental sustainability.

“Under a document provided by President Collins, the Board of PEFC would include prominent business, public and educational leaders from St. Lawrence County (see Exhibit ‘17-A’); Board members would not receive compensation for their services.  However, as set forth in a draft term sheet between PEFC and Golden, up to $250,000 of the Authority’s $10 million grant could be used to defray the costs of establishing and operating PEFC.  Further, in the event Golden is not able to secure the full $20 million in matching funds within eight years of receiving the Authority’s funds from PEFC, its relationship with PEFC would be terminated and any uninvested funds would be turned over to a successor entity to Golden.  Such a transfer to a successor entity would require the Authority’s approval, which could not be unreasonably withheld.  Upon dissolution of PEFC, its assets would be turned over to the St. Lawrence County Industrial Development Agency (‘IDA’) to be managed by the IDA under the direction of the Authority and the New York State Empire State Development Corporation.  Finally, the Authority would have the right to audit the books and records of both PEFC and Golden.

“While Authority staff have negotiated a draft term sheet between the Authority and PEFC, and received a draft term sheet between PEFC and Golden and a draft Certificate of Incorporation for PEFC (copies of all such documents are found in Exhibit ‘17-B’), final agreement on these documents has yet to be negotiated between the Authority and PEFC.  Thus, its final terms may differ in some respects from the draft terms found in Exhibit ‘17-B.’  To facilitate this matter, staff is requesting the Trustees to authorize the investment of up to $10 million for the purposes stated above and to delegate to the Vice Chairman, the President and Chief Executive Officer and the Executive Vice President, Secretary and General Counsel, collectively, the power to negotiate and enter into a final agreement with PEFC.

 

FISCAL INFORMATION

“A portion of the proceeds of the Authority’s Series 2003A Revenue Bonds, which were issued principally to finance certain costs associated with the relicensing and modernization of the St. Lawrence/FDR Project, was set aside for the SLAEC pledge.  Accordingly, the proposed $10 million investment would come from the Authority’s St. Lawrence Construction Fund.

RECOMMENDATION

“The President and Chief Executive Officer recommends that the Trustees authorize the Vice Chairman, the President and Chief Executive Officer and the Executive Vice President, Secretary and General Counsel, collectively, to negotiate a final agreement with the Private Equity Fund Consortium and commit up to $10 million of Authority funds for a grant to that entity.  This recommendation is supported by the Presidents of Clarkson and St. Lawrence Universities and the State University of New York at Potsdam (Exhibit ‘17-C’).

“The Executive Vice President, Secretary and General Counsel and the Senior Vice President, Public and Governmental Affairs concur in the recommendation.”

Mr. Blabey presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman Seymour, Mr. Blabey said that one of the issues being negotiated is whether the Authority’s $10 million contribution to the Private Equity Fund Consortium (“PEFC”) will be put in escrow until the other $20 million is raised.  Vice Chairman McCullough said that the funds will stay in and generate jobs in the North Country and Chairman Seymour added that this was a reprogramming of the funds that the Authority had committed to the St. Lawrence Aquarium and Environmental Center (“SLAEC”).  Vice Chairman McCullough introduced Anthony Collins, President of Clarkson University, and Robert A. Wood, Jr., Director of Government Relations at Clarkson, and said that without President Collins’ efforts, PEFC would not have happened.  He said that the support from Clarkson, as well as from SUNY/Potsdam and the St. Lawrence Board of Legislators, was crucial to PEFC and complimented President Collins on a job well done.  President Collins thanked the Authority for the unprecedented opportunity presented by this undertaking, as well as the positive attitude emanating from it.  Responding to a question from Trustee Cusack, Vice Chairman McCullough said that PEFC represented a better use of Authority funds than the SLAEC had.  President Collins added that this option was uniformly supported by North Country stakeholders, and that leveraging the $10 million Authority contribution with the additional $20 million will create a revolving fund to stimulate job growth in the region.  Chairman Seymour commended Vice Chairman McCullough for the tremendous amount of time he had devoted to developing the PEFC concept and said that he knew the Vice Chairman had agreed to serve on PEFC’s board.  He also thanked President Collins for taking the initiative to get the ball rolling and draft the plan of action and Senators Jim Wright and Ray Meier for their support.

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

RESOLVED, That the Vice Chairman, the President and Chief Executive Officer and the Executive Vice President, Secretary and General Counsel, be, and hereby are, together authorized to negotiate the terms of an agreement with a not-for-profit entity to be known as the Private Equity Fund Consortium and to commit up to $10 million of Authority funds for the purposes described in the foregoing report of the President and Chief Executive Officer; and be it further

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

 18.          Other Business

President Zeltmann welcomed Mr. DeCarlo and congratulated him on his promotion to the position of Senior Vice President – Transmission.

Chairman Seymour asked for a moment of recognition for former Trustee Carey, adding that he understood that Mr. Carey would be continuing to serve the Authority in a different capacity.  Vice Chairman McCullough said that Mr. Carey had been a terrific addition to the Board of Trustees and that his insight and political acumen would be missed.  He commended Mr. Carey for the job he had done as a Trustee.

 

19.          Next Meeting

The next Regular Meeting of the Trustees will be held on Wednesday, October 19, 2005, at 11:00 a.m., in Rochester, NY, unless otherwise designated by the Chairman with the concurrence of the Trustees.

 

Closing

On motion duly made and seconded, the meeting was adjourned by the Chairman at approximately
12:20 a.m.

 

 

David E. Blabey

Executive Vice President,

Secretary and General Counsel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Text Box: SEPTMINS.05

 

 

 


 

[1] Exclusive of electricity.

[2] Exclusive of electricity.