MINUTES OF THE REGULAR MEETING OF THE

POWER AUTHORITY OF THE STATE OF NEW YORK

 

March 27, 2007

 

Table of Contents

 

            Subject                                                                                                                     

 

1.              Minutes of the Regular Meeting held on February 27, 2007                                  

2.              Financial Reports for the Two Months Ending February 28, 2007, Exhibit ‘2-A’

3.              Report from the President and Chief Executive Officer                                          

4.              Allocation of 350 kW of Hydro Power, Exhibit ‘4-A’ & ‘4-A1’
Resolution

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

6.              PURPA – Compliance with Ratemaking Standard – Notice of Adoption, Exhibit ‘6A’ – ‘6-C’  
Resolution

7.              2006 Financial Reports Pursuant to Section 2800 of the Public Authorities Law and New Regulations of the Office of the  State Comptroller, Exhibit ‘7-A’ & ‘7-B’  
Resolution

8.              2006 Annual Report on Investment of Authority Funds, Exhibit ‘8-A’ & ‘8-B’
Resolution

9.              Annual Review and Approval of Guidelines and Procedures for the Disposal of Personal Property, Guidelines and Procedures for the Disposal of Real Property and the 2006 Annual Reports of the Disposal of Personal and Real Property, Exhibit ‘9-A’ – ‘9-B1’
Resolution

10.           Procurement (Services) Contracts – Business Units and Facilities –  Awards Exhibit ‘10-A’  
Resolution

11.           Procurement (Services) Contracts – Business Units and Facilities –  Extensions, Approval of Additional Funding and Increases in Compensation Ceilings, Exhibit ‘11-A’
Resolution

12.           Proposed Hydropower Contracts with the Tuscarora Nation and Niagara  Project Host Communities – Notice of Public Hearing, Exhibit ‘12-A’ – ‘12-F’
 Resolution      

13.           Informational Item: Executive Orders                                                                      

14.           Motion to Conduct an Executive Session                                                                

15.           Motion to Resume Meeting in Open Session                                                          

16.           Next Meeting                                                                                                                 

            Closing                                                                                                                             


 

Minutes of the Regular Meeting of the Power Authority of the State of New York held via video conference at the following participating locations at 11:05 a.m.:

1)       New York Power Authority, 30 South Pearl Street, Albany, NY

2)       New York Power Authority, 123 Main Street, White Plains, NY

3)       New York Power Authority, Niagara Power Project, 5777 Lewiston Road, Lewiston, NY

The following Members of the Board were present at the following locations:

                                Frank S. McCullough, Jr., Chairman (Albany, NY)

                                Elise M. Cusack, Trustee (Lewiston, NY)

                                Robert E. Moses, Trustee (Albany, NY)

                                Joseph J. Seymour, Trustee (Albany, NY)

                                Leonard N. Spano, Trustee (Albany, NY)

 

                                Michael J. Townsend, Vice Chairman – Excused

                                Thomas W. Scozzafava, Trustee – Excused

 

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Timothy S. Carey                                 President and Chief Executive Officer

Thomas J. Kelly                                    Executive Vice President and General Counsel

Joseph Del Sindaco                             Executive Vice President and Chief Financial Officer

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

Steven J. DeCarlo                                 Senior Vice President – Transmission

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

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

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

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

Arnold M. Bellis                                   Vice President – Controller

John M. Hoff                                        Vice President – Procurement and Real Estate

Donald A. Russak                                Vice President – Finance

William V. Slade                         Vice President – Environmental Health and Safety

Daniel Wiese                              Vice President and Inspector General – Corporate Security

Anne B. Cahill                                      Corporate Secretary

Angela D. Graves                                 Deputy Corporate Secretary

Dennis T. Eccleston                     Chief Information Officer

Brian C. McElroy                        Treasurer

Lisa Cole                                   Deputy Treasurer

Joseph J. Carline                         Assistant General Counsel – Power and Transmission

Frederick E. Chase                      Executive Director – Hydro Relicensing

Thomas J. Concadoro                    Director – Accounting

James F. Pasquale                        Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing

Michael A. Saltzman                            Director – Media Relations

Marilyn J. Brown                                  Manager – Market and Pricing Analysis

Steven Lockfort                                    Manager – Risk Reporting

Joanne Wilmott                                    Manager – Community Relations, Niagara

Lewis Payne                                          Supervisor – Right of Way/Environmental

Mary Jean Frank                                  Associate Corporate Secretary

Lorna M. Johnson                               Assistant Corporate Secretary

Jeffrey Carey                                         Special Assistant to the President’s Office

William Helmer                                     Special Licensing Counsel

Lynnette J. Taylor                               Senior Legal Secretary

Steven A. Mitnick                               Assistant Secretary for Energy and Telecommunications, Governor
Spitzer’s Office

Thomas Congdon                                Special Assistant for Energy and Telecommunications, Governor
Spitzer’s Office

Colleen Hurley                                      Paralegal, Couch White LLP

Steve MacNish                                     Paralegal, Couch White LLP

 

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

 

 

1.             Approval of the Minutes

 

The Minutes of the Regular Meeting of February 27, 2007 were unanimously adopted.

 

 

2.             Financial Reports for the Two Months Ended February 28, 2007

 

Mr. Bellis provided the Financial Reports for the two months ended February 28, 2007

 

3.             Report from the President and Chief Executive Officer

               

President Carey said that Alan Richardson, the keynote speaker at the Authority’s 75th anniversary celebration, was stepping down as President and Chief Executive Officer of the American Public Power Association at the end of the year.  

President Carey congratulated Mr. Chase and everyone who was involved in obtaining the new 50-year license from the Federal Energy Regulatory Commission (“FERC”) for the Niagara Power Project.  Mr. Chase said that FERC had approved the new license on March 15th, nearly six months before it will take effect on September 1, 2007.  The new license involves no adverse changes to project operation or expansion of the project’s boundaries.  The new license also approves a settlement agreement resolving all issues among the critical stakeholders in the relicensing proceeding.  Among these items are:

Other settlements with the Host Communities, Tuscarora Nation, Niagara University and Erie County/City of Buffalo discussed in the license Order are considered off-license agreements not under FERC’s jurisdiction. 

After staff’s review of the license, the consensus is that it has no fatal flaws that would require the Authority to file a request for rehearing.  It is possible, however, that groups that have sought a settlement with the Authority may request a rehearing by the deadline of April 15, 2007.  In response to a question from Trustee Seymour, Mr. Chase said that FERC did not approve the off-line settlement agreements, although it had accepted them in the license Order. 

Mr. Chase said that the Niagara River Greenway Commission approved the Niagara River Greenway Plan on March 21, 2007 and has sent it to Carol Ash, Acting Commissioner of the New York State Office of Parks, Recreation and Historic Preservation, for her consideration and approval.  As part of the settlement agreements reached during the Niagara project relicensing, the Authority will provide $9 million a year for projects consistent with the Greenway Plan.  The $9 million will be divided into four funds:  (1) projects in Niagara County, (2) projects in Erie County, (3) ecological projects and (4) projects in State parks.  The Authority must establish the funds after September 1, 2007, the effective date of the new Niagara license.

 


 

4.             Allocation of 350 kW of Hydro Power  

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

                “The Trustees are requested to approve an allocation of available Replacement Power (‘RP’) totaling 350 kW to Cameron Compression Systems.

 

BACKGROUND

 

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

 

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

 

DISCUSSION

 

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

 

                “Based on the Advisory Group’s discussions, staff recommends that the available power be allocated to Cameron Compression Systems as set forth in Exhibits ‘4-A’ and ‘4-A1.’  The Exhibit shows, among other things, the amount of power requested by the company, the recommended allocation and additional employment and capital investment information.  This project will help maintain and diversify the industrial base of Western New York and provide new employment opportunities.  It is projected to result in the creation of 18 jobs.

 

RECOMMENDATION

 

“The Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommends that the Trustees approve the allocation of 350 kW of hydro power to the company listed in Exhibits ‘4-A’ and ‘4-A1.’

 

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

 

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

RESOLVED, That the allocation of 350 kW of Replacement Power, as detailed in Exhibits “4-A” and “4-A1,” be, and hereby is, approved on the terms set forth in the foregoing report of the President and Chief Executive Officer; and be it further

 

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

 

 


 

 

 


 

APPLICATION SUMMARY

Replacement Power

 

Company:                                              Cameron Compression Systems

 

Location:                                               Cheektowaga

                                                               

County:                                                  Erie County

 

IOU:                                                       National Grid

 

Business Activity:                               Manufacturer of air and gas compressors

 

Project Description:                           The project includes investing in new equipment and constructing a new building. The new 13,500-sq.-ft. building will be used as an aftermarket repair center. The company will install new lighting and HVAC in this building, which will house manufacturing and office personnel. In addition, the company will install lathes, motors, mills, crane and testing machinery in its current facility.

 

Prior Application:                               None

 

Existing Allocation:                            None

 

Power Request:                                    370 kW

              

Power Recommended:                        350 kW  

 

Job Commitment:     

                   Existing:                            498 jobs

                   New:                                    18 jobs

                                                               

New Jobs/Power Ratio:                      51 jobs/MW

 

New Jobs –

Avg. Wage and Benefits:                   $55,000

 

Capital Investment:                             $7 million 

 Capital Investment                             $20 million /MW

Per MW

 

Summary:                                             Cameron produces air and gas compressors used mainly by air separators and the steel industry. The company is considering implementation of this expansion in either Texas or western New York.  A low-cost power allocation would help the company expand in western New York. In addition, it would help Cameron’s competitive position and bring new jobs to Cheektowaga. 

 


 

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 37 Power for Jobs (‘PFJ’) customers as listed in Exhibit ‘5-A.’  These customers have been recommended to receive such extended benefits by the Economic Development Power Allocation Board (‘EDPAB’). 

 

BACKGROUND

 

                “In July 1997, the New York State Legislature 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 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 that authorized another 183 MW of power to be allocated under the program.  The additional MW were described in the statute as ‘phase five’ of the program.  Customers that received allocations in Year Two or Year Three were given priority to reapply for the program.  Any remaining power was made available to new applicants. 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

DISCUSSION

 

“At its meeting on March 27, 2007, EDPAB recommended that the Authority’s Trustees approve electricity savings reimbursement rebates to the 37 businesses listed in Exhibit ‘5-A.’  Collectively, these organizations have agreed to retain more than 32,000 jobs in New York State in exchange for the rebates.  The rebate program will be in effect until June 30, 2007, the program’s sunset. 

 

                “The Trustees are requested to approve the payment and funding of rebates for the companies listed in Exhibit ‘5-A’ in a total amount currently not expected to exceed $3.7 million.  Staff recommends that the Trustees authorize a withdrawal of monies from the Operating Fund for the payment of such amount, provided that such amount is not needed at the time of withdrawal for any of the purposes specified in Section 503(1)(a)-(c) of the General Resolution Authorizing Revenue Obligations, as amended and supplemented.  Staff expects to present the Trustees with requests for additional funding for rebates to the companies listed in the Exhibit in the future.

 

FISCAL INFORMATION

 

“Funding of rebates for the companies listed in Exhibit ‘5-A’ is not expected to exceed $3.7 million.  Payments will be made from the Operating Fund.  To date, the Trustees have approved $69.6 million in rebates.

 

RECOMMENDATION

 

“The Executive Vice President and Chief Financial Officer and the Director – Business Power Allocations, Compliance and Municipal and Cooperative Marketing recommend that the Trustees approve the payment of electricity savings reimbursements to the Power for Jobs customers listed in Exhibit ‘5-A.’ 

 

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

 

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

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

 

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

 

RESOLVED, That based on staff’s recommendation, it is hereby authorized that payments be made for electricity savings reimbursements as described in the foregoing report of the President and Chief Executive Officer in the aggregate amount of up to $3.7 million, and it is hereby found that amounts may properly be withdrawn from the Operating Fund to fund such payments; and be it further

 

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

 

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

 

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

 

 


 


 

6.             PURPA – Compliance with Ratemaking Standard – Notice of Adoption 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to adopt the Demand Response and Smart Metering Standard (‘Standard’) in Section 1252 of the federal Energy Policy Act of 2005 (‘EPAct’).  EPAct required the Authority, as a non-regulated electric utility, to consider and make a determination as to whether to adopt the Standard by August 8, 2007.  The Standard centers on application of time-of-use rates and the metering equipment used to implement these rates.  Staff analyzed the Authority’s current offerings and has determined that the Authority has already met the intent of the Standard; therefore, staff recommends that the Trustees adopt the Standard in Section 1252 of EPAct to the extent that the Authority already has done so and that the Authority continues to offer the current selection of programs, pricing alternatives and metering to its retail customers.

 

BACKGROUND

 

“The Public Utility Regulatory Policies Act (‘PURPA’) is a federal statute first enacted in 1978 for the purposes of encouraging: (1) conservation of energy supplied by electric utilities; (2) optimization of the efficient use of facilities and resources by electric utilities and (3) equitable rates for electric consumers.  In August 2005, Congress amended PURPA via EPAct.  The Authority is a non-regulated electric utility with respect to the Federal Energy Regulatory Commission (‘FERC’), the agency that implements PURPA.  Under EPACT, the Authority was required to provide public notice and conduct a hearing with respect to consideration of the new ratemaking Standard.  While not required to adopt the Standard, the Authority was required to consider the Standard in good faith, and to issue a determination as to whether it would be adopted.  The law required the Authority to publicly announce the date of the hearing before August 8, 2006, and to make its consideration and determination by August 8, 2007.

 

“At their meeting of July 25, 2006, the Trustees directed that public notice of the Authority’s consideration of the Standard be published in the New York State Register and that a public hearing be held at which customers and the public could make oral statements and/or submit written comments.  As directed by the Trustees, staff held a public hearing on January 10, 2007 (the public forum transcript is attached as Exhibit ‘6-A’).  The public comment period closed on January 24, 2007.  Comments were filed by the City of New York’s Department of Citywide Administrative Services (‘City’).

 

DISCUSSION

 

                “The new Standard applies only to the Authority’s retail rates.  These include rates for the Authority’s retail loads, which by FERC criteria include direct-sale customers, such as governmental customers, customers that receive High Load Factor power and some of the Authority’s other industrial customers.  These retail customers account for about half of the Authority’s total load.  The other half of the Authority’s customers, in terms of load, is defined as wholesale using FERC criteria.  For example, sales to utilities (Consolidated Edison Co. of New York, Inc. (‘Con Edison’), National Grid, New York State Electric and Gas Corporation and Rochester Gas and Electric Corporation), including Replacement Power, Expansion Power, Niagara/St. Lawrence Rural and Domestic Power, Economic Development Power and Power for Jobs, are not subject to the Standard.

 

“The new Standard has two requirements.  First, the Standard requires that the electric utility provide all retail customers with a time-based rate schedule in which the rates reflect the cost of generating and purchasing the power at the wholesale level.  Second, the Standard requires that the electric utility provide the customer, on request, a time-based meter enabling the customer to receive such a rate. 

 

“Staff prepared a study detailing the complete analysis of the Standard and its findings relative to the Authority’s compliance, entitled ‘Staff Report on PURPA – Compliance with Ratemaking Standard in Consideration of the Federal Energy Policy Act of 2005 Regarding Demand Response and Smart Metering, December 2006’ (the ‘Report’), which is attached as Exhibit ‘6-B.’  The Standard’s first requirement mandates that all retail customers have access to time-based rates such as time-of-use pricing and demand-response programs.  The Authority has developed and currently offers eight programs that meet the Standard’s criteria, comprising four time-of-use and market-based pricing alternatives that reflect time-of-use pricing and real-time pricing based on wholesale market prices, and four demand-response programs.  Staff analyzed the total retail customer population to determine if every retail customer had access to at least one market-based pricing alternative or demand-response program, and determined that every retail customer was eligible for at least two programs.  The results are summarized in Table 1:  Retail Customer Eligibility for Multiple Offerings.

 

 

# of Customers Eligible

Eligible as % of Total

Eligible for at least 2 programs

160

100%

Eligible for at least 3 programs

141

88%

Eligible for at least 4 programs

32

20%

Eligible for at least 5 programs

14

9%

Eligible for at least 6 or more programs

0

0%

 

Table 1: Retail Customer Eligibility for Multiple Offerings

 

Based on this analysis, staff has determined that the Authority has satisfied the Standard’s first requirement to ‘provide individual customers upon customer request, a time-based rate schedule under which the rate charged by the electric utility varies during different time periods and reflects the variance, if any, in the utility’s costs of generating and purchasing electricity at the wholesale level.’

 

“The Standard’s second requirement is that each regulated electric utility provide ‘each customer requesting a time-based rate with a time-based meter capable of enabling the utility and customer to offer and receive such rate.’  The Authority’s retail customers are located mainly in the service territories of other local distribution companies (‘LDCs’).  Therefore, in nearly every instance, their LDC, not the Authority, meters the Authority’s customers for billing.  The LDCs that serve the Authority’s retail customers are regulated electric utilities, and therefore are subject to the new EPAct standard.  Staff expects that the LDCs’ implementation of the Standard will provide customer access to advanced metering in any instances where it currently is not available.  For the retail customer accounts where the Authority directly owns or controls the billing or revenue metering, the Authority already has interval metering installed that meets EPAct’s criteria for advanced metering.  Based on this analysis, staff has determined that the Authority meets the second requirement of the Standard.

“The City filed formal written comments (attached as Exhibit ‘6-C’) during the public comment period.  A review and analysis of these written comments follows:

 

Issue:  Advanced Metering.

 

Comment 1:  The City is a direct customer of the Authority only.  While local distribution charges come from Con Edison, the LDC, they are billed through the Authority.  The Report states that the Authority ‘expects’ the LDC to provide access to advanced metering in implementing the Standard that is the subject of the Report (p. 18).  To fully encourage customer response to information about electricity usage, the City asks the Authority to take an active, rather than a passive, role on its customers’ behalf if that is necessary to encourage the LDC to provide customer access.

 

Staff Analysis:  The Authority works closely with Con Edison and customers to make metering data available to customers.

 

Recommendation:  At the City’s request, the Authority will actively encourage Con Edison to provide customer access to their metering equipment to facilitate greater flow of usage data directly to customers.  This action is not required for the Authority to meet the EPAct Standard.

 

Comment 2:  The Authority is currently undertaking a customer load study that required the installation of advanced metering on a stratified sample of accounts.  The program was planned with attention to the main purpose of the study, which is rate design.  Right now there is no plan to deliver the real-time usage information that the advanced meters collect directly to the customers once the study is completed in March 2008.  ‘Customer access to advanced metering’ has to mean not only installation of meters, but delivery of information to the end-users.  Therefore, the City asks the Authority to further its mutual goals of improving demand response by planning now to include data delivery to customers from these meters as soon as the data-gathering phase of load sampling is complete.  Based on work that the City would do with their accounts, their belief is that the result will be greater participation in a variety of demand-response programs.

 

Staff Analysis:  The City is incorrect in stating that the Authority has no plan to make this load research metering information available to customers.  The Authority has stated that it will make that information available as soon as the infrastructure is in place, perhaps as soon as mid-2007.

 

Recommendation:  The Authority may proceed with its plan to provide customers access to the data collected by the Authority’s load research metering to support customers’ demand-response participation.  This action is not required to meet the EPAct Standard. 

 

“Staff has determined that the Authority has already met the intent of the Standard.  Therefore, staff recommends that the Trustees adopt the Standard in Section 1252 of EPAct to the extent that the Authority already has done so and that the Authority continue to offer the current selection of programs, pricing alternatives and metering to its retail customers.

 

 FISCAL INFORMATION

 

                “There is no anticipated fiscal impact.

 

RECOMMENDATION

 

                “The Manager – Market and Pricing Analysis recommends that the Trustees authorize the Corporate Secretary to file a notice with the New York State Department of State for publication in the Miscellaneous Notices/Hearings section of the New York State Register that the Authority has adopted the Demand Response and Smart Metering Standard in Section 1252 of the federal Energy Policy Act of 2005 to the extent that the Authority already has done so and that the Authority continue with these offerings and metering practices.

 

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

 

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

WHEREAS, by August 8, 2007, the Authority must consider and make a determination as to whether to adopt the Demand Response and Smart Metering Standard (“Standard”) in Section 1252 of the federal Energy Policy Act of 2005 under the Public Utility Regulatory Policies Act:

               

NOW THEREFORE BE IT RESOLVED, That the Trustees adopt the Standard to the extent that the Authority already has done so and that the Authority continue with these offerings and metering practices; and be it further

               

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

 
 

7.             2006 Financial Reports Pursuant to Section 2800 of the Public Authorities Law and New Regulations of the Office of the State Comptroller 

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to approve the financial report for the year ended December 31, 2006 and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders and the State Comptroller pursuant to Section 2800 of the Public Authorities Law, as amended by the Public Authorities Accountability Act of 2005.  In accordance with new regulations adopted by the Office of the State Comptroller (‘OSC’), the Trustees are also requested to approve a report of actual versus budgeted results for the year 2006 and authorize making this report available for public inspection at not less than five convenient public places throughout New York State, and posting it on the Authority’s website.

 

BACKGROUND

 

                “On January 15, 2006, Governor Pataki signed the Public Authorities Accountability Act of 2005 (Chapter 766 of the Laws of 2005) (‘PAAA’) into law.  The PAAA reflects the State’s commitment to maintaining public confidence in public authorities by ensuring that the essential governance principles of accountability, transparency and integrity are followed at all times.  To facilitate these objectives, the PAAA established an Authority Budget Office (‘ABO’) that will monitor and evaluate the compliance of State authorities with the requirements of the PAAA.  The ABO has advised the Authority that it is subject to the PAAA effective with the Authority’s fiscal year beginning January 1, 2006.  As one of its many changes, the PAAA amended Section 2800 of the Public Authorities Law to require that financial reports submitted by a State authority under Section 2800 be certified by the chief executive officer and chief financial officer and approved by the authority’s board.

 

                “Following rulemaking proceedings undertaken pursuant to the State Administrative Procedure Act, OSC implemented new regulations on March 29, 2006 that address the preparation of annual budgets and related reporting requirements by ‘covered’ public authorities, including the Authority.  These regulations establish various new procedural and substantive requirements relating to the budgets and require the chief financial officer to report publicly not later than 90 days after the close of each fiscal year on actual versus budgeted results. 

 

DISCUSSION

 

“The Trustees are requested to approve the financial report for the year ended December 31, 2006 (Exhibit ‘7-A’) and authorize the Corporate Secretary to submit this report to the Governor, legislative leaders and State Comptroller pursuant to Section 2800 of the Public Authorities Law, as amended by the PAAA.  This report was reviewed by the Audit Committee at its February 27, 2007 meeting.  The Trustees are also requested to approve a report of actual versus budgeted results for the year 2006 (Exhibit ‘7-B’) and authorize making this report available for public inspection at not less than five convenient public places throughout New York State, and posting it on the Authority’s website.

 

FISCAL INFORMATION

 

                “There is no anticipated fiscal impact.

 

RECOMMENDATION

 

                “The Vice President – Controller recommends that the Trustees approve and authorize submittal of the attached reports (Exhibits ‘7-A’ and ‘7-B’) as discussed herein.

 

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

 

                Mr. Concadoro presented the highlights of staff’s recommendations to the Trustees.  Chairman McCullough said that he had spoken with Vice Chairman Townsend, Chairman of the Audit Committee, who told him that at their last meeting the Audit Committee met with staff and representatives from Ernst & Young, the Authority’s independent auditing firm, as well as with the Ernst & Young representatives alone, to discuss the financial reports and that Vice Chairman Townsend fully supports this resolution.

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

RESOLVED, That pursuant to Section 2800 of the Public Authorities Law, the Corporate Secretary be, and hereby is, authorized to submit to the Governor, the Chairman and Ranking Minority Member of the Senate Finance Committee, the Chairman and Ranking Minority Member of the Assembly Ways and Means Committee, the State Comptroller, the Division of the Budget and the Authority Budget Office the attached financial report for the year ending 2006 in accordance with the foregoing report of the President and Chief Executive Officer; and be it further

 

RESOLVED, That pursuant to 2 NYCRR Part 203, the attached report of actual versus budgeted results for the year 2006 is approved in accordance with the foregoing report of the President and Chief Executive Officer; and the Corporate Secretary be, and hereby is, authorized to make the approved report available for public inspection at not less than five convenient public places throughout New York State, and post the report on the Authority’s website; and be it further               

 

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


 

 


 

8.             2006 Annual Report on Investment of Authority Funds

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

The Trustees are requested to review and approve the attached 2006 Annual Report on Investment of Authority Funds (Exhibit ‘8-A’).

 

 BACKGROUND

 

            “Section 2925 of the Public Authorities Law requires the review and approval of an annual report on investments.  Pursuant to the statute, the attached report includes Investment Guidelines that set standards for the management and control of the Authority’s investments, a summary of the Guidelines, the total investment income earned in 2006, a statement on fees paid for investment services, the results of an independent audit, a detailed inventory report for each of the Authority’s eight portfolios at December 31, 2006 and a summary of purchases from dealers and banks.  The approved annual report is filed with the State Division of the Budget, with copies to the Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee.  The report is also available to the public upon written reasonable request. 

 

DISCUSSION

 

“In 2006, the Authority’s investment portfolio averaged approximately $772 million and earned approximately $34 million.  This level of earnings is $9 million more than in 2005.  The increase in investment earnings is due to an increase in the average size of the portfolio combined with higher re-investment rates in 2006.  Income for the year from the Authority’s portfolios had an average yield of 4.50%, exceeding the Authority’s established performance measure by 41 basis points (41/100 of 1%).  The performance benchmark for 2006 was the three-year rolling average yield of the two-year Treasury note plus an average of 90 basis points. 

 

“At December 31, 2006, the portfolio consisted of 14% in direct obligations of the U.S. government; 4% in mortgages guaranteed by the U.S. government (‘GNMAs’); 68% in agencies of the U.S. government; 6% in Certificates of Deposit and Repurchase Agreements and 8% in Municipal Bonds.

“Investment management fees associated with the Nuclear Decommissioning Trust Fund, which is required to be managed by external managers, totaled $740,441 in 2006. 

“In connection with its examination of the Authority’s financial statements, Ernst & Young LLP performed tests of the Authority’s compliance with certain provisions of the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.  Ernst & Young LLP’s report, a copy of which is attached as Exhibit ‘8-B,’ states that the results of its examination disclosed no instances of noncompliance by the Authority.  Consequently, staff believes the Authority is in compliance with the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.

 

“The Investment Guidelines and procedures have not been amended since last presented and approved by the Trustees at their meeting of May 23, 2006.  They remain fundamentally sound and meet the requirements of the Authority.  Furthermore, these Guidelines continue to meet the requirements of Section 2824 (1)(e) of the Public Authorities Accountability Act of 2005, which requires the Authority’s Trustees to establish written policies and procedures with respect to investments.

 

RECOMMENDATION

 

“The Treasurer recommends that the Trustees approve the attached 2006 Annual Report on Investment of Authority Funds.

 

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

 

                Mr. McElroy presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Seymour, Mr. McElroy said that the Guidelines attached as an exhibit are the ones that were approved by the Trustees at their meeting of May 23, 2006.

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

RESOLVED, That the 2006 Annual Report on Investment of Authority Funds be, and hereby is, approved; and be it further

 

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

 

 

 

 

                                              2006 Annual Report on

                                         Investment of Authority Funds

 

 

                                                  Table of Contents

 

 

Section I                 Guidelines for the Investment of Funds

 

Section II                Explanation of the Investment Guidelines

 

Section III               A.      Investment Income Record

                             B.       Fees Paid for Investment Services

                             C.      Results of the Annual Independent Audit

 

Section IV               Inventory of Investments Held on December 31, 2006

 

Section V                Summary of Dealers and Banks from Which Securities Were Purchased 

 


 

                                                         Section I

 

                                           New York Power Authority

                                   Guidelines for the Investment of Funds

 

 

I.       General

 

These Guidelines for the Investment of Funds (the “Guidelines”) are intended to effectuate the applicable provisions of the General Resolution Authorizing Revenue Obligations, adopted February 24, 1998 (the “Resolution”), the lien and pledge of which covers all accounts and funds of the Authority and that governs the Authority's existing policies and procedures concerning the investment of funds as contained in these Guidelines.  In a conflict between the Guidelines and the Resolution, the latter shall prevail.  In addition, these Guidelines are intended to effectuate the provisions of Section 2925 of the New York State Public Authorities Law.

 

II.      Responsibility for Investments

 

The Treasurer and Deputy Treasurer have the responsibility for the investment of Authority funds under the general supervision of the Executive Vice President and Chief Financial Officer.  The Treasurer shall ensure that an operating manual is maintained that provides a detailed description of procedures for maintaining records of investment transactions and related information.

 

III.     Investment Goals

 

          The Treasurer and Deputy Treasurer are responsible for maximizing the yield on investments consistent with requirements for safety, liquidity and minimization of risk. Monies will not be invested for terms in excess of the projected use of funds.

 

IV.     Authorized Investments

 

          A.      Monies in funds established pursuant to the Resolution shall be invested in Authorized Investments or Authorized Certificates of Deposit, defined as follows:

 

                   “Authorized Investments” shall mean:

 

                        1.         Direct obligations of or obligations guaranteed by the United States of America or the State of New York;

 

2.         Bonds, debentures, notes or other obligations issued or guaranteed by any of the following: Federal National Mortgage Association (including Participation Certificates), Government National Mortgage Association, Federal Financing Bank, Federal Home Loan Mortgage Corporation and Federal Home Loan Banks, Federal Housing Administration, Federal Farm Credit Banks Funding Corporation, Federal Farm Credit Banks, Federal Intermediate Credit Banks, Federal Banks for Cooperatives, Federal Land Banks or any other agency controlled or supervised by and acting as an instrumentality of the United States government;

 

3.                  Obligations of any state of the United States of America or any political subdivision thereof or any agency, instrumentality or local government unit of any such state or political subdivision that shall be rated at the time of the investment in any of the three highest long-term Rating Categories, as such term is defined in the Resolution, or the highest short-term Rating Category by a Rating Agency, as such term is defined in the Resolution.

 

4.                  Public Housing Bonds issued by Public Housing Authorities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an Annual Contributions Contract with the United States of America; or Project Notes issued by Local Public Agencies, in each case, fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; provided that such Bonds or Notes are guaranteed by the United States of America.

 

“Authorized Certificate of Deposit” shall mean a certificate of deposit authorized by the Resolution as an “Authorized Investment.”

 

                   B.       The Authority, as an issuer of tax-exempt obligations, must not engage in any arbitrage practice prohibited by the arbitrage regulations promulgated under the Internal Revenue Code.  In no event shall Authority funds be invested in a manner that would violate the provisions of such arbitrage regulations.

 

V.      Provisions Relating to Qualifications of Dealers and Banks

 

          A.1.    The purchase and/or sale of Authorized Investments shall be transacted only through banks, trust companies or national banking associations (herein collectively termed “Banks”) that are members of the Federal Reserve System and government security dealers (herein termed “Dealers”), which are Banks and Dealers reporting to, trading with and recognized as primary dealers by the Federal Reserve Bank of New York.  A list of authorized Banks and Dealers shall be maintained.  Banks and Dealers shall have demonstrated an ability to:

 

                             a)     offer superior rates or prices on the types and amounts of securities required;

                             b)     provide a high degree of attention to the Authority's investment objectives; and

                             c)     execute trades in a timely and accurate manner.

 

          A.2.    Authorized Investments may also be purchased or sold through minority- and women-owned firms authorized to transact business in the U.S. government and municipal securities markets.  Such qualified firms shall demonstrate the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

          A.3.A.          Municipal securities qualifying as Authorized Investments may also be purchased or sold through any municipal bond dealer registered in the State of New York that demonstrates the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

B.                 Authorized Certificates of Deposit and time deposits (“Time Deposits”) shall be purchased directly from Banks that:

                   (1)      are members of the Federal Reserve System transacting business in the State of New York;

                   (2)      have capital and surplus aggregating at least $50 million; and

                   (3)      demonstrate all the qualities detailed in clauses (a), (b) and (c) of Section V.A.1.

 

          C.      Authorized Investments purchased by the Authority or collateral securing its investments shall be deposited only with custodians designated by the Authority. Such custodians shall be Banks that are members of the Federal Reserve System transacting business in the State of New York.

 

          D.      The Authority shall file with each qualified dealer a letter agreement that designates the (1) type of authorized investments, (2) Authority employees who are authorized to transact business and (3) delivery instructions for the safekeeping of investments.

 

          E.       The Authority shall enter into a written contract with any (1) Dealer from which Authorized Investments are purchased subject to a repurchase agreement and (2) Bank from which Authorized Certificates of Deposit are purchased.

 

VI.     General Policies Governing Investment Transactions

 

          A.      Competitive quotations or negotiated prices shall be obtained except in the purchase of government securities at their initial auction or upon initial offering. A minimum of three quotes shall be obtained and documented from Dealers and/ or Banks, except as indicated above, and the most favorable quote accepted.  The Treasurer or Deputy Treasurer may waive this requirement on a single-transaction basis only if warranted by market conditions and documented in writing.

          B.       Authorized Investments purchased shall be either delivered to the Authority's designated custodian or, in the case of securities held in a book-entry account maintained at the Federal Reserve Bank of New York or the Depository Trust Company, recorded in the Authority's name or in the name of a nominee agent or custodian designated by the Authority on the books of the Federal Reserve Bank of New York or the Depository Trust Company.  Payment shall be made to the Dealer or Bank only upon receipt by the Authority's custodian of (1) the securities or (2) in the case of securities held in a book-entry account, written advice or wire confirmation from the Federal Reserve Bank of New York or the Depository Trust Company that the necessary book entry has been made.

 

          C.      Each purchase or sale of Authorized Investments or Authorized Certificates of Deposit shall be authorized by the Treasurer or Deputy Treasurer.  Investment orders may be placed by Authority employees as designated by the Treasurer.  The custodian shall have standing instructions to send a transaction advice to the Authority's Controller for purposes of comparison with internal records.  The Controller shall advise the Treasurer of any variances, and the Treasurer shall ensure appropriate corrections are provided.

 

VII.    Policies Concerning Certain Types of Investment Diversification Standards Required

 

          A.      Authorized Certificates of Deposit and Time Deposits

 

                   1.       Authorized Certificates of Deposit and Time Deposits shall be purchased directly from a Bank in the primary market.

 

                        2.         Authorized Certificates of Deposit and Time Deposits shall be continuously secured/collateralized by Authorized Investments defined in subsection (1) or (2) of Section IV.A., having a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such Certificates of Deposit or Time Deposits.  Such Authorized Investments shall be segregated in a separate custodian account on behalf of the Authority.  Collateral pledged for Certificates of Deposit or Time Deposits held as investments shall be market valued (marked to market) not less than once per week.

 

                        3.         Investments in Authorized Certificates of Deposit or Time Deposits shall not exceed 25% of the Authority's invested funds.  The par value of Authorized Certificates of Deposit purchased from any one Bank shall not exceed $25 million.

 

          B.       Repurchase Agreements

 

                   The Authority may from time to time elect to enter into arrangements for the purchase and resale of Authorized Investments (known as “Repurchase Agreements”).  This type of investment transaction shall be used only when there is no other viable, short-term investment alternative.

 

                   1.       A Repurchase Agreement shall be transacted only with a Dealer or Bank qualified to sell Authorized Investments to the Authority that is recognized by the Federal Reserve Bank as a primary dealer.

 

                        2.         Authorized Investments purchased subject to a Repurchase Agreement shall be marked to market daily to ensure their value equals or exceeds the purchase price.

 

                        3.         A Repurchase Agreement shall be limited to a maximum fixed term of five business days.  Payment for the purchased securities shall be made against delivery to the Authority's designated custodian (which shall not be a party to the transaction as seller or seller's agent) or, in the case of securities held in a book-entry account maintained at the Federal Reserve Bank of New York or the Depository Trust Company, written advice that the securities are recorded in the Authority's name or in the name of a nominee, agent or custodian designated by the Authority on the books of the Federal Reserve Bank or the Depository Trust Company.

 

                        4.         No more than $50 million of Authorized Investments shall be purchased under a Repurchase Agreement with any one Dealer or Bank.  This requirement may be waived by the Vice President – Finance on a single- transaction basis only if warranted by special circumstances and documented in writing.

 

                        5.         The aggregate amount invested in Repurchase Agreements may not exceed the greater of 5% of the investment portfolio or $100 million.  The Executive Vice President and Chief Financial Officer may waive this requirement on a single-transaction basis only if warranted by cash-flow requirements and documented in writing.

 

                   6.       The Authority may not enter into arrangements (known as Reverse Repurchase Agreements) for the purpose of borrowing monies by pledging Authorized Investments owned by the Authority.

 

VIII.  Review

 

             These Guidelines and any proposed amendments shall be submitted for Trustee review and approval at least once a year.

 

             In addition to the Authority's periodic review, the Authority's independent auditors, in connection with their examination of the Authority, shall perform an annual audit of the investment portfolio, review investment procedures and prepare a report, the results of which will be made available to the Trustees.


 

IX.     Reports

 

          A.      The Treasurer shall submit an investment report to the Trustees, at least quarterly.  Such report shall contain a (1) detailed description of each investment;

                   (2) summary of the dealers and banks from which such securities were purchased and (3) a list of fees, commissions or other charges, if any, paid to advisors or other entities rendering investment services.

 

          B.       The Treasurer shall submit an annual report for approval by the Trustees.  In addition to the information provided quarterly, the Annual Report shall include

                   (i) a copy of the Guidelines; (ii) an explanation of the Guidelines and any amendments thereto since the last annual report; (iii) the results of an annual independent audit of investment inventory and procedures and (iv) a record of income earned on invested funds.  The approved report shall be submitted to the State Division of the Budget with copies distributed to the Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee.  Copies shall be made available to the public upon written reasonable request.

 

          C.      Any waivers that occurred during the prior month shall be reported to the Executive Vice President and Chief Financial Officer.

 

X.  Miscellaneous

 

          A. These Guidelines are intended for guidance of officers and employees of the Authority only, and nothing contained herein is intended or shall be construed to confer upon any person, firm or corporation any right, remedy, claim or benefit under, or by reason of, any requirement or provision thereof.

 

          B.  Nothing contained in these Guidelines shall be deemed to alter, affect the validity of, modify the terms of or impair any contract, agreement or investment of funds made or entered into in violation of, or without compliance with, the provisions of these Guidelines.

 

          C.  No provisions in these Guidelines shall be the basis of any claim against any Trustee, officer or employee of the Authority in his or her individual or official capacity or against the Authority itself.


 

Section II

 

                         EXPLANATION OF INVESTMENT GUIDELINES

 

 

Section II Responsibility for Investments

 

          Establishes responsibility for the Investment of Authority Funds and limits the number of individuals authorized to place investment orders.

 

Section III Investment Goal

 

          Establishes the policy that earning a reasonable return on investments must be consistent with standards set for minimization of risk and availability of funds when needed.

 

Section IV Authorized Investments

 

          Details the types of investments the Authority can undertake as prescribed in Section 101 of the Resolution.

 

          This section also requires that investments made in each of the Funds established under the Resolution be invested for a term commensurate with cash-flow expectations and that such investments not violate the arbitrage regulations of the Internal Revenue Code.

 

Section V Provisions Relating to Qualifications of Dealers and Banks

 

          Establishes criteria for the selection of banks and dealers from which the Authority may buy or sell investments.  Business is transacted with firms that have demonstrated financial strength and a high degree of reliability with respect to servicing the Authority's needs.  This section also directs that custody of Authority investments be maintained by banks that are members of the Federal Reserve System transacting business in the State of New York.

 

          This section also addresses the subject of contracts with banks and dealers for the purchase or sale of Authorized Investments.  The Authority has written Letters of Agreement with authorized dealers that specify the types of securities in which the Authority may invest and identify those Authority individuals authorized to give instructions related to the purchase and sale of securities.  In addition, the Authority shall have a written form of agreement for use in repurchase transactions with any authorized dealer with which the Authority may transact this type of investment. 


 

Section VI General Policies Governing Investment Transactions

 

          Requires that the Authority solicit no less than three bids for the purchase or sale of securities in order to ensure the most favorable rate except when securities are purchased at their initial auction, upon new issue or through negotiated prices.

 

          Requires that the Authority or its custodian, prior to payment, take possession of such securities, or in the case of book-entry securities, obtain written advice or wire confirmation that transfer or ownership has been recorded.

 

          Establishes authorized employees to approve the purchase or sale of securities.

 

          Establishes control procedures whereby the Controller shall compare the custodian's confirmation to Authority records.

 

Section VII Policy Concerning Certain Types of Investment Diversification Standards Required

 

          Establishes a policy concerning the purchase of Authorized Certificates of Deposit and Time Deposits intended to minimize the risk associated with such transactions.  Authorized Certificates of Deposit or Time Deposits may be purchased directly from a bank that is a member of the Federal Reserve System transacting business in the State of New York.  Such deposits shall be continuously secured by Authorized Investments as outlined in subsection (1) or (2) of Section IV.A.  This collateral shall be regularly priced to current market to assure the Authority's security interest is continuously protected.  Aggregate holdings of Authorized Certificates of Deposit shall not exceed 25% of the Authority's total investment.  Authorized Certificates of Deposit purchased from any one bank shall not exceed $25 million.

         

          Establishes a policy intended to minimize the risk associated with arrangements for the purchase and resale of Authorized Investments known as Repurchase Agreements (“Repos”).  Repos purchased from any one qualified dealer or bank shall not exceed $50 million and shall be limited to a maximum fixed term of five business days.  Aggregate investments in Repos shall not exceed the greater of 5% of the Authority's total investments or $100 million.  All securities purchased under the terms of a Repo shall be held in safekeeping by a designated custodian for the Authority.  Such securities shall be priced to market on a daily basis to assure the Authority's security interest.  Reverse Repurchase Agreements are not authorized transactions.

 

Section VIII Review

 

          Establishes policy requiring review of the Guidelines at least once a year.  Requires an annual audit by the Authority's independent auditors of the Authority's investment portfolio and compliance with the guidelines established by the Authority and the State Comptroller.

Section IX Reports

 

          Establishes policy requiring submission of reports to the Authority's Trustees concerning the management and performance of the Authority's portfolio.

 

          This Section also requires that an annual report be submitted for approval by the Authority's Trustees.  Copies of the approved report shall be sent to the State Division of the Budget, Office of the State Comptroller, Senate Finance Committee and Assembly Way and Means Committee.

 

 

                                                       Section III

 

 

A.      Investment Income Record

 

          During 2006, the Authority's investment portfolio averaged approximately $772 million and earned approximately $34 million.

 

          The earnings, by fund, were as follows (dollars in millions):

                                                         

          Operating Fund                                $29

            Capital/Construction Funds                     4

Other (Energy Con./Note Res.)               1

                                    Total                $ 34

 

          The 2006 investment income is $9 million more than in 2005.  The average size of the portfolio increased by $49 million in 2006.  The increase in the size of the portfolio, combined with higher re-investment rates in 2006, accounts for the increase in earnings.

 

B.      Fees Paid for Nuclear Decommissioning Trust Fund Investment Services

 

          $319,803                 Blackrock Financial Management, Inc.

          $327,247                 Tattersall Advisory Group, Inc.

          $  93,391                The Bank of New York

 

          Investment management fees were paid by the Nuclear Decommissioning Trust Fund.  By Nuclear Regulatory Commission mandate, the Trust is beyond the Authority's administrative control and is therefore not part of this Annual Report.

 

C.      Results of the Annual Independent Audit

 

In connection with its examination of the Authority’s financial statements, Ernst & Young, LLP, performed tests of the Authority’s compliance with certain provisions of the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law.  Ernst & Young LLP’s report, a copy of which is attached as Exhibit “8-B,” states that the results of its examination disclosed no instances of noncompliance by the Authority.  Consequently, staff believes the Authority is in compliance with the Investment Guidelines, the State Comptroller’s Investment Guidelines and Section 2925 of the Public Authorities Law. 


 

 

 

Report on Internal Control Over Financial Reporting

and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with

Government Auditing Standards

 

 

Power Authority of the State of New York

White Plains, New York

 

We have audited the financial statements of the Power Authority of the State of New York (the Authority), as of and for the year ended December 31, 2006, and have issued our report thereon dated February 16, 2007.  We have also audited the Statement of Investments as of and for the year ended December 31, 2006.  We conducted our audit in accordance with auditing standards generally accepted in the United States; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the standards for financial and compliance audits contained in the Investment Guidelines for Public Authorities, issued by the Office of the State Comptroller of the State of New York; and the investment guidelines established by the Authority.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the Authority’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control over financial reporting.  Accordingly, we do not express an opinion on the effectiveness of the Authority’s internal control over financial reporting.

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.  A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record process, or report financial data reliability in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more that a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity’s internal control.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses.  We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Authority’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and investment guidelines, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an object of our audit, and accordingly, we do not express such an opinion.  The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

We noted certain matters that we reported to management of the Authority in a separate letter dated February 16, 2007. 

 

This report is intended solely for the information and use of the Audit Committee, management and the Office of the State Comptroller of the State of New York, and is not intended to be and should not be used by anyone other than these specified parties.

5 Times Square

New York, NY 10036

 

February 16, 2007                                                                                                                                                                                                                                                                                                       


 

9.             Annual Review and Approval of Guidelines and Procedures for the Disposal of Personal Property, Guidelines and Procedures for the Disposal of Real Property and the 2006
Annual Reports of the Disposal of Personal and Real Property

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

 

“The Trustees are requested to review and approve the following two Guidelines, which comply with the requirements of the Public Authorities Accountability Act (‘PAAA’) of 2005:  (1) Guidelines and Procedures for the Disposal of Personal Property (hereinafter ‘Personal Property Guidelines’) for the disposition of surplus or obsolete material, equipment and supplies and (2) Guidelines and Procedures for the Disposal of Real Property (hereinafter ‘Real Property Guidelines’) for transfers of land or interests in land.  Such Guidelines are set forth in Exhibits ‘9-A’ and ‘9-B,’ respectively, as attached hereto.  The Trustees are also requested to review and approve the 2006 Annual Reports of the Disposal of Personal and Real Property, as set forth in Exhibits ‘9-A1’ and ‘9-B1,’ respectively, as attached hereto.

 

BACKGROUND

 

“On January 13, 2006, Governor Pataki signed the PAAA into law.  The subject law codified the Model Governance Principles established for public authorities in 2004 by the Governor’s Advisory Committee on Authority Governance, which was chaired by Ira Millstein.  Among its provisions, the PAAA established new rules for the disposal of public authority real property, as well as the disposal of personal property owned by public authorities.  The law also required each authority to draft guidelines consistent with the legislation dealing with these issues, to review and approve such guidelines annually, and to prepare an annual report of the disposal of personal and real property (including the full description, price received and name of the purchaser for all such property disposed of by the Authority during such period).

 

DISCUSSION

 

“In order to comply with the PAAA, staff drafted the Guidelines set forth in Exhibits ‘9-A’ and ‘9-B,’ which were approved by the Authority’s Trustees at their meeting of March 28, 2006. 

 

“The Personal Property Guidelines set forth the methodology detailing the Authority’s policy and procedures regarding the use, award, monitoring and reporting of contracts for the disposal of personal property, and designate a Contracting Officer responsible for the Authority’s compliance with, and enforcement of, such Guidelines.

 

“Staff has reviewed the Personal Property Guidelines and recommends the following changes:

 

(i)             Modify Section XI, ‘Authorization Levels,’ to eliminate reference to original contract price and instead base approval of disposition of personal property on fair market value.  Since personal property to be disposed of will include original plant equipment and materials, in some cases purchased as long as 50 years ago, information regarding original contract price is not always available.  The PAAA requires fair market valuation of personal property to be disposed of, and therefore it is appropriate to base internal management approval of such disposition on fair market valuation.

 

(ii)           Modify Section II.D, ‘Fair Market Value,’ to include appraisals as a method by which the fair market value may be determined, since obtaining an appraisal is also a common method for determining the fair market value of property.

 

(iii)          Modify Section VI.B.2.a to specifically list methods such as the New York State Contract Reporter and internet services typically used for advertising for bids to promote full and free competition consistent with the value and nature of the personal property.

 

(iv)         Modify Section XII.A to eliminate the reference to the definition of ‘fair market value,’ as it is a previously defined term.

 

(v)           Modify Section X to reflect the requirements of Governor Spitzer’s Executive Order Nos. 1 and 2 relating to politics and nepotism in contracting matters.

 

“The Real Property Guidelines set forth the methodology Authority will use in the following specific areas:

 

§               Maintaining inventory of the real property interests owned or under the jurisdiction of the Authority.

§               Disposing of such interests when they become surplus to the Authority’s needs.

§               Making annual reports of such transactions.

§               Designating an Authority representative (‘Contracting Officer’) responsible for implementing such guidelines.

 

“Staff has reviewed the Real Property Guidelines and recommends that Section V be modified to reflect the requirements of Governor Spitzer’s Executive Order Nos. 1 and 2 relating to politics and nepotism in contracting matters.

 

“Such Guidelines and corresponding Annual Reports will be reviewed annually and approved by the Trustees on or before the 31st day of March and will be filed with the State Comptroller, the Director of the Budget, the Commissioner of General Services and the State Legislature, as well as being posted on the Authority’s website.

 

FISCAL INFORMATION

 

“There will be no financial impact on the Authority.

 

RECOMMENDATION

 

“The Vice President – Procurement and Real Estate and the Director – Real Estate recommend that the Trustees approve the Guidelines and Procedures for the Disposal of  Personal Property for the disposition of surplus or obsolete material, equipment and supplies; the Guidelines and Procedures for the Disposal of Real Property for transfers of land and the corresponding 2006 Annual Reports of the Disposal of Personal and Real Property, as set forth in Exhibits ‘9-A’ and ‘9-A1’ and ‘9-B’ and ‘9-B1,’ respectively.

 

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Vice President – Internal Audits and Corporate Compliance 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 provisions of the Public Authorities Accountability Act of 2005, the Authority hereby reviews and approves the Guidelines and Procedures for the Disposal of Personal Property and the Guidelines and Procedures for the Disposal of Real Property, as amended and set forth in Exhibits “9-A” and “9-B,” respectively, and attached hereto; and be it further

 


 

RESOLVED, That pursuant to the provisions of the Public Authorities Accountability Act of 2005, the Authority hereby reviews and approves the 2006 Annual Reports for the Disposal of Personal and Real Property, as set forth in Exhibits “9-A1” and “9-B1,” respectively, and attached hereto; and be it further

 

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

 


 

POWER AUTHORITY OF THE STATE OF NEW YORK

 

2006 ANNUAL REPORT OF DISPOSAL OF PERSONAL PROPERTY OVER $5,000

           

DESCRIPTION                                                                     PURCHASER                                                AMOUNT RECEIVED

 

WIGGINS WC1064 FORKLIFT                                          ERIC FRYE                                                    $  5,500.00

 

1996 EAGER BEAVER TRAILER                                     JAMES LINDALE                                         $  6,200.00

 

1992 MORBARK 303 VERTICAL MOWER                    ED MARANUK – MARANUK TRUCKS   $  6,200.00

 

1996 FORD F350 TRUCK                                                    LEONID KAPLUN – NEW ORBIT AUTO $  6,300.00

 

1985 INTERNATIONAL 1854 AERIAL LIFT                   CRAIG SAGON – SAGON TRUCK            $  9,000.00

 

1997 ROTOBEC VTS172 TRACK MOWER                     SAMUEL BATTAGLIA – MCGREW EQUIP                                                                                                 $11,000.00

 

1993 GMC TOPKICK AERIAL LIFT                                 CRAIG SAGON – SAGON TRUCK            $27,000.00

 

1993 BOMBARDIER GO TRACK GT3000                      RICHART THUT – MIRK, INC.                 $85,000.00
TRACK DIGGER DERRICK

 

B/G STEP-UP TRANSFORMER                                        TCI, INC.                                                      $165,000.00

 

TRANSFER OF BEECHCRAFT AIRPLANE                    NEW YORK STATE POLICE                                                                                                Payment

(KING AIR B-200)                                                                                                                                                                waived         

 

                                                                                                                        TOTAL                                  $321,200.00

 


 

 

 

POWER AUTHORITY OF THE STATE OF NEW YORK

 

2006 ANNUAL REPORT OF DISPOSAL (CONVEYANCE) OF REAL PROPERTY OVER $15,000 IN VALUE

 

 

                                                                                                            Surplus

                                                                                                             Parcel                          Appraisal    Deed Filed in

Current Owner’s Name                                                                      Acres                             Value       County Clerk

           

Lalone’s Point, LLC                                                                              6.91                            $20,700.00       11/17/2006

Town of Lisbon                                                                                     4.61                            $1.00 P.W.         9/15/2006

Town of Lisbon                                                                                     1.37                            $1.00 P.W.       10/23/2006

Town of Massena                                                                                16.908                          $1.00 P.W.         9/14/2006

Town of Massena                                                                                22.741                          $1.00 P.W.         9/15/2006

Town of Massena                                                                                  6.029                          $1.00 P.W.         9/15/2006

Town of Massena                                                                                  4.231                          $1.00 P.W.         9/15/2006

Village of Waddington                                                                           0.932                          $1.00 P.W.         1/05/2007

Village of Waddington                                                                           0.578                          $1.00 P.W.         1/05/2007

Village of Waddington                                                                           0.066                          $1.00 P.W.         1/05/2007

Village of Waddington                                                                           0.727                          $1.00 P.W.         1/05/2007

Village of Waddington                                                                           1.187                          $1.00 P.W.         1/05/2007

Village of Waddington                                                                           0.241                          $1.00 P.W.         1/05/2007

Village of Waddington                                                                           1.259                          $1.00 P.W.         1/05/2007
 

 

 

POWER AUTHORITY OF THE STATE OF NEW YORK

 

2006 ANNUAL REPORT OF DISPOSAL (CONVEYANCE) OF REAL PROPERTY OVER $15,000 IN VALUE

COMMENCED BUT NOT COMPLETED IN 2006

 

 

                                                                                                                                                 Appraisal  Surplus Parcel

Current Owner’s Name                                                                                                             Value                   Acres                                                                                                                                                        

           

Jonathan O. Dean                                                                                                                     $13,800.00                  6.92

Robinson F. Dean                                                                                                                     $15,200.00                  7.59

John Bartlett and Linda Bartlett                                                                                                 $27,200.00                10.89

George W. and Dacie Clements Agricultural Research                                                               $16,700.00                    4.9

Town of Waddington                                                                                                                $1.00 P.W.                9.376

Town of Waddington                                                                                                                $1.00 P.W.                5.135

Town of Waddington                                                                                                                $1.00 P.W.                1.929

Town of Waddington                                                                                                                $1.00 P.W.                  0.53

Town of Waddington                                                                                                                $1.00 P.W.                0.386

Town of Waddington                                                                                                                $1.00 P.W.                0.623

Town of Waddington                                                                                                                $1.00 P.W.                0.749

Town of Waddington                                                                                                                $1.00 P.W.                  1.67

Village of Lisbon                                                                                                                       $1.00 P.W.                22.28

Lowell F. Putney                                                                                                                      $32,000.00                15.59

 

 

 

POWER AUTHORITY OF THE STATE OF NEW YORK

 

2006 ANNUAL REPORT OF DISPOSAL (CONVEYANCE) OF REAL PROPERTY OVER $15,000 IN VALUE

COMMENCED BUT NOT COMPLETED IN 2006

 

 

                                                                                                                                                 Appraisal  Surplus Parcel

Current Owner’s Name                                                                                                             Value                   Acres                                                                                                                                                        

           

Town of Waddington                                                                                                                $1.00 P.W.                11.61

Town of Waddington                                                                                                                $1.00 P.W.                0.669

Town of Louisville                                                                                                                    $1.00 P.W.                  5.65

Town of Louisville                                                                                                                    $1.00 P.W.                2.835

Town of Louisville                                                                                                                    $1.00 P.W.                0.455

Town of Louisville                                                                                                                    $1.00 P.W.                0.063

Town of Waddington                                                                                                                $1.00 P.W.                1.919

Town of Waddington                                                                                                                $1.00 P.W.                6.455

Town of Waddington                                                                                                                $1.00 P.W.                33.09

Town of Waddington                                                                                                                $1.00 P.W.              34.762                                                                                                                                                                 

Town of Louisville                                                                                                                    $1.00 P.W.                4.788

Town of Louisville                                                                                                                    $1.00 P.W.                25.65

Village of Waddington                                                                                                              $1.00 P.W.                2.255

Town of Waddington                                                                                                                $1.00 P.W.                6.914

 


 

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

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve the award and funding of the multiyear procurement contracts listed in Exhibit ‘10-A’ for the Authority’s Business Units/Departments and Facilities.  Detailed explanations of the nature of such services, the bases for the new awards if other than to the lowest-priced bidders and the intended duration of such contracts are set forth in the discussion below.

BACKGROUND

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

“The Authority’s Expenditure Authorization Procedures (‘EAPs’) require the Trustees’ approval for the award of non-personal services, construction 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 $6,996 to $7,150,000.  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 re-bid these services annually.

Contracts in Support of Business Units/Departments and Facilities:

Business Services

“In November 2006, the Trustees authorized staff to enter into negotiations for the execution of long-term supply agreements with Hudson Transmission Partners, LLC and FPL Energy, LLC.  Using these agreements, the Authority intends to provide capacity and energy to its New York City Governmental Customers following the anticipated shutdown of its Poletti plant in 2010.  The agreements will involve the Authority’s active participation in the Pennsylvania/New Jersey/Maryland (‘PJM’) Interconnection marketplace, committees and working groups.  To support contract negotiations, the Authority will need to use outside experts with knowledge of PJM markets to advise the Authority and to protect its and its customers’ interests.  Such expertise will be used to evaluate the impact of PJM rules and relevant Federal Energy Regulatory Commission (‘FERC’) proceedings on contract provisions and future operations.  To this end, nine firms were invited to submit proposals; four proposals were received and evaluated.  Three of the four responding bidders did not demonstrate the same level of depth, expertise and extensive experience as Levitan & Associates, Inc. (‘LAI’), specifically with respect to such key areas as export of capacity and energy to neighboring markets and transmission arrangements involving new transmission spanning two neighboring Independent System Operator (‘ISO’) markets/regions.  In addition, one such bidder with less relevant experience in PJM governance and operational issues, as well as relevant FERC rulings, submitted higher pricing than LAI.  Furthermore, LAI has extensive recent experience with the aforementioned and other relevant PJM issues, as well as with negotiating contracts involving transmission, energy and capacity between two neighboring ISO regions, due to its recent and ongoing similar work for the Long Island Power Authority.  Based on the foregoing reasons, staff recommended award of the subject contract to LAI, the most technically qualified bidder with reasonable pricing.  Due to the need to commence services, the contract with LAI (Q02-3982; 4600001771) became effective on March 1, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  Such consulting services are needed to support anticipated capacity and transmission rights contract negotiations with potential developers for execution of long-term supply agreements.  The intended term of this contract is up to 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, $1,500,000.

“At their meeting of December 19, 2006, the Trustees authorized Authority staff to initiate the establishment of a trust for employee benefits other than pension benefits by establishing the parameters of a trust; developing investment guidelines; soliciting bids for a financial consultant, investment manager(s) and trustee and such other related services as may be necessary.  To this end, staff prepared a Request for Proposals (Q02-3973) for financial management consulting services in connection with Other Post-Employment Benefits (‘OPEB’).  Bid documents were downloaded electronically from the Authority’s Procurement website by seven firms, including those that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Based on its qualifications and experience, staff recommended award of the subject contract to PFM Asset Management, LLC (‘PFM’), the sole responding bidder that was determined to be well qualified to serve in this capacity.  Due to the need to commence services, the contract with PFM (4600001764) became effective on February 14, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The consultant will assist the Authority in developing trust investment policies and guidelines, recommending asset allocation, selecting investment managers and a trust custodian; providing oversight of the trust; investment managers and performance reporting and any other services required to manage trust investments.  The consultant may also be requested, from time to time, to perform special analytical work or provide advice with respect to investment or other asset management issues of particular import to the Authority.  The intended term of this contract is up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $640,000.  (It should be noted that only up to $140,000 will be committed to and charged against the contract in SAP; the remaining tiered oversight fees, to be capped at $100,000 per year, will be paid directly from the trust.)

“In 2003, the Authority implemented a program of managed network security monitoring services, in response to mandates by the North American Electric Reliability Council (‘NERC’) and the Federal Energy Regulatory Commission (‘FERC’), as well as an internal study on network security vulnerability.  Services include, but are not limited to, providing managed security monitoring of the Authority’s essential computer network assets on a 7x24x365 basis and implementing a system to monitor, diagnose, notify, interpret and report important system events throughout the network.  The vendor will monitor and correlate system, audit and event logs and alerts to detect irregular activity and identify unauthorized behavior, malicious hacks and denials of service, including insider attacks and anomalies and trend analyses.  Since existing contracts for such services were expiring and since there is an ongoing need for such services, staff sought proposals (Q02-3911) for the award of new contracts.  To this end, bid documents were downloaded electronically from the Authority’s Procurement website by 54 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Twelve proposals were received and evaluated:  (1) all 12 proposals were first scored on six basic criteria (experience, company attributes, monitoring service, monitoring personnel, implementation and reporting), and the six lowest-scored proposals based on technical merit were eliminated from further consideration; (2) the remaining six proposals were then reviewed based on costs, which eliminated the three highest-priced proposals in this group; (3) the remaining three bidders were invited to make presentations to the Authority, affording each firm the opportunity to explain in detail its functional abilities and technical qualifications, as well as follow up at question-and-answer sessions.  (It should be noted that these three vendors were the lowest-priced bidders of the original 12.)  Based on the foregoing, staff recommended the award to the lowest-priced bidder (a partnered proposal submitted by NitroSecurity/Secure Works Holding Inc./LURHQ) that is qualified to perform such services and was determined by staff to offer the best technical solution with the most functionality.  For administrative purposes, two contracts were awarded: one to Secure Works Holding Inc. / LURHQ (‘LURHQ’; 4500137400) to provide network managed security and monitoring services, and a second to Nitro Security, Inc. (4500134239) to provide maintenance services for software and hardware on the network monitoring equipment (procured under a separate contract).  Due to the need to commence services, the contract with Nitro Security became effective on December 22, 2006 (but actual services will commence upon successful installation of the hardware, currently projected for the end of March 2007) and the contract with LURHQ became effective on March 2, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The intended term of these contracts is three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of each contract, $218,860 for LURHQ and $59,300 for Nitro Security.

“Due to the need to commence services, the contract with Veolia ES Technical Solutions, LLC (‘Veolia’; Q02-3927; 4600001762) became effective on February 21, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for asset management and recycling services for the Authority’s used electronic equipment.  Services include pick-up, loading, transport, reselling and/or recycling of surplus electronic equipment, including but not limited to cathode ray tubes, computer monitors, central processing units, typewriters, calculators, keyboards, Universal Power Supply units, etc.  Bid documents were downloaded electronically from the Authority’s Procurement website by 16 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated.  The two highest-priced proposals were not evaluated further.  Based on a site audit performed by the Authority’s Environment, Health and Safety (‘EH&S’) Division staff, the lowest-priced bidder’s proposal was deemed to be unacceptable.  EH&S staff also conducted a site audit of the Veolia facility and found it to be qualified and operating in compliance with its permit; the facility also has the capability to recycle mercury on site, has its own transportation vehicles and a New York State transporter’s permit, carries $15 million in pollution liability insurance, has the ability to track the equipment by serial number and electronically and has a good compliance record.  Based on the foregoing, staff recommended award of the subject contract to Veolia, the lowest-priced qualified bidder.  The intended term of this contract is approximately four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $100,000.

Corporate Services and Administration

“The contract with Bennett Kielson Storch DeSantis, A Division of O’Connor Davies Munns & Dobbins, LLP (formerly Bennett Kielson Storch DeSantis) (‘Bennett Kielson’; Q02-3999; PO# TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for audit services of the operating expenses of the Authority’s Clarence D. Rappleyea Building in White Plains, specifically the allocation of Common Area Maintenance charges to the tenants of the building.  The Authority owns the Rappleyea Building, which is a Class A, 420,000-square-foot, 17-story structure with 30,000-square-foot floors.  The Authority occupies approximately 60% of the building; the balance is occupied by tenants.  This contract is awarded as the result of a mini-bid, where bid documents were sent to eight bidders pre-qualified by the New York State Office of General Services (‘OGS’), pursuant to existing contracts competitively bid and issued by OGS, and in accordance with the Authority’s Guidelines for Procurement Contracts.  One proposal was received and evaluated.  Staff recommends award of a contract to Bennett Kielson, the sole responding bidder that is qualified to perform such services.  The intended term of this contract is up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $51,300.

“The contract with Corporate Counseling Associates (‘CCA’; Q02-3972; PO# TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for Employee Assistance Program (‘EAP’) services, including child care and eldercare assistance, to all Authority employees and retirees and their families, and to act as gatekeeper for mental health and substance abuse services provided by United Healthcare under the ‘NYPA Plan.’  EAP services consist of an off-site program designed to assess an individual’s problem(s), provide short-term counseling, if appropriate, or refer that individual for additional or specialized help, if required.  The program comprises:  (1) core services, including preventive, management, crisis intervention and on-site critical incident services; (2) support services, including supervisory training sessions, educational/promotional materials, websites and fitness-for-duty evaluations and (3) gatekeeper services, including EAP-driven managed care, utilization review, case management, appeals, coordination with insurance carrier and activity reports.  In addition to enabling employees with problems to perform their jobs in a professional manner, the Authority must comply with the U. S. Department of Transportation and U. S. Coast Guard rules, which mandate the availability of an EAP (e.g., applicable to employees who are icebreaker captains or engineers at the Niagara Project).  Since the current contract for such services expires on March 31, 2007, a new Request for Proposals was prepared.  Bid documents were downloaded electronically from the Authority’s Procurement website by 11 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated.  Two of the four bidders were eliminated from further consideration (one due to higher costs and the other due to an inadequate number of network clinicians in certain areas of New York State); the remaining two proposals were evaluated further.  Although both firms provide many of the same services at similar evaluated costs, there are important differences between them (e.g., CCA provides a tollfree ‘800’ number hotline that is answered immediately by professional counselors (versus a machine at the other firm); CCA has a larger in-house counseling staff and offers up to five additional short-term counseling sessions and CCA pre-certifies NYPA Plan mental health substance abuse claims).  In addition, CCA has provided excellent services and support to the Authority under the existing contract and has demonstrated the ability to help the Authority control health care costs, while assuring that employees receive the most appropriate and highest quality of care.  Based on the foregoing reasons, staff recommends the award of a new contract to CCA, the lowest-priced most qualified bidder.  The intended term of this contract is up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $472,908.

“Due to the need to commence services, the contract with FlightSafety International (‘FlightSafety’; Q02-3984; 4500137475) became effective on March 1, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide proficiency training on flight simulators to the Authority’s pilots for the Beechcraft King Air 350.  Services include mandatory annual recurrent pilot training, as well as initial flight training on an ‘as needed’ basis.  Bid documents were downloaded electronically from the Authority’s Procurement website by three firms, including those 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 rates, staff recommended award of the subject contract to FlightSafety.  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 amount expected to be expended for the term of the contract, $137,400.

“Pursuant to the new license for the St. Lawrence /FDR Power Project (‘Project’) issued by the Federal Energy Regulatory Commission (‘FERC’), the Authority is required to undertake a variety of activities, including a number of environmental enhancement measures, to fulfill requirements in the Project license and related Authority commitments in the license application and relicensing settlement agreements.  To this end, the contract with Kleinschmidt Associates (‘Kleinschmidt’; Q02-3952; PO# TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for environmental study management services for implementation of and compliance with the aforementioned requirements and commitments.  Kleinschmidt will assist Authority staff in the acquisition and management of contractors to:  (1) conduct studies and other related activities for 11 Habitat Improvement Projects, Wilson Hill Wildlife Management Area improvements and total dissolved gases monitoring below Long Sault Dam; (2) prepare various management plans and compliance reports and (3) perform studies related to the downstream passage of American eel in Project waters.  Bid documents were downloaded electronically from the Authority’s Procurement website by 30 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Three proposals were received and evaluated.  Based on the firm’s experience; the most in-depth understanding of the work to be performed as demonstrated in its proposal and the qualifications and expertise of its staff in terrestrial, wetland and aquatic biology (especially their knowledge of the St. Lawrence area and the downstream eel passage issue), as well as the strength, qualifications, technical and management experience and availability of both the proposed team and individual personnel, staff recommends award of a contract to Kleinschmidt, the lowest-priced most technically qualified bidder.  In addition, Kleinschmidt’s past performance for the Authority has been excellent in terms of competent management of numerous concurrent studies and reports, engineering support and contract and invoice administration.  The intended term of this contract is up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $7,150,000.  (It should be noted that this amount includes not only the direct costs for Kleinschmidt, but also the costs for the contractors that will conduct the studies and other related activities.)

“The contract with Newmark Knight Frank (‘Newmark’; Q02-3934; unnumbered agreement) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for brokerage services for potential leasing of space that may become available at the Authority’s Clarence D. Rappleyea building at 123 Main Street in White Plains.  Bid documents requesting qualification statements were downloaded electronically from the Authority’s Procurement website by six firms, including those that may have responded to a notice in the New York State Contract Reporter; three firms responded with qualification statements.  Based on a thorough review and evaluation of their qualifications, experience, key personnel, references and subsequent presentations, staff recommends award of a contract to Newmark, the firm whose team made the best presentation and was deemed to be best qualified to provide these services.  It should be noted that the commission schedules for all three firms are the same typical terms for brokerage services in the Westchester/White Plains area, so the selection of Newmark as the exclusive listing agency for available Authority commercial space would have no additional financial impact on the Authority, nor would it preclude the other entities from bringing tenants into the building as outside brokers.  The intended term of this contract is up to five years, subject to the Trustees’ approval, which is hereby requested.  Commissions will only be paid in the event of actual leasing of space and will be recovered by the Authority from rental income to be paid by such tenants.

“The contract with Rizzo & DiGiacco Certified Public Accountants, PLLC (‘Rizzo & DiGiacco’; Q02-3965; PO# TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide the services of independent certified public accountants to annually audit the assets of the Authority’s Deferred Compensation Plan (Section 457 Plan), as mandated by the rules and regulations issued by the New York State Deferred Compensation Board.  Participants in the Authority’s 457 Plan may contribute from 1% to 100% of their compensation on a pre-tax basis.  Such contributions are invested, in 1% increments, in any of 17 investment options offered by T. Rowe Price, which serves as the investment fund manager, record keeper and trustee for the Plan.  Bid documents were downloaded electronically from the Authority’s Procurement website by five firms, including those that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated.  Two of the four bidders were eliminated from further consideration based on cost.  The remaining two proposals were evaluated further, based on experience, hourly rates and the number of hours projected to perform the audit.  Although both firms were found to have nearly identical overall evaluated costs, the deciding factor was the experience of one of the partners at Rizzo & DiGiacco.  Based on the foregoing reasons, staff therefore recommends award of a contract to Rizzo & DiGiacco, the lowest-priced most qualified bidder.  The intended term of this contract is up to five years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the total amount expected to be expended for the term of the contract, $45,000.

“Due to the need to commence services, the contract with Salary.com (Q02-3940; 4500137356) became effective on February 26, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for services to implement and maintain an automated system for data gathering and evaluation of Authority jobs.  This system would assist the Authority’s Compensation staff with the job analysis process, which is currently performed manually.  Bid documents were downloaded electronically from the Authority’s Procurement website by 16 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Six proposals were received and evaluated.  Based on a review of each proposal, including the estimated costs and planned approach to such services, staff determined that the Salary.com proposal offered the best solution for the Authority’s needs.  The firm has an established automated ‘CompAnalyst’ system comprising the Survey Center, Reporting and Analysis and Job Analyzer modules, which would provide the capability of an automated search of the Authority’s compensation data resources, as well as reporting capabilities.  In addition, the system is housed on Salary.com’s servers, thereby eliminating the need for the Authority’s Information Technology staff to support the implementation and maintenance of this system.  Furthermore, the other proposals were all higher priced and proposed designing and developing a database for the Authority.  Staff therefore recommended award of the subject contract to Salary.com, the lowest-priced most 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 amount expected to be expended for the term of the contract, $57,000.  

Energy Services and Technology

“The contract with Banner Electrical Contracting Corp. (‘Banner’; Q02-3963; PO# TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for electrical installation services for samples and prototypes of lighting fixtures at various project sites throughout New York City and Westchester County, as part of the Authority’s Energy Services Program.  Bid documents were downloaded electronically from the Authority’s Procurement website by four firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommends award of the subject contract to Banner, the lowest-priced bidder that is qualified to perform the work.  The intended term of this contract is two 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, $500,000.  It should be noted that all costs will be recovered by the Authority.

“The contract with EDM International, Inc. (Q02-4012; PO# TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for maintenance services for five sagometers (which measure the sag of the phase conductors) installed in five critical locations on the Authority’s NATL Transmission Line.  The contract is awarded on a sole source basis, since EDM developed this system with the Electric Power Research Institute (‘EPRI’) and is therefore uniquely qualified to perform all required work.  A notice of the Authority’s intent to enter into a sole source contract with EDM for such services was published in the New York State Contract Reporter.  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, $27,000.

“Due to the need to commence services, the contract with UTC Power Corp. (‘UTC’; 4500133448) became effective on January 1, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for the continuation of operations and maintenance services for 14 fuel cell power plants (‘FCPPs’) providing clean, reliable power in the greater New York City metropolitan area.  The subject contract was awarded on a sole source basis, since UTC is the original equipment manufacturer of the fuel cells and, as such, is the only qualified provider of the required monitoring, diagnostics and maintenance services for these fuel cells.  A notice of the Authority’s intent to enter into a sole source contract with UTC for such services was published in the New York State Contract Reporter.  While it was previously anticipated that Authority staff might take over this function, a re-examination of this issue indicated that outsourcing such services continues to be more economical and prudent.  The intended term of this contract is up to five years, subject to the Trustees’ approval, which is hereby requested.  (It should be noted that the intended term for the 12 Authority-owned FCPPs is three years, based on more favorable pricing by UTC for a three-year term; and the intended term for the two customer-owned FCPPs is five years, at the customers’ request.)  Approval is also requested for the total amount expected to be expended for the term of the contract, $1,728,920 ($1,407,450 for Authority FCPPs and $321,470 for customer FCPPs).  Costs will be recovered by the Authority for services provided for the two customer-owned FCPPs.

Power Generation

“The contract with Bloomville Disposal Service (‘Bloomville’; BG-042007; PO# TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for trash removal and disposal services for the Authority’s Blenheim-Gilboa Project.  Services also include providing various waste containers as per specifications and landfill disposal fees.  Bid documents were sent to five firms, including any that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Staff recommends award of the subject contract to Bloomville, the sole responding bidder that is qualified to perform such services.  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, $120,000.

“The contract with CED Baldwin Hall (‘CED’; 4600001759) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for the renewal of a Priority TechConnect Support agreement for Rockwell/AB products and equipment at the St. Lawrence/FDR Power Project (‘Project’).  Services include telephone and online technical support by highly skilled, formally trained engineers and technical specialists on a 24/7/365 basis for Rockwell Automation/AB communications software and equipment, installed as part of the Life Extension and Modernization program at the Project.  This award is made on a sole source basis, since CED is the only firm authorized by Rockwell Automation to provide such services in this geographic area.  Staff therefore recommends award of the subject contract to CED, which is qualified to perform such services.  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, $6,996.

“Due to the need to commence services, the contract with Comet Flasher Inc. (‘Comet’; 4600001743) became effective on January 1, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for maintenance of traffic control devices on the Robert Moses Parkway (above the Robert Moses Niagara Power Project dam face).  Bid documents 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.  Staff recommended award of the subject contract to Comet, the lowest-priced bidder that is qualified to perform the work.  The intended term of this contract is two 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, $210,000.

“The contract with EJ Electric Installation Company (‘EJ Electric’; Q02-3989, PO# TBA) would become effective on June 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for general electrical support services for the 500 MW Combined Cycle Plant.  Such services will generally consist of supplementing and assisting the Authority’s plant employees during various periods, including but not limited to scheduled outages, emergency shutdowns and technical inspections, as may be directed by the Authority.  Bid documents were downloaded electronically from the Authority’s Procurement website by 18 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommends award of the subject contract to EJ Electric, the lowest-priced bidder that is qualified to perform the work.  The intended term of this contract is approximately 3.5 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, $750,000.

“The contract with GE Fanuc Automation Americas Inc. c/o AutomaTech Inc. (‘GE Fanuc’; 4600001748) would become effective on April 28, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for software support/maintenance and updates for the Data Acquisition and Control System (also known as the Generator Temperature Monitoring System) at the Niagara Project.  The award is made on a sole source basis, since AutomaTech is the sole distributor in the region of the proprietary GE Fanuc software.  A notice of the Authority’s intent to enter into a sole source contract with GE Fanuc c/o AutomaTech was published in the New York State Contract Reporter.  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, $80,000.

“Since the installation and commissioning of the Small Clean Power Plants (‘SCPPs’), the LM6000 units have experienced five emergency breakdown incidents that have not been covered by warranty.  In each case involving the power island equipment, the only source of emergency support has been GE Packaged Power, Inc. (‘GEPP’) and involved multiple emergency orders to GE for a spare engine, field technicians and the actual factory orders for repairs and other service bulletin upgrades, as necessary.  On several such occasions, the Authority has investigated whether other firms were capable of providing these services, but the response was negative, due to the unavailability of parts, assets or the leasing of a gas turbine for use during repairs, leaving GEPP as the only resource to meet the Authority’s needs in time of emergency.  Staff therefore recommends entering into a long-term services agreement with GEPP (Q02-4014; PO# TBA) to provide for emergency repair support services, as well as necessary maintenance services that only GEPP is qualified to provide, for the LM6000 SCPPs.  This contract is awarded on a sole-source basis, since GEPP is the original equipment manufacturer and, as such, is uniquely qualified to perform such services.  GEPP has the required engineering resources, parts and other assets available on a 24/7 basis.  GEPP also has engines for lease during repairs, so that the Authority can maintain its ISO UCAP.  GE will provide all such required services under this one contract, enabling the Authority to receive discounts on GE’s published rates and GE will also provide an 18-month warranty for parts and services.  Additionally, this agreement would allow the Authority to bid separately any major planned maintenance activities, should it choose to do so, and also would not require the Authority to guarantee any annual minimum amount of orders or services with GE.  (A notice of the Authority’s intent to enter into a sole source contract with GEPP for such services was published in the New York State Contract Reporter).  The contract would become effective on April 1, 2007 for an intended term of five 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, $6,000,000 (which will be released as needed).

“Due to the need to commence services, the contract with Hadley Exhibits, Inc. (‘Hadley’; 4600001739) became effective on December 1, 2006, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for maintenance and repair services for displays and exhibits at the Niagara Power Project’s Power Vista Visitors’ Center.  Services include, but are not limited to, maintaining and repairing display lighting and audio; carpentry, electrical and mechanical repairs; and graphic design and repairs, to be performed on a scheduled or ‘as needed’ basis.  Bid documents were sent to four firms, including any that may have responded to a notice in the New York State Contract Reporter.  Two proposals were received and evaluated.  Staff recommended award of the subject contract to Hadley, the lowest-priced evaluated bidder that is qualified to perform the work.  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, $80,000 (including contingency).

“Due to the need to commence services, the contract with Metalico Niagara Inc. (‘Metalico’; 4500134314) became effective on January 1, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for all supervision, labor, equipment and materials to provide scrap metal disposal services.  Services include, but are not limited to, providing containers and hoppers, pick-up and transport services and certified weighing of full containers.  Scrap metals include, but are not limited to, the following: #1 heavy metal (iron and steel), machine shop turnings, brass, insulated copper (wire and cables), aluminum and other miscellaneous metals.  The successful high bidder will pay the Authority a fair market price for the scrap metal removed, based on the American Metal Market’s Index Price, as competitively adjusted by the vendor.  Bid documents were sent to eight firms, including any that may have responded to a notice in the New York State Contract Reporter and three local newspapers.  Two proposals were received and evaluated.  Based on its pricing and ability to provide such services, staff recommended award of the subject contract to Metalico, which, in staff’s opinion, will provide the greatest value to the Authority.  The intended term of this contract is three years, subject to the Trustees’ approval, which is hereby requested.  The Authority will be credited the value of any metals at the time of disposal against the cost for such disposal and, at this time, the Authority anticipates that there will be a net payment to the Authority over the term of the contract.

“Due to the need to commence services, the contract with New York Merchants Protective Company, Inc. (‘NY Merchants’; 4600001692) became effective on August 21, 2006, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for inspection, maintenance and repair services for the fire protection system at the Authority’s 500 MW Plant, in accordance with all applicable National Fire Protection Association and other standards, manufacturer’s recommendations and local code requirements.  Bid documents were sent to 13 firms, including any that may have responded to a notice in the New York State Contract Reporter.  Four proposals were received and evaluated.  Staff recommended award of the subject contract to NY Merchants, the lowest-priced bidder that is qualified to perform the work.  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, $18,000.

“The three contracts with Prysmian Power Cables and Systems (‘Prysmian,’ formerly Pirelli Cables & Systems Division), USi, Inc. and InfaSource Power dba EHV Power Corp. (‘EHV Power’) (Q02-3843; PO#s TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of these contracts is to provide for emergency repair services for the Authority’s land-based high-pressure fluid-filled (‘HPFF’) and solid dielectric transmission cable systems up to 345 kV, installed in various locations through New York State, on an ‘as needed’ basis.  The award of such contracts will enable the Authority to have a mechanism in place to respond in a timely manner, in case of a failure of critical land cable transmission facilities, thereby minimizing system interruptions and associated costs and precluding the need for emergency sole-source awards.  To this end, bid documents requesting qualification statements were downloaded electronically from the Authority’s Procurement website by potential bidders, including those that may have responded to a notice in the New York State Contract Reporter (Q02-3744).  Based on a thorough review and evaluation of their qualifications, five firms were evaluated as responsive and meeting the qualification requirements.  These five pre-approved firms were then invited to submit their labor and equipment rates for such services (Q02-3843).  Three proposals were received and evaluated.  Based on their qualified manpower and equipment resources, their experience and ability to perform such services and to respond to emergency callout within 24 hours, as well as reasonable pricing, staff recommends the award of contracts to all three bidders: Prysmian, USi, Inc. and EHV Power, thereby providing flexible coverage for both upstate and downstate facilities in a timely manner, as may be required.  The intended term of these contracts is up to four years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the estimated combined total amount that may be expended for the term of the three contracts, $1,000,000.  (It should be noted that potential costs can vary widely, depending on the nature of the emergency repairs, location of the work and potential clean-up that may be required.)

“The contract with Quintal Contracting Corp. (‘Quintal’; 6000076351; PO# TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of this contract is to provide for algae removal and basin depth maintenance at the Richard M. Flynn Power Plant.  Services include the removal of algae buildup from the bottom and sides of the North and South Reinjection Basins (on an ‘as needed’ basis, approximately seven times per year), and the addition of duct bank material (coarse sand) to the bottom of the basins to maintain basin depth within 12 inches of the top of the water inlet vault.  Bid documents were sent to eight firms, including any that may have responded to a notice in the New York State Contract Reporter.  One proposal was received and evaluated.  Staff recommends award of the subject contract to Quintal, the sole responding bidder that is qualified to perform such services.  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, $78,000.

“Due to the need to commence services, the contract with SimplexGrinnell (‘Simplex’; 4600001770) became effective on March 1, 2007, subject to the Trustees’ subsequent approval as soon as practicable, in accordance with the Authority’s procurement policies and EAPs.  The purpose of this contract is to provide for emergency call-out services for the fire protection system at the Niagara Power Project.  Services include all supervision, labor, equipment and material provided on a 24/7/365 basis, as needed, and in compliance with all applicable fire and building code rules and regulations.  Bid documents 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.  Staff recommended award of the subject contract to Simplex, the lowest-priced bidder that is qualified to perform the work.  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, $20,000.

“Pursuant to FERC’s orders of November 1997 and March 2001, the Authority was mandated to install and test acoustic fish-deterrent systems at the Crescent and Vischer Ferry Projects (‘Projects’) and also to conduct additional studies and testing of the sonic systems and acoustic monitoring to demonstrate their continued effectiveness.  For the past eight years, the Authority has been developing and testing a sound deterrent system at the Projects to determine if fish (particularly blueback herring) could be effectively diverted to bypasses that would provide safe passage around the two Projects.  The original work was performed under a previous sole-source contract with a division of BAE Systems Aerospace, which was subsequently acquired by Ultra Electronics Ocean Systems, Inc. (‘Ultra Electronics’); such work was continued under a current contract with Ultra Electronics, which is due to expire on April 14, 2007.  During the development and testing of the deterrent systems, Ultra Electronics leased the sound deterrent system components (transducers, cables and electronics) to the Authority and provided services to operate and maintain these components.  In 2006, the Authority purchased nine new transducers from Ultra Electronics for the Vischer Ferry Project, upon approval by FERC and other agencies that testing verified the effectiveness of the sound deterrent system at the Vischer Ferry Project.  Testing of a similar system at the Crescent Project has shown good potential for analogous results.  In order to provide for the continuation of such FERC-mandated services, staff recommends the award of a new sole-source contract to Ultra Electronics (BG-0107; PO# TBA) to provide for installation, calibration, storage, maintenance, repair and demobilization services for fish protection/deterrent systems at the Projects.  Services include, but are not limited to, spring mobilization and lease and installation of fish-deterrent control electronics, as well as installation of Authority-owned transducers, calibration and storage of projectors, maintenance and repair services, as needed and fall demobilization services.  The subject award is made on a sole source basis, since the sound deterrent systems at both Projects are based on proprietary transducer technology designed by Ultra Electronics, which is the only firm capable of operating and maintaining the sound deterrent systems.  Furthermore, any change in the fish-deterrent technology or strategies would require approval by FERC and other regulatory agencies, as well as additional in-water testing of the sound field to verify its effectiveness.  A notice of the Authority’s intent to enter into a sole-source contract with Ultra Electronics for such services was published in the New York State Contract Reporter.  The new contract would become effective on April 15, 2007 for an intended term of 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, $375,000.

“The two contracts with Warren & Panzer Engineers, PC and Atlantic Testing Laboratories, Limited (‘Warren & Panzer’ and ‘ATL’) (Q02-3969; PO#s TBA) would become effective on April 1, 2007, subject to the Trustees’ approval.  The purpose of these contracts is to provide for asbestos and lead abatement consulting services for the Authority’s operating facilities statewide (except the Niagara Power Project, which is covered under a separate contract), as well as for other designated facilities operated by the Authority, as may be required.  Services include asbestos and lead inspections, sampling, abatement design and project monitoring to support general plant maintenance, planned renovations and emergency response situations, as may be required.  Bid documents were downloaded electronically from the Authority’s Procurement website by 46 firms, including those that may have responded to a notice in the New York State Contract Reporter.  Nine proposals were received and evaluated.  Each bidder’s cost proposal was based on a predetermined formula that weighted each bid item as an estimated percentage of expected use of the respective bid item.  The bid items were tabulated for each bidder and a number, the weighted-average bid, was generated.  The lowest weighted-average bid was determined to be the lowest-priced evaluated bidder.  Based on their ability to perform such services, as well as reasonable pricing, staff recommends the award of two contracts:  the primary to Warren & Panzer, the lowest-priced evaluated bidder, and a second contract to ATL for the northern New York region (to serve as a backup in the event the primary firm cannot meet the required response times).  The intended term of these contracts is up to three years, subject to the Trustees’ approval, which is hereby requested.  Approval is also requested for the combined total amount expected to be expended for the term of the contracts, $900,000.

FISCAL INFORMATION

“Funds required to support contract services for various Business Units/Departments and Facilities have been included in the 2007 Approved O&M Budget.  Funds for subsequent years, where applicable, will be included in the budget submittals for those years.  Payment will be made from the Operating Fund.

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

RECOMMENDATION

“The Deputy General Counsel, the Senior Vice President – Public and Governmental Affairs, the Senior Vice President – Energy Resource Management and Strategic Planning, the Vice President – Procurement and Real Estate, the Vice President – Engineering, the Vice President – Project Management, the Vice President – Environment, Health and Safety, the Vice President – Finance, the Vice President – Ethics and Employee Resources, the Treasurer, the Chief Information Officer, the Director – Corporate Support Services, the Director – Employee Benefits, the Director – Energy Services, the Acting Chief Technology Development Officer, 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 ‘10-A’ for the purposes and in the amounts set forth above.

“The Executive Vice President and General Counsel, the Executive Vice President – Corporate Services and Administration, the Executive Vice President – Chief Financial Officer, the Senior Vice President – Energy Services and Technology, the Senior Vice President and Chief Engineer – Power Generation, 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 contracts set forth in Exhibit “10-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, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

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

 

The President and Chief Executive Officer submitted the following report:

 

SUMMARY

“The Trustees are requested to approve the continuation and funding of the procurement (services) contracts listed in Exhibit ‘11-A’ in support of projects and programs for the Authority’s Business Units/Departments and Facilities.  The Trustees are also requested to approve an increase in the compensation ceiling of the contract with Lewis Tree Service, Inc., as well as an increase in the aggregate compensation ceiling for the legal contracts discussed within the item.  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 Expenditure Authorization Procedures (‘EAPs’) 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 ‘11-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 EAPs 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 ‘11-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 re-bidding 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 and Technology

“The contract with General Electric Canada (4500118157) provides for services to upgrade and repair five T-Map 3100 transformer performance monitoring systems installed on five Flexible Alternate Current Transmission System (‘FACTS’) transformers in the Marcy substation.  The subject contract was awarded on a sole source basis to the original equipment manufacturer, which is uniquely qualified to perform such services.  The contract became effective on January 10, 2006 for a term of one year.  Due to scheduling delays and a recent problem with one of the installed monitoring systems, the work could not be completed within the originally anticipated term.  Interim approval to extend the contract through March 27, 2007 was obtained in accordance with the Authority’s EAPs.  An additional six-month extension is now requested in order to provide sufficient time to complete all work under this contract, including repairs, calibration, training and follow-up evaluation.  The current contract amount is $50,587 (of the $100,000 approved total); it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to ratify the interim extension and to approve the additional extension of the subject contract through September 30, 2007, with no additional funding requested.

“The contract with Louis T. Klauder and Associates (4500117064) provides for consulting services for a traction power system study and energy storage system (‘ESS’) and aluminum contact rail analysis on the New York City Transit (‘NYCT’) system.  The intent of this analysis is to determine the potential benefits of deploying ESS installations (such as flywheels, capacitors and accumulators) that can potentially reduce energy consumption and peak power demand in substations, improve third-rail voltage levels and capture regenerative braking energy.  The original award, which was competitively bid, became effective on December 12, 2005 for a term of one year.  Due to delays in initial project mobilization and scheduling of various review meetings with NYCT, completion of the project has been delayed.  An extension through May 31, 2007 was therefore subsequently authorized by the President and Chief Executive Officer in order to provide sufficient time to complete all required services.  The current contract amount is $266,807; it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to ratify and approve the previously authorized extension of the subject contract through May 31, 2007, with no additional funding requested.  It should be noted that all costs will be recovered by the Authority.

Law

“The contract with McNamee, Lochner, Titus & Williams, PC (‘McNamee’; 4500122848) provides for legal services in connection with the Tri-Lakes Transmission Reinforcement Project (‘Project’).  This firm provides the Authority with local representation related to the Project in the Adirondack Park.  McNamee successfully defended against challenges brought by a local landowner in St. Lawrence County to the Authority’s State Environmental Quality Review Act (‘SEQRA’) determinations and the Adirondack Park Agency’s (‘APA’) order and permit allowing the Authority to build the Project (a 46kV transmission line, substation and regulator station).  Additional litigation is possible, as the Authority is currently pursuing a constitutional amendment allowing it to construct a portion of the Project through 1.9 miles of State forest preserve.  Such litigation will require the services of attorneys familiar with the Project, the APA and the local court system.  The original contract, which was competitively bid, became effective on April 1, 2006 for a term of one year with an option to extend for up to two additional years.  A two-year extension is now requested to exercise the option in order for McNamee to continue to provide legal advice and counsel, as well as representation services in connection with these matters, as may be required.  The current contract amount is $50,000; it is anticipated that an additional $50,000 may be required for the extended term.  The Trustees are requested to approve the extension of the subject contract through March 31, 2009, as well as the additional funding requested.

“At their meeting of March 30, 2004, the Trustees approved the award of a three-year contract to Pillsbury Winthrop Shaw Pittman, LLP (formerly Shaw Pittman) (4500088093) to provide for legal representation services in ongoing high-level radioactive waste litigation against the U. S. Department of Energy, in the amount of $500,000.  This firm presently represents the Authority in a multi-utility claim in the Court of Federal Claims seeking monetary damages caused by the government’s breach of contract to accept high-level radioactive waste by January 31, 1998 from the Indian Point 3 and James A. FitzPatrick nuclear power plants, formerly owned by the Authority.  The government, whose liability for breach of contract has previously been established in other similar cases, is vigorously defending damage claims.  Currently, the Court has stayed further proceedings pending resolution of appeals in several other cases whose outcomes will determine the manner in which this case will be litigated.  The current contract, which became effective on April 1, 2004, expires on March 31, 2007.  In view of the ongoing need for such services through resolution of this matter, a two-year extension is now requested.  It would not be practicable or prudent to have another firm continue such services, which are required to extend and build on prior work performed by the firm’s attorneys, who are uniquely qualified in this highly specialized field, and are knowledgeable of the law and of the Authority’s facts.  Staff therefore recommends a two-year extension of the existing contract.  The current contract amount is $500,000; it is anticipated that no additional funding will be required for the extended term.  The Trustees are requested to approve the extension of the subject contract through March 31, 2009, with no additional funding requested.

Increase in Aggregate Compensation Ceiling:

                “The following item authorizes certain administrative efficiencies with regard to the management of various outside counsel contracts by combining several discrete funding authorizations into a single account and also provides for additional funding authorization for reasons hereinafter stated.

 

“By way of background, the Trustees approved each of the following continuous-service agreements and funding authorizations since 2005:

 

-   On March 29, 2005, the Trustees approved continuous service agreements for general legal services, as needed, with Mintz Levin Cohn Ferris Glovsky & Popeo PC, Troutman Sanders LLP and Holland & Knight LLP for an initial three-year term with the option to renew for two additional years, with a total of $3,500,000 in aggregate funding for these three firms and for Bond Schoeneck & King (which had been approved for a like contract on September 27, 2004). 

 

-   On June 28, 2005, the Trustees approved continuous service agreements for general legal services, as needed, with Carter Ledyard & Milburn LLP, Langlois Kronstrom Desjardins and Van Ness Feldman PC for an initial three-year term with the option to renew for two additional years, with aggregate funding in the amount of $5 million for these three firms.

 

-   On September 20, 2005, the Trustees approved continuous service agreements for general legal services, as needed, with Dickstein Shapiro Morin & Oshinsky LLP, Kaplan, von Ohlen & Massamillo LLC, Nixon Peabody LLP and Stuntz Davis & Staffier PC for an initial three-year term with the option to renew for two additional years, with a total of $625,000 in aggregate funding for these four firms.

 

-   On June 27, 2006, the Trustees approved a sole source contract with Cravath, Swaine & Moore, LLP for a two-year term, in the amount of $250,000, to perform work related to legislative and State budget issues, which contract is to be expanded into a continuous  service agreement with the assignment of litigation support for the Entergy Value Sharing Agreement added due to recent conflict issues that have arisen.

 

-   On September 26, 2006, the Trustees approved continuous service agreements for general legal services, as needed, with Akin Gump Strauss Hauer & Feld LLP, Gilberti Stinziano Heintz & Smith PC, Harris Beach PLLC, Hawkins Delafield & Wood LLP, Keane & Beane PC, Orrick Herrington & Sutcliffe LLP, Robinson & Cole LLP, Whiteman Osterman & Hanna LLP, Wilson Elser Moskowitz Edelman & Dicker LLP and Winston & Strawn LLP for an initial three-year term with the option to renew for two additional years, with a total of $5.5 million in aggregate funding for these 10 firms.

 

“These five authorizations were based on projections of work assignments known as of their respective approval dates.  In the two years since the first of these approvals, a number of new and unanticipated events resulted in the need to add more work to several of these contracts and work anticipated for others did not materialize.  By way of example, at the time RFP # 4 (Cross Hudson Cable with PSE&G) was being awarded, and no additional monies were anticipated to support the procurement or contract negotiations for the Authority’s purchase of energy and capacity for the NYC Governmental Customers.  However, PSE&G, the low bidder proposing to supply capacity, withdrew its bid, resulting in the issuance of a new RFP for unforced capacity and other products in the summer of 2005.  Issues associated with this new RFP have required extensive support on contract, procurement and environmental issues.  Neither were the clean coal procurement and contracting process, the Value Sharing dispute with Entergy, including the recent change in litigation counsel or the extensive support for forensic work by URS (billed as subcontract work for one of these firms) in connection with the GE litigation on the construction of the 500 MW project anticipated at the time of these respective awards in the spring of 2005.  As a result of services connected with these unanticipated assignments, the current aggregate funding for the first set of contract authorizations amount available has been depleted and other funding for certain of these remains uncommitted at this time.  

 

                “Accordingly, staff proposes to consolidate these previous authorizations into a single authorization and to increase said authorization by $2,500,000 to be funded through the Law Department budget for outside counsel.  Further, upon written request of the Executive Vice President and General Counsel, estimated expenditures for individual contracts as previously approved by the Trustees may be reduced or increased as work load shifts as long as they are consistent with the authorization for aggregate legal funding contained herein.

 

Power Generation

“The contract with Simmers Crane Design & Services Co. (4500117607) provides for crane upgrade/rehabilitation services in support of the Life Extension and Modernization Program at the Blenheim-Gilboa Pumped Storage Project.  (Such cranes include one outdoor 510-ton gantry crane and two indoor 10-ton overhead traveling bridge cranes.)  The contract, which was competitively bid, became effective on December 8, 2005 for a term of one year.  Due to additional time needed for completion of Punch List Items and some additional work scope to improve the as-found operational conditions, the completion of the work to be performed under the subject contract has been delayed.  An extension through December 8, 2007, as well as additional funding, were therefore subsequently authorized by the President and Chief Executive Officer.  Such extension will also preclude any impact on the crane usage schedule for outage work, which is in progress.  The current contract amount is $2,313,475 (of the $2,400,000 authorized total); it is currently anticipated that no additional funding will be required for the extended term.  The Trustees are requested to ratify and approve the extension of the subject contract through December 8, 2007, as well as the previously authorized additional funding.

Transmission

Increase in Compensation Ceiling:

“The Federal Energy Regulatory Commission (‘FERC’), the National Electric Reliability Council (‘NERC’) and the New York State Public Service Commission (‘PSC’) have all taken proactive steps to ensure that all utilities have a strong Integrated Vegetation Maintenance (‘IVM’) program in place.  To this end, at their meeting of March 29, 2005, the Trustees approved the award of a four-year contract to Lewis Tree Service, Inc. (4600001433) for right-of-way (‘ROW’) vegetation management services and funding in the amount of $9,000,000.  Such services include various chemical and mechanical/manual treatments over a range of vegetation sites within the ROW along more than 1,400 miles of high-voltage transmission lines under the maintenance jurisdiction of the Authority, covering approximately 16,000 managed acres.  The contract, which was competitively bid, became effective on April 18, 2005 and comprises the second such four-year treatment cycle of the vegetation management program.  Due to additional PSC and FERC requirements (such as extra reclamation work to eliminate or dismantle road screens, hedge rows and other vegetation buffers that could pose a threat to the Authority’s transmission system) and the need to re-establish the ROW widths back to the edge of the original easement areas, as well as the difficulty of estimating reclamation work, additional funding will be required to complete this four-year treatment cycle.  The current approved ‘Target Value’ is $9,000,000 (of which $5,348,744 has been released to date); it is currently anticipated that an additional $3,000,000 will be required for the remaining contract term.  Although the majority of the ROW vegetation management work will occur during the normal treatment season (April-December), 10% of the contract price will be withheld to ensure complete treatment, which will be determined during the following growing season, thereby extending the contract term for six months through September 30, 2009.  The Trustees are therefore requested to approve the additional funding requested, thereby increasing the compensation ceiling to $12,000,000.

FISCAL INFORMATION

“Funds required to support contract services for various Headquarters Office Business Units/Departments and Facilities have been included in the 2007 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 (‘CEAR’).   Payment for contracts in support of the Energy Services 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, consistent with other Energy Services and Technology Programs.

RECOMMENDATION

“The Deputy General Counsel, the Vice President – Project Management, the Vice President – Procurement and Real Estate, the Acting Chief Technology Development Officer and the Transmission Superintendent recommend the Trustees’ approval of the extensions, additional funding and increases in compensation ceilings of the procurement contracts discussed within the item and/or listed in Exhibit ‘11-A.’

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

Mr. Hoff presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Trustee Seymour, Mr. Hoff said that the contract extension with GE Canada involved a carryover of work envisioned by the original contract, not any new work.  Responding to another question from Trustee Seymour, Mr. Hoff said that the services of virtually all of the law firms listed in this item had been procured through a competitive process.  Mr. Kelly explained that the Trustees had previously authorized discrete funding amounts for the contracts with each of these law firms, but that this action would enable the Authority to move funding from one law firm to another depending on the Authority’s ongoing needs for different types of legal services.  In response to a question from Trustee Seymour, Mr. Kelly said that this new method of aggregate funding was designed to increase efficiency, and that expenditures would be tracked and fully and transparently disclosed. 

The following resolution, as submitted by the President and Chief Executive Officer, was adopted by a vote of 4 to 1, with Trustee Moses abstaining.

RESOLVED, That pursuant to the Guidelines for Procurement Contracts adopted by the Authority, each of the contracts listed in Exhibit “11-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 President and Chief Executive Officer; and be it further

 

RESOLVED, That the funding authorizations adopted by the Authority for Mintz Levin Cohn Ferris Glovsky & Popeo PC, Troutman Sanders LLP, Holland & Knight LLP and Bond Schoeneck & King on March 29, 2005; Carter Ledyard & Milburn LLP, Langlois Kronstrom Desjardins and Van Ness Feldman PC on June 28, 2005; Dickstein Shapiro Morin & Oshinsky LLP, Kaplan, von Ohlen & Massamillo LLC, Nixon Peabody LLP and Stuntz Davis & Staffier PC on September 20, 2005; Cravath, Swaine & Moore, LLP on June 27, 2006 and Akin Gump Strauss Hauer & Feld LLP, Gilberti Stinziano Heintz & Smith PC, Harris Beach PLLC, Hawkins Delafield & Wood LLP, Keane & Beane PC, Orrick Herrington & Sutcliffe LLP, Robinson & Cole LLP, Whiteman Osterman & Hanna LLP, Wilson Elser Moskowitz Edelman & Dicker LLP and Winston & Strawn LLP on September 26, 2006 be consolidated into a single authorization and that such authorization be increased by $2,500,000 to be funded through the Law Department budget for outside counsel.  Further, upon written request of the Executive Vice President and General Counsel, estimated expenditures for individual contracts as previously approved by the Trustees may be reduced or increased as work load shifts as long as they are consistent with the authorization for aggregate legal funding contained herein; and be it further

 

RESOLVED, That pursuant to the Authority’s Expenditure Authorization Procedures, an increase in the compensation ceiling of the contract with Lewis Tree Service, Inc. is hereby approved, as recommended in the foregoing report of the President and Chief Executive Officer, in the amount and for the purpose listed below:

 

                                                        Contract Approval                   Projected

                                                             (Increase in                          Closing

          O & M                             Compensation Ceiling)                   Date

 

Provide for right-of
way vegetation

management services:

 

Lewis Tree

Service, Inc.

4600001433

 

Previously approved

amount                                                  $9,000,000

 

Additional amount

requested                                                3,000,000                       09/30/09*

 

REVISED

COMPENSATION

CEILING                                            $12,000,000

 

*Note:  the normal treatment season runs from April through December; additional time during the following growing season is included to ensure follow-up quality control/quality assurance of the work performed during the previous year

 

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


 

12.          Proposed Hydropower Contracts with the Tuscarora Nation and Niagara Project Host Communities – 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 the Tuscarora Nation, the City of Niagara Falls, the Town of Niagara, the City of Niagara Falls School District, the Niagara Wheatfield School District and the Lewiston-Porter School District (collectively, the ‘Tuscarora Nation’ and the ‘Host Communities’) for the sale of a total of 13.5 MW of Niagara Project Power.  These contracts, along with the proposed agreements with Niagara University, the County of Niagara and the Town of Lewiston, as to which the Trustees previously authorized a public hearing, represent all of the power contracts associated with the Niagara Power Project Relicensing Settlements.

 

“The 13.5 MW of power and energy under these six contracts comprises the following sales: 1 MW to the Tuscarora Nation, 5.5 MW to the City of Niagara Falls, 0.5 MW to the Town of Niagara, 3.5 MW to the City of Niagara Falls School District, 1.5 MW to the Niagara Wheatfield School District and 1.5 MW to the Lewiston-Porter School District.  The forms of the proposed contracts are attached as Exhibits ‘12-A’ through ‘12-F.’

 

BACKGROUND

 

                “The existing 50-year license issued to the Authority under the Federal Power Act for the Project expires on August 31, 2007.  At their meeting of June 28, 2005, the Trustees authorized the President and Chief Executive Officer (and his designees) to file an Application for a New License (‘Application’) with the Federal Energy Regulatory Commission (‘FERC’) for the Project; to file related applications with the New York State Department of State and the New York State Department of Environmental Conservation and an Offer of Settlement with FERC (‘Offer of Settlement’); to enter into and execute settlement agreements and to execute such other documents and take such other actions as may be necessary or convenient in connection with such actions.  The Application was filed with FERC on August 18, 2005 and the Offer of Settlement was filed with FERC the following day.

 

“Since its filing, the Offer of Settlement has been supplemented twice with two additional agreements.  These Agreements were filed with FERC on May 26, 2006 and June 30, 2006, respectively, after being approved by the Trustees at their meetings of May 23, 2006 and June 27, 2006, respectively.

 

“During the course of the Alternative Licensing Process, the Tuscarora Nation raised a number of issues generally arising out of the proximity of the Nation’s land to the Project and settlement negotiations between the Nation and the Authority commenced in 2004.  These negotiations resulted in the Tuscarora Nation Agreement, which includes an allocation of 1 MW of Project power to the Nation.  The Tuscarora Nation Agreement represents complete settlement of all issues raised by the Nation during the relicensing proceeding.  The Host Communities raised a number of issues relating to the loss of taxable land as a result of the Project, and settlement negotiations between the Host Communities and the Authority commenced in 2004.  These negotiations resulted in the Host Communities Relicensing Settlement Agreement (‘HCRSA’), which includes an allocation of 25 MW of Project power to the Host Communities.  The HCRSA represents complete settlement of all issues raised by the Host Communities during the relicensing proceeding.

 

“On March 15, 2007 FERC issued a new license for the Niagara Project effective September 1, 2007 for a 50-year term.

 

DISCUSSION

 

“The proposed contract with the Tuscarora Nation would make available 1 MW of Project power and energy to the Nation.  The proposed contracts with the Host Communities are five of seven that will implement the power allocations to the Host Communities, the other two contracts with the County of Niagara and the Town of Lewiston representing 12.5 MW having been addressed at the Trustees’ Meeting on February 27, 2007.  In the aggregate, these contracts will make available 13.5 MW for the Tuscarora Nation and the remaining Host Communities.  The power will come largely from the block of Niagara Project power now sold to the three upstate investor-owned utilities (National Grid, New York State Electric and Gas Corporation and Rochester Gas and Electric Corporation) for the benefit of their domestic and rural consumers under contracts that expire on August 31, 2007.  The remainder of the power will come from the non-preference part of the power produced by the Niagara Project upgrade.  The proposed contracts for the City of Niagara Falls and the local communities contemplate delivery of power and energy at the Project switchyard.  It will be the responsibility of the Tuscarora Nation and the Host Communities to arrange for delivery of the power or the benefits of the power to ultimate users. 

 

“Consistent with current local laws and other legal requirements, the contracts with the Town of Niagara, the Niagara Wheatfield School District and the Lewiston-Porter School District will be administered in conjunction with the County of Niagara, which will be a party to the contracts with these entities.  Likewise, the contract with the City of Niagara Falls School District will be administered in conjunction with the City of Niagara Falls, which will be a party to the contract with the School District.  The proposed forms of agreement reflect these arrangements and allow for changes in the way the contracts are administered in the future depending on local law and other legal requirements.

 

“The Authority’s obligation to sell power and energy to the Tuscarora Nation and the Host Communities will become effective on the latest of: (1) the first day after the date upon which the Authority files its acceptance of the New License with FERC, or the date of the expiration of the existing original license, August 31, 2007, whichever occurs later; (2) the date on which the Authority and the Host Communities execute a contract for the sale of power and energy or (3) September 1, 2007.  The proposed contracts run through September 1, 2025, the same as the current Niagara contracts with the municipal and rural electric cooperative customers and the Neighboring States.  Successor contracts will be required to meet the terms of the Settlement Agreements that the power allocations will be provided for the full 50-year term of the new license.  If the license is not granted to the Authority, the contracts will be of no force and effect. 

 

FISCAL INFORMATION

 

“The 13.5 MW of Project power and energy allocated under the proposed contracts will be sold at the then-effective preference power rate that fully recovers the Authority’s costs. 

 

RECOMMENDATION

 

“The Executive Director – Hydropower Relicensing recommends that the Trustees authorize a public hearing on the proposed contracts with the Tuscarora Nation and the above Host Communities to be held at a time and date authorized by the Chairman.  It is further recommended that, pursuant to Section 1009 of the Public Authorities Law, the Corporate Secretary be authorized to transmit copies of the proposed contracts to the Governor and legislative leaders.

 

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

 

Mr. Chase presented the highlights of staff’s recommendations to the Trustees.  In response to a question from Chairman McCullough, Mr. Chase said that staff was asking the Trustees to authorize publication of a notice of public hearing.  Responding to a question from Trustee Seymour, Mr. Chase said that the production power rates and preference power rates are the same. 

 

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 Tuscarora Nation, the City of Niagara Falls, the Town of Niagara, the City of Niagara Falls School District, the Niagara Wheatfield School District and the Lewiston-Porter School District to be held at a subsequent time and date authorized by the Chairman; and be it further

 

RESOLVED, That the Corporate Secretary 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 President or his designee be, and hereby is, authorized, subject to approval of the form thereof by the Executive Vice President and General Counsel, to enter into such other agreements, and to do such other things as may be necessary or desirable to implement sales to the Tuscarora Nation, the City of Niagara Falls, the Town of Niagara, the City of Niagara Falls School District, the Niagara Wheatfield School District and the Lewiston-Porter School District as required by the Tuscarora Nation and Host Communities Relicensing Settlement Agreements filed with the Federal Energy Regulatory Commission in support of the anticipated new 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, take any and all actions and execute and deliver any and all agreements, certificates and other documents to effectuate the foregoing resolution, subject to the approval of the form thereof by the Executive Vice President and General Counsel.

 


 

13.          INFORMATIONAL ITEM: 2007 EXECUTIVE ORDERS

 

The President and Chief Executive Officer submitted the following report:

 

“As reported to you on January 30, 2007, Governor Eliot Spitzer issued five Executive Orders on January 1, 2007, three of which recommend changes to policies and guidelines that could impact the Authority.  Among the topics addressed in Executive Order Nos. 1, 2 and 3 are new ethical conduct guidelines for public employees and members of authorities, the elimination of politics from governmental decision making and the promotion of public access to government decision making.  Staff has reviewed the principles underlying the Executive Orders and recommends their incorporation into Authority policies and guidelines.

 

“Executive Order No. 1 addresses nepotism in hiring and contracting and the use of state property for personal purposes, including stationary, postage, telephones and computers and vehicles.  Prohibitions relating to these activities have been incorporated into Corporate Policies CP2-7 (Policy Governing Use of NYPA Information Technology and Systems), CP 2-8 (Motor Vehicle Policy), Guidelines for Procurement Contracts, Guidelines and Procedures for the Disposal of Personal Property, Guidelines and Procedures for the Disposal of Real Property and Employment Policies EP 1.2 (Recruitment and Job Posting), EP 1.6 (Separation Due to Termination) and EP 4.2 (Performance Improvement).  The guidelines for the Disposal of Personal and Real Property have been presented for your approval in a separate item today.  The guidelines for Procurement Contracts will be presented in a separate item at the April Trustees’ Meeting.

 

“Executive Order No. 1 also limits the receipt of gifts of more than nominal value where the circumstances of the giving indicate an intention to influence the recipient in the performance of official business.  This prohibition is stricter than Public Officers Law § 73(5), which provides that gifts up to $75 may be allowed in certain circumstances.  As § 73 (5) is the subject of pending legislation that would implement the gift limitations of the Executive Order, staff is not suggesting incorporation of the receipt-of-gifts provision into the Code of Conduct at this time. Any revisions to the Code of Conduct will be presented for the Trustees’ approval at a future meeting.

 

“Executive Order No. 2 seeks to eliminate politics from governmental decision making by prohibiting campaign contributions to the Governor and Lieutenant Governor, prohibiting consideration of politics in employment and contracting, prohibiting state agencies or public authorities from having elected officials or candidates for elective office appearing in any advertisement paid for, in whole or part, by an agency or authority.  This Executive Order also states that the head of an agency or public authority must take a leave of absence from his/her position before commencing a candidacy for any compensated federal or state public office.  These items have been implemented in the Guidelines for Procurement Contracts, Guidelines and Procedures for the Disposal of Personal Property, Guidelines and Procedures for the Disposal of Real Property and Employment Policy EP 1.2, and will, to the extent necessary, also be incorporated in the revised Code of Conduct.  Review of the provisions relating to campaign contributions to the Governor and Lieutenant Governor are continuing in order to assure appropriate compliance.  In addition, review is also continuing on provisions dealing with appearances in state advertising in order to clarify the definition of ‘advertising’ subject to the Order.

 

“Finally, Executive Order No. 3 states that agencies and public authorities are to identify all meetings that are subject to the Open Meetings Law and start broadcasting these meetings by July 1, 2007.  The Authority filed its broadcasting plan (Broadcasting of Open Meetings on the Internet) with the Governor’s office by  March 1 as requested in the Executive Order and will commence broadcasting as of July 1.  The procedures for broadcasting open meetings have also been incorporated into Corporate Policy CP9-1.

 

“Executive Order Nos. 1 and 2 also state that an agency or public authority must establish penalties, up to and including dismissal, for any individual who violates the orders.  This concept has been incorporated into the changes referred to above in the Employment Policies.

 

“The Law Department has reviewed these polices and guidelines as to form and consistency and they have been, or are in the process of being, implemented by the Authority.”

 

 

 

14.          Motion to Conduct an Executive Session

               

Mr. Chairman, I move that the Authority conduct an Executive Session for the purpose of discussing matters regarding the GE and Entergy litigation.”  On motion duly made and seconded, an Executive Session was held.


 

15.          Motion to Resume Meeting in Open Session

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


 

16.          Next Meeting

The Annual Meeting of the Trustees will be held on Tuesday, April 24, 2007, at 11:00 a.m., at the Clarence D. Rappleyea Building, White Plains, New York, unless otherwise designated by the Chairman with the concurrence of the Trustees.


Closing 

On motion duly made and seconded, the meeting was adjourned by the Chairman at approximately
11:45 a.m.

 

 

 

 

Anne B. Cahill

Corporate Secretary