July (pdf) - New York Power Authority

Rate Covenant
The Authority has covenanted in the General Resolution that it shall at all times maintain rates, fees or
charges, and any contracts entered into by the Authority for the sale, transmission or distribution of power
shall contain rates, fees or charges, sufficient, together with other moneys available therefore (including
the anticipated receipt of proceeds of sale of Obligations or other bonds, notes or other obligations or
evidence of indebtedness of the Authority that will be used to pay the principal of Obligations issued in
anticipation of such receipt),
(i) to pay all Operating Expenses of the Authority,
(ii) to pay the debt service on all Obligations, including the 2011 Bonds, then Outstanding and the
debt service on all Subordinated Indebtedness then outstanding, and all Parity Debt and Subordinated
Contract Obligations, all as the same respectively become due and payable, and
(iii) to maintain any reserve established by the Authority pursuant to the General Resolution, in
such amount as may be determined from time to time by the Authority in its judgment.
The Authority is a party to various power sales agreements which impose limitations on the
Authority’s discretion to establish rate increases (see ‘‘PART 2—POWER SALES’’).
The rates for firm power and associated energy from the St. Lawrence-FDR and Niagara hydroelectric
facilities sold by the Authority have been established for certain customers in the context of an agreement
settling litigation (see ‘‘PART 2—POWER SALES—St. Lawrence-FDR and Niagara’’).
The rates for power generated and transmission service provided by the Authority are not subject to the
provisions of the New York Public Service Law nor to regulation by or the jurisdiction of the New York
Public Service Commission (‘‘PSC’’). In connection with the establishment of rates or charges for the use of
the Authority’s transmission system, see the discussion of the NYISO arrangement in ‘‘PART 2— NEW
YORK INDEPENDENT SYSTEM OPERATOR.’’
Covenant Regarding Projects
The General Resolution also requires the Authority to operate or cause to be operated each Project in
a sound and economical manner and to maintain, preserve and keep the same or cause the same to be
maintained, preserved and kept, in good repair, working order and condition, and from time to time to make
all necessary and proper repairs, replacements and renewals so that at all times the operations thereof may
be properly and advantageously conducted. The General Resolution permits the Authority to cease
operating or maintaining, and to lease or dispose of, any Projects (other than the Niagara and St. Lawrence-
FDR Projects) if, in the judgment of the Authority, it is advisable to lease, dispose of, or not to operate and
maintain the same and the operation thereof is not essential to the maintenance and continued operation of
the rest of the Authority’s Projects. See ‘‘PART 2—APPENDIX 1— SUMMARY OF CERTAIN
PROVISIONS OF THE GENERAL RESOLUTION.’’
Additional Debt Issuance
The General Resolution permits the Authority to issue additional Obligations for any purpose authorized
by the Act or other applicable New York State statutory provision, without restriction as to amount and
without having to satisfy any debt service coverage or historical or projected earnings test. The Authority
has covenanted in the General Resolution not to issue any bonds or evidences of indebtedness, other than
the Obligations, secured by a pledge of the Trust Estate, and not to create or cause to be created any lien or
charge on the Trust Estate, except to the extent provided in the General Resolution; provided that the
Authority may, at any time, or from time to time, incur Subordinated Indebtedness or enter into
Subordinated Contract Obligations payable from Revenues and secured by a pledge of the Trust Estate,
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