July (pdf) - New York Power Authority

(SENY) Governmental Customers necessitated by the cessation of operations of the Authority’s Poletti
plant on January 31, 2010. Wheeling expenses increased due to a Con Edison rate increase for delivery
service to the SENY Governmental Customers. The majority of these cost variations were offset through
revenues as they were reflected in customer rates. Nonoperating revenues increased by $6 million in
2010 including an increased mark-to-market adjustment for investments in 2010 due to lower market
interest rates partially offset by lower realized investment income.
During 2010, long-term debt decreased by $118 million, or 7%, primarily due to scheduled maturities
and cash funding of capital expenditures. Interest expense was $6 million lower than 2009 primarily due
to decreases in interest rates on short-term debt. During the period 2000 to 2010, the Authority reduced
its total debt/equity ratio from 1.48 to 0.65.
Operating Revenues
Operating revenues of $2,568 million in 2010 were $27 million or 1% lower than the $2,595 million in
2009, primarily due to lower market-based sales significantly offset by an increase in customer revenues
related to the pass-through of increased wheeling charges. Market-based sales were lower mainly due to
lower generation from the Niagara plant due to lower lake levels.
Purchased Power and Fuel
Purchased power costs increased by 3% in 2010 to $931 million from $905 million in 2009, primarily due
to changes in the resources utilized to serve the SENY governmental customers necessitated by the cessation
of operation of the Authority’s Poletti plant on January 31, 2010. Fuel costs were $142 million (39%) lower
during 2010, also primarily due to discontinued operations at Poletti.
Operations and Maintenance
O&M expenses increased by $5 million or 1% in 2010 to $443 million primarily due to expenditures
relating to the North Country stimulus program at St. Lawrence ($9 million) and the Industrial Incentive
Award program at Niagara ($6 million) which were partly offset by lower maintenance at the fossil fuel
facilities due to the Poletti plant closure and less emergent work at the Small Clean Power Plants.
New License for the Niagara Project
By order issued March 15, 2007, the Federal Energy Regulatory Commission (‘‘FERC’’) issued the
Authority a new, 50-year license for the Niagara Project effective September 1, 2007. In doing so, FERC
approved six relicensing settlement agreements entered into by the Authority with various public and
private entities. By decision dated March 13, 2009, the U.S. Court of Appeals for the District of Columbia
Circuit denied a petition for review of FERC’s order filed by certain entities, thereby concluding all
litigation involving FERC’s issuance of the new license. The Authority currently expects that the costs
associated with the relicensing of the Niagara Project will be at least $495 million (2007 dollars) over a
period of 50 years, which includes $50.5 million in administrative costs associated with the relicensing effort
and does not include the value of certain power allocations and operation and maintenance expenses
associated with several habitat and recreational elements of the settlement agreements. Of the $495 million,
approximately $184 million has already been spent. The costs associated with the relicensing have been
incorporated into the cost-based rates of the Project beginning in 2007. See ‘‘PART 2—THE
AUTHORITY’S FACILITIES—Generation—Niagara Relicensing.’’
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