July (pdf) - New York Power Authority

(see “PART 2―POWER SALES―Marketing Issues and Developments—Item (5)”).
Public Authority Reform Legislation
The ‘‘Public Authorities Accountability Act of 2005’’ (‘‘PAAA’’) was signed into law in January 2006 and its
various provisions address public authority reporting, governance, budgeting, oversight, and auditing
matters, among other things. Additional public authority reform legislation took effect on March 1, 2010
which provides, among other things, for State Senate approval of certain authorities’ chief executive officers,
including the Authority, and also provides the State Comptroller with discretionary authority to review and
approve certain contracts entered into by public authorities, including the Authority. See ‘‘PART 2—
LEGISLATION AFFECTING THE AUTHORITY’’.
State Pension Plan and Other Postemployment Benefits
The Authority and substantially all of its employees participate in the New York State and Local
Employees’ Retirement System (“ERS”) and the Public Employees’ Group Life Insurance Plan (“Plan”).
These are cost-sharing, multiple-employer defined benefit retirement plans. The ERS and the Plan
provide retirement benefits as well as death and disability benefits. Obligations of employers and
employees to contribute and benefits to employees are governed by the New York State Retirement and
Social Security Law (“NYSRSSL”). As set forth in the NYSRSSL, the State Comptroller serves as sole
trustee and administrative head of the ERS and the Plan. The ERS is contributory except for employees
who joined the ERS on or prior to July 27, 1976. Employees who joined between July 28, 1976 and
December 31, 2009 and have less than ten years of service contribute 3% of their salary. Employees who
join the ERS on or after January 1, 2010 contribute 3% of their salary during their entire length of service.
Pursuant to the NYSRSSL, the State Comptroller certifies annually the rates expressed as proportions of
payroll of members, which are used in computing the contributions required to be made by employers to
the pension accumulation fund.
The Authority is required to contribute to the ERS and the Plan at an actuarially determined rate. The
required contributions for 2010, 2009 and 2008 were $17.1 million, $9.6 million and $11.8 million,
respectively. The Authority’s contributions made to the ERS were equal to 100% of the contributions
required for each year. During 2008, the global decline in financial markets adversely impacted state
pension investment market values including the ERS. The average contribution rates for the fiscal years
ended March 31, 2011 and 2012 were fixed at approximately 10% and 16%, respectively. If ERS’s
investment market values do not recover, significant increases in the annual contributions to ERS in
subsequent years are expected.
Regarding the Authority’s Other Postemployment Benefits (‘‘OPEB’’) obligations, the Authority
provides certain health care and life insurance benefits for eligible retired employees and their dependents
under a single employer non-contributing (except for certain life insurance coverage) health care plan.
Employees and/or their dependents become eligible for these benefits when the employee has at least 10 years
of service and retires or dies while working at the Authority. Approximately 4,000 participants, including
1,600 current employees and 2,400 retired employees and/or spouses and dependents of retired employees,
were eligible to receive these benefits at December 31, 2010.
Through 2006, OPEB provisions were financed on a pay-as-you-go basis and the plan was unfunded. In
December 2006, the Authority’s Trustees authorized staff to initiate the establishment of a trust for OPEB
obligations, with the trust fund to be held by an independent custodian. Prior to 2009, the Authority funded the
trust with contributions totaling $225 million. At the time the trust fund was created, the Authority indicated
that it would evaluate the performance of the fund before making decisions on additional actions. The
Authority did not make any contributions to the trust fund in 2010 or 2009 but continued to pay for retiree
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