July (pdf) - New York Power Authority

II plant”) to be constructed in Astoria, Queens adjacent to its existing plant. Following approval of the NYC
Governmental Customers, the Authority and Astoria Energy II LLC entered into a long-term supply contract
in July 2008. The costs associated with the contract will be borne by these customers for the life of the
contract. Construction of the 550-MW Astoria Energy II plant has been completed and the plant entered into
commercial operation on July 1, 2011. The Authority will account for and report this transaction as a capital
asset and a capitalized lease liability in the amount of $1.12 billion. Fuel for the Astoria Energy II plant is
being procured by the Authority and the costs thereof are being recovered from the NYC Governmental
Customers.
(9) In response to the Authority’s Request for Proposals for Long-Term Supply issued in March 2005,
Authority staff entered into negotiations for the execution of a firm transmission capacity purchase agreement
with the winning bidder, Hudson Transmission Partners, LLC (”HTP”) to serve the long-term requirements
of the Authority’s NYC Governmental Customers through the transmission rights associated with HTP’s
proposed 345 kV underground/submarine transmission line (“Line”) extending from Bergen County, New
Jersey, to Con Edison’s West 49 th Street substation in midtown Manhattan. The New York Public Service
Commission issued a certificate of environmental compatibility and public need for the Line on September
15, 2010 determining, among other things, that the Line would improve electric system reliability and
promote network security by enhancing New York City’s transmission infrastructure and its access to
generation resources outside of the City. On April 15, 2011, the Authority executed a Firm Transmission
Capacity Purchase Agreement (“FTCPA”) with HTP and the Line is currently under construction. The
Authority’s obligation to make payments under the FTCPA will begin upon commercial operation of the
Line, which is expected in 2013. Under the FTCPA, the Authority also will pay the costs of certain
interconnection and transmission upgrades associated with the Line once it enters into service, estimated to
total approximately $200 million. The Authority is currently in negotiations with certain of its NYC
Governmental Customers and other third parties regarding partial recovery of the costs of the Line. It is
estimated that the revenues derived from the Authority’s rights under the FTCPA will not be sufficient to
fully cover the Authority’s costs under the FTCPA during its initial 20 year term. Depending on a number of
variables, it is estimated that the Authority’s under-recovery of costs under the FTCPA could be in the range
of approximately $[40 to 80] million per year during the first five years of commercial operation. The
Authority expects based on current projections that with its entry into the FTCPA it will be able to continue
to meet its debt service coverage ratio, cash, and reserve requirements in the future; however, there can be no
assurance that such requirements actually will be met.
(10) The Authority issued a nonbinding RFP on December 1, 2009 soliciting between 120 MW up to
500 MW of energy, capacity, and environmental attributes from a new offshore wind generating facility to be
developed in Lake Erie and/or Lake Ontario. The RFP indicates that the Authority would purchase the full
output of the project under a long-term power purchase agreement. In June 2010, the Authority announced
that five proposals had been received in response to the RFP and that evaluation of the proposals would be
undertaken in the coming months. Proposals are currently under review and the evaluation process may
result in a staff recommendation to the Authority’s Trustees concerning next steps later in 2011.
(11) The Long Island-New York City Offshore Wind Collaborative (“Collaborative”), which consists of
the Authority, Con Edison, the Long Island Power Authority (“LIPA”), the City of New York and other New
York City and New York State governmental entities, is evaluating the potential development of between 350
MW up to 700 MW of offshore wind. The Collaborative is currently planning the next steps in project
evaluation.
(12) In January 2010, the Authority issued an RFP for a 100 MW Statewide Solar Photovoltaic initiative
seeking pricing for solar energy and related environmental attributes from 100 MW of solar power capacity
to be installed statewide by 2014. The purpose of this initiative is to support New York State energy policies
and, in particular, the “45 x 15” initiative which is seeking to meet 45% of the State’s energy needs through
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