July (pdf) - New York Power Authority

improved energy efficiency and clean, renewable energy by 2015. All of the solar photovoltaic (“PV”)
systems would be installed, owned and operated by solar developers who would sell all energy and
environmental attributes to the Authority under a 20-year power purchase agreement with the Authority
reselling the energy to the host site. The solar PV would be installed primarily at schools and government
facilities statewide. Proposals received in April 2010 in response to the RFP are being reviewed by a team of
Authority staff and consultants. Initial award recommendations are expected to be made to the Trustees later
in 2011. Subject to Trustee approval and successful contract negotiations, the Authority would enter into
contracts with selected bidders. Assuming Trustee approval, development of the solar PV systems would be
expected to begin in 2011 with the full 100 MW installed by 2015. There is no assurance that the Authority
would recover its full costs under these arrangements, and while estimates show the potential level of underrecovery
to be no greater than $21 million in any given year, any such contracts would ultimately require an
overall determination of financial feasibility for the Authority and approval by the Authority’s Trustees.
(13) Authority staff and National Grid are conducting joint planning studies regarding a potential new
transmission line that would deliver power from Canada and upstate New York renewable energy projects to
New York City. One concept has been identified for further study and a consulting firm is conducting an
economic analysis of the concept. It is uncertain whether a transmission line of this type ultimately will be
formally proposed by the Authority and National Grid and advance to the permitting stage.
(14) In response to the economic downturn’s effects on New York’s manufacturing sector, the
Authority’s Trustees in March 2009 approved execution of an agreement with the Aluminum Company of
America (“ALCOA”) to provide temporary relief from certain power sales contract provisions relating to the
temporary shutdown of one of its two smelters served by the Authority in Massena, New York, including
allowing ALCOA to release back to the Authority certain hydropower allocated to it, temporary waivers of
certain minimum bill and employment thresholds, and entry into arrangements with the Authority for
inclusion of a portion of ALCOA’s load in the NYISO’s demand response programs. In addition, in May
2009, the Authority’s Trustees authorized a temporary program whereby up to $10 million would be utilized
to provide electric bill discounts for up to a year to businesses located in Jefferson, St. Lawrence, and
Franklin counties. These counties constitute the geographic region served by the Authority’s Preservation
Power program. The source of the $10 million was the net margin resulting from the sale of a portion of
ALCOA’s then unused Preservation Power allocation into the NYISO markets. In January 2011, ALCOA
announced its plans to restart the temporarily curtailed facility beginning later in the first quarter of 2011, and
the Authority announced that the associated bill discount program would end in May 2011.
(15) In March 2009, the Authority’s Trustees approved the deferral for recovery in the future of a
proposed hydropower rate increase for the Authority’s municipal electric and rural cooperative customers,
neighboring state customers, upstate investor-owned utilities, and certain other customers that was scheduled
to go into effect on May 1, 2009; and in August 2010 the Authority announced an extension of such deferral
through the end of 2010. The deferral amounted to approximately $18.5 million through the end of 2010. [It
is expected that Authority staff will recommend to the Authority’s Trustees that these hydropower rates be
increased effective in the fourth quarter of 2011.] Further, the Authority withdrew two proposed hydropower
rate increases totaling approximately $6.9 million for its Replacement Power, Expansion Power, and certain
other industrial customers that were scheduled to go into effect on May 1, 2009 and May 1, 2010,
respectively. It is expected that Authority staff will recommend to the Authority’s Trustees that these
hydropower rates be increased effective in the third quarter of 2011.
St. Lawrence-FDR and Niagara
Power and energy from the St. Lawrence-FDR and Niagara hydroelectric facilities currently are sold to
three investor-owned electric utility companies: National Grid, New York State Electric & Gas Corporation
(‘‘NYSEG’’), and Rochester Gas and Electric Corporation (‘‘RG&E’’), 47 municipal electric systems and four
2-23