July (pdf) - New York Power Authority

500-MW Plant
The installed capacity of the 500-MW Plant is being used by the Authority to meet a portion of its
installed capacity needs in New York City. The Authority is bidding the generation of the plant into the
DAM and the real time market of the NYISO for the benefit of its NYC Governmental Customers so as to,
among other things, recover the costs of the operation of the unit and to maximize the unit’s availability to the
NYISO to assure the economical and reliable supply of electricity.
Small Clean Power Plants
The installed capacity of the SCPPs is being used by the Authority to meet its installed capacity needs or, if
not needed by the Authority, is subject to sale to other users. The Authority is bidding the generation of the
SCPPs into the DAM and the real time market in such a manner as the Authority deems advisable so as to
maximize the SCPPs’ availability to the NYISO to assure the economical and reliable supply of electricity in
the SENY area. The Authority believes that the revenues derived from the sale of the SCPPs’ generation
into the NYISO energy markets, along with other available funds of the Authority, will be sufficient to meet
the costs associated with the SCPPs.
Flynn
The Authority is supplying the full output of the Flynn plant to LIPA pursuant to a capacity supply
agreement (the ‘‘CS Agreement’’) between the Authority and LIPA, which commenced in 1994 and had an
initial term of 20 years. The CS Agreement was amended, effective January 1, 2004, by an agreement (the
‘‘Supplementary Agreement’’), which, among other things, extended the CS Agreement to April 30, 2020
(with either party having the right to terminate the extension on or before April 30, 2012). A subsequent
amendment to the CS Agreement effective as of January 1, 2009, sets forth pricing terms through 2014.
Under the revised energy pricing provisions, in addition to certain fixed cost charges collected under the CS
Agreement, the daily energy price for all Flynn energy sold to LIPA is the lesser of a market-based gas
price defined in the Supplementary Agreement or 95 percent of the 24-hour average of the day ahead market
price (the ‘‘LI Price’’) for the NYISO Long Island zone. To the extent that 95 percent of LI Price applies for
any day, the Authority would under-recover its gas cost. A daily shared savings arrangement allows the
Authority the opportunity to recover some or all of its uncollected gas costs as long as LIPA’s energy cost
savings are at least 17 percent for the day. The intent of the Supplemental Agreement is to allow the Authority
to recover more of its gas costs than would have been the case under the CS Agreement. Notwithstanding
the Supplementary Agreement, the Authority cannot guarantee that this arrangement will allow it to recover
all of its Flynn plant gas costs.
TRANSMISSION SERVICE
The NYISO is responsible for scheduling the use of the bulk transmission system in New York State,
which normally includes all of the Authority’s transmission facilities, and for collecting for ancillary
services, losses and congestion fees from transmission customers. Each IOU, LIPA and the Authority retains
ownership, and is responsible for maintenance, of its respective transmission lines. All customers of the
NYISO pay fees to the NYISO for use of the transmission system. Each such customer also pays a separate fee
for the benefit of the Authority that is designed to assure that the Authority will recover its entire annual
transmission revenue requirement. If the NYISO does not maintain a FERC-accepted tariff which provides
for full recovery by the Authority of its annual transmission revenue requirement, the Authority is permitted
to withdraw from the NYISO on 90-days’ notice to the other parties. In addition, any of the IOUs, LIPA and
the Authority may withdraw from the NYISO on 90-days’ notice to the Board of Directors of the NYISO,
but, in the case of an IOU, such withdrawal is conditioned upon the effectiveness of an ‘‘open access’’
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