July (pdf) - New York Power Authority

(6) Out-of-State Power Allocations
Pursuant to the requirements of the NRA, the Authority is required to sell fifty percent of Niagara
Project power as ‘‘preference power’’ to public bodies and non-profit cooperatives and of that
amount a ‘‘reasonable portion’’ but not more than twenty percent of the preference portion (or ten
percent of the total) must be made available for sale in ‘‘neighboring states’’. The Authority is currently
selling ten per cent of Niagara Project firm and peaking power to seven ‘‘neighboring states’’, the
State of Connecticut; the Commonwealth of Massachusetts; the State of New Jersey; the State of Ohio;
the Commonwealth of Pennsylvania; the State of Rhode Island; and the State of Vermont. The
Authority reached a settlement with the neighboring states under which license articles consistent
with the NRA’s neighboring state sales requirements would be included in the Authority’s new license
for the Project and the seven states would support the Authority’s application to FERC for a new fiftyyear
license and the settlements with other parties. The settlement also provides that the Authority
staff will recommend to its Trustees that they approve and recommend to the Governor for his
approval new contracts with terms through September 1, 2025 for the continued sale of ten percent of
Project power to the states at cost-based rates. Such contracts were subsequently approved by the
Governor and are in place. The form of contract allows the Authority to petition FERC to allow the
sale of less than ten percent (but not less than 7.5%) of Niagara Project power to the neighboring
states, with such reduction to take effect prospectively only after a final, non-appealable FERC order.
(7) Host Communities
The Niagara Project Boundary encompasses lands within seven taxing jurisdictions: Niagara
County, the Towns of Lewiston and Niagara, the City of Niagara Falls, and three school districts.
While some of these lands were acquired by the Authority from entities that were already tax-exempt
(e.g., Niagara University and the Tuscarora Nation), most of the land so acquired became tax-exempt at
the time the Niagara Project was created. To address this concern and a number of other concerns
advanced by these municipal entities, including socioeconomic concerns, a Settlement Package was
developed that involves establishing a community fund, conveying certain surplus land, and providing 25
MW of low-cost power. The net present value of this Settlement Package is estimated at
approximately $182.6 million (which includes the value of the power allocation).
Further, in December 2005, the Authority reached an additional relicensing settlement agreement with
the City of Buffalo and Erie County. The Authority’s commitments pursuant to this agreement include
establishment of an Erie County Greenway Fund to be funded by the Authority through annual payments of
$2 million throughout the term of the new license; contribution of a minimum payment of $2.5 million per
year throughout the term of the new license into a Buffalo Waterfront Development Fund, $1.5 million of
which will represent the net value of 5 MW of firm hydropower sold into the NYISO market; the payment of
$4 million to be used for projects on Buffalo’s waterfront; the payment of $1 million annually to Empire
State Development Corporation for economic development and revitalization activities in the vicinity of
Buffalo’s waterfront; and the possible return of a parcel of waterfront property currently used by the
Authority as an ice boom storage area. In July 2010, the Authority agreed to an amendment of this
settlement agreement to accelerate the payments for Buffalo’s waterfront development to $4.7 million per
year for twenty years versus the original $3.5 million per year for fifty years in order to facilitate the
development of the proposed Canal Side project in Buffalo.
Further, in May 2006, the Authority entered into a settlement agreement with Niagara University
consisting of a $10.5 million capital/aesthetics fund and a 3 MW power allocation from the Niagara Project to
be sold to the university at the Authority’s business rate. The net present value of this settlement package
(including the value of the power allocation) is estimated to be $21.6 million.
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