July (pdf) - New York Power Authority

the Niagara and St. Lawrence-FDR Project interconnections and for the use of generating equipment of
either system by the other in order to make optimum use of all available water at all times. The agreement
provides for the sale by either party to the other of various classes of power and energy, and continues in force
from year to year, subject to termination by either party on not less than five years’ prior notice in writing.
The operation of Authority projects is subject to various federal and State licensing and permit
requirements which have constrained facility operations and have caused and are expected to continue to
cause the Authority to incur additional costs or to experience a reduction of revenues. Further plant
improvements and modifications may be required by regulatory action or be deemed desirable by the
Authority as the result of problems identified from its operating experience or that of operators of similar
facilities.
Fuel Supply
Flynn, 500-MW Plant, SCPPs, and Astoria Energy II plant
The Authority endeavors to purchase sufficient amounts of fuel for Flynn, the 500-MW Plant, the
SCPPs, and the Astoria Energy II plant to meet the fuel requirements of these plants. Natural gas is
secured for these plants as required while the Authority maintains adequate oil inventory at the 500-MW
Plant, Flynn, and the Astoria Energy II plant to supplement natural gas consumption. Fuel purchases are
effectuated in the spot market and, at times, through longer term supply contracts for natural gas.
Gas Transportation and Supplies
The Authority has entered into service agreements with Texas Gas Transmission, LLC, Dominion
Transmission, Inc., and Transcontinental Gas Pipe Line Corporation terminating in October 2016 under which
these pipelines provide firm natural gas transportation service at an estimated average annual cost to the
Authority of $7.5 million per year, based on current rates applied to the Authority’s full allocation of
capacity. The transportation primarily serves the Flynn plant, and also serves the SCPPs, the 500-MW
Plant, and the Astoria Energy II plant. To the extent transportation costs are for gas used at the Flynn plant,
the recovery of such costs from LIPA would be governed by the terms of the capacity supply agreement, as
supplemented, relating to the plant (see ‘‘PART 2—POWER SALES—Flynn’’).
The Authority entered into an agreement with Con Edison ending April 30, 2016 which provides gas
transportation and balancing services to the Authority to serve its expected fuel needs for the 500-MW Plant,
the Astoria Energy II plant, and the SCPPs located in Con Edison’s service territory, at an
estimated annual cost of $2.7 million, exclusive of applicable taxes and balancing charges, if any. The
Authority has also entered into gas transportation and balancing agreements with National Grid Delivery
Long Island, Inc., and National Grid Delivery New York, Inc., ending February 28, 2014, which provide gas
transportation and balancing needs of its SCPPs located in the service territories of such utilities, at an
estimated annual cost of $1.2 million, exclusive of applicable taxes and balancing charges, if any.
LEGISLATION AFFECTING THE AUTHORITY
Section 1011 of the Act constitutes a pledge of the State to holders of Authority obligations not to limit
or alter the rights vested in the Authority by the Act until such obligations together with the interest thereon
are fully met and discharged or unless adequate provision is made by law for the protection of the holders
thereof. Bills are periodically introduced into the State Legislature which propose to limit or restrict the
powers, rights and exemption from regulation which the Authority currently possesses under the Act and
other applicable law or otherwise would affect the Authority’s financial condition or its ability to conduct its
business, activities, or operations, in the manner presently conducted or contemplated hereby. It is not possible
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