Minutes of the Annual Meeting of the Power - New York Power ...

Part II: Public Comments, Staff Analysis and Recommendations
A. Issue: Prudency of Authority’s Niagara Project Upgrade Costs and their
Inclusion in Preference Power Rates.
Public Comments:
NYAPP claims that the Authority’s proposed rate increase cannot be sustained
because the $298 million of the Niagara Project Upgrade costs included in the
CoS were imprudently incurred. (NYAPP Statement at 3; Russell at 7, 24-25).
NYAPP reaches this conclusion by focusing on the 32 MW of firm power and 9
MW of firm peaking capacity that was produced by the efficiency gain associated
with the upgrade, and concluding that “[w]hen this 41 MW incremental gain is
measured against the $298 million cost of attaining it, the per-unit charge
equates to $7,268/kilowatt which is an extraordinarily high price.” (Russell at 7).
NYAPP also relies on the increased “nameplate capacity” that resulted from the
Niagara Project Upgrade. Mr. Russell states that the 25 MW nameplate capacity
increase per turbine, multiplied by the 13 upgraded turbines, should yield an
additional 325 MW of Niagara Project capacity and a much lower $/kilowatt cost.
(Russell at 6).
NYAPP also criticizes the Authority’s recently completed report, Capacity and
Energy Production Achievable at the Niagara Power Project and Niagara Load
Study (“Niagara Study”) which was released on March 22, 2007 and provided in
response to a NYAPP data request. In light of the Niagara Study’s findings that
the Niagara Project upgrades resulted in an incremental firm capacity increase of
41 MW due to the increased efficiency of the units, and that the higher nameplate
ratings did not increase project capacity, NYAPP contends that, with respect to
customers, the $298 million in upgrade costs “was wasted” on them. (Russell at
24-25).
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