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

electromechanical equipment being superseded by programmable logic
controller-based equipment.
All of these activities were documented and received thorough scrutiny from
NYPA management and the Trustees. 8
Although Mr. Russell (at 14, n.5) briefly acknowledges the “benefits of life
extension” he nonetheless asserts, without any support whatever, that the $298
million could have been accomplished “at a substantially lower capital cost than
NYPA actually incurred in replacing the units, through such measures as
rewinding the generators without replacing each entire turbine-generator unit.”
The Authority’s decisions over a decade ago to extend the life and modernize the
generator-turbines at the Niagara Project, was a prudent exercise of its
management and engineering judgment intended to assure the continued
operation of the Project for the benefit of Mr. Russell’s clients and the other
customers that enjoy the benefits of the Project. 9 As shown above, there is
ample evidence that its $298 million expenditure was prudent, and NYAPP’s
suggestions to the contrary have no merit.
2. Based on its Flawed Analysis of Niagara Project Capacity,
NYAPP Mistakenly Asserts that the Niagara Project Upgrade was
Imprudent.
NYAPP mistakenly assumes that increase in the nameplate capacity of the
Niagara Project that resulted from the Upgrade necessarily enables the Project to
produce more firm capacity. See Russell at 6, 18, 23-25. This is not the case,
8
See, e.g., 1993 RMNPP Upgrade Analysis and “Report to the Capital Review Committee,
Niagara Project Upgrade” (April 15, 1994), which also available upon request.
9
Mr. Russell’s assertion is also marred by his reliance on the 1987 License Amendment which
estimated a total project cost of $568 million, of which $49 million was for life extension benefits.
(Russell at 14 n.5). Because that license amendment described an expansion project that was
abandoned, those numbers have practically no value in determining whether NYPA’s life
extension and modernization expenditures were reasonable. It is also worth noting that NYPA’s
Niagara Project Upgrade did not replace the entire turbine, but only the runner and limited
embedded worn components, thus minimizing costs.
12