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

G. Issue: Headquarters Expense Component of Shared Services
Public Comments:
MEUA and NYAPP both contend that certain elements of the Headquarters
Expense portion of the Shared Services allocated to the Cost-of-Service should
be reallocated to other cost categories. The MEUA proposes redistributing the
allocation based on the organizational title of each department included in the
Headquarters component of the Shared Services cost category, and overall
supports a “more refined treatment, which provides a better matching of cost
responsibility and cost recovery.” MEUA requests a CoS reduction of $2.04
million in Rate Year 2007 and $1.97 million in Rate Year 2008. (MEUA
Statement at 2 and Exhibit V). NYAPP claims that certain Headquarters
functions should be allocated based on NYISO market revenues and adds that it
supports MEUA’s proposed adjustments concerning cost responsibility. (Russell
at 35-37).
Staff Analysis:
The MEUA’s recommendation is based on the title of the departments at NYPA’s
Headquarters which make up the Headquarters component of Shared Services
and not the functionality of these organizations. They assume that Power
Generation HQ is solely a production function and should be allocated
accordingly when in fact Power Generation HQ provides support for
environmental programs, safety and quality assurance, engineering support for
Corporate Headquarters offices and asset management which benefit NYPA as a
whole. The Transmission department, which they contend should be totally
excluded as does NYAPP, is responsible for the System Operations, System
Operations Scheduling & Accounting and metering functions which support all of
NYPA’s projects and operations. NYAPP proposes to allocate headquarters
costs based on revenues generated from the NYISO markets, to marketing
and/or power trading functions, and not allocate those costs based on the firm
loads of the NYAPP members which would be inconsistent with ratemaking
25