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

H. Issue: Incentive Pay Component of Shared Services
Public Comments:
Several parties commented on the amount of Shared Services portion of the
Indirect Overheads allocated to the R&D customers. MEUA contends that the
Incentive Pay portion of the Shared Services allocated to the Cost-of-Service is
overstated. (MEUA Statement at 2). NYAPP supports the MEUA claim.
(Russell at 37).
The MEUA’s analysis infers that the $1.2 million allocated as part of the
Corporate Headquarters Incentive Pay already includes the separate, directly
assigned, Hydroelectric Production component of $1 million resulting in an
overstatement of the allocation by $247,800 for each of the proposed rate years.
Staff Analysis:
The Incentive Pay allocation as presented is appropriate. NYPA does not include
a provision for Incentive Pay in the annual budget process and is therefore not
included in the projected O&M budget. Incentive Pay is expensed in the year
awarded if the goals approved by the Trustees are met. Of the $2.2 million of
Incentive Pay allocated to Niagara and St. Lawrence, $1 million is directly
assigned and represents the projected Incentive Pay for the O&M labor directly
charged to the Niagara and St. Lawrence projects. The remaining $1.2 million
assigned to the Niagara and St. Lawrence projects is the product of the allocated
portion of the total $2.9 million for Incentive Pay estimated for Headquarters
support (Shared Services) times the 42% labor allocation ratio.
Recommendation:
Based on the analysis stated, Staff does not recommend any changes to the
Incentive Pay component of the Shared Services allocation.
27