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

New York Power Authority
2007 Preliminary Staff Report
Executive Summary
At the April 2003 meeting, the Trustees approved a four-year (2003, 2004, 2005 and 2006 rate
year) rate plan applicable to the Authority’s preference power customers. The final rate year
under this plan terminates on April 30, 2007. The current rates in effect consist of a demand
charge of $2.38/kW and an energy charge of $4.92/MWh.
Staff is proposing a two-year rate plan for the 2007 and 2008 rate years covering the periods May
1, 2007 to April 30, 2008 and May 1, 2008 to April 30, 2009, respectively. A preliminary Cost
of Service (“CoS”) has been completed to determine the adequacy of the current rates. This
analysis has resulted in a projected increase in hydroelectric rates of 7.1% and 5.8% for the 2007
and 2008 rate years, respectively. The main cost drivers responsible for the increase are (1) the
relicensing costs for the St. Lawrence-FDR ($210 million) and Niagara ($494 million)
Hydroelectric Projects (individually, “Niagara Project” and “St. Lawrence Project.” and
collectively, the “Hydro Projects”); (2) the modernization and upgrades for both the St.
Lawrence-FDR and Niagara Hydroelectric Projects. The upgrade of the Niagara Project was
completed in 2006 at a cost of $298 million. The life extension and modernization program at
the St. Lawrence Project, which began in 1998, is expected to be completed in 2013. This
program is currently budgeted at $281 million; as of year-end 2006 $139 million had been spent.
The proposed rate plan incorporates continuation of the ratemaking and cost of service
methodologies adopted in the April 2003 final rate action approved by the Trustees and agreed to
by the preference power customers as part of the “global” settlement agreements.
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