Creates the Energize New York power program, extends the expiration of the power for jobs program and the energy cost savings benefit program, authorizes certain contributions to the state general fund

Summary of provisions

Section 1 of the bill would provide the short title of the bill as the "Energize New York Power Program Act."

Section 2 of the bill would add a new section 188-a to the Economic Development Law (EDL) to create the Energize New York Power Program. Section 188-a would, among other things:

& Define terms used in EDL § 188-a

* Authorize EDPAB to solicit applications for the new Energize New York Power Program (ENYPP) beginning January 31, 2011, and make recommenda- tions to NYPA for allocations under ENYPP beginning July 1, 2011.

* Establish eligibility for ENYPP allocations and provide limitations on who may receive allocations under ENYPP.

* Establish notice requirements for applications for ENYPP power allo- cations.

* Establish criteria for an ENYPP allocation award, which would be considered in the aggregate and include the following:

* significance of electricity costs to the applicant;

* extent to which an award of power to the applicant will result in new capital investments in the State;

* extent to which an allocation of power is consistent with state, local and regional economic development strategies and priorities;

* types of facilities the applicant proposes to construct, enlarge or install as consideration for an ENYPP allocation;

* applicant's payroll;

* number of jobs the applicant would create or retail in relation to the size of the ENYPP power allocation requested;

* risk that the applicant would leave the State, curtail operations or lose jobs without an ENYPP allocation;

* significance of the applicant's facilities to the local economy;

* extent to which the applicant has invested in energy efficiency meas- ures, will agree to make tangible investments ill energy efficiency measures, or will agree to participate in energy audits of its facili- ties;

* consistency between the applicant's operations and the policies and goals of the State energy plan;

* whether the applicant receives benefits under other NYPA programs;

* extent to which a power allocation might result in an advantage as compared to its competitors in the State; and

* regarding not-for-profit corporation applicants, the extent to which the applicant provides critical services or substantial benefits to the local community.

* Establish an initial term of up to 7 years for ENYPP allocations and contracts, and authorize extensions of allocations and contracts.

* Authorize EDPAB to recommend reductions of ENYPP allocations at facil- ities if actual metered load is less than the allocation and reallocate relinquished or withdrawn ENYPP allocations consistent with the provisions contained therein.

* Authorize EDPAB and NYPA to require applicants to agree to periodic audits to ensure compliance with contract terms and ENYPP requirements.

* Provide that EDPAB: (1) shall not allocate more than 910 MW of ENYPP allocations; (2) shall set aside at least 320 MW of ENYPP allocations for use at facilities located within the National Grid, New York State Electric and Gas (NYSEG), and Rochester Gas and Electric (RG&E) service territories; (3) shall set aside up to 100 MW of ENYPP allocations for eligible small businesses and not-for-profit corporations; and (4) shall set aside at least 200 MW of ENYTP allocations for the purposes of attracting new business to New York, encouraging new capital investment in New York and creating new jobs in New York.

* Authorize EDPAB to choose between eligible applicants based on which applicants best meet applicable criteria, require EDPAB to issue recom- mendations on applications in writing, and provide that a recomendation for all ENYPP allocation qualifies the applicant to enter into a contract with NYYPA on appropriate terms and conditions.

* Provide for the partial and complete withdrawal of power from ENYPP participants for non-compliance with agreed-upon commitments.

* Require NYPA and the Department or Public Service (DPS) to make recom- mendations to the Public Service Commission (PCC) for reduced rates applicable to the delivery by utility corporations of ENYPP allocations, and provide that any such recommendation for reduced delivery rates would be at such level as to allow the utility to (i) recover the incre- mental cost of providing delivery service to such customers, and (ii) contribute to the common delivery and related costs which otherwise would be borne by other customers.

* Restrict the transfer of ENYPP allocations and contracts.

* Require the EDPAB, in consultation with NYPA, to report on the effec- tiveness of the ENYPP.

Section 3 of the bill would add a new subdivision 13-a to Public Author- ities Law (PAL) § 1005 to authorize NYPA to make ENYPP allocations and enter into contracts to sell up to 910 MW to eligible applicants upon recommendation of EDPAB. This new subdivision would also provide that power used in ENYPP will consist of: (1) up to 455 MW of hydroelectrici- ty withdrawn as of June 1, 2010 from utility corporations to which it was allocated for the benefit of these companies' domestic and rural consumers (residential consumers); and (2) up to an equal amount of market power. ENYPP allocations would consist of equal parts of NYPA hydropower and market power and would be sold to all eligible applicants on a uniform basis.

Subdivision 13-a would further provide that NYPA, prior to entering into a contract with eligible applicants for the sale of ENYPP power, and prior to the provision of electric service relating to an ENYPP allo- cation, shall offer eligible applicants the option to decline to

purchase the market power component of such ENYPP allocation. If an applicant declines to purchase the market power component through EYNPP, the applicant would be responsible for acquiring any such power on its own behalf.

Section 4 of the bill would add a new subdivision 13-b to PAL § 1005 to authorize NYPA to implement two residential consumer discount programs to help mitigate the cost impacts on residential customers resulting from the reallocation of hydroelectricity for use in the ENYPP. Under a new "Residential Consumer Electricity Cost Discount" program, NYPA would be authorized, as deemed feasible and advisable by the Trustees, to fund monthly payments to be made to such classes of electricity consumers, as enjoyed the benefits of authority hydroelectric power withdrawn pursuant to subdivision 13-a of PAL § 1005. The monthly payments would commence on June 1, 2010 and the total annual amount of the temporary monthly payments for the 12-month period from June 1, 2010 through May 31, 2011, would be $100 million. The total annual amount of temporary monthly payments for each 12-month period would decline by $14 million each of the four subsequent 12-month periods. In the fifth subsequent twelve month period the total annual amount of temporary monthly payments would decline by $11 million. Thereafter, the total amount of monthly payments for each 12 month period would be $33 million. From the "Resi- dential Consumer Electricity Cost Discount" program, up to $5 million annually would be set aside for an "Agricultural Consumer Electricity Cost Discount" program to provide supplemental discounts to agricultural producers who receive electric service at the residential rate. The PSC would supervise the distribution of this funding through jurisdictional utility rates, according to the relative amounts of hydropower purchased by the utilities.

Section 5 of the bill would add a new subdivision 18 to PAL § 1005 to require NYPA to complete detailed annual reports on each economic devel- opment power program it administers.

Section 6 of the bill would provide that with respect to applicants who are in substantial compliance with contractual commitments and receiving benefits under the existing Power for Jobs, Energy Cost Savings Benefit, Economic Development, High Load Factor or Municipal Distribution Agency programs, but who would otherwise not receive a recommendation from the EDPAB for an ENYPP allocation, the EDPAB shall recommend that NYPA provide for a "transitional electricity discount." Such applicants may receive payments from NYPA as follows: (1) in the year beginning July 1, 2011 and in the year beginning July 1, 2012, in an amount equal to 66% of the benefits they received under the expiring programs during the 12 months ending May 15, 2010; and (2) in the year beginning July 1, 2013 and in the year beginning July 1, 2014, in an amount equal to 33% of such benefits. The Transitional Electricity Discount payments would end June 30, 2015.

Section 7 of the bill would amend § 9 (the effective date section) of Chapter 316 of the Laws of 1997 to extend the current June 2, 2010

sunset of the Chapter to June 30, 2011. The Chapter, among other things, created the PFJ program in EDL § 189.

Section 8 of the bill would amend § 11 (the effective date section) of Chapter 645 of the Laws of 2006 to extend the current June 2, 2010 sunset of § 7 of that Chapter to June 30, 2011. Section 7 of the Chapter provides for certain responsibilities of NYPA, the Director of the Budg- et and the Comptroller relating to the PFJ program.

Section 9 of the bill would amend EDL § 183(h)(2) and (4) to extend the current June 2, 2010 sunset of the ESCB program to June 30, 2011.

Section 10 of the bill would amend the opening paragraph of paragraph 5 of EDL § 189(a) to extend the current June 2, 2010 sunset of the PFJ Electricity Savings Reimbursements to June 30, 2011 at the same level as provided under such program during the 12 months ending May 15, 2010.

Section 11 of the bill would amend EDL § 189(f) and (1) to provide for the extension of Power for Jobs contracts and rebates through June 30, 2011.

Section 12 of the bill would amend Tax Law § 186(9) to extend the taxa- ble periods for which a utility that delivers PFJ power is allowed a tax credit through 2011.

Section 13 of the bill would amend subparagraph 2 of paragraph (g) of the ninth undesignated paragraph of PAL § 1005 to authorize NYPA, as deemed feasible and advisable by its Board of Trustees, to make a volun- tary contribution of $7.5 million to the State to offset losses to the State from the gross receipts tax revenues from PFJ contract extensions. This section would also raise the aggregate amount that NYPA may contribute to the State under the PFJ program from $461.5 million to $469 million.

Section 14 of the bill would amend subdivision 5 of PAL § 1005 to clari- fy the purposes for which Niagara and St. Lawrence Project power may be used.

Section 15 of the bill would repeal subdivision 16 of PAL § 1005 as added by Chapter 217 of the Laws of 2009. That subdivision has been implemented and is no longer necessary.

Section 16 of the bill would renumber subdivision 16 of PAL § 1005, as added by chapter 477 of the Laws of 2009, to be subdivision 17, and would amend paragraph (a) of such subdivision to authorize NYPA to offer its energy efficiency programs to ENYPP participants.

Section 17 of the bill contains a severability clause.

Section 18 of the bill contains the effective date.

Existing law

The PFJ and ECSB programs providing benefits to eligible applicants expire June 2, 2010.

Chapter 316 of the Laws of 1997, established the PFJ program to provide discounted NYPA-purchased power to businesses and not-for-profit corpo- rations that agree to create or retain jobs in New York State. In return for such commitments, successful applicants received three-year contracts for PFJ electricity. The PFJ program originally made 400 MW of power available and was to be phased in over three years. As a result of the initial popularity of the program, the PFJ statute was amended by Chapter 386 of the Laws of 1998 to accelerate the distribution of the power and increase the size of the program to 450 MW. Chapter 63 of the Laws of 2000 and Chapter 226 of the Laws of 2002 amended the statute to authorize additional power to be allocated under the program and author- ize certain participants to apply for reallocations of power under the program.

Chapter 59 of the Laws of 2004 extended program benefits for PFJ custom- ers whose contracts expired before the end of the PFJ program in 2005. Such customers were required to choose to receive an "electricity savings reimbursement" rebate or a power contract extension. NYPA was authorized to voluntarily fund the rebates if deemed feasible and advis- able by NYPA's Trustee.

PFJ customers whose contracts expired on or prior to November 30, 2004 were eligible for a rebate to the extent funded by NYPA from the date their contract expired through December 31, 2005, As an alternative, these customers could have chosen to receive a rebate to the extent funded by NYPA from the date their contract expired as a bridge to a new contract extension, with the contract extension commencing December 1, 2004. The new contract would be in effect from a period no earlier than December 1, 2004 through the end of the PFJ program on December 31, 2005. PFJ customers whose contracts expired after November 30, 2004 were eligible for rebate or contract extension from the date their contracts expired through December 31, 2005.

Approved contract extensions entitled customers to receive power from NYPA pursuant to a sale-for-resale agreement with the customer's local utility. Separate allocation contracts between customers and NYPA contained job commitments enforceable by NYPA.

In 2005, provisions of the enacted state budget extended the period during which PFJ customers could receive benefits until December 31, 2006. Chapter 645 of the Laws of 2006 included provisions extending program benefits until June 30, 2007. Chapter 89 of the Laws of 2007 included provisions extending program benefits until June 30, 2008. Chapter 59 of the Laws of 2008 included provisions extending the program benefits until June 30, 2009. Chapter 217 of the Laws of 2009 included provisions extending program benefits until May 15, 2010. Chapter 88 of the Laws of 2010 extended program benefits until June 2, 2010.

Chapter 313 of the Laws of 2005 created an ECSB Program. Pursuant to the ECSB Program, NYPA makes discounted market power available to 94 busi- nesses in the Economic Development Power, High Load Factor Power and Municipal Distribution Agency Power programs that were facing price increases before the end of 2006. Up to 70 MW of unallocated power from the Niagara Power Project and up to 20 MW of currently unallocated power from the St. Lawrence-FDR Project may be sold into the market to fund the ECSB Program.

Legislative history

This is a new bill.

Statement in support

The current recession has had a significant impact on New York State residents and businesses. New York's unemployment rate is at its highest level in 30 years, reaching 9 percent in December 2009. From July 2008 to December 2009, New York lost more than 330,000 jobs, including 73,000 jobs lost in the manufacturing sector.

Energy cost is a key factor affecting New York State's economic competi- tiveness. Energy intensive businesses currently located within the State and those considering an expansion or looking to locate in New York need affordable energy options. Key health care facilities that provide critical services to their local communities and that employ thousands of New Yorkers have also been affected by the economic down- turn and rising costs. If affordable energy options do not exist in New York, many existing businesses and institutions may cease or curtail operations, and opportunities for new investment in-State will be lost.

The PPJ and ECSB administered by NYPA are scheduled to expire on June 2, 2010. Since 1997, these programs have provided low cost power to hundreds of businesses and institutions statewide, and are among the most critical job retention programs in New York. The programs currently support over 300,000 jobs at over 500 businesses and institutions throughout the State. However, the short-term nature of these programs, a result of the practice of extending the programs annually, does not provide sufficient certainty to encourage existing businesses and insti- tutions to expand or to attract new business investment in New York. Furthermore, the existing programs are not supported by dedicated low- cost hydropower resources and the discounts cannot be continued by NYPA indefinitely in their current form because NYPA cannot predict with certainty it will have adequate cash resources to pay for the program.

The new Energize New York Power program would utilize NYPA's unique and economical hydropower resource to create for the first time a permanent statewide low-cost power program. The ENYPP would consist of 455 MW of hydropower and 455 MW of purchased power to create a 910 MW block of below-market rate power that would be used to save existing jobs in manufacturing, health care, and other industries, and attract thousands of new jobs and investment to the State.

The hydropower that would be utilized for the ENYPP is currently sold by NYPA at cost to National Grid, NYSEG, and RG&E to benefit residential customers under the Rural and Domestic program. The value of this bene- fit in 2009 was approximately $82 million, which equated to an average monthly residential discount of between $2.06 and $4.39 per customer.

Under this bill residential customers in these utility service territo- ries would continue to receive a permanent benefit from NYPA. First over the first five years after the bill is enacted, NYPA would transfer funding to National Grid, NYSEG and RG&E to provide transitional utility bill discounts for residential customers. These transitional discounts would be funded at $100 million in the first year, and be reduced by $14 million each year thereafter. Second, the bill would authorize NYPA to provide $30 million per year in perpetuity to National Grid, NYSEG and RG&E to provide discounts to their residential customers. Up to $5 million of this annual permanent benefit would be set aside for an addi- tional electricity discount for agricultural consumers taking electric service at the residential rate.

The Energize New York Program that would be created by this bill would protect existing jobs and attract new jobs to the State and would encourage new investment to grow the State's tax base. Eligible busi- nesses and institutions that receive ENYPP allocations would be allowed to enter up to seven year contracts, which would provide long-term certainty to encourage new investment and expansion in New York. The ENYPP would reserve at least 320 MW for economic development in the National Grid, NYSEG, and RG&E service territories and 200 MW to attract new investment, thus, ensuring that the bill would result in both job retention and job creation. In addition, ENYPP would reserve 100 MW for not-for-profits, such as hospitals, thus protecting jobs in institutions that provide critical services to our communities.

Budget implications

This bill would have no impact on the State budget because the resources for the new ENYPP would be provided by NYPA. Such resources would consist of hydroelectric power and other resources deemed feasible and advisable by the NYPA Trustees.

Effective date

This bill would take effect immediately and be deemed to be in full force and effect on and after May 15, 2010; provided that sections 9,10 and 11 of the bill would take effect on the same date and in the same manner as Chapter 88 of the Laws of 2010. The amendments to the provisions of law relating to the PFJ and ECSB programs; would not effect the expiration of such provisions of law and would be, deemed repealed with them.