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State Comptroller's audit of New York Power Authority

State Comptroller's audit of New York Power Authority

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Published by The Post-Standard
A public utility with a mission to provide low-cost power for New Yorkers is spending money on planes, pilots and six-figure salaries while the state's residents pay some of the highest electricity rates in the nation, according to a report Thursday from the state comptroller's office.
A public utility with a mission to provide low-cost power for New Yorkers is spending money on planes, pilots and six-figure salaries while the state's residents pay some of the highest electricity rates in the nation, according to a report Thursday from the state comptroller's office.

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Published by: The Post-Standard on Aug 08, 2013
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1
OFFICE OF THE STATE COMPTROLLER
Thomas P. DiNapoli, State Comptroller 
Public Authorities by the Numbers:Power Authority of the State of New York
August 2013
Executive Summary
The Power Authority of the State of New York is the largest public power utility in theUnited States, and its operating expenditures ranked third among New York Stateauthorities in 2012. The Authority, also known as the New York Power Authority (NYPA),is a major generator of electricity and plays a particularly important role in providing low-cost, clean, renewable power to residents, businesses, not-for-profits and municipalcustomers throughout the State. In addition, NYPA owns and operates more than 1,400miles of transmission facilities, and is a key player in efforts
to enhance the State’selectrical infrastructure. The Authority’s mission also includes promoting economic
development, which it pursues in part by providing low-cost power to selected employersin every region of the State.With more than $2.6 billion reported in annual revenue and expenditures, NYPA is among
the largest of the State’s public authorities. In NYPA’s 2012 fiscal year, the Authority’s
debt outstanding totaled $1.75 billion, including $1.32 billion in long-term debt and $431million in short-term debt. NYPA reported total compensation for more than 1,600employees of $146.3 million, with 35 percent of its staff receiving $100,000 or more.NYPA also reported more than 2,000 active procurement contracts with a total value inexcess of $6.3 billion.
NYPA’s
responsibility for delivering low-cost power and promoting economic developmentmay be hindered
by the State’s repeated use of authority resources for budget relief 
andother purposes. Over the past decade, NYPA has remitted more than $1.16 billion to the
State’s General Fund –
an average of more than $115 million a year 
 –
pursuant to budgetlegislation. On an average annual basis for the past 10 years, such transfers represented4.2
percent of NYPA’s total revenues, or 
almost $1 in every $24 the Authority receivedfrom power sales, transmission charges and other sources. While it is difficult to establishclear links between given revenue sources and particular uses of resources, NYPA hasrequested and received approval from the Federal Energy Regulatory Commission(FERC) to increase certain transmission services charges, citing the need to recover thecosts of operating, maintaining and financing its current transmission system. All
 
2electricity customers in New York State pay for this particular NYPA cost as part of a NewYork Independent System Operator (ISO) charge on their monthly electric bills. While thecost of the
increase on a typical residential customer’s bill was projected by NYPA to be
between five and eight cents per month, the request may be indicative of a certain degreeof fiscal pressure on the Authority. Transfers from the Authority to the State may diminish
NYPA’s capacity to provide low
-cost power to businesses and nonprofit organizations,and could be considered a hidden tax on utility customers who pay NYPA charges.The State Fiscal Year (SFY) 2013-14 Enacted Budget includes authorization for a $90
million payment from NYPA. This year’s transfer language appears intended to suggest
an attempt to conform with NYP
 A’s mission by directing such funds to the General Fund,
or as otherwise directed in writing by the Director of the Budget, and states that theproceeds will be utilized for energy-related or economic development purposes.However, resources received in the General Fund are not reserved for specific purposesand are available for use as determined by the Division of the Budget.During the course of nearly
a century, New York’s
public authorities have performedessential functions, while also sparking controversy over issues related to transparencyand accountability. The S
tate’s reliance on these entities
emphasizes the need for greater transparency and improved accountability in their decision making and operations.Both the Public Authorities Accountability Act of 2005 and the Public Authorities Reform Act of 2009 established additional accountability and transparency requirements for publicauthorities as State policy.This profile
 –
focusing on NYPA
 –
 
is part of Comptroller DiNapoli’s continuing
effort toimprove the accountability and transparency
of New York’s public authorities.
The Officeof the State Comptroller will continue to provide periodic profiles on individual authoritiesand report on related issues to keep the public and State policy makers informed.
Power Authority of the State of New York
 –
Background
The Power Authority of the State of New York, more commonly referred to as the NewYork Power Authority (NYPA), was established in 1931 by the Power Authority Act.
1
Oneobjective of the Act was to provide for the most beneficial use of the Niagara and St.Lawrence rivers in the development of hydroelectric power, while maintaining andpreserving these natural resources of the State. Additional goals included utilizing new energy technologies to maximize the public benefitof the hydroelectric developments, providing low-cost power to attract and expandindustry, providing an adequate supply of power and energy
to the State’s municipal and
rural electric systems, and further developing hydropower or other technologies to reduceelectricity production costs.
2
The Act also directed the Authority to help address the
1
See Chapter 772 of the Laws of 1931.
2
See Section 1000 of the Public Authorities Law.
 
3energy needs of downstate regions and entities including the City of New York, theMetropolitan Transportation Authority and the Port Authority of New York and New Jersey.Since its inception, NYPA has grown to become the largest public power utility in theUnited States, based on megawatt-hour sales and net generation.
3
NYPA operates 16generating facilities. These include the Niagara Power Project in Niagara County, the St.Lawrence-Franklin D. Roosevelt Power Project in St. Lawrence County, the Blenheim-Gilboa Pumped Storage Power Project in Schoharie County and the Richard M. FlynnPower Plant in Suffolk County, as well as smaller generating facilities located throughoutthe State, including New York City. NYPA also has 1,400 circuit-miles of transmissionlines.In addition to its energy generation and transmission functions, NYPA participates infurther developing the
State’s energy infrastructure, administers numerous economic
development low-cost power allocation programs, and promotes energy efficiency andsustainability projects. However, NYPA has also been called upon by the State toprovide financial or other support for projects and programs that are not central to the
 Authority’s core mission
.The diversion of NYPA resources for various other purposes may have contributed to theneed for NYPA
’s recent
request to increase certain service-related charges. In July 2012,NYPA submitted an application to FERC to increase the $165 million NYPA Transmission Adjustment Charge, first approved by FERC in 1999, by 10.7 percent, citing the need torecover the costs of operating, maintaining and financing its current transmission system.
4
  All electricity customers in New York State pay for this particular NYPA cost as part of aNew York ISO charge on their monthly electric bills.
5
This was the first such increaserequested by the Authority since 1999, with an estimated impact to a typical residentialcustomer of between five and eight cents per month. The request was approved byFERC in September 2012.
6
 
Power Authority of the State of New York by the Numbers
 
The data in this report have been submitted by NYPA to the Office of the StateComptroller, primarily through the Public Authorities Reporting Information System(PARIS) maintained by the Office of the State Comptroller. PARIS was created inresponse to a need for greater accountability and transparency through more timely datacollection and analysis. The system was fully implemented in November 2007 and is jointly managed by the Office of the State Comptroller and the Authorities Budget Office.
3
American Public Power Association, 2013-14 Annual Directory and Statistical Report.
4
 
See NYPA’s application under Section 205
of the Federal Power Act to increase its annual revenue requirement usedto develop the charges for transmission services provided by NYPA under the New York Independent System Operator,
Inc.’s Open Access Transmission Tariff, available at
5
 
6
See FERC Order accepting proposed transmission revenue requirement and establishing hearing and settlement judge procedures, Docket No. ER12-2317-000, issued September 25, 2012, available atwww.ferc.gov/EventCalendar/Files/20120925165517-ER12-2317-000.pdf .
 

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