threshold of no less than 95% will apply. Should Alcoa’s actual jobs reported fall below the compliance percentage, the Authority may reduce the amount of hydropower on a pro-rata percentage basis, with a proviso relating to decreases in employment resulting from production curtailment due to prolonged firm and/or interruptible power curtailment by the Authority.
2. Pricing. a.
The Authority’s base production charges (demand and energy) will be set at a new effective base rate beginning July 1, 2013, with such initial rate subject to both an annual escalator based on the indices in the current contracts and an adjustment based on increases in the market price of aluminum as reported on the London Metal Exchange.
At all times, the firm and interruptible rates will be no lower than the cost-based “Preference” rate charged by the Authority to its Preference customers.
In addition to the above base production charges, Alcoa will pay all New York Independent System Operator charges imposed on the Authority with respect to the service to Alcoa.
The new contract will provide for a pass-through to Alcoa of all taxes, assessments and other charges or costs imposed by third parties relating to the service to Alcoa, including, for example, costs incurred by the Authority to comply with any renewable portfolio standards or carbon regulation regimes.
The Authority’s standard contract provisions concerning rate increases necessary to meet bond covenant requirements will apply.
The rate provisions will be subject to reopening in the event that currently unforeseen major capital expenditures are required at the St. Lawrence/FDR Project during the life of the contract.
The Contract will have an effective date of July 1, 2013 with a Base Term of 30 years (2013 to 2043), with one 10-year option to extend under certain defined circumstances relating to availability of power and aluminum prices over the initial term.
4. Economic Development Fund.
Alcoa will capitalize a $10 million North Country Economic Development Fund (“NCEDF”) within 90 days of the date upon which its Board of Directors approves the rebuilding of its Massena East smelter. The NCEDF will be exclusively used for economic development purposes in the counties of St. Lawrence, Franklin, Essex, Jefferson, Lewis, Hamilton and Herkimer and the Akwesasne Mohawk Reservation. The NCEDF will be jointly administered by the Authority and an entity of, or specified by, the State of New York. “At their meeting of September 23, 2008, the Trustees authorized the holding of a public hearing, pursuant to Section 1009 of the Public Authorities Law, on the Contract. Copies of the proposed form of the Contract were transmitted to the Governor and the leaders of the State Legislature. In accordance with Section 1009, notice of such public hearing was published once each week for at least 30 days in at least six newspapers throughout the State. During that period, copies of the form of the Contract were made available for public inspection in the offices of the Authority and at other places throughout the State designated by the Authority, as well as on the Authority’s website. “The public hearing was held on November 6, 2008 at the Visitors’ Center at the St. Lawrence/FDR Project in Massena. The final transcript of the hearing is attached as Exhibit “1e-B.” Staff has reviewed the transcript of the hearing, including the written statements submitted for inclusion in the record. “The four speakers at the hearing were: Wesley Oberholzer, Alcoa’s Massena Operations’ Primary Location Manager; Kenneth Pokalski, Senior Director, Government Affairs, The Business Council of New York State, Inc.;