Senate Bill S4426A

                                BILL NUMBER:S4426A

TITLE OF BILL:  An act directing the power authority of the state of New
York to release requests for proposals on certain natural gas powered
generating facilities in and around New York city

PURPOSE:

To raise revenue for the Power Authority of the State of New York
through the sale of numerous "peaker" generators in and around New York
City and to provide resources for alternative energy generation projects
within the City.

SUMMARY OF PROVISIONS:

Section one of the bill requires the New York Power Authority ("NYPA")
to issue a request for proposals ("RFP") for the purchase of 10 speci-
fied gas turbine electric generating facilities within 90 days of the
effective date. NYPA is required to issue requests to determine the
likely value of the sale of the generators and to submit a report to the
Governor, the Temporary President of the Senate, and the Speaker of the
Assembly regarding the range of bids received. NYPA will be authorized
to sell one or more of the 10 specified gas turbine electric generating
facilities if NYPA and its Trustees find that it the sale or sales are
in the best interest of NYPA and the citizens of New York. The revenue
collected from any sale or sales shall be placed in an account dedicated
              

to reducing the cost of electricity for Private primary and secondary
school in NYS.  The Authority shall create and implement programs to
promote energy efficiency, install renewable energy/Green technologies,
and aggregate energy purchases for such schools.

Section two provides that in order to measure the effectives of the
programs created pursuant to this act, NYPA shall issue a yearly report
commencing July 1st, 2015. The report shall contain information on each
program created, monetary savings realized by such private primary and
secondary schools, as well as the amount of funds remaining in the dedi-
cated account. A copy of the report shall be transmitted to the tempo-
rary President of the Senate, Speaker of the Assembly, Chair of the
Senate Committee on Energy and Telecommunications, the Chair of the
Assembly Energy Committee and be published on NYPA's website.

Section three of the bill provides that this act shall take effect imme-
diately.

JUSTIFICATION:

New York City faces considerable obstacles in moving toward a greater
reliance on alternative energy sources. It is the interest of the citi-
zens of New York City and of the entire state to support new alternative
energy generating projects through the transfer of publicly owned and
operated traditional power entities within the five boroughs to private
entities committed to service and technology upgrades.

Revenues generated from the sale or transfer of the specified gas
turbine electric generating facilities are to be used to encourage, the
goals of PIaNYC for a cleaner and more reliable energy future.

An ideal candidate for such an endeavor is the New York Power Authority
("NYPA"). NYPA should issue a Request for Proposals ("RFP") to sell its
small, natural gas-powered facilities in an around New York City, there-
by providing independent power producers with the opportunity to help
trim the budget shortfall while, as the same time, applying their exper-
tise to the operation of those facilities.  If an RFP for those generat-
ing facilities was issued, it is possible for NYPA to bring in signif-
icant revenue to apply to the city's and state's future energy
requirements. Such transactions should also benefit the city and state
for years to come through the increased tax revenues that should be
realized on an ongoing basis.

In the Summer of 2001, NYPA began operating ten natural gas-powered
generating facilities at six sites in New York city, thereby adding
approximately 450 megawatts of energy to NYPA's portfolio. These facili-
ties were intended to be used as "peaker" plants, needed only in times
of extremely high demand or in case of emergency. The existence and use
of these units by a public entity has been controversial since the
onset, and moving these traditional petrochemical powered units to the
private sector would allow NYPA the opportunity to help move the city
into a brighter and cleaner future through the support of alternative
energy projects such as solar arrays, wind and tidal generation in part-
nership with independent private generators.

It would not be the first time that NYPA sold some of its property to
the private sector, and it is likely that interested investors would be
attracted to NYPA's small generation facilities as well. While it is
impossible to predict potential offers, it should be noted that, in
2008, TransCanada corporation purchased the Ravenswood Generating Facil-
ity in Queens from National Grid for $2.8 billion, a price that exceeded
expectations and demonstrates the level of attention that the private
sector takes in worthwhile assets.

PRIOR LEGISLATIVE HISTORY:

2011-12: S.5406-A - Referred to Corporations, Authorities and Commis-
sions
2010: S.7208 - Referred to Corporations, Authorities and Commissions'

FISCAL IMPLICATIONS:

The RFP will provide an accurate value, but recent estimates put the
value at a minimum of $200 million apiece.

EFFECTIVE DATE:

This act shall take effect immediately.