Governor Paterson Urges Legislative Leaders to Reform Power for Jobs Program

ALBANY, NY (03/21/2010)(readMedia)-- Governor David A. Paterson today urged for meaningful reform of the Power for Jobs program to protect existing jobs and create more opportunities for work in New York State. In a letter to Legislative Leaders, the Governor outlined the urgent need to reform the existing Power for Jobs and related programs, which have supported more than 300,000 existing jobs in New York, but have done little to attract new jobs to the State. Failure to produce comprehensive reform will cause the existing program benefits to expire, will put the livelihood of many in jeopardy, and will miss an opportunity to create thousands of new jobs.

"Power for Jobs is already one of the most critical job retention tools we have in New York. But the year-to-year uncertainty created by the need to renew legislation undermines our ability to attract new business and jobs. Let us seize this opportunity and take meaningful action that will hasten New York's economic recovery," Governor Paterson said. "Our respective staffs have already begun to meet on my proposal and I encourage all parties to continue their diligent work so that we may both protect and create jobs."

A full copy of the letter is included below.

To: Honorable John L. Sampson, Senate Majority Conference Leader; Honorable Sheldon Silver, Assembly Speaker; Honorable Dean G. Skelos, Senate Minority Leader; Honorable Brian M. Kolb, Assembly Minority Leader

CC: Honorable George Maziarz, Chair of the Senate Energy Committee; Honorable Darrel Aubertine, Vice Chair of the Senate Energy Committee; Honorable Kevin Cahill, Chair of the Assembly Energy Committee

March 21, 2010

Dear Leaders,

The State's Power for Jobs and related low-cost power programs administered by the New York Power Authority (NYPA) will expire in less than two months. If we are to make meaningful progress in reforming these programs, we should collaborate on new legislation immediately.

This program is already one of the most critical job retention tools we have in New York. But the year-to-year uncertainty created by the need to renew legislation undermines our ability to attract new business and jobs. Let us not repeat the mistake we've made for the past five years by simply extending the existing Power for Jobs program for one more year and failing to deliver a program that has significant job-growth and investment potential for our great State. We now have an opportunity to protect hundreds of thousands of existing jobs and at the same time create a new engine for economic growth. Let us seize this opportunity and take meaningful action that will hasten New York's economic recovery.

The urgency of this request is threefold. First, because these current programs expire on May 15, 2010, if no action is taken on new legislation prior to April 15, NYPA will need to begin notifying existing customers of the programs – which employ more than 300,000 New Yorkers – that their benefits will expire. Without the benefits provided by NYPA's power programs, many of these businesses will be at risk of closing or reducing their workforce at a time when we can ill afford such an outcome. Second, by acting immediately to reform the programs as I propose below, we can generate additional revenue for the State's General Fund for the next fiscal year. Third, by taking bold action now, we will accomplish something that Albany has failed to deliver after four years of effort – a permanent statewide low-cost power program that will save existing jobs in manufacturing, health care, and other industries, and attract thousands of new jobs and investment to the State.

We all recognize the importance of reforming NYPA's economic development programs, which is why I directed my staff to work with NYPA to develop a comprehensive reform proposal. Following a series of legislative roundtable discussions on the future of the Power for Jobs programs led by Assembly Energy Chair Kevin Cahill and then-Senate Energy Chair Darrel Aubertine, both houses have introduced bills that will create a permanent program. It is my understanding that Senate Energy Chair George Maziarz is also working on a proposal to create a permanent program.

Based on the legislation submitted thus far, we have never been so close to an agreement. All of the bills, including my own, embrace the following principles:

• The annual one-year extensions of the Power for Jobs and Energy Cost Savings Benefit programs have not provided sufficient certainty to businesses to encourage new investment or expansion in New York.

• A permanent program that provides long-term power contracts to eligible customers is necessary to stabilize existing businesses and institutions, promote economic growth, and create jobs for New Yorkers.

• Using NYPA's low-cost hydropower is necessary to create a stable, long-term economic development program.

• Impacts to residential customers who currently receive discounted power from NYPA should be mitigated.

My staff has already briefed legislative staff on our proposal. My legislation would create a new statewide program called Energize New York, a 900 megawatt (MW) economic development program that would provide fixed price long-term power contracts to existing and new qualifying businesses and institutions in the State that agree to maintain minimum levels of employment and/or make investments in New York. At 900 MW, Energize New York would be approximately 30 percent larger than the existing Power for Jobs and Energy Cost Savings Benefit programs and would dedicate 200 MW for attracting new business investment and expansion in order to create thousands of new jobs. Current customers of the Power for Jobs and Energy Cost Savings Benefit programs would be allowed to continue their benefits at 2009 levels for one year while the new program is designed by NYPA. The new program would commence in 2011, and current customers as well as new businesses and institutions would be able to apply for long-term contracts.

I further propose that the new economic development program be supported by low-cost hydropower that NYPA currently sells to three upstate utilities under the Rural and Domestic program. Under my proposal, the Rural and Domestic residential customers would receive declining cash discounts over five years and, beginning in 2011, would benefit from a permanent $10 million per year energy efficiency program and a permanent $10 million per year electricity discount program for low-income electric customers.

In the first year after the bill's enactment, NYPA would be authorized to sell the Rural and Domestic power into the wholesale electricity market and use the net revenue from the power sales to fund the cash discount to residential customers at the same level they received in 2009. According to NYPA, the value of the residential discounts in 2009 was $70 million. In the year following the bill's enactment, any revenues from the Rural and Domestic power sales in excess of $70 million would be transferred to the General Fund - NYPA estimates that amount would be at least $20 million. Thus, I propose that Energize New York be adopted in the State budget in order to offset further cuts that would otherwise be necessary to close the current budget gap.

I have asked my staff to schedule a meeting with you so that we may continue these discussions. I look forward to speaking with you about this important opportunity.

Sincerely,

Governor David A. Paterson

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