Government Affairs Albany UpdateMarch 28, 2002
- ISO Report on New Electricity Needs Released
- Mirant Bowline 750-Megawatt Plant Approved
- Fast Recovery Plan Tax Cut Bill
- Comptroller's Policy on Auditing Contracts
- Empire Zone Program "Reforms"
On March 27th, the New York Independent System Operator (ISO), the entity charged with administering the state's wholesale electricity markets and high-voltage electric transmission system, released a comprehensive report on electricity needs entitled; Power Alert II: New York's Persisting Energy Crisis. The report states that New York needs to add 7,100 megawatts of capacity by 2005. The report reaffirms the conclusions that the ISO reported a year ago - New York must increase generating capacity in order to avoid serious shortages of electricity and economic damage.
The report said that New York should immediately approve 3,000 megawatts of new capacity and that Long Island alone needs between 750 and 1,000 megawatts to reduce "severe reliability risks and high prices." Of the 7,100 megawatts needed by 2005, the ISO claims that between 2,000-3,000 megawatts should be located in New York City, which, like Long Island, is a load pocket - a region whose energy needs cannot be satisfied by imported electricity due to limited transmission capabilities. So far New York State has seen the approval of seven cases under the Article X siting law capable of producing 4,430 megawatts of electricity. However, only one project is currently in the construction phase - the Athens project in Greene County (1080 MWs).
The ISO's conclusions echo those reached by The Business Council's research affiliate, The Public Policy Institute, in a February 2002 report entitled The Power to Grow. That report concluded that New York must still add 9,200 megawatts of new capacity by 2007 to avoid risk of serious economic damage. Both Power Alert II: New York's Persisting Energy Crisis and The Power to Grow debunk the claims by some that the destruction of the World Trade Center and an economic slow down last fall have eliminated long-term power needs.
The ISO also stated that power supplies could also be adversely impacted by one of the Northeast's worst droughts in decades. With water levels low, hydroelectric generation may be impacted as well as the water requirements for the cooling and pollution control needs of fossil-fuel generators. In addition, the ISO recommended the reauthorization of the Article X siting law and a commitment to fuel diversity. The ISO is currently in the process of compiling a natural gas infrastructure and supply study in conjunction with the New York State Energy Research and Development Authority (NYSERDA). At request of New York State, the ISO is also assessing and studying the state's transmission infrastructure.
The New York State Board on Electric Generation and the Environment (Siting Board) approved, with conditions, the application of Mirant Bowline, LLC for a Certificate of Environmental Compatibility and Public Need to construct a 750 megawatt electric generating facility. The plant is to be located in the Town of Haverstraw, Rockland County. Mirant will construct the new plant on 25 acres adjacent to two (2) existing plants they currently operate at Bowline Point.
The approval of the Bowline project brings the total number of plants approved under the Article X siting law to seven - capable of producing 4,430 megawatts. However, only one project, located in Athens, has begun construction. So far 24 applications have been submitted to the siting board under Article X of the Public Service Law (1 has since been withdrawn).
For more information on the Article X process and individual projects, access the Public Service Commission website at; http://www.dps.state.ny.us/articlex.htm
Fast Recovery Plan Tax Cut
Staff Contact: Ken
The Business Council's "Fast Recovery Act" tax reform proposal has been introduced in both houses, by Senator James Alesi and Assemblyman Robin Schimminger, respectively. The bill would:
- allow businesses to elect a "single sales factor" allocation for assessing corporate franchise tax liability;
- phase out the alternative minimum tax to increase the value of existing investment incentives;
- make permanent the investment tax credit for the securities industry, a measure that will help promote redevelopment of lower Manhattan;
- authorize an expansion of certified capital companies, or CAPCO's, which will make additional, private sector capital available for new investments; and
- achieve parity in the state sales tax treatment of intrastate and interstate telecommunications services, and the Article 9 tax treatment of telecommunications utilities.
Bill numbers, and cosponsors, are listed below:
S.6605 – Alesi, DeFrancisco, Farley, Hoffmann, Johnson, Kuhl, Larkin, Maltese, Maziarz, Meier, Nozzolio, Padavan, Rath, Saland, Seward, Trunzo, Volker, Wright.
A.10712 – Schimminger, Destito, Magnarelli, Koon, Levy, Lavelle, Aubry, Canestrari, Carrozza, Christensen, Cook, Cymbrowitz, Davis, DelMonte, Eddington, Englebright, Gordon, Greene, Gromack, Higgins, Hoyt, John, Lafayette, Magee, Matusow, Millman, Robach, Seddio, Smith, Sweeney, Tokasz, Towns, Weisenberg.
The Business Council urges its members to convey their support for this proposal to the legislative leaders and to your regional representatives. Contact Ken Pokalsky for additional information.
State Comptroller Carl McCall has issued an "Executive Order" providing for new restrictions on entities performing auditing services to the Office of State Comptroller (OSC) and the state's Common Retirement Fund (CRF). Key provisions include the following:
- In most circumstances, "except under special, pre-defined circumstances as determined by OSC", any firm performing auditing services to the OSC or CRF will be prohibited from providing other consulting services during the term of the auditing contract. Similarly, entities providing non-auditing consulting services are precluded from providing auditing services.
- No firm will be allowed to provide audit services to either OSC or CRF for a continuous period of more than seven years.
- No person will be appointed to a policy making position in OCS who was a partner in, or employee of, a firm that provided auditing services to OSC or CRF during the previous two-year period.
The new policy was made effective February 14, 2002.
Empire Zone Program "Reforms"
Staff Contact: Ken
The Business Council continues to review the Governor's proposed amendments to the Empire Zone program. These changes, included in the Executive Budget proposal (S.6260/A.9762), are intended to close a perceived "loophole" in the program that allows Empire Zone benefits to be given to new business entities that fail to create new jobs, and to place caps on certain tax benefits provided under the program enhancements adopted in 2000. Key provisions of the bill would:
- modify the definition of a "new business," to exclude a business that is "substantially similar in operation and ownership" of existing taxpayer. This change is intended to limit benefits to businesses that create new corporate entities but do not make new investments or create new jobs. (Note that this provision would apply to businesses certified after July 1, 2002).
- exclude the consideration of employees who were employed by a related business during previous 60 months in calculating "Qualified Empire Zone Enterprises" or QEZE eligibility and employment-based tax credits. Again, the impact of this change is to limit QEZE eligibility of and/or reduce the benefits to spin-off companies that do not create new jobs within the Empire Zone.
- cap the real property tax credit for QEZEs, at the higher of $10,000 times the new jobs created within the zone, or10 percent of capital costs expended within the zone times the percentage of the real property occupied by taxpayer.
- adopt a new definition of eligible real property taxes, to excludes taxes incurred during previous tax years but paid in current tax year. The impact is to preclude tax credits for payments of past-due real property taxes.
We are interested in hearing from additional Business Council
members as to the impact of these Empire Zone changes.
For more information, contact Ken Pokalsky.