Testimony to
New York Power Authority
Proposed Expansion Power and Replacement Power Program Contract Extensions

Presented by
Marcus W. Ferguson
Director, Government Affairs
July 15, 2010


My name is Marcus Ferguson and I am Director of Government Affairs for The Business Council of New York State. 

On behalf of the Council, I greatly appreciate this opportunity to testify today regarding the proposed contract extensions for New York Power Authority (NYPA) expansion and replacement power customers.

The Business Council is New York’s largest statewide employer association, representing more than 3,000 businesses, which collectively employ about 1 million New Yorkers, across the state, and across all industrial sectors.

Importantly, The Business Council has been a long-time advocate for NYPA’s expansion and replacement power programs. We proudly represent a number of these programs’ largest participants – Occidental, FMC, Dupont, General Mills, General Motors, Greatbatch, Honeywell, Luvata, Moog, Olin and others.  And our predecessor organization, Associated Industries of New York State, grew up in western New York, and we have been associated with some of these businesses, like Dupont, for nearly a century.  We have worked together closely with these businesses on a wide range of issues of importance to the regional economy and the state’s overall business climate. 

We are especially pleased to be here today supporting a proposal designed to result in the long term retention of more than one hundred energy intensive businesses - mostly manufacturers - that provide the economic life blood of western New York.

The Business Council has long argued that New York State’s economic development policies need to:

  • focus more on retention of in-state business and jobs,
  • incentivize ongoing capital investment, in addition to job creation, and
  • focus on the quality of jobs – factors such as salaries and benefits – rather than simply on the number of jobs.

The Business Council believes that by supporting the retention of these major western New York employers, and basing contracts on employment and investment targets, these proposed contract extensions will achieve each of these key development objectives – and more.

Uncompetitive energy costs impact a state’s economic climate, and often are an important factor in business investment decisions – in some cases, the most important factor.  Too often, the high cost of energy in New York has an adverse impact on the retention of employers and jobs.

Fortunately, we have an incredibly valuable economic development tool in NYPA’s hydropower – a tool that has been used to great effect in retaining high value, energy dependent business across the state.

The Business Council’s support for this contract is based on two key factors:

  • First, it will result in more than $150 million in annual capital investment in western New York’s economy.  We believe that significant re-investment in capital plant is one of the best indicators of a business’ long term commitment to the state.  New York needs to do more – through tax policy, through economic development programs, using resources such as hydropower – to promote capital reinvestment by in-state business.
  • Second, it will result in the long term retention of more than 28,000 high paying, mostly manufacturing jobs in western New York.  We like to refer to the “manufacturing bonus” – the fact that, in the five county western New York region (Erie, Niagara, Chautauqua, Cattaraugus, Allegany counties) average manufacturing salaries – at about $53,000, exceed average non-manufacturing, private sector salaries by 54%, or $18,672 per year, based on 2009 NYS Department of Labor data.  High paying manufacturing jobs are incredibly valuable, difficult to retain, and – especially in upstate New York – even more difficult to replace once lost.  From 2000 to 2009, again using DOL data, the five-county region lost 38,000 manufacturing jobs, more than one in three of all such production jobs, and an estimated $1.1 billion in annual payroll.  Imagine the impact of the loss of additional major employers on the regional economy.

 

2009 Average Employment
Total Wages
Average Wages
Total Private
498,688
$18,364,104,646
$36,825
Manufacturing
66,570
$3,528,470,774
$53,004
Private Non-Manufacturing
432,118
$14,835,633,872
$34,332
2009 NYS Department of Labor Data

Expansion and replacement power companies are dependent on competitively priced power, with many energy intensive production processes. There is no doubt that these long term extensions of hydropower contracts with NYPA are critical in assuring future job retention and growth and new capital investment.

In addition, we believe that the proposed contract contains reasonable commitments for both the participating businesses and NYPA, in terms of long term pricing and power delivery, and in terms of conditioning contract benefits on the company’s achievement of investment and employment targets.

This extension has been a long time in coming, and we applaud NYPA’s commitment to developing and finalizing theses contract, and we applaud these businesses’ long term commitment to New York State.

For these reasons, The Business Council urges NYPA to give final approval to these proposed contract extensions.