|HIGGINS: $20.3 MILLION IN TOP NYPA EXECUTIVE PAY SHOULD BE REVIEWED TO FUND BUFFALO WATERFRONT SETTLEMENT|
|October 18, 2005|
Reviewing a number of financial, political and operational excesses that he termed as “Enron-style,” Congressman Brian Higgins (NY-27) today renewed his call for a comprehensive financial and management audit of the Niagara Power Project, the New York Power Authority’s (NYPA) highly profitable power generating plant located in Lewiston, New York.
Using NYPA’s own records, available to keen researchers via the Internet, Higgins revealed the existence of multiple corporate aircraft used to ferry NYPA trustees and staff throughout New York State and to other regions of the country, plus tens of millions of dollars in inflated salaries for patronage employees, perks and other excesses.
“NYPA’s excesses are clearly in the style of Enron, Adelphia and the other corporations that provide riches for some at the expense of many,” said Higgins, who released a list of job titles that equaled more than $20 million in management salaries for 2003. “That NYPA says it cannot fund a fair and equitable settlement for Buffalo and Western New York – saying it will increase power rates – while tolerating millions upon millions in waste and abuse is an insult to the people of this region, and we ought not to stand for it,” Higgins added.
To support his settlement proposal, Higgins suggested that NYPA trustees look at the following reforms:
- Scaling back the salaries of employees paid more than $100,000 per year. According to the Office of the State Comptroller, in 2003, 160 employees were paid more than $20.3 million in base salary. In the same year, NYPA Trustees authorized an expenditure of $11.5 million for temporary programming personnel to supplement staffing needs at the authority.
- A review of patronage hires in excess of $100,000. According to published reports, in 2004, NYPA hired a childhood friend of Governor Pataki as an Executive Vice President with an annual salary of $186,000 and hired the Governor’s former bodyguard to a new position as Director of Security the day after he retired as a State Trooper. Based on his State Police service, this former bodyguard continues to collect an annual pension of $73,238 while serving in a newly created NYPA position that was neither posted nor advertised, and which pays more than $160,000.
- Consulting fees associated with the relicensing process have reached eight-figure levels. According to NYPA records, more than $46.7 million has been spent in processing costs since 2001, with $24.5 million to one engineering firm alone, and $5 million to one outside law firm.
- A review of travel procedures within NYPA, which has over the past 6 years authorized expenditure in the tens of millions of dollars for the purchase and refurbishment of airplanes and other high-cost travel for Trustees and senior staff. According to published reports in 2000, NYPA purchased an additional airplane for $5.5 million whose purpose was, in part, to provide additional air transportation for Governor Pataki. Notwithstanding these expenditures, Trustee meeting minutes reflect that NYPA still spent $1.8 million on commercial flights and $90,000 in charter flights over the same period.
“It is the height of hypocrisy for NYPA to claim that our settlement proposal will increase power rates when this agency spends tens of millions on high salaries for patronage employees and cushy air travel for its executives and board members,” said Higgins. “The people of this state should be outraged at the waste and abuse going on at the Power Authority, and the residents of Buffalo and Western New York should demand a fair settlement for its people,” Higgins added.
Higgins’ proposal calls for an inflation-protected payment of $10 million per year to the Erie Canal Harbor Development Corporation, a not-for-profit entity Higgins fought to have Governor Pataki create to assist in the management of the many waterfront-related construction projects currently underway. Higgins said the Federal Energy Regulatory Commission (FERC), the federal agency responsible for granting a new 50-year license to NYPA for operation of the Niagara project, should refuse to consider issuance of a new license renewal until the audit is completed and its findings fully considered.
By law, NYPA is audited once every six years, although these audits now include all of NYPA’s power generating plants throughout New York – eleven in total. These audits result in often nebulous and confusing findings outlined in an overall comprehensive consolidated financial statement, and fail to appropriately highlight the fact that revenues derived from the Niagara power operation – the most profitable in New York State and perhaps in the nation – are utilized by NYPA to subsidize losing operations elsewhere in the state. According to FMY Associates, a consulting group hired to advocate for Niagara County on relicensing, NYPA’s overall revenues are more than $2 billion annually, and the Niagara Power Projects is NYPA’s largest revenue generator.
“NYPA fears an audit of the Niagara Project audit because it does not want the people of this region to know the true story of Niagara, and of the enormous profits NYPA pulls out of this region,” said Higgins. “The Niagara Project was not built to subsidize the waste and abuse of the NYPA, but was instead constructed and reconstructed to capture the unique natural resources of the Buffalo/Niagara region as an economic development and life quality resource,” Higgins added. “NYPA is a public benefit corporation, but clearly, the public across the State is not seeing the full benefit.”