Archive for March 13, 2011

The Kessel NYPA Watch, March 13, 2011 – By George J. Marlin

March 13, 2011

Memo

 To:    Senator George Maziarz and the Senate Energy
             and Telecommunications Committee

Re:     Review of Richie Kessel’s Tenure as CEO of NYPA

A Consumer Advocate or a Consummate Fool?

Since becoming the CEO of NYPA, Richard Kessel has made a score of political hires, many from Long Island and most not having the credentials to do the job in which they were placed.  For example, the Vice President for Emergency Planning and Chief Labor Negotiator, has no Emergency Planning or Labor Relations experience.  The Vice President of Human Resources, was formerly Receiver of Taxes for the Town of North Hempstead.  Many of these positions were created by moving existing approved budgeted positions from other departments to create openings for political hires from Long Island and elsewhere.  In the past year, Kessel has given some of these people promotions and salary increases in excess of 20 percent without informing the Power Authority Board of Trustees or putting out public announcements on the promotions.  This at a time when Governor Cuomo has imposed a wage freeze and may have to lay off thousands of state workers.

Also in less than a year, Kessel’s new assistant, Fran Evans, was promoted to the newly created position of Executive Vice President, Chief Administrative Officer and Chief of Staff and received a $30,000 increase in salary at a time when most employees at the Authority were subject to a salary freeze.

Kessel created an additional position for a Senior Vice President of Government Relations when one already existed.  In addition he has two Vice Presidents, a few staff directors and three outside lobbyists all working on State Government Relations for a state authority.

Kessel also hired a former Power Authority Trustee, four weeks after she stepped down from her position on the Board, to be a part-time employee at $77,500 per year!  Her assignment is to represent the Authority in Buffalo.  It is uncertain what she does or has accomplished.

Kessel has failed to comply in a timely manner with a number of requests for information under the Freedom of Information Law, many of which would confirm the above information as well as reveal expense account filings of his top management.

At Kessel’s direction, the Power Authority has made a number of contributions and grants that did not comply with Attorney General Cuomo’s 2007 Opinion on this subject, were not reported to the Authority’s Trustees and, in many cases, did not follow contributions approval procedures of NYPA.  Many were directed to Long Island organizations having no business relationship with NYPA or state energy issues including thousands to his hometown Chamber of Commerce.

Kessel has pursued the development of a number of new projects that are known by internal staff and external electricity experts to be significant money losers which would threaten the financial viability of the Power Authority and likely result in a significant reduction in the organization’s credit rating.  The following highlights the major projects that NYPA staff is working on developing, with the estimated annual loss in net present value dollars for each one.

Hudson River Transmission Project * $40 to $80 million per year for 20 years
GLOW (Great Lakes Wind) $80 to $120 million per year for 20 years
100- Mw Solar Project $20 to $30 million per year for 20 years

 *This project, as now constituted, bears little resemblance to the one that was selected as part of the winning bid by the Power Authority in 2006 following a competitive Request for Proposals process.

In addition, NYPA resources will be further drained by a contribution of $100 million to New York State this year as well as obligations to make annual payments totaling tens of millions of dollars to local governments and projects in Western and Northern New York.  The existence of these commitments makes Kessel’s blind pursuit of money-losing projects all the more reckless.

Finally, in his first two years at NYPA, Kessel’s management had led to significant underperformance in NYPA operating income including an approximate $150 million plus operating income shortfall in 2010 alone.  NYPA’s lagging income threatens its finances, its ability to afford to pursue Kessel’s grandiose projects and NYPA’s double AA credit rating.

The information stated above has come from a number of sources including current and former employees of the New York Power Authority.  Street Corner encourages all who wish to contribute to this effort to write with additional information to further expose Kessel’s incompetence and his blatant inability or unwillingness to conduct himself as a responsible and prudent public official.