07.26.06

Schumer: Updating Ancient, Pollution Belching Northport Power Plant Must Be Part Of Final LIPA, National Grid Deal

Senator: This Merger is a Once- ina- Lifetime Opportunity to Reduce Pollution, Increase Energy and Lower Energy Costs for LI Ratepayers

As the negotiations continue between National Grid and LIPA, today Senator Charles E. Schumer called for the repowering of the Northport power plant to be a part of the final agreement. With KeySpan being sold to National Grid, Schumer said today that the pending partnership of National Grid and LIPA presents a onceinalifetime opportunity to repower, or modernize, the Island's largest and dirtiest power plant at Northport, a widely desired and sorely needed action that was left out of the original KeySpan/LIPA deal reached last December.

I have said countless times that repowering is a triple win for Long Island. It will improve air quality in an area with some of the worst air pollution in the nation; it increases energy output in a place that is desperate for more power; and, perhaps most importantly, it can reduce rates for Long Island's longsuffering energy consumers, Schumer said. These are all things that are desperately needed on Long Island and we need to do all we can to ensure that we can make this happen. Northport is the poster boy for repowering National Grid needs to step up and help the ratepayers of Long Island and everyone who breathes its air.

When LIPA and Keyspan reached their original agreement in December of 2005 to continue its partnership, they announced their intention to repower at two of the smaller power plants on Long Island; Barrett and Far Rockaway were the only two plants to be considered. Schumer supports this effort but believes that the sale of KeySpan to National Grid and the concomitant negotiations between Grid and LIPA provide an historic opportunity to take meaningful and overdue action at the plant that most desperately demands attention: Northport.

The opportunity to repower is now possible because National Grid is leveraging billions of dollars as part of the proposed merger. The New York Independent System Operator estimates that repowering costs about $1 million/MW. Repowering Northport will mean leveraging a few hundred million dollars more which is unlikely to occur in the future if it is not negotiated now as part of the initial fiscal package.

In his letter to Michael Jesanis, Bob Cattell and Richard Kessel, Schumer wrote. In essence, if you do not take the necessary actions now, the chance to repower Northport in a significant way may never happen and Long Islanders will continue to suffer as a result.

Schumer said today that while he understands the financial and practical hurdles involved with repowering, its a critical step in keeping Long Island free from the detrimental effects of Northport on Long Island and its residents. He said today that a staggered approach to repowering Northport will allow National Grid and LIPA to agree upon a longterm retrofitting plan for the remainder of the units that would utilize cleaner technology to curb emissions.

Schumer believes that before National Grid and LIPA formalize any new agreement, a plan to substantially repower the Northport plant must be made along with a longterm pricing and financing plan that will guarantee no impact on the ratepayer. Savings should be realized as a result of the power plant's new efficiencies that will add energy to the grid, an enhancement of National Grid's assets.

Schumer wrote Not only would repowering benefit National Grid by amplifying its newly acquired assets, but a commitment to cleaning up Long Islands most notorious power plant would certainly engender positive feedback from the regions ratepayers and residents. With National Grid having very little record of generating electricity, I believe that your emergence into this market will be boosted by the efforts you take to clean up the relics of our past. If the merger is consummated, National Grid will stand to have a longterm relationship with LIPA and its customers that could be solidified further, with more power generated and emissions reduced. In turn, this will prove to have a positive impact not only on the bottom line, but also on reliability and consumer confidence.

With Long Island ranked among the worst in the Northeast for ozone and smog levels, the National Grid acquisition of Keyspan offers a unique opportunity for corrective action. According to a report by the Center for Management Analysis at CW Post, if the power plants were repowered and operated at their current level of generation, the Northport plant could experience a 90% reduction in NOx emissions, 95% reduction in SO2 emissions, 86% reduction in CO2 emissions, and 85% reduction in particulate emissions.

Moreover, energy capacity would be doubled at each unit repowered. This could translate into another 375 or even 750 MW of energy. With Long Islands voracious appetite for energy and emphasis on environmental protection, repowering at Northports antiquated existing units would translate into increased efficiency and reduced emissions potential.



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