LIPA Announces Electric Demand Forecast for Summer 2002 - Loss of Y-50 Cable Complicates Tight Resources

Brentwood, NY – May 29, 2002 – The Long Island Power Authority (LIPA) today announced it will have sufficient electricity supplies available to meet normal summer demand within the Long Island Control Area (LICA) this season. However, should the Y-50 transmission cable, which brings in some 400 megawatts (MW) of power to the LICA be lost for the summer, the Island's electricity supply could be stressed to its limits, even with the addition of 737MW of new resources in the weeks ahead. As a result, LIPA has decided to add an additional 200MW of stand-by generation at several generation and substation locations around Long Island in the next few weeks.

LIPA Chairman Richard M. Kessel also reported that a problem occurred over the Memorial Day weekend with the operation of the Y-49 cable that brings some 600 MW of power to Long Island. While repairs have already begun, the cable can now supply 444MW to the Island, the breakdown of Long Island's two major transmission cables in less than two weeks caused LIPA to take additional steps to increase on-Island supply. Y-49, which is owned by the New York Power Authority, is expected to be back in service within a couple of weeks.

Mr. Kessel indicated that LIPA is projecting a base peak summer demand of 4,775MW for the Long Island Control Area (LICA) assuming normal temperatures are in the low to mid-90s. Extreme peak demand could exceed 5200 MW, which would surpass last year's LICA record of 4906MW, should Long Island experience a heat wave similar to last August or that of July, 1999. When LIPA acquired the Long Island Lighting Company's electric operations in May, 1998, it didn't expect to see usage exceed 5000MW for at least ten years and possible longer.

LIPA's current available resources, including the Y-50 and Y-49 imports, total 5180 MW. With 407MW to be added in the weeks ahead through the ten Powering Long Island 2002 turbines and the new 330MW cross-Sound cable that is currently being installed -- for a total of 737MW of new 2002 resources -- the available supply of electricity could reach 5917MW. LIPA's available resources could be diminished to about 5517MW if Y-50 can not be put back into service before summer's end.

Additionally, on an expedited basis LIPA will be placing 200MW of stand-by generation at substations around the Island. The additional generation will be provided by ten, 22MW generators mounted on flatbed trailers that can be linked to LIPA's transmission system via temporary substation connections. The stand-by generation should be available by July, and will be utilized only in extreme heat conditions.

"We're taking every action possible to get Y-50 back as soon as possible, and to repair the Y-49 problem so we can meet the peak summer demand supply requirements," said Mr. Kessel. "But the cable problems vividly demonstrate how vulnerable we are to electricity shortages due to mechanical failures and not necessarily a resource short fall. Additional on-Island generation is critical if we want to keep the lights on."

Conservation and efficient energy use will be essential during extreme heat conditions, especially if Long Island experiences a repeat of last year's record-breaking temperatures and humidity, according to Mr. Kessel.

The LICA includes electricity delivered by LIPA to all of its nearly 1.1 million customers, plus electricity LIPA delivers to the municipal utilities and industrial customers on Long Island who receive power from the New York Power Authority, and customers on Long Island who receive their electricity from Energy Service Companies (ESCOs).

LIPA is working with Consolidated Edison (ConEd), the New York Power Authority, KeySpan, the Public Service Commission, the Department of Environmental Conservation and others on a plan to expedite the repair of the Y-50 cable that was taken out of service last week due to a failure in the cable. The Y-50 cable can carry some 600MW of power, which is split 400MW for LIPA and the LICA and 200MW for ConEd's service area.

Working with ConEd since May 18^th, when the Y-50 cable went out of service, a restoration plan has been put in place, work crews and equipment have been mobilized, and authorizations have been secured from the state Department of Environmental Conservation and US Coast Guard for work to proceed on Davids and Pea Islands in the Long Island Sound. Additionally, some site work has been done to prepare the Y-50 cable and access locations for the complex repair work that must be performed in difficult physical locations. Because of the remote location of Davids and Pea Islands, a great deal of the work will require barges and other marine-borne support services. An exact repair schedule should be available within the next 48 hours, once a complete physical examination of the cable fault is completed and analyzed. A minor repair, however, could take between 30 and 45 days to complete. A more extensive repair could take much longer.

LIPA is also working with NYPA on the repair of a gas-operated transformer at the East Garden City terminus of the Y-49 cable. The transformer faulted on Saturday, May 25^th and required the temporary shut down of the cable. Working over the Memorial Day weekend, the nature of the fault was determined, the cable was tested and put back in service on Monday, May 27^th. Due to the transformer fault, the power supply available through the Y-49 is limited for the time being to 444 MW. LIPA hopes to have the cable back to full service in a couple of weeks.

"We're in the final stretch of adding some 737MW of new power resources to our supply," said Mr. Kessel. "Had we not pursued such an aggressive action plan to add 407MW of new on-island generating resources and a new cable link that will provide some 330MW of off-island resources, we would be in an extremely tight circumstance all summer long. We need these new resources for July and August. Hopefully, most of them will be available for the summer.

"While the new resources will help us meet demand, we urge customers, both residential and commercial, to conserve as much electricity as possible all summer long, especially during extreme heat waves," said Mr. Kessel.

Mr. Kessel underscored the key role Governor George Pataki and the New York Power Authority have played over the last two years in helping LIPA meet Long Island's growing demand for electricity. He thanked NYPA president and chief executive officer Eugene Zeltmann for getting NYPA's Brentwood turbine project on line in time for last August's heat wave. Mr. Kessel also thanked Mr. Zeltmann for lending key personnel to LIPA to advance the Powering Long Island 2002 Project, which will have ten new turbines on line this summer to meet demand. While the ten new turbines are being constructed by four different power developers, but NYPA has been assisting LIPA with project development, guidance and coordination.

"The fact of the matter is, we never would have been able to advance the turbine projects fast enough without the backing of Governor Pataki and without the day-to-day help of NYPA," said Mr. Kessel. "It can't emphasized enough that we could not have done this without the Governor's and NYPA's help."

"Under Governor Pataki's leadership, NYPA and LIPA have formed an extremely effective partnership on Long Island," Mr. Zeltmann said. "LIPA, of course, has the lead role. But the New York Power Authority is pleased to provide valuable support, and we appreciate Chairman Kessel's acknowledgement of our efforts on the Brentwood power plant and the ten new units."

Mr. Zeltmann noted that NYPA supplies the full output of its 135MW Richard M. Flynn Power Plant in Holtsville to LIPA for use by Long Island consumers and that LIPA also receives the 675 MW carried by NYPA's Y-49 cable under Long Island Sound. In addition, he said NYPA has cut peak demand for electricity on Long Island by more than 26 MW by investing more than $75 million in energy-efficiency projects at some 340 schools and public facilities. These projects save Long Island taxpayers nearly $12.5 million annually and cut annual greenhouse-gas emissions by almost 55,000 tons by permitting reduced power-plant operation.

Mr. Kessel noted that LIPA’s historic 20% rate reduction, which is going into its fifth year, the Island’s strong economy, the surge in home air conditioning use, and the use of more electric appliances in general is creating record electric usage on Long Island. On average, electricity demand on Long Island continues to grow by approximately 3.5% annually (adjusted for weather) in recent years, which is more than twice the statewide average of 1.7%. Demand is expected to continue to grow at least 2% per year for the next five years.

According to Kessel, LIPA has initiated numerous programs to upgrade various substations, distribution circuits, and other system components to improve the reliability of its transmission and distribution system. LIPA has spent over $585 million since 1998 to improve the reliability of its islandwide electric transmission and distribution system, and plans to spend approximately $313 million this year for capital improvements.

LIPA has also expanded and enhanced the energy conservation and efficiency programs that have been implemented in recent years under the Clean Energy Initiative (CEI). The CEI, a $170 million clean energy program devised by Governor Pataki, promotes energy conservation and efficient energy use through its LIPAedge program, which allows residential customers who own homes with central air conditioning systems to use a wireless Internet technology to control the thermostat on their home unit. It also allows LIPA to control the unit for a brief period during heat waves to save energy. LIPA plans to have some 18,000 LIPAedge units installed by this summer, which will held conserve some 18MW of power when fully operational. [To date, 15,800 have been installed, which could save 14.8MW.]

LIPA has also been working with large commercial customers who have their own back up generation on site, or could conserve significant amounts of power by cutting back operations during extreme weather. To date LIPA has signed up some 147MW of power reductions through its Peak Load Reduction Partnership and is seeking to achieve a goal of 177MW by mid-summer.

In an extreme heat condition, LIPA also projects that voluntary reductions promoted via public appeals and its "Watts Going Down" summer conservation promotion could save and additional 90MW of power.

Joining Mr. Kessel in announcing LIPA’s summer 2002 forecast, David Manning, Senior Vice President for Corporate Affairs, the largest investor-owned generator of power in New York State, commented on KeySpan’s Long Island-based electric power stations and turbine units that supply LIPA with the majority of its electricity supply.

"KeySpan has been preparing its generation plants by improving capacity, availability and performance over last year," said David J. Manning, KeySpan Senior Vice President of Corporate Affairs. "Our team of experts make sure the generation is working at maximum performance, and we have a track record and the reliability of the units to prove it. On-Island generation is critical to meet the need for Long Islanders. Recent mechanical failures at two electric power import lines heighten that need. KeySpan is committed to new, highly efficient state-of-the-art on-Island generation, the most reliable source of power."

"IBEW 1049 members are fully qualified and trained to handle the summer power needs of LIPA’s customers," said Ralph Ranghelli, Business Manager of International Brotherhood of Electrical Workers (IBEW) Local 1049. "Whether it’s summer, spring, winter or fall, IBEW 1049 members are cognizant of what havoc the weather can bring to our electric system. And I can attest to the fact that the extensive restoration training and refresher courses our members receive throughout the year prepares us for whatever Mother Nature sends our way."

"Long Island’s economy is robust and is recovering from the impacts of 9/11," said Mr. Kessel. "Businesses continue to expand. Homes are being improved and new ones are being built in record numbers. Coupled with LIPA’s historic 20% electric rate cut and the addition of pools, central air- conditioning systems and multiple window AC units, personal computers, faxes, cable boxes, answering machines and other modern home appliances, the demand for electricity continues to soar."

The Powering Long Island 2002 project developers have been working on their various projects, in some instances, since last spring.

Jeffrey A. Donahue, President and CEO of Transenergie U.S. and Chairman and CEO of the Cross-Sound Cable Company, LLC said, "We are pleased that the cable is now installed across Long Island Sound to Brookhaven, and we are working aggressively to finalize the remaining tasks related to the project. Presently, our focus is to ensure that the line [which will carry 330MW of power] will be in service as soon as possible with a target date of early July."

"FPL Energy is pleased to be working with the Long Island Power Authority to augment the supply of electricity for Long Island," said Chuck Muoio, FPL Energy Vice President of Development for the Northeast. "Our Bayswater Energy Center is scheduled to be operational this summer to provide needed power [44MW] for LIPA's customers on the Rockaway Peninsula."

According to Paul Barnett, Calpine Vice President of Business Development, "Calpine is very pleased to be part of Long Island's energy future. This year's upgrade of our existing Bethpage facility will provide many benefits to consumers throughout the region and enhance Calpine's growing presence in the state's power market." [Calpine's upgrade will provide 44MW to LI's electric supply.]

"With the growth of Long Island's population and economy, residents and businesses will face the possibility of severe energy shortages in the future unless new generating capacity is quickly constructed to keep the lights on. PPL Corporation is pleased to work with LIPA in providing Long Island residents with reliable power to meet their increasing energy needs," said Jim Potter, PPL Corporation's Long Island Project Manager. [PPL is constructing four turbines at two locations, Edgemere and Shoreham, that will produce a total of 159.8 MW of power, or 79.9 MW at each location.]

KeySpan is also constructing four turbines at two locations, Glenwood Landing and Port Jefferson, that will produce a total of 159.8 MW of power, or 79.9 MW at each location.

"To avoid brownouts and blackouts during extreme heat waves, it is vital that we all use our available electric resources wisely," Mr. Kessel urged.

To conserve energy and save money, LIPA recommends that customers: