LIPA Releases 1st Comprehensive Energy Plan for LI

Outlines Region’s Electric Energy Priorities for Next Decade
Provides Framework for Wide Range of Crucial Decisions

Public Comment Sessions Will Be Scheduled

Hauppauge, NY – March 9, 2004 – Long Island Power Authority (LIPA) Chairman Richard M. Kessel today released the Authority’s first Draft Final Report of its Energy Plan 2004-2013 as the focal point of his annual address on energy issues before the members of the Hauppauge Industrial Association at the group’s annual luncheon.

The five-volume, 727-page report, the culmination of 16 months of development, will be available for a month-long period of public review and comment before it is presented to LIPA’s Board at its April 22nd meeting.

“LIPA’s Energy Plan is a dynamic, forward-looking assessment of Long Island’s electric needs and will serve as a guide for crucial decisions that must be made to ensure that our region has an adequate, reliable, safe, environmentally responsible and reasonably priced supply of electricity to meet our ever-growing customer demand,” said Mr. Kessel.

“It’s a flexible plan that builds on the many successes LIPA has achieved during its first five and a half years as the region’s non-profit, municipal retail electric utility, and sets out five extremely important interlocking strategic objectives that will guide LIPA’s short- and long-term decision- making process,” said Mr. Kessel.

Mr. Kessel said that the plan represented “Long Island’s first-ever comprehensive energy plan.”

LIPA’s Energy Plan, according to Mr. Kessel, concurs with and supports the findings and recommendations of the New York State Energy Plan, which was fostered at the direction of Governor George Pataki, and amplifies the basic strategic goals set forth by the Governor when LIPA became Long Island’s retail electric utility in May, 1998. At the same time, LIPA’s Energy Plan complies with all of the state and federal regulatory requirements that govern the operation of retail electric utilities.

LIPA’s initial draft Energy Plan was first released in October, 2002 as a three-volume, 230-page assessment of the region’s electricity needs for the years 2002 to 2011. In January, 2003 a series of joint hearings were initiated in cooperation with the Sustainable Energy Alliance (SAE) to receive public input on LIPA’s draft plan and a Citizens Energy Plan that had been organized and issued by SEA in 2003. Six joint hearings were conducted by LIPA and SEA in January and February of 2003 in the Rockaways, and Nassau and Suffolk counties. In fact, Volume Four of LIPA’s Draft Final Energy Plan provides 101 pages of responses to questions and issues raised by people who either attended the public hearings or submitted written questions via mail or e-mail as part of the public review process that remained open until March 12, 2003.

“The public dialogue has been fantastic,” said Mr. Kessel. “We’ve received extensive input from the public on our initial draft document, as well as the energy plan organized by SEA. As a result, we took the SEA plan and the public’s comments to heart and developed what I believe is a balanced, inclusive energy plan. We’ve also adopted many of the proposals recommended by SEA and the public.”

Mr. Kessel noted that the public will be provided with the opportunity to comment on the Draft Final Report of the Energy Plan at sessions that will be held in both Nassau and Suffolk counties during the week of March 22nd. Dates, times and locations will be announced shortly. In the meantime, persons interested in reviewing the plan can log on to LIPA’s Web site at www.lipower.org.

Key Strategic Objectives
The Draft Final Report of LIPA’s Energy Plan covers the years 2004 to 2013 and sets out five specific strategic objectives:

• Enhance reliability of the bulk power system;
• Enhance reliability of the distribution system;
• Minimize customer rates and increase customer satisfaction;
• Promote a healthy environment; and
• Position LIPA to respond rapidly to change.

As noted in the document: “LIPA’s energy plan recognizes the strong interrelationship of delivery infrastructure and energy sources. LIPA utilizes a flexible approach to investing in the next resource option, whether that option is transmission, demand-based, distribution, renewable energy resources, or traditional generation resources, because it is a prudent course of action to maintain many options for as long as possible before full commitment so that mid-course corrections are possible.”

The Energy Plan articulates in detail LIPA’s oft-stated philosophy of meeting Long Island’s energy needs through a wide range of energy efficiency and conservation programs coupled with developing links to off-island electricity supplies while increasing on-island generating resources with a mix of new generation – both traditional and renewable technologies such as wind power – and the potential of re-powering some existing base-load generation assets.

The plan also underscores the need to continue to utilize state-of-the-art technology to upgrade LIPA’s electric transmission and distribution system to enhance its reliability and to eliminate bottlenecks that can impede the efficient utilization of the available electric supply. Upgrading LIPA’s transmission and distribution system will also enhance both wholesale and retail competition on the Island.

“LIPA’s Energy Plan is balanced, flexible, realistic, responsible and inclusive,” said Mr. Kessel. “It balances the need to provide a safe, reliable and cost efficient supply of electricity in an environmentally and economically responsible manner. It’s flexible enough to allow LIPA to pursue a variety of supply acquisition strategies that will ensure an adequate supply of electricity well into the future. It’s realistic in that the plan takes into account the significant uncertainties that exist in today’s energy world due to a range of domestic and international influences. And it’s responsible in that it complies with all state, regional and federally mandated planning and operating criteria for electric transmission and distributions systems, and it supports with the State’s Energy Plan as well.”

Fundamental Approach for the Future
The Energy Plan’s fundamental approach to maintaining a safe, reliable, environmentally friendly and economic system for the future targets the following areas:

• Continued focus on energy efficiency and load management to manage growth in both energy and peak demand;
   
• Invest in clean renewable generation sources;
   
• Expansion of off-island resource capacity and supply diversity through increased or enhanced transmission ties;
   
• Improve existing and adding new on-island generation resources;
   
• Continued expansion and modernization renovation of the distribution and transmission systems; and
   
• Maintain a state of readiness to allow quick and effective response to unexpected system events or changes in the industry.

LIPA’s Energy Plan evaluated the region’s electricity needs through the prism of rapid change in the energy industry and the uncertainties of the post-California energy crises, post-Enron collapse and post-9/11 economic and international environment, and the 8/14/03 blackout.

Specific Short- & Long-Term Goals

• The continuation of LIPA’s Clean Energy Initiative (CEI) – fostered by Governor George Pataki – because energy conservation and demand-side management programs play a key role in the overall energy strategy for Long Island. LIPA’s portfolio of nine Clean Energy Programs commits a total of $355 million over a ten- year period (1999-2008) for energy efficiency, load management and renewable energy resources. And LIPA will also select contractors to implement a range of energy efficiency programs that will yield 75 megawatts of savings over a ten-year period.
   
• Energy Supply Initiatives focus on both short- and long-term needs. Under current supply requirements, LIPA forecasts a need to add some 59 megawatts of new on-island resources by summer 2004 to help meet supply and contingency requirements.
   
• The long-term need, as reviewed in the Energy Plan can be met with a mix of new on-island base-load units that will add some 160 megawatts of combined-cycle generation by summer 2005 and as much as 600 megawatts of base-load generation by summer 2007. The option to re-power existing base-load units owned by KeySpan will also continue to be explored along with additional or enhanced cable links to mainland supply sources.
   
• System Reliability requires a number of initiatives to enhance the Transmission and Distribution systems. LIPA has already completed a number of key projects over the last five years that have improved the ability of the bulk transmission system to reliably deliver electricity to high-demand areas on Long Island, even under extreme weather conditions.
   
• In similar fashion, LIPA has also undertaken an aggressive program to enhance the reliability of the Island’s distribution system. Numerous substations have been upgraded. Thousands of pole top transformers have been replaced. Hundreds of miles of line circuits have been inspected for potential failures and tree trim maintenance has been performed. Advanced technology is also being used in the distribution system to help identify the location of a service disruption to hasten a repair or to prevent a service disruption by re-routing electric service around the line failure.

Plan Details
LIPA has organized the Energy Plan and supporting documentation in a five-volume set as follows:

• Volume 1, Strategic Plan, which provides a description of LIPA’s Energy Plan for the period 2004 through 2013; 88 pages;
• Volume 2, Energy Primer, which offers an overview of the current state of the energy industry and a background on LIPA; 66 pages;
• Volume 3, Technical Report, which provides detailed information about the planning process and the planning methodologies employed to create the Energy Plan; 86 pages;
• Volume 4, Response to Public Hearing Comments, which summarizes the comments received during the Draft Energy Plan public hearing process and provides LIPA’s responses to commentators; 101 pages; and
• Volume 5, Appendix, which provides additional details on studies, methodogies and criteria used in the planning analysis; 386 pages.

“The Draft Final Energy Plan is a blueprint for the future that will change as circumstances change within the energy industry and as the needs of LIPA’s electric customers continue to change and grow,” said Mr. Kessel.

LIPA, a non-profit municipal electric utility, owns the retail electric system on Long Island and provides electric service to nearly 1.1 million customers in Nassau and Suffolk counties, and the Rockaway Peninsula in Queens. LIPA does not own any electric generation assets on Long Island, and it does not provide natural gas service.

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NOTE: The five-volume Energy Plan can be downloaded from LIPA’s Web site at www.lipower.org.