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LIPA Releases Levitan Report on Broadwater

Uniondale, NY – July 31, 2007 – The Long Island Power Authority (LIPA) today released a 176-page report prepared by Levitan & Associates, Inc., of Boston on the proposed Broadwater LNG project. Entitled: “Broadwater LNG: A Technical Assessment,” the report evaluates the potential economic benefits of the Broadwater project for Long Island, New York City, and the rest of New York State. It also provides an overview of the technical, environmental and safety issues associated with the project.

The report does not take a position on the Broadwater project, and neither has the LIPA Board of Trustees since LIPA does not have any regulatory authority over the project.

“The Levitan Report provides those with an interest in the project with a useful evaluation of the potential economic value of the natural gas that the Broadwater project could supply for use by either natural gas customers or for the generation of electricity,” said LIPA CEO and President Richard M. Kessel. “The Broadwater project has stimulated a great deal of discussion. We are hopeful that the report will help facilitate that discussion as the regulatory review of the project moves forward.”

The key energy market economic observations made in the Levitan Report include the following:

• Expressed in current dollars, the total economic value of the project in terms of reduced energy costs could be $14.8 billion over 10 years.
• Of that $14.8 billion, New York City energy users could derive $6.3 billion in benefits; energy consumers in the rest of New York could see $5.8 billion in savings; and Long Island’s natural gas and electric consumers could get only $2.7 billion in benefits.
• Operating at 1Bcf per day (Billion cubic feet), natural gas prices in New York would be reduced up to 17%.
• While Broadwater is not needed at this time to ensure reliable energy supply for Long Island and New York City, the project would meet expected future increases in demand and help reduce, and perhaps eliminate, natural gas price volatility in the years ahead by eliminating delivery bottlenecks to the market.
• Absent Broadwater, existing pipelines serving New York and Long Island could continue to be expanded and new projects, such as Islander East, have been proposed to help meet future natural gas demand. But these alternatives do not offer economic benefits similar to Broadwater.
• Reduced natural gas prices would benefit consumers who use natural gas for residential and commercial purposes and electric consumers as well since natural gas is used to generate electricity on Long Island, in New York City and around the state.

“The Broadwater project is in the process of being reviewed by the appropriate regulatory entities that can either approve or reject the proposal,” said Mr. Kessel. “And, while the project’s economic benefits are significant, it would seem that because of its location Broadwater should consider how it can provide Long Island with more host community benefits should the project go forward.”