NEW YORK APPROVES TRANSFER OF SENECA GAS STORAGE FACILITIES

(The following is a reformatted version of a press release
issued by State Of New York, Public Service Commission
and received via electronic mail. The release was confirmed by
the sender.) 
SALE OF NYSEG ASSETS DIRECTLY BENEFITS CUSTOMERS 
-  $31.6M Earmarked for NYSEG Ratepayers to Offset Future Gas
Rate Increases - 
Albany, NY-02/17/11-The   New   York   State  Public  Service
Commission (Commission)  today  approved  the transfer of the
Seneca gas storage, West Lateral  and  East  Pipeline
facilities from New York State Electric & Gas Corporation
(NYSEG)  to a group of investors led by Inergy Midstream, LLC,
for $65 million. With this decision, ratepayers will receive
$31.6 million of net  present  value  after  taxes  and other
costs are deducted to help reduce future delivery rate
increases. 
The lower  operating  costs  resulting from this transaction
will have the effect  of  reducing  distribution  rate
increases  for all firm NYSEG gas customers.  Based on a
compliance filing, effective 60 days after the order
is issued,  the  Commission  expects  that  the  combined  net
benefit to customers  will significantly reduce the size of the
overall rate increases imposed  in  the  second  and third year
of NYSEG’s gas operations’ current rate  plan.  While the exact
decrease has not yet been determined, it could amount  to  an
overall bill reduction of $5 million annually, depending on
the time period over which the gain will be returned to
customers. 
The  sale  of  these  assets  has been under review for nearly
one year. In petitions  filed  on  March  31,  2010,  NYSEG  and
the Inergy affiliates - including  Arlington  Storage  Company,
LLC and Inergy Pipeline East, LLC - requested  approval for the
sale of NYSEG’s Seneca storage facility, a 1.45 Bcf (billion
cubic feet) working capacity underground storage facility; the
West Lateral, a gas transmission line connecting the Seneca
facility to the interstate  gas transmission pipeline owned by
Dominion Transmission, Inc.; and  the  East  Pipeline, a gas
transmission line running from the Dominion pipeline to
Binghamton, Broome County. 
Inergy  and its affiliates are in the propane supply, liquid
petroleum, and natural  gas  storage business. In New York,
Inergy Storage is the owner of two  storage  facilities,  with
a combined capacity of 4.7 Bcf, located in Steuben  County.
Inergy  Storage’s  parent,  Inergy Midstream, is also the
parent  of  Central  New  York  Oil  and  Gas, LLC, which owns
the 26.5 Bcf capacity Stagecoach Storage Facility located in
Owego, Tioga County, on the New York-Pennsylvania border. 
Inergy,  L.P.,  the  parent of the Inergy affiliates, is also
the parent of U.S.  Salt,  LLC,  which  owns  the  property
where the Seneca facility is located  and  the  underlying
cavern  where  the  storage  operations  are conducted.  NYSEG
currently leases the storage cavern itself from U.S. Salt
for  a  term  ending in 2017, subject to a right to renew for an
additional 10-year period.  The cavern’s current working
capacity of 1.45 Bcf consists of  0.8  Bcf  reserved for NYSEG’s
gas customers and 0.65 Bcf available for NYSEG’s competitive
market operations. 
The  Commission’s  decision today, when issued, may be obtained
by going to the   Commission   Documents  section  of  the
Commission’s  Web  site  at www.dps.state.ny.us  and  entering
Case  Numbers 10-G-0146, 10-M-0143, and 95-T-0248  in  the
input box labeled “Search for Case/Matter Number.” Many
libraries  offer  free  Internet  access.  Commission  orders
may  also be obtained from the Commission’s Files Office, 14th
floor, Three Empire State Plaza, Albany, NY 12223 (518-474-2500). 
(bjh) NY 
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