LONG ISLAND POWER AUTHORITY & NATIONAL GRID ANNOUNCE AGREEMENT

(The following is a reformatted version of a press release
issued by The Long Island Power Authority and received via
electronic mail. The release was confirmed by the sender.) 
October 2, 2012 
Long Island Power Authority & National Grid Announce Agreement
on Power Supply 
Agreement includes lower costs, greater transparency, and the
ability to repower and improve the environmental performance of
older power plants 
Uniondale, N.Y.-- The Long Island Power Authority (LIPA) and
National Grid announced that they have agreed to a new Power
Supply Agreement (PSA) for the purchase of up to 3,700 megawatts
(MW) of generation produced by National Grid-owned generating
facilities, on improved terms and conditions (the Agreement). 
The new Agreement would give Long Island better options for
updating and modernizing the aged National Grid power plants
through “repowering” existing facilities while reducing energy
costs, further improving environmental performance, and removing
uneconomic generation from the Agreement. 
“I would like to thank the team at LIPA and National Grid for
negotiating a progressive and state-of-the art agreement that
would result in significant savings to our customers over time
and provide the opportunity for National Grid to potentially
repower older, inefficient generation. Next year when the
contract takes effect, and if the economics prove out, we can
take a look at next steps for repowering” said LIPA Board
Chairman Howard Steinberg. 
The Agreement would give LIPA rights it doesn’t have now to
decide on the future of these generating units, which is an
important piece of the continuing effort to enhance the overall
efficiency of Long Island’s power supply resources. The
Agreement sets forth improved terms, conditions and rates for
LIPA’s purchase of electricity produced by the power plants
owned by National Grid on Long Island. LIPA would continue to
purchase power from National Grid for a maximum term of 15
years, with an option to terminate the agreement after 12 years.
The Agreement would contain a pricing formula similar to the
current PSA, at rates approved by the Federal Energy Regulatory
Commission. 
The Agreement would result in an immediate price reduction
relative to the current agreement, associated with LIPA
exercising its options in the future to repower or remove older
generation from the contract which would be guaranteed for the
first five years, resulting in an immediate price reduction
amounting to nearly $10 million through 2017. Current PSA costs
are approximately $450 million annually, comprised of $270
million in payments to National Grid for operating and
maintaining the generation fleet, and $180 million in property
tax payments to localities related to PSA assets. 
LIPA’s Chief Operating Officer, Michael D. Hervey, said, “The
Agreement would achieve the goals of better controlling costs
for customers, securing immediate on-island energy requirements,
driving more environmentally-friendly performance and solutions,
and increasing the transparency of operations associated with
the generation units. However, this is only part of the
equation, as LIPA must still secure new generation resources,
including renewables, in order to meet its customers’ needs, as
well as increase participation in its efficiency programs.” 
“Following a lengthy and comprehensive negotiation process, LIPA
has positioned itself to further develop its energy portfolio
with an emphasis on new and cleaner more efficient generation,
improved energy efficiency, and new renewable energy resources,
that together would provide significant economic value and
environmental benefits for our customers,” said Paul A. DeCotis,
Vice President of Power Markets at LIPA. 
“National Grid is pleased we were able to reach agreement with
LIPA on improved terms and conditions related to the existing
PSA,” said Tom King, National Grid’s Executive Director in the
US. “The Agreement provides benefits for LIPA’s customers and
the economy of Long Island. We look forward to working with
LIPA, as well as the communities we jointly serve, to make Long
Island’s energy future safe, secure, and sustainable, while
keeping jobs on Long Island. Additionally, I want to thank the
LIPA and National Grid teams for achieving this innovative
Agreement and thank our power plant employees for their
continued dedicated service.” 
The Agreement establishes new procedures to evaluate the
feasibility of a potential repowering of the Port Jefferson,
Barrett, and Northport steam plants, as well as the Barrett and
Holtsville combustion turbine sites. Any subsequent repowering
would be based on the results of an economic study and subject
to a mutually agreeable power purchase agreement, which would be
subject to a separate environmental review and LIPA action. 
Before the Amended and Restated PSA between LIPA and National
Grid becomes effective, regulatory approvals are required from
the New York State Attorney General, the New York State Office
of the State Comptroller, and the Federal Energy Regulatory
Commission. These approvals are expected to be secured over the
next several months. 
Contact:
Mark Gross
Office: 516-719-9892
Email: media.relations@lipower.org 
Contact: Wendy Ladd
Office: 516-462-0862
Email: wendy.ladd@us.ngrid.com 
(bjh) NY 
#<873920.660640.3.1.0.0.76>#
 
 
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