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Government Affairs Albany Update

November 30, 2001

Public Service Commission Approves Niagara Mohawk - National Grid Merger

At their November 28th meeting, the Public Service Commission (PSC), approved the merger of Niagara Mohawk Holdings, Inc., Niagara Mohawk Power Corporation, National Grid Group plc and National Grid USA. Under the merger, National Grid will purchase 100% of Niagara Mohawk's common stock to form the ninth largest electric utility in the United States. The merger will result in a service territory of 29,450 square miles in four states serving 3.2 million customers. Its combined annual operating revenues will be $6.7 billion.

Specifics of the merger include:

The agreement saw the participation of 36 different parties over an 8 month period. The merger still requires approval of the Securities and Exchange Commission under the Public Utility Holding Company Act.

Astoria Power Plant Receives Article X Permit; Other Projects under Article X

On November 20th, The New York State Board on Electric Generation Siting and the Environment granted developer SCS Energy a permit to construct and operate a new 1,000 megawatt electric generating facility in Astoria, Queens County. SCS Energy filed its application to build the Astoria Energy project, under Article X of the Public Service Law, on June 19, 2000.

The plant will be a natural gas-fired combined-cycle generating facility located on a 26 acre oil terminal in Astoria. The project site is zoned for heavy manufacturing and has existing infrastructure that will be refurbished to provide the facility with approximately 12.6 gallons of low sulfur distillate oil fuel. The plant will use oil as a backup fuel for electricity generation.

The plant will sell its 1,000 megawatt output into New York's competitive wholesale market. The permitting of Astoria brings the total number of plants permitted under the Article X process to five (5). The other four (4) projects, and project sponsors, that have received permits and their estimated in service dates are:

Athens (PG & E) - 1080 MW - on line by 3rd quarter 2003.

East River Repowering (Con Ed) - 360 MW - on line 4th quarter 2004.

Heritage (Sithe) - 800 MW - on line 4th quarter 2004.

Ravenswood (KeySpan) - 250 - on line by 2003.

According to the records of the Public Service Commission (PSC) the following four (4) projects have received compliance determinations and are nearing certification and permitting.

The projects are as follow:

Bethlehem (PSEG) - 750 MW - decision by 3rd quarter 2002 (estimated).

Bowline 3 (Mirant) - 750 MW - decision by 4th quarter 2001 (estimated).

Poletti Station (NYPA) - 500 MW - decision by 2nd quarter 2002 (estimated).

Ramapo (ANP) - 1100 MW - decision by 1st quarter 2002 (estimated).

The earliest in service date for the above referenced four (4) projects are in the 2nd and 3rd quarters of 2004.

Five (5) other projects have submitted applications under Article X and are beginning the process under the application phase:

Brookhaven in Suffolk County by ANP
Orion Astoria by Orion Power in Queens County
Sunset Energy in Brooklyn by SEF
Torne Valley in Rockland County by Sithe
Wawayanda in Orange County by Calpine

There are also 9 in the stages prior to submitting an application. For more information on these projects or on the Article X process access the Public Service Commission's web site at: http://www.dps.state.ny.us/articlex.htm

This web site provides a chart of all Article X projects and a case by case study of each project with links to the developer's home page.

Council Seeks Party Status in Two New Cases for Generation

The Business Council is seeking status as an "intervenor" in two more power-plant application cases pending before the state Siting Board. The Council has filed for status in an application by Wawayanda Energy Center to site a 540-megawatt natural gas-fired plant in Orange County, and in an application by Astoria Generating Company to site a 1,842-megawatt natural gas-fired plant in Queens.

The Business Council is seeking to join these proceedings to advance broad economic arguments about the need for adding electricity-generating capacity in New York State. Our goal is to ensure the continued reliability of New York's electricity system, and foster the competition needed to drive down New York's electricity costs.

Earlier this year, The Business Council sought and received intervenor status in two other cases: Brookhaven Energy's proposal for a 580-megawatt plant in Suffolk County, and PSEG Power New York's proposal for a 750-megawatt plant in Bethlehem.

Since then, The Public Policy Institute, has published a report on the economic arguments on increasing capacity in New York, and submitted it as part of testimony in the Bethlehem case.

Article X of the state Public Service Law, which outlines how the state will approve or reject proposals to build new plants, allows interested parties to seek status as "intervenors." Intervenors become official parties in the Article X hearing process, and can submit testimony, analysis, and research in support of, or in opposition to, the proposed plants.