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Government Affairs Albany Update

December 20, 2001

2002 Draft Legislative Program

Member comments are sought on the Draft of the 2002 Legislative Program now posted on The Business Council's web site.

The program is the compilation of the priorities and positions of each of our Committees and Councils. The beginning of the program identifies top priority issues for The Business Council, followed by a new section called "New York City Recovery Program". There is also a new section entitled "U.S. Border and Trade".

There are dozens of new initiatives identified by our Committees and Councils. We ask that you review the program closely.

PSC Approves Temporary Rates for NYSEG

At its meeting in New York City on December 19th the Public Service Commission (PSC) approved a temporary electric rate decrease for customers served by New York State Electric and Gas (NYSEG). This temporary rate decrease will reduce bills by about 13% or $205 million overall. The PSC ordered NYSEG to file new tariffs for the temporary rates that will take effect by late January 2002. Based on the record developed to date on the Price Protection Plan proceeding (NYSEG's rate proposal), the PSC claims the temporary rates are an effort to balance the economic interest of customers and the compnay. The actual effective date of the new rates will be contained in the Commission's written order.

NYSEG is currently seeking Commission approval for its Price Protection Plan that would cut rates and freeze them through 2007. The original plan was filed with the Commission on March 14, 2001 and modified on August 3, 2001. In its ruling on December 19th, the PSC is ordering temporary rates for NYSEG until a final determination in this rate proceeding is reached.

NYSEG responded to the decision by claiming it was unlawful and that the PSC was reneging on a contract by arbitrarily reducing NYSEG's electric delivery rate on a temporary basis. NYSEG claims that it has complied with a 5 year rate agreement and contract signed on October 9, 1997 and effective until March 2003 under which they sold their generation and have attempted to become a regulated delivery company without generation. Further, NYSEG stated; "The company will study the decision and take any necessary steps to appeal the PSC's unlawful action."

Millennium Pipeline Approved

The Federal Energy Regulatory Commission (FERC) gave interim approval for a plan for the Millennium pipeline on December 19th in Washington, D.C. The pipeline, which will be constructed in New York State by the Columbia Gas Transmission Corporation, will enter New York State from U.S.-Canada border near Lake Erie. The pipeline will traverse 12 counties along the southern tier, cross the Hudson River, and terminate in Westchester County where it will hook into the Consolidate Edison (and other systems') pipeline. The U.S. portion of the pipeline will be 424 miles and carry 700 million cubic feet of natural gas daily. Estimated cost of the project is $683.6 million.

In its approval, the FERC directed the developers to meet with local leaders to come up with acceptable compromise route through Mount Vernon. If a route is not agreed upon within 60 days, the commission will determine the route. The pipeline has been the object of significant public scrutiny that has forced the developers to alter their route several times.

The FERC sited the growing need for natural gas in the region as a major factor in the approval of the pipeline. The FERC stated that it is "our overriding responsibility to insure the timely development of an adequate energy infrastructure, particularly in large employment and population centers as New York City."