October 2003

Village Counters DEC Recommendation to Prematurely Close Power Plant 2: Village Agrees to Decommission Old Diesels When New Turbine Project Operates

(Freeport, New York, October 7, 2003) - Protecting the interests of Village residents, businesses and ratepayers for reliable and cost effective electricity supply, the Village of Freeport is immediately pursuing an administrative response countering the September 29, 2003 Hearing Report issued by the NYS Department of Environmental Conservation. Administrative Law Judge Molly T. McBride has recommended that the existing diesel generators at Power Plant 2 be permanently decommissioned on November 30, 2003 prior to operation of the new turbine generator project.

"The burden of proof rests with DEC," responded Mayor William Glacken, "yet it failed to demonstrate how keeping the diesels operable but inactive would harm the environment." The two diesels have been maintained as operable, but inactive, since March of 2002 when an agreement was brokered between the Village and LIPA. Under that agreement, Power Plant 2 diesels would only be activated if directed by the New York Independent System Operator to meet emergency demands or conditions or to meet emergency conditions affecting the Freeport Electric System, as was done during the recent blackout on August 14th.

"Permanent closure of the diesels before replacement capacity of the new turbine generator is completed and in commercial operation, however, will result in significant financial risks and penalties to the Village ratepayers, even if the diesels are not actually operated," added Hubert Bianco, Superintendent of Electric Utilities. "The recommendations of ALJ McBride appear to have been made without regard for either the August 14th Northeast Blackout, nor the need for contingency and emergency planning in anticipation of recent Hurricane Isabel. These were both significant events that fell within the timeframe of the continuing Title V hearing and preparation of that report."

"The August 14th blackout proved it is necessary for the Village to maintain emergency capacity for catastrophic circumstances when so directed by NYISO. Even with the PP2 diesels, Freeport instituted rolling blackouts to manage electric load for the more than 32 hours it took to restore connection to the LIPA system," he continued. "Emergency planning for Hurricane Isabel was even more difficult because restoration of power following a storm event can take weeks compared to the days needed following the blackout. We were extremely fortunate that Isabel became a 'non-event', but it was essential to know that the PP2 diesels were there if needed."

Progress on the turbine generator project at Power Plant #2 continues, as the PCB remediation is progressing. Certain areas of PCB remediation have been completed to allow aspects of the turbine project to proceed. Piles have been installed and foundations are being poured. Consumers will soon notice a large crane on site, awaiting installation of the turbine generator, emissions controls (SCR) and stack. Continuing coordination with DEC on the PCB remediation project to address what construction activities may proceed simultaneously with the PCB program has enabled the Village to make better progress than anticipated. The current schedule for completion of the Village's LM6000 calls for April 2004 operation, but may need to be slowed slightly to coordinate construction of the LIPA unit at the same site. "The need for additional energy is a Long Island Problem," said Mr. Bianco, "and by having both the developer's unit and the Freeport Unit available by June of 2004 we are helping to address the needs of not only Freeport, but all of Long Island."

First of the New Turbine Engines Arrives in Freeport: Village Expects New Power Plant 2 Generator to be Online by Spring 2004

(Freeport, New York, October 2003) - The first of the two new dual-fuel turbine generators to be installed at Power Plant 2 was recently delivered to the Village by barge. The General Electric LM-6000 components were off-loaded from the barge to flatbed trucks and delivered to Power Plant 2. The site for the new 47-megawatt turbines is being prepared with separate concrete foundations designed to hold each of the two 90-ton generators. The water piping, electric conduits and cables will be installed next.

Freeport's new generator is expected to be in operation by Spring of 2004. The Village's electric utility will own and operate one of the planned turbines, which will provide up to 37 megawatts of power to Village customers and sell 10 megawatts of power to LIPA for use by Long Island residents for a guaranteed 30 years. The second 47-megawatt generator will be owned and operated by an independent developer, Equus Power I, LP, which is in negotiations to provide electricity to LIPA customers. The second generator is expected to go online by June 2004. The installation of the new generators at Power Plant 2 will enable the Village to continue its century-long tradition of providing safe, reliable, affordable electricity to Freeport businesses and residents for many decades to come.