Freeport Progress Toward Interim Power Supply Agreement: LIPA would Supply Electricity Pending Commercial Operation of New Generation at Freeport Power Plant 2

(Freeport, New York, March 18, 2002) - Freeport Electric Department reports that negotiations between the Village and LIPA are proceeding productively toward an interim power supply agreement. In addition, the Village has been coordinating with NYSDEC Region I regarding clarification of technical issues necessary for this agreement to be concluded without significant financial penalty to Village ratepayers. Under this agreement, LIPA would supply electricity to the Village electric utility until the new generation project at Power Plant 2 is constructed and in commercial operation. The LIPA supplied electricity would replace Village generation of electricity previously supplied from the existing diesel engine units at Power Plant 2.

"We initiated this agreement with LIPA to address the concerns of our neighbors and the community while we pursued development of new generation at Power Plant 2," stated Hubert Bianco, Superintendent of Electric Utilities. "Negotiations with LIPA have been very productive and positive and we are looking forward to completion of this agreement shortly."

"Because we are always concerned about potential impacts to our customers, the interim power agreement cannot have any negative effect on Freeport ratepayers," Bianco added. "Therefore, we are also coordinating with NYSDEC regarding the acceptable methodology to calculate Emissions Reduction Credits (ERCs) which can significantly affect the economics of the proposed new generation. NYSDEC Region I has been extremely cooperative in working with us on this technical issue."