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NYSEG TO STUDY FEASIBILITY OF ENVIRONMENTALLY-FRIENDLY COMPRESSED AIR ENERGY STORAGE TECHNOLOGY FOR SCHUYLER COUNTY

Rochester, NY, November 30, 2010 – NYSEG today executed a $29.6-million Cooperative Funding Agreement with the U.S. Department of Energy (DOE) as part of the agency’s Smart Grid Demonstration Program. As a result, NYSEG launched a comprehensive feasibility study of an innovative, environmentally-friendly compressed air energy storage (CAES) facility for a site on the west side of Seneca Lake, north of Watkins Glen.

How Compressed Air Energy Storage Works
Compressed air would be pumped into a depleted underground salt cavern when low-cost, off-peak electricity is available to power the compressors. The compressed air could then be released to spin a turbine and generate electricity as needed, particularly during times of high customer demand.

 “This is an exciting opportunity with some out-of-the-box thinking that could help us continue to meet the growing demand for electricity,” said Mark S. Lynch, president of NYSEG and RG&E. “Storing electricity in the form of compressed air for use at times of peak demand has considerably less impact on the environment than operating fossil-fuel generators to meet peak demand.”

Supporting Renewable Energy and System Reliability
CAES has the capability to match clean, off-peak renewable energy with peak load requirements and can reduce the need to operate fossil fuel-fired generating units during peak load periods.

In addition, because of its quick startup capability, the proposed facility could provide valuable power grid stability by leveling out rapid changes in generation from nearby wind farms. Further, with the continuing development of wind energy in central and western New York, the need for fast-reacting grid stabilizing technologies is growing.

NYSEG’s proposed facility could operate for up to 16 hours using the stored compressed air.

What’s Next 
The feasibility study, to be completed late next year, will evaluate the technical and economic viability of CAES technology as an integral part of promoting stable electricity transmission system operation and the continued development of renewable energy.

If the study confirms that CAES is feasible and economical, NYSEG would seek approval from state and federal agencies to proceed with construction of the plant with a target in-service date of late 2014.

Under the agreement with DOE, NYSEG is required to share all development and operational experience with the industry so that this technology and the lessons learned can be available to promote future development of similar facilities.

About NYSEG: NYSEG is a subsidiary of Iberdrola USA. NYSEG serves 873,000 electricity customers and 259,000 natural gas customers across more than 40% of upstate New York. Providing outstanding customer service and meeting our customers’ energy requirements in an environmentally-responsible manner, NYSEG is a valuable asset to the communities we serve. For more information, visit www.nyseg.com.

About Iberdrola USA: Iberdrola USA, a subsidiary of global energy leader Iberdrola, S.A., is an energy services and delivery company serving about 3 million customers throughout upstate New York and New England. For more information about Iberdrola USA, visit www.iberdrolausa.com.