Our Company 
news release

NYSEG Receives $1 Million from NYSERDA  for Compressed Air Energy Storage Project

Rochester, NY (April 5, 2011) – Is it practical to compress air, store it in a salt cavern and then use it as needed to generate electricity? NYSEG has received $1 million from the New York State Energy Research and Development Authority (NYSERDA) to help answer that question by evaluating the potential of an innovative, environmentally-friendly compressed air energy storage (CAES) facility in the Town of Reading (Schuyler County) about four miles north of Watkins Glen.

Last November, NYSEG announced the commencement of its Phase 1 engineering evaluation following the execution of 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.

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

“We are delighted that NYSERDA has chosen to support this exciting opportunity that could help us continue to meet the growing demand for electricity in an environmentally responsible manner,” 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.”

“This innovative project helps accelerate growth of the energy storage industry in New York State,” said Francis J. Murray Jr., president and CEO of NYSERDA. “Energy storage technology has the potential to help transform the renewable power generation sector, stabilize the power grid and decrease the use of fossil fuels in the state. We are pleased to partner with NYSEG to explore the possibilities of this exciting technology.”

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 – when excess wind generation is available it could be used to compress air at the CAES facility; when winds subside and wind generation diminishes, the CAES facility could generate electricity to help make up for the lost wind generation. 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 Phase 1 engineering evaluation, to be completed late this year, will test the technical and economic viability of CAES technology as a tool to support electricity transmission system stability and a catalyst for continued development of renewable energy.

If the engineering evaluation confirms that CAES is feasible and economical, NYSEG would seek approval from state and federal agencies to proceed with construction of the plant. If NYSEG decides to build the plant and receives all necessary approvals, the facility would be on line by late 2014 or early 2015.

Under the DOE agreement, NYSEG will share all development and operational experience so it can be used for possible future development of similar facilities.

###

About NYSEG and Iberdrola USA: NYSEG, a subsidiary of Iberdrola USA, serves 878,000 electricity customers and 261,000 natural gas customers across more than 40% of upstate New York. Iberdrola USA, a subsidiary of global energy leader Iberdrola, S.A., is an energy services and delivery company with more than 2.4 million customers in upstate New York and New England. We are a team of dedicated individuals working as one to deliver value to our customers, employees and shareholders. By providing outstanding customer service and exceptional reliability, while holding safety and the environment in high regard, we aspire to be a world-class energy company. For more information, visit www.nyseg.com and www.iberdrolausa.com.

About NYSERDA: NYSERDA offers innovative programs, technical expertise and funding to help consumers increase energy efficiency and save money while helping businesses create clean energy solutions. NYSERDA’s professionals help New Yorkers reduce energy consumption, increase the use of renewable energy, protect our environment and create clean energy jobs. A public benefit corporation, NYSERDA has been developing partnerships to advance innovative energy solutions in New York since 1975. For more information, visit www.nyserda.org.