A Breath of Fresh Air – Most people know that natural gas heat is a smart way to add warmth and value to their homes. It’s efficient, reliable and easy to maintain. But, best of all, natural gas is the cleanest burning fossil fuel available – and a cleaner fuel can mean healthier homes for our families, as well as a better environment for everyone. New technologies using natural gas, such as residential fuel cells, may soon be providing even more clean, energy-efficient benefits to homeowners.

The Right Choice for Future Generations – KeySpan has always been committed to supporting and enriching the communities we serve. Protecting the environment is a natural extension of that commitment. As both the fourth largest gas distribution company in the United States and the largest investor-owned electric generator in New York State, we are keenly aware of our ability to impact the environmental quality of life in our region. Employees at KeySpan work with local and national organizations to improve the quality of our beaches, waterways, woodlands, drinking water supplies and the air we breathe. Recognizing that future challenges will require creative solutions, KeySpan will build on this tradition of environmental leadership.

Powering Up With Natural Gas – Over the last decade, there has been a dramatic shift in the way our country generates electricity. The large coal and nuclear facilities that dominated the 1970s and 1980s gave way to natural gas as a cleaner, safer method of generation. Today, virtually all new generating capacity is planned to burn natural gas. KeySpan’s six electric generating facilities are all equipped to burn clean, efficient natural gas.

A Clear Alternative
One of the best ways we know to improve the environment is to increase the use of natural gas – for traditional end uses, as well as for newer technologies. KeySpan has always believed that natural gas is the environmentally superior home heating choice. In 1999, that belief was confirmed through the results of a study on reducing carbon dioxide emissions conducted by the Northeast States for Coordinated Air Use Management (NESCAUM). KeySpan voluntarily participated in NESCAUM’s review of our company’s actions to reduce greenhouse gases. The review showed that from 1990 – 1997, KeySpan’s conversions of residential heating systems to natural gas reduced carbon dioxide emissions by nearly 850,000 tons, an amount that is expected to increase by an additional 180,000 tons when 1998 figures are finalized. NESCAUM cited KeySpan’s aggressive gas marketing efforts as “real environmental actions, achieving measurable results.”
    But KeySpan’s expertise in the conversion market goes beyond homes and businesses. We have been leaders in the natural gas vehicles market and continued that effort in 1999. Last fall, KeySpan, together with the Greater Long Island Clean Cities Coalition, leveraged approximately $275,000 to facilitate the largest single purchase of natural gas vehicles by a private fleet in New York State. Arrow Security, a private security firm, purchased Ford Crown Victorias powered exclusively by natural gas. KeySpan is also providing the fuel infrastructure that will allow Arrow to displace the use of an estimated 200,000 gallons of gasoline annually.

Technology For 2000
Combining our interest in new technologies with our commitment to the environment, KeySpan has taken a first step
in developing and marketing residential fuel cells.
    Fuel cells produce electricity through a chemical process, converting the energy of hydrogen in natural gas and other sources directly into electricity, without any combustion. They can produce electricity without interruption as long as fuel and air are supplied. The technology is not new – in fact, KeySpan has been involved in the effort to develop, demonstrate and commercialize this clean energy source for more than 30 years. We currently have three fuel cells installed at our Staten Island facility, providing electricity and hot water to St. Vincent’s Medical Center, and we engineered and supervised the 1996 installation of two fuel cell units at Sun Chemical Corporation.
    What is new is the development of fuel cells that are affordable and practical for homes and small businesses. In an agreement with General Electric’s GE Microgen unit, KeySpan will purchase and test 30 natural gas-powered fuel cells manufactured by Plug Power. The agreement allows KeySpan the opportunity to become the exclusive utility to market and maintain the fuel cells in New York City and Long Island.
    With Plug Power anticipating commercial availability as early as 2001, the agreement provides KeySpan with an outstanding opportunity to provide homeowners with “green" power systems that can safely, efficiently and cost effectively meet their total energy needs.

Generating Solutions
As the largest investor-owned electric generator in New York State, KeySpan takes its commitment to clean energy very seriously. Our environmental standards meet or exceed the regulatory requirements, and we continually seek new ways to improve environmental performance in our plants.
    With demand for electricity increasing rapidly and new generation sources needed, KeySpan has been actively pursuing environmentally acceptable ways to increase our generation capacity. In June 1999, we purchased the 2,168-megawatt Ravenswood electric generating facility from Consolidated Edison Company of New York, Inc. This investment immediately increased earnings and gave KeySpan additional generating units with environmental controls that have won the New York State Governor’s Award for Energy Excellence. In the next several years, we plan to expand the generating capacity at Ravenswood by 250 megawatts by installing a state-of-the-art gas-fired cogeneration unit.
    KeySpan is a leading member of the Clean Energy Group, a coalition of electric producers that has joined forces with the United States Environmental Protection Agency and the Natural Resources Defense Council to lead the power industry to cleaner emissions. By burning natural gas in our plants, KeySpan has also been able to take advantage of nitrogen oxide and sulfur dioxide pollution credits to reduce our costs of generation, for the benefit of electric consumers.