Frequently Asked Questions
On the Proposed Long Island Offshore

The offshore wind park will be constructed, owned, operated and maintained by a private developer, FPL Energy. This is no different than any other developer owned power generation facility on Long Island which produces and sells electricity to LIPA for distribution to customers via the transmission grid. As a result of this standard relationship LIPA will agree to purchase 100% of the power produced and retained all environmental benefits associated with the Project.

LIPA would pay the developer of the Wind Park through a power purchase agreement which will be entered into between LIPA and the developer. Under such an agreement, LIPA’s obligation to pay would be contingent upon both the Wind Park being capable of producing energy as proposed and also upon the delivery of that energy to the LIPA grid. Thus LIPA’s ratepayers would pay for this energy in the same manner as for all other power purchase agreements. Unlike other power purchase agreements however, LIPA’s (and therefore its ratepayers) financial obligations under this agreement would be certain over the 20-year duration without any volatility associated with the fluctuation in fossil fuel costs. LIPA has stated consistently that the Wind Park is expected to have little to no impact on electricity rates. The Offshore Wind Park will certainly help to offset rising fuel costs and possibly help to stabilize electric rates.

The total cost of the Long Island Offshore Wind Park has not been finalized. The selection of the wind turbine manufacturer, foundation manufacturer, cable supplier, and construction contractor is still being determined. Future commodity prices such as steel are also an important factor of final cost determination. LIPA believes that the Project would be competitive with other generation options because of the elimination of the risk exposure associated with fossil fuel prices into the future.

The Long Island Offshore Wind Park, LLC, a wholly owned subsidiary of FPL Energy, would be responsible for all costs associated with constructing, operating and maintaining the Wind Park including the wind turbines and towers, offshore electrical substation platform and the turbine collector cables and 138 kilovolt transmission line beyond three nautical miles from shore. LIPA would be responsible for constructing, operating and maintaining the 138-kilovolt cable from the existing Sterling Substation to the three-nautical-mile boundary. LIPA would also be responsible for the cost associated with decommissioning the Project.

Due to the nature of offshore wind park development, whereby the primary cost components are the upfront capital costs, the initial cost of generation from this project may be more than conventional fossil generation. However, as the wind park requires no fuel to operate and fuel costs continue to rise, the difference in costs between these energy sources over time will be eliminated and wind energy will be the less costly alternative. Due to the uncertainty in accurately forecasting long-range fossil fuel prices and other associated fossil fuel related costs, it is difficult to identify at what point in time the project would become the least costly form of generation.

Most electric grid systems can handle a certain percent of wind power without needing additional generation. Wind energy is evaluated and integrated into electricity supply based on its operational patterns. Having considered the seasonal winds and intermittent operations, LIPA has forecasted it will have adequate power supply capacity to allow the Wind Park to operate as an important component of the local energy mix into the foreseeable future. The wind park is intended to be a component of a diversified energy portfolio and is an integral part of LIPA’s master 2004-2013 Energy Plan available at www.lipower.org

PILOTS are not expected to be paid at this time. However, after the passing of the 2005 Energy Bill, the Minerals Management Service under the Department of Interior will be developing a procedure for leasing Outer Continental Shelf (OCS) lands for these types of energy projects.

Construction of the Wind Park including foundations, wind turbines, offshore substation, interconnection cables and operations center will involve a variety of building trades and require specialized craftspeople. It is anticipated that 10-12 permanent positions. In addition, significant goods and services will be purchased locally during operations. While these various support jobs maybe sourced locally or from out of state, an anticipated local cottage industry of marine and eco-tourism will be established based on the European and U.S. land based wind project experience.

The Wind Park is expected to be of significant benefit to recreational fishermen due to the artificial reef characteristics of the wind turbine foundations and artificial sea grass scour protection system. The clustering of Wind Park turbines may allow for greater development of fishery resources. Studies for European offshore wind parks operating since 1991 have demonstrated that underwater structures similar to those proposed for the Wind Park have provided biological growth and diversity of species. Recreational fishing near offshore oil rigs in the United States has also been very popular and successful. The Wind Park is also close to numerous recreational fishing areas along the South Shore of Long Island, including Captree State Park marina, Freeport, and other private marinas and the proximity of these locations to the Wind Park would foster access to the recreational fishing community.

The project is not expected to have significant impacts on commercial fishing activities. The eight square mile area of the Wind Park will have wind turbines spaced between turbines is from one third to one-half mile. Some commercial fishing opportunities, such as surf clam dredging, may or may not be affected. The Project may impact long trawl net fishing within the Wind Park area, since nets could become entangled on structures. Discussions with fishermen about the use of trawlers are ongoing to determine best practices to be used within the Wind Park area.

The Project has not asked for any exclusion zone to commercial and recreational fishing. The Wind Park would not be expected to result in a loss of fish stock or fishing grounds that would require compensation. The Project is not anticipated to have significant impacts on commercial fishing activities currently occurring in the vicinity, since no restrictions would be imposed on fishing within the Wind Park area during operation. During construction, access to the nearby space adjacent to the cable and the Wind Park turbines and substation would be temporarily limited. Any potential conflicts with commercial and recreational fishing activity and gear would be minimized by notifying fishermen and marinas as to the location and timeframe of specific project construction activities well in advance of mobilization. There would be only limited interference with commercial fishing in the wind park area.

As part of the environmental review and permitting processes, the Project will perform an economic impact analysis which will address issues relating to effects of the Project on property values for nearby properties and on the tax base of nearby towns. The Project is not expected to impact beach community residential values, and there would be no lost tax base. National and international studies of property located near wind facilities have not demonstrated reductions in property values. The U.S. Government commissioned a study that was released in 2003 that tracked over 25,000 real estate transactions around the largest wind farms in the U.S., and the report found no adverse effects from wind farms on nearby real estate prices. The study was prepared by the Renewable Energy Policy Project, and it reviewed property sales in the vicinity of 10 wind farms throughout the U.S. The study found through statistical analysis that there was no evidence that wind farm development harmed property values within an established view shed. www.crest.org/wind/. An additional study by ECONorthwest involving the interviewing of local tax assessors concluded that a view of a local wind farm did not negatively impact property values. www.econw.com/pdf/kittitas.pdf.

During the environmental review and permitting processes, the Project will provide a study of the potential effects on the tourism economy. Experience to date at other off-shore and land-based wind facilities has shown an increase in tourism subsequent to the completion of Wind Park construction. It is expected that the project will expand tourism opportunities for the south shore of Long Island and offer educational opportunities for people of all ages.