A Message from LIPA's President & CEO

November/December 2009

Eleven years ago, when the State decided LIPA would take over LILCO, three significant decisions
shaped LIPA's future. First, the state directed LIPA to borrow approximately $7 billion to acquire
the stock from LILCO shareholders; second, they required KeySpan, (now National Grid) to
acquire the generation plants; third, they required LIPA, a non-profit entity, to pay property taxes
in the form of “payments in lieu of taxes” (PILOTS) to Long Island municipalities and school
districts that host power plants and other LIPA-owned properties. All these decisions create
enormous pressure on our electric rates today.

As I finish my second year at LIPA, I continue to focus my efforts on lowering these incurred
costs while leading the way to a greener, more energy-efficient future. I recently worked with U.S.
Senator Charles Schumer to introduce new federal legislation to allow LIPA to refinance its $7
billion of debt at a lower rate, which could save LIPA over a $170 million a year. Our debt makes
up 16% of your current bill.

LIPA is also looking at the $500 million it pays annually in taxes with more than $400 million
going just for property taxes. We are currently reviewing our options to reduce these taxes, which
makes up 11% of your bill.

Roughly, 27 cents of every dollar you pay to LIPA goes to service debt and taxes. If we are ever
going to provide real rate relief to our customers, it is going to have to be in these areas and thus
I will continue to examine ways to reduce those costs.

Finally, LIPA recently had the opportunity, but decided not to purchase, the generation plants
owned by National Grid. While I support re-powering some of these plants, I could not make a
compelling financial business case to acquire them given our debt. I prefer to invest our efforts
into enhancing energy efficiency and bringing more renewable sources of energy to Long Island
in order to reduce our reliance on fossil fuel.

Kevin S. Law
President & CEO