BESICORP-EMPIRE NEWSLETTER

This newsletter is provided to inform the public of the progress and upcoming activities for the Besicorp-Empire Projects. It is important to us that the public has access to information regarding the Projects. If you have any questions or comments to discuss, please feel free to contact us at the numbers listed in the Information Sources section of this newsletter.

Project Description
The Besicorp-Empire Development Company, LLC (BEDCO) Projects are being developed at the former BASF manufacturing site in the City of Rensselaer, New York. The Recycled Newsprint Facility will recycle old newspapers and magazines to produce clean, 100% recycled newsprint. The Power Generating Facility, fueled by clean burning natural gas, will produce nominally 500MW of electricity, supplying energy to the Recycled Newsprint Facility while also providing additional electric capacity for the region.

BEDCO anticipates starting site construction of the Projects in the first half of 2005, with commercial operation commencing in 2007.

Federal and State Permit Status
The Article X/SEQRA permitting process was conducted over the course of four years and dealt with all potential project impacts such as air, water, noise, traffic, and community character.

The Article X certificate was issued this month and grants approval to construct and operate the power generating facility. Final permitting decisions were made by the New York State Board on Electric Generation Siting and the Environment.

The State Environmental Quality Review Act (SEQRA) approval was granted this month including Federal and State air and State water permits for the construction and operation of both facilities. Final permitting decisions were made by the DEC Commissioner.

The Article VII Electric certificate should be issued this fall granting approval to construct an electric transmission line to transfer electricity from the power generating facility to the power grid. Final permitting decisions will be made by the Public Service Commission.

The Article VII Gas certificate issued in August grants approval to construct a natural gas pipeline to transport fuel to the power generating facility. Final permitting decisions were made by the Public Service Commission.

The Army Corps of Engineers permit is expected to be issued this year granting approval for construction of elements of the projects involving wetlands and the Hudson River.

Site Status
The North 40 refers to the property where existing buildings on the BASF site are located, the home of the Recycled Newsprint Facility. The South 40 refers to the undeveloped acreage south of the BASF site where the Power Generating Facility will be located.
North 40
Under a consent order with the NYS DEC, BASF is at work implementing remedial measures to clean up the site at the former manufacturing facility. The Record of Decision (ROD), issued by the NYS DEC on September 12, 2003, is the DEC's final selection of the remedy for the site. Sufficient cleanup is expected to be completed in time for the redevelopment of the site.
South 40
Besicorp-Empire Power Company, LLC, BASF and the NYS DEC entered into an agreement to clean up the South 40 site. The site remediation will be completed in October under New York State's Brownfield Cleanup Program, which is described below.

Brownfield Cleanup Program
The New York State voluntary Brownfield Cleanup Program (BCP), established by legislation signed by Governor Pataki in October, 2003, encourages developers to invest their resources in the environmental remediation and redeployment of existing non-productive sites, thereby assuring that these properties will make an economic contribution to the communities in which they are located.
The Besicorp-Empire Power Generating Facility is one of the first projects to be accepted into this new program. It is an example of the environmentally sound and economically beneficial project development activities that Besicorp strives to be involved in.
The application process was a collaborative effort among BASF Corporation (the landowner), Besicorp-Empire Power Company, LLC (the developer), and the NYS Department of Environmental Conservation (the presiding regulatory agency).

Community Benefits
Over the past four years of the siting and permitting process for the Projects, BEDCO, and the City of Rensselaer, and others have worked together to ensure that the many positive benefits of the Projects can be delivered to the residents of the City of Rensselaer. In May of this year the City and BEDCO reached an agreement in principle on a Host Community Agreement. Under the Agreement, BEDCO has agreed to pay the City $15 million over 20 years in annual installments (a total of $7.5 million for the Newsprint Facility and $7.5 million for the Power Facility). The proceeds may be used by the City at its discretion. The $15 million the City will receive in Host Community payments is in addition to the Payment in Lieu of Taxes (PILOT) payments it will receive over a 20 year period, the sharing of administrative fees with the County IDA ($750,000 per Project), construction jobs, permanent jobs, redeployment of the BASF industrial brownfield site, secondary economic benefits and beautification and enhancement programs (Gate at Riverside Avenue, bike path, overlook park).

Engineer, Procure and Construct (EPC) Contractors
Recycled Newsprint Facility
KSH Solutions, Inc. (KSH) of Montreal, Quebec is the EPC Contractor for the Recycled Newsprint Facility. KSH is a highly qualified contractor for this type of work.
Jaakko Pöyry-NLK, with offices in Vancouver, British Columbia, one of Canada's foremost forest industry engineering companies, is the Owner's Engineer for this project.

Power Generating Facility (including gas & electric lines)
SNC-Lavalin Constructors, Inc., based in Redmond, WA is the EPC Contractor for the Power Generating Facility and has previously designed and built several other similar facilities.
Lockwood Greene, a global engineering and consulting firm headquartered in Spartanburg, SC, has been engaged to act as Owner's Engineer for the power project.

Community Liaison Program
BEDCO will implement a Community Liaison Program to help assure proper communication with surrounding communities and stakeholders regarding construction and operation of the projects. The program will be administered by BEDCO's Community Liaison Officer, who will provide a single point of contact. Prior to the start of construction, BEDCO will also be convening a Citizens Committee including representatives of BEDCO and the City. The committee will meet regularly for project status updates.

Many Thanks to the CAB
The Citizens' Advisory Board (CAB) was organized by the City of Rensselaer to promote active communication among the citizens of the City of Rensselaer, Rensselaer County and BEDCO, and at this juncture in the development of the projects, BEDCO would like to take the opportunity to thank the CAB for its efforts. CAB members are listed below:

The Board's founding purpose was to develop an understanding of and to assist in the community communications on issues related to the facilities that BEDCO had proposed. Meetings were held on the third Thursday of each month at 7 p.m. in the Rensselaer City Hall and the public was invited to attend. The members of the Citizens' Advisory Board worked to identify, discuss, and communicate on safety, health, environmental and civic concerns.

In order to obtain and understand information relating to BEDCO's plans and development activities in the City of Rensselaer, questions in many forms were asked of BEDCO by members of the CAB and BEDCO responded to all. CAB members provided important input to BEDCO regarding relevant community issues. With the Federal and State permitting process essentially complete, meetings of the CAB were curtailed in August, 2004.

Besicorp Projects Schedule