BESICORP-EMPIRE PROJECT
May 2003Progress Update Newsletter

May 2003
PROGRESS UPDATE

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

Project Description
The BEDCO Projects are being developed at the former BASF manufacturing site in the City of Rensselaer, New York. The newsprint recycling facility will recycle old newspapers and magazines to produce clean 100% recycled newsprint. The cogeneration facility, fueled by clean burning natural gas, will produce nominally 505MW of electricity and supply the energy for the newsprint recycling facility while also supplying additional electric capacity for the region.

BEDCO anticipates starting construction of the Projects in early 2004, with commercial operation commencing in late 2005.

Benefits to the Community
The Empire Projects will bring substantial benefits to the City of Rensselaer and surrounding communities. These benefits come in the form of PILOT (payment in lieu of taxes) payments that go towards school district, city, county, other contributions and payroll taxes as well as indirect benefits from employment (payroll), local contracting, purchasing and the environmental remediation of the site of by BASF.

PILOT payments could ease the tax burden to the remaining taxpayers or could allow additional revenue to be utilized by the city and school for programs that they otherwise would not have.

Studies support the effect that increased employment has on a community. Known as an economic "spin-off" effect the statistics generally show that at least twice the amount of payroll is realized in the area surrounding a facility that generates this payroll, both during construction and during operation.

In addition, the impact and benefit of the site being restored to productive use by remediation cannot be underestimated.

Permitting Process
There are several core permits that are required for the proposed facilities as follows:

Article X/SEQRA
The Article X/SEQRA permits are essentially the core permits required to construct the facilities at the site. BEDCO and Parties have reached an agreement in principle to a settlement agreement. As first reported in the November newsletter, in October 2002, BEDCO entered settlement negotiations with Active Parties including the New York State Department of Public Service, New York State Department of Environmental Conservation, New York State Department of Health, the City of Rensselaer, the Fort Crailo Neighborhood Association, the Rensselaer Greens, the Rensselaer County Environmental Management Council, the Sierra Club, Niagara Mohawk Power Corporation, and Organichem Corporation. Since that time, confidential settlement conferences have been conducted by the parties in lieu of formal hearings.

Settlement negotiations continued through February 2003, and an "agreement in principle" among the settlement parties (with the exception of the Rensselaer Greens) was subsequently reached. A "Joint Settlement Agreement" reflecting the settlement parties' consensus on issues has been prepared and is currently being reviewed for signature by the parties. Following execution of the Joint Agreement, the presiding NYSDPS and NYSDEC examiners will resume the statutory Article X and SEQRA process, which culminates with decisions by the Siting Board and NYSDEC Commissioner.

Article VII - Electric
Niagara Mohawk Power Corporation filed an Article VII permit application on April 28, 2003 with the NYPSC. This application covers the electric transmission line to connect the BEDCO proposed Cogeneration Facility to the electric grid.

Article VII - Gas
It is anticipated that Niagara Mohawk Power Corporation will file an Article VII gas permit application during the second quarter of 2003 with the NYPSC. This application covers the gas pipeline that is needed for the Cogeneration Facility.

Army Corps of Engineers
The Army Corps of Engineers permit application for permission to construct certain components associated with both the proposed recycled newsprint manufacturing facility and the proposed Cogeneration Facility was filed by BEDCO on Friday, April 25, 2003. The Application relates to navigable waters and wetlands. Additional Corps applications for the interconnecting electric and gas lines will be filed by Niagara Mohawk Power Corporation in the near future.

City
There are various permits required for the Newsprint Recycling Facility such as: subdivision, site plan approval, variances, and special use.

Site Cleanup By BASF
The North 40 refers to the property where existing buildings on the BASF site are located and will be the future home of the Newsprint Recycling Facility. The South 40 refers to the undeveloped acreage south of the main plant and is where the Cogeneration Facility will be located:

North 40
BASF under a consent order with the DEC is currently at work on the cleanup of the site at the former manufacturing facility. The Proposed Remedial Action Plan (PRAP) for the BASF Manufacturing Site was issued by NYSDEC on February 14, 2003. The public comment period for the PRAP ended on April 16. NYSDEC will summarize and address the comments received on the PRAP in the responsiveness summary section of the Record of Decision (ROD). The ROD is the Department's final selection of the remedy for the Site.

South 40
Under a voluntary cleanup agreement, BASF has submitted a Supplemental Investigation Report (Report) and a Remedial Action Work Plan (Work Plan) to NYSDEC. Once the Report and the Work Plan are accepted, NYSDEC will publish a Notice of Availability for Comment on the Work Plan in the Environmental Notice Bulletin. Written comments on the Work Plan will be accepted by NYSDEC for 30 days following the date of the notice.

Besicorp-Empire Development Company’s proposed future home at the BASF facility, located at 36 Riverside Avenue, in the City of Rensselaer.

Public Meetings and Upcoming Events
A public Open House regarding proposed gas and electric transmission lines was held on December 19, 2002, from 3pm to 8pm in the Rensselaer City Hall. Residents in the vicinity of the proposed rights-of-way for the gas and electric transmission lines located in North Greenbush, East Greenbush, Schodack, and the City of Rensselaer were invited to attend. BEDCO, Niagara Mohawk Power Corporation, Epsilon Associates, MSE Power Systems, and Gradient Corporation had representatives available to provide information and answer questions about the proposed transmission lines.

In addition, the towns of East Greenbush and North Greenbush requested that BEDCO repeat its December 19, 2002 Open House PowerPoint® presentation for their municipalities. The presentation was made to the Town Planning Board of North Greenbush on February 3, 2003 at 7pm, the Town Planning Board of East Greenbush on January 15, 2003 at 7:30pm, and to the Town Board of North Greenbush on January 9, 2003 at 7pm. On the back of this newsletter there are answers to the most frequently asked questions from the presentations.

BEDCO also offers to do presentations regarding the proposed Cogeneration Facilty and Newsprint Recycling Facility to any responsible community group.