We are commited to New York State's plan to reduce electricity use by 15 percent by 2015, and to significantly reduce carbon emissions in the coming decades. Orange & Rockland, the Public Service Commission (PSC) along with the other electric utilities in the state, have been evaluating ways to reduce energy loss on New York's electric grid. These losses are damaging to the environment and cost hundreds of millions of dollars a year.

One of the most signficant ways electricity is lost occurs when reactive power travels along power lines. Reactive power is required for electric motors, fluorescent ballasts and other equipment to be magnetized and start up. The more reactive power that customers use, the more energy the electric system loses, with a corresponding increase in the amount of greenhouse gases that get released into the atmosphere.

To encourage businesses to reduce their use of reactive power, we will be introducing a new reactive power charge. Large commercial customers will be charged when their power factor, or efficiency, is less than 95 percent.

The reactive power charge will be introduced over the next two years. To prepare you for this change, we will be hosting information forums to bring together you, your engineers, and energy experts to help you learn more about equipment and technologies to mitigate reactive power. We will offer reactive power information kits, and tell you how reactive power can affect your bill, and what you can do to better manage energy costs. The kits will also provide details about our new energy efficiency program offerings for businesses.

The charge for reactive power will be implemented in two phases.

• Phase I - October 2010 for customers whose monthly demand is 1,000 kW or higher.
• Phase II - October 2011 for customers whose monthly demand is between 500 kW and 1,000 kW.

The charge will also apply to customers who have induction generators that meet 1,000 kW and 500 kW thresholds. Details are outlined in the tariff filings.

If you have any questions, please contact your representative through New Business at 845-577-3324. We look forward to working with you to ensure a cleaner energy future.