With Merger and Rate Filing Pending, Niagara Mohawk Submits Pricing Proposal For Final Years of 5-Year Rate and Restructuring Plan

Apr 27, 2001, 01:00 ET from Niagara Mohawk Power Corp.

    SYRACUSE, April 27 /PRNewswire/ -- As required under the terms of its
 current five-year rate and restructuring agreement, Niagara Mohawk Power Corp.
 today filed an electricity pricing proposal with the state Public Service
 Commission to cover the final two years of the agreement.  Prices proposed in
 the filing would be replaced with lower prices upon PSC approval of the rate
 plan filed as part of the company's proposed merger with National Grid Group
 plc.
     Today's proposal allows for changes in certain commodity-related costs to
 be passed through to customers beginning Sept. 1.  Electric commodity costs,
 which fluctuate with market conditions, are projected to be higher as a result
 of recent trends in commodity markets, increases in charges from the state's
 Independent System Operator and the expiration of some Niagara Mohawk supply
 contracts.  Partially offsetting the projected increase in commodity costs is
 a reduction in rates for electric delivery service associated with a lowering
 of the competitive transition charge.  On balance, most customers are
 projected to see average total price increases of 10 percent, depending upon
 actual commodity market conditions.  However, residential and commercial
 customers will be provided with significant price protection from severe
 fluctuations in the generation marketplace.
     Niagara Mohawk's largest customers, who have already experienced market
 price increases, are expected to see average total price reductions of
 10 percent as a result of the cut in delivery rates.
     Earlier this year, as part of a merger petition filed with the PSC,
 Niagara Mohawk and National Grid proposed to further cut rates for electricity
 delivery service, followed by a 10-year price freeze, with limited adjustment
 factors.  The savings associated with the merger filing would substantially
 mitigate increases in commodity prices.  Negotiations on the companies' merger
 and rate filing began in April and are continuing.
     "Our preferred course remains instituting the lower rates proposed as part
 of our merger filing with National Grid," said Theresa Flaim, vice president
 of strategic planning for Niagara Mohawk.  "In the meantime, while we await
 regulatory approval, we will continue to operate under the terms of our
 current rate agreement.  Today's filing is necessary should the merger filing
 not be approved in time for September implementation."  She noted that
 forecasts used for today's filing are consistent with those used in the merger
 and rate filing to allow for a smooth pricing transition upon merger approval.
     The merger of Niagara Mohawk and National Grid, announced in Sept. 2000,
 requires approvals from regulators in New York, as well as the Federal Energy
 Regulatory Commission, the Securities and Exchange Commission and other
 regulatory agencies.
     Niagara Mohawk Power Corp. is a wholly owned subsidiary of Niagara Mohawk
 Holdings, Inc. (NYSE:   NMK), an investor-owned energy services company that
 provides electricity to more than 1.5 million customers across 24,000 square
 miles of Upstate New York.  The company also delivers natural gas to more than
 540,000 customers over 4,500 square miles of eastern, central and northern New
 York.
 
     NOTE:  This release contains statements that constitute forward-looking
 information.  Such statements are subject to certain risks, uncertainties and
 assumptions.  All of these forward-looking statements are based on estimates
 and assumptions made by the company's management which, although believed by
 the company's management to be reasonable, are inherently uncertain.  Such
 forward-looking statements are not guarantees of future performance or results
 and involve certain risks and uncertainties.  Actual results or developments
 may differ materially from the forward-looking statements as a result of
 various factors.
 
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SOURCE Niagara Mohawk Power Corp.
    SYRACUSE, April 27 /PRNewswire/ -- As required under the terms of its
 current five-year rate and restructuring agreement, Niagara Mohawk Power Corp.
 today filed an electricity pricing proposal with the state Public Service
 Commission to cover the final two years of the agreement.  Prices proposed in
 the filing would be replaced with lower prices upon PSC approval of the rate
 plan filed as part of the company's proposed merger with National Grid Group
 plc.
     Today's proposal allows for changes in certain commodity-related costs to
 be passed through to customers beginning Sept. 1.  Electric commodity costs,
 which fluctuate with market conditions, are projected to be higher as a result
 of recent trends in commodity markets, increases in charges from the state's
 Independent System Operator and the expiration of some Niagara Mohawk supply
 contracts.  Partially offsetting the projected increase in commodity costs is
 a reduction in rates for electric delivery service associated with a lowering
 of the competitive transition charge.  On balance, most customers are
 projected to see average total price increases of 10 percent, depending upon
 actual commodity market conditions.  However, residential and commercial
 customers will be provided with significant price protection from severe
 fluctuations in the generation marketplace.
     Niagara Mohawk's largest customers, who have already experienced market
 price increases, are expected to see average total price reductions of
 10 percent as a result of the cut in delivery rates.
     Earlier this year, as part of a merger petition filed with the PSC,
 Niagara Mohawk and National Grid proposed to further cut rates for electricity
 delivery service, followed by a 10-year price freeze, with limited adjustment
 factors.  The savings associated with the merger filing would substantially
 mitigate increases in commodity prices.  Negotiations on the companies' merger
 and rate filing began in April and are continuing.
     "Our preferred course remains instituting the lower rates proposed as part
 of our merger filing with National Grid," said Theresa Flaim, vice president
 of strategic planning for Niagara Mohawk.  "In the meantime, while we await
 regulatory approval, we will continue to operate under the terms of our
 current rate agreement.  Today's filing is necessary should the merger filing
 not be approved in time for September implementation."  She noted that
 forecasts used for today's filing are consistent with those used in the merger
 and rate filing to allow for a smooth pricing transition upon merger approval.
     The merger of Niagara Mohawk and National Grid, announced in Sept. 2000,
 requires approvals from regulators in New York, as well as the Federal Energy
 Regulatory Commission, the Securities and Exchange Commission and other
 regulatory agencies.
     Niagara Mohawk Power Corp. is a wholly owned subsidiary of Niagara Mohawk
 Holdings, Inc. (NYSE:   NMK), an investor-owned energy services company that
 provides electricity to more than 1.5 million customers across 24,000 square
 miles of Upstate New York.  The company also delivers natural gas to more than
 540,000 customers over 4,500 square miles of eastern, central and northern New
 York.
 
     NOTE:  This release contains statements that constitute forward-looking
 information.  Such statements are subject to certain risks, uncertainties and
 assumptions.  All of these forward-looking statements are based on estimates
 and assumptions made by the company's management which, although believed by
 the company's management to be reasonable, are inherently uncertain.  Such
 forward-looking statements are not guarantees of future performance or results
 and involve certain risks and uncertainties.  Actual results or developments
 may differ materially from the forward-looking statements as a result of
 various factors.
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X44682482
 
 SOURCE  Niagara Mohawk Power Corp.