CEO REPORT

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5-23-2018

MEETING EXPECTATIONS

LIPA and PSEG Long Island have been designated as a diamond-level Reliable Public Power Provider for our commitment to reliable and safe electric service.

INDUSTRY-RECOGNIZED RELIABILITY

A FAIR TAX, CLEAN ENERGY FUTURE

2018 PROPERTY TAX REPORT

Port JeffersonProperty Taxes: $32,661,0001958 - 393 MW Max Output

GlenwoodProperty Taxes: $23,495,0001967 - 114 MW Max Output

NorthportProperty Taxes: $80,770,0001967 - 1,589 MW Max Output

CaithnessProperty Taxes: $9,670,0002009 - 350 MW Max Output

BarrettProperty Taxes: $42,617,0001956 - 663 MW Max Output

LIPALong Island Power Authority

BowlineRockland County NY

Property Taxes: $2,700,0001967 - 1,135 MW Max Output

Energy Produced: 2,500,000 MWh

Energy Produced: 3,000 MWh

Energy Produced: 356,000 MWh

Energy Produced: 1,600,000 MWh

Energy Produced: 1,400,000 MWh

Energy Produced: 2,500,000 MWh

* Caithness and Bowline are not legacy National Grid plants. Figures shown for comparison purposes.

�4CUSTOMERS TO PAY $2 BILLION IN OVER-TAXATION FOR FOUR POWER PLANTS OVER NEXT DECADE

*

*

NORTHPORT POWER PLANT

PORT JEFFERSON POWER PLANT

GLENWOOD POWER PLANT

E.F. BARRETT POWER PLANT

HUNTINGTON

OYSTERBAY

GLEN COVE

BABYLON

HEMPSTEAD

LONG BEACH

NORTHHEMPSTEAD

SMITHTOWN BROOKHAVEN

RIVERHEAD

SOUTHOLD

SHELTERISLAND

SOUTHAMPTON

EAST HAMPTON

ISLIP

ROCKAWAY

2015 data compiled through SeeThroughNY.net with sourced material from the Office of the State Comptroller, with further

calculations by the Empire Center for Public Policy. Median home prices sourced from Multiple Listing Service.

78%

22%

8%

92%Four Legacy Power Plants

POWER PLANT TAXES POWER PLANT OUTPUT % TAXES TO FOUR SCHOOL DISTRICTS

63%

~20,000 Customers

28 Power Plants

37%~1,100,000 Customers

E.F. Barrett; Northport; Glenwood; Port Jefferson

63% OF $2 BILLION WILL GO TO < 2% OF LONG ISLAND RESIDENTS IN FOUR SCHOOL DISTRICTS

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5,832 Customers 12,995 Customers

2,904 Customers

2,916 Customers

1.1 Million Customers

NORTHPORT POWER PLANT AVERAGE YEARLY SCHOOL TAXES

HuntingtonSchool Districts

Elwood $11,965

$11,582

$11,036

$11,801

Harborfields

Huntington

South Huntington

2015 CalculatedTax

$8,333Northport-East Northport

HUNTINGTON

OYSTERBAY

GLEN COVE

BABYLON

HEMPSTEAD

LONG BEACH

NORTHHEMPSTEAD

SMITHTOWN BROOKHAVEN

RIVERHEAD

SOUTHOLD

SHELTERISLAND

SOUTHAMPTON

EAST HAMPTON

ISLIP

ROCKAWAY

2015 data compiled through SeeThroughNY.net with sourced material from the Office of the State Comptroller, with further

calculations by the Empire Center for Public Policy. Median home prices sourced from Multiple Listing Service. Estimated taxes

based on Northport's average home value of $510,000.

NORTHPORT - EAST NORTHPORT SCHOOL TAXES ARE 24% BELOW TOWN OF HUNTINGTON AVERAGE

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* Northport - East Northport school taxes are $3 - 4,000 per year below neighboring districts in the Town of Huntington due to the over assessment of the Northport Power Plant

* Spending Per Pupil - $29,847

13%33% 54%

Tax Levy LIPA CustomersState Aid

* LIPA customers pay 33% of the Northport - East Northport school district budget

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NORTHPORT USAGE

13%18%

53%1999

20162030

NORTHPORT TAXES

$3,770,000

$100,559,376

$80,800,000

$57,583,2912017

1999

2030

NORTHPORT PLANT USAGE IS DOWN AND TAXES ARE UPPower plants, like cars, are worth less with age, if assessed fairly for tax purposes

Power plant usage will continue to decline on LIPA’s legacy steam plants, while taxes increase every year

Fair Taxes

�8LOCAL OFFICIALS SUPPORT TAX SETTLEMENTS IN THEIR DISTRICTSSupervisor Ed Romaine Announces Support for Town of Brookhaven Settlement (Port Jefferson Power Plant)April 4, 2018 - State of the Town Address

“We have a framework with LIPA to settle this case and avoid unnecessary costs that result from continuing this case. These taxes are paid by all our residents in their electric bills, but disproportionately benefit a small number of taxing districts near the plant…property assessments have to be just and fair. They’ve [school districts] collected for many years a great deal of money on a plant that some people say has been over-assessed. This property was out of line. We’re bringing it into line. So they will have to live the way other school districts do.”

“Nassau County Executive Laura Curran Supports Tax Settlements(E.F. Barrett and Glenwood Landing Power Plants)March 28, 2018 - State of the County Address

There are many “risks which go to the heart of our failed tax assessment system. The first risk relates to future tax certiorari refunds … and tax certiorari claims including utility claims for prior years. This amount is estimated to be more than $500 million. We are reviewing the pending utility litigation and we must ensure that we are not plagued with more debt.”

Brookhaven Supervisor Ed Romaine

Port Jefferson Village Mayor Margot Garant

Port Jefferson Mayor Margot Garant Approves Village of Port Jefferson Settlement (Port Jefferson Power Plant)April 16, 2018

Nassau County Executive Laura Curran

On the approval of the tax settlement: “Port Jefferson Village officials have approved a budget that increases taxes by a little less than 2 percent, Mayor Margot Garant said recently. She said the budget sets aside $107,439 in a restricted reserve account to prepare for an anticipated loss of revenue from payments in lieu of taxes made by the Long Island Power Authority on the Port Jefferson power plant.” - Newsday

ACHIEVING SUSTAINABLE TAX PAYMENTS �9

‣ LIPA’S SETTLEMENT PROPOSAL:

✓ Reduce taxes by 50% over 9 years;

✓ Waive refund liability of over $570 million owed by Town of Huntington to LIPA customers

* Includes Annual Cost of Financing a $570+ Million Refund Liability

LIPA PROPOSAL COURT ACTIONMonthly Tax Increase on

Average Household(Phased-In Annually)

Northport - East Northport School District $13

Suffolk County $0.06

Town of Huntington $0.60

Monthly Tax Increase

Northport - East Northport School

District$212

Suffolk County $0.88

Town of Huntington* $62

School Taxes Remain Below Area Average

�102018 NORTHPORT POWER PLANT SETTLEMENT PROPOSAL

Northport Power Plant P r o d u c e s t h e S a m e Amount of Energy as Caithness — at 8x the Taxes

Today, LIPA customers pay the equivalent of 20 Northport Power Plants:

9 years from now, LIPA proposes to pay the equivalent of 10 Northport Power Plants:

2017 LIPA Taxes (General & School) Settlement for YE 2027

Fair Taxes for 2017 ($2,375/mW)

$80,770,018 $40,385,009 $3,773,875

At termination of agreement, the four Northport units will be from 50 to 60 years old