AND REQUEST FOR WAIVER

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1 NEW YORK STATE PUBLIC SERVICE COMMISSION Je IN THE MATTER OF PROJECT ORANGE ASSOCIATES, LLC NOTIFICATION OF GENERATOR RETIREMENT Je NOTIFICATION OF GENERATOR RETIREMENT AND REQUEST FOR WAIVER Dated: October 25,2010 John W. DaJe, Esq. The DaJe Law Finn, P.C. Attorneys for Project Orange Associates, LLC 54 State Street, Suite 805 Albany, New York Telephone: (518) Facsimile: (518)

2 NEW YORK STATE PUBLIC SERVICE COMMISSION )C IN THE MATTER OF PROJECT ORANGE ASSOCIATES, LLC NOTIFICATION OF GENERATOR RETIREMENT )C NOTIFICATION OF GENERATOR RETIREMENT AND REQUEST FOR WAIVER Preliminary Statement Since 1992, Project Orange Associates, LLC (POA or Generator) has operated a cogeneration facility in Syracuse, New York (POA Facility) that produces (i) steam to meet the needs of Syracuse University (University or SU) and its steam customers and (ii) electricity, initially for sale to Niagara Mohawk Power Corporation and, since 1998, for sale into the wholesale market managed by the New York Independent System Operator (NYISO). The electricity generating capacity of the POA Facility is 90 MW. The POA Facility is both a Qualified Facility under the Public Utility Regulatory Policies Act of 1978 and an E)Cempt Wholesale Generator under the Federal Energy Policy Act of Starting in 1992 POA also operated steam boilers owned by SU and used them to produce steam when the POA Facility was not operating or when SU required more steam than the POA Facility was producing. This filing is intended to notify the Commission of the planned retirement of the POA Facility and to request that the Commission waive the 180 day requirement for such notices.

3 Introduction Following extended litigation concerning the price paid to POA for steam supplied to the University and the University's involvement in New York State Department of Environmental Conservation's denial of POA's application for permits to install emergency supplemental boilers, in October 2009 POA ceased steam production and turned the operation of the University's boilers over to the University. Subsequent to October 2009 POA has resolved maintenance issues that had plagued its General Electric turbines and returned both turbines to service, and has retained a new marketing manager. POA remains ready, willing and able to resume operation of the University's 50 and 80 year old boilers for backup purposes. POA's new marketing manager optimized the bidding paradigm for the POA Facility. The result has been that starting in July of 2010 the POA Facility has been generating electricity nearly everyday. In order to further optimize POA's electricity generation, in October of 2009, POA offered to supply SU with all the steam produced by the POA Facility at no charge. SU declined POA's offer of free steam. On April 29, 2010, POA filed a bankruptcy petition pursuant to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court, Southern District of New York. On or about May 13,2010, the University filed in the Bankruptcy Court a motion to transfer venue to the Northern District of New York or, in the alternative, to modify the automatic stay to permit an ongoing eviction action to proceed in state court or, in the alternative, to dismiss the POA's Chapter 11 bankruptcy case pursuant to 11 U.S.C. 1112(b). On July 1, 2010, the Bankruptcy Court issued a decision modifying the automatic stay to permit the University to continue its eviction action. 2

4 By Decision dated August 3, 2010 Judge Dejoseph, State Supreme Court, Onondaga County, ruled that POA is unlawfully holding over on the premises leased from the University and that the University was entitled to a judgment of eviction and an order awarding it possession of the leased premises. On August 11, 2010, Judge Dejoseph signed an order granting the University's petition to evict POA from and executed a warrant of eviction directing the Onondaga County Sheriff to evict POA (Eviction Warrant). On August 20, 2010, POA filed its notice of appeal from Judge Dejoseph's Eviction Warrant to the Appellate Division, Fourth Department. On or about August 20, POA filed a motion seeking a stay of the enforcement of the Eviction Warrant pending the outcome of PO A's appeal to the Appellate Division. On August 27, 2010, the University filed a proof of claim in the Bankruptcy action in the amount of$189,007,735 (Proof of Claim), a portion of which the University asserts as a secured claim in an amount equal to the value of PO A's assets. On October 16, 2010, the University and POA executed an agreement entitled "Agreement Resolving All Disputes Between the Debtor and Syracuse University" in the banlauptcy action (Agreement). The Agreement provides for the dismantling of the POA Facility and requires POA to "cease all operations of the cogeneration facility on or before November 13, 2010." The Agreement resolves the Proof of Claim and resolves the various real property and contract claims being actively litigated between the University and POA. The Agreement's effectiveness depends upon Banlauptcy Court approval. 3

5 The Commission's Notice Requirements for Generation Unit Retirements require that generators with a capacity of 80 MW or greater to provide written notice of a proposed retirement at least 180 days prior to the time the retirement is effectuated (Case 05-E-0889, Order Adopting Notice Requirements For Generation Unit Retirements, December 20, 2005). POA requests that the Commission waive the 180 day requirement. In support of its requests, POA offers the following: 1. Ceasing operations on or before November 13, 2010 is a demand made by the University, POA's landlord and steam host, to which POA has agreed in order to resolve the Proof of Claim and the multiple claims and counterclaims now in litigation. POA has had little choice but to agree to this demand given the course of the litigation, including most notably the issuance of the Eviction Warrant. 2. On information and belief, New York State and in particular, New York Independent System Operator's Zone C, have ample generating capacity to assure the continued reliable operation of the State's electric grid. Dated: October 25,2010 I J hn Wax, Esq. T eda LawFirm,P.C. At rn ys for Project Orange Associates, LLC 54 State Street, Suite 805 Albany, New York Telephone: (518) Facsimile: (518) jdax@daxlawfirm.com 4