WESTBOROUGH, Mass., July 9, 2002 – American Superconductor Corporation (Nasdaq:AMSC), a leading global supplier of superconductor products and power electronic converters for the electric power industry, and GE Industrial Systems, a business of the General Electric Company (NYSE:GE), today announced the sale of one of AMSC’s D-VAR voltage regulation systems to BC Hydro, one of Canada’s largest utilities. This marks the third sale of a D-VAR system by the GE/AMSC team.

The D-VAR, or “Dynamic VAR,” system will mitigate significant voltage problems in Fort St. James, British Columbia. The town of Fort St. James is located in central British Columbia and resides near the end of a 70 kilometer, 66 kV radial transmission line. During peak load, the line can experience voltage sags of up to 20 percent. These voltage problems are further complicated by line events such as faults, and the use of large motors in a nearby lumber mill. While the motors are starting, voltage may sag another seven percent on the 66kV transmission line. In addition, motor stalling can also potentially cause significant voltage sags.

“Fort St. James must have a dependable and reliable source of power to keep its citizens and businesses supplied with the power they need,” said Brian Avent, technical specialist at BC Hydro. “This was a highly competitive international bid process because this application required a dynamic reactive solution that was not presently available in Canada and we wanted to be sure we looked at a number of approaches for solving the voltage regulation problem. The American Superconductor-GE team submitted the best match to our technical specification and we are confident that the new D-VAR system will resolve the steady-state voltage problems and help to improve the quality of power in the area.”

Utilities and grid operators often face the challenge of finding ways to improve power reliability with their existing transmission and distribution infrastructure. In particular, long radial lines with widely varying loading often require support to maintain acceptable voltage levels. The D-VAR system is well suited for this type of application. The system is expected to be operating by the end of November 2002 and will regulate voltage to within the specifications established by BC Hydro, allowing for much improved power reliability to customers in the area.

“Utilities and grid operators are looking for innovative solutions to optimize their grid operations and more effectively utilize their transmission and distribution assets,” said Greg Yurek, chief executive officer of American Superconductor. “D-VAR is a low cost and flexible solution that allows utilities and grid operators to leverage their investment and offer better service to their customers. This winning proposal that the GE-AMSC team put together reinforces the strengths of our partnership and the importance this relationship plays in selling and marketing power quality and reliability solutions to utilities and industrial customers.”

The D-VAR system maintains steady-state voltage levels on transmission and distribution lines and also protects against other externally caused voltage disturbances – such as those caused by large motors in manufacturing facilities. The D-VAR system is a mobile power reliability resource that utilizes AMSC’s proprietary PowerModule™ power electronic converters to inject precise amounts of continuous and instantaneous reactive power (measured in VARs) into transmission grids to solve voltage regulation and dynamic voltage stability problems that otherwise may result in blackouts and brownouts. D-VAR systems can be customized to meet each customer’s needs through variations in the operating software and in the number of power electronic converters per unit. The amount of reactive power delivered per unit varies typically from 3 to 8 megaVARs (MVAR) continuous, with instantaneous reactive power output up to 18 MVAR per unit.