Text

Forwards Annual Financial Repts 1981 for Niagara Mohawk Power Corp,Ny State Electric & Gas Corp,Lilco,Rochester Gas & Electric Corp & Central Hudson Gas & Electric Corp
	ML18037A379
Person / Time
Site:	Nine Mile Point, Ginna, Sterling, 05000000, 05000516, 05000517, Shoreham
Issue date:	05/27/1982
From:	Trosten L; LEBOEUF, LAMB, LEIBY & MACRAE, NIAGARA MOHAWK POWER CORP.
To:	Harold Denton; Office of Nuclear Reactor Regulation
Shared Package
ML17053D168	List: ML17053D167; ML17053D169; ML18037A379; ML20053C613;
References
	NUDOCS 8206020312
	Download: ML18037A379 (98)
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REGULATOR NFORHATION DISTRIBUTION TEH (RIDS)

AOCESSION NBR;820602Q312 DOC ~ DATE: 82/05/27 NOTARIZED:

NO FACIL:50-000 Generic Docket 50-220 Nine Hile-Point Nuclear Station, Unit ii Niagara Powe 50-410 hine Hile Point Nuclear Station< Unit Zi Niagara Hoha STN 50"485 Sterling.Power Nucleal ProJecti Unit 1g Rochester STN-50-517 Jamespor t Nuclear Stations Unit 2i Long Island L)

STN-50 516 Jamesport Nuclear Stationi Uni,t ig Long Island, Li 50-244 Robert Emmet Ginna Nuclear Plantr Unit ig Rochester G

50"322 Shoreham Nuclear Power Station<

Long Island Lighting AU'1H ~ NAME AUTHOR AFFILIATION TROSTEN<L.H ~

LeBoeufi Lambi Leiby 8, HacRae TROSTENiL.M.

Niagara Mohawk Power

Corp,

'RBCIP ~ NAME RECIPIENT AFFILIATION DENTONgH.Re Office of Nuclear Reactor Regulationi Director

SUBJECT:

Forwards Annual Financial Repts 1981 for Niagara Mohawk Power CorpiNY State Electric 8

Gas CorpiLILCOiRochester Gas 8 Electric Corp 8 Central Hudson Gas 8 Elec ri

Corp, EF F alA~AL gyps, c<g DISTRIBUTION CODE:

Y004S COPIE5 RECEIVED:LTR g EN L i SIZF:.

TITLE: Annual Financial Reports NOTES:Standardized Plant.

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I40 8 ROADWAY N EW YOR K, N. Y. I0005 2I2 289 IIOO TELEX> 423@IS LEBoEUF, LAMB, LEIBY 8c, MAGRAE A PARTNCRSHIP INCLUDINO PROFCSSIONAI. CORPORATIONS l333 NEW HAMPSHIRE AVENUEf N W.

WAs H IN GTO N J D ~ C. 20 036 202

>I57 ~ 7500 47 BERKELEY SOUARE LONDON WIX 508> CNOLAND TELEPHONEIOI 493 733I TCLEX: 25955 83 CENTRAL STREET BOSTON, MA 02I09 BI7 451 I38S TELEX> 4%0274 TELECOPICR: 202 457 7543 500 KCARNS SUILDINO I38 SOUTH MAIN SALT LAKE CITY, UT 84IOI BOI 355 BQIS 338 FAYETTEVILLESTREET MALL P.0. SOX 750 RALCIOH,NC 27802 QI9 S33 9789 May 27, 1982

%II PEOUOT AVENUE SOUTHPORT>CT 08490 203 259 8383 Mr. Harold R. Denton Director of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Washington, D.C.

20555'q fi q( fy g l~@

Re:

Nine Mile Point Unit 2 Docket No.

50-410

Dear Mr. Denton:

Pursuant to Section 50.71(b) of the Commission's regulations, I enclose a copy of the 1981 Annual Report of each of the follow-ing owners of Nine Mile Point Unit 2:

~ I.//CP Niagara Mohawk Power Corporation New York State Electric 6 Gas Corporation~

Long Island Lighting Company

~>/0> ~~IV>p A>. ~~~~

Rochester Gas and Electric Corporation

< f I Central Hudson Gas

& Electric Corporation, Sincerely yours,

LeBOEUF, LAMB, LEIBY 6 MarHAE By Leonard M. Trosten Attorney for Niagara Mohawk Power Corporation enclosures

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NAGARA M K Po>ZR CORPORATION AND SUBS

.RY COMPANIES STATEMENT OF CONSOLIDATED EARNINGS (In Thousands of Dollars)

Three Months Ended June 30, Twelve Months Ended. June 30, Operating revenues:

Electric Gas Operating expenses:

Operation:

Fuel for electric generation Electricity purchased Gas purchased Other operation expenses Maintenance Depreciation and amortization Federal and Foreign income taxes Other taxes Operating income Other income and deductions Allowance for other funds used during construction Federal.

income tax credits Other items (net)

Income before interest charges Interest charges:

Interest on long-term debt Other interest Allowance for borrowed funds used during construction Net income Dividends on preferred stock Balance available for common stock Average number of shares of common stock outstanding during the period (in thousands)

Earnings per average share of common stock 114,844 72,548 87,948 69,435 29,002 36,577 59 910 50i5505 85575 15>974 6,417 3,941 2

5332 112 077 37>507 75077 73,271

~9478

'~~7 85,283 40.75 19 2

$457,458 129 892 5557350 19 1

$439,806 88 410 52 21 141,415 77,82o 54,434 66,358 28,614 25,190 12,519 52,563

~5913

~9303 11,578 4,63o 1 78o 1719B le 291 31,958 5 458 (5 821) 31 595 55,696

~8939 76,268

)0.61 19 2

$1,789 263 495 8o8 2 2 5,071 5525020 26o,614 343,9V4 267,116 121,880 111,775 89,178 228 357 1 97 91 310 157 56,842 22,433 12,361 91 3

01 793 1395715 23,701 ta;<

1 0 Ol 261,779 36 457 22 22 83,621 g2.69 19 1

$1,588,493 41o,221 1 99 71 538,224 239,170 289,847 240,615 110,343 98,327 43,816 201 881 1 7 2,223 23 91 41,752 16,002 7,868 5

22 302 113 123,734 16,186 (21,662) 11 25 183,855 31 075 152 7 0 7">913

@.04 The aoove information is not given in connection with any sale any stock or security.

of, or offer to sell or buy

~8206020312 820527 PDR ADOCK 05000220 I',

'DR.".

NIAGARA HAWK POWER CORPORATION AND S IARY COMPANIES CONSOLIDATED BALANCE SHEET CAPITALIZATIONAND LIABILITIES Capitalization:

Common stockholders'quity:

Cbmmon stock 41 pa'r value; authorized 125,000,000 shares; issued 86,285,742 and 83,973,252

shares, respectively.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~

Premium on'capital stock.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~

~ ~ ~ ~ ~ ~

Capital stock expense............................

Retained earnings.....................-..........

86,286 923,937 (10,505) 558,652 83,973 895'04 (10,599) 488i756 June 30, 1982 December 31, (Unaudited) 1981 (In Thousands of Dollars)

Cumulative pref erred stock, authorized 3,400,000

shares, 4100 par value:

Non-redeemable (optionally redeemable),

issued 2,100,000 shares.

~ ~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Redeemable (mandatorily redeemable),

issued 1 f 0 76, 51 0 and 1, 099< 980 shares, respectively g

including sinking fund requirements.

~ ~ ~ ~ ~ ~ ~ - ~

~

Cumulative preferred stock, authorized 9i600i000

shares, 425 par value:

Redeemable, (mandatorily redeemable),

issued 5,808,000 and 5,008,000 shares, respectively, including sinking fund requirements.

~ ~ ~ ~ ~ ~ - ~ ~ ~

Chmulative preference stock, authorized 4,000,000 sharesi 425 par value:

Redeemable (mandatorily reedeemable),

issued 1,080,000

shares, including sinking fund requirements.

~ ~. ~ ~ ~ ~ ~ ~...

~....................

Long<erm debt-

~ ~ ~....................,....

Total capitalization.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

1,558,370 210, 000 104,400 141,050 23, 000 478,450 1,704,486 3i74lg306 1,457,934 210,000 108, 198 123,550 23,000 464,748 1, 619,369 3, 542, 051 Current liabilities:

Short-term debt...-............

LongWerm debt due within one year.

~ ~

~ ~ ~ ~

~ ~

Sinking fund requirements on redeemable pre and preference stock.

~

~ ~ ~

~ ~ ~ ~ ~ ~ ~ - ~ ~ ~ ~ ~ ~ ~ ~ ~

Accounts payable...

~.......

~...

Payable on outstanding bank checks......-..

I Customers deposits

~..

~ ~ ~ ~ ~

~ ~ ~

Accrued taxesoooooooo

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Accrued interest.

~ ~

~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~ ~

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~ - ~ ~ ~ ~ ~ ~ ~

~

Accrued vacation pay-

~ ~. ~

~ ~..

~.............

Gas supplier refunds payable to customers-.

Other ~ ~

~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~

~

~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~

~

ferred Deferred credits:

Income tax refunds............

. ~.

-.. ~ ~ ~ ~ ~ ~

- ~

Mandated refunds to customers......................

Accumulated deferred Federal income taxes. - ~ ~ ~ ~ ~ ~ ~ ~

Other's

~ o ~ ~ ~ ~ i o ~ ~ ~ ~ ~ ~ ~ ~

o i. ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~. o ~ ~ ~ ~ ~

~

92, 000 38,433 11,401 128,439 51,538 4,984 45,001 44g973 19,395 6,790 13,252 456,206 9,943 8,775 157i109 22,446 198i273 123, 330 9,250 7,450 165i 354 50,358 4i769 23,343 36,340 18,367 34,080 5,814 478,455 9,943 16,418 112,544 16,521 155,426 Commitments and Contingencies (Note 3)-..............

4 395 785 4 175 932

~

NZAGARA MOHAWK POWER CORPORATION AND SUBSIDIARy COMPANIES CONSOLIDATED BALANCE SHEET June 30, 1982 December 31, (Unaudited) 1981 (Zn Thousands of Dollars)

AS SETS Utilityplant, at original cost:

Electric ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Nuclear fuel. ~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Gast ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~ ~

Commono ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~

Construction work in progress.

Totale

~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Less-accumulated depreciation Net utilityplant...

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~

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~ ~ ~ ~ ~ ~ ~

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~

and amortization.

~

~ ~ ~ ~ ~ ~ ~

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Other property and investments (Note 2)

~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~

$3,482,340 256,812 434i522 76,297 936i 183 5, 186, 154 1,410 i 014 3,776, 140 61, 076

$3i4lli098 248i836 420, 654 71, 198 833,529 4,985,315 li348,738 3,636,577 42'30 Current assets:

Cash'ncluding time deposits of 4240 and

4500, respectivelyo

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~

Accounts receivable (less-allowance for doubtful accounts of 42,800)...............

Material and supplies, at average cost:

Coal and oil for production of electricity.

Others'o

~ ~ ~ ~ ~ s.

~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ i ~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~

Prepaid real estate taxes.......~-.-..

Other prepayments............................

18,978 221, 499 134,699 53 i249 29,460 6,128 464,013 8,259 195,957 149gl02 51,742 2,795 6, 161 414g016 Deferred debits:

Unamortized debt expense.........

Deferred recoverable energy costs.

~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~

~

Extraordinary property losses (Note 3)..

Other ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ o.. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ooo ~, ~

o ~ ~ ~ ~

o ~ ~ i ~ ~ ~

19,590 37,553 23, 185 14,228 94, 556 4 395 785 16,029 50,477 16,703 83,209 4 175 932

0 NIAGARA MOHAN'K PONER CORPORATION 1982 internal Cash Flow projection for Nine Mile No. 1 Nuclear Power Station (Thousands of Dollars)

Net Income After Taxes LESS:

Dividends Paid Retained. Earnings 1981

~Actual

$220,643 162 066

~5577 1982 projected)

$258,514 194,906

~3~0 Adjustments:

Depreciation and Amortization Deferred Income Taxes and Investment Tax Credits Allowance for Funds Used During Construction Total Adjustments 139,963

195734,

. 71 890) 133,323'9,498

~94 687)

~8>

4 Internal Cash Flow Average Quarterly Cash Flow

~l46 84

$ 36,596

~16':

48 40,436 Percentage Ownership in All Operating Nuclear Units Nine Mile No. 1 - 10%/8 Maximum Total Contingent Liability 410 000 6/28/82

~

~ 1 4

A narrative statement indicating which capital expenditures (if any) would be curtailed to ensure that retrospective premiums up to $ 10 million would be available for payment.

It is Niagara Mohawk's view that the curtailment of capital expenditures to ensure payment of possible retrospective premiums of up to 910 million would not be a material problem as this amount represents only about 2.4% of currently scheduled construc-tion expenditures, net of Allowance for Funds Used During Construc-tion (AFC), for the year 1982.

DATE:

Au ust 4

1982 CERTIFIED:

NIAGARA MOHAWK POWER CORPORATION w.

John

. Powers Vice President

- Treasurer

4

~

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MQYICE THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT, CONTROL.

THEY HAVE BEEN CHARGED TO YOU FOR A LIMITEDTIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016.

PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVALOF ANY PAGE(S)

FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

DEADLINERETURN DATE RECORDS FACILITYBRANCH Dsckstk So-Kwo COIItI'efk EZ.Ohe~o glz

,KIMfORY009KFVFILF tmI Y CENTRM HUDSON Gas O'lectric Corporation Qo,o o

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CENTIRAL HUDSON GAS 8 ELECTRIC CORPORATION 284 SOUTH AVENUE Telephone 914 452-2000 POUGHKEEPSIE, N.Y. 12601 of ONE WALLSTREET Telephone 212 344-5680 NEW YORK, N.Y. 10005 APRIL 1982 TWENTY-THIRDEDITION

TABLE OF CONTENTS Introduction Area Served Growth Summary Management

& Employees Rates Company Securities & Markets Construction Program Forecast of Cash Requirements Financing Cash Requirements Statement of Income Income from Operations Electric and Gas Departments Summary Balance Sheet at December 31 Statement of Retained Earnings and Statement of Changes in Financial Position Detail of Utility Plant and Accumulated Depreciation Electric Revenues, Sales, and Customers Gas Revenues, Sales, and Customers Electric and Gas Production Data Labor Data and Industrial Revenues Capitalization and Financial Ratios Detail of Long-term Debt, Preferred Stock, and Common Stock Directors, Officers, Transfer Agents, Registrar, General Counsel, and Independent Accountants Page 2

2 2

3 5

6 7

7' 9

10 11 12 13 14 15 16 17 18 19 THIS REPORT IS NOTAREPRESENTATION OR PROSPECTUS IN REGARD TO THE COMPANY'S SECURITIES AND IS NOT FURNISHED IN CONNECTION WITH ANY PROPOSED SALE OR OFFER TO SELL OR BUY ANY STOCK OR SECURITIES.

DATA CONTAINED HEREIN WITH RESPECT TO ANY PARTICULAR YEAR SHOULD BE CONSIDERED IN CONJUNCTION WITHTHE NOTES AND COM-MENTS APPEARING IN THE COMPANY'S ANNUALREPORT FOR THATYEAR TO ITS SHAREHOLDERS.

INTRODUCTION This Financial and Statistical Report, includ-ing charts and tabulations covering the ten-year period 1971-1981, is designed to supplement the Annual Report to shareholders which contains a detailed review of operations during the year 1981.

AREA SERVED LOCATION Central Hudson serves a 2,600 square-mile area, including all or parts of eight counties, in New York's Mid-Hudson Valley. The area ex-tends about 85 miles along the Hudson River and about 25 to 40 miles east and west from the river. The southern end of the territory is about 30miles north of New YorkCityand the northern end is about 10 miles south of Albany. A map of the area is shown inside the back cover.

POPULATION The population ofthe Company's service area is currently estimated to be 542,000. During the last ten years the population has increased approximately 9%, or an average annual increase of.9%.

UTILITYSERVICE Electric service is available throughout the territory, while gas service is provided in and about the cities of Poughkeepsie,

Beacon, Newburgh, and Kingston and in certain outlying and intervening territory.

ECONOMY The Company's territory reflects a diversified economy, including manufacturing,

research, farming, governmental

agencies, public and private institutions, resorts, and wholesale and retail trade.

The Company's largest customer is Interna-tional Business Machines Corporation, which accounted for nearly 11% of the Company's total electric revenues and about 12% of its total gas revenues during the year 1981.

GROWTH

SUMMARY

Growth over the last five and ten years in terms ofearnings per share, dividends declared, electric and gas sales, revenues, and plant is shown below:

Average Annual Growth Rates 1976-1981 Average Annual Growth Rates 1971-1981 Earnings Per Share Common Stock Dividends Declared Per Share Common Stock Electric Sales Own Territory (a)..........

Electric Revenues Own Territory (a)....

Gas Sales (b)

Gas Revenues (b)

Electric UtilityPlant (c)

Gas UtilityPlant (c) ~...... ~..........

~

(a) Excluding sales to other utilities.

(b) Excluding sales of interruptible gas service.

(c) Including construction work in progress.

7.5%

6.3 2.1 14.9 1.3 12.0 8.3 3.8 3.9%

4.4 1.4 14.6

.2 10.2 7.2 3.1 Since 1973 electric sales within the Com-pany's service territory have been affected by the impact of higher fuel costs, increased rates, conservation efforts, and more efficient cus-tomer utilization of electricity.

As a result of national shortages of natural gas supplies and pursuant to an order of the New York State Public Service Commission (PSC) issued on October 26, 1971, the Company's gas tariffs precluded the sale of firm gas service to new commercial and industrial customers.

However, as a result ofthe increased availability of gas, primarily due to the passage of the National Energy Actin 1978, the PSC has removed essentially all of such restrictions.

MANAGEMENT5 EMPLOYEES The main office of the Company is located at Poughkeepsie, New York, and a financial office is located at One Wall Street, New York City.

(For telephone numbers see inside front cover.)

A list of officers and members of the Board of Directors may be found on page 19.

The Company is an equal opportunity em-ployer which maintains an active management development program and offers a wide range of educational opportunities. Included in the Com-pany's educational policy are provisions for financial assistance to employees for voluntary education, training, and other self-improvement programs.

Other benefits provided by the Company are set forth on page 16.

Union shop contracts are maintained with Locals 320 and 2218 of the International Broth-erhood of Electrical Workers (AFL-CIO). The Company and these employee groups have maintained an excellent record of cooperation.

The present two-year contracts between the Company and the I.B.E.W. Locals became effective July 1, 1981 and continue through June 30, 1983.

EMPLOYEE DATA

'Numberof Em lo ees December31.1981 a

25 years or more of service..

15-24 years of service 5-14 years of service Less than 5 years of service..

Total Total 471 197 464 213 1,345 Officers 13 Supervisory and Professional 161 43 84 76 364 Classified 302 151 378 137 968 (a) Includes 113 employees at the Roseton Plant in which the Company had a 30% interest during 1981 (see page 16).

RATES GENERAL The electric and gas retail rates of the Company applicable to service supplied within the State of New York (other than contractually established rates for service to municipalities and governmental bodies) are regulated by the PSC. Transmission rates and rates forelectricity sold for resale in interstate commerce are regulated by the Federal Energy Regulatory Commission.

RATE INCREASES Increased electric and gas rates became effective on July 18, 1981. The PSC, by order dated July14, 1981, authorized the Company to file revised electric and gas tariffs designed to increase electric revenues by $31,690,000, or 11.8% based on estimated electric sales under filed rates for the twelve-month period ending July 31, 1982, and gas revenues by $2,654,000, or 5.8% based on estimated gas sales under filed rates for the same period. The total revenue increase authorized by the PSC was approxi-mately 88% of the amount requested by the Company in its rate increase application filed in August 1980.

The PSC allowed a return on common stock equity of 16.9% and an overall return on the Company's total invested capital of 12.24% and authorized certain accounting changes designed to improve cash flow. In its determination with respect to the increased electric rates, the PSC decided to defer approval of the Company's request for increased annual electric revenues of $7,718,000 for the amortization and recovery in rates over a five-year period of its investment in the terminated Sterling Nuclear Unit No. 1, until it had reached its decision in a separate proceeding with respect to such matter. Re-garding electric sales to other utilitiesfor resale, the PSC modified its prior treatment and provided that net revenues (revenues less incremental

costs, principally fuel) from all sales for resale, except certain continuing firm sales imputed in deriving the base

rates, be flowed through the electric fuel adjustment clause to the Company's retail customers as a credit to fuel costs.

On November 23, 1981, the Company filed a request with the PSC for an 11.1% increase in electric revenues and a 5.9% increase in gas revenues from firm customers. The new rates have been requested to cover the estimated cost of providing service forthe twelve-month period November 1, 1982 through October 31, 1983. In its filing, the Company is requesting an 18.5%

return on common equity and a 13.75% return on total invested capital. The Company's elec-tric rate increase filing includes $9.9 million for the amortization of costs associated with the Sterling Project.

Rate increases authorized by the PSC during the five-year period January 1, 1977 to December 31, 1981 are summarized in the table below.

Effective Date 7/18/81 7/18/81 11/3/79 11/3/79 7/16/77 5/11/77 Service Electric Gas Electric Gas Electric Gas Amount Requested

$35,677,000 3,171,000 22,992,000 2,097,000 13,752,000 1,669,000 Amount Granted

$ 31,690,000',654,000 22,043,000'*

1,563,000 6,993,000"

1,669,000

% Increase of Test Year Revenues 11.8%

5.8 11.6 4.8 5.0 9.7 Return on Common Equity 16 9%

16.9 14.0 14.0 13.3 13.3 Total Invested Capital 12.24%

12.24 9.93 9.93 9.21 9.21

'The Commission also directed the Company to include an additional $.012 per kwhr. of fuel costs in its base rates for electricity in order to make them more representative and to reflect more closely the total cost of serving customers, including the cost of fuel. This had the effect of reducing the amount of fuel adjustment charges and increasing the base rates.

"Effective November 3, 1979 the Company transferred an additional $.015 per kwhr. of fuel costs to its rate base.

"'Afterreflecting the effect of the disposal of a substantial amount of unused capacity pursuant to a new agreement with Con Edison.

FUEL ADJUSTMENT CLAUSES The Company's tariff for electric service includes a fuel cost adjustment clause pursuant to which all retail electric rates are adjusted to reflect changes in the average cost of fuels used in electric generation and certain purchased power costs from the average of such costs included in base rates. Generally, there is a delay of approximately 40 days for customers whose bills are rendered monthly and 70 days for customers whose bills are rendered bi-monthly between a change in fuel costs and the time when rates charged fo customers are adjusted.

The Company's tarifffor gas service includes a gas cost adjustment clause pursuant to which all retail gas rates are adjusted to reflect changes in the price of natural gas purchased from pipeline suppliers and certain costs of manu-factured gas from the levels of such costs included in base rates. Generally, there is a delay of approximately one month between a

change in the cost of gas and the time when rates charged to customers are adjusted.

In addition, in the Company's last gas rate case the PSC imputed $2 million of net revenues from interruptible sales and electric generation usage in the determination of base rates. Fiftypercent of any amount in excess of $2 million is flowed through the gas cost adjustment to reduce the bills of firm gas customers and the remaining 50% is available for additional depreciation accruals.

In accordance with permission granted by the PSC, changes in electric fuel costs and gas costs are deferred in the Company's accounts until the month in which such changes are reflected in the electric fuel or gas cost adjust-ment, thereby permitting the Company to match costs and revenues.

SALES FOR RESALE The net revenues (revenues less incremental costs) from all sales of energy and capacity to other utilities, other than firm capacity, are excluded from the derivation of retail rates and are credited to its retail customers via the fuel adjustment clause. Such sales and revenues are very unpredictable and subject to the influences of many factors that are beyond the control of the Company; accordingly, the Company be-lieves that it is inadvisable to impute any level of net revenues from such sales in the derivation of base rates.

RATE DESIGN Effective March 15, 1978, the Company's tariff forelectric service was revised to include time-of-use rates for large commercial and industrial customers.

Fifty-four customers take service under this form of rate and some of these customers have taken actions to reduce loads during peak periods.

By order issued in November 1979 the PSC instituted a proceeding to consider the electric rate design of the Company and directed that

specific consideration be given to (i) allocation of revenues among service classifications; (ii) rate structure within each classification; (iii)the Company's marginal cost study; and (iv) block designs sensitive to marginal cost, seasonal rates, and time-of-day rates. It is expected that the PSC will render a decision in this proceed-ing prior to or concurrent with a decision in the Company's current electric rate proceeding.

Any future changes in rate design could affect customer usage of electricity.

COMPANY SECURITIES K MARKETS During the ten-year period from January 1,

1972 through December 31, 1981 the Company issued securities with proceeds of approxi-mately $293 millionof which $67.8 millionwas applied to the repayment of long-term debt which matured during the period. The amount of securities outstanding at December 31, 1981 was113% greater than the amount outstanding at December 31, 1971. In addition, during this same ten-year period retained earnings in-creased by about $53 million.

FIRST MORTGAGE BONDS At December 31, 1981, the Company had

$239.5 millionprincipal amount offirstmortgage bonds outstanding, of which $ 17 million had been placed privately.

On August 26, 1981 the Company issued $30 million principal amount of 17~/s% bonds which mature in 1991.

The Company's first mortgage bonds are rated H6 (Middle A) by Duff and Phelps, Inc.;

"A-" by Standard 8 Poor's Corporation and Fitch Investors Service; and "Baa" by Moody's Investors Service.

Additional bonds may be issued under the Mortgage Indenture for purposes other than refunding outstanding bonds only if net earn-ings, as defined in the Mortgage, for twelve consecutive calendar months within the fifteen calendar months preceding the date of issue shall exceed two times the interest charges for one year on all bonds outstanding under the Mortgage plus the additional bonds to be issued.

For the twelve months ended December 31

~

1981, the Company could have issued

$40 million of additional first 'mortgage

bonds, assuming an annual interest rate of 16%.

Furthermore, any additional bonds issued under the Mortgage shall not in principal amount exceed 66'/3% of the net bondable value of property additions as that term is defined in the Mortgage. As of December 31, 1981, the amount of such net bondable value was approximately

$69 million, and the amount of the additional first mortgage bonds issuable with respect thereto was approximately $46 million.

UNSECURED SINKING FUND NOTES

$7.7 million principal amount of 4.85% prom-issory notes due 1995 was outstanding at December 31, 1981. These notes were placed privately and have an annual sinking fund requirement of $ 175,000.

PREFERRED STOCK As of December 31, 1981, 490,300 shares (4~/2% 475%, 772% 744%, and 840% series) were held by 3,414 holders. These shares are traded over the counter. There were also out-standing at that time 60,000 shares (4.35%

series) and 60,000 shares (4.96% series) both of which series were placed privately. The series of preferred stock which were not privately, placed are rated "A-"by Standard 8 Poor's Corporation and Fitch Investors Service, ff7 (LowA) by Duff and Phelps, Inc., and "Baa" by Moody's In-vestors Service.

Under provisions of the tax laws, a portion of the dividends paid on the 4k% and 7.72% series of preferred stock is deductible for purposes of computing the Company's federal income tax, and, accordingly, a corporation receiving divi-dends on these series of preferred stock willnot be allowed the full 85% credit. All other pre-ferred stock series qualify for the 85% credit for corporate shareholders.

The Company's Certificate of Incorporation, as amended, provided at December 31, 1981 for a total of 1,200,000 autho'rized shares of pre-ferred stock, $ 100 par value. 610,300 shares are issued and outstanding and 589,700 shares are authorized but unissued.

COMMON STOCK The stock has been listed on the New York Stock Exchange since 1945 and dividends have been paid by the Company and its principal predecessors for 78 years.

On August 26, 1981 the Company sold 900,000 new shares of its common stock and received proceeds of $ 15.4 million from the offering.

As of December 31, 1981, 7,456,005 shares were outstanding.

The number of registered holders of common stock was 25,296 at that

time, and the largest single holder of record, other than the nominee, Cede 8 Co., for The Depository Trust Company, had less than 2% of the outstanding shares.

The Company's Certificate of Incorporation, as amended, provides for10,000,000authorized shares of common stock. Accordingly, as of December 31, 1981, the number of authorized but unissued shares amounts to 2,543,995.

Additional information on outstanding secu-rities is shown on page 18.

The Company has available for interested shareholders an Automatic Dividend Reinvest-ment and Stock Purchase Plan providing forthe issuance of original issue shares of stock.

CONSTRUCTION PROGRAM The Company is engaged in a construction program which is presently estimated to involve cash expenditures during the period 1982 Construction Expenditures':

Participation in Unit No. 2 of the Nine Mile Point Nuclear Station (9%).......

Conversion of Danskammer Units 3 and 4 to coal-firing...

Purchase of an additional 5%

interest in the Roseton Plant..

Expenditures excluding major generating projects..........

Total.

through 1986 of $316.6 million.The estimates by years are as set forth below:

$30.5

$31.0

$25.9

$27.4

$14.1

$ 128.9 8.7 26.9 8.9 44.5 13.4 13.4 28.0 28.1 22.0 25.1 26.6 129.8

$71.9

$59.1

$56.6

$79.4

$49.6

$316.6 Total 1982 1983 1984 1985 1986 1982-1986 (Millionsof Dollars)

'Excluding allowance for funds used during construction (AFDC), a noncash item.

As shown in the above table, the two most significant construction projects are the Com-pany's 9% participation (97 mw.) in Unit No. 2 of the Nine Mile Point Nuclear Station (NMP-2) and the conversion of Danskammer Units 3 and 4 from oil-firingto coal-firing.

NMP-2 is being constructed by Niagara Mohawk Power Corporation in Oswego County, New York, and presently scheduled for opera-tion in 1986. The cotenants'urrent estimate of the cost of NMP-2 is $2.4 billion, excluding the cost of nuclear fuel and AFDC, of which the Company's 9% share would be $216 million.

With the addition of the cost of nuclear fuel, currently estimated to be $9 million,and AFDC, currently estimated to be $128 million,the total cost of the Company's interest in NMP-2 is currently estimated to be $353 million.

Based on current fuel cost projections, the conversion of Danskammer Units 3 and 4 from oil to coal appears to provide substantial fuel savings for the Company's customers.

In order to finance both its continued participation in NMP-2 and the coal conversion, the Company is currently planning a sequential (rather than simultaneous) conversion of the two units with the first unit in operation on coal in September 1986 and the second unit in operation on coal not later than September 1988. Such an ap-proach willenable the Company to levelize its cash expenditures, reduce its financing require-ments in 1984-1986, and enhance its ability to raise the necessary capital. The total cash cost ofa sequential conversion is currently estimated to be $83.8 millionwithout flue gas desulfuriza-tion (FGD) equipment and $ 193.3 million with FGD equipment. In view of the many regulatory and environmental problems involved in coal conversion, the current plans and cost estimates may be changed substantially.

Estimates of construction expenditures are subject to continuous review and adjustment and actual construction expenditures may vary from such estimates.

FORECAST OF CASH REQUIREMENTS The Company's tentative annual cash require-ments for the years 1982-1986 based upon the above construction program and exclusive of funding the $ 16.5 million of short-term debt outstanding at December 31, 1981 are shown below:

Construction Expenditures:

Cash Expenditures (from page 6)

Total 1982 1983 1984 1985 1986 1982-1986 (Millionsof Dollars)

$71.9

$59.1

$56.6

$79.4

$49.6

$316.6 Internal Funds Available:

Depreciation Accruals:

Charged to Depreciation Expense.......

17.5 Charged to Other Income Accounts.......5 Total.

18.0 Deferred Income Taxnet................

7.6 Retained Earnings (a)......

9.2 AFDC (b)............

(16.3)

Sterling Amortizationnet.................5 Other

~...

~ ~..

.1 Totallnternal Funds 19.1 Balance of Construction Requirements to be Financed 52.8 18.9 19.4 20.0

.5

.7

.7 19.4 20.1 20.7 9;7 12.0 13.2 9.4 10.4 11.5 (20.1)

(20.2)

(22.2) 2.8 3.2 3.7

.6

.7

.8 21.8 26.2 27.7 27.7 103.5

.8 3.2 28.5 106.7 1?.5 60.0 12.2 52.7 (20.0)

(98.8) 4.3 14.5

.9 3.1 43.4 138.2 37.3 30.4 51.7 6.2 178.4 Refunding of Long-Term Debt Securities:

First Mortgage Bonds 6.0 Promissory Notes.....................2 Total...............

6.2 Other Cash Requirements........

3.0 Total Cash Requirements...........

$62.0 2

2 2.5

$40.0 II 11.0 2

2 11.2

.2 5.4 6.1

$47.0

$58.0 2

2 3.6 17.0 1.0 18.0 20.6

$ 10.0

$217.0 (a) Growth in Retained Earnings forthe years 1983 through 1986 is assumed to be 4% ofthe average common equity foreach ofthe respective years.

(b) Assumes an AFDC rate of 12.5% for 1982; 13.75'/8 for 1983; 12.58/8 for 1984 and 1985; and 12.08/8 for 1986. Assumes a net of tax AFDC rate for Unit No. 2 of the Nine MilePoint Plant; also assumes AFDC as a percent of income available forcommon stock willbe limited to 50% for the years 1984 and 1985 and 45% for the year 1986.

FINANCING CASH REQUIREMENTS As shown above, it is currently estimated that 44% of the cash construction expenditures for the five-year period 1982-1986 will be provided internally and the balance will be met from interim short-term borrowings and the issuance of new securities.

The issuance of new securities will be based upon the Company's general financial policies in regard to capitalization ratios, coverage, and pay-out ratios as well as market and other economic conditions existing over the next five years.

DOLLARS 5.00 EARNINGS PER SHARE 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00

.50 1971 72 73 74 75 76 77 78 79 80 81 DIVIDENDS DECLARED PER SHARE AND PAY-OUT RATIO DOLLARS 2.50 2.25 2.00 1.75 PER CENT 100 ~ DIVIDENDS DECLARED PER SHARE 80 ~ PAY-OUT 70 RATIO 1.50 60 1.25 1.00

.75

.50

.25 50 40 30 20 10 Dividends declared increased from $2.20 in 1980 to $2.39 in 1981. The pay-out ratio re-mained relatively constant decreasing from 65% in 1980 to 64% in 1981.

The Company's dividend policy has been to generally maintain a pay-out ratio of approxi-mately 65% but the figure has fluctuated widelyin some years because of the variations in yearly earnings.

1971 72 73 74 75 76 77 78 79 80 81

STATEIv)ENT OF INCOME(Thousands of Dollars) 1981 1980 1979 1978 1977 1976 1975 Operating Revenues Electric (1).

Gas (2)............

Total.

Operating Expenses Operation Maintenance Depreciation Operating Taxes Federal Income Tax Deferred Income Tax Net Total..

333,966 12,450 16,108 29,274 8,981 2,569 235,252 11,132 15,220 24,481 (2,534) 8,744 92,604 6,611 12,569 16,003 3,783 670 100,917 6,794 12,859 16,975 4,050 2,342 133,688 8,098 13,279 18,560 4,552 2,547 169,742 9,818 14,839 21,268 171 5,794 132,554 8,151 13,393 18,779 6,504 3,387 403,348 292,295 221,632 182,768 180,724 143.937 132,240

$398,392

$ 291,999

$225,971

$ 186,264

$ 184,391

$ 149,884

$ 138,414 48.489 35.994 28 813 24 738 23 449 20 831 19 897 444,881 327,993 254,784 211,002 207,840 170,715 158,311 Operating Income 41,533 35,698 33,152 28,234 27,116 26,778 26,071 Other Income and Deductions Allowance for Equity Funds Used During Construction Federal Income Tax Credit....

Deferred Income Tax Credit..

Other Net Total.

6,198 2,528 220

~533) 8,413 2,173 1,151 2,899 4,254 4,871 4,495 3,476 2,388 1,560 796 418 933 721 628 409 253 178 138 75 30

~295) ~333) ~348) ~90) ~84) 324 727 7

17 1,075 Income before Interest Charges 49,946 40,569 37,406 31,133 29,289 27,929 27,146 Interest Charges Interest on Mortgage Bonds........ ~......

Interest on Unsecured Long-term Debt.....

Interest on Short-term Debt.............:.

Other Interest Allowance for Borrowed Funds Used During Construction Amortization of Premium and Expense on Debt Total 21,043 1,815 4,296 652 15,017 3,778 4,763 305 11,306 5,195 3,422 262 10,750 762 1,673 272 10,627 805 1,075 793 10,469 1,467 704 308 8,627 1,483 2,570 445 (7,718)

(7,287) 179 95 (4,536) 63 (2,640) 56 (1,831) 73 (1,014) 68 (381) 65 20,267 16,671 15,712 10,873 11,542 12,002 12,809 Net Income...........................

Dividends on Preferred Stock. ~..........

Income Available for Common Stock.........

Dividends on Common Stock...... ~.........

29,679 4,126 25,553 16,751 23,898 4,126 19,772 13,308 21,694 4,126 17,568 10,961 20,260 4,126 16,134 10,531 17,747 3,626 14,121 8,966 15,927 2,866 13,061 8,382 14,337 2,866 11,471 7,737 Retained Earnings 8,802 6,464 6,607 5,603 5,155 4,679 3,734 65 1.10 Common Stock:

Average Shares Outstanding (000's)........

6,867 5,851 Earnings Per Share on Average Shares Outstanding Dollars........ ~.....

3.72 3.38 Dividends Declared Per Share Dollars...

2.39 2.20 Dividends Paid Per Share Dollars........

2.33 2.18 Pay-out Ratio on Dividends Declared-Per Cent 64 Retained Earnings Per Share on Average Shares Outstanding Dollars...........

1.28 Earnings Per Share Assuming Conversion oft)'!e Convertible Debentures Dollars..

(3) 3.26 (1)~>See footnote (a) on page 13.

(3) The 4V84h convertible debentures were paid 8

(2). See footnote (a) on page 14.

at maturity on June 1, 1981; therefore. at December 31 ~ 1981 there was no effect on earnings per share.

5,373 3.27 2.04 1.99 62 1.23 3.16 5,310 3.04 1.96 1.94 64 1.06 2.93 4,873 2.90 1.84 1.80 63 1.06 2.70 4,873 2.68 1.72 1.72 64

.96 2.50 4,440 2.58 1.72 1.72 67'84 2.40

RATIO OF ELECTRIC & GAS REVENUES TO TOTAL OPERATING REVENUES PER CENT 100 90 80

~ ELECTRIC Q Gas 70 60 50 40 30 20 10 1972 73 74 75 76 77 78 79 80 81 PER CENT 20 RATIO OF OPERATING INCOME TO CORPORATE NET PLANT 18 16 14 12 10 TOTAL MAINTENANCEAND DEPRECIATION AS PER CENT OF TOTAL REVENUE PER CENT 100 1971 72 73 74 75 76 77 78 79 80 81

'Excluding Constructon Work in Progress 90 80 70 60 50 40 30 20 10 The lower percentages for the years sub-sequent to 1973 have resulted from the substantially higher levels of revenues ex-perienced in those years. Revenues for those years have been Impacted by the recovery of increased eleCtriC fuel costs and higher gas

costs, In 1 981 the Company's annual provisions for depreciation amounted to approximately 3.34% of the original cost of averago depre-cfabte properly ln service. The average rate lor the Bectric Department amounted to 3.tftyo and for the Gas Department 3.79yo.

1971 72 73 74 75 76 77 78 79 80 81

Notes OU OI-K

1974

$ 114,482 17 007 131,489 1973

$77,778 13 585 91,363 1972

$71,691 14 193 85,884 1971

$64,881 13 788 78,669 10-Year

%~7o Chen e

514 237 466 Dividends Paid Nontaxable Portion of Common Stock Dividends Nontaxable for Federal Income Tax Purposes 82,327 5,250 10,312 14,529 (4,098) 3,087 111,407 40,842 5,471 9,509 12,787 2,487 869 71,965 36,768 4,863 9,084 11,987 3,454 375 66,531 20,082 19,398 19,353 34,152 5,537 8,058 10,793 2,586 283 61,409 17,260 878 125 100 171 247 808 557 141 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971

$2.33 2.18 1.99 1.94 1.80 1.72 1.72 1.72 1.61 1.51 1.48 7(a) eo(a)

None(a)

None(a) 10(a)

None(a) eo(a) 25(a) 45.44 64.33 2,731 2,080 1,754 1,884 1,040 204

~83) ~8) 1,764 301

~95) 1,970 972 538

~52)

(925) 920 814 (a)

As initiallyreported to shareholders; subject to acceptance by U.S. Treasury Department.

22,813 21,478 21,323 18,180 175 7.,904 1,500 3;164 191 6,956 1,516 1,787 150 6,758 1,533 1,016 130 5,473 1,480 1,301 158 284 23 230 313 (2;059) 63 10,763 (2,211) 60 8,258 (2,071) 60 7,426 (1,142)

(576) 52 244 7,322 177 12,050 2,866 13,220 2,827 13,897 1,974 10,858 1,820 173 127 9,184 7,328 e

1,856 10,393 6,512 11,923 5,963

$ 3,881

$ 5,960 9,038 5,066

$ 3,972 183 231 122 4,230 2.17 1.72 1.72 3,923 2.65 1.66 1.61 3,881 3.07 1.52 1.51 3,423 2.64 1.48 1.48 101 41 61 57 79 63 50 56

.44

.99 1.54 1.16 2.03 2.45 2.82 2.44

INCOME FROM OPERATIONS ELECTRIC AND GAS DEPARTMENTS (Thousands of Dollars)

Electric Operating Revenues 1981

. $398,392 1980

$291,999 1979

$225,971 1978

$ 186,264 1977

$ 184,391 1976

$ 149,884 1975

$ 138,414 Operating Expenses Production Operation............

270,631 Maintenance..........

4,767 Transmission Operation......

~..,..

2,412 Maintenance..........

1,020 Distribution Operation............

4,558 Maintenance..........

4,643 Customer Accounts and Service.....

5,978 Sales Administrative & General Operation...

16,530 Maintenance.

530 Total Operation and Maintenance.....

311,069 Depreciation 13,974 Operating Taxes......

~

.. 25,273 Federal Income Tax.........

8,112 Deferred Income Tax Net............

2,351 Total Operating Expenses............

360,779 Operating Income

~.

.... $ 37,6t3 183,727 3,964 2,020 1,098 4,017 4,372 4,852 13,743 553 218,346 13,633 21,141 (2,328) 8,428 259,220

$ 32,779 128,509 3,159 1,773 1,340 3,527 3,673 4,213 11,304 602 158,100 13,305 18,394 (26) 5,759 195,532

$ 30,439 97,415 2,543 1,792 971 3,260 3,210 3,991 10,924 454 124,560 11,887 16,129 5,658 3,141 161,375

$ 24,889 101,347 2,699 1,582 843 3,000 3,172 3,695 9,211 341 125,890

~

11,813 15,985 4,426 2,241

'2,553 2,247 1,604 582 2,917 2,659 3,468 7,701 314 94,045 11,431 14,507 4,035 2,226 66,590 2,706 1,600 457 2,773 2,226 3,052 6,822 257 86,483 11,186 13,690 3,902 392 160,355 126,244 115,653

$ 24,036

$ 23,640

$ 22.761 Gas Operating Revenues

... $ 46,489

$ 35,994

$ 28,813

$ 24,738

$ 23,449

$ 20,831

$ 19,897 Operating Expenses Production Operation............

28,690 Maintenance..........

68 Transmission Operation............

370 Maintenance..........

296 Distribution Operation............

1,427 Maintenance..........

1,078 Customer Accounts and Service.....

1,052 Sales

~ 87 Administrative & General Operation...

2,231 Maintenance.

48 Total Operation and Maintenance..

~..

35,347 Depreciation 2,134 Operating Taxes.

4,001 Federal Income Tax 869 Deferred Income Tax Net............

218 Total Operating Expenses............

42,669 Operating Income

. 3 3,920 22,602 52 324 241 1,256 795 761 39 1,911 57 28,038 1,587 3,340 (206) 316 16,763 73 311 214 1,148 687 629 1,565 70 21,460 1,534 2,874 197 35 11,771 50 280 192 1,074 681 587 1,460 50 16,145 1,506 2,650 846 246 11,783 54 284 224 987 722 521 1,278 43 15,896 1,466 2,575 126

.306 9,809 36 240 197 866 710 557 1,202 49 13,666 1,428 2,468 15 116 9,072 3

211 206 894 712 485 1,105 44 12,732 1,383 2,313 (119 278 2 919 2,713 3,345 3,080 3,138 3,310 (Expressed in Per Cent) 33,076 26,100 2t,393 20,360 t7,693 t6,667 Ratio of Operating Income to Year-end Net Plant(a):

Electric (includes allocation of common plant) 12.33 Gas (includes allocation of common plant)..

9.75 Corporate 12.03 10.71 7.38 10.33 9.87 7.23 9.56 8.95(b) 8.95 8.95(b) 8.57 8.20 8.52 8.60 8.53 8.59 8.33 9 05 8.41 Total Maintenance and Depreciation as Per Cent of Total Revenue.

Ia) Net Plant excludes construction work in progress.

(tf) Net Plant for 1978 excludes the 100k interest in the s Roseton Plant purchased as of 12/31/78.

6.42 8.03 9.68 10.21 10.29 11.51 12.1

UTILITYPLANT MILLIONSOF DOLLARS 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50

~ NET UTILITYPLANT

~ PLUS CONSTRUCTION WORK IN PROGRESS

~ NET UTILITYPLANT Net utility plant plus construction work in

progress, increased 90% during the last 10 years.

The average annual growth rate during this period was 6.2%.

Gross additions to utility plant (including construction work in progress) in the last 5 yearsamount toabout35%of total1981 plant.

The comparable figure for the last 10 years is 55%.

Net utilityplant increased 64% during the ten-year period 1971-1981 and the average annual growth rate was 5.1%,

1971 72 73 74 75 76 77 78 79 80 81 CAP ITALIZATION MILLION 650 600 550 500 450 400 350 300 250 200 150 100 50 S OF DOLLARS

~ CAPITALIZATION PLUS SHORT TERM DEBT

+ CAPITALIZATION Capitalization increased 117% during the last 10 years while capitalization plus short-term debt increased 102% during the same period.

The average annual rates ofgrowth were 7.0%

and 6.4% respectively.

0 19 71 72 73 74 75 76 77 78 79 80 81

1974 1973 1972 1

$ 114,482

$77,778

$71,691 10-Year 1971

%~hchan e

$64,881 514 Ratio of Corporate Operating Revenues Electric (Per Cent)

Gas (Per Cent) 57,970 1,381 1,530, 357 2,901 2,361 2,813 4

5,906 240 75,463 9,029 12,341 (2,978) 2,583 20,831 1,772 1,359 369 2,829 2,231 2,173 231 5,391 240 37,426 8,273 10,789 3,030 793 17,215 1,311 1,136 463 2,593 2,000 2,137 232 5,057 245 32,389 7,898 10,073 3,875 213

$ 17,007

$ 13,585

$ 14,193 8,654 23 206 118 927 725 423 1

992 45 12,114 1,283 2,188 (1,120) 504 5,638 25 208 101 916 692 314 35 917 41 8,887 1,236 1,998 (543) 76 6,161 25 209 104 804 676 326 49 849 39 9,242 1,186 1,914 (421) 162 14,969 11,654 12,083 2,038

$ 1,931

$ 2,110 96,438 60,311 54,448

$ 18,044

$ 17,467

$ 17,243 16,228 2,464 960 377 2,280 1,844 1,777 598 4,360 186 31,074 6,912 9,095 2,614 230 49,925

$ 14,956

$ 13,788 5,885 14 199 90 704 531 260 128 773 31 8,615 1,146 1,698 (28) 53 11,484

$ 2,304 93 151 171 100 152 236 279 185 901 102 178 210 922 623 151 237 388 386 86 229 103 103 305 (32) 189 55 310 86 136 311 271 70 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 90 89 89 88 89 88 87 87 85 83 82 Ratio of Corporate Operating Income Electric (Per Cent) 91 92 92 88 89 88 87 90 90 89 87 Operating Ratio (c)

Electric Gas 87.9 89.2 86.7 91.6 84.0 89.8 81.9 82.1 83.4 85.0 80.1 84.3 80.5 82.6 84.6 91.6 72.6 89.2 70.2 87.0 72.6 83.1 10 11 11 12 11 12 13 13 15 17 18 Gas (Per Cent) 9 8

8 12 11 12 13 10 10 11 13 Corporate 88.1 87.2 84.6 81.9 83.5 80.6 80.7 85.5 75.1 73.0 74.4 6.66 5.94 6.58 8.83 5.67 8.37 8.82 6.37 8.46 8.37 7.11 8.18 (c) The Operating Ratio. expressed as a percent-age, represents the relation of total operating

expenses, excluding federal income taxes, to operating revenues.

11.84 16.40 16.24 17.28 4 Change of 1,000 per cent or more.

Notes I-K I-

<<C 0

Cl cC C9 CIK CD I-O

~KO

<<CI-fL O

X O

l O

CD

~

Z

4.t

SUMMARY

BALANCESHEET AT DECEMBER 31(Thousands of Dollars) 1981 1980 ASSETS 1979 1978 UtilityPlantpage 12................... ~.......

Less Accumulated Depreciation Net UtilityPlant Construction Work in Progress Other Property and Investments Current Assets Cash Special Deposits.....................

Accounts Receivable from Customers Accrued Unbilled UtilityRevenues....

Federal Income Tax Carry-back Other Receivables Materials and Supplies.

Prepayments

$524,517 179,268 345,249 160,249 1,840 2,958 252 39,151 7,535 1,148 26,879 4,259 82,182

$511,167 165,487 345,680 123,827 1,968 3,341 247 31,947 5,771 4,676 1,878 27,264 3,771 78,895

$498,282 152,407 345,875 98,019 1,797 3,267 165 21,428 5,547 3,085 840 24,334 3,163 61.829

$486,>>6 140,813 345,303 72,546 1,787 3,282 258 16,962 4,547 1,594 16,228 3,010 45,881 4

I Deferred Charges Deferred Electric Fuel Costs........................

Deferred Gas Costs'......

Deferred Environmental Research and Development Costs Unamortized Debt Expense Unamortized Project Costs.

0 a

ther

~

~ ~

~

0 0

~

0

~

6,410 1,000 3,422 2,493 4,449 3,824 10,351 623 3,099 2,190 411 3,661 6,711 517 3,982 1,756

~ 513 2,573 2,550 834 3,603 1,555 616 1,591 Total.

~

~ ~

~

\\

~

~ ~

~

21,598

$611,>>8 20,335

$570,705 16,052 10,749

$523,572

$476,266 LIABILITIES Capitalization page 17 Current Liabilities Long-term Debt Maturing within One Sinking Fund Requirements.

Notes Payable to Banks Notes Payable (Commercial Paper)..

Accounts Payable Accrued Taxes Accrued Interest Customer Deposits Dividends Declared.

Other ear e

~ ~

~

~ ~

~ ~ oo

~

Y

$498,968 6,000 175 16,500 26,669 6,073 5,855 2,840 5,654 5,190 74,956

$451,444 18,000 175 18,000 25,808 7,183 4,022 2,677 4,696 5,775 86,336

$404,482 12,000 175 45,000 18,411 5,767 3,148 2,744 3,933 5,262 96,440

$405,352 175 23,000 12,519 5,988 2,523 2,698 3,664 3,647 54,214 l

Deferred Credits and Other Liabilities'.

Accumulated Deferred Income Tax.

Total..

Reclassified for 1980 to conform to current presentation.

10 6,143 31.051

$611,118 4,223 28,702

$570,705 2,439 20,211 2,105 14,595

$523,572

$476,266

BETAIMED EABMIIMGS THOUSANDS OF DOLLARS 9,600 8,800 8,000 7,200 6,400 5,600 4,800 4,000 3,200 2,400 1,600 800 1971 72 73 74 75 76 77 78 79 DOLLARS 3.60 3.30 3.00 2.70 2.40 2.10 1.80 1.50 1.20

.90

.60

.30 0

80 81

~ ANNUAL AMOUNT

~ PER SHARE IMTEIRMALGASH FLOW AMD CASH COMSTRUGTlOM CHARGES MILLIONSOF DOLLARS 65 60 55 50 45 40 35 30 25 20 15

~

I I

1972 73 74 75 76 77 78 79 80 81

~ CASH CONSTRUCTION CHARGES

~ INTERNALCASH FLOW"

)Ic INTERNALCASH FLOW REPRESENTS "NET FUNDS FROM INTERNAL SOURCES" LESS "DIVIDENDS"

1977 1976 1975 1974 1973 1972 1971 445,235 127,049 318,186 49,337 837

$428,543 116,709 311,834 36,610 851

$417,116 107,211 309,905 25,782 850

$403,598 98,444 305,154 19,673 840

$322,684 90,884 231,800 79,350 867

$312,465 83,805 228,660 62,788 864

$289,845 78,807 211,038 54.350 571 3,590 191 14,824 4,769 1,223 14,623 2,646 41,866 3,031 374 12,056 4,308 1,814 13,489 2.732 37,804 2,620 86 9,811 3,655 1,589 11,561 2,455 31,777 1,835 115 11,051 3,257 4,521 970 13,122 2,542 37,413 2,164 140 5,880 2 373 951 6,728 2,567 20,803 1,712 635 5,697 2,114 571 4,423 2,370 17,522 1,799 637 5,202 1,898 578 3,629 2,311 16,054 2,029 539 3,294 401 3,029 269 5,139 893 2,576 1,642 771 1,637 9,194 419,420 1,615 1,472 927 1,373 9,082

$396,181 672 1,524 1,082 1,254 7,830

$376,144 1,417 1,237 1

~ 170 8,963

$372,043 1,320 264 1,072 3,549

$336,369 1,406 316 964 2,686

$312,520 1,245 369 796 2,410

$284,423 J54,706

$338,536

$338,299

$307,061

$282,407

$266,900

$229,589 8,000 175 17,000 10,609 4,414 2,689 2,543 3i322 2.678 51,430 4,200 175 20,000 9,725 2,985 2,720 2,414 2,812 2.777 47,808 325 3,000 11,093 5,106 2,729 2,705 2,812 2,757 30,527 325 30,000 5,000 11,740 1,533 2,755 2,284 2,597 2,326 58,560 325 29,800 4,200 6,264 1.'322 2 272 2,057 2,403 1,958 50,601 325 11,300 18,000 3,375 2,035 2,137 1,814 1,984 1,829 42.799 325 28,000 11,000 3,691 3,700 1,545 1,652 1,760 1,228 52,901 1,937 11,347 419,420 962 8,875

$396,181 755 6,563

$376,144 522 5,900

$372,043 548 2,813

$336,369 877 1,944

$312,520 364 1,569

$284,423

Notes IX Lal fQ Ul LalQ

$80,155 29,679

~

STATEMENT OF RETAINED EARNINGS(Thousands of Dollars) 1981 I,

r Balance January 1.

Net Income 1980

$73,691 23,898 1979

$67,084 21,694 1978

$61,481 20.260 109,834 97,589 88,778 61,741 Dividends Declared cash:

On Cumulative Preferred Stock..

On Common Stock..................

4,126 4,126 16,751 13,308 20,877 17,434

$88,957'80,155 Pursuant to the terms of the 4.85% promissory notes, due 1995, $80,543 is not restricted with respect to the declaration of dividends on common stock.

Total e

~ ~

e

~

e

~

Balance December 31 SOURCE OF FUNDS STATEMENT OF CHANGES IN FINANCIALPOSITION(Thousands of Dollars) 1980 4,126 10,961 15,087

$73,691 1979 4,126 10,531 14,657

$67,084 1978 Internal Sources:

Net Income Income Items not Requiring Current Outlays:

Depreciation Accruals:

Charged to Depreciation Expense...........

Charged to Other Income Accounts.........

Deferred Income TaxNet.

Allowance for Funds Used During Construction..

OtherNet Net Funds from Internal Sources............

$29,679 16,108 629 2,349 (13,916) 1,973 36,822

$23,898 15,220 586 8,491 (11,782) 1,314 37,727

$21,694 14,839 530 5,616 (8,012) 355 35,022

$20,260 13,393 508 3,249 (5,028) 577 32,959 Available from Financing:

Mortgage Bonds ~......... ~.......

Convertible Debentures.

Term Loan Notes........................

Preferred Stock Common Stock Short-term Debt Total Funds from External Sources... ~......

Total Source of Funds 30,000 15,619 45,619

$82,441 50,000 19,175 69,175

$106,902 20,000 22,000 42,000

$77,022 35,000 I

10,340 6,000 51,340

$84,299 APPLICATION OF FUNDS Construction Charges:

Gross Charges for Construction.........

Less Allowance for Funds Used During Construction.

Dividends Retirement of Securities and Short-term Debt:

Mortgage Bonds........................

~

~.

Convertible Debentures............

~....

~.

Long-term Promissory Notes.

Short-term Debt Term Loan Notes...........................

$56,050 13,916 42,134 20,877 8,000 175 1,500 10,000 19,675

$41,455 11,782 29,673 17,434 12,000 175 27,000 10,000 49,175

$40,526 8,012 32,514 15,087 175 15.000 15.175

$64,51 3 5,028 59,485

]

14,657 8,000 175 8,175 Net Increase (decrease) in Working Capital, other than Short-term Debt and Current Maturities of Long-term Debt...

1,166 Ohhnges in Deferred end Other AccountsNet.......... ~1,41 tt Total Funds Applied.

$82,441 11" 6,170 4,450

$106,902 7,722 6,524

$77,022 (769) 2,751

$84,299

GROSS CONSTRUCTION CHARGES MILLIONSOF DOLLARS 65 60 55 50 Q

ELECTRIC PRODUCTION S

OTHER 45 40 35 30 25 20 15 10 I

I v I

I I

I I ~

I I

Ol total construction charges of $373.039.000 In the past 10 years,

$69,240,000 repre-sents the cost ol the Company's 3tP/o fnterest in the Roseton Efectric Generating Plant.

$ 151.970.000 represents the investment to date in the construction ol the Sterling and the Nine Mile Point No, 2 nuclear fadiities. and

$8.318.000 represents the cost of steam generating laciiitiesat the Danskamrner Point Electric Generating purnt.

1972 73 74 75 76 77 78 79 80 81 NET UTILITYPLANT* PER DOLLAR OF TOTAL REVENUE 10 8

PER CEN 100 RATIO OF ACCUMULATED DEPRECIATION TO TOTAL DEPRECIABLE PLANT 1971 72 73 74 75 76 77 78 79 80 81 ExcLuotrro coNsTRucTrorr woRK Irr pRocRsss 90 80 70 60 50 40 30 20 10 1971 72 73 74 75 76 77 78 79 80 81 The Company's annual provisions for depreciation are computed on the stralght-line method using rates based on the estimated useful lives and estimated net salvage of properties.

Total depreciable plant Includes total utility plant In service. exclusive of nondepreci-able items such as land. Intangibles. etc.

The decline in the ratio in 1974 reflects the addition to depreciable property in that year ol the Company's 20% interest In the Roseton Plant.

1977

$56,326 17,747 74,073

.1976

$51,647 15,927 67,574 1975

$47,913 14,337 62.250 1974

$46,057 12,050 58,107 1973

$42,176 13,220 55,396 1972

$36,216 13,897 50,113 1971 J

$32,244 10,858 43,102 3,626 8,966 12,592

'61,481 2,866 8,382 11,248

$56,326 2,866 7,737 10,603

$51,647 2,866 7,328 10,194

$47,913 2,827 6,512 9,339

$46,057 1,974 5,963 7,937

$42,176 1,820 5,066 6,886

$36,216 1977 1976 1975 1974 1973 1972 1971

$17,747

$ 15,927

$ 14,337

$ 12,050

$13,220

$ 13,897

$ 10,858 13,279 265 2,472 (3,391) 495 30,867 12,859 243 2,312 (1,810) 248 29,779 12,569 240 663 (705) 374 27,478 10,312 235 3,087 (3,813) 171 22,042 9,509 220 869 (4,095) 156 19,879 9,084 198 375 (3,835) 284 20,003 8,058 189 283 (2,114) 115 17,389 4,500 15,000 19,500 I $50,367 17,000 17,000

$46,779 20,000 8,102 28,102

$55,580 15,000 8,156 1,000 24,156

$46,198 12,000 4,700 16,700

$36,579 20,000 11,600 31,600

$51,603 8,000 13,000 21,000 42,000

$59,389

$32,343 3,391 28,952 12,592

$25,693 1,810 23,883 11,248

$23,337 705 22,632 10,603

$25,254 3,813 21,441 10,194

$29,038 4,095 24,943 9,339

$34,830 3,835 30,995 7,937

$41,085 2,114 38,971 6,886 4,375 3,000 325 325 32,000 325 325 325 9,700 13,265 325 7,375 325 32,325 325 325 10,025 13,590 1,240 208

'50.367 9,796 (9,602) 1.527

~378)

$46,779

$55,580 9,649 4,589

$46,198 179 1,793

$36,579 1,870 776

$51.603 (753) 695

$59,389

Notes K

O V)O Q

O CO LJJ C9 O

OI-z I-I-

CA ChK cC Vl C9K K

CL 4l CI W

4JI-fL OI-K L4I-I-

M

DETAILOF UTILITYPLANT AND ACCUMULATEDDEPRECIATION 1981 1980 1979 1978 1977 (Thousands of Dollars) 1976 1975 1974 1973 1972 1971 10-Year

%~7o chan e

UtilityP>lant December 31 Electric......................

$441,945 Gas 55,642 Common....................

26,930 Total UtilityPlant..........

524,517 Construction Work in Progress...

160,249 Total 684,766

$416,355 49,335 20,426

$433,640 53,551 23,976

$425,811 50,520 21,951 498,282 98,019 486,116 72,546 511,167 123,827 634,994 596,301 558,662

$377.753 48,726 18,756 445,235 49,337 494,572

$363,948 46,756 17,839 428,543 36,610 465,153

$235,679 40,790 13,376

$343,587 42,856 17,155

$354,394 45,585 17,137

$257,242 40,178 15,045

$265,298 41,855 15,531 417,116 25,782 322,684 79,350 403,598 19,673 289,845 54,350 312,465 62,788 442,898 423,271 402,034 375,253 344,195 Accumulated Depreciation-December 31 Electric 152,555 Gas 17,788 Common 8 925 Total....................

179,268 141,251 16,066 8,170 129,599 14,816 7,992 165,487 152,407 119,904 13,693 7,216 140,813 107,185 12,647 7,217 127,049 98,673 11,680 6,356 116,709 90,769 10,700 5,742 107,211 82,775 10,333 5,336 98,444 76,716 9,412 4,756 90,884 70,886 8,677 4,242 83,805 65,044 9,817 3,946 78,807 Net UtilityPlant December 31 (a)

Electric Gas Common 289,390 37,854 18,005 292,389 37,485 15,806 296,212 35,704 13,959 296,451 35,642 13,210 270,568 36,079 11,539 265,275 35,076 11,483 263,625 34,885 11,395 260,812 32,523 11,819 188,582 32,443 10,775 186,356 31,501 10,803 170,635 30,973 9,430 Total

.. $345,249

$345,680

$345.875

$345,303

$318,186

$311,834

$309,905

$305,154

$231,800

$228,660

$211,038 88 36 101 81 195 99 135 81 126 127 70 22 91 64 Ratio of Accumulated Depreciation to Total Depre-ciable Plant December 31 (Per Cent)

Net Utility Plant'er Dollar of Total Revenue (Dollars) 1981 34.6

.78 1980 32.8 1.05 1979 31.0 1.36 1978 29.3 1.50 1977 29.0 1.53 1976 27.6 1.83 1975 26.0 1.96 1974 24.6 2.32 1973 28.4 2.54 1972 27.1 2.66 1971 27.5 2.68 Excluding Construction Work in Progress.

Gross Additions to Plant During Year(a)

Electric Production.............

Other Electric Gas Common Total Retirements During Year Electric Production..

Other Electric Gas Common Total 4,516 9,208 2,276 3,628 19,628 414 1,923 131 631 3,099 816 8,755 3,143 2.933 15,647 135 1,689 111 651 2,586 3,850 7,800 1,352 2,051 15,053 413 1,781 167 526 2,887 40 1,925 145.

1,163 3,273 363 2,083 265 213 2,924

$ 34,396(b) 3,275 7,125 12,976 754 2,235 2,828 1,130 45,103(b) 19,616 2,243 10,415 1,379 828 14,865 563 2,274 210 391 3,438 2,647 10,653 3,390 538 17,228 23 2,473 683 531 3,710

$ 66,623 14,339 2,129 1,840 84,931 1,058 1,613 110 210 2,991 139 9,575 2,066 696 12,476 206 1,689 156 206 2,257 341 22,641 1,446 1,964 26,392 13 1,676 1,769 314 3,772 4,677 6,431 993 553 12,654 248 1,412 251 387 2,298 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 Total 56,050 41,455 40,526 64,513(b) 32,343 25,693 23,337 25,254 29,038 34,830 Electric Production 41,373

-25,799 28,564 51,622(b) 20,227 14,189 12,823 9,662 13,495 18,195 Gross Construction Charges (Thousands of Dollars)

Other 14,677 15,656 11,962 12,891 12,116 11,504 10,514 15,592 15,543 16,635 Adjustments During Year Electric Production Other Electric Gas Common Total.

(3,090) 8 (54)

(43)

~3;179 15 67 (1)

~257

~176 (608)

(346) 5 (949)

(2) 2 (230)

(37) 2 265 (2) 22 (1,018)

~25)

(6)

~1,026) 221 16 (233)

(4) 243 27 (289) 19 53 (7)

(46) 10-Year Total 373,039 235,949 137,090 Net Additions to Plant During Year(a)

Electric Production Other Electric Gas Common Total 4,429 5,072 735 120 3,437 6,019 1,185 1,525 571 20,992 (612) 1,669 154 7,902 1,677 486 2,910 10,895 1,970 917 65,565 12,724 1,001 1,624 33,748 4,854 609 1,670 2,624 8,183 2,729

~16) 1,450 8,104 1,171 702 1,012 7,293 2,091 2,954 696 7,133 3,031 2,025

$ 13,350

$ 12,885

$ 12,166 40.881

$ 16,692

$ 11,427

$ 13.518

$ 80,914

$ 10,219

$ 22,620

$ 10,356 (a) Excluding Construction Work in Progress.

(b) Gross additions include purchase of an additional 10% interest in the Roseton Plant at original book cost of $33,620.

Gross construction charges, however, reflect original book cost iess accumulated depre-ciatign. in the amount of $3.799.

Notes ELECTRICAL SALES AND REVENUES (OWN TERRITORY)

S OF KILOWATT-HOURS MILLION 4,200 3,900 3,600 3,300 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 MILLIONSOF DOL 560 Q

SALES REVENUES 480 440 400 360 320 280 240 200 160 120 80 40 PER CENT 100 RATIO OF ELECTRIC RESIDENTIAL, COMMERCIAL,AND INDUSTRIAL REVENUES TO TOTAL ELECTRIC REVENUES (OWN TERRITORY) 0 19 71 72 73 74 75 76 77 78 79 80 8

0 90 80 70 60 Q

INDUSTRIAL

~

COMMERCIAL, 50 STREET AND AREA LIGHTING, AND OTHER 40 Q

RESIDENTIAL K.

OI-LU lL D

LLI O

AVERAGE USAGE PER CUSTOMER AND AVERAGE REVENUE PER KWH.

RESIDENTIAL 20 10 1972 73 74 75 76 77 78 79 80 81 KILOWATT-HOURS 8,000 7,000 6,000 CENTS PER KILOWATT-HOUR 12.0 10.5 9.0 AVERAGE USAGE AVERAGE REVENUE 5,000 7.5 4,000 6.0 3,000 4.5 2,000 3.0 1,000 1.5 1971 72 73 74 75 76 77 78 79 80 81

ELECTRIC REVENUES, SALES, AND CUSTOMERS 1981 1980 1979 1978.

1977 1976 1975 1974 1973 1972 1971 10-Year

%~~oChan e

Revenues Thousands of Dollars Residential Commercial Industrial Street and Area Lighting...

Other.

Total Own Territory (a)

Other Utilities Total Revenues

$110,135 87,092 83,892 3,843 2,101 287,063 111,329

$398,392

$ 90,265 70,109 63,187, 3,473.

1,564

$ 65,368 47,339 41,561 2,767 1,749

$ 57,134 39,680 30,429 2,610 1,708

$ 72,359 54,122 50,545 3,007 1,672

$ 65,225 46,023 38,571 2,802 1,745

$ 56,078 38,684 32,153 2,306 2,094 228,598 63,401 158,784 27,480 154+66 30,025 131,561 18,323 131,315 7,099 181,705 44,266

$291,999

$225,971

$ 186,264

$ 184,391

$ 149,884

$ 138,414

$ 43,355 30,930 28,376 2,012 1,640 106,313 8,169

$ 114,482

$ 31,007 22,643 17,438 1,960 1,856 74,904 2,874

$77,778

$28,547 20,613 16,347 1,906 1,039 68,452 3,239

$71,691

$25,939 18,498 15,495 1,763 765 62,460 2,421

$64,881 325 371 441 118 175 360

'I 514 Sales Millionsof Kwh.

Residential Commercial Industrial Street and Area Lighting.

Other...

Total Own Territory Other Utilities Total Sales 1,164 1,023 1,206 35 1

3,429 2,093 5,522 1,169 1,006 1,149 35 1

3,360 1,390 4,750 1,204 984 1,192 35 1

3,416 1,324 4,740 1,203 957 1,126 35 1

3,322 1,019 4,341 1,199 922 1,030 35 1

3,187 1 ~104 4,291 1,203 897 938 36 1

3,075 738 3,813 1,168 871 981 35 1

3,056 303 3,359 1,160 820 1,089 35 1

3,105 335 3,440 1,176 856 1,217 34 1

3,284 280 3,564 1,,093 783 1,176 33 1

3,086 372 3,458 1,000 711 1,135 31 1

2,878 284 3,162 16 44 6

13 19 637 75 Customers Average Residential Commercial Industrial Street and Area Lighting..

Other (including other utilities)

Total Customers 185,623 23,744 726 2,948 10 213,051 183,238 23,380 736 3,061 8

, 210,423 181,631 22,966 731 3,126 5

208,459 178,934 22,296 715 3,130 6

205,081 176,891 21,553 726 3,186 8

202,364 175,130 21,289 743 3,256 11 200,429 169,863 21,352 757 3,294 10 195,276 167,559 21,183 769 3,417 10 192,938 163,181 20,436 763 3,417 8

187,805 158,833 19,824 783 3,321 12 182,773 154,575 19,237 814 3,183 12 177,821 20 23 (11)

(7)

(17) 20 Residential Average Kwh. Per Customer Average Revenue Per Kwh.

Average Annual Bill Maximum Hourly LoadKw. Winter...............

Summer..............

Annual Load Factor on Annual Peak... ~............

Revenues Per Cent of Total Own Territory Residential Commercial Industrial Street and Area Lighting.

Other Total Own Territory 6,268 9.47'593.33 640,980 625,980 64 39 30 29 1

1 100 6,379 7.728

$492.61 598,900 640,300 64 39 31 28 1

1 100 6,629 6.01@

$398.39 633,200 619,800 65 40 30 28 1

1 100 6,722 5.44c

$365.32 607,580 613,580 65 41 30 26 2

1 100 6,779 5.44C

$368.73 617,460 621,200 62 42 30 25

'2 1

100 6,870 4.75C

$326.24 607,480 534,200 61 44 30 23 2

1 100 6,879 4.80C

$330.14 584,100

=

595,360 63 43 29 24 2

2 100 6,922 3.74@

$258.75 571,500 583,760 66 41 29 27 2

1 100 7,206 2.64@

$ 190.02 585,300 632,200 64 42 30 23 3

2 100 6,883 2.614

$ 179.73 586,900 565,550 65 42 30 24 3

1 100 6,468 2.594

$167.81 548,700 538,300 65 41 30 25 3

1 100 (3) 266 254 17 16 (a) Revenues related to increased electric fuel costs billed pursuant to the electric fuel cost adjustment are as follows:

1981 '980 1979" 1978 1977 1976 1975 1974 "

1973

$36,663

$16.390

$28,792

$20,322

$24,729

$ 8,055

$ 11,636

$33,161

$1,904

-Electric fuel costs roIled in to the base rates resulting from Rate Case Proceedings were 1.2C per kwh. effective December 4, 1974, 1.5C per kwh.

effective November 3, 1979, and 1.2C per kwh. effective July 18, 1981.

See section on "Rates" on page 3.

~ Change of 1,000 per cent or more.

Notes 12.0 60.0 GAS SALES AND REVENUES (OWN TERRITORY)

BILLIONS OF CUBIC FEET MILLIONSOF DOLLARS 65.0 13.0 Q

SALES REVENUES 1 1.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 55.0 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 2.0 1.0 1971 72 73 74 75 76 77 78 79 80 81 10.0 5.0 RATIO OF GAS RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL REVENUES TO TOTAL GAS REVENUES PER cENT (OWN TERRITORY) 100 90 Q

INDUSTRIAL, INTERRUPTIBLE, AND OTHER

~

COMMERCIAL H

RESIDENTIAL WITHOUT HOUSEHEATING Q

RESIDENTIAL WITH HOUSEHEATING 80 70 60 50 40 30 20 10 CO CL OI-tO OK M

Ul cC tO M

K Lal0 Lal O

lLI-O QJ 1972 73 74 75 76 77 78 79 80 81 160 140 6.40 AVERAGE REVENUE 5.60 120 4.80 100 4.00 80 3.20 60 2.40 40 1.60 20

.80 1971 72 73 74 75 76 77 78 79 80 81 AVERAGE USAGE PER CUSTOMER AND AVERAGE REVENUE PER MCF. - RESIDENTIAL THOUSANDS OF CUBIC FEET DOLLARS PER THOUSAND CUBIC FEET 180 7.20 ~

AVERAGE USAGE

GAS REVENUES, SALES, AND CUSTOMERS 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 10-Year

%~~o Chan e

Revenues Thousands of Dollars Residential with Househeating Residential without Househeating.............~...

Total Residential Commercial Industrial.

Interruptible and Seasonal Other TotalOwn Territory (a)

Other Utilities Total Revenues Sales Thousands of Mcf. (b)

Residential with Househeating Residential without Househeating.................

Total Residential Commercial Industrial..

Interruptible and Seasonal.

Other TotalOwn Territory.

Other Utilities Total Sales..

Customers Average Residential with Househeating Residential without Househeating.................

Total Residential Commercial Industrial

~

Interruptible and Seasonal..

Other (including other utilities)

Total Customers

$17,325 2,842 20,167 9,714 2,402 46,076 413

$ 14,090 2.408 16,498 7,318 1,719 35,630 364

$35,994

$46,489 3,213 415 3,628 2,071 517 2,996 134 9,346 134 9,480 3,002 392 3,394 1,776 424 2,914 102 8,610 142 8,752 25,200 16,337 41,537 3,720 140 52 2

45,451 23,620 16.933 40,553 3,515 140 51 2

44,261 11,761 9,001 2,032 1,094

$ 11,670 2,218 13,888 6,086 1,346 6,839 654 28,813

$28,813 3,046 380 3,426 1,718 382 2,871 109 8,506 8,506 22,567 17.427 39,994 3,332 139 49 1

43,515

$ 11,868 2,201 14,069 5,880 1,169 3,432 188 24,738

$24,738 3,208 385 3,593 1,815 374 1,733 78 7,593 7,593 22,252 17,504 39,756 3,352 139 50 1

43,298

$ 11,271 2,165 13,436 5,447 1,021 3,379 166 23,449

$23,449 3,132 385 3,517 1,746 339 1,739 60 7,401 7,401 22,103 17,650 39,753-3,368 14250--

1 43,314

$ 9,885 1,945 11,830 4,770 947 3,134 150 20,831

$20,831 3,243 394 3,637 1,838 388 2,152 76 8,091 8,091 21,919 17,930 39,849 3,411 155 50 1

43,466

$ 8,647 1,800 10,447 4,307 894 4,079 170 19,897

$ 19,897

'2,997 369 3,366 1,738 376 3,265 99 8,844 8,844 21,189 17,693 38,882 3,427 164 50 1

42,524

$ 7,088 1,557 8,645 3,625 735 3,748 254 17,007

$17,007 3,096 396 3,492 1,826 398 4,798 248 10,762 10,762 20,869 18,186 39,055 3,439 176 50 1

42,721

$ 6,304 1,462 7,766 3,191 670 1,612 346 13,585

$ 6,834 1,563 8,397 3,344 752 1,330 370 14,193 3,084 395 3,479 1,822 403 2,342 422 8,468 3,314 425 3,739 1,859 448 1,880 452 8,378 8,468

~

8,378 20,332 18,529 38,861 3,450 175 45 1

42,532 20,014 18,988 39,002 3,426 187 44 1

42,660

$ 13,585

$ 14,193

$ 6,370 1,536 7,906 2,872 749 1,877 384 13,788

$ 13,788 3,210 424 3,634 1,672 466 3 222 476 9,470 9,470 19,742 19,484 39,226 3,349 193 42 1

42,811 172 85 155 238 221 527 429 234 237 (2)

(

)

24 11 (7)

(72)

(1) 28 (16) 6 11 (27) 24 100 6

Total Residential Average Mcf. Per Customer Average Revenue Per Mcf.

Average Annual Bill Househeating Saturation Per Cent.....

Maximum Daily Send-out Mcf..

Date Revenues Per Cent of TotalOwn Territory Residential with Househeating Residential without Househeating..........

Commercial Industrial.

Interruptible and Seasonal.

Other TotalOwn Territory.

87.3

$5.56

$485.51 60.7 56,054 Jan. 12 38 6

21 5

26 4

100 83.7

$4.86

$406.83 58.2 53,719 Dec. 25 39 7

21 5

25 3

100 85.7

$4.05

$347.24 56.4 55,301 Feb. 11 40 8

21 5

24 2

100 90.4

$3.92

$353.89 56.0 44,350 Dec. 29 48 9

24 4

14 1

100 88.5

$3.82

$337.99 55.6 45,668 Jan. 17 48 9

23 4

15 1

100 91.3

$3.25

$296.87 55.0 47,532 Jan. 22 47 9

23 5

15 1

100 86.6

$3.10

$268.68 54.5 46,497 Mar. 3 43 9

22 4

21 1

100 89.4

$2.48

$221.36 53.4 48,710 Jan. 18 42 9

21 4

22 2

100 89.5

$2.23

$199.84 52.3 52,162 Feb. 11 46 11 23 5

12 3

100 95.9

$2.25

$215.30 51.3 50,035 Feb. 16 48 11 24 5

9 3

100 92.6

$2.18

$201.54 50.3 45,122 Feb.

1 46 11 21 5

14 3

100 (6) 155 141 21 24 Degree Days as Per Cent of Normal (c)

Degree Days in BillingCycle Degree Days in Calendar Year 103 100 100 105 96 96 107 106 102 99 99 103 91 92 96 96 91 89 101 102 98 96 (a) Revenues billed under the provisions of the gas cost adjustment clause are as follows:

1981 1980 1979'978 1977 1976 1975 1974 1973

$7'.872

$2.500

$8,708

$8,257

$8,355

$5,704

$4,729

$3,210

$914 (b) Theaverage heating value of gas sold is not less than 1,000 Btu per cu. ft.

(c) Normal Twenty-year Moving Average.

14

'Gas cost adjustment rolled in to the base rates resulting from Rate Case Proceedings was $1.50 per mcf.effective November 3, 1979.

Notes ELECTRIC GENERATING CAPABILITY, PURCHASED CAPACITY, AND ANNUALPEAKS NDS OF KILOWATTS THOUSA 1.190 1.120 1,050 980 910 840 770 700 630 560 490 420 350 280 210 140 70 0

Qx PURCHASED CAPACITY AT TIME OF PEAK INCLUDING RESERVES Q

GENERATING CAPA6ILITYAT TIME OF PEAK

~

ANNUALPEAK ELECTRICITY GENERATED AND PURCHASED 5 OF KILOWATT-HOURS MILLION 4,000 3,600 1972 73 74 75 76 77 78 79 80 81 3,200 2,800 GENERATED 2,400 PURCHASED 2,000 1,600 1,200 V)

OI-V)

OK cC M

cCM M

K

I Ch cC C9 COST OF FUEL AND PURCHASED ELECTRICITY AS PER CENT OF ELECTRIC REVENUE PER CENT 70 65 60 55 50 45 40 35 30 25 20 15 10 1971 72 73 74 75 76 77 78 79 80 81 FUEL AND PURCHASED ELECTRICITY ELECTRIC FUEL PURCHASED ELECTRICITY 800 400 0

19 71 72 73 74 75 76 77 78 79 80 81 COST OF PURCHASED GAS AS PER CENT OF GAS REVENUE PER CENT 65 60 55 50 45 40 35 30 25 20 15 10 0

19 71 72 73 74 75 76 77 78 79 I80 81

ELECTRIC AND GAS PRODUCTION DATA Electric OutputMillions of Kwh.

Generated Steam Generated Hydro Generated Gas Turbine Total Generated Purchased for Own Territory Purchased for Resale to Other Utilities..

Total Purchased Pumped Storage (received from)

Total Output Pumped Storage (delivered to)

Company Use, Losses, etc..

Balance Sold 1981 3,810 65 5

3,880 1,727 90 1,817 5,697 175 5,522 1980 3,351 105 4

3,460 1,555 6

1,561 38 5,059 50 259 4,750 1979 3,535 162 2

3,699 1,253 1,253 16-4,968 21 207 4,740 1978 3,295 122 3

3,420 1,120 8

1.128 6

4,554 8

205 4,341 1977 3,520 134 5

3,659 798 57 855 4,514 223 4,291 1976 3,261 156 5

3,422 492 117 609 4,031 218 3,813 1975 3,189 175 8

3.372 247 18 265 89 3,726 110 257 3,359 1974 3,172 160 21 3,353 373 12 385 116 3,854 142 272 3,440 1973 3,225 168 42 3,435 316 88 404 39 3,878 56 258 3,564 1972 3,240 174 38 3,452 184 115 299 3,751 293 3,458 1971 2,987 151 37 3,175 188 49 237 3,412 250 3,162 r

10-Year ~

%~kchan e

28 (57)

(86) 22 819 84 667 67 (30) 75 Electric Peak and Capacity Annual Peak (Own Territory)Mw.

Generating Capability at Time of Peak Mw.

Steam Hydro Gas Turbine Total Purchased Capacity at Time of Peak Including Reserves Mw..

Generating Capability Plus Purchased Capacity as Per Cent of Annual Peak.......

641.0 839.2 45.6 48.0 932.8 172.4 172 640.30 839.2 44.6 38.0 921.8 255.6 184 633.2 839.2 45.6 48.0 932.8 124.8 167 722.9 44.6 38.0 805.5 296.8 180 621.2*

706.2 44.6 38.0 788.8 211.8 161 607.5 697.0 45.6 48.0 790.6 30.7 135 710.0 44.6 38.0 792.6 109.4 151 583.8 4 487.0 44.6 38.0 569.6 150.0 123 632.2

497.0 44.6 38.0 579.6 85.0 105 586.9 497.0 46.8 48.0 591.8 81.5 115 548.7 495.5 46.8 50.0 592.3 58.0 119 17 69 (3)

(4) 57 197 45 Gas Send-out Thousands of Mcf.

Purchased Natural Gas Manufactured or Propane Gas Total Company UseBoiler Fuel Other Company Use, Losses, etc Balance Sold 14,272'3 14,275 4,587 208 9,480 12,670 1

12,671 3,412 507 8,752 11,232 1

11,233 2,441 286 8,506 7,965 3

7,968 375 7,593 7,603 14 7,617 216 7,401 8,420 2

8,422 331 8,091 9,197 9,197 353 8,844 11,191 1

11,192 430 10,762 8,714 1

8,715 247 8,468 8,755 3

8,758 380 8,378 10,572 10,572 872 230 9,470 35 35 426 (10) 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 Thousands of Dollars 192,637 132,478 95,797 70,801 81,614 59,587 62,281 49,032 14,904 12,668 14,118 Cents per Kwh.

5.06 3.95 2.71 2.15 2.32 1.83 1.95 1.55

.46

.39

.47 Steam(b)

Average Cost of Fuel Burned (Cents per MM/Btu) (d) 475.9 362.2 251.2 199.1 217.6 170.1 178.0 145.1 35.2 30.7 33.9 Heat Rate for Thousands Generation of Btu Dollars 10,119 10,210 10,035 10,025 9,978 9,931 10,011 9,914 10,000 9,956 10,129 894 1,388 1,886 1,060 1,240 980 1,033 1,189 325 265 267 Cents per Kwh.

1.38 122 1.16

.87

.93

.63

.59

.74

.19

.15

.18 Electric Production Cost(a)

Hydro Thousands of Dollars 413 313 207 223 334.

222 254 620 699 494 576 Cents per Kwh.

8.26 7.83 10.35 7.43 6.68 4.44 3.18 2.95 1.66 1.31 1.55 Gas Turbines Purchased(c)

Thousands of Dollars 76,162 52,345 32,845 26,991 18,962 11,509 4,877 7,777 6,083 3,650 2,910 Cents per Kwh.

4.41 3.37 2.62 2.41 2.38 2.34 1.97 2.08 1.93 1.98 1.55 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 Thousands of Dollars 28,579 22,525 16,693 11,691 11,697 9,698 8,971 8,560 5,526 6,026 5,772 Cents per Mcf.

295.1 243.3 189.9 146.8 153.8 115.2 97.5 76.5 63.4 68.8 59.5 Purchased Gas Cost e 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 46 43 40 36 42 37 42 41 15 15 17 20 18 15 14 11 9

4 7

8 6

5 66 61 55 50 53 46 46 48 23 21 22 Cost of Fuel and Purchased Electricity as Per Cent of Electric Revenue Fuel and Electric Purchased Purchased Fuel Electricity Electricity Purchased Gas Gas and Fuel Fuel Purchased Gas 1981 1980 1979 1978 1977.

1976 1975 1974 1973 1972 1971 62 63 58 47 50 47 45 50 41 42 42 62 63 58 47 50 47 45 50 41 42 42 Cost of Purchased Gas and Fuel as Per Cent of Gas Revenue (a) Includes cost of operation and maintenance.

(b) Includes production costs related to sales to other utilities.

(c) Excludes electricity purchased for resale to other utilities.

(d) Fuel burned during 1979 through 1981 was a combination of fuel oil and natural gas.

Fuel burned during 1972 through 1978 was fuel oil. (Natural gas was used for ignition purposes only.)

Fuel burned during 1970 and 1971 was a combination of fuel oil~ coal, and natural gas.

(e) Excludes gas purchased for boiler fuel.

+ Annual peak in 1973, 1974, 1975, 1977, 1978 and 1980 occurred in the summer.

Notes PAYROLL (INCLUDING BENEFITS) AS PER CENT OF REVENUES, AND BENEFITS AS PER CENT OF PAYROLL (CHARGES To OPERATIONS 5 MAINTENANCE)

PER CENT 100 90 80 70 60 50 40 30 20 10 1971 72 73 74 75 76 77 78 79 80 81 cCI-Ci K

OI-O A

O lC fL M

C9 OK cC ILI-s Union wage negotiations in 1981 resulted in a two-year working agreement, which provided for a 10% general wage increase effective July 1, 1981, and 10% effective July 1, 1982together with fringe benefit improvements.

Compensation of professional, supervisory and executive personnel is geared to a salary program designed to assure the Company's ability to attract and hold highly qualified management personnel.

Benefits provided by the Company include

pensions, group life insurance, hospitaliza-tion,,major medical insurance, a dental plan, and a disability retirement plan.

PAYROLL (INCLUDING BENEFITS) AS PER CENT OF CORPORATE REVENUES

~ BENEFITS AS PER CENT OF PAYROLL

LABOR DATAAND INDUSTRIALREVENUES F

LABOR DATA Employees Year End Classified Supervisory and Professional Executives Total (a)

Employee Compensation Thousands Payroll Charged to Operation.and Maintenance Electric Gas.

Payroll Charged to Construction and Other.......

Roseton Payroll Billed to Others (a)............

Total Payroll 1981 968 364 13 1,345

$21,043 3,596 7,703 2,591

$34,933 1980 964 337 13 1,314

$ 18,916 3,041

. 7,202 2,289

$31,448 1979 976 313 9

1,298

$ 17,420 2,730 6,666 2,194

$29,010 1978 983 303 10 1,296

$ 15,651 2,519 6,152 2,353

$26,675 1977 995 294 9

1,298

$ 14,230 2,430 6,395 2,174

$25,229 1976 1,039 290 9

1,338

$ 12,963 2,311 6,593 2,459

$24,326 1975.

1,092 299 9

1,400

$ 12,267 2,275 6,108 2,180

$22.830 1974

- 1,117 304 11 1,432

$ 11,609 2,265 6,145 1,636

$21,655 1973 1,158 310 11 1,479

$ 11,321 2,204 6,088 1,270

$20,883 1972 1,124 308 10 1,442

$ 10,427 2,028 5,364 1,083

$ 18,902 10-Year 1971

%~~o Chan e

1,087 (11) 312 17 9

44 1,408 (4)

$ 10,121 108 1,887 91 4,510 71 427 507

$ 16,945 106 Average Weekly Wages Paid Dollars Including Overtime Excludrng Overtime.

486 442 436 402 411 371 375 345 349 326 324 293 268 273 302 274 248 228 247 213 217 124 193 126 Annual Cost of Fringe Benefits Charged to Operation and Maintenance Thousands......

$ 4,894

$ 3,986

$ 3,565

$ 3,434

$ 2,930

$ 2,250

$ 2,000

$ 1,749

$ 1,546

$ 1,519

$ 1,307 274 Ratios forPayroll Charged to Operation and Maintenance:

Payroll (Including Benefits) as Per Cent of Corporate Revenues Benefits as Per Cent of Payroll 6.6 19.9 7.9 18.6 9.3 17.7 10.2 18.9 9.4 10.3 17.6 14.7 10.5 13.8 11.9 12.6 16.5 11.4 16.3 12.2 16.9 10.9 INDUSTRIALREVENUES Thousands Electric Customers Building Products Chemicals Clothing Food Processing Foundries Machine and Metal Products.......

Paper and Paper Products Printing and Publishing Refrigeration Rubber Products Textiles Miscellaneous Total.

$16,616 1,229 152 1,013 2,604 50,362 2,712 1,909 821 1,130 2,194 3,150

$83,892

$13,726 1,007 145 830 1,977 35,924 2,121 1,551 669 891 1,649 2,697

$63,187

$13,363 796 139 605 1,624 26,276 1,734 1,185 564 785 1,309 2,165

$50,545

$ 10,613 735 136 612 1,292 21,001 1,550 1,001 420 692 1,472 2,037

$41,561

$ 10,103

'22 126 635 1,367 19,313 1,353 948 424 688 1,413 1,479

$38,571

$ 6,629 612 115 566 1,298 15,731 1,123 779 426 565 1,109 1,476

$30,429

$ 8,668 616 117 527

=1,231 15,625 1,152 732 452 498 1,120 1,415

$32,153

$ 8,476 530 101 424 1,139 12,606 1,058 611 387 455 964 1,625

$28,376

$ 4,695 370 79 278 692 7,700 600 340 268 235 608 1,573

$ 17,438

$ 4,258 384 65 248 618 7,359 578 324 283 225 556 1,449

$ 16,34?

$ 4,089 410 56 225 508 7,405 529 302 278 197 509 987

$ 15,495 306 200 171 350 413 580 413 532 195 474 331 219 441 1981 Revenue FIVE LARGEST ELECTRIC CUSTOMERS (Thousands)

IBM

$43,496 Marquette Cement Manufacturing Corp.

4,513 Alpha Portland Cement Company 3,716 Lehigh Portland Cement Company 3,430 VAWof America 2,171 (a) Includes the followingnumber of employees at the Roseton Electric Generating Plant which the Company, Consolidated Edison Company of New York, Inc., and Niagara Mohawk Power Corporation own as tenants in common:

1981 1980 1979 1978 1977 113 109 107 107 109 1976 1976 1974 1973 1972 103 96 97 97 82 The Company had, initially, a 20'/o undivided interest in the ownership of the Plant. As of

$ Q december 31. 1978 the Company has a 30% undivided interest. The Company operates the Plant as agent for the three owners.

FIVE LARGEST GAS CUSTOMERS IBM Majestic Weaving, Inc.

Vassar College Powell and Minnock Brick Works, Inc.

Technical Tape Corp.

1981 Revenue (Thousands)

$5,577 1,197 982 924 768

Notes PER CENT 100 90 80 70 60 CAPITALIZATIONRATIOS 0

COMMON EQUITY

~

PREFERRED STOCK Q OTHER LONG-TERM DEBT Q MORTGAGE BONDS 50 40 30 10 COVERAGE RATIOS (BE FORE INCOME TAX) 20 10 1972 73 74 75 76 77 78 79 80 81 TIMES MORTGAGE INTEREST EARNED RATIO OF EARNINGS TO FIXED CHARGES DOLLARS 45 MARKET AND BOOK VALUE OF COMMON STOCK TIMES INTEREST CHARGES AND PREFERRED DIVIDENDS EARNED 0

19 71 72 73 74 75 76 77 78 79 80 81 40 Cil Lxl

<<C IXI-COD ClK ClK

<<L Cl DO 35 30 25 20 15 10 MARKETVALUE (RANGE)

PER SHARE MIDPOINTOF RANGE gg BOOK VALUE PER SHARE RATIO OF INCOME AVAILABLEFOR COMMON STOCK TO OPERATING REVENUE RATIO OF INCOME AVAILABLEFOR COMMON STOCK TO AVERAGE EQUITY 1971 72 73 74 75 76 77 78 79 80 81 RATIO OF INCOME AVAILABLEFOR COMMON STOCK:

TO OPERATING REVENUE-TO AVERAGE EQUITY PER CENT 25 20 15 10 1971 72 73 74 75 76 77 78 79 80 81

CAPITALIZATIONAND FINANCIALRATIOS 1981 '980 1979 1978 1977 1976 1975 1974 1973 1972 10-Year 1971

%~ochen 4

Capitalization Thousands (a)

First Mortgage Bonds.............

Convertible Debentures...........

Long-term Promissory Notes......

Term Loan Notes.................

Unamortized Premium and Discount on Debt Net.........

Total Long-term Debt...........

Preferred Stock Par Value.......

$233,500 7,550

$209,500

$ 159,500 8,000 7,725 7,900 20,000

$ 151,500 8,000 8,075 35,000

$ 151,500 8,000 8,250

$ 147,000 16,000 8,425

$ 147,000 16,000 12,800

$ 127,000 16,000 13,125

$ 112,000 16,000 13,450

$ 112,000 16,000 13,775

~821)

~253) 168 470 501 532 563 489 455 481 240,229 216,972'95,568 203,045 168,251 171.957 176,363 156,614 141,905 142,256 61,030 61,030 61,030 61,030 61,030 46,030 46,030 46,030 46,030 34,030

$ 92,000 154 16,000 14,100 (46) 320 (357) 122,420 96 34,030 79 Common Stock

-Retained Earnings................

Premium on Stock................

Capital Stock Expense............

Total Common Equity...........

49,772 38,172 42,176 36,216 28 28 (1,362)

~1,277) 76,371 66,031 66,031 66,031 57,928 49,772 67,084 61,481 56,326 51,647 47,913 46,057 67 67 67 67 67 67

~2,245)

~2,154)

~1.875)

~1,839)

~1,491)

~1,424) 95,546 80,155 67

~2.326 111,165 88,957 67

~2.480) 76,371 73,691 67 (2,245) 197,709 173442 147.884 141,277 125,425 120,549 115,906 104.417 94.472 90,614 73,139 191 146 139 (94) 170 117 Total Capitalization.............

$498,968

$451,444

$404,482

$405,352

$354,706

$338,536

$338,299

$307,061

$282,407

$266,900

$229,589 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 Value of Common Equity (Thousands of Dollars) 197,709 173,442 147,884 141,277 125,425 120,549 115,906 104,417 94,472 90,614 73,139 Book Value Number of Per Shares Share (Thousands)

(Dollars) 7,456 26.52 6,544 26.51 5,373 27.52 5,373 26.29 4,873 25.74 4,873 24.74 4,873 23.79 4,373 23.88 3,923 24.08 3,923 23.10 3,423 21.37 Book Value Per Share of Common Stock (Year End),

Capitalization Ratios Per Cent First Mortgage Bonds.............

Other Long-term Debt............

Total Long-term Debt...........

Preferred Stock Common Equity..................

Total Capitalization.............

46.8 1.3 48.1 12.2 39.7 100.0 Coverage Ratios (before Income Tax)(c)

Times Mortgage Interest Earned(d)..

Ratio of Earnings to Fixed Charges(e)

Times Interest Charges and Preferred Dividends Earned(f)...

2.53 2.38 2.00 Ratios to Net Plant Per Cent Long-term Debt and Preferred Stock to Net Plant (b)........

59.60 Mortgage Bonds to Net Plant (b).

46.19 46.4 1.7 48.1 13.5 38.4 100.0 59.21 44.62 2.53 2'.23 1.84 39.4 8.9 48.3 15.1 36.6 100.0 57.81 35.93 3.52 2.31 1.86 63.20 62.39 36.26 41.22 62.56 66.25

."'62.39 60.40 42.19 43.79

.-.39.10 36.00 3.98 3.17 3.49 2.81 3.33 2.68 3.62 2.37 2.89 1.78 3.86 2.56 2.22 2.07 2.08 1.87 1.49 1.93 37.4 42.7 43.4 43.4 41.4 39.6 12.7 4.7 7.4 8.7

~

9.6 10.6 50.1 47.4 50.8 52.1 51.0 50.2 15.0 17.2 13.6 13.6

~. 15.0 16.3 34.9 35.4 35.6 34.3

'4.0 33.5 100.0 100.0 100.0 100.0 100.0 100.0 42.0 40.1 11.3 13.2 53.3 53.3 12.8 14.8 33.9 31.9 100.0 100.0 3.98 2.83 4.05 2.62 2.27 2.08 60.49 58.95 38.43 34.67 Market Value of Common Stock (Dollars)

(g) 1981 19

-16 1980 197/8-15 1979 20/4-18 1978 22'/8-19/4 1977 223/2-1 9'/8 1976 20'/4-1 7'/2 1975 187/8-1 2'7r2 1974 217/2-11 1973 245/3-20'/2 1972 26

-21%

1971 27

-20'/4 (g) Price range for the year Stock Exchange.

Number of Shares Traded on New York Stock Exchange 1,017,100 801,100 402,500 451,400 574,000 498,000 360,200 508,300 329,400 644,300 446,200 on the New York Market Value Per Share of Common Stock and Shares Traded Ratio of Income Available for Common Stock Per Cent To Operating Revenue..........

To Year-end Equity.............

To Average Equity..............

5.7 14.0 14.0 6.0 12.7 12.5 6.9 11.9 12.2 7.6 11.4 11.7 6.8 11.3 11.5 7.7 10.8 11.0 7.3

= 9.9 10.4 7.0 8.8 9.2 11.4 11.0 11.2 13.9 13.2 14.6 11.5 12.4 12.7 17, (a) Excludes current maturities of fong-term debt.

(b) Net Plant includes construction work in progress.

(c) For the purpose of computing the coverage ratios, "Earnings-consist of net income plus IIXed charges plus all federal income tax amounts. "Fixed Charges" consist of total interest charges excluding the allowance for borrowed funds used during construction. "Preferred Dividends" represent the preferred stock dividend requirement determined on a "pre-income tax basis-computed at the ratio that pre-tax income bears to net income.

(d) Times Mortgage Interest Earned represents the ratio of "Earnings" to "Interest on Mortgage Bonds."

(e) Ratio of Earnings to Fixed Charges represents the ratio of "Earnings" to "Fixed Charges.-

(f) Times Interest Charges and Preferred Dividends Earned represents the ratio of "Earnings" to "Fixed Charges" plus "Preferred Dividends."

Notes DEBT SilA II UIRIITY SCHEDULE AS OF DECEMBER 31, 1981 MILLIONSOF DOLLARS 30 28 26 24 22 20 18 14 12 10 95 99 2000 02 04 05 07 09 2010 0

1982 84 88 90 91 4 UNSECURED NOTES BALANCE OF $ 5.45 MILLIONAFTER ANNUALREQUIRED SINKING FUND PAYMENT.

DETAINOF LONG-TERM DEBT, PREFERRED STOCK. AND COMMON STOCK (Thousands where Dollars are Indicated) 1981 1980 1979 1978 1977 1976 1975 Public Proceeds Redemption Date Maturity Offering to Price 1974 1973 1972 1971 Issued Date Price C~cm an 12/31/81 First Mortgage Bonds December 31 2r/% Due1980...................

3.3%

Due 1982 3.2%

Due 1984..................

4/s% Due1988.

14k% Due1990..

17/s%

Due 1991 7/s% Due1999.

9%%

Due 2000 7%% Due2002...

9~/.%

Due 2004.

10%%- Due 2005...

6'/4%

Due 2007.

10%%

Due 2009.

12/s%

Due 2010.

$ 6,000

$11,000

$18,000

$25,000

$30,000

$20,000

$25,000

$20,000

$15,000

$20,000

$ 4,500

$20,000

$25,000

$ 6,000

$ 11,000

$18,000

$25,000

$20,000

$25,000

$20,000

$15,000

$20,000

$ 4,500

$20,000

$25,000

$12,000

$ 6,000

$11,000

$18,000

$20,000

$25,000

$20,000

$15,000

$20,000

$ 4,500

$20,000

$ 12,000

$ 6,000

$ 11,000

$ 18,000

$20,000

$25,000

$20,000

$ 15,000

$20,000

$4,500

$12,000

$ 6,000

$ 11,000

$ 18,000

$20,000

$25,000

$20,000

$ 15,000

$20,000

$ 4,500

$ 12,000

$ 6,000

$ 11,000

$ 18,000

$20,000

$25,000

$20,000

$ 15,000

$20,000

$ 12,000

$ 6,000

$ 11,000

$ 18,000

$20,000

$25,000

$20,000

$ 15,000

$20,000

$ 12,000

$ 6,000

$ 11,000

$ 18,000

$20,000

$25,000

$20,000

$ 15,000

$ 12,000

$ 6,000

$ 11,000

$ 18,000

$20,000

$25,000

$20,000

$ 12,000

$ 6,000

$ 11,000

$ 18,000

$20,000

$25,000

$20,000

$ 12,000

$ 6,000

$ 11,000

$ 18,000

$20,000

$25,000 Dec.

1, 1950 Dec.

1, 1952 Oct.

1, 1954 May 15, 1958 Dec.

2, 1980 Aug. 26, 1981 Jan.

23, 1969

June10, 1970 Feb.

17, 1972 Apr. 24, 1974 Nov. 13, 1975 June 9, 1977 Sept.27, 1979 May 22, 1980 Dec.

1, 1980 Dec.

1, 1982 Oct.

1, 1984 May 15, 1988 Nov. 15, 1990 Aug. 15, 1991 Jan.

15, 1999 June 1, 2000 Feb.

1, 2002 Apr. 15, 2004 Nov.

1, 2005 June 1, 2007 Sept.15, 2009 May 15, 2010 (a)

(a)

(a) 102.172 100.00 98.75 100.00 100.50 101.763 101.500 101.595 100.00 99.556 100.00 101.12 100.00 100.10 100.00 100.30 101.39 101.31 99.25 (e) 98.00 f15.88 99.18 104.18'9.625106.13 100.931 106.57 100.407 108.16 100.515 109.70 100.00 (b) 98.636 109.60 99.125 111.95 Other Long-term Debt December 31 Promissory Notes 5%%

Due 1977................

4.85%

Due 1995 (c)

Convertible Debentures 4%% Due 1981.

5N'/o Due 1978 Term Loan Notes (a) (f)...........

$ 8,000

$10,000

$20,000

$35,000

$ 8,000

$7,550

$ 7,725

$ 7,900

$ 8,075

$ 8,250

$ 4,050

$ 8,425

$ 8,000

$ 4,200

$ 8,600

$ 8,000

$ 4,350

$ 4,500

$ 8,775

$ 8,950

$ 8,000

- $ 8,000

$ 8,000

$ 4,650

$ 4,800 Oct.

1, 1957 Oct.

1, 1977 (a) 100.00

$ 9,125

$ 9,300 Dec. 21, 1965 Dec.

1, 1995 (a) 100.00 101.98

$ 8,000

$ 8,000 June 15, 1966 June 1, 1981 101.375 100.50

$ 8,000

$ 8,000 Feb. 25, 1971 Feb.

1, 1978 100.00 99.00 Dec. 29, 1978 Preferred Stock December 31

($100 Par Value) 4~/t'/o Preferred Stock.............

4%%.&referred Stock...;.........

4.75% Preferred Stock.............

4.35% Preferred Stock.............

4.96% Preferred Stock.............

7.72% Preferred Stock.............

7.44% Preferred Stock.............

8.40% Preferred Stock.............

Number of Registered Holders of Preferred Stock..............

$6,690

$340

$2,000

$6,000

$13,000

$12,000

$15,000 3,454

$ 6,690 340

$ 2,000

$ 6,000

$13,000

$ 12,000

$15,000 3,704

$ 6,690 340

$ 2,000

$ 6,000

$ 13,000

$ 12,000

$ 15,00D 3,761

$ 6,690 340

$ 2,000

$ 6,000

$ 13,000

$ 12,000

$ 15,000 3,853

$ 6,690 340

$ 2,000

$ 6,000

$ 13,000

$ 12,000

$ 15,000 3,943

$ 6,690 340

$ 2,000

$ 6,000

$ 13,000

$ 12,000 3,918

$ 6,690 340

$ 2,000

$ 6,000

$ 13,000

$ 12,000 3,927 3,924 3,959

$ 6,690

$ 6,690 340 340

$ 2,000

$ 6,000

$ 13,000

$ 12,000

$ 6,690 340

$ 2,000

$ 6,000

$ 13,000

$ 6,690 340

$ 2,000

$ 6,000

$ 13,000 3,881 3,832 Oct.

1, 1936 Oct.

1, 1936 Apr.

1, 1949 Nov.

1, 1954 June 21, 1961 Feb. 25, 1971 Jan.

17, 1973 May 24, 1977 (d) 102.50 107.00 107.50 105.00 107.00 103.75 100.55 106.75 (a) 100.00 102.00 (a) 100.00 101.00 100.00 98.55 104.00 101.22 100.323 106.80 100.00 98.80 108.40 Common Stock (No Par Value)

Number of Shares (Thousands)

December 31................

New Shares Issued (Thousands)

Total Stated Value Shares Outstanding December 31 Number of Registered Holders of Common Stock ~... ~.........

7,456 912 6,544 1,171 5,373 5,373 500 4,873 4,873 4,873 500 4,373 450 3,923 3,923 3,423 500 25,296 24,709 24,347 24,990 23,545 23,738 23,868 22,629 20,860 20,632 19,195

$111,165

$95,546

$76,371

$66,031

$57,928

$49,772

$38,172 18 (a) Placed privately.

(b) Not redeemable prior to June 1 ~ 1987.

(c) The 4.85ryrr promissory notes have an annual sinking fund requirement of $175.

(d) Exchanged for earlier 6'Ifr preferred stock and issued on an equal share basis plus $2.50 cash per share.

(e) Not redeemable prior to November 15, 1987.

In December 1978 the Company issued term loan notes aggregating $35 millionto three banks. The Loan Agreement under which these notes were issued provided that the notes should be paid in three consecutive annual installments commencing December 31, 1979. The Company repaid $15 million on December 31, 1979, $10 millionon December 31, 1980, and $10 millionon August 31, 1981. The interest rate on such notes was the "prime" rate in effect at the Irving Trust Company.

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Q Ul6 Notes DIRECTORS ERNEST E. ALTHOUSE Poughkeepsie, N.Y.

Vice Chairman of the Board and Vice Chairman of Committee on Finance; Member of Executive Committee and Committee on Compensation and Succession WILLIAMP. ARNOLD New York, N.Y.

Chairman of the Board and Chief Executive Officer Associated Dry Goods Corporation, a department store chain; Member of Committee on Audit RAYMONDT. BENEDICT Stamford, Ct.

Lawyer, of Counsel, Cummings &

Lockwood; Member of Executive Committee and Committee on Finance JAMES R. BREED, M.D.

Poughkeepsie, N.Y.

Surgeon Member of Committee on Audit MARJORIE S. BROWN Millbrook, N.Y.

Homemaker, active in civic and philanthropic work, formerly executive in retailing and promotional organizations; Member of Retirement Committee THEODORE J. CARLSON Poughkeepsie, N.Y.

Chairman of the Board and Principal Officer; Chairman of Executive Committee; Member of Retirement Committee, and Committees on Finance

'nd on Compensation and Succession ROY C. KETCHAM Fishkill~ N.Y.

Chairman of the Board and Chief Executive Officer, Ketcham Motors, Inc.;

'Chairman of the Board of The Fishkill National Bank; Chairman of Committee on Compensation and Succession; Member of Executive Committee JOHN E. MACKIII Poughkeepsie, N.Y.

Executive Vice President HERBERT L. SHULTZ Kingston, N.Y.

Special Assistant to the President, Vassar College; Chairman of Retirement Committee; Member of Committee on Audit JOHN WILKIE Katonah, N.Y.

Chairman of Committees on Finance and on Audit; Member of Executive and Retirement Committees H. CLIFTON WILSON Poughkeepsie, N.Y.

President; Member of Executive and Retirement Committees, and Committees on Finance and on Compensation and Succession 19 OFFICERS OF THE BOARD THEODORE J. CARLSON Chairman of the Board and Principal Officerand Chairman of Executive Committee JOHN WILKIE Chairman of Committees on Finance and on Audit ERNEST, E. ALTHOUSE Vice Chairman of the Board and of Committee on Finance ROY C. KETCHAM Chairman of Committee on Compensation and Succession HERBERT L. SHULTZ Chairman of Retirement Committee OFFICERS H. CLIFTON.WILSON President JOHN E. MACKIII Executive Vice President L. WALLACECROSS Senior Vice President-Finance and Accounting CHARLES E. RIDER Senior Vice President-Corporate Planning CHARLES A. BOLZ Vice President-Engineering WILLIAMA. KLING Vice President-Community Affairs HENRY L. WALKER Vice President-Production JOSEPH F.FURLONG Secretary and Treasurer JOHN F. DRAIN Controller PAUL J. GANCI Assistant Vice President STEWART P. LAIDLAW Assistant Vice President JAMES E. SMITH Assistant Vice President WILLIAME. VANWAGENEN Assistant Vice President WALTERA. BOSSERT, JR.-

Assistant Secretary and Assistant Treasurer CHARLES P. KOVAR Assistant Secretary EMORY R. OSBORN Assistant Treasurer TRANSFER AGENT & REGISTRARI COMMON & PREFERRED STOCK Morgan Guaranty Trust Company of New York 30 West Broadway New York, N.Y. 10015 GENERAL COUNSEL Gould &Wilkie One Wall Street New York, N.Y. 10005 INDEPENDENT ACCOUNTANTS Price Waterhouse 153 East 53rd Street New York, N.Y. 10022

The map depicts the 2,600 square-mile area served by Central Hudson, extending from 10 miles south of Albany to 30 miles north of New York City, and including a population of about 542,000.

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>ti rgb THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL.

THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016.

PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVALOF ANY PAGE(S)

FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

DEADLINERETURN DATE RECORDS FACILITYBRANCH

Highlights 0 Letter to Shareholders 5 Finance t9 Rate 0 Nuclear Technology@

Fuel Technology Fuel EAiciency l5 Operations 99 Financial Statements 9P Management's Discussion and Analysis 88 Financial and Statistical Information 9 Directors and OAicers Sigg95Q@MP bCo3$ 9$ CCM5 The cover illustration depicts several areas of company operations where technology and innovation have produced beneficial results.

In this report we willbe highlighting Finance, Rate, Nuclear Technology, Fuel Technology and Fuel Efficiency.

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The company supplies electric, gas and steam service wholly within the State of New York, and is engaged in the produc-tion, transmission, distribution and sale of these services in a nine-county area centering around the City of Rochester.

The company's territory, which has a population of approximately 880,000, is well diversified among residential, commercial and industrial consumers. In addition to the City of Rochester, which is the third largest city and a major industrial center in the State> it includes a large and prosperous farming area.

MO7ICE THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL.

THEY HAVE BEEN CHARGED TO YOU FOR A LIMITEDTIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016.

PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVALOF ANY PAGE(S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

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ANNUALREPORT 19Sf Contents Highlights of the Year Letter to Stockholders Condensed Statement of Income General Review of the Year Earnings and Dividends Dividend Reinvestment Plan Rate Matters Power Supply Future Power Supply Terminated Nuclear Projects 1981 Construction Future Construction Financing Research and Development Customer Assistance Personnel Electric Operations Gas Operations Balance Sheet Statement of Income Statement of Retained Earnings Statement of Changes in Financial Position Notes to Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Financial and Operating Statistics Directors and Officers Service Area Map 5

5 5

7 7

9 11 11 11 11 13 13 15 15 15 18 19 19 20 21 29 31 36 37 Cover:

IYith the rising cost of new power plants, improvement and maintenance of existing facilities becomes in-creasingly important. Shown here is new control equipment at Goudey Station near Binghamton, a plant which produces 129,000 kilowatts from electricity generating units installed over 30 years ago.

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Highlights of the Year Gross operating revenues (thousands)

Income before, interest charges (thousands)......

Earnings available for common stock (thousands)

Earnings per share of common stock 1981 1980 Increase Percent 767,539 645,314

$122,225 19, 175,764 145,886

$ 29,878 20 90,265 73,637

$ 16,628 23

$2.95

$2.70

$.25 9

Allowance for funds used during construction per share of common stock

$1.07

$1.13

$(.06)

(5)

Dividends paid per share of common stock Taxes per share of common stock Electricity sales to ultimate customers (million kwh)

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'Gas sales (thousand dekatherms)

$1.94

$3.51 11,008 39,956

$1.82

$2.98 10,742 37,658

$ 12 7

$.53 18 266 2

2,298 6

Cost of fuel for electric generation (thousands)

Total utility plant (thousands)

Expenditures for construction (thousands) 177,592 151,404

$ 26,188 17

$2,391,712

$2,117,241

$274,471 13 265,545 154,516

$111,029 72 Book value per share of common stock (average)...

'Market value per share of common stock (year end)

$22.01

$21.92

$15.00

$14.88

$.09

$ 12 1

TWE ANNUAL MEETING of stockholders will be held at the Corporation's General Office Building on Route 13 (Dryden Road) in the Town of Dryden, N.Y. on May 14, 1982 at 11 a.m. Formal notice of the meeting, a proxy state-ment and form of proxy will be sent to stockholders in early April.

REGULATORY DOCKET.FILE COPY

To the Owners of NYSEG:

In assessing 1981, probably the most significant event for NYSEG was the successful com-pletion in October of a key rate proceeding. After eleven months of study, including twelve days of public hearings, the Public Service Commission approved a 22% increase in electric rates and a 5% increase in gas rates for total added revenues of We//s P. Allen, Jr. (left) and Charles F. Kennedy

$133 million annually, which was 87% of the amount requested.

This was in marked contrast with the grossly inadequate rate relief in the two previous rate cases in 1979 and 1980 in which we received only about 40% of the amounts applied for.

Unfortunately, continued infla-tion and the attendant high costs of funds to finance our major capital requirements do not allow us much respite. Looking ahead to 1983 and the need to finance ex-penditures for completion of Somerset Generating Station and other construction makes it necessary for us to seek another rise in rates. Last month we filed for a $149-million, or 19%, in-crease in electric rates and a

$4.9-million, or 2%, increase in gas rates. The proposed rates are based on a 17.5% return on common stock equity and pro-jected operations for a calendar 1983 test year. They also in-clude an increase in constructiort work in progress in rate base to $450 million from $200 million presently reflected in rates.

Somerset is a wholly-owned, 625,000-kilowatt, coal-fired generating station which is planned for initial service in late 1984. Its construction has been progressing on schedule and, when completed, it will reduce costly electricity purchases and contribute to a reduction in the use of oil for electric

'eneration in the state. The only significant impediment to date has been the failure to obtain federal regulatory approval for a railroad connection, needed to transport coal and other raw materials to the plant, because of differences in public opinion as to a route for the facility. We anticipate that the Interstate Commerce Commission will de-cide the issue sometime this spring.

Another important regulatory decision pending is the Public Service Commission's study of the economic and financial impli-cations of continuing construction of Nine Mile Point II nuclear generating station. The Company is one of five utility owners and holds an 18% interest in the plant which is about one-third built. It is being constructed by Niagara Mohawk and is scheduled for operation in late 1986. The PSC has substantially completed its deliberations, indicating that completion of the

.plant is warranted. A decision has not yet b'een formally issued.

It is possible that the decision

~will include incentive provisions that benefit or penalize the

. project's owners if certain costs vary from prescribed target levels.

The estimated cost of Nine Mile Point II has risen sharply since 1974 when the project started.

Like other nuclear plants presently under construction, costs have been affected by inflation, high interest rates, and revisions in regulatory requirements, some of which stem from the Three Mile Island accident. Since capital costs of other sources of electricity have also increased materially, the relative economic advantage of Nine Mile Point II remains largely unchanged.

Moreover, the addition of nuclear capacity will reduce the state's dependence on imported oil.

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Last October's favorable rate decision should permit some closing of the gap, experienced in recent years, between allowed return on common stock equity and the return actually earned.

While we do not anticipate earning in 1982 the full 17% return granted by the PSC last October, we do expect to come closer to earning the allowed return than in previous years.

Rate decisions in the past year and other developments indicate that the regulatory climate in New York is improving. We were en-couraged recently to read a PSC administrative law judge's rec-ommended decision in a thorough, two-year-long proceeding ex-ploring utility financial needs.

His principal finding is that including construction work in rate base is the most effective and lowest-cost method to enable utilities to maintain financial integrity.

We heartily agree and hope this proceeding, which is expected to be completed in 1982, will re-sult in further improvement of regulation in New York.

To use a phrase heard quite regularly these days in the electric utility industry, we are beginning to see light at the end of the tunnel. Barring adverse develop-rnents we expect to be able to finance construction expendi-tures for Somerset, which peak in 1982 and 1983, then return to something resembling normalcy in the mid-1980s. For our stock-holders it will mean fewer issues of new common stock which tend to dilute earnings. For our customers it will mean moderating increases in electric and gas rates. The extent of moderation will depend on the rate of inflation.

In last year's Annual Report we included a readership survey card which many stockholders completed and returned to us. We appreciate the response as your replies and comments help in planning this report and other stockholder communications.

We look forward to the future with confidence. NYSEG has a fine service area, a competent management team, and an employee group that is second to none in the utility industry.

Employee dedication is amply demonstrated during storms and other emergencies when long, tedious hours are devoted to restoring service. In addition to their work responsibilities, many employees spend off-hours in community activities. We take this opportunity to acknowledge employee contributions and thank them for a job well done.

For the Board of Directors, Chairman and Chief Executive Officer President and Chief Operating Officer March 1, 1982

Condensed Statement of Income REVENUES Sales of electricity Sales of gas Total 1981

$609,178 158,361 767,539 1980 thousands of Dollars)

$506,502 138,812 645,314 Increase

$102,676 19,549 122,225 EXPENSES Wages and salaries of employees and contributions to retirement and insurance plans (exclusive of

$44,504,000 in 1981 and $43,046,000 in 1980 charged to construction, etc.)

Fuel used to produce electricity

Electricity purchased and interchanged Gas purchased Gther materials, services and research Federal taxes State and local taxes

'Depreciation Total

'Income available to investors 83,044 177,592 7,029 112,176 77,100 39,044 68,264 49,448 613,697 153,842 73,442 151,404 (2,030) 100,895 67,822 21,600 59,838 47,486 520,457 124,857 9,602 26,188 9,059 11,281 9,278'7,444 8,426 1,962-'3,240 28,985 ALLOWANCEFOR FUNDS USED DURING CONSTRUCTION 32,719 30,925 1,794 INVESTORS'HARE Interest on bonds Interest on notes payable and other Dividends on preferred stock Dividends on common stock Total RETAINED IN THE BUSINESS 67,389 11,371 17,536 58,657 154,953

$ 31,608 59,967 7,611 14,567 49,091 131,236

$ 24,546 7,422 3,760 2,969 9,566 23,717 7,062

General Review of the Year Earnings and Dividends Operating Income Rises 26%

Operating income was $ 145 million, an increase of $30 million, or 26%,

over 1980. Revenues increased $122 million, which includes $57 million from higher electric and gas rates and

$48 million from increased fuel and purchased-gas costs included in billings. Operating expenses, ex-cluding energy production costs, were up 13%, largely as a result of inflationary rises in labor and materials expense.

Interest charges, including interest on short-term debt, rose $ 11 mil-lion, or 1,7%. Higher interest rates and increased borrowing required to finance construction were largely re-sponsible for the increase.

Allowance for funds used during construction was 36% of earnings

available for the common stock. This is a decline of six percentage points from 1980 and reflects rate in-creases which allowed construction work in progress in rate base.

Allowance for funds used during construction represents financing cost, such as bond interest, that is allocated to major projects under construction.

It does not constitute cash earnings.

Earnings available for the common stock of $90 million increased 23%

over 1980. On a per-share basis, earnings of $2.95 were up only 9% because of a 12% increase in average number of shares out-standing.

The quarterly dividend rate on the common stock was raised from 47 to 50 cents effective with the August 15, 1981 payment. This is the fourth consecutive year the divi-dend rate has been increased.

The higher dividend, together with a greater number of shares outstanding, increased total common stock dividends $10 million, or 19%.

After dividends, the balance of net income of $32 million was added to common stock equity.

For federal income tax purposes, it is estimated that no portion of 1981 dividends was a return of capital; therefore the dividend is fully taxable as ordinary income. Similarly, the Company anticipates that no portion of 1982 dividends will be considered a return of capital.

Dividend Reinvestment Plan New Tax Break For Stockholders The Economic Recovery Tax Act of 1981 provides a tax benefit for eligible stockholders reinvesting dividends in qualifying utility companies such as NYSEG. Beginning in 1982, stockholders can exclude up to $750

($1,500 on a joint return) of re-invested dividends from their taxable income. If the shares purchased are sold after one year, the proceeds will be taxable at capital gains rates which are lower than tax rates on ordinary income. There are certain U.S. Treasury requirements regarding retention of shares.

Under present law, the tax benefit terminates at the end of 1985.

During 1981, participation in the Dividend Reinvestment and Stock Purchase Plan increased from 12,000 to 14,000 stockholders. These stockholders, representing about 20% of the total number of stock-holders, purchased over $13 million in new shares by reinvesting dividends or making optional cash purchases.

This compares with

$8 million in 1980.

In January 1982 stockholder par-ticipation in the plan increased from 20 to 25%, probably because of the new tax law benefits.

The plan allows shareholders to re-invest quarterly dividends and make monthly cash payments of up to $5,000 quarterly for purchase of shares. Dividends reinvested pur-chase shares at 95% of the average market price on the dividend payment date. There are no service charges or brokerage commissions.

If you are interested in enrolling in the plan or desire further informa-tion, please write:

NYSEG Shareholder Services, P. O. Box 200, Ithaca, New York 14850.

1972 1973 1974 1975 1976 1977 1978 236 253~ 296 408 459 532 Total Operating Revenue

~ ELECTRIC Millions of Dollars I

I GAS and Other 1979 1980 1981 25 75 125175 588 645 768

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i Rate Matters 8133-Million Rate increase Approved In October 1981 the Public Service Commission approved a $124-million, or 22%, increase in electric rates and a,'$9-million, or 5%, increase in gas rates. The $133 million in higher revenues was 87% of the amount requested and included $45 million in temporary electric rates allowed on June 1. In the two previous general rate proceedings, the PSC had approved only about 40% of the amounts requested.

To improve cash flow and interest coverage, the PSC allowed por-tions of construction work in progress to be added to rate base. The temporary rates were based entirely on the addition of $275 million of construction work to rate base. The permanent rate increase, which went into effect on October 25, is based on $200 million of construction work,in rate base. These additions to rate base substitute cash earnings for the non-cash allowance for

.,funds used during construction. Fur-therrnore, they lower the in-service cost of major projects since the

. financing costs during construction are not added to the cost of projects but are paid for currently by customers.

The October rate decision was predicated on an allowed 17% return on common stock equity, based on a test year ending October 31, 1982. It did not allow revenues to recover pre-construction expendi-tures on the abandoned New Haven nuclear project because a

separate proceeding on that matter is pending. The Company's $ 153-million rate request had included about $ 15 million for the annual recovery over five years of these ex-penditures.

While the rate decision was a satisfactory one, the Company must look beyond October 1982. The effects of past and expected future inflation, including high interest costs, will continue to affect opera-tions. For this reason it was necessary for the Company to seek another increase in rates. In February 1982 an application was filed with the PSC for a $149-million, or 19%, increase in electric rates and a $4.9-million, or 2%, increase in gas rates. The electric rate request is based on a 17.5% return on common stock equity, $450 million of construction work in rate base and a calendar 1983 test year. It also includes revenues for recovery over ten years of expenditures on the abandoned New Haven and Jamesport nuclear projects.

Power Supply Generation Primarily Coal-Fired All of NYSEG's steam-electric generating stations use coal as a primary fuel. These plants provide 98% of the Company's genera-tion with hydro-electric facilities pro-ducing the remainder.

Total power supply in 1981, on a kilowatt-hour basis, was 12.3 billion kilowatt-hours, an increase of 1% over 1980. About 88% of this was generated by Company plants.

The remainder was largely purchased under contracts with the New York State Power Authority and neighboring utilities.

A new peak load of 2,193,000 kilowatts (kw) was set during very cold weather in mid-January 1982.

The new peak exceeds the previous one, which was set a year earlier, by about 1%.

The Company's power supply capability to serve peak loads is currently 2,775,000 kw. This com-prises 1,769,000 kw of Company generating capacity, 764,000 kw of purchases from the Power Authority and 242,000 kw of firm purchases from neighboring utilities.

A large part of the purchases from the Power Authority are from hydro projects on the Niagara and St.

Lawrence Rivers. The chairman of the Authority has proposed a realloca-tion of this low-cost power through-out the state in 1985 and 1990, when present contracts expire. The Company's residential customers would continue to benefit from the power, but to a lesser extent than currently. No legislative action has been taken to date on the proposal.

Despite a three-month strike of coal miners beginning in March 1981, the Company was able to maintain normal electricity production at all its plants except Homer City. Main-tenance work scheduled for this facility late in 1981 was advanced so that there was no substantial loss of planned power production for the year.

Informing the public about energy mattersis animportant facet of NYSEG activities. Top: Youngsters visit an energy museum at a Company office.

Bottom right:Aspart ofan energyseminar, a group of teachers tours an electricity generating plant. Bottom left: Displays at fairs and exhibitions help provide the public withinformation about wise energy use and conservation.

Electric Peak Loads 1973-1982 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 (Winter Capability Period)

Megawatts 1724 1701 1768 1993 2070 2034 2118 2072 2170 2193

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Steel framing is erected for Somerset Generating Station, a coal-lired faci%'ty being built by the Company in western. New York. It willadd 625,000 kilowatts to electric generating capacity when completed in 1984.

Future Power Supply Somerset Project Progresses Good progress was made in 1981 on the construction of Somerset, a

wholly-owned, 625,000-kw, coal-fired generating station being built near Lake Ontario in western New York. Steel structure for the main building has been erected and work has begun on facilities to bring lake cooling water to the plant. En-gineering work will be substantially completed by the end of 1982.

About 70% of the work, on a dollar basis, has been contracted for with remaining major contracts ex-pected,to be awarded by September 1982. The project is scheduled for

'completion in late 1984.

The plant is estimated to cost

$1,072 million, which includes

" allowance for funds used during con-struction. The cost includes almost

$300 million for environmental protec-tion facilities including a wet limestone scrubber to remove sulphur dioxide from exhaust gases. At the end of 1981, expenditures of $215 million had been made on the plant.

Public hearings on a railroad to bring coal and limestone to the plant were completed in December. Three routes for the railroad, varying in length from 15 to 30 miles, have been proposed to the U.S. Interstate Commerce Commission. Each has been opposed by various environ-mental and farmland preservation groups. The ICC is expected to decide the issue in the spring of 1982.

The Company is participating with four other New York utilities in the con-r f

struction of a 1,084,000-kw nuclear generating station near Oswego, N.Y.,

known as Nine Mile Point II. NYSEG owns 18% of the unit, which is being built by Niagara Mohawk Power Corporation and scheduled for completion in late 1986. Like many nuclear plants currently under con-struction, the project has experienced a steady rise in estimated con-struction cost since its start in Construction Program 602 563 368 Completed Ten Years 1972-1981

$1,602,000,000 Forecast Three Years 1982-84

$1,533,000,000 64 83 116 Millions of Dollars 162 207 184 132 171 185 298 1974. As a result, the PSC, in late 1981, initiated a proceeding to review the financial and cost implications of completing the plant. It has indi-cated that completion is war-ranted. It is possible that the PSC will set financial incentives and penalties for the project owners re-lating to final construction costs.

NYSEG's share of the project's cost, including allowance for funds used during construction, is $712 mil-lion of which $235 million was spent at the end of 1981, Whenever possible, NYSEG utilizes existing rights-of-way to build transmission lines. This is a new 115,000-volt line to strengthen electric servicein the Oneonta area.

72 73 74 75 76 77 78 79 80 81 82 83 84

5L

erminated Nuclear Projects Recovery of Expenditures Pending n 1979 and 1980 the New York State Board on Electric Generation Siting nd th'e Environment turned down proposals by NYSEG and Long Island Lighting Company to build jointly-owned nuclear generating plants at New Haven in upstate New York and at Jamesport in eastern Long Island.

The Company is seeking PSC approval to recover its expenditures on the projects through rates over a period of years. About $60 million

($43 million after tax effect) had been expended by NYSEG on James-port and $44 million ($33 million after tax effect) on New Haven. Most of the outlays were for environ-mental studies and other pre-con-struction work required by law.

In September 1981 a PSC adminis-trative law judge recommended that recovery of the New Haven ex-penditures be approved. A PSC decision in the matter is expected shortly. Action on the Jamesport

'application is not expected until late 1982.

projects for general improvement of electric and gas systems, including

$43 million for minor projects, each costing $25,000 or less.

Future Construction Outlays Continue at Record Highs Outlays for construction are planned to continue at high levels through 1984 when Somerset Generating Station is expected to be completed.

It is estimated that construction expenditures in 1982 through 1984 will aggregate

$1,533 million, which includes $281 million of allowance for funds used during construction.

Somerset and its related rail facility will require $886 million. The Company's share of the Nine Mile Point II project is budgeted for $300 million. Other large expenditures include $67 million for improvements at existing coal-fired generating facilities and $60 million for additions to hydro-electric generating capacity.

The remainder of the three-year program is allocated for general reinforcement of the Company's elec-tric and gas systems.

Continuation of the 'construction program is contingent upon, among other things, receipt of adequate electric and gas rates. Ifthe PSC does not permit higher revenues to cover'increased costs, the Company may be unable to finance the entire program.

Financing Cash Needs Amount to

$374 Million Like construction expenditures, financing requirements reached new highs in 1981. Cash needs were

$374 million which included $265 mil-lion for construction, $65 million for maturing securities and $44 million for reduction in short-term debt.

About $80 million, or 30k of construction expenditures, was gen-erated internally. Sale of securities provided $270 million. The remainder of the $374 million came from a reduction in working capital and $ 11 million received as the Company's share of a settlement of nuclear fuel supply litigation.

Sales of securities during the year 7981 Construction Expenditures Total Almost

$300 Million Construction expenditures in 1981 were $298 million which includes $33 million of allowance for funds used during construction. Principal outlays were $123 million for Somerset Station, $62 million for the Company's share of Nine Mile Point II and $10 million for a hydro-electric project on the Hudson River at Mechanic-ville. The remainder was spent on Despite high mortgage rates and generally-reduced housing activity, construction of new dwelling units continued in 1981. Residential cus-tomers added during the year included 4,200 for electric service and 540 for gas. Most new residences use elec-tricity.or gas for space heating.

Industrial Electric Revenues Stone, clay and glass products Machinery, except electrical Food and kindred products Transportation equipment Electrical machinery and supplies...

Fabricated metal products Primary metal industries Rubber and plastic products Chemicals and allied products Paper and allied products Printing and publishing Instruments and related products....

Nonmetal miningexcluding fuels....

Wood products, except furniture Leather and leather products Textile mill products Petroleum and refining Metal mining Furniture and fixtures Apparel and other textile products...

Miscellaneous industries Unclassified (under 50 kw demand)..

Total Total electric revenues 1981 (thousands)

$ 17,645 13,579 11,149 10,751 10,283 10,131 9,954 8,253 4,165 3,443 3,048 3,032 3,018 2,019 1,321 1,217 1,205 1,098 921 265 2,145 2,976

$121.618

$609,178 Percent of total 14 5%

11.2 9.2 8.8 8.5 8.3 8.2 6.8 3.4 2.8 2.5 2.5 2.5 1.7 1.0 1.0 9

9

.8

.2 1.8 2.5 100 0'lo

PQP GQg NYSEG personnel work closely with customers. Top right: A meter special-ist tests a meter that willallowin-dustrial customers to benefit from newly-developed time-of-use electric rates. Top left: A market service representative discusses with cus-tomer a heat pump combined with a gas furnace which provides efficient space heating and air conditioning.

Bottom: A consumer affairs rep-resentative offers a young family financial counseling.

included the following (dollars in fTIIIIions):

January April August December December Total S 60 14'/a% bonds due 1991 30 15 /e% preferred stock 37 cornrnon stock, 2,500,000 shares 100 17sr's% bonds due 1969/90 30 15% preferred stock 13 dividend reinvestment plan

$270 The common shares issued in August were sold through under-writers to the public at $ 15.50 a share.

After deduction of underwriting fees, the Company received $14.94 a share.

In 1982 it is estimated that the Company will require about $470 million of external funds to finance construction and pay for maturing securities. About $85 million was raised in January 1982 with public sales of $50 million principal amount of 18% first mortgage bonds due 2012 and 2,500,000 shares of com-mon st'ock. The stock was sold to underwriters at $14.18 a share and reoffered to the public at $14.75 "a share.

Also in January, as part of a program to finance pollution control

" facilities at Somerset Station, the Company publicly sold $61 million principal amount of tax-exempt 91/4% pollution control notes due January 1, 1985 through the New York State Energy Research and Devel-opment Authority. The notes are backed by a letter of credit issued by a major bank. Proceeds of the sale, along with proceeds from an issuance through the Authority of up to $35 million of tax-exempt commercial paper, will be used to finance the facilities pending permanent financing.

Institute received $2.2 million. It conducts research for more than 600 electric utilities nationwide. The Company contributed $2.4 million to Empire State Electric Energy Re-search Corporation which sponsors research for the state's major electric utilities. Another $870,000 was spent for the Company's share of research conducted by the New York State Energy Research and Devel-opmentt Authority.

About $1.7 million was devoted to the Company's own research efforts. Among projects being studied is better utilization of the fly ash left after burning of coal in generating stations. Fly ash from a station near Binghamton is being used ex-perimentally as an ingredient in asphalt for paving parking lots and highways. Fly ash from another plant is being sold to firms which manu-facture concrete products.'he Revenue Dollar-1981 79 k Electricity 21% Gas 100'/o Where it came from:

Residential 4SC

,~

I'1 Q 4 Customer Assistance Consumer Advisory Panel Formed A Consumer Advisory Panel was formed in 1981 to strengthen com-munication with customers.

Nineteen persons with varied backgrounds Where it wont:

Fuel 22C rum ruL~

1~~{@&] fii=:0 Taxes 14C IWR and experience were selected from the Company's Binghamton, Elmira and Ithaca operating areas. The panel meets regularly to discuss mat-ters which concern consumers.

Each member serves a one-year term without compensation, except for reimbursement of travel expenses.

In other efforts to assist customers and improve communications, the Company has consumer repre-sentatives in district offices who assist customers who have difficulty paying for service or related prob-lems. An award-winning publication, Senior Sun, is circulated to senior citizens and provides information on how to minimize utility costs, Energy conservation continues to receive attention. Company market service representatives work with residential and business customers to identify ways of saving energy.

Almost 20,000 home energy audits have been conducted to date and 3,200 loans, aggregating $5.8 million, have been arranged to help customers reduce energy con-sumption. The loans can be used to finance such improvements as new, more efficient furnaces, insulation, storm windows and solar water heaters.

Research and Development Variety of Projects Supported More than $7 million was spent on a variety of research and develop-ment projects in 1981. About three-quarters of the expenditure was for the Company's participation in national and state electric research programs. Electric Power Research Commercial 23c Irsrtl g pi Industrial 21C Street Ughting 8, Other I Ic lr 4 Gas & Elecidcity purchased ISC trl rrr Interest to Bond Holders. otc.

10c

', Other Material and Sorvices 10c Ir~s Dep

'at'en se a~~

Olvtdends-Common Stock 7c Oivrdends-Preferred t

2c Retained in the Business 4C

Electric and gas sales to business customers increased in 1981. Shown here (above) is an engineering building at Corning completed recently by Corning Glass Works. At right is a shopping mall near Elmira that was enlarged during the year.

14

Suburban areas outside large cities constitute a large portion of the service area. Shown here is part of an award-winning condominium complex north of New York City.

4r

)

Personnel Vehicle Accident Rate Improves Employees driving Company vehicles improved their accident record during 1981. The accident rate was 5.08 accidents per million miles driven, which compares with 6.24 per million miles in 1980. For electric utilities nationally, the average rate is currently 8.89 accidents per million miles driven.

Affirmative action to hire, train and promote minority-group persons and women continued during the year. Policies and procedures on sexual harrassment, and equal employment opportunities for Viet Harn veterans and disabled persons, weje developed and implemented.

Several programs were conducted to

~. incfease the awareness of female employees to career opportunities within the Company.

" Electric Operations Sales Rise 2%,

Revenues Up 20%

Electric sales in 1981 were up 2%

while revenues increased 20% over the previous year. The revenue in-crease reflects higher rates and fuel costs included in customer bill-ings. Percent changes by customer category were as follows:

Kwh Sales Revenues Residential 2%

20%

Commercial 1

19 Industrial 3

23 Total 2%

20%

Average consumption by residential customers and the number of customers each increased about 1%

during the year. The average residential rate was 6.13 cents per kilowatt-hour, which compares to 5.25 cents in 1980.

~

Electric operating expenses in-creased

$52 million, or 19%. A large part of the increase, or $41 million, was due to higher production ex-penses, including the cost of fuel and purchased electricity. The unit cost of fuel was $1.57 per million Btu, a 15% increase over 1980.

~nil&<il',h~1V&i Gas Operations Industrial Sales Up Sharply Sales of gas increased 6% over 1980 largely as a result of sharply-higher sales to industrial customers.

Revenues were up 13%, reflecting pass-through to customers of higher purchased gas costs and increased rates. Percent changes by customer category were as follows:

Unit Sales Revenues Residential Commercial 1

8 Industrial 16 26 Total 6%

13%

About 1,500 residential gas space heating customers were added in 1981. However, the effect of the addi-tion on sales was offset by a 3%

decline in average use per customer, which largely reflects greater customer energy conservation.

Previously, in 1980, average use per customer had declined 7%.

Operating expenses rose $14 million, or 12%, primarily because of an 11% increase in purchased gas cost. On a unit basis, the cost of purchased gas was $2.82 per deka-therm which compares with $2.59 in 1980.

1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 45.2 48.3 83.9 97.7 100.2 106.7 122.6 131.0 136.2 157.0 Cost of Coal Used for Generation Cents per MillionBTU 15

i C

Environmental protection accounted for many man-hours of work and sizable expendituresin 1981. In these photos various tests, experiments and analyses are conducted to assure that environmental effects of the Company's operations are minimized.

p Market for Common Stock and Related Security Holder Matters The Company's common stock is listed on the New York Stock Exchange.

The number of stockholders of record at January 20, 1982 was 71,464.

Price of Common Stock New York Stock Exchange Composite 1981 Dividends Paid 1980 Per Share High Low High Low 1981 1980 First quarter...............

$16

$ 137/e

$17

$13'/e

$ 47

$ 44 Second quarter............

16 14 17'/4 1 41/e

.47 44 Third quarter 16'/4 14 17%

15'/4

.50

.47 Fourth quarter 157/e 14 16s/4 13e/e

.50

.47 Dividend Limitations: After dividends on all outstanding preferred stock have been paid, or declared and funds set apart for their payment, the common stock is entitled to cash dividends as may be declared by the Board of Directors out of retained earnings accumulated since December 31, 1946. Such dividends are limited if Common Stock Equity (39% at December 31, 1981) falls below 25% of total capitalization. Dividends on common stock cannot be paid unless all sinking fund requirements of the preferred stock are met. The Company has not been restricted in the payment of dividends on common stock by these provisions.

Coopers

&Lybrand certified pub!ic accountants EE E

To the Stockholders and Board of Directors New York State Electric & Gas Corporation Ithaca, New York We have examined the balance sheets of New York State Electric & Gas Corporation as of December 31, 1981 and 1980 and the related statements of income, retained earnings and changes in financial position for each of the three years in the period ended Decem-ber 31, 1981. Our examinations were made in accordance with generally accepted audit-ing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financial position of New York State Electric & Gas Corporation at December 31, 1981 and 1980 and the results of its operations and the changes in its financial position for each of the three years in the period ended December 31, 1981, in conformity with generally accepted accounting principles applied on a consistent basis.

New York, New York January 29, 1982

Balance Sheet ASSETS UTILITYPLANT, at original cost (Note 1)

Electric Gas Common December 31 1981 1980 (Thousands of Dollars)

$1,550,985 129,493 47,539

$1,469,836 124,850 45,762 New York State Electric & Gas Corporation Less accumulated depreciation Net utilityplant in service Construction work in progress (Notes 8-10)

OTHER INVESTMENTS (Note 3) 1,728,017 490,579 1,237,438 663,695 1,901,133 20,045 1,640,448 452,464 1,187,984 476,793 1,664,777 21,261 CURRENT ASSETS Cash Special deposits Accounts receivable Fuel, at average cost Materials and supplies, at average cost Pre payments 7,210 6,197 80,415 31,517 26,148 12,079 163,566 6,921 11,128 71,187 29,836 24,583 10,712 154,367 DEFERRED CHARGES Fuel costs deferred (Note 1)

Other CAPITALIZATIONAND LIABILITIES CAPITALIZATION(Notes 4-7)

Capital stock and retained earnings Preferred stock redeemable solely at the option of the Company

. Preferred stock subject Io mandatory redemption requirements Common stock equity Common stock Capital in excess of par value Retained earnings Total common stock equity Long-term debt Total CURRENT LIABILITIES Securities to be redeemed or due within one year Notes payable-commercial paper (Note 7)

Accounts payable Dividends payabie on preferred stock Pensions accrued Taxes accrued Interest accrued Other DEFERRED CREDITS Accumulated deferred investment tax credit (Note 2)

Other.........

21,886 21,668 43,554

$2,128,298 115,500 120,575 217,499 234,746 270,464 722,709 813,398 1,772,182 60,737 35,000 79,556 4,896 13,300 16,570 20,960 29,822 260,841 33,695 5,251 19,146 12,430 31,576

$1,871,981 115,500 71,313 194,732 208,629 238,856 642,217 777,819 1,606,849 64,737 6800 56,098 3,582 13,100 16,787 17,850 20,517 199,471 29,621 2,016 ACCUMULATEDDEFERRED FEDERAL INCOME TAX(Note 2)

COMMITMENTSAND CONTINGENCIES (Notes 8 and 9) 38,946 56,329

$2,128,298 The accompanying notes shown on pages 21 through 28 are an integral part of the financial statements.

31,637

=

34,024

$1,871,981 18

New York State Electric & Gas Corporation Statement of Income Years Ended Oecember 31 OPERATING REVENUES Electric Gas Total OPERATING EXPENSES

-Operationfuel (Note 1) other Electricity purchased and interchanged Gas purchased Maintenance Depreciation Federal income tax (Note 2)

Other taxes (Note 11)

Total OPERATING INCOME OTHER INCOME AND DEDUCTIONS Allowance for other funds used during construction (Notes 1 and 8)

Federal income tax credit (Note 2)

Other-net INCOME BEFORE INTEREST CHARGES INTEREST CHARGES Interest on long-term debt Other interest Allowance for borrowed funds used during construction (Notes 1 and 8)

Interest charges net NET INCOME PREFERRED STOCK DIVIDENDS

, EARNINGS AVAILABLEFOR COMMON STOCK EARNINGS PER SHARE AVERAGE NUMBER OF SHARES OUTSTANDING.

1981

$609,178 158,361 767,539 177,592 108,294 7,029 112,176 51,616 49,448 43,844 72,935 622,934 144,605 21,922 9,471 (234) 175,764 151,404 96,877 (2,030) 100,895 44,121 47,486 28,382 63,552 530,687 114,627 21,029 10,496 (266) 145,886 68,773 9,987 (10,797) 67,963 107,801 17,536

$ 90,265

$2.95 30,586,063 61,217 6,361 (9,896) 57,682 88,204 14,567

$ 73,637

$2.70 27,311,154 1980 thousands of Dollars)

$506,502 138,812 645,314 1979

$477,643 110,568 588,211 142,141 83,226 2,'626 74,542 40,569 43,807 27,163 63,362 477,436 110,775 17,486 9,815 93 138,169 55,347 3,289 (7.856) 50,780 87,389 14,117

$ 73,272

$2.83 25,886,419 Statement of Retained Earnings Balance, beginning of year Add net income Years Ended December 31 1981 1980 1979 (Thousands of Dollars)

$238,856

$214,310

$185,479 107,801 88,204 87,389 346,657 302,514 272,868 Deduct cash dividends Preferred stock (at serial rates)

Redeemable solely at the option of the Company Subject to mandatory redemption requirements Common stock ($1.94, $1.82 and $1.72 per share in 1981, 1980 and 1979, respectively)

Balance, end of year 7,710 9,826 58,657 76,193

$270,464 7,710 6,857 49,091 63,658

$238,856 7,710 6,407 44,441 58,558

$214,310 The accompanying notes shown on pages 21 through 28 are an integral part of the financial statements.

19

New York State Electric & Gas Corporation Statement of Changes in Financial Position Years Ended December 31 SOURCE OF FUNDS Net income Depreciation Amortization of deferred charges Federal income tax deferred net Investment tax credit deferred net Allowance for funds used during construction Funds from operations Proceeds from sale of first mortgage bonds Proceeds from sale of common stock Proceeds from sale of preferred stock Increase (decrease) in commercial paper Proceeds from contract settlement agreement Decrease (increase) in working capital*

Proceeds from sale and leaseback of service centers Total funds available APPLICATIONOF FUNDS Additions to utilityplant Dividends on preferred stock Dividends on common stock Securities to be redeemed or due within one year Fuel costs deferred Bonds reacquired for sinking fund

<<'.Decrease (increase) in notes payable

.Othernet Total funds applied INCREASE (DECREASE) IN WORKING CAPITAL CURRENT ASSETS

Cash

Special deposits

.Accounts receivable

'-. Fuel Materials and supplies Prepayments Total increase in current assets CURRENT LIABILITIES Securities to be redeemed or due within one year Accounts payable Dividends payable on preferred stock..........

Taxes accrued Interest and pensions accrued Other 1981

$107,801 49,448 6,146 21,122 4,074 (32,719) 155,872 160,000 50,609 60,000 28,200 11,271 23,971

$489,923

$265,545 17,536 58,657 60,737 7,316 72,500 7,632

$489,923 289 (4,931) 9,228 1,681 1,565 1,367 9,199 (4,000) 23,458 1,314 (217) 3,310 9,305 1980 thousands of Dollars)

$ 88,204 47,486 3,302 12,822 7,813 (30,925) 128,702 48,416 (18,700) 46,532 9,300

$214,250

$154,516 14,567 49,091 64,737 2,583 3,603 (74,500)

(347)

$214,250 1,336 (402) 7,630 (3,478) 3,759 901 9,746 47,493 11,585 (102)

(4,504) 1,215 591 1979

$ 87,389 43,807 1,713 (298) 11,048 (25,342) 118,317 50,000 7,243 20,000 (9,800)

(6,439)

$179,321

$ 145,928 14,117 44,441 17,244 3,600 (44,215)

(1,794)

$ 179,321 1,035

'15 9,951 14,407 4,552 1,009 31,569 7,156 9,762 412 4,040 1,123 2,637 Total increase in current liabilities*

Increase (decrease) in working capital*

'Exclusive of changes in commercial paper 33,170 56,278

$ (23,971)

~

$ (46,532) 25,130 6,439 The accompanying notes shown on pages 21 through 28 are an integral part of the financial statements.

20

Notes to Financial Statements

1. Significant Accounting Policies

a. Accounting records The Company maintains its accounting records in conformity with the uniform system of accounts pre-scribed by the Federal Energy Regulatory Commission (FERC) and the Public Service Commission of the State of New York (PSC).

b. Utilityplant Cost of current repairs and minor replacements is charged to appropriate operating expense and clearing accounts; cost of renewals and betterments, in-cluding indirect costs, is capitalized. Original cost of utility plant retired or otherwise disposed of and the cost of removal less salvage are charged to accumulated depreciation.

c. Allowance for funds used during construction (AFDC)

AFDC, a non-cash item, is shown on the Statement

'of Income as AFDC-other funds and AFDC-borrowed funds."AFDC is defined in the regulatory system of accounts as the net cost, for the period of construction,

'fborrowed funds used for construction purposes and a reasonable rate on other funds when so used.

(See Note 8.)

The Company capitalized AFDC on a compound basis, net of taxes, at rates of 7.5%%d, 8%%d and 8.7%%d for 1979, 1980 and 1981, respectively. The Company is allowed revenues equal to the federal income tax ef-fect of the interest on debt portion of AFDC.

AFDC was not recorded on construction work in prog-ress (CWIP) allowed in rate base which amounted to (1) $30 million for the first five months of 1979, (2)

$31.4 million for August 1980 through June 1981, (3) $275 million for July 1981 through October 1981 and (4) $200 million for the last two months of 1981.

d. Revenue Revenues from the sale of electricity and gas are recorded on the basis of meters read.

e. Retirement plans The Company has noncontributory retirement annuity plans which cover all officers and substantially all employees. Annuity plan costs are based on normal costs and amortization of the unfunded liability. The assumed rate of return used in determining actuarial present values of accumulated plan benefits was 6%%d, and benefit information in the following table was determined on January 1 of each year. The Company's policy is to fund pension costs accrued.

1981 1980 1979 (Thousands of Dollars)

Provision for pension cost......

$ 13,300

$ 13,100

$ 12,600 Actuarial present value of accumu-lated plan benefits:

Vested..........

Non-vested......

Net assets available for benefits.......

159,000 128,100 104,000

f. Deferred fuel charges The Company defers certain fuel and purchased gas costs which are subsequently billed to customers through adjustment clauses in rates.

g. Depreciation The annual provision for depreciation is determined using straight-line rates, based on average service lives, applied to the original cost, by groups of depreciable property in service. Depreciation accruals were equivalent to 3.2%%d of average depreciable property for 1979 through 1981.

2. Federal Income Taxes For federal income tax purposes the Company uses the sum-of-the-years digits depreciation method, the Asset Depreciation Range System (ADR) and effective January 1, 1981, for property additions subsequent to 1980 it adopted the Accelerated Cost Recovery Sys-tem (ACRS) pursuant to the Economic Recovery Tax Act of 1981.

Prior to 1981, investment tax credits (ITC) based on the Revenue Act of 1973 (4%%d) were reflected currently in income and were shared equally between stock-holders and customers for rate-making purposes.

The additional 6/0 ITC derived from the Tax Reduction Act of 1975 are deferred. The Company has approximately

$14,565,000 of unused ITC at December 31, 1981.

The PSC, in its October 1981 rate decision, required that the ACRS reductions in taxes and all ITC (10/o) claimed on ACRS property subsequent to the rate order, be deferred. The PSC previously required that federal income tax reductions arising from the use of ADR be similarly deferred. These benefits are to be returned to income over the book life of the applicable property.

Charged to operations:

Current........

Deferrednet...

AFDC imputed income tax benefit........

Investment tax credits:

Deferred......

Shared........

Included in other income:

AFDC imputed

'"'income tax

. benefit.........

.Investment tax

.-, creditsshared

.Amortization of

., ITC deferred in

." prior years.....

"fax on other

$ 6,650

$ (2,600)*

$ 6,580 21,122 12,822 (298) 6,836 7,485 6,203 7,944 8,835 11,764 1,292 1,840 2,914 43,844 28,382 27,163 (6,836)

(7,485)

(6,203)

(1,292)

(1,840)

(2,914)

(1,204)

(1,022)

(717)

. income........

~139)

~149) 19

~9,471)

~10,496)

~9,615)

Total.........

$34,373

$ 17,886

$ 17,348

This credit amount was due principally to the tax loss related to the abandonment of nuclear projects proposed for New Haven and Jamesport (see Note 8).

In the July 1980 rate decision, the PSC allowed revenues equal to the federal income tax effect of pension costs, insurance costs and all taxes charged to CWIP for electric facilities only. Effective with the PSC's October 1981 rate decision, the additional revenues will be limited to the federal income tax effect applicable to pension and insurance costs in excess of $6 million, which represents capitalized costs applicable to minor projects. The federal income tax benefit is recorded as a reduction of CWIP.

Federal income taxes for 1979 through 1981 are as follows:

1981 1980 1979 thousands of Dollars)

Federal income tax provisions for 1979 through 1981 are substantially less than the amount obtained by using the statutory rate due to the following:

1981 1980 1979 tatuto rate...........

46.0%

S ry Decrease:

Excess of allowable tax depreciation and amortization over book amounts.............

Costs capitalized on books, expensed for income taxes:

AFDC................

Taxes, pensions and insurance...........

Investment tax credits............

Miscellaneous.........

Actualrate..............

(4.7)

(5.7)

(6.3)

(10.6)

(13.4)

(1 1.1)

(.7)

(3 0)

(4 8)

(2 0)

(3 4)

(4 9)

~3.8

~3.6

~2.3 24.2%

16.9%

16.6%

3. Other Investments The Company has entered into long-term contracts for the supply of coal to the Homer City Generating Station, and in that connection, has agreed to make loans (maximum aggregate amount of $23,150,000 approved by the PSC) to the mining companies. These loans

($16,575,000 and $18,275,000 at December 31, 1981 and 1980, respectively) were made on first mortgage notes maturing December 31, 1982 which currently bear interest at one-half percent above prime. The Company intends to seek PSC permission to extend the maturity date of these notes. The Company sold to Chemical Bank 100% participations in these notes which have been recorded as long-term notes payable due April 5, 1986. The agreement with Chemical Bank requires the Company to repurchase the participations under certain conditions.

The Company has established a wholly owned sub-sidiary, the Somerset Railroad Corporation (SRC), to construct rail facilities to the Somerset Generating Station. In addition to its investment of $200,000, the Company has guaranteed SRC borrowings of $5 million under a bank line of credit.

22

4. Long-term Debt First mortgage bonds Series 10.60%

3 '/4 3%%

12 '/8%8*

4 ~/e%

3 7/e%

17 5/8%*

17 ~/8%"

14 '/z%*

4 6/8%

Oct. 1, 1982 May 1, 1984 Sept. 1, 1985 Dec. 1, 1986 May 1, 1987 Feb. 1, 1988 Mar. 1, 1989 Mar. 1, 1990 Jan.

1, 1991 May 1, 1991

$ 50,000 20,000 15,000 50,000 25,000 25,000 50,000 50,000 60,000 25,000 (Thousands of Dollars):

Due Amount 8 ~/e%

5 6/e%

6 '/4%

6 '/2%

7 ~/8%

9 35%

9 3/8%

9 3/e%

7 '/4%

6 '/8%

8%%

June 1

~ 1996 Jan.

1, 1997 Sept.

1, 1998 Nov. 1, 2001 July 1, 2003 Mar. 1, 2005 Jan.

1, 2006 June 1, 2006 Dec. 1, 2006 Nov. 1, 2007

$ 50,000 25,000 25,000 30,000 50,000 50,000 75,000 71,397 12,000 25,750 60,000 Series Due Amount Total first mortgage bonds Notes payable to banks due January 31, 1985 (Note 7)

Participations in mining companies'otes (Note 3)

Unamortized premium on debt Less debt due within one yearincluded in current liabilities Total

$844-,147 2,000 16,575 676 863,398 50,000

$813,398

Issued 1981

- Issued 1979 ln 1982 the Company issued $61 million of 9'/4% unsecured three-year notes in connection with a tax-exempt financing and $50 million principal amount of first mortgage bonds, 18% series, due 2012. At December 31, 198 I long-term debt (exclusive of notes payable to banks) which will become due during the following five calendar years is:

1982 1983 1984 1985 1988 (Thousands of Dollars)

$50,000

$2,397

$25,100

$20,100

$71,675 The Company's mortgage provides for a sinking and improvement fund. The provisions require the Company to

., make annual cash deposits with the Trustee equivalent to 1% of the principal amount of all bonds delivered and,'authenticated by the Trustee prior to January 1 of that year (excluding any bonds issued on the basis of the retirement of bonds). Pursuant to the terms of the mortgage, the Company has satisfied these requirements by crediting "bondable value of property additions" against the amount of cash to be deposited.

Mandatory annual cash sinking fund requirements are $3,000,000 for the 93/8% series due 2006, $2,100,000 begrinning July 1, 1984 for the 9.35% series, $600,000 beginning June 1, 2001 for the 7'/~% series and $250,000 beginning December 1, 1992 for the 6'/e% series. The amount increases to $500,000 and $750,000 on December 1,

1997 and December 1, 2002, respectively, for the 6T/8% series.

The mortgage indenture secures the first mortgage bonds which constitute a direct first mortgage lien on substantially all utility plant.

5. Common Stock and Capital in Excess of Par Value At December 31, 1981 common stock and capital in excess of par value were as follows:

Common stock, par value $6.66~/a a share, 60,000,000 shares authorized (shares issued: 2,500,000 in 1981 and in 1980 and 1,949,819 through the Dividend Reinvestment and Stock Purchase Plan since January 1, 1979)

Capital in excess of par value increased

$26,117,000, $27,766,000 and

$4,102,000 in 1981, 1980 and 1979, respectively, resulting from sales of the Company's common stock at amounts in excess of par value........

In February 1982 the Company sold 2,500,000 shares of common stock.

Shares D~ufsfandfn 32,624,755 Amount (Thousands

~of Dollars

$217,499

$234,746 23

$104.00 103.75 101.00 102.00 102.00 103.00 f 102.00 J 106.14 103.94 102.00 27.29 26.76 26.23 25.70 2/1/83 Thereafter 3/1/86 3/1/91 Thereafter 2/1/84 2/1/89 2/1/94 Thereafter 8.80'/o 100 8.48'/o 25

6. Preferred Stock At December 31, 1981 serial cumulative preferred stock was composed Par Redeemable Series Share Prior to Per Share Redeemable solely at the option of the Company:

3 75o/o

$100 4 '/~o/o (1949) 100 4 15'/o IOO 4 400/0 100 4.15/o(1954) 100 6.48'/o 100 of the following:

Shares Authorized(1) and Outstanding 150,000 40,000 40,000 75,000 50,000 300,000 250,000 1,000,000 Amount (Thousands of Dollars)

$ 15,000 4,000 4,000 7,500 5,000 30,000 25,000 25,000 Subject to mandatory 4 500/0 8.25'/o**

9 000/

15 ~/8'/o*

8 50o/

9.10'/o 15

'/o*

Total redemption 100 100 100 100 25 25 25 requirements:(2)

(3) 1/1/83(2) 10/1/82(4) 4/1/86(5) 7/1/82(6) 7/1/84(7) 1/1/87(8) 105.25 109.00 106.50 115.38 25.00 28.75 28.75 6,125 200,000 267,000 300,000 360,000 600,000 1,200,000

$ 115,500 612 20,000 26,700 30,000 9,000 15,000 30,000 131,312 10,737 5.00 4/1/96 Less sinking fund requirements at par valueincluded in current liabilities Total

$120,575 21.

Issued 1981

- Issued 1979 At-December 31, 1981 redeemable preferred stock sinking fund requirements for the following five calendar years are:

1982 1983 1984 1985 1986 (Thousands of Dollars)

$10,740

$1,740

$24,740

$4,740 (1)

At December 31, 1981 there were 1,250,000 shares of $100 par value preferred stock, 3,600,000 shares of $25 par value preferred stock and 1,000,000 shares of $100 par value preference stock authorized but unissued.

(2)

Each of the following series of preferred stock is not redeemable prior to the date designated, through certain refunding operations, but otherwise is redeemable at the indicated price per share prior to the indicated date.

The indicated price per share will be reduced either (A) annually or (B) at five-year intervals by the reduction amount. As of the redemption at par date and thereafter, the redemption price will be at par. By the redemption date, the Company must set aside the amount required to redeem at par all shares outstanding.

Date Indicated Indicated Reduction Redemption Redemption Series

~Desi nated Price Date Amount at Par Date 8.25 /o 1/1/85

$ 109.00(A) 1/1/83

$1.00 1/1/85 3/28/85 9.00/o 10/1/86 106.50(A) 10/1/82

.50 10/1/94 9/30/96 15 /8/o 4/1/86 115.38 4/1/86 110.00(B) 4/1/91 4/1/06 9.1 0 /o 7/1/84 28.75 7/1/84 25.65(A) 7/1/85

.16 7/1/88 7/1/89 15

'/o I/1/87 28.75(B) 1/1/87 1.25 1/1/97 1/1/1 1 24

(3)

By March 31, in each year 1982 through 1988, the Company must redeem at $103.25 per share 875 shares of the 4.50% Series. Since 1979, 875 shares have been reacquired and canceled annually.

(4)

By September 30, in each year 1982 through 1995, the Company must redeem at par 16,500 shares of the 9.00% Series. Since 1980, 16,500 shares have been reacquired and canceled annually.

(5)

By April 1, in each year 1987 through 2006, the Company must redeem at par 15,000 shares of the 15'/8% Series.

(6)

By July 1, 1982 the Company must redeem at par 360,000 shares of the 8.50% Series. Since 1980, 120,000 shares have been reacquired and canceled annually.

(7)

By July 1, in each year 1985 through 1989, the Company must redeem at par 120,000 shares of the 9.10%

Series.

(8)

By January 1, in each year 1987 through 2011'he Company must redeem at par 48,000 shares of the 15%

Series.

1981

7. Bank Loans and Other Borrowings The Company has revolving credit agreements with banks (see Note 4) which provide for borrowing, at prime, up to

$100 million through January 31, 1985 and payment of annual commitment fees of approximately three-eighths percent on the unborrowed amount. The loan agreements do not require compensating

balances, but balances generally have averaged ten percent of the available line of credit during 1981. A substantial portion of these balances represents normal working account funds. Interim financing in the form of short-term borrowings on commer-cial paper is utilized to finance construction expenditures.

The Company also has agreements with three banks which provide for borrowing, at prime, up to $30 million through November 30, 1982.

Information relative to short-term borrowings is as follows:

Commercial Pa er

~N 1981 1980 1979 (Thousands of Dollars)

Ending balance

$35,000

$ 6,800

$25,500 Maximum amount outstanding.....

$99,100

$73,500

$72,000

$60,000 Average amount outstanding(1)....

$40,600

$42,500

$22,500

$10,400

'Weighted average interest rate:

., On ending balance.............

13.4%

17.5%

13.5%

'uring the period(2)............

16.5%

12.8%

11.6%

17.0%

(1)

Calculated as the average of the sum of daily borrowings.

(2)

Calculated by dividing total interest expense by the average of the sum of daily borrowings.

,'8. Abandoned Projects New Haven and Jamesport The Company and Long Island Lighting Company have been denied certain regulatory approvals to construct, on a joint venture basis, nuclear generating facilities near New Haven, N.Y. and Jamesport, N.Y. The New York State Board on Electric Generation Siting and the Environment (Siting Board) granted the companies a Certificate of Environ-mental, Compatibility and Public Need (Certificate) for one 800,000-kw coal fired generating unit near Jamesport.

The'Company has notified the Siting Board that it will not accept the Certificate and that it has decided to terminate its participation in the Jamesport project.

The Company has filed petitions with the PSC requesting authorization to (1) continue to accumulate AFDC on its share of costs until amortization of such costs commences to be recovered in rates, (2) amortize the investments through rates and (3) include in rates appropriate carrying charges on the unamortized balances.

The Company is planning to file applications with the FERC requesting authorization to continue to accumulate AFDC in the same manner as requested in the petitions to the PSC.

PSC proceedings are continuing in connection with the New Haven petition. The PSC has authorized the Company to continue to accrue and accumulate AFDC on the nuclear related costs of the Jamesport project until a decision is made with respect to the prudence and disposition of the nuclear costs.

If the requests to the PSC or to the FERC to continue to accumulate AFDC are denied, the Company may have to reverse certain accruals of AFDC previously recorded.

If the request to amortize the investments is denied and alternative regulatory relief is not granted, the Company would have to charge income with the project costs, net of the federal income tax effect.

The Company's net income for 1981 includes $4 million of AFDC attributable to the New Haven project and $5 million of AFDC attributable to the Jamesport project. As of December 31, 1981, the Company had expended, including AFDC, approximately $44 million for the New Haven project and $60 million for the Jamesport project. The Company expects to incur additional expenditures in connection with the cancellation of the Jamesport nuclear units.

9. Commitments The Company estimates that 1982 costs for the construction program will approximate $602 million. The program is subject to periodic review and revision, and actual construction costs to be incurred may vary because of revised load estimates, imposition of additional regulatory requirements and the availability and cost of capital. (See Note 10.)

25

10. Jointly Owned Generating Stations The Company has an undivided 50% interest in the output and costs of three generating units comprising the Homer.

City Generating Station. The station is owned with Pennsylvania Electric Company which also operates the facility. The Company's share of the rated capability is 944,000-kw and its net utility plant investment is $274 million, which includes $30 million of CWIP. The accumulated provision for depreciation as of December 31, 1981 was

$55 million. The Company's share of operation and maintenance expense of the station is reflected in the Statement of Income.

The Company also has an undivided 18% interest in the 1,084,000-kw Nine Mile Point nuclear generating unit No. 2 (Unit) being constructed by Niagara Mohawk Power Corporation (Niagara Mohawk) near Oswego, N.Y. In early 1980 the co-tenants having an interest in the Unit (Co-tenants) engaged independent engineering and management consulting firms to perform a review of the Unit's estimated cost and scheduled in-service date, together with engineering, construction and management systems.

Also, a reassessment was conducted by Niagara Mohawk and Stone & Webster, the architect-engineer and construction agent. As a result of those reviews, a $2.4 billion revised cost, exclusive of AFDC and nuclear fuel, and a rescheduling of the operation date from 1984 to late 1986 were announced in September 1980. The Company's share of the construction cost, including AFDC, is now estimated at $712 million. The Company's investment of $235 million, excluding nuclear fuel costs, is included in CWIP at December 31, 1981.

During 1980 the PSC directed Theodore Barry and Associates and Canatorn Limited to perform a comprehensive management audit covering essentially the same areas as the review commissioned by the Co-tenants, and a report thereon (TB&AReport) was issued in July 1981. The TB&AReport stated that the planned 1986 completion date is possible, but that a likely one-year slippage in schedule, new regulatory requirements, higher escalation and AFDC could significantly increase the Unit's cost.

In July 1981, various parties petitioned the PSC to establish a public evidentiary proceeding to consider the future of the Unit. In September 1981, the PSC Staff issued a report on a comparative analysis of the economic and financial feasibility of the Unit and coal alternatives which concluded that completion of the Unit is warranted.

In September 1981, the PSC established a proceeding to inquire into the financial and cost implications of completing the Unit. Hearings were completed in December.

Event subsequent to the date of the'auditors'pinion At'a February 9, 1982 meeting the PSC stated its consensus that completion of the Unit is warranted and that no basis exists at this time to take further action regarding abandonment of the Unit. The PSC also concurred with the PSC Staff recommendation that the Co-tenants must emphasize their attention to the control of the Unit's cost and the con-struction schedule to minimize the impact on ratepayers and indicated its intention to monitor closely all construction activities. In addition, the PSC decided to explore the feasibility of instituting a yet undefined incentive program that could cause the return on the equity portion of the investment in the Unit to vary depending on a variety of items related to the Unit's ultimate cost and completion date. A formal PSC decision is expected upon completion of its re-view of the feasibility of instituting an incentive program. The Company is unable to predict what recommendations or:actions may arise as a result of this review or what further actions, if any, may be brought by the intervening parties.

Real estate and personal property.

Franchise and gross receipts Miscellaneous Total-charged principally to tax expense

11. Supplementary Income Statement Information Charges for maintenance, repairs and depreciation, other than those set forth in the Statement of Income, were not significant in amount. Taxes, other than payroll and federal income taxes, are classified as follows:

1981 1980 1979 thousands of Dollars)

$33,640

$29,622

$26,773 33,575 28,652 31,633 4,556 3,690 3,098

$71,771

$61,964

$61,504 26

12. Industry Segment Information Certain information pertaining to the electric and gas operations of the Company is as follows:

1981 1980 Electric Gas Electric Gas Electric (Thousands of Dollars) 1979 Gas

$ 110,568 103,701 6,867 3,128

$158,361 150,086 8,275 3,794

$138,812 133,082 5,730 3,353 4,348 7,927 259,065 6,480 97,538 103,302 Dec Operating:

Revenues...........

609,178 506,502 477,643 Expenses...........

472,848 397,605 373,735 Income.............

136,330 108,897 103,908 Depreciation*..........

45,654 44,133 40,679 Construction expenditures........

146,589 141,580 Identifiable assets**.............

1,894,367 106,165 1,654,492 1,532,984

Included in operating expenses.

- Corporate assets

($127,766, $114,187 and $107,001 at December 31, 1981, 1980 and 1979, respectively) consist primarily of cash, special deposits, accounts receivable, prepayments and unamortized debt expense.

13. Quarterly Financial Information (Unaudited)

The following is a summary of quarterly results of Company operations as previously reported to stockholders:

Quarter Ended March 31 June 30 Sept. 30

. 31 (Thousands) 1981 Operating revenues Operating income Net income

,Earnings available for common stock..

. Earnings per share (in dollars)........

Average shares outstanding...: ......

1980

" Operating revenues

'perating income Net income

~ Earnings available for common stock..

'-.Earnings per share (in dollars)........

~:"-'~Average shares outstanding..........

$220,705

$ 36,832

$ 30,110

$ 26,528

$.90 29,323

$192,070

$ 32,933

$ 26,434

$ 22,751

$.87 26,185

$173,281

$ 28,498

$ 22,661

$ 18,273

$.62 29,558

$149,122

$ 26,602

$ 19,790

$ 16,107

$.61 26,314

$168,365

$ 35,628

$ 22,532

$ 17,862

$.58 30,920

$135,180

$ 28,047

$ 22,390

$ 18,771

$.68 27,613

$205,188

$ 43,647

$ 32,498

$ 27,602

$.85 32,505

$168,942

$ 27,046 I9,590

$ 16,008

$.55 29,109

14. Supplementary Information to Disclose the Effects of Changing Prices (Unaudited)

The following presentation is intended to show certain information about the impact of inflation on the Company's financial operations. The information was developed using assumptions and estimates and therefore should not be viewed as precise indications of the effects of inflation.

Constant dollar amounts represent historical costs stated in terms of dollars of equal purchasing power, as measured by the Consumer Price Index for all Urban Consumers (CPI-U). Current cost amounts reflect the changes in specific prices of utilityplant from the date the plant was acquired to the present. The current cost of utilityplant represents the estimated cost of replacing existing utility plant assets and was determined primarily by indexing existing plant by the Handy-Whitman Index of Public UtilityConstruction Costs. The provisions for depreciation on the constant dollar and current cost amounts of utilityplant were determined by applying the Company's depreciation rates to the indexed plant amounts.

Under the rate-making processes to which the Company is subject, only the historical cost of utility plant is recoverable in revenues. Therefore, the excess of the cost of utility plant stated in terms of constant dollars or current cost over the historical cost of plant is not presently recoverable in rates as depreciation and is reflected as a reduction to net recoverable value. While the rate-making process gives no recognition to the cost of replacing utility plant, based on past practices the Company believes it will be allowed to earn on the increased cost of its net investment when replaced.

To properly reflect the economics of rate regulation, the reduction of utility plant to net recoverable value should be offset by the purchasing power gain on net amounts owed. The gain from the decline in purchasing power of net amounts owed is primarily attributable to the substantial amount of debt which has been used to finance utility plant. Since the depreciation on this plant is limited to the recovery of historical costs, the Company does not have the opportunity to realize a holding gain on debt and is limited to recovery of only the embedded cost of debt capital.

27

Income from Continuing Operations Adjusted for Changing Prices Avera e 1981 Dollars Constant Current Dollar Cost (Thousands-except per share data) erations, as reported

$107,801

$ 107,801 eciation expense

~58,138)

~69,530 erations

$ 49,663" 38,271 Income from continuing op Adjustment to restate depr Income from continuing op Income from continuing operations per common share (after preferred stock dividends)

Increase in specific prices of utilityplant held during the year**..

Less increase in general price level..........................

Net change.......

Reduction of utilityplant to net recoverable value

$.68

$ 1.05"

$ 291,494 266,320 25,174

$ 110,560

~$ 96.778)

Operating revenues As reported

$767,539 In 1981 purchasing power.........

$767,539 Income from continuing operations As reported

$ 107,801

~ - Constant dollar basis*"............

$ 49,663 Current cost basis................

$ 38,271 Income from continuing operations per

.common share (after preferred stock

":.dividends)

As reported

$2.95 Constant dollar basis**............

$ 1.05 Current cost basis................

$.68 Net assets at year-end at net recoverable value As reported Constant dollar and current cost....

Reduction of utility plant to net recoverable value Constant dollar basis

$ 96,778 Current cost basis................

$110,560 Net change in value of utility plant held during the year

$(171,793)

Purchasing power gain on net amounts owed

$ 114,534 Cash dividends per common share As reported

$1.94 In 1981 purchasing power.........

$1.94 Market price per common share at year-end Asreported..........

$ 15.00

$ 14.88 In 1981 purchasing power.........

$ 15.00

$ 16.42 Average CPI-U 272.4 246.8

Allconstant dollar and current cost data for 1979 and 1980 have been

"*Excludes the reduction of utility plant to net recoverable value.

"**TheFinancial Accounting Standards Board does not require the calcula to 1979, nor is the data readily available.

$ 645,314

$ 712,251

$ 588,211

$532,171

$ 737,022

$741,880

$459,452

$689,558 87,389

$ 70,563 62,742 44 798 88,204 44,810 32,111

$ 59,945

~

$2.70

$ 1.05

$.58

$2.46

$2.83

$1.74

$1.05

$2.21

$838,209

$ 757,717

$ 684,863

$648,906

$558,450

$809,674

$ 836,313

$ 858,126

$ 182,210 39,449

$(124,817)

$ 126,645

$ 154,662

$ 25,174

$ 85,602

$ 1.82

$2.01

$1.60

$2.40

$ 1.72

$2.16

$1.68

$2.34

$ 15.75

$16.88

$19.73

$23.53 217.4 195.4 restated to average 1981 dollars.

$ 19.13

$28.71 181.5 tion of inflation-adjusted data for years prior

Afterthe reduction of utility plant to net recoverable value, income from continuing operations on a constant dollar basis would change to a loss of $47,115 or $2.11 per average common share.

- AtDecember 31, 1981, current cost of net utility plant was $3,300,210, while net recoverable value at historical cost was $1,901,133.

Five-Year Summary of Selected Financial Data Adjusted for Changing Prices 1981 1980*

1979*

1978 1977 (Thousands-except per share data) 28

'Selected Financial Data "I

Operating revenues.............

Net income Earnings per share..............

Dividends paid per share........

Average shares outstanding......

Interest charges AFDC-other and borrowed funds Depreciation Othertaxes Utilityplant additions............

Total assets Long-term obligations and redeemable preferred stock....

1981 767,539 107,801

$2.95

$1.94 30,586 78,760 32,719 49,448 72,935 265,545

$2,128,298 1980 1979 1978 (Thousands except per share data) 645,314 588,211 532,171 88,204 87,389 70,563

$2.70

$2.83

$2.46

$1.82

$ 1.72

$1.68 27,311 25,886 23,393 67,578 58,636 57,639 30,925 25,342 16,655 47,486 43,807 41,462 63,552 63,362 57,064 154,516 145,928 143,229

$1,871,981

$1,737,523

$1,603,425 1977 459,452 59,945

$2.21

$1.60 21,208 49,129 25,363 34 544 50,645 158,493

$ 1,489,862 933,973 849,132 844,214 772,134 733,336 Ilanagement's Discussion and Analysis of Financial Condition and Results of Operations The Company is constructing a wholly owned 625,000-kw coal fired generating unit (Somerset Generating Sta-tion) and associated rail facilities near Somerset, N.Y.,

scheduled for service in late 1984. The current estimate for the cost of the plant is $1,072 million, of which approximately $352 million will be spent in 1982. The Company also has an undivided 18% interest in the 1,084,000-kw Nine Mile Point nuclear generating unit No. 2 (Unit) being constructed by Niagara Mohawk Power Corporation near Oswego, N.Y. The Company's share

'of the construction cost, including allowance for funds used during construction (AFDC), is estimated at

$712 million and its investment of $235 million, excluding nuclear fuel costs, is included in construction work in progress (CWIP) at December 31, 1981. (See Note 10.)

The Company's construction program, including AFDC, is currently estimated to cost $602 million, $563 million and $368 million for the years 1982, 1983 and 1984, respectively. Included in the three-year program is

$886 million for the Somerset Generating Station and associated rail facilities and $307 million, including nuclear fuel, for the Unit. The construction program is under continuing review and is revised from time to time in light of the Company's financial condition, load forecasts, the availability and cost of capital, licensing decisions, regulatory requirements, inflation and other factors.

The Company anticipates that to finance its construc-tion program through 1984, approximately 70% of the funds required will be raised through the issuance of securities. The nature, amounts and timing of future financings will depend in part on the level of con-struction, load growth, the timeliness and adequacy of rate relief, the availability and cost of capital and the continuing ability of the Company to meet its property additions and interest coverage requirements under its Mortgage and preferred stock dividend coverage requirements in its Certificate of Incorporation.

A $115,610,000 increase in the cost of fuel for electric generation, power purchased and interchanged and 29

in the cost of gas purchased, which was recovered through the fuel and gas adjustment clauses, and a

$96,806,000 increase in electric and gas rates accounted for 90/0 of the Company's $235,368,000 increase in operating revenues over the past three years. The balance is chiefly attributable to kilowatt-hour sales, which increased 5%%d, and unit sales of gas, which increased 2/o.

During the same period operating expenses increased

$ 193,725,000, or 31/o, principally as a result of in-creases in (a) fuel and natural gas purchased costs

($107,488,000), (b) wages, materials and supplies used in operations ($46,916,000) and (c) federal income taxes ($27,494,000).

Increased AFDC rates and higher levels of CWIP resulted in a $ 1 6,064,000 increase in AFDC during the three-year period. Interest charges before the reduction for AFDC-borrowed funds increased 37/o ($21,121,000) due to increased borrowings at higher interest rates to finance the Company's construction program.

Earnings available for interest charges provided 2.48 times the interest on the Company's first mortgage bonds for 1981. This calculation is based on the provi-sion stated in the Company's Mortgage and compares with 2.69 in 1980 and 2.54 in 1979. The Mortgage contains a requirement, subject to certain exceptions, that first mortgage bonds may be issued only if net earnings, as defined, are at least 2.0 times the annual interest charges on bonds outstanding and to be

-, outstanding. Earnings available for interest charges and

- preferred stock dividends provided 1.70 times the interest and dividends on preferred stock in 1981. This calculation is based on the provision stated in the Company's Certificate of Incorporation and compares to 1.72 and 1.85 for 1980 and 1979, respectively. The Certificate of Incorporation contains a requirement that

, preferred stock may be issued only if net earnings, as defined, are at least 1.5 times the annual interest charges on all outstanding indebtedness plus the annual dividend requirements on preferred stock outstanding and to be outstanding. These coverages willvary in future years depending on decisions in rate cases and on the need for external funds to finance the Company's construction program.

Earnings available for common stock were

$90,265,000, or $2.95 per share in 1981, compared with

$73,637,000, or $2.70 in 1980 and $73,272,000, or

$2.83 in 1979. Average shares outstanding were 30,586,063 in.1981, 27,311,154 in 1980 and 25,886,419 in 1979. Return on average common equity was 13.4%%d in 1981, 12.3/. in 1980 and 13.4%%d in 1979. The increase in 1981 earnings was principally due to rate increases received in June and October.

On October 20, 1981, the Public Service Commission of the State of New York (PSC) issued a rate decision approving $124,500,000 in added electric revenues, a

22.2/o increase, and $8,800,000 in added gas revenue, a

5%%d increase. The electric increase includes $45 million allowed on a temporary basis in June. The higher revenues are approximately 87/o of the amounts originally requested and are designed to produce a 17 0

return on common equity. The increases became effective on October 25, 1981 and allowed the inclusio of $200 million of CWIP in rate base.

On February 18, 1982, the Company applied for in creased electric and gas rates. The requested increase in annual electric and gas revenues are $148,928,000 and $4,924,000, respectively, based on a projected test year ending December 31, 1983, the inclusion in rate base of $450 million of CWIP and the recovery over a ten-year period of the expenditures related to the terminated New Haven and Jamesport projects. The requested increases are designed to produce a 17.5%%d return on common equity. The PSC is not expected to reach a final decision on this rate application until January 1983. The Company has no assurance that such higher rates will be granted.

The Company's funds requirements were provided by the following sources:

Operations Securities sales Bonds Preferred stock Common stock Notes payable Bank loans Commercial paper Contract settlement agreement Sale and leaseback of service centers 1981 1980 1979 (Thousands of Dollars)

$155,872

$128,702

$118,317 160,000 60,000 50,609 28,200 11,271 48,416 74,500 50,000 20,000 7,243 44,215 9,300

$465,952

$260,918

$239,775 In 1982 the Company will be required to raise external funds of approximately $470 million. This external funds requirement is needed for the construction program and to supply the $60,737,000 needed for refunding and sinking fund requirements on first mortgage bonds and preferred stock. In 1982 the Company issued

$61 million of 9'/4/o unsecured three-year notes in con-nection with a tax-exempt financing, $50 million principal amount of first mortgage bonds, 18/o series due 2012 and 2,500,000 shares of common stock.

Management has provided supplementary information to disclose the effects of changing prices in Note 14.

30

4 Financial and Operating Statistics

SUMMARY

OF EARNINGS OPERATING REVENUES Electric Gas Total OPERATING EXPENSES Operationfuel other Electricity purchased and interchanged Gas purchased Maintenance Depreciation Federal income tax Othertaxes Total OPERATING INCOME........

OTHER INCOME, AND DEDUCTIONS Allowance for other funds s~

used1during construction Federal:income tax credit...

Other, stet 4iNCOME BEFORE INTEREST CHARGES......

INTEREST CHARGES Interest on long-term debt.....

Other Ir)terest Allowance for borrowed funds used during construction....

Interest charges net.....

NET INCOME PREFERRED STOCK DIVIDENDS EARNINGS AVAILABLEFOR COMMON STOCK............

.COMMON STOCK DIVIDENDS...

RETAINED EARNINGS..........

1981 1980

$609,178 158,361

$506,502

,.138,812 767,539 645,314 1979 1978 1977 (Dollars in Thousands)

$477,643

$433,774

$374,456 110,568 98,397 84,996 588,211 532,171 459,452 1976 1971

$330,870 77,397

$176,574 44,488 408,267 221.062 177,592 108,294 7,029 112,176 51,616 49,448 43,844 72,935 151,404 96,877 (2,030) 100,895 44,121 47,486 28,382 63,552 142,141 83,226 2,626 74,542 40,569 43,807 27,163 63,362 118,384

. 74,465 19,059 63,896 38,529 41,462 16,350 57,064 87,181 67,544 46,599 56,284 33,709 34,544 330 50,645 72,621 60,132 33,679 47,944 29,757 32,589 7,751 44,296 32,205 32,574 15,293 26,455 17,294 24,118 1,825 25,608 622,934 530,687 477,436 429,209 376,836 328,769 175,372 144,605 114,627 110,775 102,962 82,616 79,498 45,690 21,922 9,471 (234) 21,029 10,496 (266) 17,486 9,815 93 10,659 8,383 202 14,056 7,803 975 1,255 1,166 (160)

(158) 109 175,764 145,886 138,169 122,206 97,767 88,309 46,774 68,773 9,987 61,217 6,361 55,347 3,289 52,337 5,302 45,119 4,010 39,712 2,673 20,877 653 (10,797)

(9,896)

(7,856)

(5,996)

(11,307)

(5,961)

(796) 57,682 37,822 59,945 13,094 67,963 107,801 17,536 90,265 58,657 36,424 20,734 50,780 87,389 14,117 73,272 44,441 51,643 26,040 51,885 88,204 14,567 73,637 49,091 70,563 13,090 57,473 38,732 10,465 5,205 20,835 17,145 46,851 33,564 41,420 28,375

$ 31,608

$ 24,546

$ 28,831

$ 18,741

$ 13,287

$ 13,045 3,690 Average number of shares of common stock outstanding (thousands)

Earnings per average share...

Dividends paid per share.....

30,586

$2.95

$1.94 27,311

$2.70

$1.82 25,886 23,393 21,208 18,181 12,365

$2.83

$2.46

$2.21

$2.28

$1.68

$1.72

$1.68

$1.60

$1.39

Financial Statistics INCOME STATISTICS:

Return on average common stock equitypercent.....

Mortgage bond interest times earned...........

Interest charges and preferred dividends times earned...........

Average common stock equity per share..........

PROPERTY, PLANT AND EQUIPMENT:

Electric Gas Other Total

. ACCUMULATED DEPRECIATION............

CAPITALIZATION:

Long-term debt

'referred stock.........

Common stock equity...

Total capitalization..

CAPITALIZATION

'ATIOS (percent):

Long-term debt Preferred stock.........

Common stock equity...

NOTES PAYABLE:

Bank loans Commercial paper......

Total NUMBER OF STOCKHOLDERS:

Common stock..........

Preferred stock..........

PAYROLL(including pensions, etc):

Charged to operations...

Charged to construction and other accounts....

Total..............

1981 13.4 2.8 1.9

$22.01

$2,209,278 133,156 49,278

$2,391,712 490,579 863,398 246,812 722,709

$1,832,919

,47.1 13.5 39.4 2,000 35,000 37,000 71,464 5,932 83,044 44,504 127,548 1980 1979 1978 1977 (Dollars in Thousands) 1976 1971 12.3 2.6 13.4 11.8 2.6 2.5 10.9 2.5 1 1.4 2.6 1.9 2.0 1.8 1.8 1.8 1.8

$21.92

$21.17

$20.82

$20.17

$19.96

$18.33

$1,942,378 127,456 47,407

$1,787,229 120,760 40,910

$1,659,928 117,168 40,584

$1,520,410 114,076 38,597

$1,353,604 111,062 36,743

$2,117,241

$1,948,899

$ 1,817,680

$1,673,083

$1,501,409

$795,049 94,567 20,818

$910,434 452,464 411,742 376,933 350,014 324,852

$217,597 837,819 780,671 191,550 196,287 642,217 569,363 721,347 176,375 533,406 677,961 176,463 442,950 595,026 176,543 393,184

~

$394,792 91,957 227,446

$1,671,586

$1,546,321

$1,431,128

$1,297,374

$1,164,753

$714,195 50.1 11.5 38.4 50.5 12.7 36.8 50.4 12.3 37.3 52.3 13.6 34.1 51.1 15.1 33.8 55.3 12.9 31.8 74,500

6,800 25,500 35,300 81,300 25,500 35,300 21,000 59,500 80,500 15,000

'40,500 4 000 55,500 4,000 70,737 6,083 67,014 6,308 64,579 6,503 51,580 6,544 45,146 6,591 25,033 3,605 73,442 66,611 58,186 55,639 51,175

$ 28,594 43,046 41,664 40,179 37,518 34,419 18,176 116,488 108,275 98,365 93,157 85,594

$ 46,770 Number of employees end of year.........

4,307 4,310 4,200 4,215 4,202 4,170 3,785 32

Electric Sales Statistics 1

1981 1980 1979 1978 1977 1976 1971 Kwh Sales (millions):

Residential Commercial Industrial Public authorities Other electric utilities Total 4,429 2,516 2,845 1,218 8

11,016 4,325 2,485 2,769 1,163 16 4,329 2,455 2,843 1,152 10 4,297 2,438 2,632 1,125 23 4,203 2,370 2,515 1,123 27 10,758 10,789 10,515 10,238 4,093 2,322 2,369 1,112 25 9,922 3,125 1,700 2,045 881 1,296 9,047 Operating Revenues (thousands):

Residential Commercial Industrial Public authorities Other electric utilities..............

Other operating revenues..........

Total operating revenues

'Operating Revenues per kwh (cents):

- Residential

, Commercial i, Industrial Public authorities Other electric utilities.....

Average revenue per kwh......

$271,335 142,643 121,618 64,113 301 9,168

$226,867 119,545 98,976 53,139 467 7,508

$215,504 111,292 94,013 49,802 301 6,731

$197,024 103,192 81,332 45,679 438 6,109

$168,041 89,899 70,009 40,776 447 5,284

$151,790 79,857 58,095 35,808 414 4,906

$ 80,350 35,536 24,705 17,141 15,809 3,033 6.13 5.67 4.27 5.26 3.76 5.53 5.25 4.81 3.57 4.57 2.92 4.71 4.98 4.53 3.31 4.32 3.01 4.43 4.59 4.23 3.09 4.06 1.90 4.13 4.00 3.79 2.78 3.63 1.66 3.66 3.71 2.57 3.44 2.09 2.45 1.21 3.22 1.95 1.59 1.22 3.33 1.95

$609,178

$506,502

$477,643

$433,774

$374,456

$330,870

$176,574

'Number of Customers (average for year):

Residential Commercial Industrial Other Total 599,117 58,164 1,348 9,684 586,665 56,568 1,290 9,396 578,982 55,725 1,298 9,226 571,701 55,113 1,284 9,042 564,502 54,808 1,279 8,633 593,321 57,174 1,319 9,554 513,187 51

~ 192 1,217 7,577 668,313 661,368 653,919 645,231 637,140 629,222 573,173 Annual Average Use (kwh):

Residential Commercial Industrial (thousands)...

7,393 43,257 2,111 7,289 43,464 2,099 7,379 43,399 2,204 7,422 43,751 2,028 7,352 43,003 1,959 7,252 42,366 1,852 6,089 33,208 1,680

'Annual Average Bill:

Residential Commercial Industrial 453 2,452 90,221 382 2,091 75,039 367 340 294 269 157 1,967 1,852 1,631 1,457 694 72,878 62,659 54,524 45,422 20,300

Electric Operating Statistics 1981 1980 1979 1978 1977 1976 1971 PRODUCTION DATA:

System Capability (megawatts):

Net generating capability:

Steam Hydro Internal combustion..........

Total Purchased Power Authority....

Other.............

Total system capability.....

Annual Load Factor (percent).....

Coal Burned (thousands of net tons)

Coal Heat Value (Btu per lb.)......

Btu per Kwh Generated (net)......

Kwh Production net (millions):

. Generated

-Purchased Interchanged Total Production Expenses (thousands):

Generated

. Purchased Interchanged (net).............

Total Production Costs per Kwh (mills):

Generated Purchased

~

Total incl. interchange.....

ELECTRIC OPERATION AND MAINTENANCEEXPENSES (thousands):

Production Transmission Distribution Customer accounting.........

Customer service Administrative and general Total 1,720 38 11 1,769 764 242 2,775 64.4 4,867 11,600 10,701 10,762 2,419 (923) 12,258 1,745 38 11 1,794 774 250 2,818 67.1 4,724 11,537 10,639 10,449 3,127 (1,408) 12,168 1,734 38 14 1,786 680 200 2,666 65.2 4,748 11,378 10,582 10,430 2,765 (1,082) 12,113 1,728 38 14 1,780 712 100 2,592 63.6 4,430 11,141 10,744 9,350 3,282 (909) 11,723 1,527 38 14 1,579 824 100 2,503 62.9 3,720 11,056 11,145 7,606 3,509 201 11,316 1,377 38 14 1,429 848 200 2,477 61.0 3,395 11,123 11,112 7,046 4,383 (298) 11

~ 131 1,354 38 14 1,406 541 1,947 63.8 3,214 11,353 10,879 6,920 3,101 (47) 9,974

$216,805 47,140 (40,111)

$185199

$171,079

$148,285

$110,448 47,202 35,757 37,297 39,670 (49,231)

(33,131)

(18,238) 6,929

$ 91,724 34,926 (1,247) 45,034'5,486 (193) 20.15 19A9 18.26 17.72 15.09 15.05 16 40 12.93 14.34 15.86 11.36 14.27 14.52 11.30 13.88 13.02 7.97 11.27 6.51, 4.99 6.05

$223,834 11,308 32,287 13,449 3,719 40,129

$183,170 9,930 30,455 11,379 3,669 34,423

$173,705 8,616 27,306 10,467 3,137 29,664

$167,344 8,171 22,644 9,467 2,887 25,537

$157,047 7,612 22,544 8,527 2,605 22,972

$ 125,403 7,058 21,569 7,672 2,507 20,068

$ 60,327 4,356 11,712 4,293 1,820 8,398

$324,726

$273,026

$252,895

$236,050

$221,307

$184,277

$ 90,906

$223,834

$183,170

$173,705

$167,344

$157,047

$125 403

$ 60,327

Gas Department Statistics Dekatherm (dth) Sales (thousands):

Residential Commercial Industrial Other Total Operating Revenues (thousands):

Residential Commercial Industrial Other Total operating revenues.........

Operating Revenues per dth:

Residential Commercial Industrial Other Average revenue per dth.........

Number of Customers (average for year):

Residential with house heating Residential without house heating......

'$ Commercial with space heating Commercial without space heating.....

Industrial..

Other Total Annual Average Use (dth):

Residential Commercial Industrial Annual Average Bill:

Residential Commercial Industrial Cost of Natural Gas Purchased:

Amount (thousands)

Perdth Gas Operation and Maintenance Expenses (thousands):

Production Transmission and distribution Customer accounting Customer service Administrative and general.....

Total 1981 16,412 8,044 11,509 3,991 39,956

$ 71,399 30,989 40,077 15,896

$158,361 4.35 3.85 3.48 3.98 3.96 102,386 9,910 13,540 1,080 395 1,144 128,455 146 550 29,137 636 2,120 101,461

$112,176 2,82

$112,410 8,249 2,975 871 7,476

$131,981 1980 1979 1978 1977 1976 1971 16,482 7,937 9,883 3,356 17,312 8,150 9,336 3,600 18,386 8,654 8,651 3,638 18,373 19,958 8,408 9,484 7,968 9,243 3,132 3,808 20,781 9,600 12,270 3,420 37,658 38,398 39,329 37,881 42,493 46,071

$ 66,333 28,698 31730 12,051

$ 54,196 22,894 23,461 10,017

$ 50,642 20,908 18,252 8,595

$ 44,895

$ 40,387 18,236 16,850 15,205 13,668 6,660 6,492

$ 23,637 9,256 8,495 3,\\00

$138,812

$110,568

$ 98,397

$ 84,996

$ 77,397

$ 44.488 99,969 11,117 12,909 1,108 383 1

~ 174 98,044 11,917 12,714 1,198 365 1,163 97,469 12,124 12,752 1,233 371 1,185 97,082 12,630 12,809 1,234 380 1,241 97,496 12,812 12,985 1,266 384 1,142 92,021 15,73T 13,146 1,379 417 1,130 126,660 125,401 125,134 125,376 126,085 123,830 148 566 25,804 597 2,047 82,846 157 586 25,578 493 1,646 64,277 168 619 23,321 462 1,495 49,197 167 599 20,968 409 1,300 40,013 181 665 24,070 366 1,182 35,594 193 661 29,424 219 637 20,366

$100,895 2.59

$ 74,542 1.94

$ 63,896

$ 56,284

$ 47,944

$ 26,455 1.62 1.50 1.11

.58

$101,174 7,608 2,589 749 6,121

$ 74,804 7,177 2,158 646 5,424

$ 64,089 6,775 1,988 479 4,952

$ 56,923 6,469 1,812 480 4,326

$ 48,210 5,939 1,705 321 3,681

$ 26,490 3,018 1,024 179 2,205

$118,241

$ 90,209

$ 78,283

$ 70,010

$ 59,856

$ 32,916 4.02 3.13 2.75 2.44 2.02 1.14-3.62 2.81 2.42 2.17 1.78

.96 3.21 2.51 2.11 1.91 1.48

.69 3.59 2.78 2.36 2.13 1.70

.91 3.69 2.88 2.50 2.24 1.82

.97

Directors Charles F. Kennedy Chairman and Chief Executive Officer of the Company Wells P. Allen, Jr.

President and Chief Operating Officer of the Company Roy S. Arrandale Retired Senior Vice President, Research and Engineering, Thatcher Glass Manufacturing Co. ~ Elmira, N.Y.

Alison P. Casarett Dean, The Graduate School, Cornell University. Ithaca. N,Y.

Everett A. Gilmour Chairman and President.

The National Bank and Trust Company of Norviich, Norwich, N.Y.

Howard W. Gunlocke Former President, Gunlocke Chair Company, Wayland, N.Y.

Legare R. Hole President, Columbian Rope Company, Auburn, N.Y.

Alexander Horwitz Director of various corporations Binghamton, N.Y.

William A. Lyons Chairman of the Executive and Finance Committee of the Company Alton G. Marshall President. Alton G, Marshall Associates, Inc.

New York, N.Y.

David R. Newcomb President.

Buffalo Forge Company, Buffalo. N.Y.

C. William Stuart Former Chairman of the Board, C.H. Stuart, Inc,.

Newark, N.Y.

Charles A. Winding Director of various corporations, Elmira, N.Y.

Directors Emeritus Sheldon H. Close Attorney. Oneonta, N.Y.

Edgar W. Couper Former Chancellor, New York State Board of Regents, Binghamton, N.Y.

Charles F. Kennedy Chairman and Chief Executive Officer Wells P. Allen, Jr.

President and Chief Operating Officer Dolores R. Hix*

Richard Kroboth Assistants to the Chairman E. Eugene Forrest Senior Vice President Administration Robert B. MacKenzie Senior Vice President Engineering and Operations James A. Ackerman Vice President Area Administration Francis X. Carney Vice President Research and Development Orlin W. Darrach Vice President Customer Services Allen E. Kintigh Vice President Generation Raymond A. Perine Vice President Gas Operations Bernard M. Rider Vice President Electrical Engineering and Planning Jack H. Roskoz Vice President Electric Operations Michael J. Turkovic Vice President Purchasing William P. Walker Vice President Personnel Michael J. Ray Assistant Vice President Project Engineering and Construction Vincent W. Rider Assistant Vice President Operations and Generation Services Lynn L. Sweetland Assistant Vice President Industrial Development

'Also Assistant Secretary Ithaca Executive Offices Route 13, Dryden Road, Ithaca, N.K 14850 Tel. 607/347-4131 L. Theodore Everett Senior Vice President Corporate Eugene P. Waters Senior Vice President and Treasurer Jaime S. Hecht Secretary Richard A. Jacobson Comptroller Richard W. Page Assistant Vice President Computer Services John D. Scott Assistant Vice President Economics Richard P. Fagan Assistant Comptrotler Matthew F. Felo, Jr.

Assistant Treasurer James M. Niefer Assistant Secretary General Counsel:

Huber Lawrence & Abell 99 Park Avenue, New York, N.Y. 10016 Transfer Agent for Preferred Stock:

Chemical Bank 55 Water Street, New York, N.Y. 10041 Officers Binghamton Executive Offices 4500 Vestal Parkway East, Binghamton, N.Y. 13902 Tel. 607/729-2551 Stockholder Records: Communications regarding stock transfer requirement's or lost certificates should be directed to the transfer agent. Changes of address may be sent to the Secretary.

Inquiries on dividends and dividend reinvestment should be directed to Shareholder Ser-vices.

The Company files an annual report on Form 10-K with the Securities and Exchange Commission. Stockholders may obtain a free copy of this report from the Secretary upon request.

Securities Listed on the New York Stock Exchange:

Common Stock 3.75/o Preferred Stock 8.80'/o Preferred Stock 8.48/o Preferred Stock ($25 Par VaIue) 15/o Preferred Stock ($25 Par Value) 10.60/o First Mortgage Bonds due 1982 7s/e/o First Mortgage Bonds due 2001 9s/e'/o First Mortgage Bonds due 2005 9s/e'/o First Mortgage Bonds due 2006 8s/e/o First Mortgage Bonds due 2007 Transfer Agent for Common Stock:

Manufacturers Hanover Trust Company 4 New York Plaza, New York, N.Y. 10015

ervice Area T e service territory covers 17,000 s uare miles, has a population o 1,800,000 and is largely s burban and rural in nature. It in-c udes 13 relatively-small cities, t e largest of which is Binghamton ith a population of 56,000.

mong major customers are 20 olleges and universities.

ndustry is well-diversified with igh-technology firms predominat-ng. Economic growth has generally paralleled that of the nation.

o" yr PLATTSBURGH I-2:O Somerset TON O

~K BPEWST R

8 S

LONG ISLAND NEW YORK CITY PENNSYLVANIA g To HOMER CITY

~

DISTRICT OFFICES (under construction)

LAKE ONTARIO I

I.P+ LOCKPORT 0

CHESTER SYRACUSE 0

BUFFALO

~.LANCASTER I

~

MECHANICVILLE LAKE ERIE GENE A g L

ALBANY0 o ONEOOll A ITHACA HORN LL~

~ ELIIIRA I5E BINGHAM Homer City Generating Station, located in western Pennsylvania, is lointly-owned with Pennsylvania Electric Company. It provides a little over half of NYSEG's generating capacity.

M Electric I Gas

~ Electric & Gas Major Generating Stations All coal-fired (Kilowatts)

1. Homer City

2. Milliken

3. Greenidge

4. Goudey

5. Hickling

6. Jennison Total 1,720,000 37

New York State Electric & Gas Corporation Box 287, Ithaca, New York 14850 BULK RATE U.S. POSTAGE PAID New York State Electric 8 Gas Corporation Address Correction Requested

~ Return Postage Guaranteed

ML18037A379

Text

SUBJECT:

Dear Mr. Denton:

SUMMARY

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