ML18143A782

Annual Report for Year Ended December 31, 1974

ML18143A782
Person / Time
Site:	Ginna
Issue date:	04/04/1975
From:	Rochester Gas & Electric Corp
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Download: ML18143A782 (62)

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'HE ATTACHED FlLES ARE OFFICIAL RECORDS OF THE OFFICE OF REGULATION. THEY HAVE BEEN CHARGED TO YOU FOR A LIMITEDTIME PERIOD ANS MUST BE RETURNED TO THE CENTRAL RECORDS STATION 008. ANY PAGE(S)

REMOVED FOR REPRODUCTION MUST BE RETURNED TO ITS/THEIR ORIGINAL ORDER.

DEADLINE RETURN DATE fo-gy MARY JINKS, CIIIEF CENTRAL RECORDS STATION

RG&E Service Area/Business 4 -pQ The Company supplies electric, gas and steam service wholly within the state of New York. It is engaged in the production, purchase, transmission, distribution and sale of these services in an area serving nine counties centering about the city of Rochester.

The Company's territory, which has a population of approximately 890,000 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.

Major RG&E Electric Lines Major RG&E Gas Lines co N.Y.S. Power Authority Electric Line Beebee Electric Generating Station Russell Electric Generating Station Ginna Nuclear Power Station Major Electric Substations 0 Natural Gas Supply Stations 0 Sterling Plant Site ORLEANS L jIOCIIOOIOr qq ONTARIO OSWEGO NIAGARA I I1 WAYNE .-~<(

MONROE l ONONDAGA GENESEE CAYUGA I

BuIIalo ONTAIjlo Canandaigk)a WYOMING YATES ERIE LIVINGSTON SENECA TOMPKINS ALLEGAMY SCHUYLER CHAUTAUQUA CATTARAUGUS STEUBEN CHEMUNG TIOGA PENNSYLVANIA Cover We Care.

RG&E employees are good friends and neighbors. You'l find them in many diverse community activities. And they don't hesitate to get involved when called Upon.

Our cover shows lineman, Lawrence Klein, giving "double service" on November 8, 1974.

While working in the area, he came to the aid of a misplaced kitten and its distraught owners. He was a hero to the family and a troubleshooter for the Company, averting a potentiaI electrical hazard.

Dear Shareholder r,

FIRST We are required to send a copy of the Annual Report to each shareholder.

However, if you receive more than one copy in your household and have no need for the CLASS extra copies, you will help us economize by completing this card and returning it to us.

Permit No. 322 Your instructions will eliminate duplicate mailings of only the Annual Report and will not affect dividend checks or other communications.

BUSl NESS REPLY CARD Rochester, N.Y. Thank you.

Sincerely, No postage stamp necessary if mailed in the United States DEAN W CAPLE. Secrerary and Treasurer Postage will be paid by Please discontinue sending a copy of the Annual Report to the account listed below since a duplicate copy now comes to this address.

Rochester Gas and Electric Corporation NAME (please prinQ 89 East Avenue STREET ADDRESS Rochester, New York 14604 CITY STATE ZIP CODE ACCOUNT No. (appears with your address on back cover)

SIGNATURE OF SHAREHOLDERIS)

Attr Dean W. Caple, Secretary and Treasurer Please do not return this form if you are presently receiving only one copy in your household.

Dear Shareholder FIRST We are required to send a copy of the Annual Report to each shareholder.

However, if you receive more than one copy in your household and have no need for the CLASS extra copies, you will help us economize by completing this card and returning it to us.

Permit No. 322 Your instructions will eliminate duplicate mailings of only the Annual Report and will not affect dividend checks or other communications.

BUSINESS REPLY CARD Rochester, N.Y. Thank you.

Sincerely, No postage stamp necessary ii mailed in the United States DEAN W. CAt'lE, Secretary and Treasurer Postage will be paid by Please discontinue sending a copy of the Annual Report to the account listed below since a duplicate copy now comes to this address.

Rochester Gas and Electric Corporation NAME (please print) 89 East Avenue STREET ADDRESS Rochester, New York 14604 CtTY STATE ZIP CODE ACCOUNT NO. fappears with your address on back cover)

SIGNATURE OF SHAREHOLDER(s)

Att: Dean W. Caple, Secretary and Treasurer Please do not return this form if you are presently receiving only one copy in your household.

I

Annual Report for year ended December 31, 1974 Contents Highlights 2 Letter to Shareholders 3 Electric Operations 6 Gas Operations 8 Research and Development 8 Management Changes 9 Forecast 10 Management's Discussion and Analysis of the Statement of Income 11 Financial Statements/Operating Statistics 13 Directors/Officers 24 Principal Office 89 East Avenue Rochester, New York 14649 (71 6) 546-2700 Financial Contact Paul W. Briggs President Annual Meeting Third Wednesday in May At Rochester, New York Bond Trustee and Paying Agent Bankers Trust Company One Battery Park Plaza New York, New York 10004 New York Stock Exchange Symbol Rochester Gas and Electric Corporation Common Stock-RGS Transfer Agent Lincoln First Bank of Rochester One Lincoln First Square Rochester, New York 14643 Registrar Security Trust Company of Rochester One East Avenue Rochester, New York1463B Co-transfer Agent Morgan Guaranty Trust Company of New York 23 Wall Street New York, New York 10015 Co-registrar The Chase Manhattan Bank (National Association) 1 Chase Manhattan Plaza New York, New York10015 Shareholder Inquiries Communications regarding stock trans-fer requirements or lost certificates may be directed to one of the Company's stock transfer agents.

Other inquiries should be directed to D. W. Caple, Secretary and Treasurer at the Company.

The Company will provide, without charge, a copy of the Annual Report on Form 10-K filed with Ihe Securities and Exchange Commission with respect to fiscal year1974, upon the written request of any shareholder addressed to the Secretary.

Highlights Common Stock l974 1973  % Change Earnings per weighted average share $ 1.80 $ 2.39 (25)

Number of shares (000's)

Weighted average . 9,443 8,666 Pro forma weighted average after stock divide nd paid in following year (See Note) . 9,726 8,926 Actual number at December 31. 9,469 9,1 56 Price range (Sales on New York Stock Exchange) High Low High Low 1st quarter 20'/~ 17s/s 24'/e 20>/s 2nd quarter. 17'/z 12s/e 22 20'/2 3rd quarter 14s/s 11 22'h 19'/4 4th quarter 13 10 21>/4 17'/s Cash dividends paid (100% taxable) 1st quarter $ .31 $ .30 2nd quarter. .31 .30 3rd quarter .31 .31 4th quarter .31 .31 Stock dividend paid (See Note) 3% 3%

Sales and Revenue Electricity to customers Kilowatt-hours (000's) 4,408,163 4,539,955 (3)

Revenue (000's) $ 127,560 $ 116,512 9 Electricity to other utilities Kilowatt-hours (000's) . 1,182,902 2,269,686 (48)

Revenue (000's) $ 14,697 $ 21,112 (30)

Gas Therms (000's) . 453,687 434,833 4 Revenue (000's) $ 75,463 $ 64,633 17 Steam Pounds (000's) 3,622,422 3,724,034 (3)

Revenue (000's) $ 16,321 $ 10,0'l4 63 Total Revenue $ 234,041 $ 212,271 10 Operating Expense (000's)

Electric and steam fuels. $ 36,693 $ 25,612 43 Purchased electricity 12,070 8,841 37 Purchased natural gas for resale 36,504 29,314 25 Wages and benefits . 40,692 37,687 8 Other expense 22,468 19,809 13 Total Operating Expense $ 148,427 $ 121,263 22 Taxes (000's)

Local, state, other . $ 32,410 $ 29,993 8 Federal income tax charged to operations. 1,151 7,639 (85)

Capital Expenditures (000's)

Utility plant $ 52,332 $ 34,628 51 Nuclear fuel 10,582 6,737 57 Net UtilityPlant at December 31 (000's) . $ 530,987 $ 492,833 Note: The 1Gth annual stock dividend was paid February 24, 'l975 at the rate ol three percent.

To Shareholders Considering the problems that confronted us, 1974 common was $ 6.4 million less than in 1973 because of the prolonged stock earnings of $ 1.80 per share were somewhat better shutdown of the Ginna nuclear plant.

than we thought possible. Earnings declined 59 cents and Expense of operation and maintenance was 22 percent more were 25 percent less than the $ 2.39 per share earned in than in 1973, an increase of $ 27 million. The costs of electric 1973. Of course, it was impossible to have foreseen the Ginna and steam fuels and of purchased electricity increased nuclear plant being out of operation for four months as a

$ 14 million. Purchased gas cost was $ 7 million more than last result of a turbine blade failure, the severe impact of con-year. Electric and steam fuel costs and purchased electricity tinued energy conservation by our customers and the cost increases reflect both the higher prices for fossil fuels degree of decline in the national economy. In addition, and the greater use of fossil-fired generation during the four-earnings per share were reduced because of the sale month shutdown of the Ginna nuclear station. It vividly of 9S0,000 n'w shares of common stock in October1973. illustrates the advantages of the low cost nuclear fuel gener-The Ginna plant was removed from service on January1, ation which was available throughout all of1973. The 1974 when a blade failed in one of the low-pressure stages of increased cost of purchased gas was due primarily to price the steam turbine. We combined this forced shutdown with escalation coupled with a small increase in the volume sold.

the annual refueling of the nuclear reactor and did other Expense and other charges against income are explained routine maintenance. The plant was back in service on in Management's Discussion and Analysis of the Statement of April 25 after114 days and since then has been giving excel- Income in this annual report.

lent performance. During the past nine months, its availa- Capital expenditures during1974 totaled $ 63 million, bilityhas been an impressive 92 percent, comparable to or $ 52 million for utilityplant and $ 11 million for nuclear fuel.

better than most fossil-fueled plants. It is currently operating As part of the intensive effort to improve earnings by at a capacity of 475,000 kilowatts, reducing the amount of cutting costs, the original forecast of 1974 utilityplant expen-high cost fossil fuel required and also permitting sales of ditures was reduced. We deferred projects not absolutely surplus energy from our electric system to other utilities. essential and which would not significantly jeopardize The severity of the factors causing decreased earnings in continuity of service to our customers. In addition to the 1974 was ameliorated by cost reduction measures that usual construction expenditures, negotiations with continue in 1975. Employees have given excellent coopera- Westinghouse resolved mutual liabilities related to construc-tion by increasing their productivity and sharing additional tion, operation and turbine blade failure at the Ginna nuclear plant. We also continued with licensing proceedings job responsibilities, enabling us to limit increasing expense.

and made environmental expenditures in connection with Revenue for1974 totaled $ 234 million, $ 22 million more both a proposed 600-megawatt coal-fired plant and a future than for 1973. Conservation of energy is estimated to 1,150-megawatt Standardized Nuclear Unit Power Plant have reduced 1974 revenue by $ 14 million. Electricity sold to System (SNUPPS) at our Sterling, New York site.

our customers was three percent below1973, the first time Planning, licensing and financing facilities to supply in 29 years that these sales failed to show a gain over the prior adequate energy to our customers continue to be our year. Gas and steam revenue increased $ 5.4 million due primary concerns.

to weather in 1974 that was 15.7 percent colder than 1973.

The increase in 1974 revenue from higher rates was $ 6.8 The forecast of capital expenditures in1975 includes nearly million and fuel cost adjustments were $ 20 million more than $ 22 million for a 600-megawatt coal-fired plant at the in 1973. The sales of electricity to other utilities in 1974 Company's Sterling, New York site on Lake Ontario, about Francis E. Drake, jr. Paul W. Briggs

60 miles east of Rochester. However, in late january 1975, Concurrent with the SNUPPS project, studies are under way it was determined that based on current load growth projec- by the seven investor-owned electric utilities serving tions, the 600-megawatt fossil unit could be deferred. New York State to determine the feasibility of creating a Plans for the coal-fired plant will still remain in a state of subsidiary company to be known as Empire State Power readiness, in order to give the Company a measure of Resources Inc. (ESPRI). ESPRI's long-range plan is to flexibility.The Company will seek to advance the licensing construct certain large generating plants for operation in the proceedings for approval of the fossil unit to enable its 1980's, to assure the people of New York State the contin-early construction when necessary. Factors leading to this uation of an adequate supply of power at the most economic determination included a downward revision in forecast cost possible. The seven utilities have filed a petition with electric growth for the Company and for other New York the Public Service Commission of the State of New York for utilities, which resulted in a lack of support for the project by authorization to purchase $ 2.0 million of capital stock in other utilities. We will concentrate, instead, on an already ESPRI as "seed" money to pay for taking the concept before proposed nuclear unit, in cooperation with two other the various regulatory jurisdictions for review and opinion.

utilities, Orange and Rockland Utilities, Inc. and Central If the ESPRI concept is approved, the substantial burden Hudson Electric & Gas Corporation. of financing future generating capacity on an individual basis will be relieved, and the seven companies will share RG& E has been a leading proponent of the SNUPPS concept financial risks inherent in the ownership of'the increasingly of power plant construction. Our experience in licensing large, complex, and expensive generating units required and constructing the Ginna nuclear plant convinced us that to achieve optimal economies of scale. Such savings would significant savings in time and money might be realized be reflected in the cost of power to the consumer and may by adopting a standardized approach to the licensing, de-be especially significant if the financing of ESPRI proceeds sign, fabrication, and erection of nuclear power plants.

on the basis of 80 percent debt securities and 20 percent Together with four midwestern utilities, we have signed a letter of intent to purchase a total of five SNUPPS nuclear equity, as proposed by the companies. Rochester Gas and Electric's participation in the purchase of initial shares in units for installation in the early1980's. We have signed a ESPRI is estimated to be10 percent. Our participation memorandum of understanding with Central Hudson and in ESP RI would not alter our status as an independent com-Orange and Rockland to build an 1,150-megawatt SNUPPS unit at Sterling under a pro posed Tenants in Common pany and we would continue to be responsible for our own arrangement. Under this proposed arrangement, each of the customers'equirements. We anticipate that determination three participants will share one-third of the cost of of the future of ESPRI by the various regulatory agencies construction and operation and will be entitled to one-third involved will entail a year or more of proceedings.

of the plant's ultimate output. The continuing costs of the Through careful planning and load growth research, the SNUPPS project are being shared by all three participants. Company's fuel supplies continue to be adequate, assuring We are now proceeding with a final contract and the our customers of reliable energy service. Nuclear fuel preliminary design, engineering and siting of the unit. contracts with Energy Research Development Association Electric Kilowatt-hour Sales to Customers (mill(ons]

1974 4408 0 Residential 1973 4540 Q Commercial 1972 4292 0 Industrial 1971 3982 nOI er 1970 3802

, 1969 3578 1968 3280 1967 2993 1966 2739 1965 2474 Gas Therm Sales to Customers (mll((onsl 1974 454 0 Residential 1973 C3 435 Q Residential Spaceheating 1972 469 D Commercial 1971 442 0 Industrial 1970 425 0 Municipal 1969 403 1968 374 1967 349 1966 317 1965 301

(formerly the Atomic Energy Commission) provide for In August, we sold $ 30 million of first mortgage bonds enrichment of uranium feed material for the Ginna plant and bearing an interest rate of10a/4 percent. The proceeds of the SNUPPS unit for a period of 30 years. Another contract these bonds were used to redeem $ 30 million of short-term with Nuclear Fuel Services, Inc. expiring in 1981, provides bank loans previously incurred to pay for construction costs.

for reprocessing of spent nuclear fuel. We also have An Automatic Dividend Reinvestment Plan was offered to contracts for sufficient uranium feed material to provide for shareholders on October 25, 1974, with an optional the annual refueling of the Ginna reactor scheduled for cash supplement feature, to purchase unissued shares of the springs of1975 and1976. We are continuing negotiations common stock. We are well pleased with the response.

to procure uranium feed material for future years.

Over 11 percent of the shareholders who own six percent During 1974 we burned 787,000 tons of coal and we had an of the shares are participating in the Plan. The optional cash 86-day supply of coal on hand at the end of the year. We supplemental payment of up to $ 1,000 per quarter has also normally maintain a 90-day coal supply. Arrangements with been successful. These optional cash payments amounted four large coal suppliers will provide for about 700,000 to $ 214,000 and along with the $ 181,000 of reinvested tons of coal per year through 1976. dividends resulted in the issuance of 33,299 new shares of common stock during 1974.

To comply with environmental regulations, eight boilers at two electric and steam generating plants were converted Monroe County is the major business area served by RGKE.

from coal to oil in prior years. Oil contracts during 1975 pro- During 1974 this area continued to maintain the most vide for the purchase of 44 million gallons of fuel oil, an favorable economic conditions in the State and among the amount anticipated to meet the Company's requirements most favorable in the Nation. Total employment rose through the year. rather steadily, culminating in an all-time high in October and the year averaged 8,700 jobs more than in 1973. The The Company purchases natural gas for resale to its unemployment rate for 1974 averaged only 3.2 percent, customers from Consolidated Gas Supply Corporation under ranging from a low of 2.6 percent in October to a high of a long-term contract. We were notified by our supplier in 3.7 percent in December. During the last five months of November1974 of a curtailment that was effective 1974, unemployment in Rochester and Monroe County was February1, 1975. The curtailment will result in deliveries the lowest in New York State.

which are one percent less than the supply necessary to meet our full gas requirements for the period ending January 31, We believe that the Company's earnings should improve 1976. The Company has effected this curtailment by restrict- during 1975. The demand for electricity is expected to ing gas service to customers capable of burning other fuels. increase during the year, as natural gas and oil supplies The curtailment notice was followed by an order of the become scarcer and more expensive to burn. In addition, Public Service Commission of the State of New York effective there will be a shift from other forms of energy to electricity January1, 1975 which prohibits new or additional use of to power the environmental clean-up programs that have gas by any type of customer. been decreed.

We have seen an improvement in realistic regulation in We appreciate the confidence of investors in the Company recent months although we still must contend with the and every effort will be made to justify the trust you have problem of regulatory lag which proves excessively oppres- placed in us.

sive in a time of rapid inflation. We were pleased to receive the full amounts requested from electric and gas rate Sincerely, increases approved in October 1974. However, the rate proceedings took eleven months from initial filing to conclu-sion. The Public Service Commission of the State of New York has taken various steps to ease the impact of lag by

@~~~6'P Francis E. Drake, Jr.

allowing attrition factors, using forecast test periods and Chairman of the Board and permitting end-of-period rate base. Chief Executive Officer The cost of producing energy is rising in all areas. In addition to seeing rapid price escalation for purchased goods and services, we find ourselves bearing the heavy financial bur-den of generating plant and transmission line siting and Paul W. Briggs President licensing, environmental requirements, and numerous other nonrevenue-producing costs. In the light of these factors, we expect to file, in the second quarter of1975, additional February 14, 1975 rate increase requests for both electric and gas service, in order to attain a return on equity attractive to investors.

A regulatory decision is pending on a November1974 steam rate application to increase annual revenue $ 2.5 million.

Electric Operations Among the Company's greatest concerns is the need to RG8 E has purchased a dual computer system to handle provide quality electric service to our customers. various electric system data, communication and control The reliability of service to electric customers averaged functions. When installation in the System Control Center is 99.981 percent during 1974. This is consistent with previous complete in September, the master consoles will be able years'xperience even though it was necessary to make to independently monitor and control up to 32 substations.

some expense curtailments during the latter part of1974.

A "Storm Emergency" trouble call reporting system, utilizing The long-standing preventive maintenance programs computer technology, has been developed by the Company of the electric, gas and steam systems have not been mini- to pinpoint trouble areas and speed electric line repair mized. Normal inspections, maintenance programs, and operations during storm conditions. Emergency calls are now overhauls are being adhered to in order to insure continua-automatically batched and sorted by geographic area and tion of the high level of reliability and availability our block number before they are sent to the Line customers receive. Operations'torm center for dispatching to crews in the field. The A major new substation, capable of providing an additional new system speeds identification of the problem and mini-200,000 kilowatts of power interchange capacity, mizes call backs.

was completed and energized in August of 1974 providing a second interconnection with the cross-state 345,000-volt transmission system. This interconnection has capability for expansion to 400,000-kilowatt capacity in the future. Con- "Shadow Project" exposes juniors struction of a new115,000-volt line in Webster was finished and seniors in high school, not generally bound for college, to an and operative in September of 1974. The extra service was actual work situation. Lineman necessary to meet the increased electrical requirements of First Class, Dick Cantwell, demon-Xerox Corporation and nearby residential and commercial strates safety methods employed when connecting a customer to our growth. A major110,000-volt substation to serve downtown service. Dave Sessler, Electric Rochester is under construction with an expected comple- 7ransmission and Distribution Engi-tion date of mid-summer 1975. Its unique technology neering, runs the jaycee-sponsored project and is observing below.

employs space-saving, high-voltage, gas-insulated bus con- Heis assisted by Monica Ciles from ductors to make the greatest use of the small property area. Cas Distribution.

RC&E System Capability and Electric Loads Thousands of Kilowatts 2000 Sterling Nuclear Plant Q Total Capability 0 Total Capability Forecast

-- Required Capability (load plus required reserve)

Q Peak loads Gas Turbine Plus Purchased Power Gas Turbine Plus Purchased Power urc ase ower Cilboa Purchases Cinna Nuclear P 1968 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84

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Gas Operations Research and Development A major 24-inch main linking our two natural gas supply RGRE invested over $ 1 million in more than 20 research points was completed during the year. This feeder system projects during 1974.

permits maximum flexibilitybetween our purchase points Research and development programs now being conducted under normal and emergency conditions.

by New York utilities may advance the day when solar In April 1973 the Company and 13 other utilities in New York energy, nuclear fusion and other new technologies will help State formed the New York State Gas Croup to study and satisfy man's energy requirements. Investigations are being seek solutions to the State's natural gas supply shortage. The conducted under the direction of the Empire State Electric Croup will determine the present supply resources of Energy Research Corporation (ESEERCO), a nonprofit corpo-New York State and examine the prospects for the coopera- ration. ESEERCO, created in1973, replaces a more limited tive development of underground storage fields, joint research and development corporation formed by the State' purchase and storage of imported liquefied natural gas, and power producers to study nuclear technology. As of pipeline interconnections to reinforce reliability. December 1974 ESEERCO had committed over $ 6.7 million for 32 projects. Its basic function is to find improved and The Gas Group aggressively sup'ports off-shore drilling more economical ways of producing and delivering electric as well as large-scale production of synthetic natural gas energy while preserving environmental quality. Nearly from naphtha and from coal.

every research program involves environmental considera-We have contracted to take significant quantities of liquefied tions. All of the research has potential for use in New York natural gas, scheduled to be delivered to our supplier State and is coordinated with national research projects to from Algeria in early1977. This volume will be approximately prevent wasteful duplication of efforts and funds.

14 percent of our present annual requirements and may make it possible to resume additional gas sales.

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I RC&E's Home Service lacilities pro-vide the training ground for groups of all ages and incomes, enabling them to beuer understand meal preparation, basic nutrition, and the correct use of appliances.

Each year the Rochester Chamber of Commerce hosts a "get-acquainted" gll'IBA night lor new citizens. Verna Parmelee, Home Service Depart-ment Manager, explains the many services offered by RC&E to a new American family. g~MNttx C

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Management Changes Paul W. Briggs was elected President of the Company by the Board of Directors effective October1, 1974. He succeeded Edward J. Nelson, Presidentsince July1970, who retired after more than 47 years of outstanding service. At the same time, the Board elected Keith W. Amish to the position of Executive Vice President.

Mr. Briggs joined RG8iE in 1945 and has held various positions of responsibility in the accounting, financial and general services areas. He previously was Senior Vice President, Finance and General Services, and will continue to have these executive responsibilities.

Mr. Amish was Senior Vice President, Electric and Steam, and has a background of 28 years of operating and engineering experience in the Company's electric and steam depart-ments. His responsibilities include the operations and plan-ning of the Company's utilityplant and energy systems.

Mr. Briggs and Mr. Amish were also elected to the Board of Directors to fillvacancies caused by the resignations of

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/Alai i Alexander M. Beebee and R. Dewitt Pike.

The Board also elected Harry G. Saddock to the position

/ of Vice President Electric System Planning and Operation, and Leon D. White,)r. to the position of Vice President-Electric and Steam Production. Both men have had many dL years of engineering experience with the Company and are former superintendents in their respective areas.

Ed Centhner, Electric Substations, has been involved for many years in wheelchair athletics. Many of these fine young athletes have successfully competed in the International Wheelchair Olympics.

Kefth W. Amish

Forecast 1975 Earnings for 1975 are expected to improve over those for Capital expenditures in 1975 are forecast to total $ 78 million.

1974 as a result of several factors. We will benefit from They consist of $ 73 million for utilityplant and $ 5 million the full impact of the October 1974 increases in electric and for nuclear fuel. The largest item of utilityplant in the fore-gas rates, plus a portion of the pending increase in steam cast is $ 22 million for the initial phases of a 600-megawatt service rates. There should be a return of growth in electric coal-fired plant at the Company's Sterling, New York load, although possibly at a somewhat lower rate than in site. While the construction of this generating plant has been the past. It is estimated that kilowatt-hour sales of electricity deferred, plans will remain in a state of readiness in order to customers should increase five percent over 1974. to give the Company a measure of flexibility.

Greater sales of electricity to other utilities should result Approximately $ 38 million of 1975 utilityplant expenditures from a longer operating period of the Ginna nuclear will be revenue-producing or essential to assure continued plant in 1975 than during1974. A nominal growth in gas sales operation and reliability, primarily on the electric system is anticipated from a full year's sales to customers added facilities. Other than certain nuclear costs, we must spend in 1974, plus the limited number of new residential gas cus-

$ 2 million to remain in compliance with State and Federal tomers permitted prior to the effective date of the new environmental laws. Also, we must incur costs of $ 3.5 million restrictions.

to move facilities out of the way of urban renewal projects Economy measures taken in1974, applicable to all items of and highway construction.

expense, will continue through 1975. Our forecast assumes Nuclear fuel expenditures during 1975 will be for enrich-Ginna nuclear station will operate during the year at a ment and fabrication of the fuel to be used at Ginna nuclear generation level of 475 megawatts. An eight-week shutdown electric generating plant in 1976.

for refueling and maintenance is scheduled to begin in mid-March. We expect to develop substantial savings in gas We expect that 40 percent of the proposed capital expendi-expense by conversion of the remaining 18,000 mixed gas tures will be financed with internally generated funds.

customers to natural gas. Approximately one-half of the Interest coverages should improve and we contemplate conversions will be accomplished in 1975 and the remainder issuance of $ 40 million of bonds in late summer or early fall.

in 1976. We will use the bond proceeds to pay then outstanding short-term loans. New notes outstanding at the end of 1975 The major expense increase, estimated to be $ 21 million, is may approximate $ 22 million if we expend the total in the costs of electric and steam fuels and purchased gas,

$ 78 million of the capital forecast.

primarily the result of price increases. Under present regula-tions, price increases are recovered through fuel clause adjustments in all customer categories. Expense will also be affected by a $ 5 million increase in payroll costs, primarily the result of an 8.2 percent wage adjustment effective February1,1975, and by a $ 2 million price escalation for materials and services.

Rate Increases Granted Annual amount-test year basis (000's) ..

Percent increase ..

Effective date .

Rate of return on rate base authorized ..

Rate of return on equity authorized....

Revenue fffect (000's)

Amount received in year granted.....

Amount received in subsequent year..

Pending Requests Amount (000's) .

Percent increase Date filed 10

Management's Discussion and Analysis of the Statement of Income The following financial review discusses major changes that Total revenue from electric customers increased $ 13.8 mil-affected differences in Net Income, between1973/1972 lion in 1973 and $ 11 million in 1974. In October 1974, and between 1974/1973, as reported in the Statement of the Company received approval to increase electric rates Income and Retained Earnings on page 14 of this report. The $ 17.9 million annually, of which $ 9.5 million was granted in Notes to Financial Statements on page 17 of this report July1974 on a temporary basis. Electric rate increases that contain additional information that relates to this discussion. affected 1973 and 1972 revenue resulted from rates that became effective on a temporary basis September 5, 1972 Revenue and fullyeffective October 25, 1972.

Electric revenue increased $ 20.8 million in 1973 and

$ 4.6 million in 1974. Electric kilowatt-hour sales to our customers increased 5.8 percent in 1973 but decreased 2.9 percent in 1974.

Changes in Electric Revenue Customers reduced their use of electricity beginning in Increase or (Decrease) from Prior Year November1973 in response to the energy crisis. As a result, 1974 1973 the Company experienced a $ 4.4 million sales increase Customer Revenue from: fihousands of Dollars) in 1973 against a $ 1.2 million decline in 1974.

Rate increases ... $ 5,089 $ 9,088 Revenue from electric sales to other utilities increased Fuel cost adjustment................ 7,221 409 $ 7.0 million in 1973 and decreased $ 6.4 million in 1974.

Sales . (1,208) 4,427 Surplus system generation was not available for sale in 1974 Other (54) (121) during the114-day shutdown of the Cinna nuclear station.

Total Change in Customer Revenue..... 11,048 13,803 Nuclear generating capacity was available throughout1973.

ElectricSalestoOtherUtilities.......... (6,415) 7,049 Total Change in Electric Revenue.......$ 4,633 $ 20,852 Electric Cas Steam 1974 1973 1972 1971 1970 1974 1973 1972 1971 1970 1974 1973 1972 1971 1970

$ 17,992 $ 10,154 $ 5,900 $ 4,854 $ 3,676 $ 500 $ 897 $ 1,157 16.0 11.5 7.48 7.6 6.8 5.1 11.4 21.0 10/23 10/25 3/25 10/23 4/28 11/12 5/11 11/20 8.83 7.96 7.72 8.42 7.77 7.25 6.48 4.32 13.19 12.0 12.0 12.09 12.0

! $ 5,089 $ 2,079 $ 4,702 $ 1,279 $ 1,815 $ 51 $ 392 $ 98

$ 9,088 1,998 $ 2,090 $ 387 478 $ 1,007

$ 5,089 $ 9,088 $ 4,077 $ 4,702 $ 1,279 $ 2,090 $ 1,815 $ 387 $ 529 $ 392 $ 1,007 $ 98

$ 2,475 12.0 11/15 11

Gas revenue decreased $ 1.2 million in 1973 and increased Expense

'$10.8 million in 1974. Total operation and maintenance expense increases in 1973 Changes in Gas Revenue and 1974 were affected by several major factors. Ginna nuclear plant electric generation, which has a much lower Increase or (Dccrcasc) from Prior Year cost than generation at fossil-fueled plants, was available 1974 1973 (Thousands of Dollars) during all of 1973 but less than eight months of 1974. The Customer Revenue from:

cost of labor, fuels and other materials escalated far more Rate increases $ 1,279 $ 2,090 rapidly during 1974 than in 1973.

Gas cost adjustment...... 6,730 672 Weather effects 4,863 (4,992) Changes in Opera(ion'and Maintenance Expense Sales . (2,142) 1,161 Incrcasc or (Dccrcasc) from Prior Year Other . 100 (163) 1974 Total Change in Gas Revenue ....... $ 10,830 $ (1,232) (Thousands 1973 of Dollars)

The Company received approval to increase gas rates in Electric and steam fuels.......... ..... $ 11,081 $ 3,633 October I974. These new rates will increase gas revenue Purchased electricity............ 3,229 792 Purchased natural gas for resale.... 7,190 (937)

$ 4.9 million annually, which includes $ 2.5 million granted in Other operation . 3,586 2,619 July1974 on a temporary basis. Gas rate increases that affected 1973 and 1972 revenue resulted from rates that Maintenance . 2,078 1,016 became effective April 28, 1972. Total Change in Operation and Maintenance Expense........ .. $ 27,164 $ 7,123 Revenue changes from weather effects, on a degree day basis, resulted from 14.6 percent warmer weather in 1973 The costs of electric and steam fuels were materially affected than in 1972, and15.7 percent colder weather in 1974 by price escalation in both periods. Sources of electric than in 1973. The 1974 decrease in sales of $ 2.1 million generation also influenced fuel costs due to the different reflects reduced customer use in response to the energy amounts of generation available from our nuclear plant.

crisis. Pcrccnt Elec(rici(y Gcncratcd and Purchased Steam revenue increased $ .8 million in 1973 and $ 6.3 million 1974 1973 1972 Sources of Energy:

in 1974.

Steam 32.3 26.0 31.1 Changes in Steam Rcvcrsuc Nuclear .... 343 47.2 36.9 Incrcasc or (Dccrcasc) from Prior Year Hydro and other........ 31 3.1 4.8 1974 1973 Total Generated-Net .. 69.7 76.3 72.8 Customer Revenue from: (Ihousands of Dollars)

Purchased . 30.3 23 7 272 Rate increases $ 387 $ 529 Total Electric Energy... .... 100.0 100.0 100.0 Fuel cost adjustment........ ....... 6,095 910 Weather effects. 559 (528) An accounting change affects the comparison of electric and Sales .................... (733) (96) steam fuel costs for1973 and 1974. The Company's tariffs Other . (1) for electric and steam services include a fuel cost adjustment Total Change in Steam Revenue ....... $ 6,307 $ 815 clause under which electric and steam rates are adjusted to Steam revenue in 1972 and 1973 was affected by a steam rate increase that became effective May11,1972. A second steam rate increase became effective November11,1973.

In November1974 the Company requested an additional 12 percent increase in steam rates designed to raise annual revenue $ 2.5 million. A regulatory decision is pending.

12

reflect changes in the average cost of fuels. There is a lag Financial Statements of two months from the time the average cost of fuel is deter- Income and Retained Earnings 14 mined to the application of the fuel cost adjustment rates Balance Sheet 15 to customers'ills. In 1974, the Company began to defer a Changes in Financial Position 16 portion of the increased costs to the month in which the Report of Independent Accountants 17 resultant revenues were recorded in order to achieve a better Notes to Financial Statements 17 matching of fuel expense and fuel cost adjustment revenues.

As a result of this accounting change, fuel costs included in Operating Statistics operating expenses reported for1974 were decreased by Electric Department 21

$ 3.7 million and net income for the year, after appropriate Gas Department 22 tax accruals, was increased by $ 1.9 million (20( per share). Steam Department 23 Authorization for the change was received from the Public Service Commission of the State of New York during 1974.

The increase in cost of purchased natural gas for resale in 1974 was primarily caused by price escalation. The reduction in cost of gas purchased in 1973 resulted from reduced volume in 1973 caused by warmer weather than in 1972.

Federal income tax increased $ 4.9 million in 1973 and decreased $ 6.9 million in 1974.

Changes in Federal income Tax Increase or (Decrease) in Tax from Prior Year 1974 1973 frhousands of Dollars)

Changes in tax resulting from difference in pretax incom e.......... $ (5,101) $ 4,437 Changes in tax resulting from difference in items deductible for tax purposes but not expensed on the books for which tax benefit is recognized currently............... (1,868) 992 Other 107 (540)

Total Changes in Federal Income Tax....$ (6,862) $ 4,889 See Note 3 to the financial statements for a detailed analysis.

Other Statement of Income Items The allowance for funds used during construction increase of $ 1.3 million in 1974 resulted from both the effect of higher costs of capital and the amount of utility plant expenditures.

In 1973 we applied rates of 7.5 percent for eight months when the rate was increased to 8.0 percent. We used the 8.0 percent rate through May1974 and then increased it to 10 percent for the balance of the year. It should be noted that in 1970 this allowance for funds used during construction was abnormally high due to the accumulation of construc-tion expenditures for the Ginna nuclear plant placed in service during that year.

The $ 1 million increase in the 1974 interest on notes payable resulted from higher interest rates and an increase of

$ 6 million in the average amount of short-term notes out-standing during 1974 compared with 1973.

13

)K~K ROCHESTER GAS AND ElECTRIC CORPORATION Statement Of InCOme and Retained EarningS (Thousands)

Revenue (Notes 1 and 2) Year Ended December 31 1974 1973 1972 1971 1970 Electric $ 127,560 $ 116,512 $ 102,709 $ 93,171 $ 82,559 Cas 75,463 64,633 65,865 58,062 54,005 Steam 16,321 10,014 9,199 7,754 5,885 219,344 191,159 177 773 158,987 142,449 Electric sales to other utilities. 14,697 21,112 14,063 16,892 10,517 234,041 212,271 191,836 175,879 152,966 Expense (Notes 1 and 2)

Electric and steam fuels 36,693 25,612 21,979 21,926 17,401 Purchased electricity . 12,070 8,841 8,049 7,017 7,209 Purchased natural gas for resale. 36,504 29,314 30,251 25,954 22,839 Other operation . 45,194 41,608 38,989 35,294 32,775 Maintenance . 17,966 15,888 14,872 14,043 11,259 Total operation and maintenance expense 148,427 121,263 114,140 104,234 91,483 Depreciation and amortization . 16,491 15,145 14,565 14,106 12,506 Taxes-local, state and other. 32,410 29,993 27,885 24,024 19,461 Federal income tax (Note 3) 1,151 7,639 1,660 1,256 (106) 198,479 174,040 158,250 143,620 123,344 Operating Income 35,562 38,231 33,586 32,259 29,622 Other Income and Deductions Allowance for funds used during construction .. 1,741 447 456 379 2,867 Other 670 715 203 277 32 2,411 1,162 659 656 2,899 Income before Interest Charges. 37,973 39,393 34,245 32,915 32,521 Interest Charges Interest on long term debt. 14,965 13,738 13,738 13,738 11,990 Interest on notes payable 2,255 1,246 1,160 1,031 1,483 Other 210 103 102 137 43 17,430 15,087 15,000 14,906 13,516 Income before giving effect to a change in recording month-end revenue and expense 20,543 24,306 19,245 18,009 19,005 Effect on calendar year 1972 of recording four additional days of revenue and expense (Note 2). 706 Net Income 20,543 24,306 19,951 18,009 19,005 Dividends on Preferred Stock, at required annual rates... 3,550 3,550 3,550 3,550 3,550 Earnings Applicable to Common Stock 16,993 20,756 16,401 14,459 15,455 Dividends on Common Stock Cash 11,614 9,922 8,751 8,267 8,027 Stock dividends capitalized 4,944 5,719 5,205 5,458 5,299 Retained Earnings Beginning of year. 52,184 47,069 44,624 43,890 41,761 Adjustment to record subsidiary at equity (Note 1) .. 949 Balance at beginning of period as adjusted. 53,133 47,069 44,624 43,890 41,761 End of year. $ 53,568 $ 52,184 $ 47,069 $ 44,624 $ 43,890 Weighted average number of shares outstanding in each period... 9,443 8,666 7,905 7,583 7,583 Earnings per share of common stock based on weighted average number of shares outstanding in each period, adjusted for stock dividends: (Note 1)

Income before giving effect to a change in recording month-end revenue and expense 1.80 2.39 1.98 1.90 2.03 Effect on calendar year 1972 of recording four additional days of revenue and expense (Note 2) .09 Net earnings per share 1.80 2.39 2.07 1.90 2.03 Cash Dividends per Share (Note 1) 1.23 1.18 1.12 1.09 1.06 14

ROCHESTER CAS AND ELECTRIC CORPORATION BatanCe Sheet tThousanCk)

ASSETS At December 31 1974 1973 1972 1971 1970 UtilityPlant, at original cost (Note1)

Electric $ 485,889 $ 453,484 $ 442,337 $ 429,111 $ 407,165

( as. 156,951 149,399 142,320 137 327 131,257 Steam . 16,468 16,008 15,273 15,066 14,654 659,308 618,891 599,930 581,504 553,076 Less-Accumulated Depreciation and Amortization Electric 125,941 111,401 103,240 100,642 87,783 Gas . 37,114 34,965 32/177 29,655 26,977 Steam 4,590 4,234 4,388 4,122 4,101 167,645 150,600 139,805 134,419 118,861 491,663 468,291 460,125 447,085 434,215 Construction work in progress. 39,324 24,542 16,539 16,903 16,565 530,987 492,833 476,664 463,988 450,780 Investment in subsidiary, at equity (Note 1). 1,834 Current Assets Cash (Note 5). 7,458 5,434 13,651 12,463 9,988 Accounts receivable 25,354 22,239 19,643 12,999 11,587 Materials and supplies, at average cost 19,017 10,799 9,888 10,828 9,628 Prepayments . 849 510 530 610 753 52 678 38I982 43p712 36p900 31 956 Deferred Debits Unamortized debt discount and expense (Note 1)... 2,006 1,563 1,640 1,714 Deferred fuel cost (Note 2) . 3 737 Other . 1,999 2,893 1,335 398 429 593,241',487 7,742 4,380 2,898 2,038 2,143 Total $ $ 536,195 $ 523,274 $ 502,926 $ 484,879 LIABILITIES Capitalization (Note 4)

Long term debt. $ 266,677 $ 236,677 $ 236,677 $ 236,677 $ 236,677 Preferred stock 67,000 67,000 67,000 67,000 67,000 Common stock............ 157,618 152,180 126,734 106,434 100,976 Premium on preferred stock 83 83 83 83 83 Other paid-in capital 829 Capital stock expense (3,772) (3,697) (2,772) (2,488) (2,470)

Retained earnings 53,568 52,184 47,069 44,624 43,890 542,003 504,427 474,791 452,330 446,156 Nuclear Fuel Contract. 2,145 5,687 8,724 Current Liabilities Notes payable (Note 5) 21,000 18,000 21,500 11,000 Accounts payable 11,028 12,909 14,088 10,181 9,077 Taxes accrued, including income taxes (Notes 1 and 3)... 2,428 8,922 4,958 4,246 550 Interest accrued 6,767 4,657 4,993 5,068 4,845 Payroll accrued . 1,909 1,763 1,633 1,136 1,034 Other . 820 840 821 823 869 43,952 29,091 44,493 42,954 27,375 Reserves and Deferred Credits Injuries and damages 672 720 787 854 887 Unamortized premium on debt (Note1). 200 211 222 233 245 Other . 454 63 68 96 92 1,326 994 1,077 1,183 1,224 Accumulated Deferred Income Taxes (Notes1 and 3)... 5,960 1,683 768 772 1,400 Commitments (Note 6) .

Total $ 593,241 $ 536,195 $ 523,274 $ 502,926 $ 484,879 15

RM ROCHESTER CAS AND ELECTRIC CORPORATION Statement Of ChangeS in FinanCial POSitiOn tThousands)

Working capital was provided by: 1974 1973 1972 1971 1970 Net income . $ 20,543 $ 24,306 $ 19,95 I $ 18,009 $ 19,005 Non-working capital items Provision for depreciation and amortization of utilityplant including amounts charged to other accounts. 19,495 21,643 20,173 20,292 16,185 Deferred fuel cost (Note 2) (3,737)

Deferred income taxes (Note 3). 4,277 915 (4) (628) 1,400 Allowance for funds used during construction. (1,741) (447) (456) (379) (2,867)

Total from operations 38,837 46,417 39,664 37,294 33,723 Financing Proceeds of short term loans (net) 21,000 10,500 5,000 Sale of first mortgage bonds. 30,000 30,000 Sale of common stock 494 19,726 15,095 Nuclear fuel contract ending in 1974. 11,159 51,494 19,726 15,095 10,500 46,159

$ 90,331 $ 66,143 $ 54,759 $ 47,794 $ 79,882 Working capital was used for:

Utilityplant Plant additions less allowance for funds used during construction.. $ 50,931 $ 34,181 $ 25,618 $ 25,654 $ 27,848 Nuclear fuel . 5,240 3,195 6,876 7,478 14,385 56,171 37,376 32,494 33I132 42,233 Preferred stock dividends. 3,550 3,550 3,550 3,550 3,550 Common stock dividends 11,614 9,922 8,751 8,267 8,026 First mortgage bond maturities 15,000 Payment of short term loans (net). 18,000 3,500 Nuclear fuel contractual amounts due within one year.......... 2,145 3,542 3,037 2,435 Capital stock expense 75 925 284 18 22 Net changes in working capital and other accounts (exclusive of notes payable) . 18,921 (5,775) 2,638 (210) 8,616

$ 90,331 $ 66,143 $ 54,759 $ 47,794 $ 79,882

Report of Independent Accountants Notes to Financial Statements PRICE WATERHOUSE & CO. Note 1. Summary of Accounting Policies To the Shareholders and Board of Directors of General The Company is subject to regulation by the Public Rochester Gas and Electric Corporation Service Commission of the State of New York (PSC) with respect to its rates for service and the maintenance of its accounting records. The Company's accounting policies We have examined the balance sheets of conform to generally accepted accounting principles Rochester Gas and Electric Corporation at 's applied to New York State public utilities giving effect to December 31, 1970-1974, and the related the rate making and accounting practices and statements of income and retained earnings policies'f the PSC. A description of the Company's principal and of changes in financial position for the accounting policies follows.

years then ended. Our examinations were made in accordance with generally accepted UtilityPlant and Depreciation The cost of additions to utility auditing standards and accordingly included plant and replacement of retirement units of property is such tests of the accounting records and capitalized. Cost includes labor, material, and similar items such other auditing procedures as we con- as well as indirect charges for engineering, supervision, sidered necessary in the circumstances. etc. The Company capitalizes an allowance for funds used during construction approximately equivalent to the cost Effective January1974, the Company, in of capital devoted to plant under construction. Replacement conformance with accounting policy pre- of minor items of property is included in maintenance scribed by the Public Service Commission of expenses. Costs of depreciable units of plant retired are the State of New York, changed its method eliminated from utilityplant accounts, and such costs, of accounting for fuel costs recoverable from plus removal expenses, less salvage, are charged to accumu-customers under the fuel adjustment lated depreciation and amortization.

clauses in the Company's tariffs. In 1972, the Company changed from a fiscal month Depreciation in the financial statements is provided on a basis to a calendar month basis'for purposes straight-line basis at rates based on the estimated useful of recording revenue and major expenses. lives of property, which have resulted in aggregat'e provi-The changes and their effect are described in sions in the years1970 through 1974 of approximately Note 2 to the financial statements. 2.8 percent per annum, of average depreciable property.

In our opinion, the accompanying financial Amortization of nuclear fuel assemblies is charged to statements examined by us present fairly operating expense each month based upon the thermal out-the financial position of Rochester Gas and put of the reactor and the total book cost of the fuel load.

Electric Corporation at December 31, Rates and Revenue Revenue is recorded on the basis of 1970-1974, the results of its operations and meters read during the calendar year.

the changes in financial position for the years then ended, in conformity with gener- Tariffs for electric and steam service include fuel cost ally accepted accounting principles adjustment clauses which serve to adjust electric and steam consistently applied, except for the changes, rates from time to time to reflect changes in the average with which we concur, referred to in the cost of fuels used in electric and steam generation from the preceding paragraph. average cost of such fuels during the base period. Tariffs for gas service contain a comparable clause to adjust gas rates for changes in the price of purchased natural gas.

Deferred Charges, Credits and Capital Stock Expense Discount, premium and expense on debt outstanding are being 1900 Lincoln First Tower amortized ratably over the remaining lives of the respective Rochester, New York issues. No provision has been made for amortization of February14, 1975 capital stock expense.

Federal Income Tax. Depreciation is provided for tax share are based on the weighted average number of shares purposes on the basis'of the Class Life System for property outstanding at the time dividends are paid, adjusted for placed in service before January1,1971, and the Class stock dividends.

Life Asset Depreciation Range System (ADR) for property Investment in Subsidiary Company As prescribed by the PSC placed in service after December 31,1970, utilizing the Company has recorded its subsidiary Canadea Power accelerated depreciation for all qualifying property. For tax Corporation on an equity basis as of January1, 1974. Prior purposes the Company also deducts currently the cost of years'inancial statements have not been restated due to removal of retired assets as allowed under the ADR system.

the immaterial effect on prior years. The effect of the change The Company follows a policy of flowing through the on 1974 net income and earnings per share is not significant.

current tax reduction arising from using the Class Life System and from accelerated depreciation. However, as recom-mended by the PSC, normalized tax accounting is followed Note 2. Changes in Method of Accounting in the application of straight-line depreciation methods The Company's tariffs for electric and steam services include used under the ADR system, and cost of removal deductions a fuel cost adjustment clause under which electric and is normalized over a five-year period. Investment tax credits steam rates are adjusted to reflect changes in the average are applied to reduce current tax provisions. The PSC adopted costs of fuels. There is a lag of two months from the time amendments to its Uniform System of Accounts, effective the average cost of fuel is determined to the application of January1,1973, requiring the allocation of the investment tax the fuel cost adjustment rates to customer bills. In 1974, credit between Operating Income and Other Income the Company began to defer a portion of the increased costs and Deductions. In 1973 and 1974, 50 percent of the credit to the month in which the resultant revenues were is allocated to Other Income and Deductions. recorded in order to achieve a better matching of fuel costs and fuel cost adjustment revenues. As a result of Normalized accounting is also being followed for the this accounting change, fuel costs included in operating difference in the tax and book treatment of nuclear fuel and expenses reported for 1974 were decreased by $ 3.7 million for deferred fuel cost. and net income for the year, after appropriate tax Pension Plan The Company's retirement plan is non- accruals, was increased by $ 1.9 million (20( per share). The contributory and covers all regular employees. Retirement cumulative effect of the change on retained earnings at plan benefits are provided for by payments made to an the beginning of 1974 would have been immaterial.

insurance company, to trust funds with banks, and by volun-Authorization for the change was received from the PSC tary payments made directly to retired employees. Current during 1974. Also in 1974, the PSC adopted a standard service costs are funded annually. Prior service costs electric fuel cost adjustment (FCA) clause and, in a statement under the funded portion of the Plan are being amortized of policy, provided that during rate proceedings as much of and funded over a period of about 30 years.

the fuel costs as is practical should be included in base tariff Payments for the years 1970 through 1974 of $ 3.1 million, rates. In several rate proceedings involving other New York

$ 3.4 million, $ 3.8 million, $ 4.1 million and $ 3.9 million, utilities the PSC permitted the recovery of all fuel costs respectively, have been made to the funded retirement plan. deferred either through the normal operation of the FCA or Voluntary payments to retired employees in each of those amortization of that portion of fuel costs deferred not years were approximately $ 1.6 million. Based upon the val- recoverable through the normal operations of the FCA uation report furnished to the Company by the independent clause. Those proceedings included situations in which the actuary for the Plan, the unfunded liabilityof the Plan was FCA billing lag was shortened between the period fuel approximately $ 60 million at December 31, 1974. The costs were incurred and recovered in revenues or when a actuarially computed value of vested benefits as of that date portion of the higher fuel costs was included in the base exceeds the assets in the Plan by approximately $ 11 million. tariff rates. Accordingly, the Company believes that the PSC The Pension Reform Act of 1974 will make it necessary will permit it to recover fuel costs deferred in the manner for the Company to amend its pension plan in order to described above, if and when such changes are requested conform to the Reform Act. It is management's intention to or ordered.

make further amendments to the Plan to minimize changes in pension costs so that there will be no significant effect on net income.

Earnings and Dividends Per Share Earnings applicable to each share of common stock are based on the weighted average number of shares outstanding during the respective years, adjusted for stock dividends. Cash dividends per 18

During 1972 the Company converted from a fiscal month income to january1,1972 and is shown as a separate item basis to a calendar month basis for purposes of closing in the Statement of Income. The remaining four cents a share revenue and major expenses on the same date in order to is included in income from operations. Pro forma amounts more nearly match revenue with expense. The effect of of net income and earnings per share which would reflect the this change on net income for1972 is13 cents a share effect of a retroactive application of the change are not of common stock. Of this amount $ 0.7 million or nine presented due to the immaterial effect of the change on cents a share is the cumulative nonrecurring effect on net prior periods.

Note 3. Federal Income Tax Provision The following is a reconciliation for the years 1970 through1974 of the difference between the amount of Federal income tax expense reported in the Statement of Income and the amount computed by multiplying the income before tax by the statutory tax rate.

1974 1973 1972 1971 1970

'/o of 'lo of '/o of lo of '/o of Pretax Pretax Pretax Pretax Pretax Amount Income Amount Income Amount Income Amount Income Amount Income Net income $ 20,543 $ 24,306 $ 19,951 $ 18,009 $ 19,005 Federal income tax Current (3,126) 6,724 1,664 1,884 (1,506)

Deferred . 4,277 915 (4) (628) 1,400 Charged to operating expense. 1,151 7,639 1,660 1,256 (106)

Included in other income..... (792) (418) 21 Tax effect on calendar year1972 of recording 4 additional days revenue and expense....... 651 Actual Federal income tax expense. 359 7 221 2.332 1,256 (106)

Income before tax............... $ 20,902 $ 31,527 $ 22,283 $ 19,265 $ 18,899 Computed tax expense........... $ 10,032 48.0 $ 15,133 48.0 $ 10,696 48.0 $ 9,247 48.0 $ 9,298 49.2 Increases (reductions) in tax resulting from:

Excess of tax depreciation less amount deferred......... (4,496) (21.5) (4,430) (14.1) (4I961 ) (22 3) (5r208) (27 1 ) (4,748) (25.1)

Expenses capitalized for financial statements......... (2,121) (10.2) (1,374) (4.4) (1,218) (5.5) (1,097) (5.7) (2r 755) (14.6)

Investment tax credit........... (1,320) (6.3) (890) (2.8) (1,650) (7.4) (864) (4.5) (750) (4.0)

Property taxes on basis of dateoftaxablestatus......... (1,152) (5.5) (527) (1.7) (384) (1.7) (720) (3.7) (861) (4.6)

Cost of removal, less net amount deferred ...... ~..... (312) (1.5) (204) (6) (101) (.4)

Miscellaneous items, net........ (272) (1.3) (487) (1.5) (50) (.2) (102) (.5) (290) (1.5)

Actual Federal income tax expense.$ 359 1.7 $ 7,221 22.9 $ 2,332 10.5 $ 1,256 6.5 $ (106) (.6)

A summary of the amounts deferred or credited to income for the years 1970 through 1974 is as follows:

1974 1973 1972 1971 1970 Investment tax credit........... $ (700) $ (700) $ 1,400 Class life depreciation.......... $ 640 $ 600 295 72 Excess fuel costs............... 1,794 Nuclear fuel 1,615 Cost of removal-current year.... 432 415 401 deferred in prior years ......... (204) (100)

$ 4,277 $ 915 $ (4) $ (628) $ 1,400 19

NOte 4. CapitaliZatiOn (rhousands of Dolhus) Stated Value December 31, December 31, Shares (000's)

First Mortgage Bo ndS Due 1974 1973 Outstanding, December 31, 1973.........9,156,189 $ 152,180 4s/a% Series D Sept. 1, 1977........ $ 6,000 $ 6,000 3% Stock Dividend. 274,690 4,944 3% Series L Mar. 1, 1979........ 16,677 16,677 Employee Purchases 5,212 99 2'/4% Series M Aug. 15, 1980....... 12,000 12,000 Automatic Dividend Reinvestment Plan.. 33,299 395 3/s% Series N June 1, 1982........ 6,000 6,000 Outstanding, December 31, 1974.........9,469,390 157,618 3s/a% Series 0 Mar. 1, 1985........ 10,000 10,000 At December 31,1974, there remained 166,701 shares reserved 4r/e% Series R July 1, 1987......... 15,000 15,000 and unissued of the 200,000 shares authorized under the 5% Series S Oct. 15, 1989....... 12,000 12,000 Automatic Dividend Reinvestment Plan dated August 23, 1974.

4s/a% Series T Nov. 15, 1991....... 15,000 15,000 No other shares of common or preferred stock are reserved for officers and employees or for options, warrants, conversions, 4s/s% Series U Sept. 15, 1994........ 16,000 16,000 and other rights.

5.3% Series V May 1, 1996......... 18,000 18,000 6'/4% Series W Sept. 15, 1997....... 20,000 20,000 Note 5. Short Term Borrowing 6.7% Series X July 1, 1998......... 30,000 30,000 Under informal agreements with certain banks, the Company 8% Series Y Aug. 15, 1999....... 30,000 30,000 maintains compensating balances which average 20 percent 9s/s% Series Z Sept. 1, 2000........ 30,000 30,000 of the debt outstanding plus 10 percent of the unused line 10'/4% Series AA Aug. 1, 1983........ 30,000 of credit. Under the agreements, withdrawal of the compen-

$ 266,677 $ 236,677 sating balances is not legally restricted, and at December 31, 1974 the balances amounted to $ 5.7 million. Bank lines Sinking and improvement fund requirements aggregate

$ 333,540 per annum. Such requirements were met in each of the of credit aggregated $ 64 million and borrowings are at cur-last five years by certification of additional property and it is rent floating prime interest rates.

anticipated that the 1974 requirements will be met in the same manner. No amounts are held in sinking funds and no amounts There were $ 21 million of short term borrowings outstand-are pledged by the issuer or held by affiliates. ing at December 31, 1974. The maximum amount of aggregate short term borrowings at any month end during Capital Stock the year was $ 34 million. The approximate weighted average Preferred stock (cumulative)-Par value $ 100; 2,000,000 shares end-of-month short term borrowings outstanding during authorized: 1974 was $ 21 million; the approximate weighted average Sllafes 1974 and Series Outstanding 1973 Redemption interest rate was 10.8 percent, being the weighted average of 4% Series F....120,000 $ 1 2,000 '105 At any time the end-of-month prime rates in effect at the Company's 4.10% Series H .... 80,000 8,000 101 At any time principal bank for the periods during which short term bor-4s/a% Series I ..... 60,000 6,000 101 At any time rowings were outstanding and before giving effect to the ad-4.10% Series J..... 50,000 5,000 102.50 Atanytime ditional interest cost resulting from compensating balances.

4.95% Series K.... 60,000 6,000 102 At any time Note 6. Commitments 4.55% Series M ...100,000 10,000 102 Before 3/1/80 7.50% Series N ....200,000 20,000 108 Before 6/1/79 The Company's construction program involves an estimated 670,000 $ 67,000 expenditure of $ 78 million in 1975 and the Company has entered into certain commitments for purchase of materials Common Stock-Par value $ 5; 15,000,000 shares authorized and equipment in connection with such program.

Stated The Company has deferred construction of the Sterling Value Shares (000's) fossil plant for which it has expended approximately $ 11 mil-Outstanding, December 31, 1969... ...6,541,529 $ 95,677 lion. Part of the large environmental and site-related 3% Stock Dividend. 196,246 5,299 expenditures included in this amount can be allocated to Outstanding, December 31, 1970... ...6,737,775 100,976 the SNUPPS plant now proposed. If the fossil plant is 3% Stock Dividend. 202,134 5,458 eventually cancelled, the Company would petition the PSC Outstanding, December 31, 1971 .. ...6,939,909 106,434 for authority to amortize over a period of years, for rate 3% Stock Dividend. 208,198 5,205 making purposes, the remaining portion of the fossil plant Sale of Stock .. 767,061 14,582 expenditures which would have to be written off plus Employee Purchases 27,008 513 any equipment cancellation charges.

Outstanding, December 31, 1972... ...7,942,176 126,734 3% Stock Dividend. 238,294 5,719 Sale of Stock 950,000 19,238 Employee Purchases 25,719 489 20

RQK ROCHESTER GAS AND ELECTRIC CORPORATION Electric Department Electric Revenue (000's) 1974 1973 1972 1971 1970 Residential . $ 45,354 $ 42,125 $ 37,358 $ 34,153 $ 30,010 Commercial . 37,908 34,387 29,948 26,604 23,325 Industrial 30,858 27,597 24,096 21,751 19,780 Other 13,440 12,403 11,307 10,663 9,444 Electric revenue from our customers 127,560 116,512 102,709 93,171 82,559 Other electric utilities 14,697 21,112 14,063 16,892 10,517 Total electric revenue 142,257 137,624 116,772 110,063 93,076 Electric Expense (000's)

Fuel used in electric generation 25,739 19,461 17,293 17,932 14,080 Purchased electricity 12,070 8,841 8,049 7,017 7,209 Other operation. 32,177 28,378 25,812 23173 20,933 Maintenance 12,390 11,029 10,468 10,235 7,754 Depreciation and amortization 11,977 11,026 10,669 10,181 8,608 Taxes-local, state and other . 22,784 21,281 19,554 16,784 13,134 Electric revenue deductions 117.137 100,016 91,845 85,322 71,718 Operating Income before Federal Income Tax........... 25,120 37,608 24,927 24,741 21,358 Federal income tax. (433) 7,235 23 757 (441)

Operating Income from Electric Operations (000's)....... $ 25,553 $ 30,373 $ 24,904 $ 23,984 $ 21,799 Electric Operating Ratio '/0 . 57.9 49.2 52.8 53.0 53.7 Electric Sales-KWH (000's)

Residential . 1,456,335 1,468,376 1,422,949 1,339,847 1,260,064 Commercial 1,226,333 1,261,697 1,183,042 1,076,457 1,019,046 Industrial 1,346,116 1,424,639 1,324,442 1,216,411 1,188,567 Other 379,379 385,243 361,132 348,882 334,786 Electric sales to our customers 4,408,163 4,539,955 4,291,565 3,981,597 3,802,463 Other electric utilities 1,182,902 2,269,686 1,691,432 2,123,479 1,584,074 Total electric sales 5,591,065 6,809,641 5,982,997 6,105,076 5,386,537 Electric Customers at December 31 Residential . 244,063 241,032 236,283 232,558 227,810 Commercial . 23,827 23,436 23,147 22,712 22,283 Industrial 1,365 1,360 1,345 1,382 1,412 Other 2,316 1,995 2,043 2,039 2,015 Total electric customers 271,571 267,823 262,818 258,691 253,520 Electricity Generated and Purchased KWH (000's)

Steam 1,961,453 1,869,079 1,984,424 2,093,932 2,020,832 Nuclear . 2,079,539 3,395,564 2,356,182 2,704,993 1,975,515*

, Hydro 234,568 243,582 305,104 220,668 270,673 Cilboa-Pumped storage 131,311 57,801 Cilboa-Less energy for pumping. (192,311) (86,362)

Other... 12,806 8,776 3,933 4,190 7,209 Total generated-Net 4,227,366 5,488,440 4,649,643 5,023,783 4,274,229 Purchased . 1,836,911 1,709,420 1,734,901 1,481,759 1,443,652 Total electric energy 6,064,277 7,'I97,Q60 6,384,544 6,505,542 5,7 I 7,QQ I Electric Production Costs (000's)

Steam generation $ 30,1 30 $ 17,951 $ 16,252 $ 16,298 $ 14,502 Nuclear generation 8,276 10,365 9,271 10,172 5,663 Hydro generation . 1,073 1,072 850 806 741 Other generation 1,006 123 65 65 78 Electric Department Fuel Fossil -Total BTU (million) . 20,911,993 20,331,338 21,315,214 22,698,446 21,667,624

-Cents per million BTU . 117.05 62.12 56.77 53.51 47.45 Nuclear-Total BTU (million) . 22,909,968 36,683,359 25,670,477 29,024,371 15,709,329

-Cents per million BTU 11.28 18.62 20.23 19.93 16.54 System Net Capability-KW at December 31 Steam 452,000 457,000 457,000 457,000 460,000 Nuclear . 470,000 420,000 420,000 420,000 420,000 Hydro 47,000 53,100 53,100 53,100 53,100 Other .. 29,000 42,500 42,500 42,500 42,500 Purchased .. 347,000 352,000 207,000 212,000 216,750 Total system net capability 1,345,000 1,324,600 1,179,600 1,184,600 1,192,350

.Net Peak Load-KW . 880,000 922,000 855,000 790,000 762,000 Annual Load Factor-N et 63.3 61.0 62.5 63.3 61.9

'Excludes 195,859,000 KWH of test period generation

RQK ROCHESTER GAS AND ELECTRIC CORPORATION Gas Department Gas Revenue (000's) 1974 1973 1972 1971 1970 Residential . $ 3,809 $ 3,627 $ 3,754 $ 3,638 $ 3,650 Residential spaceheating. 47,758 40,453 41,228 36,564 34,135 Commercial 12,533 10,433 10,527 8,954 8,207 Industrial 8,583 7,648 7,590 6,507 5,898 Municipal and other 2,780 2,472 2,766 2,399 2,115 Total gas revenue 75,463 64,633 65,865 58,062 54,005 Gas Expense (000's)

Purchased natural gas for resale 36,504 29,314 30,251 25,954 22,839 Other operation 12,330 12,029 11,543 10,804 10,738 Maintenance 4,757 4,043 3,677 3,049 2,793 Depreciation 3,978 3,615 3,439 3,521 3,510 Taxes-local, state and other . 7,937 7,281 7,036 6,141 5,409 Gas revenue deductions 65,506 56,282 55,946 49,469 45,289 Operating Income before Federal Income Tax................ 9,957 8,351 9,919 8,593 8,716 Federal income tax. 1,221 840 1,787 799 977 Operating Income from Gas Operations (000's)............... $ 8,736 $ 7,511 $ 8,132 $ 7,794 $ 7,739 Gas Operating Ratio % 71.0 70.2 69.0 68.6 67.3 Gas Sales-Therms (000's)

Residential .. 14,903 15,141 16,345 16,976 17,375 Residential spaceheating 263,290 245,368 267,862 253,856 245,242 Commercial . 84,872 79,039 84,759 77,348 73,827 Industrial 73,926 78,137 80,869 75,461 72,611 Municipal 16,696 17,148 19,628 18,267 16,439 Total gas sales 453,687 434,833 469,463 441,908 425,494 Gas Customers at December 31 Residential .. 42,884 45,958 48,086 50,283 52,101 Residential spaceheating 151,154 144,847 140,065 135,578 131,450 Commercial . 11,478 11,303 11,178 10,988 10,677 Industrial . 767 762 774 784 803 Municipal 1,024 865 922 945 999 Totai gas customers 207,307 203,735 201,025 198,578 196,030 Gas-Therms (000's)

Purchased for reforming and mixing. 31,518 30,834 39,819 36,294 Purchased for resale 438,494 422,718 454,723 420,244 399,629 Other .. 7,063 6,535 6.17'7,997 8,041 7,058 7 171 Total gas available 477,075 460,087 502,583 465,299 443,094 Cost of gas per therm 7.77II 6.530 5.704 5.33'otal Daily Capacity-Therms at December 31 Mixed gas 410,844 410,844 549,244 549,244 655,499 Straight natural gas 3,871,448 3,762,672 3,696,624 3,690,232 3,668,700 Total daily capacity 4,282,292 4,173,516 4,245,868 4,239,476 4,324,199 Maximum daily sendout-Therms. 3,192,631 2,985,392 3,211,192 3,368,476 3,096,020 Degree Days (Customer Silling)

For the period 6,808 5,883 6,886 7,017 6,841 Percent (warmer) colder than normal 1.3 (12.2) 2.3 4.2 1.6, 22

PK~K RocHE$ TER GAS AND ELEcTRlc coRPQRATIQN Steam Department Steam Revenue (000's) 1974 1973 1972 1971 1970 Commercial $ 5,419 $ 3,668 $ 3,565 $ 3,067 $ 2,350 Industrial . 9,396 5,470 4,878 4,076 3,057 Municipal and other . 1,506 876 756 611 477 Total steam revenue 16,321 10,014 9,199 7,754 5,884 Steam Expense (000's)

Fuel used in steam generation. 10,954 6,151 4,686 3,994 3 322 Other operation. 687 1,201 1,634 1I317 1,101 Maintenance 819 816 727 759 713 Depreciation .. 536 504 457 404 388 Taxes-local, state and other 1,689 1,431 1,295 1,099 918

'team revenue deductions 14,685 10,103 8,799 7,573 6,442 Operating Income before Federal Income Tax................ 1,636 (89) 400 181 (558)

Federal income tax. 363 (436) (150) (300) (642)

Operating Income from Steam Operations (000's) .. $ 1,273 $ 347 $ SS0 $ 481 $ 84 Steam Operating Ratio '/0 76.3 81.6 76.6 78.3 87.3 Steam Sales-Lbs. (000's)

Commercial 1 I1 60I1 22 1 268 91 7 1,468,889 1,433,708 1,429,574 Industrial .. ~ 2~1 27 837 2r1 36I794 2,292,755 2,212,644 2,1 74,853 Municipal . 334,463 318,323 328,935 299,992 313,151 Total steam sales 3,622,422 3,724,034 4,090,579 3,946,344 3,917,578 Steam Customers at December 31 Commercial 292 302 317 327 351 Industrial .. 78 78 81 78 82 Municipal . 31 30 26 28 30 Total steam customers 401 410 424 433 463 Steam-lbs. (000's)

Produced by steam department 1,532,246 1,442,472 1,818,908 1,689,830 1,527,404 By-product steam from electric department................ 2,588,120 2,613,321 2,689,115 2,531,987 2,818,008 Total steam produced 4,120,366 4,055,793 4,508,023 4,221,817 4,345,412'team Department Fuel Total BTU (million) 6,807,500 6,849,830 7,138,004 7,071,818 6,912,430 Cents per million BTU . 196.31 89.80 65.64 ~ 56.47 48.05 23

Directors Keith W. Amish 6 Francis E. Drake 11 A.J. McMullen Executive Vice President, of thc Board Jr.'hairman Chairman of the Board and Rochester Cas and Electric Corporation and Chief Executive Officer, Chic/ Executive Officer, Rochester Gas and Electric Corporation Garlock Inc.

2 Paul W.

Briggs'resident, 7 J. Wallace Ely't 12 PaulA. Miller Rochester Cas and Electric Corporation Chairman o/ thc Board, President, Security Ncw york State Corporation Rochester Institute of Technology 3 John D. Cockcro(t't Former Chairman o/ the Board, 0 Walter A. Fallon 13 Edward J. Nelson'ormer The R. T. French Company President and Chic/ Executive Officer, President, Eastman Kodak Company Rochester Cas and Electric Corporation 4 wilmot R. craig former Chairman o/ thc Board, 9 Ernest J. Howe't 14 William S. Vaughn*t Lincoln First Banks Inc. Chairman of the Executive and former Chairman of the Board, Finance Committee, Eastman Kodak Company 5 E.Kent Damon Rochester Gas and Electric Corporation Vice President, Treasurer and Secretary, 13 William G.vongerg Xerox Corporation 10 Daniel G. Kennedy't President, Partner, Sybron Corporation Nixon, Hargrave, Devans 4 Doyle

'Member of ihc Executive and Finance Committee of the Company tMember of ihc Audit Committee of the Board of t3lreetors

", h na 12 14 1

13 15

Officers Francis E. Drake, Jr.

Chairman oi the Board and Chief Executive Officer Paul W. Briggs President Keith W. Amish Executive Vice President Donald R. MacCollum Senior Vice President, Gas, Transportation and Fuels Research Robert W. Baschnagel Vice President, Marketing, Corporate Communications and Purchasing Granger E. Green Vice President, Electric Transmission, Distribution and Utilization John L. Kennedy Vice President, Rates and Governmental Ailairs Albert J. Klemmer Vice President, Customer Services Robert R. Koprowski Vice President, Engineering and Construction John E. Maier Vice President, Employee Relations Harry G.Saddock Vice President, Electric System Planning and Operation Elvin A. Skibinski Vice President, Gas and Transportation Leon D. White, Jr.

Vice President, Electric and Steam Production Dean W. Caple Secretary and Treasurer Francis A. Sullivan, Jr.

Controller Robert W. Ball Assistant Treasurer David C. Heiligman Assistant Secretary Stephen Kowba Assistant Controller John M. Kuebel Auditor

Rochester Gas and Electric Corporation 89 East Avenue Rochester, New York 14649

Rochester Gas and Electric Corporation Annual Report 1969 lP Contents gQf~ Letter from the Chairman 2 StrePig(/y el')O~ Highlights 3 Earnings and Dividends 4 Expense 6 Rate Filing 6 System Development 8 Sales and Marketing 10 Electric Operations 12 Gas Operations 16 Employee Development 16 Management 18 Income and Earned Surplus 20 Financial Condition 22 Long Term Debt 24 Capital Stock 24 Oswego Accountants Opinion 25.

LAKE ONTARIO Statistics for Analysts 26 OINNA NVCLSAR PLANT ochester ORL S Cover A schematic cross-section of the D D nuclear reactor at Ginna Station Socket wokxrkk I WAYNE I CAYLIGA I symbolizes the carefully controlled and constructive release of energy which is the very foundation of I our business.

GENE E / MONROE L

Service Area Over 820,000 people live in the 2,300 square mile area served by A\tnrrn Rochester Gas and Electric L Corporation. The region is widely ONTARIO Cteetrrerste Orrerre ttke known for its progressive businesses Skteeelern 4ke 4ke and prime residential and rt Certrt recreattonal areas

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PENNSYLVANIA This report is prepared for the information of security holders. analysts. employees and other interested persons. It is not transmitted in connection with the sale of any security or offer to sell or offer to buy any security.

To Shareholders that our shareholders favor this already under contract. The I look forward each year to this stock dividend policy and we plan production costs of power at this opportunity to discuss with the to continue it. plant will be very favorable but it Company's shareholders and friends Consistent improvements in may take some time until the my personal appraisal of "The State operating efficiency. brought about impact of all the additional expenses of the Corporation." This annual by technological innovations of this large unit will be fully offset report contains ample statistical suggested and initiated by our by the anticipated revenues.

information to enable you to make employees, have enabled us to keep Several management changes were your own judgment and I urge you our operating expenses under made during the year to bring to study the progress charted by control. In spite of strong inflationary younger men into greater areas of these figures. pressures, we have successfully responsibility and broaden their Energy sales for 1969 exceeded absorbed rapidly escalating costs knowleage of total Company those of 1968 by substantial without any increase in the rates operations.

amounts, resulting in a revenue charged our customers from 1958 We are ending one decade of increase of seven percent, nearly through 1969. In fact, during the growth and beginning a new one.

nine million dollars above the 1960's we reduced gas and electric There will be many problems for the previous year. This is the greatest rates on several occasions. If the Company to resolve during the dollar increase in the history of the Company is to continue to grow and 1970's but problems are the Company. At the same time, its securities are to attract you and hallmark of growth and we expenses charged to income other investors, an increase in rates welcome them.

increased $ 6.4 million with local, is now required. We have recently state and other taxes accounting for applied to the Public Service Sincerely,

$ 2.6 million and fuel costs $ 3.8 million. Total payroll increased S3.2 million and $ 1.9 million of this amount was included in operating Commission for authority to increase steam rates by $ 1.1 million. An electric rate filing, calling for an increase of approximately 15

~c E'i~P Chairman of the Board and Chief Executive Officer expense. Federal income taxes were percent. is being prepared and will sharply reduced, primarily due to be filed in the near future.

these increased expenses plus higher- The Ginna nuclear electric interest charges. generating station produced its first Earnings per share of common electricity at the close of 1969 and, stock were $ 2.45 compared with during tests, reached full load in

$ 2.30 for 1968, based upon the March 1970. This plant is a major shares outstanding at the close of asset both in terms of economical I

1969. There has been a steady operation and environmental increase in earnings per share protection. It is a valuable element in 1

during the decade of the sixties, and the interconnected power systems of in July, the annual cash dividend was New York State and of the increased from $ 1.10 to the present Northeast. The nuclear station will rate of $ 1.20. This is the sixth eliminate air pollution problems increase in the dividend rate since associated with conventional coal or the Company's stock became oil-fired plants. Extensive ecological publicly owned in 1949. In addition, studies together with continual the Company paid its eleventh monitoring will assure that no consecutive stock dividend in adverse effect on marine life will February 1970. The stock dividend result from the station's policy has provided the shareholder water discharge.

with an increased investment in the The Ginna station nearly doubles Company that is marketable, at his the generating capacity of the option, with minimum tax Company's electric system but our consequences to him. We believe surplus generating capacity is

Highlights Increase over 1969 1968 'N Increase Earnings per share On shares at December 31, 1969. 2.45 S .15 6.5 On shares after February 1970 stock dividend... 2.38 S .15 6.7 Cash dividends paid on common stock (000's) .. $ 7,470 S 535 7.7 Stock dividends capitalized (000's) . $ 6,097 $ 918 17.7 Revenues (000's) . $ 131,791 S 8,866 7.2 Customers. 444,068 7,754 1.8 Electricity sold (MWH) . 3,579,443 298.850 9.1 Gas sold (Therms) . 403,023,901 28.749,920 7.7 Fuels, electricity and gas purchased (000's) .. $ 38,106 S 3,760 10.9 Payroll and employee benefits (000's) $ 34,250 S 3,200 10.3 Employees 2,605 40 1.6 Taxes-other than Federal income (000's) .. $ 19,364 S 2,969 1 8.1 Interest on bonds and notes (000's) $ 11.1 35 S 1,842 19.8

Earnings and Dividends series of preferred stock during 1969 Years of research and planning come represent a non-taxable return of close to fruition as the final preparations Nineteen sixty-nine was another are made prior to receiving theinternal year of growth, with per share capital and should not be included as components of the nuclear reactor at earnings showing an increase for the dividend income for Federal income Ginna Station.

ninth consecutive year. Earnings per tax purposes.

share of common stock for the year were $ 2.45, a 6.5 percent increase Revenue The largest annual increase over the $ 2.30 attained in 1968. in revenue in the Company's history Both earnings figures are based on occurred in 1969. Gross revenue for the 6,541,529 shares of common the year was $ 131.7 million, an stock that were outstanding at increase of S8.8 million or seven the end of 1969. percent over 1968. This growth reflects the sound economic climate Dividends Reflecting the increase in in the 2,300 square mile territory we earnings, the Board of Directors serve. Industrial production in the increased the annual cash dividend Rochester area increased eight rate at its meeting on June 18. percent during 1969. This is nearly Beginning with the payment on double the national average and is July 25, 1969, the quarterly dividend characteristic of Rochester, an was increased to 30c per share, or address that is "home" to many

$ 1.20 on an annual basis, compared diversified and growing industries LOCAL. STATE AND OTHER TAXES with the previous rate of $ 1.10. delivering thousands of different MJWON4 The eleventh consecutive common types of precision goods to 418 stock dividend was paid on world-wide markets. Through February 16, 1970 at a rate of three aggressive marketing efforts, the 16 percent. This is in keeping with our Company has been able to attract 14 established policy of an annual and serve this growth with stock dividend in addition to the ever-expanding amounts of energy. 12 regular quarterly cash dividends. The sale of electricity accounted 10 We believe the payment of these for $ 5.5 million of the year's gain in annual stock dividends is revenue. While this represents an 8 advantageous to both the shareholder advance of eight percent in electric and to the Company. When the revenue, the related kilowatt hours LI U shareholder retains the stock delivered to our customers increased 1960 61 62 63 64 65 66 67 68 dividend, he owns a steadily by nine percent, a record growth for increasing number of shares in the a one year period. The largest Company. Should he sell the stock percentage increase in kilowatt 10 YEAR COMPARISON I INTEREST ON LONG TERM DEBT dividend to supplement the cash hours was 10.1 attained in the dividends he has received, he will be commercial sector, followed by subject to only a capital-gains tax. increases in the residential and $ 10 The stock dividend policy has industrial areas of 9.4 and 6.8 enabled the Company to use a percent, respectively.

substantial part of its earnings for Gas sales showed an increase of construction expenditures. $ 3.1 million for the year or seven Consequently the Company has not percent more than 1968. Measured 6 had to sell any additional shares of in therms of gas consumed, )

5 common stock in the past 11 years. industrial customers increased their 4

The Company estimates that 100 consumption by 17 percent, percent of the cash dividends paid on commercial sales were up 12 LI U LI LI LI LI the common stock and 14 percent of percent, and residential usage rt n n n the dividends paid on the outstanding accounted for a four percent increase. 1960 61 62 63 64 65 68 67 68

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The modest residential increase Expenses are reduced by the credit Electric load dispatchers sit at a vital reflects the tightened single unit for interest charged to construction center of activtty, coordinating all power flowsin our system andinterchanging residential building market during amounting to $ 5 million in 1969. an electricity with other members of the the year. increase of $ 1.6 million over last New York Power Pool.

Steam revenue for 1969 was $ 5.5 year. This large credit reflects the million, an increase of five percent continuing investment in the Ginna over the previous year. nuclear plant.

Expense Rate Filing Operating expenses of S77.3 The Company has made application million for the year were nearly nine for an increase in steam rates and is percent or S6.3 million more than in the process of filing for an electric the previous year. Steam and electric rate increase. The steam rate filing fuels plus electricity purchased was made with the Public Service amounted to $ 17.4 million or $ 1.8 Commission on March 16, 1970, million more than last year. Natural requesting an increase of gas purchased for resale and approximately $ 1.1 million on an Company use cost $ 20.7 million, an annual basis. A petition for a 15 increase of $ 2.0 million for the year. percent increase in electric rates will Payroll and employee benefits in be presented to the Public Service COST OF ELECTRICITY Vs COST OF LIVING 1969 totaled more than $ 34 million, Commission in the very near future. Index (1957-59~1 00) an increase of $ 3.2 million for the We have also notified the City of year. Operating expenses include Rochester that we will seek higher

$ 1.9 million of this payroll increase street lighting rates after June 30, and the balance is included under 1970, when their contract expires.

Cost of Uving construction costs as part of capital. The necessity for these increases 110 The provision for depreciation has been reviewed in great depth, during the year totaled $ 10.9 and we regard them as absolutely million of which $ 10.5 million was essential. Our ability to attract new Cost of Electdcity charged against income. capital, thereby enabling us to The magnitude of the Company's provide the type of service our tax bill can be appreciated when it is customers require, could be impaired realized that RGandE pays over ten if the requested increases are 70 percent of all of the real property and not granted. 1960 et e2 63 es ee 66 67 66 69 school taxes levied in the City of The last time that Company rates Rochester. Local, State and other were increased was in 1958.

taxes totaled more than $ 19.3 Through technological improvements COST OF GAS VS COST OF LIVING Index (1957-59~1 00) million in 1969, an increase of $ 3.0 and the economies inherent in a million or 18.1 percent during the growing volume of business, we year. The charge to income for these have actually made several rate taxes was $ 17.6 million, a 17 reductions since that time. Now the 120 percent increase or $ 2.6 million eroding effects of inflation have Cost of Living greater than for 1968. caught up with us. 110 Interest charges on long term Over the last six years, the cost of debt and short term notes amounted. construction has skyrocketed. Labor to $ 11.1 million. These charges and material costs have advanced Cost of Gss increased $ 1.8 million over the 1968 to unprecedented highs. New figure because of significantly higher standards for reliability and interest rates coupled with the environmental protection have been additional capital funds required for a developed. and these considerations 70 heavy construction program. have a significant effect on capital 1960 61 62 62 64 65 66 67 68 69

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requirements. We have watched plants. Steam mains were installed Station 8 to use gas instead of coal interest rates grow from a and relocated to permit new as fuel. This steam station is in the pre-World War II average of slightly building and highway construction heart of downtown Rochester and over three percent to the present in downtown Rochester. the Company has voluntarily prime rate level of 8.5 percent. Common utility plant additions undertaken the conversion in the Taxes have continued their totaled one million dollars. The interest of a cleaner city. The project unrelenting rise. major expenditures covered additions will benefit the environment and In the face of these conditions we to and replacement of construction improve operating conditions. Steam are seeking rate increases to keep equipment to maintain the Company's construction costs are forecast to be the Company financially strong and extensive electric. gas and steam one million dollars for the year.

to protect the interest of our systems. Storage areas were Common utility plant projects shareholders. enlarged and other improvements during 1970 will require $ 1.6 made at the Operations Center. million. The major costs will be for System Development the replacement of heavy duty and Utility plant investment at the end 1g7O Construction Forecast The special purpose transportation of 1969 was $ 522 million, including proposed 1970 construction will equipment used by the Company to

$ 46 million of new construction involve an estimated $ 36 million. maintain the vast networks of added during the year. Our This forecast includes $ 12 million electric, gas and steam facilities.

investment in plant at the beginning for work, on projects previously of 1960 was $ 259 million so that authorized. New projects proposed Financing The $ 8.3 million the Company has doubled during the in the forecast will require $ 24 outstanding Series J 3/4/0 bonds were decade of the sixties. The net million in 1970. redeemed at maturity on March 1, additions of $ 263 million during this Electric construction is forecast 1969. An issue of $ 20 million of period reflect the substantial to cost $ 25.2 million, including 7.50/0 preferred stock was growth of the Company and of its final payments on the Ginna Station privately sold in the spring. In customers. construction contract. During the August, the Company sold $ 30 peak construction years of Ginna million of 8/0 first mortgage Series Y 1969 Construction The cost of Station, transmission and distribution bonds due in 1999. The proceeds of electric construction during the year additions were kept at a minimum the preferred stock and bond issues was $ 37.4 million. Ginna nuclear level. The 1970 forecast provides for were used to redeem outstanding station was nearly completed and major emphasis on building up short term loans and to pay for approximately 95 percent of the transmission and distribution additional construction costs. The station's construction had been paid facilities to meet increasing load balance of 1969 construction costs for. Two 18,000 kilowatt gas turbine requirements and to maintain the was supplied by the issuance of generating units have been installed Company's adequate reserves for short term notes, and $ 6.0 million at two steam stations and these units emergency conditions. of these loans were outstanding at will add to the capacity and The gas department will require December 31.

reliability of our electric system. $ 8.3 million for system Approximately $ 17 million of the The installation of additional gas improvements during the year. $ 36 million required for 1970 distribution mains, service laterals, Unusually heavy load growth in an construction projects will be provided meters and regulators involved S7.2 area southeast of the city will from internal sources. Additional million. This construction provided require first phase construction of 20 construction funds will be provided gas service to new customers and miles of new 24 inch high pressure from short term notes until increased the capacity of the system gas main as a primary feeder to link permanent financing is undertaken.

to supply the expanding requirements two major connections with our gas The outstanding S15 million of of existing customers. supplier. Additional projects will Series K 3s/80/o bonds matured Major projects of the $ 600,000 provide facilities to supply increased steam construction program in 1969 gas use.

included completion of a new steam The major steam department Distillation Products Industries. a division of Eastman Kodak, depicts borh the boiler installation and other project during 1970 will be stability and the excitement thetis improvements at steam system conversion of the boilers at characteristic of Rochesterindustry.

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March 1, 1970, and were redeemed. 3.7 percent for New York State school, the University of Rochester No other Company bonds are and 3.5 percent for the nation. has started construction on a new scheduled to mature until 1977. $ 50,000,000 hospital. Highland, Area Development A prime objective Genesee, St. Mary's and Rochester The Years Ahoad The preliminary of the Company's area development General hospitals are completing forecast of construction costs for the activities is to help all communities expansion programs. Construction five years 1970-1974 is $ 192 in our territory grow, and to grow in of the new Park-Ridge Hospital in million and the major emphasis an orderly fashion. To reach this suburban Greece is planned for during the period will be on electric objective, our personnel offer 1970.

and gas transmission and distribution assistance in all phases of planning systems. We believe that the growth and development. Housing Following the national of business in the Rochester area Industrial growth in the Rochester trend, new single home building will continue at a high level, area is particularly strong. The rapid declined markedly during the year, although it may not be as industrial expansion of our service but apartment construction was still exceptional as the growth area is evidenced by the fact that 44 very active.

experienced during the sixties. The companies expanded plant facilities There were 2,238 new homes and Company must continue the during 1969. In addition, 13 new 3,062 new apartment units added in expansion of its electric, gas and industries located all or a portion of the Rochester area during 1969. We steam systems if it is to attract and their operations in our territory. can estimate that each new home serve the continuing growth in its In recent years, many small, will add $ 450 of annual revenue, of franchise area. However, no major highly technical industries have been which $ 265 is derived from the sale generating plant expansion is established here. They, together of gas and $ 185 from electricity.

planned during this five year period. with nationally known, well For new apartments, the figure A forecast of external financing established industries such as approximates $ 250 per year from that will be required during this five Eastman Kodak, Xerox, General each unit, in combined revenue.

year period will be delayed until the Motors, Bausch 8i Lomb and Thus, new housing units added current rate proceedings have been Sybron, continue to stimulate more than $ 1.7 million to our concluded and we have a more the economic climate. revenues during the year.

accurate picture of internal funds that The demand for addition'al retail may be available for construction. facilities in the area continues. consumor Interests One of the McCurdy 8i Company is expanding primary concerns of sales and Sales and IVlarketing its Long Ridge shopping center in marketing has been to assist our It was a good year for sales. suburban Greece. Groundbreaking customers in making an intelligent Although 1969 was not a record ceremonies have been held in choice among products and services, year for new sales of steam, gas and Victor, south of Rochester, for the thus helping them to attain electricity, new business secured Eastview Mall. When completed, this maximum satisfaction from the was substantially above that which will be the largest shopping center forms of energy we supply. Concern had been recorded for 1968. in our area. for the consumer is not at all a In spite of an expected slowdown Lincoln Rochester Trust Company new concept to us.

in the economy, fewer housing has started constructing a 26-story Since the customer is our reason starts and a restriction by our office building, shopping mall and for being, we have always supplier of natural gas on certain commercial complex which will be emphasized our responsibility to new large use gas loads, the new named Clinton Square. The 15-story him. The continuing growth of business forecast for 1970 is only Genesee Crossroads Office Building, appliance sales has been the result slightly below that for the whose principal tenant is Security of customer satisfaction with our previous year. Trust Company, was officially sales policies, coupled with, The economy of the Rochester opened late in the year and area continued to grow at a healthy Marine Midland's new 21-story rate. The unemployment rate in office building will be occupied The demanding and rigorous tasks accomplished by gas crews make 1969 was 1.9 percent (versus 1.7 in 1970. an important contribution to the warmth, percent in 1968) compared with In addition to expanding its medical comfon and convenience of customers.

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confidence in our well trained and proper application of our services. in a period marked by a variety of reliable service department. trying circumstances throughout the Knowledgeable salesmen guard the Electric Operations nuclear constructi on industry."

consumer's interest by helping him Ginne station As 1969 drew to a We are extremely proud of the select the proper product close, the Company's largest RGandE people who made this for his need. undertaking, the Ginna nuclear citation possible. It is also a tribute A great deal of effort has been station, reached its final stages of to the cooperation and dedication of devoted by sales department construction and testing. On Westinghouse Corporation, the personnel to upgrading all types of November 9, 1969, the reactor was prime contractor; Bechtel installations such as wiring, lighting first brought up to "criticality," the Corporation, the constructor; and and heating systems. Home Buyer' point at which a sustained nuclear Gilbert Associates, the Workshops have been held to reaction was established. On architect-engineer.

educate the home buyer in what to December 2, 1969, the unit's first The ability to use nuclear energy look and ask for. and what to expect electrical energy was generated and, to generate a substantial portion of in the energy systems of his home. during an elaborate series of tests, our customers'lectrical requirements We have worked with heating and the 420,000 kilowatt plant reached in 1970 will alleviate one of 1969's electrical contractors and home full load in March 1970. This unit most serious operating problems the builders to impress upon them the increases the Company's generating shortage of coal. This shortage, need to provide consumers with capability by approximately 80 which is nationwide. has been reliable installations that will do the percent and provides adequate created by the lack of adequate job they are designed to do. capacity to meet the growing expansion of coal supplies and the In 1969 we aided local inspector electrical loads in this area until the inability of the railroads to meet groups in the development of new mid 1970's. delivery schedules.

building codes and enforcement of The Company is one of five Various factors have combined to existing ones. We have assisted the utilities nominated by the Edison delay the installation of generating Better Business Bureau in protecting Electric Institute for the coveted facilities in many parts of the the consumer and the Bureau "Edison Award." The award is made country, resulting in a reduction of recommends our sales personnel as for accomplishments during the reserve margins below the desirable experts in providing reliable advice. year which are considered to be of level. The operation of Ginna station The home service department is the utmost importance to the electric has allowed Rochester to assist staffed with trained home economists industry and to the public. The other areas by delivering power to who help customers evaluate and citation reads: Northeast Utilities and to select all types of products used in "Rochester Gas and Electric Consolidated Edison Company of the home and advise them on the Corporation For the efficient and New York under interchange proper use of these products. They effective management of the agreements which are now in effect.

give advice on appliances, proper construction program that culminated Additional agreements are being lighting, home planning and provide in the completion of the Robert negotiated which will provide for the homemaking tips. They have been Emmett Ginna Nuclear Power Plant delivery of substantial amounts of involved in many projects catering to Unit No. 1 (420,000 KW) in the surplus power over the next the special needs of low-income record time of 42 months from three years.

groups. Making the most appetizing ground-breaking to initial criticality:

and nutritious use of surplus foods for achieving this record through Environmental Aspects The has been an important theme for close coordination and cooperation Company's responsibility to the many food demonstrations. of company engineering and communities it serves, and Through these and similar efforts, operating personnel in supervising particularly its obligation to minimize we have attempted to make our construction and erection procedures customers enjoy doing business as well as the fabrication of with us. The growth of our business components in a variety of The curiosity of thousands of local has been built on customer manufacturing locations: and for students has been stimulated by educational programs on nuclear power satisfaction with the many benefits regaining for the industry. new offered at the Company's Broekwood that can be obtained through the confidence in nuclear construction Science Information Center..

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any adverse effect on the merely a small vent for the controlled general public.

environment, has been a major release of minor amounts of The visual impact of our facilities consideration in its operations and gaseous discharges. on the environment has received planning for many decades. In 1925 Water will be taken into the plant substantial Company attention for we started supplying steam to from Lake Ontario and discharged many years. A policy of installing buildings in the central business back into the lake, unchanged in major electric transmission and district of Rochester. We now have quality, with a temperature increase distribution facilities underground 472 steam customers, and of just under 20 degrees at full load within the City of Rochester was elimination of individual heating plant operation. Discharge adopted in 1921. Efforts at plants is a major reason for the temperatures will be monitored to landscaping and designing plants cleanliness of the air in make sure that they are kept within and substations to blend with the downtown Rochester. appropriate limits. Through careful surroundings have received local For almost forty years the design of the discharge channel the commendation and national Company has participated in nominal heat that has been added recognition. Continuing improvements research and development designed will be dissipated over a relatively in developing better procedures for to reduce particulate emission from small area of the lake adjacent to underground installations led to 21 smoke stacks. Some of the first the discharge canal. More than 20 percent of new residential services electrostatic precipitators in the years of experience in discharging being installed underground in 1969.

country were installed at Beebee water at the same temperature into Station in 1935 and these units Lake Ontario from Russell Station Reliability While the Company have been constantly upgraded. indicates that these water presently has a record of maintaining Russell Station, which has been in temperatures have had no harmful service to customers 99.988 percent operation for over 20 years, is effects on marine life. of the time, we are still trying to equipped with electrostatic To assure that our plant will not improve on it. We believe it is good precipitators designed to remove damage the environment we have business practice as well as a basic 97.5 percent of the particulate undertaken a series of ecological responsibility to design and operate matter from the stack discharge. studies of land, air and water at the our facilities as reliably as possible.

Approximately $ 5.3 million has been plant site, starting in 1964. These During 1969. two 18,000 kilowatt invested in air and water pollution studies are continuing, and if any gas turbines were installed to control facilities. Including interest adverse effects are indicated, improve the operating flexibility and charges on this equipment, plus appropriate remedial measures will dependability of our generating associated operation and maintenance be developed. facilities. They are self-contained costs, the Company is spending Our training program for the units capable of being fully loaded approximately one million dollars a personnel who were selected to within five minutes from a cold year on pollution control. During operate and maintain this plant shutdown condition as compared 1970, an additional $ 500,000 has began in 1963. After years of with a conventional steam unit been earmarked to further reduce air intensive study of theory coupled which requires several hours from emissions in the central business with practical experience. both at startup to full load.

district. other nuclear plants and at our Installation of major additions to Safety of the public and protection plant during pre-operational testing, the transmission system were of the environment are primary these men have qualified as reactor completed in 1969. While these new considerations in the design, operators and have been licensed for lines and substations were built construction and operation of our'ew this responsibility by the United primarily to carry the output of the Ginna plant. By its very States Atomic Energy Commission. Ginna plant into our system and to nature, 0 nuclear plant has less In addition, a fully equipped health enlarge our capability for effect on the air than a fossil fuel physics laboratory is located at the interchanging power with other plant since there are no products of plant, staffed by professionals whose combustion that have to be sole responsibility is to insure that discharged through a stack to the nothing is released from the plant The doubling of our computer capacity during the year hasimproved service to atmosphere. In fact, the Ginna plant that would constitute a hazard to the customer and enhanced our ability to doesn't even have a stack, but the health of our employees or the plan for his future needs.

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utilities, they also improve reliability inspection and maintenance dwelling units are single family by reinforcing the existing activities as well as providing homes, town houses or high-rise transmission network. more informative analyses of apartments, the residential In conjunction with other results. Computers are being requirements for gas will continue members of the New York Power utilized extensively for solution of their current rate of growth. The Pool, we have built a Power engineering problems and to make 200.000th RGandE gas customer Control Center in Albany, New York. optimum choices among various will be on the line by the year 1972, This Center, which became alternatives. and virtually all new customers will operational on February 10, 1970, One of our young engineers, who use gas for heating. In addition, will coordinate and monitor the is superintendent of gas planning, conversions from other fuels by operation of all major generation and has been declared the winner of the existing customers will raise the transmission facilities within New 1969 National Beal Medal and percentage of the Company's gas York State and interconnections Award of the American Gas customers who use gas for heating with neighboring utilities in New Association. His paper, that dealt to an impressive 75 percent.

England, New Jersey, Pennsylvania with the adaption of flow formulae and Ontario, Canada. A further to digital computers, was the basis Employee Development increase in system reliability will for this award and it was judged the The Company is deeply involved in occur when the large, dual-computer outstanding technical paper of the the nuclear generation of electricity, system, ordered last year, has been gas industry for the year. This is the and in the expanding applications of installed at the Albany Center. second Company employee to computers and related equipment in These local and state efforts, the receive this award since 1938. accounting, engineering and regional coordination activities of The Company has developed a marketing. These are but a few the Northeast Power Coordinating cooperative program with other examples of how advancing Council, and countrywide utilities and local contractors that technology creates new jobs and coordination through the National has minimized costly damage that new advancement opportunities for Electric Reliability Council, are all formerly resulted from inadvertent employees at RGandE.

contributing to an outstanding digging up of our underground The average term of employment reliability record. The effectiveness facilities. The program has been so for all Company employees is 14.1 and strength of the interconnected successful on a local basis that it is years, and 35 percent of the systems was clearly demonstrated being adopted by many utilities employees have been at RGandE

. during 1969 when the loss of over throughout the country. Joint more than 20 years.

1,300,000 kilowatts of generation at trenching with other utilities is Many educational and training Niagara Falls did not cause an another new development being opportunities are available to interruption of service to a single employed to further reduce costs employees. Increased emphasis is customer. and speed installations. being placed on employee New techniques are being development in multiple phases of Gas Operations developed in striving for such the Company's operations. More During 1969 the gas department national goals as beautification and 850 employees have received 'han continued to wage an effective pollution control. Gas will play an formal training in Job Management, campaign'against increasing costs. important part in the improved the Company's work simplification Competitive bidding, a Company incineration techniques necessary to program. This particular program has policy for major projects, has been meet new standards for the helped the employee improve his effectively employed to hold down environment. immediate work methods and has costs of smaller projects such as gas The future of the gas industry is also greatly assisted the Company service installations and gas meter limited only by the adequacy of the in effecting general improvements to changes. New materials, which will natural gas supply, or our ability to minimize costs during this inflationary reduce labor costs and improve develop an economical and efficient reliability, are being carefully technique for converting coal to gas investigated. Development of at the mine site. New and expanded In the home, where heat. light and power are indispensable aspects of modern computer programs has resulted in industrial uses for gas are being living, the ultimate test of all of our more efficient scheduling of developed each day. Whether new operations and services is met.

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Qf period. The Company supports the Management Officers formal education of employees by During the year the board of providing 100 percent tuition refunds directors elected the following upon successful course completion. officers: Lynn J. Cooley. formerly FRANCIS E. DRAKE. JR.

These programs provide the Chairmen of the Board and senior vice president, became Chief Executive Officer Company with a pool of trained executive vice president of personnel to support our long R. DEWITT PIKE operations. Donald R. MacCollum, President established policy of promotion formerly vice president. became from within. senior vice president of general LYNIV J. COOLEY Executive Vice President. Operations services. Paul W. Briggs was Recruiting Total Company elected a vice president in addition HAROLD S. WEATHERBY employment has increased from Senior Vice President. Finance to his continuing responsibilities as and Accounting 2,565 in 1968 to 2,605 at the end of controller and secretary. Elvin A.

1969. The fact that many of these DONALD R. MacCOLLUM Skibinski became vice president of Senior Vice President. General Services additional jobs require highly skilled gas and transportation, areas he technical and professional personnel formerly managed as superintendent. EDWARD J. NELSON means that we have had to intensify Vice President, Electric and Steam Robert W. Baschnagel, formerly recruiting efforts as well as internal general sales manager, was elected ROBERT W. BASCHNAGEL training. Vice President, Purchasing and Sales vice president of sales and direct college recruitment

'ur purchasing. John E. Maier, formerly PAUL W. BRIGGS program now includes activities at purchasing agent, became vice Vice President. Controller and Secretary 16 colleges and five two-year president of employee and public JOHN L. KENNEDY technical institutions. An active relations. John L. Kennedy, formerly Vice President, Rates and summer trainee program brings Governmental Affairs manager of the rate and economic many fine employees into the research department, was elected JOHN E. MAIER Company, and last summer over 50 Vice President. Employee Relations and vice president of rates and Public Relations colleges and universities were governmental affairs. Keith W.

represented. ELVIIV A. SKIBINSKI Amish, an electric department Vice President, Gas and Transportation Recruitment of untrained superintendent, has been appointed employees for unskilled and assistant to the senior vice president DEAN W. CAPLE semi-skilled positions has always Treasurer of general services. All of these men presented unique problems. Work have had many years experience ALBERT J. KLEMMER with several local and national Auditor managing various phases of placement programs has been Company operations. ROBERT W. BALL encouraging, enabling us to provide Assistant Treasurer Schuyler F. Baldwin, who had opportunities for people who may been vice president of public FRANCIS A. SULLIVAN. JR.

previously have been held back for relations, retired October 1, 1969. Assistant Secretary and Assistant Controller lack of training or specific skills. The Vice President Alfred H. Doud. who Company's basic objective in this had responsibility for special regard is to find people without services, retired November 1st.

jobs, orient them to industrial jobs, On February 18, 1970, J. Wallace provide training, and assist in their Ely, president of Security Trust placement. Continual counseling ~

Company of Rochester, was elected service helps to keep the employee a director of the Company. He on the job and steadily advancing. succeeds Albert W. Whittlesey, who The Company is continuing its recently retired as senior vice active participation in many local, president of The First Pennsylvania state and national programs and Banking and Trust Company of expects that these organizations Philadelphia.

will continue to be a fruitful source of employees.

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1 Albert J. Klemmer Paul W. Briggs Dean W. Caple Harold S. Wee therby Francis A. Sullivan, Jr. Robert W. Ball R. Dewitt Pike Francis E Drake Jr John E. Maier f

,4 John L. Kennedy Donald R. MacCollum Robert W. Baschnagel Elvtn A. Sktbtnskt Edward J. tfietson Lynn J. Cooley

ROCHESTER GAS AND ELECTRIC CORPORATION Statement of Income and Earned Surplus for the Years Ended December 31 (Thousands of Dollars) 1969 1968 1967 Revenue Electric.... $ 76,250 $ 70.729 $ 65,927 Gas. 50,015 46,919 44.191 Steam 5,526 5,277 5.009 131,791 122.925 115.127 Expense Operation and maintenance. 77,338 71.051 64,826 Depreciation.............. 10.465 10,259 9,510 Taxes-local, state and other. 17,583 1 5,026 13,182 Federal income tax 930 3,545 6.270 106,316 99.881 93.788 income from Operations. 25,475 23.044 21,339 Other Income 257 138 157 Gross Income. 25,732 23.1 82 21,496 Income Deductions Interest on long term debt. 9,965 8.272 6,441 Other interest and deductions. 1,653 1.158 420 Interest charged to construction. (5,012) (3,367) (1,1 99) 6,606 6,063 5,662 Net Income. 19,1 26 17,119 15,834 Dividends on Preferred Stock 3,081 2.050 2,050 Earnings Applicable to Common Stock 16,045 15.069 1 3,784 Earnings per share on shares outstanding December 31, 1969.. $ 2.45 $ 2.30 $ 2.10 Pividends on Common Stock Cash. 7,470 6,935 6,733 Stock dividends capitalized. 6,097 5,179 5,029 Earned Surplus, beginning of year........... 39,283 36,328 34,306 Cost of redeeming 5N% Series L Preferred Stock Earned Surplus, end of year. $ 41,761 $ 39,283 $ 36.328 Notes to Financial Statements Fodoral Income Tsx Pension Plan The Company deducts depreciation for tax purposes on tho basis of guideline The Company's pension plan includes s fullyfunded career plan and a tiusteed rates, including accelerated depreciation. while it provides for depreciation in plan covering all regular employees. The actuarially computed value of vested its financial statements on a straight line basis. Depreciation for tax purposes benefits for the tiusteed plan as of December 31, 1969 exceeded tho pension exceeded that provided on the books by $ 8.9 million for1969. The provision fund by approximately $ 8.6 million. Tho total cost of these non-contributory (or Federal income tax for 1969 has been fuitherreducedby $ 800,000 due to plans for 1969 was $ 3.0 million including funding of past service cost over s the investment tax credit. period of about 30 years. The Company made voluntary payments to retired employees aggregating $ 1.3 million in 1969.

20

1966 1965 1964 1963 1962 1961 1960 S 61.259 S 56,584 S 54,035 S 51,204 S 48,281 S 45,355 S 43,164 40,683 38,903 35.585 34,097 32,420 30,418 28,073 4,889 5,009 4,741 4,874 4,842 4,718 4,740 106,831 100,496 94,361 90,1 75 85,543 80,491 75,977 59,578 55,763 51,254 49,427 46,986 44,487 42,572 9,1 27 8,747 8,375 7,917 7,579 6,598 6,242 12.451 11,538 10.564 10.078 9,554 8,934 8,411 5,852 5,475 5,520 5,580 5,400 6.075 5,430 87,008 81,523 75.713 73,002 69.519 66.094 62,655 19,823 18,973 18,648 17.173 16,024 14.397 13,322 209 173 144 137 186 138 276 20.032 19,1 46 18,792 17,310 16,210 14.535 13,598 5.700 5.1 63 4,610 4,424 4,423 3.821 3.748 20 82 555 381 168 446 207 (320) (149) (150) (163) (132) (295) (226) 5,400 5,096 5,015 4,642 4,459 3,972 3,729 14,632 14,050 13.777 12,668 11,751 10.563 9,869 2,050 2,066 2.145 2,1 45 2,145 2.145 1,956 12,582 11,984 11.632 10,523 9,606 8,418 7,913

$ 1.92 $ 1.83 $ 1.77 $ 1.60 $ 1.46 $ 1.28 $ 1.20 6,256 5,840 5,726 5.473 5,091 4,845 4,701 4,225 4,143 3,949 2,765 3,253 3.1 59 3,446 32.205 30.801 28,844 26,559 25,297 24.883 25,1 17 (597)

S 34,306 S 32,205 S 30,801 S 28.844 S 26,559 $ 25,297 S 24,883

ROCHESTER GAS AND ELECTRIC CORPORATION Statement Of FinanCial COnditiOn at DeCember 31 (Thousandsof Dollars)

Assets 1969 1968 1967 Utility Plant, at original cost Electric.................... $ 380,797 $ 345.603 $ 294,588 Gas...................... 127,291 120.514 115,539 Steam. 14,246 13.906 13,359 522,334 480.023 423,486 Less-Resorvo for Depreciation Electric........................ 78,055 74,1 82 69,208 Gas.. 24,246 21.567 19,462 Steam .. 3,752 3,681 3.651 106,053 99.430 92.321 41 6,281 380.593 331.165 Current Assets Cash. 6,678 5,754 6A58 Accounts receivable. 9,820 8,741 8.607 Matorials and supplies, at average cost. 12,545 11,530 8.066 Prepayments. 384 417 318 29.427 26,442 23,449 Deferred Debits Unamortized debt discount and expense. 1,212 861 610 Extraordinary property losses............ 232 Other.............................. 181 732 501 1,393 1,593 1,343 Total $ 447,101 $ 408.628 $ 355.957 Liabilities Capitalization Long term debt .. $ 221,677 $ 200,000 $ 170,000 Preferred stock. 67,000 47,000 47,000 Common stock. 95,678 89,581 84,401 Premium on preferred stock. 83 83 83 Capital stock expense...... (2,448) (2,123) (2.110)

Earned surplus. 41,761 39,283 36,328 423,751 373,824 335,702 Current Liabilities Notes payable 6,000 1 9,500 6.500 Accounts payable. 7,260 5,341 4,439 Customer deposits. 513 536 466 Taxes accrued 2,872 3.797 4.568 Interest accrued...... 4,264 3,474 2.132 Other. 1,238 1.051 1.048 22,147 33,699 19,153 Deforred Credits Unamortized premium on debt. 259 293 333 Other. 70 58 62 329 351 395 Resorvo Injuries and damages. 874 754 707 Total $ 447.1 01 $ 408.628 $ 355,957 22

1966 1965 1964 1963 1962 1961 1960

$ 258,147 $ 240,671 $ 229.087 $ 221,294 $ 211,947 $ 205,442 $1 94,163 110,912 105.294 98,911 91,012 83.491 77.363 70,676 13,116 12,916 12,611 1 2,308 11,956 11,906 11,384 382,175 358,881 340,609 324,614 307,394 294,711 276,223 64,852 60,665 55,764 51,421 46,813 42,863 38,746 17,452 15,661 13,910 12,290 11,114 10,165 8,981 3,410 3.203 2.964 2.794 2.587 2.494 2.338 85,714 79.529 72,638 66,505 60.514 55.522 50.083 296,461 279,352 267,971 258.1 09 246.880 239,189 226.140 9.1 84 7,760 11,064 6,369 6,266 6,508 5,041 8,084 7,1 87 6,515 5,854 5,725 5,510 5,245 6.229 5.985 4,593 4,541 4,554 5,471 5,601 350 407 341 379 264 234 311 23,847 21,339 22.513 17,143 16,809 17,723 16,198 644 484 513 541 569 594 530 464 696 927 1.1 59 1,391 1,623 1,410 350 227 222 40 47 82 20 1,458 1,407 1,662 'l.740 2.007 2.299 1,960

$ 321,766 $ 302,098 $ 292,146 $ 276,992 $ 265,696 $ 259,211 $ 244.298

$1 50.000 $ 132,000 $1 32,000 $1 1 6,000 $ 116,000 $1 1 6,000 $ ] 01,000 47.000 47,000 47,000 47,000 47,000 47,000 47,000 79.372 75,147 71,004 67,055 64.290 61,037 57.878 83 83 83 83 83 83 83 (2,1 07) (2.104) (2,105) (2.097) (2.090) (2,083) (2,037) 34.306 32.205 30.801 28.844 26,559 25,297 24.883 308,654 284,331 278,783 256,885 251,842 247,334 228,807 4,500 8.000 2,500 3,500 4,342 4,416 4,590 3.962 3,789 3,654 3,648 406 373 358 301 280 252 239 4.752 4,973 4,930 4,663 4,231 5,029 5,288 1,736 1,602 1,575 1.490 1.394 1,349 1,306 976 1,001 946 860 811 772 695 12,212 16.865 12.399 1 9,276 13,005 11,056 14,676 257 293 33'l 237 269 301 333 40 31 84 107 110 107 122 297 324 415 344 379 408 455 603 578 549 487 470 413 360

$ 321.766 $ 302.098 $ 292,146 $ 276,992 $ 265,696 $ 259,211 $ 244.298 23

Long Term Debt, December 31, 1969 DECEMBER 31 1969 1968 FIRST MORTGAGE BONDS DUE (Thousands of Dollars) 4N% Series 0 September 1, 1977 8 6,000 6.000 3r/4% Series J March 1, 1969 8.323 3/s% Series K March 1, 1970 15.000 15.000 3/o Series L March 1, 1979 16,677 16,677 2/s% Series M August 15. 1980 12,000 12.000 3s/s/o Series N Juno 1. 1982 6,000 6.000 3s/s% Series 0 March 1. 1985 10,000 10.000 4r/s% Series R July 1, 1987 15,000 1 5,000 5% Series S October 15, 1989 12,000 12.000 4)rz% Series T November 15, 1991 15,000 1 5,000 4s/s% Series U September 15, 1994 16.000 16,000 5.3% Series V May 1, 1996 18,000 18.000 6 t/s% Series W September 15, 1997 20,000 20,000 6.7% Series X July 1, 1998 30,000 30,000 8% Series Y August 15. 1999 30,000 8221,677 6200,000 Capital Stock, December 31, 1969 PREFERRED STOCK 810.000 shares authorized. 670,000 shares outstanding, par value 6100 per share (cumulative) DECEMBER 31 1969 1968 SERIES OUTSTANDING (Thousands of Dollars) 4% Series F 120,000 shares $ 12,000 12,000 4.10% Series H 80.000 shares 8.000 8.000 4%/o Series l 60,000 shares 6,000 6,000 4.10% Series J 50,000 shares 5,000 5.000 4.95/o Series K 60,000 shares 6,000 6,000 4.55% Series M 100,000 shares 10,000 10,000 7.50% Series N 200.000 shares 20,000 9 67.000 6 47,000 DECEMBER 31 COMMON STOCK 1969 1968 (Thousands of Dollars) 8,000,000 shares authorized.

6,541,529 shares outstanding, no par valuo 8 95,677 6 89,581 Now York Stock Exchange Symdol Transfer Agent Registrar Principal Office Rochester Gas and Electric Corporation Uncoln Rochester Trust Company Security Trust Company of Rochester 89 East Avenue Common Stock-RGS 183 Main Street East 103 Main Street East Rochester, New York 14604 Rochester, Now York 14603 Rochester, New York 14604 Bond Trustee and Paying Agent Co-transfer Agent Co-registrar Annual Meeting 24 Bankers Trust Company Morgan Guaranty Trust Company The Chaso Manhattan Bank Third Wednesday in May 18 Wall Street of Now York (National Association)

New York, New York 1001 5 23 Wall Street I Chase Manhattan Plaza New York. New York 10015 New York. Now York 1001 5

PBIGE WATERHQUsE & Co. reoo Mrnzowx Towea ttocrrrresnrr teooe To the Shareholders and Board of Directors of February 16, 1970 Rochester Gas and Electric Corporation In our opinion, the accompanying statement of financial condition and the related statement of income and earned surplus present fairly the financial position of Rochester Gas and Electric Corporation at December 31, 1969 and the results of its operations for the year, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Our examination of these statements was made in accordance with generally accepted auditing standards and accordingly included such tests of the account-ing records and such other auditing procedures as we considered necessary in the circumstances.

~]~ A)a~~L SOurCe and DiSPOSitiOn Of FundS (Thousands of Dollars) 1969 1968 1967 1966 1985 1964 1963 1962 1961 1960 Source of Funds 10.563 9,869 Net income............... 14.050 13.777 12.668 11.751 14,632 S S S 19,126 S 17,119 S 15.834 S S S S S 9,635 9.291 9.005 8,321 7.996 7.118 6.331 Depreciation and salvage.... 11,003 10.832 10.010 Sale of bonds............. 30,000 30.000 20.000 18,000 16.000 15.000 stock...... 20,000 10.000 Sale of preferred stock...... 166 Sale of common Proceeds of short term loans. 29,500 42,500 22.500 1,000 4.500 3,000 5,500 2,500 9,500 7,030 1.255 755 (523) (115) 67 From other sources.......,. 1,722 1.549 643 (154) (97) 6111,351 S102.000 S 68,987 S 43,113 S 27,744 S 43.037 S 27.244 S 21.724 S 42,066 S 33.463 Disposition of Funds additions......... 46,188 S 60,060 S 44.668 S 26.523 S 20,549 S 19.435 S 19.408 S 15.461 S 20.506 S 20,349 Property S dividends.... 3,081 2.050 2,050 2.050 2.066 2.145 2,145 2.1 45 2.145 1.956 Preferred stock 6.733 6.256 5.840 5,726 5,474 5,091 4.844 4.701 Common stock dividends.... 7,470 6,935 Bond maturities........... 8,323 43,000 29,500 16.000 5.500 11.000 13.000 7.030 Payment of sho~t term loans..

For other purposes......... 3,289 3,455 (464) 2.784 (711) 4.731 217 (973) 1,571 (573)

S111,351 6102,000 S 68.987 S 43.113 S 27.744 S 43.037 S 27.244 S 21.724 S 42.066 S 33.463 25

ROCHESTER GAS ANO ELECTRIC CORPORATION Electric Department 1969 1968 1967 Electricity Generated and Purchased-KWH (000's)

Steam. 2,119.003 1,979.331 1,964,957 Nuclear... 30.243 Hydro. 251,254 214,489 267.486 Other Generating 2,658 Purchased-Net. 1,564,827 1,433.736 1.097,991 Total electric energy 3,967,985 3.627.556 3.330.434 Electric Sales-KWH (000's)

Residential. 1,179,367 1.078,434 987,893 Commercial......... 932,508 847.080 764,346 Industrial .. 1,1 46,477 1.073,170 982,270 Other. 321,091 281.909 259.659 Total electric sales 3,579,443 3,280.593 2.994.163 Electric Customers at December 31 Residential. 224,365 220.074 214,761 Commercial . 21,943 21.599 21,136 Industrial 1.407 1.395 1,404 Other. 1,903 1,731 1,629 Total electric customers 249,618 244.799 238.930 Electric Revenue (000's)

Residential. S 28,981 S 27,509 S 26.483 Commercial... 20,627 18,863 17,187 Industrial 17,970 16.600 15,115 Other. 8,672 7.757 7.1 42 Total electric revenue S 76,250 S 70.729 S 65,927 Electric Expense (000's)

Operation. $ 32.762 S 30.375 S 26,763 Maintenance. 6,726 6.326 6,043 Depreciation .. 6,71 9 6.428 6.172 Taxes-local, state and other. 11,627 9.898 8,719 Federal income tax 764 2,467 4,001 Total electric expense S 58,598 S 55,494 S 51,698 Income from Electric Operations (000's). S 17 652 S 15.235 S 14,229 Electric Operating Ratio %%d. 51.8 51.9 49.8 Electric Production Costs (000's)

Steam generation. S 12,128 S 10,372 S 9,965 Hydro generation. 696 652 632 Other Generation. 109 Purchased power. 6,762 6.481 5.017 Total electric production costs S 19,695 4 17,505 S 15 614 Electric Department Coal (or coal equivalent)

Total cost (000's) .. S 8,348 S 7.067 S 6610 Fuel used-Tons. 870,576 789,499 766.462 Cost per ton. $ 9.59 S 8.95 S 862 Pounds per KWH generated-Net .82 .80 .78 System Net Capability-KW at December 31 Steam. 460.000 467,000 458.000 Nuclear. 80,000 Hydro. 53,1 00 53,1 00 53.100 Other. 42,500 Purchased power 219.750 219.750 219.750 Total system net capability 855,350 739,850 730,850 Net peak load-KW. 712,000 685,600 618.700 Annual load factor-Net  %%d. 63.6 60.2 61.4 26

1966 1965 1964 1963 1962 1961 1960 1,797,681 2.299.1 33 2,033.900 1,369,718 1,067,231 1,246,227 1,580,219 207,714 187,743 175,453 1 53.067 191,292 200.383 203,192 1,022,980 311.426 325.020 836,708 931,809 596,464 120.172 3.028,375 2,798,302 2.534,373 2,359,493 2,190,332 2.043.074 1,903.583 913.442 848,740 788,376 736,337 686,522 649,334 608.728 699.548 641,091 600.204 549,310 509,770 467,751 437,541 886,556 768.039 689,510 638,201 595,619 531,432 507,803 239,862 216,785 199.325 182,255 159,014 147,191 130,767 2.739,408 2,474.655 2,277.415 2,106,103 1,950,925 1.795.708 1,684.839 209,648 204.109 197,535 191.461 187,297 183,793 180.502 20,663 20.351 19,978 19,576 19.376 19.363 19,345 1,325 1.289 1,318 1,308 1.332 1,289 1.209 1,558 1,531 1,486 1,404 / 1,343 1,285 1.250 233,194 227,280 220.317 213,749 209,348 205.730 202,306 S 25,150 S 23,623 S 22,942 S 21,676 S 20,539 S 19,643 S 18.672 15.794 14,733 14,002 13,308 12.530 11,707 11,199 13,640 12.048 11,204 10,713 10.236 9,408 9,1 35 6,675 6,1 80 5.887 5,507 4,976 4.597 4,158 S 61,259 S 56,584 S 54,035 S 51,204 S 48,281 S 45.355 S 43 164 S 24,466 S 21,900 S 20197 S 19,416 S 18.'102 S 16.943 S 16,671 5,360 5.229 4,806 4,480 4,271 4,092 4,122 5,922 5,926 5,735 5,467 5.283 4,876 4,637 8,284 7,711 7.078 6,776 6,421 5,979 5,61 8 3,939 3.573 3,941 3,710 3,675 3,868 3,312 S 47,971 S 44,339 S 41,757 S 39,849 S 37,752 S 35,758 S 34,360 S 13.288 S 12.245 S 12 278 S 11,355 S 10,529 S 9.597 S 8,804 48.7 47.9 46.3 46.7 46.3 46.4 48.2 S 8,708 S 9,974 S 8,802 S 6,938 S 6105 $ 6,756 S 8,015 661 719 662 666 644 627 785 4.330 1,300 1,326 2.800 2.804 1,801 611 S 13,699 S 11,993 S 10,790 S 10.404 S 9,553 S 9.184 S 9411 S 5.724 S 7,023 S 6.077 S 4,397 S 3.605 S 4,268 S 5,558 684,631 869,436 746,286 507.767 404,908 477,432 593.775 S 836 S 8.08 S 814 S 8.66 S 8.90 S 8.94 S 936

.76 .76 .73 .74 .76 .77 .75 448,600 448,600 448,600 '48,600 448,600 448,600 448,600 53.100 53,100 53,100 53,100 53,1 00 53,100 53,100

'I 87.500 207.500 207.500 222,500 207.500 157.500 22.500 689,200 709,200 709,200 724.200 709,200 659.200 524,200 592.200 541.600 503,800 464.200 433,400 406,400 388.800 58.4 59.0 57.3 58.0 57.7 57.4 55.7 27

ROCHESTER GAS AND ELECTRIC CORPORATION Gas Department 1969 1968 1967 Gas-Therms (000's)

Purchased for reforming and mixing 45,819 54.256 58,773 Purchased for resale 376,234 337.372 303.428 Other. 3,866 1.956 1,496 Total gas available 425,919 393.584 363,697 Cost of gas per therm. 4.96c 4.88c 4.89c Gas Sales-Therms (000's)

Residential. 17,961 18.770 19.084 Residential spaceheating. 236,530 225.859 214,719 Commercial .. 67,856 60.814 54,342 Industrial. 65,322 55.833 49,589 Municipal. 1 5,355 12.998 11,424 Total gas sales 403,024 374,274 349,158 Gas Customers at December 31 Residential. 54,208 56,553 59,009 Residential spaceheating. 127,541 1 22,666 'I 1 6,465 Commercial . 10,570 10.330 10.071 Industrial 797 783 768 Municipal. 862 698 651 Total gas customers 193,978 191,030 186,964 Gas Revenue (000's)

Residential. $ 3,710 S 3.858 S 3935 Residential spaceheating. 31,895 30,268 28,722 Commercial. 7,353 6,644 6,030 Industrial 5,152 4,480 3.997 Municipal and other. 1,905 1,669 1.507 Total gas revenue $ 50,015 S 46.919 S 44,191 Gas Expense (000's)

Operation. $ 30,590 S 27,868 S 25.878 Maintenance. 2,650 2.477 2.420 Depreciation. 3,365 3.471 2,98'I Taxes-local, state and other. 5,092 4.361 3.763 Federal income tax 767 1,432 2,269 Total gas expense $ 42,464 6 39.609 S 37,311 Income from Gas Operations (000's) . $ 7,551 S 7310 S 6.880 Gas Operating Ratio Fo 66.5 64.7 64.0 Gas Production Costs (000's)

Catalytic reformed gas. $ 1,136 S 1,277 $ 1,407 Natural gas used for mixing. 1,563 1.815 1.963 Natural gas purchased for resale. 18,179 15.953 14,282 Other 233 164 131 Total gas production costs $ 21,111 S 19.209 S 17 783 Total Daily Capacity Therms at Dec. 31 Mixed gas. 655,499 655.499 686,703 Straight natural gas. 3,555,300 3,11 8.500 2,636.600 Total daily capacity 4,210,799 3,773.999 3.323,303 Maximum daily sendout-Therms 2,589,919 2,703,608 2,265,324 Dogree Days-Billing Basis

% colder (+) warmer (-) than normal.

28

1966 1965 1964 1963 1962 1961 1960 61,211 65,054 62,266 62,217 60,481 56,872 58.195 266,750 243.842 213.721 199,1 66 179,884 160.157 141.765 1,035 1,390 696 706 690 685 668 328.996 310,286 276,683 262.089 241,055 217,714 200,628 4.93c 4.95c 5.00c 5.10c 5.34c 5.43c 5.49c 19,212 19,650 20,308 20,947 19.926 20,339 20,717 198,683 189,769 171,686 160,339 146.420 136,171 123,669 47,671 43,608 37.122 34,178 29.943 26,785 23.530 41.975 39.820 36,840 33.452 30,523 24,894 22.304 9,045 7.779 5.775 5.240 4.481 4,031 3,709 316,586 300,626 271.731 254.156 231,293 212.220 193.929 60,429 62,732 65,127 67,096 69.242 71,311 73,640 111,153 104,673 97.520 90,159 84,175 78,603 73,467 9.758 9.461 9,213 9,092 8,971 8,798 8,605 722 684 667 583 479 473 448 587 551 521 489 466 441 418 182,649 178,1 01 173,048 167,419 1 63.333 159.626 156,578 S 3.982 S 4,100 S 4,205 S 4318 S 4,361 S 4511 S 4.624 26,680 25,483 23,131 21,981 20.778 19,427 17.643 5,346 4,955 4,342 4,11 3 3.823 3,522 3.144 3,428 3,265 3.030 2.852 2.693 2,267 2.026 1,247 1,100 877 833 765 691 636 S 40,683 S 38,903 S 35.585 S 34.097 S 32.420 S 30,418 S 28.073 S 24.033 $ 22,946 S 20.883 S 20,023 S 19.281 S 18.099 S 16,695 2,129 2.077 1,947 1,997 1,923 2.034 1,726 2,856 2,479 2.307 2,1 27 1,977 1,493 1,384 3,490 3.208 2,894 2,723 2,546 2.397 2,256 1,913 1,902 1.579 1,857 1,725 2.071 2,006 S 34.421 S 32 612 S 29,610 S 28,727 S 27.452 S 26,094 S 24.067 S 6,262 S 6,291 S 5,975 S 5,370 S 4,968 S 4,324 S 4.006 64.3 64.3 64.2 64.6 65.4 66.2 65.6 S 1.489 S 1,472 S 1,497 S 1,569 S 1,454 S 1.487 S 1,536 2,045 2.181 2.109 2,116 2.1 52 2,044 2,086 12,570 11,509 10.1 36 9,580 9,057 8,1 47 7,202 108 195 93 93 201 135 193 S 16212 S 15.357 S 13.835 S 13,358 S 12.864 S 11,813 S 11.017 686,703 686,703 686,703 686,703 686,703 686,703 592,015 2.339.400 2,241,015 2,055,533 1,711,500 1,647,335 1.495.106 1,206,240 3,026,1 03 2,927,718 2.742.236 2,398,203 2.334.038 2.1 81,809 1,798.255 2,305,931 2,017,608 1,699.174 1,957.521 1,809.387 1,481,780 1,359.588

-2.3 +3.4 +3.6 -1.7 29

ROCHESTER GAS ANO ELECTRIC CORPORATION Steam Department 1969 1968 1967 Steam-lbs. (000's)

Produced by steam dept. 1,533,480 1,471.858 1,311,068 By-product steam from electric department 2,845,952 2.825.463 2.803.068 Total steam produced 4,379,432 4,297,321 4,114.1 36 Steam Sales Lbs. (000's)

Commercial 1,397,458 1.298.258 1,371.825 Industrial. 2,366,194 2.359.575 2,1 18,820 Municipal. 281,511 264.717 256.534 Total steam sales 4.045,163 3.922.550 3,747,179 Steam Customers at December 31 Commercial 359 375 378 Industrial. 83 84 82 Municipal. 30 26 27 Total steam customers 472 485 487 Steam Revenue (000's)

Commercial S 2,142 S 1.992 S 2,065 Industrial . 2.979 2.916 2,588 Municipal and other. 405 369 356 Total steam revenue S 5.526 S 5.277 S 5,009 Steam Expense (000's)

Operation. S 3,963 S 3,347 S 3166 Maintenance 647 658 556 Depreciation. 381 360 357 Taxes-local. state and other... 864 767 700 Federal income tax. (601 ) (354)

Total steam expense S 5,254 S 4.778 S 4.779 Income from Steam Operations (000's) . S 272 S 499 S 230 Steam Operating Ratio %. 83.4 75.9 74.3 Steam Department Fuels Total cost (000's) . S 2,662 S 2.380 S 2178 Fuel used-Tons. 272,257 260.878 248,173 Cost per ton. S 9.78 S 9.12 S 8.78 30

1966 1965 1964 1963 1962 1961 1960 1,219.260 1. 211.427 1,205.718 1,211.883 1.293.973 1,354.066 1,359,971 2.766,083 2.870,207 2,715.476 2.767.11 8 2.523.133 2,469,052 2.379.852 3.985,343 4.081.634 3,921,194 3,979,001 3.817,111 3.823,118 3,739,823 1.364,1 12 1.435,1 46 1,352.855 1,385.931 1,319,401 1,243,331 1.170,655 2.095.698 2.1 42,61 3 1.980.571 1,939.020 1,952.331 1,941,406 1,990,039 256,350 249,220 219.418 200,589 182.973 1 64.906 130.458 3.716,160 3,826,979 3,552.844 3,525,540 3,454.705 3,349,643 3.291,1 52 380 403 426 432 444 461 465 80 81 90 94 95 96 97 28 27 26 25 31 31 30 488 511 542 551 570 588 592

$ ',023 $ 2.113 $ 2,027 $ 2.1 26 $ 2.075 $ 1,981 $ 1,904 2,517 2.557 2.409 2,450 2.487 2.479 2.623 349 339 305 298 280 258 213

$ 4,889 $ 5.009 $ 4,741 $ 4.874 $ 4,842 $ 4 718 $ 4,740 S 3,024 $ 3,070 $ 2,898 $ 2.967 $ 2.851 $ 2.844 $ 2,897 566 541 523 544 558 475 461 349 342 333 323 319 229 221 677 619 592 579 587 558 537 13 136 112

$ 4 616 $ 4,572 $ 4,346 $ 4.426 $ 4.315 $ 4,242 $ 4,228

$ 273 $ 437 $ 395 $ 448 $ 527 $ 476 $ 512 73.4 72.1 72.2 72.0 70.4 70.4 70.8

$ 2.065 $ 2.011 $ 1.918 $ 2.024 $ 2.038 $ 1,976 $ 2,050 242.269 244,340 232.103 231,196 226,427 218.847 216,466

$ 8.52 $ 8.23 $ 827 $ 8.75 $ 9.00 $ 9.03 $ 9A7

Directors ALEXANDER M. BEEBEE" Chairman of the Executive and Finance Committee, Rochester Gas and Electric Corporation LINN B. BOWMAN" Former President, Rochester Gas and Electric Corporation MARCUS E. BUCKMAN Vice President and General Manager, Sodus Fruit Farm, Inc.

JOHN D. COCKCROFT Chairman of the Board, The R. T. French Company WILMOT R. CRAIG President and Chief Executive Officer, Lincoln First Banks Inc.

FRANCIS E. DRAKE, JR.

Chairman of the Board and Chief Executive Officer, Rochester Gas and Electric Corporation M. HERBERT EISENHART" Former Chairman of the Board, Bausch 5 Lomb Inc.

J. WALLACE ELY President, Security Trust Company of Rochester CARL S.

HALLAUER'hairman of the Board, Bausch 5 Lomb Inc.

ERNEST J. HOWE" Former President, Rochester Gas and Electric Corporation DANIEL G. KENNEDY Partner, Nixon, Hargrave, Devans 5 Doyle R. DEWITT PIKE President, Rochester Gas and Electric Corporation WALTER L. TODD" Partner, Todd Associates WILLIAM S. VAUGHN" Chairman of the Board, Eastman Kodak Company JOSEPH C. WILSON Chairman of the Board and Executive Committee, Xerox Corporation

'Member of the Executive and Finance Committee of the Company 32