ML18143A785

Rochester Gas and Electric Corporation Annual Report 1964

ML18143A785
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Issue date:	05/23/2018
From:	Rochester Gas & Electric Corp
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Rochester Highlights 2 Letter frotn Chairman and President 3 Earnings and Dividends 4 Expense 6 Gas and Electric Shareholders Investment 8 Expansion Program 9 Research and Development 12 Corporation Market Development 16 Area Development 18 Personnel 20 Management 20 ANNUAL REPORT 1964 Accountants Opinion 22 Income and Earned Surplus 23 Financial Condition 24 Long Term Debt 26 Capital Stock 26 Financial Information 27 Statistics for Analysts 28 Directors and OQicers 32 s Qv-Thc new main oflic entrance symbolizes the Company's Open Door policy.

This report is prepored for the information of secvrity holden, analysts, employees and other interested peuons. It is not transmitted in connection with the saic oi any secvrity or otter to sell or otter to bvy any secvrity.

~ RR 1963 Iacraaso or (Decrease)

Earnings Applicable to Common Stock $ 11,632,067 $ 10,523,576 $ 1,108,491 Earned per Common Share outstanding Dec. 31, 1964 $ 2.02 $ 1 82 $ .20 Cash Dividends Paid on Common Stock $ 5,725,758 $ 5,473,915 $ 251,843 Market Value of 2% Stock Dividend at Dates of Payment $ 3,723,159 $ 3,290,677 $ 432,482 Revenue and Other Income $ 94 505 453 90 311 905 $ 4,193,548 Total Payroll and Employee Benefits $ 24,001,182 $ 22,682,709 $ 1,318,473 Total Taxes Other Than Federal Income Taxes $ 10,948,125 $ 10,452,470 $ 495,655 Dcprcciation $ 8,375,227 $ 7,916,772 $ 458 455 Additions to Plant $ 19,434,934 $ 19,408,057 $ 26,877 Total Plant Investment $ 340,608,632 $ 324,613,865 $ 15,994,767 Number of Regular Employees 2,480 2,469 Number of Holders Year End Common Stock 23,038 22,392 Preferred Stock 3,136 3p257 (121) r1 rtividend in common stock at tbe rate of 2/o Per share aquas distributed February 19, 196'5.

February 24, 19G5 to the shareholders I'or the year 19G4 the Company set new records in the dclivcry of energy to electric, gas and steam customers. Kilowatt-hour sales of electricity increased 8.1 percent and therm sales of gas incrcascd 6.9 percent over last year. Electric and gas revenues rcachcd new highs with increases over a year ago of six percent and four percent rcspcctivcly. Earnings per sharc of common stock werc $ 2.02 compared with $ 1.82 for 1963, a gain of 11 percent.

Cash dividends Eor 1964 at the annual rate of $ 1.00 amounted to over

$ 5,725,000. On February 19, 1965 a two pcrccnt stock dividend was distributed to shareholders of record January 13, 1965. This is the sixth annual stock dividend paid since 1960.

Since 1954 kilowatt-hour sales of electricity Iiave increased 95 percent.

Rcvcnues werc up 85 pcrccnt and 21 percent morc customers were added in this period. In 19G4 there were 6,5G8 electric customers added to the lines, the largest increase in any single post-war year. Therm sales of gas were up 1G2 percent since 1954, accounting for an increase of 121 percent in revenues from this source. Thc mimbcr of gas customers increased 25 percent in this period.

Thc 100,000th gas spaceheating customer was connected in 1964.

A voluntary reduction in residential electric rates of nearly three quarters of a million dollars per year became effective on December 28, 1964. Ncw equipment, ncw tcchniqucs and improvements in operating eAiciencics made this rate reduction possible.

There was $ 340,609,000 invested in plant at the end of 1964. Net additions to plant during thc past 10 years amounted to morc than $ 166,000,000.

Gross expenditures for plant in 1964 werc $ 19,435,000. Electric department projects in 1964 included thc construction of 19 miles oE 115,000-volt trans-mission lines to serve additional customers to thc south of Rochester and to supply the increasing load growth in the suburban area east of Rochester.

Special equipmcnt was installed for automation of all hydro plants. Gas department cxpcnditurcs included construction of additional major gas lines to supply ncw franchise areas cast of Rochester and to provide additional service for large usc customers. The Company supplied 77 percent of 1964 construction costs from thc rcinvcstment of earnings and accruals for depre-ciation. A portion of these costs was also provided by proceeds from the issuance of $ 16,000,000 First Mortgage 4>/e% Horuls in September 1964.

It is estimated that construction cxpcnditures in 19G5 will bc morc than

$ 22,000,000. The major portion of such costs will bc for additional electric and gas distribution facilities to provide for load growth. It is expected that Company Eunds, together with the remaining 1964 bond proceeds, will pro-vide for most of the 1965 construction program. No additional long term financing for construction purposes is proposed during 19G5.

Business conditions in thc Rochester area continue at an excellent lcvcl.

Thc unemploymcnt rate near thc cnd of thc year was 1.4 percent of the work force compared with 4.4 percent Eor the Nation and 4.2 percent for thc State.

Board Chairman Ginna and President Howe The operations of the Company arc in competent hands. Throughout thc year the operating skills and the imaginative planning of thc cmployces have been forcefully demonstrated. Wc commend them for their loyalty.

Sincerely, CIIAIRhfANOF TIIE BOARD PRES ENT

In 1964, gas revenue oE $ 35,585,000 was four per-cent greater than last year. This revenue was re-duced by $ 620,000 reflecting the additional effects oE the October 19G3 voluntary reduction in rates and automatic reductions in customers'ates due to eurnings end dividends the decreased cost of purchased natural gas. Even though more steam was sold in 1964 than in 1963, steam revenue of $ 4,741,000 declined $ 134,000 due to the decreased cost of coal which was reflected in customers rates.

ELECTRIC GROWTH The $ 2.02 earnings per share of common stock in The 220,317 electric customers at the end of the 1964 were 11 percent more than the $ 1.82 per share year represented a three percent growth over 1963, earned in 1963, based upon the 5,753,964 shares out- an increase of 6,568 customers. Electricity sold in-standing at the end oE 1964. creased eight percent.

Cash dividends at the annual rate of $ 1.00 a share A new hourly peak load of 503,800 kilowatts oc-on the common stock. amounted to $ 5,725,758. curred on December 21, 1964, and on December 22, These dividends were paid quarterly on the 25th of 1964 a new maximum daily peak of 8,696,300 kilo-January, Apriland July, and on the 24th of October. watt-hours of energy available Eor distribution was The fifth annual stock dividend was distributed established. The hourly peak was nine percent February 21, 1964, at the rate of two percent, in con- greater than that which occurred in 1963, and the tinuance of the policy to pay additional dividends daily load was eight percent greater. There was in common stock. On I'ebruary 19, 1965 the sixth more electricity available for distribution on the annual stock dividend was distributed, also at the Rochester system during the month of December rate of two percent. 1964 than for the entire year of 1923.

There was $ 4,142,880 added to the stated value of the common stock in January 1965 which increased GAS HEATING GROWTH CONTINUES the balance of this account to $ 75,146,706. This At the end of 1964 there were 102,748 customers additional amount was equivalent to $ 36 per share supplied with gas heat. Of these, 7,956 were added upon the 115,080 shares distributed as the sixth during the year. The trend to gas househeating and stock dividend. the Company's expanding gas territory contributed to the increase in gas revenue during the year.

REVENUE GROWTH Sales of gas increased seven percent during 19G4.

The $ 94,361,000 revenue for 1964 was a fiv percent The maximum sendout of gas for any one day of growth for the year. Rochester business activity, 1,699,174 therms was 13 percent less than in 1963 which reached a new high in 1964, was reflected in because of the warmer weather in 1964.

the record energy requirements among the Com-pany's customers. This record of growth was at- RATES REDUCED tained even though temperatures during the year A voluntary reduction in residential electric rates were 5.6 percent warmer than for 1963, and 1.6 per- amounting to approximately $ 740,000 annually be- =

cent warmer than normal, compared with 4.8 per- came efFective on December 28, 1964. This reduc-cent colder than normal weather for 1963. tion was made possible by new equipment, better The $ 54,035,000 of electric revenue was six per- techniques and improved operating efficiencies. It is cent more than 1963. In 1964, electric revenue was anticipated tlrat these lower rates will encourage reduced $ 500,000 due to the decreased cost of. coal additional growth in the use of electricity. The 1964 which was automatically passed on to customers. electric revenue was not affected by this change.

ELECTRIC 10 YEAR GROWTH 2 277 in Customers-KWH Sales-Revenue 2,106 MILLIONS OF KWH 1,950 UP 95ojo MILLIONS 1,795 REVENUE 1,684 UP 85%

$ 50 605=

1,428 1,359 40 1;248=

1,169 CUSTOMERS 30 -Up 21%

18 ,983 I187 239 19 1,150 19 ,426  :,19,005 199 ,711 202,306 i205 ,730 209,348 213 749 1220 317 i

20 10 0

1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 GAS 10 YEAR GROWTH in Customers-Therm Sales-Revenue 271 MILLIONS 254 MILLIONS OF THERMS 231 UP 162%

$ 40 212 193 REVENUE 182 UP 121'+

30 161 138 144 118 CUSTOMERS 20 ~08 UP 25%

138 707 '142 407 319 ,042 15 .140 153 409 15 578 159 626 163 333 16 419 173 048 10 =

0 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964

expense to the Power Authority in 1963.

The ratio of operating expense to revenue con- Electricity purchased and interchanged during tinued to decline during the year to 54.32 percent 1964 declined 61 percent from the previous year to a at the close of 1964 from 54.81 percent for 1963. This total of 325 million kilowatt-hours. The decline was ratio has declined in the past 10 years, from 55.18 due almost entirely to low water and ice conditions percent for 1954, reHecting the benelit of operating that prevented the Power Authority of the State of improvements. This result was achieved in spite of New York from delivery of their minimum contract the fact that in this same 10-year period there have obligation.

been substantial increases in the costs of payroll, Therms of natural gas purchased in 1964 in-materials and services. creased five percent.

The increase of $ 1,800,000 in operating expense Payroll and employee welfare costs for the year is due to increased production costs to supply the increased $ 1,318,000 to $ 24,000,000 oE which additional energy requirements of customers dur- $ 3,708,000 was applicable to construction.

ing the year, and to higher payroll and employee welfare costs. DEPRECIATION Unit trains were used in 1964 for 90 percent of The depreciation provision for 1964 was $ 8,524,000.

.the deliveries of 1,000,000 tons of coal received. Depreciation charged to income was $ 8,375,000 and These shipments contributed to the reduction in included $ 232,000 amortization of extraordinary the cost of electric coal used in 1964 to $ 8.14 a ton property losses. The seven percent increase in the from $ 8.66 for 1963. The Company used over 1964 provision was $ 522,000 more tlian last year due 239,000 more tons oE coal during the year than in to accruals for new services and equipment added 1963. during the year to supply the growth in Electricity generated by the Company during the customers'nergy requirements.

year increased 45 percent to 2,209,000,000 kilo-watt-hours. Steam plants produced 92 percent of TAXES CONTINUE To INCREASE this electricity and the balance was from the Com- Total taxes oE $ 16,468,000 for 1964 increased three pany's hydro plants. This increased generation was percent which was $ 436,000 more than last year.

necessary to provide for the increased customer load I'ederal income taxes were $ 5,520,000, a decrease oE and to provide 438,140,000 kilowatt-hours of en- $ 60,000 from the previous year. Other taxes ergy delivered to the Power Authority of the State charged to operations were $ 10,563,000 and in-of New York during 1964. No energy was delivered creased $ 485,000.

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skurekolders investment the Bronze Oscar award, and the second time it has Cash dividends paid on the common stock in 1964 achieved the Silver Oscar at the "Financial World" totaled $ 5,726,000, an increase of $ 252,000 com- annual report dinner. The Reddy Kilowatt annual pared with the previous year. These dividends, at report survey also awarded the report first place in the annual rate of $ 1.00 a share, were paid quarterly its class, as for the 1962 report. A first place award on the outstanding shares. The Company also con- in its class was also presented by the Better Copy tinued its policy of paying additional dividends in Contest sponsored by the Public Utilities Advertis-common stock. ing Association.

Six annual stock dividends have been paid since The Newcomen Society in North America, at its 1960, which have increased the aggregate amount National Dinner in New York City during April of cash dividends paid by the Company. The estab- 1964, honored the Company for more than 118 lished cash dividend rates have always been paid on years of continuous and successful operation. The the increased number of shares that have resulted Company's Chairman, Mr. Robert E. Ginna, was from the stock dividends. the guest of honor and spoke on "Power and Prog-There Iiave been five rights offerings and two ress in the Genesee Valley."

splits of the common stock since it was first distrib-uted to the public in 1949.

There is a wide distribution of both the com-mon and preferred shares throughout the, United States and in several other countries. There were LI95~3g) 28,088 holders of common stock of record on Janu-ary 18, 1965, of whom 24 percent reside in the terri- i hc Italy Rlknawtt Anne@ Rcport (~cene tory served by the Company. AR1llÃAll' A%AMI The annual meeting on May 20, 1964 was per-sonally attended by over 600 shareholders, and more w ~y ~A~M baeecer Cw eat a~ ~

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than 82 percent of the outstanding common shares ~ sOw4 were voted.

The 1968 annual report received three awards for its excellence, both of content and design. The Company was honored with the presentation of a Bronze Oscar for the best 1968 annual report among electric utilities having 40 million to 100 million dollars of annual revenue; and the report was also awarded a Silver Oscar as the best among electric and gas utilitycompanies. This is the fourth time in tlie past five years tliat the Company has achieved 1963 Annual Report awards

ester, which provides a major additional gas supply Growth in the number of customers served and the to serve the eastern part of the Company's gas serv-continued increase in customer use of energy re- ice territory.

quired additions and improvements to the Com- Three miles of 12-inch gas line was constructed pany's facilities during 1964 which cost $ 19,435,000. from the new main to provide additional service for I%et additions for the past 10 years amounted to the rapidly expanding Xerox plant in the Town of more than $ 166,000,000. There was $ 340,609,000 Webster. Also, five miles of 20-inch main was in-invested in plant at the end of 1964 which is nearly stalled to serve the new Rochester Institute of Tech-twice the total plant investment 10 years ago. nology campus.

Over the past 10 years 583 square miles of new CONSTRUCTION IN 1964 franchise territory have been added to the Com-The new 115,000-volt electric transmission line, 32 pany's gas system, making a total of 1;"169 square miles in length, constructed in 1963 south from miles. The Village of Sodus Point in the Lake Shore Rochester into the Genesee District, was further ex- District is receiving gas service under a franchise tended eight miles to serve additional customers granted in 1964.

and connect with other lines. Another new 11-mile Other construction projects during the'year pro-115,000-volt transmission line was built to supply a vided increased energy services for further customer new major substation required by the increase of expansion. Electric and gas lines were extended into electric load in the suburban area east of Rochester. newly developed areas and improvements were This load growth results from the Xerox indus- made at steam system generating plants.

trial expansion and the accompanying residential Additional electric, gas, and steam services con-growtll. tinued to be replaced or moved in 1964 because of Equipment was installed at the Company's larg- State and I'ederal highway construction. The Com-est hydro station which enables remote operation of pany is not reimbursed for these substantial costs, the plant. but is continuing its efForts to secure legislation that Additional coal handling equipment was added will permit reimbursement.

at Russell Station to more. efficiently receive and 1965 CONSTRUCTION PLANS empty the larger, unit train, deliveries of coal.

There was major expansion of the gas supply Construction proposed during 1965 is estimated to system during the year. In the Company's Lake cost over $ 22,000,000 and includes $ 17,691,000 for Shore District, east of Rochester, an additional 16 new projects. A further 25-mile. extension of the miles of 16-inch gas line was connected to a new new transmission line into the Genesee District will supply main completed last year. Another four be made.

miles of 16-inch gas main was constructed in Roch- An additional gas main feeder will be constructed ester's eastern suburban area. These two sections to complete the lines serving the area of the new complete a 51-mile main, from the east into Roch- Rochester Institute of Technology campus.

New customer service buildings will be con- service structures and improvements.

structed in the districts, and major expenditures will continue for moving and replacing services re- FINANCING quired by new highway construction. The Company supplied 77 percent of the 1964 con-Electric system projects are estimated to cost struction costs from the reinvestment of earnings

$ 12,466,000, and $ 7,088,000 is proposed for gas sys- and accruals for depreciation. The Company also tem improvements. The balance of estimated con- used forconstruction the proceeds ofcourt-approved struction costs will be for steam system and general settlements received from several manufacturers of electrical equipment who had been previously con-victed of violating anti-trust laws. These settlements dispose of the major dollar value of the recoveries the Company expects from such cases.

An issue of $ 16,000,000, Series U, 4>/S% Bonds was sold in September. The proceeds were used to redeem the outstanding $ 11,000,000 of short term notes previously issued to finance construction costs.

The balance has been temporarily invested, of

,Cj" which $ 2,000,000 was used for construction in 1964 and $ 9,000,000 remained at the end of the year for 1965 construction costs.

THE YEARS AHEAD Proposed construction during the next five years is estimated to exceed $ 110,000,000.

On March 1, 1965, the outstanding 100,000 shares of 5i/2% Series L Preferred Stock were re-deemed by a new issue of 100,000 shares of 4.55%

Series iM Preferred Stock. The annual dividend saviIlg ls $ 95 000 No additional new financing is proposed during 1965. It is expected that Company funds will pro-vide for a major portion of the 1965 construction program, together with the remaining 1964 bond proceeds.

Internal cash fiow is estimated to supply over 75 percent of the proposed five-year construction costs.

Substation on new 115,000.volt line 10

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'~o If Construction of 20 inch gas mam AVERAGE PRICE OF GAS AND ELECTRICITY/ To R. G. & E. Residential Consumers in Actual and 1964 Dollars Pot THTRM CIIITs PER KWH 44 15 42 13 12 Price of GAS to R.G.a E. Residential Consumers in 1964 Dollars 10 Price of GAS to R.G. & E. Residential Price of ELECTRICITY 24 Consumers in to R.G.IL E. Residential Actual Dollars Consumers in 1964 Dollars

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18 X~ 16 Price of ELECTRICITY 14 to R.G. a E. Resid ential 12 Consumers in Actual Dollars 10 3

1948 1952 1956 1960 1964 1932 I936 1940 1944 1948 1952 1956 1960 1964 1932 1936 1940 1944

resegrck end development United States Atomic Energy Commission to con-It has ahvays been the Company's objective, arid of struct a 260,000 kilowatt high temperature gas-the gas and electric utility industry, to provide bet- cooled nuclear power plant on tlie Company's system

',ter and better service to its customers at lower and at Brookwood, a site located on the southern shore lower unit costs. This objective has been success- of Lake Ontario about 19 miles east oE Rochester.

fully but not easily accomplished. There have been The A.E.C. announced acceptance of this proposal.

continual increases in labor costs, material costs, However, the Company has been unable to conclude and major increases in taxes. The Company has a satisfactory contract with the General Dynamics accomplished this objective through the co opera- Corporation Eor a high temperature gas-cooled re-tive effort of employees to increase sales and to actor and the negotiation has been terminated.

utilize new methods and materials, many of which With ample time for adequate planning available, were the result of research projects and Job Man- a complete review of generating requirements and agement techniques. sources is underway. No diAiculty will be experi-enced in supplying any and all future power needs NUCLEAR POWER of customers.

The Company through its participation in nuclear energy research and development projects is realiz- HIGH TEMPERATURE GAS REACTOR ing beneficial results of expenditures in this field. The 40,000 kilowatt prototype nuclear power gen-Significant reduction in the cost of coal and its trans- erating station being built by High Temperature portation to generating plants is directly related to Reactor Development Associates, a non-profiit group the economic operation and the competition of of 58 investor-owned electric utilities and assisted by nuclear electric generating plants, whidi in some the Atomic Energy Commission, is nearing com-areas are now operating with fuel costs below that pletion. It is anticipated that loading oE nuclear fuel of conventional fossil fueled generating plants. willstart this fall and that this plant will be in opera-Tlie Company's engineers are in the field study- tion in 1965 but an unfortunate fire, which occurred ing the tedinology and operating characteristics of in I ebruary 1965 in the final stages of construction, some of these reactor concepts. will cause some months delay. When operating at A special course in nuclear energy was arranged full power, this plant is expected to provide valuable by tlie Company in which sixty of its engineers par- information with respect to this type oE nuclear ticipated and with the advent of the new nuclear plant.

structures laboratory at the University oE Rochester, additional training facilities will be available. ESADA RESEARCH As a result of these intensive engineering and Tlie Company is continuing its participation with nuclear evaluation studies, the Company and the six other New York State electric utilities known General Atomic Division of General Dynamics as Empire State Atomic Development Associates Corporation jointly submitted a proposal to the to promote the development of high temperature 12

Turbine maintenance at Beebee electric generating station Board Chairman Ginna and Governor Rockefeller viewing University of Rochester new nuclear structure's laboratory reactor designs. They include the Nuclear Superheat The installation of some additional railroad track Boiling Water reactor, the High Temperature Gas- and the construction of coal handling equipment Cooled reactor, and fuels and components Eor the enabled the Company to use unit trains carrying Sodium Graphite reactor. Tliis three-year program 7,000 tons of coal. This new method of transporting started in 1960, and sufficient progress was made so coal substantially reduced the delivered cost of coal.

that it was extended to the end of. 1965. An analysis I'acilities for the remote operation of hydroelec-of further programs is now under study. tric generating plants and remote substations from a central control location eliminated the need for ESUPRA RESEARCH continuous manning of these stations. Significant The principal New York State electric utilities co- savings in manpower have titus been achieved.

operating as Empire State Utilities Power Resources A similar savings resulted from the installation of Associates are carrying on important research in industrial television cameras for the continuous sur-connection with future capability of transmission veillance of areas where guards were formerly line connections and the location of large electric utilized. Two-way voice communication is com-generating stations to meet the requirements of bined witli the television surveillance and remote New York State. gate control. The manpower saving has been sub-stantial. The personnel have been utilized in more ENRICO FERMI FAST BREEDER REACTOR productive areas of the Company's operations.

The Company is a member of a group of companies Additional savings have been accomplished in the which sponsored one of the earliest nuclear power electric operations and include additions to the fleet projects, the Enrico Fermi East breeder reactor at of aerial trucks, new equipment for setting of poles, Monr'oe, Michigan on the electric system of the use of stronger, more attractive and more efficient Detroit Edison Company. This concept, developed overhead line construction, and the use of new and by Atomic Power Development Associates and built less expensive underground line materials.

and operated by Power Reactor Development Com- During 1964 much time and effort have been ex-pany, has the capability oE producing more fuel than pended in developing the best procedures possible it burns. The plant has been partially loaded and to expedite the restoration oE electric service follow-operating since 1963 and considerable valuable in- ing a destructive storm. While present methods and formation has been obtained. procedures achieve quality service, the Company believes that with extensive study even quicker res-OPERATING DEVELOPMENTS toration oE service may be accomplished.

Many projects were instituted during the year to There are many research and development proj-increase the efficiency oE operations. The use of ects in progress, by the Company and in co.opera-more mechanical equipment on electric line main- tion with others, that will increase the service and tenance trucks substantially reduced the number of efficiency of the Company's electric, gas and steam personnel required on many of these trucks. operations.

14

Emergency portable transformer equipment Electronic Computer Center at the main office

musket development tion in the residential electric rate should accelerate The Company's market development program is this expansion. Dusk-to-dawn lighting units have operated to inform customers how they can gain proved their value and are being installed through-improved comfort, added convenience, increased out the Company's service area.

production and greater profits through the ex- Downtown Rochester continues to brighten with panded use of electric, gas and steam services. A staff new commercial establishments, new stores, ofIice oE experienced, trained Company engineers and buildings and banks, modern in design, well-lighted specialists are consulting with residential, commer- and space conditioned, reflecting the growth and cial, industrial and municipal customers in develop- prosperity of the City. Throughout the service area, ment of their improved uses of electricity, gas, and shopping and business centers are improving the steam. The programs are as broad as customers'n- standards of suburban and rural living.

terests, and range from the very popular demon- The Company's Commercial Department assists strations for young homemakers by the Home Serv- customers in creating better standards of lighting, ice Department to the highly technical seminars both indoors and out, and securing the best in space conducted for industrial customers by the engineers conditioning for their customers and employees.

in Industrial Sales. Seminars, inspection trips and educational classes Outstanding acceptance of new, improved ap- have been held for customers, architects and build-pliances in the Company's service area has resulted ers to achieve the best possible ways to make use oE from programs of education of customers regarding energy supplied by the Company. The acquisition the advantages of their use. Strong and co-operative oE a,floodlighting demonstration unit has allowed efforts with dealers'and distributors are improving commercial customers to secure a graphic, visual sales and service techniques, and are creating more presentation of how building lighting can gain ad-informed and satisfied customers. The Company's vertising, eye appeal and safety.

promotional efforts have resulted in an expanding The industrial power consumption index for use of such relatively new items as humidifiers, de- Rochester was five percent more in November 1964 humidifiers, frost-free refrigerators and dishwashers. than last year. Acceptance of better lighting, mod-The Company's 100,000th gas spaceheating cus- ernization of equipment and space conditioning tomer was connected in 1964. In less than 10 years has been exceptional. Company engineers through the Company's residential spaceheating customers not only day-to-day contacts, but through special have increased by 100 percent. The comfort, con- meetings held for industrial and consulting engi-venience and economy of gas heating has been de- neers are providing the necessary technical and monstratively proven in the residential field. A suc- economical information which will enable the best cessful gas conversion burner rental plan was use of energy available. Continuous effort is made adopted, primarily for the Lake Shore District, to to insure a flow of the latest in techniques and tech-facilitate the promotion of spaceheating in that new nology to the Company's industrial customers. The gas service area without major capital investment by adoption oE gas for spaceheating in both large and the customer. small industries has achieved for these customers The use of electric heating is expanding, particu- savings in operating and investment costs and ease larly in the Genesee District, and the recent reduc- an'd cleanliness of operation.

THESE MATTERS CONCERN EACH OF THE COMPANY'S vEN vHosE oF Us who don't care for heroic couplets can see in these lines of Pope something we'e been Afriend to human race trying to say. The "ever-open door" has always Fast by the road, been our way of doing business, for the chief executive his ever-open door...

Alexander Pope and other officers and supervisors.

The symbolism between this and the fact that in 1964.

we did away with our front door is, in truth, a coinci-dence. But the analogy is valid. The air curtain still keeps out the elements: Unlike the old portals, however, it's no barrier to people you no longer have to push your way into our lobby.

We'e always welcomed people, of course, but now we'e simply being more obvious about it. Regardless of the weather on the sidewalk, the air inside, like our welcome, is always warm and pleasant.

The reason for our ever-open door is no mere glad-handing impulse. Through this door we welcome our customers, our investor-owners, and our employees.

It behooves us as a service organization to welcome all, to find how we can serve them better, to both their benefit and ours.

This is the philosophy behind our Open Door.

c tl OUR MAJOR l

h CUS TONIER S INVESTORS Energy is our commodity. But energy without service is worth- Maintaining thc soundness of our share- and bondholdcrs'n-less. Our policy is the maximum in service. It is in line with the vestment is one of the fundamental goals of RG&tE's managc-high standards of our customers. In our area, the best availablc, mcnt because ivc know that no company-especially in the at a lair price, is the way of life. We scck to excel in reliability, utility fiel-can flourish without thc justified confidence of safety, promptncss, and have provided for scores of services lor its investors.

customers. Thcsc range from cooking advice lor a housewife to The proof of our convictions lies in performance:

suggestions for the best way to use gas, electricity or stcam in -Earnings supporting regular cash 'dividend payments on a large industrial plant. common stock without impairment of RG&:E's financial sta-This attention to our customers'eeds makes our service onc bility.

of the great bargains in our customers'udgets. While thc -An increasing market value of thc common stock accom-cost of living has risen by 33 percent in the last 15 yeats, thc panying thc growth of earnings and dividends.

average cost for a kilowatt-hour used by a residential customer -Regular annual payment of stock dividends since 1960 has dropped by 12-percent and each thousand cubic feet of gas without depressing the market value of shares already out-by 19 percent. One illustntion lies in recent trends in spaccheat- standing. We expect to continue this policy.

ing, biggest part of our gas market: Twenty years ago we had -A position in thc money market enabling us to raise capital two percent of that market in our scrvicc area; today, despite advantageously. Our bonds have sold at terms contributing intense competition from other fuels, wc have over 60 pcrccnt. directly to thc health of our corporation and, therefore, to Whencvcr our financial position warrants, we voluntarily the soundness of our shares.

reduce our rates. Rates have been reduced on sevenl occasions In thc last decade the rate of our cash dividend payments during thc past five years. The total annual effect of thcsc re- per sharc, adjusted for stock splits, has nearly doubled. In thc ductions applied to 1964 sales is over $ 4,500,000. This has same period the price commanded by common stock, with the bccn accomplished with the help of declining costs of gas and same adjustmcnt, has incrcascd over 151 percent. Each 100 coal purchased by us and in spite of the increased costs that shares has grown to over 114 through the stock dividends paid we have cxpericnced lor taxes, labor and materials. since 1960.

Unlike most other gas utilitics, wc build, service and main- Thc policies leading to this progress arc the result of man-tain thc lines that connect our customers'ouses to our gas agement's realization that confident investors are an indis-mains. This is a cost which must bc included in our rates; but pcnsible ingredient to our success. Wc know that sustained and it relieves the houscholdcr of the need of spending hundreds growing nct camings pcr sharc must bc the foundation of of dollars for thc installation, and of thc cxpcnse and care in- future achievcmcnts.

volved in maintenance, lor which he lacks adequate equipment Our door is open thc year round, of course, to our 26,174 and experience. shareholders.

Our customers have amply demonstrated their confidence Ten years ago it took $ 11.53 in revenue to produce $ 1 of net in the way we serve them. For this we arc grateful-and camings applicablc to common stock. In 1964 there was a determined to continue to provide all the usefulness at our dollar for the shareholders for every $ 8.11 that came in-command. dcspitc thc fact that thc percentage of labor and tax costs Our Open Door policy exists most of all for those wc serve. had increased.

This is thc kind of stewardship we strive for in thc manage-ment of capital entrusted to us.

RESPONSIBILITIES EMPLOYEES COMMUNITY Perhaps thc best measure of a company is found in thc charac- Last year our Company paid nearly $ 10i/z million in local taxes, ter, compctcnce and loyalty of people who make up its operat- more than anyone else in our scrvicc area. Wc arc also active ing team and these factors arc best evidenced by the way its supporters of those local private institutions dedicated to the jobs are cherished by their holders. health, welfare, culture and education of our community.

RG&.E is proud of its low rate of employcc turnover: 5.8 per- Yct we know that merc money cannot buy good citizenship; cent a year, compared to 14.4 pcrccnt avcngc for all industry even more important is a sense of civic responsibility,applied throughout its main service area. Even in Rochester, where with cncrgy and enthusiasm. From this conviction has grown job stability is among the best of thc Nation's cities, our record our policy of encouraging the Company and its cmployecs to on this score rates near thc top. enter into the forefront of community scrvicc, working for Thc reason for thc congeniality between our employees and progress at every opportunity. Apart from satisfaction, wc have their work, wc fccl, lies deeper than merc wages, hours and a partnership with our neighbors in common progress.

fringe bcncfits. Wc are proud, of course, ol the material re- Our neighbors recognize thc scnsc of citizenship that moti-wards wc provide. They are comparable with other local indus- vates thc scores of our pcoplc who work for thc public good, tries and with thc utility industry in genenl. But even more and the high qualities they bring to public enterprises.

fundamental, wc think, is our determination to find thc best Such signs of public confidence arc thc rule, not thc excep-person lor each job, and thc best job fitting the qualifications tion. Rochester as well as two area villages have in recent of cvcry person on our payroll. times chosen mayors from our ranks. Scores of our people Our Company is proud of its competent and cxperienccd serve on the councils, boards, commissions and committees cmployccs. Thc record shows that RG&iE and those it hires of cities, towns, villages and school districts. Wc encourage our gcncnlly stay togcthcr. Today the avcragc length of scrvicc cmployecs to work for thc party of their choice-be it Demo-among thc 2,480 permanent employees is almost 16 ycars- cratic, Republican or other. Outside govcrnmcnt, they scrve-morc than onc-third of a normal working career. both in thc ranks and in posts of leadership-in virtually every Our philosophy is that in any task the person who docs it is effort dedicated to thc good of thc many. The immediate past in thc best position to know it and how it might bc done bcttcr. president of thc Rochcstcr Chamber of Commerce and thc We encourage him to look upon his duties with the assump- Chairman of thc Board of Directors ol thc Rochester Civic tion that cvcry job can be improved. Predictably, thc result of Music Association, for instance, cam their bread at RG&tE.

this program-we call it Job Management-has been improve- Wc cncouragc those ivho work herc to serve and wc allow ment in thc ways wc carry out many of our functions. Thc sys- them thc time to do it. This is in kccping with the Company's tem has proven itself worthwhile in terms of mutual satisfac- own endeavors to make its community ever healthier, more tion and benefits for employer and employcc. Thc main reason pleasant, more'beautiful. We buried thc once-unsightly tangle it works is our Open Door-the fact that wc want to listen of downtown cables; wc made our plants smokeless; our mo-when an idea comes from among our own. tion picture-"Rochester-A City of Quality" has spread word Job Management has proved its worth up to our highest ex- of our community's virtues in this country and abroad. Three pectations, and we expect to improve on it. Among its achicvc- times in the last 10 years wc have rcccived national recognition mcnts so far arc complete reorganization of departments and for thc attractive landscaping of our plants. We'e worked for scores of less dnmatic but highly important contributions. thc common good in many other ways. Thc effort has somc-We don't try to put a dollar sign on this program. We can', timcs been considerable, but it is worthwhile.

and we shouldn't because the objective is efliciency. Eflicicney, The path to and lrom the community through our Open to us, means total, utilization of the talents of thc human re- Door has been well traveled.

sources wc are proud to have. Effectiveness might bc an cvcn bcttcr word.

0 OUR GUsTohfERs wc want to be a good servant, useful in the way they want to be served. In our setting, where high quality is a civic tradition, this means doing a little more, done a little better, at a price that reflects value received.

Our customers want more than cut-rate service. What we give them, we believe, is the best available anywhere and our rates are still below those paid by the majority of the people in New York State.

To our investors, we want to be a good steward. We aim to provide a fair return and good growth on our shares, and the overall soundness needed to make our bonds eagerly sought whenever they are offered. Management so oriented, we believe, be-gets more than satisfied investors. It also assures the availability of growth capital needed to meet the increasing demands for service by our customers.

To our employees, we want to be a good boss who recognizes the full value of work well done. Their skill, loyalty, and pride of occupation are RG&E's reward for its tradition of providing secure jobs with just compensation.

To our community, we want to be a good constituent. Being the largest payer of local taxes in our territory is only the beginning in our continuing efforts to help our environs and our neighbors to live and grow happily. This policy stems from the knowledge that RG&E cannot prosper unless its community does.

This is the role we strive to fill. To those with ideas on how we can fill it bet-ter, our door is ever open.

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force compared with 4.4 percent for the Nation and 4.2 percent for the State. During 1964 the Company participated in a program for executives of the 76 national concerns having facilities in the Rochester area. It was also active in a program, sponsored urea development jointly by the University of Rochester and Roches-ter industrial concerns, to provide additional educa-tional and research facilities Eor employees and sci-entists of Rochester companies who desire to im-The President of the University of Rochester, Mr. prove their education and skills at all levels. The W. Allen Wallis, has described Rochester: "The Company and its employees have contributed ef-City is the world's center for the manufacture of forts and funds for the construction oE new facilities photographic, optical, instrumental, and vacuum at the University of Rochester, the Rochester Insti-equipment. Rochester has more computers per tute of Technology, to hospitals and many other capita than any city in the world nearly twice as programs in which many millions of dollars were many as its nearest competitor. There are more en- raised in the Rochester area for improved and addi-gineers employed in Monroe County than you will tional facilities.

find in any one of some 23 states. Rochester has the The Midtown Plaza development has encouraged highest percentage of skilled technical and profes- a continuing modernization of the business district.

sional employees among its labor force of any major A new bank has been completed near Midtown and metropolitan area in the Country. Rochester is several other large banking Facilities are under con-unique in the high percentage of its labor force em- struction. Demolition is nearly completed to permit ployed in manufacturing. Only Wilmington, Dela- construction of the proposed 30-story Xerox tower ware, has as high a proportion of scientists employed oAice building, also near Midtown. The Civic Cen-by industrial firms as Rochester. Rochester has the ter government buildings are being expanded. Dur-lowest unemployment rate in the State, and one oE ing 1965, Rochester will begin redevelopment of

'the lowest in the iNation. Rochester has the highest Genesee Crossroads, an older commercial section of median family income of any city in the State, and the business district that will be replaced with mod-the sixth highest in the Nation." ern buildings.

The Company continues to be active in many "Rochester A City of Quality," is the Com-phases of community, industrial, agricultural, and pany's motion picture in sound and color, which recreational development. The community develop- was completed in 1963 and describes the advantages ment program has been expanded to assist each of of the City's metropolitan area. The film is receiv-the smaller communities served in building a better ing wide acceptance in the eastern United States and economic base by the attraction of additional indus- has enjoyed an almost worldwide distribution.

tries and the creation of higher employment. Many oE the Rochester industries have obtained The Rochester area continues to progress. Eight copies of the film to use in personnel recruitment new industries were added in the metropolitan area and in promotional efFort.

in 1964. I'.ntirely new Facilities were built by 19 The Company has ahvays maintained an open new and previously established companies and 23 door policy with shareholders, customers, and em-others so expanded their facilities that there was an ployees. Recently this was symbolized with the mod-increase of 730 persons in industrial employment. ernization of the main oAice building by the installa-Rochester business activity in November 1964 tion of a new open door entrance. In addition to reached a new record high wliich was six percent symbolizing the Company policy, the change pro-more than November 1963. Unemployment was at vides an unobstructed view of the merchandising its lowest level since World War II. The unemploy- and lobby areas with their warmth and inviting ment rate for this period was 1.4 percent of the work atmosphere.

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personnel pursuing college graduate degree programs is also Tliere were 2,480 employees at the year end, an in- increasing. During the year, the Company conducted crease of 11 employees over 1963. in-plant training programs, including nuclear engi-The Company has a low turnover rate in employ- neering, job management, college graduate cadet ment and 15 percent of the employees have more training, and new employee orientation.

than 30 years of service. There are 589 employees R. G. and E. employees are noted for their civic emeritus receiving pension. Contact with these em- activities. The percentage who actively participate ployees is continued by recognizing their service in community service is unusually high. Employee anniversaries and sponsoring an annual Pioneers'lub civic responsibility is well demonstrated by the gen-program for all with more than 35 years of erous response to the 1964 Community Chest-Red service. Cross fund drive in which the average pledge per The open door pliilosophy is apparent in all Com- Company employee reached a new high of $ 33.00.

pany personnel activities. Each of the more than 4,500 individuals who applied for employment in 1964 had a personal interview and their qualifica-tions were given equal consideration in filling the limited number of job vacancies that occurred. Con-tinuing emphasis on selection and development has produced a work force of men and women highly-menugement qualified to meet the Company's present and future needs.

Total injuries were down 9.1 percent in 1964 and disabling injuries were 11 percent less than last year.

Intensive efforts are being continued to help super- The passing of Mr. Leo H. East, Executive Vice

.visors reduce on-the-job accidents. In the utility President, Director and iMember of tlie Executive industry this is no easy task, for many employees Committee of the Company, on February 18, 1965 work alone and much of their work is on customers'remises greatly sorrowed the Company. Mr. East had been under conditions that cannot be con- with the Company since his graduation from col-trolled. Company vehicles traveled 320,000 more lege. His participation in the growth of the Com-miles in 1964 than in the previous'year and estab- pany and his active interest in civic affairs will long lished a new low accident frequency record. be remembered.

An increasing number of employees are availing Vice President Frederick J. PAuke retired during themselves of the excellent opportunities in Roch- 1964, having reached the Company's retirement age ester for part time higher education. The Com- of 65. Mr. Pfluke was responsible for gas operations pany's tuition refund program encourages this prof- and development, and his knowledge and ability itable use of spare time. The number of employees were highly regarded throughout the gas industry.

20

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PAICI AVATI'AIIOUSE8 CO.

shoo lnmowN Tow@a ROCllL'STLil4 14604 February 15, 1965 To the Shareholders and 13onrd of Directors of Rochester Gas nnd 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, 1964 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 examina-tion of these statements was made in accordance with gen-erally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

22

ROCHESTER GAS ANO ELECTRIC CORPORATION Statement Of InCOme and Earned SurPluS for tho Years Endod Docornbor 31,1964 and1963 1963 REVENUE:

Electric . $ 54,034,986 $ 51,204,020 Gas 35,584,939 34,096,583 Steam 4,740,750 4,874,473 94,360,675 90,175,076 ExP ENSE:

Operation and maintenance . 51,254,156 49,426,948 Depreciation........ 8,375,227 7,916,772 Federal income taxes.... 5,520,000 5,580,000 Other taxes......... 10,563,312 10,078,145 75,712,695 73,001,865 INCOME FROM OPERATIONS . 18,647,980 17,173,211 OTEIER INCOME . 144,778 136,829 GROSS INCOME 18,792,758 17,310,040 INCOME DEDUCTIONS:

Interest on long term debt... 4,610,363 4,423,307 Other interest..........

Other income deductions....

296,322 214,231 259,352 166,661 Interest charged to construction (150,346) (162,735) 5,015,691 4,641,464 NET INCOME 13,777,067 12,668,576 DIVIDENDS ON PREFERRED STOCK . 2,145,000 2,145,000 EARNINGS APPLICADLB TO COMMON STOCK 11,632,067 10,523,576 DIVIDENDS ON COMMON STOCK:

Cash Stock (1964-$ 1.00; 1963-$ .975)....... 5,725,758 5,473,915 2o/o in January 1964, 112,823 shares at $ 35 3,948,805 2o/o in January 1963, 110,611 shares at $ 25 2,765,275 EARNED SURPI.us, beginning of year....... 28,843,326 26,558,940 EARNED SURPLus, end of year.......... $ 30,800,830 $ 28,843,326 NOTES TO FINANCIAL STATEMENTS plan effective October I, 1964, thc Company expects to FeneRAL INcoxte Taxes-The provision for Fcdcral income fund an estimated past service cost of approximately taxes for 1964 has been reduced by $ 500,000 in respect of $ 11,500,000 over a period of about 30 years. This amend-the investment credit applicable to depreciable property ment increased pension expense for thc last quarter of acquired during thc year. The Company has continued its 1964 by $ 250,000.

practice of providing depreciation on a straight-linc basis in its financial statements while deducting for tax purposes Reseave eoa DeeaectxvtoN-In the accompanying state-those ainounts allowable, including accclcrated deprecia- ment of financial condition, the Company has reflected its tion. Depreciation claimed for tax purposes exceeded reserve for depreciation on thc liability side under amounts provided on the books by $ 5,800,000 and "Reserves" which it believes is proper as this practice is in

$ 5,500,000 for 1964 and 1963, respcctivcly. The Company's accord with the systems of accounts prescribed for utilities method of accounting for these items is consistent with the in the State of New York. In accordance with a footnote announced policies of the Public Service Commission of thereto, on balance sheets filed with the Securities and Ex-the State of New York. change Commission the depreciation reserve is deducted from thc recorded amount of utility plant in order to con-RertaehleNT PLAN-Under an amendment to thc retirement form with their regulations.

23

ROCHESTER OAS AND ELECTRIC CORPORATION Statement of Financial Condition at December 31, 1964 and 1963 1963 UTILITYPLANT, at original cost:

Electric.............. $ 229,086,988 $ 221,294,231 Gas.............. ~ ~ 98,911,296 91,0 1'1,953 Steam 12,610,348 12,307,681 340,608,632 324,613,865 CURRENT ASSETS:

Cash.................. 8,063,645 6,368,996 Temporary cash investments...... 3,000,000 Accounts receivable, less reserve.... 6,515,416 5,853,884 Materials and supplies, at average cost 4,593,072 4,540,942 Prepayments............ ~ ~ 341,173 378,966 22,513,306 17,142,788 DEFERRED DEBITS:

Unamortized debt discount and expense.... 512,579 540,881 Extraordinary property losses........ ~ 927,480 1,159,350 Capital stock expense.............. 2,105,396 2,097,355 Other...................... 221,617 40,016 3,767,072 3,837,602 TOTAL $ 366,889,010 $ 345,594,255 24

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1963 CAPITALIZATION,see accompanying schedules:

Long term debt....... ~......... $ 132,000,000 $ 116,000,000 Preferred stock................. 47,000,000 47,000,000 Common stock....... ~.......... 71,003,826 67,055,021 Premium on preferred stock.......... 83,412 83,412 Earned surplus................. 30,800,830 28,843,326 280,888,068 258,981,759 RESERVES:

Depreciation 72,638,067 66,504,481 Injuries and damages . 549,071 487,189 73,187,138 66,991,670 CURRENT LIABILITIES:

Notes payable 8,000,000 Accounts payable 4,590,034 3,961,515 Customer deposits 357 337 301,072 Taxes accrued 4,930,196 4,663,358 Interest accrued 1,574,945 1,490,460 Other..................... 946,180 860,395 12,398,692 19,276,800 DEFERRED CREDITS:

Unamortized premium on debt......... 331,540 237,453 Customer advances for construction...... 83,572 106,573 415,112 344,026 TOTAL $ 366,889,010 $ 345,594,255 25

ROCHESTER GAS AND ELECTRIC CORPORATION Long Term Debt, DEOEMBER 31,1964 FIRST MORTGAGE BONDS: 8. At any time at 104.70 and accrued interest upon not less than 30 days'nd not more than 60 days'revious notice before July I, Fifty-year 4t/s% Bonds due September 1, 1977, Series D (I) $ 6,000,000 1965; thereafter at 104.48 before July I, 3I/4% Bonds due March 1, 1969, Series J (2) 8,323,000 3'%onds due 3% Bonds due March 1, 1970, Series K March 1, 1979, Series L (4)

(3)........ 15,000,000 16,677,000 1966; thereafter at 104.27 before July I, 1967; thereaBer at lesser rates annually before July I of each succeeding year.

2s/4% Bonds due 3Ys% Bonds due August 15, 1980, Series M June 1, 1982, Series N (6)

(5)....... 12,000,000 9. At any time at 104.79 and accrued interest upon not less than 30 days'nd not morc 6,000,000 3s/s% Bonds due March 1, 1985, Series 0 (7) 10,000,000 than 60 days'revious notice before October 15, 1965; thereafter at 104.59 before October 4va% Bonds due July 1, 1987, Series R (8) 15,000,000 5% Bonds due 4t/a% Bonds due October 15, 1989, Series S (9).......

T(10).....

12,000,000 15, 1966; thereafter at 104.39 before October 15, 1967; thereafter at lesser rates annually before October 15 of each succeeding year.

Novcmbcr 15, 1991, Series 15,000,000 4s/s% Bonds due September 15, 1994, Series U (II)..... 16,000,000 10. At any time at 105.07 and accrued interest

$ 132,000,000 upon not less than 30 days'nd not more than 60 days'revious notice before Novem-ber 15, 1965; thereafter at 104.88 before No-vember 15, 1966; thereafter at 104.68 before Redeemable at the option of the Company 5. At any time at 101.88 and accrued interest November 15, 1967; thereafter at lesser rates upon not less than 30 days'nd not more than annually before November 15 of each suc-

1. At 102 and accrued interest, on intcrcst dates, 60 days'revious notice before August 15, cccding year, provided, however, that prior upon 60 days'revious notice, on and after 1965; thereafter at 101.79 before August 15, to November 15, 1966, no Series T Bonds Scptembcr I, 1967. 1966; thereafter at 101.69 before August 15, may bc redeemed from the proceeds of any 1967; thereafter at lesser rates annually before refunding operation which has an interest

2. At 100 and accrued interest, on interest dates, August 15 of each succeeding year. rate of less than the interest rate borne by upon 60 days'revious notice. 6. At any time at 102.60 and accrued interest the Series T Bonds.

upon not less than 30 days'nd not more than 11. At any time at 107.01 and accrued interest

3. At IOIVi and accrued interest, on interest 60 days'revious notice before June I, 1965; upon not less than 30 days'nd not more dates, upon 60 days'revious notice on or thereafter at 102.44 before June I, 1966; there- than 60 days'revious notice before Septem-before March I, 1966; thereafter less Vi% for after at 102.29 before June I, 1967; thereafter ber 15, 1965; thereafter at 106.77 before Sep-each successive twelve months'eriod through at lesser rates annually before June I of each tember 15, 1966; thereafter at 106.53 before March I, 1968; thereafter without premium. succeeding year. September 15, 1967; thereafter at lesser rates

7. At any time at 103.79 and accrued interest annually before September 15 of each suc-

4. At any time at 101.61 and accrued interest upon not less than 30 days'nd not more than ceeding year, provided, however, that prior upon not less than 30 days'otice before 60 days'revious notice before March I, 1966; to September 15, 1969, no Series U Bonds March I, 1966; thereafter at 101.49 before thereafter at 103.59 before March I, 1967; may be redeemed from the proceeds of any March I, 1967; thcrcaftcr at 101.37 before thereafter at 103.39 before March I, 1968; refunding operation which has an interest March I, 1968; thereafter at lesser rates annu- thereafter at lesser rates annually before rate of less than the interest rate borne by ally before March I of each succeeding year. March I of each succeeding year. the Series U Bonds.

CaPital Stock, DEGEMBER 31,1964 Preferred Stock (cumulative) par value $ 100 per share; 4.95%%uo 810,000 shares authorized.

Issued and outstanding:

4% Series F, 120,000 shares......... $ 12>000,000 4.10% Series H, 80,000 shares......... 8,000,000 4s/4% Series I, 60,000 shares......... 6,000,000 4.10% Scrics J, 50,000 shares...... .. ~ 5,000,000 Seri K, 60,000shares......... 6,000,000 5'%eries L, 100,000 shares (I) 10,000,000 47,000,000 Common Stock, no par value; 8,000,000 shares authorized, The outstanding preferred stocks may be re-5,753,964 shares issued and outstanding........ 71,003,826 Premium on preferred stock................. 83,412 deemed at the option of the Company at any time in whole, or in part by lot, on 30 days'o-tice by payment in the case of Series F stock of

1. Redeemed March I, 1965 at $ 105 per share. On March I, 1965, $ 118,087,238 $ 105 per share; in the case of Series H stock by 100,000 shares of 4.55% Series M Preferred Stock were issued at par. payment of $ 101 per share; in the case of Series I stock by payment of $ 101 per share; in the case Splits of the common stock werc made June 15, 1956 at the rate of 3 for 2 and of Series J stock by payment of $ 102.50 per share; and in the case of Series K stock by payment June 1, 1962 at thc rate of 2 for 1. Stock dividends were issued to stockholders of of $ 104 per share prior to September I, 1966, record in January at the rate of 3% in 1960 and 1961 and at 2% in 1962, 1963, thereafter at $ 102 per share; plus accrued divi-1964 and 1965. dends in all cases.

26

ROCHESTER GAS AND ELECTRIC CORPORATION Financial Information STATEMENT OF INCOME (OOO>s) 19da 1962 1961 1960 19S9 19SS I9S1 I956 l9SS INCOME:

Electric revenue. $ 54,035 $ 51,204 $ 48,281 $ 45,355 $ 43,164 $ 41>645 $ 37,792 $ 35>209 $ 33,108 $ 30,804 Gas revenue. 35,585 34,097 32,420 30,418 28,073 25,936 23,147 21,099 20,504 17,879 Steam revenue 4,741 4,874 4>842 4,718 4,740 4,783 4,460 3,979 3,942 3,523 Other income. 144 137 186 138 276 107 105 114 22 125 Total income $ 94.505 $ 90,312 $ 85,729 $ 80,629 $ 76,253 $ 72,471 $ 65,504 $ 60,401 $ 57,576 $ 52,331 DISPOSITION OF INCOME:

Payroll and employee benefits......... $ 24,001 $ 22,683 $ 21,504 $ 20,847 $ 20,198 $ 18,833 $ 17,718 $ 16,825 $ 15,716 $ 14,722 Federal income taxes................ ~ 5,520 5,580 5,400 6,075 5,430 6,228 5>529 4,898 5,290 5,066 Other taxes. 10,948 10,452 9,899 9,274 8,758 8,187 7>327 6,847 6,119 5,615 Electric and steam fuels.............. 7,830 6,312 5,553 6,159 7,501 7>357 7,203 7,220 6,247 5,634 Gas purchased. 13,347 12,809 12,337 11,239 10,377 8,795 7,665 6,758 6,451 5,776 Purchased electricity......... ....... 1,326 2,800 2,804 1,801 611 873 553 159 345 457 Materials and contractors'harges..... 3>422 3,365 3,224 3,287 3,404 2,853 2,872 3,040 2,921 2,281 Services and other items.............. 5,158 4,875 4,843 4,485 3>519 4,024 2,923 2,631 3,251 2 377 Depreciation 8,375 7,917 7,579 6,598 6,242 5,624 5,288 4,927 4,751 4>412 Interest on bonds and notes........... 4,907 4,637 4,472 4,181 3,891 3,559 3,382 2,999 2,587 2,468 Less-Amounts charged to construction:

Payroll and employee benefits....... 3,708 3,367 3,270 3,352 3,078 3,068 2,757 2,649 2,443 2,249 Other taxes. 248 257 235 233 243 210 184 180 63 45 Interest 150 163 132 294 226 645 286 410 446 203 Total expense 80,728 77,643 73,978 70,067 66,384 62,410 57>233 53>065 50,726 46,311 Preferred dividends................... 2,145 2>145 2,145 2,145 1,956 1,595 1,595 1,595 1,387 1,298 Earnings applicable to common stock... 11,632 10,524 9,606 8,417 7,913 8,466 6,676 5,741 5,463 4,722 Total dispositiotr of income $ 94,505 $ 90,312 $ 85,729 $ 80,629 $ 76,253 $ 72,471 $ 65,504 $ 60,401 $ 57,576 $ 52,331 Cash dividends on common stock....... $ 5,726 $ 5,474 $ 5,091 $ 4,844 $ 4,701 $ 4,464 $ 3,641 $ 3,641 $ 3,517 $ 2,950 Stock dividends capitalized............. $ 3,949 $ 2,765 $ 3,253 $ 3,159 $ 3>446 Increase in surplus.................... 1,957 2,285 1,262 414 (234) $ 4,002 $ 3,035 $ 2,100 $ 1,946 $ 1.772 Earnings reinvested................... $ 5,906 $ 5,050 $ 4,515 $ 3,573 $ 3,212 $ 4,002 $ 3,035 $ 2,100 $ 1,946 $ 1,772 Common sharest..................... 5,753,964 5,641,141 5,530,530 5,422,088 5>264,162 5,102,152 4,551,000 4,551,000 4,551,000 4,544,282 Stock dividend shares issuedt........,., 112,823 110,611 108,442 157,926 153,162 Earnings per share<<.................. $ 2.02 $ 1.82 $ 1.66 $ 1.46 $ 1.37 $ 1.47 $ 1.16 $ .99 $ .94 $ .82 Cash dividends per share<<............. $ 1.00 $ .95 $ .88 $ .84 $ .82 $ .78 $ .63 $ .63 .61 $ .51 Common stock cash dividend rate Dec. 31t $ 1.00 $ 1.00 $ .95 5 .90 $ .90 $ .90 $ .80 $ .80 $ .80 $ .746 N. Y. Stock Exchange-Shares traded.... 270,300 406,300 293,800 270,300 254,800 252,200 248,100 148,300 127,500 105,800 Closing price Dec. 31............... 37% 36Ys 27Ys 57Ys 45Yi 49Ye 41Y4 28Ys 28Ys 44Y4 Closing price Dcc. 31t.......,...,. 37Ys 36Yt> 27Ys 28Ye 22K<< 24Ãs 20Ys 14Y<< 14Ys 14se tAdjusted for stock splits in 1962 and 1956.

<<Based upon shares outstanding December 31, 1964.

SOURCE AND DISPOSITION OF FUNDS (OOO>s)

SOURCE OF FUNDS:

'rorot Qggg t96S 196 a I 961 1 960 'I 959 l9sa 195y 19S6 195S Nct income................ $ 97,166 $ 13,777 $ 12,668 $ 11,751 $ 10,563 $ 9,869 $ 10,061 $ 8,271 $ 7,336 $ 6,850 $ 6,020 Depreciation and nct salvage. 64,914 9,005 8,321 7>996 7,118 6,331 5,634 5,438 5,134 5,171 4,766 Sale of bonds.............. 68,000 16,000 15,000 12,000 15,000 10,000 Sale of preferred stock....... 16,000 10,000 6,000 Sale of common stock....... 18,628 166 10,356 91 8,015 Proceeds ol short term loans.. 78,530 3,000 5,500 2,500 9,500 7,030 14,500 10,000 5,500 14,000 7,000 Increase in other items....... 4,526 1,255 755 (523) (115) 67 346 274 (153) 1 ~ 161 1,459 Total frrnds $ 347,764 $ 43,037 $ 27,244 $ 21,724 $ 42,066 $ 33,463 $ 52,897 $ 23,983 $ 32,817 $ 33,273 $ 37,260 DISPOSITION OF FUNDS:

Property additions.......... $ 191,559 $ 19,435 $ 19,408 $ 15,461 $ 20,506 $ 20,349 $ 23,997 $ 18,809 $ 15,675 $ 22,367 $ 15,552 Preferred stock dividends.... 18,006 2,145 2>145 2,145 2,145 1,956 1,595 1,595 1,595 1,387 1,298 Common stock dividends...,. 44,049 5,726 5,474 5,091 4,844 4,701 4,464 3,641 3,641 3>517 2>950 Payment of short term loans.. 86,730 11,000 13,000 7,030 22,000 12,700 5,800 15>200 Increase in other items....... 4,513 3,036 114 (2,025) 1,398 10 763 57 (690) 1,395 455 Total disposition o//rrnds $ 344,857 $ 41,342 $ 27,141 $ 20,672 $ 41,893 $ 34,046 $ 52,819 $ 24,102 $ 32,921 $ 34,466 $ 35,455 Increase or (decrease) in cash. $ 2,907 $ 1,695 $ 103 $ 1,052 $ 173 $ (583 ) $ 78 $ (119) $ (104) $ (1,193) $ 1,805 27

ROCHESTER GAS AND ELECTRIC CORPORATION Statement of Financial Condition AT DECEMeER 8~

(Thousands of Dollars)

)gggi 19da 1952 19dl 1950 'I 959 1958 1957 19Sd 1955 1954 UtilityPlant, at original cost:

Electric ................... $ 229,087 $ 221>294 $ 211,947 $ 205,442 $ 194,163 $ 184,424 63,338

$ 170,189 56,535

$ 158,394 $ 149,880 47,826

$ 133,577 44,351

$ 125,996 38,245 Gas . 98,911 91,012 83,491 77,363 70,676 51,751 12,611 12,308 11,956 11,906 11,384 11,013 10,558 10.557 10,407 10,293 10,029 340,609 3%,614 307,394 294,711 276,223 258,775 237,282 220,702 208,113 188,221 174,270 Current Assets:

Cash 8,064 6,369 6>266 5,214 5,041 5,624 5,546 5,666 5,770 6,963 5,158 Temporary cash investments. 3,000 1,294 Accounts receivable, less reserve ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 6,515 5,854 5,725 5,510 5,245 4,965 4,706 4,071 4,091 3,989 3>461 Materials and supplies, at average cost...,....... 4,593 4,541 4,554 5,471 5>601 5,845 5,455 5,788 5,972 5,007 5,143 Prepayments .............. 341 379'. 264 234 311 320 400 427 364 229 331 22,513 17>143 16,809 17,723 16,198 16,754 16,107 15,952 16,197 16,188 14>093 Deferred Debits:

Unamortized debt discount and expense ................. 513 541 569 594 530 535 455 476 398 416 434 Extraordinary property losses. 927 1 ~ 159 1,391 1,623 1,410 1,645 1,880 2,115 Capital stock cxpensc....... 2,105 2,097 2,090 2,083 2,037 1,914 1,715 1,715 1,704 1>435 1,315 Other .................... 222 40 47 82 20 151 187 287 225 294 220 3,767 3>837 4,097 4,382 3,997 4,245 4,237 4,593 2 327 2,145 1>969 Total $ 366.889 $ 345,594 $ 328,300 $ 316,816 $ 296,418 $ 279,774 $ 257,626 $ 241,247 $ 226,637 $ 206,554 $ 190,332 Capitalization:

Long term debt ............ $ 132,000 $ 116,000 $ 116,000 $ 116,000 $ 101)000 $ 101,000 $ 89,000 $ 89,000 $ 74,000 $ 74,000 $ 64,000 Preferred stock ........,... 47,000 47,000 47,000 47,000 47,000 37,000 37,000 37,000 37,000 31,000 31,000 Common stock ............ 71,004 67,055 64,290 61,037 57,878 54>266 43,910 43,910 43,910 43,819 35,804 Premium on preferred stock.. 83 83 83 83 83 83 83 83 83 83 83 Earned surplus ..........,. 30,801 28,844 26,559 25,297 24,883 25,117 21,135 18,100 15,978 14,032 12,260 280,888 258,982 253,932 249,417 230>844 217,466 191>128 188,093 170,971 162,934 143,147 Reserves:

Depreciation:

Electric 55,764 51,421 46,813 42,863 38,746 35,884 33,177 30,539 29,192 26,505 24,053 Gas 13,910 12,290 11,114 10,165 8,981 8,691 8,457 8,156 3,253 3,467 2,960 Steam ............ 2,964 2,794 2,587 2,494 2,356 2,310 2,285 2,155 2,564 2,352 2,135 72,638 66,505 60,514 55,522 50,083 46,885 43,919 40,850 35,009 32,324 29,148 Injuries and damages .. 549 487 470 413 360 294 278 244 220 217 212 73,187 66,992 60,984 55,935 50,443 47,179 44,197 41>094 35,229 32>541 29,360 Current Liabilities:

Notes payable ...... 8>000 2,500 3,500 3,500 11,000 1,000 8,200 8,200 Accounts payable ... 4,590 3>962 3,789 3,654 3,648 3,499 3,303 3,348 3,683 2,587 1,758 Customer deposits .. 358 301 280 252 239 200 185 170 167 166 177 Taxes accrued ...... 4,930 4,663 4,231 5,029 5,288 5,508 5,407 5,210 6,260 6,679 6,038 Interest accrued .... 1,575 1,490 1,394 1,349 1,306 1>281 1,260 1>139 856 771 741 Other ............. 946 860 811 772 695 643 585 573 558 108 108 12,399 19>276 13,005 11,056 14>676 14,631 21,740 11,440 19,724 10,311 17,022 Deferred Credits:

Unamortized premium on debt 331 237 269 301 333 364 396 428 459 491 424 Customer advances for construction ............. 84 107 110 107 122 134 165 192 277 379 415 344 379 408 455 498 561 620 713 768 803 Total $ 366,889 $ 345,594 $ 328,300 $ 316,816 $ 296,418 $ 279,774 $ 257,626 $ 241,247 $ 226,637 $ 206,554 $ 190,332 28

ROCHESTER GAS AND ELECTRIC CORPORATION Electric Department Electric Energy-KWH (000's):

Generated-Steam ................,...

I~I 2,033,900 1965 1,369,718 1962 1,067,231 1961 1>246,227 1960 1,580,219 1959 1,398,456 1958 1,390,010 195y 1,420,334 1956 1>257,871 1955 1,155,792 Generated-Hydro ...,............, .. 175,453 153,067 191,292 200,383 203,192 231,684 202,951 196,491 248,698 195,468 Purchased and interchanged-Net....... 325,020 836,708 931,809 596.464 120,172 184,936 91,581 20,319 57,154 87,945 Toral electric energy 2,534,373 2,359,493 2,190,332 2.043.074 1.903.583 1,815,076 1,684,542 1,637,144 1,563,723 1,439,205 Electric Sales-KWH (000's):

Residential 788,376 736,337 686,522 649,334 608,728 583,523 545,114 507,446 470,846 424,494 Commercial 600,204 549,310 509,770 467,751 437,541 426,133 387,285 370,096 344,682 323,129 Industrial . 689,510 638,201 595,619 531,432 507,803 477,592 442,793 466,089 463,235 432,331 Street and highway lighting.. 34,039 32>274 30,904 29,507 28,153 27>666 27,068 25,584 24,925 24,165 Other municipal 164,656 149,357 126,123 115,106 100,176 88,639 66,025 56,886 53,821 41,825 Other utilities . 630 624 1,987 2,578 2,438 2,402 2,391 2,427 2,436 2,325 Total electric sales 2,277,415 2,106,103 1,9$ 0,925 1,795,708 1,684,839 1,605,955 1,470,676 1,428,528 1,359,945 1,248,269 Electric Customers at December 31:

Residential 197,535 191,461 187,297 183,793 180,502 178,021 175,260 172,788 169,477 165,607 Commercial 19,978 19,576 19,376 19,363 19,345 19,457 19,535 19,441 19,493 19,493 Industrial . 1,318 1>308 1,332 1,289 1,209 1,007 1>013 1,012 1,004 1,006 Other 1,486 1,404 1,343 1,285 1,250 1,226 1,197 1,185 1,176 1,133 Total electric customers 220,317 213,749 209,348 205,730 202,306 199,711 197,005 194,426 191,150 187,239 Electric Revenue (000's):

Residential . $ 22,942 $ 21,676 $ 20,539 $ 19,643 S 18,672 $ 18,041 $ 16,310 S 14,730 $ 13,906 $ 12,874 Commercial .... 14,002 13,308 12>530 11,707 11>199 11,016 10,041 9,369 8,669 8,155 Industrial . 11,204 10,713 10,236 9,408 9,135 8,713 8,099 8,080 7>676 7>178 Street and highway lighting......,..... 1,910 1,779 1,670 1,599 1,542 1,464 1,368 1,329 1,292 1,250 Other municipal Other utilitics

..................... 3,286 3,046 2>666 2,440 2,197 2,016 1,593 1,372 1,2$ 3 1,046 12 12 31 41 38 37 37 38 38 37 Miscclianeous . 679 670 609 517 381 358 344 291 274 264 Toral electric revenue S 54,035 S 51,204 S 48,281 $ 45,355 $ 43 164~ S 41,645 $ 37,792 $ 35,209 $ 33 108~ $ 30,804 Electric Expense (000's):

Operating expense (other than below)... $ 20,197 $ 19,416 S 18,101 $ 16,943 $ 16,671 $ 16,301 $ 14,889 $ 14,188 $ 13,502 $ 12,232 Maintenance . 4,806 4,480 4,271 4,092 4,123 3,964 3,501 3,372 3,22$ 2,890 Total operating expense 25,003 23,896 22 372 21,035 20,794 20,265 18,390 17>560 16,727 15,122 Depreciation 5,736 5,467 5,284 4,877 4,637 4,082 3>841 3,549 3,453 3,245 Federal income taxes,....

Other taxes

.......... 3,941 3>710 3,675 3>868 3,312 3,613 3,493 3,202 3,261 3,242 7,077 6,776 6,421 5,978 5,618 5,276 4,705 4,384 3,961 3,725 Total electric expense $ 41,757 $ 39,849 S 37,752 $ 35,758 $ 34,361 S 33,236 $ 30,429 $ 28,695 $ 27,402 $ 25,334 Income from Electric Operations (000's)... $ 12,278 $ 11,355 S 10,529 $ 9,597 $ 8,803 $ 8,409 $ 7,363 S 6,514 S 5,706 $ 5,470 Electric Operating Ratio................. 46.27 46.67 46.34 46.38 48.17 48.66 48.66 49.88 50.52 49.09 Analysis of Elec. Prod. Costs (000's):

Stcam generation ..................,. $ 8,802 $ 6,938 $ 6,105 $ 6,756 $ 8,015 $ 7,547 $ 7,383 $ 7,324 $ 6>431 $ 5,721 Hydro generation ...,........,.......

Purchased and interchange power.......

662 666 644 627 785 863 660 711 721 783 1,326 2,800 2,804 1,801 611 873 553 159 345. 457 Toral electric production costs $ 10,790 S 10,404 $ 9,553 $ 9,184 $ 9,411 $ 9,283 $ 8,596 $ 8,194 $ 7,497 $ 6,961 Analysis of Electric Department Fuels:

Total cost (000's)..............,..... $ 6,077 $ 4,397 $ 3,605 $ 4,268 $ 5,558 5,198 5,137 $ 5,266 $ 4,419 3,953 Fuel used-Tons Cost per ton.

................,.... 746,286 $ 07,767 404,908 477,432 593,775 S

542,689 S

529,880 $ 51,945 501,581 465,770

$ 8.14 $ 8.66 S 8.90 $ 8.94 $ 9.36 $ 9.58 S 9.69 S 9.54 $ 8.81 $ 8.49 Pounds per KWH generated-Nct....... .73 .74 .76 .77 .75 .78 .76 .78 .80 .81 System Net Capability-KW at December 31:

Steam generating ........,........... 448,600 448,600 448,600 448,600 448,600 451,500 372,500 372,500 293,500 293,500 Hydro generating .................... 53,100 53,100 53,100 53 100

~ 53,100 $ 1 ~ 100 51,100 51,100 51,100 51,100 Total gerrerarlng net capability 501,700 501,700 501,700 $ 01>700 501,700 502,600 423,600 423,600 344,600 344,600 Purchased power .................... 207,500 222,500 207,500 157,500 22,500 22,500 22,500 22,500 22,500 22,500 Toral system rrer capabiliry 709,200 724,200 709,200 659,200 SrA,200 52$ ,1OO 446.100 446,100 367,100 367,100 Net peak load-KW..................... S03,800 464,200 433,400 406,400 388>800 372>200 348,700 324,000 307,600 305,500 Annual load factor-Net................ 57.3% 58.0% 57.7% 57.4% 55.7% 55.7% 55.1% 57.7% 57.9% 53.8%

29

ROCHESTER GAS AND Ei-ECTRIC CORPORATION Gas Department Qgg+ 1962 1962 19dl 1960 1989 1968 1987 1986 1985 Gas-Therms (000's):

Purchased for mixing and produced..... 62,962 62,923 57>557 58,863 60,946 65,336 63,716 Purchased for resale.................. 213,721 199,166 179,884 5.10'1,171 160,157 141.765 125.599 5.49'9,549 108,778 4.89'2,100 86,390 75,953 63,640 Total gas available 276,683 262,089 241,055 217,714 200,628 185,148 169,724 148,490 141,289 127,356 Cost of gas per therm.................. 5.006 5.349 5.439 5.08>> 4.93C 4.965 5.024 Gas Sales-Therms (000's):

Residential 20,308 20,947 19,926 20,339 20,717 20,929 21,749 21,498 22,294 21,826 Househeating 171,686 160,339 146,420 136,171 123,669 118,151 102,~ 90,055 84,476 66,668 Commercial 37,122 34,178 29,943 26,785 23,530 22,230 19,283 17,537 16,385 13,946 Industrial 36,840 33,452 30,523 24,894 22,304 18,304 15,648 13,517 14,396 IS>351 Municipal 5,775 5,240 4,481 4,031 3,709 3,219 2,314 1,572 1,440 1,021 Total gas sales 271,731 254,156 231,293 212,220 193,929 182,833 161,018 144,179 138,991 118,812 Gas Customers at December 31:

Residential 65,127 67,096 69,242 71,311 73,640 76,067 79,033 82,471 85,377 88,679 Househeating . 97,520 90,159 84,175 78,603 73,467 68,058 61,823 56,361 50,766 44,306 Commercial . 9,213 9,092 8,971 8,798 8,605 8,466 8,537 8,462 8,513 8,734 Industrial 667 583 479 473 448 416 386 395 329 356 Municipal . 521 489 466 441 418 402 361 353 334 332 Total gas customers 173,048 167,419 163,333 159,626 156,578 153,409 150,140 148,042 145,319 142,407 Gas Revenue (000's):

Residential . $ 4,205 $ 4,318 $ 4,361 $ 4,511 $ 4,624 $ 4,603 $ 4,741 $ 4,740 $ 4,932 $ 4,873 Househeating ." 23,131 21,981 20,778 19,427 17,643 16,228 13,927 12,349 11,564 9,271 Commercial 4>342 4,113 3,823 3>522 3>144 2,902 2,564 2 377 2,324 2,046 Industrial 3,030 2,852 2,693 2,267 2,026 1,641 1>445 1,266 1,327 1,389 Municipal . 589 552 495 446 406 342 254 181 176 136 Miscellaneous 288 281 270 245 230 220 216 186 181 164 Total gas revenue $ 35,585 S 34.097 $ 32,420 $ 30,418 $ 28,073 $ 25,936 $ 23,147 S 21,099 $ 20,504 $ 17,879 Gas Expense (000's):

Operating expense (other than below)... $ 20,883 $ 20,023 S 19,281 S 18,099 $ 16,695 $ 14,576 $ 13,173 $ 11,779 $ 11,308 $ 10,119 Maintenance 1,947 1,997 1,923 2,034 1,726 1,568 1,564 1,666 1,584 1,231 Total operating expense 22,830 22,020 21,204 20,133 18,421 16,144 14,737 13,445 12,892 11,350 Depreciation 2,307 2,127 1,977 1>493 1,383 1,276 1,184 1,119 1,009 889 Federal income taxes.................. 1,579 1,857 1,725 2,071 2,006 2,402 1,853 1,673 1>932 1,730 Other taxes. 2,894 2 723 2,546 2,397 2,257 2,087 1,853 1,712 1.554 1,401 Total gas expense $ 29,610 $ 28,727 $ 27,452 $ 26,094 $ 24,067 $ 21,909 $ 19,627 $ 17,949 $ 17,387 $ 15,370 Income from Gas Operations (000's)...... $ 5,975 $ 5,370 $ 4,968 $ 4,324 S 4,006 S 4,027 S 3,520 S 3.150 $ 3,117 S 2,509 Gas Operating Ratio... 64.16 64.58 65.40 66.19 65.62 62.24 63.66 63.73 62.87 63.48 Analysis of Gas Production Costs (000's):

Catalytic reformed gas................ $ 1,472 $ 1,543 $ 1,438 $ 1,493 $ 1,574 $ 1,476 S 1,436 $ 1,434 $ 1,518 S 1,385 Blue gas . 51 49 157 71 103 106 141 112 63 218 Natural gas used for mixing........., .. 2,138 2,145 2,178 2,070 2,112 1,960 1,898 1,935 2,049 1,957 Natural gas purchased for resale........ 10,174 9,621 9,091 8,179 7,228 5,872 4,827 3,836 3,382 2,827 Total gas production costs $ 13,835 $ 13,358 $ 12,864 $ 11,813 $ 11,017 $ 9,414 S 8,302 $ 7,317 $ 7,012 S 6,387 Total Daily Capacity-Therms at Dec. 31:

Mixed gas . 686,703 686,703 686,703 686,703 592,015 592,015 592,015 592,015 592,015 592,015 Straight natural gas................... 2,055,533 1,711,500 1,647,335 1.495,106 1,206,240 1,060,973 735,000 735,000 729,361 602.600 Total dally capacity 2,742,236 2,398,203 2,334,038 2.181,809 1,798,255 1,652,988 1,327,015 1,327,015 1,321,376 1,194,615 Maximum daily scndout-Therms......... 1,699,174 1,957>521 1>809>387 1,481>780 1,359>588 1,203,1S3 1,112,399 1,024,288 746,464 835,459 Degree days-Percent warmer than normal .. 1.6 -3.1 -1.7 -1.5 -4.8 1.5 -3.5 3.1 30

ROCHESTER GAS ANO ELECTRIC CORPORATION Steam Department Steam-Lbs. (000's):

gggg 19da 19d2 19dt 19$ 0 'I 959 1958 1951 195 d 'I9$ $

Produced by steam dept..........,.... 1,205,718 1,211,883 1,293,973 1,354,066 1,359,971 1,387>008 1,336,512 1,374,536 1,319,502 1,203,074 By-product steam . 2,715,476 2,767,118 2,523 138

~ 2,469,052 2,379,852 2,291,692 2,248,935 2,156,798 2,266,173 2,153,952 Total steam produced 3,921,194 3,979,001 3,817,111 3,823,118 3,739,823 3,678,700 3,585,447 3,531,334 3,585,675 3,357,026 Steam Sales-Lbs. (000's):

Commercial 1>352,855 1>385,931 1,319,401 1,243,331 1,170,655 1,209,216 1,137,728 1,115,405 1,207,960 1,080,536 Industrial 1,980,571 1,939,020 1,952,331 1,941,406 1,990,039 1,911,546 1,842,522 1>890,404 1,916,435 1,754,004 Municipal 219,418 200,589 182,973 164,906 , 130,458 132,413 120,239 114,691 117,419 120.046 Total steam saks 3,552,844 3,525,540 3,454,705 3,349,643 3,291 152

~ 3,253,175 3,100,489 3,120,500 3,241,814 2,954,586 Steam Customers at December 31:

Commercial . 426 432 444 461 465 452 475 473 472 467 Industrial 90 94 95 96 97 112 113 116 120 117 Municipal 26 25 31 31 30 28 28 25 25 24 Total steam customers 542 551 570 588 592 592 616 614 617 608 Steam Revenue (000's):

Commercial $ 2,027 $ 2,126 $ 2,075 $ 1,981 $ 1,904 $ 1,982 S 1,814 $ 1,561 S 1,611 $ 1,426 Industrial 2,409 2,450 2,487 2,479 2,623 2,584 2,454 2>256 2,173 1,944 Municipal . 301 294 277 254 210 214 189 159 155 151 Miscellaneous ..'.... 4 4 3 4 3 3 3 3 3 2 Total steam revenue $ 4,741 S 4,874 $ 4,842 $ 4,718 $ 4,740 $ 4,783 $ 4,460 $ 3,979 S 3,942 $ 3,523 Steam Expense (000's):

Operating expense (other than below)... S 2,898 $ 2,967 $ 2,851 $ 2>844 $ 2,897 $ 2,837 $ 2,690 $ 2>609 $ 2,435 $ 2,161 Maintenance, 523 544 558 475 461 416 406 445 417 375 Total operating expense 3,421 3>511 3,409 3,319 3,358 3,253 3>096 3,054 2,852 2,536 Depreciation 333 '323 319 229 221 266 263 260 289 278 Federal income taxes.................. 13 136 112 213 182 23 97 94 Other taxes. 592 579 587 558 537 519 487 457 431 362 Total steam expense $ 4,346 S 4,426 $ 4,315 $ 4,242 $ 4,228 $ 4,251 $ 4,028 $ 3,794 S 3,669 $ 3,270 Income from Steatn Operations (000's).... $ 395 $ 448 $ 527 $ 476 $ 512 $ 532 $ 432 $ 185 $ 273 $ 253 Steam Operating Ratio.. 72.16 72.04 70.40 70.35 70.84 68.01 69.42 76.75 72.35 71.97 Analysis of Steam Department Fuels:

Total cost (000's)................ $ 1,918 S 2,024 $ 2,038 $ 1,976 $ 2,050 $ 2,094 $ 2,089 $ 1,995 $ 1,853 S 1,673 Fuel used-Tons ................ 232,103 231,196 226,427 218,847 216,466 215,247 212,467 205,789 206,578 194,261 Cost per ton. $ 8.27 $ 8.75 $ 9.00 $ 9.03 $ 9.47 S 9.73 S 9.83 $ 9.69 S 8.97 $ 8.61 31

ROCHESTER GAS AND ELECTRIC CORPORATION DIRECTORS ROBERT E. GINNA*

Chairman of Ihe Board and Chief Executive Ofgcer of the Company President, High Temperature Reactor Development Associates, Inc.

DIRECTOR Security Trust Company of Rochester National Association of Electric Companies Empire State Atomic Development Associates, Inc.

Association of Edison illuminating Companies Empire Stale Utilities Power Resources Associates Atomic Power Development Associates, Inc.

Associated Industries of New York Slate, Inc.

Atomic Industrial Forum TRUSTEE Power Reactor Development Company Regent, St. John Fisher College RAYMOND N. BAll* LEO H. EASTe T. CARL NIXON*

Chairman, Advisory Committee to the Board, Executive Vice President of the Campany Partner, Nixon, Hargrave, Devans & Doyle lincoln Rachester Trust Company DIRECTOR DIRECTOR DIRECTOR Marine Midland Trust Company ol Rochester Bausch 8 Lomb Inc.

Eastman Kodak Company Rochester General Hospital Rochester Telephone Corporation McCurdy 8 Co. Empire State Chamber of Commerce, Inc. TRUSTEE Rochester Telephone Corporation (Deceased February 18, 1965) Albany Law School TRUSTEE Honorory Trustee, The University af Rochester Honorory Trustee, The University of Rochester M. HERBERT EISENHARTe DIRECTOR WALTER L. TODD*

ALEXANDER M. BEEBEEe Bausch 8 lamb Inc. Partner, Todd Associotes Chairman of Ihe Executive Committee of the Compony Taylor Instrument Companies DIRECTOR Executive Director, Security Trust Company of Rochester Widmer's Wine Cellars, Inc.

Empire State Utilities Power Resources Associates Rochester Telephone Corporotion TRUSTEE Member, Advisory Committee to the Boord, TRUSTEE lincoln Rochester Trust Company Advisory Trustee, Advisory Trustee, Rochester Institute of Technology Member, Cornell University Council, Rochester Institute ol Technology Engineering Colleges Council of Cornell University Advisory Trustee, Rochester Savings Bank Advisory Trustee, TRUSTEE Rochester Savings Bonk Rochester Institute of Technology Honorory Trustee, The University of Rochester HUI.BERT W. TRIPP Finonciol Vice President, CARL S. HAllAUER* The University af Rochester MARCUS E. BUCKMAN Director and Member of Executive Committee, Vice President, General Nlanager ond Director, Choirmon of the Board, Bausch & lomb Inc.

Pfaudler Permutit, Inc.

Sodus Fruit Farm, Inc. DIRECTOR Member, Trust Board, Vice President and Generol Manager, lincoln Rochester Trust Company First Nationol City Bank INew York)

Sodus Packing Carp. Associated Industries of New York State, Inc.

Vr'ce President, DIRECTOR Rochester Transit Corporation Wayne County Growers 8 Processors, Inc. Chemical Fund, Inc.

Garlack lnc. Xerox Corporation DIRECTOR Tobin Packing Company TRUSTEE Notional Red Cherry Institute TRUSTEE National Council of Agricultural Employers, Inc. Rochester Savings Bank Rochester Institute of Technology The Community Savings Bon'k of Rochester Clarkson University JOHN D. COCKCROFT Monroe Community College WILLIAM S. VAUGHN President and Director, The R. T. French Company President and Director, Eostmon Kodak Company Chairman, Board of Trustees, DIRECTOR Colgote Rochester Divinity School ERNEST J. HOWE*

Lincaln Rochester Trust Company DIRECTOR Reckitt & Caiman Ho'Idings limited President of the Company The Procter & Gamble Company DIRECTOR Thompson Ramo Wooldridge, Inc.

lincoln Rochester Trust Campany Lincoln Rochester Trust Company Utilities Mutual Insuronce Company TRUSTEE TRUSTEE Rochester Savings Bank Rochester Savings Bank The University af Rochester eMember af the Executive Committee ol the Company. Vanderbilt University 32

DIRECTORS OFFICERS ALBERT W. WHITTLESEY ROBERT E. GINNA HAROLD S. WEATHERBY PAUL W. BRIGGS Senior Vice President, Choirman of the Board ond Vice President ond Controller Secretary ond Assistant Controller The First Pennsyfvania Banking and Trust Company Chief Executive OIBcer OIRECTOR Berwind Corporation Berwind White Coal Mining Co. ERNEST J. HOWE FRANCIS E. DRAKE, JR. ROBERT W. BALL Western PaciBc Railroad Co. President Vice President Assistant Treosvrer TRUSTEE Anthony J. Drexel Estate Abington Memorial Hospital LEO H. EAST GEORGE H. FIEDLER DEAN W. CAPLE Executive Vice President Vice President Assistont Secretary (Deceased February 18, 1965)

JOSEPH C. WILSON President, Chief Executive Ofyicer, and Director, Xerox Corporotion LINN B. BOWMAN SCHUYLER F. BALDWIN AI.BERT J. KLEMMER Chairman, Board of Trustees, Vice President Vice President Auditor The University of Rochester DIRECTOR Rank Xerox Limited (London)

R. DEWITT PIKE HAROI.D W. NICHOLS The Rank Organisation Limited (London)

Fvji.Xerox Co., Ltd. (Takyo) Vice President Treasurer Lincoln Rochester Trvst Company Massachusetts Mutual Life Insurance Co.

McCurdy B Ca.

Svpeiba Cravats Small Business Investment Company of New York, Inc.

Business Eqvipment Manufacturers'ssociation Independent Accountants Co-transfer Agent TRUSTEE PRICE WATERHOUSE B CO. MORGAN GUARANTY TRUST COMPANY Rochester Savings Bank 1200 Midtown Tower, Rochester, New York 14604 OF NEW YORK 23 Wall Street New York Stock Exchange Symbol New York, New York 10015 ROCHESTER GAS AND ELECTRIC CORPORATION Common Stock-RGS Registrar SECURITY TRUST COMPANY OF ROCHESTER Bond Trustee and Paying Agent 103 Main Street East BANKERS TRUST COMPANY Rochester, New York 14604 16 Wall Street, New York, New York 10015 Transfer Agent Co registrar LINCOLN ROCHESTER TRUST COMPANY THE CHASE MANHATTAN BANK 183 Main Street East 1 Chose Manhattan Plaza Rochester, New York 14603 New York, New York 10015 PRINCIPAL OFFICE 89 EAST AVENUE, ROCHESTER, NEW YORK 14604 ANNUAL MEETING Third Wednesday in May at Rochester, New York