ML18143A785

R.E. Ginna - 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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gaR ll~/,.~~0 L 3.9 COQUE e Co."T.'.~\li.I a~(IN Je AIioQ guowISII UOIIOOJ/SUOQ gggI.SSUI1 OIJ)oel3 Q SOUI1 SSQ Q ANVB3114 NOLSBNIAI I OIB'lI'J.NO sIJJOIIS I e LY eY BNI WORM n 403N3S~o+e LYN SLSL anOIspu J 308NOlhl ie'OO NOISSIWSIWNIL S'IIO'NNSL 3 NCAA/h\ISTS ALWONLhY NSPAO4'A'A>ISII'~OS WNYNOW WWSTIN snpoS psalm uoII III SNV3180 OIBVLNO 3M%i NOILVBOdHOO QIBLOB13 ON%SOS BBLSBHOOB Rochester Gas and Electric Corporation ANNUAL REPORT 1964 Highlights 2 Letter frotn Chairman and President 3 Earnings and Dividends 4 Expense 6 Shareholders Investment 8 Expansion Program 9 Research and Development 12 Market Development 16 Area Development 18 Personnel 20 Management 20 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.

Earnings Applicable to Common Stock Earned per Common Share outstanding Dec.31, 1964 Cash Dividends Paid on Common Stock~RR$11,632,067

$2.02$5,725,758 1963 Iacraaso or (Decrease)

$10,523,576

$1,108,491$1 82$.20$5,473,915$251,843 Market Value of 2%Stock Dividend at Dates of Payment Revenue and Other Income Total Payroll and Employee Benefits Total Taxes Other Than Federal Income Taxes Dcprcciation Additions to Plant Total Plant Investment Number of Regular Employees Number of Holders Year End-Common Stock Preferred Stock$3,723,159$94 505 453$24,001,182

$10,948,125

$8,375,227$19,434,934

$340,608,632 2,480 23,038 3,136$3,290,677 90 311 905$22,682,709

$10,452,470

$7,916,772$19,408,057

$324,613,865 2,469 22,392 3p257$432,482$4,193,548$1,318,473$495,655$458 455$26,877$15,994,767 (121)r1 rtividend in common stock at tbe rate of 2/o Per share aquas distributed February 19, 196'5.

to the shareholders February 24, 19G5 Board Chairman Ginna and President Howe 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.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, CIIAIRhfAN OF TIIE BOARD PRES ENT eurnings end dividends 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 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.The$2.02 earnings per share of common stock in 1964 were 11 percent more than the$1.82 per share earned in 1963, based upon the 5,753,964 shares out-standing at the end oE 1964.Cash dividends at the annual rate of$1.00 a share on the common stock.amounted to$5,725,758.

These dividends were paid quarterly on the 25th of January, April and July, and on the 24th of October.The fifth annual stock dividend was distributed February 21, 1964, at the rate of two percent, in con-tinuance of the policy to pay additional dividends in common stock.On I'ebruary 19, 1965 the sixth annual stock dividend was distributed, also at the rate of two percent.There was$4,142,880 added to the stated value of the common stock in January 1965 which increased the balance of this account to$75,146,706.

This additional amount was equivalent to$36 per share upon the 115,080 shares distributed as the sixth stock dividend.REVENUE GROWTH The$94,361,000 revenue for 1964 was a fiv percent growth for the year.Rochester business activity, which reached a new high in 1964, was reflected in the record energy requirements among the Com-pany's customers.

This record of growth was at-tained even though temperatures during the year were 5.6 percent warmer than for 1963, and 1.6 per-cent warmer than normal, compared with 4.8 per-cent colder than normal weather for 1963.The$54,035,000 of electric revenue was six per-cent more than 1963.In 1964, electric revenue was reduced$500,000 due to the decreased cost of.coal which was automatically passed on to customers.

ELECTRIC GROWTH The 220,317 electric customers at the end of the year represented a three percent growth over 1963, an increase of 6,568 customers.

Electricity sold in-creased eight percent.A new hourly peak load of 503,800 kilowatts oc-curred on December 21, 1964, and on December 22, 1964 a new maximum daily peak of 8,696,300 kilo-watt-hours of energy available Eor distribution was established.

The hourly peak was nine percent greater than that which occurred in 1963, and the daily load was eight percent greater.There was more electricity available for distribution on the Rochester system during the month of December 1964 than for the entire year of 1923.GAS HEATING GROWTH CONTINUES At the end of 1964 there were 102,748 customers supplied with gas heat.Of these, 7,956 were added during the year.The trend to gas househeating and the Company's expanding gas territory contributed to the increase in gas revenue during the year.Sales of gas increased seven percent during 19G4.The maximum sendout of gas for any one day of 1,699,174 therms was 13 percent less than in 1963 because of the warmer weather in 1964.RATES REDUCED A voluntary reduction in residential electric rates amounting to approximately

$740,000 annually be-=came efFective on December 28, 1964.This reduc-tion was made possible by new equipment, better techniques and improved operating efficiencies.

It is anticipated tlrat these lower rates will encourage additional growth in the use of electricity.

The 1964 electric revenue was not affected by this change.

MILLIONS$50 1,359 1,428 ELECTRIC 10 YEAR GROWTH in Customers-KWH Sales-Revenue 1,684 605=1,795 1,950 2,106 2 277 MILLIONS OF KWH UP 95ojo REVENUE UP 85%40 1;248=1,169 30 CUSTOMERS-Up 21%18 ,983 I187 239 1,150 19 19 ,426:,19,005 199 ,711 202,306 ,730 i205 i 209,348 213 749 1220 317 20 10 0 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 GAS 10 YEAR GROWTH in Customers-Therm Sales-Revenue MILLIONS$40 30 20~08-118 138 144 161-193 182 212-231 254 271 MILLIONS OF THERMS UP 162%REVENUE UP 121'+CUSTOMERS 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 The ratio of operating expense to revenue con-tinued to decline during the year to 54.32 percent at the close of 1964 from 54.81 percent for 1963.This ratio has declined in the past 10 years, from 55.18 percent for 1954, reHecting the benelit of operating improvements.

This result was achieved in spite of the fact that in this same 10-year period there have been substantial increases in the costs of payroll, materials and services.The increase of$1,800,000 in operating expense is due to increased production costs to supply the additional energy requirements of customers dur-ing the year, and to higher payroll and employee welfare costs.Unit trains were used in 1964 for 90 percent of.the deliveries of 1,000,000 tons of coal received.These shipments contributed to the reduction in the cost of electric coal used in 1964 to$8.14 a ton from$8.66 for 1963.The Company used over 239,000 more tons oE coal during the year than in 1963.Electricity generated by the Company during the year increased 45 percent to 2,209,000,000 kilo-watt-hours.

Steam plants produced 92 percent of this electricity and the balance was from the Com-pany's hydro plants.This increased generation was necessary to provide for the increased customer load and to provide 438,140,000 kilowatt-hours of en-ergy delivered to the Power Authority of the State of New York during 1964.No energy was delivered to the Power Authority in 1963.Electricity purchased and interchanged during 1964 declined 61 percent from the previous year to a total of 325 million kilowatt-hours.

The decline was due almost entirely to low water and ice conditions that prevented the Power Authority of the State of New York from delivery of their minimum contract obligation.

Therms of natural gas purchased in 1964 in-creased five percent.Payroll and employee welfare costs for the year increased$1,318,000 to$24,000,000 oE which$3,708,000 was applicable to construction.

DEPRECIATION The depreciation provision for 1964 was$8,524,000.

Depreciation charged to income was$8,375,000 and included$232,000 amortization of extraordinary property losses.The seven percent increase in the 1964 provision was$522,000 more tlian last year due to accruals for new services and equipment added during the year to supply the growth in customers'nergy requirements.

TAXES CONTINUE To INCREASE Total taxes oE$16,468,000 for 1964 increased three percent which was$436,000 more than last year.I'ederal income taxes were$5,520,000, a decrease oE$60,000 from the previous year.Other taxes charged to operations were$10,563,000 and in-creased$485,000.

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4'sf 4'4,4~JS C Unit train delivery of coal at Russell electric generating station skurekolders investment Cash dividends paid on the common stock in 1964 totaled$5,726,000, an increase of$252,000 com-pared with the previous year.These dividends, at the annual rate of$1.00 a share, were paid quarterly on the outstanding shares.The Company also con-tinued its policy of paying additional dividends in common stock.Six annual stock dividends have been paid since 1960, which have increased the aggregate amount of cash dividends paid by the Company.The estab-lished cash dividend rates have always been paid on the increased number of shares that have resulted from the stock dividends.

There Iiave been five rights offerings and two 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 28,088 holders of common stock of record on Janu-ary 18, 1965, of whom 24 percent reside in the terri-tory served by the Company.The annual meeting on May 20, 1964 was per-sonally attended by over 600 shareholders, and more than 82 percent of the outstanding common shares 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 utility companies.

This is the fourth time in tlie past five years tliat the Company has achieved LI95~3g)i hc Italy Rlknawtt Anne@Rcport (~cene AR1llÃAll'A%AMI baeecer Cw eat E~CecgeaAn~A~M lhI w~y a~~W NMW A~0 pW jW hen Ale.44,l LL~sOw4 le<Or~1963 Annual Report awards the Bronze Oscar award, and the second time it has achieved the Silver Oscar at the"Financial World" annual report dinner.The Reddy Kilowatt annual report survey also awarded the report first place in its class, as for the 1962 report.A first place award in its class was also presented by the Better Copy Contest sponsored by the Public Utilities Advertis-ing Association.

The Newcomen Society in North America, at its National Dinner in New York City during April 1964, honored the Company for more than 118 years of continuous and successful operation.

The Company's Chairman, Mr.Robert E.Ginna, was the guest of honor and spoke on"Power and Prog-ress in the Genesee Valley."

Growth in the number of customers served and the continued increase in customer use of energy re-quired additions and improvements to the Com-pany's facilities during 1964 which cost$19,435,000.

I%et additions for the past 10 years amounted to more than$166,000,000.

There was$340,609,000 invested in plant at the end of 1964 which is nearly twice the total plant investment 10 years ago.CONSTRUCTION IN 1964 The new 115,000-volt electric transmission line, 32 miles in length, constructed in 1963 south from Rochester into the Genesee District, was further ex-tended eight miles to serve additional customers and connect with other lines.Another new 11-mile 115,000-volt transmission line was built to supply a new major substation required by the increase of electric load in the suburban area east of Rochester.

This load growth results from the Xerox indus-trial expansion and the accompanying residential growtll.Equipment was installed at the Company's larg-est hydro station which enables remote operation of the plant.Additional coal handling equipment was added at Russell Station to more.efficiently receive and empty the larger, unit train, deliveries of coal.There was major expansion of the gas supply system during the year.In the Company's Lake Shore District, east of Rochester, an additional 16 miles of 16-inch gas line was connected to a new supply main completed last year.Another four miles of 16-inch gas main was constructed in Roch-ester's eastern suburban area.These two sections complete a 51-mile main, from the east into Roch-ester, which provides a major additional gas supply to serve the eastern part of the Company's gas serv-ice territory.

Three miles of 12-inch gas line was constructed from the new main to provide additional service for the rapidly expanding Xerox plant in the Town of Webster.Also, five miles of 20-inch main was in-stalled to serve the new Rochester Institute of Tech-nology campus.Over the past 10 years 583 square miles of new franchise territory have been added to the Com-pany's gas system, making a total of 1;"169 square miles.The Village of Sodus Point in the Lake Shore District is receiving gas service under a franchise granted in 1964.Other construction projects during the'year pro-vided increased energy services for further customer expansion.

Electric and gas lines were extended into newly developed areas and improvements were made at steam system generating plants.Additional electric, gas, and steam services con-tinued to be replaced or moved in 1964 because of State and I'ederal highway construction.

The Com-pany is not reimbursed for these substantial costs, but is continuing its efForts to secure legislation that will permit reimbursement.

1965 CONSTRUCTION PLANS Construction proposed during 1965 is estimated to cost over$22,000,000 and includes$17,691,000 for new projects.A further 25-mile.extension of the new transmission line into the Genesee District will be made.An additional gas main feeder will be constructed to complete the lines serving the area of the new Rochester Institute of Technology campus.

New customer service buildings will be con-structed in the districts, and major expenditures will continue for moving and replacing services re-quired by new highway construction.

Electric system projects are estimated to cost$12,466,000, and$7,088,000 is proposed for gas sys-tem improvements.

The balance of estimated con-struction costs will be for steam system and general ,Cj" service structures and improvements.

FINANCING The Company supplied 77 percent of the 1964 con-struction costs from the reinvestment of earnings and accruals for depreciation.

The Company also used forconstruction the proceeds ofcourt-approved 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 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.Substation on new 115,000.volt line 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.10 I+'" 0'5 8~'~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 44 42 CIIITs PER KWH 15 13 Price of GAS to R.G.a E.Residential Consumers in 1964 Dollars 12 10 Price of GAS to R.G.&E.Residential Consumers in Actual Dollars 24 Price of ELECTRICITY to R.G.IL E.Residential Consumers in 1964 Dollars X~/18 16 14 12 10 ITY ential Price of ELECTRIC to R.G.a E.Resid Consumers in Actual Dollars 3 1932 1936 1940 1944 1948 1952 1956 1960 1964 1932 I 936 1940 1944 1948 1952 1956 1960 1964 resegrck end development It has ahvays been the Company's objective, arid of the gas and electric utility industry, to provide bet-',ter and better service to its customers at lower and lower unit costs.This objective has been success-fully but not easily accomplished.

There have been continual increases in labor costs, material costs, and major increases in taxes.The Company has accomplished this objective through the co opera-tive effort of employees to increase sales and to utilize new methods and materials, many of which were the result of research projects and Job Man-agement techniques.

NUCLEAR POWER The Company through its participation in nuclear energy research and development projects is realiz-ing beneficial results of expenditures in this field.Significant reduction in the cost of coal and its trans-portation to generating plants is directly related to the economic operation and the competition of nuclear electric generating plants, whidi in some areas are now operating with fuel costs below that of conventional fossil fueled generating plants.Tlie Company's engineers are in the field study-ing the tedinology and operating characteristics of some of these reactor concepts.A special course in nuclear energy was arranged by tlie Company in which sixty of its engineers par-ticipated and with the advent of the new nuclear structures laboratory at the University oE Rochester, additional training facilities will be available.

As a result of these intensive engineering and nuclear evaluation studies, the Company and the General Atomic Division of General Dynamics Corporation jointly submitted a proposal to the United States Atomic Energy Commission to con-struct a 260,000 kilowatt high temperature gas-cooled nuclear power plant on tlie Company's system at Brookwood, a site located on the southern shore of Lake Ontario about 19 miles east oE Rochester.

The A.E.C.announced acceptance of this proposal.However, the Company has been unable to conclude a satisfactory contract with the General Dynamics Corporation Eor a high temperature gas-cooled re-actor and the negotiation has been terminated.

With ample time for adequate planning available, a complete review of generating requirements and sources is underway.No diAiculty will be experi-enced in supplying any and all future power needs of customers.

HIGH TEMPERATURE GAS REACTOR The 40,000 kilowatt prototype nuclear power gen-erating station being built by High Temperature Reactor Development Associates, a non-profiit group of 58 investor-owned electric utilities and assisted by the Atomic Energy Commission, is nearing com-pletion.It is anticipated that loading oE nuclear fuel will start this fall and that this plant will be in opera-tion in 1965 but an unfortunate fire, which occurred in I ebruary 1965 in the final stages of construction, will cause some months delay.When operating at full power, this plant is expected to provide valuable information with respect to this type oE nuclear plant.ESADA RESEARCH Tlie Company is continuing its participation with six other New York State electric utilities known as Empire State Atomic Development Associates 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 Boiling Water reactor, the High Temperature Gas-Cooled reactor, and fuels and components Eor the Sodium Graphite reactor.Tliis three-year program started in 1960, and sufficient progress was made so that it was extended to the end of.1965.An analysis of further programs is now under study.ESUPRA RESEARCH The principal New York State electric utilities co-operating as Empire State Utilities Power Resources Associates are carrying on important research in connection with future capability of transmission line connections and the location of large electric generating stations to meet the requirements of New York State.ENRICO FERMI FAST BREEDER REACTOR The Company is a member of a group of companies which sponsored one of the earliest nuclear power projects, the Enrico Fermi East breeder reactor at Monr'oe, Michigan on the electric system of the Detroit Edison Company.This concept, developed by Atomic Power Development Associates and built and operated by Power Reactor Development Com-pany, has the capability oE producing more fuel than it burns.The plant has been partially loaded and operating since 1963 and considerable valuable in-formation has been obtained.OPERATING DEVELOPMENTS Many projects were instituted during the year to increase the efficiency oE operations.

The use of more mechanical equipment on electric line main-tenance trucks substantially reduced the number of personnel required on many of these trucks.The installation of some additional railroad track and the construction of coal handling equipment enabled the Company to use unit trains carrying 7,000 tons of coal.This new method of transporting coal substantially reduced the delivered cost of coal.I'acilities for the remote operation of hydroelec-tric generating plants and remote substations from a central control location eliminated the need for continuous manning of these stations.Significant savings in manpower have titus been achieved.A similar savings resulted from the installation of industrial television cameras for the continuous sur-veillance of areas where guards were formerly utilized.Two-way voice communication is com-bined witli the television surveillance and remote gate control.The manpower saving has been sub-stantial.The personnel have been utilized in more productive areas of the Company's operations.

Additional savings have been accomplished in the electric operations and include additions to the fleet of aerial trucks, new equipment for setting of poles, use of stronger, more attractive and more efficient overhead line construction, and the use of new and less expensive underground line materials.

During 1964 much time and effort have been ex-pended in developing the best procedures possible to expedite the restoration oE electric service follow-ing a destructive storm.While present methods and procedures achieve quality service, the Company believes that with extensive study even quicker res-toration oE service may be accomplished.

There are many research and development proj-ects in progress, by the Company and in co.opera-tion with others, that will increase the service and efficiency of the Company's electric, gas and steam operations.

14 Emergency portable transformer equipment Electronic Computer Center at the main office musket development The Company's market development program is operated to inform customers how they can gain improved comfort, added convenience, increased production and greater profits through the ex-panded use of electric, gas and steam services.A staff oE experienced, trained Company engineers and specialists are consulting with residential, commer-cial, industrial and municipal customers in develop-ment of their improved uses of electricity, gas, and steam.The programs are as broad as customers'n-terests, and range from the very popular demon-strations for young homemakers by the Home Serv-ice Department to the highly technical seminars conducted for industrial customers by the engineers in Industrial Sales.Outstanding acceptance of new, improved ap-pliances in the Company's service area has resulted from programs of education of customers regarding the advantages of their use.Strong and co-operative efforts with dealers'and distributors are improving sales and service techniques, and are creating more informed and satisfied customers.

The Company's promotional efforts have resulted in an expanding use of such relatively new items as humidifiers, de-humidifiers, frost-free refrigerators and dishwashers.

The Company's 100,000th gas spaceheating cus-tomer was connected in 1964.In less than 10 years the Company's residential spaceheating customers have increased by 100 percent.The comfort, con-venience and economy of gas heating has been de-monstratively proven in the residential field.A suc-cessful gas conversion burner rental plan was adopted, primarily for the Lake Shore District, to facilitate the promotion of spaceheating in that new gas service area without major capital investment by the customer.The use of electric heating is expanding, particu-larly in the Genesee District, and the recent reduc-tion in the residential electric rate should accelerate this expansion.

Dusk-to-dawn lighting units have proved their value and are being installed through-out the Company's service area.Downtown Rochester continues to brighten with new commercial establishments, new stores, ofIice buildings and banks, modern in design, well-lighted and space conditioned, reflecting the growth and prosperity of the City.Throughout the service area, shopping and business centers are improving the standards of suburban and rural living.The Company's Commercial Department assists customers in creating better standards of lighting, both indoors and out, and securing the best in space conditioning for their customers and employees.

Seminars, inspection trips and educational classes have been held for customers, architects and build-ers to achieve the best possible ways to make use oE energy supplied by the Company.The acquisition oE a,floodlighting demonstration unit has allowed commercial customers to secure a graphic, visual presentation of how building lighting can gain ad-vertising, eye appeal and safety.The industrial power consumption index for Rochester was five percent more in November 1964 than last year.Acceptance of better lighting, mod-ernization of equipment and space conditioning has been exceptional.

Company engineers through not only day-to-day contacts, but through special meetings held for industrial and consulting engi-neers are providing the necessary technical and economical information which will enable the best use of energy available.

Continuous effort is made to insure a flow of the latest in techniques and tech-nology to the Company's industrial customers.

The adoption oE gas for spaceheating in both large and small industries has achieved for these customers savings in operating and investment costs and ease an'd cleanliness of operation.

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

OUR tl c MAJOR l h CUS TONIER S INVESTORS Energy is our commodity.

But energy without service is worth-less.Our policy is the maximum in service.It is in line with the high standards of our customers.

In our area, the best availablc, at a lair price, is the way of life.We scck to excel in reliability, safety, promptncss, and have provided for scores of services lor customers.

Thcsc range from cooking advice lor a housewife to suggestions for the best way to use gas, electricity or stcam in a large industrial plant.This attention to our customers'eeds makes our service onc of the great bargains in our customers'udgets.

While thc cost of living has risen by 33 percent in the last 15 yeats, thc average cost for a kilowatt-hour used by a residential customer has dropped by 12-percent and each thousand cubic feet of gas by 19 percent.One illustntion lies in recent trends in spaccheat-ing, biggest part of our gas market: Twenty years ago we had two percent of that market in our scrvicc area;today, despite intense competition from other fuels, wc have over 60 pcrccnt.Whencvcr our financial position warrants, we voluntarily reduce our rates.Rates have been reduced on sevenl occasions during thc past five years.The total annual effect of thcsc re-ductions applied to 1964 sales is over$4,500,000.

This has bccn accomplished with the help of declining costs of gas and coal purchased by us and in spite of the increased costs that we have cxpericnced lor taxes, labor and materials.

Unlike most other gas utilitics, wc build, service and main-tain thc lines that connect our customers'ouses to our gas mains.This is a cost which must bc included in our rates;but it relieves the houscholdcr of the need of spending hundreds of dollars for thc installation, and of thc cxpcnse and care in-volved in maintenance, lor which he lacks adequate equipment and experience.

Our customers have amply demonstrated their confidence in the way we serve them.For this we arc grateful-and determined to continue to provide all the usefulness at our command.Our Open Door policy exists most of all for those wc serve.Maintaining thc soundness of our share-and bondholdcrs'n-vestment is one of the fundamental goals of RG&tE's managc-mcnt because ivc know that no company-especially in the utility fiel-can flourish without thc justified confidence of its investors.

The proof of our convictions lies in performance:-Earnings supporting regular cash'dividend payments on common stock without impairment of RG&:E's financial sta-bility.-An increasing market value of thc common stock accom-panying thc growth of earnings and dividends.-Regular annual payment of stock dividends since 1960 without depressing the market value of shares already out-standing.We expect to continue this policy.-A position in thc money market enabling us to raise capital advantageously.

Our bonds have sold at terms contributing directly to thc health of our corporation and, therefore, to the soundness of our shares.In thc last decade the rate of our cash dividend payments per sharc, adjusted for stock splits, has nearly doubled.In thc same period the price commanded by common stock, with the same adjustmcnt, has incrcascd over 151 percent.Each 100 shares has grown to over 114 through the stock dividends paid since 1960.Thc policies leading to this progress arc the result of man-agement's realization that confident investors are an indis-pcnsible ingredient to our success.Wc know that sustained and growing nct camings pcr sharc must bc the foundation of future achievcmcnts.

Our door is open thc year round, of course, to our 26,174 shareholders.

Ten years ago it took$11.53 in revenue to produce$1 of net camings applicablc to common stock.In 1964 there was a dollar for the shareholders for every$8.11 that came in-dcspitc thc fact that thc percentage of labor and tax costs 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-ter, compctcnce and loyalty of people who make up its operat-ing team and these factors arc best evidenced by the way its jobs are cherished by their holders.RG&.E is proud of its low rate of employcc turnover: 5.8 per-cent a year, compared to 14.4 pcrccnt avcngc for all industry throughout its main service area.Even in Rochester, where job stability is among the best of thc Nation's cities, our record on this score rates near thc top.Thc reason for thc congeniality between our employees and their work, wc fccl, lies deeper than merc wages, hours and fringe bcncfits.Wc are proud, of course, ol the material re-wards wc provide.They are comparable with other local indus-tries and with thc utility industry in genenl.But even more fundamental, wc think, is our determination to find thc best person lor each job, and thc best job fitting the qualifications of cvcry person on our payroll.Our Company is proud of its competent and cxperienccd cmployccs.

Thc record shows that RG&iE and those it hires gcncnlly stay togcthcr.Today the avcragc length of scrvicc among thc 2,480 permanent employees is almost 16 ycars-morc than onc-third of a normal working career.Our philosophy is that in any task the person who docs it is in thc best position to know it and how it might bc done bcttcr.We encourage him to look upon his duties with the assump-tion that cvcry job can be improved.Predictably, thc result of this program-we call it Job Management-has been improve-ment in thc ways wc carry out many of our functions.

Thc sys-tem has proven itself worthwhile in terms of mutual satisfac-tion and benefits for employer and employcc.Thc main reason it works is our Open Door-the fact that wc want to listen when an idea comes from among our own.Job Management has proved its worth up to our highest ex-pectations, and we expect to improve on it.Among its achicvc-mcnts so far arc complete reorganization of departments and scores of less dnmatic but highly important contributions.

We don't try to put a dollar sign on this program.We can', and we shouldn't because the objective is efliciency.

Eflicicney, to us, means total, utilization of the talents of thc human re-sources wc are proud to have.Effectiveness might bc an cvcn bcttcr word.Last year our Company paid nearly$10i/z million in local taxes, more than anyone else in our scrvicc area.Wc arc also active supporters of those local private institutions dedicated to the health, welfare, culture and education of our community.

Yct we know that merc money cannot buy good citizenship; even more important is a sense of civic responsibility,applied with cncrgy and enthusiasm.

From this conviction has grown our policy of encouraging the Company and its cmployecs to enter into the forefront of community scrvicc, working for progress at every opportunity.

Apart from satisfaction, wc have a partnership with our neighbors in common progress.Our neighbors recognize thc scnsc of citizenship that moti-vates thc scores of our pcoplc who work for thc public good, and the high qualities they bring to public enterprises.

Such signs of public confidence arc thc rule, not thc excep-tion.Rochester as well as two area villages have in recent times chosen mayors from our ranks.Scores of our people serve on the councils, boards, commissions and committees of cities, towns, villages and school districts.

Wc encourage our cmployecs to work for thc party of their choice-be it Demo-cratic, Republican or other.Outside govcrnmcnt, they scrve-both in thc ranks and in posts of leadership-in virtually every effort dedicated to thc good of thc many.The immediate past president of thc Rochcstcr Chamber of Commerce and thc Chairman of thc Board of Directors ol thc Rochester Civic Music Association, for instance, cam their bread at RG&tE.Wc cncouragc those ivho work herc to serve and wc allow them thc time to do it.This is in kccping with the Company's own endeavors to make its community ever healthier, more pleasant, more'beautiful.

We buried thc once-unsightly tangle of downtown cables;wc made our plants smokeless; our mo-tion picture-"Rochester-A City of Quality" has spread word of our community's virtues in this country and abroad.Three times in the last 10 years wc have rcccived national recognition for thc attractive landscaping of our plants.We'e worked for thc common good in many other ways.Thc effort has somc-timcs been considerable, but it is worthwhile.

The path to and lrom the community through our Open Door has been well traveled.

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.

Popular new ski area in Company's territory if@lg f v Azaleas in Highland Park Company's Lake Shore District is a major fruit area urea development The President of the University of Rochester, Mr.W.Allen Wallis, has described Rochester: "The City is the world's center for the manufacture of photographic, optical, instrumental, and vacuum equipment.

Rochester has more computers per capita than any city in the world-nearly twice as many as its nearest competitor.

There are more en-gineers employed in Monroe County than you will find in any one of some 23 states.Rochester has the highest percentage of skilled technical and profes-sional employees among its labor force of any major metropolitan area in the Country.Rochester is unique in the high percentage of its labor force em-ployed in manufacturing.

Only Wilmington, Dela-ware, has as high a proportion of scientists employed by industrial firms as Rochester.

Rochester has the lowest unemployment rate in the State, and one oE'the lowest in the iNation.Rochester has the highest median family income of any city in the State, and the sixth highest in the Nation." The Company continues to be active in many phases of community, industrial, agricultural, and recreational development.

The community develop-ment program has been expanded to assist each of the smaller communities served in building a better economic base by the attraction of additional indus-tries and the creation of higher employment.

The Rochester area continues to progress.Eight new industries were added in the metropolitan area in 1964.I'.ntirely new Facilities were built by 19 new and previously established companies and 23 others so expanded their facilities that there was an increase of 730 persons in industrial employment.

Rochester business activity in November 1964 reached a new record high wliich was six percent more than November 1963.Unemployment was at its lowest level since World War II.The unemploy-ment rate for this period was 1.4 percent of the work 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 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-prove their education and skills at all levels.The Company and its employees have contributed ef-forts and funds for the construction oE new facilities at the University of Rochester, the Rochester Insti-tute of Technology, to hospitals and many other programs in which many millions of dollars were raised in the Rochester area for improved and addi-tional facilities.

The Midtown Plaza development has encouraged a continuing modernization of the business district.A new bank has been completed near Midtown and several other large banking Facilities are under con-struction.

Demolition is nearly completed to permit construction of the proposed 30-story Xerox tower oAice building, also near Midtown.The Civic Cen-ter government buildings are being expanded.Dur-ing 1965, Rochester will begin redevelopment of Genesee Crossroads, an older commercial section of the business district that will be replaced with mod-ern buildings."Rochester

-A City of Quality," is the Com-pany's motion picture in sound and color, which was completed in 1963 and describes the advantages of the City's metropolitan area.The film is receiv-ing wide acceptance in the eastern United States and has enjoyed an almost worldwide distribution.

Many oE the Rochester industries have obtained copies of the film to use in personnel recruitment and in promotional efFort.The Company has ahvays maintained an open door policy with shareholders, customers, and em-ployees.Recently this was symbolized with the mod-ernization of the main oAice building by the installa-tion of a new open door entrance.In addition to symbolizing the Company policy, the change pro-vides an unobstructed view of the merchandising and lobby areas with their warmth and inviting atmosphere.

-'@~I~I 6"I, l)r'fas I",'I)sg~>>)$3Il3YF'ZR-;U'II New Operations Center at Wolcott New Myers Community Hospital at Sodus~~~~8 C 8 7 T 8 fU Q T Qr ,Q H p A H Y N~e I e a 4-)e=.~--"p:v-%zan QQQQQQ QQt'.QQQQQQ QQ QQQQQQQQQQQQQrQQQL'QQQMQ"QQf"Q~Q

~ti 1 ,.~IIlEIfIIII5 a;-,i i~~f'~f]Redeveiopmerit and new bank building near Midtown Plaza personnel Tliere were 2,480 employees at the year end, an in-crease of 11 employees over 1963.The Company has a low turnover rate in employ-ment and 15 percent of the employees have more than 30 years of service.There are 589 employees emeritus receiving pension.Contact with these em-ployees is continued by recognizing their service anniversaries and sponsoring an annual Pioneers'lub program for all with more than 35 years of service.The open door pliilosophy is apparent in all Com-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-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-.visors reduce on-the-job accidents.

In the utility industry this is no easy task, for many employees work alone and much of their work is on customers'remises under conditions that cannot be con-trolled.Company vehicles traveled 320,000 more miles in 1964 than in the previous'year and estab-lished a new low accident frequency record.An increasing number of employees are availing themselves of the excellent opportunities in Roch-ester for part time higher education.

The Com-pany's tuition refund program encourages this prof-itable use of spare time.The number of employees pursuing college graduate degree programs is also increasing.

During the year, the Company conducted in-plant training programs, including nuclear engi-neering, job management, college graduate cadet training, and new employee orientation.

R.G.and E.employees are noted for their civic activities.

The percentage who actively participate in community service is unusually high.Employee civic responsibility is well demonstrated by the gen-erous response to the 1964 Community Chest-Red Cross fund drive in which the average pledge per Company employee reached a new high of$33.00.menugement The passing of Mr.Leo H.East, Executive Vice President, Director and iMember of tlie Executive Committee of the Company, on February 18, 1965 greatly sorrowed the Company.Mr.East had been with the Company since his graduation from col-lege.His participation in the growth of the Com-pany and his active interest in civic affairs will long be remembered.

Vice President Frederick J.PAuke retired during 1964, having reached the Company's retirement age of 65.Mr.Pfluke was responsible for gas operations and development, and his knowledge and ability were highly regarded throughout the gas industry.20 4 Microfilming at Operations Center Employee Center iiiiiiii88iiiiiÃigaaraa 1 qjgpgifP(fifLf7iLfLNf8f9Lf8 dubsultllHII Ilillillilef-'otfomal!!graflh uuip+~@g~s~ssggLrlL'ILKun nn[f<It'.'.J.J-.L Company s main Operations Center i If I I i-3@,j]Male Chorus at New York World's Fair Main office building during Christmas season PAICI AVATI'AIIOUSE 8 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 REVENUE: Electric.Gas Steam ExP ENSE: Operation and maintenance

.Depreciation........

Federal income taxes....Other taxes.........

$54,034,986 35,584,939 4,740,750 94,360,675 51,254,156 8,375,227 5,520,000 10,563,312 75,712,695 1963$51,204,020 34,096,583 4,874,473 90,175,076 49,426,948 7,916,772 5,580,000 10,078,145 73,001,865 INCOME FROM OPERATIONS

.OTEIER INCOME.GROSS INCOME 18,647,980 144,778 18,792,758 17,173,211 136,829 17,310,040 INCOME DEDUCTIONS:

Interest on long term debt...Other interest..........

Other income deductions....

Interest charged to construction 4,610,363 296,322 259,352 (150,346)5,015,691 4,423,307 214,231 166,661 (162,735)4,641,464 NET INCOME DIVIDENDS ON PREFERRED STOCK.EARNINGS APPLICADLB TO COMMON STOCK DIVIDENDS ON COMMON STOCK: Cash (1964-$1.00;1963-$.975).......

Stock 2o/o in January 1964, 112,823 shares at$35 2o/o in January 1963, 110,611 shares at$25 EARNED SURPI.us, beginning of year.......

EARNED SURPLus, end of year..........

13,777,067 2,145,000 11,632,067 5,725,758 3,948,805 28,843,326

$30,800,830 12,668,576 2,145,000 10,523,576 5,473,915 2,765,275 26,558,940

$28,843,326 NOTES TO FINANCIAL STATEMENTS FeneRAL INcoxte Taxes-The provision for Fcdcral income taxes for 1964 has been reduced by$500,000 in respect of the investment credit applicable to depreciable property acquired during thc year.The Company has continued its practice of providing depreciation on a straight-linc basis in its financial statements while deducting for tax purposes those ainounts allowable, including accclcrated deprecia-tion.Depreciation claimed for tax purposes exceeded amounts provided on the books by$5,800,000 and$5,500,000 for 1964 and 1963, respcctivcly.

The Company's method of accounting for these items is consistent with the announced policies of the Public Service Commission of the State of New York.RertaehleNT PLAN-Under an amendment to thc retirement plan effective October I, 1964, thc Company expects to fund an estimated past service cost of approximately

$11,500,000 over a period of about 30 years.This amend-ment increased pension expense for thc last quarter of 1964 by$250,000.Reseave eoa DeeaectxvtoN-In the accompanying state-ment of financial condition, the Company has reflected its reserve for depreciation on thc liability side under"Reserves" which it believes is proper as this practice is in accord with the systems of accounts prescribed for utilities in the State of New York.In accordance with a footnote thereto, on balance sheets filed with the Securities and Ex-change Commission the depreciation reserve is deducted from thc recorded amount of utility plant in order to con-form with their regulations.

23 ROCHESTER OAS AND ELECTRIC CORPORATION Statement of Financial Condition at December 31, 1964 and 1963 UTILITY PLANT, at original cost: Electric..............

Gas..............

~~Steam$229,086,988 98,911,296 12,610,348 340,608,632 1963$221,294,231 91,0 1'1,953 12,307,681 324,613,865 CURRENT ASSETS: Cash..................

Temporary cash investments......

Accounts receivable, less reserve....

Materials and supplies, at average cost Prepayments............

~~8,063,645 3,000,000 6,515,416 4,593,072 341,173 22,513,306 6,368,996 5,853,884 4,540,942 378,966 17,142,788 DEFERRED DEBITS: Unamortized debt discount and expense....

Extraordinary property losses........

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

Other......................

TOTAL 512,579 927,480 2,105,396 221,617 3,767,072$366,889,010 540,881 1,159,350 2,097,355 40,016 3,837,602$345,594,255 24 CAPITALIZATION, see accompanying schedules:

Long term debt.......

~.........

Preferred stock.................

Common stock.......

~..........

Premium on preferred stock..........

Earned surplus.................

RESERVES: Depreciation Injuries and damages.CURRENT LIABILITIES:

Notes payable Accounts payable Customer deposits Taxes accrued Interest accrued Other.....................

DEFERRED CREDITS: Unamortized premium on debt.........

Customer advances for construction......

TOTAL~~$132,000,000 47,000,000 71,003,826 83,412 30,800,830 280,888,068 72,638,067 549,071 73,187,138 4,590,034 357 337 4,930,196 1,574,945 946,180 12,398,692 331,540 83,572 415,112$366,889,010 1963$116,000,000 47,000,000 67,055,021 83,412 28,843,326 258,981,759 66,504,481 487,189 66,991,670 8,000,000 3,961,515 301,072 4,663,358 1,490,460 860,395 19,276,800 237,453 106,573 344,026$345,594,255 25 ROCHESTER GAS AND ELECTRIC CORPORATION Long Term Debt, DEOEMBER 31,1964 FIRST MORTGAGE BONDS:$6,000,000 8,323,000 15,000,000 16,677,000 12,000,000 6,000,000 10,000,000 15,000,000 12,000,000 15,000,000 16,000,000

$132,000,000 Redeemable at the option of the Company 1.At 102 and accrued interest, on intcrcst dates, upon 60 days'revious notice, on and after Scptembcr I, 1967.2.At 100 and accrued interest, on interest dates, upon 60 days'revious notice.3.At IOIVi and accrued interest, on interest dates, upon 60 days'revious notice on or before March I, 1966;thereafter less Vi%for each successive twelve months'eriod through March I, 1968;thereafter without premium.4.At any time at 101.61 and accrued interest upon not less than 30 days'otice before March I, 1966;thereafter at 101.49 before March I, 1967;thcrcaftcr at 101.37 before March I, 1968;thereafter at lesser rates annu-ally before March I of each succeeding year.5.At any time at 101.88 and accrued interest upon not less than 30 days'nd not more than 60 days'revious notice before August 15, 1965;thereafter at 101.79 before August 15, 1966;thereafter at 101.69 before August 15, 1967;thereafter at lesser rates annually before August 15 of each succeeding year.6.At any time at 102.60 and accrued interest upon not less than 30 days'nd not more than 60 days'revious notice before June I, 1965;thereafter at 102.44 before June I, 1966;there-after at 102.29 before June I, 1967;thereafter at lesser rates annually before June I of each succeeding year.7.At any time at 103.79 and accrued interest upon not less than 30 days'nd not more than 60 days'revious notice before March I, 1966;thereafter at 103.59 before March I, 1967;thereafter at 103.39 before March I, 1968;thereafter at lesser rates annually before March I of each succeeding year.Fifty-year 4t/s%Bonds due September 1, 1977, Series D (I)3I/4%Bonds due March 1, 1969, Series J (2)3'%onds due March 1, 1970, Series K (3)........

3%Bonds due March 1, 1979, Series L (4)2s/4%Bonds due August 15, 1980, Series M (5).......

3Ys%Bonds due June 1, 1982, Series N (6)3s/s%Bonds due March 1, 1985, Series 0 (7)4va%Bonds due July 1, 1987, Series R (8)5%Bonds due October 15, 1989, Series S (9).......

4t/a%Bonds due Novcmbcr 15, 1991, Series T(10).....

4s/s%Bonds due September 15, 1994, Series U (II).....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, 1965;thereafter at 104.48 before July I, 1966;thereafter at 104.27 before July I, 1967;thereaBer at lesser rates annually before July I of each succeeding year.9.At any time at 104.79 and accrued interest upon not less than 30 days'nd not morc than 60 days'revious notice before October 15, 1965;thereafter at 104.59 before October 15, 1966;thereafter at 104.39 before October 15, 1967;thereafter at lesser rates annually before October 15 of each succeeding year.10.At any time at 105.07 and accrued interest 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 November 15, 1967;thereafter at lesser rates annually before November 15 of each suc-cccding year, provided, however, that prior to November 15, 1966, no Series T Bonds may bc redeemed from the proceeds of any refunding operation which has an interest rate of less than the interest rate borne by the Series T Bonds.11.At any time at 107.01 and accrued interest upon not less than 30 days'nd not more than 60 days'revious notice before Septem-ber 15, 1965;thereafter at 106.77 before Sep-tember 15, 1966;thereafter at 106.53 before September 15, 1967;thereafter at lesser rates annually before September 15 of each suc-ceeding year, provided, however, that prior to September 15, 1969, no Series U Bonds may be redeemed from the proceeds of any refunding operation which has an interest rate of less than the interest rate borne by the Series U Bonds.CaPital Stock, DEGEMBER 31,1964 Preferred Stock (cumulative) par value$100 per share;810,000 shares authorized.

Issued and outstanding:

4%Series F, 120,000 shares.........

4.10%Series H, 80,000 shares.........

4s/4%Series I, 60,000 shares.........

4.10%Scrics J, 50,000 shares......

~..4.95%%uo Seri K, 60,000shares.........

5'%eries L, 100,000 shares (I)$12>000,000 8,000,000 6,000,000 5,000,000 6,000,000 10,000,000 47,000,000 Common Stock, no par value;8,000,000 shares authorized, 5,753,964 shares issued and outstanding........

Premium on preferred stock.................

1.Redeemed March I, 1965 at$105 per share.On March I, 1965, 100,000 shares of 4.55%Series M Preferred Stock were issued at par.71,003,826 83,412$118,087,238 Splits of the common stock werc made June 15, 1956 at the rate of 3 for 2 and June 1, 1962 at thc rate of 2 for 1.Stock dividends were issued to stockholders of record in January at the rate of 3%in 1960 and 1961 and at 2%in 1962, 1963, 1964 and 1965.The outstanding preferred stocks may be re-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$105 per share;in the case of Series H stock by payment of$101 per share;in the case of Series I stock by payment of$101 per share;in the case of Series J stock by payment of$102.50 per share;and in the case of Series K stock by payment of$104 per share prior to September I, 1966, thereafter at$102 per share;plus accrued divi-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.Gas revenue.Steam revenue Other income.Total income$54,035 35,585 4,741 144$94.505$51,204 34,097 4,874 137$90,312$48,281 32,420 4>842 186$85,729$45,355 30,418 4,718 138$80,629$43,164 28,073 4,740 276$76,253$41>645 25,936 4,783 107$72,471$37,792 23,147 4,460 105$65,504$35>209 21,099 3,979 114$60,401$33,108 20,504 3,942 22$57,576$30,804 17,879 3,523 125$52,331 DISPOSITION OF INCOME: Payroll and employee benefits.........

Federal income taxes................

~Other taxes.Electric and steam fuels..............

Gas purchased.

Purchased electricity.........

.......Materials and contractors'harges.....

Services and other items..............

Depreciation Interest on bonds and notes...........

Less-Amounts charged to construction:

Payroll and employee benefits.......

Other taxes.Interest Total expense Preferred dividends...................

Earnings applicable to common stock...Total dispositiotr of income Cash dividends on common stock.......

Stock dividends capitalized.............

Increase in surplus....................

Earnings reinvested...................

Common sharest.....................

Stock dividend shares issuedt........,., Earnings per share<<..................

Cash dividends per share<<.............

Common stock cash dividend rate Dec.31t N.Y.Stock Exchange-Shares traded....

Closing price Dec.31...............

Closing price Dcc.31t.......,...,.

tAdjusted for stock splits in 1962 and 1956.$24,001 5,520 10,948 7,830 13,347 1,326 3>422 5,158 8,375 4,907 3,708 248 150 80,728 2,145 11,632$94,505$5,726$3,949 1,957$5,906 5,753,964 112,823$2.02$1.00$1.00 270,300 37%37Ys$22,683 5,580 10,452 6,312 12,809 2,800 3,365 4,875 7,917 4,637 3,367 257 163 77,643 2>145 10,524$90,312$5,474$2,765 2,285$5,050 5,641,141 110,611$1.82$.95$1.00 406,300 36Ys 36Yt>$21,504 5,400 9,899 5,553 12,337 2,804 3,224 4,843 7,579 4,472 3,270 235 132 73,978 2,145 9,606$85,729$5,091$3,253 1,262$4,515 5,530,530 108,442$1.66$.88$.95 293,800 27Ys 27Ys$20,847 6,075 9,274 6,159 11,239 1,801 3,287 4,485 6,598 4,181 3,352 233 294 70,067 2,145 8,417$80,629$4,844$3,159 414$3,573 5,422,088 157,926$1.46$.84 5.90 270,300 57Ys 28Ye$20,198 5,430 8,758 7,501 10,377 611 3,404 3>519 6,242 3,891 3,078 243 226 66,384 1,956 7,913$76,253$4,701$3>446 (234)$3,212 5>264,162 153,162$1.37$.82$.90 254,800 45Yi 22K<<$18,833 6,228 8,187 7>357 8,795 873 2,853 4,024 5,624 3,559 3,068 210 645 62,410 1,595 8,466$72,471$4,464$4,002$4,002 5,102,152$1.47$.78$.90 252,200 49Ye 24Ãs$17,718 5>529 7>327 7,203 7,665 553 2,872 2,923 5,288 3,382 2,757 184 286 57>233 1,595 6,676$65,504$3,641$3,035$3,035 4,551,000$1.16$.63$.80 248,100 41Y4 20Ys$16,825 4,898 6,847 7,220 6,758 159 3,040 2,631 4,927 2,999 2,649 180 410 53>065 1,595 5,741$60,401$3,641$15,716 5,290 6,119 6,247 6,451 345 2,921 3,251 4,751 2,587 2,443 63 446 50,726 1,387 5,463$57,576$3,517$14,722 5,066 5,615 5,634 5,776 457 2,281 2 377 4>412 2,468 2,249 45 203 46,311 1,298 4,722$52,331$2,950$.99$.63$.80 148,300 28Ys 14Y<<$.94.61$.80 127,500 28Ys 14Ys$.82$.51$.746 105,800 44Y4 14se$2,100$1,946$1.772$2,100$1,946$1,772 4,551,000 4,551,000 4,544,282<<Based upon shares outstanding December 31, 1964.SOURCE AND DISPOSITION OF FUNDS (OOO>s)SOURCE OF FUNDS: Nct income................

Depreciation and nct salvage.Sale of bonds..............

Sale of preferred stock.......

Sale of common stock.......

Proceeds ol short term loans..Increase in other items.......

Total frrnds DISPOSITION OF FUNDS: Property additions..........

Preferred stock dividends....

Common stock dividends...,.

Payment of short term loans..Increase in other items.......

Total disposition o//rrnds Increase or (decrease) in cash.$97,166 64,914 68,000 16,000 18,628 78,530 4,526$347,764$13,777 9,005 16,000 3,000 1,255$43,037$12,668 8,321 5,500 755$27,244$191,559 18,006 44,049 86,730 4,513$344,857$2,907$19,435 2,145 5,726 11,000 3,036$41,342$1,695$19,408 2>145 5,474 114$27,141$103'rorot Qggg t96S 196 a$11,751 7>996 2,500 (523)$21,724$15,461 2,145 5,091 (2,025)$20,672$1,052 I 961$10,563 7,118 15,000 9,500 (115)$42,066$20,506 2,145 4,844 13,000 1,398$41,893$173 1 960$9,869 6,331 10,000 166 7,030 67$33,463$20,349 1,956 4,701 7,030 10$34,046$(583)'I 959$10,061 5,634 12,000 10,356 14,500 346$52,897$23,997 1,595 4,464 22,000 763$52,819$78 l9sa$8,271 5,438 10,000 274$23,983$18,809 1,595 3,641 57$24,102$(119)195y$7,336 5,134 15,000 5,500 (153)$32,817$15,675 1,595 3,641 12,700 (690)$32,921$(104)19S6$6,850 5,171 6,000 91 14,000 1~161$33,273$22,367 1,387 3>517 5,800 1,395$34,466$(1,193)195S$6,020 4,766 10,000 8,015 7,000 1,459$37,260$15,552 1,298 2>950 15>200 455$35,455$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 Utility Plant, at original cost: Electric...................

Gas.$229,087$221>294 98,911 91,012 12,611 12,308 340,609 3%,614$211,947 83,491 11,956 307,394$205,442$194,163 77,363 70,676 11,906 11,384 294,711 276,223$184,424 63,338 11,013 258,775$170,189 56,535 10,558 237,282$158,394$149,880$133,577 51,751 47,826 44,351 10.557 10,407 10,293 220,702 208,113 188,221$125,996 38,245 10,029 174,270 Current Assets: Cash Temporary cash investments.

Accounts receivable, less reserve~~~~~~~~~~~~~Materials and supplies, at average cost...,.......

Prepayments

..............

8,064 3,000 6,515 4,593 341 22,513 6,369 5,854 4,541 379'.17>143 6>266 5,725 4,554 264 16,809 5,214 1,294 5,510 5,471 234 17,723 5,041 5,245 5>601 311 16,198 5,624 4,965 5,845 320 16,754 5,546 4,706 5,455 400 16,107 5,666 5,770 6,963 4,071 4,091 3,989 5,788 5,972 5,007 427 364 229 15,952 16,197 16,188 5,158 3>461 5,143 331 14>093 Deferred Debits: Unamortized debt discount and expense.................

Extraordinary property losses.Capital stock cxpensc.......

Other....................

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

Long term debt............

Preferred stock........,...

Common stock............

Premium on preferred stock..Earned surplus..........,.

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

Electric Gas Steam............

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

Notes payable......Accounts payable...Customer deposits..Taxes accrued......Interest accrued....Other.............

8>000 3>962 301 4,663 1,490 860 4,590 358 4,930 1,575 946 12,399 19>276 2,500 3,789 280 4,231 1,394 811 13,005 3,654 252 5,029 1,349 772 11,056 3,500 3,648 239 5,288 1,306 695 14>676 3,500 3,499 200 5,508 1>281 643 14,631 11,000 3,303 185 5,407 1,260 585 21,740 8,200 3,683 167 6,260 856 558 1,000 3,348 170 5,210 1>139 573 2,587 166 6,679 771 108 11,440 19,724 10,311 8,200 1,758 177 6,038 741 108 17,022 331 237 84 107 415 344 Total$366,889$345,594 Deferred Credits: Unamortized premium on debt Customer advances for construction

.............

269 110 379$328,300 301 333 364 107 122 408 455 134 498$316,816$296,418$279,774 396 165 561$257,626 428 192 620 459 713 491 277 768$241,247$226,637$206,554 424 379 803$190,332 28 ROCHESTER GAS AND ELECTRIC CORPORATION Electric Department I~I 1965 1962 1961 1960 1959 1958 195y 1956 1955 Electric Energy-KWH (000's): Generated-Steam

................,...

Generated-Hydro

...,............,..Purchased and interchanged-Net.......

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

.Street and highway lighting..

Other municipal Other utilities.788,376 600,204 689,510 34,039 164,656 630 736,337 549,310 638,201 32>274 149,357 624 686,522 509,770 595,619 30,904 126,123 1,987 649,334 467,751 531,432 29,507 115,106 2,578 608,728 437,541 507,803 28,153 100,176 2,438 583,523 426,133 477,592 27>666 88,639 2,402 545,114 387,285 442,793 27,068 66,025 2,391 507,446 370,096 466,089 25,584 56,886 2,427 470,846 344,682 463,235 24,925 53,821 2,436 424,494 323,129 432,331 24,165 41,825 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 Commercial Industrial

.Other 197,535 19,978 1,318 1,486 191,461 19,576 1>308 1,404 187,297 19,376 1,332 1,343 183,793 19,363 1,289 1,285 180,502 19,345 1,209 1,250 178,021 19,457 1,007 1,226 175,260 19,535 1>013 1,197 172,788 19,441 1,012 1,185 169,477 19,493 1,004 1,176 165,607 19,493 1,006 1,133 Total electric customers Electric Revenue (000's): Residential

.Commercial

....Industrial

.Street and highway lighting......,.....

Other municipal.....................

Other utilitics Miscclianeous

.Toral electric revenue Electric Expense (000's): Operating expense (other than below)...Maintenance

.Total operating expense Depreciation Federal income taxes,....

..........

Other taxes Total electric expense Income from Electric Operations (000's)...

Electric Operating Ratio.................

Analysis of Elec.Prod.Costs (000's): Stcam generation

..................,.

Hydro generation

...,........,.......

Purchased and interchange power.......

Toral electric production costs Analysis of Electric Department Fuels: Total cost (000's)..............,.....

Fuel used-Tons................,....

Cost per ton.Pounds per KWH generated-Nct.......

System Net Capability-KW at December 31: Steam generating

........,...........

Hydro generating

....................

Total gerrerarlng net capability Purchased power....................

Toral system rrer capabiliry Net peak load-KW.....................

Annual load factor-Net................

220,317$22,942 14,002 11,204 1,910 3,286 12 679 S 54,035$20,197 4,806 25,003 5,736 3,941 7,077$41,757$12,278 46.27$8,802 662 1,326$10,790$6,077 746,286$8.14.73 448,600 53,100 501,700 207,500 709,200 S03,800 57.3%213,749 209,348 205,730$21,676 13,308 10,713 1,779 3,046 12 670$20,539 12>530 10,236 1,670 2>666 31 609$19,643 11,707 9,408 1,599 2,440 41 517 S 51,204 S 48,281$45,355$19,416 S 18,101 4,480 4,271$16,943 4,092 23,896 5,467 3>710 6,776 22 372 5,284 3,675 6,421 21,035 4,877 3>868 5,978$39,849 S 37,752$35,758$11,355 S 10,529$9,597 46.67 46.34 46.38$6,938$6,105 666 644 2,800 2,804$6,756 627 1,801 S 10,404$9,553$9,184 448,600 53,100 501,700 222,500 448,600 53,100 501,700 207,500 448,600 53~100$01>700 157,500 724,200 709,200 464,200 58.0%433,400 57.7%659,200 406,400 57.4%$4,397$3,605$4,268$07,767 404,908 477,432$8.66 S 8.90$8.94.74.76.77 202,306 S 18,672 11>199 9,135 1,542 2,197 38 381$43~164$16,671 4,123 20,794 4,637 3,312 5,618$34,361$8,803 48.17$8,015 785 611$9,411$5,558 593,775$9.36.75 448,600 53,100 501,700 22,500 SrA,200 388>800 55.7%199,711 197,005 194,426$18,041 11,016 8,713 1,464 2,016 37 358$16,310 10,041 8,099 1,368 1,593 37 344 S 14,730 9,369 8,080 1,329 1,372 38 291 S 41,645$37,792$35,209$16,301$14,889$14,188 3,964 3,501 3,372 20,265 4,082 3,613 5,276 18,390 3>841 3,493 4,705 17>560 3,549 3,202 4,384 S 33,236$30,429$8,409$7,363$28,695 S 6,514 48.66 48.66 49.88$7,547$7,383 863 660 873 553$9,283$8,596$7,324 711 159$8,194 451,500$1~100 502,600 22,500 372,500 51,100 423,600 22,500 372,500 51,100 423,600 22,500 52$,1OO 446.100 446,100 372>200 55.7%348,700 55.1%324,000 57.7%S 5,198 S 5,137$5,266 542,689 529,880$51,945$9.58 S 9.69 S 9.54.78.76.78 191,150$13,906 8,669 7>676 1,292 1,2$3 38 274$33~108$13,502 3,22$16,727 3,453 3,261 3,961$27,402 S 5,706 50.52$6>431 721 345.$7,497$4,419 501,581$8.81.80 293,500 51,100 344,600 22,500 367,100 307,600 57.9%187,239$12,874 8,155 7>178 1,250 1,046 37 264$30,804$12,232 2,890 15,122 3,245 3,242 3,725$25,334$5,470 49.09$5,721 783 457$6,961$3,953 465,770$8.49.81 293,500 51,100 344,600 22,500 367,100 305,500 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.....

Purchased for resale..................

Total gas available Cost of gas per therm..................

62,962 213,721 276,683 5.006 62,923 199,166 262,089 5.10'1,171 179,884 57>557 160,157 58,863 141.765 241,055 217,714 200,628 5.349 5.439 5.49'9,549 125.599 185,148 5.08>>60,946 108,778 169,724 4.89'2,100 86,390 148,490 4.93C 65,336 75,953 141,289 4.965 63,716 63,640 127,356 5.024 Gas Sales-Therms (000's): Residential Househeating Commercial Industrial Municipal 20,308 171,686 37,122 36,840 5,775 Total gas sales 271,731 20,947 160,339 34,178 33,452 5,240 254,156 19,926 146,420 29,943 30,523 4,481 20,339 136,171 26,785 24,894 4,031 20,717 123,669 23,530 22,304 3,709 231,293 212,220 193,929 20,929 118,151 22,230 18,304 3,219 182,833 21,749 102,~19,283 15,648 2,314 161,018 21,498 90,055 17,537 13,517 1,572 144,179 22,294 84,476 16,385 14,396 1,440 138,991 21,826 66,668 13,946 IS>351 1,021 118,812 65,127 97,520 9,213 667 521 Total gas customers 173,048 Gas Customers at December 31: Residential Househeating

.Commercial

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

.Househeating

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

Other taxes.Total gas expense Income from Gas Operations (000's)......

$20,883 1,947 22,830 2,307 1,579 2,894$29,610$5,975$20,023 1,997 22,020 2,127 1,857 2 723$28,727$5,370 S 19,281 1,923 21,204 1,977 1,725 2,546$27,452$4,968 20,133 1>493 2,071 2,397$26,094$4,324 18,421 1,383 2,006 2,257$24,067 S 4,006 S 18,099$16,695 2,034 1,726$14,576 1,568 16,144 1,276 2,402 2,087$21,909 S 4,027$13,173 1,564 14,737 1,184 1,853 1,853$19,627 S 3,520$11,779 1,666 13,445 1,119 1,673 1,712$17,949 S 3.150$11,308 1,584 12,892 1,009 1>932 1.554$17,387$3,117$10,119 1,231 11,350 889 1,730 1,401$15,370 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................

Blue gas.Natural gas used for mixing.........,..Natural gas purchased for resale........

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

Total dally capacity Maximum daily scndout-Therms.........

686,703 2,055,533 2,742,236 1,699,174 686,703 1,711,500 2,398,203 1,957>521 686,703 686,703 592,015 1,647,335 1.495,106 1,206,240 2,334,038 2.181,809 1,798,255 1>809>387 1,481>780 1,359>588 592,015 1,060,973 1,652,988 1,203,1S3 592,015 735,000 1,327,015 592,015 735,000 1,327,015 1,112,399 1,024,288 592,015 729,361 1,321,376 746,464 592,015 602.600 1,194,615 835,459 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 gggg 19da 19d2 19dt 19$0'I 959 1958 1951 195 d'I9$$Steam-Lbs.

(000's): Produced by steam dept..........,....

By-product steam.Total steam produced 1,205,718 1,211,883 1,293,973 2,715,476 2,767,118 2,523~138 3,921,194 3,979,001 3,817,111 1,354,066 2,469,052 3,823,118 1,359,971 1,387>008 1,336,512 2,379,852 2,291,692 2,248,935 3,739,823 3,678,700 3,585,447 1,374,536 2,156,798 3,531,334 1,319,502 1,203,074 2,266,173 2,153,952 3,585,675 3,357,026 Steam Sales-Lbs.

(000's): Commercial Industrial Municipal Total steam saks 1>352,855 1>385,931 1,319,401 1,980,571 1,939,020 1,952,331 219,418 200,589 182,973 3,552,844 3,525,540 3,454,705 1,243,331 1,941,406 164,906 3,349,643 1,170,655 1,209,216 1,137,728 1,990,039 1,911,546 1,842,522 , 130,458 132,413 120,239 3,291~152 3,253,175 3,100,489 1,115,405 1>890,404 114,691 3,120,500 1,207,960 1,080,536 1,916,435 1,754,004 117,419 120.046 3,241,814 2,954,586 Steam Customers at December 31: Commercial

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

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

Other taxes.Total steam expense Income from Steatn Operations (000's)....

3,421 333 592 3>511'323 13 579 3,409 319 587$4,346 S 4,426$4,315$395$448$527 S 2,898$2,967$2,851 523 544 558$2>844 475 3,319 229 136 558$4,242$476 3,358 221 112 537 3,253 266 213 519 3>096 263 182 487$4,228$4,251$4,028$512$532$432$2,897$2,837$2,690 461 416 406$2>609 445 3,054 260 23 457$3,794$185 2,852 289 97 431 2,536 278 94 362 S 3,669$3,270$273$253$2,435$2,161 417 375 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)................

Fuel used-Tons................

Cost per ton.$1,918 S 2,024$2,038 232,103 231,196 226,427$8.27$8.75$9.00$1,976 218,847$9.03$2,050$2,094$2,089 216,466 215,247 212,467$9.47 S 9.73 S 9.83$1,995 205,789$9.69$1,853 S 1,673 206,578 194,261 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*Chairman, Advisory Committee to the Board, lincoln Rachester Trust Company DIRECTOR Eastman Kodak Company McCurdy 8 Co.Rochester Telephone Corporation TRUSTEE Honorory Trustee, The University of Rochester ALEXANDER M.BEEBEEe Chairman of Ihe Executive Committee of the Compony Executive Director, Empire State Utilities Power Resources Associates Member, Advisory Committee to the Boord, lincoln Rochester Trust Company Member, Cornell University Council, Engineering Colleges Council of Cornell University TRUSTEE Rochester Institute of Technology MARCUS E.BUCKMAN Vice President, General Nlanager ond Director, Sodus Fruit Farm, Inc.Vice President and Generol Manager, Sodus Packing Carp.Vr'ce President, Wayne County Growers 8 Processors, Inc.DIRECTOR Notional Red Cherry Institute National Council of Agricultural Employers, Inc.JOHN D.COCKCROFT President and Director, The R.T.French Company DIRECTOR Lincaln Rochester Trust Company Reckitt&Caiman Ho'Idings limited eMember af the Executive Committee ol the Company.LEO H.EASTe Executive Vice President of the Campany DIRECTOR Marine Midland Trust Company ol Rochester Rochester General Hospital Empire State Chamber of Commerce, Inc.(Deceased February 18, 1965)M.HERBERT EISENHARTe DIRECTOR Bausch 8 lamb Inc.Taylor Instrument Companies Security Trust Company of Rochester Rochester Telephone Corporotion TRUSTEE Advisory Trustee, Rochester Institute ol Technology Advisory Trustee, Rochester Savings Bonk Honorory Trustee, The University of Rochester CARL S.HAllAUER*Choirmon of the Board, Bausch&lomb Inc.DIRECTOR lincoln Rochester Trust Company Associated Industries of New York State, Inc.Rochester Transit Corporation Garlack lnc.Tobin Packing Company TRUSTEE Rochester Institute of Technology The Community Savings Bon'k of Rochester Clarkson University Monroe Community College ERNEST J.HOWE*President of the Company DIRECTOR lincoln Rochester Trust Campany Utilities Mutual Insuronce Company TRUSTEE Rochester Savings Bank T.CARL NIXON*Partner, Nixon, Hargrave, Devans&Doyle DIRECTOR Bausch 8 Lomb Inc.Rochester Telephone Corporation TRUSTEE Albany Law School Honorory Trustee, The University af Rochester WALTER L.TODD*Partner, Todd Associotes DIRECTOR Widmer's Wine Cellars, Inc.TRUSTEE Advisory Trustee, Rochester Institute of Technology Advisory Trustee, Rochester Savings Bank HUI.BERT W.TRIPP Finonciol Vice President, The University af Rochester Director and Member of Executive Committee, Pfaudler Permutit, Inc.Member, Trust Board, First Nationol City Bank INew York)DIRECTOR Chemical Fund, Inc.Xerox Corporation TRUSTEE Rochester Savings Bank WILLIAM S.VAUGHN President and Director, Eostmon Kodak Company Chairman, Board of Trustees, Colgote Rochester Divinity School DIRECTOR The Procter&Gamble Company Thompson Ramo Wooldridge, Inc.Lincoln Rochester Trust Company TRUSTEE Rochester Savings Bank The University af Rochester Vanderbilt University 32 DIRECTORS OFFICERS ALBERT W.WHITTLESEY Senior Vice President, The First Pennsyfvania Banking and Trust Company OIRECTOR Berwind Corporation Berwind White Coal Mining Co.Western PaciBc Railroad Co.TRUSTEE Anthony J.Drexel Estate Abington Memorial Hospital JOSEPH C.WILSON President, Chief Executive Ofyicer, and Director, Xerox Corporotion Chairman, Board of Trustees, The University of Rochester DIRECTOR Rank Xerox Limited (London)The Rank Organisation Limited (London)Fvji.Xerox Co., Ltd.(Takyo)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 TRUSTEE Rochester Savings Bank ROBERT E.GINNA Choirman of the Board ond Chief Executive OIBcer HAROLD S.WEATHERBY Vice President ond Controller PAUL W.BRIGGS Secretary ond Assistant Controller ERNEST J.HOWE President FRANCIS E.DRAKE, JR.Vice President ROBERT W.BALL Assistant Treosvrer LEO H.EAST Executive Vice President (Deceased February 18, 1965)GEORGE H.FIEDLER Vice President DEAN W.CAPLE Assistont Secretary LINN B.BOWMAN Vice President SCHUYLER F.BALDWIN Vice President AI.BERT J.KLEMMER Auditor R.DEWITT PIKE Vice President HAROI.D W.NICHOLS Treasurer Bond Trustee and Paying Agent BANKERS TRUST COMPANY 16 Wall Street, New York, New York 10015 Co-transfer Agent MORGAN GUARANTY TRUST COMPANY OF NEW YORK 23 Wall Street New York, New York 10015 Registrar SECURITY TRUST COMPANY OF ROCHESTER 103 Main Street East Rochester, New York 14604 Independent Accountants PRICE WATERHOUSE B CO.1200 Midtown Tower, Rochester, New York 14604 New York Stock Exchange Symbol ROCHESTER GAS AND ELECTRIC CORPORATION Common Stock-RGS Transfer Agent LINCOLN ROCHESTER TRUST COMPANY 183 Main Street East Rochester, New York 14603 Co registrar THE CHASE MANHATTAN BANK 1 Chose Manhattan Plaza New York, New York 10015 PRINCIPAL OFFICE 89 EAST AVENUE, ROCHESTER, NEW YORK 14604 ANNUAL MEETING Third Wednesday in May at Rochester, New York