REGULATOR NFORHATION DISTRIBUTION TEH (RIDS)

AOCESSION NBR;820602Q312 DOC ~ DATE: 82/05/27 NOTARIZED: NO

FACIL:50-000 Generic Docket50-220 Nine Hile-Point Nuclear Station, Unit ii Niagara Powe50-410 hine Hile Point Nuclear Station< Unit Zi Niagara HohaSTN 50"485 Sterling .Power Nucleal ProJecti Unit 1g RochesterSTN-50-517 Jamespor t Nuclear Stations Unit 2i Long Island L)STN-50 516 Jamesport Nuclear Stationi Uni,t ig Long Island, Li50-244 Robert Emmet Ginna Nuclear Plantr Unit ig Rochester G

50"322 Shoreham Nuclear Power Station< Long Island LightingAU'1H

~ NAME AUTHOR AFFILIATIONTROSTEN<L.H ~ LeBoeufi Lambi Leiby 8, HacRaeTROSTENiL.M. Niagara Mohawk Power Corp,'RBCIP ~ NAME RECIPIENT AFFILIATION

DENTONgH.Re Office of Nuclear Reactor Regulationi Director

SUBJECT: Forwards Annual Financial Repts 1981 for Niagara MohawkPower CorpiNY State Electric 8 Gas CorpiLILCOiRochester Gas8 Electric Corp 8 Central Hudson Gas 8 Elec ri Corp,

EF F alA~AL gyps, c<gDISTRIBUTION CODE: Y004S COPIE5 RECEIVED:LTR g EN L „i SIZF:.TITLE: Annual Financial Reports

NOTES:Standardized Plant.Inactive'tandardizedplant. Inactive,

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RALCIOH,NC 27802QI9 S33 9789

May 27, 1982%II PEOUOT AVENUE

SOUTHPORT>CT 08490203 259 8383

Mr. Harold R. DentonDirector of Nuclear Reactor

RegulationU. S. Nuclear Regulatory

CommissionWashington, D.C. 20555

'q fi

q( fy

g l~@

Re: Nine Mile Point Unit 2Docket No. 50-410

Dear Mr. Denton:

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

Niagara Mohawk Power CorporationNew York State Electric 6 Gas Corporation~Long Island Lighting Company ~>/0> ~~IV>p A>. ~~~~Rochester Gas and Electric Corporation < f ICentral Hudson Gas & Electric Corporation,

Sincerely yours,

LeBOEUF, LAMB, LEIBY 6 MarHAE

ByLeonard M. TrostenAttorney for Niagara Mohawk

Power Corporation

enclosures

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0

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NAGARA M K Po>ZR CORPORATION AND SUBS .RY COMPANIES

STATEMENT OF CONSOLIDATED EARNINGS(In Thousands of Dollars)

Three MonthsEnded June 30,

Twelve MonthsEnded. June 30,

Operating revenues:ElectricGas

Operating expenses:Operation:

Fuel for electric generationElectricity purchasedGas purchasedOther operation expenses

MaintenanceDepreciation and amortizationFederal and Foreign income taxesOther taxes

Operating incomeOther income and deductionsAllowance for other funds used

during constructionFederal. income tax creditsOther items (net)

Income before interest chargesInterest charges:Interest on long-term debtOther interestAllowance for borrowed funds used

during construction

Net incomeDividends on preferred stockBalance available for common stock

Average number of shares of commonstock outstanding during the period(in thousands)

Earnings per average share ofcommon stock

114,84472,54887,94869,43529,002

36,57759 910

50i550585575

15>9746,4173,941

2 5332112 077

37>50775077

73,271~9478'~~7

85,283

40.75

19 2

$457,458129 8925557350

19 1

$439,80688 410

52 21

141,41577,82o54,43466,35828,61425,19012,51952,563

~5913~9303

11,5784,63o1 78o

1719Ble 291

31,9585 458

(5 821)31 595

55,696~8939

76,268

)0.61

19 2

$1,789 263495 8o8

2 2 5,071

552502026o,614343,9V4267,116121,880111,77589,178

228 3571 97 91

310 157

56,84222,43312,36191 301 793

139571523,701

ta;<1 0 Ol

261,77936 457

22 22

83,621

g2.69

19 1

$1,588,49341o,221

1 99 71

538,224239,170289,847240,615110,34398,32743,816

201 8811 7 2,223

23 91

41,75216,002

7,8685 22

302 113

123,73416,186

(21,662)11 25

183,85531 075

152 7 0

7">913

@.04

The aoove information is not given in connection with any saleany stock or security.

of, or offer to sell or buy

~8206020312 820527PDR ADOCK 05000220 .I', 'DR.".

NIAGARA HAWK POWER CORPORATION AND S IARY COMPANIES

CONSOLIDATED BALANCE SHEET

CAPITALIZATIONAND LIABILITIESCapitalization:

Common stockholders'quity:Cbmmon stock — 41 pa'r value; authorized125,000,000 shares; issued 86,285,742 and83,973,252 shares, respectively. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Premium on'capital stock. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Capital stock expense............................Retained earnings.....................-..........

86,286923,937(10,505)558,652

83,973895'04(10,599)488i756

June 30,1982 December 31,

(Unaudited) 1981(In Thousands of Dollars)

Cumulative pref erred stock, authorized 3,400,000shares, 4100 par value:

Non-redeemable (optionally redeemable),issued 2,100,000 shares. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Redeemable (mandatorily redeemable), issued1 f 0 76, 51 0 and 1, 099< 980 shares, respectively g

including sinking fund requirements. ~ ~ ~ ~ ~ ~ ~ - ~ ~

Cumulative preferred stock, authorized 9i600i000shares, 425 par value:

Redeemable, (mandatorily redeemable), issued5,808,000 and 5,008,000 shares, respectively,including sinking fund requirements. ~ ~ ~ ~ ~ ~ - ~ ~ ~

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

Redeemable (mandatorily reedeemable), issued1,080,000 shares, including sinking fundrequirements. ~ ~ . ~ ~ ~ ~ ~ ~ ... ~ ....................

Long<erm debt- ~ ~ ~....................,....Total capitalization. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

1,558,370

210, 000

104,400

141,050

23, 000478,450

1,704,4863i74lg306

1,457,934

210,000

108, 198

123,550

23,000464,748

1, 619,3693, 542, 051

Current liabilities:Short-term debt...-............LongWerm debt due within one year. ~ ~ ~ ~ ~ ~ ~ ~

Sinking fund requirements on redeemable preand preference stock. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ - ~ ~ ~ ~ ~ ~ ~ ~ ~

Accounts payable... ~ ....... ~ ...Payable on outstanding bank checks......-..

ICustomers deposits -. .. .. ~ .. ~ ~ ~ ~ ~ ~ ~ ~

Accrued taxesoooooooo ~ eoooooo.oo..o.woo.oo.Accrued interest. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ - ~ ~ ~ ~ ~ ~ ~ ~

Accrued vacation pay- ~ ~ . ~ ~ ~ .. ~ .............Gas supplier refunds payable to customers-.Other ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~

ferred

Deferred credits:Income tax refunds............ .. . ~ . -.. ~ ~ ~ ~ ~ ~ - ~

Mandated refunds to customers......................Accumulated deferred Federal income taxes. - ~ ~ ~ ~ ~ ~ ~ ~

Other's ~ o ~ ~ ~ ~ i o ~ ~ ~ ~ ~ ~ ~ ~ o i. ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ . o ~ ~ ~ ~ ~ ~

92, 00038,433

11,401128,439

51,5384,984

45,00144g97319,395

6,79013,252

456,206

9,9438,775

157i10922,446

198i273

123, 3309,250

7,450165i 35450,3584i769

23,34336,34018,36734,0805,814

478,455

9,94316,418

112,54416,521

155,426

Commitments and Contingencies (Note 3)-..............4 395 785 4 175 932

~ ~

NZAGARA MOHAWK POWER CORPORATION AND SUBSIDIARy COMPANIES

CONSOLIDATED BALANCE SHEET

June 30,1982 December 31,

(Unaudited) 1981(Zn Thousands of Dollars)

AS SETSUtilityplant, at original cost:

Electric ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Nuclear fuel. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

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

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

Construction work in progress.Totale ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Less-accumulated depreciationNet utilityplant...

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

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

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

and amortization. ~

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

Other property and investments (Note 2) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

$3,482,340256,812434i52276,297

936i 1835, 186, 1541,410 i 0143,776, 140

61, 076

$3i4lli098248i836420, 654

71, 198833,529

4,985,315li348,7383,636,577

42'30

Current assets:Cash'ncluding time deposits of 4240 and

4500, respectivelyo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

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

Material and supplies, at average cost:Coal and oil for production of electricity.Others'o ~ ~ ~ ~ ~ s. ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ i ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Prepaid real estate taxes.......~-.-..Other prepayments............................

18,978

221, 499

134,69953 i24929,4606,128

464,013

8,259

195,957

149gl0251,742

2,7956, 161

414g016

Deferred debits:Unamortized debt expense.........Deferred recoverable energy costs. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Extraordinary property losses (Note 3)..Other ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ o.. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ooo ~ , ~ o ~ ~ ~ ~ o ~ ~ i ~ ~ ~

19,59037,55323, 18514,22894, 556

4 395 785

16,02950,477

16,70383,209

4 175 932

0NIAGARA MOHAN'K PONER CORPORATION

1982 internal Cash Flow projection for Nine Mile No. 1Nuclear Power Station

(Thousands of Dollars)

Net Income After TaxesLESS: Dividends Paid

Retained. Earnings

1981~Actual

$220,643162 066

~5577

1982projected)

$258,514194,906

~3~0

Adjustments:Depreciation and AmortizationDeferred Income Taxes and Investment

Tax CreditsAllowance for Funds Used During

ConstructionTotal Adjustments

139,963

195734,

. 71 890)

133,323'9,498

~94 687)~8> 4

Internal Cash Flow

Average Quarterly Cash Flow

~l46 84

$ 36,596

~16': 48'

40,436

Percentage Ownership in All OperatingNuclear Units Nine Mile No. 1 - 10%/8

Maximum Total Contingent Liability 410 000

6/28/82

~ ~ 1 4

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

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

DATE: Au ust 4 1982

CERTIFIED:

NIAGARA MOHAWK POWER CORPORATION

w.John . PowersVice President - Treasurer

4

~ ~

0 0

—MQYICE—THE ATTACHED FILES ARE OFFICIAL RECORDS OF THEDIVISION OF DOCUMENT, CONTROL. THEY HAVE BEENCHARGED TO YOU FOR A LIMITEDTIME PERIOD ANDMUST BE RETURNED TO THE RECORDS FACILITYBRANCH 016. PLEASE DO NOT SEND DOCUMENTSCHARGED OUT THROUGH THE MAIL. REMOVALOF ANYPAGE(S) FROM DOCUMENT FOR REPRODUCTION MUSTBE REFERRED TO FILE PERSONNEL.

DEADLINERETURN DATE

RECORDS FACILITYBRANCH

Dsckstk So- KwoCOIItI'ef k EZ.Ohe~o glz

,KIMfORY009KFVFILF tmI Y

CENTRM HUDSONGas O'lectric Corporation

Qo,o o~~o o

OO0

CENTIRAL HUDSONGAS 8 ELECTRIC CORPORATION

284 SOUTH AVENUETelephone 914 452-2000

POUGHKEEPSIE, N.Y. 12601

of

ONE WALLSTREETTelephone 212 344-5680NEW YORK, N.Y. 10005

APRIL 1982TWENTY-THIRD EDITION

TABLE OF CONTENTSIntroduction .

Area Served

Growth Summary

Management & Employees

Rates

Company Securities & Markets

Construction Program

Forecast of Cash Requirements

Financing Cash Requirements .

Statement of Income

Income from Operations —Electric and Gas Departments

Summary Balance Sheet at December 31

Statement of Retained Earnings and Statement of Changes in Financial Position .

Detail of Utility Plant and Accumulated Depreciation .

Electric Revenues, Sales, and Customers .

Gas Revenues, Sales, and Customers

Electric and Gas Production Data .

Labor Data and Industrial Revenues

Capitalization and Financial Ratios

Detail of Long-term Debt, Preferred Stock, and Common Stock .

Directors, Officers, Transfer Agents, Registrar,General Counsel, and Independent Accountants .

Page

2

2

2

3

5

6

77'

9

10

11

12

13

14

15

16

17

18

19

THIS REPORT IS NOTAREPRESENTATION OR PROSPECTUS IN REGARD TO

THE COMPANY'S SECURITIES AND IS NOT FURNISHED IN CONNECTION

WITH ANY PROPOSED SALE OR OFFER TO SELL OR BUY ANY STOCK OR

SECURITIES.

DATA CONTAINED HEREIN WITH RESPECT TO ANY PARTICULAR YEAR

SHOULD BE CONSIDERED IN CONJUNCTION WITH THE NOTES AND COM-

MENTS APPEARING IN THE COMPANY'S ANNUALREPORT FOR THATYEAR

TO ITS SHAREHOLDERS.

INTRODUCTIONThis Financial and Statistical Report, includ-

ing charts and tabulations covering the ten-yearperiod 1971-1981, is designed to supplement the

Annual Report to shareholders which contains adetailed review of operations during the year1981.

AREA SERVEDLOCATION

Central Hudson serves a 2,600 square-milearea, including all or parts of eight counties, inNew York's Mid-Hudson Valley. The area ex-tends about 85 miles along the Hudson Riverand about 25 to 40 miles east and west from theriver. The southern end of the territory is about30miles north of New York Cityand the northernend is about 10 miles south of Albany. A map ofthe area is shown inside the back cover.

POPULATIONThe population of the Company's service area

is currently estimated to be 542,000. During thelast ten years the population has increasedapproximately 9%, or an average annual increaseof .9%.

UTILITYSERVICEElectric service is available throughout the

territory, while gas service is provided in andabout the cities of Poughkeepsie, Beacon,Newburgh, and Kingston and in certain outlyingand intervening territory.

ECONOMYThe Company's territory reflects a diversified

economy, including manufacturing, research,farming, governmental agencies, public andprivate institutions, resorts, and wholesale andretail trade.

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

GROWTH SUMMARYGrowth over the last five and ten years in terms of earnings per share, dividends declared, electric and

gas sales, revenues, and plant is shown below:

Average AnnualGrowth Rates

1976-1981

Average AnnualGrowth Rates

1971-1981

Earnings Per Share —Common StockDividends Declared Per Share—

Common Stock

Electric Sales —Own Territory (a) ..........Electric Revenues —Own Territory (a)....Gas Sales (b) .

Gas Revenues (b)

Electric UtilityPlant (c) .

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

(a) Excluding sales to other utilities.(b) Excluding sales of interruptible gas service.(c) Including construction work in progress.

7.5%

6.3

2.114.9

1.312.0

8.33.8

3.9%

4.4

1.414.6

.210.2

7.23.1

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

As a result of national shortages of natural gassupplies and pursuant to an order of the NewYork State Public Service Commission (PSC)

issued on October 26, 1971, the Company's gastariffs precluded the sale of firm gas service tonew commercial and industrial customers.However, as a result of the increased availabilityof gas, primarily due to the passage of theNational Energy Act in 1978, the PSC has removedessentially all of such restrictions.

MANAGEMENT5 EMPLOYEESThe main office of the Company is located at

Poughkeepsie, New York, and a financial officeis located at One Wall Street, New York City.(For telephone numbers see inside front cover.)

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

The Company is an equal opportunity em-ployer which maintains an active managementdevelopment program and offers a wide range ofeducational opportunities. Included in the Com-pany's educational policy are provisions forfinancial assistance to employees for voluntary

education, training, and other self-improvementprograms. Other benefits provided by theCompany are set forth on page 16.

Union shop contracts are maintained withLocals 320 and 2218 of the International Broth-erhood of Electrical Workers (AFL-CIO). TheCompany and these employee groups havemaintained an excellent record of cooperation.

The present two-year contracts between theCompany and the I.B.E.W. Locals becameeffective July 1, 1981 and continue throughJune 30, 1983.

EMPLOYEE DATA'Numberof Em lo ees December31.1981 a

25 years or more of service ..15-24 years of service .

5-14 years of serviceLess than 5 years of service ..

Total

Total

471197464213

1,345

Officers

13

Supervisoryand

Professional161438476

364

Classified

302151378137

968

(a) Includes 113 employees at the Roseton Plant in which the Company had a 30% interest during 1981 (see page 16).

RATESGENERAL

The electric and gas retail rates of theCompany applicable to service supplied withinthe State of New York (other than contractuallyestablished rates for service to municipalitiesand governmental bodies) are regulated by thePSC. Transmission rates and rates forelectricitysold for resale in interstate commerce areregulated by the Federal Energy RegulatoryCommission.

RATE INCREASESIncreased electric and gas rates became

effective on July 18, 1981. The PSC, by orderdated July14, 1981, authorized the Company tofile revised electric and gas tariffs designed toincrease electric revenues by $ 31,690,000, or11.8% based on estimated electric sales underfiled rates for the twelve-month period endingJuly 31, 1982, and gas revenues by $2,654,000,or 5.8% based on estimated gas sales under filedrates for the same period. The total revenueincrease authorized by the PSC was approxi-mately 88% of the amount requested by the

Company in its rate increase application filed inAugust 1980.

The PSC allowed a return on common stockequity of 16.9% and an overall return on theCompany's total invested capital of 12.24% andauthorized certain accounting changes designedto improve cash flow. In its determination withrespect to the increased electric rates, the PSCdecided to defer approval of the Company'srequest for increased annual electric revenuesof $7,718,000 for the amortization and recoveryin rates over a five-year period of its investmentin the terminated Sterling Nuclear Unit No. 1,until it had reached its decision in a separateproceeding with respect to such matter. Re-garding electric sales to other utilities for resale,the PSC modified its prior treatment andprovided that net revenues (revenues lessincremental costs, principally fuel) from allsales for resale, except certain continuing firmsales imputed in deriving the base rates, beflowed through the electric fuel adjustmentclause to the Company's retail customers as acredit to fuel costs.

On November 23, 1981, the Company filed arequest with the PSC for an 11.1% increase inelectric revenues and a 5.9% increase in gasrevenues from firm customers. The new rateshave been requested to cover the estimated costof providing service for the twelve-month periodNovember 1, 1982 through October 31, 1983. Inits filing, the Company is requesting an 18.5%

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

Rate increases authorized by the PSC duringthe five-year period January 1, 1977 to December31, 1981 are summarized in the table below.

EffectiveDate

7/18/817/18/8111/3/7911/3/797/16/775/11/77

Service

ElectricGasElectricGasElectricGas

AmountRequested

$35,677,0003,171,000

22,992,0002,097,000

13,752,0001,669,000

AmountGranted

$31,690,000',654,000

22,043,000'*1,563,0006,993,000" *

1,669,000

% Increaseof Test Year

Revenues

11.8%5.8

11.64.85.09.7

Return on

CommonEquity

16 9%16.914.014.013.313.3

TotalInvestedCapital

12.24%12.249.939.939.219.21

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

"Effective November 3, 1979 the Company transferred an additional $ .015 per kwhr. of fuel costs to its rate base."'Afterreflecting the effect of the disposal of a substantial amount of unused capacity pursuant to a new agreement with Con

Edison.

FUEL ADJUSTMENT CLAUSESThe Company's tariff for electric service

includes a fuel cost adjustment clause pursuantto which all retail electric rates are adjusted toreflect changes in the average cost of fuels usedin electric generation and certain purchasedpower costs from the average of such costsincluded in base rates. Generally, there is adelay of approximately 40 days for customerswhose bills are rendered monthly and 70 daysfor customers whose bills are rendered bi-monthly between a change in fuel costs and thetime when rates charged fo customers areadjusted.

The Company's tarifffor gas service includesa gas cost adjustment clause pursuant to whichall retail gas rates are adjusted to reflect changesin the price of natural gas purchased frompipeline suppliers and certain costs of manu-factured gas from the levels of such costsincluded in base rates. Generally, there is adelay of approximately one month between achange in the cost of gas and the time whenrates charged to customers are adjusted. Inaddition, in the Company's last gas rate case thePSC imputed $2 million of net revenues frominterruptible sales and electric generation usagein the determination of base rates. Fifty percentof any amount in excess of $2 million is flowedthrough the gas cost adjustment to reduce thebills of firm gas customers and the remaining50% is available for additional depreciationaccruals.

In accordance with permission granted by thePSC, changes in electric fuel costs and gascosts are deferred in the Company's accountsuntil the month in which such changes arereflected in the electric fuel or gas cost adjust-ment, thereby permitting the Company to matchcosts and revenues.

SALES FOR RESALEThe net revenues (revenues less incremental

costs) from all sales of energy and capacity toother utilities, other than firm capacity, areexcluded from the derivation of retail rates andare credited to its retail customers via the fueladjustment clause. Such sales and revenues arevery unpredictable and subject to the influencesof many factors that are beyond the control ofthe Company; accordingly, the Company be-lieves that it is inadvisable to impute any level ofnet revenues from such sales in the derivation ofbase rates.

RATE DESIGNEffective March 15, 1978, the Company's tariff

for electric service was revised to include time-of-use rates for large commercial and industrialcustomers. Fifty-four customers take serviceunder this form of rate and some of thesecustomers have taken actions to reduce loadsduring peak periods.

By order issued in November 1979 the PSCinstituted a proceeding to consider the electricrate design of the Company and directed that

specific consideration be given to (i) allocationof revenues among service classifications; (ii)rate structure within each classification; (iii) theCompany's marginal cost study; and (iv) blockdesigns sensitive to marginal cost, seasonalrates, and time-of-day rates. It is expected that

the PSC will render a decision in this proceed-ing prior to or concurrent with a decision in theCompany's current electric rate proceeding.Any future changes in rate design could affectcustomer usage of electricity.

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

1972 through December 31, 1981 the Companyissued securities with proceeds of approxi-mately $ 293 millionof which $ 67.8 million wasapplied to the repayment of long-term debtwhich matured during the period. The amountof securities outstanding at December 31, 1981was113% greater than the amount outstandingat December 31, 1971. In addition, during thissame ten-year period retained earnings in-creased by about $53 million.

FIRST MORTGAGE BONDSAt December 31, 1981, the Company had

$239.5 millionprincipal amount of first mortgagebonds outstanding, of which $ 17 million hadbeen placed privately.

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

The Company's first mortgage bonds arerated H6 (Middle A) by Duff and Phelps, Inc.;"A-" by Standard 8 Poor's Corporation andFitch Investors Service; and "Baa" by Moody'sInvestors Service.

Additional bonds may be issued under theMortgage Indenture for purposes other thanrefunding outstanding bonds only if net earn-ings, as defined in the Mortgage, for twelveconsecutive calendar months within the fifteencalendar months preceding the date of issueshall exceed two times the interest charges forone year on all bonds outstanding under theMortgage plus the additional bonds to be issued.For the twelve months ended December 31 ~

1981, the Company could have issued $40million of additional first 'mortgage bonds,assuming an annual interest rate of 16%.

Furthermore, any additional bonds issuedunder the Mortgage shall not in principal amountexceed 66'/3% of the net bondable value ofproperty additions as that term is defined in theMortgage. As of December 31, 1981, the amountof such net bondable value was approximately$69 million, and the amount of the additionalfirst mortgage bonds issuable with respectthereto was approximately $46 million.

UNSECURED SINKING FUND NOTES$7.7 million principal amount of 4.85% prom-

issory notes due 1995 was outstanding atDecember 31, 1981. These notes were placedprivately and have an annual sinking fundrequirement of $ 175,000.

PREFERRED STOCKAs of December 31, 1981, 490,300 shares

(4~/2% 475%, 772% 744%, and 840% series)were held by 3,414 holders. These shares aretraded over the counter. There were also out-standing at that time 60,000 shares (4.35%series) and 60,000 shares (4.96% series) both ofwhich series were placed privately. The series ofpreferred stock which were not privately, placedare rated "A-"by Standard 8 Poor's Corporationand Fitch Investors Service, ff7 (Low A) by Duffand Phelps, Inc., and "Baa" by Moody's In-vestors Service.

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

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

COMMON STOCKThe stock has been listed on the New York

Stock Exchange since 1945 and dividends havebeen paid by the Company and its principalpredecessors for 78 years.

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

As of December 31, 1981, 7,456,005 shareswere outstanding. The number of registeredholders of common stock was 25,296 at that

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

The Company's Certificate of Incorporation,as amended, provides for10,000,000authorizedshares of common stock. Accordingly, as ofDecember 31, 1981, the number of authorized

but unissued shares amounts to 2,543,995.Additional information on outstanding secu-

rities is shown on page 18.The Company has available for interested

shareholders an Automatic Dividend Reinvest-ment and Stock Purchase Plan providing for theissuance of original issue shares of stock.

CONSTRUCTION PROGRAMThe Company is engaged in a construction

program which is presently estimated to involvecash expenditures during the period 1982

Construction Expenditures':Participation in Unit No. 2

of the Nine Mile PointNuclear Station (9%).......

Conversion of DanskammerUnits 3 and 4 to coal-firing ...

Purchase of an additional 5%interest in the Roseton Plant ..

Expenditures excluding majorgenerating projects..........

Total .

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

$30.5 $31.0 $ 25.9 $ 27.4 $ 14.1 $ 128.9

8.7 26.9 8.9 44.5

13.4 13.4

28.0 28.1 22.0 25.1 26.6 129.8

$71.9 $59.1 $56.6 $ 79.4 $49.6 $316.6

Total1982 1983 1984 1985 1986 1982-1986

(Millionsof Dollars)

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

As shown in the above table, the two mostsignificant construction projects are the Com-pany's 9% participation (97 mw.) in Unit No. 2 ofthe Nine Mile Point Nuclear Station (NMP-2)and the conversion of Danskammer Units 3 and4 from oil-firing to coal-firing.

NMP-2 is being constructed by NiagaraMohawk Power Corporation in Oswego County,New York, and presently scheduled for opera-tion in 1986. The cotenants'urrent estimate ofthe cost of NMP-2 is $ 2.4 billion, excluding thecost of nuclear fuel and AFDC, of which theCompany's 9% share would be $ 216 million.With the addition of the cost of nuclear fuel,currently estimated to be $9 million,and AFDC,currently estimated to be $ 128 million, the totalcost of the Company's interest in NMP-2 iscurrently estimated to be $353 million.

Based on current fuel cost projections, theconversion of Danskammer Units 3 and 4 fromoil to coal appears to provide substantial fuelsavings for the Company's customers. In order

to finance both its continued participation inNMP-2 and the coal conversion, the Company iscurrently planning a sequential (rather thansimultaneous) conversion of the two units withthe first unit in operation on coal in September1986 and the second unit in operation on coalnot later than September 1988. Such an ap-proach will enable the Company to levelize itscash expenditures, reduce its financing require-ments in 1984-1986, and enhance its ability toraise the necessary capital. The total cash costof a sequential conversion is currently estimatedto be $ 83.8 millionwithout flue gas desulfuriza-tion (FGD) equipment and $ 193.3 million withFGD equipment. In view of the many regulatoryand environmental problems involved in coalconversion, the current plans and cost estimatesmay be changed substantially.

Estimates of construction expenditures aresubject to continuous review and adjustmentand actual construction expenditures may varyfrom such estimates.

FORECAST OF CASH REQUIREMENTSThe Company's tentative annual cash require-

ments for the years 1982-1986 based upon theabove construction program and exclusive of

funding the $ 16.5 million of short-term debtoutstanding at December 31, 1981 are shownbelow:

Construction Expenditures:Cash Expenditures (from page 6)

Total1982 1983 1984 1985 1986 1982-1986

(Millionsof Dollars)

$71.9 $59.1 $56.6 $79.4 $49.6 $316.6

Internal Funds Available:Depreciation Accruals:

Charged to Depreciation Expense ....... 17.5Charged to Other Income Accounts.......5

Total . ... ..... .............. 18.0Deferred Income Tax—net ................ 7.6Retained Earnings (a)...... 9.2AFDC (b) ............ (16.3)Sterling Amortization—net .................5Other . ... ..... ..... ~ ... ~ ~ .. .1

Totallnternal Funds . .... ........ 19.1

Balance of Construction Requirementsto be Financed ........................ 52.8

18.9 19.4 20.0.5 .7 .7

19.4 20.1 20.79;7 12.0 13.29.4 10.4 11.5

(20.1) (20.2) (22.2)2.8 3.2 3.7

.6 .7 .8

21.8 26.2 27.7

27.7 103.5.8 3.2

28.5 106.71?.5 60.012.2 52.7

(20.0) (98.8)4.3 14.5

.9 3.1

43.4 138.2

37.3 30.4 51.7 6.2 178.4

Refunding of Long-Term Debt Securities:First Mortgage Bonds .............. 6.0Promissory Notes .....................2

Total ............... 6.2

Other Cash Requirements........ 3.0

Total Cash Requirements ........... $62.0

2

2

2.5

$40.0

II

11.02 2

11.2 .2

5.4 6.1

$47.0 $58.0

2

2

3.6

17.01.0

18.0

20.6

$ 10.0 $217.0

(a) Growth in Retained Earnings for the years 1983 through 1986 is assumed to be 4% of the average common equity foreach of therespective years.

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

FINANCING CASH REQUIREMENTSAs shown above, it is currently estimated that

44% of the cash construction expenditures forthe five-year period 1982-1986 will be providedinternally and the balance will be met frominterim short-term borrowings and the issuanceof new securities.

The issuance of new securities will be basedupon the Company's general financial policiesin regard to capitalization ratios, coverage, andpay-out ratios as well as market and othereconomic conditions existing over the nextfive years.

DOLLARS5.00

EARNINGS PER SHARE

4.50

4.00

3.50

3.00

2.50

2.00

1.50

1.00

.50

1971 72 73 74 75 76 77 78 79 80 81

DIVIDENDS DECLARED PER SHARE AND PAY-OUT RATIODOLLARS

2.50

2.25

2.00

1.75

PER CENT100 ~ DIVIDENDS

DECLAREDPER SHARE

80 ~ PAY-OUT70 RATIO

1.50 60

1.25

1.00

.75

.50

.25

50

40

30

20

10

Dividends declared increased from $2.20 in1980 to $2.39 in 1981. The pay-out ratio re-mained relatively constant decreasing from65% in 1980 to 64% in 1981.

The Company's dividend policy has been togenerally maintain a pay-out ratio of approxi-mately 65% but the figure has fluctuatedwidely in some years because of the variationsin yearly earnings.

1971 72 73 74 75 76 77 78 79 80 81

STATEIv)ENT OF INCOME —(Thousands of Dollars)

1981 1980 1979 1978 1977 1976 1975

Operating RevenuesElectric (1) .

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

Operating ExpensesOperationMaintenanceDepreciationOperating TaxesFederal Income TaxDeferred Income Tax —Net .

Total ..

333,96612,45016,10829,274

8,9812,569

235,25211,13215,22024,481(2,534)8,744

92,6046,611

12,56916,0033,783

670

100,9176,794

12,85916,9754,0502,342

133,6888,098

13,27918,5604,5522,547

169,7429,818

14,83921,268

1715,794

132,5548,151

13,39318,7796,5043,387

403,348 292,295 221,632 182,768 180,724 143.937 132,240

$398,392 $ 291,999 $ 225,971 $ 186,264 $ 184,391 $ 149,884 $ 138,41448.489 35.994 28 813 24 738 23 449 20 831 19 897

444,881 327,993 254,784 211,002 207,840 170,715 158,311

Operating Income 41,533 35,698 33,152 28,234 27,116 26,778 26,071

Other Income and DeductionsAllowance for Equity Funds Used

During ConstructionFederal Income Tax —Credit....Deferred Income Tax —Credit ..Other —Net

Total .

6,1982,528

220~533)

8,413 2,173 1,1512,8994,2544,871

4,495 . 3,476 2,388 1,560 796418 933 721 628 409253 178 138 75 30

~295) ~333) ~348) ~90) ~84)

324727

717

1,075

Income before Interest Charges 49,946 40,569 37,406 31,133 29,289 27,929 27,146

Interest ChargesInterest on Mortgage Bonds ........ ~......Interest on Unsecured Long-term Debt.....Interest on Short-term Debt .............:.Other Interest .

Allowance for Borrowed Funds UsedDuring Construction .

Amortization of Premium and Expense on Debt

Total

21,0431,8154,296

652

15,0173,7784,763

305

11,3065,1953,422

262

10,750762

1,673272

10,627805

1,075793

10,4691,467

704308

8,6271,4832,570

445

(7,718) (7,287)179 95

(4,536)63

(2,640)56

(1,831)73

(1,014)68

(381)65

20,267 16,671 15,712 10,873 11,542 12,002 12,809

Net Income...........................Dividends on Preferred Stock. ~..........Income Available for Common Stock.........Dividends on Common Stock...... ~.........

29,679

4,126

25,553

16,751

23,8984,126

19,77213,308

21,694

4,126

17,568

10,961

20,260

4,126

16,134

10,531

17,747

3,626

14,121

8,966

15,927

2,866

13,061

8,382

14,337

2,866

11,471

7,737

Retained Earnings $ 8,802 $ 6,464 $ 6,607 $ 5,603 $ 5,155 $ 4,679 $ 3,734

65

1.10

Common Stock:Average Shares Outstanding (000's)........ 6,867 5,851Earnings Per Share —on Average Shares

Outstanding —Dollars........ ~..... 3.72 3.38Dividends Declared Per Share —Dollars ... 2.39 2.20Dividends Paid Per Share —Dollars........ 2.33 2.18Pay-out Ratio on Dividends Declared-

Per Cent . 64Retained Earnings Per Share —on Average

Shares Outstanding —Dollars........... 1.28

Earnings Per Share —Assuming Conversionoft)'!e Convertible Debentures —Dollars.. (3) 3.26

(1)~>See footnote (a) on page 13. (3) The 4V84h convertible debentures were paid8 (2). See footnote (a) on page 14. at maturity on June 1, 1981; therefore. at

December 31 ~ 1981 there was no effect onearnings per share.

5,373

3.272.041.99

62

1.23

3.16

5,310

3.041.961.94

64

1.06

2.93

4,873

2.901.841.80

63

1.06

2.70

4,873

2.681.721.72

64

.96

2.50

4,440

2.581.721.72

67'84

2.40

RATIO OF ELECTRIC & GAS REVENUESTO TOTAL OPERATING REVENUES

PER CENT100

90

80

~ ELECTRIC

Q Gas

70

60

50

40

30

20

10

1972 73 74 75 76 77 78 79 80 81 PER CENT20

RATIO OF OPERATING INCOMETO CORPORATE NET PLANT

18

16

14

12

10

TOTAL MAINTENANCEAND DEPRECIATIONAS PER CENT OF TOTAL REVENUE

PER CENT100

1971 72 73 74 75 76 77 78 79 80 81

'Excluding Constructon Work in Progress

90

80

70

60

50

40

30

20

10

The lower percentages for the years sub-sequent to 1973 have resulted from thesubstantially higher levels of revenues ex-perienced in those years. Revenues for thoseyears have been Impacted by the recovery ofincreased eleCtriC fuel costs and higher gascosts,

In 1 981 the Company's annual provisions fordepreciation amounted to approximately3.34% of the original cost of averago depre-cfabte properly ln service. The average rate lorthe Bectric Department amounted to 3.tftyoand for the Gas Department 3.79yo.

1971 72 73 74 75 76 77 78 79 80 81

Notes

OU

OI-K

1974

$ 114,48217 007

131,489

1973

$ 77,77813 585

91,363

1972

$71,69114 193

85,884

1971

$64,88113 788

78,669

10-Year%~7o Chen e

514237

466Dividends

Paid Nontaxable

Portion of Common Stock Dividends Nontaxablefor Federal Income Tax Purposes

82,3275,250

10,31214,529(4,098)3,087

111,407

40,8425,4719,509

12,7872,487

869

71,965

36,7684,8639,084

11,9873,454

375

66,531

20,082 19,398 19,353

34,1525,5378,058

10,7932,586

283

61,409

17,260

878125100171247808

557

141

19811980197919781977197619751974197319721971

$2.332.181.991.941.801.721.721.721.611.511.48

7(a)eo(a)

None(a)None(a)None(a)

10(a)None(a)

eo(a)25(a)45.4464.33

2,731 2,080

1,754 1,8841,040 204

~83) ~8)1,764

301

~95)1,970

972 538

~52) (925)

920 814

(a) As initiallyreported to shareholders; subject toacceptance by U.S. Treasury Department.

22,813 21,478 21,323 18,180 175

7.,9041,5003;164

191

6,9561,5161,787

150

6,7581,5331,016

130

5,4731,4801,301

158

28423

230313

(2;059)63

10,763

(2,211)60

8,258

(2,071)60

7,426

(1,142) (576)52 244

7,322 177

12,050

2,866

13,220

2,827

13,897

1,974

10,858

1,820

173

127

9,184

7,328e

$ 1,856

10,393

6,512

11,923

5,963

$ 3,881 $ 5,960

9,038

5,066

$ 3,972

183

231

122

4,230

2.171.721.72

3,923

2.651.661.61

3,881

3.071.521.51

3,423

2.641.481.48

101

41

6157

79 63 50 56

.44 .99 1.54 1.16

2.03 2.45 2.82 2.44

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

ElectricOperating Revenues

1981

. $398,392

1980

$291,999

1979

$ 225,971

1978

$ 186,264

1977

$ 184,391

1976

$ 149,884

1975

$ 138,414

Operating ExpensesProduction —Operation ............ 270,631

Maintenance.......... 4,767Transmission —Operation ...... ~ .., .. 2,412

Maintenance.......... 1,020Distribution —Operation ............ 4,558

Maintenance.......... 4,643Customer —Accounts and Service ..... 5,978Sales .

Administrative & General —Operation ... 16,530Maintenance. 530

Total Operation and Maintenance..... 311,069Depreciation . 13,974Operating Taxes...... ~ . ~ .. 25,273Federal Income Tax......... 8,112Deferred Income Tax —Net............ 2,351

Total Operating Expenses............ 360,779

Operating Income ~ . .... $ 37,6t3

183,7273,9642,0201,0984,0174,3724,852

13,743553

218,34613,63321,141(2,328)8,428

259,220

$ 32,779

128,5093,1591,7731,3403,5273,6734,213

11,304602

158,10013,30518,394

(26)5,759

195,532

$ 30,439

97,4152,5431,792

9713,2603,2103,991

10,924454

124,56011,88716,1295,6583,141

161,375

$ 24,889

101,3472,6991,582

8433,0003,1723,695

9,211341

125,890~ 11,813

15,9854,4262,241

'2,5532,2471,604

5822,9172,6593,468

7,701314

94,04511,43114,5074,0352,226

66,5902,7061,600

4572,7732,2263,052

6,822257

86,48311,18613,6903,902

392

160,355 126,244 115,653

$ 24,036 $ 23,640 $ 22.761

GasOperating Revenues ... $ 46,489 $ 35,994 $ 28,813 $ 24,738 $ 23,449 $ 20,831 $ 19,897

Operating ExpensesProduction —Operation ............ 28,690

Maintenance.......... 68Transmission —Operation ............ 370

Maintenance.......... 296Distribution —Operation ............ 1,427

Maintenance.......... 1,078Customer —Accounts and Service ..... 1,052Sales . ~ 87Administrative & General —Operation ... 2,231

Maintenance. 48

Total Operation and Maintenance.. ~ .. 35,347Depreciation . 2,134Operating Taxes. 4,001Federal Income Tax 869Deferred Income Tax —Net............ 218

Total Operating Expenses............ 42,669

Operating Income . 3 3,920

22,60252

324241

1,256795761

391,911

57

28,0381,5873,340(206)316

16,76373

311214

1,148687629

1,56570

21,4601,5342,874

19735

11,77150

280192

1,074681587

1,46050

16,1451,5062,650

846246

11,78354

284224987722521

1,27843

15,8961,4662,575

126.306

9,80936

240197866710557

1,20249

13,6661,4282,468

15116

9,0723

211206894712485

1,10544

12,7321,3832,313(119278

$ 2 919 2,713 3,345 3,080 3,138 3,310

(Expressed in Per Cent)

33,076 26,100 2t,393 20,360 t7,693 t6,667

Ratio of Operating Income to Year-end Net Plant(a):Electric (includes allocation of common plant) 12.33Gas (includes allocation of common plant) .. 9.75Corporate 12.03

10.717.38

10.33

9.877.239.56

8.95(b)8.958.95(b)

8.578.208.52

8.608.538.59

8.339 058.41

Total Maintenance and Depreciation as Per Centof Total Revenue.

Ia) Net Plant excludes construction work in progress.(tf) Net Plant for 1978 excludes the 100k interest in the

s Roseton Plant purchased as of 12/31/78.

6.42 8.03 9.68 10.21 10.29 11.51 12.1

UTILITYPLANTMILLIONS OF DOLLARS75070065060055050045040035030025020015010050

~ NET UTILITYPLANT~ PLUS CONSTRUCTIONWORK IN PROGRESS

~ NET UTILITYPLANT

Net utility plant plus construction work inprogress, increased 90% during the last 10years. The average annual growth rateduring this period was 6.2%.

Gross additions to utility plant (includingconstruction work in progress) in the last 5yearsamount toabout35%of total1981 plant.The comparable figure for the last 10 years is55%.

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

1971 72 73 74 75 76 77 78 79 80 81

CAP ITALIZATIONMILLION

650

600

550

500

450

400

350

300

250

200

150

100

50

S OF DOLLARS ~ CAPITALIZATIONPLUS SHORT TERMDEBT

+ CAPITALIZATION

Capitalization increased 117% during the last10 years while capitalization plus short-termdebt increased 102% during the same period.The average annual rates of growth were 7.0%and 6.4% respectively.

019 71 72 73 74 75 76 77 78 79 80 81

1974 1973 1972

1

$ 114,482 $77,778 $71,691

10-Year1971 %~hchan e

$ 64,881 514

Ratio of CorporateOperating Revenues

Electric(Per Cent)

Gas(Per Cent)

57,9701,3811,530,

3572,9012,3612,813

45,906

240

75,4639,029

12,341(2,978)2,583

20,8311,7721,359

3692,8292,2312,173

2315,391

240

37,4268,273

10,7893,030

793

17,2151,3111,136

4632,5932,0002,137

2325,057

245

32,3897,898

10,0733,875

213

$ 17,007 $ 13,585 $ 14,193

8,65423

206118927

„ 725423

1

99245

12,1141,2832,188

(1,120)504

5,63825

208101916692314

35917

41

8,8871,2361,998(543)

76

6,16125

209104804676326

49849

39

9,2421,1861,914(421)162

14,969 11,654 12,083

$ 2,038 $ 1,931 $ 2,110

96,438 60,311 54,448

$ 18,044 $ 17,467 $ 17,243

16,2282,464

960377

2,2801,8441,777

5984,360

186

31,0746,9129,0952,614

230

49,925

$ 14,956

$ 13,788

5,88514

19990

704531260128773

31

8,6151,1461,698

(28)53

11,484

$ 2,304

93151171100152236

279185

901102178210922

623

151

237

388386

86229103103305(32)18955

31086

136

311

271

70

19811980197919781977197619751974197319721971

19811980197919781977197619751974197319721971

19811980197919781977197619751974197319721971

9089898889888787858382

Ratio of CorporateOperating Income

Electric(Per Cent)

91

92928889888790908987

Operating Ratio (c)

Electric Gas

87.9 89.286.7 91.684.0 89.881.9 82.183.4 85.080.1 84.380.5 82.684.6 91.672.6 89.270.2 87.072.6 83.1

1011

11

1211

121313151718

Gas(Per Cent)

9881211

1213101011

13

Corporate

88.187.284.681.983.580.680.785.575.173.074.4

6.665.946.58

8.835.678.37

8.826.378.46

8.377.118.18

(c) The Operating Ratio. expressed as a percent-age, represents the relation of total operatingexpenses, excluding federal income taxes, tooperating revenues.

11.84 16.40 16.24 17.28

4 Change of 1,000 per cent or more.

Notes

I-K

I-«C0

Cl

cCC9

CIK

CD

I-O

~KO«CI-

fLOXO

l

OCD

~ Z

4.t

SUMMARYBALANCESHEET AT DECEMBER 31 —(Thousands of Dollars)

1981 1980ASSETS

1979 1978

UtilityPlant —page 12................... ~.......Less Accumulated Depreciation

Net UtilityPlant

Construction Work in Progress

Other Property and Investments

Current AssetsCash .

Special Deposits .....................Accounts Receivable from Customers .

Accrued Unbilled UtilityRevenues ....Federal Income Tax Carry-backOther ReceivablesMaterials and Supplies.Prepayments .

$524,517179,268

345,249

160,249

1,840

2,958252

39,1517,535

1,14826,879

4,259

82,182

$511,167165,487

345,680

123,827

1,968

3,341247

31,9475,7714,6761,878

27,2643,771

78,895

$498,282152,407

345,875

98,019

1,797

3,267165

21,4285,5473,085

84024,334

3,163

61.829

$486,»6140,813

345,303

72,546

1,787

3,282258

16,9624,547

1,59416,2283,010

45,881

$ 4I

Deferred ChargesDeferred Electric Fuel Costs ........................Deferred Gas Costs'......Deferred Environmental Research

and Development Costs .

Unamortized Debt ExpenseUnamortized Project Costs.0 ather ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 0 ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~

6,4101,000

3,4222,4934,4493,824

10,351623

3,0992,190

4113,661

6,711517

3,9821,756

~ 5132,573

2,550834

3,6031,555

6161,591

Total. ~ ~ ~ ~ ~ ~ ~ ~ \ ~ ~ ~ ~ ~ ~ ~

21,598

$611,»8

20,335

$570,705

16,052 10,749

$523,572 $476,266

LIABILITIES

Capitalization —page 17

Current LiabilitiesLong-term Debt Maturing within OneSinking Fund Requirements.Notes Payable to Banks .

Notes Payable (Commercial Paper) ..Accounts Payable .

Accrued TaxesAccrued Interest .

Customer DepositsDividends Declared.Other .

ear e ~ ~ ~ ~ ~ ~ ~ oo ~Y

$ 498,968

6,000175

16,50026,669

6,0735,8552,8405,6545,190

74,956

$451,444

18,000175

18,000

25,8087,1834,0222,6774,6965,775

86,336

$404,482

12,000175

45,00018,4115,7673,1482,7443,9335,262

96,440

$405,352

175

23,00012,5195,9882,5232,6983,6643,647

54,214

$ ;

l

Deferred Credits and Other Liabilities'.

Accumulated Deferred Income Tax.

Total ..

Reclassified for 1980 to conform to current presentation.

10

6,143

31.051

$ 611,118

4,223

28,702

$570,705

2,439

20,211

2,105

14,595

$523,572 $476,266

BETAIMED EABMIIMGSTHOUSANDS OF DOLLARS9,600

8,800

8,000

7,200

6,400

5,600

4,800

4,000

3,200

2,400

1,600

800

1971 72 73 74 75 76 77 78 79

DOLLARS3.60

3.30

3.00

2.70

2.40

2.10

1.80

1.50

1.20

.90

.60

.30

080 81

~ ANNUALAMOUNT

~ PER SHARE

IMTEIRMALGASH FLOW AMD CASHCOMSTRUGTlOM CHARGES

MILLIONS OF DOLLARS65

60

55

50

45

40

35

30

25

20

15

~ II

I I

1972 73 74 75 76 77 78 79 80 81

~ CASHCONSTRUCTIONCHARGES

~ INTERNALCASHFLOW"

)Ic INTERNALCASH FLOWREPRESENTS "NETFUNDS FROM INTERNALSOURCES" LESS

"DIVIDENDS"

1977 1976 1975 1974 1973 1972 1971

445,235127,049

318,186

49,337

837

$428,543116,709

311,834

36,610

851

$417,116107,211

309,905

25,782

850

$ 403,59898,444

305,154

19,673

840

$322,68490,884

231,800

79,350

867

$312,46583,805

228,660

62,788

864

$ 289,84578,807

211,038

54.350

571

3,590191

14,8244,769

1,22314,6232,646

41,866

3,031374

12,0564,308

1,81413,489

2.732

37,804

2,62086

9,8113,655

1,58911,5612,455

31,777

1,835115

11,0513,2574,521

97013,1222,542

37,413

2,164140

5,8802 373

9516,7282,567

20,803

1,712635

5,6972,114

5714,4232,370

17,522

1,799637

5,2021,898

5783,6292,311

16,054

2,029539

3,294401

3,029269

5,139 893

2,5761,642

7711,637

9,194

419,420

1,6151,472

9271,373

9,082

$396,181

6721,5241,0821,254

7,830

$376,144

1,4171,2371 ~ 170

8,963

$ 372,043

1,320264

1,072

3,549

$336,369

1,406316964

2,686

$312,520

1,245369796

2,410

$284,423

J54,706 $ 338,536 $338,299 $307,061 $ 282,407 $266,900 $229,589

8,000175

17,00010,6094,4142,6892,5433i3222.678

51,430

4,200175

20,0009,7252,9852,7202,4142,8122.777

47,808

325

3,00011,0935,1062,7292,7052,8122,757

30,527

32530,000

5,00011,740

1,5332,7552,2842,5972,326

58,560

32529,800

4,2006,2641.'3222 2722,0572,4031,958

50,601

32511,30018,0003,3752,0352,1371,8141,9841,829

42.799

32528,00011,000

3,6913,7001,5451,6521,7601,228

52,901

1,937

11,347

419,420

962

8,875

$ 396,181

755

6,563

$376,144

522

5,900

$ 372,043

548

2,813

$336,369

877

1,944

$ 312,520

364

1,569

$284,423

Notes

IXLalfQ

Ul

LalQ

$ 80,15529,679~ ~

STATEMENT OF RETAINED EARNINGS—(Thousands of Dollars)

1981

I,r

Balance January 1.Net Income

1980

$73,69123,898

1979

$67,08421,694

1978

$ 61,48120.260

109,834 97,589 88,778 61,741

Dividends Declared —cash:On Cumulative Preferred Stock ..On Common Stock ..................

4,126 4,12616,751 13,308

20,877 17,434

$88,957'80,155Pursuant to the terms of the 4.85% promissory notes, due 1995, $ 80,543 is notrestricted with respect to the declaration of dividends on common stock.

Total e ~ ~ e ~ e ~ ~ ~ ~ ~

Balance December 31

SOURCE OF FUNDS

STATEMENT OF CHANGES IN FINANCIALPOSITION—(Thousands of Dollars)

1980

4,12610,961

15,087

$73,691

1979

4,12610,531

14,657

$67,084

1978

Internal Sources:Net IncomeIncome Items not Requiring Current Outlays:

Depreciation Accruals:Charged to Depreciation Expense...........Charged to Other Income Accounts .........

Deferred Income Tax—Net.Allowance for Funds Used During Construction ..Other—Net

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

$ 29,679

16,108629

2,349(13,916)

1,973

36,822

$23,898

15,220586

8,491(11,782)

1,314

37,727

$21,694

14,839530

5,616(8,012)

355

35,022

$20,260

13,393508

3,249(5,028)

577

32,959

Available from Financing:Mortgage Bonds ~......... ~.......Convertible Debentures.Term Loan Notes........................Preferred StockCommon StockShort-term Debt

Total Funds from External Sources... ~......Total Source of Funds

30,000

15,619

45,619

$ 82,441

50,000

19,175

69,175

$ 106,902

20,000

22,000

42,000

$77,022

35,000I

10,3406,000

51,340

$84,299

APPLICATION OF FUNDSConstruction Charges:

Gross Charges for Construction.........Less Allowance for Funds Used During Construction.

DividendsRetirement of Securities and Short-term Debt:

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

Convertible Debentures............ ~.... ~ .

Long-term Promissory Notes.Short-term DebtTerm Loan Notes...........................

$56,05013,916

42,134

20,877

8,000175

1,50010,000

19,675

$41,45511,782

29,673

17,434

12,000

17527,00010,000

49,175

$40,5268,012

32,514

15,087

175

15.000

15.175

$64,51 35,028

59,485]

14,657

8,000175

8,175

Net Increase (decrease) in Working Capital, other than Short-term Debt and Current Maturities of Long-term Debt... 1,166

Ohhnges in Deferred end Other Accounts —Net .......... ~1,41 ttTotal Funds Applied . $82,441

11"

6,1704,450

$ 106,902

7,7226,524

$77,022

(769)2,751

$84,299

GROSS CONSTRUCTIONCHARGES

MILLIONSOF DOLLARS65

60

55

50

Q ELECTRICPRODUCTION

S OTHER

45

40

35

30

25

20

15

10

I I v I I I

I I I I I I ~ I I I I I

I I I I I I I

I I I I

I I I I I

I I I I I

I I I I I

I I I I I

Ol total construction charges of $373.039.000In the past 10 years, $69,240,000 repre-sents the cost ol the Company's 3tP/o fnterestin the Roseton Efectric Generating Plant.$ 151.970.000 represents the investment todate in the construction ol the Sterling and theNine Mile Point No, 2 nuclear fadiities. and$8.318.000 represents the cost of steamgenerating laciiities at the Danskamrner PointElectric Generating purnt.

1972 73 74 75 76 77 78 79 80 81 NET UTILITYPLANT* PER DOLLAR OFTOTAL REVENUE

10

8

PER CEN100

RATIO OF ACCUMULATEDDEPRECIATION TO TOTAL

DEPRECIABLE PLANT1971 72 73 74 75 76 77 78 79 80 81

ExcLuotrro coNsTRucTrorr woRK Irr pRocRsss

90

80

70

60

50

40

30

20

10

1971 72 73 74 75 76 77 78 79 80 81

The Company's annual provisions fordepreciation are computed on the stralght-line method using rates based on theestimated useful lives and estimated netsalvage of properties.

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

The decline in the ratio in 1974 reflects theaddition to depreciable property in thatyear ol the Company's 20% interest In theRoseton Plant.

1977

$56,32617,747

74,073

.1976

$ 51,64715,927

67,574

1975

$47,91314,337

62.250

1974

$46,05712,050

58,107

1973

$42,17613,220

55,396

1972

$ 36,21613,897

50,113

1971J

$32,24410,858

43,102

3,6268,966

12,592

'61,481

2,8668,382

11,248

$ 56,326

2,8667,737

10,603

$51,647

2,8667,328

10,194

$ 47,913

2,8276,512

9,339

$ 46,057

1,9745,963

7,937

$42,176

1,8205,066

6,886

$36,216

1977 1976 1975 1974 1973 1972 1971

$17,747 $ 15,927 $ 14,337 $ 12,050 $ 13,220 $ 13,897 $ 10,858

13,279265

2,472(3,391)

495

30,867

12,859243

2,312(1,810)

248

29,779

12,569240663

(705)374

27,478

10,312235

3,087(3,813)

171

22,042

9,509220869

(4,095)156

19,879

9,084198375

(3,835)284

20,003

8,058189283

(2,114)115

17,389

4,500

15,000

19,500

I $50,367

17,000

17,000

$ 46,779

20,000

8,102

28,102

$ 55,580

15,000

8,1561,000

24,156

$ 46,198

12,000

4,700

16,700

$ 36,579

20,000

11,600

31,600

$51,603

8,000

13,000

21,000

42,000

$ 59,389

$32,3433,391

28,952

12,592

$ 25,6931,810

23,883

11,248

$ 23,337705

22,632

10,603

$ 25,2543,813

21,441

10,194

$29,0384,095

24,943

9,339

$ 34,8303,835

30,995

7,937

$41,0852,114

38,971

6,886

4,3753,000

325 32532,000

325 325 3259,700

13,265

325

7,375 325 32,325 325 325 10,025 13,590

1,240208

'50.367

9,796 (9,602)1.527 ~378)

$46,779 $ 55,580

9,6494,589

$46,198

1791,793

$36,579

1,870776

$ 51.603

(753)695

$59,389

Notes

KO

V)OQ

O

COLJJC9

O

OI-z

I-I-CA

ChKcC

VlC9KKCL

4lCIW

4JI-fL

OI-K

L4I-I-M

DETAILOF UTILITYPLANT AND ACCUMULATEDDEPRECIATION—

1981 1980 1979 1978 1977

(Thousands of Dollars)

1976 1975 1974 1973 1972 197110-Year

%~7o chan e

UtilityP>lant —December 31Electric ...................... $441,945Gas .............. 55,642Common.................... 26,930

Total UtilityPlant .......... 524,517Construction Work in Progress ... 160,249

Total ............. 684,766

$416,35549,33520,426

$433,64053,55123,976

$425,81150,52021,951

498,28298,019

486,11672,546

511,167123,827

634,994 596,301 558,662

$377.75348,72618,756

445,23549,337

494,572

$ 363,94846,75617,839

428,54336,610

465,153

$235,67940,79013,376

$343,58742,85617,155

$354,39445,58517,137

$257,24240,17815,045

$265,29841,85515,531

417,11625,782

322,68479,350

403,59819,673

289,84554,350

312,46562,788

442,898 423,271 402,034 375,253 344,195

Accumulated Depreciation- December 31Electric ...................... 152,555Gas ..................... 17,788Common .................... 8 925

Total .................... 179,268

141,25116,0668,170

129,59914,816

7,992

165,487 152,407

119,90413,6937,216

140,813

107,18512,6477,217

127,049

98,67311,680

6,356

116,709

90,76910,7005,742

107,211

82,77510,3335,336

98,444

76,7169,4124,756

90,884

70,8868,6774,242

83,805

65,0449,8173,946

78,807

Net UtilityPlant —December 31 (a)ElectricGasCommon

289,39037,85418,005

292,38937,48515,806

296,21235,70413,959

296,45135,64213,210

270,56836,07911,539

265,27535,07611,483

263,62534,88511,395

260,81232,52311,819

188,58232,44310,775

186,35631,50110,803

170,63530,973

9,430

Total .. $345,249 $345,680 $345.875 $345,303 $318,186 $311,834 $309,905 $305,154 $231,800 $ 228,660 $ 211,038

8836

101

81

195

99

13581

126

127

702291

64

Ratio ofAccumulatedDepreciation

to Total Depre-ciable Plant

December 31(Per Cent)

Net UtilityPlant'erDollar of

TotalRevenue(Dollars)

1981 34.6 .781980 32.8 1.051979 31.0 1.361978 29.3 1.501977 29.0 1.531976 27.6 1.831975 26.0 1.961974 24.6 2.321973 28.4 2.541972 27.1 2.661971 27.5 2.68Excluding Construction Work in Progress.

Gross Additions to Plant During Year(a)Electric Production .............Other Electric .

GasCommon

Total

Retirements During YearElectric Production ..Other Electric .

Gas .

Common

Total

$ 4,5169,2082,2763,628

19,628

4141,923

131631

3,099

$ 8168,7553,1432.933

15,647

1351,689

111

651

2,586

$ 3,8507,8001,3522,051

15,053

4131,781

167526

2,887

401,925

145.1,163

3,273

3632,083

265213

2,924

$ 34,396(b) $ 3,2757,125 12,976

754 2,2352,828 1,130

45,103(b) 19,616

2,24310,415

1,379828

14,865

5632,274

210391

3,438

$ 2,64710,6533,390

538

17,228

232,473

683531

3,710

$ 66,62314,339

2,1291,840

84,931

1,0581,613

110210

2,991

$ 1399,5752,066

696

12,476

2061,689

156206

2,257

34122,641

1,4461,964

26,392

131,6761,769

314

3,772

$ 4,6776,431

993553

12,654

2481,412

251387

2,298

1981198019791978197719761975197419731972

Total

56,05041,45540,52664,513(b)32,34325,69323,33725,25429,03834,830

ElectricProduction

41,373-25,79928,56451,622(b)20,22714,18912,8239,662

13,49518,195

Gross Construction Charges(Thousands of Dollars)

Other

14,67715,65611,96212,89112,11611,50410,51415,59215,54316,635

Adjustments During YearElectric ProductionOther ElectricGasCommon

Total.

(3,090)8

(54)(43)

~3;179

1567(1)

~257~176

(608)(346)

5

(949)

(2)2

(230)(37)

2265

(2)22 (1,018)

~25) (6)

~1,026)

22116

(233)(4)

24327

(289)19

53(7)

(46)

10-YearTotal 373,039 235,949 137,090

Net Additions to Plant During Year(a)Electric ProductionOther ElectricGasCommon

Total

4,4295,072

735120

3,4376,0191,1851,525

57120,992

(612)1,669

1547,9021,677

486

2,91010,895

1,970917

65,56512,724

1,0011,624

33,7484,854

6091,670

2,6248,1832,729

~16)

1,4508,1041,171

702

1,0127,2932,0912,954

6967,1333,0312,025

$ 13,350 $ 12,885 $ 12,166 $ 40.881 $ 16,692 $ 11,427 $ 13.518 $ 80,914 $ 10,219 $ 22,620 $ 10,356

(a) Excluding Construction Work in Progress.(b) Gross additions include purchase of an additional 10% interest in the Roseton Plant at

original book cost of $33,620.Gross construction charges, however, reflect original book cost iess accumulated depre-ciatign. in the amount of $3.799.

Notes ELECTRICAL SALES AND REVENUES(OWN TERRITORY)

S OF KILOWATT-HOURSMILLION4,200

3,900

3,600

3,300

3,000

2,700

2,400

2,100

1,800

1,500

1,200

900

600

300

MILLIONSOF DOL560 Q SALES

REVENUES480

440

400

360

320

280

240

200160

120

80

40 PER CENT100

RATIO OF ELECTRIC RESIDENTIAL,COMMERCIAL,AND INDUSTRIALREVENUES TO TOTAL ELECTRIC

REVENUES (OWN TERRITORY)

019 71 72 73 74 75 76 77 78 79 80 8

090

80

70

60Q INDUSTRIAL

~ COMMERCIAL, 50STREET ANDAREA LIGHTING,AND OTHER 40

Q RESIDENTIAL

K.OI-

LUlLDLLIO

AVERAGE USAGEPER CUSTOMER AND

AVERAGE REVENUE PER KWH.— RESIDENTIAL

20

10

1972 73 74 75 76 77 78 79 80 81

KILOWATT-HOURS8,000

7,000

6,000

CENTS PER KILOWATT-HOUR12.0

10.5

9.0

AVERAGEUSAGE

AVERAGEREVENUE

5,000 7.5

4,000 6.0

3,000 4.5

2,000 3.0

1,000 1.5

1971 72 73 74 75 76 77 78 79 80 81

ELECTRIC REVENUES, SALES, AND CUSTOMERS

1981 1980 1979 1978. 1977 1976 1975 1974 1973 1972 197110-Year

%~~oChan e

Revenues —Thousands of DollarsResidentialCommercialIndustrial .

Street and Area Lighting ...Other .

Total —Own Territory (a) .

Other UtilitiesTotal Revenues

............... $ 110,13587,09283,892

3,8432,101

287,063111,329

............... $398,392

$ 90,26570,10963,187,

3,473.1,564

$ 65,36847,33941,561

2,7671,749

$ 57,13439,68030,429

2,6101,708

$ 72,35954,12250,545

3,0071,672

$ 65,22546,02338,571

2,8021,745

$ 56,07838,68432,153

2,3062,094

228,59863,401

158,78427,480

154+6630,025

131,56118,323

131,3157,099

181,70544,266

$ 291,999 $ 225,971 $ 186,264 $ 184,391 $ 149,884 $ 138,414

$ 43,35530,93028,376

2,0121,640

106,3138,169

$ 114,482

$ 31,00722,64317,438

1,9601,856

74,9042,874

$77,778

$28,54720,61316,347

1,9061,039

68,4523,239

$71,691

$25,93918,49815,495

1,763765

62,4602,421

$ 64,881

325371441118175

360'I

514

Sales —Millionsof Kwh.ResidentialCommercialIndustrial .

Street and Area Lighting .

Other...Total —Own Territory

Other UtilitiesTotal Sales

1,1641,0231,206

351

3,4292,093

5,522

1,1691,0061,149

351

3,3601,390

4,750

1,204984

1,19235

1

3,4161,324

4,740

1,203957

1,12635

1

3,3221,019

4,341

1,199922

1,03035

1

3,1871 ~ 104

4,291

1,203897938

361

3,075738

3,813

1,168871981

351

3,056303

3,359

1,160820

1,08935

1

3,105335

3,440

1,176856

1,21734

1

3,284280

3,564

1,,093783

1,17633

1

3,086372

3,458

1,000711

1,13531

1

2,878284

3,162

1644

613

19637

75

Customers —AverageResidentialCommercialIndustrial .

Street and Area Lighting ..Other (including other utilities)

Total Customers .

185,62323,744

7262,948

10

213,051

183,23823,380

7363,061

8

, 210,423

181,63122,966

7313,126

5

208,459

178,93422,296

7153,130

6

205,081

176,89121,553

7263,186

8

202,364

175,13021,289

7433,256

11

200,429

169,86321,352

7573,294

10

195,276

167,55921,183

7693,417

10

192,938

163,18120,436

7633,417

8

187,805

158,83319,824

7833,321

12

182,773

154,57519,237

8143,183

12

177,821

2023

(11)(7)

(17)

20

ResidentialAverage Kwh. Per CustomerAverage Revenue Per Kwh.Average Annual Bill

Maximum Hourly Load —Kw. —Winter ...............Summer..............

Annual Load Factor —on Annual Peak... ~............Revenues —Per Cent of Total Own Territory

ResidentialCommercial .

IndustrialStreet and Area Lighting .

OtherTotal —Own Territory

6,268

9.47'593.33

640,980625,980

64

393029

1

1

100

6,3797.728

$492.61

598,900640,300

64

393128

1

1

100

6,6296.01@

$398.39

633,200619,800

65

403028

1

1

100

6,7225.44c

$365.32

607,580613,580

65

41

3026

21

100

6,7795.44C

$368.73

617,460621,200

62

423025'2

1

100

6,8704.75C

$326.24

607,480534,200

61

443023

21

100

6,8794.80C

$ 330.14

584,100 =

595,360

63

432924

22

100

6,9223.74@

$ 258.75

571,500583,760

66

41

2927

21

100

7,2062.64@

$ 190.02

585,300632,200

64

423023

32

100

6,8832.614

$ 179.73

586,900565,550

65

423024

31

100

6,4682.594

$ 167.81

548,700538,300

65

413025

31

100

(3)266254

1716

(a) Revenues related to increased electric fuel costs billed pursuant to the electric fuel cost adjustment are as follows:1981 '980 1979" 1978 1977 1976 1975 1974 " 1973

$36,663 $ 16.390 $28,792 $20,322 $24,729 $ 8,055 $ 11,636 $ 33,161 $ 1,904

-Electric fuel costs roIled in to the base rates resulting from Rate Case Proceedings were 1.2C per kwh. effective December 4, 1974, 1.5C per kwh.effective November 3, 1979, and 1.2C per kwh. effective July 18, 1981.

See section on "Rates" on page 3.

~ Change of 1,000 per cent or more.

Notes

12.0 60.0

GAS SALES AND REVENUES(OWN TERRITORY)

BILLIONS OF CUBIC FEET MILLIONSOF DOLLARS65.013.0 Q SALES

REVENUES1 1.0

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

55.0

50.0

45.0

40.0

35.0

30.0

25.0

20.0

15.0

2.0

1.0

1971 72 73 74 75 76 77 78 79 80 81

10.0

5.0RATIO OF GAS RESIDENTIAL,

COMMERCIAL, AND INDUSTRIALREVENUES TO TOTAL GAS REVENUES

PER cENT (OWN TERRITORY)100

90

Q INDUSTRIAL,INTERRUPTIBLE,AND OTHER

~ COMMERCIAL

H RESIDENTIALWITHOUTHOUSEHEATING

Q RESIDENTIALWITHHOUSEHEATING

80

70

60

50

40

30

20

10

COCL

OI-tO

OK

MUlcCtO

M

KLal0Lal

OlLI-O

QJ

1972 73 74 75 76 77 78 79 80 81

160

140

6.40AVERAGEREVENUE

5.60

120 4.80

100 4.00

80 3.20

60 2.40

40 1.60

20 .80

1971 72 73 74 75 76 77 78 79 80 81

AVERAGE USAGE PER CUSTOMER ANDAVERAGE REVENUE PER MCF. - RESIDENTIALTHOUSANDS OF CUBIC FEET DOLLARS PER THOUSAND CUBIC FEET180 7.20 ~ AVERAGE

USAGE

GAS REVENUES, SALES, AND CUSTOMERS

1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 197110-Year

%~~o Chan e

Revenues —Thousands of DollarsResidential with HouseheatingResidential without Househeating.............~...

Total Residential .

Commercial .

Industrial .

Interruptible and SeasonalOther .

Total—Own Territory (a) .

Other UtilitiesTotal Revenues

Sales —Thousands of Mcf. (b)Residential with HouseheatingResidential without Househeating.................

Total Residential .

CommercialIndustrial ..Interruptible and Seasonal.Other .

Total—Own Territory.Other Utilities

Total Sales ..Customers —Average

Residential with Househeating .

Residential without Househeating.................Total Residential .

CommercialIndustrial ~

Interruptible and Seasonal ..Other (including other utilities)

Total Customers .

$ 17,3252,842

20,1679,7142,402

46,076413

$ 14,0902.408

16,4987,3181,719

35,630364

$35,994$46,489

3,213415

3,6282,071

5172,996

134

9,346134

9,480

3,002392

3,3941,776

4242,914

102

8,610142

8,752

25,20016,337

41,5373,720

14052

2

45,451

23,62016.933

40,5533,515

14051

2

44,261

11,761 9,0012,032 1,094

$ 11,6702,218

13,8886,0861,3466,839

654

28,813

$ 28,813

3,046380

3,4261,718

3822,871

109

8,506

8,506

22,56717.427

39,9943,332

13949

1

43,515

$ 11,8682,201

14,0695,8801,1693,432

188

24,738

$ 24,738

3,208385

3,5931,815

3741,733

78

7,593

7,593

22,25217,504 .

39,7563,352

13950

1

43,298

$ 11,2712,165

13,4365,4471,0213,379

166

23,449

$23,449

3,132385

3,5171,746

3391,739

60

7,401

7,401

22,10317,650

39,753-3,368

14250--

1

43,314

$ 9,8851,945

11,8304,770

9473,134

150

20,831

$ 20,831

3,243394

3,6371,838

3882,152

76

8,091

8,091

21,91917,930

39,8493,411

15550

1

43,466

$ 8,6471,800

10,4474,307

8944,079

170

19,897

$ 19,897

'2,997369

3,3661,738

3763,265

99

8,844

8,844

21,18917,693

38,8823,427

16450

1

42,524

$ 7,0881,557

8,6453,625

7353,748

254

17,007

$ 17,007

3,096396

3,4921,826

3984,798

248

10,762

10,762

20,86918,186

39,0553,439

17650

1

42,721

$ 6,3041,462

7,7663,191

6701,612

346

13,585

$ 6,8341,563

8,3973,344

7521,330

370

14,193

3,084395

3,4791,822

4032,342

422

8,468

3,314425

3,7391,859

4481,880

452

8,378

8,468 ~ 8,378

20,33218,529

38,8613,450

17545

1

42,532

20,01418,988

39,0023,426

18744

1

42,660

$ 13,585 $ 14,193

$ 6,3701,536

7,9062,872

7491,877

384

13,788

$ 13,788

3,210424

3,6341,672

4663 222

476

9,470

9,470

19,74219,484

39,2263,349

19342

1

42,811

17285

155238221527429

234

237

(2)

(—)2411

(7)(72)

(1)

28(16)

611

(27)24

100

6

Total ResidentialAverage Mcf. Per CustomerAverage Revenue Per Mcf.Average Annual BillHouseheating Saturation —Per Cent.....

Maximum Daily Send-out —Mcf..Date .

Revenues —Per Cent of Total—Own TerritoryResidential with Househeating .

Residential without Househeating..........CommercialIndustrial .

Interruptible and Seasonal.Other .

Total—Own Territory.

87.3$5.56

$485.5160.7

56,054Jan. 12

386

21

526

4

100

83.7$4.86

$406.8358.2

53,719Dec. 25

397

21

525

3

100

85.7$ 4.05

$347.2456.4

55,301Feb. 11

408

21

524

2

100

90.4$3.92

$353.8956.0

44,350Dec. 29

489

244

141

100

88.5$ 3.82

$337.9955.6

45,668Jan. 17

489

234

151

100

91.3$3.25

$296.8755.0

47,532Jan. 22

479

235

151

100

86.6$3.10

$268.6854.5

46,497Mar. 3

439

224

21

1

100

89.4$ 2.48

$ 221.3653.4

48,710Jan. 18

429

21

422

2

100

89.5$2.23

$ 199.8452.3

52,162Feb. 11

4611

235

123

100

95.9$2.25

$ 215.3051.3

50,035Feb. 16

4811

24593

100

92.6$ 2.18

$201.5450.3

45,122Feb. 1

4611

21

5143

100

(6)155141

21

24

Degree Days as Per Cent of Normal (c)Degree Days in Billing Cycle .

Degree Days in Calendar Year103100

100105

9696

107106

10299

99103

91

929696

9189

101102

9896

(a) Revenues billed under the provisions of the gas cost adjustment clause are as follows:1981 1980 1979'978 1977 1976 1975 1974 1973

$7'.872 $2.500 $8,708 $8,257 $ 8,355 $5,704 $4,729 $3,210 $914(b) Theaverage heating value of gas sold is not less than 1,000 Btu per cu. ft.(c) Normal Twenty-year Moving Average.

14

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

NotesELECTRIC GENERATING CAPABILITY,

PURCHASED CAPACITY,AND ANNUALPEAKS

NDS OF KILOWATTSTHOUSA1.1901.1201,050

98091084077070063056049042035028021014070

0

Qx PURCHASEDCAPACITY AT TIMEOF PEAK INCLUDINGRESERVES

Q GENERATINGCAPA6ILITYATTIME OF PEAK

~ ANNUALPEAK

ELECTRICITY GENERATEDAND PURCHASED

5 OF KILOWATT-HOURSMILLION4,000

3,6001972 73 74 75 76 77 78 79 80 81

3,200

2,800GENERATED

2,400PURCHASED

2,000

1,600

1,200

V)

OI-V)

OKcC

M

cCMM

K

:IChcCC9

COST OF FUEL ANDPURCHASED ELECTRICITY

AS PER CENT OF ELECTRIC REVENUE

PER CENT70

65

60

55

50

45

40

35

30

25

20

15

10

1971 72 73 74 75 76 77 78 79 80 81

FUEL ANDPURCHASEDELECTRICITY

ELECTRICFUEL

PURCHASEDELECTRICITY

800

400

019 71 72 73 74 75 76 77 78 79 80 81

COST OF PURCHASED GASAS PER CENT OF GAS REVENUE

PER CENT65

60

55

50

45

40

35

30

25

20

15

10

019 71 72 73 74 75 76 77 78 79 I80 81

ELECTRIC AND GAS PRODUCTION DATA

Electric Output—Millions of Kwh.Generated —Steam .

Generated —Hydro .

Generated —Gas TurbineTotal Generated .

Purchased —for Own TerritoryPurchased —for Resale to Other Utilities ..

Total Purchased .

Pumped Storage (received from)Total Output

Pumped Storage (delivered to)Company Use, Losses, etc..

Balance Sold

1981

3,81065

5

3,880

1,72790

1,817

5,697

175

5,522

1980

3,351105

4

3,460

1,5556

1,561

38

5,05950

259

4,750

1979

3,535162

2

3,699

1,253

1,253

16-

4,96821

207

4,740

1978

3,295122

3

3,420

1,1208

1.128

6

4,5548

205

4,341

1977

3,520134

5

3,659

79857

855

4,514

223

4,291

1976

3,261156

5

3,422

492117

609

4,031

218

3,813

1975

3,189175

8

3.372

24718

265

89

3,726110257

3,359

1974

3,172160

21

3,353

37312

385

116

3,854142272

3,440

1973

3,22516842

3,435

31688

404

39

3,87856

258

3,564

1972

3,24017438

3,452

184115

299

3,751

293

3,458

1971

2,98715137

3,175

18849

237

3,412

250

3,162

r10-Year ~

%~kchan e

28(57)(86)22

81984

667

67

(30)75

Electric Peak and CapacityAnnual Peak (Own Territory)—Mw.Generating Capability at Time of Peak —Mw.

SteamHydroGas Turbine .

TotalPurchased Capacity at Time of Peak

Including Reserves —Mw..Generating Capability Plus Purchased

Capacity as Per Cent of Annual Peak.......

641.0

839.245.648.0

932.8

172.4

172

640.30

839.244.638.0

921.8

255.6

184

633.2

839.245.648.0

932.8

124.8

167

722.944.638.0

805.5

296.8

180

621.2*

706.244.638.0

788.8

211.8

161

607.5

697.045.648.0

790.6

30.7

135

710.044.638.0

792.6

109.4

151

583.8 4

487.044.638.0

569.6

150.0

123

632.2 *

497.044.638.0

579.6

85.0

105

586.9

497.046.848.0

591.8

81.5

115

548.7

495.546.850.0

592.3

58.0

119

17

69(3)(4)57

197

45

Gas Send-out —Thousands of Mcf.Purchased Natural GasManufactured or Propane Gas

TotalCompany Use —Boiler Fuel .

Other Company Use, Losses, etcBalance —Sold .

14,272'314,2754,587

208

9,480

12,6701

12,6713,412

507

8,752

11,2321

11,2332,441

286

8,506

7,9653

7,968

375

7,593

7,60314

7,617

216

7,401

8,4202

8,422

331

8,091

9,197

9,197

353

8,844

11,1911

11,192

430

10,762

8,7141

8,715

247

8,468

8,7553

8,758

380

8,378

10,572

10,572872230

9,470

35

35426(10)

19811980197919781977197619751974197319721971

Thousandsof

Dollars192,637132,47895,79770,80181,61459,58762,28149,03214,90412,66814,118

Centsper

Kwh.

5.063.952.712.152.321.831.951.55

.46

.39

.47

Steam(b)

AverageCost of

Fuel Burned(Cents per

MM/Btu) (d)475.9362.2251.2199.1217.6170.1178.0145.1

35.230.733.9

Heat Ratefor Thousands

Generation ofBtu Dollars

10,11910,21010,03510,0259,9789,931

10,0119,914

10,0009,956

10,129

8941,3881,8861,0601,240

9801,0331,189

325265267

Centsper

Kwh.

1.381221.16

.87

.93

.63

.59

.74

.19

.15

.18

Electric Production Cost(a)Hydro

Thousandsof

Dollars413313207223334.222254620699494576

Centsper

Kwh.

8.267.83

10.357.436.684.443.182.951.661.311.55

Gas Turbines Purchased(c)

Thousandsof

Dollars

76,16252,34532,84526,99118,96211,5094,8777,7776,0833,6502,910

Centsper

Kwh.

4.413.372.622.412.382.341.972.081.931.981.55

19811980197919781977197619751974197319721971

Thousandsof

Dollars

28,57922,52516,69311,69111,697

9,6988,9718,5605,5266,0265,772

CentsperMcf.

295.1243.3189.9146.8153.8115.297.576.563.468.859.5

Purchased Gas Cost e

19811980197919781977197619751974197319721971

4643403642374241151517

2018151411

947865

66615550534646482321

22

Cost of Fuel and PurchasedElectricity as Per Cent of

Electric Revenue

Fuel andElectric Purchased Purchased

Fuel Electricity Electricity

PurchasedGas Gas andFuel Fuel

PurchasedGas

19811980197919781977.197619751974197319721971

6263584750474550414242

6263584750474550414242

Cost of Purchased Gas andFuel as Per Cent of

Gas Revenue

(a) Includes cost of operation and maintenance.(b) Includes production costs related to sales to other utilities.(c) Excludes electricity purchased for resale to other utilities.(d) Fuel burned during 1979 through 1981 was a combination of fuel oil and natural gas.

Fuel burned during 1972 through 1978 was fuel oil. (Natural gas was used for ignition purposes only.)Fuel burned during 1970 and 1971 was a combination of fuel oil~ coal, and natural gas.

(e) Excludes gas purchased for boiler fuel.

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

NotesPAYROLL (INCLUDING BENEFITS) AS PER CENT OF

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

PER CENT100

90

80

70

60

50

40

30

20

10

1971 72 73 74 75 76 77 78 79 80 81

cCI-Ci

KOI-OAOlCfLMC9

OKcC

ILI-s

Union wage negotiations in 1981 resulted in atwo-year working agreement, which providedfor a 10% general wage increase effective July1, 1981, and 10% effective July 1, 1982togetherwith fringe benefit improvements.

Compensation of professional, supervisoryand executive personnel is geared to a salaryprogram designed to assure the Company'sability to attract and hold highly qualifiedmanagement personnel.

Benefits provided by the Company includepensions, group life insurance, hospitaliza-tion,,major medical insurance, a dental plan,and a disability retirement plan.

PAYROLL (INCLUDINGBENEFITS) AS PER CENTOF CORPORATEREVENUES~ BENEFITS AS PER CENTOF PAYROLL

LABOR DATAAND INDUSTRIALREVENUESF

LABOR DATA

Employees —Year EndClassified .

Supervisory and Professional .

Executives

Total (a) .

Employee Compensation —ThousandsPayroll Charged to Operation.and Maintenance

ElectricGas.

Payroll Charged to Construction and Other .......Roseton Payroll —Billed to Others (a) ............

Total Payroll .

1981

968364

13

1,345

$21,0433,5967,7032,591

$34,933

1980

964337

13

1,314

$ 18,9163,041

. 7,2022,289

$31,448

1979

976 .

3139

1,298

$ 17,4202,7306,6662,194

$ 29,010

1978

983303

10

1,296

$ 15,6512,5196,1522,353

$26,675

1977

995294

9

1,298

$ 14,2302,4306,3952,174

$ 25,229

1976

1,039290

9

1,338

$ 12,9632,3116,5932,459

$ 24,326

1975 .

1,092299

9

1,400

$ 12,2672,2756,1082,180

$ 22.830

1974

- 1,117304

11

1,432

$ 11,6092,2656,1451,636

$ 21,655

1973

1,158310

11

1,479

$ 11,3212,2046,0881,270

$ 20,883

1972

1,124308

10

1,442

$ 10,4272,0285,3641,083

$ 18,902

10-Year1971 %~~o Chan e

1,087 (11)312 17

9 44

1,408 (4)

$ 10,121 1081,887 91

4,510 71

427 507

$ 16,945 106

Average Weekly Wages Paid —DollarsIncluding OvertimeExcludrng Overtime.

$ 486 $ 442$ 436 $ 402

$ 411

$ 371$ 375$ 345

$ 349$ 326

$ 324 $ 293 $ 268 $ 273$ 302 $ 274 $ 248 $ 228

$ 247$ 213

$ 217 124$ 193 126

Annual Cost of Fringe Benefits Charged toOperation and Maintenance —Thousands ...... $ 4,894 $ 3,986 $ 3,565 $ 3,434 $ 2,930 $ 2,250 $ 2,000 $ 1,749 $ 1,546 $ 1,519 $ 1,307 274

Ratios for Payroll Charged to Operation and Maintenance:Payroll (Including Benefits) as Per Cent of

Corporate RevenuesBenefits as Per Cent of Payroll

6.619.9

7.918.6

9.317.7

10.218.9

9.4 10.317.6 14.7

10.513.8

11.912.6

16.511.4

16.312.2

16.910.9

INDUSTRIALREVENUES —ThousandsElectric Customers

Building ProductsChemicalsClothing .

Food Processing .

FoundriesMachine and Metal Products.......Paper and Paper ProductsPrinting and PublishingRefrigerationRubber Products .

TextilesMiscellaneous

Total.

$ 16,6161,229

1521,0132,604

50,3622,7121,909

8211,1302,1943,150

$83,892

$ 13,7261,007

145830

1,97735,924

2,1211,551

669891

1,6492,697

$63,187

$ 13,363796139605

1,62426,276

1,7341,185

564785

1,3092,165

$ 50,545

$ 10,613735136612

1,29221,001

1,5501,001

420692

1,4722,037

$41,561

$ 10,103'22

126635

1,36719,313

1,353948424688

1,4131,479

$ 38,571

$ 6,629612115566

1,29815,731

1,123779426565

1,1091,476

$30,429

$ 8,668616117527

=1,231

15,6251,152

732452498

1,1201,415

$ 32,153

$ 8,476530101424

1,13912,606

1,058611387455964

1,625

$ 28,376

$ 4,695370

79278692

7,700600340268235608

1,573

$ 17,438

$ 4,258384

65248618

7,359578324283225556

1,449

$ 16,34?

$ 4,089410

56225508

7,405529302278197509987

$ 15,495

306200171350413580413532195474331219

441

1981 RevenueFIVE LARGEST ELECTRIC CUSTOMERS (Thousands)

IBM $43,496Marquette Cement Manufacturing Corp. 4,513Alpha Portland Cement Company 3,716Lehigh Portland Cement Company 3,430VAWof America 2,171

(a) Includes the following number of employees at the Roseton Electric Generating Plant which theCompany, Consolidated Edison Company of New York, Inc., and Niagara Mohawk PowerCorporation own as tenants in common:

1981 1980 1979 1978 1977

113 109 107 107 109

1976 1976 1974 1973 1972

103 96 97 97 82

The Company had, initially, a 20'/o undivided interest in the ownership of the Plant. As of$ Q december 31. 1978 the Company has a 30% undivided interest. The Company operates the Plant

as agent for the three owners.

FIVE LARGEST GAS CUSTOMERS

IBMMajestic Weaving, Inc.Vassar CollegePowell and Minnock Brick Works, Inc.Technical Tape Corp.

1981 Revenue(Thousands)

$5,5771,197

982924768

NotesPER CENT

100

90

80

70

60

CAPITALIZATIONRATIOS

0 COMMONEQUITY

~ PREFERREDSTOCK

Q OTHER LONG-TERM DEBT

Q MORTGAGEBONDS

50

40

30 10

COVERAGE RATIOS(BE FORE INCOME TAX)

20

10

1972 73 74 75 76 77 78 79 80 81

TIMES MORTGAGEINTEREST EARNED

RATIO OF EARNINGSTO FIXED CHARGES

DOLLARS45

MARKET AND BOOKVALUE OF COMMON STOCK

TIMES INTERESTCHARGES ANDPREFERREDDIVIDENDS EARNED

019 71 72 73 74 75 76 77 78 79 80 81

40

Cil

Lxl

«C

IXI-CODClKClK

«LClDO

35

30

25

20

15

10

MARKET VALUE(RANGE)PER SHARE

MIDPOINT OFRANGE

gg BOOK VALUEPER SHARE

RATIO OF INCOMEAVAILABLEFORCOMMON STOCK TOOPERATING REVENUE

RATIO OF INCOMEAVAILABLEFORCOMMON STOCK TOAVERAGE EQUITY

1971 72 73 74 75 76 77 78 79 80 81

RATIO OF INCOMEAVAILABLEFOR COMMON STOCK:

TO OPERATING REVENUE-TO AVERAGE EQUITY

PER CENT25

20

15

10

1971 72 73 74 75 76 77 78 79 80 81

CAPITALIZATIONAND FINANCIALRATIOS

1981 '980 1979 1978 1977 1976 1975 1974 1973 197210-Year

1971 %~ochen 4

Capitalization —Thousands (a)First Mortgage Bonds .............Convertible Debentures...........Long-term Promissory Notes ......Term Loan Notes .................Unamortized Premium and

Discount on Debt —Net.........Total Long-term Debt ...........

Preferred Stock —Par Value.......

$233,500

7,550

$ 209,500 $ 159,5008,000

7,725 7,90020,000

$ 151,5008,0008,075

35,000

$ 151,5008,0008,250

$ 147,00016,0008,425

$ 147,00016,00012,800

$ 127,00016,00013,125

$ 112,00016,00013,450

$ 112,00016,00013,775

~821) ~253) 168 470 501 532 563 489 455 481

240,229 216,972'95,568 203,045 168,251 171.957 176,363 156,614 141,905 142,256

61,030 61,030 61,030 61,030 61,030 46,030 46,030 46,030 46,030 34,030

$ 92,000 15416,00014,100 (46)

320 (357)

122,420 96

34,030 79

Common Stock-Retained Earnings ................Premium on Stock ................Capital Stock Expense ............

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

49,772 38,17242,176 36,216

28 28(1,362) ~1,277)

76,371 66,031 66,031 66,031 57,928 49,77267,084 61,481 56,326 51,647 47,913 46,057

67 67 67 67 67 67~2,245) ~2,154) ~1.875) ~1,839) ~1,491) ~1,424)

95,54680,155

67~2.326

111,16588,957

67~2.480)

76,37173,691

67(2,245)

197,709 173442 147.884 141,277 125,425 120,549 115,906 104.417 94.472 90,614 73,139

191

146139

(94)

170

117Total Capitalization ............. $498,968 $451,444 $404,482 $405,352 $354,706 $338,536 $338,299 $307,061 $ 282,407 $266,900 $ 229,589

19811980197919781977197619751974197319721971

Value ofCommon

Equity(Thousandsof Dollars)

197,709173,442147,884141,277125,425120,549115,906104,41794,47290,61473,139

BookValue

Number of PerShares Share

(Thousands) (Dollars)

7,456 26.526,544 26.515,373 27.525,373 26.294,873 25.744,873 24.744,873 23.794,373 23.883,923 24.083,923 23.103,423 21.37

Book Value Per Share of CommonStock (Year End),

Capitalization Ratios —Per CentFirst Mortgage Bonds .............Other Long-term Debt ............

Total Long-term Debt ...........Preferred StockCommon Equity ..................

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

46.81.3

48.112.239.7

100.0

Coverage Ratios (before Income Tax)(c)Times Mortgage Interest Earned(d) ..Ratio of Earnings to Fixed Charges(e) .

Times Interest Charges andPreferred Dividends Earned(f) ...

2.532.38

2.00

Ratios to Net Plant —Per CentLong-term Debt and Preferred

Stock to Net Plant (b) ........ 59.60Mortgage Bonds to Net Plant (b). 46.19

46.41.7

48.113.538.4

100.0

59.2144.62

2.532'.23

1.84

39.48.9

48.315.136.6

100.0

57.8135.93

3.522.31

1.86

63.20 62.3936.26 41.22

62.56 66.25 ."'62.39 60.4042.19 43.79 .- .39.10 36.00

3.983.17

3.492.81

3.332.68

3.622.37

2.891.78

3.862.56

2.22 2.07 2.08 1.87 1.49 1.93

37.4 42.7 43.4 43.4 - 41.4 39.612.7 4.7 7.4 8.7 ~ 9.6 10.6

50.1 47.4 50.8 52.1 51.0 50.215.0 17.2 13.6 13.6 ~. 15.0 16.334.9 35.4 35.6 34.3 '4.0 33.5

100.0 100.0 100.0 100.0 100.0 100.0

42.0 40.111.3 13.2

53.3 53.312.8 14.833.9 31.9

100.0 100.0

3.982.83

4.052.62

2.27 2.08

60.49 58.9538.43 34.67

MarketValue ofCommon

Stock(Dollars)

(g)

1981 19 -161980 197/8-151979 20/4-181978 22'/8-19/41977 223/2-1 9'/81976 20'/4-1 7'/21975 187/8-1 2'7r2

1974 217/2-111973 245/3-20'/21972 26 -21%1971 27 -20'/4

(g) Price range for the yearStock Exchange.

Number ofShares

Traded onNew York

StockExchange

1,017,100801,100402,500451,400574,000498,000360,200508,300329,400644,300446,200

on the New York

Market Value Per Share of CommonStock and Shares Traded

Ratio of Income Available forCommon Stock —Per Cent

To Operating Revenue ..........To Year-end Equity .............To Average Equity ..............

5.714.014.0

6.012.712.5

6.911.912.2

7.611.411.7

6.811.311.5

7.710.811.0

7.3= 9.910.4

7.08.89.2

11.411.011.2

13.913.214.6

11.512.412.7

17,

(a) Excludes current maturities of fong-term debt.

(b) Net Plant includes construction work in progress.

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

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

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

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

Notes

DEBT SilA II UIRIITY SCHEDULEAS OF DECEMBER 31, 1981

MILLIONS OF DOLLARS30

28

26

24

22

20

18

14

12

10

95 99 2000 02 04 05 07 09 20100

1982 84 88 90 914 UNSECURED NOTES —BALANCE OF $ 5.45 MILLIONAFTER

ANNUALREQUIRED SINKING FUND PAYMENT.

DETAINOF LONG-TERM DEBT, PREFERRED STOCK. AND COMMON STOCK(Thousands where Dollars are Indicated)

1981 1980 1979 1978 1977 1976 1975

Public Proceeds RedemptionDate Maturity Offering to Price

1974 1973 1972 1971 Issued Date Price C~cm an 12/31/81

First Mortgage Bonds —December 312r/% Due1980 ...................3.3% Due 19823.2% Due 1984 . .................4/s% Due1988.

14k% Due1990 ..17/s% Due 1991 .

7/s% Due1999.9%% Due 2000 .

7%% Due2002 ...9~/.% Due 2004.

10%%- Due 2005 ...6'/4% Due 2007 .

10%% Due 2009 .

12/s% Due 2010.

$ 6,000$ 11,000$18,000$25,000$30,000$20,000$25,000$20,000$ 15,000$20,000$ 4,500$20,000$25,000

$ 6,000$ 11,000$ 18,000$25,000

$20,000$25,000$20,000$ 15,000$20,000$ 4,500$20,000$25,000

$ 12,000$ 6,000$ 11,000$ 18,000

$ 20,000$ 25,000$ 20,000$ 15,000$ 20,000$ 4,500$20,000

$ 12,000$ 6,000$ 11,000$ 18,000

$20,000$25,000$ 20,000$ 15,000$ 20,000$4,500

$ 12,000$ 6,000$ 11,000$ 18,000

$ 20,000$ 25,000$ 20,000$ 15,000$ 20,000$ 4,500

$ 12,000$ 6,000$ 11,000$ 18,000

$ 20,000$ 25,000$ 20,000$ 15,000$ 20,000

$ 12,000$ 6,000$ 11,000$ 18,000

$20,000$25,000$20,000$ 15,000$20,000

$ 12,000$ 6,000$ 11,000$ 18,000

$ 20,000$25,000$20,000$ 15,000

$ 12,000$ 6,000$ 11,000$ 18,000

$ 20,000$25,000$20,000

$ 12,000$ 6,000$ 11,000$ 18,000

$20,000$ 25,000$20,000

$ 12,000$ 6,000$ 11,000$ 18,000

$20,000$ 25,000

Dec. 1, 1950Dec. 1, 1952Oct. 1, 1954May 15, 1958Dec. 2, 1980Aug. 26, 1981

Jan. 23, 1969June10, 1970Feb. 17, 1972Apr. 24, 1974Nov. 13, 1975June 9, 1977Sept.27, 1979May 22, 1980

Dec. 1, 1980Dec. 1, 1982Oct. 1, 1984May 15, 1988Nov. 15, 1990Aug. 15, 1991

Jan. 15, 1999June 1, 2000Feb. 1, 2002Apr. 15, 2004Nov. 1, 2005June 1, 2007Sept.15, 2009May 15, 2010

(a)(a)(a)

102.172100.00

98.75100.00100.50101.763101.500101.595100.0099.556

100.00

101.12100.00 100.10100.00 100.30101.39 101.3199.25 (e)98.00 f15.8899.18

104.18'9.625

106.13100.931 106.57100.407 108.16100.515 109.70100.00 (b)98.636 109.6099.125 111.95

Other Long-term Debt —December 31Promissory Notes

5%% Due 1977................4.85% Due 1995 (c)

Convertible Debentures4%% Due 1981.5N'/o Due 1978

Term Loan Notes (a) (f) ...........$ 8,000 $ 8,000 $ 8,000

$ 10,000 $20,000 $35,000

$ 8,000$ 8,000

$7,550 $ 7,725 $ 7,900 $ 8,075 $ 8,250$ 4,050$ 8,425

$ 8,000$ 8,000

$ 4,200$ 8,600

$ 8,000$ 8,000

$ 4,350 $ 4,500$ 8,775 $ 8,950

$ 8,000 - $ 8,000$ 8,000 $ 8,000

$ 4,650 $ 4,800 Oct. 1, 1957 Oct. 1, 1977 (a) 100.00$ 9,125 $ 9,300 Dec. 21, 1965 Dec. 1, 1995 (a) 100.00 101.98

$ 8,000 $ 8,000 June 15, 1966 June 1, 1981 101.375 100.50$ 8,000 $ 8,000 Feb. 25, 1971 Feb. 1, 1978 100.00 99.00

Dec. 29, 1978

Preferred Stock —December 31

($ 100 Par Value)4~/t'/o Preferred Stock.............4%%.&referred Stock...;.........4.75% Preferred Stock.............4.35% Preferred Stock.............4.96% Preferred Stock.............7.72% Preferred Stock.............7.44% Preferred Stock.............8.40% Preferred Stock.............Number of Registered Holders

of Preferred Stock ..............

$6,690$340

$2,000$6,000$6,000

$13,000$12,000$ 15,000

3,454

$ 6,690$ 340$ 2,000$ 6,000$ 6,000$ 13,000$ 12,000$ 15,000

3,704

$ 6,690$ 340$ 2,000$ 6,000$ 6,000$ 13,000$ 12,000$ 15,00D

3,761

$ 6,690$ 340$ 2,000$ 6,000$ 6,000$ 13,000$ 12,000$ 15,000

3,853

$ 6,690$ 340$ 2,000$ 6,000$ 6,000$ 13,000$ 12,000$ 15,000

3,943

$ 6,690$ 340$ 2,000$ 6,000$ 6,000$ 13,000$ 12,000

3,918

$ 6,690$ 340$ 2,000$ 6,000$ 6,000$ 13,000$ 12,000

3,927 3,924 3,959

$ 6,690 $ 6,690$ 340 $ 340$ 2,000 $ 2,000$ 6,000 —

$ 6,000$ 6,000 $ 6,000$ 13,000 $ 13,000$ 12,000 $ 12,000

$ 6,690$ 340$ 2,000$ 6,000$ 6,000$ 13,000

$ 6,690$ 340$ 2,000$ 6,000$ 6,000$ 13,000

3,881 3,832

Oct. 1, 1936Oct. 1, 1936Apr. 1, 1949Nov. 1, 1954June 21, 1961Feb. 25, 1971Jan. 17, 1973May 24, 1977

(d) 102.50 107.00107.50 105.00 107.00103.75 100.55 106.75

(a) 100.00 102.00(a) 100.00 101.00

100.00 98.55 104.00101.22 100.323 106.80100.00 98.80 108.40

Common Stock (No Par Value)Number of Shares (Thousands)—December 31................New Shares Issued

(Thousands) .

Total Stated Value SharesOutstanding —December 31

Number of Registered Holdersof Common Stock ~... ~.........

7,456

912

6,544

1,171

5,373 5,373

500

4,873 4,873 4,873

500

4,373

450

3,923 3,923 3,423

500

25,296 24,709 24,347 24,990 23,545 23,738 23,868 22,629 20,860 20,632 19,195

$ 111,165 $95,546 $76,371 $76,371 $ 66,031 $ 66,031 $66,031 $ 57,928 $ 49,772 $49,772 $ 38,172

18

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

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

(d) Exchanged for earlier 6'Ifr preferred stock and issued on an equal share basis plus $2.50 cash per share.(e) Not redeemable prior to November 15, 1987.

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

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NotesDIRECTORS

ERNEST E. ALTHOUSEPoughkeepsie, N.Y.Vice Chairman of the Board andVice Chairman of Committee onFinance; Member of ExecutiveCommittee and Committee onCompensation and Succession

WILLIAMP. ARNOLDNew York, N.Y.Chairman of the Board andChief Executive OfficerAssociated Dry Goods Corporation,a department store chain; Member ofCommittee on Audit

RAYMONDT. BENEDICTStamford, Ct.Lawyer, of Counsel, Cummings &Lockwood; Member of ExecutiveCommittee and Committee on Finance

JAMES R. BREED, M.D.Poughkeepsie, N.Y.SurgeonMember of Committee on Audit

MARJORIE S. BROWNMillbrook, N.Y.Homemaker, active in civic andphilanthropic work, formerly executivein retailing and promotional organizations;Member of Retirement Committee

THEODORE J. CARLSONPoughkeepsie, N.Y.Chairman of the Board and PrincipalOfficer; Chairman of ExecutiveCommittee; Member of RetirementCommittee, and Committees on Finance'nd on Compensation and Succession

ROY C. KETCHAMFishkill~ N.Y.Chairman of the Board and ChiefExecutive Officer, Ketcham Motors, Inc.;

'Chairman of the Board of The FishkillNational Bank; Chairman of Committeeon Compensation and Succession;Member of Executive Committee

JOHN E. MACK IIIPoughkeepsie, N.Y.Executive Vice President

HERBERT L. SHULTZKingston, N.Y.Special Assistant to the President, VassarCollege; Chairman of Retirement Committee;Member of Committee on Audit

JOHN WILKIEKatonah, N.Y.Chairman of Committees on Financeand on Audit; Member of Executive andRetirement Committees

H. CLIFTON WILSONPoughkeepsie, N.Y.President; Member of Executive andRetirement Committees, andCommittees on Finance and onCompensation and Succession

19

OFFICERS OF THE BOARDTHEODORE J. CARLSONChairman of the Board andPrincipal Officer andChairman of ExecutiveCommittee

JOHN WILKIEChairman of Committees onFinance and on Audit

ERNEST, E. ALTHOUSEVice Chairman of the Boardand of Committee on Finance

ROY C. KETCHAMChairman of Committee onCompensation and Succession

HERBERT L. SHULTZChairman of RetirementCommittee

OFFICERS

H. CLIFTON.WILSONPresident

JOHN E. MACK IIIExecutive Vice President

L. WALLACECROSSSenior Vice President-Financeand Accounting

CHARLES E. RIDERSenior Vice President-CorporatePlanning

CHARLES A. BOLZVice President-Engineering

WILLIAMA. KLINGVice President-Community Affairs

HENRY L. WALKERVice President-Production

JOSEPH F.FURLONGSecretary and Treasurer

JOHN F. DRAINController

PAUL J. GANCIAssistant Vice President

STEWART P. LAIDLAWAssistant Vice President

JAMES E. SMITHAssistant Vice President

WILLIAME. VANWAGENENAssistant Vice President

WALTER A. BOSSERT, JR.-Assistant Secretary andAssistant Treasurer

CHARLES P. KOVARAssistant Secretary

EMORY R. OSBORNAssistant Treasurer

TRANSFER AGENT & REGISTRARICOMMON & PREFERRED STOCK

Morgan Guaranty Trust Company of New York30 West BroadwayNew York, N.Y. 10015

GENERAL COUNSEL„Gould & WilkieOne Wall StreetNew York, N.Y. 10005

INDEPENDENT ACCOUNTANTSPrice Waterhouse153 East 53rd StreetNew York, N.Y. 10022

The map depicts the2,600 square-mile areaserved by Central Hudson,extending from 10 miles southof Albany to 30 miles northof New York City, andincluding a populationof about 542,000.

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THE ATTACHED FILES ARE OFFICIAL RECORDS OF THEDIVISION OF DOCUMENT CONTROL. THEY HAVE BEENCHARGED TO YOU FOR A LIMITED TIME PERIOD ANDMUST BE RETURNED TO THE RECORDS FACILITYBRANCH 016. PLEASE DO NOT SEND DOCUMENTSCHARGED OUT THROUGH THE MAIL. REMOVALOF ANYPAGE(S) FROM DOCUMENT FOR REPRODUCTION MUSTBE REFERRED TO FILE PERSONNEL.

DEADLINERETURN DATE

RECORDS FACILITYBRANCH

Highlights 0Letter to Shareholders 5Finance t9Rate 0Nuclear Technology@Fuel TechnologyFuel EAiciency l5Operations 99Financial Statements 9PManagement's Discussion and Analysis 88Financial and Statistical Information 9Directors and OAicers Sigg95Q@MP

bCo3$ 9$ CCM5The cover illustration depicts several areas ofcompany operations where technology andinnovation have produced beneficial results.In this report we willbe highlightingFinance, Rate, Nuclear Technology, FuelTechnology and Fuel Efficiency.

K~KMa D a ~

The company supplies electric, gas andsteam service wholly within the State ofNew York, and is engaged in the produc-tion, transmission, distribution and sale ofthese services in a nine-county area centeringaround the City of Rochester.

The company's territory, which has a

population of approximately 880,000, is welldiversified among residential, commercialand industrial consumers. In addition to theCity of Rochester, which is the third largestcity and a major industrial center in theState> it includes a large and prosperousfarming area.

—MO7ICE—THE ATTACHED FILES ARE OFFICIAL RECORDS OF THEDIVISION OF DOCUMENT CONTROL. THEY HAVE BEENCHARGED TO YOU FOR A LIMITEDTIME PERIOD ANDMUST BE RETURNED TO THE RECORDS FACILITYBRANCH 016. PLEASE DO NOT SEND DOCUMENTSCHARGED OUT THROUGH THE MAIL. REMOVALOF ANYPAGE(S) FROM DOCUMENT FOR REPRODUCTION MUSTBE REFERRED TO FILE PERSONNEL.

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RETURN DATE

RECORDS FACILITYBRANCH

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NIATORYD tlKKTFEE

IIEIMORVDOI',I<ET FILE I,'IIIV

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~ 'NYSEC

ANNUALREPORT 19Sf

ContentsHighlights of the YearLetter to StockholdersCondensed Statement of Income

General Review of the YearEarnings and DividendsDividend Reinvestment PlanRate MattersPower SupplyFuture Power SupplyTerminated Nuclear Projects1981 ConstructionFuture ConstructionFinancingResearch and DevelopmentCustomer AssistancePersonnelElectric OperationsGas Operations

Balance SheetStatement of IncomeStatement of Retained EarningsStatement of Changes in Financial PositionNotes to Financial StatementsManagement's Discussion and Analysis of Financial

Condition and Results of Operations

Financial and Operating StatisticsDirectors and OfficersService Area Map

555779

11

11

11

11

1313151515

1819192021

29

31

3637

Cover:IYith the rising cost of new powerplants, improvement and maintenanceof existing facilities becomes in-creasingly important. Shown here isnew control equipment at GoudeyStation near Binghamton, a plantwhich produces 129,000 kilowattsfrom electricity generating unitsinstalled over 30 years ago.

u''

Highlights of the Year

Gross operating revenues (thousands)

Income before, interest charges (thousands) ......Earnings available for common stock (thousands) .

Earnings per share of common stock

1981 1980 Increase Percent

$ 767,539 $ 645,314 $ 122,225 19,

$ 175,764 $ 145,886 $ 29,878 20

$ 90,265 $ 73,637 $ 16,628 23

$2.95 $2.70 $ .25 9

Allowance for funds used during constructionper share of common stock $1.07 $ 1.13 $ (.06) (5)

Dividends paid per share of common stock

Taxes per share of common stock

Electricity sales to ultimate customers (million kwh)I

'Gas sales (thousand dekatherms)

$ 1.94

$3.51

11,008

39,956

$1.82

$2.98

10,742

37,658

$ 12 7

$ .53 18

266 2

2,298 6

Cost of fuel for electric generation (thousands)

Total utility plant (thousands)

Expenditures for construction (thousands)

$ 177,592 $ 151,404 $ 26,188 17 .

$2,391,712 $2,117,241 $274,471 13

$ 265,545 $ 154,516 $111,029 72

Book value per share of common stock (average) ...

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

$22.01 $21.92

$ 15.00 $14.88

$ .09

$ 12 1

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

REGULATORY DOCKET.FILE COPY

To the Owners of NYSEG:

In assessing 1981, probably themost significant event forNYSEG was the successful com-pletion in October of a key rateproceeding. After eleven monthsof study, including twelve days ofpublic hearings, the PublicService Commission approved a22% increase in electric ratesand a 5% increase in gas ratesfor total added revenues of

We//s P. Allen, Jr. (left)and Charles F. Kennedy

$133 million annually, which was87% of the amount requested.This was in marked contrast withthe grossly inadequate raterelief in the two previous rate casesin 1979 and 1980 in which wereceived only about 40% of theamounts applied for.

Unfortunately, continued infla-tion and the attendant high costsof funds to finance our major

capital requirements do not allowus much respite. Looking aheadto 1983 and the need to finance ex-penditures for completion ofSomerset Generating Station andother construction makes itnecessary for us to seek anotherrise in rates. Last month wefiled for a $ 149-million, or 19%, in-crease in electric rates and a$4.9-million, or 2%, increase ingas rates. The proposed ratesare based on a 17.5% return oncommon stock equity and pro-jected operations for a calendar1983 test year. They also in-clude an increase in constructiortwork in progress in rate baseto $450 million from $200 millionpresently reflected in rates.

Somerset is a wholly-owned,625,000-kilowatt, coal-firedgenerating station which isplanned for initial service in late1984. Its construction hasbeen progressing on scheduleand, when completed, it willreduce costly electricity purchasesand contribute to a reductionin the use of oil for electric

'enerationin the state. The onlysignificant impediment todate has been the failure to obtainfederal regulatory approvalfor a railroad connection, neededto transport coal and otherraw materials to the plant, becauseof differences in public opinionas to a route for the facility. Weanticipate that the InterstateCommerce Commission will de-cide the issue sometime thisspring.

Another important regulatorydecision pending is the PublicService Commission's study of theeconomic and financial impli-cations of continuing constructionof Nine Mile Point II nucleargenerating station. The Companyis one of five utility ownersand holds an 18% interest in theplant which is about one-thirdbuilt. It is being constructedby Niagara Mohawk and isscheduled for operation in late1986. The PSC has substantiallycompleted its deliberations,indicating that completion of the

.plant is warranted. A decisionhas not yet b'een formally issued.It is possible that the decision

~will include incentive provisionsthat benefit or penalize the

. project's owners if certain costsvary from prescribed target levels.

The estimated cost of Nine MilePoint II has risen sharply since1974 when the project started.Like other nuclear plants presentlyunder construction, costs havebeen affected by inflation, highinterest rates, and revisions inregulatory requirements, some ofwhich stem from the Three MileIsland accident. Since capitalcosts of other sources of electricityhave also increased materially,the relative economic advantageof Nine Mile Point II remainslargely unchanged. Moreover, theaddition of nuclear capacity willreduce the state's dependence onimported oil.

/*

Last October's favorable ratedecision should permit someclosing of the gap, experiencedin recent years, between allowedreturn on common stock equityand the return actually earned.While we do not anticipate earningin 1982 the full 17% returngranted by the PSC last October,we do expect to come closerto earning the allowed return thanin previous years.

Rate decisions in the past yearand other developments indicatethat the regulatory climate in NewYork is improving. We were en-couraged recently to read a PSCadministrative law judge's rec-ommended decision in a thorough,two-year-long proceeding ex-ploring utility financial needs. Hisprincipal finding is that includingconstruction work in rate baseis the most effective and lowest-cost method to enable utilities tomaintain financial integrity.We heartily agree and hope thisproceeding, which is expectedto be completed in 1982, will re-sult in further improvementof regulation in New York.

To use a phrase heard quiteregularly these days in the electricutility industry, we are beginningto see light at the end of thetunnel. Barring adverse develop-rnents we expect to be ableto finance construction expendi-tures for Somerset, which peakin 1982 and 1983, then return tosomething resembling normalcyin the mid-1980s. For our stock-holders it will mean fewer issuesof new common stock whichtend to dilute earnings. For our

customers it will mean moderating .

increases in electric and gasrates. The extent of moderation willdepend on the rate of inflation.

In last year's Annual Report weincluded a readership surveycard which many stockholderscompleted and returned to us. Weappreciate the response asyour replies and comments help in

planning this report and otherstockholder communications.

We look forward to the futurewith confidence. NYSEG has afine service area, a competentmanagement team, and anemployee group that is second tonone in the utility industry.Employee dedication is amplydemonstrated during storms andother emergencies when long,tedious hours are devotedto restoring service. In addition totheir work responsibilities, manyemployees spend off-hours incommunity activities. We take thisopportunity to acknowledgeemployee contributions and thankthem for a job well done.

For the Board of Directors,

Chairman and ChiefExecutive Officer

President and ChiefOperating Officer

March 1, 1982

Condensed Statementof Income

REVENUESSales of electricitySales of gas

Total .

1981

$609,178158,361

767,539

1980thousands of Dollars)

$506,502138,812

645,314

Increase

$ 102,67619,549

122,225

EXPENSESWages and salaries of employees and contributions to

retirement and insurance plans (exclusive of$44,504,000 in 1981 and $43,046,000 in 1980charged to construction, etc.) .

;Fuel used to produce electricity:Electricity purchased and interchangedGas purchased .

Gther materials, services and researchFederal taxesState and local taxes'Depreciation

Total .

'Income available to investors

83,044177,592

7,029112,176

77,10039,04468,26449,448

613,697

153,842

73,442151,404

(2,030)100,89567,82221,60059,83847,486

520,457

124,857

9,60226,188

9,05911,281

9,278'7,444

8,426

1,962-'3,240

28,985

ALLOWANCEFOR FUNDS USEDDURING CONSTRUCTION 32,719 30,925 1,794

INVESTORS'HAREInterest on bondsInterest on notes payable and otherDividends on preferred stock .

Dividends on common stock .

Total .

RETAINED IN THE BUSINESS

67,38911,37117,53658,657

154,953

$ 31,608

59,9677,611

14,56749,091

131,236

$ 24,546

7,4223,7602,9699,566

23,717

$ 7,062

General Reviewof the Year

Earnings and DividendsOperating Income Rises 26%

Operating income was $ 145 million,an increase of $30 million, or 26%,over 1980. Revenues increased $ 122million, which includes $57 millionfrom higher electric and gas rates and$48 million from increased fueland purchased-gas costs included inbillings. Operating expenses, ex-cluding energy production costs,were up 13%, largely as a result ofinflationary rises in labor andmaterials expense.

Interest charges, including intereston short-term debt, rose $ 11 mil-lion, or 1,7%. Higher interest rates andincreased borrowing required tofinance construction were largely re-sponsible for the increase.

Allowance for funds used duringconstruction was 36% of earnings

;available for the common stock. Thisis a decline of six percentagepoints from 1980 and reflects rate in-creases which allowed constructionwork in progress in rate base.

Allowance for funds used duringconstruction represents financingcost, such as bond interest, that isallocated to major projects underconstruction. It does not constitutecash earnings.

Earnings available for the commonstock of $90 million increased 23%over 1980. On a per-share basis,earnings of $2.95 were up only9% because of a 12% increase inaverage number of shares out-standing.

The quarterly dividend rate onthe common stock was raised from47 to 50 cents effective with theAugust 15, 1981 payment. This is thefourth consecutive year the divi-dend rate has been increased. Thehigher dividend, together with a

greater number of shares outstanding,increased total common stockdividends $10 million, or 19%.

After dividends, the balance of netincome of $32 million was addedto common stock equity.

For federal income tax purposes, itis estimated that no portion of1981 dividends was a return of capital;therefore the dividend is fullytaxable as ordinary income. Similarly,the Company anticipates that noportion of 1982 dividends will beconsidered a return of capital.

Dividend Reinvestment PlanNew Tax Break ForStockholdersThe Economic Recovery Tax Act of1981 provides a tax benefit for eligiblestockholders reinvesting dividendsin qualifying utility companies suchas NYSEG. Beginning in 1982,stockholders can exclude up to $750($ 1,500 on a joint return) of re-invested dividends from their taxableincome. If the shares purchasedare sold after one year, the proceedswill be taxable at capital gainsrates which are lower than tax rateson ordinary income. There are

certain U.S. Treasury requirementsregarding retention of shares.Under present law, the tax benefitterminates at the end of 1985.

During 1981, participation inthe Dividend Reinvestment and StockPurchase Plan increased from12,000 to 14,000 stockholders. Thesestockholders, representing about20% of the total number of stock-holders, purchased over $ 13 millionin new shares by reinvestingdividends or making optional cashpurchases. This compares with$8 million in 1980.

In January 1982 stockholder par-ticipation in the plan increased from20 to 25%, probably because ofthe new tax law benefits.

The plan allows shareholders to re-invest quarterly dividends andmake monthly cash payments of upto $5,000 quarterly for purchaseof shares. Dividends reinvested pur-chase shares at 95% of the averagemarket price on the dividendpayment date. There are no servicecharges or brokerage commissions.

If you are interested in enrollingin the plan or desire further informa-tion, please write:NYSEG Shareholder Services,P. O. Box 200, Ithaca, New York14850.

1972

1973

1974

1975

1976

1977

1978

236

253~ 296

408

459532

Total Operating Revenue ~ ELECTRIC

Millions of Dollars I—I GAS and Other

1979

19801981

25 75 125175

588

645

768

p

1AQt g~

~ ~ sory4eawo «eas

lOs CNg~~>~ 1lsa ~

gyygg~,'4eesee

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~e

AACtOt 'ATWOIWTIOIlAd%LS l4lft'I I"~ bpeehd A

~ Typal ~~r

COLOR

i Rate Matters8133-Million Rateincrease ApprovedIn October 1981 the Public ServiceCommission approved a $ 124-million,or 22%, increase in electric ratesand a,'$9-million, or 5%, increase ingas rates. The $ 133 million inhigher revenues was 87% of theamount requested and included $45million in temporary electric ratesallowed on June 1. In the two previousgeneral rate proceedings, the PSChad approved only about 40% of theamounts requested.

To improve cash flow and interestcoverage, the PSC allowed por-tions of construction work in progressto be added to rate base. Thetemporary rates were based entirelyon the addition of $275 million ofconstruction work to rate base. Thepermanent rate increase, whichwent into effect on October 25, isbased on $200 million of constructionwork,in rate base. These additionsto rate base substitute cash earningsfor the non-cash allowance for

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

. financing costs during constructionare not added to the cost of projectsbut are paid for currently bycustomers.

The October rate decision waspredicated on an allowed 17% returnon common stock equity, basedon a test year ending October 31,1982. It did not allow revenuesto recover pre-construction expendi-tures on the abandoned NewHaven nuclear project because aseparate proceeding on that matteris pending. The Company's $ 153-

million rate request had includedabout $ 15 million for the annualrecovery over five years of these ex-penditures.

While the rate decision was asatisfactory one, the Company mustlook beyond October 1982. Theeffects of past and expected futureinflation, including high interestcosts, will continue to affect opera-tions. For this reason it was necessaryfor the Company to seek anotherincrease in rates. In February 1982 anapplication was filed with the PSCfor a $ 149-million, or 19%, increase inelectric rates and a $4.9-million,or 2%, increase in gas rates. Theelectric rate request is based on a17.5% return on common stockequity, $450 million of constructionwork in rate base and a calendar1983 test year. It also includesrevenues for recovery over ten yearsof expenditures on the abandonedNew Haven and Jamesport nuclearprojects.

Power SupplyGeneration PrimarilyCoal-FiredAll of NYSEG's steam-electricgenerating stations use coal as aprimary fuel. These plants provide98% of the Company's genera-tion with hydro-electric facilities pro-ducing the remainder.

Total power supply in 1981, ona kilowatt-hour basis, was 12.3 billion

kilowatt-hours, an increase of1% over 1980. About 88% of this wasgenerated by Company plants.The remainder was largely purchasedunder contracts with the New YorkState Power Authority and neighboringutilities.

A new peak load of 2,193,000kilowatts (kw) was set during verycold weather in mid-January 1982.The new peak exceeds the previousone, which was set a year earlier,by about 1%.

The Company's power supplycapability to serve peak loads iscurrently 2,775,000 kw. This com-prises 1,769,000 kw of Companygenerating capacity, 764,000 kw ofpurchases from the Power Authorityand 242,000 kw of firm purchasesfrom neighboring utilities.

A large part of the purchases fromthe Power Authority are from hydroprojects on the Niagara and St.Lawrence Rivers. The chairman of theAuthority has proposed a realloca-tion of this low-cost power through-out the state in 1985 and 1990,when present contracts expire. TheCompany's residential customerswould continue to benefit from thepower, but to a lesser extent thancurrently. No legislative action hasbeen taken to date on the proposal.

Despite a three-month strike of coalminers beginning in March 1981,the Company was able to maintainnormal electricity production at all itsplants except Homer City. Main-tenance work scheduled for thisfacility late in 1981 was advancedso that there was no substantialloss of planned power production forthe year.

Informing the public about energymattersis animportant facet of NYSEGactivities. Top: Youngsters visit anenergy museum at a Company office.Bottom right:Aspart ofan energyseminar,a group of teachers tours an electricitygenerating plant. Bottom left: Displaysat fairs and exhibitions help providethe public withinformation about wiseenergy use and conservation.

Electric Peak Loads 1973-1982

1973

1974

1975

1976

19771978

1979

1980

1981

1982

(Winter Capability Period)Megawatts

1724

1701

1768

1993

2070

20342118

207221702193

'i fill'i ljjlillijj„'',',I'

I )I

I

,I

II

I

I I

'I

I

I'I

I

,I,Iy,y $

'

/ "I /,'I

w.gt

1,)

E

~rWr;A

I

~r I

t,

c. I

p~

t'T~

~ip

a~P r

I

rI

Steel framing is erected for SomersetGenerating Station, a coal-lired

faci%'ty being built by the Company inwestern. New York. It willadd

625,000 kilowatts to electric generatingcapacity when completed in 1984.

Future Power SupplySomerset Project ProgressesGood progress was made in 1981 onthe construction of Somerset, awholly-owned, 625,000-kw, coal-firedgenerating station being built nearLake Ontario in western NewYork. Steel structure for the mainbuilding has been erected and workhas begun on facilities to bringlake cooling water to the plant. En-gineering work will be substantiallycompleted by the end of 1982.About 70% of the work, on a dollarbasis, has been contracted forwith remaining major contracts ex-pected,to be awarded by September1982. The project is scheduled for

'completion in late 1984.The plant is estimated to cost

$ 1,072 million, which includes" allowance for funds used during con-

struction. The cost includes almost$300 million for environmental protec-tion facilities including a wetlimestone scrubber to remove sulphurdioxide from exhaust gases. Atthe end of 1981, expenditures of $215million had been made on the plant.

Public hearings on a railroad tobring coal and limestone to the plantwere completed in December. Threeroutes for the railroad, varying inlength from 15 to 30 miles, have beenproposed to the U.S. InterstateCommerce Commission. Each hasbeen opposed by various environ-mental and farmland preservationgroups. The ICC is expected todecide the issue in the spring of1982.

The Company is participating withfour other New York utilities in the con-

rf

struction of a 1,084,000-kw nucleargenerating station near Oswego, N.Y.,known as Nine Mile Point II. NYSEGowns 18% of the unit, which isbeing built by Niagara Mohawk PowerCorporation and scheduled forcompletion in late 1986. Like manynuclear plants currently under con-struction, the project has experienceda steady rise in estimated con-struction cost since its start in

Construction Program602 563 368

Completed Ten Years1972-1981

$ 1,602,000,000

Forecast Three Years1982-84

$1,533,000,000

64 83 116

Millions of Dollars

162 207 184 132 171 185 298

1974. As a result, the PSC, in late1981, initiated a proceeding to reviewthe financial and cost implicationsof completing the plant. It has indi-cated that completion is war-ranted. It is possible that the PSC willset financial incentives andpenalties for the project owners re-lating to final construction costs.NYSEG's share of the project's cost,including allowance for fundsused during construction, is $712 mil-lion of which $235 million wasspent at the end of 1981,

Whenever possible, NYSEG utilizesexisting rights-of-way to buildtransmission lines. This is a new115,000-volt line to strengthen electricservicein the Oneonta area.

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

5L

erminated Nuclear ProjectsRecovery ofExpenditures Pendingn 1979 and 1980 the New York State

Board on Electric Generation Sitingnd th'e Environment turned down

proposals by NYSEG and Long IslandLighting Company to build jointly-owned nuclear generating plants atNew Haven in upstate New Yorkand at Jamesport in eastern LongIsland.

The Company is seeking PSCapproval to recover its expenditureson the projects through rates overa period of years. About $60 million($43 million after tax effect) hadbeen expended by NYSEG on James-port and $44 million ($33 millionafter tax effect) on New Haven. Mostof the outlays were for environ-mental studies and other pre-con-struction work required by law.

In September 1981 a PSC adminis-trative law judge recommendedthat recovery of the New Haven ex-penditures be approved. A PSCdecision in the matter is expectedshortly. Action on the Jamesport

'application is not expected until late1982.

projects for general improvement ofelectric and gas systems, including$43 million for minor projects, eachcosting $25,000 or less.

Future ConstructionOutlays Continue atRecord HighsOutlays for construction are plannedto continue at high levels through1984 when Somerset GeneratingStation is expected to be completed.It is estimated that constructionexpenditures in 1982 through 1984will aggregate $ 1,533 million, whichincludes $281 million of allowancefor funds used during construction.

Somerset and its related rail facilitywill require $886 million. TheCompany's share of the Nine MilePoint II project is budgeted for $300million. Other large expendituresinclude $67 million for improvementsat existing coal-fired generatingfacilities and $60 million for additionsto hydro-electric generating capacity.

The remainder of the three-yearprogram is allocated for generalreinforcement of the Company's elec-tric and gas systems.

Continuation of the 'constructionprogram is contingent upon, amongother things, receipt of adequateelectric and gas rates. If the PSC doesnot permit higher revenues tocover'increased costs, the Companymay be unable to finance theentire program.

FinancingCash Needs Amount to$374 MillionLike construction expenditures,financing requirements reached newhighs in 1981. Cash needs were$374 million which included $265 mil-lion for construction, $65 millionfor maturing securities and $44 millionfor reduction in short-term debt.

About $80 million, or 30k ofconstruction expenditures, was gen-erated internally. Sale of securitiesprovided $270 million. The remainderof the $374 million came from areduction in working capital and $ 11

million received as the Company'sshare of a settlement of nuclear fuelsupply litigation.

Sales of securities during the year

7981 ConstructionExpenditures Total Almost$300 MillionConstruction expenditures in 1981were $298 million which includes $33million of allowance for funds usedduring construction. Principal outlayswere $ 123 million for SomersetStation, $62 million for the Company'sshare of Nine Mile Point II and $ 10million for a hydro-electric projecton the Hudson River at Mechanic-ville. The remainder was spent on

Despite high mortgage rates andgenerally-reduced housing activity,construction of new dwelling unitscontinued in 1981. Residential cus-tomers added during the year included4,200 for electric service and 540 forgas. Most new residences use elec-tricity.or gas for space heating.

Industrial Electric Revenues

Stone, clay and glass productsMachinery, except electrical .

Food and kindred products .

Transportation equipmentElectrical machinery and supplies ...Fabricated metal productsPrimary metal industriesRubber and plastic products .

Chemicals and allied productsPaper and allied products .

Printing and publishingInstruments and related products ....Nonmetal mining„excluding fuels ....Wood products, except furnitureLeather and leather productsTextile mill productsPetroleum and refiningMetal miningFurniture and fixturesApparel and other textile products ...Miscellaneous industriesUnclassified (under 50 kw demand) ..

Total

Total electric revenues

1981(thousands)

$ 17,64513,57911,14910,75110,28310,1319,9548,2534,1653,4433,0483,0323,0182,0191,3211,2171,2051,098

921265

2,1452,976

$ 121.618

$609,178

Percentof total14 5%11.29.28.88.58.38.26.83.42.82.52.52.51.71.01.0

99.8.2

1.82.5

100 0'lo

PQPGQg

NYSEG personnel work closely withcustomers. Top right: A meter special-

ist tests a meter that willallow in-dustrial customers to benefit from

newly-developed time-of-use electricrates. Top left: A market service

representative discusses with cus-tomer a heat pump combined with agas furnace which provides efficientspace heating and air conditioning.

Bottom: A consumer affairs rep-resentative offers a young family

financial counseling.

included the following (dollars infTIIIIions):

JanuaryAprilAugust

DecemberDecember

Total

S 60 14'/a% bonds due 199130 15 /e% preferred stock37 cornrnon stock, 2,500,000

shares100 17sr's% bonds due 1969/9030 15% preferred stock13 dividend reinvestment plan

$270

The common shares issued inAugust were sold through under-writers to the public at $ 15.50 a share.After deduction of underwritingfees, the Company received $ 14.94 ashare.

In 1982 it is estimated that theCompany will require about $470million of external funds to financeconstruction and pay for maturingsecurities. About $85 million wasraised in January 1982 with publicsales of $50 million principal amountof 18% first mortgage bonds due2012 and 2,500,000 shares of com-mon st'ock. The stock was sold tounderwriters at $ 14.18 a share andreoffered to the public at $ 14.75

"a share.Also in January, as part of a

program to finance pollution control" facilities at Somerset Station,

the Company publicly sold $61 millionprincipal amount of tax-exempt91/4% pollution control notes dueJanuary 1, 1985 through the New YorkState Energy Research and Devel-opment Authority. The notes arebacked by a letter of credit issued bya major bank. Proceeds of thesale, along with proceeds from anissuance through the Authorityof up to $35 million of tax-exemptcommercial paper, will be usedto finance the facilities pendingpermanent financing.

Institute received $2.2 million. Itconducts research for more than 600electric utilities nationwide. TheCompany contributed $2.4 million toEmpire State Electric Energy Re-search Corporation which sponsorsresearch for the state's majorelectric utilities. Another $870,000 wasspent for the Company's share ofresearch conducted by the New YorkState Energy Research and Devel-

opmentt

Authority.About $ 1.7 million was devoted to

the Company's own researchefforts. Among projects being studiedis better utilization of the fly ashleft after burning of coal in generatingstations. Fly ash from a stationnear Binghamton is being used ex-perimentally as an ingredient inasphalt for paving parking lots andhighways. Fly ash from another plantis being sold to firms which manu-facture concrete

products.'he

Revenue Dollar-1981

79 k Electricity21% Gas

100'/o

Where it came from:

Residential 4SC

—,~

I'1Q 4

Customer AssistanceConsumer AdvisoryPanel FormedA Consumer Advisory Panel wasformed in 1981 to strengthen com-munication with customers. Nineteenpersons with varied backgrounds

Where it wont:

Fuel 22C

rum ruL~1~~{@&]

fii=:0Taxes 14C IWR

and experience were selected fromthe Company's Binghamton, Elmiraand Ithaca operating areas. Thepanel meets regularly to discuss mat-ters which concern consumers.Each member serves a one-year termwithout compensation, except forreimbursement of travel expenses.

In other efforts to assist customersand improve communications, theCompany has consumer repre-sentatives in district offices who assistcustomers who have difficultypaying for service or related prob-lems. An award-winning publication,Senior Sun, is circulated to seniorcitizens and provides information onhow to minimize utility costs,

Energy conservation continues toreceive attention. Company marketservice representatives work withresidential and business customers toidentify ways of saving energy.Almost 20,000 home energy auditshave been conducted to dateand 3,200 loans, aggregating $5.8million, have been arranged tohelp customers reduce energy con-sumption. The loans can be usedto finance such improvements as new,more efficient furnaces, insulation,storm windows and solar waterheaters.

Research and DevelopmentVariety of Projects SupportedMore than $7 million was spent on avariety of research and develop-ment projects in 1981. About three-quarters of the expenditure wasfor the Company's participation innational and state electric researchprograms. Electric Power Research

Commercial 23c

Irsrtl g piIndustrial 21C

Street Ughting 8, Other I Ic

lr 4Gas & Elecidcity purchased ISC

trl rrrInterest to Bond Holders. otc. 10c

', Other Material and Sorvices 10c Ir~sDep 'at'en se a ~~

Olvtdends-Common Stock 7cOivrdends-Preferred t 2c

Retained in the Business 4C

Electric and gas sales to businesscustomers increased in 1981. Shown

here (above) is an engineeringbuilding at Corning completed recently

by Corning Glass Works. At rightis a shopping mall near Elmira that was

enlarged during the year.

14

Suburban areas outside large citiesconstitute a large portion of the

service area. Shown here is part of anaward-winning condominium complex

north of New York City.

4r

)

PersonnelVehicle AccidentRate ImprovesEmployees driving Company vehiclesimproved their accident recordduring 1981. The accident rate was5.08 accidents per million milesdriven, which compares with 6.24 permillion miles in 1980. For electricutilities nationally, the average rate iscurrently 8.89 accidents per millionmiles driven.

Affirmative action to hire, trainand promote minority-group personsand women continued during theyear. Policies and procedureson sexual harrassment, and equalemployment opportunities for VietHarn veterans and disabled persons,weje developed and implemented.Several programs were conducted to

~ . incfease the awareness of femaleemployees to career opportunitieswithin the Company.

" Electric OperationsSales Rise 2%,Revenues Up 20%Electric sales in 1981 were up 2%while revenues increased 20% overthe previous year. The revenue in-crease reflects higher rates andfuel costs included in customer bill-ings. Percent changes by customercategory were as follows:

Kwh Sales RevenuesResidential 2% 20%Commercial 1 19Industrial 3 23Total 2% 20%

Average consumption by residentialcustomers and the number ofcustomers each increased about 1%during the year. The averageresidential rate was 6.13 cents perkilowatt-hour, which compares to5.25 cents in 1980.

~Electric operating expenses in-

creased $52 million, or 19%. A largepart of the increase, or $41 million,was due to higher production ex-penses, including the cost of fuel andpurchased electricity. The unitcost of fuel was $ 1.57 per million Btu,a 15% increase over 1980.

~nil&<il',h~1V&i

Gas OperationsIndustrial Sales Up SharplySales of gas increased 6% over 1980largely as a result of sharply-highersales to industrial customers.Revenues were up 13%, reflectingpass-through to customers of higherpurchased gas costs and increasedrates. Percent changes by customercategory were as follows:

Unit Sales RevenuesResidentialCommercial 1 8Industrial 16 26Total 6% 13%

About 1,500 residential gas spaceheating customers were added in

1981. However, the effect of the addi-tion on sales was offset by a 3%decline in average use per customer,which largely reflects greatercustomer energy conservation.Previously, in 1980, average use percustomer had declined 7%.

Operating expenses rose $ 14million, or 12%, primarily because ofan 11% increase in purchased gascost. On a unit basis, the cost ofpurchased gas was $2.82 per deka-therm which compares with $2.59in 1980.

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

45.2

48.3

83.9

97.7

100.2

106.7

122.6

131.0

136.2

157.0

Cost of Coal Used for GenerationCents per Million BTU

15

i

C

Environmental protection accountedfor many man-hours of work and

sizable expendituresin 1981. In thesephotos various tests, experiments

and analyses are conducted to assurethat environmental effects of the

Company's operations are minimized.

p

Market for Common Stock and RelatedSecurity Holder Matters

The Company's common stock is listed on the New York Stock Exchange. The number of stockholders of record

at January 20, 1982 was 71,464.

Price of Common StockNew York Stock Exchange Composite

1981

Dividends Paid1980 Per Share

High Low High Low 1981 1980

First quarter ............... $ 16 $ 137/e $ 17 $ 13'/e $ 47 $ 44

Second quarter ............ 16 14 17'/4 1 41/e .47 44

Third quarter 16'/4 14 17% 15'/4 .50 .47

Fourth quarter 157/e 14 16s/4 13e/e .50 .47

Dividend Limitations: After dividends on all outstanding preferred stock have been paid, or declared and funds set

apart for their payment, the common stock is entitled to cash dividends as may be declared by the Board of Directors

out of retained earnings accumulated since December 31, 1946. Such dividends are limited if Common Stock Equity

(39% at December 31, 1981) falls below 25% of total capitalization. Dividends on common stock cannot be paid unless

all sinking fund requirements of the preferred stock are met. The Company has not been restricted in the payment of

dividends on common stock by these provisions.

Coopers&Lybrand

certified pub!ic accountants

EEE

To the Stockholders and Board of DirectorsNew York State Electric & Gas CorporationIthaca, New York

We have examined the balance sheets of New York State Electric & Gas Corporation asof December 31, 1981 and 1980 and the related statements of income, retained earningsand changes in financial position for each of the three years in the period ended Decem-ber 31, 1981. Our examinations were made in accordance with generally accepted audit-

ing standards and, accordingly, included such tests of the accounting records and suchother auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financialposition of New York State Electric & Gas Corporation at December 31, 1981 and 1980and the results of its operations and the changes in its financial position for each ofthe three years in the period ended December 31, 1981, in conformity with generallyaccepted accounting principles applied on a consistent basis.

New York, New YorkJanuary 29, 1982

Balance Sheet

ASSETSUTILITYPLANT, at original cost (Note 1)

Electric .

GasCommon .

December 31

1981 1980(Thousands of Dollars)

$ 1,550,985129,49347,539

$ 1,469,836124,85045,762

New York State Electric & Gas Corporation

Less accumulated depreciation

Net utilityplant in serviceConstruction work in progress (Notes 8-10)

OTHER INVESTMENTS (Note 3)

1,728,017490,579

1,237,438663,695

1,901,133

20,045

1,640,448452,464

1,187,984476,793

1,664,777

21,261

CURRENT ASSETSCashSpecial depositsAccounts receivableFuel, at average cost .

Materials and supplies, at average costPre payments

7,2106,197

80,41531,51726,14812,079

163,566

6,92111,12871,18729,83624,58310,712

154,367

DEFERRED CHARGESFuel costs deferred (Note 1)Other

CAPITALIZATIONAND LIABILITIESCAPITALIZATION(Notes 4-7)

Capital stock and retained earningsPreferred stock redeemable solely at the option of the Company

. Preferred stock subject Io mandatory redemption requirements

Common stock equityCommon stockCapital in excess of par valueRetained earnings .

Total common stock equityLong-term debt

Total

CURRENT LIABILITIESSecurities to be redeemed or due within one year .Notes payable-commercial paper (Note 7)Accounts payable .

Dividends payabie on preferred stock .

Pensions accrued .

Taxes accruedInterest accruedOther .

DEFERRED CREDITSAccumulated deferred investment tax credit (Note 2)Other .........

21,88621,668

43,554

$2,128,298

$ 115,500

120,575

217,499234,746270,464

722,709

813,398

1,772,182

60,73735,00079,5564,896

13,30016,57020,96029,822

260,841

33,6955,251

19,14612,430

31,576

$ 1,871,981

$ 115,500

71,313

194,732208,629238,856

642,217

777,819

1,606,849

64,7376„800

56,0983,582

13,10016,78717,85020,517

199,471

29,6212,016

ACCUMULATEDDEFERRED FEDERAL INCOME TAX (Note 2)COMMITMENTSAND CONTINGENCIES (Notes 8 and 9)

38,946

56,329

$2,128,298

The accompanying notes shown on pages 21 through 28 are an integral part of the financial statements.

31,637 =

34,024

$1,871,981

18

New York State Electric & Gas Corporation

Statement of IncomeYears Ended Oecember 31

OPERATING REVENUESElectric .

Gas .

Total

OPERATING EXPENSES-Operation —fuel (Note 1)—otherElectricity purchased and interchangedGas purchasedMaintenance .

Depreciation .

Federal income tax (Note 2)Other taxes (Note 11)

Total

OPERATING INCOMEOTHER INCOME AND DEDUCTIONS

Allowance for other funds used during construction (Notes 1 and 8)Federal income tax credit (Note 2)Other-net

INCOME BEFORE INTEREST CHARGES

INTEREST CHARGESInterest on long-term debtOther interestAllowance for borrowed funds used during construction (Notes 1 and 8)

Interest charges —net

NET INCOMEPREFERRED STOCK DIVIDENDS

, EARNINGS AVAILABLEFOR COMMON STOCK

EARNINGS PER SHARE .

AVERAGE NUMBER OF SHARES OUTSTANDING .

1981

$609,178158,361

767,539

177,592108,294

7,029112,17651,61649,44843,84472,935

622,934

144,605

21,9229,471

(234)

175,764

151,40496,877(2,030)

100,89544,12147,48628,38263,552

530,687

114,627

21,02910,496

(266)

145,886

68,7739,987

(10,797)

67,963

107,80117,536

$ 90,265

$2.9530,586,063

61,2176,361

(9,896)

57,682

88,20414,567

$ 73,637

$2.7027,311,154

1980thousands of Dollars)

$506,502138,812

645,314

1979

$477,643110,568

588,211

142,14183,226

2,'62674,54240,56943,80727,16363,362

477,436

110,775

17,4869,815

93

138,169

55,3473,289

(7.856)

50,780

87,38914,117

$ 73,272

$2.8325,886,419

Statement of Retained Earnings

Balance, beginning of yearAdd net income

Years Ended December 31

1981 1980 1979(Thousands of Dollars)

$238,856 $214,310 $ 185,479107,801 88,204 87,389

346,657 302,514 272,868

Deduct cash dividendsPreferred stock (at serial rates)

Redeemable solely at the option of the CompanySubject to mandatory redemption requirements

Common stock ($ 1.94, $1.82 and $1.72 per sharein 1981, 1980 and 1979, respectively) .

Balance, end of year

7,7109,826

58,657

76,193

$270,464

7,7106,857

49,091

63,658

$238,856

7,7106,407

44,441

58,558

$214,310

The accompanying notes shown on pages 21 through 28 are an integral part of the financial statements.

19

New York State Electric & Gas Corporation

Statement of Changes in Financial PositionYears Ended December 31

SOURCE OF FUNDSNet incomeDepreciationAmortization of deferred chargesFederal income tax deferred —netInvestment tax credit deferred —net .

Allowance for funds used during construction

Funds from operationsProceeds from sale of first mortgage bonds .

Proceeds from sale of common stockProceeds from sale of preferred stockIncrease (decrease) in commercial paper .

Proceeds from contract settlement agreementDecrease (increase) in working capital*Proceeds from sale and leaseback of service centers

Total funds available

APPLICATION OF FUNDSAdditions to utilityplant .

Dividends on preferred stockDividends on common stockSecurities to be redeemed or due within one year .

Fuel costs deferredBonds reacquired for sinking fund

«'.Decrease (increase) in notes payable .

;.Other—net .

Total funds applied

INCREASE (DECREASE) IN WORKING CAPITALCURRENT ASSETS

:Cash .

:;Special deposits.Accounts receivable

'-. FuelMaterials and suppliesPrepayments .

Total increase in current assets

CURRENT LIABILITIESSecurities to be redeemed or due within one yearAccounts payableDividends payable on preferred stock ..........Taxes accruedInterest and pensions accruedOther

1981

$ 107,80149,448

6,14621,122

4,074(32,719)

155,872160,00050,60960,00028,20011,27123,971

$489,923

$265,54517,53658,65760,737

7,316

72,5007,632

$489,923

$ 289(4,931)9,2281,6811,5651,367

9,199

(4,000)23,458

1,314(217)

3,3109,305

1980thousands of Dollars)

$ 88,20447,486

3,30212,8227,813

(30,925)

128,702

48,416

(18,700)

46,5329,300

$214,250

$ 154,51614,56749,09164,737

2,5833,603

(74,500)(347)

$214,250

$ 1,336(402)

7,630(3,478)3,759

901

9,746

47,49311,585

(102)(4,504)1,215

591

1979

$ 87,38943,807

1,713(298)

11,048(25,342)

118,31750,000

7,24320,000(9,800)

(6,439)

$ 179,321

$ 145,92814,11744,44117,2443,600

(44,215)(1,794)

$ 179,321

$ 1,035'15

9,95114,4074,5521,009

31,569

7,1569,762

4124,0401,1232,637

Total increase in current liabilities* .

Increase (decrease) in working capital* .

'Exclusive of changes in commercial paper

33,170 56,278

$ (23,971) ~ $ (46,532)

25,130

$ 6,439

The accompanying notes shown on pages 21 through 28 are an integral part of the financial statements.

20

Notes to Financial Statements

1. Significant Accounting Policiesa. Accounting records

The Company maintains its accounting records inconformity with the uniform system of accounts pre-scribed by the Federal Energy Regulatory Commission(FERC) and the Public Service Commission of theState of New York (PSC).

b. UtilityplantCost of current repairs and minor replacements ischarged to appropriate operating expense and clearingaccounts; cost of renewals and betterments, in-cluding indirect costs, is capitalized. Original cost ofutility plant retired or otherwise disposed of and thecost of removal less salvage are charged to accumulateddepreciation.

c. Allowance for funds used duringconstruction (AFDC)

AFDC, a non-cash item, is shown on the Statement'of Income as AFDC-other funds and AFDC-borrowedfunds."AFDC is defined in the regulatory system ofaccounts as the net cost, for the period of construction,'fborrowed funds used for construction purposesand a reasonable rate on other funds when so used.(See Note 8.)

The Company capitalized AFDC on a compoundbasis, net of taxes, at rates of 7.5%%d, 8%%d and 8.7%%d for1979, 1980 and 1981, respectively. The Companyis allowed revenues equal to the federal income tax ef-fect of the interest on debt portion of AFDC.

AFDC was not recorded on construction work in prog-ress (CWIP) allowed in rate base which amountedto (1) $30 million for the first five months of 1979, (2)$31.4 million for August 1980 through June 1981,(3) $275 million for July 1981 through October 1981 and(4) $200 million for the last two months of 1981.

d. RevenueRevenues from the sale of electricity and gas arerecorded on the basis of meters read.

e. Retirement plansThe Company has noncontributory retirement annuityplans which cover all officers and substantially allemployees. Annuity plan costs are based on normalcosts and amortization of the unfunded liability. Theassumed rate of return used in determining actuarialpresent values of accumulated plan benefits was 6%%d,

and benefit information in the following table was

determined on January 1 of each year. The Company'spolicy is to fund pension costs accrued.

1981 1980 1979

(Thousands of Dollars)Provision for

pension cost...... $ 13,300 $ 13,100 $ 12,600Actuarial present

value of accumu-lated plan benefits:Vested ..........Non-vested......

Net assets availablefor benefits ....... 159,000 128,100 104,000

f. Deferred fuel chargesThe Company defers certain fuel and purchased gascosts which are subsequently billed to customersthrough adjustment clauses in rates.

g. DepreciationThe annual provision for depreciation is determined usingstraight-line rates, based on average service lives,applied to the original cost, by groups of depreciableproperty in service. Depreciation accruals wereequivalent to 3.2%%d of average depreciable property for1979 through 1981.

2. Federal Income TaxesFor federal income tax purposes the Company uses thesum-of-the-years digits depreciation method, theAsset Depreciation Range System (ADR) and effectiveJanuary 1, 1981, for property additions subsequentto 1980 it adopted the Accelerated Cost Recovery Sys-tem (ACRS) pursuant to the Economic Recovery TaxAct of 1981.

Prior to 1981, investment tax credits (ITC) based onthe Revenue Act of 1973 (4%%d) were reflected currentlyin income and were shared equally between stock-holders and customers for rate-making purposes. Theadditional 6/0 ITC derived from the Tax Reduction Actof 1975 are deferred. The Company has approximately$ 14,565,000 of unused ITC at December 31, 1981.

The PSC, in its October 1981 rate decision, requiredthat the ACRS reductions in taxes and all ITC (10/o)claimed on ACRS property subsequent to the rate order,be deferred. The PSC previously required that federalincome tax reductions arising from the use of ADR besimilarly deferred. These benefits are to be returnedto income over the book life of the applicable property.

Charged tooperations:Current ........Deferred —net...AFDC imputed

income taxbenefit ........

Investmenttax credits:Deferred ......Shared........

Included in otherincome:AFDC imputed'"'income tax. benefit ..........Investment tax.-, credits —shared .

.Amortization of

., ITC deferred in." prior years .....

"fax on other

$ 6,650 $ (2,600)* $ 6,58021,122 12,822 (298)

6,836 7,485 6,203

7,944 8,835 11,7641,292 1,840 2,914

43,844 28,382 27,163

(6,836) (7,485) (6,203)

(1,292) (1,840) (2,914)

(1,204) (1,022) (717)

. income ........ ~139) ~149) 19

~9,471) ~10,496) ~9,615)Total ......... $34,373 $ 17,886 $ 17,348

* This credit amount was due principally to the taxloss related to the abandonment of nuclear projectsproposed for New Haven and Jamesport (see Note 8).

In the July 1980 rate decision, the PSC allowedrevenues equal to the federal income tax effect of pensioncosts, insurance costs and all taxes charged to CWIPfor electric facilities only. Effective with the PSC's October1981 rate decision, the additional revenues will belimited to the federal income tax effect applicableto pension and insurance costs in excess of $6 million,which represents capitalized costs applicable tominor projects. The federal income tax benefit is recordedas a reduction of CWIP.

Federal income taxes for 1979 through 1981 are asfollows:

1981 1980 1979thousands of Dollars)

Federal income tax provisions for 1979 through 1981are substantially less than the amount obtained byusing the statutory rate due to the following:

1981 1980 1979tatuto rate ........... 46.0% 46.0% 46.0%S ry

Decrease:Excess of allowable taxdepreciation andamortization over bookamounts .............

Costs capitalized onbooks, expensed forincome taxes:AFDC................Taxes, pensions and

insurance ...........Investment

tax credits............Miscellaneous .........

Actualrate ..............

(4.7) (5.7) (6.3)

(10.6) (13.4) (1 1.1)

(.7) (3 0) (4 8)

(2 0) (3 4) (4 9)~3.8 ~3.6 ~2.324.2% 16.9% 16.6%

3. Other InvestmentsThe Company has entered into long-term contracts forthe supply of coal to the Homer City Generating Station,and in that connection, has agreed to make loans(maximum aggregate amount of $23,150,000 approvedby the PSC) to the mining companies. These loans($ 16,575,000 and $ 18,275,000 at December 31, 1981and 1980, respectively) were made on first mortgagenotes maturing December 31, 1982 which currentlybear interest at one-half percent above prime. TheCompany intends to seek PSC permission to extend thematurity date of these notes. The Company sold toChemical Bank 100% participations in these notes whichhave been recorded as long-term notes payable dueApril 5, 1986. The agreement with Chemical Bankrequires the Company to repurchase the participationsunder certain conditions.

The Company has established a wholly owned sub-sidiary, the Somerset Railroad Corporation (SRC), toconstruct rail facilities to the Somerset GeneratingStation. In addition to its investment of $200,000, theCompany has guaranteed SRC borrowings of $5 millionunder a bank line of credit.

22

4. Long-term DebtFirst mortgage bonds

Series10.60%

3 '/43%%

12 '/8%8*

4 ~/e%

3 7/e%

17 5/8%*

17 ~/8%"

14 '/z%*4 6/8%

Oct. 1, 1982May 1, 1984

Sept. 1, 1985Dec. 1, 1986May 1, 1987Feb. 1, 1988Mar. 1, 1989Mar. 1, 1990Jan. 1, 1991May 1, 1991

$ 50,00020,00015,00050,00025,00025,00050,00050,00060,00025,000

(Thousands of Dollars):

Due Amount8 ~/e%

5 6/e%

6 '/4%6 '/2%7 ~/8%

9 35%9 3/8%

9 3/e%7 '/4%6 '/8%8%%

June 1 ~1996

Jan. 1, 1997Sept. 1, 1997Sept. 1, 1998Nov. 1, 2001July 1, 2003Mar. 1, 2005Jan. 1, 2006

June 1, 2006Dec. 1, 2006Nov. 1, 2007

$ 50,00025,00025,00030,00050,00050,00075,00071,39712,00025,75060,000

Series Due Amount

Total first mortgage bondsNotes payable to banks due January 31, 1985 (Note 7)Participations in mining companies'otes (Note 3)Unamortized premium on debt .

Less debt due within one year—included in current liabilities

Total

$844-,1472,000

16,575676

863,39850,000

$813,398

*Issued 1981 **Issued 1979

ln 1982 the Company issued $61 million of 9'/4% unsecured three-year notes in connection with a tax-exempt

financing and $50 million principal amount of first mortgage bonds, 18% series, due 2012. At December 31, 198 I long-

term debt (exclusive of notes payable to banks) which will become due during the following five calendar years is:

1982 1983 1984 1985 1988

(Thousands of Dollars)$50,000 $2,397 $25,100 $20,100 $71,675

The Company's mortgage provides for a sinking and improvement fund. The provisions require the Company to

., make annual cash deposits with the Trustee equivalent to 1% of the principal amount of all bonds deliveredand,'authenticated by the Trustee prior to January 1 of that year (excluding any bonds issued on the basis of the

retirement of bonds). Pursuant to the terms of the mortgage, the Company has satisfied these requirements bycrediting "bondable value of property additions" against the amount of cash to be deposited.

Mandatory annual cash sinking fund requirements are $3,000,000 for the 93/8% series due 2006, $2,100,000begrinning July 1, 1984 for the 9.35% series, $600,000 beginning June 1, 2001 for the 7'/~% series and $250,000

beginning December 1, 1992 for the 6'/e% series. The amount increases to $500,000 and $750,000 on December 1,

1997 and December 1, 2002, respectively, for the 6T/8% series.The mortgage indenture secures the first mortgage bonds which constitute a direct first mortgage lien on

substantially all utility plant.

5. Common Stock and Capital in Excess of Par ValueAt December 31, 1981 common stock and capital in excess of par value were as follows:

Common stock, par value $6.66~/a a share, 60,000,000 shares authorized(shares issued: 2,500,000 in 1981 and in 1980 and 1,949,819 through theDividend Reinvestment and Stock Purchase Plan sinceJanuary 1, 1979)

Capital in excess of par value increased $26,117,000, $27,766,000 and$4,102,000 in 1981, 1980 and 1979, respectively, resulting from salesof the Company's common stock at amounts in excess of par value........

In February 1982 the Company sold 2,500,000 shares of common stock.

SharesD~ufsfandfn

32,624,755

Amount(Thousands~of Dollars

$217,499

$234,746

23

$ 104.00103.75101.00102.00102.00103.00 f102.00 J106.14103.94102.0027.2926.7626.2325.70

2/1/83Thereafter

3/1/863/1/91

Thereafter2/1/842/1/892/1/94

Thereafter

8.80'/o 100

8.48'/o 25

6. Preferred StockAt December 31, 1981 serial cumulative preferred stock was composed

Par

Redeemable

Series Share Prior to Per Share

Redeemable solely at the option of the Company:3 75o/o $ 1004 '/~o/o (1949) 1004 15'/o IOO4 400/0 1004.15/o(1954) 1006.48'/o 100

of the following:

SharesAuthorized(1)

andOutstanding

150,00040,00040,00075,00050,000

300,000

250,000

1,000,000

Amount(Thousandsof Dollars)

$ 15,0004,0004,0007,5005,000

30,000

25,000

25,000

Subject to mandatory4 500/08.25'/o**9 000/

15 ~/8'/o*

8 50o/9.10'/o

15 '/o*

Total

redemption100100100100

252525

requirements:(2)(3)

1/1/83(2)10/1/82(4)4/1/86(5)7/1/82(6)7/1/84(7)1/1/87(8)

105.25109.00106.50115.3825.0028.7528.75

6,125200,000267,000300,000360,000600,000

1,200,000

$ 115,500

$ 61220,00026,70030,000

9,00015,00030,000

131,31210,737

5.00 4/1/96

Less sinking fund requirements at par value—included in current liabilitiesTotal $ 120,575

21. *Issued 1981 **Issued 1979

At-December 31, 1981 redeemable preferred stock sinking fund requirements for the following five calendar years are:

1982 1983 1984 1985 1986(Thousands of Dollars)

$ 10,740 $ 1,740 $ 1,740 $24,740 $4,740

(1) At December 31, 1981 there were 1,250,000 shares of $ 100 par value preferred stock, 3,600,000 shares of $25par value preferred stock and 1,000,000 shares of $ 100 par value preference stock authorized but unissued.

(2) Each of the following series of preferred stock is not redeemable prior to the date designated, through certainrefunding operations, but otherwise is redeemable at the indicated price per share prior to the indicated date.The indicated price per share will be reduced either (A) annually or (B) at five-year intervals by the reductionamount. As of the redemption at par date and thereafter, the redemption price will be at par. By the redemptiondate, the Company must set aside the amount required to redeem at par all shares outstanding.

Date Indicated Indicated Reduction Redemption RedemptionSeries ~Desi nated Price Date Amount at Par Date8.25 /o 1/1/85 $ 109.00(A) 1/1/83 $ 1.00 1/1/85 3/28/859.00/o 10/1/86 106.50(A) 10/1/82 .50 10/1/94 9/30/96

15 /8/o 4/1/86 115.38 4/1/86110.00(B) 4/1/91 4/1/06

9.1 0 /o 7/1/84 28.75 7/1/8425.65(A) 7/1/85 .16 7/1/88 7/1/89

15 '/o I/1/87 28.75(B) 1/1/87 1.25 1/1/97 1/1/1 1

24

(3) By March 31, in each year 1982 through 1988, the Company must redeem at $ 103.25 per share 875 shares of the

4.50% Series. Since 1979, 875 shares have been reacquired and canceled annually.

(4) By September 30, in each year 1982 through 1995, the Company must redeem at par 16,500 shares of the

9.00% Series. Since 1980, 16,500 shares have been reacquired and canceled annually.

(5) By April 1, in each year 1987 through 2006, the Company must redeem at par 15,000 shares of the 15'/8% Series.

(6) By July 1, 1982 the Company must redeem at par 360,000 shares of the 8.50% Series. Since 1980, 120,000shares have been reacquired and canceled annually.

(7) By July 1, in each year 1985 through 1989, the Company must redeem at par 120,000 shares of the 9.10%Series.

(8) By January 1, in each year 1987 through 2011'he Company must redeem at par 48,000 shares of the 15%

Series.

1981

7. Bank Loans and Other BorrowingsThe Company has revolving credit agreements with banks (see Note 4) which provide for borrowing, at prime, up to$ 100 million through January 31, 1985 and payment of annual commitment fees of approximately three-eighthspercent on the unborrowed amount. The loan agreements do not require compensating balances, but balancesgenerally have averaged ten percent of the available line of credit during 1981. A substantial portion of thesebalances represents normal working account funds. Interim financing in the form of short-term borrowings on commer-cial paper is utilized to finance construction expenditures. The Company also has agreements with three bankswhich provide for borrowing, at prime, up to $30 million through November 30, 1982.

Information relative to short-term borrowings is as follows:Commercial Pa er ~N

1981 1980 1979

(Thousands of Dollars)Ending balance $35,000 $ 6,800 $25,500 $Maximum amount outstanding ..... $99,100 $73,500 $72,000 $60,000Average amount outstanding(1).... $40,600 $42,500 $22,500 $ 10,400

'Weighted average interest rate:., On ending balance............. 13.4% 17.5% 13.5%'uring the period(2) ............ 16.5% 12.8% 11.6% 17.0%

(1) Calculated as the average of the sum of daily borrowings.(2) Calculated by dividing total interest expense by the average of the sum of daily borrowings.

,'8. Abandoned Projects —New Haven and JamesportThe Company and Long Island Lighting Company have been denied certain regulatory approvals to construct, on a

joint venture basis, nuclear generating facilities near New Haven, N.Y. and Jamesport, N.Y. The New York StateBoard on Electric Generation Siting and the Environment (Siting Board) granted the companies a Certificate of Environ-mental, Compatibility and Public Need (Certificate) for one 800,000-kw coal fired generating unit near Jamesport.The'Company has notified the Siting Board that it will not accept the Certificate and that it has decided to terminateits participation in the Jamesport project.

The Company has filed petitions with the PSC requesting authorization to (1) continue to accumulate AFDC on its

share of costs until amortization of such costs commences to be recovered in rates, (2) amortize the investmentsthrough rates and (3) include in rates appropriate carrying charges on the unamortized balances. The Companyis planning to file applications with the FERC requesting authorization to continue to accumulate AFDC in the samemanner as requested in the petitions to the PSC.

PSC proceedings are continuing in connection with the New Haven petition. The PSC has authorized the Company tocontinue to accrue and accumulate AFDC on the nuclear related costs of the Jamesport project until a decisionis made with respect to the prudence and disposition of the nuclear costs. If the requests to the PSC or to the FERC

to continue to accumulate AFDC are denied, the Company may have to reverse certain accruals of AFDC previouslyrecorded. If the request to amortize the investments is denied and alternative regulatory relief is not granted, theCompany would have to charge income with the project costs, net of the federal income tax effect.

The Company's net income for 1981 includes $4 million of AFDC attributable to the New Haven project and $5 millionof AFDC attributable to the Jamesport project. As of December 31, 1981, the Company had expended, includingAFDC, approximately $44 million for the New Haven project and $60 million for the Jamesport project. The Companyexpects to incur additional expenditures in connection with the cancellation of the Jamesport nuclear units.

9. CommitmentsThe Company estimates that 1982 costs for the construction program will approximate $602 million. The programis subject to periodic review and revision, and actual construction costs to be incurred may vary because of revisedload estimates, imposition of additional regulatory requirements and the availability and cost of capital. (See Note 10.)

25

10. Jointly Owned Generating StationsThe Company has an undivided 50% interest in the output and costs of three generating units comprising the Homer.City Generating Station. The station is owned with Pennsylvania Electric Company which also operates thefacility. The Company's share of the rated capability is 944,000-kw and its net utility plant investment is $274 million,which includes $30 million of CWIP. The accumulated provision for depreciation as of December 31, 1981 was$55 million. The Company's share of operation and maintenance expense of the station is reflected in the Statementof Income.

The Company also has an undivided 18% interest in the 1,084,000-kw Nine Mile Point nuclear generating unit No. 2(Unit) being constructed by Niagara Mohawk Power Corporation (Niagara Mohawk) near Oswego, N.Y. In early1980 the co-tenants having an interest in the Unit (Co-tenants) engaged independent engineering and managementconsulting firms to perform a review of the Unit's estimated cost and scheduled in-service date, together withengineering, construction and management systems. Also, a reassessment was conducted by Niagara Mohawk andStone & Webster, the architect-engineer and construction agent. As a result of those reviews, a $2.4 billionrevised cost, exclusive of AFDC and nuclear fuel, and a rescheduling of the operation date from 1984 to late 1986were announced in September 1980. The Company's share of the construction cost, including AFDC, is now estimatedat $712 million. The Company's investment of $235 million, excluding nuclear fuel costs, is included in CWIP atDecember 31, 1981.

During 1980 the PSC directed Theodore Barry and Associates and Canatorn Limited to perform a comprehensivemanagement audit covering essentially the same areas as the review commissioned by the Co-tenants, and areport thereon (TB&AReport) was issued in July 1981. The TB&AReport stated that the planned 1986 completion dateis possible, but that a likely one-year slippage in schedule, new regulatory requirements, higher escalation andAFDC could significantly increase the Unit's cost.

In July 1981, various parties petitioned the PSC to establish a public evidentiary proceeding to consider the futureof the Unit. In September 1981, the PSC Staff issued a report on a comparative analysis of the economic andfinancial feasibility of the Unit and coal alternatives which concluded that completion of the Unit is warranted. InSeptember 1981, the PSC established a proceeding to inquire into the financial and cost implications of completingthe Unit. Hearings were completed in December.

Event subsequent to the date of the'auditors'pinionAt'a February 9, 1982 meeting the PSC stated its consensus that completion of the Unit is warranted and that no basisexists at this time to take further action regarding abandonment of the Unit. The PSC also concurred with the PSCStaff recommendation that the Co-tenants must emphasize their attention to the control of the Unit's cost and the con-struction schedule to minimize the impact on ratepayers and indicated its intention to monitor closely all constructionactivities. In addition, the PSC decided to explore the feasibility of instituting a yet undefined incentive program thatcould cause the return on the equity portion of the investment in the Unit to vary depending on a variety of itemsrelated to the Unit's ultimate cost and completion date. A formal PSC decision is expected upon completion of its re-view of the feasibility of instituting an incentive program. The Company is unable to predict what recommendationsor:actions may arise as a result of this review or what further actions, if any, may be brought by the intervening parties.

Real estate and personal property.Franchise and gross receiptsMiscellaneous

Total-charged principally to tax expense

11. Supplementary Income Statement InformationCharges for maintenance, repairs and depreciation, other than those set forth in the Statement of Income, were notsignificant in amount. Taxes, other than payroll and federal income taxes, are classified as follows:

1981 1980 1979thousands of Dollars)

$33,640 $29,622 $26,77333,575 28,652 31,633

4,556 3,690 3,098$71,771 $61,964 $61,504

26

12. Industry Segment InformationCertain information pertaining to the electric and gas operations of the Company is as follows:

1981 1980

Electric Gas Electric Gas Electric

(Thousands of Dollars)

1979Gas

$ 110,568103,701

6,8673,128

$ 158,361150,086

8,2753,794

$ 138,812133,082

5,7303,353

4,3487,927259,065 6,480

97,538103,302

Dec

Operating:Revenues ........... $ 609,178 $ 506,502 $ 477,643Expenses ........... 472,848 397,605 373,735Income ............. 136,330 108,897 103,908

Depreciation* .......... 45,654 44,133 40,679Construction

expenditures ........ 146,589 141,580Identifiable

assets**............. 1,894,367 106,165 1,654,492 1,532,984*Included in operating expenses.

**Corporate assets ($127,766, $ 114,187 and $ 107,001 at December 31, 1981, 1980 and 1979, respectively) consist

primarily of cash, special deposits, accounts receivable, prepayments and unamortized debt expense.

13. Quarterly Financial Information (Unaudited)The following is a summary of quarterly results of Company operations as previously reported to stockholders:

Quarter Ended

March 31 June 30 Sept. 30 . 31(Thousands)

1981Operating revenues .

Operating income .

Net income„,Earnings available for common stock ..

. Earnings per share (in dollars) ........; Average shares outstanding...:......

1980" Operating revenues'perating income

- Net income .

~ Earnings available for common stock ..'-.Earnings per share (in dollars)........

~:"-'~Average shares outstanding..........

$220,705$ 36,832$ 30,110$ 26,528

$ .9029,323

$ 192,070$ 32,933$ 26,434$ 22,751

$ .8726,185

$ 173,281$ 28,498$ 22,661$ 18,273

$ .6229,558

$ 149,122$ 26,602$ 19,790$ 16,107

$ .6126,314

$ 168,365$ 35,628$ 22,532$ 17,862

$ .5830,920

$ 135,180$ 28,047$ 22,390$ 18,771

$ .6827,613

$205,188$ 43,647$ 32,498$ 27,602

$ .8532,505

$ 168,942$ 27,046$ I9,590$ 16,008

$ .5529,109

14. Supplementary Information to Disclose the Effects of Changing Prices (Unaudited)The following presentation is intended to show certain information about the impact of inflation on the Company'sfinancial operations. The information was developed using assumptions and estimates and therefore should not beviewed as precise indications of the effects of inflation.

Constant dollar amounts represent historical costs stated in terms of dollars of equal purchasing power, as measured

by the Consumer Price Index for all Urban Consumers (CPI-U). Current cost amounts reflect the changes in

specific prices of utility plant from the date the plant was acquired to the present. The current cost of utility plantrepresents the estimated cost of replacing existing utility plant assets and was determined primarily by indexingexisting plant by the Handy-Whitman Index of Public UtilityConstruction Costs. The provisions for depreciation on

the constant dollar and current cost amounts of utility plant were determined by applying the Company'sdepreciation rates to the indexed plant amounts.

Under the rate-making processes to which the Company is subject, only the historical cost of utility plant isrecoverable in revenues. Therefore, the excess of the cost of utility plant stated in terms of constant dollars or currentcost over the historical cost of plant is not presently recoverable in rates as depreciation and is reflected as areduction to net recoverable value. While the rate-making process gives no recognition to the cost of replacing utilityplant, based on past practices the Company believes it will be allowed to earn on the increased cost of its netinvestment when replaced.

To properly reflect the economics of rate regulation, the reduction of utility plant to net recoverable value should beoffset by the purchasing power gain on net amounts owed. The gain from the decline in purchasing power ofnet amounts owed is primarily attributable to the substantial amount of debt which has been used to finance utilityplant. Since the depreciation on this plant is limited to the recovery of historical costs, the Company does not have

the opportunity to realize a holding gain on debt and is limited to recovery of only the embedded cost of debt capital.

27

Income from Continuing Operations Adjusted for Changing PricesAvera e 1981 Dollars

Constant CurrentDollar Cost

(Thousands-except per share data)erations, as reported $ 107,801 $ 107,801eciation expense ~58,138) ~69,530erations . $ 49,663" $ 38,271

Income from continuing opAdjustment to restate deprIncome from continuing op

Income from continuing operations per common share(after preferred stock dividends)

Increase in specific prices of utilityplant held during the year** ..Less increase in general price level..........................

Net change .......Reduction of utilityplant to net recoverable value

$ .68$ 1.05"

$ 291,494266,320

$ 25,174

$ 110,560~$ 96.778)

Operating revenuesAs reported . $767,539In 1981 purchasing power ......... $767,539

Income from continuing operationsAs reported . $ 107,801

~ - Constant dollar basis*" ............ $ 49,663Current cost basis ................ $ 38,271

Income from continuing operations per.common share (after preferred stock

":.dividends)As reported . $2.95Constant dollar basis** ............ $ 1.05Current cost basis ................ $ .68

Net assets at year-end at netrecoverable value

As reported .

Constant dollar and current cost ....Reduction of utility plant to net

recoverable valueConstant dollar basis $ 96,778Current cost basis ................ $ 110,560

Net change in value of utility plantheld during the year $ (171,793)

Purchasing power gain onnet amounts owed $ 114,534

Cash dividends per common shareAs reported . $ 1.94In 1981 purchasing power ......... $ 1.94

Market price per common shareat year-end

As reported.......... $ 15.00 $ 14.88In 1981 purchasing power ......... $ 15.00 $ 16.42

Average CPI-U 272.4 246.8

*Allconstant dollar and current cost data for 1979 and 1980 have been"*Excludes the reduction of utility plant to net recoverable value.

"**The Financial Accounting Standards Board does not require the calculato 1979, nor is the data readily available.

$ 645,314$ 712,251

$ 588,211 $532,171$ 737,022 $741,880

$459,452$689,558

$ 87,389 $ 70,563$ 62,742 .

"*"

$ 44 798

$ 88,204$ 44,810$ 32,111

$ 59,945 ~

$2.70$ 1.05

$ .58

$2.46$2.83$ 1.74$ 1.05

$2.21

$838,209 $ 757,717 $ 684,863 $648,906 $558,450$809,674 $ 836,313 $ 858,126

$ 182,210$ 39,449

$ (124,817)

$ 126,645

$ 154,662$

$ 25,174

$ 85,602

$ 1.82$2.01

$ 1.60$2.40

$ 1.72$2.16

$ 1.68$2.34

$ 15.75 $16.88$ 19.73 $23.53

217.4 195.4

restated to average 1981 dollars.

$ 19.13$28.71

181.5

tion of inflation-adjusted data for years prior

*After the reduction of utility plant to net recoverable value, income from continuing operations on a constant dollarbasis would change to a loss of $47,115 or $2.11 per average common share.

**AtDecember 31, 1981, current cost of net utility plant was $3,300,210, while net recoverable value at historical costwas $ 1,901,133.

Five-Year Summary of Selected Financial Data Adjusted for Changing Prices1981 1980* 1979* 1978 1977

(Thousands-except per share data)

28

'Selected Financial Data"I

Operating revenues .............Net incomeEarnings per share ..............Dividends paid per share ........Average shares outstanding ......Interest chargesAFDC-other and borrowed fundsDepreciationOthertaxesUtilityplant additions ............Total assetsLong-term obligations and

redeemable preferred stock ....

1981

$ 767,539$ 107,801

$2.95$ 1.94

30,586$ 78,760$ 32,719$ 49,448$ 72,935$ 265,545$2,128,298

1980 1979 1978

(Thousands —except per share data)$ 645,314 $ 588,211 $ 532,171$ 88,204 $ 87,389 $ 70,563

$2.70 $2.83 $2.46$ 1.82 $ 1.72 $ 1.68

27,311 25,886 23,393$ 67,578 $ 58,636 $ 57,639$ 30,925 $ 25,342 $ 16,655$ 47,486 $ 43,807 $ 41,462$ 63,552 $ 63,362 $ 57,064$ 154,516 $ 145,928 $ 143,229$ 1,871,981 $ 1,737,523 $ 1,603,425

1977

$ 459,452$ 59,945

$2.21$ 1.60

21,208$ 49,129$ 25,363$ 34 544$ 50,645$ 158,493$ 1,489,862

$ 933,973 $ 849,132 $ 844,214 $ 772,134 $ 733,336

Ilanagement's Discussion and Analysis ofFinancial Condition and Results of Operations

The Company is constructing a wholly owned 625,000-kwcoal fired generating unit (Somerset Generating Sta-tion) and associated rail facilities near Somerset, N.Y.,scheduled for service in late 1984. The current estimatefor the cost of the plant is $ 1,072 million, of whichapproximately $352 million will be spent in 1982. TheCompany also has an undivided 18% interest in the1,084,000-kw Nine Mile Point nuclear generating unitNo. 2 (Unit) being constructed by Niagara Mohawk PowerCorporation near Oswego, N.Y. The Company's share

'of the construction cost, including allowance for fundsused during construction (AFDC), is estimated at$712 million and its investment of $235 million, excludingnuclear fuel costs, is included in construction work inprogress (CWIP) at December 31, 1981. (See Note 10.)

The Company's construction program, includingAFDC, is currently estimated to cost $602 million, $563million and $368 million for the years 1982, 1983 and1984, respectively. Included in the three-year program is$886 million for the Somerset Generating Station

and associated rail facilities and $307 million, includingnuclear fuel, for the Unit. The construction programis under continuing review and is revised from time to timein light of the Company's financial condition, loadforecasts, the availability and cost of capital, licensingdecisions, regulatory requirements, inflation andother factors.

The Company anticipates that to finance its construc-tion program through 1984, approximately 70% ofthe funds required will be raised through the issuanceof securities. The nature, amounts and timing offuture financings will depend in part on the level of con-struction, load growth, the timeliness and adequacyof rate relief, the availability and cost of capital and thecontinuing ability of the Company to meet its propertyadditions and interest coverage requirements underits Mortgage and preferred stock dividend coveragerequirements in its Certificate of Incorporation.

A $ 115,610,000 increase in the cost of fuel for electricgeneration, power purchased and interchanged and

29

in the cost of gas purchased, which was recoveredthrough the fuel and gas adjustment clauses, and a$96,806,000 increase in electric and gas rates accountedfor 90/0 of the Company's $235,368,000 increasein operating revenues over the past three years. Thebalance is chiefly attributable to kilowatt-hour sales,which increased 5%%d, and unit sales of gas, whichincreased 2/o.

During the same period operating expenses increased$ 193,725,000, or 31/o, principally as a result of in-creases in (a) fuel and natural gas purchased costs($107,488,000), (b) wages, materials and supplies usedin operations ($46,916,000) and (c) federal incometaxes ($27,494,000).

Increased AFDC rates and higher levels of CWIPresulted in a $ 1 6,064,000 increase in AFDC during thethree-year period. Interest charges before the reductionfor AFDC-borrowed funds increased 37/o ($21,121,000)due to increased borrowings at higher interest ratesto finance the Company's construction program.

Earnings available for interest charges provided 2.48times the interest on the Company's first mortgagebonds for 1981. This calculation is based on the provi-sion stated in the Company's Mortgage and compareswith 2.69 in 1980 and 2.54 in 1979. The Mortgagecontains a requirement, subject to certain exceptions,that first mortgage bonds may be issued only if netearnings, as defined, are at least 2.0 times the annualinterest charges on bonds outstanding and to be

-, outstanding. Earnings available for interest charges and- preferred stock dividends provided 1.70 times theinterest and dividends on preferred stock in 1981. Thiscalculation is based on the provision stated in theCompany's Certificate of Incorporation and compares to1.72 and 1.85 for 1980 and 1979, respectively. TheCertificate of Incorporation contains a requirement that

, preferred stock may be issued only if net earnings,as defined, are at least 1.5 times the annual interestcharges on all outstanding indebtedness plus the annualdividend requirements on preferred stock outstandingand to be outstanding. These coverages will vary infuture years depending on decisions in rate cases andon the need for external funds to finance the Company'sconstruction program.

Earnings available for common stock were$90,265,000, or $2.95 per share in 1981, compared with$73,637,000, or $2.70 in 1980 and $73,272,000, or$2.83 in 1979. Average shares outstanding were30,586,063 in.1981, 27,311,154 in 1980 and 25,886,419in 1979. Return on average common equity was13.4%%d in 1981, 12.3/. in 1980 and 13.4%%d in 1979. Theincrease in 1981 earnings was principally due to rateincreases received in June and October.

On October 20, 1981, the Public Service Commissionof the State of New York (PSC) issued a rate decisionapproving $ 124,500,000 in added electric revenues, a

22.2/o increase, and $8,800,000 in added gas revenue,a 5%%d increase. The electric increase includes $45million allowed on a temporary basis in June. The higherrevenues are approximately 87/o of the amountsoriginally requested and are designed to produce a 17 0

return on common equity. The increases becameeffective on October 25, 1981 and allowed the inclusioof $200 million of CWIP in rate base.

On February 18, 1982, the Company applied for increased electric and gas rates. The requested increasein annual electric and gas revenues are $ 148,928,000and $4,924,000, respectively, based on a projectedtest year ending December 31, 1983, the inclusion inrate base of $450 million of CWIP and the recovery overa ten-year period of the expenditures related to theterminated New Haven and Jamesport projects. Therequested increases are designed to produce a 17.5%%d

return on common equity. The PSC is not expectedto reach a final decision on this rate application untilJanuary 1983. The Company has no assurance thatsuch higher rates will be granted.

The Company's funds requirements were providedby the following sources:

OperationsSecurities sales

BondsPreferred stockCommon stock

Notes payableBank loansCommercial paper

Contract settlementagreement

Sale and leasebackof service centers

1981 1980 1979(Thousands of Dollars)

$ 155,872 $ 128,702 $ 118,317

160,00060,00050,609

28,200

11,271

48,416

74,500

50,00020,000

7,243

44,215

9,300$465,952 $260,918 $239,775

In 1982 the Company will be required to raise externalfunds of approximately $470 million. This externalfunds requirement is needed for the construction programand to supply the $60,737,000 needed for refundingand sinking fund requirements on first mortgage bondsand preferred stock. In 1982 the Company issued$61 million of 9'/4/o unsecured three-year notes in con-nection with a tax-exempt financing, $50 millionprincipal amount of first mortgage bonds, 18/o series due2012 and 2,500,000 shares of common stock.

Management has provided supplementary informationto disclose the effects of changing prices in Note 14.

30

4

Financial andOperating Statistics

SUMMARYOF EARNINGS

OPERATING REVENUESElectricGas .

Total .

OPERATING EXPENSES

Operation —fuel—otherElectricity purchased and

interchangedGas purchasedMaintenanceDepreciationFederal income taxOthertaxes

Total .

OPERATING INCOME ........OTHER INCOME,

AND DEDUCTIONSAllowance for other funds

s~ used1during construction .

Federal:income tax credit ...Other, stet

4iNCOME BEFOREINTEREST CHARGES ......

INTEREST CHARGESInterest on long-term debt .....Other Ir)terestAllowance for borrowed funds

used during construction ....Interest charges —net .....

NET INCOMEPREFERRED STOCK

DIVIDENDS

EARNINGS AVAILABLEFORCOMMON STOCK ............

.COMMON STOCK DIVIDENDS ...RETAINED EARNINGS ..........

1981 1980

$609,178158,361

$506,502,.138,812

767,539 645,314

1979 1978 1977

(Dollars in Thousands)

$477,643 $433,774 $374,456110,568 98,397 84,996

588,211 532,171 459,452

1976 1971

$330,87077,397

$176,57444,488

408,267 221.062

177,592108,294

7,029112,17651,61649,44843,84472,935

151,40496,877

(2,030)100,895

44,12147,48628,38263,552

142,14183,226

2,62674,54240,56943,80727,16363,362

118,384. 74,465

19,05963,89638,52941,46216,35057,064

87,18167,544

46,59956,28433,70934,544

33050,645

72,62160,132

33,67947,94429,75732,589

7,75144,296

32,20532,574

15,29326,45517,29424,118

1,82525,608

622,934 530,687 477,436 429,209 376,836 328,769 175,372

144,605 114,627 110,775 102,962 82,616 79,498 45,690

21,9229,471

(234)

21,02910,496

(266)

17,4869,815

93

10,6598,383

202

14,056 7,803 9751,255 1,166(160) (158) 109

175,764 145,886 138,169 122,206 97,767 88,309 46,774

68,7739,987

61,2176,361

55,3473,289

52,3375,302

45,1194,010

39,7122,673

20,877653

(10,797) (9,896) (7,856) (5,996) (11,307) (5,961) (796)

57,682 37,822

59,945

13,094

67,963

107,801

17,536

90,26558,657

36,424 20,73450,780

87,389

14,117

73,27244,441

51,64326,04051,88588,204

14,567

73,63749,091

70,563

13,090

57,47338,732

10,465 5,205

20,83517,145

46,85133,564

41,42028,375

$ 31,608 $ 24,546 $ 28,831 $ 18,741 $ 13,287 $ 13,045 $ 3,690

Average number of shares ofcommon stock outstanding(thousands) .

Earnings per average share ...Dividends paid per share .....

30,586$2.95$ 1.94

27,311

$2.70$ 1.82

25,886 23,393 21,208 18,181 12,365

$2.83 $2.46 $2.21 $2.28 $ 1.68

$1.72 $1.68 $ 1.60 $ 1.60 $ 1.39

Financial Statistics

INCOME STATISTICS:Return on average common

stock equity—percent .....Mortgage bond interest—times earned ...........Interest charges and

preferred dividends—times earned ...........Average common stock

equity per share ..........PROPERTY, PLANT

AND EQUIPMENT:ElectricGasOther

Total

. ACCUMULATEDDEPRECIATION ............

CAPITALIZATION:Long-term debt

'referred stock.........Common stock equity ...

Total capitalization ..CAPITALIZATION'ATIOS (percent):

Long-term debtPreferred stock .........Common stock equity ...

NOTES PAYABLE:Bank loansCommercial paper ......

Total .

NUMBER OFSTOCKHOLDERS:Common stock ..........Preferred stock ..........

PAYROLL (includingpensions, etc):Charged to operations ...Charged to construction

and other accounts ....Total .... ..........

1981

13.4

2.8

1.9

$22.01

$2,209,278133,15649,278

$2,391,712

$ 490,579

$ 863,398246,812722,709

$ 1,832,919

,47.113.539.4

$ 2,00035,000

$ 37,000

71,4645,932

$ 83,044

44,504

$ 127,548

1980 1979 1978 1977

(Dollars in Thousands)

1976 1971

12.3

2.6

13.4 11.8

2.6 2.5

10.9

2.5

1 1.4

2.6

1.9 2.0 1.8 1.8 1.8 1.8

$21.92 $21.17 $20.82 $20.17 $ 19.96 $ 18.33

$ 1,942,378127,45647,407

$ 1,787,229120,76040,910

$1,659,928117,16840,584

$ 1,520,410114,07638,597

$ 1,353,604111,06236,743

$2,117,241 $ 1,948,899 $ 1,817,680 $1,673,083 $ 1,501,409

$795,04994,56720,818

$910,434

$ 452,464 $ 411,742 $ 376,933 $ 350,014 $ 324,852 $217,597

$ 837,819 $ 780,671191,550 196,287642,217 569,363

$ 721,347176,375533,406

$ 677,961176,463442,950

$ 595,026176,543393,184

~~

$394,79291,957

227,446$ 1,671,586 $ 1,546,321 $ 1,431,128 $ 1,297,374 $ 1,164,753 $714,195

50.111.538.4

50.512.736.8

50.412.337.3

52.313.634.1

51.115.133.8

55.312.931.8

$ 74,500 $ — $6,800 25,500 35,300

$ 81,300 $ 25,500 $ 35,300

$ 21,00059,500

$ 80,500

$ 15,000 $'40,500 4 000

$ 55,500 $ 4,000

70,7376,083

67,0146,308

64,5796,503

51,5806,544

45,1466,591

25,0333,605

$ 73,442 $ 66,611 $ 58,186 $ 55,639 $ 51,175 $ 28,594

43,046 41,664 40,179 37,518 34,419 18,176

$ 116,488 $ 108,275 $ 98,365 $ 93,157 $ 85,594 $ 46,770

Number of employeesend of year ......... 4,307 4,310 4,200 4,215 4,202 4,170 3,785

32

Electric Sales Statistics1

1981 1980 1979 1978 1977 1976 1971

Kwh Sales (millions):Residential .

CommercialIndustrial .

Public authoritiesOther electric utilities

Total .

4,4292,5162,8451,218

8

11,016

4,3252,4852,7691,163

16

4,3292,4552,8431,152

10

4,2972,4382,6321,125

23

4,2032,3702,5151,123

27

10,758 10,789 10,515 10,238

4,0932,3222,3691,112

25

9,922

3,1251,7002,045

8811,296

9,047

Operating Revenues (thousands):Residential .

CommercialIndustrialPublic authoritiesOther electric utilities ..............Other operating revenues ..........

Total operating revenues

'Operating Revenues per kwh (cents):- Residential, Commerciali, Industrial

Public authoritiesOther electric utilities .....

Average revenue per kwh ......

$271,335142,643121,61864,113

3019,168

$226,867119,54598,97653,139

4677,508

$215,504111,29294,01349,802

3016,731

$197,024103,19281,33245,679

4386,109

$ 168,04189,89970,00940,776

4475,284

$151,79079,85758,09535,808

4144,906

$ 80,35035,53624,70517,14115,8093,033

6.135.674.275.263.76

5.53

5.254.813.574.572.92

4.71

4.984.533.314.323.01

4.43

4.594.233.094.061.90

4.13

4.003.792.783.631.66

3.66

3.71 2.573.44 2.092.45 1.213.22 1.951.59 1.22

3.33 1.95

$609,178 $506,502 $477,643 $433,774 $374,456 $330,870 $176,574

'Number of Customers (average for year):ResidentialCommercial .

IndustrialOther

Total

599,11758,164

1,3489,684

586,66556,568

1,2909,396

578,98255,725

1,2989,226

571,70155,113

1,2849,042

564,50254,808

1,2798,633

593,32157,174

1,3199,554

513,18751 ~

1921,2177,577

668,313 661,368 653,919 645,231 637,140 629,222 573,173

Annual Average Use (kwh):Residential .

Commercial .

Industrial (thousands) ...

7,39343,257

2,111

7,28943,464

2,099

7,37943,399

2,204

7,42243,751

2,028

7,35243,003

1,959

7,25242,366

1,852

6,08933,208

1,680

'Annual Average Bill:Residential .

Commercial .

Industrial

$ 4532,452

90,221

$ 3822,091

75,039

$ 367 $ 340 $ 294 $ 269 $ 1571,967 1,852 1,631 1,457 694

72,878 62,659 54,524 45,422 20,300

Electric Operating Statistics

1981 1980 1979 1978 1977 1976 1971PRODUCTION DATA:System Capability (megawatts):

Net generating capability:SteamHydroInternal combustion ..........

TotalPurchased —Power Authority ....—Other .............

Total system capability .....Annual Load Factor (percent) .....Coal Burned (thousands of

net tons)Coal Heat Value (Btu per lb.) ......Btu per Kwh Generated (net) ......Kwh Production —net (millions):

. Generated-PurchasedInterchanged

Total

Production Expenses (thousands):Generated

. PurchasedInterchanged (net) .............

Total

Production Costs per Kwh (mills):GeneratedPurchased ~

Total incl. interchange .....ELECTRIC OPERATION AND

MAINTENANCEEXPENSES(thousands):ProductionTransmissionDistributionCustomer accounting .........Customer serviceAdministrative and general

Total .

1,7203811

1,769764242

2,775

64.4

4,86711,60010,701

10,7622,419(923)

12,258

1,7453811

1,794774250

2,818

67.1

4,72411,53710,639

10,4493,127

(1,408)

12,168

1,7343814

1,786680200

2,666

65.2

4,74811,37810,582

10,4302,765

(1,082)

12,113

1,7283814

1,780712100

2,592

63.6

4,43011,14110,744

9,3503,282

(909)

11,723

1,5273814

1,579824100

2,503

62.9

3,72011,05611,145

7,6063,509

201

11,316

1,3773814

1,429848200

2,477

61.0

3,39511,12311,112

7,0464,383

(298)

11 ~ 131

1,3543814

1,406541

1,947

63.8

3,21411,35310,879

6,9203,101

(47)

9,974

$216,80547,140

(40,111)

$ 185„199 $171,079 $148,285 $ 110,44847,202 35,757 37,297 39,670

(49,231) (33,131) - (18,238) 6,929

$ 91,72434,926(1,247)

$45,034'5,486

(193)

20.1519A9

18.26

17.7215.09

15.05

16 4012.93

14.34

15.8611.36

14.27

14.5211.30

13.88

13.027.97

11.27

6.51,4.99

6.05

$223,83411,30832,28713,4493,719

40,129

$ 183,1709,930

30,45511,3793,669

34,423

$173,7058,616

27,30610,4673,137

29,664

$ 167,3448,171

22,6449,4672,887

25,537

$157,0477,612

22,5448,5272,605

22,972

$ 125,4037,058

21,5697,6722,507

20,068

$ 60,3274,356

11,7124,2931,8208,398

$324,726 $273,026 $252,895 $236,050 $221,307 $ 184,277 $ 90,906

$223,834 $ 183,170 $ 173,705 $ 167,344 $ 157,047 $ 125 403 $ 60,327

Gas Department Statistics

Dekatherm (dth) Sales (thousands):ResidentialCommercial .

IndustrialOther

Total

Operating Revenues (thousands):Residential .

Commercial .

IndustrialOther

Total operating revenues .........Operating Revenues per dth:

Residential .

Commercial .

Industrial .

Other

Average revenue per dth .........Number of Customers (average for year):

Residential with house heatingResidential without house heating ......

'$ Commercial with space heatingCommercial without space heating .....Industrial ..Other

Total .

Annual Average Use (dth):ResidentialCommercialIndustrial

Annual Average Bill:ResidentialCommercialIndustrial

Cost of Natural Gas Purchased:Amount (thousands)Perdth .

Gas Operation and MaintenanceExpenses (thousands):ProductionTransmission and distributionCustomer accountingCustomer serviceAdministrative and general .....

Total

1981

16,4128,044

11,5093,991

39,956

$ 71,39930,98940,07715,896

$ 158,361

$ 4.353.853.483.98

$ 3.96

102,3869,910

13,5401,080

3951,144

128,455

146550

29,137

$ 6362,120

101,461

$ 112,1762,82

$ 112,4108,2492,975

8717,476

$131,981

1980 1979 1978 1977 1976 1971

16,4827,9379,8833,356

17,3128,1509,3363,600

18,3868,6548,6513,638

18,373 19,9588,408 9,4847,968 9,2433,132 3,808

20,7819,600

12,2703,420

37,658 38,398 39,329 37,881 42,493 46,071

$ 66,33328,69831„73012,051

$ 54,19622,89423,46110,017

$ 50,64220,90818,2528,595

$ 44,895 $ 40,38718,236 16,85015,205 13,6686,660 6,492

$ 23,6379,2568,4953,\00

$ 138,812 $ 110,568 $ 98,397 $ 84,996 $ 77,397 $ 44.488

99,96911,11712,909

1,108383

1 ~ 174

98,04411,91712,714

1,198365

1,163

97,46912,12412,752

1,233371

1,185

97,08212,63012,809

1,234380

1,241

97,49612,81212,985

1,266384

1,142

92,02115,73T13,146

1,379417

1,130

126,660 125,401 125,134 125,376 126,085 123,830

148566

25,804

$ 5972,047

82,846

157586

25,578

$ 4931,646

64,277

168619

23,321

$ 4621,495

49,197

167599

20,968

$ 4091,300

40,013

181665

24,070

$ 3661,182

35,594

193661

29,424

$ 219637

20,366

$ 100,8952.59

$ 74,5421.94

$ 63,896 $ 56,284 $ 47,944 $ 26,4551.62 1.50 1.11 .58

$ 101,1747,6082,589

7496,121

$ 74,8047,1772,158

6465,424

$ 64,0896,7751,988

4794,952

$ 56,9236,4691,812

4804,326

$ 48,2105,9391,705

3213,681

$ 26,4903,0181,024

1792,205

$118,241 $ 90,209 $ 78,283 $ 70,010 $ 59,856 $ 32,916

$ 4.02 $ 3.13 $ 2.75 $ 2.44 $ 2.02 $ 1.14-

3.62 2.81 2.42 2.17 1.78 .963.21 2.51 2.11 1.91 1.48 .693.59 2.78 2.36 2.13 1.70 .91

$ 3.69 $ 2.88 $ 2.50 $ 2.24 $ 1.82 $ .97

DirectorsCharles F. KennedyChairman and Chief ExecutiveOfficer of the Company

Wells P. Allen, Jr.President and Chief OperatingOfficer of the Company

Roy S. ArrandaleRetired Senior Vice President,Research and Engineering,Thatcher Glass ManufacturingCo. ~ Elmira, N.Y.

Alison P. CasarettDean, The Graduate School,Cornell University. Ithaca. N,Y.

Everett A. GilmourChairman and President.The National Bankand Trust Company of Norviich,Norwich, N.Y.

Howard W. GunlockeFormer President, GunlockeChair Company,Wayland, N.Y.

Legare R. HolePresident, Columbian Rope Company,Auburn, N.Y.

Alexander HorwitzDirector of various corporationsBinghamton, N.Y.

William A. LyonsChairman of the Executiveand Finance Committeeof the Company

Alton G. MarshallPresident. Alton G,Marshall Associates, Inc.New York, N.Y.

David R. NewcombPresident.Buffalo Forge Company,Buffalo. N.Y.

C. William StuartFormer Chairman of the Board,C.H. Stuart, Inc,.Newark, N.Y.

Charles A. WindingDirector of variouscorporations, Elmira, N.Y.

Directors EmeritusSheldon H. CloseAttorney. Oneonta, N.Y.

Edgar W. CouperFormer Chancellor, New YorkState Board of Regents,Binghamton, N.Y.

Charles F. KennedyChairman andChief Executive Officer

Wells P. Allen, Jr.President andChief Operating Officer

Dolores R. Hix*Richard KrobothAssistants to the Chairman

E. Eugene ForrestSenior Vice PresidentAdministration

Robert B. MacKenzieSenior Vice PresidentEngineering and Operations

James A. AckermanVice PresidentArea Administration

Francis X. CarneyVice PresidentResearch and Development

Orlin W. DarrachVice PresidentCustomer Services

Allen E. KintighVice PresidentGeneration

Raymond A. PerineVice PresidentGas Operations

Bernard M. RiderVice PresidentElectrical Engineeringand Planning

Jack H. RoskozVice PresidentElectric Operations

Michael J. TurkovicVice PresidentPurchasing

William P. WalkerVice PresidentPersonnel

Michael J. RayAssistant Vice PresidentProject Engineering andConstruction

Vincent W. RiderAssistant Vice PresidentOperations and GenerationServices

Lynn L. SweetlandAssistant Vice PresidentIndustrial Development

'Also Assistant Secretary

Ithaca Executive OfficesRoute 13, Dryden Road, Ithaca, N.K 14850Tel. 607/347-4131

L. Theodore EverettSenior Vice PresidentCorporate

Eugene P. WatersSenior Vice Presidentand Treasurer

Jaime S. HechtSecretary

Richard A. JacobsonComptroller

Richard W. PageAssistant Vice PresidentComputer Services

John D. ScottAssistant Vice PresidentEconomics

Richard P. FaganAssistant Comptrotler

Matthew F. Felo, Jr.Assistant Treasurer

James M. NieferAssistant Secretary

General Counsel:Huber Lawrence & Abell99 Park Avenue, New York, N.Y. 10016

Transfer Agent for Preferred Stock:Chemical Bank55 Water Street, New York, N.Y. 10041

OfficersBinghamton Executive Offices4500 Vestal Parkway East, Binghamton, N.Y. 13902Tel. 607/729-2551

Stockholder Records: Communicationsregarding stock transfer requirement'sor lost certificates should be directed tothe transfer agent. Changes of addressmay be sent to the Secretary. Inquirieson dividends and dividend reinvestmentshould be directed to Shareholder Ser-vices.

The Company files an annual reporton Form 10-K with the Securities andExchange Commission. Stockholdersmay obtain a free copy of this reportfrom the Secretary upon request.

Securities Listed on the New YorkStock Exchange:

Common Stock3.75/o Preferred Stock8.80'/o Preferred Stock8.48/o Preferred Stock ($25 Par VaIue)

15/o Preferred Stock ($25 Par Value)10.60/o First Mortgage Bonds due 1982

7s/e/o First Mortgage Bonds due 20019s/e'/o First Mortgage Bonds due 20059s/e'/o First Mortgage Bonds due 20068s/e/o First Mortgage Bonds due 2007

Transfer Agent for Common Stock:Manufacturers Hanover Trust Company4 New York Plaza, New York, N.Y. 10015

ervice Area

T e service territory covers 17,000s uare miles, has a populationo 1,800,000 and is largelys burban and rural in nature. It in-c udes 13 relatively-small cities,t e largest of which is Binghamton

ith a population of 56,000.mong major customers are 20olleges and universities.ndustry is well-diversified withigh-technology firms predominat-

ng. Economic growth hasgenerally paralleled that of thenation.

o"yr

PLATTSBURGHI-2:O

Somerset

TONO

~KBPEWST R 8

SLONG ISLAND

NEW YORK CITY

PENNSYLVANIA

g To HOMER CITY

~ DISTRICT OFFICES

(under construction) LAKE ONTARIO

I

I.P+ LOCKPORT 0 CHESTER SYRACUSE0

BUFFALO~ .LANCASTER I ~

MECHANICVILLE

LAKE ERIE GENE A g L ALBANY0

o ONEOOll AITHACA

HORN LL~

~ ELIIIRA I5E BINGHAM

Homer City Generating Station, locatedin western Pennsylvania, is lointly-owned with Pennsylvania ElectricCompany. It provides a little over halfof NYSEG's generating capacity.

M Electric

I Gas~ Electric & Gas

Major Generating StationsAll coal-fired(Kilowatts)

1. Homer City2. Milliken3. Greenidge4. Goudey5. Hickling6. Jennison

Total 1,720,000

37

New York State Electric & Gas CorporationBox 287, Ithaca, New York 14850

BULK RATEU.S. POSTAGE PAID

New York StateElectric 8 Gas

Corporation

Address Correction Requested ~ Return Postage Guaranteed