SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report June 9, 1994
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Date of earliest event reported)
New York State Electric & Gas Corporation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact name of registrant as specified in its charter)
New York 1-3103-2 15-0398550
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
P.O. Box 3287, Ithaca, NY 14852-3287
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of principal executive offices) (Zip Code)
607-347-4131
Registrant's telephone number, including area code . . . . . .
NA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Former name or former address, if changed since last report)<PAGE>
Item 5. Other Events
In September 1993, the Company reached a three-year electric
and natural gas rate settlement agreement (Agreement) with the
Public Service Commission of the State of New York. The
Agreement provides for an allowed return on equity of 10.8% in
year one, 11.4% in year two, and 11.4% (subject to an indexing
mechanism) in year three. The Agreement also includes incentives
(rewards or penalties) for customer service, production cost, and
demand-side management, which could increase the allowed return
to 12.3% or decrease it to 9.95% in year one, increase it to
13.05% or decrease it to 10.4% in year two, and increase it to
13.25% or decrease it to 10.2% in year three.
In June 1994, the Company estimated and recorded a $13
million, or 12 cents per share, production cost penalty for 1993,
which is the maximum provided by the Agreement.
This penalty is based on a comparison of the relative
changes in the Company's production costs per megawatt-hour of
retail sales from a base period (1989-1992) to 1993 versus the
same comparison for a 19-company peer group, which includes the
Company. The Company calculated the penalty based on financial
information that was reported in the peer group's Federal Energy
Regulatory Commission Form 1 Reports, which were received in May
1994. The Company's production cost penalty for 1993 was
primarily due to a significant increase in retail sales for the
peer group as compared to the Company's retail sales. This
penalty also resulted from higher cost increases for the Company
as compared to the peer group.
The Company does not expect to earn its allowed return on
common equity in 1994. Although the Company cannot currently
estimate the results of future production cost incentives, the
Company implemented a significant cost reduction program in early
1994 which will reduce its production costs in 1994 and beyond.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NEW YORK STATE ELECTRIC & GAS CORPORATION
(Registrant)
By Everett A. Robinson
Everett A. Robinson
Vice President and Controller
Date: June 10, 1994
