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 September 18, 1996
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(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
Rate Matter (See Form 10-Q for quarter ended June 30, 1996, Item
2(a) - Liquidity and Capital Resources - Competitive conditions
and Diversification)
On September 27, 1996, New York State Electric & Gas
Corporation (company) issued the following news release regarding
the submission of the company's filing in the Public Service
Commission of the State of New York's (PSC) Competitive
Opportunities Proceeding and a third-quarter charge by NGE
Enterprises, Inc.
NYSEG FILES PLAN FOR THE TRANSITION TO COMPETITION;
ANNOUNCES THIRD-QUARTER CHARGE BY NGE ENTERPRISES, INC.
FOR IMMEDIATE RELEASE
New York State Electric & Gas
Corporation (NYSEG) today filed with the
Public Service Commission (PSC) a five-year
rate and restructuring plan for the company's
transition to competition. NYSEGPlan calls
for the retail price of electricity to be
frozen for five years, beginning August 1,
1997, and would allow most customers to
increase their electricity use at half the
present price.
"We strongly support competition, and
NYSEGPlan is designed to treat customers and
shareholders fairly during the transition to
competition," said Jack H. Roskoz, NYSEG's
executive vice president. "It would provide
customers with stable prices and safe,
reliable service. Shareholders would
continue to have a reasonable opportunity to
fully recover prudent investments."
Retail competition - enabling customers
to choose their electricity producer - would
be phased in under NYSEGPlan, beginning
August 1, 1998. "After one year of retail
competition in areas yet to be selected, we
would work with customers and other parties
involved in the PSC's Competitive
Opportunities Proceeding to assess its
success. The schedule for expanding retail
competition to all customers in the NYSEG
service area would be reviewed during that
collaborative effort," Roskoz said.
NYSEGPlan calls for wholesale
competition to begin August 1, 1997. "In
today's energy marketplace most electric
utilities own generating stations and use the
power from those stations to serve their
customers. Under wholesale competition, we
would functionally separate our generating
stations from the rest of our operations.
The plants would then compete in an
unregulated market, and only the lowest-cost
producers would continue to operate," Roskoz
said.
Roskoz restated that it will take a
combination of competition and reducing
mandated costs - such as power from
nonutility generators (NUGs) and New York
State's high taxes - to reduce electricity
prices. "Regulators, state and local elected
officials, and the utilities must work
together to solve the problems caused by past
failed public policies. Those mandates have
resulted in excess payments to NUGs and taxes
in New York State that are more than twice
the national average. We must reduce these
costs to reduce the price of electricity,"
Roskoz said.
He also said NYSEGPlan could be affected
by the outcome of the lawsuit filed last week
by the Energy Association of New York State
which challenges specific elements of the
PSC's blueprint for competition.
The company filed NYSEGPlan to comply
with the Competitive Opportunities Proceeding
order the PSC issued on May 20, 1996.
NYSEGPlan is contingent on NYSEG being
allowed to increase prices 2.8% this year and
2.7% on August 1, 1997, as approved by the
PSC in August 1995. NYSEG needs the price
increases primarily to cover the rising cost
of NUG power and higher taxes. The plan will
be reviewed by the PSC staff, parties to the
proceeding and the public.
On an unrelated matter, NYSEG announced
today that it will take a 14 cents per share
charge against earnings in the third quarter
of 1996 to write down the investment by NGE
Enterprises, Inc. (NGE), its wholly-owned
subsidiary, in EnerSoft Corporation.
EnerSoft, formed in May 1993, develops
and markets computer software and real-time
information and trading systems for natural
gas utilities, marketers and pipeline
operators. EnerSoft developed Channel 4, a
natural gas and pipeline capacity trading and
information system for the North American
market. Channel 4 is EnerSoft's primary
product.
Electronic trading of natural gas and
pipeline capacity is an emerging market. The
Channel 4 system was made available for use
on August 11, 1995, and although EnerSoft has
been adding subscribers, sales have been
disappointing.
NGE believes that the Channel 4 system
may be best capitalized on by an established
gas pipeline/marketer or electronic network
company. Furthermore, NGE management has
determined that EnerSoft no longer fits the
company's strategic focus. NGE is assessing
various exit strategies for EnerSoft and
intends to exit the business by December 31,
1996.
On September 18, 1996, the company issued the following news
release regarding the Energy Association of New York State and
its seven electric utility member's lawsuit challenging the PSC's
plan for competition in the electric utility industry as
presented in the PSC's May 20, 1996 Competitive Opportunities
Proceeding decision.
LAWSUIT CHALLENGES PSC's RESTRUCTURING PLAN:
NYSEG CONTINUES ITS UNEQUIVOCAL SUPPORT OF COMPETITION
FOR IMMEDIATE RELEASE
The Energy Association of New York State
and its seven electric utility members,
including New York State Electric & Gas
Corporation (NYSEG), today filed suit in New
York State Supreme Court in Albany
challenging the Public Service Commission's
(PSC) plan for competition in the electric
utility industry as presented in the PSC's
May 20, 1996 Competitive Opportunities
Proceeding decision.
<PAGE>
NYSEG will comply with the PSC's October
1 deadline for filing a detailed plan to
bring wholesale and retail competition to the
company's service area.
"We strongly support competition," said
Jack H. Roskoz, NYSEG's executive vice
president. "From the beginning, we have said
that the transition to competition must be
fair to customers, shareholders and
taxpayers. We are concerned that the PSC
blueprint for competition fails to adequately
protect the reliability of the electric
system and safeguard prudent shareholder
investments made to serve customers. Because
of these shortcomings, the PSC plan impedes
the transition to competition."
Early in the Competitive Opportunities
Proceeding, NYSEG and the state's other
electric utilities presented a blueprint for
a successful transition to competition.
NYSEG employees continue to devote
considerable time and effort to developing
the details for a transition to competition.
"The time and effort that we have invested in
planning for the transition is evidence that
this lawsuit is not a challenge to
competition. Our intention is to ensure that
there is an orderly transition to competition
and that competition takes place on a level
playing field. We also want to ensure that
lawful investments made to serve customers
are protected and that the reliability of
electric service is maintained," Roskoz said.
"For decades utilities have been allowed
to recover prudent investments made to
provide safe and reliable electric service to
customers. Now the PSC proposes a new
regulatory framework that would eliminate the
assurance that utilities will be able to
recover such prudent investments. This
framework amounts to the taking of private
property without due process or fair
compensation," Roskoz said. "This position
also creates great uncertainty regarding the
status of future investments needed to
maintain New York's world-class electric
service reliability."
<PAGE>
The parties to the lawsuit also contend
that, among other things:
- The PSC did not follow proper procedures
for reaching a decision in the
Competitive Opportunities case;
- The PSC lacks the statutory authority to
order utilities to divest their
generation facilities.
- The PSC lacks the statutory authority to
order retail wheeling. (Retail wheeling
would require utilities to deliver power
sold by a third party directly to an
end-user.)
NOTE: The Energy Association's members are
Brooklyn Union, Central Hudson Gas &
Electric Corporation, Consolidated
Edison Company of New York, Inc., Long
Island Lighting Company, New York
State Electric & Gas Corporation,
Niagara Mohawk Power Corporation,
Orange and Rockland Utilities, Inc.,
and Rochester Gas and Electric
Corporation.
<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 Gary J. Turton
Gary J. Turton
Vice President and Controller
(Chief Accounting Officer)
Date: September 27, 1996
