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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 -- December 22, 1999
Commission Registrant, State of Incorporation I.R.S. Employer
File Number Address and Telephone Number Identification No.
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0-30338 RGS Energy Group, Inc. 16-1558410
(Incorporated in New York)
89 East Avenue
Rochester, NY 14649
Telephone (716)771-4444
1-672 Rochester Gas and Electric Corporation 16-0612110
(Incorporated in New York)
89 East Avenue
Rochester, NY 14649
Telephone (716)546-2700
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ITEM 5. OTHER EVENTS
On December 22, 1999, Rochester Gas and Electric Corporation issued a
press release relating to exercising its right-of-first-refusal to acquire a
controlling interest in the Nine Mile Point 2 Nuclear Plant and to buy the Nine
Mile Point 1 Nuclear Plant. See attached Exhibit No. 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits: See Exhibit Index below.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
RGS ENERGY GROUP, INC.
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(Registrant)
Date: December 22, 1999 By: /s/ J. B. Stokes
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J. Burt Stokes
Senior Vice President, and
Chief Financial Officer
Date: December 22, 1999 By: /s/ William J. Reddy
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William J. Reddy
Controller
ROCHESTER GAS AND ELECTRIC CORPORATION
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(Registrant)
Date: December 22, 1999 By: /s/ J. B. Stokes
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J. Burt Stokes
Senior Vice President, Corporate
Services and Chief Financial Officer
Date: December 22, 1999 By: /s/ William J. Reddy
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William J. Reddy
Vice President and Controller
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Exhibit Index
No.
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99 Press Release of Rochester Gas and Electric Corporation issued on December
22, 1999, relating to exercising its right-of-first-refusal to acquire a
controlling interest in the Nine Mile Point 2 Nuclear Plant and to buy the
Nine Mile Point 1 Nuclear Plant.
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Exhibit 99
CONTACTS: Rochester Gas & Electric: Entergy:
Michael A. Power (News Media) Carl Crawford (News Media)
(716) 724-8828 (601) 368-5658 [email protected]
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Mark J. Graham (Investor Relations) Paul LaRosa (Investor Relations)
(716) 724-8176 (504) 576-4878
mark [email protected] [email protected]
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ROCHESTER GAS & ELECTRIC TO BUY NINE MILE POINT NUCLEAR PLANTS; SUBCONTRACTS
OPERATION TO ENTERGY NUCLEAR INC.
. RG&E exercises right of first refusal; terms are identical to AmerGen deal
. Entergy Nuclear assumes responsibility for plant operations; establishes
fixed cost for decommissioning
. Power purchase agreements for plant output to continue
. "Advantage New York" plan assures these plants work to benefit consumers
and shareholders
ROCHESTER, NY, Dec. 22, 1999 - Rochester Gas and Electric Corporation
(RG&E) today announced it has exercised its legal right-of-first-refusal to
acquire a controlling interest in the Nine Mile Point 2 Nuclear Plant and to buy
the Nine Mile Point 1 Nuclear Plant. The company has contracted with a
subsidiary of Entergy Corporation to lease, operate and maintain the plants.
This agreement relieves RG&E of substantial operating and market risks, once the
transactions are complete. Currently, Niagara Mohawk Power Corporation operates
the plants.
"'Advantage New York' is a first-of-a-kind arrangement that will deliver
long term financial benefits to our investors and customers in a manner that is
also highly responsive to regulatory mandates and the interests of local
communities," said Thomas S. Richards, Chairman, President and Chief Executive
Officer of RGS Energy, RG&E's parent company. "Bringing in Entergy with its
impressive record of nuclear asset operation and management will lower our
overall business risk and assure that these plants work to the advantage of New
York State consumers."
"Entergy is an ideal partner to operate Nine Mile Point," said Jerry
Yelverton, President and CEO of Entergy Nuclear, the subsidiary that operates
Entergy's nuclear plants. "By bringing our expertise in nuclear safety,
operating performance and cost control, we believe we can make these plants
better and more efficient. In 1998, our other nuclear plants operated in the 90
percent capacity factor range, compared to 80-84 percent for the nuclear power
industry overall.
"Entergy Nuclear will achieve another milestone in our strategic growth
plan," Yelverton said, "and to the extent that we improve the plant's
performance, the state of
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New York will retain an even stronger contributor to its emerging competitive
power market."
Under the terms of a lease and operating agreement, Entergy Nuclear will be
responsible for operating the plants, for certain operating costs and risks
during a transition period and most operating costs and risks thereafter. RG&E
will be responsible for certain operating costs and risks during a transition
period and more limited costs and risks thereafter.
Under terms of a decommissioning agreement, Entergy will be responsible for
decommissioning the plants at a fixed price after they are taken out of service.
This fixed-cost arrangement will relieve the consumer from potential cost
escalation.
"We expect this New York State asset to produce value over time," Richards
said. "This agreement is a golden opportunity to fund the retirement of our
investment in nuclear plants and provide a source of energy at a stable,
competitive price."
RG&E is acquiring the plants by exercising the right-of-first-refusal it
holds as a non-operating partner in Nine Mile Point 2. The contract among the
Nine Mile Point 2 owners provides that any of the original co-owners of the
plant may purchase another owner's share by matching a bona fide offer from a
third party. In this instance, AmerGen, a subsidiary of PECO Energy of
Philadelphia and British Energy of the United Kingdom, has offered $72 million
for Nine Mile Point 1 and $91 million for the 59 percent share of Nine Mile
Point 2 owned by Niagara Mohawk and New York State Electric & Gas, for an
aggregate purchase price of $163 million.
In this transaction, RG&E will continue to own the rights to its original
160 megawatts of electric generating capacity from Nine Mile Point 2 and acquire
the rights to an additional 670 megawatts of capacity from that plant. It will
also acquire all 615 megawatts of capacity from Nine Mile Point 1. Niagara
Mohawk and New York State Electric and Gas will purchase the power produced by
their previous ownership shares in the Nine Mile Point plants from RG&E under a
long-term contract. These terms are the same agreed to by AmerGen. The Long
Island Lighting Company, which is wholly-owned by the Long Island Power
Authority, and Central Hudson Gas & Electric Corporation are the other non-
operating owners who will retain their interests in the plant.
The following additional significant benefits to New York State customers
will result:
. Customers will pay for energy only when produced by the plants.
. Customers will continue to benefit from stable, competitively-priced energy
from the plants.
. The owners' profits from both plants will remain in New York State and will
be shared with customers. They will be used to reduce the company's net
investment in the plants, and reduce the cost basis for customer rates as a
result.
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. The ownership of the asset and the benefits it yields will remain in New York
State, helping to boost the Upstate economy, as it grows in value and
productivity from improved operation.
. RG&E's arrangement with Entergy provides a flexible solution to the
regulatory treatment of nuclear plant investments as we transition to a
competitive energy market and could be applied statewide.
As part of its agreement with RG&E, Entergy Nuclear will offer to
continue to employ the approximately 1,330 employees at the two plants and will
accept the current collective bargaining agreement with the International
Brotherhood of Electrical Workers Local 97.
RG&E expects to take control of the Nine Mile Point nuclear plants next
year, after the completion of state and federal regulatory approvals. Needed
approvals include reviews by the New York State Public Service Commission, the
Nuclear Regulatory Commission and other government agencies.
RG&E expects the transaction to have a positive effect on earnings per
share based on the current number of shares outstanding and intends to finance
the acquisition through the issuance of long-term debt. The acquisition is not
expected to affect RG&E's customer electric rates, which already are decreasing
on a schedule fixed through 2002.
The Nine Mile Point nuclear plants total 1,754 megawatts of electric
generating capacity. They are located in Scriba, N.Y., near Oswego. The Nine
Mile Point 1 plant is wholly-owned by Niagara Mohawk. The Nine Mile Point 2
plant is owned by Niagara Mohawk (41 percent), New York State Electric & Gas
Corporation (18 percent), Long Island Power Authority (18 percent), Central
Hudson Gas & Electric Corporation (9 percent) and RG&E (14 percent).
RG&E, a subsidiary of RGS Energy (NYSE: RGS), currently serves 344,000
electric and 289,000 gas customers in a nine-county region of Upstate New York.
RG&E owns and operates the R.E. Ginna Nuclear Plant in Ontario, N.Y. The Ginna
plant consistently outperforms the nuclear industry average, and is considered
the best performing nuclear plant in New York State.
Entergy Nuclear is the nuclear operating subsidiary of Entergy Corporation,
a utility holding company headquartered in New Orleans, La., with nearly 30,000
megawatts of plant generation capability in the U.S. and about 2.5 million
customers in four states.
This release includes forward looking statements, estimates and
projections. Actual events and results may, for a variety of reasons, prove to
be materially different from those indicated in these forward looking
statements, estimates and projections. Factors that could influence actual
outcomes include the effects of changes in law, regulatory decisions, the
evolution of competition, wholesale market prices for electric energy and
capacity, changes in accounting, weather, the performance of generating units,
fuel prices and availability, financial markets, and environmental regulations,
among other factors.
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