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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended December 31, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from to
Commission file number 1-4315
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of registrant as specified in its charter)
New York 13-1727729
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Blue Hill Plaza, Pearl River, New York 10965
(Address of principal executive offices) (Zip Code)
(914) 352-6000
(Registrant's telephone number, including area code)
Common Stock, $5 Par Value -- New York Stock Exchange, Inc.
(Securities registered pursuant to Section 12(b) of the Act)
Preference Stock, No Par Value
(Securities registered pursuant to Section 12(g) of the Act)
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
At February 29, 1996, the approximate aggregate market value
of the voting stock held by nonaffiliates of the registrant was
$494,223,873*
At February 29, 1996, the registrant had 13,653,741 shares of
Common Stock ($5 par value) outstanding.
(Continued)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Continued from first page)
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of registrant as specified in its charter)
Documents incorporated by reference:
Annual Report to Shareholders for the year ended December 31, 1995
incorporated in Part I, Part II and Part IV to the extent described
therein.
The Company's definitive Proxy Statement in connection with the 1996
Annual Meeting of Common Shareholders incorporated in Part III to
the extent described therein.
* For purposes of this calculation, it is assumed that only directors
and officers of the registrant are affiliates of the registrant.
10K-95.wp
TABLE OF CONTENTS
Page
PART I
Item 1. Business
General Development of Business 1
Financial Information about Industry Segments 1
Narrative Description of Business: 1
Principal Business 1
Investigation and Litigation 2
Electric Operations 3
Gas Operations 8
Diversified Activities 10
Construction Program and Financing 12
Regulatory Matters 14
Utility Industry Risk Factors 18
Competition 19
Marketing 19
Environmental Matters 20
Research and Development 23
Franchises 23
Employee Relations 24
Item 2. Properties 25
Item 3. Legal Proceedings 27
Item 4. Submission of Matters to a Vote of Security Holders 33
Executive Officers of the Registrant 34
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 36
Item 6. Selected Financial Data 36
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 36
Item 8. Financial Statements and Supplementary Data 37
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 37
PART III
Item 10. Directors and Executive Officers of the Registrant 37
Item 11. Executive Compensation 37
Item 12. Security Ownership of Certain Beneficial Owners
and Management 37
Item 13. Certain Relationships and Related Transactions 37
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 38
Signatures 45
Report of Independent Public Accountants on Financial
Statement Schedules 47
Consent of Independent Public Accountants 47
-i-
PART I
Item 1. Business
General Development of Business:
Orange and Rockland Utilities, Inc. (the "Company") is a New York
corporation, with its principal office at One Blue Hill Plaza, Pearl River,
New York 10965 (telephone number 914-352-6000), which was formed originally
under the name Rockland Light and Power Company on May 21, 1926 through the
consolidation of a company having the latter name (organized in 1899),
Catskill Power Corporation and Orange County Public Service Company, Inc. Its
present name was adopted on February 28, 1958, when The Orange and Rockland
Electric Company was consolidated with Rockland Light and Power Company.
The Company has two wholly owned utility subsidiaries, Rockland Electric
Company ("RECO"), a New Jersey corporation, and Pike County Light & Power
Company ("Pike"), a Pennsylvania corporation. The Company has three wholly
owned non-utility subsidiaries, Clove Development Corporation ("Clove"), a
New York corporation, O&R Development, Inc. ("ORD"), a Delaware corporation
and O&R Energy Development, Inc. ("ORED"), a Delaware corporation. ORED sold
all of its oil and gas interests effective December 31, 1995 and has ceased
operations. RECO has a wholly owned non-utility subsidiary, Saddle River
Holdings Corp. ("SRH"), a Delaware corporation. SRH has two wholly owned non-
utility subsidiaries, NORSTAR Holdings, Inc. ("NHI") (formerly O&R Energy,
Inc.) and Atlantic Morris Broadcasting, Inc. ("AMB"), both Delaware
corporations. AMB sold all of its broadcasting properties during 1995 and has
ceased operations. NHI has two wholly owned non-utility subsidiaries,
Millbrook Holdings, Inc. ("Millbrook") and NORSTAR Management, Inc. ("NMI"),
both Delaware corporations. NMI is the sole general partner of a Delaware
limited partnership, NORSTAR Energy Limited Partnership ("NORSTAR
Partnership"). NORSTAR Partnership is the majority owner of NORSTAR Energy
Pipeline Company, L.L.C. ("NORSTAR LLC"), a Delaware limited liability
company. The businesses of the non-utility subsidiaries are described under
the subheading "Diversified Activities" in this Item 1.
Financial Information about Industry Segments:
Consolidated financial information regarding the Company's principal
business segments, Electric Operations, Gas Operations and Diversified
Activities is contained in Note 13 of the Notes to Consolidated Financial
Statements - "Segments of Business" on page 32 of the 1995 Annual Report to
Shareholders, which material is incorporated by reference in this Form 10-K
Annual Report.
Narrative Description of Business:
Principal Business
The Company and its utility subsidiaries supply electricity and gas to a
territory covering approximately 1,350 square miles. The eastern boundary of
the Company's service territory extends along the west bank of the Hudson
River from a point in New Jersey six miles north of the George Washington
Bridge northerly for approximately 37 miles to a point in New York a short
distance north of the United States Military Academy at West Point. From the
Hudson River, the Company's territory in New York State extends westward to
the Delaware River, embracing all of Rockland County, most of Orange County
and a part of Sullivan County. In New Jersey, RECO supplies electricity to
the northern parts of Bergen and Passaic Counties and small areas in the
northeastern and northwestern parts of Sussex County. Pike supplies
electricity and gas to the northeastern corner of Pike County, Pennsylvania.
As of December 31, 1995, the Company and its utility subsidiaries
furnished electric service to approximately 263,000 customers in 96
communities with an estimated population of 671,000 and gas service to
approximately 112,000 customers in 57 communities with an estimated
population of 474,000. There have been no significant changes in either the
population of the Company's service territory or in the number of
customers served since December 31, 1994. At that time, electric service was
provided to approximately 260,000 customers in 96 communities with an
estimated population of 666,000 and gas service was provided to approximately
111,000 customers in 57 communities with an estimated population of 470,000.
At December 31, 1995 and 1994, 95% of the Company's residential gas customers
used gas as their major source of space heating fuel. While the territory
served is predominantly residential, the Company and its utility subsidiaries
also serve a number of commercial and industrial customers in diversified
lines of business activities from which significant electric and gas revenues
are derived. No single customer accounts for more than 10% of either gas or
electric sales. The business of the Company and its utility subsidiaries is
seasonal to the extent that sales of electricity are higher during the summer,
mainly due to air conditioning requirements, and sales of gas are greater in
the winter months, primarily as a result of space heating requirements.
Investigation and Litigation
On August 16, 1993, the Rockland County, New York District Attorney (the
"District Attorney") charged a then Vice President of the Company with grand
larceny, commercial bribery and making illegal political contributions and
commenced a related investigation of the Company. Two other former employees
who had reported to the Vice President were also charged with grand larceny.
The events which followed these actions included the formation of a special
committee of the Company's Board of Directors and the conduct of an
independent investigation under the supervision of that committee,
investigations conducted by both the District Attorney and various utility
regulatory agencies, various legal actions brought both by and against the
Company (most of which have been settled), the refund of misappropriated funds
to the Company's customers, and effects on the Company's rate filings.
The Company continues to pursue a lawsuit and arbitration proceeding
against a former officer to recover misappropriated funds and other costs
attributable to any wrongdoing and the related investigations. Related
lawsuits by the former officer are also pending.
Details concerning these events, including their effect on the Company's
rate proceedings and results of operations, are contained in the "Review of
the Company's Results of Operations and Financial Condition" under the
captions "Financial Performance," "Rate Activities" and "Other Income and
Deductions and Interest Charges" and in Note 12 of the Notes to Consolidated
Financial Statements under the caption "Investigation and Related Litigation"
beginning on pages 11 and 29, respectively, of the 1995 Annual Report to
Shareholders, which material is incorporated by reference in this Form 10-K
Annual Report. Reference is also made to Item 3, "Legal Proceedings", of this
Form 10-K Annual Report.
Electric Operations
Generating Capacity and Purchased Power. As described more fully in
Item 2 of this Form 10-K Annual Report under the subheading "Electric
Generating Facilities", the capacity of the Company's plants provides the
Company with a net generating capacity of 981 megawatts ("Mw") in the summer
and 993 Mw in the winter. Additionally, the Company purchases capacity, as
more fully described below, to satisfy its reserve requirements, as well as
any demand in excess of its installed capacity. The electric energy which
RECO and Pike distribute to their customers is supplied by the Company. The
maximum historical one-hour demand for the Company and its utility
subsidiaries occurred on July 15, 1995 and was 1,068 Mw.
In addition to the energy produced at its generating facilities, the
Company, through various transmission interconnections, purchases both
capacity and energy when needed to meet load and reserve requirements and also
when such power is available at a price lower than the cost of production.
The Company maintains transmission interconnections with Central Hudson Gas
and Electric Corporation ("Central Hudson"), Public Service Electric and Gas
Company ("PSE&G") and Consolidated Edison Company of New York, Inc. ("Con
Ed"). Through these interconnections, and as a member of the New York Power
Pool ("NYPP"), the Company can exchange power directly with the above
utilities and, through the facilities of other members of the NYPP, the
Company can exchange power with all members of the NYPP and with utilities in
pools in neighboring states. In addition, members of the NYPP are able to
coordinate inter-utility transfers of bulk power in order to achieve economy
and efficiency, cooperate in long range planning of generation and
transmission facilities, coordinate inter-utility operating and emergency
procedures to assure reliable, adequate and economic electric service
throughout the state and provide for the equitable sharing of the resulting
benefits and costs. Through the NYPP control center, the Company is able to
purchase power in order to optimize its generation-interchange mix, using the
lowest cost energy available to the Company in the interconnected system. By
agreement with the NYPP, the Company must maintain capacity reserves including
firm capacity purchases of not less than 18% of its peak load.
During 1995, the Company had agreements in place for both capacity and
energy purchases. Capacity purchases included an agreement with PSE&G which
provided between 75 Mw and 225 Mw of capacity, an agreement with Pennsylvania
Power & Light Company ("PP&L") which provided between 10 Mw and 50 Mw of
capacity, an agreement with the New York Power Authority ("NYPA") for 25 Mw of
year-round capacity from the Blenheim-Gilboa pumped storage facility (the
"Gilboa Facility") and an agreement with North American Energy Conservation,
Inc. ("NAEC") which provided for 100 Mw of capacity.
During 1995 the Company met approximately 40% of its overall power
requirements by aggressively pursuing economic power purchases. These
purchases, which were primarily made pursuant to short-term purchase
agreements and interchange agreements, resulted in lower costs to the
Company's customers. During 1995, the Company could have generated all of its
customers requirements more than 99% of the time. At the time of the 1995
peak demand, the Company's installed capacity could have satisfied 94% of its
power requirements. The use of purchased power under these circumstances
reflects the Company's policy of supplementing its electric generation with
purchased power not only when needed to meet load requirements but also when
such power is available at a cost lower than the cost of production.
Information regarding future power supply, particularly the status of
capacity purchase contracts with Independent Power Producers and Qualifying
Facilities, is contained under the caption "Future Energy Supply and Demand"
in this Item 1.
Fuel Supply. The Company's 981 Mw summer generating capacity is
available from the following fuel sources:
Coal,
Oil Oil Gas
Plant* & Gas & Gas Hydro Turbine Total
(Megawatts)
Lovett Plant
Unit 3 63.0 63.0
Units 4 & 5 399.6 399.6
Hydro Plants
Swinging Bridge,
Mongaup, Rio and
Grahamsville 43.8 43.8
Gas Turbine Plants
Hillburn and
Shoemaker 74.0 74.0
Bowline Point Plant
Units 1 & 2 400.6 400.6
463.6 399.6 43.8 74.0 981.0
===== ===== ==== ==== =======
*For a description of the Company's generating plants, see "Electric
Generating Facilities" in Item 2 of this Form 10-K Annual Report.
The availability and cost of fuels and the Company's choice of fuel in
any particular circumstance are affected by a number of factors, the
majority of which are beyond the control of the Company. These factors
include the domestic and international fuel supply situation, environmental
regulations, conservation measures and the availability of alternative fuels.
The Company's principal generating plants use natural gas, coal or oil as
their primary fuels. The Company has reduced its dependence on oil through the
use of coal as the primary fuel for the Lovett Plant's two largest generating
units, the burning of increased volumes of natural gas in its boilers and the
purchase of power from other systems.
Electricity available for sale is a mix of Company generation by various
fuel types, supplemented by purchased power when such power is available at a
price lower than the price of generation or is needed to meet load
requirements. Details for the years 1991 through 1995 are as follows:
1991 1992 1993 1994 1995
Gas 22% 21% 16% 23% 23%
Coal 36 33 33 36 27
Oil 14 10 5 6 7
Hydro 3 3 4 3 3
Purchased Power 25 33 42 32 40
Total 100% 100% 100% 100% 100%
==== ==== ==== ==== ====
Gas - Natural gas is used as an alternative fuel for electric generation
when it is available and economic. Substantially all of the gas used in
electric generation is acquired through spot market purchases. During 1995,
the Company was able to use significant volumes of natural gas for boiler fuel
at both its Lovett Plant and the Bowline Point Plant. It also expects to be
able to use natural gas in the Lovett Plant and the Bowline Point Plant during
1996, whenever such gas is more economical than alternative fuels. In 1995,
the Company used 4.3 billion cubic feet ("Bcf") and 8.3 Bcf of gas,
respectively, at the Lovett Plant and the Bowline Point Plant.
Coal - The low sulfur coal (1.0 lbs. SO2 per million British Thermal
Unit ("MMBTU")) used in Lovett Plant Units 4 and 5 is supplied to the Company
primarily through a long term contract with Massey Coal Sales, Inc. and a
short-term contract with James River Coal Sales Co. The Company has the
right, under the coal purchase contracts, to suspend the purchase of coal if
alternative fuel sources become less expensive. The coal is low in ash
(typically 7%) and high in BTU content (26 MMBTU's per ton). During 1995 coal
was the predominant fuel burned at the Lovett Plant, and the Company expects
it to be the predominant fuel burned during 1996. Information regarding the
Company's coal supply contracts is contained in Note 12 of the Notes to
Consolidated Financial Statements under the caption "Coal Supply Contracts" on
page 30 of the 1995 Annual Report to Shareholders which material is
incorporated by reference in this Form 10-K Annual Report.
Oil - The Company does not anticipate purchasing any significant
quantity of fuel oil for its Lovett Plant. Con Ed has undertaken the supply
of #6 fuel oil (0.37% maximum sulfur content by weight) to the Bowline Point
Plant, which is supplied under a contract between Con Ed and the Company.
Pursuant to that contract, Con Ed has also undertaken to provide a backup oil
supply for the Company's Lovett Plant under certain conditions. The Company
believes that it will be able to secure sufficient oil supplies to meet the
total requirements of #6 fuel oil for the calendar year 1996.
Hydro - Water for the operation of the Company's Mongaup River Hydro
Plants is controlled by the Company through the ownership of the necessary
land in fee or through easements. In the case of the Grahamsville Plant,
water is obtained under contract with the City of New York Board of Water
Supply. This contract, which expires in 2005, entitles the Company to 8.1 Bcf
of free water each year. In 1995, the total amount of water used was 16.8
Bcf. Of this total, 8.7 Bcf was billed at varying rates based on an average
cost of all fuels used in power generation.
Purchased Power - The Company's practice regarding purchased power is to
supplement the Company's electric generation by purchasing both capacity and
energy when needed to meet load and reserve requirements and also when such
power is available at a price lower than the cost of production. Details
regarding purchased power are contained under the captions "Generating
Capacity and Purchased Power" and "Future Energy Supply and Demand" in this
Item 1.
Additional information regarding fuel and purchased power costs,
including a description of the fuel adjustment clauses contained in the
Company's tariff schedules, is contained in the 1995 Annual Report to
Shareholders in the "Review of the Company's Results of Operations and
Financial Condition" under the caption "Electric Energy Costs" on page 13 and
in Note 1 of the Notes to Consolidated Financial Statements under the caption
"Fuel Costs" on page 23, which information is incorporated by reference in
this Form 10-K Annual Report.
Future Energy Supply and Demand. The Company continues to be committed
to meeting customer energy needs by providing reliable energy service at the
lowest prudent cost and in an environmentally sound manner. Through its
Integrated Resource Plan the Company has responded to the changes that have
occurred in the utility industry and has incorporated a significant number of
conservation and demand reduction alternatives as well as purchased power into
its energy strategy.
The Demand Side Management ("DSM") program involves efforts to control
electric peak demand and energy usage, and addresses the need to improve plant
utilization by making customer demand more complementary over time to the
available capacity. DSM programs are available to all market segments.
Through December 31, 1995, DSM efforts have reduced the annual need for
increased generating capacity and energy by 131.4 Mw and 234,845 Mwh,
respectively, both through programs administered by the Company and by RECO as
well as through contracts with outside energy service companies pursuant to
the competitive bidding program. The costs of DSM programs are recoverable on
a current basis in both the New York and New Jersey service territories.
Additional information regarding the recovery of DSM costs, including the
Company's achievement of certain DSM related goals and their impact on the
1995 results of operations is contained under the captions "Electric Operating
Revenues and Sales" and "Other Utility Operating Expenses and Taxes" in the
"Review of the Company's Results of Operations and Financial Condition" on
pages 12 and 14, respectively, of the 1995 Annual Report to Shareholders,
which material is incorporated by reference in this Form 10-K Annual Report.
The Company's Supply Side Management program involves the acquisition of
future increments of capacity and energy as needed to meet anticipated load
and reserve requirements and, in particular, to reduce the cost of electricity
to the Company's customers. With regard to future purchases of capacity,
contracts are in place with the NYPA, NAEC and PSE&G. The NYPA agreement for
firm purchases from the Gilboa Facility, which provides for 25 Mw of year-
round capacity, will be in effect through April 2015. The agreement with NAEC
will provide capacity ranging between 100 Mw and 150 Mw through October 1998,
with an option to extend the contract through October 2001. In addition, a
firm purchased power agreement with PSE&G will provide between 75 Mw and 300
Mw of capacity during the base contract term which extends through April 1998,
with an additional 100 Mw available throughout the base contract term at the
option of the Company. The contract also provides that at the option of the
Company 400 Mw of additional capacity will be available from May 1998 through
October 2000. In total, these firm capacity agreements will provide the
Company with between 200 Mw and 475 Mw of capacity through 1998 with an
additional 500-550 Mw of capacity available at the option of the Company
through the year 2001. Information regarding future payments under capacity
purchase contracts is contained in Note 12 of the Notes to Consolidated
Financial Statements under the caption "Power Purchase Agreements" on page 30
of the 1995 Annual Report to Shareholders, which information is incorporated
by reference in this Form 10-K Annual Report.
Regarding future purchases of energy, the Company's contract with NAEC
provides for a minimum of 1.3 million megawatt hours of firm economy purchases
during the winter capability periods through the 1997/1998 winter period. In
addition, the Company will continue to take an aggressive posture in securing
economic increments of purchased power, particularly through interchange
transactions, short-term firm contracts and spot purchases.
During 1990 and 1991, the Company entered into three long-term contracts
with certain independent power producers ("IPP") for the provision of capacity
and energy to the Company. During 1994, the Company negotiated termination
agreements with two of the three IPP's and in June 1995 a termination
agreement was reached with the third IPP. Information regarding the
termination of the IPP contracts is contained in Note 1 of Notes to
Consolidated Financial Statements under the caption "IPP Settlement
Agreements" on page 24 of the 1995 Annual Report to Shareholders, which
material is incorporated by reference in this Form 10-K Annual Report.
Gas Operations
The Company distributes purchased natural gas, supplemented at times of
peak load by gas produced in its propane air gas plants.
As of December 31, 1995, the gas distribution system included 1,723
miles of mains. The highest historical maximum daily gas sendout of 206,038
thousand cubic feet ("Mcf") occurred on January 19, 1994.
Supply, Transportation and Storage. The Company has firm, long-term gas
supply contracts with seven gas producers. Together these contracts account
for all of the Company's base load gas requirements and include a contract
with a Canadian producer which accounts for approximately 28% of firm
contracted supply and expires in the year 2002. Contracts for the remaining
72% of the Company's required gas supply have been executed with six domestic
producers. One of these contracts is scheduled to expire on October 31, 1996,
and it is anticipated that a replacement gas supply will be negotiated. The
remainder have expiration dates ranging between 1997 and 2010. All of the gas
supply contracts contain options for renewal and certain of the agreements
contain "re-opener" provisions which allow the Company to modify price and
operating terms under certain conditions. This flexibility will ensure the
reliability of the Company's gas supply while allowing the Company to enhance
its supply portfolio as market opportunities arise.
In addition to its long-term contracted supply sources, the Company
purchases spot gas from producers primarily for use in electric generation.
During 1995, the Company made spot purchases of approximately 22.8 million Mcf
of gas or 54% of the total gas supply.
To supplement purchased gas, the Company manufactures gas at its propane
air gas plants located in Middletown, Orangeburg and Suffern, New York which
have a combined capacity of 30,600 Mcf per day of natural gas equivalent.
This capacity, together with gas purchases under contracts between the Company
and its suppliers, is expected to provide adequate peak day supplies to serve
existing and projected new customers through the 1998-1999 winter period.
Additional increments of new supply beyond this point are being negotiated.
In addition to the gas supply contracts, the Company has provided for
the transportation of gas through firm, long-term transportation agreements
with four major pipeline companies: Tennessee Gas Pipeline Company
("Tennessee"), Columbia Gas Transmission Corporation ("Columbia"), Algonquin
Gas Transmission Company ("Algonquin") and Texas Eastern Transmission
Corporation ("Texas Eastern"). One of these contracts will expire during
November 2000. The other three firm transportation contracts have exceeded
their initial contract term and will remain in effect on a year-to-year basis
unless terminated by the Company. The Company also has entered into
interruptible transportation agreements with the same pipeline companies. All
transportation contracts contain options for renewal.
With regard to gas storage, the Company also has long-term gas storage
contract arrangements with Tennessee, Columbia and Texas Eastern. The earliest
expiration date of any of these storage contracts is 2000 and all storage
contracts contain options for renewal. During 1993 the Company elected to
secure capacity in an innovative gas storage project operated by Avoca Natural
Gas Storage. The storage facility, which will be available in late 1997, uses
leached-out caverns in underground salt beds to create a storage reservoir and
is designed for fast withdrawal and refill capacity which will enhance the
Company's ability to meet incremental peak day gas requirements.
As noted earlier, the Company's maximum daily sendout of gas occurred
during January 1994 and amounted to 206,038 Mcf. This compares to the maximum
daily gas delivery capacity of the Company's system of 225,839 Mcf which is
available from the following sources: direct purchases - 119,567 Mcf; storage
withdrawals - 75,672 Mcf; and Company manufactured gas - 30,600 Mcf.
Additional information regarding gas supply and gas storage contracts is
contained in Note 12 of the Notes to Consolidated Financial Statements under
the caption "Gas Supply and Storage Contracts" on page 29 of the 1995 Annual
Report to Shareholders, which material is incorporated by reference in this
Form 10-K Annual Report.
Transportation for Others. The Company provides gas transportation
services for end users in its service territory who elect to obtain their own
direct gas supplies. During 1995, approximately 4.6 Bcf's of gas were
transported for such end users.
Take-or-Pay Surcharge Costs and FERC Order No. 636 Transition Costs. As
a result of a 1987 FERC order, as well as other legal and regulatory actions
since that time regarding the pass-through of certain "take-or-pay" costs by
gas suppliers, the Company has deferred approximately $1.6 million of gas
surcharges at December 31, 1995.
In addition, certain costs incurred by gas pipeline companies in
complying with FERC Order No. 636 have been approved by the FERC for
allocation to distribution companies, including the Company. It is currently
estimated that the Company's obligation related to Order No. 636 transition
costs will amount to $25.1 million.
Information regarding take-or-pay charges and FERC Order No. 636
transition costs, including the recoverability of these costs under the
Company's rate structure, is contained under the caption "Gas Energy Costs" in
the "Review of the Company's Results of Operations and Financial Condition",
in Note 1 of the Notes to the Consolidated Financial Statements under the
caption "Rate Regulation" and in Note 12 of the Notes to Consolidated
Financial Statements under the caption "Gas Supply and Storage Contracts" on
pages 14, 23 and 29, respectively, of the 1995 Annual Report to Shareholders,
which material is incorporated by reference in this Form 10-K Annual Report.
Reference is also made to Item 3, "Legal Proceedings", of this Form 10-K
Annual Report.
Diversified Activities
Both the Company and RECO have certain non-utility subsidiaries which
engage in the following diversified, non-regulated business activities: gas
marketing, real estate development and gas production. The Company's
Consolidated Financial Statements, which are incorporated in this Form 10-K
Annual Report by reference to the Company's 1995 Annual Report to
Shareholders, include the results of operations of all diversified activities.
In addition, the diversified activities are considered to be a reportable
business segment, due to the fact that the gross operating revenues of the
non-regulated business activities, which are primarily attributable to the gas
marketing activities, account for more than 10 percent of the Company's total
consolidated gross revenues. The nature of the gas marketing business is
such, however, that the net earnings realized from this activity, and from all
non-regulated activities combined, are not material. In addition, neither the
assets of the non-regulated businesses nor the continued operation of the non-
regulated business lines are material to the operations of the Company. For
these reasons, the disclosure related to the Company's diversified activities,
as prescribed by Regulation S-K, has, with few exceptions, been omitted from
other sections of this Form 10-K Annual Report.
Capital contributions to the non-utility subsidiaries by the Company and
RECO are borne by the shareholders. Any profits, losses, or tax savings from
investments in non-utility subsidiaries accrue to the shareholders and are not
included in the cost of service for ratemaking purposes. A description of the
non-utility subsidiaries of the Company and RECO follows.
Saddle River Holdings Corp. SRH, a wholly owned subsidiary of RECO, was
established for the purpose of investing in non-utility business ventures and,
through subsidiaries, is currently engaged in natural gas marketing. The gas
marketing activities were formerly carried out by O&R Energy, Inc. Effective
February 28, 1995, the gas marketing assets of O&R Energy (now NHI) were
assigned to NORSTAR Partnership. The general partner of NORSTAR
Partnership is NMI and the limited partner is Shell NORSTAR Inc., a wholly-
owned subsidiary of Shell Gas Trading Company, a Delaware corporation. The
NORSTAR Partnership currently provides natural gas to industrial, commercial
and institutional end users, gas distribution companies, gas marketing
companies and electric generating facilities in 32 states, the District of
Columbia and Canada. Additional information regarding NORSTAR Partnership is
contained in the "Review of the Company's Results of Operations and Financial
Condition" under the caption "Diversified Activities" on page 14 of the 1995
Annual Report to Shareholders, which information is incorporated by reference
in this Form 10-K Annual Report.
A subsidiary of NHI, Millbrook, holds approximately twelve acres of non-
utility real estate in Morris County, New Jersey. In December 1995 the
Company adopted a plan to sell the Millbrook real estate and wrote-down its
investment to the estimated net realizable value. Broadcasting activities
were conducted through Atlantic Morris Broadcasting, Inc., a subsidiary of SRH
which owned radio stations WKTU (FM) in Ocean City, New Jersey, WABT (FM) in
Dundee, Illinois, WALL (AM) and WKOJ (FM) in Middletown, New York and WCSO
(FM) and WLPZ (AM) in Portland, Maine. In September 1994, the Company adopted
a formal plan to sell the broadcasting properties and at December 31, 1995 the
sales of all broadcasting properties had been completed. Additional
information regarding the sale is contained in the "Review of the Company's
Results of Operations and Financial Condition" under the caption "Diversified
Activities", and in Note 1 of the Notes to Consolidated Financial Statements
under the caption "Sale of Broadcast Properties" on pages 14 and 24,
respectively, of the 1995 Annual Report to Shareholders, which information is
incorporated by reference in this Form 10-K Annual Report.
Clove Development Corporation. Clove, a wholly-owned subsidiary of the
Company, holds approximately 5,200 acres of real estate, located primarily in
the Mongaup Valley region of Sullivan County, New York. Historically, Clove's
revenues have been derived primarily from the sale of timber and sand,
property rentals and periodic sales of land.
Certain portions of Clove's property lend themselves to recreational
development. Two small subdivisions have been developed and substantially
sold off. A third development, Lakeside Forest at Swinging Bridge, is
actively being marketed, with nine lots having been sold through 1995. In
addition, during December 1995 Clove sold a single parcel of land consisting
of approximately 300 acres.
O&R Development, Inc.. ORD, a wholly owned subsidiary of the Company,
was established to promote industrial and corporate development within the
Company's service territory by providing improved sites and buildings. ORD's
activities are aimed at attracting new business and industry to the Company's
service territory, which would spread fixed costs for electricity and gas over
a wider customer base.
ORD owns Interchange Commerce Center ("ICC Project"), a 300 acre tract
of land in Orange County, New York. The ICC Project has governmental
approvals for the development of 2.7 million square feet of light industrial,
office, warehouse and retail space. Approximately 2,000 linear feet of street
and utilities have been installed, and two buildings, owned by ORD, totaling
over 200,000 square feet have been completed and fully leased.
During 1994 ORD entered into a contract for the sale of 60 acres of land
to the K-Mart Corporation. This contract was terminated by K-Mart Corporation
in November 1995 and ORD is continuing to market the property.
O&R Energy Development, Inc. ORED, a wholly-owned subsidiary of the
Company, was engaged in oil and gas production through ownership interests in
producing wells in Texas, Mississippi, Ohio and Pennsylvania. During 1995,
ORED's net investment in producing properties was written down and all of
ORED's oil and gas interests were sold effective December 1, 1995. ORED
ceased operations during 1996.
Additional information regarding the non-utility subsidiaries of the
Company and of RECO is contained in the Annual Report to Shareholders, which
information is incorporated by reference in this Form 10-K Annual Report, as
follows: in the "Review of the Company's Results of Operations and Financial
Condition" beginning on page 11 under the captions "Financial Performance" and
"Diversified Activities"; and in the Notes to Consolidated Financial
Statements beginning on page 23 in Note 1 under the captions "Principles of
Consolidation" and "Sale of Broadcast Properties", in Note 9, "Fair Value of
Financial Instruments" under the caption "Gas Futures Contracts" and in Note
13, "Segments of Business".
Construction Program and Financing
Construction Program. The construction expenditures, excluding
allowance for funds used during construction, of the Company and its utility
subsidiaries for 1996 are presently estimated at approximately $52.8 million,
which consist primarily of routine production, transmission and distribution
projects for capital replacements or system betterments and do not include any
additions to generating capacity. The Company's construction program is under
continuous review and the estimated construction expenditures are, therefore,
subject to periodic revision to reflect, among other things, changes in energy
demands, economic conditions, environmental regulations, changes in the timing
of construction activities, the level of internally generated funds and other
modifications to the construction program.
Information regarding the Company's construction program is contained
under the caption "Liquidity and Capital Resources" in the "Review of the
Company's Results of Operations and Financial Condition" and under the caption
"Construction Program" in Note 12 of the Notes to Consolidated Financial
Statements on pages 15 and 29, respectively, of the 1995 Annual Report to
Shareholders, which material is incorporated by reference in this Form 10-K
Annual Report.
Financing. The Company has historically used short-term borrowings in
the form of commercial paper to finance construction expenditures when such
expenditures exceeded internally generated funds and to finance short-term
working capital requirements. Short-term borrowings undertaken for
construction expenditures are periodically repaid with internally generated
funds and the proceeds of long-term debt and equity offerings.
At December 31, 1995, the Company and its utility subsidiaries had
unsecured bank lines of credit totaling $64.5 million. Commercial paper
borrowings, which are supported by such credit lines, amounted to $61.3
million at year end. Additional information regarding the Company's short-
term debt position is contained in Note 8 of the Notes to Consolidated
Financial Statements - "Cash and Short-Term Debt" on page 27 of the 1995
Annual Report to Shareholders, which material is incorporated by reference in
this Form 10-K Annual Report.
The external financing activities of the Company and its utility
subsidiaries during 1995 were limited to refinancing of certain pollution
control revenue bonds. Information regarding the refinancing and other
disclosures related to liquidity are contained under the caption "Liquidity
and Capital Resources" in the "Review of the Company's Results of Operations
and Financial Condition" and in Note 7 of the Notes to Consolidated Financial
Statements - "Long-Term Debt" on pages 15 and 26, respectively, of the 1995
Annual Report to Shareholders, which material is incorporated by reference in
this Form 10-K Annual Report.
The Company currently has no plans for the issuance of additional debt
or equity securities and it is expected that capital requirements will be met
primarily with funds from operations, supplemented with short-term debt as
required. However, the Company has certain series of debt which will mature
during 1997 and which may be refinanced at maturity. In addition, the Company
will continue to examine the potential for reducing the cost of debt through
the evaluation of debt refinancings.
The non-utility subsidiaries of the Company and RECO also maintain
certain lines of credit and undertake long and short-term borrowings or make
investments from time to time. NORSTAR Partnership maintains a $20 million
line of credit with one commercial bank under which there was $7.3 million
outstanding at December 31, 1995. Non-utility temporary cash investments
amounted to $1.3 million at December 31, 1995.
For a description of the non-utility subsidiaries of the Company and of
RECO, see "Diversified Activities" in Item 1 of this Form 10-K Annual Report.
Information regarding certain financial statistics of the Company is
contained under the caption "Financial Statistics" on page 36 of the 1995
Annual Report to Shareholders, which material is incorporated by reference in
this Form 10-K Annual Report.
Credit Ratings. The current ratings of the Company's principal
securities and its commercial paper are as follows:
Duff and
Phelps
Moody's Standard Credit Fitch
Investors & Poor's Rating Investors
Service,Inc. Corporation Company Service,Inc.
First Mortgage Bonds A3 A- A+ A-
Pollution Control Bonds Baa1 A- A N/R
Unsecured Debt Baa1 A- A A-
Preferred Stock baa1 BBB+ A- A-
Commercial Paper P-2 A-2 D-1 F-2
The Company's credit ratings are subject to periodic revision or
withdrawal by the particular rating agency, and each rating should be
evaluated independently of any other rating. The ratings assigned to the
Company's securities by the rating agencies are not a recommendation to
buy, sell or hold the Company's securities, but rather are assessments of
the respective credit-worthiness of the Company's various securities by
the rating agencies. The Company's bonds have an upper medium grade
credit rating, its preferred stock has a lower medium grade credit rating
and its commercial paper has an upper medium grade credit rating.
Regulatory Matters
A description of the general character of rate regulation and its
effect on the financial statements of the Company and its utility
subsidiaries, including a disclosure of the Company's regulatory assets,
is contained in Note 1 of Notes to Consolidated Financial Statements under
the caption "Rate Regulation" on page 23 of the 1995 Annual Report to
Shareholders, which information is incorporated by reference in this Form
10-K Annual Report.
State Regulation. The Company and its utility subsidiaries are
subject to the jurisdiction of state commissions in their respective
states of incorporation. The state commissions have the authority to
regulate, among other things, rates, services, the issuance of securities
and accounting and depreciation procedures. The Company is subject to the
jurisdiction of the New York State Public Service Commission ("NYPSC"),
which covers approximately 77% of consolidated energy sales. RECO is
subject to the jurisdiction of the New Jersey Board of Public Utilities
("NJBPU"), which covers approximately 22% of consolidated energy sales.
Pike is subject to the jurisdiction of the Pennsylvania Public Utility
Commission ("PAPUC"), which covers approximately 1% of consolidated energy
sales. Sales for resale, which are subject to regulation by the Federal
Energy Regulatory Commission ("FERC"), accounted for less than 1% of
consolidated energy sales.
Federal Regulation. The Company, pursuant to an order of the
Securities and Exchange Commission, has been exempted from all of the
provisions of the Public Utility Holding Company Act of 1935, except
Section 9(a)(2) thereof relating to the acquisition of securities of other
public utility companies.
The Company and its utility subsidiaries are subject to the
jurisdiction of the FERC as "public utilities". This regulation
primarily relates to sales and exchanges of electricity for resale,
certain transportation, sales and exchanges of natural gas under the
Natural Gas Act, Company sales to its utility subsidiaries and certain
other matters including accounting, recordkeeping and reporting.
Other Regulation. The Company and its utility subsidiaries are also
subject to regulation by various other Federal, state, county and local
agencies under numerous regulations dealing with, among other things,
environmental matters, energy conservation, long-range planning, fuel use,
plant siting and gas pricing.
Current Rate Activities. Information regarding the current rate
filings of the Company and its utility subsidiaries, including the impact
which the recent events affecting the Company had on the rate proceedings
of the Company and its utility subsidiaries, is contained under the
captions "Investigation and Litigation" and "Rate Activities" in the
"Review of the Company's Results of Operations and Financial Condition" on
pages 11 and 16, respectively, of the 1995 Annual Report to Shareholders,
which information is incorporated by reference in this Form 10-K Annual
Report, as well as in Item 3, "Legal Proceedings" of this Form 10-K Annual
Report. Information regarding NYPSC proceedings dealing with certain
"take-or-pay" gas contract costs is also contained under Item 3, "Legal
Proceedings" of this Form 10-K Annual Report, and in the 1995 Annual
Report to Shareholders in the "Review of the Company's Results of
Operations and Financial Condition" under the caption "Gas Energy Costs"
on page 14 and in Note 12 of the Notes to Consolidated Financial
Statements under the caption "Gas Supply and Storage Contracts" on
page 29, which information is incorporated by reference in this Form 10-K
Annual Report.
Rate Relief. During the five year period ending December 31, 1995,
the Company and its utility subsidiaries have sought rate relief to cover
the impact of increased costs. The amounts of rate relief approved by the
NYPSC, NJBPU and PAPUC are set forth in the following table.
Historical Base Rate Relief
1991 - 1995
Annual Amount Overall Rate Return on
Class of ($000's) of Return Equity
Service Effective Date Requested Granted Granted (%) Granted (%)
Electric - N.Y. 01/01/91 22,483 10,450 9.87(a) 11.45(a)
Gas - N.Y. 12/29/91 3,570 554 9.42 10.3
Electric - N.J. 01/24/92 12,863 5,100 10.17 12.0
Electric - N.Y. 05/01/92 (b) 5,548 (b) (b)
Gas - N.Y. 12/15/92 7,962 3,776 10.04(c) 11.65(c)
Electric - N.J. 01/01/93 (d) 1,685 - -
Electric - N.Y. 05/01/93 (e) 691 - -
Electric - Pa. 06/11/93 498 270 (f) (f)
Gas - Pa. 06/25/93 36 12 (f) (f)
Electric - N.Y. 07/01/94 (g) -0- (h) (h)
Gas - N.Y. 11/04/94 (i) (i) (i) (i)
Electric - N.Y. 05/01/95 (j) -0- - -
Electric - N.Y. 08/01/95 (6,112) (6,112) (k) 11.3%(k)
(a) The Company was provided with an opportunity to earn a return on
common equity of 12.51%, and an overall rate of return of 10.32%,
through the achievement of incentives related to certain DSM and
customer service goals. For 1993, the value of the incentive related
to DSM goals increased the total opportunity to earn a return on
common equity to 12.61%. However, effective January 1994, the DSM
incentive was reduced and the customer service incentive was
eliminated.
(b) The first post rate year filing made in accordance with the NYPSC
Order in the Company's 1989 electric base rate case provided for the
recovery in base rates of inflation on non-fuel operation and
maintenance expenses, rate base additions and cost of capital. The
base rate increase amounted to $5,548,000. In addition, the Company
was permitted to recover a one-time surcharge of $1,869,000 which
represents a net undercollection resulting from the reconciliation of
revenue and expenses and earned incentives for the year 1991 as
provided for in the 1989 Order.
(c) Under a multi-year gas rate agreement (1993-1996), the Company was
provided with an opportunity to earn a return on common equity of
12.15% through the achievement of incentives related to its main
replacement program, gas efficiency programs and gas marketing
programs.
(d) Rate increase as ordered by the NJBPU to reflect the effect of revised
legislation regarding gross receipts and franchise taxes. Rate
recovery with interest is permitted over a ten-year period.
(e) The second post rate year filing made in accordance with the NYPSC
Order in the Company's 1989 electric base rate case provided for the
recovery of inflation on non-fuel operation and maintenance expenses,
rate base additions and cost of capital. The base rate increase
amounted to $691,000. In addition, the Company was permitted to
replace the $1,869,000 one-time surcharge with a one-time surcharge of
$10,617,000 which represents a net undercollection resulting from the
reconciliation of revenue and expenses and earned incentives for the
year 1992 as provided for in the 1989 Order.
(f) No redetermination of the rate of return on common equity was made
under a stipulated agreement. The implied return on common equity is
12.00%, and the implied overall rate of return is 9.98%.
(g) The third post rate year filing made in accordance with the NYPSC
Order in the Company's 1989 electric base rate case allowed the
Company to replace the $10,617,000 one-time surcharge with a one-time
surcharge of $7,721,000 which represents a net undercollection
resulting from the reconciliation of revenue and expenses and earned
incentives for the year 1993 as provided for in the 1989 Order.
(h) By means of its Order dated June 10, 1994, the NYPSC, among
other things, continued the Revenue Decoupling Mechanism
("RDM") and reduced the return on equity threshold for
measuring excess earnings from 12.0% to 10.6%. The Company
was required to defer earnings in excess of 10.6%.
(i) On November 4, 1994, the NYPSC issued an order terminating the multi-
year gas rate agreement. The order denied the Company the opportunity
for rate adjustments in the third and fourth years (1995 and 1996) of
the agreement. On February 7, 1995, the Accounting and Finance
Division of the NYPSC issued an interpretation of the November 4, 1994
termination order which stated that the gas incentive mechanism
related to the attainment of certain goals is no longer available.
The Company did not contest this interpretation.
(j) On February 17, 1995, the Company submitted a compliance filing
regarding the operation of the RDM. The filing included a proposal to
eliminate the $7,721,000 effective May 1, 1995 reflecting the
completion of the recovery of an RDM undercollection applicable to the
year 1993. In addition, the filing requested that a net
overcollection of $689,000 for the year 1994 be retained by the
Company as a future rate moderator, subject to NYPSC verification. On
April 19, 1995, the NYPSC approved the proposals, and the one-time
surcharge was eliminated effective May 1, 1995.
(k) On May 25, 1995, the Company filed a petition to reduce base electric
rates by $6.1 million (1.8%) effective April 1, 1996. In accordance
with a settlement agreement the Company agreed to reduce its base
rates by $6.1 million annually effective August 1, 1995. The
settlement replaces the 10.6% earnings limitation imposed by order
issued June 10, 1994 with equal sharing of electric earnings in excess
of 11.3%. The NYPSC is expected to issue an order addressing the
Company's May 1995 electric base rate petition in April 1996.
Utility Industry Risk Factors
The electric and gas utility industry is exposed to many of the
general business and financial risks which affect all industries on a
local, national or international level. It is also exposed to business
and financial risks that are particular to the provision of utility
services and to operating a business in a regulated environment. In
particular, the industry is exposed to risks relating to, among other
things, increasing competition in the wholesale power markets and a move
to competition in the retail sector; uncertainties regarding the
transition mechanisms, both operating and financial, as the industry moves
to deregulation, including the potential for stranded, or non-recoverable
costs; increases in fuel costs and uncertainties as to fuel supplies;
numerous environmental restrictions, including potential liabilities for
environmental matters; regulatory constraints, including the timing and
adequacy of rate relief; increases in the cost of, and delays in,
construction in an industry which is fixed-asset intensive; the attraction
of capital in an industry which is capital intensive; the effects of
energy conservation and weather related sales fluctuations, both of which
have the potential of causing revenue erosion; and the requirement to
provide for growth in demand for energy services.
The Company and its utility subsidiaries are, to some extent,
experiencing all of these challenges. However, the impact on the Company
and its utility subsidiaries has been less than for the utility industry
in general, particularly due to the Company's relatively low construction
expenditures and low external financing requirements. In addition, rate
procedures which have been in effect for the Company's New York electric
and gas operations had the effect of mitigating certain risks. The RDM
procedures safeguarded revenue from the effect of sales volume changes due
to customer conservation and weather related fluctuations and provided
deferral and reconciliation procedures for certain categories of expenses,
while the DSM program provided incentives related to the achievement of
certain energy conservation goals.
In the context of the Company's pending rate petition before the
NYPSC, these mechanisms are not expected to be continued. However, the
Company is committed to managing the risks which are present in the
changing utility environment. Included in this strategy are the
maintenance of low construction and operating budgets and avoiding
external financing. The Company's tri-fuel strategy provides flexibility
regarding fuel availability and pricing and the continuance of fuel clause
adjustment mechanisms in the rate structures of the Company and its
utility subsidiaries assures fuel cost recovery on a current basis. With
regard to future power supply, the Company will continue to utilize
competitive bidding procedures to mitigate the risks associated with the
Company's purchase of both electric capacity and energy, particularly with
regard to prudency determinations, and cost recovery, and to insure
sufficient power supply to meet the growth in demand. Recent actions
taken by the Company to mitigate the risk of non-competitive future energy
prices include the write-off of two of the Company's older generating
units and the successful negotiation of termination agreements with three
independent power producers with whom the Company had power supply
contracts. In addition, as the industry moves to increased competition
and potential deregulation, the Company has taken an active role in the
competitive opportunities proceedings in the states in which it operates
and has worked extensively with industry groups and the NYPP in designing
the future framework for the utility industry.
Additional information concerning the DSM program and the RDM rate
procedure is contained under the captions "Electric Operating Revenues and
Sales", "Gas Operating Revenues and Sales" and "Rate Activities" in the
"Review of the Company's Results of Operations and Financial Condition"
on pages 12, 13 and 16, respectively, of the 1995 Annual Report to
Shareholders, which material is incorporated by reference in this
Form 10-K Annual Report. Reference is also made to the caption "Future
Energy Supply and Demand" in this Item 1. Information concerning
competition in the utility industry and the Company's strategy for
meeting the challenges of increased competition is also contained in
the "Review of the Company's Results of Operations and Financial Condition
under the caption "Competition" on page 18 of the 1995 Annual Report to
Shareholders, which material is incorporated by reference in this
Form 10-K Annual Report. Reference is also made to the section
"Competition" in this Item 1.
The problems associated with nuclear energy have not affected the
Company as it has no operating nuclear plants nor any under construction,
and has no plans for future participation in nuclear projects. For
further information on the recovery by the Company of its investment
in the cancelled Sterling Nuclear Project, see Note 3 of the Notes to
Consolidated Financial Statements - "Sterling Nuclear Project" on page 25
of the 1995 Annual Report to Shareholders, which information is
incorporated by reference in this Form 10-K Annual Report.
Competition
There are competitive factors present in the electric and gas
industry which affect utility companies in varying degrees. Among these
are the use by interruptible or dual-fuel customers of lower priced
alternative fuels; the establishment of municipal distribution agencies;
the ability of gas producers to sell gas directly to end users, usually
through an independent gas marketer; the presence of cogenerating systems,
small power producers and independent power producers; and the increasing
interest in, and research on, the development of energy sources other than
those now in use. In addition, regulatory agencies in the three states in
which the Company has retail electric franchises are currently evaluating
possible changes in regulatory and ratemaking practices designed to
promote increased competition. Depending on future development in this
area, the Company's market share and profit margins could become subject
to competitive pressures in addition to regulatory constraints.
Additional information regarding competition in the utility industry
and the Company's strategy for meeting the challenges of increased
competition is contained in the "Review of the Company's Results of
Operation and Financial Condition" under the caption "Competition" on
page 18 of the 1995 Annual Report to Shareholders, which information is
incorporated by reference in this Form 10-K Annual Report.
Marketing
In response to the increasingly competitive market environment in the
utility industry, the Company has redirected its marketing activities.
One of the primary focuses of the new marketing strategy is to work more
closely with commercial and industrial customers in order to identify the
business issues which impact these customer classes. This will provide
the base for the development of new products, services and strategies
which will be aimed at retaining and expanding this customer base.
DSM activities will remain a major focus of the new marketing
strategies in the continuing effort to achieve energy efficiency while
helping customers to reduce their energy costs. Emphasis will move from
the customer rebate aspect of the DSM programs to energy cost savings
which may be realized through these programs. In addition, research into
new and emerging technologies has been given new emphasis in the Company's
marketing strategy.
Environmental Matters
The Company is subject to regulation by Federal, state, county and,
to some extent, local authorities with respect to the environmental
effects of its operations, including regulations relating to air and water
quality, aesthetics, levels of noise, hazardous wastes, toxic substances,
protection of vegetation and wildlife and limitations on land use. In
connection with such regulation, various permits are required with respect
to the Company's facilities. Generally, the principal environmental areas
and requirements to which the Company is subject are as follows:
Water Quality. The Company is required to comply with Federal and
State water quality statutes and regulations, including the Federal Clean
Water Act ("Clean Water Act"). The Clean Water Act requires that Company
generating stations be in compliance with state issued State Pollutant
Discharge Elimination System Permits ("SPDES permits"), which prescribe
applicable conditions to protect water quality. Effective July 1, 1994,
the State of New York Department of Environmental Conservation (the
"NYSDEC") issued a new SPDES permit for the Company's Lovett Coal Ash
Management Facility. The Company also has a SPDES permit, effective
October 1, 1991 for its Lovett generating station. The Lovett SPDES
permit will expire on October 1, 1996. A renewal application will be
filed within the statutory deadline. Additional information concerning
the Lovett SPDES permit is contained in Item 3, "Legal Proceedings" of
this Form 10-K Annual Report.
The Bowline Point generating station currently operates under a SPDES
permit which expired on October 1, 1992. This permit remains in effect
since a permit renewal application was filed on April 3, 1992, which was
within the statutory deadline for renewal application. The Company is now
proceeding with the State Environmental Quality Review Act ("SEQRA")
process as part of the permit renewal procedure. The SEQRA process, and
the resulting delay in issuance of a new permit to the Company, has had no
practical impact on the operation of the Bowline Point generating station.
The Company entered into a settlement with the United States
Environmental Protection Agency ("EPA") and others that relieved the
Company for at least 10 years from a regulatory agency requirement that,
in effect, would have required that cooling towers be installed at the
Bowline Point generating station. In return, the Company agreed to
certain plant modifications, operating restrictions and other measures.
This settlement expired in May 1991. On May 15, 1991, the Company and
others entered into an Interim Agreement with the NYSDEC to continue
specific operating conditions and other measures for a period from May 15,
1991 to September 30, 1992. Several intervenors to the original
settlement filed a civil action challenging the Interim Agreement's
legality. On March 23, 1992, the parties to the Interim Agreement and
intervenors signed a Consent Order terminating litigation and agreeing to
certain operating limitations and biological monitoring requirements. The
parties have agreed to extend the terms of the Consent Order until
February 1, 1997.
Air Quality. Under the Federal Clean Air Act, the EPA has
promulgated national primary and secondary air quality standards for
certain pollutants, including sulfur oxides, particulate matter and
nitrogen oxides. The NYSDEC has adopted, and the EPA has approved, the
New York State Implementation Plan ("SIP") for the attainment, maintenance
and enforcement of these standards. In order to comply with the SIP, the
Company burns #6 fuel oil at its Lovett and Bowline Point generating
stations with a 0.37% maximum sulfur content by weight.
Pursuant to the SIP, the Company is governed by the following
limitations when it is burning coal at Lovett Units 4 and 5: if one unit
is burning, the Company may emit sulfur dioxide at a rate not to exceed
1.5 lb/MMBTU, and if two units are burning, the Company may emit sulfur
dioxide at a rate not to exceed 1.0 lb/MMBTU per unit.
The NYSDEC has requested EPA approval of revisions to the SIP to meet
ozone attainment standards and to provide a mechanism for Title V
emissions fee billing as defined under the Clear Air Act. Beginning with
calendar year 1994, the owners of Title V sources in New York State, which
sources include the Company's Lovett Plant and Bowline Point Plant, are
required to pay an emission fee based upon actual air emissions reported
to NYSDEC at a rate of approximately $26 per ton of air emissions. In
1995, the Company paid approximately $473,000 in such emission fees,
approximately $98,000 of which was recovered from Con Ed pursuant to the
Bowline Point Plant operating agreement. In 1996, this emission fee will
be based on 1995 air emissions at a rate established by the NYSDEC not to
exceed $50 per ton.
The Clean Air Act Amendments of 1990, which became law on
November 15, 1990, could restrict the Company's ability to meet increased
electric energy demand after the year 2000 or could substantially increase
the cost to meet such demand. Regulations pertaining to nitrogen oxide
reduction and continuous emissions monitoring systems required capital
expenditures totalling approximately $28.7 million through 1995. The
Company will continue to assess the impact of the Clean Air Act Amendments
of 1990 on its power generating operations as additional regulations
implementing these Amendments are promulgated.
Toxic Substances and Hazardous Wastes. The Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986 ("Superfund"),
provides that both the owners and operators of facilities where releases
of hazardous substances into the environment have occurred or are
imminent, and the generators and transporters of hazardous substances
disposed of at the facilities, are, regardless of fault, jointly and
severally liable for all response, removal and remedial action costs and
also for damages to natural resources.
As part of its operations, the Company generates materials which are
deemed to be hazardous substances under Superfund. These materials
include asbestos and dielectric fluids containing polychlorinated
biphenyls ("PCBs"), both of which are disposed of at licensed, off-site
locations not owned by the Company. Other hazardous substances may be
generated in the course of the Company's operations or may be present at
Company-owned locations.
The Company has, from time to time, received process or notice of
claims under Superfund or similar state statutes relating to sites at
which it is alleged that hazardous substances generated by the Company
(and, in most instances, by a large number of other potentially
responsible parties) were disposed of. Similar claims may be asserted
from time to time hereafter, involving additional sites. Typically, many
months, and sometimes years, are required to fully determine the probable
magnitude of the cleanup costs for a site, the extent, if any, of the
Company's responsibility, the number and responsibility of other parties
involved, the financial ability of the other parties to pay their
proportionate share of any costs, and the probable ultimate liability
exposure, if any, of the Company. This process is still under way at most
of the sites of which the Company has notice, and the costs at some of
these sites may be substantial. However, based on the information and
relevant circumstances known to the Company at this time, the Company's
share of these costs is not expected to have a material effect on the
financial condition of the Company.
Information concerning certain Superfund claims involving the Company
is included in Item 3, "Legal Proceedings" of this Form 10-K Annual
Report.
Environmental Expenditures. The Company's environmental expenditures
amounted to approximately $26.2 million in 1995.
Compliance with Federal, state and local laws and regulations which
have been enacted or adopted regulating the discharge of materials into
the environment or otherwise relating to the protection of the environment
is not anticipated to have a material effect on the financial condition of
the Company.
The Company's projected environmental expenditures are under
continuous review and are revised periodically to reflect changes in
environmental regulations, inflation, technology and other factors which
are beyond the control of the Company. Although the Company is unable to
predict the ultimate impact of environmental regulations on existing or
proposed facilities or on the operations of the Company, the Company
believes that its expenditures for compliance with environmental
regulations will be given appropriate rate treatment by the respective
regulatory commissions.
Information concerning environmental issues and their potential
effect on the Company's operations is included in Note 12 of the Notes to
Consolidated Financial Statements under the caption "Other Legal
Proceedings" beginning on page 31 of the 1995 Annual Report to
Shareholders, which information is incorporated by reference in this Form
10-K Annual Report, as well as in Item 3 "Legal Proceedings" of this Form
10-K Annual Report.
Research and Development
The Company supports research and development agencies involved in
utility research, provides funds for joint utility research projects and
conducts its own internal program. Research and development expenditures
amounted to approximately $2.9 million in 1995, $3.8 million in 1994 and
$5.0 million in 1993.
The Company provides support to national agencies such as the
Electric Power Research Institute and the Gas Research Institute. At the
state level, the Company supports the Empire State Electric Energy
Research Corporation, the New York State Energy Research and Development
Authority and the New York Gas Group Research, Development and
Demonstration Committee.
Generally, the Company's internal research and development program
concentrates on projects which uphold the corporate goal of providing safe
and reliable electric and gas service to customers at a minimum price and
in an environmentally acceptable manner. The program includes projects
which seek improvement of generation and distribution systems, mitigation
of environmental impacts of electric power generation, and enhancement of
the value of electric energy for customers. Current projects include an
evaluation of the performance characteristics of underground distribution
cable, an evaluation of the efficient use of electrotechnologies at a
municipal wastewater treatment plant, alternative methods to reduce fish
impingement at power plants, small business electrotechnologies studies,
and power quality monitoring and reporting.
Franchises
The Company and its utility subsidiaries, RECO and Pike, each have
municipal consents or franchises, together with their corporate or charter
powers, which give each of them the right to carry on their respective
operations in the territories served. The municipal consents or
franchises held by the Company and its utility subsidiaries are not
exclusive. In certain municipalities, the areas served by the Company,
RECO and Pike are limited either by the terms of the consents or
franchises or by order of the NYPSC, the NJBPU, or the PAPUC,
respectively. Under the present provisions of the State laws of New York,
New Jersey and Pennsylvania, no other private corporation can commence
public utility operations in any part of the territories now served by the
Company, RECO or Pike, respectively, without obtaining a certificate of
public convenience and necessity from the applicable State utility
commission.
A certificate of public convenience and necessity would not be
required with respect to a municipality furnishing electric or gas service
within its borders under the present provisions of the State laws of
New York, New Jersey or Pennsylvania. Municipal corporations, upon
compliance with the State laws of New York, New Jersey or Pennsylvania, as
applicable, are authorized to acquire the public utility service of any
public utility company by purchase or by condemnation. The Company does
not reasonably expect any municipal corporation to acquire the public
utility service of the Company or its utility subsidiaries through either
purchase or condemnation.
The municipal consents or franchises of the Company and its utility
subsidiaries are not uniform and contain, in certain instances, provisions
relating to, among other things, the time of commencing operations, the
furnishing of service to the particular municipality, the approval by the
municipal authorities of the location and construction of distribution
facilities, indemnification of the municipality against liabilities and
damages in consequence of construction, and administrative matters. Such
provisions are not considered by the Company to be unduly burdensome.
Employee Relations
At December 31, 1995, the Company had 1,539 employees of whom 33 were
part-time employees. The Company considers its relationship with its
employees to be satisfactory. The current contract with Local 503 of the
International Brotherhood of Electrical Workers ("IBEW") representing 878
production, maintenance, commercial and service employees of the Company
became effective June 1, 1994 and expires June 1, 1997. This contract
does not include supervisory employees.
The Company's utility subsidiaries, RECO and Pike, have no employees
other than officers. All services are performed for the utility
subsidiaries by employees of the Company pursuant to Joint Operating
Agreements approved by the NJBPU and the PAPUC, through which the Company
is reimbursed for these services. Several employees of the Company
provide managerial and clerical services for the non-utility subsidiaries
of the Company and of RECO, the cost of which are either paid directly by
the subsidiaries or are reimbursed to the Company through periodic
billings. In addition, the non-utility subsidiaries, at December 31,
1995, had 90 full-time and 5 part-time employees, none of whom were
participants in the Company's various employee benefit plans or were
covered by the Company's contract with the IBEW.
Item 2. Properties
The Company's property consists primarily of electric generation,
transmission and distribution facilities and gas distribution facilities.
This property is required for the continued operation of the Company's
major business segments. In addition, the Company maintains certain
miscellaneous utility and non-utility property. The Company's facilities
are in satisfactory condition, are suitable for the particular purpose for
which they were acquired, and are adequate for the Company's present
operations.
Electric Generating Facilities. The Company's generating plants, all
of which are located in New York State, are as follows:
Maximum
Summer Percent Net Mwh
Net Mw of Total Generated
Plant Name Units Energy Source Capacity Capacity in 1995
Swinging Bridge,
Mongaup & Rio 8 Hydroelectric 25.8 2.6% 49,722
Grahamsville 1 Hydroelectric 18.0 1.8 93,354
Hillburn 1 Jet Fuel/Gas 37.0 3.8 2,689
Shoemaker 1 Jet Fuel/Gas 37.0 3.8 19,220
Lovett 3 Coal/Oil/Gas 462.6 47.2 1,767,446
Bowline Point 2 Oil/Gas 400.6(1) 40.8 1,097,149
981.0 100.0% 3,029,580
(1) Company's share of maximum summer net megawatt capability.
Electric Transmission and Distribution Facilities. The Company owns, in
whole or in part, and operates overhead and underground transmission and
distribution facilities which include 551 circuit miles of transmission
lines, 73 substations, 83,079 in-service line transformers, 4,950 pole miles
of overhead distribution lines and 1,934 miles of underground distribution
lines. With the exception of the Grahamsville Substation, the electric
transmission and distribution facilities of the Company and its utility
subsidiaries are located within the Company's New York, New Jersey and
Pennsylvania service territory, which is described under the caption
"Principal Business" in Item 1 of this Form 10-K. The Bowline Substation and
the related transmission facilities are jointly owned by the Company and Con
Ed and are operated by the Company. The Ramapo Substation and certain
related transmission facilities consist of property which is either owned by
the Company, owned by Con Ed or jointly owned by the Company and Con Ed and
which is operated and maintained by the Company except for the 500/345 Kv
section of the Ramapo substation and a 500 Kv transmission line now operated
and maintained by Con Ed effective January 1995.
Gas Facilities. The Company owns and operates three propane air gas
plants at Middletown, Orangeburg and Suffern, New York and its gas
distribution system, which is located within its gas franchise territory in
New York and Pennsylvania, includes 1,723 miles of mains.
Miscellaneous Properties. The Company owns office buildings and
operating facilities in Middletown, Spring Valley, Blooming Grove and West
Nyack, New York, and other structures at different locations within the
Company's service territory which are used as offices, service buildings,
store houses and garages. The Company leases its corporate headquarters in
Pearl River, New York, as well as office space at other locations. In
addition, the Company has lease agreements covering certain of its data
processing equipment, office equipment and vehicle fleet.
Character of Ownership. The Company's electric and gas plants and its
major electric substations are located on land owned by the Company in fee,
except for the Grahamsville Plant and the Bowline Point Plant. The greater
portion of the Grahamsville Plant is located on land leased from the City of
New York and the Bowline Point Plant is located on land in which the Company
has a one-third undivided interest, with the remainder being owned by Con Ed.
Water power and flowage rights for the operation of its Mongaup River Hydro
Plants are controlled by the Company either through ownership of the
necessary land in fee or through easements which are, in practically all
cases, perpetual. In the case of the Grahamsville Plant, however, water is
obtained under contract with the City of New York.
Electric transmission facilities of the Company and its utility
subsidiaries (including substations) are, with minor exceptions, located on
land owned in fee or occupied pursuant to perpetual easements. Electric
distribution lines and gas mains are located in, on or under public highways
or private lands pursuant to lease, easement, permit, municipal consent,
agreement or license, express or implied through use by the Company or its
utility subsidiaries without objection by the owners. In the case of
distribution lines, the Company owns approximately 60% of the poles upon
which its wires are installed and has a joint right of use in the remaining
poles on which its wires are installed, which poles are owned, in most cases,
by telephone companies.
The Company's electric and gas plants are owned by the Company except
for the gas turbines at Hillburn and Shoemaker which are leased and the
Bowline Point Plant which is jointly owned with Con Ed and operated by the
Company. Additional information regarding the investment in the Bowline
Point Plant by the Company and Con Ed is included in Note 1 of the Notes to
Consolidated Financial Statements under the caption "Jointly Owned Utility
Plant" on page 24 of the 1995 Annual Report to Shareholders, which material
is incorporated by reference in this Form 10-K Annual Report.
Substantially all of the utility plant and other physical property owned
by the Company and its utility subsidiaries is subject to the liens of the
respective indentures securing the first mortgage bonds of the Company and
its utility subsidiaries.
Investments in securities of the utility subsidiaries costing $11.8
million which have been eliminated from the Consolidated Balance Sheet are
pledged under the Company's First Mortgage Indenture, as amended and
supplemented.
Item 3. Legal Proceedings
Environmental and Other Litigation:
On May 11, 1993, Hudson Riverkeeper Fund, Inc. v. Orange and Rockland
Utilities, Inc. was commenced in the United States District Court for the
Southern District of New York. In its complaint, Hudson Riverkeeper Fund,
Inc. ("Riverkeeper") alleged that the Company violated and continues to
violate its SPDES permit for its Lovett Generating Station ("Lovett") by
failing to maintain cooling water intake structures that reflect the best
technology available for minimizing adverse environmental impact. An amended
complaint was filed May 18, 1993. The complaint, as amended, requested that
the Court assess civil penalties aggregating $11 million and ordered the
Company to take steps to ensure that the cooling water intake structures at
Lovett reflect the best technology available for minimizing adverse
environmental impact. On June 30, 1993, the Company filed its answer to
Riverkeeper's allegations reflecting the Company's belief that Riverkeeper's
allegations have no legal merit. Subsequently, the NYSDEC intervened in this
litigation as a designated plaintiff. In April 1994, the parties agreed to
have engineers enter into discussions regarding modifications to the Lovett
plant's cooling water intake structures or alternative mitigative options.
From June to August 1995, the Company conducted a demonstration project
to assess the effectiveness of a barrier known as a "Gunderboom", at the
cooling water intake structure for Lovett Unit No. 3. The Company,
Riverkeeper and NYSDEC have agreed that the Gunderboom is worthy of further
study. The Company will install the Gunderboom at the cooling water intake
structure for Lovett Units Nos. 4 and/or 5 in the spring of 1996. The
parties have agreed to postpone all further discovery and motion practice in
this litigation until at least June 1996.
Additional information regarding the Company's SPDES Permits is
contained under the caption "Water Quality" of "Environmental Matters" in
Item 1 of this Form 10-K.
Reference is made to Item 3, Legal Proceedings, in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 for a
description of litigation entitled Warwick Administrative Group, et al. v.
Avon Products, Inc. et al. ("Warwick"). In U.S.A. v. International Paper
Co., et al. ("International Paper"), an action related to Warwick which
seeks to recover costs incurred by the United States Environmental Protection
Agency in connection with the planned remediation of the Warwick landfill
site, the Company was served with third party summonses and complaints by
Revere Smelting and Refining Corporation ("Revere") and Nepera Inc. The
Company's answers to the third party complaints from Nepera, Inc. and Revere,
denying all of the allegations contained therein and setting forth a number
of affirmative defenses, were filed on October 25 and November 6, 1995,
respectively. The Company is actively involved in settlement discussions
with the Warwick plaintiff group, which proposed settlement would also
include claims arising under the International Paper action. The Company has
determined that its liability, if any, in Warwick and International Paper
will not have a material effect on the financial condition of the Company.
On September 25, 1991, the Company was named as one of several hundred
third party defendants in United States v. Kramer, et al. and State of New
Jersey Dep't of Environmental Protection v. Almo Anti-Pollution Services, et
al., which cases have been consolidated in the United States District Court
for the District of New Jersey, Camden Vicinage. The allegations in
this action concern the Helen Kramer Landfill site in Mantua, New Jersey,
which operated from 1963 to 1981. This action was brought under Superfund
laws. Additional information concerning Superfund laws is contained under
the subheading "Environmental Matters" in Item 1 of this Form 10-K Annual
Report. It is presently unclear if any hazardous waste generated by the
Company was transported to the Helen Kramer Landfill site. The total cost of
remediation and damages at the site, while not clearly established, is
reportedly estimated at $100 million or more. It appears reasonable to
expect the Company's relative contribution to the Helen Kramer site, if any,
to have been less than 1% of the total volume sent to the site. At this
time, the Company does not believe this action will have a material effect on
the financial condition of the Company.
Reference is made to Item 3, "Legal Proceedings", in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994 for a
description of litigation entitled Carpenters Local No. 964 Pension Fund v.
DiGiacinto et al. ("DiGiacinto"), Guarino et al. v. Carpenters Local No. 964
Pension Fund ("Guarino"), and United States Gypsum Company v. Broadhaver
Realty Corp. ("U.S. Gypsum"). In August 1995, the parties to the DiGiacinto,
Guarino and U.S. Gypsum litigations entered into a settlement agreement
which, inter alia, provided for (i) the dismissal of the above-cited actions
and (ii) remediation of the site. The Company contributed $16,995 to the
settlement fund.
On March 29, 1989, the New Jersey Department of Environmental Protection
("NJDEP") issued a directive under the New Jersey Spill and Control Act to
various potentially responsible parties ("PRPs"), including the Company, with
respect to a site formerly owned and operated by Borne Chemical Company in
Elizabeth, Union County, New Jersey, ordering certain interim actions
directed at both site security and the off-site removal of certain hazardous
substances. Certain PRPs, including the Company, signed an administrative
consent order with the NJDEP requiring them to perform a removal action at
the site, which action was completed on June 22, 1992. In October 1995, the
PRPs entered an additional administrative consent order with the NJDEP which
obligated the PRPs, including the Company, to perform a remedial
investigation to determine what, if any, subsurface remediation at the Borne
site is required. The Company does not believe that this matter will have a
material effect on the financial condition of the Company.
On May 29, 1991 a group of ten electric utilities (the "Metal Bank
Group") entered into an Administrative Consent Order with the United States
Environmental Protection Agency ("EPA") to perform a remedial investigation
and feasibility study ("RIFS") at the Cottman Avenue/Metal Bank Superfund
site in Philadelphia, Pennsylvania. PCBs have been discharged at the Cottman
Avenue site from an underground storage tank and the handling of transformers
and other electrical equipment at the site. On May 25, 1994, the Company
entered into a tolling agreement pursuant to which the Metal Bank Group
reserved its right to file suit against the Company while the Metal Bank
Group and the Company entered into discussions to determine the extent of the
Company's involvement with the Cottman Avenue site. These discussions
continue. The RIFS has been completed and submitted to the EPA for
determination of what remedial measures will be required at the Cottman
Avenue site. The Company is unable at this time to estimate its share, if
any, of past or future costs at this site.
On August 2, 1994 the Company entered into a Consent Order with the New
York State Department of Environmental Conservation ("NYSDEC") in which the
Company agreed to conduct a remedial investigation of certain property it
owns in West Nyack, New York. Polychlorinated biphenyls ("PCBs") have been
discovered at the West Nyack site. Petroleum contamination related to a
leaking underground storage tank has been found as well. The results of this
investigation will determine what, if any, remediation at the West Nyack site
will be required. The Company does not believe that this matter will have a
material effect on the financial condition of the Company.
The Company has identified six former Manufactured Gas Plant ("MGP")
sites which were owned and operated by the Company or its predecessors. The
Company may be named as a potentially responsible party for these sites under
relevant environmental laws, which may require the Company to clean up these
sites. To date, no claims have been asserted against the Company. The
Company and the NYSDEC have executed a Consent Order, dated as of January 8,
1996, which provides for preliminary site assessments of these six MGP sites.
The Company is unable at this time to estimate what, if any, costs it will
incur at these sites.
The Company has been named as a defendant or third-party defendant in a
number of proceedings involving alleged personal injuries, primarily to
construction workers, as a result of exposure to asbestos at facilities owned
and operated by the Company. Discovery with regard to these cases will
determine, among other things, if the plaintiffs in each of these cases
worked at Company facilities. The Company anticipates that similar asbestos-
related claims may be asserted against the Company from time to time in the
future. However, at this time the Company does not believe that the
asbestos-related lawsuits currently outstanding, nor those which may be
brought in the future, will, individually or in the aggregate, have a
material effect on the financial condition of the Company.
Superfund and certain similar state statutes authorize various
governmental authorities to issue orders compelling responsible parties to
take cleanup action at sites determined to present an imminent and
substantial danger to the public and to the environment because of an actual
or threatened release of hazardous substances. The Company is a party to a
number of administrative proceedings involving potential impact to the
environment. Such proceedings arise out of, without limitation, the
operation and maintenance of facilities for the generation, transmission and
distribution of electricity and natural gas. Information regarding the
Company's involvement in these various proceedings is included in Note 12 of
the Notes to Consolidated Financial Statements under the caption
"Environmental" on page 32 of the 1995 Annual Report to Shareholders, which
information is incorporated by reference in Item 1 of this Form 10-K Annual
Report, as well as under the subheading, "Environmental Matters" of this Form
10-K Annual Report. Such proceedings are not, in the aggregate, material to
the financial condition of the Company.
Reference is made to Item 3, Legal Proceedings, in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 for a
description of litigation entitled Payran v. Orange and Rockland Utilities,
Inc. and James Donnery ("Payran"). The Company has determined that its
liability, if any, in Payran will not have a material effect on the financial
condition of the Company.
Investigation Related Litigation:
On February 7, 1994, the Company commenced, by the filing of a Summons
with Notice, Orange and Rockland Utilities, Inc. v. James F. Smith, in New
York State Supreme Court, County of Rockland, against James F. Smith, its
former Chief Executive Officer and Chairman of the Board of Directors, who
was terminated for cause by the Company's independent Directors in October
1993. The Summons put Mr. Smith on notice of claims for breach of his
fiduciary duties of loyalty and care, waste, conversion, fraud, and unjust
enrichment based on allegations that Mr. Smith misused Company assets and
personnel and misappropriated Company funds for his own benefit or for other
improper purposes, and failed to maintain proper management controls or to
properly supervise corporate affairs and subordinate employees. The Company
seeks an accounting by Mr. Smith of certain Company funds and property,
restitution of all amounts misappropriated, misused, or unaccounted for,
forfeiture of compensation paid or awarded by the Company to Mr. Smith during
the period in which breaches of fiduciary duties occurred, and compensatory
and punitive damages. The Company seeks recovery in an amount not less than
$5 million.
Under the terms of his employment agreement, Mr. Smith had the right to
contest his termination for cause in an arbitration proceeding. On May 5,
1994, Mr. Smith filed a motion demanding arbitration of his termination for
cause and the Company's claims asserted against him in Orange and Rockland
Utilities, Inc. v. James F. Smith. On June 17, 1994, the Court issued an
Order granting Mr. Smith's motion to compel arbitration. Pursuant to a
second Court Order dated August 10, 1994, the parties filed their demands for
arbitration with the American Arbitration Association. In the arbitration,
Mr. Smith is seeking payment of benefits in excess of $3 million. Hearings
began in June 1995 and are continuing.
Reference is made to Item 3, "Legal Proceedings", in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and to
Part II, Item 1, "Legal Proceedings", in the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995 for a description of a criminal
action brought against Mr. Smith by the Rockland County (New York) District
Attorney. As noted therein, a Rockland County Grand Jury indictment charged
Mr. Smith with 15 felony counts of grand larceny, seven counts of falsifying
business records and two misdemeanor counts of petit larceny. On August 15,
1995, Mr. Smith was acquitted of all of the charges in a non-jury trial.
On September 19, 1995, the Company was served with an Amended Summons
and First Amended Complaint ("Complaint") in James F. Smith v. Kenneth
Gribetz, et al., an action filed in the United States District Court for the
Southern District of New York by Mr. Smith. (An earlier complaint had been
filed which did not name the Company). Named as defendants in the Complaint
are former Rockland County District Attorney Kenneth Gribetz, the Office of
the Rockland County District Attorney, the Company, "John and Jane Does"
(identified in the Complaint as certain directors of the Company and/or
members of the Special Committee of the Board of Directors and referred to in
the Complaint as the "Defendant Directors"), Edwin Stier and Stier, Anderson
& Malone. In the Complaint, Mr. Smith alleges the following three causes of
action: (i) the violation by Mr. Gribetz and the District Attorney's office
of Mr. Smith's federal constitutional rights to fair trial and due process of
law; (ii) malicious prosecution by the Company, Defendant Directors and Mr.
Stier in that these defendants allegedly caused the arrest and criminal
prosecution of Mr. Smith; and (iii) abuse of process by the Company,
Defendant Directors and Mr. Stier in that these defendants were allegedly
responsible for the arrest, indictment and prosecution of Mr. Smith. Mr.
Smith seeks damages in excess of $25 million, special damages and punitive
damages, attorney fees and other costs on each count.
On December 22, 1995, the Company, Edwin Stier, and Stier, Anderson &
Malone filed a Motion for Summary Judgment seeking to terminate this action.
The Motion for Summary Judgment is currently pending. If the Motion for
Summary Judgment is unsuccessful, the Company intends to defend the action
vigorously.
Regulatory Matters:
Information regarding the current rate filings of the Company, including
the impact which the recent events affecting the Company had on the rate
proceedings of the Company, is contained in the 1995 Annual Report to
Shareholders in the "Review of the Company's Results of Operations and
Financial Condition" under the caption "Rate Activities" on page 16 and in
Note 12 of the Notes to Consolidated Financial Statements under the caption
"Legal Proceedings" on page 30, and in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, under Item 3, "Legal
Proceedings" on page 33, which information is incorporated by reference in
this Form 10-K Annual Report.
Information regarding the NYPSC proceeding relating to the NYPSC
investigation of prior financial improprieties and the related rate case
proceeding (Case 95-E-0491) and $8.5 million settlement amount proposed to be
refunded to New York ratepayers is also contained under the caption "Rate
Activities" in the "Review of the Company's Results of Operations and
Financial Condition" on page 16 of the 1995 Annual Report to Shareholders,
which information is incorporated by reference in this Form 10-K Annual
Report. The Company is unable to predict the final results of this
proceeding and what modifications, if any, will be made to the amount
proposed to be refunded to New York ratepayers.
Information regarding the NJBPU audit of RECO and amounts previously
refunded or proposed to be refunded by the Company to New Jersey ratepayers
is contained in the 1995 Annual Report to Shareholders in the "Review of the
Company's Results of Operations and Financial Condition" under the caption
"Rate Activities" on page 17, and in the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995 under Item 2, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
page 10. In addition, by order dated February 21, 1996 the NJBPU approved
RECO's proposed refund of $482,000 while noting that this refund in no way
limits any future NJBPU action which might result from the discovery of
additional misappropriated funds.
Information regarding the Company's involvement in, and the effect on
the Company of, pipeline take-or-pay proceedings before the FERC is contained
under the caption "Gas Energy Costs" in the "Review of the Company's Results
of Operations and Financial Condition" and in Note 12 of the Notes to
Consolidated Financial Statements - "Gas Supply and Storage Contracts" on
pages 14 and 29, respectively, of the 1995 Annual Report to Shareholders,
which material is incorporated by reference in this Form 10-K Annual Report.
Reference is also made to the information contained under the caption "Take-
or-Pay Surcharge Costs and FERC Order No. 636 Transition Costs" of "Gas
Operations" in Item 1 of this Form 10-K Annual Report.
The Company's gas operations were not materially affected by take-or-pay
charges in 1995. However, as required by the NYPSC in Case No. 88-G-062, the
Company has deferred $1.6 million of these costs. By Order dated June 29,
1995, the NYPSC approved a settlement agreement which resolves all issues
concerning the Company's take-or-pay liability. The settlement agreement
allows the Company to recover the $1.6 million of take-or-pay charges and
accrued interest billed to it through February 28, 1995 over the next three
years.
On April 8, 1992, the FERC issued Order No. 636 requiring interstate
natural gas pipelines to unbundle their sales and transportation services and
to offer each of these services on a stand alone basis. It is currently
estimated that the Company's obligation related to Order No. 636 transition
costs will amount to $25.1 million. Information regarding the Company's
involvement in, and effect on the Company of, Order No. 636 and its related
proceedings is contained under the caption "Gas Energy Costs" in the "Review
of the Company's Results of Operations and Financial Condition" and in
Note 12 of the Notes to Consolidated Financial Statements under the caption
"Gas Supply and Storage Contracts" on pages 14 and 29, respectively, of the
1995 Annual Report to Shareholders, which material is incorporated by
reference in this Form 10-K Annual Report. Reference is also made to the
information contained under the caption "Take-or-Pay Surcharge Costs and
FERC Order 636 Transition Costs" of "Gas Operations" in Item 1 of this
Form 10-K Annual Report.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
All of the officers of the Company are appointed on an annual basis
at the first Board of Directors' meeting following the annual meeting. The
following list includes two Company employees who, due to the policy making
functions they perform for the Company, are considered executive officers under
SEC criteria, but who are not officers of the Company and who are not appointed
on an annual basis.
Officers, Age, and Title Business Experience Past Five Years
D. Louis Peoples, 55 Vice Chairman of the Board and Chief
Vice Chairman of the Executive Officer since July 14, 1994.
Board of Directors and Executive Vice President, and a member
Chief Executive Officer of the Board of Directors, Madison
Gas and Electric Company, Madison,
Wisconsin from 1992 to 1993. Senior
Vice President, RCG/Hagler, Bailly
Inc., San Francisco, California from
1991 to 1992. Senior Vice President
and a member of the Board of
Directors, Nuclear Services Division,
Tenera, L.P., Berkeley, California
from 1990 to 1991.
Larry S. Brodsky, 47 President and Chief Operating Officer
President and Chief since January 1, 1996. Senior Vice
Operating Officer President from 1994 to 1995 and Vice
President from 1987 to 1994,
Illinois Power Company, Decatur,
Illinois.
R. Lee Haney, 56 Vice President and Chief Financial
Vice President and Officer since September 8, 1994.
Chief Financial Officer Senior Vice President from January
1993 until September 1994, and Vice
President and Chief Financial Officer
until January 1993, San Diego Gas &
Electric Company, San Diego,
California.
G. D. Caliendo, 55 Vice President, General Counsel and
Vice President, Secretary since March 2, 1995.
General Counsel Senior Vice President, General
and Secretary Counsel and Secretary of Pennsylvania
Power and Light Company, Allentown,
Pennsylvania from 1989 to 1994.
Robert J. Biederman, Jr., 43 Vice President since April 1990.
Vice President, Operations Director of Operations from 1986 until
April 1990.
Nancy M. Jakobs, 54 Vice President, Human Resources since
Vice President, April 6, 1995. Partner, Jakobs and
Human Resources Associates International, New City,
New York from 1991 to 1995. Associate
Consultant, Gilbert Tweed Associates,
West Orange, New Jersey from 1989 to
1991.
Robert J. McBennett, 53 Treasurer since 1984, and Controller
Treasurer and Controller since 1995.
George V. Bubolo, Jr., 51 Division Vice President - Engineering
Division Vice President, and System Operations since March 1,
Engineering and System 1996. Director, Engineering and
Operations System Operations from November 1,
1994 until March 1, 1996. Director,
Electric Operations from 1983 until
November 1, 1994.
Vincent R. Tummarello, 45 Division Vice President - Electric
Division Vice President, Production since November 1, 1994.
Electric Production Director, Electric Production from
April 1, 1985 until November 1, 1994.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's Common Stock, par value $5.00 per share ("Common Stock"), is
listed on the New York Stock Exchange under the ticker symbol ORU. The Common
Stock is listed in published stock tables as "OranRk".
At December 31 1995, there were 22,916 holders of record of the Company's
Common Stock. During 1995 dividend payments were made to holders of the
Company's Common Stock on February 1, May 1, August 1 and November 1.
Quarterly market price and dividend information on the Company's Common
Stock is as follows:
Quarter High Low Dividend
1995 1 $33 3/8 $31 1/4 $.64
2 34 3/8 30 7/8 .64
3 35 5/8 31 1/8 .645
4 37 3/8 34 3/8 .645
1994 1 41 1/4 32 1/8 .63
2 35 7/8 30 1/2 .63
3 31 7/8 29 1/2 .64
4 32 1/2 28 3/8 .64
Information regarding the restriction of retained earnings for dividend
payments is contained in Note 4 of the Notes to Consolidated Financial
Statements - "Retained Earnings" on page 25 of the 1995 Annual Report to
Shareholders, which material is incorporated by reference in this Form 10-K
Annual Report.
Item 6. Selected Financial Data
The information required by this Item is contained under the captions
"Financial Statistics - Common Stock Data", and "Financial Statistics -
Selected Financial Data" on page 36 of the 1995 Annual Report to Shareholders,
which material is incorporated by reference in this Form 10-K Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this Item is contained under the caption
"Review of the Company's Results of Operations and Financial Condition" on
pages 11 through 18 of the 1995 Annual Report to Shareholders, which
material is incorporated by reference in this Form 10-K Annual Report.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary financial information
required by this Item are contained on pages 19 through 33 of the 1995
Annual Report to Shareholders, which material is incorporated by reference
in this Form 10-K Annual Report. Such information is listed in Item
l4(a)(1) "Financial Statements" of this Form 10-K Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On February 10, 1994, the Executive Committee of the Board of Directors of
the Company appointed the accounting firm of Arthur Andersen LLP to audit the
books, records and accounts of the Company and its subsidiaries for the 1994
fiscal year. The appointment of Arthur Andersen LLP was approved by the
shareholders at the Annual Meeting held on May 11, 1994.
The accounting firm of Grant Thornton LLP audited the Company's
consolidated financial statements for 1993 and prior years. Upon
recommendation of the Audit Committee, the Board of Directors decided to
solicit bids for the performance of auditing services for the Company for 1994.
Bids were received from six public accounting firms, including Grant Thornton
LLP. Based on a review of the competing bids, the Audit Committee believed
that the selection of Arthur Andersen LLP would be in the best interests of the
Company and recommended such selection to the Board of Directors.
The reports of Grant Thornton LLP on the Company's consolidated financial
statements for the fiscal years ended December 31, 1992 and 1993 did not
contain an adverse opinion or a disclaimer of opinion and the reports were not
qualified or modified as to uncertainty, audit scope or accounting principles,
except that the report for 1993 was modified by inclusion of an explanatory
paragraph regarding the uncertainty of the pending investigations of the
Company and related litigation described in the Company's Current Reports on
Form 8-K dated August 16, October 6, November 23 and December 16, 1993 and
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993. Since
January 1, 1992, there have been no disagreements with Grant Thornton LLP on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which, if not resolved to the
satisfaction of Grant Thornton LLP, would have caused Grant Thornton LLP to
make reference to the subject matter of such disagreements in connection with
its report.
PART III
The information required by Item 10 - Directors and Executive Officers
of the Registrant is contained on page 34 of this Form 10-K Annual Report
and in the Company's definitive Proxy Statement in connection with the 1996
Annual Meeting of Common Shareholders (the "Proxy Statement"), which material
is incorporated by reference in this Form 10-K Annual Report. The information
required by Item 11 - Executive Compensation, Item 12 - Security Ownership of
Certain Beneficial Owners and Management and Item 13 - Certain Relationships
and Related Transactions is contained in Section 1, "Election of Directors,"
of the Proxy Statement which material is incorporated by reference in this
Form 10-K Annual Report. With the exception of this information, the Proxy
Statement is not deemed filed as part of this Form 10-K Annual Report.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
The following consolidated financial statements of the Company and
its subsidiaries appearing on pages 19 through 33 of the 1995 Annual
Report to Shareholders are incorporated by reference in this Form 10-K
Annual Report. With the exception of these consolidated financial
statements and the information incorporated in Items 1, 3, 5, 6, 7 and 8,
herein, the 1995 Annual Report to Shareholders is not deemed filed as part
of this Form 10-K Annual Report.
Page*
Consolidated Statements of Income and Retained Earnings for the
years ended December 31, 1995, 1994 and 1993. 19
Consolidated Balance Sheets as of December 31, 1995 and 1994. 20
Consolidated Cash Flow Statements for the years ended
December 31, 1995, 1994 and 1993. 22
Notes to Consolidated Financial Statements. 23
Report of Independent Public Accountants. 33
*Page number reference is to the 1995 Annual Report
to Shareholders
(a)(2) Financial Statement Schedules Page**
Valuation and Qualifying Accounts and Reserves for the years
ended December 31, 1995, 1994 and 1993 (Schedule II). 49
**Page number reference is to this Form 10-K Annual Report
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or notes
thereto.
The information required by Rule 5-04, Schedule I - Condensed Financial
Information of Registrant has been omitted since Consolidated Financial State-
ments of the Registrant and its subsidiaries are contained in the Company's
1995 Annual Report to Shareholders and the test prescribed was not met.
(a)(3) Exhibits
* 3.1 Restated Certificate of Incorporation, as amended through
April 14, 1988. (Exhibit 4.1 to Registration Statement
33-25359).
* 3.2 By-Laws, as amended through June 29, 1995. (Exhibit 3.2
to Form 10-Q for the period ended June 30, 1995, File
No. 1-4315).
* 4.1 Composite First Mortgage of the Company as Supplemented and
Modified by Twenty-six Supplemental Indentures. (Exhibit 4.1
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
* 4.2 Twenty-seventh Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1980. (Exhibit 4.2 to Form 10-K for
the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.3 Mortgage Trust Indenture of Rockland Electric Company, dated as
of July 1, 1954. (Exhibit 2.16 to Registration Statement
No. 2-14159).
* 4.11 Mortgage Trust Indenture of Pike County Light & Power Company, dated
as of July 15, 1971. (Exhibit 4.31 to Registration Statement
No. 2-45632).
* 4.12 Twenty-eighth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1982. (Exhibit 4.12 to Form 10-K for the
fiscal year ended December 31, 1992, File No. 1-4315).
* 4.17 Twenty-ninth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1984. (Exhibit 4.17 to Form 10-K
for the fiscal year ended December 31, 1989, File No. 1-4315).
* 4.20 Thirtieth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1986. (Exhibit 4.20 to Form 10-K
for the fiscal year ended December 31, 1991, File No. 1-4315).
* 4.21 Thirty-first Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1988. (Exhibit 4.21 to Form 10-K for
the fiscal year ended December 31, 1988, File No. 1-4315).
* 4.22 Thirty-second Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1990. (Exhibit 4.22 to Form 10-K for
the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.25 Indenture between the Company and The Bank of New York as Trustee
regarding unsecured debt, dated March 1, 1990. (Exhibit 4.25 to Form
10-K for the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.26 First Supplemental Indenture between the Company and The Bank of
New York as Trustee regarding unsecured debt, dated March 7, 1990.
(Exhibit 4.26 to Form 10-K for the fiscal year ended December 31,
1990, File No. 1-4315).
* 4.27 Second Supplemental Indenture between the Company and the Bank of
New York as Trustee regarding unsecured debt, dated October 15, 1992.
(Exhibit 4.27 to Form 10-K for the fiscal year ended December 31, 1992,
File No. 1-4315).
* 4.28 Thirty-third Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1992. (Exhibit 4.28 to Form 10-K for
the fiscal year ended December 3, 1992, File No. 1-4315).
* 4.29 Third Supplemental Indenture between the Company and The Bank of
New York as Trustee regarding unsecured debt, dated as of March 1,
1993. (Exhibit 4.29 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
* 4.30 Ninth Supplemental Indenture of Rockland Electric Company, dated as
of March 1, 1993. (Exhibit 4.30 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
* 4.31 Thirty-fourth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1994. (Exhibit 4.31 to Form 10-K for
the fiscal year ended December 31, 1994, File No. 1-4315).
*10.1 General Agreement: Bowline Point Generating Plant, dated as of
October 10, 1969. (Exhibit 5(b) to Registration Statement No. 2-42156).
*10.2 Financing Agreements, dated as of February 1, 1971. (Exhibit 5(a) to
Registration Statement No. 2-42156).
*10.7 New York Power Pool Agreement, dated July 16, 1985. (Exhibit 10.7
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.8 Agreement governing the supply of residual fuel oil by Con Edison to
Bowline Point Generating Station dated August 31, 1983. (Exhibit 10.18
to Form 10-K for fiscal year ended December 31, 1991, File No. 1-4315).
*10.10 PJM Facilities Agreement, dated May 1, 1970, as amended
December 12, 1972. (Exhibit 10.10 to Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-4315).
+*10.11 Officers' Supplemental Retirement Plan, as amended April 1, 1993.
(Exhibit 10.11 to Form 10-K for the fiscal year ended December 31,
1993, File 1-4315).
+*10.12 Incentive Compensation Plan, amended January 3, 1991. (Exhibit 10.12
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.13 Severance Pay Plan, as amended January 3, 1991. (Exhibit 10.13 to
Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
10.14 Management Long-Term Disability Plan as amended January 1, 1996.
*10.17 Coal Purchase and Sale Agreement among Orange and Rockland Utilities,
Inc., Rawl Sales and Processing Company, and Massey Coal Sales, Inc.,
dated March 9, 1984, as amended through July 1, 1994. (Exhibit 10.17
to Form 10-K for the fiscal year ended December 31, 1994, File 1-4315).
*10.18 Agreement between Orange and Rockland Utilities, Inc., and Pittston
Coal Sales Company, dated March 14, 1984 as amended through December 1,
1986. (Exhibit 10.18 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
*10.18A Amendment to the Agreement between Orange and Rockland Utilities, Inc.,
and Pittston Coal Sales Company, dated July 1, 1991 and executed
May 5, 1993. (Exhibit 10.18A to Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-4315).
+*10.19 Employment contract between Orange and Rockland Utilities, Inc. and
James F. Smith as amended December 1, 1990. (Exhibit 10.19 to
Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
+*10.20 Orange and Rockland Utilities, Inc. Post Director Service Retainer
Continuation Program, as amended March 2, 1995. (Exhibit 10.20 to Form
10-K for the fiscal year ended December 31, 1994, File 1-4315).
+*10.22 Form of Severance Agreement for Company Officers effective
January 3, 1991. (Exhibit 10.22 to Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-4315).
+*10.23 Performance Unit Incentive Plan effective December 3, 1992. (Exhibit
10.23 to Form 10-K for the fiscal year ended December 31, 1992,
File No. 1-4315).
+*10.25 Award Agreement under the Performance Unit Incentive Plan applicable to
J. F. Smith dated December 3, 1992. (Exhibit 10.25 to Form 10-K for
the fiscal year ended December 31, 1992, File No. 1-4315).
+*10.26 Letter agreement dated September 29, 1994 between Orange and Rockland
Utilities, Inc. and R. Lee Haney regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.26 to Form 10-Q for the period ended
September 30, 1994, File No. 1-4315).
+*10.27 Letter agreement dated September 29, 1994 between Orange and Rockland
Utilities, Inc. and D. Louis Peoples regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.27 to Form 10-Q for the period ended
September 30, 1994, File No. 1-4315).
+*10.28 Agreement between Orange and Rockland Utilities, Inc. and Victor J.
Blanchet, Jr. dated March 1, 1995. (Exhibit 10.28 to Form 10-K for
the year ended December 31, 1994, File No. 1-4315). (Portions of
Exhibit 10.28 have been omitted pursuant to an Order of the SEC dated
May 25, 1995 granting confidential treatment).
+*10.29 Deferred Compensation Plan for Non Employee Directors as amended
through October 6, 1994. (Exhibit 10.29 to Form 10-K for the year
ended December 31, 1994, File No. 1-4315).
+*10.30 Letter Agreement dated April 6, 1995 between Orange and Rockland
Utilities, Inc. and G. D. Caliendo regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.30 to Form 10-Q for the period ended
June 30, 1995, File No. 1-4315).
+*10.31 Letter Agreement dated September 21, 1995 between Orange and Rockland
Utilities, Inc. and Nancy M. Jakobs regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.31 to Form 10-Q for the period ended
September 30, 1995, File No. 1-4315).
+*10.35 Severance Agreement dated October 18, 1995 between Orange and Rockland
Utilities, Inc. and Nancy M. Jakobs. (Exhibit 10.35 to Form 10-Q for
the period ended September 30, 1995, File No. 1-4315).
+ 10.36 Agreement dated January 22, 1996 between Orange and Rockland Utilities,
Inc. and D. L. Peoples regarding change in control arrangements.
+ 10.37 Agreement dated January 21, 1996 between Orange and Rockland Utilities,
Inc. and G. D. Caliendo regarding change in control arrangements.
+ 10.38 Agreement dated January 22, 1996 between Orange and Rockland Utilities,
Inc. and R. L. Haney regarding change in control arrangements.
+ 10.39 Agreement dated January 22, 1996 between Orange and Rockland Utilities,
Inc. and L. S. Brodsky regarding change in control arrangements.
+*10.40 Performance Share Unit Plan effective January 1, 1995, described on
pages 10-11 of the Company's definitive proxy statement filed with the
Securities and Exchange Commission on March 8, 1996 for its 1996 Annual
Meeting of shareholders, which description is hereby incorporated by
reference (File No. 1-4315).
+*10.41 Annual Team Incentive Plan effective January 1, 1995, described on
pages 9-10 of the Company's definitive proxy statement filed with the
Securities and Exchange Commission on March 8, 1996 for its 1996 Annual
Meeting of shareholders, which description is hereby incorporated by
reference (File No. 1-4315).
+ 10.42 Letter Agreement dated February 16, 1995 between Orange and Rockland
Utilities, Inc. and G. D. Caliendo regarding employment.
+ 10.43 Letter Agreement dated July 14, 1994 between Orange and Rockland
Utilities, Inc. and D. L. Peoples regarding employment.
+ 10.44 Letter Agreement dated November 14, 1995 between Orange and Rockland
Utilities, Inc. and L. S. Brodsky regarding employment.
+ 10.45 Letter Agreement dated March 21, 1995 between Orange and Rockland
Utilities, Inc. and Nancy M. Jakobs regarding employment.
+ 10.46 Letter Agreement dated September 2, 1994 between Orange and Rockland
Utilities, Inc. and R. L. Haney regarding employment.
13 The Company's 1995 Annual Report to Shareholders to the extent
identified in this Form 10-K Annual Report for the fiscal year
ended December 31, 1995.
*16 Letter from Grant Thornton (Exhibit 16 to Form 8-K/A dated
February 22, 1994, File No. 1-4315).
21 Subsidiaries of the Company.
24 Powers of Attorney.
27 Financial Data Schedule.
*99.1 Joint Cooperation Agreement between the Office of the Rockland County
District Attorney and Orange and Rockland Utilities, Inc., dated
November 3, 1993 (Exhibit 99.1 to Form 10-Q for the quarter ended
September 30, 1993, File No. 1-4315).
*99.2 Complaint against James F. Smith dated March 16, 1994. (Exhibit 99.2
to Form 10-K for the year ended December 31, 1993, File No. 1-4315).
*99.5 Agreement Between Orange and Rockland Utilities, Inc. and Kroll
Associates, Inc. dated as of November 1, 1994. (Exhibit 99.5 to
Form 10-Q for the period ended September 30, 1994, File No. 1-4315).
+ Denotes executive compensation plans and arrangements.
* Incorporated by reference to the indicated filings.
The securities issued relevant to each of the following agreements were
not registered with the Securities and Exchange Commission and the total amount
of securities authorized under each agreement does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated basis. Therefore,
as provided in Item 601 of Regulation S-K, the following agreements are not
filed as exhibits. The Company agrees, however, to furnish to the Commission a
copy of each agreement upon request:
- First Supplemental Indenture, dated August 15, 1990, to the Indenture
of Mortgage and Deed of Trust of Pike County Light & Power Company.
- Eighth Supplemental Indenture of Rockland Electric Company, dated as of
August 15, 1990.
- Indenture of Trust between NYSERDA and the Bank of New York, as
Trustee, relating to the Pollution Control Revenue Bonds (Orange and
Rockland Utilities, Inc. Project) dated as of August 15, 1994.
- Participation Agreement between NYSERDA and Orange and Rockland
Utilities, Inc., dated as of August 15, 1994.
- Indenture of Trust between NYSERDA and the Bank of New York, as
Trustee, relating to the Pollution Control Refunding Revenue Bonds
dated as of July 1, 1995.
- Participation Agreement between NYSERDA and Orange and Rockland
Utilities, Inc., dated as of July 1, 1995.
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K current report
covering an event during the fourth quarter of 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ORANGE AND ROCKLAND UTILITIES, INC.
(Registrant)
By D. LOUIS PEOPLES
(D. Louis Peoples
Vice Chairman of the
Board of Directors and
Chief Executive Officer)
Date: March 18, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature and Title Capacity in Which Signing
D. LOUIS PEOPLES* Chief Executive
(D. Louis Peoples, Officer, Director
Vice Chairman of the
Board of Directors and
Chief Executive Officer)
R. LEE HANEY* Chief Financial Officer
(R. Lee Haney, Vice President
and Chief Financial Officer)
ROBERT J. MCBENNETT* Controller
(Robert J. McBennett,
Treasurer and Controller)
H. KENT VANDERHOEF* Chairman of the
(H. Kent Vanderhoef) Board of Directors
RALPH M. BARUCH* Director
(Ralph M. Baruch)
J. FLETCHER CREAMER* Director
(J. Fletcher Creamer)
Signature and Title Capacity in Which Signing
MICHAEL J. DEL GIUDICE* Director
(Michael J. Del Giudice)
JON F. HANSON* Director
(Jon F. Hanson)
KENNETH D. McPHERSON* Director
(Kenneth D. McPherson)
JAMES F. O'GRADY, JR.* Director
(James F. O'Grady, Jr.)
FREDERIC V. SALERNO* Director
(Frederic V. Salerno)
LINDA C. TALIAFERRO* Director
(Linda C. Taliaferro)
*By G. D. CALIENDO
(G. D. Caliendo,
Attorney-in-fact)
Date: March 18, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
We have audited in accordance with generally accepted auditing
standards, the 1995 and 1994 consolidated financial statements included
in Orange and Rockland Utilities, Inc.'s Annual Report to Shareholders
incorporated by reference in this Form 10-K, and have issued our report
thereon dated February 1, 1996. Our audit was made for the purpose of
forming an opinion on those consolidated financial statements taken as a
whole. Supplemental Schedule II, Valuation and Qualifying Accounts and
Reserves for the years ended December 31, 1995 and 1994 (see index of
financial statements) is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation
to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
February 1, 1996
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by reference in
this Form 10-K, into the Company's previously filed Registration
Statements on Form S-8 (File Nos. 33-25358, 33-25359 and 33-22129) and
on Form S-3 (File No. 33-63872).
ARTHUR ANDERSEN LLP
New York, New York
March 18, 1996
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
Board of Directors and Shareholders of
Orange and Rockland Utilities, Inc.
In connection with our audit of the consolidated financial
statements of Orange and Rockland Utilities, Inc. and Subsidiaries for
the year ended December 31, 1993 referred to in our report dated
February 16, 1994, which report included an explanatory paragraph that
described the investigations and litigation discussed in Note 12 (Legal
Proceedings) of those statements, which is included in the 1993 Annual
Report to Shareholders and incorporated by reference in this Form 10-K,
we have also audited the schedule listed in the Index at Item 14(a)(2)
for the year ended December 31, 1993. In our opinion, this schedule
presents fairly, in all material respects, the information required to
be set forth therein.
GRANT THORNTON LLP
New York, New York
February 16, 1994
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated February 16, 1994, accompanying
the consolidated financial statements and schedule incorporated by
reference or included in the Annual Report of Orange and Rockland
Utilities, inc. and Subsidiaries on Form 10-K for the year ended
December 31, 1993. We hereby consent to the incorporation by reference
of said reports in the Registration Statements of Orange and Rockland
Utilities, Inc. and Subsidiaries on Forms S-8 (No. 33-25358,
No. 33-25359 and No. 33-22129) and on Forms S-3 (No. 33-63872).
GRANT THORNTON LLP
New York, New York
March 18, 1996
SCHEDULE II
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years Ended December 31, 1995, 1994 and 1993
(Thousands of Dollars)
Column A Column B Column C Column D Column E
Additions
(1) (2) Balance
Balance at Charged to Charged at
beginning costs and to other end of
Description of period expenses accounts Deductions period
December 31, 1995
Allowance for Uncollect-
ible accounts:
Customer accounts $2,200 $2,374 $565 $2,832 $2,307
Other accounts 209 825 35 900 169
Gas marketing accounts 327 60 - 254 133
$2,736 $3,259 $600(A) $3,986(B) $2,609
Reserve for Claims
and Damages $4,713 $ 720 $ 52 $1,637(C) $3,848
Gas Turbine Maintenance
Reserve $ (258) $ 622 $ - $ 566(C) $ (202)
December 31, 1994
Allowance for Uncollect-
ible accounts:
Customer accounts $2,026 $2,493 $391 $2,710 $ 2,200
Other accounts 102 544 8 445 209
Gas marketing accounts 471 287 2 433 327
$2,599 $3,324 $401(A) $3,588(B) $ 2,736
Reserve for Claims
and Damages $3,830 $2,474 $140 $1,731(C) $ 4,713
Gas Turbine Maintenance
Reserve $(1,375) $1,367 $ - $ 250(C) $ (258)
(Continued)
SCHEDULE II
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years Ended December 31, 1995, 1994 and 1993
(Thousands of Dollars)
Column A Column B Column C Column D Column E
Additions
(1) (2) Balance
Balance at Charged to Charged at
beginning costs and to other end of
Description of period expenses accounts Deductions period
December 31, 1993
Allowance for Uncollect-
ible accounts:
Customer accounts $1,651 $2,428 $400 $2,453 $ 2,026
Other accounts 86 207 4 195 102
Gas marketing accounts 75 548 - 152 471
$1,812 $3,183 $404(A) $2,800(B) $ 2,599
Reserve for Claims
and Damages $3,521 $1,895 $146 $1,732(C) $ 3,830
Gas Turbine Maintenance
Reserve $(2,532) $1,367 $ - $ 210(C) $(1,375)
(A) Includes collection of accounts previously written off of $600 in 1995, $401
in 1994, and $404 in 1993.
(B) Accounts considered uncollectible and charged off of $3,986 in 1995, $3,588
in 1994 and $2,800 in 1993.
(C) Payments of damage claims of $1,637 in 1995, $1,731 in 1994 and $1,732 in 1993
and maintenance expenses of $566 in 1995, $250 in 1994 and $210 in 1993.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
________________________
Fiscal Year Ended December 31, 1995 Commission File Number 1-4315
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of Registrant as Specified in its Charter)
EXHIBITS
Orange and Rockland Utilities, Inc.
Index of Exhibits
1995 Form 10-K
* 3.1 Restated Certificate of Incorporation, as amended through
April 14, 1988. (Exhibit 4.1 to Registration Statement
33-25359).
* 3.2 By-Laws, as amended through June 29, 1995. (Exhibit 3.2
to Form 10-Q for the period ended June 30, 1995, File
No. 1-4315).
* 4.1 Composite First Mortgage of the Company as Supplemented and
Modified by Twenty-six Supplemental Indentures. (Exhibit 4.1
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
* 4.2 Twenty-seventh Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1980. (Exhibit 4.2 to Form 10-K for
the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.3 Mortgage Trust Indenture of Rockland Electric Company, dated as
of July 1, 1954. (Exhibit 2.16 to Registration Statement
No. 2-14159).
* 4.11 Mortgage Trust Indenture of Pike County Light & Power Company, dated
as of July 15, 1971. (Exhibit 4.31 to Registration Statement
No. 2-45632).
* 4.12 Twenty-eighth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1982. (Exhibit 4.12 to Form 10-K for the
fiscal year ended December 31, 1992, File No. 1-4315).
* 4.17 Twenty-ninth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1984. (Exhibit 4.17 to Form 10-K
for the fiscal year ended December 31, 1989, File No. 1-4315).
* 4.20 Thirtieth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1986. (Exhibit 4.20 to Form 10-K
for the fiscal year ended December 31, 1991, File No. 1-4315).
* 4.21 Thirty-first Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1988. (Exhibit 4.21 to Form 10-K for
the fiscal year ended December 31, 1988, File No. 1-4315).
* 4.22 Thirty-second Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1990. (Exhibit 4.22 to Form 10-K for
the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.25 Indenture between the Company and The Bank of New York as Trustee
regarding unsecured debt, dated March 1, 1990. (Exhibit 4.25 to Form
10-K for the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.26 First Supplemental Indenture between the Company and The Bank of
New York as Trustee regarding unsecured debt, dated March 7, 1990.
(Exhibit 4.26 to Form 10-K for the fiscal year ended December 31,
1990, File No. 1-4315).
* 4.27 Second Supplemental Indenture between the Company and the Bank of
New York as Trustee regarding unsecured debt, dated October 15, 1992.
(Exhibit 4.27 to Form 10-K for the fiscal year ended December 31, 1992,
File No. 1-4315).
* 4.28 Thirty-third Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1992. (Exhibit 4.28 to Form 10-K for
the fiscal year ended December 3, 1992, File No. 1-4315).
* 4.29 Third Supplemental Indenture between the Company and The Bank of
New York as Trustee regarding unsecured debt, dated as of March 1,
1993. (Exhibit 4.29 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
* 4.30 Ninth Supplemental Indenture of Rockland Electric Company, dated as
of March 1, 1993. (Exhibit 4.30 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
* 4.31 Thirty-fourth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1994. (Exhibit 4.31 to Form 10-K for
the fiscal year ended December 31, 1994, File No. 1-4315).
*10.1 General Agreement: Bowline Point Generating Plant, dated as of
October 10, 1969. (Exhibit 5(b) to Registration Statement No. 2-42156).
*10.2 Financing Agreements, dated as of February 1, 1971. (Exhibit 5(a) to
Registration Statement No. 2-42156).
*10.7 New York Power Pool Agreement, dated July 16, 1985. (Exhibit 10.7
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.8 Agreement governing the supply of residual fuel oil by Con Edison to
Bowline Point Generating Station dated August 31, 1983. (Exhibit 10.18
to Form 10-K for fiscal year ended December 31, 1991, File No. 1-4315).
*10.10 PJM Facilities Agreement, dated May 1, 1970, as amended
December 12, 1972. (Exhibit 10.10 to Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-4315).
+*10.11 Officers' Supplemental Retirement Plan, as amended April 1, 1993.
(Exhibit 10.11 to Form 10-K for the fiscal year ended December 31,
1993, File 1-4315).
+*10.12 Incentive Compensation Plan, amended January 3, 1991. (Exhibit 10.12
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.13 Severance Pay Plan, as amended January 3, 1991. (Exhibit 10.13 to
Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
10.14 Management Long-Term Disability Plan as amended January 1, 1996.
*10.17 Coal Purchase and Sale Agreement among Orange and Rockland Utilities,
Inc., Rawl Sales and Processing Company, and Massey Coal Sales, Inc.,
dated March 9, 1984, as amended through July 1, 1994. (Exhibit 10.17
to Form 10-K for the fiscal year ended December 31, 1994, File 1-4315).
*10.18 Agreement between Orange and Rockland Utilities, Inc., and Pittston
Coal Sales Company, dated March 14, 1984 as amended through December 1,
1986. (Exhibit 10.18 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
*10.18A Amendment to the Agreement between Orange and Rockland Utilities, Inc.,
and Pittston Coal Sales Company, dated July 1, 1991 and executed
May 5, 1993. (Exhibit 10.18A to Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-4315).
+*10.19 Employment contract between Orange and Rockland Utilities, Inc. and
James F. Smith as amended December 1, 1990. (Exhibit 10.19 to
Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
+*10.20 Orange and Rockland Utilities, Inc. Post Director Service Retainer
Continuation Program, as amended March 2, 1995. (Exhibit 10.20 to Form
10-K for the fiscal year ended December 31, 1994, File 1-4315).
+*10.22 Form of Severance Agreement for Company Officers effective
January 3, 1991. (Exhibit 10.22 to Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-4315).
+*10.23 Performance Unit Incentive Plan effective December 3, 1992. (Exhibit
10.23 to Form 10-K for the fiscal year ended December 31, 1992,
File No. 1-4315).
+*10.25 Award Agreement under the Performance Unit Incentive Plan applicable to
J. F. Smith dated December 3, 1992. (Exhibit 10.25 to Form 10-K for
the fiscal year ended December 31, 1992, File No. 1-4315).
+*10.26 Letter agreement dated September 29, 1994 between Orange and Rockland
Utilities, Inc. and R. Lee Haney regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.26 to Form 10-Q for the period ended
September 30, 1994, File No. 1-4315).
+*10.27 Letter agreement dated September 29, 1994 between Orange and Rockland
Utilities, Inc. and D. Louis Peoples regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.27 to Form 10-Q for the period ended
September 30, 1994, File No. 1-4315).
+*10.28 Agreement between Orange and Rockland Utilities, Inc. and Victor J.
Blanchet, Jr. dated March 1, 1995. (Exhibit 10.28 to Form 10-K for
the year ended December 31, 1994, File No. 1-4315). (Portions of
Exhibit 10.28 have been omitted pursuant to an Order of the SEC dated
May 25, 1995 granting confidential treatment).
+*10.29 Deferred Compensation Plan for Non Employee Directors as amended
through October 6, 1994. (Exhibit 10.29 to Form 10-K for the year
ended December 31, 1994, File No. 1-4315).
+*10.30 Letter Agreement dated April 6, 1995 between Orange and Rockland
Utilities, Inc. and G. D. Caliendo regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.30 to Form 10-Q for the period ended
June 30, 1995, File No. 1-4315).
+*10.31 Letter Agreement dated September 21, 1995 between Orange and Rockland
Utilities, Inc. and Nancy M. Jakobs regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.31 to Form 10-Q for the period ended
September 30, 1995, File No. 1-4315).
+*10.35 Severance Agreement dated October 18, 1995 between Orange and Rockland
Utilities, Inc. and Nancy M. Jakobs. (Exhibit 10.35 to Form 10-Q for
the period ended September 30, 1995, File No. 1-4315).
+ 10.36 Agreement dated January 22, 1996 between Orange and Rockland Utilities,
Inc. and D. L. Peoples regarding change in control arrangements.
+ 10.37 Agreement dated January 21, 1996 between Orange and Rockland Utilities,
Inc. and G. D. Caliendo regarding change in control arrangements.
+ 10.38 Agreement dated January 22, 1996 between Orange and Rockland Utilities,
Inc. and R. L. Haney regarding change in control arrangements.
+ 10.39 Agreement dated January 22, 1996 between Orange and Rockland Utilities,
Inc. and L. S. Brodsky regarding change in control arrangements.
+*10.40 Performance Share Unit Plan effective January 1, 1995, described on
pages 10-11 of the Company's definitive proxy statement filed with the
Securities and Exchange Commission on March 8, 1996 for its 1996 Annual
Meeting of shareholders, which description is hereby incorporated by
reference (File No. 1-4315).
+*10.41 Annual Team Incentive Plan effective January 1, 1995, described on
pages 9-10 of the Company's definitive proxy statement filed with the
Securities and Exchange Commission on March 8, 1996 for its 1996 Annual
Meeting of shareholders, which description is hereby incorporated by
reference (File No.1-4315).
+ 10.42 Letter Agreement dated February 16, 1995 between Orange and Rockland
Utilities, Inc. and G. D. Caliendo regarding employment.
+ 10.43 Letter Agreement dated July 14, 1994 between Orange and Rockland
Utilities, Inc. and D. L. Peoples regarding employment.
+ 10.44 Letter Agreement dated November 14, 1995 between Orange and Rockland
Utilities, Inc. and L. S. Brodsky regarding employment.
+ 10.45 Letter Agreement dated March 21, 1995 between Orange and Rockland
Utilities, Inc. and Nancy M. Jakobs regarding employment.
+ 10.46 Letter Agreement dated September 2, 1994 between Orange and Rockland
Utilities, Inc. and R. L. Haney regarding employment.
13 The Company's 1995 Annual Report to Shareholders to the extent
identified in this Form 10-K Annual Report for the fiscal year
ended December 31, 1995.
*16 Letter from Grant Thornton (Exhibit 16 to Form 8-K/A dated
February 22, 1994, File No. 1-4315).
21 Subsidiaries of the Company.
24 Powers of Attorney.
27 Financial Data Schedule.
*99.1 Joint Cooperation Agreement between the Office of the Rockland County
District Attorney and Orange and Rockland Utilities, Inc., dated
November 3, 1993 (Exhibit 99.1 to Form 10-Q for the quarter ended
September 30, 1993, File No. 1-4315).
*99.2 Complaint against James F. Smith dated March 16, 1994. (Exhibit 99.2
to Form 10-K for the year ended December 31, 1993, File No. 1-4315).
*99.5 Agreement Between Orange and Rockland Utilities, Inc. and Kroll
Associates, Inc. dated as of November 1, 1994. (Exhibit 99.5 to
Form 10-Q for the period ended September 30, 1994, File No. 1-4315).
+ Denotes executive compensation plans and arrangements.
* Incorporated by reference to the indicated filings.
The securities issued relevant to each of the following agreements were
not registered with the Securities and Exchange Commission and the total amount
of securities authorized under each agreement does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated basis. Therefore,
as provided in Item 601 of Regulation S-K, the following agreements are not
filed as exhibits. The Company agrees, however, to furnish to the Commission a
copy of each agreement upon request:
- First Supplemental Indenture, dated August 15, 1990, to the Indenture
of Mortgage and Deed of Trust of Pike County Light & Power Company.
- Eighth Supplemental Indenture of Rockland Electric Company, dated as of
August 15, 1990.
- Indenture of Trust between NYSERDA and the Bank of New York, as
Trustee, relating to the Pollution Control Revenue Bonds (Orange and
Rockland Utilities, Inc. Project) dated as of August 15, 1994.
- Participation Agreement between NYSERDA and Orange and Rockland
Utilities, Inc., dated as of August 15, 1994.
- Indenture of Trust between NYSERDA and the Bank of New York, as
Trustee, relating to the Pollution Control Refunding Revenue Bonds
dated as of July 1, 1995.
- Participation Agreement between NYSERDA and Orange and Rockland
Utilities, Inc., dated as of July 1, 1995.