Exhibit 57
[LETTERHEAD OF NYSEG]
August 8, 1997
Dear Shareholder:
Recently we entered into an agreement with the Public Service
Commission (PSC) staff regarding the transition to open competition within
our service area. This agreement will provide price reductions and choice to
our customers and the opportunity for improved returns for you, our
shareholders.
The agreement includes the following key elements:
- We will forgo two previously approved price increases for residential and
certain commercial customers totaling 6% and freeze overall average
electric prices for those customers through July 31, 2002.
- Rates for large-use industrial and commercial customers will be reduced
by 5% each year for the next five years.
- A retail choice program that is the most aggressive plan in the state
for implementing customer choice, under which all customers will be
permitted to buy electricity in a competitive marketplace by August 1,
1999, reinforcing our commitment to competition.
- After further negotiation, an extension of the current natural gas
settlement through July 31, 2002.
- We will separate our fossil fuel generation into an unregulated
subsidiary and the generating units will be subject to an auction
process in which the company can participate.
- And very importantly, we receive a reasonable opportunity to recover
all prudently incurred investments made in the past.
Prices could be reduced further by passing back to customers savings
from renegotiation of NUG contracts and the passage of proposed
securitization legislation. The combined effect of those and other actions
could be a 35% reduction in the real (inflation adjusted) price of
electricity and a 15% reduction in the real price of natural gas, both over
the next five years. PSC approval is expected in the fourth quarter of this
year.
This agreement has removed much of the uncertainty that has surrounded
our stock and will provide us greater flexibility to grow the business and
manage costs for the benefit of customers and shareholders.
We are aggressively growing the natural gas business within the state
through franchise expansion. We are also pursuing strategic natural gas
initiatives outside the state such as the recently announced joint venture
with Central Maine Power to expand natural gas services in the state of
Maine. The generation business provides reliable, low cost wholesale energy
throughout the Northeast. XENERGY, our energy services company, is
recognized as a leader in the transition to retail choice and is a platform
for future growth. We are providing outstanding customer service, as
evidenced by our having the lowest customer complaint rate to the PSC of any
combination electric and gas utility in the state. And we are effectively
controlling costs throughout the business.
We anticipate that the board of directors will be in a position shortly
to review the dividend policy in its entirety, together with its overall view
on uses of the company's cash, including buyback of additional common shares.
I don't want to prejudge what actions the board might take, but the agreement
in principle is clearly positive in terms of providing an overall framework
for planning the company's needs for cash, and its ability to generate cash.
We will continue to act in your best interests, as well as the
interests of our customers, employees and the communities we serve. Your
support is greatly appreciated.
Yours sincerely,
/s/ Xxx xxx Xxxxxx
