ROCHESTER GAS AND ELECTRIC CORPORATION History

Address:

89 East Avenue
Rochester, New York 14649
U.S.A.

Telephone: (716) 546-2700
Fax: (716) 724-8811

Public Company
Incorporated: 1950
Employees: 2,700
Stock Exchanges: New York

Company History:

A relatively small, independent public utility company, RG&E serves approximately 300,000 customers in a nine county area of upper New York state that includes metropolitan Rochester, the third largest city in the state. Historically, the company was the first in the United States to rid the entire downtown of a major metropolis of all unsightly overhead electrical wiring in favor of underground lines. It was also among the first public utility companies to lobby for the commercial use of atomic power, and nuclear power presently generates half of all RG&E's electrical output.

As with virtually all utility companies, RG&E had its roots in the days of gas lighting. A revolution in lighting was in the making when British inventor William Murdock discovered how to produced light from manufactured gas--itself a discovery of Belgian alchemist Van Helmont in the seventeenth century. In 1792, Murdock's home was the first in the world with gas lighting, a major breakthrough in the history of artificial lighting after millennia of lighting by fire, candle, and oil. Twenty-five years later, Baltimore became the first city in North America to turn to gas illumination for its streets, followed rapidly by other large and small urban centers.

In upper New York State there was keen competition among Rochester, Syracuse, and Buffalo to become the first to acquire this visible sign of progress. Not long after Rochester became a fully incorporated city in 1834, a group of leading citizens established a gas light company to illuminate the town. By 1848 Rochester, hometown to such inventors as George Eastman, who inaugurated the city's biggest industry, and Sir Hiram Maxim, machine gun inventor, became the gateway to the fertile wheatlands of the Midwest and boasted a population of 32,000. The first president of the new Rochester Gas Light Company was Lewis Brooks, who, along with treasurer Levi Ward and the board of directors, petitioned the city council for permission to lay gas mains and erect gas light posts. Permission was duly granted, ten gas lamp posts were installed in short order, and the "gas era" was on for the next 70 years.

With the onset of the Civil War the company was servicing nearly 2,500 customers, and the city boasted 657 street lamps. War brought its hardships: a dwindling workforce and the skyrocketing price of coal--costs increased from $4.65 per ton in 1861 to $11.29 four years later--limited the company's expansion as well as customer growth. But unlike hard-pressed utility companies in the southern states, the Rochester Gas Light Company kept gas lamps lit throughout the war years. Victory and the end of fratricide brought little of the expected relief to Rochesterians: the Genesee River, which wound through the city, erupted in the greatest flood that residents had ever witnessed. Gas mains broke down and the city remained dark for five days.

Boom times followed the flood, however. Mergers and acquisitions led to a bigger Rochester Gas Light Company, which began to scout around for a way to bring the natural gas deposits discovered outside the city limits into Rochester, thus bringing down fuel costs and enabling the company to grow indefinitely. In 1871 construction of large wooden pipes was completed and a total of 28 miles of pipe was laid to bring the much-coveted natural gas to the city at a total cost of $800,000. Not long after the gas was piped in and hopes were raised it was discovered that the gas deposits were far smaller than originally thought, while the wooden pipes laid with such haste were not destined to outlast the gas. The expensive project had to be abandoned and the company once again reverted to manufactured gas, which was produced from burning coal fired at intense heat; the escaping gas was then refined.

In 1876 Thomas Edison discovered a means of artificial illumination that sounded the death knell of gas lights: the incandescent electric bulb. Edison demonstrated that a single fiber charged with an electric current could glow indefinitely in a vacuum. After experimenting with 6,000 different materials for the right fiber, he finally found one that burned for 40 hours. In 1879 an even better fiber burned for 170 hours, long enough to market it for practical use. In a matter of a few years, electric lighting supplanted the gas light, which had been an improvement over kerosene. A problem with gas, though, was that innumerable fires resulted because so many people forgot to turn off their gas lights and blew them out.

Once again Rochesterians resolved not to be left behind in the acquisition of the new technology. Rochester was treated to its first display of electric light when the city hall became completely illuminated in 1879, thanks to Hiram Maxim's patronage. Less than one year later, in February 1880, the Rochester Electric Light Company was organized by prominent citizens including H. Austin Brewster and Charles F. Pond. The independent Rochester Gas Light Company was soon history.

Initially, the electric illumination was not the still unmarketed Edison electric bulb, but arc lighting that emitted fumes making it impractical for home lighting. But arc lighting was soon supplanted in the late 1880s by the long-burning electric bulb, which has remained essentially unchanged to the present day. At that time, three electric companies competed for Rochesterians' pocketbooks. Of the three, the Edison Electric Company was the most progressive and grew the most rapidly. The direct forerunner of the present day RG&E, Edison Electric went down in history as the first company in the country to install underground electric wiring and the first to measure electricity use with electric meters. All three electric companies consolidated in 1892, along with the original Gas Light Company, to form the Rochester Gas and Electric Company. Not until 1904, however, did all power in the city come under the control of a single entity, the Rochester Railway and Light Company, which was the product of yet another merger of the Rochester Gas and Electric Company with the Rochester Light and Power Company--itself a merger of several power companies. When the electric railways were transferred to the New York State Railway system in 1919, the name of the company that controlled the city's power changed accordingly to the Rochester Gas and Electric Corporation, the actual beginning of the present day RG&E. It took thirty years for the company to become completely independent. Until then it was controlled by corporations based in New York City and Philadelphia.

The RG&E company expanded rapidly after WorldWar I. In 1925 it undertook the construction of a hydroelectric dam spanning the Genesee River. The Depression years, while inaugurating a period of uncertainty and stagnation, did not result in a reduction of service. Far from it, for the post-World War I years saw a virtual explosion on the market of electric gadgets such as irons, vacuums, toasters, and washing machines, with the advent of air conditioning coming at the height of the Depression in the 1930s. Demand for electricity and gas--the latter for heating and cooking--grew apace. RG&E was one of the few utility companies in the nation that did not have to ration or reduce its gas or electric service to customers during World War II, a fact the company attributed to careful planning. At the end of the war, deregulation enabled the company to revert to local control and become independent in 1949.

By the onset of the 1950s, manufactured gas became obsolete with the discovery of vast natural gas deposits in Texas, Louisiana, and Mississippi. In 1952 RG&E became one of the first utility companies in the nation to switch from manufactured gas to natural gas, resulting in a decline in cost. The number of gas users continued to rise, and by 1956 RG&E was servicing 145,000 customers.

The severe recession of the late 1950s left the company unscathed. By then its new president and board chairman, Robert E. Ginna, who served in this capacity from 1957 to 1967, had big plans for RG&E. In particular, he planned to meet spiraling power needs with nuclear power. In the decade of his presidency the demand for electricity and gas doubled, while Rochester's population grew by only 20 percent. When the Ginna Nuclear Power plant on Lake Ontario was completed in 1966 at a cost of $75 million, it had a capacity to deliver 450,000 kilowatts of electricity. Although a minor nuclear accident shut down the plant in January 1982, the Ginna plant has since then been judged by the Nuclear Regulatory Commission as one of the safest in the country.

RG&E also acquired 14 percent ownership of Nine Mile Two, a nuclear power plant on Lake Oswego, which went into operation in the spring of 1988. The performance of this plant, constructed and operated by the Niagara Mohawk Power Corporation, has not been as outstanding as Ginna. Several months after it began operation, numerous failings in safety, maintenance, and emergency preparedness developed, causing more than one shutdown. Only in 1991 did the plant come off the Nuclear Regulatory Commission's black list.

By then, the president and chief executive officer of RG&E was the energetic Roger W. Kober, a veteran of RG&E with a degree in engineering from Clarkson College and a master's degree from the Rochester Institute of Technology. Under Kober, RG&E dropped plans for expanding nuclear power, ending the push into nuclear power plant construction characteristic of most utility companies in the 1960s and 1970s. Growing environmental consciousness and the specter of deregulation of utility companies by the year 2000 were factors responsible for the hold on nuclear power plant construction, a huge expense that few utility companies could afford as they faced greater competition.

Deregulation is one of several major challenges looming in the future. Its impact was felt on RG&E not only in its halting of nuclear power plant construction, but also in the realization that to meet the challenge of keener competition in the future, cost cutting--resulting in job losses--and rate hikes needed to be implemented. In addition, to remain viable the company had to diversify rather than concentrating on gas and electricity production. Consequently RG&E invested in the Empire State Pipeline project, a natural gas pipeline running from Niagara Falls to Syracuse that enabled the company to reduce the cost of gas transportation, improve storage, and increase the supply of natural gas, hence sharpening its competitive edge. RG&E also expanded its interest into computer software production, developing video training software for businesses and forming a wholly owned subsidiary, Utilicom, in 1988.

While looming deregulation compelled utility companies to cut back on their traditional heavy investments in nuclear power expansion, other means were also found to confront the growth of energy demands, a constant concern of utility companies since electricity and gas were commercially used. Energy efficiency became the key phrase for the 1990s: financial inducements for customers to reduce energy consumption during peak hours, energy efficient buildings, and better hazardous waste disposal were means by which the company sought to reduce energy waste and cope with spiraling energy demands and costs. Meeting the stringent demands of the Clean Air Act Amendments also posed challenges to RG&E and other utility companies. While Phase I of the Clean Air Act left the company virtually unaffected, a Clean Air Task force was formed within the company to establish the cost and the measures that the company would undertake to meet 1999's Phase II of the Clean Air Act.

Principal Subsidiaries: Utilicom, Inc.

ROCHESTER GAS AND ELECTRIC CORPORATION History

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