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PHOENIX, Page SevenREPORT TO THE PEOPLE OF NEW YORK CITYAND WESTCHESTER COUNTYby Charles F Luce. Chairman of the Board, Consolidated Edison Company of New VorK, Inc.For Con Edison 1973is a milestone. It is the150th anniversary ofthe founding of ourcorporate ancestor, theNew York Gas LightCo., which in 1823 waschartered to providegas service tr lowerManhattan.However, we are not marking ouranniversary by looking backward. Thepresent-and the future are what countthe most. Therefore this report will focus on today and tomorrow%u2014and howwe hope to improve on yesterday.increased Power SupplyThe biggest problem for our company during the past five years hasbeen, %u201cCan we build new plants fastenough to keep the lights on?\The problem is still with us, but weare gaining on it. This although everymajor facility we are building is beingcontested either in court or hpfore alicensing agency.Since 1968 we have completed2.300.000 KW of gas turbine peakingcapacity and 915,000 KW of baseloadcapacity. In the same period we haveshut down 782,000 KW of obsolete facilities. Meanwhile, summer peaks haveincreased by 1,275,000 KW.In 1973 we expect Indian Point No. 2will be available at partial power duringthe summer and will reach full powerOf 873,000 KW late in the year. Alsoexpected this year are the two 600,000-KW Roseton plants df which Con Edison%u2019s initial share is 240,000 KW perunit. With these three plants in service,our power reserves will be greater thanlast year, and they will continue to improve as we complete our current construction program.Bowline Point No. 2, in which ourshare is 400,000 KW, is anticipated forsummer 1974. Both the 965,000-KWIndian Point No. 3 and the 800,000-KWexpansion at Astoria are scheduled forservice before summer 1975. Beginningin late 1973 we also expect to beginpurchases from the FitzPatrick nuclearplant of the Power Authority of theState of New York (PASNY).Beyond 1975In the latter half of the 1970's andthereafter we expect to purchase largeblocks of power from PASNY andfrom Canada.From PASNY we expect to obtain aportion of the I million KW from itsproposed Breakabeen purnped storageplant. We also expect to purchase theexcess power from the baseload andpeaking plants which the Legislatureauthorized PASNY to construct tomeet the electric needs of the Metropolitan Transportation Authority.From Canada, we have an agreementwith Hydro Quebec to purchase up to800.000 KW of summertime power forup to 20 years starting in 1977.The Cornwall or Storm King project,now in its eighth year of litigation, cannot be completed before 1979-80.As for transmission, we expect by1982 to more than double our capacityto import power into our service area.Reliability of ServiceService reliability on Con Edison%u2019ssystem is among the best in the nationin terms of number of interruptionsper 1000 customers served. However,when a problem does occur, the denselypopulated nature of our service areameans it will affect more people than asimilar problem elsewhere%u2014and will receive more publicity.Following our unprecedented distribution problems of last summer inBrooklyn and Queens, Con Edison andthree outside consultants made separatein-depth analyses of all aspects of ourunderground system-including its design, maintenance and repair procedures.We are already acting upon their preliminary recommendations as well asthose made by experts employed by thePSC and the City. As a result, an improved inspection program has been instituted, and we have substantially reduced the average time required vorepair cable failures.Higher RalesThe program now underway to expand and modernize our facilities tomeet the growing needs of customerswill cost more than $3 billion in just thenext five years. Most of this money willhave to be raised through the issuanceof additional stocks and bonds.In 1972 Con Edison's rate of earnings on its%u2019 investment was one of thelowest in the utility industry. The recent $110 million temporary rate increase was the minimum necessary ifthe financing of our construction program was to proceed. The temporaryrate relief should allow us to meet financing requirements until the PSC actslater this year on our request for a $! 02million increase over the temporarylevel in electric, gas and steam rates.Unhappily, Con Edison%u2019s rates mustcontinue to rise if we are to meet theenergy needs of our customers.It is much more expensive to supplyelectricity in Con Edison%u2019s service territory than elsewhere in the nation. Forexample, our state and local taxes%u2014which increased by more than 13 percent in 1972 alone%u2014are double thenational utility average when computedon a kilowatt hour basis. Many utilitieselsewhere burn coal and high-sulfur oil;we must burn prenrum fuels at costs asmuch as 100 percent higher. Construction costs here are 25 to 30 per centnore than the average in other large:ities.-And our system is largely underground, therefore more expensiveResearch and DevelopmentWe have joined with most of the restof our industry in a new research organization, the Electric Power ResearchInstitute (EPRI), to find new and environmentally better ways to produce anddeliver electricity.-Con Edison%u2019s R&D expenditures,which were only $1.5 million five yearsago. will rise to about $15 million in1974. Of this sum, about $3.5 millionwill go for EPRI projects, jncluding aprototype breeder reactor.We are especially hopeful about thelarge-size fuel cel! development program Con Edison and several othercompanies plan to fund with Pratt &Whitney, the prime contractor. If thisdevelopment is successful, we couldhave in service in the late 1970%u2019s virtually pollution-free fuel cells in 26,000KW units tha* can be located at manyplaces within our service territory%u2014including existing generating stations andsubstations.The Natural EnvironmentIn September 1972, Con Edison completed the conversion to burning 0.3per cent low sulfur oil. This enabled usto reduce our emissions of sulfur dioxide down to where they are less than16 per cent of our 1965 emissions.The City of New York is now meeting the Federal primary annual ambientstandard fnr sulfur dioxide of 03 narteJT ~%u2014----per million. Various studies show thatin other ways, too, the city is makingrapid progress towards cleaner %u2018 airmore so, in fact, than many other largecities.The largest single environmentalquestion now facing us is whether tobuild cooling towers for Indian PointNo. 2. As cooling towers could havetheir own adverse effects on the environment, this Question must be decidedby balancing several environmental factors.We have asked the AEC, before making an irreversible decision, to allowtime for completion of a $10 millionHudson River study begun two yearsago. This study is gathering the additional scientific data we believe necessary to the decision.Meanwhile our engineers are uesigning towers to be as ready as possible ifit is decided they should be built. And ouroffer of several years standing to builda fish hatchery to replace fish unavoidably killed at Indian Point still stands.Save-a-WattOur Save-a-Watt program continuesto win %u2019national recognition from environmental and consumer groups. Weestimate that in 1972 it helped reduceloads on the day of the summer peak byabout 400,000 KW and summer energy consumption by about 300,000,000KWriR.M rs. Virginia Knauer, PresidentNixon%u2019s special assistant for consumeraffairs, has commended Save-a-Watt andsuggested that %u201cit might be in the interest of ehergy conservation if consideration were given to promoting Save-aWatt as a nationwide slogan for use byall electric utilities to help communicateto the public the importance of savingenergy.%u201dThe Social EnvironmentQur minority employment is about21/2 times what it was six years ago.During 1972 we hired 3,93 under-employed and disadvantaged persons intoour JOBS 70 program. Partially fundedby the U.S. Department of Labor, thisprogram is designed to help these youngpeople improve their reading, writingand arithmetic, as well as learn the specific skills required of our work force.About 1.500 young men and womenhave joined Con Edison through theJOBS 70 program and its forerunners.In 1972, our minority vendor program resulted in more than $294 million in fuel purchases from black andHispanic firms and more than $600,000in other purchases such as printing, vehicle maintenance, construction workand computer supplies and services.Customer BillingBilling our 3 million customers andresponding promptly to their telephonecalls and letters have been among ourmore difficult problems.We are installing a new CustomerService System~a modern data-processing system that will speed responses toinquiries and improve billing accuracy.In most cases this system will enable usto give %u201cone-stop\when they visit or telephone our offices.We have converted annrnxim:it<%u00bbly1,100,000 customers to the new system.This includes the entire Bronx andStaten Island Divisions and parts ofQueens and Westchester - altogethernearly 40 per cent of our accounts. Weexpect to convert the remainder byApril 1974.The Bronx Division reported an immediate improvement in it; ab:!it,f toresolve customer inquiries and complaints at the point of initial contactThe Staten Island Division reports it i%u00abnow providing one-stop service to 95per cent of its customers who telephoneand that 99 per cent of calls are answered within 20 seconds.A complicating factor during thechange-over to the new system is thatthe level of unpaid customer bills hasbecome as high as in the Great Depression. This causes greater collection expense and, ultimately, higher rates. Ifeach customer pays his bill promptly,it will not only keep his account ingood order, but will also benefit all customers.We realize that billing mistakes occasionally occur. To reduce the chance ofinjustice to any customer whom thecomputer erroneously shows to be inarrears, we have, among other things,agreed with the PSC and the Legal AidSociety to provide every customer withan opportunity to discuss his bill witha Con Edison customer service repre-'sentative before electricity or gas is cutoff for non-payment.Despite all these problems, and despite the fact that complaints to thePSC increased in 1972, we had, in total,25 per cent fewer customer service casesin 1972 than in 1971.Gas SystemThe pipeline gas companies whiclsupply natural gas to Northeast gasdistributing companies such as Con Edison have advised us they cannot increase supplies for at least 8 to 10 yearsand may even reduce them. Therefore,gas companies in the Northeast mustfind new sources of supply.This is why two years ago we beganconstruction at Astoria of a I-billioncubic-foot liquefaction and storage facility for liquefied natural gas (LNG).The design of our Astoria LNG tank isvery different from that of the tank onStaten Island which recently collapsedin an explosion. Our tank is steel-linedand uses a mineral insulation that caanot burn.The difficult gas supply situationgives us and our customers a big stakein the exploration of the Atlantic shelf.There are promising geological indications that large quantities of natural gasand oil may lie beneath the ContinentalShelf 30 to 300 miles off the New England and Mid-Atlantic coasts.From an environmental point of view,the total impact of Atlantic off-shoredrilling may well be considerably lessthan that of alternative sources of gasand oil.In ConclusionThe goals of Con Edison have notchanged since my first report about fiveyears ago. The dedicated 23.0(H) menand women of Con Edison are makingsubstantial progress in meeting thesegoals as this report has described. Werecognize all too well that in some areas,such as completing new power plantsand improving customer billing, wehave not moved as fast as we wouldhave liked. In such areas, we are intensifying our efforts to improveYour understanding and suppoit ofour efforts are needed, and will be appicCfuicu.With your cooperation, we will tryto make our anniversary year a truemilestone-especiailv for the people weare privileged to serve.