Filed by Energy East Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-6
under the Securities Exchange Act of 1934
Subject Company: RGS Energy Group, Inc.
Registration No. 333-59300
NEW YORK INDEPENDENT SYSTEM OPERATOR (ISO) MUST CONSOLIDATE WITH OTHER ISOs
FOR IMMEDIATE RELEASE
ALBANY, N.Y., June 20, 2001 -- On the heels of yesterday's Federal
Energy Regulatory Commission technical conference on interregional coordination
issues, Energy East Corporation (NYSE: EAS), through its NYSEG subsidiary, is
continuing to push for consolidation of the New York, New England and
Pennsylvania-New Jersey-Maryland Independent System Operators (ISO).
NYSEG recently issued a proposal to enhance an ongoing "memorandum of
understanding" (MOU) process under which the ISOs are exploring ways to enhance
regional reliability through coordinated operations and planning, facilitate
broader competitive markets, and improve communications with market participants
and the public.
"Under NYSEGPlan, a six-point energy policy statement issued in March,
the company advocated the creation of a regional transmission organization,"
said Denis Wickham, Energy East's senior vice president-transmission and supply.
"Energy East has the perspective of operating electric utilities in both the New
York and New England regions, and it has become crystal clear that a regional
energy market with more suppliers and more consumers will improve market
liquidity and enhance wholesale competition."
"By implementing the changes in the MOU process that NYSEG suggests, we
can move more decisively toward common markets, implementing best practices and
avoiding new problems that could result from rules or software changes within
one ISO or another," Wickham said. "If used more effectively and productively,
the MOU process we are already engaged in will lead to consensus, understanding
and greater cooperation."
In addition to various administrative improvements aimed at ensuring
full representation and thorough discussions at MOU meetings, NYSEG's suggested
process changes include:
-- Creating a chief executive officer committee, representing all
three ISOs, to monitor progress and expedite the approval and
implementation of changes.
-- Enabling all three ISO boards of directors to participate in the MOU
process through periodic meetings with an inter-ISO coordinating team.
-- Committing each ISO committee to vote on changes approved by the MOU
working group within 45 days.
-- Creating a vehicle to have all three ISOs resolve issues and approve
action in unison.
The working groups involved in the ongoing MOU discussions operate independently
and do not have a mechanism to formally implement market participant
recommendations. Coordination of activities has been cumbersome and
participation in the discussions by market participants has been declining. In
addition:
-- It has been difficult to adopt best practices across the region because
each ISO's relevant committee(s) have reviewed the results of ongoing
discussions and made changes independent from each of the other ISOs.
-- The MOU procedures are not sufficiently defined in terms of notices,
agenda development, market participant input, required presentations,
minutes, action plans, resolutions and follow-up on action items.
-- More consistent and timely information on MOU activities is needed. The
MOU process lacks transparent coordination of inter-ISO regional
initiatives, including development of solutions, milestones and
implementation plans consistent with the requirements of the region.
Transparency will enable market participants, through their individual
ISO committees, and ISO senior management to assist in resolving the
problems or prioritizing the solutions.
-- The MOU process would be far more effective if it were guided over the
intermediate-term (next two years) by a vision of broader, seamless,
consistent markets when considering rule changes or the adoption of new
rules or market design by one or more of the ISOs.
"We need to fix this process now in order to ensure optimal results. The
end result of these MOU discussions can and should be a more competitive
wholesale power market in the Northeast which will benefit retail competition
and, ultimately, end users," Wickham said.
ABOUT ENERGY EAST: Energy East is a super-regional energy services and delivery
company serving 2 million customers (1.4 million electricity and 600,000
natural gas) in upstate New York and New England over a 32,000-square mile
service area. On February 20, 2001, Energy East announced a strategic
combination with RGS Energy Group, the parent company of Rochester Gas &
Electric Corporation. The combined company will be one of the largest, most
diversified energy providers in the Northeast, servicing half of upstate New
York and nearly 3 million customers, including approximately 1.8 million
electric customers, almost one million natural gas customers and approximately
200,000 other retail energy customers. For more information about Energy East,
please visit the company's Web site at www.energyeast.com.
ABOUT NYSEG: NYSEG is a subsidiary of Energy East Corporation, a super-regional
energy services and delivery company in the Northeast. NYSEG provides superior
customer service and promotes competition. By focusing on customer service,
competition and growth, NYSEG will continue to be a valuable asset to the
communities it serves. For more information about NYSEG, visit the company's Web
site at www.nyseg.com.
SAFE HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The foregoing contains forward-looking statements within the meaning of the
"safe harbor" provisions of the United States Private Securities Litigation
Reform Act of 1995. Investors are cautioned that such forward-looking statements
with respect to revenues, earnings, performance, strategies, prospects and other
aspects of the businesses of Energy East and RGS Energy are based on current
expectations that are subject to risks and uncertainties. A number of factors
could cause actual results or outcomes to differ materially from those indicated
by such forward-looking statements. These factors include, but are not limited
to, risks and uncertainties set forth in Energy East's and RGS Energy's filings
with the SEC, including risks and uncertainties relating to: failure to obtain
and retain expected synergies from the merger between Energy East and RGS Energy
and the prior Energy East mergers, delays in obtaining or adverse conditions
contained in any required regulatory approvals, changes in laws or regulations,
economic or weather conditions affecting future sales and margins, changes in
markets for electricity and natural gas, availability and pricing of fuel and
other energy commodities, legislative and regulatory changes (including revised
environmental and safety requirements), availability and cost of capital and
other similar factors. Readers are referred to Energy East's and RGS Energy's
most recent reports filed with the SEC.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with their proposed merger, Energy East and RGS Energy have
filed a joint proxy statement/prospectus with the Securities and Exchange
Commission. The joint proxy statement/prospectus was mailed to Energy East and
RGS Energy shareholders beginning on April 28, 2001. INVESTORS AND SECURITY
HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS, BECAUSE IT
CONTAINS IMPORTANT INFORMATION. Investors and security holders may obtain a free
copy of the joint proxy statement/prospectus and other documents filed by Energy
East and RGS Energy with the Commission at the Commission's web site at
www.sec.gov. Free copies of the joint proxy statement/prospectus, and each
company's other filings with the Commission may also be obtained from the
respective companies. Free copies of Energy East's filings may be obtained by
directing a request to Energy East Corporation, P.O. Box 3200, Ithaca, NY 14852-
3200, Telephone: 800-225-5643. Free copies of RGS Energy's filings may be
obtained by directing a request to RGS Energy Group, Inc., 89 East Avenue,
Rochester, NY 14649, Telephone: 800-724-8833.
CONTACT: Thorn Dickinson
Manager-Investor Relations, Energy East
607.347.2561