FOR IMMEDIATE RELEASE                                          AT
TUESDAY, JUNE 24, 1997                             (202) 616-2771
                                               TDD (202) 514-1888


 JUSTICE DEPARTMENT SUES NEW YORK'S ROCHESTER GAS & ELECTRIC CO.
 OVER ANTICOMPETITIVE AGREEMENT WITH THE UNIVERSITY OF ROCHESTER


  Agreement Keeps Customers from Receiving Low-Cost Electricity


     WASHINGTON, D.C. -- In an effort to loosen the stranglehold
New York's Rochester Gas & Electric Company has in providing
electricity in Rochester, the Department of Justice sued the
company today challenging an agreement RG&E entered into with the
University of Rochester that prevents RG&E customers from
receiving low-cost electricity. 

     The Department's Antitrust Division said that the agreement
deprives some RG&E customers of alternative low-cost electricity,
which forces them to pay more for their electricity.

     "As the electric industry becomes increasingly deregulated,
vigorous antitrust enforcement is absolutely essential to ensure
that consumers benefit from competition," said Joel I. Klein,
Acting Assistant Attorney General in charge of the Department's
Antitrust Division.  "This case should send a wake-up call to
electric utilities.  We will not tolerate private arrangements
designed to thwart the introduction of competition into this
important industry."

     According to the lawsuit, RG&E made threats and offered
financial rewards to induce the University of Rochester to
abandon its plan to build a new, efficient power plant in the
Rochester area.  The agreement also prevented the University from
participating in any projects that would provide other current
RG&E customers with energy from anyone other than RG&E.

     Throughout the U.S., state utility commissions are beginning
to rely on competition rather than regulation to set rates where
possible for sales of electricity.  The New York Public Service
Commission allows utilities to deviate from their regulated rates
in order to compete for customers who have an alternative source
of electricity available.

     The Department's complaint, which was filed today in U. S.
District Court for the Western District of New York, alleges that
RG&E threatened to cut off certain research grants to the
University if the plant were built.  In addition, if the plant
were not built, RG&E promised to give the University hundreds of
thousands of dollars for conservation programs, even if the
University never undertook those programs.  The complaint also
alleges that RG&E gave the University an exceptionally low
electricity rate as part of the arrangement.  

     The University was planning to build a "cogeneration" plant,
which--at a negligible additional cost--produces electricity as a
byproduct of producing steam for heating and cooling campus
buildings.  At the time the parties entered into the agreement,
the University's trustees had voted to replace its aging coal-
burning steam plant with a modern and efficient gas-fired
cogeneration plant.  The complaint alleges that the new plant
would have produced inexpensive surplus electricity that the
University could have sold in competition with RG&E. 
 
     As a result of the illegal agreement, the new plant was
never built, and the University's steam is still being produced
by a coal plant built in 1929.

     In the lawsuit, the Department asked the court to prohibit
RG&E from enforcing the existing agreement or offering anything
of value to induce a competitor not to compete with RG&E in the
sale of electricity or the generation of electricity for that
purpose.  

     Rochester Gas & Electric is located in Rochester, New York
and serves more than 300,000 customers in the Monroe County area.

     No trial date has been set.  
  
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