content: Securities and Exchange Commission
  
                       Washington, DC  20549
  
                              Form 8-K
  
                           Current Report
  
               Pursuant to Section 13 or 15(d) of the
                    Securities Exchange Act 1934
  
  
                    Date of Report July 15, 1997
                 (Date of earliest event reported)
  
  
  
                      CalEnergy Company, Inc.
       (Exact name of registrant as specified in its charter)
  
  
  
      Delaware                     1-9874           94-2213782
  (State of other          (Commission File       (IRS Employer
  jurisdiction of             Number)            Identification No.)
  incorporation)
  
  
  
   302 South 36th Street, Suite 400,        Omaha, NE         68131             
       (Address of principal executive offices)              Zip Code
  
  
  
  
  Registrant's Telephone Number, including area code:    (402) 341-4500
  
  
  
  
                                N/A
   (Former name or former address, if changed since last report)
  
  
  Item 5.  Other Events
  
       On July 15, 1997, CalEnergy Company, Inc. (the "Registrant")
  announced that its wholly owned subsidiary CE Electric (NY), Inc.
  intends to commence a cash tender offer for 6,540,670 shares of
  common stock ("NYSEG Common Shares") of New York State Electric &
  Gas Corporation which, together with common shares held by
  affiliates of the Registrant,  will represent 9.9% of the
  outstanding NYSEG Common Shares.  The tender offer is the
  Registrant's first step toward the intended acquisition of 100%
  of the NYSEG Common Shares.  See attached Press Release.
  
  
  Item 7.  Financial Statements and Exhibits
  
       Exhibit 1 - Press Release dated July 15, 1997
  
  
                             SIGNATURE
  
  
       Pursuant to the requirements of the Securities Exchange Act
  of 1934, the Registrant has duly caused this report to be signed
  on its behalf by the undersigned hereunto duly authorized.
  
                                         CalEnergy Company, Inc.
  
  
  
  
                                      By: \s\ Douglas L. Anderson
                                          Douglas L. Anderson
                                          Assistant Secretary and
                                          Assistant General Counsel
  
  
  
  
  Dated: July 15, 1997
                                                          Exhibit 1
                                  
                        FOR IMMEDIATE RELEASE
                                  
  Contacts:
  Patti J. McAtee
  Director, Corporate Communications
  (402) 341-4500
  
  Joele Frank
  Abernathy MacGregor Group Inc.
  (212) 371-5999
  
   CALENERGY ANNOUNCES TENDER OFFER FOR 6,540,670 SHARES OF NYSEG
                  COMMON STOCK AT $24.50 PER SHARE
                                  
       OMAHA, Neb., July 15, 1997, CalEnergy Company, Inc.
  ("CalEnergy") (NYSE, PSE AND LSE symbol: CE) announced today that
  its wholly owned subsidiary CE Electric (NY), Inc. intends to
  commence a cash tender offer for 6,540,670 shares of the Common
  Stock of New York State Electric & Gas Corporation ("NYSEG")
  (NYSE symbol: NGE) at a price of $24.50 per share.  Holders
  tendering their shares will also be entitled to retain the
  regular 35 cents dividend payable in August.
  
       The purpose of the tender offer is to acquire shares which,
  together with the shares of Common Stock currently owned by
  CalEnergy and its affiliates, will represent 9.9% of the
  outstanding Common Stock of NYSEG, the maximum percentage that
  can be acquired without certain federal and state regulatory
  approvals.  The tender offer is CalEnergy's first step toward the
  intended acquisition of 100% of NYSEG's outstanding Common Stock.
  
       The tender offer is not subject to any financing condition.
  It is, however, conditioned upon, among other things (i) at least
  6,540,670 shares of Common Stock being validly tendered and not
  withdrawn and (ii) the expiration or termination of all waiting
  periods imposed by the Hart-Scott-Rodino Antitrust Improvements
  Act.
       
       On July 10, 1997, David L. Sokol, the Chairman and Chief
  Executive Officer of CalEnergy met with Wesley W. von Schack, the
  Chairman, President and Chief Executive Officer of NYSEG to
  discuss the possibility of a business combination between NYSEG
  and CalEnergy.  Subsequent to that meeting, Mr. von Schack called
  Mr. Sokol to inform him that the Board of Directors of NYSEG, at
  a meeting on July 11, 1997, had determined that discussions of
  this opportunity were not a priority and could not be conducted
  on the timely basis which Mr. Sokol had outlined in their meeting.
  
       Accordingly, today Mr. Sokol sent the following letter to
  the Board of Directors of NYSEG:
                               -more-
                                 -2-
                                  
  
  "July 15, 1997
  
  BY HAND AND
  VIA FAX
  
  Mr. Wesley W. von Schack
  Chairman, President &
    Chief Executive Officer
  New York State Electric & Gas Corporation
  4500 Vestal Parkway East
  Binghamton, New York  13902-3607
  Fax:  607-729-3318
  
  Dear Wes:
  
  I was disappointed to learn from you in our telephone call on
  Saturday, July 12th of your Board's decision that pursuing
  discussions with us concerning the advantages of a possible
  combination of New York State Electric & Gas Corporation
  ("NYSEG") and CalEnergy Company, Inc. ("CalEnergy") was not a
  priority and could not be conducted on the timely basis which I
  outlined to you in our meeting last week, on Thursday, July 10th.
  I might add that your Board's reaction does not appear to be
  consistent with the clear impression you gave me in our meeting
  last Thursday to the effect that a sale of NYSEG in the price
  range we conceptually discussed was an alternative that you would
  seriously and promptly consider and that you agreed it was in the
  best interests of your shareholders that you do so.
  
  Accordingly, after considered review of the publicly available
  information concerning NYSEG, the CalEnergy Board has concluded
  that the potential strategic and financial benefits to our
  companies' shareholders and other concerned constituencies are
  compelling and should be pursued on an immediate and serious
  basis.  Our strong preference would be to work together with you
  and the NYSEG Board to complete a negotiated transaction.
  However, in light of the confusing messages we have received from
  you and your Board, CalEnergy is today approaching your
  shareholders directly and announcing a cash tender offer to
  acquire for $24.50 per share that number of shares of NYSEG
  common stock which, together with the shares of NYSEG common
  stock which CalEnergy presently owns, will represent 9.9% of the
  total number of shares of NYSEG common stock outstanding. Holders
  tendering their shares will also be entitled to retain the
  regular 35 cents dividend payable in August.  This tender offer is the
  first step in the intended acquisition of 100% of NYSEG's common
  shares by CalEnergy.
  
                                  
                                  
                                  
                               -more-
                                 -3-
  
  As previously noted, we would much prefer to work together with
  you and your Board to achieve a negotiated transaction.
  Accordingly, this letter sets forth a specific proposal for
  consideration by you and your Board, together with a brief
  reiteration of the merger rationale which I shared with you at
  our meeting last week.
  
  Our specific merger proposal is to commence negotiations
  immediately to enter into a consensual merger in which each
  outstanding share of NYSEG common stock would be exchanged for
  $27.50 in cash.  This cash price represents a premium of 31.74%
  above the NYSEG $20 7/8 per share NYSE closing price on June 30,
  1997 (the day immediately preceding the day on which we first
  commenced our open market purchases of NYSEG Common Stock).  I
  would also note that the cash merger price which we propose
  exceeds the up to 25% premium for NYSEG Common Stock which you
  indicated, in our conceptual discussion during our meeting last
  Thursday, might be appropriate in the context of a stock for
  stock merger of NYSEG and CalEnergy.
  
  As I informed you in our meeting last week, we have reviewed the
  regulatory issues in detail and have fully underwritten financing
  offers in an amount sufficient to complete the acquisition of
  100% of NYSEG's common stock at the price set forth above.  The
  difference between our proposed consensual merger price and our
  partial tender offer price reflects the shorter time interval and
  increased certainty associated with the purchase of 9.9% of
  NYSEG's common shares. The partial tender offer requires no
  regulatory approvals other than expiration of the expected 15-day
  Hart-Scott-Rodino waiting period, as compared to the estimated
  nine to twelve months for the regulatory approvals required to
  complete the acquisition of 100% of NYSEG's common stock.
  
  While NYSEG clearly possesses many strengths, you have publicly
  acknowledged that both New York's energy industry generally and
  NYSEG specifically face a number of serious, complex and
  immediate challenges.  These include:
  
               The New York Public Service Commission's restructuring
  proceedings with respect to, among other things, (i) the lowering
  of the rates chargeable by NYSEG and other New York utilities,
  (ii) the potential divestiture of generation assets and (iii) the
  introduction of broadened competition;
                        
               Litigation by NYSEG concerning the unimplemented rate
  increases approved in NYSEG's last rate case (August 1995);
           
               NYSEG's potentially strandable above-market costs (which you
  have publicly stated are more than twice the national average);
           
                                  
                                  
                               -more-
                                 -4-
           
               NYSEG's flat revenues over the last two years; and
  
               The consistent underperformance of NYSEG's common stock
  since NYSEG cut its dividend in October 1994.
       
  CalEnergy welcomes the deregulation of the New York electric
  market and views increased competition as positive and beneficial
  to ratepayers and the larger New York community alike.  We would
  expect to bring a helpful competitive focus to NYSEG's transition
  to such an environment and in meeting the competitive challenges
  which it faces.
  
  CalEnergy, which has (according to analysts' consensus estimates)
  expected 1997 revenues in excess of $2 billion, traces its roots
  to the introduction of the competitive electric generation
  industry within the United States and has expanded and thrived in
  the competitive marketplace, both within the U.S. and
  internationally.
  
  As I described to you, CalEnergy's U.K. utility subsidiary,
  Northern Electric plc (which is engaged in the distribution and
  supply of electricity to approximately 1.5 million customers,
  primarily in Northeast England), brings us direct experience,
  systems and skills acquired in the deregulated and competitive
  U.K. electric and gas markets.  We anticipate using these skills
  and working closely with the New York Public Service Commission
  to provide rate reductions for all NYSEG customers following the
  proposed merger, while maintaining the safe and reliable service
  to which they are accustomed.
  
  Consistent with CalEnergy's decentralized regional organization,
  we would intend to maintain NYSEG as a separate operating
  business unit with its existing corporate headquarters.  We would
  also plan to reincorporate CalEnergy in New York and grow NYSEG's
  business by participating aggressively in the increasingly
  competitive New York electric market.  This would ultimately make
  a significant contribution to the local region's long-term
  ability to retain jobs and attract new jobs and businesses.
  CalEnergy is a high growth company which has increased its number
  of employees tenfold over the past 5 years and provides worldwide
  opportunities in its numerous locations.
  
  As I have previously detailed, we believe that our cash merger
  proposal, which reflects a substantial premium over NYSEG's
  current market value, represents a full and fair price for your
  shareholders.  Moreover, our proposal would permit your
  shareholders to realize this substantial cash value
  notwithstanding the significant uncertainties facing NYSEG and
  its business today.  To the extent that you believe that your
  shareholders would view favorably an option to receive CalEnergy
  shares or other forms of consideration in lieu of the cash price
  we have proposed, we would be willing to consider that in the
  context of a negotiated transaction.
  
  
                               -more-
                                 -5-
                                  
  Although we have found it necessary to go directly to your
  shareholders with our partial tender offer and advise them of our
  merger proposal, my continuing preference is to pursue this
  opportunity on a consensual basis with you and NYSEG's board.  We
  are available to meet with you immediately to discuss the terms
  of this proposal.  However, if you choose not to enter into
  discussions with us, we believe, and we hope you will agree, that
  NYSEG's Board ought to permit NYSEG's shareholders to freely
  decide for themselves on the merits of our offer rather than
  taking any action which would hinder the shareholders' ability to
  express their views.
  
  I look forward to hearing from you soon.
  
  Sincerely,
  
  
  /s/ David L. Sokol
  David L. Sokol
  Chairman & Chief Executive Officer
       
  cc:  Board of Directors of NYSEG
       c/o Mr. Wesley W. von Schack"
  
       Mr. Sokol added, "Our proposed business combination would
  yield many benefits for NYSEG's customers and employees and the
  State of New York.  We welcome the various initiatives of the
  Governor's office, the legislature and the New York Public
  Service Commission to introduce full competition to New York's
  energy market.  We fully expect that CalEnergy will be able to
  work closely with the New York Public Service Commission to
  implement rate reductions for all NYSEG customers, while
  providing them with the same safe and reliable energy service to
  which they are accustomed.  Lower rates would give NYSEG an
  advantage in meeting the competitive challenges of the
  deregulating energy market while contributing to New York's
  economic vitality and ability to attract and retain jobs.  We
  intend to reincorporate CalEnergy in New York and maintain NYSEG
  as a distinct operating unit with its existing corporate
  headquarters.  CalEnergy is a growth company that has increased
  its number of employees tenfold in the last five years."
  
       Lehman Brothers Inc. and Credit Suisse First Boston
  Corporation are acting as financial advisors to CalEnergy and as
  Dealer Managers in connection with the tender offer.  MacKenzie
  Partners, Inc. is acting as the Information Agent for the tender
  offer.
       
       CalEnergy, which manages and owns interests in over 5,000
  net MW of power generation facilities in operation, construction
  and development worldwide, currently operates 19 generating
  facilities and also supplies and distributes electricity to 1.5
  million customers.
                              * * * * *
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text: Securities and Exchange Commission
  
                       Washington, DC  20549
  
                              Form 8-K
  
                           Current Report
  
               Pursuant to Section 13 or 15(d) of the
                    Securities Exchange Act 1934
  
                    Date of Report July 15, 1997
                 (Date of earliest event reported)
  
                      CalEnergy Company, Inc.
       (Exact name of registrant as specified in its charter)
  
      Delaware                     1-9874           94-2213782
  (State of other          (Commission File       (IRS Employer
  jurisdiction of             Number)            Identification No.)
  incorporation)
  
   302 South 36th Street, Suite 400,        Omaha, NE         68131             
       (Address of principal executive offices)              Zip Code
  
  Registrant's Telephone Number, including area code:    (402) 341-4500
  
                                N/A
   (Former name or former address, if changed since last report)
  
  Item 5.  Other Events
  
       On July 15, 1997, CalEnergy Company, Inc. (the "Registrant")
  announced that its wholly owned subsidiary CE Electric (NY), Inc.
  intends to commence a cash tender offer for 6,540,670 shares of
  common stock ("NYSEG Common Shares") of New York State Electric &
  Gas Corporation which, together with common shares held by
  affiliates of the Registrant,  will represent 9.9% of the
  outstanding NYSEG Common Shares.  The tender offer is the
  Registrant's first step toward the intended acquisition of 100%
  of the NYSEG Common Shares.  See attached Press Release.
  
  Item 7.  Financial Statements and Exhibits
  
       Exhibit 1 - Press Release dated July 15, 1997
  
                             SIGNATURE
  
       Pursuant to the requirements of the Securities Exchange Act
  of 1934, the Registrant has duly caused this report to be signed
  on its behalf by the undersigned hereunto duly authorized.
  
                                         CalEnergy Company, Inc.
  
                                      By: \s\ Douglas L. Anderson
                                          Douglas L. Anderson
                                          Assistant Secretary and
                                          Assistant General Counsel
  
  Dated: July 15, 1997
                                                          Exhibit 1
                                  
                        FOR IMMEDIATE RELEASE
                                  
  Contacts:
  Patti J. McAtee
  Director, Corporate Communications
  (402) 341-4500
  
  Joele Frank
  Abernathy MacGregor Group Inc.
  (212) 371-5999
  
   CALENERGY ANNOUNCES TENDER OFFER FOR 6,540,670 SHARES OF NYSEG
                  COMMON STOCK AT $24.50 PER SHARE
                                  
       OMAHA, Neb., July 15, 1997, CalEnergy Company, Inc.
  ("CalEnergy") (NYSE, PSE AND LSE symbol: CE) announced today that
  its wholly owned subsidiary CE Electric (NY), Inc. intends to
  commence a cash tender offer for 6,540,670 shares of the Common
  Stock of New York State Electric & Gas Corporation ("NYSEG")
  (NYSE symbol: NGE) at a price of $24.50 per share.  Holders
  tendering their shares will also be entitled to retain the
  regular 35 cents dividend payable in August.
  
       The purpose of the tender offer is to acquire shares which,
  together with the shares of Common Stock currently owned by
  CalEnergy and its affiliates, will represent 9.9% of the
  outstanding Common Stock of NYSEG, the maximum percentage that
  can be acquired without certain federal and state regulatory
  approvals.  The tender offer is CalEnergy's first step toward the
  intended acquisition of 100% of NYSEG's outstanding Common Stock.
  
       The tender offer is not subject to any financing condition.
  It is, however, conditioned upon, among other things (i) at least
  6,540,670 shares of Common Stock being validly tendered and not
  withdrawn and (ii) the expiration or termination of all waiting
  periods imposed by the Hart-Scott-Rodino Antitrust Improvements
  Act.
       
       On July 10, 1997, David L. Sokol, the Chairman and Chief
  Executive Officer of CalEnergy met with Wesley W. von Schack, the
  Chairman, President and Chief Executive Officer of NYSEG to
  discuss the possibility of a business combination between NYSEG
  and CalEnergy.  Subsequent to that meeting, Mr. von Schack called
  Mr. Sokol to inform him that the Board of Directors of NYSEG, at
  a meeting on July 11, 1997, had determined that discussions of
  this opportunity were not a priority and could not be conducted
  on the timely basis which Mr. Sokol had outlined in their meeting.
  
       Accordingly, today Mr. Sokol sent the following letter to
  the Board of Directors of NYSEG:
                               -more-
                                 -2-
                                  
  
  "July 15, 1997
  
  BY HAND AND
  VIA FAX
  
  Mr. Wesley W. von Schack
  Chairman, President &
    Chief Executive Officer
  New York State Electric & Gas Corporation
  4500 Vestal Parkway East
  Binghamton, New York  13902-3607
  Fax:  607-729-3318
  
  Dear Wes:
  
  I was disappointed to learn from you in our telephone call on
  Saturday, July 12th of your Board's decision that pursuing
  discussions with us concerning the advantages of a possible
  combination of New York State Electric & Gas Corporation
  ("NYSEG") and CalEnergy Company, Inc. ("CalEnergy") was not a
  priority and could not be conducted on the timely basis which I
  outlined to you in our meeting last week, on Thursday, July 10th.
  I might add that your Board's reaction does not appear to be
  consistent with the clear impression you gave me in our meeting
  last Thursday to the effect that a sale of NYSEG in the price
  range we conceptually discussed was an alternative that you would
  seriously and promptly consider and that you agreed it was in the
  best interests of your shareholders that you do so.
  
  Accordingly, after considered review of the publicly available
  information concerning NYSEG, the CalEnergy Board has concluded
  that the potential strategic and financial benefits to our
  companies' shareholders and other concerned constituencies are
  compelling and should be pursued on an immediate and serious
  basis.  Our strong preference would be to work together with you
  and the NYSEG Board to complete a negotiated transaction.
  However, in light of the confusing messages we have received from
  you and your Board, CalEnergy is today approaching your
  shareholders directly and announcing a cash tender offer to
  acquire for $24.50 per share that number of shares of NYSEG
  common stock which, together with the shares of NYSEG common
  stock which CalEnergy presently owns, will represent 9.9% of the
  total number of shares of NYSEG common stock outstanding. Holders
  tendering their shares will also be entitled to retain the
  regular 35 cents dividend payable in August.  This tender offer is the
  first step in the intended acquisition of 100% of NYSEG's common
  shares by CalEnergy.
  
                                  
                                  
                                  
                               -more-
                                 -3-
  
  As previously noted, we would much prefer to work together with
  you and your Board to achieve a negotiated transaction.
  Accordingly, this letter sets forth a specific proposal for
  consideration by you and your Board, together with a brief
  reiteration of the merger rationale which I shared with you at
  our meeting last week.
  
  Our specific merger proposal is to commence negotiations
  immediately to enter into a consensual merger in which each
  outstanding share of NYSEG common stock would be exchanged for
  $27.50 in cash.  This cash price represents a premium of 31.74%
  above the NYSEG $20 7/8 per share NYSE closing price on June 30,
  1997 (the day immediately preceding the day on which we first
  commenced our open market purchases of NYSEG Common Stock).  I
  would also note that the cash merger price which we propose
  exceeds the up to 25% premium for NYSEG Common Stock which you
  indicated, in our conceptual discussion during our meeting last
  Thursday, might be appropriate in the context of a stock for
  stock merger of NYSEG and CalEnergy.
  
  As I informed you in our meeting last week, we have reviewed the
  regulatory issues in detail and have fully underwritten financing
  offers in an amount sufficient to complete the acquisition of
  100% of NYSEG's common stock at the price set forth above.  The
  difference between our proposed consensual merger price and our
  partial tender offer price reflects the shorter time interval and
  increased certainty associated with the purchase of 9.9% of
  NYSEG's common shares. The partial tender offer requires no
  regulatory approvals other than expiration of the expected 15-day
  Hart-Scott-Rodino waiting period, as compared to the estimated
  nine to twelve months for the regulatory approvals required to
  complete the acquisition of 100% of NYSEG's common stock.
  
  While NYSEG clearly possesses many strengths, you have publicly
  acknowledged that both New York's energy industry generally and
  NYSEG specifically face a number of serious, complex and
  immediate challenges.  These include:
  
               The New York Public Service Commission's restructuring
  proceedings with respect to, among other things, (i) the lowering
  of the rates chargeable by NYSEG and other New York utilities,
  (ii) the potential divestiture of generation assets and (iii) the
  introduction of broadened competition;
                        
               Litigation by NYSEG concerning the unimplemented rate
  increases approved in NYSEG's last rate case (August 1995);
           
               NYSEG's potentially strandable above-market costs (which you
  have publicly stated are more than twice the national average);
           
                                  
                                  
                               -more-
                                 -4-
           
               NYSEG's flat revenues over the last two years; and
  
               The consistent underperformance of NYSEG's common stock
  since NYSEG cut its dividend in October 1994.
       
  CalEnergy welcomes the deregulation of the New York electric
  market and views increased competition as positive and beneficial
  to ratepayers and the larger New York community alike.  We would
  expect to bring a helpful competitive focus to NYSEG's transition
  to such an environment and in meeting the competitive challenges
  which it faces.
  
  CalEnergy, which has (according to analysts' consensus estimates)
  expected 1997 revenues in excess of $2 billion, traces its roots
  to the introduction of the competitive electric generation
  industry within the United States and has expanded and thrived in
  the competitive marketplace, both within the U.S. and
  internationally.
  
  As I described to you, CalEnergy's U.K. utility subsidiary,
  Northern Electric plc (which is engaged in the distribution and
  supply of electricity to approximately 1.5 million customers,
  primarily in Northeast England), brings us direct experience,
  systems and skills acquired in the deregulated and competitive
  U.K. electric and gas markets.  We anticipate using these skills
  and working closely with the New York Public Service Commission
  to provide rate reductions for all NYSEG customers following the
  proposed merger, while maintaining the safe and reliable service
  to which they are accustomed.
  
  Consistent with CalEnergy's decentralized regional organization,
  we would intend to maintain NYSEG as a separate operating
  business unit with its existing corporate headquarters.  We would
  also plan to reincorporate CalEnergy in New York and grow NYSEG's
  business by participating aggressively in the increasingly
  competitive New York electric market.  This would ultimately make
  a significant contribution to the local region's long-term
  ability to retain jobs and attract new jobs and businesses.
  CalEnergy is a high growth company which has increased its number
  of employees tenfold over the past 5 years and provides worldwide
  opportunities in its numerous locations.
  
  As I have previously detailed, we believe that our cash merger
  proposal, which reflects a substantial premium over NYSEG's
  current market value, represents a full and fair price for your
  shareholders.  Moreover, our proposal would permit your
  shareholders to realize this substantial cash value
  notwithstanding the significant uncertainties facing NYSEG and
  its business today.  To the extent that you believe that your
  shareholders would view favorably an option to receive CalEnergy
  shares or other forms of consideration in lieu of the cash price
  we have proposed, we would be willing to consider that in the
  context of a negotiated transaction.
  
                               -more-
                                 -5-
                                  
  Although we have found it necessary to go directly to your
  shareholders with our partial tender offer and advise them of our
  merger proposal, my continuing preference is to pursue this
  opportunity on a consensual basis with you and NYSEG's board.  We
  are available to meet with you immediately to discuss the terms
  of this proposal.  However, if you choose not to enter into
  discussions with us, we believe, and we hope you will agree, that
  NYSEG's Board ought to permit NYSEG's shareholders to freely
  decide for themselves on the merits of our offer rather than
  taking any action which would hinder the shareholders' ability to
  express their views.
  
  I look forward to hearing from you soon.
  
  Sincerely,
  
  /s/ David L. Sokol
  David L. Sokol
  Chairman & Chief Executive Officer
       
  cc:  Board of Directors of NYSEG
       c/o Mr. Wesley W. von Schack"
  
       Mr. Sokol added, "Our proposed business combination would
  yield many benefits for NYSEG's customers and employees and the
  State of New York.  We welcome the various initiatives of the
  Governor's office, the legislature and the New York Public
  Service Commission to introduce full competition to New York's
  energy market.  We fully expect that CalEnergy will be able to
  work closely with the New York Public Service Commission to
  implement rate reductions for all NYSEG customers, while
  providing them with the same safe and reliable energy service to
  which they are accustomed.  Lower rates would give NYSEG an
  advantage in meeting the competitive challenges of the
  deregulating energy market while contributing to New York's
  economic vitality and ability to attract and retain jobs.  We
  intend to reincorporate CalEnergy in New York and maintain NYSEG
  as a distinct operating unit with its existing corporate
  headquarters.  CalEnergy is a growth company that has increased
  its number of employees tenfold in the last five years."
  
       Lehman Brothers Inc. and Credit Suisse First Boston
  Corporation are acting as financial advisors to CalEnergy and as
  Dealer Managers in connection with the tender offer.  MacKenzie
  Partners, Inc. is acting as the Information Agent for the tender
  offer.
       
       CalEnergy, which manages and owns interests in over 5,000
  net MW of power generation facilities in operation, construction
  and development worldwide, currently operates 19 generating
  facilities and also supplies and distributes electricity to 1.5
  million customers.
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