Fitch Affirms Energy East, NYSEG, RGE, CMP, CNG & SCG.

NEW YORK -- Fitch has affirmed the ratings of Energy East Corporation (Energy East), New York State Electric and Gas Corporation (NYSEG), Rochester Gas and Electric Corporation (RGE), Central Maine Power Company (CMP), Connecticut Natural Gas Corporation (CNG) and Southern Connecticut Gas Company (SCG). The Rating Outlook for all these issuers is Stable. A full description of the rating actions is listed below.

The affirmation of NYSEG reflects the company's strong credit metrics along with the demonstrated track record of hedging the commodity risk associated with the fixed price option (FPO) for NYSEG's retail customers. Under the FPO, NYSEG customers can elect to receive a fixed rate for generation services. Pricing for the FPO is based on prevailing futures prices during a measurement period plus a 35% margin. Left unhedged, FPO would expose NYSEG to margin compression due to changes in supply costs (i.e. fixed revenues with variable costs). NYSEG hedges the commodity price exposure associated with FPO through a mix of non-utility generator contracts, futures and contracts for differences. FPO customers accounted for approximately 55% of NYSEG's load in 2005.

The largest source of concern for NYSEG relates to the company's current electricity rate proceeding before the New York Public Service Commission. The company is seeking a six-year agreement incorporating a $91.6 million delivery rate increase and continuation of the fixed price option. In June 2006, the Administrative Law Judges (ALJ) recommended a one-year rate order with a $37.2 million delivery rate cut. In addition, the ALJ recommended that retail customers be required to explicitly choose the FPO (currently, FPO is the default option for customers who do not make an affirmative election). Adoption of these recommendations would clearly weaken the company's credit metrics. A final order is expected in August 2006.

The affirmation of RGE reflects RGE's low business risk profile and strong credit metrics. 2005 was the first year RGE offered its retail customers the fixed price option. Notably, FPO is not the default option for RGE's customers and this difference is the primary reason for the lower level of load served under FPO at RGE as compared to sister company NYSEG (20% vs. 55% for 2005). Drawing on NYSEG's experience with FPO, RGE was able to hedge its commodity exposure and earn a margin in 2005. The experience to date and the company's policy of fully hedging its FPO obligation substantially reduces the likelihood of a material mishap.

The affirmation of CMP reflects CMP's low business risk profile and strong credit ratios. CMP is a pure electricity transmission and distribution utility. Supply service is provided to retail customers by third-party energy services companies. As such, CMP has no exposure to commodity prices and volumetric risk or to under-recovery of commodity costs through the regulatory process. CMP's credit ratios are strong, with FFO to interest of 6.2 times (x) and debt to EBITDA of 2.4x for the 12 months ended March 31, 2006.

The affirmation of CNG reflects the company's low business risk profile and robust financial metrics. CNG is a pure gas distribution company that benefits from full recovery of purchased gas costs. These costs are adjusted monthly to reflect the actual cost of gas and are reviewed semi-annually by the Connecticut Department of Public Utility Control (DPUC) on an after-the-fact basis. Recently, the DPUC commenced a periodic financial review of CNG. In response, CNG anticipates filing a rate case in September 2006, which will supplant to DPUC financial review.

Similar to the situation of its sister company CNG, the affirmation of SCG's ratings also reflects the company's low business risk profile and credit metrics, which are reasonable for the ratings category. In addition to a gas cost recovery clause that is adjusted monthly, SCG benefits from a weather normalization clause. One source of concern relates to the continued relatively high level of uncollectibles at SCG. SCG's service territory includes several economically depressed municipalities. In a rate order issued Dec. 28, 2005, the DPUC expressed frustration regarding the persistence of higher than average level of uncollectibles experienced by SCG. While ratifying the settlement amount of $11.9 million in annual uncollectible expense, the DPUC stated clearly that SCG needs to improve and raised the possibility of punitive action in the company's next rate case.

The affirmation of Energy East reflects the relatively stable nature of the company's utilities and the ability to upstream dividends from these utilities. For the 12 months ended March 31, 2006, consolidated funds from operations (FFO) to interest and debt to EBITDA were 2.9x and 4.0x, respectively. These ratios are reasonable for the ratings category given the low risk nature of the company's utility delivery operations, which constitute the vast preponderance of its activities. Going forward, Fitch expects consolidated financial metrics to weaken slightly for 2006 as the company continues to invest in customer case systems and electricity delivery infrastructure.

Energy East is a utility holding company primarily involved in the delivery of electricity and natural gas. The company's regulated electricity operations involve the transmission, distribution and generation of electricity in upstate New York and Maine. Its regulated gas operations involve transportation, storage and distribution operations in upstate New York, Connecticut, Maine and Massachusetts. The company serves 1.9 million electricity customers and 950,000 natural gas customers.

Fitch affirms the following ratings with a Stable Outlook:

Energy East Corporation

--Issuer Default Rating (IDR) at 'BBB';

--Senior unsecured debt at 'BBB'.

Energy East Capital Trust I

--Trust preferred stock at 'BBB-'.

New York State Electric and Gas Corporation

--IDR at 'BBB';

--Senior unsecured debt at 'BBB+';

--Preferred stock at 'BBB';

--Short-term rating at 'F2'.

Rochester Gas and Electric Corporation

--IDR at 'BBB-';

--First mortgage bonds at 'BBB+';

--Senior unsecured debt at 'BBB';

--PCRBs at 'AAA' (insured by MBIA);

--Preferred stock at 'BBB-'.

Central Maine Power Company

--IDR at 'BBB+';

--Senior unsecured debt at 'A-';

--Preferred stock at 'BBB+'.

Connecticut Natural Gas Corporation

--IDR at 'BBB+';

--Senior unsecured debt at 'A-';

--Medium-term notes at 'A-'.

Southern Connecticut Gas Company

--IDR at 'BBB+';

--First mortgage bonds at 'A';

--Medium-term notes at 'A'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.