10KSB

U.S. Securities and Exchange Commission
Washington, D.C. 20549
	(X)	ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND
			EXCHANGE ACT OF 1934 (Fee Required)
		For the twelve month period ended September 30, 2000
			Commission file number 0-643
			Corning Natural Gas Corporation
	(Name of small business issuer in its charter)
New York					16-0397420
(State or other jurisdiction of				(I.R.S. Employer Identification No.)
incorporation or organization)
330 W. William St., Corning NY				14830
(Address of principal executive offices)				(Zip code)
Issuer's telephone number (607) 936-3755
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock - $5.00 par value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X
No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-ISV. (X)
Revenues for 12 month period ended September 30, 2000 $24,303,894
The aggregate market value of the 394,674 shares of the Common Stock held by
non-affiliates of the Registrant at the $20.00 average of bid and asked prices as of November 1, 2000 was $7,893,480.
Number of shares of Common Stock outstanding as of the close of business on
November 1, 2000 - 460,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the twelve month
period ended September 30, 2000, and definitive proxy statement and notice of
annual meeting of shareholders, dated January 2, 2000 are incorporated by
reference into Part I, Part II and Part III hereof.
Information contained in this Form 10-KSB and the Annual Report to
shareholders for fiscal 2000 period which is incorporated by reference
contains certain forward looking comments which may be impacted by factors
beyond the control of the Company, including but not limited to natural gas
supplies, regulatory actions and customer demand. As a result, actual
conditions and results may differ from present expectations.
CORNING NATURAL GAS CORPORATION
FORM 10-KSB
For the 12 Month Period Ended September 30, 2000
Part I
ITEM 1 - DESCRIPTION OF BUSINESS
(a) Business Development
Corning Natural Gas Corporation (the "Company" or "Registrant" ), incorporated
in 1904, is a natural gas utility. The Company operates as six operating segments, the Gas Company,
Appliance Corporation, Tax Center International, Corning Mortgage, Corning Realty and Foodmart Plaza.
The Gas Company purchases its entire supply of gas, and distributes it through its own pipeline
distribution and transmission systems to residential, commercial, industrial and municipal customers in
the Corning, New York area and to two other gas utilities which service the Elmira and Bath, New York
areas. The Gas Company is under the jurisdiction of the Public Service Commission of New York State
which oversees and sets rates for New York gas distribution companies. The Appliance Corporation
sells, rents and services primarily gas burning appliances. The Tax Center provides tax preparation,
accounting and payroll services to approximately 1000 clients. Corning Realty is a residential and
commercial real estate business with approximately 80 agents operating in three neighboring counties.
Foodmart Plaza is a retail complex consisting of eight tenants under multi-year leases anchored by a
major supermarket. An equal joint venture between Elmira Savings & Loan(a local commercial bank) and
Corning Mortgage Company, LLC (a subsidiary of Corning Natural Gas Appliance Corporation) has been
formed to start a mortgage lending services company, Choice One Lending LLC.
(b) Business of Issuer
(1) The Gas Company maintains a gas supply portfolio of numerous contracts and is not dependent on a
single supplier. Additionally, the Gas Company has capabilities for storing 793,000 Mcf through storage
operations with two of its suppliers. The Gas Company had no curtailments during fiscal 2000 and
expects to have an adequate supply available for its customers during fiscal 2001 providing that no abnormal conditions
or actions occur.
(2) The Gas Company is franchised to supply gas service in all of the political subdivisions
in which it operates.
(3) Since the Gas Company's business is seasonal by quarters, sales for each quarter of the year
vary and are not comparable. Sales for different periods vary depending on variations in temperature, but
the Company's Weather Normalization Clause (WNC) serves to stabalize net revenue from the effects
of temperature variations. The WNC allows the Company to adjust customer billings to compensate for
fluctuations in net revenue caused by temperatures which are higher or lower than the thirty year average
temperature for the period. Degree days, which represent the number of degrees that the average daily
temperature falls below 65 degrees Fahrenheit totaled 6,333 for the period October 1, 1999 through
September 30, 2000 and 6,241 for the same period ended September 30, 1999.
(4) The Company has three major customers, Corning Incorporated, New York State Electric & Gas (NYSEG), and Bath Electric, Gas & Water Systems
(BEGWS). The loss of any of these customers could have a significant impact
on the Company's financial results.
(5) Historically, the Company's competition in the residential market has been primarily from electricity in
cooking, water heating and clothes drying, and to a very small degree, in heating. The price of gas
remains low in comparison to that of electricity in the Company's service territory and the Company's
competitive position in the residential market continues to be very strong. Approximately 99% of the
Company's general service customers heat with gas.
Competition from oil still exists in the industrial market. The Company has been able to counteract much
of this competition, to date, through the transportation of customer owned gas for a transportation charge.
The customer arranges for their own gas supply, then moves it through the Company's facilities for a
transportation fee. The Company's transportation rate is equal to the lowest unit rate of the appropriate
rate classification, exclusive of gas costs, hence the profit margin is maintained.
Additionally, under an increasingly deregulated environment there is opportunity for the Company to
increase revenue by selling its upstream pipeline capacity to transportation customers. The Company
is authorized to retain 15% of such revenue and 85% is returned to firm customers in the form of
lower gas costs. Transportation customers that pay for this capacity are virtually assured that their supply
will not be interrupted. Revenues derived from the resale of this capacity were $92,818 for the 12
months ended September 30, 2000 and $128,445 for the 12 months ended September 30, 1999.
On November 3, 1998 the New York State Public Service Commission (PSC) issued a Policy Statement
in which they provided their view as to how to best ensure a competitive market, eliminate barriers to
competition, provide guidance to LDC's and marketers and address customer inertia. A detailed .
discussion appears in the Industry Restructuring section of the enclosed Annual Report to Shareholders
The Appliance Corporation faces the challenges of local competition. The home center chains which
have been opened in our vicinity offer competition, however, the Appliance Corporation continues to
depend on its long standing reputation in the area as a top quality sales and service company. As for the
rental section of the appliance business, there really isn't a great deal of competition in our very strong
rental water heater market. This stabilizes a substantial portion of our net income.
The real estate business is clearly a highly competitive market in which Corning Realty is well positioned.
Prudential Ambrose & Shoemaker Real Estate maintains approximately 55% of the local market. Local
economy and interest rates play a factor in the outcome of the market, however, Corning Realty
continues to hold strong.
There is a considerable amount of competition in the mortgage lending business, however, the business
plan for Choice One Lending was compiled recognizing that this company will utilize the relationships
with another subsidiary, Prudential Ambrose & Shoemaker Real Estate, the areas largest residential real
estate business that is involved in over 1,000 real estate closings annually.
The impact of competition is less material in the other two areas of our business, the commercial
property rented out at our Foodmart Plaza is in demand with limited competition. The services provided
by Tax Center are available from various competitors. The Tax Center maintains a steady growth of clients regardless of that
competition.
(6) The Gas Company believes compliance with present federal, state and
local provisions relating to the protection of the environment will not have
any material adverse effect on capital expenditures, earnings and financial
position of the Company and its subsidiaries.
(7) Ninety-two persons were employed by the Company in 2000 and 1999.
(8) The Gas Company expects no shortage of raw materials to impact our business over the next 5 - 10
years. The Energy Information Administration indicates an increase in the efficiency of gas exploration
and development is expected to result in increased gas productive capacity. As for the availability of the
necessary pipes and valves for safe distribution of natural gas, the Gas Company likewise anticipates no
shortages and continues to receive both gas supply and material inventory from various reliable sources.
ITEM 2 - DESCRIPTION OF PROPERTY
The Company completed construction of a new office building at 330 West William Street, Corning, NY in
the fall of 1991. This structure is physically connected to the operations center built three years earlier.
The Company had outgrown its general offices at 27 East Denison Parkway. That property has been
sold, and the gain on the sale was returned to ratepayers.
The Gas Company's pipeline system is thoroughly surveyed each year. Any necessary replacements are
included in the construction budget. Approximately 105 miles of transmission main, 292 miles of distribution
main, 13,513 services and 86 measuring and regulating stations, along with various other
property are owned by the Gas Company, except for one short section of 10" gas main which is under a
long-term lease and is used primarily to serve Corning Incorporated. All of the above described property,
which is owned by the Gas Company, is adequately insured and is subject to the lien of the Company's
first mortgage indenture.
The Foodmart Plaza is a retail/commercial complex consisting of a major grocery store and several other
businesses located on an approximately 7 acre lot at 328 Park Avenue, South Corning, NY. The main
building includes 2 retail stores which covers 48,300 square feet and an additional 6 buildings totaling
10,775 square feet house 7 other businesses. The property is well maintained and its overall condition
remains very good. All of the above described property, which is owned by the Appliance Company, is
adequately insured and is subject to a lien agreement with a local bank.
The Appliance Corporation, Tax Center and Realty businesses are operated out of the Company's West
William Street complex in combination with rented office space in various locations. The Tax Center and
Realty companies own no buildings at this time.
ITEM 3 - LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings,
nor is the Company aware of any problems of any consequence which it
anticipates may result in legal proceedings.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 2000.
Additional Item
Executive Officers of the Registrant
(Including Certain Significant Employees)
Name	Age		Business Experience			Years Served
			During Past 5 Years			in This Office
Thomas K. Barry	55		Chairman of the Board of Directors			7
			President & CEO			16
Russell S. Miller	37		Vice President - Operations			1
Kenneth J. Robinson	56		Executive Vice President			9
Phyllis J. Groeger	59		Secretary			13
Thomas S. Roye	47		Vice President - Administration			9
Gary K. Earley	46		Treasurer			9
Term of office is for one year. (Normally from April to April)
Part II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The principal market on which the Registrant's common stock is traded,
the range of high and low bid quotations for each quarterly period during the
past two years, the amount and frequency of dividends, and a description of
restrictions upon the Registrant's ability to pay dividends, appear in the
table below. The number of stockholders of record of the Registrant's Common
Stock was 324 at September 30, 2000. The high and low bid quotations reflect
inter-dealer prices, without retail markup, markdown or commission and may not
represent actual transactions.
MARKET PRICE - (OTC)					Dividend
			High	Low	Declared
Quarter Ended
December 31, 1998			20	20	$0.325
March 31, 1999			21 1/2	20	0.325
June 30, 1999			21 1/2	21 1/2	0.325
30/Sep/99			21 1/2	21 1/2	0.325
December 31, 1999			22 1/2	21 1/2	0.325
March 31, 2000			25	20	0.325
June 30, 2000			21	19 1/2	0.325
September 30, 2000			21	18	0.325
Under the terms of a $4,700,000 senior note issued September 5, 1997, the Company may not declare or pay any dividend,
or cause any other payment from retained earnings except to the extent that consolidated tangible net worth of the Company
exceeds $2,000,000.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion of financial condition and results of operations
of the Company appears in the 2000 Annual Report to Shareholders which is
incorporated by reference.
ITEM 7 - FINANCIAL STATEMENTS
The consolidated financial statements, together with the independent
auditors' report thereon of Deloitte & Touche LLP dated November 17, 2000 are
included in the 2000 Annual Report to Shareholders attached hereto, and are
incorporated in this Form 10-KSB by reference thereto.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
As reported on Form 8-K, dated April 19, 2000, the Board of Directors voted on April 13, 2000 to terminate KPMG LLP's appointment as principal accountants and Deloitte & Touche LLP was engaged as principal accountants. No disagreements with accountants and finacial disclosure exist.
Part III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The information required regarding the executive officers of the
Registrant is included in Part 1 under "Additional Item".
ITEM 10 - EXECUTIVE COMPENSATION
The information required regarding the compensation of the executive
officers appears in the Definitive Proxy Statement attached hereto.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required regarding the security ownership of certain
beneficial owners and management appears in the Definitive Proxy Statement
attached hereto.
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required regarding certain relationships and related
transactions appears in the Definitive Proxy Statement attached hereto.
Part IV
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
	Exhibits
(a)
	The following exhibits are filed with this Form 10-KSB or incorporated
	herein by reference: (Exhibit numbers correspond to numbers assigned to
exhibits in Item 601 of Regulation S-B)
	Name of Exhibit
Exhibit
	A copy of the Corporation's Articles of Incorporation,
3	as currently in effect, including all amendments, was
	filed with the Company's Form 10-K for December 31, 1987.
	A copy of the Corporation's complete by-laws, as
3	currently in effect, was filed with the Corporation's
	report on Form 10-Q for the quarter ended March 31, 1984.
	A copy of the "Agreement Between Corning Natural Gas
10	Corporation and Local 139", dated September 1, 1998
	was filed with Form 10-KSB for December 31, 1998.
	Consulting Agreement and Employment Contracts with
10	three executive officers were filed with the Company's
	Form 10-K for December 31, 1987.
10	A copy of the Service Agreement with CNG
	Transmission Corporation was filed with the Company's
	Form 10-KSB for December 31, 1993.
10	A copy of the Sales Agreement with Bath Electric, Gas
	and Water was filed with the Company's Form 10-K for
	December 31, 1989.
10	A copy of the Transportation Agreement between the Company
	and New York State Electric and Gas Corporation was filed
	with the Company's Form 10-KSB for December 31, 1992.
10	A copy of the Transportation Agreement between the
	Company and Corning Incorporated was filed with the
	Company's Form 10-KSB for December 31, 1992.
10	A copy of the Service Agreement with Columbia Gas
	Transmission Co. was filed with the Company's
	10-KSB for December 31, 1993.
13	A copy of the Corporation's Annual Report to
	Shareholders for 2000, is filed herewith.
22	Information regarding the Company's sole subsidiary was
	filed as Exhibit 22 with the Company's Form 10-K for
	the period ended December 31, 1981.
28	Corning Natural Gas Corporation Proxy Statement is filed herewith.
99	Order from the U.S. Bankruptcy Court, Northern District of
	New York re: Approval of Acquisition of Finger Lakes Gas
Company was filed with the Company's 10-KSB for the period ended
December 31, 1995.
99	Order from the Public Service Commission of New York State
	with the Company's 10-KSB for the period ended December 31, 1995.
re: Approval of Acquisition of Finger Lakes Gas Company was filed
(b) Reports on Form 8-K
	The Company filed no reports on Form 8-K during the three month period ended September 30, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
	CORNING NATURAL GAS CORPORATION
	(Registrant)
Date December 27, 2000			THOMAS K. BARRY
			Thomas K. Barry, Chairman of the Board, President and C.E.O.
Date December 27, 1999			GARY K. EARLEY
			Gary K. Earley, Treasurer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Date December 27, 2000			K.J. ROBINSON
			K.J. Robinson, Director
Date December 27, 2000			DONALD R. PATNODE
			Donald R. Patnode, Director
Date December 27, 2000			T.H. BILODEAU
			T.H. Bilodeau, Director

EX-28

Highlights-12 Months Ended September 30
				2000		1999
Operating Revenue			$	24,304,000		22,968,000
Net Income			$	471,500		437,900
Earnings Per Common Share			$	1.02		0.95
Gas Deliveries( Mcf)				8,047,000		8,017,000
Degree Days				6,333		6,241
Total Customers				14,246		13,993
Capital Expenditures			$	675,000		1,150,700
Property, Plant and Equipment			$	26,427,800		25,608,300
Common Stock Data-Market Price(OTC)
							Dividend
Quarter Ended		High			Low		Paid
December 31, 1998	$	20			20		0.325
March 31, 1999		21 1/2			20		0.325
June 30, 1999		21 1/2			21 1/2		0.325
September 30, 1999		21 1/2			21 1/2		0.325
December 31, 1999		22 1/2			21 1/2		0.325
March 31, 2000		25			20		0.325
June 30, 2000		21			19 1/2		0.325
September 30, 2000		21			18		0.325

EX-28

Letter To Shareholders

While there was a great deal accomplished throughout fiscal 2000, the final tally of financial results was disappointing. Consolidated earnings for the year amounted to an increase of 7.7 percent over fiscal 1999 but did not come anywhere near projected earnings due to circumstances that negatively affected the Company's gas operations. Consolidated earnings of $471,452 equates to $1.02 per share compared with dividends paid in the amount of $1.30 per share. In an effort to resolve some of the issues that affect earnings capabilities of the gas operations portion of our businesses, management filed an application for rate relief with the New York State Public Service Commission (PSC) during the year. There were several issues involved and resolved with this particular application that will become effective February 22, 2001. Hence, the Company will receive the benefits of this filing during a portion of fiscal 2001. In short, the final result of the rate application is designed to produce net operating income of $1,498,000 as compared to $1,121,423 in the test year. Thus, under normal circumstances, this rate structure will result in a 10.7 percent return on equity with an overall rate of return 9.1 percent.

The Company's subsidiaries, including Corning Natural Gas Appliance Corporation, The Foodmart Plaza, Tax Center International, and Prudential Ambrose & Shoemaker Real Estate were all successful in producing improved results during 2000 over the prior year. Combined, the subsidiary companies accounted for $385,800 of net income compared with $218,300 the prior year, an increase of 77 percent. Obviously, this indicates that earnings derived from gas operations amounted to only $85,700 throughout 2000 which compares to $219,700 during 1999. Let us briefly review the reasons for the subpar results of the gas operations and then look at the individual accomplishments of each subsidiary company.

CORNING NATURAL GAS CORPORATION

Insufficient earnings derived from gas operations might indicate a weak business climate and a slowdown in natural gas deliveries. On the contrary, gas deliveries to residential, commercial, and industrial customers that are not under a set contract basis were actually up 8 percent from the prior year. The local economy is indeed healthy and unemployment in the area is at record low levels. While we did experience another milder than average winter for the third straight year, the numbers show that gas deliveries and corresponding revenues are robust. A prolonged cold winter would certainly help, but the majority of the low earnings situation lies elsewhere. Two related factors combined to place a serious dent in net income. First, the Company was placed in a position to borrow large sums of short- term capital throughout the year and secondly, interest rates continued to climb during this period. At fiscal year end the Company's short term debt exceeded $5 million, an increase of $3 million from the previous year. Interest rates increased 1.5 percent during the year. These two factors added approximately $115,000 to overhead. Additional debt was required to fund storage gas as well as undercollections of gas costs. The large increases in the cost of gas towards the end of the year only served to exacerbate this situation. This debt will decline as we move through the winter months as we deplete gas in storage and recover undercollections at the same time. Another sizable expense was the lost and unaccounted for gas cost. While the Company experienced gains from this mechanism in the past, we have incurred an expense for the past two years. For fiscal 2000 this amounted to $121,000 before tax. Incentive earnings from capacity assignment sales continues to decline as expected. The Company received $36,000 less in revenues from capacity assignments during 2000 than the prior year. The other single most significant item contributing toward low earnings is the fact that the Company has not received any rate relief since September 1, 1996. Over this period of time expenses in every area have continued to climb. Health care insurance, liability insurance, wages and related overheads, vehicle operational costs, and other expenses necessary for day- to- day operations have all gone up significantly over the past four years. Management has monitored the results of other rate applications filed with the Public Service Commission over this period and has witnessed some discouraging outcomes. Regulators and legislators in Albany have been on a relentless quest to force down utility rates in an effort to help retain businesses and attract new business to the state. Even though this Company continues to provide gas service at one of the lowest levels in the state, we have been caught up in this political maelstrom. As such, management has been reluctant to request relief during the past few years until there was absolutely no other recourse. The outcome of the rate application filed July 10, 2000 has already been mentioned and is more thoroughly reviewed further on in this report.

APPLIANCE SUBSIDIARY

The Corning Natural Gas Appliance Corporation recorded its best year with earnings of $256,000 representing a 42 percent improvement over 1999. The Company achieved a 16 percent increase in the sales and installation of central heating units and gas fireplaces. Service revenues remained flat as did revenues from rentals of water heaters, clothes dryers and water conditioning equipment. Net income was also elevated from interest revenue received primarily from loans to other subsidiaries. The Company sold 800 units of major appliances during the year and made over 2,700 billable service calls. We continue to operate three retail stores with four full time, on the road, sales representatives. The Company has been able to achieve stability and some growth in this very competitive marketplace by placing emphasis on quality of workmanship, continuity, training, and low turnover of skilled employees. Expectations for the future remain high as the local economy continues at a vibrant pace.

TAX CENTER INTERNATIONAL

The Company's accounting services and tax preparation subsidiary served over 1,000 clients and generated over $364,000 in service revenues during fiscal 2000. Revenue increases of 32 percent helped to produce nearly $85,000 in net earnings, a 16 percent improvement over l999. After tax income represents an impressive 23 percent of gross revenues. Personnel changes and additions throughout the year have enabled the Company to improve its ability to better serve its clients. Tax Center International currently operates with seven full time employees including its manager and vice-president, Ms. Firouzeh "Fi" Sarhangi, who enthusiastically looks toward more growth during the upcoming year.

THE FOODMART PLAZA

The Company's retail plaza produced earnings of just over $100,000 on revenues of $389,000 during fiscal 2000. Last year the plaza generated approximately $40,000 of income which is more typical of expectations. One of the tenants who had vacated its space in the plaza to move into a newly constructed building opted to buy out its remaining 4 year lease at 50 cents on the dollar. This provided the Company with a one time lump sum gross revenue and accounts for the large improvement in earnings. More importantly this activity places this empty building back into the Company's control. Negotiations with a major retail marketer are nearly complete and we expect to have this building open and creating new traffic possibilities for all tenants within a few months. No significant capital investments were required during the year and the plaza continues to be fully occupied with the one exception already mentioned. The Company still has a property tax assessment court case to be decided that, if successful, will produce further reduction in expenses.

30 31

PRUDENTIAL AMBROSE & SHOEMAKER REAL ESTATE

A vigorous local economy has continued to drive a very active residential real estate market throughout the three county area served by the real estate business. Total gross revenues on commissions generated from listing and selling properties, property management fees, rental commissions, auction sales, desk rentals, and referrals amounted to $4,559,000 representing a 16 percent increase from the prior year. Gross earnings, referred to as " company dollar", which is total revenues less commissions, fees, and referrals paid, amounted to $1,793,000, a 2 percent increase over 1999. The company dollar figure becomes the basis for the operating expenses of the business and from which the Company is managed. The Company made progress as it ended the prior year with a loss of $77,000 and ended fiscal 2000 with a loss of $33,000. This business is the result of two merged real estate companies to form the areas largest real estate firm that generates more listings, sales and commissions than all of our competitors combined. Expectedly there have been some merger and growing pains. Most importantly, throughout the fiscal year management has identified over $250,000 in overhead that was unnecessary and has made the changes required to reduce costs accordingly prior to the end of the year. After some extensive work we have a budget established for 2001 that is designed to produce a healthy return on this investment. Needless to say, we are all looking toward the upcoming year with renewed excitement.

36

CORNING MORTGAGE COMPANY

Corning Mortgage Company LLC ( a wholly-owned subsidiary of Corning Natural Gas Appliance Corp.) has been formed to start a mortgage lending services company. During the year, Corning Mortgage Company formed and equal joint venture, Choice One Lending LLC, with Elmira Savings & Loan (E S & L). Management recognized that the real estate business creates a large number of potential mortgage opportunities every day as it is involved in approximately 1,000 real estate closings each year. This company will not actually lend mortgage money but will serve the customer to locate the best source of funds and do all the service work necessary to create the mortgage loan. This is strictly a fee generated business. Choice One Lending currently has one employee, Ms. Marilyn Baxter, who is the manager of this new venture. Ms. Baxter has an extensive background in the banking and loan origination business. ES&L has the banking knowledge and will be utilized as a primary funding company, Ms. Baxter has the hands on management capabilities, and our organization has access to the ultimate customer. The business will be operated out of the Elmira branch office of the real estate company. Our portion of this new venture incurred $20,206 in start up costs during fiscal 2000 . Although we are behind schedule, we are pleased to announce that Choice One Lending received its license approval from the New York State banking authority in mid November, 2000 so that it may begin processing mortgage loans.

LOCAL ECONOMY

The driving force behind almost everything that is going on in the Company's service area revolves around the intense expansion and change of Corning, Incorporated. This world wide Company with its headquarters located in Corning has been in a whirlwind growth mode in the past few years. They are determined to be the world's leader in the primary, high tech, communications industry that is fueled by fiber optics and the complex components that make it operate. Gone are the days of consumer products such as the dishware known as Corelle and Pyrex. This whole division has been sold to World Kitchens, Inc. They have spent over $10 Billion in the past few years to purchase Willow Systems Inc., IntelliSense, NZ Applied Technologies, Photonics Technology Research Center, NetOptix, Optical Polymer Group, Optovac, Oak Industries, Pirelli SpA-Optical Components, Champion Products Inc., and part of Siemens AG. These companies produce electronic precision optical instruments, micro-electromechanical systems, optical networking components, thin film optical filters, calcium fluoride optics, optical fiber, cable, and pump lasers among other products. While these companies are located all over the globe there is a direct impact upon this region. A major photonics components plant has been constructed here that employs 1,100 and is already physically expanding to employ an additional 700 people. Their primary research center located in Erwin has just doubled in size and its growth continues. Approximately 200 scientists have been added to their research effort as total employment there has ballooned to 1,700. Construction is underway in the same area for a 43,000 square foot office facility to house approximately 200 photonic technologies engineers. Corning Inc.'s expenditures on research, development and engineering has jumped from $175.7 million in 1995 to $362.6 million at the end of 1999.

Obviously, Corning Natural Gas Corporation serves all of Corning, Inc.'s new buildings, plants, and expansions of existing facilities with gas for space heating and processing requirements. But, more importantly, Corning, Inc.'s growth touches all sectors of the community we serve. There has been a large increase in demand for new housing. A 144 unit apartment complex is nearing completion in Erwin along with a variety of new housing projects that range in value from $150,000 to $500,000. A new post office is under construction and there is a very serious need for a major school facility. A new Wal-Mart Store, a new hotel, restaurants, and an expansion to the YMCA are all in various stages of construction. The Corning Federal Credit Union, which has occupied its current facility just 10 y ears is already doubling its size with a 50,000 square foot expansion. The Corning - Elmira Regional Airport "industrial park" now has a half dozen new commercial buildings and several more under construction. And finally, after years of planning and development, The Corning Museum of Glass has completed the addition to and total rehabilitation of this area's major tourist attraction. This gem is much more than a museum, it is an experience, an attraction that will be visited by hundreds of thousands of people for many years to come. This, of course, fuels all of the other tourist attractions in the Finger Lakes Region as well as the hotels and motels, the restaurants, theaters and retail shops.

As you can see, it is an exciting time to be in this community and in the entire Finger Lakes Region. Our Company, which is really our employees and each of our affiliates' employees, are geared up, connected so to speak, to meet the challenges before us. Our personnel have always done a great job to meet the requirements of our customers and we take pride in moving forward with this team as we move into a demanding and exciting new year.

Thomas K. Barry

Chairman of the Board,

President and CEO

EX-28

RATES & REGULATION

On February 24, 2000 the Company filed a request for increased rates with the New York State Public Service Commission (PSC) in the amount of $384,024. Accounting adjustments and updates to incorporate the most current information subsequently reduced that request to nearly zero. Because the Company had accumulated significant accounting credits since the last rate case, a filing was still required to resolve the final disposition of those credits as well as provide needed rate relief.

The PSC ratemaking requirements provide for the specific recovery of certain expense items as identified in the Company's most recent rate case. Any deviation in the actual expense from the amount which is included in Rates is accumulated in a deferred Balance Sheet account and can only be disposed of in the context of a rate case. Since the Company's last rate case which became effective in September, 1996 significant credits had accumulated as the actual expenses incurred were less than the amount in rates. Accumulated credits as well as the actual current reduction in the expenses amount to approximately $1,442,000 including interest. The Company proposed to include the credit in rates over a two year period, or approximately $721,000 per year.

Settlement discussions held in August with the Company, PSC Staff and intervenors resulted in an agreement to decrease rates to customers by $300,000. When the total credit of $721,000 is reduced by the rate reduction of $300,000 earnings are enhanced by the difference, or about $421,000. The Settlement is designed to produce a Return On Equity of 10.7% for the Rate Year ending February 21, 2002. Pending formal approval by the Commission new rates will become effective on February 22, 2001.

As has been previously reported, the PSC has been actively working with utilities and marketers to move into the new, deregulated environment whereby all customers have a choice of energy providers. This company has been actively involved in the regulatory process and has spent a considerable amount of time and effort attempting to educate customers, work with marketers and generally support the effort. However, progress both in our service territory and in the rest of the state has been slow for a variety of reasons.

In our own service territory customers have indicated that they have generally been happy with the service provided by Corning Natural Gas and are reluctant to choose another provider. To date approximately 650 of our 14,000 small volume customers have chosen an alternate provider. Currently, the increased cost of gas at the wellhead which is nearly double the price from the previous year has prompted the marketers to take a wait and see attitude before actively soliciting new customers as they are concerned about not being able to show real savings and possibly further slowing down the process.

Since 1986 marketers have successfully been supplying gas to large volume customers. Serving residential and small commercial customers has not been as successful for marketers as the administrative and regulatory requirements are substantially greater and profit margins are very thin. As a result , many marketers have ceased serving this market segment altogether. Activity at the regulatory level continues as all parties work collaboratively to resolve issues which seem to be hampering the success of the endeavor. This effort will likely continue for some time as the issues involved in transforming a long time regulated industry into a competitive environment are complex, the solutions are not always clear and the parties do not always share the same motivations. The Company will continue to support the efforts to deregulate the industry in an orderly fashion and will work with customers as the industry transitions into the new environment.

EX-28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EARNINGS

Consolidated net income of $471,500 or $1.02 per share in 2000 increased 7.7 percent from $438,000 or $0.95 per share in 1999. Four of the Company's operating segments produced earnings increases in 2000 over the previous year.

OPERATING REVENUE

Utility operating revenue increased $220,700 to $16,496,800 in 2000 due largely to an 8 percent increase in deliveries to non-contract customers. However, capacity assignment revenue decreased 28 percent to $92,800. This decrease was expected in this very competitive market.

Unregulated revenue increased from $6,692,200 to $7,807,000 in 2000. All four of the Company's unregulated operating segments increased revenue in 2000. Revenue by operating segment can be found in Note 3 to the financial statements.

UTILITY OPERATING EXPENSE

Purchased gas expense increased $114,800 to $9,574,400 due primarily to a loss on the

Company's lost and unaccounted for gas mechanism. This mechanism caused the Company to experience a loss of $121,000 in 2000 compared to $61,000 the previous year.

Other operating and maintenance expense increased 5.8 percent reflecting necessary

improvements and maintenance to the Company's pipeline facilities, increased professional fees incurred and general inflationary pressure on costs. Taxes other than federal income taxes decreased 4 percent due to another reduction in the New York State gross receipts tax rate. Depreciation expense increased slightly due to additional investment in plant.

OPERATING SEGMENTS

A description of the Company's six operating segments can be found in Note 3 to the

financial statements, which also contains the results by segment for fiscal year 2000 and 1999.

The Gas Corporation experienced a reduction in net income from $219,700 in 1999 to $85,700 in 2000. Contributing to the reduction were the losses incurred on lost and unaccounted for gas and the decline in capacity assignment revenues discussed above. Additionally, increased interest costs were incurred as the result of increased borrowings under line of credit agreements.

The Appliance Company increased net income from $179,600 in 1999 to $255,800 in 2000. The improvement was the result of a $196,000 increase in merchandise revenue driven by a 20 percent increase in central heating and fireplace sales.

Tax Center International increased net income 12 percent to $84,900 in 2000. The earnings boost was the result of a 32 percent increase in revenues, from $274,900 in 1999 to $364,200 in 2000.

Corning Realty experienced a loss of $33,400 in 2000. However, this is an improvement on a $77,300 loss in 1999 as the result of the implementation of some cost control measures. This cost control effort continues, in an attempt to improve this segment's contribution to consolidated earnings.

The Foodmart Plaza experienced an improvement to earnings from $40,500 in 1999 to $100,100 in 2000. The primary reason for the increase, however, was a one-time buy out of a lease by a tenant who vacated the property. Negotiations are continuing with a probable tenant for the vacated space.

Corning Mortgage Company is a new segment in the mortgage banking business. The Company experienced a loss of $21,500 in 2000 as start up expenses were incurred without any revenue yet. License approval was received in November from the New York State Banking Authority so that loan processing may begin.

A detailed discussion of the operating segments can be found in the President's letter to shareholders at the beginning of this report.

LIQUIDITY AND CAPITAL RESOURCES

The Company financed its 2000 capital additions of $695,000 through a combination of internally generated funds and short-term borrowing. The Company experienced a significant increase in short term debt due to the need to fund storage gas and a under-collection of gas costs.

The Company has $7,500,000 available through lines of credit at local banks, the terms of which are disclosed in Note 6 to the consolidated financial statements. It is expected that current capital resources will be sufficient for planned operations for 2001.

REGULATORY MATTERS

On February 24, 2000 the Company filed a request with the New York State Public Service Commission to increase rates in the amount of $384,000. A discussion appears in the Rates & Regulation section of this report.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements which, to the extent they are not recitations of historical facts, constitute "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995 (Reform Act). In this respect, the words "estimate", "project", "anticipate", "expect", "intend", "believe" and similar expressions are intended to identify forward-looking statements. All such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. A number of important factors affecting the Company's business and financial results could cause actual results to differ materially from those stated in the forward-looking statements.

EX-28

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 2000 and 1999
Assets	2000			1999
Utility plant:
Utility property, plant and equipment:	$22,251,342			$21,667,115
Non-utility - property, plant and equipment	4,176,447			3,941,232
Less accumulated depreciation	9,734,579			9,113,046
Total plant utility and non-utility net	16,693,210			16,495,301
Investments:
Marketable securities available for sale at fair value	1,334,094			1,021,696
Investment in joint venture	174,794					---
Total investments	1,508,888			1,021,696
Current assets:
Cash and cash equivalents	257,035			205,787
Customer accounts receivable, less allowance for
uncollectible accounts of $97,000 in 2000 and 1999	1,310,689			1,883,915
Gas stored underground, at average cost	2,194,436			134,650
Gas and appliance inventories	638,891			634,348
Prepaid expenses	529,905			427,458
Prepaid income taxes	354,619			340,328
Deferred income tax assets			---	11,000
Total current assets	5,285,575			3,637,486
Deferred debits and other assets:
Regulatory assets:
Income taxes recoverable through rates	1,016,661			1,016,661
Prepaid pension costs	1,833,979			1,380,984
Unrecovered gas costs	1,362,394				---
Other		---		196,707
Goodwill net of amortization of $220,031 in 2000
and $131,744 in 1999	1,763,338			1,851,625
Unamortized debt issuance cost (net of amortization	349,759			371,317
of $189,814 in 2000 and $168,256 in 1999)
Other	512,708			541,994
Total deferred debits and other assets	6,838,839			5,359,288
Total assets	$30,326,512			$26,513,771
	==========			==========
See accompanying notes to consolidated financial statements.

EX-28

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 2000 and 1999
	2000	1999
Capitalization and liabilities:
Common stockholders' equity:
Common stock (common stock $5.00 par	$2,300,000	$2,300,000
value per share. Authorized 1,000,000
shares; issued and outstanding 460,000 shares)
Other paid-in capital	653,346	653,346
Retained earnings	1,967,389	2,093,937
Accumulated other comprehensive income-
net unrealized gain on securities available
for sale (net of income taxes of $67,376
in 2000 and $33,424 in 1999)	130,790	64,883
Total common stockholders' equity	5,051,525	5,112,166
Long-term debt, less current installments	11,429,421	11,507,315
Current liabilities:
Current portion of long term debt	374,335	367,048
Borrowings under lines-of-credit	5,175,359	2,165,000
Accounts payable	1,715,628	1,404,370
Accrued expenses	591,221	233,969
Customer deposits and accrued interest	674,458	665,990
Deferred income taxes	120,103		---
Accrued general taxes	119,331	94,441
Supplier refunds	294,676	268,862
Dividends payable	149,500	149,500
Total current liabilities	9,214,611	5,349,180
Deferred credits and other liabilities:
Deferred income taxes	2,448,994	2,413,080
Deferred compensation and post-retirement
benefits	2,089,854	1,519,142
Other	92,107	612,888
Total deferred credits and other liabilities	4,630,955	4,545,110
Concentrations and commitments (notes 3 and 10)
Total capitalization and liabilities	$30,326,512	$26,513,771
	=========	=========
See accompanying notes to consolidated financial statements.

EX-28

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY
Consolidated Statements of Income
For theYears Ended September 30, 2000 and 1999
Utility Operations	2000	1999
Operating revenue:
Residential, commercial and industrial	$12,489,634	$12,668,536
Transportation	3,914,389	3,479,189
Capacity assignment	92,818	128,445
Total operating revenue	16,496,841	16,276,170
Operating expenses and taxes:
Natural gas purchased	9,574,415	9,459,613
Operating and maintenance	3,801,668	3,593,462
Taxes other than federal income taxes	1,508,090	1,570,206
Depreciation	503,248	488,631
Federal income taxes	12,077	42,835
Total operating expenses and taxes	15,399,498	15,154,747
Operating income from utility operations	1,097,343	1,121,423
Unregulated Operations
Unregulated revenue	7,807,053	6,692,216
Unregulated expenses(includes interest expense of	7,428,065	6,483,914
$177,360 for 2000 and $156,382 for 1999)
Operating income from unregulated operations	378,988	208,302
Other income (including net realized gains on
marketable securities of $30,500 and $25,375	76,483	63,353
in 2000 and 1999)
Income before interest expense	1,552,814	1,393,078
Interest expense - regulated	1,081,362	955,130
Net income	$471,452	$437,948
	=======	=======
Weighted average number of shares outstanding-
basic and diluted	460,000	460,000
Basic and diluted earnings per common share	$1.02	$0.95
	=======	=======
See accompanying notes to consolidated financial statements.

EX-28

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the Years Ended September 30, 2000 and 1999
				Accumulated
		Additional		Other
	Common	Paid in	Retained	Comprehensive
	Stock	Capital	Earnings	Income		Total
Balances at September 30, 1998	$2,300,000	$653,346	$2,403,489	$39,644		$5,396,479
Comprehensive Income:
Change in unrealized gain on
securities available for sale, net of
income taxes of $13,002	---	---	---	25,239		25,239
Net income	---	---	437,948		---	437,948
Total comprehensive income	---	---	437,948	25,239		463,187
Dividends - $1.63 per share	---	---	(747,500)		---	(747,500)
Balances at September 30, 1999	2,300,000	653,346	2,093,937	64,883		5,112,166
Comprehensive Income:
Change in unrealized gain on
securities available for sale, net of
income taxes of $33,952	---	---	---	65,907		65,907
Net Income	---	---	471,452		---	471,452
Total comprehensive income	---	---	471,452	65,907		537,359
Dividends - $1.30 per share	---	---	(598,000)		---	(598,000)
Balances at September 30, 2000	$2,300,000	$653,346	$1,967,389	$130,790		$5,051,525
	====================================================
See accompanying notes to consolidated financial statements.

EX-28

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years Ended September 30, 2000 and 1999
	2000	1999
Cash flows from operating activities:
Net income	$471,452	$437,948
Adjustments to reconcile net income to net cash(used in)
provided by operating activities:
Depreciation and amortization	964,958	895,280
Gain on sale of marketable securities	(45,256)	(25,375)
Deferred income taxes	156,017	105,415
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable	573,226	(845,391)
Gas stored underground	(2,059,786)	1,405,077
Gas and appliance inventories	(4,543)	(52,583)
Prepaid expenses	(102,447)	84,180
Unrecovered gas costs	(1,362,394)	191,819
Prepaid income taxes	(14,291)	(311,380)
Deferred income tax asset	11,000	---
Deferred charges - pension and other	(649,702)	(198,012)
Other assets and long-term debt issuance costs	---	22,397
Increase (decrease) in:
Accounts payable	311,258	137,452
Customer deposit liability	7,860	---
Accrued general taxes	24,890	(53,178)
Supplier refunds due customers	25,814	198,131
Other liabilities and deferred credits	406,575	(157,923)
Net cash (used in) provided by operating activities	(1,285,369)	1,833,857
Cash flow from investing activities:
Purchase of securities available for sale	(135,362)	(172,719)
Investment in joint venture	(195,000)	---
Acquisitions of businesses, net of cash acquired	---	(600,907)
Capital expenditures, net of minor disposals	(674,773)	(1,150,718)
Net cash used in investing activities	(1,005,135)	(1,924,344)
Cash flows from financing activities:
Net borrowings (repayments) under lines-of-credit	3,010,359	(160,000)
Dividends paid	(598,000)	(598,000)
Borrowings under long-term debt agreements	299,000	916,666
Repayment of long-term debt	(369,607)	(146,818)
Net cash provided by financing activities	2,341,752	11,848
Net increase (decrease) in cash	51,248	(78,639)
Cash and cash equivalents at beginning of year	205,787	284,426
Cash and cash equivalents at end of year	$257,035	$205,787
	============	============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$1,287,100	$1,121,174
Income taxes	$480,600	$428,208
	============	============
Noncash investing and financing activities:
Acquisition of assets financed by seller	$ ---	$1,056,666
	============	============
See accompanying notes to consolidated financial statements.

EX-28

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2000 and 1999

1. Summary of Significant Accounting Policies

Corning Natural Gas Corporation (the Company) is a gas distribution company providing gas on a commodity and transportation basis to its customers in the Southern Tier of New York State. The Company follows the Uniform System of Accounts prescribed by the Public Service Commission of the State of New York (PSC) which has jurisdiction over and sets rates for New York State gas distribution companies. The Company's regulated operations meet the criteria and accordingly, follow the accounting and reporting of Statement of Financial Accounting Standards No. 71 (SFAS 71) Accounting for the Effects of Certain Types of Regulation. The Company's financial statements contain the use of estimates and assumptions for reporting certain assets, liabilities, revenue and expenses and actual results could differ from the estimates. The more significant accounting policies of the Company are summarized below.

1. Principles of Consolidation and Presentation

The consolidated financial statements include the Company and its wholly owned subsidiary, the Corning Natural Gas Appliance Corporation. The Corning Natural Gas Appliance Corporation owns four businesses which have been established as New York State limited liability subsidiary corporations, as follows: Tax Center International, LLC; The Foodmart Plaza, LLC; Corning Realty Associates, LLC and Corning Mortgage, LLC. In fiscal 1999, the Corning Natural Gas Appliance Corporation completed the purchase of Ambrose and Shoemaker Better Homes and Gardens Real Estate, which was merged into Corning Realty Associates. In fiscal 2000, Corning Mortgage, LLC was formed. There is only one month of operations in the fiscal year ended September 30, 2000. During 2000, Corning Mortgage entered into a joint venture with Choice One Lending, detailed in Note 1 (f). Hereinafter the Appliance Corporation and its limited liability subsidiary corporations are collectively referred to as "Appliance Corporation". All significant inter-company accounts and transactions have been eliminated in consolidation. The results of the Appliance Corporation are reported separately as unregulated operations in the consolidated statements of income. Shared expenses are allocated to the Appliance Corporation.

It is the Company's policy to reclassify amounts in the prior year financial statements to conform with the current years presentation.

2. Property, Plant and Equipment

Utility plant is stated at the historical cost of construction. Those costs include payroll, fringe benefits, materials and supplies and transportation costs. The Company charges normal repairs to maintenance expense. The Appliance Corporation capitalizes the cost of appliances and the original installation to rented gas appliances. Subsequent repairs are expensed. Property and equipment acquired pursuant to the acquisitions discussed in note 2 were initially recorded at estimated fair market value.

3. Depreciation

The Company provides for depreciation for accounting purposes using a straight-line method based on the estimated economic lives of property, which ranges from 3 to 55 years for all assets except utility plant. The depreciation rate used for utility plant, expressed as an annual percentage of depreciable property, was 2.7% in 2000 and 1999. At the time utility properties are retired, the original cost plus costs of removal less salvage, are charged to accumulated depreciation.

(d) Revenue and Natural Gas Purchased

The Company records revenues from residential and commercial customers based on meters read on a cycle basis throughout each month, while certain large industrial and utility customers' meters are read at the end of each month. Pursuant to the most recent rate order, capacity assignment revenue is recorded at a rate of 15% of the amount received from released capacity and is recognized upon notification of capacity release from the pipeline company while the remaining 85% is returned to customers through reduced gas cost. The Company secured a weather normalization clause in the last major rate filing as protection against severe weather fluctuations. This affects space heating customers and is activated when degree days are 2% greater or less than a 30 year average. As a result, the effect on revenue fluctuations in weather related gas sales is somewhat neutralized.

Gas purchases are recorded on readings of suppliers' meters as of the end of the month. The Company's rate tariffs include a Gas Adjustment Clause (GAC) which adjusts rates to reflect changes in gas costs from levels established in the rate setting process. In order to match such costs and revenue, the PSC has provided for an annual reconciliation of recoverable GAC costs with applicable revenue billed. Any excess or deficiency in GAC revenue billed is deferred and the balance at the reconciliation date is either refunded to or recovered from customers over a subsequent 12-month period.

Real estate commissions are recognized at closing while professional services revenues are recognized as services are performed.

1. Marketable Securities

Marketable securities, which are intended to fund the Company's deferred compensation plan, are classified as available for sale at September 30, 2000 and 1999. Such securities are reported at fair value based on quoted market prices, with unrealized gains and losses, net of the related income tax effect, excluded from earnings, and reported as a component of accumulated other comprehensive income in stockholders' equity until realized. The cost of securities sold was determined using the specific identification method.

A summary of the marketable securities at September 30, 2000 and 1999 is as follows:

Net

Market Cost Unrealized Unrealized Unrealized

Value Basis Gains Losses Gains

2000 $ 1,334,094 $1,135,389 $249,278 $ (50,573) $198,705

1999 $ 1,021,696 $ 923,389 $130,511 $ (32,204) $ 98,307

(f) Investments in Joint Venture

Corning Mortgage, a subsidiary of The Corning Natural Gas Appliance Corporation holds a 50% equity interest in a joint venture, Choice One Lending which began operations in August, 2000. Investment by the Company in the joint venture is recorded using the equity method of accounting. The Company's pro-rate share of the results of operations of the joint venture was a loss of $20,206 in 2000.

(g) Inventories

Inventories are stated at the lower of cost or market, cost being determined on a first-in, first-out basis.

1. Federal Income Tax

The Company uses the asset and liability method to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. In addition, such deferred tax assets and liabilities will be adjusted for the effects of enacted changes in tax laws and rates.

2. Dividends

Dividends are accrued when declared by the Board of Directors. Dividends declared were $598,000 or $1.30 per share in 2000 and $747,500 or $1.63 per share in 1999. Dividends paid were $598,000 or $1.30 per share in 2000 and 1999.

Under the most restrictive long-term debt covenants, the Company may not declare or pay annual dividends except to the extent that consolidated net worth exceeds $2,000,000.

3. Goodwill

Goodwill represents the excess of purchase price over the fair value of the identified net assets of acquired businesses. Goodwill is amortized over 15 years, the estimated period of benefit, on a straight-line basis. Goodwill in excess of associated expected operating cash flows is considered to be impaired and is written down to fair value, which is determined based on undiscounted future cash flows.

4. Accounting for Impairment

SFAS 121, Accounting for the Impairment of Long-Lived Assets to be Disposed Of establishes accounting standards to account for the impairment of long-lived assets, and certain identifiable intangibles. Under SFAS 121 the Company reviews assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. SFAS 121 also requires that a rate regulated enterprise recognize an impairment when regulatory assets are no longer probable of recovery. No impairment losses were incurred for the years ended September 30, 2000 and 1999.

5. Comprehensive Income

SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Under SFAS No. 130, the Company's comprehensive income consists of net income and net unrealized gains (losses) on securities and is presented in the consolidated statements of stockholders' equity. SFAS No. 130 requires only additional disclosures in the consolidated financial statements; it does not affect the Company's financial position or results of operations.

6. Accounting for Derivatives and Hedging Activities

In June 1998, June 1999 and June 2000 the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133" and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an Amendment of FASB Statement No. 133". These Statements establish accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. These Statements require that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met.

Special accounting for qualifying hedges allows a derivate's gains and losses to offset related results on the hedged item in the statement of operations, and requires that the Company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. This accounting is effective for the Company beginning in 2001. We are currently determining the impact of SFAS 133 on our consolidated results of operations and financial position. This statement should have no impact on consolidated cash flows.

(n)Revenue Recognition

In December 1999, the Securities Exchange Commission("SEC") issued Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" defining revenue recognition guidelines. The Company is currently assessing the impact of the guidelines on its consolidated financial statements.

1. Acquisitions

In December 1998, the Corning Natural Gas Appliance Corporation acquired a local real estate company, Ambrose and Shoemaker Better Homes and Gardens Real Estate (Ambrose and Shoemaker) for $1,636,589, including direct acquisition costs funded through cash of $579,923, a $608,333 five year promissory note to the seller, and the remaining $448,333 payable over three years.

The purchase price for this acquisition, including direct acquisition costs, was allocated to assets acquired based upon the estimated fair values, with the excess of the consideration over such estimated fair values recorded as goodwill, as follows :

Property, plant and equipment 25,000

Goodwill 1,611,589

1,636,589

=======

The following summarized unaudited pro forma financial information assumes the acquisition had occurred on October 1, 1999 and reflects interest expense and goodwill amortization, net of applicable taxes, related to the acquistion:

September 30

1999(unaudited)

Total revenues $23,623,000

Net Income 457,900

Basic and diluted earnings per common share 1.00

2. Information About Operating Segments

The Company's reportable segments have been determined based upon the nature of the products and services offered, customer base, availability of discrete internal financial information, homogeneity of products, delivery channel and other factors.

The Corning Natural Gas Corporation (the Gas Company) is a gas distribution company providing gas on a commodity and transportation basis to its customers in the Southern Tier of New York State. The Appliance Corporation sells, rents and services primarily gas burning appliances. The Tax Center provides tax preparation, accounting and payroll services to approximately 1,000 clients. Corning Realty is a residential and commercial real estate business with approximately 80 agents operating in three neighboring counties. Foodmart Plaza is a retail complex consisting of eight tenants under multi-year leases anchored by a major supermarket. Corning Mortgage is a mortgage service company working closely with the realty relationship.

The following table reflects the results of the segments consistent with the Company's internal financial reporting process. The following results are used in part, by management, both in evaluating the performance of, and in allocating resources to, each of the segments.

	Gas	Appliance	Tax	Corning	Foodmart	Corning
	Company	Corporation	Center	Realty	Plaza	Mortgage	Consolidated
Revenue:
2000	$16,496,841	$2,514,971	$364,203	$4,558,721	$389,364	($20,206)	$24,303,894
1999	16,276,170	2,222,214	274,855	3,922,879	272,268	N/A	22,968,386
Net Income(Loss):(1)
2000	85,652	255,844	84,857	(33,434)	100,066	-21,533	471,452
1999	219,670	179,611	75,490	-77,289	40,466	N/A	437,948
Interest Income:
2000	1,846	94,695	N/A	N/A	N/A	N/A	96,541
1999	1,991	58,569	N/A	N/A	N/A	N/A	60,760
Interest Expense:
2000	1,081,362	16,831	1,767	78,088	73,571	7,103	1,258,722
1999	955,130	N/A	2,372	77,313	76,697	N/A	1,111,512
Total Assets:(2)
2000	23,035,108	2,150,502	188,522	2,015,860	1,311,921	N/A	28,701,913
1999	20,493,744	2,690,298	190,264	1,939,511	1,203,168	N/A	26,516,985
Depreciation and amortization:
2000	503,248	237,896	11,730	180,927	31,157	N/A	964,958
1999	503,248	237,896	11,730	180,927	31,157	N/A	964,958
Income Tax Expense:
2000	12,077	57,923	30,244	13,392	41,797	(7,706)	147,707
1999	42,835	135,369	44,846	(27,402)	26,595	N/A	222,243

(1)Before elimination of intercompany interest.

(2)Total assets include property, plant and equipment, accounts receivable, inventories, cash and other amounts specifically related to each identified segment. All other assets of the Company not specifically related to a segment as of September 30, 2000 & 1999 totaled $624,599 and ($3,214) respectivially.

Interest income and expense have been displayed in the segment in which it has been earned or incurred. Segment interest expense other than the Gas Company is included within unregulated expenses in the consolidated statements of income.

Major Customers

The Company has three major customers, Corning Incorporated, New York State Electric & Gas (NYSEG) and Bath Electric Gas & Water Systems (BEGWS). The loss of any of these customers could have a significant impact on the Company's financial results. In addition, a significant portion of capacity assignment revenue is generated from Corning Inc. Total revenue and deliveries to these customers were as follows:

Deliveries Revenue

Mcf % of Total Amount % of Total

Corning Inc.

Year ended September 30, 2000 2,135,000 27 $ 836,000 5

Year ended September 30, 1999 2,107,000 26 $ 728,000 4

NYSEG

Year ended September 30, 2000 2,414,000 30 $ 275,000 2

Year ended September 30, 1999 2,518,000 31 $ 274,000 2

BEGWS

Year ended September 30, 2000 740,000 9 $1,770,000 11

Year ended September 30, 1999 691,000 8 $1,657,000 10

1. Regulatory Matters

Certain costs are deferred and recognized as expenses when they are reflected in rates and recovered from customers as permitted by SFAS 71. These costs are shown as deferred debits and other assets. Such costs arise from the traditional cost-of-service rate setting approach whereby all prudently incurred costs are generally recoverable through rates. Deferral of these costs is appropriate while the Company's rates are regulated under a cost-of-service approach.

In a purely competitive environment, such costs might not have been incurred or deferred. Accordingly, if the Company's rate setting were changed from a cost-of-service approach and it was no longer allowed to defer these costs under SFAS 71, certain of these assets may not be fully recoverable. However, the Company cannot predict the impact, if any, of competition and continues to operate in a cost-of-service based regulatory environment. Accordingly, the Company believes that accounting under SFAS 71 is still appropriate.

Below is a summarization of the Company's regulatory assets as of September 30, 2000 and 1999:

2000 1999

Deferred pension and other $ --- $ 196,707

Deferred debits - accounting for income taxes 1,016,661 1,016,661

Unrecovered gas costs 1,362,394 ---

Total-regulatory assets $2,379,055 $1,213,368

====================

Deferred pension and other Approximately $0 and $84,000 of these balances represent costs in excess of the amounts currently recoverable through rates at September 30, 2000 and 1999, respectively. The PSC requires such excess costs to be deferred. Remaining balances represent miscellaneous regulatory assets.

Deferred debits - accounting for income taxes These amounts represent the expected future recovery from ratepayers of the tax consequences of temporary differences between the financial reporting basis and tax basis of assets and liabilities.

Unrecovered gas costs These costs are recoverable over future years and arise from an annual reconciliation of certain gas revenue and costs (as described in Note 1).

The Company expects that its regulatory assets will be fully recoverable from customers.

2. Long-Term Debt

A summary of long-term debt at September 30, 2000 and 1999 follows:

2000 1999

Unsecured senior note - 7.9%, due serially with annual payments of

$355,000 beginning in 2006 through 2016 and $795,500 due in 2017 $4,700,000 $4,700,000

First mortgage bonds - 8.25%, series all due 2018, secured by

substantially all utility plant 3,100,000 3,100,000

Unsecured senior note - 9.83%, due serially with annual payments of

$100,000 beginning in 2007 through 2015 and $700,000 due in 2016 1,600,000 1,600,000

Mortgage note - 8.02% monthly installments through April 2008 890,347 912,044

Unsecured promissory note - 6.5% monthly installments through April 2006 128,597 146,643

Note payable - 6.5% monthly installments through January 2004 secured

by assets of Corning Realty 407,796 520,128

Note payable - 7.75% monthly installments through January 2009 secured

by assets of Corning Realty 395,864 447,215

Mortgage note payable - 9.24% monthly installments through 2010 102,093 -

Note payable - at the prime rate, 9.5% at September 2000 125,000 -

Note payable - at the prime rate, 9.5% at September 2000 70,000 -

Earned out payable - 3.93% of Ambrose & Shoemaker revenues 284,059 448,333

Total long-term debt 11,803,756 11,874,363

Less current installments 374,335 367,048

Long-term debt less current installments $11,429,421 $11,507,315

======== ========

The aggregate maturities of long-term debt for each of the five years subsequent to September 30, 2000 are as follows:

2001 $374,335 2002 $394,206 2003 $ 242,681

2004 $132,342 2005 $106,671 2006 and thereafter $10,553,521

3. Lines of Credit

The Company has lines of credit with local banks to borrow up to $7,500,000 on a short-term basis. Borrowings outstanding under these lines were $5,175,359 and $2,165,000 at September 30, 2000 and 1999, respectively. The maximum amount outstanding during the year ended September 30, 2000 and 1999 was $5,175,359 and $2,840,000 respectively. The lines of credit are unsecured and payable on demand with interest at rates which range from the prime rate (9.50% on September 30, 2000) to the prime rate less 3/4%. The weighted average interest rates on outstanding borrowings during fiscal 2000 and 1999 were 7.62% and 7.24% respectively.

4. Federal Income Taxes

Federal income tax expense (benefit) for the years ended September 30 is as follows:

2000 1999

Utility Operations:

Current $(142,745) $ (86,529)

Deferred 148,708 123,251

Investment Tax Credits 6,114 6,113

12,077 42,835

======= =======

Unregulated Operations:

Current $ 117,321 197,244

Deferred 18,309 (17,836)

135,630 179,408

Total Federal Income Tax Expense $ 147,707 $ 222,243

====== =======

Actual federal income tax expense differs from the expected federal tax expense (computed by applying the federal corporate tax rate of 34% to income before federal income tax expense) as follows:

2000 1999

Expected tax expense $210,514 $224,465

Investment tax credits 6,114 6,113

Other, net (68,921) (8,335)

$147,707 $ 222,243

====== ======

The tax effects of temporary differences that result in deferred income tax assets and liabilities at September 30 are as follows:

2000 1999

Deferred income tax assets:

Unbilled revenue $ 26,741 $ 21,118

Deferred compensation reserve 312,661 272,371

Post-retirement benefit obligations 257,334 202,063

Allowance for uncollectible accounts 32,980 32,980

Inventories 59,308 32,420

Other 109,604 18,575

Total deferred income tax assets 798,628 579,527

Deferred income tax liabilities:

Property, plant and equipment, principally due to

differences in depreciation 2,263,177 2,215,658

Pension benefit obligations 524,540 449,707

Deficiency of GAC revenue billed 329,047 94,405

Other 250,961 221,837

Total deferred income tax liabilities 3,367,725 2,981,607

Net deferred income tax liability $2,569,097 $ 2,402,080

======= =======

Beginning January 1, 2000, the regulated operations of the company became subject to state income tax. Based on the results of these regulated operations, and because of the state's prescribed method regarding how the new tax rules are to be adopted, the effect of this tax on the results of 2000 operations is immaterial.

5. Pension and Other Post-retirement Benefit Plans

In 1997, the Company established a trust to fund a deferred compensation plan for certain officers. The fair market value of assets in the trust was $1,334,094 and $1,021,696 at September 30, 2000 and 1999, respectively, and the plan liability, which is included in deferred compensation, post-retirement benefits and other credits on the balance sheet, was $919,590 and $801,091 at September 30, 2000 and 1999, respectively. The assets of the trust are available to general creditors in the event of insolvency.

The Company has defined benefit pension plans covering substantially all of its employees. The benefits are based on years of service and the employee's highest average compensation during a specified period. The Company makes annual contributions to the plans equal to amounts determined in accordance with the funding requirements of the Employee Retirement Security Act of 1974. Contributions are intended to provide for benefits attributed for service to date, and those expected to be earned in the future.

In addition to the Company's defined benefit pension plans, the Company offers post-retirement benefits comprised of medical and life coverages to its employees who meet certain age and service criteria. Currently, the retirees under age 65 pay 60% of their health care premium until Medicare benefits commence at age 65. After age 65, Medicare supplemental coverage is offered with Company payment on the premium. For participants who retire on or after September 2, 1992, the Company cost, as stated above, shall not exceed $150 per month. In addition, the Company offers limited life insurance coverage to active employees and retirees. The post-retirement benefit plan is not funded. The Company accrues the cost of providing post-retirement benefits during the active service period of the employee.

The following table shows reconciliations of the Company's pension and post-retirement plan benefits as of September 30:

Pension Benefits Post-retirement Benefits

2000 1999 2000 1999

Change in benefit obligations

Benefit obligation at beginning of year $7,632,638 $8,445,196 $ 893,062 $1,062,666

Service cost 247,226 283,700 22,852 23,994

Interest cost 577,004 541,895 66,621 69,986

Participant contributions - - 51,107 18,786

Actuarial gain (loss) 385,698 (1,269,615 (9,868) ( 246,840)

Benefits paid (378,513) ( 459,727) (111,851) ( 84,358)

Amendments - 91,189 - 48,828

Benefit obligation at end of year $8,464,053 $7,632,638 $ 911,923 $ 893,062

=======================================================

Change in plan assets

Fair value of plan assets at beginning of year $10,528,613 $9,658,264 $ - $ -

Actual return on plan assets 923,389 1,138,844 - -

Company contributions 206,676 191,232 60,744 65,572

Participant contributions - - 51,107 18,786

Benefits paid (378,513) (459,727) (111,851) (84,358)

Benefit obligation $11,280,165 $10,528,613 $ - $ -

=======================================================

Funded status 2,816,112 2,864,283 (911,923) (893,062)

Unrecognized actuarial loss (gain) (1,726,788) (2,328,796) (376,814 ) (407,718)

Unrecognized PSC adjustment 292,427 332,762 - -

Unrecognized prior service cost 738,674 838,691 37,978 43,403

Unrecognized net transition asset (obligation) ( 286,446) ( 325,956) 745,250 802,250

Prepaid (accrued) benefit cost $ 1,833,979 1,380,984 $ (505,509) $ (455,127)

=======================================================

Weighted average assumptions as of

September 30, 2000 and 1999

Discount rate 8.00% 7.75% 8.00% 7.75%

Expected return on assets 8.00% 8.00%

Rate of compensation increase 5.00% 5.00%

For measurement purposes, a 9.5% annual rate of increase in the per capita cost of covered benefits (health care cost trend rate) was assumed for 2000. The rate is assumed to decrease gradually to 5% by the year 2013 and remain at that level thereafter. A 1% increase in the actual health care cost trend would result in approximately a 3.4% increase in the service and interest cost components of the annual net periodic post-retirement benefit cost and a 3.4% increase in the accumulated post-retirement benefit obligation. A 1% decrease in the actual health care cost trend would result in approximately a 3.0% decrease in the service and interest cost components of the annual net periodic post-retirement benefit cost and a 3.0% decrease in the accumulated post-retirement benefit obligation.

Pension Benefits Post-retirement Benefits

2000 1999 2000 1999

Components of net periodic benefit cost

Service cost $ 247,226 $ 285,161 $ 22,852 $ 23,994

Interest cost 577,004 543,856 66,621 69,986

Expected return on plan assets (826,613) (764,699) - -

Amortization of prior service 484,642 100,017 5,425 5,425

Amortization of transition obligation (161,247) ( 39,510) 57,000 57,000

Amortization of PSC adjustment 196,825 40,335 - -

Amortization of unrecognized actuarial

gain (loss) (1,338,600) ( 180,288) ( 40,772) (17,875)

Net periodic benefit cost (benefit) $ (820,763) $( 15,128) $(111,126 ) $138,530

=======================================================

For ratemaking and financial statement purposes, pension expense represents the amount approved by the PSC in the Company's most recently approved rate case. Pension expense for ratemaking and financial statement purposes was approximately $39,000 for the years ended September 30, 2000 and 1999. The difference between the pension expense (benefit) for ratemaking and financial statement purposes, and the amount computed above has been deferred and is not included in the prepaid pension cost noted above. Such balances equal $0 and $84,000 as of September 30, 2000 and 1999, respectively.

The PSC has allowed the Company to recover incremental cost associated with post-retirement benefits through rates on a current basis. Due to the timing differences between the Company's rate case filings and financial reporting period, a regulatory liability of $364,635 and $262,924 has been recognized at September 30, 2000 and 1999 respectively.

6. Rentals Under Operating Leases

Foodmart Plaza receives income from the rental of retail store space under operating leases. The following is a schedule of minimum future non-cancellable rentals (excluding amounts representing executory costs such as taxes, maintenance and insurance) of operating leases as of September 30, 2000:

2001 $210,756

2002 145,141

2003 6,400

Total minimum future rentals $362,297

======

All leases contain renewal options at the end of their respective lease terms.

(10) Commitments

The Company has agreements with seven pipeline companies providing for pipeline capacity for terms that extend through 2006. These agreements require the payment of a demand charge for contracted capacity at Federal Energy Regulatory Commission approved rates. Purchased gas costs incurred under these pipelines capacity agreements during 2000 and 1999 amounted to $3,759,627 and $3,599,300, respectively. The Company also has short-term gas purchase agreements averaging three months in length, with prices tied to various indices. The Company does not anticipate these agreements to be significantly in excess of normal capacity requirements.

EX-28

Independent Auditors' Report The Board of Directors and Stockholders

Corning Natural Gas Corporation:

We have audited the accompanying consolidated balance sheet of Corning Natural Gas Corporation and Subsidiary (the Company) as of September 30, 1999, and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above presently fairly, in all material respects, the financial position of Corning Natural Gas Corporation and Subsidiary at September 30, 1999, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles.

/S/ KPMG LLP

November 15, 1999

EX-28

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY
SUMMARY OF FINANCIAL AND OPERATING STATISTICS
			2000	1999	1998	1997	1996(2)
Total assets		$	30,326,512	26,513,771	24,798,172	22,495,696	20,220,562
Long-term debt, less current installments		$	11,429,421	11,507,315	10,459,351	9,400,000	6,300,000
Summary of earnings:
	Utility operating revenue	$	16,496,841	16,276,170	16,673,295	17,835,687	15,082,135
	Total operating expenses and taxes		15,399,498	15,154,747	15,354,527	16,440,231	14,122,436
	Net utility operating income		1,097,343	1,121,423	1,318,768	1,395,456	959,699
	Other income		76,483	63,353	31,885	22,977	10,447
	Appliance Corporation Earnings		378,988	208,302	248,665	221,856	131,935
	Interest expense-regulated		1,081,362	955,130	959,161	884,538	618,695
	Net Income	$	471,452	437,948	640,157	755,751	483,386
Number of common shares			460,000	460,000	460,000	460,000	460,000
Earnings per common share		$	1.02	0.95	1.39	1.64	1.05
Dividends paid per common share		$	1.30	1.30	1.30	1.28	0.95
Statistics (unaudited)-
Gas delivered (MMcf)
	Residential		1,501	1,519	1,519	1,673	1,403
	Commercial		255	271	366	343	309
	Industrial		17	23	21	29	20
	Municipal		19	20	52	80	63
	Other utilities		319	309	309	369	267
	Transportation deliveries		5,936	5,875	5,068	5,404	3,971
	Total deliveries		8,047	8,017	7,335	7,898	6,033
Number of customers-end of period			14,246	13,993	13,919	13,837	13,753
Average Mcf use per
	residential customer		117.4	117.8	116.8	129.4	108.3
Average revenue per residential
	customer	$	819.00	822.57	814.33	851.45	743.16
Number of degree days (1)			6,333	6,241	5,979	6,831	4,577
Percent (warmer) colder than avg.			(2.6)	(4.3)	(9.3)	3.6	7.0
Peak day deliveries (Mmcf)			57,642	51,770	44,250	55,190	53,328
Number of rental appliances in service			6,263	6,430	6,409	6,568	6,615
Miles of mains			396.5	394.6	391.7	388.7	384.3
Investment in gas plant (at cost)		$	22,251,342	21,667,115	21,396,130	20,378,449	19,616,872
Stockholders' equity per share		$	10.98	11.11	11.73	11.32	11.19
(1)	Fifeteen year average degree days: 6,496
(2)	The Company changed its year end from December 31 to September 30 effective January 1, 1996.
	The amounts shown for 1996 are for the nine months ended September 30, 1996.

EX-28

INDEPENDENT AUDITORS' REPORT

The Board of Directors

Corning Natural Gas Corporation

Corning, New York

We have audited the accompanying balance sheet of Corning Natural Gas Corporation, ("the Company") as of September 30, 2000, and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2000, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/S/ Deloitte & Touche LLP

Deloitte & Touche LLP

Rochester, New York

November 17, 2000