Purchased power costs decreased $70 million in 2002 com- pared with 2001, reflecting decreases in the unit cost of pur- chased power and increased volumes of electricity purchased by customers from other suppliers. lion in 2002 compared with 2001 due primarily to the recogni- tion of tax benefits relating to the September 2001 sale of the company’s nuclear generating unit. Electric operating income increased $8 million in 2002 as com- pared with 2001. This increase reflects the impact of higher net electric revenues along with lower New York state and local income and revenue taxes, offset in part by higher operation and maintenance charges and depreciation costs. Net interest charges increased $7 million in 2002 compared with 2001. The increase reflects principally the interest expense associated with a net federal income tax deficiency related to a prior period audit ($19 million), partially offset by decreased interest expense on long-term debt of $15 million. Federal income tax decreased $29 million in 2002 compared with 2001, reflecting lower income before tax and deductions related to removal costs and tax credits. In 2000, New York State implemented a tax law change that reduced or repealed certain revenue-based taxes and replaced them with a net income-based tax. State income taxes decreased $57 million in 2002 compared with 2001, reflecting lower income before tax, lowering of the tax rate and prior period adjustments. The state income tax expense is offset against the savings from the eliminated or reduced revenue taxes. Any over- or under-col- lection of these taxes is deferred for return to, or recovery from, customers. See Notes A and M to the financial statements. Gas operating revenues decreased $39 million in 2002 as compared with 2001. This decrease was primarily the result of lower gas costs and sales to firm customers in 2002.  O&R’s gas sales and deliveries, excluding off-system sales,  in 2002 compared with 2001 were: Electric operating revenues decreased $62 million in 2002 compared with 2001. This decrease was primarily the result of lower purchased power costs and tax recoveries in 2002.  O&R’s electric sales and deliveries, excluding off-system sales, in 2002 compared with 2001 were: O&R’s sales and transportation volumes for firm customers decreased 1.6 percent in 2002 compared with 2001. Revenues from gas sales in New York are subject to a weather normalization clause that moderates, but does not eliminate, the effect of weather-related changes on net income. After adjusting for weather variations in each period, total firm sales and transportation volumes were 0.3 percent lower for 2002 compar ed with 2001.  Electricity delivery volumes in 2002 increased 5.8 percent  compared with 2001 due to warmer than normal summer weather, customer growth and higher average usage.  After adjusting for weather variations, total electricity delivery volumes were 3.2 percent higher in 2002. Net electric revenues (operating revenues less purchased power) were $8 million higher in 2002 than in 2001.  Net gas revenues (operating revenues less purchased gas) were $1 million higher in 2002 due primarily to incentives earned from interruptible and off-system gas sales. The cost of gas purchased for resale was $40 million less in 2002 than in 2001, reflecting lower sales volumes and unit costs. Con Edison Annual Report 2003 45 Millions of kWhs Twelve Months Ended December 31, December 31, Percent Description 2002 2001 Variation Variation Residential/Religious 1,815 1,773 42) 2.4% Commercial/Industrial 2,393 2,567 (174) (6.8) Other 111 110 1) 0.9 Total Full Service  Customers 4,319 4,450 (131) (2.9) Retail access  customers 1,235 799 436) 54.6 Total Service Area 5,554 5,249 305 ) 5.8% Thousands of DTHs Twelve Months Ended December 31, December 31, Percent Description 2002 2001 Variation Variation Firm Sales Residential 10,203 11,724 (1,521) (12.8)% General 3,295 3,751 (456) (12.2) Firm Transportation 6,368 4,724 1,644 ) 34.8 Total Firm Sales  and Transportation 19,866 20,199 (333) (1.6) Of f Peak/ Interruptible Sales 7,366 7,264 102) 1.4 Non-Firm Transportation  of Gas Generation Plants 13,983 11,427 2,556) 22.4 Other 1,057 1,039 18 1.7 Total Sales and Transportation 42,272 39,929 2,343 5.9% Electric O&R Income Tax Gas Net Interest Charges