ML19308B996
| ML19308B996 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 01/31/1979 |
| From: | NEW JERSEY, STATE OF |
| To: | JERSEY CENTRAL POWER & LIGHT CO. |
| References | |
| TASK-TF, TASK-TMR 7610-1021, NUDOCS 8001170738 | |
| Download: ML19308B996 (28) | |
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DEPARTMENT OF ENERGY
-~ y STATE OF NEW JERSEY 3
Board of'Public Utilities C
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101 Commerce Street
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Newark, New Jersey 07102
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l-1/31/79 In the Matter of the Petition of PHASE II ORDER JERSEY CENTRAL POWER & LIGHT' COMPANY, Docket Nos.
7610-1021 for and 776-492 (1)
Increase in Rates and Charges for Electric Service (2)
Approval of Interim Implemen-tation of a Levelized Energy Adjustment Clause (Appearances Attached)
By the Board (Before Hearing Examiner Stephen Marshall)
This Phase II Order deals witn petitions filed cy Jersey Central Power Light Company
(" Company")
seeking (1) increases in its rates and charges for electric service (Cocket.No. 7610-1021) and (2) further interim implementa-tion of a levelized energy adjustment clause
("LEAC")
(Cocket No. 776-492).
In ne Phase I Order, dated Septemoer 1,
1977, we approved a series of stipulations entered into ce: ween the Company and various active parties to the proceeding.
A summary of the issues involved :. n such s t :. p u l a t io n s and Oneir resolution was annexad as Appendix A to that Orfer.
A sign:ficant part of the revenue increase initially sought by tne Company in its pe ::. t i r n in D e c:< c t No. 7610-1021 was associated with the capital and opera:;ng c:sts related :o the Company's investment in the second nuclear generating unit a: Three Mile Island
("TM:-2").
All parties :: :ne I
G 8 oo mo ne
procacdings cgread that it would be oppropricto to datormino the Company's revenue requirements associated with TMI-2 in the context of the overall results of operation during a more current test year.
In that light, the Company proposed that the proceedings in response to its petition in Docket No. 7610-1021 be dealt with in two phases, namely, the Phase I aspects which were dealt with in the September 1,
1977 Order (which established permanent rates pending this Phase II Order). and the Phase II' aspects which were to be dealt with at a later date and were to be based upon the submis-sion of updated information.
The Company agreed that, if that procedure were authorized, it would waive until May 1, 1978* the statutory limit under N.J.S.A.
48:2-21 on the suspension period for the portion of its proposed rates which would be involved in the Phase II proceedings.
No party to the p'roceeding objected to this procedure and we determined that it was appropriate.
In the Phase I.Orde r,
we authorized, among other things, an increase in base rates approximating 3.9%.
Since that time, the total charges to the Company's customers have stabilized.
In part, this has been attributable to the good performance of the Company's nuclear generating stations.
In part, it has been attributable to the combined efforts of the Company and the parties to this proceeding, including the Board's staff, to find means to provide stability of rates to customers, wnile providing for increases in the Company's costs.
The Company, the parties to the proceeding, and the Board cannot completely hold back the tide of inflation in costs.
What we can do is adopt procedures which both enable the Company to pursue the most economic means of discharging its public utility obligation to provide service
'and the Board to au tho r iz e ' r atr-inc r ease s in modest but timely amounts so as to moderate the impact on customers.
This Phase II Order is designed to serve bo th objectives.
On the one hand, this Phase II Order authorizes an average increase in retail base rates of approximately 6.6%.
On the other hand, it'provides for an anticipated redu~qtion in energy charges (attributable to the operation of TMI-2), as against the level existing at this time.
The result is that the to tal increase for the Company's retail customers is expected to be only 3.5% from present levels.
We note that the Consumer Price Index has increased by 17% since these proceedings were initiated in October 1976 and by 10% since the Phase I Order was entered.
- By a series of waivers, the Company sucsecuently extendec this waive-of the statutory limit en the suspension period until the effective date of this order.
l l l
y This Phase II Or' der does n o't adopt any new rate-making policies or principles that were not provided for in the Phase -I Order.
Instead,.it applies those policies and principles'to updated information.
This is not to say that any party will be precluded, in any future proceeding, from presenting for our consideration any new or changed policies or principles which it believes are desirable.
However, we
~
are in accord with the joint views of the active parties in this Phase II proceeding that it is appropriate to apply the policies and principles in the Phase I Ceder to the Phase II proceedings.
In so doing, the active parties to the Phase II proceedings have presented a great deal of data, initially on an estimated basis and then on an actual basis as such data became available.
Hundreds of data requests and j
responses have been submitted.
Numerous hearings have been held, with extensive cross-examination.
In all, a very full record has been compiled.
The Company, the Public Advocate and the Department of Defense presented testimony on revenue requirements and tariff design.
Other Intervenors also presented testimony on' tar if f design.
The Staff after reviewing all of the testimony presented their position.
Based on that record, there is annexed as Appendix A-1 a summary of the major elements relating to the determination of rate base, operating income and revenue requirements on which the active parties to the proceeding. have agreed for the purpose of this Phase II Order and which we endorse as appropriate for that purpose.
Moreover, the schedules annexed hereto as Appendices B-1 through B-5 reflect the results set forth in Appendix A-1 and constitute our ulti-mate findings with respect to rate base, operating income,
~
capitalization and revenue requirements.
Although we enderse this stipulation for this proceeding because it produces an equitable end result, by accepting this stipula-tion we have not ruled on the merits of all of the par-ticular adjustments proposed by the activt parties.
Al-tho'gh the Appendices summarize various positions, we u
recogni:e that unless specifically set f or th -in the Appen-dix, the positions stipulated by tne parties are to be considered without prejudice to any position the parties may take in any future proceedings.
All active parties to the proceeding waived the submission of a report and recommendation by the Hearing Examiner except as hereinafter noted.
Under the circum-stances, we find such waivers appropriate and accept them.
_]ihin _ we authorized the Phase II proceedings, there Was an ex;ect&tTCn-that_TKI;7 muid:bMWCTdZmmmerc-iQ uservice in the Sorinc of_1973.
This did not occur.
ncw-ever, as previously noted, the Company wa:.ved the s etutory limit on the suspension period for its proposed rate in-l <
1
q crease until' aftier TMI-2 was placsd in commercial service.
Since TMI-2_is_now-in--commercial _ service : _it _.is des _ir_able
'tMat i~ts associated revenue requirements and energy benefits b eTr'omp tly7e fl~ec te~d'in the Co mpanyis_tsisleZr'a te s7ni 1,evelized energy adjustment clause charges..
In our Phase I Order, we commented in some detail on the basis for establishing the Company's allowed rate of return on common stock equity at 13.25%, pointing out that the evidence in the proceeding indicated that a range of realized return on equity of 13% to 13.5% would ce adequate from tne point of view of the common stockholders.
We also noted that the Company had testified that, as a result of the Phase I Order and the provision for Phase II, there should be little erosion of earnings and that whatever return on equity was allowed by the Phase I Order should be realized.
While this expectation was realized for a time, the unanticipated delay in placing TMI-2 in commercial service and the concommitant delay in the entry of this Order has resulted in some erosion in the Company's earn-ings.
We are hopeful that the prompt entry of this Order will reverse that trend.
In the Phase I Order, we also noted that, when we allowed a 13.5% return on common stock equity to the Company in the Order, dated June 10, 1976, Docket No. 759-899, we did so in an attempt to improve the Company's financial health and ratings so that they would be comparable to those of the two other major electric utilities in New Jersey and that our decision in the Phase I.
Order to modify that allowance to 13.25% d id not reflect a slackening in our determination to achieve that goal.
We expressly stated at that time.
l I
"We continue to recognize that the long-term interests of the Company's customers are best served if the Company has financial strength and a better market for its securities.
The active parties in this Phase II proceeding have concluded. that, given the fact that it is a Phase II proceeding which generally seeks to apply the principles and policies of Phase I to more current data, it is appropriate to continue the allowance for the return on common equity at the Phase I level.
We are willing to accept their judgment on this score.
Three other items require comment.
In Phase I and in the Company's rate cases preceeding Phase I,
we allowed l
the inclusion of the Company's accumulated AFC in rate base I
in order to provide the Company with a return on its AFC investment that, in the absence Of compounding, it would otherwise not have received.
In this proceeding, Rate
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l.
Counsel have propossd, with the concurrence of the Company and the other parties, that for. that portion of previously-accrued AFC currently not included in rate base, the Company be permitted to accrue AFC on previously-accrued AFC, and we hereby approve of this method of providing the Company with a return.on its AFC investment.
Second, Rate Counsel has raised an issue as to whether up to S12 million of the Company's investment in TMI-2 should be disallowed from rate base for purposes of return, but not for purposes of depreciation allowance.
The j
Company disagrees with this suggestion by Rate Counsel.
Extensive testimony on that subject has been' presented, but there has not yet been an opportunity for the parties to i
submit briefs or for the Hearing Examiner to submit his recommendations on this issue.
The parties have agreed that the decision on this issue, if required, can be implemented in the next rate proceeding of the Company.
We agree with this proposal of the parties.
We are, therefore, providing that the Phase II rates authorized by this Order shall be placed in effect as permanent rates without delay, but we are continuing this proceeding for the limited purpose of disposing of this issue. raised by Rate Counsel.
Specifical-ly, we are authorizing and directing the Hearing Examiner to establish a schedule for the submission of briefs based on the hearing record on this issue that has been made and we direct him to submit his report and recommendations to us for disposition of this issue.
Finally, we wish to refer to the status of the Com-pany's LEAC.
Rate Counsel has submitted testimony proposing certain modifications to that clause, as well as to the clauses of the two other major New Jersey electric util-ities.
The Company has agreed to certain of these proposed modifications but objected to others.
In order to provide an opportunity for a thoughtful resolution of these issues, we are authorizing the continued implementation, on an interim basis, of the LEAC of the Company, calculated in accordance with those suggestions of Rate Counsel to whien the Company does not object and which our Staff finds appropriate.
The proceedings in respect of the LEAC will otherwise be continued to resolve the additional issues on which there is no present agreement.
In the Phase I Order, we transferred a significant portion of the ' Company's energy costs previously recovered by its LEAC adjustment to its base rates, in recognirion of the fact that large energy adjustment clause enanges cause customer misunderstanding.
In keeping with that policy, the active parties in this proceeding have recommended tnat an additional portion of such energy costs be so transferred to base rates, wnich will correspondingly reduce the level of tne LEAC.
Althcugh our customary practice is to make new __
rates effective for service rendered after the date of acceptance of such tariffs, the parties have proposed 'that the subject rates be made effective for bills rendered after the date of this Order in order to achieve consistency between the new LEAC and the new base rates.
The active parties in this proceeding and staff have reviewed the tariffs sumitted by the Company to implement the rate increase provided by this Order and recommend the acceptance of such tariffs.
The Board also notes that the Stipulation has resolved certain of the particular operating proplems concerning rail transit.
Two of the intervenors have expressed extreme interest in this area:
The New Jersey Department of Trans-portation, which operates Conrail; and the New Jersey Department of Energy, whose State Energy Master Plan calls for a further emphasis on mass transportation. The Board finds that the stipulation is a reasonable resolution of these issues, but retains its interest in this area for a review of the methodology in future rate proceedings.
Accordingly, the Board HEREBY ORDERS that:
1.
The company's petition for an increase in rates be Denied except in the respects hereinafter set forth.
2.
Petitioner has filed for the Board's considera-tion, new tariffs providing for the following:
(a)
An increase in base rates designed to provide additional annual revenues f;om retail customers of approximatel
$_3_3_. 8 millio n.
(c)
Such additional increase in base rates (and corresponding change in the base for the Company's LEAC as shall be necessary), so that the Company's base rates reflect 14 mills of energy costs per KWH of sales and related revenue taxes; (c)
The implementation, on an interim basis, of the LEAC set forth in Appendix C.
3.
Such new tariffs shall become effective for bills rendered by Petitioner on and after February 6,
- 1979, i
4.
The proceedings in Dockets Nos.
7610-1021 and 776-492 be continued for the limited purposes heretofore set forth.
5.
As provided in the Phase I Order, Petitioner snall employ, commencing with the effective date of the new tariffs provided for in paragraph 2,
the depreciation accrual rates set forth in Column II of Appendix 3 to that Phase I Crder.
s 6.
Petitioner shall accrue AFC at a net of tax rate of 7.8% on that portion of its CWIP related to certain major projects, and at a gross rate of 9.7% on the remainder of its CWIP on which AFC is to be accrued. Petitioner shall conti.nue to +4 ploy these AFC accrual rates until a further filing is made by it pursuant to the stipulation filed in Docket No. 769-965, or until a further order of this Board.
7.
Commencing with the effective date of the new tariffs provided for in paragraph 2,
Petitioner will begin accruing AFC on all previously-accrued AFC not included in rate base, and add the AFC accrued on previously-accrued AFC to the AFC base semi-annually in accordance with the AFC compounding procedure prescribed by the Federal Energy Regulatory Commission.
8.
Petitioner shall cause to be published in news-papers of general circulation in its service area not later than three days prior to the effective date of the new tariffs provided for in paragraph 2 of this Order notice of Petitioner's new tariff rates.
BOARD OF PUBLIC UTILITIES (SIGNED)
By:
President By:
l Commissioner f
By:
Commissioner Dated: January 31 1979 (SEAL)
Attest:
(SIGNED)
Secretary..
,t AP.'EARANCES Kirsten, Friedman & Cherin Jersey Central Power
& Light Company by:
Jack B.
Kirsten, Esq.
Berlack, Israels & Liberman by:
James D.
Liberman, Esq.
Alfred L. Nardelli, Esq.
Office of the Public Advocate Division of-Rate Counsel Deputy Public Advocate State of New Jersey Onkar Sharma, Esq.
Assistant Deputy Public Advocate John Hoffman, Esq.
Major Walton M.
Jeffress, Jg Department'of De'fense United States Government Robert II. Stoloff, Esq.
Department of Transpcrtation State of New Jersey Deputy Attorney General S tryker, Tams & Dill Air Products & Chemicals, Inc.
by:
Bareclcrew T. 7ana'7 4, Esq
' Gerald N. Tobia, Jr.
Staff, Board of Public Utilities Chief, Bureau cf Rates Paul Slevin Jose Catalan Walter S ymanski
l APPENDIX A-1 This Appendix summarizes the major elements relating to the determination of rate base, operating income and revenue requirements which have been reflected in the Phase II Order to which this Appendix is annexed.
I.
. Test Year.
The ' test year employed is the twelve month period ended August 31, 1978.
II.
Rate Base.
The principal components of Rate Base are (A) Utility Plant in Service, (B) Plant Held for Future Use, (C) Nuclear Fuel,-(D) Construction Work in Progress
("CWIP"),
(E) Deferred Debits, (F) Working Capital, and (G)
Accumulated Provision for Depreciation and Other Deductions.
These items are reflected in the Phase II Order to which this Appendix A-1 is annexed in the following manner:
(A)
Utility Plant in Service.
The balance of Utility Plant in Service at August 31, 1979 was $1,367,689,000 To this balance of Utility Plant in Service there has been added the Company's inves,tment_in N -2.,_namely, $163,853,000,
- Thi^s 11 Aft 7a s transferre,d from CWIP to _ Utility Plant in Service on December 30, l'978.*
As a result of the foregoing adjustment, the Utility Plant in Service Component of rate base is 51,531,542,000.
(B)
Plant Beld for Future Use.
The Company's investment at August 31, 1978 of 35,874,000'in Plant H(ld for Future Use is included in rate base.
(C)
Nuclear Puel.
The Company's average invest-ment in nuclear fuel (exclusive of the nuclear fuel included in CWIP) during the test year was SS1,694,000 and this amount has been included in rate base.
(D)
CWIP In the Phase I Order (as in the Order, dated June 10, 1976 in Docket No. 759-899), the Board allcwed S157,806,000 of CWIP in rate base without an AFC offset and identified with particular projects.
In the Phase I Order, the amounts so allowed in rate base included a portion
($74,116,000) of the Company's investment in costs other than As indicated in the Order to which this Appendix A-1 is annexed, Rate Counsel has reserved the right to cuestion vnether up to $12 million of the Company's investment in TMI-2 should be disallowed from Rate Base, tne impact of which would ce implemented in tne Company's next rate prcceeding.
?,
AFC and the Company's entico investment in AFC (S29,114,000) j l
associated with TMI-2 at March 31, 1977.
After deducting the amounts so associated with TMI-2, the balance of CrTP in l
l rate base authorized by the Phase I order was S54,5.4,000 l
and that amount of.CWIP is included in rate base for the purpose of the Phase II order to which this Appendix is annexed.
Of this amount, S24,030,000 represents the Com-pany's test-year investment in CWIP projects that do not t
accrue AFC.
In view of the decision by Public Service Electric and Gas Company to stop construction of its Atlan-l tic Units 1 and 2, in which the Company has an interest, the Company has not included its investment in these units in rate base.
Af ter reflecting these adjustments, the balance of CWIP allowed in rate base in Phase I (exclusive of TMI-2 CWIP), or 530,546,000, has been assigned to the Company's Forked River nuclear unit, as summarized in Appendix B-5.
(E)
Deferred Debits.
At August 31, 1978, the Company's deferred debit balance (representing prospactive income tax deductions that will be available in future years but which have been treated for ratemaking purposes as if currently available, thereby reducing current revenue requirements) was S3,907,000.
This represents deferred debits relating to Contributions in Aid of Construction, Oyster Creek Settlement, Decommissioning and Federal Income Tax on interest component of federal income tax refunds.
This item is (i) increased by $140,000 as a result of the treatment of decommissioning expense associated with TMI-2, (ii) increased by S1,049,000 as a result of the treatment of the Pennsylvania gross receipts tax, and (iii) increased by S1,824,000 to reflect the change in deferred tax bala'nces by reason of the 46% Federal income tax rate that became effective January 1, 1979, all of which items are discussed
- below, resulting in a net balance of $6,920,000 to be included in rate base.
(F)
Workine Capital In the Phase I Order, we authorized a working capital component of rate base of 574,299,000, consisting of (i) the Company's investment in J
materials and supplies at March 31, 1977 of $26,500,000, (ii) an allowance for cash working capital determined on the so-called "one-eighth" formula (S31,286,000), and (iii) deferred energy costs (determined in the manner therein set forth) of $28,101,000, or a subtotal of 585,887,000, less (iv) the excess, S11,588,000, of the allowance for revenue taxes over the current year's liability for such taxes.
In 1
this Phase II Order, we are including in rate base the same total dollar level of working capital without identification of the particular ccmponents.
(G)
Accumulated Provision for Decreciation and Decommissieninc and Otner Deductions.
In tne aggregate, enese items amount to 5377,416,000, determined in the
\\. - - -
.r following manneer
.-(i)
Accumulated Provision for Deprecia-tion and Decommissioning.
The Company's accumu-lated provision for depreciation and decommission-ing which has been accrued in accordance with our prior orders was $312,014,000 at August 31, 1978, of which' S1,275,000 is the' accumulated decommis-sioning provision associated with the Company's
,TMI-l and Oyster Creek nuclear units.
By the Phase I Order we authorized changes, in two steps, in the Company's depreciation accrual rates, the first to be made effective on the effective date of the tariffs authorized by the Phase I Order and the second change to be made effective with the effective date of the new service rates to cus-tomers auth rized by the Phase II Order to which this Appendix 'is annexed.
Such depreciation accrual rates are based upon direct weighted remaining service lives.
The effect of the second change in dep eciation accrual rates is to in-i crease the Company's annual depreciation expenses by S2,132,000 and its depreciation reserve by S2,213,000.
Moreover, as a consequence of the inclusion of TMI-2 in rate base (discussed above) and the recognition of the depreciation expense, amounting to S5,718,000, associated with TMI-2 the depreciation reserve is increased by 55,718,000.
In addition as discussed in item (ii) below, we have made provision for ' decommissioning expense for TMI-2 in the amount of S290,000.
As a result of these three adjustments, the accumulated provision for depreciation and decommissioning utilized in determining rate base is S320,235,000 The Company agreed in the Phase I proceeding that it will not propose, in any proceedings filed by it prior to January 1,
1985, depreciation rates based upon the equal life groupings method.
(ii)
Provision for TMI-2 Decommissioning Expense.
By a separate petition (assigned Docket No. 769-965) as well as in its claims in Docket No. 7610-1021, the Company requested authorization to provide-for decommissioning expense of its nuclear units now in operation, with the resulting funds to be set aside in a separate independent trust fund and not deducted from rate base, and with the earnings on such trust fund being utiliz-ed to provide for anticipated inflation in costs over the p-iod before decqmmissioning cecomes necessary.
Rate Counsel agreed that it is appropriate to make provision for decommissioning costs but proposed that the resulting funds not be 1 -
Det caide in a esparcta trust and that the cccum-
<ulated amounts be deducted from rate base and the associated deferred income taxes be added to rate base.
The Company agreed to accept. Rate Counsel's treatment of the accumulated amounts without prejudice to the Company's renewal of its pr posal for.a separate trust fund at a later date.
This is'the one item of the stipu-lations between the Company and Rate Counsel in Phase I about which our Staf f had reservations when the. Phase I Order was entered.
Our Staff was of the view that there may be some merit in the establishment of a separate trust fund which would not be deducted from rate base but, nevertheless, did not object to our treatment of this item in accordance with Rate Counsel's proposal in the light of our continuing jurisdiction and the Company's reserved right to renew its request at a later date.
There have not been significant developments in respect of this matter since the Phase I Order was entered and, in light of the general approach reflected in the Phase II Order, we are according the same treatment to this item 1
in the Phase II Order which was accorded in the Phase I Order.
Under these circumstances, our determination of allowable operating expenses makes annual provision of $290,000 for decommis-sioning costs associated with TMI-2 nuclear unit, with, as noted acove, a corresponding deduction from-rate base of $290,000 and addition to rate base of the associated deferred income taxes of $140,000.
(iii)
Accumulated Provision for Amorti-ration of Nuclear Fuel Assemclies.
In determining rate base, sucn accumulated provision amounting t=o 538,821,000 at August 31, 1978 has been deducted.
(iv)
Unamortized Investment Tax Credit.
This item (amounting to $322,000 at August 31, 1978) represents the unamortized balance of the original (31) investment tax credit wnich is being amortized as a credit to income over a period of 10 years and, in accordance with cur prior deci-sions, such unamorti:ed balance is deducted in determining rate base.
(. 7 )
Unamortized Gain on Reaccuired Debt.
l This item, amounting to $5,013,000 at Augus 31, 1973, less a normalizing adjustment of $40,000, er
' l
a not of $4,978,000, has baon deducted in dator-mining rate base in accordance with our establish-ed policy.
(iri)
Unamortized Litigation Recovery.
We ' previously authorized the Company to amortize over a five year period its net recovery applic-able to plant items in.a litigation related to its l
Oyster Creek station and, in determining rate
- base, to deduct the unamortized balance.
At August 31, 1978, such unamortized balance was S52,000.
(vii)
Unamortized Federal Income Tax Refund.
The Company received refunds aggregating
$1,396,000 of a portion of the Federal income taxes paid by it in the years 1961-1965 by reason of the allowance for federal. income tax purposes of depreciation and/or amortization of rights of way.
Interest associated with such refunds aggregated $1,154,000.
In October, 1976, the company began the amortization, effective as of January 1, 1976, of such refunds and interest (net of taxes on such interest) over a 10-year period.
The parties agreed for purposes of the Phase I Order that,the unamortized balance of such refunds and interest (net of taxes on such interest) at March 31, 1978 should be amortized, as a credit to operating income, over a five year period commenc-ing with the effective date of the tariffs auth-orized by the Phase I Order and that the un-amortized balance should be deducted in determin-
)
ing rate base.
The income statement for the tess year ended August 31, 1978 reflects amortization of such credit in the amount of $447,000 and the associated rate base reduction at Augus: 31,.1978 is $1,680,000.
(viii)
Customer Decosits and Advances for Construction.
In accordance witn ene policy of tnis Board, the test year-end level of customer deposits and of customer advances for construc-I tion aggregating $7,212,000 have been deducted in arriving at rate base.
(ix)
Pennsylvania Gross Receiets Tax.
Late in 1977, the Commonwealth of Pennsylvania enacted an amendment of its gross receipts tax law, effective retroactively to January 1,
- 1977, which imposed additional Pennsylvania taxes upon electric utilities owning generating facilities in Pennsylvania but not rendering service to retail Pennsylvania customers.
In common with a i
numbir of non-Ponncylvania Oloctric utilitiGO, the Company is contesting the constitutionality of this tax and, while it is accruing provison for this tax, it is not currently paying such tax.
The accumulated provision for this tax at August 31, 1978, plus the annual additional amount of this tax that will be associated with the Com-pany's ownership'of TMI, if the constitutionality of the tax should be sustained, aggregating S4,116,000, has been deducted in arriving at rate base.
The Company has also agreed that, if the Pennsylvania tax should be held invalid, it will refund to customers within 30 days after such determination and in such manner as shall be determined by the Board the amount of the tax accrued subsequent to the effective date of this
. order (net of the associated increase in federal income taxes).
Our present expectation is that, if this eventuality should occur, the refund would be effectuated by reflecting it as a credit in the operation of the Company's levelized energy adjustment clause.
(E)
Net Investment Rate Base.
As a result of I
the adjustments discussed acove, the normalized net invest-ment rate base at August 31, 1978 is $1,377,489,000.
There is annexed as Schedule B-3 a tabulation reflecting such rate base and its components.
III.
Oceratine Income.
The Company's operating income for the twelve monens ended August 31, 1978 was $114,155,000 In determining its normalized operating income for the test year, various adjusements were made and the maj or such adjustments were as follows:
(A)
Revenue Normali:aticn.
Base revenues receiv-ed during the test year were increased by $12,610,000 to reflect on an annual basis (i) the consumption by customers added during the test year and (ii) the levels of usage by customers at the end of the test year.
Test year revenues were decreased by $425,000 to eliminate waste heat revenues discussed below.
(B)
Increased Costs Associated with Revenue Normalization.
The case revenue normall:ation requires provision for increased energy costs of S3,650,000 and inc: eased operating and maintenance costs of 5558,000.
(C)
Revenue Taxes The New Jersey revenue tax liability is measured oy revenues received during tne prior calendar year.
Our practice is to make provision for tne revenue : axes based upon the current year's normali:ed revenues.
This results in a normali:ing adjustment to l -.
,(-
incr'ocsa tho 'tsat year'c revsnuo tax eccruel by S8,260,000.
The working capital allowance referred to in paragraph (D) of Section II above takes cognizance of the associated reduction in working capital, requirements.
We have discussed above (in Item II(G)(ix) the status of the Pennsylvania gross receipts tax.
Since that tax was enacted late. in 1977 but was retroactively effective to January 1, 1977, the book provision for such taxes during the test year included provision for that t'ax 1
associated with revenues for eight months prior to the beginning of the test year.
The provision for this tax has been adjusted to the amount associated with the test year base revenues.
Moreover, the portion of this tax which is-associated with LEAC. revenues is being provided for in the LEAC.
(D)
Reserve Cacacity Payments.
Under the PJM and GPU power pooling agreements, tne Company is obligated to pay for installed capacity deficiencies, measured in accor-dance with the formulae established in such agreements, at rates specified therein.
Such agreements are filed as tariffs with the Federal Energy 3egulatory Commission.
The rates so specified were increased effective June 1,
1978 and, in the absence of TMI-2, by reason of that fact and of the changes in the respective amount of reserve capacity required to be provided (or paid for), the level of the reserve capacity payments required to be made by the Company would have been increased substantially.
However, one of the consequences of normalizing the results of the test year to reflect the fact that TMI-2 is now in service is to reduce the level of reserve capacity payments that is recognized for ratemaking purposes.
The net result is that the reserve capacity payments made by the Company during the 1
test year are adjusted to increase that expense by 583,000.
(E)
EEV Rentals.
Beginning in July 1976, f
pursuant to tariffs enat were filed and became effective under the Federal Power Act, tne Company paid rentals for certain EHV facilities that were placed in service in 1976 and were associated with TMI-2, upon the basis of the expectation that the Company would be permitted to become the owner of 65 % of TMI-2.
That level of rental expense was reflected in the Phase I Order and resulting tariffs that became effective September 1,
1977; the difference in EEV rental expense based upon a 25% ownership of TMI-2 and a 65%
ownership amounted to approximately $2.5 million per year, so that, during the period between Septemcer 1,
1977 and February 1, 1979, the Company has collected from custcmers 33.5 million based ucon ene 65% allocation of EHV rentals.
In the Spring of 1978, the Pennsylvania Publiv Utility Commission. denied the request of ne Company's affiliates that they ce permitted to sell additional interests in TMI-2 l. -.
,~
so as to increase the Company's ownership of TMI-2 from 25%
to 65%.
The Company and its affiliates promptly filed amendments to the tariffs relating to the EllV facilities that reduced the rentals to a level consistent with the 25%
ownership of TMI-2 and, in its normalized operating expense
- claim, eliminated the S2,334,000 excess of the amount actually paid over that payable on a 25% ownership basis during the test year.
Rate Counsel have proposed and the parties have accepted that, in determining the level of allowable rates in this proceeding, the Company be treated as if it had received a refund of the difference (S4,252,000) in such rentals which it would have paid if it had always been anticipated that it would only own a 25% interest in TMI-2.
The result is that, within 11 months after the effectiveness of the tariffs implementing the Phase II rates authorized by this Order, the Company's customers will, in effect, have received (i) a refund of the entire amount of revenues which they provided beginning September 1,
1977 associated with EHV rentals on the expectation that the Company would be a 65% owner of THI-2, plus (ii) interest thereon at a rate equivalent to the rate of return authoriz-ed in the Phase I Order.
(F)
Increases in Wages, FICA Taxes and Pension Costs.
During the test year, a wage rate increase became effective and the Company experienced increases in FICA taxes and pension costs.
Test year expenses have been normalized to make provision in the amount of $514,000 for the annualization of the portion of such increased costs chargeable to operation and maintenance expenses, that was not reflected in the operating results for the test year.
No provision has been made for the increase in wages, FICA taxes and pe'nsion costs that became effective subsequent to the end of the test year.
(G)
Rate Case Expenses.
Allowance of $900,000 has been made for amortization rV the cost of this proceed-ing over a two year period.
Since the Company's book amortization during the test year of rate case expense from prior proceedings and to reflect provision for one-half of the expenses of the Phase II proceedings, was $1,193,000, the effect of this adjustment was to decrease allowed operating expenses by $293,000.
(H)
Depreciation and Decommissioning Cxpense.
As discussed in paragraph (G) of Section II, the provision for depreciation includes $2,132,000 at sociated with the change in depreciation rates contemplate.. in the Phase I Order.
Moreover, provision has been made for depreciation and decommissioning expense associated with TMI-2 in the amounts of SS,718,000 and S290,000, respectively.
(I)
Interceriod Tax Allocation.
The Company did not make an election under Sucsection 167(1)(4) of the 1
l Interncl Revenue Code end, conocquently, its ability to employ an accelerated method of depreciation for income tax purposes is not constrained by that subsection.
However, in Docket No.
759-399, we authorized provision for deferred income tax expense for the differences between tax deprecia-tion and book depreciation for property added subsequent to March 31, 1975.
The effect of the increased book deprecia-tion rates which we have authorized in this proceed'ing is to reduce the book test year normalization in respect of this item by S245,000.
- Moreover, in the Phase I Order, we allowed additional provision for deferred income taxes associated with the interest component of AFC (such provi-sion to be ef fected by the use of a net-of-tax AFC accrual rate commencing with the effective date of the tariffs authorized by that Order) in respect of (i) one-half of the Company's investment in Forked River, (ii) all the Company's investment in the Seward generating station, and (iii) certain EHV facilities.
The result of application of that policy to the test year conditions normalized to reflect TMI-2, is to increase operating expenses by $5,068,000 to make provision for deferred income taxes.
On the other hand, it is estimated that the balance in the deferred tax reserve, which has heretofore been accumulated on the basis of a 48% corporate federal income tax rate (which was the rate in effect when such reserve was accumulated) was, at December 31, 1978, approximately $3,033,000 in excess of the reserve that would be required on the basis of the 46%
corporate income tax rate that became effective January 1, 1979.
The Company has agreed that it will seek such auth-orization, if any, as may be required to permit it to amortize this difference in reserve balance over a two year period (i.e.,
in the amount of S1,519,000 annually) begin-ning with the effective date of the Phase II Order to which this Appendix is annexed and that we may take such amortiza-tion into account in establishing the Phase II level of rates.
In addition, provision for deferred taxes has been decreased by S140,000 to reflect provision for TMI-2 decom-missioning.
(J)
TMI-2 As previously noted, operating expenses have been increased to make provision for the depreciation and decommissioning expenses (S6,006,000) and related deferred income tax expenses (S4,928,000) associated with the Company's interest in TMI-2 and have been reduced to make provision for the reduction in reserve capacity expenses (S2,579,000) and amortization of the investment tax credit (S279,000) associated with that interest.
The Company has also sougnt an increase of S3,769,000 in allo'w-acle operating expenses to provide for the Company's share of the operations and maintenance expense of TMI-2.
The other active parties nave opposed this adjustment.
All the Parties have agreed to an allowance of one-half of the Company's request, namely, 31,384,000, and that amount is.-
reflected in the allowable operating expenses.
(K)
Income Taxes Associated with Annualized Interest. Operating expenses have been decreased by $642,000 to reflect the reduction in income taxes associated with the annualized level of interest payable by the Company based upon the long-term debt included in the agreed-upon capital structure.
(L)
Amortization of Deferred Enercy Costs.
As previously noted, one of the changes made by the Phase I Order was the implementation on an interim basis, of a levelized energy adjusteent clause, as a substitute for the energy adjustment clause that had previously been in effect.
A related action taken was to defer the recovery by the Company of the accumulated deferred energy costs amounting to S57,418,000 at the effective date of the tariffs filed in response to the Phase I Order, which otherwise would have been recovered by the Company during the September 1,
1977-January 31, 1978 period, and to amortize that amount at the rate of S2,313,000 per year.
Such amortization is ceing continued in the Pnase II Order.
There is another separate deferred energy account reflecting the energy cost savings that were at-tributable to the test operations of TMI-2.
Under the terms of the levelized energy clause
- tariff, these savings (amounting, at December 31, 1978, to S3,360,000 plus S38,000 of interest) were accumulated in a separate deferred energy account and will be reflected in the operation of the revised levelized energy adjustment clause authorized to be implemented, on an interim basis, by the Phase II Order to which this Appendix is annexed.
(M)
Waste Heat Re"enues The Company has a cogeneration arrangement witn one industrial customer whereby it makes waste heat available to that customer for industrial purposes and receives revenues therefrom.
Sucn revenues amounted to S425,000 during the test year and were reflected in the Company's operating income.
However, the level of such revenues can fluctuate widely, depending upon both the extent of operation of the combustion turbine providing the waste heat and the extent to which the cus-tomer can use such waste heat economically.
The parties have agreed that, under these circumstances.it is prefer-rable to elimincte such waste heat revenues from operating income in establishing base rates and, instead, to reflect such revenues in ene operation of the levelized energy adjustment clause which will exactly track the Company's actual experience in selling waste heat.
The allowacle operating expenses reflect this adjustment.
(N)
Miscellaneous Adjustments.
A number of I
ciccollancoua cdjustasnts havo baon mcdc.
Sono of thoco
~
adjustments increase and others decrease the allowance for operating expenses.
These items involve provision for storm damage, charitable con'tributions, the amortization of gains and. losses on reacquired debt, gains on the sale of proper-ty, correction of the misclassification of interest on the levelized energy adjustment charge over collections, and interest on customers' deposits.
In the aggregate, these adjustments reduce allowable operating expenses by 51,878,000.
(0)
Related Income Taxes.
The Company's, operat-ing income for the test year, adjusted to substitute the 46% Federal income tax rate which became effective January 1,1979 for the 48% rate that was effective during the test i
year, was'$115,705,000.
The ~ net effect of the adjustments referred to above is to reduce the allowance for Federal income taxes by S3,506,000.
1 (P)
Normalized Ocerating' Income.
The normalized operating income resulting from the foregoing is Sil5,863,000.
The details are set forth in Schedule B-2 to the Phase II Order to which this Appendix is annexed.
IV Reclassification of a Portion of Energy Adiustment Charge Revenues to Base Revenues.
In the Phase I Order we reclassified a portion of energy costs from energy adjust-ment clause costs to base revenue costs, in recognition of the fact that large energy adjustment clause charges cause customer misunderstanding.
In keeping with that policy, the active parties in this Phase II proceeding have recommended that the Company's base rates make provision for the re-
)
covery of 14 mills of energy costs per kwh of sales (and of i
the associated revenue taxes), with the transferred amounts
' ~ - -
l being added to base rates on a per kwh basis.
Correspond-ingly, the base energy cost employed in the levelized energy adjustment clause would become 14 mills per kwh of sales, so that the revised clause would deal only with differences between actual energy costs per kwh of sales and that higher base (plus revenue taxes associated with such differences).
We agree that this is appropriate and the Phase II Order to which this Appendix is annexed makes provision for such r eclassifica tion, which does not affect the Company's total charges to its customers.
V.
Cacital Structure and Rate of Return.
The active parties in tne Phase II proceeding have ag reed that the Board may properly utili:e the Company's actual capital structure existing at August 31,
- 1978, subject to the adjustment referred to in this paragraph, in developing the apptcpriate rate of return.
Under the procedures permitted by the Internal Revenue Code, the Company proposes to employ the so-called " half-year convention
- in determining its depreciation deductions for income tax purposes in respect -
~
of TMI-2 for. tho yocr 1978.
Tho recult will be that the Company will have 1978 depreciation deductions in respect of TMI-2 (which, as noted, was placed in commercial service on December 30, 1978) for six months.
As a result, the Com-pany's income tax expense for 1978 will be reduced by approximately $2,879,000 which will be offset by a normaliz-ing charge for deferred income tax expense.
There will, therefore, be no net impact of this item on operating income, but this additional deferred income tax will provide i
additional cost-free capital in that amount, and such additional cost-free capital has been recognized in the capital structure employed for developing the cate 'of i
return.
5 The embedded costs of long-term debt (7.90%)
and preferred stock (9.24%) have been employed in developing the cate of return.
For the reasons discussed in the Phase II order to which this Appendix is annexed, an allow-ance of 13.25% has been employed for the common stock equity component of capitalization.
With appropriate weighting for each of these components of capitalization (including cost-free capital) the over-all allowed rate of return is 9.62%.
The details are shown on Schedule B-III of the Phase II Order to which this Appendix is annexed.
VI.
Ooerating Income Deficiency and Revenue Factor.
On the basis of the net investment rate case (S1,377,489,000) and allowed rate of return (9.62%) set forth above, the Company would be permitted to receive revenues sufficient to produce operating income of $132,514,000.
The adjusted normalized operating income found above is
$115,863,000, resulting in an operating income deficiency of S16,651,000.
The revenue factor (takinc into account Federal income
~~~
~
taxes, New Jersey gross receipts taxes and Pennsylvania gross receipts taxes) is 2.115.
Consequently, the addi-tional revenues needed to provide for this operating income deficiency are 535,217,000, of which S33,817,000 is applic-able to retail customers, and the tariffs which the Company is authorized to file by, the Phase II order to which this Appendix is annexed may provide for increases in base rates for retail customers designed to produce additional base revenues of 33,817,000.
VII.
Rate Design.
The issue of rate design has been l
extensively litigated in the Company's prior rate proceed-l ings.
The rate design reflected in the Company's existing l
tariffs was establisned approximately two and a half years ago.
In view of the fact that the accompanying Order pecvides for approximately a 6.6% increase in the level of the Company's retail base revenues (prior to the inclusion of additional energy costs in base rates), the parties have agreed that it would be appropriate to make minor changes in the Company's existing rate design and we concur.
The l
ccnccnt Ordor iccucd in tho Phaca I. procasding ctetsd that rate design issues were to *be subject to full exploration in the Phase II proceeding."
Inasmuch as all parties have participated in the Phase II rate design and have agreed to certain changes in rate structure, the revised tariffs which are authorized by the accompanying Order allocates the allowed increase in base revenues between the rate classes on a basis which will essentially be cost based.
The Company has not made any significant changes in the cost allocation procedures employed by it for rate design pur-poses, with the exception that it has allocated one-half of the fixed charges associated with TMI-2 to demand functions and one-balf to energy functions on the ground that the low energy cost.s to be derived from TMI-2 wa7 an important element in che decision to install thrt unit.
Due to the relatively minor impact of making the TMI-2 capacity allo-ca. tion on either' a 50% demand and 50% energy basis or the traditional 100% demand basis, the parties have agr.eed that resolution of this contested issue should be reserved for a future proceeding.
The Board finds that this Agreement is a reasonable settlement for this case.
The tariffs authorized by the accompanying Order,
where appropriate, contain demand chargea that are increased more than energy charges to reflect cost incurrence char-acteristics.
Likewise, such new tariffs reflect a greater increase in customer costs where such charges are separately set forth.
Additionally, such new tariffs reflect summer-winter energy and demand rate differentials which are somewhat greater than existing differentials in the present tariff.
The current discount for curtailable service is
~
S1.625 per kW per month for transmission service.
In determining the Company's revenue requirements, provision has been made for the increase in installed capacity charges and credits under the PJM and GPU power pooling agreementc.
In the light of that fact, the curtailable service discount will be increased to 52.05 per kW per month for customers served at transmission voltages, representing the sum of
$1.925 per kW related to savings in demand costs and S0.125 per kW related to savings in energy costs resulting from the approximate 1 cent per kWh average differential between day and night PJM running rates.
The Company's new tariff eliminated space heating rates and riders.
Furthermore, the Company's new tariff provides general service by voltage levels (i.e.,
a se-condary voltage service schedule, a primary voltage service schedule, and a transmission voltage service schedule).
Finally, tne Company has made minct clarifications to its tariff for which there is no aggregate revenue impact.
All active p= ties to the proceeding have recommended acceptance i
l -
.i of these tariffs.
On this basis, the Board finds such revisions in the Company's new tariff appropriate and accepts such tariff.
I We also note that the stipulated tariff design is in accordance with the general policies of the state and i
federal governments urging a modification to encourage the conservation of energy.
There has been extensive testimony on tariff design in five of the six areas of federal stan-dards, enumerated by the Public Utilities Regulatory Poli-cies Act of 1978, P.L.95-617, section 111: Cost of Service,
, Interruptible Rates, I
Declining Bloc Rates, Seasonal Rates, and Load Management Techniques.
(The sixth standard of the federal act, Time-of-Day rates, is being extensively con-sidered in a separate proceeding under a different docket number, 767-799).
We believe that the stipulated tariff design is consistent with the intent of the federal act in so far as it is appropriate.
VIII.
Determination of AFC Accrual Rates Commenc-ing with the effective date of the tariffs provided for in the Phase I Order, the Company has been employing two AFC accrual rates, namely, (1) a gross AFC rate applied to CWIP for which normalization of the tax reduction associated with the interest component of AFC has not been recognized and (2) a net AFC rate applied to CWIP for which tax normaliza-tion has been recognized.
Both the gross and net AFC accrual rates are determined by application of the formulas 4
set forth in the stipulation in Docket No. 769-965.
IX.
Compoundinc of AFC.
In Phase I and in the Com-pany's rate cases preceeding Phase I,
we allowed the inclusion of the Company's accummulated AFC in rate base in order to provide the Company with a return on its AFC investment that, in the absence of compounding, it would not otherwise have received.
In this proceeding, Rate Counsel have proposed, with the concurrence of the Company and the other parties, that in lieu of including previously-accrued AFC in rate base, the Company be permitted to accrue AFC on previously-accrued AFC not included in Rate Base, and we hereby approve of this method of providing the Company with a return on its AFC investment.
2 g--
r
a.
Apptadix B-1 JERSEY CENTRAL POWER & LIGHT COMPANY Docket No. 7610-1021 (Phase II)
Summary of Rate Base, Operating Income" and Allowable Base Revenue Increase (S000's)
~ -
~
Rate Base 51 377 489 Rate'of Return 9'. 6 2 %
Allowable Operating Income S
132 514 Normalized Operating Income S
115 863 Operating Income Deficiency S
16 651 Additional Total Revenue Allowable (Revenue Factor = 2.115)
S 35 217 Amount Allocable to Retail Customers S
33 817
- t See Appendix D.
d Q
m JERSEY CENIBAL POWER & LIGfr. COMPANY Appendix B-2 Dock;t No. 7610-1021 (Phasa II)
Operating Income, Including M I-2
($000's)
Rate Counsel's and D.O.D.'s Position Adj..
Company's Adjustments Stipulated by No.*
Claim Acceoted By Comcany The Ptrties Operating Income,. 12 Months Ended 8/31/78 Adjusted to Reflect 46% Federal Inccme Tax Rate Sil5 705 S115 705 Normalizing Adiustments, Including TMI-2:
2 Revenue Adjustment, Net of Base Fuel & O&M Expense
$ 8 402 S
(425)
S 7 977 3
Taxes Other Than Inccane Taxes-New Jersey (8 260)
(8 260) 4 Adjust EHV Rents to Reflect 25% TMI-2 Ownership 2 334 4 252 6 586 4,18-1 Reserve Capacity Rayments (83)
(83) 5 Storm Damage 1 273 1 273 6
Wage Increases-11/1/77 and 11/1/78 (3 450) 2 936 (514)
~
Charitable Contributions (151) 69 (82) 3 Amortization of Rate Case Expense 293 293 3,18-2 Revised Cepreciation Rates, MI-2 Depreciatien & Decomissioning (8 140)
(8 140) 10,18-3,8 Deferred Inccme Taxes (4 683)
(4 683) 11 Gain en Reaccuired Deot 314 40 354
!2 Inceme Taxes-Annualized Interest 642 642 15 Interest en Customers' Deposits (323)
(323)
!6 Annualization of Oyster Creek Radwaste (Net, Including Taxes)
(601) 601 17,18-4,5 Taxes Other Than Inccme Taxes, Pennsylvania 757 285 1 042 18-9 Amertization of Inv. Tax Credit (TMI-2) 279 279 (3 769) 1 885 (1 884) 18-1 0 & M Expense (TMI-2)
^
57 57 Gain en Sale of Prcperty Interest en LEAC McVed "Selcw Line" 599 599 Ceferred Tax Balance Change Due tn 19 1 519 Effect en Current Income Taxes (46% Federal Rate) of Atove Adjustments (Including Excess of Tax Cver Bock Depreciatien) 7 658 (4 152) 3 5C6 Tctal Ncrmalizing Adjustments S (7 508)
S 7 666 S
158 Adjusted Cperating Inccme S108 197 5 7 666 5115 563
- Ruference: JC-II-107 l
... i JERSEICENTRALPCWER&LIGHTCOMPANY Aug4ndix B-3 Dock;t No. 7610--1021 (Phasa II)
Rate Base, Including TMI-2 (5000's)
Rate Counsel's and D.O.D.'s Position Company's Adjustments Stipulated by Claim _
.Accected By Cemeany The Parties Utility Plant
/
$1 531 542 Electric Plant In Service S1 531 542 S
Electric Plant Held For 5 874 Future Use 5 874 Nuclear Fuel 85 451 (3 757) 81 694 Construction Work In Progress 84 431 (29 855) 54 576 Total Plant 51 707 298
$(33 612)
$1 673 686 Additions Deferred Cebits - Accun.
Deferred Inccme Taxes S
6 622 S (2 575)
S 4 047 Ceferred Taxes Associated with 1 049 1 049 Pa. Gross Receipts Taxes Adjustment to Deferred Taxes i
To Reflect Change in Tax Rate 1 824 1 824 j
Frem 48% to 46%
Total Additions S
6 622 S
298 S
6 920 Deductions Accumulated Provision for Depreciaticn and teccmmissicning S
321 179 (944)
S 320 235
~ ' -
Accumulated Prevision for Amertization Of Nuclear 38 821 j
Fuel Assemclies 38 821 Custcmer Advances For Ccnstruc-1 834 tien 1 834 Unamceti:ed Investmenc Tax 322 Credit 322 Unamcetized Gain On Reacquired Debt (Net) 5 018 (40) 4 978 52 1
Unamortized Litigatien Reccvery 52 Unamortized Federal Inccme Tax 1 680 Refund 1 680 5 378 Custcmer Cecesits 5 378 4 116 4 116 Pa. Grcss Receipts Taxes Total Ceductions S
374 2S4 S
3 132 S
377 416 Werkinc Cacital 88 967 S(14 668) 3 74 299
- I
~
' :Ist Investment Rate Base S1 429 603 5(51 114) 31 377 489
- Same total amcunt allcwed in Phase I (includes unamcrtized deferred ener7f cesJ cf 523,541, net).
r
- ~,
JERSEY CENTRAL POWER & LIGHT CCMPANY Appendix B-4 Dock;t No. 7610-1021 (Phase II)
Capital Structure & Rate of Return (S000's)
Rate Counsel's and G.S.A.'s Position Company's Adjustments Stipulated by Claim Accacted By Ccmcany The Parties Ct.citali::stien Ratics:
Long-Term Debt 51.14%
(.05) 51.09%
Preferred Stock 12.76
(.01) 12,75 t
Comon Stock Equity 33.29
(.04) 33.25 Cost-Free Capital 2.81
.10 2.91 100.00%
Total 100.00%
! emcentnt Costs:
C 7.90%
Long-Term Debt 7.90%
9.24 Preferred Stock 9.24 Ccmmen Stock Equity 13.50
(.25) 13.25 Cost-Free Capital Weichted Cests:
4.04%
Long-Term Cect 4.04's 1.13 Preferred Steck 1.18 Cc:rmon Stock 4.49
(.09) 4.40 Cost-Free Capital l
1 9.71%
(.09) 9.62%
Tocal l
F D
,c JERSEY CDITRAL PCUER & LIGiff CCMPANY Appendix B-5 Docktt No. 7610-1021 (Phasa II)
Composition of CWIP in Rate Base (S000's)
Allowed Phase II in as Phase I Adjustments
'S ticulated TMI-2 Net S 74,116 Accumulated AFC 29,114 Total S 103,230 S(103,230)
Forked River Net 0
y Accumulated AFC 28,327 2,219 30,546 Total S 28,327 S
2,219 5 30,546 Atlantic 1 & 2 Net S
0 Accumulated AFC 865 Total S
865 S
(865)
Small Projects on which AFC Had Not Been Accrued S 12,144 S
(2,298)
S 9,846 ProjectsThat 9
L Do Not Accrue AFC' S 7,317 5
6,867 S 14,184 Previously Accrued AFC (Other Than Above)y S
5,923.
S (5,923)
Total S157,806 S(103 230)
S 54,576 1 Sucsecuent to tne entering of a Final Order in Phase II of Cocket 7610-1021, the Company will begin accruing AFC cn all previously-accrued AFC not included in rate base, and add the AFC accrued on previcusly-accrued AFC to the AFC base semi-annually in accordance witn the AFC ccmpounding precedure prescribed by tne FERC.
Union Beach, suspended (deferred) projects, work orders inactive for. cre tnan three mentns, projects in service but not transferred frcm CWIP.
L
f
}v Cf
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{
J]rssy Centrcl Power &. Light Cecpany s
1.
The nee energy adjustment charge to be applied by the Company for the six-month period beginning January 30, 1979 pursuant to the Company's EAC (unloco this Schedule shall be suspended by a revised Schedule filed in accordcnce with the terms of the Company's EAC,) shall be.755 mills per kilowatt haur.
2.
'Such net charge has been determined on the following basis:
MILLS PER KWH As Filed in Adjustment Mills per KWH Sept. 15, 1977 to Reflect per Current U_ dated Data Estimate Jd LEAC Filin6 _
(c)
Company's estimated average coct of energy during twelve months Novecbor 1,1978-October 31, 1979.
(For dctails see Appendix A)*
14.663 14.663 (b)
Credit for waste heat revenues
.068 (1)
.068 (c)
Less cost in base rates 10.779 3,.221 (2) 14.000 (d)
Net cost 3.884 (3.289)
.595 (o)
Charge (or credit) to amortize avor the twelve month period beginning January 30, 1979 under collections (or
> var collections) pursuant to previous ichzdule filed pursuant to Company's
- AC.
(For details see Appendix B)*
(.713)
.780 (3)
.067 Sub-To tal 3.171 (2.509)
.662 (f)
Amount resulting from appli-cation of tax factor.
428
(.335) (4)
.093 Total 3.599 (2.344)
.755 (1) Waste heat revenue is now deducted from energy cost.
(2) Roll-in of energy cost to base ra tes.
(3)
Increase due to an under collection as of 12/31/78 versus an estimated over collec-tion at 10/31/78.
Estimated Actual 10/31/78 12/21/78 3egular over (under)
$6 058 012 5(5 180 227)
Test 2 210 445 3 359 567 Interest 712 445 952 3al S3 081 202 5
(368 n!9)
(4)
Tax factor increased to include Pennsylvania Criss Receipts Tax.
l Prior f acto r - 1.1351 New facto r - 1.1401 I
- of LEAC filing
. -