ML19309D021
| ML19309D021 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek, Three Mile Island, 05000363  |
| Issue date: | 04/03/1980 |
| From: | GENERAL PUBLIC UTILITIES CORP., JERSEY CENTRAL POWER & LIGHT CO., METROPOLITAN EDISON CO. |
| To: | |
| Shared Package | |
| ML16341C651 | List: |
| References | |
| NUDOCS 8004090482 | |
| Download: ML19309D021 (44) | |
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CPU in Eri f General Public Utilities Corporation is an electric utility holding company that provides electricity to about 4 million people living in about half the land area of New Jersey and Pennsylvania. It serves over 1.5 million customers. Some 32 billion kilowatt hours of electricity were distributed in 1979. Of this total,34 percent went to residential customers,23 percent to commercial accounts, 37 percent to industry and 6 percent other customers.
The GPU System includes three operating companies: Jersey Central Power & Light Company and, in Pennsylvania, hietropolitan Edison Com-pany and Pennsylvania Electric Company. The System has total assets of $5 billion, making it the nation's 14th largest investor-owned electric utility.
The CPU companies depend primarily on coal and nuclear energy for the generation of electricity. ,
The generation mix in 1979, exclusive of purchased power, was 25 percent nuclear,67 percent coal and 8 percent oil and gas. The nuclear component was 34 percent in 1978, the last full year before the T.\1I accident.
1 Contents 1 1979 Financial Sununary 2 Letter to Stockholders 4 1979 Financialand Operating Report 14 The GPU System (hfap) 16 Statement of hianagement 17 Report of Auditors 18 Comments on Earnings 19 Financial Statements 23 Notes to FinancialStatements 39 System Statistics 40 Directors and Officers i
1979 Fin:nci:1 Summ:ry 1979** 1978 % Change Net income ($000) $ 95,783 $ 138,774 (31.0)
Earnings Per Average Share $ 1.56 $ 2.30 (32.2)
Annual Cash Dividend Paid Per Share $ 1.20 $ 1.77 (32.2) 13ook Value Per Share $ 22.74 $ 22.41 1.5 Common Shares Outstanding (000):
Average 61,218 60,217 1.7 Year-End 61,264 60,971 .5 Nt.mher of Stockholders 169,25S 177,056 (4.4)
Generating Capacity (megawatts)* 8,262 8,281 (.2)
Peak load (megawatts) 6,173 5,898 4.7 Cost of Fuel and Purchased Power (mills per kwh) 17.68 13.81 28.0 Niegawatt-Ilour Sales (000) 31,995 31,270 2.3 Operating llevenues ($000) $1,490,154 $1,326,644 12.3 Customers Served at Year-End 1,558,094 1,532,00S 1.7 Construction Expenditures ($000) $ 331,026 $ 407,690 (13.9)
Total Assets ($000) $4,991,994 $4,612,683 8.2 Nmnber of Employees at Year-End 11,159 11,597 (3.8)
- Includes both Tall units rated at 1700 h!W.
- See Note 1 to Consolidated Financial Statements and lleport of Auditors, i
l 1980 Annual Meeting The annual meeting of stockholders of General Public Utilities Corporation will be held at 2 P.hl.,
i local time, Alay 5,19S0, at the William G. hiennen Sports Arena,161 East II over Avenue, Alorristown, N. J.
Further Information Too Many Annual Reports?
For further information about the company, a copy You may be receiving extra copies of the GPU of the Gl'U System Statistics and the Corporation's Annual lleport because of multiple accounts 1979 annual report to the Securities and Exchange within your househohl. To stop the extra copies, Commission will be available after hlarch 31,1980. please write to the llartfard Nc;ional llank and Write to Aliss llelen NI. Graydon, Secretary, Trust Company, P.O. Ilox 210, llartford, Ct. 06101.
General Public Utilities Corporation,100 Interpace Please enclose the mailing labels from the Parkway, Parsippany, N. J. 07054. extra copies.
I
To the Stockhold:ra Last year's nuclear accident at Three Atile Island the ultimate repayment of the borrowings. This brought on the most severe crisis in the history of again is primarily directed at continuing reasonable the GPU System. That crisis continues today and regulatory response to cash and earnings needs.
dominates virtually every aspect of the company's Our borrowings under the revolving credit agree-operation. ment at the end of February amounted to $220 At the time of the accident, the GPU System was million, and our cash projections show that we could well positioned in terms of both the custom- ,d reach the interim ceiling of $292 million this the investor. We had just received rate-makn% spring. It was in the context of these difficult recognition of the $750 million investment in circumstances that we made the decision to omit the TN!!-2. The construction of that unit had imposed cash dividend in February. We fully understand a heavy burden on the investors-but it had been the importance of maintaining regular quarterly completed and was delivering lower cost nuclear cash dividends and the fact that a great many GPU i
power to our customers. The outlook for earnings shareholders, with our heavy concentration of l
was impmved as a result of rate orders approved retirees, are counting on such dividends to supple-in both Pennsylvania and New Jersey shortly before ment their other income. In light of the serious the accident. Our capital structure was balanced; uncertainties facing us, your Board of Directors our energy supply sources were a healthy concluded that it was necessary and in the best 52G coal,419 nuclear and a modest Wc oil and long-term interests of the stockholders to conserve l
l gas; and our rates were in the mid-range of those cash and credit resources. First priority had to i charged by other utilities in surrounding areas. be placed on preserving the financial integrity of Then on Alarch 28 your healthy company your corporation.
suffered the accident that the President's Commis-sion characterized as " eventually inevitable" in the nuclear industry. In the highty charged environ-ment following the accident, we have cooperated to the fullest extent possible with the regulatory agencies involved. Even with all these efforts, we The most critical factor in our continuing have had an extremely difficult time in obtaining financial viability and ultimate financial PP m Pri t" "d timely I"SPonses by state and health is the granting of timely and adequate I"d" I mgulaton to our dEcuh circumstances.
'I he accident forced us to seek rate orders to rate relief by the Pennsylvania and recover the immediate and sharp increase in the New Jersey state commissions during th.is cost of power purchased to replace the lower cost difficult period.
nuclear energy supply interrupted by the accident.
Despite the attention of the utility commissions j in both New Jersey and Pennsylvania through extensive hearings, the very nature and format of these proceedings invite delays and diversions. Other sections of this report outline the details l
! Our internal response to the cash crisis continues of our situation and our planning. To summarize to include deep cutbacks in virtually all of our our present position:
programs. Our only significant external source of 1. The cash crisis is severe:
cash today is the revolving credit agnement a. The removal of TAII-2 from rate base with 45 banks which was put in place after the deprives us of the recovery of the capital accident. Although that agreement provides for costs of that investment, thereby reducing an ultimate borrowing level of $412 million, we earnings to a point which severely restricts, are currently limited to an interim ceiling of if not climinates, continuing access to
$292 million which we cannot exceed without the long-term security markets.
favorable vote of the banks providing 85% of the
- b. The cost of power purchased to replace the bank credit. That vote will depend upon the energy made unavailable by the accident outcome of pending regulatory proceedings. In e ntinues to increase at a pace in excess addition, the availability of credit under this of that currently collected from customers.
agreement depends upon a continuing absence of
" material adverse developments" which threaten c. We must limit cash expenditures to those covered by revenues or borrowings under the revolving credit agreement.
- 2. The most critical factor in our continuing financial viability and ultimate financial 2
l l
l l health is the granting of timely and adequate l rate relief by the Pennsylvania and New Jersey l state commissions during this diilicult period.
l
- 3. We continue to be deeply involved in proceedings in Pennsylvania relating to the possible loss of Afetropolitan Edison's franchise to serve its customers. We believe l that our past record of excellent service to I those customers justifies the retention of the franchise. We have the confldence and determination to solve the problems at ThfI and do the job at least as well as any other group.
While dealing with these critical factors we have two important objectives. The first of these is the
, return to service of the undamaged TAII-1 unit, which is being unreasonably delayed by the Nuclear llegulatory Commission. The safe return
- of that unit sooner rather than later is in the interests of the customer because of the immediate relief
- t will provide from rising fuel costs. A second objective that is clearly beneficial to the TA!! plant neighbors is the clean-up of the damaged Unit 2 i
at a more rapid pace than present NilC decision making has permitted.
We are taking significant steps to strengthen the CPU System organization through the establish- We are taking signifiCant steps 10 ment of a separate nuclear corporation to design, operate and maintam all nuclear plants. Additmn-strengthen the GPU System organization any, we are combining the managements of the through the establishment of a separate two Pennsylvania operating companies so as to nuclear Corporal 10n . . .
make the fullest use of their resources.
l At the same time we recognize that neither we nor anyone else can do these tasks alone. We i continue our efforts to justify the support of the regulators and to regain the trust and confidence of our customers, plant neighbors and government leaders.
We believe very strongly that regulatory actions )
which will permit the recovery of the financial health of the GPU System are in the best interests of both customers and investors. From the time of the accident we have supported and sought to establish a sharing of the burdens of the accident.
To date the stockhoklers have borne a heavy and disproportionate share of the costs. We are determined that investor rights be protected.
We are determined that investors be treated fairly.
.Y__ A f , ._ .__ l William G. Kuhns IIerman Dieckamp Chairman and President and i Chief Executive OfIicer Chief Operating Offleer j 3
1979 Financial and Oper~ ting Report R; viewing GPU's Financial Picture Primarily because of the severe increases in oil costs and the high cost of energy purchased income and Earnings Down GPU's 1979 net to replace Th!!'s generation, energy associated income and earnings per share were down sub- revenues rose ly $91 million, or 22 percent over stantially from the previous year despite an increase 1978, to $523 million in 1979. 'I hese energy-related in kilowatt-hour sales and revenues. This was revenues had no impact on 1979 earnings because mainly because, since the accident, the capital, they were used to partially offset energy-related operating and maintenance costs of Tall-2 were expenses, with the remainder of those expenses not recovered even though they were charged beieg deferred for future recoveiy imm customers, against income for the full year. Right after the accident, Unit 2s costs were remmed from the rates Accident Creates Cash Flow Crisis The immediate impact of the Tall accident was to of the G. PU operating companies by the New depn.ve the Systen. of 1.7 md. h.on kilowatts of Jersey and Pennsylvania regulatory agencies.
nuch ar capacity fmm our two TAII nuclear um.ts, Net income for 1979 was $95.8 million, compared us ce ted du c asli How enm M auw we with $138.8 million for the previous year, a had to replace Thil.s output with more expensive decline of 31 percent.
enngrinuch of it purchased from other utilities-Earnings per average share in 1979 were $1.50. at a mst of $20 nu,Hinn to over $3a mdhon This was a decline of 32 perceni from $2.30 pn inontk in 1978.
The cash problem was further aggravated when The regulators' climination of TNII-2 costs from du Pennsykama and New Jersey regulatory our base rates has the effect of reducing our wmmissions removed the costs of T.\ll-2 from net income by $56 million a year, or 92 cents
~
the rates of the CPU operating companies, reduemg per share ammally. A major portion of this adverse base rate revenues by an estimated $100 milhon impact was n flected in 1979 net income, The lloard of Directors in April 1979 reduced the """""N F '
Slightly more than $101 million in costs were quarterly dividend from 45 cents to 25 cents, a incurred in 1979 in containing the accident and in regrettable, but necessary step. At the same time, beginning clean-up and repairs at Th!I-2. In the dividend reinvestment program was suspended.
athlition, we have retired the Unit's $37 million Even more regrettable, but necessary, was the nucle r fuel core. Of this total, $138 irillion, we recent decision to omit the February 19SO dividend.
have charged $7 million to operations and have To date, these two actions have enabled us to rewswd $M miHion in insur nee p yments.
retain approximately $G1 million to offset the Tlu n maining costs, $61 million, have been enormous cash drain imposed by the high cost deferred pending resolution of whether they will be of supplying replacement power to our customers.
twovered through insurance pavments, under rates, Approximately 59 percent of 1979's dividends or through other sources.
represented return of capital and therefore will not be subject to current income taxes as dividend immediate Remedies Applied The cash flow income. pmblem was attacked on several fronts. Very soon (For further details on the 1979 financial after the accident, the conipany suspended con-results, see .\!anagement's Comments on Earnings, struction projects involving new generating and page 18.) transmission facilities, cut compensation for n n an corp ra wn, n u ed the Growth Rate Slows Sales of electricity '
mun n o up yns, cut prm nttw manenanw increased 2.3 percent-from 31.3 billion kilowatt hours in 1978 to 32.0 billion kilmvatt hours in uory to a nanunum mmpadh we, reaQ
' " * ' " " "" " """ E F* *" * * ' " * " "
1979. This is a lower growth rate than the 5 percent registered in the previous year and the 4.5 l'ercent projected for 1979, but it is consistent Credit Agreement Negotiated To place with our conservation objectives. interim financing on a firm footing, GPU ccmcluded Operating revenues in 1979 totaled $1.49 billion, a revolving credit agreement with a consortium a gain of 12 percent over revenues of $1.33 billion of 45 banks. This arrangement currently makes the year before. available a credit level of $292 mihion. With llevenues in 1979 not related to energy (fuel approval of the banks representing 85% of the and purchased power) costs were $967 million, an total credit line, this amount may be increased increase of $70 million, or 8 percent, over the to $412 million. ( As of December 31,1979 non-energy related revenues of $S97 million GPU had S171 million outstanding under this in 1978. agreement.)
4
OPERATING REVENUES WHERE THE 1979 DOLLAR WENT
< w :.ua>
$523.3 $966.9
.37
$429.2 $S97.4
$424.4 $827.6 .17
$317.2 $751.6 .14
.09
$305.5 $648.9
.12 .09 NET INCOME CONSTRUCTION BUDGETS (m ellk ons ? (millk orns)
$455 ($185)
$415 ($260)
$455 ($230)
$320 ($400)
$275 ($240)
$351' ($104)
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' EARNINGS PER AVERAGE SHARE COST OF ELECTRICITY TO CUSTOMERS .
DIVIDENDS PAID PER SHARE Ha e ver KWH o/ Sales)
)
$1.20 2.89d 1.704 l
$1.77 2.77d 1.41d
$1.70 2.66d 1.484 I I
.$ 1.6S 2.47d 1.204
$1.68 2.37d I.lld 5
I 1979 Financial and Operating Report (continued)
Subsequently, Jersey Central Power & Light (und. unaged by the accident) would be back in Company and Pennsylvania Electric Company sold service by January 1,1950.
a total of $117 million in 20-year first mortgage We bas e been able to make substantial savings.
bonds to a group of institutional lenders. The company has negotiated agreements with U.S.
The revolving credit agreement and these bond and Canadian utilities that have been saving CPU customers about 50 million a month, and purchase agreements contain provisions which call for the immediate repayment of the total our efforts continue. Ilut since other energy costs indebtedness involved if an event occurs which a (principally oil) increased by even greater snajority of the lenders or hohlers of the hond issues amounts, net savings could not he achieved.
deem to have a materially adverse effect on the TNil replacement p(mer costs continue to be high, hor rower. especially until the NilC permits T.\ll-1 back into As of the end of February, our hormwings totaled operation. This couhl cut the replacement power
$220 million, up $19 million from the $171 million hill by over $100 million annually, or about level at year end 1979. Our cash projections show $11 million a month.
that we conhl reach our interim $292 million ceiling Additional Energy Cost Offsets Jersey Central on bank horrowings some time m the second m S.eptember received an addit.mnal $70 milh.on quarter of 1950 . .
annual m.erease m its energy adjustment charges to
.I.he banks participating .m the credit agreement offset its rising energy costs, especi lly for od. .I.his has e indicated to us and to the state regulatory inercase is not related to the 1.\l1 accident.
commissions the importance of our receiving a rate On .\tarch 6,19S0, Jersey Central received an regulatory response that would anticipate the . .
annual increa .e of SSI milh.on m its energy ultimate repayment of the hormwings before there adjustment charges, effective N1 arch 6,19S0 for is an attempt to increase the $292 million limit. energy costs, again distmet from those resulting Regulatory Actions Critical The mmt critical aspects of GPU's financial reem cry and of T.\lPs technical recovery have to It .is essential that the subs.i diary companies do wi h the actions of our regulators, especially receive rates which will restore them to those by the utility commissions of New Jersey and financial health at the earliest practical date.
Pennsylvania and by the federal Nuclear llegulatory Commission.
At the subsidiariei prewnt rates, they are not receiving sufficient revemies to meet their overall rc<piitements. It is essential that the subsidiary companies receive rates which will restore them to from the T.\ll mishap. Jersey Central has pending financial health at the earliest practical date. Ilecause in this proceeding a request for $37 million a year of our major and immediate cash flow pmblem, to cover higher replacement energy costs for delayed decisions place a great burden on our Three Niile Island, primarily because of the ability to continue with a successful reem cry regulatory delay in returning TNil Unit-1 to service, effort. This section will review our state rate and hearings in this matter are continuing.
regulatory situation. The NHC has delayed a Interim Relief for Met-Ed in November 1979, T.\ll-1 restart decision by nearly a year and has yet Alet-Ed requested a $Y) million annual increase in to approve major T.\ll.2 cleanup plans. Its its energy adjustment clause, cliective January 1, activities will be reviewed in the section following.
19S0, to permit it to recover part of its increased E;rly Rate Relief Granted In Jime, more than cost of energy. Ilecause of our declining cash two months following the accident, the regulatory resources, we have repeatedly urged the early commissions in New Jersey and Pennsylvania consideration of ;he energy cost issue. On granted increases in the energy adjustment charges January 17,199 s, the Pennsylvania PUC to customers, pmviding recovery, over an IS-month announced a s hedule which provided for the period, of about 8"i percent of the estimated issuance 4 . order on April .l. About a week replacement power costs. Both commissions later, o e tiled a motion again re<piesting prompt established these charges at levels that assumed we actico on an increase in energy costs.
could secure savings in the purchase price of On February 8, the day after GPU's Board voted replacement power and that T. \ ll Unit 1 to omit the February dividend, the Pennsylvania 6
PUC voted to temporarily permit 51et-Ed to pat and to explain the many positive actions taken to the $55 million energy clause increase into effect on assure cantinued safe, reliable customer service.
51 arch 1. This order is in effect only tmtil final The Pennsylvania PUC is to announce on Afay 23, resolution of the full proceedings, which was 19S0 its decisions concerning the three issues before pushed back from April 4 to Afay 23. The increased it: retention of T.AlI-1 in the rate base; continuation revenues collected in the mterim are subject to of Alet-Ed's franchise; and a final order concerning review. Afet-Ed's rate request.
In New Jersey, the New Jersey Board of Public GPU's Rates Below Average Despite the cost Utility Commissioners (NJBPU) stated in its of replacement power and the impact of inflation as Af arc i 6,1950 order that it will shortly take up the reflected in the rate increases, the average cost of issue of the retention of Thl!-1 in the JCP&L base electricity to GPU eustomers as of year-end 1979 rates. In February 19S0, briefs were filed in resp (mse was lower than the average paid by the majority of to a BPU order concerning what action, if any, the utility customers in New Jersey and Pennsylvania. BPU should take in the light of the Kemeny,
- b. the case of Jersey Central, the company's rates Rogovin and other reports concerning the causes of to the great bulk of its residential customers, those the ThfI-2 accident, in its Atarch 6 order, the BPU without electric space heating or electric water stated that it will establish a hearing date to begin heating, were the second lowest in the state and this complex investigation.
among the lowest of major utilities in surrotmding areas. Audit to Review Financial Viability In late 1979 The situation is much the same for both Alet-Ed the Pennsylvania PUC ordered a full-scale and Penelee. The rates of both companies are still anagement audit of Afet-Ed, Penelee and GPU.
in the mid-range of those charged by Pennsylvania's
~
The PUC has asked for preliminary findings on the major utilities. financial viability of Afet-Ed and CPU by Theodore Nor have the CPU System's rates increased significantly over the past several years. In fact.
correct'ed for general inflation (measured by the Consumer Price Index), GPU's average kilowatt . . . the average cost of electn.ci.ty to GPU hour charge for 1979 was seven percent lower than Customers aS of year-end 1979 waS lower in 1977 and two percent lower than in 1975. nuring than the average paid by the majority of the past five years, the cost to GPU's customers for Utility CUSlomerS in New Jersey and a kilowatt hour has decreased with respect to Social Security benefits; has decreased with respect to the pennsylvania.
minimum wage and has decreased with respect to manufacturing wages. Alinimi/ing electric casts for our customers remains one of our prime objectives.
Barry & Associates, the firm conducting the audit.
Show Cause Orders Present Challenges Two These results are to be presented to the PUC about "show cause" orders by the Pennsylvania PUC have mid-hf arch 19S0.
presented additional challenges for the GPU The audit is also examining decisions related to operating companies.
construction, maintenance and operation of ThfI-2.
In September 1979, the Pennsylvania Public The cost of this nine-month audit, estimated at Utility Commission ordered both Afet-Ed and
$775,000, will be paid by GPU's Pennsylvania
- Penelee to show cause why ThfI-1 should not be operating companies, hiet-Ed and Penelec. Just a taken out of their rate b ses as long as the unit is idle.
year earlier, GPU provided to the Commission the We believe that the capital, operating and nine-volume report of Booz-Allen-Hamilton's maintenance costs of ThfI Unit 1 should be exhaustive management audit of all components continued in the operating companies' rates because of the System.
of its four and a half years of safe and efficient In September of last year, in response to concerns i e ation, and because it is not permitted to resume about our long-term service capabilities, the NJBPU generation for reasons over which we have no ordered an independent study of various control.
reorganizational alternatives for Jersey Central.
l In November, the Pennsylvania PUC also ordered Completion of the study, which JCP&L will pay for, l Alet-Ed to show cause why its operating franchise is not expected until at least late 19S0.
to serve its customers should not be rescinded. GPU has used this as an opportunity to review the several problems facing Afet Ed in an integrated manner 7
1979 Financial and Operating Report (continued)
TMl Recovery Steps Clean-up, Repair, Restart The next steps in the recovery process for TAII-2 will be removal and First Step: TMl-1 Restart The first major step decontamination of the air and water from the toward financial recovery will come when Thil-1 is reactor containment building, the first entry of permitted to resume generation, now not anticipated workers into the huihling, and its partial decon-before late 1980. At that time, the bill for tamination by remote control tecimiques. These replacement power will drop an estimated $14 steps should be completed within about a year.
million monthly and sevenues could become During the following year, we plan to complete available to reduce the deferred energy balances decontamination of the containment building and and short-term debt. prepare for removal of the fuel from the Three months af ter the accident, we advised the reactor core.
NitC of the steps we planned to take to improve In the next recovery phase, fuel will be removed operational safety of Tall-1 prior to restart. and the reactor cooling system will be decon-The NitC has not yet established a firm time f aminated. Tests will be matic to certify the schedule for the completion of the hearings and physical integrity of the major system components.
decision. While we agree there should be no restart These steps will require most of 1982.
until the NitC and the public are assured of the llepair or replacement of damaged equipment unit's safety, we have urged the Commission to will follow, with startup of TAII.2 possibly expedite its procedures to get T.NII-l back on line, occurring in late 1983.
Preliminary public hearings on the Tall-1 restart The T.\ll-2 recovery effort, requiring about four began in the llarrisburg-ilershey area in mid- years and costing an estimated $400 million November,1979 and are expected to continue (up to $300 million of which may be coveted by through much of 1980. insurance), remains subject to what is found upon For our part, we expect to have the T.\ll-1 entry into the containment building, as well as on technical modifications and necessary personnel public and regulatory support for the cleanup training completed and the unit ready for restart and restart of this unit.
well ahead of the conclusion of the hearing pmeedur es.
Second Step: TMI-2 Recovery The recovery of T.\11-2, now in "cohl shutdown," is a complex and Creating a separate nuclear subsidiary and lengthy technical pmject. Ilowever, progress is combining the managements of Alet-Ed and being made. Decontammation of open areas of the Penelce will place the System in a stronger ausiliary and fuel handling buihlings is near position to carry out all aspects of the recovery comp!ction. A system designed specifically for the cifort. llegulatorv approval will be required for TNil project, known as Epicor II, has filtered both of these programs.
120.000 gallons (about 30% of the total) of the radioactive water in the auxiliary buihling storage Unifying Nuclear Control Even before the Tall tanks. The clean water is being stored in tanks accident, the company's planning contemplated a on site. GPU Nuclear Corporation. A step in this Pmbes imerted into the containment building direction was taken last June by formation of have shown that radioactive contamination is lower the T.\ll Generation Group, which brought than anticipated. Television cameras inside the together about 275 Alet Ed and GPU Service c<mtainment buihling do not indicate any major Corporation nuclear and technical people who had ilamage to any important components of the Tall as their primary responsibility, reactor system. GPU Nuclear will be responsible for the safe l
In November 1979, we submitted a plan to vent and efficient operation of Oyster Creek nuclear the gases in the reactor buikling to allow us to station in New Jersey and the restoration and begin cleanup of that area. This plan is still safe operation of the two units at Thil. It also will awaiting approval, have responsibility for the design, construction and A summary technical plan for decontamination operation of any future nuclear plants in the CPU of the facility and removal of fuel from the System. Ownership of the nuclear units will remain reactar was submitted to the NilC in 1979. The with the CPU operating companies.
plans for cleanup will be refined as we gain This move to unify and expand the System's more knowledge of the conditions inside the nuclear capability, relh cting recommendations of c<mtainment buihling. the President's Commission on Thil, will provide for safer and more reliable generation of ch ctricity 8
with nuclear -nergy. The flow of vital tecimical None of the outstanding securities of either and operational information between nuclear company will be affected.
stations, both within and outside the GPU System, liefore completing its Pennsylvania reorgani-will la stiiriulated. Formation of tiiis separate zational plan, CPU will review the proposed nuclear company 3hould help attract the best changes with the Pennsylvania PUC's management ps rsonnel from the entire nuclear industry. audit firm to secure their comments and recom-llobert G .\rnold, currently head of the Tall mendations. This review is expected to be recoven operation, will be president of CPU accomplished by late spring and implementation of Nuclear Corporation. GPU's president, lierman the approved changes to take place later in 1950.
Diet Lamp, will assume the additional resimn-sibilities of chairman and chief executive officer for GPU Nuc! car. Philip Clark, senior staff member GPU's Unequivocal Commitment to wi.h the Naval licactors Program for the past Nuclear Safety twenty-fis e years, will be named executive sice president. The continuation of a commercial nuclear industry llased at GPU headquarters in Parsippany, NJ, in America rests squarely on our industry's ability to GPU Nuclear will be responsible for about $1.S operate nuclear plants safely. This is as it should billion in nuelcar facilities. Initial employment, most be, and CPU is unequivocally committed to the of w hich will be drawn from within the System, safe operation of its nuclear generating plants.
xill be about 1,100 people; of these some 300 Both the Kemeny lleport and the report by the have professional degrees, along with 3.500 work Special Inquiry Group, directed by Alitchell years of nuclear experience. Rogovin, dealt in detail with the overall nuclear Formation of GPU Nuclear Corporation is espected to be completed by late summer 1950.
Combining Management Strengths Combining the managements of GPU's two Pennsylvania ""
operating companies will enhance the System's ability to provide reliable service to customers at The continuat. ion of a commercial reasonable cost. It will do this by bringing together nuclear industry in Americo rests the complenmntary strengths and resources of Squarely On Our industry's ability the Pennsylvania companies. 10 Operate nuclear plants Safely.
The new organization will have sole respon-sibility for the GPU System's existing coal-fired generating pLnts, all of which are in Pennsylvania.
This has obvious benefits in light of the growing role of coalin the country's energy future and the demonstrated expertise of GPU's Pennsylvania industry, including equipment suppliers, the companies in the operation of coal-fired utilities and the federal Nuclear Regulatory generating stations. Commission, which regulates the nuclear The combined management will also focus on industry. Each report offere'l a large number of the Sy. stem's espanding conservation and load recommendations to help assure that the operation management programs and on the ongoing of nuclear generating plants will be safe. Alany of impmvement of customer and community relations. their recommendations stemmed from lessons The organization will be headed by Nilliam A. learned at T.\fl. GPU is working with the NRC and Verrochi, current president of Pench e, and will be with the entire nuclear industry to implement these headquartered in Heading, where A!ct-Ed cur. and other recommendations as they apply to our rently is based. Penelec's headquarters facilities nuclear plants and to bring an added level of in Johnstown will continue as a key management s fety to nuclear power generation.
center, particularly for customer and community GPU's Safety Programs CPU's own safety relations and for the operation and management programs are closely tied to preparations for the i of the System s coal-fired generatmg plants, The new structure will have a smgle set restart of TA!I Unit 1 (the undamaged unit), which was down for refueh.ng at the time of the accident.
ofth. rectors and a sm.gle set of officers, but w.d l not be a formal corporate merger. A formal merger At the same t.ime, those improvements designed to ma M s fu also am being unplemented, as is not considered necessary to achieve the desired objectives of improved management and efficiency. appli ble, at the company's Oyster Creek nuc! car generating station.
9
a 1979 Financial and Operating Report (continued)
The major safety-oriented areas being addressed Plant Safety Modifications A number of include: the retraining and reexamination of physical modifications are being made to the plant.
operators; review and improve mt of operating These include system improvements for assuring procedures; preparation of improved plans for reactor cooling and immediate shut down of the handling emergencies; plant modifications; the reactor in the event of a wider range of potential isolation of T.\ll Unit I from Unit 2; radioactive malfunctions. Special instrumentation is being waste management; and overall management of the added to plant systems and equipment to monitor TSil operation. those items critical to safety.
' Other measures are being taken to prevent improving Operator Training GPU carly Int significant radimetive releases resulting from an summer began a emnplete review of its operator accident. Thes; include upgrading instrumentation training programs. All licensed control roo for the early isolation of the containment building.
operators and some super isory and professional The control room computer is being improved personnel are participating in retraining programs so operators will have faster and more accurate with an expanded curriculum that includes the usr information on the plant's status at all times. Visual of emnputerized simulators to re-enact not only display of this information in the control room is the TMI-2 event, but also other potential accident being improved to make it more readily apparent situations involving single and multiple and understandable to operators.
malfunctions.
At all times, a graduate engineer will be in GPU's Separating Units 1 and 2 The emumon facilities shared by TMI Units 1 and 2, such as the fuel nuclear plant contml rooms to provide additional h ndling building and the radioactive waste diagnostic capability. This has been in effect at tre tment processes, are now being modified so that the Oyster Creek station in New Jersey since last e ch unit will be totally separate and independent, fall. Operating and emergency procedures are thus renmving any likelihood that the cleanup of being completely reviewed and upgraded.
i Unit 2 can interfere with operation of Unit 1.
Emphasis on Emergency Planning The area of Safety is the prime concern cf each step involved emergency planning has received special emphasis. in the cleanup of Unit 2. Every major function The emergency plan has been revised in accord- along the wav not only is being closely examined for ance with new guidelines laid down by the Nuclear its possible impact on public safety, but also will llegulatory Commission. be the subject of searching NRC investigations, included in this emergency planning are specille evaluations and public hearings.
detailed activities to be undertaken by the utility Industry Safety Efforts Even while impmving its and pubbe officials m the event of radiatmn own facilities, GPU is participating in the releases bey md the plant site, and an emergency substantial industry-wide efforts to upgrade the l cmumunicatmns program to keep the pubhc and its safety of nuclear operations. l official representatives promptly and accurately These industry actions have led to the formation I infonned in the event of a future accident. of an industry group, the Nuclear Safety Analysis !
These plans, developed in cooperation with local Center ( NSAC), that will investigate and apply the I and state officials, provide for emergency opera- technical lessons learned at TMI. The electric tions centers to give government leaders direct utility industry also has formed (and the GPU cmnmunications with the plant. Additional companies have already joined) the Institute of emergency equipment is being provided, such as Nuclear Power Operation (INPO), with an annual respirators and radida detectors. The company is budget of $11 million, to establish benchmarks for l also lending support and assistance to local com- excellence in nuclear power operation. It will j munities to develop their own related emergency c(mduct audits to verify compliance with its l plans- standards and will analyze and share reactor operating experience with utilities owning nuclear plants.
GPU has also been involved in the industry's l establishment of a mutualinsurance organizatwn j to help cover the costs of replacement power l resulting from any future nuclear accidents. This coverage will be available only to those utilities that
! meet the safety standards established by the NRC, NSAC and INPO.
10
The Accidentinvestigated " Defense-in-Depth" Protected Public The Hogovin study found that one of nuclear's major Several major investigations at the federal, state and safety concepts, defense-in-depth, "tcorked to local levels have iocused on the Th1I accident. protect the public health and safety. In spite of The mmt important were those of the President's multiple equipment malfunctions, hum an failures, (Kemeny) Commission on T51I and of the NBC's and the creation of conditions in the reactor Special Inquiry Group, headed by 51itchell and auxiliary buildings that tvere never contem-Hogovin, a prominent Washington attorney. The plated in the design of the plant's safety sustcms, conclusions of the two are similar in many major the utility and its engineering support stag tccre areas. And their conclusions support GPU's original able to bring the system to a stable condition position that the accident involved the entire trithout releases of radioactice materials to the industrial, technological and regulatory structure of atmosphere that could hace resulted in significant nuclear pmver in the United States. health efects to those living near the plant."
Speaking to the possibility of a " meltdown" of the Trzining, Public Information Examined Despite reactor's fuel core, the Rogovin Report notes that any criticism of the company's response to the had operators not closed a valve (the PORV block accident, the efficiency and adequacy of the TAfI valve) when they did, calculations project that, operators were recogmzed as being well up on the within 30 to 60 minutes, a substantial portion of scale of nuclear m, dustry norms.The kemeny Beport states that the TA!I control room operator fuel in the core would have melted.
training program met all applicable NRC standards. However, Rogovin concludes that even with a u e now recogmic that there have been deficienenes core meltdown, "the most likely probability is that in these standards for all operator trammg and we
,ye ,,,,,,, yu;7g;ng ,,,,gg y,ce ,,,c;c,g g, ,y;,
have mstituted wide ranging improvements. accident scenario, and the cast majority of the Unt, as the Hugovm Deport points out: "These radioactice material released from the fuel icould problems accre not unique to Sletropolitan Edison. hace been retained scithin the building, not released to the surrounding environment."
Althonuh it is true that Alet-Ed's trammg program scas in some respects deficient, it appears that investigations Reject Moratorium Both the afet-Ed agorded its operators training that, taken as Kemeny and the Rogovin investigations specifically a schole, icas jti pical of the industrrt and, in certain rejected proposing or recommending a moratorium respects, scas ahore aceranc. The shift cretc on duty on operating nuclear reactors or on granting new ichen the accident began accre all products of the operating licenses for reactors now under construc-nucicar Nary training program, and cach had at tion. Both groups did, however, recommend a least 5 years of Nary experience. Prior to the number of changes in the manner in which licenses accident, all of them had completed training courses are granted and evaluated.
ichich met NRC requirements, had passed NRC The Rogovin report looked at changes since the nms, and had received simulator training totalling accident and determined that ~an accident identical
. io 9 uvecks cach. Three had received 1 sccek's to that at Three Afile Island is not going to happen training at Penn State University's research reactor. again. Not only hace changes been made to amelio.
Their combined average NRC licensing exam test rate the partictdar prob! cms revealed there, but the scores secre above the national accrage. The uccident has spatened a mafor re-examination by inadequate training that played a role in this the industry and the NRC of many aspects of design accident must he attributed to not one utdity Imt and operations that contributed to the accident."
rather to the industry as a schole and to the N!!C " Two other major investigations being conducted While many problems arose in reporting the by two committees of the U.S. Congress have been accident to the public, the Kemeny Report found essentially completed, and, as this report goes to "there acas no systematic attempt at a cocer-up br> press, recommendations for follow-up legislation the sources of information." The Rogovin study are being developed.
Eound that "the ccidence failed to establish that 3fet-Ed management or other personnel stillfully scithheld information . " The GPU companies have devekped improved emergency commimications l pians for their nuclear units based on the recommendations from these reports and on the lessons learned at Thll-2.
11
l l
1979 Financial and Operating Report (continued) I l
GPU's Construction Program Conservation Efforts Intensified As an important part of its program to minimize new Construction Program Cut Suspension of major construction, GPU has underway an intensified construction activity following the accident conservation and load management program to involved two major generating plants-a 1.1 further slash increases in the System's peak demand inillion kilowatt nuclear imit at Forked lliver, NJ, for electricity over the next decade.
and a 625,000 kilowatt coal-fired facility at the GPU's existing and planned programs had been Seward Station near jolmstown, PA. expected to cut the growth in peak demand to There aie no current plans for near-term alumt 2 million kilowatts in 1990. The newly resumption of the Forked Iliver nuclear project. intensified effort will further reduce this growth llown er, studies on capacity addition alternatives, by half to alxmt one million kilowatts.
including Forked Iliver's conversion to a coal Another move that reduced the peak power unit, are being es alnated. Subject to cash avail- demand was the transfer, on March 1,1980, of ability, construction may be resumed at Seward Met-Ed's wholesale service to IIershey ( PA)
! ate in 19ho, with a projected 19S7 completion date. Electric Company to another utility. The action GPU has cut actual and projected construction trims GPU's peak power requirement by about expenditures by more than $1.4 billion in the six- 1 percent. As part of the changeover, Met-Ed sold year 1979-81 period. This is a reduction of 3S two substations and other transmission equipment percent, droppiag construction activity from nearly for $737,0(X).
$3 7 billion to alxn.t $2.3 billion during these Coars Contributions Significant The company's y ears. This reduced construction program will be I rg coa n ynnatmg statmns m Pennsylvama backed up with an intensifi"d conservation and are contributing significantly to minimizing the load management effort through which we plan to minimize future increases in custemer re<piirements.
Financing 1979 Construction The System's 1979 capital respiirements totaled about $106 million, of which $351 million was for construction and S55 million for retirement of mcured securities GPU haS Cut actual and projected and sinking funds COnStruCliOn OXpenditureS by more than The $351 million spent in 1979 on construction was 23 percent less th m the $155 million con-
$1.4 billion in the Six year 1979-84 period.
struction budget planned before the accident.
The GPU System raised a total of $010 million from nternal sources. Of this, $151 million came from sales of first mortgage bonds; SS7 million came from bank loans (mainly from the revolving credit agr ement); and $5 million came from purchase of outside power. These stations have a conunon stock sales through GPU's dividend combined generating capacity of about 6.9 million reinvestment and employee stock purchase plans kilowatts, about half owned by the GPU companies.
(before they were suspended as a result of Two-thirds of CPU's generation was produced the accident ). from coal during 1979.
The System's capitalization ratios at year-end The clean and efficient use of coalis being 1979 stomi at 51 percent long-term debt,12 percent enhanced by the coal cleaning unit installed several preferred stock,33 percent common equity and years ago at the llomer City, PA station. In 1979,
! 4 percent short-term bank debt. These capitaliza- the IIomer City site was seheted by the Electric j tion ratios are not substantially different from Power llescarch Institute for construction of a those at the end of 1978. $12.4 million experimental facility to test the applicability of alternate cleaning processes for 1980 Capital Needs Subject to available cash various types of coal to meet environmental resources, capital expenditures in 19S0 are expected requirements, to total about $305 million, of which $275 million will be for construction and $30 million for Oyster Creek Savings The Oyster Creek nuclear retirement of matured steurities and sinking funds. station, owned by Jersey Central Power & Light, The 19SO construction budget is 47 percent less marked its tenth birthday on December 23,1979.
than the $515 million budgeted prior to the accident.
12
s With one exception, Oyster Creek has produced Cost beduction programs initiated following the more electricity than any other nuclear plant in the T.\ll accident resulted in work force reductions U.S. In its ten years of operation,it has produced or layofis at Jersey Central, hiet.Ed, Penelee and 37.5 billion kilowatt hours of electricity. Fuel the GPU Service Corporation. System. wide savings of $600 million have exceeded the interest employ hent at the end of 1979 was 11,159, down costs, taxes and operation and maintenance almut fcur percent from the 11,597 employed at the expenses of the station as well as its capital cost of beginniriq of the year.
$110 million. These fuel savings have been passed The C!PU System's labor relations climate remains on to customers through a lower energy adjustment favorable. Recent agreements with labor unions cost than wouhl have been necessary if the power inchide:
had been generated with oil. Jersey Central concluded negotiations with the Oyster Creek is now undergoing its annual Internati(nal Hmtherhood of Electrical Workers refueling, a process which has been extended (IHEW)ifor a two-year closed contract with a wage beyond its scheduled length for maintenance and se*tlemen) of 6.9 percent effective November 1, possible repairs. At this date, the schedule for its 1979, and m increase of 6.7 percent effective resumption of operations is uncertain. Heplacement Novembea 1,19S0.
power for the station's output costs about Penelec: negotiated a one-year contract with
$3.5 million a week. IHEW and the Utility Workers Union of America, pmvid ng for a wage increase of 6.8 percent.
Fuel Sources Assured Some 60 percent of the eth (umnt lakr agrwment npkn System's coal requirements in 1979 were met April 30, l' 80.
through long-term contractr. Future requirements AHt operating companies completed will be filled by a combination of spot, short-term, negodahon: mending their retirement annuities intermediate-term and long. term contracts, as well as through control of some coal reserves. E'#"'
In the fall of 1979. GPU converted five oil-burning units in New Jersey and Pennsylvania to natural gas. This fuel, purchased on a contract Board Changes basis, will be used as long as supplies remain John F. O'L;ary, former deputy secretary of the plentiful at a lower cost than od. It is estimated that U. S. Department of Energy, was elected a member the conversion will save about two mdhon barrels of the GPU Uoard of Directors at the Board's of oil by June 1,19S0 and reduce energy costs October meet ing.
by $18 million.
Afr. (YLeaf y has devoted most of his career to the Uranium for the nuclear plants is provided under energy field, having served in a number of state long. term contracts. There are, however, unresolved and federal egergy posts Imth as administrator legal questions concerning supplies for the Oyster and regulator. He joined the Department of Energy Creek Statmn. (See Note, page 28.)
when it was fhrmed in 1977. In the early 1970's he was director of licensing for the Atomic Energy Commission.
CPU's Employee Relations John W. Os;vald, president of Pennsylvania State University, wu elected a member of the GPU This year has been a very trying and stressful Board of Diret orst at the Board's afarch 19S0 period for our employees and. until all major meeting.
aspects of our recovery efforts have been resolved, Dr. Oswald has been president of Penn State they will continue to bear a significant burden. since 1970. Prie r to that he had served as president All of us, as stockholders, customers or manage- of the University of Kentucky and in several senior ment, are deeply indebted to the System's executive and teaching positions at the University employees, many of whom have worked long days of California.
l and nights and given up weekends and holidays, George II.14 nier, Jr. and Ferdinand K. Thun l
month after month, to help see us through this retired in late 1979 in accordance with company dillicult period. policy for retire nent because of age. Both were GPU continues to emphasize its Equal Employ. elected directon emeritus, effective January 1,1980.
ment commitment. While the number of employees ~ Barbara Barnes Hauptfuhrer, GPU director since in the System was reduced by over 400 people, the 1976, resigned in December, citing personal reasons.
l proportion of Imth minority and female employees actually increased slightly during 1979.
13
Th3 Genercl Public Utilities Syst::m FRONT ST.
/e ERIE CORRY eBRADFORD "
- WATERFORD . WESTFIELD
~
- WARREN SENECA e MANSFIELD
- TITUSVILLE GA WON MEADVILLE
- e BLOSSBURG G OIL CITY 'A e 111DGWAY LAPORTE EMLENTON ellENOVO e ;e BROOKVILLE e LOCK IIAVEN SHAWVILLE DU BOIS 9.
.CLEARFIELD
- e PUNXSUTAWNEY ,
PENNSYLVAN:',
PillLIPSBURG STATE COLLEGE G
KEYSTONE INDIANA HOMER CITY LEWISTOWN e ALTOONA W!LLIAMSSURG 's -
CONEMAUGH e IIARRISBUhG g pgITSBURCII MT. UNION y-9 JOHNSTOWN 4 M 'p*~A,n y e SOMERSET e p , . . ND
-BEDFORDe ./ 'r^,-
,- p -
M, ., > ue _
l Operating Companies' Statistics Revenues Total Assets Sales Mix Customers--
Company. ($000) ($000) Residential Commercial Industrial Year-End l Jersey Central Power & Light $ 664,947 $2,114,054 40% 27% 30% 690,889 l Metropolitan Edison
$ 338,136 $1,327,149 31% 19% 41% 358,265 Pennsylvania Electric' $ 493,061 $1,496,576 28% 21% 44% 508,940 General Public Utilities System $1,490,154 $4,991,094 34% 23% 37% 1,558,094 14
SUSQUEllANNA.
CONIPANY llEADQUAllTEllS EG :
0 MONTHOSE TOWANDA N Jersey Central Power & Light Company N Afetropolitan Edison Company TUNKIIANNOCK Pennsylvania Electric Company 8 SCRANTON Os COAL PLANT MILFORDe' -
'! . J f SUSSEX w ~. ,.
01L PLANT
,.f '1- -
STROUDSBUhCeh HARDS CREEK..
DOVE { d NUCLEAll PLANT
</(Os AR .:
'PORRAfD ' g Is0RResToums - k PUAIPED STORAGE PLANT (yeg [?
/
EP&L J SPE
% g: - e
.#,g+\ -'
NEWARK f' f3 3
( [5 GILBERT y.g - -
--q 4
M% g1 -]m . '
A gnaggge h? "
WERIIER j Ng' ; e BOYERTOWN SAYREVILLE
,d j ,
D;, . . TfTUS 7 3r ASBURYg MO TRENTON
' PARK,,.
, ~.'%
-4 I l'lIILADELi'IIIA g TOMS RIVE.R" o OYSTER CREEK NEW JERSEY d
F"CI MI*
Electric Sales Peak Load' Number of (MWil) (MW) Employees Coal Oil & Cas Nuclear g mm p , , , ,
i 12,770,989 2,518 3,599 10% 22% 50%
,*
- O
, 8,0S.1,033 1,533 2,659 76% 5% 19% - .0 m l 11,140,157 2,092 4,067 95% 1% 4%
- 31,995,-179 6,173 11,159 67% 8% 25%
- At time of GPU System peak.
15
General Public Utilities Corporation and Subsidiartj Companies Statement of Management The management of General Public Utilities Corporation is responsible for the information and representatwns contained in the financial state-ments and other sections of this annual report.
The financial statements have been prepared in conformity with generally accepted accounting principles consistently applied. In preparing the financial statements, management makes informed judgments and estimates of the expected effects of events and transactions that are currently being reported.
The accompanying financial statements and notes thereto disclose the effect of the nuclear accident on 51 arch 28,1979 at Unit No. 2 of the Three htile Island Nuclear Generating Station ("T.\ll-2).
The acr ident has had a significant adverse impact on the earnings and financial position of the Corporation in 1979.
In the aftermath of the accident the subsidiaries' respective state utility commissions reduced allowable annual revenues by the capital and operating costs associated with ThfI-2, resulting in a substantial decline in earnings. In addition, several significant contingencies and uncertainties, the outcome of which cannot be determined at the present time, resulted.
Reference should be made to Note I to the accompanying financial statements and to
.\lanagement Comments on Earnings on page 18 for further discussion of the effects and impact of the nuclear accident at Three hfile Island.
Coopers & Lybrand, independent public accountants, are engaged to examine and express !
an opinion on our financial statements. Their opinion, which aprars on the following page, sets forth the contingendes and uncertainties resulting from the accident i
l 1
l l
l 1
16
R: port cf Audit:rs To the Board of Directors and Stockholders CENEllAI, PUBLIC UTILITIES CORPOllATION Parsippany, New Jersey We have examined the consolidated balance sheets The accompanying consolidated financial state-of General Public Utilities Corporation and Sub- ments have been prepared in conformity with gen-sidiary Companies as of December 31,1979 and crally accepted acemmting principle applicable to 1978, and the related consolidated statements of a going concern which contemplates, among other income, retained earnings and sources of funds used things, the realization of assets and the liquidation for comtruction for each of the five years in the of liabilities in the normal course of business. The period ended December 31,1979. Our examinations Corporation's subsidiaries are currently not re-were made in acconlance with generally accepted ceiving a level of revenues sufficient to assure their auditing standards and. accordingly, included such ability to continue as a going coacern. The con-tests of the acc<mnting records and such other au- tinuation of the Corporation as a going concern is diting procedures as we considered necessary in dependent upon obtaining adequate and timely rate the circumstances, relief and maintaining and increasing the availabil-As more fully discussed in Note 1 to Consolidated ity of credit under the revolving credit agreement.
Financial Statements. the Corporation is unable to (See Note 4 to Consolidated Financial Statements.)
determine the conserpiences of the accident at Unit The eventual outcome and effect of the foregoing No. 2 of the Three Afile Island Nuclear Generating on the consolidated financial statements cannot Station (T\ll-2) and of the response of rate-making presently be determined.
and other regulatory agencies to ' hat accident. As more fully discussed in Note 1 to Consolidated Among the emtingencies and uncertainties which Financial Statements, the Corporation's New Jci cy have resulted is a direct or indirect consequence of subsidiary is engaged in litigation with a nuclear this accident are questions concerning: fuel supplier involving the pricing of nuclear fuel.
At this time, the outcome of the litigation and the
- a. The recovery of the approximately $6S2 mil- rate-making treatment of any increased fuel costs lion investment in Thll-2. which might result from an adverse legal determi-
- b. The recovery of $61 million of costs incurred nation are uncertain, net of insurance proceeds received, and the As more fully discussed in Note 1 to Consolidated indeterminable amount of uninsured costs Financial Statements, the Corporation's Pennsyl-yet to be incurred, in coimection with the vania subsidiaries may be required to make refunds anticipated restoration of T.\ll-2 to service. to customers for certain payments made for coal. At
- c. The recovery of the approxim.tely $3Si mil. this time, it is uncertain whether or to what extent lion investment by the Corporation's New such refunds will have to be made.
Jersey subsidiary in the Forked River Nu. In our opinion, subject to the effect, if any, on the clear Generating Station, construction of which consolidated financial statements (the 1979 consoli-has been suspended. dated financial statements only with regard to the uncertainties discussed in the second through fourth
- d. The recovery of the excess, if any, of amounts p r graphs above) of such adjustments as might which might be paid in connection with ham been required had the outcome of the uncer-claims for damages resulting from the acci-tam, tu, rs & cussed m the preceding paragraphs been dent over available insurance proceeds.
known, the aforementioned statements (pages 19
- c. The financial effects shouhl the capital and through SS) present fairly the consolidated financial operating costs associated with Three Afile position of General Public Utilities Corporation and Island Unit No.1 Nuclear Generating Station Subsidiary Companies at December 31,1979 and be removed from base rates and the effects of 1978 and the consolidated results of their operations various investigations and inquiries upon the and the consolidated source. of funds used for ecm-ultimate recovery of the approximately $387 struction for each of the five years in the period million investment in the unit if action is ended December 31,1979, in conformity with gen-taken to prevent its return to operatmn. erally accepted accounting principles applied on a
- f. The I'mancial elTects should the Pennsylvania consistent basis.
Public Utility Commission order the revoca- COOPERS & LYHRAND tion or modification of Aletropolitan Edison Afarch 6,19S0 Company's franchise to operate in its service 1251 Avenue of the Americas area. New York, New York 10020 17 !
k- >
i Mrn::gement'c Comment 3 on Ecrnings 1979 vs.1978 their interests in T.\ll-2. Ilowever, in their June Earnings available for common stock for 1979 1979 rate orders the two subsidiaries were ordered j declined against those for the year 1978. The major by their respective commissions to remove Tall.2 factor causing such decline was the ratemaking costs from their base rates. A rate increase for the treatment accorded to the capital and operating third subsidiary, owning the other 507e of the unit, and maintenance costs associated with Three .\ file was authorized in late Alarch 1979, but was re-Island Unit No. 2 ("T.\fl.2"). scinded before implementation so that the sub-In 1978, allowance for funds used during con. sidiary was never permitted to place rates in effect struction was accrued on the subsidiaries' invest. to cover its share of the Tall-2 related costs. Since ment 'n TNil-2 and thereby offset the interest December 30 1978 the subsidiaries have been charr,es, preferred stock dividends and common charging to income fixed capital and normal oper-stm x carnings requirements associated with such ating and maintenance costs associated with TNil-2.
in estment. Such accrual ceased when TA!I-2 was p aced in commercial operation on December 30 1978 vs.1977
'978. Aforeover, until Tall-2 was placed in emn-
. Earnings available for common stock for 1978 mercial service, the investment and operation and declined against those for the year 1977. The major maintenance costs associated with that unit were factors involved in such decline were a result of capitali7ed and depreciaticu was not accrued. increased operating, maintenance and financing Elb etive about February 1, two of the subsidi- costs due to inflation, generating plant outages and aries owning an accregate 507c of TXII 2, received new plant in service. Partially offsetting such rate increases covering the bidk of the capital and decline were revenue increases from sales growth operation and maintenance costs associated with amt increased rates.
i A summary of the principal factors affecting the changes in earnings available for common stock are as
- follows
1979 over 1978 over (under) 1978 (under) 1977 (millions) % (millions) %
KWil sales increasnl 725 1,500 5%
_2%
llevenues other than energy related:
(a) Increasnl revenues resulting from KWil sales s rowth . . . .. $21 $40 (h) lucreased revenues resulting from higher rates . 49 30 Energy relattd revenues . . . . 94* 5 Energy ants:
(a) llesulting from higher unit fuel emts . . , 46 29 (b) llesulting from increasnl (decreased) system geneution . .. . (25) 26 (c) Power pur based and interchanged . . . .. 135 (52)
(d) Deferred energy emts increasal . .. . .
(52) _ _
, Total Energy Cmt Increase . . . . ... 104* 23 3 1 Payroll and other operation and maintenance expenses inercased as a result of an increase in employees and higher wage rates in 1978, generating plant outages, increased emts associatal with new facilities and inflationary ractors.
Such increases in 1979 were substantially offset by cost reduction programs and a reduced number of employees . .. .. . . .. . . . 4 1 54 21 Depreciation espense increasnt as a result of additional plant in service (includ.
ing Thll-2 in 12/78 and llomer City 3 in 12/77) . . .. . 32 29 13 14 Tases.
l Income tases declined primarily as a result of le* r income subject to taxes and in addition, in 1978, an inercase in the ilow through portion of the excess of tat over book depreciation principally resulting from the plac-ing in service of the Thll-2 nuclear unit in December 1978 ($3 million) (9) (12) (12) (15)
Tases other than income increased due primarily to higher state revenue taxes . .. . . ... .... ... .. .. .. 20 15 15 13 Total . .. . ... ..... .. .. . .. . . 11 5 3 2 interest and preferred dividends increased primarily from additional security issuances at higher rates and increased Icvels of short-term debt . . .. .... 33* 16 11 6 Allowance for funds used during construction. net, declined in 1979 primarily as a result of Thll-2 in service in 12/78 . . . . . . .. .. .. . .
(29) (40_) 2 _3 Other income, net increased mainly as a result of interest income from securities G 3 Earnings available for common stock . . . . . . . . . . . . .... .... .. 8(43) (31) $ (4) (3)
Earnings per Average Share . . . . . . ...... ............. .. $(.74) (g)% $(.20) g)%
- These changes are mainly as a result of the nuclear accident at Thil.2. see Note 1 to consolidated financial stat. ments.
IS
1 l
Consolid:ted St:t:ments cf income (Note 1)
General l'ublic Utilities Corporation and Subsidiarts Companies (in Thousands)
For the Years Emled December 31, 1979 1978 1977 1976 19 5 Operating llevenues .... ....... $1,490,154 $1,326,611 $1,252,013 $1,0%,753 $954,420 Operating Expenses:
Fuel . . ... . . . . . ........ 347,079 326,083 270,612 245,638 256,972 Power purchased and interchanged, net . . . . . 268,210 133,741 166,233 120,784 52,277 Deferral of energy costs, net (Note 2) . . .. (69,832) (17,916) (17,937) (21,726) (9,999)
Payroll ... ... . .... ... 133,336 127,163 109,500 100,575 91,949 Other operation and maintenance (excluding payroll) (Note 12) . 177,455 179,423 143,245 131,281 113,773 Depreciation (Note 2) . ... ..... 141,224 109,503 96,508 87,839 82,834 Tases, other than income taxes (Note 12) . . 149,445 129,862 114,682 04,927 89.879 Totals . . .. . ...... 1,146,947 987,661 902,845 759,318 677,683 Operating Income before Income Taxes . . . 343,207 33S,783 349,168 309,435 276,735 Income Taxes (Notes 2 and 10) . . . . . . . . . . 65,905 84,354 95,805 79,832 66,123 Operating Income . . .......... 277,302 254,429 253,363 229,603 210,612 Other Income aml Deductions:
Allowance .. r other funds used during construction (Note 3) . . . .......... 21,744 49,8 8 47,787 42,269 32,054 Other income, net . . ........ 8,937 3,682 274 1,165 1,206 Income taxes on other income, net (Notes 2 and 10) . . ....... (5,146) (2.461) (996) (1,1.57) (1,004)
Total Other Income and Deductions 28.535 51,109 47,065 42,277 32,256 Income llefore Interest Charges and Preferred Dividends . ...... 305,837 305,538 300,428 271,880 242,86S Interest Charges and Preferred Dividends:
Interest on first mortgage bonds . ...... 144,097 131,461 118,734 108,802 87,048 Interest on debentures and other long-term debt .. . . .. ..... 24,22S 23,859 23,898 26,202 25,3S4 Other interest . . .. 24,387 4,527 9,117 3,994 15,360 Allowance for borrowed funds used during construction-credit (net of tax) (Note 3) (18,296) (22,255) (22,269) (17,0S0) (15,858)
Income taxes attributabic to the allowance for borrowed funds (Notes 3 and 10) . . . . .. (7,977) (14,758) (12,514) (10,887) (8,755)
Preferred stock dividends of subsidiaries . ... 43,615 43.930 40,6S3 39,652 32,307 Total Interest Charges and Preferred Dividends .... ... .. ... 210,054 166,764 157.649 150,683 135,486 Nct Income ...... . . ........... $ 95,783 $ 138,774 $ 142,779 $ 121,197 $107,382 Earnings per average share . . ... . $1.56 $2.30 $2.50 $2.20 $2.13 Ilook value per share (Note 1) . . . $22.74 $22.41 $21.96 $21.43 $20.04 l
l Common Shares Outstanding-Average for year . . ..... ... ........ 61,218 60,217 57,20S 54,968 50,406 Year.End . .. . .............. .. 61,264 60,971 59,721 55,263 54,757 The accompanying notes are an integral part of the consolidated financialstatements.
19
.A
Consolid ted B: lance Sheets (Nots 1)
General Public Utilities Corporation cnd bubsidiary Companies (In Thousands)
Decemhcr 31, 1979 1978 ASSETS Utility Plant (at original cost):
In service (Note 1):
Investment in Three hfile Island Unit No. 2 . ........... $ 704,992 $ 7t?l 267 Other ... . .. ............. .. ... .... ............. 3,773,597 3.59L815 Total in service .. .... ............. ................... 4,478,% 9 4,300, 5 2 I. css. accumulated depreciation ( Note 2) . . . . . . . . . . . . . . . . . . . . 973.490 850,s22 Net . .. ...................................... 3,505,399 3,419,610 Construction work in progress ( Note 1) . . . . . . . . . . . . .. .... 553,6S1 471,4t,8 liehl for future us - ...... ........ ................. 24,568 26,577 Totals .. .. .. ...... .......................... 4,083,651 3,917.705 Nuclear fuel (Note 1) . . . . 232,032 224,429 Less, accumulated amortizathm (Note 2) .. ............. 47.241 50.809 Net nuelcar fuel . . .. . . . . .................... 181,791 173.620 Net n'ility plant .. . ........... ............. 4,268,442 4,121,325 Excess of investments in subsidiaries over related net assets . . . . . 30,805 30,805 Investments:
Other physical property, net .. ...... ................. 968 1,116 1.oans to non-aifiliated coal companies (Note 11 ) . . . . . . . . . . . 19,375 19,375 Other, at cost .. . . . .... ................. 'I83 836 Totals . .... .. ...................... 21,126 21,327 Current Assets:
Cash ( Note 4) .. . . . . .. . 7,909 17,981 Special deposits ... ... ...... ............ 21,808 11,839 Temporary cash investments . . ................... 60,711 Accounts receivable:
Customers, net . .... . . .. ...... .................. 113,870 91,352 Others (Note 10) . . . .. .. ....... ......... 10,478 59,437
'uventories, at average cost or less:
Niaterials and supplies for construction and operation . . . .. . . . 53,254 39,267 Fuel .... .. . .. .. . ... ...................... 69,507 47,722 Prepayments .. . . ... . ........................... 12,439 6,152 Totals ... . . .... ...... ........................ 349,976 273.750 Deferred Debits:
Deferred energy costs (Notes 1 and 2) .... . ... . .. ... 172,770 102,938 Unamortized mine development costs (Note 2) . . . . . . . . . . . . . . . 7,631 8,765 Deferred costs-nue.' ear accident, net of insurance recoveries ( Note 1 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61;171 Deferred income taxes ( Notes 2 and 10) . . . . . . . . . . . . . . . . . . . . . 28,616 15,726 C'her ...... ..... ... .................................. 51,427 38,047 Totals ........... ................................... 321,645 165,476 Yot a l A sset s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,991,994 $4,612,683 The accsmpanying notes are an integral part of the consolidated financial statements 20
(In &uasads) 1979 1978 LIABILITIES AND CAPITAL long. Term Debt, Capital Stock and Consolidated Surplus:
Ieng. Term Debt (Notes 4 and 5):
First mortgage bonds (3%% to 12%, due 19S1 through 2009) $1,S68,733 $1,732,074 Debentures (4%% to 9%7c, due 19SG through 1998) . .. .. ... 230,5SO 236,4S0 Other long-term debt (varying rates, due 1981 through 1984) . . 54,065 54,046 Unamortized net discount on long. term debt .. ........... (4,406) (5,477)
Totals . . ... . .. .... ....................... 2,14S,972 2,017,123 Cumulative preferred stock-mandatory redemption (Note 6) . . 90,400 95,750 Less, capital stock expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,004 3,347 Totals . .. . . .... ....................... 87,396 92,403 Cumulative preferred stock-no mandatory redemption (Note 7) 423,391 423,391 Premium on cumulative preferred stock . . ................. 1,348 1,348 Less, capital stock expense . . . .......... ................. 1,663 2,495 Totals . . .
.. ............................ 423,076 422.244 Common stock and consolidated surphis (Note 1):
Common stock (Note 8) . .. . ..... . .... . ..... 153,229 152,498 Consolidated capital surplus (Note 8) .. . . ... 772,538 768,350 I.ess, capital stock expense .. . .. . .. . 17,983 17,836 Consolidated retained earnings (Note 9) .. .. .. 485,571 463,173 Totals . . .... . . .... .... ................. 1,393,355 1,366,185 Less, reacquired common stock (Note 8) . .. .. 70 70 Totals . .. ... .. .... ...... .............. 1,393,285 1,366,115 Totals . .. . . . ...... .................... 4,052,729 3,897,8S5 Current Liabilities:
Securities due within one year ( Notes 5 and 6) . . . . . . . . . .. . 44,164 65,065 Notes paya bic to banks (Note 4 ) . . . . . . . . . . . . . . . . . . . . . . . . . . 171,000 90,100 Accounts payabic . .
... .. . .. .... . ............. 162,162 94,453 Customer deposits .
.... . ...... .................. 6,3S7 d,775 Taxes accrued (Note 10) . . ........ .. ............... 40,560 20,657 I n t eres t a cc ru ed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,477 38,639 Other ..... . .......... . .......................... 36,322 34,201 Totals . . . . ..... . ....... .................... 504,072 349,893 l
Def:rred Credits and Other Liabilities:
Deferred income taxes (Notes 2 and 10) .................... 294,510 213,757 l Unamortized investment credits (Notes 2 and 10 ............. 115,212 127,055 l Other.................................).............. 25,471 24,093 Totals............................................. 435,193 364,905 Commitments and Contingencies (Note 1)
Total Liabilities and Capital . . . . . . . . . . . . . . . . . . . . . . . . . . $4,991,994 $ '.612,683 21
Consolid:.ted St:tements of Sources cf Funds Used fir Constru tion (Note 1)
General Public Utilities Corporation and Subsidiary Companies (In Thousands)
For the Years Ended December 31, 1979 1973 1977 1976 1975 Sourecs of Funds:
Funds generated from operations:
Net income . . . .... .......... ... $ 95,783 $138,774 $142,779 $121,197 $107,382 Add, items not requiring current cash outlay or (receipt):
Depreciation (Note 2) . . . . . ........... 141,224 109,505 96,508 87,839 82,834 21,314 21,443 17,734 16,374 20,843 Amortization of nuclear fuel (Note 2) . . . . . . .
Investment credits, net (Notes 2 and 10) .... (11,830) 41,733 42,496 7,783 15,834 Deferred income taxes, net (Notes 2 and 10) . . 67,SS2 58,285 35,296 33,732 27,359 Allowance for other funds used during construe-tion (Note 3) . . . ..... ............ (24,744) (49,88S) (47,787) (42,269) (32,054) 289,629 319,852 2S7,056 224,656 222,193 Totals . ... .. . ...... . ..........
1,ess, cash dividends on common stock . . . . . . . . . . . . 73,3S5 100,421 97,600 92,261 81,574 216,244 213.423 189,447 132,395 137,624 Totals . . . . . . . ... ............
Other sources (mes):
Deferred energy costs, net (Note 2) ........ (69,832) (17,916) (17,937) (21,726) (8,473)
Deferred costs-nnelear accident, net of insurance recoveries (Note 1) . .. .... . ......... (24,373) 1,oans to non-affiliated coal companies (Note 11) . . (625) (2,350) (650) (1,500)
Unamortized mine development costs (Note 2) . . . 1,134 898 513 526 471 10,072 0.310 13,378 (2,302) 20,250 Changes in-cash (Note 4) . . . .
-temporary cash investments .. . (60,711) 2,988 (2,988) 26,441 (43,7S8) (2,433) (14,070) 3,643
-accounts receivable . ..... . . ..
67,700 12,3S6 20,129 (3,168) 25,894
-accounts payable ... . ... .... ..
18,284 (30,620) (7,196) 6,876
-inventories-materials, supplies and fuel (35,772) 4,838 131 3.218 5,791 565
-interest accrued .. .. . . ... .
19,903 (7,845) (21,698) 22,470 10,352
-tases accrued . . . . ..... ........
(20,879) 5,479 (16,091) 10,121 (3,349)
Other, net .. . . . . ... . ......
(81,470) (23,698) (59,879) (10,2ni) 51,729 Totals . . . .. ..... ............
Funds from financings:
153,800 151,082 155,920 217,000 22S,953 Sale of long-term debt . . ....... . .... ....
4,771 22,273 82,166 8,466 97,014 Sale of common stock, net of expense (Note 8) ....
50,000 35,000 87;450 Sale of preferred stock (Notes 6 and 7) . . . . . . . .
llank borrowings, net ( Note 4) . . . . . . . . . . . . . . . . . 87,400 21,025 19,125 13,300 (270,690) lletirement or redemption of long-term debt and preferred stock . . . . ... ..... ............ (54,463) (32,908) (73,3S9) (71,990) (19,687) 191,503 168,072 233,822 201,776 123,G10 Totals ... .. .. ......................
Totals . . . . . . .. ..................... $326,282 $357,802 $363.390 $323,967 $315,393 _
l Comtruction Expenditures:
Utility plant ............ ......................
$2SI,912 $376,812 $343,909 $321,150 $315,350 l 69,114 30,878 67,263 45,0S6 32,097 l Nuclear fuel .......... ........................
351,026 407,690 411,177 366,236 347,447 i To t al s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for other funds used during construction (24,744) (49,888) (47,787) (42,269) (32,051)
( No t e 3 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Totals . . . . . ........................... $326.282 $357,802 $363,390 $323,967 $315,393 The accompanying notes are an integral part of the consolidated financialstatements.
21
Consolid ted St:tements Cf R:tained E:rnings (Not31) l Un Thousands)
For the Years Ended December 31, 1979 1978 1977 1976 1975 l'alance, beginning of year . . ..... $463,173 $ 130,823 $3S3,633 $356,717 $333,909 Add, net income .. ...... .. .. 03,783 13S,774 142,779 121,197 107,382 TWals .. . . ... ......... . 538,936 569.597 52S,432 477,914 441,291 Deduct, dividends on common stock .... . 73,3S3 100,421 97,60'2 92.261 84.574 Ilalance, end of year (Notes I aml 9) . $185,571 $463.173 $130h23 $3S5K33 $356,717 Cash dividends on common stock, per share . . . $1.20 $1.77 51.70 $1.68 $1.68 N:tes to Consolidated Financial Statements
- 1. Commitments aml Contingencies: an allowance of SSO million for contingencies he inchuled in the estimate of cost, bringing the total Three Mile blaml Nuclear Accident: On .\farch 28, 1979, an accident occurred at Unit No. 2 of the to $320 million. The estimate does not include Three .\lile Island nuclear generating station
-i for dm r@a ment of the reactor core
("T.\f12") re;alting in significant damage to TAfI-2, Miwed by the subsidiaries to cost $60 million to SS5 million > nor for the subsidiaries' replace-and a release of some low level radiation which
. ment power, financing and other costs during the published reports of governmental agencies indicate did not com.titute a sigmficant public health or .
iod of mMdiuion of T.\fI-2. The subsidiaries
... ;ncreased, by $2a. md. h.on, the engm.eermg firm.s safety hazard. T.\ll 2 is gomtly owned by the .
Corporat m.n s subsid.iarms, Jersey C,entral Power & estimate of costs to provide for other items Light ( JCP&L.,),25 7; .\fetropolitan Edison possibly omitted from that estn.nate. The estimates C,ompany ( Slet-Ed c"). 50?,; and Pennsylvam. do not take m. to account potentiallegal, political a
Electn. Company ( Penelce,.) 25c.a. At December e m regulatory delays, which would further increase 31,1979, total net m. vestment by the subsidianes the cost of restoring T511-2 to service. The delays in T.\ll-2 was approximately $6S2 mi!! ion expenenced to date m. obtaimng regulatoiy
($705 million investment less $23 million accu. andmnzatums to pn>cced with the decontammation mulated depreciation ), excluding the unamortized '.nay han edaiided dm aHowanw for muungens investment of approximately $37 million in the in de engnmer,s N.unate.
nuclear fuel core. m submliaries carried the maximum insurance
.I.he subsu. liaries engaged a consulting engineer- coverage available ($300 million) for damage ing firm to prepare a cost edimate and schedtde ' " " " ' " * . ""d #"'" " " "' "" ." " ' . "
for restoring T.\ll 2 to service. The firm's initial npenws. Em insurance does not cover replace-report indicates that, while the decontamination of *"." . power costs or return on n. vestment while the t!.c buildings and removal and disposal of " P #
large(piantities of radioactive materialis a major but it otherwise covers most types of costs. It is the undertaking, the technology and techniques are Corporation s belief that, if the estimates of the well-known and have been previously demon- '""'"Iting engineering firm are borne out, the strated. This initial report emphasi7es the inherent "*"" """ "# '"'"'""" C"
- P * "" # d 1 uncertainties in cost and schedule estimates until approximate the amount of the msurance carn.ed.
(a) entry into the containment vessel has been m subsidiaries do noi know the extent, if any, gained and the difficulties of decontaminatior. have to which the expenditures for repair and restoratmn been evaluated, (b) the reactor vessel has been of dm unit to operation wdl represent plant opened and the diiiiculties of core removal have improvements or other items that are properly
[ been evaluated, and (c) the physical integrity of apitalizable and iecoverable m the iuture through major components has been assessed. rates charged to customers by amortization or
<h preci tm.n ch rges. Aforcover, the subsidianes Subject to these qualifications, the initial report
. expect to seek financial assistam from the Federal est.matu that decontamm.ation and restoration of T.\!I-2 to service. exclusive of replacement of the reactor core, would cost approximately $240 million and take about four years. The report also recom-mends that, because of the unknowns and variables, 23
a General Public Utilitles Corporation and Subsidian) Companies government and/or the utility industry in areas is of the view that none of the costs of responding where the tecimical information shouhl be of wide to the incident, including repair, disposal of waste; value ami significance. Under these ciremnstances, aint decontamination are recoverable from rate-the amount of Ims,if any, suffered by the payers. These costs are and shouhl be insurable,"
Corporation and its subsidiaries resulting fmm T.\ll-1, which adjoins Tall-2, was out of service the T.\ll accident is not presently detenninable for a scheduled refueling and was not involved and no provision therefor has been made in in the accident. At December 31,1979 total net their accounts. investment by the subsidiaries in T.\ll-1 was The property damage imurance, and the approximately $M million, including the nuclear i $300 million limit of coverage, was applicable to fuel core of $30 million. Ily oniers dated July 2, both Three Ntile Island Unit No.1 ("TN!!-1") 1979 and Augmt 9,1979, the Nuclear llegulatory and Tall-2.This property insurance has been Commission ("NitC") diieeted that Thll-1 remain reduced by claims paid. The in .arance carriers in a shut down condition until resumption of have reimtated the original coverage limits for operation is authorized by the NllC, after public TA11-1 but have refmed to r'o so at this time for hearings and the satisfaction of various require-f T.\ll.2. Additional propert/d.unage imurai ce ments set forth in such orders. The NilO has not yet established a firm time schedule for the completion for TNil-1 of up to $300 r.illion was obtained by the sulnidiaries through membership in Nuclear of the hearings and decision.
Alutual Limited ("NNIL"). As members of NNIL, in their rate orders issued in June 1979, the the subsidiaries are seoject to annual assessments PaPUC and lloard of Public Utilities of the State of up to 11 times their annual premium, or of New Jersey ("NJilPU") determined that the capital and operating costs associated with T.\ll-1
$13 million. in the event of an incident at a nuclear plant of any member company. With regard to should continue to be reflected in base rates.
pmperty insurance for T.\ll-2, $50 million of flowever, on September 20,1979, the PaPUC em erage has been obtained for posr.ible damages issued an onler instituting an investigation to which might result fmm a non-nuclear accident detennine whether the costs of Alet-Ed and Penelec 4
during the unit's restoration period, associated with T.\ll-1 shouhl be removed from The subsidiaries, in responding to the accident their base rates. Similar issues havt been raised by at Tall-2, have incurred $101.2 million of costs some of the parties in the proceedings initiated associated with the clean up and recovery process, before the NjllPU in January 1980 by JCP&L which
' Of this amount, $91.5 million have been deferred are referred to below. Operating and capital emts and SR7 million charged to operations. In addition for Thll-1 in base revenues aggregate approximately to the deferred clean-up and recovery costs, the $~>l million ammally.
T\ll.2 nuclear fuel core was retired and its in onler to make pmvisions for the substantial unamortized book cost of $3RS million tramferred expenditures required for clean up and repair, to deferred debits, which aggregate $13L3 million replacement energy and other added costs resnhing and have been offset by the insurance proceeds of from this accident, the Corporation and its sub-
$70.1 million received thmugh December 31,1979. sidiaries entered into a revolving credit agreement All net d eferred ecsts will be charged to operations with a jroup of banks in June 1979 (see Note 4).
i or plant in service (for those which constitute In addition, JCP&L and Penelee cach issued permanent improvements) upon a determination $50 million of first mortgage Imnds in June 1979 I that such costs are not recoverable through and JCP&L sold $ 17.5 million of first mortgage additional insurance pmeceds, rates or by financial bonds in O ober 1979, $25 million of which was assistance from the Federal government or from applied to the payment of maturing bonds, other public or private sources and/or the utility On January 23,19S0, the NilC ordered hiet-Ed industry. In its rate onler issued on June 19,1979 to pay a fine of $155,000 for safety, maintenance, referred to below, the Pennsylvania Public Utility procedural and training violations at Th!L Such fine Commission ("PaPUC") recognized that no claim was paid on February 13,1950. The NilC has also for such costs had been made in the proceedings stated that, depending upon the findings of in which such order was entered. Nevertheless, contim.ing investigations into the TN11-2 accident, the PaPUC stated in that order:"the Commission it may take additional enforcement action such as assessing additional civil penalties or ordering the suspension, modification or re.v ocation of
.\let-Ed's license to operate Tall-2. Alet.Ed does not know what the ultimate outcome of this matter wil! be.
24
On October 30, IV79, the Presidential (Kemeny) anticipat d for the perimi September 1,1979 Commission on the Accident at Three-Alile Island August 31,1950; such increase is expected to issued its report. The Iteport states, in part, that provide approximateiy $70 million of revenues its " investigation has revealed problems with the during tl at period.
' system' that maimfactures, operates and regulates During the first quarter of 1979, Alet-Ed and nuclear power plants" and the shortcomings Penuee were granted retail rate increases by the which turned the incident into a serious accident PaPUC which, among other things, reflected "are attributable to the utility, to suppliers of in base rates their investment in T.\ll-2 and the equipment and to the federal commission that operating and maintenance costs associated with regulates nuclear power." On January 23,1980, the unit. On April 19,1979 and april 25,1979, the NIIC's Special Inquiry Group (Rogovin) the PaPUC, as a result of the accident, estallished reported the results of its investigation of the temporary rates for Afet-Ed and Penelee, respec-accident at TNil 2. Its cenclusions with respect tively, reducing annual base revenues by the to the assignment of responsibility for the accident operating and capital costs associated with th fr were similar to those of the Kemeny Commission. interest in T.\ll-2. These a tions effectively The Corporation does not know what effect, if revoked, prior to becoming effective, the $46.6 nil-any, these reports will have upon it or its lion increase in base rctes granted Afet-Ed on subsidiaries. .\ larch 22,1979. returning the rates to levels in Other investigations and inquiries into the effect prior to that late order. In Penelec's case, nature, causes and consequences of the TAII-2 the PaPUC nrc,i cetively reduced the $56.2 million 3 accident commenced by various federal and state rate increase which the company had been billing bodies are continuing. The Corporation is unable since January 27,1979 by $25.0 million, to estimate the full scope and nature of these On June 19,1979, the PaPUC issued a rate order 3 continuing investigations or the potential conse- which directed that Alet-Ed's and Penelec's quences thereof to the investors in the securities temporary rates prescribed Ly its April 19,1979 of the Corporation and its subsidiaries. The and April 25,1979 orders be made permanent.
Corporation is also unable to determine the impact In addition, the order established levelized energy if any, the results of such investigations may adjustment clauses for .\let-Ed and Penelec for have on the proceedings to return T.\1l-1 to the perimi July 1,1979-December 31,1980 at a operation and the efforts to rehabilitate Tall-2. level which the PaPUC believed would be On January 31,1979, JCP&L was granted a sufficient to recover the increases in the companies'
$33.8 million annual rate increase by the NJIIPU, energy costs during that period. This levelized which, among other things, reflected in base rates energy adjustment clause did not make provision its investment in TAII-2 and the operating and for the increased energy costs experienced by maii tenance costs associated with the unit. On .\let-Ed and Penelec during the .\tarch 28-June 30, June 18,1979, the NJIIPU issued a rate order 1979 period, but ti.. discussion at the public reducing annual base revenues by $29 million meeting at which such order was entered indicated which represents JCP&l/s annual capital and that such costs will ultimately be recoserable. The operating cost associated with its interest in T.\ll-2. order also made provision for the amortization The order also provided for a reduction in energy through base rates by Alet-Ed of $5.8 million revenues of $7.3 million over a prospective annually of previously deferred energy costs of eighteen month period as an offset to base rate $14 millica, and by Penelee of $5.5 million annually revenues attributabic to T.\fI-2, colk cted during of previously deferred energy costs of $19.4 million.
April, Afay and June 1979. Accordingly, such The increases in the subsidiaries
- levelized amount was recorded as a charge to energy costs energy adjustment charges granted by the NJIlPU by JCP&I,in June 1979. In addition, the order and PaPUC in June 1979 assumed that Tall-1 j authorized JCP&L to increase its levelized energy would re me the generation of electricity on adustment charges to its customers over the January 1,19S0. In light of the NHC's action perimi July 1,1979-December 31,19S0, by on requiring that TAII-1 remain in a shut-dow ondi-amount which the NJllPU believed wouhl be tion until resumption of operation is authorizeci sufficient to recover the replacement power costs l associated with the non. availability of T.\fI since l Af arch 31,1979. On September 5,1979, the l
NJIlPU authorized JCP&l, to incre;se its levelized energy adjustment clause charges to recover increates in energy costs, not associated with Tall, 2.5
General Public Utilities Corporation cmt! Sulnidiartj Companies by it, while allowing similar type units to operate, During the pemlency of the proceedings which and as a result of increased fuel costs, hiet-Ed resulted in the June 18,1979 onler of the NJllPU, on November 1,1979 aml JCP&l on January 21, certain intervenors requested that the NJilPU 19%0 filed with their respectis e state commissions consider the issue of fault regarding the causation for increases in their leveli/cd energy clause of the Thll-2 accident. At that time, the NJilPU charges. Slet-Ed requested an increase of $55 mil- ruled that this issue wouhl be considered in a later lion annually effective January 1,1950 and JCP&L phase of such proceedings. On January 23,1950, an increase of $112 million anmially effective the NJilPU directed the filing of legal memoranda Alarch 1,19S0. JCP&I. and N!ct-Ed, in filings with attempting to identify the legal standards which their respective state commissions, indicated that should govern the NJitPU's evaluation of fault, the failure by the Commission to act in a positive and legal and factual contentions reganling fault, timely manner on their requests couhl result in the regulatory comequences of a fault finding, the the inability of JCP&l.aml Niet Ed to obtain NJHPU's legal authority to impme such conse-uhlitional short term financing and tlms impair quences and the implications thereof. Such their ability to meet their obligations in the future. inemoranda have been filed. On Ntarch 6,1980, the With respect to JCP&lls proceeding,on NJllPU stated that it will establish a hearing date to l'chruary 27,1950, the administrative law jmlge begin consideration of the above issues.
granted a notion of interrenors in that proceeding As imlicated by the preceding paragraphs, the to deal initially with energy costs other than those depreciation and return requirements associated relating to the replacement of TNil generation and with the investment in Thll-2 (amounting to to continue the proceedings for Thll replaecment approsimately $91 million per year) are not being energy emts. On Ntarch 6.1950, the NJilPU recovered from customers. Such depreciation and authorized JCP&l, to increase its levelized energy return requirements are currently being reflected adjustment clame charges, effective N! arch fi, in the financial statements in that (a) depreciation 19%O. for non.TNil energy costs by a factor charges in respect of the unit are being provided estimat< d to produce approsimately $8-1 million of and charged to espense, (b) the interest and additional annual res ennes. The NJ BPU also stated preferred stock dividend components of that in this order that it will shortly take up the issue of investment are being accrued, and (c) the the retention of TNil-1 in JCP&l/s base rates. carnings per share of common stock are determined On I?chruary 8.19%O, the PaPUC issued an order on a basis which reflects all outstanding shares permitting Niet Ed to increase its leveli/ed energy including the shares issued to finance the common clame charges, subject to investigation, by an stock emnponents of that investment.
additional $35 mdlion annually, efTesive N! arch 1, The Price-Anderson Amendments to the Nuclear 1980. This order is effective pending final resolution Energy Act limit liability to third parties to of the issues in the proceedings referred to in the $560 million for each nuclear incident. Coverage nest paragraph and does not determine that any of the first $110 million (raised to $160 million specific emts are recoverable. following the accident) of such liability is provided On November 1,1979, the PaPUC ordered by private insurance. The next $335 million Niet-Ed to show came why its governmental (reduced to $315 million following the accident) authori/ation to conduct public utility operations is provided by assessments of up to the limit of shouhl not be revoked. Alet-Ed has responded to $5 million per nuclear reactor per incident, but not such order contending that there is no basi s for more than $10 million in any calendar year. The such revocation and that such revocation would he remainder is provided by a government indemnity, contrary to the public interest. On November 8, liased on the ownership of three nuclear reactors, 1979 the PaPUC combined into one proceeding the subsidiaries' masimum potential assessment (i) its investigation to determine whether hiet-Ed's under these provisions would be $15 million per and Penclec's costs associated with Thil-1 shouhl incident but not more than $30 million per continue to be reflected in base rates, (li) Slet-Ed's calendar year for claims covered by this insurance.
reapiest for additional energy clause adjustment The Corporation private insurance under Price-revenues and (iii) its show cause order why Anderson provides that coverage is reduced by Alet-Ed's authorization to conduct public utility claims paid but is subject to reinstatemmt to operations shouhl be revoked. Ily orders dated original coverage limits upon approval by the February 8,1950, the PaPUC stated that it expected insurance carriers. The subsidiaries have applied for to complete these combined proceedings on Niay 23,19%0 20
such reinstatement but are imable at this time to Prior to the accident, JCP&L was negotiating for ascertain whether or when such reinstatement will the sale of undivided interests in the station to two be approved. The NilC has informed Alet Ed that unaffiliated utilities, one of which has since the failure by it to obtain such reinstatement could indicated it is no longer interested in such a result in the suspensinn or revocation of its liceme purchase. JCP&L does not know whether it will be to operate Tall-2. abic to sell any undivided interest in the station.
As a result of the accident, the Corporation, in addition, JCP&L is imable to estimate what
, and/or its subsidiaries, have been named as effect any delay in, or moratorium on, the issuance defemlants in various law suits. The suits include by the NitC of construction permits or operating (i) individual suits and purported and actual class licenses for imclear generation stations may have actions for personal and property damages on the resumption of construction or the eventual (including claims for punitive damages) resulting issuance of an operating license for the Forked from the accident and (ii) suits to enjoin the future lliver station.
operations of TA11-2. JCP&L is currently reviewing possible alternatives The suits described in (i) above involve questions for the supply of additional capacity, including as to whether certain of such claims, material in the possible conversion of the Forked Iliver project amomit and arising out of both the accident to a coal-fired facility. Pending resolution of these itself and the cleanup and decontamination efforts, matters, JCP&L has continued to accrue AFC on are (a) subject to the limitation of liability set by its investment in Forked Iliver.
the Priec-Anderson Amendments: and (b) outside the insurance coverage provided pursuant to the Oyster Creek Outage: The Oyster Creek nuclear Price-Anderson Amendments. These questions have generating station, owned by JCP&L is currently not yet been resolved. heing r fueled, a pn> cess which has been extended Class suits for damages on behalf of purchasers beyond its scheduled length for maintenance and of GPU common stock during the period August 23, possible repairs. At this date, the schedule for its 1975 through April 1,1979 have also been resumption of operations is uncertain. lleplacement imtituted agaimt the Corporation and certain of its power for the station's output costs approximately directors as a result of the accident. These suits 83.5 million per week.
have raised questions. which have not yet been resolved, as to whether certain claims are beyond Coal Pm :hase Cmts: In Jar.uary and April 1977, the insurance coverage for directors' and officers' the PaPUC issued amended complaints asserting liability carried by the System companies. that Ah t-Ed and Penelee made payments in The Corporation and its subsidiaries me presently 1974 for coal that were $9.8 million and $4.9 mil-unable to estimate the hkelihood of an unfavorable lion, respectively, in excess of those required outcome on any of the matters set forth in the by their contracts, and that such exces: payments preceding paragraphs or their financial exposure were without justification and directing .\fet Ed with respeel thereto. and Penclec to show cause why they should not be required to refund $9.8 million and $4.9 million, Forked niecr Project:In view of the impact of the respectively, to their customers. Afet-Ed and accident at TAII-2 on its financing capability, Penelee believe that the payments which they JCP&L suspended construction on its Forked Iliver made were justified and that there is no basis for nuclear generating station during the second requiring such refunds and they so responded quarter of 1979. JCP&L's investment in the project to the complaints. In November 1979, the at December 31,1979 was approximately $%I administrative law judge who heard the evidence million, apprmimately $30 million of which has in the complaint against Afet-Ed for 1974 recom-been included in JCP&L's rate base. Of this mended that Alet-Ed refund $2.7 million, plus investment, $75 million reflects the accrual of interest, to its customers. Afet-Ed filed exceptions allowance for funds med during construction to such recommendation, asserting that the i
("AFC"). JCP&L does not know when it will be evidence does not support any refund. Other parties able to resume comtruction of the station, whether filed exceptions asserting that the refunds should l
it will be able to finance completion of the station be increased. Oral argument before the PaPUC without substantial rate relief and participation by was held in February 19SO and the matter is other entitics, and what additional mmlifications, if awaiting decision.
any, will be required upon resumption of In November and December 1978, the PaPUC construction. There are no current plans for issued further complaints serting that Met-Ed near-term resumption of construction of the station. and Penelee incurred excess costs of $4.6 million l
L
1 General Public Utilitles Corporation and Sulnidiary Companies and $.8 million, respectively, for coal during for damages and has also filed another suit against 1975 and 1976, and that such excess payments the supplier and its parent seeking damages.
were without justification and directing hiet-Ed JCP&L believes that any additional amount that and Pencice to show cause why they shouhl not it might be required to pay if the supplier is !
i be required to refund $4.6 million and S.8 million, successful in its suit would be valid costs and respectively, to their customers. Such complaints should be recognized for rate-making purposes.
were based on audit reports prepared by the Ilowever, there can be no assurance that this will PaPUC staff. Alet.Ed and Penelec believe that the he the case. If the suits were to be resolved payments which they made were justified and in the supplier's favor, JCP&L would incur $6.7 mil-that there is no basis for requiring such refunds, lion in additional fuel expense, based on the amount and they have so responded to the complaints. of fuel consumed through December 31,1979.
The Corporation is unable at this time to predict the outcome of these matters. Other: The subsidiaries
- construction programs, which extend over several years, contemplate Compliance Amlits: During 1977 and 1978, the expenditures of approximately $275 million during l stall of the Federal Energy llegulatory Commission 1980. In connection with these construction i
("FEllC'*) conducted en.ipliance audits of programs the subsidiaries have incurred substan-Slet-Ed's and Pc: .cc s acemmting records
~
tial commitments.
covering the periods ending December 31,1976 The subsidiaries are engaged in negotiations and December 31,1977, respectively. The remain- and, in one instance, litigation with various sup-ing unresolved issues concern the base to which pliers relating to the latters' claims for delay or AFC accruals were applied. If such issues were termination charges or increased fees which such to be unfavorably resolved, the resulting reduction suppliers assert result from the subsidiaries' revi-in consolidated earnings would approximate sions of their construction plans and schedules
$2.8 million. Slet-Ed and Penelec believe that the and/or from the increased scope of supply. The FEllC's position is not justified and they are subsidiaries
- managements do not expect at this contesting it. time that such negotiations and litigation will j
result in any material increase in costs that would N" clear l'uct Litigation: In 1971, JCP&L entered not be valid costs properly recognizable through into a contract for the purchase of three nucIcar the rate-making process.
fuel reloads for the Oyster Creek Station, with an Claims for damages arising out of the operation of option for five additianal annual reloads beginning the Oyster Creek station have been asserted.
in 1976. lu 1971 the suppbr offered an extension JCP&Ils management believes that such liability, of that contract to cover five additional annual if any, as it may have for such damages in the reloads beginning in 1981. JCP&L believes that it pending suits and for all asserted and potential effectively exercised the option in the initial similar claims would not be material.
contract and accepted the offer to estend the JCP&L was a participant in the Atlantic generat-c<mtract to cover the annual reloads through 1985. ing station project. In December 1978, the non.
The supplier disputes this position and,in affiliated co-owner and principal sponsor of the November 197S, submitted bills for material and station announced the abandonment of the project.
- 2. services in the aggregate amount of approximately At December 31,1979, JCP&L's investment in
$33 million, covering reloads supplied in 1977, the project was $1.2 million. JCP&L plans to seek 1978 and 1979. The supplier stated that its regulatory approval to amortize this investment, objective was to establish revised prices and other net of related income tax reductions of $1.4 million, terms and conditions rather than to diminish over a period of years for rate-making purposes.
supplies and, without prejudice to its legal position. The NJ HPU has accorded such treatment for provided the 1979 annual fuel reload. Of the similar items in the past.
$33 million claimed by the supplier to be due, JCP&L has paid approximately $3.8 million and 2. Sununary of Significant Accounting Policies:
is of the opinion that the balance of approximately Cencral: The consolidated financial statements
$29 million is not payable by it and has so ,
include the accounts of all subsidiaries. , ,
informed the supplier. On January 26,1979, the it is the general policy of the Corporation s supplier flied suit against JCP&L, the Corporation subsidiaries to record additions to utility plant at and GPU Service Corporation. JCP&L has filed a emmterclaim for a declaratory judgment confirming its view of the c<mtractual status and SS
cost, which includes material, labor, overhead and nations to range between $27 and $36 million per 1 AFC. The cost of current repairs (except those unit in then current dollars assuming in-place related to the nuclear accident described in Note 1) entombment), and (b) Alet-Ed and Penelee are and minor replacements is charged to appropriate charging to expense amounts intended to provide operating expense and clearing accounts and the over their service lives for the decommissioning of cost of renewals and betterments is capitalized. The their shares of the radioactive components of their original cost of utility plant retired, or otherwise nuclear units (approximately $24 million per unit disposed of, is charged to accumulated depreciation. in then current dollars for rate-making purposes).
In accordance with rate-making requirements, these Operating Herennes: llevenues are generally re. charges make no provision for possible inflation in confed on the basis of billings rendered. demmmissioning costs during the period prior to decommissioning but are expected to be subject Deferred Energy Costs: The subsidiarics follow a to modification to take cognizance of that factor.
policy of recognizing energy costs in the period in which the related energy clause revenues are billed. Amortir.ation of Nuclear Fuel: The amortization of Deferred energy costs at December 31,1979 nuclear fuel is provided on a unit of production include (a) amounts accumulated prior to the basis. Ilates are determined and periodically TAfI-2 accident which are being amortized to revised to amortize the cost over the useful life.
income in accordance with ratemaking orders Prior to December 1,1976, amortization of nuclear (JCP&I -$52 million at a rate of $2.3 million per fuel costs included estimated costs of reprocessing year, and Pennsylvania subsidiaries-$22.5 million such fuel and estimated residual value of uranium at a rate of $11.3 million per year), and and plutonium. Due to the uncertain future of (b) amounts accumulated subsequent to the government approvals for reprocessing and TN!I-2 accident reflecting the operation of levelized plutonium recycling, the Corporation's subsidiaries, energy adjustment clauses placed in eifect effective December 1,1976, began using amortiza-pursuant to ratemaking orders entered in June and tion rates for nuclear fuel at TAfI which makes no September 1979 (see Note 1). current provision for reprocessing costs and gives no credit for residual values. Effective September 1, i Depreciation: The Corporation's subsidiaries pro- 197~. simil r treat ent was adopted pursuant to I vide for depreciatim, at annual rates determined authorization by the NJilPU for the Oyster Creek and revised periodically, on the basis of studies, to stati n nuclear fuel. Also effective September 1, be suificient to amortize the original cost of 1977, JCP&L is providing for estimated future depreciable pmperty over estimated remaining handling costs for the spent Oyster Creek nuclear service lives, which are generally longer than those fuel, and similar treatment will be provide . for emploved for tax purposes. The subsidiaries use futum handling costs for the spent TAfl nuclear depreciation rates which, on an aggregate com- I"".I when required. Previously accumul:ted pcsite basis, resulted in an approximate annual rate estimated residual credits, net of previously of 3.177c,3.07%,3.02%,2.95Tc, and 2.SS% for amunul t esuma msts of reprocessing, for the years 1979,1978,1977,1976 and 1975, b Oyl ster Creek station nuclear fuel are being respectively. angrtized to fuel expense on a unit of production I
Effective January 1,1977, to conform with rate- basts. Should reprocessing eventually be under-
! making treatment, Alet-Ed and Penelee are taken, the Corporation expects that any difference charging depreciation expense with the cost of between such costs and accumulated reserves removal (less salvage) as incurred rather than Wdl he ree gnized prospectively in the rate-making including it in the provision for depreciation. E' #"8
Nuclear Plant Decommnsioning Costs: In accord- income Taxes: The Corporation and its subsidiaries ance with ratemaking determinations (a) JCP&L file consolidated Federalincome tax returns. All participants in a consolidated Federal income tax is charging to expense and crediting to a non-return are severally liable for the full amount of funded reserve amounts intended to pmvide over their semce lives for the cost of decommissiomng any tax, including' penalties and interest, which may nuclear plants at the end of their useful hves be assessed against the group.
(estimated for purposes of the ratemaking determi- The revenues of the Corporation's subsidiaries in any period are dependent to a significant extent
! upon the costs which are recognized and allowed in l l
that period for rate-making purposes. In accord-29
General Public Utilities Corporation and Subsidiarrl Companies i
ance therewith, the Corporation's subsidiaries have in service by means of the allowance for deprecia-employed the following policies: tion charges based on the total cost of the plant, including AFC.
Tar Depreciation: The subsidiaries of the Corpo- To the extent permitted in the rate-making ration generally utilize liberalized depreciation proceedings of the subsidiaries, the income tax methods and the shortest depreciation lives reductions associated with the interest component permitted by the Internal llevenue Code in com- of AFC have been allocated to reduce interest puting depreciation deductions and provide charges and, correspondingly, have not reduced for deferred income taxes where permitted in income taxes charged to operating expenses.
the rate-making proecss. Pursuant to such rate orders, the Pennsylvania subsidiaries employ a net of tax accrual rate for j Incestment Credits: The 3% investment credits AFC. JCP&L employed a partial net of tax AFC are being amortized over a 10-year period while accrual rate from June 1975 through July 1976, and, the 4% and 10% investment credits are being effective September 1977, began employing a net amortized over the estimated service lives of the of tax accrual rate for AFC on certain construction related facilities. projects while using a gross AFC rate on others.
Investment credits applicable to the Tax The subsidiaries have accrued AFC using rates lleduction Act Employee Stock Ownership Plan which, on an aggregate composite basis, resulted in
("THAESOP") are remitted to the Plan Trustee annual rates of 8.60%,7.99%,9.03%,8.71% and and have no effect on income. As a result of the 8.12% for the years 1979,1978,1977,1976 and nuclear accident referred to in Note 1, the 1975, respectively.
- Corporation has suspended the TilAESOP.
- 4. Short-Term Borrowing Arrangements:
Pension Plans: The Corporation's subsidiaries have in June 1979, the Corporation and its subsidiaries several pension plans including plans applicable entered into a revolving credit agreement with a
! to all employees, the accrued costs of which at group of banks, under which they had available, bemg funded. The costs of supplemental pension at December 31,1979, $292 million of credit, of plans applicable only to supervisory employees which $171 million were utilized for outstanding were not funded prior to 1976. The previously borrowings. Such available credit can be increased unfunded supplenyental pension plan costs are to $412 million upon the approval of banks being funded durmg the five year permd begm- holding 85% of the notes outstanding. The ning January 1,19, s. I rior service costs applicable agreement provides for a commitment fee of
. to all plans are being amortized and funded over one-half of one percent per annum of each bank's
+ year periods, total commitment (whether used or unused).
Interest rates on such borrowings range from Mine Dcrclopment Costs: These costs are being 105% to 111% of the prime rate.
amortized to income over the estimated life The Corporation has guaranteed all borrowings (20 years) of the mines. outstanding under the revolving credit agreement.
In order to secure such guarantee, plus the
- 3. Allowance for Funds Used Corporation's $39 million term loan and the During Con truction: guarantee by the Corporation of $17.8 million of 10 ns to GPU Service Corporation ("GPUSC"),
The applicable regulatory Uniform System of Accounts provides for AFC which is defined as the Corporation has pledged the common stoex of including the net cost during the period of JCP&L, Alet-Ed, Penelec and GPUSC.
em. auction of borrowed funds (allowance for JCP&L and Alet-Ed have secured their notes borrowed funds used during construction) used for tmder the revolving credit agreement by granting a security interest in certain nuclear fuel in the construction purposes and a reasonable rate on other funds (allowance for other funds used during construction) when so used. While AFC results in a current inc Tase in utility plant to be recog-nized for rate-making purposes and represents, in this fashion, current compensation for the use of capital devoted to constructi6n, AFC is not an item of current cash income; instead, AFC is realized in cash after the related plant is placed 30
process of refinement, conversion, enrichment and 5. IengTerm Debt Afaturities:
fabrication. Such nucicar fuel was recorded, on the on n December 31,1979 balance sheet, at a cost of I#gtenn
$30.5 million. In addition, afet-Ed has pledged
" "' I Mit II"**due
- dun. g dm yean M thmu@
l
$40 million of firs, mortgage bonds as security On Thouunds) for its indebtedness under the revolving credit First Mortgage agreement. Yee Bonds Debentures Other Totals The revolving credit agreement and the purchase 1 im $ 15.334 $5,m $18,m $ 38,814 agreements of the bonds sold by JCP&L and 1981 D,321 5,900 44,433 59,654 Pencice subsequent to the accident at T5ff-2
- 1982 21,625 5,000 5,433 32,958
($117.5 million) contain provisions for the 1983 101,830 5,900 200 107,930 immediate payment of the indebtedness involved 1984 90,856 5,000 4,000 100,756 up<ni tlu occurrence of an event deemed by the majority of the leiniers or holders of an issue to have Substanthily all of the subsidiaries
- property is a materially adverse cifect on the horrower. subject to the lien of their respective mortgages.
In addition, the Corporation and its subsidiaries have informal lines of credit with various lenders. G. Cumulative Preferred Stock-5fandatory These arrangements generally provide for the Hedemption:
l maintenance of emnpensating balances ranging At December 31,1979 and 1978 the subsidiaries from a minimum of 10?c of the available line of had outstaneng the following issues of cumulative credit to a maximum of 10% ui the line plus 10Te of the loans outstanding, as determined on a daily preferred stock which are subject to mmdatory average basis. At December 31,1979 and 1978, the redanption requirements:
i lines of credit asailable under these arrangements Sharcs Stated Value Dunwnding On Thouands) totaled approximately $27 million and $255 million, respectively. At December 31,1979, $1.2 million 1979 19M 1979 1078 was maintained as compensating balances. JCP&L:
Substantially all of the cash at December 31,1978 13.5% Series F 187,500 200,000 $18,750 $20,000 was inaintamed as compensating balances. 11% Series G(1) 250,000 250,000 25,000 25,000 Under the revolving credit agreement, the amount Due within one year (25,000) (12,500) (2,500) (1,250) of debt outstanding under these external lines Penelec:
11.72% Serks J(1) 200,000 212,500 20,000 21,250 cannot exceed $15'000'000' 10.88% Series K(1) 320,000 320,000 32,000 32.000 The maximum aggregate amount of bank bor- Du wthin one ya 0 9,500) 0 2,500) J2,850) 0,250) rowings outstanding at any month-end during 1979 Totals Et,000 957,5no $90,400 $95,750 was $230 million. For the year 1979, the average daily amount outstanding was approximately (1) sold in 1975
$157.2 million, having a weighted average interest rate of 14.2%. Bank borrowings outstanding at JCP&L has had an annual redemption require-December 31,1979 aggregated $171 million having nwnt of 12,500 shws of the Series F preferred a
a weighted average interest rate of 17,2%. stock since 1975. It also has an annual redemption The maximum aggregate amount of bank bor- requirement of 12,500 shares of the Series G rowings outsta uling at any month-end during preferred stock beginning in 19S0.
1978 was $102 million. For the year 1978, the Penelee has had an annual redemption require-I average daily amount outstanding was approxi. nwnt of 12.500 shares of the Series J preferred mately $67 millien, having a weighted average stock since 1976. It also has an annual redemption interest rate of 8.6%. Ilank borrowings outstanding requirement of 10,000 shares of the Series K at December 31,1978 aggregated $90,100,000 preferred stock beginning in 1980.
j having a weighted average interest rate of 11.1%. All redemptions are at the stated values of the l shares, plus accrued dividends. No redemptions of
- preferred stock may be made unless dividends on all preferred stock for all past quarterly divi-dend periods have been paid or declared and set aside for payment.
31
General Public Utilities Corporation and Subsidiary Companies The subsidiaries aggregate mandatory redemption 8. Common Stock and Capital Surplus requirement for allissues of cumulative preferred Of the 75 million authorized shares of $2.50 par stock outstanding at December 31,1979 is value common stock of the Corporation,61,264,000
$26,750,000 tbrough 1981.
shares were issued and outstanding at December 31, 1979 and 28,000 shares were recorded as re-
- s. Cumulative Preferred Stock-No blandatory acquired at $2.50 per share.
Hedemption: During the period January 1,1975 through At December 31,1979 and 1978, the subsidiaries December 31,1979, the Corporation issued addi-l had outstanding the following issues of cumulative tional shares of common stock as follows:
i preferred stock, which are redeemable solely at (Iri Thousarids) the option of the issucts:
Par Value Excess over Credard to rar value Shares Stated Value Common Credited to Outstanding Number ,
(In Thousaruls) Year Stock CapualSurplus t of Shares j JCl%L: 1975 7,399,000 $18,497 $S4,296 4% Series 125,000 $ 12,500 1,200 7,431 1976 507,000 9.36% Series 250,000 25,000 72,767 1977 4,458,000 11,140 8.12% Series 250/100 25,000 19,467 1978 1,250,000 3,121 8% Series 250,000 25J)00 4,188 1979 293,000 731 l 7.M% Series 250,000 25/XX) 8.75% Senes 11(1) 2/MM),000 50,000 mt-Ed: 9. Consolidated Hetained Earnings:
3.9n% Series 117,729 11,773 4.35% Series 33,219 3,325 Under the revolving credit agreement, $300,000,000 3.85% Series 29,175 2,917 of the balance of consolidated retained earnings is restricted as to the payment of cash dividends
,. r t 3 i 811% Series 100,000 16,000 on common stock.
7.68% Series C 350,000 35/N)0 8.32% Series !! 250,000 25,000 8.12% Series 1 250,000 25,000 10. Income Taxes:
8.32% Series J 150/XX) 15,000
,y, ,
1,,xam, m atw, n of Federalincome tax returns through 4.40c5 Series 11 50,810 5,081 1976 has been completed and the years 1977 and 3.70% Series C 97,054 0,705 1978 are currently under review. The Corporation
- 4 05% Series D 63,096 6,370 and its subsidiaries have provided for any antici-l 4.70% Series E 28,739 2,874 pated liabdities that may result from such l 4.50% Series F 42,009 4,297 . ,
75,732 7,573 j 4.00% Series G
- 8 36% Series !I 250,000 25,000 S.12% Series I 2V)JXX) 25,000 9 00% Series L(2) 1,400,000 35.000 Tote.1 0,783,912 $423,391 (1) sold in 1977 (2) sold in 1976 At December 31,1979 and 1978, the subsidiaries were authorized to issue 37,035,000 shares (JCP&L
-15,000,000 shares, Atet Ed-10,000,000 shares, and Penelec-11,435,000 shares) of cumulative preferred stock, no par value.
32
! Income tax expense for the years 1975 through Income tax expense is comprised of the following:
1979 was less than the amount computed by applying the statutory rate to book income subject to tax as follows: 1979 1978 1977 1976 1975 (in blillions) Federal income tax $ 3 $(20)(b) $ 9(c) 733 $15(d) 1979 1978 1977 1970 1975 State income Operating income tax 7 5 9 5 8 before income income tases taxes $343 $339 $349 $310 $277 on other i Other income, net 9 4 1 1 income, net 5 2 1 1 1 i Totah 352 343 389 311 278 Income taxes Interest espense (193) (160) (152) (139) (128) N tic Book income allowance subject to for income tax $159 $183 $197 $172 $150 borrowed t
funds I"C[a$ttry (Note 3) (8) (15) (13) g) J) rate (s) $ 73 $ 88 $ 95 $ 82 ? 72 Provision I ****
Excess of tax currently over book able depreciation (H
b'$hrough)
(("[h"d-
,y 7 gg g g g ote 2) (2) (10) (7) (9) (12) Deferred
^Q't'.un ijlM in- t , net 68 58 35 34 27 vestment credits Current (Note 2) (5) (4) (4) (4) (4) investment Other adjustments (3) (2) 1 2 credits (7)(a) 40(b) 47(c) 12 20(o) ,
Income tax Anwrtiehn l
l expense $ 63 $ 72 $ 88 $ 70 $ 58 nulb Effective income investment tax rate 40 % 39 % 43% 41 % 39 % credits (5) (4) (4) (4) p) 4 Income (a) Effective January 1,1979, the statutory rate tax was changed from 487c to 46To. expense $ 63 L7_2 g gg (s) Redetermination of prior years
- investment
- credits resulting from 1979 net operating loss. This amount is reflected in the 1978 4
unused investment credit.
(b) Includes 1978 investment tax credits of $27 million carried back to prior years, which is included in Accoimts receivable-Other in the accompanying December 31,1978 con-solidated balance sheet.
(c) Reflects 1976 investment tax credits of $7
, million, resulting from adoption of TRAESOP I
and the election to claim investment tax credits under the progress payment method.
(d) Reflects an investment credit carry-over of $12 million from 1974.
(c) Unused 1978 and 1979 investment credits of approximately $17 million and $29 millien, respectively (including $5 million and
$4 million, respectively, of TRAESOP credits) are available for carry-forward to future years.
I 33
1 l
Gene:al Public Utilitics Corporation and Subsidiary Companies The provisions for deferred income taxes, net, The liability for New Jersey State franchise and result from the following timing differences: gross receipt taxes and surtax is established in each year of exercise of such franchise based on the (in Afillions) preceding year's gross receipts and no liability 1979 1978 1977 1970 1975 exists in a current year to pay a tax based on that IJhcralimi depre. year's gross receipts. JCP&L has consistently made clation (Note 2): provision in its accounts for stich taxes on this Federal $ 50 $ 37 $ 21 $ 21 $ 20 hasis. For rate-making purposes (including the State 5 4 3 3 operation of the energy adjustment clause) the Deferral of energy NJilPU computes allowable expenses as including costi (Note 2): provision for such taxes based on the current year's Federal 3'l 7 8 9 5 gross receipts rather than those of the preceding
'* I ' year. Effective January 1,1979, pursuant to a
""' ""[c",'g*y*"[ta u s,. reconunendation by the FEllC, JCP&L began revenues recording the state revenue taxes related to energy (Note 12) (4) ,
clause revenues in the period the revenues are Other (9) 8 (1) (1) (1) collected.
Totals $ 68 $ 58 $ 35 $ 31 $ 27
) 13. Pemion Plans:
1 11. loans to Non.Alfiliated Coal Companies:
l Total pension costs for the years 1979,1978,1977, Penelce is providing financing to non-afliliated 197(1 and 1975 amounted to approximately $22.8 mining companies supplying coal to the llomer million, $19.0 million, $10.8 million, $14.9 million, City generating station under long-term contracts. and $12.1 malion, respectively. Ilased on the latest These loans hear interest at a rate which is 1%% available actuarial reports as of January 1,1979, per annum above the prime interest rate. the actuanally computed vested benefits under certain of the plans exceeded the actuarial value of
- 12. Supplementary Income Statement trust assets or reserves created in respect of such Information: plans by $13.0 million and the unfunded past service liabilities for the plans amounted to approxi-
.\laintenance and other taxes charged to operating inatelv $125.7 million.or 39% of the total reserve expenses consisted of the following: requirement.
(In Stillions) 1979 1978 1977 1976 1975 4 Mainte nance (including applicabic payroll charges) $ 91 $108 $ 87 $79 $70 Other tates:
State and local gross receipts $ 87 $ 75 $ 67 $55 $51
. Grnss revenac and franchlie 20 17 14 12 11 State surtas D 7 6 5 5 Capital stock 11 11 10 0 7 Heal estate and personal property 12 11 11 10 10 Other 10 9 7 7 6 Totals $149 $130 $115 $95 $90 4
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- 14. General Public Utilities Corporation The statements of sources of funds used for invest-( Parent Company): ment in operating subsidiaries of the Corporation The balance sheets of the Corporation at or t e yeau 5M9 are summarized as foHows:
December 31,1979 and 1978 are summarized (in Millions) as follows: 1979 1978 1977 1976 1975 (Ira Millions) 1979 1978 Equity in earnings of ASSETS subsidiaries not distributed (59) (3) (4) (3) (7) 4 Im , ten in sidiaries, at equity 3 D6 M9 M8 100 Cr.sh 5 Dividends paid ,g3)(106) (98) (92) (85)
Other Assets 1 2 Totals (36) 30 41 26 15 Total Assets $1.492 $1,403 Other sources (uses), net j t- (1) 25 LIABIIlTIES AND CAPITAL Totals (32) M
- 25 40 lx>ng-term debt $ 39 $ 39 Ie S*I"ggg
( ym n stock Notes payable (Note 4) 58 Sale of long-term debt 45 Other liabilities 2 3 Bank borrowings, net Totals 99 42 (Note 4) 58 (2) (35) 37 (120)
Common stock (Note 8) 153 153 Retirement of Capitti surphis, less capital stock I ng term debt (6) (58) expense 754 750 Totals _$10$ 4i $ 85 $ 70 $ 17
~
Iletained earnings (Notes 1 and 9) 486 463 Cash capital contri-Com nitme .ts and Contingencies
,I*t%s y, o operating Totals I.393 1,3ti6 Total Liabilities and Capital $1,492 $1,408
- 15. Jointly Owned Generating Stations:
The income statements of the Corporation for the The Corporation's subsidiaries participated, with years 1975-1970 are summarized as follows: nonaffiliated utilities, in the following jointly owned generating stations at December 31,1979:
1979 1978 1977 1976 1975 Balance (in Thousands)
Eqt ity in carnings in Accumulated of subsidiaries $108 $145 $153 $130 $121 Station % Otrnership Scroice Depreciation Interest expense (9) (3) (7) (6) (11) llomer City 50 $284,176 $37,013 Other expenses (3) (3) (3_) (3) (3) Keystone 16.67 37,059 9,851 Net Income $ 96 $139 E43 $121 $107 Conemaugh 16.45 43,911 8,737 Yards Creek 50 10,549 2,433 Sencea 20 13,100 1,647 Each participant in a jointly owned generating unit finances its own portion and charges the appro-priate operating expenses with its share of direct expenses. The dollar amounts shown above repre-sent only those portions of the units owned by subsidiaries of the Corporation.
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35
General Public Utilities Corporation and Subsidiary Companies
- 16. Quarterly Financial Data (Unaudited): Constant dollar amounts represent historical costs stated in terms of dollars of equal purchasing (In T/musands Except Per Share Data) power, as measured by the Consumer Price Index First Quarter Second Quarter for All Urban Consumers (CPI.U). Current cost 1979 1978 1979 1978 amounts reflect the changes in specific prices of Oper; ting plant, and differ from constant dollar amounts to Hevenues $3&l 889 $345,812 $335,368 $315,251 the extent that specific prices have increased more Opertting income $ 76,492 $ 60,591 3 63,778 $ 50,052
$ 35,744 $ 38,596 $ 19,936 $ 27,215 or less rapidly than prices in general.
Net Income Earnings per Share $ .59 $ .65 $ A3 $ .45 The current cost of property, plant, and equip-Average Shares 61,082 59,799 61,268 60,016 ment, which includes land, land rights, intangible plant, property held for future use, construction Third Quarter Fourth Quarter work in progress, and other physical property, was 1979 1978 1979 IMS determined by indexing the surviving plant by Opertting individual company equipment cost indices or by Revenues $383,927 $336,278 $385,974 $329,360 the llandy-Whitman Index of Publia Utility Operating Income $ 73.020 $ 66,639 $ 63,812 4 65,147 Construction Costs. These current cost amounts Net Income $ 25,591 $ 38,o14 $ 14,512 $ 34,919 do not necessarily represent the replacement cost or Earnings per Share $ .42 $ .63 $ .23 $ .57 . . .
Average Shares 61,268 60,275 61,268 60,776 current value of existing plant productive capacity.
The actual replacement of the capacity of present Net income for the fourth quarter of 1978 reflects facilities will occur over many years as future a $5 million decrease in income tax expense due to facilities, dillerent in kind from presc nt facilities, the flow through of a portion of the excess of are constructed and placed in service.
tax over book depreciation, resulting from Three The current year's provision for depreciation on blile Island Unit 2's being placed in service in the constant dollar and current cost amounts of Decendier 1978, and a $2.7 million reduction in property, plant, and equipment was determined by income tax expense, plus related interest of $1 applying the depreciation rates of the Corporation's million (net of tat), because of the final resolution subsidiaries to their respective indexed average of certain Federalincome tax matters. 1979 depreciable plant amounts.
Net income for the second, third and fourth Fuel inventories, nuclear fuel, the cost of fuel quarters of 1979 have been affected by the actions used in generation, and purchased power and of the PaPUC and the NJilPU in removing TN11-2 interchange have not been restated from their from rate base subsequent to the accident described historical cost in nominal dollars. Regulation limits in Note 1. the recovery of fuel and purchased power and j interchange through the operation of energy a@u nwnt claum or adjustnwnts in baw rate
- 17. Supplementary Information To Disclose The schedules to actual costs. For this reason fuel F.IIcets Of Changing Prices (Unaudited):
mventones and nuclear fuel, are effectively The following supplementary information is sup- monetary assets.
plied in accordance with the requirements of As prescribed in Statement 33, income taxes were FASil Statement No. 33, Financial lleporting and not adjusted.
Changing Prices, for the purpose of providing Under the rate making prescribed by the regula-certain information about the effects of changing tory commissions to which the Corporation's sub-prices. It shouhl be viewed as an estimate of the sidiaries are subject, only the historical cost of approsimate effect of inflation, rather than as plant is recoverable in revenues as depreciation.
a precise measure, since a number of subjective Therefore, the excess of the cost of plant stated in judgements and estimating techniques were terms of constant dollars or current cost over employed in developing the infonnation. the historical cost of plant is not presently recover-36
able in rates as depreciation, and is reflected as of net amounts owed. During a period of inflation, a reduction to net recoverable cost. While the holders of monetary assets suffer a loss of general rate-making process gives no recognition to the purchasing power while holders of monetary current cost of replacing property, plant, and liabilities experience a gain. The gain from the equipment. based on past practices, the subsidiaries decline in purchasing power of net amounts owed believe fl.cy will be allowed to earn on the in- is primarily attributable to the substantial amount creased cost of their net investment when replace- of debt which has been used to finance property, ment of facilities actually occurs. plant, and equipment. Since the depreciation on To properly reflect the economics of rate regula. this plant is limited to the recovery of historical tion in the Consolidated Statement of Income costs, the Company does not have the opportunity Adjusted for Changing Prices, the reduction of net to realize a holding gain on debt and is limited property, plant, and equipment shouhl be offset by to recovery only of the embedded cost of debt the gain from the decline in purchasing power capital.
1 Consolidated Statement of Income Adjusted for Changing Prices l l
In Thouscnds Concentional Constant Dollar Current Cost Historical Acerage Accrane For the Year Ended December 31,1979 Cost 1979 Dollars 1979 Dollars Operating Resenues(a) $1,490,154 $1,490.151 $1.490,154 Energy Cmts(h) 545,457 515,457 545,457 Depreciation 141,224 248,903 280,147 Other Operating Expenses 460,266 460,266 460,266 Income Tates 65.905 65,005 65.905 Total Operating Expenses 1,212.852 f,320.531 1,351,775 Operating Income 277,302 169,623 138,379 Other Income and Deductions 28,535 28,535 28,535 Interest Charges and Preferred Dividends 210,054 210.054 210.054 Income from (excluding continuing reduction to netoperations recoverab (a) le cost) $ 95,783 $ (11.896)(c) $ (43,140)
Income (loss) per common share (after preferred dividend n quirements)(a) $ 1.56 $ (.19) $ (.70)
Change in net plant assets during 1979 due to increases in specific prices 8 594,918(d)
Less: Change in net plant assets during 1979 due to increase in general price level (inflation) $ 864,144 Change in specific prices net of general price level (inilation) $ (269,226)
Reduction to net recoverable cost of plant assets 3 (363.695) $ (95.002)
Gain from decline in purchasing power of net amounts owed 3 281,599 $ 281,599 (a) Revenues do not include amounts for the operating and return requirements associated with the subsidiaries' investment in T.\ll a and, correspondingly, the amoimts of income from continuing operations have been adversely affected by this loss of revenues (see Note 1).
(b) Energy costs include fuel, power purchased and interchanged, and deferral of energy costs.
(c) including the reduction to net recoverable cost, the (loss) from continuing operations on a constant dollar basis wouhl have been ($375,591,000) for 1979.
(d) At December 31,1979, current cost of property, plant, equipment, and other physical property net of accumulated depreciation, was $7,199,735,000 while historical cost or net cost recoverable through depreciation was S-1,0S1,019,00l).
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General Public Utilities Corporation and Subskliary Companies Fiv:-Year Comparison of Selected Supplementary Financial Data Adiusted for Elfects of Changing Prices (in Averaae 1979 Dollars)
Year' icd December 31, 1979 1978 1977 1976 1975 Operating revenues (in thousands)
As reported $1,490,154 $1,326,614 $1,252,013 $1,068,753 $ 954,420 In 1979 purchasing power 1,490,154 1,476,010 1,499,656 1,362,738 1,287,164 Cash dividends per common share As reported $ 1.20 $ 1.77 $ 1.70 $ 1.68 $ 1.68 In 1979 purchasing power 1.22 1.97 2.04 2.14 2.26 Market price per common share at year-end As reported $ 8.625 $17.500 $20.875 $19.500 $17,000 In 1979 purchasing power 8.156 18.751 24.386 24.322 22.224 Average consumer price index 217.4 195.4 181.5 170.5 161.2 December consumer price index 229.9 202.9 186.1 174.3 166.3 Qurrterly Ston Price end Dividend uata 1978-1979 E'I
Dit klends 1978 liigh Low (Cents)
First Quarter $21% $18% 44 Second Quarter 20M 18 44 Third Quarter 19% 17% 44 l'ourth Quarter 19% 16% 45 1979 First Quarter 18% 16% 45 Second Quarter 15M SM 25 Third Quarter 10% 9 25 Fourth Quarter 9% 7 25 SS
System Statistics C;neral Public Utilities Corporation and Subsidiary Companies 1979 1978 1977 1976 1975 Cenrrating Capacities and Peaks (MW):
Inst.dled capacity (at year end)(a) . 8,262 8,281 7,190 7,038 7,115 Annual hourly peak load .. ............. 6,173(b) 5,89S(b) 5,760(b) 5,705(b) 5,244(b) lleserve (%) . . . ... ........ ......... 33.8 40.4 24.8 23.4 35.7 Net System Requirements (in thousands of Mwn):
Net generation ............. ....... 26,891 29,747 26,576 26,213 27,169 Power purchased and interchanged, net . . . . . 7,982 4,275 5,926 5,489 2,558 Total Net System Requirements . . . . .. 34,873 34,022 32,502 31,702 29,727 Load Factor ( % ) . . . . ............ 64 5 65.8 64.4 63.4 64.7 Production Data:
Cost of fuel (in mills per rwn of generation):
Coal . . ........ . ........ 12.95 13.17 11.15 10.50 10.42 Oil ....... .. .. ... ....... 39.01 28.62 29.74 26.13 27.00 Nuclear .. ................. 3.18 2.31 2.06 2.01 2.43 Other . .. ..... ....... 35.77 27.58 22.82 16.44 16.45 Average . . ............. 12.48 11.17 10.17 9.32 9.43 Generation by fuel type (%):
Coal ..... .... ........ 67 57 56 59 58 Oil .. . . ............... 6 9 10 9 9 Nuclear . .... ...................... 25 34 33 31 32 Other (gas & hydro) . ............... 2 1 1 1 Totals . . . .. . ............... 100 100 100 100 100 Electric Energy Sales (in thousands of uwn):
llesidential . . .. . ................ 10,754 10,715 10,257 9,932 9,418 Commercial .. ............... . 7,359 7,208 6,832 6,483 6,063 Industrial . . ...................... 11,974 11,447 10,849 10,477 9,847 Other .. ... ................... I,908 1,900 1,832 1,745 1,576 Totals . . .. ...... ....... 31,995 31,270 29,770 26,637 26,941 Electric Operating Ilevenues (in thousands):
llesidential . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 597,757 $ 544,571 $ 515,522 $ 444,244 $395,329 Commercial . . . .. .. .......... . 360,859 328,081 308,904 263,423 237,676 Industrial .. .. . . ........ ........ 431,104 365,456 342,487 285,056 258,355 Other . . .. ....................... 77,512 67.421 64,541 57,180 45,709 Totals from Kwn Sales . ............. I,467,232 1,305,529 1,231,454 1,049,903 937,069 Other revenues . ... . ... ............ 20,479 18,721 18,222 16,273 15,259 Totals .. . ...... .. . . . . . . . . . $1,487,711 $1,324,250 $1I249,676 $1,066,176 $952,328 Customers-Year End (in thousands):
Residential .. ... . .............. 1,386 1,364 1,339 1,320 1,299 Commercial . .. ..... ........ ..... 157 154 151 149 146 Industrial . . . . . . . .......... .......... 10 9 9 10 10 Other ............... ............... 5 5 5 4 5 Totals .. .. ....................... 1,558 1,532 1,501 1,483 1,460 Price per xwn-all customers (cents) . . . . . . . 4.59 4.18 4.14 3.67 3.48 I
i (a) Includes the installed capacity of the Three Afile Island nuclear generating station Unit No.1 of 800 htW and Unit No. 2 of 800 AlW. The reserve capacity, excluding these units for 1979, would be 6.25 (b) Winter peak.
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Directors Louis J. Appell Jr.i. 2.8 President Susquehanna Broadcasting Co.
York, Pennsylvania 17405 (Communications and Consumer Products)
John F. Burditti, a Chairman and Chief Executive Ofcer ACF Industries, inc.
New York, New York 10017 (Equipment Slanufacturing)
Herman Dieckamp President and Chief Operating O@cer General Public Utilities Corparation Parsippany, New Jersey 07054 Val B. Diehl'. 2 President and Chief Operating O@cer Nabisco inc.
East flanocer, New Jersey 079G3 (Consumer Packaged Products)
Warren J. Hayford 5.8 President and Chief Operating O@cer Internationalliarcester Company Chicago, Illinois 60611 (Equipment Slanufacturing)
William G. Kuhns Chairman and Chief Executive Ofcer General Public Utilities Corporation Parsippany, New Jersey 07054 John F. O' Leary 1.8 Energy Consultant Washington, D.C. 20006 Dr. John W. Oswald1 President Pennsylvania State University University Park, Pennsylvania 16802 Paul R. Roedeli 2 i President and Chief Operating O@cer Carpenter Technology Corporation Reading, Pennsylvania 19603 (Specially Sletals) 1 l
a 1 Member of Audit Committee 2 Member of Personnel Committee (
8 Member of Nominating Co.nmittee j l
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Officers General Public Utilities Corporation GPU Service Corporation William G. Kuhns William G. Kuhns Chairman and Chief Executive O@cer Chairman and Chief Executive O@cer H:rman Dieckamp Herman Dieckamp President and Chief Operating O$cer President and Chief Operating O@cer V:rner H. Condon Verner H. Condon Vice President and Chief Financial O@cer Executive Vice President Edw:rd J. Holcombe Robert C. Arnold Comptroller Vice President, Genera! ion John G. Graham Bernard H. Cherry Treasurer Vice President, Corporate Planning H:I:n M. Graydon Philip Clark Secretary Vice President, Nuclear Activities Graca Wade Frederick Glickman Anistant Secretary Vice President,3faterials Slanagement John G. Graham Vice President and Treacurer Fred D. Hafer Vice President, Rate Case Afanagement Edward J. Holcombe Vice President and Comp' roller William B. Murray Vice President, Communications Edmund Newton Jr.
Vice President, System Operations Subsidiary Operating Companies Robert H. Sims Vice President, Power Supply Shep:rd Bartnoff, President Jersey Central Potter ir Light Company d
(,I*Y
,, y, , ,
Stadison Ave. at Punch Bosci Road Alorristoten. N.J. 07960 Helen M. Graydon HIrman Dieckamp, Acting President #######Y
, hietropolitan Edison Compant) Patrick F. Daley l 2S00 Pottstille rike Assistant Comptroller l Reading, Pa.19603 l Mildred Misura l William A. Verrochi, President Assistant Treasurer l Pennsylcania Electric Company 2001 Broad Street Grace Wade Johnstoten. Pa.15907 Assistant Secretary l
l James B. Liberman General Counsel Transfer Agent and Registrar--Common Stock llartford National Bank and Trust Company 777 Slain Street, llartford, Ct. 06115 l
Agent-Dividend Reinvestment and Stock Purchase Plan--
Common Stock
- lixrtford National Bank and Trust Company P.O. Box 210, llartford, Ct. 06101
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