ML19312C980

Financial Practices of General Public Utils Corp,1968 Through Mar 1979

ML19312C980
Person / Time
Site:	Crane
Issue date:	09/30/1979
From:	WHITMAN & CO., INC.
To:
Shared Package
ML19312C974	List: ML19312C973 ML19312C980
References
TASK-TF, TASK-TMR NUDOCS 8001170607
Download: ML19312C980 (65)

Text

{{#Wiki_filter:... - P 4 i, i. I t I i t t !3 ii l i 1 1 i. E l l l a i l l FINANCIAL PRACTICES I OF l GENERAL.PUBLIC UTILITIES CORPORATION .a - i 1968 THROUGH MARCH 1979 i l i l l l l w September 19M - 4 l w l' 800117060 ) l.,- - -n, --,,n--c.,

I? NESTOR-OWNED ELECTRIC UTILTTY INDUSTRY OVERVIEW 1968 THROUGH MARCH 1979 l l 1 . The U.S. investor-owned public utility industry, in general, and the U.S. Investor-owned electrical industry, in particular, have unique financial l l characteristics. These unique characteristics resulted in utility companies having financial practices that have been quite different from those followed by industrial, commercial, financial and transportation conipanies during the 11-year and 3-month period ended March 31,1979. Before focusing in on the n.aterial differences, if any, in the financial practices of General Public Utilities Corporation and its subsidiaries (GPU cr the Utility), on the one hand, and the other 114 ccmpanies which make up the U.S. in'vestor-owned electric utility industry, a description of the industry environment during the 1968-1979 period may be helpful. Aside from any consideration of the regulatory environment in which the industry operated after 1968, there hardly seems any question but that the finan-cial and operating environment for companies in the industry could hardly have been worse. First, the cost of money (and its availability), both frcm the issuance of new debt securities and frem the sale of new equity issues, has been extremely important for electric utilities; such costs, while fluctuating, generally escalated dramatically after 1968. Second, fuel costs have been the largest single element of operating costs for companies in the industry; such costs skyrocketed, espe-cially after the Arab oil embargo imposed in the fall of 1973. Third, the companies

Paga 2 in the industry had to undertake massive capital expenditures in crder to expand generation, transmission, and distribution, especially ganeration facilities; the 1 ravages of inflation, especially double-digit annual in'flation after 1973, played havoc with construction costs. 4 Companies in the electric utility industry are inordinately capital-inten-sive requiring on the crder of 54 of gross plant to generate S1 of annual revenues. Demand for electricity both for regular service and to meet peak demands grew steadily and, as had been the case historically, investor-owned utilities from I 1968 thrcugh 1978 had to finance most plant construction through seeking cutside financing rather than relying heavily on the internal generation of funds. Table I reviews installed Generating Capacity in the United States for Investor-Owned Utilities frcm 1968 through 1978; Construction Expenditures by Investcr-Owned Electric Utilities (Excluding Hawait and Alaska) for 1968 through 1978; Investor-Owned Utility Sales of Long Term Debt, Preferred Stock and Common Stock from 1968 through 1978; and the Sale of Long Term Debt, Preferred Stock and Common i Stock from 1968 through 1978 as a percentage of constructica expenditures. While the various statistics in the "uble are not precisely compcrable, Table I illustrates that there was a large expansion in generating capacity during the relevant psrtod, that such expansion placed huge cash demands on investor-owned companies, and that, at all times, such cash demands were met, in large part, by chtaining funds through the sale of new issues of securities. l l

TABT.E I SOUltCl:S OF FINANCING NEW GENERATINC; CAPACITY II.S. INVESTOlt-OWNED ET.CC'IRIC UTILITIES l 1968 - 1978 Installed Generating Capacity Construction Expenditures Long Term Financing Kilowatts in Thousands (Except Alaska and IIawall) Tong Term Financing as % of Construction (Name Plate) Millions of Dollars Millions of Dollars Experw11tures 1978 P 453,647 $22,393 $12,360 55.2% 1977 438,385 19,758 13,975 70.7 1976 415,504 15.979 12,221 72.0 13,240 87.7 1975 399,036 15,090 1974 376,122 16,350 12,188 74.5 1973 316,476 14,907 9,264 62,1 1972 314,353 13,385 8,716 65.1 1971 288,301 11,894 9,369 78.8 1970 262,675 10,145 8,231 81.1 1969 240,078 8,294 4,875 58.8 1968 220,766 7,140 NA NA SOURCE: EEI P - Preliminary [e (d

Pagn 4 9 Given the need to seek outside financing in massive amounts, on a relatively continual basis, it was crucial for companies in the industry to main-tain a high level of credibility in the investment community so that new issues of debt and equity securities ~ could be marketed. This is in sharp contrast to most industrial companies - for example, IBM, General Motors, Exxon, Ametek - which were largely, or solely, self-financing, or which, if they sought recourse to outside financing, did so only rarely and then usually only tapped credit markets and not equity markets. Credibility in credit markets was cbtained by maintaining certain key ratios, e.g., earnings coverage of fixed charges and debt to stock ratios at acceptable levels which contributed to debt and preferred issues receiving satts-factory ratings from Standard & Poor's Corporation and Moody's Investors Serv-ice, Inc., the principal rating services. However, during most of 1968 through 1978, earnings coverage of charges was declining, reaching a low point in 1974 at 2.10 times coverage before improving from 1975 through 1977.* It should be noted that companies in the utility industry sell the vast majority of new issues of debt and equity securities publicly rather than marketing them through direct, or private, placements. Fixed Charge Coverages are reviewed in Table II.

• Earnings Coverage of Fixed Cherges is denominated by Moody's Investors SerMee, Inc. for holding ccmpentes (of which GPU is one) as Times Over-A11 Charges Earned" and is defined as the number of times that fixed charges and subsidiary preferred dividends (in the aggregate) were covered by total avc11-cble er.rnings after depreciatica... '

R Pags 5 TABLE II FRCM COMBINED INCOME STFIEMENTS IN'.TSICR-OWNED ELECTRIC UELIHES MILLIONS OF DOLLARS Income Before Fixed Times Fixed Charaes Charces Coverace 1978 NA NA

2. 50X E 1977

$12,985 $5,175 2.51 1976 12,549 5,566 2.25 1975 11,202 5,181 2.16 1974 9,685 4,615 2.10 1973 8,431 3,642 2.31 1972 7,397 3,048 2.43 1971 6,367 2,650 2.40 1970 5,603 2,270 2.47 1969 4,953 1,823 2.72 1968 4,454 1,494 2.98 SOURCE: EEI E -Estimate by Standerd & Poor's Ccrporation During the 1968 - 1979 period, utilities were obtaining larger propertions of funds from increasing amounts of pcrent company preferred stocks and ccmmon stock equities becomin; outstanding and a lesser percentage of long term debt being issued. Were this not the case, the fiv.cd charge coverages shown in Table II would have narrowed to points where debt securttles issued by companies e4 l

F Paga 6 ' would have been unacceptable in the market place. From the electric utt11ty's l point of view, dividend paying common stocks may be expensive money com-pared with interest paid on debt instruments. Interest is a deductible expense for tax purposes while dividends are not deductible. While both long term debt and most preferred stocks are to be retired through the operation of sinking funds, it was anticipated that dividend rates on ccamon stocks would be increased from time to time while interest payments on debt and dividend payments on preferred stocks were fixed. Failure to pay interest and principal on debt when due would be an event of default, probably resulting in bankruptcy. Failure to service equity securities does not constitute an' event of default. In any event, during the relevant period, many electric utilities found it necessary to issue increasing amounts of equity securities in order to support given levels of long term debt. This is shown in Table III, a review from the year end combined Balance Sheets of Investor-Owned Electric Utilities of Capitalisation ratios. As Table III s' .is, Icng term debt as a percentage of ' total capitalization, which was around 54% to 55% during early years after 1968, declined to 51% to 52% after 1975. 1 i

TADI.E III COMBINED CAPITAI.IZATIONS INVESTOR-OWNED ET.ECTRIC UTli.ITIES MILT.!ONS Ol' DOI.T.AHS As % of Total Capitalization Total Total I.ong Total Preferred Total Common Iong Term Preferred Common 12/31 Capitalization Term Debt Stock Stock Debt Stock Stock 1978 NA NA NA NA NA NA NA 1977 $160,690 $81,895 $20,019 $58,686 51.0%. 12.5% 36.5% 1976 146,463 75,827 18,384 52,252 51.8 12.6 35.6 1975 132,895 69,927 16,852 46,116 52.6 12.7 34.7 1974 119,415 63,612 14,740 41,063 53.3 12.3 34.4 - 1973 107,555 56,910 12,939 37,706 52.9 12.0 35.1 1972 Su,915 52,024 11,335 33,556 53.7 11.7 34.6 1971 86,096 47,122 9,157 29,817 54.7 10.6 34.7 1970 76,183 42, Ib ' 7,466 26,553 55.3 9.8 34.9 1969 67,441 37,127 6,360 23,954 55.1 9.4 35.5 1968 62,019 33,585 5,970 22,464 54.2 9.6 36.2 SOURCE: EEI E E ~

Pags B Regardless of the factors discussed above which were internal to the industry, utilittes' costs of money rose diaterially after 1968. This occurred because interest rates in the United States and, indeed, in the Western world, rose for all borrowers. The effect of this on utilities can be seen from an exam-ination of 'Ibble IV, Moody's Weighted Avbrages of Yields on Newly Issued Domestic Utility Preferred Stocks and Light, Power and Gas Bonds. RBLE IV WEIGHTED AVERAGE OF YIELDS Utility Light, Power Year Preferred Stocks Gas Bonds 1978 NA NA 1977 , 8.43% 8.43% 1976 9.12 8.92 1975 10.63 9.97 1974 9.95 9.59 1973 7.50 7.91 1972 7.53 7.50 1971 7.74 7.70 1970 9.01 8.79 1969 7.75 7.98 1968 6.44 6.80 SOURCE: Moody's Investors Service, Inc. l j l

m Pago 9 The financial practices followed by the companies in the industry insofar as common stock financing was concerne'd was to pay cut around two-thirds of earnings available for common stecks as common stock dividends. "Aen, period-ically, new ccmmen stock issues were publicly marketed, frequently just after dividend rates were increased. Commentatcrs have noted that this was akin to electric utilities giving cash to its shareholders (i.e., dividends) with its right hand and taking back cash (i.e., selling common stock) with its left hand. In this sense, utilities have been different from most major companies which have obtained a major portion, or all, of their equity funds from internally generated sources; the typical industrial company, bank, or insurance company, did not 1. pay out more than 50% of earnings available for the common stock as dividends. L The practice of electric utilities of paying large, regularly increasing, dividends and then seeking to raise new funds from the sale of common stock periodically i L is understandable against the background that massive outside financing would L be necessary and that such financing could not be met from internal sources even if a utt11ty retained all earnings available for common stock. Table V reviews Net income for Common Stock and Common Dividends during the relevant period and is taken from the ccmbined Income Statements of [ Investor-Owned Electric Utilities. i.: l -~-

Pago 10 TABLE V INCOME AVATTABLE FOR COMMON STOCK AND COMMON DTVTDENDS FROM COMBINER INCOME SRTEMENE - INVESTOR-OWNED ELECTRIC UTILITIES MILLIONS OF DOLLARS Net Income Available Common As % of Available for Common Stock Dtvidend Income 1978 NA NA 68.2% E 1977 $6,325 $4,322 68.3 1976 5,643 3,771 66.8 1975 4,859 3,272 67.3 1974 4,193 2,865 68.3 1973 4,083 2,656 65.1 1972 3,721 2,402 64.6 1971 3,281 2,191 66.8 1970 2,972 2,022 68.0 1969 2,823 1,880 66.6 1968 2,681 1,838 68.6 SOURCE: EEI E - Estimated by Standard & Poor's Corporation Because of the financial. practice of emphasizing regular cash dividends, i the rates of which are periodically increased, the investor profile of holders of I electric utility ccmmon stocks became weighted towarti those who were non-speculative and non-growth criented but, rather, enccmpassed investors seeking steady and increasing dividend income. Such investors are, of course, sensitive to changes in the cost of r..oney and, as interest rates increase, demand a ht;her l l

Pags 11 l l re: urn on their common stock invest =cnts. Such types of non-speculative investors also appeal to utilities because they constitute a =cre assured market to whom new issues could be sold than would be, say, those primarily interested in taking a chance on a company with a new invention or which is exploring for oil and gas. Thus, during the relevant period, the per share prices of utility common stocks were declining; the dividend per share was increasing; and earnings per share were increasing resulting in increasing dividend returns and falling price-l earnings ratics (the price earnings ratio -- i.e., P.E. or multiple, is equal to market price per share divided by earnings per share). This is shown in Table VI, which is compiled from averages for Moody's 24 Utility Common Stocks. TABLE VI UTILITY COMMON STOCKS Weighted Average Weighted Average Dividend Return Price Earnings Year Market Price Cividend Rate 3atio Times 1978 $63.54 $5.81 9.14% 7.4X 1977 67.55 5.54 8.20 7.8 1976 60.10 5.18 S.62 7.4 1975 51.25 4.97 9.70 6.6 l 1974 48.26 4.83 10.01 6.3 1973 71.21 5.01 7.04 9.4 l 1972 E0.20 4.87 6.07 10.4 1971 84.16 4.77 5.67 11.8 1970 79.06 4.70 5.94 11.5 1969 94.55 4.61 4.S8 13.7 1968 98.'37 4.50 4.57 14.8 SOURCE: Mcody's Investors Service, Inc.

e Pago 12 l V/hile we do state, with as much assurance as anyone can have about anything as unpredictable as commen sto'ck prices, that increasing costs of l money were a major contributor to electric utility common stocks being peer stock market performers during the relevant period, other observations about the causes of peor stock market performance are quite speculative. Specifically, it is i difficult to comment meaningfully about whether investcr-owned utilities would l have had fewer financial problems had a greater proportion of profits been re-l tained and reinvested in new plants rather than paid out as dividends. We think l the questien may be moot since few, if any, electric utilities would, or should, have been willing to take the risk that, without paying out liberal common stock dividends, the utilities still would haws been able to market new issues of com-mon stock equities. Put simply, without the prospects of regular dividends, it.. became possible -- even probable -- that, at certain times, utilities (and other ccmpanies) would have been unable to market new common stock issues at any price. And, requirements for funds for individual utilities were so great that, even if all not profits had been retained, the utilities still would have had to sell new issues of common stock periodically albeit such celes would have been much less frequent and in much smaller amounts than where utilities were paying out apprcximately two-thirds of reported net profits as dividends. Construction costs for new plant have significant impacts cn utilities and such costs had been escalating rapidly. This can be seen from an examina-l tica cf Tc.ble VII taken from the Handy-Whitman Index of Public Utility Constructica

Paga 13 Costs for electric utilities located in the North Atlantic Region. The North Atlantic Regica covers the New England States, New York, New Jersey, Penn, sylvania, Delaware, Maryland, the District of Columbia and West Virginia. The cost figures in Table VII have been adjusted to a base of Januanf 1,1968 = 100. The Handy-Whitman Index indicates that, by 1976 and 1977, electric utility construction costs - both nuclear and non-nuclear - had doubled over levels existing in 1968. TABLE VII COST TRENDS OF ELECTRIC UTILITIES CONSTRUCTION NORTH ATLANTTC REGION IANUARY 1,1968 = 100 Total Plant Nuclear Production Plant Date All Steam Generators Structures and imorevements Reactor Plant Eculptre IA/68 100 100 100 7/1/68 101 103 102 1A/69 103 105 104 7/1/69 107 112 107 1A/70 112 116-111 7/1/70 116 122 116 1A/71 119 127 120 7/1/71 126 134 125 1A/72 132 141 132 7/1/72 135 142 134 1/1/73 137 147 137 7/1/73 144 154 141 1/1/74 152 159 144 7/1/74 172 175 160 1/1/75 187 185 171 7/1/75 199 191 ISO 1/1/76 202 192 189 7A/76 208 199 195 1A/77 212 204 201 l-7/1/77 221 210 207 1/1/78 225 214 213 7/1/78 231 224 220 1A/79 242 233 229 SOURCE: Whitman, Requendt and Associates

Page 14 f Fuel costs have escalated dramatically for electric utilities, especially since the Irab oil embargo imposed in the fall of 1973. This repid fuel ascala-tion after 1973 occurred despite weaknesses in fuel prices from time to time in t l specific markets. For example, in 1978, there had been an " oil glut" especially on the V/est Coast after the Trans-Alaska Oil Pipeline commenced operating and before the fall off in Iranian production. Also, prices in the spot markets for l steam coal had weakened periodically before 1979. Nonetheless, as is shown in Table VIII, there have been almost inexorable rises in fuel costs in the Middle Atlantic States which consist of New York, New Jersey and Pennsylvania. Table VIII consists of a review cf Cost of Fuel per Net Kilowatt Hour in the Middle Atlantic States from 1971 through 1977. TABLE VIII TOTAL ELECTRIC UTILITY INEUSTRY COM POSTTE AVERAGES MIDDLE ATLANTIC STATES Cost of Fuel Per Year Net Kilowatt Hour 1978 NA 1977 1.71 1976 1.51 1975 1.52 1974 1.46 1973 0.69 1972 0.59 1971 0.54 1970 NA 1969 NA 1968 NA SOURCE: Edison Electric Institute

Page 15 Frcm the foregoing, we conclude that there has been a deterioration in the financial quality of the cen.panies in the industry from 1968 through 1978 cnd that, in the perception of equity investcrs, there, too, has been a detericra-tion In the attractiveness of utility common stocks as investments. This is par-ticularly brought out in Table VI which shows that, in 1968 and 1969, investors were willing to pay about $14 in stock price to obtain $1 in earnings;* while, after 1973, investers were only willing to pay between $6 and $8 to obtain $1 in earnings. The industry also seems to have been less favored by creditors; evidence of this is found in changes in electric utility bond ratings by Standa:d & Pocr's Ccrporation from 1969 through 1978. During that period,100 issues were downgraded while only 27 issues were upgraded. Many observers attribute the decline in the quality of utilities and their securities to an adverse regulatory atmosphere in which the full amount of rate increases requested have not been granted and where, because of environmental and otherconsiderations, facilities construction and cperations have been ham-pered. From a narrow point of view, the observation has validity. From a broader l perspective, however, the observation is less well taken. Regulatcrs do have to represent several ccnstituencies and insuring the viability of individual electric l l utilities has to, in practice, be balanced against what is desirable for society l as a whole and what groups of electric utility customers can cfford to pay. The "The amount investors are willing to pay for $1 of ecrnings is commonly known as the earnings multiple er price earnings ratio. Thus, if a commen ste k sells et $20 per share end a company has net earnings of, scy, $3 per share, the multiple, or P.E. rctio, is 6.7 times derived by dividing $3 earnings into the $20 stock price.

Pega 16 over-all economic climate in which the electric utilities operated after 1969 - marked by rampant inflation in construction. costs, rising costs of money, an unfavorable market for utility equity securities, and rapidly rising fuel costs - was adverse. Had rate regulation been more beneficial for utilities during the 1968-1978 period, it is fair to conclude that financial problems would have been fewer. Also, had not delays in construction occurred because of safety and environmental considerations, utilities would not have faced quite as difficult a constmetten ecst squeeze as actually did occur. Nonetheless, it should be nr.ted that no matter how benign regulation would have been from the industry's point of view, the over-ell economic climate would have been hostile. The industry wculd still have been victimized because of increasing costs of money and a high rate of inflation which was utterly unprecedented for the United States in the post-World War II period. In order to understand the' industry better, in general, and GPU, in parti-cular, a few additional observations may be in order. Utilities are highly regulated natural monopolics. Operctions tend to be etable and relatively unaffected by the business cycle. Growth in electric consumption has been steady and even large price increases per Kilowatt Hour i after 1974 failed, by and large, to stem growth in demand even though growth i in electric consumption waned moderately after 1973. 1974 was a no grcwth yect for the industry in terres of physical consumption cf kilowatts but, after

Pags 17 1974, annual growth resumed although at a rate below that which had existed pre-1974. These observations are brought cut in Table IX, which reviews for 1968 through 1978, electricity made available in the United States by investor-owned utilities, by total available in the U.S., and by total available per capita. TABT2 IX ELECTRICITV MADE AVAILABLE IN THE UNITEP STATES K!D', WATT-HOURS IN MI". LIONS Investor- % Change % Change % Change Owned From Prior Total Avail-From Prior KWHRs From Prior Year Utilities Year able in U.S. Year Per Person Year I 1978 P 1,721,321 F2.2% 2,304,857 '3.4% 10,570 + 2.6% l l 1977 1,684,084 + 6.5 2,229,156 +4.4 10,302 > 3.7 l 1976 1,582,029 + 6.4 2,133,369 +6.2 9,938 + 5.4 1975 1,486,844 +3.1 2,009,166 +1.4 9,430 +0.1 l 1974 1,442,114 - 0. 5 1,980,702 F0.4 9,370 - 0.3 1973 1,448,860 + 6.6 1,973,023 +6.0 9,402 +62 1972 1,358,929 + 8.8 1,861,889 +8.3 8,941 + 7.2 1971 1,248,596 + 5.5 1,719,358 +4.7 8,338 + 3.5 1970 1,183,190 +7.4 1,641,731 +6.7 8,055 + 4.4 1969 1,102,162 +8.1 1,553,829 +8.3 7,716 + 7.2 l l 1968 1,019,313 1,435,398 7,199 P - Prcliminary SOURCE: Energy Information Administration 4

Paga 18 Comparad with companies in other industries, utilities have very good abilities to predict fu,ture demands, to budget, and to plan. This was truer be-i fore the ultra rapid escalation of construction costs in recent years which came at a time when the period of construction for new plants, whether nuclear or coal; lengthened materially. A good statement about the ability of utilities to predict and prepare forward-locking information is contained in the Securities and Exchange Commission's ' Proposed Guidelines for Disclosure by Electric and Gas Utility. Company" published in June 1979. There, it is stated, "Unlike companies in many other industries, utilities, by virtue of the regulatory environment in which they operate, are constantly required to prepare exten.sive amounts of fcrward looking information for inclusion in reports to other governmental agencies and in connection with rate requests. Accordingly, utilities have considercble experi-ence in developing this information... " l l Electricity is essential and has to be provided when needed. Fcr practical purposes, it cannot be stored and, as a consequence, companies have to have capccity, unused much of the time, to meet public demands. l This is an industry in which comparisons among companies within the industry are highly meaningful. First, there is a Uniform Systems of Accounts fcr financial reporting purposes, and regulation especially within specific jurts-dictions, e.g., Pennsylvania and New Jersey, is also uniform. Statistical analysis is highly meaningful and disclosures to creditors, investers and regu-letors is ccmprehensive. Unlike other industries, financing is relatively

Page 19 conventional; non-operating assct conversion activities such as mergers and acquisitio,ns, hostile take-overs, share repurchases, or esoteric tax shelteis, are virtually non-existent. Almost all managements are hired n.anagements and only infrequently are there large blocks of stock in a positicn to exercise control. For rr.ost companies, control is exercised through Boards of Directors and rr.anage-monts which own relatively little common stock or other voting securities. FINANCIAL PRACTICES 9.E GENERAL PUBLIC UTILITIES 1968 THROU3H MARCH 1979 GPU, throughout the relevant period, was subjected to the same economic forces that existed for the uttitty industry in general. GPU followed the same financial practices that we:c typical of companies in the industry. Despite an apparent huge cost overrun connected with buildingThree Mile Island 2, its impact on GPU finances and operations was not such that GPU became a pocrly situated company relative to other electric utilities with which it might be deemed most comparable. Also, creditor and investor perceptions of GPU were not materially affected and, throughout almost all of the relevant period and certainly efter 1976, GPU had access to public securities markets fcr the sale of debt instru-ments, preferred stocks and common stocks on a virtual equal footing with the cther electric utilities which were most comparable to GPU. There were only brief periods during the relevant ints:ual where indenture ratios temporarily stopped the

Page 20 Ccmpany from selling new debt or preferred stocks. As cf the end of 1978, when , Three Mile Island 2 was placed in ecmmercial operation, GPU eppeared to have easy access to public markets fcr securities. In terms of comparative analysis among individual companies, electric utilities are mere comparable with each other than is the case for company com-parisens within other industries; comparative statistical analysis among Individual electric utilities is particularly meaningful. This does not mean, however, that there are not considerable differences that result in a lack of comparability emong individual utilities. For example, differences in rate regulation, differences in services provided, such as, many electric companies also distribute gas, differ-ences in history and differences in the geography and demography of the territory served, can ma'de two electric utilities lack considerable comparability. 1Iow-ever, even where two utilities lack comparability, it is frecpently a relatively simple matter to reconcile the lack of comparability so that meaningful financial judgments can be made. Cospite individual differences, we concluded that the individual electric utilities most comparable to GPU were those large-sl:ed, investor-owned com-l panics whose operations were located in whole, er in material part, in Penrsyl-venia and New Jersey. These other electric utilities are as follows: Allegheny Power System Pennsylvania Power & Light Philadelphia Electric Euquesne Light Atlantic City Electric Public Service Electric & Gcs

Page 21 The specific compartbilities that prcmpted us to use these six con.panies cs ccmparables (the Ocmparables) are that they are, by and large, urder corr.n.cn regulation by the same State regulators, they are geographically c1cse to each othar, and they d : have common interests in power generation; and all are, er have subsidicries which are, members of the Pennsylsenia-New Jersey-Maryland Interconnect through which their transmission facilities are interconnected. It should be noted, thcugh, that there are significant differences between GPU, en the one hand, and each of the Comparables, on the other. Fcr example, while both GPU and Allegheny Power System are the only enterprises which are holding companies registered with the Securttles and Exchange Commission under the i Public Utility Holding Company Act of 1935, Allegheny Power System has no oper-ating subsidiaries in New Jersey. Rather, its electric properties are located, besides Pennsylvania, principally in West Virginia and Maryland and also in adjacent sections of Ohio and Virginia. Unlike GPU, Duquesne Light, Philadelphia Electric and Public Service Electric and Gas serve territeries which are heavily i urbanized and, in addition, Philadelphia Electric and Pubite Service Electric and l ~3as provide significant gas utility services. Path Atlantic City Electric and Penn-sylvanic Power & Lt;ht are censiderably smaller companies than is GPU. Rates charged per KWH are one indication of the level of service en electric uttitty is providing fer customers. Table X is a review of prices paid per KWH by recidential customers for 1968 and for 1973 through 1978 fer GPU, for each of the Ocmparable: cad for the Edison Electric Institu:e (EEI) compilation of U.S. Invester-

Pa.ge 22 owned utilities." Table XI is a review of prices psid per KWH by all classes of customers for 1368 and for 1973 through 1978 fcr GPU, for each of the Com-pcrables and for the EEI compilation of U.S. Investor-owned utilities. In terms of rates charged, GPU's per KWH rates compare unfavercbly with those of Allegheny Power System, Pennsylvania Power & Light and the EEI compilation both as to prices charged in 1978 and percentage changes from 1968 to 1978. GPU's per KWH rates con. pare favorably as to prices charged in 1978 and percentage changes from 1968 to 1978 with the three comparables which are heavily urban - Cuquesne Light, Philadelphia Electric and Public Service Electric and 3as - and Atlantic City Electric. (It might be noted, too, that GPU's rate in-creases were a post-1968 phenomenon; prior to 1968, GPU had not requested any meaningful rate increases during the entire post-Werld War II period.: The GPU KWH charge before the end of 1978 may be unduly low because, fcr 1978, Three Mile Island 2 was not in the rate base; this facility did not become so included until ectly 1979 for two GPU subsidiaries, Pennsylvania Electric and Jersey Central, while the Three Mile Island 2 rate increases for Metropolitan Edison were not ex-pected before March 1979. As an addendum to Table XI, it should be noted that the price chcrged per KWH by GPU for the first 4 months of 1979 fcr all classes was 4.25C, up from 4.05 & in the year earlier interim and 4.184 for all cf 1978. It does not appear es if GPU rates were so high over-all as to cell into questien tha financini integrity of the Company. Setes chcrged by utilities in the EE! compilatica may not be especic!!y com-pcrable with GPU in terms of measuring relative efficiencies. Fcr excn:ple, mcny ut!!ities in other pcrts of the country benefit frcm access to Icw c st natural gas er hydro-electric facilities.

TABT.E X PRICCS Pall' PER KII.OWATT-IfOllR RESITTENTI AT. Allegheny Pennsylvania Power. Power & Duquesno Philadelphla Atlantic City Public Service EEI Investor-Yonr GPII system T.taht I.taht Electric Electric Electric & Gas Owned 1978 5.08C 3.954 4.074 5.924 5.474 5.114 6.604 4.314 197) 5.03 3.37 3.93 5.09 5.27 4.94 6.34 4.06 1976 4.47 3.27 3.55 4.73 4.92 4.78 5.75 3.73 1975 4.20 3.30 3.21 4.56 4.91 4.69 5.44 3.51 1974 3.00 2.74 2.88 3.78 4.39 4.17 4.85 3.09 1973 3.02 2.31 2.45 3.03 3.39 3.15 3.43 2.54 1968 2.33 2.19 2.08 2.42 2.28 2.38 2.61 2.25 % Increano 1968-1978 110.0 % 80.4% 95.7% 144.6% 139.9% 114.7% 152.9% 91.6% SOURCES: Reports to Stockholders i N 4 0

N TAlli.E XI PillCES PAID PER KII.OWATT-IIOIIR FI.T. Cf. ASSES Allegheny Pennsylmnia Power Power & Ducposno Philadelphia Atlantic City Public Service EEI investor-Year GPU System T.tqht T,tq ht Electric Electric Electric & Gas Owned 1st 4 mos. 1979 4.254 lat 4 mos. 1978 4.05 1978 4.18 3.064 3.594 4.454 4.414 4.744 5.334 3.704 1977 4.14 2.47 3.48 3.65 4.28 4.61 5.16 3.44 1976 3.67 2.33 3.13 3.34 3.86 4.44 4.69 3.11 1975 3.48 2.47 2.80 3.24 3.82 4.44 4.47 2.94 1974 3.10 1.94 2.47 2.51 3.38 3.93 3.97 2.50 1973 2.34 1.51 2.06 1.93 2.43 2.90 2.67 1.97 1968 1.76 1.38 1.68 1.48 1.56 2.08 1.93 1.64 % Increase 1968-1978 137.5% 121.7% 113.7% 200.6% 182.7% 127.9% 176.2% 125.6% SOURCES: Reports to Stockholders O 2

Pcga 25 There is an apparent correlation between KWH charges to customers of electric utilities and net investment in plant per KW capacity where construction werk in progress (CWIP) is' excluded from net plant. Howevar, because of Indi-vidual differences among companies, the inferences that ought to be drawn merely from an examination of financial data has to be limited since the cost of a utility plant will vary depending on many facters, including geographic location and when the plant was built. (See, for example, Table VII showing changes over time in costs of canstruction.) In any event, Tablo XII contains a review as of December 31, 1978 for GPU and the Comparables of Prices Paid per KWH all classes, Investment in Net Plant (exclusive of CWIP.i per KW of Capacity, and per cent of 1978 Generation which was Nuclear.

TABLE XII PRICES PAID PER KWII, INVESTMENT IN NET PT. ANT AND % NUCr.EAlt GENERATION Allegheny Pennsylvanta Power Power & Duquesno Philadelphia Atlantic City Public Servico GPU System I.la ht I.laht Electric Electric Electric & Gas Prico Pald Per KWII All ' Classes 4.184 3.064 3.594 4.45C 4.41C 4.744 5.33C Investment in Not Plant por KW of Capacity $416.58 $256.82 $280.04 $453.36 $401.61 $369.60 $366.63 % of 1978 Genera-tion 'Nhich Was Nuclear 34% 0% 0% 13% 26% 24% 28% SOURCES: Reports to Stockholders t 'd E

Prgo 27 GPU was not, at any time F.uring the relevant period, financed materf ally differently than the Comparables. Table XIII, for example, reviews capitaliza-ticas as of December 31, 1378 for GPU and the Comparables. o i e l l I i l

TART.E XIII CAPITAT.1ZATIONS OF GPU AND COMPARABr.Es Allegheny Pennsylvanta Power Power & Duquesno Philadelphia Atlantic City Public Servico GPU System I.tcht T.tcht Electric Electric _ Electric & Gas Total Capital (Including Short Term Debt (000 000) $4,053 $2,219 $2,475 $1,804 $4,301 $614 $ 4,512 % of Total Capital including Short Term Dobt: Short Term Debt 3.8% 7.6% 6.5% 3.3% 1.6% 1.2% 4.3% Long Term Debt 49.8 49.3 42.3 47.5 50.5 46.7 44.4 Preferred Stock 12.7 10.9 18.3 17.2 13.6 14.3 13.0 Common and Surplus 33.7 32.2 33.0 32.0 34.3 37.8 38.4 Total Capital 100.0 % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0 % SOURCE: Stockholder Roports - M

Page 29 l GPU's profitability during the relevant period appears to have been within ranges that existed for the Comparables. One measure of such profitability is return on equity. Moody's Investors Service, Inc. calculated such a return on i equity by dividing net income before preferred dividends into net stockholder's ecptty including preferred stocks as of the year-end. Table XIV reviews return on ecpity as calculated in this manner by Moedy's Investors Service, Inc. for the years 1972 through 1978. B.BLE XIV RETURN ON ECUITY Allegheny Pennsylvania Power Power & Duquesne Philadelphia Atlantic City Public Servic: Yect GPU System Licht Li7ht Electric Electric Electric & Gr 1978 7.4% 7.2% 7.0% 7.4% 9.0% 8.8% 9.8% 1977 7.8 7.7 11.1 8.7 8.8 10.5 9.8 1976 7.3 9.0 9.6 8.9 8.9 10.8 9.8 1975 6.4 9.4 9.9 10.7

8. '9 10.6

'8.2 1974 9.7 6.8 10.1 9.9 8.3 10.9 8.7 1973 9.8 8.8 9.0 9.9 8.4 10.5 7.9 1972 9.4 9.5 9.0 10.5 8.8 9.9

8.3 SCUFCE

Moody's Investors Service, Inc. l

Paga 30 GPU's consolidated coverage of interest charges and preferred dividende did not differ matericlly from those of the Comparables. This is reviewed in Table XV which is based on accounting statements as reported for the five calen-der years 1974 through 1978 and shows coverage in each year. Coverage is cal-culcted by dividing into

• Income before interest charges and preferred and prefer-ence dividends, the amounts represented by total interest charges and preferred and preference dividends.'-

TABLE XV EARNINGS CCVEPAGE OF FIXED CHARGES Allegheny Pennsylvania Power Power & Duquesne Philadelphia Atlantic City Public Service Year GPU System Licht Light Electric Electric Electric & Ga 1978 1.83X 1.72X 1.95X 1.80X 1.B 4X 2.05X 2.01X 1977 1.91 1.89 2.06 1.89 1.86 2.00 2.05 1976 1.80 1.83 1.65 2.12 1.88 1.99 1.95 1975 1.79 1.83 1.74 2.41 1.79 1.89 1.71 1974 1.90 1.69 1.84 2.33 1.89 1.96 1.75 SOURCE: Moody's Investors Service, Inc. G?U appeared to be relatively favorably situated versus the Ccmparables in terms of generating required funds from internal operations. This is shown in Table XVI which shows, from 1968 thrcugh 1978, annual ' Construction expenditures (including the allowance fer cther funds used during construction)" divided into l

Pcgo 31 " Funds generated from operations less cash dividends on Preferred, Preference and Cc:r.rr.cn Stock. ' TABLE XVT PERCENTA';E OF CONSTRUCTION EXPENI'ITURES GENERATED FROM INTERNAL OPERATICNS AFTER DIVIDENT PAYMENTS Allegheny Pennsylvanta Power Power & Cuquesne Philadelphia Atlantic City Pubtle Service Year GPU Svstem Ltsht Ltcht Electric Electric Electric & Gas 1978 52.4% 36.3% 16.8% 30.1% 38.3% 61.6% 65.7% 1977 46.1 38.5 26.3 38.1 36.4 59.2 64.0 1976 36.2 37.3 29.4 37.1 43.9 79.4 74.3 1975 39.6 61.2 20.8 25.8 31.3 56.0 56.3 1974 32.6 46.9 25.6 15.9 23.0 15.9 30.7 P 1973 27.4 49.1 27.7 14.5 13.3 17.1 25.6 1972 26.2 34.0 22.7 14.2 11.4 19.2 22.1 1971 25.6 25.8 15.4 15.2 13.2 16.9 23.8 1970 20.8 33.4 14.6 12.4 11.3 19.4 23.6 1969 25.1 25.1 23.8 13.8 19.0 28.7 38.1 1968 24.8 22.6 29.8 28.5 28.2 40.2 41.3 SOURCES: Stockholder Repcrts It should be noted, however, thtt, as of the end of 1978, the great weight of probabilities was that GPU's funds generated internally wculd, in 1973 through

Pago 32 1963, be a considerably smaller percentage of construction expenditures than hr.d been the case in 1978 albeit we have no reason to believe that, in the normal course of events, GPU could not have obtained adequate funding for its plans through outside financing. This smaller percentage of internal generation of funds which was anticipated is attributable to planned increases in construction expendi-tures. In addition, there were scheduled increases in debt amortization and pre-ferred retirements. In Table XVII, construction expenditures and debt amortiza-tion, plus preferred stock retirements for 1978, are ccmpared with the construction I expenditures and securities amortization and retirements that had been scheduled in each year 1979 - 1983. TABLE XVII GPU (Millions of Dollars) Construction Securities Year Expenditures Retirarj.cnt Total 1978 A $408 $ 33 $441 1979 E 455 64 520 1980 E 515 39 554 1981 E 720 31 751 1982 E ,685 41 725 1983 E 675 129 804 A - Actual E - Estimated SOURCE: GPU Reports to Stockhciders i

Pago 33 Nothing has come to our attention that would indicate that GPU would ^ have lecs access to public credit markets and public preferred stock markets than the Comperables. Throughout the period, the Moody's ratings enjoyed by GPU issues -1.e., senior securities issued by Jersey Centra 1 Power, Metropolitan Edison and Pennsylvania Electric - were satisfactory. Jersey Central issues did tend to be rated ona notch lower than issues of Metropolitan Edison, Pennsylvania Electric Company or the Comparables, but such ratings were not so low - never lower than Ba -so as to cause the belief that GPU might be excluded from selling new debt er preferred issues with the same facility as would have existed for i the Comparables. 'ihble XVIII reviews Moody's ratings for the GPU senior issues and the Comparables' senior issues as of 1978,1972,1976 and 1968. 9.BLE XVIII BOND RATINGS - SUMMIRY INFORMATTON Moody's Moody's Moody's Moody's Utilltv and Issue 1978 1976 1972 1968 General public Utilities Iersey Contral Power & Light first Bonds Baa Baa Bea A C ebontures Ba Ba Ba Baa Preferred Stock Baa Baa Unrated Unrated Metropolitan Ediscn First Bonds A A A A Debentures Bea Baa Baa Boa Preferrcd Stcck A Unrnted Unrated Unrated i

Paga 34 TABLE XVIII (continued) Moody's Moody's Moody's Moody's Utilttv end Issue 1978 1976 1972 1968 1 Pennsylvania Electric Co. First Mortgage Bonds A A A A Debentures Eaa Baa Baa A Preferred Stock Baa Baa Unrated Unrated Allecheny Power System Monongahela Power Co. First Bonds A A A A Preferred Stock A Unrated Unrated Unrated Potomac Edison Co. First Mortgage A A A(1) AII) Preferred Stock A .A Unrated Unrated West Penn Power First Bonds Aa Aa Ae Aa Preferred Stock A Unrated Unrated Unrated Pennsylvania Power & ) Lt ht Co. First Mortgage a A Aa Aa Preferred (71ssues approxin.ately) A A Unrated Unrated Preferred (5 issues approximately) Baa Baa Unrated Unreted r;uccesne f.tcht Co. First Bonds Aa Aa Aa Aaa (1) Called First Collateral Bonds in 1972 and 1968.

Paga 3,S TABLE XVTTI (continued) Moody's. Moody's Moody's Moody's Utilltv and I:teue 1978 1976 1972 1968 Cebentures A A A Aa Preferred (8 tssues approximately) Aa t.a Unrated Unrated Preferred (3 issues spproximately) A A Unrated Unrated oh!!adelphia Electric Fttst & Refunding Bonds A A Aa Aaa Cebentures Baa Baa NA NA Preferred Stock A A Unrated Unrated Atlantic City Electric First Bonds Aa Aa Aa Aa Debentures A A A A Preferred Stock Unrated Unrated Unrated Unrated Dublic Service Electric & Gas Co. First and Refunding Aa /.a Aa Aa Debentures A A A A Preferred Stcck A A Unrated Unrated Note - Preferred generally not rated by Moody's in 1972 and 1968 Tables XIX and X'{ explain the Moody':: Sond a..d Preferred Stock ratings.

Paga 36 TABLE XIX KEY TC f.:OCDY'S CCRPORATE RATINGS _ Aaa Bonds which are rated Ana are judged to be of the best quality. They carry the smallest degree of investment risk and are gen-erally referred to as "gllt edge." Interest payments are pro-tected by a large er by an exceptionally stable margin and prin-clpal is secure. While the various protective elements are likely to change, such changes as can be visualized are most un!!kely to impair the fundamentally strong position of such issues. h.a Bonds which are rated Aa are judged to be of high quality by all stand crd s. Together with the Ana group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may nct be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long term risks appear somewhat larger than in Aaa securi-ties. b. Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade cbligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa Bonds which are rated Baa are considered as medium grade obliga-tions, i.e., they are neither highly protected nor pocrly secured. Interest payments and principal security appear adequate for the pres-cnt but certain protective elements may be lacking or may be charac-toristicclly unreliable over any great length of time. Such bonds lack cutatanding investn.ent encracteristics and in fact have specula-l tive characteristics as well.

Paga 37 TIBr E XIX (continued) E.1 Bonds which are rated Sa are judged to have speculative elements; th: tr future cannet be considered as well assured. Often the pro-tection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this cless. E Bonds which are rated B generally lack chcracteristics of the desirable investment. Assurance of interest and principal payments or of main-tenance of other terms of the centract over any long period.of time may be small. Caa Bonds which are rated Can are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Eill. Bonds which are rated Ca represert cbligations which are speculative in a high degree. Such issues are often in default or have other merked shortcomings. 9 l Bonds which are rated C are the lowest rated class of bcnds and issues l so rated can be regarded as having extremely pocr prcspects of ever attcining any real investnient standing. e

Paga 38 TABLE XX MOOPY'S PREFERRER STOCK RATINGS "eaa" An issue which is rated

• asa is considered to be a top-quality preferred stock. 'Ihis rating indicates good asset protection and the least risk of dividend impairment within the universe of pre-ferred stocks.

An issue which is rated "aa" is censidered a high grade preferred stock. This rating indicates that there is reasonable assurance that earnings and asset protection will remain relatively well main-tained in the foreseeable future. .. g. An issue which is rated "a" is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the "aaa" and 'aa" classtitcations, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels. .. b aa " An issue which is rated

• baa is considered to be medium grade, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.

, g. An issue which is rated "ba ' is considered to have speculative ele-monts and its future cannot be considered vc11 assured. Earnings and asset protection may be very moderate cnd not vell safeguarded during adverse periods. Uncertainty of position charactertzes pre-ferred stocks in this class.

Pcge 39 TABLE XX (continued) i

• b

An issue which is rated "b' generally lacks the characteristics of a desirable investment. Assurance cf dividend payments and main-tenance of other terms of the issue over any long period of time may be small. caa" An issue which is rated "caa' is likely to be in arrears on dividend payments. This rating designation does not purpcrt to indicate the future status of payments. Like the Comparables, the GPU Common Stock became generally more unattractive to investors as measured by price-earnings ratios. However, both GPU and the Comparables were able to market new issues of common stock during the period; as a result of diminished market acceptance, though, larger numbers of ccmmon shares had to be sold to raise a given amount of funds. Table XXI, taken from Moody's Investers Service, Inc., reviews price-earnings ratios each year for GPU and the Comparables for the 10 years ended December 31, 1978. The Table brings out the declining trend in price-earnings ratios. At December 31,1978, GPU Common Stock, trading on the New York Stock l Exchange, was priced about in line with the Comparables as measured by current price-earnings retics, disecunt from book value, and percentage return on the Ccm-l mon Stock dividend. Tnis is brought out in 'Ibble XXII. l l l l l l

1ABI.E XXI PiliCE CAltil!!JGS RATIO IIATJGuil Allogheny Pennsylvanta Power Power & Duquesne Philadelphia I.tlantic City Public Servic. Ye ar GPII f;ystem I.t qht f.taht Electric I:lectric Electric & Gn: 1978 9.2-7.2X 10.8-8.0X 8.5-6.6X 13.1-9.7X 10.6-8.0X 12.0-9.9X 8.3-6.8X 1977 8.7-7.2 9.5-8.2 7.5-6.2 12.1-10.8 11.4-9.2 9.4-6.6 9.1-7.5 1976 8.9-7.1 8.6-6.4 8.4-7.1 10.6-8.9 9.9-7.8 8.1-5.2 8.4-6.3 1975 8.8-5.2 7.5-5.1 7.0-5.4 7.6-5.1 8.3-6.0 8.0-4.7 8.4-5.3 1974 9.0-9.2 11.9-6.6 8.0-4.5 9.3-4.8 10.8-5.2 9.8-6.9 8.9-4.5 1973 10.5-7.9 10.5-7.2-10.1-7.4 10.4-8.1 11.8-8,5 10.6-9.2 11.5-8.2 1972 11.7-9.9 10.6-8.4 10.9-9.2 11.2-9.6 12.0-10.2 13.5-10.6 . 11.6-10.0 1971 12.1-10.0 11.7-9.1 11.1-9.0 12.2-10.0 12.0-9.8 13.5-10.6 10.1-8.2 1970 14.2-9.3 11.5-8.4 13.8-10.2 12.2-9.5 13.5-10.3 14.2-10.7 11.5-8.4 1969 16.1-11.3 13.4-10.2 14.9-10.0 15.2-10.7 16.3-11.2 16.3-11.7 14.1-9.5 SOURCC: Moocly's Investors Service, Inc. N s

TAlli.E XXil COMMON STOCK MARKET APPRAISAT.S Allegheny Pennsylvania Power Power & Duquesno Philadelphia Atlantic City Public Servico C.Pil Systern T.toht I.tqht Electric Electric Electric & Gan Market Prico 17 1/2 15 1/2 19 1/4 14 3/4 15 1/2 10 20 1/4 V/herc !lsted NYS E NYSE NYSE NYSE NYSE NYSE NYSE Earnings Per Sitare: 1978 S2.30 $ 1. 90 $2.86 $1.49 $1.87 S2.21 $2.95 Dook Value Por Sharo $22.41 $20.59 $25.12 $10.20 $19.28 $21.21 S26.13 Indicated E:tvider.d $1.80 $1.72 S1.92 $1.72 $1.80 S1.74 $2.12 Price-Earnings Itatto 7.6X 8.2X 6.7X 9.9X 8.2X 8.1X 6.9X Price as % (Dlucount I'rcin) Not Asset Value (21. 9%) (24. 7%) (23. 4%) (19.0%) (10. 6%) (15. 9%) (22.5%) Z lteturn on Common Stock Dividend 10.3 % 11.1% 10.0% 11.7 % 11.6% 9.7% 10.5% SOU RCE: Standard & Poor's Corporation Moody's Investors Service, Inc. Stockholder Repor*s 's 1:

Page 42 As part of our examination of GPU fincncial practices, we especially focused on whether Three Mile Island Unit 2 was pressed into service prematurely because of GPU's financial needs. As is stated in the GPU 1978 Annual Report to Stockholders on Page 2 in regard to Unit 2,

• Cur objective has been to secure early recognition in our base rates of this fac!11ty..." We find no evidence that GPU desperately needed Unit 2 at the end of 1978 in that the Company had other sources from which it could obtain power, and the Company did have access to alternative sources of cash generation. These can be summarized as follows:

1) As is described above, GPU appeared to have reasonable access to outside sources of' funds in credit markets as well as equity merkets. The Company was not close to default on any of tl': senior securities which had been issued by its subsidiaries and as is stated on Page 17of the GPU 1978 Form 10-K in regard to senicr securities coven-ants, "GPU believes that the foregctng would permit the Subsidiaries to issue the senter securities required to carry out their 1979 con-struction programs, if such ability were measured as of December 31, 1978." 2) GPU hr.d reasoneble enticipation that funds for close to 50io of its I 1979 construction erpenditures would be generated internally. t 3) GP(J has $255 millica of bank lines of credit of which only S90,100,000 was in use as of December 31, 1978. l

Fcge 43 Whatever the merits of the October 1978 report prepared by Touche Ross & Co. for the New Jersey Department of Public Advocate entitled, Review of the Three Mile Island - Unit 2 Construction Project, as to postponements in making constn:ction expenditures in 1974 and 1976, the utility was not under the same 1 financial constraints after 1976. We reached this conclusion based in part on an anclysis of GPU's financial position and in part on interviews silth representatives of First Boston Corp. and Goldman Sachs & Co. as to their views about GPU's actual ability to market new issues of debt and equity securities in late 1978 and cerly 1979 prict to the accident. There is a dispute among tax authorities as to whether Three Mile Island Unit 2 had to have been placed in commercial service befcre the end of calendar 1978 in order for GPU to take advantage of depreciation allowances (under the half year convention) and to benefit in its 1978 tax returns frcm investment tax credits. On the one hand, GPU's general counsel relies, in large part, on Internal Revenue Ruling 76-428, included here as Exhibit XXIII, for its position. The operative lang-ucge of 76-428 is cited that,

• the nuclear generating unit hcd been placed in the control of the taxpayer by the contracter, and the generating unit had been synchron-toed into the taxpayer's power grid for its function in the business cf generating nuclear electric energy for the production of income, even though the generating unit would undergo further testing to clin.inate any defects... and to demonstrate re!!ab!11ty.
• James Liberman, Esq., of Berlack, Israels and Libent.an cf New York

1 Page 44 TABLE XXIII , '! 3 0 1976 Rulings E 3110-26 9.000 face amount of the P issue. Any with respect to the intensted facility located .d expenditures paid or incurred three in /.I during the applicable 69 ear period not , Lefore or af ter June 2,1975 with otherwise taken into account as an cutstand-et to facilities located in P, of,which ing prior exempt issue must be taken into

rincipal user is X or a related party, account in determining the face amount of be taken into account..In addition, the P bond issue, n pital expenditures. paid or incurred v..

3 0981B] Rev. Rul. 76-428, L R B.1976-45, 8. * - ' .. : a::. TCokleSec.'!67, Also CodeSec.46} - \\ I

• o 11epreciati:n: Invesiment' t'ax credit: Nuc! car electric cenerating unit: Time unit' placed in r.ervice.-A rauclear electric generating unit is first placed in service fot-at=ent credit and depreciation purToses when the unit is physically and legally d in the control of the owners by the contractor and is fully operat:'ccul, even though i.till undergoing testing to eliminate any defects and to demonstrate reliability.

c rsterences: $ 5siO27 arsi 1730D.32. Sies has been requisted' as to when signed function, that is, operating as a unit

rlear electric generating unit (" unit")

even though equipment was still under. '.rst placed in service for depreciation going testing to climinate any defects and nvestment credit purposes, under the to demonstrate reliability. All critical tests .mstances described below.. o. riecessary for power operation were per-formed pri' r to December 23,' 1975. 'IT.cre les.eEUlatt'd electric' utility o ':e taxPaY ar was a partial shutdown of the umt on its Federal mcome tas: December 24, 1975, which was due to an

.ny that ms on a calendar ear. basis,, owns a abundance of hydro-generated electricity ember 197{on of w ich commenced,in rather than to any problems concernina construct the unit.

ne unit was constructel for the tax-The taxpayer elected to apply the pro-r pt.rsuant to a contract. The major visions of section 1.167(a) !! of the Income

cnents that are necessary to the cpera.

Tax Regulations concerning the class life ct the umt include: a nuclear steam asset depreciation range system for cligible ,w. system; a reactor nuxiliary system; property laced in service in 1975 and gol and safety instrumentauon system; adopted t e half year convention set forth 2..o.c tive waste disposal systemt a in section 1.167(a)-(ll)(C)(2)(ii) for de-handheg and storace system; a tur-preciation purposes. The unit is depreciable tystem; and a contairment system. property and has a useful life of more December-23, 1975, the unit was than 3 years, ftutully comp!cte in all essential re-Section 33 of the Internal Revenue Cca t s. All systems had been proven op-of 19% allows a credit against Federal v.21 dunng the pre-operat,onal testmg income tax for qualified investmant in sec-i rn.m. A full term, full power operstmg tion 33 property. The determination of a was issued for the um,t on November what proparty, qualifies as section 38 prem- .Ts. All nuclear fuel assemblies were erty is made in accordance with the rules w

m. the reactor or. November 24, provided in section 48.

Criticality of the reactor was achieved a.:b;nes were operational en December i. Section 43(a)(1) of the Code provides, .'e cember 16, 1975. Ec: car steam sup. in pertment part, that m order to qualify '975. License restriction on the main ' n section 33 property, the property must m iso?ation valve was lifted on Decem-be depreciable and have a useful hfe of 3 2,1975. On December 23,1975, initial years or mere. trcrization and powe operation were -Section 167(2) of the Ccwic provides, in a,cd at greater the.n 17 percent of the part, that there shall be allowed as a de. me.nl capacity of the umt.. As of De-r.reciation d~iuction a reasonabic allowanco r 23,1975, a!! construct ort work was for the exhaustion, wear and tear, and ob- 't al.y comp!cte and the only rema,mu :: selescence of preperty used in a trade er .: tor personnel on the site were m busincss. } of st:.rtup and ntu.tenance activ-Ecetion 1.63(d)(1) of the regulatiens .. t se completion o: insu a ton. provides, in part, that for purposes of the ~* "- imit was physically in the control of investment credit allowed by section 33 of w n,trr, with all it.c b ea! attributes of the Code, property shall be consMcred i et!.ip such as title, risk of loss, and placed in sernce in the earlier of the fol. ty ""he unit w.is fully operational on lowinrr taxab?e years: (i) the taxable year nW 23,1975, at which time all equip-in which, under the tarrayer's elapreciation v1.s perforndng its specifically as-practice, the period for depinistion v.ith MU . @ 1976, Commerce Clearir.g IIouse,Inc. 's L

Page 45 l. 8 st toos 1976 Ru11ngs 71G5I i espect to such property begins: or (ii) in the instant case was in n condition or ne tauble yea.r m which the property is state of readiness and availability for a Aced ir. a condition cr state of readiness speci5cally assed function on December .r.d a,ailability for. a specifically assigned 23, 1975, m that the necessary permits and licenses had been approved, the critical tests %ction. Section I A6-3(d)(2)(iii) of the regulation's i e the, various components had been com-leted the nuclear generating unit had c,< ides, in part, that equipment acquired feen p, laced. in the control of the t y a taxpayer for a. specifically assigned by the contractor, and the generat,axpayer mg umt unction in the taxpayer's trade or business synchron,ized into,the taxpayer s had been,d for its function m the busmess .St is cperational but is undergoing testing power gra c'irr.ir. ate any defects is considered to of generating (nuc! car electric energy f r the ~ ' Fin a conriition or s'a e of readiness and product, ton income, even though the MMi!ity for a specUically assigned functi:n, penerating umt,would undergo further test-4 Se:tien 1.167(a)-il(c)(2)(iii) of the reg-mg to eliminate any defects. The unit was ,lations t rovides, in part, that the depre-physically in the control of the owners nation allowance.'or a vintage account for who posse $ sed all the legal attributes of Nch the taxpsytr adopts the " half year ownership.f .jnvention" shall be determined by treatiU Accordingly, in the instant case, the property m the account as placed in nuclear electric renerating unit was "fust .a ..;mcc on the first.dar of.the second half placed in service" on December 23. 1975 . the taxable yearr -..wr. a: for. depreciation and investment credit pur-litio s provides, m,-11(c)'(1)(i) of the reg-poses. Therefore/ the taxpayer is entitled Sectic, !.167(a) part, that property is to deduct 6 months depreciation and to i

t placed m service wh

n it is m, a claim the investment credit on its 1975 y:h,t:en or state of read,hiess and is avad.

Fe.deral.t. income tax return with respect to .c for a specifically asugned function. In this uni me :;l the provisions of section 1.46 3 1(1)(i.) and (d)(2) apply ice the purpose Compare Rev. Rul. 7G256,1976231. R. D. placed,ining the date.on which property7, which concerns when a coa!4 red electric <!c mr generating unit was Crst placed in service m semce.. Under the facts dif. circumstances de-for depreciation and investme-st credis purpses. l r-ibed above, the,nucIrar generating unit j 6 I M6931C) Rev. Ru!.-76-429, I. R. B.1976-45,9. .e 1 ..r l ..,..: ?s.r.(Code See. n2. A_ Iso Code Sec..t46} Uqtddstions:: Complete v. partial: ' Liquidation of subsidiary followed by reincorpora-

n.-The sale by a wholly owned subsidiary of one of its two businesses followed by an

. mediate distribution. under a plan cf complete liquidation, of all of its assets, including i

ules proceeds, to the parent which 13 days later reincorporated the retained business in :utstance a partialliquidation of the subsidiary under rection 346(a)(2) of the Code

,1 not a complete liquidation within the mes:ung of tection 332. Bacic references: .W6.064 rr.d 2495.255 - .i ../ O b .'.6 ice has been reqOcated whether, under assetsif that b'usiness to ari s:nrelated party fo!!cwing circumstaaces, a transaction for cash. On the same date S I abted a edi6es.u a complete liquidation of a sub-plan of complete liquidation and distribute ! p .ti.cy cr rporation under section 332 of the all of its a.ssets (incledine the rrocce ls of .u.r al hvenue Code of 1954. the sale) subject to its liabilities to P in en charge for the S-1 swk S-1 was then dis-14e ever 5 years prior to December 31, s Ived pursuant to the pertinent state code.

73. entporation-P had owned all of the v.k of exporatien S-1 that had been en-

. On Ja' uary 13,1974, P funnel a new cor-i- C, n .:ed in tm business (s:- (1) the manufac-poration, S-2, in the same state and haviert -e at:d sate of steel specialty items and t!:c same n:une as S 1 wd tonsferreI to it i ') the orrership a,d management of all.cf the assets c,f the steel 1usiness, ruh-ortment bu,ldings. The net assets attrih-ject to liabilities, previously conducted 1.y Ee to busine s (1) and (2) represented, S 1, in.cxchange for all the S-2 stock. In-q.cctively 52 and 48 percent of the net ciudal in the assets tranr ferred was an

r manket value of t!'e assets of S-1. All smaunt of liquid aisets representi n-the re.

cdd anets on hand v.ere considered to quired wort,in;t capital of the subject steel prennt the necessarv working capital of budness.. S-2 continued to optrate the stetl e tw o bminesses. business. Siction 332 of the Code 1.rr.vida. in gu t, ',Jn Ibcember 31,1U3, S-1 discentinued for the nonreem;mtion of gab. or fms to a ..ertivnt rental bm.iness and sold the N CCII-Standard FederalTax Reports M69CIC i l l.

Pago 16-City, stated to us that his firm would have rendered the opinion that Three Mlle Island Unit 2 was in servi::e for income tax purposes by the fall of 1978 and, thus, would have been entitled to the tax treatment actually used by GPU even if TMI 2 had never gone into commercial service in calendar 1978. Stephen Kovel, an M. J. Whitman & Co., Inc. associate and a former nuclear engineer, believes frcm the chronology of events that TMI 2 "had been synchro.at=ed into the taxpcyer's power grid" for practical purposes no later than late October-early November when actual power generation for short periods reached the 90% level. Table XXIV, sup-plied us by GPU, shows % Power Level and Reactor Modes for TMI 2 from February 1978 through recember 1979. Robert McIntyre, Esq. of the Tax Reform Research Group in Washington, D. C., and an author of the Public Citizen pcmphlet released April 5,1979, ' Death and 'Ihxes: An Investigation of the Initial Operation of Three Mile Island No. 2," believes ctherwise. Mr. McIntyre states that the fact situction surrounding Rev-enue Ruling 76-428 was materially different than that existing for TMI 2.

First, in the 76 128 fact situation, testing remaining to be done was minor and, second, the principal cause of that shutdown was that there was a surplus of electricity (not major tecting still to be done) and that there, unlike T1.II 2, the nuclear plant was fully cad permanently hooked into the taxpayer's grid. Also, Mr. Mc-Int'To peints to other rulings, especially 76-256 which defines in service for :ax puracses fcr a coal-fired facility.

l l l l l l

p... h .) on '8. E' s 0

• a

.O O ,}'. L .g b tw o.,.~4.--4,. ~3 .p ) .e.. .,._.p..... .f i -

• t. c4 a,.

,u a.. le., 0 i a i i I

• ei i.

i s n i q,, 'g* I d.$ *g P'h

• t s

si 4 a g g .l . '1. ' s.g.* 1 l ' t es.e l 1 t a j i* i'i D. ke es f ( ' l h *C d i , * ' l' - j 'I .g \\. i 5 l i, s

• lt {g i

}*e 'l I l 8 i._2.: g

-.u....- m - -

---

T j '---~r~*~~I

.T-- N i il \\ J....... _ '...;.... --- ~ 4 .p I 1 - {- [ ; i ' '.. i I.}. }. 4 3 e }. - g 8 5 i j l } i. 4 ..-m...-- -.p g. -t g,; p ]i, . 'o g,, I - g l-1 i I f g 1 s 5 f ..,_i t i I... .,..a e Me 6 I t + 4 j. 4 ;4 I i '.I - - 8 1 t ~*- ]. d' N s 3 .. j... 1 j g {! l l l ?* f + l. l... ,...._ ;._ ) I e 8- ' i l pr wa. i . f.. i. s. ice...1 r.: *.U.Z.:C~.C T ...M I ~.l i- - e. 2 t ,,.,....~...t--.---

• ;,;;;.y. *; t

[ t 4 -s .... _....... - ( j { g I .e I i 4, f: { ; j b g d t g I.. .,i . i }. h I - g 4 q -+ 7 '-}- t-r- 5 w-t g 6 l I y, i .......,u.-- j .. j..i e I I ~l 1 j C. qg,." g.-. ..s S [..._ i_.-. g.. .. p-b {l ; "- -( ,....4,.. s. { ..w.....J-t_. w t - w!_ .g._, l g. a g

t.....!.-

.,. t... ]. i.. . j- -{--- t _.l.. e _.. M.....m.. _=r.b_. ia-.n.~.~~~. ~.. t..,,:,, i

i Q

e. r. 7 ,i .a t i.,..-l-l q~ E.-- =4 -**." ~ g) i l . { [ p(*, r f..[~*,: ' - f ' ]; e . ' j. t t-

r ;

i,i gij; y n... }., e. g..,.. ;....4.. 3, .p L._ ' Y.1 =.-. h~ '~ ~, - - - ".,. *. " ""*i." '" }j ~~ ~7 i g_ ... b. '... q '. I.4 1 " ~ ~ ~ " { ,,.._i.... ..g .. !. _...1'.. - -{-

1-1 t

1-I i b i .w a -..t -.y- -{ .i. - - : t. - l. t i..;1 4 %iF._........,...l t. i.... .....g... t ?,, .i .. Q .....I.I l .l ...l. .t. .e .=. ,t

c. 4

~v-1, j [. .l .....l. t t . i....i 4 N q 6'1 -l +:[f j?-[ ! ;, ~{ ~ ~' '~ ~3, g i. ., ;1 p.3-.3, . t a-

, j r.,,,,

Wo.em , Q,b. a '1 l ,y .:-....r.- ; L.d 1.Q7 7- -- - { t 'I . }y... _ h...l1.% % r .+ . < A r:.1

s. Q,h.4 Q ".. g j i - b t,

-1 .. l... g.

1... ; ;L...

f, s ,p . l., .,,.,.,. a. i. g .' 'e ' I,- r kg . g, -+ =_ ... k ~ .A I-- I 'I 'I O *% l \\> 1.l .v a.. .2 .!.. s.. -.o' ."'..s t -.i s l + ;* l 1 '} t i ..I. .~ t+[. b v. .-6-~~- .i J.l-- l .M.. l -". g f,, e y; ~ * ', * * * ', a 1-i l.. h .,_.a.- s... u.w.,. - - -- l a i a s. c. w + 2 try 7 :-- ,g i

g..

'[, -[4 s 3

.,b.

.3.. ]..p.. .. a i j. .g ..,r.. .g - - "f k'1 ", gb l~I 1 ,j a h 5 g.:.{.i $.{... - .y. ., l i.;... N ' . 2_.. f. m- .g, j.. h _ gs. 7,..-j ~; -l 1 ;..

t..

I t g - 3* ' ;._ L..u. p)- 1.. e+ ....(,e 1 l 4-l' 4. }...;. 1 : t ..a -.. J,,. - h.; ~ ---y-*.- e* q.. g.,.;_.%.*.' ' "* j ' - [ - f ;. _-.] + 7 +- ~ [.,,;,, ,g I ~,. I_ i+'. '.t ...+. 1d. I 1 ..a E{

• I I.

.. j -,. i. e. l... i l 1 f, -]- . j.. j, - '. I 4 g .5 n .. e:-~. .5 .-.6 .}' 4 re =~J ' 'L"' 3- - "I . i 6 e i.' - ~l ; i. +. '.. ' .,i.~ ".1.,' - 7, x ' L :.'..: i..'.. i .i-i"-~ 4 i . *1 .l.,.. .a.. 4-4 i;, i. j...,. . ;....a 1,,1 :.. .'. M;g_ ---.- a i .s_i )..- g. q.. 3 t .[y. _4_,,.Q.;;,,....:;]-.T "].y* ! Ti-,;3_ g 1,. }

}. '. J,.

~ g--. *g.. -.. ,t. . C....' - ,,,,3,._. 2,. w,. . - [...t.... h,. {. - -

c i...

,I... = - - - .i. i. e w. p

- { "..7

• l ~ l i

s p.

4. -

c j..., g. q l1 .U 1,. - I . i..._;_.. L-t n l. 3..;;. .p

i. _....,....t.'i....-

.;.n..- 4{ o c

a..

..i a-r e.i q =L, i _.j -. L-1 7.;,..,{.. a.. ..... n.:._ ..... 1 -,m_- _ g _ f..p;1..g .a _...;,....n.y.- i i .qe. .. -r, '. n. M. M.. i.. rl p g l i t i.. i...l.. ... i.. [. ~. '.. j .37-- ; r ;", g ,,. g ;--.. f..} --!- -F..' 3.- ' h,q. .; [ j '* l .[ o m ,._ e 5.. i s .. 1.. 6.. L g, - 6 i., 4.43 h. + - I L ', ' ' [.- i,. !... .,.-.t.J ~b we +- .,-.1.-- [ 8 .=

t. {3 e 'a, ' r..,,

.I. A@4. o. ' j. , 1,.. a .m-. _;.._. u_. . :.y4

u-

.l .:y s g i

n., _. _

.. p..,. t._. . i. 1.,.. .p 4 = _i..- ,t l u w: . l.. ; . v i + a, (mG '(f- .. p.a..!.. j. p " ?] s t.f... .l . t i i, g 1 I i '9'W . Q 4. _..?. -l % W (".;c"i: =n i i [._ .4. c. '-$ 3< "s w h t-w we.w a wr,.y

• 1MJ.O f,! %

D PD @ D Ph ' A. j Md b a

c. asy

- :.n.,. L y,.,,. _ A e rm-

Page 48 We are not quellfied tax counsel,, cur access to certain relevant facts is limited, and, accordingly, we are in no position to adjudicate any dispute between tax counsels. However, within the context of our charge - namely, were tax considerations so crucial to GPU that it became highly impcrtant to place TMI 2 into comn.ercial service in 1978 ?- it seems apparent that tax considera-t!cas were not so crucial for the following reasons: 1) At worst, Rev. Ruhng 76-428 gave GPU strong reasons for believing that the Internal Revenue Service would not challenge the 1978 deduc-tions even if 1MI 2 did not go into commercial service before 1979. I 2) If the Internal Revenue Service did challenge such deductions, GPU had strong reasons for believing it could successfully resist such a challenge. 3) The net amounts of monies involved were not great relative to GPU's over-all financial requirements. At most, deductions would be post-poned for a year and, despite some statements to the contrary, these deductions would not be lost forever to GPU. Furthermore, insofar as delay:: in achieving commercial service increased costs because of an absence of tax benefits, it could be reasonably expected that such costs would, by and large, be recovered in the future because GPU would have had a higher rete base than would have otherwise I l been the case.

Paga 49 4) The gross tax benefits (i.e., before offsets created in the rate regulatory processes) from placing TMI 2 in service in 1978 revcived around the creation of depreciation deductions and investment tax credits.1978 depreciation deductions for income tax purposes attributeble to TMI 2 amounted to $30.7 million, equal to 14.6% of total depreciation deductions of $210.5 million which were taken by GPU on its 1978 income tax returns.1978 investment tax credits attributable to TMI 2 amounted to $24.4 million and accounted for 11.4% cf the $213.4 million of cash funds which GPU generated from cperations in 1978 after cash dividends (see Exhibit XXVII for a classification of the accounts which net cut to cash funds generated from operations net of cash dividends). 5) In terms of rate base, the TMI 2 facility at a cost of around $700 million accounted fcr 19% of GPU's net plant account (fer financial-reporting purposes) which was reccrded at $3,649,000,000 at December 31,1978 exclusive of construction work in process. Attached hereto as Exhibits XXV, XXVI and XXVII are GPU's Consolidated Statements of Income for 1974 through 1978, its Censolidated Balance Sheets as of Decer.:ber 31,1977 and 1978, and the Consolidcted Statements of Scurces of Funds Used Fcr Construction. These financials are taken from GPU's 1978 Annual P.cpert to Stockhclders. i

/g4 4 A WA A 4 h* * * ' Consolidatrd Stat:m:nts ofinctmo Pago 50 Cmt.11 Ti.l.lic Uttiuta s Cersnratwn and Sul.atky Cour r:ar.u s For the Ycars Ended Dcectnbcr 31, I:n Il.onnawls) 1979 1977 1976 1975 1974 Operating P.ewnues............ $1,320.f141 St.232.013 $1,06S.753 S')3 i,120 b.62.431 Operr. ting Expenscs: l'uel 326.05:1 270,612 213.61s 2.% 972 cs5..tfl Pmver purclused and interchanged. not......... 133.741 I sh.'t if0.7 +1 52 2-~ 12.705 Diferrd of erargy costs, net (Notes I and 8).... P.e rall ( 17,91G) (17.917) (21.726) (9.9'r)) (21122) 127.103 ltN.3PO 100.575 91,949 57,150 i)thcr oper. tion : nd rnaintenance ( ctch. ding pt.v olD Deprecialian (Ncte 1)(Note 11) 179.423 1 0.215 131 251 113.773 1hs.192 169.505 965M .97 N D S2 831 71.207 T.ner,. other th.n inecme tasc< (Note 11).. . 1_29.662 114.fis2 98.927 .S9ATO. 72.257 Totais 9i. _s. 501 _ 902.843 ...7_W 3!4 6_'77 645. 645.29.3. ()per.itir.e Iacume liefmc Incorae Tases 335,783 319.16S 309.435 276,735 217.136 .nenme Ta.es (.'lotes 1 and 7)... 84.354 95.S05 70.h32 66.123 31.312 Operating Income 254.42D 253.'iG3 22's.603 210.612 1s2 524 Other locome and Deductions: Allrewance fcr oth(r funds used during canstruction ( Note 2).... 49.5SS 17.757 42.269 32.054

M51

'Ith -r i,come, net.. 3,G42 274 1.161 1.296 1 321 1 ice me t.nes on other inecme, net (Notes 1 and 7) ( _ 2ffil) 1.corne Before Interest Charges and .~~ 51.109,_ f %G) (1.157) ( l.00 0 _, (911) Total Othe r income and Dednetions..... Preferred Dhidends... ~~ 47.htii 42.277 32,250 ~ 31nti ~ 305.53S 500..t h 271# 0 .il2.%s lh.%1

ntciest Charges and Preferred Dhidends:

Interat on first mortgage bonds.. 131.461 11%711 10'.%02 s7.0 13 71 R12 .n:crat,n debentmes and other long-term debt.. 23.859 23.ws CG 202 23.194 30.1 7 'e'wr interest ' ' law.. nee for bert. wed funds used ih: ring 4.527 0 137 3.'N, 15.Fiq l'1719 en.eractior.--credit intt of f.nl INote 2) .ime *:ars.:ttrfir:t.dJe to the allowance (22.255) < t12f f f' (17 0'.9) ( 15X.Y ( ~4.7/i7 ) i.4-b trowed inn 3, (Notes 2 and 71 (14.759) /1151 t ' (10.557) (.s.7531 46I)

.. fe red stock dividends of subsidi.1

ic<

Tot d Interc e Charges and he erred , 13.930 40.dTi 31612 32/107, 2 ;. A~2 Dividende. '..i s me Tief.>re Cen.nl.iti e Efreet of ~ 16G,761 157.F in 150 6Vi 1.3 1 Vi 112.s22 ~ ~ ~~ a ccounting Ch.mic 13t771 112.77# 12!.197 107.'152 lo: r';- .6 tite c!Icc t of.icemmtinc cl..unte ' u e. 1.nd 9 Incmne WT $ 13i.774 $_112.779 $ ill i ',7 007.3x2 51h 010 Wre ! as er.e: hares ): 7 .. *: ' brie.re enincl.itice ef*cet ..wr. fine eh nc.e H.30 9 ': i s.2.1' 32 In

.2-

ic. c(h c t a.wconnt.nc ch. a

a. I an,! 9) c r inc - 2" 42.30 5.' Ns k>l. t.' r ' V.d :e i y ear.. cd shares ) 422.41 E L's 5 ' ' m, : c '., M un i. %r 3 Oi.t. aneling- ,wh-v..r l'.: d 60 217

57. 'O'

.~ t "I 3. 'n..:',f. i.4 e c G.l.971 57 ~ :.1 1,1 iG3 5 f.7.17 t 1. '. .er.

• n

.e, a, .... :sh re! f:.

.s: *;

o.c. :. r e

r A n t!!,li /J.Wa C nsolidated Balcnce Sheets Page 51 Ccural ru.s.lu- (*tihties corrie<.stien and.%bstati v r.nntsnect i ilo. i hous in.!.i Dn rmi,rr.71. 197s 1977 ASSCTS Utility Plant (::t original emt): In senite S 1,'100.H52 $3.413.036 Le>s.icrimiol.a...I tiegsri ei.ition : N. te 1 ,. 850.122 763351 3,419.600 2,CS2.7S5 Net Cor.struction wo.k ni pro::ress 471.4r..s 376.817 ' liclil for future n.c ... 2_0.577 2fi.775 4 l To:.ih 3.947.705 _3.650.377 Nuclear fuel 224.12') 215..'11S 1.ess..tecinn il..tes! ennorti/.ation i Notc 1 T,0.s09 54.151 Net nocir.ir Inct 173.020 tri4.137 1 Net utility pl.mt 4.121.32~ 3.s50.514 INeen of invc<tments in sulisiiliaries over relateil n. t asse t<. 30,505 00.505 Investinents: OtIn r plipica! uoperty. net 1.1 IG 1.215 t 1.o.m> to niin..thli.iteil coal.,unp.mics ( Notc 10 - 19.375 18,~53 ()ther..tt cost '3') $10 Tot.il< _, 21*127 20.S25 Current Awets: C.nli ( No:e 1 17.tssi 21.291 Accetuits risvivalile: Cintomets. Ih-t. 91.3'i2 55.763 Other i Non I) .,!)Si7 21336 triscuti.iin s. 61.o traue cent on Ico: .\\laterial..nni siipplies for uantincti..n.mel opciate'n

59.2i17 31.23-Fi.cl 47.~ 22 74.03ri Prepa3 nei uts I;.!51 5,915 0tler

_l1.S it) 1 S..~.21 l' t..ls 27.t.7 *.P ._ 260.594 l Defencil Debit... I'cier ivil.ieius i nsts N.t es ! n.1 %

• 102.il3 S

$ 5.3'32

1. t...: r.i:i. c 1 unne eles cl. pment co A i b.e ! '

S.Ti,5 0.063 Oc.. r 51.773 44 447 T..tik I fi5. i~6 142,492 Ti.t.1 .s ets 44.'el2 tNI 04.303.443

• • c.ii.ur+.I tat.r w.u.

s ii.,u.,m; a.ne:ct..,.~tn are e.n.nt..a r : t et n.. u-l & R K '[_= fh0 'E N l D~*D ,a

.a.I 4 y .Ji: a -*+L. EXHf BIT XWI (continued) Page 52 (Isa chan~nul*) 197S 1977 -= LIAllit.ITIES AND CAPITAL Loag.Tenn Debt, Capital Stock and Como!! dated Surphm

1. sue;:. term debt ( Note 4):

i Fir..: moitgar.e bonds (217 to 10V!. duc 19$0 through 2003) $1.732.074 $1/i21.795 ) Debentures (4%7 to DST, due 1990 tiirough 199S). 236.8S0 2123%0 Otl.i r long t< nn debt (varying rates, due 19S0 through 19S3) S t.0 ta 61.511 i (*narnorti7c.) net disctnint on lon,eterm debt... f 5.177) (1.05Cs Tot:'h 2.017.12'l 1.021F,0 Cinmilative pict' erred stock (3.77 to 13.57) (Notes 4 and 5) 519.111 521.011 1 reinium on etunnlative preferred stock I.'l ls 1.318 1..o. capa l.ti.ek expense 5.812 0.473 a Tr.t.d s 511.fis7 516.010 l Com:non stock and consolidated surplus: Common stock ( Note 5)............. !.............. 152.-19'i 149.374 Comolidated capital surplus ( Note 5)......... 7G9.350 715 A3') 1 ess. capital stock capense........ 17,83G 17,517 Comolidate.1 retained earnines (Note fi) 4G'i.173 l'30.82'l Tot.ds 1l100,185 1 All.5G3 !.n s. reacyrired cominun stock (Note 5).. 70 70 Totah l.:36fi.l l5 1 311,193 Totah 3.897.555 3.7521>9 Castren* l.iabilitics: .Scr.t hrs due within one yrus to !se arfinanced ( %te O G'L0rii 2w.'ri2 Note < j a> able te '>anks t Note n). 90.103 7J 7~'5 L n'n.ts ['ayable 91,153 82.D(,7 Fu i nr.cr der. it. 6.775 C,554 ] !.i ss. a. crited ( Note 7) 20.G57

'S.532

~ IM rest accrord 39,G39 39.~3DV / *il., 31.204 38.421 T..t.d s 319.v).1 _ D L7(r) P fea e d Credits :.nd Other k.i.ibilities: Ih t.. rni n.cinus

• ncs ( %tes 1 :n.d 7
• 211.737 l ~.3 12 fo

.u tr,rd inn estinent t ri dit - ( Note I and 7 ' 127.M i $. l f.12 i 8 0..n 21.tf 7.'l .' 2.41') , itah Wi 1.!)Da , 02.575 C.comitartits 4.n l Con!!mrencies f Note lh I

• l I.i.sh !!!lt.s arid Cr. pit.d M.612.%1

$4 iM ll'i .i o p r $, - P. l-c rMb gs (

A.4 /% A 7 4 bl 4 A ..f.. ,4 Con.solidat:d Stat;ments cf Sources or t-und:: Used For Cont,truction Page %',, Ge. sera.~ l'ublic Utdutics Corponeson and Subsdiaiy Consposntes tin I1,.vv..n.1d For t!.c Yccurs Ended December 31, 1978 1977 197G 1975 1974 Sources of Funds: Funds generated from operationx Net Income.. $13s.774 8112.779 5121,197 5107,352 $110,010 Add. items not requiring current cash outlay or(receipt): Depreciation (Note 1) 109,505 9659s 57,539 52.WI 71,207 Amortization cf nuc! car fuel (Note 1) 21,143 17 ~61. 16 371 20f l'1 13.163 Investment credits. net (Notes 1 and 7)... 41.733 12.490 ... o 3.sil 3,294 Deferred income t:aes, net (Notes 1 and 7) 3S,255 3.12(pi 31712 27.no 27.152 A!!owance for other funds used durmq construe. tion (Note 2) (.19.5N51 ) i.17,7s7 ) (42 269: (32.031) (301,~21: Totah. 319.s52 2S7.030 221.650 222.!43 191c275 10fi. f d l 97.fo9 92.2fii s t.~,74 75.946 1.es:. cash dividends on enmmon stock. Totals.. 213.42S 159 417 112.3'13 137/>28 118.327 Other sources (uses): Deferred energy costs, net ( Notes 1 and S)......... (17,916) (17.937) (21.720) (8.473) (40,24S 1.oans to non. affiliated enal companies (Note 10) (025) (2Xen) (620) (1.500) (950 Un.imortized mine development coste. net (Note 1) 598 513 526 471 (1,055 Changes in-cash (Note 3) 6,310 13.378 e2.302, 20.250 (29,190 -accounts receivable (.13,7SS) (2.133 ) (14.070) J.(113 (30,050 -accounts payable. 12,3 9i 20.129 3 lui) 25su1 (0.231 -inventories. materials, supplies and fuel. 18,294 (30.620) (7.196) fi.s76 (36,465 -interest accrued 131 3 219 5,791 ~05 5,253 2 -taxes acerned. (7,S45) (21.695) 22.470 10.312 (4,S25 Other, n.:t 5,467 (19.079) 19.121 i:i 319) 16.85'i Totais , 23.698) (p.879) _f 10f04,), 5 1. 29 (l'12.93rs ( Fund < f am financings: Sale of h.ng. term debt 151.052 155.920 217.000 22 % 33 89.163 S.de ol common stock, net of expense (Note 5) 22.273 s2.1Mi SIM 97.014 47.161 Sale of preferred stnck l Note 5) So mu M 009 A7.430 19.570 Ilank borrowiap, r.et iNote 31.. o l.025 19.121 13.3a's ( 27MN)) 277.340 lict:rement or redemption of long term debt and pre. f, rred stock (32.90s) i ?3,W O $ 71.900 ) l 1(e.Gs":. (56.246 Totals Ifis.072 233,.s22 201.776 123 010 316.GT3 Totals.. $357.502 9_3_61.3 X.1M.2?,967 _S3:5. Mi S332.361 Const.Lc tio:i Espenditurn. Etiht3 S!ar.t $176.SI" M 3.1.W" SEi.17i W.3 MO 531r1.310 Nucle n fur 1

'O.57 N 6 7.28 's

f. OV y trC 22.~7' T nals 407.f.90 til.!T7

st 6 2 P:

317 147 ':62.915 .\\l',ew..nce for other fur.ds us. d during construction N.ee 2) t4n sm _ y m.. gs. .;i2. g _ n o.5,1 Touts s3,uo2 utn.3,o <rwc sm m 5332.asi . 4da:cd i.wu..:,. *......r,. vn a.. ser n. wne rac,.n ...n u.a part.4 oIs.- t sf3 w. =

Page 54 The longer the time fer placing Unit 2 in operation, the longer would the regulatory authcrities delay permitting GPU to increase its revenues through putting the plant in the rate base. Also, the longer the delay in putting Three Mile Island Unit 2 into commercial service, the mere the unit would cost and GPU could reasonably anticipate that most of such increased costs would even-tually be allowed as part of the rate base. 'Ihere is no question but that the earlier Three Mile Island Unit 2 became operative, the better off GPU would be. How-ever, we have found no evidence from the regulatory, the financial, cr the income tax points of view indicating that it was critical, cr a matter of utmost pricrity, fcr the Utility that Three Mile Island Unit 2 be placed in commercici service be-fcre the end of calender 1978 or even within weeks, cr a few months, after that. 1 i f {

Pagai BIBLIOGRAPHY I. General Public Utilities A. Annual P,eperts for yeers 1968 - 1978 B. Fcrm 10-K for year ending.12/31/78 C. Fcrms 10-Q for Quarters ending 9/30/78 - 3/31/79 D. Quarterly Reports to Shareholders: 3/31/78 6/30/78 9/30/78 3/31/79 E. System Statistics 1978 and 1977 F. Annual Meeting Proxy Statements 1973 through 1979 G. 3PU Financial Statements: 3/31/78 6/30/78 9/30/78 3/31/79 H. Presentation to Public Utility Security Club cf Chicago 12/6/78 by W. G. Kuhns I. Presentation before the New Ycrk Society of Security Analysts December 21, 1977 by W. G. Kuhns J. Common Stock Prospectuses dated: 7/16/68 9/10/68 5/18/70 11/3/70 5/6/71 12/13/71 5/4/72 12/7/72 5/22/73 6/6/74 3/19/75 G/17/75 9/10/75 6/29/77 3/17/78 i

Page 11 BTBf.IO7 RAP 1W(continued) K. Tax Reduction Act Stock Ownership Plan Prospectuses dated: 10/12/77 6/15/78 L. Prospectuses for Debenture Offerings dated: 12/8/69 11/4/70 M. New York Stock Exchange Listing Applications dated: 7/16/68 9/10/69 1/21/70 5/18/70 11Ai/70 11/17/70 5/6/71 12/31/71 5/4/72 12/7/72 5/22/73 6/6/74 3/19/75 6/17/75 4/20/76 4/6/76 10/12/77 N. Various News Releases O. Various Mditional Quarterly Reports and Quarterly FinancLal State-ments II. Jersey Central Power and Light A. Annual Reports 1968 - 1978 3. New Ictsey Power & Light Annual Repcrts 1968 - 1971 O. r%spectuses as follows: 10/8/08 $26 Million F!rct Mertgage Bends 10/20/69 $10 Million First Mertgage Scnds 6/10/70 $12 Million First Mortgage Bonds

Pagslit BTBLIOGR APHY (continued) 10/6/70 250,000 Shares of Preferred Stock 11/24/70 $16 Million First Mortgage Bends 2/17/71 250,000 Sheres cf Preferred Stock 2/18/71 $35 Million First Mortgtge Bonds 8/10/71 S25 Million First Mortgage Bonds 11/8/71 250,000 Shares of Preferred Stock 11/9/71 S25 Million First Mertgage Bonds 3/13/72 250,000 Shares of Preferred Stock 8/16/72 $25 Million First Mortgage Bonds 3/8/73 $30 Million Cebentures 9/19/73 $50 Million First Mortgage Bonds 12/11/73 $30 Million First Mcrtgage Bonds 10/30/74 S25 Million First Mortgage Bonds 12/12/74 250,000 Shares of Preferred Stock 3/5/15 S35 Million First Mortgage Bonds 6/17/75 250,000 Shares of Preferred Stock 7/9/75 $35 Million First Mortgage Bonds 2/18/76 $60 Million First Mertgage Bonds - 6/21/76 $35 Million First Mertgage Bonds 5/10/77 $60 Million First Mortgage Bonds 10/17/77 2,000,000 Shares of Preferred Stcck 1/24/78 $50 Million First Mortgage Bonds D. Official Statement (Red Herring) Cauphin County Industrial Development Authority Pollution Control Revenue Bonds January 1979 III. Me:ropolitan Edison A. Annual Reports 1968 - 1978 B. Prospectuses as follows: 2/10/68 $26 Million First Mortgage Bonds 8/5/69 $25 Million First Mortgage Bonds 9/28/71 160,000 Shares of Preferred Stock 11/3/71 $15 Million First Mertgage Bonds 2/28/72 350,000 Shares of Preferred Stock l 5/18/72 S26 Million First Mortgage Bonds-7/20/72 250,000 Shares of Preferred Stock 10/11/72 $53 Million Debentures 4/12/73 250,000 Shares of Prefctred Stock

Pagotv 1TBUOGRAPHY (continued) 10/18/73 150,000 S!gres of Preferred Stock 12/3/73 $20 Million Debentures 12/3/73 $20 Million First Mertgage Bonds 3/26/75 $50 Million First Mertgage Bonds 9/25/75 S45 Million First Mortgage Bonds 3/11/76 S50 Million First Mertgage Bonds 9/27/77 $35 Million First Mortgage Bonds 9/20/78 $50 Million First Mortgage Bonds O. Official Statement Dauphin County Industrial Development Authority dcted 1/17/78 IV. Pennsylventa Electric Ccmpany A. Annual Repcrts 1968 - 1978 B. Prospectuses as follows: 8/20/68 $38 Million First Mertgage Bonds 6/5/69 $28 Million First Mortgage Bonds 4/20/70 $25 Million First Mortgage Bonds 1/18/71 $30 Million Debentures 8/19/71 $20 Million Debentures 12/7/71 250,000 Shares of Preferred J.ock 12/8/71 $30 Million First Mortgage Bonds 6/19/72 250,000 Shares of Preferred Stock 7/12/73 $30 Million First Mortgage Bonds 6/ 13/74 $50 Million First Mcrtgage Bonds 3/25/75 250,000 Shares of Preferred Stock 8/14/75 $45 Millica First Mertgage Bonds 10/16/75 320,000 Shares of Preferred Stock 2/19/76 1,400,000 Shares of Preferred Stock 4/13/76 $60 Million First Mortgage Bends 6/2/76 $60 Million First Mert;cge Bonds 6/13/78 $45 Million First Mortgage Bonds C. Offletal Statement S12 Million Indiana County Develop:r.ent Authority 7/15/76 $16.42 Million Pollution Control Revenue Bonds 12/13/77

Pags v BIBLIOGR APHy (continued) V. Other Electric Uttittles - New Jersey and Pennsylvania A. Allegheny Power System 1. Annua 1 Repon 1978 2. 10-K Report 1978 3. Quarterly Report 3/31/79 4. Statistical Summary 1978 5. Sampling of cther annual repcrts, quarterly reports and financial documents B. Atlantic City Electric Company 1. Annual Report 1978 2. 10-K Report 1978 3. Quarterly 3/31/79 4. Statistical Summary 1978 5. Sampling of other ennual repcrts, quarterly reports, and financial documents C. Duquesne Light Company 1. Annual Reports 1978, 1977, 1976, 1975, 1974 4 10{ Report 1978 3. Quarterly 3/31/79 4. Sampling of other annual reports, quarterly reports and financial documents D. Pennsylvania Power and Light Co. 1. Annual Repon 1978 2. 104 Report 1978 3. Quarterly Report 3/31/79 4. Statistical Summary 1978 5. Sampling of other annual repcrts, qucrterly reports, and financial documents E. Pht!cdelphia Electric Company 1. Annual Report 1978 2. 10-K Report 1978 3. Qucrterly Report 3/31/79 4. Statistical Summary 1978 5. Sampling of other annual re;nrts, qucrterly repcrts, and financici documents

Pago vi BIBLIOGRAPHY (continued) ~ F. Public Service Electric & Ga's Company 1. Annuel Repen 1978 2. 10-K Report 1978 3. Quarterly Report 3/31/79 4. Statistical Summary 1978 5. Sampling of other annual reports, quarterly reports, and financial documents VI. Other Standard Financial Sources A. Standard & Poor's Stock Guide B. Standard & Poor's Industry Survey 1. Utilities - Electric 3/22/79 2. Utilities -Electric - Current Analysis 7/12/79 3. Utilities -Gas -Current Analysis 6/14/79 C. Moody's Bond Record D. Moody's Utility Manual E. Moody's Fact Sheets F. Newspapers and Magazines including: 1. New York Times 2. Wall Street Journal 3. Philadelphia Instirer 4. Investment Dealers Digest 5. Corporate Financing Directory 3/6/79 I G. Fortune List of 50 largest Utilities 7/16/79 H. Basic Analysis: Investment Outlock for the Investor Owned Electric Power Industry, Paine, Webber, Mitchell, Hutchins 6/4/79 I. SEC Proposed Guidelines for Disclosure by Utilitter.. Securities Act Release 6085 6/2S/79 VII. Edison Electric Institute A. Statistical Yearbooks 1977, 1976, 1975, 1974 B. Advance Release cf Statistical Barboon 1978 C. ' Rates in Effect Janucry 1,1979" fcr Pennsylventa and New Jersey D. ' Rates in Effect July 1,1979' for Pennsylvania and New Jersey

Page v11 _BTBLIOGRAPHY (continued) VIII. Documents Relating to Public Utdities Commission A. Summcry of Retail Rate Cases dated 2/79 for J. C. ?. & L., Penelec & Met. Ed. B. Final Rate Orders: Penelec 6/2/76 3/29/71 C. Final Rate Orders: Met. Ed. 9/12/70 8/8/72 3/25/74 6/22/76 D. List of Rate Cases E. Public Meeting Repcrts for 5/23 and 5/311978 Final C: der Entered 9/18/78 in the case cf Met. Ed. F. Public Meeting Report for 9/5/78 Final Order Entered 9/21/78 in the case of Penelec G. Pub!' ' Meeting Report for 3/22/79 in the rate case of Met. Ed. H. Pennsylvania Public Utilities Commission Order Docket C 79040829 Order Docket C 79040828 Order Docket C 79040830 Relating to remou:1 of IMI 2 from rate base for Met. Ed. and Penelec I. Pennsylvania Public Utilities Commission Crder Docket I 79040308 Relcting to Met'. Ed. and Penelec request for additional fuel cost recovery as a result of TMI-2 5/10/79 I. Tranceripts of Meetings Before the Pennsylvania Public Utilities Commission Case 4 R 78060626 Pc;cs 2160-229612/6/78 Pc7es 2453-253912/11/78

Pago vitt BIBLIOGRA*>HY (continued) Pages 2540-268412/12/78 Pages 2685-286012/13/78 Pages 2861-299112/14/78 K. Pennsylvania Public Utilities Ccmmission Order Docket R 78060626 Met. Ed.10/23/78 L. Pennsylvania Public Utilities Commission Onier of Informal Investigation of Met. Ed. and Penelec as a result of incident at TMI 2 4/5A9 M. Pennsylvania Public Utilities Commission Order Investigating Practices of Met. Ed. and Penelec in construction of TM12 Docket #: I 79040306 I 79040305 N. Pennsylvania Public Utilties Commission Public Meetings: 1/11/79 2/24/78 6/8/78 P. ate Hearings for Penelec O. State of New Jersey Board of Public Utilities Commissioners - fcr I. C. P. & L. Final Orders Docket Nurr.bers ( 6/25/70 (698-540 l (698-541 10/8/70 (698-540 1 (698-541 7/lh1 (698-540 (698-541

Page Lx BIB'.!O'?R APHY (continued) 5/18/72 (719-627 (719-628 8/30/73 (719-627 (719-628 5/28/74 743-184 6/27/74 743-184 6/5/75 743-184 9/26/75 759-899 1/8/76 759-899 5/24/76 759-899 7/13/76 759-899 8/4/77 771-32 9/1/77 (7610-1021 (7610-1022 (769-965 (776-492 3/2/78 (7610-1021 (7.82-75 1/31/79 (7610-1021 (776-492 5/21/79 795-487 6/18/79 795-508 6/18/79 795-427 6/27/79 795 427 P. Memo 7/17/74 from Kuhns to Pennsylvania Public Utilities Commission Q. Memo 9/10/74 from Kuhns to Pennsylvania Public Utilities Commission R. Memo 6/21/74 from J. C. P. & L. to Board of Public Utility Com-missioners - New Jersey S. Pennsylvania Public Utilities Ccmmission Meetin; 4/20/78 to approve agreement providing transfer and acquisition of undivided interest in nuclear plants at TMI 2 and Fcrked River T. Testimony of Herman Dieckamp before Pennsylvania Public Utilities Commission (undated) regarding Touche Ross report on Construction of 'IMI 2 - with Exhibits U. Testimony of F. E. Hafer before Pennsylvania Public Ut111ttes Corr.- missica Relating to Touche Ross Repcrt on Construction of TMI 2 - (With Exhibits) IX. Items Relating Directly to TMI 2 l: A. Review cf 'Lhree Mile Islar.d Unit 2 Construction Project Drepared by l Touche Ross for New Jersey Cepartn.cnt of Public Advocate - October 1978 1

e Page x StBUCGPAPHY (continued) B. Operating Units Status Reper't Department of Energy - Nuclear Regulatory Commissicn TMI 1 TMI 2 Oyster Creek C. Selected Edison Electric Institute Capacity Factors D. Graph of Con:parative Capital Costs Excluding AFDC vs. In Service Cates for Nuclear Generating Stations 1974-1985 E. TMI 2 Critical Path Method Scheduling Forecast F. Letter from 3PU (F. D. Hafer) to Touche Ross dated 5/18/78 regarding draft of the Touche Report G. Test Program Energy Generation Summery 4/21/ 78 - 12/30/78 Plant Status and Power Generation H. GPU System Construction and Sources of Capital I. TMI 2 Prelimincry Sequence of Events GPU Memo by R. L. Long to R. C. Arnold 4/} 6/79 J. J. C. P. & L. Purchase Order and Changes Relating to Purchase of Main Steam Valves for TMI 2 K. Handy-Whitman Index of Public Utility Construction Costs L. IPS Revenue Ruling 76-428. IRB 1976-45, 8 Code Section 167 M. IRS Revenue Ruling 76-256 N. IRS Revenue Ruling 79-203 O. IRS Revenue Ruling 79-98 P. Nuclear Regulatory Commission Release in Federal Register Vol. 44, No.151, August 3,1979 Q. Excerpt and Pages 18, 36 and 83-86 frcm Pennsylvania Public Utilities Commission in Philadelphia Electric Case R.I.D. 438 X. Adecate Literature I. The Nugget File - Edited by Robert D. Pollard - Union cf Concerned Scientists January,1979 B. Nucleus - A Report to Union of Concerned Scientists Volume 1 Number 4 May 1979 C. Death and Taxes: An Investigation of the Initial Operation of Three Mile Island Nc. 2' Public Citizen April 1979 D. Losing the Nuclear Encrgy Option: The Econcmic & L~ctionel Securi;y Implicaticas - Befcre the New Yc k Soc!cty of Security Anclysts Monday July 23, 1979

-.,s ?EEONS *ii2.RWEVlr II!T THZ!R PRINCIPA7. ASSCCIATIONS Ncme Associetion VI. Wilson Goode Chairman - Pennsylvanta Public Utilitle: Commission Franklin Sanders First Boston Corp. Tom Berry Goldman Sachs & Co. Barry Wigr. ore Goldman Sechs & Co. James Liberman Berlack, Israels & Liberman, Counsel to GPU L. P. Gentieu GPU Service Corporation Robert B. Stulberg, Esq. Health Research Corp. Robert h!cIntyre Tax Reform Pesearch Group i}}