ML19323A023

Annual Financial Rept 1979

ML19323A023
Person / Time
Site:	Oyster Creek
Issue date:	03/24/1980
From:	JERSEY CENTRAL POWER & LIGHT CO.
To:
Shared Package
ML19323A022	List: ML19323A021 ML19323A023 ML19323A024
References
NUDOCS 8004100355
Download: ML19323A023 (24)

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1979 InndAIReport s

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TO THE STCCKHSLSERS f Jo one event in the history of Soon af ter the TMl accident,it energy adjustment charges to These contracts saved JCP&L our Company has so in-becarrie standard procedure to be spread over the 18-month customers approximately $14 fluenced a year as did the have a graduate engineer in period July 1,1979-December million during 1979.

March 28 accident at the Three the Oyster Creek control room 31,1980,instead of the cus-Subsequently, the Compan)

Mile Island Nuclear Generating at all times to provide addi-tomary 12-month period, ator,7 with other member com-Station Unit 2, of which Jersey tional support to shift operat-This amoun!was believed to panies Of the GPU System, Central Power & Light Com-ing personnel.

be sufficient t( recover re-proposed e the Pennsylvania-pany is a 25 percent owner.

The area of emergency placement power costs from New Jersey-Ma,f and (PJM)

The other owners are Metro-plannin has received special March 31,1971 through the Interconnection an agreemerr politan Edison Company and emphasis. Included in the end of 1980, bL t assumed the t that would reduce the cost of Pennsylvania Electric Com-emergency planning are the Unit 1 would roturn to service purchasing power to replace pany, also members of the development of specif c pro-by January 1, 980.

TMI generation below that GPU System.

grams for the Ct 7pany and On Septem')er 5,1979, the provided for in the present The accident resulted in a public officials in N event of Company war, authorized to in-PJM purchased power agree-series of Congressional, Nu-unusual radiation rdesses and crease its les elized energy ment. This new agreement is clear Regulatory Commisi n an emergency communica-adjustment charges to recover currently awaiting approval b)

(NRC), and State and mum tions prog am to keep the pub-increases in energy costs not the regulatory commissions o' cipal hearings and investiga-lic and their official rtw,P associated with TMI but pri-the states involved before sub tions. From a public point of sentatives promptly and marily attributable to rising oil mittal to the appropriate federt view, the most significant out-accurately informed !n the prices.That increase is ex-agency for final approvals.

come of these investigations event of a future accident.

pected to provide approxi-In the mea of financing, was the finding that no one Theimmediateimpactof the mately $70 millicn in revenues JCP/ L, together with the oths was physicaHv harmed or is t ;cident on JCP&L was that it during the period September 1, GPU companies, entered inte likely to suf.'er 61 effects as a deprived the Company of 1979-August 31,1980 to offset a revolving credit agreement result of the accident.This was 426,000 kilowatts of nuclear increased fuel costs.

with a conertium of 45 banks affirmed by the final report of capacity from both TMI units, On M;rch 6,1980, the Com-This agreement currently the President's Commission on creating a cash flow crisis re-pany received an annualin-makes available to GPU and the Accident at Three Mile is-sulting from the need to pur-crease of about $84 million in allits subsidiaries a level of land, the Kemeny Report.

chase replacement from other its energy adjustment charge credit of $292 million. The While the accident was con-utilities at a cost of about $10 effective Varch 6,1980 for Company's maximum borrow fined to TMl Unit 2. Unit 1 at million per month.

energy custs distinct from the ing limit under the agreement that station, which was out c :

The return to service of TMI TMI mishap. The Company has is $139 million. As of Decem-service for refueling at the tir..a Unit 1 will significantly ease pending before the NJBPU a ber 31,1979, the Compar.y ha of the accident, has not yet the financial burden the acci-continuing proceeding for the

$45 million of loans outstand-been permitted to return to dent imposed on the Company recovery of higher energy ing under this agreement.

service. Despite immediate and its customers. The earlier replacement costs for Three Subsequent to the acciden steps to improve the opera-the unit is returned to service, Mile Island, primarily because the Company sold through tional safety of Unit 1,the NRC the greater will be the bene-of the regulatory delay in re-private placement two issues has inttituted a prolonged ficial effect upon our custom-turning TMI Unit 1 to service.

of first mortgage bonds, a $5C procedure of hearings on its ers. Returning TMI-1 to service immediately af ter the acci-million issue in June at a rate return to service. It does not will save JCP&L customers dent at TMI, the Company of 12 percent and a $47.5 mil-appear that these hearings can about $6 million monthly in acted to soften the impact of lion issue in October at 11 %

be completed before late 1980 energy costs.

the cash drain. Among the percent. The proceeds were end possibly later. While we Two months before the acci-steps taken were reductions used to reduce bank loans agree that there should be no dent, on January 31,1979, the in the size of our work force, obtained under the revolving restart of Unit 1 until the NRC Company was granted a rate suspension of construction credit agreement and to refi-is assured of the unit's ability increase of about $34 million projects including the Forked nance an existing first mort-to operate safety, we have 5y the New Jersey Board of River Nuclear Generat%g Sta-gage bond issue which urged the Commission to ex-F ublic Utilities (NJBPU). Of tion, cuts in the compensation matured in October. In Janua p:dite its procedure to return that, $19 million reflected a for corporate officers, and 1979, the Company sold $6.3 Unit 1 to service as quickly as re' urn on JCP&L's investment reduction of preventive main-million of pollution control ssfely possible.

in Unit 2 and the operating and tenance work to a minimum bonds at a rate of 7% percen Meanwhile, as a result of r'.aintenance costs associated compatible with reliable For further discussion on tl I:ssons learned from TMI,im-with the unit. On June 18, the service.

credit agreement and the bor provements to make its opera-NJBPU reduced annual base At the same time,in an effort sales in June and October se.

tion even safer are being im-revenues by $29 million which to reduce the cost of replace-Note 5 of the Notes to the plemented at the Oyster Creek represented the Company's ment power, the GPU System Financial Statements.

Nuclear Generating Station as capital return and operating entered into short-term and in the past several years, ti r:pidly as they are developed.

costs associated with our in-long-term contracts for re-Company has conducted The major safety-oriented terest in TMI Unit 2.The order placement power through the energy conservation and foac treas being addressed are:

also provided a one-time re-purchase of lower cost energy management programs with i plant modifications, the're-duction of $7.3 million in from other utilities in the customers. Peak demand training and reexamination of energy costs to offset the Unit United States and Canada. For growth over the next decade operators, review and revision 2 base revenues collected JCP&L and the other GPU has been projected at 900,00 of operating procedures, and after the accident.

System operating companies, kilowatts and includes the re-j preparation of improved plans The order also authorized an negotiations are continuing duction of approximately for handling emergencies, increase in the Company's with these and other utilities.

450,000 kilowatts anticipated 1

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-.me from th3 programs now in The continuation of reliable performance or reliability.

sion by the Department of cffect. With the other GPU service to our customers at the Construction was begun on a Energy on the Company's compInies, JCP&L has an-lowest possible cost which, new 230-kilovolt (KV) trans-application was pending at nounced an intensified energy over the years, has been a mission line from Whippany to year end.

constrvation and load man-source of pride to management Morristown.The line, which On November 23,1979, the tg:m:nteffort. Success of the and employees alike, remains will transmit power to the new Company signed a letter of progrtm will further reduce a top priority of the Company.

Morristown substation,is intent to Resource Recovery scheduled for completion in Associates (RRA) of Totowa, this peik growth by approxi-the first quarter of 1980.

NJ to participate in a solid mitzly 450,000 kilowatts.

Other Areas ofinterest waste fueled generating sta-Th3 conservation aspects of in 1979, the Company added tha program should also help 13,309 new customers to its Oyster Creek Performance tion to be built and operated minimize the future need for lines. Despite the addition of The Oyster Creek Nuclear by RRA.

purchased power.

these new customers, the 1979 Generating Station marked ita The RRA facility will have an Meanwhile, we are v;orking annual peak was only 2.7 mil-tenth anniversary of service on initial capability of processing with Ntw Jersey Senator Wit-tion kilowatts, an increase of December 23,1979, 1,200 tons per day of munici-litm Bradley on development only 0.4 percent (11,000 kilo-With the exception of the pal solid waste and will be of his legislative initiative to watts) over the 1978 peak and Connecticut Yankee plantin expandable to a 4,000 ton per conserve energy by helping 0.5 percent below the all. time New England,the Oyster Creek day capacity. A boiler using homeowners insulate their annual peak set in 1',77. This Station has produced more the solid waste as iuel will be homes and implement various limiting in the gro9th of the electricity than any other nu-coupled to a turbine generator lord management techniques, annual peak was due to f avor-clear generating station in the plant to produce electric The potentials for conserva-able weather ccMitions and, United States. As of the and of power.JCP&L will purchase tion in this area are significant. more importan4y, to an ag-the year,it has produced 37.5 all net electrical output for a We h:ve joined in recommend-gressive conse rvation and load billion kilowatt hours of elec-period of 25 years from the ing a pilot program involving management I rogram. That tricity.The fuel savings of date the facility becomes oper-1,000 to 1,500 homes, vdth progrem will b e accelerated about $600 million have ex-ational and will have the option JCP&L serving as a pilot during the corling years with a ceeded the interest costs, to renew this provision for the utility.

goal of keeping growth at a taxes and operation and main-ultimate operationallife of ThD NJBPU is evaluating the level of approximately 2 per-tenance expenses of the the plant.

r:nga of options available to cent per year on a long-term Oyster Creek Station as well c:sure a continued reliable

basis, as its capital cost of $110 Organization Changes and economic supply of elec-Electric sales totaled 12.8 million.These fuel savings Effective October 1,1979, tricity to the JCP&L service billion kilowatt hours, an in-over the years have been Dennis P. Baldassari was tres Among the items to be crease of only 2.7 percent over oassed on to the Company's elected Secretary-Treasurer tddressed by the approxi-the 1978 figure. Revenues castomers through lower to succeed Edgar C. Schoener, mately year-long study are isow totaled $665 million, up 12.5 er.ergy adjustment costs then who elected to take early b:st to provide for the future percent from 1978, with the wo aid have been necessary if retirement.

pow:r needs of the JCP&L riselargely attributable to an the power had been generated Effective February 29,1980, s rvice area and whether this increase in base rates and two with oil.

Carroll Aslak,en elected to should result in some alter-Increases in the levelized The Oyster Creek Station is take early retirement. His ation of the structure of JCP&L.

energy adjustment clause.

currently being refueled, a former position as Vice Presi-Ths presidents of the 'wo See Management's Com-process which has been ex-dent-Consumer Affairs has oth:r major New Jersey u'ili-ments on page 4 for a further tended beyond its scheduled been filled by James R. Leva.

ti s hive voiced their support discussion of 1979 results.

length for maintenance and of JCP&L's present structur1 possible repairs. At this date, for the Board of Directors, tnd hive upheld the quality o '

Construction Progress the schedule for its resumption JCP&L's service to its The Company's 1979 construc-of operations is uncertain.

i customers.

tion expenditures were $221 Replacement power for the Th's study, to be eviducted million, down from the $295 station's output costs approx-

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j by En independent consulting million budgeted before the imately $3.5 million per week..

firm, is expected to be con-accident.The major project cluded in early 1981.

involved in the cutback was the New Projects Mranwhile, despite the fi-Forked River Nuclear Station in August 1979,the Company Shepard Bartnoff n ncialimplications of theTMI which, until the March 28 acci-submitted a proposal to the March 24,1980 2 accident and the ensuing dent,was scheduled to come United States Department of su pension of construction on line in 1983.There are no Energy seeking a grant of $1.5 rnd the reduction in our work current plans for near term re-million for the purchase and f rct,it is our firm conviction sumption of major construction installation of a 2 megawatt thit the quality of service to activity at the Forked Riversite, wind-driven generator.No cur customers has r ot dimfn-Construction was substan-specific site has been identi-ished. And, despite the costs tially completed during the fied for the installation.

of r: placement power, the year on the Company's first Depending on wind veloci-Ev rage cost of electricity to gas-insulated substation in ties available at the selected sur costomers remains ap-Morristown. The new facility site,it is expected that approx-proximately the same as that utilizes the latest technology imately 1.3 to 1.8 million kilu charged by other utilities in the to improve esthetics and con-watt hours of electricity could Stat).

serve space without sacrificing be generated annually. A deci-2

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Jetsey C:nti:1P:wer & Light C:mpany STATEMENT BY MAN AGEMENT The management of Jersey Central Power & Light Company is responsible for the information and representations con-tained in tne financ;ct statements and other sections of this annual report. The finaccial statements have been prepared in conformity with genertily 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 March 28,1979, at Unit No. 2 of the Three Mile Island nuclear generating station ("TMI-2"). The accident has had a significant adverse impact on the earnings ano 'inancial position of the Company in 1979.

In the aftermath of the accident the New Jersey Board of Public Utilities reduced the Company's annual revenue re-quirements by the capital and opera'ing costs associated with TMI-2, resulting in a decline in earnngs. 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 1 of the accompanying financial statements and to Management's Comments on Earn-ings on page 4 for further discussion on the effects and im-pact of the nuclear accident at Three Mile Island.

Coopers & Lybrand, independent public accountants are engaged to examine and express an opinion on our financial statements.Tneir opinion, which appears on page 5, sets forth the contingencies and uncertainties resulting from the acci-dent.

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MANA"EMENT'S COMMENTS ON EA^NINZS-Nota 1 1979 vs.1978 1979 over 197s over (Under) 1978 (Under) 1977 Earnings available for common stock for 1979 declined as uiriion, g u,thons %

compared with the year 1978. The major factor causing such KWH sales growth increased 332 3

537 5

d: cline was the rate-making treatment accorded to the capital rnd operating and maintenance costs associated with the Revenues other than energy related:

(a) Increased revenues due to Company's 25% ownership interest in Three Mile Island Unit higher KWH sales

$10

$16 No. 2 ("TMI-2").

(b) Increased revenues due to in 19i B, a'lowance for funds used during construction higher rates 18 14

("AFC") was accrued on part of the Company's investment in (c) Miscellaneous electric revenues TMI-2 while the balance of the Company's investment was Energ r i e re e ues 42' 8

cirning a return through base rates as allowed in several rate Total Revenue increase 73 12 30 5

ord:rs. The return through rates and the accrual of AFC offset Energy cost increase (decrease):

th3 interest charges, preferred stock dividends and the (a) Resulting from higher (lower) cpplicable carnings for the common stock component of unit fuel costs 16 (4) c;pifal associated with the investment in the plant. The (b) Resulting from increased recrusi of AFC ceased when TMI-2 was placed in commercial (c) owe purchased ar d op ration on December 30,1978. Moreover, until TMl-2 was interchanged, net 51 (5) placed in commercial service, the investment and operating (d) Deferred energy costs (10) and maintenance costs associated with the unit were cap-Total Energy Costs 54' _

12 _

26 8

4 italized and depreciation was not accrued.

Payroll and other operation and Effective with February billings, the Company received a maintenance expenses decreased rate increase covering the full portion of the capital and in 1979 due to cost reduction pro-operation and maintenance costs associated with its invest-f,' p yees wh1ch mor m

t an f set ment in TMI-2. However,in view of the nuclear accident which increased costs associated with occurred at TMI-2 on March 28,1979, the New Jersey Board of new facilities. Costs for 1978 were Public Utilities ("NJBPU") issued an order in June 1979 higher due to inflationary factors, c ased employees and higher removing TMI-2 costs from base rates entirely. Since Decem-b:r 30,1978, the Company has been charging to income the Deprecit. tion expenses increased as a fixrd capital and normal operation and maintenance costs result of placing TMI-2 in-service in tssociated with TMI-2.

December 1978 and higher accrual rates 11 25 6 15 1978 vs.1977 T***$:

income taxes declined mainly due to Errnings available for common stock for 1978 declined lower income subject to taxes (13) (41)

(8) (20) cgrinst those for the year 1977. The major factors involved in Taxes other than income increased du o " " "" "

such decline were increased operating and maintenance p,o a es 22 31 10 16 costs, higher interest and preferred stock dividend costs and Total Taxes 9

9 2

2 increased depreciation costs resulting from inflationary Interest costs increased due to higher fIctors and new plant in service. Partially offsetting such short-term borrowings and new decline was increased revenues due to higher rates and security issuances 13* 20 6

9 incr ased sales.

Preferred stock dividends increased A summary of the principal factors affecting the changes in due to a new issue of stock in 1978 3 A c;rnings available for common stock are as follows:

Allowance for funds used during construction, net, increased due mainly to the Forked River project 6 23 5 19 Other income, net, increased as a result of interest income from securities 1

Earnings available for common stock

$(6) (11)%

$ (9) (14) %

'These changes are mainly as a result of the nuclear accident at TMI-2 (see Note 1 to the financial statements).

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REPORT OF AUDITORS To the Board of Directors Jersey Central Power & Light Company Morristown, New Jersey We have examined the t alance sheets of Jersey Central Power & Light Company as of December 31,1979 and 1978 and the related statemen's of income, retained earnings and sources of funds used for construction for each of the five years in the period ender. December 31,1979. Our examinations were made in accordance with generally accep auditing standards and. accordingly, included such tests of the accounting records and such other auditing procedu we considered necessr ry in the circumstances.

As more f ully discus sed in Note 1 to the Financial Statements, the Company is unable to determine the consequ the accident at Unit 2 jf theThree Mile Island Nuclear Generating Station (TMI-2) and of the response of rate-making and other regulatory agencies to that accident. Among the contingencies and uncertainties which have resulted as a direct or indirec t consequence of this accident are questions concerning:

a. The recovery of the approximately $160 million net investment in TMI-2.

b.The recovery of $15 million of costs incurred, net of insurance proceeds received, and the indeterminable amount of uninsured costs yet to be incurred in connection with the anticipated restoration of TMl-2 to service.

c.The recovery of the approximately $384 million investment in the Forked River Nuclear Generation Station, construction of which has been suspended.

d.The recovery of the excess,if any, of amounts which might be paid in connection with claims for damages resulting f rom the accident over available insurance proceeds.

e. The financial effects should the capital and operating costs associated with Unit 1 of the Three Mile Island Nuclear Generating Station be removed f rom base rates and the effects of various investigatic.is and inquiries upon the ultimate recovery of the approximately $96 million netinvestment in the uniSt action is taken to preventits return to operation.

The accompanying financial statements have been prepared in conformi*y with generally accepted accounting prin-ciples applicable to a going concern which contemplates, among other things, the realization of assets ano the liquida-tion of liabilities in the normal course of business. The Company is currently not receMng a level of revenues sufficient to assure its ability to continue as a going concern.The continuation of the Company as a going concern is dependent upon obtaining adequate and timely rate relief and maintaining and increasing the availability of credit under the revolving credit agreement. (See Note 5 to the Financial Statements.) The eventual outcome and offect of the fore-going on the financial statements cannot presently be determined.

As more fully discussed in Note 1 to the Financial Statements, the Company is engaged in litigation with a nuclear fuel supplier involving the pricing of nuclear fuel. At this time, the outcome of the litigation and the rate-making treatment of any increased fuel costs which might result from an Tdverse legal determination are uncertain.

In our opinion, subject to the effect,if any, on the 1979 financial statements of such adjustments as might have been required had the outcome of the uncertainties discussed in the preceding paragraphs been known, the aforementioned statements (pages 6 through 20) present fairly the financial position of Jorsey Central Power & Light Company at December 31,1979 and 1978 and the results of its operations and tho )urces of funds used for construction for each of the five years in the period ended December 31,1979,in conformity with generally accepted accounting principles consistently applied during the period except for the change, with which we concur,in the method of accounting for energy clause revenue taxes as described in Note 8 to the Financial Statements.

COOPERS & LYBRAND March 6,1980

• 520 Broad Street, Newark, New Jersey 07102 5

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CTATEMENTS OF INIOME (Not]1)

Jersey Central Power & Light Company (In Thousands) for the Years Ended December 31, 1979 1978 1977 1976 1975

$664,947

$591,294

$560,720

$468,230

$395,112 Operating Revenues Operating Expenses:

Fuel 110,11C 97,780 97,165 80,128 C,259 Power purchased and interchanged, net:

Affiliates 44,934 30,442 13,493 24 539 17,118 Others 124,854 88,044 109,789 53,071 41,515 Deferral of energy costs, net (Note 2)

(20,881)

(11,157)

(23,160) 2,676 (9,730)

Payroll 52,714 48,618 41,420 38,746 34,842 Other operation and maintenance (excluding payroll) (Note 8)............................

71,618 78,008 E4,786 54,203 47,595 Depreciation (Note 2)..

57,216 45,893 40,J49 36,010 34,102 Taxes, other than income taxes (Note 8).........

94,000 71,831 61,819 50,583 47,643 Totals.

534,565 449,459 405,361 339,956 295,344 Operating income Before income Taxes.

130,382 141,835 155,359 128,274 99,768 21,346 32,476 39,300 28,739 17,837 Income Taxes (Notes 2 and 7)

Operating income 109,036 109,359 116,059 99,535 81,931 Other Income and Deductions:

Allowance for other funds used during s nstruction (Note 3) 23,149 18,517 14,006 13,203 8,791 Ott9 r income, net.

622 1,498 (23)

(314)

(109)

Income taxes on other income, net (Notes 2 and 7).

(369)

(944)

(163) 21 (12)

Total Other income and Deductions 23,402 19,071 13,820 12,910 8,670 132,438 128,430 129,879 112,445 90.601 income Before Interest Chargee Interest Charges:

62,453 58,056 52,317 46,860 38,575 Interest on first mortgage bonds.

Interest on debentures and other long-term debt 7,078 7,574 7,765 7,712 6,569 Other interest....

10,462 904 1,143 2,025 4,413 Allo,vance for borrowed funds used during construction-credit (net of tax) (Note 3)

(13,458)

(11,302)

(11,782)

(8,505)

(8,850)

Income taxes attributable to the allowance for borrowed funds (Notes 3 and 7)...............

(3,369)

(2.182)

(538)

(1,310)

(875)

Total Interest Charges.

63,166 53,050 48,905 46,782 39,832 Net income 69,272 75,380 80,974 65,663 50,769 Preferred Stock Dividends 18,651 18,8 O 15,426 14,782 13,507 Earnings Available for Common Stock.

$ 50,621

$ 56,561

$ 65,548

$ 50,881

$ 37,262

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The accompanying n'otes are an Integralpart of the financialstatements.

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BALANCE SHEETS (Note 1)

Jersey Central Power & Ught Company (In Thousands}

December 31, 1979 1978 ASSETS Utility plant (at original cost):

In service (Note 1):

Investment in Three Mile Island Unit No. 2.

$ 166,602

$ 165,811 Other 1,450,155 1.380.150 Totals.

1,616,757 1,545,961 Less, accumulated depreciation (Note 2) 369,487 318.975 1,247,270 1,226.986 Net 496,486 393.160 Construction work in progress (Note 1) 5,870 5.785 Held for future use Totals.

1,749,626 1,625.931 Nuclear fuel (Note 5) 144,154 127,657 36,154 34,239 Less, accumulated amortization (Note 2) 108,000 93.418 Net nuclear fue!

Net utility plant 1,857,626 1,719.349 investments:

Other physical property, net.

364 449 1

1 Other, at cost Totals.

365 450 Current Assets:

2,951 2,301 Cash (Note 5)

Special deposits..

4,753 4,745 Temporary cash investments....

4,004 Accounts receivable:

Customers, net 56,095 42,384 Affiliates 32 Ot h e rs (N ote 7)........................................

2,643 17,294 inventories, at average cost or less:

Materials and supplies for construction and operation....

22,314 18.547 Fuel...............................................

25,815 15,921 Prepayments...

10,170 4.423 128,745 105,647 Totals................................

Deferred Debits:

77,286 56,405 Deferred energy costs (Noter 1 and D.

9,602 10,587 Unamortized property loss (Note 4)

Deferred costs-nuclear accident, net of insurance recoveries (Note 1).

15,316 Deferred income taxes (Notes 2 and 7).........

14,449 6,643 10,665 7,805 Other Totals...

127,318 81,440 Total Assets.........

$2,114,054

$1,906.886 o

The accompanying notes are an integral part of the financial statements.

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(In Thousands) 1979 1978 LIABILITIES AND CAPITAL Long-Term Debt, Capital Stock and Surplus:

First mortgage bonds (page 11).

S 800,006 8 700,194 Debentures (page 11) 80,620 82.700 Other long. term debt (page 11).

10,465 15,746 Unamortized net discount on iong-term debt.....

(2,181)

(3.182)

To ta l s................................

888,910 795,458 Cumulative preferred stock-mandatory redemption (page 10) 41,250 43,750 Less, capital stock expense 1,395 1,556 To ta l s........................................

39,855 42,194 Cumulative preferred stock-no mandatory redemption (page 10) 162,500 162.500 Premium on cumulative preferred stock...

442 442 Less, capital stock expense 1,202 1.639 Totals.....

161,740 161.303 Common stock and surplus (Note 1):

Common stock (page 10) 153,713 153,713 Capital surplus (Note 6) 436,989 407,489 Retained earnings (Note 6) 58,658 20.023 Totals.

649,360 581.225 Totals..

1,739,865 1,580.180 Current Liabilities:

Securities due within one year to be refinanced (pages 10 and 11) 11,215 36,790 Notes payable to banks (Note 5) 45,000 54,100 Accounts payable:

Affiliates..

1,315 1,654 Others 87,311 48.402 Dividends payable on cumulative preferred stock.....

4,624 4,666 Customer deposits...

5,328 5,456 Tax es acc rued (No te 7)..........................................

16,723 4,839 Interest accrued 20,172 17,319 Other 9,517 6.956 Totals.

201,205 180.182 Deferred Credits and Other Liabilities:

Deferred income taxes (Notes 2,4 and 7).......................

112,173 84,476 Unamortized investment credits (Notes 2 and 7).....................

50,521 51,705 Other 10,290 10.343 To t al s...................

172,984 146.524 Commitments and Contingencies (Note 1)

Total Liabilities and Capital................................ $2.114,054

$1,906,886 9

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G STATEMENTS OF SOURCES OF FUNDS USED FOR CONSTRUCTION (Note 1)

Jersey Central Power & Light Company (In Thou: ands)

For the Years Ended December 37, 1979 1978 1117 7 1976 1975 Sources of Funds:

Funds generated from operations:

Net income...

$ 69,272

$ 75,380

$ 80,974

$ 65,663

$ 50,769 Add items not requiring current cash outlay or (receipt):

Depreciation (Note 2)....

57,216 45,893 40,049 36,010 34,102 Amortization of nuclear fuel (Note 2)................

16,325 14.096 10,997 9,503 9,706 investment credits, net (Notes 2 and 7)..............

(1,176) 18,816 15,864 2,654 5,815 Deferred income taxes, net (Notes 2 and 7).

19,797 24,127 20,630 6,506 12,910 Allowance for other funds used during construction (Note 3).

(23,149)

(18,517)

(14,006)

(13.203)

(8,791)

Totals 138,285 159,795 154.508 107,133 104,511 Less, cash dividends-common stock.....

12,000 57,Cv0 63,700 50,000 36,700

-preferred stoc k 18,637 18,805 15.776 14,768 13.783 Totals 107,648 83,990 75,032 42.365 54,028 Other sources (uses):

Deferred energy costs, net (Note 2)

(20,881)

(11,157)

(23,160) 2,676 (8,204)

Deferred costs-nuclear accident net of insurance recoveries (Note 1)

(6,096)

Changes in-cash (Note 5)......................

(650)

(236) 11 3,420 (1,895)

-temporary cash investments.

(4,004) 2,988 (2,988)

-accounts receivable 972 (12,849)

(8,066)

(4,255) 8,360

-accounts payable...

38,570 13,049 12,620 (6,379) 15,695

-inventories-materials, supplies and fuel......

(13,661)

(35)

(8,628)

(2,979) 6,419

-interest accrued.

2,853 (628) 2,144 3,113 202

-taxes accrued 11,884 (4,233)

(15,565) 21,757 (995)

Other, net..

(4,784) 6,381

~ (4,892) ~ 3,237 (6,728:

Totals 4,203 (6.720)

(48,524) 20,590 12,854 Funds from financings:

Sale of long-term debt....

103,800 5'J,382 60,000 95,000 88,953 Sale of preferred stock (pge 10) 50,000 30,450 Bank borrowings, net (Note 5)...........................

(9,100) 54,100 (26,700)

(54,300) j Retirement or redemption of hng. term debt and preferred stock (38,114)

(18,520)

(5,495)

(43,104)

(4,532)

Cash contributions from Genetal Public Utilities Corporation, parent compsny (Note 6).................

29,500 44,000 40,000 40,000 13.000 Totals 86,086 129,962 144,505 65,196 73,571 Totals.

$197,937

$207,232

$171,013 f128,151

$140,453 Construction Expenditures:

Utility plant

$181,130

$210,284

$148.295

$121,387

$129,047 Nuclear fuel.

39,956 15,465 36,724 19,967 20,197 Totals....

221,086 225,749 185,019 141,354 149,244 i

Allowance for other funds used during construction (Note 3)...

(23.149)

(18,517)

(14,006)

(13,203)

(8,791) l To tal s...................................... $197,937

_%207,232

$171,013

$128,151

$140,453 The accompanying notes are an integralpart of the financialstatements.

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..w-CTATEMENT5 OF EETAINED EANIKS (Nota 1) krsey Central Power & Light Company (in Thousands)

For the Years Ended December 31, 1979 1978 1977 1976 1975

$20,023

$20.448

$18,950

$18,055

$17,769 Calance,beginning of year.

69,272 75,380 80.974 65,663 50,769 Add, net income Totals 89,295 95,828 99,924 83,718 68.538 Deduct, dividends on capital stock (in cash):

Cumulative preferred stock (at the annual rates indicated below):

4% Serie's ($4 a share) 500 500 500 500 500 2,340 2.340 2,340 2,340 2,340 9.36% Series tS9.36 a share) 8.12% Series ($8.12 a share) 2,030 2,030 2,030 2,030 2,030 8% Series ($6 a share) 2,000 2,000 2,000 2,000 2,000 7.88% Series E ($7.88 a share).

1,970 1,970 1.970 1,970 1,970 2,672 2,840 3,009 3,178 3,284 13.50% Series F ($13.50 a share).

11% Series G ($11 a share) 2,750 2,750 2,750 2,750 1,659 4,375 4,375 1,177 8.75% Series H ($2.19 a share)

Common stock (not declared on a per share basis).

12,000 57,000 63,700 50,000 36,700 30,637 75,805 79,476 64,768 50.483 Totals

............ $58,658

$20,023

$20.448

$18,950

$18.055 Balance, end of year (Notes 1 and 6)...

The accompanying notes are an integralpart of the financialstatements.

CAPITAL STOCK December 31, f 979 (In Thousands)

Cumulative preferred stock, without par value,15,600,000 shares authorized (3,562,500 shares issued and outstanding):

Cumulative preferred stock-mandatory redemption:

187,500 shares,13.50% Series F, callable initially, subject to certain limitations, at $113.50 a share

$ 18,750 250,000 shares,11% Series G, ca!!able initially, subject to certain limitations, at $111.00 a share sold 1975) 25,000 Subtotal..............................................................

43,750 Series F, sinking fund requirement due within one year (12,500 shares)................

(1,250)(a)

(1.250)(a)

Series G, sinking fund requirement due within one year (12.500 shares)

Total cumulative preferred stock-mandatory redemption

$ 41,250 Cumulative preferred stock-no mandatory redemption:

125,000 shares,4% Series, callable at $106.50 a share........

$ 12,500 250,000 shares,9.36% Series, callable at $108.76 a share..............

25,000 250,000 shares,8.12% Series, callable at $107.59 a share 25,000 250,000 shares,8% Series, callable at $107.91 a share 25,000 250,000 shares,7.88% Series E, callable at $107.59 a share....

25,000 2,000,000 shares,8.75% Series H, callable initially, subject to certain limitations, at $27.19 a share (sold in 1977)E 50,000 Total cumulativ6 preferred stock-no mandatory redemption.

$162,500 Common stock, par va% $10 a share,16,000,000 sharer authorized, 15,371,270 shares issued and outstanding (Note 5).

$153,713

(:) There has been an annual redemption requirement of 12,500 shares ($1.250.000) of Series F Cumulative Preferred Stock since 1975 which will extend through 1994. Also, beginning in 1980, there is an annual redemption requirement of 12,500 shares ($1,250,000) of Series G Cumulatiee Preferred Stock which extends through 1999. The Company's annual aggregt ' tiability with regard to redemption provisions on its cumulative preferred stock for the years 1980 through 1984. based on issues outt 2nding December 31,1979 is $12.500.000. All redemptions are at stated value of the shares, plus accrued dividends. No redemption of preferred stock may be made unless dividends on all preferred stock for all past quarterly dividends have been paid or declared and set aside for payment.

10

LONG TERM DEST

.lersey Central Power & Lcht Company December 31.1979 (In Thousands)

First Mortgage Bonds-Series as noted(s)(d):

10% % Series due 1983........

$ 35,000 7%% Series due 1998*

......... $ 8,000 3%% Series due 1984 5,868 7% % Series due 1998 24,191 3%% Series due 1984*

8,700 12 % Series due 1999 50.000(e) 3% % Series due 1985...............

17,916 8% % Series due 1999................

8.047 47,500(e) 10% % Series due 1985............

35,000 11% % Series due 1999....

4% % Series due 1986.............

9,456 10 % Series due 2000................

11,995 5% Series due 1987..............

13,806 8% % Series due 2000...............

15,701 4% % Series due 1988*.............

7,500 8%% Series due 2001 33,902 5% % Series due 1989...

4,625 8% Series due 2001 24,593 4% % Series due 1990*

5,000 8% Series due 2002...............

23,569 4% % Series due 1992.............

10.213 8%% Series due 2003 48,279 4% % Series due 1993 16,847 8%% Series due 2003 29,840 4%% Series due 1994 15,403 9%% Series due 2006.

59,748 4%% Series due 1995.

17,525 9%% Series due 2006.

35,000 6% % Series due 1996 25,743 8%% Series due 2007 59.899 6% Series due 1997*....

10,000 9%

Series due 2008....

50.000 6%% Series due 1997.

27,094 7%% Series due 2009 6.300 Subtotal.

802.260 Balance of sinking fund requirements due within one year (2,254) $800,006 Debentures-Series as noted(b):

. $ 21.000 4% % Series due 1988........

6,120 9%% Series due 1996 4%% Series due 1989*

4,200 8%% Series due 1998.....

25.800 4%% Series due 1989 3,500 Subtotal 81,800 5% Series due 1990*.

3,600 5% % Series due 1990......

6,480 Balance of sinking fund requirements due 6% Series due 1992.......

11,100 within one year.

(1,180) 80,620 Other long-term debt /c)

$ 15,746 Other long-term debt due within one year....

(5.281) 10,465 (2.181)

Unamortized net discount on long. term debt...

$888,910 Total long-term debt........

• lssued by New Jersey Power & Light Company and assumed by the Company.

(a)For the years 1981 through 1984. the Company expects to meet its sinking fund requirements by the application of qualifying property additions to the extent permissible together with the deposit of cash and/or reacquired bonds. Based on bonds outstanding at December 31,1979 such deposits of cash and/or bonds will be in the amount of $3.989,090 per annum for the years 1981 through 1984.

(b)For the years 1981 through 1984 (based on debentures outstanding at December 31,1979) cash sinking fund requirements with respect to these debentures will be $2,080.000 per annum.

(c) Represents a series of notes payable to the supplier of the turbo-generator for the Forked River generating station, with face amounts of

$2.616.310 each maturing in six month intervals ending on July 31,1982. The notes have applicable interest computed into their principal face amounts.

(d) Substantially all the utility plant of the Company is subject to the lien of the mortgage.

(e)With regard to these series of first mortgage bonds, see Note 5 of the accompanying Notes to the Financial Statements.

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NOTES TO FINANCIAL STATEMENTS Jersey CentralPower & Light Company

1. Commitments and Contingencies:

ment while the unit is not providing electricity for custorners, Three Mile Island Nuclear Acc/ dent: On March 28,1979, an but it otherwise covers most types of costs. It is the Com-cccident occurred at Unit No. 2 of the Three Mile Island pany's and its affiliates

• belief that,if the estimates of the nuclear generating station ("TMI-2") resulting in significant consulting engineering firm are borne out, the recoveries d'; mage to TMI-2, and a release of some low level radiation from the insurance companies will approximate the amount which published reports of governmental agenciesindicate of theinsurance carried.

did not constitute a significant public health or safety hazard.

The Company and its affiliates do not know the extant,if TMl 2 is jointly owned by the Company (25%) and its any, to which the expenditures for repair and restoration cffiliates Metropolitan Edison Company (" Met-Ed") (50%)

of the unit to operation will represent plant improvements or end Pennsylvania Electric Company ("Penelec")(25%) who other items that are properly capitalizable and recoverable tra collectively owned by General Public Utilities Corpora-in the future through rates charged to customers by amortiza-tion ("GPU"). At December 31,1979 total net investment by tion or depreciation charges. Moreover, the Company and th3 Company and its affiliates in TMI-2 was approximately its affiliates expect to seek financial assistance from the

$682 million ($705 million investment less $23 million accume-Federal government and/or the utility industry in areas where lited depreciation), excluding the unamortized investment of the technicalinformation should be of wide value and sig-approximately $37 million in the nuclear fuel core, of which nificance. Under these circumstances, the amount of loss, th3 Company's share is approximately $160 million ($166 if any, suffered by the Company and its affiliates resulting million less $6 million accumulated depreciation) excluding from the TMI accident is not presently determinable and no the unamortized investment of approximately $9 million in the provision therefor has been made in their accounts, nuclear fuel core.

The property damage insurance, and the $300 million limit The Company and its affiliates engaged a consulting engi-of coverage,was applicable to both Unit No.1 of the Three nuring firm to prepare a cost estimate and schedule for Mile Island nuclear generating station ("TMI-1") and TMI-2.

restoring TMI-2 to service. The firm's initial report indicates This property insurance has been reduced by claims paid. The that, while the decontamination of the buildings and removal insurance carriers have reinstated the original coverage limits tnd disposal of large quantities of radiot s. c r,',aterialis a for TMl-1 but have refused to do so at this time for TMI-2.

major undertaking, the technology and techniques are well-Additional property damage insurance for TMl-1 of up to $300 known and have been previously demonstrated.Thisinitial million was obtained through membership in Nuclear Mutual r: port emphasizes the inherent uncertainties in cost and Limited ("NML"). As members of NML, the Company and its schedule estimates until (a) entry into the containment vessel affiliates are subject to annual assessments of up to 14 times his been gained and the difficulties of decontamination have the annual premium, or $13 million, in the event of an accident bun evaluated, (b) the reactor vessel has been opened at a nuclear plant of any member company. With regard to End the difficulties of core removal have been evaluated, property insurance for 1 Mi-2, $50 million of coverage has been tnd (c) the physicalintegrity of major components has obtained for possible damages which might iesult from a bxn assessed.

non-nuclear accident during the unit's restoration period.

Subject to these qtatifications, the initial report estimates The Company, in responding to the accident at TMI-2, has th t decontamination and restoration of TMI-2 to service, incurred $25.3 million of costs associated with the clean-up Exclusive of replacement cf the reactor core,would cost and recovery process. Of this amount, $23.6 million ha been cpproximately $240 million and take about four years.The deferred and $1.7 million charged to operations. In ar'Jition to rsport also recommends that, because of the unknowns and the deferred clean-up and recovery costs, the TMI-2 nuclear v riables, an allowance of $80 million for contingencies be fuel core was retired and its unamortized book cost of $9.2 included in the estimate of cost, bringing the total to $320 million transferred to deferred debits,which aggregate $32.8 million. The estimate does not include provision for the million and have been offset by the insurance proceeds of rIplacement of the reactor core (estimated by the Company

$17.5 million received through December 31,1979. All net cnd its affiliates to cost $60 million to $85 million) nor for the deferred costs will be charged to operations, or plant-in-Company's and its affiliates

• replacement power, financing service (for those which constitute permanent improvements),

cnd other costs during the period of rehabilitation of TMI-2.

upon a determination that such costs are not recoverable The Company and its affiliates increased, by $25 million, the through additional insurance proceeds, rates or by financial cngineering firm's estimate of costs to provide for other items assistance from the Federal government or from other public possibly omitted from that estimate. The estimates do not take or private sources and/or the utility industry, ints account potentiallegal, political or regulatory delays TMI 1, which adjoins TMi-2, was out of service for a sched-which would further incgease the cost of restoring TMI-2 to uled refueling and was not involved in the accident. At Decem-service. The delays experienced to date in obtaining regula-ber 31,1979 total net investment by the Company in its 25%

tiry authorizations to prodeed with the decontamination may interest in TMI-1 was approximately $96 million, including the have exhausted the allowance for contingencies in the engi-nuclear fuel core of $7.5 million. By orders dated July 2,1979 neer's estimate.

and August 9,1979, the Nuclear Regulatory Commission The Company and its affiliates carried the maximum insur.

("NRC") directed that TMI-1 remain in a shut down condition cnce coverage available ($300 million) for damage to the unit until resumption of operation is authorized by the NRC, after and core and for decontamination expenses.The insurance public h' earings and the satisfaction of various requirements does not cover replacement power costs or return on invest-set forth in such orders. The NRC has not yet established a 12

Jersey Centr:I P:wer & Light C:mpany firm tirn 3 sch;duls for th3 complttion of the hearings tnd things, r:fl;ct;d in bisa rit:s its inv stm:nt in TMI-2 cnd the decision.

operating and maintenance costs associated with the unit. On in their rate orders issued in June 1979 affecting the Com-June 18,1979, the NJBPU issued a rate order reducing annual pany and its affiliates, the Pennsylvania Public Utility Com.

base revenues by $29 million which represents the Company's mission ("PaPUC") and the New Jersey Board of Public annual capital and operating costs associated with its interest Utilities ("NJBPU") determined that the capital and operating in TMI-2. The order also provided for a reduction in energy costs associated with the interests of the Company and its revenues of $7.3 million over a prospective eighteen month cffiliates in TMI-1 should continue to be reflected in base period as an offset to base rate revenues attributable to rites. However, on September 20,1979, the PaPUC issued an TMI-2, collected during April May and June 1979. Accord-order instituting an investigation to determine whether the ing!y, such amount was recorded as a charge to energy costs costs associated with the Company's Pennsylvania affiliates' by the Company in June 1979. In addition, the order author-investment in TMI-1 should be removed from their base rates.

ized the Company to increase its levelized energy adjustment Similar issues have been raised by some of the parties in the charges to its customers over the period July 1,1979-proceedings initiated before the NJBPU in January 1980 by December 31,1980, by an amount which the NJBPU believed the Company which are referred to below. Operating end would be sufficient to recover the replacement power costs capital costs for TMI-1 represent approximately $15 million of associated with the non-availability of TMI since March 31, the Company's annual base revenues.

1979. On September 5,1979, the NJBPU authorized the in order to make provisions for the substantial expenditures Company to increase its levelized energy adjustment clause required to clean-up and repair, replacement energy and charges to recover increases in energy costs not associated other added costs resulting from this accident, the Company with TMI, anticipated for the period September 1,1979-and its affiliates entered into a revolving credit agreement August 31,1980; such increase is expected to provide with a group of banks in June 1979 (see Note 5). In addition, approximately $70 million of revenues during that period, the Company issued $50 million of first mortgage bondsin The increases in the Company's levelized energy adjust-June 1979 and $47.5 million of first mortgage bondsin ment charges granted by the NJBPU in June and September October 1979, $25 million of which was applied to the payment 1980, assumed that TMI-1 would resume the generation of of maturing bonds.

electricity on January 1,1980. The NRC has required TMI-1 to On January 23,1980, the NRC ordered Met Ed to pay a fine remain in a shut down condition until resumption of opera-of $155,000 for safety, maintenance, procedural and trairiing tions is authorized by it, while allowing similar type units to violations at TMI. Such fine was paid on February 13,1980.

operate. On January 21,1980, the Company filed with the The NRC has also stated that, depending upon the findings of NJBPU for an increase in its levelized energy adjustment continuing investigations into the TMI-2 accident, it may take clause of approximately $142 million annually effective March additional enforcement action such as assessing additional 1,1980. Such increased energy costs are estimated to be civil penalties or ordering the suspension modification or incurred by the Company due to the unavailability of TMl-1 at revocation of Met-Ed's operating license for TMI-2. Met-Ed January 1,1980 and the higher cost of oil. The Company indi-does not know what the ultimate outcome of this matter cated in its filing that failure by the NJBPU to act in a positive will be.

and timely manner on its request could result in the inability On October 30,1979, the Presidential ("Kemeny") Com-of the Company to obtain additional short-term financing ar'd mission on the accident at Three Mile Island issued its report.

thus impair the Company's ability to meet its obligations in The Report states,in part, that its " investigation has revealed the future.

problems with the ' system' that manufactures, operates and On February 27,1980, the administrative law judge granted r:gulates nuclear power plants" and the shortcomings which a motion of intervenors in that proceeding to deal initially with turned the incident into a serious accident "are attributable to energy costs other than those relating to the replacement of the utility, to supplies of equipment and to the federal ccm-TMI generation and to continue the proceedings for TMI mission that regulates nuclear power," On January 23,30, replacement energy costs. On March 6,1980 t te NJBPU the NRC Special Inquiry ("Rogovin") Group reported the authorized the Company to increase its leveli; ed energy risults of its investigation of the TMI-2 acci6t. Its con-adjustment clause, effective March 6,1980, fo r non-TMI clusions with respect to the assignment of responsibility for energy costs by a factor estimated to product approximately the accident was similar to those of the Kemeny Commission.

$84 million of additional annual revenues. Tho NJBPU also The Company and its affiliates do not know what effect,if any, stated in this order thatit will shortly take up 1he issue of the these reports will have upon them.

retention of TMl-1 in the Company's base ratt s.

Other investigations and inquiries into the nature, causes During the pendency of the proceedings w lich resulted in tnd consequences of the TMI-2 accident cornmenced by the June 18,1979 order of the NJBPU, certair, intervenors virious federal and state bodies are continuing.The Company requested that the NJBPU consider the issue of fault regarding cnd its affiliates are unable to estimate the full scope and the causation of the TMI-2 accident. At that thne, the NJBPU nature of these continuing investigations or the potential ruled that this issue would be considered in a later phase of consequences thereof,to the investors in their securities. The such proceedings. On January 23,1980, the NJBPU directed Company and its affiliates are also unable to determine the the filing of iegal memoranda attemptirig to idantify the legal impact,if any, the resultsrof such investigations may have on standards which should govern the NJBPU's evaluation of ths proceedings to return TMI-1 to operation and the efforts fault, the legal and factual contentions regardi'ig fault, the to rehabilitate TMI-2.

regulatory consequences of a fault finding, the NJBPU's legal On January 31,1979, the Company was granted a $33.8 mil-authority to impose such consequences and the implications lior : unual rate increase by the NJBPU, which, among other thereof. Such memoranda have been filed. On March 6,1980, 13

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l the NJ8PU stated that it will establish a hearing date to begin Forked River Project:In view of theimpact of the accident at TMI-2 on its financing capabihty, the Company suspended consideration of the above issues.

As indicated by the preceeding paragraphs, the deprecia-construction on its Forked River nuclear generating station tion and return requireraents associated with the Company's during the second quarter of 1979. The Company's investment inytstment in TMl 2 (amounting to approximately $23 million in this project at December 31,1979 was approximately $384 per year) are not being recovered f rom customers. Such million, approximately $30 million of which has been included d:preciation and return requirements are currently being in t*,e Company's rate base. Of this investment $75 million rafiscted in the financial statements of the Company and its reflects the accrual of allowance for funds used during con-Effiliates in that (a) depreciation charges in respect of the nnit struction ("AFC").The Company does not know when it will be able to resume construction of the station, whether it will tro being provided and charged to expense, (b) the interest be able to finance completion of the station without sub-End preferred stock dividend components of that investment Stantial rate relief and participation by other entities, and what tre being accrued, and (c) the carnings available for common additional modifications,if any, will be required upon resump-stock reflect the loss of the return on the common equity tion of construction.There are no current plans for near-term component of thatinvestment.

resumption of construction of the station. Prior to the acci-The Price-Anderson Art,endments to the Nuclear Energy dent, the Company was negotiating for the sale of an undi-Act limit liability to third parties to $560 million for each vided interest in the station with two unaffiliated utilities, one nuclear incident. Coverage of the first $140 million (raised to of which has since indicated thatitis no longer interested in

$160 million following the accident) of sucn liability is pro-such a purchase. The Company does not know whether it will vided by private insurance.The next $335 million (reduced to be able to sell any undivided interest in the station.

$315 million following the accident)is provided by assess-in addition, the Company is unable to estimate what effect mants of up to the limit of $5 million per nuclear reactor per any delay in, or moritorium on, the issuance by the NRC of incident, but not more than $10 million ir, any calendar year, The remainder is provided by a government indemnity. Based construction permits or operating licenses for nuclear gen-on its ownership interest in three nuclear reactors, the Com-erating stations may have on the resumption of construction or the eventualissuance of an operating license for the pany's maximum potential assessment under these provisions would be $7.5 million per incident but not more than $15 mil-Forked River station, The Company is currently reviewing possible alternatives lion per calendar year for claims covered by this insurance.

for the supply of additional capacity, including the possible The Company's and its af filiates' private insurance under Price-Anderson provides that coverage is reduced by claims conversion of the Forked River project to a coal-fired facility.

paid but is subject to reinstatement to original coverage limits Pending resolution of these matters, the Company has con-tinued to accrue AFC on its investment in the project.

upon approval by the insurance carriers.The Company and its Effiliates have applied for such reinstatement but are unable at this time to ascertain whether or when such reinstatement Oyster Creek Outage:The Company's Oyster Creek nuclear will be approved. The NRC has informed Met-Ed that f ailure by generating station is currently being refueled, a process it to obtain such reinstatement could result in the suspension which has been extended beyond its scheduled length for maintenance and possibfe repairs. At this date, the schedu.o or revocation of its license to operate TMI-2.

As a result of the accident, the Company, and/or its for its resumption of operations is uncertain. Replacement Effiliates have been named as defendants in various law power for the station's output costs approximately $3.5 million suits. The suits include (i) individual suits and purported and per week.

cctual class actions f or personal and property damages (including claims for punitive damages) resulting f rom the Nuclear fuellitigation: In 1971, the Company entered into a cccident and (ii) suits to enjoin the future operation of TMI-2.

contract for the purchase of three annual nuclear fuel reloads The suits described in (i) above involve questions as to for the Oyster Creek station, with an option for five additional whether certain of such claims, material in amount and arising annual reloads beginning in 1976. In 1974, the supplier offered an extension of that contract to cover five additional annual cut of both the accident itself and the clean-up and decon.

tamination efforts, are (a) subject to the limitation of liability reloads beginning in 1981. The Company believes that it effec-set by the Price-Anderson Amendments; and (b) ouulde the tively exercised the option in the initial contract and accepted the offer to extend the contract to cover the annual reloads inzurance coverage provided pursuant to the Price-Anderson Amendment.These questions have not yet been resolved.

through 1985. The supplier disputes this position and, in November 1978, submitted bills for material and services in Cf ass suits for damages on behalf of purchasers of GPU common stock during the period August 25,1975 through the aggregate amount of approximately $33 million, covering reloads supplied in 1977,1978 and 1979.The supplier stated April 1,1979 have also been instituted against the Company that its objective was to establish revised prices and other Cnd its affiliates and certain of its and GPU's directors as a terms and conditions rather than to diminish supplies and, rrsult of the accident /These suits have raised questions, which have not yet beer 1 resolved, as to whether certain claims without prejudice to its legal position, provided the 1979 annual fuel reload. Of the $33 million claimed by the supplier cre beyond the insurance coverage for directors' and officers' to be due, the Company has paid approximately $3.8 million, li:bility carried by the Company and its affiliates, and is of the opinion that the balance of approximately $29 The Company and its af filiates are presently unable to estimate the likelihood of an unfavorable outcome on any of million is not payable by it and has so informed the supplier.

the matters set forth in the preceding paragraphs or their On January 26,1979, the supplier filed suit against the Com-pany, GPU and one of its affiliates.The Company has filed a financial exposure with respect thereto, l

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.. m Jersey CentralPner & Light Company counterclaim for a declaratory judgment confirming its views

($52 million at a rate of $2.3 million per year), and (b) amounts of the contractual status and for damages and has also filed accumulated subsequent to the TMi-2 accident reflecting cnother suit against the supplier and its parent seeking dam-the operation of levelized energy adjustment clauses placed l

ages. The Company believes that any additional amount that in effect pursuant to rate orders entered in June and Sep-it might be required to pay if the supplier is successful in its tember 1979 (see Note 1).

)

suit would be valid costs and should be recognized for rate-1 making purposes. However, there can be no assurance that Depreclation:The Company provides for depreciation at this will be the case,if the suits were to be resolved in the annual rates determined and revised periodically, on the supplier's favor, the Company would incur $6.7 million in basis of studies, to be sufficient to amortize the original cost cdditional fuel expense, based on the amount of fuel con-of depreciable property over etimated remaining service sumed through December 31,1979.

lives, which are generally longer than those employed for tax Other:The Company's construction program, which extends purposes.The Company used depreciation rates, which on l

over severalyears, contemplates expenditures of approxi-an aggregate composite basis, resulted in an approximate annual rate of 3.57%,3.40%,3.30%,3.18% and 3.13% for mately $130 million during 1980. In connection with this construction program, the Company has incurred substantial the years 1979,1978,1977,1976 and 1975, respectively, commitments.

The Company is engaged in negotiations with various Nuclear Plant Decommiss/on/ng Costs:In accordance with suppliers relating to the suppliers' claims for delay or termina-rate-making determinations, the Company is charging to tion charges or increased fees which such suppliers assert expense and crediting to a non-funded reserve amounts result from the Company's revisions of construction plans intended to provide over their service lives for the cost of and schedules and/or f rom the increased scope of supply.

decommissioning nuclear plants at the end of their useful The Company's management does not expect at this time that lives (estimated for purposes of the rate-making determina-l such negotiations will result in any materialincrease in costs tions to range between $27 and $36 million per unit in then that would not be valid costs properly recognizable through current dollars assuming in-place entombment). la accord-ance with rate-making requirements, these charges make no the rate-making process.

Claims for damages arising out of the operation of the provision for possible inflation in decommissioning costs Oyster Creek station have been asserted. The Company's during the period prior to decommissioning but are expected management believes that such liability,if any, as it may have to be subject to modification to reflect such changes.

for such damages in the pending suit and for ali asserted Amort /zation of Nuclear fuel:The amortization of nuclear and potential similar claims would not be material.

The Company was a participantin the Atlantic generating fuelis provided on a unit of production basis. Rates are station project. In December 1978, the non-affiliated co-owner determined and periodically revised to amortize the cost over and principal sponsor of the station announced the abandon-the useful life. Prior to December 1,1976, amortization of ment of the project. At December 31,1979, the Company's nuclear fuel costs included estimated costs of reprocessing investment in the project was $4.2 million.The Company plant such fuel and estimated iesidual value of uranium and to seek regulatory approval to amortize this investment, net plutonium. Due to the uncertain future of government of related income tax reductions of $1.4 million, over a period approvals for reprocessing and plutonium recycling, the of years for rate-making purposes.The NJBPU has accorded Company, effective December 1,1976, began using amortiza-such treatment for similar items in the past.

tion rates for nuclear fuel at the TMI station which makes no current provisions for reprocessing costs and gives no credit

2. Summary of Significant Accounting Policies:

for residual values. Effective September 1,1977, similar Generaf:It is the general policy of the Company to record treatment was adopted pursuant to authorization by the additions to utility plant at cost, which includes material, NJBPU for the Oyster Creek station nuclear fuel. Also effective 4

labor, overhead and AFC.The cost of current repairs (except September 1,1977, the Company is providing for estimated those relate M the nuclear accident described in Note 1) and future handling costs for the spent Oyster Creek nuclear fuel minor reph...,ments is charged to the appropriate operating and similar treatment will be provided for future handling expense and riearing accounts and the cost of renewals and costs for the spent TMI nuclear fuel when required. Pre-betterments b capitalized.The original cost of utility plant viously accumulated estimated residual credits, net of pre-retired, or otherwise disposed of,is charged to accumulated viously accumu'ated estimated costs of reprocessing, for the Oyster Creek station nuclear fuel are being amortized to fuel depreciation.

expense on a unit of production basis. Should reprocessing Operating Revenues: Revenues are generally recorded on eventually be undertaken, the Company expects that any difference between such costs and accumulated reserves will the basis of billings rendered.

be recognized prospectively in the rate-making process.

Deferred Energy Cosis: The Company follows a policy of recognizing energy costs in the period in which the related k,come Taxes: GPU and its subsidiaries file consolidated energy clause revenues are billed.

Federat income tax returns. All participants in a consolidated Deferred energy costs at December 31,1979 includes Federal income tax return are several;y liable for the full (a) amounts accumulated prior to the TMl-2 accident, which amount of any tax, including penalties and interest,which are being amortized in accordance with rate-making orders may be assessed against the group. Beginning with the year 15

I

-a w. m

s. _..

m_

o 1979, GPU and its subsidiaries changed the method of alloca-plant, including AFC, tion of Federalincome taxes.The etfect of this change is to To the extent permitted in the rate-making proceedings of cllocate the tax reduction attributable to GPU's expenses the Company, the income tax reductions associated with cmong the subsidiaries in proportion to the dollars of average the interest component of AFC have been allocated to reduce common stock equity investment of GPU in each subsidiary interest charges and correspondingly, have not reduced during the year. In addition, each subsidiary will receive in income taxes charged to operating expenses. Pursuant to current cash payments the benefit of its own net operating rate orders, the Company employed a partial net of tax AFC loss carrybacks,if any, to the extent that the remainir.g sub-accrual rate from June 1975 through July 1976, and, effective sidiaries can utilize such net operating loss carrybacks to September 1977, began employing a net of tax accrual rate offset the tax liability they would otherwise have on a sep-for AFC on certain construction projects while using a gross cr:te return basis (af ter reflecting any investment tax credits AFC rate on others.

which could be uti!ized on a separate return basis).This The Company has accrued AFC using rates which, on an msthod of allocation provides that a participant other than aggregate composite basis, resulted in an annual rate of GPU will not pay a tax in excess of its separate return tax 8.86%. 8.85%,9.15%,8.65% and 8.37% for the years 1979, liibility.

1978,1977,1976 and 1975, respectively.

The revenues of the Company in any period are dependent to a significant extent upon the costs which are recognized namo Pe@ usses:

and allowed in that period for rate-making purposes. In Effective October 1,1973, the, Company began amortizing cccordance therewith, the Company has employed the its investment in the Longwood Valley project over a ten year following policies:

period for rate-making purposes.

The Company, effective September 1,1977, began amortiz-Tax Depreciation:The Company generally utilizes liberal.

ing its unrecovered investment in a proposed pumped ized depreciation methods and the shortest depreciation storage project over a period of ten years for rate-making lives permitted by the Internal Revenue Code in computing purposes.

depreciation deductions and provides for deferred income The related Federal income tax reductions are being taxes where permitted in the rate-making process.

amortized over similar periods.

Investment Credits: The 3% investment credits are being tmortized over a 10-year period while the 4% and 10%

5. Short term Borrowing Arrangements:

investment credits are being amortized over the estimated in June 1979 the Company and its affiliates, entered into a sirvice lives of the related facilities.

revolving credit agreement with a group of banks, under Investment credits applicable to the Tax Reduction Act which they had available at December 31,1979, $292 million iImployeo Stock Ownership Plan ("TRAESOP") are of credit, of which $171 million were utilized for outstanding rsmitted to the Plan Trustee and have no effect on income.

borrowings. Such available credit can be increased to $412 As a result of the nuclear accident referred to in Note 1, the million upon the approval of banks holding 85% of the notes TRAESOP plan has been suspended.

outstandir g. Subject l a the overall System limit.which is less than the total of the ir dividuallimits of the Company and its P nsion Plans The Company has several pension plans affiliates,the Compar y is limited to $139 million of which $45 including a plan app!icable to all employees the accrued cost million was utilized a. December 31,1979. The agreement of which are being funded.The costs of a supplemental provides for a comrrstment fee of one-half of one percent per pinsion plan applicable only to supervisory employees was annum of each ban'ts total commitment (whether used or not funded prior to 1976. The previously unfunded supple-unused). Interest rates on such borrowings range f rom 105%

m sntal pension plan costs are being funded during the five to 111% of the pr me rate.

yEr period beginning January 1,1977. Prior service costs GPU has guaranteed all borrowings outstanding under the applicable to all plans are being amortized and funded over revolving credit agreement. In order to secure such guar-25-year periods.

antee, plus its own loans and the loans of GPU Service Corporation ("GPUSC"), GPU has pledged the common stock

3. Allowance for Funds Used During Construction:

of all of its subsidiaries incluoing the Company.

Tha applicable regulatory Uniform System of Accounts pro-The Company has secured its notes under the revolving vid s for AFC which is defined as including the net cost credit agreement by granting a security interest in certain during the period of construction of borrowed funds (allow-nuclear fuelin the process of refinement, conversion, enrich-ance for borrowed funds used during construction) used ment and fabrication. Such nuclear fuel was recorded on the f:r construction purposes and a reasonable rate on other December 31,1979 balance sheet at a cost of $17.9 million.

funds (allowance for other funds used during construction)

The revolving credit agreement and the purchase agree-when so used.While AFC results in a current increase in ments of the bonds sold by the Company in June and October utility plant to be recognized for rate-making purposes and of $50 million and $47.5 million, respectively, subsequent represents, in this fashion *, current compensation for the use to the accident at TMI-2 contain provisions for the immediate cf capital devoted to construction, AFC is not an item of payment of theindebtednessinvolved upon the occurrence current cash income;Instead, AFC is realized in cash after of an event deemed by the majority of the lenders or holders the related plant is placed in service by means of the allow- -

of an issue to have a materially adverse effect on the ance for depreciation charges based on the total cost of the borrowers.

16

. m.s Jersey C:ntra P1wer & Light Company (In Millions) in addition, the Company has informal lines of credit with 19r9 1978 1977 1973 1975 various tenders.These arrangements generally provide for Operating income before the maintenance of compensating balanc6s ranging from a income taxes

$130 $142 $155 $128 $100 minimum of 10% of the available line of credit to a maximum Other income, nel 1

1 of 10% of the line plus 10% of the loans outstanding, as Totals 131 143 155 128 10o determined on a daily average basis. At December 31,1979 Interest expense (80)

(66)

(61)

(57) _(50) cnd 1978, the lines of credit available under these arrange-Bo, nc me subject to ments totaled approximately $10.5 million and $66 million,

'"C respectively. At December 31,1979, $.6 million was main.

rate $

S 23 $ 37 $ 45 $ 34 $ 24 tained as compensating balances. Substantially all the cash Excess of book over tax et December 31,1978 was maintained as compensating depreciation (flow through balances. Under the revolving credit agreement, the amount portion) (Note 2) 4 1

(2)

(4)

AHocat d sh Cons d ted of debt outstanding under the externallines of the Company

,n 2) cannot exceed $7.5 million*

Amortization of accumulated The maximum aggregate amount of bank borrowings out-investment creits (Note 2)

(2)

(2)

(2)

(2)

(2) standing at any month-end during 1979 was $96.4 million.

Other adjustments (5)

(3)

(2)

(1)

For the year 1979, the average daily amount outstanding was income tax expense

$ 18 $ 31 $ 39 $ 27 $ 17 (pproximately $66.0 million, having a weighted average Effective income tax rate

~36 % 41 % 41 % 39% 34 %

interest rate of 13.5%. Bank borrowings outstanding at December 31,1979 aggregated $45.0 million having a (a) Effective January 1,1979. the statutory rate was changed f rom weighted average interest rate of 17.0%.

48% to 4W.

The maximum aggregate amount of bank borrowings out-Income tax exper'se is comprised of the following:

standing at any month-end during 1978 was $54.1 million.

For the year 1978, the average daily amount outstanding was (in Whons) approximately $6.3 million, having a weighted average 1979 1978 1977 1976 1975 interest rate of 10.7%. Bank borrowings outstanding at Federat income tax

$2 $(11)(a) $ Ab) $19 $(1)(c) inco December 31,1978 aggregated $54.1 million having a ct erincome net 1

weighted average interest rate of 11.4%.

Income tax attributable to the allowance for borrowed

6. Capital Surplus and Retained Earnings:

funds (Note 3)

(3)

(2)

(1)

(1)

(1)

Capital Surplus: During the years 1979,1978,1977,1976 and Provision for taxes 1975, cash capital contributions from GPU of $29.5 million,

{urren b e)

(1) (12)(a) 2(b) 18 (2)(c)

$44 million, $40 million, $40 million and $13 million, respec*

Deferred income taxes, net 20 24 21 6

13 tively, were credited to capital surplus.

Current investment I

credits 1

21(a)

IS(b) 5 8(c)

Amortization of accumulated Retained Earnings: In accordance with the most restrictiva investment credits (2)

(2)

J (2)

(2) of the provisions contained in the Company's mortgage, income tax expense sis $31 g

g $17 debenture indenture, charter and revolving credit agreement, the amount of common dividends payable is limited, to the (a) includes 1978 investment tax credits of $12 million carried back t pri r years which is included in " Accounts receivable-Other" Extent theY are not matched by cash capital contributions m the accompanying December 31,1978 balance sheet, from GPU, to an amount equal to 25% Sf earnings for the (b) Reflects 1976 investment tax credit of $2.5 million resulting from years 1979 and 1980 and 100% of earnings thereaf ter. In adoption of TRAESOP in 1977 and the election to claim invest-cddition, in its June 18,1979 rate order, the NJBPU pro-ment tax cred.ts under the progress payment method.

hibited the Company from paying any cash dividends on its (c) Reflects the investment credit carry-over of $4.4 million from 1974.

common stock for the year 1979.

(d) Unused 1978 and 1979 investment tax credits of approximately

$3 million and $19 million, respectively, (including about $3 million and $2 million, respectively, of TRAESOD credits) are available

7. Income Taxes:

for carry forward to future years.

Examination of Federalincome tax returns through 1976 has been completed and the years 1977 and 1978 are cur-The provision for deferred income taxes, net, result from rently under review.The Company has provided for any the following timing differences:

cnticipated liabilities that may result from such examination.

(In Millions)

Income tax expense for the years 1975 through 1979 was 1979 1978 1977 1976 1975 less than the amount computed by applying the statutory rate Liberalized depreciation to book income subj4ct to tax as follows:

(Note 2)

$ 20 $ 16 $ 10 $ 8 8 8 g,

Deferral of energy costs (Note 2) 10 4

11 (2) 5 Revenue taxes-energy clause revenues (Note 8)

(4)

Other (s) 4 Totals S 20 $ 24 $ 21 $ 6 $ 13 17

. -. _d.-...

8. Supplementary income Statement Information:

10. Jointly Owned Generating Station a:

M 'intenance and other taxes charged to operating expenses The Company participated with affiliated and nonaffiliated consisted of the following:

utilities, in the following jointly owned generating stations (In Enons) as of December 31,1979.

1979 1978 1977 1976 1975 Balance (in Thousands)

M;intenance (including rpplicable payroll in Accumulated charges

$ 29 $ 35 $ 30 $ 27 $ 23 Station Ownership Service Depreciation Other taxes:

Three Mile Island State gross receipts 8 51 $ 42 5 37 3 29 $ 27 (Note 1) 25

$269,804

$23,585 State franchise 20 17 14 12 11 Keystone 16.67 37,059 9,851 State surtax 9

7 6

5 5

Yards Creek 50 16,549 2,433

$hb Each participant in a jointly owned generating unit finances i

1 its own portion and charges the appropriate operating Totals S 94 $ 72 5 62 $ 51

-$ 48 expenses with its share of direct expenses.The dollar The liabilities for New Jersey State f ranchise and gross amounts shown above represent only those portions of the r ceipts taxes and surtax is establisned in each year of exer-units owned by the Company, cin of such franchise based on the preceding year's gross

11. Quarterly Financial Data (Unaudited):

receipts and no liability exists in a current year to pay a tax based on that year's gross receipts.The Company has con-(In Thousands) sistently made provision in its accounts for such taxes on this First Quarter Second Quarter basis. For rate-making purposes (inrJuding it,e operation of 1979 1978 1979 1978 tha energy adjustment clause), the NJBPU computes allow.

Operating Revenues

$162,294 $152,260 $142,660 $137,345 able expenses as including provision for such taxes based Operating income

$ 29,526 $ 27,253 $ 18,645 $ 24,326 on the current year's gross receipts rather than those of the Net income

$ 20,295 $ 18,506 $ 9,652 $ 16,096 Ea nings Available for preceding year. Effective January 1,1979, pursuant to a rec-ommendation by the Federal Energy Regulatory Comm,ssion i

(In Thousands)

("FERC"), the Company began recording state revenue taxes Third Quarter Fourth Quarter related to energy clause revenues in the period the revenues 1979 1978 1979 1978 tre collected which resulted in a $4.7 mi'P : decline in net income for the year 1979, af ter related Federal income tax Operating Revenues

$185,594 $161,747 $174,399 $139,942 Operating income

$ 34,454 $ 33,949 8 26,411 $ 23,831 reductions of $4.0 million. Had this accounting change been epplied retroactively, net income for 1978 would have been Ea ngs Available for increased by approximately $3.8 million to approximately Common Stock

$ 19,487 $ 20,898 8 10,520 $ 10,478

$79.2 million and the years 1977 through 1975 would not have been materially affected.

Net income for the Fourth Quarter of 1978 reflects $.5 mil-The Company is liable for property tax on its real estate lion reduction in income tax expense, plus related interest of property in both New Jersey and Pennsylvania. It 1979, the

$.3 million (net of tax) resulting from final resolution of certain Pannsylvania state legislature amended its definition of Federalincome tax matters.

" utility realty" with regard *.o its Public Utility Realty Tax Net income for the Second, Third and Fourth Quarters whereunder the Company was subject to a one time assess-of 1979 have been affected by the action of the NJBPU in m:nt of approximately $7.0 million,which correspondingly removing TMI-2 from rate base subsequent to the accident decreased Federalincome taxes by $3.2 million.

described in Note 1 For the years 1979,1978,1977,1976 and 1975, tha cost to tha Company of services rendered to it by GPUSC, nn affit-

12. Supplementary Information to Disclose the Effects i ted service company, amounted to approximately $15.7 of Changing Prices (Unaudited):

million, $14.9 million, $11.0 million, $9.6 million and $8.5 The following supplementary information is supplied in million, respectively, of which approximately $10.1 million, accordance with the requirements of Financial Accounting

$9.3 million, $7.6 million, $7.1 million and $6.2 million, respec-Standards Board ("FASB") Statement No. 33, Financial tively, was charged to income, Reporting and Changing Pricos, for the purpose of providing certain information about the effects of changing prices,it

9. Pension Plans:

should be viewed as an estimate of the approximate effect of Total pension costs for the years 1979,1978,1977,1976 and inflation, rather than as a precise measure, since a r! umber of 1975 amounted to approximately $7.0 million, $6.1 million, subjective judgements and estimating techniques were

$5.3 million, $4.7 milli'on and $3.8 million, respectively. Based employed in developing the inforrntion.

on the latest available actuarial reports as of January 1,1979, Constant dollar amounts represent historical costs stated the actuarially cc,mputed, vested benefits under certain of in terms of dollars of equal purchasing power,as measured by the plans exceeded the actuarial value of trust assets or the Consumer Price Index for All Urban Consumers (CPI-U).

reserves created in respect of such plans by $.6 million and Current cost amounts reflect the changes in specific prices of th;s unfunded past service liabilities for all the plans amounted plant and differ from pnstant dollar amounts to the extent to approximately $38.8 million, or 36% of the total reserve that specific prices have increased more or less rapidly than requirement.

prices in general.

18

.lersey CentralPower & Light Company Th3 curr:nt cost of property, plint End equipmint, which Undir ths rit>mikin0 prncribed by tha rrgulatory com-includ s lirid,11nd rights, intangibl3 plant, property held for missions to which th) Company is subjtet, only th3 historical future use, construction werk in progress, and other physical cost of plant is recoverable in revenues as depreciation.

property, was determined by indexing the surviving plant by Therefore, the excess of the cost of plant stated in terms of individual company equipment cost indices or by the Handy-constant dollars or current cost over the historical cost of WhitmL '.idex of Public Utility Construction Costs. These plant is not presently recoverable in rates as depreciation, current cost amounts do not necessarily represent the re-and is ref%cted as a reduction to net recoverable cost. While placement cost or current value of existing plant productive the rate-making process gives no recognition to the current capacity. The actual replacement of the capacity of present cost of replacing property, plant, and equipment, based on facilities will occur over many years as future facilities, past practices, the Company believes that it will be allowed t' different in kind from present f acilities, are constructed and earn on the increased cost of its net investment when replace placed in service.

ment of facilities actually occurs.

The current year's provision for depreciation on the con-To properly reflect the economics of rate regulation in the stant dollar and current cost amounts of property, plant, and Statement of income. Adjusted for Changing Prices,the redu equipment was determined by applying the depreciation rates tion of net property, plant, and equipment should be offset by of the Company to the respective indexed average 1979 the gain from the decline in purchasing power of net amount:

depreciable plant amounts.

owed. During a period of inflation, holders of monetary asset Fuelinventories, nuclear fuel, the cost of fuel used in gen-suffer a loss of general purchasing power while holders of cration, and purchased power and interchange have not been monetary liabilities experience a gain. The gain from the restated from their historical cost in nominal dollars. Regula-decline in purchasing power cf net amounts owed is primaril:

tion limits the recovery of fuel and purchased power and attributable to the substantial amount of debt which has beer interchange through the operation of energy adjustment used to finance property, plant, and equipment. Since the clauses or adjustments in base rate schedules to actual depreciati0n on this plant is limited to the recovery of histori-costs. For this reason fuel inventories and nuclear fuel are cal costs, the Company does not have the opportunity to effectively monetary assets.

realize a holding gain on debt and is limited to recovery only As prescribed in Statement 33, income taxes were not of the embedded cost of debt capital.

adjusted.

0 19

~~1

-,_a.,_,.._.....__.~-

STATEMENT OF INCOME ADJUSTED FOR CHANGING PRICES (in Thousands)

Conventional Constant Dollar Current Cost Histcrical Average Average For fhe Year Ended December 37,1979 Cost 1979 Dollars 1979 Dollars Operating revenues (a)

$664,947

$664,947

$664,947 En;rgy costs (b) 259,017 259,077 259,017 0:pr:ciation 57,216 701,391 775,856 Oth:r operation and maintenance expenses 218,332 218,332 218,332 locome taxes 21,346 21,346 27,346 Totif operating expenses 555,911 600,086 674,557 Op;ratingincome 109,036 64,867 50,396 Oth:r income..and deductions 23,402 23,402 23,402 Int:rsst charges, net 63,166 63,766 63,766 Income (loss) from continuing operations (a)(excluding reduction to net recoverable cost) 69,272 25,097(c) 70,632 Prsf arred stock dividend 18,S51 78,651 78,651_

income (loss) af ter preferred dividend requirement (a)

$ 50,621

$ 6,446

$ (8,G 9)

Change in net plant assets during 1979 due to increases in specific prices

$2412v2(d)

Less: Change in net plant assets during 1979 due to increase in general price level (inflation) 350.907 Change in specific prices net of general price level (inflation)

$(709,699)

R: duction to net recoverable cost of plant assets

$(150,02f)

$ (42,622)

Gain from decline in purchasing power of net amounts owed

$ 774,272

$ 714,272

(:) Rzvenues do not include amounts for the operating and return requirements associated with the Company's investment in TMI-2 and, cor-rgspondingly, the amounts 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 cost.

(c) including the reduction to net recoverable cost, the (loss) flom continuing operations on a constant dollar basis would have been

$(124,924,000) for 1979.

(d) At December 31,1979, current cost of property, plant, and equipment, net of accumulated depreciation, was $2,959,602,000, while historical cost or net cost recoverable through depreciation was $1,749,991,000 FIVE-YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA Adjusted for Effects of Changing Prices

~

(in Average 1979 Dollars)

Yccrs Ended December 31, 1979 1S78 1977 1976 1975 Operating revenues (in thousands) :

A2 reported

$664,947

$591,294

$560,720

$468,230

$395,112 In 1979 purchasing power

$664,947

$657,868

$671,628

$597,028

$532,862 Av:rrge consur%r price index 217.4 195.4 181.5 170.5 161.2 (1) C:sh dividends on the Company's common stock are not declared on a per share basis. The Company is a wholly owned subsidiary. Accord-ingly, no comparisons are presented with respect to cash dividends per common share and market price per share.

a h

20

- - L

~

t COMPANY STATISTICS Jersey CentralPower & Ught Company 1979 1978 1977 1976 1975 Generating Capacities and Peaks (MW):

Installed capacity (at year-end)....

3,375(b) 3,375 3,134 3,055 3,093

)

2,700 2,689 2,714 2,354 2,459 Annual hourly peak load (a).....

Reserve (%)

25.0(b) 25.5 15.5 29.8 25.8 Not System Requirements (la thousands of MWH):

N et gen eration.............................

8,582 9,033 8,483 8,727 8,412 5,310 4,611 4,526 3,928 3,374 Power purchased and interchanged, net Total Net System Requirements 13,892 13.644 13,009 12,655 11,786

t. cad Factor (%)

58.7 57.9 54.7 61.2 54.7 Production Data:

Cost of fuel (in mills per KWH of generation):

11.35 11.04 9.25 8.02 6.97 Coal Oil...

38.46 27.34 28.57 25.27 26.22 Nuclear 3.23 2.81 2.41 1.95 2.18 Other 35.43 76.75 22.24 15.52 13.16 12.62 10.87 11.38 9..)5 9.62 Average Generation by fuel types (%):

Coal.

18 16 15 18 19 Oil..

17 26 29 25 26 57 56 53 54 51 Nuclear 8

2 3

3 4

Other (gas & hydro)

Totals.

100 100 100 100 100 Electric Energy Sales (in thousands of MWH):

5,138 5,044 4,903 4,728 4,478 Residentia!

Commercial 3,487 3,395 3,210 3,053 2,823 Industrial 3,765 3,618 3,413 3,343 3,064 Other 381 382 376 364 349 12,771 12,439 11,902 11,488 10.714 Totals..

Electric Operating Revenues (in thousands):

Residential

$310,803

$279,451

$266,739

$222,605

$186,929 182,812 163,185 152,728 128,610 111,273 Commercial.

Industrial.

144,639 127,690 120,007 98,915 81,122 Other 20,146 16,973 16,979 14,784 12,689 Totals from KWH Sales...................

658,400 587,299 556,453 464,914 392,013 Other revenues.........

6,547 3.995 4,267 3,316 3,099 Totals....

$664,947

$591,294

$560,720

$468,230

$395,112 Customers-Year End (in thousands):

ResidentiaI-620 609 597 586 575 Commercial *...

67 65 63 62 61 3

3 3

3 3

Industrial 1

1 1

1 1

Other..

Totals.........

691 678 664 652 640 Price per KWH-all customers (cents).............

5.15 4.72 4.68 4.05 3.66 (a) Tt'e Company's peak has historically occurredin the summer.

(b) includes the installed capacity of 7hree Mlle Island nuclear generating station Unit 1 of 200 MW and Unit 2 of 226 MW. The Reserve Capacity, excluding these units for 1979, would be 9.2%.

21

.._._.__.__m.

i JEISEY CENTRAL POWER & LIGHT COMPANY l

0 member of the GeneralPublic Utilities System i

Officers Directors j

W.G.Kuhns J. R. McGalliard

• Shepard Bartnoff Chairman of the Board and Vice President, Personnel Englewood, N.J.

Chief Executive Officer and Services V.H.Condon Sh: pard Bartnoff G. P. Mundrane Morristown, N.J.

President and Vice President, Engineering H. M. Dieckamp Chief Operating Officer and Operations Mountain Lakes, N.J.

V.H.Condon P. H. Preis

1. R. Finfrock, Jr.

Vice President, Finance Comptro!!er Morris Township, N.J.

l. R. Finf rock, J r.

E. G. Bohn, Jr.

F. D. Hafer Vica President, Generation Assistant Comptroller Scotch Plains, N.J.

J.R. Leva E. L Jones

• W G' fly, N.J.

Kuhns Vica President.,

Assistant Comptroller Tena Consumer Affairs D. P. Baldassari J.R. Leva Secretary and Treasurer Morris Township, N.J.

M. B. Peters

• R. H. Sims Assistant Secretary Convent Station, N.J.

• Executive Committee Counsel R. O. Brokaw General Counsel Ne Managers of Operations J. X. Mangold Southern Area C.D.Cudney Nodhen1 Area Trustee-First Mortgage Bonds Citibank, N.A.

Jersey Central Power & Light Company (JCP&L) is a member com.

55 Wall Street, New York, N.Y.10015

{

pany of the General Public Utilities Corporation (GPU) System.

Trustee-Debentures GPU is an electric utility holding company with three operating Irving Trust Company subsidiaries in Pennsylvania and New Jersey. The other companies, One Wall Street, New York, N.Y.10015 in addition to JCP&L, are Metropolitan Edison Company, serving Transfer Agent-Preferred Stock about 360,000 customers in central and eastern Pennsylvania, and Manufacturers Hanover Trust Company Pennsylvania Electric Company, with about 510,000 customers in 4 New York Plaza northern and western Pennsylvania.

New York, N.Y.10015 The three companies provide electricity to about half the land Registrar-Preferred Stock area of the two states. They jointly own several of the System's Chemical Bank major electric generating facilities. This minimizes the cost to the 20 Pine Street, New York, N.Y.10015 individual companies and their customers of building new gen-Trustee-First Mortgage Bonds erating units to meet growing demand for electricity. The System (Of New Jersey Power & Light approach also enhances reliability of customer service, since power Compan )

can readily be shifted from one con pany service area to another in of New York the event of local energy shortages or power outages.

23 Wall Street, New York, N.Y.10015

,GPU is one of the nation's largest publicly-owned electric util-ities, with assets of $5 billion. GPU companies sold about 32 million (Of New Jersey Pows- & Light megawatt-hours of electricity in 1979 and had revenues of $1.5 Company) billion.

The Chase Manhattan Bank (National Association) 1 Chase Manhattan Plaza New York, N.Y.100t 5 e

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22

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Jersey Central Power & Light Company Madison Avenue at Punch Bowl Road Morristown, New Jersey 07960 201-455-8200 YARDS l

RSIP NY RI WN

1. WARK mSvittE f

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IINGTO VERNER I

AYREV 33xg LONG BRANCH UG1 ASBURY PARK VOOD T,

PLEASANT WRIGIITSTO EASIDE PARK

' STER CREEK New Jersey g'

mmrem 4

CONVENTIONAL STEAM PLAMI' l

NUCLEAR PLANT PUMPED STORAGE PLANT