ML19343A185
| ML19343A185 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 09/12/1980 |
| From: | Howson T GENERAL PUBLIC UTILITIES CORP. |
| To: | Peterson J Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML19343A186 | List: |
| References | |
| NUDOCS 8009160359 | |
| Download: ML19343A185 (29) | |
Text
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GPU Service Corporation pu, ai J
'te GWme 100 Interp ce Parkway Pars.cpany. New Jersey 0705, 201 263-6500 TELEX 136-482 wnter s Direct Dia! Nurrter (201) 263-6061 September 12, 1980 Mr. James Peterson U.
S.
Nuclear Regulatory Commission Room 266 - PHIL 7920 Norfolk Avenue Bethesda, Maryland 20014
Dear Jim:
As we discussed by telephone today, I have enclosed a copy of the following:
The letter to the PaPUC Commissioners outlining a series of cash conservation measures.
The GPU press release about the cash measures.
A letter to Chairman Ahearne A statement by PaPUC Chairman Shanaman to the Pennsylvania Congressional Delegation.
Please call me if you have any questions on this material.
Very truly yours, T.
G.
Howson TGH/lc Enclosures g
cc:
E. Wallace O
b G.
Trowbridge
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Gentieu J.
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GPU Sennce Co.ccra::cn :s a sucscary of Gererai Pacac Lt :tes Ccrcora::cn
News Release General Puche Ut Aties Corporation
- CO later0 ace Parnv.a
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Wrs ccar., '.ew Jersey 0"S4 20 163-6500 xy KENNETH C.
MCKEE September 12, 1900
,a IMMEDIATELY
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L -062 PARSIPPANY, NJ, Septemoer 12 -- Plans to cut 700 j obs, limi: new customer hookups and reduce coal inventories at Metropolitan Ecison Company (Met-Ed) were announced today by Herman Dieckamp, acting cresident of Met-Ed and cresident of General Public Utilities Corocration, parent firm of Met-Ed.
These additional economy measures, expected to take effect within days, follow the Pennsylvania Public Utility Commission's (PAPUC) decision last week denying Met-Ed a
$35 million emergency rate increase, and the subsequent re-duction of Met-Ed's available bank credit.
"Abou: 500 of the job reductions will be at Three Mile I s l a n d," D i e c < a m p e x p la i ned, 'b nd the remaining 200 job cuts directly relate to customer service operations at Met-Ed."
"We deeply regret taking these steps since these actions will have a direct impact on our customers.
We are already operating at minimum levels and these additional cuts will force a deterioration of services," said Dieckamp.
"New customer hookups, for example, will have to be held at around 4,000 customers instead of an annual require-ment of over 6,000," Dieckamp pointed out.
Dieckamp explained that the reductions in the cleanup operation at TMI are primarily related to the pace at which the company obtains regulatory approval from the NRC (Nuclear Regulatory Commission).
I
F )
Metropolitan Edisen Company
{Q.
g ff Post Office Box 542 Reading Pennsylvania 19640 215 929-3601 Writers Direct Dial Numcer September 12, 1980 Chairman Susan M. Shanaman Commissioner Michael Johnson Commissioner James H. Cawley Commissioner Linda C.
Taliaferro Pennsylvania Public Utility Commission P.O. Box 3265 Harrisburg, Pennsylvania 17120
Dear Chairman and Commissioners:
Mr. Herman Dieckamp's testimony before your Commission on August 11 s tated:
"If Me t-Ed does not receive extraordinary rate relief, it will have no choice but to reduce even further its operating and main-tenance expenses and its already sharply curtailed construction expenditures."
It is the purpose of this letter to inform you of the steps which Met-Ed must now take to remain within tte credit available.
The cash projections referenced in that testimony were based on 3 month.t actual data for 1980 and 9 months forecast for the balance of the year (3+9). We have updated our cash forecasts to reflect 6 months actual and 6 months forecast (6+6) revenue and expenses (O&M plus construction) for the period August 1980 through December 1981.
The results of this updated analysis are contained in Attachment 1. summarizes the major assumptions in both of these forecasts.
/e: ::: un E:s:- : cam 3 3 'Je re :n e 3re a. rc 2 ies S:.ste-
2-September 12, 1980 Consistent with their testimony in the proceeding for extraordinary rate relief that Met-Ed would no lonaer have S105 million of credit available, the Agent Banks for the Revolving Credit Agreement (RCA) notified Met-Ed on Septenber 5, 1980 that the continuing credit available would be limited to the value of the pledged uranium plus the deferred energy balance.
This amcunt equates to $101 million as of July 31 and will decline as the deferred energy balance is reduced.
The forecast credit available and the forecast credit needs along with the resulting Excess / Deficit are shown in Attachment 3.
Based on the (6+6) forecast, Met-Ed's short term credit requirements will exceed the RCA credit available in October of 1980 by $1.3 million and increases to S19.8 million by December of 1980.
The Banks have indicated a willingness to increase the available RCA credit to the extent cther liquid assets are pledged.
We have asked the SEC and your Commission for permission te pledge receivablen which will increase borrowing capacity by about S20 million.
This added RCA
.dit available and the reductions identified in this letter will relieve the cash problem in the immediate months.
Absent approval to pledge receivables there is no credible cash conservation program capable of aggrega ing s
suf ficient savings to remain within '.he credit available in the short term.
Assuming the added credit available with the pledge of receivables, the (6-6) forecast indicates that the credit requirement will modestly exceed that available only through March 1981.
The requirements in April 1981 before the reductions
-identified in this letter will exceed the credit available by about S30 million.
The continued' reduction in RCA credit available and the denial of extraordinary rate relief leave no alternative but to proceed immediately to reduce expenditures so as to avoid the S30 million deficit in April 1981.
1
. September 12, 1980 With the pledge of receivables and after the reductions
' identified in this letter the forecasted deficit continues to grow to approximately S31 million by December 1981.
Fo'r immediate planning purposes, we are assuming that this deficiency l
can be eliminated by rate increases, improved credit availability in response to rate relief, or a modification in the portion of 1
of current rates devoted to amortization of deferred energy.
The appropriateness of these assumptions and the level of expenditures will be continually reviewed and adjustments made as required.
The reductions from the (6+6) budget level necessary to aggregate S34 million in savings during the 7 months, October i
7 1980 thru April 1981 are summarized in Attachment 5.
The impact of these reductions on the short-term credit requirements of j
Met-Ed and the relationship to the RCA credit available is shown in Attachment 4.
It should be noted and emphasized that this plan does not produce additional savings to offset potential adverse events.
The major reductions in budgeted expenditures include:
4 a)
Coal inventories will not be expanded in preparation for a potential coal _ strike.
]
b)
Two factors impact our revised plan for the clean-up program at TMI-2.
First, and foremost, is our understanding of a. realistic schedule on which we can expect necessary NRC actions that pace the clean-up, and secondly, the availability of funding.
t 4
1
4-September 12, 1980
?
4 Under these restrictions, the TMI-2 clean-up program will be reduced to a level of effort of about 50% of the current level.
This reduced level is consistent with both the protection of public health and safety and the regulatory approval schedule.
The immedia'te cash savings of such reduction are substantially offset by decreased insurance proceeds.
Even at the reduced level of effort, progress on the critical path toward containment water clean up is anticipated.
Regulatory approval of that system is the most important element in determining the schedule for its operation.
This reduced effort at TMI-2 will result in the elimination of approximately 500 jobs.
It is in the public interest that we be in a position to proceed as aggressively as regulatory approvals (particularly approval cf the NRC's Programmatic Environmental Impact Scatement) and technical lbmitations permit.
This will require funding capacity beyond that available currently.
This matter is more specifically covered in Mr. H.
Dieckamp's letter to the NRC dated September 12, 1980 (Attachment 45, Supplement 42).
c)
The efforts necessary to restore TMI-l to service and thereby reduce custcmer energy costs will be managed at the budgeted rate of abcut S50 million per year until completion of the modifications and restart.
A constant rate of expenditures will ease short-term cash uncertainties but may cause a minor schedule impact.
It is our judgment that
5-September 12, 1980 the schedule remains limited by the ASLB hearing and NRC approval process.
d)
O&M and capital expenditures other than T&D will be reduced below the budgeted levels even though, in our judgment, the budgeted amounts are already f ar below the level necessary for normal and reliable service.
These reductions result in the elimination of about 100 jobs.
e)
T&D capital expenditures will be reduced to about 1/2 of the current level.
This will result in a necessity to limit the number of new cus tomers which can be connected.
New connections will have to be accompanied by the appropriate system reinforcement necessary to preserve the current level of reliability.
The basis for prioritizing new customer connections is outlined in Attachment 6.
A tariff change will be submitted with a request that it be permitted to become ef fective October 1, 1980. The reduced resources will permit the connection of about 4100 customers compared with an annual requirement of about 6900.
The reduced work will result in elimination of an additional 100 jobs.
In order to achieve the necessary savings, we must initiate these actions no later than September 22.
We deeply regret having to take such steps since these actions will result in an accelerating September 12, 1980 deterioration of service which will work a hardship on the communities we serve.
In addition, there will be a significant adverse impact on our ability to retain and acquire capable, qualified managerial, technical and operational personnel.
We did not want to take these serious steps without your advance notification.
Copies of this letter and its attachments have been sent to all parties concerned RE: Do cke t No. R-80051196.
Respectfully yours, f e-----
7
. :-- u Floyd /. Smith Senior Vice President cc:
Distribution.*.ist Attached j
Distribution List:
Pennsylvania Public Utility Commission United States Nuclear Regulatory Commission North & Commonwealth Streets Washington, D.C.
20555 P.O. Box 3265 Harrisburg, PA 17120
- John F. Ahearne, Chairman
- The Honorable Joseph P. Matuschak
- Mr. W. P. Thierfelder, Secretary Ryan, Russell & McConaghy
- Steven A. McClaren, Esq.
530 Penn Square Center
- Bohdan R. Pankiv, Esq.
P.O. Box 699 Reading, PA 19603 Maurice A. Frater, Esq.
- Samuel B. Russell, Esq.
McNees, Wallace & Murick P.O. Box 1166 Harrisburg, PA 17108 Gerald S. Cornish, Es q.
Wolf, Block, Schorr, Solis-Cohen 12th Floor Packard Building Philadelphia, PA 19102 Roland Morris, Esq.
Duane, Morris & Hecksher P.O. 3ox 1003 Harrisburg, PA 17108 Of fice of the Consumer Advocate Strawberry Square 14th Floor Walnut & Fourth Streets Harrisburg, PA 17120
- David M. Barasch, Es q.
- Craig R. Burgraff, Esq.
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At t eriment
- 2 Net ropolit an Ed ieoss Company Ag eoempt lone Witti No Rate Relief (3 + 9) Forecast in thic het No. B-80041196 (6
- 6) Foreca_st Sales:
ll.e sales forecast tree redesced by 6% f rame Some the 8980 original Budret. Ylee Or iginal anJget use bened <ne a 12 growth over 1979 eales.
' Encyggs_
1hree Hile f aland Unit II Seturns to service July I,1981 Same Interchange - PJH Interchange purchased and sold Replacement power far THI energy oss split - savings basis purchanel use cost plue 101 basis starting October 1980 t o July 1981.
Revenues:
Rate increases N4*E Nt *F.
Energy ourcherre E f fect ive June I,1980 t hrough November Same 1981 an energy aurcharge of F.4 mille pe r KWH i s t o amur t ire ou r de f e r r ed energy balance et May ll,1980 of appena-imately $19.5 million.
levelined energy clause June - December, 1980 - 19.1 milla per BWH Same January - June, 1988 - 19.1 mille per EWit July - December, 1981 - 12.0 mille per RWil Payroll and Other O&M Espense Assesses gradual return to nosmal crerat ion Ass. eses ennt inuat ion of leir ing (seese in 1988.
t he nur,hou t 1981.
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Re t orheemt #4 Par.e I of 2 Met ropolit en FJimms Company Short-Tern Debt /rredit Forecast (6 + 6) Fasecast With Ident ified peduct ions Wille No pate Relief 1980 - 1988 Y Miidone)
~
1980 1981 Actual Estimate August Se g Oct.
Nov.
Dec.
Jan.
F eli.
Nas ch ArQ f
Forecast Stoort-Term Debt per (6 + 65 Bisiget
$83.0
$86.5
$90.5
$99.8
$99.0
$92.8
$02.3
$95.2
$120.2 Ad juse ment e:
Roll-over of D.O.E. payment (9.7)
(9.7)
(9.7)
(9.7)
(9.7)
Ma int a in C-> e l Invent or y at 25 Days (3.3)
(7.0)
(9.2)
(8.4 )
(7.2)
(6.6)
(6.9 )
Reduction in Toole & Equi ament l
Capit al Budget (0.2)
(0.4 )
(0.7)
(0. 8 )
(0.9)
(l.8)
Delay of 1.oad Managewent " Master Plan" Program:
EEN Expense (0.8)
(0.3)
(0.4 )
(0.5 )
Cons t rue.t ion Reduct ion in CPU Service Corporat ion (0.7)
(0.1)
(0.5)
(0.6)
Espendetures Deferral of T&D Construct ion Pr oject s (0.1)
(0.8)
(0.3)
(0,5)
(0.7)
(0.8)
& Purchases Deferral of Cosenst ion Tusbine Out anes (0.7)
(0.2)
( 1.4 )
( 3.5 )
(1.7)
(!.9)
(2.1)
Reduct ion in TMI Clean Up Frogram (0.7)
Reduct ion in TMI Insurance Recovery (2.0)
(4.4 )
(6.4 )
(8.8)
(11.2)
(11.6) 1.4 3.1 4.4 6.2 7.8 9.5 De ferral of Fossil Cener at ion Capital Expenditures (0.8)
(0.7)
(0.4)
(0.5)
(0.9)
(l.1)
(l.4 )
Neduct ion in Cenerat ion St at ion OEM En g+nd it urc e Delerral of Scheduled Cenerat ion St at ion (0.4)
(0.4)
(0.43
( 0.4 )
(0.4 )
Outages (0.3)
(0.7)
(1.6 )
(1.6)
(1.6)
(l.6 )
(1.6)
Tree Triamming Espeelitus ee Otleer C&M Espense pediact ion - Personnel 0.2 (0.8)
(0.7)
(0.4 )
(0.7)
(0.H )
(l.8)
Reduct ion in Tr ansmissinn & Dist ribution Conet tuc t ion EspenJitures:
re a sonne l (0.8)
(0.3)
(0.5 )
(0.7)
(0.9)
(l.8 )
(1.3)
Amenciated Caste (0.3)
(0.7)
(I.8)
(1.5)
(1.7)
(2.1 )
(2.5)
(t~_j 1MI-! St art Up Cast e
[
Total Adjustment s (4.1)
(10.8)
(26.1)
( 28.0 )
(29.1)
( 11. 2 )
(34.3)
Revierd Short-Tere liebt Forecast
$ 51.0
$86.5
$86.4
$ 89.0
$72.7
$64.8 ji13
$ 64.0 j8JJ Short-Term Credit Availsnie:
Deferred Energy Balance
$74.8
$69.2
$ 65.9
$59.2
$54.6
$51.6
$52.0
$50.0
.Uranisse Pledge 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 Account o Receivable FicJge
~
20.0 20.0 20.0 20.0 20.0 20.0 Tot al I.imit at ion 394.5 189.2
$105.9 599 3 644.3 L*H tii.a 666.'5 W
1 Forecast Esces s/(De f ic it )
$ 8.3
$ 2.8
$l6.9
$26.5
$29.8
$ 10.6~
.$28.0 Qd U===
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Attachment #5 Metropolitan Edison Company Identified Reductions Necessary for Cash Conservation For the Period October,1980 thru April,1981 Identified Reductions Dollars Priority Item (In Millions) 1 Roll-Over of DOE Payment S 9.7 2
Maintain Coal Inventory at 25 Days 6.9 (a)
Elimination of Inventory Buildup in S 4.2 Anticipation of Coal Miner's Strike (b)
Reduction to 25 Days Inventory Level 2.7 3
Reduction in Tools and Equipment Capital Budget 1.1 4
Delay of Load Management " Master Plan" Program 1.1 5
Reduction in GPU Service Corporation Expenditures
.8 6
Deferral of T&D Construction Projects and Purchases 2.1 7
Deferral of Combustion Turbine Outages
.2 8
Reduction in TMI #2 Clean Up Program 4.1 (a)
Clean up Program
$13.6 (b)
Insurance Recovery (9.5) 9 Deferral of Fossil Generation Capital Expenditures 1.4 10 Reduction in Generating Station O&M Expenditures 4
11 Deferral of Scheduled Generating Station Outages 1.6 12 Tree Trimming Expenditures 13 Other O&M Expense Reductions - Personnel Related 1.1 14 Reduction in Trar smission and Distribution Construction 3.8 Expenditures (a)
Personnel Related S 1.3 (b)
Associated Expenditure 2.5 15 TMI #1 Start Up costs Total S34.3 l
Attaenment #5 Supplement #1 Metropolitan Edison Company Identified Reductions Necessary for Cash Conservation For the Period October,1980 thru April,1981 Impact of Identified Reductions I
- 1 Roll-Over of DOE Pavmant 1
i Cash Flow 9.7 Million The continuation of the deferral of the payment for nuclear fuel enrichment services with the Department of Energy continues the existence of the debt into the future periods when cash requirements may be even more critical.
- 2 Maintain Coal Inventerv Level at Twenev-Five Days Reduction $6.9 Million This expenditure reduction eliminates the planned strategic build up of inventory levels as a hedge to the anticipated coal min'ers' strike in March, 1981. In addition, the inventory levels will be reduced to 25 days which is well below normal operating levels. The result is the definite j
risk that an adequate supply of coal will not be available to operate the units at capacity levels, thus resulting in increased customer energy costs. An additional risk of coal handling problems is assumed with the reduced inventory levels during the winter months when freezing of the coal pile and railroad cars can occur with the potential result of reduced station output due to insufficent coal.
- 3 Reduction in Tools and Ec.uipment Capital Budz_et Reduction $1.1 Million A significant redu'ction in the planned expenditures for structure improve-ments, office furniture, transportation equipment, tools, and communication equipment expenditures has been taken. The remaining forecasted expendi-cures of $35,000 per month will cover only emergency recuirements. This reduction eliminates the office changes necessary to effect the management consolidation in the Reading building. There will be a reduction in worker productivity because the necessary and appropriate new and replace-ment tools and equipment will not be provided.
- 4 Delay in Load Management " Master Plan" Program Reduction $1.1 Million 7'
All planned field programs with water and space heating customers and T-0-D promotion are eliminated. This expenditure reduction also eliminates all T-0-D, load management and conservation media advertising. We have cancelled the hiring of energy auditors to be trained for the RCS
-.~
Attachment #5 Supplemer.r. #1 program mandated under Federal legislation in 1981. GPU Master Plan activities, which greatly expanded Met-Ed's T-0-D activity, are postponed until mid 1981 and redu :ed in scope; T-O-D auditors would be reduced from 16 to 3 and engineers from 10 to 3, all co=munications activity would be scaled down proportionately.
- 5 Reduction in GPU Service Corporation Excenditures Reduction S.8 Million Expenditures for GPUSC support services to Met-Ed are being reduced consis-tent with the revised construction and operating levels necessary for cash conservation. The reductions will include personnel reductions as well as outside services.
The Unpact is the reducaion and delay of necessary proFrams and activities which support the business requirements.
- 6 Deferral of T&D Construction Projects and Purchases Reduction S 2.1 Million Half of the large transmission and substation projects have been delayed up to one year. These projects are required to relieve existing overloads and to prevent long outages for large numbers of customers. Since these projects have been delayed in the past because of previous budget restrie-tions, significant deterioration in customer service is probable.
The transmission and substation reductions are in addition to major reductions in the distribution budget previously taken in 1980 that delayed many small distribution projects required to reduce overloads and low voltage problems and prevent long customer outages. These projects have also been delayed in the past so additional deterioration of customer service can be expected.
- 7 Deferral of Combustion Turbine Outages Reduction $.2 Million l
This reduction delays to 1982 the planned het gas inspection outages at j
the Mountain and Shawnee combustion turbines. These outages were scheduled based on the manufacturer's criteria for inspection based on number of starts and operating hours. The delay greatly increases the potential of forced outages and increased maintenance costs at these units.
There are known problems at the Mountain CT which would have been corrected during this outage. The Mountain unit is converted for gas firing. The delay of this effort could cause forced outages which would eliminate in 1981 some of the savings to the customers as a result of the change from oi. to gas firing.
Attachment #5 Supplement #1
- 8 Reduction in TMI-2 Clean-up Program Net Reduction
$4.1 Million The 6+6 forecasted spending level for TMI-2 is S100 million annually on a 100% ownership basis. For the period November, 1980 through April, 1981, the following illustrates the reduction being made:
Millions 6+6 Forecast - 100% ownership S 54.4 Reduced Spending Level 27.2 (a 50% reduction)
Reductions in Period - 107: ownership S 27.2 Met-Ed Share - 50% ownership S 13.6 Insurance Recovery - 70% of Reductions (9.5)
Net het-Ed Savings in Period S
4.1 For the impact on the TMI-2 clean up program, see the letter to the NRC dated September 12, 1980 which is contained in Attachment 5 - Supplement 2.
6
- 9 Reduction in Fossil Generation Capital Excenditure Reduction $1.4 Million Hunterstown Combustion Turbines - Gas Conversion Reduction S.5 Million This reduction eliminates the conversion of three combustion turbines at Hunterstown from oil to gas firing. The effect of this project cancella-tion-will be to eliminate savings in customer energy costs (estimated to be S.8 million in 1981) due to the continuation of the more expensive oil firing at these units.
Portland Reduction S.7 Million Unit #2 Low Pressure Clean Un and High Pressure Heater Drains Reduction S.2 Million This' project is designed to improve the water quality of the boiler water thereby improving upon the continued degradation of the boiler tubes due to hydrogen embrittlement. The delay of this project will result in the continuation of one of the current problems at Portland which has affected the unit's availability. Thus, it can be expected
_3
Attachment #5 Supplement #1 that customer energy costs and maintenance costs will be higher than if this project was completed.
Industrial Waste Improvement Projects Reduction S.2 Million The delay of these projects reduces the confidence factor for meeting existing regulatory requirements of the Clean Air and Water Act.
Minor Projects Reduction S.3 Million The reduction and delay of a variety of small projects designed to main-tain and improve the plant's availability and performance thereby contrib-uting to the reduction of customer energy costs and maintenance costs.
Titus Reduction S.2 Million Industrial Waste Improvement Projects Reduction $.1 Million The delay of this project reduces the confidence factor for meeting exis-ting regulatory requirements of the Clean Water Act.
Minor Projects Reduction 0.1 Million The reduction and delay of small improvement projects associated with the operation of the plant and the maintenance and improvement in avail-ability and performance.
- 10 Reduction of Generating Station O&M Expenditures Reduction S.4 Million 4
The reduction of planned maintenance expenditures in the generation stations will result in not completing required maintenance activities which results in the risk of increased maintenance costs and forced outages due to equipment failure.
- 11 Reduction of Scheduled Generating Station Outages Reduction $1.6 Million Major outages at Titus and Portland have been reduced to limited inspections and necessary repairs. Since these cutages were previously postponed a Attechment #5 Supplement #1 number of times, there will be a continued degrading of the units which will further increase the risk of a major, long term forced outage with significant maintenance costs and higher customer energy costs due to the need for purchase of replacement energy.
At Portland, Unit #1 was scheduled for a three week boiler inspection with slope tube replacements and other equipment replacements for a cost of $1.0 million. The necessary inspections and maintenance will be limited to a S.2 million expenditure. The planned work had been originally scheduled for the spring of 1979 and was rescheduled two timec to the present date. The Portland unit has had unsatisfactory availability and there has been significant maintenance costs. The reduction of this outage to meeting only the necessary inspection requirements prevents the improvement of the unit's availability and forced outage costs that were anticipated from the outage plan. The result will be increased customer energy costs and maintenance costs resulting from expected forced outages.
Titus Unit #2 was scheduled for a 9 week outage for a turbine overhaul and other major maintenance efforts at a cost of $1.0 million. As a replacement, a necessary inspection and maintenance outage will be planned with a cost limitation of $.2 million. The effect of this change is to continue to in-crease the risk of major problems with this unit since the work planned for this outage was originally scheduled for April,1979 and has been rescheduled two different times since that t ime. It has been gver six years since the last turbine overhaul. The result will be decreasAd availability and in-creased customer energy costs and maintenance ext.ense.
- 12 Reduction in Planned Tree Trimming Expenditures It is planned to continue Met-Ed's present contractor work force of four crews to perform the tree maintenance program until April,1381. The reduced 1981 budget then projects the addition of five crews. A review of the financial situation in April,1981 will dictate if we can add those crews.
A desirable annual level of tree maintenance program to limit customer inter-ruptions to an appropriate level and carry out an effective and efficient program is $2,948,000 in 1980 dollars, representing a work force of 37 crews.
Met-Ed's tree maintenance program ~ from January 1,1974 to the date of the TMI accident (March 28, 1979) however has averaged only $1,509,000 per year.
Since the TMI accident in March, 1979 we have further reduced that effort to an annual rate of $889,000. The annual rate of the present work force of four crews is $344,000.
The increasing impact of these reduced efforts on customer service reli-ability have been placed before the Commission in rate hearings since 1974 The mout recent information is contained in Exhibit F-22 submitted in August, 1980 in connection with Docket R-80051196.
Exhibit F-22 projects that 79% of the customer hours of interrnption are related to trees and that as of June, 1980 the annual customer hours of interruption, excluding major storms, will exceed the total hours in calendar year 1979 and will be at the highest level ever experienced.,
i
Attachment #5 Supplement 41 A continuation of the reduced tree maintenance ef fort in 1981 will result in a further increase in customer hours of interruption in 1981 and beyond. This increase will rise exponentially in 1981 and beyond as a result of the long-term reduced effort for the last six years now having its severe impact on our electr'ic supply system.
Compounding the impact of the number of interruptions a customer will experience is the fact that those interruptions will be of longer duration as a result of the reduced availability of tree crews and Met-Ed storm restoration personnel.
- 13 Other O&M Expenses Reduction - Personnel Related Reduction $1.1 Million The layof f at 10% of Production and A&G personnel will result in an additional reduction in the capabflity to meet the requirements of these functions of the business. The functions have already had significant reductions in the personnel levels since the TMI accident (Production 1%%,
A&G 10%).
The Production reductions will result in a further reduction in shift maintenance capability increasing the probability of forced outages and extend planned outage periods; a further reduction of a severely curtailed planned maintenance program; delays in coal unloading resulting in penalty payments; and significant reduction in technical and administrative support for the stations by the Corporate technical staff.
The Administrative and General reductions will severely limit the customer contact activities resulting in increased customer reaction and additional loss of credibility; the reduction in Load Management and Energy Conservation programs resulting in less load reduction than is needed; and a continued reduction in the overall ability to meet the information needs of the business and effectively conduct the business.
- 14 Reduction in Transmission and Distribution Construction Excenditures Reduction - Personnel
$1.3 Million Associated Expenditures 2.5 Million Total S3.8 Million The reduction of T&D Construction expenditures is directed at new customer connect ions. The existing customers and their requirements will be served ahead of new customer requirements, although the response to emergencies, such as storm damage, will not be rapid as in the past. New customers will be connected on a priority program that will entail delays for many
. applicants, particularly if a line extension is required. Load increases by existing customers will be delayed if new facilities are required.
These reductions in available dollars for T&D construction will requira an ll: reduction in current Transmission and Distribution personnel levels which compounds previous staffing reductions of 35 since 1974
STATEMENT SY PA PUC CHAIRMAN SHANAMAN TO PENNA CONGRESSIONAL DELEGATION WASHINGTON, D.C.
AUGUST 27, 1980 First of all I would like to thank the senior statesman from Pennsylvania, Senator Schweicker, for his gracious assis-tance in securing this room in which we are meeting today.
Let me also thank all of you for showing your interest by joining me and my colleagues.
And belatedly but nevertheless sincerely, I would like to thank the entire Pennsylvania delegation for responding to our requests on legislative action throughout the year.
We are here out of a deep sense of responsibility and commitment to seek a dispassionate resolution of one of the most serious economic and emotional crises ever faced by residents of Pennsylvania.
This unprecedented event almost completely absorbed the resources of the entire Commission and the energies and ingenuity of the Commissioners' for a year.
It received a globe-wide attention as an extraordinary, first-time event.
The several committees of Congress scheduled special hearings.
The news media touted it as "The Story of the Year."
However, when it comes to offering aid to stabilise the disrupted lives affected by this catastrophic event and aiding a crippled corporation only the ordinary regulatcry efforts were exercised.
Although the dramatic Three Mile Island incident caused
'
- prolonged and lingering harm to our constituents, financial aid and other governmental efforts that followed in the aftermath of other natural and economic disasters and even the threat of bankruptcy were not forthcoming.
It is almost as though a fine distinction ra'ther than a difference was the yardstick applied.
i When a huge industry is in serious financial trouble and threatena the loss of thousands of jobs, the results 'can be seen and felt.
When a flood rushes over the land, we can see it and the damage can be smelled and felt.
When a prolonged drought hits an area, a natural and economic
' disaster results that can be seen and felt.
When bankruptcy threatens a metropolis, its effects through cuts in service can be seen, felt, and smelled.
When a volcano erupts, we can hear it but the fallout can be seen, smelled and touched.
In all of these situations -- whether its a Lockheed or a Chrysler type econcmic disaster, an Agnes or Southwestern drought, a bailout at New York City, or a natural Mt. St. Helenes eruption --
1 federal financial assistance and special effort is available.
l Recent rains and floods in Southwestern Pennsylvania caused
_3_
the President to declare a national emergency, which was followed by an infusion of Federal dollars.
By ccmparison, the people of those communities received more Federal aid than might have been received had the nuclear facility at Shippingport been another Three Mile Island.
When the first major nuclear incident occurred at one of our nation's commercial reactors, its expected impact could not be seen, nor smelled, nor touched.
However, the aftermath of such an incident is still being felt in the pocketbooks of the ratepayers throughout the Commonwealth, whether they are resi-dential, ccmmercial, or industrial accounts.
What cannot be measured is the emotional and psychological fallout.
The ex-l l
perience of waiting for the command to evacuate your home and i
l
. leave personal belongings behind is painful.
Thus, in terms of hard, cold economics, the TMI accident is as disastrous to thousands upon thousands of Pennsylvanians as are an ash-belching volcano, a hurricane-spawned flood or l
l a financially-floundering industry.
Believe me, a constantly l
escalating electric service bill, especially for the elderly and those on fixed incomes, is something that can be seen, 1
smelled, and toriched.
Met Ed's customers are paying $6 million per month for l
power to replace that lost by TMI Unit #1 alone.
This S6 million becomes particularly significant when one considers the fact that Met Ed is only the 6th largest electric utility
a..
9 in terms of sales in Pennsylvania.
This means that the dollars must be spread over significantly fewer KWH than might be realized.
What is not commonly known or understood is the effect on other state utilities.
Pennsylvania Electric Company, a sister firm to Metropolitan Edison Company, and co-owner of TMI has had to share the harden of the incident.
The consumers of Pennsylvania Power and Light Company are paying higher fuel adjustment costs because of a lower wholesale power agreement with Met Ed to meet its replacement power requirements.
The problem has extended to the consumers of Philadelphia Electric Company, who are no longer benefiting from icwer cost nuclear generation from TMI and have to use more expensive oil generation.
To put the extent of the problem in focus in another way --
geographically Met Ed and Pcnelec serve about 45% of the land mass of the Commonwealth and PP&L serves another 30%.
This Commission has found it necessary to increase rates charged by Met Ed by S165 million since June 15, 1979.
None of those dollars represent an increase in basic service rates due to inflation or increased operating costs since 1974.
To recoup i
those costs, Met Ed is requesting an tdditional S76.5 million
- om its ratepayers by April, 1981.
That is oitly the beginning.
L. - costs to clean-up TMI #2 are now estimated at $800 million at 1980 dollars.
Insurance will provide a maximum of only
$300 million.
Insurance recovery will be exhausted by December, 1981.
~5-While the Commission has twice indicated that it will not permit the cost of clean-up to be borne by the ratepayers, the actual result is that Met Ed customers may be required indirectly to pay a-substantial portion of such costs through increased rates to support the financing required for such a purpose.
Why?
The NRC will consider whether Met Ed is financially viable to operate TMI.
The longer TMI cannot be safely operated, the less likely Met Ed will be able to meet the NPC s financial viability criteria.
Talk about catch 22.
For the 18 months ending December, 1981, the ratepayers will have paid approximately S90 million in additional deferred energy costs and until TMI #1 is placed in service, another S7 million per month in additional levelized energy costs.
For three quarters during 1980 Met Ed stockholders have reccived no divi-dend,_and'many of these shareholders depend upon :he c ividend to supplement their fixed retirement income.
Currently Met Ed is threatening jcb layoffs if no additional rates are permitted by the PUC.
On the other hand, many resi-dential ratepayers, not qualified for Federal energy assistance, are faced with unaffordable bills, and commercial and industrial customers are threatening layoffs.
Stahe, local government and school district budgetc are being squeezed.
This can only mean disaster for Pennsylvania's economy.
i If we, from atop our quasi-judicial observation bcoth, l
rest with this analysis of economic deem, we will not have 1
'O-fulfilled our responsibilities to the ratepayers of Pennsylvania.
We must, outside of usual rate case jargon and traditional ad-ministrative and legislative treatment, suggest a sense of direction.
With the impact of TMI, the Commission is faced with an unusual situation.
There are no precedents to follow, ne guide-lines to charter its course.
It must beat its own path in serving the public interest.
I note with pride and chagrin i
that the ABA choice for. the most important public utility -law j
decision during-1979-30 was in regard to the Met Ed decision.
This Commission cannot resolve the economic crisis of Pennsylvania alone.
We and the citizens of Pennsylvania need your help.
We need help to prevent needless loss of jobs, loss of homes, loss of an ability to live the American dream --
however modestly.
I
-Why should we deserve your help and not simply your pity?
Since the 1954 Atoms-for Peace Program the U.S.
government has encouraged the ccmmercial growth of nuclear power.
The Price-1 Anderson Act limited liability in the case of a nuclear accident so that nuclear power would be affordable to build.
The Federal government has preempted the licensing of nuclear plants to itself.
The NRC views the accident at TMI as a
" proving ground" to develop safe nuclear powcr for that industry throughout the nation.
- ~. - - -
. ~,...., _.. -
Some may say that the tax losses to Met Ed should provide equity.
However, the federal. investment tax credit will only allow losses to the extent that taxes had to be paid -- a small percentage of taxes otherwise due and owed during an infla-tionary economy.
As the Commission stated in its order of May 23, 1980, "never has it been so true that victory has a thousand followers and defeat has none."
What form financial relief to the citizens of Pennsylvania should take is, of course, within your province and expertise.
Whether it should be a national surcharge, an interest-free loa ~n, an outright grant of money, or something else is for you to de-cide.
All we and the ratepayers ask is a fair consideration of our needs.
We don' t want to see Pennsylvania transformed into a post-industrial pastoral society.
We want to be a society which can efficiently and economically meet our future for our children, the living and unborn.
TMI is a challenge to the ability and dedication of Met Ed, to the Commission's readiness to cope with an energy crisis, and to the industry's ability to harness its production more.
It is a test of the naticn's ccmmitment to meeting energy problems.
i