ML19345B887

Petition to Implement Early Determination of Complaint Against Temporary Rates Per PA Public Util Commission 800523 Order

ML19345B887
Person / Time
Site:	Three Mile Island
Issue date:	10/27/1980
From:	Smith F METROPOLITAN EDISON CO.
To:
Shared Package
ML19345B881	List: ML19345B880 ML19345B884 ML19345B887 ML19345B896
References
NUDOCS 8012020674
Download: ML19345B887 (10)

Text

EXHIBIT BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION Pennsylvania Public Utility  :

Commission et al.  :

Docket No. I-79040308

v.  :

Docket No. C-30072105 Metropolitan Edison Company and  :

Pennsylvania Electric Company  : Docket No. R-80051196 PETITION OF METROPOLITAN EDISON COMPANY TO IMPLEMEUT POSSIBLE EARLY DETERMINATION OF COMPLAINT AGAINST TEMPORARY RATES (AS CON-TEMPLATED BY ADMINISTRATIVE LAW JUDGE'S ORDER OF O'CTOBER l'6,1980) AND CERTAIN RELATED MATTERS TO THE PENNSYLv'ANIA PUBLIC UTILITY COMMISSION:

Metropolitan Ediso'n Company (" Met-Ed") submits this Petition'for the purpose of implementing the possible early determination of the complaint it filed at Docket No.

C-80072105 against the temporary rates prescribed for it by the Order of your Commission (the " Commission" or "PaPUC") dated May 23, 1980 at Docket No. 79040308 and certain related matters, and in support thereof respectfully represents that:

1. The rates of Petitioner now in effect were prescribed by the Commission in its Order dated May 23, 1980 at Docket No. I-79040308 as temporary rates under 81310 of the Public Utility Code, and a tariff reflecting the provisions of that Order was filed by Petitioner in accordance with-that Order.

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4 2 '. As noted in that Order, the Commission found that it could not then determine the just and reasonable base, rates to be charged by Petitioner. In prescribing the level of'such temporary rates, the Commission also observed in ,that Order (at page:1b) ,

"If Respondents file a complaint against the temporary rates set by this order and subsequently the Commission determines that the temporary rates were set unreasonably low, an adjustment can be granted through restatsment of Respondents' balances of deferred energy costs."

3. Met-Ed filed with the Commission on July 29, 1980, a complaint (at Docket No. C-80072105) against the temporary rates fixed for it by the Commission's May 23, 1980 Order.

4. On July 29, 1980, Met-Ed filed with the Com-mission-its Tariff No. 44 which proposed a general rate increase, pursuant to 11308(d) of.the Public Utility Code.

Such tariff was suspended by the operation of law and the Commission instituted an investigation with respect to it at Docket No. R-80051196. Met-Ed also filed with the Com-1 mission a petition for extraordinary rate relief pursuant to E1308(e), which was denied by the Commission by its Order, entered August 28, 1980 in Docket No. P-80070235.

Met-Ed has appealed that Order to the Pennsylvania Common-wealth Court.

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5. Under date of October 16, 1980, Administrative Law Judge Joseph P. Matuschak entered a decision in the above proceedings in which he suggested that all parties focus upon the complaint against temporary rates in the early hearings in the above proceedings in order to enable an early disposi-tion of that controversy to be made.

6. This Petition and the proposals made herein attempt to respond to the suggestion that an early disposi-tion of the complaint (together with certain related matters) be implemented.

7. 'Under the temporary rates prescribed by the Commission's May 23, 1980 Order, Met-Ed has no equity return, is prohibited by its indentures from issuing any funded debt securities and by its corporate charter from issuing any preferred stock, and has only a limited and declining amount of bank credit. In the light of this situation, Met-Ed filed with the Commission a letter dated September 12, 1980, describing the proposed reduction in expenditures which it intended to make in order to limit its expenditures to the funds available to it. Such pro-posed reductions were also the subject of testimony at a prehearing conference held on September 22, 1980 in Docket No. R-80051196.

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8. .Eais Petition requests the modification, pursuant to Il310 of the Public Utility Code, of the portion of the Commission's May 23, 1980 Order prescribing Met-Ed temporary rates to the extent and in the manner hereinafter set forth.

9. Met-Ed requests that modified base rates be established, in response to the complaint and this Peti-tion, to provide for an increase in Met-Ed's annual revenues (net of applicable revenue taxes) of $25 million, and that such increase be applied as a uniform charge to each KWH of sales subject to the jurisdiction of the Commission. Such increase recognizes only the costs and return requirements associated with the investment'of Met-Ed in facilities other than the Three Mile Island generating station ("TMI") and makes no provision for the costs or return associated with TMI. Based on the sales of 7,517,166 MWH subject to PaPUC jurisdiction during the twelve months ended August 31, 1980, and after allowing for revenue taxes at an effective rate of 4.5%, the appropriate factor to be applied to each KWH of sales would be $0.003482.

10. If this Petition is granted, Petitioner pro-poses to account for such increased rate allowance, consistent

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with the Commission's Order of May 23, 1980, for the period between June 1, 1980 and the effective date of the modified base rates. prescribed in response to the complaint and this Petition, by restating the deferred energy balances (i.e. by charging balance sheet' Account 186 ,Miscellan'eous Deferred Debits - deferred energy costs, and crediting operating expenses - other power supply expense, Account 557 -

2 Other Expenses) by an amount representing the'differer.ce between the amounts collected under the temporary rates now in effect and those which would be collected pursuant to the modified base rates prescribed pursuant to this Petition, for nervice rendered from June 1, 1980 to the effective date of'the nadified base rates proposed to be prescribed in response to this Petition. Such difference in amount would be determined by applying the uniform charge described in paragraph 9 to each KWH of sales subject to the jurisdiction of the Commission for service rendered from June 1, 1980 to the effective date of such modified base rates. (Collection of such restated deferred energy would be accomplished by continuing the previously established surcharge on each KWH of sales subject to this Commission's jurisdiction for a sufficient period of time to accomplish such coll'ection.)

The related income tax effects of restating the deferred energy balances would be accounted for by charging operating

expense Account 410.1 - Provision for Deferred Income Taxes, and crediting balance sFeet Account 283 - Accumulated Deferred In'come Taxes - Other, with amgunts representing the associated deferred income tax effects of such restatement of deferred energy balances. By allowing this restatement of the deferred energy balance, Met-Ed expects that the credit available to Met-Ed under the revolving credit agree-ment,,as expressed in the banks' letter of September 5, will be increased above the amounts otherwise available; the amount of such expected increase in credit will depend upon the effective date of th'e modified temporary rates.

11. If this Petition is granted, Petitioner will take the fol) actions:

.(a) Met-Ed will withdr'aw its complaint at C-80072105 against the temporary rates prescribed at I-79040308.

(b) Met-Ed will withdraw its appeal from the Commission's Order, dated-August 28, 1980, at Docket No. R-80051196.

(c) Met-Ed will restore the activities described as items 12 to 14 inclusive on Attachment 5 to Met-Ed's letter to the Commission dated September 12, 1980.

These items are directly related to the construction

and operation of-Met-Ed's transmission and distribution system. Met-Ed will also withdraw its request for approval of a new tariff rider which would have prioritized new customer connections.

(d) Met-Ed will continue to take'all reasonable actions to keep its cash expenditures within the limits of available resources and credit. Consistent with such undertaking, Met-Ed will remain prepared to implement such reductions in service, maintenance, operations, employees or inventory levels as it may deem necessary to avoid default under its applicable indenture, charter or credit provisions and maintain Met-Ed's financial stability. In line with such commitments,. Met-Ed will not declare'any dividend on its common stock throughout the remainder cf 1980 and 1981.

12. By an Addendum to its 'Prehearing Statement and Order, adopted September 18, 1980 in Docket No. R-80051196, the Commission directed Met-Ed and the Commission's Trial Staff to address the issue of the continued booking of annual depreciation expense for TMI Units Nos. 1 and 2 and its effect on total pperating income. That Addendum referred to the possib1: classification of TMI-l and TMI-2 "as plant held for future use, or another classification which might not require depreciation expense to be booked currently." Peti-

tiener suggests that, if this course is to be adopted, it would be appropriate to focus initially on TMI-1. Petitioner believes that it would be feasible to adopt this course for TMI-1 if the Commission would

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(a) Direct Petitioner to transfer its'50%

interest in TMI-1 to plant held for future use effective as of June 1, 1980 (the effective date of the temporary rates prescribed by the Commis-sion's Order adopted May 23, 1980) and to cease accruing depreciation on TMI-1 effective as of that date, (b) Consistent with such directive, give Peti-tiener assurance that such cessation is consistent with a future opportunity of Petitioner to recover its net investment in that facility.when it has been returned to rate base and is, therefore, appropriate and will be accepted by the Comission for its accounting and ratemaking purposes, (c) State that, upon the resumption of genera-tion by TMI-1 and its prompt recognition as a component of rate base in rates subject to the jurisdiction of the Commission, Petitioner's depreciation reserve requirement applicable to its interest in TMI-1 for ratemaking purposes shall not exceed the amount of the~ reserve requirement applicable to that interest l

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at May 31, 1980, adjusted for retirements in the interim between May 31, 1980 and the date it is so recognized in rate base, and (d) Direct Petitioner to defer and accumulate in a separate account, all capital expenditures i incurred since March 31, 1979, and all non-capital expenditures incurred since May 31, 1980, in con-nection'with modifications to TMI-l which are both (i) necessary to comply with NRC requirements and (ii) not associated with the clean-up activities

' arising as a. result of the TMI-2 accident, stating that such accounting for these costs is appropriate and will be recognized by the Commission for its 1

accounting and ratemaking purposes beginning with TMI-l's recognition in rate base.

13 '. The granting of this Petition would not increase the total level of revenues sought by Petitioner in Docket No. R-80051196, but would correspondingly reduce the increase in revenues sought in that docket. Petitioner recognizes that the granting of this Petition would not be determinative of any issues now or hereafter presented in a that docket, all of which would be reserved for disposition in that' docket. Likewise, the. granting of this Petition 9

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shall in no way be construed as modifying the positions of l the Commission as set forth in its orders dated September 18 and 26, 1980 in Docket No. R-80051196, or of Met-Ed in the i appeal taken by it from the first of those orders.

WHEREFORE, Met-Ed prays that an early determina-tion be made, in the manner suggested in the foregoing peti-tion, of the complaint filed by it at Docket No. C-80072105.

METROPOLITAN EDISON COMPANY By F. J. SMITH Senior Vice President COMMONWEALTH OF PENNSYLVANIA )

ss.

> LOUNTY OF BERKS ) .

F. J. SMITH, being duly sworn according to law, deposes and says that he is a Senior Vice President of Metropolitan Edison Company; that he is authorized to and does make this affidavit for it; and that the facts sat forth above are true and correct to the best of his knowl-edge,'information and belief.

1 F. J. SMITH Sworn to and subscribed before me this 27th day of October, 1980.

(SEAL)

RITA M. POWERS RITA M. POWERS, Notary Public Muhlenberg Twp., Berks County, Pa.

My Commission Expires Sept. 31, 1982

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