ML19345G239
| ML19345G239 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 02/18/1981 |
| From: | Dieckamp H METROPOLITAN EDISON CO. |
| To: | Cawley J, Mary Johnson, Shanaman S PENNSYLVANIA, COMMONWEALTH OF |
| References | |
| NUDOCS 8103170387 | |
| Download: ML19345G239 (6) | |
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Metrapoditan Ecison Cornoany e
Nst Office Box 542 Aeseirg Pennsylvania 19640 215 929-3601 r
mm i cines oui ween Chairman Susan M. Shanaman February 18,1981 Connaissioner Michawl Johnson Comunissioner James H. Cawley i
Coussissioner Linda C. Taliaferro g
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Y Pennsylvania Public Utility Commission j#
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P. O. Box 3256 j&
Harrisburg, Pennsylvania 17120
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Dear Madam Chairman and Comstissioners:
p Our letter of January 16, 1981 outlined the forecast 1981 and early 1982 spending levels of Met-Ed based upon minimum system needs and current austerity levels. The letter also set forth the status through Decemoer 31, 1980 of the progress made since Septeaber 12, 1980 toward curtailing Met-Ed i
expenditures so as to remain within the credit available through the Spring of 1981. The purpose of this letter is to present a similar report through i
January 31, 1981, to provide a basis for understanding the cash resources necessary for Met-Ed to serve its customers. The current severely con-I
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strained levels are less than the prudent levels necessary to maintain l
system reliability, provide acceptable emergency response and serve the economic and social interests of the service territory.
Actual net bank debt at the end of January was St.9.0 aillion while the limit pursuant to the liquid assets formula as applicable to Met-Ed was t
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$86 million. This limit decreased to $83 million February 13, 1981.
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In our letter of January 16, 1981 we indicsced that short-term borrowing would approximate $53 million at the end of January and the credit available would be $85 million. During January a combinatica of factors both reduced the need to borrow and reduced the credit available. The net effect of these was a slight widening of the margin between actual short term borrow-ings and the creiit avsilable through the liquid assets formula.
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The set of circumstances which produced this result is somewhat complex. The variation-which reduced the amount of short-teca borrowings
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was mainly a re.tult of decreased cost of energy from that projected pri-marily as a result of increased availability of low-cost power from the West. This was partially offset by decreased cash revenues collected due mainly to timing. However, along with the higher cash flow generated from being able to purchase energy at a cost lower than had been forecast, a significant decrease in the deferred energy balance of approximately $8 million reauced credit available.
The full impact of this was slightly of fset by increased customer acecants receivable. Even though sales for the l
month incrassed, dut to month end timing, cash from that increase was not
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l actually realized during the month. A significant incr' esse in customer accounts receivable was recorded on the books. The net result of all this, I
when actual and projected borrowings are compared with actual and projected credic available, is a $1 million improvement in the margin of credit avail-able. However, just as the combination of unpredictable events produced this modestly favorable result Isst month, a negative result may just as easily appear in future manchs with a reversed set of these unpredictables.
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0 A summary of the ma ~or variances frem forecast is as follows:
Millions Forecast Short-Term Debt - 1/31/81
$52.8 Decreased Energy Expense (7.8)
Decreased Revenues - cash 4.3 l
Other
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Net Change 3.8 l
Actual Short-Term Debt - 1/31/81
$19;0 Millions t
Yeeecast Credit Available
$85
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Decreased Deferred Energy 341ance (7)
Increased Customer Accounts Receivable @ 80% of increase) 5 i
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Net Change (2) l Actual Short-Term Credit Available
$83 Again, as has been the case each month since we began this series of monthly informational letters in September, 1980, we have experienced devia-i cion primarily as a result of timing and unpredictable events.
These have not significantly altered the path of Met-Ed reaching a point in 1981 where, without race relief, credit needs exce'ed availst (lity but have either in-creased or decreased modestly the dollar margin between the need and availa-bility for credit. This margin has remained relativ ly constant since our l
variance reporting began in October 1980.
Ti.e State taxes of about $23 1
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million are still to be paid in April of 1981 and will virtually eliminate i
ene nargin.
Additional cash flow benefits will be obtained for Met-Ed pursuant to a recent change in the method of allocating the prepayment of APS and P;M purchased power.
Experience has indicated that System use of this power has not been in the same proportion as ownership of the TMI units.
Prepayment t.
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is now based on experience in actual ussge of that power.
The result of this will be a one-time cash flow benefit for Met-Ed for the duration of the purchase power agreements of between $2 million to $3 million. Cash may also be generated f rom various proposed sales of nuclear fuel and/or spare parta to other utilities. The outcome of these sales 2nd the timing of the availability of the essh to serve the system it such sales take place cannot now be predicted. Regulatory approvals havS not yet been obtained, where necessary for such sales.
If currently contemplaced sales take place as plar.ned an additional $6 million will be on deposit with Met-Ed's first mortgage bond trustee.
The forecast of reouctions in non-nuclear operation depicted in September and re-emphasized in January 1931 are about on plan. The employ-meat level at Met-Ed exclusive of TMI was Id9L at January 31, 1981. On February 6,1981 employeent was reduced by an additional 32 line department emoloyees through layof f and attrition. The Lompany continues to spend at the interim sustere level of approximately $150 million annually. At this level, we have no viable reduction siternative additionally available to meet any unforeseen adverse situation in the future.
Work at IM1-1 or. the modifications necessary for the restart of that unic.is progressing on a schedule for restart toward the end of this year.
Expenditures at THI-2 by Met-Ed since the accident total $105.0' mil-tion, of which $91.5 million has been deferred for insurance recovery and
$13.5 million charged to operations and maintenance expense. As of the end e.
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O of knuary, Met-Ed had received property insurance proceeds of $101.3 mil-tion of which $12.' million was on deposit with the first mortgage bond trustee. These funds provide a small cash reserve which would be available to deal with any emergency which might arise at DtI-2.
'de will continue to manage Met-Ed's limited resources to the best of our ability to provide service and remain solveat. However, we cannot spend more than that available from customer revenues. There is no alternative to early and full race relief.
A copy of this letter is being sent to all parties in the pending Met-Ed rate case (Docket No. R-60051195).
a will continue to provide a monthly report until the critical cash constraints which have :aused these curtailments have been relieved.
Respectfully yours,
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H. Dieckamp
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Acting President j
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O DI.u.u s a N LIST:
Pennsylvania Public Utility Ca:rrissicn North & F W th Sts.
P. O. Box 3265 Harr M-, PA 17120
'Ihe Hancrable Joseph P. Matuschak
- Mr. W. P. 'Ihierfelder, Secretary
- Steven A. McClaren, Esq.
- Bohdan R. ParJciw, Esq.
Maurica A. Frater, Esq.
Richard Kir 4.ner, Esq.
ft:Nees, Wal T = & Nurick 1429 Walr.ut ut.
P. O. Box 1166 Philadelphia, PA 19102 Har. M ug, PA 17108 Stephen A. Gccrge, Esq.
Gerald S. Gornish, Esq.
Buchanan, Ingersol, Petewald, Kyle & Buerge Wolf, Block, Schorr, Solis-Cohen 57th F1cce, 600 Grant St.
12th Floor, Packard Bldg.
Pittsburgh, PA 15219 Fbi 1=Aalphia, PA 19102 acbert Jude Jenisen Bernard Ryan, Esq.
R. D. 1, Box 280-6 Dechert, Price &. M Wellsville, PA 17365 800 N. 'Ihird St.
MaM *q, PA 17102 Keaneth A. Wise, Esq.
212A N. Frcnt St.
acland.e3, Esq.
Harrisburg, PA 17100 1.t, ana, It:rris ti Hecksher P. O. Box 1003 FA M =h m, PA 17103 Office of the C=nsuner Mvocate S W =n:y Sq., 14th Fkcr Walnut,&.hh Sts.
Harrisburg, PA 17120c r
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- Cavid M. Barasch, Esq.
- Craig R. Burgraff, Esq.
Mr. John F. Ahearne, Cb24' man U. S. Nuclear Begulatory Ccmrissicn Washi. W, DC 20555 Scuel B. P"==11, Esq.
Ryan, P"==all & McConaghy 530 Penn Sq. Canter P. O. Scx 699 asading, PA 19603 l
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