ML19347E685
| ML19347E685 | |
| Person / Time | |
|---|---|
| Site: | Dresden  |
| Issue date: | 02/13/1962 |
| From: | COMMONWEALTH EDISON CO. |
| To: | |
| References | |
| 12-464, NUDOCS 8105130223 | |
| Download: ML19347E685 (1) | |
Text
_
..j
( );
ME/PN Statsmant E Supplement 1 Witness:
John G.
Graham imb Supplemental Testimony of John G.
Graham FINANCIAL PROJECTION A.
Base Financial Projection At the hearing on December 19, 1980, I sponsored ME Exhibit E-28 which updated the fore-cast of short-term debt in 1981 for ME and compared that with the level of credit available to the Company.
That Exhibit also detailed the changes in the major forecasting assumptions which have occurred since my initial testimony was filed.
I was asked, at that time, to submit certain back-up material for that Exhibit and this testimony responds to that request.
Additionally, it is now possible to reflect the results of operations chrough the close of business at year end 1980 and
,O
'l a more precise view of the forecast.for 1981.
Finally, I now have an initial view of early 1982 based upon this forecast and I have included that projection.
This testimony is, therefore, intended to revise and suoplement Exhibit E-28.
The following are the major assumptions reflected in this forecast as compared with my initial testimony:
1
\\
t 1
l O
81os a soph 4
l i q Exhibit E-28, Page 1 (Revised)
Q Metropolitan Edison Company Short-Term Debt Forecast for 1981 and 1982 Comparison of Assumptions with ME/PN, Statement E
($ Millions) 1 ME/PN ME Exhibit Statement E No. E-28 Construction, Payroll and other OEM Expenditures-1981
$ 171
$ 165 l
Deferred TMI-2 Clean-up Less Insurance ProcGods 17 TMI-l Return to Full Power Production July 1981 January 1982 Available Short-Term Credit
$ 105
" Liquid Assets" Permanent Capital None None Assumed Rate Base Increase TMI-1 Base Rates None Restored 7/81 Energy Cost Recovery Sufficient to Same as State-amortize defer-ment E; Energy O
red energy bal-cost recovery
()
ance by year-kept current in end 1981 1982 Based upon these assumptions, it is possible to construct a forecast of the short-term debt (i.e., bank credit) recuirements of ME and to compare that with the level of credit which is available to the Company:
MET-ED: SHLitt-TERM DEST OUTSTANDING
,1 i i i i i i l I i l i i l i i I
~
jg; :: ! :n==... mu.
i';; : R..... um M
'~**.
30 D 70
[60
- i. so A 40 h
~
~
R.C...
20 EXPIRES I I I t I f t t I f l I I t t ! I O
J F R A M J J A $ 0 N D J F M A M J
/-
19 81 --~~--
- / - ---- 1982 ---- /
. This chart shows that, at the projected level of spending and
(.
(_)
without rate relief, ME would exceed its available credit in April of this yea'r, at year end 1981 there would be a deficiency between the need for credit and the available credit of $43 million, and in the spring of 1982 (April, af ter ME has paid its state taxes) that deficiency would have grown to $82 million.
(Attachment 1 is the sources and applications of funds statements which accompany this projection.) is a cash flow statement for three periods of time for this case:
the last six months of 1980, the year 1981, and the first six months of 1982.
During the last six months of 1980 short-term debt wis reduced by $31 million due to a positive cash flow from energy revenues ($44 million) and due to having already made our major
(~'i state tax payment in April.
The TMI-2 insurance proceeds V
exceeded deferred costs by $7 million to aid 'n reducing our outstanding debt.
The 1981 figures still show energy revenues as a positive cash source of $46 million but the need to payoff DOE ($10 million), the effects of inflation on our levels of O&M and construction, and the annual payment of our state taxes all contribute to a negative variance to our cash flow so that bank borrowings must increase by $26 million.
The first six months of 1982 show a similar pattern as 1981 with one large exception:
the cash source of " energy revenues less current energy costs" has dried up -- the deferred energy surcharge has expired and the cash flow deficiency can only be gg closed by increasing bank borrowings by $47 million.
The
! \\_)
l l
g-annualized increase in borrowings from 1981 to 14R2 is $42 million, almost the same as the loss of the energy revenues as a source of cash.
To provide a basis for comparison, the results to the investor would be as follows:
ME 1981 1480 (No Rate Relief)
Net Income (Loss)
$(9)
$ (25)
Return on Common (2.3)%
(6.9) %
Interest Coverage 1.01X
.33X During the same period, charges to customers would have declined significantly from their current levels:
RET-ED: aut CUSTOMER cosf--No RATE RELIEF O
.o i i i i i i i i i i i i i i i i i i 8.5 5.0 g
M 7.5 g 7.0 8.5 p
E 5.0 k
" 5.5 tweev suecomest K
l5.0-
\\
4,yL Entawy etaust d'
emernr east nates 3.5 I I
- I I I I I I I I I I I I I I I 3.0 J F M A R J J A 5 0 M D J F R A R J
/
~ 1981 --------- --~ /---- 1982---/
One reduction, $60 million annually, will occur in November with the expiration of the energy cost surcharge.
A second reduction is forecasted to begin in January of 1982 as a result of the i O
l l
5-l lower energy costs accompanying the return of TMI-1.
At the end
[V of the period, customer charges would be 22% lower than they are at pre-sent.
B.
Forecast with Austerity Levels of Spending Because of the inability to finance this level of spending, operating management has established a lower, " austerity spending" level to reduce expenditures.
This is discussed and detailed in Mr.
Dieckamp's letter of January 16 to the Commission (ME Exhibit J-6) and is to stay in effect until adequate rate relief has been granted.
I should note that the composition of these levels has changed some-what since I last testified.
The austerity level of spendir.g ($149 mil 2 ion) includes most, but not all, of the employees associated with new customer connections.
Mr. Dieckamp has explained these differences.
O With this austeeity level f spending, the time when ME would exceed its credit limit would be extended only one month to May, 1981; the deficiency at the end of 1981 would still be $26 million; and the deficiency at the end of April, 1982 would still be $65 million.
This is shown on the following cL.trt:
IET-ED s SHORT-TERfl DEBT OUTSTANDitM
,1 1 1 I I I I I I I I I I I I I I I,
I 180 - mete RELIT 7: se L 110 1981 SPEND! Met $149 RILL 10M BOO
-: = a "ai'
.0
,,,,,T.7,,,,t,7 30 4
D 70
[50 60 L
g l
l 30 a.c.a.
l 30 EMPIRE 8
~
~
l i I i f I I I I I I l 8 i I i l l l
J F M A M J J A 5 0 M D J F M A M J
- 3 33 g
~....
...f -..
1982-----/
f-
i
)
\\
l 1 This reduction in spending would slightly imprcve returns and V
coverage ratios in 1981 but would still produce significantly ur? acceptable res*21ts:
ME 1981 Forecast Austerity Level Net Income (loss)
$ (25)
(21)
Return on Common (6.9) %
(5.9)%
Interest Coverage
.33X
.48X Charges to customers would be unchanged from the Base Forecast.
C.
Forecast with Rate Relief Another view is to look at the results with various levels of rate relief.
First, with the requested level of rate increase, $76.5 million, effective May 1, 1981, the relationship of ME short-term debt and credit available would be as follows:
r~'
MET-ED SHORT-TERM DEBT CUTSTANDING s
I
_l i I i i i i l i i l i l l l l l 1,
1120. Rett REL1tFs 878.5 MILT!0N 1981 SPENDINQt L 110 JAM *JUN fit 9149 RILLICM ANMDAL Rett g
JUL-DCC A7 siss alLLlon annunt tatt 1100 0 90 - R.C. A. LIMIT N
yn DM
=
g.0 t s0 s 3o
..C...
30 EXPIRES 10 I I I I I I I I I ! I I I I I I I I 0 J F M A M J J A k 0 M D J F R A M J
/
1981 - - ----
- /---1982
/
O
l 7-With the planned level of expenditures, ME would be able to meet OV its capital requirements through the time in 1982 when the state taxes must be paid.
Financial results would appear as follows:
ME 1981 Forecast -
Forecast No Rate Relief Full Rate Relief Net Income (loss)
$ (25)
$1.8 Return on Common (6. 9) %
.49%
Interest Coverage
.33X 1.54X Chargen to customers would be as follows -- with a net decrease of 6% over current bills in the spring of 1982.
PET-D
- AVE CUSTORER C0$7-FULL RATE RELIEF 8*'
I I I i 1 i i I I I I I I I I I I I s.5
[s.0 M 7.5 7
30
[DAstRATEIncnEASE
/~N S.5 p
V
/
E s.0
\\
NN 5.5 55 '
E== eu.E N
n 4.5 4.0 cummENT De:E RATES 3.5 3.0 I I I I I I I I I I I ' I I I I I '
J F M A R J J A S 0 N D J F R A M J
/
- - 3333
_. - -.f_
..gggg_.
.f The Staf f and the Consumer Advocate have filed testimony in this proceeding.
Staf f has recommended an increase of $9.7 million.
The Consumer Advocate has recommended an increase within a range whose upper limit is $5.2 million.
Each has, 1
l therefore, recommended bankruptcy -- although it is the Commission, not they, who will oave to assume the responsibilities, burdens and added costs which will follow that event.
. The recommended rate increase of the Staff, $4.7 million, can be plotted on the forecast of short-term debt and credit available at the austerity level of spending:
IET-ED: SHORT-TERM DEST OUTSTAMDING 10 g g g g g g g g ; g g g g g g 3 g g I 120 - ItATE M LIEF: 98.7 MILL!cM t 110 1981 SPEM31M$s Olds MILLION h00 o 90 R.C.A. LIMIT SMORT-TUIM 3r37 n,,
.w i.0 ta a
~
~
S Ed!NS
~
~
I I I I I I I I I I I ' I I I t t t 0
J F M A R J J A S 0 M D J F M A P J
/-
1981 - -
e ----- 1982 --- /
The Company would exceed its credit available in May, 1981; would have a deficiency of $20 million at year end 1981; and a deficiency of $55 million at April 1982.
The Consumer Advocate recon?nds about nalf of this inadequate amount!
Financial indicators, using the Staf f's recommendation, would appears as fo11cvs:
Forecast Forecast -
Forecast -
No Staff Cons. Adv. Rate Rate Relief Rate Relief Relief l
Net Income (loss)
$ (25)
$ (18)
$ (20) l Return on Common (6. 9) %
(5.1)%
(5. 5) %
Interest Coverage
.33X
. 6 4X
.56X ba
9-Neither the Staf f nor the Consumer Advocate address the f act that the Revolving Credit Agreement matures and expires on October 31, 1981.
At that time, it will be necessary to establish terms sufficient to induce the banks to continue to extend some level of credit to ME and the GPU System.
It is clear that this would be impossible if the banks are f aced with the kind of results recommended by these parties.
Mr. Packard for the Staff actually suggests that if the banks would only increase the credit avail-able to ME up to $80 million everything would be fine in 1981 even without rate relief.
It is clear they will not do so.
It would be irresponsible of them to extend credit, or of us to incur debt, which we would have no reasonable prospect of repaying.
The result will be just the opposite of what Mr. Packard suggests:
With $9.7 million of rate relief ME will not even have the credit it nnw has.
The recommendation of the Staff may also be viewed in terms of the level cf charges to customers.
It would produce significant reductions in 1982 bills from current levels:
l RET-EDI AVE CUSTOMER COST--STAFF'S RATE RELIEF 90 g g g g g g g g g g g,,,, i i i 85
[ 8.0 p.
g 7.0 p
staff past matt inentast 8.5 l
E S.0 l
" s.s
.\\
Ent y ou.e, E
ls.0 EMER y claust H 4.5 0
]
cunaENT BASE RATES I I I I I I I I I I I I I I I I I I 3.0 O
J F R A R J J A 5 0 N D J F M A R J v
/-
-1981----
--r----1933-f
. The recommendation of.the Staf f would reduce charges to pd customers 20% under current bills in the spring of 1982.
However, offsetting this reduction would be the unknown increase associated with a Met-Ed bankruptcy and the denial to the Met-Ed customers of the energy cost benefits of TMI-1.
A Met-Ed bankruptcy would be sure to delay its return to service an indeterminable length of time.
D.
Collection of Deferred Energy Cost The charts which have presented the level of charges to customers demonstrate an opportunity to aid our customers at this time.
The energy surcharge of $60 million annually will expire in November of this year.
The energy cost rate can be expected to decline significantly when TMI-l resumes generation.
The rate of recovery of deferred energy expense might be slowed so as to
(]
" smooth" the impact of this rate case to our customers.
For instance, if that surcharge were cut in half to $30 million per year, at the same time that full rate relief is granted, charges to customers would appear as follows:
MET-EDs AVE CUSTOMER COST--FULL RATE RELIEF 9.0 g g g g g 3 g g g g g 3 g,,,,
3.5
[S.0 REDUCED EMROY SURCH440E EMDS MAY 1983 N 7.5 g 7.0 6.5
\\
6.0 Bast amTE InCatast R
N N-5.5 Entacy s w. - m -.,..., \\x x 5.0 A,,,
Emacy Claust l
4.5 4.0 3.5 3.0 1 ' I I I I I I I I I I I l I I I I J F M A R J J A $ 0 N D J F M A M J i
/-
. 1 pg g ----.~
..f..... 1982
-/
l
. Customer charges in May, on this basis, would be increased only 10.5% rather than 16.7%.
It is possible to construct other designs for the energy cost surcharge to accomplish this kind of result.
Because our credit limit and the deferred energy balance move in tandem, the temporary increase in short-term debt caused by a slow down in deferred energy collections is offset by an equivalent expansion of credit because of the higher deferred energy balance.
As the amortization continues into 1982 (at one half the current rate) the temporary debt and credit increases reverse e,o that by June 1982, short-term debt and credit limits are where they would have been without the reduction of the surcharge.
H ow eve r, this mechanism has smoothed the customer cost impact in May 1981 while still allowing Met-Ed to stay within its credit limits.
This is illustrated in the following graph:
MET-ED SHORT-TERR DEST OUTSTANDING
,1 i I i i l i i i I 1 i l i i i I (
g 130. R4TC RELIfft $78.S RILt!DN REDUCCD EMERQY $URCHARGE I I
[ 100 ND$$7stNnlLkl$AEkNTE 110 1
0 90 - a.c.a. Lin!T M
80
=
D 70 =
0 go
,k SHORT-TERM DEST
-=*
~
~
R.C.A.
20 ExP!sts 10 0'
I I I I I I I I I I I I I I I I I I J F M A R J J A S 0 N D J F M A M J
/
1981 -- -
/ - 1982 --- ~ /
l l
. i i
The Company recognizes the value of the rapid collection of k-the accumulated deferred energy costs.
In this time of record high interest rates it has been particularly important.
Estab-lishing the principle of energy cost recovery was a prerequisite to continue bank support.
This was accomplished by the May 23 Order.
To aid our customers with their bills and as a part of a significant base rate increase, we believe some slowing of that collection would be acceptable.
E.
The Complaint Against the Temporary Rates There is another issue in the case which is pertinent to the level of credit available to ME.
A Complaint has been filed against the temporary rates on the basis that these rates were set ur. reason-ably low.
We have presented evidence and we have demonstrated in both the complaint and in the Extraordinary Rate Relief
()
Proceeding that the current level of base rates for Met-Ed are, in fact, unreasonably low on a non-TMI rate of return basis.
The Commission indicated in its May 23 Order that if those temporary rates were subsequently found to be unreasonably low, the Commission could correct that action by " restating" the deferred energy balance.
If this were done, at an annual rate of $26.9 million (the amount by which rates were reduced) effective May 1,1981, the level of credit which would become available to ME would be increased by $24 million (because of the formula by which credit available to ME is tied to the deterreo' energy balance).
Charges to customers in May would not be affected by this action.
The additional deferred energy could then be collected by a continuation of the surcharge.
For
{}
example, if this " restatement" were done in conjunction with the
13 -
example cited in "D" (full rate relief in May along with a cut O
in balf of the deferred energy surcharge) customer charges would increase (as in "D")
10.5% in May 1981.
The $24 million expansion in credit could be used to provide some safety margin between short-term debt and credit limits so that Met-Ed would not be borrowing at its limit in the spring of 1981 and 1982 1
hen it makes its state tax payments.
Customer charges for this example we' ld be as follows:
IV.T-ED s AVE CUSTOMER COST--FULL RATE RELIEF 9.0 g g g g g g ; g g g g g g g 4 g g ;
3.5 C
ND Emacy 'EmRD' 3
E.0 REBUCED EMERCY SURCmRGE CONTINUES PAST MAY 195E M7 5 g 7.0 5.5
(
P f
\\
g 5.0 anK mete IMcatast 55 E
v.U.c a < E.uct.. i,.i> x 55 '
E
.y et.Un N
Q w 4.5 4.0 cuanEMT ta w me m 3.5 I I I I I I I I I ' I I I I I I I I 3.0 J F M A R J J A 5 0 M D J F M A R J f.-
gggg. _ _ _ _._f
~.1982----~/
Short-term debt and credit would be as follows:
flET-EDI SHORT-TERM DEST OUTSTANDING 140 g g ; g g g g g g g g g, g g g g g R IM
~
RATE KLIEF: 37s.5 MILLIOM REDUCED EERCY SURCl44RGE:
t I 120
'KSTATED' DErERRED Emmov TALanct L 110.1981 SPEMDINGs JAM-JUN AT S149 MILLION ANNUAL RATE L
JUL-DEC AT S185 r!LLIDM ANNUAL AATE I 100 m.C. A. LIMIT,, -. *.,, ' *
- l 0 90 N
- .,_a go D 70 a
e t 50 A 40 sMORT-TEnn Ms7 A
l.30 E m a,.
m.c 0
10 l
I I I I I I I I I ' I I I I I I I I 0
J V n A N J J A 5 0 N D J V N A R J 1981 -----------/ ----- 1982 --/
/
1 l
~
. F.
Conclusion.
The Commission is faced with three s
decisions which impact upon the level of cash revenues and bank credit available to Met-Ed:
The level of base rate increase allowed The rate of amortization of the deferred energy balance The restatement of the deferred energy balance in the complaint against the temporary rates.
The simple fact is that Met-Ed must have additional cash and/or credit in the next fif teen months totaling at least $75 million.
Even this will provide no margin of safety to deal with unforeseen events.
A variety of ratemaking techniques is available - as outlined in this testimony -- to deal with this deficiency while smoothing the impact to our customers.
The problem will not however, go away, as the Staff and Consumer advocate would wish, by ignoring it.
-- s
()
0-N v
METROPOLITAN EDISON CDMFANT Source and Application of Funde Statement No 1981 Rate Relief - OEM and Construction Spending Level $165 Million
($ Millions)
Forecast 1981 Jan Feb Mar Agr May Jun Jul Aug Sept Oct Nov Dee Total Application of Funds construction 4
4 5
3 4
5 4
4 5
4 4
4 50 Pymt. of Construction Liabilities (1) 1 (1) 10 10 Refinarmings, etc.
2 2
Total Applications 5
4 5
3 4
4 4
5 6
4 4
to 62 Source of Funds Internal Net inc ome (1)
(1)
(2)
(2)
(3)
(3)
(3)
(3)
(2)
(2)
(3)
(25)
Depreciation 3
4 3
4 3
4 3
4 3
4 3
3 41 Deferred Energy 1
4 4
5 4
6 5
5 6
3 5
48 Peferred Taxes & ITC, net (1)
(1)
(1) 1 (2)
(2)
(1)
(2)
(1)
(2) 1 (II)
THIf 2 Deferred Expend., net Changes in Working Capital 9
(1)
(6)
(24)
(4)
(7) 9 I
(2) 4 3
I (17)
Total Internal 13 5
(1)
(18) 2 (2) 12 6
2 8
7 2
36 External Short-Term Debt (8)
(1) 6 21 2
6 (8)
(1) 4 (4)
(3) 12 26 Total Sources 5
4 5
3 4
4 4
5 6
4 4
14 62 Revolving Credit Ag reement Debt outstanding 53 53 58 79 81 87 79 78 82 78 75 87 Credit Available 85 84 80 77 73 71 64 59 54 48 45 44 hff[
u3 rt e Dr O
H o.
F% :3 ft bJ >'
4 4
O O
O i
l e
1 l
METROPOLITAN EDISON COMPANT Source and Application of Funds Statement Six Months Ended June 1982
($ Millions)
Forecast 1982 Sin Month Jan Feb Mar M
M g
Total Application of Funds Construction 3
3 4
5 5
4 24 Pyot. of Construction Liabilities -
Refinancings, etc.
8 R
[32 '
Total Applications 3
11 4
5 5
4 Source of Funds Internal pet inc ome (1)
(1)
(1)
(2)
(3)
(3)
(11)
Depreciation 3
4 3
4 3
4 21 Deferred Energy (1) 1 I
3 4
Deferred Taxes & ITC, t.et 2
2 2
1 1
8 Changes in Working Capital 2
(1)
(7)
(26)
(5)
(37)
Total Internal 6
3 (3)
(22) 2 (1)
TTIT l
External Short-Term Debt (3) 8 7
27 3
5 47 Total Sources 3
11 4
5 5
4
[li i
Revolving Credit Igreement i
Debt Out standing 84 92 99 126 129 134 Credit Available 44 44 44 44 44 44 Assumptions: No Base Rate Relief Reduced Energy Revenues for TMl-1 g3 gy In-Service 1/1/82 De rt 1982 Spending Levels - O&M and construction f$180 million uQ rt S Ofn h
i oe s* *3 ft FO bd
.s
Page 1 of 1 g-
\\_J METROPOLITAN EDISON COMPANY I
CASH FLOW STATEMENT NO RATE RELIEF - O&M AND CONSTRUCTION SPENDING LEVEL @$165 (1981)
(5 Millions)
July-December Year January-June 1980 1981 1982 Base Revenues (W/O Energy Component) 97 202 108 Energy Revenues less Current Energy Costs 44 46 4
TMI-1:
Operation & Maintenance (11)
(21)
(10)
Construction (5)
(10)
'5)
TMI-2:
Operation & Maint? nance (3)
(9)
(5)
DeferrGd Clean-up less rasurance 7
Non TMI Construction (Excl.
AFC)
(15)
(36)
(16)
Operating Costs (Non-TMI O&M)
(38)
(85)
(48)
^
Taxes Other (6)
(35)
(35)
Refinancings, etc.
(7)
(2)
(8)
Interest (27)
(50)
(26)
Preferred Dividends (5)
(10)
(5)
Payment of Accrued Construc-tion Liabilities (DOE)
(10)
Other Working Capital Changes (6)
(1)
Net Cash Flow from Oper-ations T
Tf6)
'IT7)
Increase (Decrease) Bank Borrowing Q)
J g
Bank Borrowing Requirements 61 87 134 Credit Available 93 44 44 j
Deficiency (43)
(90)
( ) = Cash Outflow t-T r
w.-y-e y
es
+w-m*-a--
-A
(
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,e->m-m
(
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cables Colyerand
.O r..s. E x. h a-EkW - ' 8 g
December 8,1980 j
i,.
[
Mr. E. J. Holcombe, Comptroller
>i General Public Utilities Corporation s
100 Interpa'ce Parkway l
Parsippany, NJ 07054 I
Re:
Pennsylvania Public Utility Commission S
V.
Metropolitan Edison Company
{
Docket No. R-80051196 2
4 Revenue and Expense Interrogatories i
Dear Mr. Holcombe:
1:
3
- i i
As requested, we have set forth herein our responses
{
to the Revenue and Expense Interrogatories, dated November 18, i
1980,'of the Commission Trail Staff (" Staff") of the Pennsylvania f
Public Utility Commission ("PaPuc").
With regard to the Staff's request for responses to two specific interrogatories, we have the following general comments which should be considered in connection with our specific comments on the two interrogatories, which specific comments are set forth l
on pages 3'to 6:
1 1)
Our comments and conclusions relate to the financial statements of Metropolitan Edison 5*
I Company (" Met-Ed") as of September 30, 1980 and through the quarter then ended.
Such I
comments and conclusions do not relate to the d
fourth quarter of 1980 inasmuch as the l
appropriate accounting for the items in i
question as of December 31, 1980 will be l
influenced by events or other developments l
,o that occur to the date of issuance of our 4
audit report upon the 1980 financial statements.
2)
In setting forth our comments and conclusions, we have given consideration to the " events"
described in sub-paragraphs 1. and 2. of the November 18, 1980 request.
We have f}
also given consideration to various other events and factors since the occurrence of the aecident at Three Mile Island Nuclear Generating Station Unit No. 2 ("TMI-2") on March 28, 1979 including, but not limited to:
(a) our understanding that neither Met-Ed nor Pennsylvania Electric Company ("Penelec")
has, as yet, made formal applicatica for rate relief applicable to the costs of responding to the accident, (b) the filing by Met-Ed on September 26, 1980 of a complaint in the United States District Court for the Middle District of Pennsylvania seeking a temporary restraining order and an inj unction against the order of the PaPuc dated September 18, 1980 and (c) the filing by Met-Ed in the Commonwealth Court of
()
Pennsylvania on October 16, 1980 of an appeal of the September 18, 1980 order.
3)
" Statement of Financial Accounting Standards No. 11 - A'ecounting for Contingencies -
Transit;on Method" ("FASB 11") sets forth the accounting to be employed when financial statements are presented for periods before fiscal years beginning on or after July 1, 1975, the effective date of " Statement of Financial Accounting Standards No. 5-Accounting for Contingencies" ("FASB 5").
Consequently, FASB 11 has no bearing on our re-sponses to tne interrogatories.
- 4) 'FASB Interpretation No. 14 - Reasonable Estimation of the Amount of a Loss, an interpretation of FASB 5"
(" Interpretation
()
No. 14') sets forth criteria for accruing a loss when information available indicates that
c t,
6 3_
(
)
the estimated amount of such loss is within a rance of amounts.
Inasmuch as our conc,1usion with regard to both interrogatories is that the amount of loss, if any, suffered by Met-Ed as a result of the accident at TMI-2 is not presently determinable, Interpretation No. 14 has no bearing on our responses to the inter-rogatories.
With respect to the Staff's first interrogatory, we believe that FASB 5 should be considered as follows:
Since the accident on March 28, 1979 at TMI-2, the ultimate financial i= pact of such accident has been and continues to be categorized as a loss contingency which should be accounted for in accordance with FASB 5 FASB 5 defines a loss contingency as an existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an enterprise that will utlimately O) be resolved when one or more future events occur or fail to occur.
(_
FASB 5 states that an estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions I
are met:
I' a.
Informa' tion available prior to issuance of the financial I
statements indicates that it is probable that an asset had been impaired or a liability had 'oeen incurred at the date of the financial statements.
It is implicit in this condition that it must be probable that one or more future events will occur confirming the fact of the loss.
b.
The amount of loss can be reasonably estimsted.
I In addition to the aforementioned conditions, consideration
[
must be given to the rate-=aking process, since a sustained loss l
l 1
l does not always require an immediate charge to income but may instead be recoverable from the ratepayers.
l The' matter of the potential recoverability from the f'/
s i
i ratepayers of any loss which might be sustained as a result of I
s-the TMI-2 loss contingency has been addressed in the notes to finar.a al statements included in the Quarterly Report on Form 10Q for the quarter 1
I
a f
.Cnded September 30, 1980 filed by General Public Utilities Corporation i
t
_)
("GPU")'and its cubsidiaries (including Met-Ed) with the Securities cnd Exchange Commisslun on November 14, 1980.
The relevant 5
portion of Note 1 of such notes to financial statements follows "The subsidiaries do not know the extent, if any, to which the expenditures for repair and restoration of the unit to operation will represent plant improvements or other items that are capitalisable and which may be recoverable in the future through rates charged to customers by amortization or depreciatior.
1arges.
Moreover, the subsidiaries are seeking financia. assistance from the Federal government and the utility industry.
Management believes that any loss suffered by the subsidiaries for which they do not re-ceive financial assistance, or reimbursement from suppliers,
is recoverable in rates.
Under these circumstances, the amount of loss, if any, suffered by the Corporation and its subsidiaries resulting from the TMI accident is not presently determinable and no provision therefore has been made in their accounts.
In its rate order issued on June 19, 1979 referred to below, the PaPuc recognised that no claim for such costs had been made in the proceedings in which such order was entered.
Nevertheless, the PnPuc stated in that order:
'the Commission
(~N is of the view that none of the costs of responding to the
\\>
incident, including repair, disposal of wastes and decontami-nation are recoverable from ratepayer 5.
These costs are and should be insurable.'
In its rate order of May 23, 1980, the PaPuc again addressed this issue, without any request having been made by Met-Ed or Penelec with respect thereto, by stating:
dith respect to the recovery of clean-up costs througn rates, nothing in this order negates the statements of the Commission in the June 19, 1979 order.'
On September 16, 1980 the PaPuc issued an order requiring, among other things, that Met-Ed ' cease and desist from using any operating revenues for uninsured clean-up and restoration costs' of TMI-2.
In this order, the Pa?uc stated that 'these cleanup costs and expenditures not covered by insurance ulti-i mately are the responsibility of the company's stockholders and/or the Federal government; however, they are not the responsibility of the ratepayers' and that the cease and desist order in designed 'to insure that ratepayer monies are not being used, currently or in the future either directly or indirectly to pay clean-up expenses.'
i,_ /
3 l
, j l
On September 26, 1980 Met-Ed filed a complaint in the United
,s
('~')
States District Court for the Middle District of Pennsylvania l
seeking a temporary restraining order and an injunction against enforcement of the PaPuc's cease and desist order as well as declaratory relief.
In its complaint, Met-Ed i
alleged, among other things, that the PaPuc's cease and desist order was in conflict with Met-Ed's (1) obligations under the Atomic Energy Act, rules, regulations and orders thereunder, (ii) the operating license issued by the N?.C for TMI-2 and (iii) Met-Ed's duties under the Pennsylvania Public Utility Law to furnish and maintain adequate, efficient, safe and reasonable facilities.
Met-Ed believes that compliance with the PaPuc's cease and desist order could cause Met-Ed to violate State and Federal laws.
On September 26, 1960, the District Court denied Met-Ed's request for a temporary restraining order.
This matter is now pending before the District Court.
On October 16, 1980 Met-Ed filed an appeal of the PaPuc order in the Commonwealth Court of Pennsylvania.
Met-Ed and Penelec do not know what effect these actions of the PaPuc may have on their ultimate ability to recover uninsured TMI-2 clean-up costs from ratepayers.
In the event of a final unfavorable determination in the administrative or judicial proceedings described above, Met-Ed and Penelec
^
( 'T would be required to make provision, at that time, in their financial statements for the estimated losses that would result because of the TMI-2 accident.
These losses would have a material adverse effect on the earnings and financial position of Met-Ed and Penelec.
Given (1) the statement by GPU (and Met-Ed) management that
" Management believes that any loss suffered by the subsidiaries for which they do not receive financial assistance, or reimbursement from suppliers, is recoverable in rates."
and (2) the fact that Met-Ed has filed a complaint in the United States District Court for the Middle District of Pennsylvania against the Pa?uc's September 18, 1980 order and has also appealed that order in the Commonwealth Court of Pennsylvania,1: is our view that the rate-making treatment of the cost of responding to the accident, including repair, disposal of waste and decontamination has not finally been determined and that no provision for the estimated loss is required at this time.
If the ultimate recovery of the clean-up costs from ratepayers becomes solely contingent upon the outcome of the aforementioned jud_cial (O
_/
proceedings, all recourse to administrative procedures having been e xhaus t e d,
an unfavorable determination in such judicial proceedings (either unfavorable court decisions or the cpinion of counsel for Met-Ed that the likelihood of Met-Ed receiving a favorable
-u-determination in such proceedings is remote) would require a provision
,_s
(-)
to be mndo for the-estimated loss.
With respect to the Staff's second interrogatory,,it is our understanding that it is Met-Ed's present intention to pursue a course of action designed to eventually rehabilitate, recommission and restore l
TMI-2 to service.
Although TMI-2 is presently impaired (and as such is considered a loss contingency sub, ject to the accounting requirements set forth in FASB 5), the presumption that the unit will be rehabilitated and returned to service negates any presumption that TMI-2 is presently a total loss.
In forming a judgment as to whether TMI-2 has been permanently impaired, consideration must be given to the eventual rate-making treatment which will be accorded to the original plant investment in TMI-2 and the cost of any permanent improvements made during the restoration of the unit upon the unit's return to service.
Based upon reasoning analogous to that employed in reaching our conclusions with respect to the Staff's first interrogatory, it is our view that the rate-making treatment with respect to Met-Ed's original 7,
investment in TMI-2 and the cost of any permanent improvements made
> C/
during the restoration of the unit has not been determined.-
Under these - circumstances and in accordance with the accounting principles set forth in FASS 5, we concur with the conclusion of Met-Ed's management that the amount of loss, if any, suffered by Met-Ed resulting from any possible permanent impairment to TMI-2 is not i
presently determinable and no nrovision therefore need be made in the accounts of Met-Ed at this time.
In considering our reply to the Staff's interrogatories, we wish to point out that we have not audited the financial statements of Met-Ed as of any date subsequent to December 31, 1979 Therefore,
+
the matters. set forth in this letter should not be construed as an j
expression of an opinion with respect to any financial statements as of any date or period subsequent to December 31, 1979 Further, the conclusions set forth-in this letter are, in part, based upon information furnished to us by GPU (and Met-Ed) management.
Since our examination of the 1980 financial statements of GPU (and Met-Ed) i;(~} is in progress and substantially incomplete, our investigation of the facts set forth in this let ter is according1y. limited.
1-1
. n
~ -.
gw Thin letter in solely for the information of GPU (and k-Met-Ed) and the PaPuc and its staff and is not to be.used, cir-culated, quoted or otherwise referred to for any purpose without the expressed written consent of Coopers & Lybrand.
We believo l
it is necessary to restrict the use of this letter because of the possible misuse or misinterpretation of it:; contents given the technical nature of the items discussed and the circumstances outlined in the previous paragraph.
If we can be of any further assistance to you with respect to the matters set forth in this letter, please contact William R. Hazelton, a partner in our New York office or Stephen J.
Lis, a partner in our Philadelphia office.
Very truly yours, MhlLCd l/L4 Coopers & Lybrand 1
e l
l
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=.
Met-Ed Exhibit I-32 Witness:
B. H. Cherry
[j Page 1 of 3 v
METROPOLITAN EDISON COMPANY Docket No. R-80051196 Response to Interrogatory Nos. 4, 5, and 6 of the Interrogatories of Louise Riley and the Senior Power Action Group.
Question:
4.
What are the current estimated costs, including AFUDC, in constant 1979 or 1980 dollars and in non-constant dollars for each generating unit to be completed by Met-Ed or to be shared by Met-Ed in the 1980's and 1990's? Also, please provide the name and location of the unit, dates of construction, expected dates of completion, type of fuel, capacity of the unit in megawatts, the operating cost per KWH (in constant 1979 or 1980 dollars and if possible, in non-constant dollars). In addition, please state whether or not the unit is to be jointly owned or shared, (and, if so, the company's share) and the expected average capacity factor.
5.
Please provide the information described in number 4, above, for
()
GPU and its other subsidiaries.
6.
Please give the estimated fuel /:.nd other operating and maintenance costs per KWH in 1980 (or 1979) ganstant dollars for the plants indicated in the supporting data.
Answer:
The answers to the above three questions appear on the following sheet.
The estimates for units not under construction do not reflect site apecific Costs.
l l
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i i
Meted EahlbitI L
(_/
WitneOt B.
u.Irry P;;o 2 of 3 METRomLITAN EDISON CDMPANY Das het ib. R-ROO51196 -
j.
O&M DEM Puel Puel Est. Costs As Spent Start Capacity Costs Costs Cost Costs Plant Designation 1980 Dn11ars Costs Start Construc-Coastere t al Fuel Capacity Factor. I 1980 As Spent 1980 As Spent Operati_nr, Company 2
($ M1111ons) ($ Millions) tornt ton Pro jec t tien Operation
_ Type _
(MW)
(See Mate 2) c/FVHR C/FWHR C/FWR c %%R
- 1. Warrior Ridge 5.3 6
Iluntlnzdon 1975 1981 1982 Hydro 1
35 1.42 1.66 0
0 Penetec 100 5.3 6
County, PA 1
Meted 0
0 0
0 JCP&L 0
0 0
0
- 2. Raystown 13.4 17 iluntingdon 1974 1981 1985 Hydro 2
32 6.40 9.41 0
0 Penclec 100 13.4 18 County. PA 2
Meted 0
0 0
0 JCP&L 0
0 0
0
- 3. Seward 7 637 1008 Indiana 1973 1982 1989 Coat 625 58 1.90 3.80 4.90 10.65 Penclec 90 573 907 County, PA 562.5 Meted 0
0 0
0 JCP&L 10 64 101 62.5
- 4. Coal 1 637 119s See Note 1 1981 1986 1991*
Coal 625 58 1.57 3.67 4.30 11.09 Penclee 10 64 120 62.5 Meted 60
'# 2 71 7 375 JCP&L 30 191 359 187.5
- 5. Coal 2 637 1418 See No*= 1 1983 1988 1993 Coal 625 58 1.57 4.28 4.30 13.18 Penetec 40 255 567 250 Mettd 10 64 142 62.5 JCP&L 50 318 709 312.5
- 6. Peaking 11nt t 431 1101 See Note 1 19 ?
1989 1994 Pumped 850 23
.14
.40 0
0 Penclec 0
0 0
Storage O
Meted 40 172 440 340 JCP&L 60 259 661 510
- 7. Coal 3 637 1682 See Note 1 1985 1990 1995 Coal 625 58 1.57 4.95 4.30 15.67 Penclec 10 64 168 62.5 MetPd 10 64 168 62.5 JCP&L KA M9 1346 500
- 8. Coal 4 637 1832 See Note 1 1986 1991 1996 Coal 625 58 1.57 5.38 4.30 17.06 Penc tec 20 127 183 125 Meted 10 64 366 62.5 JCP&L 70 446 1283 437.5
- 9. Coat 5 637 1995 See Note 1 1987 1992 1997 Coal 625 58 1.57 5.80 4.30 18.60 Penelec 20 127 399
?25 Meted 40 255 79 8 250 JCP&L 40 e55 798 250
- 10. Coat 6 637 2172 See Note 1 1988 1993 1998 Coat 625 58 1.57 6.28 4.30 20.27 Penetec 60 383 1304 375 Meted 20 127 4 34 125 JCP&L 20 127 4 34 1;i
L a
s Met-Ed Exhibit I-32 Witness:
B. H. Cherry Page 3 of 3 METROPOLITAN EDISON COMPANY Docket No. R-80051196 NOTES:
1.
Sites for these units have not been chosen.
Proposed sites for these projects include:
1.
Union Beach; Borough of Union Beach, New Jersey 2.
Forked River; Ocean County, New Jersey 3.
Scottsville; Wyoming County, Pennsylvania 4.
Wehrum; Indiana County, Pennsylvania 5.
Eart Brady; Clarion County, Pennsylvania 6.
Seward; Indiana County, New Jersey 7.
Coho; Erie County, Pennsylvania 8.
Gilbert; Hunterdon County, New Jersey 9.
Portland; Northampton, Pennsylvania
- 10. Yards Creek; Warren County, New Jersey 11.
Other sites which may prove to be more suitable than the foregoing.
- 2. Study results suggest that these are the probable capacity factors which
()
would result from economic dispatch. This is not to suggest that GPU will not try to run the units to higher capacity factors if economically feasible.
i O
l l'
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1 I
s s
Meted Exhibit I-33 Witness:
B. H. Cherry METROPOLITAN EDISON COMPANY Docket No. R-80iS1196 Response to Interrogatory No. 11 of the Interrogatories of Louise Riley and Senior Power Action Group.
Quest!on: What loss of load probability data does the company compile or compute?
4 j
Answer:
PJM computes loss of load probability from which PJM management determines :he system capacity reserve margin goal (currently 22%).
This system reserve margin is then applied to the PJM contractual capacity obligation formula to determine the reserve obligation for each member company including GPU. The data requirements and O
methodology are explained more fully in Meted Exhibit I-1.
O
~.
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b'
/
Meted Exhibit I-34 Witness:
B. H. Cherry METROPOLITAN EDTSON COMPANY Dor.se No. R-80051196 1
Response to Interrogatory No.13 of the Interrogatories of Louire Riley and Senior Power Action Group.
Question: Please provide the current cost estimates in constant 1980 (or 1979) dollars for a peaking plant.
Answer:
The installed cost of a combustion turbine peaking generator is approximately $220/KW in 1979 dollars.
l l
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1
t 6, (*
Mat-Ed Exhibit E-31
,6 Witness: J. G. Gre. ham CITIBANK, N.A.
CHEMICAL BANK 399 Park Avenue 277 Park Avenue New York, New York 10043 New York, New York 10017 December.3, 1980 General Public Utilities Corporation Jersey Central Power & Light Company Metropolitan Edison Company Pennsylvania Electric Company c/o General Public Utilities Corporation 100 Interpace Parkway Parsippany, New Jersey 07054 Attention:
Mr. William G.
Kuhns Chairman Gentlemen:
Reference is made to our letteri, dated September
' ('~)
5, 1980, relating to the Revolving Credit Agreement, dated as of June 15, 1979, as amended, among you, certain banks and us (the~" Letter"; terms defined or incorporated by reference in the Letter being used herein with the same meanings).
1 In the Letter, the Banks stated their expectation to the effect that, effective immediately, but by not later than the tenth Business Day of each month, ME would, to the extent necessary, prepay its Notes so that the aggregate amount of its borrowings would not exceed the value of its Liquid Assets as at the last day of the immediately preceding month.
Supplemental to the foregoing, it is the view cf the Banks that, upon the grant to the Co-Agent for the benefit of the Banks, the Agent and the Co-Agent of the perfected, first priority interest in ME's accounts receivable and during the continuation thereof, " Liquid Assets" as at the last day of a calendar month shall include 80% of the amount l
of customer accounts receivable as at such day covered by such security interest (maximum aggregate borrowings by ME l
will not, in any event, exceed S105,000,000).
We also wish to confirm our understanding that the aggregate amount of L
" Liquid Assets" at any time shall, for purposes of the l
Letter, be rounded down to the nearest whole integral of fg S1,000,000 and that ME will not deviate from its present l (/
accounting policy of writing off receivables unpaid in excess of 90 days from billing.
n
-n.
n
,jp-j- \\.,
e gj 2
We advise and confirm to you that neither this j
letter nor any action or inaction heretofore or in the future, whether or not contemplated by or in response to this letter or the Letter, constitutes or shall be deemed to constitute any waiver, or any estoppel against the exercise, by the Banks of any right heretofore existing or hereafter arising under the Credit Agreement, all of which rights the Banks are reserving.
Very truly yours, CHEMICAL BANK,
- CITIBANK, N.A.,
as Co-Agent as Agent m
~
7 By / (N'h'[
rF
By 3'
Robert Gi'llham Pnilip,C.
Kron Vice President Vice President cc:
Each of the Banks
/
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-C-Mst-Ed Exhibit E-32
's Witness: J. G. Grcham KREKSTEIN RUBIN AND LASDA 3
-(
ATTORNEYS AT LAW h/
222 PINE STREET
'?
P.O. BOX Soo cenAto KammsrEiw HARRISBURC.PENN5YLVANIA 17108
" ^ ^ ~ * = "
e*su %'m% *irJE C0'lP' e
'3 DONALD D.cEYER YAX DEPT.
4 1
November 13, 980 i
Honorable Robert Matson Deputy Secretary of Revenue Commonwealth of Pennsylvania lith Floor - Strawberry Square Harrisburg, Pennsylvania 17127
Dear Mr. Matson:
Metropolitan Edison Company's cash projections for the period August 1980 through December 1981 have forced major cost reduction efforts in order to keep short-term debt within the credit limit imposed by the Revolving Credit Agreement' These-projections are important when considering the. company's financial
()
capabilities because the Company. has' only a limited araount of short-term credit available to it under its Revolving Credit Agree-ment with banks.
This credit agreement continues to be the only external source of funds available.
By April 1981, the cumulative cost reductions arising from these efforts amount to $34 million.
This amount and the ways in which i,t would be accomplished have been submitted to the Public Utility Commission by the Company.
The cuts are deep and affect significantly the operations of the Company particularly since they are in addition to effective cost reduction programs implemented subsequent to the TMI accident.
A major problem facing Metropolitan Edison Company is that in April 1981, it anticipates tax payments to the Commonwealth of P6nnsylvania of approximately $28 million.
The principal items in this total are (1) approximately $6 million in final payment of the 1980 Gross Receipts tax and (2) approximately $17 million in payment of the 1981 Tentative Gross Receipts tax.
Without making the aforementioned $34 million of cumulative cost reductions by
' April 1981, the Company's short-term debt at that time will be approximately $30. million in exc'ess of its short-term revolving credit limit.
As you can see, the amount of taxes involved is a substantial part of the amount of excess debt which would be in-curred without the cost reduction.
This poses a substantial dilemma l
for the Company because it cannot exceed ihr short-term credit limit m
l without being in violation of the Revolving Credit Agreement.
l
.I
~
KREKSTEIN RUBIN AND LASDAY Honorable Robert Matson Deputy Secretary of Revenue November 13, 1980 In an effort to ameliorate the difficulties posed by this situation, the Company would like to have an extension of time in which to file its final 1980 Gross Receipts Tax Report and Tentative 1981 Gross Receipts Tax Report and for payment of the corresponding taxes.
We hereby are requesting such an exten-sion on its behalf.
This request will not affect any extension requests made on its behalf with respect to its combined Capital Stock-Corporate Net Income-Loans Tax Report and will not be followed by a further request for an additional extension with respect to Gross Receipts taxes beyond any extension granted.
We believe that the extension authority granted to the Department of Revenue in Section 704 of the Fiscal Code, and Section 405 of the Tax Reform Code of 1971 provide sufficient statutory authority for the Department to grant such request, at least to the extent of the sixty day extension authority granted in the Codes.
We would expect any tax payment made after the April 1981 due date to be accompanied by statutory interest; but the granting of the extension should relieve the Company from any penalty with regard to a late filing or payment.
The Company's cash position has been most difficult sined the accident at Three Mile Island due to the need to purchase sub-stantial amounts of incremental replacement power and the loss of cash revenues associated with the plant's cost.
As you can see from the attached Summary of Retail Rate Changes since January 1979 (Appendix A) the Company has lost approximately $74 million in annual base rate revenues associated with TMI #1 and #2.
The Com-pany, on July 29, 1980, filed with the PUC for a $77 million base rate increase and further requested that $34 million of this in-crease be allowed as emergency rate relief as of September 1, 1980.
The PUC denied the emergency rate relief requested by the Company.
In the meantime, the Company must pay for the fixed capital costs associated with about $500 million of assets related to TMI il and
- 2 as well as the operation and maintenance costs in connection with l
these units and at the same time fulfill its oblig,ation to pay for l
the clean-up costs (in excess of insurance recoveries) as a result of the accident.
l The Company did receive annual rate increases of approxi-mately $180 million (which increased its gross receipts tax obli-gations by $8 million) during the period, however, these rates were to recover a portion of its incremental energy costs which the Com pany had incurred as a result of the accident.
In addition, Met-Ed has had to pay through September for $67 million of incremental energy costs not yet recovered from customers and which have been ll)
I
r 3
' la.
- KREKSTEkN RUBIN AND LASDAY ;.-m V)
(
Honorable Robert Matson Deputy Secretary of Dcvenue November 13, 1980 financed primarily by funds made available from the bank Revolving Credit Agreement.
Hearings on the $77 million rate increase are presently being conducted by the PUC, but we are unable to deter-mine at this time the results or the timing of a final decision on this matter.
Consequently, we are requesting this extension in order to assure that we will have sufficient time within the frame-work of the rate making process to meet all of our obli-gations.
I believe you already have a copy of the pertinent pro-visions of the Re?olving Credit Agreement.
I am enclosing a work-sheet (Appendix B) showing the present short-term debt / credit fore-cast through April 1981, as recently prepared by the Company.
I am available at your convenience for any further dis-cussion.
We. appreciate your consideration of.this request.
Very truly yours, KREKS CEIN RU I N
LASDAY
(_-)
s" BM.6A,d M
' HARRY UBIN HJR/paf i
)
Enclosures i
t 1
%)
9
h:
x.
HETR!PGt17A:4 E0!$0N CCHPA).T
_St*?tARY CF DETAll s ATE CHAlCTS SINCE JAfftlARY 1979 e
14o M111 tons)
Tami
. TN!
Ilon-Vt t Invenes t$ste*
h
_( Ana M 1y)
Related
_RelateJ Ifetet 9 - 3/22/79 Base
? 46.6 5 46.6 0-4/11/19 asse Sft6.6)
$fL6.6)
Q
.. Removal of TMI-2 from base rates. Rates were never taple-sented.
- 0-6/19/79 Energy 5450
$ 49.0 f_{4.0)
.. Levetteed clause from 7/1/79 - 12/31/83 (asswed 1M1 1
$R - Il 1/79 return 1/1/80).
Allowed amortteation of old energy costs deferred (8).8 e
altiton annually).
0-2/ 8/$3 Energy S 55.0
$ 55.0
.. Inittet reguest '11/1/79 to be ef tergive 1/1/83.
~
Crante,d on interia basts. subject to further investigation.
0-5/23/83 lase 1(27.0)
~1(17.0) 3
.. Removal of THi-1 from base rates ef fective 6/1/10.
SR - 6/ 1/80 Inergy 86.0
- 75.0
_ 10.0 Cranted $27 stilian acnually for full recovery of energy 5 H.o s 6.0 s 10.0 from 6/1 - 12/31/80.
Cranted $$1 at111on as a surcharge for recovery of energy Total
$159
$153 W
costs over 18 Mnths.
Reaffirmed 2/8/83 interia order.
502 increase 962 of total 41 of total Disatssed franchise questtua.
Allowed recovery of defiand charges incurred from 1/1/f0.
Directed reductica of deferred energy balance for alleged 1974 coal overpa n ents.
Requestei 7/29/80 Sase
_s 76.5 4 34.2 1 t1.3
.. Filed on 7/29/83.
, Retvested $34.1'at111on emergency relief effective 9/1.
.. Filed toeplaints on 7/29 ret removal of Ot!-1 from rate bese.
8/23/20
.. PUC dented reguest for $34.1 million of interia caergency rettet.
9/18/80
.. MC ordered Het-I.i to cease and desist from using any operatteg tevenues for uninsured cleanup and restoration costs.
9/26/20
.. Met-Id filed tempot..ry injunction of 9/18 FUC Crder with g$
U.S. District Court.
9/29/80'
.. Ect-Ed (11ed an appeat v1?h Comonwealth Court re. FUC's
[
dental of interis emergency re11cf (Crder of 8/:3/30).
.. Het-Id !!!ed v1.h Comonvenith Court a petition for review of 9/18/80 FUC Crder.
10,*27/80
.. Request'for early determination of complaint Itled by the b
Company against temporary rates prescribed for it by the 5/21/83 Order.
e 7tovide en incressc in annu:1 revenues of $23 aillion and
,i,f, granted,. Het-Ed would drop the 7/29 complaint
.e
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- "'"' # C)
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ttCTROPOLITMt CDISCN C0tTANY Short-Term Debt / Credit Forecast f
i
!!aterial Consistent with the t!ct-cd 9/12/80 Letter to the Pa PUC
($ itillions) 1980 1981 SE1 M
!.hl!
M Revenue Receipts:
$37
$37
$40
$43
$46
.$. 4 5
$42 Disbursements:
Operating Costs Cnergy
$20
$22
$15
$19
$22
$25
$22 Other Operating Costs 7
6 9
8 9
10 6
Taxes Other than Income 4
28 Capital Costs Interest Expense 3
_4 3
2 6
9 3
Preferred Stock Dividends 3
3 Common Dividends Construction & Rententions (less' AFC) 3 3
14 4
4 4
4 TMI-2 Deferred Costs 4
4 4-4 4
4 4
Insurance Proceeds (8) p)
Security Retirements d
a Total Disbursements
$41
.$_4 5
_$40
_$37
$45
_$43
_$67 Short-Term Borrowings (Disbursements Less Receipts)
$4
$8
$(6)
$(1)
$3
$25 Short-Term Debt Before Cost Reductions
,$91
$99
$99
$93
$92
,$95
$120 Cu:aulative Cost Reduction per 9/12/80
. letter 4
10 26 28 29 31 Revised Short-Term Debt
$87
$S9
$73
$65
$63
$64
$86-Q Short-Term Credit Limit
$89 e $106<
$99 /,
g/ gr $92 e $90 7 E
[ ff avp4.4
@S
$9.1
$3.0
%9 9A2.
17AF
(,t(, oh(ev t.u 6&,1 gu
?g-44.9 63 0 Ji@
as.1 e
8 e
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