ML20003B473
| ML20003B473 | |
| Person / Time | |
|---|---|
| Site: | Three Mile Island  |
| Issue date: | 11/14/1980 |
| From: | PENNSYLVANIA, COMMONWEALTH OF |
| To: | |
| Shared Package | |
| ML20003B456 | List: |
| References | |
| NUDOCS 8102120168 | |
| Download: ML20003B473 (106) | |
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1 COMMONWEALTH OF PENNSYLVANIA 2 PUBLIC UTILITY COMMISSION 3
-- ----------------------x Pennsylvania Public Utility Commission :
4 versus Metropolitan Edison Company and : Docket Non.:
5 Pennsylvania Electric Company, Respondents.'; v ~: -I-79080320
~
- * * * *
- X 6
7 Operating agreement among Jersey Central : -
Power and Light Company, Metropolitan Edison. : G-80060098 Comijany, Pennsylvania Electric Company and :
8 GP') Nuclear Corporation. :
9
- * * * *
- x 10 Affiliated interest agreement between :
li Metropolitan Edison Company and Pennsylvania : G-80070101 Electric Company, relating to the proposed :
combined management of the two companies. :
(} /
12
- * * * *
- x 13
.14 Petition of JARI, Incorporated; et al. for.
an injunction to enjoin Pennsylvania Electric : P'-8 010 024 2 15 Company and Metropolitan Edison Company, and =
for hearings. :
16 :
--- --------------------x 17 Pages 78 tarough 147.
18 Executive ~ Chambers ~~
North Office. Building 19 Harrisburg, Pennsyvlania f
20 Friday, November 14, 1980 21 i
22 Met, pursuant to adjournment, at 1:18 p.m.
23l BEFORE:
) 24 EDWARD CASEY, Administrative Law Judge 25 819212Oj(,4f COMMONWEALTH REPORTING COMPANY (7171 761 7150
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79
( 1 APPEARANCES: l ),
2 SAMUEL B. RUSSELL, Esquire Ryan, Russell and McConaghy 3 P. O. Box 699 Reading, Pennsylvania 19603 4 (For Met-Ed and Penelec) 5 DENNIS S. SHILOBOD,' Esquire Strassburger, McKenna, Messer 6 Shilobod and Gutnick 3101 Grant Building 7 Pittsburg, Pennsylvania 15219 (For JARI, Incorporated) 8 STEVEN A. Mc CLAREN, Esquire 9 P. O. Box 3265 North Office Buildisg 10 Harrisburg, Pennsylvania 17120 .
(For Commission Prosecutory Staff) 11 ,
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2 EXAMINATION L
3 WITNESSES DIRECT CROSS REDIRECT RECROSS 4 (None.)
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7 EXHIBITS FOR IDENTIFICATION IN EVIDENCE 8 (None.) ,
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9 SO 1 -P_R O C_ _E _E _D _I N_ _G _S 2 JUDGE CASEY: I think we should open the record at 3 this time.
4 This is the official prehearing conference which has 5 been scheduled in the four consolidated docketed cases which 6 appear on the transcript that was taken at a preliminary meet-ing held on Friday, November 7, 1980.
7 8 Now, I will not read the caption today; it will be 9 available to the Reporter, as well as the particular docket to entries. ..
11 At that meeting last Friday, we discussed many of 12 the problems associated with putting on the case, with respect 1
13 to the four separate docketed cases, and we also managed to ( )
14 accomplish an agreement, of sorts, whereby there would be an 15 exchange of information on the part of the Metropolitan Edison 16 Company, through its Counsel, Mr. Samuel Russell, and Pennsyl-17 vania Electric Company -- and those are the two operating pub-18 lic utilities in Pennsylvania that operate under a holding 19 company known as General Public Utilities Corporation.
20 We also established what now appears to be a firm 21 set of dates for further evidentuary hearings in this case.
22 They were tentative as of last week, but I think notices have 23 been sent by the Administrative Law Judge Office that eviden-W
'1 24 tuary hearings would be held on .epte st, 2nd and 3rd, 25 and again on December 8th, 9th cnd 10th; is that correct, 1
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81 0 1 gentlemen?
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2 MR. SHILOBOD: yes.
3 MR. Mc CLAREN: Yes.
4 MR. RUSSELL: Yes.
5 JUDGE CASEY: That's now agreed.
6 Now, before we started the preliminsry conference 7 this af ternoon, Mr. Russell handed a document to the Adminis-a trative Law Judge, which is entitled "Prehearing Memorandum 9 on Behalf of Metropolitan Edison Company, Pennsylvania Electric to Company and General Public Utilities Corporation..
11 That document, which consists of nine typewritten
() ) 12 pages in the body of the prehearing memorandum, signed by 13 Mr. Russell, as Counsel, and dated November 14, 1980, also 14 contains some appendices -- or one appendix, I believe, which 15 is referred to as Appendix A.
16 Copies of the prehearing memorandum sumitted by the 17 Respondent utilities has been distributed this af ternoon to 18 Mr. Dennis Shilobod, who appears on behalf of Johnstown Area 19 Regional Industries, Incorporated.
20 Mr. Shilobod has also presented his own prehearing 21 memorandum -- if that's the way it's labeled -- prehearing 22 s ta tement , which appears to be a series of 25 numbered para-fs 23 graphs, which ara in the nature of questions or interroga-d) 24 tories in connection with this proceeding.
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l I 1 plans to call two witnesses, in his portion of the case, Mr. llh 2 Frank R. Posette, of Chesterfield, Missouri, Mr. Charles 3 Kuncl, Jr. , of Johnstown, Pennsylvania, who is with Johnstown 4 Area Regional Industry.
5 He also indicates that additional witness might be 6 called, depending on Penelec's direct case.
7 Now, Mr. Russell, in hurriedly reading through the 8 body of your prehearing memorandun, I see just one witness 9 mentioned by name, and that's Mr. Herman Dieckamp, the Presi-10 dent of General Public Utilities Corporation, plus a corporate 11 secretary or assistant secretary may be called to identify and 12 authenticate certain documents relating to the formation of t 13 proposed General Public Utilities' nuclear corporation.
14 MR. RUSSELL: At Pages 8 and 9, we make reference to 15 W. A. Verrochi --
16 JUDGE CASEY: I'm sorry.
17 MR. RUSSELL: -- and Mr. Donofrio --
la JUDGE CASEY: Mr. Verrochi, who is -- what's his 19 title?
20 MR. RUSSELL: Presently, President of Pennsylvania 21 Electric Company.
22 JUDGE CASEY: -- the current President of Pennsyl-23 vania Electric Company.
24' MR. RUSSELL: That's right.
25 JUDGE CASEY: Mr. Donofrio is --
COMMONWEAL.TH REPORTING COMPANY 17171 761 7150
83 1 MR. RUSSELL: Presently, the Controller of Pennsyl-2 vania Electric Company.
3 JUDGE CASEY: -- Controller of Pennsylvania Electric 4 Com pa ny.
5 MR. RUSSELL: And we've also indicated that, in the 6 event that the Commission does not submit the TB&A final report ,
7 that we would undertake to do so.
8 We have not as yet identified the participants in 9 the TB&A study whor. se would have to call to identify and to qualify that document.
11 JUDGE CASEY: All right.
(~s 12 MR. RUSSELL: We've indicated that this has been in s
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13 an awful hurry and this is our best judgment at this moment.
' ~
14 We would like to reserve the right to '
reserve the]
/
15 right)to make such additions as the circumstances may require 16 as we get ready for the hearings.
17 Now, if we do make any changes, we'd certainly notify 18 the parties at the earliest possible date.
19 JUDGE CASEY: So it appears that you'd be calling 20 three. witnesses; is that correct?
21 MR. RUSSELL: Well --
22 JUDGE CASEY: Unless you decide to accept the respon-23 sibility for putting the TB&A report into evidence.
O) s/ 24 MR. RUSSELL: Three witnesses plus possible corporate i 25 secretaries, to identify documents, i
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(' JUDGE CASEY: And corporate secretaries, toidentifylh 2 documents.
3 MR. RUSSELL: Yes.
4 JUDGE CASEY: In looking at the caption, for the 5 moment, in what order would you proceed in your case? What 6 matters would you take up first?
7 MR. RUSSELL: Well, maybe, first of all, I guess one a of our problems is the Commission's Staff position.
9 I did talk with Mr. Mc Claren this morning, and the to Staff remains with the view that it is unable to present the 11 TB&A study and witnesses.
12 Is that correct? ,
13 MR. Mc CLAREN: That's correct, both unable and un-14 willing to. We believe it's a proper position for the Staff, 15 to be critical of the proposed merger to assist in developing 16 a record in whatever way we are able to.
l 17 It would be inappropriate for us to, in effect, take
! 18 a position, by sponsoring them - and, as I mentioned in the 19 preliminary conference, we neither have the budget for it, nor l 20 have been authorized by the Commission to do so; so our posi-l 21 tion is we will not present the TB&A management consult 1nts as l 22 witnesses.
I l 23 JUDGE CASEY: All right.
Well, in those circumstances, subject 24 MR. RUSSELL:
25 to our ability to identify and have available the TB&A t
COMMONWEAL.TH REPORTING COMPANY 47171 761 7150 l
o 85 I witnesses, it would be our suggestion that we would proceed 2 with them first of all, because their testimony cuts across 3 several of the issues in several of the proceedings.
. 4 JUDGE CASEY: All right.
5 MR. RUSSELL: The management investigation, in 6 general, also touches upon the GPU nuclear operating agreement 7 and also touches upon the proposed combined management agree-8 ment.
9 So if it would be of any help in scheduling, we 10 would suggest, subject to that problem of availability of the 11 witnesses, that we list TB&A witnesses for December 1st and 12 2nd. ,
13 We would have Messrs. Verrochi and Donofrio available 14 as back-up witnesses, to occupy hearing time, if there are 15 problems in getting those witnesses, or they don't occupy the 16 two days, for example.
17 Mr. Dieckamp will not be available until the 3rd, 18 we propose to have him available then.
I 19 JUDGE CASEY: All right.
I 20 MR. RUSSELL: And we'd again have Messrs. Verrochi 21 and Donofrio available as back-up witnesses, to help occupy the 32 time.
23 That's the best suggestion we could make at this
) "4 moment, with respect to the first three days of hearing.
25 JUDGE CASEY: Mr. Shilobod?
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1 MR. SHILOBOD: If Your Honor please, severalthings.lh 2 First of all, for us to be able to appropriately 3 deal with the witnesues from TB&A, I respectfully request that 4 we advised, substantially in advance, as to who they are and, 5 specifically, what portions of that study they are responsible 6 for.
7 I had requested in our earlier meeting that we be -
8 advised not only of the name of the person who may come in and 9 sponsor the report, generally, but we wanted to know who 10 gathered the infornation for the work, who gathered the work 11 produc t , who dealt with the issues that were -- for which 12 conclusions were made in the report.
I 13 We don' t have that yet, but I think that if we're 14 going to come in buying on a report the size of the TB&A manag 15 ment audit study and have to guess, at that time, where we're l 16 going to be cross-examining, it's going to be very difficult 17 to deal with the issues legitimately.
I 18 Aside from that issue, I think there are some possi-19 bilities for us to short-cut some of these hearings with 20 respect to GPU Nuclear.
l l
1 21 I don't have the operating agreement with respect 22 to that particular company; I'd like to have it.
23 Aside from that, I indicated in our earlier meeting
) 24 that Penelec never was in an operating position with respect i
25 to nuclear facilities, j k
COMMONWEALTH REPORTING CoMPdNY 17171 761 7150
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([) ~ 1 JUDGE CASEY: That's correct.
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2 MR. S!!ILOBOD: That was handled through Met-Ed, and 3 now this is a situation from what appears to us to be sLiely a 4 case where Met-Ed is transferring its responsibilities for 5 operating a nuclear plant, away from itself, to this nuclear 6 operating company.
7 If that's the case,- I'm not sure that we are going' to j 8 take a ' stand, one way or another, with respect to the GPU 9 Nuclear Corportation.
10 If that is so, we would substantially short-cut the l
l 11 hearing time and, perhaps, not have to deal with oral testimony l
(}' 12 13 on that issue.
MR. RUSSELL: I think the Judge would need a factual 14 r ecord , in order to make a recommendation on --
l 15 JUDGE CASEY: I definitely need a factual record, 16 and --
17 MR. RUSSELL: We can, perhaps, abbreviate it, but I 18 don't think we can eliminate it.
19 JUDGE CASEY: If the opposing parties don't have any I
l 20 evidence to present in that connection, you would have to l
21 develop something through crcsk-examination, if you slipped e I
22 that out.
I'm sure that fir. Mc diaren will have some questions
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25 Advocate might have questions, and the Court might have COMMONWEALTH REPORTING COMPANY (7171 761-7150
88 1 questions in that connection.
2 So we will end up with some material -- but you're 3 not going to take any position with respect to that affiliated 4 interest agreement at this time?
5 MR. SHILOBOD: We have not yet, because we saw no 64 reason to, at this point.
7 I'm suggesting that perhaps the supporting evidence 8 for the GPU Nuclear Agreement, perhaps, could be submitted in 9 written form, as soon as possible, and simply authenticated on 10 the record, to avoid taking up hearing time.
11 JUDGE CASEY: To expedite and shorten the direct 12 testimo ny, in that connection,. is that what you're saying?
13 MR. SHILOBOD: That's correct.
14 JUDGE CASEY: Was Mr. Dieckamp going to testify with 15 respect to that matter, as well, Mr. Russell?
16 MR. RUSSELL: That was one of the subj ec ts , Your 17 Honor, that Mr. Dieckamp was goirg to cover, the reasons for 18 the formation of GPU Nuclear, touching, among other things, 19 upon the Kemeny Report, to which you made reference last week.
l 20 The Rogovin Report also touched on it, and the consideration 21 within GPU itself, in support of it; so that's one of the areas 22 he would touch on.
23 JUDGE CASEY: All right.
24 MR. RUSSELL: I don't thinkhewouldhavetodoso,lhf 25 necessarily, at great length.
CoMMONWCALTH REPORTING COMPANY (7171 761-7150 i
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1 JUDGE CASEY: With respect to Mr. Shilobod's first 2 observation with respect to the TB&A report, that poses a 3 little problem in my mind, because'it depends on how that 4 management audit report is assembled.
5 If the TB&A consulting team, perhaps even the Commis-6 sion's own auditors, ' accepted information and documents, from 7 the offices of the company and simply assembled this together e in report form, and made some recommendations based on infor-9 mation that was prov.ded to them, perhaps something might be 10 gained by questioning or cross-examining the officers of the l 11 company that supplied'the information.
12 Were you thinking o.f cross-examining the members of
( }) 13 the consulting team, the consultants' own firm, as to why they 14 arrived at certain conclusions, or things of that nature?
15 MR. SHILOBOD: Or how they managed to reach certain 16 conclusions and where they got the information that they 17 utilized .
18 MR. RUSSELL: Well, Your Honor'--
19 JUDGE CASEY: My brief inquiry into the problem of i
20 the report and how it gets into evidence -- I heard something --
21 it's nothing more than second-hand informations -- that part of 22 the consideration for doing the audit and receiving the $700-23 some odd thousand, was that the consulting firm would make O-) 24 witnesses available from their audit team for any Commission 25 proceedings involving the report.
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90 1 Mr. Mc Claren has already said that there's a lack 2 of money for the Commission Trial Staff to call any of these 3 people and, aside from that, the Commission Trial Staff does 4 not wish to sponsor this report, in .sny event.
5 MR. Mc CLAREN: Yes.
6 JUDGE CASEY: So if you have that authority at your 7 disposal, to call these people -- and I don't know whether you 8 had intended to or not; apparently, you had not intended to g call any --
10 MR. RUSSELL: Well, our first thought was that they 11 would be called by the Staff. Now that's not in the cards; 12 so, for reasons that we stated very briefly in our memorandum, is we think that the report does represent a body of evidence th 14 should be before Your Honor in this proceeding.
15 As we understand it, in the organization of the 16 flanagement Audit Task Force of TB&A, there was one chap, Perry l
17 Wheaton, who had overall supervision of the project.
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18 We would endeavor to have him available to deal with j n k 19 the situation, in an overally sense.
1 l 20 In addition, we would endeavor to have available one 21 John Wicker, who functions specifically in the combined manage-ii !
22 ment portion of the audit and report. I 23 Depending upon the ability of Mr. Wheaton to deal I
~-') 24 with sufficient of the specifics of the GPU Nuclear matter, wj 25 may not need a third, but if there are some problems about his
! i 1
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u 1 ability to cover it in sufficient detail, we may need a chird i
2 member of their team, Dennis Shoemaker, to cover the specifics 3
of the GPU Nuclear situation, if necessary.
4 Those would be the three that we would undertake to 5
obtain to cover the matter, generally, and with greater details s into the specifics.
7 MR. SHILOBOD: May I make an inquiry, Your Honor?
8 JUDGE CASEY: Yes.
~
9 MR. SHILOBOD: Is Mr. Wicker the only individual who 10 specifically gathered the information for the report on the -
11 combined management recommendations?
() -,
12 MR. RUSSELL: He's the one who supervised the com-la bined management portion of the audit and report.
14 MR. SHILOBOD: And were there other people, other 15 than him, that gathered the information?
16 MR. RUSSELL: I think so, yes.
17 MR. SHILOBOD: Is he the one who is responsible for 18 all conclusions in that report with respect to the combined 19 management, and later approved by his superiors?
20 MR. RUSSELL: I think, to get a final definitive 21 answer of that, you'd have to place the question to Mr.
22 Shoemaker, but it's our understanding --
23 -
MR. SHILOBOD: Excuse me -- do you mean Mr. Wicker?
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~s) 24 MR. RUSSELL: I'm sorry -- Mr. Wicker. {
t 25 MR. SHILOBOD: All right. l l
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( 1 MR. RUSSELL: But, I mean, it's our understanding g 2 that Mr. Wicker was the one who played the lead role in that 3 area and would be able to state that it was his conclusions 4 that were reflected in the final report section on management.
5 MR. SHILOBOD: And one last question:
6 Would Mr. Wicker be presenting testimony above and 7 beyond authenticating the report itself?
8 MR. RUSSELL: I think we have him -- and, again, 9 this is without prejudice, because we haven't yet had a chance to even ; o speak with him, much less work out an outline of 11 testimony, but it seems to me it would be rather narrow to call 12 him here simply for the routine. task of identifying a document.
13 I think some genuine interest would be served by 14 having him give a little detail as to his experience in the
~
15 matter, and if he has any further comments to add which may be 16 of relevance to this proceeding, I would no problem in having 17 him state whatever it may be; but, at this point, I~have no 18 way of telling.
19 MR. SHILOBOD: Well, the reason I asked that is 20 because that portion of the report can take up a substantial 21 amount of time and information, and if we could get his testi-22 many in advance, it certainly would expedite these hearings.
23 MR. RUSSELL: Well, if that's within the realm of
~) 24 human possibility, we certainly will be glad to expedite the llh 25 hearings.
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1 JUDGE CASEY: Now, you've mentioned the names of 2 three individuals connected with the TB&A report, including 3 the overall supervisor.
4 MR. RUSSELL: Yes.
5 JUDGE CASEY: I'm looking at their preliminary report 6 which was prepared for the Commission on June 26th, which says 7
the PB&A project team of six consultants, six, has substantial 8 experience and expertise in each area of review.
9 "Each consultant was assigned responsibility for 10 reviewing the functional area in all three companies.
11 For example, the same consultant reviews the trans-12 mission and distribution operations in Pennsylvania Electric Oj 13 Company, Metrolitan Edison Company and GPU Service Corporation."
14 Do you have a copy of this, by any chance?
15 MR. SHILOBOD: Yes, I believe I.do, Your Honor.
16 JUDGE CASEY: All right. This is an over-view of 17 how the report was assembled and --
18 MR. SHILOBOD: It doesn't specifically mention the 19 names of the individuals involved, neither does it mention, at 20 all, the names of the specific company representatives in each 21 company that dealt with TB&A in the compilation of this infor- l 22 mation.
23 , r d like to have that, too, particularly with respect '
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25 those individuals. j
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l I 1 MR. RUSSELL: Uell, fror. our understanding, the 2 representatives of TB&A working on the combined management 3 phase part of the report spoke with quite a number of the 4 personnel; in other words, the report treats upon transmission 5 and distribution systems in operation.
6 They spoke with the Penelec and Met-Ed vice presidents 7 in charge of T&D.
8 They spoke with vice presidents in charge of genera-9 tion for each of the two companies.
10 They spoke with, I would say, Mr. Verrochi, President 11 of Penelec, and Floyd Smith, the new Vice President of Met-Ed, 12 in connection with operations, matters, in general. l I J
13 They dealt with the accounting people, with respect 14 to accounting aspects of the matter.
15 So they covered the thing, in detail, in all phases 16 of operations.
17 So, while we had, for sample -- Mr. Kelly, here, for 18 example, was a liaison between the system, as a whole, and the 19 TB&A people, and he got down to details with each of the func-20 tional groups in the functional areas.
21 MR. SHILOBOD: Is there a log-of who met with whom?
i 22 MR. RUSSELL: Mr. Kelly says there's a record of all j i
23 interviews.
l 24 Perhaps you can send that to me.
MR. SHILOBOD:
25 I don' t see any reason why the record would have to f I CoMMcNWEAL.TH REPORTING COMPANY 17177 761-7150
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2 MR. RUSSELL: Well, I think we could make it available 3 for inspection and copying.
4 MR. SHILOBOD: Well, I think if we could obtain that 5
information, we could --
6 JUDGE CASEY: No. We don't have the time.
7 Again, in that preliminary report, if you'll look at 8 Page 3, Mr. Shilobod -- apparently, these are documents -- I 9 don't know whether that's an all-inclusive list that they 10 examined -- and then there's a general statement that all key 11 personnel of the three companies were interviewed.
12 So that could ,be somewhat lengthy.
/}
13 MR. Mc CLAREN: Is this from the final management 14 report?
15 JUDGE CASEY: No. This is from the preliminary 16 report.
17 MR. Mc CLAREN: Oh, all right.
18 JUDGE CASEY: How they approached the task.
19 MR. Mc CLAREN: All right.
20 JUDGE CASEY: It's not the final report, where they 21 supplemented that information and how they went about conduct- t 22 ing the managment as described in this document.
23 MR. Mc CLAREN: Okay.
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- ) 24 JUDGE CASEY: Which, by the way, is part of the 25 Commission's document folders in these proceedings.
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96 1 That's how it came into my hands. Itwasalready.idlh) 2 the files.
3 MR. SHILOBOD: I believe I have this -- I don't a recall seeing this, specifically, but I believe I have it.
5 JUDGE CASEY: All right.
6 MR. SHILOBOD: This may be helpful.
7 JUDGE CASEY: Mr. Dieckamp would be your key, or a lead witness? He's the individual that rould have knowledge 9 of all of these proposed matters?
10 MR. RUSSELL: He's the Chief Operating Officer of the 11 GPU system.
12 JUDGE CASEY: The GPU, system.
13 MR. RUSSELL: Yes.
14 JUDGE CASEY: I know there are references in this 15 repo rt , and several other documents, that the Chairman of the 16 Board was the one who made the initial proposal, at the -- I l
l 17 think it happened at the time in the public meeting on January l
18 17 th or 18 th.
19 Is Mr. Kuhns going to be a witness in this case?
20 MR. RUSSELL: We had not contemplated having Mr.
21 Kuhns.
l 22 Mr. Dieckamp is the Chief Operating Officer, and I 23 think he would be the one to cover the operational picture, ;
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/ 24 I think, in the overall sense.
i 25 JUDGE CASEY: Was Mr. --
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97 1 MR. RUSSELL: The Chairman has certain standings, to 2 make announcements, and so on, and we have no problem in having 3 Mr. Kuhns testify, but Mr. Dieckamp, I think, would be the 4 logical witness to cover the operational phases of this.
5 JUDGE CASEY: All right. Who was President of the 6 GPU system when the initial decisions to begin construction of 7 the nuclear facility at Three Mile Island, whatever year that a was, '70 '72?
9 TMI went on line when? In '74?
10 MR. RUSSELL: September of '74.
11 JUDGE CASEY: September of '74. -
I 12 MR. RUSSELL: My recollection -- and you'll have to 13 take it subject to check -- is that Mr. Kuhns became President 14 of GPU in about 1967.
15 It seems to me that the earliest preliminary investi-16 gation and determination with respect to TMI-l may very well 17 have been made prior to the time he assumed the Presidency.
18 Mr. Tegen was President. prior to Mr. Kuhns becoming 19 President.
20 JUDGE CASEY: The gentleman who was here last week -- ,
I 21 his name is in the transcript, but I forget what it is -- l 1 i
22 !!R. RUSSELL: Mr. Hafer.
23 JUDGE CASEY: -- Mr. Hafer --
p'/~ 24 MR. RUSSELL: That's right.
25 JUDGE CASEY: -- who is the Vice President of GPU i !
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1 Service Corporation, made some reference to the fact that the 2 decision to construct a nuclear plant in New Jersey was changed ,
3 resulting in the nuclear plant in Middletown, or Three Mile 4 Island, Pennsylva nia; is that correct?
5 MR. RUSSELL: That's TMI-2.
- 6. JUDGE CASEY: Oh, TMI-2?
7 MR. RUSSELL: Yes.
8 JUDGE CASEY: Okay.
9 MR. RUSSELL: TMI-l was a Pennsylvania unit from the 10 outset.
11 JUDGE CASEY: When did Mr. Dieckamp beccme President 12 of GPU Corporation? ,
13 MR. RUSSELL: It was somewhere in the earlier '70's.
14 JUDGE CASEY: All right.
15 MR. RUSSELL: He had been Vice President for some 16 years, and became President when Mr..Kuhns became Chairman.
17 JUDGE CASEY: Whc is the current President of the 18 Metropolitan Edison Company?
19 MR. RUSSELL: Mr. Floyd J. Smith is Senior Vice 20 President, and Mr. Dieckamp is the Acting President, after --
21 JUDGE CASEY: Mr. Walter Creitz?
22 MR. RUSSELL: -- Creitz had resigned.
23 JUDGE CASEY: Had resigned; all right. What was the 24 effective date of Mr. Creitz's resignation, if you recall?
25 I think we covered that in your MR. RUSSELL:
COMMONWEAL,TH REPORTING COMPANY (717) 761-7150
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( 1 deposition of Mr. Dieckamp.
2 JUDGE CASEY: That's right, we did.
3 I'm glad you brought that subject up.
4 At the preliminary meeting last week, Mr. Shilobod, 5 we discussed the posture of the discovery that had been taken 6 which would be relevant to these cases, and you wanted that 7 information in the record, completely; is that correct?
i 8 MR. SHILOBOD: Yes, Your Honor.
9 JUDGE CASEY: Have we made any attempt -- I'm sure 10 you gentlemen have copies of the depositions; is tha.t correct?
11 MR. RUSSELL: Oh, yes; I got a copy this morning.
12 JUDGE CASEr: For the first time?
O. . ;
- 13 MR. RUSSELL
- As a matter of fact, I read it on the 14 way up here, and I would say --
15 JUDGE CASEY: When and where were those depositions 16 taken?
17 MR. RUSSELL: They were taken on April 3rd of this
~
18 year, in Parsippany, New Jersey.
19 JUDGE CASEY: All right.
20 MR. RUSSELL: I would say we would pose no objections 21 to it. I think some of it could be said to be irrelevant, and t
22 so on, but instead of going through picking and choosing, I'd 23 say, let it all hang out. .
/ 24 JUDGE CASrfi: April 3rd, in Parsippany.
25 MR. RUSSELL: Yes.
COMMONWEALTH REPORTING CCMPANY 17171 761-7150 .
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~' So did it go into the Commission's f
1 JUDGE CASEY:
2 testimony, or it's not in the Commission's folder?
3 MR. SHILOBOD: Your Honor, after the completion of 4 the hearings, we had requested leave to conduct the discovery, 5 because the issues that we raised had not been dealt with 6 specifically.
7 T.he Commission gave us leave to conduct the deposi-8 tion, in the nature of discovery. There was never any use of 9 it at~ any prior proceedings.
10 I don't believe the Commission ever had any reason 11 to refer to it, one way or another.
12 I would agree with !!r.. Russell's characterization i
13 that some of it may not necessarily be relevant, ao 30 often 14 happens in discovery depositions, but I think it's useful, 15 overall.
16 JUDGE CASE's What Court Reporting Agency covered 17 the deposition?
18 MR. RUSSELL: It was a Mew Jersey organization, 19 J. H. Buchrer & Associates, Newark, New Jersey.
20 JUDGE CASEY: Ampersand, you're saying?
I 21 MR. RUSSELL: Ampersand, the symbol for and. !
22 JUDGE CASEY: Okay -- & Associates, Newark, New f l
23 Jersey.
~/ 2I MR. RUSSELL: Yes.
25 JUDGE CASEY: Is there a ZIP Code? ;
COMMONWEALTH REPORTING COMPANY (717 761 '150 .
101
'# 1 MR. RUSSELL: No, there doesn't appear to be any j
2 here.
3 JUDGE CASEY: Buehrer was actual Reporter, J. H.
4 Buehrer?
5 MR. RUSSELL: That was the firm --
6 JUDGE CASEY: Oh.
7 MR. RUSSELL: -- J. H. Buchrer & Associates.
8 JUDGE CASEY: Okay.
9 MR. RUSSELL: The actual Reporter was Anthony 10 Petruzzelli, P-e-t-r-u-z-z-e-1-1-i ., Notary Public and Certified 11 Shorthand Reporter of New Jersey.
12 JUDGE CASSEY: Two "z.'s" and two "l's?"
(
13 MR. RUSSELL: Yes. .
14 JUDGE CASEY: Petruzzelli.
15 MR. RUSSELL: Right.
16 JUDGE CASEY: If we're going to get it into the 17 record, I suppose we'll have to have copies for the Conmission'.s i 18 file room. ,
19 MR. SHILOBOD: I believe the originals may have been l 20 sent to the Commission; I'm not certain. I can make an inquiry 21 and see.
22 JUDGE CASEY: What was the docketed proceeding that 23 the discovery was taken?
')) 24 MR. RUSSELL: 308, I-308. ;
25 JUDGE CASEY: How, Mr. Dieckamp had overall j l
i COMMONWEALTH REPORTING COMPANY (717) 761 7150 l
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4
102 I I 1 responsibility for Met-Ed's capacity, as Operator of the TMI J
2 Plants; is that correct?
3 MR. RUSSELL: He was Chief Operating Officer of the 4 GPU system.
5 JUDGE CASEY: So any vice president in charge of 6 generation would have been responsible to Mr. Dieckamp?
7 MR. RUSSELL: Yes, sir, that's correct.
8 JUDGE CASEY: That would be the chain of command.
9 MR. RUSSELL: Yes.
10 , JUDGE CASEY: Anything further on the Theodore Barry 11 & Associates report?
12 I think we can get the identities of the individualj l J
13 who drew up the report, the six people, and perhaps the chief 14 company of ficials, but if we get down in to middle management 15 personnel, we'll never complete this proceeding.
16 MR. SHILOBOD: I'd like to reiterate that if we can 17 get an advance copy of the testimony -- that is, in prepared 18 form -- it certainly would expedite --
19 JUDGE CASEY: Mr. Kelly said either the company or 20 TB&A had the log of the officials that were --
21 MR. KELLY: Interviewed.
22 JUDGE CASEY: -- interviewed.
23 MR. KELLY: Yes.
24 And that's available, or an O
JUDGE CASEY: Okay.
25 excerpt or copy of it. ;
i CoMMoNWEAt.TH REPORTING COMPANY (7171 761 7150 '
)
103 O ,
1 All right. I think you said, Mr. Russell, at the a l
2 last conference, that you might not be able to come up with ,
9 3 everything that Mr. Shilobod has in mind, that it might require l 4 another week after the prehearing conference, or perhaps even ,
5 up to the first evidentuary hearing.
6 Is there anything additional that you weren't able 7 to assemble in your prehearing memorandum that you intend to 8 provide Mr. Shilobod and the parties?.
9 MR RUSSELL: In terms of witnesses or areas of i 10 testimony?
11 JUDGE CASEY: Anything of that nature --
12 MR. RUSSELL: Well,,I think --
13 JUDGE CASEY: -- areas of testimony, prepared --
14 MR. RUSSELL: -- s e have g iven , in the memo, what 15 we have been able to assemble up to this point. I have not 16 had a chance to sit down with Mr. Liberman, General Counsel 17 for GPU, or with Mr. Jollet: --thet'sJ-o-1-1-e-s--of(thhis 18 firm, who will be appearing here on behalf of GPU at the hear-19 ings.
20 They are working on or trying to undertake to work l 21 on the draf t -- if you want testimony from Mr. Dieckamp -- so 22 I haven' t had a chance to get, in full, all of the views with 23 respect to ,the matter, but it seems to me what we have set '
\(~)-
/ -/ 24 forth here is the basic outline, as I would see it, at least, !
25 as to evidence we would propose to put in in our case-in-chief-f CoMMoNWEAt.TH REPORTING COMPANY (7171 761 7150
_ _.-. . . , - . J r'
104i i
1 JUDGE CASEY: All right. lll 2 MR. SHILOBOD: If Your Honor please,-I don't knew
.I 3 whether you have dealt in, directly, with this list of infor-4 mation or documents that Mr. Russell indicates that he has.
5 He indicated that he listed the relevant items, and 6 when I hear that termi I'm somewhat worried about what is 7 deemed relevant and ,what isn' t relevant.
8 Was there some specific standard as to what was lef t S out --
10 MR. RUSSELL: Mr. Shilobod, I had Mr. Seltzer, of 11 our office, go out to Johnstown to get together whatever could 12 be found in any kind of definitive form, other than handwritte 1
13 notes and that kind of thing, that related to the combined j 14 managemant proposal, and the result of sif ting through that j i
t 15 turned up these list of things which do relate to the situation l.
I 16 There was no editing and deleting of whatever we ;
17 thought we might not like somebody to see.
I 18 I'm sure you will find, in going through these list i
19 of things, if you get to the point of going through them, wherd 20 ideas were changed and things were shif ted, and so on. It's 21 not a straight-line proposition. It's a developmental process 22 in working up the situation.
23 I think what I shou.ld throw in -- I think, for the 3
,i 24 record, I should -- our view as to what is relevant in the W 25 The issue is combined management matter is the agreement.
COMMONWEAt.TH REPORTING COMPANY 87171 761 7150
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is that agreement reasonable and is it in the public interest.
-)
2 I think, really, whether it was formulated in a year 3 or a day, what may or may not have been the motivating reasons 4 aren't really relevant.
5 The real relevant issue is looking at the four corner s 6 of the agreement as filed in this Commission, is that agreement 7 reasonable and in the public interest.
8 So we have provided this information pursuant to the 9 request of the conference; and, for the record, I would say, to having done so, we think the matter is not relevant, either 11 from the point of your substantive evidence and is not relevant
(~ 12 so much to be available for this purpose of discovery.
Q,}#. 3 13 JUDGE CASEY: All right, let me focus in on that for 14 a minute.
15 You may have a good lawyers' argument there, about a 16 document speaking from its four corners and that anything which 17 underlies or anything. which is perspective or speculative is is not relevant, but, for instance, looking at your documents of 19 the dates leading up' the agreement, I recall one remark that i 20 appeared in the TB&A Associates preliminary report to the ,. ,
21 Commission, that, at least at that time, the company had not f 22 concentrated a great deal on the impact that these proposed ;
1 23 agreements would have on Pennsylvania ratepayers.
1 (s-)- 24 Most of the accent was upon what would happen insof arl l 1
25 as the internal reorganization of the companies were concerned. '
COMMONWEALTH REPORTING COMPANY 17171 761 7150 _ . .
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106l l
1 And in looking at some of the items on this list, I !
9 2 don't know who Mr. F. J. Smith is, that drafted the organiza-3 tion plan, whether that's the beginning of the whole idea that 4 occurred on January -7, 1980.
5 For instance, not 10 days later, 1-15-80, " Survey of a Mortgage Dif ferential Programs in Connection With Possible 7 Employee Transfers," where your concern there is that if a officers of Penelec and middle management people were to be 9 transferred to Reading, Pennsylvania, and unay happen to have 10 an 8 - 1/2 percent mortgage in Johnstown and they have to buy 11 a new home, at a 10 or 11 or 12 percent interest, is the compan 12 going to pay the difference.- -
lh 13 Isn't that what a management mortgage differential 14 program is?
15 MR. RUSSELL: My recollection of that was there was 16 something in the file which showed various discussions of this 17 problem that had been accumulated over a period of time in the 18 past, and it was there and I thought I'd just put it on the 19 table as >ne of the items that was there.
l 1
20 JUDGE CASEY: Well, it pertains to the move, but I 21 mean the concern that's reflected by that document -- and it's 22 a justifiable concern; any company has to be able to accommcdate 23 and please its key people, but that's what that matter deals 24 with. !
i 25 MR. RUSSELL: Yes. !
l COMMONWEALTH REPORTING COMPANY 87171 761 7850
107l i
I l
Is that right or wrong? l 1 JUDGE CASEY: ;
i 2 MR. RUSSELL: Yes.
3 JUDGE CASEY: All right.
4 MR. RUSSELL: But I guess, really, what I would have 5 to say is that -- and, of course, I don't want to testify, 6 but, certainly, our position is and we would propose to prove 7 that the entire motivating force behind this entire proposal 8 was service and rate-related matters for the benefit of the i
9 ratepayers. ;
i 10 JUDGE.CASEY: If that's so, why wasn' t this whole 11 subject broached at some time in the past, before the Three 2
(} 12 Mile Island accident? ,
13 MR. R,USSELL: Well, I think in the deposition of 14 Mr. Shilobod, that Mr. Shilobod took of Mr. Kuhns and Mr.
divm W J 15 Dieckamp, would be, I think, elimina ting , in a number of ;
16 respects, with respect to that; for example, you had a number 17 of things that, sort of, coincided.
18 You had the emphasis, with considerable force behind 19 it, to take some action with respect to the nuclear group, to ,
l 20 pull those pieces together and put them in nuclear, which would'1 21 mean that Met-Ed's generation section would be cut down to a f 22 fraction of what it had previously been; should that be built 7,
23 up as a separate unit, or would that be reason to consider a ;
(_/ ~'j 24 consolidation of that function with some of the Penelec group. j i l
i 25 You had Mr. Creitz's departure, which lef t .a . vacancy l COMMONWEALTH REPORTING COMPANY (7171 761 7150 . . . _ _ . _ , , _
I i 108 I at the head of Met-Ed.
/
2 The question is, should a separate president be i 1
3 brought in or appointed from Met-Ed, or would this be an i l
4 occasion to maybe look at some alternatives.
5 So there's a group of things like that, that coin-6 cided at the same time, which led to this proposal of doing a 7 m6re " extensive job than might otherwise have been done.
8 Again, Mr. Dieckamp can bring out the fact that the 9 matter o combining operations had a'ver3; obvious precedent in 10 New Jersey, the New Jersey segment of GPU operations, was 11 something that is intermittently reviewed, and the occasion 12 arose which gave rise to their decision, or this is the time lll
-- ) l 13 do something more than just patch here'and there, or do a i i
1 14 f airly concerted job of realignment of the organization.
i 15 JUDGE CASEY: This is th'e kind of thing that you !
16 intend to cover in your direct case, present testimony -- l 17 MR. RUSSELL: I think a good bit u- it is really .
18 !
covered in the deposition, and I think we would try to put it 19 in, perhaps, a more cohesive and coherent way in our direct 20 case.
21 JUDGE CASEY: Did the Kemeny Commis.nion report have 22 any bearing at all on these management decisions that were 23 made?
) 24 MR. RUSSELL: Well, the Kemeny certainly had a bear-25 ing on GPU Nuclear, doing something with respect to the nuclear COMMONWEALTH REPORTING COMPANY (717n 7617150
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I
, 1 group; and that was one of the things that triggered this fur-2 ther proposal on broader than just the nuclear aspects.
3 MR. SHILOBOD: If Your Honor please, Mr. Russell l
4 indicated that he would attempt to present evidence to prove 1
5 the motivating force behind what is being done.
6 I think that, in and'of itself, is an adequate 7 answer in opposition to his position that no one should look 8 behind the four corners of the agreement that- he's presenting i
i 9 for approval.
10 On the one hand, he, himself, admits that the moti-11 vating force behind that agreement, from his perspective, is
% 12 relevant. .
.g 13 .
I submit for us to also delve into that motivating 14 force, it's going to be necessary for us to look behind the is four corners of that agreement, as well.
16 Mr. Kuhns -- I'm sorry -- Mr. Russell answered me, .
17 whenIaskedastowhetherornottheseissues--ifthislistf f i
18 here included all items, he indicated that he wasn't attempting; 19 to hide anything - and I didn't say that he was; I want that 20 clear on the record -- what~ I do say is that whenever I'm an i
21 advocate, what I think is relevant, in good faith, may very 22 well be dif ferent from what someone else may think is relev,:.e..
23 tiow , that's the basis on which I made my inquiry, '
( ') 24 and I hope that it has been answered in the f ashion that I am l 25 unders'tanding it.
CoMMcNWEAt.TH REPORTING COMPANY (7171 761-7150
110 1 As I understood Mr. Russell's answer, he indicated 2 that everything that was in the file, other than wha t amounted 3 to scratch pads and longhand notes that were not really in any 4 type of formal presentation and had no real bearing on anything 5 that's been presented to the Commission to date or in TB&A's 6 report, is included on this list.
7 Am I r..fht, or am I wrong on that?
8 MR. RUSSELL: Would you repeat that --
9 JUDGE CASEY: Run that past me again.
10 MR. RUSSELL: Yes.-
11 MR. SHILOBOD: Have you included on your list all the 12 documents that are in existence, other than handwritten notes ggg 13 or cursory comments, that were utilized or given to TB&A or 14 were utilized in the preparation of the annual report to the 15 Public Utility Commission, or which had a bearing on the formula-16 tion of the decision to proceed with the combined management 17 agreement?
18 MR. RUSSELL: Well, having heard it a second time, 19 I'm not sure I understand it better than I did the first time.
20 I'd say, if you're asking me whether these are the 21 only items of substance in the file that relates to matter, my 22 answer would be, yes. t
. I 23 There were untold numbers of other r ipers, correspon-i
' 24 dence between parties, in the sense of letters of transmittal O;
25 documents. j COMMONWEAL.TH REPORTING COMPANY (7171 761 7150
111 ,
t I
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I There were newspaper clippings. ;
i 2 There was all manner of preliminary drafts of this 3 propo sed .
4 For example, how was this to be presented to employ- ,
5 ees; how was this to be presented to the public; how was this 6 to be presented to the people of Johnstown. .
7 There's all manner of things that were in the file 8 that, in my judgment, weren' t going to contribute significantly i
9 or materially to the conduct of this proceeding.
10 So I go back to the point that I have taken the time 11 and made the effort and I've hauled through a mass of paper ,
12 and come up with what are the items of any substance, to my 13 knowledge, whether they are favorable or unfavorable, relating 14 to the matter.
15 MR. SHILOBOD: Mr. Russell,areallofthesemattersf 16 at the Penelec Headquarters -- I'm sorry -- are all of these 17 documents at Penelec Headquarters, in Johnstown? }
I 18 MR. RUSSELL: I'd say all of those documents plus
~
18 a bunch of other things are at my office in Reading, that I l 20 just finished going through this morning.
21 MR. SHILOBOD: All right. I would like the oppor-22 tunity to go through them myself, perhaps on Tuesday -- ,
23 MR. RUSSELL: Go through what? f
(')T-s 24 MR. SHILOBOD: To go through the documents, to see .
1 25 if __
j COMMONWEALTH REPORTING COMPANY 87171 761-7150
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112 l I i 1 MR. RUSSELL: Well, I have, you know, said for the llh '
2 record that we think that they are not relevant, either as 3 substantive evidence or they are not relevant under the rules 4 of effective discovery; so I'd like to make that objection for 5 the record.
6 JUDGE CASEY: You mean these documents that you've 7 submitted?
8 MR. RUSSELL: Yes.
9 JUDGE CASEY: The list?
10 MR. RUSSELL: Yes.
11 JUDGE CASEY: Let me ask, is this the type of thing 12 that were -- were these the actual documents which Theodore 13 Barry & Associates reviewed in connection with the proposed 14 management combination?
15 MR. RUSSELL: Well, it's ou r understanding that 16 Theodore Barry & Associates did their own audits, made up their 17 own documents and commented for or against, or very lukewarmly, i
18 with respect to the companies' proposal, at they saw fit. They l
l l
19 prepared their own documents and made their own presentations.
l l 20 JUDGE CASEY: So they may have reviewed these things, 1
21 but they may have reviewed many other pieces of material or 22 books and records or documents in the company offices? l l i 23 MR. RUSSELL: As we understand it, they did an f
24 exhaustive management audit on their own.
25 JUDGE CASEY: All of these items are peculiar to the i
COMMONWEALTH REPORTING COMPANY 17171 761 7150 !
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s 113; i,
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f^-s 1 Penelec organization in Johnstown; is that correct?
2 MR. RUSSELL: No.
i 3 JUDGE CASEY: No? j 4 MR. RUSSELL: No. Mr. Smith, for example, the very 5 first item, is the Senior Vice President of Met-Ed.
6 I'd say, certainly, more of them are Penelec origin 7 than Met-Ed, but they do represent input from both companies.
8 IIR. Mc CLAREN: Do I understand you, Mr. Russell, to 9 have refused Mr. Shilobod's request to view these documents in L 10 your office?
11 MR. RUSSELL: We have made an objection, on the I~T^ 12 grounds of relevancy, for the. record. .
% !.., i 13 JUDGE CASEY: Well --
14 MR. Mc CLAREN: Is that a refusal to allow it, or
! 15 are you going to allow it --
16 MR. RUSSELL: I say I've made an objection; we'll l 17 see what ruling is made on the objection.
i 18 JUDGE CASEY: Well, unless it priviledged material, i 19 I would permit Mr. Shilobod -- they've been listed here. They .
20 were presented to us for a purpose this morning, and to turn 21 1 around and say they are not really relevant --
22 MR. RUSSELL: They were presented as a matter of 23 information, to put them on the table.
CL) 24 We've made an objection and it has been overruled; 25 is that right?
i COMMONWEAL.TH REPORTING COMPANY (7175 761 7150 j
114 1 JUDGE CASEY: That's correct.
2 MR. RUSSELL: All right. Now, the next point Iwould somo 3 make with respect to this list is that none of the documents 4 in this list have been dealt with on a confidential basis by 5 the two companies because, among other things, .they represent 6 possible suggestions as to personnel who would be affected by 7 this matter.
8 I think we have a very legitimate interest in pro-9 tecting the companies and the employees against prejudice by 10 reason of the identity of who they may be and whether they may 11 or may not be affected by this.
, 12 MR. SHILOBOD: Well., Your Honor -- :
-1 13 MR. RUSSELL: It's in that area that we think we -
l 14 should have some privilege.
l 1
15 MR. SHILOBOD: -- with respect to the specific names 16 of employees who may be affected by the reorganization, I t
l 17 certainly will commit myself not to reveal any type of infor-l 18 mation that I might come across in going through this documen-1 l 19 tation, and note that if I deemed it relevant, I would advise i 20 Mr. Russell of that fact, and perhaps we can deal with that in !
l 21 a request to the Administrative La Tudge if it should become i 22 relevant. I 23 At this point, other than the individuals whose names C! 24 are already mentioned in applications filed with the Federal ll 25 Energy Regulatory Commission, I don't see any particular COMMONWEALTH REPORTING COMPANY (7176 761 7150
115 1 concern on my part as to whether John Smith is going to work ,
2 in one office or another. I --
3 MR. RUSSELL: I was going to add that my request did 4 not apply to t;.ase names already in the public domain.
5 JUDGE CASEY: All right.
6 MR. RUSSELL: Mainly, personnel.
7 JUDGE CASEY: Well, you know, I'll accept his oath 8 as an attorney that he would not take any priviledged informa-9 tion and leak it through the grapevine.
10 I thought maybe your concern was that these matters 11 might come up in the testimony and would, of course, become a (T 12 public record, where someone could go down to the Commission's
\ /-)
13 File Room and see what the game plan is for Met-Ed and Penelec 14 in the future. .
15 Was that your thought?
16 MR. RUSSELL: No, no. I'm prepared to take Mr.
17 shilobod's representation that he will treat them in a confiden.-
18 tial basis.
19 JUDGE CASEY: All right.
20 MR. RUSSELL: I think we're concerned about disclosur i
21 at any level, whether for hearing or leaks, or otherwise. ;
22 So we have an understanding, I think, as to how that!
23 will be handled.
/~'L/ 24 Very good.
JUDGE CASEY:
i 25 MR. SHILOBOD: Could I go through that information COMMONWEALTH REPORTING COMPANY 17171 761 7150 l .
116 I on Tuesday, Mr. Russell? gg 2 MR. RUSSELL: If there's any possibility -- I mean, 3 I have to get them in my office and pack them up.
4 There's a run leaving in the af ternoon, is it, for 5 Reading?
6 We don' t have Federal Express operating out of 7 Reading, out of Allentown. So that's the problem; the U. S.
8 Mail is not very convenient.
9 MR. SHILOBOD: Could we go off the record, Your 10 Honor?
11 JUDGE CASEY: Off the record.
12 (Discussion off the. record.)
13 JUDGE CASEY: Back on the record.
14 By the way, Mr. Russell, is this in a single file i
15 already arranged in chronological order, all of these docu- t 16 ments and --
l l 17 MR. RUSSELL: No. We could have them so arranged.
18 JUDGE CASEY: All right. l 19 MR. RUSSELL: I just went through and threw them in 20 a pile and then tabulated them chronologically, on paper, only,:
21 not in physical sequence.
22 JUDGE CASEY: What's the size, the physical dimension.
23 of this material?
4 MR. RUSSELL: Well, I think it may be a pile like llh that.
CoMMoNWEAI TH REPORTING COMPANY 47171 761 7150 .
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117I i O 1 (Counsel indicating.)
/
2 MR. RUSSELL: Gesturing six to eight inches in 3 height, for the record. j i'
4 MR. SHILOBOD: I would like to a fast pass-through 5 of those letters of transmittal, and so on, because sometimes 6 they do contain' comments that may be relevant.
7 JUDGE CASEY: What other letters of transmittal?
8 MR. SHILOBOD: Well, he indicated there were a number 9 of other matters that probably are not relevant -- and I'd say l l
10 they probably are net; however, for my responsibility, I think i 11 I really should take a look at them, the information that he
,(), .
12 has dealing with this issue. l 13 Of course, I'm going.to pay particular attention to 14 these matters that he's listed, but I want to at least go i .
l 15 through the other relevant documents -- only using the word I I l 16 " relevant" in the sense that it dealt with the issue either l I
17 tangentially or indirectly. t 18 MR. RUSSELL: Well, I suggest, Mr. Shilobod, you !
19 look at these and see what you have to say with respect to 20 these.
21 We have nothing to hide but, on the other hand, I 22 think, as a matter of principle, a fishing expedition of that l - 23 kind I don't think needs to be -- I l (s) I 24 MR. SHILOBOD: Mr. Russell, in our last meeting, I l
25 asked, specifically, for the breakdown on papers utilized to COMMONWEALTH REPORTING COMPANY (71M 7617150
118 '
l 1 prepare the portion of the annual report to the Public Utilit 2 Commission that gave an S18 million savings representation to !
3 arise out of this combined management.
4 I don't see those documents reflected.
5 MR. RUSSELL: I don' t recall that, and I don't recall 6 seeing that in the transcript that I read.
7 MR. SHILOBOD: Whether it's in the transcript or not, 8 I don't know, but I'm certain that I made the request.
9 MR. RUSSELL: I made a point of readino the trans- i i
10 cript, and I don' t remember seeing it.
11 JUDGE CASEY: This Appendix A to your prehearing 12 memorandum, was that material part of the presentation, the
-1 13 outlined presentation?
14 MR. RUSSELL: That is part of the annual review 15 presentation to the Commission. f 16 MR. SHILOBOD: If Your Honor please, it would seem !
t 17 to me that if we're going to talk about relevancy and preparing l
18 relevant items, it would have been fundamental that the back-up ,
19 information for the $18 million savings -- surely, someone 20 would have thought that was a relevant factor, that the docu-21 ments were. relevant; and that's why I'm raising the issue again, 22 Your Honor.
23 JUDGE CASEY: This same figure was repeated, the two i
' ,,4
~
components of it, in the TB&A report; is that correct?
25 MR. SHILOBOD: Yes.
COMMONWEALTH REPORTING COMPANY 4717: 761 7150
i 119 i
1 JUDGE CASEY: So I hope it wasn't obtained in a 1
2 vacuum, that there's some type of underlying study or statis- !
3 tical a nalysis, or what-have-you, that would substantiate those 4 figures.
5 MR. SHILOBOD: They were in the TB&A report and 6 referred to on several cccasions.
7 MR. RUSSELL: Well, I guess the report will speak 8 for itself. It did touch upon it, and at the moment, I don't 9 have the exact reference or comment there by TB&A with respect 10 to it.
11 I would say, in the papers I went through this morn-ing, I did not come by any breakdown of these, but I would say
(} 12 i
13 that Mr. Verrochi and Mr. Donofrio certainly will be submitting 14 testimon,y in support of whatever they thin'k the savings would 15 be. i 16 MR. SHILOBOD: If Your Honor please, I'm taking it, i
17 then, if it's not listed on this list, that either Mr. Russelli i
18 is saying that those . calculations are not relevant, or else l, 19 that they are not in a written form for us to go through. ,
20 MR. RUSSELL: I'll have the matter specifically --
21 MR. SHILOBOD: I wouldn't know how that --
22 MR. RUSSELL: -- checked , Mr . Shilobod , but, at the 23 moment, I have nothing that I have at my figertips that gate 24 I --
the calculations for those.
25 JUDGE CASEY: I think Mr. Shilobod has a very goed COMMONWEAL.TH REPORTING COMPANY e7171 761 7150
120:
i i po int , Mr. Russell. I can't visualize a corporate officer i
2 making a statement to auditors, or anybody else, in his opinion,;
I 3 or his judgment, that this proposed move, or these moves, would 4 result in a savings of S18 million.
5 There would have to be some counting or statistical 6 analysis for him to have based his opinion on.
7 And, likewise, I can't see a responsible consulting 8 firm doing a management audit that would accept the figure of ,
9 $18 million without the supporting documentation. ,
i 10 So there must be some analysis, someplace, tha t Mr .
11 Shilobod could examine.
12 MR. RUSSELL: Well,.Mr. Donofrio has just told me g i !
13 that there was something allegedly in the box that Mr. Seltzer 14 brought in, but, in all honesty, I didn' t function on it or l t
15 focus on it; I'll check it when I get back, and if it isthere,l I
16 I'll send it along to Mr. Shilobod. i 1
17 MR. SHILOBOD: If Your Honor please, thishighlightsl 18 why I asked for access to those records to be complete.
j ,
19 If something of this magnitude could have been left 20 out, I don' t know what else could have been.
21 JUDGE CASEY: Mr. Mc Claren, do you also desire the 22 opportunity to examine these documents, at the same cine?
23 MR. Mc CLAREN: I would, Your Honor, and if they are 24 ' to be made available in Harrisburg, that would be idea for the 25 Staff.
1 CoMMoNWEA1.TH REPORTING COMPANY 6717 761-7150
121 O .
1 JUDGE CASEY: All right.
2 MR. Mc CLAREN: And I would support Mr. Shilobod's i
3 request to have all of the materials that relate to the decisio'n 4 to propose a management combination.
5 I think, given the very short time that we have, 6 given the very broad nature of this kind of decision, I would 7 think, in the companies' own interest, to have public accep-8 tance of any decision in this commission, there ought to be !
9 full disclosure, at least at this level of discovery, to ;
i 10 examine all of these materials.
11 MR. RUSSELL: The TB&A references are on Pages 12 6, XIII and XIV. I
()1
~
l 13 JUDGE CASEY: Is it a conclusion, though -- I mean, 14 do they go into any detail explanation as to where the proposed.
15 savings are to be derived, what the formula for achieving these 16 savings happens to be?
17 MR. SHILOBOD: Your Honor, in that report, there is ;
18 conflicting information. ,
t 19 On one hand, there appears the acceptance of a 20 figure and, on the other hand, there was a recommendation, a ,
21 further documentation of them.
22 As I read the report, I perceived that there was 23 little back-up information available to TB&A; that's why I i 24 want to see just what the records contain.
25 MR. RUSSELL: Well, as I say, they conclude -- there's COMMONWEALTH REPORTING COMPANY 47171 761 7150 i _ - . _ _ _ . __ __ _ _ - _ . _ . _ . _ . _ _ . . . . _ _ . . _ _ . ,
122 I i
i a statement that the companies' estimate of $8 millic.n, in on 2 segment of this thing is an ultimate cost and appear to be ;
i 3 conservative.
4 So they have, obviously, functioned on it with their 5 own cerebral processes.
G JUDGE CASEY: Well, I'd appreciate it if you would 7 check the company records and documents to see if there is a sonething dealing with the proposed savings, however it was 9 descri. bed in the -- ,
10 MR. SHILOBOD: Annual report.
11 JUDGE CASEY: --
in the annual report, and at --
12 MR. SHILOBOD: It'salsoontheExhibitAtotheprll 13 trial statement.
14 JUDGE CASEY: -- Exhibit A to the pretrial statement.
15 MR. SHILOBOD: Yes.
16 JUDGE CASEY: All right.
I 17 MR. SHILOBOD: Three pages from the end.
18 MR. Mc CLAREN: And the pages that follow the 19 reference to those amounts, the laguage that they expect it to j 20 or estimate it to be, and so on, to be able to have some I l
21 discovery of this, we ought to be able to determine that therel 22 is substantiation for these figures -- l 23 JUDGE CASEY: All right -- I'm sorry, Mr. Mc Claren 1 24 I didn' t mean to talk over your voice. ;
25 MR. Mc CLAREN: That's okay.
COMMONWEALTH REPORTING COMPANY 47171 761 7150
123 !
O
\/ JUDGE CASEY: These projections, apparently .Ae from 1
2 GPU.
3 On Page 10 of that preliminary report which I keep
- referring to, it says, "During our review, GPU clarified their 5 objectives and quantified the potential benefits. TB&A can 6 now endorse the concept, the specific objectives and the bene-7 fits projected by the company.
8 In fact, we believe that the projected quantitative 9 benefits of $18 million will prove to be conservative."
10 Now, the quantitative benefits in the GPU projections 11 there, they must be traceable to some study or some report T 12 from which -- ,
13 MR. RUSSELL: Your Honor, I will dig out -- Mr.
14 Seltzer will be able to come back and -- he's helping in is another hearing, in the last several days -- I'll see if he 16 can' t run down what I may very well have missed.
17 JUDGE CASEY: All right. So it would be that item i*
is and the matters that are going to be delivered to Harrisburg ;
1 19 for review by Mr. Shilobod and Mr. Mc Claren of the Commission ,
20 Trial Staff.
21 MR. SHILOBOD: If Your Honor please, I believe that's!
22 going to be available to us on Tuesday.
23 Is that correct, Mr. Russell?
~1 24 MR. RUSSELL: Je s .
25 MR. SHILOBOD: hill you give me the address as to 1
CoMMoNWEAt.TH REPORTING COMP ANY 47171 761 7150 l . __ , _ _ . _
124 I where we would go? ll 2 MR. RUSSELL: 800 North Third Straet, Third Floor, ,
3 and you turn lef t at the entrance of Pennsylvania Electric 4 Association, and s alk straight ahead.
5 MR. SHILOBOD: And if I were to come in early in the 6 morning, say, be there at 9:00, would that information be there 7 that early in the morning?
8 MR. RUSSELL: I'm not sure it will be there quite 9 by that time, but it will be there as close to it as we can 10 make it.
11 MR. SHILOBOD: All right. ,
12 JUDGE CASEY: All right, one other point, and then
('
)
13 I'll leave the further remarks to Counsel, but, for my benefit, 14 I mentioned something that -- you were to give me something 15 in the nature of an economic impact statement, if you could, 16 to take the place of a typical legal prehearing memorandum.
17 What I was thinking of is whether the system, as a I l
18 whole, or whether Penelec and Met-Ed sat down, at any point 19 in time, to analyze the immediate,. as well as long-range effect,s 20 on the ratepayers of the companies. l 21 The supplementary document you gave me this morning I i
22 was the chronological list of underlying information. I 23 I looked at the Verrochi letter to the people of j
- q. g
' 24 Johnstown. W h
25 Was that supposed to be an explanation of what the COMMoNWEA1.TH REPORTING COMPANY (7171 761 7150
125
/%
b 1 general economic impact would be of the shift of management 2 from Johnstown to Reading, Pennsylvania, Or did it zero-in, 3 specifically, on what effect, if any, it would have on the 4 rates of the Penelec customers?
5 MR. RUSSELL: I can't, at the moment, recall the 1
6 specifics o,f the letter.
7 My recollection is that there was some expressions 8 of concern in the Johnstown area and Mr. Verrochi tried to I
i 9 address those expressions of concern.
10 The specifics of it, I don't, honestly, have at my
(
l l
11 fingertips.
12 MR. SIIILOBOD: I believe I saw the letter, if it was l
(~~)/ ,
13 the one in the newspaper. The folder on the newspaper article 14 was probably six to eight inches thick. There was a substan-15 tial amount of publicity concerning this issue.
16 At this time, I'm not sure to what extent that letter 17 itself is helpful, one way or another. It was just part of the 18 on-going communication that occurred in the newspapers at that 19 time, a very substantial period of , time.
l l
20 JUDGE CASEY: Well, this letter, I suppose, was l
21 disseminated in the form of a press release, was it, directed 22 to the people, in general?
,_s 23 MR. RUSSELL: I think so. I think whether it took
' (b. i 24 more than just the form of a newspaper ad of a letter or not, l
25 I don' t know, but there was much correspondence between Penelec COMMONWEAL TH REPORTING COMPANY 17871 761-7150 l ___ _ _ - _ _ _ _ _ _ ._
126 I
l l
/ '
I and public officials, and industrial representatives and othe 2 in the Johnstown area, particularly, with respect to the matteri, ,
3 in the Johnstown area, primarily.
4 JUDGE CASEY: How about the W. A. Verrochi letter to 5 Penelec employees, was that distributed in their pay envelopes, 6 or what was the nature of that information?
7 MR. RUSSELL: Well, I don't know the specifics, but 8 it was, again, a matter of trying to allay some concerns that 9 had been expressed, and give them information available as to 10 what was being considered.
11 MR. SHILOBOD: If Your Honor please, to give you a 12 perspective of this information, or this flow of communication .
I I I 13 I might point out that it went so far that as I passed the 14 MacDonald's Restaurant, I saw a marquee dealing" with the issue.
15 So that it had a great amount of publicity and a 16 great amount of activity.
17 JUDGE CASEY: Was there any printed explanation 18 inserted in the bills sent to Penelec's and Met-Ed's rate-19 payers?
20 MR. RUSSELL: There were billing inserts.
21 JUDGE CASEY: Billing inserts?
22 MR. RUSSELL: Yes.
23 JUDGE CASEY: Explanatory material, such as what l i
h 24 this was?
25 MR. RUSSELL: There's base limitations associated I
COMMONWEALTH REPORTING COMPANY 17171 761 7150
127 O' I with billing inserts, so I don't think it could have gone into 2 any great detail, but it did give an over-view as to what was 3 contemplated.
4 JUDGE CASEY: How about any information disseminated 5 to the GPU common stockholders regarding either the GPU Nuclear 6 Corporation, its formation and the proposed combined management 7 agreement?
8 MR. RUSSELL: I'm sure there was a disclosure; 9 actually, there would have been, because of it being a publicly 10 held company -- disclosure is a very sensitive problem, and 11 there would have had to be press releases at various times, 12 with respect to this information, for.. investors, and so on.
( '}
13 The exact timing, and so on, I don't recall, and I 14 don't -- it was not in the subject matter that I went through, 15 the ones that went to the investors.
16 JUDGE CASEY: There have been applications with FERC 17 or NRC, the ones that .. e 18 MR. RUSSELL: SEC --
19 JUDGE CASEY: SEC?
20 MR. RUSSELL: -- in connection with GPU Nuclear; I
21 FERC, in connection with interlocking officers and director- l 22 ships.
23 JUDGE CASEY: You say that legally, the corporation,'
--) 24 GPU Nuclear Corporation, has already been form, it's incorpor-25 a ted?
l CoMMoNWEAt.TH REPORTING COMPANY 1717s 761 7150 l
128 1 MR. RUSSELL: It was incorporated after authorizatio ,
2 was obtained from the SEC.
3 Of course, this proposed operating agreement is down 4 tha road from the point of nearing incorporation and certainly b can' t be implemented until further necessary authorizations are 6 obtained.
7 MR. SHILOBOD: This matter with respect to the com-8 bined management agreement hasn't been dealt with by the SEC, ,
9 in one form ')r another, has it? l to MR. RUSSELL: No -- and I think we touched upon that 11 in our filingt with the Commission, if I'm not mistaken.
(
'/
12 MR. SHJLOBOD: I'm not aware of them --
llf 13 MR. RUSSZLL: I think the representation was that 14 this would be brought to the attention of the SEC, not in ;
15 connection with the official filing, because we're not aware 5
16 that there is any requirement for SEC filings with respect to 17 any change in the management organization. ,
i 18 The Commission would be notified if the SEC had any l
19 differing views as to the. scope of its jurisdiction.
20 MR. SHILOBOD: If there have been --
21 MR. RUSSELL: But there's been no such --
22 MR. SHILOBOD: If there have been any communications 23 with the SEC with respect to this combined management operati
~8 24 I'd request that that information be included with the informa >
25 tion that we are to review.
t COMMONWEALTH REPORTING COMPANY 47171 761-7150
-129
(' 1 MR. RUSSELL: All right. I'd have to speak with 2 Mr. Liberman about that.
3 MR. SHILOBOD: And I'd also like to see those billing 4 inserts, because I haven't seen them.
5 JUDGE CASEY: Did you say that one of Mr. Liberman's 6 partners or associates would appear representing GPU, Jwhen the 7 hearing starts?
8 MR. RUSSELL: Yes, Mr. Jolles.
9 JUDGE CASEY: Mr. Jolles?
10 MR. RUSSELL: Yes.
11 MR. SHILOBOD: Will he be appearing as Counsel, or as
(} 12 a witness? ,
13 MR. RUSSELL: As Counsel -- pardon me, can we go off 14 the record?
15 JUDGE CASEY: Off the record.
16 (Discussion off the record.)
17 JUDGE CASEY: Back on the record.
18 Just as a point of information, Mr. Russell, did the 19 companies get much feedback from the general public af ter they 20 made known their plans, through the media and speeches before 21
- the Chamber of Commerce?
22 MR. RUSSELL: Well --
23 JUDGE CASEY: Anything that was enough to influence 7_
\ /~) 24 the judgments of the company officials, or their future plans?
25 Well, from the information we have MR. RUSSELL:
COMMONWEALTH REPORTING COMPANY 47171 761-7150
- - - -. - -- . _ , . . , , , - ,, , l
130 1 here, from those here present, Mr. Kelly, who has been func-j 2 tioning in this picture, indicates that he's not aware of any 3 feedback that came back in his area of operations.
4 Mr. Donofrio indicates that the only two of which 5 Penelec was favorable, coming from A' .oona and negative from 6 the Johnstown area.
7 MR. SHILOBOD: I might point out -- and I think y'ou 8 would agree with me -- that the reaction in Johnstown was 9 quite forceful from not just my clients, but from the public, 10 generally, in a negative fashion.
11 MR. RUSSELL: Well, now --
12 MR. SHILOBOD: All you have to do -- g g 13 MR. RUSSELL: -- I think that's a matter of some 14 debate, as to the actual scope of --
15 MR. SHILOBOD: Well, may.--
16 MR. RUSSELL: Certainly, the negative reaction that 17 did arise was in the Johnstown area.
18 MR. SHILOBOD: May I ask another question?
19 JUDGE CASEY: Sure.
20 Were there communications with the MR. SHILOBOD:
21 banks under the Revolving Credit Agreement with respect to 22 this proposed combined management agreement?
I 23
, MR. RUSSELL: I am not aware of anything that was, 24 l say, an original piece of correspondence germrated and direct l
l 25 to the banks by reason of this.
i
, j COMMONWEALTH REPORTING COMPANY 8717 761-7150 f
131
. 1 Routinely, however, the banks require that we furnish
/
2 them with copies.of regulatory filings, on press releases, and 3 so on; so tae banks would have gotten some contact on the 4 matter, through the media.
5 MR. SHILOBOD: Other than this information that you 6 included in your list, would I be correct in ssuming that the 7 banks haven't received any other communications with respect 8 to the proposed combined management agreement, other than what 9 might have been in a filing or in a press release?
10 MR. RUSSELL: Wel_, when you say "information," are 11 you talking about written information?
/T 12 MR. SHILOBOD: Or any records of oral information?
U g 13 MR. RUSSELL: The banks meet regularly with our 14 financial people to discuss what's going on, and I'm not, at 15 this point, in a position to say that there were no references 16 to this proposal, because it was something that, obviously, --
17 through these other routine submissions to the banks, something 18 that came across the banks' desks.
19 JUDGE CASEY: I think what Mr. Shilobod is driving ,
1 20 at is whether these proposed actions on the part of the company 21 has had any effect on the credit and borrowing relationship 22 that Pennsylvania Electric Company had with these major banks j i
23 that it deals with in the Johnstown area and elsewhwere, per- !
)~l 24 haps Pittsburgh or New York? !
25 MR. RUSSELL: Well, if that's the thrust of your -- ,
1 COMMONWEALTH REPORTING COMPANY (7171 761 7150
132 1 MR. SHILOBOD: That's a part of it.
2 I also would like to see what role this proposed 3 arrangement is to play with respect to the general relationship 4 between GPU and Met-Ed and banks, and how this whole program 5 fits in with the problems that the banks are perceiving.
6 I think all of that is relevant, and I don't see any 7 reference to any of that in this list; and that's why I'm a wondering just wnat is available.
9 Surely, there must be minutes in which this informa-to tion was dealt with, and comments made, and so on.
11 MR. RUSSELL: Well, there are a number of pages 12 questioning Mr. Dieckamp and Mr. Kuhns about this, in your 13 deposition.
14 MR. SHILOBOD: I don't think I focused specifica'lly 15 on information that was given to banks dealing with the com-16 bined management agreement.
17 MR. RUSSELL: Well, now, when you're talking about is bank. are you talking about the banks participating in the 19 credit agreement, the consortium of banks, or are you talking 20 about some other banks?
21 MR. SHILOBOD: I wasn't aware that there was any 22 relationships with any other banks.
23 My impression was that the only banks that we're 24 dealing with now, Penelec, GPU and Met-Ed -- well, strike the 25 word "Penelec" -- dealing with Met-Ed and GPU, were those that COMMONWEALTH REPORTING COMPANY (717) 761 7150 t
~, -
133
I were parties to the Revolving Credit Agreement.
2 MR. RUSSELL: Well, just to keep from being misunder-3 stood, I think that, in substance, is correct, however, there 4 are a couple of banks we have line of credit with, just a*few 5 million dollars -- a line of credit for Met-Ed, that are out-6 side that, but, for all practical purposes, the short-term 7 credit that's available to Met-Ed is, literally, virtually '
8 limited to what's available from the consortium of banks under 9 the Revolving Credit Agreement.
10 Now, exactly what the situation is with respect to 11 Penelec --
/~'t 12 MR. DONOFRIO: With Penelec, we have $10,155,000
\/ 4 13 worth of lines of credit, but we can't borrow anymore than 14 $5 million or S6 million from those lines, because of the 15 Revolving Credit Agreement, and we do not have anything out-16 standing at this time.
17 MR. SHILOBOD: All right. But what I'm interested 18 in are minutes of meetings or communications, or records of 19 conversations with any of your financial institutions dealing 20 specifically with or referring to the combined management agree-21 ment, in any fashion.
22 MR. RUSSELL: Well, we will investigate the matter, 23 Mr. Shilobod, but I would say to you, quite frankly, I think
")
24 it's highly unlikely that when our financial people meet with !
i 25 the banks and have a discussion, that they run minutes of the COMMONWEALTH REPORTING COMPANY t71717617150
-- .- .~. -
~
,. .~ - - .-. - _ . . . . .- - . . - _ _ . - - . . . . , _ .
l 134 I meeting, and that kind of thing.
2 MR. SHILOBOD: If they're not there, they're not 3 there. I'm inquiring into any records. l 4 MR. RUSSELL: Anything we can find.
5 MR. SHILOBOD: Yes.
6 MR. RUSSELL: All right.
7 MR. Mc CLAREN: I think Mr. Shilobod's question
~
8 relates to a broader extent than .the Staff has, and that is I
9 that in Met-Ed's present financial condition, there is some to substantial possibility of a bankkruptcy.
11 The management consultants state this, as well.
12 The Penelee situation seems to be much more secure, g
13 and we're concerned whether this combination will somehow bring' I.
14 Penelec within greater jeopardy or will have the effect of l i
f 15 trying to shore up Met-Ed. !
l 16 I think we would like to be able to explore that .'
I 17 relationship. !
I 18 JUDGE CASEY: I think, Mr. Russell, that Mr. Mc Claren j 19 has just articulated the major fear on the part of the public 20 and, perhaps, maybe, this Commission, that the whole proposed 21 venture here is simply an effort to spread the losses which i
l 22 have caused irreparable harm to the Metropolitan Edison Company, 23 as a company; and that's why there some skepticism.
24 I think it's just an honest reaction to all the 25 things, the events that have taken place over the last --
COMMONWEALTH REPORTING COMPANY 1717' 761-7150
135f 1
4
~'
s MR. RUSSELL: All right. May we go off the record? !
I 2 JUDGE CASEY: -- year-and-a-half period. ,
p 3 MR. RUSSELL: May we go off the record? l l
4 JUDGE CASEY: Before we do that -- we will go off the' s record in a moment, but I had one other request of my own --
6 MR. RUSSELL: All right.
7 JUDGE CASEY: -- now that I think of it.
8 I asked whether there was any underlying document, 9 such as the minutes of the meeting of the Board of Directors {
1 10 of GPU, which gave overall authorization' to its subsidiary l 11 companies to enter into these agreements, and you didn' t answer I
i 12 me by saying, yes, or, no. ,
13 MR. RUSSELL: I didn't frankly know; I've checked, I
14 and there are none.
15 We will, probably through the corporate secretaries l
16 to which I have made reference, bring in any action that has f 17 been taken prior to the hearings.
18 JUDGE CASEY: All right. Well, that leads me to the 19 next question:
20 How autonomous are these two Pennsylvania utilities?
21 Could they enter into a contractual agrsement of this 22 nature without first getting approval from the holding company;.
23 is that possible?
bL
' 24 MR. RUSSELL: Well, Mr. Shilobod's deposition did 25 touch upon when this decision was made, and Mr. Kuhns gave his' COMMoNWEA1.TH REPORTING COMPANY 17175 761 71!!O
.-. . . - - - . . - . - ~ . . . . . .. .,
136' 1 own opinion as to when he thought the decision was made.
2 The decision was, obviously, communicated to two a subsidiaries, and they have been pursuing it.
4 And I think, for the record, there should be some 5 action by the respective Boards of Directors of the two com-6 panies, ratifying what has been done thus far and authorizing i l
7 further steps to implement the proposed agreement, and that, l l
I 8 I have been led to understand, will be undertaken.
9 JUDGE CASEY: And that will be covered in these pro-l 10 ceedings? ;
11 MR. RUSSELL: Yes.
12 JUDGE CASEY: In the six days of hearings; is'that ggg i'
13 right?
i 14 MR. RUSSELL: Yes. f i
I 15 JUDGE CASEY: All right. ,
16 MR. SHILOBOD: If Your Honor, please, one other issue!.
I 17 In this list of items that Mr. Russell presented, the!
l 18 first two items, dated January 7, 19 E ,), and January 8, 1980, 19 are draf ts of organization plans.
20 I presume those simultaneous draf ts were submitted 21 in response to some request, and I'd like to see what that 22 request is, if it exists in writing anywhere.
23 MR. RUSSELL: All right. I'll have to see if any-~
thing is available.
h 25 Requests from --
JUDGE CASEY:
COMMONWEALTH REPORTING COMPANY s717' 761 7150 F
137'
' 1 MR. SHILOBOD: Two different vice presidents or two I
, 2 different officers of two different corporations, simultaneous-l 3 ly -- !
4 MR. RUSSELL: I see what you mean.
5 MR. SHILOBOD: -- on their drafts of reorganization 6 is too coincidental.
7 MR. RUSSELL: I think it's too coincidental for there a not being some motivating reason for it to come into being --
9 MR. SHILOBOD: I know --
10 MR. RUSSELL: -- but if there's anything in writing, 11 or anything else that would show what it was or what the occa I 12 sion was, we'll see what we can find. i
{';
13 JUDGE CASEY: For instance, you're saying -- and I 14 don' t blame you for saying -- that they are acting in response 15 to a directive from a higher corporate official at GPU; and, if 16 so, where is that directive and what form did it take.
17 I think Mr. Kuhns came here, as I said before, on 18 January 17th or 18th, because it was on a day of public meeting, 19 and held a press conference -- Mr. Dieckamp was there -- and 20 they released the master plan, so to speak, at that time.
21 Now, it seems to me as though there'd be a lot more 22 preliminary work done in that connection, that would go back 23 even prior to January 7, 1980, leading up to this announce- ,
~'[ 24 ment.
25 MR. SHILOBOD: The deposition suggests otherwise than!
COMMONWEALTH REPORTING COMPANY (7171 761 7150
138!
i 1 your expectation, Your Honor. lh 2 My point is that somewhererightbefore,orsometimel 3 before early January 1980, someone requested these organiza-4 tion plans be submitted. There was some motivating force or 5 some directive; that's all I'm looking for.
l 6 The depositions of Mr. Kuhns and Dieckamp would 7 indicate that there wasn't any long line of planning before-8 that. ,
9 JUDGE CASEY: If anyone can tell me, when was the i 10 Kemeny Commission report first released, or at least made 11 available to the companies?
12 MR. RUSSELL: I guess, February or March.
~
13 MR. SHILOBOD: No -- it was well --
14 MR. RUSSELL: I'm sorry --
15 JUDGE CASEY: Sometime in 1979? ,
16 MR. RUSSELL: -- it was over -- I think it was 1
17 February or March of '80, because we had it before we closed 18 the record in 308.
I9 MR. SHILOBOD: The Committee report was a subtantial 20 amount of time prior to that. ;
I '
l MR. RUSSELL: Well, I --
l 22 I thins it was in October of '79.
MR. Mc CLAREN:
l , , -
JUDGE CASEY: October of 1979?
'^
,4 MR. SHILOBOD: I would think around July of 1979; I
'5 bu t I 'm no t sure.
COMMONWEALTH REPoPTING COMPANY (717' 761-7150
139 O~ I JUDGE CASEY: Well, I just wanted to raise that last 2 point, and to say, finally, that I'm still concerned about what 3 the canpany is going to present -- when I say " company," I'm 4 using it in the broadest sense -- with respect to the future .
I 5 impact on ratepayers of the two Pennsylvania utilities. ;
I 6 What studies are you saying that this is a matter f 7 which would be in the rate proceedings which would be cover'ed. '
s Now, mechanically, they would be covered in any 8
current filing that's undergoing in any investigation and any IO proposed future filing.
11 I think an over-view of what effects, beneficial or
( 12 otherwise, this will have on-the customers of the two companies, I3 the classes who are only represented -- well, Mr. Mc Claren, I I4 don't know whether you're looking at the public interest, in 15 general, the ratepayers, but Mr. Shilobod's position is more -
16 narrow; he's concerned about the industrial customers of 17 Penelec and the industries -- l i
18 Not all, Your Honor --
MR. SHILOBOD:
19 JUDGE CASEY: -- is that correct?
20 MR. SHILOBOD: -- I'm concerned about all customers 21 of Penelec.
I submit that the Commission itself has an obligation 23 to be concerned about the customers of Penelec.
I don' t think it's proper for the Commission to take 25 a broader view if there should be the danger of COMMONWEAL.TH REPoR71NG COMPANY 47171 761 7150
~
l 140 cross-subsidization or other danger to the Penelee service arl h 2i These entities decided to operate under separate 3 Certificates of Public Convenience. I think the Commission 4 should accept that. Whenever that's done, I think the statu-5 tory obligation the.. is to place the relationship or inter-6 relationship between these affiliated interests under greater
- scrutiny, ;
I a I mean, what if they weren't related, and not some- i 9 thing else?
10 Under that scenario, I think this is why the Commis ,
11 I
sion Staff must loor. at the interests of the Penelee customers.!
12 JUDGE CASEY:
Well, we can certainly do that, and d W
, I 13 intend to do it, in a theoretical sense, but I'm saying, as a 14 practical matter, there's no one here to appear and represent, 15 for instance, the residential customers and put on a case on 16 their behal f, or attempt to vigorously cross-examine the wit-17 nesses for the companies.
18 MR. SHILOBOD: That's true, they are not specifically 19 represented as parties in this proceeding.
20 MR. RUSSELL: Well, I am somewhat troubled by the 21 thought that the effect of combined management can be identi-22 l fied with respect to specific rate impacts of a given class or i
23 { customers in the future.
-t 24 I k I don't, literally, think that's a possibility.
25 I think that what is possible -- and I think it's about as far COMMONWEALTH REPORTING COMPANY i717, 761 7150
141!
t l
I as one can reasonably project at this point -- is whether or -
2 not this proposed management will affect cost savings as against 3 it doing nothing with the present organization. l i .
4 The future rates of any class of customers will i
5 depend not merely on what is done for or against the management l 6 combination, but such a myriad of other intervening events --
7 I can't see how we could quantify it even with respect to a currently pending cases, for example. '
i, 9 JUDGE CASEY: All right. .
i 10 MR. RUSSELL: We're confronted with the problem that 11 this proposed comb'ination of management, assuming it gets this 12 Commission's blessing, can't be. implemented until the FERC
{ '
13 authorization for the joint holding of common officers -- and 14 I think it's clear that that's not something that happens very 15 expeditiously; so even in the present rate proceeding, I don't 16 think we are in a position to say this will save so much that i
17 will be reflected in present rates, because it hasn't been 18 achieved yet, and it won't be achieved for some period of time.!
19 JUDGE CASEY: Well, I think the situation transcends 20 the question of rates only -- perhaps I've done the record a 21 disservice by focusing on the impact on rates the customers 22 will have to pay in the overall service and everything, the 23 entire relationship of the customers of these utilities will 24 have in the future.
25 How do they stand to benefit, in any possible way?
CoMMoNWEAt.TH REPORTING COMPANY (7171 761 7150
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142 i We've heard how management may be better of f and thllh 2 companies might operate more efficiently, but we've heard 3 abcolutely nothing at all about the ratepayers; and that's why 4 we're all here.
5 You're in existence to serve people who need electric 6 service in the Commonwealth of Pennsylvania.
7 Everything else is incidental ancilary and collateral 8 thereto.
9 So I think we have to devote a little more time and to effort, coming into these hearings, and alert your officers, 11 accordingly, "What is this going to do for the ratepayers of 12 Penelec, the ratepayers of Met-Ed, who have already suffered 13 some form of inconvenience through higher rates because of 14 purchased power? What is this going to do? Why is it superior 15 to go down this road than it is to allow the status quo as it 16 was before the nuclear accident?"
17 And I'm not losing site of the fact that all of thes e is proposed changes have their genesis in that nuclear accident --
19 that's the way it appears to me -- and the financial problems l
20 that you've experienced since then.
21 MR. Mc CLAREN: Let me itisert, Your Honor, at this l
22 point, since these other statements have been made, that, on 23 behalf of the Staf f, I view our responsibility in the broadest terms to the public served by both Met-Ed and Penelec, and I l )
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'4 l
25 think that is the public which the Commission is mandated to CoMMoNWEAI.TH REPORTING COMPANY 4717 761 7150
143f .
I protect, and that's the public interest we will try to pursue '
2 as a party here.
i 3 In the first instance, though, this proceeding, I 4 think, was initiated, in a sense, bythefilingbythecompanieh
~
5 of this proposed change, and it's that change that we want to 6 be critical of.
7 It may well be we'll find that that's the most appro-!
l 8 priate thing and recommend it to you or urge it upon you, or 9 it may well be that we will recommend to leave the status quo -
10 JUDGE CASEY: Quite possible.
11 MR. Mc CLAREN: -- but thats, in general terms, how
(} 12 we view our responsibility. -
13 All right.
JUDGE CASEY:
14 MR. SHILOBOD: If Your Honor please, I submit that i
15 the Staff's obligation should be to accentuate if there is a 16 conflict of interest between the different ratepayers for the 17 different companies. I think that this is something the Commis-18 sion should be aware of if it does exist.
18 I think the final decision by the Staff, if they 20 should review -- they should view this procedure grouping the 91
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public in a great generic term, regardless of where they are, 22 it ignores the very specific provision in the statute which says 93
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the Commission shall very carefullly when there are affiliated 24 interests -- there's a reason for that, ano that's because the
- 5 public utility --
COMMONWEALTH REPORTING COMPANY (7171 761 7150
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4 1 MR. Mc CLAREN: I don't think, Your Honor, that llg 2 there's a substantial difference between our view of the Staff's 3 responsibility and what Mr. Shilobod has stated. ;
i 4 In saying I viewed our responsibility in the broadest 5 terms is not to say that we would lump those ratepayers to-6 gether and assume they have a common identify and interest.
7 It's that we feel they both have an interest, and we 8 should examine those.
9 In fact, I think Mr. Shilobod raises a very real i 10 ;", concern; and that is the potential for conflict. Tha t ' s 11 evident in my statement of the concern of whether the effective 12 bankkruptcy could be shared here by Penelec. It's also a con-
^'
k 13 cern that I would share with Mr. Shilobod in his prior state-t i
14 ment in the preliminary conference that there perhaps ought to i
15 be separate Counsel in these proceedings , because as this !
16 record becomes developed, if it becomes appropriate to ques- l I
l 17 tion whether there is a conflict, whether a statement is beingi l
I 18 made on behalf of one company and not another, that it may well l
19 make it difficult for' us to not have separate Counsel repre-l 20 sented here.
21 MR. RUSSELL: Well, I think the conflict of interest!
l l 22 issue is not limited to the company. I think there's a real 23 potential of conflict of interest, for example, in the repre-24 sentation of the Petitioners. lh 25 We have an industrial association with one petition, COMMONWEAL.TH REPORTING COMPANY (7171 761 7150
e .
l 145 ! '
i
() 1 JARI, and you have quasi-public corporations thau issues tax-2 free bonds, and other petitioners; and to .say that their 3 interests are coincidental with one another is a little less 4 than perhaps realistic.
t
'5 We're not pursuing that, anymore than Mr. Shilobod,-
6 for example, pursued his point as to a preliminary conference.
7 If there is a demonstration of a conflict of interest.
8 in anything more than in just a speculative way, we have no ,
9 problem having other counsel come in, but until that demonstra-!
10 tion is made, we don't foresee any conflict whatsoever between 11 the position of the two companies.
12 I would ask to go off.the record? Could we go off the 13 record for just a minute?
14 JUDGE CASEY: Yes, we can, at this point. ,
t 15 Off the record.
16 (Discussion off the record.)
I.
17 JUDGE CASEY: All right. We have arranged for the ;
i 18 examination of certain documents at the Pennsylvania Electric l i,
19 Association offices on North Third Street, and Mr. Mc Claren, i 20 Commission Trial Staff Counsel, and Mr. Shilobod, Attorney for 21 the JARI interests, will be present on that date and examine 22 the documents.
23 We already have our hearing schedule formulated; so
~A 24 there appears to be nothing further that we can accomplish in 25 a prehearing conference, and we ncw declare the prehearing CoMMoNWEAt TH REPORTING COMPANY 47171 761 7150
. . - - . . . - . - _ . . . ., . . ~ , , . ._.
l
. o 146 1 i
1 1
conference, and we now declare the prehearing conference l l 2 closed.
3 The record and the hearings shall remain open, and 4 we will reconvene at 10:00 a.m., on December 1, 1980, at a s hearing room to be announced by the Commission.
6 Thank you very much.
7 (Whereupon, at 3:14 p.m., the hearing was adjourned, a to reconvene on Monday, December 1, 1980.)
9 10 11 12
-t 13 h 14 15 16 17 18 l
19 l
20 l
21 l 22 l 23 1 .
l 25 COMMONWEALTH REPORTING COMPANY 47171 761-7150
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147i I
f I
l O 1 EER11((QAEE i
i 2 i I hereby certify, as the Stenographic Reporter, 3
l that the foregoing proceedings were taken stenographically 4
l by me, and thereaf ter reduced to typewriting by me or under 5
! my direction; and that this transcript is a true and accurate 6 !
record to the best of my ability. t 7
COMMONWEALT REPORTING COMPANY, INC.
8
// /t BY: / t -- s 10 kTHUR STAFFORDkCVR-Gbi 11 Q. .
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16 l 17 18 19 20 21 l 22 i
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'l 24 25 COMMONWEALTH REPORTING COMPANY (7176 761 7150
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.i Mat-Ed Exhibit: E-27 c ,,a Witniss: J. G. Graham uEs ComoRADops g Stockholder
- 1. Years as GPU stockholder - The me-() Survey dian has increased slightly from 6 to 7 1980 years, with virtually all of the change com-ing from decreases in the percentage of CPU's typical stockholder is 65 years of stockholders in the 3 to 5 year category, age, retired, owns approximately 180 The percent of stockholders who have shares of CPU stock, has been a stock- owned CPU shares for less than a year has holder for 6 to 7 years, is pnmarily in- nearly doubled since the 1978 survey from terested in dividends (but with a somewhat 5% to 9% of all shareholders.
growmg mterest in long-term growth), and has a moderate income level. 2. Shares owned - Median holdings for 1980 were 179 shares compared to the Most CPU shareholders have not changed 1978 median of 184 shares. The number of their holdings since the TMl accident and small shareholders (100 or less shares) and remam pro-nuclear, while foreseeing a large shareWers (ove W Aard have ncrea5e , w et m e group have moderate, or possibly senous, energy shortage in the United States. CPU shares
represent less than a tenth of the typical 3. Changes since the accident - The shareowner's stock portfolio. March 28,1979 accident at the Three Mile Island Nuclear Generating Station has had when compared with the results of the a significant impact on CPU's share-1978 Stockholder Survey, there have been holders. The decline in market value of virtually no sigmficant changes. Some ex- CPU common stock represents a loss of ceptions are the slight increases in the over 52100 for the typical stockholder number of new and small stockholders and family. In addition to this, the reduction the influx of employee stockholders as a and subsequent elimination of dividends '
result of the Tax Reduction Act Employee has cost the typical shareholder 5360.00 Stock Ownership Plan (TRAESOP). While since the accident. Approximately three-
, the number of volunteered comments has fourths of the stockholders indicate they increased significantly, the ratio of (V;
f avorable to unfavorable is about the have neither increased nor decreased their CPU holdings since the TMI-2 accident.
same as in 1978 and the distnbution of the About 19% have stated that they have in-comments by subject is relatively close, creased their holdings since the accident. I with the exception of a greater number of However, about half of these are new '
TMI related comments in the 1980 survey. stockholders who had owned no shares of CPU prior to the accident. Only about 5% .
These are the highlights of the final of our existing stockholders state they ,
responses of the 74.000 CPU stockholders have decreased their CPU holdings since who participated in the August 1980 the accident. Obviously, this does not in-stockholder survey. The following items, clude the number of people who have arranged in approximate order of their ap- totally eliminated their CPU holdings since pearance in the questionnaire, provide in-then. Were this number to be included, we formation on the various subject areas estimate that the percentage of stock- )l covered in the survey: holders " decreasing" their CPU holdings , ,;
. would increase by approximately 12% to IJ l
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TOP SHEET ONLY y gg a s
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Met-Ed Exhibit No. F-1.1 Witness: E. Newton Jr.
Page 1 of 2
.n r Penelec-Met-Ed-JC Agreement Schedule 4.01 Rev. 6 Date of Issue >Srch 31, 1980 Date Ef f ect ive June i, 1980
SUBJECT:
INSTALLED CAPACITY OBLIGATIONS WITHIN GPU AND RELATED CHARGES
- 1. The responsibility for capacity, equal in total to the Installed Capacity of the Integrated System, shall be allocated among the parties by application of the methods specified in Schedules 2.21, 2.211, 2.212 and 2.214 of the PJM Interconnection Agreement. Modifications of those PJM Schedules, appropriate for application within the Integra.ted System, are identified herein as Schedules 4.21 and 4.211 to 4.213. Compu-tations made annually in accordance with these schedules provide
(~'.).
.kd the basis for the specified week-by-week capacity accounting.
- 2. Within GPU the capacity accoun.ing shall be on a weekly basis. The Weekly Capacity Obligations (WCO) of each party shall be the sum of its 3asic Ca paci ty Obliga tion (BCO),
as determined under Schedule 4.11(3), and its Unavailable Capacity Adjustment (UCA), as determined under Schedule 4.12(4).
- 3. The Weekly Capacity Obligation of each party shall l be compared with its Installed Capacity to determine the excess or deficiency of capacity for each party. If the Installed Capacity of a party changes during the week, the value used here shall be the average of its capacities actually installed on each weekday, excluding holidays.
N_. !
- j ,
. - Met-Ed Exhibit No. F-1 l_
Witness: E. ?!evton Jr.
Page 2 of 2 Page 2 h.J
- 4. Those parties that are deficient in capacity chall nake payments to those parcies having excess capacity at a weekiy race for each kilowatt of tapacity deficiency according to the following, schedule:
Effective June 1, 1980 S0.539 per kW-week ACCEPTED:
l D""}D O W il u
"}^3'Y c,Ju S Pennsylvania Electric Co. Metropolitan Edison Co. Jersey Cantral Power & Ligh:
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D l :. et-Ed Exhibit No. F-?.1 00 Witness: E. I!ewton Jr.
.- ?ennsylvania-New Jersey-Maryland
, . Interconnection (?JM) Agree = enc
)
_ _. SCHEDULE i.01
- e REVISION MO. 3 (Supersedes Revisien No. 2 !ssued March L3, 1979)
Issuec: March 31, 1980 Effec:ive: June 1, 1980 MTES AND PA*C!ENTS FOR CONTRACT CAPACIT?
(a) Payment by a Par:7 Hereco for planned purchases of capaci:7 under Schedule 2.01 and for Accounced-For Deficiencies under Schedule 3.01 shall he based on a ra:a de er=inec annually by the MANAGEEENT CCMMIME.
The annual race ef fec:ive June 1,1980, snall be $28.105 per kilowa::.
(b) Planned purchases shall be decer=ined for each por:ier. of a Planning Pericd, measured in days, as required by changes in planned anc ac:ual Syste= Capacities. ?ayments shall be =ade by Par:tes Hereto cha: have 3 adjusted planned purchases to : hose supplying ?arties Hereco :ha: have J
c.; ad j.uscad planned sales in : hat portion at a da:..Ay rate equat :o L/3o..3 or.
the race specified in (a).
(c) Accounced-For Oeficiencies and Excesses shall be decernined.for each por:ica of a ?lanning Period, measurec in days, as required by changes in Accounced-For Obligacions or actual Contrac: Capaci:ies. ?cy=ents shall
- be =ade by
- he Parties Hereco : hat have Accouncec-For Oefic;encies :o those : hat have Accoun:ed-For Ixcesses in :nac portion se a daily race equal :o 1/265 of :he race soecified in (2) .
1 l (d) 3illings under (b) and (c) and ander Schecules 5.01' ) anc id) :nc l
5.02(c) and (d) shall be monthly wi:n respect :: :ne por:: n or porcians of :he Planning ?eriod in a con:h. 3uen billings snail be keo: curran:
- hreugh es tica:as =2ce curing :ne ? lann:n; ?e r'.:c. f r:m :ima :: time as l s_- recu.:ec 37 c=an;es i= sc:ust 2 s e= ==e Cent:::: c2:2 .: 24. : ;;a r:e r e, t
1
- as rec.uired by Ac
- unted-For Oblie_s::cas. All esci 2:ec ::::u:::icns anc l
paymen:s shall be revised as requ;tec a: he sne of :he ?lanning ?eriod l
- o reflec: 2:0:21 ::ndi:ians.
(^ 0s J ,
CPU SYSTilt Sit 0RT TFSH F0WER AGRElftEfff 5 CONTit ACT COSTS cot 41R ACT WIF Ft I NG , ._ BI t I lt( _ _ ,
ACk F t Hi TIT T rit H AttulNT BFGINNil.C DURATION DEHAND FNFRGY I)FHAND FNFFC7 TtNH DOIF & PAYAHtF A PS 4 Wekl y 200 ItW - Hay Wy 7, 1979 Remaindes uf $850hSJ-WK Co st t 10% $ 2 40 /Hid-UK Cust + lesser uskly uithi. 7 days ite .er va t ion reserve larger 1979 or "umh adjusted of 101 of (In a t-or man al l e r longur or shorter for loss =a amoun t p.a t t t>y vance) asounta period as either supplying party par t y may dent re" or $1.0/ttWil pl u6 l om ue m C:I ACA R4 W e kl y Up to but Jul y 17, 19 79 Terminata Dec. 28, 941 buys for $0.62/ Hull + ttin t hl y 1st banking tiotuWK (tc1)/ Re se rva t ion not exceeJing 1979. BeneweJ by CPU account lossen by 10t h Jay c anmon to JAMESTOWN 40 HWitR/ilR sutsal ag reassent fruin .lamestown of month pa r E l e m tol-to June 1, 1980. at pr o luc t io n lowing 19th cost t $1./ Wit of month u.en scuderet tet/ON fA RIO Short Term itp to 200 July 1, 1979 Terminate Dec. 29, $600 /W-WK tot buys for CPU $1.31/tont 1%ntt l y l$t b a.ik a na -
HYbit 0 Powe r & W Cont r ac t 1979. Ranewed by acc oun t a t the + losses by 10th Jay cuamon h 2) the rg y DeLaan t mutual ag reesment greater of ut amonth to parties to June 28, 1980 Ilydru's incro- falloulos
- mental pr oduc- 19th ut tion cost & 10% s.outh shen or $30/ftWil un- s en.1e r ni peak and $20/HWH G. 2) off geak e
Cgle Wokl y Up to 1,000 HW Herch 10, 1980 Continued until $850/HW-WK Coat pl ua $240/t4 UK Cost + $0.50/ Hunthly let banking hh Re se rva t ion cancelled by $1.40/tslu HWit J.n y c ommon either par ty tu parties following p'
19th of aianth when senlese4 b CH We ekl y Up to Hay 11, '1980 Continued until $3 /WH Cost --- --- Monthly 15 Jays or Jaily 150 HW cancelled by after bill either party in mailed p re og n rt CD D 4 CD tn a Fnr systema to the went of APS & CEI, the Capacity Oaarge le $8'O/HW-WK and the Wheeling Qiarge for American Electric Power Company ( Af?) i s $ 2 40 /ifW-UK. M CL Deistni and Wiaal to;l Diarges are cumulative (e.g. for Capacity Purchased frus the went of AEP through APS the cost is: " $ pg
$850/tsi-WK (Capacity) + $240/%WK ( AEP Wheeling) + $175/HW-uK ( APS Wheeling) ~ $1265/GWK). M O
10/20/80 mffer
'.4 H N (b r1 C
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- 4M rt i e e=*
N ,
. Met-Ed Exhibit :c. F-23 Witness: E. ?!ew cn Jr.
AGREE >.E?T OF SETTLE"ENT A"D CCMPRCMISE This Agreecent of Settlement and.Cc= premise (hereinafter referred to as the " Settlement Agreement") dated this 25th day of July 1980, by and a ong Public Service Electric and Gas Ccepany (PS), Philadelphia El,ectric Cc:pany (PE), Pennsylvania Power & Light Cc:pany (PL), Saltimore Gas and Elec,tric Cc=pany (SC), General Public Utilities Corporation (GPU) , Jersey Central Power & Light Company (JC), Metropolitan Edison Cc=pany (ME), Pennsylvania
' Electric Cd pany (Pil), and Patc=ac Electric Power Company (PEPCO), hereinafter collectively referred to as "the Parties Hereto" (GPU, JC, ME and Pit are hereinafter also referred to collectively as the "GPU Group"),
- WITliESSETH :
WHEREAS, PS, PE, PL, BC, JC, ME, PN and PEPC0 constitute the members of the Pennsylvania-New Jersey-Maryland Interconnection (PJM) and are O signatories to the PJM Agreement dated September 26, 1956, as supplemented, i
l which is on file with the Federal Energy Regulatory Cc= mission (hereinafter i
' referred to as "the Commission") and which is effective under the Federal Power Act; and l -
kHEREAS, the PJM Agreement contemplates coordinated operation,
! accounting and rates for interconnection services; and l
' WHEREAS, as the result of an accident which occurred on March 28, 1979, GPU Grcup's.Three Mile Island Nuclear Unit I!c. 2 is not currently producing electric energy and will not do so until sometime after December 31, 1981, and l kHEREAS, by orders issued July 2,1979 and August 9,1979 by the Nuclear Regulatory Cc mission, GPU Grcup's Three Mile Island Nuclear Unit No.
O 1 is precluded frcm the generation of electric energy until further l v D7 D N a . x -
s
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D**]D *]D'TlfM~
w oJu o Ju A KINL cuthorizatica by th(:iucicar Rc;ulat:ry C =is:ica; and WEREAS, the c;2.:tica cI the FJ:! A;m:ent under these-O circ = stances wie:ut further s=P*==nt w.:uid n2=any sma the GPU Gr=a to pay to the cther . ember: in cc::rdan:: with tha econ:.ry interchange principles set forth in the PJ:1 A;;rarant fcr any cperating capacity and energy purchased by the G'PU Gr:tp fcr repla:= ant cf the T:!! Unit ; and WEREAS, en March 21, 1553 the GPU Gr:up filed with the Cc= issica a docu= ant entitled "C : plaint" and a dccument entitled " Motion for Interim Order" pur:uant to which the GPU Group cebplained against the applica$ica of the split-savings pricing principle to the replacacant of TMI capacity and energy and pursuant to which the GPU Group scught an interim order pending the final dispesitica of it: Cc= plaint; and ,
kHEREAS, on March 31, 1920 the Commission dccheted tliese, matters as Occket No. ELE 0-22 and on April 30, 1950 each of the cther PJM machers responded to the Cc= plaint and Motica for Interim Order which had been filed by GPU; and kHEREAS, by Order. dated July 2,1980 the Commission denied the GPU Group Motion for Interim Order and decided that the issue which would be entertained in Docket No. EL80-22 would be limited to the question of the reascnableness of the split-savings provision of the PJ:i Agreecent (in the context of the PJ:1 Agreement as a whole) as it applies to purchases of replacement energy by the G?U operating companies while the TMI units are cut l
of service; and kHEREAS, discussicas with respect to this matter among the GPU Grcup, the remaining members of PJM and other interested parties to Occket No.
EL30-EZ ensued at a'cth formal and infomal settlement conferences; and kHEREAS, these discussions have resulted in settlement and C
l ,
c:. pr::ite of all is:ces cutstanding c :ng the GFU Grcup and the other c=:c~;.
cf PJ:4 in this care; D l s NCU T1!I?.EFC.II, in censideration of the cutual c:venants and pr::i:es J
h:rcin cen:ain:d and 5cr ether :::d and valuable con:ideratien the parties h:ve agreed to e settl=c. t and cc: precise as folleis:
I -
- 1. The parties herm agr:2 thtt this Settler:nt 7:rcement c:nstitutes a full settic nt and . .,.. .ise of all issess arising frc: the non-availchility of gaaeratica fr:= C?U Grcup's Three j4ile Island Units N:.1 I and 2 which are the subject of FEP.C Dec'.et No. EL80-22.
t
- 2. .The parties hereto agree for the purposes of the Settlement Agreemant that the appended PJ:1 analysis, annexed hereto and made a part ha. eof, simulates and esti=ctes the effects of the settlement and that the Appended Interim !!adificaticas to Schedules 6.03 and 7.01 and Interim Schedule 10.01 to the PJM Agreement (hereinafter collectively referred to as the
, " Appended Interim Schedules"), annexed hereto and cade a part hereof, shall Le 1
l
> effective for service rendered en and after the first day of the calendar centh after the Appended Intcrim Schedules to the PJ:1 Agreement bec=a
' effective until December 31, 1981 or until Three liile Island Unit No. I resumes the generation of electric energy on a continuing basis, whichever occurs first; and that Article 15 to the PJM Agreement, annexed hereto and 1 .-
'made a part hereof, shall be effective as of the day upon which the Appended t
Interim Schedules take effect but shall cer.tinue to be effective thereafter in
~
accordance with Article 14 'of the PJM Agreement rather than in accordance with the provisions of this Settlement Agreement. " Continuing basis" is defined as the c=ulative generhtion of 80,000 Mwh and authorization by the Nuclear F.egulatory CO mission to operate Three Mile Island Unit No.1 at a power level of at least 70% of rating. The appended interim schedules expire as set forth
~h
(%sl l l A
m in this Sectica 2 of the Settlecent . Agreement. Upon such expiration, all the
- tisi
- ns of the PJ:1 Agrc= ant which ha'ta heen tc pcrarily = dified by Ois Settlement Agreement and the Appended Interim Sch:dules shall aut::atically, and withcut further Order of the Cc mission and withcut any change, condition or suspension, be effective in full and like canner thereafter as if there had been no Appended Interia Schedules in effect.
- 3. . This Setticer.t Agreecant shall not constitute or be dee=ed in any respect an admissica or concession by any party hereto that any contention er allegatien which might be made in the absence of settlement, would be untrue or invalid, and this Settlement Agreement shall not establish principles nor shall it be deemed to foreclose a'ny party hereto frca caking any contention or allegation in any other proceeding or investigation.
- 4. The acceptance of the Settlement Agreement by the Commission shall not be deemed nor shall it constitute in any respect a determination by O the Co==ission as to the merits of any of the contentions or aiiesations whica might be made by any of the parties hereto in the absence of settlement.
- 5. The Settlement Agreement is expressly conditioned upon the Cc= mission's acceptance of all the provisions hereof, withcut change or condition and is expressly conditioned upon the termination of Docket No.
i l
EL80-22 concurrent with the issuance of the Order of the Cc= mission approving i the Settlement Agreement.
e
'OV 4
x G. The di:::: .ica; nich have prci:::. : this Setti.:. ment Agr:na.,:
in:luding the Append:d Int:ri.: Schedules, tha -- and2d Articia 15 to th p;",
OV Agrae ant and the appanded TJ t analysis h:ve b:2n cer. duct:d ca the expli:it end2r:tanding, pur:uant to S0:ti n 1.1:( ) cf th: C::.m:i::ica': P,ules of Prc:tice and Pr:ctdure, th:.t all effers cf c.tticment and discus:fons reir.ing th2reto are and shall b2 privile:ed and c nfid: tial, chall 50 without prcfudice to tha position cf any party cr participan: precanting any such cffer or participating in any such distu:dion, and are n:t to be used in any manner 'in connection with this proceeding or othen;ise. The Settlement Agreerent is submitted and filed on the express conditions that, (a) in the event the Commission does not accept it in its entirety, it shall be desced witHrawn, null and void and shall not constitute any p. art of any record before the ccmaission or be used for any other purpose whatsoever, and (h). the Settlement Agreement including the Appended Interia' Schedules and the appended O
v PJ:t analysis are deemed withdrawn, null, void, and without any effect whatsoever in the event any' regulatory commission having jurisdictidn over the rates charged to custcmars of any party hereto formally proposes to negate or modify the means by which Interchange results are reflected in rates and/or proposes to adjust the cost of service for ratemaking purposes, as a direct or l indirect result of this Settlement Agreement, in any manner objecticnable to i the affected party hereto.
i
- 7. The parties hereto agree for the purposes of the Settlement Agreement that the PJ;i analysis appended hereto supports the Appended Interim n
fv) f Schedules and that the Appended Interia Sch2dules and the appended Article 15 to the PJ:! Agrec:ent and the settic ent itself are in the public injerest cnd constitute a just and reasonable accc=cdatica cf the interests of the p;rties. The parties specifically understand and agree that the Settlemart A;reement represer ts a cc=;rc..dse and, exce;.t c3 expressly stated herein no 1 -
l party hereto shall be det:2d ta have approved, accepted, agreed or consented to ary ratemaking or tariff principle or any method of cost detemination, cost allocation or rate design underlying or supposed to underlie any of the provisions hereof.
- 8. It should be noted that PL and GPU Grcup have agreed that the
( agreament between them for the sale of energy and operating capacity by PL to GPU Group designated as PP&L Rate Schedule FERC fio. 72 shall be terminated as of the same date this filing is permitted t'o beccme effective. PL will file under separate cover a notice of termination under the Commission's p regulation.
O Ill WITNESS WHEREOF, the Parties Hereto have caused these presents to be signed in their respective names, by their respective authorized officers, effective as of the day and year first above written.
PUBLIC SERVICE ELECTRIC AND GAS COMPA?lY T
DT "D'A "
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Vice Prestaenc PHILADELPHIA ELECTRIC COMPNiY By A4/. -
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Nh Vice Presicenn PENNSYLVANIA PC'n'ER & LIGHT COMPMtY
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Ly / ['t Vice Presicent P.ETR0?0LITA?! EDIS0!! C0:9AtlY BYGPdSE' fwd N P~
By /h// Vice President JERSEY CEllTRAL P0',lER & LIGHT COM? Ally
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l POTOMAC ELECTP.IC P0'ER COMPN {Y By \ M ( h Sf,Vice Prbsident GEllERAL PUBLIC UTILITIES CORPORATI0ft By , b 'J ". : : . ; : . _ _ c.;
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I, Frances G. Dunlop, a !!otary Public in and for the District of Columbia, do hereby certify that this is a true copy of the original as seen by me this 31st day of July,1980.
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.bo w Frances G. Dunlo?
. bdf /
!!atary Public, D.C.
My Cc. mission Expires June 30,1983
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1 ku h Pennsylvania-New Jersey-Maryland.
Intereccnectica (PJ :) AEraam2nt O INTERI:! ::DIFICATICH TO SCHECul.E 6.03 issued:
Effective:
/.CC00:: TING FOR OPERATING CAPACITY In recognitien of the extraordinary circur: stances resulting frca the current lack of generation frem Three Mile Island Units No. I and 2, the folicuing sectica is an interim addendum to Schedule 6.03:
-(d) Until'Tnres Mile Islari No.1 resumes the gbneration of electric energy on a continuing basis or until December 31, 1981, whichever occurs first, operating capacity received by GPU Group frca TiiE INTE?. CONNECTION of up to 1700 megawatts in each peak period, i.ess one half of any amcunt of operating
' capacity purchased by GPU Grcup frcm any other source except the PE-JC Agreement dated July 13, 1979, shall not be accountad for in accordance with the procedures set forth in foregoing secticas (d) (g) and (h) but instead shall be l allocated amcng the Parties Hereto supplying operating capacity to InE INTERCONNECTION in proportion to amounts 0 supplied by each and in the acccunting each such supplying ccapany shall be credited for its allocated share of such supply at a rate per kilowatt equal to its average cost of operating capacity supplied to THE.IIITERCONNECTION increased
.by 10% and GPU Group shall be debited an amount equal to the sum of such credits. Tnis procedure will no longer be applicable in the event the cumulative total of GPU Grcup energy receipts exceeds the tuelve-month limit set forth in the Interim itdification to Schedule 7.01 l issued , 1980, GPU Group receipts of l operating capac ty frca iHE INTERCONNECTION in excess of the aforementioned limits shall be acccunted for in accordance with the other sections of Schedule 6.03. For the purposes of this interim mcdification, "centinuing basis" is defined as the cumulative generation of 80,000 Mwn and authorization by the Nuclear Regulatory Ccemission to operate Three Mile Island Unit No.1 at a power level of at least 70% of rating. This interim acccunting procedure is null and void and without any
- cffect whatsoever in the event any regulatory ccmmission having jurisdiction over the rates charged to custcmers of any Party Hereto formally proposes to negate or modify the means
.by which interchange results are reflected in rates and/or formally proposes to adjust the cost of service for ratemaking lO
& }.
rur;:ses, cs a dir:ct er indircct r : alt of thi: interia r.edificatica to the ?J:1 I;re sent, in any escner cbjecticr.:Sie to the affected Party Harate.
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..i: . . O r_ e. ..e . .:.,.t In recognitica.cf the c:'.tr:cr inr;' circu-.:tnces resulting frca the curr2nt lack c genera:ica reca inree ..'ia Island Units i::.1 and 2, the folicwing subsac:ica is an interim acdencum to sactica (c) of Schedule 7.01:
(6) ' ntil J Thcee Mile Island ib. I rest as t:ta generction of' ciectric energy en a continuing basis or until Dec mber 31, 1931, whichever cccurs first, energy received by GPU Grcup frca THE It!TERC':::tiECTIO:i of up to 1700 mag wattheurs each hcur shall not be acccuntcd for in acccrcance with the precadures
' set forth in fcrescing sactions (a) and (e) (1) through (5) but instead shall be allccatad each hcur amcng the Parties Hereto su.cplying enargy to THE I:ITERCO::::ECTIO;i during that hcur in prcportion tc the accunts supplied by each and in the acccunting each such supplying company shall be credited for its allccated share of such supply at a rate per kilcwatthcur equal to its average cost of enercy supplied to THE f,) IllTE?.C0tuiECTI0ti during that hour increased by 10% and GPU Grcup shall be debited an amount equal to the sum of such credits. The cumulative total of GPU Grcup energy receipts frem THE IitTERCC l:!ECTI0tt acccuntad for by this precedure shall not exceed 7 millica megawatthcur: per year. This annual limit shall be applied to a period of twelve calend.lr menths starting with the first day cf tha effectiveness of this interim schedule and thereafter shall not be exc2eded in any consecutive twelve month pericd during the effectiveness of this interim modification. In determining the quantity of TMI l replacement energy to be purchased by GPU Group frca THE l
IliTERCO:itiECTI0t!'under the terms of this interim modification on b'oth an hourly and annual basis, as set forth above, there shall be deducted one half the energy purchased by GPU Grcup from any other source, with the exception of the energy purchased by JC from PE under the PE-JC Agreement dated July t
13, 1979. GPU Group receipts of enercy frem THE IllTE?C0ftflECTIO ( in excess of the aforemantioned limits shall l be accounted for in acccrdance with othar subsections of i
Schedule 7.01(c). For the purpcses of this interim ccdification, " continuing basis" is defined as the cumulative generation of 80,000 Mwh and authcrization by the ifuclear Regulatory Commission to operate Three Mile Island Unit lio.1 at a power level of at least 70t of rating. Until such time A
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In ac::ciat.'m with the spacial a:: un:ing pr:cedures set forth in tha fnt :-im :.:diff ecti:n.: to Sche"uie G.G'.i and 7.01 i: ued .
ISEO, rhich ra :gni:2 the current lac.'i cf genar ation frcm ihree M. ia Island Unit: No. I and 2, the fciinio special billing prec2dures shall app;-l un:il T':ree F.iie Isl:nd Unit 30. I resumas the ganaration of ciec ric enargy en a centinuing ba:i or until Daca .ber .31, ISEl, whichaver cc:urs first. "C:ncinuing basis" is definad as the cumulative gene.atica of C0,000 ihth an' au:hori:::icn by the Ituelca:-
Regulatory C:=issica to cpara:a Thr:.e Mile Island Unit No.1 at a pcwer level of at least 70% cf rating.
(b) By the second working day after the end cf each week, tha Office of THE INTERCONNECTION chall estimate the cm:unt of GPU Group's debits and credits for that week for interchange of cparating capacity and enerEy,
.and ice any allecated share of such transacticas with others not party p to this AGREEMENT, and when GPU Group's nat balance for a week is a
(^) debit, the Office shall prepare an intarin billing statement to GPU Grcup. The am:unt cf this billing statcment shall be due and payable to PE, as agent for THE INTERCGNNECTION, on the sixth banking day co=on to PE and GPU Gr6up after the day it is rendered. Payments by GPU Grcup shall be made by wire transfar of i=ediately available funds to the agent for THE IliTERCONNECTION without reccurse and the agen: for THE IliTERCONNECTION shall disburse said waekly payments by GPU Grcup to the other members of THE IllTERCONNECTION on that day in prcportion to the net megawatt hours estimated to have been supplied to THE INTERCONNECTION by each in that week. Net m:nthly billings as determined in ace rdance with Section 11.1 of the AGREEMENT shall be adjusted to reficct weekly payments and r :cipts made in accordance with this interim schedule.
(c) For the purposes of Article 15 of the AGREE".ENT, GPU Group shall be considered in default in the event payment of such interim billing statement is not made on er before the sixth banking day ce=on to PE and GPU Group after the day it is rendered.
(d) These special billing procedures are null and void and without any '
e'ffect whatsoever in the event any regulatory cc=ission having
- jurisdicti:n over the rates charged to custcmcrs of any Party Hareto
- formally proposes to negate or modify the maans by which interchange results are reflected in rates and/or formally proposes to adjust the A
V _1 i
i cost of servic'c fer rat:: king pur;c:cs, as a dircet er indirect recult of thn: interia :difi:::icas ts the Po';; A;ral: ant, in any n: anne:-
cbj:ctier:251e to the affe : d Party Ear:::c.
mo o 3-D D D vol of.S1 2 6
Pennsylvania-;iew Jersey-?briland D b Intur cnr.:. :ica (?J:!) As. wan:
Article 15 issued:
Effective:
DE.:AULT .
/.ny Party Hersta shall be ccasidered in dafault in the ~ event that it does not meet its financial chligations under Article 11. So 1cna as any Par:y Hareta is in default, it shall not have a vote in PJM matters including that it: assent shall not be necessary to rer. der any decisica or direction of the P.an2cscent Cc :ittee unaniccus within the provisions of Sectica 3.2 of Article 3 of the PJ:t Agrcecant, and shall no: participate in the benefits of paci-to-pco1 transacticas unless the other Parties Hereto not in default unan!=cusly agree to permit participation in such benefits by the defaulting party. A Farty Hereto is censidered to be in default until all accunts in arrears including interest thereen accrued in acccedance with Section 11.1 of Article 11 are paid in full to the agent for THE IllTEP.C0iltiECTI0tt.
O lO -
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g* Witness: E. Newton Jr.
.d. '. .L UNI' FED STATES OF AMERICA
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.' FEDERAL E'lERGY REGULATORY COMMISSION g s .a *
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- OPINION NO. ~ 97
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.] 'Geneid.1/s.2.hblic Utilitics Corporation
. ) Docket No. ELBO-22
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or d
OPINION AND ORDER APPROVING SETTLEMENT i
O.
O Issue.d: October 1, 1980 O
Defore Commissioners: Charles B. Curtis, Chairman; G orgiana Sheldca, Matthew Holden, Jr.
G orge R. Hall and J. David Hughes.
O General Public Utilities ) Docket No. EL80-22 Corporation )
. D 0 h-OPINION NO. 97 We - *'"
OPINION AND ORDER APPROVING SETTLE!!ENT (Issued 0.=tober 1, 1980) .
Introduction on March 21, 1980, the General Public Utilities Corporation
.(GPU) filed a complaint and request for ihvestigation, under Section 206(a) of the Fede'ral Power Act, of the provision of
. the Pennsylvania-New Jersey-Maryland Interconnection Agreement
. (PJ!! Agreement) which speci::ies a " split-savings" pricing formula for sales of energy by other PJM participants to the three operating subsidiaries of GPU.
() Commission 1/ 'GPU reques ted the to order that the sales of such replacement energy to the GPU operating companies be made at a price equal to
'the sellers' incremental production cost plus any other costs
. reasonably allocable to supplying such service. GPU's filing also requested an interin order adopting its proposed energy pricing formula until such time as the Commission might issue a final order or until Three Mile l'sland (TMI) Unit No. 1 i
resumed generating on a continuing basis, On July 2, 1980, we denied GPU's motion for interim relief and ordered a hearing in the above entitled docket.
On July 31l 1980, the PJM members _2/ filed an Agreement of i
! _1/ Jersey Central Power & Light Company, Metropolitan .
l Edison., Company, and Pennsylvania Electric Company.
_2/ Public Service Electric and Gas Company, Philadelphia Electric Company, Pennsylvania Power & Light Company, Baltimore Gas and Electric Company, General Public Utilities Corporation, Jersey Central Power & Light Company, Metropolitan Edison Company and Pennsylvania
{]) Electric Company and Potomac Electric Power Company.
l
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D]MJ]D I
M6L effect of resolving this proceeding.settlenens and Ccmprcm
(]) the Ccamission on a ccrtification The matter is before dated August 21, 1930, of the proposed setticaant by the pre, siding cdministrative law judge.
which would be effected thereby ar2The sp cific terms of the Sett discussed below.
reasons stated, we approve the Agreement as submitted. For the
.Bacharound March This proceeding grew o6t of the puclear incident on 28, 1979, which incapacitated the TMI Unit No . 2 of the
, GPU Group, and the July .2.and August 9,1979 orders of the Nuc1 car negulatory Commission prchibiting the use of TMI Unit.No. 1 for au.thorized. the generation of electric energy until otherwise Since that time GEU has made cubstantial purchases
'of replacement without PJM. capacity and energy, both from within and Under the PJM Agroomant dated September 26 wide basis .with equalization charges assessed fo o-
. between member installed and required capability ces f ygenerating units are then dispatched on an econom. Member
(_/o'rder'of
' ownership) ascending incremental cost (without regard ic basis to in
- mix in any hour.in order to achievn* the most ' economical generation On an hour-by-hour basis, each supplier --
-any member whose deliveries to the pool during the hour exceed its native system requirements -- is credited for energ y delivered at a rate per kUh halfway between its incremental
~
cost all and the weighted purchasing members. average decremental (avoided) cost of Conversely, each purchasing member --
_one whose system requirements exceed its deliveries to the pool hWh halfway between its decremental cost and the
' average incrementel cost of all suppliers.
which is set out This
' referred to as " split-savings" pricing.in Schedulo 7.01 is of the PJM A In its .' larch 21 1980 complaint, GPU alleged that the split-savings pricing to TMI replacement energy s in tha O .
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coete t Ho. ELEC-22 D D D on5 oS -
h inc~crental r cc:tc.it creducca revenues cubatantially in excess f") Febru_rj 1500, its TMZ r" of the suppliers' GPU -.; dica'ted that frca April 1979 thrcugh reflected split-cavim s "a?lacement dders" energy purchaces from POM GPC uni 2e preduct:ca Schecule 7.01 cvar and .bove(_ia cast) the amounts paid by ti.e relevant PJM equivalent to a marku? cf fr:a 2G paradatranging frca 9.5 mills / h the cuppliers' incremental ccsts. to 43 percent of ,
Settlement Acreenent __
The Settlement Agreement provides that the PJM P Agreement ar it now exists be modified tempo ool that GPU may~ purchase up to~1,700 megawatts frarily to provide rom the Pool in purchased by except purchases made pursuant the GPU. Group from pacityany source
.July Company-Jersey 13 Central Power & to a PennsylvaniaeElectric the Pool 1979 of energ,y at a rate supp, liedper to kWhPool the equalbytothe themember average costLigh compa increased further by (plus) 10 percent provides n es that energy re. The propose,d modification ruh each hour shall be allocated among ther pa ticeived by GPU of up gm the energy to amount the PJM Interconnection es supplying during that h
(,l pcoportion to the supplied by e ach and, in the our in f accoun ting, each such supplying company hour equal ~ to its average cost Interconnection during that hour increa a e perofmWh es to the energy supp The cumulative total of GPU energy receiptsed by 10 percent.
.Intercon,nection accounted for by sthis er.ceed 7 million mWh per year.
fromprocedure the shall not
'%s 'provided The proposed interim in the Settlement modification Ag reement, to theeement, PJM Agr j
i inonth af ter interim schedules become ef f continue either until December 31, 1981 .ective and would ay of the calendar resumes the generation of electric energ,y on ao r TMI Unit tio . 1 basis, in.te rim _sch 3/ whichever ed ules , occurs first. continuing
\
to its pre-amendmentthe form.PJM Agreement would automatically rUpon evert l
~~/3 "Continui_g basis" is defined as the cumulativ e l
(])
\ generation to operate TMI of 80,000 Unit tha.mHh and authorization by th e MRC 70 parcent of " rating". 1 at a power level of at least i
{
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av D P D *D kl 1J o .a T Che prepecod AT ce mt airc pr=viC:s that by the second
(
==
working day cit:r th; er : cd cac;. '..eek, PJ.! shall ccticato
() the accunt cf tha C?C Stoep's dici c cn5 credits for that week f== interchange cf c;erating c:7: city and energy and for any allocated chara of such trans ctions with othora not a partv to the Eatticment .igreement and, when C20's nat balance for a week is a debit P'M chall riaptra *.n intarim billing s tatement to G?U. The a. cent of the billing statement shall be due and payable to ?hiladalphia Electric Ccmpany, as agent
'Cor the Interconnectica, en tha 5 th banking day common to Philadc1phia Electric aca CPU Group af ter the day that it is rende red. Philadelphia 21cccric is required to disburse such paymenrc on that day to the other members in proportion to the net mern.'atthours estimated to have been supplied by
.cach to the interconnection in the ucek being billed. Het monthly billings as determined in accordance with Section
-11.1 of the PJM Agreement.are to be adjusted to reflect weekly payments and receipts made in accordance with the proposed interin schedule.
Finally, the special biliing procedures are voided if any regulatwry commission having jurisdiction over the rates charged to customers of any of the PJM member companies formally proposes to negate or modify the tracking of PJM-charges under the interim schedules into such customers' rates.
(9 ss Comments on Settlement Acreement The Settlement Agreement was filed subs'cribed to by all PJM member companies,by GPU and is Through filingk made af ter submission, or orally at'a July 31, 1980 i
prehearing conference, represqntatives of the D.C. Public Service Commission, the Maryland Public Service Commission, l
the New Jersey Board of Public Utilities, the New Jersey I
Department of Energy, the Pennsylvania Public Utility Commission I and the staff of this Commisnion have stated either that they recommended approval of, or interposed no objection to, the
. Settlement Agreement. General Motors Corporation and'the -
l Lehigh Valley Power Committee, the latter an ad hoc association of indus trial cus tomers, also does not object to the Settlement.
~
Alleg heny Electric Cooperative, Inc. and a number of investor-owned electric companies have filed comments recommending approval of the settlement Agreement.
t
/
l I
Doc.ke t tio. ELSU-22 D FD D m}D a n$'3 _
) 7.ppreval of the Settlement has been opposed only by the Of fi:c cf the Pcrpla ' Cemsal of the DJ. strict of Columbia (c?:) . O?C casart; th:t (1) no inder.enden examination of the publi= intarest has been made; (2) the revenus analysis cucs .l :2ny..ng t. 2 Catt10m;nt 97:ss.'.y undarcstinates its 1= pact; (3) it =ny b2 improper to reduca enurgy charges without revision of the capacity charges; (4) the Settlement Agreement is precised in rama degr 3 on G?U's desire to shield its cus tomars fecm high oil pricca; (5) the Settlement /.greement would preempt state ccamission authority to determine reasonable rates; and (6) there is no demonstration cf public interest of the prcpcsed fiettlemta t Agreemen t in tha record. A reply comment respanding directly"to OPC's arguments (and certain of the other comments) was filed by GPU.
Discussion Like any settlement of a contested proceed' .9 pending before the Commission, apph. oval of the Settleme: , Agreement
.will not establish principles or precedent or control future proceedings or otherwise " settle issues." We need not inquire (m)
A- why the parties to the proceeding supporting (or not opposing) the Settle.ent Agreement have,taken their r.cspective position.
It is the e'usence of a settlement agreement that the participants can agree on an end result without necessarily agreeing upon the reasoning,. data, analyses or principles which led to the agreement. It is clear that approval of the Settigment Agreement will terminate the pro.ceeding on a basis acceptable to all but one of the participants and result in the cECectiveness of new rate schedules at the earliest possible date. From GPU's point of view, it will benefit from the availability at an early date of the new rate schedules. On the other hand, GPU uill be foregoing at least a potential opportunity to obtain even -lower rates and for possibly larger quantities of interchango energy purchases
! during part of the period when the schedules annexed to the Settlement Agreement are in effect; moreover, GPU has undertaken an obligation to make earlier payments for the purchases made by it under the Settlement Agreement.
O O
l Docket No. EL80-22
-G-o V
J ,
to GPU will be pric< d at 110% of incremental e vered s s. Incremental co tTh
' cellers. Che use of incremental energy costcosts are . d
~~in thic instance inasmuch as a= ociated capacity is appropriate obli are covered by other previcicas of the PJM Agreement gations
'Dased on the evidence av change will notinsirates which would be,ailable, it appears that the effected under the Settlement companies. gnificantly affect the revenues of the PJM selling The PJM analysis indicates that if the Settl ement Agreement 30, 1980, GPU's had been payment in ef fect from July 1,1979 th rough June.
$18 million less, assum:ng the came pattern of pur hto PJM w i
within PJM.the GPU Group outside the PJM Agreement and c ases by Public Service Electric and Gas Company wReceipts n by Pe virtually unaffected, while th'ose by Pennsylvani ould have been Light Company would have been reduced o ppa Power roximately $10 and nillion, Baltimore Gas and Slectric approximately $2 end Potomac . Electric Power Company's approximately million 56 If f the reduction in rates from llkresultofreducingGPU'spurchasesfrom Group has the PJM to the million.
GPU increasing put. haces within PJM , outside PJM and
_4/ the PJM analysis states:
"Such impact as (such' change) might have had would have been in the mdirection of(a) red outside PJM (because the PJM soecial pricing would have been less costly to the
~~/4 Since the occurrence of the TMI incident capacity directly from Pennsylvania n operating
. Light Power rhas b Company FERC under No. 72. the terms of the latter's R t These parties have agreed a e Schedule schedules become effective.purchaces will that these mterminate on the dat
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D cke t No. CL80-22 -7 O I E
O J .
GPU Group than the purchases frca outside.
pan) c.nd thus reducing the overall power cor.t c5 the- GPU Group, and (h) increasing the receipts by other PJM companies from tSe Cru Grcup and thereby reducing their overall power costs."
Che c. Misting tariffs of the GPU Grcup provide that any reductions in purcheced power costs will be reficcted in the races of both their retail and' wholesale customers. GPU han ota'ted that this will centinue to be the case. On this basis the Settlement will provide no direct financial benefit to GPU or its s tockholders, but wil1 reduce the rates charged to the Grouo's customers. GPU has contended that it would derive an
' indirect benefit frca approval of the Settlement in that the banking censortium currently providing short-term credit may thereby be more likely to continue to extend the credit line.
Whatever may be the value of this "benefie", any improvement in GPU's Group andfinancial situation ultimately may, be expected would be toof redound assistance to the to the consumers' benefit. -
().are, The objections to the Settlement Agreement posed by OPC in our opinion, adequately answered in the reply comments filed by GPU. OPC has claimed that the present Agreement
'does not differ (" identical in every material respect")
froa an earlier proposal prepared in October 1979. As pointed out by GPU, this assertion is not accurate: The hourly
' limitation has been increased (from.1,100 mWh to 1,700 mWh)
'and the ann to offbet al limitation certain of GPU's ofnon-Pool 7 million mWh has been reduced significant modifications since, as' purchases. These are noted above, an increase in purchases from PJM should have the effect of increasing the receipts overall powerbycosts.
the.other PJM companies and of reducing their The existing provision in the Pool Agreement relative to the treatment of installed capacity by member companies is clear, as is the fact that GPU has fulfilled its membership obligations in this regard.
not now available for serviceThe doesfact not,that_the by the THI termsUnits are of the pool Agreement, directly impair GPU's " Forecast Obligation" Iunder Schedule 2.01(b). Mo adjustment of GPU's obligation has been necessary or, under present circumstances, is required.
C.S)
umrevanrwgs y.reuter m DykD P .,
O D
hb O bb 5 wE\ N. E},!ru One other cen a.M in mJrthy of noto. OPC cbjects to 3 the provisica relieving a PJ:1 .:-!:cr frcn tha 0:t: lament
/
te r;::s if a s t: t= cc: mission re ulatin ; itc retail estes accords diffe: cat ratom:%ing tr: ate:nt. ' ithout getting into the question c:. f ade..*al vs. sente cupren cy en a tarif f matter duly a,2preve by thic Cccaiscica -- a utbject which we expressly do not here decide -- un not2 that all affected r ta te cc ::circions are on record ac .:ct opyc :ing the Settlement.
On this basis alone, uc parecive no difficulty with the provision.
Settlement P. ate In lieu of the normally applicable rates based on the split- savings concept generally used in pricing. economy energy transactions, and for the limited amounts of operating capacity and interchange energy supplies by the PJM Interconnection to GDU as replacement for T;1I Units No.1 and 2, the proposed Settlement rate is 110% of the Interconnection's cost of supplyirig such operating capacity and interchange energy. By the Settlement's terms this special rate will continue no longer than December 31, 1981.
Q As indicated in the following table, the use of a " cost-plus-10't" rate should significantly reduce what GPU must pay for interchange energy'from PJM ( the figures reflect average monthly rates, in mWh, based on PJM's deliveries to GPU in
.1979-1980):
PJM Price at Pro < luc tion Split-Split- . Existing Settlement Se ttle-Savings Markup 104 Price-Cost l'J 79/UU Cost Saving aste Adder on PJM Hatu
_(Mills /kWh) Adder Plus 10%
_(Mills /hwh) (Mills /kWh) Reducti.
Cost ( _Milla/kWh)
( (Mtils/kWh) , ( Mills,'
A3'r il 36.7 46.2 9.5 26 M.s y 39.6 3.7 40.4 5. E 50.4 10.8 27 4.0 43.6 Juno 34.3 45.3 11.0 32 6.3 July 25.9 37.1 11.2 3.4 37.7 7.G August 43 2.6 23.5 31.0 42.0 11.0 35 8. c
- ieptesrbe r 33.5 44.2 10.7 3.1 34.1 7.S October 32 3.4 36.9 33.1 49.4 11.3 30 7.3 November. 35.3 49.7 13.9 3.8 41.9 7. 5 Dececher 39 3.6 39.4 35.5 50.1 14.6 41 10.3 January 41.4 56.9 15.5 3.6 39.1 11.0 37 4.1 45.5 Februsry 44.6 59.0 14.4 32 11.4 4.5 49.1 9.9 O
V
Docke t No. ELCO-22 D T D{ L 4
While the monthly aver:ge =plit-savings adders in th; abcve d:: a rangt- in nagnitude frc= 9.5 to 15.5 mills /h'.Th ,
the cit 2:nst;.va 11; a0dar: range frc 2.G to 4.5 mills /kWh.
The incremental ccst olus 10% rate vill produce adders much clocar in mr.gnitula to the 5 mills /h.h addar ace:pted for PJM's feal con 32:vation energy pricing 5/ than does the split-saving: Lste.
A nur.ber of the parties have suggested'that it would be desirable iar the Ccami=sion to consider an investigation of the hey issues associated with extended base load outages, as well as a ccmprehensive review of the economic balance of both capacity and energy cos't factors inherent in the PJM Agreement. He are not prepared to initiate such a review or investigation based on the foundation of this proceeding.
Recogni=ing the urgency involved in GPU's situation, our May 2, 1980 Order underscored the need for expedited disposition and actively encouraged settlement -- a result uhich has been achieved.
The consecuence of the Settlement is a rate reduction to levels consistent with the, fuel conservation energy rates recently .approyed for PJM, In our opi'nion, an
-adequate basis has been shown.for accroval of the Settlement
(])onJulyand the Settlement Agreement submitted by the PJM Companies 31, 1980, should be accepted in all respects.
The Commission orders:
('A) The Settlement Agreement submitted by the PJM Companies on July 31, 1980, in this proceeding is hereby accepted.
(B) The revisions to the PJM Agreement contained in the settlement Agreement are hereby permitted to become o'ffective as of October 1, 1980
_5/ See order issued July 31, 1980, in Docket Mos.
ER80-427, et al.
S e
9 Doche t ::c. ELO'J-12 D""]D D' T f f Q s o Ju of A d
. 2 (C) 1:ot later than 30 da,*s prior to their proposed effectivo da c, Caneral Public Utilities Corporation shall submit appr=prista tariff changes for the Ceranission's approval to roccic.i une int 2ria r.cdifications of Schedules
.6.03 and 7.01, Intarim ::chedula 10.01 and Artiicle 15, such
, changes to be offective when Three !!ile Island Unit !!o.1 resumes generatica 1981, whichever en a continuing occurs first.. basis or December 31, Agreeman(D)- The Co= mission's approval of this Settlement chall not constitute approval of or precedent regarding any principle or issue in this proceeding.
(E) Docket No. EL30-22 is hereby terminated.
By the Commission.
(SEAL f O
sAGddl Lcis D. cashell, Acting Secretary.
1 O
Mat-Ed Exhibit No. f ,2. f
- 4 Witness: E. Newton Jr.
Page 1 of 6 O
CALCULATION OF PJM RESERVE OBLICATION O
(
{
i iO
.t.ne.... or P.. .UNtt .. R t Q ., . .. ..M t N )
a r a t.e to F0ptCA57 OlvE251Ff ] PLA>NING PERIO3 PEtK -
O P
1 \ /
- SCittueLE 2.281
- PLAhrilhG PLRIOD 19EO-1981 7
1 RUN DATE 6/30/F8 {C .
SV5tEP t PS PE PL EC GPU PEP 10fAL PJM t 13 FCRECASI SLMPER PEAK Ph 3500 9270 4060 4130 6160 4100 35220 34870 input I 28 FCptCAST htNIER FtAN PW S250 eC80 5130 3330 6440 2930 31400 INPUT ICIAL AEI CAPA51LIfIES AS SPIClFl[0 IN 2.211l03 AS CF 12-1-20 e h9 c; 53 4 38 st;P P E R CChutitch5 PW 95G3 12'49 44SC 5162 7754 4989 input j t 48 kh. Ep CCncitirks Ph 103t0 13262 ,teet 5317 e310 5124 thrut ,f I si E)Cf55 CF klNIER 4 0%E8 SUPPtH PW t*7 713 211 155 556 135 262F L4 - L3 1_ C l .E E C L L E D_ h l h ! L B. E E M _______ t!8.____.$ 5 33_.____73 61.____ $312______J115._____600 s_____. 212 5 _2DlI3___________L2_:.t.5._________
i WlhttH PIAKlhG Sv5tEP5 = le>Lt t il PLAkNir.G PlatCG PEAK Mk 4024
' CO. til PAGE 1.A t al PtAANIf4G PERICU PfAF
__ _ . 01 h t B 51 11. L h ! ! I L E ti h 1_ _ __. t h.______ ______._ _________.J8 2 9._______ _ _ ________._ __ ._ ___ ___..J 8 2. 0 .___.5 01.C O.L 15_E G.I. A SUPMtR P(AKthG SYSIEM5 = L1316
- I 93 PL AF A lt.G PE RIE C F t AN PW TSCO 1270 4t30 '6160 4100 i SAME 45 L INE 1 1101 CtffEPENCE=PtAh. FEP. PEAK LE55 NFCUClu hik1ER FEAR PW 3047 ,1903 955 76 1305 T306 i L9 - L 6 till RAllC Of CC. CIFF. IC total t 41.50 24.05 13.07 .t.04 17.86 Co. Llo/tutAL L10 1828 PLAhklNG PERICC PIAg CIVfR5tli ENIIILEPEh! Ph 382.0 501 10llt5 PG 1.A 11 J 1. 8 L L L LA 110.0 l i f B 5 D Y_ ._____ _ f k.____J 4 0.3_.__. 53.5.______ ________S S. S._____3. 0._____6 8 2_____J D 2.0
____L11.E.L12________
(148 $ UPPER PEAK DIVEP!Ilv Ph 350.0 TOTAL t I - PJM L t 1158 Railt CC. til/ICIAL til 1 23.29 26.32 81. 3 11.73 37.49 11.64 E tt Lt/IHIAL Lt m
1161.8LLLCA110.01 HLB 3117._______th______Js.3______S2.2.____.3D.J. _ __31.0 . 61. J_ ____ _ a D. I_____ J 5 0. 0_________ _ _ L l i 1. L 11 - ___$
DIVEf451fIEC FLAhNIhG PEplCC PEAK 5 m it)) hit.IIR PEspIhG SV!IfP5 sa Ph 4401.7 4401.7 LT - Le - Lt6 o
1881 50HPER PEAMikG SV!IEPS Ph 12t5.1 9018.3
- 4039.3 6094.7 3991.1 .30%D.3 L9 - Lt3 - Ll6 34870.0
. O e
. . _. . . . . . . . . . . . . . . . . . . . .. % . w . n 6 n t .. .
PLAhMIN3 PERIOD PEAR 'bER511Y-blNTED PEAK!hG SYSTEMS PAGE 1.d O.
- I JCULE 2.218 PlAhNlhG PEDIOD 19PO-1981 t
! RUN PAIE 6/10/18 hhh SY5IEM F5 PE PL EG GPU PEP 101AL f5 ac .
( Il RECUCEO blhTER PE7K Ibl5 PLAhhlNG PEplCC PW Yb' 4919 L6 PAGE t t 23 kihlER PEtM L#51 PLAhhlNG PERILC Mk 4940 INPUI ICI AL kEl C APAEILITIES .
bb A5 $PEClf IED IN 2.2E18C9
- A5 Cf 12-1-19 F
l El SLPPER CChtlitch5 PW E450
, , INPUT a
( 48 hihlER CCACIll0h5 Pb 6661 INPUI "
b I 5) E PCE55 Of hihlER u l
1 ObE R SUPPER Mb -
211
. L4 - L 3 8 il RECU(E0 blNTER PEAK * ,
l LA5I FLAhhlhG PEPICC Ph 4T29 t L2 - L5 l
1_ J i _ A k E B A G E . E E A E _ _ _. . . . .__ _.. f h _ _.._ __....._ _ _ .__... . 3 8 2 & _.......___._____....._______.._ . __.. 1L1_f_ Loll 2.._____.
fI88 l RE[bEEC hitiTER PEAK i IFIS ftAthlhG PEpl0C Ph 4919 16 PAGE I k
I il 5LPPEP PEAM I Iris PLAhhlhG PERlr0 Ph
- 4C60 Lt PAGE I 110!_AiLEAGL.EEAE_. .....;....._fk___ .._.......________ $130_.
...._. .__ ._..._ . _. __ ___ _ ___ _ __ _ _ _ __ _1 L 5.1. L 21 / 2_ ___ _ - -
Illt wit.tER PEAKIhG 5V5TE'M5 PLAhhlhG PIRICO PEAK Ph . 4824 4824 GRE ATER OF LF OR L to
' 1823 W ire t E R PEANthG SV5tEP5
- SLMPER PEAM MW 4060 4060 LE PAGE 1 *
(13) ClffEREhCE - klhTER i.
PEaxthG SYSTEP5 Ph IE4 764 L 11 - L12 (149 ClffERENCE - SUPPER -
- PEAKIhG 515fEP5 Ph 7306 IOIAL LIO PAGE I
' 1158 blh1ER PEAKIhG SV5fEP5
- PLAhNihG PERICO CIVER5tIY MW.
764 100 L11/10f Lt33 X 144
. LESSER CF L13 04 Ll4 '
4 L O
I
. .. .C 4 I . . . . . f f . . . 0X E L... . R EO.. ...M E NI O
U FOMCEO COTAf D
( ) ATE .
ADJLSINENTS - F
<-o. 2.
SCHICULE 2.212 .
PLAhMING PERIUll I'I D O-19 0 8 RUN llAIE 6/30/f8 e
Sv5 TEM F5 P I- PL et GPU PEP TOTAL i ,
I Li DIVERSIFIED PLAhklNG i PERIUC PEAK 5 MW 12ES.1 1012.1 4401.7 4039.1 6094.7 3991.1 348T0.0 LIF OR LIB PAGE I
( 21 Avitt AGF Cf FCRCED Ot.f AE E
] RAlf5 Cf thlI5 PLAhhtC
- IN SikvlCE 1 23.33 11.f 1 12.04 15.04 18.44 18.03 input
! t 31 ACJt!IPE Al FOR EnfRGY tINIIAIICh 1 U.0 C.00 0.0 0.02 0.0 0.0 0.0 Itdru T i Al Av{pAGE TCRC,EC CUIAGE HAIE 1 15.71 23.33 '12.04 15.06 18.44 18.0! L2
- L3 I 51 a vil: A GE ICHCED CulAGE Ph 1694.9 1789.3 530.0 608.3 1123.9 719.6 4466.0 Lt X L4 I 68 PJM AvlHACE ftRCEE CLIAGE Malf 1 18.54 IulAL L5/IOTAL L1 I il CifffH[ ACE DEthEth CC. Aho PJP AVEPAGC FCRCEC atIAct RAIE 1 9.79 3.17 -4.50
-3.48 -0 10 -0.51 L 4 - L6 8 el FCktfo Et;tAGE RATE *
[]
ACJU$INENI 3 7.14 1.74 -9.68 -5.19 ,
-0.15 -0.76 LT XI.490 i
V2) 1 6 9 L AltGE UNif ADJU51MENTS - U
[C]
SCHEDULE 2.233 PLAANING PERIOD 1920-1981 {}
SYSTEM PS
- PE , PL EC CPU PEP TOTAL M i I 91 DIVEH5ffilC PLAhhlhC 253D PERICO PEAK 5 Pb 7245.1 9018.3 4401.7 4039.1 6094.7 3993.1 34870.0 LIT OR L18 PAGE 1 b (101 (Jhlt idE1 CAPABILIIV IA face 55 0F 900 Pb Pb 0.0 0.0 0.0 0.0 0.0 0.0 '
O.0 input Illi PPCP[RIltt. ATE PARI PW 0.0 0.0 0.C 0.0 0.0 0.0 , 0.0 ,tCO. L9/ TOT L9px10TLt0 112) LAPGE UNii ACJU51PEh! MW .
0.0 0.0 0.0 0.0 0.0 0.0 0.0 Illo-Lill X0.0 (138 LARGE Uhlt ACJLSIPENT I 0.0 C.0 0. 0 ' O.0 0.0 0.0 Lt2/L9
- ALLCCAllCN OF PJM FORECAST REQUIREMENT PAGE 3.
LCA3 CPO ')Jb5IPLh15 - 0 SClif[ULE 2.2 84
- PLAkNING PERIOD 19PO-1988 ruN DAIE 6/30/F6
$YSIEM P5 PI PL EC CPU PfP fili AL PJN I 18 A%IRAGE hEEFLV PEAMS Mh S450.0 124C.0 Al20.C 3180.0 5480.0 29P0.0 28390.0 thPUI I 23 AvtPAGE PLAF.hED AhC MalhIEhAhCE CLIActs Pb !!26.0 1625.0 613.0 601.0 891.0 666.0 5922.0 liePu t i II AVE 18 AGE PISC. ACJtSIMENIS PW -355.0 -2E6.0 -102.0 -82.0 -217.0 -81.0 -8823.0 It4PUI f 43 PLAFhlhG PLHi[0 PIAN PW 15CO.0 , 9270.0 4824.f 4130.0 6160.0 4100.0 35904.0 L P (>R L9 PAGE I
< l.51.LLAC. CELE.EAII0...__........I.__ 83.28..._.52.J6... .St.00..__.ES.St._...SS.30.__..E5.00 _____...______32.23.1Ll!L2iLJllL5....
CitWAhv NAll05 AECVE PJP I 6) IkCptA1E lh PE5fP%E 3 '2.29 S.6F 10.50 I.90 ut il RMit110 f HUM f Ant [ ntLUW I il LCAO CPCP A u jl. 51 F E N I Ph 18. 90.1 264.9 3F3.9 100. 16-PJH t 6 5
-_- ..____.-- : ._.I1UL5_LLh.5_D.5L-CCMPANY Pall 05 EEtok PJr I 88 CliffpEkCE lh HallC 1 3.95 2.67 7.23 . PJH L5 - CO. 15 8 13 PLAkhlf4G PlHIED PEAR N lel Pb 25E.2 IIC.3 , 296.4 102.9 14 N LS 1108 RAllt [f (C. 10 ICIAL 3 42,3 g$,7 42,2 Co, t9/goggg (g 1111. L L A U. U E L E. A C J L 5 ] E L U]..._.. th_....M J. A. ............___.___... 5 2. I... .._.__..__151. I.__ 3 I3.2_.___..__ .L U. . L 10.E. I U l . .L I 1821 OlVER5tfIED PtAhklHG PEplEU PEAN 5 Pb 12ES.0 9018.0 4402.0 4C39.0 6095.n 3998.0 tilIR 118 PAGE I 113) LCAO CHCP ADJL5fMENT 1 -2.17 C.20 2.07 -1.45 4.35 -3.95 L F/Ll? OR E ll/L12 '
thCPEAlf IN' RESERVE V5 LCAO DROP RAll0 LCAO OFCP RAtlC INCREASE IN
- RESERVE LDAD CEUP RAfl0 INCPEASE IN 1 RESERVE 0.00 C.00 C.95 4.49 0.25 *
. 0.01 0.96 5.67 C.Et C.tf 0.02 0.08 C .S T 0.58 6.90 8.14 2
09 0.08 0.22 C.99 9.35 thPUI *
, C.09 C.45 1.00 10.61 - c' C.16
C.90 1.01 II.90 O.91 1.I6 1.02 11.2I C.52 1.73 1.01 14.50 0,,
0.93 -
2.47 -
1.04 15.95 0 94 3.39 1.05 17.32 ml
u.C C A s .s.,
CF sy sonEt . CtrlusM PENS e nu'E 4' .
C EIE::MIhATICN OF fCA$l COLIGATIEN PLAhNIC PURCitA5ES A60 SALES CUN OAIF. 6/30/FM 5 Cite 00LES 2.01 ANC 2.21 PE PLAhNihC PFHt0D 1580-1981 FRCP 6/ 1 10 12/31 System F5 PE PL BC CPU PEP TOTAL PJM 8 Il DIVER 51FIEC PLAkhlhC PERICD PEAN Mk 1245 SCTS 4402 4C39 6094 3998 34RFU L17 UR Ll8 PAGE I i 21 PJP ftPECA51 PECblRPEh! Ph 42541 input
, t 33 PJF PE5EpbE PARGIA - R 1 22.00 22.00 22.C0 22.00 (PJPL2-PJHLil 22.00 22.00 22.00 /PJHL t
( Al FCRCIO CUI ACE R AIE ADJU51PEh1 - F 1 7.14 1.74 -9.68 -5.11 -0.15 -0.76 La PAGE 2 4 SI LARCE Uhlt ADJLSIPEh! - U 1 0.C C.0 0.0 0.0 0.0 0.0 t13 PAGE 2 8 68 LfAD CPCP ADJLSIPENT - D 1 -2.17 C.20 2.07 -1.45 4.35 -3.95 L11 PAGE 3 1 73 ICIAL DESEPVE PAPCth 1 26.57 23.9% 14.39 15.36 26.20 17.29 22.00 L3eL4eL5eL6 I el AlttCAllCh 0F RF5EHbf Ph 1959 2173 433 620 1596 690 7611 Li N LF I 93 IRI AL T CR f C A51 OELIGAllCN PW 1224
- 18251 5035 4659 1691 4681 42541 L t + t8 1108 PLAhhED SYSTEP CAPACIlY Ph 15C3 32549 E450 5162 7754 4SO9
, 4640F INPUI liti CAPAClIV ADJU5INEh! (+8 PW 26 26 ICO.L8/CO.L13 A CO.lf4PUI 1821 ACJLSIED PLAbhEC SY31(P CAPACITY PW 95C3 12549 (450 5188 7754 4989 46433 LEO + Lli (118 litCLCilCN RAll0 IF FJPl19)PJPil29 '
1.0000 f"JML12-PJPLtl/PJMt8 114) ACJLSIED PESERVE PW 1759 2173 433 620 1596 690 7671 te ztl3 1858 FEREr.AST COLIGATICN PW 9224 88251 5035 4659 769t 4681 42541 LI + t !4 Ital OlFICIEhCV=
P L A F.N E D P OR C t' A S E PW g .
O Ll2 - LI5 Elit EDCE55 Pb 279 1298 1415 529 63 308 3892 LIS - L12 i1el PtAbhEC 5 ALE l-) FW O ICO.L t F/IOT L17) y X Tot L16 oo ,
en (193 PLakhEC CEhTRACI CAPACRIY PW 95C3 32549 2450 5188 7754 4989 46433 LE2*Ll6 om L18 cn tel ECulVALEh! To "SullAELE ACJL51PEhl---IC IFE CAPACITV 00LIGAlloh5" PEQUIPEC EY 2.38tEl o m
e
l .- . ,
. . . ms Mat-Ed Exhibit No.s3I-52(#e f Witness: E. Nawton Jr.
Page 1 of 3 l ,
- i I r
! l 1
l METROPOLITAN EDISON COMPANY_
i l
! l
, t GPU POWER POOLING AGREEMENT ,
I
! DETERMINATION OF INSTALLED t RESERVE CAPACITY OBLICATION i
! i
! ILLUSTRATIVE DATA i .
! i 1 l l
O r
)
i i
l '
i i
i 9
9 l
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e
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[!
AlltiCATIOli 0F Crtl cal A( )lf:l le.'F. Pi t ttil h Ftll tilS Silultii tot u 'wsit I t
(
k/
)
~
1978-1979 P!.Attfil t4G I I N IOD 4 . .. t t . . I PN Hr. JC Total CPU lie s a t g a p oi .
- pr \
l g ua c.u s Lu na. reak fu ! 70 5 I 390 2 740 5 815 5 690 Inties 4 ?ll 2 t os. ( - t l* lute r l e ik IM 2 220 1 495 2 545 6 200 -- Input . .' l l
) .. Wii.t. : over PM 83 115 358 556 -- Difference teet weea S m.w e an.1 Pintri tie t espehnlet) ?ll
- a. m #t. - f r ig aC i()
. 's d us e t t'i ..t e r l'awk it! 2 137 1 380 2 187 5 704 --
Wlueer Peak t4as f.xrei.s ulni.: r .r i. t e s : e '- 1 ' . .* l l i kr.l ce.l U t nt er Ibk-l ast rr l'It i 902 -- -- -- --
ralt.ulation su.e is aliat for l '. ..?ll
.'i a t e r ,1%4 I n tro .p.in a
t es 0 i j..nu tsyg 1.rlod Icak IM 2 020 -- -- -- --
Avg. of 1 d. U 1c 4 an.! fas ater of S l. l .e . .II l's e v s ou l' r 1". .l . 9P.d?
7 or 1. .I lii v. s c.i t y IN 315 -- --
3I5 --
t r re al less sum. s 1. 4 ; t e I l . 211 11 4' a . li t s . e s. i t . lutitle- tu s 157.5 -- --
157.5 --
S0Z of ulntes G.iar my r:' t e 4. .t i v i .e p . . p. i i i . .e :ll e . i.t tn or rc:ek I 64
'.7 ,l t i 4 l o _ , s.if J an icia
't PI n.at n 4.tto' l'c el IU --
1 390 2 140 -- --
S.mic .m S wn .cr P. A . Jli 14 o r re d. l 4. s .ll y fH --
10 553 561 --
rr red lew. kcao .d unnter I . ..l : I 'e a ' lit 1i : P tv . t 1 1". : :; t t > ineit!" till --
2.8 154.7 157.5 --
501. o f Minnes s '. 4 m l' I' Pr.4 it 6 - t .. t ' -( t 4 n ll' c r> t to il P. ik Dt.
I; 'reta I . .i' D i e . I'. . e l s l e- tM 42.4 14.5 68.1 145 --
sua u r reak D 6 vro n t t y Il l..c.at e.t 6 n 6..q . : e 1 i a c ?Il i t Sn.e r l's A It a6- rsille.l PI' I. J 'Y tu ! 820.1 1 352.7 2 517.2 5 690 --
rr real. Ic % IT I cA Div. aut l e .4 14 ;lt-l'-II' ftt or t.9- 4.41 -l 12
- 1. I :. . .! e . + .i e l i t - 1 17.08 15.95 19.96 18.09 --
companies - t ero. ; tot it - u. i n n t ed h . . 212
- l. t. l f s . -8 u . f. Total 1.0.k. % (l.01) (2.14) 1.87 -- -- . 262 l '. 3..r( 1 Dot erc '.11. "F" Z (l.50) (3.19) 2. 79 -- -- I.15 x 1.490 ("l'" fri. tor) . ?ll l7 h ;. u t ly I e.ek tal I 800 1 285 2 185 5 270 --
luput -
1i w r. . 1 laverd t%t age til 28) 219 439 947 --
Input -
la w p. . *il e A .t lun t e. n t s HW (35) (44) (112) (211) --
Input --
'l ' a t 1.s up r at to 1 101.68 105.04 90.95 --
97.66 (Ll7 + Llo + 1.19)/ Pr 1 eal. '. 21I t- py.v r.u l .r. t he. .; t:rtl 7.72 pe t e r mi ned 8 t ute t i.pu t l at. l e ;' 4 3
?! In :t. ne in P.cu r ve .E 12.79 17.38 -- -- .
72 l o ul I.rol Ad ju t rent tp 58.2 67.1 --
188.3 --
50t (ro. Ill-ci ti 1.21) x rt' r. ak : ( c. . l.? I . <.t D t 2 6 # t t + > t o . H . . / l i ri g yq P it 10<. tu im GPU 21 Dil fi rer.cc in tut to % -- -- 6.71 -- -- s.IU I. Co. 12 0 4.241 laal Drop Alj.i.tn.cnt ifW -- --
118.3 118.3 -- Tot.a t I.22 in t r aport ion to l'r l'eali (thi ant 1981. In '. . .' l l 2 *.
L.D. Matto (1.2 5)
{ 2' f.n ut lir..;> t. lj.estraent "p" I 2.81 4.96 (4.70) -- -- It.a t t o o f I..D. A ljun t s.cn t to Fr ira;172 or 1.24 / t. I ) 4.261 6- , 26 1 l l: Av g. C.ip.ic i t y tH -- -- -- --
7 533 input --
27 4 IT I!c a.i. r v.- Iti r r i n "R % 32.39 32.39 32.39 -- 32.39 Capacity Les4 Div. I'r real. DtvlJed I.y Div. I r n r.sk 4.21 (L26-lutj l.1 D / f ot . Ll3 2:1 P opo.y re.etvc 'larrin Z 33.70 34.16 30.48 -- 32.39 "R" t "T" e "D" L?? 1 1 16 + I.25 4.21 n Alau..ation of le crvo IU 614 462 767 -- t 843 iteserve Hatran !!ica. Div. Il re ik it 29.\it) 21 y g 4.21 ra r cn 39 lorccast Lap. Re5Ponst- PM 2en I 81) 3 284 --
7 533 Reserve rius Div. I P l'eakt L29 + Lil 00 n av b i l i t y "I CR" In a.
9/21/7!$ to in 7M 0
.. tit
- 4 to :r re. . r U*
Z ra-b- u .D tv C
e, ?;
OO
- 3
- L Pt
- - Mat-E/ Exhibit No.
l Witness: E. Newton Jr.
Page 3 of 3 O
METROPOLITAN EDISON COMPANY GPU PO'.;ER POOLING AGREF.ME::T DETEPMI'** TION OF I:: STALLED CAPACITY OBLIGATIONS -
FORMULAS A';D OTHER RELATED FACTORS Weekly Capacity O_bliga tion = WC0 = Basic Cap. Oblig. + Unavail. Cap. Adj .
C4.01(2)] C4.11(5)] C4.12(4)]
WC0 = BCO = UCA Weekly Capacity Deficiency = (WC0 - Installed Capacity)
C4.01(3)3 C4.2113 C4.212] C4.2133 I
I W +
+
+ W 3
Forecast Capacity
" " = Responsibility = FCR = P C 1 100 l C4.21]
Annual Adjustment gatio = AAR = Est. Avg. Wee Peak in P.P.
C4.11(3)J l
i Weeklyfilocationgactor=WAF=ActualWeeklyPeakXAAR C4.11(4)J l
gasic gapacity Obligation = BCO = CSystem Inst. Cap. - (UCA] X WAF C4.11(5)]
-ForecastAverageU_navailab1kA FAU = 52 Weekly Avg. for P.P.
t C4712(2)] -
! Actual Average Unavailable = AAU = 52 Wk. Avg. Ending in Current Wk.
I C4.12(3)J l ~
gnavailable Capacity Adjustment = UCA = 3 J C4.12(4)]
f i
f FCR
""* *
- Weighted Avg. GPU Inst. Cap. in P.P.
g y 3 l
( ) Unavailable Capacity includes: Forced Outages; Maintenance Outages; and; Miscellaneous Adjustments
- Note
- (a) Each ele: rent referenced to contract schedule.
(b) Installed capacity uses sut:mer rating.
[
vuuuveva.__
,~s.
Met-Ed Exhibit I-28 Witness: .B. H. Cherry
() Page 1 of 3 Metropolitan Edison Company Docket No. R-80051196 Response to Interrogatory No. 13 by St. Regis Paper Company, ej al_, dated September 29, 1980.
Question:
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" Provide an analysis establishing the weather sensitive load
'by rate class, including a demonstration of the relationship, if any, to system peak and total energy output."
Answer:
The attached tables provide monthly data for 1979 and 1980 showing actual and weather adjusted sales for each major class of customers.
( The weather adjustments are based on a historical correla-tion of monthly class sales to monthly cooling and heating l degree days.
Actual monthly sales are adjusted to reflect normal weather conditions which are based on a 10 year average of weather data from the Reading weather station.
Historical weacher adjusted peak loads and energy output are not available. As with sales, peaks and energy output during the winter are significantly more weather sensi'tive than during the summer because of the large amount of elec-tric space heating load and the relative small amount of air-conditioning load.
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Met-Ed Monthly Sales - 1979 f, Actual Sales (GWII) Weather Adjusted Sales (GWil) l Res. Com. Ind.* Other Total Res. Com. Ind.* Other Total January 270 138 271 76 755 269 137 271 76 753 February 284 140 283 84 789 270 138 283 81 771 1
l March 261 133 284 66 745 257 132 284 66 739 April 217 116 278 58 669 220 116 278 58 673 i
{ May 170 114 285 51 619 174 113 285 52 623 1
June 166 122 292 52 631 169 124 292 53 637 I July 173 130 266 51 619 178 136 266 52 631 i August 189 135 276 54 654 183 132 276 53 644 1
September 192 132 287 51 662 190 131 287 50 658 October 174 118 286 54 632 172 120 286 54 631 November 183 126 269 59 638 185 126 269 59 639 December 211 132 264 65 673 233 135 264 69 701 Total 2489 1535 3340 721 8086 , 2500 1539 3340 723 8100 i
!
- The sensitivity of industrial sales to weather is insignificant, and therefore are not weather y $ $ '
adjusted. jgy am
! Total may not add up due to rounding. " g D' 1 O ** M is g
wpg .
10/14/80
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Met-Ed Monthly sales - 1980 .
i Actual Sales (GWH) Weather Adjusted Sales (GWH) i Res. Com. Ind.* Other Total Res. Com. Ind.* Other Total Jcnuary 256 138 269 71 734 267 140 269 73 748
~
February 266 142 285 77 770 268 143 285 77 773 f March 250 139 282 42 713 234 137 282 39 693 April 213 126 275 35 649 227 128 275 37 668 May 175 116 273 28 591 182 118 273- 29 601 I June 163 125 271 26 585 173 133 271 27 604 i July 175 137 235 26 573 174 136 235 26 570 August 203 152 262 26 642 186 139 262 24 610 i September :107 156 267 26 655 200 149 267 26 642 Year-to-date 1908 1231 2419 357 5912 1911 1223 2419 358 5909
- The sensitivity of industrial sales to weather is insignificant, and therefore are not weather adjusted.
Total may not add up due to rounding.
50 i g 'T mail R"[
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10/14/80 ,M "
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, Met-Ed Exhibit I-29 l Witness: B. H. Cherry 1
j Metropolitan Edison Company
, Docket No. R-80051196 I
l Response to Interrogatory No.109 of Set Four of the Consumer Advo c.te Interrogatories.
I
$ Question: "icovide the KWh sales forecast for each month of the year i ending 3/31/81, corresponding to the budget used by Mr.
! Carter as the starting point for his normalization."
l 1
l Answer: Provided below is the requested information:
Total GWh Total GWh Month Sales Forecast Month Sales Forecast
() 4/80 649 10/80 608 5/80 605 11/80 632 6/80 606 12/80 686 7/80 601 1/81 756 i 8/80 621 2/81 761 l 9/80 627 3/81 735 l
12-month total = 7887 GWh l
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