ML20116B184
| ML20116B184 | |
| Person / Time | |
|---|---|
| Site: | 05000363 |
| Issue date: | 03/29/1977 |
| From: | JERSEY CENTRAL POWER & LIGHT CO. |
| To: | |
| Shared Package | |
| ML20116B089 | List: |
| References | |
| FOIA-96-199 NUDOCS 9607290129 | |
| Download: ML20116B184 (14) | |
Text
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i UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of
)
)
JERSEY CENTRAL POWER & LIGHT COMPANY, ET AL.
) Docket No. 50-363
)
(Forked River Nuclear Generating
)
Station, Unit 1)
)
I APPLICATION FOR AMENDMENT OF CONSTRUCTION PERMIT FOR FORKED RIVER NUCLEAR STATION, UNIT 1 (CPPR-96)
Jersey Central Power & Light Company is presently the holder of a construction permit (CPPR-96) for Forked River Nuclear Station, Unit 1 (" Forked River") and is presently the sole owner of the facility.
By this application Jersey l
Central Power & Light Company (" Jersey Central"), Metropolitan Edison Company (" Met-Ed") and Pennsylvania Electric Company
("Penelec"), each of which is a wholly-owned operating l
subsidiary of General Public Utilities Corporation ("GPU"),
request an amendment to construction permit CPPR-96 adding j
Met-Ed and Penelec as co-owners of Forked River as further i
described below.
Jersey Central will retain exclusive responsibility for the d'asign, construction and operation of I
i Forked River.
i i
Jersey Central plans to sell to each of Met-Ed and Penelee a 257. undivided interest in Forked River.
Such sales are to be made in one or more installments and are expected I
9607290129 960719 i
DEKOK96-199 PDR
l to be completed by the Spring of 1978.
Thereafter the costs of completing construction of Forked River will be borne by Jersey Central, Met-Ed and Penelec in proportion to their respective ownership interests.
The proposed sales trans-actions are more fully described in an Application-Declaration to the Securities and Exchange Commission (SEC) filed by Jersey Central, Met-Ed and Penelec on January 13, 1977, which Application-Declaration is incorporated herein by reference.
A copy of the Application. Declaration, including the Exhibits filed therewith, is attached as Attachment A.
The Application-Declaration to the SEC also describes pro-posed changes in ownership interests of Jersey Central, Met-Ed and Penelee in Three Mile Island Nuclear Station, Unit 2
("THI #2"), which changes are the subj ect of a separate application filed this date with the NRC for amendment of the TMI #2 construction permit.
Jersey Central, Met-Ed and Penelee have agreed in principle that Allegheny Electric Cooperative, Inc.
(" Allegheny")
may purchase, if it wishes to do so, a 37. undivided interest in Forked River.
Negotiations to this end are currently in progress and when completed the purchase by Allegheny will be the subj ect of a further application for amendment of the Forked River construction permit.
The planned sales by Jersey l
Central to Met-Ed and Penelec are, however, independent of l
l the proposed purchase by Allegheny.
-2
The following information, including updated infor-mation with respect to Jersey Central, is submitted in support l
of this application.
l
\\
l I.
General Information l
a.
Names and Addresses of Proposed Co-Owners Jersey Central Power & Light Company Madison Avenue at Punch Bowl Road Morristown, New Jersey 07960 l
Metropolitan Edison Company.
Post Office Box 542
(
Reading, Pennsylvania 19603 Pennsylvania Electric Company 1001 Broad Street Johnstown, Pennsylvania 15907 l
b.
Description of Business and Organization "of Co-Owners l
Jersey Central, Met-Ed and Penelec are the three wholly-owned major operating subsidiaries of GPU, a l
Pennsylvania corporation, registered under the Public l
Utility Holding Company Act of 1935.
l 1.
Jersey Central Power & Light Company l
Jersey Central is a public utility incorporated under the laws of the State of New Jersey and en-l gaged in the generation, distribution and sale of l
electric energy.
Its principal place of business j
is located in the Township of Morris (Post Office, Morristown), New Jersey.
Jersey Central has a total generating capacity in service in excess of 2695 megawattc and serves more than 650,000 customers e
1 l
?
in an area of 3,300 square miles constituting 43 percent of the land area of the State of New Jersey.
The names and business addresses of Jersey Central's directors and principal officers, all of whom are citizens of the United States, are as follows:
DIRECTORS C. Aslaksen, Madison Avenue at Punch Bowl Roe.d, Morristown, New Jersey 07960 Shepard Bartnoff, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 H. M. Dieckamp, 260 Cherry Hill Road, Parsippany, New Jersey 07054 I. R. Finfrock, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07054 W. G. Kuhns, 260 Cherry Hill Road, Parsippany, New Jersey, 07054 J. R. Leva, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 G. J. Schneider, 260 Cherry Hill Road, Parsippany, New Jersey, 07054 R. H. Sims, 260 Cherry Hill Road, Parsippany, New Jersey, 07054 0FFICERS W. G. Kuhns, Chairman of the Board and Chief Executive Officer, 260 Cherry Hill Road, Parsippany, New Jersey 07054 Shepard Bartnoff, President and Chief Operating Officer, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 C. Aslaksen, Vice President, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960
-L-
I.-R.
Finfrock, Jr., Vice President Madison Avenue at Punch Bowl Road, Morristown, New Jersey, 07960 J. G. Graham, Vice-President-Legal, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 J. R. Leva, Vice President, Madison Madison at Punch Bowl Road, Morristown, New Jersey 07960 J. R. McGalliard, Vice President, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 G. P. Fundrane, Vice President, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 G. J. Schneider, Vice President, 260 Cherry Hill Road, Parsippany, New Jersey, 07054 E. C. Schoener, Secretary and Treasurer
)
Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 M. B. Peters, Assistant Secretary Madison Avenue at Punch Bowl Road Morristown, New Jersey 07960 H. S. Clayton, Assistant Treasurer Madison Avenue at Punch Bowl Road Morristown, New Jersey 07960 J. S. Burchell, Comptroller, Madison Avenue at Punch Bowl Road, Morristown, New Jersey, 07960 j
P. H. Preis, Assistant Comptroller, Madison Avenue at Punch Bowl Road Morristown, New Jersey 07960
- 2. ' Metropolitan Edison Company Met-Ed is a public utility incorporated under the laws of the Commonwealth of Pennsylvania and engaged in the generation, distribution and sale l f
of olectric energy.
Its principal place of busi-ness is located near Reading, Pennsylvania.
Met-Ed has a total generating capacity in excess of 1703 l
l megawatts and serves more than 335,000 customers in an area of 3,274 square miles constituting 7.2 l
percent of the land area of the Commonwealth of l
The names and business addresses of Met-Ed's directors and principal officers, all of whom are citizens of the United States, are as follows:
DIRECTORS J. S. Bartman, Post Office Box 542, Reading, Pennsylvania 19603 l
W. M. Creitz, Post Office Box 542, Reading, Pennsylvania 19603 H. M. Dieckamp, 260 Cherry Hill Road, Parsippany, New Jersey, 07054
.W. G. Kuhns, 260 Cherry Hill Road, Parsippany, New Jersey, 07054 i
E. W. Schleicher., Post Office Box 542, Reading, Pennsylvania 19603 i
G. J. Schneider, 260 Cherry Hill Road, Parsippany, New Jersey 07054 R. E. Werts, Post Office Box 542, Reading, Pennsylvania 19603 0FFICERS W. G. Kuhns, Chairman of the Board and Chief Executive Officer, 260 Cherry Hill Road, Parsippany, New Jersey 07054-W. M. Creitz, President, Post Office Box 542, Reading, Pennsylvania 19603
R. C. Arnold, Vice President, Post Office Box 542, Rending, Pennsylvania, 19603 J. S. Bartman, Vice President, Post Office Box 542, Reading, Pennsylvania 19603 H. L. Robidoux, Vice President, Post Office Box 542, Reading, Pennsylvania 19603 E. W. Schleicher, Vice President, Post Office Box 542, Reading, Pennsylvania 19603 G. J. Schneider, Vice President, 260 Cherry Hill Road, Parsippany, New Jersey 07054 R. B. Heist, Secretary, Post Office Box 542, Reading, Pennsylvania 19603 R. E. Gehman, Treasurer, Post Office Box 542, Reading, Pennsylvania 19603 R. E. Werts, Comptroller, Post Office Box 542, Reading, Pennsylvania 19603 R. M. Powers, Assistant Secretary, Post Office Box 542, Reading, Pennsylvania 19603 D. L. Huff, Assistant Comptroller, Post Office Box 542, Reading, Pennsylvania 19603 3.
Pennsylvania Electric Company Penelee is a public utility incorporated under the laws of the Commonwealth of Pennsylvania and engaged in the generation, distribution and sale of electric energy.
Its principal place of business is located in Johnstown, Pennsylvania.
Penelee i
has a total generating capacity in excess of 2101 megawatts and serves more than 490,000 customers in an area of 17,600 square miles constituting about 39 percent of the land area of the Common-wealth of Pennsylvania.
I 1 i
The names and business addresses of Penelec's i
directors and principal officers, all of whom are citizens of the United States, are as follows:
DIRECTORS W. G. Kuhns, 260 Cherry Hill Road, Parsippany, New Jersey 07054 1
J. F. Smith, 1001 Broad Street, Johnstown, Pennsylvania. 15907 R. W. Conrad, 1001 Broad Street, Johnstown, Pennsylvania 15907 P. L. Lumnitzer, 1001 Broad Street, j
Johnstown, Pennsylvania 15907 E. J. Miller, 1001 Broad Street, Johnstown, Pennsylvania 15907
.G..J. Schneider, 260 Cherry Hill Road, Parsippany, New Jersey 07054 H. M. Dieckamp, 260 Cherry Hill Road, Parsippany, New Jersey 07054 W. A. Verrochi, 260 Cherry Hill Road, Parsippany, New Jersey 07054 OFFICERS W. G. Kuhns, Chairman of the Board and Chief Executive Officer, 260 Cherry Hill Road, Parsippany, New Jersey 07054 i
J. F. Smith, President, 1001 Broad Street Johnstown, Pennsylvania 15907 R. G. Baker, Vice President-Consumer Affairs, l
1001 Broad Street, Johnstown, Pennsylvania 15907 R. W. Conrad, Vice President-Generation, 1001 Broad Street, Johnstown, Pennsylvania 15907 l
P. L. Lumnitzer, Vice President-Technical, 1001 Broad Street, Johnstown, Pennsylvania 15907 l
_a_
I l
E. J. Millor, Vice President-Operations, l
l 1001 Broad Street, Johnstown, Pennsylvania 15907 G. J. Schneider, Vice President-Financial, 260 Cherry Hill Road, Parsipanny, New Jersey 07054 l
F. A. Donofrio, Comptroller, 1001 Broad l
Street, Johnstown, Pennsylvania 15907 i
W. R. Thomas, Secretary and Treasurer 1001 Broad Street, Johnstown, Pennsylvania 15907 J. W. Bonarrigo, Assistant Secretary, 1001 Broad Street, Johnstown, Pennsylvania 15907 E. Simmons, Assistant Treasurer, 1001 Broad Street, Johnstown, Pennsylvania 15907 T. M. Mowry, Assistant Comptroller, 1001 Broad Street, Johnstown, Pennsylvania 15907 Jersey Central, Met-Ed, Penelec and GPU are not owned, controlled, or dominated by an alien, a foreign corporation or foreign government.
Jersey Central, Met-Ed and Penelee make this application on their own behalf and are not acting as agent or
]
representative of any other person.
II.
Financial Qualifications Arrangements for the transfer of ownership interests in Forked River from Jersey Central to Met-Ed and Penelee are described in Attachment A (Application-Declaration to SEC),
including Exhibit B-1 thereto constituting the agreement dated December 16, 1976 Jersey Central, Met-Ed and Penelee with respect to such transfer.
Construction of Forked River will be financed as an integral part of the total construction program of Jersey
l C ntral, Met-Ed and Penelec in the same general manner as 1
other additions to the GPU system are financed.
Long-term i
debt capital will be obtained through the issuance by Jersey 1
Central, Met-Ed and Penelec of mortgage bonds and unsecured debentures.
Equity capital will be obtained mainly through l
the receipt of capital contributions from GPU.
- However, additional shares of preferred stock are expected to be l
issued and sold from time to time.
The issuance by Jersey Central of mortgage bonds, unsecured debentures and shares of preferred stock requires the approval of the Board of Public Utility Commissioners of the State of New Jersey and of the Securities and Exchange Commission.
The issuance by Met-Ed and Penelec of mortgage bonds, unsecured debentures and shares of preferred stock requires the approval of the Pennsylvania Public Utility Commission and of the Securities and Exchange Commission.
Capital contributions by GPU also require SEC approval under the Public Utility Holding Company Act.
The 1976 System Statistics of GPU and its Subsi-diaries, including the consolidating statement of income and retained earnings financial statements, for the year ended December 31, 1976 and the consolidating balance sheet at December 31, 1976, are annexed as Attachment B.
Jersey Central's estimate of the cost of construc-tion of Forked River, including fabrication and uranium content of the initial reactor core, is shown in Table I.
's of January 1, 1977, construction of Forked River was A
approximately 1% complete.
Table I (Note 1) l Forked River Nuclear Station - Unit 1 i
-Estimated Cost of Construction l
l a.
Total nuclear production plant cost (including all costs assignable to l
FPC account classifications 321-325 inclusive, plus the main power trans-l l
formers ordinarily included in Account i
353)
S ' 900,000,000 (Note 2) b.
Transmission. distribution and general plant costs
$4 82,000,000 (Note 1) s c.
Nuclear Fuel inventory cost for i
first core 74,653,000 (Note 3).
l TOTAL
$1,056,653,000 (Note 4) l NOTES l
1.
The items included in the same categories of Table I are the same as those defined in the applicable electric plant and nuclear fuel inventory accounts prescribed by the Federal Power Commission.
i 2.
These costs include taxes, interest during construction, escalation, insurance, training, licensing and contin-e gen'cies.
l 3.
This cost includes.the cost of procurement of uranium i
ore, conversion and enrichment, and fabrication and delivery of the fuel.
4.
The bases from which the estimated construction costs 1
l-are derived are the contract prices for the nuclear j
steam supply system, uranium and fuel fabrication, in-cluding estimated escalation, and cost proj ections for the other portions of the unit.
III.
Regulatory Approvals l
The proposed transfers of ownership interests in Forked River will require authorizations by the Board of
- 9
l Public Utility Commissioners of the State of New Jersey, the Pennsylvania Public Utility Commission and the Securities and l
Exchange Commission.
Such authorizations will be obtained prior to effecting the proposed transfers.
I IV.
Security Agreement This application does not contain any Restricted Data or other defense information.
Jersey Central, Met-Ed and Penelec agree that they will.not permit any individual to have access to Restricted Data until the Civil Service Commis-l sion shall have made an investigation and a report to the Nuclear Regulatory Commission on the character, associations and loyalty of such individual, and the Nuclear Regulatory Commission shall have determined that permitting such persons to have access to Restricted Data will not endanger the common defense and security.
V.
Communications i
Jersey Central will continue to be solely responsible for communications with the NRC related to Forked River.
All communications to Jersey Central pertaining to this application should continue to be sent to:
Ivan R. Finfrock, Jr.
Vice President Jersey Central Power & Light Company Madison Avenue at Punch Bowl Road Morristown, New Jersey 07960 In addition, it is requested that copies of each communication be sent to:
M. Kenneth Pastor GPU Service Corporation Interpace Building 260 Cherry Hill Road Parsippany, New Jersey 07054
end Thomas M. Crimmins, Jr.
GPU Service Corporation Interpace Building 260 Cherry Hill Road Parsippany, New Jersey 07054 and to Jersey Central's Washington, D. C. counsel:
Shaw, Pittman, Potts & Trowbridge Attention: George F. Trowbridge, Esquire 1800 M Street, N. W.
Washington, D. C.
20036 JERSEY CENTRAL POWER & LIGHT COMPANY d
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION 4
In the Matter of
)
)
METROPOLITAN EDISON COMPANY, ET AL.
)
Docket No. 50-320
)
(Three Mile Island Nuclear
)
Station, Unit 2)
)
l APPLICATION FOR AMENDMENT OF CONSTRUCTION PERMIT FOR THREE MILE ISLAND NUCLEAR STATION, UNIT 2 (CPPR-66)
By this application Metropolitan Edison Company
(" Met-Ed"), Jersey Central Power & Light Company (" Jersey Central") and Pennsylvania Electric Company ("Penelec"), each of which is a wholly-owned operating subsidiary of General Public Utilities Corporation ("GPU"), request an amendment to the construction permit (CPPR-66) for Three Mile Island Nuclear Station, Unit 2 ("TMI #2") adding Penelec as a co-owner of TMI #2 to reflect the current ownership interests in TMI #2 and the further proposed changes in ownership inter-ests described below.
l Construction permit CPPR-66 was issued to Met-Ed and to Jersey Central, as joint owners each having a 507.
undivided interest in TMI #2.
Subsequent to the issuance of the construction permit, Jersey Central sold to Penelee one-half of its interest in TMI #2 (257.), so that the current s
-l f,'
,Q
1 ownsrship percentages for Mat-Ed, Jersey Central and Penelec l
are 50%, 25% and 25%, respectively.
The sale of a 25%
interest to Penelee has not yet been reflected in an acend-l ment to the TMI #2 construction permit but plans for such sale were reflected in the application for an operating license and accompanying Final Safety Analysis. Report filed on behalf of all three companies.
Met-Ed has and will retain exclusive responsibility for the design, con-struction and operation of TMI #2.
In a further rearrangement of ownership interests, Met-Ed plans to sell to Jersey Central one-half of its current interest in TMI #2 (25%) and Penelee plans to sell to Jersey Central three-fifths of its current interest in TMI #2 (157.), so that the resulting ownership percentages for Met-Ed, Jersey Central and Penelee will be 25%, 65%,
and 10%, respectively.
Such sales are to be made in a series of installments geared to Jersey Central's ability to i
make the payments and the ability of Met-Ed and Penelec to make use of the sales proceeds but will be completed by the time TMI #2 is placed in commercial service.
TMI #2 is scheduled to be placed in service by the spring of 1978.
The proposed sales transactions are core fully described in an Application-Declaration to the Securities and Exchange Commission filed by Met-Ed, Jersey Central and Penelee on January 13, 1977, which Application-Declaration is incor-l porated herein by reference.
Copies of the Application-
[
Declaration, including the Exhibits filed therewith, which,
J
also describe proposed changes in ownership interests of Met-Ed, Jersey Central and Penelec in Forked River Nuclear Station Unit 1 (" Forked River"), have been filed this date as Att'chment A to a separate application to NRC for amend-a ment of the Forked River construction permit.
The following info'mation, including updated infor-r mation with respect to Met-Ed, Jersey Central and Penelec, is submitted in support of this application.
l I.
General Information i
a.
Names and Addresses of Co-Owners Metropolitan Edison Company Post Office Box 542 Reading, Pennsylvania 19603 Jersey Central Power & Light Company Madison Avenue at Punch Bowl Road i
Morristown, New Jersey 07960 Pennsylvania Electric Company 1001 Broad Street Johnstown, Pennsylvania 15907 1
b.
Descripcion of Business and Organization of i
I Co-Owners i
Met-Ed, Jersey Central and Penelee are the three wholly-owned, major operating subsidiaries of GPU, a Pennsylvania corporation, registered under the Public l
Utility Holding Company Act of 1935.
t 1.
Metropolitan Edison Company Met-Ed is a public utility incorporated under the laws of the Commonwealth of Pennsylvania and engaged in the generation, distribution and sale of electric energy.
Its principal place of busi-l l ___
f.
~
ness is located near Reading, Pennsylvania.
Met-Ed has a total generating capacity in excess of 1703 megawatts and serves more than 335,000 customers in an area of 3,274 square miles constituting 7.2 percent of the land area of the Commonwealth of Pennsylvania.
The names and business addresses of Met-Ed's directors and principal officers, all of whom are l
citizens of the United States, are as follows:
DIRECTORS a
J. S. Bartman, Post Office Box 542, Reading, Pennsylvania 19603 W. M. Creitz, Post Office Box 542, Reading, Pennsylvania 19603 E. M. Dieckamp, 260 Cherry Hill Road, Parsippany, New Jersey 07054 W. G. L ins, 260 Cherry Hill Road Parsippany, New Jersey 07054 E. W. Schleicher, Post Office Box 542, Reading, Pennsylvania 19603 G. J. Schneider, 260 Cherry Hill Road, Parsippany, New Jersey 07054 R. E. Werts, Post Office Box 542, Reading, Pennsylvania 19603 0FFICERS s
W. G. Kuhns, Chairman of the Board and Chief Executive Officer, 260 Cherry Hill Road, i
Parsippany, New Jersey 07054 W. M. Creitz, President, Post Office Box 542 Reading, Pennsylvania 19603 R. C. Arnold, Vice President, Post Office Box 542, Reading, Pennsylvania 19603.
J. S.-Bartman, Vice President, Post Office Box 542, Reading, Pennsylvania 19603 H. L. Robidoux, Vice President, Post Office Box 542, Reading, Pennsylvania 19603 E._W.
Schleicher, Vice President, Post Office l
Box 542, Reading, Pennsylvania 19603 G. J. Schneider, Vice President, 260 Cherry
- Hill Road, Parsippany, New Jersey 07054 L
R. B. Heist, Secretary, Post Office Fox 542, l
Reading, Pennsylvania 19603 l
R. E. Gehman, Treasurer, Post Office Box 542, L
Reading, Pennsylvania 19603 R. E. Werts,: Comptroller Post Office Box 542, Reading, Pennsylvania' 19603 l
R. M. Powers, Assistant Secretary, Post Office l
Box 542, Reading, Pennsylvania 19603 I
L D. L. Huff, Assistant Comptroller, Post j
Office Box 542, Reading, Pennsylvania 19603 l
2.
Jersey Central Power & Light Company Jersey Central is a public utility incorporated under the laws of the State of New Jersey and en-gaged in'the generation, distribution and sale of electric energy.
Its principal place of business is located in the Township of Morris (Post Office, Morristown), New Jersey.
Jersey Central has a H
total generating capacity in service in excess of 2695 megawatts and serves more than 650,000 cus-comers in an area of 3,300 square miles constituting 43 percent of the land area of the State of New l
Jersey.
4 i-j j --
The namns and business addresses of Jersey Central's directors and principal officers, all of whom are citizens of the United States, are as follows:
DIRECTORS C. Aslaksen, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 Shepard Bartnoff, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 H. M. Dieckamp, 260 Cherry Hill Road, Parsippany, New Jersey 07054 I. R. Finfrock, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07054 W. G. Kuhns, 260 Cherry Hill Road, Parsippany, New Jersey 07054 J. R. Levy, Madison Avenue at Punch Bowl Road, Hbrristown, New Jersey 07960 G. J. Schneider, 260 Cherry Hill Road, Parsippany, New Jersey 07054 R. H. Sims, 260 Cherry Hill Road, Parsippany, New Jersey 07054 OFFICERS
'W.
G. Kuhns, Chairman of the Board and Chief Executive officer, 260 Cherry Hill Road, Parsippany, New Jersey 07054 Shepard Bartnoff, President and Chief Operating Officer, Madison Avenue at Punch 1
Bowl Road, Morristown, New Jersey 07960 C. Aslaksen, Vice President, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 I. R. Finfrock, Jr., Vice President Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 J. R. McGelliard, Vice President, Madison Avenue at Punch Bowl Road Morristown, New Jersey 07960 i
G. P. Mundrane, Vice President, Madison Avenue at Punch Bowl Road, Morristown, i
New Jersey 07960 G. J. Schneider, Vice President, j
260 Cherry Hill Road, Parsippany, New Jersey 07054 E. C. Schoener, Secretary and Treasurer, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 M. B. Peters, Assistant Secretary, t
Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 H. S. Clayton, Assistant Treasurer, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 i
J. S. Burchell, Comptroller, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 P. H. Preis, Assistant Conptroller, Madison Avenue at Punch Bowl Road, Morristown, New Jersey 07960 3.
Pennsylvania Electric Company Penelee is a public utility incorporated under the laws of the Commonwealth of Pennsylvania and engaged in the generation, distribution and sale of electric energy.
Its principal place of business is located in Johnstown, Pennsylvania.
Penelee has a total generating capacity in excess of 2701 megawatts and serves more than 490,000 customers in an area of 17,600 square miles constituting about 39 percent of the land area of the Commonwealth of Pennsylvania.
(
The nam:s and business addresses of Penelec's directors and principal officers, all of whom are citizens of the United States, are as follows:
DIRECTORS W. G. Kuhns, 260 Cherry Hill Road, Parsippany, l
New Jersey 07054 J. F. Smith, 1001 Broad Street, Johnstown, i
Pennsylvania 15907 j
R. W. Conrad, 1001 Broad Street, Johnstown, j
Pennsylvania 15907 I
P. J.
Lumnitzer, 1001 Broad Street, Johnstown, Pennsylvania 15907 E. J. Miller, 1001 Broad Street, Johnstown, Pennsylvania 15907 G. J. Schneider, 260 Cherry Hill Road, Parsippany, New Jersey 07054 H. M. Dieckamp, 260 Cherry Hill Road, Parsippany, New Jersey 07054 W. A. Verrochi, 260 Cherry Hill Road, Parsippany, New Jersey 07054 0FFICERS W. G. Kuhns, Chairman of the Board and Chief Executive Officer, 260 Cherry Hill Road, i
Parsippany, New Jersey 07054 J. F. Smith, President and Chief Operating Officer, 1001 Broad Street, Johnstown, Pennsylvania 15907 R. G. Baker, Vice President-Consumer Affairs, 1001 Broad Street, Johnstown, Pennsylvania l
15907 I
R. W. Conrad, Vice President-Generation, 1001 Broad Street, Johnstown, Pennsylvania 15907 P. L. Lumnitzer, Vice President-Technical, 1001 Broad Street, Johnstown, Pennsylvania 15907
E. J. Miller, Vice President-Operations, 1001 Broad Street, Johnstown, Pennsylvania 15907 G. J. Schneider, Vice President-Financial, 260 Cherry Hill Road, Parsippany, New Jersey 07054 F. A. Donofrio, Comptroller, 1001 Broad j
Street, Johnstown, Pennsylvania 15907 W. R. Thomas, Secretary and Treasurer, i
1001 Broad Street, Johnstown, Pennsylvania 15907 J. W. Bonarrigo, Assistant Secretary, 1001 Broad Street, Johnstown, Pennsylvania 15907 E. Simmons, Assistant Treasurer, 1001 Broad Street, Johnstown, Pennsylvania 15907 T. M. Mowry, Assistant Comptroller, 1001.7 cad Street, Johnstown, Pennsylvania 15907 Met-Ed, Jersey Central, Penelec and GPU are not owned, controlled, or dominated by an alien, a foreign corporation or fereign government.
Met-Ed, Jersey Central and Penelee make this application on their own behalf and are not a, ting as agent or representative of any other person.
II.
Financial Qualifications Arrangements for the transfer of ownership interests in TMI #2 to Jersey Central from Met-Ed and Penelec are des-cribed in the above-referenced Application-Declaration to the SEC, including Exhibit B-1 thereto constituting the Agree-ment dated December 16, 1976 between Met-Ed, Jersey Central and Penelee with respect to such transfer.
Construction of TMI #2 will continue to be financed l
as an integral part of the total construction program of Met-Ed, i
Jorssy Central and Penolec in the same general manner as other i
additions to the GPU system are financed.
Long-term debt capital will be obtained through the issuance by Met-Ed, Jersey Central and Penelec of mortgage bonds and unsecured debentures.
Equity capital will be obtained mainly through the receipt of capital contributions from GPU and the utilization of funds derived from the operations of its three subsidiaries.
However, additional shares of preferred stock are expected to-be issued and sold from time to time.
The issuance by Met-Ed and Penelec of mortgage bonds, unsecured debentures and shares of preferred stock requires the approval of the Pennsylvania Public Utility Commission and of the Securities and Exchange Commission.
The issuance by Jersey Central of mortgage bonds, unsecured debentures and shares of preferred stock requires the approval of the Board of Public Utility Commissioners of the State of New Jersey and of the Securities and Exchange Commission.
Capital contributions by GPU also require SEC approval under the Public Utility Holding Company Act.
The 1976 System Stations of GPU and its Subsi-diaries, including the consolidating statement of income and retained earnings financial' statements, for the year ended December 31, 1976 and the consolidating balance sheet at December 31, 1976 are annexed as Attachment B to the above referred separate applications to NRC for amendment of the Forked River construction permit.
. 1
^
r Met-Ed's estimate of the cost of construction of TMI #2, including fabrication and uranium content of the initial reactor core, is shown in Table I.
As of January 1, 1977, construction of TMI #2 was approximately 89% complete.
i l
Table I (Note 1)
Three Mile Island Nuclear Station - Unit 2 Estimated Cost of Construction a.
Total nuclear production plant cost (including all costs assignable to l
FPC account classifications 321-325 inclusive, plus the main power trans-formers ordinarily included in Account 353)
$637,000,000 (Note 2) b.
Transmission distribution and general plant costs
$ 28,498,000 (Note 1) c.
Nuclear Fuel inventory cost for first core
$ 41,286,000 (Note 3) l TOTAL
$706,784,000 (Note 4)
NOTES 1.
The items included in the same categories of Table I are the same as those defined in the applicable electric plant and nuclear fuel inventory accounts prescribed by the Federal Power Cocmission.
2.
These costs include taxes, interest during construction, escalation, insurance, training,. licensing and contin-gencies.
3.
This cost includes the cost of procureces_ of uranium ore, conversion and enrichment, and fabrication and delivery of the, fuel.
4.
The bases from which the estimated construction costs are derived are the contract prices for the nuclear steam supply system, uranium and fuel fabrication, in-cluding estimated escalation, and cost proj ections for i
the other portions of the unit.
5 III.
Regulatory Approvals The proposed additional transfers of ownership interests in TMI #2 will require authorizations by the Board of Public Utility Commissioners of the State of New Jersey, the Pennsylvania Public Utility Commission and the Securities and Exchange Commission.
Such authorizations will be obtained prior to effecting the proposed transfers.
IV.
Security Agreement This application does not contain any Restricted Data or other defense information.
Met-Ed, Jersey Central and Penelee agree that they will not permit any individual to have access to Restricted Data until the Civil Service Commis-sion shall have made an investigation and a report to the Nuclear Regulatory Commission on the character, associations and loyalty of-such individual, and the Nuclear Regulatory Commission shall have determined that permitting such persons to have access to Restricted Data will not endanger the cocmon defense and security.
V.
Communications Met-Ed will continue to be solely responsible for communications with the NRC related to TMI #2.
All communica-tions to Met-Ed pertaining to this application should continue to be sent to:
l l
R. C. Arnold, Vice President l
Metropolitan Edison Cocpany l
Post Office Box 542 l
Reading, Pennsylvania 19603 j l
i In addition, it is requested that copies of each
]
i communication be sent to:
R. W. Heward, Jr.
GPU Service Corporation Interpace Building 260 Cherry Hill Poad Parsippany, New Jersey 07054 and l
Thomas M. Crimmins, Jr.
j GPU Service Corporation Interpace Building 260 Cherry Hill Road 1
Parsippany, New Jersey 07054 and to Met-Ed's Washington, D. C. counsel:
Shaw, Pittman, Potts & Trowbridge Attention: George F. Trowbridge, Esquire l
1800 M. Street, N.W.
Washington, D. C. 20036 l
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METROPOLITAN EDISON OMPANY I
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ATTEST:
-m/ /3,/ ] c Secretary Sworn to ond subscribed before me this N day o
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NOTARY PURIC CF NEW JERIZY.
My Commission Expires March 7,19!0 i
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JERSEY CENTRAL POWER & LIGHT COMPANY i
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t [and subscribed before e this N day of bd' 971 Sworn & f ~ y GC h-6C, G'W
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Nota y PQ Lic AUCE j. !!.;.2 NOTARY PUDLIC OF NEW JI151Y
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\\k le Sdcretary Sworn tog nd subscribed before me this k day of M / 977, arn ay,- p g.
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ATTACHMENT A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM U-1 APPLICATION UNDER
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THE PUBLIC UTILITY HOLDING COMPANY ACT OP 1935 ("ACT")
JERSEY CENTRAL POWER S LIGHT COMPANY ("JCPSL")
Madison Avenue at Punchbowl Road, Morristown, N.J. 07960 METROPOLITAN EDISON COMPANY (" MET-ED")
j 2800 Pottsville Pike, Reading, Pa. 19603 l
l PENNSYLVANIA ELECTRIC COMPANY ("PENELEC")
1001 Broad Street, Johnstown, Pa. 15907 l
(Names of companies filing this statement l
and addresses of principal executive offices) i GENERAL PUBLIC UTILITIES CORPORATION ("GPU")
80 Pine Street, New York, N.Y. 10005 (Name of top registered holding company parent
}
of each applicant or declarant) t i
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Mr. E. C. Schoener W. T. Osborne, Esq.
Secretary and Treasurer General Attorney
[
Jersey Central Power & Light Company Jersey Central Power & Light Company Madison Avenue at Punchbowl Road Madison Avenue at Punchbowl Road Morristown, New Jersey 07960 Morristown, New Jersey 07960 Mr. R. B. Heist, Secretary S. B. Russell, Esq.
Metropolitan Edison-Company Ryan, Russell & McConaghy 2800 Pottsville Pike
- Suite 304 Colonial Trust Bldg.
Reading, Pennsylvania 15907 Reading, Pennsylvania 19601 Mr. W. R. Thomas H. N. Platt, Jr., Esq.
Secretary and Treasurer Ballard Spahr. Andrews S Ingersoll l
Pennsylvania Electric Company 30 South 17th Street j
1001 Broad Street Philadelphia, Pennsylvania 19103 j
i' Johnstown, Pennsylvania 15907 l
I Mr. F. D. Hafer Treasurer J. B. Liberman, Esq.
I General Public Utilities Corporation Berlack, Israels & Liberman 80 Pine Street 26 Broadway i
New York, llew York 10005 New York, New Yor) 10004
,i Names and addresses of agents for service 4l l
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ITEM 1.
DESCRIPTION OF PROPOSED TRANSACTIONS i<
l 1.01.
JC, ME and PE are currently engaged in the construction of Unit No. 2 of the Three Mile Island nuclear generating station ("TMI #2"),
t as tenants in common (without rights of partition) 3i in which their current respective undivided l
interests are:
JC -- 25%
ME -- 50%
PE -- 25%
TMI (2 is scheduled to be placed in commercial service in the Spring of "78.
t 1.02.
ME proposes to sell JC an additional l
t 25% undivided interest and PE proposes to sell JC an additional 15% undivided interest in TMI (2, so that the respective undivided interests (without rights of partition) in TMI (2 will then be:
JC -- 65%
ME -- 25%
PE -- 10%
I l
l 1.03.
Such sales will be made in a series of installments (which will not necessarily be pro rata as between ME and PE) geared to' JC's ability to make payments and the ability of ME and PE to make use of j
the sales proceeds but will be completed by the time that TMI #2 is placed in commercial service, i
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1.04.
The sale prices received by NE and PE I
will be the book cost, including allowance for funds used during construction ("AFC"), of the interests j
conveyed by them, adjusted in order to retain for the respective customers of ME and PE the net benelit of certain interperiod tax allocations previously effected in accordance with orders of the Pennsy1-vania Public Utility Commission ("PaPUC") and thus will reflect the economic cost of the interests in TMI #2 being sold by NE and PE.
(For details, see Financial Statements 1(e) and 1(f).)
2.01.
JC is currently engaged in the con-struction of the Forked River nuclear generating station ("FR"), which is scheduled to be placed in commercial service in 1983.
2.02.
JC proposes to sell to ME and to PE 25% undivided interests in FR, so that the respective undivided interests (without rights of partition) in FR will then bei JC -- 50%
ME -- 25%
PE -- 25%
2.03.
Such sales will be made in one or more installments but will be completed by the time that THI #2 is placed in commercial service.
l 2.04.
The sale prices received by JC will be l
the book cost, including AFC, of the interests conveyed by it, adjusted in order to retain for i
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JC's customers the net benefit of (a) certain interperiod tax allocations previously effected in accordance with orders of the Board of Public Utility Commissioners of the State of New Jersey
("NJPUC") and (b) the inclusion of a portion of JC's investment in FR in rate base, and thus will reflect the economic cost of the inter-eats in FR being sold by JC.
(For details, see Financial Statement 1(d).)
3.01.
JC, ME and PE will contribute to the on-going construction costs of TMI #2-and FR I
each month in proportion to their. respective ownership interests therein as they exist that month and each of them will continue to accrue AFC on their investments in TMI #2 and FR as such investments exist each month, with the result that each selling company will be reim-bursed for its carrying charges on such invest-ments as they exist from month to month until the transfers are completed.
4.01.
JC, ME and PE own undivided interests l
in Unit No. 1 of the Three Mile Island nuclear generating station (TMI #1), which was placed i
l in service on September 2, 1974, in the following proportions:
JC -- 25%
ME -- 50%
PE -- 257.
The proposed transactions will not affect interests I
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in TMI fl. There are certain facilities at 4
TMI that will be used in comon for TMI #1 and TMI #2.
The aggregate original cost of such y
common facilities at the time that TMI #1 was c1 placed in comercial service was approximately i
$14 million, of which ME's share was approxi-mately $7 million and the PE and JC shares were each approximately $3.5 million. In its rate orders l
relating to Penelec (entered June 10, 1976) and Met-Ed (entered July 7, 1976), the PaPUC excluded from rate base one half of their respective investments in such comon facilities as being assignable to TMI #2, and suggested the continued accrual of AFC thereon. Pursuant thereto, j
l one half of their cost of such comon facilities will be regarded by NE and PE as assignable to TMI #2 l
and the interests in TMI #2 to be transferred by ME and PE to JC will include proportionate 1
interests in such facilities.
4.02.
JC owns 100% of the Oyster Creek nuclear generating station ("OC"), which was placed in comercial service on December 23, 1969.
Some of the OC facilities will be used in comon for FR, which is imediately adjacent to OC.
l Such cot.a. fe:ilities will be equitably allocated between OC and FR and the undivided interests in FR conveyed by JC to ME and PE will include proportionate interests in such comon faci-i l
lities.
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I 5.01.
In accordance with the provisions of the Act, for more than 30 years the planning of the GPU System facilities has been on a basis which, under normal conditions, would permit such facilities to be economically operated as a single interconnected system confined in its operations to a single area or region, in one or more States, not so large as to impair (considering the state of the art and the area or region af-fected) the advantages of localized management, efficient operation and the effectiveness of regulation. In that light, while facilities have i
been planned and installed on an over-all System requirements basis, the allocation of benefits l
and obligations among the System companies has been i
designed to result in an equitable allocation related to their own energy and capacity require-ments. When the decisions were made to proceed with the installation of TMI #2 and FR, and taking into account the then anticipated dates for com-mercial service of TMI #2 and FR, the anticipated participations in base-load energy and capacity i
1 I
among the System companies were reasonably con-i sistent with those standards. However, inter-vening events (including the OPEC oil embargo I
and subsequent price increases, the rise in the cost of coal and uranium, the pause in the rate of increase of the consumption of electricity, and the deferral of the completion dates for TMI #2 and FR) have made it appropriate to reallocate l
among the System companies the participation in u l
P It q
g il TMI #2 and FR.
The factors taken into account in i-determining such reallocation are summarized in the letter, dated October 8, 1976, to the NJPUC and PaPUC filed as Exhibit c
ITEM 2.
FEES, COMMISSIONS AND EXPENSES.
To be filed by amendment.
ITEM 3.
APPLICABLE STATUTORY PROVISIONS.
1.01.
The proposed sales by ME and PE to JC of interests in TMI #2 and the proposed acqui-sition by JC of such interests are subject to l
Sections 12(d) and 12(f) of the Act and Rule 43 thereunder.
I 9I 1.02.
The proposed sales by JC to ME and PE of interests in FR and the proposed acquisition by ME and PE of such interests are subject to Sections 12(d) and 12(f) of the Act and Rule 43 thereunder.
ITEM 4.
RECULATORY APPROVAL.
1.01.
Consummation of certain of the pro-I posed transactions sill require the authorization of the NJPUC and the PaPUC and certain subdivision approvals.
1.02.
The consummation of certain of pro-j posed transactions may require amendment of the 6-
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.e construction permits issued by the Nuclear Regulation Comission ("NRC") for TMI #2 and FR.
1.03.
Operation of TMI #2 and FR will require permits by NRC, the Environmental Protection Agency, the New Jersey Department of Environmental Protection, the Pennsylvania De-partment of Environmental Protection and the Susquehanna River Basin Comission. It is believed that consumation of the proposed transactions will not affect the issuance of such authorizations.
1.04 Except as set forth above, consum-mation of the proposed transactions is not subject to the jurisdiction of any other State Comission and, assuming that the proposed transfers and acquisitions are authorized by your Comission, of any other Federal comission.
ITEM 5.
PROCEDURE.
1.01.
The Applicants-Declarants (a) believe that there should not be a 30-day waiting period between the issuance of the Comission's order and the date on which it is to become effective, (b) waive a recomended decision by a hearing officer or other responsible officer of the Commission, and (c) consent to the participa-tion in the preparation of the Comission's decision by the Division of Corporate Regulation.
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r; ITEM 6.
Exhibits and Financial Statements (a) P"hibits
- Not applicable.
f B-1
-Agreement, dated as of December 16, i
1976 between JE, ME and PE.
C
-Not Applicable.
D-1
-Petition of JC to NJPUC - to be filed by amendment.
D-1(a)
-Order of NJPUC - to be filed by l
Amendment.
D-2
-Filing of ME, PE and JC with PaPUC -
l to be filed by amendment.
l D-2(a)
-Order of PaPUC - to be filed by amendment.
E
-Not applicable.
F
-Opinions of Counsel - to be filed j
by amendment.
1 G
-Letter, dated October 8, 1976, (Revised December 9, 1976) to NJPUC and PaPUC.
H
-Memoranda of services - to be l
filed by amendment.
(b) Financial Statements E
1(a)
-JC - Actual and pro forma balance j
sheet as at, and statements of in come and retained earnings for the 12 months ending, September 30, 1976; pro forma journal entries.
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i 1(b)
-ME - Actual and pro forma balance sheet as at, and statements of in come and retained earnings for the 12 months ending September 30, 1976; pro forma journal entries.
1(c)
-PE - Actual and pro forma balance sheet as at, and statements of income and retained earnings for the 12 months ending, September 30, 1976; 1
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pro forma journal entries.
1(d)
-JC - Statement of method of deter-mining price for sale to ME and PE j
of interests in FR.
{
1(e)
-ME - Statement of method of deter-mining price for sale by ME to JC of interest in TMI #2.
1(f)
-PE - Statement of method of deter-l mining price for sale by PE to JC of interest in TMI #2.
2
-Omitted since the proposed transactions will have no effect thereon.
3
-Not applicable.
4
-None, except as set forth in the Notes l
to the financial statements listed l
above.
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SIGNATURE PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANIES HAVE DULY CAUSED THIS STATEMENT TO BE SIGNED ON THEIR RESPECTIVE BEHALVES BY THE UNDERSIGNED THERE-UNTO DULY AUTHORIZED.
JERSEY CENTRAL POWER & LIGHT COMPANY By:
S. Bartnoff, Pr ent METROPOLITAN EDISON COMPANY r
By:
W. M. CreKz, President PENNSYLVANIA ELECTRIC COMPANY s
By:
- f. F. Smith, President l
l 4
1 l
Dated l
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l EKHIBIT B-1 AGREEMENT, DATED DECEMBER 16, 1976 i
BY AND BETWEEN l
l JERSEY CENTRAL POWER & LIGHT COMPANY ("JCP&L")
AND l
METROPOLITAN EDISON COMPANY (" MET-ED"),
AND l
PENNSYLVANIA ELECTRIC COMPANY ("PENELEC")
l l
l f
l
- WHEREAS, 1.
JCP&L, Met-Ed and Penelec are currently engaged in the construction of Unit No. 2 of the Three Mile Island nuclear generating station ("TMI #2"), as tenants i
in consnon (without rights of partition) in which JCP&L l
currently has a 257. undivided interest, Met-Ed currently
)
has a 507. undivided interest, and Penelec currently has a 25% undivided interest; 2.
JCP&L is currently engaged in the construction of the Forked River nuclear generating station ("FR")
and has agreed in principle with Allegheny Electric Co-operative, Inc. (" Allegheny") to sell the latter, as a tenant in conunon without right of partition, a 3%
undivided interest in FR; and 3.
As a result of unforeseen changes in con-dicions that occurred subsequent to the decisions to proceed with the construction of TMI #2 and FR, JCP&L i
t
i C.
l make installment payments to Met-Ed and Penelec from t
i time to time on schedules agreed upon by it with Met-Ed and Penelec, respectively, and Met-Ed and Penelee shall make conveyances to JCP&L from time to time on schedules agreed upon by them, respectively, with JCP&L.
l l
1.04.
In determining their respective costs of 1
l construction of TMI #2, Met-Ed and Penelee have, for l
some-time, been utilizing a so-called " net-of-tax" l
accrual rate for allowance for funds used during con-L struction ("AFC") in accordance with filings made by them with the Pennsylvania Public Utility Commission
("PaPUC"), in which the income tax reductions associated with the interest component of AFC have been normalized and have been applied to reduce the AFC which otherwise i
i l
would have accrued.
(Such normalization is in accord-q ance with generally accepted accounting principles and l
the application thereof by the use of a net-of-tax AFC accrual rate is expressly authorized by the PaPUC and the FPC.)
The costs shown on their books in respect of the interests in TMI #2 to be sold to JCP&L by Met-Ed and Penelec shall, for the purpose of calculating the price to be paid by JCP&L, be increased by an amount equal to the income tax reductions so normalized by Met-Ed and Penelec, respectively, and the purchase price paid by JCP&L shall be based on such adjusted l-costs.
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L 1.05.
JCP&L will bear the out-of-pocket costs, 1
including transfer taxes, involved in conveying to JCP&L the interests in TMI #2 covered by this Agreement.
l l
i 1.06.
Met-Ed will continue to be responsible on behalf of itself, JCP&L and Penelec for the comple-l tion of the construction and operation of TMI #2.
JCP&L, Met-Ed and Penelec will share the further costs of constructing and completing TMI #2 in proportion to
'their respective interests in TMI #2.as such interests shall exist from time to time.
l 1.07.
If test energy shall be produced by TMI #2 I
before completion of the transfers by Met-Ed and Penelee to JCP&L, such test energy shall be shared l
by JCP&L, Met-Ed and Penelec (and applied to their respective work orders for TMI #2) in proportion to their respective interests in TMI #2 as such interests i
shall exist when such test energy is produced.
1.08.
The PaPUC has heretofore held that the interests of Met-Ed and Penelec in $5,282,000 of the facilities used in common for TMI #1 and TMI #2 as at September 2, 1974, are applicable to TMI #2
[
and should be excluded from rate base and should i
continue to accrue AFC.
The costs of the undivided i
_ /. _
l interestsofMet-EdandPeneleeinsuchcommbfaci-lities and properties which are to be conveyed by them to JCP&L shall reflect such continued AFC accruals'.
I II.
With respect to FR 2.01.
JCP&L agrees to sell to Met-Ed and to Penelec 25% undivided interests (without right of partition) in FR, and Met-Ed and Penelec each agree to purchase such a 25% undivided interest in FR from JCP&L.
2.02.
The amounts to be paid by Met-Ed and Penelec to JCP&L for the 25% undivided interests in FR purchased by them pursuant to Section 2.01 shall be equal to JCP&L's book cost (adjusted as set forth in Section 2.03) for such interests as such adjusted cost shall exist at the time when JCP&L shall make a conveyance to Met-Ed and Penelec.
In the event the transfer of interests in FR is not concluded with one conveyance by JCP&L and one payment therefor by Met-Ed and Penelec, Met-Ed and Penelec shall each make installment payments to JCP&L from time to time on schedules agreed upon by them with JCP&L and JCP&L shall make conveyances to Met-Ed and Penelec from time to time on schedules agreed upon by it with each of them.
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2.03.
In determining its cost of construction of l
l FR, JCP&L has not accrued AFC on varying portions l
of its investment in FR for varying periods in accord-I ance with orders of the Board of Public Utility Com-missioners of the State of New Jersey ("NJPUC").
Moreover, in determining such cost of construction of FR, JCP&L utilized for a period a partial " net-of-tax" AFC accrual rate in accordance with an order of the NJPUC which had the effect of reducing the AFC which otherwise would have been accrued thereon.
The costs shown on JCP&Ls books in respect of the interests in i
l FR to be sold by JCP&L to Met-Ed and Penelec shall, i
for the purpose of calculating the price to be paid by Met-Ed and Penelec, be increased by an amount equal to any AFC which would have been accrued on such investment in the absence of such NJPUC orders, and the purchase prices paid by Met-Ed and Penelec shall be based on l
l such adjusted costs.
2.04.
Met-Ed and Penelec will bear the out-of-pocket costs, including transfer taxes, involved in conveying to each of them the interests in FR covered by this Agreement.
2.05.
JCP&L will be responsible, on behalf of itself, Met-Ed and Penelec (and, if interests in FR shall be sold to Allegheny, on behalf of Allegheny) 1 i
for the completion of the construction and operation of FR.
JCP&L, Met-Ed and Penelec (and, if Allegheny shall become a participant in the ownership of FR, Allegheny) will share the further costs of constructing and com-pleting FR in proportion to their respective interests l
in FR as such interests shall exist from time to time.
2.06.
If test energy shall be produced by FR I
before completion of the transfers by JCP&L to Met-Ed and Penelec, such test energy shall be shared by JCP&L, Met-Ed and Penelec (and applied to their respective work orders for FR) in proportion to their respective interests in FR as such interests shall exist when such test energy is produced.
l 2.07.
JCP&L is the sole owner of the Oyster Creek nuclear generating station ("0C") which is adjacent to FR and some facilities and properties employed l
in connection with FR may also be employed in connec-1 tion with FR.
The costs of such facilities and properties so used in common shall be eauitably allo-cated between OC and FR and the payments made by Met-Ed and Penelec to JCP6L for the interests in FR which they purchase pursuant to this Agreement shall reflect such allocation.
(,
. - _. - - - -. -. -. -.._.. - ~. -. -... -
3 l
1 III.
Conditions i
I j
3.01.
The obligations of each of the parties hereto are subject to satisfaction of the following conditions:
(a)
The obtaining of any-and all requisite authorizations of regulatory, l
licensing or other governmental agencies having jurisdiction with respect to this agreement and the transactions herein pro-vided for;_and (b)
The obtaining of any and all t
requisite releases from the lien of.its first mortgage bond indenture.
3.02.
Each of the parties agree that it will use its best efforts to obtain the authorizations and releases referred to in Section 3.01.
IV.
Assumption of Obligations.
4.01.
To the extent. feasible and appropriate, the parties will make arrangements with their vendors, suppliers and others to whom obligations now exist or will arise in the future with respect to TMI #2 and FR so that such obligations will be borne by them,
\\
IN WITNESS WHEREOF, the undersigned have executed i
1 and delivered this agreement as of the day and year first l
above written.
JERSEY CENTRAL POWER & LIGHT COMPANY
( !/ /[ < /
By:
/
- S~. 'Bartnof f President METROPOLITAN EDISON COMPANY By:
8 4,
W. M. Q#Eitz, President l
l l
PENNSYLVANIA ELECTRIC COMPANY By:
f.'F! Smith, President 1
I i
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General Public Utilitie.r /E.C Corporation AND SUDSIDIAHY ELECTHIC POWER COMPANIES Pertenylvain,i ticete r C. "; ris
- N'r. ;)vi.:.tri i 1.
C. ni; N'y Jer' *, Critt'al P. wer (. L r;ht Lt.tr; 4,
80 PLNE STREET. NEW YOHK. N Y.1000$. TELEPHONE. 747 5200 -
October 8, 1976 OFFICE OF THE PRESIDENT (Revised 12/9/76)
Board Of Public Utility Commissioners State of New Jersey 101 Commerce Street Newarh, Mcv Jersey 07102 At tent i on:
Honorable Joc1 R. Jacobson, President Pennsylvania Public Utility Commission Commonwealth of Pennsylvania 104 North Office Building llarrisburg, Pennsylvania 17120 Attention:
Honorable Louis J. Carter, Chairman
Dear Commissioners:
An intensive review of the load and capacity planning of Jersey Central Power and Light (JC), Metropolitan Edison (ME), and Pennsylvania Electric (PN) has indicated the overall desirability of modifying the ovnership of the i
future CPU nuclear capacity, i.e. Three lille Island Unit 2 (T!!I-2) and Forked River Unit 1 (FR-1), scheduled for commercial service in 5/78 and 5/83 i
respectively.
Specifically, we plan to change the percentage ownership of these units as indicated below:
% Ownership prior plan JC ME PN THI-2 25 50 25 FR-1 100 0
0 revised plan THI-2 65,,
25 10 FR-1 50 25 25 This revision does not result from a change in the underlying principles
' ~
governing system planning and individual company responsibility.
- Instead, they result from a number of external f actors which have changed the projected energy and capacity requirements of the individual companics and the timing of capacity installations since the present ownership percentages in TM1-2 and FR-1 were established several years ago.
This ownership revision will result in a more equitable balance of capacity ownership and fuel costs to the individual CPU subsidiaries.
This letter sets forth the basis for this result and for our decision.
l l
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severally and not jointly, in proportion to their respec-tive ownership interests in TMI #2 and FR as such owner-ship interests shall then exist.
If, however, it shall i
not be feasible or appropriate to make such arrangements with a vendor, supplier or any other obligee with respect to any such obligation, the parties hereto shall nevertheless share such obligation in accordance with such ownership interests.
4.02.
JCP&L's book cost in respect of FR include the principal amount of certain obligations undertaken by JCP&L to Brown Boveri Corporation in connection with the purchase of the turbo-generator and accessory equipment and services for FR.
Notwithstanding Section 4.01, JCP&L shall continue to be solely responsible for the obligations undertaken by it to Brown Boveri Corporation (and any assignee of the latter) in respect of such purchase.
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October 8, 1976 (Revised 12/9/76)
The CPU system planning combines the diverse characteristics of the individual subsidiaries' loads into a composite plan which permits the individual subsidiaries, through joint ownership and other means, to gain the benefits of new technology and economies of scale that would otherwise not be availabic on the basis of their individual needs.
Beyond this joint planning and ownership, the CPU Power Pooling Agreement automatically distributes the benefit from the combined system capability among the companies as seasonal load variations or capacity outages change the short run relationship between load and capacity of the individual' subsidiary.
The ability of the summer peaking New Jersey company to exchange capacity with the winter peaking Pennsylvania companies (combined) is a prime example.
The interchange i
. agreement compensates the supplying company for incremental fuel costs and for the approximate value of the capacity support provided to a sister subsidiary to meet its capacity obligation for system reliability.
The agreement, however, operates most equitably when each subsidiary is in the long run bearing its f air share of the cost of generating capacity and energy production.
When the subcldiaries are each in a position to contribute their fair share, the practical approximations of the interchange agreement are acceptable.
The CPU subsidiaries operate together in a manner analogous to PJM and in turn CPU interacts with PJM on the basis of one composite obligation.
While the absolute icyc1 of each subsidiary's contribution toward the' total CPU capacity inherently varies as load changes and capacity is added and retired, events of the recent past have significantly changed the balance contained in the prior plan.
Notable among these events are:
a) The OPEC embargo and subsequent fuel price changes l
b) The indefinite deferral of Union Beach (800 Mw-oil steam) due to oil supply uncertainty.
c) The recent recession an,d its impact on load growth d) The potentially reduced and more uncertain load growth ci the future c)
Changes in specific loads, e.g.,
Steelton, Hershey, etc.
These events have not only a direct impact on future planning but have changed the current energy supply position of each subsidiary in the sense that valid and sometimes pragmatic choices and decisions which gere made in the past do not, under today's energy pricing, provide the optimum (lowest total revenue requirement) mix of facilities. As.a result, the i
planning challenge today is further complicated by the need to reduce these i
problems by moving each subsidiary incrementally toward today's perception of the long run optimum mix of generation.
.__-__.__m._.._.
i l
3-l
~
October 8, 1976 j
(Revised 12/9/76).
t The impending start-up of THI-2, Spring 1978, provides the first practical opportunity to take specific action with respect to a re-establish-ment of a proper balance between the subsidiaries.
Since it is impossible to define precisely the " optimum" for the future or the criteria for absolute equity among the CPU subsidiaries, we have approached the probicm in terms of j
a number of considerations.
j The following discussion will review the impact of various considerations on the " optimum" ownership of the' n' ext increment of capacity - TMI-2.
)
I Capacity (MW) 2 a)
In the past GPU allocated its total capacity to the individual subsidiaries in relationship to the average of their weekly peaks.
Application of this method to the 1978 conditions would indicate the follouing allocation of Tlil-2.
Capacity. MW
- JC ME PN Obligation 3102 1914 2688 Capacity other than THI-2 2821 1592 2411 Indicated THI-2 ownership 281 322 277 b) GPU's future planning will utilize internally the same method for determining capacity obligations that was adopted by PT.! in 1974.
This method was developed to give more specific recognition to the differences in load shape a,nd seasonar characteristics and the Eencrating unit size and reliability of each PJM member in order to most equitably allocate the required capacity.
The same variations exist between CPU subsidiaries and the same considerations for equity are applicabic.
Allocation of capacity on this PJM basis which CPU has adopted indicates the following distribution of THI-2:
Capacity. HW JC ME PN Obligation 3324 1815 2565 Capacity other than THI-2 2821 1592 2411 j
Indicated THI-2 ownership 503 223 154 i
- Denotes change from October 8 1ctter.
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October 8,1976 (Revised 12/9/76) 11 Enerny (MWH) a) The capacity obligations discussed above are primarily derived from considerations of system reliability and do not distinguish between types of capacity (base, intermediate, and peaking) in l
relationship to producing energy (!!WH) at the lowest cost. Also l
the GPU and PJ!t capacity charge rates in the various interchange agreements are most applicable when each party supplies its own load and the interchange is used primarily to cover short run deficiencies. The capacity charge rate is related primarily to the fixed cost of peaking (combustion turbine) capacity.
These capacity charges, unlike the fixed charges in a purchased power agreement, do not entitle the purchaser to the energy output of a specific unit or class of units. The agreements compensate the owner of generating capacity for the fuel cost associated with supplying energy to a participant in the pooling agreement but do not neces-sarily compensate for the fixed costs associated with making lower l
cost energy available.
It is therefore necessary to further define l
the capacity obligations of each participant. A logical and direct approach is to plan the ownership of base load and intermediate gen-erating capacity such that each subsidiary owns in proportion to the energy (Hwh) requirements of its load, usually referred to as the company's net system requirements (NSR's). Application of this consideration indicates the f ollowing allocation of THI-2:
Capacity, NW l
40 24 36 100 Allocation of base and intermediate capacity 2464 1478 2217 6159 l
Base and intermediate ownership w/o THI-2
_1819 1324 2136 5279 l
Indicated TMI-2 ownership 645 154 81 880 b) A computer simulation of the pooling operation has been used to derive the THI-2 ownership needed to bring each company to a posi-tion of zero net energy interchange cost.
Under this condition the cost of each subsidiaries' interchange purchases and sales nets The indicated ownership of TM1-2 or equivalent capacity to zero.
i for this condition in 1978/9 is:
f Capac i ty, 101
- i I
LC.
HE PN GPU 947 186 101 1234
.t--aa t-a=
naenhor A letter.
l Octobe'r 8, 1976 i
(Revised 12/9/76)
It should be noted that this condition requires more capacity than is availabic from THI-2 and only indicates that, at today's oil prices, CPU, and particularly Jersey Central, can use significant quantities of base load, low energy cost capacity.
l l
III Economics a) The total cost of power (fixed charges, O&M, and fuel) from THI-2, as it is from any new base load facility, will be higher i
than the cost f rom existing facilities or the current energy (f uel) cost from PJM interchange.
This latter condition is the temporary l
result of recent base load generating additions and higher than normal reserves resulting from the recent hesitation in load growth.
Further it cannot be assumed that net interchange will continue to be availabic indefinitely to serve a growing load because that would l
require the other pool members to build excess capacity.
The PJM agreement specifically obligates each party to install or purchase generating capacity of such character that, under normal operating conditions, it can supply the energy requirements of its own load.
l As the load and capacity of each pool member is returned to its normal relationship, it should be expected that the cost of inter-change will be characterized by the cost of peaking power, e.g. oil fired combustion turbines.
The high fixed costs of the new capacity j
that must be added cause that capacity to appear uneconomic in the l
early years but it is clearly economic when over the plant life, the fuel savings offset and exceed the fixed costs on a cumulative present worth basis.
If, however, the company owns too much new high capital cost base load generation before it has a sufficient load to need the energy, the excessive fixed costs in the early years cannot be offset by the future savings.
The optimum ownership then for each company depends upon the opportunity to displace higher cost generation, the fuel cost of that generation, possibic differential inflation between fucis, capacity obligations, and the company's load.
Computer simulation studies which treat each subsidiary as a stand alone system so as to eliminate the short run benefit from inter-l change made possible by someone elses investment and which assume that j'
combustion turbines have been run in order to determine the economic the immediate alternative to ownership of TMI-2 is energy f rom oil fired THI-2 ownership for each subsidiary. These studies calculate the present worth of the cost of owning and operating THI-2 plus the I
cost of alternative energy and capacity payments as a function of THI-2 ownership.
The calculations indicate a different optimum l
ovnership for each subsidiary because the result depends upon a
6
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-. _ _ _. _ _ _.. ~ - _
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October 8,1976 (Revised 12/9/76) load, generation mix and fuel costs. On this stand alone basis,
~
the indicated ownership of THI-2 or equivalent capacity for minimum present worth life time costs for each subsidiary is:
Capacity MW oil escalation rate JC FE PN CPU 7%
750 380 440 1570 10 %
880 440 500-1820 There is clearly a significant increment of load in 1978 which can be served by THI-2 or capacity of equivalent characteristics.
- Again, in total, the subsidiaries could in the long run benefit from more capacity than is available f rom THI-2.
This result depends upon future fuci prices but not future load growth, b) Because of the differing current conditions of the GPU subsi-diaries, the relative value of THI-2 capacity is not equal for the three.
Since there is only 880 Mw of THI-2 to divide among the three subsidiaries, we have examined the ownership split that results in an equal benefit / cost ratio for each.
The benefits are the reduction in fuel, interchange, and capacity costs to serve an increment of a subsidiary's load and the costs are the total cost of owning and operating that portion of THI-2 capable of serving the same increment.
In all cases the calculations are on the basis of l
the present worth (1978) life time cost to serve that increment of l
load.
In this analysis we have again considered the sensitivity of the result to the future price of oil.
The results of this analysis l
indicate the following ownership split for TMI-2:
Capacity Mw
- oil escalation rate JC ME PN GPU 7%
400 295 185 880 10 %
575 210 95 880 As should be expected, the subsidiary with the most existing oil capacity (JC) has the greatest sensitivity to future oil prices and also the greatest opportunity for fuel savings to offset the fixed I
costs and therefore can use the most THI-2 at a benefit / cost ratio that is equal for all three subsidiaries.
Under today's outlook i
for the world supply of oil, the high escalation case is favored.
i, l
- Denotes change from October 8 1ctter.
1 1
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October 8, 1976 (Revised 12/9/76)
IV Timing The foregoing analysis demonstrates the long term benefits available i
from THI-2.
The results also indicate a variety of bases for split-ting the ownership.
Our revised plan is essentially characterizable as an exchange of THI-2 and FR-1 capacity.
An analysis of the present worth of exchanging a portion of THI-2 in 1978 for an equal portion of FR-1 in 1983 with the added cost of replacement power l
in the intervening 1978-83 period demonstrates an indifference to the exchange within the uncertainty in such analysis.
The following gives the 30 year cost of trading 1 Im' of TMI-2 for 1101 of FR stated in terms of present worth in 1978:
$ Hi13fons/Mu (1978 pu) t i
JC ME or PN
', ((sell) purchase' interchange sell) purchase THI-2 2.23 (2.09) l 1978-1983 (0.53) 0.49 (sell) purchase FR-1 (1.59).
1.54 Net 0.11 (0.06)
The costs of TMI-2 and FR-1 include, and differ'slightly due to, local taxes and regulatory differences, i
V.
Revised Plan l
From the analysis above, greatest emphasis should be placed on:
1.
The capacity obligation which takes into account the details i
of each company's characteristics and their impact on the total 1
i 2.
The need for a proper generation mix; namely the relation-ship of base and intermediate capacity to net system (energy) requirements i
3.
The ability to derive benefit from the displacement of high cost (oil) generation.
l
- Denotes change from October 8 letter.
i
t a I D
October 8, 1976 (Revised 12/9/76)
The indicated THI-2 ownership split derived from the above 3 considerations, along with the summary conclusion are listed below:
THI-2 Ownership, (Hw)
JC ME PN
- 1. Capacity Obligation (Ib) 503 223
-154
- 2. Base & Intermediate Mix 645 154 81
- 3. Equal Benefit / Cost (Iligh 011
.iflation) 575 210 95 GPU Revised Plan (%)
572(65) 220(25) 88(10)
It is apparent from the above that the indicated split of THI-2 based upon capacity and energy obligations is consistent with the split (3) l derived from the opportunity to displace high cost fuel.
Similar analysiP has been applied to the ownership of FR-1 and subsequent units.,
With the adjustments resulting from the revised THI-2 ownership, the prime future consideration is maintaining the proper balance of base and intermediate capacity in relationship to NSR or energy requirements of each subsidiary.
On this basis the revised FR-1 ownership (neglecting the planned 3 % ownership of Allegheny Electric Cooperative) is:
Capacity, Hu JC HE PN 4
560
'280 280 The relative balance of the revised plan in comparison with the prior plan is apparent from a comparison of each subsidiary's fraction of CPU's base and intermediate capacity to its fraction of GPU's net system requirements. The following presents that comparison in terms of the departure of such capacity in Hw (brackets indicate deficiency) from that standard:
Capacity, 'the
'J FE PN prior plan after THI-2 (425) 286 139 after FR-1 187 24 (211) revised plan after THI-2 (73) 66 7
after FR-1 (21) 84 (63)
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-g-October 8, 1976 (Revised 12/9/76)
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l It is apparent from the above that the prior plan had drif ted to the point of sizeable dif ferences in base and intermediate capacity relative to NSR's af ter TMI-2 but was somewhat corrected af ter FR-1.
The revised plan achieves a reasonable balance immediately af ter THI-2 and improves that approximate balance af ter FR-1.
Minor iobalances or changes resulting from external f actors outside our control can be adjusted as each increment of future capacity is added. We do, of course, prefer to minimize planning fluctuations if for no other reason than to minimize the minor inequities that can result from changes.
VI Summary The allocation of capacity among the CPU subsidiaries can be viewed from a number of considerations which result in a relatively consistent set of recommendations. Our analysis has shown the general benefit of added
)
nucicar capacity to all three subsidiaries and that THI-2 and FR-1 capacity can be exchanged with no significant present worth diff erence.
The immediate need is to take full account of the nany forces that have impacted the planning in the recent past and to allocate the next increment of capacity so as to restore an equitable balance between the subsidiaries. More specifically, this means the distribution of the fixed costs of ownership in relationship to each subsidiaries' obligations.
While the economic evaluations and our decisions are based on life time present worth considerations, it must be pointed out that the impact on the Pennsylvania companies of cxchanging some TMIe2 for FR-1 later is to def er the rate increase necessary to recognize in rate base the investment in the transferred amount of nuclear power, and conversely in New Jersey, the earlier addition of THI-2 capacity in return for less FR-1 will require an earlier recognition of a nuclear power investment into i
rate base. In this regard it should be noted that no part of the current investment of HE or PN in THI-2 is in rate base, and that portions of JC's investment in TMI-2 and FR-1 that is in rate base will be retained by JC.
It should also be noted that JC will f ace some increased costs for THI-2 related transmission.
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l (Revised 12/9/76) d V
h We seek your understanding of these planning revisions and the asseisted ownership shift in n!I-2 and TR-1.
A detailed report of the analysis and
)
assumption that lead to these revisions will be provided by November 22. We vill f
be pleased to provide any further information as well as follow-up disettssion N
l with your staff as desired.
5 Since p
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EC dtyv 1
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- 11. Dieckamp ji l
cc: Honorable George 11. Barbour fj l
Ilonorable Richard B. McGlynn I
l lionorable Robert K. Bloom l
Ilonorable Michael Johnson a
Ilonorable Je.mes !!cGirr Kelly I
flonorable Helen O'Dannon k*
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R. C. Arnold S. Bartnoff
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l R. W. Conrad i !
I W. M. Creitz 4 l l
I. R. Finfrock F. D. Hafer l
J. Kirsten l
W. G. Kuhns J. B. Liberman E. Newton Jr.
S. B. Russell
.h l G. J. Schneider fI j!
R. H. Sime J. F. Smith y
W. A. Verrochl 9
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FINANCIAL SMTDtDTTS Itera 6(b) 1(a)
Page 1 of 5 JERSEY CDfrRAL IOWER & LIGHT COMPANY
]
BAIANCE SHEET ACTUAL AND PIO FORMA AT SEPTEEER 30, 1976 i
(In housands) f 3
1 k
e Adjustments I
(Details on Actual Page 3)
Pro-Forma l'
UTILITY PLANT (at original cost):
y In service
$1 184 871
$1 184 871 3
Less, accunulated depreciation (Note 1) 245 002 245 002 G
Net 939 869 939 869 Construction work in progress 397 649.
$196 000 593 649 f'
Held for future use 4 911 4 911 y,
Totals 1 342 429 196 000 1 538 429 4
Nuclear fuel 85 154
~ITIU6 102 754 Iess, accunulated amortization (Note 1) 20 485 20 485 4{
Net Nuclear Fuel 64 669 ITT06 82 269 9
Net Utility Plant 1 407 098 213 600 1 620 698 INVESTMDCS:
Other physical property, net 1 246 1 246
{
i htals 1 246 1 246 CURRDC ASSEIS:
h j
Cash (Note 3) 4 898 (215 400)
(210 502)(1) 4 h mporary cash investment 2 000 2 000 I
Special deposits 3 786 3 786 Accounts receivable 36 634 36 634 Inventories at average cost or less:
Materials and supplies for construction and operation 13 842 1 800 15 642 e
Fuel 9 718 9 718 L
Prepayments 5 265 5 265 h
Other 1 331 1 331 i,
Totals 77 474 (IITT56)
(136 126)
DEFERRED DEBITS:
Deferred energy costs (Note 1) 19 694 19 694 Unamortized expense on debt 2 570 2 570 Charges related to proposed construction projects and other work 1 613 1 613 Unamortized property loss 3 701 3 701 Other (Note 10) 3 207 3 207 Tbtals 30 785 20 765 MAL ASSETS S1 516 603
$1 516 603 1
h e accompanying notes are an integral part of tne financial statements.
7 (1) JCP&L intends to build up its cash balances by the issuance of additional securities.
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Ni rInuCIAL STATDDrfS Item 6(b) 1(a)
Page 2 of 5 i.
JERSEY CENTRAL POWER & LIGff COMPANY I
BAIANCE SHEEIS ACTUAL AND PIO-PORMA' AT SEPIDBER 30, 1976 (In thousands)
LIABILITIES AND CAPITAL Adjustments 1
(Details on i
LONG-TElm DEBT, CAPITAL STOCK AND Actual Page 3)
Pro-Forma SURPIlJS (Note 5)
First mortgage bonds and debentures
$ 722 473
$ 722 473 Unamortized prenium and discount, net 1 051 1 051 Other long-term debt 18 953 18 953
(.
Totals 742 477 742 477 Cunulative preferred stock 160 000 160 000 Premiun on cunulative preferred stock 441 441
\\
Less, capital stock expense 1 957 1 957-Ibtals 158 484 158 484 Common stock and surplus Connon stock (Note 4) 153 713 153 713 Capital surplus (Note 4) 293 489 293 489 Retained earnings (Note 6) 21 089 21 089 l
Totals 468 291 468 291 1btals 1 369 252 1 369 252 CURRDFT LIABILITIES:
h J
Securities due within one year to be refinanced (Note 7) 4 928 4 928 l
Notes cayable to banks (Note 7) 16 700 16 700
(
i Accounts payable 16 682 16 682 g )
l Dividends payable on cumulative preferred stock 3 699 3 699 J l
'i Customer deposits 4 570 4 570 4
Taxes accrued 22 306 22 306
,s l l
Interest accrued 13 323 13 323 I j Other 6 561 6 561 s
Totals 88 769 88 769 f
DEFERRED CREDITS:
Deferred income taxes (Notes 1, 2 and 8) 32 202 32 202 4
Unamortized investment credits (Notes 1 and 8) 18 465 18 465
{
Unamortized litigation recovety (Note 10) 1 245 1 245 l
Other 4 007 4 007 y
ibtals 55 919 55 919 Reserve for Pensions (Notes 1 and 12) 2 663 2 663 J
10TAL LIABILITIES AND CAPITAL
$1516 603
$1 516 603 j
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Itta 6(b)1(a)
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Page 3 of 5 1
l JERSEY CENTRAL POWER & LIGHT COMPANY PRO-FORMA JOURNAL ENTRIES TO REF1.ECT PROPOSED TRANSACTIONS AT SEPTEMBER 30. 1976 (1)
(In Thousands)
Construction work in progress
$ 44 000 Nuclear fuel 6 000 Cash
$ 50 000 To record the additional investments incurred by JCP&L on its present ownership interests in Three Mile Island #2 and Forked River to the date of transfer of 50% of Forked River to Met-Ed (25%) and Penelec (25%).
(2)
Construction work in progress
$244 500 Nuclear Fuel 20 600 Cash
$ 265 100 To record the purchase of an additional 40%
interest in Three Mile Island #2 (generating plant and nuclear fuel) together with related
)
realty and transfer taxes.
(3)
Cash
$101 500 0
Construction work in progress
$ 92 500 f
Nuclear Fuel 9 000 jl To record the sale of 50% interest in Forked River (generating plant and nuclear fuel) to j;
Met-Ed (25%) and Penelec (25%).
-- (
)
(4)
Materials and supplies
$ 1 800 t
Cash
$ 1 800 I
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l To record the purchase of materials and supplies associated with Ihree Mile Island.
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I FINANCIAL STATDENTS Item 6(b)l(b)
Page 4 of 5 METROPOLITAN EDISON COMPANY AND SUBSIDIARY 00MPANY 00lEOLIDATED STA'115ENT OF INCOME FOR THE 'WELVE NONMS ENDED SEPTDGER 30, 1976 (In Thousands) l OPERATING REVENUES: (Note 14)
Revenues other than fuel clause revenues S 216 589 Fuel clause revenues 41 166
'Ibtal Operating Revenues 257 755 OPERATING EXPEIEES:
Puel (Note 1) 74 111 Power purchased and interchanged, net (Note 1):
1 Affiliates (4 515)
Others 12 188 Deferral of energy costs (Note 1)
(1 528)
Payroll 26 485 I
i Other operation and maintenance (excluding payroll)(Note 12) 34 601 Depreciation (Note 1) 22 005 l
Federal income tax (Notes 1 and 8) 7 470 State income tax (Notes 1 and 8) 2 304 l
Deferred income taxes, net (Notes 1 and 8) 9 177 Amount equivalent to investment credits (Notes 1 and 8) 1 882 Amortization of acetnulated investment l
credits (Notes 1 and 8)
(993) j Other taxes (Note 13) 20 917 j
Total Operating Expenses 204 104 OPERATING INCOME
$3 651 01HER IIGME AND DEDUCTIOIE:
j l
Allowance for funds used during construction l
i (Note 1) 21 381 Other income, net 223 l
l Income taxes, other income and deductions (Notes 1 and 8) 4 564 l --
Tbtal 26 168 l
l I!GME BEFORE INIEREST CHARGES 79 819 l
i-INIEREST CHARGES:
l Interest on first mortgage bonds and debentures 32 589 Other interest (including amortization of l
premita and expense on debt)(Note 1) 245 Total 32 834 Net Income
$ 46 985
'Ihe accompanying notes are an integral part of the financial statements.
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1 i
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Page 5 of 5
(
s METROPOLITAN EDISON COMPANY AND SUBSIDIARY ColfANY.
1 j
si.
- CONSOLIDATED STATEMENT OF RETAINED EARNINGS i
3 s.
I FOR THE 1WELVE 10 NTH 8" ENDED SEPTEMBER 30, 1976 (In Thousands) i I
i I
Balance, beginning of period
$22 746 Add, Net Income 46 985 i
Total 69 731 i
Deduct:
Dividends on capital stock:
Cumulative preferred stock:
3.90% Series 459 4.35% Series 145 3.85% Series 112 j
3.80% Series 69 4.45% Series 159 8.12% Series 1 299 7.68% Series C 2 688 8.32% Series H 2 080 8.12% Series I 2 030 8.32% Series J 1 248 Common stock 39 300 Total 49 589 Balacce, end of period (Note 6) gg
)
The accompanying notes are an integral part of the financial statements.
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PDNSYLVANIA EIKTRIC COMPANY AND SUBSIDIARY COMPANIES CONSOLIIATED BAIANCE SHEET AC'IUAL AND PEO FORMA AT SEPIDGER 30, 1976 (In 'Ihousands)
ASSETS i
Adjustments (Details on Actual Page 3)
Pro-Forma UTILITY PIANT (at original cost):
i In service
$1 078 673
$1 078 673 Iass, accumulated depreciation (Note 1) 260 912 260 912 Net 817 761 817 761 i
Construction work in progress 247 879
$(15 350) 232 529 Held for future use 3 773 3 773 Tbtals 1 069 413 (T3 357) 1 054 063 Nuclear fuel 21 319 7
22 219 Iess, accumulated amortization (Note 1) 6 799 6 799 Net Nuclear Fuel 14 520 900 15 420 Net Utility Plant 1 083 933 (14 450) 1 069 483 INVESTMENTS:
Other physical property, net 359 359 Ioans to non-affiliated coal companies (Note 11) 16 400 16 400
?
Other, at cost 351 351 Tbtals 17 110 17 110 CURRENT ASSETS:
Cash (Note 3) 10 650 15 150 25 800 Special deposits 5 018 5 018 Accounts receivable 39 205 39 205
)
Inventories at average cost or less:
Materials and suglies for construction and operation 5 146 (700) 4 446 Puel 21 908 21 908 Prepayments 3 063 3 063 Other 2 324 2 324
'lbtals 87 314 (IT TEU) 101 764 DEFERRED DEBITS:
Deferred energy costs (Note 1) 16 625 16 625 Unamortized expense on debt 1 372 1 372 Unamortized mine developnent costs (Note 1) 10 322 10 322 Charges related to proposed construction projects and other work 4 281 4 281 Accum. deferred income taxes 267 267 Other (Note 10) 5 298 5 298 Tbtals 38 165 38 165 1UTAL ASSETS S1 226 522
$1 226 522
'Ihe accompanying notes are an integral part of the financial statements.
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PINANCIAL STATEMENTS Item 6(b)1(c)
Page 3 of 15 PENNSYLVANIA ELECTRIC ColWANY PRO-PORMA JOURNAL ENTRidS TO REFLECT PROPOSED TRANSACTIONS AT SEP'ITMBER 30, 1976 (1)-
(In Thousands)
Construction work in progress
$ 28 000 Nuclear fuel 4 000 Cash
$32 000 To record the additional investments incurred by Penelec on its present ownership interests in Three Mile Island #2 to the date of transfer of a 15% interest to JCP&L together with re.
Isted realty taxes.
(2)
Cash
$ 98 600 Cons truction work in progress
$'91 000 Nuclear fuel 7 600 To record the sale by Penelee of a 15% interest in Three Mile Island #2 (generating pidnt and nuclear fuel) together with related realty taxes to JCP&L.
(3)
Construction work in progress
$ 1 400 Cash
$ 1 400 To record the net Pennsylvania income taxes associated with the transfer of 15% of Three Mile Island #2 to JCP&L.
(4)
Cash 700 Materials and supplies 700 l
l To record the sale of materials and suppites associated with Three Mile Island.
- i (5) 1I
$l Construction work in progress
$ 46 250 g
Nuclear fuel 4 500 2
Cash
$ 50 750 To record the purchase of a 25% interest in Porked River (generating plant and nuclest j
fuel) from JCP&L.
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3 FINANCIAL STATEMENTS 4
Item 6(b) 1(c)
Page 5 of 15 PENNSYLVANIA ELECTRIC COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMEhr OF RETAINED EARNINGS FOR THE 1VELVE NDNTHS ENDED SEPTEMBER 30. 1976 (In Thousands)
Balance, beginning of period
$28 371 Add, leet Income 50 379 Total 78 750 Deduct:
Dividends on capital stock:
i Cumuistive preferred stock:
4.40% Series B 250 3.70% Series C 359 4.0$% Series D 258' 4.70% Series E 135 I
4.50% Series F 193 4.60% Series c 348 8.36% Series H 2 090 8.12% Series I 2 030 11.72% Series-J 2 857 10.88% Series K 3 269 t
9.00% Series L 1 829 Common stock 36 000 Total 49 618 I
j Balance, end of period (Note 6)
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FINANCIAL STMEMENTS Item 6(b)l(c) j Page 6 of 15
,1 NL7fES 1D FINANCIAL STATEMENTS I
f 1.
SIM4ARY OF SI@IFICANT ACODUMTING POLICIES:
i OPERATING REVENUES:
It is the general plicy of Jersey Central Power & Light Company
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("JCP&L"), Metropolitan Edison Company (" Met-Ed") and Pennsylvania Electric Company ("Penelec") to include in their operating revenues y
only those sales recorded by meters read during that period.
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DEPPICIATION:
JCP&L, Met-Ed and Penelec (Re " Companies") provide for depreci-ation at annual rates determined and revised periodically on the basis f
of sttdies by independent engineers to be sufficient to amortize the original cost of depreciable property over estimated service lives, which are generally longer than those eroployed for tax purposes. The Companies use depreciation rates based on functional account groups which, on an aggregate cmposite basis, resulted in an approximate annual rate of 3.13%, 2.68% and 2.78%, respectively, for the year 1975.
In its rate order of June 10, 1976, the New Jersey Board of Public Utility Carmissioners ("NJPUC") approved changes in JCP&L's functional account depreciation accrual rates which resulted in an approximate annual rate of 3.27%.
AMORTIZATION OF NUCLEAR PUEL:
he amortization of nuclear fuel is provided on a unit of produc-tion basis. Rates are determined and periodically revised to amortize the net cost over the useful lives.
INCOME R XES:
General Public Utilities (" CPU") and its subsidiaries file consoli-dated Federal income tax returns. The consolidated Federal income tax liability is allocated amory the participants in the consolidated returns pursuant to agreements generally designed to allocate such liability in proportion to the participants' respective contributions to such liability.
% e agreements also provide that a participant other than CPU will not pay a tax in excess of its separate return tax liability.
Re revenues of the Companies in any period are dependent to a significant extent upon the costs which are recognized and allowed in that period for rate-making purposes. In accordance therewith, the companies have employed the following policies:
Liberalized Depreciation %e Companies generally utilize he shortest depreciation lives permitted by the Internal Revenue Code in computing depreciation deductions, and pro-( I vide for deferred taxes where permitted in the rate-making process.
Investment Credits: he 3% investment credits are being amortized over a ten-year period while the 4% and 10%
investment credits are being amortized over the estimated j
service lives of the related facilities.
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FINA!CIAL SMTDOFTS Item 6(b)1(c)
Page 7 of 15 tore:S 10 FINANCIAL STATEMDCS 1.
SLM1ARY OF SIGNIFICANT ACCXXNTItC FOLICIES: (Continued)
ALLOWANCE FOR FUNDS USED DURItC CONSTRUCTION:
ne applicable regulatory uniform systems of accounts define allowance for furds used during construction ("AFC") as " including the net cost during the period of construction of borrowed funds i
l used for construction purposes and a reasonable rate on other funds when so used." While AFC results in a current increase in utility plant to be recognized for rate-making purposes and represents, in this fashion, current compensation for the use of capital devoted to construction, AFC is not an item of current cash income; instead, AFC is realized in cash after the related plant is placed in service by means of the allowance for depreciation charges, based on total
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cost of the plant, including AFC.
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Effective September 1,1973, April 1,1974 and June 17, 1975, j
Penelec, Met-Eld and JCP&L, consistent with charges in rate-making d
treatment, began allocating the income tax reductions (50% in the 3
case of JCP&L) associated with the interest component of AFC to other income ard employing af ter-tax accrual rates for AFC.
Effective July 19, 1976, the IUPUC required that JCP&L allocate such tax reductions to operating income ard that JCP&L employ a before tax AFC accrual rate.
Se accrual rates employed by the companies during the twelve months ended September 30, 1976 were as follows:
JCP&L 8.23%
- 9.70%
Met-Ed 7-1/4% 1/4%*
Penelec 7-3/4% 1/4%*
- Rate currently employed.
On October 29, 1976, the IUPUC changed JCP&L's accrual rate to 9.3%, effective July 19, 1976.
b All of the accrual rates have been less than the cost of in-y cremental capital employed to finance the Companies' construction s
programs. We accrual rates are reviewed periodically with the 4
Commissions at periodic intervals.
3 PENSION PIM E:
n e Companies have several pension plans including plans applicable to all employees, the accrued costs of which are being funded and supplemental pension plans applicable only to super-visory employees which were not funded prior to 1976 but for which reserves had been created by charges to pension expense. Se com-panies began to fund such supplemental plans beginning in 1976.
Prior service costs are being amortized over 25 year periods.
DEFERRED DERGY COSTS:
l Re tariffs urder which the Companies' excess fuel and energy costs are billed prwide for the automatic recovery of such costs within a period of four months from the incurrence of such costs.
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FINh!CIAL S1ATD1ERIS Item 6(b)l(c)
Page 8 of 15 N7tES 10 FINA!CIAL STATEMENTS 1.
SLH4ARY OF SIGNIFICANT ACCOUNTI!G FOLICIES: (Continued)
DEFERRED ENEFGY COSTS: (Continued)
In accordance therewith, the Companies are employing the policy of providing for the recognition of such costs in the period in which the related revenues are billed. Se Companies believe that the regulatory bodies governing their rates will permit the future recovery of such deferred costs.
MINE DEVEIDPMIRT COSTS:
nese costs are being amortized to income over a period of 20 years, the estimated life of the mines.
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2.
UNAMORTIZED PROPERTY IDSS:
j Effective October 1, 1973, JCP&L began amortizing its invest-ment in the Iongwood Valley project over a ten year period. Se related Federal income tax reduction is being amortized over the same period.
3 CDMPENSATI!G BAIANCES AND SHORT-TERM DORBOWI!C ARRANGEMERIS:
The Companies have informal lines of credit with various lenders whereby the lenders have agreed to provide specified maximum amounts, in the periods between permanent financings, as a temporary source of funds for their capital programs. W ese arrangements generally pro-
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vide for the maintenance of compensating balances rangirg frcun a mini-1 mtzn of 10% of the available line of credit to a maximum of 10% of the line plus 10% of the loans outstanding, as determined on an average daily basis. Rece informal arrangements expire at various dates in the next twelve months and are expected to be extended or new arrange-ments negotiated with other sources.
At September 30, 1976, the lines of credit available under these arrangements totaled approximately $121 million, S61 million and $99 million, for JCP&L, Met-Ed and Penelec, respectively. Substantially all of the cash at that date was maintained as compensating balances.
4.
CAPITAL S'IOCK AND CAPITAL SURPLUS:
Penelec sold 320,000 shares of Cumulative Preferred Stock,10.88%
Series K, par value $100 per share, in October 1975. It also sold 1,400,000 shares of Cumulative Preferred Stock, 9% Series L, stated value $25 per share, in March 1976.
lJ During the twelve months ended September 30, 1976, cash contri-l butions from GPU of $23,000,0f,0 (JCP&L) and $24,000,000 (Penelec) were credited to Capital surplus
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FINhNCIAL STATDENTS h
Item 6(b)1(c) j' Page 9 of 15 j
4, NOITS 10 FINANCIAL STATDE!NIS 4i 5.
IDNG-TERM DEBT AND CLMUIATIVE PREFERRED S'10CK MATURITIES:
Iong-term debt and etnulative preferred stock maturities during I
the years 1977 through 1981 are as follows:
(In housands)
JCP&L Met-Ed Penelec Debt Prefer red Debt Debt Prefer red 1977
$ 5 143
$1 250
$ 6 715 $ 1 921
$1 250 1978 16 064 1 250 5 720 1 922 1 250 1979 37 555 1 250 2 222 12 923 1 250 180 9 353 2 500 14 475 2 498 2 850 t
9 675 2 500 2 227 6 925 2 850 l
A ";eptember 30, 1976, annual sinking fund requirements on out-l standiw first mortgage bonds and debentures aggregate $5,143,000 (JCP&L), $1,980,000 (Met-Ed) and $1,840,000 (Penelec) per annum for the years 1977 through 1981. W e remaining long-term debt and cumu-lative preferred stock (JCP&L,13.50% Series F and 11.006 Series G; Penelec, 11.726 Series J and 10.88% Series K), matures at various dates through 2006.
6.
PfrAINED EARNINGS:
Retained earnings include $1,729,000 (JCP&L), $3,360,000 (Met-Ed) and $10,084,000 (Penelec) which amounts are restricted as to the declar-ation of cash dividends on comon stock in accordance with provisions contained in the Companies' mortgages, debenture indentures and charters.
These restrictions do not affect the Companies' present policies with respect to the distribution of dividends on their common stock.
7.
CURRDTP MATURITIES ON SfrURITIFE AND NOTES PAYABIE:
At September 30, 1976, current maturities on securities and notes payable comprised the following (In Thousands)
JCP&L Met-Ed Penelec Notes Payable to Banks (1)
$16 700 $12 000 Sinking Fund Pequirements on long-Term Debt S 3 673
$1 640 First Mortgage Honds, 3% Serles, due 1977
$ 4 500 Redemption of Cumulative Preferred Stock 1 250 1 250 Othet 237 B1 Securities due within one year to be refinanced
$ 4 928 $ 4 737
$2 971 1
(1) Average interest rate 6.9%
6.7%
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FIl&NCIAL STATEMDCS Item 6(b)1(c)
Page 11 of 15 1
I turf:S '!O FINANCIAL STATEMDRS i
9.
00PMMMDfIS AND CONTINGENCIES:
l he Companies expect to make expenditures of approximately I
$151 million (JCP&L), $92 million (Met-Ed) and $127 million i
(Penelec) for construction purposes during 1976, and in that connection have incurred substantial commitments.
W e Companies are engaged in negotiations with various e
suppliets telating to the latters' claims for delay or termin-ation charges or increased fees which such suppliers assert result ftom the Companies' tevisions of their construction plans and schedules and/or from the increased scope of supply. We do not expect at this time that such negotiations will result in any matetial increase in costs that would not be subsequently tecovered.
A suit has been brought against JCP&L seeking injunctions against the continued operation of the Oyster Creek station as well as damages in an unspecified amount. In the opinion of JCP&L's general counsel W. T. Osborne the likelihood of the grant of the injunctions requested is temote. Other claims for damages have been asserted. JCP&L's management believes that l
such liability, if any, as it may have for such damages in the pending suits and for all asserted and potential similar claims l
would not be material. If JCP&L were required to pay danages in respect to such claims, it would seek to amortize such cost over a reasonable petiod fot rate-making purposes and JCP&L's management believes that such amottization would be authorized.
JCP&L acquited a site for a proposed ptmiped storage project by assignment of an option. %e contract relating to such assign-ment provides that the assignot has the right to acquire such site for $6 million by notice given by July 1,1976, if the requisite regulatory authorizations for the construction of the project were not obtained by Decembet 31, 1975. Such auttorizations were not obtained by that date. On June 29, 1976, the assignor notified JCP&L that it elects to acquire the property on December 30, 1976.
At September 30, 1976, JCP&L's investment in the project, includ-ing the purchase price of the site, was approximately $10 million.
In its pending rate increase application, JCP&L is seeking authori-zation from the RTPUC to amortize JCP&L's resulting loss ($3 million after income tax deductions) over a reasonable period for rate-making purposes and JCP&L's management believes that there are pre-cedents for permitting such amortization.
+ i In 1975, a comittee of the Pennsylvania legislature issued re-ports prepared by a staff auditor of the Comittee which were critical
, l of the coal procurement practices of Met-Ed and Penelec and claimed l
that they had not vigorously enforced their coal supply agreements, wtth the result that increased charges were billed to Met-Ed's and Penelec's customets under their fuel adjustment clauses. W e reports noted that Met-Ed and Penelec stated that they had paid the higher prices because there was an unacceptable risk of inadequate supply and that other alternatives would have resulted in even higher costs 11 or decreased service to customets. We report recommended investi-gations to determine if Met-Ed and Penelec or their custoners are entitled to a legal remedy for the allegedly excessive payments.
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FImKIAL STATDtERTS Item 6(b)l(c)
Page 12 of 15 tDIES 'IO PIfRNCIAL STATDDTIS 9.
COMMITMDfrS AND CONTINGENCIES: (Continued)
In October 1976, the Governor of Pennsylvania approved an act requiring the Pennsylvania Public Utility Commission ("PaPUC") to order any public utility which is found by the PaPT, after a hearing, to have improperly paid a strn in excess of its contract price for coal duting the calendar year 1974 to refund said improper excess amount to its constrners. Het-Ed and Penelec believe that they have not improperly paid any material stns in excess of such contract price for coal. %e bill also provides that the PaPUC shall adopt regulations prohibiting utilities subject to its jurisdiction frczn paying for or agreeing to pay for goods, services, equipment or fuels at prices in excess of those contained in contracts existing between such utilities and providers of such goods, services, equipnent for fuel services.
As a result of a PaPUC directed sttdy of Met-Ed's and Penelec's fuel procurement policies, practices and procedures, Met-Ed's and Penelec's independent auditors subnitted reports to the PaPUC on March 1,1976, which identified payments to suppliers in excess of contract prices of approximately $5,800,000 (Met-Ed) and $4,500,000 (Penelec) (which payments were mMe in 1974) but stated that "(a) part of these additional costs was unavoidable since they were caused by external conditions beyond the control of Met-Ed and Penelec" and "to some degree", because of its coal procurement practices which the reports found to be " informal and not well doctrnented". " Met-Ed's and Penelec's alternatives were limited and they were not in a strong bargaining position to contend with 1974 corditions", the reports j
stated, but added that, in retrospect, Met-Ed and Penelec might have done more to contain fuel costs, despite such conditions and i
procurement problens. Although the reports said that Met-Ed's and Penelec's primary commitment is to maintain reliable electric service, it added that Met-Ed and Penelec "could have been more responsive to the developing procurement problems and taken more effective action to cope with them".
On March 15, 1976, the PaPUC instituted complaints against several Pennsylvania electric utilities, including Met-Ed and Penelec, as to the components of their fuel cost adjustment surcharge and the amount of, as well as the manner in which said fuel cost adjustment surcharge was calculated and applied, and passed on or otherwise charged to customers.
We PaPUC ordered that an investigation be instituted for the purpose of determining the fairness, reasonableness, justness and lawfulness of the charges made and rates received by Met-Ed and Penelec throtqh the fuel cost Mjustment surcharge. In the opinion of the management of Met-Ed and Penelec, the charges made and rates received by it through the fuel cost a33ustment surcharge were fair, reasonable, just an$
lawful and Met-Ed and Penelec intend to so state in their response to the complaint.
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On April 20, 1976, the pap'JC adopted an order, the purpose of which was stated therein being to insure proper application of fuel ij adjustment clauses of all electric utilities in the State. %e terms of the April 20, 1976 order raised questions of interpretation and 3
on May 17, 1976, the PaPUC amended that order and directed each elec-f tric utility utilizing a fuel cost adjustment clause to subnit to the f
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Item 6(b)1(c) j Page 13 of 15 g) f..
fores 10 FINANCIAL STATDENTS
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9.
00PMITMDirS AND CONTINGENCIES: (Continued)
PaPUC, within 30 days, for its prior approval a tariff supplement, f
effective August 1, 1976, adding at the end of such clause the following:
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I "At least ten (10) days prior to the beginning 7
l of each billing month, Met-Ed and Penelec will file r
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l with Pennsylvania Public Utility Cbmission in such form as the Commission shall have prescribed (a) a copy of the computation of the fuel cost adjustment or purchased power a$justment to be applied during such month, and (b) such other information pertain-ing thereto as the Commission may require."
"The application of this clause shall be subject to continuous review and to audit by the Comission at such intervals as the Comission shall determine.
The Comission shall continuously review the reason-ableness and lawfulness of the mounts of the sur-l charges produced by the fuel adjustment clause and the charges included therein."
"If from such audit it shall be determined, by final order entered after notice and hearing, that this clause has been erroneously or imp:operly uti-lized, Met-Ed and Penelec will rectify such error or impropriety, and apply credits against future fuel cost adjustments or purchased power adjustments for i
such revenues as shall have been erroneously or l
impoperly collected. The Comission's Order shall be subject to the right of Appeal."
i The PaPUC order also stated that the PaPUC would establish eti-teria to safeguard rate-payers by requiring that utilities adhere to fuel procurement policies designed to obtain the lowest reasonable i
cost to rate-payers. On June 2,1976, the PaPUC promulgated interim criteria for fuel procurement policies and procedures which require j
submission by the utilities, within 60 days, of their procurement j
policies ard procedures for teview by the PaPUC.
In June 1975, the PaPUC initiated a general investigation of fuel adjustment clauses of all Pennsylvania electric utilities, in which it stated that it proposed to consider whethet it should allow utilities to recover through fuel adjustment clauses less than the full increase in fuel costs. Hearings before the PaPUC in this general investigation began in March 1976 and further hearings are scheduled.
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10.
thAMORTIZED LITIGATION RECCNERY:
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JCP&L is amortizing the portion of its net recovery arising from the settlement of the Oyster Creek litigation applicable to results of operations over a five year period comencing October 1, 1973. The related Federal income tax is beirq amortized over the same period.
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Page 14 of 15 tOITS 10 FINANCIAL STATD4DCS 11.
IIANS 70 NON-AFFILIATED COAL COMPANIES:
l Penelec is providing interim financing to non-affiliated mining companies supplying coal to the 11omer City generatirxj station under long-term contracts. These loans bear interest at a rate which is 1-1/2% per annum above the prime interest rate.
12.
PENSION PLANS:
Ibtal pension costs for the twelve months ended September 30, 1976, amounted to approximately $4.4 million (JCP&L), $3.5 million (Met-Ed) and $5.2 million (Penelec).
Based on the latest available actuarial reports (as of January 1, 1975), the actuarially computed vested benefit under the plans ex-ceeded by approximately $2.7 million (JCP&L), $8.1 million (Met-Ed) j and $12.5 million (Penelec) the actuarial value of trust assets or reserves created in respect of such plans. The unfunded past service liabilities for the plans amounted to approximately $28 million (JCP&L), $24.9 million (Met-Ed) and $35 million (Penelec).
Ef fective January 1,1974, the plans were amended to provide improved benefits relating to, among other things, earlier age ard service vesting requirements and surviving spouse benefits. In addition, the actuarial assumption relating to early retirements was changed to more closely match current experience.
The 1974 Pension Reform Act requires that the supplemental plans be funded. It is not anticipated that the Act will have a signifi-cant impact on annual pension costs; unfunded vested tenefits are expected to increase approximately $2.4 million (JCP&L), $1.9 million (Met-Ed) and $2.8 million (Penelec) to comply with the vesting re-quirements of the Act.
13.
SUPPID4ENIARY INCOME STATD4DC INFORMATION:
Maintenance and other taxes charged to operating expense for the twelve months erded September 30, 1976 consisted of the followings (In Thousands)
JCP&L Met-Ed Penelec Maintenance (incitdire applicable payroll charges)
$27 640
$23 263
$30 025 Other taxes:
State and local gross receipts
$28 140
$11 266
$14 281 J
Gross revenue and franchise 11 705 y
State surtax 4 968 i
Capital stock 4 004 3 466
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Deal estate ard personal property 3 059 4 016 3 859 1
Other 2 151 1 628 2 191 i
1 Total
$50 023
$20 914
$23 797 The liability for New Jersey State franchise ard gross receipts taFes and surtax is estimated in each year of exercise of such fran-chise based on the preceding year's gross receipts and no liability exists in a current year to pay a tax based on that year's gross re-I ceipts. JCP&L has consistently made provision in its accounts for
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teres 10 FINANCIAL STATDONTS 13.
SUPPLDerrARY INCOME STATDeft INFOHMATION: (Continued) such taxes on this basis. Fbr rate-making purposes (incl Ming the operation of the fuel adjustment clause) the IUPUC computes allowable expenses as including provision for stch taxes based on the current year's gross receipts rather than those of the preceding year.
14.
RATE PROCEEDINGS:
In July 1974, Met-Ed and Penelec filed three-part proposed rate increases with the PaPUC for $50.2 million (Met-Ed) and $45.5 million (Penelec), plus an additional $20.7 million (Met-Ed) and $22.5 million (Penelec) to cover possible erosion of earnings arisirg during the course of the rate proceedings. In Septenber 1974, the first step to such increases involving $12.7 million (Met-Ed) and $17.9 million (Penelec) annually were permitted to go into effect subject to possi-ble refund and the second aM third steps of such increases were suspended, peMing final rate determination. On July 9, 1975, the PaPUC prescribed as temporary those rates then in effect. In June 1976, the PaPUC entered orders granting Met-Ed $17.1 million out of
$37.5 million and Penelec $14.9 million out of $27.6 million second step increases and denying the third step increases. Such orders permit Met-Ed and Penelee to recoup the difference, estimated at approximately $15 million (Met-Ed) and $14 million (Penelec) bet-ween the revenues received since July 9,1975 urder the temporary l
tates that had been in effect and those which would have been produced if the new rates had been in effect. Revenues, income taxes and net income for the last three months of 1975, included in the twelve months ended September 30, 1976, have been restated by $3.8 million (Met-Ed) and $3.8 million (Penelec); $1.9 million (Met-Ed) and $1.9 (Penelec); and, $2 million (Met-Ed) and $1.4 million (Penelec), respectively.
% e PaPUC orders also permitted Met-Ed and Penelec to change their fuel adjustment clauses to energy clauses. %e new clauses, which were authorized on a trial basis, reflect changes in the cost of fossil fuel, nuclear fuel and interchanged purchases and sales and are designed to track changes in energy costs and I
match customer billings to these costs. The old Pennsylvania standard form of fuel clause covered only the changes in fossil fuel cost.
On June 10,1976, the M7PUC granted JCP&L a $59.2 million rate increase, on an annualized basis, effective July 19, 1976.
I On Octobet 15, 1976, JCP&L flied a request with the IUPUC for a futthet tate increase of $107 million.
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FIl&NCIAL SMTD(INTS Item 6(b) 1(e)
ME"Il0POLITAN EDISCH COMPANY SMTDOIT & DASIS T SELLING PRICE &
50% M MEP-ED'S 50% INTEREST IN Dt! 62 GENERATIN STATIN (In %ousands)
(a) Dook Cost of Plant Under Construction f-Exclusive of Art
$222 000 l
50% of Book Value of (a) above
$111 000 (b) Book Cost of AFC Accrued 72 600 i
l 50% of Book Value of AFC in (b) above 36 300 (c) Value of Tax Credits Associated with l
Constructio. Interest Allocated to Future Customers Applicable to: Plant 7 400 Nuclear Fuel 1 000 50% of Tax Credits in (c) above Pursuant to Section 1.04 of his Application i
Appleiable to: Plant 3 700 Nuclear Fuel 500 l
(d) Book Value of Nuclear Fuel in Process Exclusive of AFC 20 000 50% of Book Value of Nuclear Fuel in (d) above 10 000 (e) Dook Cost of AFC Accrued on Nuclear Fuel 5 000 50% of AFC Accrued in (e) above 2 500 i
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- Total Basis of Selling Price
$328 000*
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Total Selling Price
$164 000 i i i l 1
- Excludes $1.6 million net value of Pa. realty transfer taxes to be paid directly by JCP&L.
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_j FImNCIAL SMTDENTS i
Item 6(b) 1(f) l PDelSYLVANIA ELECMIC COMPANY SMTDENT T MSIS OF SELLING PRICE &
3/5th's OF PENEIJt's 25% INTERF&r IN MI 42 GENERATION SMTIGI (In h ousands)
(a) Book Cost of Plant Under Construction Exclusive of APC
$110 000 3/5th's of Book value of (a) above
$ 66 000 I
(b) Book Cost of AFC Accrued 34 000 3/5th's of Book Value of AFC in (b) above 20 500 I
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(c) Value of Tax credits Associated with Construction Interest Allocated to Future Custon.ars Applicable to: Plant 7 500 Nuclear Fuel 500 3/5th's of Tax Credits in (c) above Pursuant to Section 1.04 of This Application Applicable to: Plant 4 500 f
Nuclear Fuel 300 (d) Book Value of Nuclear Fuel in Process
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Exclusive of AFC 10 000 3/5th's of Book Value of Nuclear Fuel in (d) above 6 000 1
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(e) Book Cost of AFC Accrued on Nuclear Fuel 2 200 3/5th's of AFC Accrued in (e) above 1 300
- Total Basis of Selling Price
$164 200*
'lbtal Selling Price
$ 98 600 I
- Excludes $976 thousand net value of Pa. realty transfer taxes to be paid directly by JCP&L.
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