SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 17, 1999
CONECTIV
(Exact Name of Registrant as Specified in Charter)
____Delaware 1-13895 51-0377417
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
No.)
800 King Street, P.O. Box 231, Wilmington, Delaware 19899
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 302-429-3114
None
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
As previously noted in the Company's Form 10-Q for the
quarters ended March 31, June 30, and September 30, 1998, the Company is
in a transition caused by electric utility restructuring in New Jersey,
Delaware, Maryland and elsewhere in the region. On February 9, 1999,
the Governor of New Jersey signed into law the "Electric Discount and
Energy Competition Act" (the Act). The Act provides for retail choice
of electricity suppliers; deregulation of electric rates and other
services, such as metering and billing; separation of competitive
and regulated services; unbundling of rates for electric service;
and licensing of electricity and gas suppliers. August 1, 1999 is
the latest date for each electric utility to implement retail choice
of electricity suppliers for all of its customers.
The Act requires each electric utility to reduce its rates
by at least 5% at the start of retail choice and by a total of 10%
within 36 months of the start of choice. If the New Jersey Board of
Public Utilities (NJBPU) determines that a rate decrease of more than
10% is warranted, a "just and reasonable" financial test is applied.
The mandated rate reductions must be sustained through the end of the
48th month after choice begins. The Act requires that the rate
reductions be measured against the rates in effect on April 30, 1997.
In connection with the deregulation of electric rates, the
Act authorizes the NJBPU to permit electric utilities the opportunity to
recover the eligible amount of their stranded costs through a non-
bypassable market transition charge, as long as the rate reductions are
achieved. The NJBPU will determine the utility's stranded costs eligible for
recovery. The NJBPU-determined eligible stranded costs will be subject to
periodic recalculation over the recovery period. The Act generally limits the
period for recovery of stranded costs to 8 years. However, the recovery period
for stranded costs associated with purchased power contracts may be extended
to the remainder of the relevant contract terms. The NJBPU may also
extend the recovery period to allow for the opportunity to fully recover
the eligible stranded cost amount while meeting the rate reductions
mandated by the Act. In addition, the Act would allow for the issuance
of transition bonds to finance portions of a utility's stranded costs,
as determined to be appropriate by the NJBPU.
The Act makes the current incumbent utility as the
provider of "default service" or Basic Generation Service (BGS) for a
period of at least 3 years. Future NJBPU proceedings will be held to
determine if the provision of BGS should be made competitive. The Act
also grants the NJBPU authority to require an electric utility to either
functionally separate its regulated business functions from its
competitive electric generation service or its electric power generator
functions, or to divest to an unaffiliated company all or a portion of
its electric generation assets and operations. Such mandated
divestiture will require a finding by the NJBPU that such action was
necessary to address problems such as market power and/or
competitiveness.
The Act is effective immediately, and provides authority
to the NJBPU, retroactive to April 1, 1997, with respect to such matters
as the holding of hearings, the issuance of orders and the establishment
of various standards in connection with deregulation. As previously
reported by the Company, Atlantic City Electric Company (ACE), as
directed by the NJBPU, has participated in unbundling and stranded cost
proceedings before the Office of Administrative Law, and in
separate proceedings before the NJBPU with respect to various
restructuring issues, beginning with ACE's deregulation filings
submitted in July 1997.
The NJBPU has announced its intention to settle all
restructuring-related issues affecting ACE by the end of April 1999.
Depending on the outcome, these settlement efforts or other procedures
under the Act and the application of the Act by the NJBPU to ACE,
including NJBPU decisions on the rate reductions mandated by the Act,
could have a material adverse effect upon the financial results and
operations of the Company and ACE.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Conectiv
(Registrant)
Date: February 17, 1998 /s/ L.M. Walters
Treasurer
