As filed with the Securities and Exchange Commission on April 29, 1996.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: April 11, 1996
(Date of earliest event reported)
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
1-9130 CENTERIOR ENERGY CORPORATION 34-1479083
(An Ohio Corporation)
6200 Oak Tree Boulevard
Independence, Ohio 44131
Telephone (216) 447-3100
1-2323 THE CLEVELAND ELECTRIC 34-0150020
ILLUMINATING COMPANY
(An Ohio Corporation)
55 Public Square
Cleveland, Ohio 44113
Telephone (216) 622-9800
1-3583 THE TOLEDO EDISON COMPANY 34-4375005
(An Ohio Corporation)
300 Madison Avenue
Toledo, Ohio 43652
Telephone (419) 249-5000
This combined Form 8-K is separately filed by Centerior Energy Corporation
("Centerior Energy"), The Cleveland Electric Illuminating Company ("Cleveland
Electric") and The Toledo Edison Company ("Toledo Edison"). Centerior Energy,
Cleveland Electric and Toledo Edison are sometimes referred to collectively
as the "Companies". Cleveland Electric and Toledo Edison are sometimes
referred to collectively as the "Operating Companies". Information contained
herein relating to any individual registrant is filed by such registrant on its
behalf. No registrant makes any representation as to information relating to
any other registrant, except that information relating to either or both of
the Operating Companies is also attributed to Centerior Energy.
Item 5. Other Events
1. 1995 Rate Requests. For background and further developments related to
this topic, see Item 1. Business--Electric Rates--1995 Rate Case in the
Companies Annual Reports on Form 10-K for the year ended December 31, 1995.
On April 11, 1996, The Public Utilities Commission of Ohio ("PUCO") issued an
order in the pending rate cases of Cleveland Electric and Toledo Edison. The
PUCO granted the full amount of the Operating Companies' request of $119 million
per year. The PUCO also recommended that the Operating Companies reduce the
value of their assets for regulatory purposes by $1.25 billion during the
next five years. Implementation of the rate increase is not contingent upon a
revaluation of assets. The new rates have been put into effect. The PUCO
invited the Operating Companies to file a proposal to effectuate the PUCO's
recommendation and expressed a willingness to consider alternatives to its
recommendation. The PUCO stated in its order that failure by the Operating
Companies to follow the recommendation could result in a PUCO-ordered
write-down of assets for regulatory purposes.
The Operating Companies agree with the concept of accelerating the recognition
of costs and recovery of assets as such concept is consistent with the corporate
objective to become more competitive. However, the Operating Companies believe
that such acceleration must also be consistent with their reduction of debt and
the opportunity for share owners to receive a fair return on their investment.
The PUCO provided for recovery of all regulatory assets in the approved rates
and the Operating Companies continue to comply with the provisions of
Financial Accounting Standard No. 71 (FAS 71). With respect to the PUCOs
asset revaluation recommendation and the corporate objective to become more
competitive, the Operating Companies are examining a number of accelerated
cost recognition and asset recovery plans. If there is a change in the
Operating Companies evaluation of the competitive environment, regulatory
framework or other factors, or the PUCO significantly reduces the value of the
Operating Companies' assets for future regulatory purposes, such actions could
require the Operating Companies to record material charges to earnings.
The PUCO order will increase rates by 2.7% to 7.2% depending upon the customer
class. The average rate increase will be 4.7% for Toledo Edison customers and
4.9% for Cleveland Electric customers. The PUCO approved a return on equity of
12.59% and an overall rate of return of 10.06% for both Operating Companies.
However, the PUCO indicated the authorized return could be lowered by the
PUCO if the Operating Companies do not implement the asset
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revaluation recommendation. The Operating Companies intend to freeze rates
through at least 2002, although they are not precluded from requesting further
rate increases.
The PUCO also approved the Operating Companies request for increases in the
rate of depreciation on nuclear property to 2.91% which will increase annual
depreciation expense for Centerior Energy by $21 million. The PUCO authorized a
reduction in the composite depreciation rate for non-nuclear property from 3.31%
to 3.2%, resulting in a decrease in depreciation expense of $5 million annually.
2. PUCO Order on Request by City of Clyde. For background and further
developments related to this topic, see Item 1. Business--Competition--
Toledo Edison in the Companies Annual Reports on Form 10-K for the year
ended December 31, 1995.
On April 11, 1996, the PUCO denied the request by the City of Clyde, Ohio, to
require Toledo Edison to abandon service within the city limits of Clyde. The
PUCO determined that the City of Clyde has the authority to require such an
abandonment, but that Clyde failed to show that such an action would benefit
the public interest. The PUCO also denied Clyde's application on the basis
that there was no clear mechanism for Toledo Edison to recover stranded costs
caused by such forced abandonment. This action by the PUCO is significant
because cities contemplating forming a municipal electric system are now on
notice that they cannot evict a utility without compensating that utility for
stranded costs.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTERIOR ENERGY CORPORATION
Registrant
THE CLEVELAND ELECTRIC ILLUMINATING
COMPANY
Registrant
THE TOLEDO EDISON COMPANY
Registrant
By: KEVIN P. MURPHY
Kevin P. Murphy,
Assistant Secretary of each Registrant
April 29, 1996
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