Amendment No. 3 to
SEC File No. 70-8409
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
JERSEY CENTRAL POWER & LIGHT COMPANY ("JCP&L")
300 Madison Avenue
Morristown, New Jersey 19640
METROPOLITAN EDISON COMPANY ("Met-Ed")
PENNSYLVANIA ELECTRIC COMPANY ("Penelec")
2800 Pottsville Pike
Reading, Pennsylvania 19640
GENERAL PUBLIC UTILITIES CORPORATION ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
(Names of companies filing this statement and
addresses of principal executive offices)
GENERAL PUBLIC UTILITIES CORPORATION
(Name of top registered holding company parent of applicants)
T. G. Howson, Vice President W. Edwin Ogden, Esq.
and Treasurer Ryan, Russell Ogden & Seltzer
M. A. Nalewako, Secretary 1100 Berkshire Boulevard
M. J. Connolly, Esq. P.O. Box 6219
GPU Service Corporation Reading, Pennsylvania 19610
100 Interpace Parkway
Parsippany, New Jersey 07054
Richard S. Cohen, Esq. Robert C. Gerlach, Esq.
Jersey Central Power & Light Co. Ballard Spahr Andrews &
300 Madison Avenue Ingersoll
Morristown, New Jersey 07960 1735 Market Street
Philadelphia, Pennsylvania 19103
William C. Matthews Douglas E. Davidson, Esq.
Secretary Berlack, Israels & Liberman LLP
Metropolitan Edison Company 120 W. 45th Street
Pennsylvania Electric Company New York, New York 10036
2800 Pottsville Pike
Reading, Pennsylvania 19601
(Names and addresses of agents for service)<PAGE>
GPU, JCP&L, Met-Ed and Penelec amend their Declaration
on Form U-1, as heretofore amended, docketed in SEC File No. 70-
8409, as follows:
1. By amending paragraph J of Item 1 to read in its
entirety as follows:
J. 1. The GPU Companies, like a number of other
electric utility systems, have concluded that consolidation
of operation and maintenance of the System's fossil-fuel and
hydroelectric generation facilities under a single, unified
management structure (as was successfully done for the
System's nuclear plants in the early 1980s with GPU Nuclear
Corporation) will better prepare and position the GPU System
to meet the challenges of an increasingly competitive market
for electric energy. This conclusion is based in part upon
the experience of the GPU Companies which, for example, cen-
tralized in 1990 the procurement of fuels within the GPU
System in order to create a devoted focus to generation
fuels issues and needs. More importantly, it is also based
upon the clear marketplace and regulatory signals of the
need to unbundle the traditionally vertically integrated
electric
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utility system.(1) The GPU Companies believe that the
realignment, integration and overall consolidation of the
operation and maintenance of the GPU System's non-nuclear
generation facilities will improve the productivity, enhance
the performance, and reduce the construction, operation and
maintenance costs of these generation facilities in the near
future. This action is intended to allow these operating
assets to effectively participate in an openly competitive
future energy market.
2. Formation of GPUGC is an integral part of the
GPU System's overall corporate restructuring and cost
reduction program which the GPU System began to implement in
1994 and is designed to produce significant cost savings.
The initial phase of this program consisted of the
management consolidation of Met-Ed and Penelec, which began
in February 1994 and has now been completed. As a second
component of the program, in early 1994 the GPU Companies
offered to eligible employees a Voluntary Enhanced
Retirement Program ("VERP").
(1) This proposed functional realignment and restructuring
is consistent not only with these signals, but also
with recommendations for change that are emerging from
many corners of the industry. For example, on March 29,
1995, the Federal Energy Regulatory Commission ("FERC")
issued a Notice of Proposed Rulemaking (RM95-8-000),
the so-called "Mega NOPR", on open access transmission
service and stranded cost recovery. Although the
proposed rule would not require an electric utility to
sell off its transmission assets or otherwise establish
a separate subsidiary to manage those assets, the FERC
recognized that some utilities may ultimately chose to
do so. The proposed rule does, however, require
functional unbundling of transmission functions, so
that utilities must provide transmission related
services to third parties essentially on the same basis
as the utility makes them available to itself. The GPU
Companies' proposal is also consistent with the
restructuring along functional business unit lines
undertaken by other utility systems.
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As the GPU Companies have previously reported, approximately
1,350 employees, or about 11% of the total GPU System
workforce, accepted the VERP. Future payroll and benefits
savings for the GPU System are estimated to be $75 million
annually, which reflects limiting the replacement of
employees to about 10% of those retired.
3. The combined operation of the GPU System's
non-nuclear generation facilities through GPUGC will result
in future efficiencies and cost reductions in a number of
important areas. As of February, 1994 the GPU Companies
employed about 2,615 individuals (JCP&L - 462; Met-Ed - 387;
and Penelec - 1,766) in the operation and maintenance of
their non-nuclear generation facilities and the jointly-
owned facilities which are operated by JCP&L and Penelec for
the co-owners. However, since announcing their intention to
form GPUGC, the GPU Companies have taken steps, including
the VERP, in anticipation of the Commission's authorization,
to begin the process of culture change and cost savings
which are necessary in the increasingly competitive energy
market and essential in the management of generation
facilities which will compete in that market. It is now
expected that through the elimination of overlapping
activities, attrition and other efficiencies, the process of
establishing GPUGC will lead to the elimination of
approximately 460 positions by the end of 1996.(2) Some of
these reductions have already been realized
(2) In Amendment No. 2, dated February 14, 1995, to the
Declaration the GPU Companies had initially estimated
that formation of GPUGC would result in about 150 job
reductions by the end of 1996 and associated savings of
$10 million annually.
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through the VERP and attrition. The balance of the
reductions are expected to occur as a result of anticipated
business-process improvements and efficiencies. It is
presently anticipated that as of December 31, 1995, the
total number of authorized personnel employed in the
generation function will be about 2,150. The GPU Companies
project that the annual savings resulting from these job
reductions will amount to approximately $29 million
(JCP&L - $6.6 million; Met-Ed - $5.0 million; and
Penelec $17.4 million) as follows: employee retirements
($16 million); improved work force
utilization through restructuring, business-process
improvement and attrition ($10 million); reduction in levels
of administrative and support services ($3.0 million).
There are also plans for future reductions in force by the
end of 1996 as a result of continuing business-process re-
engineering, involving the elimination or redesign of
processes and operations intended to improve the efficiency,
quality, economy or effectiveness of structures, equipment,
systems and business functions, operations or processes.
4. In addition, as indicated earlier, all non-
nuclear fuel procurement and management functions will now
be consolidated within GPUGC. This is expected to produce
further efficiencies and cost savings as these functions
become more closely integrated with the day-to-day operation
and maintenance of the related generating units.
5. Other savings, which cannot be quantified at
the present time, are expected to be realized from ongoing
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intensive business process re-engineering efforts which
include organizational delayering, increased spans of
supervisory control and increased utilization of personnel
through multi-tasking redesign of all pertinent job descrip-
tions. For example, staffing requirements can be met more
efficiently by creating and/or negotiating broader job
descriptions and work rules which allow individuals to
perform multiple and various tasks as opposed to a strictly
limited set of tasks and duties as is traditionally the case
in a power plant. This provides for increased opportunities
for cross-training and more efficient utilization of
personnel. In the GPUGC financial function, for example,
all employees will be required to be able to perform
budgeting, planning, control, accounting and reporting
tasks. Another example is GPUGC's intention to manage plant
outages as a coordinated process based upon the
requirements, performance and plans for all of the GPU
System's non-nuclear generation plants as opposed to those
of an individual company's plants. This approach will
result in extended intervals between plant outages, reduced
duration of outage and reduced expenditures in connection
therewith. In addition, the centralized management of the
fossil generation function, previously handled by three
separate management organizations, will be able to
streamline approval, budgeting and procurement processes
through reduced paperwork and decreased levels of
management. Other initiatives such as administrative
overhead reductions, operation of plants as individual
profit centers and improved utilization of information
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technologies will be implemented. GPUGC will also redesign
the procurement process for materials and services to
improve efficiencies and to realize greater savings and will
re-evaluate/re-engineer the level of service and the manner
in which it is received from the other GPU Companies.
6. The GPUGC organization will operate the GPU
System and joint-owned generation facilities as an
integrated fleet of plants with centralized management,
driven by competitive demands to lower the cost of
production. This perspective, organizational focus and
management consolidation will allow for more effective
decision-making on critical issues such as modification,
unit repowering, retirements, and plant life extension.
Finally, System-wide corporate decisions about the
appropriate strategies to deal with a fully competitive
generation market will be facilitated by the formation of
GPUGC as a separate subsidiary structure within the GPU
holding company system.
7. As noted in paragraph E of Item 1, to the
extent practicable, costs will be determined and accumulated
and allocated to the GPU Company owner of the particular
generation facility to which the services relate. To the
extent that costs are not directly allocable to a particular
generation facility, such costs will be allocated among the
GPU Companies in the same proportion as the direct costs
(less fuel) are allocated, except that a relatively minor
portion of such costs may be allocated in accordance with
one of the allocation formulae listed on Exhibit I hereto,
if one of such formulae is deemed more appropriate for a
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particular cost.
2. By adding a new paragraph L to Item 1 thereof to
read in its entirety as follows:
L. There are presently two subsidiary service
companies within the GPU System. GPU Service Corporation
("GPUSC") was organized in 1971 to provide a variety of
administrative services to the GPU Companies. As authorized
in SEC File No. 70-4490, GPUSC furnishes accounting,
internal auditing, corporate, executive, finance, insurance,
human resources and strategic planning services to the GPU
Companies and other affiliates within the System. GPUSC
personnel do not operate or maintain any of the GPU System
generation or other electric facilities; they do, however,
provide certain senior management and supervisory services
and assistance to the GPU Companies in the areas of bulk
power supply, system transmission and distribution planning
and administration.
GPU Nuclear Corporation ("GPUNC") was formed in
1981 following the TMI-2 accident to provide for the safe
operation and management of the GPU System's nuclear
generating stations and the cleanup of TMI-2 (SEC File No.
70-6443). While GPUNC has, pursuant to Commission
authorization, recently expanded to a limited degree, the
scope of its "non-nuclear" activities for non-affiliates, it
does not engage in any significant activities beyond its
primary and overriding purpose of insuring the safe
operation of the GPU System's nuclear facilities. Indeed,
the GPU Companies believe it would be inconsistent with
GPUNC's mandate and commitments to the Nuclear Regulatory
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Commission and other regulatory bodies if it were to do
otherwise.
To date, each GPU System operating company has had
responsibility for the operation and maintenance of its own
fossil-fuel and hydroelectric plants other than the Keystone
and Conemaugh stations which are jointly-owned with non-
affiliated utilitieswhich Penelec operatesfor the co-owners.
For the reasons set forth elsewhere in this
Declaration, the GPU Companies have now concluded that it is
both necessary and desirable that the responsibility for the
operation and maintenance of the GPU System's non-nuclear
generating facilities be transferred to and consolidated
within a single organization in order to achieve needed
economies of scale and efficiencies and to better position
the GPU System to meet the challenges of an increasingly
competitive market. The generation responsibilities
envisioned for GPUGC are broader than the functions or
responsibilities that either GPUSC or GPUNC have the
capability to perform, with respect to fossil generation.
3. By deleting numbered item (1) in paragraph H of
Item 1 thereof and renumbering items (2) and (3) as items (1) and
(2).
4. By filing the following exhibit in Item 6(a)
thereof:
J - Information regarding employees of GPUSC,
GPUNC and GPUGC.
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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 BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
GENERAL PUBLIC UTILITIES CORPORATION
JERSEY CENTRAL POWER & LIGHT COMPANY
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
By:__________________________________
T. G. Howson, Vice President
and Treasurer
Date: July 26, 1995<PAGE>
EXHIBIT TO BE FILED BY EDGAR
Exhibit:
J - Information regarding employees of GPUSC,
GPUNC and GPUGC<PAGE>
EXHIBIT J
GPU Service Company Employees following authorization
of GPU Generation Corporation
Service Company # of Employees
GPUSC 1,017
GPUNC 2,106
GPUGC 2,150<PAGE>
