Post-Effective Amendment No. 4 to
SEC File No. 70-8593
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GENERAL PUBLIC UTILITIES CORPORATION ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
ENERGY INITIATIVES, INC. ("EI")
EI SERVICES, INC. ("EI Services")
One Upper Pond Road, Parsippany, New Jersey 07054
JERSEY CENTRAL POWER & LIGHT COMPANY ("JCP&L")
300 Madison Avenue, Morristown, New Jersey 07960
METROPOLITAN EDISON COMPANY ("Met-Ed")
P.O. Box 16001, Reading, Pennsylvania 19640
PENNSYLVANIA ELECTRIC COMPANY ("Penelec")
1001 Broad Street, Johnstown, Pennsylvania 15907
GPU SERVICE CORPORATION ("GPUSC")
100 Interpace Parkway, Parsippany, New Jersey 07054
(Names of companies filing this statement
and addresses of principal offices)
GENERAL PUBLIC UTILITIES CORPORATION
(Name of top registered holding company parent of the applicants)
T. G. Howson, Vice President Michael J. Connolly, Esq.
and Treasurer Assistant General Counsel
M.A. Nalewako, Secretary GPU Service Corporation
GPU Service Corporation 100 Interpace Parkway
100 Interpace Parkway Parsippany, New Jersey 07054
Parsippany, New Jersey 07054
R. S. Cohen, Secretary W. A. Boquist, II, Vice Presi-
Jersey Central Power & dent - Legal Services
Light Company Metropolitan Edison Company
300 Madison Avenue Pennsylvania Electric Company
Morristown, New Jersey 07960 P.O. Box 16001
Reading, Pennsylvania 19640
B. L. Levy, President Douglas E. Davidson, Esq.
K. A. Tomblin, Secretary Berlack, Israels & Liberman
LLP
Energy Initiatives, Inc. 120 West 45th Street
EI Services, Inc. New York, New York 10036
One Upper Pond Road
Parsippany, New Jersey 07054
_________________________________________________________________
(Names and addresses of agents for service)<PAGE>
GPU, EI, EI Services, JCP&L, Met-Ed, Penelec and GPUSC
hereby post-effectively amend the Application on Form U-1,
docketed in SEC File No. 70-8593, by restating paragraphs A
through I of Post-Effective Amendment No. 1, as amended by Post-
Effective Amendment No. 3, in their entirety as follows:
A. By Order dated July 6, 1995 (HCAR No. 35-26326) (the
"Order"), the Commission authorized GPU to acquire the securities
of subsidiary companies (each, a "Subsidiary Company") which
would, in turn, acquire the securities or other interests of one
or more foreign utility companies ("FUCOs") and/or exempt
wholesale generators ("EWGs"; together with FUCOs, "Exempt
Entities"). The Subsidiary Companies would not themselves be
Exempt Entities. The Order also authorized GPU to make invest-
ments in one or more Subsidiary Companies from time to time
through December 31, 1997 in an aggregate amount of up to $200
million ("Investment Cap").
B. In addition, the Order authorized GPU to make invest-
ments directly in Exempt Entities from time to time through
December 31, 1997, subject to the limit of the Investment Cap.
C. At November 30, 1995, GPU had made investments pursuant
to the Order of approximately U.S. $112 million. GPU is actively
pursuing a number of other FUCO and EWG opportunities which, if
successful in whole or in part, would require investments in
excess of the balance of the Investment Cap.
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D. Accordingly, GPU now proposes to increase the Invest-
ment Cap to an amount equal to 50% of GPU's consolidated retained
earnings, as determined in accordance with Rule 53(a), at the
time of each investment. At September 30, 1995, GPU's consoli-
dated retained earnings, as so determined, was approximately
$1.87 billion. GPU believes such expanded authorization is
necessary to provide GPU with sufficient flexibility to pursue
investments in Exempt Entities both domestically and internation-
ally.
E. Investments in Subsidiary Companies may take the form
of capital stock or shares, trust certificates, partnership
interests or other equity or participation interests; (1) loans
evidenced by promissory notes; guarantees by GPU of the principal
of or interest on any promissory notes or other evidences of
indebtedness or obligations of any Subsidiary Company, or of
GPU's undertaking to contribute equity to a Subsidiary Company;
assumption of liabilities of a Subsidiary Company; and reimburse-
ment agreements with banks entered into to support letters of
credit delivered as security for GPU's equity contribution
obligation to a Subsidiary Company or otherwise in connection
with a Subsidiary Company's project development activities.
_________________
(1) Rules 52(b) and 45(b)(4) would generally exempt from prior
Commission authorization under the Act the making by GPU of cash
capital contributions to Subsidiary Companies, except in connec-
tion with the acquisition by GPU of securities of a new Subsid-
iary Company as provided by Rule 52(d) ("New Sub Contribu-
tions"). Accordingly, cash capital contributions by GPU to
Subsidiary Companies will be subject to the limit of the Invest-
ment Cap only to the extent they constitute New Sub Contribu-
tions. In addition, open account advances without interest by
GPU to Subsidiary Companies are now exempt from prior Commission
authorization under Rule 45(b)(4) and are thus not subject to the
limitation of the Investment Cap.
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F. As stated in the Order, investments by GPU directly in
Exempt Entities would take the form of (i) guarantees of the
indebtedness or other obligations of one or more Exempt Entities;
(ii) assumption of liabilities of one or more Exempt Entities;
and (iii) guarantees and letter of credit reimbursement agree-
ments in support of equity contribution obligations or otherwise
in connection with project development activities for one or more
Exempt Entities.
G. GPU would obtain the funds for any direct or indirect
investment in any Subsidiary Company or Exempt Entity from
available cash or as the Commission may otherwise authorize by
separate order. GPU is not requesting authority herein to issue
any additional securities for the purpose of funding the acquisi-
tion of any Subsidiary Companies or Exempt Entities.
H. Any direct or indirect investment by GPU in any
Subsidiary Companies would be made only if, at the time thereof
and after giving effect thereto, GPU's "aggregate investment,"
determined in accordance with Rule 53(a)(1)(i), in all FUCOs,
EWGs and Subsidiary Companies, does not exceed the Investment
Cap. In addition, GPU will limit its direct and indirect
investment in any particular Subsidiary Company to an amount
which does not exceed that reasonably required in connection with
making the underlying investment in any Exempt Entities with
respect to which such Subsidiary Company was organized or formed,
taking into account development expenditures, working capital
needs, and cash reserves required to be maintained in accordance
with any related financing agreements.
I. To provide operational flexibility, it is also proposed
that the Subsidiary Companies provide other Subsidiary Companies
and Exempt Entities with all services necessary or desirable for
their operations, including, without limitation, management,
operations, administrative, employment, tax, accounting, engi-
neering, consulting, utility performance, and electronic data
processing services, and software development and support
services in connection therewith. The Subsidiary Companies
propose to provide such services and to sell goods to other
associated Subsidiary Companies and associated Exempt Entities at
fair market prices, and request an exemption pursuant to Section
13(b) from the requirements of Rules 90 and 91 applicable to such
transactions in any case in which one or more of the following
circumstances are present:
1. Such associate is a FUCO or an EWG which derives
no part of its income, directly or indirectly, from the
generation, transmission, or distribution of electric energy
for sale within the United States; or
2. Such associate is an EWG which sells electricity
at market-based rates which have been approved by the FERC
or the appropriate state public utility commission, provided
the purchaser of such electricity is not an associate of GPU
within the GPU System; or
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3. Such associate is an EWG that sells electricity at
rates based upon its cost of service, as approved by the
FERC or any state public utility commission, provided that
the purchaser of such electricity is not an associate of GPU
within the GPU System; or
4. Such associate is a Subsidiary Company, the sole
business of which is developing, owning and/or operating
FUCOs or EWGs described in clauses 1, 2 or 3 above.
The Commission has heretofore authorized EI, either directly
or through its subsidiary EI Services, Inc. (collectively,
"Initiatives"), to provide services and sell goods to associate
EWGs and FUCOs which satisfy one of the requirements in clauses
1, 2 or 3 above under an exemption from the cost standard.
Accordingly, it is also proposed that Initiatives be exempt under
Section 13(b) from the requirements of Rules 90 and 91 with
respect to the rendering of services or sale of goods to Subsid-
iary Companies that satisfy the requirements of clause 4 above.
The Subsidiary Companies and Initiatives will provide
services and goods to associates that do not satisfy any of the
above circumstances at cost in accordance with Section 13(b) of
the Act and Rules 90 and 91.
GPU acknowledges that the Commission's authorization for
Subsidiary Companies and Initiatives to provide services or sell
goods at prices that are not based on cost (as determined in
accordance with Rules 90 and 91) to any such associate shall not
be binding upon the FERC or any state public utility commission
having jurisdiction over the rates charged by any such associate,
and agrees that neither the Subsidiary Companies nor Initiatives
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will assert or take any position to the contrary in any adminis-
trative or judicial proceeding involving the determination of
rates that may be charged by any such associate. GPU also states
that neither the Subsidiary Companies nor Initiatives will
provide services or sell goods to any associate which, in turn,
provides such services or sells such goods, directly or indirect-
ly, to any other associate which does not fall within any of the
preceding enumerated categories, except pursuant to the require-
ments of the Commission's rules and regulations under Section
13(b) or an exemption therefrom obtained in a separate filing.
It is also contemplated that GPU Service Corporation
("GPUSC"), a subsidiary service company, would provide certain
services to Subsidiary Companies or Exempt Entities in which GPU
owns an interest. For example, there are certain activities such
as financial reporting, tax services, pension and benefit
administration, risk management, treasury, corporate, financial
and legal which may be most cost effectively performed by GPUSC
to meet the mutual needs of GPU and all of its associates. All
such services provided by GPUSC will be performed at cost in
accordance with Rules 90 and 91.
There may also be instances where it is desirable for
employees of Jersey Central Power & Light Company, Metropolitan
Edison Company and Pennsylvania Electric Company (collectively,
the "Operating Companies") to perform services for Subsidiary
Companies and Exempt Entities in which GPU directly or indirectly
owns an interest. For example, employees of the Operating
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Companies may have expertise regarding the operation and mainte-
nance of electric generation, transmission or distribution
facilities owned or operated by a Subsidiary Company or Exempt
Entity, and it may be more efficient and/or economic to utilize
existing system personnel rather than hiring new employees for
this purpose. In addition, it may be desirable to utilize
certain Operating Company personnel to assist in due diligence
evaluations, audits, assessments and the like of potential Exempt
Entity acquisitions. Accordingly, authorization is requested for
the Operating Companies to provide such services to Subsidiary
Companies and Exempt Entities in which GPU directly or indirectly
owns an interest. Pursuant to Rule 53(a)(3), no more than 2% of
the employees of the Operating Companies will render services, at
any one time, directly or indirectly, to Subsidiary Companies or
Exempt Entities in which GPU directly or indirectly holds an
interest. All such services will be provided at cost in accor-
dance with Rules 90 and 91.
There will be no diversion of GPU System personnel or
resources (either by the Operating Companies or GPUSC) that will
adversely affect any Operating Subsidiary's domestic customers or
GPU's shareholders. Moreover, in no case will GPUSC or the
Operating Company be obligated to render services, if in the sole
judgment of GPUSC or the Operating Company, the personnel and
resources needed to fill the request are not available. The
provision of such services will enable the Subsidiary Companies,
and Exempt Entities in which GPU directly or indirectly holds an
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interest, to employ economies of scale while not adversely
affecting the GPU System.
I(1) The Order further authorized GPU, among other things,
to guaranty the indebtedness of Subsidiary Companies and Exempt
Entities, and stated that the interest rate of such indebtedness
would not exceed the greater of:
(A) if such note, bond or other indebtedness is U.S.
dollar denominated, the greater of (i) 250 basis points
above the greater of (a) the lending bank's or other
recognized prime rate and (b) 50 basis points above the
federal funds rate, (ii) 400 basis points above the speci-
fied London Interbank Offered Rate plus any applicable
reserve requirement, or (iii) a negotiated fixed rate which,
in any event, would not exceed 500 basis points above the 30
year "current coupon" treasury bond rate; and
(B) if such note, bond or other indebtedness is
denominated in the currency of a country other than the
United States, at a fixed or floating rate which, when
adjusted (i.e., reduced) for the prevailing rate of infla-
tion in such country, as reported in official indices
published by such country, would be equivalent to a rate on
a U.S. dollar denominated borrowing of identical average
life that does not exceed 10% over the highest rate set
forth in clause (A) above.
GPU now proposes that the interest rate on Subsidiary
Company or Exempt Entity indebtedness, with respect to which
there is recourse to GPU, whether the indebtedness is denominated
in U.S. or foreign currency, not exceed that rate of interest
which is generally obtainable for indebtedness bearing similar
terms, conditions and features and which is issued by companies
of the same or reasonably comparable credit quality.
I(2) Except as otherwise described herein, the authorization
as heretofore granted by the Commission would remain unchanged.
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I(3) GPU submits that all of the criteria of Rules 53 and 54
under the Act with respect to the proposed transactions are
satisfied.
(i) The average consolidated retained earnings
for GPU and its subsidiaries, as reported for the four
most recent quarterly periods in GPU's Annual Report on
Form 10-K for the year ended December 31, 1994 and
Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995,
as filed under the Securities Exchange Act of 1934, was
approximately $1.87 billion. As of November 30, 1995,
GPU had invested, or committed to invest, directly or
indirectly, an aggregate of approximately $199 million
in EWGs and $112 million in FUCOs, representing approx-
imately 17% of such average consolidated retained
earnings. GPU's aggregate investments in EWGs and
FUCOs, including amounts invested pursuant to all other
outstanding or pending authorizations ($500 million in
SEC File No. 70-7727, $30 million in SEC File No. 70-
8369, $130 million in SEC File No. 70-8455 and $200
million in SEC File No. 70-7926), together with the
authorization requested herein, will not at any time
exceed the 50% limitation in Rule 53.
(ii) GPU maintains books and records to identify
investments in, and earnings from, each EWG and FUCO in
which it directly or indirectly holds an interest. (A)
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For each United States EWG in which GPU directly or
indirectly holds an interest:
(1) the books and records for such EWG
will be kept in conformity with United States
generally accepted accounting principles ("GAAP");
(2) the financial statements will be
prepared in accordance with the GAAP; and
(3) GPU directly or through its subsid-
iaries undertakes to provide the Commission access
to such books and records and financial statements
as the Commission may request.
(B) For each FUCO or foreign EWG which is a
majority-owned subsidiary of GPU:
(1) the books and records for such
subsidiary will be kept in accordance with GAAP;
(2) the financial statements for such
subsidiary will be prepared in accordance with
GAAP; and
(3) GPU directly or through its subsid-
iaries undertakes to provide the Commission access
to such books and records and financial state-
ments, or copies thereof in English, as the
Commission may request.
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(C) For each FUCO or foreign EWG in which
GPU owns 50% or less of the voting securities, GPU directly
or through its subsidiaries will proceed in good faith, to
the extent reasonable under the circumstances, to cause
(1) such entity to maintain books and
records in accordance with GAAP;
(2) the financial statements of such entity
to be prepared in accordance with GAAP; and
(3) access by the Commission to such books
and records and financial statements (or copies
thereof) in English as the Commission may request
and, in any event, GPU will provide the Commission
on request copies of such materials as are made
available to GPU and its subsidiaries. If and to
the extent that such entity's books, records or
financial statements are not maintained in accor-
dance with GAAP, GPU will, upon request of the
Commission, describe and quantify each material
variation therefrom as and to the extent required
by subparagraphs (a) (2) (iii) (A) and (a) (2)
(iii) (B) of Rule 53.
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(iii) No more than 2% of GPU's domestic public
utility subsidiary employees will render any services,
directly or indirectly, to EWGs and FUCOs in which GPU
directly or indirectly holds an interest.
(iv) Copies of this Post-Effective Amendment are
being provided to the New Jersey Board of Public Utilities,
the Pennsylvania Public Utility Commission and the New York
Public Service Commission, the only federal, state or local
regulatory agencies having jurisdiction over the retail
rates of GPU's electric utility subsidiaries. In addition,
GPU will submit to each such commission copies of any Rule
24 certificates required hereunder, as well as a copy of
Item 9 of GPU's Form U5S and Exhibits G and H thereof
(commencing with the Form U5S to be filed for the calendar
year in which the authorization herein requested is grant-
ed).
(v) None of the provisions of paragraph (b) of
Rule 53 render paragraph (a) of that Rule unavailable for
the proposed transactions.
(A) Neither GPU nor any subsidiary of GPU is
the subject of any pending bankruptcy or similar
proceeding.
(B) GPU's average consolidated retained
earnings for the four most recent quarterly
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periods (approximately $1.87 billion) represented
an increase of approximately $47 million (or
approximately 2.6%) in the average consolidated
retained earnings for the previous four quarterly
periods (approximately $1.82 billion).
(C) GPU did not incur operating losses from
direct or indirect investments in EWGs and FUCOs
in 1994 in excess of 5% of GPU's December 31, 1994
consolidated retained earnings.
(vi) in accordance with Rule 54, the requirements
of Rule 53(a), (b) and (c) are fulfilled.
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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 UNDER-
SIGNED THEREUNTO DULY AUTHORIZED.
GENERAL PUBLIC UTILITIES CORPORATION
JERSEY CENTRAL POWER & LIGHT COMPANY
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
GPU SERVICE CORPORATION
By:________________________________
T.G. Howson
Vice President and Treasurer
ENERGY INITIATIVES, INC.
EI SERVICES, INC.
By: ________________________________
B.L. Levy
President
Date: December 21, 1995<PAGE>
