Post-Effective Amendment No. 10 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")
GPU, INC. ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
GPU INTERNATIONAL, INC. ("GPUI")
EI SERVICES, INC. ("EI Services")
One Upper Pond Road, Parsippany, New Jersey 07054
JERSEY CENTRAL POWER & LIGHT COMPANY ("JCP&L")
METROPOLITAN EDISON COMPANY ("Met-Ed")
PENNSYLVANIA ELECTRIC COMPANY ("Penelec")
P.O. Box 16001, Reading, Pennsylvania 19640
GPU SERVICE, INC. ("GPUS")
100 Interpace Parkway, Parsippany, New Jersey 07054
(Names of companies filing this statement
and addresses of principal offices)
GPU, INC.
(Name of top registered holding company parent of the applicants)
M.A. Nalewako, Secretary W.A. Boquist, II
M.J. Connolly, Esq. Jersey Central Power & Light Co.
GPU Service, Inc. Metropolitan Edison Company
100 Interpace Parkway Pennsylvania Electric Company
Parsippany, New Jersey 07054 P.O. Box 16001
Reading, Pennsylvania 19640
W.S. Greengrove, Secretary Douglas E. Davidson, Esq.
GPU International, Inc. Berlack, Israels & Liberman LLP
One Upper Pond Road 120 W. 45th Street
Parsippany, New Jersey 07054 New York, New York 10036
______________________________________________
(Names and addresses of agents for service)<PAGE>
GPU, GPUI, EI Services, JCP&L, Met-Ed, Penelec and GPUS
hereby post-effectively amend the Application on Form U-1,
docketed in SEC File No. 70-8593, as heretofore amended, as
follows:
A. By Order dated July 6, 1995 (HCAR No. 35-26326) (the
"1995 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 1995 Order also authorized GPU to make
investments in one or more Subsidiary Companies from time to time
through December 31, 1997 in an aggregate amount of up to $200
million ("Original Investment Cap").
B. In addition, the 1995 Order authorized GPU to make
investments directly in Exempt Entities from time to time through
December 31, 1997, subject to the limit of the Original
Investment Cap.
C. By Order dated January 19, 1996 (HCAR No. 35-26457)
(together with the 1995 Order, the "Orders"), the Commission
approved an increase in the Original Investment Cap, which would
include all forms of equity or participation interests, to 50% of
GPU's "consolidated retained earnings" as defined in Rule 53(a)
under the Act at the time any investment in a Subsidiary Company
or Exempt Entity is made (the Original Investment Cap, as so
revised, is referred to as the "Investment Cap").
D. At June 30, 1996, GPU's consolidated retained earnings,
as determined in accordance with Rule 53(a) was approximately<PAGE>
$2.054 billion, and the Investment Cap was accordingly about
$1.027 billion. As of that date, GPU had invested or committed
to invest an aggregate of approximately $914 million in EWGs and
FUCOs as follows:
Project Amount
(US $ millions)
Midlands Electricity plc $544
Termobarranquilla S.A. 123
Solaris Power 129
Empresa Guaracachi S.A. 49
Mid-Georgia Cogen L.P. 41
Selkirk Cogeneration Partners, L.P. 17
Brooklyn Energy Limited Partnership 10
Other Development Projects 1
Total $914
As a result, only approximately $113 million remains available
under the Investment Cap for GPU to make further investments in
or acquisitions of interests in EWGs and FUCOs.
GPU believes it is appropriate and consistent with the
philosophy of the Energy Policy Act of 1992 (which added Sections
32 and 33 to the Act) for the Commission to provide GPU with
additional flexibility to invest in both its existing and new
EWGs and FUCOs as appropriate opportunities both domestically and
internationally may arise in the future. Because GPU's ability to
do so is severely limited given the amount now remaining under
the Investment Cap, GPU believes such expanded authorization is
necessary to provide it with sufficient flexibility to pursue
investments in Exempt Entities. It is, moreover, consistent with
the similar authorization the Commission has now granted to The
Southern Company by Order dated April 1, 1996 (HCAR No. 35-
26501).
E. Accordingly, GPU now proposes to increase the
2<PAGE>
Investment Cap to an amount equal to 100% of GPU's consolidated
retained earnings, as determined in accordance with Rule 53(a),
at the time of each investment. Investments in Subsidiary
Companies may take the form of: (i) capital stock or shares; (ii)
trust certificates, partnership interests or other equity or
participation interests; (iii) loans evidenced by promissory
notes; (iv) guaranties 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; (v) assumption of
liabilities of a Subsidiary Company; and (vi) reimbursement
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.
F. Investments by GPU directly in Exempt Entities would
take the form of (i) guaranties of the indebtedness or other
obligations of one or more Exempt Entities; (ii) assumption of
liabilities of one or more Exempt Entities; and (iii) guaranties
and letter of credit reimbursement agreements 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
acquisition of any Subsidiary Companies or Exempt Entities.
3<PAGE>
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. Investments in independent power production facilities
and foreign utility systems involve a variety of risks that are
not necessarily present in the traditional, regulated, electric
utility industry. GPU and GPUI have established comprehensive
procedures to identify and address (i.e., limit and/or mitigate)
these risks, which are described below.
(1) The Project Review Process. Every potential
project investment opportunity developed by GPUI and its
affiliates, GPU Electric, Inc. (formerly "EI Energy") and GPU
Power, Inc. (formerly "EI Power", collectively, the "GPU
International Group") is subjected to a series of formal reviews
to ensure the project's soundness. The process begins with a
consideration of the GPU International Group's strategic plans
which survey independent power opportunities domestically and
throughout the world and provide a variety of tools to assist in
4<PAGE>
the evaluation of risks. These plans, which are updated
periodically, lead to the identification of projects and
countries where the GPU International Group intends to pursue
project development efforts. The plans also lead to the
development of budgeted levels of expenditures on foreign
development activities. Before GPU or the GPU International
Group makes any investment in a foreign country, an analysis of
that opportunity, including the specific country risk, is
presented first to the senior management group, then to the
relevant board of directors of the GPU International Group
company, and finally to the Finance Committee of the GPU board of
directors and then the full GPU board. The analysis includes a
review of the political and economic stability of the particular
country, the government's commitment to private power, the legal
and regulatory framework for private investment in electricity
facilities and whether local business practices will support
long-term investment of private capital. The boards of directors
of both GPU and the GPU International Group company involved must
approve investments in any foreign country. This careful
planning and budgeting process helps to mitigate an important
risk of the independent power business - the expenditure of
development funds without a realistic expectation of success in
terms of both making investments in projects and in obtaining
appropriate levels of non-recourse financing on commercially
reasonable terms.
Once development of a project is undertaken, milestones
are established to ensure that continuing expenditures on
development are producing acceptable results. In addition,
5<PAGE>
project teams are required to identify the major technical,
financial, commercial and legal risks associated with their
particular project and whether and how those risks have been
mitigated. The members of the project team are responsible for
the due diligence investigation of those risks that have been
identified and must present their findings to an officer of the
GPU International Group, with functional oversight over the
relevant risk factor subject matter.
Finally, every project is subjected to increasing
levels of management review. Depending on the amount of GPU's
anticipated financial exposure to a particular project, the
proposed investment must be approved successively by the entire
executive management group of the GPU International Group, the
board of directors of the GPU International Group company
involved (which includes senior GPU executives), and finally, by
the board of directors of GPU.
The final project review process is to a large extent
replicated by the lenders who agree to provide construction or
permanent debt financing or acquisition financing on a non-
recourse basis, since repayment of that debt will depend solely
upon the success of the project. Project debt maturities are
often long-term (e.g., 15 or more years), meaning that the
lenders' exposure to the risks of a project extends for many
years after closing or completion of construction. Typically,
project debt documents require the establishment of plant
overhaul, debt service and other funded reserves, all of which
are designed to preserve the asset and protect the financial
performance of the project against interruptions in revenues and
6<PAGE>
other contingencies. On the other hand, debt maturities for
acquisition financing are generally much shorter -- usually 5 to
7 years. The GPU International Group's success in arranging
appropriate levels of non-recourse financing for its QF and
Exempt Entity investments and acquisitions in effect serves as a
validation of the project review process described above.
(1) Risk Mitigation of Independent Power Projects.
The GPU International Group carefully evaluates the potential
risk of an independent power project or foreign utility system
before GPU's funds are committed.
(a) Operating Risks. The GPU International Group
has focused its project development efforts on technologies with
which it has existing competencies in coal, gas or oil generation
and, more recently, in retail distribution. Due diligence of
operating assumptions is carried out by the GPU International
Group's engineers with experience in the technology being
evaluated and by outside technical consultants. Where
appropriate, assistance is provided by personnel from the GPU
utility operating subsidiaries. The risk of changes in the price
of fuel is often passed through to the purchaser of electricity
under the negotiated terms of a long-term power purchase
agreement. Other operating risks can be covered by equipment
warranties and by casualty, business interruption and other forms
of insurance. Further, when the GPU International Group or an
affiliate is responsible for managing the day-to-day operations
of Exempt Entities in which it holds an ownership interest, its
ability to address and correct operating problems is far greater
than would be the case if operating control were in the hands of
7<PAGE>
a third party.
(b) Construction Risks. Construction risks are
typically addressed under fixed-price contracts with milestones
and performance guarantees (e.g., guaranteed heat rates,
availability factors and the like), backed by appropriate levels
of liquidated damages. The credit-worthiness and "track record"
of the construction contractor is a very important consideration
in this regard. To date, the GPU International Group has not
served as its own general construction contractor.
(c) Commercial Risks. Most independent power
projects rely on the commitment of a single power purchaser,
usually the local utility company, to eliminate all or most of
the risk of variation in revenues. In such cases, the GPU
International Group makes an assessment of the credit-worthiness
of its power purchaser over the life of the project and/or seeks
to have a contingency plan in the event of default.
In competitive power markets outside the United
States, long-term contracts are not always available and
electricity prices may be determined by supply and demand. The
GPU International Group conducts extensive investigations of the
electricity markets in these environments to ensure the viability
of long-term demand. Further, the GPU International Group seeks
projects that will be capable of producing electricity at or
below long-run marginal costs in the region, thus providing that
the project will be a competitive supplier.
(d) Financial Risks. The GPU International Group
addresses the financial risks of its projects in a variety of
ways. First and foremost, the construction and permanent debt
8<PAGE>
financing for such projects is, by its express terms, non-
recourse to GPU or any associate company (other than other Exempt
Entities or Subsidiary Companies) to the greatest extent
practicable. This means that the non-recourse debt of each
project or foreign utility system is secured solely by its own
assets and revenues, and creditors have no ability to seek
repayment from GPU upon default. This method of financing
ensures that GPU's exposure to any independent power project is
limited to the amount of its equity commitment and that GPU's
domestic public utility subsidiaries (the "Operating Companies")
and their customers bear no risk of a project's failure or
financial distress. From time to time, GPU and one or more of
the GPU International Group companies may agree to provide
Guarantees in connection with non-recourse financing or bridge
financing, but these financial supports are carefully monitored
and treated as a part of GPU's equity commitment for regulatory
reporting purposes. To date, neither GPU nor any GPU
International Group company has been called upon to fund its
obligation under any such Guarantee issued with respect to an
investment in an Exempt Entity.
In addition to the essentially non-recourse nature
of project debt financing, project debt is carefully structured
to meet, or match, the characteristics of the particular project.
For example, when the value of a project depends on a long-term,
fixed-price, power purchase agreement, the project debt is
typically designed to be of a shorter term, with scheduled debt
payments usually covered by fixed charges (usually the capacity
payment component in the contract). On the other hand, where
9<PAGE>
there is no long-term, fixed source of revenue, the percentage of
non-recourse debt financing is typically smaller, so that
financial risk is not induced by excessive debt levels. Thus,
while the GPU International Group's projects with long-term power
purchase contracts generally have debt capitalization levels in
the 70% to 80% range, other projects will be leveraged at levels
similar to those of United States regulated utilities so that
project cash flows will be sufficient to service, and where
required, amortize, the debt.
In its more recent acquisitions of the Solaris
Power distribution business in Australia and (together with
Cinergy) of Midlands Electricity, plc, a UK regional electric
company, it has, of course, been necessary for GPU itself to
provide equity financing given the size of the enterprises
involved. GPU has met these equity contribution obligations
through the guaranty of Subsidiary Company borrowings (made in
local currency), the proceeds of which are used to pay a portion
of the acquisition costs. These borrowing arrangements are
normally for shorter terms (i.e., 5 to 7 years) and GPU expects
ultimately to refinance or repay these loans through future sales
of senior capital in the form of equity and debt.
Another financing risk is the potential
variability of interest rates. This risk is addressed, in part,
by borrowing to the extent possible, on a long-term, fixed-rate
basis or through the use of interest rate swap or other hedging
arrangements. The finance department of the GPU International
Group (together with the GPU treasury department) is responsible
for monitoring these instruments to ensure they are used
10<PAGE>
properly.
(e) Foreign Currency Exchange Risk. There are
several ways in which the GPU International Group has addressed
the foreign currency exchange risk element, depending on the
status of the host country. In countries which do not have a
history of stability in the management of their exchange policy,
part or all of the revenue from a project is payable in or
indexed to hard currency (almost invariably US dollars). In
addition, back-up guarantees or other undertakings by the central
government may be available to ensure that the US dollar payments
due under the power purchase agreement are actually made
available by the central bank or ministry of finance.
In some countries, the sources of revenues can be
tied in other ways to the US dollar. For example, the capacity
payment component of revenues derived by an Exempt Entity may be
tied to the cost of new capacity measured in US dollars. In
addition, an Exempt Entity's revenue may be expressed in a unit
of account (i.e., a national monetary unit) which adjusts for any
inflation of the local currency, thereby protecting the project
against depreciation of the currency.
In other cases, the non-recourse project debt and
GPU equity loans are borrowed in the same currency as the
project's revenues, thereby ensuring a match between debt service
obligations and operating income. In addition, in more developed
countries, long-term currency swaps are available to provide
further hedging for the equity component of the investment. This
has been the case in both the Solaris Power and Midlands
acquisitions where the loans to finance the acquisition were
11<PAGE>
provided in Australian Dollars and Sterling, respectively.
(f) Legal Risks. Legal risks are addressed by
careful review of any investment by legal counsel, including
local and international counsel where foreign projects are
concerned. Such legal reviews address regulatory and permitting
risks, environmental risks, the adequacy and enforceability of
guarantees or other contractual undertakings of third parties,
the status of title to utility property and the obligations
inherent in the financing arrangements.
In addition to the specific risks mentioned above,
investment outside the United States can entail country-specific
risks related to political or economic performance. As indicated
above, the GPU International Group evaluates country risk at the
outset of any project development effort and attempts to mitigate
this risk through a number of measures. Most important, the
country review process described above ensures that the political
and economic stability of any country has been reviewed at
several decisional levels up to and including GPU's board of
directors before any investment occurs. In addition to a general
review, the country analysis focuses specifically on the
country's electric sector and on the government's support for
private ownership in that sector.
Also, at the outset of development work in a
foreign country, the GPU International Group normally seeks local
partners who are experienced in doing business in the host
country. Local partners are a very important element in
mitigating the risk of future expropriation or unfair regulatory
treatment. An additional mitigating factor is the participation
12<PAGE>
of official or multilateral agencies in a project. When funds
for the project are supplied by government-sponsored export
credit agencies or other governments or institutions, such as the
World Bank through its International Finance Corporation
affiliate, the host country has strong incentives not to take
actions which would harm a project's viability. In addition,
political risk can often be addressed through political risk
insurance obtained from the Overseas Private Investment
Corporation, a United States agency, or the Multilateral
Investment Guaranty Agency, a World Bank affiliate, or in the
commercial insurance market. Political risk insurance is
available to insure the project debt or the return of an
investor's equity. One can also insure against outright
expropriation, acts of civil violence or even "creeping"
nationalization brought about by punitive regulation.
(g) Portfolio Diversification. Apart from the
detailed and comprehensive approach to the specific risks
described above, GPU's fundamental view is that the best long-
term approach to managing the risk of investing in the
independent power business is through diversifying both the type
and the location of projects. In this regard, GPU recognizes
that the risk inherent in any investment cannot be eliminated
entirely, even by the most careful approach to project
development. Consequently, GPU is committed to diversifying its
investments across countries and regions of the world. GPU's
strategy has to date been focused on investment opportunities in
North America (outside the core regulated business of GPU),
including Canada, South America, Australia, the United Kingdom
13<PAGE>
and Europe. Substantial investments have been made in the first
three regions, and development efforts are underway in Europe.
Preliminary project development is also being conducted in other
regions.
Regional diversification is important since
economic and political instability, when they have occurred
historically, have tended to involve multiple countries in a
region. Accordingly, GPU's board of directors may set limits on
investment in specific countries which vary according to an
assessment of the country's stability.
Another element of GPU's diversification policy is
to achieve a balance between so-called "greenfield" projects and
acquisitions of existing facilities and power systems.
Greenfield projects are those that involve completely new
development and construction of electric facilities, principally
generating stations. Greenfield projects involve a higher degree
of risk since they entail a lengthy process of development and
construction. Funds are expended during the early years of such
projects; return on investment is not earned until the project is
in operation. Nevertheless, while these projects typically have
higher levels of risk and deferred returns, they are important to
GPU because they generally produce higher rates of return on
investment than investments in existing assets and because they
lay the foundation for continued earnings growth for GPU after
the turn of the century.
To balance this type of project development
efforts, GPU's development efforts also target the acquisition of
assets that are already in operation, either from existing
14<PAGE>
private owners or through privatization. These acquisitions
reduce the risk of GPU's overall business by producing near-term
earnings without significant development or construction risk.
In addition, GPU has been pursuing a strategy of diversifying the
types of electric business in which it invests. Thus, GPU has
more recently been pursuing retail distribution businesses, as
evidenced by the Solaris and Midlands acquisitions, to balance
its ownership portfolio of generating facilities. GPU believes
that through this type of asset portfolio balance, it can
mitigate the risk inherent in excessive reliance on the prospects
of one sector of the utility business.
The result of this balanced portfolio strategy is
that GPU is not dependent on any single country, regulatory
environment or type of asset for its earnings from independent
power projects and foreign utility investments. In addition,
while GPU has successfully developed significant investments in
projects which are expected to produce long-term results, it has
also ensured that its portfolio of projects will add cash flow
and earnings for its shareholders in the near term future,
thereby supporting share value and dividend growth.
J. The GPU International Group is presently investigating,
alone and in conjunction with others, investment opportunities in
several additional domestic and foreign power projects and
existing foreign utility systems. Most of these ventures are
expected to qualify as either EWGs or FUCOs. In particular,
several foreign countries are now privatizing state-owned utility
systems. Others are promoting private investment to construct,
own and operate generating plants.
15<PAGE>
GPU intends to make substantial additional investments in
Exempt Entities, primarily for the following reasons:
There has been only limited capital investment in new
generating, transmission and distribution facilities by the
Operating Companies over the last five years, with most of such
investment being made to upgrade, repair or replace existing
facilities. This has been in large measure due to the low growth
in kwh sales in the Operating Companies service territories,
averaging about 1.39% during this period. The Operating Companies
anticipate that this situation will continue. Importantly,
however, capital investments which have been (and are projected
to be) made in the Operating Companies' utility plant have been
funded through the GPU System's retained earnings. Thus, the
Operating Companies' capital needs have been relatively "in
balance" with the GPU System's retained earnings growth.
Acquisitions of Exempt Entities, on the other hand, have been
funded by raising additional capital and this is expected to
continue in the future. In sum, foreign investment in Exempt
Entities presents GPU with the opportunity to continue to grow in
an industry sector that GPU has decades of experience in, while
at the same time diversifying overall asset risk.
Second, GPU directly or through the GPU International Group,
has purposely pursued investments in utility systems in
geographical regions, such as Australia, the United Kingdom and
South America, which have moved much further than the United
States towards deregulation and full competition in both
wholesale and retail electricity markets. GPU believes that the
creation and maintenance of value for its shareholders will
16<PAGE>
depend critically on its ability to operate its core business in
the United States successfully as that business becomes subject
to increasing competition. GPU's experience in markets that are
already largely deregulated will be critical to the long-term
success of its core business. Moreover, the lessons learned from
these markets provide GPU with insights about the market
structures that produce efficient and equitable results for
consumers and shareholders. These insights will allow GPU to
play a role in shaping the evolution of the electric sector of
the United States.
K. For the reasons stated above, GPU hereby requests that
the Commission exempt GPU from the requirements of Rule 53(a)(1)
under the Act such that GPU may use the net proceeds from any
subsequently authorized issuances of recourse debt and equity
securities, and may issue Guarantees, in an aggregate amount at
any time outstanding which, when added to GPU's direct and
indirect "aggregate investment" in all Exempt Entities, would not
at any time exceed GPU's "consolidated retained earnings". Based
on GPU's "aggregate investment" in all Exempt Entities
(approximately $914 million as of June 30, 1996) and
"consolidated retained earnings" as of June 30, 1996
(approximately $2 billion), such limitation would allow financing
of additional investments in Exempt Entities of approximately
$1.113 billion.
L. Rule 53 under the Act provides that, if each of the
conditions of paragraph (a) thereof is met, and none of the
conditions of paragraph (b) thereof is applicable, then the
Commission may not make certain adverse findings under Sections 7
17<PAGE>
and 12 of the Act in determining whether to approve a proposal by
a registered holding company to issue securities in order to
finance an investment in any EWG or to guaranty the securities of
any EWG. Giving effect to the proposals contained herein, GPU
submits that all of the criteria of Rules 53 and 54 under the Act
with respect to the proposed transactions, except for clause (1)
of Rule 53(a) (which provides that GPU's "aggregate investment"
may not exceed 50% of GPU's "consolidated retained earnings"),
are satisfied.
(1) 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, 1995 and Quarterly Reports on Form 10-Q
for the quarters ended March 31 and June 30, 1996, as filed under
the Securities Exchange Act of 1934, was approximately $2
billion. As of June 30, 1996, GPU had invested, or committed to
invest, directly or indirectly, an aggregate of approximately
$241 million in EWGs and $673 million in FUCOs, representing
approximately 44% of such average consolidated retained earnings.
(2) 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) For each United States EWG in which GPU directly
or indirectly holds an interest:
(a) the books and records for such EWG will be
kept in conformity with United States generally accepted
accounting principles ("GAAP");
18<PAGE>
(b) the financial statements will be prepared in
accordance with the GAAP; and
(c) GPU directly or through its subsidiaries
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:
(a) the books and records for such subsidiary
will be kept in accordance with GAAP;
(b) the financial statements for such subsidiary
will be prepared in accordance with GAAP; and
(c) GPU directly or through its subsidiaries
undertakes to provide the Commission access to such books and
records and financial statements, or copies thereof in English,
as the Commission may request.
(3) 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
(a) such entity to maintain books and records in
accordance with GAAP;
(b) the financial statements of such entity to be
prepared in accordance with GAAP; and
(c) 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
19<PAGE>
such entity's books, records or financial statements are not
maintained in accordance 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.
(4) No more than 2% of the Operating Companies'
employees will render any services, directly or indirectly, to
EWGs and FUCOs in which GPU directly or indirectly holds an
interest.
(5) Copies of this Post-Effective Amendment are being
provided to the New Jersey Board of Public Utilities ("NJBPU")
and the Pennsylvania Public Utility Commission ("PaPUC"), the
only federal, state or local regulatory agencies having
jurisdiction over the retail rates of the Operating Companies.1
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 H and I hereof (commencing
with the Form U5S to be filed for the calendar year in which the
authorization herein requested is granted).
(6) None of the provisions of paragraph (b) of Rule 53
render paragraph (a) of that Rule unavailable for the proposed
transactions.
(7) Neither GPU nor any subsidiary of GPU is the
______________________________
1 Penelec is also subject to retail rate regulation by the New
York Public Service Commission with respect to retail service to
approximately 11,300 customers in Waverly, New York served by
Waverly Electric Power & Light Company, a Penelec subsidiary.
Waverly Electric's revenues are immaterial, accounting for less
than 1% of Penelec's total operating revenues.
20<PAGE>
subject of any pending bankruptcy or similar proceeding.
(8) GPU's average consolidated retained earnings for
the four most recent quarterly periods (approximately $2 billion)
represented an increase of approximately $63 million (or
approximately 3%) compared to the average consolidated retained
earnings for the previous four quarterly periods (approximately
$1.99 billion).
(9) GPU did not incur operating losses from direct or
indirect investments in EWGs and FUCOs in 1995 in excess of 5% of
GPU's December 31, 1995 consolidated retained earnings.
(10) in accordance with Rule 54, the requirements of
Rule 53(a), (b) and (c) are fulfilled, except for clause (1) of
Rule 53(a).
M. Rule 53(c) states that, in connection with a proposal
to issue and sell securities to finance an investment in any EWG,
or to guarantee the securities of any EWG, a registered holding
company that is unable to satisfy the requirements of paragraph
(a) or (b) of Rule 53 must "affirmatively demonstrate" that such
proposal:
(a) will not have a substantial adverse impact
upon the financial integrity of the registered holding company
system; and
(b) will not have an adverse impact on any
utility subsidiary of the registered holding company, or its
customers, or on the ability of State commissions to protect such
subsidiary or customers.
In its recent Memorandum Opinion and Order in Southern
Company (HCAR No. 35-26501, April 1, 1996), the Commission, among
21<PAGE>
other things, authorized The Southern Company ("Southern") to
invest the proceeds of securities sales and guarantee obligations
of EWGs and FUCOs in an amount up to 100% of Southern's
consolidated retained earnings. The Commission expressly found
that on the basis of the facts and circumstances presented by
Southern, "there would not be a substantial adverse impact upon
the financial integrity of the Southern system if Southern is
permitted to use financing proceeds to invest in EWGs and FUCOs,
and to issue related guaranties, up to the requested aggregate
amount." Thus, the Commission concluded that Southern had
"adequately demonstrated that it is currently entitled, under the
standards of Rule 53(c), to the relief sought" subject to certain
conditions discussed in the order.
GPU submits that on the basis of the facts set forth herein
and for the reasons more specifically discussed below, it has
likewise demonstrated that it has adequately satisfied the
standards of Rule 53(c) and is therefore entitled to the relief
sought herein.
(1) The use of proceeds from the issuance of debt and
equity securities by GPU to make investments in EWGs (as well as
in FUCOs), and the issuance of, or provision for, Guarantees in
connection therewith by GPU, in amounts up to 100% of GPU's
"consolidated retained earnings", will not have a "substantial
adverse impact" on the financial integrity of the GPU System.
The lack of any "substantial adverse impact" on GPU's
financial integrity as a result of increased levels of
investments in Exempt Entities can be demonstrated in several
ways, including by analyses of historic trends in GPU's
22<PAGE>
consolidated capitalization ratios and retained earnings, the
market view of GPU's securities and GPU's proven success in
obtaining appropriate levels of non-recourse debt financing and
third-party equity for its investments in QFs and Exempt
Entities. Consideration of these and other relevant factors
supports the conclusion that the issuance of securities and
Guarantees by GPU to finance investments in Exempt Entities
exceeding the 50% consolidated retained earnings limitation in
Rule 53(a)(1) will not have any "substantial adverse impact" on
the financial integrity of the GPU System.
(a) Aggregate investments in Exempt Entities in
amounts up to 100% of GPU's "consolidated retained earnings"
would still represent a relatively small commitment of capital
for an enterprise the size of GPU, based on various key financial
ratios at June 30, 1996. For example, investments in this amount
would be equal to only 29% of GPU's total capitalization ($7.1
billion); 32% of consolidated net utility plant ($6.4 billion);
and 19% of total consolidated assets ($10.7 billion).
(b) GPU's consolidated retained earnings have
grown on average approximately 5.5% per year over each of the
previous five years. Excluding certain non-recurring charges to
income,2 consolidated retained earnings increased $127 million
__________________________________
2 Consolidated retained earnings have been adjusted to exclude
the following non-recurring items: net decrease in 1994 earnings
of $164.7 million (after-tax), due to write-off of certain future
TMI-2 retirement costs ($104.9 million), charges for costs
related to early retirement programs ($76.1 million), write-off
of Penelec's OPEB costs not probable of recovery in rates ($10.6
million) and net interest income from federal income tax refund
($26.9 million); and a 1995 reversal of $104.9 million for TMI-2
retirement costs and charge of $8.4 million (after-tax) of TMI-2
monitored storage costs deemed not probable if recovery in rates.
23<PAGE>
from 1993 to 1994, a 7% increase; and by $132 million for the
year ended December 31, 1995, a 6.8% increase.
(c) Taken together with the credit strength of
the Operating Companies (which are presently rated at the
equivalent of BBB+ or higher by the three major credit rating
agencies), GPU's actual consolidated capitalization and interest
coverage ratios for 1995 are well within industry ranges set by
independent debt rating agencies for BBB+ rated companies, as
shown below:
Actual 1995 Capitalization and Interest Coverage Ratios
(Excluding Non-Recourse Project Debt):
Total Debt/Capital 44.2%
EBIT/Total Interest (times) 4.37
Operating Income/Interest (times) 3.36
1995 Industry Ratios for BBB+ Rated Investor-Owned Utilities*
High Avg. Low
Total Debt/Capital 62.3% 51.4% 41.3%
EBIT/Total Interest (times) 4.37 3.06 .84
Operating Income/Interest (times) 3.74 3.08 2.22
___________
*Source: Computed using Bloomberg's financial database.
(d) There is no indication that GPU's ability to
raise common equity has been adversely affected by investments in
Exempt Entities. In fact, just the opposite appears to be true,
relative to the rest of the industry. GPU sold an aggregate of
5,000,000 shares of common stock during 1995 (excluding shares
sold through its Dividend Reinvestment Plan), with net proceeds
(average of $31.51 per share) being well above the then net book
value per share of GPU's common stock (average of $24.44),
resulting in average market-to-book ratios of 129%. The market's
assessment of GPU's future growth and earnings also compared
favorably to other electric utility issuers in the 1994 to 1995
24<PAGE>
time frame. This can be shown by comparison of price-earnings
and market-to-book ratios, both of which were in line with the
electric utility industry averages in that period. These
measures indicate investor confidence in GPU's ability to deliver
shareholder value.
Twelve Months
1994 1995 Ended 6/30/96
P/E Ratio:
GPU3 9.2 11.5 10.8
Electric Industry* 11.8 12 N/A
Market-to-Book Ratio:
GPU 118% 138% 140%
Electric Industry* 133% 137% N/A
____________
*Source: Historical - Compustat Electric Utilities Database.
Current - Utility Focus, Regulatory Research
Associates, Inc.
(e) In recent years, GPU s dividend payout policy
has been more conservative than that of the industry as a whole.
Thus, GPU's dividend payout ratio (percentage of earnings paid
out in dividends), has consistently been below the electric
utility industry average. The implication of a relatively
conservative payout policy is that GPU's earnings are more than
adequate to cover current dividend levels and to support the growth
in dividend levels needed to attract common stock investors, while
continuing to strengthen the equity base through retained earnings
growth.
Twelve Months
1992 1993 19944 19954 Ended 6/30/96
GPU Payout Ratio(%) 69.4 62.4 62.2 62.7 57.7
Electric Industry* 84.3 78.6 81.4 81 N/A
_____________
3 Excludes effect of non-recurring charges described in note 2
above.
4 Excludes non-recurring charges described in note 2 above.
25
<PAGE>
*Source: Historical - Compustat Electric Utilities Database.
1995 - Merrill Lynch & Co., Utility Data Sheet.
(f) The market's assessment of the overall
quality of the GPU International Group's portfolio of projects
(Exempt Entities and QFs) is particularly demonstrated by the
recent success that the GPU International Group has had in
obtaining appropriate levels of non-recourse debt to finance and
refinance the operations of these projects. For example, in
1995, the GPU International Group (a) obtained approximately $750
million of largely non-recourse project financing for the
acquisition of a 240 MW and construction of a 750 MW gas-fired
facility in Baranquilla, Colombia, and (b) acquired for $356
million a 50% interest in Solaris Power, an Australian electric
distribution company. More recently, in May 1996, the GPU
International Group completed $132.6 million of non-recourse
financing for its 300 MW Mid-Georgia Cogeneration Project and, as
a 50/50 partner with Cinergy, acquired Midlands supported by
approximately $2.25 billion of non-recourse bank financing.
(2) The proposed increased use of financing proceeds
to invest in Exempt Entities will not have an "adverse impact" on
any of GPU's Operating Companies, their respective customers, or
on the ability of the two State commissions having jurisdiction
over one or more such Operating Companies to protect such
Operating Companies or such customers.
The conclusion that the Operating Companies and their
customers will not be adversely impacted by increased levels of
investment by GPU in Exempt Entities is well supported by
26
<PAGE>
analyses of the Operating Companies' financial integrity
(including the ability of the Operating Companies to issue senior
securities), lack of present and anticipated need for any
significant amount of equity capital from GPU, continuing
compliance with the other applicable requirements of Rule 53(a),
and the proven effectiveness of State commission oversight
together with the affirmation by the State commissions that they
will protect ratepayers from any adverse impact. The State
commissions can set the cost of capital for electric utilities by
comparison with selected groups of domestic utilities, which
exclude any utilities with adverse impacts due to foreign
investments or EWGs. Therefore, the States have the authority
and the mechanism to prohibit any adverse effects on the cost of
capital due to investments in Exempt Entities from being passed
on to ratepayers.
(a) All of GPU's investments in Exempt Entities
are segregated from the Operating Companies. No Operating
Company has extended credit or sold or pledged any of its assets
directly or indirectly to any Exempt Entity, and the indebtedness
of the Exempt Entities is not otherwise recourse to any Operating
Company. GPU represents that it will not seek recovery through
higher rates to the Operating Companies' utility customers in
order to compensate GPU for any possible losses that it may
sustain on investments in Exempt Entities or for any inadequate
returns on such investments.
It should be noted that Section 33(f) of the Act, with
a minor exception, prohibits State-regulated public utilities
from financing investments in FUCOs, and Section 33(g) prohibits
27
<PAGE>
outright any pledge or encumbrance of utility assets by a State-
regulated public utility for the benefit of any associated FUCO.
(b) Debt (including short-term debt) ratios of
the Operating Companies have been and continue to be consistent
with industry averages for BBB+ rated electric utilities. The
current industry average for BBB+ rated electric utilities is
51%*.
Debt as % of 1991 1992 1993 1994 1995
Capitalization
JCP&L 44% 44% 46% 46% 41%
Met-Ed 42% 42% 47% 44% 44%
Penelec 44% 47% 48% 48% 46%
__________
*Source: An industry average-Calculated using Merrill Lynch &
Co., Utility Data Sheet - Electric and Combination
Utilities Companies.
Debt levels of the Operating Companies are projected to remain in
the low-to mid-40% range through the year 2000.
(c) Additional investments in Exempt Entities
will not have a negative impact on the Operating Companies'
ability to fund operations and growth. Over the past five years,
the Operating Companies have funded substantially all of their
construction expenditures from internal sources of cash and from
sales of senior securities and other borrowings. The only
significant equity infusion by GPU in the Operating Companies
over the last five years was made in 1995 ($120 million).
Present projections indicate that GPU will not have to make any
significant equity investment in any Operating Company for at
least the next five years.
Operating Companies - Construction Expenditures:
Actual (1992-1995) and projected 1996 expenditures, net of
Allowance for Funds Used During Construction ($ million):
28
<PAGE>
1991 1992 1993 1994 1995 1996*
$465 $460 $490 $578 $461 $454
__________
*estimated
Percent internally generated:
1991 1992 1993 1994 1995
96% 76% 69% 73% 80%
GPU presently estimates that for 1996 and 1997 the cash flow from
operations and proceeds from the sale of senior securities will
be sufficient to fund expected construction expenditures.
(d) The Operating Companies' ability to issue
debt and equity securities in the future depends upon earnings
coverages at the time such securities are issued -- that is, the
Operating Companies must comply with certain coverage
requirements contained in their mortgage bond indentures.
Presently, the Operating Companies anticipate having more than
adequate earnings coverages for financing requirements in the
foreseeable future.
(e) The senior securities of the Operating
Companies are presently rated at an equivalent of BBB+ or higher
by the three major credit rating agencies. The Operating
Companies' bond ratings have been BBB+ or higher as set by the
major rating agencies for the last five years. The Operating
Companies continue to show strong financial statistics as
measured by the rating agencies (pre-tax interest coverage, debt
ratio, funds from operations to debt, funds from operations to
interest coverage, and net cash flow to capital expenditures).
Bond Rating: 1992 1993 1994 1995 Current
29
<PAGE>
JCP&L A- A- BBB+ BBB+ BBB+
Met-Ed A- A- BBB+ BBB+ BBB+
Penelec A A A- A- A-
As of June 30, 1996, mortgage indenture earnings coverages
for the Operating Companies range from about 4.6x to 5.0x, in
each case well above the required coverages of 2.0x necessary to
issue additional first mortgage bonds.
(f) Increased levels of investment in Exempt
Entities are not expected to have any impact on utilization of
Operating Company employees. The Operating Companies have not
and will not increase staffing levels or acquire other resources
to support the operations of Exempt Entities. In this regard,
the vast majority of the operational employees are hired or
contracted locally. Indeed, the GPU International Group has
permanent employees resident in South America and Australia to
supervise project matters; the GPU International Group employees
are also secunded to foreign development projects where
necessary. This is true even where the GPU International Group
or their respective subsidiary is the operator. Project
development, management and home office support functions for the
Exempt Entities are largely performed by the GPU International
Group, which has approximately 60 full time employees, and by
outside consultants (e.g., engineers, investment advisors,
accountants and attorneys) engaged by the GPU International
Group. Accordingly, the GPU International Group's need for the
support of personnel provided by the Operating Companies has been
and is projected to remain relatively modest.
(g) There is no evidence that the two State
commissions having jurisdiction over substantially all the
30
<PAGE>
Operating Companies' operations have been or will be unable to
protect utility customers. The State commissions have not raised
objections to GPU's investments in Exempt Entities. To provide
the Commission with additional assurances in this regard, the
NJBPU and the PaPUC will be requested to provide the Commission
with letters certifying that such State commission has
jurisdiction over certain Operating Companies and that such State
commission does not expect that any adverse effect or costs that
might result from GPU's investments in Exempt Entities would
impact customers. Additionally, GPU will have to comply with
certain reporting requirements and covenant, among other things,
that such investments in Exempt Entities will not result in the
assumption of any obligation by the Operating Companies. GPU and
its affiliates have been subjected to audits by the Federal
Energy Regulatory Commission and the Commission, and it is
assumed both staffs will participate in future audits. Audits by
the Commission have not raised "significant" questions.
N. The estimated fees, commissions and expenses to be
incurred in connection with the proposed transactions will be
supplied by further post-effective amendment.
O. It is believed that Sections 6(a), 7, 12(b), 32 and 33
of the Act and Rules 45, 53 and 54 thereunder are applicable to
the transactions proposed herein.
P. No state or Federal commission other than your
Commission has jurisdiction with respect to any aspect of the
proposed transactions. Section 33(c)(2) of the Act provides that
the State commissions may make recommendations to the Commission
regarding a registered holding company's relationship to FUCOs,
31
<PAGE>
and that the Commission shall "reasonably and fully consider"
such recommendations. GPU has submitted a copy of this Post-
Effective Amendment to the PaPUC and the NJBPU.
Q. It is requested that the Commission issue an order with
respect to the transactions proposed herein at the earliest
practicable date, but in any event not later than December 10,
1996. It is further requested that (i) there not be a
recommended decision by an Administrative Law Judge or other
responsible officer of the Commission, (ii) the Office of Public
Utility Regulation be permitted to assist in the preparation of
the Commission's decision, and (iii) there be no waiting period
between the issuance of the Commission's order and the date on
which it is to become effective.
R. It is further requested that upon the effectiveness of
the authorization herein sought, the Commission s orders in
Docket Nos. 70-8817, 70-8793, 70-8695, 70-8593, 70-8537, 70-8369
(GPUI), 70-7926, 70-7727 and 70-7670 and the Applications pending
in Docket Nos. 70-8877, 70-8829, 70-8827, 70-8805 and 70-8289
(GPU Generation) be amended to permit the transactions therein
authorized and/or contemplated notwithstanding the increase in
the Investment Cap to 100% of GPU s consolidated retained
earnings.
S. The following additional exhibits are filed in Item 6
hereof:
(a) Exhibits:
F-1 - Opinion of Berlack, Israels & Liberman
LLP -- to be filed by post-effective
amendment.
F-2 - Opinion of Ballard Spahr Andrews &
32
<PAGE>
Ingersoll -- to be filed by post-
effective amendment.
H - Proposed form of public notice.
T. The proposed transactions are for the purpose of
financing GPU's business activities. As such, the issuance of an
order by your Commission with respect to the proposed
transactions which are the subject hereof is not a major Federal
action significantly affecting the quality of the human
environment. No Federal agency has prepared or is preparing an
environmental impact statement with respect to the proposed
transactions which are the subject hereof.
33
<PAGE>
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.
GPU, INC.
JERSEY CENTRAL POWER & LIGHT COMPANY
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
GPU SERVICE, INC.
By: ________________________________
T.G. Howson
Vice President and Treasurer
GPU INTERNATIONAL, INC.
EI SERVICES, INC.
By: ________________________________
B.L. Levy
President
Date: October 17, 1996<PAGE>
EXHIBITS TO BE FILED BY EDGAR
(a) Exhibits:
H - Proposed form of public notice.<PAGE>
Exhibit H
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35 - ); 70-8593
GPU, Inc., et al. (70-8593)
GPU, Inc. ("GPU"), 100 Interpace Parkway, Parsippany,
New Jersey 07054, a registered holding company, GPU
International, Inc. ("GPUI") and EI Services, Inc., One Upper
Pond Road, Parsippany, New Jersey 07054, both wholly-owned non-
utility subsidiaries of GPU, Jersey Central Power & Light
Company, Metropolitan Edison Company and Pennsylvania Electric
Company, P.O. Box 16001, Reading Pennsylvania 19640, utility
subsidiaries of GPU ("Utility Subsidiaries") and GPU Service,
Inc., 100 Interpace Parkway, Parsippany, New Jersey 07054, a
subsidiary service company, (collectively, "Applicants"), have
filed a post-effective amendment to their application under
sections 6(a), 7, 12(b), 32 and 33 of the Act and rules 45, 53
and 54 thereunder.
GPU, through its direct and indirect subsidiaries, is
engaged in development activities (including preliminary studies,
research, investigation and consulting) pertaining to independent
power facilities, including, among other things, exempt wholesale
generators ("EWGs"), as defined in section 32 of the Act, and
foreign utility companies ("FUCOs"), as defined in section 33 of
the Act.<PAGE>
GPU is currently authorized under the terms of the
orders and supplemental orders [HCAR No. 35-26326] (July 6,
1995); and [HCAR No. 35-26457] (January 19, 1996) (collectively,
the "Financing Orders") to finance these activities by issuing
and selling debt and equity securities and by issuing guarantees
of the obligations of certain subsidiaries.
Under the terms of the Financing Orders, GPU, among
other things, may use the proceeds of common stock sales and
borrowings to finance the acquisition of the securities of, or
other interests in, one or more EWGs or FUCOs, as defined in
sections 32 and 33 of the Act, and may issue guarantees of the
obligations of such entities, provided that the sum of the
guarantees at any time outstanding and the net proceeds of common
stock sales and borrowings by GPU that at any time may be used by
GPU to fund investments in EWGs or FUCOs shall not, when added to
GPU's "aggregate investment" (as defined in rule 53(a) under the
Act) in all EWGs and FUCOs, exceed 50% of GPU's "consolidated
retained earnings" (as defined in rule 53(a)). This investment
limitation is consistent with the investment limitation contained
in rule 53(a)(1).
Applicants request the Commission to modify this
limitation, and exempt them from the requirements of rule
53(a)(1), to permit GPU to use the net proceeds of common stock
sales and borrowings to acquire, directly or indirectly, the
securities of, or other interests in, EWGs and FUCOs, and to
issue guarantees of the obligations of such entities (all as
authorized by and in accordance with the terms of the Financing
Orders) in an aggregate amount that, when added to GPU's direct
and indirect "aggregate investment," as defined, in all EWGs and<PAGE>
FUCOs, would not at any time exceed 100% of GPU's "consolidated
retained earnings," as defined. The current amount of GPU's
"aggregate investment," as defined, in EWGs and FUCOs
(approximately $914 million as of June 30, 1996) represents
approximately 45% of its "consolidated retained earnings," as
defined (approximately $2.05 billion as of June 30, 1996).
Increasing this limitation as Applicants propose would allow
financing of additional investments in EWGs and FUCOs of
approximately $1.113 billion.
Applicants state that GPU is committed to making
additional investments in EWGs and FUCOs, primarily because (1)
over the last five years there has been, and for at least the
near term there is projected to be, no significant need for GPU
to make new equity investment in any of its Utility Subsidiaries;
(2) acquisitions of EWGs and FUCOs give GPU the opportunity to
continue to grow in an industry sector that GPU has decades of
experience in, while at the same time diversifying overall asset
risk; and (3) GPU has purposely invested in utility systems in
foreign countries where deregulation of and competition in retail
and wholesale electricity markets is more fully developed than in
the United States in order to gain valuable experience with
deregulated markets that will enhance GPU's ability to make its
core domestic utility operations more competitive and efficient
in the future as the United States moves toward deregulation and
increased competition. Applicants also describe comprehensive
procedures that GPU has established to identify and address risks
involved in EWG and FUCO investments.
GPU states that the use of financing proceeds and
4
<PAGE>
guarantees to make investments in EWGs and FUCOs to the proposed
increased level will not have a substantial adverse impact on the
financial integrity of the GPU system or an adverse impact on any
Utility Subsidiary of GPU or its customers or on the ability of
the affected state commissions to protect such customers.
Applicants also state that GPU will not seek recovery through
higher rates to its Utility Subsidiaries' customers in order to
compensate GPU for any possible losses that it may sustain on
investments in EWGs and FUCOs or for any inadequate returns on
such investments.
Interested persons wishing to comment or request a
hearing on the post-effective amendment should submit their views
in writing by _______, 1996, to the Secretary, Securities and
Exchange Commission, Washington, D.C. 20549, and serve a copy on
the relevant applicant(s) at the address(es) specified below.
Proof of service (by affidavit or, in case of an attorney at law,
by certificate) should be filed with the request. Any request
for hearing shall identify specifically the issues of fact or law
that are disputed. A person who so requests will be notified of
any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After said date, the post-effective
amendment, as filed or as amended, may be granted and/or
permitted to become effective.
5
<PAGE>
