SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of
earliest event reported): March 24, 1997
GPU, Inc.
(Exact name of registrant as specified in charter)
Pennsylvania 1-6047 13-5516589
(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation)
100 Interpace Parkway, Parsippany, New Jersey 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 263-6500
<PAGE>
ITEM 5. OTHER EVENTS.
As has been previously reported, on June 27, 1996,
Jersey Central Power & Light Company ("JCP&L") entered into a
Stipulation of Final Settlement ("Global Settlement") with the
Staff of the New Jersey Board of Public Utilities ("NJBPU") and
the New Jersey Ratepayer Advocate to resolve numerous rate
matters pending before the NJBPU. Among other things, the Global
Settlement, as later supplemented, includes a base rate freeze
until the year 2000, a net rate reduction of approximately $5
million annually and recovery of buyout costs of certain non-
utility generation projects.
On March 24th, 1997, the NJBPU approved the Global
Settlement. Regarding JCP&L's request to recover over seven
years up to $135 million of the buyout costs of the Freehold
Cogeneration Project, however, the NJBPU gave interim approval to
JCP&L's request pending further review. In its order, the NJBPU
stated that it would conduct this review on an expedited basis to
resolve an apparent conflict between JCP&L's statements in the
proceeding and statements made by the Freehold Project sponsors
in other civil litigation regarding the Project's viability at
the time JCP&L agreed to the buyout.
Copies of the NJBPU's order and JCP&L's related news
release are annexed as exhibits.<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) Exhibits.
1. Summary Order, dated March 24, 1997, of the NJBPU.
2. New Release, dated March 24, 1997.<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED.
GPU, INC.
By:______________________________
T.G. Howson
Vice President and Treasurer
Date: April 2, 1997<PAGE>
EXHIBITS TO BE FILED BY EDGAR
EXHIBITS.
(c) Exhibits.
1. Summary Order, dated March 24, 1997, of the NJBPU.
2. New Release, dated March 24, 1997.<PAGE>
Exhibit 1
AGENDA DATE: 3/24/97
STATE OF NEW JERSEY
Board of Public Utilities
Two Gateway Center
Newark, .NJ 07102
I/M/O THE PETITIONS OF JERSEY CENTRAL )
POWER & LIGHT CO. FOR APPROVAL OF AN ) SUMMARY ORDER
INCREASE IN ITS LEVELIZED ENERGY ADJ. ) ______________________
CHARGE, DEMAND SIDE FACTOR, IMPL. OF A ) OAL Dkt. Nos. PUCRA12423-95N,
REMED. ADJ. CLAUSE (RAC), OTHER TARIFF ) PUCOTO9673-94N, PUC 9739-96
CHANGES, RECOVERY OF CROWN/VISTA AND ) BPU Dkt. Nos. ER95120633,
FREEHOLD BUYOUT COSTS, CHANGES IN DEPR. ) ER95120634, EM95110532,
RATES, SETTLEMENT OF PHASE 1 OF THE ) EX93060255, EO95030098
BOARD'S GENERIC PROCEEDING ON THE )
RECOVERY OF NUG CAPACITY PAYMENTS )
(Service List Attached)
This Order memorializes action taken by the Board at a
special agenda meeting held on March 24, 1997 by a vote of two
commissioners. By Order in Docket No. EX93060255 dated September
16, 1994, the Board initiated generic proceeding to consider
potential overrecoveries of capacity costs attributed to the
inclusion of the capacity component of power purchases from non-
utility generators ("NUGs") in the Levelized Energy Adjustment
Clauses ("LEACs") of the electric utilities regulated by the
Board. The initial fact-finding phase (Phase 1) of the generic
proceeding was transmitted to the Office of Administrative Law
("OAL") on October 4, 1994, and following discovery and
evidentiary hearings, was concluded for Public Service Electric &
Gas Company ("PSE&G"), Atlantic City Electric Company
("Atlantic") and Rockland Electric Company by separate
Stipulations approved by the Board by Order dated December 19,
1996. However, Phase 1 remains open for Jersey Central Power &
Light Company ("Jersey Central," "JCP&L" or "Company," now doing
business as GPU Energy), pending Board action on the instant
Stipulation of Final Settlement.
On March 3, 1995, JCP&L filed a petition in Docket No.
EO95030098 for changes in depreciation rates applicable to
certain categories of utility plant. Specifically, the petition
sought a decrease in annual depreciation accruals for
transmission and distribution plant of $8.6 million, a decrease
in accruals for general plant of $0.2 million, and an increase in
nuclear plant accruals of $10.2 million to reflect actual and
projected capital additions made or to be made after the
conclusion of the Company`s last base rate case. The net effect
of the changes would increase the Company's overall depreciation
expense by $1.4 million. However, rate recovery of this increased
annual depreciation expense was not requested in the petition.
<PAGE>
On November 9, 1995, JCP&L filed a petition in Docket No.
EM95110532 seeking approval of the proposed ratemaking treatment
of the buyout of its power purchase agreements ("PPAs") with
Crown Energy, L.P. and Vista Energy, L.P., the developers of a
362 Mw coalfired independent power producer ("IPP") HUG project
planned for construction in West Deptford Township in Gloucester
County, of which Jersey Central had contracted to purchase 200
Mw. The PPAs, each for lOOMw, were bought out for $17 million.
On December 8, 1995, JCP&L filed petitions in Docket Nos.
ER95120633 and ER95120634 seeking approval of 1) a $37.6 million,
1.9% revenue increase for recovery of costs recoverable by its
LEAC and Demand Side Factor ("DSF"); 2) implementation of a
Remediation Adjustment Clause ("RAC") for the recovery of the
Company's share of the cost of remediating its former
manufactured gas plant sites; and 3) the elimination of $3.2
million of late payment and connection/disconnection costs from
base rates and the prospective application of such charges to the
specific customeers for whom such costs are incurred.
By letter dated April 3, 1996 the Company amended its LEAC
petition to seek recovery of the $125 million cost, plus third
party termination costs, of buying out the PPA with Freehold
Cogeneration Associates, L.P. ("Freeholder or "FCA") for the
purchase of l00 Mw of the capacity of a cogeneration facility
planned for construction on the Nestle Beverage Company
("Nestle's") plant site for the manufacture of freeze-dried
coffee in Freehold in Monmouth County. The Company re-noticed the
amended filing, requesting a total revised increase of $45.2
million (2.3%) annually, including $7.3 million for the recovery
of Crown/Vista and $5.0 million for the recovery of Freehold
buyout costs, $6.2 million for a nuclear performance standard
("NPS") reward, $19.8 million for increased DSM costs filed under
its DSM*2 Plan, and initial RAC recovery of $0.1 million.
By order dated June 5, 1996, the Board approved a
provisional LEAC settlement executed by JCP&L, Board Staff and
the the Division of the Ratepayer Advocate ("Advocate" or "RPA")
on May 31, 1996 and approved by Administrative Law Judge ("ALJ")
William Gural on June 3, 1996. The provisional LEAC settlement
provided for an annual revenue increase of $27.9M (1.4%),
reflecting uncontested cost increases of $16.9M for energy costs
and the NPS reward, and $11.OM for DSM costs. There was no
provision for recovery of either Crown/Vista or Freehold buyout
costs.
On June 27, 1996, a Stipulation of Final Settlement ("Global
Settlement") was executed by JCP&L, Staff and the Ratepayer
Advocate and filed with the OAL (Attachment A). The Settlement
addressed and proposed to resolve the pending matters described
above, and an Initial Decision approving the Settlement was
issued by ALJ Gural on July 1, 1996. On December 31, 1996, the
same parties executed an Addendum (Attachment B) to reflect the
effect of the unanticipated delay in implementing the rate
compression and similar provisions of the June 27, 1996
Settlement. The Global Settlement as amended would make the
provisonal LEAC increase granted on June 5, 1996 final, and among
its other provisions are the following:
<PAGE>
o a disallowance of $3.0 million of Crown/Vista buyout
costs and recovery of the $14 million balance through
the LEAC over 2 years without carrying costs, resulting
in an additional LEAC increase above the provisional
level of $7.0 million. By terminating the Crown/Vista
PPAs, the Company estimates ratepayers will save
approximately $700 million in nominal dollars' or about
$250 million on a net present value (NPV) basis, over
the 20-year terms of the PPAs;
o recovery of Freehold buyout costs, including third
party termination payments to Nestle Beverage Co. and
New Jersey Natural Gas Co. when known, of up to $130
million, and 50% of buyout costs in excess of $130
million up to a maximum of $135 million, through the
LEAC over 7 years without carrying costs. Initial LEAC
recovery will be $5.0 million, achieved by reallocating
revenue for the recovery of other energy costs. The
Company estimates that terminating the Freehold PPA
will save ratepayers over $1 billion in nominal
dollars, or approximatley $300 million on an NPV basis,
net of contract termination costs, over its 20-year
term;
o base rate reductions aggregating $12.0 million to
settle the Phase 1 double recovery" of NUG capacity
costs issue before the OAL ($5.0 million), to recognize
cost reductions potentially achievable over the term of
the settlement ($4.2 million), partial implementation
of the proposed base tariff changes for residential
customers ($1.4 million), and an additional reduction
of $1.4 million to adjust for the delay in implementing
these reductions;
o Company agreement to not seek increases in its
LEAC/DSF/RAC and base rates during the term of the
Settlement except under limited circumstances (a
combined balance of deferred LEAC/DSF/RAC costs,
exclusive of unamortized buyout costs, in excess of
$40.0 million, a financial emergency or downgrading of
the Company's bonds to less than investment grade, or a
major change in the regulatory environment, such as the
allowance of retail wheeling);
o "excess" equity return, if any, is to be used to reduce
rates and accelerate the recovery of stranded costs
(regulatory assets) currently included in rates. If
after deducting DSM and and nuclear performance
incentives the Company's rate of return on common
equity as booked exceeds its last allowed return of
12.2%, but is less than 12.7%, 25% of the excess is to
be used to reduce customer base rates and 75% to write
down stranded costs. If equity return exceeds 12.7%,
50% of the excess is to be used to reduce rates and 50%
to write down stranded costs;
<PAGE>
o nuclear depreciation is to be increased by $16.8
million annually and offset by a decrease in T&D
depreciation of $11.5 million, with no current rate
recovery of the $5.3 million difference;
o effective January 1, 1998, previously-deferred
post-employment benefits other than pensions (PBOPS)
are to be amortized over 15 years, and together with
the ongoing annual accrual and amortization of the
transition obligation, are to be deemed recovered by
current rates. The resultant increase in booked expense
of approximately $13 million per year in the years 1998
and 1999 is to be absorbed by the Company without any
rate adjustment;
o based on site-specific estimates, the Company's
provision for nuclear decommissioning costs is to be
increased by approximately $11 million per year
effective January 1, 1998, with the increase absorbed
by the company without any rate adjustment;
o when implemented, the stranded cost recovery mechanism
developed in Phase 2 of New Jersey's Energy Master Plan
is to be adopted by the Company in lieu of the stranded
cost treatment provided for in the Settlement;
o the Company agrees to increase its funding of the
Project Helping Hand program to $150,000 annually, and
to explore with other appropriate organizations the
implementation of a comprehensive, state-wide low
income energy assistance fund program;
o the Settlement does not limit the Board's authority to
assure just and reasonable rates under Title 48.
The net effect of the Global Settlement as amended on rates
is a reduction of approximately $5.0 million (a $7.0 million LEAC
increase offset by an aggregate base rate reduction of $12.0
million), or 0.3%, and if approved, would would reduce the
average monthly bill of the typical residential customer using
500 kwh per month from $61.67 to $61.33, or by $0.34 per month,
representing decrease of approximately 0.5%.
On July 8, 1996, additional public notice and opportunity
for comment was given on those aspects of the Global Settlement
not previously noticed for the public hearings held in February
and May 1996. In July and August of 1996, comments were submitted
to the Board by intervenors Nestle and New Jersey Natural Gas
Company ("NJNG"), as well as Nabisco, Inc., a large commercial
customer of the Company's, and the Coalition for Fair Competition
("CFC"). On September 5, 1996, the Board voted to remand the
proceeding to the OAL for the sole purpose of conducting a
limited, expedited evidentiary hearing On Freehold buyout issues
raised by Nestle. A hearing was held at the OAL On October 30,
1996, and a second Initial Decision, i.e., on remand, was issued
by ALJ Gural on December 10, 1996.
<PAGE>
In his Initial Decision on Remand, among other findings,
Judge Gural found that the sworn testimony of JCP&L's witnesses
supports approval of the Global Settlement, including recovery of
the costs attendant to the buyout agreement, as provided for in
the Settlement. In so finding, however, Judge Gural notes the
potential impact of statements made by Freehold in separate civil
litigation, introduced in the record in this matter, which appear
to raise questions as to whether the project meets the Board's
viability criteria established for rate recovery of buyout costs,
as set forth in the Board's Order I/M/O/ the Joint Petition of
Public Service Electric & Gas Company and Towner Electric I, L.P.
for Approval of Second Amendment to Power Purchase and
Interconnection Agreement (the Board's "Towner" Order issued in
Docket No. EM91040844 on April 12, 1993). In brief, in addition
to the expectation of significant energy cost savings from
terminating the PPA, this Order requires a showing with regard to
the viability of the NUG project in the absence of a buyout.
Accordingly, while recommending approval of the Global
Settlement, the ALJ notes that Staff or the Ratepayer Advocate
may bring a motion for revocation or modification of the Initial
Decision if further information comes to light (if Freehold's
assertions are upheld) at the conclusion of that civil
litigation.
Exceptions to the Initial Decision were submitted on January
7 and 8, 1997 by the Company, Staff, the Advocate, Nestle NJNG
and Nabisco. Replies to exceptions were submitted later in
January by JCP&L, Nestle and Nabisco. The Board and the OAL
granted two 45 day extensions in the effective date of the
Initial Decision, to May 1, 1997.
Further, on March 20, 1997, Nestle filed a motion with the
Board requesting that the record in this matter be reopened to
introduce a March 7, 1997 ruling by the Honorable E, Benn
Micheletti, the judge hearing Nestle's complaint filed against
Freehold and Jersey Central in the Law Division of the Superior
Court of New Jersey, Monmouth county on October 7, 1996. Judge
Micheletti's ruling addresses an alleged conflict of interest on
the part of counsel jointly representing both Jersey Central and
Freehold in that proceeding, in view of the respective positions
on the viability of the Freehold project taken by JCP&L in the
instant proceeding and by Freehold in the Monmouth County
litigation (previously, now-stayed litigation in the Circuit
Court for Baltimore County, Maryland).
After carefully considering all of the information before us
in this matter, subject to the modifications set forth below, we
ACCEPT the Initial Decision on Remand and HEREBY APPROVE the
amended Stipulation of Final Settlement as modified hereinbelow.
Approval and implementation of the Settlement will result in a
net decrease in rates of approximately $5 million and other
benefits, as noted above.
While the testimony offered by Jersey Central's witnesses in
this matter supports the decision by JCP&L to buyout the Freehold
PPA, and indicates that there will be substantial benefits
therefrom, statements made in the Monmouth County litigation (as
well as statements made by Freehold in litigation with Heller
<PAGE>
Financial, Inc. in Illinois) appear to contradict the testimony
in this proceeding. Accordingly, the Board believes further
proceedings are necessary to resolve these potentially
conflicting statements before giving its final approval on the
rate recovery of Freehold buyout costs. We therefore HEREBY
MODIFY the Initial Decision on Remand solely and specifically as
it pertains to the recovery of costs related to the Freehold
buyout agreement, and HEREBY FIND that the terms of the
Stipulation of Final Settlement addressing the treatment of
Freehold buyout costs, specifically paragraphs 13 (a) and (b) on
pages 16 through 18, are approved on an interim basis only at
this time, subject to refund with interest, pending further
review.
The Board will conduct a further review of the circumstances
and conflicting position" taken by Jersey Central and Freehold
with respect to the viability of the Freehold project on or about
the time the buyout agreement was executed, for the purpose of
making a final determination as to whether the Freehold buyout
meets the Board's Towner criteria. Such a review may require and
include the calling of representatives of Freehold and/or other
relevant witnesses, by subpoena if necessary.
We hereby authorize the advising Deputy Attorney General in
this matter to develop, on an expedited basis, the specific
procedures and timing for this review for our further approval.
We address one additional issue herein pertaining to JCP&L's
request in its April 3, 1996 filing for rate recovery of Freehold
buyout costs. Section 3 (a) ("Purchase Priced") of the buyout
agreement between Jersey Central and Freehold executed on April
2, 1996, provides as follows:
As consideration for the purchase of the
Power Purchase Agreement, JCP&L shall pay to
Freehold an aggregate of $125,000,000 (the
"Purchase Price"). Payment of Purchase Price
shall be made as follows:
(i) $65,000,000 on the Effective
Date [April 2, 1996];
and, subject to receipt of any required order of the
NJBPU as described below,
(ii) $15,000,000, payable on or
before March 28, 1997; and
(iii) $15,000,000, payable on or
before March 27, 1998; and
(iv) $30,000,000, payable on or
before March 26, 1999.
Promptly following the Effective Date,
JCP&L shall file a petition with the NJBPU
seeking an order authorizing deferred payment
of the Purchase Price as provided above. In
<PAGE>
the event the NJBPU fails to issue such an
order on or before March 25, 1997, then the
entire remaining balance of the Purchase Price
shall become due and payable on March 26,
1997.
Accordingly, while asserting that it did not believe the
obligation to make the deferred payments, as provided above,
should be considered evidence of indebtedness within the meaning
of N.J.S.A. 48:3-9, the Company, in paragraph 15 on page 8 of its
April 3, 1996 petition, requested such authorization, as follows:
follows:
JCP&L does not believe that the three-year
payout by JCP&L of the balance of the Buyout
Costs, as contemplated by the [buyout]
Agreement, should properly be considered
"evidence of indebtedness payable more than 12
months after the date or dates thereof" within
the meaning of N.J.S.A. 48:3-9. JCP&L will
not be issuing "any bonds, notes or other
evidence of indebtedness" evidencing its
contractual obligation to Freehold, nor is
JCP&L paying Freehold any interest with
respect to these amounts. Moreover, in
accordance with the FERC's Uniform System of
Accounts, JCP&L will be recording these unpaid
amounts on its balance sheet as "Other
Deferred Credits" under A/C 253, and not as
Long Term Debt under A/C 224. Nevertheless,
since the matter may not be wholly free from
doubt, JCP&L hereby requests the Board's
specific authorization and approval, pursuant
to N.J.S.A 48:3-9, to make the payments to
Freehold over the three-year period
contemplated by the Agreement.
N.J.S.A. 48:3-9 provides, in pertinent part, as follows:
No public utility shall, unless it shall have have
first obtained authority from the board so to do:
(a) Issue any stocks, or any bonds, notes or other
evidence of indebtedness payable more than 12 months
after the date or dates thereof, or extend or renew any
bond, note or any other evidence of indebtedness so
that any extension or renewal thereof shall be payable
later than 12 months after the date of the original
instrument, or
(b) Permit any demand note to remain unpaid for a
period of more than 12 months after the date thereof.
The Board shall approve any such proposed issue,
with or without hearing at its discretion, when
satisfied that such issue is to be made in accordance
with law and the purpose thereof is approved by the
Board.
<PAGE>
Based on its review of the Company's petition and the
relevant statute, and for the reasons advanced by the Company,
the Board HEREBY FINDS that the subject transactions do not fall
within the ambit of N.J.S.A 48:3-9. In making this
determination, the Board also notes that it has no objection to
and will authorize the Company to make the installment payments,
as indicated above, in lieu of paying the full remaining balance
of the PPA purchase price on March 26, 1997. However, we
emphasize that nothing in this Order shall constitute Board
approval of the buyout agreement or Jersey Central's prudence in
entering into this agreement, or the ratemaking treatment to be
accorded the buyout payments, which, as indicated above, will be
subject to further review and addressed in a subsequent Order of
the Board.
By letter dated January 10, 1997, Jersey Central moved to
strike Nabisco's exceptions to Judge Gural's Initial Decision on
Remand on the basis that the filing of exceptions by Nabisco was
not authorized by the ALJ's Order granting Nabisco participant
status. By letter dated January 14, 1997, in response to Jersey
Central's motion to strike, Nabisco petitioned the Board for full
intervenor status, or, in the alternative, to allow its
exceptions to stand. Jersey Centralis motion is HEREBY DENIED,
allowing Nabisco's exceptions to stand.
By letter dated March 20, 1997, Nestle moved to enter Judge
Micheletti's March 7, 1997 decision in the Monmouth County
litigation in the evidentiary record of this proceeding. Such
submission, while objected to with respect to the inferences
drawn by Nestle, was not opposed by Jersey Central in its
response dated March 21, 1997. We HEREBY APPROVE Nestle's motion
that the subject decision be entered into the record of this
proceeding.
Finally we recognize that our decision in this matter,
specifically with regard to the interim recovery of the Freehold
buyout costs, represents modification to certain terms of the
Stipulation of Final Settlement. Accordingly, we will provide
the parties to the Stipulation fifteen business days from the
date of this Order to indicate, in writing, whether they accept
these modified terms or whether, pursuant to their rights as
preserved in the Stipulation, they opt to withdraw from the
Stipulation of Final Settlement.
DATED: March 24, 1997 BOARD OF PUBLIC UTILITIES
BY:
HERBERT H. TATE
PRESIDENT
CARMEN J. ARMENTI
COMMISSIONER
ATTEST:
_______________________
JAMES A. NAPPI, ESQ.
SECRETARY<PAGE>
Exhibit 2
(GPU ENERGY NEWS RELEASE LETTERHEAD)
Date: March 24, 1997
Further Information: Ron Morano, 201-644-4297
For Release: Immediately
Release Number: 35-97
NJ BOARD OF PUBLIC UTILITIES APPROVES GPU ENERGY GLOBAL RATE
SETTLEMENT
Morristown--The New Jersey Board of Public Utilities (BPU)
today approved GPU Energy's global rate settlement which includes
a variety of rate-related items to reduce rates for New Jersey
customers of GPU Energy and provide rate stability into the year
2000. The agreement provides for a net rate decrease of
approximately $5 million.
JCP&L, now doing business as GPU Energy, the Staff of the
BPU and the Ratepayer Advocate had agreed to the settlement last
June, pending review by an Administrative Law Judge of GPU
Energy's request to recover buyout costs for the Freehold non-
utility generation project.
The agreement includes a freeze on base rates until the year
2000, a $12 million reduction in base rates and an approximate $7
million increase in the levelized energy adjustment clause
(LEAC).
"We are pleased to have reached this agreement with the
BPU," said GPU Energy president Dennis Baldassari. "The
agreement which freezes rates until the year 2000 demonstrates
<PAGE>
the commitment of the BPU, the BPU Staff, the Ratepayer Advocate
and GPU Energy to mitigate potential stranded costs and provide
rate stability to our customers. We believe the issues addressed
in this settlement will help pave the way in the transition to
the new competitive electricity markets recently outlined in the
BPU's proposed findings and recommendations in Phase II of the
New Jersey Energy Master Plan on the Restructuring of the
electric Power Industry in New Jersey."
One element of the settlement calls for GPU Energy to
recover over a seven-year power purchase agreement with Freehold
Cogeneration Associates L.P. (FCA). The company entered into the
agreement because the FCA contract would have required customers
to pay more than $1 billion in excess future energy costs. The
BPU approved this recovery on an interim basis subject to further
expeditious review of a possible conflict between the testimony
submitted to the Administrative Law Judge during the proceeding
and certain assertions being made by FCA in other proceedings
regarding the financing for the project.
"While we certainly would have preferred that the BPU not
make the Freehold buyout recovery interim," Baldassari said, "we
are confident that the BPU will quickly complete its review and
grant final approval, assuring full recovery of the buyout
costs."
The other principal elements of the rate settlement are:
o A two-year recovery of $14 million in buyout costs for the
Crown/Vista non-utility generation project. GPU Energy will
write off the remaining $3 million.
o A cap on GPU Energy's earnings at 12.2 percent. if earnings
exceed 12.2 percent, the surplus will be used to reduce base
rates and potential stranded costs.
<PAGE>
o A $17 million nuclear depreciation expense increase,
combined with a transmission and distribution, and general
plant depreciation decrease of $12 million.
o An $11 million nuclear decommissioning expense increase,
effective Jan. 1, 1998.
o A $13 million increase in the expense of certain employee
post-employment benefit costs, effective Jan. 1, 1998.
o Resolution, for GPU Energy, of current generic proceedings
before the BPU regarding the collection of non-utility
generation capacity costs.
o Current rate recovery of the depreciation of certain
generating plants, which will be retired in the near future,
will continue to be applied to the amortization of the
unrecovered plant balances.
o A new structure for the collection of certain late payments,
and a separate new structure for the collection of certain
disconnect and reconnect fees.
o An increase in the company's contribution to the Helping
hand program for low-income and financially disadvantaged
customers.
o No increase in the Levelized Energy Adjustment Clause (LEAC)
until the year 2000, unless there is an accumulated under
recovery of $40 million in costs includable in the LEAC.<PAGE>
