AMENDMENT NO. 1 to
SEC File No. 70-8967
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM U-1
DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GPU, INC. ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
JERSEY CENTRAL POWER & LIGHT COMPANY ("JCP&L")
METROPOLITAN EDISON COMPANY ("MET-ED")
PENNSYLVANIA ELECTRIC COMPANY ("PENELEC")
2800 Pottsville Pike
Reading, Pennsylvania 19605
(Names of companies filing this statement and
addresses of principal executive offices)
GPU, INC.
(Name of top registered holding company parent of applicants)
Scott L. Guibord Douglas E. Davidson, Esq.
Secretary Berlack, Israels & Liberman
Jersey Central Power & Light Company LLP
Metropolitan Edison Company 120 West 45th Street
Pennsylvania Electric Company New York, New York 10036
2800 Pottsville Pike
Reading, Pennsylvania 19605
M.A. Nalewako, Secretary
Michael J. Connolly, Esq., Assistant
General Counsel
GPU Service, Inc.
100 Interpace Parkway
Parsippany, New Jersey 07054
(Names and addresses of agents for service)<PAGE>
GPU, JCP&L, Met-Ed and Penelec hereby amend their Declaration
on Form U-1, docketed in SEC File No. 70-8967, as follows:
1. By amending Item 1 thereof to read in its entirety as
follows:
Item 1. Description of Proposed Transactions.
A. JCP&L, Met-Ed, and Penelec (collectively, the
"Operating Companies") are electric utility subsidiaries of GPU,
a registered holding company. The service territory of JCP&L is
in New Jersey and the service territories of Met-Ed and Penelec
are in Pennsylvania.
B. The Operating Companies maintain insurance policies
that provide coverage for workers compensation claims, as
required by state law. The policies also provide liability
insurance coverage for employee claims made directly against the
Operating Companies. Prior to 1993, in the cases of Met-Ed and
Penelec, and 1994, in the case of JCP&L, the policies required
the insurance company to pay all claims without a deductible and
to pay all expenses and costs, including legal fees, incurred in
connection with the investigation, defense or settlement of
claims.
C. In order to reduce premium costs, commencing in 1993
for Met-Ed and Penelec and in 1994 for JCP&L, the Operating
Companies modified the policies to provide for the payment of a
deductible for each claim, up to a specified maximum amount for
all claims in the calendar year, and to pay the expenses
attributable to all claims. While the insurance company
continues to administer and pay all claims and expenses as they
arise, the Operating Companies reimburse the insurance company
for the amount of each claim paid up to the deductible and all
expenses paid in such month.
D. The insurance companies required, as a condition to
permitting the policies to be modified to provide for the payment
of the deductible, that the Operating Companies deliver an
irrevocable bank letter of credit ("L/C") as security for the
Operating Companies obligations to pay the deductible.
Accordingly, by Order dated April 14, 1993 (HCAR No. 35-25793)
("1993 Order"), Met-Ed and Penelec were authorized, among other
things, to enter into L/C reimbursement agreements with banks and
to deliver to their insurance company irrevocable bank L/Cs from
time to time through December 31, 1998. The aggregate face
amount of the L/Cs delivered by Met-Ed and Penelec would not
exceed $20 million, provided that the L/Cs delivered on behalf of
Met-Ed or Penelec individually would not exceed $15 million. In
addition, by Order dated March 15, 1994 (HCAR No. 35-26003)
("1994 Order"), JCP&L was authorized, among other things, to
enter into L/C reimbursement agreements with banks and to deliver
to its insurance company irrevocable bank L/Cs in an aggregate
face amount of up to $15 million from time to time through
December 31, 1998.
E. The Operating Companies now anticipate that it might be
more efficient for the workers compensation insurance policies to
cover, in addition to their employees, the Pennsylvania and New
<PAGE>
Jersey employees of GPU Service, Inc., GPU Nuclear, Inc., and GPU
Generation, Inc., which are subsidiary service companies of GPU
("Service Companies"). Accordingly, it will now be necessary to
furnish L/Cs to the insurance companies to support the
obligations of the Service Companies to pay the deductible with
respect to claims, as well as the obligations of the Operating
Companies.
F. Applicants have thus determined that it would be cost-
effective and less burdensome administratively for the L/Cs to be
furnished by GPU. Accordingly, GPU proposes to enter into L/C
reimbursement agreements and to deliver the related L/Cs from
time to time through December 31, 2006 to the insurance companies
providing workers compensation insurance coverage to the
Operating Companies and Service Companies. The maximum face
amount of the L/Cs which would be outstanding with respect to all
Pennsylvania employees of the Operating Companies and Service
Companies would not exceed $20 million. Similarly, the maximum
face amount of the L/Cs which would be outstanding with respect
to all New Jersey employees of the Operating Companies and
Service Companies would not exceed $20 million. Accordingly,
upon receipt of the authorization herein requested, GPU would be
authorized to enter into L/C reimbursement agreements in an
aggregate face amount of up to $40 million. Each L/C would have
a term not exceeding three years. Draws under the L/C would bear
interest at not more than 5% above the issuing bank's prime rate
as in effect from time to time.
G. GPU would allocate the fees for each L/C to the
Operating Companies and Service Companies on whose behalf the L/C
was issued based on loss exposure (determined generally by
payroll) in the applicable state. GPU would seek reimbursement
for a draw on an L/C from the Operating Company or Service
Company which failed to pay the applicable deductible which
resulted in such draw. Upon receipt of the authorization herein
requested, the Operating Companies would relinquish their
authority to enter into L/C reimbursement agreements pursuant to
the 1993 and 1994 Orders, provided that such relinquishment would
not affect any currently outstanding L/C's delivered under such
orders.
H. The Applicants submit 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, 1995 and
Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996,
as filed under the Securities Exchange Act of 1934, was
approximately $2.07 billion. As of September 30, 1996,
GPU had invested, or committed to invest, directly or
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<PAGE>
indirectly, an aggregate of approximately $244 million
in exempt wholesale generators ("EWGs") and $679
million in foreign utility companies ("FUCOs"). GPU's
aggregate investment in EWGs and FUCOs, including
amounts invested pursuant to all outstanding or pending
authorizations to make investments in EWGs or FUCOs,
will not at any time exceed the "safe harbor"
limitation imposed by Rule 53 without prior Commission
authorization.(1)
(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) 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 GAAP; and
(3) 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:
(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
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.
(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;
_________________________
1 GPU has filed with the Commission a Post-Effective Amendment
to its Application on Form u-1 in docket No. 70-8593 requesting
authorization to increase this limitation to 1005 of GPU's
"consolidated retained earnings."
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(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, 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 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.
(iii) No more than 2% of GPU's domestic public
utility subsidiary employees will render any services,
directly or indirectly, to any EWG or FUCO in which GPU
directly or indirectly holds an interest.
(iv) Copies of this Application are being provided
to the New Jersey Board of Public Utilities and the
Pennsylvania Public Utility Commission, the only federal,
state or local regulatory agencies having jurisdiction over
the retail rates of GPU's electric utility subsidiaries.(2)
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
thereof (commencing with the Form U5S to be filed for the
calendar year in which the authorization herein requested is
granted).
(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 periods
(approximately $2.07 billion) represented an increase of
approximately $200 million (or approximately 10%) in the average
consolidated retained earnings for the previous four quarterly
periods (approximately $1.87 billion).
_____________________
2 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.
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(C) GPU did not incur operating losses from
direct or indirect investments in EWGs and FUCOs in 1995 in
excess of 5% of GPU's consolidated retained earnings.
(iv) In accordance with Rule 54, the requirements
of Rule 53(a), (b) and (c) are fulfilled.
2. By filing a new proposed form of public notice in Exhibit G
of Item 6 thereof as follows:
(a) Exhibits:
G Proposed form of public notice.
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANIES HAVE DULY
CAUSED THIS STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
GPU, INC.
JERSEY CENTRAL POWER & LIGHT COMPANY
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
By:
T. G. Howson
Vice President and Treasurer
Date: January 14, 1997<PAGE>
EXHIBIT TO BE FILED BY EDGAR
(a) Exhibits:
G Proposed form of public notice.
<PAGE>
EXHIBIT G
SECURITIES AND EXCHANGE COMMISSION
(Release no. 35-_________; 70-8967)
GPU, INC. ("GPU"), a registered holding company, at 100
Interpace Parkway, Parsippany, New Jersey 07054, and JERSEY
CENTRAL POWER & LIGHT COMPANY ("JCP&L"), METROPOLITAN EDISON
COMPANY ("Met-Ed") and PENNSYLVANIA ELECTRIC COMPANY ("Penelec")
(JCP&L, Met-Ed and Penelec, collectively, the "'Operating
Companies"), each of 2800 Pottsville Pike, Reading, Pennsylvania
19605 and electric utility subsidiaries of GPU have filed a
Declaration pursuant to Section 6(a), 7 and 12 of the Public
Utility Holding Company Act of 1935 (the "Act") and Rules 45, 53
and 54 thereunder.
The Operating Companies maintain insurance policies that
provide coverage for workers compensation claims, as required by
state law. The policies also provide liability insurance
coverage for employee claims made directly against the Operating
Companies. Prior to 1993, in the cases of Met-Ed and Penelec,
and 1994, in the case of JCP&L, the policies required the
insurance company to pay all claims without a deductible and to
pay all expenses and costs, including legal fees, incurred in
connection with the investigation, defense or settlement of
claims.
In order to reduce premium costs, commencing in 1993 for
Met-Ed and Penelec and in 1994 for JCP&L, the Operating Companies
modified the policies to provide for the payment of a deductible
for each claim, up to a specified maximum amount for all claims
in the calendar year, and to pay the expenses attributable to all
claims. While the insurance company continues to administer and
pay all claims and expenses as they arise, the Operating
Companies reimburse the insurance company for the amount of each
claim paid up to the deductible and all expenses paid in such
month.
The insurance companies required, as a condition to permitting
the policies to be modified to provide for the payment of the
deductible, that the Operating Companies deliver an irrevocable
bank letter of credit ("L/C") as security for the Operating
Companies obligations to pay the deductible. Accordingly, by Order
dated April 14, 1993 (HCAR No. 35-25793) ("1993 Order"), Met-Ed and
Penelec were authorized, among other things, to enter into L/C
reimbursement agreements with banks and to deliver to their
insurance company irrevocable bank L/Cs from time to time through
December 31, 1998. The aggregate face amount of the L/Cs delivered
by Met-Ed and Penelec would not exceed $20 million, provided that
the L/Cs delivered on behalf of Met-Ed or Penelec individually
would not exceed $15 million. In addition, by Order dated March
15, 1994 (HCAR No. 35-26003) ("1994 Order"), JCP&L was authorized,
<PAGE>
among other things, to enter into L/C reimbursement agreements
with banks and to deliver to its insurance company irrevocable
bank L/Cs in an aggregate face amount of up to $15 million from
time to time through December 31, 1998.
The Operating Companies now anticipate that it might be more
efficient to have their insurance policies cover, in addition to
their employees, the Pennsylvania and New Jersey employees of GPU
Service, Inc., GPU Nuclear, Inc., and GPU Generation, Inc., which
are subsidiary service companies of GPU ("Service Companies").
Accordingly, it will now be necessary to furnish L/Cs to the
insurance companies to support the obligations of the Operating
Companies and of the Service Companies to pay the deductible with
respect to claims.
Applicants have thus determined that it would be cost-
effective and less burdensome administratively for the L/Cs to be
furnished by GPU. Accordingly, GPU proposes to enter into L/C
reimbursement agreements and to deliver the related L/Cs from
time to time through December 31, 2006 to the insurance companies
providing workers compensation insurance coverage to the
Operating Companies and Service Companies. The maximum face
amount of the L/Cs which would be outstanding with respect to all
Pennsylvania employees would not exceed $20 million. Similarly,
the maximum face amount of the L/Cs which would be outstanding
with respect to all New Jersey employees would not exceed $20
million. Accordingly, upon receipt of the authorization herein
requested, GPU would be authorized to enter into L/C
reimbursement agreements in an aggregate face amount of up to $40
million. Each L/C would have a term not exceeding three years.
Draws upon the L/C would bear interest at not more than 5% above
the issuing bank's prime rate as in effect from time to time.
GPU would allocate the fees for each L/C to the Operating
Companies and Service Companies on whose behalf the L/C was
issued based on loss exposure (determined generally by payroll)
in the applicable state. GPU would seek reimbursement for a draw
on an L/C from the Operating Company or Service Company which
failed to pay the applicable deductible which resulted in such
draw. Upon receipt of the authorization herein requested, the
Operating Companies would relinquish their authority to enter
into L/C reimbursement agreements pursuant to the 1993 and 1994
Orders, provided that such relinquishment would not affect any
currently outstanding L/C's delivered under such orders.
The Applicants submit that all or the criteria of Rules 53
and 54 under the Act with respect to the proposed transactions
are satisfied.
The Declaration and any amendments thereto are available for
public inspection through the Commission s Office of Public
Reference. Interested persons wishing to comment or request a
hearing should submit their views in writing by ________, 1997,
to the Secretary, Securities and Exchange Commission, Washington,
DC 20549, and serve a copy on the applicants at the address above.
2<PAGE>
Proof of service (by affidavit, or in case of an attorney at law,
by certificate) should be filed with the request. Any
request for a 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 this matter. After said date, the
Declaration, as it may be amended, may be permitted to become
effective.
Jonathan G. Katz
Secretary
3<PAGE>
