SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): May 20, 1998
GPU, Inc.
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(Exact name of registrant as specified in charter)
Pennsylvania 1-6047 13-5516989
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(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation)
300 Madison Avenue, Morristown, New Jersey 07962-1911
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 455-8200
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ITEM 5. OTHER EVENTS
As previously reported on May 6 and 7, 1998, an Administrative
Law Judge (ALJ) issued Recommended Decisions in the Metropolitan Edison Company
(Met-Ed) and Pennsylvania Electric Company (Penelec) restructuring proceedings
pending before the Pennsylvania Public Utility Commission (PaPUC).
Reference is made to the Quarterly Reports on Form 10-Q for
the quarter ended March 31, 1998 filed by GPU for a summary of the ALJ's
recommendations which description is incorporated in this Report by reference.
On May 20, 1998, Met-Ed and Penelec filed exceptions to the
ALJ's Recommended Decisions. In their filings, Met-Ed and Penelec have argued,
among other things, that the recommendations, if adopted, would improperly
disallow a significant portion of their transmission and distribution (T&D)
costs, leaving the companies with virtually no earnings on their primary
business. Moreover, the ALJ's recommendations fail to assure full recovery of
non-utility generation (NUG) costs by calculating these costs based upon a
projected market line, which could change over time. Met-Ed and Penelec had
proposed a separate mechanism to recover above-market NUG costs over the terms
of the related contracts. In their exceptions, Met-Ed and Penelec further argue
that the ALJ's recommendations are contrary to the federal Public Utility
Regulatory Policies Act of 1978 which requires full cost recovery for these NUG
contracts which were mandated by federal and state law. As previously reported,
if the PaPUC were to adopt the ALJ's recommendations, it would result in Met-Ed
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and Penelec incurring write-offs in material amounts.
The PaPUC is scheduled to take a preliminary vote on the
ALJ's Recommended Decision on June 4 and final action on June 24.
There can be no assurance of the outcome of these proceedings.
GPU's related news release is annexed as an exhibit.
ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
1. GPU News Release, dated May 20, 1998.
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SIGNATURE
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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: May 22, 1998
EXHIBITS TO BE FILED BY EDGAR
ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
1. GPU News Release, dated May 20, 1998.
Date: May 20, 1998
Further Information: Gary Plummer
610) 921-6636 1-888-510-7067 Pager
For Release: Immediate
Release Number: 38-98
GPU ENERGY CALLS FOR GREATER RECOVERY OF DISTRIBUTION, NUG COSTS
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READING, May 20 - In formal filings made today, GPU Energy said a Pennsylvania
Public Utility Commission (PUC) administrative law judge's recommendations deny
recovery of a significant portion of its transmission and distribution costs and
fail to assure full recovery of non-utility generation costs.
GPU Energy filed the comments as the next step in the restructuring cases for
its Metropolitan Edison Co. (Met-Ed) service territory and Pennsylvania Electric
Co. (Penelec) service territory. The law judge released her recommendations in
the cases early in May.
"I am hopeful that the PUC will remove the financial roadblocks in the
judge's decisions so that we can proceed with offering our customers the
benefits of competition," said GPU Energy President Dennis Baldassari.
In its filing with the PUC, GPU Energy stated that the judge
effectively disallowed a significant portion of its transmission and
distribution (T&D) costs.
(MORE)
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"This disallowance would seriously affect GPU's ability to conduct
business," said Baldassari. "The recommended decision would provide virtually no
earnings on our primary business of T&D operations." Furthermore, as previously
reported, if the PUC were to adopt the judge's recommendations, it would result
in Met-Ed and Penelec incurring write-offs in a material amount, the company
said.
In addition, the company argued that state and federal law requires
full and actual recovery of the costs of buying electricity from non-utility
generators (NUGs). The judge's recommendations could deny full recovery, the
company said, because NUG costs would be calculated based on a projected market
line, which could change over time.
Baldassari noted GPU Energy's proposal for recovering above-market NUG
costs offers a fair means of resolving this issue. The company had proposed a
mechanism that would recover above-market NUG costs over the lives of the
contracts. Under this mechanism, customers would never pay too much and the
company would not recover too little.
"This proposal is consistent with much of the judge's philosophy and
assures full recovery of NUG costs, as is guaranteed in state and federal law,"
he said.
The NUG issues stems from federal law and state regulatory decisions
that forced Met-Ed and Penelec to sign contracts for the purchase of electricity
that is often priced well above the current market price. So, under the
government-mandated contracts, GPU Energy is forced to buy electricity at a
higher price than the company can sell it.
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