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): June 4, 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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<PAGE>
ITEM 5. OTHER EVENTS
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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 June 4, 1998, the PaPUC, in non-binding polls, approved
restructuring plans for Met-Ed and Penelec. Among other things, the PaPUC action
would allow Met-Ed to collect through a competitive transition charge $975
million of its requested $1.466 billion in stranded costs over 11 years; Penelec
would recover approximately $858 million of its requested $1.245 billion over an
8 year period. Retail choice would begin for one third of each companies'
customers January 1, 1999, another third could choose their supplier on January
2, 1999 and full retail choice would be available on January 2, 2000. The PaPUC
has scheduled final votes for June 25, 1998.
In a news release issued following the PaPUC's votes, GPU
stated that the PaPUC's reductions in transmission and distribution rates and
failure to insure full recovery of non-utility generation costs amounts to
"confiscating the property of GPU Energy and its shareholders in violation of
their legal and constitutional rights." Noting that it could not accept the
<PAGE>
PaPUC's action, GPU stated that if the PaPUC's final order followed its
preliminary action, GPU would "vigorously pursue all available remedies to
challenge the ruling."
Copies of GPU's news release and the news releases issued by
the PaPUC are annexed as exhibits.
ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
1. GPU News Release, dated June 4, 1998.
2. PaPUC News Releases, dated June 4, 1998.
<PAGE>
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: June 5, 1998
EXHIBITS TO BE FILED BY EDGAR
1. GPU News Release, dated June 4, 1998.
2. PaPUC News Releases, dated June 4, 1998.
Exhibit 1
News Release
GPU Energy
2800 Pottsville Pike
Post Office Box 16001
Reading, PA 19640-0001
Tel 610-929-3601
Date: June 4, 1998
Further Information: Ray E. Dotter 717-720-5310
Pager: 888-584-3971
For Release: Immediate
Release Number: 59-98
GPU ENERGY EXPECTS TO CHALLENGE PaPUC DECISION
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Reading, PA - GPU Chairman and Chief Executive Officer Fred D. Hafer said he was
astounded at the action taken today by the Pennsylvania Public Utility
Commission which reduces transmission and distribution rates and offers no
mechanism for ensuring non-utility generation cost recovery.
"The Commission has taken the Competition Act, which was designed to introduce
competition to electricity generation, and turned it into a vehicle for rate
reduction by confiscating the property of GPU Energy and its shareholders in
violation of their legal and constitutional rights," said Hafer. "If the PaPUC
final order on our restructuring cases follows the results of today's
preliminary action, GPU Energy will vigorously pursue all available remedies to
challenge the ruling."
-MORE-
<PAGE>
GPU ENERGY EXPECTS TO CHALLENGE PaPUC DECISION
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ADD ONE
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The company said that, in order to continue to be able to provide reliable
service to its customers, it must have the opportunity to recover prudently
incurred transmission and distribution costs as well as non-utility generation
costs. "The PaPUC's approach also violates the Pennsylvania Competition Act,"
said Hafer. "Apparently, no recognition was given to our historically low rates,
our need to recover our substantial non-utility generation costs under
government-mandated contracts and our need to maintain transmission and
distribution rates at adequate levels."
"The Commission failed to provide a mechanism to ensure recovery of the full
amount of the company's stranded costs related to non-utility generation, while
conceding our legal right to recovery of the actual amount of these costs." "We
cannot accept today's Commission action. It is very disheartening to take a
leadership role in bringing competition to our industry and choice to our
customers and to be treated in this manner," said Hafer. "It would be
unfortunate if the Commission's action today had the effect of delaying the
benefits of customer choice that the state has correctly sought to create. This
is not a good day for our customers, shareholders, vendors and employees or for
the Commonwealth of Pennsylvania."
# # #
Exhibit 2
Pennsylvania
Public Utility Commission
NEWS RELEASE
DATE: June 4, 1998
R-00974009 (OSA-237)
PUC Approves Penelec Restructuring Plan in Non-Binding Poll
The Public Utility Commission (PUC) today approved by a 4-0 vote, in a
non-binding poll, the restructuring plan for Pennsylvania Electric Company
(Penelec). Penelec is a subsidiary of GPU, Inc.
A final vote is scheduled for June 25.
Today's action, coupled with the previous PUC decisions on PECO Energy,
Duquesne Light Company, West Penn Power Company and PP&L creates the most
competitive electric market in the U.S.
New PUC Commissioner Aaron Wilson Jr. did not participate in today's
voting.
Under the plan approved today, Penelec will provide customers who shop
for their electricity a system average shopping credit of 3.73 cents per
kilowatt-hour beginning in January 1999. Shopping credits will vary from one
rate class to another and will increase over time to match anticipated increases
in the market price of generation. Assuming the market price in Penelec's
service territory is 3 cents, the Penelec plan will enable customers to reduce
bills in 1999 by about 10 percent.
The plan allows Penelec to collect approximately $858 million in
stranded costs over eight years, starting in January 1999, through a competitive
transition charge. In it's restructuring plan, Penelec had requested recovery of
$1.322 billion in stranded costs. Stranded costs are those costs incurred under
a regulated market which may not be recoverable in a competitive market. The
Electricity Generation Customer Choice and Competition Act of 1996 allows
utilities to collect stranded costs that the PUC finds to be just and
reasonable.
The PUC directed that one-third of Penelec's customers will be able to
buy power from the supplier of their choice on Jan. 1, 1999, another third on
Jan. 2, 1999, and the remainder on Jan. 2, 2000. In a recent separate action,
the PUC directed that open enrollment begin July 1, 1998, for customers
throughout the Commonwealth to choose their electric generation supplier.
Starting in 1999, Penelec will unbundle its rates to reflect separate
prices for the generation charge, the competitive transition charge, and
transmission and distribution charges. While generation will be open to
competition, Penelec will continue to provide transmission and distribution
services to its customers at PUC-regulated rates.
--MORE--
<PAGE>
Today's action also significantly expands Penelec's funding of both the
Low Income Usage Reduction Program and its universal service program.
Penelec filed its initial restructuring plan on June 2, 1997.
Administrative Law Judge Allison K. Turner held public input hearings in Erie
and Johnstown and held seven technical hearings in Harrisburg. Turner issued a
recommended decision on May 7, 1998.
Reading-based Penelec serves 575,000 customers in 32 northern and
central Pennsylvania counties.
Eric Levis
Press Secretary
717/787-5722
(86)
<PAGE>
GPU Restructuring
Kevin F. Cadden - Manager of Communications - 787-5722
Penelec and Met-Ed Rate Cuts
Rate Cuts for Shopping Customers - System Average
If the Generation Market Price is 3 cents/kwh rising at 3%,
rate cuts for shopping customers will be:
Penelec Met-Ed
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1999 10.02% 9.82%
2000 10.30% 10.09%
2001 10.50% 10.26%
2002 10.62% 10.37%
2003 10.66% 10.44%
2004 10.61% 10.42%
2005 10.48% 10.31%
2006 10.28% 10.11%
2007 20.29% 9.82%
2008 18.73% 9.35%
2009 17.12% 8.81%
<PAGE>
Pennsylvania
Public Utility Commission
NEWS RELEASE
DATE: June 4, 1998
R-00974008 (OSA-236)
PUC Approves Met-Ed Restructuring Plan in Non-Binding Poll
The Public Utility Commission (PUC) today approved by a 4-0 vote, in a
non-binding poll, the restructuring plan for Metropolitan Edison Company
(Met-Ed). Met-Ed is a subsidiary of GPU, Inc.
A final vote is scheduled for June 25.
Today's action, coupled with the previous PUC decisions on PECO Energy,
Duquesne Light Company, West Penn Power Company and PP&L creates the most
competitive electric market in the U.S.
New PUC Commissioner Aaron Wilson Jr. did not participate in today's
voting.
Under the plan approved today, Met-Ed will provide customers who shop
for their electricity a system average shopping credit of 3.757 cents per
kilowatt-hour beginning in January 1999. Shopping credits will vary from one
rate class to another and will increase over time to match anticipated increases
in the market price of generation. Assuming the market price in eastern
Pennsylvania is 3 cents, the Met-Ed plan will enable customers to reduce bills
in 1999 by about 10 percent.
The plan allows Met-Ed to collect $975 million in stranded costs over
11 years, starting in January 1999, through a competitive transition charge. In
it's restructuring plan, Met-Ed had requested recovery of $1.475 billion in
stranded costs. Stranded costs are those costs incurred under a regulated market
which may not be recoverable in a competitive market. The Electricity Generation
Customer Choice and Competition Act of 1996 allows utilities to collect stranded
costs that the PUC finds to be just and reasonable.
The PUC directed that one-third of Met-Ed customers will be able to buy
power from the supplier of their choice on Jan. 1, 1999, another third on Jan.
2, 1999, and the remainder on Jan. 2, 2000. In a recent separate action, the PUC
directed that open enrollment begin July 1, 1998, for customers throughout the
Commonwealth to choose their electric generation supplier.
Starting in 1999, Met-Ed will unbundle its rates to reflect separate
prices for the generation charge, the competitive transition charge, and
transmission and distribution charges. While generation will be open to
competition, Met-Ed will continue to provide transmission and distribution
services to its customers at PUC-regulated rates.
--MORE--
<PAGE>
Today's action also significantly expands Met-Ed's funding of both the
Low Income Usage Reduction Program and its universal service program.
Met-Ed filed its initial restructuring plan on June 2, 1997.
Administrative Law Judge Allison K. Turner held five public input hearings
throughout the company's service territory and held seven technical hearings in
Harrisburg. Turner issued a recommended decision on May 6, 1998.
The Reading-based Met-Ed serves 470,381 customers in all or portions of
14 eastern and southcentral counties.
Eric Levis
Press Secretary
717/787-5722
(87)
<PAGE>
GPU Restructuring
Kevin F. Cadden - Manager of Communications - 787-5722
Penelec and Met-Ed Rate Cuts
Rate Cuts for Shopping Customers - System Average
If the Generation Market Price is 3 cents/kwh rising at 3%,
rate cuts for shopping customers will be:
Penelec Met-Ed
------- ------
1999 10.02% 9.82%
2000 10.30% 10.09%
2001 10.50% 10.26%
2002 10.62% 10.37%
2003 10.66% 10.44%
2004 10.61% 10.42%
2005 10.48% 10.31%
2006 10.28% 10.11%
2007 20.29% 9.82%
2008 18.73% 9.35%
2009 17.12% 8.81%
