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): April 14, 1999
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
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1-6047 GPU, Inc. 13-5516989
(a Pennsylvania corporation)
300 Madison Avenue
Morristown, New Jersey 07962-1911
Telephone (973) 455-8200
1-3141 Jersey Central Power & Light Company 21-0485010
(a New Jersey corporation)
2800 Pottsville Pike
Reading, Pennsylvania 19640-0001
Telephone (610) 929-3601
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ITEM 5. OTHER EVENTS.
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On April 14, 1999, GPU, Inc.'s subsidiary Jersey Central Power & Light
Company (doing business as "GPU Energy") entered into a settlement agreement
with several parties to its stranded cost and rate unbundling proceedings
pending before the New Jersey Board of Public Utilities ("NJBPU").
The settlement agreement, which is subject to NBJPU approval, provides,
among other things, for a 5% rate reduction commencing August 1, 1999, a 5% rate
refund beginning August 1, 2002, and for average customer shopping credits
beginning at 4.9 cents per kilowatt hour and increasing to 5.16 cents per
kilowatt hour in 2003. It also allows for the application of the net proceeds
from GPU Energy's generation asset sales to reduce stranded costs, the
securitization of approximately $525 million of stranded costs associated with
the Oyster Creek nuclear generating station, and adequate assurance (through a
deferral and true-up mechanism) of full recovery of above market costs
associated with GPU Energy's obligations under non-utility generation power
purchase agreements.
If approved by the NJBPU, the settlement agreement would result in an
approximately $195 million reduction in 1999 pre-tax earnings, or about $0.90
per share (after tax).
A copy of GPU Energy's related news release is annexed as an exhibit.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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(c) Exhibit
1. GPU Energy news release, dated April 14, 1999.
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANTS HAVE DULY CAUSED THIS REPORT TO BE SIGNED ON THEIR BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
GPU, INC.
JERSEY CENTRAL POWER & LIGHT COMPANY
By: /s/ T. G. Howson
--------------------------------
T. G. Howson, Vice President
and Treasurer
Date: April 16, 1999
EXHIBIT TO BE FILED BY EDGAR
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(c) 1 GPU Energy news release, dated April 14, 1999.
Exhibit (c) 1
GPU Energy News Release
April 14, 1999
GPU Energy Reaches Restructuring Settlement
MORRISTOWN, N.J. -- April 14, 1999 -- GPU Energy and several parties
have reached a negotiated settlement on the Company's stranded cost and rate
unbundling plans for restructuring in New Jersey.
The settlement agreement for Jersey Central Power & Light Company (doing
business as GPU Energy), which was filed today and is subject to approval by the
New Jersey Board of Public Utilities (NJBPU), includes a rate reduction for all
customers of five percent effective August 1, 1999 and an additional five
percent rate refund effective August 1, 2002. Under the recently passed New
Jersey Electric Discount and Energy Competition Act, GPU Energy is required to
sustain these rate reductions through July 31, 2003. The rate refund will result
in an approximately $115 million reduction in 1999 pre-tax earnings or $0.53 per
share (after tax) of GPU, Inc. common stock.
The agreement also provides a greater opportunity for savings for
customers who choose to shop by establishing average shopping credits of 4.9
cents per kilowatt hour effective August 1, 1999, 5.03 cents in 2000, 5.07 cents
in 2001, 5.12 cents in 2002 and 5.16 cents in 2003. The new legislation gives
all electric customers the opportunity to shop for their electric supplier
beginning August 1, 1999.
In addition, the settlement also allows for the net proceeds from the
sale of GPU Energy's merchant generating stations to be applied to reduce
stranded costs, which will eliminate essentially all generation-related stranded
costs (other than for the Oyster Creek Station), and the securitization of
approximately $525 million of stranded costs associated with the Oyster Creek
Nuclear Generating Station. GPU Energy would write down its investment in Oyster
Creek by about $80 million, or $0.37 per share (after tax) to reflect potential
tax savings.
It also provides adequate assurance (through a deferral and true-up
mechanism) of full recovery of the above-market costs of government mandated
contracts to buy electricity from non-utility generators, and protection against
unanticipated market fluctuations in energy costs required to meet GPU Energy's
basic generation service obligations. Under the legislation, electric utilities
must continue to provide basic electric supply to customers who do not choose an
alternative supplier.
"We are pleased that we have been able to reach what all the parties to
the settlement agree is a fair and balanced settlement that complies with the
New Jersey Electric Discount and Energy Competition Act," said GPU Energy
President Dennis Baldassari. "We have long maintained that for restructuring to
be successful and for competition to be introduced in the electric utility
industry, the process to achieve it would have to be fair to all parties. We
believe the proposed settlement accomplishes that goal.
<PAGE>
"Our paramount concern has been to reach a settlement that provides
adequate revenues to maintain the reliability of the system of wires that
deliver electricity to customers. The transmission and distribution rates agreed
upon in this settlement make that a reality."
Baldassari also said he was encouraged that the agreement recognized
GPU's efforts to sell its merchant generating facilities and to apply the
proceeds of the sale toward reducing stranded costs.
Under the agreement, in 2002, the average GPU Energy residential
customer using 500-kilowatt hours per month will be paying less for electricity
than in 1984.
Parties agreeing to the settlement with GPU Energy include: Enron
Capital and Trade Resources, PP&L EnergyPlus, the Independent Energy Producers
of New Jersey, the New Jersey Food Council and New Jersey Retail Merchants
Association who have jointly intervened as the New Jersey Commercial Users and
New Jersey Transit. Under the NJBPU's procedure, the Staff of the NJBPU was not
a participant in the settlement discussions.
GPU, Inc., headquartered in Morristown, New Jersey is a registered
utility holding company. GPU's three domestic electric utility subsidiaries --
Jersey Central Power and Light Company, Metropolitan Edison Company and
Pennsylvania Electric Company -- do business under the trade name of GPU Energy,
and serve approximately two million customers in a service area encompassing
about half the land areas in New Jersey and Pennsylvania. GPU's other
subsidiaries include: GPU Advanced Resources, Inc.; GPU International, Inc.; GPU
Generation, Inc.; GPU Nuclear, Inc.; GPU Service, Inc.; and GPU Telcom Services,
Inc.
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Contact:
GPU Energy
Ron T. Morano, 973-644-4297
