Amendment No. 2
SEC File No. 70-8425
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1 APPLICATION UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("ACT")
GPU NUCLEAR, INC. ("GPUN")
GPU INTERNATIONAL, INC. ("GPUI")
One Upper Pond Road, Parsippany, New Jersey 07054
JERSEY CENTRAL POWER & LIGHT COMPANY ("JCP&L")
METROPOLITAN EDISON COMPANY ("Met-Ed")
PENNSYLVANIA ELECTRIC COMPANY ("Penelec")
P.O. Box 16001, Reading, Pa. 19640
GPU SERVICE, INC.("GPUS")
100 Interpace Parkway, Parsippany, New Jersey 07054
(Name of company or companies filing this statement
and address of principal offices)
GPU, INC.
(Name of top registered holding company parent of the applicants)
T. G. Howson, Vice President B. L. Levy, President
and Treasurer W. S. Greengrove, Secretary
M. A. Nalewako, Secretary GPU International, Inc.
Michael J. Connolly, Esq., One Upper Pond Road
Assistant General Counsel Parsippany, NJ 07054
GPU Service, Inc.
100 Interpace Parkway
Parsippany, New Jersey 07054
S. L. Guibord, Secretary
GPU Nuclear, Inc.
Jersey Central Power & Light Company
Metropolitan Edison Company
Pennsylvania Electric Company
c/o GPU Service, Inc.
100 Interpace Parkway
Parsippany, New Jersey 07054
_________________________________________________________________
(Names and addresses of agents for service)<PAGE>
The Applicants hereby amend their Application on Form U-1,
as heretofore amended, docketed in SEC File No. 70-8425 as
follows:
1. By amending paragraph E of Item 1 to read in its
entirety as follows:
E. By order dated January 26, 1996 (HCAR No. 35-26463) the
Commission authorized GPU to organize GPU Generation, Inc.
("GPUG") as a wholly-owned subsidiary of GPU and to enter
into an operating agreement whereby GPUG would operate,
maintain and rehabilitate, among other things, the non-
nuclear generation facilities of the GPU Operating
Companies.(1) Accordingly, GPUN expects and proposes that
it also be allowed to provide services for and in support of
GPUG under the authorization requested herein. For purposes
of this Application, GPUS, GPUI, GPUG and the GPU Operating
Companies are collectively referred to as the "GPU
Companies".
2. By amending paragraph G of Item 1 to read in its
entirety as follows:
G. (i) GPUN intends to enter into a Non-Nuclear Technical,
Training, Management and Consulting Services Agreement ("New
Agreement") with one or more of the GPU Companies to provide
the Services as they may from time to time request in
connection with their business operations. The New Agreement
will be in substantially the form of Exhibit B hereto which is
____________________
1 On August 1, 1996 General Public Utilities Corporation
changed its name to GPU, Inc. Similarly GPU Service Corporation,
GPU Nuclear Corporation and GPU Generation Corporation each
changed its name to GPU Service, Inc. ("GPUS"), GPU Nuclear, Inc.
("GPUN") and GPU Generation, Inc. ("GPUG"). On August 13, 1996
Energy Initiatives, Inc. changed its name to GPU International,
Inc. ("GPUI"). Accordingly, this Amendment reflects the new
names of each Applicant.
2
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substantially in the form of the Laboratory Service Agreement
previously filed as Exhibit A-4 to SEC File No. 70-7720, HCAR No.
35-25149.
(ii) Any Services to be rendered by GPUN will be charged at
cost pursuant to the Act and the Commission's rules and
regulations thereunder. In addition, GPUN will (a) charge
capital costs for providing Services in accordance with
accepted accounting principles, and (b) bill the serviced
company the costs of service before they are paid as
approved by the commission Staff in its letter to GPU
Service Corporation dated June 3, 1982. Such costs will be
accounted for and billed to the GPU Companies substantially
as described in the Application and Order docketed in SEC
File No. 70-7720.
(iii) Notwithstanding the foregoing, the costs of any
Services provided by GPUN to GPUS or GPUG will be billed by
GPUN directly to the GPU Operating Companies to which such
Services relate. Accordingly, no GPUS or GPUG capital costs
will be charged to the GPU Operating Companies for such
Services.
(iv) GPUN currently obtains cash from associate companies
only as cash is needed. For payments which can be
attributed to a particular associate company, funds are
obtained from that company. However, for payments which
cannot be directly attributed to a particular associate
3
<PAGE>
company, funds are obtained utilizing an allocation based on
the billing to affiliates during the previous month. This
percentage allocation of funding is updated monthly, taking
into account intercompany receivable and payable balances.
(v) All of the material supplied and services rendered will
be charged to the GPU Companies at the actual cost thereof.
All materials, labor, and other costs which can be directly
associated with a specific generating facility are charged
to the appropriate GPU Operating Company according to its
ownership interest in the facility. All other costs
incurred by GPUN, not directly assignable to a particular
generating facility, will be allocated in accordance with
Rules 90 and 91 of the Act.
(vi) Invoices for services rendered by GPUN to the GPU
Companies will be reviewed with and will be subject to
approval by the GPU Companies in the ordinary course. Such
review and approval will be conducted by the comptroller
departments at each GPU Company or on their behalf by GPUS
comptrollers. This is consistent with the procedures which
have been in place for many years with respect to the
regular services provided to the GPU Companies by GPUN and
by GPUS. Consistent with those procedures, the GPU Companies
will receive monthly reports from GPUN summarizing all
services provided by GPUN during the prior month. The
report provides the detail for the invoice and will identify
the GPUN work orders charged and provide a detailed listing
4
<PAGE>
of all current charges. Such charges will be subject to
review by the GPU Companies for reasonableness before
approval of payment.
3. By amending paragraph H of Item 1 to read in its
entirety as follows:
H. (i) The GPU Companies believe that the technical,
analytical and related expertise of GPUN s staff
(described generally in paragraph F above) can be
usefully applied in support of their business
activities.
(ii) With respect to GPUS, it is expected that the
Services provided by GPUN would consist primarily of
Training Programs (such as computer-based training and
management and supervisory training, as described in
paragraph F (11) of the application).
(iii) The GPU Companies do not anticipate that the
Services to be provided by GPUN will duplicate the
Services provided to the GPU Operating Companies by
GPUS. This is due to the fact that the GPU Operating
Companies anticipate that, in general, they will only
request those Services from GPUN which are not being
provided by GPUS and are of such a technical,
analytical or specialized nature that GPUS is unable to
provide or GPUN is believed better positioned to
provide. The GPU Companies will use their best efforts
5
<PAGE>
to ensure that such services are provided at the lowest
predictable cost by either GPUS or GPUN, as the case
may be.
(iv) Similarly, the GPU Companies do not believe that
GPUN will render Services to the GPU Operating
Companies that are duplicative of the Services to be
provided by GPUG. As described in SEC File No. 70-
8409, GPUG will be responsible for the operation,
maintenance and rehabilitation of all non-nuclear
generation facilities owned and operated by the GPU
Operating Companies. It is anticipated that GPUG will
solicit Services from GPUN in discrete cases where its
duties require the expertise or capabilities of a third
party contractor. GPUN will not, however, supersede or
replace GPUG as the party responsible to the GPU
Operating Companies for the non-nuclear generation
facilities. The total cost of services GPUN will
provide to GPUG will not during any calendar year
exceed five percent of the cost of services which GPUG
provides to or on behalf of the GPU Operating Companies
during such year.
4. By amending Item 6 and filing the following
exhibits hereunder:
(a) Exhibits:
D-1 - Petition of JCP&L to New Jersey
Board of Public Utilities
D-2 - Order of New Jersey Board of Public
Utilities, dated March 15, 1996
6
<PAGE>
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 NUCLEAR, INC.
GPU SERVICE, INC.
JERSEY CENTRAL POWER & LIGHT
COMPANY
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
By:
T. G. Howson, Treasurer
GPU INTERNATIONAL, INC.
By:
B. L. Levy, President
Date: November 15, 1996<PAGE>
EXHIBITS TO BE FILED BY EDGAR
(a) Exhibits:
D-1 - Petition of JCP&L to New Jersey
Board of Public Utilities
D-2 - Order of New Jersey Board of Public
Utilities, dated March 15, 1996<PAGE>
EXHIBIT D-1
STATE OF NEW JERSEY
BOARD OF PUBLIC UTILITIES
--------------------------------------------X
IN THE MATTER OF THE VERIFIED PETITION OF : DOCKET NO.
JERSEY CENTRAL POWER & LIGHT COMPANY FOR :
APPROVAL OF A SERVICE AGREEMENT : VERIFIED PETITION
--------------------------------------------X
TO THE HONORABLE BOARD OF PUBLIC UTILITIES:
Petitioner, Jersey Central Power & Light Company
("Petitioner" or "JCP&L"), a public utility corporation of the
State of New Jersey subject to the jurisdiction of the New Jersey
Board of Public Utilities (the "Board"), having its principal
offices at 300 Madison Avenue, Morristown, New Jersey 07962,
pursuant to N.J.S.A. 48:3-7.1 and N.J.A.C. 14:1-5.1 hereby
petitions the Board as follows:
1. JCP&L is engaged as a public utility in the production,
purchase, transmission, distribution and sale of electric energy
to more than 900,000 residential, commercial and industrial
customers in thirteen counties, which include 236 municipalities,
within the State of New Jersey.
2. Correspondence and other communications relating to this
Verified Petition should be sent as follows:
Michael P. Morrell, Vice-President
Jersey Central Power & Light Company
310 Madison Avenue
Morristown, New Jersey 07962
-and-
Peter C. Ard, Esq.
Jersey Central Power & Light Company
300 Madison Avenue
Morristown, New Jersey 07962<PAGE>
3. JCP&L is a wholly-owned subsidiary of General Public
Utilities Corporation ("GPU"), a registered public utility
holding company under the Public Utility Holding Company Act of
1935 (the "Act"), and is an affiliate of GPU's other subsidiaries
including Metropolitan Edison Company ("Met-Ed"), Pennsylvania
Electric Company ("Penelec"), GPU Service Company ("GPUSC"), GPU
Nuclear Corp. ("GPUN"), and Energy Initiatives, Inc. ("EI")
(collectively, the "GPU Companies").
DESCRIPTION OF PROPOSED TRANSACTIONS
4. GPUN was organized for the purpose of the safe
operation, maintenance, rehabilitation, design, construction,
start-up and testing of all nuclear generating facilities owned
by JCP&L, Met-Ed and Penelec (collectively, the "GPU Operating
Companies") and related research and development.
5. After obtaining the requisite authorizations from the
United States Securities and Exchange Commission (the "SEC"), the
Nuclear Regulatory Commission, the Pennsylvania Public Utility
Commission and the Board by Order dated October 14, 1981, in
Docket No. 804-254, GPUN commenced operation on or about January
1, 1982. Since that time, GPUN has been responsible for the
operation and maintenance of Three Mile Island Unit No. 1 and
Oyster Creek generating units and for the clean-up of Three Mile
Island Unit No. 2 which was disabled in an accident on March 28,
1979, and for the monitoring, maintenance and preparation for
ultimate decommissioning of the Saxton Nuclear Experimental
Corporation's nuclear facility.
6. GPUN proposes to perform for JCP&L and the other GPU
Companies as and when requested, or as otherwise agreed between the
2<PAGE>
parties, a range of non-nuclear technical, training, management and
consulting services (the "Services") for and in support of JCP&L,
and the other GPU Companies by separate agreements.
7. The Services to be provided to JCP&L are generally
described to include the following types of services:
(a) Plant Operations and Maintenance:
Providing services, as available, for scheduled and
non-scheduled maintenance functions for the non-nuclear
plants of JCP&L. Such Services shall include, but not
be limited to: plant operations; management and
supervision; written work instructions and planning;
craft coordination and supervision; estimating and
scheduling; contracting and purchasing; non-nuclear
engineering assistance; building maintenance; grounds
maintenance; mechanical maintenance; electrical
maintenance and equipment maintenance.
(b) Plant Inspections and Risk Analysis:
Conducting plant inspections and performing
probabilistic risk assessments of JCP&L's non-nuclear
plants and plant systems including the use of robotic
devices and techniques to conduct such inspections and
analysis.
(c) Plant Equipment Corrosion Control and Failure Analysis:
Assessing the potential corrosion risks and processes
in JCP&L's non-nuclear plant systems and providing
recommendations for corrective action; investigating
system and equipment failures and providing
3<PAGE>
recommendations for corrective action; and using
ultrasonic and other inspection techniques to monitor
and assess plant systems and equipment for possible
degradation from erosion or corrosion.
(d) Engineering and Design Services:
Providing technical design and engineering services for
JCP&L's non-nuclear plant modifications and for the
resolution of operating and maintenance issues.
(e) Plant Life Extension Analysis:
Reviewing JCP&L's non-nuclear plant facility
structures, systems and components and performing
technical procedures and processes that may be
necessary to extend the useful life of such plant
facilities.
(f) Project and Construction Management:
Providing to JCP&L non-nuclear project and construction
management and supervision; project controls (from
project design to project completion), such as
planning, estimating, cost engineering, scheduling and
procurement; craft coordination and supervision;
construction compliance and review assistance; design
and engineering assistance; project permitting; and
contract and procurement assistance in connection with
a variety of projects, including, but not limited to:
construction of buildings, underground piping and
utilities, major concrete foundations, mechanical
piping and equipment, roofing and renovations, disposal
and shutdown.
4<PAGE>
(g) Plant Modification, Design, Installation, Evaluation &
Testing:
Providing to JCP&L guidelines, criteria, designs,
drawings, material selection, specifications, and
analyses in support of non-nuclear plant modifications;
organizing, planning and coordinating engineering
project activities with regard to technical adequacy,
schedule and cost; performing start-up and test
activities to assure new or modified plants, facilities
and systems are systematically tested to conform with
technical requirements.
(h) Environmental Protection Services:
Providing to JCP&L EPA and State-required environmental
sampling and analysis;environmental impact statements;
hazardous waste management; bioremediation of petroleum
contaminated soil; and regulatory affairs and rule
making review assistance.
(i) Emergency Preparedness Training and Services:
Providing JCP&L with general emergency preparedness
support; emergency preparedness training and
consultation; and assisting in emergency preparedness
communications with state and local government
authorities.
(j) Quality Assurance Services:
Providing quality assurance supervisory services for
contractors performing inspections or construction
activities at JCP&L's non-nuclear facilities.
(k) Training Programs:
5<PAGE>
Providing non-nuclear training services and programs to
JCP&L such as computer-based training; instructor
training; management and supervisory training; fire
protection training; facility security training;
mechanical maintenance training; chemistry training;
electrical, instrument & control training; safety and
environmental training; and development of Performance
Based Training Programs using GPUN's Training and
Education Data Base Software System.
(l) Plant Management Consulting and Operation Analysis:
Providing JCP&L with situational expertise and guidance
to aid the management decision-making process and
provide assistance and expertise in developing
reliability centered maintenance programs and on-line
maintenance scheduling programs. Providing job and
work process re-engineering consultation and analysis
to identify potential for improvement of existing job
and work process methods.
(m) Industrial Safety and Hygiene Services:
Providing JCP&L with OSHA Compliance assistance; plant
safety analysis; asbestos sampling and analysis; noise
surveillance and analysis; heat stress assessment; and
policy and procedure writing.
(n) Medical Services:
Providing fitness-for-duty medical services and other
medical services related to JCP&L's needs to comply
with state, federal or local laws or regulations.
6<PAGE>
PETITION FOR APPROVAL OF A SERVICE AGREEMENT
8. JCP&L intends to enter into a Non-Nuclear Technical,
Training, Management and Consulting Services Agreement (the
"Service Agreement") with GPUN whereby GPUN would provide the
Services as JCP&L may request in connection with its business
operations. The Service Agreement will be substantially in the
form of Exhibit A hereto.
Schedule I to the Service Agreement generally describes
the types of Services (as set forth in paragraph 7) above that
GPUN will furnish to JCP&L. Schedule II to the Service Agreement
entitled "Determination of Cost of Service and Allocation
Thereof" provides that any Services to be rendered by GPUN will
be charged at the actual cost thereof (including all applicable
direct and indirect charges and costs of doing business).
N.J.S.A. 48:3-7.1 requires, among other things, that
advisory service and engineering contracts between a public
utility and an affiliate involving expenditures of sums exceeding
Twenty-Five Thousand ($25,000.00) Dollars must be approved by the
Board before said agreements will be valid or effective. JCP&L
and GPUN are affiliates, and the services to be provided under
the Service Agreement are advisory and engineering services which
are covered by N.J.S.A. 48:3-7.1. In addition, it is anticipated
that the aggregate of the payments to be made by JCP&L for the
Services is likely to exceed Twenty-Five Thousand ($25,000.00)
Dollars.
9. JCP&L believes that the technical, analytical and
related expertise (referred to generally in paragraph 7 above) of
GPUN's staff can be usefully applied in support of its efforts to
7<PAGE>
provide safe, adequate and proper service to the public.
10. The proposed Service Agreement and the Services to be
provided thereunder are subject to Sections 12 and 13(b) of the
provisions of the Act and Rules 87, 90 and 91 issued thereunder
which provide, generally, that subsidiary companies of registered
holding companies may, without prior approval of the SEC, perform
services or construction for, or sell goods to, associate
companies thereof provided that such performances are rendered
and such sales are made at cost. The Service Agreement has been
embodied in an Application on Form U-1, dated May 19, 1994 filed
with the SEC at file no. 70-8425. A copy of the Application on
Form U-1 as filed with the SEC is attached as Exhibit B.
11. The need for the Services is expected to arise on a
case-by-case basis and, accordingly, no precise projections as to
the magnitude thereof can be made. Because of the inability to
make precise projections, it is impossible to quantify specific
savings to be realized by JCP&L from the Service Agreement.
Nonetheless, the Service Agreement will give JCP&L an additional
choice in its determination, on an individual project basis, of
the most cost efficient manner to have the Services performed.
12. It is anticipated that the Service Agreement will
confer economic benefits upon JCP&L and its customers, and will
not adversely affect the ability of JCP&L to properly serve the
public or otherwise prejudice the public interest.
13. The Service Agreement does not violate the laws of this
State or of the United States, the compensation provided
thereunder does not exceed the fair and lawful compensation for
such Services to be rendered and the Service Agreement is not
contrary to the public interest.
8<PAGE>
CONCLUSION
WHEREFORE, the Petitioner, Jersey Central Power & Light
Company, does hereby respectfully request the Board approve the
Service Agreement pursuant to N.J.S.A. 48:3-7.1 and N.J.A.C.
14:1-5.1 for the reasons set forth in the foregoing Verified
Petition, and that no hearing be required.
Respectfully submitted,
Dated: January 13, 1995
PETER C. ARD, Esq.
Attorney for Petitioner
AFFIDAVIT
OF
VERIFICATION
MICHAEL P. MORRELL, being duly sworn upon his oath, deposes
and says:
1. I am a Vice President of Jersey Central Power & Light
Company, the Petitioner named in the above captioned matter, and
I am duly authorized by said Petitioner to make this Affidavit of
Verification on its behalf.
2. I have read the contents of the foregoing Verified
Petition and Exhibit(s) annexed thereto, and I hereby verify that
<PAGE>
9
the statements of fact and other information contained therein
are true and correct to the best of my knowledge, information and
belief.
MICHAEL P. MORRELL
Sworn to and subscribed
before me this day
of January, 1995
(Notary Public)
10<PAGE>
January 13, 1995
Blossom A. Peretz, Secretary
Board of Public Utilities
Two Gateway Center
Newark, NJ 07102
Re: Jersey Central Power & Light Company
Verified Petition For Approval of a
Service Agreement
Dear Madam Secretary:
Enclosed herewith for filing on behalf of Jersey Central
Power & Light Company is an original and ten (10) copies of the
Company's Verified Petition For Approval of a Service Agreement.
A copy of this letter is also enclosed. Kindly affix the
assigned docket number to the copy of this letter and return the
copy to the undersigned in the enclosed self-addressed, stamped
envelope.
Very truly yours,
Peter C. Ard
Enclosures
cc: Robert S. Chilton<PAGE>
EXHIBIT D-2
STATE OF NEW JERSEY
Board of Public Utilities
Two Gateway Center
Newark, NJ 07102
ELECTRIC
IN THE MATTER OF THE PETITION OF )
JERSEY CENTRAL POWER & LIGHT COMPANY) DECISION AND ORDER
FOR APPROVAL OF A SERVICE AGREEMENT )
WITH GPU NUCLEAR CORPORATION ) DOCKET NO. EM95010030
(SERVICE LIST ATTACHED)
BY THE BOARD:
Jersey Central Power & Light Company ("JCP&L"), "Company",
or "Petitioner") is a wholly owned subsidiary of General Public
Utilities Corporation ("GPU") which is a registered public
utility holding company under the Public Utility Holding Company
act of 1935. JCP&L provides electric service to various portions
of the State of New Jersey. JCP&L is an affiliate of GPU's other
subsidiaries including Metropolitan Edison Company ("Met-Ed"),
Pennsylvania Electric Company ("Penelec"), GPU Service Company
("GPUGC") [sic], GPU Nuclear Corporation ("GPUNC"), GPU
Generating Corporation ("GPUGC"), and Energy Initiatives,
Inc.("EII"), (collectively, the "GPU Companies").
GPUNC was organized for the safe operation, maintenance,
rehabilitation, design, construction, start-up, testing and
related research and development of all nuclear generating
facilities owned by the GPU Operating Companies. GPUNC commenced
operation on or about January 1, 1982. Since that time, GPUNC
has been responsible for the operation and maintenance of Three
Mile Island Unit No. 1 and Oyster Creek generating units and for
the clean-up of Three Mile Island Unit No. 2 which was disabled
in an accident on March 28, 1979. GPUNC is also responsible for
the monitoring and maintenance of the Saxton Nuclear Experimental
Corporation's nuclear facility.
On January 13, 1995, pursuant to N.J.S.A. 48:3-7.1 and
N.J.A.C. 14:l-5.1, JCP&L filed a petition with the Board
requesting approval of a Service Agreement with GPUNC, wherein
GPUNC proposes to perform for JCP&L, and the other GPU companies
as and when requested, a range of non-nuclear technical,
training, management and consulting services including, but not
limited to the following:<PAGE>
a) Plant Operation and Maintenance:
Providing services, as available, for scheduled and
non-scheduled maintenance functions for the non-nuclear
plants of JCP&L. Such services shall include, but not
be limited to: plant operations; management and
supervision; written work instructions and planning;
craft coordination and supervision; estimating and
scheduling; contracting and purchasing; non-nuclear
engineering assistance; building maintenance; grounds
maintenance; mechanical maintenance; electrical
maintenance and equipment maintenance.
b) Plant Inspections and Risk Analysis:
Conducting plant inspections and performing
probabilistic risk assessments of JCP&L's non-nuclear
plants and plant systems including the use of robotic
devices and techniques to conduct such inspections and
analysis.
c) Plant Equipment Corrosion Control and Failure Analysis:
Assessing the potential corrosion risks and processes
in JCP&L's non-nuclear plant systems and providing
recommendations for corrective action; investigating
system and equipment failures and providing
recommendations for corrective action; and using
ultrasonic and other inspection techniques to monitor
and assess plant systems and equipment for possible
degradation from erosion or corrosion.
d) Engineering and Design Services:
Providing technical design and engineering services for
JCP&L's non-nuclear plant modifications and for the
resolution of operating and maintenance issues.
e) Plant Life Extension Analysis:
Reviewing JCP&L's non-nuclear plant facility
structures, systems and components and performing
technical procedures and processes that may be
necessary to extend the useful life of such plant
facilities.
f) Project and Construction Management:
Providing to JCP&L non-nuclear project and construction
management and supervision; project controls (from
project design to project completion), such as
planning, estimating, cost engineering, scheduling and
procurement; craft coordination and supervision;
construction compliance and review assistance; design
and engineering assistance; project permitting; and
contract and procurement assistance in connection with
a variety of projects, including, but not limited to:
construction of buildings, underground piping and
utilities, major concrete foundation, mechanical piping
and equipment, roofing and renovations, disposal and
shutdown.
2<PAGE>
g) Plant Modification, Design, Installation, Evaluation &
Testing:
Providing to JCP&L guidelines, criteria, designs,
drawings, material selection, specifications, and
analyses in support of non-nuclear plant modifications;
organizing, planning and coordinating engineering
project activities with regard to technical adequacy,
schedule and cost; performing start-up and test
activities to assure new or modified plants, facilities
and systems are systematically tested to conform with
technical requirements.
h) Environmental Protection Services:
Providing to JCP&L EPA and State-required environmental
sampling and analysis; environmental impact statements;
hazardous waste management; bioremediation of petroleum
contaminated soil; and regulatory affairs and rule
making review assistance.
i) Emergency Preparedness Training and Services:
Providing JCP&L with general emergency preparedness
support; emergency preparedness training and
consultation; and assisting in emergency preparedness
communications with state and local government
authorities.
j) Quality Assurance Services:
Providing quality assurance supervisory services for
contractors performing inspections or construction
activities at JCP&L's non-nuclear facilities.
k) Training Programs:
Providing non-nuclear training services and programs to
JCP&L such as computer-based training; instructor
training; management and supervisory training; fire
protection training; facility security training;
mechanical maintenance training; chemistry training;
electrical, instrument & control training; safety and
environmental training; and development of Performance
Based Training Programs using GPUNC's Training and
Education Data Base Software System.
l) Plant Management Consulting and Operation Analysis:
Providing JCP&L with situational expertise and guidance
to aid the management decision-making process and
provide assistance and expertise in developing
reliability centered maintenance programs and on-line
maintenance scheduling programs. Providing job and
work process reengineering consultation and analysis to
identify potential for improvement of existing job and
work process methods.
m) Industrial Safety and Hygiene Services:
Providing JCP&L with OSHA Compliance assistance; plant
safety analysis; asbestos sampling and analysis; noise
<PAGE>
3
surveillance and analysis; heat stress assessment; and
policy and procedure writing.
n) Medical Services:
Providing fitness-for-duty medical services and other
medical services related to JCP&L's needs to comply
with state, federal or local laws or regulations.
JCP&L maintains that the proposed Service Agreement will
give JCP&L an additional option when choosing the most cost
efficient manner to have the above type services performed.
Through the proposed Service Agreement, JCP&L is seeking the
opportunity to award work to its affiliate, GPUNC.
N.J.S.A. 48:3-7.1 provides in pertinent part that
"no management, advisory service, construction or
engineering contract ... made by any public utility
with any person or corporation owning, holding or
controlling separately, or in affiliation with another
person or corporation, five percent or more of the
capital stock of such public utility ... shall be valid
or effective until approved in writing by the Board."
The foregoing Statute also provides that:
"The [B]oard shall disapprove such contract if it
determines that that [sic] such contract violates the
laws of this state or of the United States, or that the
price or fair compensation thereby fixed exceeds the
fair price or fair compensation for the property to be
furnished or the work to be done or the services to be
rendered thereunder or is contrary to the public
interest: otherwise the Board shall approve such
contract."
Any services that are rendered by GPUNC will be charged at
the actual costs thereof. This proposal does not entail the
formation, of a new service organization, but utilizes an
existing service organization and existing skills in the performance
of new duties.
Following an extensive discovery and conference process
between JCP&L, the Division of the Ratepayer Advocate and Staff,
the parties entered into a Stipulation recommending approval of
the Service Agreement between JCP&L and GPUNC. On January 26, 1996,
an Amendment to the Stipulation was executed by the parties, and
incorporated in Paragraph 3 of the Stipulation.
Staff believes the Stipulation represents a reasonable
resolution of the issues in this proceeding and recommends its
approval subject to the conditions set forth herein.
Based upon a complete review of the Company's filing, and
its responses to discovery requests, the Board FINDS that the
4
<PAGE>
Service Agreement is not unreasonable and not contrary to the
public interest, is in accordance with the law, and has the
potential to attain considerable cost efficiencies and thereby
ultimately lower costs to consumers. In addition, we firmly
believe that the ability to compete successfully in today's
competitive generation environment will lead to greater financial
stability for the Company and lower rates for ratepayers. We
further believe that the conditions embodied in the Stipulation
provide important ratepayer protections and continued regulatory
oversight. We hereby place JCP&L on notice that the Board will
review the actions taken by JCP&L to determine that the services
provided by GPUNC to JCP&L are economically competitive with
other services.
Accordingly, the Board concurs with Staff's recommendation
and HEREBY APPROVES the Service Agreement between GPUNC and
JCP&L, subject to the terms and conditions provided for in the
Stipulation and set forth herein below:
1. Staff recommends approval of this Service Agreement.
2. JCP&L shall file with the Board a letter stating the
following:
Notwithstanding the filing with the
Securities and Exchange Commission ("SEC"),
and/or the Federal Energy Regulatory
Commission ("FERC"), if applicable or
approval by the SEC and/or the FERC of the
Service Agreement between GPUNC and JCP&L,
JCP&L agrees that it shall not assert, in any
administrative, regulatory, judicial or
quasi-judicial forum, that such filing in any
way pre-empts the New Jersey Board of Public
Utilities' ability to review and rule upon
the prudence, reasonableness, and the
utility's right to recovery in its retail
rates of costs incurred by JCP&L under the
Service Agreement.
3. JCP&L shall submit to the Board, on behalf of JCP&L, a
written certification executed by an authorized officer
of JCP&L which states that it is JCP&L's intention that
the letter immediately referenced above will be
enforceable in future regulatory proceedings.
If and to the extent that GPU
Generation Corporation, acting on
behalf of JCP&L, contracts for and
receives services from GPU Nuclear
Corporation comparable to the
services contemplated by the
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Service Agreement (as defined in
the Stipulation), the Board shall
have the same authority to review
such transactions as it has to
review transactions under the
Service Agreement received directly
by JCP&L.
4. This Order shall not affect or in any way limit the
exercise of the authority of the Board or of the State
in any future petition or in any proceeding with
respect to rates, franchises, services, financing,
capitalization, depreciation, accounting, maintenance,
operations or any other matter affecting GPUNC, JCP&L
and the Board.
5. The Board of Directors of GPUNC shall agree in writing
to the terms and conditions of this Order.
6. Approval of the Service Agreement does not preclude the
Board from investigating during any formal proceeding,
or from conducting an inquiry into, the reasonableness
of charges incurred under the Service Agreement.
7. It should be emphasized that the Board has ample
statutory authority to regulate all utility activities
in this State, and if required by then existing facts
or circumstances, to take reasonable and appropriate
action. Approval of the Service Agreement cannot alter
or diminish the Board's pervasive regulation of and
jurisdiction over all New Jersey utility operations,
including rates, service and assets. In order to
assure the continuation of safe, adequate and proper
service, the activities of JCP&L will continue to be
subject to ongoing surveillance by the Board pursuant
to Title 48 of the New Jersey Statutes Annotated,
including, but not limited to, N.J.S.A. 48:2-13,
N.J.S.A. 48:2-29.1, N.J.S.A. 48:2-29.2, N.J.S.A. 48:3-
7, N.J.S.A. 48:3-7.1, N.J.S.A. 48:3-7.2, N.J.S.A. 48:3-
9 and N.J.S.A. 48:3-10.
8. Full access shall be provided to the Board to any books
and records and other information of any kind,
documentary or otherwise, of GPUNC or any of its
divisions or subsidiaries relating to the Service
Agreement.
9. GPUNC shall maintain its books and records in
accordance with the appropriate Uniform System of
Accounts as prescribed by this Board reflecting all
costs, expenditures and charges made to or for the
account of JCP&L.
10. JCP&L shall file with the Board a signed copy of the
executed Service Agreement between JCP&L and GPUNC
within ten working days of its effective date.
11. JCP&L shall also file a copy of all amendments made to
the original Service Agreement and copies of all
subsequent Service Agreements and the Board shall be in
receipt of the amendments or subsequent Service
Agreements at least fifteen days prior to their
proposed effective date.
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12. The terms and conditions of the Service Agreement as
actually executed by and between JCP&L and GPUNC shall
not be changed substantively from the draft Service
Agreement currently on file with the Board.
13. JCP&L shall file with the Board, and the Board shall be
in receipt of, a copy of the final SEC approval with
respect to this Service Agreement, within ten working
days of receipt of the approvals by JCP&L. JCP&L shall
also file with the Board copies of all future SEC and
FERC approvals received by GPUNC, that affect JCP&L in
any way relating to the Service Agreement, within ten
working days of JCP&L's receipt of same.
14. GPUNC shall record costs and, to the extent applicable,
all allocations of costs billed to JCP&L through the
Service Agreement in sufficient detail to allow the
Board to analyze, evaluate, and render a determination
as to their fairness and reasonableness for ratemaking
purposes.
15. Information regarding the total salary of GPUNC
employees and, where applicable employees or
contractors hired by GPUNC, as well as the dollar
amount and percentage allocations of the employees' or
contractors employees' total salary for which JCP&L is
being billed under the Service Agreement shall be
maintained and made available to the Board during each
rate proceeding and upon request. Such salary
information shall continue to be subject to ongoing
review by the Board during each rate proceeding as to
the reasonableness thereof for ratemaking purposes,
subject to the confidentiality procedures previously
approved and followed by the Board with respect to
personal data relating to individual employees, where
applicable.
16. All SEC and FERC filings relating to changes in the
Service Agreement cost allocation formulas, or other
changes to the Service Agreement affecting JCP&L, shall
be submitted to the Board or its successors at least 45
days prior to the proposed effective date thereof as
set forth in the filing to the SEC and/or FERC, but in
no event later than the date of the filing thereof with
the SEC and/or the FERC. JCP&L shall also submit to
the Board or its successors any workpapers associated
with such SEC and FERC filing at least 45 days prior to
such proposed effective date as set forth in the formal
SEC and FERC filing, but in no event later than the
date of the filing thereof with the SEC and/or FERC.
Copies of all annual, periodic or other reports filed
by GPUNC with the SEC or FERC relating to the Service
Agreement shall be contemporaneously submitted to the
Board.
17. There shall be a willingness on the part of GPUNC and
JCP&L to prepare data relating to the Service Agreement
as requested by the Board or its successors.
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18. JCP&L shall exercise diligent oversight over GPUNC to
ensure that GPUNC performs services in accordance with
the provisions of the Service Agreement's terms.
During regulatory proceedings before the board or its
successors, JCP&L and GPUNC shall, upon request,
provide information showing the benefits to JCP&L and
its ratepayers of this Service Agreement between JCP&L
and GPUNC.
19. The Board's or its successors' approval of this Service
Agreement shall not reduce or constrain any existing
authority the Board or its successors currently has to
review JCP&L's capitals costs and operating and
maintenance expenses.
20. JCP&L will maintain a full accounting of any and all
services provided by JCP&L to GPUNC, if any such
services are provided.
21. In addition to providing identified data, documents,
reports and notifications to the Board as set forth
above, JCP&L agrees that all such information will
likewise be submitted simultaneously to the New Jersey
Division of the Ratepayer Advocate.
22. Approval of this Service Agreement shall not modify the
Board's previous approval of the Operating Agreement
between JCP&L and GPUNC.
Dated: March 15, 1996 BOARD OF PUBLIC UTILITIES
BY:
HERBERT H. TATE
PRESIDENT
CARMEN J. ARMENTI
COMMISSIONER
EDWARD H. SALMON
COMMISSIONER
JAMES A NAPPI
SECRETARY
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