FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report: December 11, 1997
PECO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-1401 23-0970240
(State or other (SEC (IRS Employer
jurisdiction of file number) Identification
incorporation) Number)
230l Market Street, Philadelphia, Pennsylvania 19101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 841-4000
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Item 5. Other Events
As previously reported, the Company has been involved in a restructuring
proceeding, which began April 1, 1997, pursuant to the Pennsylvania Electricity
Generation Customer Choice and Competition Act (Competition Act).
On December 11, 1997, the Pennsylvania Public Utility Commission (PUC) issued
the following news release:
"The Public Utility Commission today approved a restructuring plan for
PECO Energy Co. that will enable customers to reduce electric bills by up to 15
percent and allow the utility to collect $5.024 billion in stranded costs.
The PUC-approved plan differs markedly from the partial settlement
signed by PECO and some other parties in the restructuring case which would have
given savings to customers of 7 percent for 28 months and permitted PECO's
recovery of at least $ 5.461 billion in stranded costs.
Both the partial settlement and an alternative plan submitted by Enron
Energy Services Power Inc. were rejected. Enron's plan, calling for deeper rate
cuts and the designation of Enron as the `provider of last resort' in PECO's
service territory, was deemed unworkable because it required PECO's willingness
to be the service company under Enron's terms and conditions.
Today's decision was in the form of a motion made by Commissioner John
Hanger and adopted on a 3-2 vote. Commissioners David W. Rolka and Nora Mead
Brownell supported the motion; Chairman John M. Quain and Vice Chairman Robert
K. Bloom dissented, saying they would have approved the partial settlement. The
majority said today's decision `will insure the creation of a competitive retail
electric generation market in PECO's service territory, the just and reasonable
treatment of PECO's shareholders and customers, and the preservation of
reliability.' Under the plan approved today, PECO, starting in January 1999,
will
give residential customers who shop for their electricity a shopping credit of
about 5.2 cents per kilowatt hour. The credit amount will vary from one rate
class to another. Customers should realize savings of up to 15 percent by
purchasing electricity from generation suppliers at rates below the credit, the
motion said.
The partial settlement called for an initial shopping credit 3.02 cents
per kilowatt hour for residential customers, a level that would be below market
prices available to many customers from 2000 to 2003, thus hindering creation of
a competitive retail generation market, the motion said.
The partial settlement had provided for rate reductions for all
customers, starting in September 1998. The initial reduction was to be 7 percent
for 28 months if there were `legal impediments' to PECO's plan to refinance its
stranded costs at lower interest rates through issuance of asset securitization
bonds. Legal impediments do exist, the motion says, in the form of court
challenges. Without legal impediments, rates would have been reduced 10 percent
under the partial settlement.
Under today's ruling, one-third of PECO's customers can start choosing a
supplier on Jan. 1, 1999; another third on the following day (Jan. 2, 1999); and
the remainder on Jan. 1, 2000. The commission directed PECO to open enrollment
on March 1, 1998, for customer who wish to choose their generation supplier.
Today's decision allows PECO to collect $5.024 billion in stranded
costs over 8-1/2 years, starting in 1999, through a competitive transition
charge, which will be adjusted yearly to ensure that PECO receives neither more
nor less than that amount. The partial settlement would have set a competitive
transition charge designed to recover $5.461 billion over 10 years if the
utility's load remained constant. With increased sales and without provision for
an annual true-up, PECO would recover far more than the $5.461 billion, the
motion says. It adds that the annual true-up is required by the Electricity
Generation Customer Choice and Competition Act. The 1-1/2 year reduction in the
collection period will result in about $1 billion in savings to customers.
Stranded costs are generation-related and other costs, incurred to
provide service in a regulated environment, which may not be recoverable in a
competitive marketplace.
Starting in 1999, PECO 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, PECO and other electric distribution utilities will continue to
provide transmission and distribution services at PUC-regulated rates.
Also in today's action, the commission requires PECO to increase
enrollment in its Customer Assistance Program, now 40,000, to at least 80,000
with no limit on the number who may enroll. The partial settlement established a
maximum of 100,000 enrollees. PECO also is directed to spend $5.6 million -
twice the amount specified in the partial settlement -- on weatherization
programs for low-income customers.
The commission also sets specific guidelines, absent in the settlement,
designed to maximize the effectiveness of PECO's $25 million consumer education
program, especially in reaching those customers who will need the most support
in order to take advantage of customer choice.
PECO must file a plan within 30 days incorporating the
commission-ordered changes.
The utility filed its initial restructuring plan last April 1. The partial
settlement was filed on Aug. 27, and Enron's proposal was filed Oct. 7.
Administrative Law Judges Marlane R. Chestnut and Charles E. Rainey, Jr.
Held public input hearings in Philadelphia and Media and six days of technical
hearings in Philadelphia. Thirty-five parties interevened in the case.
PECO furnishes electric service to 1.5 million customers in Philadelphia
and the counties of Bucks, Chester, Delaware, Montgomery and York."
The Company is currently evaluating the PUC's decision.
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SIGNATURES
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 hereunto duly authorized.
PECO ENERGY COMPANY
\s\ Michael J. Egan
-----------------------
Senior Vice President-
Finance
December 11, 1997
