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 12, 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
<PAGE>
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) rendered
a decision. A summary of that decision follows:
PUC Restructuring Vote
December 12, 1997
On Thursday, December 11, 1997, the Pennsylvania Public Utility Commission (PUC)
approved a restructuring plan for PECO Energy. Rejecting both the Enron Plan and
the Partial Settlement, the PUC approved a motion by a 3-2 vote in favor of a
PUC-designed alternative plan. The PUC has directed the Office of Special
Assistants to prepare an appropriate order consistent with the motion.
PECO is reviewing the terms of the PUC motion and making an assessment of its
financial and operational impact, as well as an assessment of any legal actions
the Company may take. (A thirty-day appeal window begins after the order is
entered.) Under the terms of the motion, PECO must submit a compliance filing
with the PUC within 20 days following the entry of the written order.
The following is a summary of the major elements of the restructuring plan
approved by the PUC:
- - PECO may collect $5.024 billion in stranded costs over an eight and one-half
year transition period beginning January 1, 1999 and ending June 30, 2007.
- - Rates are capped at the 1996 system average of 9.95 cents per kWh.
- - Beginning on January 1, 1999, PECO will unbundle rates into three components:
- a transmission and distribution rate, lowered from the 3.11 cents
per kWh established in the Partial Settlement, of approximately 2.93 cents per
kWh.
- a levelized competitive transition charge (CTC) designed to
collect the $5.024 billion of stranded costs over eight and one-half years. The
CTC rates will not be set until PECO's compliance filing is approved. In setting
the rates, the PUC will assume a 0.8 percent annual sales growth rate and a cost
of capital of 7.47 percent on the unamortized balance. Revenue collected through
the CTC will be reconciled annually.
- an estimated "shopping credit" set at approximately 4.46 cents per
kWh on a system-wide basis. The actual credit will be determined in the
Company's compliance filing.
- - The PUC estimates that a customer who chooses to "shop" can save as much as 15
percent, depending on actual market prices.
- - Customers who elect not to choose an alternative energy supplier will have the
option to remain on bundled rates through the end of the transition period.
- - Customer choice will be phased in over a two-year period. One-third of PECO's
customers will be eligible to choose on January 1, 1999, with an additional
one-third gaining access on January 2, 1999. The final third will be eligible to
choose their power supplier on January 2, 2000. Open enrollment for the first
two-thirds will begin on March 1, 1998.
- - The PUC did not issue a qualified rate order authorizing PECO to issue
transition bonds in excess of the $1.1 billion approved under the PUC's May 22,
1997 order. In its motion, the PUC stated that PECO may file a request for
additional authorization.
- - With regard to the transfer of PECO's generation assets to a separate entity,
the PUC stated that PECO must submit a separate filing requesting such a
transfer.
<PAGE>
Stranded Cost Recovery
Below is a summary of stranded cost recovery, as requested by PECO in its July
18, 1997 rebuttal filing; as provided for in the settlement agreement; and as
reflected in the Pennsylvania PUC's motion. These numbers are based on PECO's
preliminary assessment of the motion and may change pending clarification or
correction.
<TABLE>
<CAPTION>
July 18, 1997 August 27, 1997 PA PUC
Rebuttal Filing Settlement Motion
(000) (000) (000)
<S> <C> <C> <C>
Generation Plant $ 6,787,296 $ 6,787,296 $ 6,639,000
Market Value (2,303,000) (2,303,000) (3,960,000)
------------ ------------- ------------
Stranded Generation
Assets 4,484,296 4,484,296 2,679,000
Regulatory Assets 2,589,057 2,589,057 2,219,600 (1)
Regulatory Liabilities (5,319) (5,319) (368,208) (2)
Nuclear Decommissioning 233,827 233,827 0 (3)
Fossil Decommissioning 126,605 126,605 0
Other Transition Costs 32,661 32,661 33,000
T&D Transfer (4) 0 0 461,000
Disallowance (5) 0 (2,000,000) 0
------------ ------------- -----------
Total $ 7,461,127 $ 5,461,127 $ 5,024,392
<FN>
(1) Subject to correction. PECO's initial review of the motion indicates
recovery of $2,237,000.
(2) Represents pension fund adjustment and SFAS 106
Trust Earnings.
(3) No recovery of unfunded portion; ongoing expense will be funded through a
separate surcharge.
(4) Transfer of previously classified T&D expense to generation-related expense,
effectively reducing the market value of generation plant.
(5) No explicit disallowance by PUC.
</FN>
</TABLE>
<TABLE>
Regulatory Asset Detail
<CAPTION>
Rebuttal Filing PAPUC
& Settlement Motion
Description (000) (000)
- ------------------------------------------------------------------------------------------------------
<S>
Carrying charges on 50 percent of Limerick <C> <C>
common plant not included in ratebase $ 175,812 $ 158,300
Carrying charges on 50 percent of common
plant of Peach Bottom, Salem and Eddystone 17,400 17,400
Unamortized loss on reacquired debt 158,311 158,311
Nuclear design basis documentation 28,852 0
Limerick "early window" deferred costs 86,286 65,446
Deferred fuel costs 311,468 96,162
Deferred SFAS 106 costs 100,580 20,394
Deferred SFAS 109 tax expense 1,687,069 1,687,000
Other/Compensated Absences 23,279 16,587
------------ ------------
Total Regulatory Assets $ 2,589,057 $ 2,219,600
</TABLE>
The Company will continue to evaluate the PUC's motion.
* * * *
<PAGE>
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\ J. Barry Mitchell
-----------------------
Vice President-Finance
and Treasurer
December 12, 1997
