UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
April 15, 1999
(Date of earliest
event reported)
PECO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-1401 23-0970240
(State or other (Commission (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
The matters discussed in this Report include forward-looking statements. The
Company's current expectations, anticipated plans and estimates set forth in
these statements are dependent on numerous factors which may change, including
timing of plant restart, plant operating conditions, execution of a definitive
agreement and power market prices. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this Report.
On April 15, 1999, AmerGen Energy Company, LLC (AmerGen), the joint venture
between PECO Energy Company (the Company) and British Energy, Inc. (British
Energy), announced an interim agreement to purchase the Clinton Nuclear Power
Station (Clinton) from Illinois Power (IP), a subsidiary of Illinova
Corporation. In addition, the Company and IP have amended the January 15, 1998
Management Agreement, providing for the provision of certain management services
by the Company to IP in support of Clinton's outage recovery efforts and
operations.
Sale of Clinton Power Station
Pursuant to the execution of a Definitive Agreement and regulatory approvals, at
closing, AmerGen will pay IP $20.0 million for Clinton including all IP
equipment and nuclear fuel. Closing is anticipated by year-end 1999.
IP will provide sufficient funds to decommission Clinton at the expected end of
license life on the basis of the current decommissioning cost estimates. At
closing, IP will transfer to AmerGen its existing Clinton decommissioning fund,
expected to be approximately $95 million at the end of 1999, and beginning one
year after closing, IP will make six annual payments of $30 million toward
future decommissioning.
The parties prefer that IP transfer the decommissioning funds to AmerGen at
closing so that responsibility and ownership of the funds would be with the
owner of Clinton. This alternative may require changes to the current tax laws
and regulations relating to such funds or IRS rulings. The parties will work
together to bring about such changes and to obtain such rulings to accomplish
the transfer of the funds in the most efficient manner.
AmerGen and IP will also enter into a Power Purchase Agreement (PPA) providing
for IP's purchase of 75% of the energy produced at Clinton from closing through
December 31, 2004. AmerGen expects to sell the energy produced by Clinton in the
wholesale market beyond 2004.
The Definitive Agreement will contain provisions which make the closing subject
to a condition that Clinton has returned to service from its current outage
prior to January 1, 2000. Closing will also be subject to, among other things,
receipt of all necessary federal, state and local regulatory approvals.
AmerGen will recognize the unions which currently represent employees at Clinton
and will adopt pension and other employee benefit plans and arrangements for
Clinton employees which will provide substantially similar benefits to IP's
plans and programs in effect as of the date of closing.
Amended Management Agreement
Under the Amended Management Agreement, effective April 1, 1999, the Company
will be responsible for the payment of all direct operating and
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maintenance (O&M) costs and direct capital costs incurred by IP and allocable to
the operation of Clinton. Current estimates of these costs average $18 million
per month in 1999. IP will continue to pay indirect costs such as pension
benefits, payroll taxes and property taxes. Following restart of Clinton, and
through December 31, 1999, the Company will sell 80% of the output of Clinton to
IP under a PPA. The remaining output will be sold by the Company in the
wholesale market. Under a separate agreement with the Company, British Energy
has agreed to share 50% of the costs and revenues associated with the Amended
Management Agreement.
Based on Clinton's current restart schedule, the Company expects both the
Amended Management Agreement and the Clinton Purchase Agreement to be acretive
to earnings.
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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\ Jean H. Gibson
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Vice President & Controller
April 15, 1999
