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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report March 14, 1996
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Exact name of registrant as specified in its
charter)
New Jersey 1-9120 22-2625848
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
80 Park Plaza, P. O. Box 1171
Newark, New Jersey 07101-1171
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-430-7000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Exact name of registrant as specified in its charter)
New Jersey 1-973 22-1212800
(State or other Commission (I.R.S.
Employer
jurisdiction of File Number) Identification
No.)
incorporation)
80 Park Plaza, P. O. Box 570
Newark, New Jersey 07101-0570
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-430-7000
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Item 5. Other Events.
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The following information updates certain matters previously
reported to the Securities and Exchange Commission under
Item 1 - Business and Item 3 - Legal Proceedings of Part I
of the Annual Report on Form 10-K for 1995 of Public Service
Electric and Gas Company (PSE&G) and its parent, Public
Service Enterprise Group Incorporated (Enterprise).
PSE&G - Nuclear Operations - Hope Creek/Nuclear Performance
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Standard
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Hope Creek Generating Station has been undergoing a
refueling and maintenance outage since November 11, 1995 and
is currently scheduled to return to service later this
month. Based upon current operating projections, performance
for 1996 for PSE&G's nuclear units under the New Jersey
Board of Public Utilities' (BPU) Nuclear Performance
Standard (NPS) is estimated to be 55%, which would result in
an NPS penalty for 1996 of approximately $13 million. (See
Rate Matters/ Regulation.)
Rate Matters/Regulation
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The BPU has initiated an investigation regarding Salem 1(In
the Matter of the Board's Investigation of Public Service
Electric and Gas Company into the Continuing Outage of the
Salem Nuclear Generating Station, Docket Nos. ES96030158 and
ES96030159). The BPU issued an Investigation Order dated
March 14, 1996 making PSE&G's base rates, with respect to
Salem 1, interim and subject to refund, effective
immediately, and requiring hearings to be held to a)
investigate the expected restart date of Salem 2; b)
precisely quantify that portion of PSE&G's base rates which
are attributable to each Salem unit; c) determine if Salem
2's base rates should also be made interim and subject to
refund; and d) determine if each Salem unit remains "used
and useful" for rate making purposes.
Pursuant to the Investigation Order, PSE&G has until April
4, 1996 to provide its comments with respect to the Order
and to submit the required data to the BPU to enable it to
quantify that portion of base rates which are attributable
to each Salem unit. Dates for follow-up hearings have not
yet been scheduled.
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Rate Matters/Regulation (continued)
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Neither Enterprise nor PSE&G can predict the ultimate
outcome of this proceeding. Removal of Salem 1 and Salem 2
from base rates could have a material adverse effect on
PSE&G's financial position, results of operations and net
cash flows. PSE&G will oppose the issuance of any Order to
remove either Salem unit from base rates and believes that
in the event of a unit's removal from base rates, all of the
replacement power costs attributable to such units would be
recoverable through its Electric Levelized Energy Adjustment
Clause(LEAC) and that the estimated $13 million NPS penalty
for 1996 would be substantially reduced.
In January 1996, PSE&G filed its Partners in Power
alternative rate plan (Alternative Rate Plan) with the BPU
which plan proposes, among other things, an indexed, or
price capped, approach to replace existing rate base/rate of
return regulation, including the discontinuance of the LEAC
and the NPS. PSE&G cannot predict what impact, if any, this
Salem proceeding will have on its proposed Alternative Rate
Plan.
Legal Proceedings
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As previously reported, Enterprise and certain of its
directors and officers were served with a civil complaint in
a shareholder derivative action seeking to recover damages
for alleged losses purportedly arising out of PSE&G's
operation of Salem and Hope Creek. Enterprise has been made
aware of additional complaints which have not yet been
served, containing substantially the same allegations,
naming it, PSE&G and certain officers as defendants and
seeking unspecified damages.(Dr. Steven Fink and Dr. David
Friedman, P.C. Profit Sharing Plan, derivatively, et al. v.
Lawrence R. Codey, et al., Superior Court of New Jersey,
Chancery Division, Essex County, Docket No. C-65-96). (A.
Harold Datz Pension and Profit Sharing Plan derivatively, et
al. v. Lawrence R. Codey, et al., Superior Court of New
Jersey, Chancery Division, Essex County, Docket No. C-68-96).
Enterprise and PSE&G are reviewing these matters.
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Legal Proceedings (continued)
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On February 27, 1996, PSE&G and the three other co-owners of
Salem filed suit in the United States District Court for the
District of New Jersey against Westinghouse Electric
Corporation (Westinghouse) (Public Service Electric & Gas
Co., et al v. Westinghouse Electric Corporation, Civil
Action No. CB-96-925) seeking damages to recover the cost of
replacing the steam generators at Salem Units 1 and 2. The
suit alleges fraud and breach of contract by Westinghouse in
the sale, installation and maintenance of the generators.
PSE&G has been advised that PECO Energy Company and Delmarva
Power and Light Company, two of the co-owners of Salem,
filed a lawsuit dated March 5, 1996 in the United States
District Court for the Eastern District of Pennsylvania
(PECO Energy Company and Delmarva Power and Light Company v.
Public Service Electric and Gas Co., Civil Action No. 96-CU7705).
This action alleges mismanagement by PSE&G in its
operation of Salem and seeks unspecified compensatory and
punitive damages. PSE&G has been further advised that
Atlantic Electric Company, the third Salem co-owner, filed a
suit based upon similar allegations seeking similar damages
in the New Jersey Superior Court, Law Division, Atlantic
County (Atlantic Electric Company v. Public Service Electric
& Gas Co., Docket No. L-773-96).
PSE&G believes it has operated Salem in accordance with the
requirements of the owners' agreement and applicable law.
PSE&G believes it has substantial and valid defenses and
will vigorously oppose both of these actions.
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SIGNATURE
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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 hereunto duly
authorized.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By R. EDWIN SELOVER
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R. Edwin Selover
Vice President and General Counsel
Public Service Enterprise Group Incorporated
Senior Vice President and General Counsel
Public Service Electric and Gas Company
Date: March 14, 1996
