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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 (Date of earliest event reported) June 15, 1998
PP&L Resources, Inc.
___________________________________________________________________________
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-11459 23-2758192
___________________________________________________________________________
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
No.)
PP&L, Inc.
___________________________________________________________________________
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-905 23-0959590
___________________________________________________________________________
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
No.)
TWO NORTH NINTH STREET, ALLENTOWN, PA. 18101-1179
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-774-5151
___________________________________________________________________________
(Former name or former address, if changed since last report.)
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5. Other Events
PUC Restructuring Proceeding
Reference is made to PP&L Resources, Inc.'s (PP&L
Resources') and PP&L, Inc.'s (PP&L's) Annual Reports to the SEC
on Form 10-K for the year ended December 31, 1997, regarding
PP&L's April 1, 1997 filing of its restructuring plan with the
Pennsylvania Public Utility Commission (PUC) pursuant to the
Pennsylvania Electricity Generation Customer Choice and
Competition Act (Customer Choice Act).
On June 15, 1998, the PUC entered its final order in PP&L's
restructuring proceeding (final order). The final order states
that PP&L can recover $2.864 billion (present value as of January
1, 1999) in stranded (or "transition") costs over 8-1/2 years --
i.e., through June 30, 2007. The final order also allows PP&L to
earn a pretax return of 10.86% on the unamortized balance of
these transition costs. However, the PUC also directed that each
year's recoverable competitive transition charge ("CTC") be
reduced by $70 million to reflect the annual savings associated
with a reduction in depreciation on certain property at the
Susquehanna Steam Electric Station. This adjustment results in a
reduction of revenues of approximately $295 million on a present
value basis as of January 1, 1999 over the transition period.
PP&L had requested permission to recover about $4 billion of its
$4.5 billion of estimated transition costs through 2005. Most of
the PUC's stranded cost disallowance was from PP&L's generation
claim; recovery of stranded costs associated with regulatory
assets and purchases from non-utility generators was essentially
allowed in full.
The transition costs will be recovered through the CTC. The
final order provides that, beginning on January 1, 1999, PP&L
will unbundle its retail electric rates to reflect separate
prices for the transmission and distribution charge, the CTC and
a "shopping credit." For 1999, the system average transmission
and distribution rate will be 1.70 cents per kWh and the system
average CTC will be 1.78 cents per kWh. The PUC subtracted from
PP&L's current rates the transmission and distribution rate and
the CTC. The residual component is a "shopping credit."
Applying this process, the PUC developed a PP&L system average
shopping credit for 1999 of 3.73 cents per kWh for customers who
choose to shop for electricity. These shopping credits vary
among customer rate classes and will increase over time to
reflect anticipated increases in the market price of electricity.
The final order determines that one-third of PP&L customers
will be able to choose their electricity supplier on January 1,
1999, one-third on January 2, 1999, and the remainder on January
2, 2000. PP&L is continuing to review and analyze the PUC final
order.
PP&L is considering a number of options to challenge the
final order, including petitioning the PUC to reconsider its
final order. PP&L also is considering an appeal to the
Pennsylvania Commonwealth Court and other challenges in state and
federal court. PP&L cannot predict the ultimate outcome of any
potential litigation.
PP&L Resources and PP&L are continuing to review and analyze
the final order and its impact on their respective financial
positions and operations. PP&L Resources and PP&L are also
conducting an overall assessment of their respective financial
positions in light of the final order to identify additional
measures to be taken to meet the challenges of the competitive
marketplace. Among other things, this assessment will include a
review of operating expenses, capital expenditures and the book
value of generating assets. However, as a result of this
assessment, it is likely that PP&L will have to take a
substantial write-off although the amount of the write-off has
not yet been determined. This assessment also will include an
examination of the appropriate level of PP&L Resources' common
stock dividend to determine the dividend payout ratio that allows
PP&L Resources to properly balance current returns to shareowners
through dividends with the opportunity for growth in shareowner
value through the investment of retained earnings. As a result
of this examination, PP&L Resources will likely reduce its common
stock dividend.
South Western Electricity plc (SWEB)
On June 18, 1998, PP&L Resources' subsidiary, PP&L Global,
acquired an additional ownership stake in SWEB, the regional
electricity company based in Bristol, England. PP&L Global,
which had owned 25 percent of SWEB since 1996, purchased an
additional 26 percent equity interest from its co-owner, Southern
Energy Inc., which is an affiliate of Southern Company.
The purchase price for the additional ownership was $170
million. PP&L Global, through subsidiaries, now owns 51 percent
of the equity interest and 49 percent of the voting interest in
SWEB. While Southern Energy will retain operating control of
SWEB, PP&L Global will be increasing its role in management and
on the board of directors.
PP&L Global subsidiaries and affiliates now serve more than
2 million electric distribution customers in the U.K., Chile and
El Salvador. In addition, PP&L Global owns interests in electric
generation facilities in Spain, Portugal, Bolivia and Peru.
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SIGNATURE
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 thereunto duly authorized.
PP&L RESOURCES, INC.
PP&L, INC.
By: ________/s/John R. Biggar_______
Senior Vice President-Financial
Date: June 23, 1998
