ML20003B518

Petition to Implement Possible Early Determination of Complaint Against Temporary Rates as Contemplated by Administrative Law Judge Order of 801016 & Certain Related Matters

ML20003B518
Person / Time
Site:	Crane
Issue date:	01/27/1981
From:	Smith F METROPOLITAN EDISON CO.
To:	PENNSYLVANIA, COMMONWEALTH OF
Shared Package
ML20003B456	List: ML20003B455 ML20003B459 ML20003B464 ML20003B466 ML20003B469 ML20003B471 ML20003B472 ML20003B473 ML20003B474 ML20003B475 ML20003B511 ML20003B516 ML20003B518 ML20003B525 ML20003B529 ML20003B533 ML20003B535 ML20003B538 ML20003B539 ML20003B542 ML20003B544 ML20003B546 ML20003B550 ML20003B552 ML20003B554 ML20003B557
References
NUDOCS 8102120321
Download: ML20003B518 (10)

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Li BEFORE THE PENUSYLVidIIA PUBLIC UTILITY COMMISSION Pennsylvania Public Utility Commission et al.

Docket No. I-79040308 v.

Docket No. C-80072105 Metropolitan Edison Company and Pennsylvania Electric Company Docket No. R-80051196 PETITION OF METROFDLITAN EDISON COMPANY TO IMPLEMENT POSSIBLE EARLY DETERMINATI0l! 0F COMPLAINT AGAINST TEMPO?ARY RATES (AS CON-TEMPLATED BY ADMI::STRATIVE LAW JUDGE'S ORDER OF OCTOBER 16, 1953) AND CERTAIN RELATED MATTERS TO THE PE:INSYLVANIA PUBLIC UTILITY COMMISSION:

Metropolitan Edisc.- Company (" Met-Ed") submits this Petition for the purpose of implementing the possible early determination of the esmplaint it filed at Docket No.

C-80072105 against the tempsrary rates prescribed for it by the Order of your Commission (the " Commission" or "PaPUC") dated May 23, 1980 at Docket No. 79040308 and certain related matters, and in support thereof respectfully reprocents that:

1.

The rates of Feritioner now in effect were i

prescribed by the Commission in its Order dated May 23, 1980 at Docket No. I-79040308 as cmporary rates under S1310 of the Public Utility Code, and a tariff reflecting the provisions of that Order was filed by Fe:itioner in accordance with that Order.

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. 2.

As noted in that Order, the Commission found that it could not then determine the just and reasonable base rates to be charged by Petitioner.

In prescribing the level of such temporary rates, the Commission also observed in.that Order (at page 15)

"If Respondents file a complaint against the temporary rates set by this order and subsequently the Commission determines that the temporary rates were set unreasonably low, an adjustment can be granted through restatement of Respondents' balances of deferred energy costs."

3.

Met-Ed filed with the Commission on July 29, 1980, a complaint (at Docket No. C-80072105) against the temporary rates fixed for it by the Commission's May 23, 1980 Order.

4.

On July 29, 1980, Met-Ed filed with the Com-mission its Tariff No. 44 which proposed a general rate increase, pursuant to 31308(d) of.the Public Utility Code.

Such tariff was suspended by the operation of law and the Commission instituted an investigation with respect to it at Docket No. R-80051196.

Met-Ed also filed with the Com-mission a petition for extraordinary rate relief pursuant to 31308(e), which was denied by the Commission by its Order, entered August 28, 1980 in Docket No. P-80070235.

Met-Ed has appealed that Order to the Pennsylvania Common-wealth Court.

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. 5.

Under date of October 16, 1980, Administrative Law Judge Joseph P. Matuschak entered a decision in the above proceedings in which he suggested that all parties focus upon the complaint against temporary rates in the early hearings in the above proceedings in order to enable an early disposi-tion of that controversy to be made.

6.

This Petition and the proposals made herein attempt to respond to the suggestion that an early disposi-tion of the complaint (together with certain related matters) be implemented.

7.

Under the temporary rates prescribed by the Commission's May 23, 1980 Order, Met-Ed has no equity return, is prohibited by its indentures from issuing any funded debt securities and by its corporate charter from issuing any preferred stock, and has only a limited and declining amount of bank credit.

In the light 'cxf this situation, Met-Ed filed with the Commission a letter dated September 12, 1980, describing the proposed reduction in expenditures which it intended to make in order to limit its expenditures to the funds available to it.

Such pro-posed reductions were also the subject of testimony at a prehearing conference held on September 22, 1980 in Dochet No. R-80051196.

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-4 8.

This Petition requests the modification, pursuant to 01310 of the Public Utility Code, of the portion of the Commission's May 23, 1980 Order prescribing Met-Ed temporary rates to the extent and in the manner hereinafter set forth.

9.

Met-Ed requests that modified base rates-be established, in response to the complaint and this Peti-tion, to provide for an increase in Met-Ed's annual revenues (net of applicable revenue taxes) of $25 million, and-that such increase be applied as a uniform charge to each KWH1off sales subject to the jurisdiction.of'the Commission. -Such increase recognizes only the costs and return requiremen'ts associated with the investment of Met-Ed in facilities other than the Three Mile Island generating station:("TMI") and makes no provision for the-costs or return associated with TMI.

Based'on the sales of 7,517,166 MWH-subject to^

PaPUC jurisdiction during the twelve months ended August 31, 1980, and-after. allowing for' revenue taxes at an effective i

rate of 4.5%, the appropriate factor to;be applied to eachL KWH ofl sales'would be-$0.003482.

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1CL If-thisfPetition~is granted, Petitioner pro-poses to' account for.such increased' rate ~ allowance, consistent L-f-

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. with the Commission's Order c May 23, 1980, for the period c

between June 1, 1980 and the effective date of the modified base rates prescribed in response to the complaint and this Petition, by restating the deferred energy balances (i.e. by charging balance sheet Account 166 - Miscellaneous Deferred Debits - deferred energy costs, and crediting operating expenses -

other power supply expense, Account 557 -

Other Expenses) by an amount representing che difference between the amounts collected under the temporary rates now in effect and those which would be collected pursuant to the modified base rates prescribed pursuant to this Petition, for service rendered from June 1, 1980 to the effective date of the modified base rates proposed to be prescribed in response to this Petition. Such difference in amount would be determined by applying the uniform charge described in paragraph 9 to each KWH of sales subject to the jurisdiction of the Commission for sarvice rendered from June 1, 1980 to the effective date of such modified base rates.

(Collection of such restated deferred energy would be accomplished by continuing the previously established surcharge on each KWH of sales subject to this Commission's jurisdiction for a sufficient period of time to accomplish such collection.)

The r21ated income tax effects of restating the deferred energy balances would be accounted for by charging operating A

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, expense Account 410.1 - Provisio'n for Deferred Income Taxes, and crediting balance sheet Account 283 - Accumulated Deferred Income Taxes - Other, with amounts representing the associated deferred income tax effects of such restatement of deferred energy balances.

By allowing this restatement of the deferred energy balance, Met-Ed expects that the credit available to Met-Ed under the revolving credit agree-ment, as expressed in the banks' letter of Septamber 5, will be increased above the amounts otherwise available; the amount of such expected increase in credit will depend hpon the effective date of the modified temporary rates.

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11.

If this Petition is granted, Petitioner will take the following actions:

(a)

Met-Ed will withdraw its. complaint at C-80072105 against the temporary rates prescribed at I-79040308.

(b)

Met-Ed will withdraw its appeal from the Commission's Order, dated August 28, 1980', at

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Docket No. R-80051196.

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(c)

Met-Ed will restore the activities described i

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as items 12 to 14 inclusive on Attachment 5 to Met-Ed's t

a letter to the Commission dated-September 12, 1980.

These items are directly related to the construction L

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. and operation of Met-Ed's transmission and distribution system.

Met-Ed will also withdraw its request for.

approval of a new tariff rider which would have prioritized new customer connections.

(d)

Met-Ed will continue to take all reasonable actions to keep its cash expenditures within the limits.

of available resources and credit.

Consistent with such undertaking, Met-Ed will remain preparedfto implement.

such reductions.in' service,' maintenance, operations,

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l employees or inventory levels as it may deem necessary to avoid default under its applicable indenture, charter or credit. provisions and maintain Met-Ed'sl financial j

stability.

In line with such commitments, Met-Edlwill not declare any dividend on its commen stock throughout F

u the remainder of.1980 and 1981.

12.

Byr an Addendum - to - its ' Preitearing Statement and Order, adopted September 18,.i980.inLDocket No.'R-80051196, the Commission directed Met-Ed and the Commission's Trial Staff to address the issue of the continued booking of annual depreciation expense for TMI Unit's Nos. l'and 2 and its effect on total operating' income..

ThatfAddendum referred to-the-possible classification-of.TMI-1 and TMI-2."as1plantLheld for future use, or another classification which might'not.

require depreciation expense-to'be' booked' currently."

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tioner suggests that, if this course is to be adopted, it-would be appropriate to focus initially on TMI-1.

Petitioner believes that it would be-feasible to adopt this course for TMI-l if the Commission would (a)

Direct Petitioner to transfer its:50%

interest in TMI-1 to plant. held.for future use effective as of June 1, 1980 (the effective date of the temporary rates prescribed by the Commis-sion's Order adopted May 23, 1980) and to cease-

accruing depreciation on TMI-1 effective as.of that'date, (b)

Consistent with such directive, give Peti-

.tioner assurance that.such cessation ~is consistent with.

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a future opportunity of Petitioner to recover its. net-investment in that facility when'it has=been returned

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to' rate. base and is, therefore, appropriate and-will be accepted by the Comission for its accounting and-ratemaking purposes,

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(c): State'that, upon the resumption 1of genera--

tion by TMI-1 andlits. prompt 1 recognition:as a componentL b

of rate basc<in rates' subject to.;the' jurisdiction:of t.t:

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-the-Commission, Petitioner',sfdepreciation reserve requirement applicable. to its interest :in 'TMI-l' for?

ratemaking purposes shall1not exceed the amountLof.

.the-reserve requirement applicable.to thattinterest

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at May 31, 1980, adjusted for retirements in the interim between May 31, 1980 and the date it is so recognized in rate base, and

.(d)

Direct Petitioner to' defer and accumulate-in a separate account, all capital expenditures incurred since March 31, 1979, and all non-capital expenditures incurred since May 31, 1980, in con-nection with modifications to.TMI-1 which are both-(i) necessary to comply-with NRC requirements and (ii) not associated with the clean-up-. activities arising.as a result of the TMI-2 accident, stating-that such accounting for these costs is appropriate and will be recognized by the Commission.for its

. accounting and ratemeling purposes beginning with-TMI-l's recognition in rate-base.

13.

The granting of this Petition would not

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increase the.

stal level of revenues sought by Petitioner in-Docket No. R

%1196, but would correspondingly; reduce the-increase in rc

.res sought in that docket.

. Petitioner recognizes that the granting-of this Petition-wouldLnot' be determinative.of anyrissues'now or hereafter_ presented in that docket, all oflwhich would be reserved?for disposition t

in that docket.

Likewise, the granting of this! Petition I

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. chall in no way be construed as modifying the positions of the Commission as set forth in its orders dated September 18 and 26, 1980 in Docket No. R-80051196, or of Met-Ed in the appeal taken by it from the first of those orders.

WHEREFORE, Met-Ed prays that an early determina-tion be made, in the manner suggested in the foregoing peti-tion, of the complaint filed by it at Docket No. C-80072105.

METROPOLITAN EDISON COMPANY

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Sen r Tice President COMMONWEALTH OF PENNSYLVANIA

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COUNTY OF BERKS

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F. J.

SMITH, being duly sworn according to 7.aw, deposes and says that he is a Senior Vice President of Metropolitan Edison Company; that he is authorized to and does make this affidavit for it; and that the facts set forth above are true and correct to the best of his knowl-edge, information and belief.

wA Sworn to and subscribed before me this 27th day of October, 1980.

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