Press Release

    Harrisburg, Pa. ¾ Calling the restructuring settlement talks with Pennsylvania Power & Light (PP&L) fair-minded and well-intentioned, the Pennsylvania Public Utility Commission (PUC) today voted 5-0 to accept the agreement reached earlier this month.

    "We thank all of the parties involved in this settlement for coming to the negotiating table with fair and reasonable expectations," said PUC Chairman John Quain. "PP&L, as well as PECO in its case, have acted in the best interest of their shareholders, customers and the community at large. These two companies and the other participants realize that a negotiated settlement is in the best interest of all Pennsylvanians."

    Under the settlement agreement reached August 12, PP&L customers will receive a guaranteed 4 percent rate cut in 1999, regardless of whether they participate in shopping for a new generation supplier. Customers will also receive an increased "price to compare" figure. That figure was increased from 3.72 cents per kilowatt-hour (kWh) to 3.81 cents per kWh. Customers will save additional money beyond the guaranteed rate cut when they purchase electricity for less than 3.81 cents per kWh.

    The Allentown utility, in turn, will be able to recover $2.97 billion in stranded costs over 11 years. It was originally awarded $2.86 billion over eight and one-half years. It will also be allowed to refinance approximately $3 billion of power plant debt, with 75 percent of any savings being passed through to customers. With today’s PUC approval, PP&L agrees to withdraw all legal challenges to the case.

    Parties that have signed off on the settlement include the International Brotherhood of Electrical Workers; Mid-Atlantic Power Supply Association, representing generation suppliers; rural electric cooperatives; Office of Consumer Advocate; Office of Small Business Advocate; and environmentalists.

Provisions of the settlement include:

• Allowing two-thirds of PP&L customers to shop for power as of January 2, 1999.

• Extending the cap on transmission and distribution rates through December 31, 2004 ? three and a half years beyond the statutory requirement.

• Extending generation rate caps until December 31, 2009, or four years beyond what is required by law. This is important for customers who don’t shop for power.

• An option for customers to choose another licensed supplier to provide metering and billing services.

• Establishing a $3.2 million per year fund for the development and use of renewable energy and clean energy technologies.

• $16 million per year in assistance and energy conservation programs for low-income customers.

• Competitive bidding beginning in 2002 for the right to serve 20 percent of all PP&L residential customers who choose not to shop for electricity.

• A requirement that PP&L transfer its retail marketing function to a separate, affiliated corporation.

    PUC Chairman John Quain invited PP&L to participate in settlement talks on July 10 after the utility sued the PUC in Commonwealth Court and federal court over the amount of stranded costs it would be allowed to recover. The utility originally sought to collect $4.04 billion in stranded costs. On July 9, the PUC denied PP&L’s reconsideration request to increases the amount of stranded cost recovery to $4 billion.

    For recent news releases, or more information about the PUC, visit our Internet home page: http://puc.paonline.com. Additional information on electric competition can be found at www.electrichoice.com or by calling 888-PUC-FACT.

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