Press Release

    Harrisburg, Pa. ¾ The Public Utility Commission (PUC) today denied a reconsideration request by Pennsylvania Power & Light Company (PP&L) to increase the amount of stranded costs it can recover from $2.86 billion to approximately $4 billion. In its original restructuring plan filed in April 1997, the utility had requested $4.04 billion in stranded cost recovery.

    "The [petition] merely reiterates arguments raised and already decided," said PUC Chairman John Quain. "These issues have been exhaustively litigated in the course of the restructuring proceeding...It is apparent that any further delay of this proceeding will be adverse to the public interest and would impede a smooth and orderly transition to electric competition."

    The PUC today also approved a minor adjustment in the calculation of PP&L’s shopping credit, which decreases the shopping credit from its original 3.73 cents per kilowatt-hour (kWh) to 3.72 cents per kWh beginning in 1999. Shopping credits will vary from one rate class to another and will increase over time to match anticipated increases in the market price of generation. Assuming the market price in eastern Pennsylvania is 3 cents, the PP&L plan will enable customers to reduce bills in 1999 by about 10 percent.

    PP&L must comply with the PUC’s June 4 restructuring order by July 15. The utility filed its petition for reconsideration on June 26.

    The restructuring plan allows PP&L to collect $2.86 billion in stranded costs over eight and one-half years, starting in January 1999, through a competitive transition charge. Stranded costs are those costs incurred under a regulated market which may not be recoverable in a competitive market. The Electricity Generation Customer Choice and Competition Act of 1996 allows utilities to collect stranded costs that the PUC finds to be just and reasonable.

    The PUC directed that one-third of PP&L customers will be able to buy power from the supplier of their choice on Jan. 1, 1999, another third on Jan. 2, 1999, and the remainder on Jan. 2, 2000.

    Starting in 1999, PP&L will unbundle its rates to reflect separate prices for the generation charge, the competitive transition charge, and transmission and distribution charges. While generation will be open to competition, PP&L will continue to provide transmission and distribution services to its customers at PUC-regulated rates.

    PP&L filed its initial restructuring plan on April 1, 1997. Administrative Law Judge George Kashi held 13 public input hearings throughout PP&L’s service territory. Kashi issued a recommended decision on April 7, 1998. The Allentown-based PP&L serves 1.2 million customers in eastern and central Pennsylvania.

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