Press Release

JOINT STATEMENT OF CHAIRMAN JOHN M. QUAIN
AND COMMISSIONER AARON WILSON, JR.

   Today, the Commission tentatively approves the settlement proposed by numerous parties in Met-Ed’s and Penelec’s restructuring proceedings who represent diverse and varied interest groups, including residential consumers, small and large commercial and industrial consumers, marketers and alternative suppliers, non-utility generation projects and the Companies. Under the proposed settlement, all Met-Ed customers will receive a guaranteed 2.5% rate reduction and all Penelec customers will receive a guaranteed 3.0% rate reduction, effective January 1, 1999 through December 31, 1999. In addition to these guaranteed rate decreases, Met-Ed customers will receive a system-average shopping credit of 4.350 cents per KWH on January 1, 1999 and Penelec customers will receive a system-average shopping credit of 4.404 cents per KWH on January 1, 1999. Customers that elect to shop for generation will receive total rate reductions in 1999 equal to the 2.5% or 3.0% decreases, plus any savings produced by the difference between their generation purchase price and their shopping credit. Given the level of the shopping credits included in the proposed settlement, as well as other specific components of the proposed settlement, the parties to the settlement expect the development of a vibrant competitive market with many alternative electric generation suppliers.

    In addition to the guaranteed rate decreases for 1999 and the substantial shopping credits that will enable consumers to achieve even greater savings, the proposed settlement provides several other significant benefits:

• all customers will have the opportunity to choose an alternative supplier on January 1, 1999;

• the Companies will complete the divestiture of their generation assets and will use the net proceeds of those efforts to offset stranded costs that they expect to incur in the transition to a competitive generation market;

• the Companies will be assured of full recovery of their contractual obligations associated with non-utility generation projects;

• transmission and distribution rates will be capped for an additional three and one-half years (to December 31, 2004);

• the generation rate caps will be extended for an additional five years (to December 31, 2010);

• universal service programs will be expanded, and a sustainable energy fund will be established to promote the development and use of renewable energy and clean energy technologies, energy conservation and efficiency which will benefit the environment;

• consumers will have the opportunity to receive metering and billing services from competitive suppliers;

• a competitive market for provider of last resort service will be established so that non-shopping customers also have the opportunity to realize bill savings;

• the reliability of the Companies’ transmission and distribution systems will continue to be maintained; and

• substantial litigation and its associated costs and uncertainties will be avoided.

    Overall, we are tentatively satisfied that the interests of the various parties have been fairly balanced so that the Companies are assured full recovery of their stranded costs while consumers receive guaranteed rate reductions and other necessary safeguards, as well as the opportunity to achieve even greater savings in a vibrant competitive generation market. The proposed settlement, by resolving conflicting issues in a practical and enforceable manner, represents an important step in the advancement of economies in the areas served by Met-Ed and Penelec and is another historic breakthrough in the creation of retail electric competition in the Commonwealth.

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DATE                 JOHN M. QUAIN, CH

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