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GPU Seeks $1 Billion in Stranded Costs

Fortnightly Magazine - August 1997

GPU Energy has filed electric restructuring proposals for its subsidiaries with the Pennsylvania Public Utilities Commission, calling for stranded cost recovery through a customer charge.

The filing for subsidiaries Metropolitan Edison Co. and Pennsylvania Electric Co. estimates stranded costs of $641 million and $372 million, respectively. The utilities want to recover stranded costs through implementation of a competitive transition charge paid by all customers using GPU Energy's distribution system. The utilities have asked to recover in rates the costs of previously approved contracts with nonutility generators. GPU expects to offset part of those costs through issuance of transition bonds. It will ask the PUC later this year for authority to securitize part of its stranded costs.

The GPU companies will allow residential customers to volunteer on a first-come-first-served basis by mail, phone or World Wide Web, for the first two stages of enrollment. The initial enrollment period will run from July 1 to Oct. 1, 1998. Commercial and industrial customers with hourly metering may volunteer, subscribing up to one-third of their load each year of the phase-in. Those without hourly metering may pay to have it installed, or have all their requirements below a certain demand level met by an alternative supplier.

GPU Generation anticipates closing Penelec's Warren and Seward generating stations by 2000, and Met Ed's Portland and Titus stations by 2004. Pennsylvania's new competition law allows one-third of all customers to choose electric suppliers on Jan. 1, 1999, the next third by Jan. 1, 2000, and the last third by Jan. 1, 2001. (em LB


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