GPU unit agrees to lawsuit settlement.

MORRISTOWN, N.J.--(BUSINESS WIRE)--May 22, 1997--Jersey Central Power & Light Co. (JCP&L), now doing business as GPU Energy, announced today that a settlement had been reached in the lawsuit brought by Nestle Beverage Co. against it and Freehold Cogeneration Associates L.P. (FCA).

As a result of the settlement, JCP&L, FCA and Nestle have agreed to terminate and dismiss all pending litigation and other proceedings between them. The parties have agreed to keep other terms confidential.

The lawsuit stemmed from FCA's decision to accept JCP&L's April 1996 agreement to buy out the power purchase agreement for the proposed Freehold cogeneration plant. Nestle had filed suit in the New Jersey Superior Court in October 1996, seeking damages of at least $75 million alleging the FCA breached a steam sales agreement and $412 million for unlawful interference by JCP&L with the agreement together with an unspecified amount of punitive damages.

In the April 1996 buy out, JCP&L agreed to pay FCA $125 million over a three-year period, to terminate a 1992 agreement for the purchase of 100 megawatts of power from a proposed 110 megawatt gas-fired project in Monmouth County. The contract with FCA would have required JCP&L customers to pay more than $1 billion in excess future costs over other available sources of energy.

"The agreement to cancel the contract with Freehold Cogeneration Associates was clearly in our customers' best interest," said Charles A. Mascari, vice president, power services. "In fact, our decision was consistent with subsequent decisions rendered by the New Jersey Board of Public Utilities (BPU) in the Energy Master Plan which call for the mitigation of over market priced non-utility generation contracts. The settlement with Nestle is another step in finalizing the Freehold agreement for the benefit of our customers."

In April 1997, the BPU approved on an interim basis, subject to refund, JCP&L's request to recover the FCA buyout costs in rates. Further proceedings on this matter have been ordered by the BPU but have not yet been scheduled. "With the Nestle disputes resolved, we are confident that the BPU will promptly complete its review and grant final approval for the buyout cost recovery," Mascari said.

GPU Energy, which serves nearly 2 million customers in New Jersey and Pennsylvania, is the trade name for the three GPU Inc. operating subsidiaries, JCP&L, Metropolitan Edison and Pennsylvania Electric.

CONTACT: GPU Energy Inc., Morristown

Ron Morano, 201/644-4297