NJ Board of Public Utilities approves GPU Energy global rate settlement.

MORRISTOWN, N.J.--(BUSINESS WIRE)--March 24, 1997--The New Jersey Board of Public Utilities (BPU) today approved GPU Energy's global rate settlement which includes a variety of rate-related items to reduce rates for New Jersey customers of GPU Energy and provide rate stability into the year 2000.

The agreement provides for a net rate decrease of approximately $5 million.

JCP&L, now doing business as GPU Energy, the staff of the BPU and the Ratepayer Advocate had agreed to the settlement last June, pending review by an Administrative Law Judge of GPU Energy's request to recover buyout costs for the Freehold non-utility generation project.

The agreement includes a freeze on base rates until the year 2000, a $12 million reduction in base rates and an approximate $7 million increase in the levelized energy adjustment clause (LEAC).

"We are pleased to have reached this agreement with the BPU," said GPU Energy president Dennis Baldassari. "The agreement which freezes rates until the year 2000 demonstrates the commitment of the BPU, the BPU staff, the Ratepayer Advocate and GPU Energy to mitigate potential stranded costs and provide rate stability to our customers.

"We believe the issues addressed in this settlement will help pave the way in the transition to the new competitive electricity markets recently outlined in the BPU's proposed findings and recommendations in Phase II of the New Jersey Energy Master Plan on the restructuring of the electric power industry in New Jersey."

One element of the settlement calls for GPU Energy to recover over a seven-year period, up to $135 million for the buyout of a 20-year power purchase agreement with Freehold Cogeneration Associates L.P. (FCA). The company entered into an agreement because the FCA contract would have required customers to pay more than $1 billion in excess future energy costs.

The BPU approved this recovery on an interim basis subject to further expeditious review of a possible conflict between the testimony submitted to the Administrative Law Judge during the proceeding and certain assertions being made by FCA in other proceedings regarding the financing for the project.

"While we certainly would have preferred that BPU not make the Freehold buyout recovery interim," Baldassari said, "we are confident that the BPU will quickly complete its review and grant final approval, assuring full recovery of the buyout costs."

The other principal elements of the rate settlement are:

-- A two-year recovery of $14 million in buyout costs for the

Crown/Vista non-utility generation project. GPU Energy will

write off the remaining $3 million.

-- A cap on GPU Energy's earnings at 12.2 percent. If earnings

exceed 12.2 percent, the surplus will be used to reduce base

rates and potential stranded costs.

-- A $17 million nuclear depreciation expense increase, combined

with a transmission and distribution, and general plant

depreciation decrease of $12 million.

-- An $11 million nuclear decommissioning expense increase,

effective Jan. 1, 1998.

-- A $13 million increase in the expense of certain employee

post-employment benefit costs, effective Jan. 1, 1998.

-- Resolution, for GPU Energy, of current generic proceedings

before the BPU regarding the collection of non-utility

generation capacity costs.

-- Current rate recovery of the depreciation of certain generating

plants, which will be retired in the near future, will continue

to be applied to the amortization of the unrecovered plant

balances.

-- A new structure for the collection of certain late payments,

and a separate new structure for the collection of certain

disconnect and reconnect fees.

-- An increase in the company's contribution to the Helping Hand

program for low-income and financially disadvantaged

customers.

-- No increase in the Levelized Energy Adjustment Clause (LEAC)

until the year 2000, unless there is an accumulated under

recovery of $40 million in costs includable in the LEAC.

CONTACT: GPU Energy

Ron Morano, 201/644-4297