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PECO FILES FOR 1.5 PERCENT ELECTRIC RATE INCREASE WITH THE PENNSYLVANIA PUC

 PECO FILES FOR 1.5 PERCENT ELECTRIC RATE INCREASE
 WITH THE PENNSYLVANIA PUC
 PHILADELPHIA, Sept. 11 /PRNewswire/ -- Philadelphia Electric Company (NYSE: PE) today filed for a 1.5 percent electric rate increase with the Pennsylvania Public Utility Commission (PUC) to recover costs associated with new accounting regulations involving health and welfare benefits for retired employees.
 The proposed increase would be effective on Jan. 1, 1993, when PECO must begin following the new accounting regulations required by the Securities and Exchange Commission (SEC) for all the nation's major publicly held companies.
 The impact of the filing on the typical PECO residential customer using 500 kilowatt-hours of electricity a month would be an increase of approximately $1 a month. However, typical residential customers would actually see a net rate decrease of more than $2 a month after Jan. 1, since a 4.6 percent decrease was already scheduled to take place on that date prior to this filing.
 For example, if the proposed increased is approved, a typical residential bill would decrease from $73.87 per month today to $71.51 on Jan. 1, 1993, instead of decreasing to $70.42 as presently scheduled.
 The proposed 1.5 percent rate increase relates to a mandate from the Financial Accounting Standards Board (FASB) that publicly held companies change from a cash, or "pay-as-you-go," accounting system for health care and other benefits for retired employees, to an accrual system.
 Under the current pay-as-you-go system, companies report costs concurrent with cash outlays to pay the premiums for health and welfare benefits covering retirees. Under the mandated accrual system, companies must recognize and report, on a current basis, the expected future liability which will be accrued as employees earn their retirement benefits while still working for the company.
 The accounting change will mean an approximate $50 million annual increase in electric operation expenses for PECO, which it is seeking to recover in the rate filing, so the company's earnings would not be penalized.
 The company's filing with the PUC recommends that the additional revenue provided by the rate increase be used to establish a trust fund for paying benefit premiums when the employees are retired.
 FASB, the governing body for generally accepted accounting principles (GAAP), determined that the current, cash accounting system, which has been used in the past, does not adequately recognize companies' future postretirement benefit obligations.
 Therefore, it ordered the switch to accrual accounting to comply with GAAP.
 The SEC mandates compliance with GAAP for a variety of financial reports, including financial reports to shareholders, registration statements for new securities, proxy solicitations, annual reports to the SEC on Form 10-K, and other reports to the SEC.
 The filing was made in accordance with terms of the settlement of PECO's Limerick Unit 2 rate case appeal. The 1990 settlement was reached by the company, the commonwealth's Office of Consumer Advocate and others, and approved by the PUC.
 The terms of the settlement agreement permit PECO to file single issue rate cases that reflect changes in expense due to factors beyond the company's control, including new laws, regulations, or change in policy by legislative, judicial and regulatory authorities or administrative agencies.
 /delval/
 -0- 9/11/92
 /CONTACT: Bill Jones of Philadelphia Electric, 215-841-4129/
 (PE) CO: Philadelphia Electric Company ST: Pennsylvania IN: UTI SU:


LJ -- PH007 -- 8364 09/11/92 09:47 EDT
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Publication:PR Newswire
Date:Sep 11, 1992
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