UNITED STATES | ||
Form 8-K | ||
CURRENT REPORT | ||
PURSUANT TO SECTION 13 or 15(d) OF THE | ||
Date of Report (Date of earliest event reported) | April 25, 2003 | |
CONECTIV | ||
Delaware | 1-13895 | 51-0377417 |
800 King Street, P.O. Box 231, Wilmington, Delaware | 19899 | |
Registrant's telephone number, including area code | (302) 429-3018 | |
|
CONECTIV | |
Item 5. | Other Events. |
Cancellation of Contract for Combustion Turbines Conectiv previously reported that, in light of continuing declines in wholesale energy prices, further analysis of energy markets and projections of future demand for electricity, among other factors, Conectiv Energy was considering all of its options, including further delaying delivery of equipment, delaying construction, selling the equipment and canceling equipment orders. Because of uncertainty in the energy markets, the decline in the market for CTs and the current high level of capacity reserves within the PJM power pool, Conectiv Energy has provided notice to General Electric canceling the contract for delivery of the GE CTs. The net unfavorable impact on Conectiv of this cancellation, recorded in the first quarter 2003, is $110.7 million before tax, $65.7 million after tax, comprised of the fees associated with cancellation of the GE CTs, all associated site development and engineering costs and the costs associated with cancellation of ancillary equipment orders. The unfavorable impact specif ied above is net of over $51 million in cash associated with pre-payments on the GE CT orders, which General Electric is required to refund as a result of the cancellation. There will be a positive cash impact in the second quarter related to this refund. Conectiv's unfavorable after-tax impact of $65.7 million does not include the offsetting favorable $34.6 million purchase accounting adjustment that was recorded at the Pepco Holdings parent company level. The cancellation of the GE CTs and associated equipment is one of the steps being taken by the company to proactively deal with the risks it would otherwise have in the merchant energy sector. | |
|
Signatures | |
| |
| CONECTIV |