FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report: May 12, 1997
PECO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-1401 23-0970240
(State or other (SEC (IRS Employer
jurisdiction of file number) Identification
incorporation) Number)
230l Market Street, Philadelphia, Pennsylvania 19101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 841-4000
Item 1. Legal Proceedings
As previously reported in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996, on March 5, 1996, the Company and Delmarva
Power & Light Company (Delmarva) filed an action in the United States District
Court for the Eastern District of Pennsylvania against Public Service Enterprise
Group Incorporated (Public Service) and its subsidiary Public Service Electric
and Gas Company (PSE&G) concerning the shutdown of the Salem Generating Station
(Salem). On May 9, 1997, the parties to the litigation entered into a settlement
agreement, which has been approved by PECO Energy's Board of Directors. Under
the terms of the settlement, PSE&G will pay the plaintiffs $82 million. The
Company will receive $69,848,600 and Delmarva will receive $12,151,400. The
payments will be made on December 31, 1997. The settlement also provides that if
the current outage exceeds 64 reactor unit months, then PSE&G will pay the
plaintiffs, in addition to the $82 million, $1.4 million per reactor unit month,
up to an aggregate of $17 million. The Company and Delmarva would receive
$1,192,520 and $207,480 per reactor unit month, respectively. A reactor unit
month is a month during the current outage in which a unit is off-line. Salem
Unit No. 1 has been off-line since May 17, 1995, and Unit No. 2 has been
off-line since June 7, 1995. Under the settlement, none of the parties admits
any liability. The terms of the settlement also include a term sheet setting
forth provisions regarding liability and performance obligations of the plant
operator in connection with the owners agreements for Salem and Peach Bottom
Atomic Power Station. The term sheet provides for payments to the non-operating
owners if a station's electrical output falls below specified ranges. The
parties also intend to negotiate a more complete agreement embodying the
provisions of the term sheet. The settlement is unrelated to the claims of the
Salem co-owners asserted against Westinghouse Electric Corporation on February
27, 1996.
* * * *
Item 5. Other Events
As previously reported in the Current Report on Form 8-K dated February
27, 1997, the Company filed with the Pennsylvania Public Utility Commission
(PUC) its comprehensive pilot program to enable some 90,000 customers to choose
their electric suppliers beginning as early as October 1997 in accordance with
the Pennsylvania Electricity Generation Competition and Customer Choice Act.
On May 8, 1997, the PUC issued a Preliminary Opinion and Order
(Preliminary Order) which revised the retail choice pilot programs proposed by
the Company and the other utilities in the state. The Preliminary Order provides
for the following:
- Market-based generation price of 3 cents per kWh credited to retail
customer bills during the pilot program;
- A fixed rate that reflects 75 percent recovery of stranded costs
during the pilot program; and
- Requirement to track any difference between the 75 percent and the
ultimate stranded cost recovery level adopted, subject to possible
true-up at a later time.
Pilot programs are scheduled to begin in the fall of 1997 and last through the
end of 1998. Written comments to the PUC regarding the preliminary order are
due May 22, 1997.
* * * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PECO ENERGY COMPANY
s\ J. B. Mitchell
Vice President - Finance
and Treasurer
May 12, 1997