1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 15, 1999
Commission Registrant, State of Incorporation I.R. S. Employer
File Number Address and Telephone Number Identification Number
- ----------- ---------------------------- ---------------------
1-13895 Conectiv (a Delaware Corporation) 51-0377417
800 King Street
P.O. Box 231
Wilmington, Delaware 19899
Telephone (302) 429-3114
1-3559 Atlantic City Electric Company 21-0398280
(a New Jersey Corporation)
800 King Street
P.O. Box 231
Wilmington, Delaware 19899
Telephone (302) 429-3114
2
Item 5. OTHER EVENTS
On June 9, 1999, Conectiv's subsidiary, Atlantic City Electric
Company ("Company"), entered into a Stipulation of Settlement ("Stipulation")
with some of the parties to the Company's stranded costs, unbundled rates, and
restructuring proceedings pending before the New Jersey Board of Public
Utilities ("NJBPU") and filed the Stipulation with NJBPU. On July 15, 1999, the
NJBPU approved, with modifications, the Company's Stipulation and issued a
summary order ("Summary Order") detailing the modifications to the original
Stipulation. The NJBPU stated that a more detailed order would be issued at a
later date.
In its Summary Order, the NJBPU directed the Company to
implement a five percent aggregate rate reduction effective August 1, 1999. As
part of the initial five percent aggregate rate reduction, the NJBPU set the
Company's system average distribution rate at 2.1384 cents per kwh. The Company
also must implement at least an additional two percent rate reduction by January
1, 2001, and by August 1, 2002 an additional rate reduction such that rates are
reduced a total of ten percent, as compared to rates in effect as of April 30,
1997. The Company estimates that the initial rate reduction will result in about
a $50 million reduction in revenues. However, the ultimate impact on the net
income of the Company will depend upon the nature and extent of cost reductions
that may be realized by the Company.
The NJBPU Summary Order also established minimum initial shopping
credits for customers who choose an alternative electric supplier, from a system
average 5.27 cents per kilowatt hour, effective August 1, 1999, to a system
average of 5.48 cents per kilowatt hour in 2003. These shopping credits, based
on the charges for power supply and transmission, include charges by the Company
for Basic Generation Service ("BGS") to be provided retail customers who do not
have a competitive electric power supplier. The NJBPU Summary Order also
approved the deferral mechanism contained in the Company's Stipulation, in order
to enable the Company to meet and sustain the rate reductions ordered by the
NJBPU. The deferral mechanism provides for the accumulated deferral of costs and
application of certain over-recovery credits, for ultimate recovery of the
resultant net deferred balance, during the four years after the initial
four-year transition period ("Transition Period") commencing August 1, 1999. The
NJBPU approved certain rates of return to be applied to the deferred balances.
Also under the Stipulation, the Company will divest itself of its
nuclear and fossil fuel baseload units and transfer the remaining generating
units to a non-utility affiliated company at the net book value. As a condition
to the transfer and for the duration of the Transition Period, the NJBPU Summary
Order requires that if any transferred asset is sold to an unaffiliated company,
the net after-tax gain over the adjusted book value would be shared equally
between the Company and customers. The NJBPU Summary Order concurred with the
Stipulation that the Company shall be permitted the opportunity to recover 100%
of the net stranded costs related to the generation units to be divested. The
Summary Order further concurred with the Stipulation that the Company may also
2
3
recover 100% of the stranded costs associated with power purchased from
Non-Utility Generators ("NUG's"). The NJBPU Summary Order also provided for the
securitization of amounts used to effect potential buyouts or buydowns of
contracts with NUG's as well as limited incentives for the Company in the event
of such contract restructuring.
The NJBPU Summary Order does not provide for recovery of stranded costs
associated with the Company's transfer of generating units to a non-utility
affiliated company. As previously reported in the Company's 1999 first quarter
Form 10-Q, the Company expects during 1999 an extraordinary charge to earnings
of approximately $50 million to $75 million as a result of this transfer.
Conectiv's related news release, the NJBPU Summary Order and
Atlantic City Electric Company's Stipulation of Settlement are annexed as
exhibits.
Item 7. FINANCIAL STATEMENTS PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
1. Conectiv News Release, dated July 15, 1999
2. NJBPU Summary Order, dated July 15, 1999
3. Atlantic City Electric Company Stipulation of Settlement as
filed with the NJBPU, dated June 9, 1999
3
4
SIGNATURE
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.
CONECTIV
Atlantic City Electric Company
Date: July 22, 1999 /s/Philip M. Reese
Treasurer
5
EXHIBITS TO BE FILED BY EDGAR
(c) Exhibits
1. Conectiv News Release, dated July 15, 1999
2. NJBPU Summary Order, dated July 15, 1999
3. Atlantic City Electric Company Stipulation of Settlement as filed
with the NJBPU, dated June 9, 1999