Exhibit 99.2
PP&L Files Customer Choice Plan with PUC
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Pledging to continue its record of price stability and
to provide customers with the information they need to make
informed choices in a changing marketplace, Pennsylvania
Power & Light Co. Tuesday (4/1) filed its customer choice
implementation plan with the state Public Utility
Commission.
Under the filing, called a restructuring plan, all
customers will have the prices they pay for electricity
capped at current levels for as long as four-and-one-half
years and for up to nine years for some customers.
"This plan outlines a smooth transition from today's
regulated prices to a marketplace in which customers will
have the opportunity -- through the choices they make -- to
reduce the prices that they pay for electricity," said
William F. Hecht, PP&L's chairman, president and chief
executive officer. "Under this plan, customers can't lose.
They will have more choices while having the assurance of a
price cap during the transition period."
Tuesday's filing continues PP&L's leadership role in
the transition to a competitive electricity marketplace for
electricity, Hecht said. Under legislation signed by Gov.
Ridge last December, Pennsylvanians will have the
opportunity to select the company that generates the
electricity they use. The state's current electric
utilities will continue to provide delivery services.
Customer choice would be phased in, beginning in January of
1999.
Hecht pointed out that PP&L's plan provides that
customers who decide to shop for their electricity supply
will have a guarantee that the prices PP&L charges for the
delivery service component of current rates will not
increase for four-and-one-half years and that electricity
generation rates for those who decide not to shop for their
electricity supply will be capped for nine years.
"If our plan is approved, customers who are buying
their electricity from PP&L in the year 2001 will be paying
prices that are essentially the same as they were paying in
1986," said Hecht. "This is a 15-year record of price
stability that is unmatched in Pennsylvania." Hecht noted
that, when inflation is taken into account, PP&L rates will
have dropped by about one-third over that same period.
As part of its plan, PP&L also is proposing to make
available to all customers rates that sharply reduce the
cost of delivering additional electricity. These savings
would apply in addition to any savings that customers
realize through the competitive marketplace. "Our proposal
to provide reduced prices for additional electricity use
will benefit individual customers and promote economic
growth in the communities we serve," said Hecht.
"As the issue of customer choice has been examined over
the past several years, there has been a lot of discussion
about lower rates for Pennsylvanians. The customers of PP&L
have enjoyed low rates for decades and will continue to do
so in the future. At PP&L, we have a proven history of
delivering on the promise of competitive prices," said
Hecht.
In addition to being stable, he noted that PP&L's
prices are among the lowest in the Mid-Atlantic region.
The Company's plan is based on charges in effect on
Jan. 1, 1997. The company does not propose to change those
rate levels in its filing.
Hecht said PP&L is committed to a comprehensive
customer education effort as part of the transition to
competition. "We already are working with the PUC and other
groups to ensure that customers have the information they
need to make informed choices," said Hecht. "Customers
shouldn't be apprehensive about these changes, especially
because they don't need to make any decisions until they are
comfortable with the information they have."
As part of Tuesday's filing, PP&L outlines extensive
education efforts for consumers, Hecht said. The consumer
education initiatives, which include a comprehensive
customer handbook, Internet information and community
meetings, will be carried out in cooperation with the PUC
and consumer groups.
The filing also details the Company's plan to increase
efforts to help customers who have difficulty paying their
bills.
Hecht said that a competitive generation marketplace is
good news for all of the state's electricity users.
"As a result of the changes coming to the state's
electricity business, PP&L -- which has competitive prices
and a superior record of satisfying customers -- will be
able to offer electricity to all the residents of
Pennsylvania. We are very much looking forward to that
opportunity," said Hecht.
In Tuesday's filing, the Company asks the PUC to
approve a Competitive Transition Charge that would permit
PP&L to recover costs incurred to provide service to
customers in a regulated environment which may not be
recoverable in a competitive marketplace. The Competitive
Transition Charge would be listed as a separate line item on
the bills of all "delivery" customers.
"The proposal to recover these costs through the CTC
does not represent an increase in the prices customers pay.
As a practical matter, customers are paying these charges
today under a regulated system. The transition charge is
simply a mechanism to smooth the road to the competitive
marketplace," said Hecht.
Based on projected electricity prices, PP&L estimates
that it faces transition costs of about $4.6 billion. Most
of these transition costs result from the construction of
the Susquehanna nuclear power plant. Other components
include costs to add environmental protection equipment at
coal-fired power plants, the cost of purchasing power from
non-utility generators and accounting-related charges
resulting from certain financial and ratemaking practices
under regulation.
Hecht stressed that these costs are the result of the
Company's efforts to live up to responsibilities that it
takes very seriously. "We spent this money to provide high-
quality and competitively priced service to our customers in
central eastern Pennsylvania. We anticipated being able to
recoup these investments over periods ranging up to 40
years. With competition coming to the business, that is no
longer practical," said Hecht.
Hecht said that the Company's transition cost request
is fair and is consistent with the legislation enacted last
year. "Even with the plan we propose, our projections show
that PP&L will fail to recover about $400 million of its
transition costs," said Hecht.
The Company's filing also outlines the organizational
changes that PP&L will make to treat all electricity
suppliers on a comparable basis, including PP&L's
competitive electricity generation and sales business.
These organizational changes, which include the
establishment of a Retail Energy Supply group to sell
electricity throughout the Mid-Atlantic region, were
announced last month.
The Company has deferred a decision on whether or not
it will seek to securitize any portion of the transition
costs that are approved by the PUC. The Pennsylvania
customer choice legislation permits utilities to issue
special bonds to refinance -- or "securitize" -- transition
costs. "It is not clear at this time whether
securitization will be in the long-term best interest of our
customers and our shareowners," said Hecht. "For that
reason, we have not included a request to securitize
transition costs in our filing with the PUC. We will
continue to study this issue and may seek securitization in
the future."
Hecht emphasized that PP&L will continue its commitment
to improve the quality of life in the communities of central
eastern Pennsylvania. "As has been the case for more than
75 years, the continued health and vitality of this region
is an important factor in the financial success of PP&L.
Our commitment to economic development and community
involvement will remain a top priority," Hecht said.
The PUC is expected to hold hearings on the Company's
filing and make a final decision on the proposal by the end
of this year.
"We look forward to a full, open discussion of our
filing. We are convinced that this plan is in the long-term
best interests of all who depend on PP&L," said Hecht.
PP&L, a subsidiary of PP&L Resources, Inc., provides
electric service to 1.2 million customers in 29 counties of
central and eastern Pennsylvania. Other company
subsidiaries are Power Markets Development Co., an
international power company; and Spectrum Energy Services
Corp., which markets energy-related services and products.
For recent news releases and other information about
PP&L Resources, see our Internet home page:
http://www.papl.com/
* * * * *
Following is a fact sheet that provides more details on the
Company's filing.
PP&L Restructuring Plan
Fact Sheet
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- -- With the April 1, 1997, filing of its Restructuring Plan,
PP&L continues to be a strong and active proponent of retail
competition.
- -- The plan caps rates that all customers pay for
electricity for four-and-one-half years and for some
customers for as long as nine years. PP&L rates already are
below the Pennsylvania average. PP&L's rates today are
essentially the same as they were in 1986, which means they
are about 25 percent lower in real terms when adjusted for
inflation.
- -- One-third of PP&L's customers would have the opportunity
to choose their electricity supplier beginning Jan. 1, 1999.
Another third would have that opportunity beginning on Jan.
1, 2000, and all customers would be able to choose by Jan.
1, 2001.
- -- Enrollment periods would begin six months before each
step of the phase-in. If a class is over-subscribed,
customers will be selected on a random basis.
- -- Any supplier who is licensed by the PUC and satisfies
interconnection requirements may participate. The filing
includes a fee schedule for PP&L to provide certain services
to suppliers, including billing and general administration.
- -- PP&L plans to participate as a generation supplier to
customers in its current service territory and elsewhere.
To accommodate this participation, the company is proposing
a separation of its generation and electricity sales
function from the transmission and distribution function.
- -- PP&L plans an extensive education effort to ensure that
customers understand retail competition and can participate
on an informed basis.
- -- PP&L's transition costs are estimated to be $4.6 billion
in four main categories: nuclear generation, fossil
generation, non-utility generator contracts and regulatory
assets. PP&L is not proposing to securitize any of its
transition costs at this time, but it continuing to study
the securitization option.
- -- The plan will unbundle customer rates into three main
categories: Transmission & Distribution charge; a
Generation charge; and a Competitive Transition Charge,
which will be used to recover transition costs. The CTC
will be paid by all customers who receive transmission and
distribution service from PP&L.
- -- The CTC does NOT result in an increase in customer rates;
it is simply a restatement of costs currently being paid by
customers.
- -- PP&L will continue to be the "supplier of last resort"
for customers who choose not to shop.
- -- The filing includes a proposal to expand programs for
low-income customers.