-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WXzLt34XaKcpeFi58FWMI8+KIZ4viPtoGA5vkeAUuT/Yj5x8clMrtqPkkPVI39ZX 4eBnQ7hMo6bgmCiKnfM7yw== 0000008192-97-000031.txt : 19970717 0000008192-97-000031.hdr.sgml : 19970717 ACCESSION NUMBER: 0000008192-97-000031 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970716 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19970716 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTIC CITY ELECTRIC CO CENTRAL INDEX KEY: 0000008192 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 210398280 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03559 FILM NUMBER: 97641409 BUSINESS ADDRESS: STREET 1: 6801 BLACK HORSE PIKE CITY: EGG HARBOR TOWNSHIP STATE: NJ ZIP: 08232 BUSINESS PHONE: 6096454100 MAIL ADDRESS: STREET 1: PO BOX 1264 CITY: PLEASANTVILLE STATE: NJ ZIP: 08232 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K Current Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report July 15, 1997 (Date of Earliest Event Reported) Registrant; Commission State of Incorporation IRS Employer File No. Address and Telephone No. Identification No. 1-9760 Atlantic Energy, Inc. 22-2871471 (New Jersey) 6801 Black Horse Pike Egg Harbor Township, NJ 08234 (609) 645-4500 1-3559 Atlantic City Electric Company 21-0398280 (New Jersey) 6801 Black Horse Pike Egg Harbor Township, NJ 08234 (609) 645-4100 Item 5. Other Events The following information updates certain matters previously reported under Part I, Item 1- Business of the Annual Report on Form 10-K for the year ended December 31, 1995 for Atlantic Energy, Inc. and Atlantic City Electric Company, as amended and supplemented by Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, and Current Reports on Form 8-K dated January 6, 1997 and January 27, 1997. Competition On July 15, 1997, Atlantic City Electric Company filed its response to the New Jersey Board of Public Utilities (BPU) in connection with the BPU proposal for restructuring the electric power industry in New Jersey. Attached as exhibit 99 is the Company's release to the financial community with respect to its filing. ***************** 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. Atlantic Energy, Inc. Atlantic City Electric Company (Registrant) By: /s/ L. M. Walters L. M. Walters Treasurer of Atlantic Energy, Inc. and Vice President, Treasurer and Assistant Secretary of Atlantic City Electric Company Date: July 16, 1997 Exhibit Index Exhibit No. 99 Release to Financial Community dated July 15, 1997. EX-99 2 Exhibit No. 99 For additional information Contact: Bob Marshall, Director of Investor Relations voice: 609-645-4655 fax: 609-645-4132 e-mail:rkmarsha@aenergy.com July 15, 1997 Atlantic City Electric Submits Restructuring Filing To Members of the Financial Community: Atlantic City Electric Company, the utility subsidiary of Atlantic Energy, Inc. (ticker symbol:ATE) today filed information required by the New Jersey Board of Public Utilities (BPU) under its proposal for restructuring the electric power industry in New Jersey. Stranded Costs In its filing, Atlantic City Electric (the Company) provided an estimate of stranded costs for its owned generation and for power purchase agreements with nonutility generators (NUGs). Those estimates, developed using an internal market price forecast, amount to $341 million for the Company's wholly and jointly owned generation. Utilizing the same market forecast, the Company estimated its stranded costs associated with its 579 megawatts of NUG capacity at approximately $965 million. That estimate is based on contract terms which run for an additional 18 to 27 years. The Company has requested full recovery of stranded costs associated with its owned generating assets over a eight year period and full recovery of payments to the NUGs over the remaining term of those agreements. Recovery of regulatory assets and decommissioning expense, as noted in the BPU plan, would continue to be recovered through regulated base rates, or addressed through traditional ratemaking techniques. Customer Choice Under the BPU plan, customer choice commences October 1998 and full retail access occurs by July 2000. The Company plans to begin customer choice to 10% of its customers across all customer classes on a first come first serve basis. At that time, all Atlantic customers will be charged the market price for electricity, whether served by ACE or another provider. In its filing, the Company proposed a two phase future rate reduction for customers which, when fully implemented in 2001, represents a 5% decrease in annual revenues, based on 1996 reported revenues. The Company has proposed a $7.2 million reduction upon completion of its proposed merger with Delmarva Power & Light Co., which is expected to be completed on or around year end 1997. This amount represents one third of the synergy savings from the merger and will be available upon BPU approval of the Company's pending request. The additional projected revenue reduction of approximately $40 million, beginning in 2001, is related to reductions in operating costs. This includes amounts currently being collected and amortized for changes in state tax law and for utility purchased power agreements, which amortizations expire in 2000. Securitization The Company has proposed securitizing its transition costs associated with its owned generation, with the proceeds applied toward the redemption and retirement of its debt and equity securities. Any savings associated with securitization would be available to support further rate reductions. Legislation required for securitization is expected to be introduced in New Jersey in early 1998. Mitigation In keeping with the BPU plan, the Company has also proposed mitigation and a resolution of the NUG contracts by funding a buyout or buydown of the contracts through securitization of a nonbypassable wires charge, subject to negotiation of an acceptable value of the contracts with the NUGs. While mandated by Federal law, and despite renegotiations with two of the four suppliers which have produced some savings, those NUG contracts are substantially over market. The NUG contracts, over which the Company has no control, represent about 24% of the Company's annual revenues. The contracts had an average cost of 10.7 cents per kilowatthour in 1996. The Company in its filing also addressed several cost savings initiatives since its last base rate case in 1991, including: voluntary severance plans which reduced its workforce by 25%; refinancing and refundings of a significant amount of the Company's long term debt and preferred stock which have produced lower capital costs; the Southern New Jersey Economic Initiative, through which the Company provided rate reductions in 1994 and 1995 totaling $38 million. The BPU plans to transfer the stranded cost and unbundled rate portions of the filings for all four New Jersey electric utilities to the Office of Administrative Law for evidentiary hearings and initial decision by April 1998. The BPU has retained the review of each company's restructuring plans, with the overall objective being full reviews completed by October 1998. ++++++++++++++++++++ A Conference Call is scheduled for 2:00 pm on Tuesday July 22 to review the Company's filing. To participate, please call 1-888- 209-3752, Reservation # 2951342. Call for Replay at # 1-800-633-8284 beginning 2:00 PM on July 23 for 24 hours. The information in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements made that are not historical facts are forward-looking and accordingly, involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Although such forward-looking statements have been based on reasonable assumptions, there is no assurance that the expected results will be achieved. Some of the factors that could cause actual results to differ materially include, but are not limited to: the effects of regulatory decisions; changes in laws and other governmental actions and initiatives; the impact of deregulation and increased competition in the electric utility industry; expected outcomes of legal proceedings; generating plant performance; fuel prices and availability. Elements of Stranded Costs Calculation Adjusted Book Value Plant Megawatts @ 1/1/99 Market Stranded Value* Cost (Dollars in Millions) Jointly Owned Nuclear Units 380 $ 346.2 $107.7 $238.5 Jointly Owned Fossil Units 107 $ 31.7 $ 90.9 $(59.1) Wholly Owned Fossil Units 1,183 $ 346.0 $184.1 $162.0 Total Owned 1,670 $ 723.9 $382.7 $341.3 NUG Contracts 579 N/A $(965.1) $965.1 Utility Power Purchase Contracts 125 $( 4.4) $ 4.4 Total Stranded Costs $1,310.8 *Assumes net cash flows (expected market revenues less operating expenses or purchase power payments) through remaining life of asset or contract term discounted at 9.76%. +++++++++++++++++++++++ -----END PRIVACY-ENHANCED MESSAGE-----