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JERSEY CE TRALpCOMPANY

O 1980ANNUALREPORT

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Jersey Central Power & Light Company is a Member of the General Public Utilities System

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TO THE STOCKH2LCERS

By year-end, almost two years sources. Of the $300 million of substantially higher costs of and to permit additionalafter the accident at Unit 2 of property damage insurance litigation, capital, and replace- training.the Three Mile Island Nuclear which GPU had at the time of ment power. It is anticipated that 1982 willGencrating Station, the after- the accident, $100 million re- The report recommended be a difficult year primarily ascffects of the accident con- mains available for future that the NJBPU "should con- a result of the Oyster Creektinue to dominate Company cleanup costs, an amount that tinue to provide rate relief Station being cut of service foractivities and operations. will cover less inan one year of necessary to preserve the about six months icr refueling

Unit 1 of the Thrae Mile is- full effort. solvency of the Company until and replacement of parts of theI:nd Station, which was out of it is the feeling of the Com- the full study of options for the plant's emergency core cool-

I service for refueling at the time pany that the causes and extent Company is completed." ing rystem.The situation could'

cf the accident,was not dam- of the accident and the magni- be eased to some extent if TMIaged in the accident. Restart tude of the cleanup task de- Oyster Creek Unit 1 is permitted to rt orn to|

! cf that unit, however, has been serves and requires a sharing A positive note for the Com- service and operate at fJlldelayed by the Nuclear Regu- of theburdenof thecleanup pany was the return to service, power levels.litory Commission (NRC) among more than the custom- July 19,1980, of the Oysterpendingtheoutcomeof along ers and investors of the GPU Creek Nuclear Generating Sta- Lowared Purchasedseries of public hearings. It is System. An equitable solution tion wPh was out of service Power Costsnot currently anticipated that requires the financial participa- for reft ling and maintenance As reported in the 1979 Annual

| Unit 1 will return to service tion of the Federal and State from J muary 5,1980. The ex- Report, the Company,in con-untillate 1981 or 1982. governments and the entire tended outage of Oyster Creek junction with the other GPU

TMI Unit 1, which had an ex- nuclear power industry. resulted from the discovery of companies, has had consider-emplary operating record,was The GPU System has been cracks in piping associated able success in reducingshut down for refueling and working hard to provide the with the emergency core cool- purchased power costs throughwas scheduled to restart the technical and financialin- ing system.The findings as agreements with other com-j

! dry of the Unit 2 accident. formation required to develop well as a method of repair were panies outside the Pennsyl-1 Hearings for restart began such a broad support program subject to extensive safety vania-New Jersey-Maryland

October 1,1980 before an and to bring together the in- reviews and approval by the Interconnection (PJM). SuchAtomic Safety and Licensing terests of the various parties NRC. Modifications to the continued agreements in 1980Board. involved including regulators, emergency core coolmg sys- reduced purchased power

The replacement energy legislators, and industry reo- tem will be made during a six- costs by some $75 million,costs for Unit 1 are running resentatives.The job will not month outage scheduled to thereby providing substantialcbout $60 million per year. The be easy, but we believe the begin December 1,1981. savings to our customers.New Jersey Board of Public importance of the problem and An earlier shutdown of the During the year, a new pur-Utilities (NJBPU)in 1979 and the benefits of the results to be Oyster Creek Station for about chase power agreement was1980, respectively, removed obtaineo will produce positive five weeks is scheduled for the reached with PJM to replacei

Unit 2 and Unit 1 from JCP&L's action in 1981 in solving the spring of 1981 for the installa- energy lost as a result of the'

I rite base, resulting in a reduc- difficult finar cial problems tion of equip nont required by continued shutdown of TMtI tion !n the Company's return involved. the NRC as a result of" Lessons Unit 1. Under the new agree-| cn investments for those On the financial side, short- Learned" from Three Mile Is- ment, the Company buys TMI'

plants. The restart of Unit 1 and term loans obtained under a land. Operation of the Oyster replacement power at 10 per.Its return to rate base would revolving credit agreement Creek Station saves JCP&L cent above cost. This agree-hive the effect of restoring part with a consortium of 45 banks customers $10 miilion to $14 ment provides additional

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I cf those revenues and of sav- stood at $61 million, down from million per month in energy insurance of the availability of

| ing JCP&L customers about $4 a high of $156 million outstand- costs. replacement power for the TM1million monthlyin energy costs. Ing in August. Levels of short- Improvements continued to Units.

On January 1?,1981, the term loans during 1981 will be made during the year at theSupreme Court of NewJersey depend upon levels of rate Cyster Creek Station as a Gas Conversionheard the Company's appeal of relief received, any accelera- result of " Lessons Learned" At the Company's Sayrevillethe NJBPU's order reducing tion in the return to service from Three Mile Island to Station, the burning of naturalthe Company's rates by $17.2 date of Three Mile Island further improve safety at the gas has saved more than $15million annually through the Unit 1, and the continued oper- station. Major areas addressed million for the Company's cus-r;moval of capital and operat- ation of the Oyster Creek included plant modifications, tomers since July when the useing costs of TMI Unit 1 from Nuclear Generating Station. retraining and reexamination of gas instead of heavy fuel oilrite base in April 1930. In so The Company's complex of operators, review and revi- was begun.do!ng, the Supreme Court per- financial situation was reem- sion of operating procedures, The Company continues tomitted the Company to bypass phasized in October with the and preparation of improved look for similar agreementsthe Appellate Division of the releaseof thefirst phaseof a plans for handling possible with other gas companies forSuperior Court of New Jersey management audit, ordered by emergencies. the supply of gas at its othercnd paved the way for an ex- the NJBPU, on the financial To emphasize theimportance oil-fired stations.pedited decision. status of the Company.This attached to the safe operation Another favorable develop-

report, done by Arthur Young of Oyster Creek, additional ment is the expected comple-TMI Unit 2 Cleanup and Company, concluded that professional and technical sup- tion in April of a seven-mile gasMeanwhile, the current rate of bankruptcy offers no economic port along with other personnel pipeline from Warren Glen,

| progress on the cleanup of advantages to JCP&L's rate- resources will be assigned to N. J., to the Company's GilbertUnit 2 of TMIis negligible and payers and, conversely, Oyster Creek during 1981 in Generating Station in Holland12 limited by financial re- introduces additional risk of order to improve operations Township and the conversion

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I togisof thecombined-cycle standing balance, $50.7 million vestigate and develop other and load management pro-

{ units at Gilbert Station.The relatestothe recoveryof Forked sources of capacity such as grams,18,000 pieces of energypipelins and the conversion of River costs over a reasonable cogeneration, low-head hydro, conservation material were

i the units at Gilbert are being period of time;$21.3 million and resource recovery. mailed to customers.i done by Elizabethtown Gas relates to the Three Mile Island *

Comptny at a cost of approx- Unit 1 investment; $10.7 million Conservation-Load Other Areas ofInterest1

imitity $7 million to be re- to increased return on common Management in 1980,the Company added'

ccv2rzd by Elizabethtown Gas equity; $4.2 million to growth The Company continued its 12,573 new customers to its'

through the price of purchased in rate base; and $26.6 million energy conservation andload lines.Theadditionof thesegis.Th3 not savings to the to increased costs of operation. management programs which customers, plus an extended,

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j Comptny's customers is ex- On January 16,1981,the have beenin effect for several period of hot weather in July,pectId to be about $3 million Company petitioned the NJBPU years. Plans are underway to resulted in an all-time system

J) when compared to the cost of for an increase in Levelized expand these programs during peak of 3,024 megawatts (MW),cil-firsd generation for the Energy Adjustment Charge 1981 to help minimize the anincrease of12 percentsevin-month term of the initial (LEAC) revenues of $104.6 mil- growth in peak load and the above the 1979 peak and 11

! g*.s supply contract. lion.The petition reflects $55 future purchased power needs. percent above the high of 2,714,

! Mstnwhile, the Company million in energy costs incurred Work is continuing with New MW in 1977.This results in an- continuis to study the possibil- since the TMt accident but not Jersey Senator William Brad- average annual growth rate for4

i ity of a high-voltage transmis- yet recovered from customers ley's Plan for helping home- these three years of 3.7 per-i sion line under Lake Erie which and anticipated increased owners insulate their homes cent.Without the continuing -

could provide 1,000 megawatts energy costs that will result and implement various load aggressive energy conserva- |

cf ctptcity from coal-derived from planned cutages of the management techniques.This tion and load management |Energy from Ontario Hydro. Oyster Creek Station planned pilot projectwould include programs,the peak would have

for later in 1981 and from in- 1,100 homes, of which 340 are been even higher.These pro-

Construction flationary pressures. total electric. grams will be accelerated dur-Construction is underway on in September 1980,the in1976, as part ofits ongoing ing the coming years with a

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the Company's first 500 kilo- NJBPU denied an application energy conservation andload goal of keeping peak growth to,

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volt (KV)line between Public for a $71.8 million increase in management programs,JCP&L approximate'y 2 percent per4

SIrvica Electric and Gas Com- LEAC revenues. established the " Big E" Award year on along-term basis.wi),ch is presented to those Electric sales totaled 12.9

| . piny's Deans substation and.

JCP&L's new Smithburg Forked River Project bus!nesses and industries that billion kilowatt-hours (KWH),' 500/230 KV Substation in At a joint meeting November 6, actively promote conservation an increase of only 1.1 percent I

Freehold Township. the Boards of Directors of GPU and energy management in over the 1979 figure. Revenues

i This facility,when complete and JCP&L made the decision their facilities. In 1980, the totaled $883.0 million, up 32.8

i in June 1981,will significantly to end efforts to complete the Company presented " Big E" percent from 1979 with the rise; incrsts3 the power supply cap- Company's Forked River Awards to 15 commercial and largely attributable to the in-

tbility and reliability to grow- Nuclear Generating Station. Industrial customers. creasesin base rates anding trsas of Monmouth and Construction on the project Also in 1980, the Company levelized energy adjustment

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Ocstn Counties. It will also was suspended in April 1979 presented " Energy Watch" charges granted during 1980i

provida substantial reinforce- after the accident at Three Awards to 17 builders in recog- and the latter part of 1979.

! mint to the Company's 230 KV Mile Island, nition of their having met Not income was $41.1 mil-transmission system. In terminating the project,it national conservation stand- lion, down $28.2 million fromI

in May 1980, construction was felt that both State and ards.The 17 awards covered the prior year, even though thei wts completed on a 230 KV Federal regulatory delays in 3,500 living units. Company received a base rato

l transmission line which ex- trying to construct Forked At year-end,719 residential increase of $38.0 million duringl trndr 3.5 miles between River will continue to be sub- customers were receiving ser- the year.The loss was due

Hinovtr Township and Morris- stantial and that such an en- vice under Time-of-Day rates mainly to the removal of thetown. Completion of theline vironment will rapidly escalate which offer price incentives for Three Mile Island Station Unit

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permitttd the new gas-insu- the cost of the station and even off-peak use of electricity and 1 from rate base,the loss of1

littd substation at Morristown, affect the construction and a discount for customers who Allowance for Funds used dur-tha first of its type to be built by operation. use solar water heaters with ing Constructio,1(AFC) on theJCP&L, to be energized. With the cancellation of electric backups.The figure Forked River project, and in-

InSIptember 1980,construc- Forked River,which was to represents an increase of 427 flationary pressures on the

| tion began on a new 230 KV have a capacity of 1,100 mega- over the figure for 1979. Plans costs of operation.

! substition in East Flemington. watts,JCP&L,in addition to the are underway to more actively| proposed intertie with Ontario promote Time-Of-Day rates in For The Boardof Directors,' Rate Case Matters Hydro of Canada,will seek a . the future.

In AW 1980, the Company suitable site for a coal-fired in 1980, Company repre-filed uth the NJBPU for a base plant in New Jersey or, as an sentatives conducted more g ffrit3 increase of $173.5 million. alternative,in western Penn- than 900 Home Energy Audits _

in Miy, the NJBPU granted an sylvania near coal supplies. and supplied more than 4,000 hincrstse of $80 million as an The Forked River site will con- customerswith Home Energy /pintirim measure subject to re- tinue to be stu&ed as one pos- Audit Do-it-Yourself surveyfund. At year-end, proceedings sibility for a new coal-fired booklets.w:rs continuing on the remain- plant. Also as part of the Com- Shepard Sarfnoffing $113.5 million.Of the out- JCP&Lwill continue to in- pany's residential conservation March 24,1981

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STATEMENT CF MANAGEMENTThe management of Jersey Central Power & Light Company disclose the effect of the nuclear accident on March 28,1979

is responsible for the information and representations con- at Unit No. 2 of the Three Mile Island nuclear generatingtained in the financial statements and other sections of this station (TMI-2). The accident has had a significant adverseannual report. The financial statements have been prepared impact on the earnings and financial position of the Companyin conformity with generally veepted accounting principles in 1980 and 1979. in addition, several significant contin- f

consistently applied. In pN 1g the financial statements, gencies and uecertainties, the outcome of which cannot bemanagement makes informec judgments and estirutes of the determined at the present time, resulted.expected effects of events and transactions that are currently Referencels made to Note 1 of the accompanying financialbeing reported. statements and Management's Discussion and Analysis of

To f ulfillits responsibilities for the reliability of the financial Financial Condition and Results of Operations,which appearsstatements, management has developed and maintains a below, for further discussion of the effects and impact of thesystem of internal accounting control. This system is intended nuclear accident at Three Mile is'and.to provide reasonable assurance that assets are safe- Coopers & Lybrand, independent public accountants, areguarded and transactions are executed in accordance with engaged to examine and express an opinion on ti.o firmncialmanagement's authorization and recorded properly to permit statements.Their opinion, which appears on page 5, setsthe preparation of financial statements in accordance with forth the contingencies and uncertainties resultirsg fromgenerally accepted accounting principles. the accident.

The accompanying financial statements and notes thereto

MANAGEMENT'S DISCUSSION AND ANALYS15OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSUquidity and Capital Resources: $53.4 million prior to the accident to an average of $88 millionThe nuclear accident at Three Mile Island has had a significant in periods subsequent to the accident. At December 31,1980,adverse impact on the earnings and financial position of the short-term borrowings were $61 million against availableCompany and its affiliates. As a direct result of this accident, credit of $123 million.the Company is not earning a return on invested capital aggre- Expenditures for the cleanup and restoration of TMI-2 aregating approximately $672 million. anticipated to aggregate $1.4 billion for the Compa1y and its

in the afteimath of the accident, the New Jersey Board of affiliates (of which the Company's share is $350 mi' lion) andNblic Utilities (NJBPU) reduced allowable annual revenues is estimated to continue through December 31,1387. Theby excluding the capital and operating costs associated with Company, through December 31,1980, has incurred cleanupTMI-2 and TMI-1. Furthermore, in view of regulatory and cost and recovery costs of $45.3 million. The unamortized icvest-uncertainties arising from the accident, the Company aban- ment in the nuclear fuct core amounts to $9.2 million. Thesedoned the construction of its Forked River nuclear generating costs have been partially offset by insurance proceeds ofproject. These actions resulted in a significant decline in earn- $50.7 million.ings because the operating expenses, depreciation and capi- The Company and its affiliates anticipate recovering $300tal costs associated with the aforementioned assets are being million of insurance proceeds (of which the Company's shareabsorbed by the common shareholder, is $75 million), the maximum amount available under their

With respect to the abandoned Forked River nuclear gener- . policy, for property damage at TMI-2. The Company and itsating project, the Company is seeking recovery of its invest- affiliates are uncertain as to the source of funding for cleanupment in the project in a pending rate proceeding. and restoration costs in excess of such insurance coverage.

The adverse financial results and continuing uncertainties The Company has rate increase requests pending beforearising from the accident preclude the Company from issuing the NJBPU. Failure by the NJBPU to act in a positive anelany securities. Consequently, the only available source of out- timely manner on these requests coutr* Mult in the inabilityMde funding is short-term borrowings (see Note 5 to the finan- of the Company to refinance its short-ti.'.n borrowings andcial statements). Short-term borrowings nave int:reased from impair its ability to meet its obligations.

Results of Operations: (i) the suspension,in April,1980, of the accruing of credits toThe results of operations, as discussed below compare 1980 income for the carrying cost of funds associated with the con-with 1978. The year 1978 is used to pmvide the reader with a struction of the Forked River project (which was subsequentlybasis for comparison with 1980 results, as 1978 represents the abandoned), (ii) the increase in operation and maintenancelast year of normal operations for the Company. expenses primarily resulting from inflation and additional ex-

Although operating revenues increased by $292 million penditures at the nuclear stations and (iii) increased interest(49%) in 1980 over those of 1978, earnings available for com- expense.mon stock and the return on average common equity de- Following is a comparative statement of operations andcreased from $57 million and 10.1%, respectively, in 1978 to return on average common equity for the years 1978 and 1980.$23 million and 3.4%, respectively,in 1980. The statement shows the cost components of TMI-1, TMI-2

The substantial increase in operating revenues frca 1978 and Forked River that are being excluded from base rates and,to 1980 is primarily attributable to the recovery of higher fuel therefore, incurred by the common shareholder, and thoseand purchased power costs in energy clauses. Such addi- costs associated with the operations of the Company whichtional tevenues ($221 million) reflects the recovery of the are included in rates. The statement indicates that, net of in-higher energy costs incurred by the Comparty and have no come taxes, TMI-1 accounted for $5 million of costs in excessimpact on earnings. of revenues, and TMI-2 and Forked River each accounted for

The decline in earnings available for common stock be- $6 million of costs in excess of revenues. Furthermore, thetween 1978 and 1980 of $34 million is primarily the result of statement shows that, if non-earning operations were ex-the regulatory response to the accident at TMI-2. As previ- cluded, the electric system would have produced earningsously indicated,the Company is not recovering in its base available for common stock of $40 million in 1980 and a returnrates the ecsts associated with TMI-1 and TMI-2. The capital on average common equity of 9.3%.and operating costs associated with TMI-1 were removed For a further discussion of events subsequent to the acci-from base rates in the second quarter of 1980 while similar dent at Three Mile Island, see Note 1 to the financial state-costs for TMI-2 were removed from base rates during 1979. ments. With regard to the effect of changing prices, seeOther factors contributing to the decline in earn!ngs include pages 20 through 22.

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STATEMENTS OF OPERATIONS AND RUURN ON GOMMON EQUITY (UNAUDITED)Jersey CentralPower & Light Company

($ In Millions)

1978(a) 1980(b)

ExcludingTMI andForked Forked

Total Total River TMI-1 TMI-2 River

Plant Values (net of depreciation). . $1.719 $1.915 $1.243 $96 $164 $412

Revenues. . . . . 591 883 876 5 2

Energy costs . 216 450 450. . ..

Deferred energy. net. . (11) (21) (21).

Other operation and maintenance 127 165 158 10 (3)(c)46 60 51 3 6Depreciation . .. . . .. . . .

Taxes. other than income taxes 72 105 105

67 92 62 4 7 19Interest expense . . .. ..

(3) 1 1Other income and deductions. net . . . ..

. . 514 852 806 17 10 19Totals .77 31 70 (12) (10) (17)Pre-tax income . . .

Income tax expense . . 31 9 30 (8)_ (5) (8)

income after taxes . . 46 22 40 (4) (5) (9)

Allowance for funds used during construction. net. 30 19 12 7

Preferred stock dividends . 19 18 12 1 1 4

Earnings Available for Common Stock . $ 57 $ 23 $ 40 $ (5) , 5 (6) $ (6)

Return on Average Common Equity . 10.1 % 3.4% 9.3% (15.1)% (10.5)% (4.2)%

(a) Operations and return on average common equity for 1978 represent the last pre-accident par.(b) TMt.1 costs were escluded frcm base revenues effective April 1.1980. TMi-2 costs were removed from base revenues

in early 1979. With respnt to the Forked River prolect. the credits charged to income for the allowance for funds used duringcons *ruction were suspendsd April 1,1980.

(c) Includes $6 milhon of operation and maintenan:e espenditures more than ottset by reserve capacity credits.

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REPORT OF AUDITORS

To the Board of DirectorsiJersey Central Power & Light Company

Morristown, New Jersey

We have examined the balance sheats of Jersey Central Power & Light Company as of December 31,1980 and 1979and the related statements of income, retained earnings and changes in financial position for each of the five yearsin the period ended December 31,1980. Our examinations were made in accordance with generally accepted auditingstandards and, accordingly, included such tests of the accounting records and such other auditing procedures aswe considered necessary in the circumstances.

As more fully discussed in Note 1 to the Financial Statements, the Company is unable to determine the ultimateconsequences of the accident at Unit No. 2 of the Three Mile Island Nuclear Generating Station (TMI-2) and of theresponse of ratemaking and other regulatory agencies to that accident. Among the contingencies and uncer-tainties which have resulted as a direct or indirect conseouence of this accident are questions concerning:

a. The recovery of the approximately $155 million investment in TMI-2;b. The recovery of $4 million of costs incurred, net of insurance proceeds received, and the indeterminable amount

of sminsured costs yet to be incurred in connection with the anticipated cleanup and restoration of TMI-2to service;

c. The recovery of the approximately $96 million investment in Unit No.1 of the Threa Mile Island NuclearGenerating Station;

d.The recovery of the approximately $412 million investment in the Forked River Nuclear project, constructionof which has been abandoned; and

e. The recovery of the excess,if any, of amounts w5ich might be paid in connection with claims for damagesresulting from the accident over available insurance proceeds.

The accompanying financial statements have been prepared in conformity with generally accepted accountingprinciples applicable to a going concern whict' contemplates, among other things, the reattrition of assets and theliquidation of liabilit|es in the normal course of business. The Company is currently not receiving a level of revenuessufficient to assure its ability to continue as a going concern. The continuation of the Company as a going concern isdependent upon obtaining adequate and timely rate relief, receiving financial assistance for the cleanup and testoration

- costs required for TMI-2, and maintaining and increasing the availability of credit under the revolving credit agree-ment (see Note 5 to the Financial Statsments).The =3ventual outcome and effect of the foregoing on the financialstatements cannot presently be determined.

As more fully discussed in Note 1 to the Finan cial Statements, the Company is engaged in litigation with a nuclear fuelsupplier involving the pricing of nuclear fuel. At this time, the outcome of the litigation and the ratemaking treatmentof any increased fuel costs which might result from an adverse legal determination are uncertain.

In our opinion, subject to the effect, L any, on the 1980 and 1979 financial statements of such adjustments as mighthave been required had the outcome of the uncertainties discussed in the preceding paragraphs been known, the

( aforementioned statements (pages 6 through 22) present fairly the financial position of Jersey Central Power & Light| Company at December 31,1980 and 1979 and the results of its operations and the changes in its financial position for

each of the five years in the period ended December 31,1980,in conformity with generally accepted accountingprinciples consistently applied during the period except for the change, with which we concur,in the method ofaccounting for energy clause revenue taxes as described in Note 8 to the Financial Statements.

COOPERS & LYBRANDMarch 5,1981

| 80 Park Plaza| Newark, New Jersey 071021

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STATEMENTS OF INCOME (Note 1)Jersey Central Power & Light Company

(In Thousandslfor the Years Ended December 3f, 1980 1979 1978 1977 1976

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Operating Revenues $882,975 $664,947 $591,294 $560,720 $468,230.. . .... ...

Operating Expenses:Fuel . ... ........................ .......... 142,796 110,110 97,780 97,165 80,128

Power purchased and interchanged, net:30,355 44,934 30,442 13,493 24,539Affiliates . .. . ... ....

Others 276,599 124,854 88,044 109,789 53,071.. .. .......

Deferral of energy costs, net (Note 2) (20,588) (20,881) (11,157) (23,160) 2,676.. . . ...

Other operation and maintenance (Note 8) . 165,061 124,332 126,626 106,206 92,949Depreciation (Note 2) . 60,162 57,216 45,893 40,049 36,010. ... . ...............

Taxes, other than income taxes (Note 8) . . . . . . . . . . 104,822 94,000 71,831 61,819 50.583

Totals . 759,207 534,565 449,459 405,361 339,956. ......

Operating income before income taxes , 123,768 130,382 141,835 155,359 128,274

Income taxes (Notes 2 and 7) 11,417 21,346 32,476 39,300 28,739

Operating income 112,351 109,036 109,359 _116,059 99,535

Other income and Deductions:Allowance for other funds used during

construction (Note 3) 9,898 23,149 18,517 14,006 13,203. . ..

Other income, net . . . . (558) 622 1,498 (23) (314)............ . .......

Income taxes on other income, net (Notes 2 and 7) . 33 (369) (944) (163) 21*

Total other income and deductions . 9,373 23,402 19,071 13,820 12,910

Income Before interest Charges 121,724 132,438 128,430 129,879 112,445... ...

Interest Charges:. . . .. 66,164 62,453 58,056 52,317 46,860Interest on first mortgage bonds

Interest on debentures and other long-term debt 6,681 7,078 7.574 7,765 7,712

Other interest 19,415 10,462 904 1,143 2,025.... ...... .................

Allowance for borrowed funds used duringconstruction-credit (net of tax) (Note 3) (9,548) (13,458) (11,302) (11,782) (8,505). .

Income taxes attributable to the allowance forborrowed funds (Notes 3 and 7) . . . . . . . . . . . . . . (2,040) (3,369) (2.182) (538) (1,310)

Total interest charges . . 80,S72 63,166 53,050 48,905 46,782

41,052 69,272 75,380 80,974 65,663Net Income . . . .. . ..

18,282 18,651 18,819 15,426 14,782Preferred Stock Dividends . . . .. ... .....

Eamings Available for Common Stock . $ 22,770 $ 50,621 $ 56,561 $ 65,548 $ S0,881

The accompanying notes are en Integral part of the financial statements.

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BALANC3 SNEETS (Note 1)Jersey CentralPower & Ught Company

(In Thousands}December 37, 1980 1979

ASSETS r

Utility plant (at original cost):In service (Note 1):

Investment in Three Mile Island Unit No. 2 . . . . . . . . . . . . . . . . . . . . . . . $ 167,229 $ 166,602

Other 1,537,857 1,450.155......... .................... ..... .... ........ .

Totals.................................................. 1,705.086 1,616,757

Less, accumulated depreciation (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . 421,092 369.487 ,

Net.................................................... 1,283,994 1,247,270

Construction work in progress (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,996 496,486

Held f or f utu re use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,113 5.870

Totals................................................ 1,393,103 1.749.626

Nuclea r fuel (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,609 144,154

Less, accumulated smortization (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,273 36.154

f Net nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . 102.336 108.000........ .....

N e t utili ty plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,495,439 1.857.626$

Investments:Other physical property, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360 364

1 1Other, at cost . .... .. .............. ............... . ..

To tal s . . . . . . . . . . . . . . . . . . . . . . . . . 361 365.... ...... .....

Current Assets:3,832 2.951Cash ............ ... .. .. . .. . .. .. . ..

Special deposits (Note 1) .. . .. .. . . . . 7,715 4,753

Temporary cash investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 4,004

Accounts receivable:Customers, net . . . 69,224 56,095.... ..... ..... .... .... .. ... ......

( Oth e rs (N o te 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,046 2.643

| Inventories, at average cost or less:Materials and supplies for construction and operation . . . . . . . . . . . . . . 25,451 22.314

j Fuel 13,812 25.815.. .. .. . . ...... ........... ....................

Prep aym e nts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,448 10.170

Totals . . . . 157,528 128.745........... .. ... ... ....... .. .... .....

Deferred Debits:Deferred energy costs (Notes 1 and 2) . . . . . . . . . . . 97,873 77.286. .. .. ... .

420,216 9,602Unamortized property losses (Notes 1 and 4) . . . . . . . .. .

Deferred costs-nuclear accident, net of insurance recoveries (Note 1) . 3,759 15,316

Deferred income taxes (Notes 2 and 7) . . . . . . . . . . . . . . . . . . . . . . . 26,980 14,449...

Other ...... .................................................. 12.120 10.665

Totafs.................................................. 560,948 127.318

To tal Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,214,276 $2.114.054

7he accompanying notes are an integralpart of the financial statements.

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(In Thousands)1980 1979

LIABILITIES AND CAPITALLong-Term Debt, Capital Stock and Surplus:First mortgage bonds (page 11) S 796,016 8 800,006.. .... .. . . . .. ..

Debentures (page 11) . . 78,540 80,620.. .. . .. . .. . .

Other long. term debt (page 11) . 5,233 10,465.. . .. . . . ..

Unamortized net discount on long. term debt (1,408) (2.181)... . . ....... ....

Totals . . . . . . . . . . 878,381 888,910... .. . . . ....... . .............

Cumulative preferred stock-mandatory redemption (page 10) . . . 38,750 41,250Less, capital stock expense . . . 1,240 1.395.. .... . . .. . ... ....... ....

Totals................................................... 37,510 39.855,Cumulative preferred stock-no mandatory redemption (page 10) . . . . 162,500 162.500Premium on cumulative preferred stock 442 442.... . ... .. .. ....

Less. capital stock expense . . . . . . . . . 765 1.202. . .. .. .. ..

Totals . 162,177 161,740................. ... . ....... ...........

Common stock and surplus (Note 1):Common stock (page 10) . . . . 153,713 153,713Capital surplus (Note 6) 437,408 436,989..... ..... . .... . .. ....... . ..

Retained earnings (Note 6) . . 81,428 58,658.... .... . .. . ......... ..

Totals . . .... ..... .. ...... .. . ... 672,549 649.360Totals . 1,750,617 1.739,865. ... . .. .. ... ... . ... .. . ......

Current uabilities:Securities due within one year (pages 10 and 11) 11,532 11,215. ..

Notes payable to banks (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,000 45,000

Accounts payable:Affiliates . . . 1,236 1,315. .... ... .. .. . .. .... .......... .....

Others 75,730 87.311. ........ ..... . ........ ..................

Dividends payable on cumulative preferred stock . . . 4,513 4,624. ...... . ...

Cu stom e r depo sits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,230 5,328

Tax es acc rued (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,558 16,723

Interest accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,666 20,172

Other (Note 1) 32,097 9.517. .. .. .. .. . .. ... . . ....

; To tals . . . . . . . . . . . . . . . . . . . . 249,562 201.205. .. ... . ... . .....

|

Deferred Credits and Other Liabilities:Deferred income taxes (Notes 2,4 and 7) . . . 177,979 112,173... . ........ .. ...

Unamortized investment credits (Notes 2 and 7) . . . . . . . . . . . . . . . . . . . . . 23,876 50.521Othe r . . . . . . . . 12,242 10,290....... .. ............... .................

| Totals . . . 214,097 172,984.. .. . .... ... . . .. ... .. ............

Commitments and Contingencies (Note 1)

Total Liabilities and Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,214,276 $2.114,054i

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8

. - . . . - -. _ ._.

STATEMENTS OF CHANGES IN FINANCIAL POSITION (Note 1)Jersey CentralPower & Light Company

(In 7housands)

For the Years Ended December 3f. 19G0 1979 1978 1977 1976 ,

f!

Source of Funds:Operations:

Net income $ 41,052 $ 69,272 $ 75,380 $ 80,974 $ 65,663............ . . . .. ..

Principal non-cash charges (credits) to income:Depreciation (Note 2) 60,162 57.216 45,893 40,049 36,010

.... . . . ... .

Amortization of nuclear fuel (Note 2) . . . . 7,260 16,325 14,096 10,997 9,503

investment tax credits, net (Notes 2 and 7) (28,422) (1,176) 18,816 15,864 2,654...

Deferred income taxes, net (Notes 2 and 7) 54,042 19,797 24,127 20,630 6,506

Allowance for other funds used duringconstruction (Note 3) . . . . . . . . . (9,898) (23.149) (18,517) (14,006) (13,203)

.

Total from operations . . . . . . . . . . . . . . . 124,196 138,285 159,795 154,508 107,133

Long-term debt 103.800 50,382 60,000 95,000. .. .. ... ....

Cash contributions from General Public UtilitiesCorporation, parent company (Note 6) 29,500 44,000 40,000 40,000

.

50,000Preferred stock (page 10) ... . .. . . ...

Bank borrowings, net (Note 5) 16,000 (9,100) 54,100 (26,700). ..

<> Sale of nuclear fuel . . . . . . . . . . . . . . 15,798........

Decrease in working capital (excluding debt)(a) 3,257 32,600 14,972

Other, net . . . .3,E33 5,989 2,942

Total source of funds $162,784 $295,085 $314,266 $304,508 $233,347' .

Applicationof Funds:$101,408 $181,130 $210,284 $148,295 $121,387Construction expenditures-Utility plant . .

Nuclear fuel 31,481 39,956 15,465 36,724 19,967

Allowance for other funds used duringconstruction (Note 3) (9,898) (23,149) (18,517) (14,006) (13,203)

Retirement or redemption of long-term debt andpreferred stock 12,480 38,114 18,520 5,495 43,104

. .. ...

Dividends on common stock 12,000 57,000 63,700 50,000

Dividends on preferred stock 18,282 18,637 18.805 15,776 14,769..

Deferred energy costs, net (Note 2) 20,588 20,881 11,157 23,160 (2,676)..

Def erred costs-nuclear accident, net of insurancerecoveries (Note 1) . (11,557) 6,096

. .

increase in working capital (excluding debt)(a) 1,552 18,532

|Other, net .

1,420 6,832

Total application of funds . $162,784 $295,085 $314,266 $304,508 $233,347

i (c) Changes in components of working capitalI (excluding debt):i Cash and temporary investments S 877 $ 4,654 $ (2,752) $ 2,977 $ (3,420)

|Special deposits . . 2,962 8 (360) 1,404 (167)

'

Accounts receivable . 33,532 (972) 12,849 8,066 4,255

Inventories . (8,866) 13,661 35 8,628 2,979

( Accounts payable . . 11,660 (38,570) (13.049) (12,620) 6,379

| Taxes accrued . (20,835) (11,884) 4,233 15,565 (21,757)

506 (2,853) 628 (2,144) (3,113)Interest accrued . .

(23,093) 3,356 (32) (3.344) (128)Other. net .. . . .. ... ...

7

... . . .. . . $ (3,257) $ (32,600) $ 1.552 $ 18,532 $ (14,972)! Total

The accompanying notes are en integralpart of the financial statements.

9

STATEMENTS OF RETAINED EARNINGS (Note 1)Jersey Central Power & Light Company

(In Thousands)

F;r the Years Ended December 31, 1980 1979 1978 1977 1976

$58,658 $20,023 $20,448 $18,950 $18.055Balance,beginning of year . . .. . . ..... .

Add, net income 41,052 69,272 75.380 80.974 65,663. ... . . . . .. .. .

Totals 99,710 89.295 95.828 99,924 83.718. . . . .. ... ... . . . ...

Deduct, dividends on capital stock (in cash):Cumulative preferred stock (at the annual rates indicated

below):500 500 500 500 5004% Series ($4 a share) . . .. . .. . ..

9.36% Series ($9.36 a share) 2,340 2,340 2,340 2,340 2,340. .. . . ...

8.12% Series ($8.12 a share) 2,030 2,030 2,030 2,030 2,030. . . . . ..

8% Series ($8 a share) 2,000 2,000 2,000 2,000 2,000. . . . . ...

7.88% Series E ($7.88 a share) . . 1,970 1,970 1,970 1,970 1,970. .. . ...

2,489 2,672 2,840 3.009 3,17813.50% Series F ($13.50 a share) . . . . .

. . . . 2,578 2,750 2,750 2.750 2,75011% Series G ($11 a share)8.75% Series H ($2.19 a share) 4,375 4,375 4,375 1,177

. . . ...

Common stock (not declared on a per share basis) . 12,000 57,000 63,700 50.000..

Totals 18.282 30,637 75.805 79,476 64,768. . . .

Balance, end of year (Notes 1 and 6) $81.428 $58,658 $20,023 $20.448 $18.950. .. . ... .. . ..

The accompanying notes are an integral part of the financial statements.

CAPITAL STOCK

December 31,1980 (In Thousands)

Cumulative preferred stock, without par value,15.600,000 shares authorized(3,525,000 shares issued and outstanding):Cumulative preferred stock-mandatory redemption (b):

175,000 shares,13.50% Series F, callable initially, subject to certain limitations, at $113.50 a share $ 17,500

225,000 shares 11% Series G, callable subject to certain limitations, at $108.00 a share 22.500

Subtotal 40,000. .. .. .. . .. .... . . ... .. . .

Series F, sinking fund requirement due within one year (12,500 shares) . . . (1.250)(a)$ 38,750Total cumulative preferred stock-mandatory redemption

Cumulative preferred stock-no mandatory redemption (b):125.000 shares. 4% Series, callable at $106.50 a share $ 12,500

250,000 shares,9.36% Series, callable at $106.42 a share 25,000

250,000 shares 8.12% Series, callable at $107.59 a share 25,000. . .

250,000 shares,8% Series, callab!e at $107.91 a share 25,000.

25,000250,000 shares,7.88% Series E, callable at $107.59 a share . . . . .. .

2,000,000 shares,8.75% Series H, callable initially, subject to certain limitations, at $27.19 a share50,000

(sold in 1977) , ... .... ..... ....................... ... . ... ..... .

Total cumulative preferred stock-no mandatory redemption . $162,500. ... . . ... .

C:mmon stock, par value $10 a share,16,000,000 shares authorized,15,371,270 shares issued and outstanding (Notes 5 and 6) . . .. . . $153,713

( ) There has been an annual redemption requirement of 12,500 shares ($1.250.000) of Series F Cumulative Preferred Stock since 1975 whichwill extend through 1994. Also, beginning in 1980, there is an annual redemption requirement of 12,500 shares ($1.250.000) of Series GCumu!ative Preferred Stock which extends through 1999. During 1980, the Company satisfied its 1981 annual redemption requiremem of12,500 shares ($1,250.000) of Series G Cumulabve Preferred Stock. The Company's annual aggregate liability with regard to redemptionprovisions on its cumulative preferred stock for the years 1981 thrcugh 1985, based on issues outstanding December 31.1980, is$11,250.000. Att redemptions are at stated value of the shares, plus accrued dividends. No redemption of preferred stock may be madeunless dividends on all preferred stock for all past quarterly dividends have been paid or declared and set aside for payment.

C) If dividends upon any shares of cumulative preferred stock are in arrears to an amount equal to the annual dividend, the holders of pre.ferred stock, votmg as a class, are entitled to elect a rnajority of the board of directors until all dividends in arrears have been paid.

10

LONS-TERM DESTJersey Central Power & Light Company

December 31.1980 (In Thousands)

First Mortgage Bonds-Series as noted(a)(d): ,

10% % Series due 1983 . $ 35.000 7% % Series due 1998* 8,000. . . .

3% % Series due 1984 5,868 7% % Series due 1998 24,191.. .. . . . . ..

3% % Series due 1984* 8,700 12 % Series due 1999 50,000(e). . .. .. .

3% % Series due 1985 . 17,916 8%% Series due 1999 8.047. .. . ... .

10% % Series due 1985 35,000 11%% Series due 1999 47,500(e). ... .

4% % Series due 1986 9,456 10 % Series due 2000 11,995. .. .. .. .

5% Series due 1987 13,806 8% % Series due 2000 15,701. .. .. .

4% % Series due 1988* 7,500 8% % Series due 2001 33.902. . .. . .. . ... .

5% % Series due 1989 4,625 8% Series due 2001 24.593. . . . . ... .

4% % Series due 1990* 5,000 8% Series due 2002 23,569. . ....

4%% Series due 1992 10,213 8% % Series due 2003 48,279. . . ..

4%% Series due 1993 15,622 8% % Series due 2003 29,840. . . .

4% % Series due 1994 14,502 9% % Series due 2006 59,748. . ...

4% % Series due 1995 17,430 9% % Series due 2006 35,000. . . .

6% % Series due 1996 25,710 8% % Series due 2007 59,899.. . . . ...

6% Series due 1997* 10,000 9% Series due 2008 50,000g . .. . . .

[ 6% % Series due 1997 27,094 7% % Series due 2009 6.300.. . . . .. .... ..

Subtotal 800,006. .. .

Balance of sinking fund requirements duewithin one year (3.990) $796,016.. .

Debentures-Series as noted(b):4%% Series due 1988 $ 5.940 9% % Series due 19% 20,500. .

4%% Series due 1989* 3,960 8%% Series due 1998 25.200. . . .. .

4%% Series due 1989 . 3.400 Subtotal . 79,600.. . .. . . ..

5% Series due 1990* 3,500..

5% % Series due 1990 6,300 Balance of sinking fund requirements due. ..

6% Series due 1992 10,800 within one year (1.060) 78,540... . .. . .. . .. .

|i

Other long-term debt (c) . . . . . . . . . . . $ 10,465.... . .. ..... ......... .. . .. ... . .. ... ..

Other long. term debt due within one year . . . . . . . . . . . . . . . . . . . . . . . . (5,232) 5,233.. .... . ................i

| Unamortized net discount on iong-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,408)... .... . ......

Total long-te rm d ebt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $878,381............ .................. .

( * lssued by New Jersey Power & Light Company and assumed by the Company.1 (1) For the years 1982 through 1985 the Company expects to meet its sinking fund requirements by the application of qualifying property| additions to the extent permissible together with the deposit of cash and/or reacquired bonds. Based on bonds outstanding at December

31.1980, such depos s of cash and/or bonds will be in the amount of $3.989,090 per annum for the years 1982 through 1985.(b) For the years 1982 through 1985 (based on debentures outstanding at December 31,1980) cash sinking fund requirements with respect to

these debentures will be $2,080,000 per annum.(c) Represents a series of notes payable to the supplier of the turbo-generator for the abandoned Forked River project (see Note 1) with face

. amounts of $2,616,310 each maturing in sii month intervals ending on July 31,1982. The notes have applicable interest computed into their| principal face amounts.l (d) Substantially all the uti:ity plant of the Company is subject to the lien of the mortgage.

(:) With regard to these series of first mortgage bonds, see Note 5 of the accompanying Notes to the Financial Statements.

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L

NOTES TO FINANCIAL STATEMENTSJersey CentralPower & Light Company

1. Commitments and Contingencies of $9.2 million transferred to Deferred Debits (Deferred costsThree Mile Island Nuclear Accident: On March 28,1979, an -nuclear accident). These deferred debits, which aggregate

accident occurred at Unit No. 2 of the Three Mile Island $54.5 million, have been partially offset by insurance proceeds

nuclear generating station (TMI-2) resulting in significant of $50.7 million received through December 31,1980.

damage to TMI-2 and a release of some low level radiation The Company's first mortgage bond indentures provido for

which published reports of governmental agencies indicate insurance proceeds to be held by the trustee for reimburse-

did not constitute a significant public health or safety hazard. ment to the Company for either expenditures on repair of

TMI-2 is jointly owned by the Company (25%) and its damaged property or construction of other bondable property.

cffill:tes Metropolitan Edison Company (Met-Ed) (50%) insurance proceeds of $7.2 million remained on deposit

and Pennsylvania Electric Company (Penelec)(25%) who with the trustee at December 31,1980. Such amount is

cra collectively owned by General Public Utilities Corpora- recorded on the balance sheet as a speclat deposit and in-cluded in the aforementioned insurance proceeds,tion (GPU). At December 31,1980, total net investment by

the Company and its affiliates in TMI 2 was approximately The Company and its affiliatcs carried the maximum insur-

$661 million ($706 million investment less $45 million accumu- ance coverage available at the time ($300 million) for damage

1 ted depreciation), excluding the unamortized investment to the unit and core and for decontamination expenses. it is

Cf rpproximately $37 million in the nuclear fuel core, of which the Company's and its affiliates' belief that the recoveries

the Company's share is approximately $155 million ($167 from the insurance companies will ap[ roximate the amount

million less $12 million accumulated depreciation) excluding of the insurance carried as estimated cleanup expenditures

the unamortized investment of approximately $9 million in are expded to exceed significantly the available insurancethe nuclear fuel core, coverage.

Three Mile Island nuclear generating station Unit No.1 The Company and its affiliates do not know the extent, if

(TMI-1), which adjoins TMI-2, was out of service for a sched- any, to which the expenditures for repair and restoration of

ul d refueling and was not involved in the accident. TMI-1 is the unit to operation will represent plant improvements or

jointly owned by the Company and its affiliates in the same other items that are capitalizable and which may be recov-

percentages as TMI-2. At December 31,1980, total net invest- erable in the future through rates charged to customers, by

m:nt by the Company in TMI-1 was approximately $96 amortization or depreciation charges. Moreover, the Company

million, including the unamortized investment in the and its affiliates are seeking financial assistance from the

nuclear fuel core of $7.5 million. By orders dated July 2,1979 Federal government and the utility industry. Although, as set

cnd August 9,1979, the Nuclear Regulatory Commission forth below, the Pennsylvania Public Utility Commission

(NRC) directed that TMI-1 remain in a shut-down condition(PaPUC) has expressed a contrary view with respect to the

until resumption of operation is authorized by the NRC, after costs of responding to the TMI-2 accident, management be-

public hearings and the satisfaction of various requirements lieves that any loss suffered by the Company and its affiliates

set forth in such orders. i.4 ~mmed on October 15, for which they do not receive financial assistance, or reim-,

1980 before an NRC Atomic Safety and w : ,g Board. bursement from suppliers or others, should be recoverable in

TMI-1 is not expected to return to operation before the fourth rates. Moreover,it is management's intent to seek to recover

qu rter of 1981. such costs in future rate and/or judicial proceedings. Underthese circumstances, the amount of loss, if any, suffered

Cost of Cleanup and Restoration: Current projections by the by the Co,npany and its affiliates resulting from the TMI-2,

Company and its affiliates provide for decontamination, accident is not p asently determinable and, therefore, no pro-|

including fuel removal, to be completed in 1985, at a cost of vision has been made in their accounts.$750 million in current dollars ($1 billion when adjusted for in its rate order of September 18,1980 affecting the Com.

inft: tion of 10% per annum). Restoration of the unit (including pany's affiliates, the PaPUC required, among other things,r;plicement of the nuclear fuel core)is expected to take an that Met-Ed " cease and desist from using any operating

additional two years, at a cost of $260 million in current dollars revenues for uninsured cleanup and restoration costs" of

($430 million when adjusted for inflation of 10% per annum). TMI-2. In this order, the PaPUC stated that "these cleanup

The estimated amounts do not include the cost of modifica- costs and expenditures not covered by insurance ultimately

ti:ns to meet post-accident regulatory requirements (esti- are the responsibility of the company's stockholders and/or

m:ted at $80 million) or the :~st of ordinary operation and the Federal government; however, they are not the responsi-

m:intenance of TMI-2 (estimated at $170 million) expected to bility of the ratepayers" and that the cease and desist orderI be incurred during this period. is designed "to inure that ratepayer monies are not being

The above estimates are subject to major uncertainties, used, currently or in the future, either directly or indirectly, to

including (a) the regulatory environment, (b) the full scope of pay clean-up expenses.";

i the challenges in decontaminating the reactor, (c) the effect On September 26,1980, Met Ed filed a complaint in the

| cf government regulations on the isrue of mste disposal and United States District Court for the Middle District of Pennsyl-

| (d) the reusability of major components. vania seeking a temporary restraining order and an injunctionThe Company, as of December 31,1980, in respor. ling to against enforcement of the PaPUC's cease and desist order'

the accident at TMI-2, has deferred $45.3 million of costs as well as declaratory relief.The District Court deniedassociated with the cleanup and recovery process. In addition Met-Ed's request for a temporary restraining crder; the pro-t) the deferred cleanup and recovery costs, the TMI-2 nuclear ceedings relating to Met-Ed's request for an injunction are

fuel core was retired in 1979 and its unamortized book cost being held in abeyance at Met-Ed's request.

12

- _ _ . _ _ _ _ _ _ _ _ _ _ _ _ . _- ..- _-- . - - _ . _ . - . . _ _ _ _ _ - _ . .

; Jersey CentralPower a Upht Company ,

! On October 16,1980, Met-Ed filed an appeal Cf the af:re- during April, May and June,1979. Acccrdingly, such cmount'

mentioned PaPUC crder of September 18,1980 t3 the was rec:rded cs a ch:rg2 is energy costs by the Company

: Commonwealth Court of Pennsylvania and the matter is now in June,1979. i

pending in that court. By order dated April 1,1980, the NJBPU removed from the'

Met-Ed and Penelec do not know what effect these actions Company's base rates the capital and operating costs asso- ?

cf the PaPUC may have on their ultimate ability to recover clated with TMl 1 of $17.9 million annually.That order did not ,uninsured TMI-2 cleanup costs from rstepayers, in the event reduce the Company's charges to customers; instead, it,

t of a final unfavorable determination in administrative or directed that an equivalent amount (after adjustment for,

I

i judicial proceedings, these losses would have a meterial ad- revenue taxes) be applied to accelerate the amortization of itsv:rse effect on the eamings and financial position of Met Ed deferred energy costs incurred prior to the TMI-2 accident,'

and Peneloc. lf the New Jersey Board of Public Utilities in removing TMI 1 from the Company's base rates, the NJBPU

(NJ2PU) were to take similar action with respect to the Com- determined that "given the extended period of unavailability;

i piny and such action were not reversed by appeal, this and the impossibility of ascertaining when the unit may

1 would have a material adverse effect on the Company's earn. retum to service, TMl-1 is not used and useful in supplying

| ings and financialIsosition, energy...." The Company has appealed to the Supreme Courti In order to finance the substantial expenditures required of New Jersey, that portion of the order which removed TMl-1

|. f r replacement energy, cleanup and repair, and other added costs f rom base rates. Other parties have filed cross appeals,

! costs resulting from this accident, the Company and its contesting the provisions of that order directing the accelera-' cffiliates entered into a revolving credit agreement with a tion of the amortization of prior deferred energy costs. Oral .

| gr:up of banks in June,1979. In addition, the Company issued argument has been held and a decision is pending.7

i $50 million of first mortgage bonds in June,1979 and $47.5 On April 29,1980, the Company filed a petition with the .

j million of first mortgage bonds in October,1979, $25 million NJBPU requesting an increase in base rates of $173 millionof which was applied to the payment of maturing borids annually. The petition requested an interim increase of

j $60 million annually subject to review and possible refund at(see Note 5). ,

; '

| As indicated below, the operating expenses, depreciation the conclusion of the rate case. On May 13,1980, the NJBPU

; cnd capital costs associated with the Company's investment granted such interim increase subject to possible refund.j in TMI-1 and TMI-2 are not being recovered from custom- Through December 31,1980, the Company has collected

( crs. Such depreciatsn and capital costs are currently being approximately $38 million pursuint to such interim increase.

! riflected in the financial statements in that (a) depreciation In the opinion of the Company's counsel in this proceeding,

j" chirges (TMI-1,$3 million annually and TMI-2, $6 million there is little likelihood that such increase will be refunded.

j cnnually) are being charged to expense ,(b) the interest and With respect to additional energy costs, including those'

,

' pr forred stock dividend components of these investments resulting from the outage at TMI-1 and TMI-2, the NJBPU has

f. tr3 being accrued and (c) the earnings available for common allowed the Company to recover these costs from rate-

[stock reflect the loss of the return on the common equity payers over current and future periods. Pending before thecamponents of that investment. NJBPU is a petition for an increase in the Company's levelized

The Company and its affiliates are members of the Pennsy!. energy adjustment clause (LEAC) of $104.6 million annually,

vinia-NewJersey-Maryland Interconnection (PJM). The requested to become effective March 9,1981.

generating facilities of the membei companies cumulatively During the pendency of the proceedings which resulted in i

satisfy their capacity requirements. As a result of the unavail- the June 18,1979 order of the NJBPU, certain interveaors

cbility of both TMI units, the GPU System is unable to meet its requested that the NJBPU consider the issue of fault regard-

obligation for their allocated share of the PJM capacity ing the cause. bon of the TMI-2 accident. in accordance with.

l

requirements. Consequently, the Company and its affiliates the NJBPU's dirntion, legal memoranda have been filed ;

will be required to make payments to other PJM members attempting to identify the legal standards which should govern~

in the future. Furthermore, until such time as TMl or other the NJBPU's evalution of fault, the legal and factual con-

rtplacement capacity becomes available, the GPU System tentions regarding fault, the regulatory consequences of a

will continue to be unable to meet its PJM obligation. fault finding, the NJBPU's legal authority to impose such con-

In view of the association of such costs with the accident at sequences and the implications thereof. The NJBPU has not

TMI-2, their ultimate ratemaking treatment is uncertain. established a hearing date to begin consideration of the

Should such future cost not be recoverable in rates, this could above issues. |

have a material adverse effect on future earnings. In cor.aection with the current base rate and LEAC pro- [.

ceedings, intervenors have filed motions requesting, among ,

! Rite Proceedings: On January 31,1979, the Company was other items, a moratorium on any additional base rate reliel

| gr:nted a $33.8 million annual rate increase by the NJBPU, and the suspension of the flow-through to ratepayers of

| which, among other things, reflected in base rates its invest. TMl accident related replacement power costs pending the ;

I ment in TMI-2 and the operating and maintenance costs final outcome of fault proceedings. t

icssociated with the unit. On June 18,1979, the NJBPU issueda r te order reducing annual tease revenues by $29 million investigations: On January 23,1980, the NRC imposed civilwhich represented the amount allowed by the NJBPU in its penalties against Met-Ed for C155,000 for safety, maintenance,

! January 31,1979 order for the Company's annual capital procedural and training violations at TMI. The NRC has also,

| . cnd operating costs associated with its interest in TMI-2. The stated that, depending upon the findings of continuing investi-crder also provided for a reduction in energy revenues of gations into the TMI-2 accident, it may take additional en-i

| $7.3 million over a prospective eighteen month period as an forcement action such as assessing additional civil penaltieseffset to base rate revenues attributable to TMI-2, collected or ordering the suspension, modification or revocation of

13

_, . _ _ _ ,~m. . _ _ _ . _ . _ _ _ u _. __ _ _ . _ _

ii

; Met-Ed's license to oporrt)TMi-2. Met-Ed does not know what a fund cf $20 milli:n f r economic 1:ss cirims and c separate

j the ultimate outcome of this matter will be. fund of $5 million for public health purposes. Earlier, theOn October 30,1979, the Presidential (Komony) Commis- court had held that personal injury claims (other than for

i sion on the Accident at Three Mile Island issued its report. medical detection services) could not be pursued in classThe report states, in part, that its " investigation has revealed action proceedings and the February,1981 agreement does ,

,

| problems with the ' system' that manufactures, operates and not deal with such claims. i

'j regulates nuclear power plants" and the shortcomings which Class suits for damages on behalf of purchasers of GPU! turned the incident into a serious accident "are attributable common stock during the period August 25,1975 throughj t3 the utility, to suppliers of equipment and to the federal April 1,1979 have also been instituted against GPU andj c:mmission that regulates nuclear power." The NRC's Special certain of its directors as a result of the accident. These suits ,

j inquiry Group (Rogovin) and the U.S. Senate Subcommittee have raised questions, which have not yet been resolved, as to |

cn Nuclear Regulation (Hart Committee) issued the results of whether certain claims are bevond the insurance coveragetheir investigations of the accident at TMI-2 on January 23, for directors' and officers' livlity carried by the System'

1980 and July 2,1980, respectively. Their conclusions with companies. The directors have filed a third-party complaintrespect to these matters were similar to those of the Kemeny against the insurance company providing such primary insur-3

Commission.|

ance coverage.in March,1960, the NJBPU ordered a study of future options On March 25,1980, the Company and its affiliates filed a;

|for the Company. The firm conducting the study has been complaint against the supplier (and its parent) of the nuclear '

directed to determine whether the ultimate costs to the steam supply system, and associated services, training andCcmpany a customers of the accident at TMI-2 could be procedures for TMI 2.The complaint is for damages suffered :,

; lessened if the Company's corporate structure was changed by the Company and its affiliates as a result of the accident.*

| cr reorganized. The study, a portion of which has now been The complaint alleged that the damages incurred werej c:mpleted and submitted to the NJBPU, concludes that "the in excess of $300 million and that very substantial future

process of bankruptcy introduces risks of higher costs to damages are expected. On July 18,1980, the defendantsj ret: payers and would probably reduce the flexibility of the answered the complaint denying liability and seeking $4.1

NJBPU and the Company to make important decisions during million, plus finance charges, from the Company and its]

e critical time period. Therefore, we believe that the NJBPU affiliates for services rendered and equipment allegedly; should continue to provide rate relief necessary to preserve provided under the contract for the TMI-2 nuclear steam4

the solvency of the Company until the strategic options ,,pp,y ,y,,,,*! study initiated by the NJBPU has been completed."I The Company and its affiliates do not know what effect, The Company and its affiliates are presently unable to

estimate the likelihood of an unfavorable outcome on any of'if cny, these reports will have upon them.

| Other investigations and inquiries into the nature, causes the matters set forth in the preceding paragraphs or their

j cnd consequences of the TMI-2 accident commenced by financial exposure with respect thereto.,

f virlaus federal and state bodies are continuing. The Company On December 8,1900, the Company and its affiliates filed

| End its affiliates are unable to estimate the full scope and a claim with the NRC for damages, estimated at about $4

; n ture of these continuing investigations or the potential billion, resulting from the accident. The claim alleges that the

i ccnsequences thereof to the investors in the securities of the NRC violated its statutory and regulatory duties to warn

j Ccmpany and its affiliates. The Company and its affiliates nuclear plant licensees of defects in equipment, analyses,

j tra Eleo unable to determine the impact,if any, the results of procedures and training at nuclear facilities.The claim also

such investigations may have on the proceedings to return charges that following a similar incident at a nuclear poweri

TMI-1 to operation and the efforts to cleanup and rehabili- plant operated by an unaffiliated utility which the NRC had

tata TMI-2. Investigated, the NRC failed to take and recommend appro-

! priate action and warn Met-Ed and other licensees of similar

| Lit /gation: As a result of the accident, the Company, and/or retctors of any defects. The claim seeks to recover the cost'

its cffiliates, have been named as defendants in various law of cleanup and restoration, replacement power costs, lost

! suits. The suits include (i) individual suits as well as purported revenues and increased financing costs. The NRC has not

! cnd actual class actions for personal and property damages yet responded to the claim. ,

(including claims for punitive damages) resulting from thecccident and (ii) suits to enjoin the future operation of TMI-2. insurance:The property hmage insurance, and t% $300 mil-

The suits described in (i) above involve questions as to lion limit of coverage,were applicable to both TMl-1 andwhether certain of such claims, material in amount and arising TMI-2. This property insuraace had been reduced by claimsout of both the accident itself and the cleanup and decon- paid. The insurance carriert have reinstated the originaltImination efforts are (a) subject to limitation of liability set coverage limits for TMI-1 With regard to property insuranceby the Price-Anderson Act; and (b) outside the insurance for TMI-2, coverage has been reinstated only for possiblecoverage provided pursuant to the Price-Anderson Act. damage which might result from a non-r,uclear accident r

These questions have not yet been resolved. during the unit's restoration period. Additional propertyin February,1981, the insurance companies and repre- damage insurance for TMl-1 of up to $375 million was

sentatives in the class actions reached an agreement for the obtained by the subsidiaries through membership in Nuclearproposed settlement of the class action claims for economic Mutual Limited (NML). As members of NML, the sub-1:sses resulting f+om the TMI-2 accident. lf the settlement sidiaries are subject to annual assessments of up to 14 timesagreement is approved by the court in which the class action their annual premium, or $19.3 million, in the event of ancilims are pending, the insurance companies would establish incident at a nuclear plant of any member company.

14

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1 .. t

Jereer CeMrelPower & Upht Company i,

j The Price-Anderson Amendments to the Atomic Energy Act the Oyster Crook st5 tion, with cn option f;r five additional |3 limit liability to third parties is $$80 million f r each nuclear annu-l reloads beginning in 1976. In 1974, the supplier c ff: red fincident. Coverage of the first St40 million (raised to $160 an extension of that contract to cover five additional reloads ;

million following ths accide@f such liability is provided by beginning in 1981.The Company believes that it effectively i

; private insurance. The next $355 million is provided by assess- exercised the option in the initial contract and accepted the '

monts of up to the limit of $5 million rst nuclear reactor per offer to extend the contract to cover the annual reloads ,I incident, but not more than $10 million per reactor in any through 1985. The supplier disputes this position and, in ;

'; calendar year. The remainder is provided by a government November,1978, submitted bills for material and service ini indemnity. Based on the ownership of three nuclear reactors, the aggregate amount of approximately $33 million, covering .

'

!; the Company's maximum potential assessment under these reloads supplied in 1977,1978 and 1979. The supplier stated' provisions would be $7.5 million per incident but not more than that its objective was to establish revised prices and other ji $15 million per calendar year for claims covered by this terms and conditions rather than to diminish supplies and,! insurance, without prejudice to its legal position, provided the 1979 ,

i The Company's and its affiliates * private insurance under annual fuel reload. Of the $33 million claimed by the supplier! Price-Anderson with respect to TMI-2 provides that coverage to be due, the Company has paid approximately $4 million, i

! is reduced by claims paid but is subject to reinstatement and is of the opinion that the balance of approximately $29'

i 13 original coverage limits upon approvsl by the insurance million is not payable by it and has so informed the supplier. ,

; carriers. The Company and its affiliates have applied for such On January 26,1979, the supplier filed a suit against the1 rtinstatement but are unable at this time to ascertain whether Company and some of its affiliates. The Company has filed

cr when such reinstatements will be approved. The NRC a counterclaim for a declaratory judgment confirming its viewi

,

; has informed Met-Ed that the failure by it to obtain such rein- of the contractual status and for damages and has also filedi statement could result in the suspension or revocatioes of another suit against the supplier and its parent seeking ;

! its licei'se to operate TMI-2. da nages. The Company believes that any additional amount,[Effective September 15,1980, the Company with respect that it might be required to pay if the supplier is successful in

to its Oyster Creek nuclear generating station only, is a its suit would be valid costs and should be recognized formember of Nuclear Electric Insurance Limited (NEIL). NEIL, ratemaking purposes. However, there can be no assurance;

; a mutual insurance company, provides coverage for the that tNs will be the case. If the suits were to be resolved ini inciemental cost of replacement power durir* y rolonged the supplier's favor, the Company would incur $10 million ;

! accidental outages of nuclear power generating units. As a in additional fuel expense, based on the amount of fuel |

! member of NEIL, the Company is subject to a retrospective consumed through December 31,1980.j premium adjustment limited to $7.55 million, which is five,

times its annual premium,in the event that losses exceed the Other: The Company's construction program, which extends !

E accumulated funds available to NEIL over several years, contempiates expenditures of approxi-

| The Company's insurance coverage under NEIL provides mately $131 million during 1981. In connection with this

| for a maximum weekly indemnity of $2 million, beginning Mnstruction program, the Company has incurred substantial |twenty-six weeks after an outage, for the incremental cost of commitments.i ;

| rsplacement power. The policy limits covered outages to The Company is engaged in negotiations and,in certain |i fifty-two weeks at 100% of the weekly indemnity and fifty-two instances, litigation with various suppliers relating to the [} cdditional weeks at 50% of the weekly indemnity. latters' claims for del 6y or termination charges or increased *

#

fees which such suppliers assert result from the Company'sForked River Project: On November 6,1980, as a result of revisions of their construction plans and schedules and/orregulatory, cost and other uncertainties, the Company aban- from the increased scope of supply.1he Company's manage- '

| doned its effort to proceed with the construction of the Forked ment does not expect at this time that such negotiations will'

River nuclear project. The Company's investment in the result in any material increase in costs that would not be valid 5

project of $412 million (including $20 million of estimated costs properly recognizable through the ratemaking process. ,

a cancellation costs) at December 31,1980 has been reclas- Claims for damages arising out of the operation of the! sified to Deferred Debts (Unamortized property losses).Of this Oyster Creek station have been asserted. The Company's

investment, $82 million reflects cor. f.ruction financing costs management believes that such liability, if any, as it may have'

,

cnd $23 million represents expenditures on contracts for for such damages in the pending suits and for all asserted |nuclear fuel. and potential similar claims would not be material. !

| During the second quarter of 1979, in view of the impact of The Company was a participant in the Atlantic generating

i the accident at TMI-2 on its financing capability, the Company station project. In December,1978, the unaffiliated co-owner i

: tuspended construction on the project. Furthermore, effective and principal sponsor of the station announced the abandon-April 1,1980, the Comrony ceased the accrual of oredits ment of the project. At December 31,100, the Company'sto income for the ci.rrying cost of funds associated with con- unamor'! zed investment in the project was $4.1 million. In itsstruction of the or sject (allowance for funds used during pending rate increase application to the IJJBPU, the Company !

| construction), pending a decision as to its continuation. is seeking allowance for amortization of its investment in the I

! In its April 29,1980 rate increase application, the Company project for retomaking purposes. In testimony submittedis seeking allowance for amortization of its investment in the in connection with the Company's motion for an interim rate'

,

project for ratemaking purposes. Increase, NJSPU staff members recommended allowancefor retomaking purposes of amortization of this investment

Nuoleer Fue1 Litigellen: In 1971, the Company entsred into over a twenty year period. Effective April 1,1980, in accord- ;

o contract for the purchase of three nuclear fuel reloads for ance with the Federal Energy Regulatory Commission's '

i

15 iI

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authoriz; tion, the Comp;ny is am:rtizing its investment in be assessed agilnst the gt;up. Beginning with the ye:r 1979,the Atlantic station (n:t cf rel:ted income tax benefits cf C PU cnd its suosidi ries ch:rged the method cf tiloc ti:n cf$:.4 million) over a period of twenty years. Federal income taxes.The effect of this change is to allocate

the tax reductic n attributable to GPU's expenses among the

2. Summary of Significant Accounting Policles subsidiaries in proportion to the dollars nf average commona chWnvesWeMNWneadsMa@dgh |

General It is the geneal policy of the Company to secord year. a n, ea s s a e n ch cash j

additions to utility plant at cost, which includes material E*Y**" * ** * *" E"* "E ' ** * * **labor, overheads and the allowance for funds used during ""Y' "" * *construction (AFC). The cost of current repairs (except those su h net operating loss carrybacks to offset the tax liabilityr:lited to the nuclear accident described in Note 1) and they would otherwise have on a separate return basis (afterminor replacements is charged io appropriate operating reflecting any investment tax credits which could be utilizedcxpense and clearing accounts and the cost of renewals and on a separate return basis).This method of allocationbett:rments is capitalized. The original cost of utility pf ant provides that a participant other than GPU will not pay a taxr;'. ired, or otherwise disposed of,is charged to accumulated in excess of its separate return tax liability,depreciation. The revenues of the Company in any period are dependent

to a significant e xtent upon the costs which are recognizedOperat/ng Revenues: Revenues are generally recorded on the and allowed in that period for ratemaking purposes, in accord-basis c'. billings rendered. ance therewith, the Company has employed the following

Del:tred Energy Costs:The Company follows a policy ofrecognizing energy costs in the period in which the related ,

energy clause revenues are billed (see Note 1).

lives perm 9ted by the Internal Revenue Code in computingDepreciation:The Company provides for depreciation at depreciation deductions and provides for deferred incomeEnnual rates determined and revised periodically, on the basis

taxes where permitted in the ratemaking process. However,cf studies, to be sufficient to amortize the original cost of

in 1980, the Cc.mpany utilized straight-line tax depreciationdepreciable property over estimated remaining service lives, with respect tc TMI-2.which are generally longer than those employed for tax pur-peses. The Company used depreciation rates which, on anaggregate composite basis, resulted in an approximate annual Investment Credits:The 3% investment credits are belag

rit3 cf 3.58%,3.57%,3.40%,3.30% and 3.18% for the years amortized over a ten year period while the 4% and 10%

1980,1979,1978,1977 and 1976, respectively. Investment credits are being amortized over the estimatedservice lives of the related facilities.

Nuclear Plant Decommissioning Costs:In accordance withrrt; making determinations, the Company is charging to 3. Allowance for Funds Used During ConstructionExpense and crediting to a non-funded reserve amounts in' The applicable regulatory Uniform System of Accounts pro-t:nded to provide over their service lives for the cost of vides for AFC which is defined as including the net cost duringdecommissioning nuclear plants at the end of their useful the period of construction of borrowed funds (allowance for

. livIs (ectimated for purposes of the ratemuing determina- borrowed funds used during construction) used for construc-tiins to ra.7ge between $27 and $36 million per unit in then tion purposes a7d a reasonable rate on other funds (allowance

! current dollars assuming inplace entombment). In accordance for other funds used during construction) when so used.While! with ratemaking requirements, these charges make no pro- AFC results in a (,urrent increase in utility p! ant to be rec-

visi:n for possible inflation in decommissioning costs during ognized for ratemaking purposes and represents,in thisth] period prior to decom'missioning but are expected to be fashion, current compensation, AFC is not an item of currentsubject to modification to take cognizance of that factor. cash income;instead, AFC is realized in cash after the related

plant is placed in service by means of the allowance forAm:rtization of Nuclear Fuel: The amortization of nuclear fuel depreciation charges based on the total cost of the plant,is provided on a unit of production basis. Rates are determined including AFC.End periodically revised to amortize the cost over the useful To the extent permitted in the ratemaking proceedings oflif]. The Company is providing for estimated future handling the Company, the income tax reductions associated with thec:sts for the spent Oyster Creek nuclear fuel and similar treat * interest component of AFC have been allocated to reducei

| m:nt will be provided for future handling costs for the spent interest charges and, correspondingly, have not reducedTMI nuclear fuel when required. Previously accumulated income taxes charged to operating expenses. Pursuant to rateestimated residual credits, net of previously accumulated orders, the Company employed a partial net of tax AFCestimated costs of reprocessing, for the Oyster Creek station accrual rate from June,1975 through July,1976 and, effective

i

I nucl:ar Nel are being amortized to fuel expense on a unit of September,1977, began employing a net of tax accrual rateproducaon basis, for AFC on certain construction projects while using a

gross AFC rate on others.Inc me Taxes: GPU and its subsidiaries file consolidated The Company has accrued AFC using rates which, on an

! Federal income tax returns. All participants in a consolidated aggregate composite basis, resulted in an annual rate of| Federal income tax return are severally liable for the full 9.30%,8.86%,8.85%,9.15% and 8.65% for the years 1900,

amount of any tax, including penalties and interest, which may 1979,1978,1977 and 1976, respectively.

16*

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Jersey Central Power & Light Company

4.Unemortised Property Loeses DecembIr 31,1980 aggregIted $61.0 millian having a

The Company is amortizing costs associated with the follow, wilgh'ad cvtr:ga intirest rita cf 22.8%.

ing properties for ratemaking purposes. The maximum aggregate amount of bank borrowings out- :

standing at any month-end during 1979 was $96.4 million.Period of For the year 1979, the average daily amount outstanding was

Effective Date Project Amortization (years) approximately $66.0 million, having a weighted average f~ 'j 1873,77 ",9 [8 y interest rate of 13.5%. Bank borrowings outstanding at

,,April 1,1980 - Atlantic Station - 20 December 31,1979 aggregated $45.0 million having a '

weighted average interest rate of 17.0%.The related .-ederal income tax reductions are being S. Capital Surplus and Retained Earnings

Emortized over similar periods.Capitat Surplus: In 1980, there were no capital contributions >With respect to the Forked River project abandonment, seefrom GPU. During the years 1979,1978,1977 and 1976, cash

Note 1. ,

capital contributions from GPU of $29.5 million, $44 million,$40 million and $40 million, respectively, were credited to5.Short-Term Sorrowing Agreementsapital surplus.

,

in June,1979, the Company and its affiliates entered into arevolving credit agreement with a group of banks scheduled Retained Earnings: All of the Company's outstanding commonto expire on October 1,1981, under which they hed available, stock is owned by GPU. In accordance with the Company'sat December 31,1980, $292 million of credit, of w lich $169 supplemental indenture dated June 1,1979, the amount ofmillion ($156 million of short-term borrowings, $1J million of common dividends payable is limited, to the extent they arefirst mortgage bonds due October 1,1981) has been utilized not matched by cash capital contributions from GPU, to an '

for outstanding borrowings. Borrowings under the agresv ent amount equal to 25% of earnings for the years 1979 and 1980tre renewable at six month intervals, the next such date and 100% of earnings thereafter. As of December 31,1980,being April 1,1981. Such available credit may be increased approximately $18.3 million of retained earnings was availableto $412 million upon the approval of banks holding 85% of the for declaration or payment of common dividends. '

notes outstanding. Subject to the overall system limit, wh*ch in January,1979, the Company paid $12 millioriin commonis less than the total of the individuallimits of the Company stock dividends to GPU. However, pursuant to its rate orderstnd its affiliates, the Company is limited to $123 million of dated June 18,1979 and May 13,1980, the NJBPU pro-which $61 million was outstanding at December 31,1980. hibited the Company from paying any further cash dividendsThe agreement provides for a commitment fee of one-half of on its common stock during 1979 and 1980, respectively.one percent per annum of each bank's total commitment The May 13,1980 rate order also required the Company to(whether used or unused). Interest rates on such borrowings give thirty days notice of its intention to declare a dividend on ,

range from 105% to 111% of the prime rate. Its common stock, so that the NJBPU can evaluate the

GPU has guaranteed all borrowings outstanding under the Company's financial condition.~

revolving credit agreement. As collateral for such guarantee, I* I"" ****GPU's $39 million term loan, and the guarantee by GPU of $4.6

|millinn of loans to GPU Service Corporation (GPUSC), GPU Examination of Federalincome tax returns through 1978 has -

' has pledged the common stock of the Company,its affiliates been completed.Income tax expense for the years 1976 through 1980 was! and GPUSC.

The Company has secured its notes under the revolving less than the amount computed by applying the statutory rate

credit agreement by pledging certain nuclear fuel in the to book income subject to tax as follows:

process of refinement, conversion, enrichment and fabrica- ff, uffffon,yt'on as collateral. Such nuclear fuel was recorded, on the 1980 1979 1978 1977 1976December 31,1980 balance sheet at a cost of $18.5 mijlion. Operating income before

The revolving credit agreement and the purchase agree- income taxes $124 $130 4142 $155 $128ments for the bonds sold by the Company subsequent to the Other income, net (1) 1 1

tecident at TMI-2 ($97.5 million) contain provisions for the Totals 123 131 143 155 128

immediate payment of the indebtedness involved upon the Interest expanse (92) (80) (66) (61) (57)

cccurrence of an event deemed by specified majorities of the Book income subject tolenders or of holders of such bonds to have a materially income tax 8 31 3 51 s 77 $ 94 $ 71

cdverse effect on the borrower. Moreover, should the borrow- Income tax at statutoryings under the rervolving credit agreement not be renewed rate (a) 8 14 $ 23 3 37 8 45 4 34cn April 1,1981, or the agreement not be extendediubsequent Excess cf book over tax

in October 1,1981, a specified majority of tiu bondholders p]cist on fw-through

could require the immediate payment of the indebtedness. A locrced share of consolidatedThere can be no assurance that the notes under the revolv- *an ietuin benefits (Note 2) (3) (2) (2) (2) (2)

ing credit agreement will be renewed or that the agreement Amortization of accumulatedInvestment credits (Note 2) (2) (2) (2) (2) (2)will be extended beyond October 1,1981. Other a@ments (3) (5) (3) (2) (1)

The maximum aggregate amount of bank borrowings out- Income tax expense S 9 5 18 5 31 8 39 8 27standing at any month-end during 1980 was $146.0 million.For the year 1980, the average daily amount outstanding was Effective income tax rate 30 % 36 % 41 % 41 % 38 %

rpproximately $101.3 million, having a weighted average (a) Effective January 1,1979, the statutory rate was changed frominterest rate of 16.3%. Bank borrowings outstanding at 48% to 46%.

I

17i!(

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Income tu cxpense is comprised * - 1following: grns r:cIipts and no li bility sxists lii o current y:1r ta p;y atax b:. sed on thit yrir's gross receipts. The C;mp:ny h:s

(in Millions) consistently made provision in its accounts for such taxes on,_

g ,_ 1 1978 1977 1976 this lasis. For ratemaking purposes (including the operation

Federalincome tax 8(14) 52 $(11) $3 $19 of we energy adjustment clause), the NJBPU computesincoms taxes on other allowable expenses as including provision for such taxes +

" @* * " "*

in me tax attributable to the the preceding year. Effective January 1,1979, pursuant to anclinance for borrowed funds(Note 3) (2) (3) (2) (1) (1) order by the Federal Energy Regulatory Commission,

the Company began recording state revenue taxes related toProvision for taxes

currcntly payable energy clause revenues in the period the revenues are(refundable) (18)(a) (1) (12) 2 18 collected which resulted in a $4.7 million decline in net

Def;rred income taxes, net 53 20 24 21 6 income for the year 1979, after related Federal income taxI 'I ' ' reductions of $4.0 million. Had this accounting change been

ion ac u ut edinvestment credits (2) (2) (2) (2) (2) applied retroactively, net income for 1978 would have been

income tax expense S9 $18 $31 $39 $27 increased by approximately $3.8 million to approximately$79.2 million and the years 1977 and 1976 would not have been

(1) Due principally to the Forked River project abandonment, the materially affected.Company incurred a net operating loss for tax purposes in 1980 The Company is liable for property tax on its real estatermounting to $327 million ($318 million on a consolidated GPU property in both New Jersey and Pennsylvania. In 1979, thesystem basis). Of this amount, $95 million ($144 millinn on a PennsYIvania state legislature amended its definition ofcrnsolidated GPU system basis) was carried back to prior year-r:sulting in a federal income tax refund of $15.6 milhon which is " utility realty" with regard to its Public Utility Realty Taxrecorded in Accounts receivable-Others.The unused balance of whereunder the Company was subject to a one time assess-tha net operating tax loss of $232 million ($174 million on a ment of approximately $7 million,which correspondinglyconsolidated GPU system basis) is available as a carryforward reduced Federalincome taxes by $3.2 million.Cnd can be a plied against taxable income for the years 1981

For the years 1980,1979,1978,1977 and 1976, the c,ost tothe Company of services rendered to it by GPUSC, an affil-

(b) Due to the abandonment loss noted above, the Company hascitimated investment tax credit carryforwards of approximately lated service company, amounted to approximately $16.0$42 million of which approximately $3 million, $17 million, $1 I million, $15.7 million, $14.9 million, $11.0 million and $9.6million, and $11 million expire in 1984,1985,1986 and 1987, million, respectively, of which approximately $10.9 million,respectively. $10.1 million, $9.3 million, $7.6 million, $7.1 million, respec-

Tha provisions for deferred income taxes, net, result f rom tively, was charged to income,the following timing differences:

(in Millions) The Company has several pension plar's including a plan1980 1979 1978 1977 1976 applicable to all employees the accrued cost of which is

LibIr:.lized depreciation being funded.The costs of the supplemental pension plans(Nite 2) $18 $20 $16 $10 $8

applicable only to supervisory employees was not fundedDefIrralof energy costs(N te 2) 9 10 4 11 (2) prior to 1976. The previously unfunded supplemental pension

Fcrked River abandonment plan costs are being funded during the five year period be-ginning January 1,1977. Prior service costs applicable to all

R v nue xes-energy plans are being amortized and funded over twenty-tivect:Use revenues (Note 8) (10) (4)

Oth:r (5) (6) 4 year periods.

Totals - $20 $24 $21 $6 Total pension cost for the years 1980,1979,1978,1977$53and 1976 amounted to approximately $7.6 million, $7.0 million,$6M million, $5.3 million and $4.7 million, respectively.

8. Supplementary Income Statement information Based on the latest available actuarial report, as of Jan-Maintenance and other taxes charged to operating expenses uary 1,1980, the Company's plans had accumulated benefitsconsisted of the following: and net assets as follows:

(In Millions)(In Millions)1980 1979 1978 1977 1976January 1,

M; int: nance S 44 $29 $36 $30 $27 1980 1979

' Actuarial present value of accumulated benefits:t gr ss receipts 8 81 $51 $42 $37 $29 V

State franchise 26 20 17 14 12 1.NonvestadSrte surtax 11 9 7 6 5

883.8 $73.3Real estate 3 10 2 2 3Other 4 4 4 3 2 Net assets avr liable for benefits $80.8 $68.2

Totals $105 $94 $72 $62 $51 'Represente benefits earned only to the date of the evaluation bycurrent ptticipants in the plans. Based upon assumptions of con-tinuation af employment by all participants until normal retirement

The liability for New Jersey State franchise and gross age, futu a levels of salary increases and fund eamings, the un-receipts taxes and surtax is established in each year of funded p_st service liabihties for the plans amounted to $41.9 millioncx:rcise of such franchise based on the preceding year's and $38.8 million at January 1,1980 and 1979, respectively.

18

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Jersey Central Power & Light Comp'ny

The assumed r;t3 of r; turn used in d:t;rmining the actu: rill 11. Quarterly Fincncial Data (Unaudited)present v:Jue cf accumul:ted pt n benefits w:s 8 per:cnt

(in Thousands)f;r both 1980 and 1979.First Ouarter Second Ouarter

1" 1878 1" 187810. Jointly Owned Generating StationsOperating Revenues $201,454 $162,294 8202,499 $142,660

The Company participated with affiliated and nonaffiliated Operating income 21.163 29,526 21,033 18,645 I

utilities,in the following jointly owned generating stations at Net income 11,890 20,295 84 9.652December 31,1980, income (Loss) After

Preferred Sto;k

Balance (In Thousands)' ' '# 0'88N #' #'

% in Accumulated (In Thousands)Station Ownership Service Depreciation

pThree Mile Island

1980 1979 1980 1979(Note 1) 25 $268,620 $31,499Keystone 16.67 2,841 10,617 Operating Revenues $254,989 $185,594 8222,033 $174,399Yards Creek 50 16,003 2,524 Operating income 41,001 34,454 29,074 26,411

Net income 20,784 24,153 8,512 15,172

Each participant in a jointly owned generating unit finances its income (Loss) Afterp , ,

cwn portion and charges the appropriate operating expenses Dividends 16,196 19,487 3,999 10,520with its share of direct expenses. The dollar amounts showns bove represent only those portions of the units owned by

Ses Note 1 which contains information with respect to rate ordersthe Company. ano their effect on quarterly earnings.*

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SUPPLEMENTARY INFORMATION TO DISCLO:E THEEFFECTS OF CHANGING PRICES (UNAUDITED)Th2 following supplementary information is supplied in ac- prices. it should be viewed as an estimate of the approximatecord:nce with the requirements of FASB Statement No.33, effect of inflation, rather than as a precise measurement," Fin:nciaiReporting and Changing Prices /* for the purpose since a number of subjective judgments and estimating '

cf providing cartain information about the effects of changing techniques were employed in developing the information.

CTATEMENT OF INCOME ADJUSTED FOR CHANGING PRICES (NOTE A)(In Thousands)

Conventional Constant Dollar Current CostHistorical Average Average

For the Year Ended December 37,1980 Cost 1980 Dollars 1980 Dollars

Operiting revenues * $882,975 $882,975 $882,975

En:rgy costs (Note D) .429,162 429,762 429,762

D:prIciation (Note C) 60,162 778,097 128,298

Oth:r operating expenses 269,883 269,883 269,883

Income taxes (Note E) 11,417 f1,417 77,477

Tctil operating expenses 770,624 828,559 838,760

OperIting income * 112,351 54,476 44,275

Oth:r income and deductions 9,373 9,373 9,373

Int:r:st chargeo, net 80,672 80,672 80,672

inc me (loss) from continuing operations (excluding reductionto net recoverable cost) 41,052 (f6,883) (27,084)

Pr:farred stock dividend 18,282 78,282 78,282

Income (loss) after preferred dividend requirement * $ 22,770 $(35,765) $(45,366)

Chrnge in net plant assets during 1980 due to increases in:pecific prices $268,442

L:ss: Change in net plant assets during 1980 due to increase ingeneral price level (inflation) _338,582

Change in specific prices net of general price level (inflation) (70,740)R; duction to net recoverable cost of plant assets (Note F) $(732,889) (52,501)

ExcIss of increase in general price level over increase in specificprices, after reduction to net recoverable value (722,647)

Grin from decline in purchasing power of net amountscw:d (Note B) 94,101 94,107

N;t (Note F) $(38,788) $(28,540)

*R; venues, operating income, and income (loss) after preferred dividend requirement have been adversely affected by regulatory disallowancesof operating expenses and return requirements associated with TMI-1 and TMi-2 (see Note 1).

Not:s to Supplementary Information

Not7 A-Adjusting for changing pricesConstant dollar amounts represent histori:,al costs stated in A key concept in understanding the data adjusted fort:rms of dollars of equal purchasing power, as measured by inflation is the distinction between monetary and nonmone-

th3 Consumer Price Index for All Urban Consumers (CPI-U). tary assets and liabilities.Current cost amounts reflect the changes in specific prices of Monetary items are those assets and liabilities which are orplint, and differ from constant dollar amounts to the extent will be converted into a fixed number of dollars regardless of

thit specific prices have increased more or less rapidly than changes in prices. Examples of monetary items include cash,pricts in general, accounts receivable and debt. During periods of inflation, the

Th3 current cost of property, plant, and equip nent, which holding of monetary assets results in a toss of generalincludes land, land rights, intangible plant, property held for purchasing power. Similarly, monetary liabilities are associ-futurs use, construction work in progress, and other physical ated with a gain of general purchasing power because theproperty, was determined by applying Company equipment amount of money required to settle the liabilities representscost indices or the Handy-Whitman Index of Public, dulity dollars of diminished purchasing power.Construction Costs to surviving plant investments. These All assets and liabilities that are not monetary are non-curr;nt cost amounts are restatements of the purchasing monetary. Nonmonetary items, such as property, plant andpow;r which was invested in surviving plant, but do not equipment, do not gain or lose general purchasing powernect;sarily represent replacement cost or current value of colely as a result of general price level changes, but rathernisting plant production capacity. The actual replacement of are affected by the relationships between specific prices forthe capacity of present facilities will occur over many years as theitem and changesin the generallevel of prices,futura f acilities, different in kind from present facilities, are

20con;tructed and placed in service.

Jersey Centr:1 Power & Light Company

Note B-Purchasing Power Gain or cdjustments in bIse r;ta sch:dules to actull historicilSince the Company owed net monetary liabilities during a costs. For this reason, fuel inventories and nuclear fuel are

period in which the purchasing power of the dollar declined effectively monetary assets.(i.e., during a period of inflation), the Company experienced again in purchasing power. This net gain in purchasing power, Note E-Income Taxesshown separately in the accompanying supplementary sched- Since present tax laws do not allow increased deductions for iute, was calculated as the difference between beginning and depreciation adjusted for the effects of inflation, income taxesending year net monetary liabilities, each converted to included in the data adjusted for general inflation remainaverage 1980 dollars per the CPI-U index. All assets and unchanged from those amounts presented in the Company's -liabilities other than property, plant and equipment, as well as primary financial statements.amounts applicable to redeemaole preferred stock, weretreated as monetary items and thus included in the purchas. Note F-Effect of Rate Regulationing power gain computation. Although certain assets and Under the ratemaking prescribed by the regulatory commis-liabilities might be considered nonmonetary from a strict sions to which the Company is subject, only the historicaltheoretical point of view, such amounts do not materially cost of plant is recoverable in revenues as depreciation.affect the purchasing power gain reported.This gain is Therefore, the excess of the cost of plant stated in terms of

strictly an economic concept and will never be realized in constant dollars or current cost over the historical cost ofi

| cash. As such, the amount does not represent funds available plant is not presently recoverable in rates as depreciation,

for distribution to shareholders. and is reflected as a reduction to net recoverable cost.While the ratemaking process presently givcs no recognition

Note C-Depreciation Adjusted for Changing Prices to the current cost concept of property, plant, and equipment,in accordance with procedures specified in FASB Statement the Company believes, based on past practices, it will beNo. 33, revenues and all expenses other than depreciation allowed to earn on the increased cost of its net investmentare considered to reflect the average price level for the year when construction of both new and replacement capacityand accordingly remain unchanged from thora amounts actually occurr..

|' shown in the Company's primary financial statements. To properly reflect the economics of rate regulation in theThe current year's constant dollar and current cost de- Statement of Income Adjusted for Changing Prices, the

preciation provisions were determined by applying the reduction of net property, plant, and equipment should bedepreciation rates of the Company toits respective indexed offset by the gain from the declinein purchasing power of net

j average depreciable plant amounts. amounts owed. During a period of inflation, holders ofmonetary assets suffer a toss of general purchasing power'

Note D-Energy Costs and Inventories while holders of monetary liabilities experience a gain.The

Energy costs include fuel, power purchased and inter- gain from the decline in purchasing power of net amounts

changed, and changes in deferred energy cost balances. owed is primarily attributable to the substantial amount cfl Fuelinventories, nuclear fuel, the cost of fuel usad in debt which has been used to finance property, plant, and

generation, and purchased power and interchange have not equipment. Since the depreciation on this plant is limitedbeen restated from their actual historical cost. Regulation to the recovery of historical costs, the Company does not have'

limits the recovery of fuel and purchased power and inter- the opportunity to realize a holding gain on debt and is limited

change through the operation of energy adjustment clauses to recovery only of the embedded amounts of debt capital.

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FIVE YEA'] COMPARISON OF SELECTED FINANCIAL CATA0($ In Thousands)

Year Ended December 3f, 1980 1979 1978 1977 1976

Operating revenuesA2 reported $ 882,975 $ 664,947 $ 591,294 $ 560,720 $ 468,230in 1980 average purchasing power 882,975 754,871 746,834 762,456 677,766

inc me (loss) after preferred dividend requirementin historical cost dollars $ 22,770 $ 50,621 $ 56,561 $ 65,548 $ 50,881

In constant dollars (35,165) 7,318in current cost dollars (45,366) (9,103)

N;t plant assets (in year end dollars)In historical cost dollars $1,393,463 $1,749,990 $1,626,380 $1,468,086 $1,365,413

In constant dollars 2,565,565 3,191,061

In current cost dollars 2,650,502 3,326,495 -

N;t r.ssets at year end at net recoverable costin constant dollars $ 797,257 $ 881,086in current cost dollars 797,257 881,086

Exc:ss of increase in general price level over increasein specific prices after reduction to netrecoverable cost $ (122,641) $ (172,920)

Grin from decline in purchasing power of netEmounts owed $ 94,101 $ 129,657

Selected balance sheet data at year end(historical costs)

Total assets $2,214,276 $2,114,054 $1,906,886 $1.723,354 $1,544,018Long-term debt 878,381 888,910 795,458 784,666 741,973Cumulative preferred stock-mandatory redemption 37,510 39,855 42,194 43,276 44,354

Av;rIge consumer price index 246.8 217.4 195.4 181.5 170.5

Dec mber consumer priceindex 258.4 229.9 202.9 186.1 174.3

'All constant dollar and current cost amounts expressed in average 1980 dollars, except as noted.

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COftsPANY STATISTICSJersey Central Power & Light Company

1980 1979 1978 1977 1976

IGenerating Capacities and Peaks (MW):installed capacity (at year end)(a) 3,371 3,375 3,375 3,134 3,055

. . .. . . 3,024 2,700 2,689 2,714 2,354Annual hourly peak load (b) .

Reserve (%)(a) 11.5 25.0 25.5 15.5 29.8.. . .... .

Net System Requirements (in thousands of MWH):Net generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,819 8,582 9,033 8.483 8,727

Power purchased and interchanged, net 8,322 5,310 4.611 4,526 3,928........ .

Total net system requirements 14,141 13,892 13.644 13,009 12.655. . ..

Load Factor (%) . . . 53.2 58.7 57.9 54.7 61.2.... .... .. .... ..

Production Data:Cost of fuel (in mills per KWH of generation):

Coal . . . . . 10.38 11.35 11.04 9.25 8.02....... .. .. ...... ........

011.. . ... ..... . ............. ......... 61.67 38.46 27.34 28.57 25.27

N u cle a r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.85 3.23 2.81 2.41 1.95

Other 41.10 35.43 76.75 22.24 15.52. . .. ... ...... .... . ........

23.95 12.62 10.87 11.38 9.05Average . ..... . ... . ... ...... ...

Generation by fuel types (%):Coal.................................... 28 18 16 15 18

Oil . 19 17 26 29 25..... . ... ..... ................

Nuclear 31 57 56 53 54.... .. . .... ................ .

Other (gas & hydro) 22 8 2 3 3. . ....... . . . .

Totals . . . . . 100 100 100 100 100...... . .... .. ..

Electric Energy Sales (in thousands of MWH):Residential 5,211 5,138 5,044 4.903 4,728

. .. . . ...... .. .... . ... .

Commercial 3,637 3,487 3,395 3,210 3.053. . . . .. ... .... ..... ....

Industrial 3,670 0,765 3,618 3,413 3,343.. .. ..... ...... ..........

Other 389 381 382 376 364.. . . .. . .. .. ..

12.90,7 12.771 12.439 11,902 11.488Totals . .. .. ... ......... ..

Electric Operating Revenues (in thousands):$393,396 $310,803 $279,451 $266,739 $222.605Residential . ... . . ... . . ....... .

Commercial . . 256,227 182,812 163,185 152,728 128,610. .. . . .... . .....

Industrial . 200,046 144,639 127,690 120,007 98,915. .... ......... ........ ........

Other 26,806 _ 20.146 16,973 16,979 14.784. .. ... . . . . ... ...

Totals from KWH sales 876,475 658,400 587,299 556,453 464,914. . ..

Other reveaues . . . . 6,500 6,547 3.995 4,267 3,316....... ........ ...

Totals . . . . . . . . $882.975 $664,947 $591,294 $560,720 $468,230........ . ....... .

Customers-Year End (in thousands):R esid e n tial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632 620 609 597 586

Commercial 68 67 65 63 62. ....................... .....

Industrial 3 3 3 3 3.......................... ........

Other . ...... 1 1 1 1 1. ................. ...... . .

Totals . . . . . . 704 691 678 664 652... .....................~

Price per KWH-all customers (cents) . . . . . . . . . . . . . 6.79 5.15 4.72 4.68 4.05

(a) includes the Installed capacity of the 7hree Mile Island nuclear generating station Unit No.1 of 200 MW and Unit No. 2 of 226MW. The reserve (%), excluding these units for 1980 and 1979. would be (2.3) and 9.2, respectively.

(b) The Company's peak has historically occurred in the summer.

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JERSEY CENTRAL POWER O LIGHT COMPANYa member of the General Pubilc Utiliti:s Syst:m

DirectorsOfficers 'W.G.Kuhns J. R. McGalliard * Shepard Bartnoff

Chairman of the Board and Vice President, Personnel Englewood, N.J.

Chief Executive Officer and Services V.H.CondonShepard Bartnoff G. P. Mundrane Morristown, N.J.

President and Vice President, EngineeringChief Operating Officer and Operations ho ain akes, N.J.

R.C. Arnold P. H. Preis I. R. Finf rock, Jr. '

Senior Vice President, Nuclear Comptroller Morris Township, N.J.

P. R. Clark E. G. Bohn, Jr. F. D. HaferVice President, Nuclear Assistant Comptroller Scotch Plains, N.J.

V.H.Condon E. L. Jones K sVice President, Finance Assistant Comptroller .( ' flyna _

l. R. Finf rock, Jr. D. P. Baldassarihgr'r sYownship, N.J.R

Vice President, Generation Secretary and Treasurer

J.R. Leva M. B. Peters M" dr eVice President, Assistant Secretary ,nt St gn, N.J.Consumer Affairs

* R. H. SimsConvent Station, N.J.

* Executive Committee

CounselR. O. BrokawGeneral Counsel

Managers of OperationsJ. X. Mangold Southern AreaC.D.Cudney Northern AreaTrustee-First Mortgage BondsJ. Henry Schroder Bank &Trust Company

ew or , . 0015

Trustee-Debentures (a)United States Trust Companyof NewYork

Jersey Central Power & Light Company (JCP&L) is a member com- 45 Wall Streetpany of the General Public Utilities Corporation (GPU) System. New York, N.Y.10015

GPU is an electric utility holding company with three operating Transfer Agent-Preferred Stocksubsidiaries in Pennsylvania and New Jersey.The other companies, Manufacturers Hanover Trust Companyin addition to JCP&L, are Metropolitan Edison Company, serving 4 New York Plazaabout 360,000 customers in central and eastern Pennsylvania, and New York, N.Y.10005

Pennsylvania Electric Company, with about 510,000 customers in Registrar-Preferred Stocknorthern and western Pennsylvania. Chemical Bank

The three companies provide electricity to about half the land 20 Pine Street, New York, N.Y.10015

area of the two states. They jointly own several of the System's Trustee-First Mortgage Bondsmajor electric generating facilities. This minimizes the cost to the (Of New Jersey Power & Light

individual companies and their customers of building new gen. Company)M an Gu ranty Trust Company

erating units to meet growing demand for electricity. The System g,o w yg kapproach also enhances reliability of customer service, since power 23 Wall Street, New York, N.Y.10015can readily be shifted from one company service area to another inthe event of local energy shortages or power outages. (Of New Jersey Power & Light

GPU is one of the nation's largest publicly-owned electric util- Company)ities, with assets of $5 billion. GPU companies sold about 32 million The Chase Manhattan Bankmegawatt-hours of electricity in 1980 and had revenues of $1.8 (National Association)

1 Chase Manhattan Plazabillion ~ New York, N.Y.10015

(a) As of February 6,1981

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Jersey CentralPower & Light CompanyMadison Avenue at Punch Bowl RoadMorristown, New Jersey 07960201-455-8200 t

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