[Federal Register Volume 65, Number 36 (Wednesday, February 23, 2000)]
[Notices]
[Page 9023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-4218]



[[Page 9023]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27138]


Filings Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

February 16, 2000.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission pursuant to provisions of the Act and rules 
promulgated under the Act. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendment(s) is/are available for public 
inspection through the Commission's Branch Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by March 10, 2000, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in the case of an attorney at law, 
by certificate) should be filed with the request. Any request for 
hearing should identify specifically the issues of facts or law that 
are disputed. A person who so requests will be notified of any hearing, 
if ordered, and will receive a copy of any notice or order issued in 
the matter. After March 10, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Jersey Central Power & Light Company (70-9529)

    Jersey Central Power & Light Company (``JCP&L''), 2800 Pottsville 
Pike, Reading, Pennsylvania, a wholly owned public utility subsidiary 
of GPU, Inc., a registered holding company, has filed an application-
declaration with this Commission under sections 6(a), 7, 9, 10, 12(b), 
12(f), and 13(b) of the Act and rules 54, 90, and 91 under Act.
    The New Jersey Electric Discount and Energy Competition Act 
(``Competition Act'') provides for the restructuring of the New Jersey 
electric utility and natural gas industries. The Competition Act 
requires New Jersey electric utilities, including JCP&L, to unbundle 
electric services into separate charges for, among other things, 
customer account services (metering and billing), distribution, 
transmission, and generation. The Competition Act also requires 
utilities to submit restructuring plans to the New Jersey Board of 
Public Utilities (``BPU''). These plans include claims for ``stranded 
costs,'' i.e., costs related to investments and power purchase 
commitments that a utility would have recovered in a regulated 
environment but that are not expected to be recovered in a competitive 
market. Utilities may, subject to BPU approval, recover these costs 
from their distribution customers through a non-bypassable market 
transition charge (``MTC'').
    To facilitate utility restructurings, the Competition Act empowers 
the BPU to authorize a utility to issue, directly or indirectly, 
transition bonds that it may use to recover and/or finance a portion of 
its stranded costs and to achieve compliance with the statute's rate 
reduction requirements. In order to issue the bonds, a utility must 
first apply to the BPU for a bondable stranded costs rate order 
authorizing their issuance and approving the amount of the MTC that 
would be used to recover the principal of and interest on the 
transition bonds and all other costs associated with their issuance.
    JCP&L has petitioned the BPU for a bondable stranded costs rate 
order to authorize securitization of, among other things, the stranded 
costs attributable to JCP&L investment in its Oyster Creek nuclear 
generation plant expected as of September 1, 2000, net of deferred 
income taxes and investment tax credits attributable to the plant. In 
this petition, JCP&L has requested the BPU for authority to issue up to 
$587 million (``Bond Amount'') in securitized bonds (``Transition 
Bonds''). This amount is made up of $400 million representing the 
expected net investment in Oyster Creek, $20 million for expected 
transaction costs, $78 million for a deposit made in this amount by 
JCP&L into the Oyster Creek decommissioning trust, and up to $89 
million associated with the costs of a refueling outage for Oyster 
Creek scheduled for the fall of 2000 that will be funded by JCP&L.
    In connection with the petition, JCP&L requests Commission 
authority through December 31, 2001 for several related transactions. 
JCP&L seeks to form and acquire all of the common equity interests in a 
new wholly owned subsidiary (``Special Purpose Issuer''), and to form 
one or more wholly owned subsidiaries that would own the Special 
Purpose Issuer. JCP&L also requests authority for the Special Purpose 
Issuer to issue and sell Transition Bonds from time to time through 
December 31, 2001 in one or more series aggregating up to the Bond 
Amount.
    JCP&L will transfer to the Special Purpose Issuer the right it 
receives from the BPU to charge, collect, and receive the MTC in 
exchange for the net proceeds from the sale of the Transition Bonds. 
JCP&L states that use of the Special Purpose Issuer to issue the 
Transition Bonds will enhance the creditworthiness of those bonds by 
isolating the right to the MTC from any credit risks associated with 
other JCP&L assets.
    JCP&L will service the revenue stream generated by the MTC under a 
servicing agreement between it and the Special Purpose Issuer. In this 
capacity, JCP&L will, among other things, bill customers, make 
collections on behalf of the Special Purpose Issuer, and file with the 
BPU for periodic adjustments to the MTC to achieve a level that allows 
for payment of all debt service and full recovery of the amounts the 
BPU authorizes JCP&L to collect through the MTC. JCP&L may subcontract 
with other companies to carry out some of its servicing 
responsibilities.
    The servicing agreement entitles JCP&L to receive a servicing fee 
and reimbursement for certain expenses. Financial rating agency 
standards require that JCP&L's servicing fee be comparable to a 
reasonable and sufficient fee negotiated at arms-length by a similar, 
unaffiliated entity performing similar services. This requirement is 
meant to assure that the Special Purpose Issuer would be able to 
operate independently and, accordingly, the fee must be increased to 
retain a third party servicer if for any reason JCP&L could not 
continue to perform the services. JCP&L anticipates that the servicing 
fee will be set at approximately $400,000 annually. This fee may not 
reflect JCP&L's actual costs of providing the related services and 
therefore may not meet the cost standards of section 13(b) of the Act 
and rules 90 and 91 under the Act. Accordingly, JCP&L requests 
authority to enter into a servicing agreement with the Special Purpose 
Issuer under an exemption from the cost standards of section 13(b) of 
the Act and rules 90 and 91 under the Act.

For the Commission by the Division of Investment Management, under 
delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 00-4218 Filed 2-22-00; 8:45 am]
BILLING CODE 8010-01-M