Pennsylvania court rejects $316 million rate relief request of GPU

PITTSBURGH, Feb. 21, 2002 — The Commonwealth Court of Pennsylvania today sided with arguments made by Citizen Power, holding that GPU was not entitled to any of the $316 million in rate cap relief it had sought to collect from customers.

The court also ordered the Pennsylvania Public Utility Commission (PUC) to determine the amount of merger savings and the share ratepayers will receive, and that the merged company would be bound by a code of conduct barring its affiliates from favoring each other in business dealings.

Citizen Power said it was disappointed that the court chose to uphold the PUC’s approval of the FirstEnergy-GPU merger.

Last year, GPU, the parent company of Metropolitan Edison Co. and Pennsylvania Electric Co., petitioned the Pennsylvania Public Utility Commission (PUC) for approval of its merger with FirstEnergy, and for $316 million in annual relief from the rate cap it had agreed to just a few years earlier.

As a part of a contested settlement opposed by Citizen Power and others, the PUC approved the merger and granted GPU the rate cap relief it requested. The court rejected GPU’s rate relief request in its entirety. Finally, the court agreed with Citizen Power that the PUC acted arbitrarily when it approved a contested settlement that exempted affiliates of the merged company from a Code of Conduct that would have prevented the merged company from granting preferential treatment to those affiliates.

Until the PUC approved its elimination, GPU was subject to a Code of Conduct that the court correctly noted was “intended to prevent GPU affiliates from favoring each other through cross-subsidization in market transactions, thereby protecting fair and open competition.”

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