EXHIBIT D-4
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
HARRISBURG, PA 17105-3265
Public Meeting held December 18, 2003
Commissioners Present:
Xxxxxxxx X. Xxxxxxxxxxx, Chairman
Xxxxxx X. Xxxxx, Vice Chairman
Xxxx X. Xxxxxx
Xxx Xxxxxxxxxxxx
Xxxxxxx X. Xxxxxxx
Application and Affiliated Interest Docket Numbers:
Agreement of Metropolitan Edison A-110300 F0101
Company for approval of the G-00031028
transactions related to the sale of
undivided interests in accounts
receivable to a special purpose
affiliate
ORDER
BY THE COMMISSION:
On October 27, 2003, Metropolitan Edison Company (Met-Ed) filed pursuant to
Chapter 11 and Chapter 21 of the Pennsylvania Public Utility Code, 66 Pa. C.S.
Sections 1101, et seq. and 66 Pa. C.S. Sections 2101, et seq., respectively, an
application for approval of the sale of undivided interests in accounts
receivable (Receivables) to a newly formed wholly owned special purpose entity
(SPE), for the formation of the SPE by Met-Ed, and for affiliated transactions
related to the sale of Receivables.
The instant application also seeks relief for the registration of a
securities certificate in the event that the proposed transactions may be viewed
to constitute a form of indebtedness. Met-Ed provided proof of compliance with
our regulations at 52 Pa. Code Section 5.14, relating to applications requiring
notice. Further notice was not required and no protest period was established.
No protests or comments have been received.
On December 4, 2003, Met-Ed filed a supplement to the instant application.
The supplement included the form of the agreements that will be entered into as
part of the sale of Receivables. Based on those agreements, Met-Ed determined
that the registration of a securities certificate was not necessary since the
sale of Receivables is intended to be a true sale and the termination date for
each of the Receivables' arrangements will be 364 days. We agree that a
securities certificate is not necessary for the evidence of indebtedness for
which the date of maturity is set at a period of less than one year from the
date of its execution.
Through the instant application, Met-Ed requests authorization to sell its
Receivables at a discount to its wholly owned SPE. The sale of Receivables is
intended to be a true sale in that it provides the SPE with the full benefits of
ownership. Met-Ed and the SPE do not intend these transactions to be, or for any
purpose to be characterized as, loans from the SPE to Met-Ed. Furthermore,
Met-Ed will not have any obligation to repurchase the Receivables that have been
sold to the SPE.
The SPE will fund its purchases of Receivables by selling, on a revolving
basis, undivided ownership interests in the Receivables to one or more
investment companies administered by Bank One, NA and/or to Bank One, NA and the
other committed funded entities (Financial Institutions). The maximum investment
in Receivables at any time will not exceed $80,000,000. The Financial
Institutions will sell commercial paper to fund the purchase of the Receivables.
The proposed sale of Receivables will have no effect on the service
provided to Met-Ed's customers. Met-Ed will continue to bill and collect all its
utility service accounts receivable in accordance with its current credit and
collection policies.
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Through the sale of Receivables, Met-Ed will gain indirect access to the
commercial paper market which should result in financing costs that would be
lower than the cost of conventional financing. Met-Ed will use the funds for
general corporate purposes.
Our review of the subject application leads us to conclude that the
proposed sale of receivables is necessary or proper for the service,
accommodation, convenience, or safety of the public and thus the application
should be approved; THEREFORE,
IT IS ORDERED:
1. That the application of Metropolitan Edison Company at A-110300 F0101
and G-00031028 for approval of the transactions related to the sale of an
undivided interest in accounts receivable to a special purpose affiliate is
hereby approved, and that certificates of public convenience be issued
evidencing such approvals.
2. That within 30 days of the effective date of the sale of accounts
receivable, Metropolitan Edison Company file with this Commission a copy of the
agreement governing such sale in the form in which it is executed.
3. That if it is determined that the instant transaction will not occur,
Metropolitan Edison Company shall promptly file with this Commission notice of
such determination.
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4. That the sale of accounts of receivable authorized in Paragraph No. 1,
above, is subject to audit by the Commission's Bureau of Audits.
BY THE COMMISSION,
/s/ Xxxxx X. XxXxxxx
Xxxxx X. XxXxxxx
Secretary
(SEAL)
ORDER ADOPTED: December 18, 2003
ORDER ENTERED: December 18, 2003
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