General Public Utilities Corp., the company that owns the damaged Three Mile Island nuclear plant, today announced that it would cut its quarterly dividend from 45 cents and also trim salaries of officers and directors.
General Public's stock fell to $10.50 a share from Wednesday's close of $11.50, a small decline considering the company's financial difficulties, industry analysts said.
Other utilities such as Duke Power and the Southern Company also declined in price today. Both operate nuclear power generating stations. Duke Power fell $1.25 a share to $16.50.
The Nuclear Regulatory Commission is to decide soon whether to close three plants owned by Duke Power that were designed by Babcock and Wilcox. Babcock and Wilcox designed the reactor at Three Mile Island.
J. Ray McDermott, which owns Babcock and Wilcox, declined $1 a share to $16.875.
General Public Utilities Chairman William G. Kuhns said the dividend cut and the trims in salaries of officers and directors was the first step in a program aimed at reducing operating and maintenance expenses by 10 percent.
The company, in an effort to conserve cash, earlier this month announced that it would suspend construction of two new facilities - one nuclear and one coal - and also postpone all but the most urgent building programs at its operating facilities.
The company also said it would seek a $400 million revolving credit arrangment with major banks.
No one yet knows what costs the company will incur as a result of the major accident at its $1.1 billion Three Mile Island Number Two plant near Harrisburg. Three Mile Island Number One, which opened in 1974, is also closed although it was not damaged in the accident. It is expected to reopen some time this summer.
The salary cuts and the dividends reductions are primarily symbolic steps for the utility, since most of its operating expenses are not wages. Utilities are extremely capital intensive and most of their other costs are fuel costs.
But, analysts said, since the utility will need sizeable rate increases from regulatory commissions if it is to avoid bankruptcy, it had to take steps to show public service commissions that the company and its shareholders would share in the costs of Three Mile Island.
General Public Utilities owns several power companies, including Metropolitan Edison, which operates Three Mile Island, as well as Jersey Central Power & Light Co.
Earlier this month the Pennsylvania Public Service Commission rescinded a rate increase granted to Metropolitan Edison. The increase had been based on Three Mile Island Number Two being in service.
The Pennsylvania commission has set a hearing schedule for Metropolitan Edison and another General Public subsidiary, Pennsylvania Electric. The hearings begin on May 2 and are supposed to be finished by the end of the month, with a decision due by the end of June.
Kuhns said the Jersey Central Power & Light Co. expects to file a rate increase request next week that "will provide a procedural framework for dealing with the impact" of the nuclear accident.
Jersey Power was supposed to share in some of the output from the Three Mile Island plant.
Kuhns said the "outcome of rate regulatory proceedings is the key element in the determination of the ability of the General Public Utilities system companies and their ability to serve their customers."
Because the two nuclear plants are shut down, Metropolitan Edison has had to buy power from other generating companies at a cost estimated to range from $800,000 to $1 million a day.
Kuhns said, "We are aggressively seeking opportunities to perfect reduction in replacement power costs."
The company said that it did not know how much more it might have to cut dividends or other salaries, if at all, until it gets a firmer estimate of the cost it faces.
The company reported first quarter net income of $35.7 million (59 cents a share) compared with $38.6 million (65 cents) in the first quarter of 1978. The Three Mile Island accident occurred March 28, just days before the end of the quarter. CAPTION: Graph, no caption, The Washington Post