UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN
GENERAL INSTRUCTION H(1) (a) AND (b) OF FORM 10-Q AND
IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
- ----------- --------------------------------------- ------------------
333-31250 JCP&L TRANSITION FUNDING LLC 75-2998870
(A Delaware Limited Liability Company)
c/o FirstEnergy Corp.
76 South Main Street
Akron, OH 44308
Telephone (800) 736-3402
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- --------
This Form 10-Q includes forward-looking statements based on information
currently available to management. Such statements are subject to certain risks
and uncertainties. These statements typically contain, but are not limited to,
the terms "anticipate", "potential", "expect", "believe", "estimate" and similar
words. Actual results may differ materially due to national or regional economic
conditions; changes in market demand and prices for energy; legislative and
regulatory developments; new technologies (including distributed generation);
weather variations affecting customer energy usage; the effect of continued
electric industry restructuring; operating performance of third party suppliers;
the payment patterns of customers, including the rate of delinquencies; and the
outcomes of legal proceedings.
TABLE OF CONTENTS
Pages
Part I. Financial Information
Management's Narrative Analysis of Results of Operations ... 1
Quantitative and Qualitative Disclosures About Market Risk.. 2
Controls and Procedures..................................... 2
Financial Statements
Statements of Operations and Changes in Member's Equity.... 3
Balance Sheets............................................. 4
Statements of Cash Flows................................... 5
Notes to Financial Statements.............................. 6-8
Report of Independent Accountants.......................... 9
Part II. Other Information............................................. 10
Signature and Certifications................................ 11-13
PART I. FINANCIAL INFORMATION
- ------------------------------
JCP&L TRANSITION FUNDING LLC
MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
Issuance of Transition Bonds
- ----------------------------
In accordance with the Electric Discount and Energy Competition Act
enacted by the state of New Jersey in February 1999, the New Jersey Board of
Public Utilities (NJBPU) is authorized to issue "bondable stranded cost rate
orders," approving, among other things, the issuance of transition bonds to
recover bondable stranded costs and related expenses of an electric public
utility. On February 6, 2002, Jersey Central Power & Light Company (JCP&L)
received a bondable stranded costs rate order (Financing Order) from the NJBPU
with authorization to issue $320 million of transition bonds to securitize the
recovery of bondable stranded costs associated with the previously divested
Oyster Creek Nuclear Generating Station.
In February 2000, JCP&L Transition Funding LLC (Company), a Delaware
limited liability company, was organized for the limited purpose of purchasing
bondable transition property (BTP) and issuing transition bonds secured by the
BTP. The Company is wholly-owned by JCP&L. The Company's organizational
documents require it to operate in a manner so that it should not be
consolidated in the bankruptcy estate of JCP&L in the event JCP&L becomes
subject to a bankruptcy proceeding.
BTP represents the irrevocable right of JCP&L, or its successor or
assignee, to charge, collect and receive a non-bypassable transition bond charge
(TBC) from customers. The Financing Order authorizes the TBC collections to be
sufficient to recover $320 million aggregate principal amount of transition
bonds, plus an amount sufficient to provide for any credit enhancement, to fund
any reserves and to pay interest (including financing costs), redemption
premiums, if any, servicing fees and other expenses relating to the transition
bonds. In June 2002, the Company acquired BTP from JCP&L and issued $320 million
of Transition Bonds (Bonds), Series 2002-A, Class A-1 through Class A-4, with
scheduled maturities ranging from 2007 through 2017 and final maturities ranging
from 2009 through 2019.
The Company entered into a servicing agreement with JCP&L. The servicing
agreement requires JCP&L, as Servicer, to manage and administer the BTP of the
Company and to collect the TBC on behalf of the Company. JCP&L began remitting
TBC collections to The Bank of New York, as trustee for the Bonds (Trustee), on
July 15, 2002. The first quarterly payment of Bond principal, interest and
related expenses is due on March 5, 2003.
Results of Operations
- ---------------------
The Company did not have results of operations for the three- and
nine-month periods ended September 30, 2001.
Revenues
The Company did not earn revenues prior to purchasing BTP and issuing
the Bonds on June 11, 2002. Revenues of $11.4 million and $13.5 million,
respectively, for the three- and nine-month periods ended September 30, 2002,
relate to TBC revenues recognized during the respective periods, which are being
collected from JCP&L customers.
Expenses
Expenses of $7.0 million and $8.2 million, respectively, for the three-
and nine-month periods ended September 30, 2002, relate to amortization of BTP
(which is based on TBC revenue collections). In addition, expenses of $5.2
million and $4.3 million for the respective periods represent accrued interest
on the Bonds.
1
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Omitted, as the Company meets the conditions set forth in General
Instruction H(1) of Form 10-Q.
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
The Company's chief executive officer and chief financial officer have
reviewed and evaluated the Company's disclosure controls and procedures, as
defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c), as
of a date within 90 days prior to the filing date of this report (Evaluation
Date). Based on that evaluation those officers have concluded that the Company's
disclosure controls and procedures are effective and were designed to bring to
their attention, during the period in which this quarterly report was being
prepared, material information relating to the Company by others within the
Company and/or the Company's parent, JCP&L.
(b) Changes in Internal Controls
There have been no significant changes in internal controls or in other
factors that could significantly affect those controls subsequent to the
Evaluation Date.
2
JCP&L TRANSITION FUNDING LLC
STATEMENTS OF OPERATIONS AND CHANGES IN MEMBER'S EQUITY
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
(In Thousands)
REVENUES:
Transition bond charge revenues................... $11,448 | $ -- $ 13,515 | $ --
Interest income................................... 3 | -- 3 | --
------- | -------- -------- | ------
| |
Total Revenues................................ 11,451 | -- 13,518 | --
------- | -------- -------- | ------
| |
| |
EXPENSES: | |
Amortization of bondable transition property...... 7,020 | -- 8,177 | --
Interest expense.................................. 4,311 | -- 5,221 | --
Servicing and administrative expenses............. 117 | -- 117 | --
------- | -------- -------- | ------
| |
Total Expenses................................ 11,448 | -- 13,515 | --
------- | -------- -------- | ------
| |
OPERATING INCOME....................................... 3 | -- 3 | --
------- | -------- -------- | ------
| |
Income tax expense..................................... 1 | -- 1 | --
------- | -------- -------- | ------
| |
NET INCOME............................................. $ 2 | $ -- $ 2 | $ --
======= | ======== ======== | ======
| |
| |
Member's equity, beginning of period................... $ 1,601 | $ 1 $ 1 | $ 1
| |
Net income............................................. 2 | -- 2 | --
| |
Capital contributed by member.......................... -- | -- 1,600 | --
------- | -------- -------- | ------
| |
Member's equity, end of period......................... $ 1,603 | $ 1 $ 1,603 | $ 1
======= ======== ======== ======
The accompanying Notes to Financial Statements are an integral part of these
statements.
3
JCP&L TRANSITION FUNDING LLC
BALANCE SHEETS
September 30, December 31,
2002 2001
------------- ------------
(Unaudited)
(In Thousands)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents....................................... $ 1 $ 1
Restricted funds held by Trustee................................ 9,623 --
Transition bond charge receivable from Servicer................. 5,555 --
---------- --------
15,179 1
---------- --------
OTHER ASSETS:
Bondable transition property.................................... 311,823 --
Deferred financing costs........................................ -- 1,581
---------- --------
311,823 1,581
---------- --------
$ 327,002 $ 1,582
========== ========
LIABILITIES AND MEMBER'S EQUITY
-------------------------------
CURRENT LIABILITIES:
Currently payable long-term debt................................ $ 19,398 $ --
Taxes accrued................................................... 1 --
Interest accrued................................................ 5,221 --
Payable to JCP&L................................................ 116 1,581
---------- --------
24,736 1,581
---------- --------
CAPITALIZATION:
Member's equity................................................. 1,603 1
Long-term debt.................................................. 300,663 --
---------- --------
302,266 1
---------- --------
$ 327,002 $ 1,582
========== ========
The accompanying Notes to Financial Statements are an integral part of these
balance sheets.
4
JCP&L TRANSITION FUNDING LLC
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
(In Thousands)
Cash Flows from Operating Activities:
Net income................................................ $ 2 | $ -- $ 2 | $ --
Adjustments to reconcile net income to net cash | |
from operating activities- | |
Amortization of bondable transition property ... 7,020 | -- 8,177 | --
Transition bond charge receivable from Servicer. (3,472) | -- (5,555) | --
Accrued interest................................ 4,311 | -- 5,221 | --
Other........................................... 159 | -- 175 | --
--------- | --------- --------- | --------
| |
Net cash provided from operating activities............... 8,020 | -- 8,020 | --
--------- | --------- --------- | --------
| |
| |
Cash Flows from Financing Activities: | |
New Financing- | |
Proceeds from issuance of transition bonds...... -- | -- 318,106 | --
Capital contributed by member................... -- | -- 1,600 | --
--------- | --------- --------- | --------
| |
Net cash provided from financing activities............... -- | -- 319,706 | --
--------- | --------- --------- | --------
| |
| |
Cash Flows from Investing Activities: | |
Deposit of restricted funds with Trustee............. 8,020 | -- 9,620 | --
Purchase of bondable transition property............. -- | -- 318,106 | --
--------- | --------- --------- | --------
| |
Net cash used for investing activities.................... 8,020 | -- 327,726 | --
--------- | --------- --------- | --------
| |
| |
Net change in cash and cash equivalents................... -- | -- -- | --
Cash and cash equivalents at beginning of period.......... 1 | 1 1 | 1
--------- | --------- --------- | --------
Cash and cash equivalents at end of period................ $ 1 | $ 1 $ 1 | $ 1
========= | ========= ========= | ========
| |
| |
Supplemental Cash Flows Information: | |
Cash Paid During the Period- | |
Interest.............................................. $ -- | $ -- $ -- | $ --
========= ========= ========= | ========
The accompanying Notes to Financial Statements are an integral part of these
statements.
5
JCP&L TRANSITION FUNDING LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1 - NATURE OF OPERATIONS
JCP&L Transition Funding LLC, a Delaware limited liability company, was
established on February 24, 2000. Effective February 19, 2002, the Company
became a wholly owned subsidiary of JCP&L. JCP&L, a wholly owned electric
utility operating subsidiary of FirstEnergy Corp., was formerly a wholly owned
subsidiary of GPU, Inc., which merged with and into FirstEnergy Corp. on
November 7, 2001. Accordingly, the post-merger and pre-merger period financial
results presented in this report are separated by a heavy black line.
The Company was organized for the sole purpose of purchasing and owning
BTP, issuing transition bonds to fund purchasing BTP, pledging its interest in
BTP and other collateral to the Trustee under an indenture between the Company
and the Trustee (Indenture) to collateralize the transition bonds, and
performing activities that are necessary, suitable or convenient to accomplish
these purposes. BTP represents the irrevocable right of JCP&L, or its successor
or assignee, to charge, collect and receive a non-bypassable TBC from customers
pursuant to the Financing Order, which was issued on February 6, 2002 by the
NJBPU in accordance with the Electric Discount and Energy Competition Act
enacted by the state of New Jersey in February 1999. The Financing Order
authorizes the TBC collections to be sufficient to recover $320 million
aggregate principal amount of transition bonds, plus an amount sufficient to
provide for any credit enhancement, to fund any reserves and to pay interest
(including financing costs), redemption premiums, if any, servicing fees and
other expenses relating to the transition bonds.
On June 11, 2002, the Company issued $320 million of Bonds, in four
different classes, to securitize the recovery of bondable stranded costs
associated with the previously divested Oyster Creek Nuclear Generating Station.
See Note 3 for additional information.
The Company's organizational documents require it to operate in a manner
so that it should not be consolidated in the bankruptcy estate of JCP&L in the
event JCP&L becomes subject to a bankruptcy proceeding. Both JCP&L and the
Company have treated the transfer of BTP to the Company as a sale under
applicable law, and the Bonds are being treated as debt obligations of the
Company. For financial reporting, federal income tax and State of New Jersey
income and corporation business tax purposes, the transfer of BTP to the Company
is being treated as a financing arrangement and not as a sale. Under applicable
law, the Bonds are recourse only to the Company and are not secured by the
assets of JCP&L.
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements as of September 30, 2002 and for
the three and nine months then ended are unaudited, but include all adjustments
that the Company considers necessary for a fair presentation of its financial
statements. All adjustments are of a normal, recurring nature, except as
otherwise disclosed. The December 31, 2001 balance sheet data were derived from
audited financial statements but do not include all disclosures required by
generally accepted accounting principles. Certain information in these unaudited
footnote disclosures, normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States,
has been condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission. These unaudited financial
statements and notes should be read in conjunction with the notes to the audited
financial statements of the Company included in its Form S-3 registration
statement No. 333-31250 declared effective on May 13, 2002, by the Securities
and Exchange Commission.
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of
the financial statements, and revenues and expenses during the reporting period.
Actual results could differ from those estimates.
6
Revenues
Substantially all of the Company's revenues are derived from the TBC
authorized pursuant to the Financing Order, which is being collected from JCP&L
customers. The Company also accrues unbilled TBC revenues for electric service
provided by JCP&L through the end of the accounting period. In addition, the
Company records investment income on amounts on deposit with the Trustee;
however, only earnings on the capital subaccount are recorded in income, as
earnings on the other subaccounts must be credited to JCP&L customers pursuant
to the Financing Order. The Company also earns interest on temporary cash
investments.
Cash and Cash Equivalents
All temporary cash investments purchased with an initial maturity of
three months or less are reported as cash equivalents on the Balance Sheet at
cost, which approximates their fair market value. Cash and cash equivalents do
not include restricted funds deposited with the Trustee.
Restricted Funds
Amounts on deposit with the Trustee are classified as restricted funds
on the Balance Sheet. See Note 3 for additional information.
Amortization of Bondable Transition Property
The BTP was recorded at the acquired cost and is being amortized over
the life of the Bonds, based on TBC revenue collections, interest accruals and
other fees. The BTP is solely the property of the Company.
Financing Costs
Prior to issuance of the Bonds, certain costs associated with the
issuance were paid by JCP&L and included as deferred financing costs on the
Company's Balance Sheet. Upon issuance of the Bonds, the Company reimbursed
JCP&L for these costs, and the costs are being amortized as part of the BTP.
Income Taxes
The Company is a single member limited liability company which is
treated as a disregarded entity for federal and state income tax purposes.
Accordingly, the Company's results are included in the tax returns of JCP&L.
However, the provision or liability for income taxes related to the Company's
operations are included in the Company's financial statements.
3 - BONDS
In June 2002, the Company issued $320 million of Bonds, consisting of
four classes. The Company used the net proceeds from the sale of Bonds to fund
the purchase of BTP from JCP&L. The Bonds are collateralized on a pro-rata basis
by the BTP and the equity and assets of the Company.
Scheduled maturity and interest rates for the Bonds at September 30,
2002 are as follows:
Expected Final Legal Final
Class Interest Rate Principal Amount Payment Date Maturity Date
----- ------------- ---------------- ----------------- -----------------
(In Thousands)
A-1.. 4.19% $91,111 December 5, 2007 December 5, 2009
A-2.. 5.39% 52,297 September 5, 2010 September 5, 2012
A-3.. 5.81% 77,075 December 5, 2013 December 5, 2015
A-4.. 6.16% 99,517 June 5, 2017 June 5, 2019
--------
320,000
Refundable Bond Collateral 61
Current Maturities (19,398)
--------
Long-Term Debt $300,663
========
The expected final payment date for each class of Bonds is the date on
which there is expected to be no further outstanding principal balance for that
class, based upon an expected amortization schedule for that class. The Company
has made certain assumptions in establishing these amortization schedules,
including, among other things, that all TBC collections are received in
accordance with JCP&L's forecasts. There can be no assurance that the principal
balance of any class of Bonds will be reduced at the rates indicated in these
amortization schedules. The legal final maturity date for each class of Bonds is
7
the date on which the Company is required to pay any outstanding principal
balance for that class. The Bonds will not be in default if principal is not
paid in accordance with the expected amortization schedules; however, a default
will occur if the entire outstanding balance of any class is not paid on or
before the final maturity date of that class.
The source for repayment of the Bonds is the TBC authorized pursuant to
the Financing Order, which is being collected from JCP&L customers by JCP&L, as
Servicer. Daily, JCP&L deposits TBC collections into a collection account
maintained by the Trustee. In accordance with the Indenture, the Trustee
allocates amounts in the collection account to general, reserve,
overcollateralization and capital subaccounts. The general subaccount is used to
make principal and interest payments on the Bonds and to pay expenses, fees and
charges as specified in the Indenture. The Trustee is required to make the first
payment on the Bonds on March 5, 2003. The reserve subaccount is maintained for
the purpose of retaining any excess amount of TBC collections and investment
earnings not released to the Company. The funding level of the
overcollateralization subaccount is 0.5% of the initial principal balance of the
Bonds, funded ratably over the life of the Bonds. If amounts available in the
general, reserve or overcollateralization subaccounts are not sufficient on any
payment date to make scheduled payments specified in the Indenture, the Trustee
will draw on amounts in the capital subaccount. Upon issuance of the Bonds, an
amount equal to 0.5% of the initial principal balance of the Bonds was deposited
into the capital subaccount. Any amounts collateralizing Bonds will be refunded
to JCP&L upon repayment of the Bonds.
JCP&L began remitting TBC collections to the Trustee on July 15, 2002.
At September 30, 2002, the following balances were reflected in the subaccounts
maintained by the Trustee:
Balance
Subaccount (In Thousands)
---------- --------------
General.................. $8,020
Reserve.................. --
Overcollateralization.... --
Capital.................. 1,603
------
Total................... $9,623
======
4 - SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS
Under the servicing agreement between JCP&L and the Company, JCP&L, as
Servicer, manages and administers the BTP of the Company and collects the TBC on
behalf of the Company. The Company is required to pay an annual servicing fee to
JCP&L equal to 0.125% of the initial principal balance of Bonds outstanding, or
$400,000, of which the Company has accrued $117,000 during the three- and
nine-month periods ended September 30, 2002. This servicing fee is being
recovered by the Company through the TBC. The Company has also entered into an
administration agreement with GPU Service, Inc., an affiliated company, pursuant
to which GPU Service, Inc. is providing administrative services to the Company.
During the three- and nine-month periods ended September 30, 2002, no expenses
for administrative services were paid or accrued by the Company.
8
REPORT OF INDEPENDENT ACCOUNTANTS
To the Member of
JCP&L Transition Funding LLC:
We have reviewed the accompanying balance sheet of JCP&L Transition Funding LLC
(a Delaware limited liability company and wholly owned subsidiary of Jersey
Central Power & Light Company) as of September 30, 2002, and the related
statements of operations and changes in member's equity and of cash flows for
each of the three-month and nine-month periods ended September 30, 2002. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying interim financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
We previously audited in accordance with auditing standards generally accepted
in the United States of America, the balance sheet as of December 31, 2001, and
the related statements of changes in member's equity and of cash flows for the
year then ended (not presented herein), and in our report dated April 25, 2002
we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying balance sheet as of
September 30, 2002, is fairly stated in all material respects in relation to the
balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
Cleveland, Ohio
November 13, 2002
9
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit
Number
------
99.1 Certification letter from chief executive officer, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification letter from chief financial officer, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
No reports on Form 8-K were filed since June 30, 2002.
10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
JCP&L Transition Funding LLC has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
November 13, 2002
/s/Harvey L. Wagner
-----------------------------
Harvey L. Wagner
Vice President, Controller
and Chief Accounting Officer
11
CERTIFICATION
I, Earl T. Carey, certify that:
1. I have reviewed this quarterly report on Form 10-Q of JCP&L Transition
Funding LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to
us by others within the registrant and/or the registrant's parent,
particularly during the period in which this quarterly report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 13, 2002
/s/ Earl T. Carey
-----------------------
Earl T. Carey
Chief Executive Officer
12
CERTIFICATION
I, Richard H. Marsh, certify that:
1. I have reviewed this quarterly report on Form 10-Q of JCP&L Transition
Funding LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us
by others within the registrant and/or the registrant's parent,
particularly during the period in which this quarterly report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 13, 2002
/s/Richard H. Marsh
-----------------------
Richard H. Marsh
Chief Financial Officer
13