The company ignores PSC's suggested tweaks to a bid request that would ensure it doesn't favor sibling TECO Transport.
By LOUIS HAU
Published July 16, 2003
TAMPA - For more than four decades, Tampa Electric has used the same company to ship coal for its power plants to the Tampa Bay area: its TECO Energy Co. sibling, TECO Transport.
But this arrangement, under which one TECO Energy subsidiary profits from selling services to another, is coming under renewed scrutiny as Tampa Electric collects bids on a new five-year coal-transport contract that begins Jan. 1.
Consumer advocates have expressed concern that the wording of the company's call for bids narrows the pool of prospective bidders, which could favor the company that has the current contract - TECO Transport. To help ensure that Tampa Electric's request for bids cast as wide a net as possible, the staff of the Florida Public Service Commission was prepared to provide nonbinding suggestions on how to structure the bid request to the utility at a scheduled meeting July 1.
But during the week of June 23, Tampa Electric proceeded to issue the request for bids without hearing that advice, drawing the ire of PSC economic regulation director Tim Devlin.
In a July 11 letter to Tampa Electric, Devlin said the PSC staff was "surprised and disappointed" by the utility's actions, urging it to amend its bid request to include some modifications requested by the PSC staff.
Devlin's letter is the latest clash between the PSC and a local utility. On July 9, the PSC voted unanimously to order Progress Energy Florida Inc. of St. Petersburg to pay an $18-million refund to its customers by the end of October.
Tampa Electric spokesman Ross Bannister said Tuesday in a statement that the company doesn't plan to change the bid request's wording because "any changes now . . . could cause confusion or discourage potential proposals."
The modifications sought by the PSC included more explicit language about eligible ports and the structure of the bids in the hope it would broaden the pool of bidders. One suggestion was that Tampa Electric be clearer in saying that it will consider bids for different parts of the contract "to achieve the best combination of price and non-price factors."
The current language in the bid request states that "Tampa Electric prefers proposals for integrated waterborne transportation services, however proposals for segmented services will be considered."
Robert Vandiver, an attorney in the state Office of Public Counsel, which represents consumers on utility issues before the PSC, noted that expressing a preference for integrated services could favor TECO Transport. Other than TECO Transport, "there are very few (barge) operators that could bid the whole thing from the upper (Mississippi) river all the way into Tampa," Vandiver said.
The public counsel's office will be following the bid process closely because electric utilities in Florida are allowed to pass on fuel-related costs to consumers, Vandiver said.
"We want a transparent, fair process so that the consumers can get the best possible deal," Vandiver said.
In his statement, Bannister downplayed concerns about a small pool of bidders. "Based on the company's knowledge and experience, along with the advice of an expert consultant, Tampa Electric is confident that its (call for bids) will generate interest and consideration from potential providers."
While Tampa Electric promises a fair evaluation of all bids, its parent TECO Energy has an incentive to keep the coal-transport contract in-house. In 2002, TECO Transport generated $110.7-million in revenue from its contract with Tampa Electric, representing 43 percent of its sales.
Because of its troubled investments in wholesale power generation, TECO has been scrambling to generate cash to pay off debt. One asset it is considering selling is TECO Transport, the value of which, observers note, would be damaged if it lost its contract with Tampa Electric.
- Louis Hau can be reached at hau@sptimes.com or 813 226-3404
