The utility rebuts critics, saying its coal-hauling contract with a sister company benefits ratepayers.
By LOUIS HAU
Published May 5, 2004
TAMPA - Tampa Electric Co. is firing back at critics of its waterborne coal-transport contract with a fellow TECO Energy Inc. subsidiary.
In filings with the Florida Public Service Commission made public Tuesday, Tampa Electric and its consultants defended the contract for coal delivery as a good deal for ratepayers.
Critics "have presented very broad but extremely shallow and unsupported or grossly inaccurate theories and calculations," Tampa Electric's wholesale marketing and fuels director Joann Wehle said in testimony filed with the PSC.
"Tampa Electric's contract with TECO Transport," Wehle maintained, "is priced at or below market and its customers continue to receive the most efficient and cost-effective services for coal transportation."
Wehle claimed that the relationship has yielded Tampa Electric customers more than $500-million in savings over the years.
Her testimony was submitted as part of TECO's case before the PSC, which has scheduled hearings May 27-28 to review the contract between Tampa Electric and TECO Transport.
A mix of consumer groups and competitors have challenged the contract as a sweetheart deal that benefits financially strapped TECO at the expense of its customers. Among those facing off against the utility are the Florida Industrial Power Users Group, rail company CSX Transportation and the state Office of Public Counsel, which represents Florida utility consumers before the PSC.
On Jan. 1, Tampa Electric began a new five-year contract with TECO Transport, which has shipped coal to the utility's power plants for more than 40 years. The utility signed the deal after taking competitive bids in a process critics claimed was rigged.
Tampa Electric had rejected suggestions by the PSC's economic regulation director to amend its bid requirements to broaden the pool of candidates.
Tampa Electric president Bill Cantrell said Tuesday that the company wasn't required by the PSC to put its transport contract out to bid last year. He said Tampa Electric did so "to indicate how comfortable we were that we were below market prices," based on the bids it received, calculations made by an industry consultant and a PSC-approved market benchmark.
Cantrell also defended the company's practice of pocketing "backhaul" revenue, which is generated by shipping other commodities on TECO Transport vessels on their return voyages. Consumer advocates argue those revenues should be returned to ratepayers.
"It's an irrelevant argument. . . . It doesn't have anything to do with the market rate," Cantrell said. "We are a little shocked and dismayed that folks are bringing it up."
The TECO Transport case is unrelated to a settlement Progress Energy Florida of St. Petersburg reached last week regarding its own coal transport costs. Under an agreement with the public counsel's office and the industrial power users group, Progress will reduce its projected waterborne coal transport costs by 27 percent in 2004.
- Louis Hau can be reached at hau@sptimes.com or 813 226-3404.
