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Progress Energy makes rate hike pitch to PSC

The utility is asking to add a two-year surcharge to customers' bills to help it recoup $251.9-million in hurricane expenses.

By LOUIS HAU
Published March 31, 2005

TALLAHASSEE - When it comes to Progress Energy Florida's hurricane recovery costs, just about the only thing the St. Petersburg utility and consumer advocates fully agree on is that last year's hurricane season was devastating and unprecedented in scope.

Beyond that, the sides seem to disagree on just about everything else - which of Progress' hurricane expenses and how much of them should be shouldered by its customers and even which prior rulings by state utility regulators are relevant to the case.

On Wednesday, the Florida Public Service Commission opened an evidentiary hearing to sort through the claims and counter-claims. The commission's decision on the matter will affect Progress customer bills for the next two years.

Progress has asked the PSC for permission to pass through $251.9-million in hurricane costs to its customers in the form of a two-year surcharge. In the first year, the company would tack on $3.81 per 1,000 kilowatt hours of electricity consumed per month. The surcharge would drop to $3.59 in the second year.

Progress charges a monthly residential rate of $94.43 for the first 1,000 kilowatt hours consumed per month. A typical household uses about 1,200 to 1,400 kilowatt hours a month.

Consumer advocates, including the state Office of Public Counsel, the Florida Industrial Power Users Group and senior citizen advocacy group AARP, reaffirmed Wednesday their opposition to Progress' proposal.

The advocates said many of the costs the company seeks to pass through to customers are items that are covered by its base rates, the portion of a customer's electric bill that covers the company's cost of doing business, minus fuel and environmental costs. A February audit of Progress' hurricane costs by the PSC staff determined the company had overstated its hurricane labor costs by $12-million.

In addition, the advocates argued that approval of a surcharge on customer bills would violate the terms of a 2002 rate-reduction settlement with the state, which banned increases in base rates before the end of this year.

Progress officials countered that the 2002 settlement was of no relevance to its hurricane costs and the company was only seeking to pass through costs that were never meant to be covered by base rates.

"The costs of such severe storms are too volatile, irregular in their occurrence and unpredictable to be addressed in base rates," Progress regulatory services director Javier Portuondo said. "Traditionally and historically, severe, catastrophic storm events and their costs have not been addressed in base rates."

The PSC hearing on Progress' hurricane costs will continue today with further testimony by Progress officials and by expert witnesses called by consumer advocates.

Louis Hau can be reached at 813 226-3404 or hau@sptimes.com

[Last modified March 31, 2005, 01:27:20]