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Businesses unhappy with Progress plan

By LOUIS HAU
Published July 27, 2005

Last week's public hearings on Progress Energy Florida's request for an increase in its base electricity rate might have left the impression that businesses served by the St. Petersburg utility support the rate hike.

Various Tampa Bay area chambers of commerce, which count Progress as a member, provided glowing testimonials on behalf of the company.

However, Progress' plans to increase rates face stiff and well-organized opposition from many in the business community.

Leading the charge are the Florida Industrial Power Users Group, which represents large commercial and heavy-industrial customers, and the Florida Retail Federation, whose members range from locally owned retailers to corporate giants including Wal-Mart, Target, Home Depot and most major grocery store chains in the state.

Both groups appear regularly before the Florida Public Service Commission representing business customers. In the Progress base-rate case, they are supporting the state Office of Public Counsel's contention that the utility's rates should be cut by more than the company wants to raise them.

"They're a government-created monopoly and we don't believe they need to be making that kind of money," said Randy Miller, senior vice president of governmental affairs for the retail federation.

According to data compiled by the Edison Electric Institute, a trade group representing regulated electric utilities, Progress charges industrial customers among the highest electricity rates in the Southeast.

Although most of Progress' commercial and industrial customers pay a lower average electricity rate than residential customers, most will pay higher percentage increases under the company's proposed rate hike.

Because of Progress' plans to restructure the complex formulas it uses to calculate rates for various classes of business customers, a small number of the company's biggest industrial customers face double-digit rate hikes.

For example, PCS Phosphate-White Springs, a phosphate mining company with operations in Hamilton County along the Georgia border, filed testimony this month with the PSC arguing that Progress' planned rate hike would raise the base-rate component of its electric bill by more than 80 percent. The company, which is advocating a smaller rate cut than what is being sought by public counsel, said its electricity costs top $20-million a year.

PCS Phosphate also has a mining facility in Aurora, N.C., where Progress Energy Carolinas charges industrial customers a lower rate for electricity, said Bryan Stone, the company's superintendent of electrical and instrumental maintenance in Hamilton County.

If Progress Florida's proposed rate hike is approved, "it would be that much more of an incentive to shift operations or expand operations elsewhere," Stone said.

Progress spokesman Aaron Perlut said the company has been frank with its commercial and industrial customers that the proposed rate hike would have a bigger effect on them than on residential customers.

Perlut said business customers have a better understanding of the need for rate increases because their cost of doing business has risen in recent years.

"Nobody likes price increases," he said.

Miller of the retail federation said he wasn't surprised by the support Progress has received from chamber of commerce officials, given the financial and manpower support that the utility provides for various local economic-development initiatives.

"They do a wonderful job," Miller said of these efforts, adding however that, "you have to separate that from the earnings issue."

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

[Last modified July 27, 2005, 01:03:14]