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Progress freezes base power rate

The rate will not increase for two years, but customers will still pay more to cover 2004 hurricane costs.

By LOUIS HAU
Published September 1, 2005


Progress Energy Florida has agreed to freeze its base electricity rate for two years under a settlement reached with consumer advocates.

The bottom line? The deal means customer bills will still go up, but not as much as Progress wanted. The median residential customer will be spared a planned increase of about $5 a month.

Customers will still have to pay a monthly surcharge that Progress added to customer bills in August to cover its 2004 hurricane recovery costs. And they will still be subject to rate increases next year to cover rising fuel costs.

The settlement was negotiated by Progress executives and consumer advocates led by state Attorney General Charlie Crist, public counsel Harold McLean and attorneys representing senior citizen advocacy group AARP and major industrial and commercial consumers of electricity.

"This is across-the-board a great benefit," Crist said Wednesday at a press conference in Tampa to announce the settlement.

The terms of the pact are similar to those of an Aug. 22 agreement that consumer advocates reached with Florida Power & Light of Juno Beach.

Under the Progress settlement, the St. Petersburg utility agreed to drop its request for an annual $206-million base rate increase, which would have raised residential customers' bills by $3.79 per 1,000 kilowatt hours of electricity consumed per month. The base rate pays for the company's cost of doing business, excluding fuel and environmental compliance costs.

Both the Progress and FPL pacts include a base-rate freeze, revenue-sharing arrangements and the ability for the companies to cover the cost of new power-plant construction.

As part of the agreement, consumer advocates agreed to drop their appeals of a Florida Public Service Commission decision in June to allow Progress to pass through $231.8-million in hurricane costs to customers in a form of a two-year monthly surcharge of $3.35 per 1,000 kilowatt hours.

Progress charges a combined monthly residential rate of $97.78 per 1,000 kilowatt hours, which includes the hurricane surcharge.

Wednesday's press conference at times had the air of a campaign stop for Crist, who is running for the 2006 Republican nomination for governor. The attorney general thanked his fellow negotiators and emphasized the savings they helped secure for Progress and FPL customers.

"We're pleased to have reached a fair agreement," said Progress senior vice president Jeffrey Lyash.

The lone sour note during the press conference was sounded by Bentley Lipscomb, state director of AARP.

Lipscomb praised the settlement but criticized the PSC for what he described as its lax regulation of Florida investor-owned utilities. He said that AARP intervened in the Progress and FPL base-rate cases because it was concerned that the PSC would have allowed higher rate increases.

"AARP believes Florida needs a new Florida Public Service Commission," Lipscomb said.

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

[Last modified September 1, 2005, 01:15:56]


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