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As utilities' fuel costs rise, get ready to pay bill

Progress Energy and Tampa Electric want to pass on their costs to consumers by tacking on about $12 to $19 monthly to residential bills.

By LOUIS HAU
Published September 10, 2005

Florida consumers already saddled with higher gasoline prices will now be asked to cover the rising fuel costs of their electric company, too.

Progress Energy Florida and Tampa Electric said Friday in their annual fuel rate requests that they want to charge the median household about $12 to $19 a month more for electricity. The increase would mostly cover the higher costs the companies are paying for natural gas, coal and oil to run their power-generating plants.

The increases, which would take effect Jan. 1, mark a dubious milestone. It would be the first time the two utilities' residential rates have ever topped $100 per 1,000 kilowatt hours of electricity consumed per month. A median residential customer uses about 1,200 to 1,400 kilowatt hours a month.

"Just as we are seeing prices rise at the gas pumps, the cost of fuels used in electricity generation has increased dramatically in recent months and we expect that trend to continue next year," Progress Energy Florida president and chief executive Bill Habermeyer said in a statement.

"We are very disappointed that it is necessary to increase our rates," Tampa Electric president Chuck Black said in a statement. "Over the last year we have all seen unprecedented increases in fuel prices at the gas pump. . . . Unfortunately, for the same reasons, prices have risen for our generation fuels."

The Florida Public Service Commission, which regulates the rates of investor-owned utilities, is scheduled to hold hearings on the proposals Nov. 7, 8 and 9.

Progress of St. Petersburg wants to raise its residential rate of $97.78 for the first 1,000 kilowatt hours by $10.53, or 11 percent, to $108.31. The increase mostly reflects a rise in fuel costs, but also includes a 31-cent rise in the company's hurricane-cost recovery surcharge and a decline in its environmental costs.

Progress already charges a penny more per kilowatt hour used above 1,000. To promote energy conservation, the company wants to charge another penny per kilowatt hour above 1,000.

Tampa Electric, meanwhile, plans to increase its residential rate of $98.07 per 1,000 kilowatt hours by $9.90, or 10 percent, to $107.97. It could have been worse, the utility said. The tab for rising fuel costs was partially offset by environmental credits that the company had earned for reducing sulfur-dioxide emissions.

Commercial and industrial customers of both companies will face even steeper rate increases because fuel makes up a larger portion of their bills.

The news is bleaker for residents in other parts of Florida.

Florida Power & Light of Juno Beach, the state's largest electric utility, has filed to raise its residential rate 15 percent to $105.45 per 1,000 kilowatt hours.

Investor-owned utilities are allowed to pass through to their customers any increases in the costs of fuel and environmental-compliance programs. But they're not allowed to profit from the pass-throughs. If costs fall, the utilities are required to return the savings to customers.

Public counsel Harold McLean, whose office represents Florida utility customers, said he was surprised by the size of the requested rate increases.

McLean contends that electric utilities have hurt themselves by becoming too dependent on natural-gas-fired plants. Over the long run, he suggests, they should consider expanding use of coal-fired plants and nuclear power.

According to the Edison Electric Institute, an industry trade group, more than three-quarters of U.S. power plants built during the past two decades are fueled by natural gas. Stricter federal clean-air rules have helped further the boom in natural-gas plants because they burn far more cleanly than oil or coal-fired plants.

Natural gas accounts for 33 percent of Tampa Electric's power generation, 16 percent of Progress' and 38 percent of FPL's.

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

[Last modified September 10, 2005, 01:24:05]