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PSC allows big electric rate hikes

Rates in the bay area could climb about 12 percent as utilities pass on the higher cost of fuel to their customers.

By LOUIS HAU
Published November 10, 2005

State regulators approved rate increases Wednesday for the Tampa Bay area's major providers of electricity, Progress Energy Florida and Tampa Electric. That means customers will see monthly bills go up in January to account for rising oil and natural gas costs in the past year.

The rate approval by the Florida Public Service Commission was mostly a foregone conclusion - with no dispute that the companies have seen an enormous upsurge in fuel costs, which they are customarily allowed to pass on to consumers.

Residential customers of Progress will see their monthly rate rise to $109.56 for the first 1,000 kilowatt hours of electricity per month, up $11.78. The St. Petersburg utility charges customers 2 cents more per kilowatt hour above 1,000.

Tampa Electric residential customers will pay $109.60 per 1,000 kilowatt hours, up $11.53.

The increases are attributed to the rising demand for fuel around the world and to choices made about what kinds of fuel should be burned to make electricity. Many Florida power companies rely heavily on natural gas and oil, the fuel commodities that have seen the biggest jumps in price.

Part of Progress' fuel costs came under scrutiny last month when the Office of Public Counsel, which represents the state's utility customers, pointed out that the company had bought large amounts of coal from one of its sister subsidiaries at higher prices than it paid other suppliers. Progress said the price discrepancies stemmed from changes in market prices for coal.

Public counsel had sought to hold separate deliberations on the matter, a request the PSC rejected last month. However, the commission ruled this week to allow consumer advocates to present expert testimony on the matter during next year's fuel-cost deliberations.

Customers of Florida Power & Light, the state's largest electric company and a utility that struggled for weeks to restore power to South Florida residents in the wake of Hurricane Wilma, will see their monthly power bill increase about 19 percent on average. That means the residential customer using an average amount of electricity will see their bill go up about $17 to $108.61 a month.

Customers of Gulf Power in the Panhandle, which uses much more cheap coal, will see their bills go up about 5 percent in January, or $4.57 to $92.48 a month, on average.

Public Service commissioners went out of their way during Wednesday's hearing to point out that they aren't to blame for what will be one of the largest increases to Floridians' electric bills at the same time that residents have seen higher rates for unprecedented hurricane recovery costs.

A long-used process allows for passing on fuel cost increases to customers - and the country is seeing fuel prices at near historic levels.

"The price increase we have seen, particularly in natural gas, is just as volatile and significant as we saw in the oil embargo" of the 1970s, said commissioner Terry Deason. "Yes, it is unprecedented. The impact on customers does not escape this commissioner. But, . . . there is a procedure in place, and the commission is following that procedure."

Some consumer advocates were disappointed.

"All Floridians, and especially older Floridians on a fixed income, took a massive hit today," said Bentley Lipscomb, the state director of the senior lobby AARP. "Some fuel recovery increases are understandable, but rate hikes of this magnitude are shocking. Older people already are struggling to meet the rising costs of prescription drugs, food, clothing, telephone bills, fuel, homeowner's insurance and property taxes."

Wednesday's approved increases will be in effect at least through April of next year. After that, the outlook depends largely on what happens with fuel prices. If they continue to increase dramatically, or take a precipitous drop, the charge could be altered again. If not, it will remain in effect until the beginning of 2007.

Information from the Associated Press was used in this story. Louis Hau can be reached at hau@sptimes.com or 813 226-3404.

[Last modified November 10, 2005, 01:20:16]