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Letter to the editor

Utility may owe refunds

PSC will decide how much, if anything, Progress Energy customers are due.

By Asjylyn Loder
Published July 31, 2007

Progress Energy may owe its customers a multimillion dollar refund, according to a case slated to come before the Public Service Commission today.

Two state agencies offer widely different estimates of the utility's potential liability, ranging from $13.8-million to $134-million. Progress Energy says it owes nothing.

At issue is whether Progress Energy bought the cheapest coal available for generators at its Crystal River plant.

The Public Service Commission, the five-member body that regulates the state's utilities, will have to decide if Progress Energy should have bought cheaper coal. If so, how much would customers have saved?

The higher estimate comes from the Office of Public Counsel, a state agency that acts as an independent advocate for utility customers. It alleges that Progress Energy purchased more expensive coal from Progress-related companies, even though cheaper coal was available.

That meant customers paid more for power, said Joseph McGlothlin, associate public counsel. Progress Energy owes customers $134-million that they would have saved from 1996 on, if the company had purchased cheaper coal, he said.

The staff of the Public Service Commission offered a different estimate, limiting the refund to coal purchased from 2003 to 2005, plus interest, for a total of $13.8-million.

The commission also could find that Progress Energy acted properly, and owes nothing.

The company claims that the cheaper coal had a lower BTU content, meaning it wouldn't have produced as much power. Progress Energy would have had to burn more, wiping out any savings.

"Our fuel purchases at Crystal River have been reasonable and prudent," said C.J. Drake, a spokesman for Progress Energy. According to the utility's calculations, Progress Energy's coal-buying strategies have actually saved consumers more than $500-million from 1996 to 2005.

Progress Energy Florida, based in St. Petersburg, supplies power to nearly 1.7-million customers in 35 counties. It has 14 power plants with a capacity of producing 9,000 megawatts of electricity. It is owned by Progress Energy, which is based in Raleigh, N.C.

Asjylyn Loder can be reached at (813) 225-3117 or aloder@sptimes.com

[Last modified July 31, 2007, 12:04:10]