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Utilities request increases

Tampa Electric, Peoples Gas don't have specifics.

By ASJYLYN LODER, Times Staff Writer
Published February 6, 2008


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John Ramil said the utilities will probably ask for the increase in 2008, so it could be applied starting sometime in 2009.

TAMPA - Expect higher bills from Tampa Electric Co. and Peoples Gas.

TECO Energy Inc., parent company of both utilities, said Tuesday that it wants to increase prices at both. The company isn't ready to specify exactly how much it will seek or when, said John Ramil, TECO's president and chief operating officer.

"We think it's going to be a reasonable increase," Ramil said Tuesday.

Ramil said the utilities will probably ask for the increase in 2008, so that it could be applied starting sometime in 2009. The increase will likely amount to less than 10 percent of the monthly bills for Tampa Electric's more than 666,000 customers and Peoples Gas' more than 330,000 customers.

Based on current price and average customer use, that could add up to roughly $4 a month for Peoples Gas bills and up to $14 a month for Tampa Electric bills.

Tampa Electric last asked for a base rate increase in 1992. Its current base rate is $51.92 for 1,000 kilowatt-hours, including an $8.50 customer charge. Its fuel cost is $52.41 for 1,000 kwh, and the total bill is about $114.38 for 1,000 kwh.

Peoples Gas has a total rate of $38.04 for 20 therms, which includes $20.21 for fuel, a small conservation charge, a $10 customer service charge, and a nongas energy charge covering other costs of $7.53. A rate increase would apply to the customer service charge and the nongas energy charge. Peoples Gas last won a rate change in 2002. Its customer charge rose $3 from $7, and its nongas energy charge decreased from $8.22.

The total rate includes the utilities' costs for fuel - a charge that customers have seen sharply escalate on their monthly bills in recent years, especially after the 2004 hurricanes caused natural gas prices to soar. That price is a pass-through, reflecting what utilities pay for fuel. Utilities don't profit from it.

Since its last rate increase, Tampa Electric has added 1,100 megawatts of generating capacity, 17 substations, 100 miles of transmission lines and more than 200,000 customers - a 42 percent increase in its customer base, said spokeswoman Laura Duda. In those 16 years, the consumer price index has risen 48 percent, labor costs have increased 77 percent and prices for steel and concrete soared more than 70 percent.

Prices have surged for materials and labor, while the company faces new costs from new federal and state regulation, Ramil said. Tampa Electric plans to spend $20-million a year shoring up its transmission system against hurricanes, a cost that didn't exist before the 2004 storms. It needs to spend $120-million this year on new natural gas peaking units. The cost of supporting growth and reliability has grown to $270-million, an increase of 35 percent in the past four or five years.

The utility managed to control costs as it grew and to stave off any rate increases. But those days are over, Ramil said.

"We see a lot of things building that mean we really can't do it anymore," Ramil said.

Progress Energy Florida Inc., the bay area's other major utility, last sought a rate increase in 2005. The company settled the case without a base rate increase, but was allowed to increase fuel rates and charge a surcharge for storm damage costs.

Unless Tampa Electric reaches a settlement with state regulators, its petition for a rate case will be heard before the Florida Public Service Commission.

How do base rates affect your bill?

Your electric bill has two big pieces: base rates and fuel.

Fuel is the biggest chunk of your bill, but the utility doesn't make money from it. It's a pass-through. Every year, the utilities estimate costs to fuel power plants. At year's end, those costs get reviewed by the state. Lower-than-expected costs can mean refunds.

The second big piece of the bill is base rates. This is the piece that Tampa Electric and Peoples Gas want to increase. Base rates include a monthly customer charge that covers services like meter readings. The bulk of the rate pays for things like power plants, maintenance and operations. It also includes an agreed-upon rate of return - basically, the utilities' profit.

TECO earnings
The Tampa utility company announced its 2007 results Tuesday morning. It more than tripled its net income and share price in the fourth quarter of 2007. That includes the $146.1-million after-tax gain from the sale of TECO Transport. Despite that bright spot, the company is coping with higher operating costs, higher capital demands, slower growth and lower per-household energy use at both Peoples Gas and Tampa Electric. GAAP results excluding synfuels and the TECO Transport sale give a clearer picture of the company's performance:

                    4th Qtr          Year ago
Net income    $47.7M          $37M
Per share      23 cents      18 cents

                    2007                 2006
Net income   $223.7M       $201.5M
Per share     $1.07           97 cents

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

[Last modified February 5, 2008, 23:27:16]


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