Utility rate cut delayed for now

The Public Service Commission says it cannot lower Florida Power rates without a full hearing first.

By STEVE HUETTEL

© St. Petersburg Times,
published September 5, 2001

Florida Power customers won't receive an immediate rate cut to make up for excess profits state regulators contend the utility is earning. But they could get a break on their bills in January to reflect the company's declining cost for fuel burned in its power plants.

On Tuesday, state Public Service Commission members rejected arguments by representatives of Florida Power's large industrial customers that they should cut rates while investigating the utility's earnings.

Commission staffers have reported that for the year ended Feb. 28, Florida Power would have earned nearly $114-million in excess profits without recording a number of extraordinary expenses. Those included one-time expenses such as severance payments to employees whose jobs were eliminated when the utility was combined with Carolina Power & Light.

Because at least some of those expenses won't recur this year, the commission directed the utility to set aside $114-million for possible refunds during the investigation, expected to stretch into mid-2002.

The Florida Industrial Power Users Group asked the commission to start giving customers the money back now. The group proposed cutting the monthly bill for a typical residential customer using 1,000 kilowatt hours by $3.12, or 3.3 percent.

"The magnitude of the overcharges are in the vicinity of $10-million a month," said John McWhirter, attorney for the group. "Today, you could do something to give customers relief."

But Florida Power attorneys countered that state law prohibits the commission from cutting bills without a full hearing on the utility's rates. Commission members agreed.

"We have an obligation to consumers, and we're fulfilling that with a comprehensive rate proceeding," commissioner Lila Jaber said.

But thanks to a drop in fuel prices, Florida Power expects to ask the Public Service Commission this month to reduce the fuel charge on the bills of 1.4-million customers, spokesman John Strickling said. He couldn't estimate the size of the decrease.

Tampa Electric customers won't be so lucky. The utility likely will ask the PSC to boost its fuel charge to cover higher costs of electricity purchased from other generators, spokeswoman Laura Plumb said. It's too early to say how much bills might increase, she said.

The PSC will hold hearings in November on fuel charges for next year.

State law lets utilities pass increases and decreases in their fuel costs on to consumers. Soaring natural gas, oil prices and wholesale power prices led the PSC to approve three fuel increases for Florida Power and Tampa Electric since summer 2000.

In March, the typical monthly residential bill for Florida Power, already the highest in Florida, increased by $3.71 to $93.41. For Tampa Electric, the bill went up $3.29 to $87.76 in April. Both increases will continue through the end of the year.

- Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

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