Its proposal calls for a 3.5 percent cut for the next 15 years and establishes a credit of $75-million. A review of its rates and any overcharges continues.
By JEFF HARRINGTON
© St. Petersburg Times, published September 15, 2001
Florida Power Corp. has offered to cut customers' bills 3.5 percent for the next 15 years as their share of the savings from the utility's merger with Carolina Power & Light.
The proposal, outlined in a voluminous rate filing to state regulators Friday, calls for establishing a credit of $5-million a year for 15 years, or $75-million. For the average residential user of 1,000-kilowatt hours, it would cut $3.25 off a monthly bill of $93.41.
The filing comes as state regulators begin an intense review over how the St. Petersburg company has set electricity rates and how much it may have overcharged customers.
The Florida Public Service Commission in May directed Florida Power to set aside nearly $114-million for possible refunds to its 1.4-million customers. The PSC also ordered Florida Power to file extensive financial documents.
State regulators, while welcoming the rare news of a filing to cut rates, were not quite sure how to handle it Friday.
Tim Devlin, head of economic regulation for the PSC, said the filing would likely be expedited to the commission within 60 days because it deals with a rate credit instead of a rate increase. The latter takes months to wind through the system.
At the same time, Devlin vowed to go forward with its review of the alleged overcharging. "That's an independent issue," he said.
In an attempt to fend off the review, Florida Power offered in May to reduce rates $127-million over the next 31/2 years. The PSC rejected the settlement.
Florida Power spokesman John Strickling emphasized that Friday's proposed rate cut is not a second settlement offer in the overcharging inquiry. Asked how the company expects the rate cut to affect the inquiry, he said, "There's really no firm answer to that at the moment."
Florida Power said its rate cut proposal deals strictly with costs savings from the $5.3-billion merger of the old Florida Power of St. Petersburg and CP&L of Raleigh, N.C., to create a new parent company, Raleigh-based Progress Energy.
In a statement, Florida Power chief executive Bill Habermeyer said his company shares with the PSC the goal of lowering customer rates.
"This is the beginning of our plans designed to lower prices for our customers while ensuring that they continue to have adequate generation supply coupled with a superior level of customer service," Habermeyer said.
The filing marks the company's first rate change since 1993, although such basic rates do not include surcharges for increases in the cost of fuel purchased by Florida Power.
The company said it will file separate plans next week with the PSC to lower its annual fuel costs and related charges by about $65-million beginning in 2002. It also said it may be able to seek additional, unspecified rate reductions if regulators approve an "innovative" incentive plan proposed Friday. Under the plan, the company said it could pass on savings in the cost of its utility operations in the form of rate cuts.
Florida Public Counsel Jack Shreve, who represents consumers in rate issues before the PSC, said he had not seen the voluminous filing yet. But at first blush, he didn't like what he heard.
Florida Progress' proposal for a rate credit would allow the utility to go back to charging higher rates in 15 years.
"I would hope we get a rate reduction and not a credit, and I certainly hope it's much greater magnitude than $5-million" a year, Shreve said.
Friday's filing was the first of three requested by the PSC in preparation for a rate review. Subsequent filings are expected by mid-October.
- Jeff Harrington can be reached at firstname.lastname@example.org or (813) 226-3407.