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Public Counsel: TECO Rate Request $190 Million Too High

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By RUSSELL RAY | The Tampa Tribune

Published: December 5, 2008

TAMPA - Tampa Electric Co.'s request to raise base service rates by $228 million a year is far too high, the Florida Public Counsel told state regulators Thursday.

In papers filed with the Florida Public Service Commission, the counsel, which represents Florida ratepayers, said TECO's request should be slashed to $38 million.

Expert witnesses hired by the counsel contend TECO "has significantly overstated the basic revenues it needs to earn a fair return and provide good service," the counsel's J.R. Kelly said. "The company has enjoyed excellent earnings since 1992, and they continue to do so today at existing rates."

A $228 million-a-year rate increase would give TECO a 12 percent return on its investments. But the public counsel said a 9.75 percent return would be fair and reasonable in these tough economic times.

TECO hasn't raised base rates since 1992. Since then, the utility has added 200,000 customers, invested $3.4 billion in new projects and seen its costs for labor and materials soar.

Hearings on TECO's rate request are scheduled for late January. Regulators are expected to issue a ruling in March, and the new rate would become effective in May. If TECO's request is approved, electric bills for residential customers would rise about 8 percent in May. The cost of 1,000 kilowatt hours would rise about $10 a month.

Electric bills have two major components: a base rate from which utilities earn a certain rate of return and a fuel charge that reflects the utility's cost for coal, natural gas and other fuels used to generate electricity.

The company's fuel costs are passed on to customers with no markup.

Already, electric bills for TECO customers are set to go up 12 percent in January to cover the higher fuel costs.

If the $228 million request is approved, TECO customers would be paying 20 percent more by next summer than they are now.

Reporter Russell Ray can be reached at (813) 259-7870.

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