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2 TECO Utilities To Seek Approval Of Rate Increases

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By RUSSELL RAY, The Tampa Tribune

Published: February 6, 2008

TAMPA - The parent company of Tampa Electric and Peoples Gas said Tuesday that both utilities will be seeking permission from state regulators this year to raise consumer rates, citing major investments in new generation and higher operating costs.

TECO Energy, which disclosed the rate plans while releasing its fourth-quarter results Tuesday, said the last time Tampa Electric raised its base rate for electricity was in 1992. Since then, the utility has added more than 1,700 megawatts of generation capacity, built more than 100 miles of new transmission lines, added 200,000 customers and spent nearly $1 billion to reduce power plant emissions.

"We need higher rates in 2009," said John Ramil, president and chief operating officer of TECO Energy.

Each utility is allowed to earn a certain rate of return, which was approved by regulators. Higher operating costs, increased spending on capital projects and additional regulation have lowered the rate of return for both utilities to unacceptable levels, Ramil said.

"The trigger point for new rates is when you start to fall below your allowed return range," Ramil said. "Peoples Gas has just slipped under theirs. Although Tampa Electric hasn't, as we look at the year ahead, that will happen in 2008."

The rate increases, if approved by regulators, would be applied to customers' bills in 2009, Ramil said.

"We have to keep investing capital to be able to grow and provide service and reliability," he said.
Tampa Electric provides power to more than 660,000 customers in Hillsborough County and portions of Pinellas, Pasco and Polk counties. Peoples Gas is Florida's largest natural gas utility, serving 320,000 customers.

TECO said it's too early to estimate the size of the rate increases or their effects on customers' bills.

Meanwhile, TECO Energy said Tuesday that fourth-quarter earnings more than tripled compared with the same quarter in 2006, due largely to the recent sale of its shipping business.

Net income for the quarter totaled $174 million, or 83 cents a share, up from $49 million, or 23 cents a share, during the same period a year ago. The results included a $146 million after-tax gain from the fourth-quarter sale of TECO Transport, which carries coal, phosphate and grain to locations throughout the Midwest and the Caribbean.

Fourth-quarter revenue rose 4 percent to $858 million.

The parent company now has $1.3 billion in debt and a debt-to-cap ratio of 61 percent, down from 69 percent at the end of 2006.

Tampa Electric, TECO Energy's largest business, earned $29 million during the fourth quarter, up from $19.4 million in the fourth quarter of 2006. Customer growth averaged 1.3 percent for the quarter and 1.9 percent for the year. Although customer growth has slowed, Tampa Electric's retail energy sales were 2.7 percent higher, TECO Energy said.

Excluding special charges and gains, TECO Energy earned $47.7 million from continuing operations in the fourth quarter, up from $37 million in the fourth quarter of 2006.

For the year, TECO Energy earned $413 million, a 68 percent increase compared with 2006 earnings. Revenue for the year rose 3 percent to $3.54 billion.

Shares of TECO Energy fell 82 cents, or 4.75 percent, Tuesday to close at $16.43 on the New York Stock Exchange.

The company said it expects to earn between 95 cents and $1.10 a share in 2008, below the expectations of analysts polled by Thomson Financial, who projected a 2008 profit of $1.12 a share.

Reporter Russell Ray can be reached at (813) 259-7870 or rray@tampatrib.com

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