TBO.com - TBO is Tampa Bay Online

TECO Seeks 22% Bump In Fuel Charges

ADVERTISEMENT

By RUSSELL RAY

The Tampa Tribune

Published: July 19, 2008

Updated: 07/19/2008 12:11 am

TAMPA - Customers of Tampa Electric Co. should brace themselves for a hefty increase in their monthly electric bill next year.

On Friday, Tampa Electric said it will ask regulators for a 22.3 percent increase in electric bills to cover the escalating cost of fuel. Last month, the utility announced plans to seek a 9 percent increase in base electric rates.

If both proposals are approved, Tampa Electric's residential customers will be paying a whopping 31 percent more for electricity by May.

Translation: Residential customers using 1,000 kilowatt hours a month could be paying $150 a month by next summer, up from $114.38 now.

Both plans will be filed with state regulators this summer.

"I know people don't want their electric rates to go up," Tampa Electric President Chuck Black said. "But when you think about it, if gasoline has gone up 55 percent since July 2007, it shouldn't be too much of a surprise that the fuel we use to generate electricity is also going to go up."
Tampa Electric is the chief power provider in Hillsborough County, serving nearly 667,000 customers.

The utility produces 55 percent of its power from coal and 45 percent from natural gas. Coal prices have more than doubled and natural gas prices are up 82 percent since July 2007, the utility said.

"The increases we've seen are just staggering and they're unprecedented," Black said.
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. Next year, Tampa Electric expects to spend $1.4 billion on fuel.

The utility said Friday it underestimated its fuel costs for 2008 by $209 million, or 20 percent. It will ask the Florida Public Service Commission in September for permission to recover those costs from customers next year.

"We don't have a whole lot more influence over the cost of natural gas than the individual consumer has over the cost of gasoline," Black said.

The unrecovered fuel costs coupled with the utility's projected fuel costs for 2009 mean residential customers using 1,000 kilowatt hours a month would be billed $140 a month beginning in January, a 22.3 percent increase.

To shelter customers from the full impact of soaring fuel costs, the utility has been maximizing the use of its coal-fired units. Although coal prices have jumped to record levels, the cost of producing electricity with coal is still significantly cheaper than producing it with natural gas, Black said.

"We're working hard to squeeze every megawatt we can out of our coal-fired fleet," he said.

Tampa Electric's fuel costs are adjusted each year. The utility's base rates, however, haven't changed since 1992.

Next month, it will ask the state Public Service Commission for a 9 percent increase in base rates. If approved, the new rates will take effect in May.

Under the rate increase proposal, the electric bill for a residential customer using 1,000 kilowatt hours a month would rise from $114.38 to more than $125.

A rate increase is needed, the utility said, because its costs have soared while its rate of return has shrunk to a paltry level.

Since its last rate increase, Tampa Electric has added 200,000 customers and invested $3.4 billion in new generation, transmission and environmental upgrades. The electric utility also pointed to the higher cost of steel, concrete and labor as a reason to raise rates. The cost of each has risen more than 70 percent since 1992, the company said.

Tampa Electric's current base rate is $43.42 for 1,000 kilowatt hours.

Meanwhile, customers of Progress Energy Florida will see their bills rise next month because of the rising cost of coal and oil. The St. Petersburg-based utility recently won approval to impose a midyear increase in fuel costs.

In August, residential customers who use 1,000 kilowatt-hours a month will see monthly bills rise to $110.59, up from about $108 now. In January, Progress Energy bills will increase again to $113.24 a month under the plan approved by regulators.

A midyear adjustment in fuel costs is allowed when a utility underestimates or overestimates its fuel cost for the year by more than 10 percent. Progress Energy is Central Florida's largest power provider, serving nearly 1.7 million customers in 35 counties.

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

Share this:

Loading Comments...

Email Print

ADVERTISEMENT