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Electric, Gas Bills Could Rise 10%In'09

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By RUSSELL RAY

The Tampa Tribune

Published: June 13, 2008

TAMPA - Customers of Tampa Electric and Peoples Gas could see rate increases of 9 percent to 10 percent starting next spring, the parent company of both utilities said Thursday.
TECO Energy Corp. said it plans to ask state regulators in August for permission to raise the base rates of both Tampa-based utilities. If approved, the rate increases would be applied to customers' bills beginning in May. Together, the two utilities serve more than 1 million Florida customers.

Tampa Electric, which serves more than 666,000 customers, hasn't raised its base service rate since 1992.

Since then, the electric utility has added 200,000 customers and invested $3.4 billion in new generation, transmission and environmental upgrades.

The utility also cited escalating costs for steel, concrete and labor. Since its last rate increase, the cost of each has risen more than 70 percent, the company said.

"Those are all costs that we've incurred and we'll continue to incur those costs," said TECO spokesman Rick Morera.

If approved, the electric bill for an average residential customer using 1,000 kilowatt hours a month would rise from $114.38 to more than $125 under the utility's proposal.

Of the $114.38 total, fuel costs represent $52.41. Tampa Electric's current base rate is $43.42 for 1,000 kilowatt hours.

That doesn't include an $8.50 customer charge.

"None of us at Tampa Electric wants to see even a minimal increase to electricity prices for our customers, especially during this difficult economy," Tampa Electric President Chuck Black said in a statement.

"However, we must seek rates that address the investments we've made to serve our growing area, to enhance our service reliability and to improve our environmental performance," Black said.
Peoples Gas is Florida's largest natural gas utility, serving 334,000 customers.

The last time the gas utility raised its base service rate was in 2002.

The utility pointed to higher operating costs, increased demand and the installation or replacement of more than 1,500 miles of pipe.

A Peoples Gas customer who uses 20 therms of gas a month would pay about $47 a month under the proposed increase, up from $42.90 now.

"Our Peoples Gas team has worked hard to offset the increased costs of providing high-quality natural gas service to a growing customer base," said Peoples Gas President Bill Cantrell. "Unfortunately, we are unable to put off an adjustment any longer."

Although fuel costs are rising for most utilities, the rate increases proposed by Tampa Electric and Peoples Gas are not linked to the increased cost of fuel.

Each utility is allowed to earn a certain rate of return approved by the state.

Higher operating costs, increased spending on capital projects and additional regulation have lowered the rate of return for both utilities to unacceptable levels, John Ramil, TECO's president and chief operating officer, said in February.

St. Petersburg-based Progress Energy Florida isn't seeking an increase in base rates, but the electric bills of Progress Energy customers are expected to rise 8 percent this summer because of higher-than-expected fuel costs.

After underestimating its fuel costs for the year, Progress Energy went back to state regulators last month and asked for a midyear increase in consumer fuel charges. Power plants use a variety of fuels to generate electricity, including coal, natural gas and oil, commodities that are becoming increasingly expensive.

Under the proposal, the electric bill for an average residential customer who uses 1,200 kilowatt hours a month would increase $10.42, or 8 percent, to $142.61 a month, Progress Energy said.

Commercial customers would pay up to 16 percent more each month under Progress' proposal.

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

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