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Utilities Report Drop In Clients

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By RUSSELL RAY

rray@tampatrib.com

Published: November 1, 2008

TAMPA - Something else to blame on the grim housing market: The Bay area's largest power providers are losing customers for the first time in memory.

After years of steady growth, Progress Energy Florida and Tampa Electric Co. reported a slight drop in customers in the third quarter, an unprecedented event for both utilities, which have been hammered by a surge in housing foreclosures and vacant homes.

"This is the first decline that we can recall ever seeing," said TECO spokesman Rick Morera.

TECO said it had 409 fewer customers in the third quarter versus the third quarter of 2007. The year-to-year decline contributed to a 22-percent drop in the utility's third-quarter earnings.

Although TECO continues to add new customers, it is losing more customers than it is gaining because of vacancies and foreclosures, Morera said.

Florida had the second highest foreclosure rate in the third quarter and Hillsborough County had 4,663 filings in August, up 146 percent from a year ago, according to market researcher RealtyTrac.

St. Petersburg-based Progress Energy Florida reported Friday that it had 2,000 fewer customers in the third quarter compared with the same quarter of 2007.

Jeff Lyash, the utility's president and CEO, said he expects customer growth to remain flat through next year and is confident it will return to more normal levels once the economy and the housing market begin to recover.

"We ought to see and we expect to see a return to steady growth in Florida," Lyash said. "This is still a very attractive place to live and work."
Progress Energy recently won approval from state regulators to pass on costs related to the construction of a $17 billion nuclear plant in Levy County to meet rising demand. Beginning next year, Progress Energy customers will see $11.42 added to the cost of 1,000 kilowatt hours to cover the utility's tab for preconstruction costs.

If the utility continues to lose customers, though, the need for the nuclear plant may be questioned by more people, said Bill Newton, executive director of the Florida Consumer Action Network.

"Their estimates for demand could change rapidly," Newton said.

But Lyash said the short-term decline in customers won't affect the utility's plans to build two new reactors in Levy County. The company's decision to build the plant wasn't based solely on customer growth, Lyash said.

"That Levy plant serves a number of long-term objectives," he said. "It adds to fuel diversity, it lowers fuel prices and volatility and it has no greenhouse gases."

The decline in Progress Energy Florida customers was disclosed in the parent company's third-quarter report, which was released Friday. The parent company owns and operates electric utilities in Florida and the Carolinas. In the Carolinas, the company added 23,000 customers compared with the third quarter of 2007.

Raleigh, N.C.-based Progress Energy, the parent company, reported flat earnings for the quarter and lowered its earnings expectations for the year to between $2.95 and $3.05 a share. The company's original forecast ranged between $2.95 and $3.15 a share.

Earnings totaled $306 million, or $1.17 a share, below analysts' expectation of $1.23 a share.

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

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