Hearings set on base rate
2010 electrical rates may go up
By SUZETTE PORTER
| Article published on Tuesday, July 7, 2009 |
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| A number of options are available to help people keep electrical costs down. Progress Energy Florida is proposing a number of rate increases for 2010. |
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Negotiations have already begun to determine the rates Progress Energy can charge for electricity in 2010.
The process is comprised of a series of filings, hearings and meetings on each of the five different rates that make up the total electrical charge, according to Suzanne Grant, Progress Energy spokesperson.
The rates include: base, fuel, nuclear, environmental and energy conservation. Grant said each rate is decided through a separate process that determines the final cost per kilowatt hour of electrical use.
Base rate
Progress Energy Florida informed the Public Service Commission of its intent to request an increase in the base rate in February and filed the necessary paperwork in March, Grant said.
The base rate, which, depending on fuel costs, amounts to about 1/3 of customers’ bills. It pays the cost to produce and deliver electricity which includes operations of energy plants, power lines, maintenance, improvements and other needs such as hardening facilities for hurricanes.
Grant said the utility was requesting a base rate increase of $499 million which would equate to an increase of 11 to 12 percent for 1,000 kilowatt hours on a residential customer’s bill.
“Over the past 25 years, the base rate has only increased 1 percent,” Grant said. “An increase is needed to ensure the continued delivery of reliable electrical services at a reasonable price.”
The increase is needed not only to keep up with the rising cost of plant operations and maintenance, it also would allow Progress Energy Florida to recoup the costs of improvements to the Bartow power plant located on Weedon Island in St. Petersburg.
The two-year, $800 million project, which was completed this year, changed the 50-year-old facility's primary fuel source from fuel oil to more efficient, cleaner burning natural gas.
Public hearings are the next step in the process to determine whether or not the PSC grants the utility’s request for a base rate increase for 2010.
The PSC scheduled public hearings on Thursday, July 16 in Pinellas County. The first begins at 9 a.m. in St. Petersburg City Council Chambers located in City Hall, 175 Fifth St. N. in St. Petersburg. The second begins at 6 p.m. in the Pinellas County Board of Commissioners Assembly Room located on the fifth floor of Court House, 315 Court St. in Clearwater.
Grant said the PSC would make a determination on the request to increase the base rate most likely by late fall. The rates would take effect in January of 2010. She said a new base rate will have to be determined as the current rate, determined by a settlement, is set to expire next year.
Fuel costs
Fuel costs make up the largest portion of the electricity bill, Grant said, and Progress Energy uses a variety of fuel sources to generate the power needed to serve more than 1.6 million customers in 35 counties.
On June 30, the PSC told Progress Energy Florida to refund more than $7.6 million to its customers for excessive fuel costs in 2006 and 2007. The fuel cost in question was the coal used to generate electricity at the utility’s Crystal River power plant, Grant said.
She explained that coal comes in a variety of forms and each type has characteristics that allow it to burn longer or cleaner or more efficiently. Each type also has a different price tag.
“We can’t make money on fuel,” Grant said. “We purchase at the lowest price possible.”
The PSC ordered Progress to refund more than $13.8 million to its customers in 2007 for excessive fuel costs paid from 2003 to 2005. The refund was a result of the company burning a more expensive coal blend.
The June 30 decision was “an offshoot of that earlier case and the Commission’s ongoing review of fuel costs,” a PSC press release said.
“Today’s decision should encourage electric utilities to seek the lowest cost sources for their fuel purchases,” PSC Chairman Matthew M. Carter II said.
Progress Energy argued that the coal purchases “were prudent and saved customers $3.1 million during 2006 and 2007,” according to the press release.
Grant said the utility was still working on its response to the recent order and had the right to appeal.
She also said that the $7.6 million represented only a small fraction of the money the utility spends each month on fuel. She said the amount the PSC had directed Progress Energy to repay represented about 20 to 30 cents a month per 1,000 kilowatt hours.
As for fuel costs for 2010, Grant said that portion of the process has not yet started. Each year, utilities are required to estimate fuel costs for the next year.
She said most likely Progress Energy would file the required paperwork by end of the summer. Then the PSC would schedule public meetings and make a final ruling on the utility’s request in time for Progress Energy to send out a notice of new rates before they take affect in January.
Nuclear costs
Unlike non-nuclear powered plants, which utilities recoup costs on after they’re complete, a 2005 law allows for customers to be billed pre-construction for nuclear plants.
Grant said the law was meant to encourage utilities to build nuclear plants which are more efficient and less expensive than using other fuels.
Progress Energy began charging its customers in 2009 in anticipation of building two new nuclear plants in Levy County. Due to the economy, the utility requested permission from the PSC in March to reduce the nuclear charge, as well as the fuel charge, Grant said.
She said Progress Energy filed its proposal for 2010 nuclear charges in early May. She said the utility proposed spreading the costs out over a five year period, meaning a saving for customers. She said the proposal called for a charge of $6.69 per 1,000 kilowatt hours as opposed to the previously approved charge of $12.63 per 1,000 kilowatt hours.
She said determination of the nuclear charge, as well as environmental and energy conservation charge would go through the same process as the base rate and fuel, meaning a series of public hearings and final decision by the PSC.
Taking control of electric bills
Beyond the ability to testify at a public hearing or send in a written statement, the public has very little control over the rates that make up their electricity bill. However, that doesn’t mean they can’t make change to lower their electrical use and their bills.
Grant said the public can do a lot to make a difference in their electrical bill, and Progress Energy has a number of programs to help, including free energy checks.
“The free energy checks really do work,” Grant said. “The checks are good for finding a number of ways to save money on people’s electric bills.”
She said some people may have older style windows that leak. She said an energy check can help pre-qualify residents for a program to help with the costs of window replacements.
She said leaking air conditioning ducts are a major issue. She said if leaking ducts are identified as a problem, people can be qualified for a program where Progress Energy pays up to half of the cost to have the ducts repaired.
Another program helps people pay to insulate their homes. There is even a program to help people purchase a new more efficient air conditioning system.
The free energy check program is not only for homeowners. Grant said renters also are encouraged to call for the free evaluation. She said little things such as turning down the hot water heater or setting the thermostat at 78 degrees can save people money.
The Energy Wise program is open to all customers and can save people up to $145 a year on their electrical costs. A small device is installed on the meter box that allows Progress Energy to power down customer’s hot water heater, pool pump or air conditioner during times of peak load. The peak load time is usually late in the afternoon when people return home from work, Grant said.
For more information about a free energy check, call 1-888-302-8348. For information on the Energy Wise program, call 1-800-700-8744. Information also is available at progress-energy.com.
For more information on the Public Service Commission, call 1-800-342-3552 or visit www.floridapsc.com.
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Article published on Tuesday, July 7, 2009
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