Tampa Electric files 2009 fuel costs with Florida Public Service Commission
Continued high fuel costs will increase electricity prices
TAMPA, September 2, 2008
Today, Tampa Electric made its annual fuel filing with the Florida Public Service Commission (FPSC). As the company originally announced in July, based on its most recent analysis of actual and projected fuel costs for 2008, total fuel costs for the year will exceed original projections and are expected to remain high through 2009.
Costs experienced through July exceeded projections by 9 percent, but with no relief expected for the balance of the year, as well as some hurricane activity in the Gulf of Mexico and the continuation of increased costs projected in 2009, the company estimates that by year-end, it will be under-recovered by $209 million, or about 20 percent. The company is not seeking a surcharge this year to address the under-recovery. Instead, it intends to address it through its 2009 fuel charge.
President Chuck Black said, “Just as fuel is used to power cars, fuel is also used to power electric generators. This unprecedented run up in fuel prices has been frustrating for our entire team and truly challenging for our customers on all energy fronts. As we produce and deliver electricity, we are doing all we can to minimize our fuel costs through hedging purchases where appropriate and maximizing our use of coal, a more affordable fuel.”
Tampa Electric’s fuel mix is primarily made up of coal and natural gas. While substantial and growing portion of an electric bill, fuel costs are what is known as a “pass-through” component. They are collected from customers by the utility and used to pay fuel suppliers, typically the large oil and coal companies, without any mark-up. This keeps electricity prices as low as possible to customers.
Fuel cost increases
The cost of fuels, including those used to produce power, has risen dramatically in the past eight years and especially in the past year. Based on current market price levels, Tampa Electric’s 2009 fuel costs are expected to be about $1.4 billion, which is $278 million or 25 percent greater than the company’s original 2008 projection filed with the FPSC in September 2007.
Due to the $209 million under-recovery for 2008, combined with recent projections for 2009 fuel costs, the company estimates that starting in January 2009, the bill for a residential customer using 1,000 kilowatt-hours of electricity per month will be about $140, compared to the present bill of $114. This 2009 bill is a projection and may vary depending on factors like fuel market price fluctuations, hurricane events and other bill impacts. It does not reflect the company’s recently announced plans to request an increase to its base rates and service charges, which would be effective in May 2009. At that time, the bill for the same residential customer described above would increase by 7.5 percent to $150.
Energy efficiency programs
To help manage the increase, customers have a wide variety of energy efficiency programs available through Tampa Electric.
Tampa Electric recently added 12 new energy efficiency programs to its roster; the company also made improvements to several longtime programs. The company received approval from the FPSC to expand its innovative Energy Planner pilot program to all new qualified customers beginning in October.
Energy Planner allows customers to make energy consumption decisions based on near real-time energy prices by using a programmable “smart” thermostat provided by the company at no charge. Customers participating in the pilot study saved an average of a month’s worth of electricity over the course of a year. Other new programs include a Low Income program, where qualified customers can receive a number of items geared toward increasing their home’s energy efficiency.
Continuing the company’s efforts to offer innovative energy efficiency solutions to all customer groups, the company also recently launched a new program for commercial customers. Known as Demand Response, the program will pay incentives to participating commercial customers when they conserve energy at times of peak demand.
Through these programs, Tampa Electric believes that the average user of electricity can help minimize the impact of electricity price increases.
About Tampa Electric
Tampa Electric Company is the principal subsidiary of TECO Energy, Inc. (NYSE: TE), an energy-related holding company with regulated utility operations in Florida, including both Tampa Electric and Peoples Gas System. Tampa Electric serves almost 667,000 customers in West Central Florida. Other subsidiaries include TECO Coal, which owns and operates coal production facilities in Kentucky and Virginia, and TECO Guatemala, which is engaged in electric power generation and distribution and energy-related businesses in Guatemala.
Note: This release contains forward-looking statements, which are subject to the inherent uncertainties in predicting future results and conditions. Actual results or outcomes may differ materially from those forecasted. The forecasted information is based on the company’s current expectations and assumptions, and the company does not undertake to update that information or any other information contained in this release, except as may be required by law. Fuel prices are dependent on market conditions, and customer rates are dependent on many factors, including actions by the FPSC. Additional information is contained under “Risk Factors” in TECO Energy, Inc.’s and Tampa Electric Company’s combined Annual Report on Form 10-K for the period ended Dec. 31, 2007.