On August, 11, 2008, Tampa Electric formally filed its request for a base rate increase with the Florida Public Service Commission (FPSC), the first such request made by the company in 16 years. The proposed new rates will reflect the cost of investments the company has made to add environmentally responsible power generation and meet new reliability standards, as well as increased costs of commodities essential to the production and delivery of electricity. With FPSC approval of the proposed base rates, the overall increase for a for a Tampa Electric residential customer using 1,000 kilowatt-hours of electricity per month is anticipated to be approximately 8 percent, effective May 2009. To encourage energy efficiency and benefit lower-income customers, Tampa Electric is seeking approval from the FPSC for tiered base rates. Under a tiered rate structure, the first 1,000 kWh you use would be billed at one rate, and any usage above that 1,000 kWh would be billed at a slightly higher rate. If approved, tiered base rates would take effect in May 2009.
Tampa Electric now serves 200,000 more customers than it did at its last base rate adjustment in 1992, with peak demand up nearly 50 percent. The company has made investments to reliably serve that additional demand, while at the same time dramatically reducing air emissions, including carbon dioxide (C02).
The efforts of the entire Tampa Electric team to run the business as efficiently as possible have enabled the company to avoid adjusting its base rates for 16 years, but the costs of producing and delivering electricity have soared since the company’s base rates were last addressed. Commodities essential to our business, including labor, concrete and steel, have increased by more than 70 percent each.
In Florida, an electric utility’s base rates cover all costs, excluding fuel, necessary to establish and operate its system, including for power plants and transmission and distribution infrastructure. Base rates are adjusted periodically to accurately reflect current operating costs. The State of Florida requires that an electric utility serve every customer located in its service territory and make the needed investments to reliably do so. A utility is allowed the opportunity to recover its costs, including a fair return on those investments. The fair return is essential for continued access to capital markets to finance the maintenance, replacement and enhancement of the system.
In addition to base rate charges, Tampa Electric customer bills include charges for fuel, purchased power, certain environmental initiatives and energy conservation programs. The largest segment of a customer bill is the fuel charge, which Tampa Electric collects from its customers without any mark-up or profit to pay fuel suppliers. The fuel charge is adjusted on annual basis. On November 6, the Florida Public Service Commission approved Tampa Electric’s petition for an inverted fuel rate for residential customers: beginning in January, customers will pay 6.416 cents per kWh for fuel up to 1,000 kWh, and then 7.416 cents per kWh for usage over 1,000 kWh. This tiered fuel conservation measure is linked to Tampa Electric’s base rate filing, in which the company has also sought approval for an inverted, two-block base energy rate for residential customers. Due to lower projections for 2008 and 2009 natural gas prices and the company’s ongoing cost management efforts including maximization of the use of coal, the bill increase for a residential customer using 1,000 kilowatt-hours (kWh) of electricity will be almost $11 less than originally projected. Starting in January 2009, the 1,000 kWh per month residential bill will be $128.44, compared with the original estimate of $139.25.
The August 11 filing begins an eight-month process, during which the FPSC considers Tampa Electric's request. New rates would be effective at the conclusion of the process, in May 2009.
From Tampa Electric’s last rate adjustment in 1992 through 2009, the company’s investment in system infrastructure will total $3.4 billion. Included in that $3.4 billion is $1.7 billion invested in 1,700 megawatts (MW) of environmentally responsible generating capacity, and $1.5 billion in other system infrastructure, including transmission and distribution facilities.
The company’s single largest investment since 1992 has been the 1,800-MW H. L. Culbreath Bayside Power Station. Formerly known as the (1,200-MW) Gannon Power Station, this project anchors the company’s $1.2 billion, 10-year environmental improvement plan. Resulting emissions and greenhouse gases reductions include more than 20 percent reduction in C02 and 70 to 90 percent reductions in emissions of sulfur dioxide (SO2), nitrogen oxide (NOx), mercury and particulate matter.
Tampa Electric’s second-largest investment in the past 16 years has been a landmark facility for clean coal technology: the 250-MW Polk Power Station Unit 1. Polk 1 has been recognized as North America’s cleanest coal-powered generating unit, using integrated gasification combined cycle technology (IGCC). It is viewed as a key link to the future development of carbon capture and storage, a science with the potential to make economical, domestically produced coal usable in a carbon-constrained setting. Polk Power Station also includes four peaking units powered by natural gas with a generating capacity of 720 MW.
The company has also invested to meet new requirements for reliability. These requirements include “storm hardening” guidelines enacted by the FPSC following the 2004 and 2005 hurricane seasons, and federal transmission standards enacted following the 2003 Northeast blackout. To help ensure reliable service to its customers and address growth in its service territory, Tampa Electric has added 100 net miles of transmission to its system since 1992.
Tampa Electric’s team members have worked hard to reduce the impact of higher costs by continually finding ways to do their work more efficiently, while continuing to invest in the system to ensure the reliable, environmentally responsible service customers expect.
Measured from 1992, the Consumer Price Index (CPI) has increased by 48 percent. The cost of electricity has not reflected the volatility in other consumer prices such as gasoline (up 180 percent), or even basic food items such as bread (up 84 percent).
For business goods and services required in the production and delivery of electricity, some of the costs have eclipsed the CPI during the same period with labor costing approximately 77 percent more than in 1992, steel 72 percent more, and concrete with a 73 percent increase.
To encourage energy efficiency and benefit lower-income customers, Tampa Electric is proposing a residential rate structure for both base rates and fuel that would include a lower rate for the first 1,000 kWh of usage.
Sensible energy consumption can help customers manage their energy costs, and care for the environment. Tampa Electric has a variety of energy efficiency programs available to its customers, including 12 new programs.
Tampa Electric’s Energy Planner program empowers customers to control their energy costs by using a programmable thermostat provided at no charge. The FPSC recently approved expansion of Energy Planner from its highly successful pilot program. On average, pilot participants saved a month’s worth of electricity per year.
Tampa Electric also recently debuted its new Low Income program, which provides energy-saving items to qualified customers to help increase their homes’ energy efficiency.
For business customers, Tampa Electric has expanded its commercial energy efficiency programs and introduced Demand Response. This incentive-based program rewards peak demand energy conservation by participating commercial customers.
For more information on energy efficiency programs and tips to help you save money on your monthly energy costs, visit the energy efficiency section of this site.
