Tampa Electric revises fuel projections; lower cost increases expected
New projections reflect lower natural gas prices and maximized use of coal
TAMPA, October 13, 2008
Today, Tampa Electric filed a revised fuel forecast with the Florida Public Service Commission (FPSC). Due to lower projections for 2008 and 2009 natural gas prices and the company’s team members’ ongoing efforts to maximize the availability of its coal-fired generating units, the bill for a residential customer using 1,000 kilowatt-hours of electricity is now projected to be almost $11 less than originally expected.
President Chuck Black said, “We’re very pleased to see a downward trend in fuel pricing, which means a lower cost impact for our customers.”
The company now expects that it will be $133 million under-recovered by year-end, compared with its original September filing projection of $209 million. The company did not seek a surcharge this year to address the under-recovery. Instead, it intends to address it through its 2009 fuel charge.
Starting in January 2009, the bill for a 1,000-kWh per month residential customer would be $128.44, compared with the original projection of $139.25. This does not reflect the company’s recently announced plans to request an increase to its base rates and service charges. If approved, the base rate increase would result in an additional increase of $10, effective in May 2009.
In addition to the moderation of fuel prices, the company has continued its ongoing effort to hedge purchases where appropriate and maximize the use of coal, a more affordable fuel. Moreover, unlike most coal units in Florida, Tampa Electric’s units are equipped with the best environmental equipment available.
Tampa Electric’s fuel mix is primarily made up of coal and natural gas. The cost of fuel is a substantial and growing portion of an electric bill, currently approaching 50 percent. Fuel costs are collected from customers by the utility at cost and used to pay fuel suppliers, typically the large oil and coal companies, without any mark-up by the utility.
The cost of fuels, including those used to produce power, has risen dramatically in the past eight years and especially in the past year. To help manage the increase, customers have a wide variety of energy efficiency programs available through Tampa Electric.
Tampa Electric has 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.
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 one 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 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, as updated by the Quarterly Reports on form 10-Q, filed with the Securities and Exchange Commission.