Fuel costs give utility customers break

by | Apr 2, 2024

State regulators approved a plan to reduce Florida Power & Light customers’ monthly bills due to lower-than-expected natural gas costs, while Duke Energy Florida and Tampa Electric plan similar cuts but also propose base rate increases for 2025-2027 to fund infrastructure and service improvements.

State regulators Tuesday approved a plan that will trim Florida Power & Light customers’ monthly bills because of lower-than-expected natural gas costs, while Duke Energy Florida and Tampa Electric Co. said they will seek similar reductions.

Meanwhile, Duke and Tampa Electric separately filed proposals that would increase base electric rates from 2025 to 2027. The proposals will kickstart complicated months-long processes that will include the Florida Public Service Commission and representatives of consumers and business customers examining the details.

With little discussion, the Public Service Commission approved FPL’s plan to reduce customers’ bills starting in May because of the lower-than-expected fuel costs.

FPL and other utilities rely heavily on natural gas to fuel power plants, and gas prices have been volatile in recent years. When gas prices surge, increased costs are passed along to customers; when prices drop, customers get a break in their bills.

The FPL plan will save customers about $662 million, with a relatively small portion of that, $37 million, related to resolving fuel costs from 2023, an FPL filing at the commission said.

“Anytime we have the opportunity to give money back to customers, that is great,” Mark Bubriski, director of state regulatory relations for FPL, said. “That’s more money for our economy. It helps our communities, and for FPL, that’s really important.”

Utilities typically use a benchmark bill of residential customers who consume 1,000 kilowatt hours of electricity a month. FPL has two sets of rates because of a merger with the former Gulf Power.

Customers in the former Gulf Power region in Northwest Florida who use 1,000 kilowatt hours in a month will pay $135.38 starting in May, down from $143.08 in April, according to the Public Service Commission. Such customers in other areas will pay $121.19 in May, down from $128.88 in April.

Other FPL bill reductions also began taking effect this month because of the end of storm-related costs that had been passed along to customers. Those reductions and the fuel-related reductions are expected to combine to save about $14 on 1,000-kilowatt hour residential bills, according to the utility.

Meanwhile, Tampa Electric said it asked the commission Tuesday to approve reducing customer bills in June because of lower-than-expected fuel costs. The utility said in a news release that the proposal would lead to about $137 million in savings for consumers, with 1,000-kilowatt hour residential bills decreasing by about $7 a month.

Similarly, Duke said it expects this month to file a proposal at the commission to reduce customer bills because of fuel costs. While full details were not released, Duke said the reductions could happen as soon as June or July and save more than $5 a month for residential customers who use 1,000 kilowatt hours of electricity.

Monthly utility bills are made up of a combination of factors, with base rates and fuel costs the largest. Other costs include such things as expenses for environmental projects and temporary charges for storm recovery and preparation.

Duke and Tampa Electric said early this year that they would seek increased base rates and followed up Tuesday by filing three-year proposals.

Under its proposal, Duke would increase base rates by $593 million in 2025, $98 million in 2026 and $129 million in 2027. The proposal said the rate increases would help pay for such things as adding 14 solar-energy facilities and to make investments to continue “providing customers with reliable, clean, and cost-efficient service.”

“Despite DEF’s (Duke Energy Florida’s) efforts to minimize costs, DEF must request a rate increase from the Florida Public Service Commission,” Melissa Seixas, Duke’s state president, said in testimony filed with the proposal. ”DEF understands the impact that requesting a base rate increase has on our customers and it is not something that the company takes lightly, as we know customers trust us to manage our costs and spend what is necessary to provide the safe and reliable service they depend on. However, to maintain this level of service, DEF must request an increase.”

While base rates would increase, Duke said customer bills would actually be lower in January 2025 than they were in January 2024. That is because other costs, such as expenses related to storm recovery and purchasing power from other sources, will drop off customers’ bills at the end of 2024.

Tampa Electric’s proposal had not been posted on the Public Service Commission website as of Tuesday morning. But the company said in a Feb. 1 filing that it wanted to increase rates by $290 million to $320 million in 2025. It would increase the rates by an additional $100 million in 2026 and $70 million in 2027, according to the filing.

“We are fortunate to serve such a fast-growing region of the country,” Archie Collins, president and chief executive officer of Tampa Electric, said in a prepared statement Tuesday. “As the demands on the electrical grid are changing rapidly, our job is to prepare for the future in a manner that is seamless for customers. We are committed to making meaningful investments that help us to keep up with growth, increase power plant efficiency and reduce outages. This rate request will allow us to continue delivering the value that our customers expect, while keeping rates as low as possible.

— News Service broadcast journalist Mike Exline contributed to this report.


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