Tampa Electric Seeks $135 Million Rate Hike
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Following the lead of other major utilities in the state, Tampa Electric Co. said Monday it will seek a $135 million rate increase that would take effect in January 2014.
Tampa Electric filed a notice with the Florida Public Service Commission that said increased base rates are needed as the utility grapples with lagging revenues and higher costs to provide electricity. In the notice, company President Gordon Gillette acknowledged that "there is never a good time to seek rate relief " and that "our customers are also feeling the effects of a difficult economy."
"We have made every effort to avoid seeking a rate increase, but now must request an adjustment to the company's base rates and various charges to continue fulfilling our obligation to serve and to meet our customers' needs and expectations for safe, reliable and adequate electric service,'' Gillette wrote.
The six-page notice is the first step in a months-long process of seeking PSC approval. Tampa Electric expects to file a detailed rate proposal in April, and regulators will later hold hearings and examine company financial and technical information.
In a news release, the utility said residential customers who use 1,000 kilowatt hours of electricity a month would see their bills grow by about $11 if the proposal is approved. The total monthly bills for such customers would increase to about $113.
Base rates are one of the largest parts of customers' monthly bills, along with fuel costs for power plants. Tampa Electric and other utilities have taken advantage of relatively low fuel costs to hold down -- and even reduce -- customers' bills during the past year. As a result of fuel charges approved by the PSC, Tampa Electric's 1,000-kilowatt hour residential bills dropped from $106.90 last year to $102.58 in January.
While most details of the proposed rate hike will be filed later, one closely watched issue likely will be a measure of profitability known as return on equity. Monday's notice indicated that Tampa Electric will ask regulators to approve an 11.25 percent return on equity, which would be a continuation of the company's current target.
The filing came after the PSC last year approved base-rate increases of varying amounts for Florida Power & Light, Progress Energy Florida and Gulf Power Co.
Base-rate cases can be highly contentious, as was evident in the PSC's December approval of an increase for Florida Power & Light. The state Office of Public Counsel, which represents consumers in utility cases, fiercely opposed the PSC's decision and has threatened to file a challenge in the Florida Supreme Court.
Tampa Electric, which has a service area that includes Hillsborough County and parts of Polk, Pasco and Pinellas counties, said in the filing that its costs of providing power to customers in recent years have outpaced its revenue growth. The utility filed its last base-rate case in 2008, with rate changes taking effect in 2009.
As examples of the increased costs, the company pointed to the addition of more than 170 miles of new power lines and the replacement and repair of other electrical infrastructure. It also said in the filing that "predicted revenues have not come to fruition."
"While Tampa Electric continues to add new customers to its system and must build and operate the system to serve them, the company's revenues are not adequate to offset the higher costs associated with operating and maintaining the system,'' the filing said. "Per-customer usage has declined significantly since the last base-rate proceeding and is a significant driver behind the shortfall in revenues."