Fuel costs cause power companies to raise rates in Florida

DeLand's power bill to increase $160,000

By Jen Horton
BEACON STAFF WRITER

posted Jun 11, 2008 - 3:10:07pm

DeLand City Manager Mike Abels received some figures from Progress Energy recently that he found disturbing.

West Volusia residents may find the figures disturbing, as well, because the figures affect homeowners as well as commercial users like the city.

Progress Energy is seeking an 18-percent increase in its fuel-adjustment charge. Florida Power & Light also is asking for more money to pay for fuel.

In an e-mail, Abels said the city had budgeted for a 5-percent increase in electricity costs. It looks like that wasn’t enough.

The city’s annual electric bill is about $800,000. The fuel-adjustment increase and other factors will push that to about $961,000 in the next budget year, Abels said.

Like residents beset with cost increases for basics like gasoline and food, the city is struggling to keep up.

It’s hard, Abels said, to “budget in accordance with artificial revenue caps when we have double-digit operational costs passed to us by others.”

Why the hike?

The price hike is directly related to the rising cost of fuel. Be it oil or natural gas, fuel costs have skyrocketed over the past year, and the power companies have to adjust.

Cherie Jacobs, Progress Energy spokeswoman, said, “For the fuel we use in the power plant, we make no profit. When the price of fuel goes up, we adjust. When the price of fuel goes down, we adjust.”

The cost of fuel, she said, has increased dramatically.

“Total? It’s over $200 million,” Jacobs said.

The $200 million will be spread out among Progress Energy’s 1.7 million customers.

The average customer, who uses 1,000 kilowatt-hours per month, will see about an $8 increase in the total fuel bill.

Progress Energy’s current fuel-adjustment charge is $43 per 1,000 kwh; they want to go to $51.

“The price increases we see are the same increases consumers see at the gas pumps,” Jacobs said.

Mike Villafana, Florida Power & Light spokesman, echoed Jacobs’ statements; fuel costs are way above the anticipated amount.

FPL’s fuel charges will increase a 1,000 kwh-per-month bill by about 16 percent.

“This is a direct pass-through,” Villafana said. “We only buy enough oil or natural gas needed to generate our power plant.”

Villafana said the cost of natural gas is up 32 percent from one year ago, and fuel is up 54 percent from last year.

FPL serves 4.5 million customers in Florida, and hopes to recover a total of $746 million in fuel costs.

Both companies are dependent upon the Florida Public Service Commission (PSC) to approve the increase. The PSC must approve any price changes.

Cindy Muir, director of public information for the Florida Public Service Commission, said the power companies are hopeful the increases will go through on July 1.

Any changes will be reflected on customers’ August bills, for their July power use.

Muir confirmed power companies don’t make more money by charging more for fuel.

“They do not make a profit. That’s why they’re allowed to come in for a midcourse adjustment,” Muir said. “If the rates go up or down by 10 percent, they must come in for an adjustment.”

Typically, power companies estimate fuel costs for the upcoming year. The PSC approves the projected costs, and the new costs become effective in January. Those projections lock the power companies in for one year.

If fuel costs drop or rise, the power companies must come back for an adjustment.

— jen@beacononlinenews.com

Reader Comments

The comments posted below are posted by readers, not by The Beacon staff. These comments express the views and opinions of the authors, and not the administrators, moderators or webmaster. The comments forum is governed by these rules. Please use the report abuse link if you find offensive comments.

Comment on this article

Commenting is closed for this article.

If you would like to contribute a letter to the editor, please click here.

Did you find this story interesting or informative? Subscribe to The DeLand-Deltona Beacon to read more stories by Jen Horton, along with others from our award-winning writers. Subscribe now!