Duke, Tampa Electric file to hike rates following Hurricane Irma

Published December 28 2017
Updated December 29 2017

If local utilities have their way, monthly electric bills will go up $4 to $5 across Tampa Bay next spring, largely because of Hurricane Irma.

Duke Energy Florida filed with regulators late Thursday for a $5.20 increase to cover $513 million in storm costs. Tampa Electric Co., meanwhile, filed to recover $88 million in storm costs, amounting to $4 extra on bills.

That puts rates at $129.50 per 1,000 kilowatt hours for Duke Energy customers and $110 per 1,000 kilowatt hours for Tampa Electric customers.

Duke, which covers much of Pinellas County, already has among the highest rates in the state. The proposed increase pending before the Florida Public Service Commission would take place between March 2018 and February 2021, though the company hedged that customers might catch a break.

"If we find that we need to adjust, we will go back to the Public Service Commission and adjust" to help customers, Ann Marie Varga, Duke Energy spokesperson, said.

The utility has not filed for storm recovery costs since the mid-2000s, as its $62 million reserve sufficiently covered costs until Hurricane Irma. Of the $513 million Duke Energy is attempting to recover, $381 million will cover costs related to Hurricane Irma, while $132 million will replenish reserves from previous storms.

This effectively undoes the break customers were set to receive on bills now that they won’t be paying for the Levy County nuclear facility.

Customers were expecting to finally see relief after paying $800 million for a nuclear facility that was never built. In August, Duke Energy reached a settlement with regulators to wipe out the remaining $150 million for the Levy County nuclear project, a venture started by Duke Energy’s predecessor Progress Energy and abandoned in 2013.

At the time of the settlement, monthly bills were expected to go down about $2.50 to $123.90 per 1,000 kilowatt hours.

"A massive storm like this required a massive response," Varga said. "A restoration effort of this size and scope has costs. It’s nothing like we could have ever anticipated."

Tampa Electric’s proposed hike, which would begin in March, is intended to cover costs related to restoring power following Hurricane Irma and replenish storm reserves.

"(The tropical storms) depleted our storm reserve. Irma knocked out the rest of it and then some," Cherie Jacobs, Tampa Electric spokesperson, said.

The increase, which covers reserves chipped away by Hurricanes Hermine and Matthew and Tropical Storms Erika and Colin, will run through 2018. Pending approval by the Florida Public Service Commission, bills are likely to jump further in September to $111.99 per 1,000 kilowatt hours because of upcoming solar projects.

Once Tampa Electric’s solar projects come online, monthly bills are expected to drop an undetermined amount in 2019, the utility has said.

Related coverage: Duke Energy strikes deal to lower customer bills, boost solar>

Even including the hike, Tampa Electric’s rates would remain among the lowest in the state.

The filing came the same day that federal safety regulator the Occupational Safety and Health Administration handed down a $160,000 fine for a fatal accident at the utility’s Big Bend Power Station.

Related coverage: OSHA fines Tampa Electric, contractor $160,000 for fatal accident at Big Bend>

Earlier this month, the PSC announced it was taking a closer look at utilities’ responses to Hurricane Irma. After soliciting comments from more than 400 customers, the regulator requested input from other stakeholders — local governments, advocacy groups and businesses — to understand local conditions leading up to and after the storm.

"Now we’re drilling down another level to reach more stakeholders," PSC chair Julie Brown said in a release, "who can provide an even broader perspective on how utilities are handling tree trimming" and recovery-related repairs and communication.

Duke Energy faced scrutiny following Hurricane Irma for failing to meet its promise of quickly restoring power to much of its customer base in the days following the storm.

It again came under fire after a Tampa Bay Times review found that Duke had cut its annual tree trimming budget from $9.9 million to $7.4 million ahead of the storm. The tree trimming budget for Tampa Electric, which is a smaller utility, was $10.7 million for the year.

Related coverage: Before Irma outages, Duke Energy cut its tree-trimming budget in Pinellas and Pasco>

Contact Malena Carollo at [email protected] or (727) 892-2249. Follow @malenacarollo.