Fill out this form to email this article to a friend

Your name		Your email
Recipient email	You may enter up to 20 multiple email addresses, separated by commas.
Your message
Validation Code	Hear validation code
	Enter validation code

We were unable to send your email.

Click here to try again.

Fewer customers, power cutbacks squeeze utilities

By Asjylyn Loder, Times staff writer
In print: Saturday, November 1, 2008

Story Tools E-mail this story Contact the editor Print this story Comment on this story Social Bookmarking Digg Facebook Stumbleupon Reddit Del.icio.us Newsvine

ADVERTISEMENT Loading Video...

After years of breakneck growth, Tampa Bay's largest utilities suffered a reversal, losing customers as the state's economy devolved into a recession.

Both Tampa Electric and Progress Energy announced this week that they lost more customers than they gained. The unprecedented losses underscore the depth of the downturn facing Tampa Bay.

Neither utility predicted a return to normal growth until late next year or early 2010.

"It's been amazing. It's sort of surprising," said David Parker, a utility analyst with Robert W. Baird in Tampa. "It shows you how the housing market has definitely imploded, and the impact it's had on the overall economy."

Already, Progress Energy has slashed $12-million from its third-quarter operating costs, delayed planned investments in power line networks, and laid off 151 workers.

Both utilities blamed foreclosures and vacant homes. The utilities had been counting newly connected electric meters as new customers. As property values plummeted, investors fled their speculative buys, workers lost their jobs, and cash-strapped homeowners found their homes worth less than they owed the bank. Homes went unsold or landed in foreclosure.

One by one, customers abandoned their houses, turning off the lights as they left.

"I think what we're seeing in our business is a result of the Florida economy and the national economy," said Jeff Lyash, president and chief executive of Progress Energy Florida. "This is not just a Florida issue."

The housing market collapse pushed thousands of workers onto the unemployment rolls. Recent numbers show that 7 percent of Tampa Bay's work force is without jobs.

Looking for a place to cut back, electric customers adjusted the thermostat. Conservation was especially pronounced due to a mild, cloudy summer that allowed customers to keep their houses cool without running up their electric bill.

With fewer customers and lower energy sales, both utilities will have a harder time spreading costs without raising rates to pay for the rising costs for labor, cement, steel and cable. Tampa Electric has already requested a base rate increase that, if approved, would hit customer bills starting in May. Progress Energy has an agreement with the state on base rates that expires at the end of next year.

"They are going to need an increase," said Parker, the Tampa analyst. "There are just too many cost increases"

Lyash said higher rates aren't certain. The utility will decide early next year how to handle the expiration of its base rate agreement.

Progress Energy has already won an increase of $11.42 per 1,000 kilowatt hours to cover pre-construction and licensing costs of its $17-billion new nuclear project in Levy County.

Both utilities have also asked for an increase in their fuel rates. While fuel prices have come down in recent months, they haven't been low enough, long enough to make up for high costs that persisted through most of 2008. Utilities estimate each fall how much fuel will cost, and the Public Service Commission approves a fuel rate that allows the utility to collect that money from its customers.

Last year, Progress Energy and Tampa Electric projected fuel costs that turned out to be far too low. When fuel costs spiked this year, the utilities still had to buy coal, oil and natural gas to run their power plants. The utilities have filed to get that money back next year, and expect higher fuel costs in 2009.

The commission will decide this week if the fuel costs will be passed on to customers. If approved, Progress Energy's customer bills could be 25 percent higher in January. Tampa Electric's rates, including the planned base rate and fuel increases, could be 21 percent higher by May.

Asjylyn Loder can be reached at aloder@sptimes.com or (813) 225-3117.