Make us your home page

Fewer customers, power cutbacks squeeze utilities

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 or (813) 225-3117.


Progress Energy

Progress Energy, the Raleigh, N.C., parent of Progress Energy Florida, saw its revenue fall as the stalled housing market and cooler weather led to lower-than-expected energy sales. The company narrowed its earnings guidance to $2.95 to $3.05 per share, the lower end of the range predicted at the beginning of this year.

3rd QuarterYear Ago

Revenue $2,696M $2,750M

Net income $309M $319M

Per share $1.19 $1.24

Fewer customers, power cutbacks squeeze utilities 10/31/08 [Last modified: Tuesday, November 4, 2008 7:17am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Tampa Bay among top 25 metro areas with fastest growing economies

    Economic Development

    Tampa Bay had the 24th fastest growing economy among 382 metro areas in the country for 2016. According to an analysis by the U.S. Bureau of Economic Analysis, Tampa Bay's gross domestic product, or GDP, increased 4.2 percent from 2015 to 2016 to hit $126.2 billion.

    Tampa Bay had the 24th fastest growing economy in the country for 2016. Rentals were one of the areas that contributed to Tampa Bay's GDP growth. Pictured is attorney David Eaton in front of his rental home. 
  2. Tampa Bay cools down to more moderate home price increases

    Real Estate

    The increase in home prices throughout much of the Tampa Bay area is definitely slowing from the torrid rate a year ago.

    This home close to Bayshore Boulevard in Tampa sold for $3.055 million in August, making it Hillsborough County's top sale of the month. [Courtesy of Bredt Cobitz]
  3. With successful jewelry line, Durant High alum Carley Ochs enjoys 'incredible ride'



    As a child Carley Ochs played dress up, draped in her grandmother's furs.

    Founder Carley Ochs poses for a portrait in her Ford Bronco at the Bourbon & Boweties warehouse in Brandon, Fla. on September 19, 2017. Ochs is a Durant High and Florida State University graduate.
  4. At Menorah Manor, planning paid off during Irma

    Nursing Homes

    ST. PETERSBURG — Doris Rosenblatt and her husband, Frank, have lived in Florida all of their lives, so they know about hurricanes.

    Raisa Collins, 9, far left, works on a craft project as Certified Nursing Assistant Shuntal Anthony holds Cassidy Merrill, 1, while pouring glue for Quanniyah Brownlee, 9, right, at Menorah Manor in St. Petersburg on Sept. 15. To help keep its patients safe during Hurricane Irma, Menorah Manor allowed employees to shelter their families and pets at the nursing home and also offered daycare through the week. The facility was able to accommodate and feed everyone who weathered the storm there. [LARA CERRI   |   Times]
  5. After Irma, nursing homes scramble to meet a hard deadline

    State Roundup

    TALLAHASSEE — Florida's nursing homes and assisted-living facilities find themselves in an unfamiliar place this week — pushing back against Gov. Rick Scott's administration over new rules that require them to purchase generator capacity by Nov. 15 to keep their residents safe and comfortable in a power …

    In this Sept. 13 photo, a woman is transported from The Rehabilitation Center at Hollywood Hills as patients are evacuated after a loss of air conditioning due to Hurricane Irma in Hollywood. Nine have died and patients had to be moved out of the facility, many of them on stretchers or in wheelchairs. Authorities have launched a criminal investigation to figure out what went wrong and who, if anyone, was to blame. [Amy Beth Bennett | South Florida Sun-Sentinel via AP]