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Housing slump takes toll on Tampa Electric, FPL

TAMPA — Florida's grim housing market continues to extend its reach, squeezing the state's utilities.

Fewer home buyers mean fewer new electric customers. More vacant homes drag down electric sales. Higher prices push customers to turn up the thermostat and turn off the lights. Even the restaurant slump takes a toll, as fewer diners mean less gas is sold to run ovens and stoves.

Tampa Electric and Florida Power & Light, two of the state's three largest electric utilities, reported Thursday that customer growth in the second quarter continued to slow. Progress Energy won't announce its second-quarter results until next week, but the utility is making plans to trim its staff, a sign that the St. Petersburg utility's growth is suffering a similar slowdown.

Sluggish growth might continue through the rest of 2008, said Gordon L. Gillette, executive vice president and chief financial officer for TECO Energy, Tampa parent of both Peoples Gas and Tampa Electric.

"With the general slowdown, it's looking like it will be more pronounced and unfortunately more protracted than we would have liked," Gillette said.

Tampa Electric's customer growth slowed to 0.2 percent in the second quarter, down from 0.6 percent in the first quarter, and far lower than the 2.5 percent average annual customer growth the utility has enjoyed since 2000. Peoples Gas reported 0.3 percent growth. FPL Group, the Juno Beach parent of Florida Power & Light, reported that its customer growth was just 0.5 percent.

Gillette said that Tampa Electric still expects to bring a 555-megawatt natural gas plant online in 2013, and will complete several natural gas peaking units next year. Five or six natural gas peaking units planned for 2010 and 2011 may be delayed, he said.

Tampa Electric and Peoples Gas plan base rate increases next year of as much as 10 percent. Tampa Electric also plans to increase bills by 22.4 percent to pay for the rising cost of fuel.

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

TECO Energy

The Tampa parent of Tampa Electric and Peoples Gas reported a steep drop in quarterly income. The decline reflected discontinued synthetic fuel operations and lost revenue since the sale of its TECO Transport subsidiary. In addition to the slowdown at its Florida utilities, company coal mining business TECO Coal continued to suffer from higher production costs while locked in contracts struck in 2006 and 2007 that don't reflect this year's higher coal prices. TECO Energy lowered its earnings forecast from 95 cents to $1.10 per share to 80 cents to 90 cents per share.

2nd QtrYear Ago

Revenue$887.2M $866.5M

Net Income$51.4M$73.7M

Per Share24 cents35 cents

Housing slump takes toll on Tampa Electric, FPL 07/31/08 [Last modified: Wednesday, August 6, 2008 12:58pm]
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