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Progress Energy's plan to hike rates criticized at public hearing

NEW PORT RICHEY — Her disability payments don't go too far these days, so Mary Ellen McGee says she stopped using her air conditioning to save on her Progress Energy bill.

But her oxygen machine?

"If this bill goes up," said McGee, 64, of Port Richey, "how do I get my oxygen?"

McGee was one of more than 250 people who filled Spartan Manor on Wednesday for a Public Service Commission hearing on Progress Energy's proposed rate hikes.

Progress Energy, which has about 129,500 customers in Pasco County and more than 10,000 in Hernando, wants to raise base rates by more than 30 percent, which would generate about $500 million.

Base rates make up more than a third of your power bill, along with separate fuel, environmental, conservation and nuclear costs. If the base rate increases are approved, customers who use 1,000 kilowatts an hour would see their monthly bill go up by about $13.

Regulators are holding a series of public hearings around the state and are expected to make a decision in December. If approved, the rates would go into effect in January.

The utility's request was far from a popular idea with the mostly senior crowd gathered Wednesday, most of whom have seen their Social Security wages freeze and their investments tank while the cost of everything keeps going up.

"I suggest Progress Energy freeze their rates for two years," said Fred Tomaski of New Port Richey. "We're not getting ahead here. They are."

The company says it needs the new rates to cover increasing operating costs, pay for an overhaul at its Bartow power plant and earn a fair rate of return on its investment. That return? 12.5 percent.

Alex Glenn, a lawyer for Progress Energy, told the crowd that the company had invested more than $4.5 billion in improving the electricity infrastructure since 1993, and during that time the residential base rate had increased by only 1 percent.

The improvements are expensive, right down to the smallest pieces of equipment. He held up a small turbine blade and said it would cost $41,000 to replace it.

Glenn argued, too, that the company had a legitimate request to entice investors, whose money is important to insure that Progress can offer the best service. "We compete with the IBMs, the McDonald's, the Wal-Marts of the world for investors," he said.

J.R. Kelly, public counsel with the Florida Legislature, called Progress' request "unreasonable" and said that Progress is entitled to a smaller return, less than 10 percent. (Every 1 percent equals about $51 million in rate revenues, according to his office.)

"How many of you right now are getting a 10 percent return on your stocks and bonds?" he said, drawing laughter.

Kelly said that focusing only on the utility's base rate wasn't the whole story because other costs — for everything from nuclear and fuel charges — have gone up.

Those pass-through charges have risen to pay for fuel increases and the early stages of the utility's $17 billion nuclear project in Levy County. (Amid public outrage, Progress announced it would decrease the nuclear costs to about half of what it was entitled to recover in 2010.)

"All those expenses, you pay," Kelly said. "Dollar in, dollar out."

Dollars are in short supply for many right now. Judith Tilton, who works with a nonprofit jobs program called Connections, said the rate increases would have "lasting and detrimental impacts" for her unemployed clients.

Just the other day, she said, a client called to ask for help with his gas money: He had a 45-minute drive to a job interview. Imagine if that client had an extra $15 a month on his power bill, she said.

"Daily, I'm working with people struggling to keep the lights on as it is," she said.

Jodie Tillman can be reached at jtillman@sptimes.com or (727) 869-6247.

FAST FACTS

Comparing costs

Here's how some residential bills for Progress Energy customers would increase, based on the household use:

1,000 kwh: $123 in June; $136 in January.

1,500 kwh: $190 in June; $207 in January.

2,000 kwh: $258 in June; $279 in January.

Progress Energy's plan to hike rates criticized at public hearing 07/08/09 [Last modified: Wednesday, July 8, 2009 10:25pm]

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