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Spotlight on PSC as utilities face critics on rate hike requests

Progress Energy customers could soon see their rates increase as the state Public Service Commission begins voting Monday on the utility's proposal to increase revenue by $499 million.

Monday's decision is the first of two steps in the PSC's voting process. Commissioners are expected to decide Monday whether Progress and Florida Power & Light should receive any revenue increases at all.

If an increase is approved, the commission on Jan. 28 would decide how much residential and commercial customers would be responsible for paying toward the increase.

Progress' proposed increase would affect the so-called base rate, which is money the company receives to handle its operating costs, such as plant maintenance.

While the utility requested $499 million, PSC analysts recommended to the commission a smaller increase of $180 million. Commissioners could vote for a different amount, including no increase at all.

Under Progress' proposal, residential customers would see their bills increase by about 7 percent above the current $127.26 charge for 1,000 kilowatt-hours of electric usage.

Businesses would see their rates increase 4 to 10 percent.

One of the leading advocates for residential customers, the Florida Consumer Action Network, or FCAN, wants a delay in Monday's vote because of the recent addition of two new commissioners. FCAN does not believe there should be any increase in rates.

"There's no way they're ready," Bill Newton, executive director of FCAN, said of the two new commissioners.

He said the commission's staff recommendation for a substantially lower increase already shows concerns about Progress' proposal.

"It did not hold up to scrutiny," Newton said.

J.R. Kelly, the state public counsel, said his office's position has been that there should be a decrease in residential rates. But he said it is time to make a decision because, "these decisions were supposed to be rendered in late November, early December."

"First of all, we're disappointed that the staff and their recommendations did not totally adopt our position," Kelly said. "Not only should there not be an increase, there should be a decrease."

Progress Energy's request would increase the base rate component of customers' bills, which is listed as part of the "energy charge."

The utility said the base rate has increased 1 percent over the past 25 years and is a necessary revenue source for maintenance and upkeep of plants and company operations.

Suzanne Grant, a spokeswoman for the utility, said the PSC staff's recommendation of about a third of Progress' request will hamper the gains the company has made in improving customer service.

"That would be like trying to put a $15,000 roof on your house and having only $5,000 to do it," Grant said.

To customers, the source of the increase often does not matter, as the trending upward of fuel costs has led to increases in the fuel charge on utility bills. But utilities do not benefit from the fuel charge, as it is a direct cost for the price of the commodity.

"Fuel is very volatile," Grant said. "Utilities do not make money on fuel costs. Fuel costs for 2010 are down dramatically."

Grant said she believes commissioners have now had time to thoroughly review the request and is prepared to make a decision.

The result of their votes will be reflected in customer bills for March billing.

Kelly said the commission — including the new commissioners — has been reviewing all of the material regarding the proposed increase, and he believes it is prepared enough to make a decision.

However, because it is a new commission, Kelly said it is difficult to predict what kind of decision it will render.

"That's the total unknown," Kelly said. "Since we do have two brand-spanking-new commissioners, I have no idea what they will do and how they will react to the staff's recommendations."

Ivan Penn can be reached at [email protected] or (727) 892-2332. Follow him on Twitter at www.twitter.com/Consumers_Edge and become a fan of Consumer's Edge on Facebook.

Spotlight on PSC as utilities face critics on rate hike requests 01/09/10 [Last modified: Friday, January 8, 2010 7:53pm]
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