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Construction plans fuel TECO rate request

The opening day of Tampa Electric Co.'s request to raise rates $98-million featured a common refrain:

Why should TECO customers get socked with a 10.3 percent increase in their monthly bills when they're already paying more to keep the lights burning than most other Floridians?

President Girard Anderson, TECO's top pitchman, tried to answer that question as the Public Service Commission rate hearing began Monday. He said electric rates in Tampa and several neighboring communities need to go up.

TECO must increase rates to pay for more than $1-billion in new construction projects _ including a "clean coal" power plant in Polk County _ to maintain good service and its favorable bond rating, Anderson said.

"We're very sensitive to the fact that any price increase puts pressure on our customers," Anderson told the three PSC members assigned to the case. "The financial condition of our company coupled with the obligation to serve our customers mandates the need for price change."

Considering TECO's prices, consumer activists reminded the PSC and Anderson that the utility ought to change its prices _ downward.

"You are aware," Deputy Public Counsel John Roger Howe asked Anderson, "that Tampa Electric's total rates _ base rates plus fuel charges _ are higher than the rates of Florida Power, Gulf Power and Florida Power & Light?"

Anderson responded that differences in Florida Power & Light's rate structure make TECO's prices appear to be higher than they are.

Not satisfied with Anderson's answer, Howe asked: "Is there any simple or macro explanation that could tell us why TECO _ a predominantly coal-fired utility _ is higher?"

"There is not a simple and straightforward answer to that question," Anderson replied. TECO's prices are a complex mix driven by plant costs and fuel costs, he said.

To underscore the Tampa utility's high rates, the PSC's staff offered some comparisons.

The first, based on typical bills in July, showed TECO with the highest residential and commercial rates of Florida's four major investor-owned utilities. For residential, the rates were: TECO, $80.54 per 1,000 kilowatt hours; Florida Power Corp, $70.64; Florida Power & Light Corp., $73.47; and Gulf Power Co., $65.85. TECO had the second-highest industrial rates.

Another chart showed TECO topping Alabama, Georgia, Mississippi, North Carolina, South Carolina and Tennessee for residential, commercial and industrial rates of average power bill charges.

TECO wants to raise its rates in two steps by early 1994. A customer who uses 1,000 kilowatt hours a month would pay $9.30 more. The monthly bill would increase from $77.95 to $87.25.

TECO also wants the PSC to approve a 13.75 percent return on equity. Public Counsel Jack Shreve says the PSC should lower TECO's rates $22-million and grant only an 11.25 percent return on equity.

A decision is scheduled in January. Hearings are scheduled into next week.

Opponents of TECO's rate increase hammered Anderson with questions about the way the utility handled the 1989 Christmas freeze power failures.

There's a big question on the minds of TECO's customers, said Monte Belote, head of the Florida Consumer Action Network. "Is TECO pursuing aggressively every available option before building new power plants? I think that answer is very clearly, no."