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Industrial clients angry with TECO

The utility's wholesale selling practices result in the companies paying higher prices, they charge in a complaint. TECO refutes the claim.

A Florida group of big industrial users of electricity accused Tampa Electric Co. on Thursday of selling off power on the lucrative wholesale market instead of supplying it to them, then charging excessive prices for supplemental electricity.

The complaint was filed with the Florida Public Service Commission two days after the PSC agreed to let Tampa Electric, Florida Power Corp. and Florida Power & Light increase their electricity prices starting next month to reflect the higher costs of oil.

The complaint by the Florida Industrial Power Users Group argues that Tampa Electric, which depends heavily on coal, uses little oil to produce electricity. The utility won PSC approval for a price increase only because it purchases expensive supplemental power from other utilities that do rely on oil to generate power.

That's unfair to FIPUG companies, said John McWhirter, a Tampa lawyer who represents the coalition of big companies that are the heaviest users of power in the state.

"Tampa Electric has sold cut-rate power on the wholesale market, leaving it without sufficient capacity to meet the needs of its own customers," McWhirter said.

Worried the power problem will get worse with the approach of summer, the group's complaint asks the PSC either to curtail Tampa Electric's sales of cheap electricity to non-customers or allow companies to shop for more affordable power among other utilities.

Without some relief, big power users must either pay huge price increases for electricity at peak times or have their power supply interrupted.

The feud between big utilities and industrial customers is not new. But the FIPUG complaint refreshes the growing controversy in Florida's electric power business:

The state's power reserve has grown thinner in recent years as Florida utilities have failed to keep up with the growing demand for electricity.

A spring heat wave along the East Coast and the prospect of a hot Florida summer have industrial customers worried they will pay exorbitant prices for electricity in the coming months.

While power deregulation is accelerating in other states, Florida's electric utilities have successfully resisted efforts to loosen their market control. At best, a state commission will be appointed by Gov. Jeb Bush and begin studying the notion of deregulation this summer.

Big power companies based outside Florida, including North Carolina's Duke Energy and California's Pacific Gas & Electric, want to build merchant power plants in the state and boost the supply of electricity. So far, their efforts have failed. Most recently, a decision by the Florida Supreme Court denied their rights to build in the state.

Years ago, utilities agreed to sell electricity to many big industrial companies in Florida at a discount of more than 30 percent. The trade-off was that utilities could interrupt delivery of electricity at times of peak capacity, or utilities could buy extra power on the open market and pass on the extra costs to the companies.

While such options seemed unlikely when power was abundant, utilities lately have been forced to buy more power or interrupt electricity to industrial users with increasing frequency.

On Thursday, Tampa Electric dismissed McWhirter's claims, saying the FIPUG group had made the same arguments before and won little sympathy from the PSC.

Tampa Electric is accelerating efforts to add more generating power of its own. And it is contracting with other power providers to help control short-term spikes in electricity prices, said Tom Hernandez, vice president for regulatory affairs at TECO Energy, Tampa Electric's parent.

Besides, he said, big industrial companies grew accustomed to the deep price discounts of buying interruptible power. But now they do not like the flip side of their power contracts.

Power prices have skyrocketed lately during periods of peak demand. Short-term market prices have hit $3,000 and even $6,000 per 1,000 kilowatt hours. In comparison, residential rates that are not subject to wholesale price fluctuations run about $84 per 1,000 kwh.

"Summer's approaching and we need some quick action," McWhirter said.