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Tampa Electric loses at PSC

In a sharp repudiation of Tampa Electric Co.'s controversial coal transport contract with a sister company, the Florida Public Service Commission voted Tuesday to require the utility to absorb more than $15-million in annual coal costs it had planned to pass on to its electricity customers.

The commission also rejected Tampa Electric's request to postpone the vote to give other parties time to consider its offer to rebid the contract, which has long been held by TECO Transport, a fellow subsidiary of TECO Energy Inc.

Richard Lehfeldt, senior vice president of external affairs for TECO, said the company would wait until the PSC issues its final order before deciding whether to appeal the decision or ask the commission to reconsider it.

"Obviously we're not happy," Lehfeldt said. "Clearly it's not the position we had argued."

Critics of the contract, who forced the issue before the PSC, hailed the vote as a victory for Tampa Electric customers. In August, the PSC staff determined that the Tampa utility hadn't tried hard enough to find the lowest price for having coal shipped to its local generating plants when it signed a five-year renewal of a long-standing contract with TECO Transport.

"If you make that kind of finding, that's an outrageous thing for a utility," said deputy public counsel Charlie Beck, whose office represents utility customers before the PSC. "That means they made a sweetheart deal and tried to pass it on to their customers. There should be some kind of outrage for them having done that. And the commission, to its credit, took corrective action."

In its August opinion, the PSC staff recommended several possible remedies, and on Tuesday the commission chose a hybrid of two of them. While the PSC reduced the amount that Tampa Electric can pass along to customers for the cost of carrying coal by river and ocean-barge, it left untouched the amount that can be passed along for the cost of ocean-terminal services, which includes blending coals and transferring them from river vessels to ocean vessels.

The final cost for consumers is not available because TECO Transport claims the rates it charges Tampa Electric are confidential. As a result, Tampa Electric will have to absorb about $15.3-million in transport costs each year, or a total of roughly $76.6-million over the life of the five-year pact, which took effect Jan. 1.

Lehfeldt said that comments made by some commissioners Tuesday appeared to indicate support for rebidding the contract using revised specifications that Tampa Electric hoped would address the PSC staff concerns.

"Whether that next (request for bids) comes at the end of 2008 or earlier, we have now very good guidance from the commission on what it is they're looking for," he said.

Tallahassee consumer attorney Mike Twomey, who was involved in the case against Tampa Electric, countered that a central concern about the contract had not been addressed in the revised specifications. TECO Transport would still have the right to meet or beat any other bid.

"Did they get some guidance? Yes," Twomey said. "But did they also get whacked for $15.3-million a year? Yes, they did. It was a very excellent decision by the PSC after an excellent, well-reasoned recommendation by the PSC staff."

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