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Local utilities finalize plans to use tax savings to cover storm costs

Published Apr. 23, 2019

Two Tampa Bay utilities have reached settlements with the state utility consumer advocate that, if approved, will make good on their promises to use 2017 federal tax savings to cover the cost of recovery from Hurricane Irma and other storms.

The proposed settlements will apply Duke Energy Florida's and Tampa Electric Co.'s savings from the 2017 Tax Cuts and Jobs Act to the utilities' Hurricane Irma expenses, according to a filing made last week. In Duke's case, that covers $484 million in hurricane costs and hurricane response fund replenishment. In Tampa Electric's case, the figure is $91 million.

"We feel very good that the (settlements are) a reasonable resolution of the costs for Hurricane Irma," said Charles Rehwinkel, a lawyer with the Office of Public Counsel. His office advocates for utility consumers.

The Florida Public Service Commission is set to vote on the settlements in May.

For customers of both utilities, the agreements mean there should be no increases in their monthly bills to cover lingering costs from 2017's Hurricane Irma. Instead, Rehwinkel said Tampa Electric customers will get a small credit of about $8 each at the end of the year, as the utility had an additional $11 million left over thanks to tax reform after recovery costs were accounted for. Part of its tax savings would also go toward costs incurred from Hurricanes Matthew, Erika, Collin and Hermine.

Duke customers will also see some rate relief. As part of an earlier settlement, Duke agreed to lower its rates for customers once its storm costs are fully paid off in early 2021. A portion of its tax savings will also go toward $5 million for recovery costs from 2017's Hurricane Nate.

"We're pleased with the work we've completed in conjunction with the Office of Public Council and other consumer advocates to standardize major storm restoration processes to facilitate minimizing future restoration costs," Duke spokeswoman Ana Gibbs said in a statement. "Stable energy pricing is important to our customers, and it's important to (Duke)."

Along with the savings, the settlements also codify several policies the utilities will follow for recovering storm costs starting with the 2020 hurricane season. They are meant to make recovery efforts more cost effective and efficient, Rehwinkel said. Among the policies include commitments to establish when billing starts for companies the utilities contract with to handle storm response; limits on compensation for travel time and remibursing vendors for meals; and a requirement to track work crews using GPS.

It also requires that any exceptions to these policies be documented and justified by the utilities. Some of these policies, Rehwinkel said, are meant to address issues with the utilities from prior storms.

"When you're dealing with hundreds of millions of dollars and tens of thousands of people, there are going to be issues in some of the accounting," Rehwinkel said. "We're just trying to straighten something out and have more of a focus on money being spent to put people back in service and less in, maybe, travel that takes too long or sitting down and eating in restaurants (and) things like that."

Rehwinkel said he expects the commission to approve the settlements at a May hearing.

Contact Malena Carollo at mcarollo@tampabay.com or (727) 892-2249. Follow @malenacarollo.

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