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Base rate hikes approved for Tampa Electric

The increases will promote a shift to solar power.
Tampa Electric Co. won approval Thursday to increase its base rates over the next three years to pay for its transition to cleaner energy.
Tampa Electric Co. won approval Thursday to increase its base rates over the next three years to pay for its transition to cleaner energy.
Published Oct. 21
Updated Oct. 22

TALLAHASSEE — With supporters saying the deal will help transition to cleaner energy, the Florida Public Service Commission on Thursday approved a settlement that will increase base rates for customers of Tampa Electric Co. over the next three years.

The commission unanimously approved the settlement, which was reached in August by Tampa Electric, the state Office of Public Counsel and representatives of major business and government electricity users.

Supporters said the deal is designed, at least in part, to boost solar energy and continue shifting away from Tampa Electric’s past reliance on using coal to fuel power plants.

“We view the 2021 agreement as an important stepping stone from Tampa Electric’s past to a safer, cleaner, greener and even more customer-focused future,” Jeff Wahlen, an attorney for the company, told commissioners.

Other parties in the settlement also pointed to a push in the utility industry to move toward the use of solar power and other types of renewable energy.

“This settlement agreement recognizes that the world is changing, and the settlement affirmatively and substantially moves Tampa Electric in the right direction toward the lower carbon future that the world demands and that the world needs and that Tampa Electric’s parent company has embraced in a net-zero goal by the year 2050,” Robert Scheffel Wright, an attorney for the Florida Retail Federation, said, referring to the parent company Emera Inc.

Under the settlement, the utility will receive an annual $302 million revenue increase that will be phased in over three years — $191 million in 2022, $90 million in 2023 and $21 million in 2024, according to the commission.

The settlement will provide money to add solar facilities that will generate 600 megawatts of electricity, and it will help carry out a project to upgrade the Big Bend Power Station in Hillsborough County. That project includes shutting down coal-fired generation units.

Base rate cases are perhaps the most complex issues that go before the Public Service Commission, which will also hold a hearing Tuesday on a base-rate plan for Florida Power & Light. The cases can involve billions of dollars and analysis of highly complicated financial and technical information.

Tampa Electric filed an initial base-rate proposal in April but then negotiated with the other parties on a final plan that made numerous changes, including reducing the potential revenue increases. The initial proposal sought a $295 million increase in 2022, followed by increases of $102 million in 2023 and $25.6 million in 2024.

The settlement was reached with the Office of Public Counsel, which represents consumers in utility issues; the Florida Retail Federation; the Florida Industrial Power Users Group; federal executive agencies; Walmart and the West Central Florida Hospital Utility Alliance. The federal agencies involved in the case included MacDill Air Force Base, a major electricity user.

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Tampa Electric has about 800,000 customers across most of Hillsborough County and parts of Polk, Pasco and Pinellas counties.

Among the closely watched issues in base-rate cases is the amount of profit that utilities are allowed to earn. The settlement includes a targeted return on equity — a key measure of profitability — of 9.95 percent. That was down from 10.75 percent in Tampa Electric’s initial proposal.

Jon Moyle, an attorney for the Florida Industrial Power Users Group, said the settlement also provides predictability about rates for the next three years, an important issue for the group’s members.

State Deputy Public Counsel Charles Rehwinkel called the settlement a “comprehensive, forward-looking agreement that is innovative and good for all concerned.”

“The public counsel urges your favorable vote because the deal is fair to all customers and results in rates that are fair, just and reasonable, resolves all the issues in this case and is in the public interest,” Rehwinkel told commissioners.

— By Jim Saunders