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Higher natural gas costs could hit electric bills

Duke customers’ bills are still expected to increase in 2022, but the plan will result in smaller increases than ratepayers would have otherwise seen.
Duke customers’ bills are still expected to increase in 2022, but the plan will result in smaller increases than ratepayers would have otherwise seen.
Duke customers’ bills are still expected to increase in 2022, but the plan will result in smaller increases than ratepayers would have otherwise seen.
Published Nov. 2, 2021|Updated Nov. 2, 2021

TALLAHASSEE - As Florida utilities grapple with higher-than-expected natural gas prices, regulators Tuesday approved a plan to ease the hit to monthly bills of Duke Energy Florida customers.

The state Public Service Commission signed off on a Duke plan that, in part, will spread collection of $246.8 million in fuel costs over the next two years — rather than the utility recouping all of the money in 2022.

Duke customers’ bills still are expected to increase in 2022, but the plan will result in smaller increases than ratepayers would have otherwise seen.

”I think that the bottom line is it’s what’s best for customers,” Public Service Commission Chairman Gary Clark said before the regulatory panel approved the plan.

Natural gas plays a critical role in Florida’s utility system, as it was used to fuel about two-thirds of the electricity generated in 2019, according to a Public Service Commission report. Utilities are supposed to pass fuel costs through to customers without markup. Utilities each year file projected fuel costs that regulators then use that to determine how much will be charged to customers in the subsequent year. But Duke and other utilities have been hammered this year by higher-than-expected fuel costs, spurring them to return to the PSC for permission to increase the amounts they pass along to customers.

The $246.8 million in the Duke plan involves a projection of what is known as an “under-recovery” of fuel costs for this year. Ordinarily, that would be recouped from customers next year, but the plan will lead to half being recovered in 2022 and half in 2023.

“DEF (Duke) recognizes the significant impact these unexpected fuel price increases will have on its customers and desires to voluntarily undertake measures to mitigate the rate impacts of this increase,” the utility said in a Sept. 3 filing at the commission.

Customers’ bills are made up of a series of components, including fuel costs. The plan includes changes related to issues such as costs of restoring electricity after storms.

The Public Service Commission said Duke residential customers who use 1,000 kilowatt hours of electricity a month will see bill increases of about $8.75 in 2022. The commission said that is $4.67 less than what the increase would have been without the newly approved plan. Utilities use 1,000 kilowatt-hour bills as a benchmark, though actual electricity consumption varies widely.

The plan was backed by the state Office of Public Counsel, which represents consumers in utility issues. It received support from the Southern Alliance for Clean Energy and business groups and large commercial customers — the Florida Industrial Power Users Group, the Florida Retail Federation, PCS Phosphate and Nucor Steel Florida, Inc.

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Amid high natural-gas prices, however, Duke and other utilities already are warning the commission that they might have to revamp estimates of fuel costs that will be passed along to homeowners and businesses next year.

”As a result of the current volatility of natural gas prices, DEF (Duke Energy Florida) will continue to monitor natural gas price activity and will report to the commission later this year,” Duke said in an Oct. 18 filing.

By Jim Saunders

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