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Duke Energy seeks 7 percent rate hike for fuel and nuclear costs

Published Aug. 31, 2013

Duke Energy Florida wants to raise the average customer's bill by more than $8 a month to $124.30 starting Jan. 1 to pay for an increase in fuel and nuclear costs.

Part of the proposed rate hike for 2014 is an 89-cent monthly charge to the average customer to cover the utility's cost of a failed plan to increase nuclear power at the Crystal River nuclear plant, even though Duke permanently closed it in February after a botched repair job.

If state regulators approve the request, the average Duke customer will pay $10 more than those Tampa Bay area neighbors who are served by Tampa Electric and $24 more than those in Florida Power & Light's service area.

The state's three largest investor-owned utilities submitted their final proposed rate adjustments Friday to meet Sunday's deadline for fuel and environmental costs.

All three utilities want more money from their customers.

Tampa Electric is proposing the biggest overall rate increase: an $11.68 boost that will bring its monthly rate to $114.26 per 1,000 kilowatt hours of usage. Duke wants $8.24 per month more, raising its rate to $124.30. And FPL is seeking a $5 increase for a rate of about $100 a month.

Most of the increase for Duke and FPL is related to fuel costs.

Tampa Electric is just the opposite. On Friday, Tampa Electric requested a small increase in fuel costs of $1.27 per 1,000 kilowatt hours. However, earlier this year it filed for a $10.41 increase in its base rate, which covers the cost of the utility's expenses and profit.

The state Public Service Commission will consider Tampa Electric's base rate increase Sept. 9 and the proposed fuel increases for all three utilities in November.

"We work hard to deliver reliable and affordable electric service to our customers 24/7," said Alex Glenn, Duke Energy Florida state president. "Although we cannot control the price of fuel needed to run our power plants, we actively manage our business operations so we can provide dependable service to customers who rely on us."

The proposed increase for 2014 sharply contrasts with Duke's decrease this year.

Duke's rate fell from $123.19 in 2012 to the current $116.06, in large part because the utility refunded customers $129 million due to damage at the Crystal River nuclear plant.

The utility took the nuclear plant offline in fall 2009 to replace old steam generators. During the maintenance and upgrade project, workers cracked the 42-inch-thick concrete containment building that houses the plant's reactor.

An attempt to repair the crack and bring the plant back online led to more cracks. Duke decided to close the plant permanently rather than attempt another repair.

In attempting to upgrade Crystal River and increase its output, Duke predecessor Progress Energy spent hundreds of millions of dollars. Though the effort proved futile, customers nonetheless can be charged the cost of the upgrade, a figure that's reflected in the utility's new rate request.

The PSC is reviewing a settlement agreement between Duke and consumer advocates over hundreds of millions of dollars in other costs related to the plant fiasco.

The company said in a statement Friday that customers will continue to benefit from already-approved refunds totaling $259 million through 2016, but that is not enough to stave off the substantial increase that resulted from fuel expenses.

Fuel is one of the largest components of the electric bill, the utilities noted. By law, utilities do not make a profit from the fuel portion of the bill.

Fuel consumption and costs are subject to a variety of factors including weather, customer demand and commodity prices.

The annual fuel filing provides a means of ensuring that customers are charged fairly for fuel costs incurred to provide electric service.

Gordon Gillette, president of Tampa Electric, a subsidiary of TECO Energy, noted that even with the proposed increases, his company's rates would remain 5 percent lower than the national average and other utilities in the state.

"With one of the lowest rates in Florida," Gillette said, "Tampa Electric is proud to serve you every day for less than the cost of a gallon of gas, while providing outstanding value to our customers."

Ivan Penn can be reached at ipenn@tampabay.com or (727) 892-2332.

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