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Regulators look at power companies fuel costs

By on November 2, 2011

Jim Saunders of the News Service of FloridaState regulators largely signed off Tuesday on how much Floridians will have to pay for electricity next year — but faced a tricky question about the amount Progress Energy Florida should pass along to consumers.

The state Public Service Commission approved fuel costs and a series of other smaller costs for Florida Power & Light, Tampa Electric Co. and Gulf Power Co.

The bottom line: FPL customers can expect to see small increases in their bills in 2012, while Tampa Electric customers will receive slight decreases. Gulf Power bills will go down in January but could increase later in the year if the PSC approves new base rates.

Commissioners, however, grappled with whether Progress should be able to collect what are known as “replacement power” costs related to a massive repair project at its Crystal River nuclear plant. The company has to buy power elsewhere to make up for lost generation at the idled plant.

Attorneys for consumers and business groups argued the PSC should not allow Progress to pass along the costs because the company has not handled the Crystal River project properly. The PSC will hold a hearing next year about that issue.

“We are now convinced that Progress made errors in judgment they need to be held accountable for,” said state Deputy Public Counsel Charles Rehwinkel, whose office represents consumers in utility issues.

But Progress attorney John Burnett urged the PSC to not be swayed by “sound bites.” Utilities are allowed by law to pass along such costs if the PSC determines that the companies have acted prudently.

“Just because Mr. Rehwinkel says so (about Progress not being prudent), doesn’t mean it’s so,” Burnett said.

The Public Service Commission holds a hearing each fall to determine how much utilities should be able to collect from customers for such expenses as power-plant fuel and environmental-compliance projects. Those costs make up a large chunk of customers’ monthly bills and are in addition to base rates that cover many day-to-day operations.

Tuesday’s hearing was a final piece in determining the total amounts customers will pay for electricity next year. Commissioners breezed through issues related to FPL, Tampa Electric and Gulf and are scheduled Wednesday to resume listening to arguments about Progress.

With all of the factors taken into consideration, customers should not see dramatic changes in their bills in January.

FPL, the state’s largest utility, expects an increase in residential customer bills of less than 3 percent. FPL customers who use 1,000 kilowatt hours of electricity of month would see their monthly bills go from $96.54 to $99.26, according to the company.

Tampa Electric would trim 1,000 kilowatt-hour residential bills from $107.02 a month to $106.90. Gulf customers, meanwhile, would see those bills drop from $127.16 to $125.80.

The reprieve for Gulf’s Northwest Florida customers, however, might be temporary. The company also has proposed a base-rate increase that could boost 1,000-kilowatt hour bills to as much as $133.46 in April.

Utilities use 1,000 kilowatt hours as a benchmark for customer bills, though many residents consume more electricity than that each month. Commercial customers also are billed differently.

If the PSC approves Progress’ proposals, the St. Petersburg-based utility’s 1,000-kilowatt hour bills would increase about 3 percent, from $119.34 to $123.19, according to the company.

But the decision about the Crystal River nuclear project could affect those numbers. The company is seeking replacement-power costs of about $176 million, though that total would be offset somewhat by more than $30 million in over-estimated costs from the past.

The nuclear plant was first damaged in 2009 during a project to replace a steam generator. Workers needed to create an opening in a containment building to allow the generator to be replaced, but the project caused a separation in part of the building’s concrete.

Early this year, as the plant was being prepared to operate again, another concrete separation was discovered in a different part of the containment building. That led to a decision to do a highly unusual repair project to remove and replace concrete in the building’s walls.

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