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Economy / Business

Duke Energy, TECO Get OK To Raise Rates To Cover Natural Gas Costs

Duke Energy trucks assisting with Hurricane Zeta recovery in South Carolina
Duke Energy
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Customers of Tampa Electric Co. and Duke Energy Florida will see higher monthly bills through the end of the year to cover unexpected increases in natural-gas prices.

The Florida Public Service Commission approved the requests to increase utility rates through the end of the year.

Customers of Tampa Electric Co. and Duke Energy Florida will see higher monthly bills through the end of the year to cover unexpected increases in natural-gas prices.

The Florida Public Service Commission on Tuesday approved separate short-term increases, which will affect about 2.7 million customers of the two utilities.

Commission Chairman Gary Clark said in a prepared statement that “utilities do not earn a profit on fuel charges, and the PSC will continue to ensure utilities have done everything possible to keep fuel costs reasonable, while maintaining a reliable fuel supply.”

James Brew, an attorney for PCS Phosphate, called for additional talks about the Duke increase, which he said will be a “real punch in the gut” for consumers who haven’t fully recovered economically during the COVID-19 pandemic. PCS Phosphate makes fertilizer products and has North Florida operations served by Duke.

The commission last fall held hearings and determined how much utilities could charge customers this year for natural gas and other fuel for power plants. But utilities can request mid-year increases when it appears fuel costs will exceed projections by more than 10 percent --- what is known as an “under-recovery.”

“It's not that there's an under-recovery, it’s that we think it can be better managed,” said Brew, who added that a similar adjustment to customer bills in 2017 --- when the economy was more robust --- was spread over two years.

Tampa Electric, which is seeking to make up $73.68 million, will have increased bills from September through December. The changes will add about $12.82 to the monthly bills of residential customers who use 1,000 kilowatt hours of electricity a month --- a 12.18 percent increase. Utilities use 1,000 kilowatt-hour residential bills as a benchmark, though actual electricity usage varies widely.

Tampa Electric’s small commercial customers are expected to see increases between 11.1 percent and 12.7 percent, while medium-size commercial customers face increases of 12.8 percent to 15.4 percent. Large commercial and industrial customers are expected to see a 16 percent hike.

The state Office of Public Counsel, which represents consumers in utility issues, proposed extending the increases over two years to lessen the impacts on customers.

Duke residential customers who use 1,000 kilowatt hours face a $4.28 a month increase, or 3.34 percent. Duke’s commercial customers will see monthly increases between 3.2 percent and 4.1 percent, while industrial customers face about a 5.2 percent bump.

Duke intends to recoup $190.99 million in fuel costs in two phases. It will collect a portion of the money from September through December and the rest as part of its fuel costs in 2022.

Clark said Tuesday he would “try not to get on the soapbox regarding heavy reliance on our natural gas production,” but he cautioned against spreading the increases over a longer timeline. Clark said the costs should go to customers who were buying electricity during the period when the natural gas was purchased.

“That's kind of a bedrock principle for me, the people who incurred it are the people who should pay it,” Clark said.

Duke argued the rise in natural gas prices was driven by increased demand during this winter, which was coupled with “a short-term decrease in supply stemming from the severe winter storm that impacted Texas and the Midwest during February,” according to a commission staff report.

Another factor in the price change was a reduction in natural gas production and storage, as well as increased exports of liquefied natural gas.

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