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Florida Utility Proposes Shifting Costs from Big Corps to Residents

Tampa Electric has called for a new rate structure that would shift the economic onus from the utility’s largest customers to residences and smaller businesses, resulting in a potential rate increase of $200 monthly.

Tampa Electric’s bid to raise rates next year would put more of the burden on residents, lessening the impact on big businesses, according to filings reviewed by the Tampa Bay Times.

If their proposed version of the 2025 rate structure is approved by state regulators, everyone’s costs would rise. But millions of dollars in bills could be shifted from some of Tampa Electric’s largest customers — like industrial plants, hospitals and big-box retailers — and onto residential consumers, as well as smaller businesses. Under the plan, a typical household would be charged at least $200 more annually for base rates over what it’s paying now, according to the filings.

The reason for this shift goes back to 2021, the last time Tampa Electric raised rates on customers. The case ended in a lengthy and complex settlement agreement, a piece of which required the utility to change the way it distributed costs in its next rate case. At the time, it drew little attention.

Now, as the utility asks for another increase, documents within its filings reveal the potential impact that prior agreement could have on ratepayers. Tampa Electric submitted two cost structures to state regulators: one that fits the requirements of that 2021 settlement, and an alternative. Under the first method, residents would be required to pay roughly $70 million more next year compared to the second plan, according to a Times analysis.

Meanwhile, Tampa Electric estimates that large industrial and commercial electricity users would experience less of an increase than they would under the first plan, according to documents. That’s in part because of the way the utility would assign costs according to peaks in energy usage.

Residential energy consumption tends to spike in the hottest and coolest months — January, June, July and August. By comparison, consumption among large corporate customers is more consistent, said Jordan Williams, Tampa Electric’s director of pricing and financial analysis, in written testimony. Therefore, putting more costs on residents and smaller businesses better matches the costs caused by the demand peaks, he said.

The $70 million figure is an early estimate, and in an email to the Times, Tampa Electric disputed the accuracy of that number. But Florida Public Service Commission staff confirmed it is likely that residential customers would pay more under the proposal compared to Tampa Electric’s other plan for distributing costs in 2025.

The rate hike request must be approved by the commission, which regulates utilities and decides how much they can charge customers. Tampa Electric is asking to raise base rates, which are a major component of electricity bills that also include other charges like fuel.

Duke Energy Florida, which is also asking to raise its customers’ base rates next year, is not seeking this same type of cost structure.

In paperwork filed to the commission, Tampa Electric says the plan is necessary because of the 2021 settlement agreement.

In addition to the Office of Public Counsel, which represents consumers, that settlement agreement was signed by multiple corporate electricity users involved in the 2021 case, including the Florida Retail Federation, Walmart, the West Central Florida Hospital Utility Alliance and the Florida Industrial Power Users Group. Federal agencies, including representatives for MacDill Air Force Base, a major electricity user, also signed on.

Williams, of Tampa Electric, said in his testimony that lessening the burden of rate hikes to large, Tampa-area companies could help give them a competitive edge, adding it could be a “catalyst for economic development.”

“Pure and simple, TECO is requesting a rate hike and most of that hike is going to residential customers,” said Brooke Ward, the senior Florida organizer with Food & Water Watch, an environmental group. “Industrial customers are getting a break while residential customers are carrying a heavier energy burden, and a lot of that is happening because of a behind-closed-doors agreement that was made in 2021 with industrial customers.”

The hospital group did not respond to emailed questions. Walmart and the Florida Retail Federation declined to comment.

The Florida Industrial Power Users Group, which is composed of “businesses whose operations are dependent on and use large amounts of electricity and/or natural gas,” said in a statement that this proposal takes into account the source of demand peaks, adding that this “fair and recognized” method has been approved by utility regulators in other states.

Late last year, Tampa Electric asked the Public Service Commission to allow it to skip filing the paperwork outlining the version more favorable to residential users. More than 100 Hillsborough County residents wrote letters to the commission, asking it to deny the request over concerns that it could result in higher bills for their homes.

Tampa Electric withdrew the request and submitted paperwork outlining both methods.

In an email, Tampa Electric spokesperson Cherie Jacobs said the proposed base rate increase will cause residential as well as commercial and industrial customers’ bills to go up a “similar” percentage compared to what they’re paying now.

“When the (commission) makes its decision, it will consider the fairest way to divide costs among all customers,” Jacobs said. “We are providing two ways to make that evaluation, as required.”

In another recent filing, Tampa Electric revealed details about how customers’ bills would be impacted if its request to raise base rates is approved.

It showed that for a typical residential household, base rates will jump from nearly $88 per month in 2024 to $107 in 2025. The monthly base rate charge will increase by about $7 more in 2026, then by around $5 in 2027.

Tampa Electric has said that decreasing fuel prices could help offset its requested hikes, making it so an average customer pays $5 more in January 2025 than they paid in January 2024. On Tuesday, the Public Service Commission approved a fuel cost reduction for Tampa Electric and Duke customers that will take effect in June and is estimated to save residents around $7 on their monthly bills this year.

After public hearings slated for June around Tampa Bay, the commission will proceed with the case in Tallahassee. A final decision is expected by the end of the year.

©2024 Tampa Bay Times. Distributed by Tribune Content Agency, LLC.
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