UTILITIES
Expect FPL savings, then a jolt
FPL customers will save $1.57 a month starting in January but are likely to get a rate hike in 2010 that would bring a typical homeowner's cost to $115 to $118 a month.
BY JOHN DORSCHNER
jdorschner@MiamiHerald.com
After pressure from consumer groups, Florida Power & Light announced Monday that it wants customers to save a couple of bucks a month starting in January -- but will ask for a basic rate hike of 6 to 9 percent in 2010.
The residential customer who uses 1,000 kilowatt-hours a month will pay $109.55 monthly in 2009, down from the current $111.12, if the Public Service Commission approves the utility's request.
The reason for the reduction: a ''breathtaking'' drop in the utility's fuel costs, said FPL President Armando Olivera. The company expects it will save almost $1 billion next year in fuel, primarily from lower natural gas prices.
Mike Twomey, who represented AARP before the PSC, said it was important that money ended up in consumer's pockets. ''A billion dollars is obviously a lot of money. The majority of the PSC didn't seem that interested,'' because if FPL overcharged for fuel, consumers could get it back later.
''But FPL could have earned 3 or 4 percent on that billion,'' about $30 million or $40 million, Twomey said. ''That's pretty darn good money,'' but consumers need whatever help they can get now in these tough economic times, he said.
Originally, FPL had asked the PSC for an increase of about $8 a month in 2009, for an average bill of $119.
Several consumer groups complained to the PSC that it was outrageous that the utility would dare seek an increase when fuel prices were plummeting.
The utility first insisted its fuel estimates were solid for 2009, but after a lengthy hearing, the company asked to reconsider its numbers.
During a conference call Monday with journalists, Olivera said the utility had changed its mind because fuel costs had declined by more than 10 percent, the limit for seeking a formal change in charges.
The FPL executive called the volatility in fuel prices ''truly remarkable.'' The company had originally estimated it would need about $64 a month from the average customer to pay for fuel. It now believes it will need between $52 and $55 a month.
The reason the customer's bill won't be dropping by that much is that deferred 2008 fuel charges, plus costs for construction of new nuclear and solar plants, is being tacked on to the 2009 bills.
Fuel charges are pass-through costs. The utility makes no profit on them.
On Monday, the utility also announced it has started the formal, arduous process for an increase in its base rate for 2010, increasing the present bill by 6 to 9 percent above the present bill, which would bring a typical homeowner's cost to $115 to $118 a month, based on current fuel costs.
FPL's present rate agreement, which took effect in 2006, expires at the end of 2009.
Unlike fuel charges, base rates include profits.
In March, the utility will start the rate-making process, leading to pleadings and proceedings that will last through most of 2009. The last rate hearing cost the utility about $3 million or $4 million, Olivera said, in amassing the documentation and experts to justify the rate increase. Such costs ultimately get passed on to customers.
Even with the proposed rate increase, FPL customers would still be paying considerably less than those of other investor-owned utilities in the state.
After charges recently approved by the PSC, customers of Progress Energy Florida will see their monthly bills for 1,000 kilowatt-hours go from $110.59 to $137.87 on Jan. 1. Tampa Electric's will climb from $114.38 to $128.44.
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