WKNIGHT94 TALK [CC BY-SA 3.0 (HTTPS://CREATIVECOMMONS.ORG/LICENSES/BY-SA/3.0)]Tampa Electric Co. will call on state regulators to approve an increase in the base rate. In 2022, an initial installment of $ 280 million to $ 295 million will be paid to build a “smarter” power grid that provides reliable energy.
On a filing Monday, the utility, which serves nearly 800,000 customers in West Central Florida, announced that a formal application would be filed with the Florida Public Service Commission this spring for rate changes due to take effect in January 2022.
“The overall base rate relief, which will be addressed in the company’s upcoming petition, will be critical to Tampa Electric maintaining its financial integrity while providing safe, reliable, responsible and efficient electrical service and meeting our customers’ expectations can, “said Tampa Electric President Nancy Tower wrote in a letter to commission chairman Gary Clark.
Tampa Electric residential customers who consume 1,000 kilowatt hours of electricity per month – an industry standard – are currently paying $ 105.25. The monthly cost to such customers increased $ 7.56 in January as the cost of natural gas for power plants was higher. These costs are added to the base rates that vary from year to year.
The company failed to detail on Monday how customer bills are expected to change over the next year if the rate increases are approved.
The proposed rate hike from $ 280 million to $ 295 million in 2022 would be followed by increases of $ 100 million in 2023 and $ 30 million in 2024.
The additional money in 2022 would help fund a “modernization project” at the utility company’s Big Bend power plant in Hillsborough County, advanced metering infrastructure, and the expansion of solar energy.
The 2023 increase would help fund solar projects and the Big Bend project, while the 2024 increase would apply to solar projects, according to the utility. Filing these base rate increases would be partially offset by savings in the power plant’s fuel costs.
In the letter, Tower said the company’s solar systems produce enough electricity to power more than 100,000 homes, businesses and schools, and that 11 projects are planned to add an additional 600 megawatts of solar capacity.
“When we complete these additional solar projects, nearly 14 percent of our energy will come from solar,” Tower wrote. “This cost-effective long-term energy solution will be sufficient to supply more than 200,000 households with electricity. It will promote price stability for customers, increase our fuel diversity and reduce CO2 emissions.”
Tower listed 10 main factors responsible for the proposed rate hikes, with current revenue growth not keeping up with the cost of projects like upgrading Big Bend, smart grid infrastructure, and new solar systems.
Other factors include investing in information technology to improve customer service and increase cybersecurity, the addition of overhead lines over 40 miles and underground distribution lines over 890 miles since 2013, and the need to provide investors with a “reasonable” return.
The letter said the company will seek approval for a 10.75 percent return on equity – a common measure of profitability – although the rate of return could fluctuate in a range above and below that amount.
“Adequate return on equity is critical for a regulated utility to attract the capital needed to make long-term investments, maintain and improve the company’s quality of service, and reduce costs to customers over time,” explains Tower. “Tampa Electric currently expects ROE to be below five percent in 2022 without interest rate relief.”
Tampa Electric is operating under a 2017 base agreement that ends December 31st.
Base rate cases are one of the most closely watched issues in the Public Service Commission because of their large sums of money and extensive financial and technical details.
Last month Florida Power & Light took a similar move to seek approval of a four-year tariff plan designed to increase the amount of money paid by customers and to complete a merger with Gulf Power.
FPL calls for a base revenue increase of $ 1.1 billion in 2022 and an increase of $ 615 million in 2023. The proposal also provides for an increase of $ 140 million in 2024 and an increase of 140 million Million US dollars in 2025 to fund solar energy projects.
Filings from both companies will lead to months of analysis and hearings attended by consumer representatives.
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