Higher fuel costs to hit TECO customers after state approves rate hike

TALLAHASSEE, Fla. - More Florida residents are about to feel the pain of high natural-gas costs.

The state Public Service Commission on Tuesday unanimously approved a proposal by Tampa Electric Co. to collect additional money from customers to cover higher-than-expected costs of fuel for power plants. The commission during the past three months also gave similar approvals to Florida Power & Light and Duke Energy Florida.

The Tampa Electric increases will take effect in April. For example, residential customers who use 1,000 kilowatt hours of electricity a month will see their bills jump from $120.91 to $131.87, according to the commission and the utility.

Utilities generally are allowed to pass along fuel costs to customers and are not supposed to profit from those costs. Each year, the commission sets the amounts that utilities can collect for fuel in the following year. But if costs are higher than expected, utilities can seek what are known as "mid-course corrections" that allow them to increase the amounts that customers pay.

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The industry has grappled for months with natural gas prices, prompting Tampa Electric, Duke and FPL to return to the commission seeking mid-course corrections. Tampa Electric sought to pass along about $165 million in additional fuel costs.

"We remain focused on managing our resources to reduce fuel impacts as much as we can," Archie Collins, president and chief executive officer of Tampa Electric, said in a prepared statement Tuesday. "It’s important to remember we offer customers opportunities to better manage their electricity use to help lower bills, and we continue to offer several forms of customer assistance to help those who need it most."

For years, Florida utilities have increasingly relied on natural gas, in part because it is cleaner than burning coal. Tampa Electric, which has about 800,000 customers, said Tuesday that its "fuel mix" this year is 82 percent natural gas, 10 percent solar and 8 percent coal.

Volatile natural gas prices also have affected utilities — and their customers — in other parts of the country.

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The U.S. Energy Information Administration said Tuesday that retail electricity prices nationally in 2021 increased at the fastest rate since 2008.

"Prices for most types of energy commodities rose significantly in 2021, including the cost of power generation fuels, especially natural gas, which helped push electricity prices higher in 2021," the agency said on its website.

The agency said the cost of natural gas that went to U.S. power plants in 2021 averaged $4.98 per million British thermal units, more than double the price in 2020. Among the factors, it said, was severe weather, including a winter storm in Texas that disrupted the flow of natural gas.

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The U.S. Energy Information Administration also said it forecasts that "residential retail electricity prices will continue to rise in 2022, although at a slightly slower rate."

The higher fuel costs for Duke customers are taking effect this month, while the FPL costs took effect in January.