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Gulf Power Seeks $93 Million Rate Hike, Partially For North Escambia Land Purchases
December 13, 2011
Gulf Power began Monday to try and convince state regulators that customers should pay an additional $93.5 million a year for electricity — partially to fund land purchases in North Escambia that could be for a nuclear power plant.
Attorneys for consumers and business groups criticized the proposal on a series of grounds Monday. For example, they targeted money that the company wants to use for employee bonuses and money that would go toward purchasing 4,000 acres near McDavid for a possible future nuclear-power plant.
While Gulf Power says it is justified in seeking money for the land purchase, state Associate Public Counsel Joe McGlothlin said the company has not taken initial regulatory steps for a nuclear plant.
“In this case, the cart is about a city block in front of the horse,” said McGlothlin, whose office represents consumers in utility issues.
Currently, a Gulf Power residential customer who uses 1,000 kilowatt hours a month of electricity pays $127.16. That number will drop slightly to $125.80 in January because of lower fuel and environmental costs. But if the PSC approves Gulf Power’s base-rate proposal, the customer bill would jump to $133.46 in April.
Utilities commonly use 1,000 kilowatt hours as a benchmark, though many customers use more power than that each month. After the hearing this week, the commission could make a decision as early as February about whether to approve Gulf Power’s proposal.
Top executives told the state Public Service Commission that Gulf Power has not received a base-rate increase in nearly a decade and needs to collect more money to continue upgrading its system in Northwest Florida.
“We asked for what we thought we needed,” Gulf Power President and Chief Executive Officer Mark Crosswhite told the commission on the first day of a week-long hearing. ” We didn’t pad it.”
But attorneys for consumers and business groups argued that Gulf Power far overstated the need to raise rates, contending that the utility had only justified a $16.2 million hike.
“Gulf simply doesn’t need any more than that to continue providing safe, reliable and adequate service,” said Robert Scheffel Wright, an attorney for the Florida Retail Federation, which often becomes involved in utility issues.
Gulf Power’s request likely will be the first of three major rate cases that the Public Service Commission will consider during the coming year. Florida Power & Light and Progress Energy Florida in early 2012 are expected to seek increases in base rates — the billions of dollars that flow to utilities each year to cover many of their day-to-day costs.
Base-rate cases involve myriad details of utility financing. But looming over the Gulf case are questions about how much customers should be required to pay amid tough economic times, an issue that was raised during earlier public hearings in the Panhandle.
“One of the themes we seemed to hear (was), ‘This is just bad timing,’ ” Commissioner Lisa Edgar said as she questioned Crosswhite about money-saving steps the utility has taken.
Gulf Power earlier this year proposed a $93.5 million base-rate increase for such needs as power-plant fuel and environmental compliance. That total has increased to about $101 million because of a shift of costs from the environmental-compliance part of customers’ bills. But because it is a shift, Gulf says the bottom-line impact on customers would be $93.5 million.
Perhaps the biggest issue during the hearing will be how much money Gulf should be able to earn through base rates. The company is seeking an 11.7 percent return on equity, a common measure of profitability, but opponents say that number should be limited to 9.25 percent.
Vicki Gordon Kaufman, an attorney for the Florida Industrial Power Users Group, a business group that includes heavy users of electricity, described the 11.7 percent proposal as “pretty shocking.”
But Gulf officials said they need to offer returns that will attract investors to help finance costly improvements in the company’s electric system. Chief Financial Officer Scott Teel said Gulf’s return on equity dropped from 12.75 percent in 2007 to 9.5 percent in 2010 and has continued to sink this year.
Crosswhite said the utility has taken steps to hold down costs and is concerned about financially strapped customers’ ability to pay for electricity. But he said he also has concerns about being able to provide adequate service if the company does not receive a base-rate increase.
“We tried to push this case off as long as we could,” Crosswhite said.
The News Service Florida contributed to this report.
Comments
17 Responses to “Gulf Power Seeks $93 Million Rate Hike, Partially For North Escambia Land Purchases”
I’m spending my money on very efficient solar panels…will be off the power grid in 3 months…screw GP because they are screwing the public
It seems to me the power company has already messed with our natural resources (Escambia River) on the south end. Who would want them to use the North End for Nuclear power? I don’t understand why we aren’t using natural
gas when it is a clean burning source and when it is produced in the Gulf of
Mexico in such large amounts.
I agree with everyone on a business doesn’t charge the customers for improments. That comes out of their profits.
REGARDING:
“Gulf Powers top executives tell the PSC there has been no increase in almost a decade, I say that’s hogwash and I have my receipts to prove it.”
Could be, but did you subtract the difference in fuel costs? That isn’t a charge to Gulf Power, just a pass-through of expenses — they charge you what the fuel supplier charge them. some claim they’re selling themselves the fuel but I don’t see it, they didn’t show the ownership links to prove it.
David for free power
From 5-12-06 to 6-12-06 i used 1,021 kwh,my bill was $98.89. From 10-10-11 to 11-8-11 i used 1,044 kwh my bill was $139.06. Gulf Powers top executives tell the PSC there has been no increase in almost a decade,i say thats hogwash and i have my receipts to prove it.
Sam, I have been to both Iraq & Afghanistan and their lack of amenities still does not convince me that I should agree to be robbed by a utility company that has a monopoly. Perhaps we could get the downtown Occupy protesters to move their protest to the front of the GP bayfront complex & protest the rate hike and I’m sure most of them would hate having a nuke plant close by.
As copied from an article posted on Northescambia from November 6, a little over a month ago. . .Why even bother mentioning reducing the rates and then wanting to raise them again. . .
Gulf Power Drops Rates
November 6, 2011
It’s won’t be much, but Gulf Power Company customers will see a decrease in their electric bill in January due to lower coal and natural gas prices.
Currently, the electricity bill for an average home buying 1,000 kilowatt-hours is $127.16. At the beginning of 2012, the same amount of electricity will cost $125.80, a decrease of $1.36.
“The FPSC adjusts our prices each year based on the cost of the fuel used to make electricity, power bought from other utilities and providers, environmental compliance expenses and the cost of energy efficiency programs for customers,” said Jeff Rogers, Gulf Power Corporate Communications supervisor.
Gulf Power monitors its fuel mix to use the most cost-effective generation available at any time during the day. That has helped the company take advantage of some lower fuel prices for coal and natural gas – the two major fuels Gulf Power uses to make electricity.
“We are pleased with this decrease because it will partially offset the base rate increase request we have before the FPSC,” said Rogers. “If the PSC grants the full amount of the request — the total cost for 1,000 kilowatt-hours was expected to be $134.82. Now, with this decrease, the total will be $133.46. We understand that’s a small decrease, but hopefully fuel costs will continue to decline and we can continue to pass along those savings to our customers.”
I agree with all those fed up with rising costs but don’t think that competition would make it better because Escambia River Electric Co-op (Escambia/Santa Rosa) would be better because they would be charging you right now an average of $140.37 for 1000 Kilowatts used while Gulf Power is charging 127.16 for 1000 Kilowatts. Hope Gulf Power rates are not approved because Escambia River will probably go up also. Since they are suppose to be non-profit organization quess they can raise rates as they wish. Don’t hear many people complain, quess they are content with prizes donated by businesses they give out at annual meeting each year. So why not just charge what you want when no one questions what you do! Monthly board business meetings are held behind locked doors and you have to let them know ahead of time you want to come to the meeting. This is never a problem though, because no one usually shows up. I read a news article where Gulf Power charges a minumum fee of $10.00 per month. Guess what! Escambia River charges $25.00 per month for residential and more for businesses. Maybe Gulf Power will buy out Escambia River Electric so our rates will go down EVEN IF they raise the costs.
Sam
We may be without those things if they keep raising the rates. We will not be able to pay the bill anymore. I agree with ‘Hater’ why do we have to pay for it before it is built. Please don’t insult us by saying they don’t have the money to build the plant. At least built it or start building it before making customers pay more.
And good point, why do they spend money on ads ? Thats our money they are wasting. We don’t have a choice to buy your power so we don’t need advertisment to rub it in.
just like spoiled kids. go to afghanistan or 100 other countries and stay for a while. after you went without lights. running water. air conditioning, and many other luxuries you take for granted, you would have a change of heart.
REGARDING:
“NO ONE wants a nuclear power plant here! ”
Not no one, it would be an uninterruptible power supply, not subject to supplies in the Middle East. Further, it’s safer than coal with no greenhouse gas emissions..
I just want their workers to pay attention while at work.
David for better things
If Gulf Power would publish a list of the salaries and bonuses of their 100 top-paid employees, there be no way anybody could support a rate increase.
I understand return on investment, but I would like to see excesses eliminated before making that calculation. As it is, GP has so much cash they are inventing ways to get rid of it all.
What i can’t figure is how they charge me $190 + for levelized. Less than 1000 KWH and regular customers $125+ for less than 1000 KWH. I think i will go back to regular billing.The way i figure it i would be paying about $63 dollars a month less. People should check their bills and do some figuering also.
Have to agree with you on that one Hater.
Tell me why, in the middle of this bad economy, Gulf power would raise rates to pay for something we don’t want? NO ONE wants a nuclear power plant here! And we certainly don’t want to pay for it!
Wished I could buy something and then make someone else pay for it. I guess the last extortion hike wasn’t enough for the thugs from the southern company.
So….are they going to pay for the devalued homes and land we own in the area? Since they want there customers to pay for there nuclear power plant? I think not. Not to mention the increase health and environmental impact. But there backed by our government who has the greater good moto. Think im going to have a serious talk with my wife.
Gulf power has a monoply on the power business in our area. Why do they waste millions on ads??? The leaders are overpaid and spend millions on their feel good projects.
What GP need is some competition for our business. Their ruse about a nuke plant is just another way to get more for less.
The public service comm. is owned by GP and the other utility providers and do nothing for the consumer. Just watch them give GP what they ask for, again. This is a office that needs to be held by elected officals that answere to the public. (voters)