Hundreds of thousands of Panhandle residents and businesses could see their utility bills go up next year, as Gulf Power Co. seeks a $74.4 million increase in base electric rates.
The Pensacola-based Gulf filed a detailed request Friday with the state Public Service Commission, saying higher rates are needed to pay for upgrading the utility's transmission system while boosting returns for investors. The commission also approved a $64.1 million base-rate hike for Gulf last year.
"Without the revenue increase requested, Gulf cannot meet its obligations to either its customers or investors in the long run,'' Gulf said in the filing. "If Gulf is rendered unable to meet its obligations to its customers and shareholders due to inadequate rates, both stakeholder groups will suffer. Customers will suffer from less reliable service and eventually higher costs of electricity, while the shareholders will suffer from an inadequate and confiscatory return on investment and will seek other places to invest their money."
The Public Service Commission spends months considering requests for base-rate increases, holding hearings and weighing technical and financial information submitted by utilities and by consumer and business groups. The Gulf filing comes as the commission prepares in September to hold hearings on a proposal by Tampa Electric Co. to increase base rates by about $135 million.
Last year, the commission approved a rate hike for Florida Power & Light, though the state Office of Public Counsel --- which represents consumers in utility issues --- has challenged the approval in the state Supreme Court.
Base rates are a major part of customers' monthly electric bills, paying for many of the operations of utilities. But monthly bills also include charges for such expenses as natural gas and coal that fuels power plants and for environmental upgrades.
The Gulf case likely will focus, at least in part, on the returns that investors can expect if base rates are increased. Gulf, which has 436,000 customers in eight counties, is seeking an 11.5 percent "return on equity," a closely watched measure of profitability.
Jon Moyle, an attorney for the Florida Industrial Power Users Group, said his business organization plans to formally intervene in the Gulf rate case. While the group was still in the process of reviewing the filing Monday, Moyle pointed to the proposed return on equity as a concern.
"The ROE request seems to be on the high side of things,'' said Moyle, whose group regularly intervenes in utility cases.
But in its filing, Gulf said it has worked to control costs while also making major improvements to such things as its transmission system.
Those improvements came at a time when the utility has not seen substantial sales or customer growth.
"As a result of the relatively flat sales and customer growth, Gulfs base revenues in 2012 were over $30 million less than expected,'' the filing said. "That revenue shortfall represents more than 50 percent of the annual rate relief authorized in 2012. Gulf is requesting rate relief in order to continue to fulfill the public service requirements set forth in the statutes."
In a news release, Gulf said increased rates, if approved, would take effect in April 2014. Residential customers who use 1,000 kilowatt hours a month would see bills jump from the current $118.88 to $127.82, or 7.5 percent, according to the company. Utilities use 1,000 kilowatt hours as a benchmark, though actual customer usage can vary widely.
Customers also could seek another bump in their rates in 2015. Gulf, like other utilities, faces making upgrades to comply with federal standards aimed at limiting emissions of mercury and other toxic pollutants.
In Friday's filing, Gulf said it should be able to pass along the costs of such upgrades in the part of consumer bills that goes toward environmental improvements. But if not, Gulf said it would seek a $16.4 million increase in base rates, effective July 1, 2015.
Information provided by The News Service of Florida