Tampa Electric retracts its petition to modify a procedure preceding a potential rate hike

Efforts by the local utility to alter the method for determining rates in the upcoming years faced criticism from advocates for affordable energy.

On Monday, Tampa Electric Co. withdrew its petition to the state, seeking permission to modify a procedural step before deciding on a rate increase. The initial request, submitted in October, had garnered attention and raised concerns.

Critics of the petition argued that its approval could potentially impact the finances of residential customers unfavorably, while providing advantages to the company’s larger industrial clients.

The announcement made on Monday does not detail the reasons behind the utility’s withdrawal of the petition. However, a company spokesperson stated that the decision was made after engaging in discussions with all consumer parties involved in their existing rate agreement.

In recent months, over 100 residents of Hillsborough County have written letters urging the Florida Public Service Commission, the state agency responsible for overseeing utility companies, to deny the request.

Barbara Toepke of Tampa wrote: “I bundle up in the winter to save heat and wear skimpy clothes in the summer to save air … please don’t let TECO charge citizens more and corporations less.”

In an email sent to the Tampa Bay Times last week, Tampa Electric refuted claims that the request would have disproportionately raised residents’ bills.

The withdrawal of the petition occurred just days before opponents of the petition were scheduled to voice their concerns during a public meeting, where the state would have made a decision to approve or reject Tampa Electric’s request.

On December 28, the staff of the Public Service Commission recommended denying Tampa Electric’s request. However, the final decision rested with the commission, and approval was still a possibility.

Here’s an analysis of what Tampa Electric proposed and the potential impact it could have had on residents’ bills.

A look at the utility’s request

The sequence of events originated in 2021 when Tampa Electric entered into a settlement to raise customers’ base rates until the present year, resulting in a $302 million increase in revenue for the company. Tampa Electric asserted the necessity of this rate hike to modernize power stations, retire coal-burning units, and expand solar power initiatives.

To initiate a rate increase request, a utility must fulfill a “minimum filing requirement,” which includes a mandatory “cost of service” study. This study allocates the operational costs of a utility among its diverse customer categories, such as residential, industrial, and commercial.

In the 2021 settlement, Tampa Electric agreed to transition to using an alternative cost of service study, presenting a departure from the original study. The original and alternative studies employ distinct methods for determining how costs are distributed among customers.

In late October, anticipating another impending rate increase later in the year, Tampa Electric submitted a request seeking approval to waive the use of the original study and solely rely on the alternative study.

In an email to the Times on Monday, Cherie Jacobs, a spokesperson for the utility, said, “Tampa Electric spoke with all the consumer parties involved in our existing rate agreement, and we have decided to use both methods to study the cost of service.”

Bradley Marshall, an attorney in Florida representing Earthjustice, a national nonprofit environmental law group, contended that the alternative study would have shifted more costs onto residential customers while shielding larger industrial customers from increased bills.

However, Tampa Electric, through spokesperson Lauren Nieves, refuted this claim in an email to the Times last week. The company asserted that the use of the alternative study would not result in an increase in its revenue. When asked about the potential rate increases for each customer class under the alternative study, Nieves stated that the “question is not relevant at this time.”

While technically permissible, Marshall expressed that he had never encountered a situation where a company sought to waive the mandatory cost of service study.

“TECO has obviously been thinking about this for a while,” Marshall said. “When I saw this petition, it was a surprise to me.”

What do bills look like now?

Brooke Ward, a senior organizer with Florida’s chapter of the environmental nonprofit Food & Water Watch, expressed the view that the state has evolved into a “rubber stamp” for endorsing the requests of utility companies. She highlighted a recent decision permitting Duke Energy to recover $92 million from customers for Hurricane Idalia costs as an example.

Ward, who has been closely monitoring Tampa Electric’s rate adjustments for several years, contends that, based on her calculations, average rates have increased by 62% over the past five years.

“Tampa Electric customers are paying some of the highest bills in the country,” she said. “Because of the way that bills are structured, though, it’s not always clear.”

Nieves said that’s not true. She said Tampa Electric’s current rate ratio is “well below the U.S. national average.”

“Over the years, Tampa Electric’s rates have consistently fallen below or at the national average and among the lowest in Florida,” Nieves said.

A review conducted by The Times of publicly available revenues reported by the U.S. Energy Information Administration revealed that Tampa Electric, catering to over 800,000 customers in Hillsborough County and portions of Polk, Pasco, and Pinellas counties, has recently recorded some of the highest average residential bills in the nation.

Tampa Electric has consistently ranked among the top 10 utilities with more than 10,000 customers for having some of the most expensive bills in the United States since May. It’s worth noting that record high temperatures, such as Tampa’s hottest summer on record in 2023, could potentially contribute to these high bills, a trend observed in other areas of Tampa Bay as well.

Other Florida utilities, including Duke Energy Florida and Florida Power & Light, were often in close proximity on the list. Notably, in June, Tampa Electric claimed the top spot for the most expensive average bill in the nation, with Duke Energy Florida securing the second position during that month.

“In Florida, we have state-created utility monopolies,” Ward said. “And if you want your power to be on, you have to pay their bills.”

How increased bills impact residents

Britani Silvera, aged 21, became a member of Ward’s affordable energy coalition shortly after transferring to the University of South Florida in Tampa in 2022.

“I have so many friends working two, three jobs just to be able to afford rent. The housing crisis and energy crisis go hand in hand,” she said. “I’ve seen my own rates go up and it’s very scary. You cannot be without AC.”

Numerous letters, a total of 133, sent by Hillsborough residents to the Public Service Commission resonate with Silvera’s concerns. Patricia W. Hall, a retired teacher from Tampa, expressed that her electric bills reached the highest levels she had ever witnessed last year. Stephanie Wargo, residing in Hillsborough County on a fixed income, shared her struggle with the challenges of meeting heating and cooling expenses.

Mary-Elizabeth Estrada ofLutz wrote that her utility bill doubled over the summer.

“The recent rate hikes have hit the families I know extremely hard,” Lora Karas of Tampa wrote.

Marshall called the withdrawal of the petition a victory for customers.

“TECO tried — and failed — to use a complicated accounting gambit to make sure that its next try at hiking rates would shove more costs onto residential customers,” he said.