Florida residents and businesses likely will get hit with higher electric bills in 2023 as utilities continue to struggle with increased costs of natural gas.
Florida Power & Light, Duke Energy Florida and Tampa Electric Co. filed petitions Friday at the state Public Service Commission that detailed expected costs in 2023. If the commission approves the utilities’ proposals, each would result in higher monthly bills in 2023.
And that might not be all: The utilities also could seek to pass along higher-than-expected fuel costs from this year, though they are holding off on making such requests.
While utility bills are made up of a combination of costs, a key driver in the petitions is the high cost of natural gas, which Florida utilities rely on heavily to generate electricity. The three large privately owned utilities also increased customer bills earlier this year because of gas prices.
“Both domestic conditions and international events have significantly impacted the natural gas market,” Duke’s petition said. “Since early this year, natural gas prices have more than doubled due to increased domestic demand, flat natural gas production, strong LNG (liquefied natural gas) overseas exports, and low natural gas storage inventories. The natural gas market has not stabilized and continues to be extremely volatile.”
As an example of the industry’s heavy reliance on natural gas, Tampa Electric expects in 2003 to use gas to generate 84 percent of its electricity, with solar accounting for 11% and coal for 5%, John Heisey, director of origination and trading for the company, said in written testimony included with Tampa Electric’s petition.
Meanwhile, overall demand for natural gas exceeded supply in 2022, he said.
“Higher gas demand is driven by LNG exports, low coal inventories, extreme summer weather, and low storage inventories,” Heisey said in the testimony. “Production growth has been very slow as producers exercise capital discipline despite rising gas prices. In addition, the Ukraine invasion continues to impact the energy markets through increased volatility and uncertainty, which is expected to continue into 2023.”
The Public Service Commission is expected to consider the petitions in November. As a benchmark, utilities typically cite bills for residential customers who use 1,000 kilowatt hours of electricity a month.
Duke said in its petition that Duke customers who use 1,000 kilowatt hours are projected to pay an average of $170.68 in 2023, up from an average of $148.23 this year. Tampa Electric said in a news release that such Tampa Electric customers would pay $146.86 in 2023, up from $132.66 this year.
Because of a merger with the former Gulf Power, FPL has two sets of rates. Its petition said customers who use 1,000 kilowatt hours a month in areas traditionally served by FPL would pay $130.23 in 2023, up from $120.67 this year. In the Northwest Florida areas formerly served by Gulf Power, customers would pay $160.43 in 2023, up from $155.61 in 2022.
Natural gas is not the only factor expected to lead to higher bills. The utilities also are carrying out multiyear plans that include gradually increasing base electric rates.
Utilities generally are allowed to pass along fuel costs to customers and are not supposed to collect profits on those costs. Each year, they file petitions that include projected costs for the coming year. The commission then decides whether those projected costs can be baked into customers’ bills.
Also, the utilities in 2023 could seek to recoup higher-than-expected fuel costs in 2022. Each has faced higher costs but said in their filings that they want to wait until late this year or early 2023 before addressing the issue.
“FPL believes it is appropriate to continue to monitor the market to determine whether the conditions and international events that have sharply impacted the natural gas market will moderate, such that a future fuel forecast may mitigate the projected fuel costs to be recovered,” FPL said in its petition Friday. “FPL will continue to update its fuel cost calculation with additional data reflecting actual gas prices, actual sales and actual revenues. At the appropriate time toward the end of 2022 or beginning of 2023, FPL will file a request for recovery based on an updated calculation, to be considered by the commission in early 2023 for implementation following the customer notice period.”
Duke and Tampa Electric issued news releases acknowledging what Tampa Electric President and CEO Archie Collins described as the “unique economic challenges our customers and communities are facing.” They also pointed to efforts to help customers struggling to pay bills.
“We understand our customers continue facing increased financial demands in all parts of their lives,” Melissa Seixas, Duke’s state president, said in a statement. “We’re connecting customers to available assistance and providing energy-saving tools and programs to help manage their bills and lessen the impact. Please reach out to us. We’re here to help.”
