While trying to cushion the blow for Tampa Electric Co. customers, state regulators Tuesday approved proposals by Tampa Electric and Duke Energy Florida to collect more than $1.55 billion to cover hurricane-related costs and replenish storm reserves.
Customers of both utilities will start to see higher bills in March as Tampa Electric and Duke primarily recover money they spent to amass crews and restore power when three hurricanes hit the state in 2024.
While Tampa Electric proposed collecting $463.6 million from customers over a 12-month period, the Florida Public Service Commission on Tuesday decided to spread those costs over an 18-month period. That effectively will reduce the sticker shock, though customers will still see hefty increases.
Utilities typically cite a benchmark of residential customers who use 1,000 kilowatt hours of electricity a month. Under the approved 18-month plan, such Tampa Electric customers are expected to pay an additional $19.95 a month; under the 12-month proposal, they would have paid an additional $30.04.
The commission grappled with the decision because lengthening the time period will lead to increased interest costs that will be passed on to customers. Also, commission members cited a risk of the state getting hit with additional hurricanes, which could lead to more storm-related costs for Tampa Electric customers during the 18-month period — what is known as a “pancaking” effect of extra costs.
Chairman Mike La Rosa said it was a tough decision that involved looking at “what’s in the best interest of the customer. And although I hate to push off costs, we’ve got to consider how impactful this is to the customer.”
Commissioners approved Duke’s plan to recover $1.09 billion over a 12-month period, but they pointed to different circumstances with Duke.
For Duke residential customers who use 1,000 kilowatt hours, the storm costs represent a $32.40 increase on monthly bills, according to a commission staff recommendation. But commissioners pointed to other upcoming changes in Duke bills, with the utility saying the net increase in March on a 1,000-kilowatt hour residential bill will be $22.62. Also, commissioners said a Duke base-rate settlement constrained their ability to change the 12-month timeframe.
The utilities will recoup money they spent to prepare for hurricanes Debby, Helene and Milton last year and to restore power after the storms passed. Both also will collect money to replenish storm reserve funds and pay interest costs, while Tampa Electric also will collect money for costs related to 2023’s Hurricane Idalia.
The commission in the past has routinely approved utility requests to recover storm costs, with the issue also included in overall rate agreements. On Dec. 3, the commission approved a proposal by Florida Power & Light to recover about $1.2 billion from customers for costs related to last year’s hurricanes and to replenish a reserve fund.
While commissioners supported Tampa Electric being able to recover its costs, they grappled Tuesday with the length of time to collect the money. Commissioners raised possible timeframes of 12 months, 15 months, 18 months and 22 months.
“I just don’t think there is a magic number,” Commissioner Gary Clark said.
Bradley Marshall, an attorney for the groups Florida Rising and the League of United Latin American Citizens, or LULAC, urged a 22-month period. The commission’s staff recommended a 12-month period.
“Simply put, this (a 12-month period) is unaffordable to many hard-working Floridians,” said Marshall, an attorney with the Earthjustice legal organization.
Malcolm Means, an attorney for Tampa Electric, said the company supported the commission staff’s recommendation.
“Tampa Electric understands that an additional charge is always difficult for customers,” Means said.
Commissioner Andrew Fay said moving to an 18-month period would lead to a more “manageable impact” for customers.
“None of us want to be up here doing this,” Fay said. “It’s part of storms, and it’s part of the impact that we have in our state.”
