Gulf Power Customers Face Storm Costs

Pointing to an “unprecedented event” that knocked out power to 136,000 customers and caused massive damage to its distribution system, Gulf Power on Wednesday asked state regulators to approve a plan to collect an estimated $342 million from customers to cover costs related to Hurricane Michael.

Gulf, the largest electric utility in Northwest Florida, filed a petition at the state Public Service Commission as it seeks authorization to start recovering the money in April. Customers would pay the storm costs over a five-year period, according to the filing.
“Hurricane Michael was the most destructive hurricane to ever hit Northwest Florida, with Panama City and the surrounding areas of Bay County nearly destroyed, including critical infrastructure and the energy grid that serves our customers,” Gulf President Marlene Santos said in a prepared statement. “We know that many of our customers continue to face challenges due to the aftermath of Hurricane Michael and we have worked hard to propose a plan to the Florida Public Service Commission that takes this into account and supports our ability to continue to serve them with reliable service now and into the future.”

The Public Service Commission has signed off on such proposals from utilities after past storms. Also, Gulf operates under a 2017 rate settlement that anticipated the utility would be allowed to recover such costs if a major storm occurred.

The proposed increase would translate to about $8 a month for a residential customer who uses 1,000 kilowatt hours a month of electricity, a common benchmark in the utility industry, according to the filing and a Gulf news release. Commercial and industrial customers, which are billed differently than residential customers, would see increases of 3 percent to 8 percent.

If the Public Service Commission authorizes the storm-related increases, Gulf said monthly customer bills would remain lower than they were in January 2018. During the past year, Gulf has trimmed bills, in part by passing along savings to customers from a federal tax overhaul that lowered corporate-income tax rates.

Hurricane Michael made landfall Oct. 10 in Mexico Beach as a Category 4 storm and caused widespread damage as it roared north into Georgia. The damage came in the eastern parts of Gulf’s service territory, particularly in Bay County. Western parts of Gulf’s territory, in areas such as Pensacola, were largely unscathed.

The filing at the Public Service Commission said Gulf had 136,000 customer outages and that 120,452 customers lacked power late in the afternoon of Oct. 10. In all, 96 percent of customers in the utility’s eastern area lost power, with more than 99,000 outages in Bay County.

Gulf had $48 million in a storm reserve, but that was dwarfed by $350 million in restoration costs that the utility says it is eligible to recover from customers. Also as part of the filing, Gulf is seeking to collect about $41 million to replenish the storm reserve. The total sought comes to about $342 million after some accounting adjustments.
The Pensacola-based utility has more than 460,000 customers in eight counties. The filing said Gulf workers and outside crews replaced about 7,000 poles, 200 miles of line and 4,000 transformers after the storm.
“For areas that experienced the most significant impact of Michael's eye wall, Gulf Power's restoration efforts required a complete rebuild of the electric system,” the filing said.

Article reposted with permission from The News Service of Florida.