TECO Rate Hikes Get Backing

Article reposted with permission from The News Service of Florida.

The Florida Public Service Commission should stand behind its decision to approve base-rate increases for Tampa Electric Co. after objections were raised by consumer representatives, the commission’s staff recommended Thursday.

The regulatory commission is scheduled May 6 to take up a request by the state Office of Public Counsel, which represents ratepayers, and two consumer groups to reconsider approval of the rate hikes.

In a December vote followed by a Feb. 3 final order, the commission approved a nearly $185 million base-rate increase for Tampa Electric in 2025, followed by expected increases of $86.6 million in 2026 and $9.1 million in 2027. The first increases took effect in January.

The Office of Public Counsel and the groups Florida Rising, Inc., and LULAC Florida, Inc. raised a series of arguments as they sought reconsideration, including that the commission approved an excessive return on equity — a closely watched measure of profitability — for Tampa Electric.

The commission approves return-on-equity ranges for utilities and what is known as a “midpoint.” Tampa Electric sought an 11.5 percent midpoint, with the commission ultimately approving a 10.5 percent midpoint.

The staff recommendation Thursday backed the commission’s decision to approve the 10.5 percent midpoint, saying it is “supported by substantial and competent evidence and was reasonable given the unique aspects of TECO’s business.”

“The commission was confronted with a considerable amount of competing testimony including over 20 variations of financial models provided by three competing witnesses and further testimony provided by two additional witnesses,” the recommendation said. “Additionally, TECO established that it faces unique risks due to its geography, namely having a highly concentrated service territory located in an area prone to potentially devastating hurricanes which may cause considerable damage to a high percentage of TECO’s territory.”

But in its Feb. 18 request for reconsideration, the Office of Public Counsel said Tampa’s Electric’s “size and storm risk are already mitigated through other methods.” Also, it pointed to the commission staff saying in November that the return-on-equity midpoint should be 10.3 percent — rather than the 10.5 percent later approved by the commission.

“No reasonable mind would accept that the evidence in this case is adequate to support the commission’s arbitrary conclusion that a 10.5% ROE (return on equity) would mitigate the risks expressed by the commission while a 10.3% ROE would not,” the Office of Public Counsel argued. “The commission should have relied upon the well-documented and supported calculation of 10.3% ROE when deciding the ROE issue in this case.”

Base rates make up a major part of customers’ monthly electric bills, and rate cases play out over months and involve voluminous amounts of information. Other parts of customers’ bills include such expenses as power-plant fuel and costs of complying with environmental regulations.

In addition to seeking reconsideration by the Public Service Commission, the Office of Public Counsel, Florida Rising, Inc., and LULAC Florida, Inc., which is also known as the League of United Latin American Citizens of Florida, appealed approval of the Tampa Electric rate hikes at the Florida Supreme Court.

The court last month put the appeals on hold while the commission considers the reconsideration request.

While the commission staff Thursday recommended denying reconsideration on major issues, it said a relatively small calculation error should be corrected.

Tampa Electric has about 844,000 customers in Hillsborough, Polk, Pasco and Pinellas counties.