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Progress Energy Carolinas Asks for Fuel Factor Increase in North Carolina

Posted on: Friday, 2 June 2006, 15:00 CDT

RALEIGH, N.C., June 2 /PRNewswire-FirstCall/ -- Reflecting continued high prices for coal, natural gas and other fuel used to produce electricity, Progress Energy Carolinas today filed for an increase in the fuel rate charged to its North Carolina customers.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020923/CHM008LOGO-c )

Progress Energy is asking the N.C. Utilities Commission to approve an increase in the fuel component of its rates. The company requested the change to recoup under-recovered fuel costs and to meet expected fuel costs in the near future. If approved, the increase would take effect Oct. 1.

If approved, the average increase would be 8.9 percent for residential customers who use 1,000 kilowatt-hours of electricity per month. This translates into an $8.04 per month increase for a residential electric bill, based on usage of 1,000 kilowatt-hours (from $90.62 to $98.66). The average commercial customer bill would increase by 10.9 percent, and the average industrial customer's bill would increase by 13.8 percent.

Progress Energy Carolinas has been working with major stakeholders on a settlement that would phase in the increase and lower the cost impact on customers. The company will continue to work toward an agreement that is in the best interest of its customers and other stakeholders.

The primary cause of the increase is the rising cost of coal and natural gas needed to run Progress Energy Carolinas' generating plants. Market prices of energy commodities have increased significantly over past price levels. Based on comparing market prices as of March 5, 2006, to historical prices -- the market price of natural gas has almost tripled in less than four years; coal market prices have doubled since 2003; and the market price of oil has almost tripled since late 2001.

The fuel portion of the company's rates is adjusted annually by the N.C. Utilities Commission to reflect any under- or over-recovery of fuel costs for the previous 12 months and to recover Progress Energy Carolinas' expected fuel costs for the next 12 months to produce electricity to meet customer demand. Progress Energy Carolinas does not make a profit from the fuel charge. The other major component of the rates, base rates, has not increased in 16 years.

"Although Progress Energy Carolinas cannot control the global economic factors that largely determine the price of fuels, we do work to control how efficiently we operate power plants on behalf of customers. And we're doing all we can to keep overall costs for our customers as low as possible while ensuring a stable and reliable supply of electricity," said Bill Johnson, president and chief operating officer of Progress Energy.

Progress Energy Carolinas' power plants have been recognized nationally for sustained reliable and efficient performance. In 2005, the H.B. Robinson Nuclear Plant near Hartsville, S.C., and the Harris Nuclear Plant near Raleigh, N.C., set production records. The Electric Utility Cost Group recognized several Progress Energy coal-fired power plants as among the best- performing facilities in the nation. That performance, coupled with the company's diversity of power plant resources, has helped to keep fuel expenses as low as possible for customers.

In some other parts of the country, dependence on single fuel sources and other issues have led to proposed consumer price increases in excess of 50 percent. Even with Progress Energy Carolinas' proposed increase, the average price of electricity for its customers in North Carolina would still be below the national average.

In the commission-approved settlement agreement from the fuel case in 2005, the company agreed to recoup only a portion of the fuel expenses sought in its initial filing. The settlement resulted in collection of under- recovered costs but the setting of a lower projected fuel charge than the company initially sought. The settlement agreement was negotiated in an effort to reduce the impact on customers.

"We understand that any increase in a customer bill has an impact on our neighbors," Johnson said. "We're doing all we can to operate efficiently, and we encourage our customers to learn more about how they can save on their own energy bills."

Customers can save up to 20 percent on their energy costs by making simple changes at home. Cleaning air filters, adjusting the thermostat and sealing windows and doors can result in noticeable savings. For more energy-efficiency tips, visit the company's Web site at http://www.progress-energy.com/save.

Progress Energy, headquartered in Raleigh, N.C., is a Fortune 250 diversified energy company with more than 24,000 megawatts of generation capacity and $10 billion in annual revenues. The company's holdings include two electric utilities serving approximately 3 million customers in North Carolina, South Carolina and Florida. Progress Energy also includes nonregulated operations covering energy marketing and natural gas exploration. Progress Energy was the 2005 recipient of the prestigious J.D. Power and Associates Founder's Award for dedication, commitment and sustained improvement in customer service. For more information about Progress Energy, visit the company's Web site at progress-energy.com.

Photo: http://www.newscom.com/cgi-bin/prnh/20020923/CHM008LOGO-cAP Archive: http://photoarchive.ap.org/PRN Photo Desk, photodesk@prnewswire.com

Progress Energy

CONTACT: Corporate Communications of Progress Energy, 24-Hour MediaLine, +1-919-877-(NEWS) 6397

Web site: http://www.progress-energy.com/http://www.progress-energy.com/save

Source: PRNewswire-FirstCall

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