Utility Seeks OK to Raise Rates: Progress Energy Blames the Need for an Increase on Higher Costs of Coal and Transporting It
Posted on: Saturday, 3 June 2006, 15:00 CDT
By John Murawski, The News & Observer, Raleigh, N.C.
Jun. 3--Progress Energy is seeking to raise electricity rates for residential customers by 8.9 percent to offset the soaring price of fuel required to run the utility's power plants.
If approved by the N.C. Utilities Commission, the rate increase would become effective Oct. 1 and amount to the company's largest increase in more than a decade.
The effect on a typical household would be an additional $8.04 per month, based on 1,000 kilowatt hours of use. The increase for commercial customers would be 10.9 percent and 13.8 percent for industrial customers.
"This is a titanic increase for manufacturers," said Sharon Miller, executive director of Carolina Utility Customers Association, a group known as CUCA that advocates for industrial users. "We would rather dance than fight, but we're ready to fight if we don't reach a reasonable settlement."
A year ago, Progress Energy filed for an even larger rate increase but reached a settlement with state officials to collect about half the increase in the first year. The result was a 4.4 percent increase for residential users -- in effect until Sept. 30. CUCA refused to sign on to the settlement.
Friday's filing is an attempt to recoup the remainder of last year's deferred rate increase, plus additional fuel costs.
"It's cumulative," said Robert Gruber, who runs the Public Staff, the state's consumer advocacy agency for the utilities commission.
State officials are concerned about the impact on the economy if large businesses are forced to absorb electricity costs. The likely result: Another partial cost recovery and a continuation until next year.
"It'll be less than what they're asking for," said Gruber. "We're very close."
A hearing on the expected settlement is scheduled for Aug. 1.
According to Progress Energy, the cost of coal has gone up from about $34 a ton in 2002 to about $52 a ton this year. The cost of transporting the coal has increased from about $14 a ton in 2002 to about $20 a ton today. Coal is the utility's single largest fuel source, used to produce half the electricity Progress Energy generates in the Carolinas. The No. 2 source is nuclear power.
Heidi Deja, a spokeswoman for the company, said the utility has kept down fuel costs.
"We work really hard to insure that we are maximizing the efficiency of our power plants, reducing our reliance on fossil fuels," she said.
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Copyright (c) 2006, The News & Observer, Raleigh, N.C.
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Source: The News & Observer
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