Dramatic Rise in Fuel Prices Prompts Proposed Cost-Recovery Increase in N.C. Rates
07 June 2008 - 1:59AM
PR Newswire (US)
Fuel component in customer rates tied to spiking costs for coal,
other fuels RALEIGH, N.C., June 6 /PRNewswire-FirstCall/ -- The
same global economic influences that have caused prices to rise
dramatically at the gas pump have pushed up the cost of other fuels
in recent months. The increase - particularly in the price of coal
used in electricity generation - has prompted Progress Energy
Carolinas to seek an increase in the fuel component of the rates
paid by the company's N.C. customers. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020923/CHM008LOGO-c ) The
company today filed a petition to increase rates by about $424
million, to address the significant under-recovery of fuel expenses
from prior years and the anticipated higher expense of fuel for the
next year. The company also has filed to recover expenses
associated with the implementation of energy-efficiency and
demand-side management programs, as well as a renewable energy
portfolio standard, both of which are required under the state's
energy law enacted in 2007. If approved, the changes would equate
to an increase of about 16.2 percent for residential customers
using 1,000 kilowatt-hours (kWh) of electricity per month,
including a 13.61 percent increase for fuel expenses, 2 percent to
recover energy-efficiency and demand-side management expenses and a
flat monthly charge of 46 cents for renewable energy costs. As
filed, the increase would raise the monthly residential price of
1,000 kWh to $112.57 from the current $96.86. The increase would
take effect Dec. 1. Progress Energy Carolinas makes a fuel
cost-recovery filing annually in North Carolina, to recover the
cost of fuel used to provide electric service to the company's 1.25
million N.C. customers. The Utilities Commission reviews Progress
Energy Carolinas' fuel costs and adjusts the fuel component of
customer rates accordingly. By law, the company makes no profit
from the fuel component of rates. In April, the company made its
annual fuel expense filing in South Carolina. Commercial and
industrial customers in North Carolina would see the same
fuel-related percentage increase, 13.61 percent. For commercial and
industrial customers, the energy-efficiency and demand-side
management and renewable energy costs vary based on size of the
customer, energy usage and other factors. Progress Energy Carolinas
has maintained a deferred fuel balance (unrecovered fuel expenses)
since 2000 in an effort to minimize the impact of rate increases on
customers. Over time, that balance has grown and is expected to be
approximately $300 million by the end of 2008. After a slight
increase in 2007, the prices of coal and other fuels used to
produce electricity have risen sharply. Since June 2007, the market
price for coal has increased more than 160 percent and has
established several records thus far in 2008; natural gas prices
have risen 55 percent; fuel oil prices have risen 87 percent.
Meanwhile, demand for coal in developing countries, particularly
China and India, continues to rise, creating global supply and
price issues. Coal fueled about half the electricity that Progress
Energy Carolinas generated for its customers in 2007. The company's
nuclear plants accounted for about 44 percent. Plants that use
natural gas and oil accounted for about 5 percent, with the
remaining generation coming from hydroelectric plants in central
and western North Carolina. The other major component of the rates,
the base rate, has not been increased since 1988. In fact, since
1991, the total price of electricity for Progress Energy Carolinas'
N.C. customers has increased only about 15 percent, while the U.S.
Consumer Price Index, a measure of overall inflation, has increased
about 58 percent in that time. "Any price increase has an impact on
our customers, and we are very sensitive to that fact," said Lloyd
Yates, CEO and president of Progress Energy Carolinas. "Rising fuel
prices are a new energy reality, and we will continue to work to
meet the challenges of a growing service area reliably, affordably
and in an environmentally sound manner. Even though we cannot
control global economics that affect fuel prices, we are focused on
managing the costs that we do have control over. We're doing all we
can to operate our plants and facilities as efficiently as
possible. We're pursuing a balanced energy strategy that includes
investments in renewable energy sources, new programs to help our
customers use energy wisely every day, and a state-of-the-art power
system." The company has filed a number of proposed
energy-efficiency and demand-side management programs and will
introduce additional programs this year. Meanwhile, customers can
save up to 20 percent on their energy costs by making simple
changes at home. Cleaning air filters, replacing incandescent light
bulbs with compact-fluorescent bulbs, adjusting the thermostat and
sealing windows and doors can result in noticeable savings. For
more than 100 energy-efficiency tips, visit the company's Web site
at http://www.savethewatts.com/. Progress Energy, headquartered in
Raleigh, N.C., is a Fortune 250 energy company with more than
21,000 megawatts of generation capacity and $9 billion in annual
revenues. The company will observe a century of operation in 2008.
Progress Energy includes two major utilities that serve 3.1 million
customers in the Carolinas and Florida. Progress Energy is the 2006
recipient of the Edison Electric Institute's Edison Award, the
industry's highest honor, in recognition of its operational
excellence. The company also is the first utility to receive the
prestigious J.D. Power and Associates Founder's Award for customer
service. Progress Energy serves two fast-growing areas of the
country, and the company is pursuing a balanced approach to meeting
the future energy needs of the region. That balance includes
increased energy efficiency programs, investments in renewable
energy technologies and a state-of-the-art electricity system. For
more information about Progress Energy, visit the company's Web
site at http://www.progress-energy.com/.
http://www.newscom.com/cgi-bin/prnh/20020923/CHM008LOGO-c
http://photoarchive.ap.org/ DATASOURCE: Progress Energy Carolinas
CONTACT: Corporate Communications 24-Hour Media Line,
+1-919-877-(NEWS) 6397 Web site: http://www.progress-energy.com/
http://www.savethewatts.com/
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