FPL ordered to refund customers $365M in January 2010

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Related Companies Florida Power & Light Co. Florida Power Corp. FPL Group Inc. (FPL) Progress Energy Inc. (PGN) Tampa Electric Co. TECO Energy Inc. (TE)

Related Articles 10/27/2009 Florida regulators push back decisions on FPL, Progress rate increases 8/21/2009 Citing fuel savings of $3B, FPL expects drop in 2010 customer bills 3/27/2009 Research & Analysis: Florida Power requests electric base rate increase

Florida Power & Light Co. has been ordered to issue a refund to its customers on their January 2010 bills after collecting more money than it needed to pay for fuel costs in 2009.

The Florida Public Service Commission ordered FPL during a hearing Nov. 2 to pay back its customers a total of $364.8 million it collected through a fuel charge that appears on monthly bills in the form of a one-time credit on their bills in January 2010, PSC spokeswoman Cindy Muir confirmed Nov. 3. The utility overprojected its fuel costs in 2009 by about 6%, Muir said.

Utilities typically reduce the monthly fuel charge the following year when they overcollect for fuel costs, but commissioners decided Nov. 2 that FPL's overcollection should be immediately returned to customers as a one-time refund. (090001)

"It was just so consumers would have that money up front," Muir said.

FPL had said in August that the fuel cost adjustment, combined with the company's pending request for a $1.3 billion base rate increase, would reduce the average residential customer bill about $9 per month in 2010.

The PSC said in a news release Nov. 3 that the monthly charge for the typical FPL customer using 1,000 kWh would decline to $95.43 from $110.72. The credit for the typical customer would be $44.46, but will vary based on the individual customer's usage.

The FPL Group Inc. subsidiary has said its investments in fuel efficiency have significantly decreased the amount of fuel that its power plants use, resulting in fuel costs savings of nearly $3 billion since 2002. FPL expects savings to reach $1 billion annually over 2002 levels beginning in 2014.

The commission began its annual hearings on the fuel cost recovery clause Nov. 2, along with hearings on capacity, conservation and environmental cost recovery.

Utilities are allowed to recover fuel and purchased power costs necessary to meet customer demand through a fuel charge that appears as a separate line item on customers' bills, but they are not allowed to earn a profit and must adjust customers' bills for lower-than-expected fuel costs.

Along with FPL, the PSC has so far approved 2010 fuel and energy charges for Progress Energy Florida and Tampa Electric Co.

Muir said the average Progress Energy Florida residential bill will total $127.26 in January 2010, down from $127.31, but that is not including the company's $500 million rate case now before the commission. The rate case is expected to be decided by March 2010.

Progress Energy Florida is the trade name of Florida Power Corp., a unit of Progress Energy Inc.

The average Tampa Electric residential bill will drop to $113.21 from $114.67 in January 2010 as a result of its approved fuel and energy charges, Muir said. Tampa Electric is a subsidiary of TECO Energy Inc.