Regulators Ready To Grapple With Gulf Power Rate Increase Request

March 20, 2017

State regulators are poised to hear arguments about a request from Gulf Power to raise base electric rates for hundreds of thousands of customers in Northwest Florida, amid opposition from consumer, business and environmental groups.

The Florida Public Service Commission is scheduled Monday to begin a multi-day hearing on Gulf Power’s request for a $106.8 million base-rate increase. Pensacola-based Gulf provides electricity to about 450,000 customers in eight counties and is one of four major investor-owned utilities in the state.

In a document filed last month in advance of the hearing, Gulf said the increase is needed “both to continue to provide reasonable and adequate service to its customers and simultaneously to recover the costs of providing that service including a reasonable and adequate rate of return on invested capital.”

“If Gulf is rendered unable to meet its obligations to the customers and shareholders due to inadequate rates, both stakeholder groups will suffer,” the document said. “The customers will suffer from less reliable service and eventually higher costs of electricity than would otherwise be the case, while the shareholders will suffer from an inadequate and confiscatory return on investment and will seek other places to invest their money.”

But the proposed increase has drawn objections from the state Office of Public Counsel, which represents consumers in utility cases, and other parties ranging from Walmart to the Sierra Club. The Office of Public Counsel and other opponents have argued, in part, that Gulf Power’s base rates should decrease by about $2 million — not increase.

“The ultimate issue to be addressed by the (Public Service Commission) in this proceeding is whether Gulf Power Company needs any additional revenues in order to provide safe, adequate, reliable service, to recover its legitimate costs of providing such service, and to have an opportunity to earn a fair and reasonable return on its legitimate investment in assets used and useful in serving Gulf’s retail customers,” Walmart said in a filing last month. “The evidence offered by intervenor parties … shows that, in total, the answer to this question is that Gulf can indeed fulfill its duty to provide safe, adequate, reliable service with no rate increase at all and probably with a modest overall rate reduction of approximately $2 million per year.”

Public Service Commission hearings in base-rate cases are highly technical and include detailed information about utility finances and operations. Gulf Power’s current base rates stem from a settlement of a 2013 rate case.

A key issue in many rate cases — and likely in the upcoming Gulf hearing — is setting a “return on equity,” a measure of profitability. In its proposal, Gulf Power is seeking an 11 percent return on equity, while the Office of Public Counsel argues the rate should be 8.875 percent.

Another issue in the case involves whether costs related to a Georgia power plant, known as Plant Scherer, should be included in the base rates. Gulf and other utilities have owned stakes in the plant. In the past, Gulf Power sold electricity generated at the plant on the wholesale market but now uses power from the plant for its retail customers.

“Gulf is requesting that the (Public Service) Commission now include in retail rates the portion of (the plant) that is no longer committed under long-term off-system wholesale contracts,” Gulf said in the document filed last month. “This action is necessary to honor the regulatory compact that contemplates that Gulf is entitled to the opportunity to earn a fair return on prudent investments that are used and useful in the public service.”

But the other parties in the case are fighting the proposal to include the costs in base rates. The Office of Public Counsel, for instance, argued that “Gulf is asking the commission to let it put a 30-year-old coal plant in retail rate base after its shareholders had wrung out all of the profit from it in the wholesale market place since it was acquired but never needed for retail rates.”

by Jim Saunders, The News Service of Florida


13 Responses to “Regulators Ready To Grapple With Gulf Power Rate Increase Request”

  1. Retired on March 20th, 2017 11:56 pm

    They asked for X amount, knew they would have a backlash, settled for X/2 knowing that’s all they would get, a story comes out that the consumers win because it is less. Now they have an increase and they tell the consumers they won. I grew in European open market barter system, they always ask for twice what they want to sell it to you for. Saw it coming.

  2. "WELL" on March 20th, 2017 8:13 pm

    What’s the saying ” stick it to the man” I’m not sure but, it clearly says without saying “hey screw the customer ” we have company pickup trucks we have to pay for that sit under trees, we have to pay for guys to go to the shop and get a truck an equipment instead of when they’re called out at the time of the call leaving from home which just about any “on call” company does but gulf power, oooh lets not for get the investors and corporate guys wanting to go golfing so forth and so on, the government sticks it to the man enough. Any corporation for that fact but who has to stay and live below grade because everyone and their stinking mother is MONEY HUNGRY and can’t leave things the way they’ve been or lower the rates to see how much more customers would do/ use if they could afford it. I’m done, this country, corporations, all of y’all SUCK and don’t give two gosh darn hoots about anyone not in your “click” upper class, whatever you want to call it

  3. mike on March 20th, 2017 4:26 pm

    Have not used my AC in going on 2 years, still went from around $165 to $228 a month, what I would call a whopping increase. Now they want more. This is just (unprintable). :mad:

  4. anne 1of2 on March 20th, 2017 11:56 am

    We all have a dog in this fight and mine is gnawing at his chain right now. Let’s try a no lights night to show Gulf Power just how strong 450,000 of us can be. Those investors aren’t going anywhere, they already know how bad the little people are being ripped off or they wouldn’t be invested with GP. So, when is the meeting about starting a second power company? I’ll invest in that, I promise.

  5. Grace on March 20th, 2017 11:35 am

    So all you Gulf Power whiners, here is my advice to you and myself, EREC is a monopoly, no other choice.
    As with ALL utilities.
    I do appreciate turning on a switch and having electrity and sometimes it is up to me how much that bill will be each month.
    Do you complain about that smart phone for each family member plus all the other electronic bills ( cable, direct TV, game stations, etc each month?
    Perhaps we all could cut back on expenses if we really wanted to instead of playing the blame game.
    Have a great day and God Bless !

  6. Grace on March 20th, 2017 11:25 am

    My electricity and water is provided thru Escambia River Electric Co-op. In the past I was home most of the time and could understand the HIGH bills. Due to a family member illness, I am home less than 50% of the time.
    Same HIGH electric and water bill with 50% less usage.
    We have to pay for Digital Remote read meters but still have water meter readers to come out and read those each month.
    Two weeks ago the Digital meters were replaced because they were not working properly.

  7. Helping hands on March 20th, 2017 10:16 am

    If they need more money then stop sending your crews to other areas to help in emergency assistance. I’m all about helping those in need but if your company isn’t doing well financially then maybe it’s time to think of other ways to help those in need instead of expecting others to pay for your humanitarian adventures. I donate all year to the United Way. Keyword is “I” donate. Don’t take recognition for a job well done then ask customers to pay for your kind deed. It feels like you should leave the money in an envelope on the dresser on your way out the door

  8. Shay on March 20th, 2017 10:07 am

    I guess I’m uneducated about this because I can’t figure out for the life of me why I should pay more so “shareholders” see a profit. Aren’t making money? Sell your shares and invest in a more profitable company. I guess I just don’t get it.

  9. David on March 20th, 2017 9:26 am

    Stockholders….let them pay for the increase because its about the money in the very beginning. The Gulf Power ” if you dont” tactic is like extortion and a threat. Gulf Power is a good provider…I want the people working there to be safe on their jobs.
    But dont paint a gloom and doom to all of us under a guise of you not being able to function as a business as no other business constantly asks for these types of constant increases.
    Again…the company trying to appease the stockholders…they never get enough..

  10. James on March 20th, 2017 9:19 am

    GP air public service commercials telling us how to save on kilowatts by having timers, improving insulation and such. Then they turn around and want to jack up the price on the base meter fee. Sounds like a win win situation for them. We use less electricity and they and they still charge us more.

  11. BB on March 20th, 2017 8:54 am

    Gulf Power are becoming a bunch of crooks! Don’t tell me it is the cost of doing business either. Southern Company needs some competition to prevent monopolizing. Maybe we all need to invest in solar power.

  12. tg on March 20th, 2017 5:55 am

    Reminds me of that song Here We Go Again.

  13. marc cayson on March 20th, 2017 5:50 am

    In walnut hill our power bill way usually close to $200 a month. Moved to north Dakota and its usually around $50 a month even in the winter.

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