Electricity rates to rise

Electricity rates to rise

By Deborah Nelson
August 1, 2008

With the company posting a $21 million net income so far this year, Gulf Power customers will see a double-digit rate hike through 2009. The increase will cover higher fuel rates, according to a company press release.

Gulf Power does not absorb fuel costs of doing business. Instead, those expenses are passed onto customers.

Florida’s Public Service Commission has approved a company request to raise rates to compensate for increased fuel costs.

The company must notify the PSC of fuel costs that go 10 percent above or below projected expenses, according to PSC spokesperson Cynthia Muir. The company may then request a rate increase to compensate for losses – or more rarely, must refund overages to customers.

Residential customers will absorb an 11.3 percent hike, and commercial customers will pay about 15-18 percent more through 2009.

In the company press release, Gulf Power cited a $76 million shortfall in 2008 revenues as cause for the increase.

That shortfall is the projected amount fuel is expected to increase this year, according to company spokesman Jeff Rogers.

Gulf Power reported a net income of $87.9 million in 2007, according to the U.S Securities and Exchange Commission. That’s up from $79.2 million in 2006 and $75.9 million in 2005.

In the first quarter of this year, Gulf Power reported a net income of $21 million, up from $19 million during the same time last year.

The company paid $150.1 million for fuel between January and March 31 of this year. That’s an increase from $146.4 million during the same time last year.

Gulf Power’s 2007 10K Annual Report form includes the following executive salaries, per the SEC:

Susan N. Story President and Chief Executive Officer $396,084
Ronnie R. Labrato Vice President and Chief Financial Officer $242,959
P. Bernard Jacob Vice President $223,637
Theodore J. McCullough Vice President $182,973
Bentina C. Terry Vice President $209,572

Undisclosed company officials also receive tax-deferred compensation benefits and various stock benefits, according to the Annual Report. Gulf Power’s parent company, Southern Company, is publicly traded.

With local businesses suffering the current downturn, has Gulf Power considered taking a hit on fuel-related costs of doing business?

The company must pass fuel costs onto customers by Florida law, says Rogers.

“There’s nothing we can really consider there,” he remarked.

Rogers says Florida fuel consumption has increased 17 percent over the past 20 years.

Could Gulf Power survive as a private, for-profit service without passing fuel costs on to customers?

“I doubt it,” says Rogers. “Just like any business costs, they have to pass it onto their customers.”

Gulf Power offers training and information to aid customers in conserving energy. Their website is www.gulfpower.com