Progress wants 31% rate jump in Florida

N.C. electricity still cheap, for now

Progress Energy wants to raise residential rates 31 percent in Florida next year, offering a glimpse of where the utility's rates could be headed in North Carolina.

For years, North Carolina has enjoyed some of the lowest electricity rates in the nation, but this state is finally beginning to experience the runup in electricity prices that have plagued other regions of the country.

The Raleigh-based power company said Friday that the typical residential rate in Florida could jump from $110.59 to $144.86 a month if that state's regulators approve its requested increases. The company is seeking to recover costs for fuel, nuclear plant investment and clean-air technology at coal-burning power plants.

In this state, Progress has started to request similar rate increases. The N.C. Utilities Commission is considering the utility's request for a 16 percent rate increase. Progress has said it needs it to cover the rising cost of coal and other fuels needed to generate electricity. If regulators agree, the rate increase would go into effect Dec. 1.

Larger cost increases to cover new nuclear plants and other expenses are in the offing.

"I expect further increases next year and into the foreseeable future," said James McLawhorn, director of the electric division of the Public Staff, the state's consumer protection agency in utility rate cases.

For a North Carolina customer who uses 1,000 kilowatt hours a month, the residential bill is now $97. Rising fuel costs have steadily pushed up the utility's residential rate in this state by 20 percent in the past decade.

Officials at Progress Energy and Duke Energy have declined to speculate publicly on how high rates could go here. But a 31 percent rate increase in Florida in one year leaves no doubt that the increases for all Progress customers will be painful.

The company has also given other hints that costs are rising. Part of the 31 percent increase in Florida includes $11.42 a month in 2009 for nuclear costs. By 2015, that cost is projected to nearly triple to $28.73 month. The charge will go down in subsequent years.

Construction on the Florida nuclear plant won't start for at least three years, but the company is already committing millions of dollars for engineering work, metal forgings and other heavy equipment, and wants to recover its investment.

Progress, which wants to add two reactors at its Shearon Harris site in southwest Wake County, has already spent millions of dollars on the project. But it has not yet asked North Carolina regulators to let it recover costs for those expenses. That request could come next year.

The cost estimate for the new reactors has not been released here, but in Florida, two reactors and related transmission facilities are estimated to cost $17 billion.

Another possible expense could be climate-change legislation from Congress that would penalize electric utilities for greenhouse gas emissions from coal-burning power plants. Duke Energy, which operates in five states, is one of the nation's largest emitters of carbon dioxide. Progress Energy is also a major operator of coal-burning power plants.

Duke Energy will raise its residential rates 4 percent on Monday to cover fuel increases. The Charlotte utility is also evaluating options for new reactors in South Carolina.

The utility has received an OK from the N.C. Utilities Commission to spend $230 million through 2009 on site preparation, environmental testing and other development work. Duke has not yet asked regulators for permission to increase rates to pay for these expenses.