Duke Customers Could Be Shielded from Storm Hikes

Posted By: Garnie Holmes Industry ,

Duke Energy Florida wants to use savings from a 2017 federal-tax overhaul to cover the costs of restoring power after Hurricane Michael, potentially sparing customers from higher monthly electric bills.

The utility filed a proposal Tuesday at the state Public Service Commission that centers on $221 million in costs from the massive October storm, which, at its height, knocked out power to about 77,000 Duke customers.

Typically, utilities are allowed to recover storm-restoration costs by tacking on extra charges to customers’ monthly bills. In the case of Michael, that could translate to an extra $6.95 on the bills of Duke residential customers who use 1,000 kilowatt hours of electricity a month --- a common industry benchmark.

But the 2017 federal tax law, which included reducing the corporate-income tax rate from 35 percent to 21 percent, created major savings. While Duke would ordinarily need to pass along tax savings to customers, the utility wants to use the money to shield customers from the extra hurricane-related costs. The Public Service Commission last year approved a similar plan to cover Duke’s restoration costs after Hurricane Irma.

Documents filed Tuesday at the Public Service Commission indicate that Duke reached an agreement on the new plan with the state Office of Public Counsel, which represents consumers in utility issues, and the Southern Alliance for Clean Energy, an organization frequently involved in utility cases.

“In essence, the stipulation (agreement) authorizes a continuation of using the tax savings to avoid unnecessary bill adjustments, while simultaneously providing customers with the benefits of tax savings and allowing DEF (Duke) to recover its costs,” the proposal said. “That is, the company foregoes its right to implement the storm recovery charge and the customers forego their right to an immediate reduction in bills as a result of the tax savings stemming from the tax act.”

In a prepared statement, Catherine Stempien, Duke’s state president, pointed to continuing efforts to recover from the Category 5 storm that caused billions of dollars in damage in Northwest Florida. Michael made landfall Oct. 10 in Mexico Beach, east of Panama City, and then barreled north into Georgia.

“The Florida Panhandle is still recovering from the damage to homes, businesses, infrastructure and tourism as a result of Hurricane Michael,” Stempien said. “We appreciate the Office of Public Counsel, Southern Alliance for Clean Energy and other consumer advocates who helped find a creative solution to avoid the cost impact of the significant restoration and rebuild work that was unprecedented on our system.”

Duke serves customers in hard-hit areas such as Bay, Gulf, Franklin and Wakulla counties. Pensacola-based Gulf Power, the largest utility in the Panhandle, has filed a proposal at the Public Service Commission seeking to recover $342 million from customers to pay for its Michael-related costs. The commission is expected to take up that proposal this month.

Article reposted with permission from The News Service of Florida.