With natural gas prices remaining higher than normal, Progress Energy Florida has asked the Florida Public Service Commission to approve a cost adjustment — primarily related to rising costs of fuel — that will increase residential bills 6.5% beginning Jan. 1, 2004.

Progress Energy noted that it was able to offset 22% of the increase to fuel as a result of early termination of buyout costs on five more expensive long-term power contracts.

“High demand and tight supplies for natural gas have driven fuel prices up and created increased costs for utilities nationwide,” said Bill Habermeyer, CEO of Progress Energy Florida. “Progress Energy Florida’s size and scale will help minimize most impacts. Our average monthly cost will still be lower than our pre-2000 merger rates.”

The company added that the majority of the adjustment is due to the increased costs of fuel used to generate electricity. In March 2002, gas prices on the wholesale commodities market were $2.38/MMBTU; in March 2003, the price had risen to $9.13/MMBTU — an increase of more than 280%.

Progress Energy uses natural gas to produce 1,939 MW of electricity, enough to supply roughly 1.2 million homes and businesses with power. In addition to the fuel costs, the remainder of the increase is for environmental cost recovery, but these increases are reduced by savings in capacity cost recovery and energy conservation.

Currently, Progress Energy’s residential customers pay $83.71 per 1,000 kWh, nearly 10% below the national average. If the current request is approved by the FPSC, bills will rise to $89.16 per 1,000 kWh beginning Jan. 1, 2004. A decision is expected from the FPSC on Nov. 12, 2003.

“Even when fuel and electricity costs are low, we promote conservation and responsible use of energy by our customers,” Habermeyer said. “We encourage our customers to visit our Web site or call our customer service center to learn about energy efficiency and programs we offer to help conserve energy and manage their electricity bills.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.