Potential rate increase ahead for Duke Energy customers

Pinellas County’s electric provider recently announced that it plans to pass soaring fuel costs to customers beginning in January 2023.

In the Sept. 2 announcement, St. Petersburg-based Duke Energy Florida said it would seek approval from the Public Service Commission (PSC) for a double-digit rate increase. Tampa Electric (TECO) proposed a similar hike for its customers. Duke Florida serves 35 counties and nearly 2 million customers throughout the state, and roughly a quarter, or about 500,000, reside in Pinellas.

Ana Gibbs, corporate communications manager, said customers could see a 13% rise in their bills from December to January. However, she noted Duke Florida passes fuel cost increases onto the customer with no additional markup, meaning the company will not profit from the rate hikes.

“Since the beginning of the year, we have seen natural gas costs more than double,” said Gibbs. “There’s a really low supply and greater demand for natural gas. We haven’t seen it stabilize yet, and so it continues to be extremely volatile.”

Duke Energy Florida’s St. Petersburg headquarters.

Gibbs explained that while the company does not provide natural gas to homes, the utility uses it as fuel for its power plants. She said the company continues to diversify its fuel mix, with an increasing number of solar stations and two coal units in Crystal River.

Duke Florida began investing heavily in solar power in 2018, and Gibbs said that by 2024, the company would dedicate $2 billion to produce nearly 1,500 megawatts of renewable energy from 20 solar plants. However, as those stations rely on sunlight, she noted the importance of utilizing natural gas to offset overnight production and cloudy days.

In addition to increased demand, explained Gibbs, natural gas prices have more than doubled this year due to stagnant production, increased exports to Europe and Asia and low storage inventories. She noted that Duke Florida has yet to raise its rates accordingly, leading to what is called “under-recovery.”

That means the fuel costs are higher than what customers have paid this year. Gibbs said Duke did not ask for those under-recovered costs in its Sept. 2 filing with the SPC.

“What we did is basically just adjusted the costs for the 2023 fuel costs,” she said. “So, that’s the 13% increase … obviously there’s other costs involved, but I would say the majority of the increase that you’re seeing in 2023 is related to those fuel costs.”

Gibbs added that Duke officials withheld the 2022 under-recovered fuel costs in the hopes that the market would stabilize. She said they are continuing to monitor the situation over the next few months to determine when is “the right time” to file for those charges.

The company, said Gibbs, could file for this year’s under-recovered costs later this year or early next year, depending on the market.

She explained that electric providers must notify the PSC anytime they over or under-collect more than 10% of fuel costs.  “It doesn’t mean we have to collect it,” she added.

Gibbs realizes many residents already struggle to keep up with soaring prices. According to the latest Consumer Price Index, released Sept. 13, household goods remained 8.3% higher last month compared to August 2021. Rent and food costs continue to lead the historic inflation rates.

“We recognize that when it comes to our customers, they are experiencing what I would say are unprecedented price increases throughout all of their lives,” said Gibbs. “It’s not just their electric bills.”

Duke Florida, said Gibbs, offers different levels of assistance depending on a customer’s situation. These include budget billing, which allows people to pay one predictable amount each month, choosing their due date and a management and tracking program through the use of “smart meters.”

If customers cannot afford to pay their bills, Gibbs said Duke Florida works with outside agencies that provide payment assistance and called disconnection a “last resort.” While she relayed that the company proactively reaches out to customers to offer support, she stressed the importance of residents contacting the company when a need arises.

“It’s easier to find assistance when they are first in a situation,” said Gibbs. “Rather than allowing bills to build up over time. As soon as you may need assistance, reach out to us so that we can help.”

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