Rising Fuel Prices Cause Wholesale Electric Rate Increase
ORLANDO, Fla., Jan. 30, 2001 – Faced with rising prices for oil and gas, the Florida Municipal Power Agency (FMPA) approved a rate increase Jan. 26 that will affect electric customers in 13 Florida cities. The cities are Bushnell, Clewiston, Fort Meade, Fort Pierce, Green Cove Springs, Havana, Jacksonville Beach, Key West, Leesburg, Newberry, Ocala, Starke and Vero Beach.
The price of natural gas has increased nearly 300 percent above where it was a year ago. In January 2000, FMPA paid approximately $2.39 per million British thermal units (a standard unit of measurement for natural gas). In January 2001, the price had risen to $9.25.
FMPA serves the wholesale power needs of 13 municipally owned electric utilities in Florida. FMPA is a nonprofit organization formed by the utilities themselves in an effort to minimize power costs through joint operations.
The members of FMPA voted Jan. 26 to increase the wholesale rate they charge for fuel (the energy rate) from 3.05 cents per kilowatt-hour to 3.85 cents effective Feb. 1. For the average city that purchases 45 million kilowatt-hours per month, the total price of wholesale power for a typical month will increase from approximately $2.1 million to $2.4 million.
Chances are that in most cities the wholesale price increase will result in increased retail costs. How much and when this might impact the bills of retail customers in each city is undeterminable by FMPA.
“FMPA has worked hard to hold costs steady,” said Claude L’Engle, FMPA General Manager and CEO. “For example, we’ve diversified our fuel usage, so that some of our power comes from plants fueled by natural gas, some power comes from coal-fired plants, some comes from oil-fired plants, and some comes from nuclear plants. Since FMPA began serving the cities in 1986, our wholesale power costs have remained stable. And in that time, we saved the cities millions of dollars compared to regional competitors.
“It’s disappointing to incur these extraordinary costs. It’s not just FMPA that’s being affected, though. Utilities around Florida and throughout the nation are raising rates to compensate for increased costs,” L’Engle said.
“Fuel prices have risen dramatically and remained at such a high level, beyond what energy analysts had predicted. That’s why it is necessary for us to raise rates to cover our costs,” L’Engle said. “If, in the future, natural gas prices drop back down to normal levels, FMPA’s costs will come down, and because FMPA is a nonprofit organization, we will return any excess revenue to our customers.”