Tampa Electric Company

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Tampa Electric Company
April 13, 2009
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Regulation of theFlorida Investor-OwnedElectric
Utilities Mayors Citizen / Tampa
ElectricConservation Task Force April 13, 2009
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Tampa Electric Service Area
Hernando
Orange
Sumter
Lake
Dade City
Osceola
Pasco
Winter Haven
Oldsmar
Polk
Hillsborough
Pinellas
Hardee
Manatee
Highlands
Sarasota
De Soto
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Tampa Electric Statistics

• Service Territory Population 2008 1,443,323
• Customers 2008 667,266
• Residential 587,602
• Commercial 70,770
• Industrial 1,421
• Other 7,473
• System Peak 4,352 MW in August 2007
• Average Residential Customer Use 2008 14,545
  kWh
• Total Generation Capacity 4,600 Megawatts
• Generation Mix
• 60 Coal
• 40 Natural Gas
• Less than 1 Oil
• Total Plant Investment 2008 5.9 Billion

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Regulatory Oversight

• Regulatory statutes
• Impose a legal obligation to serve all customers
• Leaves the day-to-day operation and
  decision-making in the hands of Tampa Electrics
  management
• Agencies that regulate Tampa Electric
• The Federal Energy Regulatory Commission (FERC)
• The Florida Public Service Commission (FPSC)

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State Regulation

• FPSC
• Five member panel appointed by Governor serving
  four-year terms
• Industries regulated by FPSC
• Electric natural gas IOUs, water wastewater
  IOUs, telecommunications companies
• Exercises authority in key areas
• Rate base / economic regulation
• Monitoring of safety, reliability and service
  issues
• Limited jurisdiction over municipals or coops
• Territorial boundaries, bulk power supply
  operations and planning

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FPSC Commissioners
Carter Appointed Jan. 06 FL Bar Minister

• Edgar
• Appointed Jan. 05
• ChairmanFL Bar DEP

McMurrian Appointed Jan. 06 PSC Staff MBA

• Skop
• Appointed
• May 07
• B.A.E. MBA FL Bar

Argenziano Appointed May 07 StateSenator
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Regulatory Oversight

• Tampa Electric must seek FPSC approval to change
  its prices (Rate Case)
• Tampa Electrics rates are designed to cover all
  its prudent costs for providing electric service
• Day-to-day operating expenses
• Cost of operating maintaining its power plants,
  substations, power lines, etc.
• Opportunity to earn a fair rate of return
  (profit) for investors

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Retail Rate Design

• Retail rates
• Covers allocated costs to serve each customer
  class
• Includes fair rate of return
• Criteria for sound rate design
• Simple, understandable and acceptable by the
  public
• Revenue and rate stability from year to year
• Fairness of rates and avoidance of undue
  discrimination or subsidization proper cost
  of service
• Same rates must apply across the entire service
  area
• Promotion of efficient use of electricity

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Residential Rate/Bill Components
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Cost Recovery Clauses

• Cost recovery or pass thru clauses
• Costs approved by the FPSC
• Dollar-for-dollar recovery
• Current clauses
• Fuel Cost Recovery Clause (Fuel Clause)
• Capacity Cost Recovery Clause
• Environmental Clause (ECRC)
• Energy Conservation Cost Recovery Clause (ECCR)
• Each clause requires annual filings
• Projection filing of expenditures for the
  upcoming year
• True-up filing of expenditures for previous year

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Final Thoughts

• Tampa Electric has a legal obligation to serve
  all customers
• Tampa Electric is granted an opportunity to earn
  a fair rate of return on rate base and selected
  clause components
• Tampa Electric must demonstrate costs have been
  prudently incurred for recovery to occur base
  rates or clauses
• Cost recovery clauses do impact the overall price
  of electricity

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QA