Natural Gas Prices Increase
As the rest of the United States marches towards energy independence, Florida seems to be moving in the opposite direction. Instead of embracing the cheaper and more efficient solar power, the so-called Sunshine State has been expanding its natural gas generation capacity for the next decade. As a result, Florida residents will disproportionately bear the financial burden when natural gas prices increase.
That’s exactly what’s about to happen. On Monday, July 19, 2021, Tampa Electric and Duke — two of the largest utilities the state combined total of about 2.7 million customers — requested the Florida Public Service Commission to approve a proposal that would raise their customers’ electric bills from September through December.
And it’s not just these two. Earlier in April, Florida Power & Light made a similar request, which the Public Service Commission subsequently approved.
Rising Natural Gas Costs
As expected, the two utilities (Tampa Electric and Duke) cited rising gas costs as the reason for the increase in the cost of electricity. Florida’s reliance on gas for power generation (70%) is one of the highest in the country. To deliver electricity to their customers, Florida utility companies spend a lot of money — usually to the tune of hundreds of millions of dollars — on natural gas. The utilities, in turn, pass this cost to their customers.
According to the Tampa Electric filing to the Public Service Commission, the increase in natural gas prices was caused by the skyrocketing demand for liquefied natural gas exports, static production, and low natural storage levels. And things are just getting started. In the same filing, the company also stated that rising gas prices are expected to linger throughout 2021 and continue into 2022.
The production of natural gas in the US saw a dramatic reduction during the early months of the coronavirus pandemic. Production has been gradually increasing since then, but not at the same pace as demand. The slower increase in production has kept the inventories low and prices high. The same applies to gasoline, meaning that the rising energy costs will also be hitting your wallet at the gas pump.
Rising electric bills in the middle of the year are nothing new. Every year, the Florida Public Service Commission sanctions projected fuel costs baked into your electric bill. If the actual cost of fuel exceeds the projected costs by more than 10%, power companies can ask for approval to raise electric bills mid-year from the Public Service Commission. This practice is known as an ‘under-recovery.’
Usually, the Public Service Commission approves mid-year corrections. The only thing utilities have to do is show how much they spent on fuel and pass any additional costs to the consumer. This hike in electric bills allows the utilities to recoup the unexpected increases in the cost of natural gas. If approved, the proposals by Tampa Electric and Duke will considerably increase the electric bills for Floridians served by these two utilities.
How Much Will Your Electric Bill Increase Under These Proposals?
So, by exactly how much should you expect your electric bill to rise? You know, if the folks at the Florida Public Service Commission were to approve these proposals — and they most likely will. The exact figure will be different for Tampa Electric customers and Duke customers. The latter could see an increase of $4.28 per month starting from September or October.
Similarly, Tampa Electric customers who use 1000 kWh hours of electricity per month could see their monthly electric bill rise by a whopping $12.82 from September through December of 2020. While electricity consumption varies widely among residents, the utility industry uses a 1000 kWh residential bill as a benchmark when making these calculations.
So, what can Florida homeowners do to avoid the disproportionately high utility bills? Switch to clean and more affordable alternatives such as solar. Go Solar Power can help you install Solar, Battery, and Roof solutions to meet your Home’s energy needs. Get a free quote today.