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RALEIGH, N.C., Nov. 17 /PRNewswire-FirstCall/ -- State regulators have
approved a plan that will save residential customers nearly $70 on their
electricity bills in 2009, compared to an earlier proposal. The approved plan
reflects an agreement among Progress Energy Carolinas, large industrial users
and the state's consumer-advocacy agency to spread recovery of some fuel costs
over three years, rather than recoup the costs in a single year.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020923/CHM008LOGO-c )
New retail rates for Progress Energy's North Carolina customers take
effect Dec. 1 and reflect record high prices for coal and natural gas in 2008,
as well as costs to implement state-mandated energy-efficiency and renewable
energy programs. For the residential customer using 1,000 kilowatt-hours (kWh)
of electricity per month, the average bill will rise 10.2 percent, from the
current $96.86 to $106.78. Of the total increase, 9.1 percent ($8.82 on a
1,000-kWh bill) is for higher fuel costs, and the remaining 1.1 percent ($1.10
on a 1,000-kWh bill) is for efficiency and renewable energy costs.
Progress Energy Carolinas provides electricity to 1.4 million households
and businesses in the Carolinas, including 1.25 million in North Carolina. The
company files annually to recover the cost of fuel used in electricity
generation - coal, oil, natural gas and uranium. The fuel component in the
company's retail rates reflects the actual cost of fuels used to produce
electricity. By law, the company makes no profit on the fuel portion of its
rates.
Fuel comprises the largest single operational cost for Progress Energy
Carolinas, representing about $1.9 billion in 2008.
In June, the company had proposed an overall increase of 16.2 percent,
including fuel and costs associated with energy efficiency and renewable
energy as mandated by the state's energy legislation, adopted in 2007. The
proposed increase was the largest in more than a decade and reflected the fact
that coal and natural gas prices rose to record levels in 2008. The filing
also reflected a deferred fuel balance expected to be about $300 million by
the end of 2008. This balance includes fuel costs the company has not yet
recovered from prior years.
The approved settlement will spread recovery of those costs over a longer
period, reducing the effect of the increase on customers. Without the
agreement, the 1,000-kWh bill would have risen to $112.57. Thus, the approved
settlement will save customers $69.48 over 12 months (based on 1,000 kWh per
month usage).
"We know that any cost increase is unwelcome, particularly when many North
Carolinians are struggling with rising prices in other aspects of their
lives," said Lloyd Yates, president and CEO of Progress Energy Carolinas.
"Higher prices are a new energy reality, but we're doing all we can to
minimize the effect of cost increases on our customers. We can't change the
global factors that are contributing to higher prices, but we can - and do -
actively manage our use of fuels by negotiating the best possible terms on
supply contracts, by operating our power plants safely and efficiently, and by
encouraging our customers to use energy wisely every day."
Customers are encouraged to visit www.savethewatts.com to learn more from
Progress Energy about using energy wisely and saving on energy costs. Progress
Energy is implementing energy-efficiency programs to help customers save money
and delay the need for building new power plants. The company is aggressively
pursuing a goal of doubling efficiency among Carolinas customers in the next
decade. N.C. Utilities Commission has approved a number of programs and is
evaluating others proposed by the company.
Meanwhile, Progress Energy also is moving forward with renewable energy
sources that make sense for the company's customers. In 2008, the company has
announced contracts to purchase energy produced by three 1-megawatt-sized
solar photovoltaic plants - one each in the N.C. mountains, Piedmont and
coast. The company expects additional announcements on solar energy projects,
as well as projects involving biofuels and other renewable energy sources, in
the near future. The state's energy legislation established a requirement for
N.C. utilities to provide a portion of their retail energy sales from
renewable sources in the future. The requirement starts at 3 percent in 2012
and grows to 12.5 percent in 2021.
Under the plan approved by the N.C. Utilities Commission, commercial and
industrial customers in North Carolina would see the same fuel-related
percentage increase as residential customers. For commercial and industrial
customers, the energy-efficiency and demand-side management and renewable
energy costs vary based on size of the customer, energy usage and other
factors. For the residential customer using 1,000 kWh per month, the
efficiency/demand-side management cost will add 74 cents to the monthly bill,
and the renewable energy cost will equate to an additional 36 cents per month.
Progress Energy Carolinas has maintained a deferred fuel balance
(unrecovered fuel expenses) since 2000 in an effort to minimize the impact of
rate increases on customers. At the time of the June 2008 filing, the deferred
fuel balance was more than $200 million. By the end of December 2008, it is
expected to be about $300 million.
After a slight increase in 2007, the prices of coal and other fuels used
to produce electricity rose sharply in the first seven months of 2008. Between
June 2007 and June 2008, the market price for coal increased more than 160
percent and established several records; natural gas prices rose 55 percent;
fuel oil prices rose nearly 90 percent. Meanwhile, demand for coal in
developing countries, particularly China and India, continues to rise,
creating global supply and price issues.
Coal fuels about half the electricity that Progress Energy Carolinas
generates for its customers. The company's nuclear plants account for the
second-largest portion (44 percent in 2007). Plants that use natural gas and
oil account for about 5 percent, with the remaining generation coming from
hydroelectric plants in central and western North Carolina.
The other major component of the company's retail rates, the base rate,
has not been increased since 1988. In fact, since 1991, the total price of
electricity for Progress Energy Carolinas' N.C. customers has increased only
about 15 percent, while the U.S. Consumer Price Index, a measure of overall
inflation, has increased about 58 percent in that time.
Progress Energy, headquartered in Raleigh, N.C., is a Fortune 250 energy
company with more than 21,000 megawatts of generation capacity and $9 billion
in annual revenues. The company is observing its 100th anniversary in 2008.
Progress Energy includes two major utilities that serve 3.1 million customers
in the Carolinas and Florida. Progress Energy is the 2006 recipient of the
Edison Electric Institute's Edison Award, the industry's highest honor, in
recognition of its operational excellence. The company also is the first
utility to receive the prestigious J.D. Power and Associates Founder's Award
for customer service. Progress Energy serves two fast-growing areas of the
country, and the company is pursuing a balanced approach to meeting the future
energy needs of the region. That balance includes increased energy efficiency
programs, investments in renewable energy technologies and a state-of-the-art
electricity system. For more information about Progress Energy, visit the
company's Web site at www.progress-energy.com.
SOURCE Progress Energy Carolinas
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