PENSACOLA, Fla. - Nov. 8, 2006 - Rising national fuel prices – primarily for coal – are causing an increase in electricity prices for Gulf Power Company customers. The Florida Public Service Commission has approved a 10 percent price increase for residents to go into effect Jan. 1.

The PSC adjusts utility prices each January to reflect the cost of the fuels used to make electricity. Fuel costs are charged directly to customers, with Gulf Power retaining none of the increase.

The impact on the residential customer will be an increase in the price of 1,000 kilowatt-hours from $92.34 to $101.87.

"Just like many other businesses, our prices have been impacted by rising fuel costs," John Hutchinson, Gulf Power spokesman said. "The good news is our customers will still pay the lowest electricity prices of all the major utilities in Florida."

The annual January price adjustment takes into account what Gulf Power paid for fuel – coal and natural gas – the previous year and the projected costs for the coming year. Because of sharp increases in coal prices in 2006, Gulf Power is paying $40 million more for coal than the company will recover from customers in 2006.

"As demand for electricity continues to rise we constantly look for ways to diversify our fuel mix and keep fuel costs as low as possible," Hutchinson said. "Being tied into the Southern Company electrical grid allows us to deliver the lowest cost generation, whether that's coal, natural gas, hydro or nuclear power."

As Northwest Florida grows, the total demand for electricity from Gulf Power has increased more than 80 percent in the last 20 years from 6 billion kilowatt-hours to more than 11 billion.

Even without the growth, Hutchinson said existing Gulf Power customers are buying more and more electricity each year. In-home electricity consumption has grown more than 24 percent in the last 20 years.

"As demand continues to go up it impacts fuel supplies and that can contribute to higher fuel prices," Hutchinson said. "Our prices are still below the national average, but rising fuel costs will continue to be a challenge for all utilities."

Gulf Power offers free energy audits to identify energy efficiency measures that can be taken to save homeowners and businesses money on their electricity bills. The company also offers a number of payment options and programs to help customers smooth out payments during high-bill months. Plan details and energy-saving tips are available online.

"No one likes a price increase, including us," Hutchinson said. "But it's simply a matter of fuel prices being higher during 2006 and 2007 than what our prices were set at last January."

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