Gulf Power and consumer representative groups agree on customer rates for utility’s largest-ever construction program

Gulf Power Company and consumer representative groups are asking the Florida Public Service Commission to approve a settlement of the request to increase base rates that was filed in July. The utility’s request would help pay for the largest power grid construction program in the history of the company.

Starting last year and continuing over the next three years, the company is building and replacing power lines and infrastructure — some more than 70 years old — to keep electricity flowing to its 430,000 customers. In addition, new lines and equipment are needed to comply with new mandatory federal environmental regulations. The formal request was filed in July.

“Constructive collaboration between Gulf Power and consumer representative groups has led to an agreement among all parties that we believe is in the best interest of our customers,” said Stan Connally, Gulf Power President & CEO. “Most importantly, it supports our current grid construction program — which ultimately helps us continue to deliver long-term, reliable service across Northwest Florida.”

The residential bill in January 2014 for 1,000 kilowatt-hours of electricity is currently slated to be $127.94. If the settlement is approved by the FPSC, that same bill will increase $4.06, an increase of about 3.2 percent. In addition, in January 2015 the price would increase an additional $2.42 per 1,000 kilowatt-hours of electricity. Originally, Gulf Power filed a request that, if approved, would have increased the cost for a residential customer using 1,000 kilowatt-hours of electricity $10.93 per month by the end of 2015.

Connally cited aged, obsolete equipment and facilities that are at or beyond life cycle that must be upgraded and replaced.

“For example, one section of our transmission lines — 70 miles of it — is more than 70 years old,” Connally said. “We have transformers and other equipment operating well beyond their operational expectancy. We must rebuild parts of our system so we can continue to provide reliable service.”

Part of the new transmission line construction is to help the company comply with new federal environmental regulations that will change the way the company operates its plants. The new lines and equipment will be used to ensure voltage stability and reliable power flow throughout the year even if the plants are offline.

“There’s never a good time to raise prices — but our obligation is to have the electricity available when and where our customers need it,” Connally said. “This investment is necessary to meet our customers’ expectations, as well as the new federal environmental regulations.”

Another significant part of this settlement includes new job creation incentives. These incentives would reduce the amount the business pays for electricity by a certain percentage for four years if the business meets certain eligibility requirements.

“Some businesses could apply for incentives for relocating to Northwest Florida or for expanding their existing business in Northwest Florida,” said Connally. “This is another important program in the growing portfolio of economic development programs and activities Gulf Power can use to help draw businesses and jobs to the region.”

Examples of Gulf Power Infrastructure Investments

1. Substations are being added and improved to continue to provide reliable service to our customers. In Pensacola, a substation on Devilliers Street has been rebuilt. On Allison Avenue in Panama City, a new substation has been built.

2. Seventy miles of 70-year-old transmission line is being rebuilt from Panama City to Holmes County.

3. An existing transmission line between Highland City and Holmes Creek substations in the Panama City area is being upgraded to maintain reliability for our customers.

4. A new 38-mile line is being added that begins in the Pensacola area and goes to the Florida-Alabama state line. This project is necessary for mandatory federal environmental compliance.

Gulf Power Price Changes

For residential customers buying 1,000 kilowatt-hours of electricity per month

January 2012

$125.80

Decrease for lower coal, natural gas and environmental costs

March 2012

$122.46

Decrease for lower natural gas costs

April 2012

$126.53

Base Rate increase

July 2012

$116.61

Largest decrease in company history

January 2013

$118.88

Increase for clause filings/base rate increase

January 2014

$127.94

Increase for clause filings

January 2014

$132.00

Base Rate increase

January 2015

 

Base Rate increase of $2.42

 

 

Gulf Power Company is an investor-owned electric utility with all of its common stock owned by Atlanta-based Southern Company. Gulf Power serves more than 430,000 customers in eight counties throughout Northwest Florida. The company’s mission is to safely provide exceptional customer value by delivering reliable, affordable and environmentally responsible electricity while strengthening our communities. Visit online at GulfPower.com or on the company’s Facebook page, “Gulf Power Company.”

 

Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning Gulf Power Company’s construction program, infrastructure investment, and economic growth.  Gulf Power Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Gulf Power Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Gulf Power Company’s Annual Report on Form 10-K for the year ended December 31, 2012, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to the Florida Public Service Commission’s review of Gulf Power Company’s filing to increase retail base rates and the related settlement; the impact of recent and future federal and state regulatory changes, environmental laws, and also changes in tax and other laws and regulations to which Gulf Power Company is subject, as well as changes in application of existing laws and regulations; ability to control costs and avoid cost overruns during the development and construction of facilities; the ability of counterparties of Gulf Power Company to make payments as and when due and to perform as required; catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as influenzas, or other similar occurrences; and the direct or indirect effects on Gulf Power Company’s business resulting from incidents affecting the U.S. electric grid or operation of generating resources. Gulf Power Company expressly disclaims any obligation to update any forward-looking information.