Q: Why did Progress Energy Florida file a request to delay a base rate increase?

A: Florida law provides for the company’s proposed base rates for 2010 go into effect on Jan. 1, 2010 subject to refund with interest, until the PSC makes a final decision on the case. The Nov. 2 filing would delay the proposed base rate increase until after the final PSC vote, which is currently scheduled for Jan. 28, 2010.

If the PSC adheres to the Jan. 28, 2010 schedule, base rates would be effective in customers’ March 2010 billing cycle.
 
Q: Why does the company need PSC’s approval to decide against implementing a base rate increase?

A: As a regulated utility, any changes to Progress Energy Florida’s rates must be approved by the PSC. Since the commission delayed its decision on the company’s rate case, under the normal process the company’s proposed base rates for 2010 would go into effect on Jan. 1, 2010. PSC approval is necessary to avoid the Jan. 1, 2010 implementation of the proposed base rates.

Q: If the request to delay the increase is approved, how much will Progress Energy Florida customers pay for power in January 2010?

A: If the PSC grants Progress Energy’s request to delay the base rate increase, and based on all the approved clause filings to date, the total 1,000 kWh residential customer bill will remain relatively flat in January 2010 – a $0.05 decrease over current prices. 

The average commercial customer bill would decrease 3-5 percent and the average industrial customer bill would decrease 3-7 percent starting with the January 2010 bill.

Q: How much will Progress Energy Florida customers pay in January 2010 if the PSC denies the company’s request?

A: If the PSC denies the company’s request and the company follows the normal procedure, the total customer bill will be $ 136.92 per 1,000 kWh, based on all the approved and pending clause filings - an increase of $ 9.61 (about 8 percent) over current prices starting with the January 2010 bill.

The average commercial customer bill would increase 4-7 percent and the average industrial customer bill would increase 7-10 percent starting with the January 2010 bill.

Q: Throughout its rate case proceedings, Progress Energy Florida repeatedly asserted the immediate need for a base rate increase. Does this request mean Progress Energy Florida no longer needs the total proposed base rate increase?

A: No. The needs outlined by Progress Energy Florida during the company’s base rate proceedings remain very real. However, the company wants to balance its real need for a base rate increase with the commission’s desire to take more time and to allow the new commissioners to vote on this case. Progress Energy Florida is therefore asking the commissioners to let them defer the base rate increase until after a final decision is made.

If approved by the PSC, the collection of any base rate increase required in January and February would be deferred to subsequent months.

Q: What do base rates entail?

A: Base rates cover a regulated electric company’s cost of producing and delivering electricity to customers’ homes and businesses including maintenance expenses for power plants, power lines and similar costs. The current base rate is 36 percent of the total residential customer bill and does not include fuel, the cost of energy conservation, government-mandated environmental projects, gross receipts taxes and local government fees and taxes.

Base rates also include the opportunity to recover a reasonable return on the equity portion of the company’s capital. Electric utilities are extremely capital-intensive. Large investment requirements in plants, transmission and distribution lines and other infrastructure impose heavy and frequent capital requirements. As a result, it is important that utilities are well-regarded in the investment community – and provide reasonable returns to attract investors. Investors are the company’s primary source of the capital needed to expand facilities to serve customers.

It is in the best interest of our customers for our shareholders to earn a fair return on their investment in our company. Without satisfied shareholders, everything becomes more expensive for customers. Progress Energy competes with other electric utilities and other companies in other industries for investors. Funds from these investors provide the resources for a variety of capital projects and help the company to meet the future energy needs of its customers. Having a strong Total Shareholder Return value is what attracts these investors. This is particularly important in today’s volatile and shrinking capital markets.

Q: What will the 2010 base rate adjustment cover?

A: The base rate adjustment is needed to cover, among other investments:

• A steam generator replacement project at the existing Crystal River nuclear unit to ensure that customers will continue to receive state-of-the-art performance from the company’s only nuclear generation plant. This unit provides around-the-clock, carbon- and emission-free electricity from the lowest cost fuel source currently available to the company.
• A repower of the Bartow plant to switch it from oil-fired generation to cleaner, more efficient natural gas. The change is significantly reducing emissions from the site as well as lowering fuel costs for customers.  Based on current fuel price estimates, this plant improvement will save customers $83 million in 2010 and could be higher in subsequent years depending on the price of fuel.
• Critical transmission and distribution system upgrades, and operations and maintenance projects. These improvements, many of which are federally mandated, will further strengthen the system for storms, enhance reliability and ensure customers have continuous access to safe, reliable power.

Q: Has the company done everything it can to avoid a base rate increase?

A: Yes.  Progress Energy Florida’s base rates have remained relatively stable for more than two decades. However, Florida public policy requires the company to make significant investments to secure Florida’s energy future with a cleaner, more diverse energy portfolio. The base rate adjustment is necessary to help cover the costs of those investments.

Q: What else is Progress Energy doing to help customers manage their energy costs during these challenging economic times?

A: Customers who need help paying their electric bills can apply to receive assistance through the Energy Neighbor Fund. Since the program began in 1988, it has provided more than $8 million in assistance to families in crisis. For more information, visit www.progress-energy.com or call toll-free 1 (800) 700-8744. To help customers with higher bills, Progress Energy also offers several programs:

Home or Business Energy Checks: This is a free evaluation of your home or business to analyze its overall energy use and help you save energy and money. For more details, visit www.savethewatts.com or call toll-free 1 (888) 302-8348 (Home Energy Check) and 1 (877) 372-8477 (Business Energy Check).

Budget Billing: This free program helps customers on fixed incomes or others who need a consistent bill to forecast monthly energy costs and better plan their finances. Customers pay an average amount that is approximately the same each month. Visit www.progress-energy.com for more information.

EnergyWise: Customers can earn more than $145 per year by allowing Progress Energy to temporarily cycle off power to their central heating or cooling, hot water and pool during periods of peak community demand. For more details, visit www.savethewatts.com.