Consumers in West Central Florida are pretty worried about TECO’s upcoming rate rise. But how bad is it? What are the consumers saying about it?
We will answer all this in today’s post and provide a probable solution to the problem.
How Much is Tampa Electric (TECO) Increasing Rates by?
TECO had proposed earlier this year to raise tariffs amounting to $445 million over the next 3 years in increasing rates. While the hike was proposed over a 3-year period, the proposed bill increase for small to medium consumers was significant starting from January of 2025. This proposal eliminated any TECO rate increase 2024 but proposed significant increases in the coming 3 years.
According to some back-of-the-envelope calculations, spread across 3 years, Tampa Electric will increase tariffs by 20%. Let’s say an average household pays $4200/year ($350 per month) in electricity costs. In the first year, the consumer is likely to pay 12% more followed by a 5% hike in the second year and another 3% in the third year. Cumulatively it’s a 20% hike across 3 years but that’s not all.
A couple of years back there was another hike of close to 17%. That’s a whooping 40% increase in just 5 years. So, if a homeowner was paying $4200/Year earlier in electricity bills that now goes up by $1680/year in a matter of 5 years which is sure to upset the budgets of many households. With 1 in 5 Tampa Households already burdened by energy bills, this hike will surely make homeowners cut back on the essentials just to pay electricity bills.
And what’s the guarantee that TECO won’t increase prices again?
In all likelihood it will. That means over a period of 10 years you might end up paying thousands of dollars extra in energy costs if you rely on public utility companies.
With more than 8,40,000 customers impacted across Polk, Pasco, and Pinellas Counties, the overall impact of this hike is going to be significant.
According to a report by the Florida Public Service Commission, historically, electricity costs in Florida have remained higher than the neighboring states. Such high electricity prices are already putting a burden on the consumers. According to some estimates, roughly 1 in 5 Tampa Households are energy burdened and spend around 6% of their income on energy bills. That’s why this additional hike in prices is not being well-received by the customers.
The hike is even more painful when you take into account the rise in electricity costs in the last few years. An analysis by the Tampa Bay Times, revealed that 2 years ago the electricity prices jumped by 17% and then the trajectory has been upward.
Most Floridians are already plagued by high inflation, and this rise in electricity costs is sure to dent their budget.
Tampa Electric’s Justification:
Sure enough TECO has a justification for the same. In fact, multiple justifications which we will cover below.
1. Improved Shareholder Return
Tampa Electric wants to boost its margins through this price rise. The expanded margins will certainly please its shareholders since that would, in turn, boost shareholder returns.
According to Fox13 News, one of the reasons for TECO to increase prices is to boost shareholder returns. While boosting shareholder returns is necessary for every business, many are terming it to be nothing more than greed as per this news report.
With so many solar incentives in Florida, there is no reason for Floridians to suffer due to such greed. They can simply harness this renewable source of energy.
2. Company Headquarters Payment
There is no formal announcement about the same but news outlets like Fox13 are also reporting that the company’s headquarters is also the reason behind this price rise.
3. New Solar Projects
One of the main reasons behind TECO Increased Rates is because it is investing in solar projects. Since the infrastructure cost is piling up, TECO is raising tariffs to ensure it has sufficient funds for investment.
4. Automation of responses to outages
TECO also stated that infrastructure investment will automate responses to certain outages. This will help customers since it would mean faster power restoration after natural calamities like the recent Hurricane Milton.
5. Inflation
Above, we highlighted how consumers are already stung by skyrocketing inflation. The company has also cited this reason for this proposal to increase the electricity tariffs over 3 years.
6. Rising fuel prices
TECO uses natural gas in significant proportions to generate electricity. The price of natural gas has gone up over the years, which is another reason Tampa Electric has proposed a rise in electricity prices.
Regulatory Review Process
The 2021 Florida Statutes mandates that any rate changes by public utility companies should be approved by the Florida Public Service Commission (FPSC). FPSC has the authority to determine and approve or disapprove fair rates including rate hikes. The commission can also deny the rate hikes if it deems them unreasonable.
FPSC has approved a rate hike by TECO. However, instead of the initially proposed hikes, FPSC staff called for increasing the tariffs by $153.4 mn in 2025, $74.7 mn by 2026, and nil increase in 2027.
The good news is that instead of the $20 per month increase in tariffs, with the modified proposal approved by FPSC, the rise will be between $9 to $13 per month in 2025 as per AOL. The subsequent hike in 2026 will be lower and nil in 2027.
According to the commission, these raises will enable TECO to raise its ROE to 10.5% instead of 11.5%, which TECO had initially proposed. It seems like FPSC found a middle way out. However, the problem hasn’t been solved entirely since it still means the electricity bills will go up for at least 2 years.
Customer Reactions
A single look at relevant Florida subreddits will tell you how disappointed consumers are with this price rise.
The basic premise being companies like TECO are going after profits at the cost of consumers.
Rate Changes of Other Florida Utility Companies:
Of course, it’s equally important to consider the tariff changes made by other companies operating in Florida.
Let’s take Duke Energy as an example. It tabled a proposal to hike tariffs, but the bills are expected to increase by only 2% per annum over the next 3 years. However, the trajectory is still up.
Impact on Large Customers
The original proposal by TECO put the burden of price rise on small consumers which meant residential users experienced the most price hike. While FPSC has reduced the extent of overall rate hike, the burden of price rise still remains on the residential
consumers.
That’s because consumers who use more energy during the peak months are likely to pay more. Since most homes use more power in peak months, most of the burden will be on small residences.
On the other hand, ongoing cost shifting is favorable for corporate entities, hospital groups, and even industrial complexes.
Potential Solution to TECO Raising Rates
Many Floridians have now realized that as long as they remain reliant on public utility companies they will be susceptible to such price rises every few years. Many of those who aren’t comfortable with spending over $25,000 in the next decade or so have found a solution to this problem.
The solution is going solar.
Going solar helps them counter this problem in multiple ways:
1. Quick breakeven
A solar energy system can break even in 5 to 7 years, depending on your energy usage. The lifespan of a solar power system is around 25 years. This means that you will make money from the system for the rest of the period. Moreover, since the maintenance of a solar energy system is negligible, you need not worry about any additional expenses either.
2. Multiple purchase options
Many homeowners don’t prefer to spend a few thousand dollars in down payment for a solar energy system. However, worry not!
If you want to spend less, you have 2 options.
- Financing:
We at Current Home provide interest rates as low as 1.9%, depending on your credit profile. Additionally, you don’t have to put anything down.
- Leasing:
Another option is leasing a solar energy system, which helps you break even from month 1 since the lease amount paid per month is lower than your electricity bill.
3. Direct consumption of renewable energy
One of the primary reasons TECO is going for a price rise is to invest more in solar infrastructure. If you need to utilize renewable energy either way, why not do it directly?
When you eliminate a middleman like the public utility company, you will, of course, save money.
4. Can sell back power to utility companies
With Net Metering policy active in Florida, you can also sell excessive power back to the grid and get credits for it. Doing so, will reduce the bill to almost 0 which is another reason why it makes sense to go solar.
5. Value increase
Going solar reduces your electricity bills and reliance on utility companies, and it also increases the value of your property.
FAQs
Are TECO and Tampa Electric the Same?
TECO Energy has multiple subsidiaries. One such subsidiary is Tampa Electric.
How Much Will My Electricity Bill Increase Under the New Rates?
After the scaled-back proposal approved by FPSC, the average household’s monthly bill is likely to go up by 10% in 2025. This will be followed by another 5% in 2026. This comes on the back of a 17% hike a couple of years ago which means consumers are likely to face close to 40% hike in 4 years.
How Will This Rate Increase Affect Homeowners?
The proposal approved by FPSC is likely to increase costs of electricity by 15% over 2 years. For example, an average homeowner paying $4200/Year in electricity costs will have to pay $630/year extra once these hikes kick in. On top of that it is very likely that public utility companies might increase tariffs again after a couple of years.
Are There Any Assistance Programs Available to Help With Higher Electricity Bills?
The Low Income Home Energy Assistance Program is available for low-income households to help them with their energy needs. However, going solar with no money down or leasing a solar energy system is a better choice.
Wrapping it up:
So, TECO rates are going up in 2025 and 2026 which is surely going to pinch consumers. In fact, TECO rate increase 2025 is likely to pinch the most since TECO reducing rates in 2024. Even with the reduced extent of the hikes, things are going to get difficult for consumers.
Want a way out? Contact us to go solar to stop worrying about electricity bills.
