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Progress Energy Rates - Poor Subsidize Rich

By Bruce of Stone Marmot

July 3, 2009

Progress Energy has requested another rate increase. Among the rates proposed for increase are the category of RS-1: "Customer Charge - $ per line of Billing." For example, the subcategory of RST-1, "Standard," is requested to increase from the present $8.03 to $13.21, a 64.5 % increase!

This charge should not even exist at all for the following reasons:

1) It is regressive and hurts the poor far more than the rich. The rich typically use much more electricity than the poor. But since this charge is the same for every user, no matter how much electricity they use, the effective rate per kilowatt hour, that is, the total bill divided by the kilowatt hours used, is much higher for the poor than the rich. Effectively, the poor are subsidizing electricity for the rich, which is backwards from all just logic.

This appears even worse in today's economy. With so many people losing jobs or forced to take pay cuts, plus many in danger of defaulting on their mortgages, many people are trying to cut costs every way they can just to survive. For these people, every penny saved counts. One way to save is to cut back on electricity use. But the resulting savings are diluted by this big flat charge added to everyone's bill, no matter how much electricity they use. This charge should be completely eliminated and the rates per kilowatt hour consumed adjusted accordingly so that all customer charges are based directly on the amount of electricity used.

2) It punishes those who conserve energy and rewards the energy gluttons. Again, since this charge is the same for every user, no matter how much electricity they use, the effective rate per kilowatt hour, that is, the total bill divided by the kilowatt hours used, is much higher for those who conserve energy than for those who don't. Effectively, those who try to be good stewards of our earth's resources are subsidizing electricity for those who are wasteful and don't care, which again is backwards from all just logic.

In this age of concern for global warming and talk of carbon footprints and carbon taxes, much of it coming from our own President of the United States and his staff, we should be doing all we can to encourage all people to conserve energy and our resources. One way to do this is by structuring our rates for electricity so that the amount a customer pays is based strictly upon how much they consume. This flat RS-1 charge per customer is counter to this desire. Therefore, this charge should be completely eliminated and the rates per kilowatt hour consumed adjusted accordingly so that all customer charges are based directly on the amount of electricity used.

3) It is effectively a government imposed tax where all the tax revenue is handed directly to a private corporation. Many local governments require a structure to be actively hooked up to the local electrical utility before they will grant an occupancy permit, even if the structure can meet all its electrical needs by some other means, such as solar power. This requirement in itself isn't just and discourages alternative energy installations. But since many communities have this requirement, and the government also approves all the fees charged by the electrical utility, this flat RS-1 charge per customer is effectively a government imposed tax where all the resulting tax revenue is handed directly to the electrical provider - a private, for profit corporation (and in the case of Progress Energy, one whose headquarters isn't even located in this state). This is counter to all logic in a just, democratic society.

Progress Energy may argue that it has fixed costs it needs to recover that exist no matter how much electricity is used. This is true of virtually every other business that exists in this country. Yet most all the successful businesses are able to be successful and profitable by including these charges in the cost of their product. Using the logic of the Progress Energy RS-1 charge per customer, are we soon going to be taxed $200 per year per driver, with all the tax revenue handed to the oil companies to partly cover the costs of their wells, refineries, pipelines, etc.? Are we going to be taxed $50 per year per person, with all the tax revenue given to McDonald's to help cover the cost of all their restaurants?

Progress Energy may also argue that they need the money to build new facilities (like a nuclear power plant) to handle the increased demand. The problem is that billing every customer a fixed cost every month to provide this money isn't fair to those who have reduced their energy consumption and are actually reducing the need for these new facilities. The ones who have created this increased demand should be paying the majority of the cost for these new facilities. The only fair way to do this is to fund these new facilities from the rate per kilowatt hour used so that those who use the most electricity and create the demand for these new facilities provide most of the funding for these facilities.

All Progress Energy customer charges should be strictly based on how much electricity the customer uses. This is the only truly fair way to bill electric power customers. Therefore, the category of RS-1: "Customer Charge - $ per line of Billing," and all its subcategories of charges, such as RST-1, RSS-1, RSL-1, and RSL-2, should be eliminated and the rates per kilowatt hour consumed adjusted accordingly so that all customer charges are based directly on the amount of electricity used.

To express that you want to eliminate this fixed RS-1 customer charge, please write a letter to the Florida Public Service Commission at:

Director
Division of the Commission Clerk and Administrative Services
Florida Public Service Commission
2540 Shumard Oak Boulevard
Tallahassee, FL 32399-0850
Regards: Docket No. 090079-El

Or call the Florida Public Service Commission at 1-800-342-3552 to register your dissatisfaction with this fixed customer charge.

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