Lykes Energy, Inc. and Subsidiaries - Page 6

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                         1990           83                                            
                         1991           85                                            
                         1992           76                                            
                         1993           63                                            
                         1994           62                                            
               Each FEECA program was initially designed by People's to               
          meet goals established by the PSC.  The PSC had the final say as            
          to whether a particular program was approved and implemented.               
          In deciding whether to approve a particular program, the PSC                
          calculated the present dollar value of cost savings to be                   
          realized by the people of Florida.  These cost savings related to           
          factors such as reduced consumption of kilowatt hours of electric           
          energy.  Other benefits taken into account were the value of                
          incentive payments paid to, or on behalf of, Florida public                 
          utility customers.  The value of these benefits was then divided            
          into the projected costs of the program.  Under this formula, a             
          proposed program had to have a cost effectiveness ratio greater             
          than 1 to be approved.  In deciding which of People's program               
          proposals to approve, the PSC did not consider the benefit to               
               Funds to pay for the FEECA programs were generated by                  
          building an extra factor into the rate People's charged most of             
          its customers.3  People's had to identify the portion of its                

               3 Beginning in 1990, certain commercial and industrial                 
          customers who agreed to have their gas service interrupted when             
          People's experienced unusually high demand did not have FEECA               
          costs built into their rates.                                               

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Last modified: May 25, 2011