Florida Progress Corporation and Subsidiaries - Page 9




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          ARAM.  The settlement agreement was made effective as of                    
          January 1, 1988, but, because the agreement was not finalized               
          until August 30, 1988, credits that wholesale customers were                
          entitled to receive from January through August were not                    
          reflected on those months’ bills.  To compensate wholesale                  
          customers for credits they did not receive, checks were issued to           
          each wholesale customer.  The wholesale customers received                  
          credits on their September, October, November, and December                 
          bills.                                                                      
               No interest component was ever included with any refund.               
          Florida Power did not take a deduction for the credits and refund           
          checks.  Instead, the credits and refund checks were netted                 
          against taxable revenues for 1987 and 1988, thereby lowering                
          Florida Power’s gross income in both years.  The amount of refund           
          that was returned to a particular retail customer was based on              
          the projected amount of electricity to be provided to that                  
          customer during the refund period and was not determined by the             
          amount of excess deferred income tax paid, if any, by a                     
          particular customer between 1975 and 1986.  In addition, many               
          customers who paid excess deferred income tax between 1975 and              
          1986 did not receive any refund because they left Florida Power’s           
          service area, died, or otherwise terminated their accounts.                 









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