Florida Progress Corporation and Subsidiaries - Page 11




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               In order to calculate fuel and energy conservation rates,              
          Florida Power must provide the FPSC and FERC with data that                 
          estimate fuel costs, energy conservation costs, and projected               
          sales over a 6-month recovery period.  Recovery periods run from            
          April through September and October through March.  The agencies            
          calculate a fuel and energy conservation cost per kilowatt hour             
          of electricity consumed that remains level over the entire                  
          period.  The FPSC and FERC have determined that level pricing               
          over a 6-month period is beneficial to customers because it                 
          reduces the volatility of customers’ monthly bills caused by                
          fluctuating fuel prices and random energy conservation                      
          expenditures.                                                               
               Because the rates approved by the regulatory agencies are              
          based on estimates, the amount billed by Florida Power for fuel             
          or energy conservation costs in a given month may be more or less           
          than the costs actually incurred in that month.  However, an over           
          or underrecovery at the close of a given month may be increased             
          or decreased by over or underrecoveries occurring in a subsequent           
          month during the same recovery period.  Therefore, any                      
          overrecovery balance as of December 31 of any taxable year could            
          be reduced or eliminated as a result of underrecoveries occurring           
          during January, February, or March of the following year but same           
          rate period.                                                                







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Last modified: May 25, 2011