Progress Energy under fire?

May 13, 2009 5:29:43 PM PDT
Some Progress Energy customers are upset shareholders are making money after a rate increase.Nine days after Progress Energy customers first got a surge in their monthly power bills, shareholders received another boost in profits.

Progress has issued 21 straight years of profit increases to its shareholders. And the latest increase has some customers angry since the company just raised electricity rates by 10 percent.

The investor owned utility company says most of the rate hike was a fuel surcharge triggered by a spike in coal prices and it was approved by the state utilities commission. They say the added surcharge did not add to profits.

"The two things are completely different," said Mike Hughes with Progress Energy. "The dividend has absolutely nothing to do with what our customers are paying on the fuel side."

But during a recession, when customers can't choose a different power company, some are crying foul.

A single mom wrestling with a $300 power bill says it's not fair to raise stock dividends in December after raising electricity rates 10 percent.

"It's hard times and they shouldn't be raising it when it's a hard time right now," she said. "It's a struggle."

CEO Bill Johnson told stockholders Wednesday that Progress Energy is about "keeping a life necessity at a reasonable price."

But Progress stockholder David Pate left the meeting with a different outlook.

"They're pretty upfront about making the money and providing the power," Pate said. "Welcome to America."

And Morningstar, the respected analyst for investors, says that Progress allowed return on equity, a measure of profits, is one of the highest among U.S utilities.

"We shouldn't be seeing people's rates go up, and meanwhile shareholders getting richer." said Al Ripley with the NC Justice Center.

Progress Energy says if they lowered the dividend, the stock price would fall. Then it would be harder to raise money to build new plants. Ultimately, they say, customers would suffer.

Progress Energy also says it will ask for another rate change next month. And given the current price of coal, power rates might actually go down.


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