As expected, the two utilities (Tampa Electric and Duke) cited rising gas costs as the reason for the increase in the cost of electricity. Florida’s reliance on gas for power generation (70%) is one of the highest in the country. To deliver electricity to their customers, Florida utility companies spend a lot of money — usually to the tune of hundreds of millions of dollars — on natural gas. The utilities, in turn, pass this cost to their customers.
According to the Tampa Electric filing to the Public Service Commission, the increase in natural gas prices was caused by the skyrocketing demand for liquefied natural gas exports, static production, and low natural storage levels. And things are just getting started. In the same filing, the company also stated that rising gas prices are expected to linger throughout 2021 and continue into 2022.
The production of natural gas in the US saw a dramatic reduction during the early months of the coronavirus pandemic. Production has been gradually increasing since then, but not at the same pace as demand. The slower increase in production has kept the inventories low and prices high. The same applies to gasoline, meaning that the rising energy costs will also be hitting your wallet at the gas pump.