PPD Utility Rebates and Rates

David S. O’Brien, Director

We have just been notified that Florida Power Corp., UF’s primary provider of electricity, has been approved by the Florida Public Service Commission for a rate increase effective April 1, 2003. It is the policy of Physical Plant to avoid mid-year rate increases if possible. Therefore, we will maintain current rates through June 30, 2003. In order to avoid fiscal disruption to our customers this fiscal year, we are also going to honor our commitment to distribute the anticipated fourth and final rebate. However, the impact of this increase in our costs through this fiscal year will have to be folded into our electricity rate for next fiscal year. At this time our best estimate is that electricity rates will increase in the range of eight to ten percent.

Florida Power Corp. is also UF’s provider of raw steam for distribution throughout campus. This steam is produced as a by-product of the campus co-generation plant, which is fueled by natural gas. Our steam cost is contractually tied to a Federal index for natural gas prices for the month of March preceding the fiscal year. Natural gas prices recently reached all-time highs and therefore it is anticipated that UF Steam rates for next fiscal year will be affected in the same way. Unfortunately, the primary cost to produce chilled water is electricity and therefore chilled water rates will be impacted as well. Although few specifics are available at this time, we are providing this information for your fiscal planning through this year and next.