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TALLAHASSEE, Florida -- The Florida Public Service Commission (PSC) Wednesday approved Tampa Electric's (TECO) proposed base-rate settlement that takes effect in November.

However, the Agreement reduces TECO's requested base rate increase from $134.8 million to $70 million and sets a Return on Equity at 10.25 percent.

To reduce customer bill impacts, the base rate increase will be tiered over three years beginning in Nov. 1.Residential customers using 1,000 kilowatt hours of electricity will see an estimated monthly bill increase of $7.23, which breaks down to a $5.68 adjustment in November 2013, $1.09 the following November, and $0.46 in November 2015.

"We are pleased that all parties reached an equitable Agreement that reduces the rate impact on all customer classes and still meets TECO's responsibility to provide quality service," said PSC Chairman Ronald A. Brisé. "With Florida's economy still in recovery, customers will benefit from the Agreement's tiered adjustments that maintains rate stability through 2017."

A $110 million increase will take effect in January 2017, or later, when TECO's Polk 2-5 Waste Heat Recovery Conversion project enters commercial service. Including this increase in the Agreement saves customers money by avoiding the expense of a new TECO base rate petition upon project completion.

TECO's 2014 customer bills will be further adjusted for fuel and environmental compliance costs following the PSC's annual Cost Recovery Hearings in November. Parties to the Agreement include TECO, OPC, Florida Industrial Power Users Group, Florida Retail Federation, Federal Executive Agencies, and WCF Hospital Utility Alliance.

TECO filed its base rate increase petition with the PSC on April 5. The commission held customer service hearings in TECO's service territory in May to hear from the utility's customers. TECO provides electric service to more than 687,000 customers in Hillsborough and portions of Polk, Pasco, and Pinellas counties.