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KEYS’ RATE RESTRUCTURING TO FUND CAPITAL IMPROVEMENTS

09/28/2006 ~ Beginning October 1st, an average Keys Energy Services’ (KEYS) residential customer consuming 1,000 kilowatt hour’s (kWh) of electricity will experience a four cent, or .03 percent, increase on their monthly energy bill from $130.90 per month to $130.94 per month.

“KEYS staff has worked extremely hard to both meet the requirements of maintaining our system and account for the bottom-line to our rate payers,” said Lynne Tejeda, KEYS General Manager & CEO. She added that, “given the system improvements needed and the costs of purchasing power, KEYS has done everything within its power to minimize the cost to our customers while maximizing the effects of system improvement efforts.”

The new rate reflects a four percent increase to the residential base energy rate which had previously not increased since 1988. However, the total bill is only increasing by .03 percent because the Power Cost Adjustment (PCA) charge has decreased.

The residential base energy rate increase, in conjunction with a $42 million revenue bond issue, will provide necessary funding for capital improvements to KEYS system. Such capital projects include, but are not limited to, replacing all wooden poles with concrete poles; construction of a new substation on Stock Island to keep pace with demand; construction of new electrical feeders from the Big Pine Key Substation to satisfy increasing load; replacement of substation transformers; conversion to a remote electronic meter reading system; and the installation of coolers at KEYS Stock Island Generating Facility which will replace salt water wells.

Budgeted Operations & Maintenance (O&M) expenses for Fiscal Year (FY) 2007 equal $92.0 million, approximately $2.6 million higher than FY 2006. The cost to purchase power represents 69 percent of the entire O&M budget ($63.9 million), with insurances, salaries, and related benefits rounding out the difference.

The PCA charge will decrease this month due to a quiet 2006 hurricane season and lower natural gas prices. The PCA charge can fluctuate on a monthly basis, but at this time KEYS does not anticipate a change to the PCA charge until spring 2007. As a member of the Florida Municipal Power Agency (FMPA), a non-profit organization that supplies the wholesale power needs of 15 municipal electric utilities throughout Florida, KEYS is subject to fluctuations of FMPA’s wholesale energy rate – which are then passed on to its customers.

Note: A kWh is a common unit of electric energy consumption, and the basic unit of electric energy. One kWh is equivalent to 1,000 watts consumed over a period of one hour.

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