Fair Value Measurements

15 Months Ended

Jun. 30, 2012

Fair Value Measurements

13. Fair Value Measurements

Items Measured at Fair Value on a Recurring Basis

The following tables set forth by level within the fair value hierarchy the company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2012 and Dec. 31, 2011. As required by accounting standards for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. For natural gas and diesel fuel swaps, the market approach was used in determining fair value. There were no reclassifications between levels for the quarter.

Recurring Fair Value Measures
	At fair value as of June 30, 2012
(millions)	Level 1		Level 2		Level 3		Total
Assets
Natural gas swaps	$	0.0	$	0.5	$	0.0	$	0.5
Diesel fuel swaps		0.0		0.3		0.0		0.3
Total	$	0.0	$	0.8	$	0.0	$	0.8
Liabilities
Natural gas swaps	$	0.0	$	41.5	$	0.0	$	41.5
Diesel fuel swaps		0.0		2.9		0.0		2.9
Total	$	0.0	$	44.4	$	0.0	$	44.4

	At fair value as of Dec. 31, 2011
(millions)	Level 1		Level 2		Level 3		Total
Assets
Natural gas swaps	$	0.0	$	0.0	$	0.0	$	0.0
Diesel fuel swaps		0.0		0.9		0.0		0.9
Total	$	0.0	$	0.9	$	0.0	$	0.9
Liabilities
Natural gas swaps	$	0.0	$	65.8	$	0.0	$	65.8
Diesel fuel swaps		0.0		1.2		0.0		1.2
Total	$	0.0	$	67.0	$	0.0	$	67.0

Natural gas and diesel fuel swaps are over-the-counter swap instruments. The primary pricing inputs in determining the fair value of these swaps are the NYMEX quoted closing prices of exchange-traded instruments. These prices are applied to the notional amounts of active positions to determine the reported fair value (see Note 12).

The company considered the impact of nonperformance risk in determining the fair value of derivatives. The company considered the net position with each counterparty, past performance of both parties, the intent of the parties, indications of credit deterioration and whether the markets in which the company transacts have experienced dislocation. At June 30, 2012, the fair value of derivatives was not materially affected by nonperformance risk. The company’s net positions with substantially all counterparties were liability positions.

Tampa Electric Co [Member]

Fair Value Measurements

11. Fair Value Measurements

Items Measured at Fair Value on a Recurring Basis

The following tables set forth by level within the fair value hierarchy TEC’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2012 and Dec. 31, 2011. As required by accounting standards for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. TEC’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. For all assets and liabilities presented below, the market approach was used in determining fair value. There were no reclassifications between levels for the quarter.

Recurring Derivative Fair Value Measures
	At fair value as of June 30, 2012
(millions)	Level 1		Level 2		Level 3		Total
Assets
Natural gas swaps	$	0.0	$	0.5	$	0.0	$	0.5
Total	$	0.0	$	0.5	$	0.0	$	0.5
Liabilities
Natural gas swaps	$	0.0	$	41.5	$	0.0	$	41.5
Total	$	0.0	$	41.5	$	0.0	$	41.5

	At fair value as of Dec. 31, 2011
(millions)	Level 1		Level 2		Level 3		Total
Assets
Natural gas swaps	$	0.0	$	0.0	$	0.0	$	0.0
Total	$	0.0	$	0.0	$	0.0	$	0.0
Liabilities
Natural gas swaps	$	0.0	$	65.8	$	0.0	$	65.8
Total	$	0.0	$	65.8	$	0.0	$	65.8

Natural gas swaps are over-the-counter swap instruments. The primary pricing inputs in determining the fair value of natural gas swaps are the NYMEX quoted closing prices of exchange-traded instruments. These prices are applied to the notional amounts of active positions to determine the reported fair value (see Note 10).

TEC considered the impact of nonperformance risk in determining the fair value of derivatives. TEC considered the net position with each counterparty, past performance of both parties, the intent of the parties, indications of credit deterioration and whether the markets in which TEC transacts have experienced dislocation. At June 30, 2012, the fair value of derivatives was not materially affected by nonperformance risk. TEC’s net positions with substantially all counterparties were liability positions.