Accounting for Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2013

Fair Values and Locations of Derivative Instruments Recorded on Balance Sheet

The following table presents the derivatives that are designated as cash flow hedges at Sept. 30, 2013 and Dec. 31, 2012:

Total Derivatives(1)
(millions)	Sept. 30, 2013		Dec. 31, 2012
Current assets	$	0.2	$	0.0
Long-term assets		0.0		0.2
Total assets	$	0.2	$	0.2
Current liabilities	$	5.2	$	14.6
Long-term liabilities		1.5		0.6
Total liabilities	$	6.7	$	15.2

(1) Amounts presented above are on a gross basis, with asset and liability positions netted by counterparty in accordance with accounting standards for derivatives and hedging.

Gross Amounts of Derivatives and Their Related Offset Amounts

The following table presents the gross amounts of derivatives and their related offset amounts as permitted by their respective master netting agreements at Sept. 30, 2013 and Dec. 31, 2012. There was no collateral posted with or received from any counterparties.

Offsetting of Derivative Assets and Liabilities
(millions)
	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset on the Balance Sheet			Net Amounts of Assets (Liabilities) Presented on the Balance Sheet
Sept. 30, 2013
Description
Derivative assets	$	1.2		$	(1.0	)	$	0.2
Derivative liabilities	$	(7.7	)	$	1.0		$	(6.7	)
Dec. 31, 2012
Description
Derivative assets	$	1.0		$	(0.8	)	$	0.2
Derivative liabilities	$	(16.0	)	$	0.8		$	(15.2	)

Effect of Hedging Instruments on OCI and Income

The following table presents the effect of hedging instruments on OCI and income for the three and nine months ended Sept. 30:

For the three months ended Sept. 30:	Amount of			Amount of
(millions)	Gain/(Loss) on Derivatives Recognized in OCI		Location of Gain/(Loss) Reclassified From AOCI Into Income	Gain/(Loss) Reclassified From AOCI Into Income
Derivatives in Cash Flow Hedging Relationships	Effective Portion (1)			Effective Portion (1)
2013
Interest rate contracts	$	0.0	Interest expense	($	0.2	)
Commodity contracts:
Diesel fuel derivatives		0.7	Mining related costs		0.1
Total	$	0.7		($	0.1	)
2012
Interest rate contracts	$	0.0	Interest expense	($	0.2	)
Commodity contracts:
Diesel fuel derivatives		1.6	Mining related costs		0.1
Total	$	1.6		($	0.1	)

(1) Changes in OCI and AOCI are reported in after-tax dollars.

For the nine months ended Sept. 30:	Amount of				Amount of
(millions)	Gain/(Loss) on Derivatives Recognized in OCI			Location of Gain/(Loss) Reclassified From AOCI Into Income	Gain/(Loss) Reclassified From AOCI Into Income
Derivatives in Cash Flow Hedging Relationships	Effective Portion (1)				Effective Portion (1)
2013
Interest rate contracts	$	0.0		Interest expense	($	0.7	)
Commodity contracts:
Diesel fuel derivatives		0.4		Mining related costs		0.0
Total	$	0.4			($	0.7	)
2012
Interest rate contracts	($	4.9	)	Interest expense	($	0.6	)
Commodity contracts:
Diesel fuel derivatives		0.4		Mining related costs		0.3
Total	($	4.5	)		($	0.3	)

(1) Changes in OCI and AOCI are reported in after-tax dollars.

Derivative Volumes Expected to Settle

The following table presents by commodity type the company’s derivative volumes that, as of Sept. 30, 2013, are expected to settle during the 2013, 2014 and 2015 fiscal years:

(millions)	Diesel Fuel Contracts (Gallons)				Natural Gas Contracts (MMBTUs)
Year	Physical		Financial		Physical		Financial
2013		0.0		1.8		0.0		9.8
2014		0.0		2.0		0.0		35.0
2015		0.0		0.0		0.0		5.9
Total		0.0		3.8		0.0		50.7

Fair Value of Overall Contractual Contingent Liability Positions

The table below presents the fair value of the overall contractual contingent liability positions for the company’s derivative activity at Sept. 30, 2013:

Contingent Features
(millions) At Sept. 30, 2013	Fair Value Asset/ (Liability)			Derivative Exposure Asset/ (Liability)			Posted Collateral
Credit Rating	($	6.6	)	($	6.6	)	$	0.0

Derivatives Designated as Hedging Instruments [Member]

Fair Values and Locations of Derivative Instruments Recorded on Balance Sheet

The following tables present the fair values and locations of derivative instruments recorded on the balance sheet at Sept. 30, 2013 and Dec. 31, 2012:

Derivatives Designated as Hedging Instruments
	Asset Derivatives			Liability Derivatives
(millions) Sept. 30, 2013	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity Contracts:
Diesel fuel derivatives:
Current	Derivative assets	$	0.1	Derivative liabilities	$	0.3
Long-term	Derivative assets		0.0	Derivative liabilities		0.1
Natural gas derivatives:
Current	Derivative assets		0.1	Derivative liabilities		4.9
Long-term	Derivative assets		0.0	Derivative liabilities		1.4
Total derivatives designated as hedging instruments		$	0.2		$	6.7

	Asset Derivatives			Liability Derivatives
(millions) Dec. 31, 2012	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity Contracts:
Diesel fuel derivatives:
Current	Derivative assets	$	0.0	Derivative liabilities	$	0.5
Long-term	Derivative assets		0.0	Derivative liabilities		0.4
Natural gas derivatives:
Current	Derivative assets		0.0	Derivative liabilities		14.1
Long-term	Derivative assets		0.2	Derivative liabilities		0.2
Total derivatives designated as hedging instruments		$	0.2		$	15.2

Cash Flow Hedging [Member]

Effect of Hedging Instruments on OCI and Income

The following table presents the derivative activity for instruments classified as qualifying cash flow hedges for the nine months ended Sept. 30:

(millions)	Fair Value Asset/ (Liability)			Amount of Gain/(Loss) Recognized in OCI (1)			Amount of Gain/(Loss) Reclassified From AOCI Into Income
2013
Interest rate swaps	$	0.0		$	0.0		($	0.7	)
Diesel fuel derivatives		(0.3	)		0.4			0.0
Total	($	0.3	)	$	0.4		($	0.7	)
2012
Interest rate swaps	$	0.0		($	4.9	)	($	0.6	)
Diesel fuel derivatives		(0.2	)		0.4			0.3
Total	($	0.2	)	($	4.5	)	($	0.3	)

(1) Changes in OCI and AOCI are reported in after-tax dollars.

Diesel Fuel Derivatives [Member]

Fair Values and Locations of Derivative Instruments Recorded on Balance Sheet

The following table presents the derivative hedges of diesel fuel contracts at Sept. 30, 2013 and Dec. 31, 2012 to limit the exposure to changes in the market price for diesel fuel used in the production of coal:

Diesel Fuel Derivatives
(millions)	Sept. 30, 2013		Dec. 31, 2012
Current assets	$	0.1	$	0.0
Long-term assets		0.0		0.0
Total assets	$	0.1	$	0.0
Current liabilities	$	0.3	$	0.5
Long-term liabilities		0.1		0.4
Total liabilities	$	0.4	$	0.9

Natural Gas Derivatives [Member]

Fair Values and Locations of Derivative Instruments Recorded on Balance Sheet

The following table presents the derivative hedges of natural gas contracts at Sept. 30, 2013 and Dec. 31, 2012 to limit the exposure to changes in market price for natural gas used to produce energy and natural gas purchased for resale to customers:

Natural Gas Derivatives
(millions)	Sept. 30, 2013		Dec. 31, 2012
Current assets	$	0.1	$	0.0
Long-term assets		0.0		0.2
Total assets	$	0.1	$	0.2
Current liabilities	$	4.9	$	14.1
Long-term liabilities		1.4		0.2
Total liabilities	$	6.3	$	14.3

Energy Related Derivatives [Member]

Fair Values and Locations of Derivative Instruments Recorded on Balance Sheet

The following tables present the effect of energy related derivatives on the fuel recovery clause mechanism in the Consolidated Condensed Balance Sheet as of Sept. 30, 2013 and Dec. 31, 2012:

Energy Related Derivatives
	Asset Derivatives			Liability Derivatives
(millions) Sept. 30, 2013	Balance Sheet Location (1)	Fair Value		Balance Sheet Location (1)	Fair Value
Commodity Contracts:
Natural gas derivatives:
Current	Regulatory liabilities	$	0.1	Regulatory assets	$	4.9
Long-term	Regulatory liabilities		0.0	Regulatory assets		1.4
Total		$	0.1		$	6.3

(millions) Dec. 31, 2012	Balance Sheet Location (1)	Fair Value		Balance Sheet Location (1)	Fair Value
Commodity Contracts:
Natural gas derivatives:
Current	Regulatory liabilities	$	0.0	Regulatory assets	$	14.1
Long-term	Regulatory liabilities		0.2	Regulatory assets		0.2
Total		$	0.2		$	14.3

(1) Natural gas derivatives are deferred in accordance with accounting standards for regulated operations and all increases and decreases in the cost of natural gas supply are passed on to customers with the fuel recovery clause mechanism. As gains and losses are realized in future periods, they will be recorded as fuel costs in the Consolidated Condensed Statements of Income.

Tampa Electric Company [Member]

Fair Values and Locations of Derivative Instruments Recorded on Balance Sheet

The following table presents the effect of energy related derivatives on the fuel recovery clause mechanism in the Consolidated Condensed Balance Sheet as of Sept. 30, 2013 and Dec. 31, 2012:

Energy Related Derivatives
	Asset Derivatives			Liability Derivatives
(millions) Sept. 30, 2013	Balance Sheet Location (1)	Fair Value		Balance Sheet Location (1)	Fair Value
Commodity Contracts:
Natural gas derivatives:
Current	Regulatory liabilities	$	0.1	Regulatory assets	$	4.9
Long-term	Regulatory liabilities		0.0	Regulatory assets		1.4
Total		$	0.1		$	6.3

(millions) Dec. 31, 2012	Balance Sheet Location (1)		Fair Value		Balance Sheet Location (1)		Fair Value
Commodity Contracts:
Natural gas derivatives:
Current		Regulatory liabilities	$	0.0		Regulatory assets	$	14.1
Long-term		Regulatory liabilities		0.2		Regulatory assets		0.2
Total			$	0.2			$	14.3

(1) Natural gas derivatives are deferred in accordance with accounting standards for regulated operations and all increases and decreases in the cost of natural gas supply are passed on to customers with the fuel recovery clause mechanism. As gains and losses are realized in future periods, they will be recorded as fuel costs in the Consolidated Condensed Statements of Income.

Gross Amounts of Derivatives and Their Related Offset Amounts

The following table presents the gross amounts of derivatives and their related offset amounts as permitted by their respective master netting agreements at Sept. 30, 2013 and Dec. 31, 2012. There was no collateral posted with or received from any counterparties.

Offsetting of Derivative Assets and Liabilities
(millions)
	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset on the Balance Sheet			Net Amounts of Assets (Liabilities) Presented on the Balance Sheet
Sept. 30, 2013
Description
Derivative assets	$	1.1		$	(1.0	)	$	0.1
Derivative liabilities	$	(7.3	)	$	1.0		$	(6.3	)
Dec. 31, 2012
Description
Derivative assets	$	1.0		$	(0.8	)	$	0.2
Derivative liabilities	$	(15.1	)	$	0.8		$	(14.3	)

Effect of Hedging Instruments on OCI and Income

The following tables present the effect of hedging instruments on OCI and income for the three and nine months ended Sept. 30:

For the three months ended Sept. 30:	Amount of			Amount of
(millions)	Gain/(Loss) on Derivatives Recognized in OCI		Location of Gain/(Loss) Reclassified From AOCI Into Income	Gain/(Loss) Reclassified From AOCI Into Income
Derivatives in Cash Flow Hedging Relationships	Effective Portion (1)			Effective Portion (1)
2013
Interest rate contracts	$	0.0	Interest expense	($	0.2	)
Total	$	0.0		($	0.2	)
2012
Interest rate contracts	$	0.0	Interest expense	($	0.2	)
Total	$	0.0		($	0.2	)

(1) Changes in OCI and AOCI are reported in after-tax dollars.

For the nine months ended Sept. 30:	Amount of Gain/(Loss) on Derivatives Recognized in OCI			Location of Gain/(Loss) Reclassified From AOCI Into Income	Amount of Gain/(Loss) Reclassified From AOCI Into Income
(millions)
Derivatives in Cash Flow Hedging Relationships	Effective Portion (1)				Effective Portion (1)
2013
Interest rate contracts	$	0.0		Interest expense	($	0.7	)
Total	$	0.0			($	0.7	)
2012
Interest rate contracts	($	4.9	)	Interest expense	($	0.6	)
Total	($	4.9	)		($	0.6	)

(1) Changes in OCI and AOCI are reported in after-tax dollars.

Derivative Volumes Expected to Settle

The following table presents by commodity type TEC’s derivative volumes that, as of Sept. 30, 2013, are expected to settle during the 2013, 2014 and 2015 fiscal years:

(millions)	Natural Gas Contracts (MMBTUs)
Year	Physical		Financial
2013		0.0		9.8
2014		0.0		35.0
2015		0.0		5.9
Total		0.0		50.7

Fair Value of Overall Contractual Contingent Liability Positions

The table below presents the fair value of the overall contractual contingent liability positions for TEC’s derivative activity at Sept. 30, 2013:

Contingent Features
(millions) Sept. 30, 2013	Fair Value Asset/ (Liability)			Derivative Exposure Asset/ (Liability)			Posted Collateral
Credit Rating	($	6.3	)	($	6.3	)	$	0.0

Tampa Electric Company [Member] | Cash Flow Hedging [Member]

Effect of Hedging Instruments on OCI and Income

The following table presents the derivative activity for instruments classified as qualifying cash flow hedges for the nine months ended Sept. 30:

(millions)	Fair Value Asset/ (Liability)		Amount of Gain/(Loss) Recognized in OCI (1)			Amount of Gain/(Loss) Reclassified From AOCI Into Income
2013
Interest rate swaps	$	0.0	$	0.0		($	0.7	)
Total	$	0.0	$	0.0		($	0.7	)
2012
Interest rate swaps	$	0.0	($	4.9	)	($	0.6	)
Total	$	0.0	($	4.9	)	($	0.6	)

(1) Changes in OCI and AOCI are reported in after-tax dollars.

Tampa Electric Company [Member] | Natural Gas Derivatives [Member]

Fair Values and Locations of Derivative Instruments Recorded on Balance Sheet

The following table presents the derivative hedges of natural gas contracts at Sept. 30, 2013 and Dec. 31, 2012 to limit the exposure to changes in the market price for natural gas used to produce energy and natural gas purchased for resale to customers:

Natural Gas Derivatives
(millions)	Sept. 30, 2013		Dec. 31, 2012
Current assets	$	0.1	$	0.0
Long-term assets		0.0		0.2
Total assets	$	0.1	$	0.2
Current liabilities (1)	$	4.9	$	14.1
Long-term liabilities		1.4		0.2
Total liabilities	$	6.3	$	14.3

(1) Amounts presented above are on a gross basis, with asset and liability positions netted by counterparty in accordance with accounting standards for derivatives and hedging.