Regulatory

6 Months Ended

Jun. 30, 2014

Regulatory

3. Regulatory

Tampa Electric’s and PGS’s retail businesses are regulated by the FPSC. Tampa Electric is also subject to regulation by the FERC under PUHCA 2005. However, pursuant to a waiver granted in accordance with the FERC’s regulations, TECO Energy is not subject to certain accounting, record-keeping and reporting requirements prescribed by the FERC’s regulations under PUHCA 2005. The operations of PGS are regulated by the FPSC separately from the operations of Tampa Electric. The FPSC has jurisdiction over rates, service, issuance of securities, safety, accounting and depreciation practices and other matters. In general, the FPSC sets rates at a level that allows utilities such as Tampa Electric and PGS to collect total revenues (revenue requirements) equal to their cost of providing service, plus a reasonable return on invested capital.

Storm Damage Cost Recovery

Prior to Nov. 1, 2013, Tampa Electric was accruing $8.0 million annually to a FERC-authorized and FPSC-approved self-insured storm damage reserve. This reserve was created after Florida’s IOUs were unable to obtain transmission and distribution insurance coverage due to destructive acts of nature. Effective Nov. 1, 2013, Tampa Electric ceased accruing for this storm damage reserve as a result of the 2013 rate case settlement. However, in the event of a named storm that results in damage to its system, Tampa Electric can petition the FPSC to seek recovery of those costs over a 12-month period or longer as determined by the FPSC, as well as replenish its reserve to $56.1 million; the level it was as of Oct. 31, 2013. Tampa Electric’s storm reserve remained $56.1 million at both June 30, 2014 and Dec. 31, 2013.

Regulatory Assets and Liabilities

Tampa Electric and PGS maintain their accounts in accordance with recognized policies of the FPSC. In addition, Tampa Electric maintains its accounts in accordance with recognized policies prescribed or permitted by the FERC.

Tampa Electric and PGS apply the accounting standards for regulated operations. Areas of applicability include: deferral of revenues under approved regulatory agreements; revenue recognition resulting from cost-recovery clauses that provide for monthly billing charges to reflect increases or decreases in fuel, purchased power, conservation and environmental costs; and the deferral of costs as regulatory assets to the period in which the regulatory agency recognizes them, when cost recovery is ordered over a period longer than a fiscal year.

Details of the regulatory assets and liabilities as of June 30, 2014 and Dec. 31, 2013 are presented in the following table:

Regulatory Assets and Liabilities
(millions)	Jun 30, 2014		Dec 31, 2013
Regulatory assets:
Regulatory tax asset (1)	$	68.1	$	67.4
Other:
Cost-recovery clauses		1.8		6.1
Postretirement benefit asset		177.6		182.7
Deferred bond refinancing costs (2)		7.6		8.0
Environmental remediation		52.0		51.4
Competitive rate adjustment		2.8		4.1
Other		7.7		7.7
Total other regulatory assets		249.5		260.0
Total regulatory assets		317.6		327.4
Less: Current portion		33.7		34.3
Long-term regulatory assets	$	283.9	$	293.1
Regulatory liabilities:
Regulatory tax liability (1)	$	5.6	$	9.8
Other:
Cost-recovery clauses		34.8		54.5
Transmission and delivery storm reserve		56.1		56.1
Deferred gain on property sales (3)		1.4		2.0
Provision for stipulation and other		0.8		0.8
Accumulated reserve - cost of removal		588.4		594.0
Total other regulatory liabilities		681.5		707.4
Total regulatory liabilities		687.1		717.2
Less: Current portion		65.7		85.8
Long-term regulatory liabilities	$	621.4	$	631.4

(1) Primarily related to plant life and derivative positions.

(2) Amortized over the term of the related debt instruments.

(3) Amortized over a 5-year period with various ending dates.

All regulatory assets are recovered through the regulatory process. The following table further details the regulatory assets and the related recovery periods:

	Jun 30,		Dec 31,
(millions)	2014		2013
Clause recoverable (1)	$	4.6	$	10.2
Components of rate base (2)		180.7		185.6
Regulatory tax assets (3)		68.1		67.4
Capital structure and other (3)		64.2		64.2
Total	$	317.6	$	327.4

(1) To be recovered through cost-recovery mechanisms approved by the FPSC on a dollar-for-dollar basis in the next year.

(2) Primarily reflects allowed working capital, which is included in rate base and earns a rate of return as permitted by the FPSC.

(3) “Regulatory tax assets” and “Capital structure and other” regulatory assets have a recoverable period longer than a fiscal year and are recognized over the period authorized by the regulatory agency. Also included are unamortized loan costs, which are amortized over the life of the related debt instruments. See footnotes 1 and 2 in the prior table for additional information.

Tampa Electric Company [Member]

Regulatory

3. Regulatory

Tampa Electric’s and PGS’s retail businesses are regulated by the FPSC. Tampa Electric is also subject to regulation by the FERC under PUHCA 2005. However, pursuant to a waiver granted in accordance with the FERC’s regulations, TECO Energy is not subject to certain accounting, record-keeping and reporting requirements prescribed by the FERC’s regulations under PUHCA 2005. The operations of PGS are regulated by the FPSC separately from the operations of Tampa Electric. The FPSC has jurisdiction over rates, service, issuance of securities, safety, accounting and depreciation practices and other matters. In general, the FPSC sets rates at a level that allows utilities such as Tampa Electric and PGS to collect total revenues (revenue requirements) equal to their cost of providing service, plus a reasonable return on invested capital.

Storm Damage Cost Recovery

Prior to Nov. 1, 2013, Tampa Electric was accruing $8.0 million annually to a FERC-authorized and FPSC-approved self-insured storm damage reserve. This reserve was created after Florida’s IOUs were unable to obtain transmission and distribution insurance coverage due to destructive acts of nature. Effective Nov. 1, 2013, Tampa Electric ceased accruing for this storm damage reserve as a result of the 2013 rate case settlement. However, in the event of a named storm that results in damage to its system, Tampa Electric can petition the FPSC to seek recovery of those costs over a 12-month period or longer as determined by the FPSC, as well as replenish its reserve to $56.1 million; the level it was as of Oct. 31, 2013. Tampa Electric’s storm reserve remained $56.1 million at both June 30, 2014 and Dec. 31, 2013.

Regulatory Assets and Liabilities

Tampa Electric and PGS maintain their accounts in accordance with recognized policies of the FPSC. In addition, Tampa Electric maintains its accounts in accordance with recognized policies prescribed or permitted by the FERC.

Tampa Electric and PGS apply the accounting standards for regulated operations. Areas of applicability include: deferral of revenues under approved regulatory agreements; revenue recognition resulting from cost-recovery clauses that provide for monthly billing charges to reflect increases or decreases in fuel, purchased power, conservation and environmental costs; and the deferral of costs as regulatory assets to the period in which the regulatory agency recognizes them, when cost recovery is ordered over a period longer than a fiscal year.

Details of the regulatory assets and liabilities as of June 30, 2014 and Dec. 31, 2013 are presented in the following table:

Regulatory Assets and Liabilities
(millions)	Jun 30, 2014		Dec 31, 2013
Regulatory assets:
Regulatory tax asset (1)	$	68.1	$	67.4
Other:
Cost-recovery clauses		1.8		6.1
Postretirement benefit asset		177.6		182.7
Deferred bond refinancing costs (2)		7.6		8.0
Environmental remediation		52.0		51.4
Competitive rate adjustment		2.8		4.1
Other		7.7		7.7
Total other regulatory assets		249.5		260.0
Total regulatory assets		317.6		327.4
Less: Current portion		33.7		34.3
Long-term regulatory assets	$	283.9	$	293.1
Regulatory liabilities:
Regulatory tax liability (1)	$	5.6	$	9.8
Other:
Cost-recovery clauses		34.8		54.5
Transmission and delivery storm reserve		56.1		56.1
Deferred gain on property sales (3)		1.4		2.0
Provision for stipulation and other		0.8		0.8
Accumulated reserve - cost of removal		588.4		594.0
Total other regulatory liabilities		681.5		707.4
Total regulatory liabilities		687.1		717.2
Less: Current portion		65.7		85.8
Long-term regulatory liabilities	$	621.4	$	631.4

(1) Primarily related to plant life and derivative positions.

(2) Amortized over the term of the related debt instruments.

(3) Amortized over a 5-year period with various ending dates.

All regulatory assets are recovered through the regulatory process. The following table further details the regulatory assets and the related recovery periods:

Regulatory Assets	Jun 30,		Dec 31,
(millions)	2014		2013
Clause recoverable (1)		$4.6		$10.2
Components of rate base (2)		180.7		185.6
Regulatory tax assets (3)		68.1		67.4
Capital structure and other (3)		64.2		64.2
Total	$	317.6	$	327.4

(1) To be recovered through cost-recovery mechanisms approved by the FPSC on a dollar-for-dollar basis in the next year.

(2) Primarily reflects allowed working capital, which is included in rate base and earns a rate of return as permitted by the FPSC.

(3) “Regulatory tax assets” and “Capital structure and other” regulatory assets have a recoverable period longer than a fiscal year and are recognized over the period authorized by the regulatory agency. Also included are unamortized loan costs, which are amortized over the life of the related debt instruments. See footnotes 1 and 2 in the prior table for additional information.