Accounting for Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2014

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 June 30, 2014 and Dec. 31, 2013:

Total Derivatives(1)
(millions)	Jun 30, 2014		Dec 31, 2013
Current assets	$	8.2	$	9.7
Long-term assets		0.5		0.3
Total assets	$	8.7	$	10.0
Current liabilities	$	0.2	$	0.1
Long-term liabilities		0.1		0.2
Total liabilities	$	0.3	$	0.3

(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.

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 June 30, 2014 and Dec. 31, 2013. 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
Jun 30, 2014
Description
Derivative assets	$	9.9		$	(1.2	)	$	8.7
Derivative liabilities	$	(1.5	)	$	1.2		$	(0.3	)
Dec 31, 2013
Description
Derivative assets	$	10.5		$	(0.5	)	$	10.0
Derivative liabilities	$	(0.8	)	$	0.5		$	(0.3	)

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 six months ended June 30:

For the three months ended Jun 30: (millions)	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
Derivatives in Cash Flow Hedging Relationships		Effective Portion (1)					Effective Portion (1)
2014
Interest rate contracts	$	0.0			Interest expense	$	0.0
Commodity contracts:
Diesel fuel derivatives		0.1			Mining related costs		0.0
Total	$	0.1				$	0.0
2013
Interest rate contracts	$	0.0			Interest expense	($	0.2	)
Commodity contracts:
Diesel fuel derivatives		(0.4	)		Mining related costs		(0.1	)
Total	($	0.4	)			($	0.3	)
For the six months ended Jun 30: (millions)	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
Derivatives in Cash Flow Hedging Relationships		Effective Portion (1)					Effective Portion	(1)
2014
Interest rate contracts	$	0.0			Interest expense	($	0.2	)
Commodity contracts:
Diesel fuel derivatives		0.0			Mining related costs		(0.1	)
Total	$	0.0				($	0.3	)
2013
Interest rate contracts	$	0.0			Interest expense	($	0.4	)
Commodity contracts:
Diesel fuel derivatives		(0.2	)		Mining related costs		(0.1	)
Total	($	0.2	)			($	0.5	)

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

For derivative instruments that meet cash flow hedge criteria, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or period during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. For the three and six months ended June 30, 2014 and 2013, all hedges were effective.

The following table presents the derivative activity for instruments classified as qualifying cash flow hedges for the six months ended June 30:

(millions)	Fair Value Asset/ (Liability)			Amount of Gain/(Loss) Recognized in OCI (1)			Amount of Gain/(Loss) Reclassified From AOCI Into Income
2014
Interest rate swaps	$	0.0		$	0.0		($	0.2	)
Diesel fuel derivatives		0.1			0.0			(0.1	)
Total	$	0.1		$	0.0		($	0.3	)
2013
Interest rate swaps	$	0.0		$	0.0		($	0.4	)
Diesel fuel derivatives		(1.1	)		(0.2	)		(0.1	)
Total	($	1.1	)	($	0.2	)	($	0.5	)

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

Derivative Volumes Expected to Settle

The maximum length of time over which the company is hedging its exposure to the variability in future cash flows extends to Dec. 31, 2014 for financial diesel fuel contracts and Dec. 31, 2016 for financial natural gas contracts. The following table presents by commodity type the company’s derivative volumes that, as of June 30, 2014, are expected to settle during the 2014, 2015 and 2016 fiscal years:

(millions)	Diesel Fuel Contracts (Gallons)				Natural Gas Contracts (MMBTUs)
Year	Physical		Financial		Physical		Financial
2014		0.0		1.0		0.0		19.4
2015		0.0		0.0		0.0		25.0
2016		0.0		0.0		0.0		2.8
Total		0.0		1.0		0.0		47.2

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 June 30, 2014 and Dec. 31, 2013:

Derivatives Designated as Hedging Instruments
	Asset Derivatives			Liability Derivatives
(millions) Jun 30, 2014	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity Contracts:
Diesel fuel derivatives:
Current	Derivative assets	$	0.1	Derivative liabilities	$	0.0
Long-term	Derivative assets		0.0	Derivative liabilities		0.0
Natural gas derivatives:
Current	Derivative assets		8.1	Derivative liabilities		0.2
Long-term	Derivative assets		0.5	Derivative liabilities		0.1
Total derivatives designated as hedging instruments		$	8.7		$	0.3

	Asset Derivatives			Liability Derivatives
(millions) Dec 31, 2013	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity Contracts:
Diesel fuel derivatives:
Current	Derivative assets	$	0.2	Derivative liabilities	$	0.1
Long-term	Derivative assets		0.0	Derivative liabilities		0.0
Natural gas derivatives:
Current	Derivative assets		9.5	Derivative liabilities		0.0
Long-term	Derivative assets		0.3	Derivative liabilities		0.2
Total derivatives designated as hedging instruments		$	10.0		$	0.3

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 June 30, 2014 and Dec. 31, 2013 to limit the exposure to changes in the market price for diesel fuel used in the production of coal:

Diesel Fuel Derivatives
(millions)	Jun 30, 2014		Dec 31, 2013
Current assets	$	0.1	$	0.2
Long-term assets		0.0		0.0
Total assets	$	0.1	$	0.2
Current liabilities	$	0.0	$	0.1
Long-term liabilities		0.0		0.0
Total liabilities	$	0.0	$	0.1

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 June 30, 2014 and Dec. 31, 2013 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)	Jun 30, 2014		Dec 31, 2013
Current assets	$	8.1	$	9.5
Long-term assets		0.5		0.3
Total assets	$	8.6	$	9.8
Current liabilities	$	0.2	$	0.0
Long-term liabilities		0.1		0.2
Total liabilities	$	0.3	$	0.2

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 Sheets as of June 30, 2014 and Dec. 31, 2013:

Energy Related Derivatives
	Asset Derivatives			Liability Derivatives
(millions) Jun 30, 2014	Balance Sheet Location (1)	Fair Value		Balance Sheet Location (1)	Fair Value
Commodity Contracts:
Natural gas derivatives:
Current	Regulatory liabilities	$	8.1	Regulatory assets	$	0.2
Long-term	Regulatory liabilities		0.5	Regulatory assets		0.1
Total		$	8.6		$	0.3
(millions) Dec 31, 2013	Balance Sheet Location (1)	Fair Value		Balance Sheet Location (1)	Fair Value
Commodity Contracts:
Natural gas derivatives:
Current	Regulatory liabilities	$	9.5	Regulatory assets	$	0.0
Long-term	Regulatory liabilities		0.3	Regulatory assets		0.2
Total		$	9.8		$	0.2

(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 derivative hedges of natural gas contracts at June 30, 2014 and Dec. 31, 2013 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)	Jun 30, 2014		Dec 31, 2013
Current assets	$	8.1	$	9.5
Long-term assets		0.5		0.3
Total assets	$	8.6	$	9.8
Current liabilities (1)	$	0.2	$	0.0
Long-term liabilities		0.1		0.2
Total liabilities	$	0.3	$	0.2

(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 June 30, 2014 and Dec. 31, 2013. 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
Jun 30, 2014
Description
Derivative assets	$	9.8		$	(1.2	)	$	8.6
Derivative liabilities	$	(1.5	)	$	1.2		$	(0.3	)
Dec 31, 2013
Description
Derivative assets	$	10.3		$	(0.5	)	$	9.8
Derivative liabilities	$	(0.7	)	$	0.5		$	(0.2	)

Effect of Hedging Instruments on OCI and Income

The following table presents the effect of hedging instruments on OCI and income for the three months and six months ended June 30:

(millions)	Location of Gain/(Loss) Reclassified From AOCI Into Income	Amount of Gain/(Loss) Reclassified From AOCI Into Income
Derivatives in Cash Flow Hedging Relationships	Effective Portion (1)	Three months ended Jun 30:			Six months ended Jun 30:
2014
Interest rate contracts:	Interest expense	$	0.0		$	0.2
Total		$	0.0		$	0.2
2013
Interest rate contracts:	Interest expense	($	0.2	)	($	0.4	)
Total		($	0.2	)	($	0.4	)

(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 June 30, 2014, are expected to settle during the 2014, 2015 and 2016 fiscal years:

(millions)	Natural Gas Contracts (MMBTUs)
Year	Physical		Financial
2014		0.0		19.4
2015		0.0		25.0
2016		0.0		2.8
Total		0.0		47.2

Tampa Electric Company [Member] | Energy Related Derivatives [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 Sheets as of June 30, 2014 and Dec. 31, 2013:

Energy Related Derivatives
	Asset Derivatives			Liability Derivatives
(millions) Jun 30, 2014	Balance Sheet Location (1)	Fair Value		Balance Sheet Location (1)	Fair Value
Commodity Contracts:
Natural gas derivatives:
Current	Regulatory liabilities	$	8.1	Regulatory assets	$	0.2
Long-term	Regulatory liabilities		0.5	Regulatory assets		0.1
Total		$	8.6		$	0.3
(millions) Dec 31, 2013	Balance Sheet Location (1)	Fair Value		Balance Sheet Location (1)	Fair Value
Commodity Contracts:
Natural gas derivatives:
Current	Regulatory liabilities	$	9.5	Regulatory assets	$	0.0
Long-term	Regulatory liabilities		0.3	Regulatory assets		0.2
Total		$	9.8		$	0.2

(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.