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Employee Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Amount Recognized in Balance Sheet

The amounts recognized in TEC’s Consolidated Balance Sheets for pension and other postretirement benefit obligations and plan assets at December 31 were as follows:

TEC	Pension Benefits						Other Benefits
Amounts recognized in balance sheet
(millions)	2018			2017			2018			2017
Accrued benefit costs and other current liabilities	$	(5	)	$	(7	)	$	(10	)	$	(10	)
Deferred credits and other liabilities		(68	)		(30	)		(137	)		(154	)
	$	(73	)	$	(37	)	$	(147	)	$	(164	)

Schedule of Postretirement Benefit Amounts Recognized in Accumulated Other Comprehensive Income, Pretax and Regulatory Assets

The following table provides a detail of the unrecognized gains and losses and prior service credits and costs.

TEC	Pension Benefits				Other Benefits
Amounts recognized in regulatory assets
(millions)	2018		2017		2018		2017
Net actuarial loss (gain)	$	251	$	215	$	45	$	70
Prior service cost (credit)		0		1		0		(13	)
Amount recognized	$	251	$	216	$	45	$	57

Benefit Obligations [Member]

Schedule of Assumptions Used to Determine Benefit

Assumptions used to determine benefit obligations at December 31:

	Pension Benefits						Other Benefits
	2018			2017			2018			2017
Discount rate		4.33	%		3.62	%		4.38	%		3.70	%
Rate of compensation increase-weighted average		3.75	%		3.32	%		3.75	%		3.31	%
Healthcare cost trend rate
Immediate rate	n/a			n/a				6.31	%		6.58	%
Ultimate rate	n/a			n/a				4.50	%		4.50	%
Year rate reaches ultimate	n/a			n/a			2038			2038

Schedule of One-Percentage-Point Change in Assumed Health Care Cost

A one-percentage-point change in assumed health care cost trend rates would have the following effect on TEC’s benefit obligation:

(millions)		1% Increase				1 % Decrease
Effect on PBO		$	5			$	(4	)

Net Periodic Benefit Cost [Member]

Schedule of Assumptions Used to Determine Benefit

Assumptions used to determine net periodic benefit cost for years ended December 31:

	Pension Benefits									Other Benefits
	2018			2017			2016			2018			2017			2016
Discount rate		3.62	%		4.11	%		4.69	%		3.70	%		4.28	%	4.67%/3.85%
Expected long-term return on plan assets		6.85	%		7.00	%		7.00	%	N/A			N/A			N/A
Rate of compensation increase		3.32	%		2.57	%		2.59	%		3.31	%		2.48	%		2.50	%
Healthcare cost trend rate
Initial rate	n/a			n/a			n/a				6.58	%		6.83	%		7.05	%
Ultimate rate	n/a			n/a			n/a				4.50	%		4.50	%		4.50	%
Year rate reaches ultimate	n/a			n/a			n/a			2038			2038			2038

Effect on Expenses [Member]

Schedule of One-Percentage-Point Change in Assumed Health Care Cost

A one-percentage-point change in assumed health care cost trend rates would have a less than $1 million effect on net periodic benefit cost.

TECO Energy [Member]

Schedule of Change in Plan Assets

Change in plan assets
Fair value of plan assets at beginning of year	$	766		$	649		$	0		$	0
Actual return on plan assets		(63	)		122			0			0
Employer contributions		10			46			0			0
Employer direct benefit payments		8			27			15			13
Plan participants’ contributions		0			0			4			3
Plan settlement		(7	)		(26	)		0			0
Benefits paid		(54	)		(51	)		(19	)		(16	)
Direct benefit payments		(1	)		(1	)		0			0
Fair value of plan assets at end of year ⁽¹⁾	$	659		$	766		$	0		$	0

(1)	The MRV of plan assets is used as the basis for calculating the EROA component of periodic pension expense. MRV reflects the fair value of plan assets adjusted for experience gains and losses (i.e. the differences between actual investment returns and expected returns) spread over five years.

(2)	Represent amounts for TECO Energy’s Florida-based other postretirement benefit plan.

Schedule of Net Periodic Benefit Cost

TECO Energy	Pension Benefits													Other Benefits ⁽¹⁾
	2018					2017					2016			2018			2017			2016
(millions)
Service cost	$	21				$	20				$	19		$	2		$	2		$	2
Interest cost		29					31					31			7			7			7
Expected return on plan assets		(49	)				(48	)				(46	)		0			0			0
Amortization of:
Actuarial loss		19					17					16			1			0			0
Prior service (benefit) cost		0					0					0			(2	)		(2	)		(2	)
Curtailment loss (gain)		0					0					1			0			0			0
Settlement loss		2		⁽³	⁾		7		⁽²	⁾		1			0			0			0
Net periodic benefit cost	$	22				$	27				$	22		$	8		$	7		$	7

Schedule of Amounts Recognized in OCI and Regulatory Assets

New prior service cost	$	0		$	0		$	1		$	0		$	0	$	0
Net loss (gain) arising during the year		62			(5	)		47			(14	)		22		5
Amounts recognized as component of net periodic benefit cost:
Amortization or curtailment recognition of prior service (benefit) cost		0			0			0			2			2		2
Amortization or settlement of actuarial gain (loss)		(20	)		(24	)		(17	)		(1	)		0		0
Total recognized in OCI and regulatory assets	$	42		$	(29	)	$	31		$	(13	)	$	24	$	7
Total recognized in net periodic benefit cost, OCI and regulatory assets	$	64		$	(2	)	$	53		$	(5	)	$	31	$	14

(1)	Represents amounts for TECO Energy’s Florida-based other postretirement benefit plan

(2)	Represents TECO Energy’s SERP settlement charge as a result of retirements that occurred subsequent to the Merger with Emera. The charge did not impact TEC’s financial statements.

(3)	Represents TECO Energy’s SERP and Restoration settlement charges as a result of the retirement of certain executives. These charges did impact TEC’s financial statements.

Schedule of Pension Plan Assets

TECO Energy’s strategy is to hire proven managers and allocate assets to reflect a mix of investment styles, emphasize preservation of principal to minimize the impact of declining markets, and stay fully invested except for cash to meet benefit payment obligations and plan expenses.

TECO Energy	2018 Target Allocation		Actual Allocation, End of Year
Asset Category			2018			2017
Equity securities	47%-53%			46	%		51	%
Fixed income securities	47%-53%			54	%		49	%
Total		100%		100	%		100	%

Schedule of Fair Value Hierarchy Plan's Investments

The following table sets forth by level within the fair value hierarchy the plan’s investments.

Pension Plan Investments

TECO Energy	At Fair Value as of December 31, 2018
(millions)
	Level 1			Level 2			Level 3		NAV ⁽¹⁾		Total
Cash	$	(3	)	$	0		$	0	$	0	$	(3	)
Accounts receivable		10			0			0		0		10
Accounts payable		(51	)		0			0		0		(51	)
Short-term investment funds (STIFs)		17			0			0		0		17
Common stocks		32			0			0		0		32
Real estate investment trusts (REITs)		3			0			0		0		3
Mutual funds		97			0			0		0		97
Municipal bonds		0			1			0		0		1
Government bonds		0			59			0		0		59
Corporate bonds		0			55			0		0		55
Collateralized mortgage obligations (CMOs)		0			1			0		0		1
Long Futures		6			0			0		0		6
Swaps		0			3			0		0		3
Purchase options (swaptions)		0			1			0		0		1
Written options (swaptions)		0			(1	)		0		0		(1	)
Investments not utilizing the practical expedient		111			119			0		0		230
Common and collective trusts ⁽¹⁾		0			0			0		330		330
Mutual fund ⁽¹⁾		0			0			0		99		99
Total investments	$	111		$	119		$	0	$	429	$	659

(1)

In accordance with accounting standards, certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts in this table are to permit reconciliation of the fair value hierarchy to amounts presented in the Consolidated Balance Sheet.

TECO Energy	At Fair Value as of December 31, 2017
(millions)
	Level 1			Level 2			Level 3		NAV ⁽¹⁾		Total
Cash	$	3		$	0		$	0	$	0	$	3
Accounts receivable		14			0			0		0		14
Accounts payable		(43	)		0			0		0		(43	)
STIFs		14			0			0		0		14
Common stocks		44			0			0		0		44
REITs		4			0			0		0		4
Mutual funds		196			0			0		0		196
Municipal bonds		0			2			0		0		2
Government bonds		0			55			0		0		55
Corporate bonds		0			45			0		0		45
MBS		0			(1	)		0		0		(1	)
CMOs		0			1			0		0		1
Swaps		0			4			0		0		4
Purchase options (swaptions)		0			1			0		0		1
Written options (swaptions)		0			(2	)		0		0		(2	)
Investments not utilizing the practical expedient		232			105			0		0		337
Common and collective trusts ⁽¹⁾		0			0			0		326		326
Mutual fund ⁽¹⁾		0			0			0		103		103
Total investments	$	232		$	105		$	0	$	429	$	766

The following list details the pricing inputs and methodologies used to value the investments in the pension plan:

•

Cash collateral is valued at cash posted due to its short-term nature.

•

The STIF is valued at net asset value (NAV). The fund is an open-end investment, resulting in a readily-determinable fair value. Additionally, shares may be redeemed any business day at the NAV calculated after the order is accepted. The NAV is validated with purchases and sales at NAV. These factors make the STIF a level 1 asset.

•

The primary pricing inputs in determining the fair value of the Common stocks and REITs are closing quoted prices in active markets.

•

The primary pricing inputs in determining the level 1 mutual funds are the mutual funds’ NAVs. The funds are registered open-ended mutual funds and the NAVs are validated with purchases and sales at NAV. Since the fair values are determined and published, they are considered readily-determinable fair values and therefore Level 1 assets.

•

The primary pricing inputs in determining the fair value of Municipal bonds are benchmark yields, historical spreads, sector curves, rating updates, and prepayment schedules. The primary pricing inputs in determining the fair value of Government bonds are the U.S. treasury curve, CPI, and broker quotes, if available. The primary pricing inputs in determining the fair value of Corporate bonds are the U.S. treasury curve, base spreads, YTM, and benchmark quotes. CMOs are priced using to-be-announced (TBA) prices, treasury curves, swap curves, cash flow information, and bids and offers as inputs. MBS are priced using TBA prices, treasury curves, average lives, spreads, and cash flow information.

•

Swaps are valued using benchmark yields, swap curves, and cash flow analyses.

•

Options are valued using the bid-ask spread and the last price.

•

The primary pricing input in determining the fair value of the mutual fund utilizing the practical expedient is its NAV. It is an unregistered open-ended mutual fund. The fund holds primarily corporate bonds, debt securities and other similar instruments issued by U.S. and non-U.S. public- or private-sector entities. The fund may purchase or sell securities on a when-issued basis. These transactions are made conditionally because a security has not yet been issued in the market, although it is authorized. A commitment is made regarding these transactions to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. Since this mutual fund is a closed-end mutual fund and the prices are not published to an external source, it uses NAV as a practical expedient. The redemption frequency is daily. The redemption notice period is the same day. There were no unfunded commitments as of December 31, 2018.

•

The common collective trusts are private funds valued at NAV. The NAVs are calculated based on bid prices of the underlying securities. Since the prices are not published to external sources, NAV is used as a practical expedient. Certain funds invest primarily in equity securities of domestic and foreign issuers while others invest in long duration U.S. investment-grade fixed income assets and seeks to increase return through active management of interest rate and credit risks. The redemption frequency of the funds ranges from daily to weekly and the redemption notice period ranges from 1 business day to 30 business days. There were no unfunded commitments as of December 31, 2018.

•

Discounted notes are valued at amortized cost.

•

Treasury bills are valued using benchmark yields, reported trades, broker dealer quotes, and benchmark securities.

•

Futures are valued using futures data, cash rate data, swap rates, and cash flow analyses.

Schedule of Benefit Payments

Expected Benefit Payments

TECO Energy			Other
(including projected service and net of employee contributions)	Pension		Postretirement
	Benefits		Benefits
(millions)
2019	$	57	$	12
2020		55		12
2021		59		12
2022		60		12
2023		60		12
2024-2028		333		59

TECO Energy [Member] | Other Postretirement Benefits Florida-Based Plan [Member]

Schedule of Change in Benefit Obligation

TECO Energy	Pension Benefits						Other Benefits ⁽²⁾
Obligations and Funded Status
(millions)	2018			2017			2018			2017
Change in benefit obligation
Net benefit obligation at beginning of year	$	812		$	770		$	193		$	175
Service cost		21			20			2			2
Interest cost		29			31			7			7
Plan participants’ contributions		0			0			4			3
Plan curtailment		0			(1	)		0			0
Plan settlement		(7	)		(26	)		0			0
Benefits paid		(55	)		(51	)		(19	)		(16	)
Actuarial loss (gain)		(50	)		69			(14	)		22
Net benefit obligation at end of year	$	750		$	812		$	173		$	193

Represent amounts for TECO Energy’s Florida-based other postretirement benefit plan

Schedule of Funded status

At December 31, the aggregate financial position for TECO Energy pension plans and Florida-based other postretirement plans with benefit obligations in excess of plan assets was as follows:

TECO Energy	Pension Benefits						Other Benefits ⁽¹⁾
Funded Status
(millions)	2018			2017			2018			2017
Benefit obligation (PBO/APBO)	$	750		$	812		$	173		$	193
Less: Fair value of plan assets		659			766			0			0
Funded status at end of year	$	(91	)	$	(46	)	$	(173	)	$	(193	)

(1)	Represent amounts for TECO Energy’s Florida-based other postretirement benefit plan.