FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
OR
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from _________ to ________
Commission File Number 1-5007
TAMPA ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
FLORIDA 59-0475140
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
TECO Plaza
702 N. Franklin Street
Tampa, Florida 33602
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (813)228-4111
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of the voting stock held by
nonaffiliates of the registrant as of February 28, 1997 was zero.
As of February 28, 1997, there were 10 shares of the registrant's
common stock issued and outstanding, all of which were held,
beneficially and of record, by TECO Energy, Inc.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. BUSINESS.
Tampa Electric Company (Tampa Electric or the company) was
incorporated in Florida in 1899 and was reincorporated in 1949.
As a result of a restructuring in 1981, the company became a
subsidiary of TECO Energy, Inc. (TECO Energy), a diversified
energy-related holding company. The company is a public utility
operating within the state of Florida and is engaged in the
generation, purchase, transmission, distribution and sale of
electric energy. The retail territory served comprises an area of
about 2,000 square miles in west central Florida, including
substantially all of Hillsborough County and parts of Polk, Pasco
and Pinellas Counties, and has an estimated population of over
one million. The principal communities served are Tampa, Winter
Haven, Plant City and Dade City. In addition, the company engages
in wholesale sales to other utilities. The company has three
electric generating stations in or near Tampa, one electric
generating station in southwestern Polk County, Florida, and two
electric generating stations located near Sebring, a city located
in Highlands County in south central Florida.
Power Engineering & Construction, Inc. (PEC), a Florida
corporation formed in late 1996, is a wholly owned subsidiary of
the company and is engaged in the engineering and construction of
transmission and distribution facilities outside of the company's
service territory. Operations of PEC in 1996 were not
significant.
The company had 2,798 employees as of Dec. 31, 1996, of
which 1,142 were represented by the International Brotherhood of
Electrical Workers (IBEW) and 292 by the Office and Professional
Employees International Union.
In 1996, approximately 48 percent of the company's total
operating revenue was derived from residential sales, 29 percent
from commercial sales, 9 percent from industrial sales and 14
percent from other sales including bulk power sales for resale.
The sources of operating revenue for the years indicated
were as follows:
(millions) 1996 1995 1994
Residential $ 539.7 $ 523.3 $ 505.5
Commercial 321.3 316.1 316.8
Industrial-Phosphate 59.6 61.7 58.3
Industrial-Other 43.3 45.0 50.0
Other retail sales
of electricity 83.5 82.0 80.7
Sales for resale 93.3 80.0 70.4
Deferred revenues (34.2) (50.8) --
Other 6.4 35.0 13.2
$1,112.9 $1,092.3 $1,094.9
No significant part of the company's business is dependent
upon a single customer or a few customers, the loss of any one or
more of whom would have a significantly adverse effect on the
company, except IMC-Agrico, a large phosphate producer
representing four percent of 1996 operating revenues.
In May 1996, IMC-Agrico issued a request for proposals (RFP)
for electric power to serve load currently served by the company
and others. The company has made load-retention proposals that it
believes are competitively priced and attractive because of the
flexibility offered. The company continues to have discussions
with IMC-Agrico. While it is unclear how this process will
develop, the ultimate impact on the company is not expected to be
significant. See the further discussion on page 12.
The company's business is not a seasonal one, but winter
peak loads are experienced due to fewer daylight hours and colder
temperatures, and summer peak loads are experienced due to use of
air conditioning and other cooling equipment.
Regulation
The retail operations of the company are regulated by the
Florida Public Service Commission (FPSC), which has jurisdiction
over retail rates, the quality of service, issuances of
securities, planning, siting and construction of facilities,
accounting and depreciation practices and other matters.
The company is also subject to regulation by the Federal
Energy Regulatory Commission (FERC) in various respects including
wholesale power sales, certain wholesale power purchases,
transmission services and accounting and depreciation practices.
Federal, state and local environmental laws and regulations
cover air quality, water quality, land use, power plant,
substation and transmission line siting, noise and aesthetics,
solid waste and other environmental matters. See Environmental
Matters on pages 7 and 8.
TECO Transport Corporation (TECO Transport), TECO Coal
Corporation (TECO Coal) and TECO Power Services Corporation (TECO
Power Services), subsidiaries of TECO Energy, sell transportation
services, coal, and generating capacity and energy, respectively,
to the company and to third parties. The transactions between the
company and these affiliates and the prices paid by the company
are subject to regulation by the FPSC and FERC, and any charges
deemed to be imprudently incurred may not be allowed to be
recovered from the company's customers. See Utility Regulation on
pages 17 through 20.
Competition
The company's retail business is substantially free from
direct competition with other electric utilities, municipalities
and public agencies. At the present time, the principal form of
competition at the retail level consists of natural gas for
residences and businesses and the self-generation option
available to larger users of electric energy. Such users may seek
to expand their options through legislative and/or regulatory
initiatives that would permit competition at the retail level.
The company intends to take all appropriate actions to retain and
expand its retail business, including managing costs and
providing high quality service to retail customers. Such action
could, with the approval of the FPSC, include the use of load
retention and/or economic development service contracts and
tariffs to reduce the loss of existing load and/or acquire
additional load. The company does not expect the effect of such
actions to have a significant affect on its operations. See the
description of the IMC-Agrico request for proposals on page 12.
There is presently active competition in the wholesale power
markets in Florida, and this is increasing largely as a result of
the Energy Policy Act of 1992 and related federal initiatives.
This act removed certain regulatory barriers to independent power
producers, and required utilities to transmit power from such
producers, utilities and others to wholesale customers as more
fully described below. The company's wholesale business is
largely dependent on access to transmission systems owned by
others and it has generally supported the regulatory efforts
described below to implement open access to transmission. The
company is also continuing its efforts to reduce costs, again
with the view of increasing its wholesale business in an
increasingly competitive market.
In April 1996, the FERC issued its Final Rule on Open Access
Non-Discriminatory Transmission, Stranded Costs, Open Access
Same-time Information System (OASIS) and Standards of Conduct.
These rules work together to open access for wholesale power
flows on transmission systems. Utilities owning transmission
facilities (including the company) are required to provide
services to wholesale transmission customers comparable to those
they provide to themselves on comparable terms and conditions
including price. Among other things, the rules require
transmission services to be unbundled from power sales and owners
of transmission systems must take transmission service under
their own transmission tariffs.
Transmission system owners are also required to implement an
OASIS system providing, via the Internet, access to transmission
service information (including price and availability), and to
rely exclusively on their own OASIS system for such information
for purposes of their own wholesale power transactions. To
facilitate compliance, owners must implement Standards of Conduct
to ensure that personnel involved in marketing of wholesale power
are functionally separated from personnel involved in
transmission services and reliability functions. The company,
together with other utilities, has implemented an OASIS system
and believes it is in compliance with the Standards of Conduct.
Retail Pricing
In general, the FPSC's pricing objective is to set rates at
a level that allows the utility to collect total revenues equal
to its cost of providing service, including a reasonable return
on invested capital.
The costs of owning, operating and maintaining the utility
system, other than fuel, purchased power and certain
environmental compliance costs of providing electric service are
recovered through base rates. The costs intended to be covered by
base rates include operation and maintenance expenses,
depreciation and taxes, as well as a return on the company's
investment in assets used and useful in providing electric
service (rate base). The rate of return on rate base, which is
intended to approximate the company's weighted cost of capital,
includes its costs for debt and preferred stock, deferred income
taxes at a zero cost rate and an allowed return on common equity.
Base prices are determined in FPSC price setting hearings which
occur at irregular intervals at the initiative of the company,
the FPSC or other parties. See the discussion of the FPSC-approved
agreements covering 1995 through 1999 on pages 18 and 19.
Fuel, conservation, certain environmental and certain
purchased power costs are recovered through levelized monthly
charges established pursuant to the FPSC's cost recovery clauses.
These charges, which are reset semi-annually in an FPSC hearing,
are based on estimated costs of fuel, environmental compliance,
conservation programs, and purchased power and estimated customer
usage for a specific recovery period, with a true-up adjustment
to reflect the variance of actual costs from the projected
charges.
The FPSC may disallow recovery of any costs that it
considers imprudently incurred.
Fuel
About 98 percent of the company's generation for 1996 was
from its coal-fired units. About the same level is anticipated
for 1997.
The company's average fuel cost per million BTU and average
cost per ton of coal burned have been as follows:
Average cost
per million BTU: 1996 1995 1994 1993 1992
Coal $ 2.01 $ 2.15 $ 2.22 $ 2.26 $ 2.23
Oil $ 3.68 $ 2.76 $ 2.49 $ 2.69 $ 2.76
Gas -- -- -- $ 3.52 $ 2.43
Composite $ 2.05 $ 2.16 $ 2.22 $ 2.27 $ 2.24
Average cost per ton
of coal burned $46.71 $50.97 $53.39 $54.55 $53.65
The company's generating stations burn fuels as follows:
Gannon Station burns low-sulfur coal; Big Bend Station burns coal
of a somewhat higher sulfur content; Polk Power Station burns
high-sulfur coal which is gasified; Hookers Point Station burns
low-sulfur oil; Phillips Station burns oil of a somewhat higher
sulfur content; and Dinner Lake Station, which was placed on
long-term reserve standby in March 1994, burned natural gas and
oil.
Coal. The company burned approximately 8.0 million tons of
coal during 1996 and estimates that its coal consumption will be
7.9 million tons for 1997. During 1996, the company purchased
approximately 58 percent of its coal under long-term contracts
with six suppliers, including TECO Coal, and 42 percent of its
coal in the spot market or under intermediate-term purchase
agreements. About 16 percent of the company's 1996 coal
requirements were supplied by TECO Coal. During December 1996,
the average delivered cost of coal (including transportation) was
$42.59 per ton, or $1.87 per million BTU. The company expects to
obtain approximately 60 percent of its coal requirements in 1997
under long-term contracts with six suppliers, including TECO
Coal, and the remaining 40 percent in the spot market. The
company's long-term coal contracts provide for revisions in the
base price to reflect changes in a wide range of cost factors and
for suspension or reduction of deliveries if environmental
regulations should prevent the company from burning the coal
supplied, provided that a good faith effort has been made to
continue burning such coal. The company estimates that about 12
percent of its 1997 coal requirements will be supplied by TECO
Coal. For information concerning transactions with affiliated
companies, see Note I on page 38.
In 1996, about 64 percent of the company's coal supply was
deep-mined, approximately 33 percent was surface-mined and three
percent was a processed oil by-product known as petroleum coke.
Federal surface-mining laws and regulations have not had any
material adverse impact on the company's coal supply or results
of its operations. The company, however, cannot predict the
effect on the market price of coal of any future mining laws and
regulations. Although there are reserves of surface-mineable coal
dedicated by suppliers to the company's account, high-quality
coal reserves in Kentucky that can be economically surface-mined
are being depleted and in the future more coal will be
deep-mined. This trend is not expected to result in any
significant additional costs to the company.
Oil. The company had supply agreements through Dec. 31, 1996
for No. 2 fuel oil and No. 6 fuel oil for its four combustion
turbine units, Polk Station, Hookers Point Station and Phillips
Station at prices based on Gulf Coast Cargo spot prices.
Contracts for the supply of No. 2 and No. 6 fuel oil through Dec.
31, 1997 are expected to be finalized in early 1997. The price
for No. 2 fuel oil deliveries taken in December 1996 was $31.90
per barrel, or $5.50 per million BTU. The price for No. 6 fuel
oil deliveries taken in December 1996 was $21.98 per barrel, or
$3.48 per million BTU.
Franchises
The company holds franchises and other rights that, together
with its charter powers, give it the right to carry on its
retail business in the localities it serves. The franchises are
irrevocable and are not subject to amendment without the consent
of the company, although, in certain events, they are subject to
forfeiture.
Florida municipalities are prohibited from granting any
franchise for a term exceeding 30 years. If a franchise is not
renewed by a municipality, the franchisee has the statutory right
to require the municipality to purchase any and all property used
in connection with the franchise at a valuation to be fixed by
arbitration. In addition, all of the municipalities except for
the cities of Tampa and Winter Haven have reserved the right to
purchase the company's property used in the exercise of its
franchise, if the franchise is not renewed.
The company has franchise agreements with 13 incorporated
municipalities within its retail service area. These agreements
have various expiration dates ranging from December 2005 to
September 2021, including the agreement with the city of Tampa,
which expires in August 2006. The company has no reason to
believe that any of these franchises will not be renewed.
Franchise fees payable by the company, which totaled
$20.1 million in 1996, are calculated using a formula based
primarily on electric revenues.
Utility operations in Hillsborough, Pasco, Pinellas and Polk
Counties outside of incorporated municipalities are conducted in
each case under one or more permits to use county rights-of-way
granted by the county commissioners of such counties. There is no
law limiting the time for which such permits may be granted by
counties. There are no fixed expiration dates for the
Hillsborough County and Pinellas County agreements. The
agreements covering electric operations in Pasco and Polk
counties expire in September 2010 and March 2004, respectively.
Environmental Matters
The company's operations are subject to county, state and
federal environmental regulations. The Hillsborough County
Environmental Protection Commission and the Florida Environmental
Regulation Commission are responsible for promulgating
environmental regulations and coordinating most of the
environmental regulation functions performed by the various
departments of state government. The Florida Department of
Environmental Protection (FDEP) is responsible for the
administration and enforcement of the state regulations. The U.S.
Environmental Protection Agency (EPA) is the primary federal
agency with environmental responsibility.
The company has all required environmental permits. In
addition, monitoring programs are in place to assure compliance
with permit conditions. The company has been identified as one of
numerous potentially responsible parties (PRP) with respect to
seven Superfund Sites. While the total costs of remediation at
these sites may be significant, the company shares potential
liability with other PRPs, many of which have substantial assets.
Accordingly, the company expects that its liability in connection
with these sites will not be significant.
Expenditures. During the five years ended Dec. 31, 1996, the
company spent $159.3 million on capital additions to meet
environmental requirements, including $102.7 million for the Polk
Power Station project. Environmental expenditures are estimated
at $6 million for 1997 and $8 million in total for 1998 through
2001. These totals exclude amounts required to comply with the 1990
amendments to the Clean Air Act.
The company is complying with the Phase I emission
limitations imposed by the Clean Air Act Amendments which became
effective Jan. 1, 1995 by using blends of lower-sulfur coal,
controlling stack emissions and using emission allowances.
In 1995, the company successfully integrated Big Bend Unit
Three into the existing scrubber on Big Bend Unit Four. This
resulted in an additional scrubbed unit at a fraction of the cost
of a new scrubber. Also as part of its Phase I compliance plan,
the company has a long-term contract for the purchase of low-sulfur coal.
The company is currently evaluating options to comply with
Phase II sulfur dioxide emission standards imposed by the Clean
Air Act Amendments set for the year 2000. The options include
potentially having to scrub additional capacity. The company is
evaluating equipment and technologies to accomplish compliance in
the most cost effective manner. The company is also evaluating
options to comply with Phase II of the Clean Air Act Amendments
for nitrogen oxide reductions. These options include combustion
modifications and retrofit control technology. While the
company's capital expenditure estimates for the 1997-2001 period,
discussed on pages 16 and 17, include $30 million for compliance
with Phase II of the Clean Air Act Amendments,the actual level of
required expenditures is uncertain at this time. The cost of
compliance with Phase II is expected to have little impact on the
company's prices.
In addition to recovering certain prudently incurred
environmental costs through base rates, the company may petition
the FPSC for recovery of certain other environmental compliance
costs on a current basis pursuant to a statutory environmental
cost recovery procedure.
Merger of TECO Energy with Lykes Energy, Inc.
In November 1996, TECO Energy announced an agreement with
Lykes Energy, Inc. (LEI) to merge it into TECO Energy in a tax-free,
stock-for-stock transaction with an equity value of $300
million. This merger, to be accounted for as a pooling of
interests, was approved by both companies' boards of directors
and in December 1996 by the Lykes Energy shareholders. Approval
by TECO Energy shareholders is not required.
The principal subsidiary of LEI is Peoples Gas System (PGS),
a regulated retail natural gas distributor in Florida. PGS is
Florida's largest natural gas distribution company with retail
operations in all of the state's major metropolitan communities
and over 200,000 customers. It recorded annual sales of 86 Bcf of
natural gas in fiscal 1996. Other subsidiaries include Peoples
Gas Company, a propane business, and a unit involved in natural
gas marketing.
TECO Energy plans to merge PGS into Tampa Electric
immediately after the merger between TECO Energy and LEI, and
thereafter operate PGS as a separate business unit. This merger
will permit the company to better meet its customers' needs
through a broader range of energy services. In particular, it
will allow full service with either gas or electric energy to
wholesale customers in peninsular Florida and to retail customers
in the limited area served by both the company and PGS.
The merger is subject to certain closing conditions with
closing expected by mid-year 1997.
Item 2. PROPERTIES.
The company believes that its physical properties are
adequate to carry on its business as currently conducted. The
properties are generally subject to liens securing long-term
debt.
At Dec. 31, 1996, the company had five electric generating
plants and four combustion turbine units in service with a total
net winter generating capability of 3,650 MWs, including Big Bend
(1,745-MW capability from four coal units), Gannon (1,205-MW
capability from six coal units), Hookers Point (212-MW capability
from five oil units), Phillips (34-MW capability from two diesel
units), Polk (250-MW capability from one integrated gasification
combined cycle unit (IGCC)) and four combustion turbine units
located at the Big Bend and Gannon stations (204 MWs). The
capability indicated represents the demonstrable dependable load
carrying abilities of the generating units during winter peak
periods as proven under actual operating conditions. Units at
Hookers Point went into service from 1948 to 1955, at Gannon from
1957 to 1967, and at Big Bend from 1970 to 1985. The Polk IGCC
unit began commercial operation in September 1996. In 1991, the
company purchased two power plants (Dinner Lake and Phillips)
from the Sebring Utilities Commission (Sebring). Dinner Lake
(11-MW capability from one natural gas unit) and Phillips were placed
in service by Sebring in 1966 and 1983, respectively. In March
1994, Dinner Lake Station was placed on long-term reserve
standby.
The company owns 180 substations having an aggregate
transformer capacity of 16,235,857 KVA. The transmission system
consists of approximately 1,208 pole miles of high voltage
transmission lines, and the distribution system consists of 6,866
pole miles of overhead lines and 2,538 trench miles of
underground lines. As of Dec. 31, 1996, there were 513,117 meters
in service. All of this property is located in Florida.
All plants and important fixed assets are held in fee except
that title to some of the properties are subject to easements,
leases, contracts, covenants and similar encumbrances and minor
defects, of a nature common to properties of the size and
character of those of the company.
The company has easements for rights-of-way adequate for the
maintenance and operation of its electrical transmission and
distribution lines that are not constructed upon public highways,
roads and streets. It has the power of eminent domain under
Florida law for the acquisition of any such rights-of-way for the
operation of transmission and distribution lines. Transmission
and distribution lines located in public ways are maintained
under franchises or permits.
The company has a long-term lease for its office building in
downtown Tampa, Florida, that serves as its headquarters.
Item 3. LEGAL PROCEEDINGS.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of 1996 to
a vote of the company's security holders, through the
solicitation of proxies or otherwise.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
All of the company's common stock is owned by TECO Energy
and, therefore, there is no market for the stock.
The company pays dividends substantially equal to its net
income applicable to common stock to TECO Energy. Such dividends
totaled $134.9 million for 1996 and $115.2 million for 1995. See
Note C on page 34 for a description of restrictions on dividends
on the company's common stock.
Item 6. SELECTED FINANCIAL DATA.
(millions)
Year ended
Dec. 31, 1996 1995 1994 1993 1992
Operating
revenues(1) $1,112.9 $1,092.3 $1,094.9 $1,041.3 $1,005.7
Net income $ 141.6 $ 133.7 $ 110.1(2) $ 106.7 $ 110.8
Total assets $2,723.2 $2,639.2 $2,417.8 $2,267.5* $2,104.7*
Long-term debt $ 661.1 $ 583.1 $ 607.3 $ 606.6* $ 591.5*
* These balances have been restated to reflect the current year
presentation.
(1) Amounts shown in 1996 and 1995 are after deferral of revenues of
$34.2 million and $50.8 million, respectively, in accordance with
FPSC-approved plans described in the Utility Regulation section
on pages 17 through 19.
(2) 1994 net income includes the effect of a corporate restructuring
charge of $13.1 million, after tax.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
This Management's Discussion and Analysis contains forward-looking
statements. These forward-looking statements are subject to the
inherent uncertainties in predicting future results and conditions.
Certain factors that could cause actual results to differ materially
from those projected in these forward-looking statements are set forth
below in the Investment Considerations section.
EARNINGS SUMMARY
The company's net income for 1996 was $141.6 million, six percent
higher than in 1995, after the deferral of $34.2 million of revenues
in 1996. Total energy sales were five percent higher than in 1995,
while non-fuel operating and maintenance expenses were one percent
lower. Allowance for funds used during construction (AFUDC) of $22.9
million was up from $19.3 million in 1995 and $5.7 million in 1994 due
to the additional investment in Polk Unit One discussed in the Capital
Expenditures section.
Net income for 1995 of $133.7 million was 21 percent higher than
1994's, after the deferral of $50.8 million of revenues in 1995. Two-percent
customer growth and favorable weather increased retail energy
sales 5 percent. In addition, non-fuel operations and maintenance
expenses were 5 percent below 1994's level as the company benefited
from the 1994 restructuring efforts.
The company recorded a one-time $21.3 million pretax
restructuring charge ($13.1 million after tax) in the fourth quarter
of 1994. The restructuring program included a reduction in staffing
levels and other cost reductions. Approximately 70 percent of the
charge represents costs associated with retirement benefits.
OPERATING RESULTS
The company's 1996 operating income increased almost six percent
after the deferral of $34.2 million of revenues under the agreements
described in the Utility Regulation section. Two-percent customer
growth and colder than normal weather early in the year contributed to
five percent higher total energy sales. Non-fuel operations and
maintenance expenses were one percent below 1995 levels, despite a
full quarter of operations of the Polk Power Station, reflecting the
continued focus on aggressive cost management throughout the company.
Operating income also increased because of the inclusion of the Polk
Power Station in rate base for earnings purposes upon commencement of
commercial operation late in the third quarter.
In 1996, the company successfully completed the construction of
the 250-megawatt, state-of-the-art, clean-coal technology Polk Power
Station. The addition of this facility will cause an increase in
1997's operating expenses. However, during the first two years of
operations the U. S. Department of Energy (DOE) will provide funding
that will offset a portion of the non-fuel operations and maintenance
expenses associated with the facility. Agreements approved by the
Florida Public Service Commission (FPSC) allowing full recovery of
capital costs and operations and maintenance expenses associated with
the plant described in the Utility Regulation section are in place.
The company's 1995 operating income increased 11 percent over
1994's. Higher base revenues from retail customer growth, favorable
weather, and an improved economy together with lower operating
expenses contributed to the improved results after the deferral of
$50.8 million of revenues.
Operating Results 1996 Change 1995 Change1994
(millions)
Revenues $1,112.9(1) 1.9% $1,092.3(1) - .2%$1,094.9
Operating expenses 940.3 1.2% 929.0 -2.0% 947.8
Operating income 172.6 5.7% 163.3 11.0% 147.1
Restructuring charge
(included in operating
expenses above) -- -- -- -- 21.3
Operating income before
restructuring charge $ 172.6 5.7% $ 163.3 -3.0%$ 168.4
(1) 1996 and 1995 revenues are net of $34.2 million and $50.8 million,
respectively, of revenues deferred under agreements as described in
the Utility Regulation section.
Operating Revenues
The company's 1996 revenues increased almost two percent to $1.1
billion, after the deferral of $34.2 million of revenues, reflecting
customer growth of more than two percent and increased retail energy
usage. The company's 1995 revenues decreased slightly as the deferral
of $50.8 million of revenues offset increased energy sales.
The economy in the company's service area continued to grow in
1996 due to increased employment from corporate relocations and
expansions. Combined residential and commercial energy sales grew by
more than three percent in 1996. Non-phosphate industrial sales
declined in 1996 due to the closure of a brewery at the end of 1995.
Sales to the phosphate industry decreased in 1996 reflecting the
closure of some depleted phosphate mines and reduced production at
several processing plants. Energy sales to the phosphate industry are
expected to increase in 1997 over 1996 levels from increased
production to meet continued strong domestic and international demand
for phosphate products. After 1997 sales are expected to decline
slowly as mining activity migrates out of the company's service area.
In 1996 sales to the phosphate customer group represented about five
percent of total operating revenues.
In May IMC-Agrico, a large phosphate producer representing four
percent of 1996 revenues, issued a request for proposals (RFP) for
electric power to serve load currently served by the company and
others. Some portions of the services identified in the RFP are not
permitted under current Florida laws and utility regulation. The
company has made load-retention proposals that it believes to be
competitively priced and attractive because of the flexibility
offered, and continues to have discussions with IMC-Agrico. While it
is unclear how this process will develop, the ultimate impact on the
company is not expected to be material. For a general description of
competition see the Utility Competition section.
The company's and independent forecasts indicate that in 1997 the
Tampa Electric service area economy is expected to grow moderately at
rates higher than the country as a whole. The local economy continues
to benefit from a good labor market, available land, good access
through airport and port facilities and aggressive economic
development activities by the communities served by the company.
Based on the expected continued growth of the local economy with
both population and business activity increases, the company projects
retail energy sales growth of more than two percent annually for the
next five years. This forecast includes combined energy sales growth
in the residential and commercial sectors of almost three percent
annually as the company's service area economy becomes more service
oriented. Growth in energy sales to non-phosphate industrial customers
is expected in 1997 after the 1996 decline.
Non-fuel revenues from sales to other utilities were $36 million
in 1996, $34 million in 1995 and $33 million in 1994. Energy sold to
other utilities increased in 1996 due to weather-related demand and
lower Tampa Electric fuel costs. A shift from broker system economy
sales to longer-term, higher-margin wholesale power sales resulted in
a seven percent increase in revenues in 1996. In 1995 energy sold to
other utilities increased because of higher generating unit
availability and lower fuel costs.
Signing additional longer-term wholesale power sales agreements
remains a priority; in recent years 11 bulk power sales contracts of
varying size and duration have been added. Competitive pricing of
coal-fired generation has allowed the company to market available
capacity successfully.
Megawatt-Hour Sales:
1996 Change 1995 Change 1994
(thousands)
Residential 6,607 4.0% 6,352 6.8% 5,947
Commercial 4,815 2.2% 4,710 2.8% 4,583
Industrial 2,304 -2.4% 2,362 3.7% 2,278
Other 1,203 2.3% 1,176 4.6% 1,124
Total retail 14,929 2.3% 14,600 4.8% 13,932
Sales for resale 3,241 19.8% 2,706 28.7% 2,102
Total energy sold 18,170 5.0% 17,306 7.9% 16,034
Retail customers 506.0 2.2% 495.2 2.0% 485.7
(average)
Operating Expenses
Effective cost management and improved efficiency continue to be
the company's principal objectives. Other operating and maintenance
expenses declined in 1996 from the continuing focus on managing costs
in all areas of the company and the restructuring actions taken in
1994.
Operating Expenses:
1996 Change 1995 Change 1994
(millions)
Fuel $383.1 -.3% $384.3 -1.3% $389.3
Purchased power 49.0 10.4% 44.4 32.9% 33.4
Total fuel cost 432.1 .8% 428.7 1.4% 422.7
Other operating expenses 164.2 .6% 163.3 -4.8% 171.6
Maintenance 65.5 -5.9% 69.6 -4.5% 72.9
Depreciation 120.2 6.1% 113.3 -1.6% 115.1
Taxes, federal and
state income 71.3 7.7% 66.2 15.3% 57.4
Taxes, other than income 87.0 -1.0% 87.9 1.3% 86.8
Operating expenses 940.3 1.2% 929.0 .3% 926.5
Restructuring charge - - -. - 21.3
Total operating expenses $940.3 1.2% $929.0 -2.0% $947.8
Aggressive cost management reduced non-fuel operations and
maintenance expenses more than one percent in 1996, despite the
additional expenses related to the operation of the Polk Power
Station. In 1995 non-fuel operations and maintenance expenses declined
almost five percent from 1994 levels before the restructuring charge.
The $11.6-million reduction in 1995 was primarily from lower payroll
and employee-related expenses as a result of 217 fewer positions than
in 1994.
In both 1996 and 1995 the company achieved lower costs from
equipment redesign and enhancements, work redesign efforts including
the streamlining of maintenance programs, the sharing of manpower
resources in power generation facilities and the use of new
technologies throughout the company.
In 1996 the savings realized from these efforts more than offset
increased operations and maintenance expenses from the Polk Power
Station. Over the next several years, non-fuel operations and
maintenance expenses are expected to remain at 1996 levels.
During the first two years of operations, when specified domestic
coals will be evaluated for use in the gasifier, the company will
receive up to a total of $20 million from DOE for operations and
maintenance expenses of the Polk Power Station. Based on current
forecasts this funding is expected to offset a significant portion of
the non-fuel operating costs of the new plant during this period.
Total operating expenses in 1994 included the $21.3 million
restructuring charge discussed in the Earnings Summary section and the
first annual $4.0-million charge to a transmission and distribution
property storm-damage reserve in accordance with regulatory directives
described in the Utility Regulation section.
Depreciation expense increased $6.9 million in 1996 from normal
plant additions and the completion of the Polk Power Station.
Depreciation expense in 1995 decreased as certain shorter-lived assets
were fully amortized. This decrease more than offset the impact of
normal additions to plant and equipment. The company's efforts to
reduce capital investment in recent years have limited additions to
all asset classes. Depreciation expense is projected to increase again
in 1997 as a result of a full year of depreciation of the Polk Power
Station.
Changes in taxes other than those on income reflected increased
state gross receipts taxes and franchise fees associated with higher
energy sales, changes in property values and decreases in payroll
related taxes as a result of the 1994 restructuring. Taxes other than
those on income are expected to increase in 1997 as a result of the
property taxes associated with the Polk Power Station.
Total system fuel cost in 1996 was less than one percent higher
than in 1995 despite a five-percent increase in total energy sales.
The success in controlling fuel cost is a result of the company's use
of lower-priced coals and the mix in operating generating units.
Average coal costs, on a cents-per-million BTU basis, declined more
than six percent in 1996 after a three-percent decrease in 1995. Fuel
and purchased power cost rose one percent in 1995 despite a five-percent rise
in retail energy sales.
The company purchased more power in both 1996 and 1995 primarily
to meet weather-related demand. Substantially all fuel and purchased
power expenses were recovered through the fuel adjustment clause.
Nearly all of the company's generation in the last three years
has been from coal, and the fuel mix will continue to be substantially
coal. External forecasts indicate relatively stable coal prices during
the next few years compared to oil or gas prices. The company
continues to work to reduce its fuel cost through effective contract
management, use of non-traditional fuels such as petroleum coke and
tire-derived fuel, and increased purchases of coal in the lower-cost
spot market
Coal Contract Buyout:
In December 1994, the company bought out a long-term coal supply
contract which would have expired in 2004 for a payment of $25.5
million and entered into two new contracts with the supplier. The coal
supplied under the new contracts is competitive in price with coals of
comparable quality.
As a result of this buyout the company's customers will benefit
from anticipated savings of more than $40 million, net of the buyout
costs, through the year 2004. The FPSC has authorized the recovery of
the buyout costs plus carrying costs through the fuel adjustment
clause during the years 1995 through 2004.
NON-OPERATING ITEMS
Other Income (Expense)
Other income consisted mostly of allowance for other funds used
during construction (AFUDC) of $16.5 million in 1996, $13.7 million in
1995, and $3.5 million in 1994. With the construction of Polk Unit One
now complete, AFUDC will decline to minimal levels for the next
several years.
Interest Charges
Interest charges were $47.3 million in 1996, up 10 percent from
1995 due to higher short-term debt balances and rates. In 1996 and
1995 interest expense included $3.8 million and $1.5 million,
respectively, of interest accrued on the revenues deferred under the
FPSC-approved plans described in the Utility Regulation section.
Income Taxes
Total income tax expense, as described in Note G on pages 37 and
38, of $71.1 million increased from $66.0 million in 1995 and $58.7
million in 1994 primarily due to higher pretax income.
MERGER OF TECO ENERGY WITH LYKES ENERGY, INC.
In November 1996, TECO Energy announced an agreement with Lykes
Energy, Inc. (LEI) to merge it into TECO Energy in a tax-free, stock-for-stock
transaction with an equity value of $300 million. This
merger, to be accounted for as a pooling of interests, was approved by
both companies' boards of directors and in December 1996 by the Lykes
Energy shareholders. Approval by TECO Energy shareholders is not
required.
The principal subsidiary of LEI is Peoples Gas System (PGS), a
regulated retail natural gas distributor in Florida. PGS is Florida's
largest natural gas distribution company with retail operations in all
of the state's major metropolitan communities and over 200,000
customers. It recorded annual sales of 86 Bcf of natural gas in fiscal
1996.
TECO Energy plans to merge PGS into Tampa Electric immediately
after the merger between TECO Energy and LEI, and thereafter operate
PGS as a separate business unit. This merger will permit the company
to better meet its customers' needs through a broader range of energy
services. In particular, it will allow full service with either gas or
electric energy to wholesale customers in peninsular Florida and to
retail customers in the limited area served by both the company and
PGS.
The merger is subject to certain closing conditions with closing
expected by mid-year 1997.
ACCOUNTING STANDARDS
FAS 121
FAS 121, Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of (FAS 121), effective for years
beginning after Dec. 15, 1995, requires that long-lived assets and
certain intangibles to be held and used by the company be reviewed for
impairment. The company periodically assesses whether there has been a
permanent impairment of these assets. No write-down of assets due to
impairment was required in 1996.
CAPITAL EXPENDITURES
The company's 1996 capital expenditures of $203 million included
$22.9 million of AFUDC.
The company spent $75 million in 1996 on construction of the
Polk Power Station, a 250-megawatt coal-gasification plant which
entered commercial service late in the third quarter. The capital cost
of the plant to the company including AFUDC was $508 million, which is
net of the construction funding from the Department of Energy under
its Clean Coal Technology Program.
The company spent an additional $105 million in 1996 for
equipment and facilities to meet its growing customer base and for
generating equipment improvements.
The company estimates total capital expenditures for ongoing
operations to be $116 million in 1997 and $470 million during the
1998-2001 period, mainly for distribution facilities to meet customer
growth and generation reliability programs. At the end of 1996, the
company had outstanding commitments of about $7 million for capital
programs.
The company's capital expenditure projections include about $30
million over the 1997-2000 period to comply with Phase II of the Clean
Air Act as described in the Environmental Compliance section. However,
the level of capital expenditures that will actually be required for
compliance is uncertain at this time.
Capital requirements for PGS are not reflected in the above
projections. Capital investment plans for this company are still being
developed. In recent years, the capital invested by PGS was about $25
million annually. Capital expenditures are expected to be above
historical levels as opportunities to grow this business are
identified.
ENVIRONMENTAL COMPLIANCE
The company is subject to various environmental regulations and
believes that it is substantially in compliance with the currently
applicable standards of the respective environmental enforcement
agencies and that potential environmental liabilities are not
significant.
The company is complying with the Phase I emission limitations
imposed by the Clean Air Act Amendments which became effective Jan.
1, 1995 by using blends of lower-sulfur coal, controlling stack
emissions and owning emission allowances.
In 1995, the company successfully integrated Big Bend Unit Three
into the existing scrubber on Big Bend Unit Four. This resulted in an
additional scrubbed unit at a fraction of the cost of a new scrubber.
The company is currently evaluating options to comply with Phase
II sulfur dioxide emission standards set for the year 2000. The
options include potentially scrubbing additional capacity. The company
is evaluating equipment and technologies to accomplish compliance in
the most cost effective manner. The company is also evaluating options
to comply with Phase II of the Clean Air Act Amendments for nitrogen
oxide reductions. These options include combustion modifications and
retrofit control technology. While the company's estimates reflected
in the Capital Expenditure section include up to $30 million for
compliance with Phase II of the Clean Air Act Amendments, the actual
level of required expenditures is uncertain at this time. The cost of
compliance with Phase II is expected to have little impact on the
company's prices.
UTILITY REGULATION
Return on Equity (ROE) and Other Regulatory Agreements:
1994
In March 1994 the FPSC issued an order which changed the
company's authorized ROE to an 11.35-percent midpoint with a range of
10.35 percent to 12.35 percent, while leaving in effect the rates it
had previously established. The FPSC also ordered a $4.0-million
annual accrual to establish an unfunded storm damage reserve for
transmission and distribution property.
In July 1994 the FPSC issued an order approving an agreement
between its staff and the company to cap the utility's authorized
regulatory ROE at 12.45 percent for calendar year 1994 with any
earnings above that amount to be used to increase the storm damage
reserve. The company did not exceed the 12.45-percent cap in 1994 and
therefore accrued only the $4.0 million to the storm damage reserve.
Rate Stabilization Strategy
Building on the 1994 approach, the company's objective has been
to place the Polk Power Station in service without increasing the
total price for electric service while securing the opportunity to
earn a fair return. A number of actions, discussed in the Operating
Expenses section, were taken to manage costs. Another key component of
the strategy to accomplish this objective has been the deferral of
certain revenues. With the agreements approved by the FPSC in 1995 and
1996, the objectives of stabilizing prices through 1999 and securing
fair earnings opportunities during this period were accomplished.
1995
In 1995 the FPSC approved a plan submitted by the company to
defer certain revenues for 1995. Under this plan the company's allowed
ROE increased to an 11.75-percent midpoint with a range of 10.75
percent to 12.75 percent. For 1995 an initial $15 million of revenues
were deferred as well as 50 percent of actual revenues in excess of a
ROE of 11.75 percent up to a net earned ROE of 12.75 percent and all
actual revenues above a ROE of 12.75 percent. In 1995 the company
deferred $50.8 million of revenues under this plan. The deferred
revenues accrue interest at the 30-day commercial paper rate specified
in the Florida Administrative Code.
Also as part of this plan the company's oil backout tariff was
eliminated Jan. 1, 1996, an annual revenue reduction of about $12
million.
1996 - 1999
In May 1996 the FPSC issued an order approving an agreement among
the company, the Florida Office of Public Counsel (OPC) and the
Florida Industrial Power Users Group (FIPUG) on a multi-year base rate
freeze and refund plan. Under this plan, base rates were frozen
through 1998 and the company's customers began receiving a $25-million
refund starting in October 1996 over a 12-month period. The refund
consists of $10 million of revenues deferred from 1995 and $15 million
of 1996 revenues.
In addition, the agreement set forth a multi-year plan for
allocating revenues based on the company's ROE. For the years 1996
through 1998, the company retains all revenues contributing to a ROE
up to 11.75 percent. Any additional revenues will be allocated
according to a formula.
In 1996, 40 percent of any actual revenues contributing to a ROE
in excess of 11.75 percent were included in 1996 revenues. The
remaining 60 percent were deferred for use in 1997 and 1998. Under
this allocation $34.2 million of 1996 revenues were deferred. About
$65 million of revenues deferred from 1996 and 1995, after the effect
of the $25-million refund are available for use in 1997 and 1998. It
is expected that the company will recognize $30 million to $35 million
of previously deferred revenues in 1997.
In 1997, 40 percent of any revenues that contribute to a ROE in
excess of 11.75 percent up to 12.75 percent will be included in 1997
revenues. The remaining 60 percent will be deferred for use in 1998 as
will any revenues contributing to a ROE in excess of 12.75 percent.
The same 40 percent allocation will be made in 1998 after taking into
account any deferred revenues not used in previous years. The
remaining 60 percent, as well as any revenues contributing to a ROE in
excess of 12.75 percent will be refunded to customers in 1999.
In October 1996 the FPSC unanimously approved an agreement among
the company, OPC and FIPUG that resolved all pending regulatory issues
associated with the Polk Power Station.
The agreement allows the full recovery of all of the expected
capital costs, and operations and maintenance expenses associated with
the Polk Power Station. The agreement also calls for an extension of
the base rate freeze established in the May agreement through 1999.
The company has the option of filing an application with the FPSC on
or after July 1, 1999 for authorization to adjust base rates after
Jan. 1, 2000.
Under the October agreement, the $25-million refund established
in the May agreement remains intact and, in addition, customers will
receive a $25-million temporary base rate reduction to be reflected as
a credit on customer bills over a 15-month period beginning Oct. 1,
1997. This temporary base rate reduction will be netted against any
refunds that otherwise might have been made in 1999 under the May
agreement.
The October agreement closely parallels the ROE formula in the
May agreement. In 1999, 60 percent of the revenues contributing to a
ROE in excess of 12.0 percent will be refunded to customers in 2000
along with any 1999 revenues which contribute to a ROE above 12.75
percent. The company agreed to remove from rate base the $5-million investment
made in land at Port Manatee. This land has value for uses other than
as a power plant site, and will continue to be recorded as an asset
of the company. A citizens task force recommended using previously
mined land in Polk County over the Manatee site as the preferred
location for the Polk Power Station.
Environmental Cost Recovery Clause
In August the FPSC approved the recovery of $3.0 million of the
company's environmental compliance costs through the environmental
cost recovery clause. These are new costs incurred by the company to
comply with environmental regulations enacted subsequent to its most
recent full regulatory price setting proceeding but not included in
current rates. The company plans to seek continuing recovery of these
types of costs through this clause until the next full regulatory
price setting proceeding. Under the October 1996 agreement the
earliest any such new prices could be in effect is in the year 2000.
Utility Competition:
The company's retail business is substantially free from direct
competition with other electric utilities, municipalities and public
agencies. At the present time, the principal form of competition at
the retail level consists of natural gas for residences and businesses
and the self-generation option available to larger users of electric
energy. Such users may seek to expand their options through
legislative and/or regulatory initiatives that would permit
competition at the retail level. The company intends to take all
appropriate actions to retain and expand its retail business,
including managing costs and providing high quality service to retail
customers. Such action could, with the approval of the FPSC, include
the use of load retention and/or economic development service
contracts and tariffs to reduce the loss of existing load and/or
acquire additional load. See the description of the IMC-Agrico request
for proposals in the Operating Revenues section.
There is presently active competition in the wholesale power
markets in Florida, and this is increasing largely as a result of the
Energy Policy Act of 1992 and related federal initiatives. This Act
removed certain regulatory barriers to independent power producers and
required utilities to transmit power from such producers, utilities
and others to wholesale customers as more fully described below. The
company continues its cost reduction efforts to increase its wholesale
business, which is dependent on access to transmission systems owned
by others.
In April 1996 the Federal Energy Regulatory Commission (FERC)
issued its Final Rule on Open Access Non-discriminatory Transmission,
Stranded Costs, Open Access Same-time Information System (OASIS) and
Standards of Conduct. These rules work together to open access for
wholesale power flows on transmission systems. Utilities owning
transmission facilities (including the company) are required to
provide services to wholesale transmission customers comparable to
those they provide to themselves on comparable terms and conditions
including price. Among other things, the rules require transmission
services to be unbundled from power sales and owners of transmission
systems must take transmission service under their own transmission
tariffs.
Transmission system owners are also required to implement an
OASIS system providing, via the Internet, access to transmission
service information (including price and availability), and to rely
exclusively on their own OASIS system for such information for
purposes of their own wholesale power transactions. To facilitate
compliance, owners must implement Standards of Conduct to ensure that
personnel involved in marketing of wholesale power are functionally
separated from personnel involved in transmission services and
reliability functions. The company, together with other utilities, has
implemented an OASIS system and believes it is in compliance with the
Standards of Conduct.
FERC Proceedings:
In July 1996 FERC's final rule on open access mandated that all
public utilities file transmission service tariffs with terms and
conditions that conform with FERC's "pro forma" tariffs. The company
received interventions and protests from various parties to the
implementing tariffs it filed. On Jan. 29, 1997, FERC ordered minor
revisions in the terms and conditions of these tariffs. The rates
proposed by the company had previously become effective on July 10,
1996, subject to refund.
The company has intervened and protested the rates filed by
Florida Power and Light Company and Florida Power Corporation.
FINANCING ACTIVITY
The company's 1996 year-end capital structure was 40 percent
debt, 59 percent common equity and 1 percent preferred equity. The
company's objective is to maintain a capital structure over time that
will support its current credit ratings.
Credit Ratings/Senior Debt
Duff & Phelps Moody's Standard & Poor's
AA+ Aa2 AA
In December 1996 the Polk County Industrial Development Authority
issued $75 million of Solid Waste Disposal Facility Revenue Bonds for
the benefit of the company. The bonds were issued at a tax-exempt rate
of 5.85% and will mature on Dec. 1, 2030. The proceeds of the issue
were used to repay short-term debt incurred during the construction of
the Polk Power Station.
In April 1996, the company retired $35 million aggregate par
value 8.0% Series E and 7.44% Series F preferred stock at redemption
prices of $102.00 and $101.00 respectively.
As a part of its risk management program the company had entered
into an interest rate exchange agreement to moderate its exposure to
interest rate changes. This agreement expired in early 1996.
Currently, the company is not a party to and does not own any
derivative instruments.
LIQUIDITY, CAPITAL RESOURCES
The company met cash needs during 1996 largely with internally
generated funds, short-term debt and capital contributions from its
parent.
At Dec. 31, 1996 the company had bank credit lines of $180
million, all of which was available.
The company anticipates meeting its capital requirements for
ongoing operations in 1997 through 2001 substantially from internally
generated funds.
INVESTMENT CONSIDERATIONS
The following are certain of the factors which could affect the
company's future results. They should be considered in connection with
evaluating forward-looking statements contained in this Management's
Discussion and Analysis and elsewhere in this Report and otherwise
made by or on the behalf of the company since these factors, among
others, could cause actual results and conditions to differ materially
from those projected in these forward-looking statements.
General Economic Conditions. The company's business is dependent
on general economic conditions. In particular, the projected growth in
the company's service area is important to the realization of
forecasts for annual energy sales growth for 1997 and beyond. An
unanticipated downturn in the area's economy could adversely affect
the company's performance through time.
Weather Variations. The company's business is affected by
variations in general weather conditions and unusually severe weather.
In particular, energy sales are sensitive to variations in weather
conditions. The company forecasts energy sales on the basis of normal
weather, which represents a long-term historical average. Significant
variations from normal weather could have a material impact on energy
sales. Unusual weather, such as hurricanes, could also have an effect
on operating costs as well as sales.
Potential Competitive Changes. The electric industry has been
undergoing certain restructuring. Competition in wholesale power sales
has been introduced on a national level. Some states have mandated or
encouraged competition at the retail level. While there is active
wholesale competition in Florida, the retail electric business has
remained substantially free from direct competition. Changes in the
competitive environment occasioned by legislation, regulation or
market conditions, however, particularly with respect to retail
competition, could adversely affect the company's business and its
performance.
Regulatory Actions. The company operates in a highly regulated
industry. Its retail operations, including the prices it charges, are
regulated by the FPSC, and its wholesale power sales and transmission
services are subject to regulation by FERC. Changes in regulatory
requirements or adverse regulatory actions could have an adverse
affect on the company's performance.
Commodity Price Changes. The company's business is sensitive to
changes in certain commodity prices. Fuel costs used for generation
are mostly affected by the cost of coal. The company is able to pass
the cost of fuel through to retail customers, but increases in fuel
costs affect electric prices and therefore the competitive position of
electricity against other energy sources. On the wholesale side, the
ability to make sales and the margins on power sales are affected by
the cost of coal to the company particularly as it relates to the cost
of oil and gas to other power producers.
Environmental Matters. The company is subject to regulation by
various governmental authorities dealing with air, water and other
environmental matters. Changes in and compliance with these
regulations may impose additional costs on the company, or result in
the curtailment of certain activities.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
No.
Report of Independent Accountants 24
Balance Sheets, Dec. 31, 1996 and 1995 25
Statements of Income for the years ended
Dec. 31, 1996, 1995 and 1994 26
Statements of Cash Flows for the years ended
Dec. 31, 1996, 1995 and 1994 27
Statements of Retained Earnings for the years ended
Dec. 31, 1996, 1995 and 1994 28
Statements of Capitalization, Dec. 31, 1996 and 1995 28-30
Notes to Financial Statements 31-39
Financial Statement Schedules have been omitted since they are
not required, are inapplicable or the required information is
presented in the financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Tampa Electric Company,
We have audited the balance sheets of Tampa Electric Company, (a
wholly owned subsidiary of TECO Energy, Inc.) as of Dec. 31, 1996 and
1995, and the related statements of income, cash flows, retained
earnings and capitalization for each of the three years in the period
ended Dec. 31, 1996. These financial statements are the responsibility
of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Tampa Electric Company as of Dec. 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years in
the period ended Dec. 31, 1996, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Certified Public Accountants
Tampa, Florida
Jan. 15, 1997
BALANCE SHEETS
(millions)
Assets
Dec. 31, 1996 1995
Property, Plant and Equipment,
At Original Cost
Utility plant in service $3,536.6 $2,930.2
Construction work in progress 40.2 475.2
3,576.8 3,405.4
Accumulated depreciation (1,298.5) (1,203.3)
2,278.3 2,202.1
Other property 6.0 .9
2,284.3 2,203.0
Current Assets
Cash and cash equivalents .1 3.8
Receivables, less allowance
for uncollectibles 128.8 120.3
Inventories, at average cost
Fuel 57.0 70.0
Materials and supplies 41.2 38.7
Prepayments 3.5 3.5
230.6 236.3
Deferred Debits
Unamortized debt expense 17.4 18.3
Deferred income taxes 102.9 94.6
Regulatory asset-tax related 44.8 36.9
Other 43.2 50.1
208.3 199.9
$2,723.2 $2,639.2
Liabilities and Capital
Capital
Common stock $ 935.4 $ 851.9
Retained earnings 191.7 188.2
1,127.1 1,040.1
Preferred stock, redemption not required 20.0 55.0
Long-term debt, less amount due
within one year 661.1 583.1
1,808.2 1,678.2
Current Liabilities
Long-term debt due within one year 1.0 26.0
Notes payable 98.6 144.5
Accounts payable 117.3 117.4
Customer deposits 52.9 51.3
Interest accrued 12.1 8.9
Taxes accrued 7.4 16.5
289.3 364.6
Deferred Credits
Deferred income taxes 359.5 331.8
Investment tax credits 53.8 58.5
Regulatory liability-tax related 80.6 84.5
Other 131.8 121.6
625.7 596.4
$2,723.2 $2,639.2
The accompanying notes are an integral part of the financial
statements.
STATEMENTS OF INCOME
(millions)
Year ended Dec. 31, 1996 1995 1994
Operating Revenues
Residential $ 539.7 $ 523.3 $ 505.5
Commercial 321.3 316.1 316.8
Industrial-Phosphate 59.6 61.7 58.3
Industrial-Other 43.3 45.0 50.0
Sales for resale 93.3 80.0 70.4
Deferred and other revenues 55.7 66.2 93.9
1,112.9 1,092.3 1,094.9
Operating Expenses
Operation
Fuel 383.1 384.3 389.3
Purchased power 49.0 44.4 33.4
Other 164.2 163.3 171.6
Restructuring charge -- -- 21.3
Maintenance 65.5 69.6 72.9
Depreciation 120.2 113.3 115.1
Taxes-Federal and state income 71.3 66.2 57.4
Taxes-Other than income 87.0 87.9 86.8
940.3 929.0 947.8
Operating Income 172.6 163.3 147.1
Other Income (Expense)
Allowance for other funds
used during construction 16.5 13.7 3.5
Other income (expense), net (.2) (.4) (1.2)
16.3 13.3 2.3
Income before interest charges 188.9 176.6 149.4
Interest Charges
Interest on long-term debt 39.3 38.2 36.9
Other interest 14.4 10.3 4.6
Allowance for borrowed funds
used during construction (6.4) (5.6) (2.2)
47.3 42.9 39.3
Net Income 141.6 133.7 110.1
Preferred dividend
requirements 1.8 3.6 3.6
Balance Applicable to
Common Stock $ 139.8 $ 130.1 $ 106.5
The accompanying notes are an integral part of the financial
statements.
STATEMENTS OF CASH FLOWS
(millions)
Year ended Dec. 31, 1996 1995 1994
Cash Flows from
Operating Activities
Net income $141.6 $ 133.7 $ 110.1
Adjustments to reconcile net
income to net cash
Depreciation 120.2 113.3 115.1
Deferred income taxes 7.6 (13.8) (14.1)
Restructuring charge and
other cost reductions -- -- 21.3
Investment tax credits, net (4.7) (4.8) (5.4)
Allowance for funds used
during construction (22.9) (19.3) (5.7)
Deferred clause revenues
(expenses) 4.0 (12.4) 19.9
Deferred revenue 34.2 50.8 --
Coal contract buyout 2.7 2.0 (25.5)
Refund to customers (6.0) -- (2.4)
Receivables, less allowance
for uncollectibles (8.5) (16.8) (5.3)
Fuel inventory 13.0 25.8 (18.4)
Taxes accrued (9.1) 14.4 (10.2)
Accounts payable (.1) 3.6 27.8
Other (12.5) 25.1 18.1
259.5 301.6 225.3
Cash Flows from
Investing Activities
Capital expenditures (203.4) (334.5) (230.8)
Allowance for funds used
during construction 22.9 19.3 5.7
(180.5) (315.2) (225.1)
Cash Flows from
Financing Activities
Proceeds from contributed
capital from parent 83.0 76.0 111.0
Proceeds from long-term debt 78.0 .6 .7
Repayment of long-term debt (25.3) (.2) (.2)
Net increase (decrease)in
short-term debt (45.9) 52.7 10.3
Redemption of preferred stock (35.5) -- --
Dividends (137.0) (118.8) (119.4)
(82.7) 10.3 2.4
Net increase (decrease)
in cash and cash equivalents (3.7) (3.3) 2.6
Cash and cash equivalents at
beginning of year 3.8 7.1 4.5
Cash and cash equivalents at
end of year $ .1 $ 3.8 $ 7.1
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest $ 39.4 $ 42.6 $ 39.8
Income taxes $ 83.9 $ 71.2 $ 83.9
The accompanying notes are an integral part of the financial
statements.
STATEMENTS OF RETAINED EARNINGS
(millions)
Year ended Dec. 31, 1996 1995 1994
Balance, Beginning of Year $187.1(1) $173.3 $182.6(2)
Add-Net income 141.6 133.7 110.1
328.7 307.0 292.7
Deduct-Cash dividends on
capital stock
Preferred 2.1 3.6 3.6
Common 134.9 115.2 115.8
137.0 118.8 119.4
Balance, End of Year $191.7 $188.2 $173.3
(1) The Retained Earnings balance was reduced by $1.1 million
related to the retirement of preferred stock Series E and F on
April 29, 1996. See Statements of Capitalization below.
(2) The Retained Earnings balance at Jan. 1, 1994 was restated to
reflect a net $.3 million reclassification of stock issuance
expense and additional paid in capital in accordance with a FERC
audit recommendation. See Note B on page 33.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF CAPITALIZATION
Capital Stock
Outstanding Cash Dividends
Dec.31, 1996 Paid in 1996(1)
Current
Redemption Per
Price Shares Amount(2) Share Amount(2)
Common stock-Without par value
25 million shares
authorized N/A 10 $935.4 N/A $135.0
Preferred Stock-$100 Par Value
1.5 million shares authorized
4.32% Cumulative,
Series A $103.75 49,600 $ 5.0 $4.32 $ .2
4.16% Cumulative,
Series B $102.875 50,000 5.0 $4.16 .2
4.58% Cumulative,
Series D $101.00 100,000 10.0 $4.58 .5
8.00% Cumulative,
Series E (3) -- -- -- -- .5 (3)
7.44% Cumulative,
Series F (3) -- -- -- -- .7 (3)
199,600 $20.0 $2.1
Preferred Stock - No Par
2.5 million shares authorized, none outstanding.
Preference Stock - No Par
2.5 million shares authorized, none outstanding.
_________________
(1) Quarterly dividends paid on Feb. 15, May 15, Aug. 15 and Nov. 15.
(2) Millions.
(3) Amounts paid in 1996 for Series E and F reflect dividends paid through
April 29, 1996, the date that these series were redeemed.
STATEMENTS OF CAPITALIZATION (continued)
In April 1996, the company retired $35 million aggregate par value of 8.00%
Series E and 7.44% Series F preferred stock at redemption prices of $102.00 and
$101.00 per share, respectively.
At Dec. 31, 1996, preferred stock had a carrying amount of $20.0 million
and an estimated fair market value of $12.6 million. The estimated fair market
value of preferred stock was based on quoted market prices.
Long-Term Debt Outstanding at Dec. 31, Due 1996 1995
First mortgage bonds (issuable in series):
5 1/2% 1996 $ -- $ 25.0
7 3/4% 2022 75.0 75.0
5 3/4% 2000 80.0 80.0
6 1/8% 2003 75.0 75.0
Installment contracts payable(2)
5 3/4% 2007 24.1 24.4
7 7/8% Refunding bonds(3) 2021 25.0 25.0
8% Refunding bonds(3) 2022 100.0 100.0
6 1/4% Refunding bonds(4) 2034 86.0 86.0
5.85% 2030 75.0 --
Variable rate: 3.56% for 1996 and
3.81% for 1995(1) 2025 51.6 51.6
Variable rate: 3.43% for 1996 and
3.72% for 1995(1) 2018 54.2 54.2
Variable rate: 3.67% for 1996 and
3.90% for 1995(1)(5) 2020 20.0 16.9
Unamortized debt premium (discount), net (3.8) (4.0)
662.1 609.1
Less amount due within one year(6) 1.0 26.0
Total long-term debt $ 661.1 $ 583.1
(1) Composite year-end interest rate.
(2) Tax-exempt securities.
(3) Proceeds of these bonds were used to refund bonds with interest
rates of 11 5/8% - 12 5/8%. For accounting purposes, interest
expense has been recorded using blended rates of 8.28%-8.66% on
the original and refunding bonds, consistent with regulatory
treatment.
(4) Proceeds of these bonds were used to refund bonds with an
interest rate of 9.9% in February 1995. For accounting purposes,
interest expense has been recorded using a blended rate of 6.52%
on the original and refunding bonds, consistent with regulatory
treatment.
(5) This amount is recorded net of $3.1 million on deposit with
trustee at Dec. 31, 1995.
(6) Of the amount due in 1997, $.8 million may be satisfied by the
substitution of property in lieu of cash payments.
Substantially all of the property, plant and equipment of the
company is pledged as collateral. Maturities and annual sinking fund
requirements of long-term debt for the years 1998, 1999, 2000 and 2001
are $1.1 million, $1.1 million, $81.1 million, and $1.1 million,
respectively. Of these amounts $.8 million per year for 1998 through
2001 may be satisfied by the substitution of property in lieu of cash
payments.
STATEMENTS OF CAPITALIZATION (continued)
At Dec. 31, 1996, total long-term debt had a carrying amount of
$661.1 million and an estimated fair market value of $701.5 million.
The estimated fair market value of long-term debt was based on quoted
market prices for the same or similar issues, on the current rates
offered for debt of the same remaining maturities, or for long-term
debt issues with variable rates that approximate market rates, at
carrying amounts. The carrying amount of long-term debt due within one
year approximated fair market value because of the short maturity of
these instruments.
The company had an interest rate exchange agreement, which
expired Jan. 11, 1996, to reduce the cost of $100 million of fixed
rate long-term debt. The agreement reduced interest expense by $2.3
million per year in 1995 and 1994.
The accompanying notes are an integral part of the financial
statements.
NOTES TO FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Basis of Accounting
Tampa Electric Company (Tampa Electric or the company) maintains
its accounts in accordance with recognized policies prescribed or
permitted by the Florida Public Service Commission (FPSC) and the
Federal Energy Regulatory Commission (FERC). These policies conform
with generally accepted accounting principles in all material
respects.
The impact of Financial Accounting Standard (FAS) No. 71,
Accounting for the Effects of Certain Types of Regulation, has been
minimal in the company's experience, but when cost recovery is ordered
over a period longer than a fiscal year, costs are recognized in the
period that the regulatory agency recognizes them in accordance with
FAS 71. Also as provided in FAS 71, the company has deferred revenues
in accordance with various regulatory agreements approved by the FPSC
in 1995 and 1996. In the future, these revenues will be recognized as
allowed under the terms of the agreements.
The company's retail and wholesale businesses are regulated by
the FPSC and the FERC, respectively. Prices allowed by both agencies
are generally based on recovery of prudent costs incurred plus a
reasonable return on invested capital.
The use of estimates is inherent in the preparation of financial
statements in accordance with generally accepted accounting
principles.
Revenues and Fuel Costs
Revenues include amounts resulting from cost recovery clauses
which provide for monthly billing charges to reflect increases or
decreases in fuel, purchased capacity, oil backout, conservation and
environmental costs. These adjustment factors are based on costs
projected by the company for a specific recovery period. Any over-recovery
or under-recovery of costs plus an interest factor are taken
into account in the process of setting adjustment factors for
subsequent recovery periods. Over-recoveries of costs are recorded as
deferred credits and under-recoveries of costs are recorded as
deferred debits.
In August 1996, the FPSC approved the company's petition for
recovery of certain environmental compliance costs through the
environmental cost recovery clause. These are new costs incurred by
the company to comply with environmental regulations enacted
subsequent to its most recent full regulatory price setting proceeding
but not included in current rates. The company plans to seek
continuing recovery of these types of costs through this clause until
the next full regulatory price setting proceeding.
On May 10, 1995, the FPSC approved the termination of the oil
backout clause effective Jan. 1, 1996. Any oil backout project costs
incurred beginning Jan 1, 1996 were no longer recovered through the
cost recovery clause.
In December 1994, the company bought out a long-term coal supply
contract which would have expired in 2004 for a lump sum payment of
$25.5 million and entered into two new contracts with the supplier.
The coal supplied under the new contracts is competitive in price with
coals of comparable quality. As a result of this buyout, the company's
customers will benefit from anticipated net fuel savings of more than
$40 million through the year 2004. In February 1995, the FPSC
authorized the recovery of the $25.5 million buy-out amount plus
carrying costs through the Fuel and Purchased Power Cost Recovery
Clause over the ten-year period beginning April 1, 1995. In 1996 and
1995, $2.7 million and $2 million, respectively, of buy-out costs were
amortized to expense.
Certain other costs incurred by the company are allowed to be
recovered from customers through prices approved in the regulatory
process. These costs are recognized as the associated revenues are
billed.
The company accrues base revenues for services rendered but
unbilled to provide a closer matching of revenues and expenses.
In May 1996, the FPSC issued an order approving an agreement
among the company, the Office of Public Counsel (OPC) and the Florida
Industrial Power Users Group (FIPUG) regarding 1996 earnings. This
agreement provides for a $25-million revenue refund to customers to be
made over the 12-month period beginning Oct. 1, 1996. This refund
consists of $15 million of revenues deferred from 1996 and $10 million
of revenues deferred from 1995, plus accrued interest.
In October 1996, the FPSC approved an agreement among the
company, OPC and FIPUG that resolved all pending regulatory issues
associated with the Polk Power Station. The agreement allows the full
recovery of all of the expected capital costs and operations and
maintenance expenses associated with the Polk Power Station, and calls
for an extension of the base rate freeze established in the May
agreement through 1999. Under the October agreement, the $25-million
refund established in the May agreement remains intact and customers
will receive a $25-million temporary base rate reduction to be
reflected as a credit on customer bills over a 15-month period
beginning Oct. 1, 1997.
Depreciation
The company provides for depreciation primarily by the straight-line
method at annual rates that amortize the original cost, less net
salvage, of depreciable property over its estimated service life. The
provision for utility plant in service, expressed as a percentage of
the original cost of depreciable property, was 3.9% for 1996 and 1995,
and 4.2% for 1994.
The original cost of utility plant retired or otherwise disposed
of and the cost of removal less salvage are charged to accumulated
depreciation.
Asset Impairment
FAS 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets Disposed Of (FAS 121), effective for years
beginning after Dec. 15, 1995, requires that long-lived assets and
certain intangibles to be held and used by the company be reviewed for
impairment. The company periodically assesses whether there has been a
permanent impairment of these assets. No write-down of assets due to
impairment was required in 1996.
Deferred Income Taxes
The company utilizes the liability method in the measurement of
deferred income taxes. Under the liability method, the temporary
differences between the financial statement and tax bases of assets
and liabilities are reported as deferred taxes measured at current tax
rates. The company is a regulated enterprise, and its books and
records reflect approved regulatory treatment, including certain
adjustments to accumulated deferred income taxes and the establishment
of a corresponding regulatory tax liability reflecting the amount
payable to customers through future rates.
Investment Tax Credits
Investment tax credits have been recorded as deferred credits and
are being amortized to income tax expense over the service lives of
the related property.
Allowance for Funds Used During Construction (AFUDC)
AFUDC is a non-cash credit to income with a corresponding charge
to utility plant which represents the cost of borrowed funds and a
reasonable return on other funds used for construction. The rate used
to calculate AFUDC is revised periodically to reflect significant
changes in the company's cost of capital. The rate was 7.79% for 1996
and 1995, and 7.28% for 1994. The base on which AFUDC is calculated
excludes construction work in progress which has been included in rate
base.
Short-Term Investments
There were no short-term investments or available-for-sale
securities at Dec. 31, 1996 or 1995.
Reclassifications and Restatements
Certain 1995 and 1994 amounts were reclassified or restated to
conform with current year presentation.
B. Common Stock
The company is a wholly owned subsidiary of TECO Energy, Inc.
Common Stock Issue
Shares Amount Expense
(thousands)
Balance Dec. 31, 1993 10 $666.3 $(1.7)
Contributed capital from parent 111.0 --
Reclassification to other
capital accounts(1) -- .3
Balance Dec. 31, 1994 10 777.3 (1.4)
Contributed capital from parent 76.0 --
Balance Dec. 31, 1995 10 853.3 (1.4)
Contributed capital from parent 83.0 --
Costs associated with Preferred
Stock retirements (2) -- .5
Balance Dec. 31, 1996 10 $936.3 $ (.9)
(1) In 1994, a FERC audit recommended that $.3 million of net costs
be reclassified from common stock issuance expense and
additional paid in capital, to retained earnings. The issuance
expense related to a retired series of preferred stock.
(2) In April 1996, the company retired $35 million aggregate par
value of 8.00% Series E and 7.44% series F preferred stock. In
connection with this retirement, $.5 million of associated
issuance costs were recognized.
C. Retained Earnings
The company's Restated Articles of Incorporation and certain
series of the company's first mortgage bond issues contain provisions
that limit the dividend payment on the company's common stock and the
purchase or retirement of the company's capital stock. At Dec. 31,
1996, substantially all of the company's retained earnings were
available for dividends on its common stock.
D. Retirement Plan
The company is a participant in the comprehensive retirement
plan of TECO Energy, which has a non-contributory defined benefit
retirement plan which covers substantially all employees. Benefits are
based on employees' years of service and average final earnings.
TECO Energy's policy is to fund the plan within the guidelines
set by ERISA for the minimum annual contribution and the maximum
allowable as a tax deduction by the IRS. The company's share of net
pension expense, excluding the restructuring charge, was $1.8 million
for 1996, $0.2 million for 1995 and $0.9 million for 1994. The
company's portion of pension expense related to the restructuring
charge in 1994 was $12.7 million. About 67 percent of plan assets were
invested in common stocks and 33 percent in fixed income investments
at Dec. 31, 1996.
Components of net pension expense, reconciliation of the funded
status and the accrued pension liability are presented below for TECO
Energy consolidated.
Components of Net Pension Expense
(millions)
1996 1995 1994
Service cost
(benefits earned during the period) $ 9.4 $ 7.2 $ 8.8
Interest cost on projected
benefit obligations 18.8 17.3 15.8
Less: Return on plan assets
Actual 43.4 66.4 (3.7)
Less net amortization of unrecognized
transition asset and deferred return 18.6 43.3 (25.8)
Net return on assets 24.8 23.1 22.1
Net pension expense 3.4 1.4 2.5
Effect of restructuring charge (.9) -- 13.3
Net pension expense recognized
in the Consolidated Statements
of Income $ 2.5 $ 1.4 $15.8
Reconciliation of the Funded Status of the Retirement Plan and the
Accrued Pension Prepayment/(Liability)
(millions)
Dec. 31, Dec. 31,
1996 1995
Fair market value of plan assets $ 320.5 $ 286.7
Projected benefit obligation (262.2) (260.2)
Excess of plan assets over projected
benefit obligation 58.3 26.5
Less unrecognized net gain from past
experience different from that assumed 65.9 33.4
Less unrecognized prior service cost (11.7) (7.1)
Less unrecognized net transition asset
(being amortized over 19.5 years) 8.5 9.5
Accrued pension prepayment/(liability) $ (4.4) $ (9.3)
Accumulated benefit obligation
(including vested benefits of
$196.7 for 1996 and $193.2 for 1995) $ 220.0 $ 215.2
Assumptions Used in Determining Actuarial Valuations
1996 1995
Discount rate to determine projected
benefit obligation 7.75% 7.3%
Rates of increase in compensation levels 3.3-5.3% 3.3-5.3%
Plan asset growth rate through time 9% 9%
E. Postretirement Benefit Plan
The company currently provides certain postretirement health care
benefits for substantially all employees retiring after age 55 meeting
certain service requirements. The company contribution toward health
care coverage for most employees retiring after Jan. 1, 1990 is
limited to a defined dollar benefit based on years of service.
Postretirement benefit levels are substantially unrelated to salary.
The company reserves the right to terminate or modify the plan in
whole or in part at any time.
Components of Postretirement Benefit Cost (millions)
1996 1995 1994
Service cost (benefits earned
during the period) $ 1.3 $ 1.2 $ 1.5
Interest cost on projected
benefit obligations 4.3 4.8 4.1
Amortization of transition obligation
(straight line over 20 years) 1.9 2.0 2.1
Amortization of actuarial (gain)/loss .3 .2 .2
Net periodic postretirement
benefit expense 7.8 8.2 7.9
Effect of restructuring charge -- -- 2.6
Net periodic postretirement
benefit expense recognized in
the Statements of Income $ 7.8 $ 8.2 $10.5
Reconciliation of the Funded Status of the Postretirement Benefit Plan
and the Accrued Liability (millions)
Dec. 31, Dec. 31,
1996 1995
Accumulated postretirement benefit obligation
Active employees eligible to retire $ (2.4) $ (2.2)
Active employees not eligible to retire (18.6) (22.6)
Retirees and surviving spouses (37.8) (41.8)
(58.8) (66.6)
Less unrecognized net gain/(loss)
from past experience (9.2) (16.7)
Less unrecognized transition obligation (29.6) (33.9)
Liability for accrued postretirement benefit $(20.0) $(16.0)
Assumptions used in Determining Actuarial Valuations
Discount rate to determine projected
benefit obligation 7.75% 7.35%
The assumed health care cost trend rate for medical costs prior
to age 65 was 10.25% in 1996 and decreases to 5.75% in 2002 and
thereafter. The assumed health care cost trend rate for medical costs
after age 65 was 7.25% in 1996 and decreases to 5.75% in 2002 and
thereafter.
A 1 percent change in the medical trend rates would produce a
7 percent ($0.4 million) change in the aggregate service and interest
cost for 1996 and an 8 percent ($4.7 million) change in the
accumulated postretirement benefit obligation as of Dec. 31, 1996.
F. Restructuring Charge
In 1994, the company implemented a corporate restructuring program
which resulted in a $21.3 million charge ($13.1 million after tax).
The cost of this restructuring program included 225 early retirements,
the elimination of other positions and other cost control initiatives.
Approximately $1.7 million of this charge was paid in 1994 and $3.8
million in 1995. No amount remained payable at the end of 1996. The
impact on pension cost resulting from the restructuring as determined
under the provisions of FAS 88, "Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination
Benefits," was approximately $13.0 million. The impact on
postretirement benefits as determined under FAS 106, "Accounting for
Postretirement Benefits Other Than Pensions," was approximately $2.6
million. These amounts are included as part of the total charge of
$21.3 million. See Note D on pages 34 and 35, and Note E on pages 35
and 36.
G. Income Tax Expense
The company is included in the filing of a consolidated Federal income
tax return with its parent and affiliates. The company's income tax
expense is based upon a separate return computation. Income tax
expense consists of the following components:
(millions) Federal State Total
1996
Currently payable $ 58.1 $ 10.1 $ 68.2
Deferred 6.7 .9 7.6
Amortization of investment
tax credits (4.7) - (4.7)
Total income tax expense $ 60.1 $ 11.0 71.1
Included in other income, net (.2)
Included in operating expenses $ 71.3
1995
Currently payable $ 72.1 $ 12.5 $ 84.6
Deferred (11.8) (2.0) (13.8)
Amortization of investment
tax credits (4.8) - (4.8)
Total income tax expense $ 55.5 $ 10.5 66.0
Included in other income, net (.2)
Included in operating expenses $ 66.2
1994
Currently payable $ 68.3 $ 9.9 $ 78.2
Deferred (11.1) (3.0) (14.1)
Investment tax credits (.6) -- (.6)
Amortization of investment
tax credits (4.8) -- (4.8)
Total income tax expense $ 51.8 $ 6.9 58.7
Included in other income, net 1.3
Included in operating expenses $ 57.4
Deferred taxes result from temporary differences in the
recognition of certain liabilities or assets for tax and financial
reporting purposes. The principal components of the company's deferred
tax assets and liabilities recognized in the balance sheet are as
follows:
Dec. 31, Dec. 31,
(millions) 1996 1995
Deferred tax assets(1)
Property related $ 84.4 $ 76.6
Leases 5.4 5.5
Insurance reserves 7.2 6.6
Early capacity payments 2.2 2.2
Other 3.7 3.7
Total deferred income tax assets 102.9 94.6
Deferred income tax liabilities(1)
Property related (401.7) (361.5)
Other 42.2 29.7
Total deferred income tax liabilities (359.5) (331.8)
Accumulated deferred income taxes $(256.6) $(237.2)
_________________
(1) Certain property related assets and liabilities have been netted.
The total income tax provisions differ from amounts computed by
applying the federal statutory tax rate to income before income taxes
for the following reasons:
(millions) 1996 1995 1994
Net income $141.6 $133.7 $110.1
Total income tax provision 71.2 66.0 58.7
Income before income taxes $212.8 $199.7 $168.8
Income taxes on above at federal
statutory rate (35% for 1996,
1995 and 1994) $ 74.5 $ 70.0 $ 59.1
Increase (decrease) due to
State income tax, net of federal
income tax 7.2 6.8 4.5
Amortization of investment tax
credits (4.7) (4.8) (4.8)
Equity portion of AFUDC (5.8) (4.9) (1.4)
Other (.1) (1.1) 1.3
Total income tax provision $ 71.1 $ 66.0 $ 58.7
Provision for income taxes as
a percent of income before
income taxes 33.4% 33.0% 34.8%
H. Short-Term Debt
Notes payable consisted exclusively of commercial paper with
weighted average interest rates of 5.40% and 5.69% at Dec. 31, 1996
and Dec. 31, 1995, respectively. The carrying amount of notes payable
approximated fair market value because of the short maturity of these
instruments. Unused lines of credit at Dec. 31, 1996 were $180
million. Certain lines of credit require commitment fees ranging from
.05% to .075% on the unused balances.
I. Related Party Transactions (millions)
Net transactions with affiliates are as follows:
1996 1995 1994
Fuel and interchange related, net $154.9 $166.4 $180.0
Administrative and general, net $ 10.1 $ 11.8 $ 9.0
Amounts due from or to affiliates of the company at year-end are as
follows:
1996 1995
Accounts receivable $ 2.3 $ 2.6
Accounts payable $ 17.7 $ 23.9
Accounts receivable and accounts payable were incurred in the ordinary
course of business and do not bear interest.
J. Pending Merger
In November 1996, TECO Energy announced an agreement with Lykes
Energy, Inc. (LEI) to merge it into TECO Energy in a tax-free,
stock-for-stock transaction with an equity value of $300 million. This
merger, to be accounted for as a pooling of interests, was approved by
both companies' boards of directors and in December 1996 by the Lykes
Energy shareholders. Approval by TECO Energy shareholders is not
required.
The principal subsidiary of LEI is Peoples Gas System (PGS), a
regulated retail natural gas distributor in Florida. PGS is Florida's
largest natural gas distribution company with retail operations in all
of the state's major metropolitan communities and over 200,000
customers. It recorded annual sales of 86 Bcf of natural gas in fiscal
1996.
TECO Energy plans to merge PGS into Tampa Electric
immediately after the merger between TECO Energy and LEI, and
thereafter to operate PGS as a separate business unit.
The merger is subject to certain closing conditions with closing
expected by mid-year 1997.
K. Commitments and Contingencies
The company has made certain commitments in connection with its
continuing capital improvements program. Capital expenditures are
estimated to be $116 million for 1997 and $470 million for 1998
through 2001 for equipment and facilities to meet customer growth.
This includes commitments of approximately $7 million at the end of
1996.
Capital requirements for PGS are not reflected in the above
projections. Capital investment plans for this company are still being
developed.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
During the period from Jan. 1, 1995 to the date of this report,
the company has not had and has not filed with the Commission a report
as to any changes in or disagreements with accountants on accounting
principles or practices, financial statement disclosure or auditing
scope or procedure.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Information concerning Directors of Tampa Electric is as
follows:
Principal Occupation During
Last Five Years and Director
Name Age Other Directorships Held Since
Girard F. Anderson 65 President and Chief Operating 1994
Officer, TECO Energy, Inc.;
formerly Executive Vice President
-Utility Operations, TECO Energy,
Inc. and President and Chief
Operating Officer, Tampa Electric
Company
DuBose Ausley 59 Chairman, Ausley & McMullen 1992
(attorneys), Tallahassee, Florida;
formerly Chairman Macfarlane,
Ausley, Ferguson & McMullen
(attorneys), Tallahassee, Florida
and President of a predecessor firm;
also a director of Sprint Corporation
and Capital City Bank Group Inc.
Sara L. Baldwin 65 Private Investor; formerly 1980
Vice President, Baldwin and
Sons, Inc. (insurance agency),
Tampa, Florida
Hugh L. Culbreath 75 Retired; formerly Chairman of 1971
the Board of TECO Energy, Inc.
and Tampa Electric Company
James L. Ferman, Jr. 53 President, Ferman Motor Car 1985
Company, Inc. (automobile
dealerships), Tampa, Florida;
also a director of The Bank of
Tampa and its holding company,
The Tampa Banking Company
Edward L. Flom 67 Retired; formerly Chairman 1980
of the Board and Chief Executive
Officer, Florida Steel
Corporation (production and
fabrication of steel products),
Tampa, Florida; also a director
of Outback Steakhouse, Inc.
Henry R. Guild, Jr. 68 President and Director, Northeast1980
Investment Management, Inc. (private
trustees and family investment
advisers), Boston, Massachusetts
Timothy L. Guzzle 60 Chairman of the Board and 1988
Chief Executive Officer,
Tampa Electric Company and
TECO Energy, Inc.; also a director
of NationsBank Corporation
Dennis R. Hendrix 57 Chairman of the Board and formerly 1995
Chief Executive Officer and
President, PanEnergy Corp
interstate gas pipeline),
Houston, Texas;
also a director of Texas Eastern
Products Pipeline Company, general
partner of TEPPCO Partners, LP, a
publicly traded limited partnership
Robert L. Ryan 53 Senior Vice President and 1991
Chief Financial Officer,
Medtronic, Inc. (medical
devices manufacturer),
Minneapolis, Minnesota;
formerly Vice President-Finance,
Union Texas Petroleum Holdings,
Inc. (independent oil and gas
exploration and production),
Houston, Texas; also a director
of Inter-Regional Financial Group,
Inc. and United Healthcare Corporation
William P. Sovey 63 Vice Chairman and Chief Executive 1996
Officer and formerly President
and Chief Operating Officer,
Newell Co. (consumer products),
Freeport, Illinois; also a director
of Acme Metals, Inc.
J. Thomas Touchton 58 Managing Partner, The 1987
Witt-Touchton Company (private
investment partnership), Tampa,
Florida; also a director of
17 Merrill Lynch-sponsored
mutual funds
John A. Urquhart 68 President, John A. Urquhart 1991
Associates (management
consultants), Fairfield,
Connecticut and Vice Chairman and
Director of Enron Corp. (diversified
natural gas company), Houston, Texas;
formerly Senior Vice President,
G. E. Industrial & Power Systems,
General Electric Company; also a
director of Hubbell Incorporated and
Aquarion Company
James O. Welch, Jr. 65 Retired; formerly Vice Chairman, 1976
RJR Nabisco, Inc. and Chairman,
Nabisco Brands, Inc.; also a
director of Kmart Corporation and
Vanguard Group of Investment Companies
The term of office of each director extends to the next annual
meeting of shareholders, scheduled to be held on April 16, 1997, and
until a successor is elected and qualified. At present, all the
directors of the company are also directors of TECO Energy.
(b) Information concerning the current executive officers of the
company is as follows:
Current Positions and
Principal Occupations
Name Age During Last Five Years
Timothy L. Guzzle 60 Chairman of the Board and
Chief Executive Officer;
also Chairman of the
Board and Chief Executive
Officer of TECO Energy, Inc.
Keith S. Surgenor 49 President and Chief
Operating Officer, 1994 to
date; and prior thereto, Vice
President-Human Resources.
Charles R. Black 46 Vice President-Energy Supply,
January 1997 to date; and
prior
thereto, Vice President-Project
Management.
William N. Cantrell 44 Director Peoples Gas Companies
Transition Team, 1996 to date;
Vice President-Energy Supply,
1994 to January 1997; and
prior
thereto, Vice President-Energy
Resource Planning.
Roger A. Dunn 54 Vice President-Human
Resources,
1995 to date; also
Vice President-Human Resources
of TECO Energy, Inc., 1995 to
date; and prior thereto,
Senior Vice President-
Human Resources and
Corporate Affairs of LTV
Corporation (steel
manufacturer), Cleveland, Ohio.
Gordon L. Gillette 37 Vice President-Regulatory
And Business Strategy, 1996 to
date;
Vice President-Regulatory
Affairs,
1994 to 1996; and prior
thereto,
Director-Project Services,
TECO Power Services
Corporation.
William L. Griffin 42 Vice President-Controller,
1996 to date; also Vice
President-Controller, TECO
Energy, Inc, 1994 to
date; and
prior thereto, Vice President
and Group Controller,
Automatic Transmission
Systems,
a division of Borg-Warner
Automotive Corporation.
(automobile parts
manufacturer), Chicago,
Illinois.
Roger H. Kessel 60 General Counsel and Secretary,
1992
to date; Also Senior Vice
President-General Counsel and
Secretary of TECO Energy,
Inc.,
April 1995 to date.
Alan D. Oak 50 Vice President, Treasurer and
Chief Financial Officer;
also Senior Vice President-
Finance and Chief Financial
Officer of TECO
Energy, Inc.
John B. Ramil 41 Vice President-Energy Services
and Planning, 1994 to date;
Vice President-Energy Services
and Bulk Power, 1994;
Director-Resource Planning,
1993 to 1994; and prior
thereto, Director-Power
Resource Planning.
Harry I. Wilson 58 Vice President-Energy
Delivery, 1996
to date; and prior thereto,
Vice President-Transmission
and Distribution.
There is no family relationship between any of the persons named
in response to Item 10. The term of office of each officer extends to
and expires at the meeting of the Board of Directors following the
next annual meeting of shareholders, scheduled to be held on April 16,
1997, and until a successor is elected and qualified.
Item 11. EXECUTIVE COMPENSATION.
The following tables set forth certain compensation information
for the Chief Executive Officer of the company and each of the four
other most highly compensated executive officers of the company.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
Other Res- Shares
Annual tricted Underlying All Other
Name and Compen- Stock Options Comp-
Principal Position Year Salary Bonus sation (1) Awards(2) /SARs(#)(3) sation(4)
Timothy L. Guzzle(5) 1996 $526,250 $480,000 $491,150 $32,010
Chairman of the Board 1995 493,750 415,000 $50,925 60,000 31,092
Chief Executive Officer 1994 468,750 384,000 40,000 28,703
Keith S. Surgenor(5) 1996 295,000 215,000 206,800 14,199
President and Chief 1995 272,500 195,000 45,664 25,000 17,994
Operating Officer 1994 215,376 225,000 12,000 13,986
Roger H. Kessel(5) 1996 248,500 163,000 143,350 11,063
General Counsel and 1995 238,500 135,000 44,765 17,000 9,052
Secretary 1994 228,750 150,000 14,000 10,257
Alan D. Oak(5) 1996 241,750 160,000 143,350 15,248
Vice President, 1995 225,000 135,000 44,264 17,000 14,432
Treasurer and Chief 1994 201,750 130,000 13,000 12,905
Financial Officer
Roger A. Dunn(5)(6) 1996 202,500 90,000 108,100 9,186
Vice President- 1995 89,502 42,000 15,000 462
Human Resource
_________________
(1) Participants in the company car program received a one-time cash
payment in connection with its elimination in 1995. The amount set
forth includes this payment, which in the case of the four executive
officers listed was $40,890.
(2) The reported values of the restricted stock awards were determined
using the closing market price of the Common Stock on the date of
grant. Restricted stock holdings and the values thereof based on the
closing price of the Common Stock on Dec. 31, 1996 are as follows:
Mr. Guzzle, 20,900 shares ($504,213); Mr. Surgenor, 8,800 shares
($212,300); Mr. Kessel, 6,100 shares ($147,163); Mr. Oak, 6,100
shares ($147,163); and Mr. Dunn, 4,600 shares ($110,975). The shares
granted to Messrs. Guzzle, and Kessel will vest on December 1, 1998
and January 1, 1999, respectively; the other shares listed above will
vest more than three years after the date of grant. Holders of
restricted stock receive the same dividends as holders of other
shares of Common Stock.
(3) Stock appreciation rights that can only be exercised during limited
periods following a change in control of the Corporation ("LSAR"s)
were awarded in tandem with the options granted. Upon exercise of an
LSAR, the holder is entitled to an amount based upon the highest
price paid or offered for Common Stock during the 30-day period
preceding a change in control of the Corporation, as defined under
"Employment and Change in Control Arrangements" below. The exercise
of an option or an LSAR results in a corresponding reduction in the
other.
(4) The reported amounts for 1996 consist of $924 of premiums paid by the
company to the Executive Supplemental Life Insurance Plan for each of
the named executive officers, with the balance in each case being
employer contributions under the TECO Energy Group Retirement Savings
Plan and Retirement Savings Excess Benefit Plan.
(5) Includes compensation for services as an officer of TECO Energy.
(6) Mr. Dunn began employment as Vice President-Human Resources in July
1995.
Aggregated Option/SAR Exercises In Last Fiscal
Year and Fiscal Year-End Option/SAR Value
Number of
Shares Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
at Year-End(#) at Year-End
Value
Shares Acquired Realized Exercisable/ Exercisable/
Name On Exercise(#) ($) Unexercisable Unexercisable
Timothy L. Guzzle 80,000 615,000 140,000/0 $345,000/0
Keith S. Surgenor 14,000 167,250 77,000/0 330,000/0
Roger H. Kessel 0 0 137,000/0 930,313/0
Alan D. Oak 26,000 158,750 43,000/0 125,625/0
Roger A. Dunn 0 0 15,000/0 37,500/0
Pension Table
The following table shows estimated annual benefits payable
under the company's pension plan arrangements for the named executive
officers other than Messrs. Guzzle, Kessel and Dunn.
Final Three Years of Service
Years Average
Earnings 5 10 15 20 or more
$100,000 $ 15,000 $ 30,000 $ 45,000 $ 60,000
150,000 22,500 45,000 67,500 90,000
200,000 30,000 60,000 90,000 120,000
250,000 37,500 75,000 112,500 150,000
300,000 45,000 90,000 135,000 180,000
350,000 52,500 105,000 157,500 210,000
400,000 60,000 120,000 180,000 240,000
450,000 67,500 135,000 202,500 270,000
500,000 75,000 150,000 225,000 300,000
550,000 82,500 165,000 247,500 330,000
600,000 90,000 180,000 270,000 360,000
650,000 97,500 195,000 292,500 390,000
700,000 105,000 210,000 315,000 420,000
750,000 112,500 225,000 337,500 450,000
The annual benefits payable to each of the named executive
officers are equal to a stated percentage of such officer's final
average earnings multiplied by his number of years of service, up to a
stated maximum. The amounts shown in the table are based on 3% of
such earnings and a maximum of 20 years of service. The amounts
payable to Mr. Guzzle are based on 6% of earnings and a maximum of 10
years of service; the amounts payable to Mr. Kessel are based on 5% of
earnings and a maximum of 12 years of service; and the amounts payable
to Mr. Dunn are based on 4% or earnings and a maximum of 10 years of
service. Final average earnings are based on the greater of (i) the
officer's final 36 months of earnings or (ii) the officer's highest
three consecutive calendar years of earnings out of the five calendar
years preceding retirement.
The earnings covered by the pension plan arrangements are the
same as those reported as salary and bonus in the summary compensation
table above. Years of service for the named executive officers are as
follows: Mr. Guzzle (9 years), Mr. Surgenor (8 years), Mr. Kessel (7
years), Mr. Oak (23 years) and Mr. Dunn (2 years). The pension benefit
is computed as a straight-life annuity commencing at the officer's
normal retirement age and is reduced by the officer's Social Security
benefits. The normal retirement age is 62 for Messrs. Guzzle and
Kessel and 63 for Messrs. Surgenor, Oak and Dunn. The pension plan
arrangements also provide death benefits to the surviving spouse of an
officer equal to 50% of the benefit payable to the officer. If the
officer dies during employment before reaching his normal retirement
age, the benefit is based on the officer's service as if his
employment had continued until such age. The death benefit is payable
for the life of the spouse. If Mr. Guzzle's employment is terminated
by TECO Energy without cause or by Mr. Guzzle for good reason (as such
terms are defined in Mr. Guzzle's employment agreement referred to
below), his age and service for purposes of determining benefits under
the pension plan arrangements are increased by two years.
The present value of the portion of the officer's pension
benefit that is in excess of the amount payable under the company's
qualified retirement plan is, at the election of the officer, payable
in the form of a lump sum.
Employment and Change in Control Arrangements
TECO Energy has severance agreements with the named executive
officers under which payments will be made under certain circumstances
following a change in control of TECO Energy. A change in control
means in general the acquisition by any person of 30% or more of the
Common Stock, the change in a majority of the directors or the
approval by the shareholders of a merger or consolidation of TECO
Energy in which TECO Energy's shareholders do not have majority voting
power in the surviving entity or of the liquidation or sale of the
assets of TECO Energy. Each of these officers is required, subject to
the terms of the severance agreements, to remain in the employ of TECO
Energy for one year following a potential change in control (as
defined) unless a change in control earlier occurs. The severance
agreements provide that in the event employment is terminated by TECO
Energy without cause (as defined) or by one of these officers for good
reason (as defined) following a change in control, TECO Energy will
make a lump sum severance payment to the officer of three times annual
salary and bonus. Upon such termination, the severance agreements also
provide for: (i) a cash payment equal to the additional retirement
benefit which would have been earned under TECO Energy's retirement
plans if employment had continued for three years following the date
of termination and (ii) participation in the life, disability,
accident and health insurance plans of TECO Energy for such period
except to the extent such benefits are provided by a subsequent
employer.
In addition, the terms of the restricted stock awarded to the
named executive officers provide for full vesting upon a change in
control. These officers will also receive a payment to compensate for
the additional taxes, if any, payable on the benefits received under
the severance agreements and any other benefits contingent on a change
in control as a result of the application of the excise tax associated
with Section 280G of the Internal Revenue Code.
TECO Energy has an employment agreement with Mr. Guzzle
providing that if his employment is terminated by TECO Energy without
cause or by Mr. Guzzle for good reason, he will receive benefits
similar to those provided under the severance agreements described
above based upon a level of two times annual salary and bonus and a
two-year benefit continuation period. Consistent with his employment
agreement, certain of Mr. Guzzle's option grants provide for a two-year
exercise extension period in the event of such a termination.
Compensation of Directors
Directors of TECO Energy and the company who are not employees
or former employees of the company, TECO Energy or any of its
subsidiaries are paid a combined annual retainer of $27,000 and a fee
of $750 for attendance at each meeting of the Board of TECO Energy,
$750 for each meeting of the Board of the company and $1,000 for
attendance at each meeting of a Committee of the Board on which they
serve. Directors may elect to defer these amounts with earnings
credited at either the 90-day U.S. Treasury bill rate or a rate equal
to the total return on TECO Energy's common stock. Subject to approval
of the 1997 Director Equity Plan (the "Plan") discussed below, the
Board has voted, with respect to compensation for 1997, to provide
each eligible director the opportunity to elect to receive all or a
portion (in 25% increments) of the director's cash compensation in
shares of TECO Energy common stock.
TECO Energy has an agreement with Mr. Culbreath under which he
will provide consulting services to TECO Energy through December 31,
2000 for compensation at a rate of $175,000 per year. Mr. Culbreath
served as Chief Executive Officer of TECO Energy until April 1989 and
retired as an employee in April 1990 at which time the consulting
relationship commenced. The agreement provides a severance benefit (in
the event of termination of Mr. Culbreath's consultancy following a
change in control of TECO Energy) equal to the total compensation that
would have been payable over the remaining term of the agreement. This
benefit is payable under the same circumstances as the benefits
described under "Executive Compensation Employment and Change in
Control Agreements" above and will be reduced to the extent that such
benefit, taking into account any other compensation provided by TECO
Energy, would not be deductible by TECO Energy pursuant to Section
280G of the Internal Revenue Code.
1991 Director Stock Option Plan and 1997 Director Equity Plan.
All non-employee directors of the company or TECO Energy participate
in TECO Energy's 1991 Director Stock Option Plan (the "1991 Plan"),
which provides automatic annual grants of options to purchase shares
of TECO Energy common stock to such directors. The exercise price is
the fair market value of the common stock on the date of grant,
payable in whole or in part in cash or TECO Energy common stock. The
plan provides for an initial grant of options for 10,000 shares to
each new director and an annual grant of options for 2,000 shares to
each continuing director. Grants are made on the first trading day of
TECO Energy common stock after each annual meeting of shareholders.
The options are exercisable immediately and expire ten years after
grant or earlier as provided in the plan following termination of
service on the Board.
The TECO Energy Board has adopted, subject to TECO Energy
shareholder approval, the 1997 Director Equity Plan as an amendment
and restatement of the 1991 Plan. Approval of the Plan would amend the
1991 Plan to expand the types of awards available to be granted and
replace the current fixed formula grant by giving the Board
discretionary authority to determine the amount and timing of awards
under the Plan.
Directors' Retirement Plan. All directors who have completed 60
months of service as a director of TECO Energy and who are not
employees or former employees of TECO Energy or any of its
subsidiaries are eligible to participate in the TECO Energy, Inc.
Directors' Retirement Plan (the "Directors' Retirement Plan"). Under
this plan, a retired director or his or her surviving spouse will
receive a monthly retirement benefit at the rate of $20,000 per year.
Such payments will continue for the lesser of the number of months the
director served as a director or 120 months, but payments will in any
event cease upon the death of the director or, if the director's
spouse survives the director, the death of the spouse.
The TECO Energy Board has terminated the Directors' Retirement
Plan for active directors, subject to shareholder approval of the 1997
Director Equity Plan. If such Plan is approved, active directors who
participate in the Directors' Retirement Plan will receive a one-time
payment, made 50% in TECO Energy common stock and 50% in cash, of the
present value of the income stream they would have received under the
plan based on their length of service as of December 31, 1996. At the
election of the director, the cash portion of this payment could be
deferred in the same manner as the retainer and meeting fees or paid
in TECO Energy common stock. The aggregate value of the cash and TECO
Energy common stock that would be payable in connection with the
termination of the Directors' Retirement Plan is approximately $1.1
million.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
All outstanding shares of Tampa Electric's common stock are
owned by TECO Energy. As of Jan. 31, 1997, none of the directors or
executive officers of Tampa Electric or TECO Energy owned any shares
of the preferred stock of Tampa Electric.
The following table sets forth the shares of TECO Energy common
stock beneficially owned as of Jan. 31, 1997 by directors and
nominees, the executive officers named in the summary compensation
table and Tampa Electric's directors and executive officers as a
group. Except as otherwise noted, such persons have sole investment
and voting power over the shares. The number of shares of TECO
Energy's common stock beneficially owned by any director or executive
officer or by all directors and executive officers as a group does
not exceed 1% of such shares outstanding at Jan. 31, 1997.
Name Shares (1)
Girard F. Anderson 157,304(2)(3)
DuBose Ausley 23,727
Sara L. Baldwin 22,918(4)
Hugh L. Culbreath 77,800(5)
James L. Ferman, Jr. 28,207(6)
Edward L. Flom 24,172(7)
Henry R. Guild, Jr. 123,579(8)
Timothy L. Guzzle 199,041(2)(9)
Dennis R. Hendrix 12,500
Robert L. Ryan 22,000(10)
William P. Sovey 11,000
J. Thomas Touchton 24,000(11)
John A. Urquhart 23,499(12)
James O. Welch, Jr. 28,600(13)
Keith S. Surgenor 98,025(2)(14)
Roger H. Kessel 145,414(2)
Alan D. Oak 79,175(2)(15)
Roger A. Dunn 23,893(2)
24 directors and executive
officers as a group (including
those named above) 1,288,917(2)(16)
__________________
(1) The amounts listed include the following shares that are
subject to options granted under TECO Energy's stock option
plans: Mr. Anderson, 112,000 shares; Mr. Ausley, 18,000 shares;
Mrs. Baldwin and Messrs. Culbreath, Ferman, Flom, Guild, Ryan,
Touchton and Welch, 20,000 shares each; Messrs. Hendrix and
Sovey, 10,000 shares each; Mr. Guzzle, 140,000 shares; Mr.
Urquhart, 17,200 shares; Mr. Surgenor, 77,000 shares; Mr.
Kessel, 137,000 shares; Mr. Oak, 43,000 shares; Mr. Dunn,
15,000 shares; and all directors and executive officers as a
group, 910,100 shares.
(2) The amounts listed include the following shares that are held
by benefit plans of TECO Energy for an officer's account: Mr.
Guzzle, 2,041 shares; Mr. Anderson, 8,684 shares; Mr. Surgenor,
2,717 shares; Mr. Kessel, 2,314 shares; Mr. Oak, 9,945 shares;
Mr. Dunn, 257 shares; and all directors and executive officers
as a group, 51,124 shares.
(3) Includes 800 shares owned by Mr. Anderson's wife, as to which
shares he disclaims any beneficial interest.
(4) Includes 350 shares held by a trust of which Mrs. Baldwin is a
trustee.
(5) Includes 8,000 shares owned by Mr. Culbreath's wife, as to
which shares he disclaims any beneficial interest.
(6) Includes 2,584 shares owned jointly by Mr. Ferman and his wife.
Also includes 903 shares owned by Mr. Ferman's wife, as to
which shares he disclaims any beneficial interest.
(7) Includes 1,596 shares owned by Mr. Flom's wife, as to which
shares he disclaims any beneficial interest. Also includes
1,388 shares owned by a Revokable Living Trust of which Mr.
Flom is the sole trustee.
(8) Includes 101,179 shares held by trusts of which Mr. Guild is a
trustee. Of these shares, 49,800 are held for the benefit of
Mr. Culbreath and are also included in the number of shares
beneficially owned by him.
(9) Includes 34,100 shares owned by a Revocable Living Trust of
which Mr. Guzzle is a trustee.
(10) Includes 2,000 shares owned jointly by Mr. Ryan and his wife.
(11) Includes 4,000 shares owned by a Revocable Living Trust of
which Mr. Touchton is the sole trustee.
(12) Includes 1,000 shares owned by Mr. Urquhart's wife, as to which
shares he disclaims any beneficial interest.
(13) Includes 2,000 shares owned by a charitable foundation of which
Mr. Welch is a trustee.
(14) Includes 9,403 shares owned jointly by Mr. Surgenor and his
wife.
(15) Includes 20,130 shares owned by a Revocable Living Trust of
which Mr. Oak's wife is the sole trustee.
(16) Includes a total of 13,987 shares owned jointly with spouses
and 1,169 shares owned jointly with parent and sibling. Also
includes a total of 23,899 shares owned by spouses, as to which
shares beneficial interest is disclaimed.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During 1996, Mr. Ausley served as Chairman of Macfarlane, Ausley,
Ferguson & McMullen and of a successor to that firm, Ausley &
McMullen, both of which rendered legal services to TECO Energy and its
subsidiaries during 1996.
In addition, reference is made to Note I on page 38.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) 1. Financial Statements - See index on page 23.
2. Financial Statement Schedules - See index on page 23.
3. Exhibits
*3.1 Articles of Incorporation (Exhibit 3.1 to
Registration Statement No. 2-70653).
*3.2 Bylaws, as amended, effective July 18, 1995 (Exhibit
3, Form 10-Q for the quarter ended June 30, 1995 of
Tampa Electric Company).
*4.1 Indenture of Mortgage among Tampa Electric Company,
State Street Trust Company and First Savings & Trust
Company of Tampa, dated as of Aug. 1, 1946 (Exhibit
7-A to Registration Statement No. 2-6693).
*4.2 Thirteenth Supplemental Indenture, dated as of Jan.
1, 1974, to Exhibit 4.1 (Exhibit 2-g-l, Registration
Statement No. 2-51204).
*4.3 Sixteenth Supplemental Indenture, dated as of Oct.
30, 1992, to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for
the quarter ended Sept. 30, 1992 of Tampa Electric
Company).
*4.4 Eighteenth Supplemental Indenture, dated as of May 1,
1993, to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for the
quarter ended June 30, 1993).
*4.5 Installment Purchase and Security Contract between
the Hillsborough County Industrial Development
Authority and Tampa Electric Company, dated as of
March 1, 1972 (Exhibit 4.9, Form 10-K for 1986 of
Tampa Electric Company).
*4.6 First Supplemental Installment Purchase and Security
Contract, dated as of Dec. 1, 1974 (Exhibit 4.10,
Form 10-K for 1986 of Tampa Electric Company).
*4.7 Third Supplemental Installment Purchase Contract,
dated as of May 1, 1976 (Exhibit 4.12, Form 10-K for
1986 of Tampa Electric Company).
*4.8 Installment Purchase Contract between the
Hillsborough County Industrial Development Authority
and Tampa Electric Company, dated as of Aug. 1, 1981
(Exhibit 4.13, Form 10-K for 1986 of Tampa Electric
Company).
*4.9 Amendment to Exhibit A of Installment Purchase
Contract, dated as of April 7, 1983 (Exhibit 4.14,
Form 10-K for 1989 of Tampa Electric Company).
*4.10 Second Supplemental Installment Purchase Contract,
dated as of June 1, 1983 (Exhibit 4.11, Form 10-K for
1994 of Tampa Electric Company).
*4.11 Third Supplemental Installment Purchase Contract,
dated as of Aug. 1, 1989 (Exhibit 4.16, Form 10-K for
1989 of Tampa Electric Company).
*4.12 Installment Purchase Contract between the
Hillsborough County Industrial Development Authority
and Tampa Electric Company, dated as of Jan. 31, 1984
(Exhibit 4.13, Form 10-K for 1993 of Tampa Electric
Company).
*4.13 First Supplemental Installment Purchase Contract,
dated as of Aug. 2, 1984 (Exhibit 4.14, Form 10-K for
1994 of Tampa Electric Company).
*4.14 Second Supplemental Installment Purchase Contract,
dated as of July 1, 1993 (Exhibit 4.3, Form 10-Q for
the quarter ended June 30, 1993).
*4.15 Loan and Trust Agreement among the Hillsborough
County Industrial Development Authority, Tampa
Electric Company and NCNB National Bank of Florida,
dated as of Sept. 24, 1990 (Exhibit 4.1, Form 10-Q
for the quarter ended Sept. 30, 1990 of Tampa
Electric Company).
*4.16 Loan and Trust Agreement, dated as of Oct. 26, 1992
among the Hillsborough County Industrial Development
Authority, Tampa Electric Company and NationsBank of
Florida, N.A., as trustee (Exhibit 4.2, Form 10-Q for
the quarter ended Sept. 30, 1992 of Tampa Electric
Company).
*4.17 Loan and Trust Agreement, dated as of June 23, 1993,
among the Hillsborough County Industrial Development
Authority, Tampa Electric Company and NationsBank of
Florida, N.A., as trustee (Exhibit 4.2, Form 10-Q for
the quarter ended June 30, 1993 of Tampa Electric
Company).
4.18 Loan and Trust Agreement, dated as of Dec. 1, 1996,
among the Polk County Industrial Development
Authority, Tampa Electric Company and the Bank of New
York, as trustee.
*10.1 1980 Stock Option and Appreciation Rights Plan, as
amended on July 18, 1989 (Exhibit 28.1, Form 10-Q for
the quarter ended June 30, 1989 of TECO Energy,
Inc.).
*10.2 Directors' Retirement Plan, as amended effective July
1, 1995 (Exhibit 10.1, Form 10-Q for the quarter
ended June 30, 1995 of Tampa Electric Company).
10.3 TECO Energy Group Supplemental Executive Retirement
Plan, as amended and restated as of Oct. 16, 1996.
10.4 TECO Energy Group Supplemental Retirement Benefits
Trust Agreement, as amended and restated as of Jan.
15, 1997.
*10.5 Annual Incentive Compensation Plan for TECO Energy
and subsidiaries, as revised January 1993 (Exhibit
10.2, Form 10-Q for the quarter ended March 31, 1994
of Tampa Electric Company).
*10.6 TECO Energy, Inc. Group Supplemental Disability
Income Plan, dated as of March 20, 1989 (Exhibit
10.19, Form 10-K for 1988 of Tampa Electric Company).
*10.7 Forms of Severance Agreements between TECO Energy,
Inc. and certain senior executives, as amended and
restated as of March 20, 1996.
*10.8 TECO Energy, Inc. 1991 Director Stock Option Plan as
amended on Jan. 21, 1992 (Exhibit 10.20, Form 10-K
for 1991 of Tampa Electric Company).
10.9 Supplemental Executive Retirement Plan for T.L.
Guzzle, as amended and restated as of Oct. 16, 1996.
10.10 Supplemental Executive Retirement Plan for R.H.
Kessel, as amended and restated as of Jan. 15, 1997.
*10.11 Supplemental Executive Retirement Plan for H.L.
Culbreath, as amended on April 27, 1989 (Exhibit
10.14, Form 10-K for 1989 of TECO Energy, Inc.).
10.12 Supplemental Executive Retirement Plan for A.D. Oak,
as amended and restated as of Oct. 16, 1996.
10.13 Supplemental Executive Retirement Plan for K.S.
Surgenor, as amended and restated as of Oct. 16,
1996.
*10.14 Terms of T.L. Guzzle's employment, dated as of July
20, 1993 (Exhibit 10, Form 10-Q for the quarter ended
June 30, 1993 of Tampa Electric Company).
10.15 Supplemental Executive Retirement Plan for G.F.
Anderson, as amended and restated as of Oct. 16,
1996.
*10.16 TECO Energy Directors' Deferred Compensation Plan, as
amended and restated effective April 1, 1994 (Exhibit
10.1, Form 10-Q for the quarter ended March 31, 1994
of Tampa Electric Company).
*10.17 TECO Energy, Inc. Annual Incentive Compensation Plan,
revised January 1993 (Exhibit 10.2, Form 10-Q for the
quarter ended March 31, 1994 of Tampa Electric
Company.
*10.18 TECO Energy Group Retirement Savings Excess Benefit
Plan, as amended and restated effective Aug. 1, 1994
(Exhibit 10.20, Form 10-K for 1994 of Tampa Electric
Company).
*10.19 Severance Agreement between TECO Energy, Inc. and H.
L. Culbreath, dated as of April 28, 1989 (Exhibit
10.24, Form 10-K for 1989 of TECO Energy, Inc.).
10.20 Supplemental Executive Retirement Plan for R.A. Dunn,
as amended and restated as of Jan. 15, 1997.
*10.21 Form of Nonstatutory Stock Option under the TECO
Energy, Inc. 1996 Equity Incentive Plan (Exhibit
10.1, Form 10-Q for the quarter ended June 30, 1996
of Tampa Electric Company).
*10.22 Form of Restricted Stock Agreement between TECO
Energy, Inc. And certain senior executives under the
TECO Energy, Inc. 1996 Equity Incentive Plan (Exhibit
10.2, Form 10-Q for the quarter ended June 30, 1996
of Tampa Electric Company).
*10.23 Form of Restricted Stock Agreement between TECO
Energy, Inc. And G. F. Anderson under the TECO
Energy, Inc. 1996 Equity Incentive Plan (Exhibit
10.3, Form 10-Q for the quarter ended June 30, 1996
of Tampa Electric Company).
12. Ratio of earnings to fixed charges.
23. Consent of Independent Accountants.
24.1 Power of Attorney.
24.2 Certified copy of resolution authorizing Power of
Attorney.
27. Financial Data Schedule (EDGAR filing only).
_____________
* Indicates exhibit previously filed with the Securities and
Exchange Commission and incorporated herein by reference.
Exhibits filed with periodic reports of Tampa Electric
Company and TECO Energy, Inc. were filed under Commission
File Nos. 1-5007 and 1-8180, respectively.
Executive Compensation Plans and Arrangements
Exhibits 10.1 through 10.23 above are management contracts or
compensatory plans or arrangements in which executive officers or
directors of TECO Energy, Inc. and its subsidiaries participate.
(b) The company filed the following reports on Form 8-K during the
last quarter of 1996.
The registrant filed a Current Report on Form 8-K dated Oct. 9,
1996 reporting under "Item 5. Other Events" announcing the
Florida Public Service Commission's vote to approve the
agreement among the registrant, the Office of Public Counsel and
the Florida Industrial Power Users Group which resolves all
regulatory issues related to a prudence review of the
registrant's Polk Power Station, extends the current base rate
freeze through 1999 and provides for a temporary reduction in
base rates.
The registrant filed a Current Report on Form 8-K dated Nov. 21,
1996 reporting under "Item 5. Other Events" that TECO Energy,
Inc. (TECO Energy), the parent company of the registrant, and
Lykes Energy, Inc. (LEI) entered into an Agreement and Plan of
Merger pursuant to which the registrant will acquire LEI through
the merger of LEI with and into the registrant or, subject to
certain conditions, with a wholly owned subsidiary of TECO
Energy.
The registrant filed a Current Report on Form 8-K dated Dec. 5,
1996 reporting under "Item 5. Other Events" announcing approval
by the shareholders of LEI of the previously announced merger of
LEI with TECO Energy, parent of the registrant.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized on the 26th day of March, 1997.
TAMPA ELECTRIC COMPANY
By T. L. GUZZLE*
T. L. GUZZLE, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf
of the registrant and in the capacities indicated on March 26, 1997:
Signature Title
T. L. GUZZLE* Chairman of the Board,
T. L. GUZZLE Director and Chief Executive
Officer (Principal Executive
Officer)
A. D. OAK* Vice President, Treasurer
A. D. OAK and Chief Financial Officer
(Principal Financial Officer)
/s/ W. L. GRIFFIN Vice President-Controller
W. L. GRIFFIN (Principal Accounting Officer)
G. F. ANDERSON* Director
G. F. ANDERSON
C. D. AUSLEY* Director
C. D. AUSLEY
S. L. BALDWIN* Director
S. L. BALDWIN
H. L. CULBREATH* Director
H. L. CULBREATH
J. L. FERMAN, JR.* Director
J. L. FERMAN, JR.
E. L. FLOM* Director
E. L. FLOM
H. R. GUILD, JR.* Director
H. R. GUILD, JR.
D. R. HENDRIX* Director
D. R. HENDRIX
R. L. RYAN* Director
R. L. RYAN
W. P. SOVEY* Director
W. P. SOVEY
J. T. TOUCHTON* Director
J. T. TOUCHTON
J. A. URQUHART* Director
J. A. URQUHART
J. O. WELCH, JR.* Director
J. O. WELCH, JR.
*By: /s/ W. L. GRIFFIN
W. L. GRIFFIN, Attorney-in-fact
INDEX TO EXHIBITS
Exhibit Page
No. Description No.
3.1 Articles of Incorporation (Exhibit 3.1 to *
Registration Statement No. 2-70653).
3.2 Bylaws, as amended, effective July 18, 1995 *
(Exhibit 3, Form 10-Q for the quarter ended June 30,
1995 of Tampa Electric Company).
4.1 Indenture of Mortgage among Tampa Electric *
Company, State Street Trust Company and First Savings &
Trust Company of Tampa, dated as of Aug. 1, 1946
(Exhibit 7-A to Registration Statement No. 2-6693).
4.2 Thirteenth Supplemental Indenture, dated as of *
Jan. 1, 1974, to Exhibit 4.1 (Exhibit 2-g-l,
Registration Statement No. 2-51204).
4.3 Sixteenth Supplemental Indenture, dated as of *
Oct. 30, 1992, to Exhibit 4.1 (Exhibit 4.1,
Form 10-Q for the quarter ended Sept. 30, 1992
of Tampa Electric Company).
4.4 Eighteenth Supplemental Indenture, dated as of May 1, *
1993, to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for the
quarter ended June 30, 1993).
4.5 Installment Purchase and Security Contract *
between and the Hillsborough County Industrial
Development Authority and Tampa Electric Company,
dated as of March 1, 1972 (Exhibit 4.9, Form 10-K
for 1986 of Tampa Electric Company).
4.6 First Supplemental Installment Purchase and *
Security Contract, dated as of Dec. 1, 1974
(Exhibit 4.10, Form 10-K for 1986 of
Tampa Electric Company).
4.7 Third Supplemental Installment Purchase Contract, *
dated as of May 1, 1976 (Exhibit 4.12, Form 10-K
for 1986 of Tampa Electric Company).
4.8 Installment Purchase Contract between the *
Hillsborough County Industrial Development
Authority and Tampa Electric Company, dated
as of Aug. 1, 1981 (Exhibit 4.13, Form 10-K for
1986 of Tampa Electric Company).
4.9 Amendment to Exhibit A of Installment Purchase *
Contract, dated as of April 7, 1983 (Exhibit 4.14,
Form 10-K for 1989 of Tampa Electric Company).
4.10 Second Supplemental Installment Purchase Contract, *
dated as of June 1, 1983 (Exhibit 4.11, Form 10-K for
1994 of Tampa Electric Company).
4.11 Third Supplemental Installment Purchase Contract, *
dated as of Aug. 1, 1989 (Exhibit 4.16, Form 10-K
for 1989 of Tampa Electric Company).
4.12 Installment Purchase Contract between the *
Hillsborough County Industrial Development
Authority and Tampa Electric Company, dated
as of Jan. 31, 1984 (Exhibit 4.13, Form 10-K
for 1993 of Tampa Electric Company).
4.13 First Supplemental Installment Purchase Contract, *
dated as of Aug. 2, 1984 (Exhibit 4.14, Form 10-K for
1994 of Tampa Electric Company).
4.14 Second Supplemental Installment Purchase Contract, *
dated as of July 1, 1993 (Exhibit 4.3, Form 10-Q
for the quarter ended June 30, 1993).
4.15 Loan and Trust Agreement among the Hillsborough *
County Industrial Development Authority,
Tampa Electric Company and NCNB National
Bank of Florida, dated as of Sept. 24, 1990
(Exhibit 4.1, Form 10-Q for the quarter ended
Sept. 30, 1990 of Tampa Electric Company).
4.16 Loan and Trust Agreement, dated as of *
Oct. 26, 1992 among the Hillsborough County
Industrial Development Authority, Tampa Electric
Company and NationsBank of Florida, N.A., as
trustee (Exhibit 4.2, Form 10-Q for the quarter
ended Sept. 30, 1992 of Tampa Electric Company).
4.17 Loan and Trust Agreement, dated as of June 23, *
1993, among the Hillsborough County Industrial
Development Authority, Tampa Electric Company and
NationsBank of Florida, N.A., as trustee (Exhibit 4.2,
Form 10-Q for the quarter ended June 30, 1993 of Tampa
Electric Company).
4.18 Loan and Trust Agreement, dated as of Dec. 1, 1996, 63
among the Polk County Industrial Development Authority,
Tampa Electric Company and the Bank of New York, as
trustee.
10.1 1980 Stock Option and Appreciation Rights Plan, *
as amended on July 18, 1989 (Exhibit 28.1,
Form 10-Q for the quarter ended June 30, 1989 of
TECO Energy, Inc.).
10.2 Directors' Retirement Plan, as amended effective *
July 1, 1995 (Exhibit 10.1, Form 10-Q for the quarter
ended June 30, 1995 of Tampa Electric Company).
10.3 TECO Energy Group Supplemental Executive Retirement Plan, 157
as amended and restated as of Oct. 16, 1996.
10.4 TECO Energy Group Supplemental Retirement 169
Benefits Trust Agreement as amended and restated as of
Jan. 15, 1997.
10.5 Annual Incentive Compensation Plan for TECO Energy and *
subsidiaries, as revised January 1993 (Exhibit 10.2,
Form 10-Q for the quarter ended March 31, 1994 of Tampa
Electric Company).
10.6 TECO Energy, Inc. Group Supplemental Disability *
Income Plan, dated as of March 20, 1989 (Exhibit 10.19,
Form 10-K for 1988 of Tampa Electric Company).
10.7 Forms of Severance Agreements between TECO Energy, Inc. *
and certain senior executives, as amended and restated
as of March 20, 1996.
10.8 TECO Energy, Inc. 1991 Director Stock Option Plan *
as amended on Jan. 21, 1992 (Exhibit 10.20, Form 10-K
for 1991 of Tampa Electric Company).
10.9 Supplemental Executive Retirement Plan for 183
T.L. Guzzle, as amended and restated as of Oct. 16,
1996.
10.10 Supplemental Executive Retirement Plan for 190
R.H. Kessel, as amended and restated as of Jan. 15,
1997.
10.11 Supplemental Executive Retirement Plan for *
H.L. Culbreath, as amended on April 27, 1989 (Exhibit
10.14, Form 10-K for 1989 of TECO Energy, Inc.).
10.12 Supplemental Executive Retirement Plan for 197
A.D. Oak, as amended and restated as of Oct. 16, 1996.
10.13 Supplemental Executive Retirement Plan for 204
K.S. Surgenor, as amended and restated as of Oct. 16,
1996.
10.14 Terms of T.L. Guzzle's employment, dated *
as of July 20, 1993 (Exhibit 10, Form 10-Q for the
quarter ended June 30, 1993 of Tampa Electric Company).
10.15 Supplemental Executive Retirement Plan for 211
G.F. Anderson, as amended and restated as of Oct. 16,
1996.
10.16 TECO Energy Directors' Deferred Compensation Plan, *
as amended and restated effective April 1, 1994
(Exhibit 10.1, Form 10-Q for the quarter ended March 31,
1994 of Tampa Electric Company).
10.17 TECO Energy, Inc. Annual Incentive Compensation Plan, *
revised January 1993 (Exhibit 10.2, Form 10-Q for the
quarter ended March 31, 1994 of Tampa Electric Company).
10.18 TECO Energy Group Retirement Savings Excess Benefit *
Plan, as amended and restated effective Aug. 1, 1994
(Exhibit 10.20, Form 10-K for 1994 of Tampa Electric
Company).
10.19 Severance Agreement between TECO Energy, Inc. and *
H.L. Culbreath, dated as of April 28, 1989 (Exhibit
10.24, Form 10-K for 1989 of TECO Energy, Inc.).
10.20 Supplemental Executive Retirement Plan for R.A. Dunn,217
as amended and restated as of Jan. 15, 1997.
10.21 Form of Nonstatutory Stock Option under the TECO Energy,*
Inc. 1996 Equity Incentive Plan (Exhibit 10.1, Form 10-Q
for the quarter ended June 30, 1996 of Tampa Electric
Company).
10.22 Form of Restricted Stock Agreement between TECO Energy,*
Inc. And certain senior executives under the TECO
Energy, Inc. 1996 Equity Incentive Plan (Exhibit 10.2,
Form 10-Q for the quarter ended June 30, 1996 of Tampa
Electric Company).
10.23 Form of Restricted Stock Agreement between TECO Energy,*
Inc. And G. F. Anderson under the TECO Energy, Inc. 1996
Equity Incentive Plan (Exhibit 10.3, Form 10-Q for the
quarter ended June 30, 1996 of Tampa Electric Company).
12. Ratio of earnings to fixed charges. 224
23. Consent of Independent Accountants. 225
24.1 Power of Attorney. 226
24.2 Certified copy of resolution authorizing Power 228
of Attorney.
27. Financial Data Schedule (EDGAR filing only).
_____________
* Indicates exhibit previously filed with the Securities and
Exchange Commission and incorporated herein by reference.
Exhibits filed with periodic reports of Tampa Electric Company
and TECO Energy, Inc. were filed under Commission File Nos.
1-5007 and 1-8180, respectively.