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, 1997
OR
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period _____ to _____

Commission File Number 1-8180

TECO ENERGY, INC.
(Exact name of registrant as specified in its charter)

FLORIDA 59-2052286
(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 executive offices) (Zip Code)

Registrant's telephone number, including area code: (813) 228-4111

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each class which registered
Common Stock, $1.00 par value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange

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 amendments to this Form 10-K.

The aggregate market value of the voting stock held by nonaffiliates of
the registrant as of February 28, 1998 was $3,462,121,918.

Number of shares of the registrant's common stock outstanding as of
February 28, 1998 was 131,577,080.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Definitive Proxy Statement relating to the 1998 Annual
Meeting of Shareholders of the registrant are incorporated by reference
into Part III.

PART I

Item 1. BUSINESS.

TECO ENERGY

TECO Energy, Inc. (TECO Energy) was incorporated in Florida in
1981, as part of a restructuring in which it became the parent
corporation of Tampa Electric Company.
TECO Energy currently owns no operating assets but holds all of
the common stock of Tampa Electric and the other subsidiaries listed
below. TECO Energy is a public utility holding company exempt from
registration under the Public Utility Holding Company Act of 1935.
In June 1997, TECO Energy acquired Lykes Energy, Inc. (the
Peoples companies). As part of this acquisition, Lykes' regulated gas
distribution utility was merged into Tampa Electric Company and now
operates as the Peoples Gas System division of Tampa Electric Company.

TECO Energy's directly owned subsidiaries include:

Tampa Electric Company, a Florida corporation and TECO
Energy's largest subsidiary, provides retail electric service to more
than 525,000 customers in west central Florida with a net system
generating capability of 3,600 megawatts (MWS) (Tampa Electric). The
P e oples Gas System division (PGS)is engaged in the purchase,
distribution and marketing of natural gas for residential, commercial,
industrial and electric power generation customers in the State of
Florida. With 238,000 customers, PGS has operations in Florida's major
metropolitan areas. Annual natural gas throughput (the amount of gas
delivered to its customers including transportation only service) in
1997 was 900 million therms.

T E CO Diversified, Inc. (TECO Diversified), a Florida
corporation formed in 1987, has four subsidiaries which conduct a
substantial portion of the diversified activities of TECO Energy: TECO
Coal Corporation (TECO Coal), TECO Coalbed Methane, Inc. (TECO Coalbed
Methane), TECO Properties Corporation (TECO Properties) and TECO
Transport Corporation (TECO Transport).

TECO Power Services Corporation (TECO Power Services), a
Florida corporation formed in 1987, has subsidiaries that own and
operate independent power projects in Florida and in Guatemala. TECO
Power Services also seeks other opportunities principally in the
southeastern United States and Latin America to develop independent
power and cogeneration projects.

- Peoples Gas Company (PGC), a Florida corporation formed in
1950, sells liquefied petroleum gas, or propane, to almost 50,000
customers, primarily within peninsular Florida.

- Suwanee Gas Marketing, Inc. (Suwanee Gas Marketing), a
F l orida corporation formed in 1988, through its wholly owned
subsidiary TECO Gas Services, Inc. (TECO Gas Services), formerly known
as Gator Gas Marketing, Inc., markets natural gas to large commercial
and industrial customers.

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T E CO Investments, Inc. (TECO Investments), a Florida
corporation formed in 1987, invests capital in short- and long-term
securities and financial instruments. TECO Energy does not expect to
expand this business.

TECO Finance, Inc. (TECO Finance), a Florida corporation
formed in 1987, is a source of debt capital for the diversified
activities of TECO Energy.

TeCom Inc. (TeCom), a Florida corporation formed in 1994, is
marketing advanced energy management, automation and control systems.

- B o sek, Gibson and Associates, Inc. (BGA), a Florida
corporation formed in 1986 and acquired by TECO Energy in 1996,
provides engineering and energy services to customers primarily in
Florida and California.

- Peoples Cogeneration Company, (Peoples Cogeneration), a
Florida corporation formed in 1985, is the holding company for PAS
Power Company, which holds an interest in a qualified facility (QF) in
Florida.

TECO Oil & Gas, Inc. (TECO Oil & Gas), a Florida corporation
formed in 1995, was involved in the exploration and development of oil
and gas in the shallow Gulf waters off Texas and Louisiana, and on-
shore in the Permian Basin area of west Texas. TECO Oil & Gas sold
its offshore assets in March 1998 and is now pursuing the sale of its
onshore assets. The results of this business are reported as
discontinued operations in the financial statements.

For financial information regarding TECO Energy's significant
business segments, see Note K on pages 75 and 76.

TECO Energy and its subsidiaries had 5,643 employees as of Dec.
31, 1997.

TAMPA ELECTRIC--Electric Operations

Tampa Electric was incorporated in Florida in 1899 and was
reincorporated in 1949. Tampa Electric 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 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 utility engages in
wholesale sales to other utilities. Tampa Electric has three electric
generating stations in or near Tampa, one electric generating station
in southwestern Polk County, Florida and two electric generating
stations (one of which is on long-term standby) located near Sebring,
a city located in Highlands County in south central Florida.
Tampa Electric Company s electric operations (Tampa Electric) had
2,771 employees as of Dec. 31, 1997, of which 1,123 were represented
by the International Brotherhood of Electrical Workers (IBEW) and 306
by the Office and Professional Employees International Union.

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In 1997, approximately 46 percent of Tampa Electric's total
operating revenue was derived from residential sales, 27 percent from
commercial sales, 9 percent from industrial sales and 18 percent from
other sales including bulk power sales for resale.
The sources of operating revenue for the years indicated were as
follows:

(millions) 1997 1996 1995

Residential $ 532.3 $ 539.7 $ 523.3
Commercial 326.7 321.3 316.1
Industrial-Phosphate 61.3 59.6 61.7
Industrial-Other 51.5 43.3 45.0
Other retail sales
of electricity 85.0 83.5 82.0
Sales for resale 94.3 93.3 80.0
Deferred revenues 30.5 (34.2) (50.8)
Other 7.6 6.4 35.0
$1,189.2 $1,112.9 $1,092.3

No significant part of Tampa Electric'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 Tampa Electric,
except for IMC-Agrico (IMCA), a large phosphate producer representing
less than three percent of Tampa Electric's 1997 base revenues. In May
1996, IMCA issued a request for proposals (RFP) for electric power to
serve load currently served by Tampa Electric and others.
In 1997, IMCA and Duke Energy Power Services (Duke) announced the
result of IMCA's RFP and that they had signed a letter of intent for
the construction of a natural gas fired combined cycle power plant
with a minimum capacity of 240 megawatts to serve retail load
currently served by Tampa Electric and two other utilities.
Tampa Electric and others objected to the proposed project on the
grounds that it involved retail transactions within defined service
areas that are prohibited under existing Florida regulation. Prior to
an FPSC ordered evidentiary hearing to determine if the proposed
project should be considered permitted self-generation or a prohibited
retail sale, IMCA withdrew its petition. As a result, the status of
the proposed project and the RFP process initiated by IMCA are unclear
at this time. See further discussion on page 46.
Tampa Electric'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 Tampa Electric 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.
In general, the FPSC's pricing objective is to set rates at a
level that allows the utility to collect total revenues (revenue
requirements) equal to its cost of providing service, including a
reasonable return on invested capital.

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The costs of owning, operating and maintaining the utility
system, other than fuel, purchased power, conservation and certain
environmental costs, are recovered through base rates. These costs
include operation and maintenance expenses, depreciation and taxes, as
well as a return on Tampa Electric'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 Tampa Electric'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 Tampa
Electric, the FPSC or other parties. See the discussion of the FPSC-
approved agreements covering 1995 through 1999 on pages 43 through 44.
Fuel, conservation, certain environmental and certain purchased
p o w e r costs are recovered through levelized monthly charges
established pursuant to the FPSC's fuel adjustment and cost recovery
clauses. These charges, which are reset semi-annually (annually in the
case of conservation cost recovery) 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.
Tampa Electric 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 8 and 9.
TECO Transport, TECO Coal and TECO Power Services subsidiaries
sell transportation services, coal, and generating capacity and
energy, respectively, to Tampa Electric and to third parties. The
transactions between Tampa Electric and these affiliates and the
prices paid by Tampa Electric 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 Tampa Electric's customers. See Utility
Regulation on pages 43 through 46. Except for transportation services
performed by TECO Transport under the U.S. bulk cargo preference
p r ogram, the prices charged by TECO Transport and TECO Coal
subsidiaries to third-party customers are not subject to regulatory
oversight. See also TECO Power Services on pages 17 and 18.

Competition

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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.
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 Tampa Electric) 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. Tampa Electric, together with other utilities,
has implemented an OASIS system and believes it is in compliance with
the Standards of Conduct.
In addition to these transmission developments at the federal
level, there have been initiatives at the state level to facilitate
the construction of merchant power plants, i.e. plants built on
speculation with a portion or all of their capacity not subject to
purchase agreements. Tampa Electric has opposed these efforts and it
is uncertain at this time how the FPSC will proceed on this matter.
See Merchant Power Plants on page 46 for a further description of
proposed projects and the issues they raise.

Fuel

About 98 percent of Tampa Electric's generation for 1997 was from
its coal-fired units. About the same level is anticipated for 1998.

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Tampa Electric's average fuel cost per million BTU and average
cost per ton of coal burned have been as follows:

Average cost
per million BTU: 1997 1996 1995 1994 1993

Coal $ 1.97 $ 2.01 $ 2.15 $ 2.22 $ 2.26
Oil $ 3.76 $ 3.68 $ 2.76 $ 2.49 $ 2.69
Gas -- -- -- -- $ 3.52
Composite $ 2.01 $ 2.05 $ 2.16 $ 2.22 $ 2.27
Average cost per ton
of coal burned $44.50 $46.71 $50.97 $53.39 $54.55

Tampa Electric's generating stations burn fuels as follows:
Gannon Station burns low-sulfur coal; Big Bend Station burns a
combination of low-sulfur coal and 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. Tampa Electric burned approximately 8.1 million tons of
coal during 1997 and estimates that its coal consumption will be about
the same for 1998. During 1997, Tampa Electric purchased approximately
42 percent of its coal under long-term contracts with five suppliers,
including TECO Coal, and 58 percent of its coal in the spot market or
under intermediate-term purchase agreements. About 12 percent of Tampa
Electric's 1997 coal requirements were supplied by TECO Coal. During
D e cember 1997, the average delivered cost of coal (including
transportation) was $42.27 per ton, or $1.88 per million BTU. Tampa
Electric expects to obtain approximately 40 percent of its coal
requirements in 1998 under long-term contracts with five suppliers,
including TECO Coal, and the remaining 60 percent in the spot market
o r under intermediate-term purchase agreements. Tampa Electric
estimates that about 9 percent of its 1998 coal requirements will be
supplied by TECO Coal. Tampa Electric'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 Tampa Electric from burning
the coal supplied, provided that a good faith effort has been made to
continue burning such coal. For information concerning transportation
services and sales of coal by affiliated companies to Tampa Electric,
see TECO Coal on pages 14 and 15 and TECO Transport on pages 16 and
17.
In 1997, about 61 percent of Tampa Electric's coal supply was
deep-mined, approximately 38 percent was surface-mined and one 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 Tampa Electric's coal supply or results of its operations.
Tampa Electric, 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 Tampa
Electric'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 Tampa Electric.
Oil. Tampa Electric had supply agreements through Dec. 31, 1997
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, 1998 are expected to be
finalized in early 1998. The price for No. 2 fuel oil deliveries taken
in December 1997 was $24.37 per barrel, or $4.20 per million BTU. The
average price for No. 6 fuel oil deliveries taken in December 1997 was

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$19.44 per barrel, or $3.08 per million BTU.

Franchises

Tampa Electric 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 Tampa
Electric, 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 Tampa Electric's property
used in the exercise of its franchise, if the franchise is not
renewed.
Tampa Electric 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.
Tampa Electric has no reason to believe that any of these franchises
will not be renewed.
Franchise fees payable by Tampa Electric, which totaled $19.9
million in 1997, 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 well after the year 2000.

Environmental Matters

Tampa Electric's operations are subject to county, state and
f e deral 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.
T h e 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.
Tampa Electric has all required environmental permits. In
addition, monitoring programs are in place to assure compliance with
permit conditions.
Tampa Electric Company has been identified as a potentially
responsible party (PRP) for certain superfund sites. While the total
costs of remediation at these sites may be significant, Tampa Electric
shares potential liability with other PRPs, many of which have
substantial assets. Accordingly, Tampa Electric expects that its
liability in connection with these sites will not be significant. The
environmental remediation costs associated with these sites are not
expected to have a material impact on customer prices.
Expenditures. During the five years ended Dec. 31, 1997, Tampa
E l e c tric spent $161.9 million on capital additions to meet
environmental requirements, including $106.9 million for the Polk
Power Station project. Environmental expenditures are estimated at $6
million for 1998 and $4 million in total for 1999 through 2002. These
totals exclude amounts required to comply with the 1990 amendments to

8
the Clean Air Act.
Tampa Electric 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.
Tampa Electric is currently evaluating options to comply with
Phase II sulfur dioxide emission standards set for the year 2000. The
options include scrubbing additional capacity or switching to lower
sulfur fuels. It is also evaluating options to comply with Phase II of
the Clean Air Act Amendments for nitrogen oxide (NOx) reductions.
These options include combustion modifications and retrofit control
technology. Tampa Electric s estimates reflected in the Capital
Expenditure section on pages 41 and 42, include $20 million for
compliance with all Phase II requirements including NOx reductions.
The actual level of required expenditures is uncertain at this time,
however, it would be higher if the option of scrubbing additional
capacity is chosen. In any event, Tampa Electric believes that the
cost of compliance with Phase II, which would be reflected in
customers' bills, is not expected to have a material impact on its
prices.
In addition to recovering certain prudently incurred
environmental costs through base rates, Tampa Electric may petition
the FPSC for recovery of certain other environmental compliance costs
on a current basis pursuant to a statutory environmental cost recovery
procedure.
In 1997, Tampa Electric recovered $5.8 million of environmental
compliance costs through the environmental cost recovery clause. These
are costs incurred by Tampa Electric after April 1993 to comply with
e n v i ronmental regulations enacted, or which became effective
subsequent to the test year of Tampa Electric's most recent full
regulatory price setting proceeding but not included in current rates.
Tampa Electric 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 with the FPSC the
earliest any such new prices could be in effect is in the year 2000.

PEOPLES GAS SYSTEM--Gas Operations

As part of the acquisition of Lykes Energy by TECO Energy in June
1997, Peoples Gas System (PGS) was merged into Tampa Electric Company
and now operates as the Peoples Gas System division of Tampa Electric
Company. PGS is engaged in the purchase, distribution and marketing of
natural gas for residential, commercial, industrial and electric power
generation customers in the State of Florida. Also in June 1997, TECO
Energy completed its merger with West Florida Gas Inc. (West Florida).
West Florida's regulated gas distribution utility, West Florida
Natural Gas Company, now operates as part of the Peoples Gas System
division.
PGS has no gas reserves, but relies on two interstate pipelines
to deliver gas to it for sale or other delivery to customers connected
to its distribution system. Currently, PGS operates a distribution
system that serves approximately 238,000 customers. The system
includes approximately 6,900 miles of mains and over 4,700 miles of
service lines.
Industrial and power generation customers consume approximately
70 percent of the company's annual therm volume. Commercial customers
use approximately 23 percent with the balance consumed by residential
customers.
While the residential market represents only a small percentage
of total therm volume, residential operations generally comprise 23
p e r c ent of total revenues. New residential construction and
conversions of existing residences to gas have steadily increased
since the late 1980's.
Natural gas has historically been used in many traditional

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industrial and commercial operations throughout Florida, including
production of products such as steel, glass, ceramic tile and food
products. Gas climate control technology is expanding throughout
F l orida, and commercial/industrial customers including schools,
hospitals, office complexes and churches are utilizing this new
technology.
Within the PGS operating territory, large cogeneration facilities
utilize gas technology in the production of electric power and steam.
Over the past three years, the company has transported more than 500
million therms annually to facilities involved in cogeneration.

Revenues for PGS for the years ended Dec. 31, are as follows:

(millions) 1997 1996 1995
Residential $ 56.3 $ 51.6 $ 43.3
Commercial 132.2 140.7 114.2
Interruptible 14.5 24.5 24.4
Transportation 27.1 19.4 20.6
Other revenues 19.5 22.5 18.1
Total $249.6 $258.7 $220.6

PGS had 1,046 employees as of Dec. 31, 1997. A total of 179
employees in six of the company's 13 operating divisions are
represented by various union organizations.

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Regulation

The operations of PGS are regulated by the FPSC separate from the
regulation of Tampa Electric's electric operations. The FPSC has
jurisdiction over rates, service, issuance of certain securities,
safety, accounting and depreciation practices and other matters.
In general, the FPSC's pricing objective is to set rates at a
level that allows a utility such as PGS to collect total revenues
(revenue requirements) equal to its cost of providing service,
including a reasonable return on invested capital.
The basic costs, other than the costs of purchased gas and
interstate pipeline capacity, of providing natural gas service are
recovered through base rates, which are designed to recover the costs
of owning, operating and maintaining the utility system. The rate of
return on rate base, which is intended to approximate PGS' weighted
cost of capital, includes its cost for debt, deferred income taxes at
a zero cost rate, and an allowed return on common equity. Base prices
are determined in FPSC proceedings that occur at irregular intervals
at the initiative of PGS, the FPSC or other parties.
PGS recovers the charges (both reservation and usage) it pays for
transportation of gas for system supply through the purchased gas
adjustment charge. This charge is designed to recover the costs
incurred by PGS for purchased gas, and for holding and using
interstate pipeline capacity for the transportation of gas it sells to
its customers. These charges, which are reset annually in an FPSC
hearing, are based on estimated costs of purchased gas and pipeline
capacity, and estimated customer usage for a specific recovery period,
with a true-up adjustment to reflect the variance of actual costs and
usage from the projected charges for prior periods.
PGS' tariff approved by the FPSC contains incentives for a
transportation customer to maintain as close a balance as possible
between estimated gas requirements (nominated gas) and gas actually
used. These customers pay a set rate for the amount of gas nominated
and a premium if the amount of gas actually used varies from the
amount nominated by more than 5 percent. In contrast, system supply
customers are billed monthly for the amount of gas actually consumed
at the rates set forth in PGS' FPSC-approved tariff.
In addition to its base rates and purchased gas adjustment clause
c h a r g es for system supply customers, PGS customers (except
interruptible customers) also pay a per-therm charge for all gas
consumed to recover the costs incurred by the company in developing
and implementing energy conservation programs, which are mandated by
Florida law and approved and supervised by the FPSC. The company is
permitted to recover, on a dollar-for-dollar basis, expenditures made
in connection with these programs. PGS must demonstrate that the
programs are cost effective for its ratepayers in order to obtain FPSC
approval.
In June 1996, following informal workshops held in late 1995, the
FPSC initiated a proceeding for the purpose of investigating the
unbundling of natural gas services provided by PGS and other local
distribution companies subject to the FPSC's regulatory jurisdiction.
Although the proceeding was initially patterned after the FERC's
proceedings which culminated in the issuance of FERC Order 636, the
staff of the FPSC has indicated that the scope of the proceeding would
be broader than those preceding Order 636.
The FPSC staff has issued a draft tariff which would allow all
customers except residential the right to take transportation-only
service and purchase gas from third parties. PGS is opposed to this
proposal unless there is a showing of benefit to the general body of
customers. It is unclear whether the FPSC staff action will lead to
FPSC action requiring further unbundling.
In addition to economic regulation, PGS is subject to the FPSC's
safety jurisdiction, pursuant to which the FPSC regulates the
construction, operation and maintenance of PGS' distribution system.

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In general, the FPSC has implemented this by adopting the Minimum
Federal Safety Standards and reporting requirements for pipeline
facilities and transportation of gas prescribed by the U.S. Department
of Transportation in Parts 191 and 192, Title 49, Code of Federal
Regulations.
PGS is also subject to Federal, state and local environmental
laws and regulations pertaining to air and water quality, land use,
noise and aesthetics, solid waste and other environmental matters.

Competition

PGS is not in direct competition with any other regulated
distributors of natural gas for customers within its service areas. At
the present time, the principal form of competition for residential
and small commercial customers is from companies providing other
sources of energy and energy services.
In general, PGS faces competition from other energy source
suppliers offering fuel oil, electricity and in some cases liquid
propane gas. PGS has taken actions to retain and expand its commodity
and transportation business, including managing costs and providing
high quality service to customers.
Competition is most prevalent in the large commercial and
industrial markets. In recent years, these classes of customers have
been targeted by competing companies seeking to sell gas directly
either using PGS facilities or transporting gas through other
f a c i lities, thereby bypassing PGS facilities. Many of these
competitors are larger natural gas marketers with a national presence.

Gas Supplies

Because PGS has no natural gas reserves, it relies on purchases
of gas from various suppliers depending on the needs of its customers.
The gas is delivered to the PGS distribution system for further
delivery by PGS to its customers through two interstate pipelines on
which PGS has reserved firm transportation capacity.
Gas is delivered by Florida Gas Transmission (FGT) through 40
interconnections (gate stations) serving PGS' operating divisions. In
addition, PGS' Jacksonville Division receives gas delivered by the
South Georgia Natural Gas Company (South Georgia) pipeline through a
gate station located northwest of Jacksonville.
P G S has commitments for pipeline capacity with various
transporters, with various expiration dates.
Companies with firm pipeline capacity receive priority nominating
and scheduling deliveries during times when the pipeline is operating
at its maximum capacity. PGS presently holds sufficient firm capacity
to permit it to meet the gas requirements of its system supply
customers except during localized emergencies affecting the PGS
d i s tribution system, and on extremely cold days, which have
historically been rare in Florida.
Firm transportation rights on an interstate pipeline represent a
right to use the amount of the capacity reserved for transportation of
gas, on any given day. PGS pays reservation charges on the full amount
of the reserved capacity whether or not it actually uses such capacity
on any given day. When the capacity is actually used, PGS pays a usage
charge for the amount of the capacity actually used. The levels of the
reservation and usage charges are regulated by FERC.
PGS procures natural gas supplies using base load and swing
supply contracts distributed among various vendors along with spot
market purchases. Pricing generally takes the form of either a
variable price based on published indices, or a fixed price for the
contract term.
The current supply portfolio consists of approximately 8 percent
spot purchases, 17 percent swing purchases and 75 percent base load
purchases.

12
PGS has one long-term supply contract which expires in 2002.
This long-term contract has approximately 83 million therms remaining
to purchase with a total cost of $18 million over the remaining years.
The purchase price is $.22 per therm.
PGS occasionally faces situations when the demands of all of its
customers for the delivery of gas cannot be met. Neither PGS nor any
of its interconnected interstate pipelines has storage facilities. In
these instances, it is necessary that PGS interrupt or curtail
deliveries to its interruptible customers. In general, the largest of
PGS' industrial customers are in the categories that are first
c u rtailed in such situations. PGS tariff and transportation
agreements with these customers give PGS the right to divert these
customers gas to other higher priority users during the period of
curtailment or interruption. PGS pays these customers for such gas at
the price they paid their suppliers (if purchased by the customer
under a contract with a term of five years or longer), or at a
published index price (if purchased by the customer pursuant to a
contract with a term less than five years), and in either case pays
t h e c u stomer for charges incurred for interstate pipeline
transportation to the PGS system.

Franchise

PGS holds franchise and other rights with 75 municipalities
within its service area. These include the cities of Jacksonville,
Daytona Beach, Eustis, Orlando, Lakeland, Tampa, St. Petersburg,
Bradenton, Sarasota, Avon Park, Frostproof, Palm Beach Gardens,
Pompano Beach, Fort Lauderdale, Hollywood, North Miami, Miami Beach,
Miami, Panama City and Ocala. These agreements give PGS a right to
conduct its retail business in the localities it serves. The
franchises are irrevocable and are not subject to amendment without
the consent of PGS, although in certain events, they are subject to
forfeiture.
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
municipalities to purchase any and all property used in connection
with the franchise at a valuation to be fixed by arbitration. In
addition, several of the municipalities have reserved the right to
purchase PGS property used in the exercise of its franchise, if the
franchise is not renewed.
PGS franchise agreements with the incorporated municipalities
within its service area have various expiration dates ranging from
April 1998 to September 2025. PGS has no reason to believe that any of
these franchises will not be renewed.
Franchise fees payable by PGS, which totaled $7.7 million in
1997, are calculated using a formula based principally on revenues
from the sale of gas.
U t ility operations in areas 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 and these
rights are, therefore, considered perpetual.

Environmental Matters

PGS's operations are subject to federal, state and local
statutes, rules and regulations relating to the discharge of materials
into the environment and to the protection of the environment that
r e quire monitoring, permitting and ongoing expenditures. Those
expenditures have not been prohibitive in the past, but the trend is
toward stricter standards, greater regulation and more extensive
permitting requirements.

13
PGS has been identified as a potentially responsible party for
certain former manufactured gas plant sites. While the joint and
several liability associated with these sites presents the potential
for significant response costs, the company estimates its ultimate
financial liability could be up to $15 million over the next ten
years. PGS is permitted to recover costs of environmental remediation
and cleanup associated with manufactured gas sites. The environmental
remediation costs associated with these sites are not expected to have
a material impact on customer prices.
To PGS knowledge, it is in substantial compliance with
applicable environmental laws, regulations, orders and rules.
Expenditures. During the five years ended Dec. 31, 1997, PGS has
not incurred any material capital additions to meet environmental
requirements, nor are any anticipated for 1998 through 2002.
P G S i s allowed to recover certain prudently incurred
environmental costs through rates charged to its customers.

TECO DIVERSIFIED

TECO Diversified owns all of the common stock of TECO Coal, TECO
Coalbed Methane, TECO Properties and TECO Transport. It is a holding
company that owns no operating assets. TECO Diversified and its
subsidiaries had 1,402 employees as of Dec. 31, 1997.

TECO Coal

TECO Coal, a Kentucky corporation, owns no operating assets but
holds all of the common stock of Gatliff Coal Company (Gatliff), Rich
Mountain Coal Company (Rich Mountain), Clintwood Elkhorn Mining
Company (Clintwood), Pike-Letcher Land Company (Pike-Letcher) and
Premier Elkhorn Coal Company (Premier). TECO Coal's subsidiaries own
mineral rights, and own/or operate surface and underground mines and
coal processing and loading facilities in Kentucky and Tennessee.
In 1997, TECO Coal subsidiaries sold 6.1 million tons of coal,
with approximately 83 percent sold to third parties and 17 percent
sold to Tampa Electric. Rich Mountain has no reserves; it mines coal
reserves owned by Gatliff. About 53 percent of Gatliff's production
and third-party purchases were sold to Tampa Electric. This specialty
coal has low-ash fusion temperature and low-sulfur characteristics
specifically suited for Tampa Electric's Gannon Station units. The
majority of production from Clintwood and Premier is sold to third
parties.
Tampa Electric is reducing its coal purchases from TECO Coal as a
result of its efforts to reduce costs and its successful use of more
conventional steam coal from other sources. TECO Coal expects
increased sales volumes from the Premier and Clintwood operations to
offset the impact on operating results of lower sales to Tampa
Electric in 1998.
Primary competitors of TECO Coal's subsidiaries are other coal
suppliers, many of which are located in Central Appalachia.
The operations of underground mines, including all related
surface facilities, are subject to the Federal Coal Mine Safety and
Health Act of 1977. TECO Coal's subsidiaries are also subject to
various Kentucky and Tennessee mining laws that require approval of
roof control, ventilation, dust control and other facets of the coal
mining business. Federal and state inspectors inspect the mines to
ensure compliance with these laws. TECO Coal's subsidiaries are in
compliance with the standards of the various enforcement agencies. It
is unaware of any mining laws or regulations having a prospective
effective date that would materially affect the market price of coal
sold by its subsidiaries.
TECO Coal's subsidiaries have not experienced difficulty in
complying with federal, state and local air and water pollution
standards in their mining operations. In 1997 approximately $1.6

14
million was spent on environmental protection and reclamation
programs. TECO Coal expects to spend a similar amount in 1998 on these
programs.
The coal mining operations are also subject to the Surface Mining
Control and Reclamation Act of 1977 which places a charge of $.15 and
$.35 on every net ton mined of underground and surface coal,
respectively, to create a fund for reclaiming land and water adversely
affected by past coal mining. Other provisions establish standards for
the control of environmental effects and reclamation of surface coal
mining and the surface effects of underground coal mining, and
requirements for federal and state inspections.

TECO Coalbed Methane

TECO Coalbed Methane, an Alabama corporation, participates in the
production of natural gas from coalbeds located in Alabama's Black
Warrior Basin. TECO Coalbed Methane has invested $209 million as the
principal investor in three ventures that control, in the aggregate,
approximately 100,000 acres of lease holdings. At the end of 1997,
TECO Coalbed Methane had interests in 739 wells that were operational
and producing gas for sale. These wells are operated by Taurus
Exploration, a unit of Energen Corporation, and, to a much lesser
extent, by other third-party operators.
A non-conventional fuel tax credit is available on all production
through the year 2002. The tax credit escalates with inflation and
could be limited by domestic oil prices. In 1997, domestic oil prices
would have had to exceed $48 per barrel for this limitation to have
been effective.
All production from these wells is committed for the life of the
reserves based on spot prices which are tied to the price of onshore
Louisiana gas.
TECO Coalbed Methane s operations are subject to federal, state
and local regulations for air emissions and water and waste disposal.
Its operations are in substantial compliance with all applicable
environmental laws and regulations.

TECO Properties

TECO Properties, a Florida corporation, has $25.4 million
invested in five projects, by itself or as a limited partner, and in
undeveloped land in the Tampa area.

TECO Transport

TECO Transport, a Florida corporation, owns all of the common
stock of four subsidiaries that transport, store and transfer coal and
other dry bulk commodities. TECO Transport currently owns no operating
assets.
All of TECO Transport's subsidiaries perform substantial services
for Tampa Electric. In 1997, approximately 48 percent of TECO
Transport's revenues were from third-party customers and 52 percent
were from Tampa Electric. The pricing for services performed by TECO
Transport's operating companies for Tampa Electric is based on a fixed
price per ton, adjusted quarterly for changes in certain fuel and
price indices. Most of the third-party utilization of the ocean-going
b a r ges is for domestic phosphate movements and domestic and
international movements of other dry bulk commodities. Both the
terminal and river transport operations handle a variety of dry bulk
commodities for third-party customers.
A substantial portion of TECO Transport's business is dependent
upon Tampa Electric, industrial phosphate customers, export coal and
g r ain customers, and participation in the U.S. Department of
Agriculture cargo preference program.
TECO Transport's barge subsidiaries consist of Gulfcoast Transit

15
Company (Gulfcoast), which transports products in the Gulf of Mexico
and worldwide, and Mid-South Towing Company (Mid-South), which
operates on the Mississippi, Ohio and Illinois rivers. Their primary
competitors are other barge and shipping lines and railroads. There
are a number of companies offering transportation services on the
waterways served by TECO Transport's subsidiaries. To date, physical
and technological improvements have allowed barge operators to
maintain competitive rate structures with alternate methods of
transporting bulk commodities when the origin and destination of such
shipments are contiguous to navigable waterways.
Electro-Coal Transfer Corporation (Electro-Coal) operates a major
transfer and storage terminal on the Mississippi River south of New
Orleans. Demand for the use of such terminals is dependent upon
customers' use of water transportation versus alternate means of
moving bulk commodities and the demand for these commodities.
Competition consists primarily of mid-stream operators and another
land-based terminal located nearby.
The business of TECO Transport's subsidiaries, taken as a whole,
is not subject to significant seasonal fluctuation.

16
The Interstate Commerce Act exempts from regulation water
t r ansportation of certain dry bulk commodities. In 1997, all
transportation services provided by TECO Transport's subsidiaries were
within this exemption.
TECO Transport's subsidiaries are also subject to the provisions
of the Clean Water Act of 1977 that authorize the Coast Guard and the
EPA to assess penalties for oil and hazardous substance discharges.
Under this Act, these agencies are also empowered to assess clean-up
costs for such discharges. Compliance with this Act has had no
material effect on TECO Transport's capital expenditures, earnings or
competitive position, and no such effect is anticipated. In 1997, TECO
Transport spent $.4 million for environmental control. Environmental
expenditures are estimated at $.7 million in 1998, primarily for work
on solid waste disposal and storm water drainage at the Electro-Coal
facility in Louisiana and for expenses related to oil and bilge water
disposal at its river-barge repair facility in Illinois.

TECO POWER SERVICES

TECO Power Services, a Florida corporation, has subsidiaries that
own and operate independent power projects in Florida and in
Guatemala. TECO Power Services also seeks opportunities to develop
other independent power and cogeneration projects. It had 64 employees
as of Dec. 31, 1997.
Hardee Power Partners Limited (Hardee Power), a Florida limited
partnership whose general and limited partners are wholly owned
subsidiaries of TECO Power Services, owns the Hardee Power Station, a
295-MW combined cycle electric generating facility located in Hardee
County, Florida, which began commercial operation on Jan. 1, 1993.
Hardee Power has 20-year power supply agreements, for all of the
capacity and energy of the Hardee Power Station, with Seminole
E l e c tric Cooperative (Seminole Electric), a Florida electric
cooperative that provides wholesale power to 11 electric distribution
cooperatives, and with Tampa Electric. Under the Seminole Electric
agreement, Hardee Power has agreed to supply Seminole Electric with an
additional 145 MWs of capacity during the first 10 years of the
contract, which it is purchasing from Tampa Electric's coal-fired Big
Bend Unit Four for resale to Seminole Electric, and at the option of
Seminole Electric, to expand the Hardee Power Station's capacity by
145 MWs for the second 10 years of the contract. Tampa Electric also
has the right under its agreement to require the expansion of the
Hardee Power Station, subordinate to Seminole Electric's expansion
option.
The Hardee Power Station is fueled by natural gas or No. 2 fuel
oil. Its contract for the supply and transportation of natural gas
terminated June 30, 1997. It is operating under an interim contract
and is currently in the process of negotiating a new contract for
periods beyond that date with a projected execution date of March
1998. About 99 percent of the Hardee Power Station's generation for
1997 was from natural gas.

17
Hardee Power's average fuel cost per million BTU has been as
follows:
Average cost
per million BTU: 1997 1996 1995 1994

Oil $4.73 $ 4.61 $ 4.64 $ 3.68
Gas $2.90 $ 3.60 $ 2.70 $ 2.02
Composite $3.15 $ 3.65 $ 2.71 $ 2.40

The price for natural gas deliveries taken in December 1997 was
$3.00 per thousand cubic feet, or $2.86 per million BTU. The price for
fuel oil deliveries taken in August 1997 was $26.35 per barrel, or
$4.524 per million BTU. There were no fuel oil deliveries taken in
1997 subsequent to that date.
Through its ownership and operation of a wholesale generating
facility in the U.S., TECO Power Services is subject to regulation by
the FERC in various respects. Depending upon the nature of the
project, FERC may regulate, among other things, the rates, terms and
conditions for the sale of electric capacity and energy.
Like Tampa Electric, the U.S. operations of TECO Power Services
are subject to federal, state and local environmental laws and
regulations covering air quality, water quality, land use, power
plant, substation and transmission line siting, noise and aesthetics,
solid waste and other environmental matters.
Tampa Centro Americana de Electricidad, Ltd. (TCAE), an entity
98.15-percent owned by TPS Guatemala One, Inc. (TPS Guatemala One), a
subsidiary of TECO Power Services, has a U.S. dollar-denominated power
sales agreement to provide 78 MWs of capacity to an electric utility
in Guatemala for a 15-year period ending in 2010. The project (the
Alborada Power Station) consists of two combustion turbines with a
total cost of approximately $50 million. TECO Power Services has
obtained political risk insurance from the Overseas Private Investment
Corporation (OPIC), an agency of the U.S. government, for currency
inconvertibility, expropriation and political violence covering up to
90 percent of its equity investment and economic returns.
TCAE began commercial operation of the Alborada Power Station on
Sept. 14, 1995. The power sales agreement between TCAE and the power
purchaser, Empresa Electrica de Guatemala, S.A. (EEGSA), provides for
a capacity charge and operations and maintenance expense payments. The
capacity charge is subject to adjustment due to output, heat rate and
availability. EEGSA is responsible for providing the fuel for the
p l a nt with TECO Power Services providing assistance in fuel
administration.
EEGSA, a private distribution and generation company formed in
1894, serves more than 400,000 customers. Approximately 92 percent of
this company is currently owned by the Guatemalan central government
through the Ministry of Finance, with the remaining 8 percent owned by
private Guatemalan investors. EEGSA s service territory includes the
capital of Guatemala, Guatemala City.
In January 1997, TECO Power Services secured $29 million of
limited-recourse financing for the Alborada Power Station from OPIC.
In 1996, Central Generadora Electrica San Jose, SRL (CGESJ), an
entity in which TECO Power Services has a 46 percent ownership
interest, signed a U.S.-dollar denominated power sales agreement with
EEGSA to provide 120 MWs of capacity for 15 years beginning in 2000.
The project consists of a single unit pulverized coal baseload
facility (San Jose Power Station) including port modifications to
accommodate the importation of coal, as well as the construction of
approximately 12 miles of transmission lines to connect the San Jose
Power Station to the Alborada substation. The total cost of the
project is estimated at $181 million. At Dec. 31, 1997 46 percent of
CGESJ was owned by another U.S. independent power producer (a
subsidiary of The Coastal Corporation) and 8 percent was owned by the
same Guatemalan business group that TECO Power Services partnered with

18
for the Alborada Power Station project. The U.S. partners have
obtained a commitment for political risk insurance from OPIC for
inconvertibility, expropriation and political violence covering up to
90 percent of their equity investment and economic returns.
In the first quarter of 1998, TECO Power Services and a local
partner were awarded the right to provide a 60 megawatt diesel powered
plant in Pavana, Honduras with an estimated cost of $49 million. The
award was made in connection with a declaration of electric emergency
by the President of Honduras. TECO Power Services and its local
partner are presently negotiating the terms of their interests in the
project and a 20-year power sales agreement with the Honduran national
utility.

PEOPLES GAS COMPANY

Peoples Gas Company, a Florida corporation, is engaged in the
purchase, distribution and marketing of propane gas for residential,
commercial, and industrial customers in the State of Florida. It
possesses no production facilities but purchases propane gas from
major national suppliers. In 1997, PGC had more than 37,000 customers
and sold more than 22 million gallons of propane.
Propane gas has historically been used in many traditional
industrial and commercial operations throughout Florida, including
production of durable products such as steel, glass, ceramic tile and
food products.
Propane is purchased under short-term contracts which enables PGC
to make purchases at prevailing market prices. During 1997, PGC
entered into options contracts to limit the exposure to propane price
increases. PGC may employ similar or other price management strategies
in the future.
PGC purchases propane from a small number of major national
suppliers and from the Dixie Pipeline. The company has storage
capacity in excess of one million gallons, mostly in South and
Central Florida. Delivery of propane product to PGC storage facilities
is primarily via rail cars and tanker trucks. PGC owns rail cars and
tanker trucks used throughout the northern and northeastern markets in
F l orida. The delivery of propane to PGC's storage facilities
throughout the central and southeastern parts of the State is through
transports controlled by a major propane supplier.
The majority of PGC s propane is delivered into tanks and
containers on the customer's premises via bulk delivery trucks.
Propane block systems are also an integral part of the company's
propane distribution operations in the residential market. Block
systems are typically used in areas where natural gas is not
available, and are often converted when a natural gas pipeline is
constructed in the area.

19
In the Florida propane market there are over thirty distributors
competing within the residential and commercial markets. Competition
ranges from a number of large, national companies to numerous local,
independent operators. The primary focus among distributors is to gain
market share through new customer growth (i.e., providing service for
home construction). PGC, presently the largest independent propane
distributor in Florida, expects to increase its customers and volumes
t h rough increased marketing activity and acquisitions. Propane
competes directly with natural gas, electricity and fuel oil, and its
marketing areas are not limited by a pipeline infrastructure.
In January 1998, TECO Energy acquired an additional Florida
propane gas business, Griffis Gas, Inc., serving more than 10,000
propane customers in northern peninsular Florida, mainly in the
Jacksonville area, and in Gainesville and Ocala. An affiliated company
which transports propane for Griffis Gas, U.S. Propane, Inc., was also
acquired. These companies now operate as part of PGC and are expected
to increase its annual volume by about one third.

SUWANEE GAS MARKETING

Suwanee Gas Marketing, a Florida corporation, owns no operating
assets but owns all of the common stock of TECO Gas Services (formerly
G a tor Gas Marketing) and has a 50% interest in two limited
partnerships involved in gas marketing and promoting compressed gas as
an alternative fuel for motor vehicles. TECO Gas Services provides gas
management and marketing services for large industrial customers. In
1997, it provided gas management for three cogeneration facilities.
TECO Gas Services owns no operating assets.

TECO INVESTMENTS

T E CO Investments' assets consist of short- and long-term
financial investments. The portfolio includes a continuing investment
in leveraged leases of $61 million. At Dec. 31, 1997, the net
leveraged lease investment had essentially a zero balance. TECO Energy
does not expect to expand this business.

TECO FINANCE

TECO Finance raises short- and long-term debt capital for the
diversified activities of TECO Energy. It has its own credit ratings,
based on a guarantee by TECO Energy. TECO Finance owns no operating
assets.

TeCom

TeCom, a Florida corporation formed in 1994, is marketing
advanced energy management, automation and control systems for
c o m mercial and residential applications, called the InterLane
systems. Several utilities and end-use operators have purchased
products from TeCom to demonstrate and test the InterLane systems.
Because of a continued high level of product enhancement
activity, TeCom capitalized $6.5 million pretax of product development
costs in 1997 and $4.9 million in 1996. The product development costs
capitalized in 1997 and 1996 and those to be capitalized in 1998 are
expected to be amortized starting in 1998 when TeCom anticipates its
commercial product will be available for general distribution. TeCom
had 50 employees at Dec. 31, 1997.

BOSEK, GIBSON AND ASSOCIATES

In November 1996, TECO Energy acquired Bosek, Gibson and
Associates, Inc., an engineering energy services company. BGA,
headquartered in Tampa, has seven offices in Florida and two in

20
California, and had 92 employees as of Dec. 31, 1997.
It provides engineering, construction management and energy
services to more than 300 customers, including public schools,
universities, health care facilities and other governmental facilities
throughout Florida and California.

TECO OIL & GAS

TECO Oil & Gas, a Florida corporation, was formed in 1995 to
enter into joint ventures with several partners to explore for oil and
gas in the shallow Gulf waters off Texas and Louisiana.
In 1997, TECO Oil & Gas began an on-shore exploration program in
the Permian Basin area of west Texas.
In August 1997, TECO Energy announced its intent to exit the
conventional oil and gas exploration and production business because
of the earnings volatility inherent in an oil and gas business of this
size.
In 1997, TECO Energy reported an after-tax loss from discontinued
operations of $6.5 million, including a write-off of non-producing
wells and net results up to the decision to exit the business. In
addition, a $3 million after tax loss from the ongoing drilling
program subsequent to the decision, was reported as a loss on disposal
of discontinued operations.
In March 1998, TECO Oil & Gas sold its offshore assets to a
subsidiary of American Resources of Delaware for $57.7 million,
consisting of $39.2 million in cash and a subordinated note in the
amount of $18.5 million. TECO Energy will report an after-tax gain on
this transaction of about 18 cents per share in the first quarter of
1998.
TECO Oil & Gas is now pursuing the sale of its onshore assets.

Item 2. PROPERTIES.

TECO Energy believes that the physical properties of its
operating companies are adequate to carry on their businesses as
currently conducted. The properties of Tampa Electric and the
subsidiaries of TECO Power Services are generally subject to liens
securing long-term debt.

TAMPA ELECTRIC

At Dec. 31, 1997, Tampa Electric had five electric generating
plants and four combustion turbine units in service with a total net
winter generating capability of 3,600 MWS, including Big Bend (1,742-
MW capability from four coal units), Gannon (1,180-MW capability from
six coal units), Hookers Point (200-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 (194 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, Tampa Electric 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.
T a m pa Electric owns 182 substations having an aggregate
transformer capacity of 16,326,356 KVA. The transmission system
c o n s ists of approximately 1,198 pole miles of high voltage
transmission lines, and the distribution system consists of 6,894 pole

21
miles of overhead lines and 2,625 trench miles of underground lines.
As of Dec. 31, 1997, there were 525,236 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
Tampa Electric.
Tampa Electric has easements for rights-of-way adequate for the
m a i ntenance 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.
Tampa Electric has a long-term lease for its office building in
downtown Tampa that serves as headquarters for TECO Energy, Tampa
Electric and certain other TECO Energy subsidiaries.

PEOPLES GAS SYSTEM

PGS' distribution system extends throughout the areas it serves
in Florida, and consists of more than 11,600 miles of pipe, including
approximately 6,900 miles of mains and over 4,700 miles of service
lines.
P G S operating divisions are located in thirteen markets
throughout Florida. While most of the facilities are owned, a small
number of operations, storage and administrative facilities are
leased.

TECO COAL

TECO Coal, through its subsidiaries, controls over 100,000 acres
of coal reserves and mining property in Kentucky and Tennessee.

22
Pike-Letcher controls in excess of 43,000 acres in Pike and
Letcher Counties, Kentucky. These properties contain estimated proven
and probable reserves in excess of 110 million tons.
Premier owns and operates a preparation plant and unit-train
loadout facility in Pike County, Kentucky and conducts surface and
deep mining operations of reserves which are leased from Pike-Letcher.
Premier does not own any coal reserves.
Clintwood has 25,000 acres of coal reserves held under long-term
leases in Pike County, Kentucky. These properties contain estimated
proven and probable reserves of 30 million tons. Clintwood owns and
operates a rail tipple and a coal preparation plant near the mines.
Gatliff has 65,000 acres of coal reserves and mining property in
Knox and Whitley Counties, Kentucky and Campbell County, Tennessee.
Gatliff owns 9,300 acres in fee and leases 55,700 acres under
long-term leases. These properties contain estimated proven and
probable coal reserves of 15 million tons. This coal, which combines
low-sulfur and low-ash fusion temperature characteristics, is found in
both deep and surface mines. Gatliff owns and operates a rapid-loading
rail tipple and a coal preparation plant near its deep mines. In 1996,
TECO Coal closed certain of its older Gatliff mines.
Rich Mountain operates a surface mine for Gatliff in Campbell
County, Tennessee, and does not own any coal reserves.

TECO COALBED METHANE

TECO Coalbed Methane's interest in proved gas reserves at Dec.
31, 1997 was independently estimated to be 195 billion cubic feet for
669 wells.
TECO Coalbed Methane's share of gas production for 1997 was 19.2
billion cubic feet.

TECO TRANSPORT

Electro-Coal's storage and transfer terminal is on a 1,070-acre
site fronting on the Mississippi River, approximately 40 miles south
of New Orleans. Electro-Coal owns 342 of these acres in fee, with the
remainder held under long-term leases.
Mid-South operates a fleet of 18 towboats and over 710 river
barges, most of which it owns, on the Mississippi, Ohio and Illinois
rivers. This includes three towboats and 110 covered river barges
chartered in March 1998 under a five-year agreement which provides for
the acquisition of these assets at the conclusion of the charter term.
Mid-South owns 15 acres of land fronting on the Ohio River at
Metropolis, Illinois on which its operating offices, warehouse and
repair facilities are located. Fleeting and repair services for its
barges and those of other barge lines are performed at this location
and on the upper Mississippi River near the mouth of the Kaskaskia
R i v er. Additionally, Mid-South performs fleeting and supply
activities at leased facilities in Cairo, Illinois.
Gulfcoast owns and operates a fleet of 12 ocean-going tug/barge
units, a 30,000 ton ocean-going ship and a 40,000 ton ocean-going
ship, with a combined cargo capacity of over 413,000 tons.

TECO POWER SERVICES

Hardee Power has a lease for approximately 1,300 acres of land in
Hardee and Polk Counties, Florida on which the Hardee Power Station is
located. The lease term runs through the 2012 and has options to
extend the term for up to an additional 20 years.
In addition, a TECO Power Services' subsidiary has a 96.06-
percent interest in a project entity, TCAE, which owns 7 acres in
Guatemala on which the Alborada Power Station is located. Another TECO
Power Services subsidiary has a 46-percent ownership in a project
entity, CGESJ, which owns 190 acres in Guatemala on which the San Jose

23
Power Station is being built.

PEOPLES GAS COMPANY

PGC operating divisions are located in eleven markets throughout
the state; most of its facilities are leased.

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 1997 to a
vote of TECO Energy's security holders, through the solicitation of
proxies or otherwise.

EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning the current executive officers of TECO Energy
is as follows:
Current Positions and Principal
Name Age Occupations During Last Five Years
Girard F. Anderson 66 Chairman of the Board, President and
Chief Executive Officer, February
1998 to date; President and Chief
Executive Officer, November 1997 to
February 1998; President and Chief
O p erating Officer July 1994 to
November 1997; and prior thereto,
Executive Vice President-Utility
Operations and President and Chief
Operating Officer of Tampa Electric
Company.

Alan D. Oak 51 Executive Vice President and Chief
Operating Officer, November 1997 to
date; Senior Vice President-Finance
and Chief Financial Officer, April
1995 to November 1997; and prior
thereto, Senior Vice President-
Finance, Treasurer and Chief
Financial Officer.

24
Current Positions and Principal
Name Age Occupations During Last Five Years

Roger H. Kessel 61 Senior Vice President-General
Counsel and Secretary, April 1995 to
d a t e; and prior thereto, Vice
President-General Counsel and
Secretary.

Roger A. Dunn 55 Vice President-Human Resources, July
1995 to date; and prior thereto,
S e n ior Vice President-Human
Resources and Corporate Affairs of
L T V C o r p oration (steel
manufacturer), Cleveland, Ohio.

Royston K. Eustace 56 Vice President-Strategic Planning
and Business Development.

Gordon L. Gillette 38 Vice President-Finance and Chief
Financial Officer, effective April
1998; Vice President-Regulatory
Affairs, April 1997 to April 1998;
Vice President-Regulatory and
Business Strategy of Tampa Electric
Company, April 1996 to April 1997;
Vice President-Regulatory Affairs of
Tampa Electric Company, January 1995
to April 1996; and prior thereto,
Director-Project Services of TECO
Power Services Corporation.

John B. Ramil 42 President of Tampa Electric Company,
effective April 1998; Vice
P r e sident-Finance and Chief
Financial Officer, November 1997 to
April 1998; Vice President-Energy
S e rvices and Planning of Tampa
Electric Company, November 1994 to
November 1997; Vice President-Energy
Services and Bulk Power of Tampa
Electric Company, April 1994 to
November 1994; and prior thereto,
Director-Resource Planning of Tampa
Electric Company.

There is no family relationship between any of the persons named
above. The term of office of each officer extends to the meeting of
t h e Board of Directors following the next annual meeting of
shareholders, scheduled to be held on April 15, 1998, and until his
successor is elected and qualified.

25
PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.

The following table shows the composite high, low and closing
sale prices for shares of TECO Energy common stock, which is listed on
the New York Stock Exchange, and dividends paid per share, per
quarter.

1st 2nd 3rd 4th
1997
High $25 1/8 $25 5/8 $25 7/8 $28 3/16
Low $23 3/4 $23 3/4 $23 7/8 $22 3/4
Close $24 $25 9/16 $24 1/2 $28 1/8
Dividend $.28 $.295 $.295 $.295

1996
High $27 $25 1/4 $25 1/4 $25 3/8
Low $23 3/4 $23 $23 $23 1/4
Close $24 7/8 $25 1/4 $23 3/4 $24 1/8
Dividend $.265 $.28 $.28 $.28

___________________

The approximate number of shareholders of record of common stock
of TECO Energy as of Feb. 28, 1998 was 28,562.

TECO Energy's primary source of funds is dividends from its
operating companies. Tampa Electric Company's Restated Articles of
Incorporation, certain of the supplemental indentures relating to
different series of its First Mortgage Bonds and certain long-term
debt issues at Peoples Gas System contain restrictions as to the
payment of dividends on the common stock of Tampa Electric Company.
Substantially all of Tampa Electric Company's retained earnings were
available for dividends throughout 1997.

Recent Sales of Unregistered Securities

On Jan. 27, 1998, TECO Energy issued 606,060 shares of its common
stock (the Shares) in connection with its acquisition of Griffis, Inc.
(Griffis), pursuant to the Agreement and Plan of Merger dated as of
Jan. 20, 1998 (the Merger Agreement) among TECO Energy, two wholly
owned subsidiaries of TECO Energy, Griffis and U.S. Propane, Inc.
(USPI), an affiliate of Griffis. Under the Merger Agreement, TECO
Energy s wholly owned subsidiaries merged into Griffis and USPI,
respectively, and as a result, all of the outstanding capital stock of
Griffis and USPI was exchanged for the Shares.
The Shares were issued without registration under the Securities
Act of 1933, as amended, in reliance upon the exemption provided in
Section 4(2) thereof. Reliance upon this exemption was based upon the
nature of the transaction, the number of shareholders and investment
representations made by each.

Item 6. SELECTED FINANCIAL DATA.
Year ended Dec. 31, 1997 1996 1995 1994 1993
(millions, except per share amounts)

Revenues (1)(2) $1,862.3 $1,775.3 $ 1,658.9 $1,615.4 $ 1,563.7
Net income (1):
From continuing operations $ 211.4 $ 217.4 $ 200.8 $ 163.8(3) $ 161.4
From discontinued operations (6.5) (0.9) (0.5) -- --
Disposal of discontinued
operations (3.0) -- -- -- --
Net Income before cumulative
effect of change in accounting
principle 201.9 216.5 200.3 163.8(3) 161.4
Cumulative effect of change in
accounting principle -- -- -- -- 11.2
Net income $ 201.9 $ 216.5 $ 200.3 $ 163.8 $ 172.6

Total assets (1) $3,960.4 $3,901.6 $3,801.0 $3,622.6 $3,423.2
Long-term debt (1) $1,080.2 $1,118.0 $1,126.4 $1,156.3 $1,169.1

Earnings per average share (EPS)
outstanding -- basic (1):
From continuing operations $ 1.62 $ 1.68 $ 1.56 $ 1.28(3) $ 1.26(4)
From discontinued operations (0.05) (0.01) -- -- --
Disposal of discontinued
operations (0.03) -- -- -- --
Before cumulative effect of
change in accounting
principle $ 1.54 $ 1.67 $ 1.56 $ 1.28(3) $ 1.26(4)
Cumulative effect of change in
accounting principle -- -- -- -- .09(4)
Earnings per average common
share outstanding -- basic $ 1.54 $ 1.67 $ 1.56 $ 1.28 $ 1.35(4)
Common dividends paid per
common share (5) $ 1.165 $ 1.105 $ 1.0475 $ .9975 $ .9475(4)
_________________
(1) The amounts prior to 1997 have been restated to include the results of the Peoples companies
merger.
(2) Amounts shown in 1997, 1996 and 1995 include the impact of deferred revenues, as discussed on
page 29 of Management's Discussion and Analysis.
(3) Includes the effect of a corporate restructuring charge which reduced new income by $15 million
and earnings per share by $0.12.
(4) Restated to reflect a two-for-one stock split on Aug. 30, 1993.
(5) Dividend rate for TECO Energy Common Stock (not restated for Peoples companies merger).

27
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

This Management s Discussion and Analysis contains forward-looking
statements which 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 in the Investment Considerations
section.

EARNINGS SUMMARY:

All prior year amounts have been restated to reflect the merger with the
Peoples Gas companies and exclude the discontinued operations of TECO
Oil & Gas. See the discussion of the mergers in Note A on pages 59 and
60, and Discontinued Operations on page 39.

TECO Energy reported basic earnings from continuing operations of
$1.62 per share in 1997 compared to $1.68 in 1996. Excluding $.04 per
share of one-time merger related transactions expenses, the earnings
were $1.66. Results in 1997 included the recognition of $30.5 million
of previously deferred revenues at Tampa Electric compared with the
deferral of $34.2 million of revenues in 1996 under agreements approved
by the Florida Public Service Commission (FPSC). Results in 1995
reflect the deferral of $50.8 million of revenues at Tampa Electric
under an FPSC approved agreement. See Utility Regulation section.
Earnings per share after, after a $9.5 million after-tax loss from
the discontinued conventional oil and gas operations, were $1.54
compared with $1.67 in 1996.
The decline in 1997 earnings from continuing operations was due
primarily to one-time merger related costs from the Peoples Gas
companies merger and an FPSC decision, described in the Tampa Electric
section, directing the regulatory treatment of two wholesale power sales
contracts. These effects more than offset earnings growth from the
diversified businesses. Earnings growth in 1996 was driven by strong
performance at the diversified companies as well as continued growth in
energy sales at Tampa Electric, lower operations and maintenance
expenses, and higher levels of capitalized financing costs (AFUDC),
associated with the investment in the Polk Power Station at Tampa
Electric which entered commercial service in September 1996.

Earnings per share-basic 1997 Change 1996 Change 1995
Continuing operations $1.62 -3.6% $1.68 7.7% $1.56
Discontinued operations (.08) -- (.01) -- --
Earnings per share $1.54 -7.8% $1.67 7.1% $1.56

Earnings per share-diluted
Continuing operations $1.61 -3.6% $1.67 7.7% $1.55
Discontinued operations (.07) -- -- -- --
Earnings per share $1.54 -7.8% $1.67 7.7% $1.55

28
Earnings per share by operating group
from continuing operations- basic:

Regulated companies 1997 Change 1996 Change 1995
Tampa Electric $1.03 -4.6% $1.08 6.9% $1.01
Peoples Gas System .11(1) -- .11 10.0% .10
Diversified companies
/other .52(2) 6.1% .49 8.9% .45
Merger related
expenses (.04) -- -- -- --
Total $1.62 -3.6% $1.68 7.7% $1.56

Net Income (millions)
from continuing
operations $211.4 -2.8% $217.4 8.3% $200.8

Average common shares outstanding
Basic (millions) 130.8 1.2% 129.3 .5% 128.6
Diluted (millions) 131.2 1.1% 129.8 .6% 129.0

Return on average
common equity 14.3% 15.6% 15.5%

(1) Excludes $.01 of one-time merger related transactions.
(2) Excludes $.03 of one-time merger related transactions.

OPERATING RESULTS

TECO Energy's Operating Results
Operating income growth in 1997 reflected increased operating
income at Tampa Electric from the recognition of $30.5 million of
previously deferred revenues, the inclusion of Polk Unit One in rate
base for earnings purposes and strong performance by the diversified
companies, particularly TECO Transport. Consolidated operating income
rose in 1996 despite the deferral of $34.2 million of revenues at Tampa
Electric under agreements approved by the FPSC. Results in 1995
included the deferral of $50.8 million of revenues, also, under an FPSC
approved agreement Tampa Electric agreement. See Utility Regulation
section.
The following table identifies the unconsolidated revenues and
operating income from continuing operations of the significant operating
groups.

Contributions by operating group (unconsolidated)(1)

Revenues 1997 Change 1996 Change 1995
(millions)
Tampa Electric (2) $1,189.2 6.8% $1,112.9 1.9% $1,092.3
Peoples Gas System $ 249.6 -3.5% $ 258.7 17.3% $ 220.6
Diversified companies $ 632.5 4.3% $ 606.2 9.7% $ 552.8

29
Operating income 1997 Change 1996 Change 1995
(millions)
Tampa Electric $ 271.5 11.3% $ 244.0 6.3% $ 229.5
Peoples Gas System $ 33.6 5.0% $ 32.0 4.9% $ 30.5
Diversified companies(3) $ 115.1 1.1% $ 113.9 8.0% $ 105.4

(1) All amounts have been restated to exclude discontinued operations
of TECO Oil & Gas.
(2) 1997 Tampa Electric revenues include the recognition of $30.5
million of previously deferred revenues, 1996 and 1995 revenues
were net of $34.2 and $50.8 million respectively, deferred under
agreements described in the Utility Regulation section.
(3) O p erating income includes items which are reclassified for
consolidated financial statement purposes. The principal items are
the non-conventional fuels tax credit related to coalbed methane
production and interest expense on the limited-recourse debt
related to the independent power operations. In the Consolidated
Statements of Income, the tax credit is part of the provision for
income taxes and the interest is part of interest expense. Certain
amounts have been restated to conform to current year presentation.

Tampa Electric -- Electric Operations

Tampa Electric's Operating Results
In 1997, Tampa Electric benefited from a strong local economy, good
customer growth and continued cost control. Its 1997 operating income
increased more than 11 percent, after the recognition of $30.5 million
of previously deferred revenues to support the inclusion of Polk Unit
One in rate base for earnings purposes.
Tampa Electric's 1996 operating income increased more than six
percent over 1995 results even after the deferral of $34.2 million of
revenues. Higher base revenues from retail customer growth, favorable
weather and an improved economy together with lower operating expenses
and the inclusion of Polk Unit One in rate base for earnings purposes in
the fourth quarter contributed to the improvement.

Tampa Electric Results 1997 Change 1996 Change 1995
(millions)
Revenues (1) $1,189.2 6.8% $1,112.9 1.9% $1,092.3
Operating expenses 917.6 5.6% 868.9 .7% 862.8
Operating income $ 271.5 11.3% $ 244.0 6.3% $ 229.5

(1) 1997 Tampa Electric revenues include the recognition of $30.5
million of previously deferred revenues. 1996 and 1995 revenues are
net of $34.2 million and $50.8 million of deferred revenues,
respectively.

Tampa Electric's Operating Revenues
Tampa Electric s 1997 operating revenues increased almost seven
percent to $1.2 billion, after the recognition of $30.5 million of
previously deferred revenues. The company benefited from customer
growth of more than two percent and retail energy sales growth, despite
mild weather, of one percent. Tampa Electric's 1996 revenues, even after
the deferral of $34.2 million of revenues, increased due to more than
two percent customer growth and higher energy sales due to a colder than
normal winter.

30
The economy in Tampa Electric's service area continued to grow in
1 9 9 7 with increased employment from corporate relocations and
expansions. Combined residential and commercial energy sales declined
slightly in 1997, as the effects of mild weather more than offset the
addition of over 12,000 new customers. Non-phosphate industrial sales
increased in 1997 primarily due to the strong local economy and the
shift of some commercial customers to the industrial classification to
take advantage of new favorable Florida tax law changes on electricity
used in manufacturing.
Sales to the phosphate industry increased in 1997 as production
increased to meet continued strong domestic and international demand for
phosphate products. Sales to the phosphate customer group represented
less than four percent of base revenues in 1997.
Based on its own and independent forecasts, Tampa Electric expects
its service area economy to grow moderately for the next several years
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 economic development activities by local
communities.
Based on this expected growth reflecting both population and
business activity increases, Tampa Electric projects higher retail
energy sales of more than two percent annually for each of the next five
years, with combined energy sales growth in the residential and
commercial sectors of almost three percent annually. Energy sales to
non-phosphate industrial customers are expected to grow almost two
percent annually for the next five years.
After 1998, sales to the phosphate industry are expected to decline
slowly as mining activity migrates out of Tampa Electric's service area.
This decline could be accelerated if IMC Agrico (IMCA) or others decide
to pursue new self-generation projects. See the Utility Regulation
section. IMCA is Tampa Electric's largest customer, representing less
than three percent of base revenues.
All of these growth projections are based on important assumptions,
including continued local area economic growth, normal weather and no
significant regulatory changes.
Non-fuel revenues from sales to other utilities were $39 million in
1997, $36 million in 1996 and $34 million in 1995. Non-fuel revenues
increased in 1997 and 1996 due to a shift from broker system economy
sales to longer-term, higher-margin wholesale power sales. Megawatt
hours sold to other utilities decreased in 1997 primarily due to lower
Tampa Electric generating unit availability.
An adverse FPSC decision in 1997 which required Tampa Electric to
change its regulatory treatment of two wholesale power sales contracts,
had the effect of reducing Tampa Electric s 1997 earnings by about $.05
per share. The required treatment eliminates certain assets from retail
rate base and shifts certain costs from retail to wholesale where they
are not fully recovered. One of the contracts has been terminated and
efforts are being made to mitigate the effects of the second. The impact
of the remaining contract and the mitigation effort is not expected to
have a material impact on 1998 results. As a result of the FPSC
decision, Tampa Electric will concentrate its wholesale power sales
efforts on energy broker and other short-term sales through 1999, and
not on longer-term capacity contracts as in the past.

31
Tampa Electric megawatt-hour sales

1997 Change 1996 Change 1995
(thousands)
Residential 6,500 -1.6% 6,607 4.0% 6,352
Commercial(1) 4,901 1.8% 4,815 2.2% 4,710
Industrial(1) 2,466 7.0% 2,304 -2.4% 2,362
Other 1,223 1.7% 1,203 2.3% 1,176
Total retail 15,090 1.1% 14,929 2.3% 14,600
Sales for resale 3,160 -2.5% 3,241 19.8% 2,706
Total energy sold 18,250 0.4% 18,170 5.0% 17,306
Retail customers
(average) 518.4 2.4% 506.0 2.2% 495.2

(1) Results reflect the shift of some commercial customers to the
industrial classification to take advantage of new favorable
Florida tax law changes on electricity used in manufacturing. This
does not affect Tampa Electric s revenues.

Tampa Electric's Operating Expenses
Non-fuel operations and maintenance expenses rose almost six
percent, reflecting a full year of operations of Polk Unit One and
increased generating unit maintenance. Improved efficiency and the
continued focus on aggressive cost management throughout the company
limited other operations expense increases. Absent increased generating
unit maintenance expense, operations and maintenance expense in all
other areas increased less than one percent. Non-fuel operations and
maintenance expenses declined in 1996 due to the continuing focus on
managing costs in all areas of the company. Over the next several years,
non-fuel operations and maintenance expense increases are expected to
average about the same level as inflation.
In September 1996, Tampa Electric completed the construction of the
250-megawatt, state-of-the-art, clean-coal technology Polk Unit One. The
addition of this facility was the primary cause of increased non-fuel
operating expenses in 1997. During the first three years of operations
a total of $28 million from the U. S. Department of Energy (DOE) is
available to partially offset a significant portion of the non-fuel
operations and maintenance expenses. The FPSC has allowed full recovery
of the capital costs incurred in the construction of the plant as
described in the Utility Regulation section.

Operating expenses
1997 Change 1996 Change 1995
(millions)
Other operating expenses $165.1 .6% $164.1 .5% $163.3
Maintenance 78.2 19.4% 65.5 -5.9% 69.6
Depreciation 141.4 17.6% 120.2 6.1% 113.3
Taxes, other than income 91.8 5.4% 87.0 -1.0% 87.9
Operating expenses 476.5 9.1% 436.8 .6% 434.1
Fuel 373.4 -2.5% 383.1 -.3% 384.3
Purchased power 67.7 38.3% 49.0 10.4% 44.4
Total fuel cost 441.1 2.1% 432.1 .8% 428.7
Total operating expenses $917.6 5.6% $868.9 .7% $862.8

32
Depreciation expense increased $21 million in 1997 due to normal
plant additions to serve the growing customer base and a full year of
service of Polk Unit One. Depreciation expense in 1996 increased from
normal plant additions and the fourth quarter addition of Polk Unit One.
Depreciation expense is projected to rise moderately for the next
several years due to normal utility plant additions.
Changes in taxes other than those on income reflected the property
taxes associated with Polk Unit One in 1997. Higher state gross
receipts taxes and franchise fees associated with higher energy sales
and changes in property values in 1996 were offset by decreases in
payroll related taxes as a result of the 1994 restructuring.
Total fuel cost increased by two percent in 1997 due to higher
energy sales and a larger proportion of purchased power, a component of
total fuel cost, as a result of lower generating unit availability. In
1996, total fuel cost 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 Tampa Electric'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 two percent
in 1997 after a six-percent decrease in 1996.
Purchased power increased in 1997 due to lower generating unit
availability. In 1996, purchased power increased primarily to meet
weather-related demand. Substantially all fuel and purchased power
expenses were recovered through the fuel adjustment clause.
Nearly all of Tampa Electric's generation in the last three years
has been from coal, and the fuel mix is expected to continue to be
substantially coal. External forecasts indicate relatively stable coal
prices for the next few years compared to oil or gas prices.

Peoples Gas System

Peoples Gas System Results
In June 1997, TECO Energy completed its merger with the parent
company of the Peoples Gas companies. Concurrent with this merger, the
largest subsidiary, Peoples Gas System (PGS), a regulated local gas
distribution company, was merged into Tampa Electric Company and now
operates as the Peoples Gas Division of Tampa Electric Company. Also in
June 1997, TECO Energy completed its acquisition of the West Florida
Natural Gas Company (West Florida Gas), a local distribution company
serving the Ocala and Panama City, Florida areas. West Florida Gas was
merged into Tampa Electric and now operates as part of the Peoples Gas
Division.
These acquisitions were accounted for as poolings of interests and,
accordingly, the 1997 financial and operating data include the results
of West Florida Gas and PGS, combined for the full year. The financial
statements prior to 1997 have been restated to include the results of
the Peoples Gas companies. The prior years have not been restated to
reflect the operations and financial position of West Florida Gas due to
its insignificant size.
These acquisitions further TECO Energy's strategy of pursuing
growth in energy-related businesses through geographic expansion and the
addition of new product and service offerings.

33
Peoples Gas System Results (1)
(millions) 1997 Change 1996 Change 1995
Revenues $249.6 -3.5% $258.7 17.3% $220.6
Cost of gas sold 119.6 -8.1% 130.1 32.1% 98.5
Operating expenses 96.4 -.2% 96.6 5.5% 91.6
Operating income $ 33.6 5.0% $ 32.0 4.9% $ 30.5

Therms sold (millions)
Residential 48.9 1.5% 48.2 11.1% 43.4
Commercial 207.8 -11.6% 235.1 2.2% 230.0
Industrial 35.9 -39.2% 59.0 -26.0% 79.7
Transportation 607.2 21.5% 499.8 -19.7% 622.6
Total 899.8 6.8% 842.1 -13.7% 975.7
Customers (thousands) 234.7 16.0% 202.4 2.7% 197.1

(1) Excludes the revenues and expenses for 1996 and 1995 of West
Florida Gas. Excludes approximately 28,000 customers and 57.5
million therms in 1996 and 28,000 customers and 50.1 million therms
in 1995 of West Florida Gas.

PGS is the largest natural gas distribution utility in Florida with
about 65 percent of the market. It serves almost 235,000 customers in
the major metropolitan areas of Florida, including Jacksonville, Daytona
Beach, Orlando, Fort Lauderdale, Miami, St. Petersburg, Tampa, Sarasota,
Ocala and Panama City and the surrounding communities. The operations
of PGS are regulated by the FPSC, which has jurisdiction over rates,
service, issuance of certain securities, safety, accounting practices
and other matters.
The PGS customer base is largely residential and small commercial
customers with a smaller number of large commercial and industrial
customers and power generation facilities. PGS has increased the number
of commercial and residential customers served more than two percent
annually over the last five years.
PGS is actively marketing natural gas service to major new home
builders, targeting upscale communities where annual per customer usage
approaches 1,000 therms per year compared to the current average of 250
therms per customer per year. In 1997, residential customers represented
89 percent of customers, used five percent of total gas and contributed
34 percent of non-fuel revenues.
In Florida, natural gas has been used by commercial customers for
food processing and production of products such as steel, glass and
ceramic tile. In addition, the use of natural gas for climate control is
s p r eading to institutional, commercial and industrial customers
including schools, hospitals and office complexes. In 1997, commercial
customers represented 10 percent of customers, used 23 percent of total
gas and contributed 53 percent of non-fuel revenues.
PGS is increasing its investment in infrastructure to serve
residential and commercial customers. It expects to invest $50 to $60
million annually for the next five years to grow the business, doubling
the historical level of capital expenditures. Infrastructure will be
expanded in areas already currently served and into areas not yet served
by natural gas.
Gas sales to large commercial and industrial customers have
decreased as these customers shifted to increased use of transportation
only services. Large industrial and power generation customers are
permitted under current regulation to purchase natural gas directly from
gas marketers, with PGS providing gas delivery at transportation only
rates. Deliveries to these customers can vary significantly from year
to year due to price and availability of gas compared to prices for
other fuels that may be substituted for natural gas. In 1997, large
industrial and transportation customers represented one percent of the
customers, used 72 percent of total gas transported and contributed 13
percent of non-fuel revenues.
Transportation volumes increased in 1997 due to the addition of

34
West Florida Gas and the conversion of some large commercial customers
to transportation only service. Transportation gas volumes decreased
significantly in 1996 due to a power generation customer decreasing gas
usage and the scheduled removal from the system of a cogeneration
customer.
Residential gas sales increased in 1997 due to the additional
volume from West Florida Gas, which was partially offset by a mild 1997
winter after high levels of gas sales in 1996. The 1995-1996 winter was
one of the coldest in Florida history.
P G S s ales volumes and revenues are subject to seasonal
fluctuations. Typically sales volumes are higher during the winter
months reflecting greater demand for residential space heating, and
revenues are higher reflecting both increased demand and higher demand-
driven natural gas prices. Changes in the cost of gas sold are reflected
in customers bills through the FPSC-approved Purchased Gas Adjustment
clause.
PGS is focused on cost control and held operating expenses flat in
1997 despite the addition of West Florida Gas. Additional operating
expense savings are expected in 1998 as a result of merger related
synergies, mainly from the elimination of duplicative overhead and
administrative activities, as well as improved operating efficiencies
and lower interest costs.
Operating expenses increased in 1996 over 1995 due to the
implementation of an incentive compensation program for employees and
h i gher depreciation on normal additions to property, plant and
equipment.

Diversified Companies

Diversified Companies' Operating Results
The diversified companies achieved operating income of $115.1
million in 1997 compared with $113.9 million in 1996 and $105.4 million
in 1995. The diversified companies now include a propane company, an
appliance sales and service company and a gas marketing company acquired
with PGS.
The improved results in 1997 were due to higher coal volumes
handled for Tampa Electric along with increased overseas grain business
at TECO Transport, and TECO Coal s growth in third party sales and lower
operating expenses. Higher operating income in 1996 resulted from higher
gas prices throughout the year at TECO Coalbed Methane and TECO Power
Services first full year of operations at the Alborada Power Station in
Guatemala.

35
Diversified Companies Results from Continuing Operations
(unconsolidated) (1)
(millions) 1997 Change 1996 Change 1995(2)
Revenues $632.5 4.3% $606.2 9.7% $552.8
Operating expenses 517.4 5.1% 492.3 10.0% 447.4
Operating income (3) $115.1 1.1% $113.9 8.1% $105.4

(1) A l l amounts have been restated to exclude the discontinued
operations of TECO Oil & Gas.
(2) Certain 1995 amounts have been restated to conform to the current
year presentation.
(3) O p e rating income includes items which are reclassified for
consolidated financial statement purposes. The principal items are
the non-conventional fuels tax credit related to coalbed methane
production and interest expense on the limited-recourse debt related
to independent power operations, both of which are included in
operating income for the diversified companies. In the Consolidated
Statements of Income the tax credit is part of the provision for
income taxes and the interest is part of interest expense.

TECO Transport achieved higher operating income in 1997. The
transfer terminal handled higher coal volumes for Tampa Electric to
replenish coal inventories depleted in 1996 and all areas of the company
achieved increased operating efficiencies. The ocean-going business
also benefited from a full year of operations from the ship added in
1996 and increased grain charter business. The river business was
impacted by adverse weather conditions early in the year. This was
partially offset by increased northbound business and higher volumes
handled for Tampa Electric.
Results in 1996 improved due to added capacity on the river and in
the ocean going fleet and increased northbound river traffic.
The ocean-shipping business in late 1997 again increased its
capacity, adding a second ship to the fleet. This 36,000 ton ship will
be used in the government sponsored export grain trade and will free
other vessels for general business uses.
T h e transfer terminal handled slightly lower quantities of
petroleum coke as excess capacity depressed market prices leading
suppliers to hold the product off the market. This decrease was more
than offset by higher export coal volumes and increased tonnage of coal
transferred for Tampa Electric.
TECO Transport expects to benefit from the continued strong
domestic demand for phosphate products, and from further diversification
into new markets and cargoes in 1998.
Transfers of petroleum coke are expected to increase in 1998
reflecting an increase in supply and a return to more normal demand.
Increased transfers and northbound river shipments of steel related
products are also expected as a result of new steel mini-mills coming on
line and the offering of an integrated package of services for scrap and
other steel products.
Significant factors which could affect overall results are weather,
commodity grain prices and domestic and overseas economic conditions.
TECO Coal s operating income increased nine percent in 1997 due to
increased shipments of specialty coals to third parties from the new
facilities at Clintwood Elkhorn and the growth in third-party steam coal
sales which more than offset higher production costs at Premier and
lower shipments to Tampa Electric. In 1996, operating income was lower
than in 1995 primarily due to a $5.2-million pretax gain from a road
condemnation settlement in 1995. Sales increased to 6.1 million tons in
1997, compared to 5.9 million tons in 1996 and 5.3 million tons in 1995.
Success in burning more conventional and lower-cost steam coals has
enabled Tampa Electric to adopt a competitive strategy of phasing down
coal shipments from TECO Coal for the last several years. Shipments to
Tampa Electric declined by about 25 percent in 1997 after a 17 percent
decline in 1996. Because of this decrease and high production costs,

36
Gatliff closed several mines in 1996. Shipments to Tampa Electric are
expected to decline by approximately 25 percent in 1998.
I n September 1996, TECO Coal acquired 25 million tons of
metallurgical grade coal reserves contiguous to its existing Clintwood
operations and constructed a new preparation plant at this location.
This facility, which supports an additional one million tons of annual
production, went into service in mid-1997. Metallurgical coal has unique
characteristics and is sold primarily to the steel industry both
domestically and internationally.
Most of the production from the Premier mines is committed through
1998. TECO Coal expects increased sales volumes from the Premier mines
and the Clintwood expansion to offset the impact on operating results of
lower sales to Tampa Electric in 1998.
TECO Coalbed Methane's 1997 operating income increased more than
two percent as higher per unit Section 29 tax credits and lower per unit
operating costs more than offsetting the anticipated three percent
decline in production. Gas price strength in 1997 was a result of low
inventory levels at the start of the fall heating season. Production
declined to 19.2 billion cubic feet (Bcf) from 19.8 Bcf in 1996. At
year-end 1997, proven reserves were estimated to be 195 Bcf.
Results in 1996 improved due to strong gas prices.
Production from TECO Coalbed Methane s reserves are eligible for
non-conventional fuels tax credits under Section 29 of the Internal
Revenue Code through the year 2002. The credit, which grows with
inflation, was estimated at $1.05 per thousand cubic feet (Mcf) in 1997.
All gas produced is sold under contract at spot market prices for
the life of the reserves. Although natural gas prices have been subject
to significant volatility since late 1994, the Section 29 tax credits
provide some degree of stability to TECO Coalbed Methane s operating
results.
TECO Power Services operating income decreased, as expected, in
1997 as a result of interest expense associated with the $29 million
limited-recourse project debt financing completed in January 1997 for
the Alborada Station in Guatemala. Operating income rose in 1996 from a
full year of operation of this 78-megawatt station.
In 1996, TECO Power Services formed a partnership with the same
Guatemalan business interest it partnered with for the Alborada Power
Station and with Coastal Corporation to build, own and operate a 120-
megawatt pulverized coal-fired power plant, the San Jose Power Station
in Guatemala. The partnership signed a 15-year power supply agreement
with the same Guatemalan distribution utility that purchases power from
the Alborada plant. All necessary construction permits are in hand,
design and engineering work continues and construction has started. The
$181 million San Jose Station is scheduled to be completed by early
2000. TECO Power Services has a 46 percent interest in the project.
TECO Power Services domestic project, the Hardee Power Station in
west central Florida, continues to operate reliably, supplying power to
Seminole Electric Cooperative and Tampa Electric.

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Peoples Gas Company (PGC), the unregulated propane gas business
acquired in the Peoples Gas companies merger, is the largest independent
propane distributor in Florida. In 1997, it had more than 37,000
customers and sold more than 22 million gallons of liquid propane gas
compared with 35,000 customers and 23 million gallons sold in 1996. In
1997, the effects of mild weather more than offset customer growth.
PGC does business in the same major metropolitan areas as PGS and
in other areas as well, marketing liquid propane gas to residential,
commercial and industrial customers. Propane competes directly with
natural gas, electricity and fuel oil, and its marketing areas are not
limited by a pipeline infrastructure.
PGC also serves as a strategic partner to PGS by installing propane
systems to support early phases of development while holding the
delivery of natural gas until there is sufficient demand to justify the
extension of the pipeline infrastructure to serve customers.
PGC expects to grow customers and volumes in 1998 and beyond
through increased marketing activity and acquisitions.
Peoples Sales and Service, also acquired in the Peoples Gas
companies merger, helps facilitate new growth and sales for PGS and PGC
through the coordination of the retail sales installation and service of
gas burning appliances for PGS and PGC customers.
TECO Gas Services is another unregulated business acquired in the
Peoples Gas companies merger. This company provides gas management and
marketing services for large industrial customers. In 1997 TECO Gas
Services provided gas management for three cogeneration facilities.
TeCom is marketing advanced energy management, automation and
control systems for commercial and residential applications, called the
InterLane Power Manager and the InterLane Home Manager respectively.
TeCom made progress in 1997 in the development and marketing of
these systems, particularly the one for commercial applications. The
system was installed in a number of commercial facilities in locations
within, among others the Nashville Electric System, the Nebraska Public
Power District and Omaha Public Power District, the Idaho Power system
and the Washington Water Power System. In 1998, the Power Manager is
being offered to Tampa Electric s commercial and light industrial
c u s t o mers as part of an energy information service package.
Additionally, several utilities engaged in projects demonstrating the
residential product in 1997.
Because of a continued high level of product enhancement activity,
TeCom capitalized $6.5 million pretax of product development costs in
1997 and $4.9 million in 1996. In accordance with accepted accounting
practices, capitalized development costs associated with the commercial
system capitalized in 1996 and 1997 are expected to be amortized
starting in 1998 when TeCom anticipates its commercial product will be
available for general distribution.
Bosek, Gibson and Associates, Inc. (BGA), an energy services
company headquartered in Tampa with seven offices in Florida and two in
California, was acquired in November 1996. It provides engineering,
construction management and energy services to more than 300 customers,
including public schools, universities, health care facilities and other
governmental facilities throughout Florida and California.
In 1997, it was selected to provide energy services, analysis and
economic evaluation by, among others, the Jacksonville Naval Air Station
and the Suncoast District of the United States Postal Service. BGA is
working with both Peoples Gas System and TeCom throughout Florida to
make integrated product and services offerings that are energy source
neutral. In 1997, BGA began to transition from a traditional engineering
services company to a company focused more on energy performance
contracting.

Diversified Companies' Operating Revenues
Unconsolidated diversified revenues rose four percent in 1997, from
increased third party and Tampa Electric business at TECO Transport,
increased third party sales at TECO Coal, and increased utilization of

38
TECO Power Services' Alborada Station in Guatemala. In 1997,
diversified revenues also reflected a full year of revenues for BGA,
acquired in November 1996.
In 1996, the diversified companies achieved a 10 percent increase
in revenues. The largest increases occurred at TECO Coal from higher
sales to third parties, at TECO Coalbed Methane from higher gas prices,
and at TECO Power Services from a full year of operations at the
Alborada Power Station in Guatemala.

Diversified Companies' Operating Expenses
Operating expenses increased five percent in 1997, due to higher
production at TECO Coal, increased fleet utilization at TECO Transport
and the interest on new limited-recourse project debt at TECO Power
Services.
Diversified companies operating expenses increased 10 percent in
1996. Difficult underground mining conditions at TECO Coal s Gatliff
mines increased costs and led to the closing of several mines. Higher
fuel prices at TECO Transport and a full year of operations at TECO
Power Services Alborada Power Station also contributed to increased
operating expenses.

Discontinued Operations
In August 1997, TECO Energy announced its intent to exit the
conventional oil and gas exploration and production business because of
the small scale of the operations and earnings volatility inherent in an
oil and gas business of this size.
In 1997, TECO Energy reported an after-tax loss from discontinued
operations of $6.5 million including the write off of a group of three
offshore wells that ceased producing and the net results up to the
decision to exit the business. In addition, a $3 million after-tax loss
from the ongoing drilling program subsequent to the decision, was
reported as a loss on disposal of discontinued operations.
In March 1998, TECO Oil & Gas sold its offshore assets to a
subsidiary of American Resources of Delaware for $57.7 million,
consisting of $39.2 million in cash and a subordinated note in the
amount of $18.5 million. TECO Energy will report an after-tax gain on
this transaction of about 18 cents per share in the first quarter of
1998.
TECO Energy will continue to operate its separate coalbed methane
gas production business. It is not a part of this sale.

Year 2000 Computer Systems Compliance
Based on a complete inventory and risk assessment of all hardware,
firmware and software systems, TECO Energy identified three primary
areas with Year 2000 compliance issues: the energy control system at
Tampa Electric; mainframe based business systems such as financial
reporting and customer billing; and process controllers in power
generation facilities, and other operating areas of the TECO Energy
companies.

39
Working with the original equipment manufacturers and other users,
Tampa Electric began modifying the energy control system in 1997 and
expects the system to be Year 2000 compliant by the end of 1998. In
early 1997, TECO Energy began using a contractor specializing in Year
2000 conversions to make mainframe business applications compliant and
expects conversion and testing to be completed by the end of 1998.
Process controllers throughout the corporation are being modified or
replaced in the normal course of business with compliance expected in
all areas by the end of 1998.
The cost to make all of TECO Energy's equipment, systems and
processes Year 2000 compliant is expected to be about $5 million, of
which approximately $1 million was reflected in 1997 results.
TECO Energy is surveying all major suppliers and customers to
determine the status and schedule for their Year 2000 compliance and
expects to complete this effort by the middle of 1998. If customers and
suppliers' compliance plans present risks to TECO Energy, the company
plans to identify alternate suppliers and provide assistance where
appropriate.
TECO Energy does not at this time foresee a material impact on its
business operations or results associated with achieving Year 2000
compliance.

NON-OPERATING ITEMS

Other Income (Expense)
The dividend requirement for Tampa Electric preferred stock,
included in Other Income (Expense), declined in 1996 and 1997 reflecting
the redemption of all outstanding preferred stock.
Allowance for other funds used during construction (AFUDC) was $.1
million in 1997, $16.5 million in 1996 and $13.7 million in 1995. With
the completion of Tampa Electric's Polk Unit One in 1996, AFUDC is
expected to be minimal for the next several years.

Interest Charges
Interest charges were $105.8 million in 1997, up seven percent,
reflecting lower AFUDC on borrowed funds at Tampa Electric. In 1996,
interest charges were $98.7 million, up three percent from 1995
primarily due to the expiration of an interest rate swap agreement.

Income Taxes
Income tax expense increased in 1997 reflecting higher pretax
income and the effect of lower AFUDC on equity funds at Tampa Electric.
Income tax expense increased in 1996 primarily from increases in pretax
income. Income tax expense as a percent of income from continuing
operations before taxes was 31 percent in 1997, 27 percent in 1996 and
25 percent in 1995.
Total income tax expense was reduced by the federal tax credit
related to the production of coalbed methane. This tax credit totaled
$20.2 million in 1997, $19.6 million in 1996 and $20.6 million in 1995.
The tax credit rate was estimated at $1.05 per Mcf in 1997, up from
$1.02 in 1996 and $1.01 in 1995. This rate escalates with inflation and
could be limited by domestic oil prices. In 1997 domestic oil prices
would have had to exceed $46 per barrel for this limitation to have been
effective. The federal tax credit on production of coalbed methane is
available through the year 2002.

40
The income tax effect of losses from discontinued operations is
shown as a component of results from discontinued operations.

BUSINESS DEVELOPMENT ACTIVITY

In January 1998, TECO Energy acquired an additional Florida propane
gas business, Griffis Gas, Inc., in a stock-for-stock merger transaction
that was accounted for as a pooling of interests. About 600,000 shares
of TECO Energy common stock were issued in the transaction.
Griffis Gas, Inc., was a privately owned business operating in
northern peninsular Florida, mainly in the Jacksonville area, and in
Gainesville and Ocala. An affiliated company which transports propane
for Griffis Gas, U.S. Propane, Inc., was also acquired.
Both of the acquired companies operate as a part of Peoples Gas
Company; this acquisition is expected to increase Peoples Gas Company's
annual volume by about one third.
In the first quarter of 1998, TECO Power Services and a local
partner were awarded the right to provide a 60 megawatt diesel powered
plant in Pavana, Honduras with an estimated cost of $49 million. The
award was made in connection with a declaration of electric emergency by
the President of Honduras. TECO Power Services and its local partner are
presently negotiating the terms of their interests in the project and a
20-year power sales agreement with the Honduran national utility.
I n March 1998, TECO Transport's river barge transportation
subsidiary, Mid-South Towing, chartered three towboats and 110 covered
river barges under an agreement that provides for their acquisition at
t h e end of the five-year charter term. This additional river
transportation equipment is expected to be used to expand TECO
Transport's service offerings.

ACCOUNTING STANDARDS

Reporting Comprehensive Income
In 1997 the Financial Accounting Standards Board issued Financial
Accounting Standard (FAS) 130, Reporting Comprehensive Income, effective
for fiscal years beginning after Dec. 15, 1997. The new standard
requires that comprehensive income, which includes net income as well as
certain changes in assets and liabilities recorded in common equity, be
reported in the financial statements. TECO Energy does not expect this
standard to have a significant impact on its reporting practices.

Segment Reporting
FAS 131, Disclosures about Segments of an Enterprise and Related
Information, effective for fiscal years beginning after Dec. 15, 1997
establishes standards for reporting information about operating segments
in annual financial statements and interim financial reports issued to
shareholders. Generally, certain financial information is required to be
reported on the basis that is used internally for evaluating performance
of and allocation of resources to operating segments. TECO Energy has
not yet determined to what extent the standard will impact its current
practice of reporting operating segment information.

CAPITAL EXPENDITURES

TECO Energy's 1997 capital expenditures of $213 million consisted of
$125 million for Tampa Electric, $30 million for Peoples Gas System and
$58 million for the diversified companies.
Tampa Electric spent $125 million in 1997 for equipment and
facilities to meet its growing customer base and for generating
equipment improvements.
Peoples Gas System spent $30 million for system expansion and normal
equipment replacement. TECO Transport invested $29 million in 1997 for
the purchase of a 36,000 ton ship, a program of barge enlargement and
refurbishment, and normal equipment replacement. TECO Coal spent $12

41
million for an expansion of its Clintwood operations and acquisition of
new mining equipment. TECO Power Services spent $2 million for initial
design work for the San Jose Power Station in Guatemala. TECO Oil & Gas
spent $7 million for natural gas exploration and development.
T E CO Energy estimates total capital expenditures for ongoing
operations to be $304 million for 1998 and $879 million during the 1999-
2002 period. Of these amounts, Tampa Electric expects to spend $129
million in 1998 and $515 million during the 1999-2002 period, mainly for
d i s tribution facilities to meet customer growth and generation
reliability programs.
Tampa Electric s capital expenditure projections include about $20
million over the 1999-2002 period to comply with Phase II of the Clean
Air Act as described in the Environmental Compliance section. The level
of capital expenditures that will actually be required for compliance is
uncertain at this time.
Capital requirements for Peoples Gas System are expected to be about
$60 million in 1998 and $190 million during the 1999-2002 period for
infrastructure expansion to grow the customer base and normal asset
replacement.
The diversified companies expect capital expenditures of about $116
million in 1998 and $175 million during the 1999-2002 period. Included
in these amounts are the acquisition of coal mining equipment and mine
development costs, acquisition of replacement river barges and ocean
transportation equipment and normal asset replacement. At the end of
1997, $39 million had been committed.
Included in these estimates for the diversified companies are $76
million over the next three years at TECO Power Services for the
construction of the San Jose Power Station in Guatemala and the Pavana
project in Honduras. TECO Power Services is seeking external debt
financing for the remainder of its share of the construction costs, and
expects to use limited-recourse project debt financing after completion.

ENVIRONMENTAL COMPLIANCE

TECO Energy and its subsidiaries are subject to various environmental
regulations. TECO Energy believes that it and all of its subsidiaries
are substantially in compliance with the currently applicable standards
of the various environmental enforcement agencies and that potential
environmental liabilities are not material.
Tampa Electric Company is a potentially responsible party for certain
superfund sites and, through its Peoples Gas System division, for
certain former manufactured gas plant sites. While the joint and several
liability associated with these sites presents the potential for
significant response costs, Tampa Electric Company estimates its
ultimate financial liability could be up to $15 million over the next
ten years. The environmental remediation costs associated with these
sites are not expected to have a material impact on customer prices.

42
Tampa Electric 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.
Tampa Electric is currently evaluating options to comply with Phase
II sulfur dioxide emission standards set for the year 2000. The options
include adding a scrubber or switching to lower sulfur fuels. It is also
evaluating options to comply with Phase II of the Clean Air Act
Amendments for nitrogen oxide (NOx) reductions. These options include
combustion modifications and retrofit control technology. While Tampa
Electric s estimates reflected in the Capital Expenditure section
include $20 million for compliance with all Phase II requirements
including NOx reductions. The actual level of required expenditures is
uncertain at this time, however, it would be higher if the option of
scrubbing additional capacity is chosen. In any event, Tampa Electric
believes that the cost of compliance with Phase II, which would be
reflected in customers' bills, is not expected to have a material impact
on its prices.

UTILITY REGULATION

Return on Equity (ROE) and Other Regulatory Agreements:

Rate Stabilization Strategy
Building on an FPSC approved agreement in 1994, Tampa Electric s
objective has been to place the Polk Power Station in service without
increasing the total price for electric service while earning a fair
return. To meet this objective the company took action to significantly
reduce costs. Another key component of the strategy to accomplish this
objective was the deferral and subsequent recognition of 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 are being accomplished.

1995
In 1995, the FPSC approved a plan submitted by Tampa Electric to
defer revenues for 1995. Under this plan Tampa Electric 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 Tampa Electric deferred $50.8
million of revenues under this plan. The deferred revenues accrue
interest at the 30-day commercial paper rate as specified in the Florida
Administrative Code.
Also as part of this plan, Tampa Electric s oil backout tariff was
eliminated Jan. 1, 1996, an annual revenue reduction of approximately
$12 million.

1996 - 1999
In May 1996, the FPSC issued an order approving an agreement among
Tampa Electric, 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 Tampa Electric s customers received a $25-million refund over
12 months starting in October 1996. The refund consisted 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 Tampa Electric s ROE. For the years 1996 through 1998
Tampa Electric 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

43
percent were deferred for use in 1997 and 1998.
In 1997, 40 percent of any revenues that contributed to a ROE in
excess of 11.75 percent up to 12.75 percent were included in revenues.
The remaining 60 percent were deferred for use in 1998 as were 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.
Under these agreements $34.2 million of 1996 revenues were deferred.
Approximately $60 million of revenues deferred from 1996 and 1995 plus
$8 million of interest, after the effect of the $25-million refund, were
available for use in 1997 and 1998. Tampa Electric recognized $30.5
million in 1997 and is expected to recognize up to $39 million of
previously deferred revenues in 1998.
In October 1996, the FPSC unanimously approved an agreement among
Tampa Electric, OPC and FIPUG that resolved all pending regulatory
issues associated with the Polk Power Station. The agreement allows the
full recovery of the capital costs incurred in the Polk Power Station
project. The agreement also calls for an extension of the base rate
freeze established in the May agreement through 1999. Tampa Electric 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 1996 agreement, the $25-million refund established
in the May 1996 agreement remained intact and, in addition, customers
began receiving a $25-million temporary base rate reduction 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.
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.
Tampa Electric 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 Tampa Electric. In 1990, 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.
Tampa Electric s results under these agreements are subject to FPSC
review and audit.

Wholesale Power Sales Contracts
In September, the FPSC ruled that costs associated with two long-
term, wholesale power sales contracts should be assigned to the
wholesale jurisdiction and that for retail rate making purposes, the
costs transferred from retail to wholesale should reflect average costs
rather than the lower incremental costs on which the two contracts are
based. As a result of this decision and the related reduction of the
retail rate base upon which Tampa Electric is allowed to earn a return,
these contracts became uneconomic. See Tampa Electric Operating Results
section.

Environmental Cost Recovery Clause
In 1997, Tampa Electric recovered $5.8 million of environmental
compliance costs through the environmental cost recovery clause. These
are costs incurred by Tampa Electric after April 1993 to comply with
environmental regulations enacted, or which became effective subsequent
to the test year of Tampa Electric's most recent full regulatory price
setting proceeding but not included in current rates. Tampa Electric
will continue to seek 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.

44
Utility Competition: Electric

Tampa Electric s retail electric 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
various initiatives including legislative and/or regulatory changes that
would permit competition at the retail level. One such initiative,
described below, involves a proposed merchant power plant with a claimed
self generation use. Tampa Electric 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 might, 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.
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.
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 Tampa Electric) 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. Tampa
Electric, together with other utilities, has implemented an OASIS system
and believes it is in compliance with the Standards of Conduct.

Merchant Power Plants
In a 1997 FPSC informational workshop to address long range power
supply planning, questions were raised as to whether merchant power
plants, i.e plants built on speculation with a portion or all of their
capacity not subject to purchase agreements, could or should be
p e r m i t ted to serve growing customer demand for electricity.
Subsequently, utilities, cogeneration/independent power producers and
power marketers presented views before the FPSC on the applicability of
existing law and regulations to merchant power plants.
Tampa Electric presented its position that only utilities or entities
with contracts to serve the long term needs of an individual utility
could legally be applicants under the Florida Power Plant Siting Act
(PPSA). The PPSA governs the building of new generation and requires the
applicant to demonstrate that a plant is needed prior to receiving
construction and operating permits.
In subsequent declaratory statement proceedings addressing
specifically a proposed Duke/IMCA power plant discussed below, and a
project with a municipal utility, proposed by Duke, the FPSC denied

45
Duke's petitions and determined that the issue of the ability of
merchant power plants to be applicants under the PPSA needed to be
addressed in a more inclusive proceeding. It is uncertain at this time
whether or how the FPSC will proceed on this issue.
In 1997, IMCA and Duke announced that they had signed a letter of
intent for the construction of a natural gas fired combined cycle power
plant with a minimum capacity of 240 megawatts to serve retail load
currently served by Tampa Electric and two other utilities, and the
merchant wholesale function described above.
Tampa Electric and others objected to the proposed project on the
ground that it involved retail transactions within defined service areas
that are prohibited under existing Florida regulation. Prior to an FPSC-
ordered evidentiary hearing to determine if the proposed project should
be considered permitted self-generation or a prohibited retail sale,
IMCA withdrew its petition. As a result, the status of the proposed
project is unclear at this time.
I f the Duke/IMCA project or similar projects by others are
successfully pursued there would be an adverse effect on Tampa
Electric's retail operations, with some likely cost shifting to other
retail customers. Likewise, if necessary regulatory or legislative
actions are taken that result in the construction of wholesale merchant
power plants, Tampa Electric's wholesale operations would be adversely
affected.

Utility Competition: Gas

P G S is not in direct competition with any other regulated
distributors of natural gas for customers within its service areas. At
the present time, the principal form of competition for residential and
small commercial customers is from companies providing other sources of
energy and energy services.
Competition is most prevalent in the large commercial and industrial
markets. In recent years, these classes of customers have been targeted
by companies seeking to sell gas directly either using PGS facilities or
transporting gas through other facilities, thereby bypassing PGS
facilities. In response to this competition, various programs have been
developed by PGS including the provision of transportation services at
discounted rates.
In general, PGS faces competition from other energy source suppliers
offering fuel oil, electricity and in some cases liquid propane gas.
P G S has taken actions to retain and expand its commodity and
transportation business, including managing costs and providing high
quality service to customers.

Purchased Gas Adjustment
Changes in the cost of gas sold are passed along to customers through
the FPSC approved Purchased Gas Adjustment (PGA) clause.

Gas Unbundling
In some areas of the country, gas service for large customers has
become unbundled, with these customers able to choose a third-party
supplier of the gas commodity and to secure from the distribution
company transportation-only service. PGS is already largely unbundled
with 60 percent of the system throughput coming from third-party
suppliers.
The FPSC staff has issued a draft tariff which would allow all
customers, except residential, the right to take transportation-only
service and purchase gas from third parties. PGS is opposed to this
proposal unless there is a showing of benefit to the general body of
customers. It is unclear whether the FPSC staff action will lead to FPSC
action requiring further unbundling.

INVESTMENT ACTIVITY

46
At Dec. 31, 1997, TECO Energy had $10.6 million in cash and cash
equivalents versus $15.9 million at year end 1996.
The company also has a continuing investment in leveraged leases of
$61 million. At Dec. 31, 1997 the net leveraged lease investment had
essentially a zero balance and all leases were performing on a current
basis. The company has made no investment in leveraged leases since
1989.

FINANCING ACTIVITY

TECO Energy's 1997 year-end capital structure, excluding the effect
of unearned compensation, was 51 percent debt and 49 percent common
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
Tampa Electric AA+ Aa2 AA
TECO Finance/TECO Energy AA- A1 AA-

In December 1996 the Polk County Industrial Development Authority
issued $75 million of Solid Waste Disposal Facility Revenue Bonds for
the benefit of Tampa Electric. 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.
TECO Energy raised $9.2 million of common equity in 1996 and $9.4
million in 1995 from the sale of common stock through its Dividend
Reinvestment and Common Stock Purchase Plan (DRP). In 1997, the DRP
purchased TECO Energy shares on the open market for plan participants.
In July 1997, Tampa Electric retired all of its outstanding shares of
cumulative preferred stock at per share redemption prices of $103.75 for
Series A, $102.875 for Series B and $101.00 for Series D. In April 1996
Tampa Electric retired Series E and Series F preferred stock at
redemption prices of $102.00 and $101.00, respectively.
In January 1997, TECO Power Services secured $29 million of long term
limited-recourse debt financing for its Alborada Power Station in
Guatemala. Proceeds repaid short-term debt that had funded the
construction of the station.
In 1997, TECO Energy repaid $70 million of maturing medium-term notes
and redeemed $24 million of long-term debt assumed in the West Florida
Gas and Peoples Gas companies mergers.
As a part of its risk management program, during 1995 TECO Energy
entered into an interest rate exchange agreement to moderate its
exposure to short-term interest rate changes. This three-year agreement
effectively converted the interest rate on $100 million of short-term
debt from a floating rate to a fixed rate. TECO Finance pays a fixed
rate of 5.8% and receives a floating rate based on a 30-day commercial
paper index. The benefits of this agreement are at risk only in the
event of non-performance by the other party to the agreement, which the
company does not anticipate. This agreement did not have a significant
impact on interest expense in 1997 or 1996.
TECO Energy enters into futures and options contracts, from time to
time, to hedge the selling price for TECO Coalbed Methane s physical
production and to limit its exposure to gas price increases in both the
regulated Peoples Gas System and the unregulated propane business. TECO
Energy does not use derivative or other hedging instruments for
speculative purposes.

LIQUIDITY, CAPITAL RESOURCES

TECO Energy and its operating companies met cash needs during 1997
largely with internally generated funds with the balance from short-term

47
borrowing.
At Dec. 31, 1997 TECO Energy had unused bank credit lines of $485
million.
TECO Energy anticipates meeting its capital requirements for ongoing
operations in the 1998-2002 period substantially from internally
generated funds. TECO Power Services expects to finance the San Jose
Power Station with limited-recourse project financing upon completion of
construction.
Based upon anticipated revenue growth and effective cost management
in all of its current businesses and identified capital expenditures,
TECO Energy expects to generate, after dividends, about $400 million of
free cash flow through the year 2002. This amount would be available to
further grow the business and strengthen the balance sheet.

INVESTMENT CONSIDERATIONS

The following are certain of the factors that could affect TECO
Energy 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 TECO Energy, since these factors could cause
actual results and conditions to differ materially from those projected
in these forward-looking statements.
General Economic Conditions. The company s businesses are dependent
on general economic conditions. In particular, the projected growth in
Florida and Tampa Electric s service area is important to the
realization of Tampa Electric s and the Peoples Gas companies' forecasts
for annual energy sales growth for 1998 and beyond. An unanticipated
downturn in Florida s or the local area s economy could adversely affect
Tampa Electric s or the Peoples Gas companies' performance, through
time.
The activities of the diversified businesses, particularly TECO
Transport and TECO Coal, are also affected by general economic
conditions in the respective industries and geographic areas they serve,
both nationally and internationally.
Weather Variations. Most of TECO Energy s businesses are affected by
variations in general weather conditions and unusually severe weather.
Tampa Electric s and the Peoples Gas companies' energy sales are
particularly sensitive to variations in weather conditions. The TECO
Energy companies forecast 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.
Peoples Gas System and Peoples Gas Company are more weather sensitive
with a single winter peak period than Tampa Electric with both summer
and winter peak periods. Mild winter weather in Florida can be expected
to negatively impact results at these Peoples Gas companies.
Variations in weather conditions also affect the demand and prices
for the commodities sold by TECO Coalbed Methane and TECO Coal. TECO
Transport is also impacted by weather because of its effects on the
supply of and demand for the products transported. Severe weather
conditions that could interrupt or slow service and increase operating
costs also affects these businesses.
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, and in some situations
required divestiture of generating assets. 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, market
conditions or initiatives of other electric power providers, however,
particularly with respect to retail competition, could adversely affect

48
Tampa Electric s business and its performance.
The gas distribution industry has been subject to competitive forces
for several years. Further unbundling of gas service could adversely
affect Peoples Gas System.
Regulatory Actions. Tampa Electric and Peoples Gas System operate in
highly regulated industries. Their retail operations, including the
prices charged, are regulated by the FPSC, and Tampa Electric s
w h olesale power sales and transmission services are subject to
regulation by FERC. Changes in regulatory requirements or adverse
regulatory actions could have an adverse effect on either Tampa
Electric s or Peoples Gas System's performance.
Commodity Price Changes. Most of TECO Energy s businesses are
sensitive to changes in certain commodity prices. Such changes could
affect the prices they charge, their operating costs and the competitive
position of their products and services.

49
In the case of Tampa Electric, fuel costs used for generation are
mostly affected by the cost of coal. Tampa Electric is able to recover
the cost of fuel through retail customers' bills, 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 Tampa Electric, particularly as it relates to the cost
of gas and oil to other power producers.
In the case of Peoples Gas System, costs for purchased gas and
pipeline capacity are recovered through retail customers' bills, but
increases in gas costs affect total retail prices and therefore the
competitive position of Peoples Gas relative to electricity, other forms
of energy and other gas suppliers.
At the diversified companies, changes in gas and coal prices directly
affect the margins at TECO Coalbed Methane and TECO Coal.
Environmental Matters. TECO Energy s businesses are 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 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Page
No.

Report of Independent Accountants 51

Consolidated Balance Sheets, Dec. 31, 1997 and 1996 52

Consolidated Statements of Income for the years ended
Dec. 31, 1997, 1996 and 1995 53

Consolidated Statements of Cash Flows for the years
ended Dec. 31, 1997, 1996 and 1995 54

Consolidated Statements of Common Equity for the years
ended Dec. 31, 1997, 1996 and 1995 55

Notes to Consolidated Financial Statements 56-78

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.

50
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
of TECO Energy, Inc.,

We have audited the accompanying consolidated balance sheets of TECO
Energy, Inc. and subsidiaries as of Dec. 31, 1997 and 1996, and the
related consolidated statements of income, common equity and cash flows
for each of the three years in the period ended Dec. 31, 1997. 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 consolidated financial position of
TECO Energy, Inc. and subsidiaries as of Dec. 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each
of the three years in the period ended Dec. 31, 1997, in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
Jan. 15, 1998, except for certain
information included in Notes L
and I, for which the dates are
Jan. 27, 1998 and March 10, 1998,
respectively.

51
CONSOLIDATED BALANCE SHEETS
(millions)
Assets
Dec. 31, 1997 1996

Current Assets
Cash and cash equivalents $ 10.6 $ 15.9
Receivables, less allowance for uncollectibles 222.7 226.7
Inventories, at average cost
Fuel 80.8 62.2
Materials and supplies 63.1 60.0
Prepayments 12.9 12.8
390.1 377.6
Property, Plant and Equipment, at Original Cost
Utility plant in service
Electric 3,880.6 3,784.7
Gas 471.1 410.4
Construction work in progress 57.0 45.4
Other property 950.8 927.8
5,359.5 5,168.3
Accumulated depreciation (2,123.0) (1,935.5)
3,236.5 3,232.8
Other Assets
Other investments 88.3 91.1
Deferred income taxes 88.1 76.7
Deferred charges and other assets 157.4 123.4
333.8 291.2
$3,960.4 $3,901.6
Liabilities and Capital
Current Liabilities
Long-term debt due within one year $ 12.7 $ 80.3
Notes payable 447.5 305.7
Accounts payable 158.7 181.5
Customer deposits 77.9 77.7
Interest accrued 21.8 20.2
Taxes accrued 14.0 14.9
732.6 680.3
Other Liabilities
Deferred income taxes 470.9 458.9
Investment tax credits 51.7 56.3
Regulatory liability-tax related 35.1 35.7
Other deferred credits 145.2 160.9
Long-term debt, less amount due within one year 1,080.2 1,118.0

Preferred Stock of Tampa Electric -- 20.0

Capital
Common equity 1,512.2 1,442.2
Unearned compensation (67.5) (70.7)
$3,960.4 $3,901.6

The accompanying notes are an integral part of the consolidated financial
statements.

52
CONSOLIDATED STATEMENTS OF INCOME
(millions)

Year ended Dec. 31, 1997 1996 1995
Revenues $ 1,862.3 $ 1,775.3 $ 1,658.9
Expenses
Operation 966.6 955.5 871.6
Maintenance 114.2 97.4 106.5
Depreciation 225.4 202.8 192.7
Taxes, other than income 143.5 137.8 1,304.0

Income from Operations 412.6 381.8 354.9

Other Income (Expense)
Allowance for other funds used
during construction 0.1 16.5 13.7
Other income (expense) (0.3) 1.4 (0.5)
Preferred dividend requirements of
Tampa Electric (0.5) (1.8) (3.6)
(0.7) 16.1 9.6
Income Before Interest and
Income Taxes 411.9 397.9 364.5
Interest Charges
Interest expense 105.9 105.1 101.0
Allowance for borrowed funds
used during construction (0.1) (6.4) (5.6)
105.8 98.7 95.4
Income Before Provision for
Income Taxes 306.1 299.2 269.1
Provision for income taxes 94.7 81.8 68.3
Net income from continuing
operations 211.4 217.4 200.8

Net Loss from Discontinued
Operations, net of income tax
benefit of $3.5 million, $0.5
million and $0.3 million for 1997,
1996 and 1995, respectively (6.5) (0.9) (0.5)
Loss on Disposal of Discontinued
Operations, net of income tax
benefit of $1.6 million for 1997 (3.0) -- --
Net Income $ 201.9 $ 216.5 $ 200.3
Average common shares
outstanding during year 130.8 129.3 128.6

Earnings per Average Common Share
Outstanding From continuing operations
--Basic $ 1.62 $ 1.68 $ 1.56
--Diluted $ 1.61 $ 1.67 $ 1.55

Net income
--Basic $ 1.54 $ 1.67 $ 1.56
--Diluted $ 1.54 $ 1.67 $ 1.55
The accompanying notes are an integral part of the consolidated financial
statements.

53
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
Year ended Dec. 31, 1997 1996 1995
Cash Flows from Operating Activities
Net income $201.9 $216.5 $200.3
Adjustments to reconcile net
income to net cash from
operating activities
Depreciation 225.4 202.8 192.7
Deferred income taxes (1.9) 9.7 (14.9)
Investment tax credits, net (5.0) (5.1) (5.3)
Allowance for funds used
during construction (0.2) (22.9) (19.3)
Amortization of unearned
compensation 5.9 5.4 4.9
Deferred revenue (30.5) 34.2 50.8
Deferred recovery clause 2.7 7.4 (17.9)
Refund to customers (19.8) (6.0) --
Receivables, less allowance for
uncollectibles 6.4 (26.3) (22.3)
Inventories (21.4) 7.6 26.0
Taxes accrued (0.9) (1.6) 13.1
Interest accrued 1.6 2.8 (2.2)
Accounts payable (2.8) (9.6) 7.6
Other (10.6) (1.3) 28.7
350.8 413.6 442.2
Cash Flows from Investing Activities
Capital expenditures (212.6) (296.3) (461.2)
Allowance for funds used
during construction 0.2 22.9 19.3
Investment in short-term investments -- 32.3 68.4
Other non-current investments 2.0 2.8 17.5
(210.4) (238.3) (356.0)
Cash Flows from Financing Activities
Common stock 5.1 13.9 11.1
Proceeds from long-term debt 29.3 78.1 0.6
Repayment of long-term debt (103.8) (34.0) (9.1)
Net increase (decrease) in
credit lines (49.8) (6.2) 1.0
Net increase (decrease) in
short-term debt 141.2 (55.8) 11.4
Redemption of preferred stock (20.4) (35.5) --
Dividends (147.3) (134.2) (126.2)
(145.7) (173.7) (111.2)
Net increase (decrease) in
cash and cash equivalents (5.3) 1.6 (25.0)
Cash and cash equivalents at
beginning of year 15.9 14.3 39.3
Cash and cash equivalents at end of year $ 10.6 $ 15.9 $ 14.3

Supplemental Disclosure of Cash Flow Information
Cash paid during the year for
Interest (net of amounts capitalized) $115.5 $ 93.8 $ 97.3
Income taxes $ 97.4 $ 87.1 $ 72.0

The accompanying notes are an integral part of the consolidated financial
statements.

CONSOLIDATED STATEMENTS OF COMMON EQUITY
(millions)

Additional Total
Common Paid-in Retained Unearned Common
Shares(1) Stock Capital Earnings Compensation Equity

Balance, Dec. 31, 1994,
as restated 128.3 $ 128.3 $ 321.6 $ 801.8 $ (79.1) $1,172.6
Net income for 1995 200.3 200.3
Common stock issued 0.5 0.5 10.6 11.1
Cash dividends declared (126.2) (126.2)
Amortization of unearned
compensation 4.9 4.9
Tax benefits-ESOP dividends
And stock options 0.1 2.2 2.3
Balance, Dec. 31, 1995 128.8 128.8 332.3 878.1 (74.2) 1,265.0
Net income for 1996 216.5 216.5
Common stock issued 0.9 0.9 17.8 (1.9) 16.8
Cash dividends declared (134.2) (134.2)
Amortization of unearned
compensation 5.4 5.4
Premium on redemption of
preferred stock (0.5) (0.5)
Tax benefits-ESOP dividends
and stock options 0.3 2.2 2.5
Balance, Dec. 31, 1996 129.7 129.7 350.4 962.1 (70.7) 1,371.5
Net income for 1997 201.9 201.9
Common stock issued 0.4 0.4 7.4 (2.7) 5.1
Common stock issued-
West Florida Gas Inc. merger 0.8 0.8 (1.1) 5.8 5.5
Cash dividends declared (147.3) (147.3)
Amortization of unearned
compensation 5.9 5.9
Tax benefits-ESOP dividends 2.1 2.1
Balance, Dec. 31, 1997 130.9 $ 130.9 $ 356.7 $1,024.6 $ (67.5) $1,444.7

The accompanying notes are an integral part of the consolidated financial
statements.

(1) TECO Energy had 400 million shares of $1 par value common stock authorized
in 1997, 1996 and 1995.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. Summary of Significant Accounting Policies

Principles of Consolidation
The significant accounting policies for both utility and diversified
operations are as follows:
The consolidated financial statements include the accounts of TECO
E n ergy, Inc. (TECO Energy or the Company) and its wholly owned
subsidiaries, including the Peoples Gas companies acquired in 1997.
The equity method of accounting is used to account for investments in
partnership arrangements in which TECO Energy or its subsidiary companies
do not have majority ownership or exercise control.
The proportional share of expenses, revenues and assets reflecting
TECO Coalbed Methane's and TECO Oil & Gas s undivided interest in joint
venture property is included in the consolidated financial statements.
All significant intercompany balances and intercompany transactions
have been eliminated in consolidation.

Basis of Accounting
Tampa Electric and Peoples Gas System (the regulated utilities)
maintain their accounts in accordance with recognized policies prescribed
or permitted by the Florida Public Service Commission (FPSC). In
addition, Tampa Electric maintains its accounts in accordance with
r e cognized polices prescribed or permitted by 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
experience of the regulated utilities, 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, Tampa Electric has deferred revenues in
accordance with the various regulatory agreements approved by the FPSC in
1995 and 1996. Revenues are recognized as allowed under the terms of the
agreements.
The regulated utilities retail business is regulated by the FPSC and
Tampa Electric s wholesale business is regulated by FERC. 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 for Tampa Electric and purchased gas, interstate pipeline capacity
and conservation costs for Peoples Gas System. These adjustment factors
are based on costs projected 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 Tampa Electric's petition for
r e c o v ery of certain environmental compliance costs through the
environmental cost recovery clause.
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, Tampa Electric 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, Tampa Electric 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 1997, 1996 and 1995, $2.7 million, $2.7
million, and $2 million, respectively, of buy-out costs were amortized to
expense.
Certain other costs incurred by the regulated utilities 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 regulated utilities accrue 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
Tampa Electric, the Office of Public Counsel (OPC) and the Florida
Industrial Power Users Group (FIPUG) regarding 1996 earnings. This
agreement provided for a $25-million revenue refund to customers to be
made over the 12-month period beginning Oct. 1, 1996. This refund
consisted 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 Tampa Electric,
OPC and FIPUG that resolved all pending regulatory issues associated with
the Polk Power Station. The agreement allows the full recovery of the
capital costs incurred in the construction of the Polk Power Station
project, 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 began receiving a $25-million temporary base rate reduction
reflected as a credit on customer bills over the 15-month period which
began Oct. 1, 1997.

Depreciation
TECO Energy 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 4.0% for 1997, 1996 and 1995.
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
The company periodically assesses whether there has been a permanent
impairment of its long-lived assets and certain intangibles held and used
by the Company, in accordance with FAS 121, Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to be Disposed of. No write-
down of assets due to impairment was required in 1997 or 1996.

Foreign Operations
The functional currency of TPS Guatemala One, Inc. s partnership in
Guatemala is the U.S. dollar. Transactions conducted in Guatemala in the

local currency are remeasured to the U.S. dollar for financial reporting
purposes with aggregate transaction gains or losses included in net
income. The aggregate transaction losses included in net income in 1997,
1996 and 1995 were not significant.
The partnership is protected from any significant currency gains or
losses by the terms of the power sales agreement in which payments are
defined in U.S. dollars.

Deferred Income Taxes
TECO Energy utilizes the liability method in the measurement of
d e ferred 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.
Tampa Electric and Peoples Gas System are regulated, and their books and
r e c o rds 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 Tampa
Electric's cost of capital. The rate was 7.79% for 1997, 1996 and 1995.
The base on which AFUDC is calculated excludes construction work in
progress which has been included in rate base.

Capitalized Development Costs
TeCom, a subsidiary of TECO Energy, is developing for market advanced
energy management and automation systems for residential and commercial
applications. TeCom capitalized product development costs of $6.5 million
in 1997 and $4.9 million in 1996. The costs capitalized in 1997 and 1996
and those anticipated to be capitalized during the product enhancement
period are expected to be amortized over the life of the product,
estimated to be three years. In 1998 TeCom anticipates its commercial
product will be available for general distribution and will begin
amortizing the associated product development costs.

Interest Capitalized
Interest costs for the construction of TECO Coal's preparation plant
and loadout facility, and TECO Power Services Alborada Power Station were
capitalized and are being depreciated over the service lives of the
related property. Such interest costs capitalized were not significant.

Cash Equivalents
Cash equivalents are highly liquid, high-quality debt instruments
purchased with a maturity of three months or less. The carrying amount of
cash equivalents approximated fair market value because of the short
maturity of these instruments. The amount of cash equivalents outstanding
at Dec. 31, 1997 and 1996 was not significant.

Other Investments

Other investments include longer-term passive investments, primarily
leveraged leases.

Coalbed Methane Gas Properties
TECO Coalbed Methane, a subsidiary of TECO Energy, has developed
jointly the natural gas potential in a portion of Alabama's Black Warrior
Basin.
TECO Coalbed Methane utilizes the successful efforts method to
account for its gas operations. Under this method, expenditures for
unsuccessful exploration activities are expensed currently.
Capitalized costs are amortized on the unit-of-production method
using estimates of proven reserves. Investments in unproven properties and
major development projects are not amortized until proven reserves
associated with the projects can be determined or until impairment occurs.
Aggregate capitalized costs related to wells producing and under
development at Dec. 31, 1997 and 1996 were $209.1 million and $207.1
million respectively. Net proven reserves at Dec. 31, 1997 and 1996 were
as follows:

Net Proven Reserves - Coalbed Methane Gas

(billion cubic feet) 1997 1996
Proven reserves,
beginning of year 190.4 184.0
Production (19.2) (19.8)
Revisions of and additions
to previous estimates 23.8 26.2
Proven reserves, end of year 195.0 190.4
Number of wells 669 656

Hedges - Gas Prices
TECO Energy enters into futures and options contracts, from time to
time, to hedge the selling price for TECO Coalbed Methane s physical
production and to limit its exposure to gas price increases in both the
regulated Peoples Gas System and the unregulated propane business. TECO
Energy does not use derivatives or other hedging instruments for
speculative purposes.

Mergers
In June 1997, TECO Energy completed its merger with Lykes Energy,
Inc. (the Peoples companies) and issued approximately 12.1 million shares
of its common stock. Concurrent with this merger, the regulated gas
distribution utility, Peoples Gas System, Inc., was merged into Tampa
Electric Company and now operates as the Peoples Gas division of Tampa
Electric Company.
Also in June 1997, TECO Energy completed its merger with West Florida
Gas Inc. (West Florida) and issued approximately .8 million shares of its
common stock. Concurrent with this merger, West Florida s regulated gas
distribution utility, West Florida Natural Gas Company, was merged into
Tampa Electric Company and now operates as part of the Peoples Gas
division.
These mergers were accounted for as poolings of interests and,
accordingly, the company s Consolidated Balance Sheet as of Dec. 31, 1997
and its Consolidated Statements of Income and Cash Flows for the period
ended Dec. 31, 1997 include the results of the Peoples companies and West
Florida.
Financial statements and all financial information presented for
periods prior to 1997 have been restated to include the results of the

Peoples companies. Prior period financial statements have not been
restated to reflect the operations and financial position of West Florida
due to its size.
The company s combined restated revenues and net income from
continuing operations for the years ended Dec. 31, 1997, 1996 and 1995
were as follows:

Revenues (1) Net Income (1)
(thousands) (thousands)
Year Ended Dec. 31, 1997
TECO Energy pre-merger(2) $ 753.9 $ 94.1
Peoples companies pre-merger(3) 157.2 10.5
911.1 104.6
Merger related(4) - (5.3)
911.1 99.3
TECO Energy post-merger 951.2 112.1
Combined $1,862.3 $ 211.4

Year Ended Dec. 31, 1996
TECO Energy pre-merger(2) $1,468.2 $ 201.6
Peoples companies pre-merger(3) 307.1 15.8
1,775.3 217.4
Merger related(4) - -
1,775.3 217.4
TECO Energy post-merger - -
Combined $1,775.3 $ 217.4

Year Ended Dec. 31, 1995
TECO Energy pre-merger(2) $1,392.3 $ 186.6
Peoples companies pre-merger(3) 266.6 14.2
1,658.9 200.8
Merger related(4) - -
1,658.9 200.8
TECO Energy post-merger - -
Combined $1,658.9 $ 200.8

(1) From continuing operations.
(2) The 1996 and 1995 amounts were previously reported on Form 10-K for
the years ended Dec. 31, 1996 and 1995.
(3) The Peoples companies include Peoples Gas System, Inc. and the non-
regulated Peoples companies for 1997, 1996 and 1995 and West Florida
Gas Inc. for 1997.
(4) Reflects a net, after-tax, one-time charge for all merger related
transactions.

Reclassifications and Restatements
Certain prior year amounts were reclassified or restated to conform
with current year presentation.

B. Common Equity

Stock-Based Compensation
In April 1996, the shareholders approved the 1996 Equity Incentive
Plan (the "1996 Plan"). The 1996 Plan superseded the 1990 Equity Incentive
Plan (the "1990 Plan") which superseded the 1980 Stock Option and
Appreciation Rights Plan (the "1980 Plan") and no additional grants will
be made under the superseded Plans. The rights of the holders of

outstanding options under the 1990 Plan and the 1980 Plan were not
affected. The purpose of the 1996 Plan is to attract and retain key
employees of the company, to provide an incentive for them to achieve
long-range performance goals and to enable them to participate in the
long-term growth of the company. The 1996 Plan amended the 1990 Plan to
increase the number of shares of common stock subject to grants by
3,750,000 shares, expand the types of awards available to be granted and
specify a limit on the maximum number of shares with respect to which
stock options and stock appreciation rights may be made to any participant
under the Plan. Under the 1996 Plan, the Compensation Committee of the
Board of Directors may award stock grants, stock options and/or stock
equivalents to officers and key employees of TECO Energy and its
subsidiaries. The Compensation Committee has discretion to determine the
terms and conditions of each award, which may be subject to conditions
relating to continued employment, restrictions on transfer or performance
criteria.
In April 1997, under the 1996 Plan, 351,500 stock options were
granted, each with a weighted average option price of $24.38 and a maximum
term of 10 years. In addition, 112,800 shares of restricted stock were
awarded, each with a weighted average fair value of $24.38. Compensation
expense recognized for stock grants awarded under the 1996 Plan was $1.3
million in 1997 and $0.5 million in 1996. In general, the stock grants are
restricted subject to continued employment; vesting occurs at normal
retirement age.
Stock option transactions during the last three years under the 1996
Plan, the 1990 Plan and the 1980 Plan (collectively referred to as the
"Equity Plans"), are summarized as follows:

Stock Options - Equity Plans
Option Weighted Avg.
Shares Option
(thousands) Price
1997
Outstanding, beginning of year 2,286 $19.77
Granted 352 $24.38
Exercised 265 $17.53
Canceled 1 $24.38
Outstanding, end of year 2,372 $20.70
Exercisable, end of year 2,372 $20.70
Available for grant 4,852

1996
Outstanding, beginning of year 2,263 $18.99
Granted 293 $23.69
Exercised 268 $17.42
Canceled 2 $23.56
Outstanding, end of year 2,286 $19.77
Exercisable, end of year 2,286 $19.77
Available for grant 5,314

Option Weighted Avg.
Shares Option
(thousands) Price
1995
Outstanding, beginning of year 1,913 $18.48
Granted 488 $20.78
Exercised 100 $16.47
Canceled 38 $23.11
Outstanding, end of year 2,263 $18.99
Exercisable, end of year 2,263 $18.99
Available for grant 1,936

As of Dec. 31, 1997, the 2.4 million options outstanding and
currently exercisable under the Equity Plans are summarized in the
following table:

Stock Options Outstanding at Dec. 31, 1997
Weighted
Weighted Avg.
Option Avg. Remaining
Shares Range of Option Contractual
(thousands) Option Prices Price Life

239 $11.5 -$14.5625 $13.22 3 Years
2,133 $17.375-$24.375 $21.54 7 Years

In April 1997, the Shareholders approved the 1997 Director Equity
Plan (the "1997 Plan"), as an amendment and restatement of the 1991
Director Stock Option Plan (the 1991 Plan ). The 1997 Plan supersedes the
1991 Plan and no additional grants will be made under the 1991 Plan. The
rights of the holders of outstanding options under the 1991 Plan will not
be affected. The purpose of the 1997 Plan is to attract and retain highly
qualified non-employee directors of the company and to encourage them to
own shares of TECO Energy common stock. The 1997 Plan will be administered
by the Board of Directors. The 1997 Plan amended the 1991 Plan to increase
the number of shares of common stock subject to grants by 250,000 shares,
expanded the types of awards available to be granted and replaced the
current fixed formula grant by giving the Board discretionary authority to
determine the amount and timing of awards under the Plan.
In April 1997, 34,000 options were granted, each with a weighted
average option price of $24.60. Transactions during the last three years
under the 1997 Plan are summarized as follows:

Director Equity Plan
Option Weighted Avg.
Shares Option
(thousands) Price
1997
Outstanding, beginning of year 215 $19.96
Granted 34 $24.60
Exercised -- --
Canceled -- --
Outstanding, end of year 249 $20.59
Exercisable, end of year 249 $20.59
Available for grant 428

Option Weighted Avg.
Shares Option
(thousands) Price
1996
Outstanding, beginning of year 175 $19.13
Granted 40 $23.63
Exercised -- --
Canceled -- --
Outstanding, end of year 215 $19.96
Exercisable, end of year 215 $19.96
Available for grant 246

1995
Outstanding, beginning of year 171 $18.86
Granted 20 $21.13
Exercised 14 $18.13
Canceled 2 $23.40
Outstanding, end of year 175 $19.13
Exercisable, end of year 175 $19.13
Available for grant 286

As of Dec. 31, 1997, the 249,000 options outstanding and currently
exercisable under the 1997 Plan with option prices of $17.7188-$25.125,
had a weighted average option price of $20.59 and a weighted average
remaining contractual life of 6 years.
TECO Energy has adopted the disclosure-only provisions of FAS 123,
Accounting for Stock-Based Compensation (FAS 123), but applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting
for its plans. Therefore, no compensation expense has been recognized for
stock options granted under the 1996 Plan and the 1997 Plan. If the
company had elected to recognize compensation expense for stock options
based on the fair value at grant date, consistent with the method
prescribed by FAS 123, net income and earnings per share would have been
reduced to the pro forma amounts shown below:

1997 1996 1995
Net Income
from
continuing
operations As reported $211.4 $217.4 $200.8
(millions) Pro forma $210.7 $216.7 $199.8

Net Income As reported $201.9 $216.5 $200.3
(millions) Pro forma $201.1 $215.8 $199.4

Net Income
from
continuing
operations As reported $ 1.62 $ 1.68 $ 1.56
- -EPS basic Pro forma $ 1.61 $ 1.68 $ 1.55

Net Income As reported $ 1.54 $ 1.67 $ 1.56
- -EPS basic Pro forma $ 1.54 $ 1.67 $ 1.55

These pro forma amounts were determined using the Black-Scholes
valuation model with the following key assumptions: (a) a discount rate of
6.81%, 6.42% and 7.05% for 1997, 1996 and 1995, respectively; (b) an
expected volatility factor and dividend yield to equal the rate in effect

for the 36 months prior to grant; and an average expected option life of
6 years.

Dividend Reinvestment Plan
In 1992, TECO Energy implemented a Dividend Reinvestment and Common
Stock Purchase Plan (DRP). TECO Energy raised common equity from this plan
of $9.2 million in 1996 and $9.4 million in 1995. In 1997, the DRP
purchased shares of TECO Energy common stock on the open market for plan
participants.

Shareholder Rights Plan
In 1989, TECO Energy declared a distribution of Rights to purchase
one additional share of the company's common stock at a price of $40 per
share for each share outstanding. The Rights expire in May 1999. The
Rights will become exercisable 10 days after a person acquires 20 percent
or more of the company's outstanding common stock or commences a tender
offer that would result in such person owning 30 percent or more of such
stock or at the time the Board of Directors declares a person who acquired
10 percent or more of such stock to be an "adverse person." If any person
acquires 20 percent or more of the outstanding common stock or the Board
declares that a person is an adverse person, the rights of holders, other
than such acquiring person or adverse person, become rights to buy shares
of common stock of the company (or of the acquiring company if the company
is involved in a merger or other business combination and is not the
surviving corporation) having a market value of twice the exercise price
of each right.
The company may redeem the Rights at a price of $.005 per Right until
10 days after a person acquires 20 percent or more of the outstanding
common stock but not after the Board has declared a person to be an
adverse person.

Employee Stock Ownership Plan
Effective Jan. 1, 1990, TECO Energy amended the TECO Energy Group
Retirement Savings Plan, a tax-qualified benefit plan available to
substantially all employees, to include an employee stock ownership plan
(ESOP). During 1990, the ESOP purchased 7 million shares of TECO Energy
common stock on the open market for $100 million. The share purchase was
financed through a loan from TECO Energy to the ESOP. This loan is at a
fixed interest rate of 9.3% and will be repaid from dividends on ESOP
shares and from TECO Energy's contributions to the ESOP.
TECO Energy's contributions to the ESOP were $3.4 million, $3.6
million and $4.8 million in 1997, 1996 and 1995, respectively. TECO
Energy's annual contribution equals the interest accrued on the loan
during the year plus additional principal payments needed to meet the
matching allocation requirements under the plan, less dividends received
on the ESOP shares. The components of net ESOP expense recognized for the
past three years are as follows:

(millions) 1997 1996 1995
Interest expense $7.7 $8.0 $8.3
Compensation expense 4.7 4.9 4.9
Dividends (7.8) (7.5) (7.1)
Net ESOP expense $4.6 $5.4 $6.1

Compensation expense was determined by the shares allocated method.
At Dec. 31, 1997, the ESOP had 2.1 million allocated shares, .1
million committed-to-be-released shares, and 4.5 million unallocated

shares. Shares are released to provide employees with the company match in
accordance with the terms of the TECO Energy Group Retirement Savings Plan
and in lieu of dividends on allocated ESOP shares. The dividends received
by the ESOP are used to pay debt service.
For financial statement purposes, the unallocated shares of TECO
Energy stock are reflected as a reduction of common equity, classified as
unearned compensation. Dividends on all ESOP shares are recorded as a
reduction of retained earnings, as are dividends on all TECO Energy common
stock. The tax benefit related to the dividends paid to the ESOP for
allocated shares is a reduction of income tax expense and for unallocated
shares is an increase in retained earnings. All ESOP shares are considered
outstanding for earnings per share computations.

C. Preferred Stock

Preferred Stock of TECO Energy - $1 Par
10 million shares authorized, none outstanding.

Preferred Stock of Tampa Electric - no Par
2.5 million shares authorized, none outstanding.

Preference Stock of Tampa Electric - no Par
2.5 million shares authorized, none outstanding.

Preferred Stock of Tampa Electric - $100 Par Value
1.5 million shares authorized, none outstanding.

In July 1997, Tampa Electric retired all of its outstanding shares
($20 million aggregate par value) of 4.32% Series A, 4.16% Series B and
4.58% Series D preferred stock at redemption prices of $103.75, $102.875
and $101.00 per share, respectively.
Cash dividends paid in 1997 were $0.2 million, $0.1 million and $0.3
million for Series A, Series B and Series D, respectively. These amounts
reflect dividends paid through July 16, 1997, the date that these series
were redeemed.

D. Short-term Debt
Notes payable consisted primarily of commercial paper with weighted
average interest rates of 5.72% and 5.43% at Dec. 31, 1997 and 1996,
respectively. The carrying amount of notes payable approximated fair
market value because of the short maturity of these instruments.
Consolidated unused lines of credit at Dec. 31, 1997 were $485 million.
Certain lines of credit require commitment fees ranging from .05% to .075%
on the unused balances.
During 1995, TECO Finance entered into an interest rate exchange
agreement to moderate its exposure to interest rate changes. This three-
year agreement effectively converted the interest rate on $100 million of
short-term debt from a floating rate to a fixed rate. TECO Finance will
pay a fixed rate of 5.8% and will receive a floating rate based on a 30-
day commercial paper index. There would not have been a significant gain
or loss to terminate this agreement at Dec. 31, 1997. The benefits of this
agreement are at risk only in the event of non-performance by the other
party to the agreement, which the company does not anticipate. The costs
of this agreement did not have a significant impact on interest expense in
1997, 1996 or 1995.

E. Long-term Debt
Dec. 31,
(millions) Due 1997 1996
TECO Energy
Medium-term notes payable: 9.29% for
1997 and 9.28% for 1996(1) 2000 $ 50.0 $ 100.0

Tampa Electric
First mortgage bonds (issuable in series):
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 23.8 24.1
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 75.0
Variable rate: 3.55% for 1997 and
3.56% for 1996(1) 2025 51.6 51.6
Variable rate: 3.45% for 1997 and
3.43% for 1996(1) 2018 54.2 54.2
Variable rate: 3.78% for 1997 and
3.67% for 1996(1) 2020 20.0 20.0
665.6 665.9

Peoples Gas System
Senior Notes (5)
10.35% 2007 7.4 8.0
10.33% 2008 9.2 9.4
10.3% 2009 9.4 9.6
9.93% 2010 9.6 9.8
8.0% 2012 33.5 35.0
Variable rate long-term revolving
credit note: 6.07% for 1996(1) 2001 - 10.0
69.1 81.8
Diversified companies
Dock and wharf bonds, variable rate:
3.75% for 1997 and 3.56% for 1996(1)(2) 2007 110.6 110.6
Mortgage notes payable: 7.6% 1998-1999 0.8 1.7
Non-recourse secured facility notes,
Series A: 7.8% 1998-2012 143.5 148.5
Limited recourse secured facility
note: 9.875% 1998-2008 26.8 -
Senior Notes (5)
10.0% 1998 - 1.5
10.55% 2000 - 2.2
Variable rate long-term revolving
credit note: 6.35% for 1996(1) 2001 - 39.8
281.7 304.3
TECO Finance
Medium-term notes payable, various rates:
7.35% for 1997 and 7.04% for 1996(1) 1999-2002 30.0 50.0

Unamortized debt premium (discount), net (3.5) (3.7)
1,092.9 1,198.3
Less amount due within one year(6) 12.7 80.3
Total long-term debt $1,080.2 $1,118.0

(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
o r i g inal and refunding bonds, consistent with regulatory
treatment.
(5) These long-term debt agreements contain various restrictive
covenants, including provisions related to interest coverage,
maximum levels of debt to total capitalization and limitations on
dividends.
(6) Of the amount due in 1998, $0.8 million may be satisfied by the
substitution of property in lieu of cash payments.

Substantially all of the property, plant and equipment of Tampa
Electric is pledged as collateral to secure its long-term debt.
Maturities and annual sinking fund requirements of long-term debt
for the years 1999, 2000, 2001 and 2002 are $34.2 million, $143.7
million, $14.6 million, and $25.0 million, respectively. Of these
amounts $0.8 million per year for 1999 through 2001 may be satisfied by
the substitution of property in lieu of cash payments.
At Dec. 31, 1997, total long-term debt had a carrying amount of
$1,080.2 million and an estimated fair market value of $1,196.5
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.
Tampa Electric 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
in 1995.

F. Retirement Plan

TECO Energy Retirement Plan

TECO Energy has a non-contributory defined benefit retirement plan
which covers substantially all employees. Benefits are based on
employees' years of service and average final salary.
The company'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. About 67 percent of plan assets were
invested in common stocks and 33 percent in fixed income investments at
Dec. 31, 1997.

Components of Net Pension Expense
(millions)
1997 1996 1995
Service cost
(benefits earned during the period) $ 9.2 $ 8.5 $ 7.2
Interest cost on projected
benefit obligations 19.9 18.8 17.3
Less: Return on plan assets
Actual 65.6 43.4 66.4
Less net amortization of unrecognized
transition asset and deferred return 38.8 18.6 43.3
Net return on assets 26.8 24.8 23.1
Net pension expense $ 2.3 $ 2.5 $ 1.4

Reconciliation of the Funded Status of the Retirement Plan and the
Accrued Pension Prepayment/(Liability)
(millions)
Dec. 31, Dec. 31,
1997 1996

Fair market value of plan assets $ 365.9 $ 320.5
Projected benefit obligation (297.1) (262.2)

Excess of plan assets over projected
benefit obligation 68.8 58.3
Less unrecognized net gain from past
experience different from that assumed 78.8 65.9
Less unrecognized prior service cost (10.8) (11.7)
Less unrecognized net transition asset
(being amortized over 19.5 years) 7.5 8.5

Accrued pension prepayment/(liability) $ (6.7) $ (4.4)

Accumulated benefit obligation
(including vested benefits of
$221.6 for 1997 and $196.7 for 1996) $ 248.1 $ 220.0

Assumptions Used in Determining Actuarial Valuations
1997 1996
Discount rate to determine projected
benefit obligation 7.25% 7.75%
Rates of increase in compensation levels 3.3-5.3% 3.3-5.3%
Plan asset growth rate through time 9% 9%

Peoples Gas System Retirement Plan

The Peoples Gas System retirement plan was merged with the TECO
Energy retirement plan effective Jan. 1, 1998. As of Dec. 31, 1997,
Peoples Gas System had a non-contributory defined benefit retirement
plan which covered substantially all employees. Benefits were based on
employees' years of service and average compensation during specified
years of employment.

Peoples Gas System s retirement plan was funded annually by the
company within the guidelines set by ERISA for the minimum annual
contribution and the maximum allowable as a tax deduction by the IRS.
Plan assets were invested primarily in a collective investment trust
consisting of equity securities, fixed income securities and cash
equivalents.

Components of Net Pension Expense
(millions)
1997 1996 1995
Service cost
(benefits earned during the period) $ 2.1 $ 2.0 $ 1.9
Interest cost on projected
benefit obligations 3.0 2.6 2.4
Less: Return on plan assets
Actual 6.7 4.1 5.8
Less net amortization of unrecognized
transition asset and deferred return 3.5 1.2 3.1
Net return on assets 3.2 2.9 2.7
Net pension expense 1.9 1.7 1.6
Voluntary employee retirement program - - 0.8
Net pension expense recognized in the
Consolidated Statements of Income $ 1.9 $ 1.7 $ 2.4

Reconciliation of the Funded Status of the Retirement Plan and the
Accrued Pension Prepayment/(Liability)
(millions)
Dec. 31, Dec. 31,
1997 1996

Fair market value of plan assets $ 48.9 $ 40.6
Projected benefit obligation (47.6) (39.3)

Excess of plan assets over projected
benefit obligation 1.3 1.3
Less unrecognized net gain from past
experience different from that assumed 4.9 4.7
Less unrecognized prior service cost (0.2) (0.2)
Less unrecognized net transition asset
(being amortized over 19.5 years) 0.6 0.8

Accrued pension prepayment/(liability) $ (4.0) $ (4.0)

Accumulated benefit obligation
(including vested benefits of
$34.0 for 1997 and $28.1 for 1996) $ 34.4 $ 28.4

Assumptions Used in Determining Actuarial Valuations
1997 1996
Discount rate to determine projected
benefit obligation 7.25% 7.75%
Rates of increase in compensation levels 6% 6%
Plan asset growth rate through time 8% 8%

G. Postretirement Benefit Plan

TECO Energy and its subsidiaries currently provide 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 plans in whole or in part at any time.

Components of Postretirement Benefit Cost
(millions)

1997 1996 1995

Service cost (benefits earned
during the period) $ 2.2 $ 2.4 $ 2.1
Interest cost on projected
benefit obligations 6.1 6.1 6.6
Amortization of transition obligation
(straight line over 20 years) 2.7 2.7 2.9
Amortization of actuarial loss/(gain) (0.1) 0.3 0.2
Net periodic Postretirement
benefit expense $10.9 $11.5 $11.8

Reconciliation of the Funded Status of the Postretirement Benefit Plan
and the Accrued Liability (millions)
Dec. 31, Dec. 31,
1997 1996
Accumulated Postretirement benefit obligation
Active employees eligible to retire $ (6.3) $(4.9)
Active employees not eligible to retire (30.4) (28.3)
Retirees and surviving spouses (49.1) (50.2)
(85.8) (83.4)
Less unrecognized net loss from past
experience (9.0) (10.0)
Less unrecognized transition obligation (41.1) (43.8)
Liability for accrued postretirement benefit $(35.7) $(29.6)

Assumptions Used in Determining Actuarial Valuations
1997 1996
Discount rate to determine projected
benefit obligation 7.25% 7.75%

The assumed health care cost trend rate (excluding Peoples
companies employees)for medical costs prior to age 65 was 9.5% in 1997
and decreases to 5.75% in 2002 and thereafter. The assumed health care
cost trend rate for medical costs after age 65 was 7.0% in 1997 and
decreases to 5.75% in 2002 and thereafter.
The assumed health care cost trend rate (for Peoples companies
employees)for medical costs prior to age 65 was 6% in 1997 and
decreases to 5% in 2003 and thereafter. The assumed health care cost
trend rate for HMO medical costs prior to age 65 was 4% for all future
years.

A 1% change in the medical trend rates would produce a 7% ($0.6
million) change in the aggregate service and interest cost for 1997 and
a 7%($6.0 million) change in the accumulated postretirement benefit
obligation as of Dec. 31, 1997.

H. Income Tax Expense

Income tax expense consists of the following components:

(millions) Federal State Total
1997
Currently payable $ 88.5 $ 9.9 $ 98.4
Deferred (6.0) 7.3 1.3
Amortization of investment tax credits (5.0) -- (5.0)
Income tax expense from continuing
operations 77.5 17.2 94.7
Currently payable (4.1) 0.4 (3.7)
Deferred (1.0) (0.4) (1.4)
Income tax benefit from discontinued
operations (5.1) -- (5.1)
Total income tax expense $ 72.4 $ 17.2 $ 89.6

1996
Currently payable $ 67.4 $ 12.7 $ 80.1
Deferred 6.9 (0.1) 6.8
Amortization of investment tax credits (5.1) -- (5.1)
Income tax expense from continuing
operations 69.2 12.6 81.8
Currently payable (3.1) (0.3) (3.4)
Deferred 2.6 0.3 2.9
Income tax benefit from discontinued
operations (0.5) -- (0.5)
Total income tax expense $ 68.7 $ 12.6 $ 81.3

1995
Currently payable $ 74.0 $ 14.2 $ 88.2
Deferred (14.3) (0.3) (14.6)
Amortization of investment tax credits (5.3) -- (5.3)
Income tax expense from continuing
operations 54.4 13.9 68.3
Currently payable (0.3) -- (0.3)
Deferred -- -- --
Income tax benefit from discontinued
operations (0.3) -- (0.3)
Total income tax expense $ 54.1 $ 13.9 $ 68.0

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:

(millions) Dec. 31, Dec. 31,
1997 1996
Deferred income tax assets(1)
Property related $ 59.1 $ 54.3
Other 29.0 22.4
Total deferred income tax assets 88.1 76.7

Deferred income tax liabilities(1)
Property related (521.9) (499.1)
Basis difference in oil and gas
producing properties (22.2) (23.6)
Revenue deferral plan (2) 11.7 23.1
Alternative minimum tax
credit carry forward 40.8 22.2
Other 20.7 18.5
Total deferred income
tax liabilities (470.9) (458.9)
Accumulated deferred income taxes $(382.8) $(382.2)

(1) Certain property related assets and liabilities have been netted.
(2) In 1998 an estimated $11.7 million of deferred taxes related to
deferred revenue is expected to currently reverse.

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) 1997 1996 1995
Net income from continuing operations $211.4 $217.4 $200.8
Total income tax provision 94.7 81.8 68.3
Preferred dividend requirements 0.5 1.8 3.6

Income from continuing operations
before income taxes and
preferred dividend requirements $306.6 $301.0 $272.7

Income taxes on above at federal
statutory rate of 35% $107.3 $105.3 $ 95.4
Increase (Decrease) due to:
State income tax, net of
federal income tax 11.2 8.2 9.1
Amortization of investment
tax credits (5.0) (5.1) (5.3)
Non-conventional fuels tax credit (20.2) (19.6) (20.6)
Equity portion of AFUDC -- (5.8) (4.9)
Other 1.4 (1.2) (5.4)
Total income tax provision from
continuing operations $ 94.7 $ 81.8 $ 68.3
Provision for income taxes as a percent
of income from continuing operations,
before income taxes 30.9% 27.1% 25.0%

The provision for income taxes as a percent of income from
discontinued operations was 34.8%, 34.7% and 38.6% for 1997, 1996 and
1995, respectively. The total effective income tax rate differs from
the federal statutory rate due to state income tax, net of federal
income tax and other miscellaneous items.

I. Discontinued Operations

On Aug. 28, 1997, the company announced its plan to discontinue
operations of its conventional oil and gas subsidiary, TECO Oil & Gas,
Inc. Since its formation in the second half of 1995, TECO Oil & Gas
has participated in joint ventures utilizing 3-D seismic imaging in the
exploration for oil and gas. It acquired a portfolio of interests in
producing wells, discoveries not yet producing and lease prospects in
the shallow waters of the Gulf of Mexico and on shore in Texas.
As a result of the company s intention to sell this business, all
activities of the subsidiary through Aug. 31, 1997, the measurement
date, were reported as discontinued operations on the Consolidated
Statements of Income. An estimate of activities at TECO Oil & Gas
after that date, including the sale of the assets at book value, has
been reported as a loss on the disposal of discontinued operations. A
summary of net assets is as follows:

(millions) Dec. 31, Dec. 31,
1997 1996
Current assets $ 1.5 $ 2.5
Net property, plant and equipment 19.5 14.8
Other assets 4.1 4.7
Total liabilities (3.3) (3.2)
Net assets $ 21.8 $ 18.8

Total revenues from discontinued operations for the years ended
D e c . 31, 1997 and 1996 were $9.6 million and $4.7 million,
respectively. There were no revenues in 1995.
In March 1998, TECO Oil & Gas sold its offshore assets to a
subsidiary of American Resources of Delaware for $57.7 million,
consisting of $39.2 million in cash and a subordinated note in the
amount of $18.5 million. TECO Energy will report an after-tax gain on
this transaction of about 18 cents per share in the first quarter of
1998.

J. Earning Per Share

In 1997, the Financial Accounting Standards Board issued FAS 128,
Earning per Share, which requires disclosure of basic and diluted
earnings per share and a reconciliation (where different) of the
numerator and denominator from basic to diluted earnings per share.
The reconciliation of basic and diluted earnings per share is shown
below:

Year ended Dec. 31,
1997 1996 1995

Numerator (Basic and Diluted)
Net income from continuing operations $211.4 $217.4 $200.8
Net income $201.9 $216.5 $200.3

Denominator
Average number of shares outstanding
- basic 130.8 129.3 128.6
Plus: incremental shares for assumed
conversions: Stock options at end
of period 2.6 2.5 2.4
Less: Treasury shares which could
be purchased (2.2) (2.0) (2.0)

Average number of shares outstanding
- diluted 131.2 129.8 129.0

Earnings per share from continuing operations

Basic $1.62 $1.68 $1.56
Diluted $1.61 $1.67 $1.55

Earnings per share

Basic $1.54 $1.67 $1.56
Diluted $1.54 $1.67 $1.55

K. Segment Information

TECO Energy's principal business segment is Energy Services. This
segment has been separated into three components: Regulated Electric
Utility Services, Regulated Gas Utility Services and Other Energy
Services which includes the transportation, coal mining, coalbed
methane gas production, independent power generation, propane gas
s a les, gas appliance sales and service, gas marketing, energy
management and energy services subsidiaries. All other activities of
TECO Energy have been included in Other.
Identifiable assets are those assets used directly in a segment's
operations and are presented net of depreciation.

Income Identifiable Capital
From Assets Expenditures
(millions) Revenues(1) Operations(1) Depreciation(1) at Dec. 31, for the Year

1997
Regulated electric utility
services $1,189.2(2) $271.5 $141.4 $2,678.4 $125.1
Regulated gas utility services 249.6 33.6 19.8 348.9 30.2
Other energy services 627.2 111.4 (3) 63.7 963.1 57.9
Eliminations (208.6) (6.1)(3) -- (133.3) --
Energy services segment 1,857.4 410.4 224.9 3,857.1 213.2
Other and eliminations 4.9 2.2 0.5 103.3 (0.6)
TECO Energy consolidated $1,862.3 $412.6 $225.4 $3,960.4 $212.6

1996
Regulated electric utility
services $1,112.9(2) $244.0 $120.2 $2,645.8 $203.3
Regulated gas utility services 258.7 32.0 17.2 302.7 25.9
Other energy services 600.3 110.8 (3) 64.8 917.5 71.5
Eliminations (202.5) (7.6)(3) -- (83.3) --
Energy services segment 1,769.4 379.2 202.2 3,782.7 300.7
Other and eliminations 5.9 2.6 0.6 118.9 (4.4)
TECO Energy consolidated $1,775.3 $381.8 $202.8 $3,901.6 $296.3

Income Identifiable Capital
From Assets Expenditures
(millions) Revenues(1) Operations(1) Depreciation(1) at Dec. 31, for the Year

1995
Regulated electric utility
services $1,092.3(2) $229.5 $113.3 $2,566.7 $334.5
Regulated gas utility services 220.6 30.5 16.2 292.3 26.0
Other energy services 547.7 100.2 (3) 62.9 873.7 98.3
Eliminations (206.6) (8.2)(3) -- (86.1) --
Energy services segment 1,654.0 352.0 192.4 3,646.6 458.8
Other and eliminations 4.9 2.9 0.3 154.4 2.4
TECO Energy consolidated $1,658.9 $354.9 $192.7 $3,801.0 $461.2

(1) From continuing operations
(2) Revenues shown in 1997 include the recognition of
previously deferred revenue at Tampa Electric of
$30.5 million. Revenues shown in 1996 and 1995 are
after the revenue deferral at Tampa Electric of
$34.2 million and $50.8 million, respectively.
(3) Income from operations includes non-conventional
fuels tax credit of $20.2 million, $19.6 million and
$20.6 million in 1997, 1996 and 1995, respectively,
and interest cost on the non-recourse debt related
to independent power operations of $14.1 million,
$12.0 million and $12.4 million in 1997, 1996 and
1995, respectively. In the Consolidated Statements
of Income, the tax credit is part of the provision
for income taxes and the interest is part of
interest expense.

L. Subsequent Events

In January 1998, TECO Energy acquired an additional Florida
propane gas business, Griffis Gas, Inc. in a stock-for-stock merger
transaction that was accounted for as a pooling of interests. About
600,000 shares of TECO Energy common stock were issued in the
transaction.
Griffis Gas Inc. was a privately owned business operating in
northern peninsula Florida, mainly in the Jacksonville area, and in
Gainesville and Ocala as well. An affiliated company which transports
propane for Griffis Gas, U. S. Propane, Inc. was also acquired.
Both of the acquired companies will be operated as a part of
Peoples Gas Company and will initially increase its annual volume by
about one third.
In the first quarter of 1998, TECO Power Services and a local
partner were awarded the right to provide a 60 megawatt diesel
powered plant in Pavana, Honduras with an estimated cost of $49
million. The award was made in connection with a declaration of
electric emergency by the President of Honduras. TECO Power Services
and its local partner are presently negotiating the terms of their
interests in the project and a 20-year power sales agreement with the
Honduran national utility.
In March 1998, TECO Transport's river barge transportation
subsidiary, Mid-South Towing, chartered three towboats and 110
covered river barges under an agreement that provides for their
acquisition at the end of the five-year charter term.

M. Commitments and Contingencies

TECO Energy has made certain commitments in connection with its
continuing capital improvements program. TECO Energy estimates that
capital expenditures for ongoing businesses during 1998 will be about
$304 million and approximately $879 million for the years 1999
through 2002.
Tampa Electric's capital expenditures are estimated to be $129
million in 1998 and $515 million for 1999 through 2002 for equipment
and facilities to meet customer growth and generation reliability
programs.
Peoples Gas System s capital expenditures are estimated to be
$59 million for 1998 and $190 million for 1999 through 2002 for
infrastructure expansion to grow the customer base and normal asset
replacement.
At the diversified companies, capital expenditures are estimated
at $116 million for 1998 and $174 million for the years 1999 through
2002, primarily for asset replacement and refurbishment at TECO
Transport and TECO Coal and the construction of the San Jose and
Honduras power stations at TECO Power Services. This includes
commitments of $39 million at the end of 1997, mainly for the
construction of the San Jose Power Plant in Guatemala and vessel
refurbishment at TECO Transport.

N. Quarterly Data (unaudited)

Financial data by quarter is as follows (unaudited)
Quarter ended
March 31 June 30 Sept. 30 Dec. 31
1997
Revenues(1) $ 450.3 $ 460.8 $ 494.7 $ 456.5
Income from operations(1) $ 98.0 $ 103.4 $ 125.6 $ 85.6
Net income(1)
Net income from
continuing operations $ 50.8 $ 50.5 $ 67.5 $ 42.6
Net income $ 50.8 $ 50.5 $ 59.3 $ 41.3
Earnings per share (EPS)
- basic
EPS from continuing
operations $ 0.39 $ 0.39 $ 0.51 $ 0.33
EPS $ 0.39 $ 0.39 $ 0.45 $ 0.31
Dividends paid per common
share (2) $ 0.28 $ .295 $ .295 $ .295
Stock price per common
share(3)
High $ 25 1/8 $ 25 5/8 $ 25 7/8 $ 28 3/16
Low $ 23 3/4 $ 23 3/4 $ 23 7/8 $ 22 3/4
Close $ 24 $ 25 9/16 $ 24 1/2 $ 28 1/8

1996
Revenues(1) $ 442.3 $ 434.7 $ 458.2 $ 440.1
Income from operations(1) $ 85.8 $ 87.9 $ 110.8 $ 97.3
Net income(1)
Net income from
continuing operations $ 50.2 $ 51.1 $ 66.3 $ 49.8
Net income $ 50.0 $ 50.5 $ 66.5 $ 49.5
Earnings per share (EPS)
- basic
EPS from continuing
operations $ 0.39 $ 0.39 $ 0.52 $ 0.38
EPS $ 0.39 $ 0.39 $ 0.51 $ 0.38
Dividends paid per common
share (2) $ .265 $ 0.28 $ 0.28 $ 0.28
Stock price per common
share(3)
High $ 27 $ 25 1/4 $ 25 1/4 $ 25 3/8
Low $ 23 3/4 $ 23 $ 23 $ 23 1/4
Close $ 24 7/8 $ 25 1/4 $ 23 3/4 $ 24 1/8

(1) Millions.
(2) Dividends paid for TECO Energy common stock (not restated for
Peoples Companies merger).
(3) Trading prices for common shares.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

During the period Jan. 1, 1996 to the date of this report, TECO
Energy 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) The information required by Item 10 with respect to the directors
of the registrant is included under the caption "Election of Directors"
on pages 1 through 4 of TECO Energy's definitive proxy statement, dated
March 5, 1998, for its Annual Meeting of Shareholders to be held on
April 15, 1998 (Proxy Statement) and is incorporated herein by
reference.

(b) The information required by Item 10 concerning executive officers
of the registrant is included under the caption "Executive Officers of
the Registrant" on pages 24 and 25 of this report.

(c) The information required by Item 10 concerning compliance with
Section 16(a) of the Exchange Act is included under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" on page 13 of
the Proxy Statement and is incorporated herein by reference.

Item 11. EXECUTIVE COMPENSATION.

The information required by Item 11 is included in the Proxy
Statement beginning on page 9 and ending just before the caption
"Shareholder Proposal" on page 11 and under the caption "Compensation
of Directors" on page 4, and is incorporated herein by reference.

Item 12. S E C U RITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

The information required by Item 12 is included under the caption
"Share Ownership" on pages 4 through 6 of the Proxy Statement and is
incorporated herein by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by Item 13 is included under the caption
"Election of Directors" on page 4 of the Proxy Statement and is
incorporated herein by reference.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.

(a) 1. Financial Statements - See index on page 50.
2. Financial Statement Schedules - See index on page 50.
3. Exhibits
*3.1 Articles of Incorporation, as amended on April 20, 1993
(Exhibit 3, Form 10-Q for the quarter ended March 31, 1993
of TECO Energy, Inc.).
*3.2 Bylaws, as amended effective Jan. 21, 1998 (Exhibit 4.2 to
Registration Statement No. 333-46951).
*4.1 Indenture of Mortgage among Tampa Electric Company, State
Street Trust Company and First Savings & Trust Company of
T a m pa, 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-1, 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 TECO Energy, Inc.).
*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 of TECO Energy, Inc.).
*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 TECO Energy, Inc.).
*4.6 F i rst Supplemental Installment Purchase and Security
Contract, dated as of Dec. 1, 1974 (Exhibit 4.10, Form 10-K
for 1986 of TECO Energy, Inc.).
*4.7 Third Supplemental Installment Purchase Contract, dated as
of May 1, 1976 (Exhibit 4.12, Form 10-K for 1986 of TECO
Energy, Inc.).
*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 TECO Energy, Inc.).
*4.9 Amendment to Exhibit A of Installment Purchase Contract,
dated April 7, 1983 (Exhibit 4.14, Form 10-K for 1989 of
TECO Energy, Inc.).
*4.10 Second Supplemental Installment Purchase Contract, dated as
of June 1, 1983 (Exhibit 4.11, Form 10-K for 1994 of TECO
Energy, Inc.).
*4.11 Third Supplemental Installment Purchase Contract, dated as
of Aug. 1, 1989 (Exhibit 4.16, Form 10-K for 1989 of TECO
Energy, Inc.).
*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 TECO Energy, Inc.).
*4.13 First Supplemental Installment Purchase Contract, dated as
of Aug. 2, 1984 (Exhibit 4.14, Form 10-K for 1994 of TECO
Energy, Inc.).

*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 of TECO Energy, Inc.).
*4.15 Loan and Trust Agreement among the Hillsborough County
Industrial Development Authority, Tampa Electric Company
and NCNB National Bank of Florida, as trustee, dated as of
Sept. 24, 1990 (Exhibit 4.1, Form 10-Q for the quarter
ended Sept. 30, 1990 for TECO Energy, Inc.).
*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 TECO Energy, Inc.).
*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 TECO Energy, Inc.).
*4.18 Installment Sales Agreement between the Plaquemines Port,
Harbor and Terminal District (Louisiana) and Electro-Coal
Transfer Corporation, dated as of Sept. 1, 1985 (Exhibit
4.19, Form 10-K for 1986 of TECO Energy, Inc.).
*4.19 Reimbursement Agreement between TECO Energy, Inc. and
Electro-Coal Transfer Corporation, dated as of March 22,
1989 (Exhibit 4.19, Form 10-K for 1988 of TECO Energy,
Inc.).
*4.20 Rights Agreement between TECO Energy, Inc. and The First
National Bank of Boston, as Rights Agent, dated as of April
27, 1989 (Exhibit 4, Form 8-K, dated as of May 2, 1989 of
TECO Energy, Inc.).
*4.21 Amendment No. 1 to Rights Agreement dated as of July 20,
1993 between TECO Energy, Inc. and The First National Bank
of Boston, as Rights Agent (Exhibit 1.2, Form 8-A/A, dated
as of July 27, 1993 of TECO Energy, Inc.).
*4.22 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.
(Exhibit 4.22, Form 10-K for 1996 of TECO Energy, Inc.).
*10.1 1980 Stock Option and Appreciation Rights Plan, as amended
on July 18, 1989 (Exhibit 28.1, Form 10-Q for quarter ended
June 30, 1989 of TECO Energy, Inc.).
*10.2 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.).
*10.3 Supplemental Executive Retirement Plan for T. L. Guzzle, as
amended and restated as of Oct. 16, 1996 (Exhibit 10.4,
Form 10-K for 1996 of TECO Energy, Inc.).
*10.4 Supplemental Executive Retirement Plan for R. H. Kessel, as
amended and restated as of Jan. 15, 1997 (Exhibit 10.5,
Form 10-K for 1996 of TECO Energy, Inc.).
*10.5 TECO Energy Group Supplemental Executive Retirement Plan,
as amended and restated as of Oct. 16, 1996 (Exhibit 10.6,
Form 10-K for 1996 of TECO Energy, Inc.).
*10.6 TECO Energy Group Supplemental Retirement Benefits Trust
Agreement as amended and restated as of Jan. 15, 1997
(Exhibit 10.7, Form 10-K for 1996 of TECO Energy, Inc.).

10.7 Annual Incentive Compensation Plan for TECO Energy and
subsidiaries, as revised April 1997.
*10.8 TECO Energy Group Supplemental Disability Income Plan,
dated as of March 20, 1989 (Exhibit 10.22, Form 10-K for
1988 of TECO Energy, Inc.).
*10.9 Forms of Severance Agreement between TECO Energy, Inc. and
certain senior executives, as amended and restated as of
March 20, 1996 (Exhibit 10.2, Form 10-Q for the quarter
ended June 30, 1996 of TECO Energy, Inc.).
*10.10 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.).
*10.11 Loan and Stock Purchase Agreement between TECO Energy, Inc.
and Barnett Banks Trust Company, N.A., as trustee of the
TECO Energy Group Savings Plan Trust Agreement (Exhibit
10.3, Form 10-Q for the quarter ended March 31, 1990 for
TECO Energy, Inc.).
*10.12 Supplemental Executive Retirement Plan for A.D. Oak, as
amended and restated as of Oct. 16, 1996 (Exhibit 10.14,
Form 10-K for 1996 of TECO Energy, Inc.).
*10.13 Supplemental Executive Retirement Plan for K. S. Surgenor,
as amended and restated as of Oct. 16, 1996 (Exhibit 10.15,
Form 10-K for 1996 of TECO Energy, Inc.).
*10.14 Supplemental Executive Retirement Plan for G. F. Anderson,
as amended and restated as of Oct. 16, 1996 (Exhibit 10.17,
Form 10-K for 1996 of TECO Energy, Inc.).
*10.15 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 for TECO
Energy, Inc.).
*10.16 TECO Energy Group Retirement Savings Excess Benefit Plan,
as amended and restated effective Aug. 1, 1994 (Exhibit
10.21, Form 10-K for 1994 of TECO Energy, Inc.).
*10.17 Supplemental Executive Retirement Plan for R. A. Dunn, as
amended and restated as of Jan. 15, 1997 (Exhibit 10.20,
Form 10-K for 1996 of TECO Energy, Inc.).
*10.18 TECO Energy, Inc. 1996 Equity Incentive Plan (Exhibit 10.1,
Form 10-Q for the quarter ended March 31, 1996 of TECO
Energy, Inc.).
*10.19 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 TECO Energy, Inc.).
*10.20 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 TECO Energy, Inc.).
*10.21 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 TECO Energy, Inc.).
*10.22 TECO Energy, Inc. 1997 Director Equity Plan (Exhibit 10.1,
Form 8-K dated April 16, 1997 of TECO Energy, Inc.).
*10.23 Form on Nonstatutory Stock Option under the TECO Energy,
Inc. 1997 Director Equity Plan (Exhibit 10, Form 10-Q for
the quarter ended June 30, 1997 of TECO Energy, Inc.).
10.24 Supplemental Executive Retirement Plan for R. K. Eustace
as of Jan. 15, 1997.
21. Subsidiaries of the Registrant.

23. Consent of Independent Accountants.
24.1 Power of Attorney.
24.2 Certified copy of resolution authorizing Power of Attorney.
27.1 Financial Data Schedule-1997 (EDGAR filing only).
27.2 Financial Data Schedule-1996 restated (EDGAR filing only).
27.3 Financial Data Schedule-1995 restated (EDGAR filing only).
_____________
* Indicates exhibit previously filed with the Securities and
Exchange Commission and incorporated herein by reference. Exhibits
filed with periodic reports of TECO Energy, Inc. were filed under
Commission File No. 1-8180.

Executive Compensation Plans and Arrangements

Exhibits 10.1 through 10.10 and 10.12 through 10.24 above are
management contracts or compensatory plans or arrangements in which
executive officers or directors of TECO Energy, Inc. participate.

Certain instruments defining the rights of holders of long-term
debt of TECO Energy, Inc. and its consolidated subsidiaries authorizing
in each case a total amount of securities not exceeding 10 percent of
total assets on a consolidated basis are not filed herewith. TECO
Energy, Inc. will furnish copies of such instruments to the Securities
and Exchange Commission upon request.

(b) TECO Energy, Inc. filed the following report on Form 8-K during
the last quarter of 1997.

The registrant filed a Current Report on Form 8-K dated Nov. 13,
1997 reporting under "Item 5. Other Events" certain officer
changes.

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 30th day of March, 1998.

TECO ENERGY, INC.

By G. F. ANDERSON*
G. F. ANDERSON, Chairman of the Board,
President 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 30, 1998:

Signature Title

G. F. ANDERSON* Chairman of the Board, President,
G. F. ANDERSON Director and Chief Executive
Officer
(Principal Executive Officer)

/s/ J. B. RAMIL Vice President-Finance
J. B. RAMIL and Chief Financial Officer
(Principal Financial Officer)

W. L. GRIFFIN* Vice President-Controller
W. L. GRIFFIN (Principal Accounting Officer)

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.

T. L. RANKIN* Director
T. L. RANKIN

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/ J. B. RAMIL
J. B. RAMIL, Attorney-in-fact

INDEX TO EXHIBITS
Exhibit Page
No. Description No.

3.1 Articles of Incorporation, as amended on *
April 20, 1993 (Exhibit 3, Form 10-Q for the
quarter ended March 31, 1993 of TECO Energy, Inc.).
3.2 Bylaws, as amended effective Jan. 21, 1998 *
(Exhibit 4.2 to Registration Statement No. 333-
46951).
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-1,
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 TECO
Energy, Inc.).
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 of TECO
Energy, Inc.).
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 TECO Energy, Inc.).
4.6 First Supplemental Installment Purchase and *
Security Contract, dated as of Dec. 1, 1974
(Exhibit 4.10, Form 10-K for 1986 of TECO Energy,
Inc.).
4.7 Third Supplemental Installment Purchase *
Contract, dated as of May 1, 1976 (Exhibit 4.12,
Form 10-K for 1986 of TECO Energy, Inc.).
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
TECO Energy, Inc.).
4.9 Amendment to Exhibit A of Installment *
Purchase Contract, dated April 7, 1983 (Exhibit
4.14, Form 10-K for 1989 of TECO Energy, Inc.).
4.10 Second Supplemental Installment Purchase *
Contract, dated as of June 1, 1983 (Exhibit 4.11,
Form 10-K for 1994 of TECO Energy, Inc.).
4.11 Third Supplemental Installment Purchase *
Contract, dated as of Aug. 1, 1989 (Exhibit 4.16,
Form 10-K for 1989 of TECO Energy, Inc.).

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
TECO Energy, Inc.).
4.13 First Supplemental Installment Purchase *
Contract, dated as of Aug. 2, 1984 (Exhibit 4.14,
Form 10-K for 1994 of TECO Energy, Inc.).
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 of TECO Energy,
Inc.).
4.15 Loan and Trust Agreement among the Hillsborough *
County Industrial Development Authority, Tampa
Electric Company and NCNB National Bank of Florida,
as trustee, dated as of Sept. 24, 1990 (Exhibit
4.1, Form 10-Q for the quarter ended Sept. 30, 1990
for TECO Energy, Inc.).
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 TECO Energy, Inc.).
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 TECO Energy, Inc.).
4.18 Installment Sales Agreement between the *
Plaquemines Port, Harbor and Terminal District
(Louisiana) and Electro-Coal Transfer Corporation,
dated as of Sept. 1, 1985 (Exhibit 4.19, Form 10-K
for 1986 of TECO Energy, Inc.).
4.19 Reimbursement Agreement between TECO Energy, *
Inc. and Electro-Coal Transfer Corporation, dated
as of March 22, 1989 (Exhibit 4.19, Form 10-K for
1988 of TECO Energy, Inc.).
4.20 Rights Agreement between TECO Energy, Inc. *
and The First National Bank of Boston, as Rights
Agent, dated as of April 27, 1989 (Exhibit 4, Form
8-K, dated as of May 2, 1989 of TECO Energy, Inc.).
4.21 Amendment No. 1 to Rights Agreement dated as *
of July 20, 1993 between TECO Energy, Inc. and The
First National Bank of Boston, as Rights Agent
(Exhibit 1.2, Form 8-A/A, dated as of July 27, 1993
of TECO Energy, Inc.).
4.22 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(Exhibit 4.22, Form 10-K for
1996 of TECO Energy, Inc.).

10.1 1980 Stock Option and Appreciation Rights *
Plan, as amended on July 18, 1989 (Exhibit 28.1,
Form 10-Q for quarter ended June 30, 1989 of TECO
Energy, Inc.).
10.2 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.).
10.3 Supplemental Executive Retirement Plan *
for T. L. Guzzle, as amended and restated as of
Oct. 16, 1996 (Exhibit 10.4, Form 10-K for 1996 of
TECO Energy, Inc.).
10.4 Supplemental Executive Retirement Plan for *
R. H. Kessel, as amended and restated as of Jan.
15, 1997 (Exhibit 10.5, Form 10-K for 1996 of TECO
Energy, Inc.).
10.5 TECO Energy Group Supplemental Executive Retirement *
Plan, as amended and restated as of Oct. 16, 1996
(Exhibit 10.6, Form 10-K for 1996 of TECO Energy,
Inc.)
10.6 TECO Energy Group Supplemental Retirement Benefits *
Trust Agreement, as amended and restated as of Jan.
15, 1997 (Exhibit 10.7, Form 10-K for 1996 of TECO
Energy, Inc.).
10.7 Annual Incentive Compensation Plan for 90
TECO Energy and subsidiaries, as revised April
1997.
10.8 TECO Energy Group Supplemental Disability *
Income Plan, dated as of March 20, 1989 (Exhibit
10.22, Form 10-K for 1988 of TECO Energy, Inc.).
10.9 Forms of Severance Agreement between TECO *
Energy, Inc. and certain senior executives, as
amended and restated as of March 20, 1996 (Exhibit
10.2, Form 10-Q for the quarter ended June 30, 1996
of TECO Energy, Inc.).
10.10 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.).
10.11 Loan and Stock Purchase Agreement between *
TECO Energy, Inc. and Barnett Banks Trust Company,
N.A., as trustee of the TECO Energy Group Savings
Plan Trust Agreement (Exhibit 10.3, Form 10-Q for
the quarter ended March 31, 1990 for TECO Energy,
Inc.).
10.12 Supplemental Executive Retirement Plan *
for A. D. Oak, as amended and restated as of Oct.
16, 1996 (Exhibit 10.14, Form 10-K for 1996 of TECO
Energy, Inc.).
10.13 Supplemental Executive Retirement Plan *
for K. S. Surgenor, as amended and restated as of
Oct. 16, 1996 (Exhibit 10.15, Form 10-K for 1996 of
TECO Energy, Inc.).

10.14 Supplemental Executive Retirement Plan *
for G. F. Anderson, as amended and restated as of
Oct. 16, 1996 (Exhibit 10.17, Form 10-K for 1996 of
TECO Energy, Inc.).
10.15 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 for TECO Energy, Inc.).
10.16 TECO Energy Group Retirement Savings Excess Benefit *
Plan, as amended and restated effective Aug. 1, 1994
(Exhibit 10.21, Form 10-K for 1994 of TECO Energy, Inc.).
10.17 Supplemental Executive Retirement Plan for R. A. Dunn, *
as amended and restated as of Jan. 15, 1997 (Exhibit
10.20, Form 10-K for 1996 of TECO Energy, Inc.).
10.18 TECO Energy, Inc. 1996 Equity Incentive Plan (Exhibit *
10.1, Form 10-Q for the quarter ended March 31, 1996
of TECO Energy, Inc.).
10.19 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 TECO
Energy, Inc.).
10.20 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 TECO Energy, Inc.).
10.21 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 TECO Energy,
Inc.).
10.22 TECO Energy, Inc. 1997 Director Equity Plan *
(Exhibit 10.1, Form 8-K dated April 16, 1997 of
TECO Energy, Inc.).
10.23 Form on Nonstatutory Stock Option under the TECO *
Energy, Inc. 1997 Director Equity Plan (Exhibit 10,
Form 10-Q for the quarter ended June 30, 1997 of
TECO Energy, Inc.).
10.24 Supplemental Executive Retirement Plan for R. K. Eustace 93
as of Jan. 15, 1997.
21. Subsidiaries of the Registrant. 99
23. Consent of Independent Accountants. 100
24.1 Power of Attorney. 101
24.2 Certified copy of resolution authorizing Power of
Attorney. 103
27.1 Financial Data Schedule-1997 (EDGAR filing only).
27.2 Financial Data Schedule-1996 restated (EDGAR filing only).
27.3 Financial Data Schedule-1995 restated (EDGAR filing only).
_____________
* Indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference. Exhibits filed with
periodic reports of TECO Energy, Inc. were filed under Commission File
No. 1-8180.