Issuu on Google+

TECO Energy, Inc. 2006 Corporate Social Responsibility Report

Team members at the company’s corporate office celebrate the American Heart Association’s “Go Red for Women” event. The company is one of the leading fundraisers in the area for this event.

Sustaining tomorrow. For our customers, our team members and our shareholders.


LETTER FROM MANAGEMENT

SHERRILL W. HUDSON

Chairman of the Board and Chief Executive Officer

Challenges / Opportunities Continuing to reduce power plant emissions, which builds on the voluntary steps we have taken in the past. This entails:

TECO Energy’s vision is to be a company where people want to work, an organization that is an asset to the community and a business in which investors want to invest. This is our first corporate social responsibility report, yet our accountability to our stakeholders has been fully functioning for many years. We provide the energy that powers the lifestyle and the economy of a growing service area. We have pioneered in the reduction of greenhouse gas

• Installing

additional scrubber upgrades

at our coal-powered Big Bend Power Station,

emissions and the use of clean coal technology. We have contributed over $8 million in the past four years to enhance education, social services, health

which will result in further sulfur dioxide (SO2)

and artistic efforts in the communities we serve. We stay focused on the growth

emission reductions.

and expansion of our businesses and the capital needs required to support

• Installing

selective catalytic reduction

technology on our Big Bend station that

that growth. Social responsibility is viewed as the impact one has on one’s stakeholders,

will reduce nitrogen oxide (NOx) emissions

and what a corporation is doing for the future of those stakeholders. The nature

85 percent by 2010.

of it, however, is important to understand its effects.

• Monitoring

the increasing conversation

1. Social responsibility must be fluid, changing, and responsive. Our

concerning carbon dioxide (CO2 ) and

social responsibility can only flourish when it responds to the needs of our stake-

climate change on the national and

holders. That means initiating change in the best interests of our communities,

international policy stage and preparing

going beyond what is required when it effectively serves the long-term interests

for potential increased regulation at

of our stakeholders and effectively functioning as a viable business and service

Tampa Electric. • Managing

a fuel portfolio that ensures

fuel diversity and will continue to enhance the company’s philosophy of balancing the need to protect the environment with the need to provide reliable, affordable electricity for customers.

on which an economy depends. 2. Social responsibility has consistent ethics and compliance as a foundation. Social responsibility means high standards, the preservation of a reputation for integrity and deeds rather than words. Every business action must be within the spirit of the law and reflective of a long tradition of doing what’s right.


Challenges / Opportunities continued • Continuing

development of renewable

energy sources, with a target of increasing megawatts being produced through biomass, solar power and other renewable sources 3. Social responsibility means anticipating the future in terms of all

and alternative technologies.

stakeholders. We are not the only people who must live with our decisions. Our thinking must be long range, and we must understand our impact ahead of time,

Engaging customer audiences

whether it’s planning electric generation, protecting the environment or serving

for the best use of our resources.

the needs of our communities.

This entails:

4. Social responsibility means identification, consideration and

• Communicating

regular review of stakeholder needs, and engagement with these

through open houses

and face-to-face communications

groups in meaningful dialogue. In a world that has become challenging

with customers in neighborhoods where

and unpredictable, stakeholders know that what affects one, affects all.

future infrastructure would be located,

Communication is not something written on a piece of paper or a course taught

prior to any work being done.

in a workshop. It’s an awareness of what is crucial, and the impact that a decision will have on operations and on the people who are the lifeblood of TECO Energy. Ongoing dialogue and regular review of stakeholder relationships is a crucial component of social responsibility. 5. Social responsibility means the dissolution of boundaries of limited thinking. As a corporation, we are in many physical ways defined by boundaries – the electric and gas companies’ service areas, the coal mines in Kentucky and Virginia, the navigated rivers and seas of a transport company.

• Maintaining

affordable electricity rates

through conservation programs and diversity in fuel resources. • Meeting

the forecasted electricity and

natural gas needs for Tampa Electric, Peoples Gas and TECO Guatemala. • Meeting

expectations to improve

It is socially responsible for a corporation to see itself in a more all-encompassing

disaster preparedness, response and

way. It means operating without boundaries when those boundaries impose

recovery at all our businesses.

rigidity of thinking, tunnel vision, an attitude of limitation and disregard for the long-term effects of our decisions. 6. TECO Energy’s social responsibility naturally flows from our five core values: safety, integrity, respect for others, achievement with a sense of urgency and customer service. Those values define our culture, and ultimately the connection we have with our stakeholders.

Team members work to inform the community about transmission projects in the area.

We are proud to have the trust of the people who invest in our company, who use its services and who spend long hours working to achieve our goals. Ultimately, corporate social responsibility means honoring that trust, and protecting the long-term interests of the communities we serve. It is a responsibility TECO Energy will always take seriously because it represents the future we all share.

Sherrill W. Hudson LETTER FROM MANAGEMENT

1


Accomplishments in 2006

Tampa Electric added 18,000 new customers to its service territory,

reflecting an average customer growth of 2.8 percent. •

Challenges / Opportunities continued

TECO Energy achieved its cash goals in 2006, including the repayment of

notes of January 2007, and accumulated the cash to retire $300 million of notes

Reducing debt to continue to improve our financial position. This entails:

maturing in May 2007.

• Continuing

$100 million in trust preferred securities and $57 million of junior subordinated

TECO Energy announced potential sale of TECO Transport, our water-

borne transportation business. •

Tampa Electric continued work on the next major phase of the

company’s $1.5-billion, 10-year environmental improvement plan: the installation of a selective catalytic reduction system (SCR) to reduce nitrogen oxide (NOx) emissions at the coal-fired Big Bend Power Station. •

Tampa Electric implemented a predictive dialing phone system

the commitment to balance

sheet improvement and debt retirement at the parent company level. • Exploring

the potential sale of

TECO Transport. Repositioning the workforce for the challenges ahead by encouraging creative and innovative solutions that put high

to help manage safety, power restoration, bill collection and other communica-

premiums on learning and development.

tions in a single package.

This entails:

TECO Coal installed equipment to improve coal recovery from two

coal preparation plants. The equipment is expected to add 50,000 tons of

• Considering

the aging work force

and developing staffing strategies for

coal for the high-value metallurgical market and 100,000 tons of high quality

critical job families to ensure we attract

utility coal to the market in 2007.

and retain talented people.

Tampa Electric announced plans for its next baseload unit, due to be

in commercial operation by Jan. 1, 2013.

• Developing

a culture that models our

core values: safety, integrity, respect for others, achievement with a sense of urgency

Tampa Electric received an award of $133.5 million in tax credits

from the United States Department of Energy under a program to encourage the development of clean coal technologies. •

Peoples Gas celebrated its 10th straight year of earnings growth,

and in 2006, an annual customer growth rate of 3.3 percent. The company added four more counties to its service area. •

and customer service. • Achieving

safety and diversity goals

within the TECO Energy work force. • Providing

competitive and affordable

benefits for our active and retired team members.

Peoples Gas completed construction of a large gas supply line to

enhance service to its largest customer, Jacksonville Electric Authority. •

The American Gas Association presented Peoples Gas with the

Leader Accident Prevention Award for achieving a total OSHA recordable

TECO Energy, Inc.

injuries and illness rate below the industry average.

Corporate Headquarters 702 N. Franklin Street Tampa, FL 33602

2


About this Report This report is a summary of TECO Energy’s investor, environmental, workplace, customer and community responsibilities.The report reflects the 2006 time period. However, since it is our first corporate sustainability report, we have included information from previous years where it is relevant. TECO Energy’s corporate social responsibility report has been written following the guidelines of the Global Reporting Initiative or GRI (www.globalreporting.org), which seeks to provide consistency among corporations for reporting corporate social responsibility. We have chosen to present our story in terms of our key audiences and entities. Those key audiences are investors, customers and the work force. The key entities in which we have accountability are both collective and living: the environment we protect and the communities we serve and support. If you are seeking information on a specific GRI indicator, we have completed an index in the table of contents of this report to assist you. Should you have comments or inquiries about this report, please e-mail us at csr@tecoenergy.com.

Note: This Corporate Social Responsibility report contains forward-looking statements, which are subject to the inherent uncertainties in predicting future results and conditions. Actual results may differ materially from those forecasted. Forecasted results, if any, are based on the company’s current expectations and assumptions, and the company does not undertake to update that or any other information that is in this report. Information regarding factors that could impact results is contained under “Risk Factors” in TECO Energy, Inc.’s Annual Report on Form 10-K for the period ended December 31, 2006.

ABOUT THIS REPORT

3


Table of Contents This table of contents refers to the principal sections of this report, the pages on which certain information is located, and the global reporting initiative (GRI) factor that is addressed in that particular section. The GRI is a reporting framework to assist in comparing information among various companies. This report uses Version Three of the Sustainability Reporting Guidelines. More information on GRI is available at www.globalreporting.org. Section

Page

GRI

3

3.1, 3.3, 3.4, 3.5, 3.12

Letter from Sherrill Hudson, Chairman and CEO

Inside Front Cover

1.1, 1.2, 2.1, 2.4

Challenges/Opportunities

Inside Front Cover

1.1, 1.2

2

1.1

Social Responsibility/Strategic Priorities

6

1.1

Executive Summary

6

3.5

Our Responsibility to Key Stakeholders

6-8

2.8

Our Businesses

9 - 13

2.1, 2.2, 2.3

About this Report LETTER FROM MANAGEMENT

2006 Achievements EXECUTIVE SUMMARY pp 6 - 8

OUR BUSINESSES pp 9 - 18 2.1, 2.2, 2.3, 2.4,

The Companies: Tampa Electric, Peoples Gas, TECO Coal, TECO Transport, TECO Guatemala Franchise Agreements

10 - 13 10 - 11

2.5, 2.7, 2.8

Financial Information

10 -11

2.8, EC1

Compliance, Ethics and Core Values: Corporate Compliance and Ethics Program Standards of Integrity Reporting Mechanisms for Compliance and Ethics Inquiries Our Culture

14 -15 14 -15 15 1, 15

4.6, 4.8, 4.9, 4.10, 4.11 4.8 4.4 SO1

16 17 17 17 17 18

4.1, 4.2, 4.3 4.6 4.7 4.16 2.8, EC1 SO5, SO6, 4.14

19

4.17

Customer Communications

22 - 23

4.14, 4.16, PR5, PR6

Customer Service

23 - 26

PR5

Special Needs Customers

25

PR5

Energy Conservation Programs

25

EN26

Privacy

26

PR5

Governance: List of TECO Energy Board Members Board Committees Board Composition Communication with the Board Board-Directed Compensation Legislative and Regulatory Activities

2.6

OUR RESPONSIBILITY TO CUSTOMERS pp 19 - 26 Reliability, Fuel Strategies and Diversity

4


Section

Page

GRI

Workforce

27

LA1, LA2

Compensation

28

LA3, EC5

Retirement

28 - 29

LA3

Health Care

29

LA3, EC3

Labor Relations/Unions

30

LA4, LA5

Safety, History and Training

30 - 32

LA7, LA8, 2.10

Training and Development

33

LA10

Standards of Integrity

33

SO3

Leadership Development

33

LA11, LA12

Performance Appraisals

37

LA12

34 - 35

LA13, SO3, HR3

Workforce Ethnicity

34

LA13

Leadership by Gender and Ethnicity

36

LA13

Workforce Gender

35

LA13

Team Member Communications

37

4.16, 4.17

39 - 46

EC1, EC8, EC9

Economic Development

39

EC1, EC8, EC9

Support of Local Vendors

39

EC6

Corporate Contributions

40 - 42

EC1, EC8, EC9

39

—

Volunteerism

40 - 43

EC8

Emergencies Affecting the Communities

44 - 46

4.14, 4.16, 4.17, SO1

Community Organizations

39 - 41

4.13

OUR RESPONSIBILITY TO TEAM MEMBERS pp 27 - 38

Diversity, History and Training

OUR RESPONSIBILITY TO THE COMMUNITY pp 39 - 46 Community Relations

Taxes, Funds Paid

OUR RESPONSIBILITY TO THE ENVIRONMENT pp 47 - 64 Environmental Investments

50

EN30, EC2, EC4

Responsibility for the Air, including Emission Reduction Initiative

47 - 50

EN26, EN16, EN17, EN18, E19, E20, S01

Responsibility for the Water

51 - 53

EN8, EN9, EN10, EN21, EN25, S01

Responsibility for the Land and Byproducts of Electrical Generation

54 - 56

EN11, EN2, EN14, EN22, S01

Stewardship

57 - 59

EN13, S01, EN15

59

EN5, EN6, EN7, S01

Energy Conservation

58 - 59

EN5, EN6, EN7, S01

Our Environmental Policy

60 - 64

4EN1, EN2, 1.2, EN14

61

EN1, EC2

Renewable Energy

Climate Change

TABLE OF CONTENTS

5


Strategic priorities for TECO Energy’s social responsibility: • The

co-existence of social

responsibility and healthy earnings and shareholder returns •A

focus on the best

service possible to our customers, including reliability now and in the future • Support

and involvement in

the communities we serve, through financial contribution, volunteerism, stewardship and emergency management • Commitment

to the air, land

and water environments in which we live and which we leave to our children and grandchildren • Opportunities,

appreciation

and development for a diverse work force. • The

highest ethical

behavior and compliance with all laws and regulations.

6

EXECUTIVE SUMMARY TECO Energy’s first corporate social responsibility report reflects the company’s significant economic, environmental and social impacts on our key stakeholders. This report details our involvement and engagement with those audiences: investors, customers and team members. It also articulates the responsibility our companies have to the communities they serve, and to the air, water and land we all share. The report is divided into five sections: • Our Businesses, which focuses on our financial position, governance and ethical responsibilities to our investors • Our Responsibility to Customers • Our Responsibility to Team Members • Our Responsibility to the Community • Our Responsibility to the Environment These sections are summarized below. Our Businesses. This section provides the basic details and data of TECO Energy’s principal businesses: Tampa Electric, Peoples Gas, TECO Coal, TECO Transport and TECO Guatemala. The section provides information on TECO Energy’s Corporate Compliance and Ethics Program, including its Standards of Integrity. It also provides information on how compliance is monitored and managed within the corporation. This section presents governance details, including information on the company’s Board of Directors and its committees. Elsewhere in this section are details on TECO Energy’s legislative and regulatory affairs activities on local, state and federal levels. TECO Energy’s sustainability efforts are made with an understanding of the effects on our earnings and our investors. We believe that corporate social responsibility and healthy earnings can co-exist. Our Responsibility to Customers. TECO Energy’s customers include residential and commercial users of the services of Tampa Electric and Peoples Gas and the commercial customers of TECO Transport, TECO Coal and TECO Guatemala. The most important service provided to all customers is reliability. This section details the reliability needs of the electric and gas companies, which include infrastructure, fuel and overall costs. The section includes information about the 2004 and 2005 hurricane seasons, and the plans to meet new requirements of the Florida Public Service Commission related to weather emergencies. TECO Energy’s subsidiaries all have various ways of communicating with customers. Both Tampa Electric and Peoples Gas conduct surveys throughout the year with customers. In 2006, Tampa Electric had a 95 percent favorability rating with customers, and Peoples Gas reflected 96 percent customer satisfaction.


Part of the responsibility to customers of the electric and gas companies is the promotion and implementation of a wide variety of conservation programs to help save energy. Tampa Electric has spent nearly $400 million since 1981 on conservation programs that include energy audits, heating and cooling rebates and load management programs. Within the past five years, over 82,000 customers have participated in Peoples Gas programs, primarily through rebates. Additional information is available in this section about TECO Transport’s and TECO Coal’s customer service. Our Responsibility to Team Members. TECO Energy had a total of 5,092 team members as of year-end 2006. Details of the work force demographics, compensation, retirement plans and health care are provided in this section. There are four unions to which some TECO Energy members belong. They are described in the Team Members section of this report. Key elements of TECO Energy’s commitment to its work force includes creating a company where people want to work and focuses on our core values. Safety of life is a key value within TECO Energy, and the safety statistics for all of TECO Energy’s companies are provided in this section. Training and development is also covered in this section, as is the company’s diversity training and development. The work force is also presented in terms of gender and race. In 2006, on the annual team member survey, TECO Energy’s work force showed an overall favorability rating of 72 percent, which represents an upward trend. Our Responsibility to the Community. TECO Energy and its companies provide funds for economic development in service areas, and help their communities through stewardship efforts, volunteerism and social programs. A key commitment to the community is also emergency management. TECO Energy contributed over $8 million between 2002 and 2006 to education; arts and culture; health and human services; and environmental initiatives (over and above Tampa Electric’s environmental stewardship projects). Over $2 million was donated to educational institutions and programs during this same time frame. In 2006, TECO Energy team members volunteered over 66,000 hours of service to their communities. Tampa Electric’s Storm Implementation Plan’s initiatives are also mentioned in this section, including the vegetation management plan; pole inspection procedures; transmission structure inspection program; and the company’s transmission and distribution geographic information system, which will be fully implemented by the summer of 2007. Other topics covered in this section include TECO Coal and TECO Guatemala’s community efforts.

EXECUTIVE SUMMARY

7


EXECUTIVE SUMMARY

continued

Our Responsibility to the Environment. Within TECO Energy, the concern and respect for the environment is a living program that has made its principal business unit, Tampa Electric, one of the cleanest coal-burning utilities in the nation. For the last 20 years, Tampa Electric has taken major steps to reduce air emissions from its major power plants. As it faces a future that favors low emission facilities and carbon capture, Tampa Electric is already accomplishing what others are just now considering as part of its 10-year, $1.5-billion program to dramatically reduce emissions. By 2010, the company will have reduced systemwide emissions by 90 percent for nitrogen oxides; 89 percent for sulfur dioxides; by more than 70 percent for mercury; and by 72 percent for particulate matter. Carbon dioxide will be reduced by 20 percent. This section outlines the subsidiaries’ responsibilities for air, land and water, and also includes TECO Energy’s stewardship activities with specific examples. For further information, the 2005 Environmental Report provides greater detail on Tampa Electric’s environmental responsibility. It is available at tecoenergy.com/enviroreport.

Conclusion

The five sections of this report emphasize our company’s commitment to responsibly providing electric and natural gas service for a wide service area and energy-related services to our coal and transportation customers. We recognize this report is the beginning of a dialogue, one that must include present and future stakeholders and creates a forum where together we can address short-, medium- and long-term challenges. Our efforts cannot exist in a vacuum. This corporate social responsibility report serves as the foundation for our future efforts on behalf of our sustainability mission: to be a beneficial presence where and when we are needed.

8


OUR BUSINESSES Energy is our business. It is the common thread that binds TECO Energy and its subsidiaries.

Before the lights can come on in a subdivision or a restaurant can prepare a cooked meal or the sound system can resonate in a theater, there must be energy. Creating that energy involves a highly complex process that starts with fuel, operates with generation, transformers and pipelines, and ultimately flows into the homes and businesses of customers. Tampa Electric provides energy to residential and business customers in the Tampa Bay area; Peoples Gas serves customers throughout the State of Florida; TECO Coal produces, processes and sells high quality, predominately lowsulfur coal. TECO Transport delivers fuel that is ultimately converted into energy in both domestic and foreign markets; TECO Guatemala operates power plants that supply energy to the largest distribution utility in Central America.

Each TECO Energy subsidiary plays its part in the company’s overall mission, and they are bonded by more than a common name. They are united in meeting the challenges of growing customer bases. They are committed to protecting the environments in which they operate. They are allied with their customers through long-term commitments to meet crucial energy needs. They are dedicated to the safety and success of their team members. Above all else, they share values and ethics that are the bedrock of their operations, solid codes that support the vision and commitment that shape corporations in the 21st century.

Tampa Electric’s Polk Power Station, the cleanest coal-fired power plant in North America.

OUR BUSINESSES

9


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR BUSINESSES

The Companies

Tampa Electric

Tampa Electric, an investor-owned electric utility incorporated in 1899, is TECO Energy’s principal subsidiary. The company serves approximately 650,000 residential, commercial and industrial customers within a 2,000 squaremile area that includes Hillsborough County and parts of Pasco, Pinellas and Polk counties in West Central Florida. Tampa Electric has three major electric plants and five combustion turbine units that use a generation mix of coal (58 percent); gas (41 percent) and oil (1 percent). The company has 2,411 employees. Tampa Electric has franchise fee agreements with 13 municipalities, mostly 30-year agreements. Tampa Electric paid $34,903,000 in franchise fees in 2006.

Team members at work in the switchyard at Tampa Electric’s H.L. Culbreath Bayside Power Station.

FINANCIAL INFORMATION Consolidated Net Sales 2006

Top Five Shareholders in 2006

Structural and Other Changes

- $3.4 billion

- T. Rowe Price Associates, Mutual Fund, Baltimore, Md.

- TECO Energy had no corporate structure changes, no significant openings or closing of facilities, and no significant share issuances in 2006.

Consolidated Total Capitalization - $3.8 billion in debt (68 percent); $71.5 million in junior subordinated debt (1 percent), and $1.7 billion (31 percent) in equity.

- Franklin Resources, Mutual Fund, Rancho Cordera, Calif.

Retained Earnings

- State Street Global Advisors (US), Mutual Fund, Fort Lauderdale, Fla.

- Increased $166 million in 2006.

Revenues by Region - More than 95 percent of total revenues are generated in the United States.

10

- Vanguard Group Inc., Mutual Fund, Malvern, Pa.

- Barclays Global Investors, NA, Mutual Fund, San Francisco, Calif.

Total Consolidated Debt Decrease - Net $31 million in 2006, as Tampa Electric issued $250 million of long-term debt offset by retirement of short-term debt, and the retirement of $106 million of junior subordinated debt.


Tampa Electric Generating Units POWER PLANT

MEGAWATTS

BAYSIDE (gas)

1,841

BIG BEND (coal)

1,677

POLK 1 (coal)

260

POLK 2 - 5 (gas/oil)

688

PEAKING UNITS (oil)

138

OTHER

42

SYSTEM TOTAL

4,646

Peoples Gas

Since 1895, Peoples Gas, which was acquired by TECO Energy in 1997, has provided Florida’s citizens and businesses with reliable, economical natural gas service. It presently delivers natural gas to nearly 330,000 commercial, industrial and residential customers in the state. Headquartered in Tampa, Peoples Gas has offices in major metropolitan areas throughout Florida: St. Petersburg, Lakeland, Sarasota, Jacksonville, Ocala, Panama City, Miami, Fort Myers, Orlando and Daytona Beach. The company is organized into three operating regions and a number of divisions, and has 619 employees.

Peoples Gas holds franchise and other rights with approximately 100 municipalities throughout Florida, which give Peoples Gas rights to occupy municipal rights-of-way within the franchise area. Peoples Gas franchises range from 3 to 30 years (the maximum allowed by law). Most are between 10 and 30 years. Fees are a percentage of revenues derived from the sale of natural gas and are collected only from those customers within each franchise area. Peoples Gas’ franchise fees totaled $9.5 million in 2006.

The natural gas system is made up of approximately 10,326 miles of distribution main and 113 miles of transmission main served through 61 gate stations.

Peoples Gas team members prepare pipeline for natural gas installation.

[dollars]

TECO Energy Stock Price (NYSE: TE) 18.0

18.0

17.5

17.5

17.0

17.0

16.5

16.5

16.0

16.0

15.5

15.5

15.0

15.0

14.5 14.0

2006 2007 APR. MAY JUN. JUL. AUG. SEP. OCT. NOV. DEC. JAN. FEB. MAR. APR.

14.5 14.0

Detailed financial information is available in the company’s Annual Report on form 10-K for the period ended Dec. 31, 2006.

OUR BUSINESSES

11


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR BUSINESSES

The Companies continued

TECO Coal

TECO Coal produces, processes and sells high quality, predominately low-sulfur bituminous coal to a variety of customers for steam, industrial and metallurgical uses. Its operations are conducted on both owned and leased properties totaling nearly 250,000 acres in Kentucky, Tennessee and Virginia. Coal is produced by both surface and underground mining and is transported to customers by railroad cars, trucks, barges or vessels. In 2006, the company sold 9.8 million tons of coal to 35 customers in the United States, Canada, Norway and the United Kingdom. TECO Coal’s primary customers include the United States and European steel industry, as well as domestic utilities and industrial customers.

TECO Ocean Shipping vessel, the M/V Sheila McDevitt.

TECO Coal

W ES T VIRGINIA

KENTUCKY

VIRGINIA

Clintwood Elkhorn Mining

• • Premier Elkhorn Coal

Perry County Coal TENNES S E E NORTH CAROLINA

GEORGIA

SOUTH CAROLINA

Premier Elkhorn Coal Company, one of TECO Coal’s operations.

12

TECO Coal has four mining complexes located throughout Kentucky and Virginia, and 1,018 employees. In 2006, TECO Coal acquired areas representing nearly 37 million tons of previously uncontrolled reserves, bringing the total recoverable reserves to 274 million tons. TECO Transport

TECO Transport operates TECO Ocean Shipping, Tampa, Fla., a U.S.-flag oceangoing fleet; TECO Barge Line, Metropolis, Ill., a river barge fleet on the U.S. inland waterways; and TECO Bulk Terminal, Davant, La., a dry-bulk commodity deep-water transfer and storage terminal. TECO Transport as a whole has 814 employees.


San José Power Station.

TECO Guatemala

MEXICO

BELIZE

G U AT E M A L A HONDURAS

• Alborada Power Station • San José Power Station EL SALVADOR

TECO Transport has built its business moving coal and other commodities via rivers, as well as through the Gulf of Mexico and the Caribbean and worldwide, for domestic and international markets. The company handles coal, petroleum coke, phosphate, grain and other dry-bulk commodities domestically and internationally.

City near the Pacific coast. The Alborada station is a simple-cycle facility located in Escuintla, Guatemala. TECO Guatemala has 123 team members, located at the two plants, the company’s offices in Guatemala City, and TECO Energy’s headquarters in Tampa.

TECO Guatemala

The operations include TEMSA, an unloading facility for coal and liquid fuels in Puerto Quetzal at Guatemala’s Pacific coast.

TECO Guatemala’s operations include two power plants with long-term sales agreements in Guatemala: the 120-megawatt San José Power Station and the 78-megawatt Alborada Power Station. The San José facility is a pulverized coal-fired power plant located near the town of Masagua, Guatemala. The plant site is located about 46 miles south of Guatemala

TECO Guatemala also includes a 24 percent ownership interest in the largest electric utility in Central America, Emprésa Eléctrica de Guatemala, S.A. (EEGSA). EEGSA serves more than 800,000 customers, and demand is growing at a rate of approximately four percent annually. EEGSA serves the major metropolitan market area in Guatemala.

OUR BUSINESSES

13


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR BUSINESSES

President and Chief Operating Officer John Ramil, winner of the 2006 Tampa Bay Ethics Award, presented by The University of Tampa.

Compliance, Ethics and Core Values TECO Energy and its subsidiaries adhere to the highest ethical behavior in all business activities, including legal, regulatory, financial, operational and environmental matters. We have longstanding policies and practices designed to provide the framework for the ethical operation of the company. The company’s philosophy of business conduct has existed since 1899, when Tampa Electric first brought electric service to its customers. This philosophy is reflected in the Corporate Compliance and Ethics Program initiated in 1987 and the company’s purpose, vision and values, most recently updated in 2005. TECO Energy maintains a comprehensive program based on sound, ethical business practices. It encourages a culture of compliance to prevent and detect violations of the law. The purpose of this program is to: •

14

Promote an organizational culture that encourages ethical behavior and a commitment to the spirit of and actual compliance with the law; Clearly state and enhance TECO Energy’s commitment to legal compliance, and provide the programs and mechanisms for managers and team members to take preventive action, seek appropriate advice and report violations; Enhance team members’ opportunities to achieve total compliance as a result of program integration; Encourage honest and open communication among all levels of team members concerning matters affecting legal and regulatory obligations.

Standards of Integrity

Our code of ethics for all team members, including the Board of Directors, is known as the Standards of Integrity. These standards form the centerpiece and framework under which we conduct our business. The company’s Standards of Integrity brochure contains the Code of Ethics and is the guiding document of TECO Energy’s Corporate Compliance and Ethics Program. The program incorporates administrative policies; departmental and companywide procedures adopted for business reasons or in response to legal responsibilities; auditing and monitoring activities on a routine or scheduled basis; and ethics and subject matter training to educate team members in their responsibilities. The document is available at tecoenergy.com/compliance/commitment. Our compliance plan is structured to address the legal and regulatory risks relevant to our businesses while incorporating our annual enterprisewide risk assessment, which also includes operational risks in our businesses. A multidisciplinary Corporate Compliance Oversight Committee meets at least semiannually to discuss compliance-related topics, as applied throughout TECO Energy. TECO Energy’s Corporate Compliance Officer has the overall responsibility for administering the Corporate Compliance and Ethics program. The officer reports to the Audit Committee of the company’s Board of Directors, and makes at least one report each quarter to that committee on the status of the program. The Corporate Compliance Officer is available for assistance to team members at any time and receives periodic reports from the company’s departments and subsidiaries on their compliance efforts.

Each year, the Corporate Compliance and Ethics Department sends a business conduct questionnaire to all management-level team members, and includes questions concerning awareness of possible conflicts of interest by team members or their co-workers. TECO Energy holds its suppliers and contractors to these standards as well. An annual letter is sent to them reminding them of the company’s policy concerning gifts and gratuities to team members. Training Programs

Standards of Integrity refresher training is conducted for all Board members and team members throughout the corporation and all operating companies at least every two years. The training is continually updated as appropriate. Each recipient provides written acknowledgment of the completion of the training. New team members receive the Standards of Integrity brochure and agree to abide by the standards when they are hired as a condition of employment. A curriculum of training programs consistent with the Standards of Integrity philosophy has been implemented. Legal training programs are delivered on an ongoing basis. Compliance and ethics training has been included as part of the company’s standard management training curriculum. Standards of Integrity and other training have been supplemented by core values training and awareness programs. Team members and teams are recognized for demonstrating behavior consistent with the core values in the company’s monthly internal publication, Insight, and through a recognition program established in early 2007.


Our Culture OUR PURPOSE A commitment to inspiring trust, achieving excellence, providing environmental leadership and rising to any challenge we face, which will benefit our customers, team members and shareholders, and the communities we serve.

OUR VISION A company where people want to work, an organization that is an asset to the community and a business in which investors want to invest.

The company also maintains a bibliography of materials, information and publications on compliance methods, industry standards and subject matter material. Reporting Mechanisms

TECO Energy has established several reporting systems to allow team members, officers, directors, stakeholders and customers to make ethics and compliance inquiries or reports, remaining anonymous if desired. They include the following: 1) Hot Line. A Hot Line has been established in the Corporate Compliance and Ethics Department, allowing all team members in every subsidiary to make inquiries on ethical or other matters and to report violations. This Hot Line is also available to customers, shareholders and the general public. Callers have the option to remain anonymous when making reports, and all questions and incident reports receive prompt and confidential attention. The number is posted on the TECO Energy Web site, and is divided into six subject areas: environmental and reporting issues; improper use of company equipment and/or information; safety and alcohol and drug usage issues; procurement issues; human resources issues; and other issues. 2) Online Reporting. An online reporting mechanism is also available for inquiries and reports. The Corporate Compliance and Ethics Web site can be accessed either through the company intranet available to all team members or through the Internet by accessing the TECO Energy Web site. The on-line system uses the same six subject areas as the Hot Line, as well as categories for audit and accounting issues; regulatory standards of conduct issues; and environmental and permitting issues.

O U R VA L U E S Safety • We

emphasize a safe work environment and a culture of looking out for the safety and well-being of each other, our customers and our community.

• We

believe the safety of life outweighs all other considerations.

Integrity • We hold ourselves to the highest ethical behavior in all of our business activities,

including legal, regulatory, financial, operational and environmental matters. • We

honor our commitments.

Respect for Others • We value differences, development, teamwork, open communications and

continuous learning. •

We treat all stakeholders, customers, team members, business partners and investors fairly.

• We communicate openly and in a timely way with all stakeholders.

Achievement With a Sense of Urgency •

We work, as a team, with speed, sound judgment and diligence toward common goals.

We support the business strategy and accept ownership and personal responsibility for our actions.

Customer Service •

We realize customers are why our organization exists.

We treat them fairly and provide high-quality services.

All team members are encouraged to discuss concerns or violations with their immediate supervisors, to their respective vice presidents or to the Corporate Compliance Officer without fear of retribution through a problem resolution process. The process is available for reporting problems or asking questions on work-related issues. In addition, TECO Energy has an opendoor procedure for all team members to receive a fair and impartial hearing regarding treatment in accordance with established corporate policy.

This policy does not replace any collective bargaining grievance process, but is offered as an alternative method to all team members to solve work-related problems. All information or a message received through any of the reporting mechanisms is held in strictest confidence. The company has no legal actions against it for anti-competitive behavior, anti-trust or monopoly practices and no significant fines for non-compliance with laws and regulations.

OUR BUSINESSES

15


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR BUSINESSES

TECO Energy rang the closing bell at the New York Stock Exchange on April 11, 2006.

Governance We are governed by a Board of Directors elected by the shareholders to oversee the management and operation of the business. The members of TECO Energy’s Board are: Sherrill W. Hudson, Chairman of the Board and Chief Executive Officer, TECO Energy, Inc.; former Managing Partner for South Florida, Deloitte & Touche, LLP, Miami, Florida DuBose Ausley, Attorney and former Chairman, Ausley & McMullen, P.A. Sara L. Baldwin, Private investor (retired May 2, 2007) James L. Ferman, Jr., President, Ferman Motor Car Company, Inc. Luis Guinot, Jr., Attorney and former partner, Shapiro, Sher, Guinot & Sandler, P.A. Joseph P. Lacher, former Chairman, Great Florida Bank, and former President of Florida Operations for BellSouth Telecommunications Loretta A. Penn, Vice President, Spherion Corp. Tom Rankin, independent investment manager; former CEO of Lykes Energy, Inc. William D. Rockford, former President, Primary Energy Ventures, LLC, former Managing Director, Chase Securities, Inc. William P. Sovey, former Chairman of the Board and former CEO, Newell Rubbermaid, Inc. J. Thomas Touchton, President, The Witt-Touchton Company, LLC Paul Whiting, President, Seabreeze Holdings, Inc.; Chairman of the Board, Sykes Enterprises, Inc.

The Board selects senior management, provides guidance and advice to management and ultimately monitors management’s performance. More specifically, the Board, among other things, reviews with management and approves business and financial strategies and other major corporate actions. The Board assesses the major risks facing our business and monitors the management of those risks.

16

The Board has adopted Corporate Governance Guidelines, which require that the Board be comprised of a majority of directors who qualify as independent directors under the listing standards of the New York Stock Exchange and applicable law.


Currently, ten of our 12 directors are independent, as defined by those standards. Only one of these directors is a member of management, Chairman of the Board and CEO Sherrill W. Hudson. The Board has no mandatory policy with respect to separation of the offices of Chairman and the Chief Executive Officer. The Board believes that this is part of the succession planning process and is best addressed by the Board when electing a new Chief Executive Officer.

including the diversity, age, skills and experience of the Board of Directors as a whole. In February 2007, TECO Energy was recognized by the Women Executive Leadership group as a Florida company with more than one female on its board of directors. Board Operations

The Audit Committee assists the Board of Directors in overseeing the Company’s policies and procedures for risk assessment and risk management, including an enterprisewide risk Committees of the Board assessment conducted on an annual basis. The Board has standing Audit, Compensa- The Audit Committee also reviews transactions tion, Finance, and Governance and Nominating with related persons for potential conflicts Committees. The Audit, Compensation and of interest, and receives regular reports on Governance and Nominating Committees are environmental matters. comprised exclusively of independent directors The Finance Committee has responsibility as defined by the listing standards of the New for assisting the Board in formulating strategic York Stock Exchange. financial policies and evaluating significant The full Board receives information regarding social issues, such as the company’s contributions to charitable organizations, and issues affecting its employees and the community. Board Diversity and Qualifications

The Governance and Nominating Committee assists the Board with respect to corporate governance matters, including the composition and functioning of the Board. The Governance and Nominating Committee’s process for evaluating nominees for director, including nominees recommended by shareholders, is to consider an individual’s character and professional ethics, judgment, business and financial experience, expertise and acumen, familiarity with issues affecting business, and other relevant criteria,

investments and other financial commitments. The Board and its committees undergo a self-evaluation process on an annual basis in order to assess and discuss its processes and performance. Communication with the Board and Shareholder Proposals

The Board provides a process by which shareholders and interested parties may communicate with its members, described in the Corporate Governance section of the Investors page of our Web site, tecoenergy.com. Any shareholder or interested party wishing to contact our Board, or any of the non-management directors separately, may do so by U.S. mail or e-mail through the Corporate Governance section of the Investors page on our Web site.

In order for shareholder proposals to be considered for inclusion in our proxy materials relating to the annual meeting of shareholders, they must be submitted in accordance with applicable Securities and Exchange Commission rules. These proposals must be received in order for inclusion in the proxy materials on a schedule set forth every year in our proxy statement. Additional information regarding shareholder communications is contained in the proxy statement. Compensation

TECO Energy’s Board links the compensation of management with its performance by paying incentives based on achievement of corporate and individual performance goals and by tying a meaningful percentage of executive compensation to equity-based compensation, which serves to align management’s interests with our shareholders’. Non-financial goals measure items such as compliance, safety and leadership, both within the company and the community. A portion of our directors’ compensation is tied to our long-term success through the use of annual restricted stock grants. Legislative and Regulatory Activities: Federal

OUR BUSINESSES

17


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR BUSINESSES

Governance continued TECO Energy has offices in Washington, D.C., to represent the company’s interests at the congressional and federal executive branch levels. The office is located at 1301 Pennsylvania Avenue, Suite 1030, Washington, DC. The Federal Affairs group identifies and analyzes federal legislative and administrative policy initiatives that impact the company, its subsidiaries and its customers. Working with the company, the team develops communications with federal and executive decision-makers. Primary areas of activity include energy, environment, taxes and human resources, as well as maritime and agriculture issues related to TECO Transport and mine safety and general mining issues related to TECO Coal. TECO Energy’s federal presence also includes the use of outside consulting firms that assist in representing the company. Legislative and Regulatory Activities: State and Local

18

TECO also maintains a governmental affairs office in Tallahassee, Fla., to represent customer and company interests in the state legislative and executive branches, including the Florida Public Service Commission. The company monitors public policy issues that could affect the quality or cost of service to Tampa Electric and Peoples Gas customers. Examples include basic economic regulatory policies; fuel and technology options; alternative and renewable energy sources; environmental policies and regulations; and state tax policy. At times, the company provides written analysis and recommendations to the legislature and executive branch agencies. TECO Energy’s Tallahassee office is located at 106 E. College Avenue in Tallahassee. TECO Energy’s Tallahassee presence also includes the use of outside consulting firms that assist in representing the company. The company also maintains a staff of community relations professionals throughout

Florida. These individuals work with local governments and neighborhood associations. TECO Energy’s Political Action Committees

TECO Energy has two administrative and management employee-driven political action committees: TEPAC Federal and TEPAC Florida. The bylaws for both provide for a Board of Directors comprised of no more than 15 members. Board members are elected by the membership (all contributors to the political action committee) and serve three-year terms. The Board is led by an executive committee comprised of a president, vice president, treasurer, deputy treasurer and secretary. The executive committee is elected by the Board of Directors. There are currently 14 members on the Board. TEPAC Federal received $97,268 in 2006, all contributed by TECO Energy team members. In 2006, TEPAC Federal contributed $102,500 to federal candidates and other political committees. TEPAC Florida received $14,473 in 2006.


OUR RESPONSIBILITY TO CUSTOMERS For TECO Energy and its subsidiaries, sustaining the future means meeting customer needs for the long term, whether through electricity and gas or mining and transporting the fuel that helps create energy.

At the core of TECO Energy’s responsibility to its customers is reliability. Generation must be available to serve the energy needs of business and residential customers. Fuel must be available to use with minimum impact to the environment. Communication – both ways – is also a key ingredient of responsibility to customers, especially when it helps us help customers. We communicate about how customers can save money by being energy-efficient. We communicate about using electricity and natural gas safely, and about hurricane preparedness. We continually strive for better customer service, with improved technology and highly trained people. We routinely survey residential and commercial customers to determine how we are performing in our service areas.

RELIABILITY Service reliability means customers can count on TECO Energy. This is most keenly evident in the operations of Tampa Electric and Peoples Gas.

Within Tampa Electric, generation is planned 10 years in advance so that it will be available to serve the energy needs of business and residential customers. Power plants and transmission and distribution lines must be in place when energy demand increases. Fuel must be available to provide generation with minimum impact to the environment. Tampa Electric serves its retail customers’ energy needs through a portfolio of generation and wholesale purchases. With the completion of the H.L. Culbreath Bayside Power Station in 2004, Tampa Electric’s fuel mix has been a balanced blend of coal and natural gas. Within Peoples Gas, fuel supply sources are provided from multiple interconnections on various interstate pipelines. The distribution pipelines are underground, and service is virtually 100 percent reliable, even during hurricanes. The company constantly monitors the availability of natural gas and distribution integrity.

Downtown Tampa, Florida, corporate headquarters for TECO Energy, Inc.

OUR RESPONSIBILITY TO CUSTOMERS

19


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO CUSTOMERS

Fuel Impact on Customer Bills

Coal Strategies

All fuel comes with some degree of price volatility, and in recent years, natural gas and oil prices have been substantially more volatile than coal. Fuel prices in general have increased since 2003, and projected fuel prices for 2007 are expected to remain high due to the demand on natural resources. The global economy and increasing industrialization of countries like China have affected the global balance of fuel.

Tampa Electric’s two coal-fired plants have varying operational and environmental restrictions. They require fuel with certain quality characteristics, such as sulfur content, Btu/lb, ash, fusion temperature and chlorine content. (Additional information on the company’s coal-fired power plants, voluntary emission reductions and use of scrubbers and clean coal technology is detailed in the Environmental section of this report.)

TECO Energy companies manage fuel price volatility through a blend of long- and short-term supply contracts and risk management activities. So a diverse generation portfolio, coupled with active and sound risk management strategies, enhances reliability and provides for relatively stable pricing.

More stable coal prices directly benefit customers by displacing more volatile higher cost fuels. Tampa Electric keeps a portfolio of appropriate coal suppliers and monitors the market to obtain favorable prices. This allows for stable supply sources, while providing the flexibility to take advantage of spot market opportunities.

Tampa Electric’s actual fuel costs, without markup, are reflected throughout the year in fuel adjustment charges, which customers see on their electric bills following approval by the Florida Public Service Commission (FPSC). The rate for the natural gas commodity is set by Peoples Gas and approved by the FPSC on a monthly basis, based on the actual cost of gas. Peoples Gas purchases natural gas and delivers it directly to residential customers. Like Tampa Electric, Peoples Gas passes the price paid for the natural gas commodity directly on to the customer with no markup. Peoples Gas’ unbundling programs allow all non-residential customers to select their natural gas commodity supplier, while the company maintains delivery responsibility and does so in a safe and reliable manner.

20

Still, coal prices reflect the mining-related costs of petroleum products, steel, and lumber in production processes. Coal prices increase when prices for these commodities increase. Advance contracts are necessary to ensure reliability. Tampa Electric has contracted for nearly two-thirds of its expected coal needs for both 2007 and 2008 delivery. Natural Gas Strategies

In acquiring natural gas, Tampa Electric’s and Peoples Gas’ strategies balance the need for reduced price volatility and reasonable cost with the inherent uncertainty of natural gas volumes. The company feels that natural gas should continue to be a part of Florida’s energy mix, but strongly supports increased fuel

diversity for power generation because Florida is significantly more dependent on natural gas than the nation as a whole. A challenge for the future: Natural gas has experienced a great increase in price over the last several years. Market drivers include increased demand from natural gas-fired generation, declining natural gas production in North America, delayed liquefied natural gas projects, concerns about the adequacy of natural gas in storage and concerns about production losses due to tropical storms. Both Tampa Electric and Peoples Gas use a portfolio approach to acquiring natural gas commodity and pipeline transportation. The commodity contracts have various term lengths and are based on monthly and daily price indexes.


Tampa Electric’s Customer Favorability Scores TWO-WAY COMMUNICATION WITH CUSTOMERS

Transportation of Natural Gas

Peoples Gas and Tampa Electric also have diversified natural gas transportation arrangements. Peoples Gas has long-term transportation agreements with Florida Gas Transmission, Southern Natural Gas and Gulfstream Natural Gas. Tampa Electric has long- and short-term agreements for its Bayside plant with Florida Gas Transmission and Gulfstream Natural Gas. Peoples Gas transportation agreements provide access to diverse supply resources from the Gulf Coast Onshore, Gulf of Mexico, Mid-continent and Eastern Interior supply basins. Peoples Gas and Tampa Electric have also entered into contracts for over 40 percent of their expected natural gas needs for the winter of 2007 through 2008. Other reliability-driven efforts have included Tampa Electric’s storage capacity agreement with Bay Gas Storage near Mobile, Ala. Various supply infrastructure projects are underway that should relieve concerns about the natural gas supply adequacy. These projects include (1) the eastern Gulf of Mexico and the Outer Continental Shelf, estimated to contain 300 trillion cubic feet of gas (a longer-term proposition); (2) two proposed pipeline expansions, the Southeast Supply Header and the Gulf South Pipeline, will bring over 1 billion cubic feet per day from the Fort Worth Basin and other sources into Florida by mid-2008; (3) the Cypress Pipeline will come on line in 2007, bringing significant quantities of natural gas into Florida from the Elba Island Terminal in Georgia; (4) at least four gas storage facilities are in various stages of development or expansion and will be able to satisfy shifts in demand; and (5) six new liquified natural gas (LNG)

2001 2002 2003 2004

– – – –

96 percent 96 percent 95 percent 96 percent

2005 – 96 percent 2006 – 95 percent First Quarter 2007 – 98 percent

terminals will be connected to pipelines by 2009, providing Florida with up to seven billion cubic feet per day of LNG. For more than 40 years, Tampa Electric has maintained a reliable supply of coal for its customers through a transportation contract with TECO Transport. Because this business was originally formed to serve the utility, it is uniquely positioned to do so in a reliable and cost-effective way. Service Reliability

With the impacts of the 2004 and 2005 hurricane seasons, maintaining ongoing natural gas supplies became visible, frustrating and critical. Nationally-recognized meteorologists are predicting a 15 to 20 year increase in hurricane and tropical storm activity. This is a significant challenge for all Florida utilities. In 2005, excluding hurricanes, Tampa Electric’s system averaged about one interruption per customer, the lowest among Florida’s five investor-owned utilities. Though it has the lowest number of system interruptions, it has taken longer to restore power when interruptions do occur. The company’s average time to restore service to customers has increased since 2001. Tampa Electric has addressed this with a 15 percent staffing increase in its Trouble Department in 2006 and with increased vegetation management and substation maintenance. As a result of the 2004 and 2005 hurricane seasons, the FPSC initiated a proceeding to explore methods of designing and building transmission and distribution systems that would minimize long-term outages and restoration costs. Working with the FPSC,

OUR RESPONSIBILITY TO CUSTOMERS

21


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO CUSTOMERS

Tampa Electric has implemented a 10-point storm preparedness plan that addresses vegetation management, pole inspections, including inspections of pole attachments, collaboration with local governmental agencies and additional research. Tampa Electric has put together a comprehensive plan to meet the state’s requirements on design standards for new and replacement transmission and distribution line construction to make structures stronger to withstand extreme wind loading standards.

Customer service is one of TECO Energy’s five core values.

Peoples Gas’ distribution system is underground and provided virtually uninterrupted service to its 330,000 customers during the hurricanes of 2004 and 2005. Wood Pole Inspections

Tampa Electric has a wood pole groundline inspection program to help protect the system in severe weather. The company has about 20,000 wooden transmission poles and 287,000 wooden distribution poles. About 12.5 percent of the system will be targeted for inspections annually. The company will also conduct quality control checks of both team member- and contractor-performed work. Because of system hardening commitments and the continual need for and increasing cost of maintenance, certain wood poles will be replaced by steel and concrete structures.

CUSTOMER COMMUNICATIONS Tampa Electric and Peoples Gas value twoway communication with customers. Both have visible communications with customers through bill inserts, a Web site and advertising.

22

Through a third-party research firm, Tampa Electric conducts quarterly favorability surveys with its customers. In 2006, Tampa Electric’s customer favorability rating was 95 percent. In 2006, Tampa Electric scored 705 points out of a possible 1,000 in the J.D. Power survey for customer service. Tampa Electric communicates with residential, commercial and industrial customers periodically about bill information and other company information, including sources of generation. Although Tampa Electric has not had a base rate increase since 1992, overall rates change annually to adjust for fuel, purchased power and environmental and conservation costs that are permitted by the FPSC. Customers are always given at least a 30-day advanced notice of any price changes. In addition, Tampa Electric conducts a new construction survey with an average of 25 to 50 customers each week. The company began the survey in July 2005, with 92 percent satisfaction with regard to job completion, quality and timeliness. Tampa Electric tests customer satisfaction on its Zap Cap Systems® meter-based surge protection product each quarter. Of the new units sold in 2005, 96 percent of the respondents were either satisfied or very satisfied with the ordering process, and 87 percent reported their unit was installed by the scheduled date. Tampa Electric also conducts focus panels before beginning construction of a project with possible immediate community impact. The company schedules and invites customers living in the area to discuss issues. Paid advertising is placed in local newspapers about the events.


Since 2004, 14 open houses have been held in the service area to discuss matters ranging from the selective catalytic reduction (SCR) equipment at the Big Bend Power Station to transmission lines and new substations. Tampa Electric also has a Web page (tampaelectric.com/infrastructure) that lists and provides information about various infrastructure projects. From 2002-2006, Peoples Gas tracked customer satisfaction with postage-paid postcards left behind by field service technicians. In each of the five years, customer postcards reported 99 percent favorability ratings. In 2006, Peoples Gas conducted two customer satisfaction surveys of 5,000 of its randomly chosen customers. These surveys reflected a 98 percent level of satisfaction with the work of Peoples Gas field service technicians, a 95 percent rating for its call center and an overall rating of 96 percent customer satisfaction. Peoples Gas conducts a water heater program customer satisfaction survey, and a new customer satisfaction survey. The surveys include follow-up phone interviews. Peoples Gas also surveys customers to assist in making decisions that will affect them. In 2005, the company surveyed 9,800 customers regarding its hours of operation. Response Time to Customers

Tampa Electric has worked diligently to reduce its response time in its call center. In 2006, the average wait time for customers was one minute 39 seconds, compared to three minutes 51 seconds in 2004. The company significantly improved the number of lines available to customers to reduce busy signals. In 2004, almost 43 percent of callers received busy signals initially. In 2006, the percentage was a mere 0.47 percent.

Formal Communications

In addition to a quarterly survey and focus panels, Tampa Electric produces a monthly newsletter inserted with the electric bill to its customers. Message topics include basic customer services, such as surge protection technology, bill payment options and energy conservation/savings, as well as electrical safety information and hurricane preparedness. The newsletter is also available online for the 127,303 customers who use the company’s e-Bill feature.

Tampa Electric Call Center Performance MEASUREMENT Percentage of customers who received busy signals

2004

2005

2006

42.65%

16.58%

0.47%

3.51

4.41

1.39

72%*

75%*

85%

Average wait time (in minutes)

Percentage of calls answered in: 30 seconds or less *60 seconds or less

Tampa Electric also posts customer service messages on the envelopes of customers who receive their bills by mail. A quarterly electronic newsletter for large commercial and industrial customers and builders is also produced. Information focuses on ways these customers can use Tampa Electric’s online service and payment options.

OUR RESPONSIBILITY TO CUSTOMERS

23


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO CUSTOMERS

Tampa Electric places paid advertisements that (1) support its conservation programs, particularly during high-energy use weather in the summer and winter; (2) communicate fuel costs that will have impact on customers; and (3) respond to situations such as Hurricane Katrina, which indirectly affected Tampa Electric due to damage to energy production facilities in the Gulf of Mexico. The company advertises in local publications twice each year to encourage customers to report malfunctioning street lights online or by calling its Customer Service Department. During the summer months, the company advertises to encourage customers to purchase surge protection equipment to help protect appliances and electronics from harmful highvoltage surges caused by lightning.

Tampa Electric has a variety of programs to assist special needs customers.

Tampa Electric also has promotional agreements with a number of organizations it sponsors throughout the community and places advertisements in program guides and event bulletins highlighting the company’s support for economic development. Peoples Gas uses its bill insert newsletter throughout the year to communicate with customers on safety, energy conservation and the lifestyle benefits associated with the use of natural gas. Peoples Gas uses statewide newspaper advertising to educate the public regarding the appropriate response to gas leaks and to remind citizens to call before they dig. Peoples Gas also participates in the statewide “Get Gas Florida” campaign – a cooperative effort among the state’s natural gas utilities. The campaign uses radio, television, billboard and print advertising to promote energy conservation. TECO Energy also has a media relations specialist who proactively provides information regarding company issues for both Tampa

24

Electric and Peoples Gas, and provides regular contact with reporters during weather emergencies or for outage information. Customer Service

In 2006, Tampa Electric spent over $350,000 to improve customer service. Enhancements included additional staff in the call center and new systems. The High-Volume Call Answering system allows the company to handle as many as 30,000 calls at a single time through its interactive voice response system. This is particularly useful during a storm, and virtually eliminates “busy” signals. The system also enables the company to provide an estimated time of restoration during larger outages. This is something the company improved on significantly following lessons learned during the 2004 hurricane season. The company has also expanded its outbound dialer system, which notifies customers of important information, such as when their power is expected to be restored after storms or to remind them of a late bill that needs to be paid. Peoples Gas invested $215,000 in special software to enhance customer service. Witness Quality Monitoring was added. It records customer calls and allows management to use these recordings to analyze team member behavior during the call, and then use the analysis as a coaching tool. The company also purchased Workforce Management Software, which allows customer service management to anticipate call volumes and do a more effective job in scheduling call center team members. Conservation Programs

Both Tampa Electric and Peoples Gas offer energy conservation programs to their customers as a way to increase energy


efficiency, conserve resources and reduce and control the growth rate of energy consumption. Tampa Electric’s roster of conservation programs helps customers use energy wisely. For residential customers, programs include energy audits; a ceiling insulation program; duct repair services; heating and cooling rebates; load management; and an Energy Plus home program aimed at residential builders. Commercial/Industrial programs include industrial energy audits; indoor lighting programs; commercial load management; standby generation; conservation value; commercial cooling; and cogeneration. Customer participation in these programs, through the end of 2006 reflects 365,745 residential, commercial and industrial customers who have participated in on-site, online and mail-in energy audits; 160,775 residential customers who have received heating and cooling rebates; and 79,376 who have used ceiling insulation incentives. Additional participation levels for other programs are available in Tampa Electric’s 2005 environmental report (tecoenergy.com/enviroreport). Tampa Electric also offers its customers participation in renewable energy programs. (This is covered in the Environmental section of this publication.) Within the past five years, over 82,000 customers have participated in the Peoples Gas energy conservation programs, primarily through rebates. Peoples Gas programs offer incentives to customers to help reduce the cost of piping and venting and assist customers in paying less when purchasing new appliances. Residential customers also participate in the New Residential Construction program, and the Appliance Retention program, which offers incentives for natural gas water heating, home heating, cooking and clothes drying.

Special Needs Customers

Tampa Electric offers a number of services to customers with special needs. - Medical Watch. The Medical Watch program provides special notification procedures for customers dependent on electric service for health-related needs. Customers who notify Tampa Electric of a health-related need receive special notification when disconnection of electric service is required for nonpayment of an electric bill or planned service interruptions must occur for powerline equipment maintenance. - Neighborhood Radio Watch. Speciallytrained Tampa Electric team members are equipped with two-way radio vehicles to alert local law enforcement agencies of crimes, fires, accidents and other emergencies or potential neighborhood problems. - SHARE. Tampa Electric customers may make a voluntary, tax-deductible contribution to help low-income seniors or the medically-disabled pay energy-related bills. The company sends the collected donations to the Salvation Army, which administers the program. - TTY for Hearing-Impaired. Tampa Electric’s Customer Care Department is equipped with a TTY device, which is special text telephone equipment for customers with hearing and/or speech disabilities. - Weather Care. Low-income senior citizens who have homes in need of energy-related improvements may qualify for the company’s Weather Care program. The program is available to senior citizens on fixed incomes who own their homes within Tampa Electric’s service area and do not have the resources to weatherize their homes. The program is a joint service with the local not-for-profit agency The Centre for Women. OUR RESPONSIBILITY TO CUSTOMERS

25


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO CUSTOMERS

TECO Coal

At TECO Coal, customer service centers around quality and feedback. TECO Coal established a quality management system in 1996 and was registered under the ISO-9000 International Quality System Standard in 1998. The ultimate goal of the system is to help ensure that products meet or exceed customer requirements and to enhance customer satisfaction. TECO Coal customers have various channels of communications available through sales representatives and select operations personnel. These team members can provide timely handling of customer inquiries, feedback and complaints, as well as quick exchange of product information. Customer complaints, if any, are immediately addressed through a documented correction process. There were no complaints during 2006. The company also uses key performance indicators (KPIs) for product and process performance. These KPIs are analyzed monthly to help improve products, processes, services and customer satisfaction. An outside consultant conducts a formal customer survey annually with TECO Coal customers. Should any customer report a rating below normal the item is addressed by developing and implementing a customer

26

satisfaction action plan. This helps provide additional input as well as current perception about the value and performance of the company’s products. Data collected from on-site visits is also included in an annual customer survey. TECO Transport

TECO Transport serves over 150 customers, mostly domestic grain supply houses and dry bulk commodity shippers requiring transportation and storage services. During 2006, TECO Ocean Shipping achieved the maximum 30-day limitations for domestic transportation (a federal requirement) by maximizing the number of oceangoing vessels to improve traffic. TECO Barge Line added 100 more barges in the past year to greatly enhance service levels and capabilities. Privacy

All TECO Energy companies take care, consistent with law and best practices, to safeguard the personal information of their customers and to make certain that such information is used only for legitimate business purposes for which it was collected. The company performs a regular review of its information practices, the security measures that are taken and the information security measures of its third-party contractors.


OUR RESPONSIBILITY TO TEAM MEMBERS For TECO Energy and its subsidiaries, sustaining the future means meeting customer needs for the long term, whether through electricity and gas or mining and transporting the fuel that drives energy delivery. A remarkable team of people works hard everyday to make it happen. A corporation may be known for its industry ranking or its symbol on the New York Stock Exchange or its place on any number of lists of superlatives. Yet, what makes it work is not a trophy case of awards. It’s the people who are its lifeblood, who embody its values and forge success with their energy, ideas and dedication. At TECO Energy, employees are known as team members, underlining the concepts of interdependence, strength and common focus.

Team Member Demographics

TECO Energy had a total of 5,092 team members as of 2006 year-end. By gender, 970 are female, and 4,122 are male. The company has 1,545 exempt team members, 2,326 non-exempt, non-union and 1,221 who belong to unions. The 2006 year-end team member count per company with turnover rate is shown in the table below.

TECO Energy Team Member Count - 2006 BY COMPANY

ACTIVE COUNT

TECO ENERGY

107

TAMPA ELECTRIC

PEOPLES GAS (Includes TECO Partners)

TECO TRANSPORT (Includes TECO Bulk Terminal, TECO Ocean Shipping, TECO Barge Line, TECO Marine Services)

TECO COAL

TECO GUATEMALA (Corporate and Power Stations)

TOTAL

TURNOVER COUNT

TURNOVER RATE

9

8%

2,411

136

6%

619

58

9%

814

225

28%

1,018

153

15%

123

2

2%

5,092

584

11%

OUR RESPONSIBILITY TO TEAM MEMBERS

27


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO TEAM MEMBERS

Compensation

Additional Compensation

Compensation for both exempt and nonexempt team members of TECO Energy is market-based. Each position has a job market value consistent with compensation for similar positions in the field and the geographic location. TECO Energy’s range of ratios of standard entry-level wages compared to the local minimum wage is from 121.4 percent to 135 percent, depending upon the position and locale.

TECO Energy offers base salary and incentive programs. A broad based incentive program, called Success Sharing/RSVP, gives non-exempt and exempt team members the opportunity to share in the company's success. This plan has a target payout of five percent, with the possibility to earn up to 12 percent of annual earnings or job market value, whichever is greater. TECO Coal’s team members do not participate in Success Sharing, but are covered by a similar program. A separate program focuses on the performance of senior managers of the company, while an executive compensation program provides an incentive payout for officers when certain quantitative and qualitative goals are met. Additional long-term incentive programs, including stockbased plans, are used as attraction and retention tools for senior management. Both short-term and long-term incentives for TECO Energy Board members, senior managers and executives are tied to the corporation’s performance against utility peer groups.

TECO Energy Team Member Count - 2006 BY GENDER FEMALE MALE

BY EMPLOYEE TYPE

28

ACTIVE COUNT

TURNOVER COUNT

TURNOVER RATE

970

100

10%

4,122

485

12%

ACTIVE COUNT

TURNOVER COUNT

TURNOVER RATE

EXEMPT

1,545

97

6%

NON-EXEMPT/ NON-COVERED

2,326

407

17%

UNION

1,221

81

7%

Retirement Pension Plan and Retirement Savings Plan

Substantially all U.S.-based TECO Energy team members are eligible for the company’s two retirement plans. TECO Energy sponsors a defined benefit retirement plan funded 100 percent for substantially all employees of the corporation. Team members become eligible for the plan after reaching age 21 with at least one year of service.


All of the company’s defined benefit plan obligations are fully disclosed in its 2006 Annual Report in Note 5 to the Consolidated Financial Statements. The Annual Report is available at tecoenergy.com. Another plan, called the Retirement Savings Plan, is a 401(k) product. This plan allows team members to contribute from one to 50 percent of their compensation on a before- or after-tax basis. TECO Energy matches team member contributions in two ways: with the fixed match – matching a portion of the first six percent that team members contribute each pay period – and with the performance match – adding an annual performance match (based on the achievement of certain operating company financial goals). Together, these components total up to the first six percent that team members save. Separately, TECO Guatemala has a voluntary savings plan. Team members can save up to 10 percent of their salary, and the company matches up to 50 percent of what the team member saves.

supported financially at the same level. However, if a team member elects a more expensive plan, it’s available to him or her at a group rate but at a higher cost. TECO Guatemala offers medical, dental and life insurance at no cost to employees. TECO Coal offers its team members a separate medical program with equivalent or better benefits to TECO Energy’s program. The company also offers basic and optional additional life insurance, short- and long-term disability coverage, dependent care and transportation, flexible spending accounts, and paid vacation and sick days for most companies. In addition, the company offers:

Health Care/Wellness Programs

TECO Energy and its subsidiaries offer eligible team members a health care program that covers medical, disease management, pharmacy and dental coverages. The company pays 95 percent of the premium for a PPO plan for team members, 85 percent for spouse, and 90 percent for children. The company offers two other plans, a PPO Plus and an HMO, requiring a higher team member contribution, as part of the company’s shared responsibility strategy. The PPO plan is the company-preferred plan, but all plans are

An Employee Assistance Program (EAP);

A 24-hour, 7-day-a-week toll-free number staffed by registered nurses, which most team members can call for advice on non-emergency health issues;

12 fitness centers at Florida locations for a nominal monthly fee per participating team member;

No-cost flu shots to team members and retirees each fall; Annual health screenings and health fairs;

Wellness Works, a monthly newsletter provided to team members covering topics such as cholesterol, breast cancer awareness, stress reduction and more. All of the above benefits are available to full-time team members and part-time team members who work 20-31 hours a week. Temporary employees do not qualify for benefits.

TECO Energy’s team member benefits include the use of fitness centers at many locations.

OUR RESPONSIBILITY TO TEAM MEMBERS

29


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO TEAM MEMBERS

Labor Relations

There are no operations identified within TECO Energy in which collective bargaining may be at significant risk. There are four unions to which some TECO Energy team members belong. The International Brotherhood of Electrical Workers (IBEW), Local 108 (Tampa Electric) and Local 2072 (Peoples Gas). About 36 percent of Tampa Electric team members and five percent of Peoples Gas team members belong to the IBEW.

Office and Professional Employees International Union (OPEIU), Local 46. About 12 percent of Tampa Electric team members belong to the OPEIU. •

Tampa Electric team members install pollution control equipment at Big Bend Power Station.

International Association of Machinists and Aerospace Workers (IAMAW). About four percent of Peoples Gas team members belong to the IAMAW.

International Chemical Workers Union Council (ICWUC) of the United Food and Commercial Workers Union. About seven percent of Peoples Gas team members belong to the ICWUC.

Tampa Electric’s IBEW contract was renewed for three years in April 2007. The OPEIU contract expires Jan. 1, 2008. Both contracts include automatic extensions for one year. Contract negotiations are scheduled in 2007 with the IAMAW and the ICWUC. A successful wage re-opener with the IBEW Local 2072 for 2007 was conducted, with the associated increase effective in February. Neither TECO Coal, TECO Transport nor TECO Guatemala team members are represented by any labor organization. Safety

Safety of life outweighs all other concerns at TECO Energy. TECO Energy takes regulatory compliance very seriously and in a proactive and voluntary manner. Our policies frequently exceed the requirements set by governing agencies because of the concern we have for our team members. Due to the unique nature of the company’s industries, we have the knowledge to develop safety programs that reflect our experience and observation of specific hazards. Although industry comparisons are not easily made due to the diverse nature of TECO Energy and work force sizes of other utilities, the OSHA recordable incidence rate for the last five years is given on the facing page. In 2005, Peoples Gas had a 3.44 OSHA incidence rate, which was the second lowest among eight similar gas operations throughout the United States (the lowest rate was 3.24 and the highest was 9.34).

30


TECO Energy Safety Performance History COMPANY

2002

2003

2004

2005

2006

RI

IR

RI

IR

RI

IR

RI

IR

RI

IR

TAMPA ELECTRIC

116

2.89

131

4.98

83

3.26

96

3.91

58

2.1

TECO TRANSPORT

57

2.94

52

2.72

43

2.59

45

2.75

24

1.51

PEOPLES GAS

15

2.44

26

2.13

18

2.58

19

3.44

13

2.27

RI = Recordable Incidence (number of recordable events) IR = Incidence Rate (number of OSHA recordable events normalized for the number of employees and the number of man-hours worked.)

TECO Coal’s safety regulations are governed by the Federal Coal Mine Safety and Health Act of 1969 (MSHA), rather than OSHA, and by the new Miner Act of 2006. TECO Coal has experienced an improvement in reportable accident rates of 31.8 percent across the past five years versus an improvement of 25.6 percent in reportable accident rates on the national level.

TECO Coal has limited the impact of violations by working diligently to correct conditions as quickly as possible.

TECO Coal believes it is in substantial compliance with the standards of the various enforcement agencies. The company is unaware of any mining laws or regulations that would materially affect the market price of coal sold by its subsidiaries.

Since 2002, TECO Coal subsidiaries have received 15 safety awards, including Premier Elkhorn’s award for the Safest Mine in both Kentucky’s Hazard and Pikeville districts. This award is given annually to the safest surface mine in each district. The company has won numerous awards for performance, including the Emergency Medical Technician National Championship Award.

Payment of penalties for health and safety violations of federal regulations across the previous five-year period were slightly over $98,000 per year.

TECO Guatemala’s total recordable incidence rate for 2004-2006 is 1.21. The incidence rate is 0.30 for total recordable cases involving days away from work, during that same time period. Safety-Related Awards

Peoples Gas won the 2004 Safety Achievement Award from the American Gas

Association, achieving the lowest incidence rate of days away, restricted duty and transfers among large-sized local distribution companies. It also received the 2004 Leader Accident Prevention Award, achieving a total OSHA recordable injuries and illnesses rate below the industry average among large-sized local distribution companies. Peoples Gas also won the 2005 Leader Accident Prevention Award. Safety Training

Each TECO Energy company uses different methods to promote safety, with the programs falling into general categories. On a corporate level, TECO Energy lists safety as its top core value. A portion of the company’s Success Sharing program is tied to individual, departmental and total company safety performance.

OUR RESPONSIBILITY TO TEAM MEMBERS

31


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO TEAM MEMBERS

In business units, in addition to the corporate-level emphasis, there is extensive onthe-job safety training required for operational positions. One hundred percent of operational team members must attend safety meetings and ongoing safety training. Workgroups facing specific potential hazards, such as those at power plants, have safety committees that help identify and correct potential hazards. The unions representing team members all agree to abide by TECO Energy safety and health rules and guidelines. Contractors working on behalf of the company also agree to abide by these requirements. TECO Coal team members receive annual refresher training for safety, dust control and hearing conservation programs.

Health and safety concerns are taken into account at all levels when determining the products TECO Energy uses in its operations and services. One example is Tampa Electric’s Standards group, which helps determine what equipment will be purchased and used by team members in the field. Regarding occupational diseases, in an effort to reduce the incidence of occupational pneumoconiosis, TECO Coal uses continuous miner equipment with scrubbers and water spray systems and follows approved ventilation plans. Dust sampling and monitoring is performed to ensure compliance with coal dust level regulations.

32

Under TECO Coal’s Hearing Conservation Program, hearing protection is provided to all employees, and the company monitors noise exposure levels. Annual refresher training at TECO Coal includes compliance with dust control plans and procedures and compliance with the company’s hearing conservation program. TECO Guatemala conducts “safety talks” on OSHA requirements throughout the year for team members, who complete a written test at each event. The company has incorporated Guatemala City team members in its safety talks for OSHA requirements applicable to them. The company has also implemented firefighting training, and provides yearly medical evaluations for all team members, including spirometric and audiometric testing.


Training and Development

TECO Energy team members have extensive opportunities for development. A total of 3,059 team members attended corporate training courses in 2006 for a total of 12,473 hours. This is in addition to off-site training and seminars. Separately, TECO Coal has its own internal training department that develops skills training for its team members and training in underground mining positions for entry-level candidates. Many programs have also been implemented to help team members attain required state and federal certifications for the mining industry. Additional skills improvement modules have been developed for the current work force and management teams. These modules include electrical re-certification, gas detection and explosives training. In 2006, TECO Coal team members completed 23,058 hours of training. TECO Coal also provides supervisory training for its supervisory team members. The program encompasses supervisory training mandated by regulation, policies and proactive employee relations and training in motivating and supervising team members. TECO Guatemala power plant team members achieved 5,743 training hours in 2006. Administrative team members achieved 3,129 hours. Training was in the technical, administrative, languages and computer software areas. Tuition Reimbursement

TECO Energy also has a tuition reimbursement plan for team members that pays 100 percent of tuition, laboratory fees,

application /registration fees and 50 percent of required textbooks. In 2006, approximately 200 team members were enrolled in tuition reimbursement through qualifying educational programs. To participate in the tuition reimbursement plan, team members must be full-time (working 32 or more hours per week) for at least six months (three months for Peoples Gas team members), and courses must be from institutions accredited by the Southern Association of Colleges and Schools or company-approved institutions. Courses must be related to the team member’s present job or a future position.

Leadership development programs include the Emerging Leader program, which provides leadership training for supervisor-nominated exempt professionals from all TECO Energy companies. Peoples Gas has a Leadership Academy, where current and future leaders learn about strategic and operational elements of the gas business. Through its relationship with The University of Tampa (UT) and the university’s TECO Energy Center for Leadership, the company annually sends 20 director-level or above team members through UT’s oneyear Focused Leadership executive development program.

A minimum grade of C must be maintained for undergraduate work and a B for graduate work. Standards of Integrity

One hundred percent of TECO Energy’s work force has been trained in the company’s Standards of Integrity, which includes anticorruption policies, codes of conduct and procedures and identifies accountability for the major areas of the company. These standards and the core values of the corporation are covered annually, with refresher training required at least every other year. Leadership Development

Organizational analysis identifies key positions and required leadership competencies. Leaders that demonstrate success in current positions and the potential for future success are nominated for an executive development process.

OUR RESPONSIBILITY TO TEAM MEMBERS

33


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO TEAM MEMBERS

Race/Ethnicity of Work Force - 2006 COMPANY

Diversity

BLACK

WHITE

HISPANIC

OTHER

TECO ENERGY (Corporate)

6%

84%

10%

0%

TAMPA ELECTRIC

14%

73%

11%

2%

PEOPLES GAS (Includes TECO Partners)

14%

70%

15%

1%

TECO TRANSPORT

12%

85%

2%

1%

TECO COAL

0%

100%

0%

0%

TECO GUATEMALA (Corporate)

0%

43%

43%

14%

TECO GUATEMALA**

N/A

N/A

N/A

N/A

TOTALS

522

3,993

399

178

**U.S. ethnicity codes not applicable to TECO Guatemala.

TECO Energy’s purpose is a commitment to inspiring trust, achieving excellence, providing environmental leadership and rising to any challenge we face, which will benefit our customers, team members and shareholders, and the communities we serve. One of the ways in which the company expresses its purpose is through diversity. Within TECO Energy, diversity means valuing differences in people and leveraging diverse viewpoints to achieve greater success. Some common diversity aspects include age, education, culture, religion, ability, ethnicity, gender and nationality. Diversity is characterized by recognition, respect and appreciation for the differences in people. This concept is woven into the company’s core value of respect for others. A commitment to diversity means that we develop and sustain a business environment that serves the interests, needs and ambitions of TECO Energy’s stakeholders, including shareholders, customers, team members, regulators/legislators and the communities in which we do business. The benefits of diversity include increased morale within the company; team members who feel empowered to contribute; better understanding of customers and new marketplaces; better creativity and innovation; better performance and productivity; and removal of the obstacles to effectiveness of team members doing their jobs. These benefits enhance profitability because valued team members contribute more and feel better about their jobs and the company. They stay with the company, improving retention.

34


Gender of Work Force as of 2006 COMPANY

FEMALE

MALE

TECO ENERGY (Corporate)

62%

38%

TAMPA ELECTRIC

25%

75%

PEOPLES GAS

28%

72%

TECO TRANSPORT

10%

90%

TECO COAL

4%

96%

TECO GUATEMALA (Corporate)

29%

71%

TECO GUATEMALA

12%

88%

TOTAL

970

4,122

History of Diversity within TECO Energy

TECO Energy’s diversity initiative began expanding in 1998 with the purpose of redesigning or implementing processes to support a diverse business culture. In January 1999, a consulting firm completed an extensive interview process as part of this initiative. Representatives from the consulting firm interviewed more than 100 managers, directors and officers to prepare the foundation for TECO Energy’s strategic objectives. A series of focus groups were formed, which included an additional 50 leaders who helped to further define the information from the initial interviews. Diversity Training and Support

TECO Energy’s diversity training and diversity leadership team training classes were rolled out, based on information gathered in the 1999 focus groups. Training classes for TECO Energy’s senior leadership personnel began in June 1999. Diversity training within the company implements the company’s five core requirements: - Affirmative Action (AA). Affirmation Action goals are continuously communicated to company presidents and officers on a quarterly basis. The difference between AA goals and the diversity initiative is communicated through the year at meetings and diversity orientation workshops. - Communication. Diversity orientation workshops were initially held for all supervisory and management team members as part of the start of the diversity initiative.

OUR RESPONSIBILITY TO TEAM MEMBERS

35


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO TEAM MEMBERS

Leadership by Gender and Race - 2006 COMPANY

FEMALE

MALE

BLACK

WHITE

HISPANIC

OTHER

TECO ENERGY (Corporate)

56%

44%

4%

87%

9%

0%

TAMPA ELECTRIC

30%

70%

9%

77%

11%

3%

PEOPLES GAS (Includes TECO Partners)

28%

72%

6%

80%

14%

0%

TECO TRANSPORT

20%

80%

6%

91%

2%

1%

TECO COAL

9%

91%

0%

100%

0%

0%

TECO GUATEMALA (Corporate)

29%

71%

0%

43%

43%

14%

TECO GUATEMALA

11%

89%

N/A**

N/A**

N/A**

N/A**

TOTALS

28%

72%

7%

79%

10%

4%

**U.S. ethnicity codes not applicable to TECO Guatemala.

36


- Performance Appraisal. All team members are required to have a formal annual performance review that includes a measurable diversity component specific to the team member’s business unit and personal development level. - Selection for Excellence. The hiring process has been revised, and training in the form of refresher courses is mandatory for those who are part of the hiring process. - Supplier Diversity. The Supplier Diversity program strives to provide qualified minorityand woman-owned businesses with the opportunity to engage in supplying quality products and services to all of TECO Energy. Diversity-related information is communicated to team members through MyTECOnet, the company’s intranet site; Insight, the monthly newsletter for TECO Energy team members; and TECOtv, a video program distributed to all TECO Energy team members.

Team Member Communications

The company communicates with team members through print and multimedia. Communications is two-way within TECO Energy. The company conducts annual opinion surveys to hear back from team members. In addition to a wide spectrum of communications available on MyTECOnet, the company’s intranet site, print publications distributed to team members include: - INSIGHT, a monthly newsmagazine distributed to all companies in TECO Energy, with company-specific inserts.

INSIGHT, TECO Energy’s award-winning internal newsletter, is published monthly.

- The TECOEdge Update, a newsletter published three times a year that provides team members with benefits information. A retiree version is published one to two times a year depending on communication needs. - Discover Your Edge, a publication sent to team member homes each fall that highlights the benefit options for the coming year and enrollment instructions. - Wellness Works, a monthly newsletter produced by the company’s Fitness Center and Human Resources that offers helpful information about healthy living. - TECOtv is a monthly video program available to all team members. TECO Energy’s Human Resources Department also provides team members with information about health and retirement benefits, compensation, training, emergency management, security and performance management.

Discover Your Edge, an internal newsletter for team members highlighting benefit options.

OUR RESPONSIBILITY TO TEAM MEMBERS

37


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO TEAM MEMBERS

Team Member Surveys

TECO Energy’s most recent team member survey was conducted in 2006. It showed a higher overall favorability rating of 72 percent, compared to 63 percent in the 2005 survey. The survey assessed team member favorability for the company’s core values. Favorability ratings meant that team members agreed or disagreed with positive statements regarding key areas of the company. Team members gave an 86.5 percent favorability rating to safety; a 72.7 percent favorability rating to customer service; a 73 percent favorability rating for integrity; a 69 percent favorability rating for respect for others; and a 67.1 percent favorability rating to achievement with a sense of urgency.

TECO Energy team members celebrate the company’s 2007 Values Week, highlighting safety, integrity, respect for others, achievement with a sense of urgency and customer service.

38

Following distribution of survey results, working sessions were held at the corporate, company and department levels to develop action plans to address areas for improvement. All of TECO Energy’s commitments cannot be achieved without the efforts and enthusiasm of its work force. In any social responsibility program, the implementation is through team members, as is every aspect of the company’s future.


OUR RESPONSIBILITY TO THE COMMUNITY We are part of the communities we energize. They are where we operate and where we live. It is not enough to be sure we have the resources to provide energy and energy products 25 years from now. We are part of these areas today.

FUNDS (2006) •

Tampa Electric paid over $45 million in taxes and fees to local municipalities, primarily in Hillsborough, Polk, Highland, Pasco and Pinellas counties.

Peoples Gas paid over

$24.5 million in taxes and fees to more than 100 communities throughout Florida.

We help our communities in four key ways. The first is through TECO Energy providing funds for economic development initiatives and programs in service areas of subsidiaries. The second is through stewardship. Doing our part to keep the air, land and water clean for the future. Much of this is detailed in the Environmental portion of this report. The third is through active participation in the communities we serve by volunteerism and social programs. The fourth is through emergency management, those times when weather and related events bring communities together. Economic Development

Tampa Electric President Chuck Black dedicates a new solar energy array at Middleton High School in Tampa, Fla. Funded by Tampa Electric’s Renewable Energy program, the array is the largest in Florida’s schools.

Tampa Electric and Peoples Gas work directly with local, state and regional agencies, chambers of commerce, the Tampa Bay Partnership and other economic development authorities to attract businesses to their service areas. They also support area builders and developers associations and Enterprise Florida, which markets the state to companies worldwide. This ultimately creates jobs and prosperity for the communities we serve, which

has significant impact on education, health and human services and the arts. In addition, in 2006 alone, Tampa Electric purchased equipment and services totaling $427.9 million with local businesses. Of that, $24.8 million was business with minority vendors. Community Involvement

The company’s Community Relations team consists of regional managers who are responsible for government and community relations throughout Tampa Electric’s and Peoples Gas’ service territory. They work closely with government entities, business leaders and community organizations when it comes to the day-to-day operations of our business, supporting community events and providing leadership on boards and organizations that have impact. These efforts often support economic development and social services to provide for the greater good of the community. The company supports: - Chambers of commerce throughout our service territories, including Brandon, North Tampa, Riverview, West Tampa, South Tampa, Plant City and the Greater Tampa Chamber.

OUR RESPONSIBILITY TO THE COMMUNITY

39


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE COMMUNITY

- Children and education-related programs, such as Take Stock in Children; Boy and Girl Scouts; School Enrichment Resource Volunteers in Education; The Children’s Board of Hillsborough County.

a new power line project scheduled for completion in 2010. Residents were invited to discuss possible routes for a 230-kilovolt transmission line spanning 30 miles from Polk County to Hillsborough County.

- Civic organizations, such as Rotary Clubs; Volunteer Improvement Partnership.

In 2006, through the efforts of Community Relations regional managers at Tampa Electric, the company invested nearly $150,000 and volunteer time to support diverse economic development efforts, including neighborhood comprehensive plans, chambers of commerce initiatives and events that help us market our communities for future growth.

- Women’s support, including participation in the Susan G. Komen 60-mile walk for Breast Cancer; The Centre for Women; and The Spring of Tampa Bay.

The company works hard to communicate with the public about upcoming infrastructure projects.

- Professional associations such as Refrigeration and Air Conditioning Contractors Association and the Tampa Bay Builders Association. - Miscellaneous groups, such as Share of Florida; the Home Environment Advisory Committee for The University of Florida; the Friendship Trail Bridge Corp.; the City of Tampa Parks; Florida Kidney Disaster Coalition; Leadership Hillsborough; Leadership Tampa Bay; Tampa Connection; The Children’s Board; and Junior Achievement, to name just a few.

OPEN HOUSES/COMMUNITY MEETINGS Other community relations efforts include special community meetings that are held with customers affected by various operations and infrastructure activities. For example, meetings and open houses are held concerning new substations, transmission lines and power plant activities, such as the installation of selective catalytic reduction technology on the company’s Big Bend Power Station. Another example includes four open houses Tampa Electric hosted in February and March 2007, as the company prepared to start

40

In 2006, Tampa Electric provided nearly $750,000 in community support and hundreds of volunteer hours serving on various state, local and regional boards. Peoples Gas supports and works closely with chambers of commerce, economic development councils, professional associations and civic organizations in each of the communities it serves throughout Florida. The Peoples Gas Charity Fishing Tournament has raised in excess of $90,000 over the last three years to benefit Builders Care, a northeast Florida not-for-profit that repairs seriously deteriorated homes belonging to low-income, elderly and disabled members of the community. Corporate Contributions

Between 2002 and 2006, TECO Energy contributed a total of $8,131,000 to education, arts and culture, health and human services, and environmental initiatives (over and above Tampa Electric’s environmental stewardship, detailed in the Environmental section of this report).


- Education

The company donated over $2 million to educational institutions and programs from 2002 to 2006. Recipients included The University of Tampa, the University of South Florida Foundation, the Hillsborough Community College Foundation and the Hillsborough Education Foundation. TECO Energy team members at all levels of the organization are highly involved in education, starting at the top. President and Chief Operating Officer John Ramil is vice chairman of the Board of Trustees for the University of South Florida (USF). Executive Vice President and Chief Financial Officer Gordon Gillette is chairman of the Hillsborough Education Foundation. Senior Vice President and General Counsel Sheila McDevitt is Vice Chair of the Board of Governors for the Florida university system, as well as chairman of the board for Saint Leo University. She also chaired, at the request of former Florida Governor Jeb Bush, a special blue ribbon task force on the topic of increasing minority inclusion in the university system. Peoples Gas President Bill Cantrell is on the Board of Trustees of The University of Tampa.

through Big Brothers/Big Sisters, Junior Achievement and the Hillsborough Education Foundation. TECO Energy believes the strength of the education system is a key facet of economic development. A strong educational system helps attract new businesses to an area, and a well-educated work force helps those new businesses and ours. - Arts and Culture

TECO Energy has contributed almost $1.5 million to arts and culture activities from 2002-2006. Key recipients have included the Florida Orchestra, the Tampa Bay History Center and the Tampa Bay Performing Arts Center. We believe such programs are important tools to attract new businesses to our communities, and they also create a cultured and knowledgeable public. - Health and Human Services

Over $1.1 million has been donated to health and human services by TECO Energy between 2002 and 2006. Recipients have included The Centre for Women, the American Cancer Society, the Hurricane Relief Fund and the Salvation Army.

Tampa Electric President Chuck Black is on the Board of the College of Engineering at the University of South Florida.

In addition, the company’s total United Way pledge for the 2007 campaign was nearly $760,000, including contributions from team members and the company.

Team members throughout the company take time each year to teach one or more classes at the Great American Teach-In and participate in school-based mentoring programs

Tampa Electric also provides services for low-income, elderly and disabled customers, which are detailed in the Customer section of this report.

Members of TECO Energy’s Speakers Bureau speak on electrical and storm safety, and a variety of other topics, in classrooms and for numerous community groups.

OUR RESPONSIBILITY TO THE COMMUNITY

41


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE COMMUNITY

- Environmental

The company contributed $174,987 to various environmental causes, over and above its considerable stewardship program, which is detailed in the Environmental section of this report and in the 2005 Environmental Report, available at tecoenergy.com/enviroreport. Environmental recipients included the Tampa Audubon Society, the Tampa Bay Marine Institute and the Florida Coastal Islands Sanctuary, a program of Audubon of Florida.

The Tampa Bay Performing Arts Center

Tampa Electric and Peoples Gas also communicate regularly with customers about conservation programs, detailed in this report’s Environmental section and in the 2005 Environmental Report. Volunteerism

Volunteerism is encouraged among team members at TECO Energy. In a recently conducted community involvement survey, team members reported volunteering over 66,000 hours during 2006. Over 38 percent of

TECO Energy team members participated in the 2006 American Heart Walk with one of the largest corporate presences in the area.

42

the survey respondents participated in the TECO Energy VIP program through which TECO Energy makes a contribution of $3 per volunteer hour to a given charity, up to a certain limit. Much volunteer activity was in education, youth sports and human services agencies. One hundred thirty-two team members report serving on one or more community organization boards. Tampa Electric Tampa Electric team members participated extensively in volunteer activities ranging from school-based mentoring programs to providing home improvements for the elderly. Environmental volunteerism was also a prominent theme, with team members active in beach clean-up events and many other activities. Peoples Gas At Peoples Gas, team members across the state volunteered time to groups that include


the American Heart Foundation; Kiwanis Club; Big Brothers/Big Sisters; United Way; Home at Last Pet Adoption; Florida Blood Services; Food Pantry; and the Literacy Foundation, as well as mentoring programs at schools. TECO Coal In 2006, TECO Coal donated over $500,000 to the communities where it operates. TECO Coal was the major donor for Shelby Valley High School’s new artificial turf and the scoreboard for Letcher County Central High School. In-kind donations were also given to local fire departments, emergency response groups and many civic organizations. TECO Coal team members field a Relay for Life Team in their operational area, and in 2006, four teams raised over $44,000 to support the American Cancer Society. TECO Coal was also among the top fundraisers in Buchanan County, Va., and in Whitley County, Ky. TECO Coal was presented with an award in 2006 for its support of Project U.N.I.T.E., which combats substance abuse and addiction problems in East Kentucky through enforcement, treatment and education. Each year during the holidays, The TECO Coal Children’s Fund provides clothing and toys to as many as 900 underprivileged children in areas where the company has mining operations. The company also donates to support food charities in those areas. TECO Coal was nominated for a “Friends of Education” award in the state of Kentucky for its work with the Whitley County school system in site preparation for some of its facilities. The

company has also worked with numerous high schools to renovate or build football and baseball fields. TECO Guatemala Since operations began, TECO Guatemala has been investing in the communities where its two power plants operate, focusing primarily in promoting education with the construction of schools. The company began contributing materials and the volunteer time of its employees on the weekends to build classrooms and promote educational activities. TECO Guatemala has constructed or rebuilt several small schools near its plant facilities. The company has also donated desks and chairs for the students and teachers. In 2006, TECO Guatemala initiated a large-scale construction project at Los Lirios in Masagua, Guatemala. When completed in 2008, the school will have 16 classrooms and educate approximately 500 children in the area. TECO Guatemala is also very active with a new project Universidad del Valle de Guatemala, in which every person in the community participates in some activity to help integrate the community itself. Some women in the community participate in cooking and sewing classes; children are now learning how to grow a fish species and earn money by selling their production. Other adults in the community are learning to read and write. There is also a school for parenting. TECO Guatemala has donated over $100,000 to the project.

TECO Guatemala is active in improving educational opportunities in the areas it operates.

OUR RESPONSIBILITY TO THE COMMUNITY

43


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE COMMUNITY

Tampa Electric’s Storm Implementation Plan is a key part of its joint approach with the Florida Public Service Commission, which is reviewing the infrastructure of the statewide grid to withstand severe weather conditions. The 2006 implementation plan included the company’s existing response program and addresses some recent initiatives. The company will spend more than $3 million annually, a 37 percent increase based on current contractor rates, to implement its vegetation management plan. This plan provides a balance of trimming vegetation outside the right-of-way that are in danger of falling into distribution facilities. The plan calls for each circuit to be trimmed every three years, with special emphasis on areas identified by the company’s reliability-based methodology. Tampa Electric will spend over $5 million each year for its pole inspection procedures, so that appropriate safety, reliability and capacity considerations are met regarding attachments to electric distribution poles. Tampa Electric works year-round to manage the fast-growing vegetation near its equipment.

Crisis Communication

When a community is in crisis, it’s important that the electric and gas service providers have clear cut plans to deal with the crisis, responding quickly and working closely with local agencies. Hurricane preparedness and restoration is of prime importance to any Florida utility. Tampa Electric has a very detailed and comprehensive natural disaster preparedness and recovery plan designed to cover all aspects of emergency management.

44

The company has also expanded its transmission structure inspection program that identifies potential system issues using ground line, above ground and aerial inspection techniques. This enhanced inspection program is estimated to cost $3 million. The company’s transmission and distribution geographic information system (GIS) will be fully implemented by the summer of 2007. This system replaces and enhances manual processes, and will aid the company in providing information on exact location of facilities and


performance. The incremental cost of enhancements to this system is about $400,000. The GIS will also enable post-storm data collection, and provide a basis for forensic analysis of data to determine the cause of equipment failures and assess preventive measures. The costs for this activity is a one-time expenditure of $200,000 and a variable cost of $100,000 for each storm. The company will collect detailed outage data that can determine differences in reliability of overhead and underground systems. This will require enhancements to Tampa Electric’s outage management system which will be completed in the summer of 2007 at a cost of $500,000. Tampa Electric team members conduct extensive mock storm drills each year prior to the start of the Atlantic hurricane season June 1. The drills are held within individual departments and as a whole through the company’s Unified Command System. “After action” reviews are conducted following each storm to determine areas for improvement. Tampa Electric participates in the Southeastern Electric Exchange’s mutual assistance program, a cooperative arrangement wherein members support one another during times of natural disaster or other crises. The company most recently provided significant assistance to its fellow utilities following hurricanes Katrina, Rita and Wilma in 2005. Tampa Electric won the Edison Electric Institute’s Emergency Response Award for its

response to the unprecedented 2004 Florida hurricane season, in which four hurricanes directly impacted the company’s service territory.

Peoples Gas team members and families serve meals for Charlotte County families affected by the 2004 hurricane season.

In preparation for future hurricane seasons, Peoples Gas adopted an Incident Command System in line with that of Tampa Electric. The emergency preparedness has included mock hurricane sessions. Vulnerability assessments were conducted in each location to determine specific needs and preparedness plans for each location.

OUR RESPONSIBILITY TO THE COMMUNITY

45


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE COMMUNITY

Peoples Gas has also partnered with both the Southern Gas Association and American Gas Association for mutual assistance. Members can request or provide assistance to restore gas service when it has been disrupted and cannot be restored in a safe and timely manner by the affected companies alone. Communication in Emergencies

Tampa Electric coordinates with local governments regarding critical service and restoration. Systems for local government involvement in reporting damaged or unsafe system conditions will be expanded across the company’s service area.

Devastation in Auburndale, Fla. shows the amount of damage endured by Tampa Electric’s system during the 2004 hurricane season.

46

During restoration after a storm, Tampa Electric communicates regularly with state and local officials, the news media and its customers. Power restoration updates, which include the number of outages remaining, the estimated time to fully restore power, safety information and other important details, are shared through a variety of channels. These include formal updates to state and local Emergency Operations Centers, news releases, media interviews and the company’s Power Restoration Update Web page.


OUR RESPONSIBILITY TO THE ENVIRONMENT TECO Energy’s responsibility to the environment includes power plant emissions reductions that have made it a model for the nation. Yet, it also includes a sanctuary for manatees who flock each winter to the warm water discharge canal next to a coal-fired power plant. It ranges from significant management programs for containing oil spills to habitat creation for ospreys, hawks and even Indiana bats.

In 2006, TECO Energy produced a lengthy, comprehensive environmental report for its principal subsidiary, Tampa Electric. This section includes excerpts from that report and updates to it. For a more detailed view of Tampa Electric’s environmental profile, access the report online: tecoenergy.com/enviroreport

Within TECO Energy, the concern and respect for the environment is a living program, not a study project. It is deeds, not words. Those deeds have made its principal subsidiary, Tampa Electric, one of the cleanest utilities in the nation. Our business is to serve present and future customers by meeting their energy needs in the most responsible manner possible, with a focus on sustainability, cost-effectiveness and processes that minimize environmental impact. The company aims to continue balancing the competing concerns of shareholders for strong returns, customers for reliable, affordable energy, and the community for a responsible approach to the environment.

RESPONSIBILITY FOR THE AIR For the last 20 years, Tampa Electric has taken major steps to reduce air emissions from its major power plants, which include:

Fantasy Island is located near Tampa Electric’s Bayside Power Station. With the help of other companies, Tampa Electric has helped to restore the island to native growth. The island will be used by the Florida Aquarium and others to educate students.

H.L.Culbreath Bayside Power Station, a $730 million, 1,841-megawatt plant fueled by natural gas, which replaced the coal-fired boilers of the company’s nearly 50-year-old Gannon Station. The repowering reduced 99 percent of

nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions from the former station. Big Bend Power Station, with a generating capacity of almost 1,700 megawatts, which meets strict regulations through the use of scrubbers that remove 95 percent of SO2 from all four units at the station. Central to future reduction of NOx emissions is the $330-million installation of selective catalytic reduction (SCR) technology. The installation will be completed in 2010, with the first unit scheduled for completion June 1, 2007. Polk Power Station, a first-of-its-kind facility located in Polk County, Fla., that uses integrated gasification combined-cycle technology (IGCC) that removes 95 percent of the sulfur from the coal prior to combustion. Tampa Electric was awarded $150 million from the U.S. Department of Energy for the development of its Polk Unit 1. Two additional gas-fired peaking units, Polk 2 and 3, were added shortly thereafter. In the spring of 2007, Tampa Electric welcomed Polk 4 and 5, two additional natural gas-fired peaking units at the Polk facility, with 160 megawatts of capacity each.

OUR RESPONSIBILITY TO THE ENVIRONMENT

47


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

Tampa Electric’s Emission Reduction Initiatives: A Summary INITIATIVES

ACTIONS

EMISSION REDUCTION ACHIEVEMENTS

CONVERSION OF COAL-FIRED GANNON STATION TO NATURAL GAS (Bayside)

$730-million repowering of coal-fired Gannon Station to the reconfigured new natural gas-fired station.

Almost 99 percent less NOx and more than 99 percent less SO2, and 92 percent less particulate matter (PM). Mercury (Hg) levels have decreased 99 percent below 1998 levels. Carbon dioxide levels have been reduced more than 55 percent since 1998.

SCRUBBER INSTALLATIONS AND UPGRADES (Big Bend)

Installation, beginning in 1985, of flue gas desulfurization equipment on all four units at Big Bend.

Removal of 95 percent of SO2.

Investments in improved removal efficiency and scrubber reliability upgrades at Big Bend.

The addition of scrubbers on Units 1 and 2 and overall scrubber upgrades reduced SO2 emissions more than 88 percent versus 1998 levels.

THE FUTURE

Additional scrubber upgrades will result in further SO2 emissions reductions.

ELECTROSTATIC PRECIPITATORS (Big Bend)

Upgrade of electrostatic precipitators to further reduce emissions of PM completed in 2004.

Reduction of about 60 percent of PM emissions (compared to 1998 levels). Combined with the Bayside repowering, PM has been reduced by more than 70 percent systemwide, compared to 1998 levels.

SELECTIVE CATALYTIC REDUCTION TECHNOLOGY AND COMBUSTION MODIFICATIONS (Big Bend)

Installation began in 2005 of $330 million in SCR technology to reduce NOx emissions, with installation scheduled for completion in 2010.

Combustion modifications have resulted in more than 15,000 tons of early NOx reductions prior to SCR installation.

NOx emission reductions of about 85 percent by 2010.

IGCC TECHNOLOGY (Polk)

Built $600-million state-of-the-art facility with IGCC technology partially funded by US DOE.

Coal-fueled power has a minimum removal of 95 percent of the sulfur from the coal gas, pre-combustion.

Polk Unit 6, a 630-megawatt new generation IGCC unit, is planned for 2013.

As part of its agreement with the DOE, the company has commercialized the IGCC technology, hosting visitors from around the world. Polk Unit 1 has been named the cleanest coal-fired power plant in North America, and the world leader in the production of electricity from environmentally friendly, coal-derived synthesis gas. Pending regulatory and other approvals, the company is also making plans for its next baseload unit, Polk 6. This unit is envisioned as a 630-megawatt IGCC unit, building on the

48

company’s decade of success with Polk 1. The new generation of IGCC units offer an even more environmentally friendly emissions profile, and the promise of carbon capture and sequestration. The major raw material used by Tampa Electric’s power plants is fuel needed for power production. Tampa Electric’s fuel mix consists of 62 percent coal; 37 percent natural gas; and one percent oil. The Big Bend and Polk power stations together burned about 5 million tons of coal in 2006.


Tampa Electric has spent nearly $400 million in delivering cost-effective conservation programs to the marketplace. Since 1981, these programs have reduced summer demand by 262 MW and the winter demand by 731 MW, resulting in a cumulative savings of over 8,300 GWh.

Tampa Electric’s Emission Reductions

Sulfur Dioxide (SO2) 190,000

90,000

172,000

80,000

154,000

70,000

136,000

60,000

118,000 [tons]

[tons]

Nitrogen Oxides (NOx) 100,000

50,000

100,000

40,000

82,000

30,000

64,000

20,000

46,000

10,000 0

10,000 '98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

Actual Projected

28,000

Actual Projected '09

'10

'98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'09

'10

Mercury (Hg)

Carbon Dioxide (CO2) 20,300

0.9

19,600

0.8

18,900

0.7

18,200

0.6 [tons]

[tons X 1,000]

21,000

17,500

0.5

16,800

0.4

16,100

0.3

15,400

0.2

14,700

0.1

Actual Projected

0.0 '98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

Actual Projected '98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

OUR RESPONSIBILITY TO THE ENVIRONMENT

49


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

Tampa Electric is •

The first utility in the nation to commercialize integrated coal gasification technology with the U.S. Department of Energy at Polk Power Station, recognized as a world leader in clean coal technology.

The first utility in the nation to reach an agreement with the Environmental Protection Agency and Florida’s Department of Environmental Protection, by launching a 10-year, $1.5 billion program to dramatically reduce emissions from our power plants.

A leader in launching and achieving conservation goals.

The first utility in Florida to set up an Avian Protection Plan for all bird species.

The only utility to build a center to view and learn about manatees, the Manatee Viewing Center, located adjacent

By 2010, within a decade of beginning its $1.5-billion environmental improvement program announced in 1999, the company will have reduced systemwide emissions by 89 percent for NOx and SO2, by 73 percent for mercury and by 72 percent for particulate matter. Carbon dioxide will be reduced by 20 percent over the same time frame. As it faces a future that favors low emission facilities and carbon capture, Tampa Electric is already accomplishing what others are just now considering.

to our Big Bend Power Station. TECO Coal •

The first utility to organize a task force of business, education, governmental and environmental leaders to site a power plant (which later became Polk Power Station).

Aerial view of Polk Power Station’s IGCC facility.

TECO Coal’s operations are subject to the Surface Mining Control and Reclamation Act of 1977, which places a charge of $0.15 and $0.35 on every net ton of underground and surface coal mined, respectively, to create a fund for reclaiming land and water adversely affected by coal mining. For 2006, TECO Coal paid more than $2 million for reclamation through this program. TECO Coal’s operations are subject to various federal, state and local air and water pollution standards. In 2006, TECO Coal spent approximately $2.6 million on environmental protection and reclamation programs. The company expects to spend a similar amount in 2007. TECO Coal monitors methane emissions from its underground operations. TECO Coal averaged 196,450 cubic feet of methane every 24 hours from each of its seven underground mines. NOx and SO2 are measured regularly on all diesel equipment used underground. These amounts are insignificant.

50


RESPONSIBILITY FOR THE WATER Tampa Electric is committed to using the smallest amount of water possible to operate its facilities, and recycles large volumes of that water to reduce overall consumption. Water is used at the company’s power plants for purposes that include process water and cooling water. Water sources for processing and cooling vary from plant to plant, but generally consist of groundwater, storm water, treated effluent (i.e., reused water from sewage treatment plants) or municipal potable water. The Big Bend and Bayside stations also circulate large

amounts of saltwater from Tampa Bay through the unit condensers to condense the steam produced by the boilers. However, this water is simply returned to the bay, rather than consumed by these plants, a process known as “once-through cooling.” Polk Power Station uses groundwater drawn from deep wells to supply both process and cooling water for the plant. However, the plant uses a closed-loop cooling reservoir which allows the facility to treat and recycle this water continuously to reduce overall consumption, as well as to avoid the need to discharge as much effluent from the site.

Polk Power Station, the world leader in integrated gasification combined cycle technology.

Tampa Electric Water Use POWER PLANT BIG BEND

% RECYCLE

FACILITY DISCHARGE VOLUME/DESTINATION

961

90

91 million gallons per year/ Tampa Bay

City of Tampa water system

120.4

85

18.3 million gallons per year/ Tampa Bay

Groundwater

971.4

88

120 million gallons per year/ Little Payne Creek Peace River

WATER SOURCE

County potable water and County-treated effluent

BAYSIDE

POLK

TOTAL WITHDRAWAL (MGY)

OUR RESPONSIBILITY TO THE ENVIRONMENT

51


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

Water Bodies and Affected Related Habitats

Water Use at TECO Coal

Wastewater from Tampa Electric’s power plants must meet all applicable state and federal water quality standards, which seek to protect the water quality, ecology and wildlife in and near the water bodies that receive the plant discharges.

Preparation plants at TECO Coal operate on water use demands ranging from as little as 200 gallons per minute to as much as 1,200 gpm. A minimal amount of withdrawn water is used in the process of cleaning coal. Ninety-nine percent of all processed water is recycled through impoundments at the company’s preparation plants. Withdrawn water replaces water lost to evaporation. In 2006, TECO Coal withdrew 157 million gallons. No water bodies are significantly affected by water withdrawal at any of the company’s preparation plant facilities.

Three of Tampa Electric’s four power generating facilities are required to maintain National Pollutant Discharge Elimination System (NPDES) Discharge Permits and are presently in compliance with all applicable requirements of these permits. The chart below provides more detail about the plants, the water bodies, the protected status and the biodiversity.

Power Plant Proximity to Water Sources POWER PLANT

WATER BODY

SIZE

Tampa Bay

400 square miles

PROTECTED STATUS /CRITERIA

BIODIVERSITY

Class III / Marine BIG BEND

BAYSIDE

POLK

52

Tampa Bay

400 square miles

Little Payne Creek

2,188 square miles

Peace River Watershed

(Peace River Watershed)

Maintenance of healthy, balanced ecosystem

200 fish species

Class III / Marine

200 fish species

Maintenance of healthy, balanced ecosystem

40,000 pairs of 25 different species of birds

Class III / Freshwater Maintenance of healthy, balanced ecosystem

Assorted plants and animals: palmettos, cypress, water locust, sweet gum, cabbage palm, live oak, Coreopsis (state wildflower), Florida black bear, raccoons, opossums, white-tailed deer, and Florida panthers


There is no direct discharge of process waters to streams. Storm water discharges from coal preparation facilities and mine sites drain into the Upper Cumberland River basin (Kentucky) and the Big Sandy River basin (Kentucky and Virginia). Amounts discharged vary in accordance with rainfall amounts. TECO Coal’s goals include a “no net loss” of stream function and aquatic habitat as a result of its operations. The company has a stream mitigation program with projects that include identifying impaired streams, securing property rights, performing stream function assessments, designing improvements, securing permits, constructing of the restoration and enhancement and monitoring the projects’ successes. The company currently has 15 projects under development, with three completed, others in permit-pending status, and some either awaiting construction or partially constructed.

requires the use of engineering and management controls to prevent the release of oil to the environment. These plans are reviewed annually and enhanced or revised as necessary. Annual training is provided to all employees who have specific spill prevention responsibilities under these plans. If there is ever a release of oil in the environment, the company’s incident command facility response plans provide specific guidance to team members and contract emergency responders. TECO Coal has had no significant spills of oil or other petroleum products at its facilities or mines in the past five years.

Stewardship programs like Tampa Electric’s Avian Protection Program help protect Florida’s fragile environment.

Spill Prevention and Control

Tampa Electric experienced no significant spills in 2006. The company maintains a very effective oil spill prevention program. Each power station has an extensive Spill Prevention, Control and Countermeasures plan which

OUR RESPONSIBILITY TO THE ENVIRONMENT

53


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

RESPONSIBILITY FOR THE LAND

Hazardous Waste Disposal

Byproducts

Hazardous waste generation and disposal quantities from Tampa Electric operations are comparatively small, given the magnitude and complexity of the company’s power facility operations.

Tampa Electric aggressively minimizes pollution and markets byproducts of its operations. The recycling and reuse of coal combustion byproducts produced at Tampa Electric’s coalburning power facilities has had a beneficial impact on the environment and the economy of the Tampa Bay area. Byproducts are used to support industries important to the area’s growing economy. The beneficial uses of these products reduces consumption of natural resources, as well as valuable landfill space. Nearly 100 percent of combustion byproducts generated in 2005-2006 were marketed to customers for beneficial reuse.

The company has practices in place that greatly reduce waste, such as source reduction and waste minimization. Recycling also had a significant impact on reducing the production of solid and hazardous wastes and conserving valuable natural resources. Tampa Electric established off-site recycling programs for products such as antifreeze, used oil, paint and solvents, mercury and mercury-containing devices, pesticides and scrap metal.

Tampa Electric Byproducts of Electric Generation

POWER PLANT

BIG BEND POWER STATION

PRODUCT

USE

PRODUCED (TONS)

Fly Ash (tons)

Used in the cement and concrete industries

218,326

Bottom Ash (tons)

Used in the cement industry for roofing shingles or as grit blasting material

18,219

Gypsum (tons)

Used to manufacture wallboard

683,537

Slag

Used in cement industry and as blasting material to clean ships, tanks, etc. Used as a granule on roofing shingles for home and commercial buildings

62,336

Slag (tons)

Used as a commodity; separating and recycling recovers its energy value

33,000

Sulfuric Acid

Used to help purify water and in production of fertilizer

56,000

(2005)*

*2006 figures were not available as of the printing of this report

POLK POWER STATION (2006)

54


The total quantity of hazardous waste generated at Tampa Electric facilities in 2006 was about 31,000 pounds. These wastes consisted mainly of paint wastes and thinners, laboratory wastes, halogenated spent refrigerants and spent blast media. Liquid hazardous wastes were sent either for blending as alternative fuels or for incineration. Solid hazardous wastes were stabilized and landfilled at RCRA-permitted sites. The company also reuses excess nonhazardous solid waste and damaged or obsolete materials such as power poles for use as timbers in constructing fences and pole barns. Wherever possible, the company refurbishes oil-filled equipment, such as transformers and capacitators by repairing, rebuilding and returning units to service.

DISPOSED (TONS)

At TECO Coal, amounts of hazardous wastes generated are insignificant. All such wastes are transported offsite to licensed facilities for recycling or disposal. Environmental Improvements at Power Plants

In complying with standards for the construction, operation and closure of solid waste management units, Tampa Electric conducted a comprehensive environmental study in 2002 and 2003 to address land and water issues at Big Bend, its largest coal-fired power plant. Based on that study, the company has voluntarily implemented a number of large projects at Big Bend, including: • Lining /redesigning solids settling ponds and recycle water ponds to improve the industrial wastewater management system. This should

SOLD (TONS)

% REUSE

873

287,043

99.7

0

60,366

100

0

591,409

100

223

43,570

99.7

1,048

33,000

96.7

0

56,000

100

minimize impact to groundwater or surface water and ensure compliance with groundwater standards. • Replacing the slag pond with totally enclosed above-ground slag bins.

Lining or remediating both the gypsum conveyor and scrubber byproduct storage area, which may be relocated to another area on the site to help minimize groundwater/surface water impacts due to runoff. •

All projects should minimize impacts to groundwater or surface water to ensure compliance with groundwater standards. This environmental improvement plan is discussed in greater detail in the company’s 2005 Environmental Report, available at tecoenergy.com/enviroreport. TECO Coal and the Land

TECO Coal has been active in promoting the development of forested mine lands as a viable reclamation technique. Over the past five-year period, TECO Coal has planted about one million trees, mostly native species that are predominately mixed hardwoods. Trees provide both a marketable asset for owners of the land and are one of the most effective vehicles known for absorbing and storing carbon. The reforestation has increased aesthetic land values and provided an enhanced habitat for wildlife. In some cases, such as the threatened Indiana Bat (Myotis sodalist), new habitat has been created. The Indiana Bat is a IUCN Red List species in category E, which means it has a 10 percent probability of extinction within

OUR RESPONSIBILITY TO THE ENVIRONMENT

55


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

100 years. Pre-mine bat counts are required and performed prior to the start of mining operations, and accommodations are made during active mining for the use of their “maternity trees.” Post-mining land use requirements establish Indiana bat roosts and maternity tree stands. TECO Coal also recycles and re-uses materials used in its mining processes. Heavy equipment generates almost all of the recyclable metals sent out of its operations annually. Old equipment is used for parts until there are no economically significant parts remaining for re-use. The frames and other components of the machines are then recycled for their scrap metal value.

Tampa Electric’s Big Bend Power Station and Manatee Viewing Center

56

TECO Coal also sells large equipment tires, which are turned into watering troughs for elk in national parks in the western United States. Other parts of the tires are used in the manufacture of industrial and agricultural implements, such as scrapper blades and

bucket linings. Scrap rubber is sent to industrial burners for steam generation for either heat value or power generation. Peoples Gas and the Land

When Peoples Gas installs new underground pipelines, it minimizes impacts to sensitive habitats such as wetlands by using a boring technique. Boring rather than trenching a wetland reduces the effect on the habitat. Though no species are known to be threatened by its operations, Peoples Gas identifies the gopher tortoise within pipeline projects. If tortoises are known to reside within a project site, Peoples Gas will change the location of the line to avoid affecting their burrows. TECO Guatemala

TECO Guatemala operates its facilities under an approved environmental management plan, providing for efficient facility operation while ensuring worker health and safety and reducing


environmental impacts. A well-designed plan is incorporated into the plant’s standard operating procedures without sacrificing the quality of the operation. TECO Guatemala has an environmental emission controls plan, monitoring programs, and overall compliance with the World Bank Guidelines of 1999. In 2006, TECO Guatemala spent $145,700 on its emission controls plan.

STEWARDSHIP Key elements in the company’s stewardship activities are educational programs, habitat protection and enhancement, sponsorship of environmental organizations, and employee participation in a wide variety of organizations.

attracts endangered manatees each winter, the Manatee Viewing Center has attracted over 2 million visitors since 1986 to view the species from the center’s 900-foot walkway and numerous observation platforms. The Center also includes a photovoltaic array to harness solar power. - Oyster Habitat Creation. Tampa Electric has worked with Tampa Bay Watch to create oyster habitat and plant salt marshes. - Fantasy Island. Tampa Electric, the Florida Aquarium and the Tampa Port Authority have teamed up to restore habitat on a three-acre island just north of the Alafia River in Hillsborough Bay.

Examples of the company’s stewardship include:

- Osprey Program. Begun in 1988, the program ensures that fish-eating hawks choose nesting sites away from utility poles.

- Manatee Viewing Center. Overlooking Big Bend’s warm water discharge canal which

- Avian Protection Program. An expansion of the Osprey Program, the APP helps prevent large

birds of prey from electrocution and collision with electric infrastructure. The program also identifies at-risk species. It identified potential problem areas based on field surveys, and was developed by nationally recognized wildlife biologist Richard Harness. - Newman Branch Restoration Project. Tampa Electric is restoring 11 acres of coastal marsh, mangrove forest and saltern habitats along Newman Branch Creek, funded by grants from the National Oceanic and Atmospheric Administration, the Southwest Florida Water Management District and the Pinellas County Environmental Fund. - Environmental Education Curriculum. With the Southwest Florida Water Management District, Tampa Electric educates children and adults on the role fresh water plays in an estuarine system. - Bay Regional Atmospheric Chemistry Experiment. Tampa Electric provides funding for this program at the USF College of Public Health. The program is developing better estimates of the atmospheric nitrogen deposition to Tampa Bay and assessment of Tampa Bay air quality before and after the repowering of Bayside station. - Support of various community and environmental programs, all of which are detailed in the company’s 2005 Environmental Report, available at tecoenergy.com/enviroreport. - PRIDE commitment. TECO Coal is actively involved with the PRIDE program (Personal Responsibility in a Desirable Environment)

OUR RESPONSIBILITY TO THE ENVIRONMENT

57


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

televised volunteer of the month recognition program on behalf of PRIDE. In appreciation of TECO Coal's support for the PRIDE program and efforts in environmental stewardship, TECO Coal was recognized with the prestigious Rogers-Bickford Environmental Leadership Award in 2002. The award is given to the individual, civic group or business in Kentucky that has demonstrated environmental stewardship and leadership for others to follow.

WISE ENERGY USE: CONSERVATION AND RENEWABLES Both Tampa Electric and Peoples Gas offer energy conservation programs to residential and commercial customers.

Tampa Electric’s Manatee Viewing Center, which has welcomed more than a million visitors since its inception.

established in 1997 by Congressman Hal Rogers and the late General James Bickford, former Kentucky Secretary of Natural Resources and Environmental Protection. The goal of PRIDE is to eliminate pollution of the land and water in eastern and southeastern Kentucky. In conjunction with PRIDE, TECO Coal team members are involved in a variety of clean-up activities, ranging from eliminating illegal dump sites that threaten the integrity of local water supplies to picking up trash along roadways. The company also sponsors a

58

Peoples Gas has offered programs for over 25 years that increase energy efficiency, encourage the development of gas-fired cogeneration and increase conservation of petroleum fuels by promoting direct use of natural gas. Since 2000, Peoples Gas has paid approximately $67 million in incentives to over 110,000 participating customers. Peoples Gas programs offer incentives to customers to help reduce the cost of piping and venting, and assist customers in paying less when purchasing new appliances. Many residential customers participate in the New Residential Construction Program and the Appliance Retention Program, which offers incentives for natural gas water heating, home heating, cooking, and clothes drying.


Tampa Electric’s conservation programs were introduced in the late 1970s, prior to any federal or state energy conservation requirements becoming law. In response to legislation, Tampa Electric developed a conservation program portfolio in 1981. By 1989, Tampa Electric was the only utility in Florida to have met its conservation goals. Through 2004, Tampa Electric spent $398.7 million in delivering cost-effective conservation programs to the marketplace. Tampa Electric’s Renewable Energy program invests in solar energy and biomass (energy from plant clippings), which offsets the use of coal to generate electricity. Grass from lawn clippings is part of a group of plant materials known as biomass, a renewable energy source that reduces air emissions and greenhouse gases. Tampa Electric has government permission to test bahia grass as a fuel to generate electricity at its Polk Power Station. More than 60 tons of bahia grass, grown and harvested on the 4,300-acre plant site near Mulberry, have been used successfully in the gasifier at the station.

Photovoltaic panels located at the Museum of Science and Industry in Tampa and at Walker Middle School in Odessa, Fla., harness energy from the sun. In 2007, the company dedicated a new solar array at Middleton High School in Tampa, the largest array in a Florida school. The company continues to evaluate opportunities to use renewable energy and alternative technologies. Residential and business customers can sign up online by purchasing blocks of power generated from renewable sources of energy in increments of $5 per month, which are added to the monthly electric bill. Since April 2004, customer participation in the program has increased from 233 to 1,422 participants. In-depth material on Tampa Electric’s conservation programs is available in the company’s 2005 Environmental Report, available at tecoenergy.com/enviroreport.

President and COO John Ramil and Executive Vice President and CFO Gordon Gillette celebrate the opening of the TECO Energy Center for Environmental Studies, part of the Nature’s Classroom project of Hillsborough County Public Schools.

OUR RESPONSIBILITY TO THE ENVIRONMENT

59


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

OUR ENVIRONMENTAL POLICY TECO Energy has taken a leading role in activities that protect the environment, while ensuring reliable and affordable electricity that is vital to the economic well-being of the communities we serve. We take our responsibilities seriously, yet we are aware that one company’s or one industry’s efforts alone are not enough to totally protect the environment. Participation from all elements of our economy, including individuals, is needed. Simultaneously, we are aware that efforts to address environmental policy, including resulting requirements, will raise costs for our customers. We believe our customers are willing to support additional costs that produce environmental benefits, but these benefits must be achieved in a responsible way that addresses the economic impact to consumers and businesses. Environmental policy, energy policy and economic policy cannot be separated.

As part of our environmental responsibility, TECO Energy concentrates its efforts in four main areas: conventional air emissions, energy efficiency, renewable energy and climate change/greenhouse gas initiatives. Conventional Air Emissions

We believe that all emissions from fossil fuels should be controlled using the most current technology, including conventional emissions from long-recognized controlled pollutants like sulfur dioxide (SO2), nitrogen oxides (NOx), mercury (Hg) and particulate matter (PM). It is our belief that these pollutants should be fully controlled on existing conventional pulverized coal and oil steam plants.TECO Energy’s principal subsidiary, the mid-sized utility Tampa Electric, has proven that it is possible to balance the need to be environmentally responsible with the need to provide its customers with affordable electricity. The company has taken significant steps to dramatically reduce these emissions. Those actions were begun over two decades ago, without edict or mandate from outside our company. Building on those initial efforts,

60

the company in 1999 committed to a sweeping $1.5-billion environmental improvement plan, which through the repowering of one coal-fired station, the optimization of flue gas desulfurization or “scrubber” technology and the installation of selective catalytic reduction (SCR) technology, will reduce systemwide emissions by more than 89 percent (SO2 ), 90 percent (NOx) and 72 percent (PM) compared to 1998 levels. This was accomplished without an increase to customers’ base electric rates. TECO Energy favors coal facilities that are fully controlled for conventional air pollutants. We remain supportive of national efforts to bring others into compliance as quickly as possible. Energy Efficiency

The State of Florida is a leader in energy efficiency and conservation efforts. Wider participation in conservation programs is a goal that has long been a priority for Tampa Electric. Since 1981, the company’s energy conservation programs have reduced summer peak demand by 251 megawatts and its winter peak demand by 731 megawatts. Tampa Electric has spent


close to $400 million establishing and promoting energy-saving programs. The company continues to look for opportunities to develop energyefficient ideas, to provide customers with more options for managing their energy use and to support conservation policies, ranging from energy-efficient appliances to efficient building codes. Renewable Energy

Renewables are a key component of any environmental policy. Tampa Electric’s renewable energy program utilizes energy from renewable sources that have included biomass and solar energy. Through the end of 2006, the company has produced more than 2 million kilowatthours of renewable energy, offsetting about 1,400 tons of coal and equivalent to removing 1,700 cars from the street. At the same time, Florida does not have significant sources of renewable energy. Support for tax incentives for renewable energy development specific to regional disparities will facilitate the development of new sources. Mandates for renewables portfolios at high percentages create concerns that credits will be purchased to meet the mandate, and no new renewables will be developed. Climate Change

High on the national and international agenda is the topic of climate change. When it comes to climate change, we believe that whether or not one agrees with the science on the issue, the United States must proceed promptly to actively pursue the reduction of greenhouse gas emissions in a way that does not economically disadvantage the nation. On

our own, we have addressed CO2 reductions through the repowering of a coal-fired station to natural gas. But that on its own is not enough, because shifting too much generation to natural gas poses negative economic consequences to our customers. For our next baseload generating unit, we are actively pursuing a new generation IGCC unit that will be designed to be capable of carbon capture. We are addressing our own situation. On a national level, we feel there are several key elements that should be the foundation of any legislative plan addressing greenhouse gases. The following section details key elements for consideration for any legislative proposal to address greenhouse gases. Greenhouse Gas Legislation

TECO Energy, through its principal subsidiary Tampa Electric, has made environmental strides long before the global warming issue and the focus on greenhouse gas emissions became prominent. The company is well positioned for the debate on climate change. In 1999, the company became the first utility in the nation to develop a plan with the U.S. Environmental Protection Agency to address EPA’s coal-fired utility initiative. The company committed to invest $1.5 billion through 2010 to dramatically reduce SO2 , NOx and particulate matter emissions from its system. In taking these steps, the company also reduced CO2 emissions by 20 percent. Now that national attention has shifted sharply toward greenhouse gases and global warming, the practical consensus is that actions should be taken to encourage reductions in greenhouse gases.

OUR RESPONSIBILITY TO THE ENVIRONMENT

61


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

Integrated Gasification Combined-Cycle Facility: Polk Power Station

Diluent Nitrogen 5250 TBD

MDEA Acid Gas Removal

COS Hydrolysis (COS H2S)

Cold Box

Acid Gas H2S + CO2

Cooling Water

To Sulfuric Acid Plant

55 psig Steam

Oxygen 2100 TPD Clean Syngas

Dryers

Final Filter Main Air Compressor 32 MW Coal 2500 TPD Water

Product Compressors 18MW

Combustor Gasifier

Coal/Water Slurry

Water Flyash & Chloride Removal

Scrubber

Clean Stack Gas

Air Radiant Syngas Cooler

Flyash & Water

Turbine Cumbustion Turbine

Compressor

Generator 192 MW

Heat Recovery Steam Generator (HRSG)

Raw Syngas

Rod Mill Convective Cooling Water

1600 psig Syngas Cooler

Slurry Tank

Slurry Pump

BFW Pump

Generator 123 MW

Saturated Steam

Economized Boiler Feedwater Lockhopper Slag & Water

Steam Turbine Condenser

Condensate Pump

Cooling Water

© 2007 Tampa Electric. All rights reserved.

About IGCC Technology

62

Uses low-cost carbon-based feedstocks to create a low-emission synthesis gas fuel for combustion

Allows the use of multiple carbon-based feedstocks, including renewables, such as biomass

Sulfur dioxide is removed prior to combustion

Nitrogen oxides are controlled with selective catalytic reduction

New generation units are capable of being equipped for carbon capture

Uses much less water than a conventional coal plant

Requires a smaller workforce to fully operate the plant


Such policy should: Apply greenhouse gas policy economywide to all industries. A national approach eliminates the patchwork quilt approach to regulation. Also, a comprehensive and seamless approach reflects the fact that several sectors contribute to man-made greenhouse gas emissions. An economywide effort ensures a comprehensive solution to the problem. Focus on, encourage and * – with subsidies and tax credits – developing technologies. These should be able to eliminate, reduce or control greenhouse gas emissions and related technologies and concepts, such as carbon capture and sequestration for advanced clean coal projects, such as IGCC. We believe that research and development efforts should be aimed at carbon capture and sequestration technology for a variety of industries. We also believe that IGCC provides the best opportunity for carbon capture, and the technology exists for demonstration of this capability. We recognize there are issues with the sequestration of carbon, including liability and leakage, but believe these can be addressed. We have already begun studying geologic sequestration at Polk Power Station. There should be continued financial support for IGCC. New regulatory mechanisms are also needed to address the recovery of the capital costs of clean coal technology.

Support an input-based cap-and-trade program that minimizes economic disruptions and rewards those that actually reduce emissions, as opposed to rewarding non-emitters. The top priority for any cap-andtrade program for Tampa Electric is to ensure the program rewards those who actually reduce greenhouse gas emissions. An input-based system provides for a more equal distribution of allowances and is based on a standard that reflects true emissions reductions and improvements in air quality. An output-based system would provide a windfall of allowances for non-emitters without adequately addressing compliance. Tampa Electric belongs to the U.S. Department of Energy’s Climate Challenge program and participates in the Chicago Climate Exchange, a voluntary but legally-binding cap-and-trade program dedicated to reducing greenhouse gas emissions. Give credit for early action for steps taken by companies prior to any mandated CO2 reduction program. Companies should be recognized for taking action prior to any mandates. Knowing they will receive credit for their efforts is an incentive to start sooner, rather than later. Tampa Electric long ago established itself as a leader in making sweeping changes voluntarily to comply with, rather than fight, ever-increasing environmental regulations. These and similar efforts should be recognized by providing credit for actions taken prior to the implementation of a mandatory greenhouse gas reduction program.

OUR RESPONSIBILITY TO THE ENVIRONMENT

63


TECO ENERGY, INC CORPORATE SOCIAL RESPONSIBILITY REPORT | OUR RESPONSIBILITY TO THE ENVIRONMENT

Support a realistic timeframe for addressing climate change that maintains fuel diversity, supports advanced clean coal technology, including IGCC, and avoids fuel switching. Coal, natural gas, renewables and nuclear power all have a role in addressing greenhouse gas reductions. Regional resources, technology advances and the time frame needed to build new capacity affect the implementation of each of these new technologies. Tampa Electric’s fuel diversity includes coal, natural gas, oil and renewables. We support coal as a plentiful, cost-effective and domestic fuel that can be environmentally friendly when burned using

advanced clean coal technology, especially IGCC. Natural gas can play a significant role in addressing carbon reductions, as can nuclear. These should be determined taking into consideration cost to electric customers, because there will be an economic impact. Ensure that any greenhouse gas initiative that is implemented does not economically disadvantage the United States. Such initiatives must include international participation to reduce emissions, including developing countries.

Nationally, a variety of approaches have been discussed for CO2 reduction, including a cap-and-trade program and a carbon tax in some form. Neither of these approaches have been fully explored, nor have reasonable alternatives been identified. In Tampa Electric's 2005 Environmental Report, the company described the potential impact of various scenarios for CO2 reductions at various price signals. The environmental policy described in this section would sufficiently eliminate those exposures to the company. The Environmental Report is available online at tecoenergy.com/enviroreport.

64


This report is printed on paper containing 30% post-consumer recycled fiber and is certified by Green Seal which meets the EPA guidelines for recycled papers. This paper was also manufactured with renewable, non-polluting, wind-generated energy.

P.O. Box 111 Tampa, FL 33601-0111 tecoenergy.com

094.0794 6M 5/07 RN


2006 Corporate Social Responsibility Report