News Release

TECO Energy declares quarterly dividend

TAMPA, January 25, 2006

At its meeting today, the Board of Directors of TECO Energy, Inc. declared a dividend of 19 cents per share on the company's common stock. The dividend is payable February 15 to shareholders of record as of February 3.

Effective with the February 2007 dividend, the expected payment dates will move from the 15th of the month to the 28th. Thus, the expected 2007 dividend payment dates will be: February 28, May 28, August 28 and November 28, or the first business day following in the event that date falls on a weekend or bank holiday.

The company previously reported that, following the transfer of the Union and Gila River power stations to the lenders, some of its future common stock distributions might be characterized as return of capital distributions rather than ordinary dividend income for tax purposes. A return of capital distribution is generally a nontaxable reduction of the original purchase cost tax basis. This reduction in basis could affect future gains or losses, if any, on the sale of the shares, which would generally be taxed as capital gains or losses depending upon current law and the holding period for the shares.

The tax characterization of dividends depends upon the availability of the company's earnings and profits, as defined by the Internal Revenue Code, first for the current year and then on an accumulated basis. If the distribution is determined to be out of earnings and profits, it is characterized as ordinary taxable dividend income. If current and accumulated earnings and profits are negative, the distribution is characterized as a return of capital distribution. The preliminary results of a detailed earnings and profits study indicate that the company had negative current and accumulated earnings and profits when the November 2005 distribution was made, and that therefore this payment should be characterized as a return of capital when reported on IRS Form 1099. The company has provided this information regarding the taxability of its dividends to various tax reporting services for use in preparing the IRS Form 1099 to shareholders to report the quarterly dividends received from the company in 2005. Shareholders should consult their tax advisors for details as to what impact the tax treatment of this distribution will have in their individual tax situations.

TECO Energy expects that in 2006 the company's earnings and profits, as defined by the Internal Revenue Code, for the current year will be positive and that distributions will be characterized as ordinary taxable dividend income.

TECO Energy, Inc. (NYSE: TE) is an integrated energy-related holding company with regulated utility businesses, complemented by a family of unregulated businesses. Its principal subsidiary, Tampa Electric Company, is a regulated utility with both electric and gas divisions (Tampa Electric and Peoples Gas System). Other subsidiaries are engaged in waterborne transportation, coal and synthetic fuel production and electric generation and distribution in Guatemala.