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News Release

TECO Energy reports improved second quarter results

Company updates 2009 outlook

TAMPA, July 28, 2009

TECO Energy, Inc. (NYSE:TE) today reported second quarter net income of $60.9 million or $0.29 per share, compared to $51.4 million or $0.24 per share in the second quarter of 2008.

Year-to-date net income and earnings per share were $95.6 million or $0.45 per share in 2009, compared to $82.2 million or $0.39 per share in the same period in 2008.

TECO Energy Chairman and CEO Sherrill Hudson said, “Our improved results this quarter reflect the benefits of the recent balanced decisions by the Florida Public Service Commission in the base rate proceedings for our Florida utilities and better prices for our products at TECO Coal. Despite better weather, energy sales at our Florida utilities were reduced by the lower numbers of customers and the continued weak Florida economy. There are some signs that the economy may be near the bottom and that limited growth may be ready to resume, but we expect only a modest improvement later this year.”

Non-GAAP Results

The table below compares the TECO Energy GAAP net income to the non-GAAP measures used in this release. There were no non-GAAP adjustments to second quarter 2009 results. Non-GAAP results in the year-to-date and 12-months ended periods exclude the charges and gains described in the operating company discussions. Non-GAAP Results Excluding Synthetic Fuel exclude charges and gains and also exclude the earnings benefits associated with the production of synthetic fuel in the 12-months ended Jun. 30, 2008 period. For a reconciliation to GAAP results and a discussion regarding this presentation of non-GAAP results and management’s use of this information, please see the Non-GAAP Presentation section and Results Reconciliation table later in this release.

Results Comparisons

3 months ended June 30

6 months ended June 30

12 months ended June 30

(millions)

2009

2008

2009

2008

2009

2008

Net income

$ 60.9

$ 51.4

$ 95.6

$ 82.2

$175.7

$348.9

Net income from continuing operations

$ 60.9

$ 51.4

$ 95.6

$82.2

$175.7

$348.9

Non-GAAP Results With Synthetic Fuel

$ 60.9

$ 51.4

$ 90.5

$82.8

$190.9

$220.5

Non-GAAP Results Excluding Synthetic Fuel

$ 60.9

$ 51.4

$ 90.5

$ 82.8

$ 190.9

$209.6

Segment Reporting

The table below includes TECO Energy segment information on a GAAP basis, which includes all charges and gains and synthetic fuel-related benefits or costs for the periods shown.

Segment Information

3 months ended June 30

6 months ended June 30

12 months ended June 30

(millions)

Net Income (loss)

2009

2008

2009

2008

2009

2008

Tampa Electric

$48.5

$40.2

$66.8

$56.1

$146.3

$149.8

Peoples Gas System

4.6

5.3

15.8

15.3

27.6

25.5

TECO Coal

10.1

4.2

18.1

11.7

24.4

39.4

TECO Guatemala

7.9

14.9

21.1

25.4

32.6

47.0

Parent/other

(10.2)

(13.2)

(26.2)

(26.3)

(55.2)

69.2

TECO Transport (1)

--

--

--

--

--

18.0

Net income from continuing operations

60.9

51.4

95.6

82.2

175.7

348.9

Discontinued operations (1)

--

--

--

--

--

--

Total net income

$60.9

$51.4

$95.6

$82.2

$175.7

$348.9

(1) Due to the ongoing contractual relationship for solid fuel waterborne transportation services, TECO Transport was not classified as a discontinued operation and is included in TECO Energy’s historical results through the sale in December 2007.

Operating Company Results:

All amounts included in the operating company and Parent / Other results discussions are after tax, unless otherwise noted.

Tampa Electric

Tampa Electric reported net income for the second quarter of $48.5 million, compared with $40.2 million for the same period in 2008. Results for the quarter reflected 4.8% higher base revenues due to the increase in base rates effective May 7, 2009, higher earnings on nitrogen oxide (NOx) control projects, a 0.2% lower average number of customers, and slightly higher operations and maintenance expenses. Net income included $2.5 million of Allowance for Funds Used During Construction (AFUDC) - equity, which represents allowed equity cost capitalized to construction costs, related to the installation of NOx control equipment and combustion turbines for peak loads, compared with $1.7 million in the 2008 period.

In the second quarter of 2009, there was no reduction in net income due to the previous waterborne transportation disallowance for the transportation of solid fuel, which reduced net income $2.3 million in the 2008 period. In November 2008, the Florida Public Service Commission (FPSC) approved Tampa Electric's fuel adjustment filing, which included full recovery of waterborne transportation costs under new contracts effective Jan. 1, 2009. This approval eliminated the annual reduction in net income that occurred in 2004 through 2008 during the previous transportation contract.

Total retail energy sales decreased 4.7% in the second quarter of 2009, compared to the same period in 2008. Although total degree days in Tampa Electric's service area were 5% above normal and 3% above the second quarter of 2008, the 15 consecutive days of rain in May, the third wettest May on record, contributed to the lower energy sales. Sales to the residential, commercial and industrial customer segments decreased 4.5%, 3.6% and 10.1%, respectively, in the second quarter, driven primarily by the weak housing market, economic conditions and the weather. Pretax base revenues increased approximately $15 million in the second quarter due to higher base rates approved by the Florida Public Service Commission for Tampa Electric effective May 7, 2009, which were partially offset by the lower number of customers and the effects of the weather .

Operations and maintenance expense, excluding all FPSC-approved cost recovery clauses, increased $0.6 million. The increase included the write-off of $0.6 million of disallowed rate case expenses, and higher employee-related expenses, including pension, that were offset by lower power generating unit maintenance and lower overhead expenses. Bad-debt expense was $0.1 million higher than in the second quarter of 2008.

Compared to the second quarter of 2008, depreciation expense increased $2.3 million, reflecting additions to facilities to serve customers. Interest expense at Tampa Electric increased slightly due to higher long-term debt balances outstanding, and interest income decreased due to lower interest rates and lower under-recovered fuel balances on which interest is accrued.

Year-to-date net income was $66.8 million, compared with $56.1 million in the 2008 period, driven primarily by the higher base revenues from the new base rates and higher earnings on NOx control projects, partially offset by 0.2% lower average number of customers, and higher operations and maintenance expenses. Net income included $5.8 million of AFUDC - equity related to the installation of NOx control equipment and combustion turbines for peak loads, compared with $3.0 million in the 2008 period. Sales to other utilities declined 37% from the 2008 period, reflecting lower demand and lower natural gas prices. In the 2009 year-to-date period, there was no reduction in net income due to the waterborne transportation disallowance for the transportation of solid fuel, compared to a $3.9 million reduction in the 2008 period.

In the 2009 year-to-date period, total retail energy sales decreased 2.4%, compared to the 2008 period driven primarily by the economy, weather in the second quarter, and the 0.2% decline in the average number of customers. Total degree days in Tampa Electric's service area were 5% above normal and 6% above the prior year; however, extended periods of rain reduced sales in May. Colder winter weather in the first quarter contributed to a 0.3% increase in sales to the weather-sensitive residential customer class. Sales to commercial and industrial customers declined by 4.1% and 7.9% respectively, primarily due to economic conditions. Operations and maintenance expense, excluding all FPSC-approved cost recovery clauses, increased $3.5 million. The increase included the second quarter write-off of disallowed rate case expenses and higher employee related expenses that were partially offset by lower power generating unit maintenance and overhead costs. Bad-debt expense was $0.3 million higher in the 2009 year-to-date period than in 2008.

Compared to the 2008 year-to-date period, depreciation expense increased $4.0 million, reflecting additions to facilities to serve customers. Interest expense at Tampa Electric increased slightly due to higher long-term debt balances outstanding.

Peoples Gas

Peoples Gas reported net income of $4.6 million for the second quarter, compared to $5.3 million in the same period in 2008. Quarterly results reflect a 0.2% lower average number of customers due to the weak Florida housing market, decreased sales to residential customers and increased sales to commercial customers due to several higher volume new customers. Base rates increased due to an interim base rate increase granted in October 2008 and the higher permanent base rates effective June 18, 2009. Gas transported for power generation customers increased in 2009, compared to the second quarter of 2008 when mild weather, generating unit outages, and the use of other fuels for power generation due to high gas prices affected natural gas used for power generation. Lower sales volumes to industrial customers reflected economic conditions and reduced operations by industries sensitive to the housing market, such as cement plants and wallboard producers. Non-fuel operations and maintenance expense increased, primarily due to higher spending on pipeline integrity inspections and the $0.4 million write-off of disallowed rate case expenses partially offset by lower overhead costs. Results also reflect increased depreciation expense due to routine plant additions.

Peoples Gas reported net income of $15.8 million for the year-to-date period, compared to $15.3 million in the same period in 2008. Results reflect a 0.2% lower average number of customers. Residential customer usage increased due to colder winter weather in the first quarter of 2009, compared to the very mild winter weather in 2008. Gas transported for power generation customers increased over the year-to-date period 2008. Non-fuel operations and maintenance expense increased, due to the same factors as the second quarter.

TECO Coal

In 2009, TECO Coal achieved second quarter net income of $10.1 million on sales of 2.2 million tons, compared to $4.2 million on sales of 2.4 million tons in the same period in 2008. Results reflect an average net per-ton selling price, excluding transportation allowances, of more than $70 per ton, almost 17% higher than 2008, but below prior guidance due to a sales mix that was more heavily weighted to steam coal. Second quarter 2009 metallurgical coal sales were below prior projections due to economic conditions that have reduced demand for steel products worldwide. In the second quarter of 2009, the all-in total per-ton cost of production increased to more than $65 per ton, almost 12% over 2008’s level, and within the cost guidance range previously provided. Net income for the quarter included $2.0 million related to a payment for a contract renegotiation with a steam coal customer, which resulted in higher selling prices in 2009 in exchange for deferred deliveries of contracted tons into 2010 and 2011. Due to tax percentage depletion differences between periods, in the second quarter of 2009 TECO Coal's effective income tax rate was 14% compared to 6% in the 2008 period.

TECO Coal recorded year-to-date net income of $18.1 million on sales of 4.5 million tons in 2009, compared to $11.7 million on sales of 4.9 million tons in the 2008 period. T he year-to-date sales mix was driven by the same factors as the second quarter. The 2009 year-to-date average net per-ton selling price and the all-in total per-ton cost of production were similar to those in the second quarter. Results in 2008 reflected a $0.6 million benefit in the first quarter from the true-up of the 2007 synthetic fuel tax credit rate. I n the 2009 year-to-date period, TECO Coal's effective income tax rate was 14% compared to 15% in the 2008 period.

TECO Guatemala

TECO Guatemala reported second quarter net income of $7.9 million in 2009, compared to $14.9 million in the 2008 period. Year-to-date 2009 net income was $21.1 million, compared to $25.4 million in the 2008 period. Year-to-date 2009 non-GAAP results were $12.4 million, which exclude the $8.7 million gain on the sale of the telecommunication company, Navega, recorded in the first quarter. There were no non-GAAP adjustments to 2008 results in either period. Results in the 2009 quarter for the distribution utility (EEGSA) and affiliated companies also include a $2.5 million benefit related to an adjustment to previously estimated year-end equity balances, compared to a similar $3.1 million benefit in 2008.

Lower contract and spot energy sales at the San José Power Station reduced net income $3.8 million in the second quarter of 2009 due to the extended unplanned outage as a result of a generator rotor failure. The repairs were completed and the unit returned to service July 2. The 2009 results reflect $2.5 million of lower net income from EEGSA as a result of the reduction in the Value A dded Distribution tariff (VAD) in August 2008, partially offset by customer and energy sales growth . The earnings from the unregulated EEGSA-affiliated companies (DECA II), which provide, among other things, electricity transmission services, wholesale power sales to unregulated electric customers and engineering services, increased in both periods from fundamental growth in the businesses.

Parent / Other

The cost for “Parent/other” in the second quarter of 2009 was $10.2 million, compared to a cost of $13.2 million in the same period in 2008. Results in 2009 included a $2.6 million benefit from a sale of property by TECO Properties. The year-to-date “Parent/other” cost was $26.2 million in 2009, compared to $26.3 million in the 2008 period. The 2009 year-to-date Parent/other non-GAAP cost was $22.6 million, excluding the $3.6 million valuation adjustment recorded in the first quarter on student-loan securities held at TECO Energy parent . In 2008, the year-to-date non-GAAP cost for Parent/other was $25.7 million excluding the $0.6 million after-tax adjustment to previously estimated transaction costs related to the sale of TECO Transport. (See the Results Reconciliation table.)

Cash and Liquidity

The table below sets forth the Jun. 30, 2009 consolidated liquidity and cash balances, the cash balances at the operating companies and TECO Energy parent, and amounts available under the TECO Energy/Finance and Tampa Electric Company credit facilities.

Balances as of Jun. 30, 2009

(millions)

Consolidated

Tampa Electric Company

Unregulated Companies

Parent

Credit facilities

$ 675.0

$ 475.0

$ --

$ 200.0

Drawn amounts/LCs

201.4

165.3

--

36.1

Available credit facilities

473.6

309.7

--

163.9

Cash and short-term investments

28.0

5.6

17.9

4.5

Total liquidity

$501.6

$315.3

$17.9

$168.4

Consolidated other cash and short-term investments includes $17.9 million of cash at the unregulated operating companies for normal operations. In addition to consolidated cash, as of Jun. 30, 2009 unconsolidated affiliates owned by TECO Guatemala, CGESJ (San José) and TCAE (Alborada), had unrestricted cash balances of $18.9 million, which are not included in the table above.

2009 Earnings Outlook

TECO Energy indicated in May an outlook for 2009 earnings per share to be within a range of $1.00 and $1.15 per share, excluding charges and gains, and continues to expect earnings to be within that range.

The May guidance was provided in the form of a range to allow for varying outcomes with respect to important variables, such as a start to an economic recovery late in 2009, weather and customer usage at the Florida utilities, pricing and demand for production at TECO Coal for uncontracted tons and the potential impact of the world-wide economic slowdown on coal demand. The upper end of the guidance range in May included TECO Coal’s full sales forecast of 9.9 million tons, including the 0.4 million tons that were unsold at that time, at an average selling price of $73 per ton and an average all-in, total cost of production in a range between $63 and $66 per ton. At the same time, Tampa Electric forecasted that an economic recovery would begin later in 2009 and there would be 0.1% customer growth for the year with energy sales growth slightly above that.

Consistent with the guidance provided in May , for the remainder of 2009 Tampa Electric will benefit from the higher base rates that became effective May 7. Additionally, a base rate increase will become effective August 13 as a result of the recent FPSC decision on Tampa Electric’s Motion for Reconsideration. Tampa Electric and Peoples Gas have continued to experience lower numbers of retail customers and continued economic weakness in the areas served, which has reduced sales to commercial and industrial customers. Both utilities are focused on managing costs to offset the lower number of customers and lower energy sales forecasts than were included in their base rate proceedings. Tampa Electric continues to anticipate the start of an economic recovery late in 2009 to produce limited customer and weather-normalized energy sales growth, and also expects higher AFUDC, and ECRC-related earnings on an additional NOx control project that entered service in May. Peoples Gas will benefit from higher base rates that were effective June 18, but expects resumption of customer growth to lag Tampa Electric. The rate design approved by the FPSC in Peoples Gas’ base rate proceeding makes it less volume and weather sensitive.

At TECO Coal, the world-wide demand for metallurgical coal remains weak, and domestic steam coal usage has been reduced due to declining electricity sales to commercial and industrial customers nationwide. TECO Coal expects total sales volumes below prior guidance due to the 0.4 million tons of metallurgical coal that remains unsold and the possible net deferral of 0.2 to 0.7 million tons of steam and metallurgical coal from 2009 into 2010 and 2011. Due to less metallurgical coal in the product mix, the average per-ton selling price is expected to be slightly below the previously provided guidance. TECO Coal expects the all-in total cost of production to be within the previously provided range but towards the high end reflecting the lower volume. TECO Coal’s effective income tax rate is now expected to be about 18% in 2009.

TECO Guatemala previously indicated earnings for 2009 would be lower than 2008 levels and that outlook remains unchanged. Repairs were completed on the San José Power Station and the unit returned to service July 2. Provided crude oil prices remain in the $60 per barrel or higher range, the station is expected to run at 65% capacity factor or more for the remainder of the year. TECO Guatemala benefited from the second quarter adjustment to previously estimated year-end equity balances, and the DECA II companies continue to seek opportunities to offset the impact of the 2008 VAD decision.

Non-GAAP Presentation

The "Results Reconciliation" table below presents non-GAAP financial results after elimination of the effects of certain identified gains and charges in the 2009 and 2008 quarterly periods and earnings from the production of synthetic fuel in the 12-months ended 2008 period . The production of synthetic fuel ended in December 2007 upon the expiration of the Federal tax credit program associated with the production of synthetic fuel. This non-GAAP presentation provides investors additional information to compare 2009 results, which include no synthetic fuel production, to 12-month ended 2008 results, which included synthetic fuel production.

Management believes it is helpful to present a non-GAAP measure of

performance that clearly reflects the ongoing operations of TECO Energy's businesses and which allows investors to better understand and evaluate the business as it is expected to operate in future periods.

Management and the Board of Directors use non-GAAP measures as a yardstick for measuring the company's performance, in making decisions that are dependent upon the profitability of the company's various operating units, and in determining levels of incentive compensation.

The non-GAAP measures of financial performance used by the company are not measures of performance under accounting principles generally accepted in the United States and should not be considered an alternative to net income or other GAAP figures as an indicator of the company's financial performance or liquidity. TECO Energy's non-­ GAAP presentation of net income may not be comparable to similarly titled measures used by other companies.


Results Reconciliation

(millions)

3 months ended June 30

6 months ended June 30

12 months ended June 30

2009

2008

2009

2008

2009

2008

GAAP net income

$60.9

$51.4

$95.6

$82.2

$175.7

$348.9

Exclude discontinued operations

--

--

--

--

--

--

GAAP net income from continuing operations

$60.9

$51.4

$95.6

$82.2

$175.7

$348.9

Add TECO Transport transaction costs recorded at TECO Energy parent

--

--

--

0.6

6.9

Exclude TECO Transport depreciation

--

--

--

--

--

(6.1)

Exclude gain on TECO Transport sale

--

--

--

--

--

(149.4)

Add parent debt extinguishment

--

--

--

--

--

20.2

Exclude TECO Transport transaction costs and final adjustments recorded at TECO Energy parent

--

--

--

--

(3.2)

--

Exclude gain on sale of Navega

--

--

(8.7)

--

(8.7)

--

Add valuation adjustment on auction rate securities

--

--

3.6

--

3.6

--

Add Tampa Electric waterborne transportation audit adjustment

--

--

--

--

1.9

--

Add taxes on repatriated cash and investments

--

--

--

--

21.6

--

Total charges and gains

--

--

(5.1)

0.6

15.2

(128.4)

Non-GAAP results from continuing operations (1)

$60.9

$51.4

$90.5

$82.8

$190.9

$220.5

Synthetic fuel cost / (benefit)

--

--

--

--

--

(10.9)

Non-GAAP results excluding synthetic fuel

$60.9

$51.4

$90.5

$82.8

$190.9

$209.6

(1) A non-GAAP financial measure is a numerical measure that includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable GAAP measure.

Webcast

As previously announced, TECO Energy will host a Webcast with the investment community on its second quarter results at 5:00 PM Eastern time, Tuesday, July 28, 2009. The Webcast will be accessible through the link on TECO Energy’s Website: www.tecoenergy.com. The Webcast and accompanying slides will be available for replay for 30 days through the Web site, beginning approximately two hours after the conclusion of the live event.

TECO Energy, Inc. (NYSE: TE) is an energy-related holding company. Its principal subsidiary, Tampa Electric Company, is a regulated utility in Florida with both electric and gas divisions (Tampa Electric and Peoples Gas System). Other subsidiaries include TECO Coal, which owns and operates coal production facilities in Kentucky and Virginia , and TECO Guatemala, which is engaged in electric power generation and distribution and energy-related businesses in Guatemala.

Note: This press release 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. The forecasted results are based on the company's current expectations and assumptions, and the company does not undertake to update that information or any other information contained in this press release, except as may be required by law. Factors that could impact actual results include: regulatory actions by federal, state or local authorities; unexpected capital needs or unanticipated reductions in cash flow that affect liquidity; the ability to access to capital and credit markets when required; the availability of adequate rail transportation capacity for the shipment of TECO Coal's production; general economic conditions affecting energy sales at the utility companies; economic conditions, both national and international, affecting the Florida economy and demand for TECO Coal 's production; weather variations and changes in customer energy usage patterns affecting sales and operating costs at Tampa Electric and Peoples Gas and the effect of extreme weather conditions or hurricanes; operating conditions, commodity price and operating cost changes affecting the production levels and margins at TECO Coal; fuel cost recoveries and related cash at Tampa Electric and natural gas demand at Peoples Gas; the ability of TECO Energy's subsidiaries to operate equipment without undue accidents, breakdowns or failures; changes in the U.S. federal tax code on earnings from foreign investments that could reduce earnings; the ability to increase the utilization of the coal-fired San José Power Station versus competing oil-fired generators during a period of lower oil prices; and the ultimate outcome of efforts to revise the significantly lower EEGSA VAD tariff rates implemented by regulatory authorities in Guatemala effective Aug. 1, 2008 affecting TECO Guatemala's results. Additional information is contained under "Risk Factors" in TECO Energy, Inc.'s Annual Report on Form 10-K for the period ended Dec. 31, 2008.


Summary Information as of June 30, 2009

3 months ended

6 months ended

12 months ended

(millions except per share amounts)

2009

2008

2009

2008

2009

2008

Revenues

$825.2

$887.2

$1,649.2

$1,678.9

$3,345.5

$3,527.3

Net income

$ 60.9

$ 51.4

$ 95.6

$82.2

$ 175.7

$348.9

Earnings (loss) per share – basic

$0.29

$0.24

$0.45

$0.39

$0.82

$1.65

Earnings (loss) per share – diluted

$0.29

$0.24

$0.45

$0.39

$0.82

$1.65

Average common shares outstanding – basic

211.7

210.4

211.6

210.1

211.4

209.7

Average common shares outstanding – diluted

212.5

212.1

212.3

211.6

212.1

211.1

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