Our financial condition and results could be adversely affected if our capital expenditures are greater than forecast.
We are forecasting capital expenditures at Tampa Electric to support the current levels of customer growth, to comply with
the design changes mandated by the FPSC to harden transmission and distribution facilities against hurricane damage, to maintain
transmission and distribution system reliability, to maintain coal-fired generating unit reliability and efficiency, and longer-term to
add generating capacity at the Polk Power Station.
If we are unable to maintain capital expenditures at the forecasted levels, we may need to draw on credit facilities or access
the capital markets on unfavorable terms. We cannot be sure that we will be able to obtain additional financing, in which case our
financial position, earnings and credit ratings could be adversely affected.
Our financial condition and ability to access capital may be materially adversely affected by ratings downgrades, and we
cannot be assured of any rating improvements in the future.
Our senior unsecured debt is rated as investment grade by Standard & Poor's (S&P) at BBB with a stable outlook, by
Moody's Investor's Services (Moody's) at Baa3 with a stable outlook, and by Fitch Ratings (Fitch) at BBB with a stable outlook.
The senior unsecured debt of Tampa Electric Company is rated by S&P at BBB+ with a stable outlook, by Moody's at Baa1 with a
stable outlook and by Fitch at A- with a stable outlook. Any downgrades by the rating agencies may affect our ability to borrow,
may change requirements for future collateral or margin postings, and may increase our financing costs, which may decrease our
earnings. We also may experience greater interest expense than we may have otherwise if, in future periods, we replace maturing
debt with new debt bearing higher interest rates due to any such downgrades. In addition, downgrades could adversely affect our
relationships with customers and counterparties.
At current ratings, Tampa Electric and PGS are able to purchase electricity and gas without providing collateral. If the ratings
of Tampa Electric Company decline to below investment grade, Tampa Electric and PGS could be required to post collateral to
support their purchases of electricity and gas .
Because we are a holding company, we are dependent on cash flow from our subsidiaries, which may not be available in the
amounts and at the times we need it.
We are a holding company and are dependent on cash flow from our subsidiaries to meet our cash requirements that are not
satisfied from external funding sources. Some of our subsidiaries have indebtedness containing restrictive covenants which, if
violated, would prevent them from making cash distributions to us.
Various factors could affect our ability to sustain our dividend.
Our ability to pay a dividend, or sustain it at current levels, could be affected by such factors as the level of our earnings and
therefore our dividend payout ratio, and pressures on our liquidity, including unplanned debt repayments, unexpected capital
spending and shortfalls in operating cash flow. These are in addition to any restrictions on dividends from our subsidiaries to us
discussed above.
Item 1B. UNRESOLVED STAFF COMMENTS.
None.
Item 2. PROPERTIES.
TECO Energy believes that the physical properties of its operating companies are adequate to carry on their businesses as
currently conducted. The properties of Tampa Electric are subject to a first mortgage bond indenture under which no bonds are
currently outstanding.
TAMPA ELECTRIC
Tampa Electric has four electric generating plants in service, with a December 2011 net winter generating capability of
4,684 MW. Tampa Electric assets include the Big Bend Power Station (1,582 MW capacity from four coal units and 61 MW from
a CT), the Bayside Power Station (2,083 MW capacity from two natural gas combined cycle units and four CTs), the Polk Power
Station (220 MW capacity from the IGCC unit and 732 MW capacity from four CTs) and 6 MW from the Howard Current
Advanced Waste Water Treatment Plant, operated by the City of Tampa.
The Big Bend coal fired units went into service from 1970 to 1985 and the CT was installed in 2009. The Polk IGCC unit
began commercial operation in 1996. In 1991, Tampa Electric purchased the Phillips Power Station from the Sebring Utilities
Commission (Sebring) and it was placed on long-term reserve standby in 2009. Bayside Unit 1 was completed in April 2003, Unit
2 was completed in January 2004, Units 5 and 6 were completed in April 2009 and Units 3 and 4 were completed in July 2009.
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