##### Index to Financial Statements





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to







|                    |  |  |  |                                                                                                                                             |  |                                     
|------------------- |  |  |  | ------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------
|Commission
File No. |  |  |  | Exact name of each Registrant as specified in
its charter, state of incorporation, address of
principal executive offices, telephone number |  | I.R.S. 
EmployerIdentificationNumber
|1-8180              |  |  |  | TECO ENERGY, INC. (a
Florida corporation) TECO Plaza 702
N. Franklin Street Tampa, Florida 33602
(813) 228-1111                             |  | 59-2052286                          
|                    |  |  | 
|1-5007              |  |  |  | TAMPA ELECTRIC COMPANY
(a Florida corporation) TECO Plaza
702 N. Franklin Street Tampa, Florida
33602 (813) 228-1111                        |  | 59-0475140                          





Indicate by check mark whether
the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) have been subject to such filing requirements for the past 90
days.    YES  x    NO   ̈

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such
files).    YES   ̈    NO   ̈

Indicate by check mark whether TECO Energy, Inc. is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  | x |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  |  ̈

Indicate
by check mark whether Tampa Electric Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and
smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  | x |  | Smaller reporting company |  |  ̈

Indicate
by check mark whether TECO Energy, Inc. is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    YES   ̈    NO  x

Indicate by check mark whether Tampa Electric Company is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    YES   ̈    NO  x

The number of shares of TECO Energy, Inc.s common stock outstanding as of Apr. 30, 2010 was 213,917,701. As of Apr. 30, 2010, there were 10 shares
of Tampa Electric Companys common stock issued and outstanding, all of which were held, beneficially and of record, by TECO Energy, Inc.

Tampa Electric Company meets the conditions set forth in General Instruction (H) (1) (a) and (b) of Form 10-Q and is therefore filing
this form with the reduced disclosure format.

This combined Form 10-Q represents separate filings by TECO Energy, Inc. and Tampa Electric
Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Each registrant makes representations only as to information relating to itself and its subsidiaries.

Page 1 of 54

Index to Exhibits appears on page 53.









---

##### Index to Financial Statements

PART I. FINANCIAL INFORMATION



|Item 1. | CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|------- | -------------------------------------------

TECO ENERGY, INC.

In the opinion of management, the unaudited consolidated condensed financial statements include all adjustments that are of a recurring
nature and necessary to state fairly the financial position of TECO Energy, Inc. and subsidiaries as of Mar. 31, 2010 and Dec. 31, 2009, and the results of their operations and cash flows for the periods ended Mar. 31, 2010 and 2009. The results of
operations for the three month period ended Mar. 31, 2010 are not necessarily indicative of the results that can be expected for the entire fiscal year ending Dec. 31, 2010. References should be made to the explanatory notes affecting the
consolidated financial statements contained in TECO Energy, Inc.s Annual Report on Form 10-K for the year ended Dec. 31, 2009 and to the notes on pages 8 through 25 of this report.

INDEX TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



|                                                                                                                   |  |         
|------------------------------------------------------------------------------------------------------------------ |  | --------
|                                                                                                                   |  | Page No.
|                                                                                                                   | 
|Consolidated Condensed Balance Sheets, Mar. 31, 2010 and Dec. 31, 2009                                             |  | 3-4     
|                                                                                                                   | 
|Consolidated Condensed Statements of Income for the three month periods ended Mar. 31, 2010 and 2009               |  | 5       
|                                                                                                                   | 
|Consolidated Condensed Statements of Comprehensive Income for the three month periods ended Mar. 31, 2010 and 2009 |  | 6       
|                                                                                                                   | 
|Consolidated Condensed Statements of Cash Flows for the three month periods ended Mar. 31, 2010 and 2009           |  | 7       
|                                                                                                                   | 
|Notes to Consolidated Condensed Financial Statements                                                               |  | 8-25    



2



---

##### Index to Financial Statements

TECO ENERGY, INC.

Consolidated Condensed Balance Sheets

Unaudited



|                                                                                                                 |  |              |          |   |              |   |          |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ------------ | - | -------- | -
|Assets
(millions, except for share amounts)                                                                      |  | Mar. 31,2010 |          |   | Dec. 31,2009 |  
|                                                                                                                 |  |             
|Current assets                                                                                                   |  |              |          |   |              |   |          |  
|Cash and cash equivalents                                                                                        |  | $            | 232.0    |   |              | $ | 46.0     |  
|Short-term investments                                                                                           |  |              |         |   |              |   | 0.8      |  
|Receivables, less allowance for uncollectibles of $3.3 and $3.0 at Mar. 31, 2010 and Dec. 31, 2009, respectively |  |              | 347.9    |   |              |   | 277.4    |  
|Inventories, at average cost                                                                                     |  |              |          |   |              |   |          |  
|Fuel                                                                                                             |  |              | 154.0    |   |              |   | 124.3    |  
|Materials and supplies                                                                                           |  |              | 74.5     |   |              |   | 65.7     |  
|Current derivative asset                                                                                         |  |              | 0.5      |   |              |   | 0.8      |  
|Current regulatory assets                                                                                        |  |              | 117.0    |   |              |   | 109.2    |  
|Prepayments and other current assets                                                                             |  |              | 24.5     |   |              |   | 25.7     |  
|Income tax receivables                                                                                           |  |              | 2.1      |   |              |   | 1.7      |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Total current assets                                                                                             |  |              | 952.5    |   |              |   | 651.6    |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|                                                                                                                 |  |             
|Property, plant and equipment                                                                                    |  |              |          |   |              |   |          |  
|Utility plant in service                                                                                         |  |              |          |   |              |   |          |  
|Electric                                                                                                         |  |              | 6,300.2  |   |              |   | 6,079.5  |  
|Gas                                                                                                              |  |              | 1,024.6  |   |              |   | 1,017.2  |  
|Construction work in progress                                                                                    |  |              | 346.0    |   |              |   | 304.5    |  
|Other property                                                                                                   |  |              | 382.3    |   |              |   | 377.2    |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Property, plant and equipment                                                                                    |  |              | 8,053.1  |   |              |   | 7,778.4  |  
|Accumulated depreciation                                                                                         |  |              | (2,318.4 | ) |              |   | (2,234.3 | )
|                                                                                                                 |  |              |          |   |              |   |          |  
|Total property, plant and equipment, net                                                                         |  |              | 5,734.7  |   |              |   | 5,544.1  |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|                                                                                                                 |  |             
|Other assets                                                                                                     |  |              |          |   |              |   |          |  
|Deferred income taxes                                                                                            |  |              | 188.5    |   |              |   | 222.7    |  
|Long-term regulatory assets                                                                                      |  |              | 338.2    |   |              |   | 335.6    |  
|Long-term derivative assets                                                                                      |  |              | 0.3      |   |              |   | 0.2      |  
|Investment in unconsolidated affiliates                                                                          |  |              | 146.2    |   |              |   | 279.3    |  
|Goodwill                                                                                                         |  |              | 59.4     |   |              |   | 59.4     |  
|Deferred charges and other assets                                                                                |  |              | 131.0    |   |              |   | 126.6    |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Total other assets                                                                                               |  |              | 863.6    |   |              |   | 1,023.8  |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Total assets                                                                                                     |  | $            | 7,550.8  |   |              | $ | 7,219.5  |  
|                                                                                                                 |  |              |          |   |              |   |          |  

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



3



---

##### Index to Financial Statements

TECO ENERGY, INC.

Consolidated Condensed Balance Sheetscontinued

Unaudited





|                                                                                                                                   |  |              |         |   |              |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------ | - | ------- | -
|Liabilities and Capital
(millions, except for share amounts)                                                                       |  | Mar. 31,2010 |         |   | Dec. 31,2009 |  
|                                                                                                                                   |  |             
|Current liabilities                                                                                                                |  |              |         |   |              |   |         |  
|Long-term debt due within one year                                                                                                 |  |              |         |   |              |   |         |  
|Recourse                                                                                                                           |  | $            | 206.5   |   |              | $ | 106.5   |  
|Non-recourse                                                                                                                       |  |              | 9.8     |   |              |   | 1.4     |  
|Notes payable                                                                                                                      |  |              | 18.0    |   |              |   | 55.0    |  
|Accounts payable                                                                                                                   |  |              | 240.3   |   |              |   | 251.4   |  
|Customer deposits                                                                                                                  |  |              | 153.1   |   |              |   | 151.2   |  
|Current regulatory liabilities                                                                                                     |  |              | 69.0    |   |              |   | 85.4    |  
|Current derivative liabilities                                                                                                     |  |              | 67.8    |   |              |   | 34.0    |  
|Interest accrued                                                                                                                   |  |              | 74.9    |   |              |   | 45.3    |  
|Taxes accrued                                                                                                                      |  |              | 42.7    |   |              |   | 20.5    |  
|Other current liabilities                                                                                                          |  |              | 17.4    |   |              |   | 20.6    |  
|                                                                                                                                   |  |              |         |   |              |   |         |  
|Total current liabilities                                                                                                          |  |              | 899.5   |   |              |   | 771.3   |  
|                                                                                                                                   |  |              |         |   |              |   |         |  
|                                                                                                                                   |  |             
|Other liabilities                                                                                                                  |  |              |         |   |              |   |         |  
|Investment tax credits                                                                                                             |  |              | 10.7    |   |              |   | 10.8    |  
|Long-term regulatory liabilities                                                                                                   |  |              | 608.2   |   |              |   | 602.6   |  
|Long-term derivative liabilities                                                                                                   |  |              | 8.1     |   |              |   | 3.6     |  
|Deferred credits and other liabilities                                                                                             |  |              | 534.5   |   |              |   | 544.2   |  
|Long-term debt, less amount due within one year                                                                                    |  |              |         |   |              |   |         |  
|Recourse                                                                                                                           |  |              | 3,342.6 |   |              |   | 3,195.4 |  
|Non-recourse                                                                                                                       |  |              | 42.2    |   |              |   | 6.2     |  
|                                                                                                                                   |  |              |         |   |              |   |         |  
|Total other liabilities                                                                                                            |  |              | 4,546.3 |   |              |   | 4,362.8 |  
|                                                                                                                                   |  |              |         |   |              |   |         |  
|                                                                                                                                   |  |             
|Commitments and contingencies (see Note 10)                                                                                        |  |              |         |   |              |   |         |  
|                                                                                                                                   |  |             
|Capital                                                                                                                            |  |              |         |   |              |   |         |  
|Common equity (400.0 million shares authorized; par value $1; 213.9 million shares outstanding at Mar. 31, 2010 and Dec. 31,
2009) |  |              | 213.9   |   |              |   | 213.9   |  
|Additional paid in capital                                                                                                         |  |              | 1,533.3 |   |              |   | 1,530.8 |  
|Retained earnings                                                                                                                  |  |              | 378.8   |   |              |   | 365.7   |  
|Accumulated other comprehensive loss                                                                                               |  |              | (21.5   | ) |              |   | (25.0   | )
|                                                                                                                                   |  |              |         |   |              |   |         |  
|TECO Energy Stockholders' Equity                                                                                                   |  |              | 2,104.5 |   |              |   | 2,085.4 |  
|Noncontrolling Interest                                                                                                            |  |              | 0.5     |   |              |   |        |  
|                                                                                                                                   |  |              |         |   |              |   |         |  
|Total Equity                                                                                                                       |  |              | 2,105.0 |   |              |   | 2,085.4 |  
|Total liabilities and capital                                                                                                      |  | $            | 7,550.8 |   |              | $ | 7,219.5 |  
|                                                                                                                                   |  |              |         |   |              |   |         |  

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



4



---

##### Index to Financial Statements

TECO ENERGY, INC.

Consolidated Condensed Statements of Income

Unaudited



|                                                                                                                 |  |                             |       |   |      |   |       |  
|---------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                                                 |  | Three months ended Mar. 31, |      
|(millions, except per share amounts)                                                                             |  | 2010                        |       |   | 2009 |  
|Revenues                                                                                                         |  |                             |       |   |      |   |       |  
|Regulated electric and gas (includes franchise fees and gross receipts taxes of $30.9 in 2010 and $30.1 in 2009) |  | $                           | 706.5 |   |      | $ | 653.8 |  
|Unregulated                                                                                                      |  |                             | 205.8 |   |      |   | 170.2 |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Total revenues                                                                                                   |  |                             | 912.3 |   |      |   | 824.0 |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Expenses                                                                                                         |  |                             |       |   |      |   |       |  
|Regulated operations                                                                                             |  |                             |       |   |      |   |       |  
|Fuel                                                                                                             |  |                             | 164.0 |   |      |   | 228.7 |  
|Purchased power                                                                                                  |  |                             | 57.2  |   |      |   | 42.2  |  
|Cost of natural gas sold                                                                                         |  |                             | 116.0 |   |      |   | 88.3  |  
|Other                                                                                                            |  |                             | 87.9  |   |      |   | 77.0  |  
|Operation other expense                                                                                          |  |                             |       |   |      |   |       |  
|Mining related costs                                                                                             |  |                             | 117.6 |   |      |   | 118.5 |  
|Guatemalan Power Generation                                                                                      |  |                             | 15.2  |   |      |   | 3.1   |  
|Other                                                                                                            |  |                             | 1.6   |   |      |   | 1.0   |  
|Maintenance                                                                                                      |  |                             | 44.7  |   |      |   | 52.4  |  
|Depreciation and amortization                                                                                    |  |                             | 77.0  |   |      |   | 69.7  |  
|Restructuring charges                                                                                            |  |                             | 1.5   |   |      |   |      |  
|Taxes, other than income                                                                                         |  |                             | 60.7  |   |      |   | 60.4  |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Total expenses                                                                                                   |  |                             | 743.4 |   |      |   | 741.3 |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Income from operations                                                                                           |  |                             | 168.9 |   |      |   | 82.7  |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Other income (expense)                                                                                           |  |                             |       |   |      |   |       |  
|Allowance for other funds used during construction                                                               |  |                             | 1.0   |   |      |   | 3.3   |  
|Other income                                                                                                     |  |                             | 3.4   |   |      |   | 14.0  |  
|Loss on debt extinguishment                                                                                      |  |                             | (26.4 | ) |      |   |      |  
|Income from equity investments                                                                                   |  |                             | 2.7   |   |      |   | 8.8   |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Total other income                                                                                               |  |                             | (19.3 | ) |      |   | 26.1  |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Interest charges                                                                                                 |  |                             |       |   |      |   |       |  
|Interest expense                                                                                                 |  |                             | 59.9  |   |      |   | 57.6  |  
|Allowance for borrowed funds used during construction                                                            |  |                             | (0.6  | ) |      |   | (1.3  | )
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Total interest charges                                                                                           |  |                             | 59.3  |   |      |   | 56.3  |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Income before provision for income taxes                                                                         |  |                             | 90.3  |   |      |   | 52.5  |  
|Provision for income taxes                                                                                       |  |                             | 34.3  |   |      |   | 17.8  |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Net income                                                                                                       |  | $                           | 56.0  |   |      | $ | 34.7  |  
|Less: Net income attributable to noncontrolling interest                                                         |  |                             | (0.2  | ) |      |   |      |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Net income attributable to TECO Energy                                                                           |  | $                           | 55.8  |   |      | $ | 34.7  |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Average common shares outstanding Basic                                                                         |  |                             | 212.2 |   |      |   | 211.4 |  
| Diluted                                                                                                        |  |                             | 213.9 |   |      |   | 212.2 |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Earnings per share attributable to TECO Energy Basic                                                            |  | $                           | 0.26  |   |      | $ | 0.16  |  
| Diluted                                                                                                        |  | $                           | 0.26  |   |      | $ | 0.16  |  
|                                                                                                                 |  |                             |       |   |      |   |       |  
|Dividends paid per common share outstanding                                                                      |  | $                           | 0.20  |   |      | $ | 0.20  |  
|                                                                                                                 |  |                             |       |   |      |   |       |  

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



5



---

##### Index to Financial Statements

TECO ENERGY, INC.

Consolidated Condensed Statements of Comprehensive Income

Unaudited



|                                                                     |  |                             |      |   |      |   |     
|-------------------------------------------------------------------- |  | --------------------------- | ---- | - | ---- | - | ----
|                                                                     |  | Three months ended Mar. 31,
|(millions)                                                           |  | 2010                        |      |   | 2009
|Net income                                                           |  | $                           | 56.0 |   |      | $ | 34.7
|                                                                     |  |                             |      |   |      |   |     
|Other comprehensive income (loss), net of tax                        |  |                             |      |   |      |   |     
|Net unrealized gains on cash flow hedges                             |  |                             | 0.8  |   |      |   | 2.5 
|Amortization of unrecognized benefit costs and other                 |  |                             | 1.8  |   |      |   | 0.3 
|Recognized benefit costs due to settlement                           |  |                             | 0.9  |   |      |   |    
|Reclassification to earnings - loss on available-for-sale securities |  |                             |     |   |      |   | 1.7 
|                                                                     |  |                             |      |   |      |   |     
|Other comprehensive income, net of tax                               |  |                             | 3.5  |   |      |   | 4.5 
|                                                                     |  |                             |      |   |      |   |     
|Comprehensive income                                                 |  | $                           | 59.5 |   |      | $ | 39.2
|                                                                     |  |                             |      |   |      |   |     
|Comprehensive income attributable to noncontrolling interests        |  |                             | (0.2 | ) |      |   |    
|                                                                     |  |                             |      |   |      |   |     
|Comprehensive income attributable to TECO Energy, Inc.               |  | $                           | 59.3 |   |      | $ | 39.2
|                                                                     |  |                             |      |   |      |   |     

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



6



---

##### Index to Financial Statements

TECO ENERGY, INC.

Consolidated Condensed Statements of Cash Flows

Unaudited



|                                                                                       |  |                             |        |   |      |   |        |  
|-------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                       |  | Three months ended Mar. 31, |       
|(millions)                                                                             |  | 2010                        |        |   | 2009 |  
|Cash flows from operating activities                                                   |  |                             |        |   |      |   |        |  
|Net income                                                                             |  | $                           | 56.0   |   |      | $ | 34.7   |  
|Adjustments to reconcile net income to net cash from operating activities:             |  |                             |        |   |      |   |        |  
|Depreciation and amortization                                                          |  |                             | 77.0   |   |      |   | 69.7   |  
|Deferred income taxes                                                                  |  |                             | 36.3   |   |      |   | 18.1   |  
|Investment tax credits, net                                                            |  |                             | (0.1   | ) |      |   | (0.1   | )
|Allowance for funds used during construction                                           |  |                             | (1.0   | ) |      |   | (3.3   | )
|Non-cash stock compensation                                                            |  |                             | 1.7    |   |      |   | 1.8    |  
|Gain on sale of business/assets, pretax                                                |  |                             | (0.4   | ) |      |   | (18.7  | )
|Non-cash debt extinguishment, pretax                                                   |  |                             | 0.9    |   |      |   |       |  
|Equity in earnings of unconsolidated affiliates, net of cash distributions on earnings |  |                             | (2.7   | ) |      |   | (7.1   | )
|Deferred recovery clauses                                                              |  |                             | 7.9    |   |      |   | 66.9   |  
|Receivables, less allowance for uncollectibles                                         |  |                             | (58.4  | ) |      |   | (9.1   | )
|Inventories                                                                            |  |                             | (22.4  | ) |      |   | (27.7  | )
|Prepayments and other current assets                                                   |  |                             | 2.6    |   |      |   | 5.2    |  
|Taxes accrued                                                                          |  |                             | 19.7   |   |      |   | 13.1   |  
|Interest accrued                                                                       |  |                             | 26.5   |   |      |   | 33.6   |  
|Accounts payable                                                                       |  |                             | 6.7    |   |      |   | (23.4  | )
|Other                                                                                  |  |                             | (8.9   | ) |      |   | 25.0   |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Cash flows from operating activities                                                   |  |                             | 141.4  |   |      |   | 178.7  |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Cash flows from investing activities                                                   |  |                             |        |   |      |   |        |  
|Capital expenditures                                                                   |  |                             | (142.9 | ) |      |   | (191.0 | )
|Allowance for funds used during construction                                           |  |                             | 1.0    |   |      |   | 3.3    |  
|Net proceeds from sale of business/assets                                              |  |                             | 0.4    |   |      |   | 29.1   |  
|Restricted cash                                                                        |  |                             |       |   |      |   | 0.2    |  
|Contributions to unconsolidated affiliates                                             |  |                             | (0.6   | ) |      |   |       |  
|Other investments                                                                      |  |                             | 0.8    |   |      |   | 2.4    |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Cash flows used in investing activities                                                |  |                             | (141.3 | ) |      |   | (156.0 | )
|                                                                                       |  |                             |        |   |      |   |        |  
|Cash flows from financing activities                                                   |  |                             |        |   |      |   |        |  
|Dividends                                                                              |  |                             | (42.7  | ) |      |   | (42.6  | )
|Proceeds from the sale of common stock                                                 |  |                             | 1.1    |   |      |   | 1.0    |  
|Proceeds from long-term debt                                                           |  |                             | 543.5  |   |      |   |       |  
|Repayment of long-term debt/Purchase in lieu of redemption                             |  |                             | (302.4 | ) |      |   | (1.4   | )
|Dividend to noncontrolling interest                                                    |  |                             | (0.7   | ) |      |   |       |  
|Net (decrease) increase in short-term debt                                             |  |                             | (37.0  | ) |      |   | 43.0   |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Cash flows from financing activities                                                   |  |                             | 161.8  |   |      |   |       |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Net increase in cash and cash equivalents                                              |  |                             | 161.9  |   |      |   | 22.7   |  
|Cash and cash equivalents at beginning of period
(1)                                   |  |                             | 70.1   |   |      |   | 12.2   |  
|                                                                                       |  |                             |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                             |  | $                           | 232.0  |   |      | $ | 34.9   |  
|                                                                                       |  |                             |        |   |      |   |        |  



|(1) | In accordance with new accounting guidance, cash and cash equivalents for the three months ended Mar. 31, 2010 have been adjusted to include the $24.1 million
from the reconsolidation of two projects in Guatemala effective Jan. 1, 2010. (See Note 16.)
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



7



---

##### Index to Financial Statements

TECO ENERGY, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

UNAUDITED

1. Summary
of Significant Accounting Policies

The significant accounting policies for both utility and diversified operations
include:

Principles of Consolidation and Basis of Presentation

The consolidated condensed financial statements include the accounts of TECO Energy, Inc., its majority-owned and controlled subsidiaries,
and the accounts of variable interest entities (VIEs) for which it is the primary beneficiary (TECO Energy or the company). TECO Energy is considered to be the primary beneficiary of VIEs if it has both 1) the power to direct the activities of a VIE
that most significantly impact the entitys economic performance and 2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be
significant to the VIE. Effective Jan. 1, 2010, amended accounting standards on consolidation resulted in the reconsolidation of two projects in Guatemala. Prior periods presented in this quarterly report were not restated. (See Note 16.)

All significant intercompany balances and intercompany transactions have been eliminated in consolidation. Generally, the
equity method of accounting is used to account for investments in partnerships or other arrangements in which TECO Energy is not the primary beneficiary but is able to exert significant influence. In the opinion of management, the unaudited
consolidated condensed financial statements include all adjustments that are of a recurring nature and necessary to state fairly the financial position of TECO Energy, Inc. and subsidiaries as of Mar. 31, 2010 and Dec. 31, 2009, and the results of
operations and cash flows for the periods ended Mar. 31, 2010 and 2009. The results of operations for the three month period ended Mar. 31, 2010 are not necessarily indicative of the results that can be expected for the entire fiscal year ending
Dec. 31, 2010.

The use of estimates is inherent in the preparation of financial statements in accordance with generally
accepted accounting principles (GAAP). Actual results could differ from these estimates. The year-end condensed balance sheet data was derived from audited financial statements, however this quarterly report on Form 10-Q does not include all
year-end disclosures required for an annual report on Form 10-K by GAAP in the United States of America.

Revenues

As of Mar. 31, 2010 and Dec. 31, 2009, unbilled revenues of $57.4 million and $51.6 million, respectively, are included in the
Receivables line item on the Consolidated Condensed Balance Sheets.

Accounting for Franchise Fees and Gross Receipts

The regulated utilities (Tampa Electric and Peoples Gas System (PGS)) are allowed to recover from customers certain costs
incurred through rates approved by the FPSC. The amounts included in customers bills for franchise fees and gross receipt taxes are included as revenues on the Consolidated Condensed Statements of Income. These amounts totaled $30.9 million
for the three months ended Mar. 31, 2010, compared to $30.1 million for the three months ended Mar. 31, 2009. Franchise fees and gross receipt taxes payable by the regulated utilities are included as an expense on the Consolidated Condensed
Statements of Income in Taxes, other than income. These totaled $30.8 million for the three months ended Mar. 31, 2010, compared to $30.0 million for the three months ended Mar. 31, 2009.

Purchased Power

Tampa
Electric purchases power on a regular basis to meet the needs of its customers. Tampa Electric purchased power from entities not affiliated with TECO Energy at a cost of $57.2 million for the three months ended Mar. 31, 2010, compared to $42.2
million for the three months ended Mar. 31, 2009. Prudently incurred purchased power costs at Tampa Electric have historically been recoverable through Florida Public Service Commission (FPSC)-approved cost recovery clauses.

Cash Flows Related to Derivatives and Hedging Activities

The company classifies cash inflows and outflows related to derivative and hedging instruments in the appropriate cash flow sections
associated with the item being hedged. In the case of heating oil swaps which are used to mitigate the fluctuations in the price of diesel fuel, the cash inflows and outflows are included in the operations section. For natural gas and ongoing
interest rate swaps, the cash inflows and outflows are included in the operating section. For interest rate swaps that settle coincident with the debt issuance, the cash inflows and outflows are treated as premiums or discounts and included in the
financing section of the Consolidated Condensed Statements of Cash Flows.

2. New Accounting Pronouncements

Subsequent Events

In
February 2010, the Financial Accounting Standards Board (FASB) issued additional guidance related to subsequent event disclosure. The guidance was effective upon issuance and has no effect on the companys results of operations, statement of
position or cash flows.



8



---

##### Index to Financial Statements

Fair Value Measures and Disclosures

In January 2010, the FASB issued guidance that requires entities to disclose more information regarding the movements between Levels 1 and
2 of the fair value hierarchy. The guidance was effective for fiscal years that begin after Dec. 15, 2010, and for interim periods within that year. This guidance will not have any effect on the companys results of operations, statement of
position or cash flows.

3. Regulatory

Tampa Electrics and PGSs retail businesses are regulated by the FPSC. Tampa Electric also is subject to regulation by the
Federal Energy Regulatory Commission (FERC) under the Public Utility Holding Company Act of 2005 (PUHCA 2005). However, pursuant to a waiver granted in accordance with the FERCs regulations, TECO Energy is not subject to certain accounting,
record-keeping and reporting requirements prescribed by the FERCs regulations under PUHCA 2005. The operations of PGS are regulated by the FPSC separately from the regulation of Tampa Electric. The FPSC has jurisdiction over rates, service,
issuance of securities, safety, accounting and depreciation practices and other matters. In general, the FPSC sets rates at a level that allows utilities such as Tampa Electric and PGS to collect total revenues (revenue requirements) equal to their
cost of providing service, plus a reasonable return on invested capital.

Storm Damage Cost Recovery

Tampa Electric accrues $8.0 million annually effective May 2009, an increase of $4.0 million from the prior year, to a FERC-authorized and
FPSC-approved self-insured storm damage reserve. This reserve was created after Floridas investor owned utilities (IOUs) were unable to obtain transmission and distribution insurance coverage due to destructive acts of nature. Tampa
Electrics storm reserve was $31.4 million and $29.3 million as of Mar. 31, 2010 and Dec. 31, 2009, respectively.

Regulatory Assets
and Liabilities

Tampa Electric and PGS maintain their accounts in accordance with recognized policies of the FPSC. In
addition, Tampa Electric maintains its accounts in accordance with recognized policies prescribed or permitted by the FERC.

Tampa Electric and PGS apply the accounting standards for regulated operations. Areas of applicability include: deferral of revenues
under approved regulatory agreements; revenue recognition resulting from cost recovery clauses that provide for monthly billing charges to reflect increases or decreases in fuel, purchased power, conservation and environmental costs; and the
deferral of costs as regulatory assets to the period that the regulatory agency recognizes them when cost recovery is ordered over a period longer than a fiscal year.



9



---

##### Index to Financial Statements

Details of the regulatory assets and liabilities as of Mar. 31, 2010 and Dec. 31, 2009 are
presented in the following table:

Regulatory Assets and Liabilities



|                                        |  |              |       |              |   |      
|--------------------------------------- |  | ------------ | ----- | ------------ | - | -----
|(millions)                              |  | Mar. 31,2010 |       | Dec. 31,2009
|Regulatory assets:                      |  |              |       |              |   |      
|Regulatory tax asset(1)                 |  | $            | 68.9  |              | $ | 69.0 
|                                        |  |              |       |              |   |      
|Other:                                  |  |              |       |              |   |      
|Cost recovery clauses                   |  |              | 103.5 |              |   | 89.4 
|Postretirement benefit asset            |  |              | 226.0 |              |   | 229.1
|Deferred bond refinancing costs(2)      |  |              | 17.0  |              |   | 18.0 
|Environmental remediation               |  |              | 21.4  |              |   | 21.2 
|Competitive rate adjustment             |  |              | 2.9   |              |   | 3.1  
|Other                                   |  |              | 15.5  |              |   | 15.0 
|                                        |  |              |       |              |   |      
|Total other regulatory assets           |  |              | 386.3 |              |   | 375.8
|                                        |  |              |       |              |   |      
|Total regulatory assets                 |  |              | 455.2 |              |   | 444.8
|Less: Current portion                   |  |              | 117.0 |              |   | 109.2
|                                        |  |              |       |              |   |      
|Long-term regulatory assets             |  | $            | 338.2 |              | $ | 335.6
|                                        |  |              |       |              |   |      
|Regulatory liabilities:                 |  |              |       |              |   |      
|Regulatory tax liability(1)             |  | $            | 18.6  |              | $ | 19.6 
|                                        |  |              |       |              |   |      
|Other:                                  |  |              |       |              |   |      
|Cost recovery clauses                   |  |              | 45.1  |              |   | 61.4 
|Environmental remediation               |  |              | 19.9  |              |   | 19.9 
|Transmission and delivery storm reserve |  |              | 31.4  |              |   | 29.3 
|Deferred gain on property sales(3)      |  |              | 2.2   |              |   | 2.8  
|Accumulated reserve-cost of removal     |  |              | 559.2 |              |   | 554.3
|Other                                   |  |              | 0.8   |              |   | 0.7  
|                                        |  |              |       |              |   |      
|Total other regulatory liabilities      |  |              | 658.6 |              |   | 668.4
|                                        |  |              |       |              |   |      
|Total regulatory liabilities            |  |              | 677.2 |              |   | 688.0
|Less: Current portion                   |  |              | 69.0  |              |   | 85.4 
|                                        |  |              |       |              |   |      
|Long-term regulatory liabilities        |  | $            | 608.2 |              | $ | 602.6
|                                        |  |              |       |              |   |      



|(1) | Primarily related to plant life and derivative positions.
|--- | ---------------------------------------------------------

|(2) | Amortized over the term of the related debt instrument.
|--- | -------------------------------------------------------

|(3) | Amortized over a 4 or 5-year period with various ending dates.
|--- | --------------------------------------------------------------

All regulatory assets are being recovered through the regulatory process. The following table further details the regulatory assets and
the related recovery periods:

Regulatory assets



|                               |  |              |       |             |   |      
|------------------------------ |  | ------------ | ----- | ----------- | - | -----
|(millions)                     |  | Mar. 31,2010 |       | Dec 31,2009
|Clause recoverable(1)          |  | $            | 106.4 |             | $ | 92.5 
|Components of rate base(2)     |  |              | 235.4 |             |   | 238.1
|Regulatory tax assets(3)       |  |              | 68.9  |             |   | 69.0 
|Capital structure and other(3) |  |              | 44.5  |             |   | 45.2 
|                               |  |              |       |             |   |      
|Total                          |  | $            | 455.2 |             | $ | 444.8
|                               |  |              |       |             |   |      



|(1) | To be recovered through cost recovery clauses approved by the FPSC on a dollar-for-dollar basis in the next year.
|--- | -----------------------------------------------------------------------------------------------------------------

|(2) | Primarily reflects allowed working capital, which is included in rate base and earns a rate of return as permitted by the FPSC.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(3) | Regulatory tax assets and Capital structure and other regulatory assets have a recoverable period longer than a fiscal year and are recognized
over the period authorized by the regulatory agency. Also included are unamortized loan costs, which are amortized over the life of the related debt instruments. See footnotes 1 and 2 in the prior table for additional information.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



10



---

##### Index to Financial Statements

4. Income Taxes

The companys U.S. subsidiaries join in the filing of a U.S. federal consolidated income tax return. The Internal Revenue Service
(IRS) concluded its examination of the companys 2008 consolidated federal income tax return during 2009. There is one open issue for the 2008 tax return for which an Appeals Conference is expected to take place in June 2010. The U.S. federal
statute of limitations remains open for the year 2006 and onward. Years 2009 and 2010 are currently under examination by the IRS under the Compliance Assurance Program, a program in which the company is a participant. The company does not expect the
settlement of current IRS examinations to significantly change the total amount of unrecognized tax benefits by the end of 2010. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years from the filing of
an income tax return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. Years still open to examination by tax authorities in major state
and foreign jurisdictions include 2004 and forward. In the first quarter of 2010, the company reached a favorable settlement for certain state items that were under appeal. As a result, the company recorded a $2.4 million after-tax benefit,
excluding interest.

The company recognizes interest and penalties associated with uncertain tax positions in the Consolidated
Condensed Statements of Income in accordance with standards for accounting for uncertainty in income taxes. During the three month periods ended Mar. 31, 2010 and Mar. 31, 2009, the company recorded ($1.3) million and $0.3 million,
respectively, of pre-tax (income) charges for interest only. Pre-tax income for interest of $1.4 million was recorded during the first quarter of 2010 as a result of reaching a favorable settlement for certain state items that were under appeal. No
amounts have been recorded for penalties for the three month periods ended Mar. 31, 2010 or Mar. 31, 2009.

The effective tax
rate increased to 37.96% for the three months ended Mar. 31, 2010 from 33.95% for the same period in 2009 primarily due to an additional $5.2 million valuation allowance related to our updated, anticipated ability to use foreign tax credits.

5. Employee Postretirement Benefits

Included in the table below is the periodic expense for pension and other postretirement benefits offered by the company.

Pension Expense



|                                                        |  |                  |      |   |                               |   |      |      |  |      |     |  |   |    
|------------------------------------------------------- |  | ---------------- | ---- | - | ----------------------------- | - | ---- | ---- |  | ---- | --- |  | - | ---
|(millions)                                              |  | Pension Benefits |      |   | Other Postretirement Benefits
|Three months ended Mar. 31,                             |  | 2010             |      |   | 2009                          |   |      | 2010 |  | 2009
|Components of net periodic benefit expense              |  |                  |      |   |                               |   |      |      |  |      |     |  |   |    
|Service cost                                            |  | $                | 4.2  |   |                               | $ | 3.9  |      |  | $    | 0.8 |  | $ | 0.8
|Interest cost on projected benefit obligations          |  |                  | 8.3  |   |                               |   | 8.3  |      |  |      | 2.9 |  |   | 2.8
|Expected return on assets                               |  |                  | (9.0 | ) |                               |   | (9.5 | )    |  |      |    |  |   |   
|Amortization of:                                        |  |                  |      |   |                               |   |      |      |  |      |     |  |   |    
|Transition obligation                                   |  |                  |     |   |                               |   |     |      |  |      | 0.6 |  |   | 0.6
|Prior service (benefit) cost                            |  |                  | (0.1 | ) |                               |   | (0.1 | )    |  |      | 0.2 |  |   | 0.2
|Actuarial loss                                          |  |                  | 3.0  |   |                               |   | 1.8  |      |  |      |    |  |   |   
|                                                        |  |                  |      |   |                               |   |      |      |  |      |     |  |   |    
|Pension expense                                         |  |                  | 6.4  |   |                               |   | 4.4  |      |  |      | 4.5 |  |   | 4.4
|Settlement cost                                         |  |                  | 1.5  |   |                               |   |     |      |  |      |    |  |   |   
|                                                        |  |                  |      |   |                               |   |      |      |  |      |     |  |   |    
|Net pension expense recognized in the                   |  |                  |      |   |                               |   |      |      |  |      |     |  |   |    
|TECO Energy Consolidated Condensed Statements of Income |  | $                | 7.9  |   |                               | $ | 4.4  |      |  | $    | 4.5 |  | $ | 4.4
|                                                        |  |                  |      |   |                               |   |      |      |  |      |     |  |   |    

For the fiscal 2010 plan year, TECO Energy assumed an
expected long-term return on plan assets of 8.25% and a discount rate of 5.75% for pension benefits under its qualified pension plan, and a discount rate of 5.60% for its other postretirement benefits as of their Jan. 1, 2010 measurement dates.
Additionally, TECO Energy assumed a discount rate of 5.75% for its Supplemental Executive Retirement Plan (SERP) benefits as of its Mar. 1 and Jan. 1, 2010 measurement dates.

Effective Dec. 31, 2006, in accordance with the accounting standard for defined benefit plans and other postretirement benefits, TECO
Energy adjusted its postretirement benefit obligations and recorded other comprehensive income (loss) to reflect the unamortized transition obligation, prior service cost, and actuarial gains and losses of its postretirement benefit plans. The
adjustment to other comprehensive income was net of amounts that, for purposes prescribed by accounting standards for regulated operations, were recorded as regulatory assets for Tampa Electric Company. For the three months ended Mar. 31, 2010, TECO
Energy and its subsidiaries reclassed $0.6 million of unamortized transition obligation, prior service cost and actuarial gains and losses from accumulated other comprehensive income to net income as part of periodic benefit expense. In addition,
during the three months ended Mar. 31, 2010, Tampa Electric Company reclassed $3.1 million of unamortized transition obligation, prior service cost and actuarial losses from regulatory assets to net income as part of periodic benefit expense.

In connection with the restructuring events that occurred in the third quarter of 2009 that changed the senior management
structure, TECO Energy recognized a settlement charge of $1.5 million in the first quarter of 2010 for pay-outs from its SERP.



11



---

##### Index to Financial Statements

In March 2010, the Patient Protection and Affordability Care Act and a companion bill, The
Health Care and Education Reconciliation Act were signed into law. Among other things, both acts reduce the tax benefits available to an employer that receives the Medicare Part D subsidy, resulting in a write-off of any associated deferred tax
asset. As a result, TECO Energy reduced its deferred tax asset by $6.4 million and recorded a corresponding charge of $1.1 million and a regulatory tax asset of $5.3 million.

6. Short-Term Debt

At
Mar. 31, 2010 and Dec. 31, 2009, the following credit facilities and related borrowings existed:

Credit Facilities



|                                    |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    
|----------------------------------- |  | ---------------- | ----- | -------------------------- | - | --------------------------- |  | ---------------- | --- | -------------------------- | - | --------------------------- |  | - | ---- |  | - | ---
|                                    |  | Mar. 31, 2010    |       | Dec. 31, 2009             
|(millions)                          |  | CreditFacilities |       | BorrowingsOutstanding 
(1) |   | Lettersof CreditOutstanding |  | CreditFacilities |     | BorrowingsOutstanding 
(1) |   | Lettersof CreditOutstanding
|Tampa Electric Company:             |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    
|5-year facility                     |  | $                | 325.0 |                            | $ |                            |  | $                | 0.9 |                            | $ | 325.0                       |  | $ | 55.0 |  | $ | 0.7
|1-year accounts receivable facility |  |                  | 150.0 |                            |   | 18.0                        |  |                  |    |                            |   | 150.0                       |  |   |     |  |   |   
|TECO Energy/TECO Finance:           |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    
|5-year facility(2)                  |  |                  | 200.0 |                            |   |                            |  |                  | 6.7 |                            |   | 200.0                       |  |   |     |  |   | 6.9
|                                    |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    
|Total                               |  | $                | 675.0 |                            | $ | 18.0                        |  | $                | 7.6 |                            | $ | 675.0                       |  | $ | 55.0 |  | $ | 7.6
|                                    |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    



|(1) | Borrowings outstanding are reported as notes payable.
|--- | -----------------------------------------------------

|(2) | TECO Finance is the borrower and TECO Energy is the guarantor of this facility.
|--- | -------------------------------------------------------------------------------

These credit facilities require commitment fees ranging from 7.0 to 60.0 basis points. The weighted-average interest rate on
outstanding amounts payable under the credit facilities at Mar. 31, 2010 and Dec. 31, 2009 was 0.64% and 0.66%, respectively.

Tampa Electric Company Accounts Receivable Facility

On Feb. 19, 2010, Tampa Electric Company and TEC Receivables Corp. (TRC), a wholly-owned subsidiary of Tampa Electric Company, amended
their $150 million accounts receivable collateralized borrowing facility, entering into Amendment No. 8 to the Loan and Servicing Agreement with certain lenders named therein and Citicorp North America, Inc. as Program Agent. The amendment
(i) extends the maturity date to Feb. 18, 2011, (ii) provides that TRC will pay program and liquidity fees, which, pursuant to the amendment, will total 100 basis points, (iii) provides that the interest rates on the borrowings will
be based on prevailing asset-backed commercial paper rates, unless such rates are not available from conduit lenders, in which case the rates will be at an interest rate equal to, at Tampa Electric Companys option, either Citibanks prime
rate (or the federal funds rate plus 50 basis points, if higher) or a rate based on the London interbank offer rate (if available) plus a margin and (iv) makes other technical changes.

7. Long-Term Debt

Issuance of TECO
Finance, Inc. 4.00% Notes due 2016 and 5.15% Notes due 2020

On Mar. 15, 2010, TECO Finance, Inc. issued $250 million
aggregate principal amount of 4.00% Notes due Mar. 15, 2016 and $300 million aggregate principal amount of 5.15% Notes due Mar. 15, 2020. The 2016 Notes were priced at 99.594% of the principal amount to yield 4.077% to maturity, and the 2020 Notes
were priced at 99.552% of the principal amount to yield 5.208% to maturity. TECO Finance is a wholly owned subsidiary of TECO Energy whose business activities consist solely of providing funds to TECO Energy for its diversified activities. The TECO
Finance notes are fully and unconditionally guaranteed by TECO Energy.

The offering resulted in net proceeds to TECO Finance
(after deducting underwriting discounts and commissions and estimated offering expenses) of approximately $543.5 million. TECO Finance used a portion of these net proceeds to fund the cash purchase of the TECO Energy and TECO Finance notes tendered
in March 2010 (see TECO Energy, Inc. and TECO Finance, Inc. Tender Offers below) and to fund the redemptions of the TECO Energy Floating Rate Notes due 2010 and 7.20% Notes due 2011 in April 2010 (see Note 17). TECO Finance
may redeem some or all of the notes at its option at any time and from time to time at a redemption price equal to the greater of (i) 100% of the principal amount of Notes to be redeemed or (ii) the sum of the present value of the remaining payments
of principal and interest on the Notes to be redeemed, discounted at an applicable treasury rate (as defined in the Indenture), plus 25 basis points; in either case, the redemption price would include accrued and unpaid interest to the redemption
date.



12



---

##### Index to Financial Statements

TECO Energy, Inc. and TECO Finance, Inc. Tender Offers

On Mar. 22, 2010, TECO Energy and TECO Finance completed debt tender offers which resulted in the purchase of approximately $70 million
principal amount of TECO Energy notes for cash and approximately $230 million principal amount of TECO Finance notes for cash.

The tender offers resulted in the purchase and retirement of approximately:



| |  |  | $43.0 million principal amount of TECO Energy 7.2% notes due 2011
| | - |  | -----------------------------------------------------------------



| |  |  | $27.0 million principal amount of TECO Energy 7.0% notes due 2012
| | - |  | -----------------------------------------------------------------



| |  |  | $156.9 million principal amount of TECO Finance 7.2% notes due 2011
| | - |  | -------------------------------------------------------------------



| |  |  | $73.1 million principal amount of TECO Finance 7.0% notes due 2012.
| | - |  | -------------------------------------------------------------------

In connection with these debt tender transactions, $25.5 million of premiums and fees were expensed, and are included in Loss on
debt extinguishment on the Consolidated Condensed Statements of Income and as part of the Cash flows from operating activities in the Consolidated Condensed Statements of Cash Flows for the quarter ended Mar. 31, 2010. Loss
on debt extinguishment also includes remaining unamortized debt issue costs of $0.9 million.

Reconsolidation of TCAE and CGESJ

Effective Jan. 1, 2010, new accounting standards for consolidations amended the determination of the primary beneficiaries for
variable interest entities. As a result of adopting these standards, TECO Guatemala, Inc., a wholly-owned subsidiary of TECO Energy, was determined to be the primary beneficiary of, and therefore required to consolidate, both the TCAE and CGESJ
projects in Guatemala. (See Note 16.) The consolidation resulted in a net $44.4 million increase of non-recourse debt.



13



---

##### Index to Financial Statements

8. Other Comprehensive Income

TECO Energy reported the following other comprehensive income (OCI) for the three months ended Mar. 31, 2010 and 2009, related to changes
in the fair value of cash flow hedges, amortization of unrecognized benefit costs associated with the companys pension plans and unrecognized gains and losses on available-for-sale securities:

Other Comprehensive Income



|                                                                   |  |                             |      |   |     |   |      |     |  |   |      |  
|------------------------------------------------------------------ |  | --------------------------- | ---- | - | --- | - | ---- | --- |  | - | ---- | -
|                                                                   |  | Three months ended Mar. 31, |     
|(millions)                                                         |  | Gross                       |      |   | Tax |   |      | Net | 
|2010                                                               |  |                             |      |   |     |   |      |     |  |   |      |  
|Unrealized gain on cash flow hedges                                |  | $                           | 0.4  |   |     | $ | (0.3 | )   |  | $ | 0.1  |  
|Plus: Loss reclassified to net income                              |  |                             | 1.2  |   |     |   | (0.5 | )   |  |   | 0.7  |  
|                                                                   |  |                             |      |   |     |   |      |     |  |   |      |  
|Gain on cash flow hedges                                           |  |                             | 1.6  |   |     |   | (0.8 | )   |  |   | 0.8  |  
|Amortization of unrecognized benefit costs                         |  |                             | 0.6  |   |     |   | 1.2  |     |  |   | 1.8  |  
|Recognized benefit costs due to settlement                         |  |                             | 1.5  |   |     |   | (0.6 | )   |  |   | 0.9  |  
|                                                                   |  |                             |      |   |     |   |      |     |  |   |      |  
|Total other comprehensive income                                   |  | $                           | 3.7  |   |     | $ | (0.2 | )   |  | $ | 3.5  |  
|                                                                   |  |                             |      |   |     |   |      |     |  |   |      |  
|2009                                                               |  |                             |      |   |     |   |      |     |  |   |      |  
|Unrealized loss on cash flow hedges                                |  | $                           | (3.1 | ) |     | $ | 1.2  |     |  | $ | (1.9 | )
|Plus: Loss reclassified to net income                              |  |                             | 7.0  |   |     |   | (2.6 | )   |  |   | 4.4  |  
|                                                                   |  |                             |      |   |     |   |      |     |  |   |      |  
|Gain on cash flow hedges                                           |  |                             | 3.9  |   |     |   | (1.4 | )   |  |   | 2.5  |  
|Amortization of unrecognized benefit costs                         |  |                             | 0.5  |   |     |   | (0.2 | )   |  |   | 0.3  |  
|Reclassification to earnings loss on available-for-sale securities |  |                             | 1.7  |   |     |   |     |     |  |   | 1.7  |  
|                                                                   |  |                             |      |   |     |   |      |     |  |   |      |  
|Total other comprehensive income                                   |  | $                           | 6.1  |   |     | $ | (1.6 | )   |  | $ | 4.5  |  
|                                                                   |  |                             |      |   |     |   |      |     |  |   |      |  

Accumulated Other Comprehensive Loss



|                                                                                    |  |               |       |   |               |   |       |  
|----------------------------------------------------------------------------------- |  | ------------- | ----- | - | ------------- | - | ----- | -
|(millions)                                                                          |  | Mar. 31, 2010 |       |   | Dec. 31, 2009 |  
|Unrecognized pension losses and prior service
costs(1)                              |  | $             | (26.6 | ) |               | $ | (27.8 | )
|Unrecognized other benefit gains, prior service costs and transition
obligations(2) |  |               | 11.6  |   |               |   | 10.1  |  
|Net unrealized losses from cash flow
hedges(3)                                      |  |               | (6.5  | ) |               |   | (7.3  | )
|                                                                                    |  |               |       |   |               |   |       |  
|Total accumulated other comprehensive loss                                          |  | $             | (21.5 | ) |               | $ | (25.0 | )
|                                                                                    |  |               |       |   |               |   |       |  



|(1) | Net of tax benefit of $16.9 million and $17.1 million as of Mar. 31, 2010 and Dec. 31, 2009, respectively.
|--- | ----------------------------------------------------------------------------------------------------------

|(2) | Net of tax expense of $4.6 and $6.0 million as of Mar. 31, 2010 and Dec. 31, 2009, respectively.
|--- | ------------------------------------------------------------------------------------------------

|(3) | Net of tax benefit of $3.7 million and $4.5 million as of Mar. 31, 2010 and Dec. 31, 2009, respectively.
|--- | --------------------------------------------------------------------------------------------------------



14



---

##### Index to Financial Statements

9. Earnings Per Share

Earnings Per Share



|                                                                                                       |  |                             |       |   |      |   |       |  
|------------------------------------------------------------------------------------------------------ |  | --------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                                       |  | Three months ended Mar. 31, |      
|(millions, except per share amounts)                                                                   |  | 2010                        |       |   | 2009 |  
|                                                                                                       |  |                            
|Basic earnings per share                                                                               |  |                             |       |   |      |   |       |  
|Net income from continuing operations                                                                  |  | $                           | 56.0  |   |      | $ | 34.7  |  
|Less: Income attributable to noncontrolling interest                                                   |  |                             | (0.2  | ) |      |   |      |  
|Less: Amount allocated to nonvested participating shareholders                                         |  |                             | (0.4  | ) |      |   | (0.3  | )
|                                                                                                       |  |                             |       |   |      |   |       |  
|Net Income attributable to TECO Energy available to common shareholders - basic                        |  | $                           | 55.4  |   |      | $ | 34.4  |  
|                                                                                                       |  |                             |       |   |      |   |       |  
|Average shares outstanding common                                                                      |  |                             | 212.2 |   |      |   | 211.4 |  
|                                                                                                       |  |                             |       |   |      |   |       |  
|Basic earnings per share attributable to TECO Energy available to common shareholders                  |  | $                           | 0.26  |   |      | $ | 0.16  |  
|                                                                                                       |  |                             |       |   |      |   |       |  
|                                                                                                       |  |                            
|Diluted earnings per share                                                                             |  |                             |       |   |      |   |       |  
|Net income from continuing operations                                                                  |  | $                           | 56.0  |   |      | $ | 34.7  |  
|Less: Income attributable to noncontrolling interest                                                   |  |                             | (0.2  | ) |      |   |      |  
|Less: Amount allocated to nonvested participating shareholders                                         |  |                             | (0.4  | ) |      |   | (0.3  | )
|                                                                                                       |  |                             |       |   |      |   |       |  
|Net income attributable to TECO Energy available to common shareholders - diluted                      |  | $                           | 55.4  |   |      | $ | 34.4  |  
|                                                                                                       |  |                             |       |   |      |   |       |  
|Average shares outstanding common                                                                      |  |                             | 212.2 |   |      |   | 211.4 |  
|Assumed conversions of stock options, unvested restricted stock and contingent performance shares, net |  |                             | 1.7   |   |      |   | 0.8   |  
|                                                                                                       |  |                             |       |   |      |   |       |  
|Adjusted average shares outstanding common - diluted                                                   |  |                             | 213.9 |   |      |   | 212.2 |  
|                                                                                                       |  |                             |       |   |      |   |       |  
|Diluted earnings per share attributable to TECO Energy available to common shareholders                |  | $                           | 0.26  |   |      | $ | 0.16  |  
|                                                                                                       |  |                             |       |   |      |   |       |  
|Anti-dilutive shares                                                                                   |  |                             | 4.8   |   |      |   | 7.1   |  
|                                                                                                       |  |                             |       |   |      |   |       |  

10. Commitments and Contingencies

Legal Contingencies

From
time to time, TECO Energy and its subsidiaries are involved in various legal, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies in the ordinary course of its business. Where appropriate, accruals
are made in accordance with accounting standards for contingencies to provide for matters that are probable of resulting in an estimable, material loss. While the outcome of such proceedings is uncertain, management does not believe that their
ultimate resolution will have a material adverse effect on the companys results of operations or financial condition.

Superfund and
Former Manufactured Gas Plant Sites

Tampa Electric Company, through Tampa Electric and PGS, is a potentially responsible
party (PRP) for certain superfund sites and, through PGS, for certain former manufactured gas plant sites. While the joint and several liability associated with these sites presents the potential for significant response costs, as of Mar. 31, 2010,
Tampa Electric Company has estimated its ultimate financial liability to be approximately $19.9 million, primarily at PGS, and this amount has been accrued in the companys financial statements. The environmental remediation costs associated
with these sites, which are expected to be paid over many years, are not expected to have a significant impact on customer prices.

The estimated amounts represent only the estimated portion of the cleanup costs attributable to Tampa Electric Company. The estimates to
perform the work are based on Tampa Electric Companys experience with similar work adjusted for site specific conditions and agreements with the respective governmental agencies. The estimates are made in current dollars, are not discounted
and do not assume any insurance recoveries.

Allocation of the responsibility for remediation costs among Tampa Electric
Company and other PRPs is based on each partys relative ownership interest in or usage of a site. Accordingly, Tampa Electric Companys share of remediation costs varies with each site. In virtually all instances where other PRPs are
involved, those PRPs are considered creditworthy.

Factors that could impact these estimates include the ability of other PRPs
to pay their pro-rata portion of the cleanup costs, additional testing and investigation which could expand the scope of the cleanup activities, additional liability that might arise from the cleanup activities themselves or changes in laws or
regulations that could require additional remediation. These costs are recoverable through customer rates established in subsequent base rate proceedings.



15



---

##### Index to Financial Statements

Guarantees and Letters of Credit

A summary of the face amount or maximum theoretical obligation under TECO Energys and Tampa Electric Companys letters of
credit and guarantees as of Mar. 31, 2010 is as follows:

Letters of Credit and Guarantees-TECO Energy



|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|-------------------------------------------------------------- |  | ---- | - | --------- | - | ------------ |  | ----- | ----- | -------------------------------------- | - | ----- |  | - | ---
|(millions)
Letters of Credit and Guaranteesfor the Benefit of: |  | 2010 |   | 2011-2014 |   | After(1)2014 |  | Total |       | Liabilities Recognizedat Mar. 31, 2010
|Tampa Electric                                                 |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Guarantees:                                                    |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Fuel purchase/energy management(2)                             |  | $    |  |           | $ |             |  | $     | 20.0  |                                        | $ | 20.0  |  | $ | 0.4
|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|                                                               |  |      |  |           |   |             |  |       | 20.0  |                                        |   | 20.0  |  |   | 0.4
|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|TECO Coal                                                      |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Letters of credit                                              |  |      |  |           |   |             |  |       | 6.7   |                                        |   | 6.7   |  |   |   
|Guarantees: Fuel purchase related(2)                           |  |      |  |           |   |             |  |       | 1.4   |                                        |   | 1.4   |  |   | 1.9
|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|                                                               |  |      |  |           |   |             |  |       | 8.1   |                                        |   | 8.1   |  |   | 1.9
|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Other subsidiaries                                             |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Guarantees:                                                    |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Fuel purchase/energy management(2)                             |  |      |  |           |   |             |  |       | 109.7 |                                        |   | 109.7 |  |   |   
|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Total                                                          |  | $    |  |           | $ |             |  | $     | 137.8 |                                        | $ | 137.8 |  | $ | 2.3
|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|                                                               |  |      |   |           |  
|Letters of Credit-Tampa Electric Company                       |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|                                                               |  |      |   |           |  
|(millions)
Letters of Credit for the Benefit of:               |  | 2010 |   | 2011-2014 |   | After(1)2014 |  | Total |       | Liabilities Recognizedat Mar. 31, 2010
|Tampa Electric                                                 |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Letters of credit                                              |  | $    |  |           | $ |             |  | $     | 0.9   |                                        | $ | 0.9   |  | $ |   
|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    
|Total                                                          |  | $    |  |           | $ |             |  | $     | 0.9   |                                        | $ | 0.9   |  | $ |   
|                                                               |  |      |   |           |   |              |  |       |       |                                        |   |       |  |   |    



|(1) | These guarantees renew annually and are shown on the basis that they will continue to renew beyond 2014.
|--- | --------------------------------------------------------------------------------------------------------

|(2) | The amounts shown are the maximum theoretical amounts guaranteed under current agreements. Liabilities recognized represent the associated obligation of TECO Energy
under these agreements at Mar. 31, 2010. The obligations under these letters of credit and guarantees include net accounts payable and net derivative liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Financial Covenants

In
order to utilize their respective bank facilities, TECO Energy, TECO Finance and Tampa Electric Company must meet certain financial tests as defined in the applicable agreements. In addition, TECO Energy, TECO Finance, Tampa Electric Company and
other operating companies have certain restrictive covenants in specific agreements and debt instruments. At Mar. 31, 2010, TECO Energy, TECO Finance, Tampa Electric Company and the other operating companies were in compliance with all applicable
financial covenants.

11. Segment Information

TECO Energy is an electric and gas utility holding company with significant diversified activities. Segments are determined based on how
management evaluates, measures and makes decisions with respect to the operations of the entity. The management of TECO Energy reports segments based on each subsidiarys contribution of revenues, net income and total assets, as required by the
accounting guidance for disclosures about segments of an enterprise and related information. All significant intercompany transactions are eliminated in the Consolidated Condensed Financial Statements of TECO Energy, but are included in determining
reportable segments.



16



---

##### Index to Financial Statements

Segment Information
(1)



|                                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|--------------------------------------------- |  | ------------- | ------- | ---------- | - | -------- |  | ----------------- | ----- | ------------------- | - | ----- | ---------- | - | ----- | - |  | - | -------
|(millions)Three months ended Mar. 31,         |  | TampaElectric |         | PeoplesGas |   | TECOCoal |  | TECO
(2)Guatemala |       | Other &Eliminations |   |       | TECOEnergy
|2010                                          |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|Revenues - external                           |  | $             | 524.8   |            | $ | 181.7    |  | $                 | 172.0 |                     | $ | 33.8  |            | $ |      |   |  | $ | 912.3  
|Sales to affiliates                           |  |               | 0.3     |            |   | 11.2     |  |                   |      |                     |   |      |            |   | (11.5 | ) |  |   |       
|                                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|Total revenues                                |  |               | 525.1   |            |   | 192.9    |  |                   | 172.0 |                     |   | 33.8  |            |   | (11.5 | ) |  |   | 912.3  
|Equity earnings of unconsolidated affiliates  |  |               |        |            |   |         |  |                   |      |                     |   | 3.2   |            |   | (0.5  | ) |  |   | 2.7    
|Depreciation                                  |  |               | 53.0    |            |   | 11.4     |  |                   | 10.8  |                     |   | 1.8   |            |   |      |   |  |   | 77.0   
|Restructuring charges                         |  |               |        |            |   |         |  |                   |      |                     |   |      |            |   | 1.5   |   |  |   | 1.5    
|Total interest
charges(1)                     |  |               | 30.3    |            |   | 4.6      |  |                   | 1.8   |                     |   | 4.6   |            |   | 18.0  |   |  |   | 59.3   
|Internally allocated interest(1)              |  |               |        |            |   |         |  |                   | 1.8   |                     |   | 3.3   |            |   | (5.1  | ) |  |   |       
|Provision (benefit) for taxes                 |  |               | 27.8    |            |   | 11.2     |  |                   | 2.4   |                     |   | 4.0   |            |   | (11.1 | ) |  |   | 34.3   
|Net income (loss) attributable to TECO Energy |  | $             | 48.1    |            | $ | 17.9     |  | $                 | 16.8  |                     | $ | 10.4  |            | $ | (37.4 | ) |  | $ | 55.8   
|                                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|2009                                          |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|Revenues - external                           |  | $             | 507.3   |            | $ | 146.5    |  | $                 | 168.1 |                     | $ | 2.1   |            | $ |      |   |  | $ | 824.0  
|Sales to affiliates                           |  |               | 0.3     |            |   | 6.5      |  |                   |      |                     |   |      |            |   | (6.8  | ) |  |   |       
|                                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|Total revenues                                |  |               | 507.6   |            |   | 153.0    |  |                   | 168.1 |                     |   | 2.1   |            |   | (6.8  | ) |  |   | 824.0  
|Equity earnings of unconsolidated affiliates  |  |               |        |            |   |         |  |                   |      |                     |   | 8.8   |            |   |      |   |  |   | 8.8    
|Depreciation                                  |  |               | 48.0    |            |   | 10.8     |  |                   | 10.6  |                     |   | 0.2   |            |   | 0.1   |   |  |   | 69.7   
|Total interest
charges(1)                     |  |               | 28.2    |            |   | 4.7      |  |                   | 1.8   |                     |   | 3.2   |            |   | 18.4  |   |  |   | 56.3   
|Internally allocated interest(1)              |  |               |        |            |   |         |  |                   | 1.5   |                     |   | 3.1   |            |   | (4.6  | ) |  |   |       
|Provision (benefit) for taxes                 |  |               | 9.4     |            |   | 7.2      |  |                   | 1.3   |                     |   | 9.6   |            |   | (9.7  | ) |  |   | 17.8   
|Net income (loss) attributable to TECO Energy |  | $             | 18.3    |            | $ | 11.2     |  | $                 | 8.0   |                     | $ | 13.2  |            | $ | (16.0 | ) |  | $ | 34.7   
|                                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|At Mar. 31, 2010                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|Goodwill                                      |  | $             |        |            | $ |         |  | $                 |      |                     | $ | 59.4  |            | $ |      |   |  | $ | 59.4   
|Investment in unconsolidated affiliates       |  |               |        |            |   |         |  |                   |      |                     |   | 145.9 |            |   | 0.3   |   |  |   | 146.2  
|Total assets                                  |  | $             | 5,782.6 |            | $ | 904.1    |  | $                 | 348.5 |                     | $ | 428.7 |            | $ | 86.9  |   |  | $ | 7,550.8
|                                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|At Dec. 31, 2009                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        
|Goodwill                                      |  | $             |        |            | $ |         |  | $                 |      |                     | $ | 59.4  |            | $ |      |   |  | $ | 59.4   
|Investment in unconsolidated affiliates       |  |               |        |            |   |         |  |                   |      |                     |   | 279.2 |            |   | 0.1   |   |  |   | 279.3  
|Total assets                                  |  | $             | 5,697.9 |            | $ | 870.1    |  | $                 | 326.6 |                     | $ | 380.7 |            | $ | (55.8 | ) |  | $ | 7,219.5
|                                              |  |               |         |            |   |          |  |                   |       |                     |   |       |            |   |       |   |  |   |        



|(1) | Segment net income is reported on a basis that includes internally allocated financing costs. Total interest charges include internally allocated interest costs that
for 2010 and 2009 were at a pretax rate of 7.15% based on an average of each subsidiarys equity and indebtedness to TECO Energy assuming a 50/50 debt/equity capital structure.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Revenues for 2009 are exclusive of entities deconsolidated as a result of the accounting guidance for variable interest entities. Total revenues for unconsolidated
affiliates, attributable to TECO Guatemala based on ownership percentages, were $18.7 million for the three months ended Mar. 31, 2009. Entities were consolidated as of Jan. 1, 2010 as a result of accounting guidance effective on that date. See
Note 16 for more information. 2009 earnings include the sale of a 16.5% interest in the Central American fiber optic telecommunications provider Navega. (See Note 14.)
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12. Accounting for Derivative Instruments and Hedging Activities

From time to time, TECO Energy and its affiliates enter into futures, forwards, swaps and option contracts for the following purposes:



| |  |  | To limit the exposure to price fluctuations for physical purchases and sales of natural gas in the course of normal operations at Tampa Electric and
PGS;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limit the exposure to interest rate fluctuations on debt securities at TECO Energy and its affiliates; and
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | To limit the exposure to price fluctuations for physical purchases of fuel at TECO Coal.
| | - |  | ----------------------------------------------------------------------------------------



17



---

##### Index to Financial Statements

TECO Energy and its affiliates use derivatives only to reduce normal operating and market
risks, not for speculative purposes. The companys primary objective in using derivative instruments for regulated operations is to reduce the impact of market price volatility on ratepayers.

The risk management policies adopted by TECO Energy provide a framework through which management monitors various risk exposures. Daily
and periodic reporting of positions and other relevant metrics are performed by a centralized risk management group which is independent of all operating companies.

The company applies the accounting standards for derivative instruments and hedging activities. These standards require companies to
recognize derivatives as either assets or liabilities in the financial statements, to measure those instruments at fair value, and to reflect the changes in the fair value of those instruments as either components of OCI or in net income, depending
on the designation of those instruments. The changes in fair value that are recorded in OCI are not immediately recognized in current net income. As the underlying hedged transaction matures or the physical commodity is delivered, the deferred gain
or loss on the related hedging instrument must be reclassified from OCI to earnings based on its value at the time of the instruments settlement. For effective hedge transactions, the amount reclassified from OCI to earnings is offset in net
income by the market change of the amount paid or received on the underlying physical transaction.

New accounting standards
for disclosures became effective for financial statements issued for fiscal years and interim periods beginning after Nov. 15, 2008. This new standard requires enhanced disclosures about a companys derivative activities and how the
related hedged items affect a companys financial position, financial performance and cash flows. The new requirements include quantitative disclosures about the companys fair value amounts of gains and losses associated with
derivative instruments, as well as disclosures about credit-risk-related contingent features in derivative agreements. The company adopted this new standard effective Jan. 1, 2009.

The company applies the accounting standards for regulated operations to financial instruments used to hedge the purchase of natural gas
for its regulated companies. These standards, in accordance with the FPSC, permit the changes in fair value of natural gas derivatives to be recorded as regulatory assets or liabilities to reflect the impact of hedging activities on the fuel
recovery clause. As a result, these changes are not recorded in OCI (see Note 3).

A companys physical contracts
qualify for the normal purchase/normal sale (NPNS) exception to derivative accounting rules, provided they meet certain criteria. Generally, NPNS applies if the company deems the counterparty creditworthy, if the counterparty owns or controls
resources within the proximity to allow for physical delivery of the commodity, if the company intends to receive physical delivery and if the transaction is reasonable in relation to the companys business needs. As of Mar. 31, 2010, all of
the companys physical contracts qualify for the NPNS exception.

The following table presents the derivatives that are
designated as cash flow hedges at Mar. 31, 2010 and Dec. 31, 2009:

Total
Derivatives(1)



|                      |  |              |      |              |   |     
|--------------------- |  | ------------ | ---- | ------------ | - | ----
|(millions)            |  | Mar. 31,2010 |      | Dec. 31,2009
|Current assets        |  | $            | 0.5  |              | $ | 0.8 
|Long-term assets      |  |              | 0.3  |              |   | 0.2 
|                      |  |              |      |              |   |     
|Total assets          |  | $            | 0.8  |              | $ | 1.0 
|                      |  |              |      |              |   |     
|Current liabilities   |  | $            | 67.8 |              | $ | 34.0
|Long-term liabilities |  |              | 8.1  |              |   | 3.6 
|                      |  |              |      |              |   |     
|Total liabilities     |  | $            | 75.9 |              | $ | 37.6
|                      |  |              |      |              |   |     



|(1) | Amounts presented above are on a gross basis, with asset and liability positions netted by counterparty in accordance with accounting standards for derivatives and
hedging.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table presents the derivative hedges of heating oil contracts at Mar. 31, 2010
and Dec. 31, 2009 to limit the exposure to changes in the market price for diesel fuel used in the production of coal:

Heating Oil
Derivatives



|                      |  |              |     |              |   |    
|--------------------- |  | ------------ | --- | ------------ | - | ---
|(millions)            |  | Mar. 31,2010 |     | Dec. 31,2009
|Current assets        |  | $            |    |              | $ |   
|Long-term assets      |  |              | 0.3 |              |   | 0.2
|                      |  |              |     |              |   |    
|Total assets          |  | $            | 0.3 |              | $ | 0.2
|                      |  |              |     |              |   |    
|                      |  |             
|Current liabilities   |  | $            | 0.3 |              | $ | 0.9
|Long-term liabilities |  |              |    |              |   |   
|                      |  |              |     |              |   |    
|Total liabilities     |  | $            | 0.3 |              | $ | 0.9
|                      |  |              |     |              |   |    



18



---

##### Index to Financial Statements

The following table presents the derivative hedges of natural gas contracts at Mar. 31, 2010
and Dec. 31, 2009 to limit the exposure to changes in market price for natural gas used to produce energy and natural gas purchased for resale to customers:

Natural Gas Derivatives



|                      |  |              |      |              |   |     
|--------------------- |  | ------------ | ---- | ------------ | - | ----
|(millions)            |  | Mar. 31,2010 |      | Dec. 31,2009
|Current assets        |  | $            | 0.5  |              | $ | 0.8 
|Long-term assets      |  |              |     |              |   |    
|                      |  |              |      |              |   |     
|Total assets          |  | $            | 0.5  |              | $ | 0.8 
|                      |  |              |      |              |   |     
|                      |  |             
|Current liabilities   |  | $            | 66.6 |              | $ | 33.1
|Long-term liabilities |  |              | 8.1  |              |   | 3.6 
|                      |  |              |      |              |   |     
|Total liabilities     |  | $            | 74.7 |              | $ | 36.7
|                      |  |              |      |              |   |     

The ending balance in accumulated other comprehensive
income (AOCI) related to the cash flow hedges and previously settled interest rate swaps at Mar. 31, 2010 is a net loss of $6.5 million after tax and accumulated amortization. This compares to a net loss of $7.3 million in AOCI after tax and
accumulated amortization at Dec. 31, 2009.

The following table presents the derivative hedges of interest rate swaps at Mar.
31, 2010 and Dec. 31, 2009 to limit the exposure to market changes in interest rates on outstanding debt:

Interest Rate Swaps



|                      |  |              |     |                  |   |  
|--------------------- |  | ------------ | --- | ---------------- | - | -
|(millions)            |  | Mar. 31,2010 |     | Dec. 31,2009 (1)
|Current assets        |  | $            |    |                  | $ | 
|Long-term assets      |  |              |    |                  |   | 
|                      |  |              |     |                  |   |  
|Total assets          |  | $            |    |                  | $ | 
|                      |  |              |     |                  |   |  
|                      |  |             
|Current liabilities   |  | $            | 0.9 |                  | $ | 
|Long-term liabilities |  |              |    |                  |   | 
|                      |  |              |     |                  |   |  
|Total liabilities     |  | $            | 0.9 |                  | $ | 
|                      |  |              |     |                  |   |  



|(1) | Interest rate swaps residing on the balance sheet of TECO Guatemala, Inc. were deconsolidated at Dec. 31. 2009. See Note 16.
|--- | ----------------------------------------------------------------------------------------------------------------------------



19



---

##### Index to Financial Statements

The following table presents the fair values and locations of derivative instruments
recorded on the balance sheet at Mar. 31, 2010:

Derivatives Designated As Hedging Instruments



|                                                    |  |                       |  |                       |     |                       |                        |           |   |     
|--------------------------------------------------- |  | --------------------- |  | --------------------- | --- | --------------------- | ---------------------- | --------- | - | ----
|                                                    |  | Asset Derivatives     |  | Liability Derivatives
|(millions)at Mar. 31, 2010                          |  | Balance SheetLocation |  | FairValue             |     | Balance SheetLocation |                        | FairValue
|Commodity Contracts:                                |  |                       |  |                       |     |                       |                        |           |   |     
|                                                    |  |                       |  |                      
|Heating oil derivatives:                            |  |                       |  |                       |     |                       |                        |           |   |     
|Current                                             |  | Derivative assets     |  | $                     |    |                       | Derivative liabilities |           | $ | 0.3 
|Long-term                                           |  | Derivative assets     |  |                       | 0.3 |                       | Derivative liabilities |           |   |    
|                                                    |  |                       |  |                      
|Natural gas derivatives:                            |  |                       |  |                       |     |                       |                        |           |   |     
|Current                                             |  | Derivative assets     |  |                       | 0.5 |                       | Derivative liabilities |           |   | 66.6
|Long-term                                           |  | Derivative assets     |  |                       |    |                       | Derivative liabilities |           |   | 8.1 
|                                                    |  |                       |  |                      
|Interest rate swaps:                                |  |                       |  |                       |     |                       |                        |           |   |     
|Current                                             |  | Derivative assets     |  |                       |    |                       | Derivative liabilities |           |   | 0.9 
|Long-term                                           |  | Derivative assets     |  |                       |    |                       | Derivative liabilities |           |   |    
|                                                    |  |                       |  |                       |     |                       |                        |           |   |     
|Total derivatives designated as hedging instruments |  |                       |  | $                     | 0.8 |                       |                        |           | $ | 75.9
|                                                    |  |                       |  |                       |     |                       |                        |           |   |     

The following table presents the effect of energy
related derivatives on the fuel recovery clause mechanism in the Consolidated Condensed Balance Sheet as of Mar. 31, 2010:

Energy Related
Derivatives



|                           |  |                           |  |           |     |                           |                   |           |   |     
|-------------------------- |  | ------------------------- |  | --------- | --- | ------------------------- | ----------------- | --------- | - | ----
|(millions)at Mar. 31, 2010 |  | Balance 
SheetLocation(1) |  | FairValue |     | Balance 
SheetLocation(1) |                   | FairValue
|Commodity Contracts:       |  |                           |  |           |     |                           |                   |           |   |     
|                           |  |                           |  |          
|Natural gas derivatives:   |  |                           |  |           |     |                           |                   |           |   |     
|Current                    |  | Regulatory liabilities    |  | $         | 0.5 |                           | Regulatory assets |           | $ | 66.6
|Long-term                  |  | Regulatory liabilities    |  |           |    |                           | Regulatory assets |           |   | 8.1 
|                           |  |                           |  |           |     |                           |                   |           |   |     
|Total                      |  |                           |  | $         | 0.5 |                           |                   |           | $ | 74.7
|                           |  |                           |  |           |     |                           |                   |           |   |     



|(1) | Natural gas derivatives are deferred, in accordance with accounting standards for regulated operations and all increases and decreases in the cost of natural gas supply
are passed on to customers with the fuel recovery clause mechanism. As gains and losses are realized in future periods, they will be recorded as fuel costs in the Consolidated Condensed Statements of Income.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Based on the fair value of the instruments at Mar. 31, 2010, net pretax losses of $66.1 million are expected to be reclassified from
regulatory assets or liabilities to the Consolidated Condensed Statements of Income within the next twelve months.



20



---

##### Index to Financial Statements

The following table presents the effect of hedging instruments on OCI and income for the
three months ended Mar. 31:



|                                               |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  
|---------------------------------------------- |  | -------------------------------------------------- | ---- | - | --------------------------------------------------------- | -------------------- | ---------------------------------------------------- | - | ---- | -
|                                               |  | Amount ofGain/(Loss) onDerivativesRecognized inOCI |      |   | Location of Gain/(Loss)Reclassified From AOCI
Into Income |                      | Amount ofGain/(Loss)ReclassifiedFrom AOCIInto Income |  
|(millions)                                     |  |                                                    |     
|Derivatives in Cash Flow Hedging Relationships |  | EffectivePortion(1)                                |      |   | Effective
Portion(1)                                      |                     
|2010                                           |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  
|Interest rate contracts:                       |  | $                                                  | (0.1 | ) |                                                           | Interest expense     |                                                      | $ | (0.4 | )
|Commodity contracts:                           |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  
|Heating oil derivatives                        |  |                                                    | 0.2  |   |                                                           | Mining related costs |                                                      |   | (0.3 | )
|                                               |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  
|Total                                          |  | $                                                  | 0.1  |   |                                                           |                      |                                                      | $ | (0.7 | )
|                                               |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  
|2009                                           |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  
|Interest rate contracts:                       |  | $                                                  |     |   |                                                           | Interest expense     |                                                      | $ | (0.5 | )
|Commodity contracts:                           |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  
|Heating oil derivatives                        |  |                                                    | (1.4 | ) |                                                           | Mining related costs |                                                      |   | (3.7 | )
|Natural gas derivatives                        |  |                                                    | (0.5 | ) |                                                           |                      |                                                      |   | (0.2 | )
|                                               |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  
|Total                                          |  | $                                                  | (1.9 | ) |                                                           |                      |                                                      | $ | (4.4 | )
|                                               |  |                                                    |      |   |                                                           |                      |                                                      |   |      |  



|(1) | Changes in OCI and AOCI are reported in after-tax dollars.
|--- | ----------------------------------------------------------

For derivative instruments that meet cash flow hedge criteria, the effective portion of the gain or loss on the derivative is reported as
a component of OCI and reclassified into earnings in the same period or period during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the
assessment of effectiveness are recognized in current earnings. For the three months ended Mar. 31, 2010 and 2009, all hedges were effective.

The following table presents the derivative activity for instruments classified as qualifying cash flow hedges for the three months ended
Mar. 31:



|                        |  |                             |        |   |                                         |   |      |                                                       |  |   |      |  
|----------------------- |  | --------------------------- | ------ | - | --------------------------------------- | - | ---- | ----------------------------------------------------- |  | - | ---- | -
|(millions)              |  | Fair ValueAsset/(Liability) |        |   | Amount ofGain/(Loss)Recognizedin
OCI(1) |   |      | Amount
ofGain/(Loss)Reclassified FromAOCI Into Income | 
|2010                    |  |                             |        |   |                                         |   |      |                                                       |  |   |      |  
|Interest rate swaps     |  | $                           | (0.9   | ) |                                         | $ | (0.1 | )                                                     |  | $ | (0.4 | )
|Heating oil derivatives |  |                             |       |   |                                         |   | 0.2  |                                                       |  |   | (0.3 | )
|                        |  |                             |        |   |                                         |   |      |                                                       |  |   |      |  
|Total                   |  | $                           | (0.9   | ) |                                         | $ | 0.1  |                                                       |  | $ | (0.7 | )
|                        |  |                             |        |   |                                         |   |      |                                                       |  |   |      |  
|2009                    |  |                             |        |   |                                         |   |      |                                                       |  |   |      |  
|Interest rate swaps     |  | $                           |       |   |                                         | $ |     |                                                       |  | $ | (0.5 | )
|Heating oil derivatives |  |                             | (22.4  | ) |                                         |   | (1.4 | )                                                     |  |   | (3.7 | )
|Natural gas derivatives |  |                             | (172.5 | ) |                                         |   | (0.5 | )                                                     |  |   | (0.2 | )
|                        |  |                             |        |   |                                         |   |      |                                                       |  |   |      |  
|Total                   |  | $                           | (194.9 | ) |                                         | $ | (1.9 | )                                                     |  | $ | (4.4 | )
|                        |  |                             |        |   |                                         |   |      |                                                       |  |   |      |  



|(1) | Changes in OCI and AOCI are reported in after-tax dollars.
|--- | ----------------------------------------------------------

The maximum length of time over which the company is hedging its exposure to the variability in future cash flows extends to Dec. 31,
2012 for both financial natural gas and financial heating oil fuel contracts. The following table presents by commodity type the companys derivative volumes that, as of Mar. 31, 2010, are expected to settle during the 2010, 2011 and 2012
fiscal years:



21



---

##### Index to Financial Statements

|           |  |                                 |  |                                |  |          |  |          
|---------- |  | ------------------------------- |  | ------------------------------ |  | -------- |  | ---------
|(millions) |  | Heating Oil 
Contracts(Gallons) |  | Natural Gas 
Contracts(MMBTUs)
|Year       |  | Physical                        |  | Financial                      |  | Physical |  | Financial
|2010       |  |                                |  | 7.0                            |  |         |  | 29.1     
|2011       |  |                                |  | 4.5                            |  |         |  | 20.7     
|2012       |  |                                |  |                               |  |         |  | 2.3      
|           |  |                                 |  |                                |  |          |  |          
|Total      |  |                                |  | 11.5                           |  |         |  | 52.1     
|           |  |                                 |  |                                |  |          |  |          

The company is exposed to credit risk primarily
through entering into derivative instruments with counterparties to limit its exposure to the commodity price fluctuations associated with diesel fuel and natural gas. Credit risk is the potential loss resulting from a counterpartys
nonperformance under an agreement. The company manages credit risk with policies and procedures for, among other things, counterparty analysis, exposure measurement, and exposure monitoring and mitigation.

It is possible that volatility in commodity prices could cause the company to have material credit risk exposures with one or more
counterparties. If such counterparties fail to perform their obligations under one or more agreements, the company could suffer a material financial loss. However, as of Mar. 31, 2010, substantially all of the counterparties with
transaction amounts outstanding in the companys energy portfolio are rated investment grade by the major rating agencies. The company assesses credit risk internally for counterparties that are not rated.

The company has entered into commodity master arrangements with its counterparties to mitigate credit exposure to those
counterparties. The company generally enters into the following master arrangements: (1) Edison Electric Institute agreements (EEI) - standardized power sales contracts in the electric industry; (2) International Swaps and Derivatives
Association agreements (ISDA) - standardized financial gas and electric contracts; and (3) North American Energy Standards Board agreements (NAESB) - standardized physical gas contracts. The company believes that entering into such
agreements reduces the risk from default by creating contractual rights relating to creditworthiness, collateral and termination.

The company has implemented procedures to monitor the creditworthiness of our counterparties and to consider nonperformance in valuing
counterparty positions. The company monitors counterparties credit standing, including those that are experiencing financial problems, have significant swings in credit default swap rates, have credit rating changes by external rating agencies
or have changes in ownership. Net liability positions are generally not adjusted as the company uses derivative transactions as hedges and has the ability and intent to perform under each of these contracts. In the instance of net asset positions,
the company considers general market conditions and the observable financial health and outlook of specific counterparties, forward looking data such as credit default swaps, when available, and historical default probabilities from credit rating
agencies in evaluating the potential impact of nonperformance risk to derivative positions. As of Mar. 31, 2010, substantially all positions with counterparties are net liabilities.

Certain TECO Energy derivative instruments contain provisions that require the companys debt, or in the case of derivative
instruments where Tampa Electric Company is the counterparty, Tampa Electric Companys debt, to maintain an investment grade credit rating from any or all of the major credit rating agencies. If debt ratings, including Tampa Electric
Companys, were to fall below investment grade, it could trigger these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on
derivative instruments in net liability positions. The company has no other contingent risk features associated with any derivative instruments.

The table below presents the fair value of the overall contractual contingent liability positions for the companys derivative
activity at Mar 31, 2010:

Contingent Features



|                            |  |                             |       |   |                                     |   |       |                  |  |   |  
|--------------------------- |  | --------------------------- | ----- | - | ----------------------------------- | - | ----- | ---------------- |  | - | -
|(millions)
At Mar. 31, 2010 |  | Fair ValueAsset/(Liability) |       |   | DerivativeExposureAsset/(Liability) |   |       | PostedCollateral
|Credit Rating               |  | $                           | (74.4 | ) |                                     | $ | (74.4 | )                |  | $ | 

13. Fair Value
Measurements

Items Measured at Fair Value on a Recurring Basis

The following table sets forth by level within the fair value hierarchy the company's financial assets and liabilities that were accounted
for at fair value on a recurring basis as of Mar. 31, 2010. As required by accounting standards for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to
the fair value measurement. The company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair
value hierarchy levels. For natural gas, interest rate and heating oil swaps, the market approach was used in determining fair value.



22



---

##### Index to Financial Statements

Recurring Fair Value Measures



|                    |  |                                   |   |         |   |         |  |       |   |  |   |     
|------------------- |  | --------------------------------- | - | ------- | - | ------- |  | ----- | - |  | - | ----
|                    |  | At fair value as of Mar. 31, 2010
|(millions)          |  | Level 1                           |   | Level 2 |   | Level 3 |  | Total
|Assets              |  |                                   |   |         |   |         |  |       |   |  |   |     
|Natural gas swaps   |  | $                                 |  |         | $ | 0.5     |  | $     |  |  | $ | 0.5 
|Heating oil swaps   |  |                                   |  |         |   | 0.3     |  |       |  |  |   | 0.3 
|                    |  |                                   |   |         |   |         |  |       |   |  |   |     
|Total               |  | $                                 |  |         | $ | 0.8     |  | $     |  |  | $ | 0.8 
|                    |  |                                   |   |         |   |         |  |       |   |  |   |     
|                    |  |                                   |   |        
|Liabilities         |  |                                   |   |         |   |         |  |       |   |  |   |     
|Natural gas swaps   |  | $                                 |  |         | $ | 74.7    |  | $     |  |  | $ | 74.7
|Interest rate swaps |  |                                   |  |         |   | 0.9     |  |       |  |  |   | 0.9 
|Heating oil swaps   |  |                                   |  |         |   | 0.3     |  |       |  |  |   | 0.3 
|                    |  |                                   |   |         |   |         |  |       |   |  |   |     
|Total               |  | $                                 |  |         | $ | 75.9    |  | $     |  |  | $ | 75.9
|                    |  |                                   |   |         |   |         |  |       |   |  |   |     
|                    | 
|                    |  | At fair value as of Dec. 31, 2009
|(millions)          |  | Level 1                           |   | Level 2 |   | Level 3 |  | Total
|Assets              |  |                                   |   |         |   |         |  |       |   |  |   |     
|Natural gas swaps   |  | $                                 |  |         | $ | 0.8     |  | $     |  |  | $ | 0.8 
|Heating oil swaps   |  |                                   |  |         |   | 0.2     |  |       |  |  |   | 0.2 
|                    |  |                                   |   |         |   |         |  |       |   |  |   |     
|Total               |  | $                                 |  |         | $ | 1.0     |  | $     |  |  | $ | 1.0 
|                    |  |                                   |   |         |   |         |  |       |   |  |   |     
|                    |  |                                   |   |        
|Liabilities         |  |                                   |   |         |   |         |  |       |   |  |   |     
|Natural gas swaps   |  | $                                 |  |         | $ | 36.7    |  | $     |  |  | $ | 36.7
|Heating oil swaps   |  |                                   |  |         |   | 0.9     |  |       |  |  |   | 0.9 
|                    |  |                                   |   |         |   |         |  |       |   |  |   |     
|Total               |  | $                                 |  |         | $ | 37.6    |  | $     |  |  | $ | 37.6
|                    |  |                                   |   |         |   |         |  |       |   |  |   |     

Natural gas and heating oil swaps are over-the-counter
swap instruments. The primary pricing inputs in determining the fair value of these swaps are the New York Mercantile Exchange (NYMEX) quoted closing prices of exchange-traded instruments. These prices are applied to the notional amounts of active
positions to determine the reported fair value.

The primary pricing inputs in determining the fair value of interest rate
swaps are LIBOR swap rates as reported by Bloomberg. For each instrument, the projected forward swap rate is used to determine the stream of cash flows over the life of the contract. The cash flows are then discounted using a spot discount rate to
determine the fair value.

Fair Value of Debt Outstanding

At Mar. 31, 2010, total long-term debt had a carrying amount of $3,604.01 million and an estimated fair market value of $3,823.0 million.
At Dec. 31, 2009, total long-term debt had a carrying amount of $3,309.7 million and an estimated fair market value of $3,500.3 million.

14. Mergers, Acquisitions and Dispositions

Sale of Navega

On Mar.
13, 2009, TECO Guatemala sold its 16.5% interest in the Central American fiber optic telecommunications provider Navega. The sale resulted in a pretax gain of $18.3 million and total proceeds of $29.0 million.

15. Restructuring Charges

On Jul. 30, 2009, TECO Energy, Inc. announced organizational changes and a new senior management structure as part of its response to
industry changes, economic uncertainties and its commitment to maintain a lean and efficient organization. As a second step in response to these factors, on Aug. 31, 2009, the company decided on a total reduction in force of 229 jobs. The
reduction in force was substantially completed by Dec. 31, 2009. In connection with this reduction in force, the company incurred total costs of $26.6 million related to severance and other benefits. For the three months ended Mar. 31,
2010, the remaining $1.5 million of these costs were recognized on the Consolidated Condensed Statements of Income under Restructuring Charges. The companys wholly-owned subsidiary, Tampa Electric Company, incurred
$23.1 million of such costs, all of which were recognized in the year ended Dec. 31, 2009. The total cash payments related to these actions were $28.4 million; including $4.9 million for the settlement of pension obligations. As of Mar.
31, 2010, all restructuring charges were paid or settled.



23



---

##### Index to Financial Statements

Restructuring Charges to be Incurred



|                                    |  |                        |       |   |             |   |      |       |  |   |       |  
|----------------------------------- |  | ---------------------- | ----- | - | ----------- | - | ---- | ----- |  | - | ----- | -
|                                    |  | Terminationof Benefits |       |   | Other Costs |   |      | Total | 
|Total costs expected to be incurred |  | $                      | 26.6  |   |             | $ | 0.6  |       |  | $ | 27.2  |  
|Costs incurred in 2009              |  |                        | (25.1 | ) |             |   | (0.6 | )     |  |   | (25.7 | )
|Current period costs incurred       |  |                        | (1.5  | ) |             |   |     |       |  |   | (1.5  | )
|                                    |  |                        |       |   |             |   |      |       |  |   |       |  
|Total costs remaining               |  | $                      |      |   |             | $ |     |       |  | $ |      |  
|                                    |  |                        |       |   |             |   |      |       |  |   |       |  

Accrued Liability for Restructuring Charges



|                                      |  |                        |       |   |             |   |      |       |  |   |       |  
|------------------------------------- |  | ---------------------- | ----- | - | ----------- | - | ---- | ----- |  | - | ----- | -
|                                      |  | Terminationof Benefits |       |   | Other Costs |   |      | Total | 
|Beginning balance, Jul. 1, 2009       |  | $                      |      |   |             | $ |     |       |  | $ |      |  
|Costs incurred and charged to expense |  |                        | 26.6  |   |             |   | 0.6  |       |  |   | 27.2  |  
|Costs paid/settled                    |  |                        | (22.9 | ) |             |   | (0.6 | )     |  |   | (23.5 | )
|Non-cash expense                      |  |                        | (3.7  | ) |             |   |     |       |  |   | (3.7  | )
|                                      |  |                        |       |   |             |   |      |       |  |   |       |  
|Ending balance, Mar. 31, 2010         |  | $                      |      |   |             | $ |     |       |  | $ |      |  
|                                      |  |                        |       |   |             |   |      |       |  |   |       |  

Restructuring Charges by Segment



|                                    |  |               |       |   |     |   |      |          |  |   |       |   |  |   |       |  
|----------------------------------- |  | ------------- | ----- | - | --- | - | ---- | -------- |  | - | ----- | - |  | - | ----- | -
|                                    |  | TampaElectric |       |   | PGS |   |      | Other(1) |  |   | Total |  
|Total costs expected to be incurred |  | $             | 18.4  |   |     | $ | 4.7  |          |  | $ | 4.1   |   |  | $ | 27.2  |  
|Costs incurred in 2009              |  |               | (18.4 | ) |     |   | (4.7 | )        |  |   | (2.6  | ) |  |   | (25.7 | )
|Current period costs incurred       |  |               |      |   |     |   |     |          |  |   | (1.5  | ) |  |   | (1.5  | )
|                                    |  |               |       |   |     |   |      |          |  |   |       |   |  |   |       |  
|Total costs remaining               |  | $             |      |   |     | $ |     |          |  | $ |      |   |  | $ |      |  
|                                    |  |               |       |   |     |   |      |          |  |   |       |   |  |   |       |  



|(1) | Restructuring costs incurred at the parent company.
|--- | ---------------------------------------------------

16. Variable Interest Entities

The company formed Tampa Centro Americana de Electricidad (TCAE) to own and construct the Alborada Power Station and the company formed
Central Generadora Eléctrica San José (CGESJ) to own and construct the San José Power Station. Both power stations are located in Guatemala and both projects obtained long-term power purchase agreements (PPAs) with Empresa
Eléctrica de Guatemala, S.A. (EEGSA), a distribution utility in Guatemala. The terms of the two separate PPAs include EEGSAs right to the full capacity of the plants for 15 years, U.S. dollar based capacity payments, certain terms for
providing fuel, and certain other terms including the right to extend the Alborada and San José contracts. Under prior accounting standards for consolidation, management believed that EEGSA was the primary beneficiary of the variable
interests in TCAE and CGESJ due to the terms of the PPAs. Accordingly, both entities were deconsolidated as of Jan. 1, 2004. The TCAE deconsolidation resulted in the initial removal of $25.0 million of debt and $15.1 million of net assets from TECO
Energys Consolidated Balance Sheet. The CGESJ deconsolidation resulted in the initial removal of $65.5 million of debt and $106.6 million of net assets from TECO Energys Consolidated Balance Sheet. The results of operations for the two
projects were classified as Income from equity investments on TECO Energys Consolidated Statements of Income since the date of deconsolidation through Dec. 31, 2009.

Effective Jan. 1, 2010, the accounting standards for consolidation of VIEs were amended. The most significant amendment was the
determination of a VIEs primary beneficiary. Under the amended standard, the primary beneficiary is the enterprise that has both 1) the power to direct the activities of a VIE that most significantly impact the entity's economic performance
and 2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. As a result of adopting this amendment, the
company reconsolidated both TCAE and CGESJ.



24



---

##### Index to Financial Statements

The following table summarizes combined income statement information for the TCAE and CGESJ
projects for the three months ended Mar. 31, 2010, which were consolidated, and Mar. 31, 2009, which were not consolidated:



|                        |  |               |     
|----------------------- |  | ------------- | ----
|As of Mar. 31, 2010     |  |              
|(millions)              |  | TCAE andCGESJ
|Revenues                |  | $             | 32.6
|Operating expenses      |  | $             | 16.4
|Project level income(1) |  | $             | 13.5
|                        | 
|As of Mar. 31, 2009     |  |              
|Revenues                |  | $             | 18.7
|Operating expenses      |  | $             | 10.4
|Project level income(1) |  | $             | 5.7 



|(1) | Excludes taxes, allocated interest expense and administrative and general expenses. Includes project level interest.
|--- | --------------------------------------------------------------------------------------------------------------------

The following table summarizes combined balance sheet information for the TCAE and CGESJ projects for the periods ended Mar. 31, 2010,
which were consolidated, and Dec. 31, 2009, which were not consolidated:



|                                                 |  |               |      
|------------------------------------------------ |  | ------------- | -----
|Summary Results                                  |  |              
|As of Mar. 31, 2010                              |  |              
|(millions)                                       |  | TCAE andCGESJ
|Current assets                                   |  | $             | 46.9 
|Long-term assets and other deferred debits       |  |               | 158.5
|                                                 |  |               |      
|Total assets                                     |  | $             | 205.4
|                                                 |  |               |      
|Current liabilities                              |  | $             | 17.9 
|Long-term liabilities and other deferred credits |  |               | 45.9 
|Equity                                           |  |               | 141.6
|                                                 |  |               |      
|Total liabilities and equity                     |  | $             | 205.4
|                                                 |  |               |      
|                                                 | 
|As of Dec. 31, 2009                              |  |              
|(millions)                                       |  | TCAE andCGESJ
|Current assets                                   |  | $             | 58.1 
|Long-term assets and other deferred debits       |  |               | 161.2
|                                                 |  |               |      
|Total assets                                     |  | $             | 219.3
|                                                 |  |               |      
|Current liabilities                              |  | $             | 17.6 
|Long-term liabilities and other deferred credits |  |               | 51.2 
|Equity                                           |  |               | 150.5
|                                                 |  |               |      
|Total liabilities and equity                     |  | $             | 219.3
|                                                 |  |               |      

Tampa Electric Company has entered into multiple PPAs
with wholesale energy providers in Florida to ensure the ability to meet customer energy demand and to provide lower cost options in the meeting of this demand. These agreements range in size from 121 MW to 370 MW of available capacity,
are with similar entities and contain similar provisions. Because some of these provisions provide for the transfer or sharing of a number of risks inherent in the generation of energy, these agreements meet the definition of being variable interest
entities. These risks include: operating and maintenance; regulatory; credit; commodity/fuel; and energy market risk. In most instances, Tampa Electric Company has reviewed these risks and has determined that the owners of these entities have
retained the majority of these risks over the expected life of the underlying generating assets, have the power to direct the most significant activities, the obligation or right to absorb losses or benefits and hence remain the primary
beneficiaries. As a result, Tampa Electric Company is not required to consolidate any of these entities. Tampa Electric Company purchased $57.2 million and $42.2 million under these PPAs for the three months ended Mar. 31, 2010 and
2009, respectively.

In one instance the companys agreement with the entity for 370 MW of capacity was entered into
prior to Dec. 31, 2003, the effective date of these standards. Under the standards, the company is required to make an exhaustive effort to obtain sufficient information to determine if this entity is a VIE and which holder of the variable interests
is the primary beneficiary. The owners of this entity are not willing to provide the information necessary to make these determinations, have no obligation to do so and the information is not available publicly. As a result, the company is unable to
determine if this entity is a VIE and if so, which variable interest holder, if any, is the primary beneficiary. The company has no obligation to this entity beyond the purchase of capacity; therefore, the maximum exposure for the company is the
obligation to pay for such capacity under terms of the PPA at rates that could be unfavorable to the wholesale market. The company purchased $12.7 million and $6.2 million under this PPA for the three months ended Mar. 31, 2010 and 2009,
respectively.

The company does not provide any material financial or other support to any of the VIEs it is involved with,
nor is the company under any obligation to absorb losses associated with these VIEs. Other than the Guatemalan projects previously mentioned, in the normal course of business, our involvement with the remaining VIEs does not affect our Consolidated
Balance Sheets, Statements of Income or Cash Flows.

17. Subsequent Events

Redemption of TECO Energy, Inc. Floating Rate Notes due 2010

On Apr. 14, 2010, TECO Energy redeemed all of the outstanding $100 million aggregate principal amount of its Floating Rate Notes due 2010.
The redemption price was equal to 100% of the principal amount of notes redeemed, plus accrued and unpaid interest on the redeemed notes up to the redemption date.

Redemption of TECO Energy, Inc. 7.2% Notes due 2011

On Apr. 22, 2010, TECO Energy redeemed $100 million aggregate principal amount of its 7.2% Notes due 2011. The redemption price was equal
to $1,066.38 per $1,000 principal amount of notes redeemed, plus accrued and unpaid interest on the redeemed notes up to the redemption date.



25



---

##### Index to Financial Statements

TAMPA ELECTRIC COMPANY

In the opinion of management, the unaudited consolidated condensed financial statements include all adjustments that are of a recurring
nature and necessary to state fairly the financial position of Tampa Electric Company as of Mar. 31, 2010 and Dec. 31, 2009, and the results of operations and cash flows for the periods ended Mar. 31, 2010 and 2009. The results of operations for the
three months ended Mar. 31, 2010 are not necessarily indicative of the results that can be expected for the entire fiscal year ending Dec. 31, 2010. References should be made to the explanatory notes affecting the consolidated financial statements
contained in Amendment No. 1 to Tampa Electric Companys Annual Report on Form 10-K for the year ended Dec. 31, 2009 and to the notes on pages 31-40 of this report.

INDEX TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



|                                                                                                                              |  |        
|----------------------------------------------------------------------------------------------------------------------------- |  | -------
|                                                                                                                              |  | PageNo.
|                                                                                                                             
|                                                                                                                              | 
|Consolidated Condensed Balance Sheets, Mar. 31, 2010 and Dec. 31, 2009                                                        |  | 27-28  
|                                                                                                                              | 
|Consolidated Condensed Statements of Income and Comprehensive Income for the three month periods ended Mar. 31, 2010 and 2009 |  | 29     
|                                                                                                                              | 
|Consolidated Condensed Statements of Cash Flows for the three month periods ended Mar. 31, 2010 and 2009                      |  | 30     
|                                                                                                                              | 
|Notes to Consolidated Condensed Financial Statements                                                                          |  | 31-40  



26



---

##### Index to Financial Statements

TAMPA ELECTRIC COMPANY

Consolidated Condensed Balance Sheets

Unaudited



|                                                                                                                 |  |              |          |   |              |   |          |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ------------ | - | -------- | -
|Assets
(millions)                                                                                                |  | Mar.
31,2010 |          |   | Dec.
31,2009 |  
|                                                                                                                 | 
|                                                                                                                 |  |             
|Property, plant and equipment                                                                                    |  |              |          |   |              |   |          |  
|Utility plant in service                                                                                         |  |              |          |   |              |   |          |  
|Electric                                                                                                         |  | $            | 6,084.2  |   |              | $ | 6,065.9  |  
|Gas                                                                                                              |  |              | 1,024.6  |   |              |   | 1,017.2  |  
|Construction work in progress                                                                                    |  |              | 316.5    |   |              |   | 303.0    |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Property, plant and equipment, at original costs                                                                 |  |              | 7,425.3  |   |              |   | 7,386.1  |  
|Accumulated depreciation                                                                                         |  |              | (1,994.3 | ) |              |   | (1,988.1 | )
|                                                                                                                 |  |              |          |   |              |   |          |  
|                                                                                                                 |  |              | 5,431.0  |   |              |   | 5,398.0  |  
|Other property                                                                                                   |  |              | 4.4      |   |              |   | 4.4      |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Total property, plant and equipment, net                                                                         |  |              | 5,435.4  |   |              |   | 5,402.4  |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Current assets                                                                                                   |  |              |          |   |              |   |          |  
|Cash and cash equivalents                                                                                        |  |              | 13.9     |   |              |   | 5.5      |  
|Receivables, less allowance for uncollectibles of $2.0 and $1.6 at Mar. 31, 2010 and Dec. 31, 2009, respectively |  |              | 263.2    |   |              |   | 228.6    |  
|Inventories, at average cost                                                                                     |  |              |          |   |              |   |          |  
|Fuel                                                                                                             |  |              | 105.4    |   |              |   | 85.8     |  
|Materials and supplies                                                                                           |  |              | 56.3     |   |              |   | 55.8     |  
|Current regulatory assets                                                                                        |  |              | 117.0    |   |              |   | 109.2    |  
|Current derivative assets                                                                                        |  |              | 0.5      |   |              |   | 0.8      |  
|Taxes receivable                                                                                                 |  |              |         |   |              |   | 16.8     |  
|Prepayments and other current assets                                                                             |  |              | 10.6     |   |              |   | 12.0     |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Total current assets                                                                                             |  |              | 566.9    |   |              |   | 514.5    |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Deferred debits                                                                                                  |  |              |          |   |              |   |          |  
|Unamortized debt expense                                                                                         |  |              | 19.4     |   |              |   | 20.1     |  
|Long-term regulatory assets                                                                                      |  |              | 338.2    |   |              |   | 335.6    |  
|Other                                                                                                            |  |              | 0.9      |   |              |   | 1.2      |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|Total deferred debits                                                                                            |  |              | 358.5    |   |              |   | 356.9    |  
|                                                                                                                 |  |              |          |   |              |   |          |  
|                                                                                                                 |  |             
|Total assets                                                                                                     |  | $            | 6,360.8  |   |              | $ | 6,273.8  |  
|                                                                                                                 |  |              |          |   |              |   |          |  

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



27



---

##### Index to Financial Statements

TAMPA ELECTRIC COMPANY

Consolidated Condensed Balance Sheetscontinued

Unaudited



|                                                |  |              |         |   |              |   |         |  
|----------------------------------------------- |  | ------------ | ------- | - | ------------ | - | ------- | -
|Liabilities and Capital
(millions)              |  | Mar. 31,2010 |         |   | Dec. 31,2009 |  
|Capital                                         |  |              |         |   |              |   |         |  
|Common stock                                    |  | $            | 1,852.4 |   |              | $ | 1,802.4 |  
|Accumulated other comprehensive loss            |  |              | (5.9    | ) |              |   | (6.1    | )
|Retained earnings                               |  |              | 317.3   |   |              |   | 307.5   |  
|                                                |  |              |         |   |              |   |         |  
|Total capital                                   |  |              | 2,163.8 |   |              |   | 2,103.8 |  
|Long-term debt, less amount due within one year |  |              | 1,994.4 |   |              |   | 1,994.4 |  
|                                                |  |              |         |   |              |   |         |  
|Total capitalization                            |  |              | 4,158.2 |   |              |   | 4,098.2 |  
|                                                |  |              |         |   |              |   |         |  
|Current liabilities                             |  |              |         |   |              |   |         |  
|Long-term debt due within one year              |  |              | 3.7     |   |              |   | 3.7     |  
|Notes payable                                   |  |              | 18.0    |   |              |   | 55.0    |  
|Accounts payable                                |  |              | 187.0   |   |              |   | 206.1   |  
|Customer deposits                               |  |              | 153.1   |   |              |   | 151.2   |  
|Current regulatory liabilities                  |  |              | 69.0    |   |              |   | 85.4    |  
|Current derivative liabilities                  |  |              | 66.6    |   |              |   | 33.1    |  
|Current deferred income taxes                   |  |              | 11.0    |   |              |   | 15.9    |  
|Interest accrued                                |  |              | 42.5    |   |              |   | 27.7    |  
|Taxes accrued                                   |  |              | 55.9    |   |              |   | 12.1    |  
|Other                                           |  |              | 11.9    |   |              |   | 16.5    |  
|                                                |  |              |         |   |              |   |         |  
|Total current liabilities                       |  |              | 618.7   |   |              |   | 606.7   |  
|                                                |  |              |         |   |              |   |         |  
|Deferred credits                                |  |              |         |   |              |   |         |  
|Non-current deferred income taxes               |  |              | 560.3   |   |              |   | 543.8   |  
|Investment tax credits                          |  |              | 10.7    |   |              |   | 10.8    |  
|Long-term derivative liabilities                |  |              | 8.1     |   |              |   | 3.6     |  
|Long-term regulatory liabilities                |  |              | 608.2   |   |              |   | 602.6   |  
|Other                                           |  |              | 396.6   |   |              |   | 408.1   |  
|                                                |  |              |         |   |              |   |         |  
|Total deferred credits                          |  |              | 1,583.9 |   |              |   | 1,568.9 |  
|                                                |  |              |         |   |              |   |         |  
|Total liabilities and capital                   |  | $            | 6,360.8 |   |              | $ | 6,273.8 |  
|                                                |  |              |         |   |              |   |         |  

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



28



---

##### Index to Financial Statements

TAMPA ELECTRIC COMPANY

Consolidated Condensed Statements of Income and Comprehensive Income

Unaudited



|                                                                                               |  |                             |       |   |      |   |       |  
|---------------------------------------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                               |  | Three months ended Mar. 31, |      
|(millions)                                                                                     |  | 2010                        |       |   | 2009 |  
|Revenues                                                                                       |  |                             |       |   |      |   |       |  
|Electric (includes franchise fees and gross receipts taxes of $21.4 in 2010 and $22.1 in 2009) |  | $                           | 525.0 |   |      | $ | 501.0 |  
|Gas (includes franchise fees and gross receipts taxes of $9.5 in 2010 and $8.0 in 2009)        |  |                             | 181.7 |   |      |   | 153.0 |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Total revenues                                                                                 |  |                             | 706.7 |   |      |   | 654.0 |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Expenses                                                                                       |  |                             |       |   |      |   |       |  
|Operations                                                                                     |  |                             |       |   |      |   |       |  
|Fuel                                                                                           |  |                             | 164.0 |   |      |   | 228.7 |  
|Purchased power                                                                                |  |                             | 57.2  |   |      |   | 42.2  |  
|Cost of natural gas sold                                                                       |  |                             | 116.0 |   |      |   | 88.3  |  
|Other                                                                                          |  |                             | 87.7  |   |      |   | 76.9  |  
|Maintenance                                                                                    |  |                             | 30.0  |   |      |   | 36.2  |  
|Depreciation                                                                                   |  |                             | 64.4  |   |      |   | 58.8  |  
|Taxes, federal and state                                                                       |  |                             | 38.8  |   |      |   | 16.5  |  
|Taxes, other than income                                                                       |  |                             | 49.3  |   |      |   | 48.2  |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Total expenses                                                                                 |  |                             | 607.4 |   |      |   | 595.8 |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Income from operations                                                                         |  |                             | 99.3  |   |      |   | 58.2  |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Other income                                                                                   |  |                             |       |   |      |   |       |  
|Allowance for other funds used during construction                                             |  |                             | 1.0   |   |      |   | 3.3   |  
|Taxes, non-utility federal and state                                                           |  |                             | (0.2  | ) |      |   | (0.1  | )
|Other income, net                                                                              |  |                             | 0.8   |   |      |   | 1.0   |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Total other income                                                                             |  |                             | 1.6   |   |      |   | 4.2   |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Interest charges                                                                               |  |                             |       |   |      |   |       |  
|Interest on long-term debt                                                                     |  |                             | 32.7  |   |      |   | 31.4  |  
|Other interest                                                                                 |  |                             | 2.8   |   |      |   | 2.8   |  
|Allowance for borrowed funds used during construction                                          |  |                             | (0.6  | ) |      |   | (1.3  | )
|                                                                                               |  |                             |       |   |      |   |       |  
|Total interest charges                                                                         |  |                             | 34.9  |   |      |   | 32.9  |  
|                                                                                               |  |                             |       |   |      |   |       |  
|                                                                                               |  |                            
|Net income                                                                                     |  |                             | 66.0  |   |      |   | 29.5  |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Other comprehensive income (loss), net of tax                                                  |  |                             |       |   |      |   |       |  
|Net unrealized gain (loss) on cash flow hedges                                                 |  |                             | 0.2   |   |      |   | 0.2   |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Total other comprehensive income (loss), net of tax                                            |  |                             | 0.2   |   |      |   | 0.2   |  
|                                                                                               |  |                             |       |   |      |   |       |  
|Comprehensive income                                                                           |  | $                           | 66.2  |   |      | $ | 29.7  |  
|                                                                                               |  |                             |       |   |      |   |       |  

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



29



---

##### Index to Financial Statements

TAMPA ELECTRIC COMPANY

Consolidated Condensed Statements of Cash Flows

Unaudited



|                                                                           |  |                            |        |   |      |   |        |  
|-------------------------------------------------------------------------- |  | -------------------------- | ------ | - | ---- | - | ------ | -
|                                                                           |  | Three months endedMar. 31, |       
|(millions)                                                                 |  | 2010                       |        |   | 2009 |  
|Cash flows from operating activities                                       |  |                            |        |   |      |   |        |  
|Net income                                                                 |  | $                          | 66.0   |   |      | $ | 29.5   |  
|Adjustments to reconcile net income to net cash from operating activities: |  |                            |        |   |      |   |        |  
|Depreciation                                                               |  |                            | 64.4   |   |      |   | 58.8   |  
|Deferred income taxes                                                      |  |                            | 10.6   |   |      |   | 0.5    |  
|Investment tax credits, net                                                |  |                            | (0.1   | ) |      |   | (0.1   | )
|Allowance for funds used during construction                               |  |                            | (1.0   | ) |      |   | (3.3   | )
|Deferred recovery clause                                                   |  |                            | 7.9    |   |      |   | 66.9   |  
|Receivables, less allowance for uncollectibles                             |  |                            | (34.6  | ) |      |   | 5.3    |  
|Inventories                                                                |  |                            | (20.1  | ) |      |   | (16.2  | )
|Prepayments                                                                |  |                            | 1.4    |   |      |   | 3.6    |  
|Taxes accrued                                                              |  |                            | 60.6   |   |      |   | 22.3   |  
|Interest accrued                                                           |  |                            | 14.8   |   |      |   | 13.1   |  
|Accounts payable                                                           |  |                            | 0.8    |   |      |   | (32.8  | )
|Gain on sale of assets, pretax                                             |  |                            | (0.1   | ) |      |   | (0.2   | )
|Other                                                                      |  |                            | (7.3   | ) |      |   | 12.0   |  
|                                                                           |  |                            |        |   |      |   |        |  
|Cash flows from operating activities                                       |  |                            | 163.3  |   |      |   | 159.4  |  
|                                                                           |  |                            |        |   |      |   |        |  
|Cash flows from investing activities                                       |  |                            |        |   |      |   |        |  
|Capital expenditures                                                       |  |                            | (112.7 | ) |      |   | (177.8 | )
|Allowance for funds used during construction                               |  |                            | 1.0    |   |      |   | 3.3    |  
|Net proceeds from sale of assets                                           |  |                            |       |   |      |   | 0.1    |  
|                                                                           |  |                            |        |   |      |   |        |  
|Cash flows used in investing activities                                    |  |                            | (111.7 | ) |      |   | (174.4 | )
|                                                                           |  |                            |        |   |      |   |        |  
|Cash flows from financing activities                                       |  |                            |        |   |      |   |        |  
|Proceeds from long-term debt                                               |  |                            |       |   |      |   |       |  
|Common stock                                                               |  |                            | 50.0   |   |      |   |       |  
|Repayment of long-term debt                                                |  |                            |       |   |      |   |       |  
|Net (decrease)/increase in short-term debt                                 |  |                            | (37.0  | ) |      |   | 67.0   |  
|Dividends                                                                  |  |                            | (56.2  | ) |      |   | (46.3  | )
|                                                                           |  |                            |        |   |      |   |        |  
|Cash flows (used in) from financing activities                             |  |                            | (43.2  | ) |      |   | 20.7   |  
|                                                                           |  |                            |        |   |      |   |        |  
|Net increase in cash and cash equivalents                                  |  |                            | 8.4    |   |      |   | 5.7    |  
|Cash and cash equivalents at beginning of period                           |  |                            | 5.5    |   |      |   | 3.6    |  
|                                                                           |  |                            |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                 |  | $                          | 13.9   |   |      | $ | 9.3    |  
|                                                                           |  |                            |        |   |      |   |        |  

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



30



---

##### Index to Financial Statements

TAMPA ELECTRIC COMPANY

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

UNAUDITED

1. Summary
of Significant Accounting Policies

The significant accounting policies for Tampa Electric Company include:

Principles of Consolidation and Basis of Presentation

Tampa Electric Company is a wholly-owned subsidiary of TECO Energy, Inc., and is comprised of the Electric division, generally referred to
as Tampa Electric, the Natural Gas division, generally referred to as Peoples Gas System (PGS) and the accounts of variable interest entities (VIEs) for which it is the primary beneficiary. Tampa Electric Company is considered to be the primary
beneficiary of VIEs if it has both 1) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and 2) the obligation to absorb losses of the entity that could potentially be significant to the VIE
or the right to receive benefits from the entity that could potentially be significant to the VIE. (See Note 12.)

All
significant intercompany balances and intercompany transactions have been eliminated in consolidation. In the opinion of management, the unaudited consolidated condensed financial statements include all adjustments that are of a recurring nature and
necessary to state fairly the financial position of Tampa Electric Company and subsidiaries as of Mar. 31, 2010 and Dec. 31, 2009, and the results of operations and cash flows for the periods ended Mar. 31, 2010 and 2009. The results of operations
for the three month period ended Mar. 31, 2010 are not necessarily indicative of the results that can be expected for the entire fiscal year ending Dec. 31, 2010.

The use of estimates is inherent in the preparation of financial statements in accordance with generally accepted accounting principles
(GAAP). Actual results could differ from these estimates. The year-end consolidated condensed balance sheet data was derived from audited financial statements, however this quarterly report on Form 10-Q does not include all year-end disclosures
required for an annual report on Form 10-K by GAAP in the United States of America.

Revenues

As of Mar. 31, 2010 and Dec. 31, 2009, unbilled revenues of $57.4 million and $51.6 million, respectively, are included in the
Receivables line item on the Consolidated Condensed Balance Sheets.

Purchased Power

Tampa Electric purchases power on a regular basis to meet the needs of its customers. Tampa Electric purchased power from entities not
affiliated with TECO Energy at a cost of $57.2 million for the three months ended Mar. 31, 2010, compared to $42.2 million for the three months ended Mar. 31, 2009. Prudently incurred purchased power costs at Tampa Electric have historically been
recoverable through Florida Public Service Commission (FPSC)-approved cost recovery clauses.

Accounting for Franchise Fees and Gross
Receipts

The regulated utilities (Tampa Electric and PGS) are allowed to recover from customers certain costs incurred
through rates approved by the FPSC. The amounts included in customers bills for franchise fees and gross receipt taxes are included as revenues on the Consolidated Condensed Statements of Income. These amounts totaled $30.9 million for the
three months ended Mar. 31, 2010, compared to $30.1 million for the three months ended Mar. 31, 2009. Franchise fees and gross receipt taxes payable by the regulated utilities are included as an expense on the Consolidated Condensed Statements of
Income in Taxes, other than income. These totaled $30.8 million for the three months ended Mar. 31, 2010, compared to $30.0 million for the three months ended Mar. 31, 2009.

Cash Flows Related to Derivatives and Hedging Activities

Tampa Electric Company classifies cash inflows and outflows related to derivative and hedging instruments in the appropriate cash flow
sections associated with the item being hedged. For natural gas and ongoing interest rate swaps, the cash inflows and outflows are included in the operating section. For interest rate swaps that settle coincident with the debt issuance, the cash
inflows and outflows are treated as premiums or discounts and included in the financing section of the Consolidated Condensed Statements of Cash Flows.

2. New Accounting Pronouncements

Subsequent Events

In
February 2010, the Financial Accounting Standards Board (FASB) issued additional guidance related to subsequent event disclosure. The guidance was effective upon issuance and has no effect on the companys results of operations, statement of
position or cash flows.



31



---

##### Index to Financial Statements

Fair Value Measures and Disclosures

In January 2010, the FASB issued guidance that requires entities to disclose more information regarding the movements between Levels 1 and
2 of the fair value hierarchy. The guidance was effective for fiscal years that begin after Dec. 15, 2010, and for interim periods within that year. This guidance will not have any effect on the companys results of operations, statement of
position or cash flows.

3. Regulatory

Tampa Electrics and PGSs retail businesses are regulated by the FPSC. Tampa Electric is also subject to regulation by the
Federal Energy Regulatory Commission (FERC) under the Public Utility Holding Company Act of 2005 (PUHCA 2005). However, pursuant to a waiver granted in accordance with the FERCs regulations, Tampa Electric is not subject to certain accounting,
record-keeping and reporting requirements prescribed by the FERCs regulations under PUHCA 2005. The operations of PGS are regulated by the FPSC separately from the regulation of Tampa Electric. The FPSC has jurisdiction over rates, service,
issuance of securities, safety, accounting and depreciation practices and other matters. In general, the FPSC sets rates at a level that allows utilities such as Tampa Electric and PGS to collect total revenues (revenue requirements) equal to their
cost of providing service, plus a reasonable return on invested capital.

Storm Damage Cost Recovery

Tampa Electric accrues $8.0 million annually effective May 2009, an increase of $4.0 million from the prior year, to a FERC-authorized and
FPSC-approved self-insured storm damage reserve. This reserve was created after Floridas investor owned utilities (IOUs) were unable to obtain transmission and distribution insurance coverage due to destructive acts of nature. Tampa
Electrics storm reserve was $31.4 million and $29.3 million as of Mar. 31, 2010 and Dec. 31, 2009, respectively.

Regulatory Assets
and Liabilities

Tampa Electric and PGS maintain their accounts in accordance with recognized policies of the FPSC. In
addition, Tampa Electric maintains its accounts in accordance with recognized policies prescribed or permitted by the FERC.

Tampa Electric and PGS apply the accounting standards for regulated operations. Areas of applicability include: deferral of revenues
under approved regulatory agreements; revenue recognition resulting from cost recovery clauses that provide for monthly billing charges to reflect increases or decreases in fuel, purchased power, conservation and environmental costs; and the
deferral of costs as regulatory assets to the period that the regulatory agency recognizes them when cost recovery is ordered over a period longer than a fiscal year.



32



---

##### Index to Financial Statements

Details of the regulatory assets and liabilities as of Mar. 31, 2010 and Dec. 31, 2009 are
presented in the following table:

Regulatory Assets and Liabilities



|                                        |  |              |       |              |   |      
|--------------------------------------- |  | ------------ | ----- | ------------ | - | -----
|(millions)                              |  | Mar. 31,2010 |       | Dec. 31,2009
|Regulatory assets:                      |  |              |       |              |   |      
|Regulatory tax asset(1)                 |  | $            | 68.9  |              | $ | 69.0 
|                                        |  |              |       |              |   |      
|Other:                                  |  |              |       |              |   |      
|Cost recovery clauses                   |  |              | 103.5 |              |   | 89.4 
|Postretirement benefit asset            |  |              | 226.0 |              |   | 229.1
|Deferred bond refinancing costs(2)      |  |              | 17.0  |              |   | 18.0 
|Environmental remediation               |  |              | 21.4  |              |   | 21.2 
|Competitive rate adjustment             |  |              | 2.9   |              |   | 3.1  
|Other                                   |  |              | 15.5  |              |   | 15.0 
|                                        |  |              |       |              |   |      
|Total other regulatory assets           |  |              | 386.3 |              |   | 375.8
|                                        |  |              |       |              |   |      
|Total regulatory assets                 |  |              | 455.2 |              |   | 444.8
|Less: Current portion                   |  |              | 117.0 |              |   | 109.2
|                                        |  |              |       |              |   |      
|Long-term regulatory assets             |  | $            | 338.2 |              | $ | 335.6
|                                        |  |              |       |              |   |      
|Regulatory liabilities:                 |  |              |       |              |   |      
|Regulatory tax liability(1)             |  | $            | 18.6  |              | $ | 19.6 
|                                        |  |              |       |              |   |      
|Other:                                  |  |              |       |              |   |      
|Cost recovery clauses                   |  |              | 45.1  |              |   | 61.4 
|Environmental remediation               |  |              | 19.9  |              |   | 19.9 
|Transmission and delivery storm reserve |  |              | 31.4  |              |   | 29.3 
|Deferred gain on property sales(3)      |  |              | 2.2   |              |   | 2.8  
|Accumulated reserve-cost of removal     |  |              | 559.2 |              |   | 554.3
|Other                                   |  |              | 0.8   |              |   | 0.7  
|                                        |  |              |       |              |   |      
|Total other regulatory liabilities      |  |              | 658.6 |              |   | 668.4
|                                        |  |              |       |              |   |      
|Total regulatory liabilities            |  |              | 677.2 |              |   | 688.0
|Less: Current portion                   |  |              | 69.0  |              |   | 85.4 
|                                        |  |              |       |              |   |      
|Long-term regulatory liabilities        |  | $            | 608.2 |              | $ | 602.6
|                                        |  |              |       |              |   |      



|(1) | Primarily related to plant life and derivative positions.
|--- | ---------------------------------------------------------

|(2) | Amortized over the term of the related debt instrument.
|--- | -------------------------------------------------------

|(3) | Amortized over a 4 or 5-year period with various ending dates.
|--- | --------------------------------------------------------------

All regulatory assets are being recovered through the regulatory process. The following table further details the regulatory assets and
the related recovery periods:

Regulatory assets



|                               |  |              |       |             |   |      
|------------------------------ |  | ------------ | ----- | ----------- | - | -----
|(millions)                     |  | Mar. 31,2010 |       | Dec 31,2009
|Clause recoverable(1)          |  | $            | 106.4 |             | $ | 92.5 
|Components of rate base(2)     |  |              | 235.4 |             |   | 238.1
|Regulatory tax assets(3)       |  |              | 68.9  |             |   | 69.0 
|Capital structure and other(3) |  |              | 44.5  |             |   | 45.2 
|                               |  |              |       |             |   |      
|Total                          |  | $            | 455.2 |             | $ | 444.8
|                               |  |              |       |             |   |      



|(1) | To be recovered through cost recovery clauses approved by the FPSC on a dollar-for-dollar basis in the next year.
|--- | -----------------------------------------------------------------------------------------------------------------

|(2) | Primarily reflects allowed working capital, which is included in rate base and earns a rate of return as permitted by the FPSC.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(3) | Regulatory tax assets and Capital structure and other regulatory assets have a recoverable period longer than a fiscal year and are recognized
over the period authorized by the regulatory agency. Also included are unamortized loan costs, which are amortized over the life of the related debt instruments. See footnotes 1 and 2 in the prior table for additional information.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



33



---

##### Index to Financial Statements

4. Income Taxes

Tampa Electric Company is included in the filing of a consolidated federal income tax return with TECO Energy and its affiliates. Tampa
Electric Companys income tax expense is based upon a separate return computation. Tampa Electric Companys effective tax rates for the three months ended Mar. 31, 2010 and Mar. 31, 2009 differ from the statutory rate principally due to
state income taxes, the domestic activity production deduction and the equity portion of Allowance for Funds Used During Construction.

The Internal Revenue Service (IRS) concluded its examination of the companys consolidated federal income tax return for the year
2008 during 2009. There is one open issue for the 2008 tax return for which an Appeals Conference is expected to take place in June 2010. The U.S. federal statute of limitations remains open for the year 2006 and onward. Years 2009 and 2010 are
currently under examination by the IRS under the Compliance Assurance Program, a program in which TECO Energy is a participant. TECO Energy does not expect the settlement of current IRS examinations to significantly change the total amount of
unrecognized tax benefits by the end of 2010. Floridas statute of limitations is three years from the filing of an income tax return. The state impact of any federal changes remains subject to examination by various states for a period of up
to one year after formal notification to the states. Years still open to examination by Floridas tax authorities include 2006 and onward. The company does not expect the settlement of audit examinations to significantly change the total amount
of unrecognized tax benefits within the next 12 months.

5. Employee Postretirement Benefits

Tampa Electric Company is a participant in the comprehensive retirement plans of TECO Energy. Amounts allocable to all participants of the
TECO Energy retirement plans are found in Note 5, Employee Postretirement Benefits, in the TECO Energy, Inc.Notes to Consolidated Condensed Financial Statements. Tampa Electric Companys portion of the net pension expense
for the three months ended Mar. 31, 2010 and 2009, respectively, was $4.9 million and $3.4 million for pension benefits, and $3.6 million and $3.4 million for other postretirement benefits.

For the fiscal 2010 plan year, TECO Energy assumed an expected long-term return on plan assets of 8.25% and a discount rate of 5.75% for
pension benefits under its qualified pension plan, and a discount rate of 5.60% for its other postretirement benefits as of their Jan. 1, 2010 measurement dates. Additionally, TECO Energy assumed a discount rate of 5.75% for its Supplemental
Executive Retirement Plan (SERP) benefits as of its Mar. 1 and Jan. 1, 2010 measurement dates.

Effective Dec. 31, 2006, in
accordance with the accounting standard for defined benefit plans and other postretirement benefits, Tampa Electric Company adjusted its postretirement benefit obligations and recorded regulatory assets to reflect the unamortized transition
obligation, prior service cost, and actuarial gains and losses of its postretirement benefit plans. Included in the benefit expenses discussed above, for the three months ended Mar. 31, 2010, Tampa Electric Company reclassed $3.1 million of
unamortized transition obligation, prior service cost and actuarial losses from regulatory assets to net income.

In March
2010, the Patient Protection and Affordability Care Act and a companion bill, The Health Care and Education Reconciliation Act were signed into law. Among other things, both acts reduced the tax benefits available to an employer that receives the
Medicare Part D subsidy, resulting in a write-off of any associated deferred tax asset. As a result, Tampa Electric Company reduced its deferred tax asset by $5.3 million and recorded a corresponding regulatory tax asset.

6. Short-Term Debt

At
Mar. 31, 2010 and Dec. 31, 2009, the following credit facilities and related borrowings existed:

Credit Facilities



|                                    |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    
|----------------------------------- |  | ---------------- | ----- | -------------------------- | - | --------------------------- |  | ---------------- | --- | -------------------------- | - | --------------------------- |  | - | ---- |  | - | ---
|                                    |  | Mar. 31, 2010    |       | Dec. 31, 2009             
|(millions)                          |  | CreditFacilities |       | BorrowingsOutstanding 
(1) |   | Lettersof CreditOutstanding |  | CreditFacilities |     | BorrowingsOutstanding 
(1) |   | Lettersof CreditOutstanding
|Tampa Electric Company:             |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    
|5-year facility                     |  | $                | 325.0 |                            | $ |                            |  | $                | 0.9 |                            | $ | 325.0                       |  | $ | 55.0 |  | $ | 0.7
|1-year accounts receivable facility |  |                  | 150.0 |                            |   | 18.0                        |  |                  |    |                            |   | 150.0                       |  |   |     |  |   |   
|                                    |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    
|Total                               |  | $                | 475.0 |                            | $ | 18.0                        |  | $                | 0.9 |                            | $ | 475.0                       |  | $ | 55.0 |  | $ | 0.7
|                                    |  |                  |       |                            |   |                             |  |                  |     |                            |   |                             |  |   |      |  |   |    



|(1) | Borrowings outstanding are reported as notes payable.
|--- | -----------------------------------------------------

These credit facilities require commitment fees ranging from 7.0 to 60.0 basis points. The weighted-average interest rate on outstanding
amounts payable under the credit facilities at both Mar. 31, 2010 and Dec. 31, 2009 was 0.64%.



34



---

##### Index to Financial Statements

Tampa Electric Company Accounts Receivable Facility

On Feb. 19, 2010, Tampa Electric Company and TEC Receivables Corp. (TRC), a wholly-owned subsidiary of Tampa Electric Company, amended
their $150 million accounts receivable collateralized borrowing facility, entering into Amendment No. 8 to the Loan and Servicing Agreement with certain lenders named therein and Citicorp North America, Inc. as Program Agent. The amendment
(i) extends the maturity date to Feb. 18, 2011, (ii) provides that TRC will pay program and liquidity fees, which, pursuant to the amendment, will total 100 basis points, (iii) provides that the interest rates on the borrowings will
be based on prevailing asset-backed commercial paper rates, unless such rates are not available from conduit lenders, in which case the rates will be at an interest rate equal to, at Tampa Electric Companys option, either Citibanks prime
rate (or the federal funds rate plus 50 basis points, if higher) or a rate based on the London interbank offer rate (if available) plus a margin and (iv) makes other technical changes.

7. Commitments and Contingencies

Legal Contingencies

From
time to time, Tampa Electric Company and its subsidiaries are involved in various legal, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies in the ordinary course of its business. Where
appropriate, accruals are made in accordance with accounting standards for contingencies to provide for matters that are probable of resulting in an estimable, material loss. While the outcome of such proceedings is uncertain, management does not
believe that their ultimate resolution will have a material adverse effect on the companys results of operations or financial condition.

Superfund and Former Manufactured Gas Plant Sites

Tampa Electric Company, through Tampa Electric and PGS, is a potentially responsible party (PRP) for certain superfund sites and, through
PGS, for certain former manufactured gas plant sites. While the joint and several liability associated with these sites presents the potential for significant response costs, as of Mar. 31, 2010, Tampa Electric Company has estimated its ultimate
financial liability to be approximately $19.9 million, primarily at PGS, and this amount has been accrued in the companys financial statements. The environmental remediation costs associated with these sites, which are expected to be paid over
many years, are not expected to have a significant impact on customer prices.

The estimated amounts represent only the
estimated portion of the cleanup costs attributable to Tampa Electric Company. The estimates to perform the work are based on Tampa Electric Companys experience with similar work adjusted for site specific conditions and agreements with the
respective governmental agencies. The estimates are made in current dollars, are not discounted and do not assume any insurance recoveries.

Allocation of the responsibility for remediation costs among Tampa Electric Company and other PRPs is based on each partys relative
ownership interest in or usage of a site. Accordingly, Tampa Electric Companys share of remediation costs varies with each site. In virtually all instances where other PRPs are involved, those PRPs are considered creditworthy.

Factors that could impact these estimates include the ability of other PRPs to pay their pro-rata portion of the cleanup costs,
additional testing and investigation which could expand the scope of the cleanup activities, additional liability that might arise from the cleanup activities themselves or changes in laws or regulations that could require additional remediation.
These costs are recoverable through customer rates established in subsequent base rate proceedings.

Guarantees and Letters of Credit

At Mar. 31, 2010, Tampa Electric Company was not obligated under guarantees, but had $0.9 million of letters of credit
outstanding.

Letters of Credit -Tampa Electric Company



|                                      |  |      |   |              |   |           |  |       |     |                                        |   |     |  |   |  
|------------------------------------- |  | ---- | - | ------------ | - | --------- |  | ----- | --- | -------------------------------------- | - | --- |  | - | -
|(millions)                            |  |      |   |              |   |           |  |       |     |                                       
|Letters of Credit for the Benefit of: |  | 2010 |   | 2011-2014(1) |   | After2014 |  | Total |     | Liabilities Recognizedat Mar. 31, 2010
|Tampa Electric                        |  |      |   |              |   |           |  |       |     |                                        |   |     |  |   |  
|Letters of credit                     |  | $    |  |              | $ |          |  | $     | 0.9 |                                        | $ | 0.9 |  | $ | 
|                                      |  |      |   |              |   |           |  |       |     |                                        |   |     |  |   |  
|Total                                 |  | $    |  |              | $ |          |  | $     | 0.9 |                                        | $ | 0.9 |  | $ | 
|                                      |  |      |   |              |   |           |  |       |     |                                        |   |     |  |   |  



|(1) | These guarantees renew annually and are shown on the basis that they will continue to renew beyond 2014.
|--- | --------------------------------------------------------------------------------------------------------

Financial Covenants

In
order to utilize its bank credit facilities, Tampa Electric Company must meet certain financial tests as defined in the applicable agreements. In addition, Tampa Electric Company has certain restrictive covenants in specific agreements and debt
instruments. At Mar. 31, 2010, Tampa Electric Company was in compliance with applicable financial covenants.



35



---

##### Index to Financial Statements

8. Segment Information



|                                       |  |               |         |            |   |                     |  |   |                       |   |  |   |        
|-------------------------------------- |  | ------------- | ------- | ---------- | - | ------------------- |  | - | --------------------- | - |  | - | -------
|(millions)
Three months ended Mar. 31, |  | TampaElectric |         | PeoplesGas |   | Other &Eliminations |  |   | Tampa ElectricCompany
|2010                                   |  |               |         |            |   |                     |  |   |                       |   |  |   |        
|Revenues - external                    |  | $             | 524.8   |            | $ | 181.7               |  | $ |                      |   |  | $ | 706.5  
|Sales to affiliates                    |  |               | 0.3     |            |   | 11.2                |  |   | (11.3                 | ) |  |   | 0.2    
|                                       |  |               |         |            |   |                     |  |   |                       |   |  |   |        
|Total revenues                         |  |               | 525.1   |            |   | 192.9               |  |   | (11.3                 | ) |  |   | 706.7  
|Depreciation                           |  |               | 53.0    |            |   | 11.4                |  |   |                      |   |  |   | 64.4   
|Total interest charges                 |  |               | 30.3    |            |   | 4.6                 |  |   |                      |   |  |   | 34.9   
|Provision for taxes                    |  |               | 27.8    |            |   | 11.2                |  |   |                      |   |  |   | 39.0   
|Net income                             |  | $             | 48.1    |            | $ | 17.9                |  | $ |                      |   |  | $ | 66.0   
|                                       |  |               |         |            |   |                     |  |   |                       |   |  |   |        
|2009                                   |  |               |         |            |   |                     |  |   |                       |   |  |   |        
|Revenues - external                    |  | $             | 507.3   |            | $ | 146.5               |  | $ |                      |   |  | $ | 653.8  
|Sales to affiliates                    |  |               | 0.3     |            |   | 6.5                 |  |   | (6.6                  | ) |  |   | 0.2    
|                                       |  |               |         |            |   |                     |  |   |                       |   |  |   |        
|Total revenues                         |  |               | 507.6   |            |   | 153.0               |  |   | (6.6                  | ) |  |   | 654.0  
|Depreciation                           |  |               | 48.0    |            |   | 10.8                |  |   |                      |   |  |   | 58.8   
|Total interest charges                 |  |               | 28.2    |            |   | 4.7                 |  |   |                      |   |  |   | 32.9   
|Provision for taxes                    |  |               | 9.4     |            |   | 7.2                 |  |   |                      |   |  |   | 16.6   
|Net income                             |  | $             | 18.3    |            | $ | 11.2                |  | $ |                      |   |  | $ | 29.5   
|                                       |  |               |         |            |   |                     |  |   |                       |   |  |   |        
|Total assets at Mar. 31, 2010          |  | $             | 5,526.1 |            | $ | 858.0               |  | $ | (23.3                 | ) |  | $ | 6,360.8
|                                       |  |               |         |            |   |                     |  |   |                       |   |  |   |        
|Total assets at Dec. 31, 2009          |  | $             | 5,457.5 |            | $ | 826.0               |  | $ | (9.7                  | ) |  | $ | 6,273.8
|                                       |  |               |         |            |   |                     |  |   |                       |   |  |   |        

9. Accounting for Derivative Instruments and Hedging Activities

From time to time, Tampa Electric Company enters into futures, forwards, swaps and option contracts for the following
purposes:



| |  |  | To limit the exposure to price fluctuations for physical purchases and sales of natural gas in the course of normal operations; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limit the exposure to interest rate fluctuations on debt securities.
| | - |  | -----------------------------------------------------------------------

Tampa Electric Company uses derivatives only to reduce normal operating and market risks, not for speculative purposes. Tampa Electric
Companys primary objective in using derivative instruments for regulated operations is to reduce the impact of market price volatility on ratepayers.

The risk management policies adopted by Tampa Electric Company provide a framework through which management monitors various risk
exposures. Daily and periodic reporting of positions and other relevant metrics are performed by a centralized risk management group which is independent of all operating companies.

Tampa Electric Company applies the accounting standards for derivatives and hedging. These standards require companies to recognize
derivatives as either assets or liabilities in the financial statements, to measure those instruments at fair value, and to reflect the changes in the fair value of those instruments as either components of other comprehensive income (OCI) or in net
income, depending on the designation of those instruments. The changes in fair value that are recorded in OCI are not immediately recognized in current net income. As the underlying hedged transaction matures or the physical commodity is delivered,
the deferred gain or loss on the related hedging instrument must be reclassified from OCI to earnings based on its value at the time of the instruments settlement. For effective hedge transactions, the amount reclassified from OCI to earnings
is offset in net income by the market change of the amount paid or received on the underlying physical transaction.

New
accounting standards for disclosures became effective for financial statements issued for fiscal years and interim periods beginning after Nov. 15, 2008. This new standard requires enhanced disclosures about a companys derivative
activities and how the related hedged items affect a companys financial position, financial performance and cash flows. The new requirements include qualitative disclosures about the companys fair value amounts of gains and losses
associated with derivative instruments, as well as disclosures about credit-risk-related contingent features in derivative agreements. Tampa Electric Company adopted this new standard effective Jan. 1, 2009.

Tampa Electric Company applies accounting standards for regulated operations to financial instruments used to hedge the purchase of
natural gas for the regulated companies. These standards, in accordance with the FPSC, permit the changes in fair value of natural gas derivatives to be recorded as regulatory assets or liabilities to reflect the impact of hedging activities on the
fuel recovery clause. As a result, these changes are not recorded in OCI (see Note 3).

A companys physical
contracts qualify for the normal purchase/normal sale (NPNS) exception to derivative accounting rules, provided they meet certain criteria. Generally, NPNS applies if the company deems the counterparty creditworthy, if the counterparty owns or
controls resources within the proximity to allow for physical delivery of the commodity, if the company intends to receive physical delivery and if the transaction is reasonable in relation to the companys business needs. As of Mar. 31, 2010,
all of Tampa Electric Companys physical contracts qualify for the NPNS exception.



36



---

##### Index to Financial Statements

The following table presents the derivative hedges of natural gas contracts at Mar. 31, 2010
and Dec. 31, 2009 to limit the exposure to changes in the market price for natural gas used to produce energy and natural gas purchased for resale to customers:



|                        |  |              |      |              |   |     
|----------------------- |  | ------------ | ---- | ------------ | - | ----
|Natural Gas Derivatives |  |              |      |              |   |     
|(millions)              |  | Mar. 31,2010 |      | Dec. 31,2009
|Current assets          |  | $            | 0.5  |              | $ | 0.8 
|Long-term assets        |  |              |     |              |   |    
|                        |  |              |      |              |   |     
|Total assets            |  | $            | 0.5  |              | $ | 0.8 
|                        |  |              |      |              |   |     
|                        |  |             
|Current
liabilities(1)  |  | $            | 66.6 |              | $ | 33.1
|Long-term liabilities   |  |              | 8.1  |              |   | 3.6 
|                        |  |              |      |              |   |     
|Total liabilities       |  | $            | 74.7 |              | $ | 36.7
|                        |  |              |      |              |   |     



|(1) | Amounts presented above are on a gross basis, with asset and liability positions netted by counterparty in accordance with accounting standards for derivatives and
hedging.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The ending balance in accumulated other comprehensive income (AOCI) related to previously
settled interest rate swaps at Mar. 31, 2010 is a net loss of $5.9 million after tax and accumulated amortization. This compares to a net loss of $6.1 million in AOCI after tax and accumulated amortization at Dec. 31, 2009.

The following table presents the effect of energy related derivatives on the fuel recovery clause mechanism in the Consolidated Condensed
Balance Sheet as of Mar. 31, 2010:



|                            |  |                           |  |                       |     |                           |                   |           |   |     
|--------------------------- |  | ------------------------- |  | --------------------- | --- | ------------------------- | ----------------- | --------- | - | ----
|Energy Related Derivatives  |  |                           |  |                       |     |                           |                   |           |   |     
|                            |  |                          
|                            |  | Asset Derivatives         |  | Liability Derivatives
|(millions)
at Mar. 31, 2010 |  | Balance 
SheetLocation(1) |  | FairValue             |     | Balance 
SheetLocation(1) |                   | FairValue
|Commodity Contracts:        |  |                           |  |                       |     |                           |                   |           |   |     
|                            |  |                           |  |                      
|Natural gas derivatives:    |  |                           |  |                       |     |                           |                   |           |   |     
|Current                     |  | Regulatory liabilities    |  | $                     | 0.5 |                           | Regulatory assets |           | $ | 66.6
|Long-term                   |  | Regulatory liabilities    |  |                       |    |                           | Regulatory assets |           |   | 8.1 
|                            |  |                           |  |                       |     |                           |                   |           |   |     
|Total                       |  |                           |  | $                     | 0.5 |                           |                   |           | $ | 74.7
|                            |  |                           |  |                       |     |                           |                   |           |   |     



|(1) | Natural gas derivatives are deferred in accordance with accounting standards for regulated operations and all increases and decreases in the cost of natural gas supply
are passed on to customers with the fuel recovery clause mechanism. As gains and losses are realized in future periods, they will be recorded as fuel costs in the Consolidated Condensed Statements of Income.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Based on the fair value of the instruments at Mar. 31, 2010, net pretax losses of $66.1 million are expected to be reclassified from
regulatory assets to the Consolidated Condensed Statements of Income within the next twelve months.



37



---

##### Index to Financial Statements

The following table presents the effect of hedging instruments on OCI and income for the
three months ended Mar. 31:



|                                               |  |                                                    |   |                                                          |                  |                                                      |   |      |  
|---------------------------------------------- |  | -------------------------------------------------- | - | -------------------------------------------------------- | ---------------- | ---------------------------------------------------- | - | ---- | -
|(millions)                                     |  | Amount ofGain/(Loss) onDerivativesRecognized inOCI |   | Location of Gain/(Loss)Reclassified From AOCIInto Income |                  | Amount ofGain/(Loss)ReclassifiedFrom AOCIInto Income |  
|Derivatives in Cash Flow Hedging Relationships |  | EffectivePortion(1)                                |   | Effective Portion(1)                                     |                 
|2010                                           |  |                                                    |   |                                                          |                  |                                                      |   |      |  
|Interest rate contracts:                       |  | $                                                  |  |                                                          | Interest expense |                                                      | $ | (0.2 | )
|                                               |  |                                                    |   |                                                          |                  |                                                      |   |      |  
|Total                                          |  | $                                                  |  |                                                          |                  |                                                      | $ | (0.2 | )
|                                               |  |                                                    |   |                                                          |                  |                                                      |   |      |  
|2009                                           |  |                                                    |   |                                                          |                  |                                                      |   |      |  
|Interest rate contracts:                       |  | $                                                  |  |                                                          | Interest expense |                                                      | $ | (0.2 | )
|                                               |  |                                                    |   |                                                          |                  |                                                      |   |      |  
|Total                                          |  | $                                                  |  |                                                          |                  |                                                      | $ | (0.2 | )
|                                               |  |                                                    |   |                                                          |                  |                                                      |   |      |  



|(1) | Changes in OCI and AOCI are reported in after-tax dollars.
|--- | ----------------------------------------------------------

For derivative instruments that meet cash flow hedge criteria, the effective portion of the gain or loss on the derivative is reported as
a component of OCI and reclassified into earnings in the same period or period during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the
assessment of effectiveness are recognized in current earnings. For the three months ended Mar. 31, 2010 and 2009, all hedges were effective.

The maximum length of time over which Tampa Electric Company is hedging its exposure to the variability in future cash flows extends to
Dec. 31, 2012 for the financial natural gas contracts. The following table presents by commodity type the companys derivative volumes that, as of Mar. 31, 2010, are expected to settle during the 2010, 2011 and 2012 fiscal years:



|           |  |                               |  |          
|---------- |  | ----------------------------- |  | ---------
|(millions) |  | Natural Gas Contracts(MMBTUs)
|Year       |  | Physical                      |  | Financial
|2010       |  |                              |  | 29.1     
|2011       |  |                              |  | 20.7     
|2012       |  |                              |  | 2.3      
|           |  |                               |  |          
|Total      |  |                              |  | 52.1     
|           |  |                               |  |          

Tampa Electric Company is exposed to credit risk
primarily through entering into derivative instruments with counterparties to limit its exposure to the commodity price fluctuations associated with natural gas. Credit risk is the potential loss resulting from a counterpartys
nonperformance under an agreement. Tampa Electric Company manages credit risk with policies and procedures for, among other things, counterparty analysis, exposure measurement, and exposure monitoring and mitigation.

It is possible that volatility in commodity prices could cause Tampa Electric Company to have material credit risk exposures with one or
more counterparties. If such counterparties fail to perform their obligations under one or more agreements, Tampa Electric Company could suffer a material financial loss. However, as of Mar. 31, 2010, substantially all of the
counterparties with transaction amounts outstanding in Tampa Electric Companys energy portfolio are rated investment grade by the major rating agencies. Tampa Electric Company assesses credit risk internally for counterparties that are
not rated.

Tampa Electric Company has entered into commodity master arrangements with its counterparties to mitigate credit
exposure to those counterparties. The company generally enters into the following master arrangements: (1) Edison Electric Institute agreements (EEI) - standardized power sales contracts in the electric industry; (2) International
Swaps and Derivatives Association agreements (ISDA) - standardized financial gas and electric contracts; and (3) North American Energy Standards Board agreements (NAESB) - standardized physical gas contracts. Tampa Electric Company
believes that entering into such agreements reduces the risk from default by creating contractual rights relating to creditworthiness, collateral and termination.

Tampa Electric Company has implemented procedures to monitor the creditworthiness of our counterparties and to consider nonperformance in
valuing counterparty positions. Tampa Electric Company monitors counterparties credit standing, including those that are experiencing financial problems, have significant swings in credit default swap rates, have credit rating changes by
external rating agencies, or have changes in ownership. Net liability positions are generally not adjusted as Tampa Electric Company uses derivative transactions as hedges and has the ability and intent to perform under each of these contracts. In
the instance of net asset positions, Tampa Electric Company considers general market conditions and the observable financial health and outlook of specific



38



---

##### Index to Financial Statements

counterparties, forward looking data such as credit default swaps, when available, and historical default probabilities from credit rating agencies in evaluating the potential impact of
nonperformance risk to derivative positions. As of Mar. 31, 2010, substantially all positions with counterparties are net liabilities.

Certain of Tampa Electric Companys derivative instruments contain provisions that require Tampa Electric Companys debt to
maintain an investment grade credit rating from any or all of the major credit rating agencies. If debt ratings were to fall below investment grade, it could trigger these provisions, and the counterparties to the derivative instruments could
request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. Tampa Electric Company has no other contingent risk features associated with any derivative instruments.

The table below presents the fair value of the overall contractual contingent liability positions for Tampa Electric
Companys derivative activity at Mar. 31, 2010:



|                            |  |                             |       |   |                                     |   |       |                  |  |   |  
|--------------------------- |  | --------------------------- | ----- | - | ----------------------------------- | - | ----- | ---------------- |  | - | -
|Contingent Features         |  |                             |       |   |                                     |   |       |                  |  |   |  
|(millions)
At Mar. 31, 2010 |  | Fair ValueAsset/(Liability) |       |   | DerivativeExposureAsset/(Liability) |   |       | PostedCollateral
|Credit Rating               |  | $                           | (74.2 | ) |                                     | $ | (74.2 | )                |  | $ | 
|                            |  |                             |       |   |                                     |   |       |                  |  |   |  

10. Fair Value Measurements

Items Measured at Fair Value on a Recurring Basis

The following table sets forth by level within the fair value hierarchy Tampa Electric Companys financial assets and liabilities
that were accounted for at fair value on a recurring basis as of Mar. 31, 2010. As required by accounting standards for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input
that is significant to the fair value measurement. Tampa Electric Companys assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities
and their placement within the fair value hierarchy levels. For all assets and liabilities presented below the market approach was used in determining fair value.



|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     
|---------------------------------------- |  | --------------------------------- | - | ------- | - | ------- |  | ----- | - |  | - | ----
|Recurring Derivative Fair Value Measures |  |                                   |   |         |   |         |  |       |   |  |   |     
|                                         |  | At fair value as of Mar. 31, 2010
|(millions)                               |  | Level 1                           |   | Level 2 |   | Level 3 |  | Total
|Assets                                   |  |                                   |   |         |   |         |  |       |   |  |   |     
|Natural gas swaps                        |  | $                                 |  |         | $ | 0.5     |  | $     |  |  | $ | 0.5 
|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     
|Total                                    |  | $                                 |  |         | $ | 0.5     |  | $     |  |  | $ | 0.5 
|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     
|                                         |  |                                   |   |        
|Liabilities                              |  |                                   |   |         |   |         |  |       |   |  |   |     
|Natural gas swaps                        |  | $                                 |  |         | $ | 74.7    |  | $     |  |  | $ | 74.7
|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     
|Total                                    |  | $                                 |  |         | $ | 74.7    |  | $     |  |  | $ | 74.7
|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     
|                                         | 
|                                         |  | At fair value as of Dec. 31, 2009
|(millions)                               |  | Level 1                           |   | Level 2 |   | Level 3 |  | Total
|Assets                                   |  |                                   |   |         |   |         |  |       |   |  |   |     
|Natural gas swaps                        |  | $                                 |  |         | $ | 0.8     |  | $     |  |  | $ | 0.8 
|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     
|Total                                    |  | $                                 |  |         | $ | 0.8     |  | $     |  |  | $ | 0.8 
|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     
|                                         |  |                                   |   |        
|Liabilities                              |  |                                   |   |         |   |         |  |       |   |  |   |     
|Natural gas swaps                        |  | $                                 |  |         | $ | 36.7    |  | $     |  |  | $ | 36.7
|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     
|Total                                    |  | $                                 |  |         | $ | 36.7    |  | $     |  |  | $ | 36.7
|                                         |  |                                   |   |         |   |         |  |       |   |  |   |     

Natural gas swaps are over-the-counter swap
instruments. The primary pricing inputs in determining the fair value of natural gas swaps are the New York Mercantile Exchange (NYMEX) quoted closing prices of exchange-traded instruments. These prices are applied to the notional amounts of active
positions to determine the reported fair value.

Tampa Electric Company considered the impact of nonperformance risk in
determining the fair value of derivatives. Tampa Electric Company considered the net position with each counterparty, past performance of both parties and the intent of the parties, indications of credit deterioration, and whether the markets
in which we transact have experienced dislocation. At Mar. 31, 2010, the fair value of derivatives was not materially affected by nonperformance risk. Tampa Electric Company's net positions with substantially all counterparties were
liability positions.

Fair Value of Long-Term Debt

At Mar. 31, 2010, Tampa Electric Companys total long-term debt had a carrying amount of $1,999.3 million and an estimated fair
market value of $2,131.3 million. At Dec. 31, 2009, total long-term debt had a carrying amount of $1,999.4 million and an estimated fair market value of $2,115.4 million.



39



---

##### Index to Financial Statements

11. Other Comprehensive Income



|                                               |       |                             |      |     |  |   |      |               |  |   |      |  
|---------------------------------------------- | ----- | --------------------------- | ---- | --- |  | - | ---- | ------------- |  | - | ---- | -
|Other Comprehensive Income
(millions)          |       | Three months ended Mar. 31, |     
|                                               | Gross |                             |      | Tax |  |   | Net  |              
|2010                                           |       |                             |      |     |  |   |      |               |  |   |      |  
|Unrealized gain (loss) on cash flow hedges     |       |                             |     |     |  |   |     |               |  |   |     |  
|Add: Loss reclassified to net income           |       |                             | 0.3  |     |  |   | (0.1 | )             |  |   | 0.2  |  
|                                               |       |                             |      |     |  |   |      |               |  |   |      |  
|Gain on cash flow hedges                       |       |                             | 0.3  |     |  |   | (0.1 | )             |  |   | 0.2  |  
|                                               |       |                             |      |     |  |   |      |               |  |   |      |  
|Total other comprehensive income               |       | $                           | 0.3  |     |  | $ | (0.1 | )             |  | $ | 0.2  |  
|                                               |       |                             |      |     |  |   |      |               |  |   |      |  
|2009                                           |       |                             |      |     |  |   |      |               |  |   |      |  
|Unrealized gain (loss) on cash flow hedges     |       | $                           |     |     |  | $ |     |               |  | $ |     |  
|Add: Loss reclassified to net income           |       |                             | 0.3  |     |  |   | (0.1 | )             |  |   | 0.2  |  
|                                               |       |                             |      |     |  |   |      |               |  |   |      |  
|Gain on cash flow hedges                       |       |                             | 0.3  |     |  |   | (0.1 | )             |  |   | 0.2  |  
|                                               |       |                             |      |     |  |   |      |               |  |   |      |  
|Total other comprehensive income               |       | $                           | 0.3  |     |  | $ | (0.1 | )             |  | $ | 0.2  |  
|                                               |       |                             |      |     |  |   |      |               |  |   |      |  
|                                               |       |                             |     
|Accumulated Other Comprehensive Loss           |       |                             |      |     |  |   |      |               | 
|(millions)                                     |       | Mar. 31, 2010               |      |     |  |   |      | Dec. 31, 2009 | 
|Net unrealized losses from cash flow hedges(1) |       | $                           | (5.9 | )   |  |   |      |               |  | $ | (6.1 | )
|                                               |       |                             |      |     |  |   |      |               |  |   |      |  
|Total accumulated other comprehensive loss     |       | $                           | (5.9 | )   |  |   |      |               |  | $ | (6.1 | )
|                                               |       |                             |      |     |  |   |      |               |  |   |      |  



|(1) | Net of tax benefit of $3.7 million and $3.8 million as of Mar. 31, 2010 and Dec. 31, 2009, respectively.
|--- | --------------------------------------------------------------------------------------------------------

12. Variable Interest Entities

Tampa Electric Company accounts for VIEs under accounting standards for consolidations. In accordance with these standards, the company
evaluates for consolidation all long-term agreements with VIEs in which contractual, ownership or other pecuniary interests in that entity change with changes in the fair value of the entitys net assets. A party to an agreement that has both
1) the power to direct the activities of a VIE that most significantly impact the entitys economic performance and 2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive
benefits from the entity that could potentially be significant to the VIE, is considered to be the primary beneficiary and is required to consolidate that entity.

Tampa Electric Company has entered into multiple PPAs with wholesale energy providers in Florida to ensure the ability to meet customer
energy demand and to provide lower cost options in the meeting of this demand. These agreements range in size from 121 MW to 370 MW of available capacity, are with similar entities and contain similar provisions. Because some of these
provisions provide for the transfer or sharing of a number of risks inherent in the generation of energy, these agreements meet the definition of being variable interest entities. These risks include: operating and maintenance; regulatory; credit;
commodity/fuel; and energy market risk. In most instances, Tampa Electric Company has reviewed these risks and has determined that the owners of these entities have retained the majority of these risks over the expected life of the underlying
generating assets, have the power to direct the most significant activities, the obligation or right to absorb losses or benefits and hence remain the primary beneficiaries. As a result, Tampa Electric Company is not required to consolidate any of
these entities. Tampa Electric Company purchased $57.2 million and $42.2 million under these PPAs for the three months ended Mar. 31, 2010 and 2009, respectively.

In one instance Tampa Electric Companys agreement with the entity for 370 MW of capacity was entered into prior to Dec. 31, 2003,
the effective date of consolidation standards. Tampa Electric Company is required to make an exhaustive effort to obtain sufficient information to determine if this entity is a VIE and which holder of the variable interests is the primary
beneficiary. The owners of this entity are not willing to provide the information necessary to make these determinations, under the contract have no obligation to do so and the information is not available publicly. As a result, Tampa Electric
Company is unable to determine if this entity is a VIE and, if so, which variable interest holder, if any, is the primary beneficiary. Tampa Electric Company has no obligation to this entity beyond the purchase of capacity; therefore, the maximum
exposure for Tampa Electric Company is the obligation to pay for such capacity under terms of the PPA at rates that could be unfavorable to the wholesale market. The company purchased $12.7 million and $6.2 million under this PPA for the three
months ended Mar. 31, 2010 and 2009, respectively.

Tampa Electric Company does not provide any material financial or other
support to any of the VIEs it is involved with, nor is it under any obligation to absorb losses associated with these VIEs. Tampa Electric Companys involvement with these VIEs does not affect our Consolidated Condensed Balance Sheets,
Statements of Income or Cash Flows.



40



---

##### Index to Financial Statements

|Item 2. | MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS
|------- | ---------------------------------------------------------------------------------

This Managements Discussion & Analysis 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 Managements Discussion and Analysis except as may be required by law. Factors that could impact actual results include: regulatory actions by federal, state or local
authorities; the hearings before the FPSC in September on Tampa Electrics 2010 portion of rate approved in 2009, and the intervenors appeal of that rate change to the Florida Supreme Court; unexpected capital needs or unanticipated
reductions in cash flow that affect liquidity; the ability to access the 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 prices; operating cost and environmental or safety rule 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 success of ongoing discussions with regulators in Guatemala to extend the purchase power agreement for the Alborada Power Station;
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, 2009 and Item 1A Risk Factors of Part II of this Report.

Earnings Summary -Unaudited



|                                       |  |                             |       |      |   |      
|-------------------------------------- |  | --------------------------- | ----- | ---- | - | -----
|                                       |  | Three months ended Mar. 31,
|(millions, except per share amounts)   |  | 2010                        |       | 2009
|Consolidated revenues                  |  | $                           | 912.3 |      | $ | 824.0
|                                       |  |                             |       |      |   |      
|Net income attributable to TECO Energy |  | $                           | 55.8  |      | $ | 34.7 
|                                       |  |                             |       |      |   |      
|Average common shares outstanding      |  |                             |       |      |   |      
|Basic                                  |  |                             | 212.2 |      |   | 211.4
|Diluted                                |  |                             | 213.9 |      |   | 212.2
|                                       |  |                             |       |      |   |      
|Earnings per share - basic             |  | $                           | 0.26  |      | $ | 0.16 
|                                       |  |                             |       |      |   |      
|Earnings per share - diluted           |  | $                           | 0.26  |      | $ | 0.16 
|                                       |  |                             |       |      |   |      

Operating Results

Three Months Ended Mar. 31, 2010

TECO Energy, Inc. reported first quarter 2010 net income attributable to TECO Energy of $55.8 million or $0.26 per share, compared to
$34.7 million or $0.16 per share in the first quarter of 2009. As discussed in each subsidiary Operating Results section below, first quarter results in 2010 were reduced by charges of $16.2 million for early debt retirement and $0.9 million for
restructuring; results in the first quarter of 2009 benefited from $5.1 million of net charges and gains, primarily the gain on the sale of the Guatemalan telecommunications provider, Navega.

Operating Company Results

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

Due to an accounting rule change related to variable interest entities (VIEs), effective Jan. 1, 2010 the San José and Alborada
power stations at TECO Guatemala were consolidated in the financial statements of TECO Energy. Prior periods have not been restated to reflect this change, which did not affect net income.

Tampa Electric Company  Electric Division

Net income for the first quarter was $48.1 million, compared with $18.3 million for the same period in 2009. Results for the quarter
reflect significantly higher energy sales as a result of one of the coldest winters in the Tampa area in approximately 40 years. Results for the quarter also reflected higher base rates effective in May 2009 and the 2010 portion of rates approved by
the Florida Public Service Commission (FPSC) in December, and lower operations and maintenance expenses discussed below. Net income included $1.0 million of Allowance for Funds Used During Construction (AFUDC) - equity, which represents allowed
equity cost capitalized to construction costs, compared with $3.3 million in the 2009 period.

The pretax base revenue benefit
from the exceptionally cold weather is estimated to be between $15 and $20 million for the 2010 quarter compared to the same period last year. Pretax base revenues increased between $25 and $30 million in the first quarter of 2010 due to the new
base rates approved by the FPSC for Tampa Electric effective in May 2009 and on Jan. 1, 2010.



41



---

##### Index to Financial Statements

Operations and maintenance expense, excluding all FPSC-approved cost recovery clauses,
decreased $5.1 million, or about 9%, in the first quarter of 2010, compared to the same period in 2009, reflecting lower generating unit maintenance expenses due to the timing and scope of maintenance outages, lower expenses to operate the
distribution system, and the benefits of the 2009 restructuring actions. Pension expense increased in the quarter, as expected, reflecting the impact of the 2008 financial market downturn on pension assets. Interest expense increased due to higher
levels of outstanding long-term debt. Depreciation and amortization expense increased due to additions to facilities to serve customers, including the combustion turbines to meet peak load and the rail car unloading facilities at the Big Bend Power
Station, all completed in 2009.

Tampa Electrics retail energy sales increased 7.4% in the first quarter driven
primarily by total heating and cooling degree days 37% above normal and 33% above 2009 levels, which drove an 18% increase in sales to the weather-sensitive residential customers. Sales to non-phosphate industrial customers declined almost 11%,
reflecting the current Florida economic situation. Off-system sales declined due to lower coal-fired unit availability and the need to meet native load demand during the abnormally cold weather. The average number of customers increased 0.4% in the
2010 first quarter as a result of improvements in the Florida housing market, which appear to be driven by the home-buyer tax credit programs.



42



---

##### Index to Financial Statements

A summary of Tampa Electrics operating statistics for the three months ended Mar. 31,
2010 and 2009 follows:



|                                       |  |                    |       |   |                     |   |       |          |  |       |      |  |         |  |          |  |       |  
|-------------------------------------- |  | ------------------ | ----- | - | ------------------- | - | ----- | -------- |  | ----- | ---- |  | ------- |  | -------- |  | ----- | -
|                                       |  | Operating Revenues |       |   | Kilowatt-hour sales |  
|(millions, except average customers)   |  | 2010               |       |   | 2009                |   |       | % Change |  |       | 2010 |  | 2009    |  | % Change | 
|Three months ended Mar. 31,            |  |                    |       |   |                     |   |       |          |  |       |      |  |         |  |          |  |       |  
|By Customer Type                       |  |                    |       |   |                     |   |       |          |  |       |      |  |         |  |          |  |       |  
|Residential                            |  | $                  | 267.1 |   |                     | $ | 251.0 |          |  | 6.4   |      |  | 2,229.9 |  | 1,887.7  |  | 18.1  |  
|Commercial                             |  |                    | 147.1 |   |                     |   | 166.3 |          |  | (11.5 | )    |  | 1,385.2 |  | 1,399.9  |  | (1.1  | )
|Industrial  Phosphate                 |  |                    | 21.5  |   |                     |   | 21.0  |          |  | 2.4   |      |  | 243.7   |  | 246.8    |  | (1.3  | )
|Industrial  Other                     |  |                    | 24.0  |   |                     |   | 29.3  |          |  | (18.1 | )    |  | 242.7   |  | 272.2    |  | (10.8 | )
|Other sales of electricity             |  |                    | 46.3  |   |                     |   | 50.0  |          |  | (7.4  | )    |  | 430.9   |  | 414.5    |  | 4.0   |  
|Deferred and other revenues(1)         |  |                    | (3.4  | ) |                     |   | (32.5 | )        |  | (89.5 | )    |  |         |  |          |  |       |  
|                                       |  |                    |       |   |                     |   |       |          |  |       |      |  |         |  |          |  |       |  
|                                       |  |                    | 502.6 |   |                     |   | 485.1 |          |  | 3.6   |      |  | 4,532.4 |  | 4,221.1  |  | 7.4   |  
|Sales for resale                       |  |                    | 9.9   |   |                     |   | 12.1  |          |  | (18.2 | )    |  | 94.1    |  | 145.5    |  | (35.3 | )
|Other operating revenue                |  |                    | 12.4  |   |                     |   | 10.4  |          |  | 19.2  |      |  |        |  |         |  |      |  
|NOx allowance sales                    |  |                    | 0.2   |   |                     |   |      |          |  |      |      |  |        |  |         |  |      |  
|                                       |  |                    |       |   |                     |   |       |          |  |       |      |  |         |  |          |  |       |  
|                                       |  | $                  | 525.1 |   |                     | $ | 507.6 |          |  | 3.4   |      |  | 4,626.5 |  | 4,366.6  |  | 6.0   |  
|                                       |  |                    |       |   |                     |   |       |          |  |       |      |  |         |  |          |  |       |  
|Average customers (thousands)          |  |                    | 669.9 |   |                     |   | 667.3 |          |  | 0.4   |      |  |         |  |          |  |       |  
|Retail output to line (kilowatt hours) |  |                    |       |   |                     |   |       |          |  |       |      |  | 4,636.1 |  | 4,362.6  |  | 6.3   |  



|(1) | Primarily reflects the timing of environmental and fuel clause recoveries.
|--- | --------------------------------------------------------------------------

Tampa Electric Company  Natural Gas Division (Peoples Gas)

Peoples Gas reported net income of $17.9 million for the first quarter, compared to $11.2 million in the same period in 2009. Pretax base
revenues increased approximately $10 million due to the unusually cold winter weather and approximately $1 million due to the higher permanent base rates which became effective in June 2009. Quarterly results reflect a 0.2% higher average number of
customers due to improvements in the Florida housing market, which appear to be driven by the home-buyer tax credit programs. Total therm sales increased 25% driven by 40% and 14% increases in sales to residential and commercial customers,
respectively, due to the colder than normal winter weather. Higher therm sales to industrial customers reflect a return to service of a previously idled customer, and higher usage by other industrial customers. Gas transported for power generation
customers and off-system sales increased in 2010 compared to the first quarter of 2009 due to high energy demands from the cold weather. Non-fuel operations and maintenance expense was essentially unchanged compared to 2009 levels. Results also
reflect slightly higher depreciation and property tax expenses due to routine plant additions.

A summary of PGS
regulated operating statistics for the three months ended Mar. 31, 2010 and 2009 follows:



|                                     |  |                    |       |      |        |          |  |       |      |  |       |  |          |  |     
|------------------------------------ |  | ------------------ | ----- | ---- | ------ | -------- |  | ----- | ---- |  | ----- |  | -------- |  | ----
|                                     |  | Operating Revenues |       |      | Therms
|(millions, except average customers) |  | 2010               |       | 2009 |        | % Change |  |       | 2010 |  | 2009  |  | % Change
|Three months ended Mar. 31,          |  |                    |       |      |        |          |  |       |      |  |       |  |          |  |     
|By Customer Type                     |  |                    |       |      |        |          |  |       |      |  |       |  |          |  |     
|Residential                          |  | $                  | 71.4  |      | $      | 59.4     |  | 20.2  |      |  | 46.3  |  | 33.1     |  | 39.9
|Commercial                           |  |                    | 50.1  |      |        | 47.2     |  | 6.1   |      |  | 125.3 |  | 110.1    |  | 13.8
|Industrial                           |  |                    | 2.7   |      |        | 2.2      |  | 22.7  |      |  | 54.6  |  | 46.9     |  | 16.4
|Off system sales                     |  |                    | 51.3  |      |        | 26.4     |  | 94.3  |      |  | 82.5  |  | 51.0     |  | 61.8
|Power generation                     |  |                    | 2.3   |      |        | 2.7      |  | (14.8 | )    |  | 128.9 |  | 108.1    |  | 19.2
|Other revenues                       |  |                    | 12.7  |      |        | 13.0     |  | (2.3  | )    |  |      |  |         |  |    
|                                     |  |                    |       |      |        |          |  |       |      |  |       |  |          |  |     
|Total                                |  | $                  | 190.5 |      | $      | 150.9    |  | 26.2  |      |  | 437.6 |  | 349.2    |  | 25.3
|                                     |  |                    |       |      |        |          |  |       |      |  |       |  |          |  |     
|By Sales Type                        |  |                    |       |      |        |          |  |       |      |  |       |  |          |  |     
|System supply                        |  | $                  | 148.9 |      | $      | 113.7    |  | 31.0  |      |  | 146.1 |  | 102.2    |  | 43.0
|Transportation                       |  |                    | 28.9  |      |        | 24.2     |  | 19.4  |      |  | 291.5 |  | 247.0    |  | 18.0
|Other revenues                       |  |                    | 12.7  |      |        | 13.0     |  | (2.3  | )    |  |      |  |         |  |    
|                                     |  |                    |       |      |        |          |  |       |      |  |       |  |          |  |     
|Total                                |  | $                  | 190.5 |      | $      | 150.9    |  | 26.2  |      |  | 437.6 |  | 349.2    |  | 25.3
|                                     |  |                    |       |      |        |          |  |       |      |  |       |  |          |  |     
|Average customers (thousands)        |  |                    | 336.4 |      |        | 335.6    |  | 0.2   |      |  |       |  |          |  |     



43



---

##### Index to Financial Statements

TECO Coal

TECO Coal reported first quarter net income of $16.8 million, compared to $8.0 million in the same period in 2009. Results in 2010
included a $3.3 million benefit from the settlement of state income tax issues recorded in prior years.

In 2010, first
quarter sales were 2.1 million tons, compared to 2.3 million tons in the first quarter of 2009. Results reflected an average net per ton selling price, excluding transportation allowances, of more than $76 per ton, almost 10% higher than
in 2009. First quarter sales volumes were affected by rail shipment disruptions throughout Central Appalachia from severe winter weather in January and February. Shipping volumes partially recovered in March and full-year sales are expected to be at
previously forecasted levels. In the first quarter of 2010, the all-in total per ton cost of production was $68 per ton, an increase of less than 4% over 2009s level and within the cost guidance range previously provided. Costs increased in
the first quarter primarily due to the timing of certain surface mine reclamation activities early in the year and lost productivity due to winter weather. TECO Coals effective income tax rate in the first quarter of 2010 was 23%, excluding
the effect of the state income tax settlement, compared to 14% in the 2009 Period.

On Apr. 1, 2010, the U.S. Environmental
Protection Agency (EPA) issued new guidance on environmental permitting requirements for Appalachian mountain top removal and other surface mining projects. The guidance limits conductivity (level of mineral salts) in water discharges into streams
from permitted areas, and will be effective immediately on an interim basis. The EPA will decide whether to modify the guidance after consideration of public comments and the results of the Science Advisory Board (SAB) technical review of the EPA
scientific reports. Because the EPAs standards appear to be unachievable under most circumstances, surface mining activity could be substantially curtailed since most new and pending permits would likely be rejected. This guidance could also
be extended to discharges from deep mines and preparation plants, which could result in a substantial curtailing of those activities as well. If this guidance becomes a regulation, or is enforced like one, it is expected to face legal challenges
relating to the stringency of the standards as well as the focus on the coal industry and the Appalachian region in particular.

TECO
Guatemala

TECO Guatemala reported first quarter net income of $10.4 million in 2010, compared to $13.2 million in the 2009
period. TECO Guatemalas first quarter 2009 included the $8.7 million gain from the sale of the telecommunications service provider, Navega, which was sold in the first quarter of 2009. The improved 2010 first quarter results reflect a full
quarter of normal operations for the San José Power Station, compared to the first quarter of 2009 when the plant experienced unplanned outages for much of the quarter. Improved availability allowed for higher spot energy sales at higher
margins driven by the current high cost of residual fuel oil, which sets the market clearing price, and lower than normal power supplies from hydro-electric sources. Higher net income from normal operations and spot energy sales was partially offset
by $2.0 million lower capacity payments under the power sales contract. Capacity payments for the San José Power Station are based on a 12-month rolling average availability, and were reduced starting in the second half of 2009 as a result of
the unplanned outages in the first six months of 2009. At EEGSA, the distribution utility, 2010 first quarter results reflect the benefit of customer growth, higher energy sales, and cost control measures to offset the impact of the lower
distribution tariff implemented in August 2008. Higher earnings at the remaining DECA II unregulated EEGSA-affiliated companies, which provide, among other things, electricity transmission services, wholesale power sales to unregulated electric
customers and engineering services, were more than offset by the absence of Navega earnings after its sale.

Other and Eliminations

Parent/other cost in the first quarter was $37.4 million, compared to a cost of $16.0 million for the 2009 period. The cost in
2010 included a $16.2 million charge related to the early debt retirement described below, and a $0.9 million charge related to the 2009 restructuring activities. The cost in 2010 also included a $5.2 million negative valuation adjustment to foreign
tax credits based on estimated foreign source income and projected timing of the utilization of the net operating loss (NOL) carry forwards, and a $1.1 million charge to adjust deferred tax balances related to the Medicare Part D subsidies as a
result of the recently enacted Patient Protection and Affordability Care Act. The cost in the 2009 period included a $3.6 million valuation adjustment on student loan securities held at TECO Energy parent.

Income Taxes

The
provisions for income taxes from continuing operations for the three month periods ended Mar. 31, 2010 and Mar. 31, 2009 were $34.3 million and $17.8 million, respectively. The provision for income taxes from continuing operations in the three
months ended Mar. 31, 2010 was impacted by the foreign tax credit valuation allowance.

Liquidity and Capital Resources

The table below sets forth the Mar. 31, 2010 consolidated liquidity and cash balances, the cash balances at the operating companies and
TECO Energy parent, and amounts available under the TECO Energy/TECO Finance and Tampa Electric Company credit facilities.



44



---

##### Index to Financial Statements

|                                |  |                              |       |                       |   |       |  |        |      |  |   |      
|------------------------------- |  | ---------------------------- | ----- | --------------------- | - | ----- |  | ------ | ---- |  | - | -----
|                                |  | Balances as of Mar. 31, 2010
|(millions)                      |  | Consolidated                 |       | Tampa ElectricCompany |   | Other |  | Parent
|Credit facilities               |  | $                            | 675.0 |                       | $ | 475.0 |  | $      |     |  | $ | 200.0
|Drawn amounts / LCs             |  |                              | 25.6  |                       |   | 18.9  |  |        |     |  |   | 6.7  
|                                |  |                              |       |                       |   |       |  |        |      |  |   |      
|Available credit facilities     |  |                              | 649.4 |                       |   | 456.1 |  |        |     |  |   | 193.3
|                                |  |                              |       |                      
|Cash and short-term investments |  |                              | 230.9 |                       |   | 13.9  |  |        | 31.9 |  |   | 185.1
|                                |  |                              |       |                       |   |       |  |        |      |  |   |      
|Total liquidity                 |  | $                            | 880.3 |                       | $ | 470.0 |  | $      | 31.9 |  | $ | 378.4
|                                |  |                              |       |                       |   |       |  |        |      |  |   |      

In the first quarter, TECO Energy and TECO Finance
tendered for, purchased and retired a total of $300 million aggregate principal amount of 7.00% and 7.20% TECO Energy and TECO Finance notes, and TECO Finance issued $250 million aggregate principal amount of 4.00% notes due in 2016 and $300 million
aggregate principal amount of 5.15% notes due in 2020, which notes are fully and unconditionally guaranteed by TECO Energy. In April 2010, TECO Energy redeemed all of the outstanding $100 million aggregate principal amount of its floating rate notes
due May 2010 and $100 million aggregate principal amount of its 7.20% notes due in 2011.

Covenants in Financing Agreements

In order to utilize their respective bank credit facilities, TECO Energy, TECO Finance and Tampa Electric Company must meet certain
financial tests as defined in the applicable agreements. In addition, TECO Energy, TECO Finance, Tampa Electric Company and other operating companies have certain restrictive covenants in specific agreements and debt instruments. At Mar. 31, 2010,
TECO Energy, TECO Finance, Tampa Electric Company and the other operating companies were in compliance with all applicable financial covenants. The table that follows lists the covenants and the performance relative to them at Mar. 31, 2010.
Reference is made to the specific agreements and instruments for more details.



45



---

##### Index to Financial Statements

Significant Financial Covenants



|                                                                       |  |                                 |  |                                                           |  |                             
|---------------------------------------------------------------------- |  | ------------------------------- |  | --------------------------------------------------------- |  | ----------------------------
|(millions, unless otherwise indicated)
Instrument                      |  | Financial Covenant (1)          |  | Requirement/Restriction                                   |  | Calculation at
Mar. 31, 2010
|Tampa Electric Company                                                 |  |                                 |  |                                                           |  |                             
|PGS senior notes(7)                                                    |  | EBIT/interest(2)                |  | Minimum of 2.0 times                                      |  | 3.6 times                   
|                                                                       |  | Restricted payments             |  | Shareholder equity at least $500                          |  | $2,164                      
|                                                                       |  | Funded debt/capital             |  | Cannot exceed 65%                                         |  | 49.4%                       
|                                                                       |  | Sale of assets                  |  | Less than 20% of total assets                             |  | 0%                          
|Credit facility(3)                                                     |  | Debt/capital                    |  | Cannot exceed 65%                                         |  | 48.2%                       
|Accounts receivable credit
facility(3)                                 |  | Debt/capital                    |  | Cannot exceed 65%                                         |  | 48.2%                       
|6.25% senior notes                                                     |  | Debt/capital                    |  | Cannot exceed 60%                                         |  | 48.2%                       
|                                                                       |  | Limit on liens(4)               |  | Cannot exceed $700                                        |  | $0 liens outstanding        
|Insurance agreements relating to certain pollution bonds               |  | Limit on liens(4)               |  | Cannot exceed $432 (7.5% of net assets)                   |  | $0 liens outstanding        
|TECO Energy/TECO Finance                                               |  |                                 |  |                                                           |  |                             
|Credit facility(3)                                                     |  | EBITDA/interest(2)              |  | Minimum of 2.6 times                                      |  | 4.2 times                   
|TECO Energy floating rate and 6.75% notes and TECO Finance 6.75% notes |  | Restrictions on secured
debt(6) |  | (5)                                                       |  | (5)                         
|TECO Diversified                                                       |  |                                 |  |                                                           |  |                             
|Coal supply agreement
guarantee(8)                                     |  | Dividend restriction            |  | Net worth not less than $307 (40% of tangible net assets) |  | $562                        



|(1) | As defined in each applicable instrument.
|--- | -----------------------------------------

|(2) | EBIT generally represents earnings before interest and taxes. EBITDA generally represents EBIT before depreciation and amortization. However, in each circumstance, the
term is subject to the definition prescribed under the relevant agreements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | See description of credit facilities in Note 6 to the 2009 TECO Energy, Inc. Annual Report on Form 10-K.
|--- | --------------------------------------------------------------------------------------------------------

|(4) | If the limitation on liens is exceeded, the company is required to provide ratable security to the holders of these notes.
|--- | --------------------------------------------------------------------------------------------------------------------------

|(5) | The indentures for these notes contain restrictions which limit secured debt of TECO Energy if secured by Principal Property or Capital Stock or indebtedness of
directly held subsidiaries (with exceptions as defined in the indentures) without equally and ratably securing these notes.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | These limitations would not include first mortgage bonds of Tampa Electric Company if any were outstanding.
|--- | -----------------------------------------------------------------------------------------------------------

|(7) | Principal amount outstanding of these notes totaled $10.5 million at Mar. 31, 2010, well below any cross default thresholds in various debt agreements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Limits the payment of dividends to TECO Energy, but does not limit loans or advances.
|--- | -------------------------------------------------------------------------------------

Credit Ratings of Senior Unsecured Debt at Mar. 31, 2010



|                         |  |                   |  |         |  |      
|------------------------ |  | ----------------- |  | ------- |  | -----
|                         |  | Standard & Poors |  | Moodys |  | Fitch
|Tampa Electric Company   |  | BBB               |  | Baa1    |  | BBB+ 
|TECO Energy/TECO Finance |  | BBB-              |  | Baa3    |  | BBB- 



46



---

##### Index to Financial Statements

Off-Balance Sheet Financing

Unconsolidated affiliates have project debt balances as follows at Mar. 31, 2010. TECO Energy has no debt payment obligations with respect
to these financings. Although the company is not directly obligated on the debt, the equity interest in those unconsolidated affiliates is at risk if those projects are not operated successfully.



|           |  |                |  |                   
|---------- |  | -------------- |  | ------------------
|(millions) |  | Long-term Debt |  | Ownership Interest
|DECA II    |  | $177.7         |  | 24%               

2010 Guidance and Business Drivers

TECO Energy is maintaining its 2010 earnings per share guidance range between $1.20 and $1.35, excluding charges and gains. TECO Energy
expects earnings in 2010 to be driven by the factors discussed below.

Tampa Electric and Peoples Gas have combined the
organizations under a single management team with new organizational structures following the restructuring actions taken in the third quarter of 2009. These actions have reduced Tampa Electrics expected operations and maintenance expenses in
2010 to approximately 2008 levels to offset the approximately $40 million revenue shortfall compared to the revenue projections filed in its base rate case. These restructuring actions are expected to enable the utilities to earn the authorized
returns on equity set in the respective 2009 rate case decisions.

Tampa Electric and Peoples Gas will have the full year
benefit of the 2009 base rate increases implemented in 2009. In addition, the FPSC approved a $26 million base rate increase related to the five combustion turbines and the rail unloading facilities placed in service in 2009, with rates effective
Jan. 1, 2010 subject to refund pending the outcome of a hearing on that increase to be held by the FPSC in 2010. The hearing is scheduled for Sep. 1 and 2, and a Commission vote is expected in early November.

The forecast for Tampa Electric and Peoples Gas assumes normal weather for the remainder of the year. The outlook and timing for a
Florida economic recovery remains uncertain due to high unemployment and an uncertain housing market. Year-to-date housing market improvements appear to be driven by the home-buyer tax credit programs. The strength of the housing market is uncertain
after the expiration of these tax credits at mid-year. Economists continue to forecast a very slow recovery in employment starting in 2010, while others are forecasting a flat economy for 2010. The forecast used by Tampa Electric and Peoples Gas
reflects a slight decline in energy sales due to continued weakness in the commercial and industrial sectors and lower customer usage in response to the continued weak economy.

Due to the current strong markets for metallurgical and pulverized coal injection coals, TECO Coal now expects its sales in 2010 to be
near the upper end of the previously provided production sales range of 8.3 to 8.7 million tons. The total expected sales are contracted and priced at an average price of more than $75 per ton. More than one-third of sales are to steel producers and
specialty stoker coal users with the remainder sold to utility steam coal customers. The all-in, fully-loaded production costs are expected to be in a range between $65 and $69 per ton, driven by lower diesel fuel costs offset by higher safety
requirements, lower productivity that reflects the industry-wide trend of increased inspections by state and federal agencies, and higher royalty cost and severance taxes due to the higher selling prices. Diesel fuel prices have been hedged for
those contracts that do not have diesel price adjustments in the contract at average prices below 2009 levels. Production costs may be negatively impacted if there are increased mine safety requirements as a result of the recent mine tragedy in West
Virginia.

TECO Guatemala expects improved operating and financial performance at the San José Power Station following
the extended unplanned outages in 2009, and higher contract capacity payments, which are expected to increase as the 12-month rolling average availability factor improves. Assuming a return to more normal hydro-electric operating conditions, spot
energy sales from the San José Power Station are expected to return to more normal levels for the remainder of the year. EEGSA, the Guatemalan distribution utility, continues to experience customer and energy sales growth, but the issue with
the value added distribution tariff (VAD), which was reduced by the Guatemalan regulators in August 2008, remains unresolved. Iberdrola, EEGSAs largest investor, is in an international arbitration process under the bilateral trade agreement
between Spain and Guatemala. At this time, there is no firm schedule to resolve this matter. TECO Guatemala is currently in discussions with the Guatemalan regulatory authorities regarding the five-year extension of the power sales contract for the
Alborada Power Station, which expires in September 2010.

This guidance is provided in the form of a range to allow for
varying outcomes with respect to important variables, such as the timing of the start of and the strength of an economic and housing market recovery in Florida, weather and customer usage at the Florida utilities, steam coal inventories at TECO
Coals utility customers and their ability to accept contracted amounts, and margins at TECO Coal.

Fair Value Measurements

All natural gas derivatives were entered into by the regulated utilities to manage the impact of natural gas prices on
customers. As a result of applying accounting standards for regulated operations, the changes in value of natural gas derivatives of Tampa Electric and PGS are recorded as regulatory assets or liabilities to reflect the impact of the risks of
hedging activities in the fuel recovery clause. Because the amounts are deferred and ultimately collected through the fuel clause, the unrealized gains and losses associated with the valuation of these assets and liabilities do not impact our
results of operations.

Heating oil hedges are used to mitigate the fluctuations in the price of diesel fuel which is a
significant component in the cost of coal production at TECO Coal and its subsidiaries.



47



---

##### Index to Financial Statements

The valuation methods we used to determine fair value are described in Note 13 to the
TECO Energy, Inc. Consolidated Condensed Financial Statements. In addition, the company considered the impact of nonperformance risk in determining the fair value of derivatives. The company considered the net position with each
counterparty, past performance of both parties and the intent of the parties, indications of credit deterioration, and whether the markets in which we transact have experienced dislocation. At Mar. 31, 2010 the fair value of derivatives was not
materially affected by nonperformance risk. Our net positions with substantially all counterparties were liability positions.

Critical Accounting Policies and Estimates

Our critical accounting policies relate to deferred income taxes, employee postretirement benefits, long-lived assets and regulatory
accounting. For further discussion of our critical accounting policies, see our Annual Report on Form 10-K for the year ended Dec. 31, 2009.



48



---

##### Index to Financial Statements

|Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Interest Rate Risk

We
are exposed to changes in interest rates primarily as a result of our borrowing activities. We may enter into futures, swaps and option contracts, in accordance with the approved risk management policies and procedures, to moderate this exposure to
interest rate changes and achieve a desired level of fixed and variable rate debt.

Commodity Risk

We face varying degrees of exposure to commodity risks including coal, natural gas, fuel oil and other energy commodity prices. Any
changes in prices could affect the prices these businesses charge, their operating costs and the competitive position of their products and services, and affect the net fair value of derivatives. We assess and monitor risk using a variety of
measurement tools based on the degree of exposure of each operating company to commodity risk. Our most significant commodity risk exposure for the remainder of 2010 is the potential effect of high natural gas prices on our cash flows. Prudently
incurred costs for natural gas are recoverable through FPSC-approved cost recovery clauses, and therefore do not affect our earnings. However, higher than expected prices for natural gas can affect the timing of recovery and thus impact cash flows.

The change in fair value of derivatives is largely due to the decrease in the price of natural gas of approximately 20% from
Dec. 31, 2009 to Mar. 31, 2010. For natural gas, the company maintains a similar volume hedged as of Mar. 31, 2010 from Dec. 31, 2009.

The following tables summarize the changes in and the fair value balances of derivative assets (liabilities) for the three months ended
Mar. 31, 2010:



|                                                                            |  |   |       |  
|--------------------------------------------------------------------------- |  | - | ----- | -
|Changes in Fair Value of Derivatives(millions)                              |  |   |      
|Net fair value of derivatives as of Dec. 31, 2009                           |  | $ | (36.6 | )
|Additions and net changes in unrealized fair value of derivatives           |  |   | (58.5 | )
|Changes in valuation techniques and assumptions                             |  |   |      |  
|Realized net settlement of derivatives                                      |  |   | 20.0  |  
|                                                                            |  |   |       |  
|Net fair value of derivatives as of Mar. 31, 2010                           |  | $ | (75.1 | )
|                                                                            |  |   |       |  
|Roll-Forward of Derivative Net Assets (Liabilities)(millions)               |  |   |       |  
|Total derivative net liabilities as of Dec. 31, 2009                        |  | $ | (36.6 | )
|Change in fair value of net derivative assets:                              |  |   |       |  
|Recorded as regulatory assets and liabilities or other comprehensive income |  |   | (58.5 | )
|Recorded in earnings                                                        |  |   |      |  
|Realized net settlement of derivatives                                      |  |   | 20.0  |  
|Net option premium payments                                                 |  |   |      |  
|Net purchase (sale) of existing contracts                                   |  |   |      |  
|                                                                            |  |   |       |  
|Net fair value of derivatives as of Mar. 31, 2010                           |  | $ | (75.1 | )
|                                                                            |  |   |       |  

Below is a summary table of sources of fair value, by maturity period, for derivative contracts at Mar. 31,
2010:



|                                                                                                |  |         |       |   |             |   |      |                  |  |   |       |  
|----------------------------------------------------------------------------------------------- |  | ------- | ----- | - | ----------- | - | ---- | ---------------- |  | - | ----- | -
|Maturity and Source of Derivative Contracts Net Assets (Liabilities) at Mar. 31, 2010(millions) |  |         |       |   |             |   |      |                  | 
|Contracts Maturing in                                                                           |  | Current |       |   | Non-current |   |      | Total Fair Value | 
|Source of fair value                                                                            |  |         |       |   |             |   |      |                  |  |   |       |  
|Actively quoted prices                                                                          |  | $       |      |   |             | $ |     |                  |  | $ |      |  
|Other external sources(1)                                                                       |  |         | (67.3 | ) |             |   | (7.8 | )                |  |   | (75.1 | )
|Model prices(2)                                                                                 |  |         |      |   |             |   |     |                  |  |   |      |  
|                                                                                                |  |         |       |   |             |   |      |                  |  |   |       |  
|Total                                                                                           |  | $       | (67.3 | ) |             |   | (7.8 | )                |  |   | (75.1 | )
|                                                                                                |  |         |       |   |             |   |      |                  |  |   |       |  

|(1) | Reflects over-the-counter natural gas or heating oil swaps for which the primary pricing inputs in determining fair value are NYMEX quoted closing prices of exchange
traded instruments.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Model prices are used for determining the fair value of energy derivatives where price quotes are infrequent or the market is illiquid. Significant inputs to the models
are derived from market-observable data and actual historical experience.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For all unrealized derivative
contracts, the valuation is an estimate based on the best available information. Actual cash flows could be materially different from the estimated value upon maturity.



49



---

##### Index to Financial Statements

|Item 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

TECO Energy,
Inc.



|(a) | Evaluation of Disclosure Controls and Procedures. TECO Energys management, with the participation of its principal executive officer and principal
financial officer, has evaluated the effectiveness of TECO Energys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the
end of the period covered by this quarterly report (the Evaluation Date). Based on such evaluation, TECO Energys principal financial officer and principal executive officer have concluded that, as of the Evaluation Date, TECO Energys
disclosure controls and procedures are effective.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Changes in Internal Controls. There was no change in TECO Energys internal control over financial reporting (as defined in Rules 13a15(f) and
15d-15(f) under the Exchange Act) identified in connection with the evaluation of TECO Energys internal control over financial reporting that occurred during TECO Energys last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, such controls.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Tampa Electric Company



|(a) | Evaluation of Disclosure Controls and Procedures. Tampa Electric Companys management, with the participation of its principal executive officer and
principal financial officer, has evaluated the effectiveness of Tampa Electric Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the Evaluation Date.
Based on such evaluation, Tampa Electric Companys principal financial officer and principal executive officer have concluded that, as of the Evaluation Date, Tampa Electric Companys disclosure controls and procedures are effective.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Changes in Internal Controls. There was no change in Tampa Electric Companys internal control over financial reporting (as defined in Rules 13a15(f)
and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of Tampa Electric Companys internal control over financial reporting that occurred during Tampa Electric Companys last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, such controls.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



50



---

##### Index to Financial Statements

PART II. OTHER INFORMATION



|Item 1A. | RISK FACTORS
|-------- | ------------

New
water quality standards recently announced by the EPAcould potentially curtail the issuance of future surface mine permits and mining activityat TECO Coal, which could adversely affect its production and financial results.

On Apr. 1, 2010, the U.S. Environmental Protection Agency (EPA) issued new guidance on environmental permitting requirements
for Appalachian mountain top removal and other surface mining projects. The guidance limits conductivity (level of mineral salts) in water discharges into streams from permitted areas, and is effective immediately on an interim basis. The EPA will
decide whether to modify the guidance after consideration of public comments and the results of the Science Advisory Board (SAB) technical review of the EPA scientific reports. Because the EPAs standards appear to be unachievable under most
circumstances, surface mining activity could be substantially curtailed since most new and pending permits would likely be rejected. This guidance could also be extended to discharges from deep mines and preparation plants, which could result in a
substantial curtailing of those activities as well. If this guidance becomes a regulation, or is enforced like one, it is expected to face legal challenges relating to the stringency of the standards as well as the focus on the coal industry and the
Appalachian region in particular. Any curtailment of TECO Coals mining activities as a result of these new water standards could have an adverse effect on TECO Coals financial results.



|Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

The following table shows the number of shares of TECO Energy common stock deemed to have been repurchased by TECO Energy.



|                             |  |                                                   |  |                                          |       |                                                                                              |   |                                                                                                                        |  
|---------------------------- |  | ------------------------------------------------- |  | ---------------------------------------- | ----- | -------------------------------------------------------------------------------------------- | - | ---------------------------------------------------------------------------------------------------------------------- | -
|                             |  | (a)Total Number ofShares 
(or Units)Purchased (1) |  | (b)Average PricePaid 
per Share (orUnit) |       | (c)Total Number of Shares 
(orUnits) Purchased as Partof Publicly AnnouncedPlans or Programs |   | (d)Maximum Number (orApproximate 
Dollar Value)of Shares (or Units) thatMay Yet Be PurchasedUnder the Plans orPrograms
|Jan. 1, 2010  Jan. 31, 2010 |  | 1,492                                             |  | $                                        | 15.74 |                                                                                              |  |                                                                                                                        | 
|Feb. 1, 2010  Feb. 28, 2010 |  | 25,286                                            |  | $                                        | 15.59 |                                                                                              |  |                                                                                                                        | 
|Mar. 1, 2010  Mar. 31, 2010 |  | 448                                               |  | $                                        | 15.76 |                                                                                              |  |                                                                                                                        | 
|                             |  |                                                   |  |                                          |       |                                                                                              |   |                                                                                                                        |  
|Total 1st Quarter 2010       |  | 27,226                                            |  | $                                        | 15.60 |                                                                                              |  |                                                                                                                        | 
|                             |  |                                                   |  |                                          |       |                                                                                              |   |                                                                                                                        |  



|(1) | These shares were not repurchased through a publicly announced plan or program, but rather relate to compensation or retirement plans of the company. Specifically,
these shares represent shares delivered in satisfaction of the exercise price and/or tax withholding obligations by holders of stock options who exercised options (granted under TECO Energys incentive compensation plans), shares delivered or
withheld (under the terms of grants under TECO Energys incentive compensation plans) to offset tax withholding obligations associated with the vesting of restricted shares and shares purchased by the TECO Energy Group Retirement Savings Plan
pursuant to directions from plan participants or dividend reinvestment.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 6. | EXHIBITS
|------- | --------

Exhibits - See index on page 54.



51



---

##### Index to Financial Statements

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



|                  |  |  |  |                        |  |                                                                  
|----------------- |  |  |  | ---------------------- |  | -----------------------------------------------------------------
|                  |  |  |  | TECO ENERGY, INC.     
|                  |  |  |  | (Registrant)          
|                  |  |  | 
|Date: May 6, 2010 |  |  |  | By:                    |  | /s/ S. W. CALLAHAN                                               
|                  |  |  |  |                        |  | S. W. CALLAHAN                                                   
|                  |  |  |  |                        |  | Vice President-Finance and Accounting and Chief Financial Officer
|                  |  |  |  |                        |  | (Chief Accounting Officer)                                       
|                  |  |  |  |                        |  | (Principal Financial and Accounting Officer)                     
|                  |  | 
|                  |  |  |  | TAMPA ELECTRIC COMPANY
|                  |  |  |  | (Registrant)          
|                  |  |  | 
|Date: May 6, 2010 |  |  |  | By:                    |  | /s/ S. W. CALLAHAN                                               
|                  |  |  |  |                        |  | S. W. CALLAHAN                                                   
|                  |  |  |  |                        |  | Vice President-Finance and Accounting and Chief Financial Officer
|                  |  |  |  |                        |  | (Chief Accounting Officer)                                       
|                  |  |  |  |                        |  | (Principal Financial and Accounting Officer)                     



52



---

##### Index to Financial Statements

INDEX TO EXHIBITS



|           |  |                                                                                                                                                                                                                                                                                                                                                                                                   |  |  
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|3.1        |  | Articles of Incorporation of TECO Energy, Inc., as amended on Apr. 20, 1993 (Exhibit 3, Form 10-Q for the quarter ended Mar. 31, 1993 of TECO Energy, Inc.).                                                                                                                                                                                                                                      |  | *
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|3.2        |  | Bylaws of TECO Energy, Inc., as amended effective Oct. 29, 2009 (Exhibit 3.1, Form 8-K dated Oct. 29, 2009 of TECO Energy, Inc.).                                                                                                                                                                                                                                                                 |  | *
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|3.3        |  | Articles of Incorporation of Tampa Electric Company (Exhibit 3 to Registration Statement No. 2-70653 of Tampa Electric Company).                                                                                                                                                                                                                                                                  |  | *
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|3.4        |  | Bylaws of Tampa Electric Company, as amended effective Jan. 30, 2008 (Exhibit 3.4, Form 10-K for 2007 of TECO Energy, Inc. and Tampa Electric Company).                                                                                                                                                                                                                                           |  | *
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|4.1        |  | Third Supplemental Indenture dated as of Mar. 15, 2010 by and among TECO Finance, Inc., as issuer, TECO Energy, Inc.,) as guarantor, and The Bank of New York Mellon Trust
Company, N.A., as trustee, (including the form of TECO Finance notes to be issued thereunder) supplementing the Indenture dated as of Dec. 21, 2007 (Exhibit 4.26, Form 8-K dated Mar. 15, 2010 of TECO Energy, Inc.). |  | *
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|4.2        |  | 4.00% Notes due 2016 (Exhibit 4.27, Form 8-K dated Mar. 15, 2010 of TECO Energy, Inc.).                                                                                                                                                                                                                                                                                                           |  | *
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|4.3        |  | 5.15% Notes due 2020 (Exhibit 4.28, Form 8-K dated Mar. 15, 2010 of TECO Energy, Inc.).                                                                                                                                                                                                                                                                                                           |  | *
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|10.1       |  | Change-in-Control Severance Agreement between TECO Energy, Inc. and Sandra W. Callahan (Exhibit 10.1, Form 8-K dated Feb. 5, 2010 of TECO Energy, Inc.).                                                                                                                                                                                                                                          |  | *
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|12.1       |  | Ratio of Earnings to Fixed Charges  TECO Energy, Inc.                                                                                                                                                                                                                                                                                                                                            |  |  
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|12.2       |  | Ratio of Earnings to Fixed Charges  Tampa Electric Company.                                                                                                                                                                                                                                                                                                                                      |  |  
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|31.1       |  | Certification of the Chief Executive Officer of TECO Energy, Inc. pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                         |  |  
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|31.2       |  | Certification of the Chief Financial Officer of TECO Energy, Inc. pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                         |  |  
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|31.3       |  | Certification of the Chief Executive Officer of Tampa Electric Company pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                    |  |  
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|31.4       |  | Certification of the Chief Financial Officer of Tampa Electric Company pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                    |  |  
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|32.1       |  | Certification of the Chief Executive Officer and Chief Financial Officer of TECO Energy, Inc. pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.(1)                                                                                                                                                                                         |  |  
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|32.2       |  | Certification of the Chief Executive Officer and Chief Financial Officer of Tampa Electric Company pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.(1)                                                                                                                                                                                    |  |  



|(1) | This certification accompanies the Quarterly Report on Form 10-Q and is not filed as part of it.
|--- | ------------------------------------------------------------------------------------------------

|* | Indicates exhibit previously filed with the Securities and Exchange Commission and incorporated herein by reference. Exhibits filed with periodic reports of TECO
Energy, Inc. and Tampa Electric Company were filed under Commission File Nos. 1-8180 and 1-5007, respectively.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



53