TECO Energy Deutsche Bank Energy and Utilities Conference. Miami, Florida May 31, 2007

Transcription

1 TECO Energy Deutsche Bank Energy and Utilities Conference Miami, Florida May 31, 2007

2 Forward Looking Statements The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Certain information included in this presentation contains statements that are forward-looking, such as statements relating to growth projections and trends as well as capital spending, cash generation and liquidity. Such statements are based on the company s current expectations and the company does not undertake any obligation to update or revise such statements. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by TECO Energy. For more information regarding these risks and uncertainties, review the Risk Factors section of the TECO Energy Annual Report on form 10-K for the period ended Dec. 31,

3 Commitments to Investors Reduce risk to earnings and cash flow from merchant power Merchant power exit essentially completed 2005 Retire parent level debt Grow Non-GAAP earnings from 2005 base (excluding charges, gains and synfuel) 2005 $0.83 per share 2006 $0.97 per share 2007 guidance $0.97 to $1.07 Regular communication with the financial community 3

4 Cash Priorities Reduce parent debt Meet TECO Energy 2007 debt retirements without refinancing Annual parent interest payments now $60 million below 2004 Retire additional debt with available free cash Commitment to an incremental $500 million of accelerated parent debt repayment through 2010 Potential additional repayment of $200 million Invest in the core businesses to support earnings growth Equity contributions to Tampa Electric Smaller incremental unregulated investments 4

5 Recent Financial Accomplishments Repaid $637 million parent level debt since 2005, including all 2007 maturities $52 million 2006 equity contribution to Tampa Electric $80 million planned for 2007 $30 million pension contribution TECO Energy and Tampa Electric credit facilities extended TECO Energy unsecured Positive rating agency actions Moody s upgrade to Ba1, Fitch outlook positive Increased common dividend 2.6% 5

6 Tampa Electric 658,000 retail electric customers 2.5% customer growth forecast 2.8% weather-normalized energy sales growth forecast Forecast reflects lower per residential customer energy usage 6

7 Tampa Electric Capital Investments Environmental compliance investments Big Bend SCRs total project cost $330 million Big Bend Unit 4 in service May 2007 One additional unit annually through 2010 T&D infrastructure investment $35 million annually FPSC mandated T&D system storm hardening $20 million annually Central Florida transmission system upgrades $25 million annually to meet NERC reliability requirements 7

8 Tampa Electric Capacity Requirements Customer growth drives 150 MW / year need Peaking capacity needed / baseload after 2012 Expected baseload option self-build 630 MW solid fuel IGCC unit Diversifies fuel supply Existing site $133 million of tax credits awarded by DOE / IRS Potential cost for peaking capacity and IGCC in excess of $1.5 billion Florida legislative support for IGCC Provides cash AFUDC during construction Provides for first-year revenue requirements through a base-rate surcharge Approved by House and Senate 8

9 Tampa Electric Polk Power Station IGCC Generated most power from IGCC in the world 10 years of successful operation Over 13,000 gigawatt hours generated Over 5 million tons of coal gasified Dispatches first on Tampa Electric s system Cleanest coal fired power plant in North America 9

10 Tampa Electric Capital Expenditures Capital Spending ($ Million) $1,200 $1,000 $800 $600 $400 $200 $ Without Generation Expansion With Generation Expansion 10

11 Peoples Gas 335,000 natural gas customers Serves major metropolitan areas of Florida Consistent customer growth Expect 2.5% customer growth in 2007 Florida housing market driven 11

12 TECO Coal Expect 2007 sales of million tons Includes 5.7 million tons of synthetic fuel Risk from high oil prices hedged Expect margins consistent with production levels based on market conditions 12

13 TECO Guatemala San José MW baseload coal fired Alborada - 78 MW oil fired peaking CTs EEGSA- 24% interest continued customer and energy sales growth Over $210 million of cash repatriated since 2002 San Jose Alborada 13

14 TECO Transport Expect continued strong river market conditions Continued strong demand for dry-bulk oceangoing shipments Improved operations with decreased turnaround times & higher equipment utilization 14

15 Strategic Direction Continued to search for ways to further accelerate financial recovery Developed more defined plans for Tampa Electric T&D reliability Environmental spending Transmission system upgrades New generating capacity needs Announced in February potential sale of TECO Transport 15

16 Benefits of Strategic Direction Significant growth in predominately regulated earnings over the long-term TECO Energy able to support significant asset growth at utility without issuing common equity Potential TECO Transport sale improves credit profile Lowers business risk position Accelerate committed $500 million parent debt retirement into the period Use significant internal cash generation in to support Tampa Electric IGCC legislation would reduce utility financing during construction 16

17 2006 Long-Range Cash Projection Millions $2,500 $2,000 $1,500 Consolidated debt/total capital* % % % % $1,000 $500 $ Parent Cash Uitlity Equity Debt Retirement * See the reconciliation table in the appendix. 17

18 2007 Accelerated Debt Retirement Plan $2,500 Millions $2,000 $1,500 Consolidated debt/total capital* % % $1,000 $500 $ Accelerated Debt Retirement Plan 2006 Debt Retirement Plan * See the reconciliation table in the appendix. 18

19 Tampa Electric Equity Contributions With IGCC and Increased Capital Expenditures $2,500 $2,000 Millions $1,500 $1,000 $500 $ Equity Contributions with IGCC and higher capital spending 2006 Equity Contributions 19

20 Cumulative Parent Cash with Sale of TECO Transport and Tampa Electric IGCC Cash AFUDC Recovery $2,500 $2,000 Millions $1,500 $1,000 $500 $ Parent Cash Forecast 2006 Parent Cash Forecast 20

21 2007 Parent Cash Projection Including Sale of TECO Transport and Tampa Electric IGCC $2,500 $2,000 Millions $1,500 $1,000 $500 $ Parent Cash Utility Equity Debt Retirement 21

22 Tax Position $763 million NOL tax benefit available 12/31/ balance increased due to the final disposition of the McAdams Power Station Expect to pay minimal cash taxes through 2011 Average about $10 million / year after 2007 NOLs can be used to shield gain on a sale of TECO Transport Accelerates use of NOLs $197 million AMT carry forward available at 12/31/06 for use after NOLs exhausted Limits cash taxes to AMT (20%) level 22

23 Regulated Companies Contribution to Parent Cash Flow 100% 90% 80% 70% 48% 29% 21% 60% 50% 40% 30% 20% 52% 71% 79% 10% 0% Regulated Unregulated 23

24 Conclusion Disciplined approach to improved financial position Further improvement through accelerated debt retirement Opportunity for significant utility rate base additions Expected to result in earnings and cash flow growth Business mix predominantly regulated 24

25 APPENDIX

26 GAAP Non-GAAP Reconciliation Net income reconciliation ($ millions) GAAP net income (loss) $ $ $ (522.0) Exclude discontinued operations (1.9) (63.5 ) GAAP net income (loss) from continuing operations (355.5) Exclude TECO Transport hurricane insurance recovery (1.5) (13.7 ) Add TECO Transport direct hurricane costs Exclude Dell & McAdams valuation/(gain) on sale net (8.1) (1.9 ) Exclude gain on sale of unused steam turbine (5.7) Add TECO Energy parent debt retirement Add merchant power valuations Add steam turbine valuations 12.8 Add taxes on cash repatriation 17.4 Add asset impairments 0.6 Add restructuring charges 6.5 Add valuation adjustment 3.4 Exclude tax credit reversals (7.0) Exclude gain on sale of propane business (12.0) Total charges and (gains) (10.8) Non-GAAP results from continuing operations $ $ $ Subtract synfuel benefit (32.1) (82.4 ) (80.0) Non-GAAP Results Excluding Synfuel $ $ $

27 GAAP Non-GAAP Reconciliation Per share results reconciliation ($ millions) GAAP net income (loss) $ 1.19 $ 1.33 $ (2.87) Exclude discontinued operations (0.1) (0.31 ) 1.02 GAAP net income (loss) from continuing operations (1.85) Exclude TECO Transport hurricane insurance recovery (0.01) (0.07 ) Add TECO Transport direct hurricane costs Exclude Dell & McAdams valuation/(gain) on sale net (0.04) (0.01 ) Exclude gain on sale of unused steam turbine (0.03) Add TECO Energy parent debt retirement Add merchant power valuations 2.50 Add steam turbine valuations 0.07 Add taxes on cash repatriation 0.09 Add asset impairments Add restructuring charges 0.03 Add valuation adjustment 0.02 Exclude tax credit reversals (0.04) Exclude gain on sale of propane business (0.06) Total charges and (gains) (0.05) Non-GAAP results from continuing operations $ 1.13 $ 1.23 $ 0.79 Subtract synfuel benefit (0.15) (0.40 ) (0.41) Non-GAAP Results Excluding Synfuel $ 0.97 $ 0.83 $

28 2007 Coal / Synfuel Economics Conventional coal/ synfuel feed stock Cash/ton Earnings/ton Tons Revenue $ 58 $ 58 Cash cost* Cash margin DD&A and allocated interest 1 6 Pretax margin $ 11 $ M** Synfuel impact Synfuel margin effects*** $ (10) $ (11) 5.7M Investor proceeds $ 35 $ M General business tax credit $ $ M *Fully loaded cash cost of production **Mid-point of 2007 production range *** Excludes cost of oil price hedges 28

29 2007 Synthetic Fuel Oil Price Hedging Benefits (Millions) NYMEX Phase-out Investor Production Hedge Hedge Net Net oil price/bbl % Revenue Cost Cost Payoff Cash Income < 63 0 $ 195 $ 58 $ 37 $ 0 $ 100 $ $ 0 $ 58 $ 37 $ 195 $ 100 $ 70 Expected phase-out range $63 to $79/Bbl NYMEX 29

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