This Management's Discussion and 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; unexpected capital needs or unanticipated reductions in cash flow that affect liquidity; the ability to access capital and credit markets when required; the availability of adequate rail transportation capacity for the shipment of TECO Coal's production; general economic conditions affecting energy sales at the utility companies; economic conditions, both national and international, affecting the Florida economy and demand for TECO Coal's production; weather variations and changes in customer energy usage patterns affecting sales and operating costs at Tampa Electric and Peoples Gas and the effect of extreme weather conditions or hurricanes; operating conditions, commodity price and operating cost changes affecting the production levels and margins at TECO Coal; fuel cost recoveries and related cash at Tampa Electric and natural gas demand at Peoples Gas; the ability of TECO Energy's subsidiaries to operate equipment without undue accidents, breakdowns or failures; changes in the U.S. federal tax code on earnings from foreign investments that could reduce earnings; the ability to increase the utilization of the coal-fired San José Power Station versus competing oil-fired generators during a period of lower oil prices; and the ultimate outcome of efforts to revise the significantly lower EEGSA VAD tariff rates implemented by regulatory authorities in Guatemala effective Aug. 1, 2008 affecting TECO Guatemala's results. Additional information is contained under "Risk Factors" in TECO Energy, Inc.'s Amendment No. 1 to Annual Report on Form 10-K/A for the period ended Dec. 31, 2008.

Earnings Summary - Unaudited



                                           Three months ended Jun. 30,          Six months ended Jun. 30,
(millions, except per share amounts)        2009                2008              2009              2008
Consolidated revenues                  $         825.2     $         887.2   $      1,649.2    $      1,678.9

Net income                             $          60.9     $          51.4   $         95.6    $         82.2

Average common shares outstanding
Basic                                            211.7               210.4            211.6             210.1
Diluted                                          212.5               212.1            212.3             211.6

Earnings per share - basic

Earnings per share - basic             $          0.29     $          0.24   $         0.45    $         0.39

Earnings per share - diluted

Earnings per share - diluted           $          0.29     $          0.24   $         0.45    $         0.39

Three Months Ended Jun. 30, 2009

TECO Energy recorded second quarter net income of $60.9 million or $0.29 per share, compared to $51.4 million or $0.24 per share in the second quarter of 2008.

Six Months Ended Jun. 30, 2009

Year-to-date net income and earnings per share were $95.6 million or $0.45 per share in 2009, compared to $82.2 million or $0.39 per share in the same period in 2008. Year-to-date net income and earnings per share include an $8.7 million gain on the sale of the telecommunication company, Navega, recorded in the first quarter at TECO Guatemala, and the $3.6 million valuation adjustment recorded in the first quarter on student-loan securities held at TECO Energy parent.

Operating Company Results:

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

Tampa Electric Company - Electric Division

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

In the second quarter of 2009, there was no reduction in net income due to the previous waterborne transportation disallowance for the transportation of solid fuel, which reduced net income $2.3 million in the 2008 period. In November 2008,

the Florida Public Service Commission (FPSC) approved Tampa Electric's fuel adjustment filing, which included full recovery of waterborne transportation costs under new contracts effective Jan. 1, 2009. This approval eliminated the annual reduction in net income that occurred in 2004 through 2008 during the previous transportation contract.

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

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

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

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

In the 2009 year-to-date period, total retail energy sales decreased 2.4%, compared to the 2008 period, driven primarily by the economy, weather in the second quarter, and the 0.2% decline in the average number of customers. Total degree days in Tampa Electric's service area were 5% above normal and 6% above the prior year; however, extended periods of rain reduced sales in May. Colder winter weather in the first quarter contributed to a 0.3% increase in sales to the weather-sensitive residential customer class. Sales to commercial and industrial customers declined by 4.1% and 7.9%, respectively, primarily due to economic conditions.

Operations and maintenance expense, excluding all FPSC-approved cost recovery clauses, increased $3.5 million. The increase included the second quarter write-off of disallowed rate case expenses and higher employee related expenses that were partially offset by lower power generating unit maintenance and overhead costs. Bad-debt expense was $0.3 million higher in the 2009 year-to-date period than in 2008.

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

A summary of Tampa Electric's operating statistics for the three months and six months ended Jun. 30, 2009 and 2008 follows:

                                                          Operating Revenues                   Kilowatt-hour sales
(millions, except average customers)                2009           2008      % Change       2009      2008     % Change
Three months ended Jun. 30,
By Customer Type
Residential                                       $   257.6      $   247.3        4.2      2,057.1   2,153.5       (4.5 )
Commercial                                            173.3          161.9        7.0      1,563.6   1,621.5       (3.6 )
Industrial - Phosphate                                 19.9           16.5       20.6        220.3     240.2       (8.3 )
Industrial - Other                                     29.3           30.3       (3.3 )      287.1     324.2      (11.4 )
Other sales of electricity                             50.5           46.8        7.9        450.3     464.0       (3.0 )
Deferred and other revenues (1)                         7.4           13.0      (43.1 )         -         -          -

Total                                                 538.0          515.8        4.3      4,578.4   4,803.4       (4.7 )
Sales for resale                                       13.1           19.2      (31.8 )      121.1     230.6      (47.5 )
Other operating revenue                                12.4           10.1       22.8           -         -          -
SO2 Allowance sales                                     0.1            1.0      (90.0 )         -         -          -

Total                                             $   563.6      $   546.1        3.2      4,699.5   5,034.0       (6.6 )

Average customers (thousands)                         666.4          668.0       (0.2 )
Retail output to line (kilowatt hours)                                                     5,100.7   5,278.0       (3.4 )

Six months ended Jun. 30,
By Customer Type
Residential                                       $   508.7      $   454.3       12.0      3,944.8   3,931.5        0.3
Commercial                                            339.5          309.3        9.8      2,963.5   3,089.5       (4.1 )
Industrial - Phosphate                                 40.8           33.1       23.3        467.1     484.8       (3.7 )
Industrial - Other                                     58.6           57.7        1.6        559.2     630.1      (11.3 )
Other sales of electricity                            100.5           89.4       12.4        864.8     882.6       (2.0 )
Deferred and other revenues (1)                       (25.1 )          5.8         -            -         -          -

Total                                               1,023.0          949.6        7.7      8,799.4   9,018.5       (2.4 )
Sales for resale                                       25.2           35.2      (28.4 )      266.7     419.8      (36.5 )
Other operating revenue                                22.9           20.9        9.6           -         -          -
SO2 Allowance sales                                     0.1            1.9      (94.7 )         -         -          -

Total                                             $ 1,071.2      $ 1,007.6        6.3      9,066.1   9,438.3       (3.9 )

Average customers (thousands)                         666.8          668.3       (0.2 )
Retail output to line (kilowatt hours)                                                     9,463.4   9,635.7       (1.8 )

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

Tampa Electric Company - Natural gas division (PGS)

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

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

to the same factors as the second quarter. Revenues associated with off-system sales declined in 2009 due to lower commodity natural gas prices, which are included in off-system sales revenues. Average commodity gas prices in 2008 were almost three times higher than average prices in 2009. In addition, off-system sales volumes were lower in 2009 largely reflecting lower demand for gas used in power generation due to lower power demand. Off-system sales of natural gas are low margin and therefore do not have a material impact on net income.

A summary of PGS' regulated operating statistics for the three months and six months ended Jun. 30, 2009 and 2008 follows:

Tampa Electric Company - Natural gas division (PGS)

                                            Operating Revenues                    Therms
(millions, except average customers)    2009      2008     % Change      2009    2008    % Change
Three months ended Jun. 30,
By Customer Type
Residential                            $  27.1   $  32.2      (15.8 )     13.7    14.8       (7.4 )
Commercial                                33.2      38.0      (12.6 )     91.6    90.8        0.9
Industrial                                 1.8       2.3      (21.7 )     45.4    53.4      (15.0 )
Off system sales                          26.3      97.8      (73.1 )     62.2    82.1      (24.2 )
Power generation                           2.6       3.8      (31.6 )    144.9   132.9        9.0
Other revenues                            10.0       8.6       16.3         -       -          -

Total                                  $ 101.0   $ 182.7      (44.7 )    357.8   374.0       (4.3 )

By Sales Type
System supply                          $  69.5   $ 151.7      (54.2 )     89.0   111.0      (19.8 )
Transportation                            21.5      22.4       (4.0 )    268.8   263.0        2.2
Other revenues                            10.0       8.6       16.3         -       -          -

Total                                  $ 101.0   $ 182.7      (44.7 )    357.8   374.0       (4.3 )

Average customers (thousands)            335.5     336.3       (0.2 )

Six months ended Jun. 30,
By Customer Type
Residential                            $  86.5   $  80.9        6.9       46.8    42.6        9.9
Commercial                                80.5      82.4       (2.3 )    201.7   197.8        2.0
Industrial                                 4.0       4.5      (11.1 )     92.3   100.2       (7.9 )
Off system sales                          52.7     166.4      (68.3 )    113.2   160.6      (29.5 )
Power generation                           5.3       7.2      (26.4 )    253.0   239.6        5.6
Other revenues                            23.0      18.4       25.0         -       -          -

Total                                  $ 252.0   $ 359.8      (30.0 )    707.0   740.8       (4.6 )

By Sales Type
System supply                          $ 183.2   $ 294.4      (37.8 )    191.2   234.9      (18.6 )
Transportation                            45.8      47.0       (2.6 )    515.8   505.9        2.0
Other revenues                            23.0      18.4       25.0         -       -          -

Total                                  $ 252.0   $ 359.8      (30.0 )    707.0   740.8       (4.6 )

Average customers (thousands)            335.5     336.2       (0.2 )

TECO Coal

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

TECO Coal recorded year-to-date net income of $18.1 million on sales of 4.5 million tons in 2009, compared to $11.7 million on sales of 4.9 million tons in the 2008 period. The year-to-date sales mix was driven by the same factors as the second

quarter. The 2009 year-to-date average net per-ton selling price and the all-in total per-ton cost of production were similar to those in the second quarter. Results in 2008 reflected a $0.6 million benefit in the first quarter from the true-up of the 2007 synthetic fuel tax credit rate. In the 2009 year-to-date period, TECO Coal's effective income tax rate was 14% compared to 15% in the 2008 period.

TECO Guatemala

TECO Guatemala reported second quarter net income of $7.9 million in 2009, compared to $14.9 million in the 2008 period. Year-to-date 2009 net income was $21.1 million, compared to $25.4 million in the 2008 period. Year-to-date 2009 net income includes the $8.7 million gain on the sale of the telecommunication company, Navega, recorded in the first quarter. Results in the 2009 second quarter for the distribution utility (EEGSA) and affiliated companies also include a $2.5 million benefit related to an adjustment to previously estimated year-end equity balances, compared to a similar $3.1 million benefit in 2008.

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

Other and Eliminations

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

Income Taxes

The provisions for income taxes from continuing operations for the six month periods ended Jun. 30, 2009 and Jun. 30, 2008 were $45.1 million and $35.5 million, respectively. The provision for income taxes from continuing operations in the six months ended Jun. 30, 2009 was impacted by $9.7 million related to TECO Guatemala's sale of its 16.5% interest in Navega.

Liquidity and Capital Resources

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



                                                             Balances as of Jun. 30, 2009
                                                               Tampa
                                                              Electric          Unregulated
(millions)                              Consolidated          Company            Companies        Parent
Credit facilities                       $       675.0     $          475.0     $           -      $ 200.0
Drawn amounts / LCs                             201.4                165.3                 -         36.1

Available credit facilities                     473.6                309.7                 -        163.9

Cash and short-term investments                  28.0                  5.6               17.9         4.5

Total liquidity                         $       501.6     $          315.3     $         17.9     $ 168.4

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

On Jul. 7, 2009, Tampa Electric Company issued $100 million of senior unsecured notes at a premium to yield net proceeds of $102.1 million and an effective interest rate of 5.7%. Proceeds were used to reduce amounts drawn under its credit facilities and for general corporate purposes.

Capital Expenditures



                 (millions)                        2009 Forecast
                 Tampa Electric
                 Transmission                     $            40
                 Distribution                                 100
                 Generation                                   190
                 Committed generation expansion                85
                 Other                                         30
                 NOx control projects                          50
                 Other environmental                            5

                 Tampa Electric total                         500
                 Peoples Gas                                   50
                 Unregulated companies                         50

                 Total                            $           600

TECO Energy now estimates capital expenditures for ongoing operations will be $600 million for 2009, which is $140 million lower than previous estimates.

For 2009, Tampa Electric expects to spend $500 million. For the transmission and distribution systems, Tampa Electric expects to spend $140 million in 2009, including $20 million for transmission and distribution system storm hardening, and $40 million for new high-voltage transmission system improvements and to meet reliability requirements. Based on the most recent Florida Reliability Coordinating Council studies, the central Florida transmission system upgrades have been deferred due to lower state-wide transmission system demand. Capital expenditures for the existing generating facilities of $190 million include $60 million for the construction of Big Bend Station rail coal facilities for delivery of solid fuel and $130 million for generating system reliability, including approximately $75 million in major improvements to coal-fired units at Big Bend Station during the extended outages to install NOx control equipment. In addition, Tampa Electric expects to spend $85 million for the addition of five combustion turbines, $50 million for the additional NOx control equipment at the Big Bend Power Station and $5 million for other environmental compliance programs in 2009.

Capital expenditures at Peoples Gas are expected to be about $50 million in 2009. Capital expenditures for the unregulated companies are expected to be about $50 million.

In 2010 and beyond, Tampa Electric's capital spending is expected to be about $300 million annually, absent any spending on generation expansion or for sources of renewable energy. Peoples Gas expects to spend about $50 million annually in 2010 and beyond.

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. TECO Energy, TECO Finance, Tampa Electric Company and the other operating companies are in compliance with all applicable financial covenants. The table that follows lists the covenants and the performance relative to them at Jun. 30, 2009. Reference is made to the specific agreements and instruments for more details.

. . .