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 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 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, and as updated in periodic filings with the SEC.

Earnings Summary - Unaudited
                                           Three months ended Sep. 30,          Nine months ended Sep. 30,
(millions, except per share amounts)        2009                2008              2009              2008
Consolidated revenues                  $         896.3     $         926.1   $      2,545.5    $      2,605.0

Net income                             $          64.8     $          58.2   $        160.4    $        140.4

Average common shares outstanding
Basic                                            211.9               211.2            211.7             210.4
Diluted                                          213.2               212.6            212.8             211.7

Earnings per share - basic
Earnings per share - basic             $          0.30     $          0.28   $         0.75    $         0.67

Earnings per share - diluted
Earnings per share - diluted           $          0.30     $          0.27   $         0.75    $         0.66

Three Months Ended Sep. 30, 2009

TECO Energy, Inc. reported third quarter net income of $64.8 million or $0.30 per share, compared to $58.2 million or $0.28 per share in the third quarter of 2008. Third quarter net income included $20.8 million of charges, which included $15.4 million of restructuring charges at Tampa Electric, Peoples Gas and TECO Energy, the write-off of $5.2 million of project development costs at Tampa Electric primarily related to the Polk Unit 6 IGCC plant, and $0.2 million charge associated with the sale of student loan securities in the third quarter.

The $15.4 million of restructuring charges reflect termination benefits for approximately 225 employees, and costs for consultants and other related costs. As a result of this restructuring program, organizational changes are being made to reporting structures to create synergies at the utilities and at TECO Energy.

The total cost of these restructuring efforts is expected to be approximately $27.0 million, with the majority of these costs recognized in 2009. Cash outflows related to these efforts is estimated at $28.0 million in 2009 and early 2010. (see Note 15, Restructuring Charges in the TECO Energy, Inc. Notes to Consolidated Condensed Financial Statements.)

Nine Months Ended Sep. 30, 2009

Year-to-date net income and earnings per share were $160.4 million or $0.75 per share in 2009, compared to $140.4 million or $0.67 per share in the same period in 2008. In addition to the third-quarter items, year-to-date net income in 2009 included an $8.7 million net gain on the sale of TECO Guatemala's 16.5% interest in the Central American fiber optic telecommunications provider Navega, and a $3.8 million valuation adjustment charge to student loan securities held at TECO Energy. Year-to-date 2008 net income included a $0.6 million charge for adjustments to previously estimated costs associated with the sale of TECO Transport.

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 third quarter of $54.3 million, compared with $50.6 million for the same period in 2008. Third quarter net income included $11.1 million of restructuring charges and the $5.2 million write-off of project development costs primarily related to the Polk Unit 6 IGCC project. Results for the quarter reflected 15.0% higher base revenues due to the increase in base rates effective May 7, 2009, higher earnings on nitrogen oxide (NOx) control projects, a 0.1% lower average number of customers, and slightly higher operations and maintenance expenses. Net income included $2.5 million of Allowance for Funds Used During Construction (AFUDC)-equity, which represents allowed equity cost capitalized to construction costs, related to the installation of NOx control equipment, coal rail unloading facilities and combustion turbines for peak loads, compared with $1.3 million in the 2008 period.

In the third 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 $2.4 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 less than 1.0% in the third quarter of 2009, compared to the same period in 2008. Total degree days in Tampa Electric's service area were 2% above normal and 10% above the third quarter of 2008, which drove a 1.5% increase in sales to residential customers and partially offset lower sales to commercial and non-phosphate industrial customers. Pretax base revenues increased approximately $33 million in the third quarter due to higher base rates approved by the FPSC, for Tampa Electric effective May 7, 2009, which were partially offset by the lower number of customers.

Operations and maintenance expense, excluding all FPSC-approved cost recovery clauses and non-GAAP charges, increased $1.6 million primarily due to higher power generating unit maintenance.

Compared to the third quarter of 2008, depreciation expense increased $2.2 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 $121.1 million, compared with $106.7 million in the 2008 period. In 2009, year-to-date net income included the third-quarter items noted above. These results were 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 $8.3 million of AFUDC-equity related to the installation of NOx control equipment and combustion turbines for peak loads, compared with $4.3 million in the 2008 period. Sales volumes to other utilities declined 47% from the 2008 period, reflecting lower demand. 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 $6.3 million reduction in the 2008 period.

In the 2009 year-to-date period, total retail energy sales decreased 1.8% 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 3% above normal and 8% above the prior year; however, extended periods of rain reduced sales in the second quarter. Colder winter weather in the first quarter contributed to a 0.8% increase in sales to the weather-sensitive residential customer class, while sales to commercial and industrial customers declined, primarily due to economic conditions. Operations and maintenance expense, excluding all FPSC-approved cost recovery clauses and non-GAAP items noted in the third quarter, increased $5.1 million. The increase included the write-off of $0.6 million of disallowed rate case expenses, $1.8 million higher employee-related expenses, $1.6 million higher tree trimming expense, $1.0 million higher transmission and distribution system storm damage reserve accrual and $1.2 million higher power generating unit maintenance partially offset by cost reductions in other operating areas. Bad-debt expense was $0.4 million higher in the 2009 year-to-date period than in 2008.

Compared to the 2008 year-to-date period, depreciation expense increased $6.2 million, reflecting additions to facilities to serve customers. Interest expense at Tampa Electric increased slightly due to higher long-term debt balances outstanding.

The write-off of the project development costs primarily related to the Polk Unit 6 IGCC project was driven by Tampa Electric's most recent forecast for customer, energy sales and demand growth, which is significantly below prior forecasts. As a result, the need for new base load generation has been extended beyond the normal planning horizon. If load growth were to unexpectedly resume, it is projected that there would be excess capacity available in Florida to buy needed power rather than build a base load unit. In addition, Tampa Electric's application for a U.S. Department of Energy grant for a carbon capture and sequestration demonstration project on Polk Unit One was turned down in July. This combination of factors makes is highly unlikely that the preliminary studies previously performed for Polk Unit Six will be applicable in the future.

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

                                                           Operating Revenues                     Kilowatt-hour sales
(millions, except average customers)               2009           2008         % Change        2009       2008     % Change
Three months ended Sep. 30,
By Customer Type
Residential                                      $   325.1      $   299.3           8.6       2,677.3    2,638.8        1.5
Commercial                                           183.2          176.3           3.9       1,747.8    1,784.1       (2.0 )
Industrial - Phosphate                                20.1           14.3          40.6         217.7      208.3        4.5
Industrial - Other                                    26.8           28.1          (4.6 )       271.5      327.0      (17.0 )
Other sales of electricity                            52.3           49.4           5.9         492.9      494.5       (0.3 )
Deferred and other revenues (1)                       (7.8 )         (0.3 )     2,500.0            -          -          -

Total                                                599.7          567.1           5.7       5,407.2    5,452.7       (0.8 )
Sales for resale                                       8.3           18.4         (54.9 )        81.1      241.4      (66.4 )
Other operating revenue                               12.9           11.8           9.3            -          -          -
SO2 Allowance sales                                     -             4.6        (100.0 )          -          -          -

Total                                            $   620.9      $   601.9           3.2       5,488.3    5,694.1       (3.6 )

Average customers (thousands)                        665.6          666.2          (0.1 )
Retail output to line (kilowatt hours)                                                        5,722.4    5,729.1       (0.1 )


Nine months ended Sep. 30,
By Customer Type
Residential                                      $   833.8      $   753.6          10.6       6,622.1    6,570.3        0.8
Commercial                                           522.8          485.6           7.7       4,711.3    4,873.6       (3.3 )
Industrial - Phosphate                                60.9           47.4          28.5         684.8      693.1       (1.2 )
Industrial - Other                                    85.4           85.8          (0.5 )       830.7      957.1      (13.2 )
Other sales of electricity                           152.7          138.8          10.0       1,357.7    1,377.1       (1.4 )
Deferred and other revenues (1)                      (32.9 )          5.5            -             -          -          -

Total                                              1,622.7        1,516.7           7.0      14,206.6   14,471.2       (1.8 )
Sales for resale                                      33.5           53.5         (37.4 )       347.8      661.2      (47.4 )
Other operating revenue                               35.8           32.7           9.5            -          -          -
SO2 Allowance sales                                    0.1            6.6         (98.5 )          -          -          -

Total                                            $ 1,692.1      $ 1,609.5           5.1      14,554.4   15,132.4       (3.8 )

Average customers (thousands)                        666.4          667.6          (0.2 )
Retail output to line (kilowatt hours)                                                       15,185.7   15,362.7       (1.2 )

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

Tampa Electric Company - Natural gas division (PGS)

PGS reported net income of $3.4 million for the third quarter, compared to $2.6 million in the same period in 2008. Third quarter net income included $2.8 million of restructuring costs, compared to $6.2 million in the third quarter of 2008. Quarterly results reflect a 0.3% 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 and conversion of propane customers to natural gas. Base revenues increased due to the higher permanent base rates that became effective Jun. 18, 2009. Gas transported for power generation customers increased in 2009, compared to the third quarter of 2008 when high natural gas prices reduced demand for natural gas 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. Off-system sales volumes, which are very low margin sales, decreased due to lower spot sales to power generation customers. Excluding restructuring charges, non-fuel operations and maintenance expense was essentially unchanged from 2008 levels due to cost control efforts by the operating areas. Results also reflect increased depreciation expense due to routine plant additions.

PGS reported net income of $19.2 million for the year-to-date period, compared to $17.9 million in the same period in 2008. In 2009, year-to-date net income included the third quarter restructuring charges. 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 2008

year-to-date period due to lower natural gas prices, which made it a more economical generating fuel choice. Excluding restructuring charges, non-fuel operations and maintenance expense increased due to higher pipeline integrity costs and the $0.4 million write-off of disallowed rate case expenses.

A summary of PGS' regulated operating statistics for the three months and nine months ended Sep. 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 Sep. 30,
By Customer Type
Residential                            $  25.0   $  26.6       (6.0 )        9.9      10.7       (7.5 )
Commercial                                29.1      34.1      (14.7 )       83.3      82.1        1.5
Industrial                                 1.7       1.9      (10.5 )       41.5      44.4       (6.5 )
Off system sales                          31.9     105.4      (69.7 )       82.8      99.0      (16.4 )
Power generation                           2.4       2.9      (17.2 )      159.0     134.3       18.4
Other revenues                             8.7       7.8       11.5           -         -          -

Total                                  $  98.8   $ 178.7      (44.7 )      376.5     370.5        1.6

By Sales Type
System supply                          $  69.7   $ 151.3      (53.9 )      104.0     122.5      (15.1 )
Transportation                            20.4      19.6        4.1        272.5     248.0        9.9
Other revenues                             8.7       7.8       11.5           -         -          -

Total                                  $  98.8   $ 178.7      (44.7 )      376.5     370.5        1.6

Average customers (thousands)            333.0     334.1       (0.3 )


Nine months ended Sep. 30,
By Customer Type
Residential                            $ 111.4   $ 107.5        3.6         56.7      53.3        6.4
Commercial                               109.6     116.5       (5.9 )      284.9     279.8        1.8
Industrial                                 5.7       6.4      (10.9 )      133.8     144.5       (7.4 )
Off system sales                          84.6     271.8      (68.9 )      196.0     259.7      (24.5 )
Power generation                           7.8      10.0      (22.0 )      412.0     374.0       10.2
Other revenues                            31.7      26.3       20.5           -         -          -

Total                                  $ 350.8   $ 538.5      (34.9 )    1,083.4   1,111.3       (2.5 )

By Sales Type
System supply                          $ 252.9   $ 445.6      (43.2 )      295.2     357.4      (17.4 )
Transportation                            66.2      66.6       (0.6 )      788.2     753.9        4.5
Other revenues                            31.7      26.3       20.5           -         -          -

Total                                  $ 350.8   $ 538.5      (34.9 )    1,083.4   1,111.3       (2.5 )

Average customers (thousands)            334.7     335.5       (0.2 )

TECO Coal

In 2009, TECO Coal achieved third quarter net income of $11.6 million on sales of 2.3 million tons, compared to $3.7 million on sales of 2.2 million tons in the same period in 2008. Results reflect an average net per-ton selling price, excluding transportation allowances, of more than $73 per ton, almost 20% higher than 2008. Compared to prior 2009 quarters, metallurgical coal sales increased in the third quarter due to slightly higher operating rates at steel producers, although economic conditions continue to keep demand for steel products at lower levels worldwide. In the third quarter of 2009, the all-in total per-ton cost of production increased to almost $67 per ton, 9% over 2008's level, and above the cost guidance range previously provided, but on lower tons than previously forecast. Cost increased in the third quarter due to reclamation work at surface mines that were closed earlier in the year due to weak demand. Due to tax percentage depletion differences between periods, in the third quarter of 2009 TECO Coal's effective income tax rate was a more normal 24% compared to 20% in the 2008 period. Third quarter net income in 2008 included a $2.6 million benefit from a contract settlement related to future coal sales.

TECO Coal recorded year-to-date net income of $29.7 million on sales of 6.8 million tons in 2009, compared to $15.4 million on sales of 7.1 million tons in the 2008 period. The year-to-date sales mix was driven by the same factors as the third quarter. At $71 per ton, the 2009 year-to-date average net per-ton selling price was almost 20% above the 2008 average selling price. At $66 per ton, the all-in total per-ton cost of production was 14% higher than 2008, as expected. In the 2009 year-to-date period, TECO Coal's effective income tax rate was 18% compared to 13% in the 2008 period.

TECO Guatemala

TECO Guatemala reported third quarter net income of $8.1 million in 2009, compared to $11.7 million in the 2008 period. Year-to-date 2009 net income was $29.2 million, compared to $37.1 million in the 2008 period. Year-to-date 2009 net income included the $8.7 million gain on the sale of the telecommunication company, Navega, recorded in the first quarter.

Lower contract and spot energy sales and lower capacity payments due to the unplanned outages at the San José Power Station reduced net income $3.5 million in the third quarter of 2009. The 2009 results reflect $1.3 million of lower net income from the distribution company, EEGSA, as a result of the reduction in the Value Added Distribution tariff (VAD) in August 2008, partially offset by customer and energy sales growth, and cost reduction actions by EEGSA to offset the impact of the lower VAD. Results for the quarter included a $1.2 million benefit associated with the final settlement of contingencies related to Central American interests previously sold.

Lower year-to-date results reflect the impact of unplanned outages at the San José Power Station and lower net income from EEGSA as a result of the VAD reduction. Results for both the quarter and year-to-date periods reflect the absence of earnings from the telecommunications company, Navega, which was sold in March. Year-to-date results in 2009 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.

Other and Eliminations

The cost for "Parent/other" in the third quarter of 2009 was $12.6 million, compared to a cost of $10.4 million in the same period in 2008. In 2009, third quarter net income included $1.5 million of restructuring costs and a $0.2 million charge associated with the sale of student loan securities in the third quarter. The year-to-date "Parent/other" cost was $38.8 million in 2009, compared to $36.7 million in the 2008 period. The 2009 year-to-date "Parent/other" cost included the third quarter items and 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 net income included the $0.6 million after-tax adjustment to previously estimated transaction costs related to the sale of TECO Transport. Results in the third quarter included a $1.5 million gain on the sale of a lease, the final asset held in a leveraged lease portfolio. Year-to-date results in 2009 included a $2.6 million benefit from a sale of property by TECO Properties.

Income Taxes

The provisions for income taxes from continuing operations for the nine month periods ended Sep. 30, 2009 and Sep. 30, 2008 were $73.0 million and $64.1 million, respectively. The provision for income taxes from continuing operations in the nine months ended Sep. 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 Sep. 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 Sep. 30, 2009
                                                           Tampa Electric       Unregulated
(millions)                              Consolidated          Company            Companies        Parent
Credit facilities                       $       675.0     $          475.0     $           -      $ 200.0
Drawn amounts / LCs                              67.8                 54.7                 -         13.1

Available credit facilities                     607.2                420.3                 -        186.9

Cash and short-term investments                  45.5                  6.7               17.7        21.1

Total liquidity                         $       652.7     $          427.0     $         17.7     $ 208.0

Consolidated other cash and short-term investments includes $17.7 million of cash at the unregulated operating companies for normal operations. In addition to consolidated cash, as of Sep. 30, 2009 unconsolidated affiliates owned by TECO Guatemala, CGESJ (San José) and TCAE (Alborada), had unrestricted cash balances of $16.7 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
. . .