Overview of Tampa Electric s Compliance Program

1. Overview of Tampa Electric’s Compliance Program FRCC’s Compliance Enforcement and Monitoring Program April 4 and 11, 2007

2. 2 Key Elements of Compliance Framework Design of program will be in the context of Federal regulatory and legal precedent on compliance Program framework will be consistent with other compliance programs In most cases, business unit has responsibility and accountability for managing program Independent oversight of program by Regulatory Compliance Officer responsible for all compliance programs

3. 3 FERC – Transitioning from Regulation of Services to Regulation of Behavior FERC has begun discharging their legal duties by setting rules of general application (behavior) EPAct of 2005 and enabling FERC regulations Expanded FERC’s Civil penalty to cover violations over any provision of Part II of the FPA Increased civil penalty authority to $1M/day Policy Statement on Enforcement December 21, 2006 Administrative Policy Clear message – enhancement & creation of compliance programs based on FERC Enforcement Policy & the Federal Sentencing Guidelines

4. 4 FERC Policy Statement on Enforcement Factors guiding the selection of enforcement remedies Credit for internal compliance, self-reporting & cooperation Adopts or references enforcement policies of other agencies DOJ Federal Sentencing Guidelines Commodity Futures Trading Commission (CFTC) Securities & Exchange Commission (SEC) Evolution of FERC enforcement rules A journey but FERC will use existing enforcement policies of the above agencies as a benchmark

5. 5 Federal Sentencing Guidelines No established body of law interpreting FERC’s new policy Guidelines represent critical history to benchmark FERC compliance programs Incorporates U.S. Sentencing Commission premise that it would not be fair to impose harsh fines on organizations that had taken all reasonable steps to prevent criminal conduct Guidelines establish criteria for an effective compliance program Guidelines are currently used in the industry as the basis for Corporate Compliance Programs

6. 6 Tie to Corporate Compliance Program Antitrust Company Information and Records Credit, Collection, Customer Service and Purchasing Electric and Gas Economic Regulation Energy Risk Management Environmental General Risk Management and Safety Government Affairs Labor, Benefits and Employment Securities Taxes

7. 7 Federal Sentencing Guidelines – Compliance Program Criteria Periodic risk assessments Standards & procedures to prevent/detect unlawful conduct Directors’ program oversight responsibility Senior officer(s) program responsibility Specific individual delegated day-to-day operational responsibility Background checks at hire & promotion Communication of standards & procedures Auditing & monitoring, including internal reporting mechanisms Periodic evaluation of the program Promote and enforce the program consistently Respond appropriately to violations to prevent future occurrences

8. 8 Compliance Programs Standards of Conduct (SOC) Open Access Transmission Tariff (OATT) Reliability Standards Marketing & Trading Rules (M&TR) Anti-Manipulation Regulations Market Based Rate Tariff OATT related trading procedures Price reporting

9. 9 Compliance Programs North American Energy Standards Board (NAESB) NERC cousin - business practices Tariff and Other Matters MBR & Cost Based Tariffs PUHCA Section 203 Interlocking Directorates Periodic Reports & Filings

10. Regulatory Compliance Framework

11. 11 Implementing the Regulatory Compliance Program Written delegation from Compliance Officer to specific program administrators (job descriptions) Each Program Administrator will have primary responsibility and accountability for managing their compliance area Common template for each compliance area Written procedures Audit & Monitoring Training Above items developed, revised and maintained by Program Administrators

12. 12 Regulatory Compliance Program Process Quarterly reports developed for Regulatory Compliance Officer Coordination with TECO Energy Corporate Compliance Program Administration of compliance programs overseen by Regulatory Compliance Administrator

13. 13 Reliability Program Next Steps – “Devil in the Detail” Integrate into existing company compliance structures as previously discussed Outreach and education Make individual employees accountable for each requirement Determining what standards are applicable - NERC functional model registration Identifying what constitutes compliance for each standard and requirement 118 standards, 1234 requirements!

14. 14 The Details – Education Director/Manager level training Topics Roles of NERC & FERC EPACT 2005 Compliance Enforcement & Audits Standards 101 Corporate Compliance Plan Compliance Documentation Standards Development Process

15. 15 The Details – Accountability Each Requirement and Sub-Requirement is assigned to a manager The Violation Risk Factor matrix was used as a template

17. 17 The Details - Documentation Compliance Template for Each Requirement Tampa Electric Company NERC Reliability Standard Compliance Template File Name: Compliance Template ABC-XXX-X RX[-RX] Standard Name & Number: Requirement Number(s): Business Unit(s): Responsible Department(s): Date Completed: Next Review Date: Requirement: Violation Risk Factor: Compliance Statement: Compliance Documents & Location: Training Requirements (if applicable):

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19. 19 The Details – Document Maintenance All Compliance Templates and as many related documents as possible to be stored on a SharePoint site Documents are uploaded by the responsible managers The Compliance Manager approves all submissions

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24. 24 QUESTIONS?