Overview of Tampa Electric’s Compliance Program

1. Overview of Tampa Electric’s Compliance Program APPA Reliability Standards and Compliance Program January 10, 2007

2. Key Elements of Reliability 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 • Business unit has responsibility and accountability for managing program • Independent oversight of program by Regulatory Compliance Officer responsible for all compliance programs

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 • Expanded scope of criminal provisions of FPA, NGA and NGPA & increased maximum fines & imprisonment time • Clear message – enhancement & creation of compliance programs based on FERC Enforcement Policy & the Federal Sentencing Guidelines

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) • Evolvement of FERC enforcement rules • A journey but FERC will use existing enforcement policies of the above agencies as a benchmark

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. 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 occurences

7. Compliance Programs • Standards of Conduct (SOC) • Open Access transmission Tariff (OATT) • Reliability Standards • FERC Anti-Manipulation Regulations (AMR)

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

9. Regulatory Compliance Framework Regulatory Compliance Officer Regulatory Compliance Administrator • Specific Compliance Program Administrators & Support SOC OATT NAESB Reliability Transmission & Generation Standards Cyber-security Standards AMR Tariff & Other Matters Compliance Counsel

10. 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

11. 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

12. 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!

13. QUESTIONS? Greg Ramon gjramon@tecoenergy.com 813-228-4469