Fitch Rates Polk Cnty (FL) $75MM Solid Waste Revs (Tampa Electric) 'F2/BBB+'; Rating Watch Positive

NEW YORK--(BUSINESS WIRE)--Fitch rates Tampa Electric Company's $75 million solid waste disposal facility revenue refunding bonds series 2010, issued through Polk County Industrial Development Authority, 'F2/BBB+', Rating Watch Positive. Fitch placed Tampa Electric's ratings on Watch Positive in October 2010 based on the expectation of faster than expected deleveraging at its parent TECO Energy, Inc. (TECO; Issuer Default Rating [IDR] 'BBB-') to which its ratings are linked.

The key rating drivers include:

--The strength and stability of Tampa Electric's financial metrics including operating EBITDA-to-interest of 5.5 times (x), funds from operations (FFO) coverage of 5.6x, and debt-to-operating EBITDA of 2.6x for the 12 months ending Sept. 30, 2010.

--Credit protection measures are expected to continue to strengthen as a result of higher 2010 base rates ($26 million), operations and maintenance (O&M) cuts, and a corporate restructuring in 2009. Fitch expects the utility to earn at or near its authorized return on equity (ROE) for the next several years and no new base rate case is likely.

--Tampa Electric's financial performance is also supported by annual rate adjustments for fuel and environmental compliance costs which provide further stability.

--Concerns remain, however, related to the slow pace of economic and housing recovery in Tampa Electric's service territory and its impact on load trends, as well as ongoing uncertainty at the Florida Public Service Commission (FPSC). While the outcome of Tampa Electric's most recent rate case was balanced, the regulatory environment has been more politicized recently than in the past and unaffiliated utilities have received adverse rate orders.

--Other rating concerns relate to potential cost recovery lags or disallowances due to any adverse regulatory treatment and potential diminishment of operating performance in light of recent O&M cuts.

Tampa Electric is a regulated utility which provides integrated electric service to approximately 677,000 customers in west central Florida, and through its Peoples Gas subsidiary, gas service to approximately 334,000 customers.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology', Aug. 16, 2010;

--'Credit Rating Guidelines for Regulated Utility Companies' July 31, 2007;

--'U.S. Power and Gas Comparative Operating Risk (COR) Evaluation and Financial Guidelines' Aug. 22, 2007;

--'Utilities Sector Notching and Recovery Ratings', March 16, 2010.

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646

Credit Rating Guidelines for Regulated Utility Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=334652

U.S. Power and Gas Comparative Operating Risk (COR) Evaluation and Financial Guidelines

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=338030

Utilities Sector Notching and Recovery Ratings

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=504546

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