On April 2, 2024, Tampa Electric requested a base rate increase, reflecting an increased revenue requirement increase of $297 million, effective January 1, 2025, and additional adjustments of $100 million and $72 million for 2026 and 2027, respectively. Tampa Electric’s proposed rates include recovery of solar generation projects, energy storage capacity, a more resilient and modernized energy control center, and other resiliency and reliability projects. Prior to the rate case hearing, Tampa Electric submitted revisions to its requested base rate increase to reflect items that included production tax credits, energy storage life expectancy, and the company’s grid reliability and resilience project. The company’s August 22, 2024, requested revenue requirement reflects a base rate increase of $288 million, effective January 1, 2025, and adjustments of $92 million and $65 million for 2026 and 2027, respectively. From August 26 through 30, 2024, Tampa Electric’s rate case hearing was heard by the FPSC. A decision by the FPSC is expected by the end of 2024.

On April 2, 2024, Tampa Electric requested a mid-course adjustment to its fuel and capacity charges, reflecting a $138 million reduction over 12 months, from June 2024 through May 2025. The requested reduction is due to a significant decrease in actual and projected 2024 natural gas prices since Tampa Electric submitted its projected 2024 costs in the fall of 2023. On May 7, 2024, the FPSC approved the mid-course adjustment.

In accordance with Tampa Electric’s 2021 rate case settlement agreement, in the event of a named storm that results in damage to its system, Tampa Electric can petition the FPSC to seek recovery of those costs over a 12-month period or longer as determined by the FPSC, as well as replenish its storm reserve regulatory liability. Based on an FPSC order, if the charges to the storm reserve exceed the reserve liability account balance, the excess is to be carried as a regulatory asset. At June 30, 2024, the balance in the reserve liability for storm restoration costs was $5 million. At September 30, 2024, the balance in the regulatory asset for storm restoration costs was $35 million.

Hurricane Helene made landfall on September 26, 2024. Tampa Electric was impacted by Hurricane Helene, resulting in a peak number of customers out of approximately 100,000. Tampa Electric expects approximately $45 million to $55 million to be charged to the storm reserve regulatory asset and a minimal impact to earnings. The majority of the costs that are expected to be charged to the storm regulatory accounts were recorded in September 2024.

Hurricane Milton, the worst weather event to impact the area in over 100 years, made landfall on October 9, 2024. Tampa Electric was impacted by Hurricane Milton, resulting in a peak number of customers out of approximately 600,000. Tampa Electric expects approximately $320 million to $370 million to be charged to the storm reserve regulatory asset and a minimal impact to earnings.

Restoration costs for the storms described above will be deferred and are expected to be collected from customers in subsequent periods. Tampa Electric will determine the timing of the request for recovery of Hurricane Helene and Hurricane Milton costs at a future time.

Details of the regulatory assets and liabilities are presented in the following table:


Regulatory Assets and Liabilities
(millions)	September 30, 2024		December 31, 2023
Regulatory assets:
Regulatory tax asset (1)	$	117	$	112
Cost-recovery clauses (2)		17		94
Capital cost recovery for early retired assets (3)		513		507
Postretirement benefits (4)		234		236
Storm reserve (5)		35		7
Other		29		32
Total regulatory assets		945		988
Less: Current portion		104		161
Long-term regulatory assets	$	841	$	827
Regulatory liabilities:
Regulatory tax liability (6)	$	445	$	477
Cost-recovery clauses - deferred balances (2)		75		20
Accumulated reserve - cost of removal (7)		302		271
Other		58		27
Total regulatory liabilities		880		795
Less: Current portion		188		94
Long-term regulatory liabilities	$	692	$	701

(1)

The regulatory tax asset is primarily associated with the depreciation and recovery of AFUDC-equity. This asset does not earn a return but rather is included in the capital structure, which is used in the calculation of the weighted cost of capital used to determine revenue requirements. It will be recovered over the expected life of the related assets.

(2)

These assets and liabilities are related to FPSC clauses and riders, primarily related to the fuel clause and the decrease in natural gas prices. They are recovered or refunded through cost-recovery mechanisms approved by the FPSC on a dollar-for-dollar basis in a subsequent period.

(3)

This asset is related to the remaining net book value of Big Bend Units 1 through 3 and meter assets that were retired. The balance earns a rate of return as permitted by the FPSC and will be recovered as a separate line item on customer bills for a period of 15 years, beginning in 2022 through 2036.

(4)

This asset is related to the deferred costs of postretirement benefits and it is amortized over the remaining service life of plan participants. Deferred costs of postretirement benefits that are included in expense are recognized as cost of service for rate-making purposes as permitted by the FPSC.

(5)

See "Tampa Electric Storm Restoration Cost Recovery" above for information regarding this reserve. The regulatory asset is included in rate base and earns a rate of return as permitted by the FPSC.

(6)

The regulatory tax liability is primarily related to the revaluation of TEC’s deferred income tax balances recorded on December 31, 2017 at the lower corporate income tax rate due to U.S. tax reform. The liability related to the revaluation of the deferred income tax balances is amortized and returned to customers through rate reductions or other revenue offsets based on IRS regulations and the settlement agreement for tax reform benefits approved by the FPSC.

(7)

This item represents the non-ARO cost of removal in the accumulated reserve for depreciation. AROs are costs for legally required removal of property, plant and equipment. Non-ARO cost of removal represents estimated funds received from customers through depreciation rates to cover future non-legally required cost of removal of property, plant and equipment, net of salvage value upon retirement, which reduces rate base for ratemaking purposes. This liability is reduced as costs of removal are incurred.