Employee Postretirement Benefits

12 Months Ended

Dec. 31, 2024

Retirement Benefits [Abstract]

Employee Postretirement Benefits

5. Employee Postretirement Benefits

Pension Benefits

TEC is a participant in the comprehensive retirement plans of TECO Energy, LLC (formerly known as TECO Energy, Inc. prior to April 1, 2024), including a qualified, non-contributory defined benefit retirement plan that covers substantially all employees. Subsequent to April 1, 2024, TECO Energy, LLC became a wholly owned subsidiary of the newly created TECO Holdings (see Note 1 for further detail.) Effective January 1, 2025, the comprehensive retirement plans were transferred to TECO Holdings. Benefits are based on the employees’ age, years of service and final average earnings. Where appropriate and reasonably determinable, the portion of expenses, income, gains or losses allocable to TEC are presented. Otherwise, such amounts presented reflect the amount allocable to all participants of the TECO Energy retirement plans.

Amounts disclosed for pension benefits in the following tables and discussion also include the fully-funded obligations for the SERP and the unfunded obligations of the Restoration Plan. The SERP is a non-qualified, non-contributory defined benefit retirement plan available to certain members of senior management. The Restoration Plan is a non-qualified, non-contributory defined benefit retirement plan that allows certain members of senior management to receive contributions as if no IRS limits were in place.

Other Postretirement Benefits

TECO Energy and its subsidiaries currently provide certain postretirement health care and life insurance benefits (other benefits) for most employees retiring after age 50 meeting certain service requirements. Where appropriate and reasonably determinable, the portion of expenses, income, gains or losses allocable to TEC are presented. Otherwise, such amounts presented reflect the amount allocable to all participants of the TECO Energy postretirement health care and life insurance plans. Postretirement benefit levels are substantially unrelated to salary. TECO Energy reserves the right to terminate or modify the plans in whole or in part at any time.

TECO Energy has made a change to the postretirement health plan to replace the pharmacy services provider. The change was treated as a plan amendment and the plan was remeasured as of September 30, 2023. See "Plan Amendments" line item in the "Obligations and Plan Assets" table below.

Obligations and Funded Status

TEC recognizes in its statement of financial position the over-funded or under-funded status of its allocated portion of TECO Energy’s postretirement benefit plans. This status is measured as the difference between the fair value of plan assets and the PBO in the case of its defined benefit plan, or the APBO in the case of its other postretirement benefit plan. Changes in the funded status are reflected, net of estimated tax benefits, in benefit liabilities and regulatory assets. The results of operations are not impacted.

The following table provides a detail of the change in TECO Energy’s benefit obligations and change in plan assets for combined pension plans (pension benefits) and TECO Energy’s Florida-based other postretirement benefit plan (other benefits).

TECO Energy	Pension Benefits						Other Benefits (2)
Obligations and Funded Status
(millions)	2024			2023			2024			2023
Change in benefit obligation
Benefit obligation at beginning of year	$	678		$	666		$	132		$	142
Service cost		17			15			1			1
Interest cost		35			35			7			7
Plan participants’ contributions		0			0			4			4
Benefits paid		(57	)		(59	)		(10	)		(19	)
Actuarial loss (gain)		1			27			(4	)		7
Plan amendments		0			0			0			(10	)
Plan settlements (3)		0			(6	)		0			0
Benefit obligation at end of year	$	674		$	678		$	130		$	132

Change in plan assets
Fair value of plan assets at beginning of year	$	686		$	650		$	0		$	0
Actual gain (loss) return on plan assets		41			78			0			0
Employer contributions		16			16			0			0
Employer direct benefit payments		0			7			6			15
Plan participants’ contributions		0			0			4			4
Benefits paid		(57	)		(58	)		0			0
Direct benefit payments		0			(1	)		(10	)		(19	)
Plan settlements (3)		0			(6	)		0			0
Fair value of plan assets at end of year (1)	$	686		$	686		$	0		$	0

(1)The market-related value of plan assets is used as the basis for calculating the expected return on plan assets component of periodic pension expense. The market-related value reflects the fair value of plan assets adjusted for experience gains and losses (i.e. the differences between actual investment returns and expected returns) spread over five years.

(2)Represent amounts for TECO Energy’s Florida-based other postretirement benefit plan.

(3)Represents TECO Energy’s SERP and Restoration settlement charges as a result of the retirement of certain executives. These charges did impact TEC’s financial statements.

Decreases in the benefit obligation for the period ended December 31, 2024 are the result of normal growth of the plan, due to the continued accrual of benefits, and increases in the discount rate used to calculate the benefit obligation.

At December 31, the aggregate financial position for TECO Energy pension plans and Florida-based other postretirement plans with projected benefit obligations and accumulated projected benefit obligations in excess of plan assets was as follows:

TECO Energy	Pension Benefits				Other Benefits (1)
Funded Status
(millions)	2024		2023		2024			2023
Benefit obligation (PBO/APBO)	$	674	$	678	$	130		$	132
Less: Fair value of plan assets		686		686		0			0
Funded status at end of year	$	12	$	8	$	(130	)	$	(132	)

(1)Represent amounts for TECO Energy’s Florida-based other postretirement benefit plan.

The accumulated benefit obligation for TECO Energy consolidated defined benefit pension plans was $638 million and $642 million at December 31, 2024 and 2023, respectively.

The amounts recognized in TEC’s Consolidated Balance Sheets for pension and other postretirement benefit obligations and plan assets at December 31 were as follows:

TEC	Pension Benefits						Other Benefits
Amounts recognized in balance sheet
(millions)	2024			2023			2024			2023
Noncurrent assets	$	14		$	10		$	0		$	0
Accrued benefit costs and other current liabilities		0			0			(10	)		(10	)
Deferred credits and other liabilities		(2	)		(1	)		(97	)		(99	)
	$	12		$	9		$	(107	)	$	(109	)

Unrecognized gains and losses and prior service credits and costs are recorded in regulatory assets for TEC. The following table provides a detail of the unrecognized gains and losses and prior service credits and costs.

TEC	Pension Benefits				Other Benefits
Amounts recognized in regulatory assets
(millions)	2024		2023		2024		2023
Net actuarial loss	$	213	$	207	$	29	$	29
Amount recognized	$	213	$	207	$	29	$	29

Assumptions used to determine benefit obligations at December 31:

	Pension Benefits						Other Benefits
	2024			2023			2024			2023
Discount rate		5.66	%		5.27	%		5.69	%		5.28	%
Rate of compensation increase		4.42	%		4.42	%		4.42	%		4.42	%
Healthcare cost trend rate
Immediate rate	n/a			n/a				7.45	%		6.09	%
Ultimate rate	n/a			n/a				4.00	%		4.00	%
Year rate reaches ultimate trend rate	n/a			n/a			2050			2047

The discount rate assumption used to determine the December 31, 2024 and 2023 benefit obligation was based on a cash flow matching technique that matches yields from high-quality (AA-rated, non-callable) corporate bonds to TECO Energy’s projected cash flows for the plans to develop a present value that is converted to a discount rate assumption.

Amounts recognized in Net Periodic Benefit Cost, OCI and Regulatory Assets

TECO Energy	Pension Benefits									Other Benefits (1)
	2024			2023			2022			2024			2023			2022
(millions)
Service cost	$	17		$	15		$	18		$	1		$	1		$	2
Interest cost		35			35			23			7			7			5
Expected return on plan assets		(55	)		(54	)		(51	)		0			0			0
Amortization of:
Actuarial loss		7			5			17			0			0			3
Prior service cost		0			0			0			(3	)		(2	)		(2	)
Settlement loss (2)		0			2			2			0			0			0
Net periodic benefit cost	$	4		$	3		$	9		$	5		$	6		$	8

Net loss (gain) arising during the year (includes curtailment gain)	$	15		$	2		$	123		$	(4	)	$	7		$	(50	)
Prior service cost		0			0			0			0			(11	)		0
Amounts recognized as component of net periodic benefit cost:
Amortization or curtailment recognition of prior service credit		0			0			0			3			3			2
Amortization or settlement of actuarial loss		(7	)		(7	)		(19	)		0			0			(3	)
Total recognized in OCI and regulatory assets	$	8		$	(5	)	$	104		$	(1	)	$	(1	)	$	(51	)
Total recognized in net periodic benefit cost, OCI and regulatory assets	$	12		$	(2	)	$	113		$	4		$	5		$	(43	)

(1)Represents amounts for TECO Energy’s Florida-based other postretirement benefit plan

(2)Represents TECO Energy’s SERP and Restoration settlement charges as a result of the retirement of certain executives. These charges did impact TEC’s financial statements.

TEC’s portion of the net periodic benefit costs for pension benefits was $0 million, $1 million and $8 million for 2024, 2023 and 2022, respectively. Tampa Electric’s portion of the net periodic benefit costs for pension benefits was $0 million, $1 million and $4 million for 2024, 2023 and 2022, respectively. TEC’s portion of the net periodic benefit costs for other benefits was $4 million, $5 million and $9 million for 2024, 2023 and 2022, respectively. Tampa Electric’s portion of the net periodic benefit costs for other benefits was $4 million, $5 million and $8 million for 2024, 2023 and 2022, respectively. Net periodic benefit costs for pension and other benefits is included as an expense on the Consolidated Statements of Income in “Operations & maintenance”.

Assumptions used to determine net periodic benefit cost for years ended December 31:

	Pension Benefits									Other Benefits
	2024			2023			2022			2024			2023			2022
Discount rate (1)		5.27	%	4.19%-5.55%				2.77	%		5.28	%	5.53%-6.14%				2.84	%
Expected long-term return on plan assets		7.05	%		7.05	%		6.50	%	n/a			n/a			n/a
Rate of compensation increase		4.42	%		3.79	%		3.05	%		4.42	%		3.79	%		3.04	%
Healthcare cost trend rate
Initial rate	n/a			n/a			n/a				6.09	%		6.39	%		5.61	%
Ultimate rate	n/a			n/a			n/a				4.00	%		4.00	%		4.00	%
Year rate reaches ultimate trend rate	n/a			n/a			n/a			2047			2047			2045

(1)Discount rate range is the result of remeasurements that occurred in 2023.

The discount rate assumption used to determine the benefit cost for 2024, 2023 and 2022 was based on the same technique that was used to determine the December 31, 2024 and 2023 benefit obligation as discussed above.

The expected return on assets assumption was based on historical returns, fixed income spreads and equity premiums consistent with the portfolio and asset allocation. A change in asset allocations could have a significant impact on the expected return on assets. Additionally, expectations of long-term inflation, real growth in the economy and a provision for active management and expenses paid were incorporated in the assumption. For the year ended December 31, 2024, TECO Energy’s pension plan’s actual return was approximately 5.1%.

The compensation increase assumption was based on the same underlying expectation of long-term inflation together with assumptions regarding real growth in wages and company-specific merit and promotion increases.

Pension Plan Assets

Pension plan assets are invested in a mix of equity and fixed-income securities. TECO Energy’s investment objective is to obtain above-average returns while minimizing volatility of expected returns and funding requirements over the long term. TECO Energy’s strategy is to hire proven managers and allocate assets to reflect a mix of investment styles, emphasize preservation of principal to minimize the impact of declining markets, and stay fully invested except for cash to meet benefit payment obligations and plan expenses.

TECO Energy	2024 Target Allocation			2023 Target Allocation			Actual Allocation, End of Year
Asset Category							2024			2023
Cash and cash equivalents	0%-10%			0%-10%				2	%		3	%
Equity securities	48%-68%			48%-68%				58	%		57	%
Fixed income securities	29%-49%			29%-49%				40	%		40	%
Total		100	%		100	%		100	%		100	%

TECO Energy reviews the plan’s asset allocation periodically and re-balances the investment mix to maximize asset returns, optimize the matching of investment yields with the plan’s expected benefit obligations, and minimize pension cost and funding. TECO Energy will continue to monitor the matching of plan assets with plan liabilities over the long term.

The plan’s investments are held by a trust fund administered by The Bank of New York Mellon. Investments are valued using quoted market prices on an exchange when available. Such investments are classified Level 1. In some cases where a market exchange price is available but the investments are traded in a secondary market, acceptable practical expedients are used to calculate fair value.

If observable transactions and other market data are not available, fair value is based upon third-party developed models that use, when available, current market-based or independently-sourced market parameters such as interest rates, currency rates or option volatilities. Items valued using third-party generated models are classified according to the lowest level input or value driver that is most significant to the valuation. Thus, an item may be classified in Level 3 even though there may be significant inputs that are readily observable.

As required by the fair value accounting standards, the investments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The plan’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. For cash equivalents, the cost approach was used in determining fair value. For bonds and U.S. government agencies, the income approach was used. For other investments, the market approach was used. The following table sets forth by level within the fair value hierarchy the plan’s investments.

Pension Plan Investments

TECO Energy	At Fair Value as of December 31, 2024
(millions)
	Level 1			Level 2		Level 3		Using NAV (1)		Total
Cash	$	1		$	0	$	0	$	0	$	1
Accounts receivable		19			0		0		0		19
Accounts payable		(38	)		0		0		0		(38	)
Short-term investment funds (STIFs)		17			0		0		0		17
Real estate investment trusts (REITs)		2			0		0		0		2
Mutual funds		9			0		0		0		9
US Equity		99			0		0		0		99
Municipal bonds		0			2		0		0		2
Government bonds		0			71		0		0		71
Corporate bonds		0			53		0		0		53
Mortgage Backed Securities (MBS)		0			11		0		0		11
Investments not utilizing the practical expedient		109			137		0		0		246
Limited Partnership Pooled Fund		0			0		0		79		79
Common and collective trusts (1)		0			0		0		361		361
Total investments	$	109		$	137	$	0	$	440	$	686

(1)In accordance with accounting standards, certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts in this table are to permit reconciliation of the fair value hierarchy to amounts presented in the TECO Energy fair value of plan assets.

TECO Energy	At Fair Value as of December 31, 2023
(millions)
	Level 1			Level 2			Level 3		Using NAV (1)		Total
Cash	$	(1	)	$	0		$	0	$	0	$	(1	)
Accounts receivable		3			0			0		0		3
Accounts payable		(10	)		0			0		0		(10	)
Short-term investment funds (STIFs)		24			0			0		0		24
Common stock		1			0			0		0		1
Real estate investment trusts (REITs)		3			0			0		0		3
Mutual funds		38			0			0		0		38
Municipal bonds		0			2			0		0		2
Government bonds		0			108			0		0		108
Corporate bonds		0			57			0		0		57
Long futures		5			0			0		0		5
Short Sales		0			(1	)		0		0		(1	)
Investments not utilizing the practical expedient		63			166			0		0		229
Common and collective trusts (1)		0			0			0		443		443
Mutual fund (1)		0			0			0		14		14
Total investments	$	63		$	166		$	0	$	457	$	686

(1)In accordance with accounting standards, certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts in this table are to permit reconciliation of the fair value hierarchy to amounts presented in the TECO Energy fair value of plan assets.

The following list details the pricing inputs and methodologies used to value the investments in the pension plan:

•Cash collateral is valued at cash posted due to its short-term nature.

•The STIF is valued at net asset value (NAV). The fund is an open-end investment, resulting in a readily-determinable fair value. Additionally, shares may be redeemed any business day at the NAV calculated after the order is accepted. The NAV is validated with purchases and sales at NAV. These factors make the STIF a level 1 asset.

•The primary pricing inputs in determining the fair value of the Common stocks, US Equity and REITs are closing quoted prices in active markets.

•The primary pricing inputs in determining the level 1 mutual funds are the mutual funds’ NAVs. The funds are registered open-end mutual funds and the NAVs are validated with purchases and sales at NAV. Since the fair values are determined and published, they are considered readily-determinable fair values and therefore level 1 assets.

•The primary pricing inputs in determining the fair value of municipal bonds are benchmark yields, historical spreads, sector curves, rating updates, and prepayment schedules. The primary pricing inputs in determining the fair value of government bonds are the U.S. treasury curve, consumer price index, and broker quotes, if available. The primary pricing inputs in determining the fair value of corporate bonds are the U.S. treasury curve, base spreads, YTM, and benchmark quotes. Collateralized mortgage obligations are priced using to-be-announced (TBA) prices, treasury curves, swap curves, cash flow information, and bids and offers as inputs. Mortgage-backed securities are priced using TBA prices, treasury curves, average lives, spreads, and cash flow information.

•The limited partnership pooled fund investment and common collective trusts are private funds valued at NAV. The NAVs are calculated based on bid prices of the underlying securities. Since the prices are not published to external sources, NAV is used as a practical expedient. Certain funds invest primarily in equity securities of domestic and foreign issuers while others invest in long duration U.S. investment-grade fixed income assets and seeks to increase return through active management of interest rate and credit risks. The redemption frequency of the funds ranges from daily to weekly and the redemption notice period ranges from 1 business day to 30 business days. There were no unfunded commitments as of December 31, 2024.

•Treasury bills are valued using benchmark yields, reported trades, broker dealer quotes, and benchmark securities.

•Futures are valued using futures data, cash rate data, swap rates, and cash flow analyses.

Additionally, the non-qualified SERP had $4 million and $4 million of assets as of December 31, 2024 and 2023, respectively. Since the plan is non-qualified, its assets are included in the “Deferred charges and other assets” line item in the Consolidated Balance Sheets rather than being netted with the related liability. The non-qualified trust holds investments in a money market fund. The fund is an open-end investment, resulting in a readily-determinable fair value. Additionally, shares may be redeemed any business day at the NAV calculated after the order is accepted. The NAV is validated with purchases and sales at NAV. These factors make it a level 1 asset. The SERP was fully funded as of December 31, 2024 and 2023.

Other Postretirement Benefit Plan Assets

There are no assets associated with TECO Energy’s Florida-based other postretirement benefits plan.

Contributions

The qualified pension plan’s actuarial value of assets, including credit balance, was 110.22% of the Pension Protection Act funded target as of January 1, 2024 and is estimated at 100.38% of the Pension Protection Act funded target as of January 1, 2025.

TECO Energy’s policy is to fund the qualified pension plan at or above amounts determined by its actuaries to meet ERISA guidelines for minimum annual contributions. TEC’s contribution is first set equal to its service cost. If a contribution in excess of service cost for the year is made, TEC’s portion is based on TEC’s proportion of the TECO Energy unfunded liability. TECO Holdings made contributions to this plan in 2024 and TECO Energy made contributions to this plan in 2024, 2023 and 2022, which met the minimum funding requirements for 2024, 2023 and 2022. TEC’s portion of the contribution in 2024 was $10 million, in 2023 was $10 million and in 2022 was $15 million. Tampa Electric’s portion of the contribution was $10 million in 2024, $10 million in 2023 and $12 million 2022. These amounts are reflected in the “Other” line on the Consolidated Statements of Cash Flows. TEC estimates its portion of the 2025 contribution to be $11 million. The amount TECO Holdings expects to contribute is in excess of the minimum funding required under ERISA guidelines.

TEC’s portion of the contributions to the SERP in 2024, 2023 and 2022 was zero. Since the SERP is fully funded, TECO Holdings does not expect to make significant contributions to this plan in 2025. TEC made SERP payments of approximately $0 million, $5 million and $2 million from the trust in 2024, 2023 and 2022, respectively.

The other postretirement benefits are funded annually to meet benefit obligations. TECO Energy's contribution toward health care coverage for most employees who retired after the age of 55 between January 1, 1990 and June 30, 2001 is limited to a defined dollar benefit based on service. TECO Energy’s contribution toward pre-65 and post-65 health care coverage for most employees retiring on or after July 1, 2001 is limited to a defined dollar benefit based on an age and service schedule. In 2025, TEC expects to make a contribution of approximately $10 million. Postretirement benefit levels are substantially unrelated to salary.

Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Expected Benefit Payments

TECO Energy			Other
(including projected service and net of employee contributions)	Pension		Postretirement
	Benefits		Benefits
(millions)
2025	$	70	$	12
2026		70		12
2027		69		12
2028		68		12
2029		66		12
2030-2034		296		51

Defined Contribution Plan

TECO Energy has a defined contribution savings plan covering substantially all employees of TECO Energy and its subsidiaries that enables participants to save a portion of their compensation up to the limits allowed by IRS guidelines. TECO Energy and its subsidiaries match 75% of the first 6% of the participant’s payroll savings deductions. Effective January 1, 2017, the employer matching contributions increased from 70% to 75% with an additional incentive match of up to 25% of eligible participant contributions based on the achievement of certain operating company financial goals. For the years ended December 31, 2024, 2023 and 2022, TEC’s portion of expense totaled $20 million, $18 million and $22 million, respectively, related to the matching contributions made to this plan. Tampa Electric’s portion of expense totaled $20 million, $18 million and $19 million, respectively, related to the matching contributions made to this plan. The expense related to the matching contribution is included on the Consolidated Statements of Income in “Operations & maintenance”.

Effective October 21, 2019, TECO Energy amended the defined contribution plan such that certain participants covered by the IBEW collective bargaining agreement shall not be eligible to participate in the plan for purposes of receiving the fixed matching contribution. This has been replaced with a non-elective employer contribution on a bi-weekly basis equal to a percentage of the member’s compensation for that period based on years of tenure of employment. For the years ended December 31, 2024, 2023 and 2022, Tampa Electric recognized expense totaling $11 million, $10 million and $10 million, respectively, related to the contributions made to this plan. The expense related to this contribution is included on the Consolidated Statements of Income in “Operations & maintenance”.