TEC determines whether a contract contains a lease at inception by evaluating if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Operating lease ROU assets and operating lease liabilities are recognized on the Consolidated Balance Sheets based on the present value of the future minimum lease payments over the lease term at commencement date. As most of TEC’s leases do not provide an implicit rate, the incremental borrowing rate at commencement of the lease is used in determining the present value of future lease payments. Lease expense is recognized on a straight-line basis over the lease term and is recorded as “Operations and maintenance expenses” on the Consolidated Statements of Income.

TEC has certain contractual agreements that include lease and non-lease components, which management has elected to account for as a single lease component for all leases in which TEC is the lessee.

Tampa Electric has operating leases for buildings, land, telecommunication services and rail cars. Tampa Electric’s leases have remaining lease terms of 1 year to 61 years, some of which include options to extend the leases for up to an additional 65 years. These options are included as part of the lease term when it is considered reasonably certain that they will be exercised.


(millions)	Classification	2024		2023
Right-of-use asset	Deferred charges and other assets	$	19	$	21
Lease liabilities
Current	Other current liabilities	$	2	$	2
Long-term	Deferred credits and other liabilities		18		20
Total lease liabilities		$	20	$	22

Tampa Electric has recorded operating lease expense for the year ended December 31, 2024, 2023 and 2022 of $5 million, $4 million and $4 million, respectively.


(millions)
Year ended December 31:	2025		2026		2027		2028		2029		Thereafter		Total
Minimum lease payments	$	2	$	1	$	1	$	1	$	1	$	45	$	51
Less imputed interest														(31	)
Total future minimum payments													$	20

Additional information related to Tampa Electric’s leases is as follows:


Year ended December 31,	2024			2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases (millions)	$	5		$	4
Weighted average remaining lease term (years)		46			45
Weighted average discount rate - operating leases		4.4	%		4.4	%