Employee Postretirement Benefits

3 Months Ended

Mar. 31, 2015

Employee Postretirement Benefits

5. Employee Postretirement Benefits

Included in the table below is the periodic expense for pension and other postretirement benefits offered by the company.

Pension Expense
(millions)	Pension Benefits						Other Postretirement Benefits
Three months ended Mar. 31,	2015			2014			2015			2014
Components of net periodic benefit expense
Service cost	$	4.5		$	4.1		$	0.6		$	0.6
Interest cost		7.4			8.2			2.0			2.6
Expected return on assets		(10.8	)		(10.3	)		(0.3	)		0.0
Amortization of:
Prior service (benefit) cost		(0.1	)		(0.1	)		(0.6	)		0.0
Actuarial loss		3.4			3.2			0.0			0.0
Regulatory asset		0.0			0.0			0.3			0.0
Net pension expense recognized in the    TECO Energy Consolidated Condensed Statements of Income	$	4.4		$	5.1		$	2.0		$	3.2

For the fiscal 2015 plan year, TECO Energy is using an assumed long-term EROA of 7.00% and a discount rate of 4.256% for pension benefits under its qualified pension plan. For the Jan. 1, 2015 measurement of TECO Energy’s other postretirement benefits, TECO Energy assumed a discount rate of 4.206%. Additionally, TECO Energy made contributions of $14.9 million and $16.0 million to its pension plan for the three months ended Mar. 31, 2015 and 2014, respectively.

For the three months ended Mar. 31, 2015 and 2014, TECO Energy and its subsidiaries reclassified $0.8 million and $0.6 million, respectively, of pretax unamortized prior service benefit and actuarial losses from AOCI to net income as part of periodic benefit expense. In addition, during the three months ended Mar. 31, 2015 and 2014, the regulated companies reclassified $2.2 million and $2.5 million, respectively, of unamortized prior service benefit and actuarial losses from regulatory assets to net income as part of periodic benefit expense.

Black Lung Liability

TECO Coal is required by federal and state statutes to provide benefits to terminated, retired or (under state statutes) qualifying active employees for benefits related to black lung disease. TECO Coal is self-insured for black lung related claims. TECO Coal applies the accounting guidance of ASC 715, Compensation – Retirement Benefits, and annual expense is recorded for black lung obligations as determined by an independent actuary at the present value of the actuarially-computed liability for such benefits over the employee’s applicable term of service. At Mar. 31, 2015 and Dec. 31, 2014, TECO Coal had an actuarially-determined black lung liability of $24.8 million and $24.7 million, respectively. Expense related to the black lung liability recognized during the three months ended Mar. 31, 2015 and 2014 was not material.

As discussed in Note 15, TECO Coal was classified as an asset held for sale at Mar. 31, 2015. In accordance with ASC 715, an after-tax settlement charge of approximately $7.7 million related to the unfunded black lung obligations recorded in AOCI will be recognized as a loss from discontinued operations upon completion of the sale of TECO Coal, which is expected to occur in 2015.

Tampa Electric Company [Member]

Employee Postretirement Benefits

5. Employee Postretirement Benefits

TEC is a participant in the comprehensive retirement plans of TECO Energy. Amounts allocable to all participants of the TECO Energy retirement plans are found in Note 5, Employee Postretirement Benefits, in the TECO Energy, Inc. Notes to Consolidated Condensed Financial Statements. TEC’s portion of the net pension expense for the three months ended Mar. 31, 2015 and 2014, respectively, was $2.6 million and $3.8 million for pension benefits, and $1.4 million and $2.6 million for other postretirement benefits.

For the fiscal 2015 plan year, TECO Energy assumed a long-term EROA of 7.00% and a discount rate of 4.256%. For the Jan. 1, 2015 measurement of TECO Energy’s other postretirement benefits, TECO Energy used a discount rate of 4.206%. Additionally, TECO Energy made contributions of $14.9 million and $16.0 million to its pension plan in the three months ended Mar. 31, 2015 and 2014, respectively. TEC’s portion of the contributions was $11.0 million and $13.0 million, respectively.

Included in the benefit expenses discussed above, for the three months ended Mar. 31, 2015 and 2014, TEC reclassified $1.9 million and $2.5 million, respectively, of unamortized transition obligation, prior service cost and actuarial losses from regulatory assets to net income.