From time to time, TEC and its subsidiaries are involved in various legal, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies in the ordinary course of business. Where appropriate, accruals are made in accordance with accounting standards for contingencies to provide for matters that are probable of resulting in an estimable loss.

TEC, through its Tampa Electric and Peoples Gas divisions, is a PRP for certain superfund sites and, through its Peoples Gas division, for certain former MGP sites. While the joint and several liability associated with these sites presents the potential for significant response costs, as of December 31, 2018, TEC has estimated its ultimate financial liability to be $28 million, primarily at PGS. This amount has been accrued and is primarily reflected in the long-term liability section under “Deferred credits and other liabilities” on the Consolidated Balance Sheets. The environmental remediation costs associated with these sites are expected to be paid over many years.

The estimated amounts represent only the portion of the cleanup costs attributable to TEC. The estimates to perform the work are based on TEC’s experience with similar work, adjusted for site-specific conditions and agreements with the respective governmental agencies. The estimates are made in current dollars, are not discounted and do not assume any insurance recoveries.

In instances where other PRPs are involved, most of those PRPs are creditworthy and are likely to continue to be creditworthy for the duration of the remediation work. However, in those instances that they are not, TEC could be liable for more than TEC’s actual percentage of the remediation costs.

Factors that could impact these estimates include the ability of other PRPs to pay their pro-rata portion of the cleanup costs, additional testing and investigation which could expand the scope of the cleanup activities, additional liability that might arise from the cleanup activities themselves or changes in laws or regulations that could require additional remediation. Under current regulations, these costs are recoverable through customer rates established in subsequent base rate proceedings.

TEC has commitments for long-term leases (primarily for land, building space, vehicles and office equipment), long-term service agreements and capital projects, including Tampa Electric’s solar projects (see Note 3) and the modernization of the Big Bend power station. Rental expense for these leases included in “Operations & maintenance expense” on the Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016, totaled $2 million, $2 million and $2 million, respectively. In addition, TEC has payment obligations under contractual agreements for fuel, fuel transportation and power purchases that are recovered from customers under regulatory clauses. The following is a schedule of future payments under minimum lease payments with non-cancelable lease terms in excess of one year and other net purchase obligations/commitments at December 31, 2018:


			Capital		Fuel and Gas		Long-term Service		Operating		Demand Side
(millions)	Transportation		Projects		Supply		Agreements		Leases		Management		Total
Year ended December 31:
2019	$	194	$	298	$	257	$	7	$	2	$	5	$	763
2020		175		89		106		6		2		1		379
2021		141		33		3		6		2		0		185
2022		133		8		3		7		2		0		153
2023		108		2		1		11		2		0		124
Thereafter		1,013		6		0		78		34		0		1,131
Total future minimum payments	$	1,764	$	436	$	370	$	115	$	44	$	6	$	2,735

TEC must meet certain financial tests, including a debt to capital ratio, as defined in the applicable debt agreements. TEC has certain restrictive covenants in specific agreements and debt instruments. At December 31, 2018 and 2017, TEC was in compliance with all required financial covenants.