News Release

Tampa Electric reaches agreement with EPA, Department of Justice on environmental issues

TAMPA, February 29, 2000

Tampa Electric Company, the U.S. Environmental Protection Agency and the U.S. Department of Justice announced today they have resolved the federal agencies' pending enforcement actions against the company, which were filed last year.

The resolution, which is in the form of a consent decree, will result in full and final settlement of the November 1999 federal litigation and Notices of Violation alleging violations of NSR requirements under the Clean Air Act. It will be lodged with the U.S. District Court in Tampa.

The agreement is substantially the same as Tampa Electric's earlier agreement with the Florida Department of Environmental Protection with respect to environmental controls and pollution reductions. It was developed over six months of negotiations with the agencies.

While the federal consent decree provides significant additional details for the implementation by Tampa Electric of various requirements, the terms of the federal and state agreements result in substantially the same environmental controls and pollution reductions.

"We're extremely pleased to have resolved the concerns of EPA and the Department of Justice," said Tampa Electric President John Ramil. "This consent decree strengthens our historic environmental plan developed with DEP, and it satisfies environmental regulators on both the state and federal levels."

Under the consent decree, announced today in Washington, D.C., Tampa Electric will commit to a comprehensive cleanup program that will dramatically decrease overall emissions from the company's power plants.

"This agreement makes Tampa Electric the first utility in the nation to respond to EPA's coal-fired utility initiative," added Ramil, "and we're doing so in a way that benefits our customers, our community and our environment."

Background
On Nov. 3, the Department of Justice filed lawsuits against seven midwestern and southern utilities, including Tampa Electric, to install additional pollution control devices on coal-fired generation units.

The EPA then issued Notices of Violation under its Coal-Fired Utility Initiative to those same companies. This triggered a 30-day window of time in which state environmental regulators were to step in to implement the needed emissions reductions.

On Dec. 7, 1999, Tampa Electric and the Florida Department of Environmental Protection announced a 10-year environmental program, which was hailed by Florida Governor Jeb Bush as "the largest pollution reduction achievements that this state has seen in the last quarter century."

Compliance plan comparison
The centerpiece of the EPA/Department of Justice consent decree, like the DEP agreement, is the $600-million conversion of Tampa Electric's Gannon Station from coal to natural gas by installing high-efficiency, combined-cycle technology.

The agreements call for all of Gannon's coal-fired operations to eventually cease, with the station's Units 1, 2 and 6 shutting down in 2004, and Units 3, 4 and 5 being repowered with combined-cycle technology fired by natural gas.

The repowered plant will be renamed Bayside Power Station and by 2004 will provide 1,475 megawatts of natural gas-fueled electric energy.

In addition, Tampa Electric's comprehensive environmental plans with both the EPA/Department of Justice and DEP call for the company to:

  • Reduce sulfur dioxide (SO2) emissions by more than 85 percent and emissions of oxides of nitrogen (NOx) by 85 percent by the year 2010 from 1997 levels.
  • Maximize the efficiency and availability of the new SO2-removing scrubber for Units 1 and 2 at Tampa Electric's coal-fired Big Bend Station – its largest power plant – to target a 95 percent sulfur removal efficiency and 100 percent availability, except under specific circumstances.
  • Develop a plan to maximize efficiency and availability of the scrubber serving Big Bend Unit 3 in a manner similar to Big Bend Units 1 and 2.
  • Achieve major NOx emission reductions by 2010 from the Big Bend Station units by installing NOx controls, repowering or shutting down units, with significant emissions reductions as early as 2007.
  • Invest up to $9 million for early NOx reductions and for demonstrating innovative technologies for reducing NOx emissions at Big Bend and other power plants.
  • Cooperate with DEP on its Bay Regional Air Chemistry Experiment program that studies nitrogen deposition in Tampa Bay, including contributing up to $2 million.

Tampa Electric said its environmental plan will also result in significant reductions in carbon dioxide and other greenhouse gases. The repowering of Gannon Station alone will result in a more than 25 percent reduction in carbon dioxide emissions from 1997 levels.

The company has signed a memorandum of agreement with Environmental Resources Trust, Inc. (ERT) to provide independent tracking and verification of greenhouse gas emissions reductions, including carbon dioxide.

"By setting up a comprehensive system for tracking Tampa Electric's greenhouse gas emissions and reductions, ERT is hoping to help the company establish its greenhouse gas emissions performance," said Ben Feldman, ERT's Greenhouse Gas Market Development Project Director. "We think that will provide an important service both to the company and the public."

"By asking an independent environmental group like ERT to provide this service, Tampa Electric is signaling its commitment to such performance," added Feldman.

According to the EPA/Department of Justice consent decree, incremental emissions credits allocated to Tampa Electric as a result of the emissions reductions may not be sold by the company but can be kept each year for the company's own use.

The EPA/Department of Justice agreement also requires Tampa Electric to pay $3.5 million in penalties in exchange for resolution of the litigation and the violations issued by EPA and the Department of Justice in November 1999.

According to Ramil, the company has always complied with the Clean Air Act and its permitting requirements and the historical interpretation of its rules, but has agreed to settle this matter and pay the penalties to avoid lengthy and costly litigation with an uncertain outcome.

"Two to three years of litigation would not have been in the best interest of our customers, our shareholders or the environment," said Ramil. "In addition to avoiding costly litigation, we can now move ahead in this new positive direction for our company and our community."

Tampa Electric is the principal subsidiary of TECO Energy, Inc. (NYSE: TE). TECO Energy is a diversified, energy-related utility holding company also based in Tampa. In addition to Tampa Electric, its principal businesses include Peoples Gas, TECO Power Services, TECO Transport, TECO Coal, TECO Coalbed Methane, and Bosek, Gibson and Associates.

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CHERIE JACOBS
TECO Energy, Tampa Electric, Peoples Gas
TECO Energy, Inc.
702 N. Franklin Street
Tampa, Florida 33602
E-mail: cljacobs@tecoenergy.com