1. Overview of Tampa Electric’s Compliance Program FRCC’s Compliance Enforcement and Monitoring Program April 4 and 11, 2007

2. 2 Key Elements of Compliance Framework Design of program will be in the context of Federal regulatory and legal precedent on compliance Design of program will be in the context of Federal regulatory and legal precedent on compliance Program framework will be consistent with other compliance programs Program framework will be consistent with other compliance programs In most cases, business unit has responsibility and accountability for managing program In most cases, business unit has responsibility and accountability for managing program Independent oversight of program by Regulatory Compliance Officer responsible for all compliance programs Independent oversight of program by Regulatory Compliance Officer responsible for all compliance programs

3. 3 FERC – Transitioning from Regulation of Services to Regulation of Behavior FERC has begun discharging their legal duties by setting rules of general application (behavior) FERC has begun discharging their legal duties by setting rules of general application (behavior) EPAct of 2005 and enabling FERC regulations EPAct of 2005 and enabling FERC regulations Expanded FERC’s Civil penalty to cover violations over any provision of Part II of the FPA Expanded FERC’s Civil penalty to cover violations over any provision of Part II of the FPA Increased civil penalty authority to $1M/day Increased civil penalty authority to $1M/day Policy Statement on Enforcement Policy Statement on Enforcement December 21, 2006 Administrative Policy December 21, 2006 Administrative Policy Clear message – enhancement & creation of compliance programs based on FERC Enforcement Policy & the Federal Sentencing Guidelines Clear message – enhancement & creation of compliance programs based on FERC Enforcement Policy & the Federal Sentencing Guidelines

4. 4 FERC Policy Statement on Enforcement Factors guiding the selection of enforcement remedies Factors guiding the selection of enforcement remedies Credit for internal compliance, self- reporting & cooperation Credit for internal compliance, self- reporting & cooperation Adopts or references enforcement policies of other agencies Adopts or references enforcement policies of other agencies DOJ Federal Sentencing Guidelines DOJ Federal Sentencing Guidelines Commodity Futures Trading Commission (CFTC) Commodity Futures Trading Commission (CFTC) Securities & Exchange Commission (SEC) Securities & Exchange Commission (SEC) Evolution of FERC enforcement rules Evolution of FERC enforcement rules A journey but FERC will use existing enforcement policies of the above agencies as a benchmark A journey but FERC will use existing enforcement policies of the above agencies as a benchmark

5. 5 Federal Sentencing Guidelines No established body of law interpreting FERC’s new policy No established body of law interpreting FERC’s new policy Guidelines represent critical history to benchmark FERC compliance programs Guidelines represent critical history to benchmark FERC compliance programs Incorporates U.S. Sentencing Commission premise that it would not be fair to impose harsh fines on organizations that had taken all reasonable steps to prevent criminal conduct Incorporates U.S. Sentencing Commission premise that it would not be fair to impose harsh fines on organizations that had taken all reasonable steps to prevent criminal conduct Guidelines establish criteria for an effective compliance program Guidelines establish criteria for an effective compliance program Guidelines are currently used in the industry as the basis for Corporate Compliance Programs Guidelines are currently used in the industry as the basis for Corporate Compliance Programs

6. 6 Tieto Corporate Compliance Program Tie to Corporate Compliance Program Antitrust Company Information and Records Credit, Collection, Customer Service and Purchasing Electric and Gas Economic Regulation Energy Risk Management Environmental General Risk Management and Safety Government Affairs Labor, Benefits and Employment Securities Taxes

7. 7 Federal Sentencing Guidelines – Compliance Program Criteria Periodic risk assessments Periodic risk assessments Standards & procedures to prevent/detect unlawful conduct Standards & procedures to prevent/detect unlawful conduct Directors’ program oversight responsibility Directors’ program oversight responsibility Senior officer(s) program responsibility Senior officer(s) program responsibility Specific individual delegated day-to-day operational responsibility Specific individual delegated day-to-day operational responsibility Background checks at hire & promotion Background checks at hire & promotion Communication of standards & procedures Communication of standards & procedures Auditing & monitoring, including internal reporting mechanisms Auditing & monitoring, including internal reporting mechanisms Periodic evaluation of the program Periodic evaluation of the program Promote and enforce the program consistently Promote and enforce the program consistently Respond appropriately to violations to prevent future occurrences Respond appropriately to violations to prevent future occurrences

8. 8 Compliance Programs Standards of Conduct (SOC) Standards of Conduct (SOC) Open Access Transmission Tariff (OATT) Open Access Transmission Tariff (OATT) Reliability Standards Reliability Standards Marketing & Trading Rules (M&TR) Marketing & Trading Rules (M&TR) Anti-Manipulation Regulations Anti-Manipulation Regulations Market Based Rate Tariff Market Based Rate Tariff OATT related trading procedures OATT related trading procedures Price reporting Price reporting

9. 9 Compliance Programs North American Energy Standards Board (NAESB) North American Energy Standards Board (NAESB) NERC cousin - business practices NERC cousin - business practices Tariff and Other Matters Tariff and Other Matters MBR & Cost Based Tariffs MBR & Cost Based Tariffs PUHCA Section 203 PUHCA Section 203 Interlocking Directorates Interlocking Directorates Periodic Reports & Filings Periodic Reports & Filings

10. Regulatory Compliance Framework Regulatory Compliance Officer Regulatory Compliance Administrator Specific Compliance Program Administrators & Support SOC OATT NAESB Reliability Transmission & Generation Standards Cyber-security Standards M&TRCompliance Counsel Tariff & Other Matters

11. 11 Implementing the Regulatory Compliance Program Written delegation from Compliance Officer to specific program administrators (job descriptions) Written delegation from Compliance Officer to specific program administrators (job descriptions) Each Program Administrator will have primary responsibility and accountability for managing their compliance area Each Program Administrator will have primary responsibility and accountability for managing their compliance area Common template for each compliance area Common template for each compliance area Written procedures Written procedures Audit & Monitoring Audit & Monitoring Training Training Above items developed, revised and maintained by Program Administrators Above items developed, revised and maintained by Program Administrators

12. 12 Regulatory Compliance Program Process Quarterly reports developed for Regulatory Compliance Officer Quarterly reports developed for Regulatory Compliance Officer Coordination with TECO Energy Corporate Compliance Program Coordination with TECO Energy Corporate Compliance Program Administration of compliance programs overseen by Regulatory Compliance Administrator Administration of compliance programs overseen by Regulatory Compliance Administrator

13. 13 Reliability Program Next Steps – “Devil in the Detail” Integrate into existing company compliance structures as previously discussed Integrate into existing company compliance structures as previously discussed Outreach and education Outreach and education Make individual employees accountable for each requirement Make individual employees accountable for each requirement Determining what standards are applicable - NERC functional model registration Determining what standards are applicable - NERC functional model registration Identifying what constitutes compliance for each standard and requirement Identifying what constitutes compliance for each standard and requirement 118 standards, 1234 requirements! 118 standards, 1234 requirements!

14. 14 The Details – Education Director/Manager level training Director/Manager level training Topics Topics Roles of NERC & FERC Roles of NERC & FERC EPACT 2005 EPACT 2005 Compliance Enforcement & Audits Compliance Enforcement & Audits Standards 101 Standards 101 Corporate Compliance Plan Corporate Compliance Plan Compliance Documentation Compliance Documentation Standards Development Process Standards Development Process

15. 15 The Details – Accountability Each Requirement and Sub- Requirement is assigned to a manager Each Requirement and Sub- Requirement is assigned to a manager The Violation Risk Factor matrix was used as a template The Violation Risk Factor matrix was used as a template

16. Emergency Operations Planning EOP-001-0 R1.Balancing Authorities shall have operating agreements with adjacent Balancing Authorities that shall, at a minimum, contain provisions for emergency assistance, including provisions to obtain emergency assistance from remote Balancing Authorities. HIGHDonahey/Nordlinger EOP-001-0 R2.The Transmission Operator shall have an emergency load reduction plan for all identified IROLs. The plan shall include the details on how the Transmission Operator will implement load reduction in sufficient amount and time to mitigate the IROL violation before system separation or collapse would occur. The load reduction plan must be capable of being implemented within 30 minutes. MEDIUMDavis/Busot EOP-001-0 R3.Each Transmission Operator and Balancing Authority shall:MEDIUMHeading EOP-001-0 R3.1.Develop, maintain, and implement a set of plans to mitigate operating emergencies for insufficient generating capacity. MEDIUMDavis/Busot EOP-001-0 R3.2.Develop, maintain, and implement a set of plans to mitigate operating emergencies on the transmission system. MEDIUMDavis/Busot EOP-001-0 R3.3.Develop, maintain, and implement a set of plans for load shedding. MEDIUMDavis/Busot

17. 17 The Details - Documentation Compliance Template for Each Requirement Compliance Template for Each Requirement Tampa Electric Company NERC Reliability Standard Compliance Template File Name: Compliance Template ABC-XXX-X RX[-RX] Standard Name & Number: Requirement Number(s): Business Unit(s): Responsible Department(s): Date Completed: Next Review Date: Requirement: Violation Risk Factor: Compliance Statement: Compliance Documents & Location: Training Requirements (if applicable):

18. 18 Tampa Electric Company NERC Reliability Standard Compliance Template File Name:Compliance Template EOP-001-0 R1 Standard Name & Number:EOP-001-0 Emergency Operations Planning Requirement Number(s):R1 Business Unit(s):Energy Delivery Responsible Department(s):Transmission Tariff & Contracts Date Completed:February 16, 2007 Next Review Date:February 16, 2010 Requirement: Balancing Authorities shall have operating agreements with adjacent Balancing Authorities that shall, at a minimum, contain provisions for emergency assistance, including provisions to obtain emergency assistance from remote Balancing Authorities. Violation Risk Factor:High Compliance Statement: Tampa Electric has three types of operating agreements that include provisions to obtain emergency assistance from other Balancing Authorities. First, … Compliance Documents & Location: FRCC Operating Reserve Policy – FRCC web site Tampa Electric Interchange Agreements – located at the Energy Control Center, Interchange Billing Department and online at \\TECO_TREE\.PLAZA6_SYS....\CONTRACTS Training Requirements (if applicable): None Required Additional Comments:

19. 19 The Details – Document Maintenance All Compliance Templates and as many related documents as possible to be stored on a SharePoint site All Compliance Templates and as many related documents as possible to be stored on a SharePoint site Documents are uploaded by the responsible managers Documents are uploaded by the responsible managers The Compliance Manager approves all submissions The Compliance Manager approves all submissions

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24. 24 QUESTIONS? Greg Ramon gjramon@tecoenergy.com 813-228-4469 Art Nordlinger alnordlinger@tecoenergy.com 813-630-6203