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TECO chief details cost-saving moves
By LOUIS HAU, Times Staff Writer TAMPA -- TECO Energy Inc.'s battered stock price rebounded Wednesday after chairman and chief executive Robert Fagan reaffirmed during a conference call that the utility was committed to maintaining its dividend. After sinking to a 12-year low on Tuesday, TECO's shares jumped $1.72, or 11.9 percent, to finish Wednesday at $16.16 on about twice the average trading volume. It's still well below its 52-week high of $29.05 set on April 23. With TECO's beleaguered wholesale power business sparking concerns about the company's cash-flow and earnings outlook for next year, some analysts on Wall Street have been raising questions about the Tampa company's ability to maintain its dividend. Acutely aware of these concerns, Fagan addressed the issue early in Wednesday's conference call. He and other TECO executives discussed a plan the company released Monday to fend off further earnings deterioration due to troubles in the wholesale power business. "In response to some of the recent analyst reports that have questioned our dividend, I want to say right upfront that the plan we are discussing today includes maintaining our dividend next year," Fagan said. "We've put together a very credible plan to weather the storm that the energy sector is enduring." TECO's plan includes suspending construction work on two 599-megawatt power plant projects in Arkansas and Mississippi and selling $400-million in assets. That's enough to make up for bank financing that it no longer expects to obtain for the two suspended projects and another power plant in Texas. In another cost-saving move, TECO also plans to lay off about 5 percent of the work force at its Tampa Electric Co. in 2003. The announced measures failed Tuesday to allay Wall Street and ratings agencies' concerns. But a day later, TECO's assurances on the dividend and its responses to analysts' questions about the details of the plan appeared to buoy market sentiment, amid gains in the broader market. Fagan argued that the company was being conservative in its calculations. "We've been assuming the worst and hoping for the best," he said. Part of the $400-million to be raised from asset sales would come from selling a fuel-conversion system known as a gasifier at Tampa Electric's power station in Polk County. The gasifier converts a mixture made up mostly of coal and petroleum coke into a synthetic gas with relatively low emissions comparable to natural gas. The gasifier was built in the mid-1990s in part with funds from the Department of Energy as part of its Clean Coal Technology program and is integrated into a 250-megawatt power generating unit at the Polk complex. The purchaser of the gasifier would be eligible for federal income tax credits awarded to so-called synthetic fuelmakers. Tampa Electric isn't eligible for the credits because federal law prohibits a company from claiming them on fuel that it produces and consumes itself, according to TECO spokeswoman Laura Plumb. After the sale of the gasifier, which is expected by the end of the year, Tampa Electric would continue to buy the fuel produced by the gasifier to power the adjacent generating unit, in a transaction that Plumb said would not affect ratepayers. -- Louis Hau can be reached at hau@sptimes.com or (813) 226-3404
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From the Times Business report
From the AP
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