prices would be the key, not only in Florida, but also in all the other markets where TECO
Energy was building plants, including Arizona, Arkansas, Mississippi and Texas.^6
Lessons learned
Lower-than-expected power demand and power prices, along with lagging development of
transmission facilities, highlight the risk of merchant power exposure combined with lever-
age. A few credit problems with prominent merchant power players, combined with scepti-
cism concerning electricity deregulation, could begin to push power companies back toward
the traditional integrated-utility business model.
(^1) This case study is based on the Offering Memorandum for the Project Loans and articles in the financial press.
(^2) The source for this and other Exhibits is the Offering Memorandum for Project Loans.
(^3) Hau, Louis, ‘TECO Energy Shares Drop 17% on Plant Concerns’, St. Petersburg Times,8 November 2002, p. 6E.
(^4) Hau, Louis, ‘TECO Energy Shares Drop 17% on Plant Concerns’, St. Petersburg Times,8 November 2002, p. 6E.
(^5) Hau, Louis, ‘TECO Shares Sink to a 15-Year Low’, St. Petersburg Times,9 November 2002, p. 1E.
(^6) ‘Looking for Cash, TECO Sells $380 Million in Bonds, Strings Attached,’ Electric Utility Week,13 January 2003.
PANDA ENERGY–TECO POWER JOINT VENTURE, UNITED STATES