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As Tampa gears up to woo corporate headquarters, it loses TECO to Canada buyer

 
Published Sept. 6, 2015

How bittersweet is this twist of financial fate?

TECO Energy, the longtime business mover and shaker headquartered in the core of downtown Tampa, is selling itself to a Canadian power company called Emera that nobody here knows — just as a team of Tampa business leaders are about to visit greater New York to pitch name-brand corporations on moving their head offices here.

For those keeping score — and everyone does these days — the loss of TECO as one of Tampa Bay's top 10 public corporations is another blow to a metro-wide economy whose headquarters bench strength was modest at best and now is shrinking.

TECO, parent of Tampa Electric, Peoples Gas and New Mexico Gas, will keep its main office in Tampa but only in the guise of a Canadian subsidiary. When it comes, the next notable corporate headquarters relocation will in effect merely replace the loss of TECO — No. 753 on the latest Fortune 1000 list of large public companies — and the corporate independence it has enjoyed here since it was started more than a century ago.

TECO's $10.4 billion sale to the Nova Scotia-based Emera power company delivers a particular blow to downtown Tampa at a time when the city's central economic momentum is rising fast.

When I arrived decades ago in Tampa, TECO's CEO was a tall, cerebral chief with a Gary Cooper look and a Ph.D. in physics. Tim Guzzle commanded respect and attention and so did the power company that kept the air conditioning on in a tightly packed service territory of Tampa, Hills-borough County and parts of a few other adjacent counties.

Today, TECO's CEO of the past five years is a similarly respected John Ramil. He started with the local electric utility nearly 40 years ago as a University of South Florida engineering student and has since chaired nearly every economic development group here, as well as the USF Board of Trustees.

It is now on his watch that TECO becomes a unit of Emera, officially by mid-2016.

Once TECO is sold, shares of its stock that now trade under the TE stock symbol on the New York Stock Exchange, will cease. To invest in TECO will mean buying shares in its Emera parent trading on the Toronto Stock Exchange. And at least some basic local decisions that TECO executives have made so casually before will have to be sent up the ladder to the Halifax headquarters for a green light.

It is the way of all mergers.

Those who lived here 15 or so years ago saw it happen when St. Petersburg-headquartered Florida Progress, parent of the Florida Power Corp. utility, decided to sell to Carolina Power & Light in Raleigh, N.C. That power company became known as Progress Energy and in another dozen years was in turn acquired by Duke Energy, which today is a far bigger and very different power company from the one once based in St. Pete.

Emera CEO Chris Huskilson already is spending time in Tampa to ease any early shocks of the merger. He is upbeat, reassuring and saying all the right things about buying TECO.

TECO will remain based in Tampa. There will be no layoffs and it will continue to be run by familiar TECO faces like CEO Ramil. Its electricity and gas rates — for now — will be untouched.

And, Huskilson said, "operating boards" with "local directors" will be created in Florida and New Mexico (where a TECO gas subsidiary operates) to ensure the company stays in touch with those communities.

By adding TECO, Emera is basically doubling its size. Once TECO's business belongs to Emera, U.S. operations will account for 71 percent of the Canadian company's earnings.

That's impeccable timing. Economic experts this past week declared that Canada is now entering a recession.

"This is a bull's-eye," Huskilson told analysts on a Friday evening phone call after the TECO deal was announced. "It is the perfect match for us."

Whether it will be perfect for TECO customers remains to be seen.

In annual J.D. Power surveys, Tampa Electric ranks extremely low in residential customer satisfaction. In fact, the only utility to rate even lower, in last place among larger utilities serving the Southeast, is Duke Energy Florida. Will Emera influence TECO's poor service marks?

Emera used to operate as Nova Scotia Holdings until 2000 when the company name was rebranded out of a combination of three words: energy, sea ("mer" in French) and air. Its purchase of TECO, described as a "healthy price" by one analyst, was unexpected when the adjacent service territories of utility giants Duke Energy Florida and Florida Power & Light seemed to make them more likely buyers.

But Duke is suffering public relations challenges in Florida and charges higher rates than Tampa Electric. FPL charges lower rates. Some industry experts suggest regulators are starting to balk at the largest power companies gobbling up others — a potential reason neither Duke nor FPL chose to become serious buyers.

Contact Robert Trigaux at rtrigaux@tampabay.com.