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POWER POINTS // TECO deal puts some spark in its market share

What do you do if you're an electric utility bound by a tiny central Florida service territory? Buy somebody with a bigger turf.

That's what TECO Energy, parent company of Tampa Electric, did last fall when it agreed to buy Peoples Gas System - Florida's largest natural gas distribution business with 200,000 customers and more than a 60 percent share of the market.

In one swoop, that $300-million deal made TECO a potential power heavyweight thanks to its ability to deliver gas or electricity to customers in major markets throughout Florida. The pitch: Businesses will like the one-stop shopping for electricity and gas available at TECO.

"The acquisition," TECO chief Tim Guzzle says, "gives us excellent opportunities for expansion throughout our growing state."

The deal actually gives TECO two legs up. First, TECO rids itself of a stubborn competitor in its own service territory that sold an alternative to electricity to homes and commercial businesses. Now TECO can offer both types of power and win either way.

Peoples Gas also gives TECO an entree to retail customers in the service territories of other electric utilities. TECO can't sell electricity to the business or residential customers outside its 2,000-square-mile turf that stretches from the Hillsborough County towards Lakeland. But as rules governing competition begin to relax, the Peoples Gas deal will benefit TECO all the more.

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