I'll try to explain the best I can.  In my opinio

I'll try to explain the best I can.  In my opinion NSS shares are never covered until the share structure is accounted for in full with a NOBO list or similar and with full cooperation from the DTCC.  Simply put the paper certificate numbers would be compared to their electronic counterparts and accounted for via all registered brokers electronic records.  If electronic shares outnumber paper certificate numbers then where are those paper certs to account for all those extra electronic shares?  The electronic shares are the NSS shares!  NSS shares don't have corresponding certs issued by the treasury.   Let's say that each borrowed share is given an electronically assigned number.  When it comes time to cover the shorted shares i.e. buy them back at a lower price, the cert number is entered into some brokers backroom ledger.  The DTCC has no record of this certificate.  The DTCC has TECO with an OS 1.25B shares but what is really floating around is 
1.25B  shares plus those backroom ledger entries and voila no certificated shares are bought back when being covered.  It gets worse!  The targeted companies  PPS  has already taken the beaten via the numerous shorted shares.  Then when there is no cert to return to the treasury this phanthom share is brought into the float as an electronic number only.   The company thinks it has an OS of 1.25B but the extra 100mm NSS shares being traded exponentially increases the dilution effect by compounding it.  Every time that electronic qty 1 share gets passed back and forth in a buy and sell transaction; it dilutes further since it really doesn't exist.   It's an electron in the brokers digital airwaves and it continues on as some brokers back room ledger share number that the Depository Trust & Clearing Corporation (DTCC) has no record of.  That has a huge dilution effect  if 100mm NSS shares or better exist in TECO's case. 
Imagine writing an IOU with incurred interest but nobody is forcing you to pay back the IOU.  Consider the IOU to be qty 1 NSS share. The IOU plus interest increases on paper but the money owed is never returned to the lender.  Consider  TECO the lender.  The  IOU  over a period of years becomes a very valuable IOU due to the compounded interest.  Consider the IOU's  "compounded interest"  equivalent to  the years of TECO's "decreasing share value" due to non-enforcement of the NSS (IOU).  Hence the share value becomes more and more worthless as time goes on since TECO can never collect on that IOU until taking some expensive action in addition to the ongoing day to day expenses.