NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The accompanying condensed consolidated financial statements should be read in conjunction with the 2020 Form 10-K. In the opinion of NEE and FPL management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts included in the prior year's condensed consolidated financial statements have been reclassified to conform to the current year's presentation. FPL amounts have been retrospectively adjusted to reflect the merger of FPL and Gulf Power Company, see Note 5 - Merger of FPL and Gulf Power Company. The results of operations for an interim period generally will not give a true indication of results for the year. Prior year's share and share-based data have been retrospectively adjusted to reflect the four-for-one split of NEE common stock effective October 26, 2020 (2020 stock split). See Note 10 - Earnings Per Share.
1. Revenue from Contracts with Customers
FPL and NEER generate substantially all of NEE’s operating revenues, which primarily include revenues from contracts with customers, as well as derivative and lease transactions at NEER. For the vast majority of contracts with customers, NEE believes that the obligation to deliver energy, capacity or transmission is satisfied over time as the customer simultaneously receives and consumes benefits as NEE performs. NEE’s revenue from contracts with customers was approximately $4.0 billion ($3.0 billion at FPL) and $3.9 billion ($2.9 billion at FPL) for the three months ended March 31, 2021 and 2020, respectively. NEE's and FPL's receivables are primarily associated with revenues earned from contracts with customers, as well as derivative and lease transactions at NEER, and consist of both billed and unbilled amounts, which are recorded in customer receivables and other receivables on NEE's and FPL's condensed consolidated balance sheets. Receivables represent unconditional rights to consideration and reflect the differences in timing of revenue recognition and cash collections. For substantially all of NEE's and FPL's receivables, regardless of the type of revenue transaction from which the receivable originated, customer and counterparty credit risk is managed in the same manner and the terms and conditions of payment are similar. During the three months ended March 31, 2021, NEER did not recognize approximately $180 million of revenue related to reimbursable expenses from a counterparty that are deemed not probable of collection. These reimbursable expenses arose from the impact of severe prolonged winter weather in Texas in February 2021. These determinations were made based on assessments of the counterparty's creditworthiness and NEER's ability to collect.
FPL - FPL’s revenues are derived primarily from tariff-based sales that result from providing electricity to retail customers in Florida with no defined contractual term. Electricity sales to retail customers account for approximately 90% of FPL’s operating revenues, the majority of which are to residential customers. Retail customers receive a bill monthly based on the amount of monthly kWh usage with payment due monthly. For these types of sales, FPL recognizes revenue as electricity is delivered and billed to customers, as well as an estimate for electricity delivered and not yet billed. The billed and unbilled amounts represent the value of electricity delivered to the customer. At March 31, 2021 and December 31, 2020, FPL's unbilled revenues amounted to approximately $466 million and $454 million, respectively, and are included in customer receivables on NEE's and FPL's condensed consolidated balance sheets. Certain contracts with customers contain a fixed price which primarily relate to certain power purchase agreements with maturity dates through 2041. As of March 31, 2021, FPL expects to record approximately $420 million of revenues related to the fixed capacity price components of such contracts over the remaining terms of the related contracts as the capacity is provided. These contracts also contain a variable price component for energy usage which FPL recognizes as revenue as the energy is delivered based on rates stipulated in the respective contracts.
NEER - NEER’s revenue from contracts with customers is derived primarily from the sale of energy commodities, electric capacity and electric transmission. For these types of sales, NEER recognizes revenue as energy commodities are delivered and as electric capacity and electric transmission are made available, consistent with the amounts billed to customers based on rates stipulated in the respective contracts as well as an accrual for amounts earned but not yet billed. The amounts billed and accrued represent the value of energy or transmission delivered and/or the capacity of energy or transmission available to the customer. Revenues yet to be earned under these contracts, which have maturity dates ranging from 2021 to 2053, will vary based on the volume of energy or transmission delivered and/or available. NEER’s customers typically receive bills monthly with payment due within 30 days. Certain contracts with customers contain a fixed price which primarily relate to electric capacity sales associated with ISO annual auctions through 2025 and certain power purchase agreements with maturity dates through 2034. At March 31, 2021, NEER expects to record approximately $810 million of revenues related to the fixed price components of such contracts over the remaining terms of the related contracts as the capacity is provided.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
2. Derivative Instruments
NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the physical and financial risks inherent in the purchase and sale of fuel and electricity, as well as interest rate and foreign currency exchange rate risk associated primarily with outstanding and expected future debt issuances and borrowings, and to optimize the value of NEER's power generation and gas infrastructure assets. NEE and FPL do not utilize hedge accounting for their cash flow and fair value hedges.
With respect to commodities related to NEE's competitive energy business, NEER employs risk management procedures to conduct its activities related to optimizing the value of its power generation and gas infrastructure assets, providing full energy and capacity requirements services primarily to distribution utilities, and engaging in power and fuel marketing and trading activities to take advantage of expected future favorable price movements and changes in the expected volatility of prices in the energy markets. These risk management activities involve the use of derivative instruments executed within prescribed limits to manage the risk associated with fluctuating commodity prices. Transactions in derivative instruments are executed on recognized exchanges or via the OTC markets, depending on the most favorable credit terms and market execution factors. For NEER's power generation and gas infrastructure assets, derivative instruments are used to hedge all or a portion of the expected output of these assets. These hedges are designed to reduce the effect of adverse changes in the wholesale forward commodity markets associated with NEER's power generation and gas infrastructure assets. With regard to full energy and capacity requirements services, NEER is required to vary the quantity of energy and related services based on the load demands of the customers served. For this type of transaction, derivative instruments are used to hedge the anticipated electricity quantities required to serve these customers and reduce the effect of unfavorable changes in the forward energy markets. Additionally, NEER takes positions in energy markets based on differences between actual forward market levels and management's view of fundamental market conditions, including supply/demand imbalances, changes in traditional flows of energy, changes in short- and long-term weather patterns and anticipated regulatory and legislative outcomes. NEER uses derivative instruments to realize value from these market dislocations, subject to strict risk management limits around market, operational and credit exposure.
Derivative instruments, when required to be marked to market, are recorded on NEE's and FPL's condensed consolidated balance sheets as either an asset or liability measured at fair value. At FPL, substantially all changes in the derivatives' fair value are deferred as a regulatory asset or liability until the contracts are settled, and, upon settlement, any gains or losses are passed through the applicable fuel clause. For NEE's non-rate regulated operations, predominantly NEER, essentially all changes in the derivatives' fair value for power purchases and sales, fuel sales and trading activities are recognized on a net basis in operating revenues and the equity method investees' related activity is recognized in equity in earnings of equity method investees in NEE's condensed consolidated statements of income. Settlement gains and losses are included within the line items in the condensed consolidated statements of income to which they relate. Transactions for which physical delivery is deemed not to have occurred are presented on a net basis in the condensed consolidated statements of income. For commodity derivatives, NEE believes that, where offsetting positions exist at the same location for the same time, the transactions are considered to have been netted and therefore physical delivery has been deemed not to have occurred for financial reporting purposes. Settlements related to derivative instruments are primarily recognized in net cash provided by operating activities in NEE's and FPL's condensed consolidated statements of cash flows.
For interest rate and foreign currency derivative instruments, all changes in the derivatives' fair value, as well as the transaction gain or loss on foreign denominated debt, are recognized in interest expense and the equity method investees' related activity is recognized in equity in earnings (losses) of equity method investees in NEE's condensed consolidated statements of income. In addition, for the three months ended March 31, 2020, NEE reclassified from AOCI approximately $23 million ($3 million after tax) to gains on disposal of businesses/assets - net (see Note 11 - Disposal of a Business) because it became probable that related future transactions being hedged would not occur. At March 31, 2021, NEE's AOCI included amounts related to discontinued interest rate cash flow hedges with expiration dates through March 2035 and foreign currency cash flow hedges with expiration dates through September 2030. Approximately $7 million of net losses included in AOCI at March 31, 2021 are expected to be reclassified into earnings within the next 12 months as the principal and/or interest payments are made. Such amounts assume no change in scheduled principal payments.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Fair Value Measurement of Derivative Instruments - The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. NEE and FPL use several different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or comparable assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis. NEE's and FPL's assessment of the significance of any particular input to the fair value measurement requires judgment and may affect placement within the fair value hierarchy levels. Non-performance risk, including the consideration of a credit valuation adjustment, is also considered in the determination of fair value for all assets and liabilities measured at fair value.
NEE and FPL measure the fair value of commodity contracts using a combination of market and income approaches utilizing prices observed on commodities exchanges and in the OTC markets, or through the use of industry-standard valuation techniques, such as option modeling or discounted cash flows techniques, incorporating both observable and unobservable valuation inputs. The resulting measurements are the best estimate of fair value as represented by the transfer of the asset or liability through an orderly transaction in the marketplace at the measurement date.
Most exchange-traded derivative assets and liabilities are valued directly using unadjusted quoted prices. For exchange-traded derivative assets and liabilities where the principal market is deemed to be inactive based on average daily volumes and open interest, the measurement is established using settlement prices from the exchanges, and therefore considered to be valued using other observable inputs.
NEE, through its subsidiaries, including FPL, also enters into OTC commodity contract derivatives. The majority of these contracts are transacted at liquid trading points, and the prices for these contracts are verified using quoted prices in active markets from exchanges, brokers or pricing services for similar contracts.
NEE, through NEER, also enters into full requirements contracts, which, in most cases, meet the definition of derivatives and are measured at fair value. These contracts typically have one or more inputs that are not observable and are significant to the valuation of the contract. In addition, certain exchange and non-exchange traded derivative options at NEE have one or more significant inputs that are not observable, and are valued using industry-standard option models.
In all cases where NEE and FPL use significant unobservable inputs for the valuation of a commodity contract, consideration is given to the assumptions that market participants would use in valuing the asset or liability. The primary input to the valuation models for commodity contracts is the forward commodity curve for the respective instruments. Other inputs include, but are not limited to, assumptions about market liquidity, volatility, correlation and contract duration as more fully described below in Significant Unobservable Inputs Used in Recurring Fair Value Measurements. In instances where the reference markets are deemed to be inactive or do not have transactions for a similar contract, the derivative assets and liabilities may be valued using significant other observable inputs and potentially significant unobservable inputs. In such instances, the valuation for these contracts is established using techniques including extrapolation from or interpolation between actively traded contracts, or estimated basis adjustments from liquid trading points. NEE and FPL regularly evaluate and validate the inputs used to determine fair value by a number of methods, consisting of various market price verification procedures, including the use of pricing services and multiple broker quotes to support the market price of the various commodities. In all cases where there are assumptions and models used to generate inputs for valuing derivative assets and liabilities, the review and verification of the assumptions, models and changes to the models are undertaken by individuals that are independent of those responsible for estimating fair value.
NEE uses interest rate contracts and foreign currency contracts to mitigate and adjust interest rate and foreign currency exchange exposure related primarily to certain outstanding and expected future debt issuances and borrowings when deemed appropriate based on market conditions or when required by financing agreements. NEE estimates the fair value of these derivatives using an income approach based on a discounted cash flows valuation technique utilizing the net amount of estimated future cash inflows and outflows related to the agreements.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The tables below present NEE's and FPL's gross derivative positions at March 31, 2021 and December 31, 2020, as required by disclosure rules. However, the majority of the underlying contracts are subject to master netting agreements and generally would not be contractually settled on a gross basis. Therefore, the tables below also present the derivative positions on a net basis, which reflect the offsetting of positions of certain transactions within the portfolio, the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral, as well as the location of the net derivative position on the condensed consolidated balance sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(a)
|
|
Total
|
|
(millions)
|
Assets:
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
775
|
|
|
$
|
1,893
|
|
|
$
|
1,499
|
|
|
$
|
(2,197)
|
|
|
$
|
1,970
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
218
|
|
|
$
|
—
|
|
|
$
|
(69)
|
|
|
149
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
(40)
|
|
|
(5)
|
|
Total derivative assets
|
|
|
|
|
|
|
|
|
$
|
2,114
|
|
|
|
|
|
|
|
|
|
|
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
(1)
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
858
|
|
|
$
|
1,639
|
|
|
$
|
342
|
|
|
$
|
(2,176)
|
|
|
$
|
663
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
418
|
|
|
$
|
—
|
|
|
$
|
(69)
|
|
|
349
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
(40)
|
|
|
20
|
|
Total derivative liabilities
|
|
|
|
|
|
|
|
|
$
|
1,032
|
|
|
|
|
|
|
|
|
|
|
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
(1)
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value by NEE balance sheet line item:
|
|
|
|
|
|
|
|
|
|
Current derivative assets
|
|
|
|
|
|
|
|
|
$
|
496
|
|
Noncurrent derivative assets(b)
|
|
|
|
|
|
|
|
|
1,618
|
|
Total derivative assets
|
|
|
|
|
|
|
|
|
$
|
2,114
|
|
Current derivative liabilities(c)
|
|
|
|
|
|
|
|
|
$
|
437
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent derivative liabilities
|
|
|
|
|
|
|
|
|
595
|
|
Total derivative liabilities
|
|
|
|
|
|
|
|
|
$
|
1,032
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value by FPL balance sheet line item:
|
|
|
|
|
|
|
|
|
|
Current other assets
|
|
|
|
|
|
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current other liabilities
|
|
|
|
|
|
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
———————————————
(a)Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.
(b)Reflects the netting of approximately $66 million in margin cash collateral received from counterparties.
(c)Reflects the netting of approximately $45 million in margin cash collateral paid to counterparties.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(a)
|
|
Total
|
|
(millions)
|
Assets:
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
919
|
|
|
$
|
1,881
|
|
|
$
|
1,679
|
|
|
$
|
(2,325)
|
|
|
$
|
2,154
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
—
|
|
|
$
|
(41)
|
|
|
40
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
(34)
|
|
|
23
|
|
Total derivative assets
|
|
|
|
|
|
|
|
|
$
|
2,217
|
|
|
|
|
|
|
|
|
|
|
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
1,004
|
|
|
$
|
1,468
|
|
|
$
|
305
|
|
|
$
|
(2,277)
|
|
|
$
|
500
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
1,042
|
|
|
$
|
—
|
|
|
$
|
(41)
|
|
|
1,001
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
(34)
|
|
|
9
|
|
Total derivative liabilities
|
|
|
|
|
|
|
|
|
$
|
1,510
|
|
|
|
|
|
|
|
|
|
|
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value by NEE balance sheet line item:
|
|
|
|
|
|
|
|
|
|
Current derivative assets
|
|
|
|
|
|
|
|
|
$
|
570
|
|
Noncurrent derivative assets(b)
|
|
|
|
|
|
|
|
|
1,647
|
|
Total derivative assets
|
|
|
|
|
|
|
|
|
$
|
2,217
|
|
Current derivative liabilities(c)
|
|
|
|
|
|
|
|
|
$
|
311
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent derivative liabilities
|
|
|
|
|
|
|
|
|
1,199
|
|
Total derivative liabilities
|
|
|
|
|
|
|
|
|
$
|
1,510
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value by FPL balance sheet line item:
|
|
|
|
|
|
|
|
|
|
Current other assets
|
|
|
|
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current other liabilities
|
|
|
|
|
|
|
|
|
$
|
2
|
|
Noncurrent other liabilities
|
|
|
|
|
|
|
|
|
1
|
|
Total derivative liabilities
|
|
|
|
|
|
|
|
|
$
|
3
|
|
———————————————
(a)Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.
(b)Reflects the netting of approximately $184 million in margin cash collateral received from counterparties.
(c)Reflects the netting of approximately $136 million in margin cash collateral paid to counterparties.
At March 31, 2021 and December 31, 2020, NEE had approximately $5 million and $6 million (none at FPL), respectively, in margin cash collateral received from counterparties that was not offset against derivative assets in the above presentation. These amounts are included in current other liabilities on NEE's condensed consolidated balance sheets. Additionally, at March 31, 2021 and December 31, 2020, NEE had approximately $401 million and $315 million (none at FPL), respectively, in margin cash collateral paid to counterparties that was not offset against derivative assets or liabilities in the above presentation. These amounts are included in current other assets on NEE's condensed consolidated balance sheets.
Significant Unobservable Inputs Used in Recurring Fair Value Measurements - The valuation of certain commodity contracts requires the use of significant unobservable inputs. All forward price, implied volatility, implied correlation and interest rate inputs used in the valuation of such contracts are directly based on third-party market data, such as broker quotes and exchange settlements, when that data is available. If third-party market data is not available, then industry standard methodologies are used to develop inputs that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Observable inputs, including some forward prices, implied volatilities and interest rates used for determining fair value are updated daily to reflect the best available market information. Unobservable inputs which are related to observable inputs, such as illiquid portions of forward price or volatility curves, are updated daily as well, using industry standard techniques such as interpolation and extrapolation, combining observable forward inputs supplemented by historical market and other relevant data. Other unobservable inputs, such as implied correlations, block-to-hourly price shaping, customer migration rates from full requirements contracts and some implied volatility curves, are modeled using proprietary models based on historical data and industry standard techniques.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at March 31, 2021 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
Valuation
|
|
Significant
|
|
|
|
|
|
Weighted-
|
Transaction Type
|
|
March 31, 2021
|
|
Technique(s)
|
|
Unobservable Inputs
|
|
Range
|
|
average(a)
|
|
|
Assets
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
Forward contracts - power
|
|
$
|
703
|
|
|
$
|
92
|
|
|
Discounted cash flow
|
|
Forward price (per MWh)
|
|
$1
|
—
|
$133
|
|
$30
|
Forward contracts - gas
|
|
277
|
|
|
34
|
|
|
Discounted cash flow
|
|
Forward price (per MMBtu)
|
|
$1
|
—
|
$8
|
|
$3
|
Forward contracts - congestion
|
|
23
|
|
|
5
|
|
|
Discounted cash flow
|
|
Forward price (per MWh)
|
|
$(8)
|
—
|
$75
|
|
$—
|
Options - power
|
|
38
|
|
|
9
|
|
|
Option models
|
|
Implied correlations
|
|
39%
|
—
|
85%
|
|
54%
|
|
|
|
|
|
|
|
|
Implied volatilities
|
|
7%
|
—
|
236%
|
|
59%
|
Options - primarily gas
|
|
137
|
|
|
120
|
|
|
Option models
|
|
Implied correlations
|
|
39%
|
—
|
85%
|
|
54%
|
|
|
|
|
|
|
|
|
Implied volatilities
|
|
16%
|
—
|
115%
|
|
29%
|
Full requirements and unit contingent contracts
|
|
295
|
|
|
70
|
|
|
Discounted cash flow
|
|
Forward price (per MWh)
|
|
$5
|
—
|
$318
|
|
$50
|
|
|
|
|
|
|
|
|
Customer migration rate(b)
|
|
—%
|
—
|
49%
|
|
1%
|
Forward contracts - other
|
|
26
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,499
|
|
|
$
|
342
|
|
|
|
|
|
|
|
|
|
|
|
———————————————
(a)Unobservable inputs were weighted by volume.
(b)Applies only to full requirements contracts.
The sensitivity of NEE's fair value measurements to increases (decreases) in the significant unobservable inputs is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant Unobservable Input
|
|
Position
|
|
Impact on
Fair Value Measurement
|
Forward price
|
|
Purchase power/gas
|
|
Increase (decrease)
|
|
|
Sell power/gas
|
|
Decrease (increase)
|
Implied correlations
|
|
Purchase option
|
|
Decrease (increase)
|
|
|
Sell option
|
|
Increase (decrease)
|
Implied volatilities
|
|
Purchase option
|
|
Increase (decrease)
|
|
|
Sell option
|
|
Decrease (increase)
|
Customer migration rate
|
|
Sell power(a)
|
|
Decrease (increase)
|
———————————————
(a)Assumes the contract is in a gain position.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The reconciliation of changes in the fair value of derivatives that are based on significant unobservable inputs is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2021
|
|
2020
|
|
NEE
|
|
FPL
|
|
NEE
|
|
FPL
|
|
(millions)
|
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior period
|
$
|
1,374
|
|
|
$
|
(1)
|
|
|
$
|
1,207
|
|
|
$
|
(8)
|
|
Realized and unrealized gains (losses):
|
|
|
|
|
|
|
|
Included in earnings(a)
|
(130)
|
|
|
—
|
|
|
387
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Included in regulatory assets and liabilities
|
(2)
|
|
|
(2)
|
|
|
(2)
|
|
|
(2)
|
|
Purchases
|
38
|
|
|
—
|
|
|
81
|
|
|
—
|
|
Sales(b)
|
—
|
|
|
—
|
|
|
114
|
|
|
—
|
|
Settlements
|
(89)
|
|
|
1
|
|
|
(206)
|
|
|
1
|
|
Issuances
|
(21)
|
|
|
—
|
|
|
(32)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers out(c)
|
(13)
|
|
|
—
|
|
|
(30)
|
|
|
—
|
|
Fair value of net derivatives based on significant unobservable inputs at March 31
|
$
|
1,157
|
|
|
$
|
(2)
|
|
|
$
|
1,519
|
|
|
$
|
(9)
|
|
Gains (losses) included in earnings attributable to the change in unrealized gains (losses) relating to derivatives held at the reporting date(d)
|
$
|
(125)
|
|
|
$
|
—
|
|
|
$
|
308
|
|
|
$
|
—
|
|
———————————————
(a)For the three months ended March 31, 2021 and 2020, realized and unrealized gains (losses) of approximately $(130) million and $405 million, respectively, are included in the condensed consolidated statements of income in operating revenues and the balance is included in interest expense.
(b)See Note 11 - Disposal of a Business.
(c)Transfers from Level 3 to Level 2 were a result of increased observability of market data.
(d)For the three months ended March 31, 2021 and 2020, unrealized gains (losses) of approximately $(125) million and $319 million, respectively, are included in the condensed consolidated statements of income in operating revenues and the balance is included in interest expense.
Income Statement Impact of Derivative Instruments - Gains (losses) related to NEE's derivatives are recorded in NEE's condensed consolidated statements of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
Commodity contracts(a) - operating revenues
|
|
|
|
|
$
|
(488)
|
|
|
$
|
625
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts - interest expense
|
|
|
|
|
(40)
|
|
|
(79)
|
|
|
|
|
|
|
|
|
|
Interest rate contracts - interest expense
|
|
|
|
|
747
|
|
|
(905)
|
|
Losses reclassified from AOCI:
|
|
|
|
|
|
|
|
Interest rate contracts(b)
|
|
|
|
|
(1)
|
|
|
(25)
|
|
Foreign currency contracts - interest expense
|
|
|
|
|
(1)
|
|
|
(1)
|
|
Total
|
|
|
|
|
$
|
217
|
|
|
$
|
(385)
|
|
———————————————
(a)For the three months ended March 31, 2021 and 2020, FPL recorded losses of approximately $7 million and $3 million, respectively, related to commodity contracts as regulatory assets on its condensed consolidated balance sheets.
(b)For the three months ended March 31, 2020, approximately $23 million was reclassified to gains on disposal of businesses/assets - net (see Note 11 - Disposal of a Business); remaining balances were reclassified to interest expense on NEE's condensed consolidated statements of income.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Notional Volumes of Derivative Instruments - The following table represents net notional volumes associated with derivative instruments that are required to be reported at fair value in NEE's and FPL's condensed consolidated financial statements. The table includes significant volumes of transactions that have minimal exposure to commodity price changes because they are variably priced agreements. These volumes are only an indication of the commodity exposure that is managed through the use of derivatives. They do not represent net physical asset positions or non-derivative positions and the related hedges, nor do they represent NEE’s and FPL’s net economic exposure, but only the net notional derivative positions that fully or partially hedge the related asset positions. NEE and FPL had derivative commodity contracts for the following net notional volumes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
Commodity Type
|
|
NEE
|
|
FPL
|
|
NEE
|
|
FPL
|
|
|
(millions)
|
Power
|
|
(104)
|
|
|
MWh
|
|
—
|
|
|
|
|
(90)
|
|
|
MWh
|
|
—
|
|
|
|
Natural gas
|
|
(811)
|
|
|
MMBtu
|
|
241
|
|
|
MMBtu
|
|
(607)
|
|
|
MMBtu
|
|
87
|
|
|
MMBtu
|
Oil
|
|
(23)
|
|
|
barrels
|
|
—
|
|
|
|
|
(6)
|
|
|
barrels
|
|
—
|
|
|
|
At March 31, 2021 and December 31, 2020, NEE had interest rate contracts with a net notional amount of approximately $10.5 billion and $10.5 billion, respectively, and foreign currency contracts with a net notional amount of approximately $1.0 billion and $1.0 billion, respectively.
Credit-Risk-Related Contingent Features - Certain derivative instruments contain credit-risk-related contingent features including, among other things, the requirement to maintain an investment grade credit rating from specified credit rating agencies and certain financial ratios, as well as credit-related cross-default and material adverse change triggers. At March 31, 2021 and December 31, 2020, the aggregate fair value of NEE's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately $1.5 billion ($8 million for FPL) and $1.9 billion ($3 million for FPL), respectively.
If the credit-risk-related contingent features underlying these derivative agreements were triggered, certain subsidiaries of NEE, including FPL, could be required to post collateral or settle contracts according to contractual terms which generally allow netting of contracts in offsetting positions. Certain derivative contracts contain multiple types of credit-related triggers. To the extent these contracts contain a credit ratings downgrade trigger, the maximum exposure is included in the following credit ratings collateral posting requirements. If FPL's and NEECH's credit ratings were downgraded to BBB/Baa2 (a three level downgrade for FPL and a one level downgrade for NEECH from the current lowest applicable rating), applicable NEE subsidiaries would be required to post collateral such that the total posted collateral would be approximately $100 million (none at FPL) at March 31, 2021 and $80 million (none at FPL) at December 31, 2020. If FPL's and NEECH's credit ratings were downgraded to below investment grade, applicable NEE subsidiaries would be required to post additional collateral such that the total posted collateral would be approximately $1.2 billion ($35 million at FPL) at March 31, 2021 and $1.2 billion ($75 million at FPL) at December 31, 2020. Some derivative contracts do not contain credit ratings downgrade triggers, but do contain provisions that require certain financial measures be maintained and/or have credit-related cross-default triggers. In the event these provisions were triggered, applicable NEE subsidiaries could be required to post additional collateral of up to approximately $385 million ($85 million at FPL) at March 31, 2021 and $880 million ($75 million at FPL) at December 31, 2020.
Collateral related to derivatives may be posted in the form of cash or credit support in the normal course of business. At March 31, 2021 and December 31, 2020, applicable NEE subsidiaries have posted approximately $3 million (none at FPL) and $2 million (none at FPL), respectively, in cash, and $111 million (none at FPL) and $66 million (none at FPL), respectively, in the form of letters of credit, each of which could be applied toward the collateral requirements described above. FPL and NEECH have capacity under their credit facilities generally in excess of the collateral requirements described above that would be available to support, among other things, derivative activities. Under the terms of the credit facilities, maintenance of a specific credit rating is not a condition to drawing on these credit facilities, although there are other conditions to drawing on these credit facilities.
Additionally, some contracts contain certain adequate assurance provisions whereby a counterparty may demand additional collateral based on subjective events and/or conditions. Due to the subjective nature of these provisions, NEE and FPL are unable to determine an exact value for these items and they are not included in any of the quantitative disclosures above.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
3. Non-Derivative Fair Value Measurements
Non-derivative fair value measurements consist of NEE’s and FPL’s cash equivalents and restricted cash equivalents, special use funds and other investments. The fair value of these financial assets is determined by using the valuation techniques and inputs as described in Note 2 – Fair Value Measurements of Derivative Instruments as well as below.
Cash Equivalents and Restricted Cash Equivalents - NEE and FPL hold investments in money market funds. The fair value of these funds is estimated using a market approach based on current observable market prices.
Special Use Funds and Other Investments - NEE and FPL hold primarily debt and equity securities directly, as well as indirectly through commingled funds. Substantially all directly held equity securities are valued at their quoted market prices. For directly held debt securities, multiple prices and price types are obtained from pricing vendors whenever possible, which enables cross-provider validations. A primary price source is identified based on asset type, class or issue of each security. Commingled funds, which are similar to mutual funds, are maintained by banks or investment companies and hold certain investments in accordance with a stated set of objectives. The fair value of commingled funds is primarily derived from the quoted prices in active markets of the underlying securities. Because the fund shares are offered to a limited group of investors, they are not considered to be traded in an active market.
Recurring Non-Derivative Fair Value Measurements - NEE's and FPL's financial assets and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
(millions)
|
Assets:
|
|
|
|
|
|
|
|
Cash equivalents and restricted cash equivalents:(a)
|
|
|
|
|
|
|
|
NEE - equity securities
|
$
|
699
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
699
|
|
FPL - equity securities
|
$
|
97
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
97
|
|
Special use funds:(b)
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
2,329
|
|
|
$
|
2,650
|
|
(c)
|
$
|
—
|
|
|
$
|
4,979
|
|
U.S. Government and municipal bonds
|
$
|
712
|
|
|
$
|
63
|
|
|
$
|
—
|
|
|
$
|
775
|
|
Corporate debt securities
|
$
|
1
|
|
|
$
|
829
|
|
|
$
|
—
|
|
|
$
|
830
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
434
|
|
|
$
|
—
|
|
|
$
|
434
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
139
|
|
|
$
|
—
|
|
|
$
|
139
|
|
FPL:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
791
|
|
|
$
|
2,405
|
|
(c)
|
$
|
—
|
|
|
$
|
3,196
|
|
U.S. Government and municipal bonds
|
$
|
558
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
605
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
618
|
|
|
$
|
—
|
|
|
$
|
618
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
328
|
|
|
$
|
—
|
|
|
$
|
328
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
126
|
|
|
$
|
—
|
|
|
$
|
126
|
|
Other investments:(d)
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
70
|
|
Debt securities
|
$
|
104
|
|
|
$
|
120
|
|
|
$
|
15
|
|
|
$
|
239
|
|
FPL - equity securities
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12
|
|
———————————————
(a)Includes restricted cash equivalents of approximately $85 million ($84 million for FPL) in current other assets and $9 million ($9 million for FPL) in noncurrent other assets on the condensed consolidated balance sheets.
(b)Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.
(c)Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
(d)Included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
(millions)
|
Assets:
|
|
|
|
|
|
|
|
Cash equivalents and restricted cash equivalents:(a)
|
|
|
|
|
|
|
|
NEE - equity securities
|
$
|
742
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
742
|
|
FPL - equity securities
|
$
|
137
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137
|
|
Special use funds:(b)
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
2,237
|
|
|
$
|
2,489
|
|
(c)
|
$
|
—
|
|
|
$
|
4,726
|
|
U.S. Government and municipal bonds
|
$
|
590
|
|
|
$
|
127
|
|
|
$
|
—
|
|
|
$
|
717
|
|
Corporate debt securities
|
$
|
1
|
|
|
$
|
870
|
|
|
$
|
—
|
|
|
$
|
871
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
422
|
|
|
$
|
—
|
|
|
$
|
422
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
124
|
|
FPL:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
752
|
|
|
$
|
2,260
|
|
(c)
|
$
|
—
|
|
|
$
|
3,012
|
|
U.S. Government and municipal bonds
|
$
|
449
|
|
|
$
|
87
|
|
|
$
|
—
|
|
|
$
|
536
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
627
|
|
|
$
|
—
|
|
|
$
|
627
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
335
|
|
|
$
|
—
|
|
|
$
|
335
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
119
|
|
|
$
|
—
|
|
|
$
|
119
|
|
Other investments:(d)
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
Equity securities
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62
|
|
Debt securities
|
$
|
91
|
|
|
$
|
127
|
|
|
$
|
—
|
|
|
$
|
218
|
|
FPL - equity securities
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12
|
|
———————————————
(a)Includes restricted cash equivalents of approximately $111 million ($91 million for FPL) in current other assets and $42 million ($42 million for FPL) in noncurrent other assets on the condensed consolidated balance sheets.
(b)Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.
(c)Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
(d)Included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets.
Contingent Consideration - At March 31, 2021, NEER had approximately $264 million of contingent consideration liabilities which are included in noncurrent other liabilities on NEE's condensed consolidated balance sheet. The liabilities relate to contingent consideration for the completion of capital expenditures for future development projects in connection with the acquisition of GridLiance Holdco, LP and GridLiance GP, LLC (see Note 5 - GridLiance). NEECH guarantees the contingent consideration obligations under the GridLiance acquisition agreements. Significant inputs and assumptions used in the fair value measurement, some of which are Level 3 and require judgement, include the projected timing and amount of future cash flows, estimated probability of completing future development projects as well as discount rates.
Fair Value of Financial Instruments Recorded at Other than Fair Value - The carrying amounts of commercial paper and other short-term debt approximate their fair values. The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
|
(millions)
|
|
NEE:
|
|
|
Special use funds(a)
|
$
|
853
|
|
|
$
|
854
|
|
|
$
|
919
|
|
|
$
|
920
|
|
|
Other investments(b)
|
$
|
28
|
|
|
$
|
28
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
Long-term debt, including current portion
|
$
|
49,902
|
|
|
$
|
53,173
|
|
(c)
|
$
|
46,082
|
|
|
$
|
51,525
|
|
(c)
|
FPL:
|
|
|
|
|
|
|
|
|
Special use funds(a)
|
$
|
644
|
|
|
$
|
645
|
|
|
$
|
718
|
|
|
$
|
719
|
|
|
Long-term debt, including current portion
|
$
|
17,421
|
|
|
$
|
19,859
|
|
(c)
|
$
|
17,236
|
|
|
$
|
21,178
|
|
(c)
|
———————————————
(a)Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis (Level 2).
(b)Included in noncurrent other assets on NEE's condensed consolidated balance sheets.
(c)At March 31, 2021 and December 31, 2020, substantially all is Level 2 for NEE and FPL.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Special Use Funds - The special use funds noted above and those carried at fair value (see Recurring Non-Derivative Fair Value Measurements above) consist of NEE's nuclear decommissioning fund assets of approximately $7,934 million and $7,703 million at March 31, 2021 and December 31, 2020, respectively ($5,441 million and $5,271 million, respectively, for FPL), and FPL's storm fund assets of $76 million and $76 million at March 31, 2021 and December 31, 2020, respectively. The investments held in the special use funds consist of equity and available for sale debt securities which are primarily carried at estimated fair value. The amortized cost of debt securities is approximately $2,134 million and $2,009 million at March 31, 2021 and December 31, 2020, respectively ($1,642 million and $1,521 million, respectively, for FPL). Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at March 31, 2021 of approximately eight years at both NEE and FPL. FPL's storm fund primarily consists of debt securities with a weighted-average maturity at March 31, 2021 of approximately one year. The cost of securities sold is determined using the specific identification method.
Effective January 1, 2020, NEE and FPL adopted an accounting standards update that provides a modified version of the other than temporary impairment model for debt securities. The new available for sale debt security impairment model no longer allows consideration of the length of time during which the fair value has been less than its amortized cost basis when determining whether a credit loss exists. Credit losses are required to be presented as an allowance rather than as a write-down on securities not intended to be sold or required to be sold. NEE and FPL adopted this model prospectively. See Note 11 - Measurement of Credit Losses on Financial Instruments.
For FPL's special use funds, changes in fair value of debt and equity securities, including any estimated credit losses of debt securities, result in a corresponding adjustment to the related regulatory asset or liability accounts, consistent with regulatory treatment. For NEE's non-rate regulated operations, changes in fair value of debt securities result in a corresponding adjustment to OCI, except for estimated credit losses and unrealized losses on debt securities intended or required to be sold prior to recovery of the amortized cost basis, which are recognized in other - net in NEE's condensed consolidated statements of income. Changes in fair value of equity securities are recorded in change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds - net in NEE’s condensed consolidated statements of income.
Unrealized gains (losses) recognized on equity securities held at March 31, 2021 and 2020 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
|
|
|
|
FPL
|
|
|
|
Three Months Ended March 31,
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
(millions)
|
Unrealized gains (losses)
|
|
|
|
|
$
|
247
|
|
|
$
|
(808)
|
|
|
|
|
|
|
$
|
161
|
|
|
$
|
(502)
|
|
Realized gains and losses and proceeds from the sale or maturity of available for sale debt securities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
|
|
|
|
FPL
|
|
|
|
Three Months Ended March 31,
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
(millions)
|
Realized gains
|
|
|
|
|
$
|
18
|
|
|
$
|
30
|
|
|
|
|
|
|
$
|
12
|
|
|
$
|
25
|
|
Realized losses
|
|
|
|
|
$
|
14
|
|
|
$
|
17
|
|
|
|
|
|
|
$
|
13
|
|
|
$
|
15
|
|
Proceeds from sale or maturity of securities
|
|
|
|
|
$
|
548
|
|
|
$
|
738
|
|
|
|
|
|
|
$
|
390
|
|
|
$
|
607
|
|
The unrealized gains and unrealized losses on available for sale debt securities and the fair value of available for sale debt securities in an unrealized loss position are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
March 31, 2021
|
|
December 31, 2020
|
|
March 31, 2021
|
|
December 31, 2020
|
|
(millions)
|
Unrealized gains
|
$
|
72
|
|
|
$
|
134
|
|
|
$
|
56
|
|
|
$
|
104
|
|
Unrealized losses(a)
|
$
|
29
|
|
|
$
|
9
|
|
|
$
|
21
|
|
|
$
|
9
|
|
Fair value
|
$
|
747
|
|
|
$
|
201
|
|
|
$
|
537
|
|
|
$
|
150
|
|
———————————————
(a) Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at March 31, 2021 and December 31, 2020 were not material to NEE or FPL.
Regulations issued by the FERC and the NRC provide general risk management guidelines to protect nuclear decommissioning funds and to allow such funds to earn a reasonable return. The FERC regulations prohibit, among other investments, investments in any securities of NEE or its subsidiaries, affiliates or associates, excluding investments tied to market indices or
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
mutual funds. Similar restrictions applicable to the decommissioning funds for NEER's nuclear plants are included in the NRC operating licenses for those facilities or in NRC regulations applicable to NRC licensees not in cost-of-service environments. With respect to the decommissioning fund for Seabrook, decommissioning fund contributions and withdrawals are also regulated by the New Hampshire Nuclear Decommissioning Financing Committee pursuant to New Hampshire law.
The nuclear decommissioning reserve funds are managed by investment managers who must comply with the guidelines of NEE and FPL and the rules of the applicable regulatory authorities. The funds' assets are invested giving consideration to taxes, liquidity, risk, diversification and other prudent investment objectives.
4. Income Taxes
NEE's effective income tax rate for the three months ended March 31, 2021 and 2020 was approximately 14.3% and (321.9)%, respectively. NEE's effective income tax rate is based on the composition of pre-tax income and, for the three months ended March 31, 2020, primarily reflects the impact of unfavorable changes in the fair value of interest rate derivative instruments and equity securities held in NEER's nuclear decommissioning funds, and the gain on the sale of the Spain solar projects that was not taxable for federal and state income tax purposes (see Note 11 - Disposal of a Business). State income taxes for the three months ended March 31, 2021 reflect state tax benefits associated with financial impacts from the severe prolonged winter weather in Texas in February 2021.
A reconciliation between the effective income tax rates and the applicable statutory rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Statutory federal income tax rate
|
|
|
|
|
|
|
|
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
|
|
|
|
|
|
|
|
Increases (reductions) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes - net of federal income tax benefit
|
|
|
|
|
|
|
|
|
0.8
|
|
|
(61.0)
|
|
|
4.4
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
Taxes attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
2.0
|
|
|
32.7
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
PTCs and ITCs - NEER
|
|
|
|
|
|
|
|
|
(5.0)
|
|
|
(86.5)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Amortization of deferred regulatory credit
|
|
|
|
|
|
|
|
|
(1.9)
|
|
|
(55.5)
|
|
|
(3.4)
|
|
|
(4.8)
|
|
|
|
|
|
|
|
|
|
Foreign operations
|
|
|
|
|
|
|
|
|
0.2
|
|
|
(76.9)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other - net
|
|
|
|
|
|
|
|
|
(2.8)
|
|
|
(95.7)
|
|
|
(0.8)
|
|
|
(2.7)
|
|
|
|
|
|
|
|
|
|
Effective income tax rate
|
|
|
|
|
|
|
|
|
14.3
|
%
|
|
(321.9)
|
%
|
|
21.2
|
%
|
|
17.8
|
%
|
|
|
|
|
|
|
|
|
NEE recognizes PTCs as wind energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes, which may differ significantly from amounts computed, on a quarterly basis, using an overall effective income tax rate anticipated for the full year. NEE uses this method of recognizing PTCs for specific reasons, including that PTCs are an integral part of the expected value of most wind projects and a fundamental component of such wind projects' results of operations. PTCs, as well as ITCs, can significantly affect NEE's effective income tax rate depending on the amount of pretax income. The amount of PTCs recognized can be significantly affected by wind generation and by the roll off of PTCs after ten years of production.
5. Acquisitions
Merger of FPL and Gulf Power Company - On January 1, 2021, FPL and Gulf Power Company merged, with FPL as the surviving entity. However, FPL will continue to be regulated as two separate ratemaking entities until the FPSC approves consolidation of the FPL segment and Gulf Power rates and tariffs. The FPL segment and Gulf Power will continue to be separate operating segments of NEE as well as FPL through 2021. See Note 13. As a result of the merger, FPL acquired assets of approximately $6.7 billion, primarily relating to property, plant and equipment of approximately $4.9 billion and regulatory assets of $1.2 billion, and assumed liabilities of approximately $3.9 billion, including $1.8 billion of debt, primarily long-term debt, $729 million of deferred income taxes and $566 million of regulatory liabilities. Additionally, goodwill of approximately $2.7 billion and purchase accounting adjustments associated with the 2019 Gulf Power Company acquisition by NEE were transferred to FPL from NEE Corporate and Other. The assets acquired and liabilities assumed by FPL were at carrying amounts as the merger was between entities under common control.
GridLiance - On March 31, 2021, a wholly owned subsidiary of NEET acquired GridLiance Holdco, LP and GridLiance GP, LLC (GridLiance), which owns and operates three FERC-regulated transmission utilities with approximately 700 miles of high-voltage transmission lines across six states, five in the Midwest and Nevada. The purchase price included approximately $502 million in cash consideration, and the assumption of approximately $175 million of debt, excluding post-closing adjustments.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Under the acquisition method, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair value. The approval by the FERC of GridLiance’s rates, which is intended to allow GridLiance to collect total revenues equal to GridLiance's costs for the development, financing, construction, operation and maintenance of GridLiance, including a reasonable rate of return on invested capital, is considered a fundamental input in measuring the fair value of GridLiance's assets and liabilities and, as such, NEE concluded that the carrying values of all assets and liabilities recoverable through rates are representative of their fair values. As a result, NEE acquired assets of approximately $389 million, primarily relating to property, plant and equipment, and assumed liabilities of approximately $222 million, primarily relating to long-term debt. The acquisition agreements are subject to earn-out provisions for additional payments, valued at approximately $264 million at March 31, 2021, to be made upon the completion of capital expenditures for future development projects (see Note 3 - Contingent Consideration). The excess of the purchase price over the fair value of assets acquired and liabilities assumed resulted in approximately $599 million of goodwill which has been recognized on NEE's condensed consolidated balance sheet at March 31, 2021, of which approximately $597 million is expected to be deductible for tax purposes. Goodwill associated with the GridLiance acquisition is reflected within NEER and, for impairment testing, is included in the rate-regulated transmission reporting unit. The goodwill arising from the transaction represents expected benefits from continued expansion of NEE's regulated businesses. The valuation of the acquired net assets is subject to change as additional information related to the estimates is obtained during the measurement period.
6. NEP
NextEra Energy Resources provides management, administrative and transportation and fuel management services to NEP and its subsidiaries under various agreements (service agreements). NextEra Energy Resources is also party to a cash sweep and credit support (CSCS) agreement with a subsidiary of NEP. At March 31, 2021 and December 31, 2020, the cash sweep amounts (due to NEP and its subsidiaries) held in accounts belonging to NextEra Energy Resources or its subsidiaries were approximately $84 million and $10 million, respectively, and are included in accounts payable. Fee income related to the CSCS agreement and the service agreements totaled approximately $33 million and $28 million for the three months ended March 31, 2021 and 2020, respectively, and is included in operating revenues in NEE's condensed consolidated statements of income. Amounts due from NEP of approximately $68 million and $68 million are included in other receivables and $33 million and $32 million are included in noncurrent other assets at March 31, 2021 and December 31, 2020, respectively. Under the CSCS agreement, NEECH or NextEra Energy Resources guaranteed or provided indemnifications, letters of credit or surety bonds totaling approximately $577 million at March 31, 2021 primarily related to obligations on behalf of NEP's subsidiaries with maturity dates ranging from 2021 to 2059 and included certain project performance obligations, obligations under financing and interconnection agreements and obligations related to the sale of differential membership interests. Payment guarantees and related contracts with respect to unconsolidated entities for which NEE or one of its subsidiaries are the guarantor are recorded on NEE’s condensed consolidated balance sheets at fair value. At March 31, 2021, approximately $32 million related to the fair value of the credit support provided under the CSCS agreement is recorded as noncurrent other liabilities on NEE's condensed consolidated balance sheet.
Summarized financial information of NEP is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2021
|
|
2020
|
|
(millions)
|
Operating revenues
|
$
|
246
|
|
|
$
|
212
|
|
Operating income
|
$
|
78
|
|
|
$
|
49
|
|
Net income (loss)
|
$
|
571
|
|
|
$
|
(720)
|
|
Net income (loss) attributable to NEP
|
$
|
202
|
|
|
$
|
(222)
|
|
7. Variable Interest Entities (VIEs)
NEER - At March 31, 2021, NEE consolidates 40 VIEs within the NEER segment. Subsidiaries within the NEER segment are considered the primary beneficiary of these VIEs since they control the most significant activities of these VIEs, including operations and maintenance, and they have the obligation to absorb expected losses of these VIEs.
NextEra Energy Resources consolidates two VIEs, which own and operate natural gas electric generation facilities with the capability of producing 1,450 MW. These entities sell their electric output to third parties under power sales contracts with expiration dates in 2021 and 2031. The power sales contracts provide the offtaker the ability to dispatch the facilities and require the offtaker to absorb the cost of fuel. The assets and liabilities of these VIEs were approximately $184 million and $24 million, respectively, at March 31, 2021 and $188 million and $22 million, respectively, at December 31, 2020. At March 31, 2021 and December 31, 2020, the assets of these VIEs consisted primarily of property, plant and equipment.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Three indirect subsidiaries of NextEra Energy Resources have an approximately 50% ownership interest in five entities which own and operate solar photovoltaic (PV) facilities with the capability of producing a total of approximately 409 MW. Each of the three subsidiaries is considered a VIE since the non-managing members have no substantive rights over the managing members, and is consolidated by NextEra Energy Resources. These five entities sell their electric output to third parties under power sales contracts with expiration dates ranging from 2035 through 2042. The five entities have third-party debt which is secured by liens against the assets of the entities. The debt holders have no recourse to the general credit of NextEra Energy Resources for the repayment of debt. The assets and liabilities of these VIEs were approximately $756 million and $573 million, respectively, at March 31, 2021 and $751 million and $607 million, respectively, at December 31, 2020. At March 31, 2021 and December 31, 2020, the assets and liabilities of these VIEs consisted primarily of property, plant and equipment and long-term debt.
NEE consolidates a NEET VIE that is constructing an approximately 280-mile electricity transmission line. A NEET subsidiary is the primary beneficiary and controls the most significant activities during the construction period, including controlling the construction budget. NEET is entitled to receive 50% of the profits and losses of the entity. The assets and liabilities of the VIE totaled approximately $501 million and $91 million, respectively, at March 31, 2021, and $423 million and $68 million, respectively, at December 31, 2020. At March 31, 2021 and December 31, 2020, the assets and liabilities of this VIE consisted primarily of property, plant and equipment and accounts payable.
NextEra Energy Resources consolidates a VIE which has a 10% direct ownership interest in wind generation facilities and solar PV facilities which have the capacity of producing approximately 400 MW and 599 MW, respectively. These entities sell their electric output under power sales contracts to third parties with expiration dates ranging from 2025 through 2040. These entities are also considered a VIE because the holders of differential membership interests in these entities do not have substantive rights over the significant activities of these entities. The assets and liabilities of the VIE were approximately $1.6 billion and $0.1 billion, respectively, at March 31, 2021, and $1.6 billion and $0.4 billion, respectively, at December 31, 2020. At March 31, 2021 and December 31, 2020, the assets and liabilities of this VIE consisted primarily of property, plant and equipment and accounts payable.
The other 33 NextEra Energy Resources VIEs that are consolidated relate to certain subsidiaries which have sold differential membership interests in entities which own and operate wind electric generation and solar PV facilities with the capability of producing a total of approximately 10,513 MW and 778 MW, respectively. These entities sell their electric output either under power sales contracts to third parties with expiration dates ranging from 2024 through 2053 or in the spot market. These entities are considered VIEs because the holders of differential membership interests do not have substantive rights over the significant activities of these entities. NextEra Energy Resources has financing obligations with respect to these entities, including third-party debt which is secured by liens against the generation facilities and the other assets of these entities or by pledges of NextEra Energy Resources' ownership interest in these entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of these VIEs totaled approximately $16.2 billion and $1.4 billion, respectively, at March 31, 2021, and $16.2 billion and $1.7 billion, respectively, at December 31, 2020. At March 31, 2021 and December 31, 2020, the assets and liabilities of these VIEs consisted primarily of property, plant and equipment and accounts payable.
Other - At March 31, 2021 and December 31, 2020, several NEE subsidiaries had investments totaling approximately $4,025 million ($3,399 million at FPL) and $3,704 million ($3,124 million at FPL), respectively, which are included in special use funds and noncurrent other assets on NEE's condensed consolidated balance sheets and in special use funds on FPL's condensed consolidated balance sheets. These investments represented primarily commingled funds and mortgage-backed securities. NEE subsidiaries, including FPL, are not the primary beneficiaries and therefore do not consolidate any of these entities because they do not control any of the ongoing activities of these entities, were not involved in the initial design of these entities and do not have a controlling financial interest in these entities.
Certain subsidiaries of NEE have noncontrolling interests in entities accounted for under the equity method, including NEE's noncontrolling interest in NEP OpCo. These entities are limited partnerships or similar entity structures in which the limited partners or non-managing members do not have substantive rights over the significant activities of these entities, and therefore are considered VIEs. NEE is not the primary beneficiary because it does not have a controlling financial interest in these entities, and therefore does not consolidate any of these entities. NEE’s investment in these entities totaled approximately $4,267 million and $3,932 million at March 31, 2021 and December 31, 2020, respectively. At March 31, 2021, subsidiaries of NEE had commitments to invest additional amounts in five of the entities. Such commitments are included in the NEER amounts in the table in Note 12 - Contracts.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
8. Employee Retirement Benefits
NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries and sponsors a contributory postretirement plan for other benefits for retirees of NEE and its subsidiaries meeting certain eligibility requirements.
The components of net periodic income for the plans are as follows:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
Service cost
|
|
|
|
|
|
|
|
|
$
|
22
|
|
|
$
|
21
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Interest cost
|
|
|
|
|
|
|
|
|
16
|
|
|
23
|
|
|
1
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Expected return on plan assets
|
|
|
|
|
|
|
|
|
(85)
|
|
|
(80)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial loss
|
|
|
|
|
|
|
|
|
6
|
|
|
4
|
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Amortization of prior service benefit
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
Special termination benefits(a)
|
|
|
|
|
|
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic income at NEE
|
|
|
|
|
|
|
|
|
$
|
(41)
|
|
|
$
|
(30)
|
|
|
$
|
(1)
|
|
|
$
|
(1)
|
|
|
|
|
|
|
|
|
|
Net periodic income allocated to FPL
|
|
|
|
|
|
|
|
|
$
|
(27)
|
|
|
$
|
(21)
|
|
|
$
|
(1)
|
|
|
$
|
(1)
|
|
|
|
|
|
|
|
|
|
_________________________
(a) Reflects enhanced early retirement benefit.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
9. Debt
Significant long-term debt issuances and borrowings during the three months ended March 31, 2021 were as follows:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount
|
|
Interest Rate
|
|
Maturity Date
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
Senior unsecured notes
|
$
|
184
|
|
|
Variable
|
(a)(b)
|
2071
|
|
|
|
|
|
|
NEECH:
|
|
|
|
|
|
Debentures
|
$
|
2,150
|
|
|
Variable
|
(a)
|
2023
|
Debentures
|
$
|
2,000
|
|
|
0.65
|
%
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term loan
|
$
|
200
|
|
|
Variable
|
(a)
|
2024
|
———————————————
(a)Variable rate is based on an underlying index plus or minus a specified margin.
(b)Allows individual noteholders to require repayment at specified dates prior to maturity.
See Note 5 - Merger of FPL and Gulf Power Company and - GridLiance regarding the assumption of debt during the quarter ended March 31, 2021.
10. Equity
Earnings Per Share - The reconciliation of NEE's basic and diluted earnings per share attributable to NEE is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
(millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator - net income attributable to NEE(a)
|
|
|
|
|
$
|
1,666
|
|
|
$
|
421
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding - basic
|
|
|
|
|
1,961.6
|
|
|
1,957.0
|
|
Equity units, stock options, performance share awards and restricted stock(b)
|
|
|
|
|
11.4
|
|
|
10.0
|
|
Weighted-average number of common shares outstanding - assuming dilution
|
|
|
|
|
1,973.0
|
|
|
1,967.0
|
|
Earnings per share attributable to NEE:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
$
|
0.85
|
|
|
$
|
0.21
|
|
Assuming dilution
|
|
|
|
|
$
|
0.84
|
|
|
$
|
0.21
|
|
———————————————
(a)The NEP Series A convertible preferred units and the NEP senior unsecured convertible notes issued in 2017 were both antidilutive for the three months ended March 31, 2020. The NEP senior unsecured convertible notes issued in 2020 were not materially dilutive for the three months ended March 31, 2021.
(b)Calculated using the treasury stock method. Performance share awards are included in diluted weighted-average number of common shares outstanding based upon what would be issued if the end of the reporting period was the end of the term of the award.
Common shares issuable pursuant to equity units, stock options and/or performance share awards, as well as restricted stock which were not included in the denominator above due to their antidilutive effect were approximately 58.4 million and 24.7 million for the three months ended March 31, 2021 and 2020, respectively.
On September 14, 2020, NEE's board of directors approved a four-for-one split of NEE common stock effective October 26, 2020. NEE's authorized common stock increased from 800 million to 3.2 billion shares. Prior year's share and share-based data included in NEE's condensed consolidated financial statements have been retrospectively adjusted to reflect the 2020 stock split.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Accumulated Other Comprehensive Income (Loss) - The components of AOCI, net of tax, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Net Unrealized Gains (Losses) on Available for Sale Securities
|
|
Defined Benefit Pension and Other Benefits Plans
|
|
Net Unrealized Gains (Losses) on Foreign Currency Translation
|
|
Other Comprehensive Income (Loss) Related to Equity Method Investees
|
|
Total
|
|
(millions)
|
Three Months Ended March 31, 2021
|
|
Balances, December 31, 2020
|
$
|
8
|
|
|
$
|
20
|
|
|
$
|
(75)
|
|
|
$
|
(49)
|
|
|
$
|
4
|
|
|
$
|
(92)
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(8)
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
(2)
|
|
Amounts reclassified from AOCI
|
2
|
|
(a)
|
(3)
|
|
(b)
|
1
|
|
(c)
|
—
|
|
|
—
|
|
|
—
|
|
Net other comprehensive income (loss)
|
2
|
|
|
(11)
|
|
|
1
|
|
|
6
|
|
|
—
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
Balances, March 31, 2021
|
$
|
10
|
|
|
$
|
9
|
|
|
$
|
(74)
|
|
|
$
|
(45)
|
|
|
$
|
4
|
|
|
$
|
(96)
|
|
Attributable to noncontrolling interests
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Attributable to NEE
|
$
|
10
|
|
|
$
|
9
|
|
|
$
|
(74)
|
|
|
$
|
(47)
|
|
|
$
|
4
|
|
|
$
|
(98)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
———————————————
(a)Reclassified to interest expense in NEE's condensed consolidated statements of income. See Note 2 - Income Statement Impact of Derivative Instruments.
(b)Reclassified to gains on disposal of investments and other property - net in NEE's condensed consolidated statements of income.
(c)Reclassified to other net periodic benefit income in NEE's condensed consolidated statements of income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Net Unrealized Gains (Losses) on Available for Sale Securities
|
|
Defined Benefit Pension and Other Benefits Plans
|
|
Net Unrealized Gains (Losses) on Foreign Currency Translation
|
|
Other Comprehensive Income (Loss) Related to Equity Method Investees
|
|
Total
|
|
(millions)
|
Three Months Ended March 31, 2020
|
|
Balances, December 31, 2019
|
$
|
(27)
|
|
|
$
|
11
|
|
|
$
|
(114)
|
|
|
$
|
(42)
|
|
|
$
|
3
|
|
|
$
|
(169)
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(8)
|
|
|
—
|
|
|
(35)
|
|
|
—
|
|
|
(43)
|
|
Amounts reclassified from AOCI
|
2
|
|
(a)
|
(1)
|
|
(b)
|
3
|
|
(c)
|
—
|
|
|
—
|
|
|
4
|
|
Net other comprehensive income (loss)
|
2
|
|
|
(9)
|
|
|
3
|
|
|
(35)
|
|
|
—
|
|
|
(39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of disposal of a business
|
23
|
|
(d)
|
—
|
|
|
—
|
|
|
(13)
|
|
(d)
|
—
|
|
|
10
|
|
Balances, March 31, 2020
|
$
|
(2)
|
|
|
$
|
2
|
|
|
$
|
(111)
|
|
|
$
|
(90)
|
|
|
$
|
3
|
|
|
$
|
(198)
|
|
Attributable to noncontrolling interests
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6)
|
|
|
$
|
—
|
|
|
$
|
(6)
|
|
Attributable to NEE
|
$
|
(2)
|
|
|
$
|
2
|
|
|
$
|
(111)
|
|
|
$
|
(84)
|
|
|
$
|
3
|
|
|
$
|
(192)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
———————————————
(a)Reclassified to interest expense in NEE's condensed consolidated statements of income. See Note 2 - Income Statement Impact of Derivative Instruments.
(b)Reclassified to gains on disposal of investments and other property - net in NEE's condensed consolidated statements of income.
(c)Reclassified to other net periodic benefit income in NEE's condensed consolidated statements of income.
(d)Reclassified to gains on disposal of businesses/assets - net and interest expense in NEE's condensed consolidated statements of income. See Note 2 - Income Statement Impact of Derivative Instruments. See Note 11 - Disposal of a Business.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
11. Summary of Significant Accounting and Reporting Policies
FPL 2021 Base Rate Proceeding - On March 12, 2021, FPL filed a petition with the FPSC requesting, among other things, approval of a four-year rate plan that would begin in January 2022 (proposed four-year rate plan) replacing the current base rate settlement agreement that has been in place since 2017 (2016 rate agreement). As Gulf Power Company legally merged into FPL on January 1, 2021, the proposed four-year rate plan set forth in the petition includes the total revenue requirements of the combined utility system, reflecting the legal and operational consolidation of Gulf Power Company into FPL. The proposed four-year rate plan consists of, among other things: (i) an increase to base annual revenue requirements of approximately $1,108 million effective January 2022; (ii) a subsequent increase of approximately $607 million effective January 2023; (iii) a SoBRA mechanism to recover, subject to FPSC review, the revenue requirements of up to 894 MW of solar projects in 2024 and up to 894 MW in 2025 (preliminary estimate is that it would result in base rate adjustments of approximately $140 million in 2024 and $140 million in 2025 assuming the full amount of new solar capacity allowed under the proposed SoBRA mechanism was constructed). The plan also requests the continuation of the reserve surplus amortization mechanism and the storm cost recovery mechanism that are part of the 2016 rate agreement. Under this proposed four-year rate plan, FPL commits that if its requested base rate adjustments are approved, it will not request additional general base rate increases that would be effective before January 2026. FPL’s requested increases are based on a regulatory ROE of 11.50%, which includes a 50 basis point incentive for superior performance. In the event the FPSC declines to approve FPL’s proposed four-year rate plan, FPL's petition includes requests for approval of a two-year combined utility rate plan or a two-year separate utility rate plan. Testimony and exhibits of FPL witnesses, minimum filing requirements supporting the 2022 and 2023 general base rate increases and charges and other supporting schedules were also filed with the FPSC. Hearings on the base rate proceeding are scheduled during the third quarter of 2021 and a final decision is expected in the fourth quarter of 2021.
Regulatory Assets of Gulf Power - In March 2021, the FPSC approved a request to establish regulatory assets of approximately $462 million for the unrecovered investment in Plant Crist and to defer the recovery of the regulatory assets until base rates are reset in the general base rate proceeding discussed above. The amount and recovery period are subject to FPSC prudence review.
In March 2021, the FPSC approved a request to begin recovering eligible storm restoration costs, which are currently estimated at approximately $187 million, related to Hurricane Sally through an interim surcharge effective March 2, 2021, with the amount collected subject to refund based on an FPSC prudence review.
Restricted Cash - At March 31, 2021 and December 31, 2020, NEE had approximately $703 million ($94 million for FPL) and $441 million ($135 million for FPL), respectively, of restricted cash, of which approximately $669 million ($84 million for FPL) and $374 million ($93 million for FPL), respectively, is included in current other assets and the remaining balance is included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets. Restricted cash is primarily related to debt service payments, bond proceeds held for construction at FPL and margin cash collateral requirements. In addition, where offsetting positions exist, restricted cash related to margin cash collateral of $60 million is netted against derivative assets and $45 million is netted against derivative liabilities at March 31, 2021 and $183 million is netted against derivative assets and $136 million is netted against derivative liabilities at December 31, 2020. See Note 2.
Disposal of a Business - In February 2020, a subsidiary of NextEra Energy Resources completed the sale of its ownership interest in two solar generation facilities located in Spain with a total generating capacity of 99.8 MW, which resulted in net cash proceeds of approximately €111 million (approximately $121 million). In connection with the sale, a gain of approximately $260 million (pretax and after tax) was recorded in NEE's condensed consolidated statements of income for the three months ended March 31, 2020 and is included in gains on disposal of businesses/assets - net.
Allowance for Doubtful Accounts and Bad Debt - FPL maintains an accumulated provision for uncollectible customer accounts receivable that is estimated using a percentage, derived from historical revenue and write-off trends, of the previous four months of revenue and includes estimates of credit and other losses based on both current events and forecasts. NEER regularly reviews collectibility of its receivables and establishes a provision for losses estimated as a percentage of accounts receivable based on the historical bad debt write-off trends for its retail electricity provider operations, as well as includes estimates for credit and other losses based on both current events and forecasts. When necessary, NEER uses the specific identification method for all other receivables.
Credit Losses - NEE's credit department monitors current and forward credit exposure to counterparties and their affiliates. Prospective and existing customers are reviewed for creditworthiness based on established standards and credit quality indicators. Credit quality indicators and standards that are closely monitored include credit ratings, certain financial ratios and delinquency trends which are based off the latest available information. Customers not meeting minimum standards provide various credit enhancements or secured payment terms, such as letters of credit, the posting of margin cash collateral or use of master netting arrangements.
For the three months ended March 31, 2021 and 2020, NEE recorded approximately $152 million and $11 million of bad debt expense, including credit losses, which are included in other operations and maintenance in NEE’s condensed consolidated statements of income. The amount for the three months ended March 31, 2021 primarily relates to credit losses at NEER driven
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
by the operational and energy market impacts of severe prolonged winter weather in Texas in February 2021. The estimate for credit losses related to the impacts of the weather event was developed based on NEE’s assessment of the ultimate collectability of these receivables under potential workout scenarios.
Measurement of Credit Losses on Financial Instruments - Effective January 1, 2020, NEE and FPL adopted an accounting standards update that provides for a new methodology, the current expected credit loss (CECL) model, to account for credit losses for certain financial assets measured at amortized cost. On January 1, 2020, NEE recorded a reduction to retained earnings of approximately $11 million representing the cumulative effect of adopting the new standards update, which primarily related to the impact of applying the CECL model to NEER's receivables. The impact of adopting the new standards update was not material to FPL. See also Note 3 - Special Use Funds.
Property Plant and Equipment - Property, plant and equipment consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
(millions)
|
Electric plant in service and other property
|
|
$
|
107,395
|
|
|
$
|
105,860
|
|
|
$
|
64,018
|
|
|
$
|
62,963
|
|
Nuclear fuel
|
|
1,657
|
|
|
1,604
|
|
|
1,178
|
|
|
1,143
|
|
Construction work in progress
|
|
12,192
|
|
|
10,639
|
|
|
5,561
|
|
|
5,361
|
|
Property, plant and equipment, gross
|
|
121,244
|
|
|
118,103
|
|
|
70,757
|
|
|
69,467
|
|
Accumulated depreciation and amortization
|
|
(26,940)
|
|
|
(26,300)
|
|
|
(15,839)
|
|
|
(15,588)
|
|
Property, plant and equipment – net
|
|
$
|
94,304
|
|
|
$
|
91,803
|
|
|
$
|
54,918
|
|
|
$
|
53,879
|
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
12. Commitments and Contingencies
Commitments - NEE and its subsidiaries have made commitments in connection with a portion of their projected capital expenditures. Capital expenditures for the FPL segment and Gulf Power include, among other things, the cost for construction of additional facilities and equipment to meet customer demand, as well as capital improvements to and maintenance of existing facilities. At NEER, capital expenditures include, among other things, the cost, including capitalized interest, for construction and development of wind and solar projects, the procurement of nuclear fuel and the cost to maintain existing rate-regulated transmission facilities, as well as equity contributions to joint ventures for the development and construction of natural gas pipeline assets and a rate-regulated transmission facility. Also see Note 3 - Contingent Consideration.
At March 31, 2021, estimated capital expenditures for the remainder of 2021 through 2025 for which applicable internal approvals (and also, if required, regulatory approvals such as FPSC approvals) have been received were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of 2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
Total
|
|
(millions)
|
FPL Segment:
|
|
|
|
|
|
|
|
|
|
|
|
Generation:(a)
|
|
|
|
|
|
|
|
|
|
|
|
New(b)
|
$
|
640
|
|
|
$
|
880
|
|
|
$
|
1,030
|
|
|
$
|
1,050
|
|
|
$
|
760
|
|
|
$
|
4,360
|
|
Existing
|
880
|
|
1,155
|
|
1,005
|
|
945
|
|
695
|
|
4,680
|
|
Transmission and distribution(c)
|
3,035
|
|
3,665
|
|
3,575
|
|
3,925
|
|
4,300
|
|
18,500
|
|
Nuclear fuel
|
185
|
|
170
|
|
120
|
|
145
|
|
145
|
|
765
|
|
General and other
|
600
|
|
760
|
|
750
|
|
645
|
|
795
|
|
3,550
|
|
Total
|
$
|
5,340
|
|
|
$
|
6,630
|
|
|
$
|
6,480
|
|
|
$
|
6,710
|
|
|
$
|
6,695
|
|
|
$
|
31,855
|
|
Gulf Power
|
$
|
705
|
|
|
$
|
695
|
|
|
$
|
625
|
|
|
$
|
685
|
|
|
$
|
685
|
|
|
$
|
3,395
|
|
NEER:
|
|
|
|
|
|
|
|
|
|
|
|
Wind(d)
|
$
|
1,755
|
|
|
$
|
75
|
|
|
$
|
30
|
|
|
$
|
30
|
|
|
$
|
20
|
|
|
$
|
1,910
|
|
Solar(e)
|
1,445
|
|
|
660
|
|
|
190
|
|
|
10
|
|
|
10
|
|
|
2,315
|
|
Battery storage
|
195
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
195
|
|
Nuclear, including nuclear fuel
|
190
|
|
|
190
|
|
|
145
|
|
|
190
|
|
|
200
|
|
|
915
|
|
Natural gas pipelines(f)
|
360
|
|
|
150
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
515
|
|
Rate-regulated transmission
|
175
|
|
|
100
|
|
|
20
|
|
|
15
|
|
|
30
|
|
|
340
|
|
Other
|
580
|
|
|
115
|
|
|
100
|
|
|
75
|
|
|
65
|
|
|
935
|
|
Total
|
$
|
4,700
|
|
|
$
|
1,290
|
|
|
$
|
490
|
|
|
$
|
320
|
|
|
$
|
325
|
|
|
$
|
7,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
———————————————
(a)Includes AFUDC of approximately $60 million, $50 million, $35 million, $35 million and $25 million for the remainder of 2021 through 2025, respectively.
(b)Includes land, generation structures, transmission interconnection and integration and licensing.
(c)Includes AFUDC of approximately $40 million, $50 million, $40 million, $55 million and $45 million for the remainder of 2021 through 2025, respectively.
(d)Consists of capital expenditures for new wind projects, repowering of existing wind projects and related transmission totaling approximately 2,509 MW.
(e)Includes capital expenditures for new solar projects and related transmission totaling approximately 2,866 MW.
(f)Construction of natural gas pipelines are subject to certain conditions, including applicable regulatory approvals and in certain cases the resolution of legal challenges.
The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.
In addition to guarantees noted in Note 6 with regards to NEP, NEECH has guaranteed or provided indemnifications or letters of credit related to third parties, including certain obligations of investments in joint ventures accounted for under the equity method, totaling approximately $288 million at March 31, 2021. These obligations primarily related to guaranteeing the residual value of a financing lease. Payment guarantees and related contracts with respect to unconsolidated entities for which NEE or one of its subsidiaries are the guarantor are recorded at fair value and are included in noncurrent other liabilities on NEE’s condensed consolidated balance sheets. Management believes that the exposure associated with these guarantees is not material.
Contracts - In addition to the commitments made in connection with the estimated capital expenditures included in the table in Commitments above, FPL has firm commitments under long-term contracts primarily for the transportation of natural gas with expiration dates through 2042.
At March 31, 2021, NEER has entered into contracts with expiration dates ranging from late April 2021 through 2033 primarily for the purchase of wind turbines, wind towers and solar modules and related construction and development activities, as well as for the supply of uranium, and the conversion, enrichment and fabrication of nuclear fuel, and has made commitments for the construction of natural gas pipelines and a rate-regulated transmission facility. Approximately $4.2 billion of related commitments
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
are included in the estimated capital expenditures table in Commitments above. In addition, NEER has contracts primarily for the transportation and storage of natural gas with expiration dates ranging from late April 2021 through 2042.
The required capacity and/or minimum payments under contracts, including those discussed above, at March 31, 2021 were estimated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of 2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
Thereafter
|
|
(millions)
|
FPL(a)
|
$
|
780
|
|
|
$
|
970
|
|
|
$
|
955
|
|
|
$
|
940
|
|
|
$
|
890
|
|
|
$
|
9,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEER(b)(c)(d)
|
$
|
3,430
|
|
|
$
|
955
|
|
|
$
|
210
|
|
|
$
|
210
|
|
|
$
|
140
|
|
|
$
|
1,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
———————————————
(a)Includes approximately $315 million, $415 million, $410 million, $410 million, $405 million and $6,360 million for the remainder of 2021 through 2025 and thereafter, respectively, of firm commitments related to the natural gas transportation agreements with Sabal Trail and Florida Southeast Connection. The charges associated with these agreements are recoverable through the fuel clause and totaled approximately $103 million and $79 million for the three months ended March 31, 2021 and 2020, respectively, of which $26 million and $27 million, respectively, were eliminated in consolidation at NEE.
(b)Includes approximately $25 million, $70 million, $70 million, $70 million and $1,155 million for 2022 through 2025 and thereafter, respectively, of firm commitments related to a natural gas transportation agreement with a joint venture, in which NEER has a 31.5% equity investment, that is constructing a natural gas pipeline. These firm commitments are subject to the completion of construction of the pipeline, which is currently estimated to be in 2022.
(c)Includes approximately $50 million of commitments to invest in technology investments through 2029.
(d)Includes approximately $580 million, $10 million, $10 million, $10 million and $5 million for the remainder of 2021 through 2025, respectively, of joint obligations of NEECH and NEER.
Insurance - Liability for accidents at nuclear power plants is governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of insurance available from both private sources and an industry retrospective payment plan. In accordance with this Act, NEE maintains $450 million of private liability insurance per site, which is the maximum obtainable, and participates in a secondary financial protection system, which provides up to $13.2 billion of liability insurance coverage per incident at any nuclear reactor in the U.S. Under the secondary financial protection system, NEE is subject to retrospective assessments of up to $1.1 billion ($550 million for FPL), plus any applicable taxes, per incident at any nuclear reactor in the U.S., payable at a rate not to exceed $164 million ($82 million for FPL) per incident per year. NextEra Energy Resources and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $16 million, $41 million and $20 million, plus any applicable taxes, per incident, respectively.
NEE participates in a nuclear insurance mutual company that provides $2.75 billion of limited insurance coverage per occurrence per site (other than Duane Arnold) for property damage, decontamination and premature decommissioning risks at its nuclear plants and a sublimit of $1.5 billion for non-nuclear perils,except for Duane Arnold which has a sublimit of $500 million for non-nuclear perils. NEE participates in co-insurance of 10% of the first $400 million of losses per site per occurrence. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. NEE also participates in an insurance program that provides limited coverage for replacement power costs if a nuclear plant is out of service for an extended period of time because of an accident. In the event of an accident at one of NEE's or another participating insured's nuclear plants, NEE could be assessed up to $173 million ($106 million for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NextEra Energy Resources and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $2 million, $4 million and $4 million, plus any applicable taxes, respectively.
Due to the high cost and limited coverage available from third-party insurers, NEE does not have property insurance coverage for a substantial portion of either its transmission and distribution property or natural gas pipeline assets. If either the FPL segment's or Gulf Power's future storm restoration costs exceed their respective storm and property insurance reserve, such storm restoration costs may be recovered, subject to prudence review by the FPSC, through surcharges approved by the FPSC or through securitization provisions pursuant to Florida law.
In the event of a loss, the amount of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered from customers in the case of the FPL segment or Gulf Power, would be borne by NEE and FPL, and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.
Coronavirus Pandemic - NEE and FPL are closely monitoring the global outbreak of COVID-19 and are taking steps intended to mitigate the potential risks to NEE and FPL posed by COVID-19. NEE, including FPL, has implemented its pandemic plan, which includes putting in place various processes and procedures to limit the impact on its business, as well as the spread of the virus in its workforce. NEE and its subsidiaries, including FPL, have been able to access the capital markets. To date, there has been no material impact on NEE’s or FPL’s workforce, operations, financial performance, liquidity or on their supply chain as a result of COVID-19; however, the ultimate severity or duration of the outbreak or its effects on the global, national or local economy, the capital and credit markets, or NEE’s and FPL’s workforce, customers and suppliers are uncertain. NEE and FPL cannot predict whether COVID-19 will have a material impact on their businesses, financial condition, liquidity or results of operations.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(unaudited)
13. Segment Information
The tables below present information for NEE's and FPL's segments. NEE's segments include its reportable segments, the FPL segment, a rate-regulated utility business, and NEER, which is comprised of competitive energy and rate-regulated transmission businesses, as well as an operating segment of NEE, Gulf Power, a rate-regulated utility business. FPL's reportable segments include the FPL segment and Gulf Power. See Note 5 - Merger of FPL and Gulf Power Company. Corporate and Other for each of NEE and FPL represents other business activities, such as purchase accounting adjustments for Gulf Power Company, and includes eliminating entries.
NEE's segment information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2021
|
|
2020
|
|
FPL Seg-ment
|
|
Gulf Power
|
|
NEER(a)
|
|
Corporate
and Other
|
|
NEE
Consoli-
dated
|
|
FPL Seg-ment
|
|
Gulf Power
|
|
NEER(a)
|
|
Corporate
and Other
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
2,623
|
|
|
$
|
347
|
|
|
$
|
781
|
|
|
$
|
(25)
|
|
|
$
|
3,726
|
|
|
$
|
2,540
|
|
|
$
|
328
|
|
|
$
|
1,773
|
|
|
$
|
(28)
|
|
|
$
|
4,613
|
|
Operating expenses - net
|
$
|
1,580
|
|
|
$
|
276
|
|
|
$
|
1,172
|
|
|
$
|
43
|
|
|
$
|
3,071
|
|
|
$
|
1,625
|
|
|
$
|
270
|
|
|
$
|
980
|
|
|
$
|
30
|
|
|
$
|
2,905
|
|
Net income (loss) attributable to NEE
|
$
|
720
|
|
|
$
|
57
|
|
|
$
|
491
|
|
(b)
|
$
|
398
|
|
|
$
|
1,666
|
|
|
$
|
642
|
|
|
$
|
40
|
|
|
$
|
318
|
|
(b)
|
$
|
(579)
|
|
|
$
|
421
|
|
———————————————
(a)Interest expense allocated from NEECH is based on a deemed capital structure of 70% debt and differential membership interests sold by NextEra Energy Resources' subsidiaries. Residual NEECH corporate interest expense is included in Corporate and Other.
(b)See Note 4 for a discussion of NEER's tax benefits related to PTCs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
FPL Segment
|
|
Gulf Power
|
|
NEER
|
|
Corporate
and Other
|
|
NEE
Consoli-
dated
|
|
FPL Segment
|
|
Gulf Power
|
|
NEER
|
|
Corporate
and Other
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
62,708
|
|
|
$
|
6,732
|
|
|
$
|
59,318
|
|
|
$
|
3,683
|
|
|
$
|
132,441
|
|
|
$
|
61,610
|
|
|
$
|
6,725
|
|
|
$
|
55,633
|
|
|
$
|
3,716
|
|
|
$
|
127,684
|
|
FPL's segment information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2021
|
|
2020
|
|
FPL Segment
|
|
Gulf Power
|
|
Corporate
and Other
|
|
FPL
Consoli-
dated
|
|
FPL Segment
|
|
Gulf Power
|
|
Corporate
and Other
|
|
FPL
Consoli-
dated
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
Operating revenues
|
$
|
2,623
|
|
|
$
|
347
|
|
|
$
|
—
|
|
|
$
|
2,970
|
|
|
$
|
2,540
|
|
|
$
|
328
|
|
|
$
|
—
|
|
|
$
|
2,868
|
|
Operating expenses - net
|
$
|
1,580
|
|
|
$
|
276
|
|
|
$
|
—
|
|
|
$
|
1,856
|
|
|
$
|
1,625
|
|
|
$
|
270
|
|
|
$
|
(1)
|
|
|
$
|
1,894
|
|
Net income
|
$
|
720
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
777
|
|
|
$
|
642
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
FPL Segment
|
|
Gulf Power
|
|
Corporate
and Other
|
|
FPL
Consoli-
dated
|
|
FPL Segment
|
|
Gulf Power
|
|
Corporate
and Other
|
|
FPL
Consoli-
dated
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
Total assets
|
$
|
62,708
|
|
|
$
|
6,732
|
|
|
$
|
2,657
|
|
|
$
|
72,097
|
|
|
$
|
61,610
|
|
|
$
|
6,725
|
|
|
$
|
2,666
|
|
|
$
|
71,001
|
|