NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The accompanying condensed consolidated financial statements should be read in conjunction with the
2018
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. In addition, certain prior year amounts have been retrospectively adjusted for an accounting standards update related to leases. The results of operations for an interim period generally will not give a true indication of results for the year.
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. For the
three months ended March 31, 2019 and 2018
, NEE’s revenue from contracts with customers was approximately
$3.8 billion
(
$2.6 billion
at FPL) and
$3.6 billion
(
$2.6 billion
at FPL), 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.
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. FPL’s 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, 2019
and
December 31, 2018
, FPL's unbilled revenues amounted to approximately
$442 million
and
$432 million
, respectively, and are included in customer receivables on NEE's and FPL's condensed consolidated balance sheets.
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
2019
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 related primarily to electric capacity sales associated with ISO annual auctions through 2020 and certain power purchase agreements with maturity dates through 2034. At
March 31, 2019
, NEER expects to record approximately
$890 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.
2. NEP
NEP was deconsolidated from NEE for financial reporting purposes in January 2018 as a result of changes made to NEP's governance structure during 2017 that, among other things, enhanced NEP common unitholder governance rights. In connection with the deconsolidation, NEE recorded an initial investment in NEP of approximately
$4.4 billion
based on the fair value of NEP OpCo and NEP common units that were held by subsidiaries of NEE on the deconsolidation date, which investment is included in the investment in equity method investees on NEE's condensed consolidated balance sheets. The fair value was based on the market price of NEP common units as of January 1, 2018, which resulted in NEE recording a gain of approximately
$3.9 billion
(
$3.0 billion
after tax) during the
three months ended March 31, 2018
. NEER continues to operate the projects owned by NEP.
NEER provides management, administrative and transportation and fuel management services to NEP and its subsidiaries under various agreements (service agreements). NEER is also party to a cash sweep and credit support (CSCS) agreement with a subsidiary of NEP. At
March 31, 2019
and
December 31, 2018
, the cash sweep amounts (due to NEP and its subsidiaries) held in accounts belonging to NEER or its subsidiaries was approximately
$42 million
and
$66 million
, respectively, and is included in accounts payable. Fee income totaling approximately
$24 million
and
$24 million
related to the CSCS agreement and the service agreements is included in operating revenues in NEE's condensed consolidated statements of income for the
three months ended March 31, 2019 and 2018
, respectively. Amounts due from NEP of approximately
$46 million
and
$45 million
are included in other receivables and
$58 million
and
$34 million
are included in noncurrent other assets at
March 31, 2019
and
December 31, 2018
, respectively. Under the CSCS agreement, NEECH or NEER guaranteed or provided indemnifications, letters of credit or bonds
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
totaling approximately
$761 million
at
March 31, 2019
primarily related to obligations on behalf of NEP's subsidiaries with maturity dates ranging from 2019 to 2050 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, 2019
, approximately
$33 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.
In March 2019, subsidiaries of NEER entered into an agreement to sell their ownership interests in certain wind and solar generation facilities to a NEP subsidiary. See Note 11 - Assets and Liabilities Associated with Assets Held for Sale.
3. 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(millions)
|
Service cost
|
$
|
20
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
29
|
|
|
20
|
|
|
3
|
|
|
2
|
|
Expected return on plan assets
|
(79
|
)
|
|
(69
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service benefit
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
Net periodic income at NEE
|
$
|
(30
|
)
|
|
$
|
(31
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Net periodic income allocated to FPL
|
$
|
(18
|
)
|
|
$
|
(20
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
4. 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 gas 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 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 of equity method investees in NEE's condensed consolidated statements of income. In addition, for the
three months ended March 31, 2019
, NEE reclassified approximately
$6 million
(
$5 million
after tax) from AOCI to interest expense primarily because it became probable that related future transactions being hedged would not occur. At
March 31, 2019
, 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
$9 million
of net losses included in AOCI at
March 31, 2019
is 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 of Derivative Instruments
- The tables below present NEE's and FPL's gross derivative positions at
March 31, 2019
and
December 31, 2018
, 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 (see Note 5 - Recurring Fair Value Measurements for netting information), as well as the location of the net derivative position on the condensed consolidated balance sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
Gross Basis
|
|
Net Basis
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
(millions)
|
NEE:
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
3,812
|
|
|
$
|
2,478
|
|
|
$
|
1,772
|
|
|
$
|
499
|
|
Interest rate contracts
|
19
|
|
|
759
|
|
|
19
|
|
|
759
|
|
Foreign currency contracts
|
9
|
|
|
34
|
|
|
22
|
|
|
47
|
|
Total fair values
|
$
|
3,840
|
|
|
$
|
3,271
|
|
|
$
|
1,813
|
|
|
$
|
1,305
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
7
|
|
|
$
|
21
|
|
|
$
|
5
|
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
Net fair value by NEE balance sheet line item:
|
|
|
|
|
|
|
|
Current derivative assets
(a)
|
|
|
|
|
$
|
474
|
|
|
|
Noncurrent derivative assets
(b)
|
|
|
|
|
1,339
|
|
|
|
Current derivative liabilities
|
|
|
|
|
|
|
$
|
674
|
|
Liabilities associated with assets held for sale
|
|
|
|
|
|
|
15
|
|
Noncurrent derivative liabilities
|
|
|
|
|
|
|
616
|
|
Total derivatives
|
|
|
|
|
$
|
1,813
|
|
|
$
|
1,305
|
|
|
|
|
|
|
|
|
|
Net fair value by FPL balance sheet line item:
|
|
|
|
|
|
|
|
Current other assets
|
|
|
|
|
$
|
5
|
|
|
|
Current other liabilities
|
|
|
|
|
|
|
$
|
12
|
|
Noncurrent other liabilities
|
|
|
|
|
|
|
7
|
|
Total derivatives
|
|
|
|
|
$
|
5
|
|
|
$
|
19
|
|
———————————————
|
|
(a)
|
Reflects the netting of approximately
$31 million
in margin cash collateral received from counterparties.
|
|
|
(b)
|
Reflects the netting of approximately
$30 million
in margin cash collateral received from counterparties.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
Gross Basis
|
|
Net Basis
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
(millions)
|
NEE:
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
4,651
|
|
|
$
|
3,305
|
|
|
$
|
1,840
|
|
|
$
|
683
|
|
Interest rate contracts
|
56
|
|
|
472
|
|
|
49
|
|
|
465
|
|
Foreign currency contracts
|
17
|
|
|
30
|
|
|
30
|
|
|
43
|
|
Total fair values
|
$
|
4,724
|
|
|
$
|
3,807
|
|
|
$
|
1,919
|
|
|
$
|
1,191
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
2
|
|
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
Net fair value by NEE balance sheet line item:
|
|
|
|
|
|
|
|
Current derivative assets
(a)
|
|
|
|
|
$
|
564
|
|
|
|
Noncurrent derivative assets
(b)
|
|
|
|
|
1,355
|
|
|
|
Current derivative liabilities
|
|
|
|
|
|
|
$
|
675
|
|
Noncurrent derivative liabilities
|
|
|
|
|
|
|
516
|
|
Total derivatives
|
|
|
|
|
$
|
1,919
|
|
|
$
|
1,191
|
|
|
|
|
|
|
|
|
|
Net fair value by FPL balance sheet line item:
|
|
|
|
|
|
|
|
Current other liabilities
|
|
|
|
|
|
|
$
|
32
|
|
Noncurrent other liabilities
|
|
|
|
|
|
|
9
|
|
Total derivatives
|
|
|
|
|
$
|
—
|
|
|
$
|
41
|
|
———————————————
|
|
(a)
|
Reflects the netting of approximately
$124 million
in margin cash collateral received from counterparties.
|
|
|
(b)
|
Reflects the netting of approximately
$65 million
in margin cash collateral received from counterparties.
|
At
March 31, 2019
and
December 31, 2018
, NEE had approximately
$13 million
and
$16 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, 2019
and
December 31, 2018
, NEE had approximately
$263 million
and
$157 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.
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,
|
|
2019
|
|
2018
|
|
(millions)
|
Commodity contracts
(a)
- operating revenues
|
$
|
(4
|
)
|
|
$
|
137
|
|
Foreign currency contracts - interest expense
|
(19
|
)
|
|
45
|
|
Interest rate contracts - interest expense
|
(326
|
)
|
|
59
|
|
Losses reclassified from AOCI to interest expense:
|
|
|
|
Interest rate contracts
|
(12
|
)
|
|
(9
|
)
|
Foreign currency contracts
|
(1
|
)
|
|
(1
|
)
|
Total
|
$
|
(362
|
)
|
|
$
|
231
|
|
———————————————
|
|
(a)
|
For the
three months ended March 31, 2019
and 2018, FPL recorded gains of approximately
$2 million
and
$4 million
, respectively, related to commodity contracts as regulatory liabilities on its condensed consolidated balance sheets.
|
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 their 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, 2019
|
|
December 31, 2018
|
Commodity Type
|
|
NEE
|
|
FPL
|
|
NEE
|
|
FPL
|
|
|
(millions)
|
Power
|
|
(94
|
)
|
|
MWh
|
|
1
|
|
|
MWh
|
|
(100
|
)
|
|
MWh
|
|
1
|
|
|
MWh
|
Natural gas
|
|
(1,114
|
)
|
|
MMBtu
|
|
334
|
|
|
MMBtu
|
|
(491
|
)
|
|
MMBtu
|
|
231
|
|
|
MMBtu
|
Oil
|
|
(25
|
)
|
|
barrels
|
|
—
|
|
|
|
|
(30
|
)
|
|
barrels
|
|
—
|
|
|
|
At
March 31, 2019
and
December 31, 2018
, NEE had interest rate contracts with notional amounts totaling approximately
$17.5 billion
and
$18.2 billion
, respectively, and foreign currency contracts with notional amounts totaling approximately
$656 million
and
$656 million
, respectively. In April 2019, NEECH terminated a forward starting interest rate swap agreement with a notional amount of
$5.2 billion
.
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, 2019
and
December 31, 2018
, the aggregate fair value of NEE's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately
$1.8 billion
(
$20 million
for FPL) and
$1.8 billion
(
$34 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 two 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
$110 million
(
none
at
FPL
) at
March 31, 2019
and
$270 million
(
none
at FPL) at
December 31, 2018
.
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
$1.1 billion
(
$30 million
at FPL) at
March 31, 2019
and
$1.5 billion
(
$45 million
at FPL) at
December 31, 2018
. 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
$800 million
(
$100 million
at FPL) at
March 31, 2019
and
$610 million
(
$145 million
at FPL) at
December 31, 2018
.
Collateral related to derivatives may be posted in the form of cash or credit support in the normal course of business. At
March 31, 2019
and
December 31, 2018
, applicable NEE subsidiaries have posted approximately
$2 million
(
none
at FPL) and
$2 million
(
none
at FPL), respectively, in cash and
$6 million
(
none
at FPL) and
$88 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.
5. Fair Value Measurements
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
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
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.
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.
Derivative Instruments
- 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)
Recurring Fair Value Measurements -
NEE's and FPL's financial assets and liabilities and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
Total
|
|
|
(millions)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and restricted cash equivalents:
(b)
|
|
|
|
|
|
|
|
|
|
|
NEE - equity securities
|
$
|
805
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
805
|
|
|
FPL - equity securities
|
$
|
171
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
171
|
|
|
Special use funds:
(c)
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
1,606
|
|
|
$
|
1,824
|
|
(d)
|
$
|
—
|
|
|
|
|
$
|
3,430
|
|
|
U.S. Government and municipal bonds
|
$
|
466
|
|
|
$
|
133
|
|
|
$
|
—
|
|
|
|
|
$
|
599
|
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
775
|
|
|
$
|
—
|
|
|
|
|
$
|
775
|
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
466
|
|
|
$
|
—
|
|
|
|
|
$
|
466
|
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
160
|
|
|
$
|
—
|
|
|
|
|
$
|
160
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
454
|
|
|
$
|
1,655
|
|
(d)
|
$
|
—
|
|
|
|
|
$
|
2,109
|
|
|
U.S. Government and municipal bonds
|
$
|
341
|
|
|
$
|
104
|
|
|
$
|
—
|
|
|
|
|
$
|
445
|
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
564
|
|
|
$
|
—
|
|
|
|
|
$
|
564
|
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
354
|
|
|
$
|
—
|
|
|
|
|
$
|
354
|
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
136
|
|
|
$
|
—
|
|
|
|
|
$
|
136
|
|
|
Other investments:
(e)
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
16
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
|
|
$
|
28
|
|
|
Debt securities
|
$
|
78
|
|
|
$
|
69
|
|
|
$
|
—
|
|
|
|
|
$
|
147
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
810
|
|
|
$
|
1,659
|
|
|
$
|
1,343
|
|
|
$
|
(2,040
|
)
|
|
$
|
1,772
|
|
(f)
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
(f)
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
22
|
|
(f)
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
5
|
|
(f)
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
850
|
|
|
$
|
1,276
|
|
|
$
|
352
|
|
|
$
|
(1,979
|
)
|
|
$
|
499
|
|
(f)
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
612
|
|
|
$
|
147
|
|
|
$
|
—
|
|
|
$
|
759
|
|
(f)
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
47
|
|
(f)
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
17
|
|
|
$
|
(2
|
)
|
|
$
|
19
|
|
(f)
|
———————————————
|
|
(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)
|
Includes restricted cash equivalents of approximately
$68 million
(
$61 million
for FPL) in current other assets and
$62 million
(
$62 million
for FPL) in noncurrent other assets on the condensed consolidated balance sheets.
|
|
|
(c)
|
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.
|
|
|
(d)
|
Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
|
|
|
(e)
|
Included in noncurrent other assets in the condensed consolidated balance sheets.
|
|
|
(f)
|
See Note 4 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to 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, 2018
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
Total
|
|
|
(millions)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and restricted cash equivalents:
(b)
|
|
|
|
|
|
|
|
|
|
|
NEE - equity securities
|
$
|
486
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
486
|
|
|
FPL - equity securities
|
$
|
206
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
206
|
|
|
Special use funds:
(c)
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
1,445
|
|
|
$
|
1,601
|
|
(d)
|
$
|
—
|
|
|
|
|
$
|
3,046
|
|
|
U.S. Government and municipal bonds
|
$
|
449
|
|
|
$
|
155
|
|
|
$
|
—
|
|
|
|
|
$
|
604
|
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
728
|
|
|
$
|
—
|
|
|
|
|
$
|
728
|
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
478
|
|
|
$
|
—
|
|
|
|
|
$
|
478
|
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
145
|
|
|
$
|
1
|
|
|
|
|
$
|
146
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
398
|
|
|
$
|
1,452
|
|
(d)
|
$
|
—
|
|
|
|
|
$
|
1,850
|
|
|
U.S. Government and municipal bonds
|
$
|
350
|
|
|
$
|
120
|
|
|
$
|
—
|
|
|
|
|
$
|
470
|
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
544
|
|
|
$
|
—
|
|
|
|
|
$
|
544
|
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
367
|
|
|
$
|
—
|
|
|
|
|
$
|
367
|
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
131
|
|
|
$
|
1
|
|
|
|
|
$
|
132
|
|
|
Other investments:
(e)
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
13
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
|
|
$
|
24
|
|
|
Debt securities
|
$
|
36
|
|
|
$
|
90
|
|
|
$
|
—
|
|
|
|
|
$
|
126
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
1,379
|
|
|
$
|
1,923
|
|
|
$
|
1,349
|
|
|
$
|
(2,811
|
)
|
|
$
|
1,840
|
|
(f)
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
56
|
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
$
|
49
|
|
(f)
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
30
|
|
(f)
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
(f)
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
1,329
|
|
|
$
|
1,410
|
|
|
$
|
566
|
|
|
$
|
(2,622
|
)
|
|
$
|
683
|
|
(f)
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
336
|
|
|
$
|
136
|
|
|
$
|
(7
|
)
|
|
$
|
465
|
|
(f)
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
43
|
|
(f)
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
36
|
|
|
$
|
(2
|
)
|
|
$
|
41
|
|
(f)
|
———————————————
|
|
(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)
|
Includes restricted cash equivalents of approximately
$85 million
(
$81 million
for FPL) in current other assets on the condensed consolidated balance sheets.
|
|
|
(c)
|
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.
|
|
|
(d)
|
Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
|
|
|
(e)
|
Included in noncurrent other assets in the condensed consolidated balance sheets.
|
|
|
(f)
|
See Note 4 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to 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)
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, 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.
All price, volatility, correlation and customer migration inputs used in valuation are subject to validation by the Trading Risk Management group. The Trading Risk Management group performs a risk management function responsible for assessing credit, market and operational risk impact, reviewing valuation methodology and modeling, confirming transactions, monitoring approval processes and developing and monitoring trading limits. The Trading Risk Management group is separate from the transacting group. For markets where independent third-party data is readily available, validation is conducted daily by directly reviewing this market data against inputs utilized by the transacting group, and indirectly by reviewing daily risk reports. For markets where independent third-party data is not readily available, additional analytical reviews are performed on at least a quarterly basis. These analytical reviews are designed to ensure that all price and volatility curves used for fair valuing transactions are adequately validated each quarter, and are reviewed and approved by the Trading Risk Management group. In addition, other valuation assumptions such as implied correlations and customer migration rates are reviewed and approved by the Trading Risk Management group on a periodic basis. Newly created models used in the valuation process are also subject to testing and approval by the Trading Risk Management group prior to use and established models are reviewed annually, or more often as needed, by the Trading Risk Management group.
On a monthly basis, the Exposure Management Committee (EMC), which is comprised of certain members of senior management, meets with representatives from the Trading Risk Management group and the transacting group to discuss NEE's and FPL's energy risk profile and operations, to review risk reports and to discuss fair value issues as necessary. The EMC develops guidelines required for an appropriate risk management control infrastructure, which includes implementation and monitoring of compliance with Trading Risk Management policy. The EMC executes its risk management responsibilities through direct oversight and delegation of its responsibilities to the Trading Risk Management group, as well as to other corporate and business unit personnel.
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, 2019
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
Valuation
|
|
Significant
|
|
|
|
|
Transaction Type
|
|
March 31, 2019
|
|
Technique(s)
|
|
Unobservable Inputs
|
|
Range
|
|
|
Assets
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
Forward contracts - power
|
|
$
|
828
|
|
|
$
|
180
|
|
|
Discounted cash flow
|
|
Forward price (per MWh)
|
|
$(17)
|
—
|
$167
|
Forward contracts - gas
|
|
81
|
|
|
22
|
|
|
Discounted cash flow
|
|
Forward price (per MMBtu)
|
|
$1
|
—
|
$7
|
Forward contracts - other commodity related
|
|
4
|
|
|
3
|
|
|
Discounted cash flow
|
|
Forward price (various)
|
|
$1
|
—
|
$64
|
Options - power
|
|
37
|
|
|
4
|
|
|
Option models
|
|
Implied correlations
|
|
1%
|
—
|
100%
|
|
|
|
|
|
|
|
|
Implied volatilities
|
|
8%
|
—
|
169%
|
Options - primarily gas
|
|
105
|
|
|
111
|
|
|
Option models
|
|
Implied correlations
|
|
1%
|
—
|
100%
|
|
|
|
|
|
|
|
|
Implied volatilities
|
|
1%
|
—
|
135%
|
Full requirements and unit contingent contracts
|
|
288
|
|
|
32
|
|
|
Discounted cash flow
|
|
Forward price (per MWh)
|
|
$(50)
|
—
|
$862
|
|
|
|
|
|
|
|
|
Customer migration rate
(a)
|
|
—%
|
—
|
20%
|
Total
|
|
$
|
1,343
|
|
|
$
|
352
|
|
|
|
|
|
|
|
|
|
———————————————
|
|
(a)
|
Applies only to full requirements contracts.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
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.
In addition, the fair value measurement of interest rate contract net liabilities related to the solar projects in Spain of approximately
$147 million
at
March 31, 2019
includes a significant credit valuation adjustment. The credit valuation adjustment, considered an unobservable input, reflects management's assessment of non-performance risk of the subsidiaries related to the solar projects in Spain that are party to the contracts.
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,
|
|
2019
|
|
2018
|
|
NEE
|
|
FPL
|
|
NEE
|
|
FPL
|
|
(millions)
|
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior period
|
$
|
647
|
|
|
$
|
(36
|
)
|
|
$
|
566
|
|
|
$
|
—
|
|
Realized and unrealized gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings
(a)
|
180
|
|
|
—
|
|
|
16
|
|
|
—
|
|
Included in other comprehensive income (loss)
(b)
|
3
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
Included in regulatory assets and liabilities
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(2
|
)
|
Purchases
|
24
|
|
|
—
|
|
|
42
|
|
|
—
|
|
Settlements
|
(39
|
)
|
|
20
|
|
|
48
|
|
|
—
|
|
Issuances
|
(14
|
)
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
Impact of adoption of revenue standard
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
Transfers out
(c)
|
45
|
|
|
2
|
|
|
22
|
|
|
—
|
|
Fair value of net derivatives based on significant unobservable inputs at March 31
|
$
|
844
|
|
|
$
|
(16
|
)
|
|
$
|
627
|
|
|
$
|
(2
|
)
|
Gains (losses) included in earnings attributable to the change in unrealized gains (losses) relating to derivatives held at the reporting date
(d)
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
———————————————
|
|
(a)
|
For the
three months ended March 31, 2019 and 2018
, realized and unrealized gains of approximately
$194 million
and
$26 million
, respectively, are included in the condensed consolidated statements of income in operating revenues and the balance is included in interest expense.
|
|
|
(b)
|
Included in net unrealized gains (losses) on foreign currency translation in the condensed consolidated statements of comprehensive income.
|
|
|
(c)
|
Transfers from Level 3 to Level 2 were a result of increased observability of market data. NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.
|
|
|
(d)
|
For the
three months ended March 31, 2019 and 2018
, unrealized gains of approximately
$130 million
and
$29 million
, respectively, are included in the condensed consolidated statements of income in operating revenues and the balance is included in interest expense.
|
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:
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
|
(millions)
|
|
NEE:
|
|
|
Special use funds
(a)
|
$
|
930
|
|
|
$
|
929
|
|
|
$
|
884
|
|
|
$
|
883
|
|
|
Other investments
(b)
|
$
|
39
|
|
|
$
|
39
|
|
|
$
|
54
|
|
|
$
|
54
|
|
|
Long-term debt, including current portion
|
$
|
32,497
|
|
(c)
|
$
|
34,165
|
|
(c)(d)
|
$
|
29,498
|
|
|
$
|
30,043
|
|
(d)
|
FPL:
|
|
|
|
|
|
|
|
|
Special use funds
(a)
|
$
|
759
|
|
|
$
|
758
|
|
|
$
|
693
|
|
|
$
|
692
|
|
|
Long-term debt, including current portion
|
$
|
12,379
|
|
|
$
|
13,756
|
|
(d)
|
$
|
11,783
|
|
|
$
|
12,613
|
|
(d)
|
———————————————
|
|
(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 in the condensed consolidated balance sheets.
|
|
|
(c)
|
Excludes debt totaling approximately
$876 million
reflected in liabilities associated with assets held for sale on NEE's condensed consolidated balance sheets for which the carrying amount approximates fair value. See Note 11 - Assets and Liabilities Associated with Assets Held for Sale.
|
|
|
(d)
|
At
March 31, 2019
and
December 31, 2018
, substantially all is Level 2 for NEE and all is Level 2 for FPL.
|
Special Use Funds
- The special use funds noted above and those carried at fair value (see Recurring Fair Value Measurements above) consist of NEE's nuclear decommissioning fund assets of approximately
$6,291 million
and
$5,818 million
at
March 31, 2019
and
December 31, 2018
, respectively, (
$4,298 million
and
$3,987 million
, respectively, for FPL) and FPL's storm fund assets of
$69 million
and
$68 million
at
March 31, 2019
and
December 31, 2018
, respectively. The investments held in the special use funds consist of equity securities and available for sale debt securities which are primarily carried at estimated fair value. The amortized cost of debt securities is approximately
$1,980 million
and
$1,994 million
at
March 31, 2019
and
December 31, 2018
, respectively, (
$1,485 million
and
$1,542 million
, respectively, for FPL). For FPL's special use funds, consistent with regulatory treatment, changes in fair value, including any other than temporary impairment losses, result in a corresponding adjustment to the related regulatory asset or liability accounts. For NEE's non-rate regulated operations, changes in fair value of debt securities result in a corresponding adjustment to OCI, except for unrealized losses considered to be other than temporary, including any credit losses, which are recognized in other - net in NEE's condensed consolidated statements of income. For NEE's non-rate regulated operations, 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. The unrealized gains (losses) recognized during the
three months ended March 31, 2019 and 2018
on equity securities held at
March 31, 2019
and
March 31, 2018
were
$367 million
and
$(20) million
, respectively (
$234 million
for the three months ended March 31, 2019 for FPL). Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at
March 31, 2019
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, 2019
of approximately
one
year. The cost of securities sold is determined using the specific identification method.
Realized gains and losses and proceeds from the sale or maturity of available for sale securities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(millions)
|
Realized gains
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
5
|
|
Realized losses
|
$
|
9
|
|
|
$
|
14
|
|
|
$
|
4
|
|
|
$
|
9
|
|
Proceeds from sale or maturity of securities
|
$
|
687
|
|
|
$
|
595
|
|
|
$
|
543
|
|
|
$
|
389
|
|
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, 2019
|
|
December 31, 2018
|
|
March 31, 2019
|
|
December 31, 2018
|
|
(millions)
|
Unrealized gains
|
$
|
37
|
|
|
$
|
14
|
|
|
$
|
28
|
|
|
$
|
11
|
|
Unrealized losses
(a)
|
$
|
18
|
|
|
$
|
52
|
|
|
$
|
14
|
|
|
$
|
41
|
|
Fair value
|
$
|
676
|
|
|
$
|
1,273
|
|
|
$
|
508
|
|
|
$
|
961
|
|
———————————————
|
|
(a)
|
Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at
March 31, 2019
and
December 31, 2018
were not material to NEE or FPL.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
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 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.
6. Income Taxes
NEE's effective income tax rates for the
three months ended March 31, 2019 and 2018
were approximately
11%
and
25%
, respectively. The rates for both periods reflect state income taxes net of federal income tax benefits, the benefits of PTCs of approximately
$14 million
and
$23 million
, respectively, related to NEER's wind projects and ITCs of approximately
$40 million
and
$36 million
, respectively, related to solar and certain wind projects at NEER. During the
three months ended March 31, 2019 and 2018
, NEE recorded income tax benefits of
$33 million
and
$29 million
related to the amortization of deferred regulatory credits, primarily at FPL. During the three months ended March 31, 2018, NEE recorded an income tax charge of approximately $
125 million
related to an adjustment to differential membership interests primarily as a result of the change in federal income tax rates effective January 1, 2018.
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 financial viability 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.
7. Acquisitions
Gulf Power -
On January 1, 2019, NEE acquired the outstanding common shares of Gulf Power, a rate-regulated electric utility under the jurisdiction of the FPSC. Gulf Power serves more than
460,000
customers in
eight
counties throughout northwest Florida, has approximately
9,400
miles of transmission and distribution lines and owns approximately
2,300
MW of net generating capacity. The purchase price included approximately
$4.47 billion
in cash consideration less estimated post-closing working capital adjustments of
$104 million
and the assumption of approximately
$1.3 billion
of Gulf Power debt. The cash purchase price was funded through
$4.5 billion
of borrowings by NEECH in December 2018 under certain short-term bi-lateral term loan agreements (see Note 10); the proceeds of which borrowings were restricted and included in noncurrent other assets on NEE's condensed consolidated balance sheet at December 31, 2018.
Under the acquisition method, the purchase price was allocated to the assets acquired and liabilities assumed on January 1, 2019 based on their fair value. The approval by the FPSC of Gulf Power's rates, which is intended to allow Gulf Power to collect from retail customers total revenues equal to Gulf Power's costs of providing service, including a reasonable rate of return on invested capital, is considered a fundamental input in measuring the fair value of Gulf Power'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
$5.3 billion
, primarily relating to property, plant and equipment of
$4.0 billion
and regulatory assets of
$490 million
, and assumed liabilities of approximately
$3.5 billion
, including
$1.3 billion
of long-term debt,
$640 million
of regulatory liabilities and
$590 million
of deferred income taxes. The excess of the purchase price over the fair value of assets acquired and liabilities assumed resulted in approximately
$2.6 billion
of goodwill which has been recognized on NEE's condensed consolidated balance sheet at
March 31, 2019
. Goodwill associated with the Gulf Power acquisition will be reflected within Corporate and Other and, for impairment testing, will be included in the Gulf Power reporting unit. The goodwill arising from the transaction represents expected benefits from continued expansion of NEE's regulated business mix and the indefinite life of Gulf Power's service territory franchise. In connection with the acquisition, operating right-of-use assets and lease liabilities were recorded primarily related to a purchased power agreement; such amounts each totaled approximately
$248 million
at
March 31, 2019
. The operating leases have fixed payments with expiration dates ranging from late 2019 to 2023. At
March 31, 2019
, expected lease payments over the remaining terms of the operating leases were approximately
$260 million
with no one year being material. Gulf Power's operating leases did not have a material impact to NEE's condensed consolidated statements of income or cash flows.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Trans Bay Cable, LLC
- In March 2019, a wholly owned subsidiary of NextEra Energy Transmission, LLC received FERC approval to acquire the outstanding membership interests of Trans Bay Cable, LLC for approximately
$1.05 billion
, including the assumption of debt. The acquisition is expected to close in 2019, pending approval of the California Public Utilities Commission.
8. Variable Interest Entities (VIEs)
At
March 31, 2019
, NEE had
31
VIEs which it consolidated and had interests in certain other VIEs which it did not consolidate.
FPL
- FPL is considered the primary beneficiary of, and therefore consolidates, a VIE that is a wholly owned bankruptcy remote special purpose subsidiary that it formed in 2007 for the sole purpose of issuing storm-recovery bonds pursuant to the securitization provisions of the Florida Statutes and a financing order of the FPSC. FPL is considered the primary beneficiary because FPL has the power to direct the significant activities of the VIE, and its equity investment, which is subordinate to the bondholder's interest in the VIE, is at risk. Storm restoration costs incurred by FPL during 2005 and 2004 exceeded the amount in FPL's funded storm and property insurance reserve, resulting in a storm reserve deficiency. In 2007, the VIE issued
$652 million
aggregate principal amount of senior secured bonds (storm-recovery bonds), primarily for the after-tax equivalent of the total of FPL's unrecovered balance of the 2004 storm restoration costs, the 2005 storm restoration costs and to reestablish FPL's storm and property insurance reserve. In connection with this financing, net proceeds, after debt issuance costs, to the VIE (approximately
$644 million
) were used to acquire the storm-recovery property, which includes the right to impose, collect and receive a storm-recovery charge from all customers receiving electric transmission or distribution service from FPL under rate schedules approved by the FPSC or under special contracts, certain other rights and interests that arise under the financing order issued by the FPSC and certain other collateral pledged by the VIE that issued the bonds. The storm-recovery bonds are payable only from and are secured by the storm-recovery property. The bondholders have no recourse to the general credit of FPL. The assets of the VIE were approximately
$35 million
and
$77 million
at
March 31, 2019
and
December 31, 2018
, respectively, and consisted primarily of storm-recovery property, which are included in current regulatory assets on NEE's and FPL's condensed consolidated balance sheets. The liabilities of the VIE were approximately
$36 million
and
$76 million
at
March 31, 2019
and
December 31, 2018
, respectively, and consisted primarily of storm-recovery bonds, which are included in current portion of long-term debt on NEE's and FPL's condensed consolidated balance sheets.
NEER
- NEE consolidates
29
NEER VIEs. NEER is considered the primary beneficiary of these VIEs since NEER controls the most significant activities of these VIEs, including operations and maintenance, and has the obligation to absorb expected losses of these VIEs.
NEER consolidates
two
VIEs, which own and operate natural gas/oil electric generation facilities with the capability of producing
1,450
MW. These entities sell their electric output under power sales contracts to third parties, 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
two
VIEs were approximately
$218 million
and
$18 million
, respectively, at
March 31, 2019
. These
two
VIEs, together with a third VIE that consolidated
two
separate NEER entities, collectively had assets and liabilities that totaled
$257 million
and
$21 million
, respectively, at
December 31, 2018
. At
March 31, 2019
and
December 31, 2018
, the assets of these consolidated VIEs consisted primarily of property, plant and equipment.
Two
indirect subsidiaries of NEER each contributed, to a NEP subsidiary, an approximately
50
% ownership interest in
three
entities which own and operate solar PV facilities with the capability of producing a total of approximately
277
MW. Each of the
two
indirect subsidiaries of NEER is considered a VIE since the non-managing members have no substantive rights over the managing members, and is consolidated by NEER. These
three
entities sell their electric output to third parties under power sales contracts with expiration dates in
2035
and
2036
. The
three
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 NEER for the repayment of debt. The assets and liabilities of these VIEs were approximately
$492 million
and
$542 million
, respectively, at
March 31, 2019
and
$529 million
and
$557 million
, respectively, at
December 31, 2018
, and consisted primarily of property, plant and equipment and long-term debt.
The other
25
NEER 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
7,081
MW and
473
MW, respectively. These entities sell their electric output either under power sales contracts to third parties with expiration dates ranging from
2019
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. Certain entities have third-party debt which is secured by liens against the generation facilities and the other assets of these entities or by pledges of NEER's 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 consisted primarily of property, plant and equipment and long-term debt and totaled approximately
$10.2 billion
and
$1.4 billion
, respectively, at
March 31, 2019
, including amounts classified as held for sale (see Note 11 - Assets and Liabilities Associated with Assets Held for Sale), and
$10.2 billion
and
$1.4 billion
, respectively, at
December 31, 2018
.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
In February 2018, NEER sold a special purpose entity for net cash proceeds of approximately
$71 million
. In connection with the sale, a gain of approximately
$50 million
(approximately
$37 million
after tax) was recorded in gains on disposal of investments and other property - net in NEE's condensed consolidated statements of income during the three months ended March 31, 2018.
Other
- At
March 31, 2019
and
December 31, 2018
, several NEE subsidiaries had investments totaling approximately
$2,885 million
(
$2,396 million
at FPL) and
$2,668 million
(
$2,203 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 nonmanaging members do not have substantive rights, 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
$4,504 million
and
$4,680 million
at
March 31, 2019
and
December 31, 2018
, respectively. Subsidiaries of NEE had committed to invest an additional approximately
$55 million
in
three
of these entities at both
March 31, 2019
and
December 31, 2018
.
Beginning in the first quarter of 2019, NEE consolidates a NEET subsidiary, which is considered a VIE since NEET is the primary beneficiary and controls the most significant activities during the period in which the subsidiary is constructing an approximately
275
-mile electricity transmission line, including controlling the construction budget. Prior to the construction period, the entity was jointly controlled and was accounted for under the equity method. NEET is entitled to receive
50%
of profits and losses of the entity. At
March 31, 2019
, the assets and liabilities of the VIE totaled
$68 million
and
$7 million
, respectively.
9. 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,
|
|
2019
|
|
2018
(a)
|
|
(millions, except per share amounts)
|
Numerator:
|
|
|
|
Net income attributable to NEE - basic
|
$
|
680
|
|
|
$
|
4,431
|
|
Adjustment for the impact of dilutive securities at NEP
(b)
|
—
|
|
|
(9
|
)
|
Net income attributable to NEE - assuming dilution
|
$
|
680
|
|
|
$
|
4,422
|
|
|
|
|
|
Denominator:
|
|
|
|
Weighted-average number of common shares outstanding - basic
|
478.3
|
|
|
470.7
|
|
Equity units, stock options, performance share awards and restricted stock
(c)
|
3.5
|
|
|
3.6
|
|
Weighted-average number of common shares outstanding - assuming dilution
|
481.8
|
|
|
474.3
|
|
Earnings per share attributable to NEE:
(a)
|
|
|
|
Basic
|
$
|
1.42
|
|
|
$
|
9.41
|
|
Assuming dilution
|
$
|
1.41
|
|
|
$
|
9.32
|
|
———————————————
|
|
(a)
|
Amounts have been retrospectively adjusted for an accounting standards update related to leases.
|
|
|
(b)
|
The NEP Series A convertible preferred units and NEP senior unsecured convertible notes were both antidilutive for the three months ended March 31, 2019. The
adjustment for the three months ended March 31, 2018 is related to both the NEP Series A convertible preferred units and the NEP senior unsecured convertible notes.
|
|
|
(c)
|
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 stock options as well as restricted stock which were not included in the denominator above due to their antidilutive effect were approximately
0.5 million
and
0.2 million
for the
three months ended March 31, 2019 and 2018
, respectively.
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, 2019
|
|
Balances, December 31, 2018
|
$
|
(55
|
)
|
|
$
|
(7
|
)
|
|
$
|
(65
|
)
|
|
$
|
(63
|
)
|
|
$
|
2
|
|
|
$
|
(188
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
8
|
|
|
(52
|
)
|
|
10
|
|
|
(1
|
)
|
|
(35
|
)
|
Amounts reclassified from AOCI
|
10
|
|
(a)
|
2
|
|
(b)
|
(1
|
)
|
(c)
|
—
|
|
|
—
|
|
|
11
|
|
Net other comprehensive income (loss)
|
10
|
|
|
10
|
|
|
(53
|
)
|
|
10
|
|
|
(1
|
)
|
|
(24
|
)
|
Acquisition of Gulf Power
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
Balances, March 31, 2019
|
$
|
(46
|
)
|
|
$
|
3
|
|
|
$
|
(118
|
)
|
|
$
|
(53
|
)
|
|
$
|
1
|
|
|
$
|
(213
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2018
|
|
Balances, December 31, 2017
|
$
|
(77
|
)
|
|
$
|
316
|
|
|
$
|
(39
|
)
|
|
$
|
(69
|
)
|
|
$
|
(20
|
)
|
|
$
|
111
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(5
|
)
|
|
(1
|
)
|
|
(20
|
)
|
|
2
|
|
|
(24
|
)
|
Amounts reclassified from AOCI
|
7
|
|
(a)
|
(1
|
)
|
(b)
|
(1
|
)
|
(c)
|
—
|
|
|
—
|
|
|
5
|
|
Net other comprehensive income (loss)
|
7
|
|
|
(6
|
)
|
|
(2
|
)
|
|
(20
|
)
|
|
2
|
|
|
(19
|
)
|
Impact of NEP deconsolidation
(d)
|
3
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
18
|
|
|
58
|
|
Adoption of accounting standards updates
(e)
|
(7
|
)
|
|
(312
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(328
|
)
|
Balances, March 31, 2018
|
$
|
(74
|
)
|
|
$
|
(2
|
)
|
|
$
|
(50
|
)
|
|
$
|
(52
|
)
|
|
$
|
—
|
|
|
$
|
(178
|
)
|
———————————————
|
|
(a)
|
Reclassified to interest expense in NEE's condensed consolidated statements of income. See Note 4 - 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 consolidated statements of income.
|
|
|
(d)
|
Reclassified and included in gain on NEP deconsolidation. See Note 2.
|
|
|
(e)
|
Reclassified to retained earnings.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
10. Debt
Significant long-term debt issuances during the
three months ended March 31, 2019
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount
|
|
Interest Rate
|
|
Maturity Date
|
|
(millions)
|
|
|
|
|
|
|
FPL - First mortgage bonds
|
$
|
600
|
|
|
3.99
|
%
|
|
2049
|
NEECH:
|
|
|
|
|
|
Debentures
|
$
|
550
|
|
|
Variable
|
|
(a)
|
2020 - 2022
|
Debentures
|
$
|
800
|
|
|
3.20%
|
-
|
3.30
|
%
|
|
2022
|
Junior subordinated debentures
|
$
|
688
|
|
|
5.65
|
%
|
|
2079
|
———————————————
|
|
(a)
|
Variable rate is based on an underlying index plus a margin.
|
In April 2019, NEECH sold
$2,700 million
principal amount of its debentures with interest rates ranging from
2.90%
to
3.50%
and maturity dates ranging from 2022 through 2029, and
$500 million
principal amount of its Series O Junior Subordinated Debentures due May 1, 2079 which bear interest at a rate of
5.65%
until 2029 and thereafter will bear interest at a variable rate. Also, in April 2019, NEECH entered into and borrowed
$500 million
under
two
$250 million
variable rate term loan agreements with maturity dates of 2021 and 2022. Finally, in April 2019, NEECH repaid
$4.5 billion
of borrowings under the short-term term loan agreements that it entered into to finance a portion of the purchase price paid by NEE for the acquisition of Gulf Power. See Note 7 - Gulf Power.
11. Summary of Significant Accounting and Reporting Policies
Restricted Cash
- At
March 31, 2019
and
December 31, 2018
, NEE had approximately
$369 million
(
$122 million
for FPL) and
$4,615 million
(
$142 million
for FPL), respectively, of restricted cash, of which approximately
$307 million
(
$61 million
for FPL) and
$89 million
(
$81 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, and, at December 31, 2018, also related to cash restricted for the acquisition of Gulf Power (see Note 7 - Gulf Power). In addition, where offsetting positions exist, restricted cash related to margin cash collateral is netted against derivative instruments, which totaled
$57 million
and
$184 million
at
March 31, 2019
and
December 31, 2018
, respectively. See Note 4.
Assets and Liabilities Associated with Assets Held for Sale -
In March 2019, subsidiaries of NEER entered into an agreement to sell their ownership interests in
three
wind generation facilities and
three
solar generation facilities located in the Midwest and West regions of the U.S. with a total net generating capacity of
611
MW to a NEP subsidiary for a cash purchase price of approximately
$1,020 million
, subject to certain adjustments. A NEER affiliate will continue to operate the facilities included in the sale. The transaction is expected to close in the second quarter of 2019, pending the receipt of necessary regulatory approvals and satisfaction of other customary closing conditions. The carrying amounts of the major classes of assets and liabilities related to the facilities that were classified as held for sale on NEE's condensed consolidated balance sheets at
March 31, 2019
primarily represent property, plant and equipment and the related long-term debt.
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 at FPL 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 and the procurement of nuclear fuel, as well as equity contributions to joint ventures for the development and construction of natural gas pipeline assets. Capital expenditures for Corporate and Other primarily include the cost to maintain existing transmission facilities at NEET.
At
March 31, 2019
, estimated capital expenditures for the remainder of 2019 through 2023 for which applicable internal approvals (and also, if required, regulatory approvals such as FPSC approvals for FPL and Gulf Power) have been received were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of 2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Total
|
|
(millions)
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
Generation:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
New
(b)
|
$
|
1,075
|
|
|
$
|
1,410
|
|
|
$
|
995
|
|
|
$
|
1,000
|
|
|
$
|
790
|
|
|
$
|
5,270
|
|
Existing
|
985
|
|
|
700
|
|
|
895
|
|
|
760
|
|
|
810
|
|
|
4,150
|
|
Transmission and distribution
(c)
|
2,205
|
|
|
3,170
|
|
|
3,135
|
|
|
3,530
|
|
|
3,895
|
|
|
15,935
|
|
Nuclear fuel
|
125
|
|
|
205
|
|
|
220
|
|
|
165
|
|
|
120
|
|
|
835
|
|
General and other
|
545
|
|
|
535
|
|
|
425
|
|
|
345
|
|
|
365
|
|
|
2,215
|
|
Total
|
$
|
4,935
|
|
|
$
|
6,020
|
|
|
$
|
5,670
|
|
|
$
|
5,800
|
|
|
$
|
5,980
|
|
|
$
|
28,405
|
|
Gulf Power
|
$
|
605
|
|
|
$
|
915
|
|
|
$
|
740
|
|
|
$
|
465
|
|
|
$
|
270
|
|
|
$
|
2,995
|
|
NEER:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind
(d)
|
$
|
1,580
|
|
|
$
|
2,960
|
|
|
$
|
130
|
|
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
4,710
|
|
Solar
(e)
|
570
|
|
|
230
|
|
|
160
|
|
|
—
|
|
|
5
|
|
|
965
|
|
Nuclear, including nuclear fuel
|
150
|
|
|
160
|
|
|
165
|
|
|
180
|
|
|
130
|
|
|
785
|
|
Natural gas pipelines
(f)
|
570
|
|
|
310
|
|
|
15
|
|
|
20
|
|
|
—
|
|
|
915
|
|
Other
|
490
|
|
|
50
|
|
|
40
|
|
|
40
|
|
|
40
|
|
|
660
|
|
Total
|
$
|
3,360
|
|
|
$
|
3,710
|
|
|
$
|
510
|
|
|
$
|
260
|
|
|
$
|
195
|
|
|
$
|
8,035
|
|
Corporate and Other
|
$
|
60
|
|
|
$
|
30
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
105
|
|
———————————————
|
|
(a)
|
Includes AFUDC of approximately
$40 million
,
$70 million
,
$85 million
,
$60 million
and
$35 million
for the remainder of 2019 through 2023, respectively.
|
|
|
(b)
|
Includes land, generation structures, transmission interconnection and integration and licensing.
|
|
|
(c)
|
Includes AFUDC of approximately
$15 million
,
$45 million
,
$45 million
,
$55 million
and
$45 million
for the remainder of 2019 through 2023, respectively.
|
|
|
(d)
|
Consists of capital expenditures for new wind projects, repowering of existing wind projects and related transmission totaling approximately
5,740
MW.
|
|
|
(e)
|
Includes capital expenditures for new solar projects and related transmission totaling approximately
930
MW.
|
|
|
(f)
|
Construction of a natural gas pipeline is subject to certain conditions, including FERC approval. In addition, completion of another natural gas pipeline is subject to final permitting.
|
The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.
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 and coal with expiration dates through
2042
.
At
March 31, 2019
, NEER has entered into contracts with expiration dates ranging from
June 2019
through
2032
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. Approximately
$3.5 billion
of related commitments 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 2019
through
2050
.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The required capacity and/or minimum payments under contracts, including those discussed above, at
March 31, 2019
were estimated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of 2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
(millions)
|
FPL
(a)
|
$
|
750
|
|
|
$
|
995
|
|
|
$
|
985
|
|
|
$
|
975
|
|
|
$
|
970
|
|
|
$
|
11,500
|
|
NEER
(b)(c)
|
$
|
2,315
|
|
|
$
|
1,075
|
|
|
$
|
175
|
|
|
$
|
185
|
|
|
$
|
110
|
|
|
$
|
1,380
|
|
Corporate and Other
(d)
|
$
|
40
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
———————————————
|
|
(a)
|
Includes approximately
$240 million
,
$385 million
,
$415 million
,
$415 million
,
$410 million
and
$7,175 million
for the remainder of 2019 through 2023 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
$79 million
and
$73 million
for the three months ended March 31, 2019 and 2018, respectively, of which
$28 million
and
$22 million
, respectively, were eliminated in consolidation at NEE.
|
|
|
(b)
|
Includes approximately
$50 million
,
$65 million
,
$65 million
,
$65 million
and
$1,050 million
for 2020 through 2023 and thereafter, respectively, of firm commitments related to a natural gas transportation agreement with a joint venture, in which NEER has a
31%
equity investment, that is constructing a natural gas pipeline. These firm commitments are subject to the completion of construction of the pipeline.
|
|
|
(c)
|
Includes an approximately
$55 million
commitment to invest in clean power and technology businesses through 2022.
|
|
|
(d)
|
Excludes approximately
$25 million
,
$20 million
,
$10 million
,
$10 million
and
$5 million
for the remainder of 2019 through 2023, respectively, of joint obligations of NEECH and NEER which are included in the NEER amounts above.
|
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
$13.6 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. NEE 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 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
. 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
$174 million
(
$106 million
for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NEE 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
$3 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 FPL's or Gulf Power's future storm restoration costs exceed their respective storm reserve, FPL and Gulf Power may recover their storm restoration costs, subject to prudence review by the FPSC, either 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 FPL or Gulf Power, would be borne by NEE and either FPL or Gulf Power, and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
13. Segment Information
The table below presents information for NEE's two reportable segments, FPL, a rate-regulated utility business, and NEER, a competitive energy business, as well as for Gulf Power, a rate-regulated utility business acquired in January 2019. Corporate and Other represents other business activities and includes eliminating entries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
(a)
|
|
FPL
|
|
Gulf Power
(b)
|
|
NEER
(c)
|
|
Corporate
and Other
|
|
NEE
Consoli-
dated
|
|
FPL
|
|
NEER
(c)
|
|
Corporate
and Other
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
Operating revenues
|
$
|
2,618
|
|
|
$
|
328
|
|
|
$
|
1,135
|
|
|
$
|
(6
|
)
|
|
$
|
4,075
|
|
|
$
|
2,620
|
|
|
$
|
1,241
|
|
|
$
|
(4
|
)
|
|
$
|
3,857
|
|
Operating expenses - net
|
$
|
1,761
|
|
|
$
|
271
|
|
|
$
|
864
|
|
|
$
|
44
|
|
|
$
|
2,940
|
|
|
$
|
1,913
|
|
|
$
|
843
|
|
|
$
|
42
|
|
|
$
|
2,798
|
|
Net income attributable to NEE
|
$
|
588
|
|
|
$
|
37
|
|
|
$
|
301
|
|
(d)
|
$
|
(246
|
)
|
|
$
|
680
|
|
|
$
|
484
|
|
|
$
|
3,929
|
|
(d)(e)
|
$
|
18
|
|
|
$
|
4,431
|
|
———————————————
|
|
(a)
|
Amounts have been retrospectively adjusted for an accounting standards update related to leases.
|
|
|
(b)
|
See Note 7 - Gulf Power.
|
|
|
(c)
|
Interest expense allocated from NEECH is based on a deemed capital structure of
70%
debt and differential membership interests sold by NEER subsidiaries. Residual NEECH corporate interest expense is included in Corporate and Other.
|
|
|
(d)
|
See Note 6 for a discussion of NEER's tax benefits related to PTCs.
|
|
|
(e)
|
Includes gain on deconsolidation of NEP. See Note 2.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
FPL
|
|
Gulf Power
(a)
|
|
NEER
|
|
Corporate
and Other
|
|
NEE
Consoli-
dated
|
|
FPL
|
|
NEER
|
|
Corporate
and Other
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
Total assets
|
$
|
54,324
|
|
|
$
|
5,378
|
|
|
$
|
44,526
|
|
|
$
|
4,801
|
|
|
$
|
109,029
|
|
|
$
|
53,484
|
|
|
$
|
43,530
|
|
|
$
|
6,688
|
|
|
$
|
103,702
|
|
———————————————
|
|
(a)
|
See Note 7 - Gulf Power.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
14. Summarized Financial Information of NEECH
NEECH, a
100%
owned subsidiary of NEE, provides funding for, and holds ownership interests in, NEE's operating subsidiaries other than FPL and Gulf Power. NEECH’s debentures and junior subordinated debentures including those that were registered pursuant to the Securities Act of 1933, as amended, are fully and unconditionally guaranteed by NEE. Condensed consolidating financial information is as follows:
Condensed Consolidating Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
(a)
|
|
NEE
(Guarantor)
|
|
NEECH
|
|
Other
(b)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guarantor)
|
|
NEECH
|
|
Other
(b)
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
Operating revenues
|
$
|
—
|
|
|
$
|
1,167
|
|
|
$
|
2,908
|
|
|
$
|
4,075
|
|
|
$
|
—
|
|
|
$
|
1,271
|
|
|
$
|
2,586
|
|
|
$
|
3,857
|
|
Operating expenses - net
|
(57
|
)
|
|
(875
|
)
|
|
(2,008
|
)
|
|
(2,940
|
)
|
|
(56
|
)
|
|
(859
|
)
|
|
(1,883
|
)
|
|
(2,798
|
)
|
Interest expense
|
—
|
|
|
(561
|
)
|
|
(153
|
)
|
|
(714
|
)
|
|
(1
|
)
|
|
(92
|
)
|
|
(133
|
)
|
|
(226
|
)
|
Equity in earnings of subsidiaries
|
694
|
|
|
—
|
|
|
(694
|
)
|
|
—
|
|
|
4,364
|
|
|
—
|
|
|
(4,364
|
)
|
|
—
|
|
Equity in earnings of equity method investees
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
197
|
|
|
—
|
|
|
197
|
|
Gain on NEP deconsolidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,927
|
|
|
—
|
|
|
3,927
|
|
Other income - net
|
51
|
|
|
166
|
|
|
26
|
|
|
243
|
|
|
51
|
|
|
53
|
|
|
23
|
|
|
127
|
|
Income (loss) before income taxes
|
688
|
|
|
(87
|
)
|
|
79
|
|
|
680
|
|
|
4,358
|
|
|
4,497
|
|
|
(3,771
|
)
|
|
5,084
|
|
Income tax expense (benefit)
|
8
|
|
|
(94
|
)
|
|
160
|
|
|
74
|
|
|
(73
|
)
|
|
1,211
|
|
|
112
|
|
|
1,250
|
|
Net income (loss)
|
680
|
|
|
7
|
|
|
(81
|
)
|
|
606
|
|
|
4,431
|
|
|
3,286
|
|
|
(3,883
|
)
|
|
3,834
|
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
74
|
|
|
—
|
|
|
74
|
|
|
—
|
|
|
597
|
|
|
—
|
|
|
597
|
|
Net income (loss) attributable to NEE
|
$
|
680
|
|
|
$
|
81
|
|
|
$
|
(81
|
)
|
|
$
|
680
|
|
|
$
|
4,431
|
|
|
$
|
3,883
|
|
|
$
|
(3,883
|
)
|
|
$
|
4,431
|
|
———————————————
|
|
(a)
|
Amounts have been retrospectively adjusted for an accounting standards update related to leases.
|
|
|
(b)
|
Represents primarily FPL and consolidating adjustments.
|
Condensed Consolidating Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
(a)
|
|
NEE
(Guarantor)
|
|
NEECH
|
|
Other
(b)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guarantor)
|
|
NEECH
|
|
Other
(b)
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to NEE
|
$
|
656
|
|
|
$
|
110
|
|
|
$
|
(110
|
)
|
|
$
|
656
|
|
|
$
|
4,470
|
|
|
$
|
3,924
|
|
|
$
|
(3,924
|
)
|
|
$
|
4,470
|
|
———————————————
|
|
(a)
|
Amounts have been retrospectively adjusted for an accounting standards update related to leases.
|
|
|
(b)
|
Represents primarily FPL and consolidating adjustments.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Condensed Consolidating Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric plant in service and other property
|
$
|
300
|
|
|
$
|
36,804
|
|
|
$
|
61,054
|
|
|
$
|
98,158
|
|
|
$
|
220
|
|
|
$
|
37,145
|
|
|
$
|
54,718
|
|
|
$
|
92,083
|
|
Accumulated depreciation and amortization
|
(71
|
)
|
|
(8,571
|
)
|
|
(14,722
|
)
|
|
(23,364
|
)
|
|
(58
|
)
|
|
(8,473
|
)
|
|
(13,218
|
)
|
|
(21,749
|
)
|
Total property, plant and equipment - net
|
229
|
|
|
28,233
|
|
|
46,332
|
|
|
74,794
|
|
|
162
|
|
|
28,672
|
|
|
41,500
|
|
|
70,334
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
1
|
|
|
842
|
|
|
129
|
|
|
972
|
|
|
(1
|
)
|
|
525
|
|
|
114
|
|
|
638
|
|
Receivables
|
202
|
|
|
1,638
|
|
|
1,134
|
|
|
2,974
|
|
|
292
|
|
|
1,771
|
|
|
906
|
|
|
2,969
|
|
Other
|
5
|
|
|
2,777
|
|
|
1,494
|
|
|
4,276
|
|
|
5
|
|
|
1,425
|
|
|
1,356
|
|
|
2,786
|
|
Total current assets
|
208
|
|
|
5,257
|
|
|
2,757
|
|
|
8,222
|
|
|
296
|
|
|
3,721
|
|
|
2,376
|
|
|
6,393
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
33,850
|
|
|
—
|
|
|
(33,850
|
)
|
|
—
|
|
|
33,397
|
|
|
—
|
|
|
(33,397
|
)
|
|
—
|
|
Investment in equity method investees
|
—
|
|
|
6,735
|
|
|
—
|
|
|
6,735
|
|
|
—
|
|
|
6,748
|
|
|
—
|
|
|
6,748
|
|
Goodwill
|
1
|
|
|
589
|
|
|
2,898
|
|
|
3,488
|
|
|
1
|
|
|
587
|
|
|
303
|
|
|
891
|
|
Other
|
516
|
|
|
5,931
|
|
|
9,343
|
|
|
15,790
|
|
|
937
|
|
|
5,890
|
|
|
12,509
|
|
|
19,336
|
|
Total other assets
|
34,367
|
|
|
13,255
|
|
|
(21,609
|
)
|
|
26,013
|
|
|
34,335
|
|
|
13,225
|
|
|
(20,585
|
)
|
|
26,975
|
|
TOTAL ASSETS
|
$
|
34,804
|
|
|
$
|
46,745
|
|
|
$
|
27,480
|
|
|
$
|
109,029
|
|
|
$
|
34,793
|
|
|
$
|
45,618
|
|
|
$
|
23,291
|
|
|
$
|
103,702
|
|
CAPITALIZATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders' equity
|
$
|
34,226
|
|
|
$
|
7,463
|
|
|
$
|
(7,463
|
)
|
|
$
|
34,226
|
|
|
$
|
34,144
|
|
|
$
|
7,917
|
|
|
$
|
(7,917
|
)
|
|
$
|
34,144
|
|
Noncontrolling interests
|
—
|
|
|
3,614
|
|
|
—
|
|
|
3,614
|
|
|
—
|
|
|
3,269
|
|
|
—
|
|
|
3,269
|
|
Redeemable noncontrolling interests
|
—
|
|
|
71
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
468
|
|
|
—
|
|
|
468
|
|
Long-term debt
|
—
|
|
|
16,199
|
|
|
13,684
|
|
|
29,883
|
|
|
—
|
|
|
15,094
|
|
|
11,688
|
|
|
26,782
|
|
Total capitalization
|
34,226
|
|
|
27,347
|
|
|
6,221
|
|
|
67,794
|
|
|
34,144
|
|
|
26,748
|
|
|
3,771
|
|
|
64,663
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt due within one year
|
—
|
|
|
9,878
|
|
|
452
|
|
|
10,330
|
|
|
—
|
|
|
9,579
|
|
|
1,351
|
|
|
10,930
|
|
Accounts payable
|
7
|
|
|
1,615
|
|
|
776
|
|
|
2,398
|
|
|
32
|
|
|
1,730
|
|
|
624
|
|
|
2,386
|
|
Other
|
318
|
|
|
2,822
|
|
|
2,058
|
|
|
5,198
|
|
|
168
|
|
|
2,364
|
|
|
1,715
|
|
|
4,247
|
|
Total current liabilities
|
325
|
|
|
14,315
|
|
|
3,286
|
|
|
17,926
|
|
|
200
|
|
|
13,673
|
|
|
3,690
|
|
|
17,563
|
|
OTHER LIABILITIES AND DEFERRED CREDITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset retirement obligations
|
—
|
|
|
1,007
|
|
|
2,343
|
|
|
3,350
|
|
|
—
|
|
|
988
|
|
|
2,147
|
|
|
3,135
|
|
Deferred income taxes
|
(381
|
)
|
|
2,663
|
|
|
5,768
|
|
|
8,050
|
|
|
(157
|
)
|
|
2,778
|
|
|
4,746
|
|
|
7,367
|
|
Other
|
634
|
|
|
1,413
|
|
|
9,862
|
|
|
11,909
|
|
|
606
|
|
|
1,431
|
|
|
8,937
|
|
|
10,974
|
|
Total other liabilities and deferred credits
|
253
|
|
|
5,083
|
|
|
17,973
|
|
|
23,309
|
|
|
449
|
|
|
5,197
|
|
|
15,830
|
|
|
21,476
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CAPITALIZATION AND LIABILITIES
|
$
|
34,804
|
|
|
$
|
46,745
|
|
|
$
|
27,480
|
|
|
$
|
109,029
|
|
|
$
|
34,793
|
|
|
$
|
45,618
|
|
|
$
|
23,291
|
|
|
$
|
103,702
|
|
———————————————
|
|
(a)
|
Represents primarily FPL and consolidating adjustments.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(unaudited)
Condensed Consolidating Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
(a)
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(b)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(b)
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
$
|
979
|
|
|
$
|
353
|
|
|
$
|
265
|
|
|
$
|
1,597
|
|
|
$
|
1,391
|
|
|
$
|
503
|
|
|
$
|
(603
|
)
|
|
$
|
1,291
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, independent power and other investments and nuclear fuel purchases
|
(108
|
)
|
|
(1,224
|
)
|
|
(5,697
|
)
|
|
(7,029
|
)
|
|
—
|
|
|
(2,385
|
)
|
|
(1,203
|
)
|
|
(3,588
|
)
|
Capital contributions from NEE
|
(276
|
)
|
|
—
|
|
|
276
|
|
|
—
|
|
|
(853
|
)
|
|
—
|
|
|
853
|
|
|
—
|
|
Proceeds from sale or maturity of securities in special use funds and other investments
|
—
|
|
|
404
|
|
|
562
|
|
|
966
|
|
|
—
|
|
|
489
|
|
|
430
|
|
|
919
|
|
Purchases of securities in special use funds and other investments
|
—
|
|
|
(423
|
)
|
|
(596
|
)
|
|
(1,019
|
)
|
|
—
|
|
|
(506
|
)
|
|
(533
|
)
|
|
(1,039
|
)
|
Other - net
|
12
|
|
|
104
|
|
|
21
|
|
|
137
|
|
|
12
|
|
|
11
|
|
|
18
|
|
|
41
|
|
Net cash used in investing activities
|
(372
|
)
|
|
(1,139
|
)
|
|
(5,434
|
)
|
|
(6,945
|
)
|
|
(841
|
)
|
|
(2,391
|
)
|
|
(435
|
)
|
|
(3,667
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances of long-term debt
|
—
|
|
|
2,051
|
|
|
717
|
|
|
2,768
|
|
|
—
|
|
|
804
|
|
|
1,000
|
|
|
1,804
|
|
Retirements of long-term debt
|
—
|
|
|
(127
|
)
|
|
(39
|
)
|
|
(166
|
)
|
|
—
|
|
|
(155
|
)
|
|
(787
|
)
|
|
(942
|
)
|
Net change in commercial paper
|
—
|
|
|
412
|
|
|
(860
|
)
|
|
(448
|
)
|
|
—
|
|
|
1,403
|
|
|
(126
|
)
|
|
1,277
|
|
Repayments of other short-term debt
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
|
(250
|
)
|
Payments from (to) related parties under CSCS agreement - net
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Issuances of common stock - net
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
Dividends on common stock
|
(598
|
)
|
|
—
|
|
|
—
|
|
|
(598
|
)
|
|
(523
|
)
|
|
—
|
|
|
—
|
|
|
(523
|
)
|
Contributions from (dividends to) NEE
|
—
|
|
|
(895
|
)
|
|
895
|
|
|
—
|
|
|
—
|
|
|
(1,191
|
)
|
|
1,191
|
|
|
—
|
|
Other - net
|
(27
|
)
|
|
(38
|
)
|
|
(10
|
)
|
|
(75
|
)
|
|
(32
|
)
|
|
(9
|
)
|
|
(24
|
)
|
|
(65
|
)
|
Net cash provided by (used in) financing activities
|
(605
|
)
|
|
1,329
|
|
|
703
|
|
|
1,427
|
|
|
(548
|
)
|
|
852
|
|
|
1,006
|
|
|
1,310
|
|
Effects of currency translation on cash, cash equivalents and restricted cash
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
2
|
|
|
552
|
|
|
(4,466
|
)
|
|
(3,912
|
)
|
|
2
|
|
|
(1,045
|
)
|
|
(32
|
)
|
|
(1,075
|
)
|
Cash, cash equivalents and restricted cash at beginning of period
|
(1
|
)
|
|
533
|
|
|
4,721
|
|
|
5,253
|
|
|
1
|
|
|
1,807
|
|
|
175
|
|
|
1,983
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
1
|
|
|
$
|
1,085
|
|
|
$
|
255
|
|
|
$
|
1,341
|
|
|
$
|
3
|
|
|
$
|
762
|
|
|
$
|
143
|
|
|
$
|
908
|
|
———————————————
|
|
(a)
|
Amounts have been retrospectively adjusted for an accounting standards update related to leases.
|
|
|
(b)
|
Represents primarily FPL and consolidating adjustments.
|