NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Recurring Non-Derivative Fair Value Measurements – NEE's and FPL's financial assets and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| (millions) |
Assets: | | | | | | | |
Cash equivalents and restricted cash equivalents:(a) | | | | | | | |
NEE – equity securities | $ | 1,528 | | | $ | — | | | $ | — | | | $ | 1,528 | |
FPL – equity securities | $ | 116 | | | $ | — | | | $ | — | | | $ | 116 | |
Special use funds:(b) | | | | | | | |
NEE: | | | | | | | |
Equity securities | $ | 2,141 | | | $ | 2,537 | | (c) | $ | — | | | $ | 4,678 | |
U.S. Government and municipal bonds | $ | 716 | | | $ | 58 | | | $ | — | | | $ | 774 | |
Corporate debt securities | $ | 6 | | | $ | 715 | | | $ | — | | | $ | 721 | |
Asset-backed securities | $ | — | | | $ | 645 | | | $ | — | | | $ | 645 | |
Other debt securities | $ | 3 | | | $ | 18 | | | $ | — | | | $ | 21 | |
FPL: | | | | | | | |
Equity securities | $ | 778 | | | $ | 2,309 | | (c) | $ | — | | | $ | 3,087 | |
U.S. Government and municipal bonds | $ | 587 | | | $ | 25 | | | $ | — | | | $ | 612 | |
Corporate debt securities | $ | 6 | | | $ | 534 | | | $ | — | | | $ | 540 | |
Asset-backed securities | $ | — | | | $ | 467 | | | $ | — | | | $ | 467 | |
Other debt securities | $ | 3 | | | $ | 10 | | | $ | — | | | $ | 13 | |
Other investments:(d) | | | | | | | |
NEE: | | | | | | | |
Equity securities | $ | 50 | | | $ | 1 | | | $ | — | | | $ | 51 | |
U.S. Government and municipal bonds | $ | 279 | | | $ | 118 | | | $ | — | | | $ | 397 | |
Corporate debt securities | $ | — | | | $ | 341 | | | $ | 122 | | | $ | 463 | |
Other debt securities | $ | — | | | $ | 152 | | | $ | 11 | | | $ | 163 | |
FPL: | | | | | | | |
Equity securities | $ | 10 | | | $ | — | | | $ | — | | | $ | 10 | |
Debt securities | $ | — | | | $ | 114 | | | $ | — | | | $ | 114 | |
———————————————(a)Includes restricted cash equivalents of approximately $41 million ($33 million for FPL) in current other assets on the condensed consolidated balance sheets.
(b)Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.
(c)Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
(d)Included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| (millions) |
Assets: | | | | | | | |
Cash equivalents and restricted cash equivalents:(a) | | | | | | | |
NEE – equity securities | $ | 961 | | | $ | — | | | $ | — | | | $ | 961 | |
FPL – equity securities | $ | 36 | | | $ | — | | | $ | — | | | $ | 36 | |
Special use funds:(b) | | | | | | | |
NEE: | | | | | | | |
Equity securities | $ | 2,062 | | | $ | 2,375 | | (c) | $ | — | | | $ | 4,437 | |
U.S. Government and municipal bonds | $ | 641 | | | $ | 63 | | | $ | — | | | $ | 704 | |
Corporate debt securities | $ | 6 | | | $ | 716 | | | $ | — | | | $ | 722 | |
Asset-backed securities | $ | — | | | $ | 615 | | | $ | — | | | $ | 615 | |
Other debt securities | $ | 1 | | | $ | 19 | | | $ | — | | | $ | 20 | |
FPL: | | | | | | | |
Equity securities | $ | 743 | | | $ | 2,162 | | (c) | $ | — | | | $ | 2,905 | |
U.S. Government and municipal bonds | $ | 505 | | | $ | 29 | | | $ | — | | | $ | 534 | |
Corporate debt securities | $ | 6 | | | $ | 547 | | | $ | — | | | $ | 553 | |
Asset-backed securities | $ | — | | | $ | 473 | | | $ | — | | | $ | 473 | |
Other debt securities | $ | 1 | | | $ | 11 | | | $ | — | | | $ | 12 | |
Other investments:(d) | | | | | | | |
NEE: | | | | | | | |
Equity securities | $ | 30 | | | $ | 1 | | | $ | — | | | $ | 31 | |
U.S. Government and municipal bonds | $ | 117 | | | $ | 118 | | | $ | — | | | $ | 235 | |
Corporate debt securities | $ | — | | | $ | 125 | | | $ | 108 | | | $ | 233 | |
Other debt securities | $ | — | | | $ | 57 | | | $ | 10 | | | $ | 67 | |
FPL: | | | | | | | |
Equity securities | $ | 9 | | | $ | — | | | $ | — | | | $ | 9 | |
Debt securities | $ | — | | | $ | 114 | | | $ | — | | | $ | 114 | |
———————————————
(a)Includes restricted cash equivalents of approximately $69 million ($33 million for FPL) in current other assets on the condensed consolidated balance sheets.
(b)Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.
(c)Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
(d)Included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets.
Contingent Consideration – On March 31, 2021, a wholly owned subsidiary of NEET acquired GridLiance Holdco, LP and GridLiance GP, LLC (GridLiance). The acquisition agreements are subject to earn-out provisions for additional payments by NEER related to the completion of capital expenditures for certain future development projects. NEECH guarantees the contingent consideration obligations under the GridLiance acquisition agreement. Significant inputs and assumptions used in the fair value measurement of the contingent consideration, some of which are Level 3 and require judgment, include the projected timing and amount of future cash flows, estimated probability of completing future development projects as well as discount rates. The contingent consideration liabilities were valued at approximately $264 million as of the acquisition date. Approximately $128 million and $203 million of contingent consideration liabilities are included in noncurrent other liabilities on NEE's condensed consolidated balance sheets at March 31, 2023 and December 31, 2022, respectively. The decrease in contingent consideration liabilities is primarily due to a revised assessment of the likelihood of future payments expected under the purchase and sale agreement governing the acquisition of GridLiance.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Fair Value of Financial Instruments Recorded at Other than Fair Value – The carrying amounts of commercial paper and other short-term debt approximate their fair values. The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 | |
| Carrying Amount | | Estimated Fair Value | | Carrying Amount | | Estimated Fair Value | |
| (millions) | |
NEE: | | |
Special use funds(a) | $ | 1,023 | | | $ | 1,024 | | | $ | 998 | | | $ | 999 | | |
Other receivables, net of allowances(b) | $ | 236 | | | $ | 236 | | | $ | 221 | | | $ | 221 | | |
Long-term debt, including current portion | $ | 65,930 | | | $ | 62,621 | | (c) | $ | 61,889 | |
| $ | 57,892 | | (c) |
FPL: | | | | | | | | |
Special use funds(a) | $ | 752 | | | $ | 752 | | | $ | 744 | | | $ | 744 | | |
Long-term debt, including current portion | $ | 23,457 | | | $ | 22,307 | | (c) | $ | 21,002 | | | $ | 19,364 | | (c) |
———————————————
(a)Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis (Level 2).
(b)Included in noncurrent other assets on NEE's condensed consolidated balance sheets (primarily Level 3).
(c)At March 31, 2023 and December 31, 2022, substantially all is Level 2 for NEE and FPL.
Special Use Funds and Other Investments Carried at Fair Value – The special use funds noted above and those carried at fair value (see Recurring Non-Derivative Fair Value Measurements above) consist of NEE's nuclear decommissioning fund assets of approximately $7,861 million ($5,471 million for FPL) and $7,495 million ($5,220 million for FPL) at March 31, 2023 and December 31, 2022, respectively, and FPL's storm fund assets of $1 million and $1 million at March 31, 2023 and December 31, 2022, respectively. The investments held in the special use funds and other investments consist of equity and available for sale debt securities which are primarily carried at estimated fair value. The amortized cost of debt securities is approximately $3,369 million ($1,877 million for FPL) and $2,858 million ($1,873 million for FPL) at March 31, 2023 and December 31, 2022, respectively. Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at March 31, 2023 of approximately nine years at both NEE and FPL. Other investments primarily consist of debt securities with a weighted-average maturity at March 31, 2023 of approximately five years. The cost of securities sold is determined using the specific identification method.
For FPL's special use funds, changes in fair value of debt and equity securities, including any estimated credit losses of debt securities, result in a corresponding adjustment to the related regulatory asset or liability accounts, consistent with regulatory treatment. For NEE's non-rate regulated operations, changes in fair value of debt securities result in a corresponding adjustment to OCI, except for estimated credit losses and unrealized losses on debt securities intended or required to be sold prior to recovery of the amortized cost basis, which are recognized in other – net in NEE's condensed consolidated statements of income. Changes in fair value of equity securities are primarily recorded in change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds – net in NEE’s condensed consolidated statements of income.
Unrealized gains (losses) recognized on equity securities held at March 31, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | NEE | | | | | | FPL |
| | | Three Months Ended March 31, | | | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 | | | | | | 2023 | | 2022 |
| | | | | (millions) |
Unrealized gains (losses) | | | | | $ | 273 | | | $ | (299) | | | | | | | $ | 180 | | | $ | (190) | |
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Realized gains and losses and proceeds from the sale or maturity of available for sale debt securities are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | NEE | | | | | | FPL |
| | | Three Months Ended March 31, | | | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 | | | | | | 2023 | | 2022 |
| | | | | (millions) |
Realized gains | | | | | $ | 8 | | | $ | 8 | | | | | | | $ | 7 | | | $ | 7 | |
Realized losses | | | | | $ | 38 | | | $ | 27 | | | | | | | $ | 30 | | | $ | 19 | |
Proceeds from sale or maturity of securities | | | | | $ | 428 | | | $ | 721 | | | | | | | $ | 299 | | | $ | 418 | |
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, 2023 | | December 31, 2022 | | March 31, 2023 | | December 31, 2022 |
| (millions) |
Unrealized gains | $ | 18 | | | $ | 4 | | | $ | 13 | | | $ | 3 | |
Unrealized losses(a) | $ | 223 | | | $ | 285 | | | $ | 147 | | | $ | 193 | |
Fair value | $ | 2,181 | | | $ | 2,315 | | | $ | 1,212 | | | $ | 1,466 | |
———————————————
(a) Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at March 31, 2023 and December 31, 2022 were not material to NEE or FPL.
Regulations issued by the FERC and the NRC provide general risk management guidelines to protect nuclear decommissioning funds and to allow such funds to earn a reasonable return. The FERC regulations prohibit, among other investments, investments in any securities of NEE or its subsidiaries, affiliates or associates, excluding investments tied to market indices or 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.
Nonrecurring Fair Value Measurements – NEE tests its equity method investments for impairment whenever events or changes in circumstances indicate that the investment may be impaired. On February 2, 2022, the U.S. Court of Appeals for the Fourth Circuit (the 4th Circuit) vacated and remanded Mountain Valley Pipeline, LLC’s (Mountain Valley Pipeline) Biological Opinion issued by the U.S. Fish and Wildlife Service. While NextEra Energy Resources continues to evaluate options and next steps with its joint venture partners, this event along with the 4th Circuit vacatur and remand of the U.S. Forest Service right-of-way grant on January 25, 2022 caused NextEra Energy Resources to re-evaluate its investment in Mountain Valley Pipeline for further other-than-temporary impairment, which evaluation coincided with the preparation of NEE's December 31, 2021 financial statements. As a result of this evaluation, it was determined that the continued legal and regulatory challenges have resulted in a very low probability of pipeline completion. Accordingly, NextEra Energy Resources performed a fair value analysis based on the market approach to determine the amount of the impairment. The challenges to complete construction and the resulting economic outlook for the pipeline were considered in determining the magnitude of the other-than-temporary impairment. Based on this fair value analysis, NextEra Energy Resources recorded an impairment charge of approximately $0.8 billion ($0.6 billion after tax) during the first quarter of 2022, which is reflected in equity in earnings of equity method investees in NEE’s condensed consolidated statements of income for the three months ended March 31, 2022. This impairment charge resulted in the complete write off of NextEra Energy Resources’ equity method investment carrying amount of approximately $0.6 billion, as well as the recording of a liability of approximately $0.2 billion which reflects NextEra Energy Resources’ share of estimated future dismantlement costs.
The fair value estimate was based on a probability-weighted earnings before interest, taxes, depreciation and amortization (EBITDA) multiple valuation technique using a market participant view of the potential different outcomes for the investment. As part of the valuation, NextEra Energy Resources used observable inputs where available, including the EBITDA multiples of recent pipeline transactions. Significant unobservable inputs (Level 3), including the probabilities assigned to the different potential outcomes, the forecasts of operating revenues and costs, and the projected capital expenditures to complete the project, were also used in the estimation of fair value. An increase in the revenue forecasts, a decrease in the projected operating or capital expenditures or an increase in the probability assigned to the full pipeline being completed would result in an
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
increased fair market value. Changes in the opposite direction of those unobservable inputs would result in a decreased fair market value.
4. Income Taxes
NEE's effective income tax rate for the three months ended March 31, 2023 and 2022 was approximately 17.8% and 34.1%, respectively. NEE's effective income tax rate is based on the composition of pretax income or loss, and, for the three months ended March 31, 2022, primarily reflects the impact of unfavorable changes in the fair value of commodity derivatives and equity securities held in NEER's nuclear decommissioning funds, as well as the first quarter of 2022 impairment charge related to the investment in Mountain Valley Pipeline (see Note 3 – Nonrecurring Fair Value Measurements).
A reconciliation between the effective income tax rates and the applicable statutory rate is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | NEE | | FPL | | | | |
| | | | | Three Months Ended March 31, | | Three Months Ended March 31, | | | | |
| | | | | | | | | 2023 | | 2022 | | 2023 | | 2022 | | | | | | | | |
Statutory federal income tax rate | | | | | | | | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | | | | | | | |
Increases (reductions) resulting from: | | | | | | | | | | | | | | | | | | | | | | | |
State income taxes – net of federal income tax benefit | | | | | | | | | 3.2 | | | 5.7 | | | 4.2 | | | 4.3 | | | | | | | | | |
Taxes attributable to noncontrolling interests | | | | | | | | | 3.3 | | | (4.7) | | | — | | | — | | | | | | | | | |
PTCs and ITCs | | | | | | | | | (6.1) | | | 6.2 | | | (1.6) | | | — | | | | | | | | | |
Amortization of deferred regulatory credit | | | | | | | | | (2.1) | | | 4.7 | | | (3.5) | | | (4.0) | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Other – net | | | | | | | | | (1.5) | | | 1.2 | | | (0.4) | | | (0.6) | | | | | | | | | |
Effective income tax rate | | | | | | | | | 17.8 | % | | 34.1 | % | | 19.7 | % | | 20.7 | % | | | | | | | | |
NEE recognizes PTCs as wind and solar energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes, which may differ significantly from amounts computed, on a quarterly basis, using an overall effective income tax rate anticipated for the full year. NEE uses this method of recognizing PTCs for specific reasons, including that PTCs are an integral part of the expected value of most wind and some solar projects and a fundamental component of such wind and solar 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 or loss. The amount of PTCs recognized can be significantly affected by wind and solar generation and by the roll off of PTCs after ten years of production absent a retrofitting of the wind and solar projects.
5. Acquisitions
RNG Acquisition – On March 21, 2023, a wholly owned subsidiary of NextEra Energy Resources acquired a portfolio of renewable energy projects from the owners of Energy Power Partners Fund I, L.P. and North American Sustainable Energy Fund, L.P., as well as the related service provider (RNG acquisition). The portfolio primarily consists of 31 biogas projects, one of which is an operating renewable natural gas facility and the others of which are primarily operating landfill gas-to-electric facilities. The purchase price included approximately $1.1 billion in cash consideration and the assumption of approximately $34 million of debt, excluding post-closing adjustments.
Under the acquisition method, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair value. NEE acquired identifiable assets of approximately $1.1 billion, primarily relating to property, plant and equipment and intangible assets associated with biogas rights agreements and above-market purchased power agreements, and assumed liabilities of approximately $0.2 billion and noncontrolling interests of approximately $0.1 billion. The excess of the purchase price over the fair value of assets acquired and liabilities assumed resulted in approximately $0.3 billion of goodwill which has been recognized on NEE's condensed consolidated balance sheet at March 31, 2023, of which approximately $0.1 billion is expected to be deductible for tax purposes. Goodwill associated with the RNG acquisition is reflected within NEER and, for impairment testing, is expected to be included in the clean energy assets reporting unit. The goodwill arising from the transaction represents expected benefits of synergies and expansion opportunities for NEE's clean energy businesses. As the acquisition was completed shortly before the end of the reporting period, the provisional valuation of the acquired net assets, including goodwill, is subject to change as additional information related to the estimates is obtained.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
6. Related Party Transactions
NextEra Energy Resources provides operational, management and administrative services as well as transportation and fuel management services to NEP and its subsidiaries under various agreements (service agreements). NextEra Energy Resources is also party to a CSCS agreement with a subsidiary of NEP. At March 31, 2023 and December 31, 2022, the cash sweep amounts (due to NEP and its subsidiaries) held in accounts belonging to NextEra Energy Resources or its subsidiaries were approximately $21 million and $298 million, respectively, and are included in accounts payable. Fee income related to the CSCS agreement and the service agreements totaled approximately $44 million and $41 million for the three months ended March 31, 2023 and 2022, respectively, and is included in operating revenues in NEE's condensed consolidated statements of income. Amounts due from NEP of approximately $52 million and $94 million are included in other receivables and $114 million and $101 million are included in noncurrent other assets at March 31, 2023 and December 31, 2022, respectively. See also Note 11 – Disposal of Businesses/Assets for amounts due to NEP for reimbursement of construction-related costs. NEECH or NextEra Energy Resources guaranteed or provided indemnifications, letters of credit or surety bonds totaling approximately $4,599 million at March 31, 2023 primarily related to obligations on behalf of NEP's subsidiaries with maturity dates ranging from 2023 to 2059, including certain project performance obligations, obligations under financing and interconnection agreements and obligations, primarily incurred and future construction payables, associated with the December 2022 sale of projects to NEP (see Note 11 – Disposal of Businesses/Assets). 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, 2023, approximately $56 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.
During 2023 and 2022, certain services, primarily engineering, construction, transportation, storage and maintenance services, were provided to subsidiaries of NEE by related parties that NEE accounts for under the equity method of accounting. Charges for these services amounted to approximately $233 million and $175 million for the three months ended March 31, 2023 and 2022, respectively.
See also Note 11 – Disposal of Businesses/Assets for sales to NEP.
7. Variable Interest Entities (VIEs)
NEER – At March 31, 2023, NEE consolidates a number of VIEs within the NEER segment. Subsidiaries within the NEER segment are considered the primary beneficiary of these VIEs since they control the most significant activities of these VIEs, including operations and maintenance, and they have the obligation to absorb expected losses of these VIEs.
Nine indirect subsidiaries of NextEra Energy Resources have an ownership interest ranging from approximately 50% to 67% in entities which own and operate solar generation facilities with the capability of producing a total of approximately 772 MW, and own a solar generation and battery storage facility that is expected to have total generating/storage capacity of approximately 125 MW and 65 MW, respectively, upon completion of construction, which is expected in 2023. Each of the subsidiaries is considered a VIE since the non-managing members have no substantive rights over the managing members, and is consolidated by NextEra Energy Resources. These entities sell their electric output to third parties under power sales contracts with expiration dates ranging from 2035 through 2052. These entities have third-party debt which is secured by liens against the assets of the entities. The debt holders have no recourse to the general credit of NextEra Energy Resources for the repayment of debt. The assets and liabilities of these VIEs were approximately $2,095 million and $1,179 million, respectively, at March 31, 2023, and $2,084 million and $1,174 million, respectively, at December 31, 2022. At March 31, 2023 and December 31, 2022, the assets and liabilities of these VIEs consisted primarily of property, plant and equipment and long-term debt. At March 31, 2023, subsidiaries of NEE had guarantees related to certain obligations of one of these consolidated VIEs.
NEE consolidates a NEET VIE which owns and operates an approximately 280-mile electric transmission line that went into service during the first quarter of 2022. A NEET subsidiary is the primary beneficiary and controls the most significant activities of the VIE. NEET is entitled to receive 50% of the profits and losses of the entity. The assets and liabilities of the VIE totaled approximately $755 million and $23 million, respectively, at March 31, 2023, and $744 million and $18 million, respectively, at December 31, 2022. At March 31, 2023 and December 31, 2022, the assets of this VIE consisted primarily of property, plant and equipment.
NextEra Energy Resources consolidates a VIE which has a 10% direct ownership interest in wind and solar generation facilities which have the capability of producing approximately 400 MW and 599 MW, respectively. These entities sell their electric output under power sales contracts to third parties with expiration dates ranging from 2025 through 2040. These entities are also considered a VIE because the holders of differential membership interests in these entities do not have substantive rights over the significant activities of these entities. The assets and liabilities of the VIE were approximately $1,479 million and $77 million, respectively, at March 31, 2023, and $1,488 million and $86 million, respectively, at December 31, 2022. At March 31, 2023 and December 31, 2022, the assets of this VIE consisted primarily of property, plant and equipment.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
NextEra Energy Resources consolidates 31 VIEs that primarily relate to certain subsidiaries which have sold differential membership interests in entities which own and operate wind generation, solar generation and battery storage facilities with the generating/storage capacity of approximately 12,014 MW, 731 MW and 324 MW, respectively, and own solar generation and battery storage facilities that, upon completion of construction, which is anticipated in 2023, are expected to have generating/storage capacity of approximately 1,030 MW and 390 MW, respectively. These entities sell, or will sell, their electric output either under power sales contracts to third parties with expiration dates ranging from 2024 through 2053 or in the spot market. These entities are considered VIEs because the holders of differential membership interests do not have substantive rights over the significant activities of these entities. NextEra Energy Resources has financing obligations with respect to these entities, including third-party debt which is secured by liens against the generation facilities and the other assets of these entities or by pledges of NextEra Energy Resources' ownership interest in these entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of these VIEs totaled approximately $19,960 million and $1,886 million, respectively, at March 31, 2023, and $19,690 million and $2,318 million, respectively, at December 31, 2022. At March 31, 2023 and December 31, 2022, the assets and liabilities of these VIEs consisted primarily of property, plant and equipment and accounts payable. At March 31, 2023, subsidiaries of NEE had guarantees related to certain obligations of three of these consolidated VIEs.
Other – At March 31, 2023 and December 31, 2022, several NEE subsidiaries had investments totaling approximately $4,317 million ($3,468 million at FPL) and $4,016 million ($3,331 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 asset-backed securities. NEE subsidiaries, including FPL, are not the primary beneficiaries and therefore do not consolidate any of these entities because they do not control any of the ongoing activities of these entities, were not involved in the initial design of these entities and do not have a controlling financial interest in these entities.
Certain subsidiaries of NEE have noncontrolling interests in entities accounted for under the equity method, including NEE's noncontrolling interest in NEP OpCo. These entities are limited partnerships or similar entity structures in which the limited partners or non-managing members do not have substantive rights over the significant activities of these entities, and therefore are considered VIEs. NEE is not the primary beneficiary because it does not have a controlling financial interest in these entities, and therefore does not consolidate any of these entities. NEE’s investment in these entities totaled approximately $5,355 million and $5,214 million at March 31, 2023 and December 31, 2022, respectively. At March 31, 2023, subsidiaries of NEE had guarantees related to certain obligations of one of these entities, as well as commitments to invest an additional approximately $205 million in several of these entities. See further discussion of such guarantees and commitments in Note 12 – Commitments and – Contracts, respectively.
8. Employee Retirement Benefits
NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries and sponsors a contributory postretirement plan for other benefits for retirees of NEE and its subsidiaries meeting certain eligibility requirements.
The components of net periodic cost (income) for the plans are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Pension Benefits | | Postretirement Benefits | | | | |
| | | | | Three Months Ended March 31, | | Three Months Ended March 31, | | | | |
| | | | | | | | | 2023 | | 2022 | | 2023 | | 2022 | | | | | | | | |
| | | | | | | | | (millions) |
Service cost | | | | | | | | | $ | 16 | | | $ | 22 | | | $ | — | | | $ | — | | | | | | | | | |
Interest cost | | | | | | | | | 33 | | | 19 | | | 3 | | | 1 | | | | | | | | | |
Expected return on plan assets | | | | | | | | | (98) | | | (91) | | | — | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Amortization of actuarial loss | | | | | | | | | — | | | — | | | — | | | 1 | | | | | | | | | |
Amortization of prior service benefit | | | | | | | | | — | | | — | | | — | | | (1) | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Net periodic cost (income) at NEE | | | | | | | | | $ | (49) | | | $ | (50) | | | $ | 3 | | | $ | 1 | | | | | | | | | |
Net periodic cost (income) allocated to FPL | | | | | | | | | $ | (32) | | | $ | (34) | | | $ | 2 | | | $ | 1 | | | | | | | | | |
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
9. Debt
Significant long-term debt issuances and borrowings during the three months ended March 31, 2023 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Principal Amount | | Interest Rate | | Maturity Date | |
| (millions) | | | | | |
FPL: | | | | | | | | | | |
First mortgage bonds | $ | 2,500 | | | 5.05 | % | – | 5.30 | % | | 2028 | – | 2053 | |
| | | | | | |
| | | | | | | | |
NEECH: | | | | | | | | | | |
Debentures | $ | 4,000 | | | 4.90 | % | – | 5.25 | % | | 2028 | – | 2053 | |
| | | | | | |
| | | | | | |
| | | | | | | | |
| | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
In March 2023, NEECH completed a remarketing of $2.5 billion aggregate principal amount of its Series K Debentures due March 1, 2025 that were issued in February 2020 as components of equity units issued concurrently by NEE (February 2020 equity units). The debentures are fully and unconditionally guaranteed by NEE. In connection with the remarketing of the debentures, the interest rate on the debentures was reset to 6.051% per year, and interest is payable on March 1 and September 1 of each year, commencing September 1, 2023. In connection with the settlement of the contracts to purchase NEE common stock that were issued as components of the February 2020 equity units, on March 1, 2023, NEE issued 33,380,000 shares of common stock in exchange for $2.5 billion.
10. Equity
Earnings (Loss) Per Share – The reconciliation of NEE's basic and diluted earnings (loss) per share attributable to NEE is as follows:
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 |
| | | | | (millions, except per share amounts) |
| | | | | | | |
Numerator – net income (loss) attributable to NEE | | | | | $ | 2,086 | | | $ | (451) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Denominator: | | | | | | | |
Weighted-average number of common shares outstanding – basic | | | | | 1,999.9 | | | 1,964.7 | |
Equity units, stock options, performance share awards and restricted stock(a) | | | | | 5.2 | | | 8.9 | |
Weighted-average number of common shares outstanding – assuming dilution | | | | | 2,005.1 | | | 1,973.6 | |
Earnings (loss) per share attributable to NEE: | | | | | | | |
Basic | | | | | $ | 1.04 | | | $ | (0.23) | |
Assuming dilution | | | | | $ | 1.04 | | | $ | (0.23) | |
———————————————
(a)Calculated using the treasury stock method. Performance share awards are included in diluted weighted-average number of common shares outstanding based upon what would be issued if the end of the reporting period was the end of the term of the award.
Common shares issuable pursuant to equity units, stock options and/or performance share awards, as well as restricted stock which were not included in the denominator above due to their antidilutive effect were approximately 51.1 million and 58.5 million for the three months ended March 31, 2023 and 2022, 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 Related to Equity Method Investees | | Total | |
| (millions) | |
Three months ended March 31, 2023 | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Balances, December 31, 2022 | $ | 20 | | | $ | (69) | | | $ | (101) | | | $ | (74) | | | $ | 6 | | | $ | (218) | | |
Other comprehensive income before reclassifications | — | | | 9 | | | — | | | 3 | | | — | | | 12 | | |
Amounts reclassified from AOCI | 1 | | (a) | 5 | | (b) | 1 | | | — | | | — | | | 7 | | |
Net other comprehensive income | 1 | | | 14 | | | 1 | | | 3 | | | — | | | 19 | | |
Less other comprehensive income attributable to noncontrolling interests | — | | | — | | | — | | | (1) | | | — | | | (1) | | |
Balances, March 31, 2023 | $ | 21 | | | $ | (55) | | | $ | (100) | | | $ | (72) | | | $ | 6 | | | $ | (200) | | |
Attributable to noncontrolling interests | $ | — | | | $ | — | | | $ | — | | | $ | (13) | | | $ | — | | | $ | (13) | | |
| | | | | | | | | | | | |
———————————————
(a)Reclassified to interest expense in NEE's condensed consolidated statements of income (loss). See Note 2 – Income Statement Impact of Derivative Instruments.
(b)Reclassified to gains (losses) on disposal of investments and other property – net in NEE's condensed consolidated statements of income.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Accumulated Other Comprehensive Income (Loss) |
| Net Unrealized Gains (Losses) on Cash Flow Hedges | | Net Unrealized Gains (Losses) on Available for Sale Securities | | Defined Benefit Pension and Other Benefits Plans | | Net Unrealized Gains (Losses) on Foreign Currency Translation | | Other Comprehensive Income Related to Equity Method Investees | | Total |
| (millions) |
Three Months Ended March 31, 2022 | |
Balances, December 31, 2021 | $ | 14 | | | $ | 5 | | | $ | 25 | | | $ | (49) | | | $ | 5 | | | $ | — | |
Other comprehensive income (loss) before reclassifications | — | | | (30) | | | — | | | 12 | | | — | | | (18) | |
Amounts reclassified from AOCI | 4 | | (a) | — | | | — | | | — | | | — | | | 4 | |
Net other comprehensive income (loss) | 4 | | | (30) | | | — | | | 12 | | | — | | | (14) | |
Less other comprehensive income attributable to noncontrolling interests | — | | | — | | | — | | | (6) | | | — | | | (6) | |
Balances, March 31, 2022 | $ | 18 | | | $ | (25) | | | $ | 25 | | | $ | (43) | | | $ | 5 | | | $ | (20) | |
Attributable to noncontrolling interests | $ | — | | | $ | — | | | $ | — | | | $ | 12 | | | $ | — | | | $ | 12 | |
———————————————
(a)Reclassified to interest expense in NEE's condensed consolidated statements of income (loss). See Note 2 – Income Statement Impact of Derivative Instruments.
11. Summary of Significant Accounting and Reporting Policies
Rate Regulation – In March 2023, the FPSC approved FPL’s January 2023 request to recover its 2022 fuel under-recovery of approximately $2.1 billion over 21 months effective April 2023 and its request for a $1.0 billion mid-course correction to reduce the 2023 levelized fuel charges to customers over 9 months effective April 2023. In April 2023, the FPSC approved FPL’s March 2023 request to reduce its 2023 levelized fuel charges, due to further decline in the natural gas forward curve, by an additional $379 million over 8 months effective May 2023.
Storm Cost Recovery – In March 2023, the FPSC approved FPL’s January 2023 request for an interim storm restoration charge for recovery of approximately $1.5 billion in unrecovered storm costs, primarily related to the surcharge for Hurricanes Ian and Nicole. The interim surcharge will apply for a 12-month period that began April 2023. The amount collected will be subject to refund based on an FPSC prudence review.
Other Current Liabilities – At March 31, 2023 and December 31, 2022, approximately $328 million and $618 million, respectively, of unpaid storm restoration costs, including estimated capital costs, are included in other current liabilities on NEE's and FPL's condensed consolidated balance sheets.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Restricted Cash – At March 31, 2023 and December 31, 2022, NEE had approximately $1,914 million ($42 million for FPL) and $1,840 million ($33 million for FPL), respectively, of restricted cash, which is included in current other assets on NEE's and FPL's condensed consolidated balance sheets. Restricted cash is primarily related to debt service payments and margin cash collateral requirements at NEER and bond proceeds held for construction at FPL. In addition, where offsetting positions exist, restricted cash related to margin cash collateral of $1,590 million is netted against derivative liabilities at March 31, 2023 and $7 million is netted against derivative assets and $1,541 million is netted against derivative liabilities at December 31, 2022. See Note 2.
Disposal of Businesses/Assets – In April 2023, subsidiaries of NextEra Energy Resources entered into an agreement to sell to a NEP subsidiary their 100% ownership interests in five wind generation facilities and three solar generation facilities located in geographically diverse locations throughout the U.S. with a total generating capacity of 688 MW. NEER expects to close the sale by the end of the second quarter of 2023, subject to customary closing conditions, for cash proceeds of approximately $566 million, subject to closing adjustments. Additionally, NEP’s share of the entities’ debt and noncontrolling interests related to differential membership investors is estimated to be approximately $307 million at the time of closing.
In December 2022, subsidiaries of NextEra Energy Resources sold (i) a 49% controlling ownership interest in three wind generation facilities and one solar plus battery facility located in geographically diverse locations throughout the U.S. with a total generating capacity of 1,437 MW and 65 MW of battery storage capacity, two of which facilities were under construction with expected in service dates in 2023, and (ii) their 100% ownership interest in three wind generation facilities located in the Midwest region of the U.S. with a total generating capacity of 347 MW to a NEP subsidiary for cash proceeds of approximately $805 million, plus working capital and other adjustments of $8 million (subject to post-closing adjustments). A NextEra Energy Resources affiliate will continue to operate the facilities included in the sale. In connection with the facilities under construction, approximately $251 million of cash received was recorded as contract liabilities, which is included in current other liabilities on NEE's condensed consolidated balance sheet at December 31, 2022. During the three months ended March 31, 2023, upon one of the facilities achieving commercial operations, approximately $81 million of contract liabilities were reversed and the sale of the facility was recognized for accounting purposes. The remaining contract liability balance relates to sale proceeds from NEP of approximately $69 million and differential membership interests of approximately $101 million. The contract liabilities associated with the sale proceeds and the differential membership interests are subject to the facility currently under construction achieving commercial operations by a specified date in 2023. The contract liabilities will be reversed and the sale recognized for accounting purposes if the contingency is resolved in 2023. Otherwise, NextEra Energy Resources may be required to return proceeds related to differential membership interests and/or repurchase the facilities for up to $170 million. NEER will continue to consolidate the project currently under construction for accounting purposes. In addition, NextEra Energy Resources is responsible to pay for all construction costs related to the portfolio. At March 31, 2023 and December 31, 2022, approximately $707 million and $810 million, respectively, are included in accounts payable on NEE's condensed consolidated balance sheets and represent amounts owed by NextEra Energy Resources to NEP to reimburse NEP for construction costs.
Property Plant and Equipment – Property, plant and equipment consists of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | NEE | | FPL |
| | March 31, 2023 | | December 31, 2022 | | March 31, 2023 | | December 31, 2022 |
| | (millions) |
Electric plant in service and other property | | $ | 128,927 | | | $ | 124,963 | | | $ | 76,103 | | | $ | 74,353 | |
Nuclear fuel | | 1,732 | | | 1,684 | | | 1,223 | | | 1,190 | |
Construction work in progress | | 16,264 | | | 15,675 | | | 6,352 | | | 7,026 | |
Property, plant and equipment, gross | | 146,923 | | | 142,322 | | | 83,678 | | | 82,569 | |
Accumulated depreciation and amortization | | (31,994) | | | (31,263) | | | (18,032) | | | (17,876) | |
Property, plant and equipment – net | | $ | 114,929 | | | $ | 111,059 | | | $ | 65,646 | | | $ | 64,693 | |
During the three months ended March 31, 2023 and 2022, FPL recorded AFUDC of approximately $39 million and $44 million, respectively, including AFUDC – equity of approximately $30 million and $34 million, respectively. During the three months ended March 31, 2023 and 2022, NEER capitalized interest on construction projects of approximately $58 million and $36 million, respectively.
Structured Payables – Under NEE's structured payables program, subsidiaries of NEE issue negotiable drafts, backed by NEECH guarantees, to settle invoices with suppliers with payment terms that extend the original invoice due date (typically 30 days) to less than one year and include a service fee. At their discretion, the suppliers assign the negotiable drafts and the rights under the NEECH guarantees to financial institutions. NEE and its subsidiaries are not party to any contractual agreements between their suppliers and the applicable financial institutions.
At March 31, 2023 and December 31, 2022, NEE's outstanding obligations under its structured payables program were approximately $3.6 billion and $3.7 billion, respectively, substantially all of which is included in accounts payable on NEE's condensed consolidated balance sheets.
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 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 development, construction and maintenance of its competitive energy businesses. Also see Note 3 – Contingent Consideration.
At March 31, 2023, estimated capital expenditures, on an accrual basis, for the remainder of 2023 through 2027 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Remainder of 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Total |
| (millions) |
FPL: | | | | | | | | | | | |
Generation:(a) | | | | | | | | | | | |
New(b) | $ | 2,810 | | | $ | 2,315 | | | $ | 2,820 | | | $ | 3,670 | | | $ | 3,150 | | | $ | 14,765 | |
Existing | 1,110 | | 1,175 | | 1,045 | | 1,280 | | 1,465 | | 6,075 | |
Transmission and distribution(c) | 1,945 | | 3,975 | | 3,645 | | 3,340 | | 3,575 | | 16,480 | |
Nuclear fuel | 90 | | 160 | | 200 | | 200 | | 225 | | 875 | |
General and other | 510 | | 455 | | 515 | | 385 | | 525 | | 2,390 | |
Total | $ | 6,465 | | | $ | 8,080 | | | $ | 8,225 | | | $ | 8,875 | | | $ | 8,940 | | | $ | 40,585 | |
NEER:(d) | | | | | | | | | | | |
Wind(e) | $ | 2,750 | | | $ | 1,320 | | | $ | 625 | | | $ | 50 | | | $ | 40 | | | $ | 4,785 | |
Solar(f) | 3,365 | | | 1,320 | | | 240 | | | 5 | | | 5 | | | 4,935 | |
Other clean energy(g) | 705 | | | 300 | | | 80 | | | 90 | | | 15 | | | 1,190 | |
Nuclear, including nuclear fuel | 140 | | | 230 | | | 220 | | | 225 | | | 295 | | | 1,110 | |
| | | | | | | | | | | |
Rate-regulated transmission | 185 | | | 105 | | | 95 | | | 70 | | | 20 | | | 475 | |
Other | 580 | | | 275 | | | 175 | | | 160 | | | 130 | | | 1,320 | |
Total | $ | 7,725 | | | $ | 3,550 | | | $ | 1,435 | | | $ | 600 | | | $ | 505 | | | $ | 13,815 | |
| | | | | | | | | | | |
———————————————(a)Includes AFUDC of approximately $100 million, $105 million, $90 million, $125 million and $115 million for the remainder of 2023 through 2027, respectively.
(b)Includes land, generation structures, transmission interconnection and integration and licensing.
(c)Includes AFUDC of approximately $40 million, $50 million, $55 million, $30 million and $30 million for the remainder of 2023 through 2027, respectively.
(d)Represents capital expenditures for which applicable internal approvals and also, if required, regulatory approvals have been received.
(e)Consists of capital expenditures for new wind projects and repowering of existing wind projects totaling approximately 3,081 MW, and related transmission.
(f)Includes capital expenditures for new solar projects (including solar plus battery storage projects) totaling approximately 6,890 MW and related transmission.
(g)Includes capital expenditures primarily for battery storage projects and renewable fuels projects.
The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.
In addition to guarantees noted in Note 6 with regards to NEP, NEECH has guaranteed or provided indemnifications or letters of credit related to third parties, including certain obligations of investments in joint ventures accounted for under the equity method, totaling approximately $493 million at March 31, 2023. These obligations primarily related to guaranteeing the residual value of certain financing leases. Payment guarantees and related contracts with respect to unconsolidated entities for which NEE or one of its subsidiaries are the guarantor are recorded at fair value and are included in noncurrent other liabilities on NEE’s condensed consolidated balance sheets. Management believes that the exposure associated with these guarantees is not material.
Contracts – In addition to the commitments made in connection with the estimated capital expenditures included in the table in Commitments above, FPL has firm commitments under long-term contracts primarily for the transportation of natural gas with expiration dates through 2042.
At March 31, 2023, NEER has entered into contracts with expiration dates through 2033 primarily for the purchase of wind turbines, wind towers and solar modules and related construction and development activities, as well as for the supply of uranium, and the conversion, enrichment and fabrication of nuclear fuel. Approximately $4.6 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 through 2041.
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, 2023 were estimated as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Remainder of 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Thereafter |
| (millions) |
FPL(a) | $ | 835 | | | $ | 1,065 | | | $ | 1,065 | | | $ | 1,065 | | | $ | 985 | | | $ | 8,545 | |
| | | | | | | | | | | |
NEER(b)(c)(d) | $ | 3,230 | | | $ | 1,800 | | | $ | 145 | | | $ | 100 | | | $ | 95 | | | $ | 670 | |
| | | | | | | | | | | |
———————————————(a)Includes approximately $310 million, $410 million, $405 million, $400 million, $400 million and $5,560 million for the remainder of 2023 through 2027 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 $102 million and $102 million for the three months ended March 31, 2023 and 2022, respectively, of which $25 million and $26 million, respectively, were eliminated in consolidation at NEE.
(b)Excludes commitments related to equity contributions and a 20-year natural gas transportation agreement (approximately $70 million per year) with a joint venture, in which NEER has a 32.2% equity investment, that is constructing a natural gas pipeline. These commitments are subject to the completion of construction of the pipeline which has a very low probability of completion. See Note 3 – Nonrecurring Fair Value Measurements.
(c)Includes approximately $260 million of commitments to invest in technology and other investments through 2031. See Note 7 – Other.
(d)Includes approximately $365 million, $1,285 million, $5 million, $5 million, $0 million and $0 million for the remainder of 2023 through 2027 and thereafter, respectively, of joint obligations of NEECH and NEER.
Insurance – Liability for accidents at nuclear power plants is governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of insurance available from both private sources and an industry retrospective payment plan. In accordance with this Act, NEE maintains $450 million of private liability insurance per site, which is the maximum obtainable, except at Duane Arnold which obtained an exemption from the NRC and maintains a $100 million private liability insurance limit. Each site, except Duane Arnold, participates in a secondary financial protection system, which provides up to $13.2 billion of liability insurance coverage per incident at any nuclear reactor in the U.S. Under the secondary financial protection system, NEE is subject to retrospective assessments of up to $963 million ($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 $143 million ($82 million for FPL) per incident per year. NextEra Energy Resources and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook and St. Lucie Unit No. 2, which approximates $16 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 limit of $50 million for property damage, decontamination risks and non-nuclear perils. NEE participates in co-insurance of 10% of the first $400 million of losses per site per occurrence, except at Duane Arnold. 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 $158 million ($100 million for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NextEra Energy Resources and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $2 million, $2 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 FPL's storm restoration costs exceed the storm reserve, such storm restoration costs may be recovered, subject to prudence review by the FPSC, through surcharges approved by the FPSC or through securitization provisions pursuant to Florida law.
In the event of a loss, the amount of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered from customers in the case of FPL, would be borne by NEE and FPL and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.
Legal Proceedings – FPL is the defendant in a purported class action lawsuit (Velez, et al. v. Florida Power & Light Company) filed in February 2018 that seeks from FPL unspecified damages for alleged breach of contract and gross negligence based on service interruptions that occurred as a result of Hurricane Irma in 2017. The trial of this matter is set for November 2023 in the Miami-Dade County Circuit Court. The trial court certified the case as a class action and FPL's appeal of that decision was denied by Florida's Third District Court of Appeal (3rd DCA) in March 2023. FPL filed a motion on March 31, 2023, for rehearing with the 3rd DCA claiming that the opinion upholding the class certification contains several errors that should be reheard by the full 3rd DCA. The motion is pending. FPL does not believe that the plaintiffs’ claims should be meritorious on a class, individual or appellate basis, but management is unable to predict with certainty the outcome of the lawsuit.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(unaudited)
13. Segment Information
The tables below present information for NEE's two reportable segments, FPL, a rate-regulated utility business, and NEER, which is comprised of competitive energy and rate-regulated transmission businesses. Corporate and Other represents other business activities, includes eliminating entries, and may include the net effect of rounding.
NEE's segment information is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
| FPL | | NEER(a) | | Corporate and Other | | NEE Consoli- dated | | FPL | | NEER(a) | | Corporate and Other | | NEE Consoli- dated |
| | | | | | | (millions) | | | | | | |
Operating revenues | $ | 3,919 | | | $ | 2,792 | | | $ | 5 | | | $ | 6,716 | | | $ | 3,712 | | | $ | (800) | | | $ | (22) | | | $ | 2,890 | |
Operating expenses – net | $ | 2,373 | | | $ | 1,325 | | | $ | 74 | | | $ | 3,772 | | | $ | 2,469 | | | $ | 1,168 | |
| $ | 51 | |
| $ | 3,688 | |
Gains (losses) on disposal of businesses/assets – net | $ | — | | | $ | 1 | | | $ | (3) | | | $ | (2) | | | $ | — | | | $ | 25 | | | $ | (2) | | | $ | 23 | |
Net loss attributable to noncontrolling interests | $ | — | | | $ | 301 | | | $ | — | | | $ | 301 | | | $ | — | | | $ | 242 | | | $ | — | | | $ | 242 | |
Net income (loss) attributable to NEE | $ | 1,070 | | | $ | 1,440 | | (b) | $ | (424) | | | $ | 2,086 | | | $ | 875 | | | $ | (1,499) | | (b) | $ | 173 | | | $ | (451) | |
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(a)Interest expense allocated from NEECH to NextEra Energy Resources' subsidiaries is based on a deemed capital structure of 70% debt and differential membership interests sold by NextEra Energy Resources' subsidiaries. Residual NEECH corporate interest expense is included in Corporate and Other.
(b)See Note 4 for a discussion of NEER's tax benefits related to PTCs
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
| FPL | | NEER | | Corporate and Other | | NEE Consoli- dated | | FPL | | NEER | | Corporate and Other | | NEE Consoli- dated |
| | | | | | | (millions) | | | | | | |
Total assets | $ | 88,025 | | | $ | 74,846 | | | $ | 2,486 | | | $ | 165,357 | | | $ | 86,559 | | | $ | 70,713 | | | $ | 1,663 | | | $ | 158,935 | |