NextEra Energy, Inc. · NYSE:NEE
NextEra Energy — Edison Electric Institute Conference 2017
70 slides from NextEra Energy's conference presentation, November 2017
Slide 1: Edison Electric Institute Conference
Edison Electric Institute Conference Orlando, Florida November 5-8, 2017
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results This presentation includes forward-looking statements within the meaning of the federal securities laws. Actual results could differ materially from such forward- looking statements. The factors that could cause actual results to
Slide 3: NextEra Energy is comprised of two strong businesses supported by a common platform
NextEra Energy is comprised of two strong businesses supported by a common platform • ~$73 B market capitalization(1) • ~46.5 GW in operation(2,3) • ~$97 B in total assets(3) • One of the largest • The world leader in electric utilities in the electricity generated nation by retail MWh from the wind
Slide 4: Built on best-in-class operational excellence and financial strength
Built on a foundation of best-in-class operational excellence and financial strength, and focused on clean generation Cost and Reliability Generation Profile 2016 Utility & Corporate Benchmarks 2016 NextEra Energy Fuel Mix MWhs(3) Operational Cost(1) SAIDI(2) ($/Retail MWh) (Minutes) Nuclear Wind ~$
Slide 5: Long-term track record of delivering value to shareholders
We have a long-term track record of delivering value to shareholders Adjusted Earnings Per Share(1) Total Shareholder Return(2) 20% 18% 60% $6.19 53% $5.71 16% $5.30 50% $4.97 15% 43% $4.39 $4.57 $3.84 $4.05 $4.30 12% 40% $3.49 29% $3.04 10% 30% $2.63 20% 5% 10% 0% 0% '05 '06 '07 '08 '09 '10 '11 '12
Slide 6: Growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 10/31/2017 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $72,945 NextEra Energy 2 $38,185 2 $63,068 3 $34,476 3 $61,
Slide 7: Well positioned to continue this track record for the next four years
We are well positioned to continue this track record for the next four years Wholesale FPL & Service FPL Coal Retirements Energy Territory Expansion Services FPL FPL Battery FPL T&D FPL New Solar Infrastructure Generation Storage Expect $40 B - Capital FPL $44 B of capital New Wind Generation Asset
Slide 8: Strong financial results in the first three quarters of 2017
NextEra Energy achieved strong financial results in the first three quarters of 2017 Year-to-Date 2017 Highlights • NextEra Energy achieved year-over-year growth of ~9.2% in adjusted earnings per share • FPL remains focused on delivering outstanding customer value and deploying capital productively
Slide 9: Florida Power & Light is one of the best utility franchises in the U.S.
Florida Power & Light is one of the best utility franchises in the U.S. Florida Power & Light • One of the largest U.S. electric utilities • Vertically-integrated, retail rate-regulated • ~5 MM customer accounts • ~26.5 GW in operation • $10.9 B(1) in operating revenues • ~$50 B in total assets 1) A
Slide 10: Our core focus at FPL has been consistent for many years
Our core focus at FPL has been consistent for many years Areas of Focus • Unyielding commitment to customer value proposition Customer – Low Bills Satisfaction – High reliability – Excellent customer service • Focus on efficiency and best-in- Superior Virtuous Constructive class cost performance Cus
Slide 11: FPL's value delivery founded on low cost position and best-in-class operations
FPL’s value delivery is founded on a low cost position and best-in-class operations Operational Cost Effectiveness(1) $100.00 Good Adjusted Regressed Top Quartile Top Decile $/ Retail MWh Log/Log FPL 2016 = $12.91/MWh $10.00 1,000,000 10,000,000 100,000,000 1,000,000,000 Retail MWh 1) FERC Form 1, 2
Slide 12: FPL 2017 – 2020 Investment Initiatives
FPL projects total capital deployment of $17.5 B to $19.0 B from 2017 to 2020 through smart investments that result in customer savings and enhanced reliability FPL 2017 – 2020 Investment Initiatives Projected Recovery Opportunity Status Investment(1) Mechanism In construction and on track to Solar
Slide 13: Typical residential bills below Florida and National averages
FPL’s strategy continues to result in typical residential bills below both Florida and National averages FPL 1,000-kWh Residential Bill $139.86 $140 $120.45 $120 $108.61 $102.55 $107.16 $100 Good $80 $60 $40 $20 $- FPL FPL (1) FPL (2) FL IOUs(3) National (4) 2006 2017 2020E Average Average FPL expec
Slide 14: Energy Resources: leading North American clean energy company
Energy Resources’ focus is to be the leading North American clean energy company Energy Resources • World leader in electricity generated from the wind and sun • ~20 GW(1) of generation in operation – ~14 GW wind – ~2 GW solar – ~3 GW nuclear – ~1 GW natural gas/oil • ~8 BCF of natural gas pipeline
Slide 15: Energy Resources' renewables development opportunities have never been stronger
Energy Resources’ renewables development opportunities have never been stronger Cost and Technology Improvements Best-in- Development Class Nuclear/Coal- Federal Tax Skills Construction to-Renewables Incentives Expertise Switching ~60 GW U.S. Cost of Customer Renewable Capital and Relationships Dema
Slide 16: Wind and solar expected to be competitive into the next decade
With continued technology improvements and cost declines, wind and solar are expected to be competitive into the next decade Wind and Solar Technology Levelized Cost of Levelized Cost of Electricity from Wind Electricity from Solar (Including Production Tax Credits) (Including Investment Tax Credits
Slide 17: Energy Resources Development Program
Energy Resources’ competitive advantages position us well for continued success Energy Resources Development Program(1) (Signed Contracts as of October 26, 2017) 2017 – 2018 2017 – 2018 2019 – 2020 2019 – 2020 2017 – 2020 Signed Current Signed Current Current Contracts Expectations Contracts Expecta
Slide 18: Battery improvements and cost declines expected to expand storage market
Battery efficiency improvements and cost declines are expected to expand the storage market and enable even greater renewables expansion Storage Technology Lithium-ion 4-Hour Battery Pack Cost(1) Battery Storage Adder(2) $/kWh $/MWh $1,200 $80 $71-$81 $1,000 $70 $1,000 $60 $800 $45-$55 $50 $642 $38-
Slide 19: Largest solar and storage facility of its kind in the United States
Energy Resources recently signed an agreement for a solar and storage facility which is the largest of its kind in the United States Tucson Electric Power (TEP): Solar and Storage • 100 MW solar with 30 MW, four $45 hour battery storage system <$15 <$45 • 2019 - 2020 expected commercial operation da
Slide 20: Expansion into the natural gas pipeline business
We have leveraged our skills and capabilities to expand into the natural gas pipeline business Natural Gas Pipeline Assets Sabal Trail and Florida Mountain Texas Southeast Connection (FSC) Valley Pipeline (MVP) Pipelines • ~$1.5 B investment in Sabal • NextEra expects to invest • NEP completed the $
Slide 21: Investments expected to drive capital expenditures through 2020
New wind, solar, and natural gas pipeline investments are expected to drive capital expenditures through 2020 Projected Capital Expenditure Summary(1,2) $7.0 $6.1 - $6.8 $5.4 - $6.2 $5.3 - $6.1 $6.0 $5.2 - $5.9 $5.0 $4.0 $ B $3.0 $2.0 $1.0 $0.0 2017E 2018E 2019E 2020E Renewables (including Repowerin
Slide 22: NextEra Energy Post–2020 Snapshot
We expect opportunities for smart capital deployment to continue beyond 2020 NextEra Energy Post–2020 Snapshot Generation Nuclear Transmission and Modernization 26% Distribution Wind Solar Storage Gas Pipelines 22
Slide 23: Positioned to capitalize on potentially disruptive industry changes
We are well positioned to capitalize on and respond to potentially disruptive changes to our industry in the next decade Disruptive Industry Changes Potential Cost per kWh Post-2020(1) Shale (¢/kWh) Gas 3.5 - 5¢ 4 - 5¢ 3 - 4¢ 3 - 4¢ Big Data Renewables 2 - 3¢ /Storage Generation Wind Solar Gas Coal
Slide 24: Excess balance sheet capacity to fund growth into the next decade
We expect to have excess balance sheet capacity to fund growth into the next decade NEE Adjusted Earnings NEE Balance Sheet Strength From Regulated Businesses(1) • We remain committed to maintaining 69% one of the strongest balance sheets in the industry 67% • Regulated business mix expected to mean
Slide 25: NextEra Energy's Financial Expectations
We remain well positioned to achieve our adjusted EPS compound annual growth rate of 6% to 8% through 2020 NextEra Energy’s Financial Expectations • Remain committed to maintaining the strength of our $7.85 - balance sheet $8.45 $6.80 - • Equity forward announced in $6.35 - $7.30 2016 settled in ful
Slide 26: NextEra Energy presents an attractive value proposition
NextEra Energy presents an attractive value proposition NextEra Energy Value Proposition • Proven track record with experienced management team 9% - 11% / year • Consistent low-risk strategy with largely regulated and long-term contracted portfolio and growth Expected • Constructive regulatory Adjus
Slide 27: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 28: NextEra Energy Partners' strategic and growth initiatives
NextEra Energy Partners’ strategic and growth initiatives have significantly enhanced the LP unitholder investor value proposition NEP Year-to-Date 2017 Highlights • Grew distributions per unit by ~15% year-over-year • Year-to-date adjusted EBITDA growth of ~15% and CAFD growth of ~10% against prior
Slide 29: NextEra Energy Partners' Portfolio
NextEra Energy Partners is a best-in-class diversified clean energy growth company NextEra Energy Partners’ Portfolio(1) • Stable cash flows supported by: – Long-term contracts with credit- worthy counterparties – Geographic and asset diversity • ~3,700 MW of renewables – ~3,100 MW wind – ~600 MW so
Slide 30: Since the IPO, NEP has grown distributions by ~109%
Since the IPO, NEP has grown distributions by ~109% and delivered total unitholder return of 76% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices $1.57 100% 90% 80% 76% 70% 60% 50% 41% 41% 40% 30% $0.75 20% 10% Yie 0% -10% (5%) (2) NEP S&P 500 S&P 500 YieldCo (3) Utilities Aver
Slide 31: NEP's value proposition is built upon four core strengths
NEP’s value proposition is built upon four core strengths NextEra Energy Partners’ Core Strengths High-Quality Portfolio(1) Financial Strength and Flexibility Issuer Credit ~3.7 GW Rating(4) Year-end 2017E 18-Yr A3 Renewables >90% Ba1/BB/BB+ Remaining Counterparty Capacity of Project Debt ~1.2x & Ta
Slide 32: NEP focuses on investing in clean energy assets with stable cash flows
NEP continues to focus on investing in clean energy assets with stable cash flows Asset Suitability Long-Term Contract Clean Energy Technology Creditworthy Counterparty “NEP-Able” Asset Stable Regulatory Environment Limited or Monetized Tax Credits Strong Operations Any clean energy asse
Slide 33: Clear visibility to future growth for NEP
Acquisitions from Energy Resources, organic growth and third party M&A all provide NEP with clear visibility to future growth Growth Opportunities Potential Acquisition of Potential Organic Clean Energy Potential for 3rd Prospects for Assets at Energy Party Texas Pipelines Resources, Acquisitions an
Slide 34: Governance changes at NEP to enhance LP unitholder rights
We have implemented certain governance changes at NEP in order to enhance LP unitholder rights Enhancing Unitholder Governance Rights Prior Structure New Structure • BOD at NEP GP • New BOD at NEP LP Board of • Three Directors appointed by GP (NEE) Directors • NEE appointed all Directors • • Four Di
Slide 35: NEP's ongoing financing optimization minimizes need for common equity
NEP’s ongoing financing optimization is expected to minimize the need for common equity Optimizing The Capital Structure Investor IDR Fee Low double-digit Investor Demand Modification ROEs on acquisitions Demand Access Access to Utilized high-yield Dividend Alternative to Low Low Cost Financing debt
Slide 36: NEP's credit ratings increase financing flexibility and debt capacity
NEP’s credit ratings increase financing flexibility and debt capacity due to greater market access Corporate Credit Rating and Debt Capacity • NEP corporate credit ratings: High-Yield Term Loan B Moody’s S&P Fitch Debt Revolving Credit Ba1 BB BB+ Convertible Facility Stable Stable Stable Preferred O
Slide 37: NEP's ongoing financing initiatives
NEP’s ongoing financing initiatives are expected to minimize the need for common equity NEP Financing Update • $550 MM Convertible Preferred Offering – 4.50% coupon – 15% conversion premium • $300 MM Convertible Debt/Capped Call Transaction – 1.5% coupon for 3 years – Initial conversion rate represe
Slide 38: NEP Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners Adjusted EBITDA and CAFD Expectations(1) Adjusted EBITDA CAFD 12/31/17 Run Rate(2) $875 - $975 MM $310 - $340 MM 12/31/18 Run Rate(3) $1,050 - $1,200 MM $360 - $400 MM Unit Distributions 2017(4) $1.58 - $1.62 annualized rate by year-end 2016 – 2022(5) 12% - 15% average annual
Slide 39: Tenor of NEP's distribution growth guidance relative to peers
The tenor of NEP’s distribution growth guidance relative to peers reflects our confidence in the long-term opportunity Valuing NEP’s Growth Guidance Tenor vs. High Growth MLP Peers(1) Long-Term/Terminal Value Drivers NEP • 18-year average remaining contract life(2) of NEP’s assets limits commodity p
Slide 40: NEP offers a superior value proposition
We believe NEP offers a superior value proposition and is better positioned than ever to deliver upon its long-term expectations Investor Total Return Potential • Opportunity to earn a total return of ~4% 16% - 19% roughly 16% - 19% per year through at least 2022 12% - 15% • Diversified portfolio wi
Slide 41: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 41
Slide 42: NextEra Energy
NExTera’ ENERGY @
Slide 43: FPL's Base Rate Case Settlement
FPL’s settlement agreement is designed to help deliver continued outstanding customer value FPL’s Base Rate Case Settlement • Effective January 2017 through December 2020 • Retail base revenue increases according to the following schedule: – $400 MM beginning January 2017 – $211 MM beginning January
Slide 44: Contracted Renewables Development Program
Contracted Renewables Development Program(1) Wind Location MW Solar Location MW 2017 – 2018: 2017 – 2018: Oliver III ND 99 Whitney Point CA 20 Huron MI 150 Marshall MN 62 Golden Hills North CA 46 Stuttgart AR 81 Bluff Point IN 120 Westside CA 20 Eight Point NY 102 Blue Bell TX 30 Dodge County MN 200
Slide 45: Energy Resources Wind Production Index
Energy Resources Wind Production Index(1)(2) 2016 2017 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR Location MW Jul Aug Sep QTR MW QTR YTD MW QTR MW QTR MW Jul Aug Sep QTR YTD Midwest 3,054 98% 84% 105% 96% 3,039 106% 100% 3,039 101% 3,039 104% 3,039 83% 72% 92% 83% 98% West 2,718 111% 100% 105% 105% 3,1
Slide 46: Reconciliation of EPS to Adjusted EPS
Reconciliation of Earnings Per Share Attributable to NextEra Energy, Inc. to Adjusted Earnings Per Share 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Earnings Per Share Attributable to NextEra Energy, Inc. (assuming dilution) $ 2.34 $ 3.23 $ 3.27 $ 4.07 $ 3.97 $ 4.74 $ 4.59 $ 4.56 $ 4
Slide 47: NEP deconsolidation beginning in 2018
Due to the enhanced governance rights for LP unitholders, NextEra Energy will no longer consolidate NEP in its financial statements beginning in 2018 Practical Accounting Impacts of Deconsolidation(1) GAAP Adjusted Earnings • NEP’s balance sheet removed from • Same as GAAP Equity NEE’s and replaced
Slide 48: Adjusted earnings with or without NEP deconsolidation
NextEra Energy’s adjusted earnings, with or without NEP deconsolidation, are expected to be roughly the same Hypothetical Example of NextEra Energy’s Adjusted Earnings - December 31, 2018(1) With NEP Consolidated ($ MM) With NEP Deconsolidated ($ MM) GAAP Net income attributable to NEE $3,335 GAAP N
Slide 49: Deconsolidation removes NEP's PP&E and debt from NEE balance sheet
Deconsolidation results in NEP’s PP&E and debt being removed from NEE’s balance sheet Hypothetical Example of NextEra Energy’s Balance Sheet - December 31, 2018(1) ($MM) With NEP Consolidated With NEP Deconsolidated(2) Change Assets Assets Total PP&E $75,000 Total PP&E $68,200 ($6,800) Investment in
Slide 50: Definitional information
Definitional information NextEra Energy, Inc. Adjusted Earnings Expectations This presentation refers to adjusted earnings per share expectations. Adjusted earnings expectations exclude the effect of non- qualifying hedges, net OTTI losses on securities held in NextEra Energy Resources’ nuclear deco
Slide 51: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, bu
Slide 52: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) effect of reductions in the liquidity of energy markets on NextEra Energy's ability to manage operational risks; effectiveness of NextEra Energy's and FPL's risk management tools associated with their hedging and trading pr
Slide 53: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 54: NextEra Energy Partners – Portfolio Additions
We continue to execute on our plan to expand NextEra Energy Partners’ portfolio NextEra Energy Partners – Portfolio Additions • Acquisition from NEE is expected to close by year-end Contract Project Resource MW COD Expiration(1) Desert Sunlight Solar 142.5 2014 2037 Brady I Wind 149.7 2016 2046 Brad
Slide 55: Portfolio Overview
NEP’s portfolio is comprised of ~3.7 GW of renewable assets plus seven natural gas pipelines with an ~18 year weighted average remaining contract life Portfolio Overview(1) Project COD Location Net MW Technology Counterparty Credit PPA Life Ashtabula III Dec-10 ND 62 Wind A3 21 Baldwin Dec-10 ND 102
Slide 56: NEP Wind Production Index
NEP Wind Production Index(1) 2016 2017 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR Location MW Jul Aug Sep QTR MW QTR YTD MW QTR MW QTR MW Jul Aug Sep QTR YTD West 659 98% 94% 113% 101% 659 106% 102% 659 90% 909 92% 909 85% 85% 86% 85% 89% Texas 250 102% 84% 94% 94% 250 98% 92% 250 89% 250 91% 250 79% 6
Slide 57: PAYGO Tax Equity Financing
NEP’s tax shield creates the need to employ tax equity financing for projects that generate a large portion of their economics from tax credits PAYGO Tax Equity Financing • Tax equity financing is used Project Cash Flow Split(1) to monetize tax attributes • Under tax equity, an investor makes an up-
Slide 58: NEP $550 MM convertible preferred securities
In June 2017, NEP announced an agreement to issue $550 MM of convertible preferred securities Convertible Preferred Offering(1) • NEP’s 4.50% coupon is the Coupon at Issuance(2) lowest ever for a preferred security in the MLP or Yieldco 10.75% sector 9.5% 10.0% • Provides a low cash cost of 8.0% 8.0
Slide 59: NEP $300 MM convertible debt and capped call
NEP has issued $300 MM of convertible debt and entered into a capped call transaction in connection with the offering Convertible Debt/Capped Call Transaction • Low 1.5% coupon for 3 years Impact of NEP Unit Price • Initial conversion rate At Conversion(1) represents a 25% premium $65 Cap Price ~$63
Slide 60: NEP HoldCo debt refinancing
NEP has further de-risked LP distributions by refinancing its existing ~$1.1 B HoldCo debt balance at attractive rates and pushing its maturity into the middle of the next decade NEP HoldCo Debt Refinancing • NEP refinanced its ~$1.1 B NEP HoldCo Debt Maturity Profile HoldCo debt balance with $ MM s
Slide 61: NEP upsized revolving credit facility
NEP has upsized its revolving credit facility while also reducing borrowing costs, extending the maturity date and increasing the size of its bank group NEP Credit Revolver Changes Old Revolver Amended Revolver Facility Size $250 MM $750 MM Pricing 3.0x Leverage Ratio(2): 225 bps 175 bps 4.0x Levera
Slide 62: NEP's holdco leverage target consistent with credit ratings
NEP’s holdco leverage to project distributions metric target of 4.0x – 5.0x is consistent with its strong mid– to high–BB credit ratings Credit Metrics(1) BB Target Target (2) S&P Range YE 2017 YE 2018 Holdco Debt/EBITDA 4.0x - 5.0x 3.0x - 4.0x 4.0x - 5.0x Ba1 Target Target (3) Moody's Range YE 2017
Slide 63: Reconciliation of Net Income to Adjusted EBITDA and CAFD
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution (CAFD) Nine months ended (millions) September 30, 2017 Net income $ 132 Add back: Depreciation and amortization 149 Interest expense 154 Income taxes 32 Tax credits 143 Benefits associated with differential membershi
Slide 64: Expected Cash Available for Distribution (2017 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2017 Run Rate CAFD) $960-$1,060 ($15-$25) ($60-$70) $875-$975 ($240-$290) ($270-$320) $ MM ($30-$35) ($3-$8) $310-$340 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service (2)
Slide 65: Expected Cash Available for Distribution (2018 Run Rate)
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,150-$1,300 ($20-$30) ($75-$85) $1,050-$1,200 ($240-$320) ($380-$460) ($30-$35) ($5-$15) $360-$400 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service (2
Slide 66: Definitional information
Definitional information NextEra Energy Partners, LP. Adjusted EBITDA and CAFD Expectations This presentation refers to adjusted EBITDA and CAFD expectations. NEP’s adjusted EBITDA expectations represent projected (a) revenue less (b) fuel expense, less (c) project operating expenses, less (d) corpo
Slide 67: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This presentation contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra
Slide 68: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) A change in the jurisdictional characterization of some of the Texas pipeline entities' assets, or a change in law or regulatory policy, could result in increased regulation of these assets, which could have a material adve
Slide 69: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) The natural gas pipeline industry is highly competitive, and increased competitive pressure could adversely affect NEP's business; NEP may not be able to access sources of capital on commercially reasonable terms, which wou
Slide 70: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common units currently cannot remove NEP GP without NEE’s consent; NEE’s interest in NEP GP and the control of NEP GP may be transferred to a third party without unitholder consent; The IDR fee may be assig
NextEra Energy — Edison Electric Institute Conference 2017 on 6ix