Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (September 2016)
57 slides from Nextera Energy's investor presentation, September 2016
Slide 1: September 2016 Investor Presentation
September 2016 Investor Presentation
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: Table of Contents
Table of Contents • NextEra Energy, Inc. Overview (NYSE: NEE) Slide 4 • Florida Power & Light Slide 14 • NextEra Energy Resources Slide 21 • NextEra Energy Partners, LP (NYSE: NEP) Slide 31 • Financial Review Slide 38 • Appendix Slide 41 3
Slide 4: 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 • $57 B market capitalization(1) • 45 GW in operation(2) • $85 B in total assets • Partnership with • One of the largest electric • The world leader in utilities in the nation by electricity generated from retail MWh
Slide 5: Built on a foundation of 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 2015 Utility & Corporate Benchmarks 2015 NextEra Energy Fuel Mix MWhs(3) Nuclear Wind Industry ~$23 FL Avg ~133 Good 25% 17% FPL ~$14 FPL ~61
Slide 6: We have a 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) $5.71 2% 1.4% 70% 65% $5.30 $4.97 0.7% 1% 60% $4.30 $4.39 $4.57 53% $3.84 $4.05 0% 50% $3.49 (1%) 39% $3.04 40% $2.63 (2%) 30% (3%) (4%) 20% (5%) 10% (4.8%) (6%) 0% One Yea
Slide 7: Our growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 8/24/2016 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $57,357 NextEra Energy 2 $38,185 2 $56,195 3 $34,476 3 $53,0
Slide 8: NextEra Energy the premier YieldCo sponsor in the sector
We believe the strength of NextEra Energy (NEE) makes it the premier YieldCo sponsor in the sector NextEra Energy: Partnership with NEP • Characteristics of a premier sponsor: NEE – Scale, financial strength and experience – Strong development track record – Incentives properly aligned with Yiel
Slide 9: NEP benefits from substantial sponsor strength
NEP benefits from substantial sponsor strength Sponsor Strength • Energy Resources is the largest generator in the world of renewable energy from the wind and sun • ~16 GW of renewables in operation by the end of 2016(1) • ~19 GW of all fuel technologies in operation(1) • Assets primarily in 25 stat
Slide 10: NextEra Energy agreement to acquire an 80% interest in Oncor
NextEra Energy announced agreement to acquire an 80% interest in Oncor Electric Delivery Company (Oncor) Oncor Transaction Overview • Oncor expected to add an attractive, rate regulated T&D utility to NextEra Energy – NextEra Energy’s proven track record of providing affordable, reliable electric se
Slide 11: Agreement is part of an overall Plan of Reorganization for EFH
Agreement is part of an overall Plan of Reorganization designed to allow EFH to emerge from chapter 11 bankruptcy Transaction Structure • Overall EFH Plan of Reorganization: – Tax-free spin-off of merchant generation and retail electricity service businesses – NextEra Energy would acquire 100% of th
Slide 12: Transaction expected to close in the first quarter of 2017
Based on our current targets for completing key milestones, we expect the transaction to close in the first quarter of 2017 Expected Timeline and Solicitation Rights • Transaction remains subject to certain conditions: – EFH bankruptcy approvals include: Approval of EFH entering into merger agreemen
Slide 13: Combination expected to create benefits for all stakeholders
Combination of NextEra Energy and Oncor expected to be a compelling opportunity to create benefits for all stakeholders Expected Benefits for All Stakeholders • NextEra Energy’s proven track record of providing affordable, reliable electric service for customers complements Oncor’s operational stren
Slide 14: 14
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Slide 15: 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 • 4.8 MM customer accounts • 26.5 GW in operation • $11.7 B in(1)operating revenues • $44 B in total assets (1) As
Slide 16: 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 Superior Customer Value Delivery customer value proposition • Focus on efficiency and Strong Financial Virtuous Circle Customer best-in-class cost Position Satisfaction performance Constructive • One o
Slide 17: Florida's economic growth remains strong
Florida’s economic growth remains strong Florida Economy Florida Unemployment(1) Florida Consumer Sentiment(2) 12% 100 90 10% 80 June-16 8% 70 60 June-16 6% 50 40 4% 30 2% 20 10 0% 0 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-1
Slide 18: Value delivery founded on a low cost position and best-in-class operations
Our value delivery is founded on a low cost position and best- in-class operations Operational Cost Effectiveness(1) $100.00 Good Adjusted Regressed Top Decile $/Retail MWh Log/Log FPL ~$14 $10.00 1,000,000 10,000,000 100,000,000 1,000,000,000 Retail MWh (1) FERC Form 1, 2015. Excludes pensions and
Slide 19: FPL 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 Customer Bill(1) ~$132 ~$122 ~$108 ~$92 Medical Home FPL bill Care Food Insurance down up 38% up 28% up 28% 15% FPL FPL Florida National Change vs. 2006 (6) 2006 (2) 2016 (3) Avg (4) Avg(5) (
Slide 20: FPL submitted its formal base rate filing on March 15th
FPL submitted its formal base rate filing on March 15th Estimated FPL Rate Case Timeline March 15, July/ August/ January 2016 June August September Q4 2017 File formal Quality Intervenor, Technical Final New rate request of staff, and hearings decision rates (testimony; service FPL by PSC effective
Slide 21: NextEra Energy Resources
NEXTeCra’ ENERGY &% RESOURCES _
Slide 22: Energy Resources is a diversified clean energy company
Energy Resources is a diversified clean energy company whose skills and assets are well aligned to drive growth Energy Resources Skills and Capabilities Generation Portfolio(1) • Largest, most successful developer of renewables in North America – Consistent strategy to build, own and operate environ
Slide 23: Growth driven by best-in-class development skills
Energy Resources’ growth is driven by its best-in-class development skills NextEra Energy Resources Development Skills Wind and Solar Portfolio(1) 18,000 Customer Wind Relationships Engineering/ Regulatory 12,000 Solar Construction MW Management 6,000 0 Best-In-Class Integrated 2002 2004 2006 2008 2
Slide 24: Optimistic about prospects for new renewables growth
We continue to be optimistic about the prospects for new renewables growth Energy Resources Development Program(1) • 2015 – 2016 renewables development program of over 4 GW – ~1.5 GW brought into service in 2015 – ~2.5 GW on track for 2016 delivery(2) • 2017 – 2018 development program: – Signed ~576
Slide 25: Renewables development opportunities have never been stronger
Energy Resources’ renewables development opportunities have never been stronger Drivers for Renewables • Certainty of U.S. Federal Tax incentives for renewables • Improvements in wind and solar technology and declining cost trends • Evaluating repowering opportunities across our fleet • State regula
Slide 26: U.S. Federal tax incentives for renewables extended into the next decade
U.S. Federal tax incentives for completed renewables projects have been extended into the next decade Extended U.S Federal Tax Credits Wind Production Solar Investment Tax Credit (PTC) Tax Credit (ITC) Start of Start of Construction COD Wind Construction Solar Date Deadline PTC Date ITC(1) During 20
Slide 27: Wind turbine price reductions and efficiency improvements
Turbine price reductions and efficiency improvements due to blade length and tower heights have reduced the average delivered cost of new wind across North America Wind Technology Levelized Cost of Net Capacity Factor(1) Electricity from Wind(2) (Including Production Tax Credits) 60% $70 55% $60 50%
Slide 28: Solar installation costs are declining and efficiency is improving
Solar installation costs are declining and efficiency is improving Solar Technology PV Module Efficiency Levelized Cost of and Delivered Cost(1) Electricity from Solar(2) 19.0% Efficiency Cost $0.80 $160 (Including Investment Tax Credits) $0.71 18.0% $0.62 $0.65 $120 17.0% $0.54 16.7% $/Wdc $/MWh 16
Slide 29: Battery storage has the potential to be a game-changer
While still in its infancy, battery storage has the potential to be a game-changer for the renewable energy industry and for peaking capacity and T&D referral applications on the grid Storage Technology • Storage is a natural extension of Lithium Ion Battery our development business and Cost Curve a
Slide 30: Expansion into the gas pipeline business
We have leveraged our skills and capabilities from gas infrastructure activities to expand into the gas pipeline business Gas Pipeline Assets Sabal Trail and Florida Mountain Valley Pipeline Texas Pipelines(1) Southeast Connection • Energy Resources expects • Energy Resources expects • NEP completed
Slide 31: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 32: NEP is focused on investing in clean energy assets with stable cash flows
NextEra Energy Partners (NEP) is focused on investing in clean energy assets with stable cash flows NEP Overview • NEP is a growth-oriented partnership formed by NextEra Energy, Inc. (NEE) to: – Acquire contracted clean energy projects with stable, long-term cash flows from NEE and the market – Take
Slide 33: The NEP portfolio is diversified by geography and asset mix
The NEP portfolio is diversified by geography and asset mix NEP Asset Portfolio(1,2) • Wind assets: – 17 projects – ~2,346 MW • Solar assets: – 4 projects – ~310 MW • Pipeline assets: – Seven natural gas pipelines – ~542 miles – ~3 Bcf of contracted and ~4 Bcf total capacity (1) Consolidated project
Slide 34: NEP portfolio characteristics
NEP has diversified its high-quality asset base while maintaining the long contract life, minimal commodity risk, and largely investment-grade counterparty mix of its portfolio NEP Portfolio Characteristics Counterparty Credit(1,2) Contract Life(2) A2 A3 21 Years 19 Years IPO 7/5/2016 IPO 7/5/2016 A
Slide 35: Accretive acquisitions have supported growth in CAFD and LP distributions
Accretive acquisitions funded by access to both equity and debt have supported significant growth in cash available for distribution (CAFD) and LP distributions NEP Portfolio Additions Renewables Capacity(1) Pipeline Assets 2,656 MW ~4 Bcf 990 MW 0 IPO 7/5/2016 IPO 7/5/2016 Run-Rate CAFD(2) Annualiz
Slide 36: NEP to grow LP distributions by 12-15% annually through 2020
After the acceleration of growth in 2015, our current expectations are for NEP to grow LP distributions by 12-15% annually through 2020 NEP LP Distributions Long-Term Growth Outlook(1) $2.17-$2.47 $2.50 $2.00 $1.50 $1.38-$1.41 $1.23 $1.00 $0.50 $0.00 2015 2016 2017 2018 2019 2020 12% Growth 15% Grow
Slide 37: NEP Adjusted EBITDA and CAFD Expectations
NextEra Energy Partners’ Adjusted EBITDA and CAFD Expectations(1,2) Adjusted EBITDA CAFD 12/31/16 Run Rate(3) $670 - $760 MM $230 - $290 MM Unit Distributions 2016 $1.38 - $1.41 annualized rate by year end(4) 2016 - 2020 12% - 15% average annual growth(5) (1) See Appendix for definition of Adjusted
Slide 38: Financial Review
NExTera’ ENERGY @ FINANCIAL REVIEW
Slide 39: NextEra Energy's Adjusted Earnings Per Share Expectations
NextEra Energy’s Adjusted Earnings Per Share Expectations(1) 2016 $5.85 - $6.35 $6.60 - $7.10 2018 (6% - 8% CAGR off a 2014 base) (1) See Appendix for definition of Adjusted Earnings expectations 39
Slide 40: NextEra Energy Dividend Expectations
NextEra Energy announced a new dividend policy on the second quarter 2015 earnings call NextEra Energy Dividend Expectations Dividend Per Share Growth Dividend Policy • Targeting increased rate of dividend growth $4.30 - $4.60 • Dividend payout ratio expected to increase to 65% by 2018 $3.08 • Expec
Slide 41: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 41
Slide 42: NExTera’
NExTera’ ENERGY @
Slide 43: Contracted Renewables Development Program
Contracted Renewables Development Program(1,2) Wind Location MW COD Solar Location MW COD Breckinridge OK 98 2015 Shafter CA 20 2015 Goshen Ontario 102 2015 Adelanto I & II CA 27 2015 East Durham Ontario 22 2015 McCoy Solar CA 250 2016 Cedar Point JV Ontario 50 2015 Blythe CA 110 2016 Golden Hills C
Slide 44: Reconciliation of Earnings Per Share to Adjusted Earnings Per Share
Reconciliation of Earnings Per Share Attributable to NextEra Energy, Inc. to Adjusted Earnings Per Share 44
Slide 45: Definitional information
Definitional information NextEra Energy, Inc. Adjusted Earnings Expectations This presentation refers to adjusted earnings per share expectations. Adjusted earnings expectations exclude the unrealized mark-to-market effect of non-qualifying hedges, net OTTI losses on securities held in NextEra Energ
Slide 46: 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 47: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) potential volatility of NextEra Energy's results of operations caused by sales of power on the spot market or on a short-term contractual basis; effect of reductions in the liquidity of energy markets on NextEra Energy's ab
Slide 48: Forward Looking Statements
Forward Looking Statements Forward-looking statements also include, but are not limited to, statements about the anticipated benefits of the proposed merger involving NEE and EFH, including future financial or operating results of NEE or Oncor, NEE’s, EFH’s or Oncor’s plans, objectives, expectations
Slide 49: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 50: NEP organizational structure creates value for LP holders
NEP is a growth-oriented limited partnership with many structural attributes that create value for LP holders NEP Organizational Structure • OpCo Ownership NEE – Public investors own economic interest in ~100% ~71% OpCo through 100% ownership of NEP Economic Economic Interest in NEP Interest in OpCo
Slide 51: Long-term capital structure targeting Holdco leverage of approximately 3.5x
Currently targeting a long-term capital structure utilizing Holdco leverage of approximately 3.5x project distributions after debt service HoldCo Debt Capacity $1,075-$1,175 $775 $MM 3.5x $21-$31 $310-$340 $300-$400 $10-$20 $37-$41 $230-$260 Estimated Corporate IDR Fees(2) HoldCo Cash HoldCo Current
Slide 52: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2016 Run Rate CAFD) $750-$840(2) ($10-$20) ($40-$60) $670-$760 ($240-$260)(3) ($155-$205)(4) $ MM ($25-$30)(5) ($3-$8) $230-$290(6) Project-level Corporate IDR Adjusted Debt Service Pre-tax Non-Cash Maintenance Estimated Adjusted Expenses Fee
Slide 53: 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 54: 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 55: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP may incur significant costs and liabilities as a result of pipeline integrity management program testing and any necessary pipeline repair or preventative or remedial measures; The Texas pipelines’ operations could incu
Slide 56: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Acquisitions of existing clean energy projects involve numerous risks; Renewable energy procurement is subject to U.S. state and Canadian provincial regulations, with relatively irregular, infrequent and often competitive p
Slide 57: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common units have limited voting rights and are not entitled to elect NEP's general partner or NEP GP’s directors; NEP's partnership agreement restricts the remedies available to holders of NEP's common uni
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