Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (September 2014)
64 slides from Nextera Energy's investor presentation, September 2014
Slide 1: September 2014 Investor Presentation
September 2014 Investor Presentation
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results Any statements made herein about future operating and/or financial results and/or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These f
Slide 3: Table of Contents
Table of Contents • NextEra Energy, Inc. Overview (NYSE: NEE) Slide 4 • Florida Power & Light Slide 9 • NextEra Energy Resources Slide 21 • NextEra Energy Partners, LP (NYSE: NEP) Slide 30 • Financial Review Slide 36 • Appendix Slide 42 3
Slide 4: NextEra Energy is comprised of two strong businesses supported by a common platform
NextEra Energy (NYSE: NEE) is comprised of two strong businesses supported by a common platform • $42.4 B market capitalization (1) • 43,798 MW in operation (2, 3) • $72 B in total assets • One of the largest U.S. electric utilities • U.S. leader in renewable generation • 4.7 MM customer accounts •
Slide 5: NextEra Energy – Investment Proposition
NextEra Energy is well-positioned for future growth NextEra Energy – Investment Proposition • Above-average and highly visible growth through 2016 – Rate agreement through 2016 provides visibility at FPL – Strong backlog at Energy Resources with upside potential • Strong and increasing cash flow fro
Slide 6: NextEra Energy – Partnership with NEP
NextEra Energy investment proposition is enhanced by the formation of NextEra Energy Partners (NYSE: NEP) NextEra Energy – Partnership with NEP • Best in class YieldCo vehicle through creation of – Strong sponsor with proven development track record – Extensive potential drop down visibility – Well-
Slide 7: Built on a foundation of operational excellence and financial strength, and focused on clean generation
Built on a foundation of operational excellence and financial strength, and focused on clean generation Cost and Reliability Generation Profile 2013 Utility & Corporate Benchmarks 2013 NextEra Energy Fuel Mix MWhs(4) Good Industry 6.9% Nuclear Wind Good 27% 16% Industry ~$24 FL Avg ~97 Natural Gas C
Slide 8: Long-term record of delivering shareholder value
Long-term record of delivering shareholder value Adjusted Earnings Per Share(1) Total Shareholder Return(2) 35% 32% 90% 84% $4.97 30% 28% 80% $4.57 $4.30$4.39 70% $3.84 $4.05 25% 57% $3.49 60% $3.04 20% 50% $2.48$2.49 $2.63 38% 15% 13% 40% 30% 10% 20% 5% 10% 0% 0% One Year Three Year '03 '04 '05 '06
Slide 9: 9
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Slide 10: 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(1) • One of the largest U.S. electric utilities • Vertically integrated, retail rate-regulated • 4.7 MM customer accounts • 25,581 MW in operation • $10.4 B in operating revenues(1) • $38 B in total assets
Slide 11: FPL currently operates under a settlement agreement extending through the end of 2016
FPL currently operates under a settlement agreement extending through the end of 2016 Settlement Agreement • Effective for a four-year term beginning January 2013 through December 2016 • Base rate adjustment increase of $350 MM effective January 2013 and Generation Base Rate Adjustment (GBRA) upon c
Slide 12: Our strategy at FPL is founded on the virtuous circle
Our strategy at FPL is founded on the “virtuous circle” and our efforts are being recognized Competitive Strategy Industry Recognition Customer • FPL accomplishments: Satisfaction – ServiceOne Award earned for 10 consecutive years Superior Customer Virtuous Circle Constructive Regulatory – JD Power
Slide 13: Focus on efficiency has driven best in class performance
Focus on efficiency has driven best in class performance 2013 Operational Cost Effectiveness $100.00 Good Adjusted Regressed Top Quartile Top Decile $/Retail MWh(1) FPL 2013 = $15.19/MWh Log/Log $10.00 1,000,000 10,000,000 100,000,000 1,000,000,000 Retail MWh (1) FERC Form 1, 2013. Excludes pensions
Slide 14: Project Momentum productivity improvements
Line of sight to achieving incremental productivity gains through corporate initiative “Project Momentum” Project Momentum Productivity Improvements • Moving forward with several • Goals through 2016: initiatives – Keep nominal base O&M • Significant O&M cost expenses flat to 2012 base savings in th
Slide 15: Value proposition enhanced by deploying capital productively while managing expenses
Value proposition enhanced by deploying capital productively while managing expenses and reducing fuel costs Capital Expenditures Total Expenses Fuel/Purchase Power Other O&M $B $10 $8.5 $8 $5.6 $6 Roughly $2-4 B per year since 2006 $4 “Win/win” for customers and $2 shareholders Alongside lase
Slide 16: Significant opportunity set to invest capital in clean power generation
Significant opportunity set to invest capital in clean power generation and other infrastructure Projected Capital Expenditures $B $4.0 $3.5 ~$3.4 B $2.5 - $3.0 B $2.2 - $3.2 B ~$2.9 B $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2013 2014 2015 2016 New Generation Existing Generation Transmission and distribu
Slide 17: Projected capital expenditure backlog of ~$10.9B from 2013 to 2016
Projected capital expenditure backlog of ~10.9 B from 2013 to 2016 includes excellent progress on our major capital projects Projected Backlog Capex Major Capital Projects • Mar ‘13 Investor Conference • Cape Canaveral and Riviera backlog of $9.2 B on track Beach completed ahead of schedule and unde
Slide 18: We continue to pursue a number of incremental investments
We continue to pursue a number of incremental investments Incremental Capital Opportunities through 2016 Opportunity Status • Long-term natural gas supplies Responding to questions from staff • Potential peaker upgrades Acquiring data per FDEP • Solar Investment Evaluating opportunities • Vero Beach
Slide 19: FPL proposed an innovative plan to invest in natural gas supplies
FPL proposed an innovative plan to invest in natural gas supplies Natural Gas Supply Project • JV with PetroQuest • Up to 38 production wells in Woodford Shale region • Connected to existing natural (1) gas transportation • Capex estimated to begin at ~$70 MM, with potential growth up to ~$190 MM •
Slide 20: Florida PSC has approved FPL's natural gas pipeline proposal
The Florida Public Service Commission has approved FPL’s natural gas pipeline proposal Natural Gas Pipeline Investments • Best economic solution for customers – Sabal Trail Transmission (Spectra Energy): – ~465 miles to Central Florida Hub – Estimated capital cost of ~$3 B – NextEra Energy to invest
Slide 21: NextEra Energy Resources
NEXTeCra’ ENERGY & RESOURCES
Slide 22: What is Energy Resources?
What is Energy Resources? A Set of Skills + A Set of Assets • Largest greenfield developer in • Largest wind and solar renewable North America over the last decade portfolio in North America – Over 12,000 MW of greenfield • Over 11,000 MW of stable long-term development contracted projects • Leader
Slide 23: Energy Resources' generation portfolio consists of a diverse set of technologies
Energy Resources’ generation portfolio consists of a diverse set of technologies positioned in a number of regions… Energy Resources’ Generation Portfolio(1) Wind Nat Gas 10,210 MW 3,990 MW Nuclear 2,721 MW Oil - 796 MW Solar - 477 MW Coal - 9 MW Contracted 63% Not Contracted 37% 23 (1) As of Decemb
Slide 24: Largely built by the addition of wind assets in North America
…and has been largely built by the addition of wind assets in North America Energy Resources’ Top U.S. Wind Wind Portfolio Developers/Owners(1) 10,210 10,210 5,444 3,637 2,623 2,530 1,745 (MW) Energy Company Company Company Company Resources A B C D (1) As of December 31, 2013. Includes 367.5 megawa
Slide 25: Significant visible growth in contracted renewables projects through 2016
Significant visible growth in contracted renewables projects through 2016 Wind and Solar Additions 2013 - 2016 COD and Total Committed (MW) Contracted Potential $MM Capital Expenditures(1, 2) 3,000 ~2,600 2013 – 2015 Wind Program 2,500 ~2,400 U.S. ~1,770 ~2,000-2,500 2,000 ~1,600 1,500 Canada ~590 ~
Slide 26: Renewable projects are increasingly price competitive with conventional generation
Renewable projects are increasingly price competitive with conventional generation U.S. Wind U.S. Solar Delivered Cost of Electricity(1) Delivered Cost of Electricity(2) Levelized cost to wholesale customer ($/MWh) Levelized cost to wholesale customer ($/MWh) $70 $67 $220 $200 $210 $60 $55 $180 $50
Slide 27: EPA Proposed CAA 111(d) Rule
111(d) has the potential to drive significant demand EPA Proposed CAA 111(d) Rule • Published on June 18, 2014 with 120 day comment period • Rule proposes state-by-state CO2 emission targets, expressed in pounds of CO2 per megawatt hour • State emission targets based on four building blocks – Effici
Slide 28: Energy Resources' strategy implies a shift towards long-term contracted assets
Energy Resources’ strategy implies a shift in portfolio mix towards long-term contracted assets Energy Resources Adjusted EBITDA(1) 100% 11% 15% 14% 75% 22% 40% 26% 50% 59% 64% 25% 49% 0% 2009 2012 2014 Long‐Term Contracted Merchant Peripheral Businesses 28 (1) See appendix slide 57 for definition o
Slide 29: Looking Ahead to 2017+
Energy Resources has a lot of different avenues for growth Looking Ahead to 2017+ • Contracted wind and solar remain strategic over the long-term • “Toe in the water” – Distributed solar generation – C&I space – Storage – evolution of batteries and energy apps • Natural gas generation – Handful of p
Slide 30: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 31: NextEra Energy Partners – Investment Proposition
NextEra Energy Partners is a best-in-class YieldCo NextEra Energy Partners – Investment Proposition • Growth-oriented partnership formed by NextEra Energy – Strong sponsor with proven development track record – Access to management, skills and industry-leading expertise of NEE to monitor and operate
Slide 32: Initial portfolio of geographically diversified projects under long-term contracts
Initial portfolio consists of 10 geographically diversified projects operating under long-term contracts Initial Portfolio Capacity: ~990 MW Wind Asset Solar Asset Conestogo, 23 MW Bluewater, 60 MW Tuscola Bay, 120 MW Summerhaven, 124 MW Northern Colorado, 174 MW Sombra, 20 MW Moore, 20 MW Perrin Ra
Slide 33: NEP's distributable cash flow is driven by OpCo distributions
NEP’s distributable cash flow is driven by OpCo distributions Distribution Policy Public Unitholders • The operating subsidiaries manage the project entities, service debt payments and NextEra Energy NextEra Energy fund any maintenance CapEx Partners requirements • The OpCo manages the cash Distribu
Slide 34: Structure incorporates the IDR Fee structure from typical MLPs
Structure incorporates the IDR Fee structure from typical MLPs Incentive Distribution Fee Overview • IDR Fee entitles an affiliate of sponsor to receive an increasing share of distributions as benchmarks for OpCo distributions are achieved (up to 50%) Cash Flow $/ Unit & Split levels Example with $2
Slide 35: Aligned interests with NextEra Energy
Aligned interests with NextEra Energy IDR Fee Asset Sale Interest Proceeds Accretive Increase Drop- IDR Fee Downs Cash Flows Driving LP Unit Growth is the Key LP Distribution Growth Retained LP Stake 35
Slide 36: Financial Review
NEXT@ra ANANCIAL REVIEW
Slide 37: Capital expenditures expected to be roughly $5B - $7B per year
Capital expenditures for the next several years are expected to be in a range of roughly $5 B - $7 B per year 2013 – 2016 Capital Expenditures(1) ($ B) 2013 2014 2015 2016 (2) Committed Capital Expenditures FPL $2.9 $3.4 $2.5 $2.2 NEER Renewables 2.6 2.4 1.6 0.5 NEER Other 1.0 0.8 0.4 0.4 Corporate
Slide 38: Current credit expectations are in line with 2013 targets
Our current credit expectations are in line with the targets we set out in 2013 2014 Credit Expectations 2014 Current (2) 2013 Actuals 2014 Target Expectations (1) S&P FFO / Debt 22.7% 25% 24% - 25% Debt / EBITDA(3) 3.5x 3.4x 3.2x - 3.3x Adj. Debt to Total Capital(3) 48.7% 48% 47% - 49% Moody's(1) C
Slide 39: NextEra Energy has received approximately $18.5 billion of credit
NextEra Energy has received approximately $18.5 billion(1) of credit, including commitments and funded transactions Country Breakdown by Funding We have a balanced and well-diversified lending group (1) $18.5 billion of credit includes corporate credit facilities commitments and term loans outstandi
Slide 40: Business mix shifting towards more regulated and long-term contracted
NextEra Energy’s business mix is expected to continue to shift towards more regulated and long-term contracted Adjusted EBITDA(2) from Adjusted Earnings from Regulated and Long-Term Regulated Businesses(1) Contracted Operations 100% 100% 84% 78% 80% 80% 65% 58% 60% 60% 40% 40% 20% 20% 0% 0% 2011 201
Slide 41: Current dividend policy
NextEra Energy’s current dividend policy reflects its expected increase in the proportionate contribution from its rate-regulated businesses and long-term contracted assets Dividend Per Share(1) Growth Dividend Policy • Implemented dividend policy $2.90(2) 2011 to 2014 CAGR: ~10% $2.64 of 55% target
Slide 42: Appendix
42 Appendix NeExTera’ ENEBIGY 2
Slide 43: History of State Deregulation
While the majority of states use “cost-of-service” ratemaking, a number of states have gone through deregulation History of State Deregulation • During the 1990s, a number of states adopted different regulatory models to encourage competition among generators to serve retail customers • Status of el
Slide 44: Major Regulatory Agencies
Multiple regulators, at the federal and state level, govern rate setting, transmission, reliability, and environmental protection Major Regulatory Agencies • Federal Energy Regulatory Commission (FERC) – FERC has also encouraged the formation of regional transmission organizations (RTOs) and Indepen
Slide 45: Florida Public Service Commission
Florida is regulated by a state agency known as the Florida Public Service Commission Florida Public Service Commission • Consists of five members selected for their knowledge and experience in fields substantially related to the duties and functions of the Commission – Commissioners are appointed b
Slide 46: Cost Recovery Mechanisms
FPL’s costs are recovered through base rates as well as through clause mechanisms Cost Recovery Mechanisms • Base rates – designed to recover the costs of constructing, operating, and maintaining a utility system – Generally, most of FPL’s return is earned through base rates • Cost recovery clauses
Slide 47: United States Electric Power Industry Overview
The United States electric power sector faces a number of challenges United States Electric Power Industry Overview • Electricity demand growth in the United States is projected to be flat through 2015(1) – Demand in Florida is projected to grow faster than the national average • Economics turned up
Slide 48: The United States power industry varies meaningfully by region
The United States power industry varies meaningfully by region United States Power Markets Large and small regulated and Regulated Geographically Transmission & dispersed merchant utilities Distribution regulated utilities Large merchant utilities Large regulated utilities Large regulated utilities
Slide 49: NEX Tera
NEX Tera ENERGY &
Slide 50: The Investor Relations website is a great source for company information
The Investor Relations website is a great source for company information NEE Investor Relations Website • You can find the IR home page here on the main www.nexteraenergy.com site: 50
Slide 51: Florida's economy continues to progress well
Florida’s economy continues to progress well Florida Economy Florida Unemployment & Florida Building Permits(2) Labor Participation Rates(1) 12,000 12% 65% Labor 64% 10% Participation Rate 10,000 (Right Axis) May-14 63% 8% 8,000 62% 6% 61% 6,000 4% 60% 4,000 59% 2% 2,000 58% 0% 57% 0 Jan-07 Jan-08 J
Slide 52: NextEra Energy Resources Portfolio Additions
NextEra Energy Resources Portfolio Additions(1) (2) March 2013 Investor Conference Backlog Incremental Opportunities Incl. in Incl. in U.S. Wind: MW COD Form 10-Q(3) U.S. Wind: MW COD Form 10-Q(3) Tuscola Bay II (4) 100.3 2013 Yes Tuscola Bay II(4) 100.3 2013 Yes Steele Flats(4) 74.8 2013 Yes Steele
Slide 53: Reconciliation of Base O&M Cents per kWh to GAAP O&M Cents per kWh
Reconciliation of Base O&M Cents per kWh to GAAP O&M Cents per kWh 2012 ($ in millions) Base O&M (A) $1,500 Clause 269 Other 4 GAAP O&M (B) $1,773 Retail delivered kWhs (in millions) (C) 102,128 Base O&M cents per Retail kWh (A)/(C)*100 = (D) 1.47 GAAP O&M cents per Retail kWh (B)/(C)*100 = (E) 1.74
Slide 54: Reconciliation of 2011 Adjusted EBITDA to Net Income
Reconciliation of 2011 Adjusted Earnings Before Interest, Taxes Depreciation and Amortization (Adjusted EBITDA) to Net Income (Full-Year Ended December 31, 2011) ($ in millions) GAAP Adjustments Adjusted (1) Net income $1,923 ($86) $1,837 Add back interest 1,034 0 1,034 (1) Add back income taxes 529
Slide 55: Reconciliation of Adjusted Earnings to Net Income
Reconciliation of Adjusted Earnings to Net Income ($ millions) 2011 Net Income $1,923 Adjustments, net of income taxes: Net unrealized mark-to-market losses (gains) associated with non-qualifying hedges (190) Loss (income) from other than temporary impairment losses, net 6 Loss on sale of natural ga
Slide 56: Reconciliation of Adjusted Earnings Per Share to Earnings Per Share
NextEra Energy, Inc. Reconciliation of Adjusted Earnings Per Share to Earnings Per Share 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Earnings Per Share (assuming dilution) $2.53 $2.48 $2.34 $3.23 $3.27 $4.07 $3.97 $4.74 $4.59 $4.56 $4.47 Adjustments: Net unrealized mark-to-market losses (
Slide 57: Definitional information
Definitional information NextEra Energy Resources, LLC. Adjusted EBITDA (Slides 28, 40) Adjusted EBITDA includes Energy Resources’ consolidated investments as well as its share of equity method investments. Adjusted EBITDA for each category set forth above is represented by (a) revenue, including a
Slide 58: 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 59: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) failure or breach of NextEra Energy's or FPL's information technology systems; risks to NextEra Energy and FPL's retail businesses from compromise of sensitive customer data; losses from volatility in the market values of d
Slide 60: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 61: NextEra Energy Partners IPO and ROFO Assets
NextEra Energy Partners IPO and ROFO Assets(1) Contract Contract (2) NEP IPO Portfolio: MW COD Expiration NEP ROFO Portfolio : MW COD Expiration Northern Colorado 22.5 Sept 2009 2029 Story II 150 Dec 2009 2030 151.8 Sept 2009 2034 Day County 99 Apr 2010 2040 Elk City Wind 98.9 Dec 2009 2030 Baldwin
Slide 62: 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 63: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's growth strategy depends on the acquisition of projects developed by NextEra Energy, Inc. (NEE) and third parties, which face risks related to project siting, financing, construction, permitting, the environment, gover
Slide 64: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP GP’s interest in NEP and the control of NEP GP may be transferred to a third party without unitholder consent; the IDR Fee may be transferred to a third party without unitholder consent; NEP may issue additional units w
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