Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Day (March 2013)
137 slides from Nextera Energy's investor day presentation, Mar 12, 2013
Slide 1: Investor Conference 2013
Investor Conference 2013
Slide 2: Agenda
Agenda Introduction and Overview Jim Robo President and CEO, NextEra Energy FPL Update Eric Silagy President, Florida Power & Light Break Energy Resources and NextEra Energy Transmission Update Armando Pimentel President and CEO, NextEra Energy Resources Financial Outlook Moray Dewhurst Vice Chairma
Slide 3: 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
Slide 4: Introduction and Overview
Investor Conference 2013 Introduction and Overview Jim Robo President and CEO March 12, 2013
Slide 5: Agenda
Agenda • 2012 review • Keys to our business strategy • FPL update • Energy Resources update • Closing summary 5
Slide 6: Agenda
Agenda • 2012 review • Keys to our business strategy • FPL update • Energy Resources update • Closing summary 6
Slide 7: NextEra Energy had a great 2012
NextEra Energy had a great 2012 2012 Performance Summary Rank in top 10 largest U.S. utilities(1) • 2012 adjusted EPS growth #1 • 2012 - 2014 consensus projected DPS growth (2) #1 • 2012 industry comparable return on equity(3) #2 • 1-Year total shareholder return #2 • 3-Year total shareholder return
Slide 8: Each of our major businesses contributed to successful performance (FPL)
Each of our major businesses contributed to NextEra Energy’s successful performance NextEra Energy 2012 Review – FPL • Earned an 11% regulatory ROE and grew net income by 16.1% vs. 2011 • The PSC approved a four-year settlement to FPL’s rate case that we believe is fair for both customers and shareh
Slide 9: Each of our major businesses contributed to successful performance (Energy Resources)
Each of our major businesses contributed to NextEra Energy’s successful performance NextEra Energy 2012 Review – Energy Resources • Delivered adjusted earnings of $693 MM and an adjusted ROE of 11.4% • Secured an extension of the wind production tax credit – Expected to be effectively a 2 year exten
Slide 10: Overall, 2012 was a year of strong performance
Overall, 2012 was a year of strong performance for NextEra Energy NextEra Energy 2012 Review – Overall Performance • Achieved adjusted EPS of $4.57(1) and grew adjusted EPS by 4.1% vs. 2011 • Delivered total shareholder return of 17.9%, beating the S&P 500 Utilities Index (up 1.3%) and the S&P 500 (
Slide 11: In 2012, we continued our long-term record of delivering shareholder value
In 2012, we continued our long-term record of delivering shareholder value Adjusted Earnings Per Share(1) Total Shareholder Return(2) 20% 18% 50% 47% $4.57 16% $4.30 $4.39 40% $3.84 $4.05 15% 36% $3.49 28% $3.04 30% $2.41 $2.48 $2.49 $2.63 10% 20% 5% 1% 10% 0% 0% '02 '03 '04 '05 '06 '07 '08 '09 '10
Slide 12: Agenda
Agenda • 2012 review • Keys to our business strategy • FPL update • Energy Resources update • Closing summary 12
Slide 13: Our long-term vision drives our strategy
Our long-term vision drives our strategy NextEra Energy: Long-Term Vision • Largest clean energy provider in the U.S. • FPL: the best utility in the U.S. – Customer value – Operations – Regulatory environment • Energy Resources: highly profitable competitive energy supplier – Largest renewable energ
Slide 14: Growth strategy built around core strengths
A key part of our growth strategy at NextEra Energy has been to build around our core strengths, taking advantage of market opportunities NextEra Growth Strategy Core Strengths Visible Growth Opportunities + Operational Excellence + Financial Strength 2008 FPL Wholesale Skills 2008 Gas Infra. + 2006
Slide 15: We are not going to change the underpinnings of our successful strategy
We are not going to change the underpinnings of our successful strategy Long-Term Critical Success Factors • Customer focus • Clean energy strategy • Low cost and high reliability • Strong balance sheet • Financial discipline • Attention to detail and focus on execution • Process discipline / benchm
Slide 16: We have maintained our emphasis on operational excellence
We have maintained our emphasis on operational excellence over time SAIDI: System Average (1) Interruption Duration Index 2012 Operational Highlights Minutes 150 • Best-ever reliability FL Industry Average Good 125 performance at FPL for 100 both distribution and FPL 75 transmission 50 25 '06 '07 '0
Slide 17: FPL's cost performance continues to be outstanding among industry peers
FPL’s cost performance continues to be outstanding among industry peers 2011 Total Non-Fuel O&M per Retail MWh(1) $100 Top Quartile Top Decile ($15.67) O&M $ per Retail MWh $10 1 10 100 1,000 Retail MWh (MM) (1) FERC Form 1, 2011. Note: Holding companies with >100,000 customers. Excludes companies w
Slide 18: A strong balance sheet supports our strategies
A strong balance sheet supports our strategies at both FPL and Energy Resources Credit Ratings Utility S&P Credit Ratings(1) NextEra Energy Ratings(2) 30% 28% NextEra S&P Moody’s Fitch Energy 25% NextEra Energy 23% 21% Issuer’s Credit Rating A- Baa1 A- 20% Outlook Stable Stable Stable 16% FPL 15% Fi
Slide 19: We have maintained our focus on financial discipline
We have maintained our focus on financial discipline 2002 – 2012 Portfolio Optimization • Conservative approach to MW 14,000 hedging 12,000 – Energy Resources’ existing 10,000 assets are hedged 97%, 8,000 95%, 89%, 86% for 2013-16 respectively 6,000 12,161 4,000 – FPL earnings are protected 4,475 ag
Slide 20: 2007-2012 Adjusted EPS CAGR ranking
Through the difficult economic period of 2007-2012, NextEra Energy ranked first in adjusted EPS growth among the top 10 power companies 2007-2012 Adjusted EPS CAGR – Top 10 Power Companies by Market Cap 10.0% 5.5%(1) 5.0% 3.8% 3.6% 3.2% 3.0% Adjusted 1.4% EPS 0.6% 0.4% CAGR 0.0% (%) (1.4%) (5.0%) (8
Slide 21: 2002-2012 Adjusted EPS CAGR ranking
NextEra Energy also ranked first among the top 10 power companies in adjusted EPS growth over the last decade 2002-2012 Adjusted EPS CAGR – Top 10 Power Companies by Market Cap 10.0% 6.6%(1) 5.0% 4.5% 4.3% 3.8% Adjusted 3.2% EPS 2.4% CAGR 1.8% 1.7% (%) 0.8% 0.0% (2.6%) (5.0%) (1) See Appendix for re
Slide 22: Agenda
Agenda • 2012 review • Keys to our business strategy • FPL update • Energy Resources update • Closing summary 22
Slide 23: Our strategy at FPL is founded on the virtuous circle
Our strategy at FPL is founded on the “virtuous circle” Customer Satisfaction Superior Constructive Customer Value Virtuous Circle Regulatory Delivery Environment Strong Financial Position 23
Slide 24: We deliver excellent value to our customers
We deliver excellent value to our customers FPL’s Customer Value Proposition Competitive, Award-Winning Clean Affordable Bills + Superior Reliability + Customer Service + Environmental Profile Florida Electric Utility Residential Bill Comparison of Average Typical Monthly Bills from February 2012 –
Slide 25: Settlement provides a four-year window for productivity improvements
The settlement approved in December provides a four-year window for productivity improvements FPL Efficiency Opportunities • Identified several initiatives with significant O&M cost savings in the following areas: – Nuclear operations – Transmission and distribution – Staff functions • Focused on id
Slide 26: FPL has identified potential incremental capital expenditures
FPL has identified potential incremental capital expenditures over the next four years in addition to its “baseline” case Incremental Capital Expenditures Through 2016 • Incremental storm hardening • Infrastructure / reliability investment • Generation upgrades ~ $4 B to $5 B in • Natural gas pipeli
Slide 27: Agenda
Agenda • 2012 review • Keys to our business strategy • FPL update • Energy Resources update • Closing summary 27
Slide 28: Energy Resources is an industry-leading competitive wholesale generator
Energy Resources is an industry-leading competitive wholesale generator with a diverse portfolio of assets Clean Energy Industry Leader • Largest renewables developer in North America – $3.6 B backlog of renewables projects (2013-16 expected cap ex) – Terrific pipeline of new renewables projects Ene
Slide 29: We will spend ~$3.6 B building out our renewables backlog
We will spend ~$3.6 B building out our backlog of attractive renewables projects Wind and Solar Project Backlog Estimated Cap Ex(1) for Wind • ~$1.5 B for backlog of wind and Solar Projects in Backlog projects through 2016 $MM 2,000 – ~600 MW of Canadian wind, 1,800 $1.7-1.9 B primarily in 2014 1,60
Slide 30: A pipeline of new renewables projects provides incremental capital opportunity
A pipeline of new renewables projects provides the opportunity to deploy $1.5 to $3.0 B in incremental capital through 2016 New Wind and Solar Development • 500 to 1,500 MW of additional Projected Cap Ex(1) including growth opportunities wind through 2014 $MM 3,000 – $1 B to 3 B in cap ex $2.6-2.8B
Slide 31: Evaluating portfolio to reduce merchant exposure
We continue to evaluate our portfolio for opportunities to reduce our merchant exposure Energy Resources’ Merchant MW(1) 10,000 9,000 8,780 8,000 7,000 7,536 6,960 6,732 6,000 5,000 4,000 3,000 2,000 1,000 0 2009 2010 2011 2012 (1) Includes hedged wind. 2012 reflects the sale of the Maine Hydro asse
Slide 32: Long-term contracted assets expected to be two-thirds of adjusted EBITDA
Long-term contracted assets are expected to be two-thirds of Energy Resources’ adjusted EBITDA 120% Energy Resources’ Adjusted EBITDA(1) 100% 11% 14% 15% 80% 22% 19% 40% 60% 40% 64% 66% 49% 20% 0% 2009 2014 2016 Long-Term Contracted Merchant Peripheral Businesses (1) See Appendix for definition of a
Slide 33: Agenda
Agenda • 2012 review • Keys to our business strategy • FPL update • Energy Resources update • Closing summary 33
Slide 34: Potential to deploy additional $6 B - $8 B of growth capital through 2016
We have the potential to deploy an additional $6 B - $8 B of growth capital through 2016 NextEra Projected Capital Expenditures through 2016(1) $B • Strong visibility into $8.0 4 Year Total incremental capital $4.5-7.0 B of ~$23 B investment opportunities $7.0 $5.4-6.1 B – 60%+ at FPL $6.0 – Remaind
Slide 35: Credit metrics expected to return to historical levels by 2014
We expect our credit metrics to return to historical levels by 2014 NextEra Energy’s Credit Metrics(1) Adjusted Debt to Total Capital Adjusted FFO to Debt 53.0% 30.0% 52.0% 51.8% 25.2% 25.0% 52.0% 25.0% 51.0% 20.3% 20.0% 17.0% 50.0% 49.4% 15.0% 49.0% 48.3% 10.0% 48.0% 47.0% 5.0% 46.0% 0.0% 2009 2012
Slide 36: Long-term adjusted EPS growth of 5% to 7%
We expect further capital investment to translate into long-term adjusted EPS growth of 5% to 7% Adjusted Earnings Per Share Expectations 2013 $4.70 – $5.00 2014 $5.05 – $5.45 5% to 7% CAGR 2016 off of 2012 base or $5.50 – $6.00 36
Slide 37: NextEra Energy – Investment Proposition
We are well-positioned for future growth NextEra Energy – Investment Proposition • Above-average and highly visible growth through 2016 – Four years of regulatory certainty at FPL – Strong backlog at Energy Resources with upside potential • Strong and increasing cash flow from operations • Moderate
Slide 38: Florida Power & Light
Investor Conference 2013 Florida Power & Light Eric Silagy President March 12, 2013
Slide 39: Agenda
Agenda • Overview • Customers and Economy • O&M Productivity • Capital Investments • Summary of Financial Outlook 39
Slide 40: 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 • 4.6 MM customer accounts • 24,057 MW in operation • $10.1 B in operating revenues • $34.9 B in total assets 4
Slide 41: FPL's strategy produced excellent reliability and lowest residential bill
Under the previous two settlement agreements, FPL’s strategy produced excellent reliability for customers and the lowest residential bill in the state 2006-2012 FPL’s Strategy – Customer Value SAIDI: System Average (1) • FPL’s reliability is the Interruption Duration Index best in the state among 15
Slide 42: Significant capital investments while managing expense growth
Since 2006, FPL has made significant capital investments while managing expense growth and reducing fuel costs 2006-2012 2006-2012 Capital Expenditures(1) Total Expense Base Clause Fuel/Purchase Power $B $B $5 $10 $4.2 $8.5 $8.2 $8.2 $4 $3.7 $8 $7.7 $6.6 $6.7 $3 $2.8 $6.0 $2.5 $6 $2.4 $2.1 $2 $1.8 $
Slide 43: FPL's investments saved customers over $6 B in fuel
Over the last decade, FPL's investments have saved customers over $6 B due to fuel efficiency improvements 2002-2012 Customer Fuel Savings $1,200 Annual Fuel Savings Cumulative Savings $7 $1,008 $1,000 $6 $785 $5 $800 Annual $672 $666 Cumulative Savings $643 $654 $4 Savings ($ MM) $600 ($ B) $485 $3
Slide 44: Capital investment program produced excellent returns for shareholders
Additionally, FPL’s capital investment program between 2006 and 2012 has produced excellent returns for shareholders 2006-2012 Net Income and Rate Base Net Income Rate Base $1,400 $30 $1,240 $1,200 $25 $1,068 $25.1 $1,000 $945 $836 $831 $21.7 $20 $802 $789 $800 $19.5 Net $17.7 $15 Income $600 $15.9
Slide 45: Overview of Settlement Agreement
In December 2012, the Florida Public Service Commission voted unanimously to approve FPL’s settlement agreement Overview of Settlement Agreement • Effective for a four-year term beginning January 1, 2013 through December 31, 2016 • Base rate adjustment increase of $350 MM effective January 2013 and
Slide 46: FPL's Growth Potential
Earnings growth at FPL will come from a variety of sources FPL’s Growth Potential • FPL’s opportunity to grow earnings comes from a variety of sources including: – Base rate increase from settlement agreement – Service territory volume growth – Wholesale / service territory expansion – Productivity-
Slide 47: FPL's Growth Strategy Through 2016
FPL is now better positioned to improve its customer value proposition and create shareholder value FPL’s Growth Strategy Through 2016 • Drive incremental O&M efficiency and productivity • Strategically invest in incremental capital projects that generate value for both customers and shareholders –
Slide 48: Agenda
Agenda • Overview • Customers and Economy • O&M Productivity • Capital Investments • Summary of Financial Outlook 48
Slide 49: Characteristics of Florida's Recovery
The Florida economy is clearly on the mend, but the recovery has been tepid by historical standards Characteristics of Florida’s Recovery • Almost every metric shows improvement in the housing market • The improvement in construction activity is particularly significant given the role that sector ha
Slide 50: Florida employment position has improved significantly
Although Florida was hit harder by the recession than the US as a whole, the employment position has improved significantly U.S. vs. Florida Annual Change in Florida Unemployment Rate Non-Farm Employment(1) (Absolute Change in 000s) (%) # of Jobs 12 400 U.S. 10 Florida 200 8 0 6 -200 4 -400 2 -600 J
Slide 51: Florida taxable sales almost returned to pre-recession levels
Florida taxable sales, a broad measure of economic activity, have almost returned to pre-recession levels Florida Florida Retail Taxable Sales Index(1) Consumer Confidence Index(2) (Base Year = 1999) (Base year = 1966) Index Index 140 110 Bear Stearns Announces Subprime Losses Earthquake in Japan &
Slide 52: Inactive accounts and low use customers continue to decline
Both inactive accounts and low use customers continue to decline % of Inactive Accounts Low Usage Customers 7.0% 10% 6.5% 9% 6.0% 5.5% 8% Long Term Average 5.0% Long Term Average 7% 4.5% 4.0% 6% Jan-05 Jul-06 Jan-08 Jul-09 Jan-11 Jul-12 Jan-05 Jul-06 Jan-08 Jul-09 Jan-11 Jul-12 However, the drop in
Slide 53: Florida population growth projected to surpass U.S. rate
Projections still indicate that Florida’s population growth will surpass the U.S. rate in the long-run Florida Population Growth 5% Actual Projected 4% 3% Annual Change (%) 2% 1% 0% 1976 1982 1988 1994 2000 2006 2012 2018 2024 2030 FL Population % Growth US Population % Growth Florida is not project
Slide 54: 2013 forecast shows increase in use per customer
The forecast for 2013 shows an increase in use per customer along with higher customer growth Weather-Normalized Customer Growth Use per Customer Annual MWh/ Growth (000s) Customer 80 23.0 65-70 22.7-23.0 70 60-65 22.8 60 50-55 22.6 50 40-45 22.4 40 22.4 22.3 29 30 27 22.2 21 22.2 20 22.0 10 0 21.8
Slide 55: Agenda
Agenda • Overview • Customers and Economy • O&M Productivity • Capital Investments • Summary of Financial Outlook 55
Slide 56: Base O&M expenses increased 2.6% on average annually
Since 2006, base O&M expenses increased 2.6% on average annually Base O&M Expense $ MM $1,600 $1,500 $1,438 $1,451 $1,400 $1,322 $1,299 $1,327 $1,285 $1,200 $1,000 $800 $600 $400 $200 $- 2006 2007 2008 2009 2010 2011 2012 56
Slide 57: FPL's cost performance continues to be outstanding
FPL’s cost performance continues to be outstanding 2011 Total Non-Fuel O&M per Retail MWh(1) $100 Top Quartile Top Decile O&M $ per Retail MWh ($15.67) $10 1 10 100 1,000 Retail MWh (MM) (1) FERC Form 1, 2011. Note: Holding companies with >100,000 customers. Excludes companies with no utility 57 own
Slide 58: Flat O&M expense could reduce cost per retail kWh
Keeping nominal O&M expense flat from 2012 could reduce the cost per retail kWh substantially by 2016 Base O&M Cost Per Retail kWh O&M Nominal vs. Real ¢/kWh 1.60 = Nominal Base O&M = Nominal Base O&M Flat From 2012 1.50 1.47 ¢ = Real Base O&M = Real Base O&M Flat From 2012 1.40 1.34 ¢ 1.30 Potentia
Slide 59: FPL's Productivity
FPL expects all parts of the business to identify opportunities to increase productivity FPL’s Productivity • To date, FPL has already identified several initiatives with potential for $50 MM to $75 MM annual O&M cost savings: – Offering voluntary early retirement option for a limited population of
Slide 60: Agenda
Agenda • Overview • Customers and Economy • O&M Productivity • Capital Investments • Summary of Financial Outlook 60
Slide 61: FPL has deployed significant capital in clean generation and infrastructure
Over the last decade, FPL has deployed significant capital in clean power generation and other infrastructure to lower customer fuel bills and drive shareholder value $ MM FPL Capital Expenditures(1) $5,000 $4,000 Total of ~$28 B since 2000 $3,000 $2,000 $1,000 $0 2000 2001 2002 2003 2004 2005 2006
Slide 62: Baseline capital expenditures projected at $9.2 B
FPL’s baseline capital expenditures are projected to be $9.2 B over the four-year period from 2013 to 2016 FPL’s Projected Baseline Capital Expenditures(1) $B $3.0 $2.6 $2.6 $2.5 $2.1 $2.0 $1.9 $1.5 $1.0 $0.5 $- 2013E 2014E 2015E 2016E (1) Capital expenditures are categorized by the year in which th
Slide 63: Incremental capital expenditures of $4 B to $5 B
FPL has identified $4 B to $5 B in incremental capital expenditures over the next four years in addition to its “baseline” case Incremental Capital Expenditures Through 2016 • Incremental storm hardening • Infrastructure / reliability investment • Generation upgrades $4 B - $5 B • Natural gas pipeli
Slide 64: Incremental Storm Hardening Investment
The 2012 storm season highlighted and reinforced FPL’s need for maintaining hurricane resistance initiative Incremental Storm Hardening Investment • Between 2006 and 2012, FPL invested almost $500 MM in capital for storm hardening – The investment reflects FPL’s commitment to harden its electric inf
Slide 65: Incremental Storm Hardening Investment (continued)
FPL is identifying incremental storm hardening opportunities Incremental Storm Hardening Investment (continued) • FPL plans to continue investing in strengthening the grid against storms and help keep everyday reliability high – An incremental 400 to 600 feeders may be hardened through this program
Slide 66: Infrastructure and Reliability Investments
Capital investments in infrastructure and reliability will have significant customer benefits Infrastructure and Reliability Investments • FPL will continue to invest Potential Impact in the grid to improve of Deploying AFS (Service Unavailability) customer reliability Minutes 90 • One example: Auto
Slide 67: Generation Upgrades
Achieving improved environmental standards could require replacement of FPL’s fleet of existing gas turbine peakers Generation Upgrades • Original peakers were placed in- service in the early 1970s with heat rates of 17,000 to over 19,000 Btu/kWh • Achieving improved environmental standards could re
Slide 68: Natural Gas Pipeline Investment
FPL has an opportunity to invest in a new natural gas pipeline to meet future gas requirements while increasing the reliability and diversity of FPL’s gas transportation portfolio Natural Gas Pipeline Investment • FPL’s current request for proposal includes a two- Butler, AL segment approach for New
Slide 69: Opportunities to serve others within the state
FPL’s low rates, high reliability and excellent customer service have created opportunities to potentially serve others within the state Florida’s Electric Utility Market • Florida’s electric utility market is comprised of three main segments dominated by five investor-owned utilities, representing
Slide 70: Potential acquisition of Vero Beach municipal electric utility
FPL has the opportunity to expand its service territory through a potential acquisition of the Vero Beach municipal electric utility Vero Beach Electric Utility • Serves approximately 34,000 customers, primarily residential • Approximately 61% of customers are outside the city limits, primarily in I
Slide 71: FPL rates lower than Vero Beach electric utility rates
FPL’s electric rates have historically been lower than Vero Beach electric utility’s rates and the disparity is growing Vero Beach Utility vs. FPL Typical Bill(1) • With the potential $160 acquisition, Vero Beach $137.89 (2) utility customers could $140 benefit from FPL’s retail $120 (3) rate struct
Slide 72: FPL contracting with several cooperatives
FPL has been successful at contracting with several cooperatives, including Lee County Electric Coop Existing Wholesale Power Sales MWs Full Requirements MWs Partial Requirements 1,200 350 1,000 300 800 250 600 200 150 400 100 200 50 - - 2009 2012 2014 2009 2012 2014 $ MM Estimated Net Income Key Cu
Slide 73: Investing in incremental solar projects
FPL is exploring opportunities to invest in incremental solar projects to provide additional fuel diversity in Florida Solar Investment DeSoto Solar Expansion • 25-50 MW solar PV project Manatee Solar • Potential for additional 275 MW • Potential for 40 MW Solar Costs for 100 MW(1) Babcock Ranch $/1
Slide 74: Agenda
Agenda • Overview • Customers and Economy • O&M Productivity • Capital Investments • Summary of Financial Outlook 74
Slide 75: Additional capital expenditures to improve customer value proposition
FPL is developing plans to deploy additional capital expenditures to improve the long-term customer value proposition Projected Capital Expenditures(1) $B $4.0 $2.6 - $3.7 $2.1 - $3.6 $1.9 - $3.5 $3.5 $3.0 $2.6 - $2.8 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2013E 2014E 2015E 2016E Baseline Capital Expenditure
Slide 76: FPL expects net income growth of 5% to 9% annually
FPL expects to grow net income by an average of 5% to 9% annually through 2016, while keeping customer bills flat in real terms and improving reliability Projected Additional Net Income $ MM $2,000 $1,500 - $1,750 $1,600 $1,240 $1,200 $800 $400 $0 2012 2016E 76
Slide 77: Typical residential bill expected to remain significantly lower
FPL’s typical 1,000 kWh residential bill is expected to continue to be significantly lower than other Florida investor-owned utilities (IOUs) and the national average Projected Typical Customer Bill(1): 2013-2016 $140 $128.29 $120 $112.51 $99-$101 $100 $94.25 Typical 1,000 kWh $80 Residential Bill $
Slide 78: Break
NEXTera’ ENERGY & = Break
Slide 79: NextEra Energy Resources & NextEra Energy Transmission
Investor Conference 2013 NextEra Energy Resources & NextEra Energy Transmission Armando Pimentel President and CEO, Energy Resources March 12, 2013
Slide 80: 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- development term contracted projects • #1 in
Slide 81: Generation portfolio of diverse technologies and regions
Energy Resources’ generation portfolio consists of a diverse set of technologies positioned in a number of regions… Portfolio by Generation Assets Fuel Type(1) by Region(1) SPP PJM 7% 8% Natural ERCOT Gas NPCC & 30% Wind 3,991 MW NEPOOL 10,057 13% MW Nuclear WECC 2,721 MW 18% MISO 24% Solar 198 MW O
Slide 82: Energy Resources built largely by addition of wind assets
…and has been largely built by the addition of wind assets in North America; Energy Resources has over 75% more MW of wind capacity when compared to the next competitor Energy Resources Cumulative Wind Growth 12,000 10,057 10,000 8,298 8,569 8,000 7,544 MW 6,375 6,000 5,077 4,016 4,000 3,192 2,719 2
Slide 83: EBITDA mix continues to shift to long-term contracted assets
Our EBITDA mix continues to shift to long-term contracted assets Energy Resources’ Adjusted EBITDA(1) 100% 11% 15% 14% 75% 26% 22% 40% 50% 59% 64% 25% 49% 0% 2009 2012 2014 Long-Term Contracted Merchant Peripheral Businesses In 2014, we expect 64% of Energy Resources’ adjusted EBITDA to come from lo
Slide 84: Consciously shifting the focus of our portfolio
We have been consciously shifting the focus of our portfolio 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 84 (1) See appendix for definition of adjusted EBITDA
Slide 85: Over 11,000 MW of contracted assets
Our generation portfolio consists of over 11,000 MW of contracted assets, which are primarily wind and nuclear Energy Resources: Contracted Assets(1) Technology MW Wind 8,213 Nuclear 1,621 Solar 193 Natural Gas 1,004 Total: 11,031 85 (1) As of December 31, 2012
Slide 86: Contracted gross margin concentrated in MISO and WECC
Over 75% of contracted gross margin is concentrated in MISO and WECC Contracted Assets Contracted Assets MW by Region(1) Gross Margin(2) NPCC/NEPOOL NPCC/NEPOOL ERCOT 4% 5% 2% ERCOT 6% South West 12% PJM 25% 7% PJM Northeast 11% 11% Natural SPP ERCOT MISO Gas 7% 10% 6%38% Wind SPP 74% MISO 12% Midwe
Slide 87: Current backlog of signed PPAs for wind and solar
Our current backlog of signed long-term PPAs for wind and solar projects translates into roughly $3.6 B of capital investment through 2016 Estimated Cap Ex(1) for Wind Current Backlog and Solar Projects in Backlog ($MM) • ~600 MW Canadian wind $2,000 program $1.7-1.9 B • 175 MW of new 2013 U.S. $1,5
Slide 88: Spain Update
Our Spain project is nearing completion, however the project is facing financial challenges as a result of recent tariff changes Spain Update • The project has been impacted by two recent legislative changes to the tariff: Unit 1 – December 2012: 7% tax on energy sales Limitation on payment for non-
Slide 89: Renewable Energy Development Opportunities
Energy Resources has strong renewable energy prospects beyond the current backlog Renewable Energy Development Opportunities Wind Solar • PTC extension creates an • Expect up to 300 MW of opportunity for new U.S. additional opportunities wind development through 2016 • Expect 500-1,500 MW(1) of • Up
Slide 90: Renewable Portfolio Standards could support 3-5 GW per year
Renewable Portfolio Standards could support 3-5 GW per year of additional renewables through 2020 Individual State Renewable Portfolio Standards(1) Renewable Portfolio Standard (RPS) Voluntary standards or goals 90 (1) Source: dsireusa.org and internal NEER research
Slide 91: Reduced delivered cost of energy from new wind
Turbine price reductions and efficiency improvements combined have reduced the average delivered cost of energy from new wind installations by roughly 50% from 2009 to 2012 Delivered Cost of Electricity from Wind(1) $70 $67 $64 ~50% $60 Decrease $55 $50 $51 Levelized $50 PPA Price $/MWh $39 $40 $36
Slide 92: Solar PPA prices down significantly
Typical PPA prices for delivered solar energy are also down significantly, primarily as a result of lower solar module pricing Solar PPA Pricing (illustrative California example) $220 $200 $210 ~50% Decrease $180 Since 2008 $160 Levelized $140 $160 $160 PPA Price $120 $140 $/MWh $120 $100 $100 $80 $
Slide 93: Near-term wind development pipeline of roughly 2,000 MW
Our near-term wind development pipeline contains roughly 2,000 MW of potential growth opportunities 2013-2014 U.S. Wind Development Pipeline Project Region MW Project A MISO 150 Project B SPP 200 Project C PJM 120 Project D WECC 75 Project E SPP 90 Project F SPP 100 Represents Project G SPP 200 ~$3.
Slide 94: Near-term solar development pipeline of more than 500 MW
Energy Resources’ near-term solar development pipeline represents more than 500 MW of potential growth opportunities 2014-2016 U.S. Solar Development Pipeline Project Region MW Project A WECC 250 Project B WECC 20 Project C WECC 20 Project D WECC 20 Represents Project E WECC 20 ~$1.5 B - $2.0 B Cap
Slide 95: Distributed solar expected to be about 50% of solar market
Roughly 50% of the total solar market is expected to be in distributed solar as costs continue to decline significantly 2012 U.S. Solar Distributed Solar Installed Installed Capacity Cost Projections $/KW DC $6,000 $5,700 CAGR Commercial $5,000 (~11%) Distributed Utility Solar $4,000 Scale PV 34% $3
Slide 96: Consciously shifting the focus of our portfolio
We have been consciously shifting the focus of our portfolio Energy Resources’ Adjusted EBITDA(1) 100% 11% 15% 14% 75% 22% 40% 26% 50% 59% 64% 25% 49% 0% 2009 2012 2014 Long-Term Contracted Merchant Peripheral Businesses 96 (1) See appendix for definition of Adjusted EBITDA
Slide 97: Evaluating portfolio to reduce merchant exposure
We continue to evaluate our portfolio for opportunities to reduce merchant exposure Energy Resources’ Merchant MW(1) 10,000 • Consciously focused on reducing merchant exposure by contracting previously 8,000 8,780 merchant assets or selling our asset position 7,536 6,960 6,732 • Evaluating a potenti
Slide 98: Seabrook Station remains a cornerstone of merchant operations
Our 88% ownership share of Seabrook Station remains an important cornerstone of Energy Resources’ merchant operations Seabrook • One of newest nuclear units in 2010-2016 Adjusted EBITDA(1)(2) the United States ($MM) – Large unit provides scale:1,246 $600 Seabrook has not MW pressurized water reactor
Slide 99: Forney and Lamar positioned for changing Texas market
Forney and Lamar are well positioned to take advantage of the changing market paradigm in Texas Merchant Fossil: Forney and Lamar ERCOT North On-Peak • Located in the attractive Spark Spread(1) ERCOT market and equipped ($/MWh) with proven technology $25 • Texas economy expected to grow at 3.5% from
Slide 100: Consciously shifting the focus of our portfolio
We have been consciously shifting the focus of our portfolio 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 100 (1) See appendix for definition of Adjusted EBITDA
Slide 101: Leveraging our skills to generate additional earnings
By leveraging our skills we have generated additional earnings and cash flows with little incremental capital or risk Capital Employed (Year-end 2012) Wholesale Full Structured Competitive Proprietary Origination PMI/Retail Requirements Products Retail Trading 1% Competitive Proprietary Retail Tradi
Slide 102: One of the largest consumers of natural gas in the U.S. power sector
NextEra Energy is one of the largest consumers of natural gas in the U.S. power sector U.S. Power Company Annual Gas Consumption (2011) Gas Infrastructure Rationale (Bcf) • NextEra Energy is one of 800 the largest consumers of 700 natural gas in the U.S. 600 power sector 500 – Over 700 Bcf in 2011 4
Slide 103: Attractive economic returns from gas infrastructure business
Our economic returns from the gas infrastructure business have been attractive, and we have gained valuable insight into the dynamics of the gas business Typical Shale Gas – Activities To-Date Return on Investment(1) 4-5 Year Simple Payback • 12-15% unlevered return 40% 37% • 4 to 5-year simple payb
Slide 104: Typical Income and Cash Flow Profile
For a typical well investment, EBITDA and EBIT have a front-end loaded shape reflecting the production decline rate over time Typical Income and Cash Flow Profile 35% 30% Adj. EBITDA(1) Adj.EBITDA(1) • Typical cost per well is ~$3 to $8 MM 25% Adj. Adj. EBIT(2) EBIT(2) • We expect to commit up % of
Slide 105: A Look Ahead to 2016
Pulling it all together and looking forward… Energy Resources: A Look Ahead to 2016 • Expectations for: – Capital Investment – Earnings – Continued shift in portfolio mix 105
Slide 106: Roughly $7.2 B of growth capital planned
…our current plans include roughly $7.2 B of growth capital primarily related to wind and solar projects, in addition to roughly $1.6 B in maintenance capital Estimated Capital Expenditures(1) Summary ($B) $4 $1.8 - $3.3 Baseline + Maintenance Capital Incremental $3 $2.4 - $2.9 0.5 1.5 $2 $0.8 - $1.
Slide 107: Adjusted Earnings Walk – 2012 vs. 2016
Investments in wind and solar will drive adjusted earnings growth through 2016 Energy Resources: Adjusted Earnings(1) Walk – 2012 vs. 2016 ($MM) $1,200 $85-$95 $950-$1,040 $1,000 $30-$50 $870-$940 $95-$105 Primarily $800 Additional $130-$150 Wind & Solar $693 ($70) Solar All Other $600 Wind 2016 Win
Slide 108: Business mix shifts toward long-term contracted assets through 2016
The resulting business mix continues to shift toward long-term contracted assets through 2016 Energy Resources’ Adjusted EBITDA(1) 100% 11% 14% 15% 75% 22% 19% 40% 50% 64% 66% 25% 49% 0% 2009 2014 2016 Long-Term Contracted Merchant Peripheral Businesses 108 (1) See Appendix for definition of Adjuste
Slide 109: Energy Resources is the U.S. leader in renewable energy
Energy Resources is the U.S. leader in renewable energy and has solid growth prospects supported by a solid strategic focus Diversified portfolio: fuel type and geography Stable cash flows from mostly contracted assets – Securing long-term power purchase agreements for new projects One of the
Slide 110: NextEra Energy Transmission
INVESTOR CONFERENCE 2013 NextEra Energy Transmission
Slide 111: NextEra Energy Transmission pursuing new transmission investments
NextEra Energy Transmission (NEET) is pursuing new transmission investments throughout North America NextEra Energy Transmission • Holding company for our incumbent transmission utilities outside Florida – Lone Star and New Hampshire Transmission • Development team focused on sourcing new regulated
Slide 112: Lone Star Transmission
The Lone Star CREZ project in Texas is the cornerstone of our growing transmission business Lone Star Transmission • 330 mile, 345 kV line and five substations in Texas • Energized initial two substations Q4 2012 • On schedule to complete project in Q1 2013 • Total capital investment of approximatel
Slide 113: Competitive Transmission Opportunity Set
The overall market for new transmission projects is aligned regionally, with increasing opportunities to compete Competitive Transmission Opportunity Set • Competing for $4 B of investment opportunities in several jurisdictions – Alberta – Hawaii – New England – New York – Ontario • Decisions expect
Slide 114: Financial Outlook
Investor Conference 2013 Financial Outlook Moray Dewhurst Vice Chairman and CFO March 12, 2013
Slide 115: Growth Drivers
Our financial outlook remains strong, and we have multiple avenues for growth Growth Drivers Florida Power & Light Energy Resources • Base rate increase from • Existing renewables backlog: settlement agreement – ~600 MW Canadian wind • Service territory volume – ~900 MW solar growth – 175 MW of U.S.
Slide 116: Backlog supports 5% CAGR through 2016
Our backlog supports reasonable expectations of a 5% CAGR through 2016; incremental investment could increase that to 7% NextEra Energy Adjusted Earnings Per Share Expectations $5.50 to $6.00 $4.57(1) 2012 Actual 2016 Adjusted EPS Expectation 116 (1) See Appendix for reconciliation of adjusted amoun
Slide 117: Incremental growth and Spanish law will challenge earnings above $5.45 in 2014
Incremental growth, plus changes in Spanish law, will challenge our ability to earn above $5.45 in 2014 NextEra Energy Adjusted Earnings Per Share Expectations $5.50 – • Assumes no contribution $5.30 – $6.00 from Spain $5.05 – $5.70 $4.70 – $5.45 • Incremental equity to $5.00 maintain credit strengt
Slide 118: Balance sheet as a source of competitive advantage
We view our balance sheet as a source of competitive advantage and expect to maintain strong credit metrics Adjusted Debt to Utility Credit Ratings(1) Total Capital(2) 60% 52.0% 51.8% 49.4% 48.3% 30% 50% 28% NextEra 40% Energy 25% 30% 23% 21% 20% 20% 10% 16% 0% 2009 2012 2013E 2014 Target 15% 30% Ad
Slide 119: Financing Strategy: 2013 - 2016
Any equity issuances to support capital spend in 2014 are likely to be in the form of straight common stock, rather than equity units Financing Strategy: 2013 - 2016 • At FPL: – Maintain consistent balance sheet ~60% regulatory equity ratio – Focus on long-dated maturities, but may selectively short
Slide 120: Free Cash Flow Before Dividends
Our free cash flow position is improving every year NextEra Energy’s Free Cash Flow Before Dividends 2013 2014 2016 Operating Cash Flow $4.7 B to $4.9 B $5.6 B to $5.9 B $6.2 B to $6.6 B Capital Expenditures(1) ($5.0) B to ($5.7) B ($4.4) B to ($6.9) B ($2.8) B to ($4.9) B Other Investing $0.3 B to
Slide 121: Hypothetical Steady State Cash Flow
Free cash flow is largely a function of capex; our underlying productivity is strong Hypothetical “Steady State” Cash Flow (Based on 2014 expectations) Baseline Hypothetical Operating $5.6 B to $5.9 B Sustained $5.6 B to $5.9 B Cash Flow Capital ($4.4) B to ($6.9) B Reduce Growth Capex ($2.0) B - ($
Slide 122: Cash quality of earnings comparable to other utilities
NextEra Energy’s cash quality of earnings is comparable to other utilities’ S&P 500 Electric Utilities Index Companies Ratio of Cash Flow to Adjusted Earnings – 4-Yr Avg. (2009-2012)(1) Cash Flow to Adjusted Earnings Cash Flow to Adjusted Earnings Including Deferred Taxes(2) Excluding Deferred Taxes
Slide 123: Business mix shifting towards regulated and long-term contracted
NextEra’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 2016 2011
Slide 124: Market risk mitigated by significantly hedged position
Market risk will be mitigated by our significantly hedged position over the next several years Energy Resources Equivalent Gross Margin Contracted or Hedged(1) 100% 100% 100% 100% 100% 97% 95% 89% 86% 80% 60% 40% 20% 0% 2013 2014 2015 2016 Existing New (1) Projected equivalent gross margin includes
Slide 125: Pension plan funded status well above peers
The funded status of NextEra’s pension plan remains well above that of its peers 2012 Pension Funded Status of Large U.S. Electric Utilities 143% Peer median funded status: 84% Limited risk to NEE from changes in the funded status 125
Slide 126: Dividend policy reflects increased contribution from regulated businesses
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 2011 to 2014 CAGR: ~10% $2.80 - $3.00 ? of 55% targ
Slide 127: NextEra Energy presents an attractive value proposition
NextEra Energy presents an attractive value proposition 2 Year Forward P/E Comparison(1): NextEra Energy UTY Index versus NEE Value Proposition • Strong backlog with many 16.0x ~4% incremental investment discount opportunities at both major 15.0x businesses ~15% 14.0x discount • Low risk business st
Slide 128: Appendix
NEXTera’ ENERGY & = Appendix
Slide 129: Reconciliation of Adjusted Earnings to GAAP Net Income
Reconciliation of Adjusted Earnings to GAAP Net Income (Full Year Ended December 31, 2012) Florida Pow er Energy Corporate & (m illions, except per share am ounts) & Light Resources Other NextEra Energy, Inc. Net Income (Loss) $ 1,240 $ 687 $ (16) $ 1,911 Adjustments, net of income taxes: Net unreal
Slide 130: Reconciliation of Adjusted Earnings to Net Income
NextEra Energy, Inc. Reconciliation of Adjusted Earnings to Net Income ($ millions) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Net Income $479 $903 $896 $901 $1,281 $1,312 $1,639 $1,615 $1,957 $1,923 $1,911 Adjustments, net of income taxes: Net unrealized mark-to-market (gains) losses as
Slide 131: Reconciliation of Adjusted Earnings Per Share to Earnings Per Share
NextEra Energy, Inc. Reconciliation of Adjusted Earnings Per Share to Earnings Per Share 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Earnings Per Share (assuming dilution) $1.38 $2.53 $2.48 $2.34 $3.23 $3.27 $4.07 $3.97 $4.74 $4.59 $4.56 Adjustments: Net unrealized mark-to-market (gains)
Slide 132: 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) GAAP Adjustments Adjusted Net income $1,923 ($86) (1) $1,837 Add back interest 1,034 0 1,034 Add back income taxes 529 (57) (1) 472 Add ba
Slide 133: Reconciliation of Cash Flow/Adjusted Earnings (Including Deferred Taxes)
NextEra Energy, Inc. Reconciliation of Cash Flow/Adjusted Earnings to Cash Flow from Operations/Net Income (Including Deferred Taxes) Cash Flow to Cash Flow from Adjusted Earnings to Net ($ MM) Operations Income (1) Ratio 2009 2010 2011 2012 Average 2009 2010 2011 2012 Average Adjusted Cash Flow $3,
Slide 134: Reconciliation of Cash Flow/Adjusted Earnings (Excluding Deferred Taxes)
NextEra Energy, Inc. Reconciliation of Cash Flow/Adjusted Earnings to Cash Flow from Operations/Net Income (Excluding Deferred Taxes) Cash Flow to Cash Flow from Adjusted Earnings to Net ($ MM) Operations Income (1) Ratio 2009 2010 2011 2012 Average 2009 2010 2011 2012 Average Adjusted Cash Flow $3,
Slide 135: Definitional information
Definitional information NextEra Energy Resources, LLC. Adjusted EBITDA Adjusted EBITDA includes Energy Resources’ consolidated investments as well as its share of earnings from equity method investments. Adjusted EBITDA for each category set forth above is represented by (a) revenue, including a pr
Slide 136: 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 137: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) failure or breach of NextEra Energy's and FPL's information technology systems; risks to NextEra Energy and FPL's retail businesses of compromise of sensitive customer data; risks to NextEra Energy and FPL of volatility in