Operator:

Good day, and welcome to the NextEra Energy and NextEra Energy Partners LP Second Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Mark Edelman, Director of Investor Relations. Please go ahead.

John Ketchum:

Thanks, Mark, and good morning, everyone. NextEra Energy delivered strong increasing more than 9% year-over-year. In addition, through the first six months of the year, our adjusted earnings per share has increased 9.4% year-over-year. The continued strong financial and operational performance at both FPL and Energy Resources position our company well to meet its overall objectives for the year. At FPL, we have continued to deliver for our customers on multiple fronts since the start of our most recent rate settlement in 2022. We are making smart capital investments in low cost solar generation and battery storage. We’re continuing to reduce our overall fuel cost and combined with generation modernizations have saved customers nearly $16 billion since 2001. We are delivering best in class non-fuel O&M where we're 70% better than the national average, saving our customers $3 billion every year compared to the average utility. A big driver of our outperformance has been our team and culture of continuous improvement and productivity. Nowhere is this better demonstrated than through our annual companywide initiative to reimagine everything that we do, which we call Project Velocity. This year, we identified record $460 million of run rate cost savings opportunities through 2027, part of which benefit FPL and its customers. By finding opportunities to take cost out of the business and making smart capital investments to reduce its fuel costs, FPL has kept residential bills nearly 40% below the national average and by far the lowest among all the Florida investor owned utilities. FPL’s reliability also ranks among the best in the industry, where we are 66% better than the national average in the number of minutes a customer's power is interrupted per year. I'm most proud of the fact we continue to deliver on our customer value proposition during a period of unprecedented growth in Florida. Florida continues to be one of the fastest growing states in the U. S. with roughly 1,000 people moving to Florida every day. And it's not just the residential sector. We're seeing the commercial and industrial sector growing too. As a result of this accelerated growth, FPL's regulatory capital employed has grown at a 12% compound annual growth rate since the beginning of 2022 compared against an estimated 9% comp in annual growth rate that was originally anticipated for the four year settlement period. We have shouldered this additional growth through our reserve amortization mechanism, which enables FPL to absorb the cost for these capital investments without increasing customer bills in the interim. While these efforts have helped us to meet customer growth and deliver for our Florida customers, our reserve amortization mechanism has been utilized faster than expected. FPL fully expects to seek recovery of these increased expenditures in its rate case filing next year. FPL ended the second quarter with a remaining reserve amortization balance of $586 million which is expected to be sufficient to support FPL's capital investment plan and its ability to earn an 11.4% regulatory ROE this year and next. An 11.4% percent regulatory ROE is expected to have a $0.06 EPS impact in each of 2024 and 2025, which has already been taken into account in our financial expectations, and we will be disappointed if we are unable to deliver financial results at or near the top of our adjusted earnings per share expectation ranges each year through 2027 at NextEra Energy. We expect to continue to demonstrate the benefits and protections that the reserve amortization mechanism provides customers when we file our rate case next year. Our vision is for FPL to be the best utility franchise in the country by doubling down on what we do best, delivering low bills and high reliability for our customers by making smart capital investments and being an industry leader on costs. These attributes are important to our customers and regulators, and they are important to us. We look forward to continuing to deliver on what we believe is an outstanding customer value proposition at FPL. Growth is not only occurring inside Florida, but outside Florida as well. At Energy Resources, we are benefiting from two types of demand, replacement cycle and gross cycle demand. With regard to the former, we have long been a beneficiary of a replacement cycle where higher cost, less efficient generation has been retired in favor of low cost renewables and battery storage. We expect this to continue and while replacement cycle demand has been around for a long time, growth cycle demand is new. With the exception of a few states such as Florida, power demand from new growth has been static in our industry for decades. That's changing as power demand is projected to grow 4x faster over the next 2 decades compared to the prior two. That growth is being driven by demand across multiple sectors, which is expected to create a long term opportunity for faster deploy low cost generation. As highlighted at our investor conference, we expect the demand for new renewables to triple over the next seven years versus the prior seven to help meet this increased power demand. Energy Resources couldn't be better positioned as it has a 300 gigawatt pipeline, half of which is in the interconnection queue process or is already interconnection ready. Our scaled experience and technology coupled with our ability to build new transmission where required enable us to meet the growing demands of our power and commercial and industrial customer base. Underpinning these competitive advantages are our decades of data, analytical capabilities and experience with system operators and relationships with utilities that position us well to get the power to where it needs to go. Our continued ability to drive origination results speaks for itself. Energy Resources added over 3,000 megawatts of new renewables and storage projects for the backlog this quarter, 860 megawatts of which come from agreements with Google to meet their data center power demand. This marks our second best origination quarter ever. These results support our belief that the bulk of the growth demand will be met by a combination of new renewables and battery storage. The importance of renewable and storage to help meet our economies growing demand for power has never been more evident. As data center growth accelerates to facilitate our economy shift to artificial intelligence, and as we continue to re-domesticate and electrify across multiple sectors, our nation must embrace an all of the above strategy to meet increasing electric demand. Renewables and storage are energy independent as they rely on American wind and sunshine. They also are extremely fast to deploy compared to alternative forms of generation making them vital to our country's success going forward. And importantly, the country has stood up a significant domestic industry to support their growth, which is driving investment in factories and is creating good paying jobs and a tax base that is revitalizing rural communities across America. As customers increasingly demand smart clean energy solutions, we are the company with experience in every part of the energy value chain and are uniquely positioned to help them make the right decisions for their business. As the owner and operator of a large natural gas-fired fleet in Florida, we are also conscious of the importance of natural gas-fired generation as a bridge fuel. Yet, we also are well aware of the realities of new build gas-fired generation. It's more expensive in most states, is subject to fuel price volatility and takes considerable time given the need to get gas delivered generating unit and the three to four year waiting period for gas turbines. Low cost, fast to deploy renewables help keep power prices down, making our economy more competitive globally. Ultimately, our country needs all forms of energy as we move forward and the future has never been brighter for the power generation sector as a whole and renewables in particular. As I've been saying, NextEra Energy was built for this moment and our future outlook has never been stronger. Our strategic focus is to deliver low cost clean energy and storage for customers both inside and outside Florida, while building new transmission where required to support new generation. We have the playbook and the platform to win in any environment and most importantly, we have the team. Our competitive advantages continue to grow every day, providing industry differentiation that is over two decades in the making and difficult to replicate. And I firmly believe, we will continue to expand that strategic distance, creating value for customers and shareholders. Nobody is better positioned to meet the demands of the energy customer of tomorrow than NextEra Energy. And I wouldn't trade our opportunity set with anyone. With that, I will turn the call over to Brian to cover the detailed results beginning with FPL.

Operator:

[Operator Instructions] The first question comes from Steve Fleishman from Wolfe Research.

John Ketchum:

Yeah. No, absolutely, Steve. So we've had a lot of population growth in Florida, a lot of that has impacted our service territory. When we first entered in the settlement agreement, back in ’21, we’ve got our regulatory capital employed to be around 9%. It's actually been around 12% as we have accommodated that growth. And so we've got surplus that's right around $586 million today as we look forward for this year and next based on where we are, the capital plans that we have for the FPL business, which are still very strong to take into account the further growth that we see. We believe that with that amortization balance and those CapEx plans will probably be right around an 11.4% ROE for the full year '24 and for the full year ‘25. And that has about a $0.06 impact here this year and a $0.06 impact next year. It's already folded into our financial expectations and not a concern in terms of our ability to cover it. And a big plus from the Steve is, it really I think is a good fact heading into a refiling in 2025 because it demonstrates how the surplus mechanism can really help customers. And the last point that I'll make is don't forget these additional capital investments that we've made, we would expect to see full recovery of in our next filing. So this remember that the surplus mechanism is intended really just to deal with the regulatory lag as we make new investments at FPL to accommodate the additional growth. So we're not worried about this. This is something that is something that we feel very comfortable about addressing in our financial expectations and doesn't impact where we feel like we will end up this year and next.

John Ketchum:

Yeah, it was 1.6 gigawatt portfolio just a mix of renewable assets. And I think the real positive takeaway here for investors is there's a real demand for NextEra assets. I mean, we are recognized in the private equity market as being really the top developer. And given all the growth and this quarter is a great example of the 3 gigawatts that we were able to do. We have a strong trajectory going forward. And as private equity has opportunities to work with us and we have a long history of working with private equity going back the last five or six years. It really is a good potential win-win for us and for them. With the Blackstone organization, we really like the capability that they bring to the table and there's a lot of crossover between our two organizations in terms of what we do. And so this was a good fit for us.

John Ketchum:

They invested capital alongside us. And so they have a partial interest in that portfolio of 1.6 gigawatts.

John Ketchum:

Yes, for us, I mean, look, first I'll start with the fact that we are a top tensile operator of wind. I think really recognized as the best operator of wind in the business. And we have a real partnership with GE, and so, look, wind turbines have moving parts, they'll have issues from time to time. But our partnership with GE runs 20 years and so we've really never had issues in getting things and we're always able to structure win-win arrangements with them. So as any problems arise to the portfolio they've always been well managed and addressed in a conciliatory way with GE and future.

Shahriar Pourreza:

So just real quick, I want to start on NEP. I mean, obviously, you guys have the standard language around continuing to evaluate all options. I mean, Brian obviously reiterated the current CAGR, but also used the word for now core-on-core which is somewhat new language, believe it or not. Could we get a sense on timing, what range of options you're thinking about? And I guess how confident are you we can get something done at favorable pricing before the dividend goes under some level of pressure in '27?

Shahriar Pourreza:

And I think Brian just to not to take words out of [indiscernible] mentioned in the next couple of quarters is that -- is this something maybe we'll get to some sort of a definitive direction this year?

Shahriar Pourreza:

And then just on NEE obviously just congrats on a very strong origination quarter, it was definitely on the higher end, Google was a key contributor. I guess do your sort of existing contract protections and supply chain maybe strategy like to kind of navigate some of the challenges in this space as you're continuing to expand development to maybe much higher levels, right? So can supply chain kind of these bottlenecks that we've seen become a governor around backlog additions as we look through '25 and beyond, especially as you're trying to meet the needs of these large energy intensive customers like the hyperscalers?

Operator:

The next question comes from Julien Dumoulin-Smith from Jefferies.

John Ketchum:

Yes. No, good question, Julien. So from a recycling standpoint, feel better than I ever have in terms of the options that we have going forward for the portfolio. In terms of asset mix and how we think about that, obviously, we've always had a history of being able to recycle capital around renewables, which are terrific assets which I think we have a great reputation in the market around and our ability to attract capital on the renewable portfolio. But look, we are also making a conscientious effort and I think I made these comments at the Investor Conference that we're looking at our core business, right. Our core business is wind, it's solar, it's battery storage, it's transmission both inside Florida, outside of Florida. And so to the extent we can do some targeted capital recycling around our gas infrastructure business that will continue to be top of mind. Transmission, you raised as well. We are having a lot of success in transmission and the team has done a terrific job I think on the competitive transmission side of identifying new opportunities, and just based on the return structure that we could target, there's good sense to bring in a partner on some of those deals. And so those have been opportunities that we have been targeting as well as we think about the future. But obviously it puts us in a position where we continue to manage those assets and those opportunities as we think about how they contribute to the future. But those certainly are 2 things that we look at in addition to the renewable portfolio. And the numbers that we gave at the Investor Conference, I certainly don't lose any sleepover in terms of the ability to meet those capital recycling targets. From a business mix perspective, I think which is your last question, you know and I think most folks on the phone know that we are very rigorous about looking at our five year forecast and even go beyond that. And so we're constantly looking at our mix and what our obligations are and undertakings are with the agencies and we have a lot of headroom, a lot of headroom on our business mix. So that is not an issue, that is not a concern and the capital recycling plan I think fits well with what our undertakings are there, but plenty ahead of room on business mix.

John Ketchum:

Absolutely. I'm going to turn that one over to Rebecca.

Operator:

The next question comes from Nick Campanella from Barclays.

John Ketchum:

Sure. First of all, as you know, we are always looking to manage risk around our capital investment decisions. And one of those risks is it's not only locking in equipment cost, it's not only locking in labor, but it's also locking in our cost of capital. So as we approach our renewable portfolio, we've been very mindful of making sure that we are locking in our cost of capital through interest rate hedge products swaps in that regard. As I think about the future and the rate the one, the two rate cuts, who knows where we ultimately end up on those fronts. Obviously given the financing plans that we have moving forward, those would be tailwinds for the business. But at the same time, if those don't materialize, we have already taken those into account in our financial expectations and we're very prudent and on top of managing the risk the interest rate risk exposure that we have across the business.

John Ketchum:

Sure. Thanks, Nick, for that question on nuclear. With regard to Duane Arnold, I think there would be opportunities and a lot of demand from the market if we were able to do something with Duane Arnold. Obviously bringing back a nuclear plant is into service is not something that you can do without a lot of thought. And it is something that we are looking at, but there is a lot of thought that has to go into it and obviously a real assessment around risks associated with that as well. And so sure, we're looking at it, but we would only do it if we could do it in a way that is essentially risk free with plenty of mitigants around the approach and there are a few things that we would have to work through. But yes, we are looking at it.

Jeremy Tonet:

Just want to get a little bit more color on renewables market right now as you've discussed very strong demand in the market. And just wondering going back to some of the comments at the Analyst Day, what trends you see in PPA pricing at this point and how could that potentially benefit NextEra going forward?

Operator:

The next question comes from David Arcaro from Morgan Stanley.

Rebecca Kujawa:

Hi David, it's Rebecca, I'll chime in here. We certainly are hearing from our power sector customers a lot of interest, from various data center customers, whether the data center operators or the hyperscalers. It is a little bit challenging to see how much of that is potentially multiple requests for ultimately the same data center, but there is no escaping the fact that these are very large numbers and things that numbers that I don't think any utility across the industry has seen before. And so it's going to take some time not only to rationalize that and figure out how you address it, but also to procure and bring online the megawatts and the transmission over the long term that is going to be required to serve this demand if it ends up being as strong as we see it and we think it might be. From our perspective, consistent with our comments from last month, we are seeing a lot of interest both from the power sector customers as well as hyperscalers and data center customers. You're clearly seeing some of that show up in our origination, but you're also seeing some of that more of that show up in this '26 and '27 timeframe and now even '28 as we are lining up these projects to support when they will come online for our utility customers. So I think we all are very excited. It is very interesting for our sector to see this growth that we haven't seen in a couple of decades. But I do think from a practical standpoint, it's going to take a couple of years for this really to materialize and utilities to be able to absorb it and serve it. But that's a terrific backdrop for us. Some of these challenges are going to be difficult to solve, and I believe there's no better company to partner with our customers to help solve them.

Rebecca Kujawa:

Sure. Well, David, I'll answer it more broadly than just specific to one certainly for a variety of reasons, including sensitivities. Some of these comments would otherwise be sent for them for their own competitive positioning. But those specifically were new contracts, and they were to support data center demand wind, solar and battery storage. And then more broadly speaking from a hyperscalars perspective, they are interested in a variety of technologies, wind solar and battery storage. And they I would say probably the biggest change for many of them is a shift or certainly an increasing percentage of these projects that are very specifically associated with the data centers that these hyperscalars are trying to build. So it's less interest in just a pure virtual power purchase agreement where the project could be anywhere in the U. S. to I want to make sure these resources are there to support my datacenters as they are getting connected to the utilities in those local jurisdictions and can come online at the same time. So very much becoming a more physical market, and one in which it's really important that their partners show up and perform and deliver as expected, because they are the load on the other side of that. So that's a very attractive proposition from our perspective. As it relates to the structured agreements, listen, we were most focused on making sure that we add value for these customers. That could come in a variety of different forms and factors, but our primary focus is being there and delivering for them when they need us. And we'll update you as those structures evolve, but it's really focused around creating value with and for them.

Carly Davenport:

Maybe just to start, a lot has obviously changed in the U. S. Election landscape since your last earnings call. So can you just talk us through your latest expectations on potential implications on the IRA and what impact any modification to that legislation might have on your renewable development plans?

Carly Davenport:

Awesome. Appreciate all of that color. It's really helpful. The follow-up was just on the backlog. Wind saw a bit of an acceleration this quarter from being a bit weaker in the last several. Anything in particular you'd point to in sort of driving that? And do you think that's a potential sign of an inflection on the wind demand side?

Operator:

The next question comes from Andrew Weisel from Deutsche Bank.

Rebecca Kujawa:

Hi, Andrew, it's Rebecca. So that is just projects with technology companies, Roughly 3 gigawatts of those are already in service and roughly 4 gigawatts now are the ones that are in the backlog that we plan to build over the coming years. It is a mix of technologies, probably trend wise, fairly consistent with what we have seen for overall trends for renewables development. So projects that are already in service are likely to be more heavily weighted towards wind as we've entered into those relationships over a longer period of time. And then in terms of the backlog, for now, they're more weighted towards solar and storage, but I expect that to even out over time, particularly as these products get more deliberately balanced with new data center demand as these hyperscalers and datacenter operators are starting to put projects in service. So broadly speaking, roughly consistent with overall development trends, And we certainly are seeing a lot of demand, both directly with them as well as in kind of these three way collaborations the utilities that ultimately will need to serve them as they are. And we'll continue to be adding these new data centers and bringing them on themselves.

Rebecca Kujawa:

I would say from a transmission perspective, all of this demand, whether it was the historical replacement cycle demand and now further accelerated by the growth demand, particularly as it gets served with renewables and storage, it is incredibly important that new transmission get built in order to be able to get the resources from which they're most optimally generated to where they're most optimally consumed, and that's changing a little bit. But what's not changing is the need to build transmission. We see interest from the hyperscalers and the datacenter operators to understand transmission and be supportive of it getting built. But it is a very technically complex and you need to understand transmission and how to interact with the system operators and the transmission owners and operators themselves. So I don't see them necessarily wanting to build transmission, but they are very interested in having us and others ensure that it gets built to support their own long term objective.

Durgesh Chopra:

Really, really appreciate you taking the time and answering my questions here. Just all my other questions have been answered. Just one quick follow-up on Carly's questions on election and potential repeal of either risks. How much of that you had a really strong quarter on renewable origination, but how much of that political instability is actually impacting your ability to sign contracts? Is that -- does that come up in your negotiations? Is that keeping your customers away from signing contracts into the future? Any color on that is appreciated.

Operator:

This concludes our question-and-answer session and the conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator:

Good morning and welcome to the NextEra Energy and NextEra Energy Partners LP First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to, Kristin Rose, Director of Investor Relations. Please go ahead.

John Ketchum:

Thanks Kristen and good morning. NextEra Energy has strong first quarter results growing adjusted earnings per share by 8.3% year-over-year. Based on FPL and energy resources, financial and operational performance, we are once again off to a solid start for the year. In addition, FPL placed into service 1640 MW of new solar, while Energy Resources added 2765 MW of new renewables and storage projects to its backlog. This quarter marks Energy Resources second best origination quarter ever, as well as its best solar and best storage origination quarter. As we highlighted at our March Renewables Development Day, we believe NextEra Energy is well positioned for the expected strong power demand growth through the end of the decade and beyond. After years of relatively flat U.S. power growth, numerous reports now highlight significant future low growth being driven across industries such as oil and gas, manufacturing and technology. The re-domestication of industry to U.S., supported by public policy, will drive the need for more electricity and the tech industry is going to need data centers to support the expected cloud capacity demands that come with artificial intelligence applications. Of course, increased load demand will not come all at once and will take some time to materialize, but it is clear that many new customers are concerned about power availability to meet their plans and consider power supply as a significant obstacle to business expansion. We believe renewables and storage are a key enabler to help meet this increased demand. In fact, we believe the U.S. renewables and storage market opportunity has the potential to be 3x bigger over the next seven years compared to the last seven, growing from roughly 140 gigawatts of additions to approximately 375 to 450 gigawatts. And we believe no one is better positioned to address these power supply challenges and capitalize on this demand than NextEra Energy. At NextEra Energy, the plan is simple. Our two businesses are deploying capital in renewables, storage and transmission for the benefit of customers, while also providing visible growth opportunities for shareholders. Our enterprise-wide scale decades of experience and technology investments are key competitive advantages that allow us to drive value and meet this expected power demand. Scale is one of our key differentiators, and it matters more than ever. Scale allows us to buy and build with better pricing, better protections, and better positioning to navigate disruption. Scale provides access to capital and cost of capital advantages, allowing us to leverage one of the strongest balance sheets in the sector and worldwide banking relationships to finance projects at beneficial terms. Scale has driven top decile operational performance throughout our generation fleet. Today, NextEra Energy's roughly 74 gigawatt operating fleet, comprised of 35 gigawatts at FPL and 39 gigawatts at Energy Resources, provide significant operational scale. As FPL continues its solar and storage build out and Energy Resources brings new renewables and storage projects online for customers, the operating fleet could grow to over 100 gigawatts by the end of 2026. This would further extend our scale advantages and create value for customers and shareholders. Our scale has enabled greater supply chain diversification and flexibility. And the good news is the solar supply chain has much improved from two years ago. Inflationary pressures are alleviating and manufacturing capacity is significantly expanding. In the U.S. manufacturing incentives are expected to support increases in domestic module manufacturing capacity to over 50 gigawatts by 2026 from just under 8 gigawatts at the end of 2021. We have greater supplier diversity and flexibility than ever before, strengthening our ability to bring low cost solar to American consumers and businesses. Our decades of experience is another key competitive advantage. Our experience allows us to navigate power demand challenges, delivering cost effective, reliable generation for our growing FPL customer base and designing clean energy solutions to help our Energy Resources customers. We understand every part of the energy value chain with deep expertise in all technologies, the power markets and transmission. Our team embraces continuous improvement that drives innovation. We recognized the changing landscape and secured land interconnects and transmission equipment years in advance. Technology is the next frontier for the power industry, and we believe our two-decade head start on the rest of the industry is a significant competitive advantage. Today, NextEra Energy captures 560 billion operational data points each day and has dozens of proprietary artificial intelligence tools to drive analytical, real-time decision making. We use these tools to analyze over 100 attributes of our own data to secure and develop the best sites in Florida and across the country. We use our tools to iterate millions of site layout designs based on proprietary resource data and assessments to maximize value, and we use our tools to operate nearly all our renewable storage and fossil generation fleets around the clock from our headquarters in South Florida. We are leveraging this combination of enterprise-wide scale, decades of experience and investment in technology to better position both businesses to capitalize on what we believe will be years of demand to drive long-term value for customers and shareholders. Today, electricity represents just 20% of overall U.S. energy consumption, and wind and solar generation represents only 16% of the U.S. electricity mix. In short, we believe the U.S. will need a significant and growing amount of electricity over the next decade and beyond, a large part of which will be powered by new renewables and storage. At FPL as more people move into Florida, we are focused on extending the customer value proposition by keeping our bills as low as possible and delivering clean, affordable energy by investing in solar, battery storage and transmission. At Energy Resources, our business is focusing on building low cost wind, solar, battery storage, and transmission. We are using our data and proprietary technology to help power customers balance supply and demand while keeping customer bills affordable. We also use our tools with commercial and industrial customers to identify the best locations based on their physical preferences and most important variables. For both power and commercial and industrial customers we leverage our 300 gigawatt development pipeline and transmission and market expertise to help design the lowest cost clean energy solutions. Both businesses complement each other, deepen our skill sets and advantages, and foster innovation and we leverage our greatest asset, our people, who have decades of experience to drive value for our customers and shareholders. When I consider current energy demands, the long-term electricity needs, and our competitive advantages, I wouldn't trade our opportunity set with anyone. I look forward to telling more of our story and explaining why NextEra Energy is uniquely positioned to lead the electrification of the U.S. economy at our Investor Day on June 11 in New York City. With that, I will turn the call over to Kirk to cover the quarterly results.

Operator:

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Steve Fleishman with Wolfe Research. Please go ahead.

John Ketchum:

Sure. Steve, this is John. I'll go ahead and take that. Let me take those in order. Let me talk about, first of all, the speculation around AD/CVD filing, which, may or may not occur, and then the bifacial exemption. But first on the AD/CVD, the bottom line takeaway for folks is that, we expect that any trade actions that would occur this time around will be very manageable and for several reasons, I'm going to go through them. This is not like circumvention. This is not circumvention 2.0. The solar panel market is in a very different spot. And the first point, I want to make is, we don't expect any trade action, if it were to occur, to result in delivery stoppages. And in any event, our panels are delivered well in advance of construction, which gives us a lot of time and opportunity to be able to troubleshoot any issues should they arise. And why do I think no stoppages are going to occur this time around? The main reason is the U.S. is the most expensive solar panel market in the world and so there's a lot of economic reasons for deliveries to continue to occur. The second point, I want to make is that given our scale, we have appropriate incentives and contractual protections that are in place in our agreements with our suppliers to ensure that delivery occurs timely. And we also don't put all of our eggs in one basket. We have a diversified set of suppliers, as you would all expect, and the ability to pivot from one supplier to another should any issues occur. So I feel like in very good spot there. Third point I want to make, and it's one that I hit in my prepared remarks, is that the U.S. and the global supply, supply of solar panels is bigger than ever and it's growing. And let me talk, for example, about the U.S. market, specifically. The U.S. domestic solar panel industry is getting stronger and stronger than it's ever been. One of the points that I made also in the prepared remarks is at the end of 2021, solar panel module capacity in the U.S. was about 8 gigawatts. That's expected to be about 50 gigawatts by the time we get to 2026. So the U.S. market is in a much different spot. There's already been 150 gigawatts of new U.S. solar panel factory announcements that have been made. If you talk to most U.S. domestic solar panel manufacturers, they're sold out through 2026. So they're certainly not having any trouble with demand, which is the other point that I want to make. So now let's speculate a little bit. So if a filing is made around anti-dumping, let me deal with that first. We find it hard to believe that any panels are being dumped into the U.S. market under the law that would be applied. As I said, the U.S. is the most expensive solar panel market in the world. It's two to three times higher than any other market in the world. And if panels were being dumped, that could not be the case. So that's the first point I want to make on anti-dumping. The second point I want to make, if there were a countervailing duty claim filed, the Department of Commerce would first have to look in to see if the price of solar modules in Southeast Asian countries, for example, were being subsidized. We don't really have any idea or way of knowing that until we see what gets filed. But, after we see those arguments, we'll be able to make a better assessment. But countervailing duties, historically, I mean, if you look at examples for countervailing duties that have been applied in the past against China suppliers, they've typically been around, 10% to 15%. So even if those were to be applied in this case, quite mean, manageable. And the other point I want to make is that what's different is tariffs in this situation would be prospective and not retroactive. And so for all of these reasons, even if something were to move forward, we still have no way of knowing if it will. We are very well positioned to manage through this, like we always do. Our inventory position and the contractual protections that we have in place are expected to give us strong coverage for our backlog through 2027. And by that time, as more and more U.S. production comes online, as expected, these trade issues will fall away. So that's AD/CVD. Let me just turn quickly to a couple of minor comments on the bifacial exemption. The bottom line, the bifacial exemption, even if it's removed, really has no impact on NextEra. Why is that? We've contracted all of our panel needs through February 26, and we have very minimal exposure to the bifacial exemption being removed. And once that bifacial exemption, even if removed, it would expire at the end of February of 2026, and it can't be brought again and reinstated for another eight years. So we feel like we're in a very good spot. And the last point I'll make is as more and more U.S. production capacity comes online and it's actually available by, we will continue to source from U.S. suppliers. So look, when you put all those things together, feel like this is very manageable and feel like we will be fine.

John Ketchum:

I think kind of all of the above, Steve. Our opportunity is significant around data centers is a point, first point that I'll make and I think if you look historically on what we've been able to do with data center customers, I don't think anybody's had better results than we have. If you look at just our gigawatts in operation, we have 3.5 gigawatts in operation today. We have another 3, close to 3.5 gigawatts in our backlog with technology providers. We really understand their business. We really understand what it is they need. And part of that is because we spent a lot of time with them, we do business with all the, what I would call the top five hyperscalers in this country, also doing business increasingly with some of the developers of data centers as well. And we've owned data centers, and so we understand how they work, how they operate, what the CapEx and OpEx is, and how it's driven by energy and power, and what the right locations are for them. We've developed tools to address them. And so what do we see? We see about a 15% CAGR through the end of the decade for data center demand. I think data center developers are really focused more than anything on three things. They want low cost energy. They want to be able to say that they've accomplished additionality from a decarbonization standpoint, which requires a new facility to be built, not an existing facility. And third piece is it's got to be in the right location, and it's got to have speed to market. And, there's obviously been a lot of talk about renewables and nuclear, and I do want to, I'm a little more of a skeptic, about nukes, and let me explain why that is. They're already in the ground. You can't move them. And if you look at the nuclear fleet, there's only 15 nuclear plants in this country that are west of the Mississippi. And when you think about the 15 that are west of the Mississippi, most of them already rate regulated or long-term contracted. So that really is just creating maybe an east coast opportunity for those that aren't rate regulated and that aren't contracted. I think that's a small subset of nuclear units that could perhaps satisfy east coast demand. But in our discussions with data center providers, getting access to cloud capacity for Silicon Valley, Santa Clara in particular, is critical. I mean, we can all count on one or two fingers how many nuclear plants are located in those regions. Not many. And you just can't move a nuclear plant. And so the thing we bring to the table is a lot of flexibility and speed to market. We can put the renewable project exactly where it needs to be. And SMRs, I hear a lot of talk about SMRs. SMRs are still, a decade to 15 years away. Not only do you have, nine OEMs that are really struggling to access capital. If we pass a sanctions bill against Russia, a nuclear fuel that's going to limit conversion and enrichment capacity in the U.S. for sourcing of nuclear fuel for these SMRs, which also is going to require a real step up in technology to get them done, and you're also dealing with undercapitalized fuel providers. I'm a real skeptic on SMRs really coming into the picture to satisfy data center demand anytime in the near future. And so when you put all of that together, I think the right answer is renewables. In our discussions with data center developers and providers, their first focus is renewables. And I hear a lot about the reliability concerns and, well, what do you do when the wind doesn't blow and the sun doesn't shine and the four hour battery is done enough? We can overbuild the battery. We can also help work with them to design a clean energy solution where if they do have a grid by, we can green it up with wrecks, from our green desk. We have technology and tools, which we showcased back in March, where we can identify partners in the country that not only the best resource areas, but also the best fiber connectivity, the best water resource. And those are the areas that we're locking up. And we have the sites and we have the relationships. And so I don't think anybody's better positioned to capitalize on data center demand than NextEra’s. And I'm very excited about what the future opportunities hold for us there. But the other thing I would say, and we'll talk a lot more about this at our investor conference in June, is this electricity demand is real. We've been in a period of static demand for decades, and the demand is not only coming from data centers, it's coming from decoupling from China, creating more domestic manufacturing around industry, around chip manufacturing. Oil and gas industry continues to electrify. We continue to, even beyond data centers, see significant electric demand. We have the tools. We have the sites. We have the relationships, and we are chasing those opportunities. And look, we're coming off our second best origination quarter ever. I think the results speak for themselves.

Operator:

The next question comes from Shahriar Pourreza with Guggenheim Partners. Please go ahead.

John Ketchum:

Good morning Shahriar.

John Ketchum:

Yes, sure. Thanks for the question. A few comments that I'll make on it. One is we have talked about private capital raise potentially being a solution to address back in CEPFs for NEP. Obviously, there's a lot of interest in that, just given NextEra’s stature in the market, NextEra Energy Partner stature in the market. And so those discussions continue to move forward. We don't have anything to say about them right now. We may not have anything to say about them at the Analyst Day. I wouldn't expect us to make a whole lot of comments at the Analyst Day about NEP, when we do have something to say about NEP. As these discussions continue to evolve, we will address them at that point.

John Ketchum:

Yes, I think the way I look at it, Shahriar is plain and simple. FEC voted. They voted to close the matter. We're now moving on, and I think this is behind us.

John Ketchum:

Thank you.

Carly Davenport:

Hey, good morning. Thanks for taking the questions today. I appreciate it. I wanted to just ask one on the backlog. Good strength in the additions this quarter and we continue to see a lot of strength in the solar and the storage piece of it. Wind has been a little bit weaker. So I guess just as you think about the difference in the returns on those projects, are there any sort of implications for your financial guidance and your plan as you think about the mix that you've seen actually evolve versus what is in that base plan?

Carly Davenport:

Awesome. Thanks for that, Rebecca. And then you mentioned in the prepared or the last question, you know, 15% CAGR for data center demand growth through the end of the decade. I guess as you think about some of these other drivers that you've mentioned of increased power demand in the U.S., how do you think that will drive kind of overall load growth? Do you have expectations there through the end of the decade?

Carly Davenport:

Great. Thank you for that color.

Operator:

The next question comes from Durgesh Chopra with Evercore ISI. Please go ahead.

Rebecca Kujawa:

Yes, Durgesh, I appreciate the question. I think a little bit of context is important. I think all of us, ourselves included, have really started talking about the significant change in load growth, really over the last year, maybe even the last six months. And you all very much appreciate that a development business, anything connecting to electrical infrastructure, usually talks in terms of years and sometimes a lot of years, depending on the market, to get something into place in the ERCOT [ph] market is maybe a couple of years and some markets in the Midwest that have had congested queues and some transmission constraints. That could be five to seven years. And obviously we've been working for a period of time. I think we're the least behind of anybody with our 300 gigawatt portfolio, but some of this will take some time to materialize. I feel very confident in long term trends. I feel really excited and pleased with our team's preparedness in terms of the development of that pipeline. And I very much think our competitive advantages that John highlighted on scale, experience, and technology really position us well in the types of conversations we're having with our customers, creating this long term visibility into demand dynamics. You guys asked John the question about data centers and how competitive we are with them. They are not looking for projects anymore. They are looking for integrated solutions that solve long-term problems for them, and we are a perfect partner for them with which to work.

Rebecca Kujawa:

I continue to believe we have very attractive returns across the board, consistent with the comments that I've made today, as well as the comments we made at our development 101-day and included in our monthly updates for investor materials. So mid-teens and solar, and above 20% for both wind and storage, of course, as we talk with customers and we have unique solutions that solve particular problems that we have, we design the solutions to meet those needs and always stay focused at the end of the day on what's the attractive value proposition from an investor standpoint and we remain disciplined around that. So I love the portfolio, I love positioning, and I believe what we ultimately deliver for investors is very attractive.

Operator:

The next question comes from Jeremy Tonet with JPMorgan. Please go ahead. Excuse me, Mr. Tonet, your line is open. Is your phone…? Thank you.

Rebecca Kujawa:

Hey, Jeremy, it's Rebecca. I'm going to go for the presumptive close on the answer. Hopefully it's the question you actually asked. Storage origination is very strong, as Kirk highlighted in some of the prepared remarks, and John commented in Q&A, as we think about our customers’ needs for energy and capacity, it remains a very attractive value proposition to incorporate storage to firm up renewables, either co located or separate so we're seeing terrific origination from an energy resources perspective and we've also talked today about the attractiveness of storage at FPL. So I'll hand it off to Armando to give some additional color.

Jeremy Tonet:

Thank you for that. Just going back to the renewable development day or for people that weren't able to make it, any particular points I want to highlight?

Jeremy Tonet:

Great. Thank you very much.

Operator:

Good morning, and welcome to the NextEra Energy Inc and NextEra Energy Partners LP Fourth Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to, Kristin Rose, Director of Investor Relations. Please go ahead.

John Ketchum:

Thanks, Kristen, and good morning. NextEra Energy has strong operational and financial performance at both FPL and Energy Resources in 2023. NextEra Energy delivered full year adjusted earnings per share of $3.17, up over 9% from 2022, exceeding the high end of our adjusted EPS expectations range. From solar supply chain challenges to higher inflation and interest rates, NextEra Energy navigated through a challenging environment for the last two years, delivering compound annual adjusted EPS growth of roughly 11.5% since 2021. These were unprecedented events for our sector and clear headwinds for renewables, but disruption often presents opportunity. At NextEra Energy, we relied on our 25 years of renewables experience and our culture of execution to navigate this tough environment. On the strengths of our scale and competitive advantages, our world class supply chain capabilities, customer relationships, access to and cost of capital advantages, the strength of our balance sheet, our data driven development playbook, and our team just to a name few we successfully manage through the disruption. Our scale and competitive advantages served as key differentiators and allowed us to continue to deliver for our customers and extend our long track record of earnings and dividend growth. Over the past 10 years, we have delivered compound annual growth and adjusted EPS of roughly 10%, which is the highest among all top 10 power companies. Over that same period, the remaining top 10 power companies have achieved, on average, compound annual growth and adjusted EPS of roughly 2%. Notwithstanding the strong adjusted EPS results, we recognize and are disappointed by the underperformance in the share price. And as we start 2024, we remain steadfast in our continued focus on execution and creating long-term value for shareholders. We believe that disruption over the last two years has made NextEra Energy an even stronger company. Our business model is more resilient, our development platform is even more advanced, and our supply chain is more diversified than it has ever been. Bottom line, we believe NextEra Energy is well positioned headed into 2024. And there is good reason for optimism at NextEra Energy. Although nobody can predict with certainty what 2024 will bring, inflation and interest rates have declined from their peak, and NextEra Energy has taken steps to mitigate its exposure to interest rate volatility through its interest rate hedging program. The Commerce Department has provided the final determination around circumvention, providing solar suppliers with more certainty around the rules and expectations of importing solar equipment. New solar supply chains have been established in the U.S. and internationally, leading to lower solar panel prices, and we see the continued longer-term push towards EVs as being incrementally positive for continued reductions in battery prices. Solar panel and battery prices have already declined by roughly 25% from their peak over the last 24 months, heading into 2024. We have proactively procured critical electrical equipment to complete our renewable projects, securing enough transformers and breakers to cover our expected build through 2027. And due to our scale and construction partnerships, we have not experienced any labor shortages impacting project timelines. Ultimately, all these tailwinds are great for customers, and we believe should drive greater renewables demand in 2024 and beyond, all on the heels of consecutive record years for new renewables originations at Energy Resources in 2022 and 2023, totaling over 17 gigawatts. NextEra Energy offers a unique value proposition with two strong businesses that we believe are strategically positioned with outstanding prospects for future growth. FPL, which represents more than two thirds of our company, is the nation's largest electric utility and continues to deliver what we believe is the best customer value proposition and one of the fastest growing states in the US. Energy Resources, the world's renewables leader, has differentiated itself in an industry in which scale, experience, and being well capitalized matters. At NextEra Energy, the plan is simple. Our two businesses are deploying capital in renewables and transmission for the benefit of customers, providing visible growth opportunities for shareholders. At FPL, we identify investment opportunities that drive value for customers and support Florida's growing economy while keeping bills approximately 30% lower than the national average. We focus on running the business efficiently and continue to lead the industry with the lowest nonfuel O&M per megawatt hour of any large utility in the nation. Our emphasis on modernizing FPL's generation fleet to improve efficiency and reduce fuel costs has saved customers over $15 billion since 2001. We continue this trend in 2023 by placing into service approximately 1, 200 megawatts of cost effective solar and expect to add roughly 4, 800 megawatts over the current rate agreement. And by 2032, we expect to increase FPL's solar from 5% of our total generation today to roughly 35% by adding over 15, 000 incremental megawatts. We are also continuing to invest in FPL's grid to make it stronger and more resilient for our customers. Almost all of FPL's transmission system has been hardened with concrete or steel towers or poles, and we continue to invest in undergrounding our distribution system to further enhance reliability and resiliency for customers. The capital plan of the current rate agreement of $32 billion to $34 billion extends our customer value proposition and provides clear visibility for growth through 2025. Beyond 2025, we continue to believe FPL is strategically well positioned as Florida remains one of the fastest growing states in the U.S. with a population growth that is expected to roughly double the national average through 2030. Florida's economy is also growing and is now the 14th largest in the world if Florida were a country. FPL is responsible for keeping the lights on for approximately $2 billion per day of Florida's GDP. These long-term growth prospects coupled with investment opportunities and renewables and transmission and distribution infrastructure enhance our best-in-class customer value proposition and support our belief that FPL is the highest quality rate regulatory utility in the country. Energy Resources' deep expertise in renewables and transmission serves as a key differentiator with customers. As a result of our data-driven development playbook, Energy Resources had a record year of new renewables and storage origination, adding approximately 9, 000 megawatts to our backlog. Driven in part by the roughly 5, 600 megawatts placed in service in 2023, Energy Resources grew adjusted earnings almost 13% versus 2022. Energy Resources continues to see strong demand and is well positioned to realize its development expectations over the four year period ending 2026. Assuming we achieve the midpoint of the range, Energy Resources will be operating a roughly 63 gigawatt renewable portfolio by the end of 2026. That would be larger than the installed renewables capacity of all but nine countries. Energy Resources also is extending its excellent track record of optimizing our existing footprint to create additional shareholder value. To date, we have repowered six gigawatts of our existing 24 gigawatt wind operating fleet, investing roughly 50% to 80% of the cost of a new build and starting a new 10 years of production tax credits, resulting in attractive returns for shareholders. By 2026, Energy Resources' wind footprint could be roughly 32 gigawatts, and with over a decade to potentially qualify for repowering, it represents a great opportunity set. We believe there are multiple opportunities to drive value from the existing footprint, multiple wind repowers, adding solar underneath existing wind and locating battery storage with existing wind and solar. And we have dedicated teams leveraging our development playbook to optimize our existing and future fleet. We can maximize existing land, permits, interconnection capacity, and operations to provide enhanced value to customers and shareholders. By 2026, Energy Resources could operate up to 53 gigawatts of generation with the potential to co-locate battery storage, which represents a great long-term opportunity, especially considering the likely future capacity needs of customers. Throughout 2023, Energy Resources also continue to build what we believe is the nation's leading competitive transmission business. As growth and renewables occur throughout the U.S., there is a growing imperative to build additional or upgrade existing transmission. 2023 was a record year for our competitive transmission business. NextEra Energy transmission was awarded projects to construct transmission in PJM, CAISO and SPP that would roughly double the investments made in the existing business. We anticipate deploying approximately $1.9 billion of capital through 2027 to complete these transmission projects, which we estimate could enable up to 12 gigawatts of new renewables. Beyond 2026, Energy Resources is strategically positioned to benefit significantly from the irreversible shift towards electrification. With renewables only comprising roughly 16% of the U.S. generating mix, Energy Resources is just getting started. Renewable penetration is expected to double to over 30% by 2030, and Energy Resources is ready. We have a substantial development pipeline, including roughly 150 gigawatts of interconnection queue positions for new renewables and storage projects. We believe Energy Resources has the most comprehensive renewable energy business in the world and is better positioned than ever to capitalize on long-term growth prospects. FPL and Energy Resources individually have executed well, delivering value for our customers, both businesses complement each other, push one another to be better, and together create scale and foster innovation. We have one of the sectors strongest balance sheets and constructed and placed in the service roughly 6, 800 megawatts of new renewables and storage projects in 2023. To put that into context, 6, 800 megawatts of installed U.S. renewable generating capacity is enough on its own to rank as the fourth largest U.S. renewable energy company and the 14th largest utility. Turning to NextEra Energy Partners, we continue to focus on executing against the partnership's transition plans and delivering an LP distribution growth target of 6% through at least 2026. Last September, we made the tough decision to reduce the target distribution growth rate to 6% when NextEra Energy Partners no longer benefited from a competitive cost to capital. With a growth rate now comparable to its peers, we are focused on the partnership's cost to capital improving, which is critical for its future success. Towards that end, we are evaluating alternatives to address the remaining convertible equity portfolio financings with equity buyout obligations in 2027 and beyond. We are executing against the transition plans and with the closing of the Texas Pipeline portfolio sale, the partnership has addressed two of the three near-term convertible equity portfolio financings. The STX Midstream convertible equity portfolio financing has been extinguished and we have sufficient proceeds available to complete the NEP Renewables to buyouts that are due in June 2024 and 2025. The third convertible equity portfolio financing associated with the Meade natural gas pipeline assets is expected to be addressed in 2025. Looking ahead to 2024 and beyond, NextEra Energy Partners does not expect the need and acquisition in 2024 to meet the 6% growth and LP distributions per unit target and the partnership does not expect to require growth equity until 2027. We are executing against the growth plans and have identified approximately 985 megawatts of wind repowers through 2026 making progress against our expectations. As we turn the page on 2023 and head into 2024, we are optimistic about the renewable sector, about our opportunity set, about customer demand, and about NextEra Energy’s future. Demand for renewables has never been stronger, and yet the challenges have never been more complex, making the stakes even higher for customers. Our scale and competitive advantages are enabling us to be the partner of choice with both power and commercial and industrial customers. On March 14th, we will discuss Energy Resources development process in greater detail at our Development Investor event in Juno Beach and illustrate how our proprietary tools differentiate Energy Resources with customers. And then on June 11th, we will hold our NextEra Energy Investor Day in New York to discuss our long-term plans for both Energy Resources and FPL. Our optimism for NextEra Energy's future flows from the strength of our two world class businesses, FPL and Energy Resources, that leverage our scale and competitive advantages to differentiate themselves as leaders. Our optimism is driven from our proven playbooks of deploying capital and renewables and transmission to create value for customers. But I am most optimistic because we have spent the last two decades building a world class team at NextEra Energy, and it is, by far, our greatest competitive strength. Our team lives and breathes a culture of continuous improvement working together to solve the tough challenges of the day. We drive innovation relying on data analytics and automation to make better decisions, and we have developed and deployed smart, low cost, clean energy solutions that lead our industry. Most importantly, our team remains hyper focused on continuing our long track record of execution, serving our customers with excellence and providing long term value for shareholders. With that let me turn it over to Kirk who will review the 2023 results in more detail.

Operator:

[Operator Instructions] And our first question will come from Shahriar Pourreza of Guggenheim Partners.

Kirk Crews :

Sure. So with respect to repowering, Shahr, we look at that as on the project level. There are really two options there. We can look at it from a project financing standpoint and pair that with transferability, or we can look at it as tax equity. So we will look at both of those options and decide that at the time of the repowerings. With respect to your second question, there's, we're looking at all options right now, as John said, in the prepared remarks. We are exploring a number of opportunities and alternatives for addressing the convertible equity portfolio financing that are coming due in 2027 and beyond. There's really not a timeframe in terms of the update now, but we are looking at all options and with the goal of really maximizing unit holder value.

John Ketchum:

And Shahr, this is John, just adding on to that again, on the repowers. Just like we do at the, I mean, just think about it as tax equity and project finance.

John Ketchum:

And again, the private capital raises provide us with a number of options, but we're looking at a lot of different alternatives, that being one of them.

John Ketchum:

Yes, thanks for the question, Shahr. So let me just take those in order. First of all, there's no update. We have not been contacted by the FEC. And I think just to remind investors of the timing, first of all, these are just guidelines I'm going to give you. I mean, there is no prescribed timeline in terms of the FEC providing a response to us. But as you may recall, we originally received the FEC complaint, I guess is what you would call it, that had been filed by a group called CREW back in November of 2022. And if you follow the historical precedent of the FEC, it's usually 12 to 18 months after you first are notified of a complaint having been filed, that you would learn whether or not the FEC decides to find that there's reason to believe that they ought to conduct an investigation. We have not heard anything from the FEC in that regard. The second thing I would remind investors of is this is not material again these were five allegations totaling political contributions of roughly $1.3 million to $1.5 million. So we're talking about smaller dollar amounts and how and when we would update investors would depend on what exactly we hear from the FEC.

Steve Fleishman:

Yes, hi. Good morning. Thanks. I guess a couple of big picture questions. First, obviously a lot more focus in the elections now as we're in ‘24 and curious your thoughts in the event of Republican trifecta so to speak just how you're thinking about the sustainability of IRA provisions.

Steve Fleishman:

Okay. And I guess two other big picture questions on the renewable space. And it's just any kind of new thoughts color on your data center strategy and also your thoughts on hydrogen after the based on the proposed rules that came out.

Operator:

The next question comes from David Arcaro of Morgan Stanley.

Rebecca Kujawa :

Hey, David. It's Rebecca. I'll take a first cut at that. We're obviously excited about the origination, as John and Kirk have highlighted, originating 17 gigawatts over the last two years, and both years serving as a record, so this year topping last year's record is very exciting. We also, of course, see the mix being more focused towards solar and storage, and as I've commented in the past, I think some of this is an after effect of the strong demand that we saw going into 2020 when we and others thought that the production tax credit would ultimately phase down and then ultimately go to zero over a period of time, so there was a pull forward of demand. And then the second dynamic that I think has impacted the short term is that the solar production tax credit clearly stimulated near-term demand and deployments for our customers, and obviously we're very excited about that. Storage is growing at least as well as we thought, perhaps exceeding even our expectations in terms of adoption, not just in the Western markets, but now really spreading in a very constructive way through the Midwest, and we've got, as John highlighted in the prepared remarks, a really advantaged position to be able to respond quickly to the demand characteristics that we're seeing where our customers need capacity quickly, where they hadn't anticipated the demand that they would see in their underlying business. And so getting to market quickly is very much a premium and a priority, and we're there to serve them well. In that storage market, as we've talked about from a returns characteristic standpoint, it's an awful lot like wind, and it's certainly complex to deliver the value that our customers are looking for in the various streams. I'd say the other part that is at least as strong as we anticipated when we laid out the expectations is repowering. And we're excited about the economics of that and economics specifically in context to the value that it brings to our customers, bringing some incremental generation and extending the life of these projects, often extending the contracts with our customers at the same times that we do repowering. So overall, with all those comments in context, I feel really good about meeting our development expectations in aggregate. We'll continue to look at the mix in individual technologies over time. But at this point, we are obviously leaving the ranges as we've had them now for a couple of years, in part to reflect what I'm sure you recall, wind is a very short development cycle. Maybe not the actual laying the groundwork to be able to build a project, but when we enter into a contract and acquire the term and put it into service, it can be as short as nine months. So there's still a lot of time left between now and the end of ‘26 to add more wind to not only the backlog, but ultimately commission. And when I look at the forward couple of quarters, there are a couple of chunky opportunities that our teams are working on, and I feel good about bringing them some of those to fruition.

Rebecca Kujawa :

Sure. We always are out in the development right acquisition market. In the recent couple of years, we've really prioritized our greenfield portfolio, in part because of our ability to work so closely with our customers and make sure that we're building the projects over the long term where they need them. But we will always be opportunistic in the development project market to be selective and create opportunities where it may be particularly attractive. The dynamic from a couple of years ago where a number of the development portfolios were acquired by folks looking to, I would say, compete with us, but certainly have a bigger presence on the development side. We haven't seen those holistically come back to market. I think that may change over time. I know the private equity cycle of wanting to be able to turn over capital quickly and realize isn't necessarily completely aligned with the development cycle where sometimes things are a little bit faster or a little bit slower than you anticipated, and you need to be patient. So I'm optimistic there'll be opportunities. But most importantly, and this is one of the things that we'll focus on in March, is we want to keep our fate, our development opportunities in our own hands. And I am super excited about what our team is working on from a greenfield development standpoint and the competitive advantages that we're investing in to make sure that we can serve our customers well, not just in the next two or three years as we often talk about with you all, but the next five, seven, 10 years plus down the road.

Carly Davenport:

Hey, good morning. Thanks so much for taking the questions. I wanted to just ask about transmission. You highlighted the $1.9 billion of capital through ‘27 at NEER. And as we look at the EBITDA contributions at NEER for 2024 that piece is moving higher as well. So could you just talk a bit about what sort of growth you could see at NEER over the next several years and what that EBITDA contribution could be over time?

Carly Davenport:

Great, thank you for that. And then maybe just one more on the financing side for this year, just based on what you've seen so far in the markets, how are you thinking about the mix of the different avenues that you can use to monetize tax credits, whether through tax equity or transferability? How do we think about the sort of magnitude of each of those in your financing plans for ‘24?

Operator:

The next question comes from Jeremy Tonet of JPMorgan.

Kirk Crews :

Sure. So we, when we look at capital allocation and you look at, we shared on the third quarter call the returns that we see within the renewable business and as we shared then at Energy Resources within for when we see returns in the low 20s on a levered ROE basis. In solar, we see returns in the mid-teens and then storage is also in the low 20s. And so it's great returns and we look to get capital allocated to the renewable business. And that as John discussed in the prepared remarks, we are allocating capital across both businesses in renewables and transmission. And so that is the priority with the way that we allocate capital. And then in terms of the funding of that, again, it's the way that we've traditionally funded the business, it’s tax equity, it’s project finance, and then we also use the transferability provisions.

Rebecca Kujawa :

Sure, I'll take that. In terms of the, obviously the backlog additions are quite strong and we're thrilled about that. And for this quarter, in terms of the removal that we had, it's really project specific items and one part is really related to higher interconnection costs for a particular project where we need to go back and do a little bit more work, very likely these project megawatts will come back into the backlog. They're good projects, but in near term we're removing them while we work through the issues. We, I think it's important to keep in mind that as we add something to the backlog, it's tremendous visibility and we're really excited about moving forward with the projects based on what we know at the time. But this is still a development business and there are things that you have to work through before you commit significant capital to a project and occasionally some of those things that we work through are better. Sometimes they're a little bit worse and we need to make the decisions that are ultimately right for our shareholders at the time that we need to make them. So in context of a 20 plus gigawatt portfolio, I think it's de minimis for what is kind of the normal run rate for development type issues. And fortunately we've worked through the issues that we had talked about over the last two years around anti -dumping, countervailing duties and the significant changes in the marketplace related to the inflationary pressures and changes in the interest rates. So at this point I think we're in kind of like normal development, every once in a while, there's something that changes our view on a specific project and we're going to do the right thing from a shareholder perspective and only commit capital where it makes sense.

Operator:

Good morning, and welcome to the NextEra Energy and NextEra Energy Partners, LP Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kristin Rose, Director of Investor Relations. Please go ahead.

Kirk Crews:

Thanks Kristin and good morning. NextEra Energy delivered strong third-quarter results, growing adjusted earnings per share approximately 10.6% year-over-year. In the quarter, FPL continued to deliver outstanding value to its customers in what we believe has been one of the most constructive regulatory jurisdictions in the nation. FPL's bills are well below the national average, and we are relentlessly focused on reliability and running the business efficiently. Energy Resources extended its leadership position in renewable energy during the third quarter with strong adjusted earnings growth and its best renewables and storage origination quarter in its history. NextEra Energy has clear growth visibility through FPL's capital plan and Energy Resources' over 21 gigawatt renewables and storage backlog. With the strongest balance sheets in the sector and worldwide banking relationships, we believe NextEra Energy has both significant access to capital and cost-of-capital advantages and is well positioned to continue to deliver long-term value for shareholders. Now let's turn to FPL's detailed results. For the third quarter of 2023, FPL's earnings per share increased $0.04 year-over-year. The principal driver of this performance was FPL's regulatory capital employed growth of approximately 13.6% year-over-year. We continue to expect FPL to realize roughly 9% average annual growth in regulatory capital employed over our current rate agreement's four-year term, which runs through 2025. FPL's capital expenditures were approximately $2.6 billion for the quarter, and we expect FPL's full-year 2023 capital investments to be between $9 billion and $9.5 billion. For the 12 months ending September 2023, FPL's reported ROE for regulatory purposes will be approximately 11.8%. During the third quarter, we reversed roughly $245 million of reserve amortization, leaving FPL with a balance of over $1.2 billion. Over the current four-year settlement agreement, we continue to expect FPL to make capital investments of between $32 billion to $34 billion. Our capital investment plan is well-established and focused on enhancing what we believe is one of the best customer value propositions in the industry. Key indicators show that the Florida economy remains healthy and Florida continues to be one of the fastest-growing states in the country. FPL's third-quarter retail sales increased 3% from the prior year-comparable period due to warmer weather, which had a positive year-over-year impact on usage for customer of approximately 2%. As a result, FPL observed solid underlying growth in third quarter retail sales of roughly 1% on a weather normalized basis. Now let's turn to energy resources, which reported adjusted earnings growth of approximately 21% year-over-year. Contributions from new investments increased $0.11 per share year-over-year, while our existing clean energy portfolio declined $0.02 per share, which includes the impact of weaker year-over-year wind resource. The comparative contribution from our customer supply and trading and gas infrastructure businesses increased by $0.04 per share and $0.01 per share respectively. All other impacts reduced earnings by $0.08 per share. This decline reflects higher interest costs by $0.06 per share, half of which is driven by new borrowing costs to support new investments. Energy resources had a record quarter of new renewables and storage origination at approximately 3,245 megawatts to the backlog, which is the first time we have exceeded three gigawatts in a single quarter. Although we will remind you that signings can be lumpy quarter-to-quarter, we do believe this is a terrific sign of strong underlying demand for new renewable generation. With these additions, our backlog now totals over 21 gigawatts after taking into account roughly 1,025 megawatts of new projects placed into service since our second quarter call. We also removed roughly 1,180 megawatts from our backlog, including roughly 800 megawatts of projects in New York following an adverse decision by NYSERDA two weeks ago. We are optimistic that these projects will ultimately move forward, but are removing them from backlog for now. The remaining megawatts were removed due to permitting challenges. Overall, we remain on track to achieve our renewable development expectations of roughly 33 gigawatts to 42 gigawatts through 2026. This quarter's backlog additions include roughly 455 megawatts to repower existing wind facilities, which includes energy resources share of approximately 740 megawatts of repowers within the NextEra Energy Partners portfolio, which I'm going to discuss in a few minutes. As a reminder, in a repower, we invest roughly 50% to 80% of the cost of a new build, are able to refresh and enhance the performance of the turbine equipment, and start a new 10 years of production tax credits, collectively resulting in attractive returns. Energy Resources has previously repowered roughly 6 gigawatts of its approximately 23 gigawatt operating wind portfolio, and we believe we will be able to repower much of our existing wind portfolio in the coming years. Also included in the backlog additions are roughly 250 megawatts of standalone battery storage projects co-located with existing wind and solar facilities. The combination of the standalone storage tax credit and the ability to utilize existing interconnection capacity from our operating renewables and storage footprint positions us well to serve our customers' growing needs for capacity. Turning now to our third quarter 2023 consolidated results, adjusted earnings from corporate and other decreased by $0.01 per share year-over-year. Our long-term financial expectations remain unchanged. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted EPS expectation ranges in each year from 2023 through 2026. From 2021 to 2026, we continue to expect that our average annual growth and operating cash flow will be at or above our adjusted EPS compound annual growth rate range, and we continue to expect to grow our dividends per share at roughly 10% per year for at least 2024 off a 2022 base. As always, our expectations are subject to our caveats. Going forward, we plan to fund the business in a manner similar to how we have historically done so at both FPL and Energy Resources. This includes utilizing cash flow from operations for roughly half of our funding needs, in addition to tax equity, project finance, and corporate debt. The sale of tax credits is serving as a new source of capital funding for NextEra Energy. We expect to transfer roughly $400 million in tax credits in 2023 and expect this amount to grow over the next couple of years to approximately $1.6 billion to $1.8 billion in 2026. This dynamic has reduced NextEra Energy's capital recycling needs, including those previously met via sales to NextEra Energy partners, which has historically averaged roughly $1 billion of annual cash proceeds. Let me address future equity issuances specifically. Our balance sheet and financial discipline remain core to our strategy. As we find attractive investments for our customers and shareholders, we expect to fund those investments in a way that maintains the strength of our balance sheet. As a reminder, over the last five years, we have issued roughly $1.5 billion annually on average of equity in the form of equity units. We do not expect to issue any equity for the balance of 2023 and expect our year-end credit metrics to exceed those specified by the agencies to support our current ratings. From 2024 through 2026, we would expect our total equity needs to be no more than $3 billion in total with continued reliance on equity units to satisfy our equity needs, which have no dilution for the first three years. We believe FPL and Energy Resources are well-positioned to manage interest rate volatility in the current environment. At FPL, we primarily rely on the surplus mechanism to offset higher interest rates for the benefit of customers. In addition, FPL's rate agreement already provided for an ROE adjustment to 11.8%, enabling it to earn a higher ROE in the current higher rate environment. We expect that FPL will be able to absorb much and potentially all of the cumulative effects of the current interest rate environment through the use of the surplus mechanism over the remaining settlement period. Consistent with the expiration of the current rate agreement, FPL expects to file a rate case in early 2025 for new rates effective 2026. For Energy Resources and corporate and other, we now have $20.5 billion of interest rate hedges in place. While the amounts vary as we add and settle hedges, the tenor of the swaps are between five years and ten years and have a weighted average rate of roughly 3.75%. Swaps allow us to mitigate the impact of interest rate changes on energy resources backlog returns and capital holdings $12.8 billion of debt maturities from 2024 through 2026. Specifically, these swaps allow us to hedge the project-level debt funding we expect to issue on our renewables backlog as well as a portion of the $12.8 billion of the term maturities. To put this all in perspective, NextEra Energy's sensitivity for an immediate 50 basis point upward shift in the yield curve has essentially no expected adjusted EPS impact on 2023 and 2024 and has on average $0.03 to $0.05 of expected adjusted EPS impact in 2025 and 2026, which is equivalent to approximately 1% of our adjusted EPS expectations. This sensitivity, of course, assumes we do not implement other offsetting initiatives, including among others, our normal process of cost reductions and capital efficiency opportunities. Our backlog is in good shape and is benefiting from our interest rate swaps, global supply chain management capabilities, and the ability to procure equipment, materials and balance of plant services at scale across our portfolio. The expected returns on equity for our backlog are mid-teens for solar and over 20 for wind and storage. As we have done historically, we price our power purchase agreements commensurate with current market conditions, including our current cost of capital in order to maintain appropriate returns. In addition, at the time of our final investment decision, before we commit significant capital to our backlog projects, we are utilizing interest rate swaps on contracts that we were entered into when rates were lower to maintain our return expectations. We remain financially disciplined and pass on projects that don't meet our return expectations. Going forward, we are encouraged by the trends we are seeing in lower equipment pricing for solar panels and batteries, given increased competition globally, and declining prices for materials, which we believe will help offset the impacts of higher interest rates on power purchase agreement prices. We are optimistic that demand will remain resilient due to the factors you all know well, including the continued cost competitiveness of renewable energy, relative to alternative forms of generation. Importantly to date, demand has remained strong, as evidenced by our substantial new additions to backlog this quarter. Now let's turn to NextEra Energy Partners. As a reminder, the partnership is a financing vehicle that grows its distribution by acquiring assets with long-term contracted high-quality cash flows and financing those acquisitions at low cost. Over the years, NextEra Energy Partners has been able to rely on low-cost financing to help drive its distribution growth. To meet its financing needs in recent years, the partnership has relied primarily on convertible equity portfolio financing that have a low cash coupon during their term and convert into equity over time. A significant amount of the equity required to be issued to buy out these financings began coming due this year and over the next several years, which we believe contributed to the partnership's trading yield almost doubling at the same time interest rates were rising. Consequently, the partnership's cost of capital increased, which made it difficult to support a 12% growth rate in a way that is sustainable and in the best interest of unit holders over the long term. By reducing the growth rate to 6%, NextEra Energy Partners LP distribution rate is now comparable to its peers, and the partnership does not expect to require growth equity until 2027. In order to meet these objectives, the partnership is focused on first executing against its transition plan. As a reminder, the transition plans include successfully entering into agreement to sell the Texas natural gas pipeline portfolio and natural gas pipeline assets this year and in 2025, respectively. Doing so will enable the partnership to address the equity buyouts associated with the FPL's midstream, the 2019 NEP pipelines and NEP renewables to convertible equity portfolio financing through 2025. Through the period of our current financial expectations, that would leave a small equity buyout of roughly $147 million on the genesis holding convertible equity portfolio financing in 2026. The partnership is continuing its process to sell the Texas pipeline portfolio and expects to have an update on or before our fourth quarter call in January. NextEra Energy Partners is focused on executing against its growth plan for unit holders. That plan involves organic growth, specifically repowering of approximately 1.3 gigawatts of wind projects, as well as acquiring assets from energy resources or third parties at favorable yields. Importantly, NextEra Energy Partners does not expect to need an acquisition in 2024 to meet the 6% growth in distributions per unit target. Today, we're announcing plans to repower approximately 740 megawatts of wind facilities through 2026, which require the final approval of the customer's [ph] board of directors, which is expected to be received in the near term. The repowerings are projected to generate attractive CAFD yields and the partnership expects to fund the repowerings with either tax equity or project-specific debt. Repowerings represent an efficient way to support the partnership's growth targets. Overall, we are pleased with this progress and remain focused on executing additional repowering opportunities in the future across NextEra Energy Partners' roughly 8-gigawatt wind portfolio. To minimize the volatility associated with the changes in interest rates and support the growth plan, the partnership also executed roughly $1.9 billion to hedge refinancing costs for the 2024 and 2025 maturities. The resulting expected refinancing costs of the maturities are factored into our expectations. Turning to the detailed results, NextEra Energy Partners' third quarter adjusted EBITDA was $488 million and cash available for distribution was $247 million. New projects, which primarily reflect contributions from approximately 1,100 net megawatts of new long-term contracted renewable projects acquired in 2022 and the approximately the 690 net megawatts of new projects that closed in the second quarter of this year, contributed approximately $66 million of adjusted EBITDA and $32 million of cash available for distribution. The third quarter adjusted EBITDA contribution from existing projects increased by approximately $5 million year-over-year. Third quarter results for adjusted EBITDA and cash available for distributions were positively impacted by the incentive distribution rights fee suspension and provided approximately $39 million of benefit this quarter, more than offsetting the cash available for distribution impacts of lower pay-go payments driven by lower wind resource at existing projects. Yesterday, NextEra Energy Partners' board declared a quarterly distribution of 86.75 cents per common unit or $3.47 per common unit on an annualized basis, which reflects an annualized increase of 6% from its second quarter 2023 distribution per common unit. From a base of our second quarter 2023 distribution per common unit at an annualized rate of $3.42, we continue to see 5% to 8% growth per unit per year in LP distributions per unit, with a current target of 6% growth per year, being a reasonable range of expectations through at least 2026. For 2023, we expect an annualized rate for the fourth quarter 2023 distribution that is payable in February of 2024 to be $3.52 per common unit. NextEra Energy Partners expects run rate contributions for adjusted EBITDA and cash available for distributions from its forecasted portfolio at December 31, 2023 to be in the range of $1.9 billion to $2.1 billion and $730 million to $820 million, respectively. As a reminder, year-end 2023 run rate projections reflect calendar year 2024 contributions from the forecasted portfolio at year-end 2023. The adjusted EBITDA and related cash available for distributions associated with the Texas Pipeline portfolio have been excluded from these run rate financial expectations. As always, our expectations are subject to our caveat. While NextEra Energy Partners navigates through this current environment, it's important not to lose sight of the value of the underlying portfolio. NextEra Energy Partners is the seventh largest producer of electricity from the wind and the sun in the world, with over 10 gigawatts of renewables in operation. The partnership owns renewable projects that deliver high-quality cash flows in 30 states, serving 94 customers with an average counterparty credit rating of BBB plus via contracts with an average remaining contract life of 14 years. We remain optimistic the partnership can be an attractive vehicle to own existing renewable assets over the long term. We want the partnership to be successful, and separately, to address a question we've been receiving from some investors, NextEra Energy has no plans to buy back NextEra Energy Partners. With that, I'll turn the call over to John.

Operator:

[Operator instructions] Our first question comes from Steve Fleishman with Wolfe Research. Please go ahead.

John Ketchum:

Yeah, Steve, on that slide, I'll take that. This is John. We are -- the example is a $1 dollars. You take a $1 dollars, you divide by the 18% FFO to debt, that gets you about $5.5 billion. You add the $1 billion of cash that you receive, and that gets you the $6.5 billion of equity content on a $1 billion transfer.

John Ketchum:

The way I think about it is it's going to show up in your cash flow from operations. That's the cash that you actually receive, and then there's also some equity content that benefits the rest of the sources, including corporate debt issuances.

John Ketchum:

Yeah, the way I think about it, Steve, it's 70%. So, when you think about our backlog, just some rough math, if you take the $20.5 billion, I would think about roughly $15.5 billion of that or so going against the backlog, and then the balance going against near-term maturities that we have through 2026. But the interest rate sensitivity that we have given you includes our exposure on everything, right? So, on the project debt, on the corporate debt issuances, it includes it all.

John Ketchum:

Yeah, Steve, I'm going to turn it over to Rebecca. But one thing I would say is the renewable business is increasingly moving more and more towards the scale players, and you can see reasons why. One of them is the ability to have a balance sheet to actually enter into the kind of interest rate hedges that we can enter into. If you can't do that, that really puts you at a significant disadvantage. And then all the other competitive advantages that you're all aware of, where, we buy at scale, we build at scale, we operate at scale. And the last point I want to make is the cost of capital advantage. In today's market environment, having a strong balance sheet with an ultimate parent with an A-minus rating is really, really important, and a super big competitive advantage that we have over the smaller developers that we compete against and that's a big part of our success. But let me turn it over to Rebecca to talk more about what she's seeing in the market.

Steve Fleishman:

Okay. Great. Thank you.

Operator:

Our next question comes from Shahriar Pourreza with Guggenheim Partners. Please go ahead.

John Ketchum:

Yeah, sure. Thank you. Let me start by saying, obviously, as we said in our prepared remarks, our focus is on selling these pipes, growing at 6% and putting NEP in a position to succeed going forward. So, along those lines, we continue to work very diligently on the sales process. We're working with counterparties to get it done. And at the same time, look, this is a little bit more of a challenging macroeconomic environment. These are very valuable pipes and we are looking for a transaction that maximizes value for unit holders and we're going to continue to be disciplined. But in terms of the progress that we're making, things are continuing to advance and move forward and we look forward to having a further update either on the fourth quarter call or sometime before that in terms of where we are.

Rebecca Kujawa:

Hey, Shahriar, it's Rebecca, I'll take that one. So, we're super excited about repowers as part of the longer-term growth plan within NEP. And with such an extensive pipeline of renewable projects, to pursue these repowers, it'll be a nice complement to continuing to acquire assets. So, it doesn't meet the entire growth plan, but certainly is a nice part of it. As we talked about in May, we have a total of 1.3 gigawatts that we see in the near term. And obviously, this is a first step forward in order to make progress on that. So, attractive CAFD yields, as we noted, there's still some steps to finish. But we're also not done with the opportunities repower other assets in the portfolio.

John Ketchum:

Yeah. Listen, thank you. Thank you, Shahriar and obviously, we are very, very focused, as always on costs. We're very, very focused on capital productivity and efficiency as well. So, those are two levers we always have and I think our shareholder base is very familiar with the success that we've had in our annual cost reduction processes that we run across the company. But those are certainly point of focus for us and look, when I think about the $3 billion of equity and the $3 billion of asset recycling, if you look historically at what we've been able to do, I'd be pretty disappointed if we can only do $3 billion of asset recycling, not only through NEP, but third parties and as a reminder, over the last three or four years, we've been very successful in selling renewable projects, not only to NEP, but to third parties. Think about the OTPP transaction, the Apollo transaction, the KKR transaction. So, we feel very good about our sources plan that we've laid out and look forward to executing against it.

Operator:

Our next question comes from David Arcaro with Morgan Stanley. Please, go ahead.

Rebecca Kujawa:

Dave, I'll take that. As you know, we've always characterized the backdrop for renewables as a competitive environment. So, I'm very proud of how this team, our team, is executed across an ever-changing environment. And I certainly think it's a strength of our team and most importantly, the competitive advantages that John has highlighted, investment over a long period of time, the ability to work with our supply chain, the ability to work with the folks that we partner with to build the projects and ultimately operate these projects well over time. So, I think that really contributes to our ability to maintain appropriate returns and I also think it reflects what you expect us to do, which is adjust to all of the current costs of both building, financing and operating projects over time and we believe that we are successfully able to achieve that. In terms of demand, obviously, we can't fully predict the future, but I can tell you that the two data points that I think are really top of mind and illustrated from our report today is 3.2 gigawatts is a fantastic sign I think, of demand. And as I highlighted a minute ago to Steve's question, a good underlying foundation of technology, dates, locations, etcetera. So, I'm really pleased and also, in looking at the pipeline for the fourth quarter, obviously, this is a development business. Things can change. But I believe that we're in a good position to continue realizing strong demand, particularly in that 24 timeframe to 26 timeframe. So, based on what we see today, very exciting and I think it's founded on the things that you all know well, which is a backdrop of increasing electrification, increasing demand for generation and capacity value across our sector, and renewables continuing to be the least cost form of generation. So, I would hope you would expect what I would argue is the best position company to execute well against an environment like that.

John Ketchum:

Yeah, Dave, I'll take that question. First of all, I would argue, we have an outstanding tax department. And our tax department, yeah, together with our treasury group started early and we've already reached out to 50 of the top U.S. taxpayers in our building relationships and have had terrific execution against our '23 plan. The demand is extremely robust for tax credit transfers and we're already working on '24 as we speak, having '23 pretty much behind us. And one of the things that really helps NextEra and the tax transfer market is the fact that we have a strong balance sheet. We have an A minus rate from the parent and we're able to underwrite the credit. And being able to underwrite the credit is really, really important because we compete against a lot of really small developers that can't, that if you go to the top 50 taxpayers, they've never heard of these companies. They don't know who they are. They don't really know what they do. They know NextEra and we can provide an indemnity behind the tax credit that we transfer. It sleeves off our vest, so to speak, to be able to do that and we get preferred pricing because of it and so I feel great about where things stand in terms of our tax credit transfer program.

David Arcaro:

Okay, great. Appreciate all the color. Thanks so much.

Julien Dumoulin-Smith:

Hey, just going back to the last question a bit, how do you think about the composition of the $25 billion to $35 billion of project tax equity and tax credit transferability, how do you think about your existing tax equity commitments, and how do you think about some of the impacts from a regulatory perspective on the tax equity market? Obviously, you're talking about a robust start to the tax credit transferability. How much does it matter? How much does it play into that $25 billion to $35 billion, and ultimately, how much TE is contemplated anyway in that range, if you will?

Julien Dumoulin-Smith:

Got it. So transferability is not technically part of the $25 billion to $35 billion, but obviously it's a fluid conversation, right, if I understand that piece.

Julien Dumoulin-Smith:

The transferability, the credit transferability, technically not included in that $25 billion to $35 billion as it stands, but it's a fluid question of how you finance going forward.

Julien Dumoulin-Smith:

Yeah. And then just quickly, if I can, on the interest rate question here, thank you again for the additional sensitivities and disclosures here. How do you think about sort of a baseline and the open impact as you roll to kind of 2026? I think it's notable, for instance, you guys reaffirmed through that period with your usual commentary. How do you think about sort of the puts and takes as you roll into that longer dated '26 period, considering the roll off of the hedges here in that, I think, period more specifically, if you will? Is there a way to kind of quantify the interest rate kind of head one?

Julien Dumoulin-Smith:

Got it. Excellent. All right, guys. Thank you very much. I'll pass it there. Have a nice one.

Carly Davenport:

Hey, good morning. Thanks for taking the questions. Appreciate the incremental disclosure on the funding plan and the asset sales and just to follow up there. Are renewables the only element kind of embedded in that $3 billion in proceeds, or are there any other non-core assets and energy resources that you'd consider monetizing?

Carly Davenport:

Got it. Okay, great. That's helpful. And then just as you think about the timing cadence of the backlog additions and also the dispersion across the different technologies, I think, Rebecca, you alluded to the fact that the 4Q pipeline is shaping up to be kind of more weighted to the '24 timeframe to '26 timeframe versus this quarter being a little bit longer dated. But can you also just talk about the split across wind, solar, and storage? It seems like there's been step up in solar relative to wind. So just any thoughts on how you see that piece evolving going forward would be helpful.

Carly Davenport:

That's great. I appreciate the color.

Andrew Weisel:

Hey, good morning, everyone. First, a question. Can you talk a bit about supply chains? I'd be curious your latest thoughts on the availability and status of supply chains, both for solar equipment as well as for grid-level equipment like transformers or switchgears?

Andrew Weisel:

Great. Just to clarify, NIR [ph] is buying this equipment, or FPL? Like, do you keep those separate inventories?

Andrew Weisel:

Okay, great. And one quick follow-up, if I may, I'm almost apologizing to bring this up. But the Florida State Supreme Court asked the PSU for some details on their approval of the rigged case settlement. Can you just share your expectations around timing of the process and maybe potential outcomes?

Andrew Weisel:

Sounds good. Thank you.

Operator:

Good morning, and welcome to the NextEra Energy and NextEra Energy Partners' Q2 2023 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kristin Rose, Director of Investor Relations. Please go ahead.

Kirk Crews:

Thanks Kristin and good morning. NextEra Energy continued its track record of solid execution as reflected in our second quarter results. Adjusted earnings per share grew by approximately 8.6% as we deploy capital for the benefit of FPL customers and leverage our competitive advantages to extend Energy Resources for a noble leadership position. As our fastest growing state in the U.S., Florida has underlying population growth and an economy that continues to drive clear investment needs. For years, FPL strategy has been simple

Steve Fleishman :

Yeah, hey good morning, thanks. Hope you're all well. So a couple – first, just on the quarter. The customer supply trading business continues to do well and you mentioned higher margins. I think Constellation has been talking about that too. Could you just talk more about what you think is driving that in the supply business?

Steve Fleishman :

Okay, next question just on… [Cross Talk]

Steve Fleishman :

Okay, great. Just maybe just the latest year hearing on the hydrogen, green hydrogen rules from Treasury, both kind of timing in any color of where they are on some of the key issues like matching and additionality. Thanks.

Steve Fleishman :

Okay, last question, just on the Texas sale. So I think you said you'd still expect to get it done by year end. When would that, when would you need or expect to or need to kind of announce transaction to make the year-end and just how should we think about the recent data points we've seen like the TransCanada, the TC sell down, Columbia sell down, and co-point. I know they're different assets, but just in the context of views on valuation of energy. Thank you.

Steve Fleishman :

Okay, great. Thank you.

John Ketchum:

Oh! And Steve. I think I said 2% on the bar, I meant $2 million on the bar for PMI, just correct that. Thank you.

Shahriar Pourreza :

Hey! Good morning, guys.

Shahriar Pourreza :

Good morning. Let me just, as we kind of look at the latest renewable portfolio transactions, the valuations have come in fairly noticeably. Do you guys see any opportunities to kind of leverage NextEra platform in either picking up existing assets or developer books, especially sort of given what seems to still be a type financing and supply chain position for some of your competitors, while you're seeing improvements with yours, right?

Shahriar Pourreza :

Got it. Perfect. And John, it's been a little bit quiet and it hasn't really been a focus for a lot of investors, but is there any sort of updates around the FTC case as of today? Any change in stances indicated by the disclosures? Any opportunities to settle? Thanks.

Shahriar Pourreza :

Perfect. Thank you, guys. I appreciate it. Thanks for the time. Fantastic.

Operator:

Our next question will come from Julien Dumoulin-Smith with Bank of America. You may now go ahead.

John Ketchum:

Yeah, good question, Julien. So let me just start with – take that in chunks, because everyone knows our development expectations are ‘23 to ‘26. So let's just start with the first two years and then we'll talk about the second two years. So for ‘23 through ‘24, we are in great shape. We are already within the range as we had expected to be. And then on ‘25 and ‘26, you know if you go back to the beginning of ‘22, and you add up where we are today, we've already added 12 gigawatts just in the last six quarters. That puts us in great shape against ‘25 and ‘26, because now we have 15 gigawatts to get to the midpoint and if you kind of work backwards from ‘26, that's 3.5 years to get 15 gigawatts. So we feel like we are really in great position and on track on that build. And I think there's some real tailwinds that we're going to start to see come forward and I want to explain some dynamics, you know just around what we've seen in the renewable industry, which was part of your question Julien. Let's just go back to ‘22. I mean, in ‘22 we saw a lot of supply chain issues that started to surface. And then we saw here a flip, we saw circumvention and that cost them delays. It also cost us outages supply, because some developers are scrambling for panels that they thought they could get into the country, which I think for a short period of time drove prices up. The great thing is, all those 22 projects that got delayed in to ‘23 are now starting to go into commercial operation. That's a really good news, good news for customers, because those customers that were digesting that ‘22 build and waiting for those projects to go COD in to ‘23 are now coming back to the market. And so we're seeing really strong demand from those folks as we start to look forward. The other benefit of that is as you see you flip up, as you start to get works work through. We're not seeing that you flip awhole back that we used to see, so we're making a lot of progress on that front. When you take that into account with the clarity that we're now seeing around circumvention, we finally have this bright line rule with the six-part test and as long as you meet four of the six, and you're importing from Southeast Asia, you're okay. And so what we've seen is a relaxation in pricing as a result of that. So now the risk premium that was being charged last year by the import market is starting to come down. The other terrific phenomenon that we're seeing around solar pricing is that Southeast Asia still sets the price for panels in the U.S., but as that risk price premium is starting to come down and Southeast Asia really wants a big part of the U.S. market. Why do they want a big part of the U.S. market? They sell panels for $0.20 everywhere else, right? They've been selling panels for $0.40 roughly in the U.S. So they have a lot of room to move. And so as that risk premium comes down around, you flip in and circumvention is forcing prices down in the U.S. At the same time you're seeing a lot more U.S. supply come online through new module facilities are getting announced, also through cell facilities that will come along with it. And so the bottom line is when you look at the solar picture, it's favorable from an equipped price standpoint, because I think you're starting to see a lot of capacity come online that is going to force prices down over time, particularly as you see the U.S. market evolve. And it's no secret with some of the economic data coming out of China that some of those Southeast Asian markets are under pressure with capacity, excess capacity positions, and so they've got batteries and panels they need to find things to do with. Battery prices are coming down as well. We’re finally seeing a relaxation in battery prices. Really struggling to see – really struggling in the EV market in China, which has created very much in excess capacity around batteries and so we’re finally starting to see some relaxation there. I think there's been more of a movement around traditional lithium ion and some of the rare mineral exposure you see there, sodium and other battery forms, and so very encouraged about the landscape there. And then on the wind OEM side, the wind folks are really one of the only ones that can reap the full benefit of domestic content and the full manufacturer incentive. So we feel really good about where wind sits as well. So I think as you start to look forward and we started to move through these supply chain issues you saw in ‘22 of these projects coming online in ‘23 come combined with excess capacity globally around the supply chain, we feel great there. And let me talk about transferability for a second. There's been a lot of discussion and I've heard a lot of questions about folks saying, well, how is transferability going to be accounted for? And is it going to be part of the FFO and in the FFO-to-debt metric. We feel very good and we've told investors for a long time that we feel very good that it's in accordance with GAAP, it flows through the tax line for tax credits that get transferred, to be included and so we feel good about where that is heading and that will end up in a good place there on that FFO-to-debt question that has surfaced around transferability. So when you put all those pieces together, as we've worked through some of these headwinds that we've had, we feel very good about where things are heading and let's just face it, we're just getting started. Renewables are here to stay, they're not going anywhere. And so while we might – you know the development process isn’t always going to be a straight line, we're in terrific shape and feel very optimistic about the future.

John Ketchum:

Yeah, a lot of it is going to depend on, as I said before, these ‘22 projects continuing to come online in 2023 and those customers that had a little bit of fatigue so to speak. We are around those delays coming back to market which we're starting to see and so that will be the wild card. But we feel good about how the rest of the year continues to shape up.

John Ketchum:

And Julien, one of the things to add to that is, it’s hydrogen. We get the right rules there and again I can't stress it enough. I mean we've always only had two customer classes for renewable. It's been power sector, it's been the C&I sector. Now with the right rules, we have the potential to add a third customer class, which is the renewables for hydrogen customers and that's exciting as well.

John Ketchum:

Yes, I think that's right. And then remember, those projects that have longer lead time development cycles. So in terms of the contribution that investors should expect, it's going to come in the latter part of the decade.

Operator:

Our next question will come from David Arcaro with Morgan Stanley. You may now go ahead.

John Ketchum:

Yes, I mean for NEP, first of all the focus is on the simplification strategy which we shared with the market back in May and we have said that our expectation as a result of that is, we don't – you know assuming a successful execution on that sale, that we don't expect to have equity requirements in 2024, other than opportunistic equity issuances under our ATM to help finance growth beyond 2024. But if you look, and you can see in the slides here, that we have a lot of flexibility under our current metrics with the agencies, in terms of the ability to add additional, what I would call traditional debt based capital market financing, mechanisms to accommodate the growth going forward. And we are very busy looking at the back end, three sublets that we have and some ideas around how we are going to address those as well. Because when we move on from the simplification transaction, that's going to be the next point of focus. We are not – but we're not waiting. We are continuing to look at that. And look, there continues to be a strong bid for an interest in renewable interest, in renewable assets long term. Particularly when you think about the opportunity to do that with the world leader in renewable development, with the competitive advantages that we have, the 20 gigawatt backline log. The growth visibility that NEP has going forward, all very promising. And so we could continue to engage in those discussions as well as we think about the future.

John Ketchum:

Yes, so let me take that in two pieces. I mean one is the 145 gigawatts that you reference and David around the 250 gigawatt pipeline that we have, already have, with the 145 interconnection position secured. I would challenge you to find anybody in the industry that has even close to that that number of projects with interconnection capacity. And don't forget, given the demand we're seeing in the market, if you have a site ready to go with interconnection capacity, that's the hard part. Finding the customer right now is not the hard part. And so that's why we have such a focus on making sure that our early stage development program is right on track and I feel just terrific about where we stand there today. Let me take the second piece, so that you have which is just about transmission in general. We are not waiting. We are taking the transmission and interconnect issues in our own hands and we are doing that through NextEra Energy transmission. We are laser focused on competitive transmission build out around where our renewable assets are going and where they are going to be built. We announced a project last quarter, another $400 million opportunity in Cal ISO. I'm not going to talk about them today, but we have a number of various other transmission projects, on the board right now that we are evaluating. That business is going terrific and again, the bottom line message for investors is we're not waiting. We're taking the game, we're taking that into our own hands, that’s why we bought GridLiance. That's why we continue to make investments in that space and we intend to solve those problems ourselves as we go along.

John Ketchum:

Thanks David.

Carly Davenport:

Hi! Good morning. Thanks for taking the questions. Just wanted to go back to the supply chain and thanks for the commentary there in the earlier question. But just in terms of rate of change from a supply chain perspective relative to recent quarters, are you seeing any divergence between trends and wind projects versus solar projects?

Carly Davenport:

Great. That's helpful. And then the follow-up is just a quick one on kind of the cost environment. It seems like it's starting to improve a bit, but still challenging for many. Can you just talk about how your managing costs in this environment and kind of what levers exist that are available to pull if needed to continue to execute at a high level from an earnings perspective.

Carly Davenport:

Great! Thanks for that color.

Operator:

Good day, and welcome to the NextEra Energy and NextEra Energy Partners' First Quarter 2023 Earnings Call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that, this event is being recorded. I would now like to turn the conference over to Kristen Rose [ph] , Director of Investor Relations. Please go ahead.

Kirk Crews:

Thank you, Kristen, and good morning everyone. NextEra Energy is off to a strong start in 2023. Adjusted earnings per share increased by approximately 13.5% year-over-year building on the success of last year's strong execution and financial performance. During the quarter, we were honored that NextEra Energy was again ranked number one in our sector on Fortune's list of the world's most admired companies for the 16th time in 17 years. We are extremely proud of the team and culture we have built that has enabled us to deliver low-cost clean and reliable power to our customers, while also providing long-term value to our shareholders. FPL is the largest electric utility in the US and Florida is now officially the fastest-growing state in America. At FPL, our focus remains the same deploying smart capital to deliver on what we believe is one of the best customer value propositions in our industry. Key to that strategy is keeping customer bills affordable. And this quarter, we proposed using projected 2023 fuel savings to reduce unbilled fuel costs from 2022 to provide bill relief to customers. To further manage fuel price volatility, we are also helping customers by adding more solar to the FPL grid. This quarter, we placed into service approximately 970 megawatts of new low-cost solar. Putting FPL's owned and operated solar portfolio at nearly 4,600 megawatts, which is the largest solar portfolio of any utility in the country. We believe solar is now the lowest cost generation option for Florida customers, but represents only about 5% of FPL's delivered energy. In order to extend the benefits of low-cost solar to customers, FPL's recently filed 10-year site plan, now includes nearly 20,000 megawatts of new solar. Energy Resources, the world's leader in renewables and a leader in battery storage, remains laser-focused on executing a strategy of decarbonizing the power sector and helping commercial and industrial customers outside the power sector, reduce their energy cost and decarbonize their operations by moving to low-cost renewables and other clean energy solutions. This quarter, Energy Resources added approximately 2,020 megawatts of new renewables and storage projects to its backlog. Energy Resources also closed on its previously announced acquisition of a large portfolio of operating landfill gas-to-electric facilities, providing the foundation for our growing RNG business. We are also excited to announce a new memorandum of understanding with CF Industries to create green hydrogen, establishing what we expect will be a long-term relationship with the world's largest ammonium producer. And finally, Energy Resources continues to build what we believe is the nation's leading competitive transmission business to help support growth in renewables. We are pleased to announce that the California ISO recently recommended for approval approximately $400 million in new transmission and substation upgrades for NextEra Energy Transmission. We believe, NextEra Energy continues to be anchored by two great businesses that leverage each other's expertise to make them even better. We do not believe anyone in our industry has our set of skills, scale and breadth of opportunities. We believe NextEra Energy is able to buy, build operate and finance cheaper with one of the strongest balance sheets in our sector. We also believe our best-in-class development skills and unparalleled data set enable us to provide innovative technology and low-cost clean energy solutions for the benefit of our customers. The opportunities and products demanded by the market are becoming more complex, requiring significant scale and a combination of skills that we believe few of our competitors can offer, further enhancing our competitive advantages and creating even more growth opportunities for our business going forward. We have a culture rooted and continuous improvement, always striving to be better. Along those lines, we just completed our annual employee-led productivity initiative, which we now call Velocity. For over 11 years, our employees have generated approximately $2.6 billion in annual run rate savings ideas, as part of this process. In 2023 alone, our team generated ideas expected to produce roughly $325 million in annual run rate savings, which when combined with last year's results of over $400 million is the most productive two-year period in this program's history and that's after doing it for over a decade. We believe we have the best team in the industry, and these results are indicative of the breadth and depth of capabilities and the commitment to excellence that our team brings to our business every day and executing on behalf of our customers and shareholders. With that let's turn to the detailed results beginning with FPL. For the first quarter of 2023, FPL reported net income of $1.07 billion, or $0.53 per share an increase of $0.09 year-over-year. Regulatory capital employed growth of approximately 11.2% was a significant driver of FPL's EPS growth versus the prior year comparable quarter. FPL's capital expenditures were approximately $2.3 billion for the quarter. We expect our full year 2023 capital investments at FPL to be between $8.0 billion and $9.0 billion, as we continue to invest capital smartly for the continued benefit of our customers. FPL's reported ROE for regulatory purposes will be approximately 11.8% for the 12 months ending March 2023. During the quarter, we utilized $373 million of reserve amortization to achieve our targeted regulatory ROE leaving FPL with a balance of $1.07 billion. As we've previously discussed, FPL historically utilizes more reserve amortization in the first half of the year, and we expect this trend to continue this year. Earlier this year, the Florida Public Service Commission approved FPL's proposed plan to recover approximately $2.1 billion of incremental fuel costs from 2022 partially offset by projected 2023 fuel savings of approximately $1.4 billion. Amid high natural gas prices in 2022, FPL's decades-long modernization of its generation fleet has saved customers more than $2 billion in fuel costs in 2022 alone. The commission also recently approved recovery of approximately $1.3 billion of hurricane costs from 2022 over a 12-month period. Taking all approved adjustments together, we anticipate that FPL's typical 1,000 kilowatt hour residential customer bills will remain well below the projected national average and among the lowest of all Florida utilities. Turning to our development planning and efforts. FPL recently filed its annual 10-year site plan that presents our generation resource plan for the next decade. The 2023 plan includes roughly 20,000 megawatts of new low-cost solar capacity across our service territory over the next 10 years, which would result in nearly 35% of FPL's forecasted energy delivery in 2032 coming from cost-effective solar generation up significantly from roughly 5% in 2022. Given the increasing customer benefits of low-cost renewables FPL's post-2025 solar capacity additions and this year's plan are more than double last year's approved plan and also includes 2 gigawatts of battery storage over the next decade. We believe the expansion of cost-effective solar and storage will provide a valuable hedge for our customers against volatile natural gas prices and meet the electricity demand of FPL's growing customer base with a low-cost generation source. Finally, construction of our green hydrogen pilot at our Okeechobee Clean Energy Center is on track and projected to go into service later this year. Turning now to the Florida economy. Florida became the fastest-growing state in the nation in 2022 and its population continues to increase with over 1,000 people moving to Florida every day. Over the last five years, Florida's GDP has grown at a roughly 7% compound annual growth rate and is now approximately $1.4 trillion which is up approximately 8% versus a year ago. Based on GDP, if Florida was a country, it would have the 14th largest economy in the world. FPL's first quarter retail sales increased 0.4% from the prior year comparable period driven by continued solid underlying population growth with FPL's average number of customers increasing by approximately 65,000, even after removing roughly 15,000 inactive customers due to Hurricane Ian. For the first quarter, we estimate that the positive impact of warmer weather was more than offset by a decline in underlying usage for our customers. As we have often pointed out, underlying usage can be somewhat volatile on a quarterly basis, particularly during periods when temperatures deviate significantly from normal, as we experienced this winter with average temperatures greater than four degrees above normal. Our long-term expectations of underlying usage growth continues to average between zero and approximately negative 0.5% per year. Energy Resources report first quarter 2023 GAAP earnings of approximately $1.440 billion or $0.72 per share. Adjusted earnings for the first quarter were $732 million or $0.36 per share up $0.04 versus the prior year comparable period. Contributions from new investments increased $0.07 per share year-over-year. Contributions from our existing Clean Energy portfolio were lower by $0.03 per share primarily due to less favorable wind and solar resource compared to the prior year. The contribution from our customer supply and trading business increased by $0.06 per share primarily due to higher margin in our customer-facing business and compared to a relatively weaker contribution in the prior year comparable quarter. Gas infrastructure and all other impacts reduced earnings by $0.01 and $0.05 per share respectively versus 2022. Energy Resources had another strong quarter of origination capitalizing on strong global demand environment. Since the last call, we added approximately 2020 megawatts of new renewables and storage projects to our backlog including roughly 1370 megawatts of solar, 450 megawatts of storage and 200 megawatts of wind. With these additions, our renewables and storage backlog now stands at over 20.4 gigawatts net of projects placed in service and provides strong visibility into our future growth. With more than 1.5 years remaining before the end of 2024, we are now within the 2023 to 2024 development expectations range. Given the volatility in gas and power prices over the last 1.5 years, we continue to see economics driving long-term decision-making and renewables remain the clear low-cost option for many customers. On the supply -- solar supply chain front, we continue to take constructive steps to mitigate potential future disruption. Nearly every one of our suppliers has repositioned their supply chains to manufacture solar panels in Southeast Asia using wafers and cells produced outside of China, and all our suppliers are expected to meet the criteria established in the Commerce Department's preliminary determination in the 2022 circumvention case by the end of 2023. Additionally, we are focused on further diversifying our supply chain and are currently advancing discussions to support the domestic production of solar panels. Finally, we are encouraged by the improvement in the flow of panels into the US as suppliers continue to provide the requested traceability documentation to US Customs and Border Protection. Also, during the quarter, we closed on the previously announced transaction to acquire a large portfolio of operating landfill gas-to-electric facilities that I mentioned earlier. The approximately $1.1 billion transaction represents an attractive opportunity for energy resources to realize double-digit returns on this investment, while expanding its portfolio of renewable natural gas assets and growing its in-house capabilities and rapidly expanding renewable fuel market. Turning to green hydrogen, we are excited about the role it is expected to play as a solution to help our customers cost effectively lower emissions. As the world leader in renewables and a leader in battery storage, we believe we are the logical partner for green hydrogen with significant interconnection and land inventory positions and deep market expertise to help our potential partners optimize some of the best green hydrogen sites around the country. As a result, with the right regulation, we see hydrogen quickly becoming a significant technology for our customers and a new growth driver for energy resources given the number and size of the opportunities we are evaluating. Earlier this month, NextEra Energy joined a coalition of 45 other companies with a combined approximately $1 trillion in market capitalization and sending a letter to the Secretaries of Energy & Treasury and the White House advocating for programmatic policies for the implementation of the IRAs green hydrogen production tax credit. This coalition is advocating for prudent policy that will foster investment in green hydrogen technology paving the way for the US to become the world leader in hydrogen technology. A key aspect of this policy is for the electricity consumed for green hydrogen production to be matched to its renewable power generation on an annual rather than an hourly basis. We believe that an annual matching construct has several benefits over hourly including lower green hydrogen prices, more renewables being built, a significant reduction in carbon emissions, and green hydrogen achieving cost parity with gray and blue hydrogen both of which rely on fossil fuels for their production. This viewpoint is supported by numerous third-party studies from respected entities such as Wood Mackenzie, Rhodium Group, Energy Futures Initiative, Energy and Environmental Economics, and MIT Energy Institute. As we continue to work with the industry and government representatives to progress a smart hydrogen policy, we are also advancing our green hydrogen development efforts including a recently executed Memorandum of Understanding for a joint venture with CF Industries, the world's largest producer of ammonia to develop -- to deliver green hydrogen to an existing CF Industries ammonia production facility which it intends to expand and incorporate green hydrogen into its production process. The proposed facility includes an approximately 450-megawatt renewable energy solution, powering a 40 tons per day hydrogen facility. This project combined with other opportunities we are pursuing represent significant momentum for green hydrogen, which we believe will continue to be a driver of new renewables growth going forward. Our team continues to engage with multiple potential partners and customers on hydrogen projects, representing over $20 billion of capital investments and requiring more than 15 gigawatts of new renewables to support. As we focus on leading the decarbonization of the US economy, building additional transmission is essential to support long-term renewables deployment. We believe our ability to build, own and operate transmission as a key competitive advantage for our renewables business, in addition to being a terrific investment opportunity. We are pleased that the California ISO recently recommended for approval of approximately $400 million in transmission and substation upgrades for NextEra Energy Transmission, subject to approval by the CAISO Board of Governors in May. We believe these projects along with others could unlock up to 11 gigawatts of new renewable generation that could be built to support California's ambitious clean energy goals. Turning now to the consolidated results for NextEra Energy. For the first quarter of 2023 GAAP earnings attributable to NextEra Energy were $2.086 billion or $1.04 per share. NextEra Energy's 2023 first quarter adjusted earnings and adjusted EPS were approximately $1.678 billion and $0.84 per share respectively. Adjusted earnings for the Corporate and Other segment decreased results by $0.03 per share year-over-year, primarily driven by higher interest rates. In March, S&P affirmed all its ratings for NextEra Energy and lowered its downgrade threshold for its funds from operations or FFO to debt metric from the previous level of 20% to the current level of 18%. In making this favorable adjustment, S&P acknowledged improvement in Energy Resources business risk following the passage of the IRA, particularly noting the improved visibility and clarity into long-term cash flows. At the same time, S&P adjusted its treatment of non-recourse project debt associated with FERC Regulated investments to bring it back on credit. We believe this overall favorable adjustment, which creates roughly 50 bps of additional headroom against the downgrade threshold, highlights the attractive risk profile of renewables and acknowledges the long-term stable cash flows and Energy Resources business, particularly given the benefits of the IRA. Finally as we have discussed in the past, we actively enter into various interest rate swaps products to manage interest rate exposure on future debt issuance. Today, we have $21 billion of interest rate swaps at NextEra Energy to help mitigate the impact of potential future increases in rates, which exceeds the notional value of our 2023 and 2024 maturities. And as always, the current interest rate environment is taken into account in our financial expectations. Our long-term financial expectations which we extended earlier this year through 2026 remain unchanged. And we will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted EPS expectation ranges in each year from 2023 to 2026, while at the same time maintaining our strong balance sheet and credit ratings. From 2021 to 2026, we also continue to expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through at least 2024 off a 2022 base. As always, our expectations assume our usual caveats including normal weather and operating conditions. Turning to NextEra Energy Partners. We believe, we have never had more visible growth opportunities than we have today. We have the ability to grow in three ways

Steven Fleishman:

Yeah. Thank you. Good morning. So first a couple of questions on the NEP drop. So just -- should -- I think you're looking at the CAFD yield is the midpoint of the CAFD range over the $708 million, which I guess would be about 9.5%. If you were to over time exclude the project debt and exclude the project debt from the base and exclude the payments of the project debt how does that compare to the 9.5% yield?

Steve Fleishman:

Okay. Great. That's helpful. And then the amount of tax equity just to kind of round this out.

Steve Fleishman:

Okay. And Kirk, I think you said something about the growth through 2026 could just come from the I don't know if that was from the NEP portfolio or I guess maybe from the near portfolio. Could you just clarify what you said there?

Steve Fleishman:

Okay. That's helpful. I'm sure others will have questions on that topic. But one other thing I guess just on the overall renewable development environment. Maybe Rebecca you could just talk to what the -- we've now seen I think some stabilization and a lot of the pressures last year, but we've also seen lower gas prices. Just when you look at the overall environment, could you give us some kind of color on what you're seeing and conviction on hitting the development targets that you have out there or maybe hopefully better? Thanks.

Steve Fleishman:

Okay. Thank you.

Operator:

The next question comes from Julien Dumoulin-Smith with Bank of America. Please go ahead.

Rebecca Kujawa :

Thanks Julien. It's Rebecca. I'll take that. So we continue to feel and I didn't directly answer Steve's question, so I appreciate you giving me another shot at it. I feel very good about our development expectations across the board. Obviously, we're now -- we're at the low end of the range for 2023 and 2024 and continue to feel very well positioned to meet the longer-term expectations across the four-year period. And with the comments I just made and Kirk made on the call, we couldn't be more excited about what's beyond the 2026 time frame. I do think the hydrogen opportunity is probably more -- not probably, it is definitively more past 2026 than in 2026 for a lot of practical reasons, not the least of which is needing clarity on the treasury guidance, which of course affects the customer discussions that we're having today. It also affects the way manufacturers are committing to their ramp-up of their capabilities to produce electrolyzers in particular. And, of course, as that clarity comes to fruition and hopefully in particular we realize the annual matching guidance for the hydrogen production tax credit all of that will start to accelerate. And then on top of that, we continue to see tremendous innovation across the clean tech space. Just over the last two years I was looking at the numbers from Bloomberg New Energy Finance and its $100 billion invested in clean tech across the venture capital space. So just tremendously exciting innovations that we're seeing and I think will really make a huge difference in the latter part of this decade.

Kirk Crews:

All right. So Julien I'll try to work off all those questions and the team will make sure I get to them all. So the first question was around the use of the ATM. So look as we shared in the prepared remarks, we have the flexibility to be opportunistic to use -- to deliver to the investor either directly units or to use the ATM on the buyouts. And so you should expect us to use that flexibility and to be opportunistic around those options. And so if we go to the ATM, there's some value to go into the ATM at times to deliver. And there's also -- there will be times where it's just beneficial to deliver the units. So we have both those tools and we can use them. In terms of using unit CPIF in the future. As we share today the CPIF have provided benefits for unitholders. And when you compare it to the alternative, which is doing an underwritten block equity deal when you compare those two as we presented on the slide, it has saved unitholders considerably more than 16 million units. And when you compare those two, I think that slide is -- does a really nice job laying out the benefits. And so as we've always done, we will look at what's the best financing option when it's time to finance an acquisition. And we look at all the different financing tools that we have. And as we shared today when we build our financing plan and when we think about delivering on our LP distribution growth, we build a financing plan into those financing expectations and that includes the conversion of the outstanding units. And certainly, if we're going to use a new CEPF, we will build that into the financing plan and what that means in terms of being able to continue to deliver on the expectations. And I believe your third question was around what are the other -- is there going to be something around an IDR holiday or something like that. Look, as I shared in responding to Steve's comment, we have tremendous growth opportunities and in tremendous growth visibility at NextEra Energy Partners. We have a lot of flexibility in terms of being able to finance that growth. The acquisition that we announced today I think is a really strong indication of how we can acquire a very attractive set of assets for unitholders. And so we feel very good about being able to acquire assets and support growth. And so we're focused on being able to tap into that growth visibility and deliver to unitholders that way.

Julien Dumoulin-Smith:

Thank you, guys.

Shar Pourreza:

Hey, guys. Good morning. Just real quick on rounding out on NEP. So I guess the latest portfolio acquisition, the midpoint CAFD yield, 9.5%. It's a bit higher than some of the prior ones. I guess, do you still see attractive economics on new acquisitions? Is it enough to balance out the dilution from the legacy CEPF conversions. So I guess I'm kind of asking a question on accretive economics versus the cost of capital there?

Shar Pourreza:

Got it. And then just on NextEra in general in terms of sort of the inputs we've seen, you guys have announced several earnings accretive data points since last year, right? You've got RNG acquisition hydrogen, organic transmission growth and some incremental visibility on FPL solar deployment. Do any of these investments kind of displace the CapEx, you guys embedded in plan at the Analyst Day? Is there any sort of headwinds we should be thinking about? And ultimately, do you anticipate this to start being accretive to your plan from let's say 2025 to 2026 time frame especially, as we're thinking about the six to eight.

Shar Pourreza:

Terrific. Thank you guys. Appreciate it.

Jeremy Tonet:

Hi, good morning.

Jeremy Tonet:

Just wanted to touch base a little bit more on supply chain if you could. If you might be able to provide a bit more commentary on how flow panels stand today versus a few years back and also as well as bringing the supply chain onshore. Just wondering if you could provide a little bit more color on how what time line you see that finalizing?

Jeremy Tonet:

Got it. And just flow panels today, just wondering how that stacks up versus where it was a few years ago?

Jeremy Tonet:

Got it. That’s helpful. I’ll leave it there. Thanks.

Durgesh Chopra:

Hey good morning team. Thanks for taking my question. All my other questions have been asked and answered. Just quickly, I wanted to follow up on the 10-year pipeline. Maybe, can you just remind us, what are sort of the key milestones for us to watch from here on from a regulatory standpoint for you to get approvals et cetera, et cetera? And then, just second, would this be the spending here you mentioned post-2025. Would some of this spending investment be accretive to the current plan you have through 2026? Thank you.

Durgesh Chopra:

Got it. So the approval -- Armando, thank you for that, I appreciate it. The approval of this plan comes through to the rate case process?

Durgesh Chopra:

Got it. Thanks, so much. Much appreciated. Thank you, guys.

Operator:

Good morning, and welcome to the NextEra Energy and NextEra Energy Partners Fourth Quarter 2022 Earnings Call. All participants will be in listen-only mode. [Operator instructions] After today's presentation there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Jessica Geoffroy, Director of Investor Relations. Please go ahead.

John Ketchum:

Thank you, Jessica, and good morning everyone. Before I turn to a discussion of our financial results and the future growth prospects, I'd like to make some comments on the status of our review. As a reminder, we reported last quarter that we were reviewing allegations of Florida state and federal campaign finance law violations raised in media articles and a related complaint filed in October with the Federal Election Commission. Our review of information reasonably available to us is now substantially complete. Regarding the Florida allegations, based on information in our possession, we believe that FPL would not be found liable for any of the Florida campaign finance law violations as alleged in the media articles. With respect to the FEC complaint, you may recall that it was filed by a special interest group and primarily relies on media articles that allege certain violations of the Federal Election Campaign Act by various parties, including by implication FPL. The FEC process is a confidential, civil administrative process with an investigation only commencing if the FEC votes to do so. We plan to file our response seeking dismissal of the FEC complaint in the next few weeks and do not believe it is appropriate for a complaint such as this to move forward. The total amount of contributions referenced in the complaint is less than $1.3 million and we do not expect that allegations of federal campaign finance law violations taken as a whole would be material to us. With that behind us, I would like to now discuss our fourth quarter and full-year 2022 financial results and future growth prospects. Both NextEra Energy and NextEra Energy Partners had a terrific year in 2022 and both businesses have never been better positioned. The cost and efficiency of new renewables have improved significantly over the last two decades, while natural gas prices have seen an increase over the past year with volatility likely to continue going forward. At the same time, landmark renewables legislation was entered into law last fall. After the passage of the Inflation Reduction Act, or IRA, we often said it was transformational for our industry and our business. Before IRA, we largely qualified for two federal incentives -- wind production tax credits and solar investment tax credits. We always had the challenge of planning the business with those federal incentives expected to phase down and expire in a few months or years. Some years they were extended, others they were not. The uncertainty changed customer behavior and it changed our behavior. Today, the incentives are clear. They support a broader range of renewable technologies. They are in place for a much longer period of time. And they incentivize a domestic supply chain that will further reduce the cost of renewables that are made in the USA, creating new American jobs. In short, we believe the IRA provides growth visibility for a broad range of low-cost clean energy solutions, in a predictable way and for a long time. We believe that, in this environment, low-cost renewables will help NextEra Energy and NextEra Energy Partners continue to drive long-term value for our customers and our shareholders and unitholders. So today, I am excited to share that we are extending our financial expectations for an additional year at both NextEra Energy and NextEra Energy Partners and I look forward to sharing more details on those expectations in a few minutes. In 2022, NextEra Energy continued its long track record of outstanding execution, delivering full-year adjusted earnings per share of $2.90, up nearly 14% from 2021. As a result of strong operational and financial performance at both FPL and Energy Resources, we achieved the high-end of our adjusted EPS expectations range. Over the past 10 years, we have delivered compound annual growth and adjusted EPS of roughly 10% for our shareholders, which is the highest among all top 10 power companies. NextEra Energy outperformed the S&P 500 Index by nearly 10% in 2022, despite a challenging year in the financial markets. In terms of total shareholder return, NextEra Energy has outperformed the S&P 500 Index and the S&P 500 Utilities Index on a three, five, 10 and 15-year basis. Over the past 15 years, we have outperformed nearly all of the other companies in the S&P 500 Utilities Index and more than tripled the average total shareholder return of the index. Over the same period, we have outperformed 75% of the companies in the S&P 500, while nearly tripling the average total shareholder return of the index. We are proud of our long-term track record of creating shareholder value, but we remain intensely focused on execution at both FPL and Energy Resources and we remain committed to delivering long-term growth for shareholders going forward. We have a long history of executing and delivering on our commitments, even in periods of uncertainty and disruption, and 2022 was no exception. Despite a challenging macro environment, we invested more than $19 billion in American energy infrastructure, while maintaining our strong balance sheet and credit ratings. Overcoming supply chain challenges, we constructed and placed into service roughly 5,000 megawatts of new renewables and storage projects, demonstrating the strength and resiliency of our team's expertise and competitive advantages. While disruption created some near-term challenges, it also created opportunities and I'm extremely proud of our team's execution in 2022 in delivering adjusted EPS growth of nearly 14%. During 2022, FPL successfully executed on its strategic initiatives, while delivering on what we believe is the best customer value proposition in America. Despite inflationary pressures, we further reduced our already best-in-class non-fuel O&M cost per megawatt-hour by approximately 8.6% versus 2021. We also continued our investments in solar generation that can reduce the variable fuel component of our customer bills. We placed into service approximately 450 megawatts of cost-effective solar during 2022 and we anticipate commissioning another roughly 1,200 megawatts of low-cost solar in 2023, bringing our total solar buildout to roughly 1.7 gigawatts within the first two years of our current rate agreement. Our relentless focus on productivity and making smart capital investments for the benefit of customers is a significant part of what has kept our typical 1,000 kWh residential customer bills the lowest among Florida investor-owned utilities and more than 30% below the national average. FPL has also continued to provide exceptional service reliability and was recognized for the seventh time in eight years as being the most reliable electric utility in the nation. Our team responded exceptionally well in response to hurricanes Ian and Nicole. And during a year of high inflation and high natural gas prices, FPL used its strong balance sheet to provide bill relief for its customers. Looking forward, we remain committed to providing clean, affordable, and reliable service to our customers for many years to come. Energy Resources also had a terrific year in 2022, delivering adjusted earnings growth of nearly 11% versus the prior year. With economics driving strong demand for renewables, Energy Resources had a record year of new renewables and storage origination, adding more than 8,000 megawatts to our backlog as we continue to capitalize on the ongoing clean energy transition that is occurring across the United States. With the significant net additions over the last year, our renewables and storage backlog now stands at a year-end record of approximately 19 gigawatts, net of projects placed in service, and provides strong visibility into the growth that lies ahead. Our continued execution, combined with the long-term visibility into clean energy incentives and the strong market backdrop for low-cost renewables, gives us more confidence in our long-term outlook at NextEra Energy. Last June, we laid out our vision and strategy to decarbonize both ourselves and the broader U.S. economy. In August, the IRA helped provide more certainty and flexibility to plan for growth than at any other time in our history. Over the next two decades, we are well positioned to continue our track record of creating long-term value for shareholders through additional renewables and storage investments, expansion into new markets and products that enable even more renewables, and organic growth opportunities to optimize our existing fleet by repowering assets and co-locating storage. At FPL, our plan is to lower cost for customers by accretively deploying capital into low-cost solar, storage and eventually hydrogen. By transforming our generation fleet and continuing our decades-long strategy of fuel-switching, we will not only help customers by keeping bills low but also help the state of Florida achieve energy independence. Our customers have already seen the positive impacts of the IRA on their bills. We estimate that solar production tax credits are expected to save customers roughly $400 million over the term of our current rate agreement. This month, those savings started with a one-time $36 million refund on customer bills for our completed 2022 rate based solar projects. With only about 5% of FPL's generation mix coming from solar today, we are still in the early stages of building out our low-cost solar portfolio. At April, FPL expects to file its annual Ten-Year Site Plan, which will present our generation resource plan through 2032. Last year's plan included roughly 9,400 megawatts of new solar capacity through 2031, including roughly 4,600 megawatts of additional solar after 2025. By incorporating the IRA benefits, we expect the post-2025 new solar capacity in this year's plan will more than double what it was last year. We believe low-cost solar will also provide a valuable hedge for our customers against rising natural gas prices in the future. At Energy Resources, the combination of low-cost renewables, higher natural gas prices and the broader push toward decarbonization across the economy enables our strategy to serve both utilities and commercial and industrial customers with comprehensive clean energy solutions. These comprehensive clean energy solutions are often complex and, in addition to new renewables, can include renewable fuels, hydrogen, and Behind the Meter projects, all of which are expected to ultimately create even greater demand for renewables. Customers are looking for long-term partnerships with customized solutions at a scale unlike anything we have seen in the past. And we believe that no company is better positioned than Energy Resources to serve these complex customer needs in a way that helps them both save money on their energy bills and meet their emissions reduction goals. We are particularly excited about the potential for green hydrogen and the role it will play as a solution to help commercial and industrial customers cost-effectively lower emissions. We are building the algorithms and tools to identify and optimize the best green hydrogen sites around the country and leverage our significant interconnection and land inventory position. We are using the skills and capabilities that we have developed over the decades that we have led the renewables industry to participate in emerging clean hydrogen markets in a big way, and we are already starting to see some of our early efforts materialize. Last week, we signed a term sheet for approximately 800 megawatts of new solar generation, which we have not included in our backlog, that is expected to reach commercial operations in 2026 and is expected to support a green hydrogen-related facility in development in the Central United States. Additionally, Energy Resources is participating in the development of hydrogen hubs in the Southwest and Southeast. Earlier this month, these hubs were encouraged to file full applications for federal funding from the U.S. Department of Energy under its $8 billion program to create networks of hydrogen producers, consumers, and local connective infrastructure to accelerate the use of hydrogen as a clean energy carrier. In the Southeast, our plan is to support a 140 tons-per-day clean hydrogen facility at our Gulf Clean Energy Center that would be powered by FPL solar projects. In the Southwest, our plan is to build a 120 tons per day electrolysis-based clean hydrogen project in Arizona in partnership with Linde, the world's largest industrial gases company and the largest liquid hydrogen producer in the United States, with whom we recently signed a Memorandum of Understanding. The clean hydrogen produced by this facility would be used to support decarbonization of the West Coast mobility and industrial end-markets. These are just a few examples of clean hydrogen opportunities our team is actively pursuing. We continue to work with various partners on hydrogen solutions and we are excited by both the number and scale of opportunities in front of us. At our investor conference in June last year, we announced Energy Resources development expectations of roughly 28 to 37 gigawatts of new build renewables and storage through 2025. In sizing those expectations, we considered, among other factors, the expiration and phase down of production tax credits and investment tax credits under then-existing tax law. Typically, when tax credits are near the planned expiration dates, we see a spike in demand in the immediate years prior. Then, after tax credits are extended, demand weakens in the short term. Even though tax credits were extended with the IRA, we are continuing to see tremendous demand for new renewables. It is against that backdrop of strong market demand and the continued cost advantages of renewables combined with our unparalleled competitive advantages that today we are extending our development expectations at Energy Resources through 2026. We now believe that we will place into service approximately 32,700 to 41,800 megawatts of new renewables and storage projects from 2023 through the end of 2026. If you compare midpoint to midpoint, our new four-year development expectations at Energy Resources are approximately 15% higher than the previous four year development expectations range that we announced at our investor conference last year. To put these numbers into context, just executing at the low-end of our new development expectations through 2026 would more than double the size of our current renewables and storage operating portfolio, which took us more than 20 years to complete. Due to our long-term visibility into clean energy incentives and the significant growth opportunities at both FPL and Energy Resources, I am pleased to announce that we are extending our adjusted earnings per share growth expectations at NextEra Energy by an additional year through 2026. For 2023 and 2024, we expect our adjusted earnings per share to be in the ranges of $2.98 to $3.13 and $3.23 to $3.43, respectively. For 2025 and 2026, we expect to grow 6% to 8% off the 2024 adjusted EPS range. This equates to a range of $3.45 to $3.70 for 2025 and $3.63 to $4 for 2026. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectations ranges in each of 2023, 2024, 2025 and 2026, while at the same time maintaining our strong balance sheet and credit ratings. As always, our expectations assume our usual caveats, including normal weather and operating conditions. Let me now turn to NextEra Energy Partners, which had another terrific year of execution, while delivering on its commitments to unitholders. For 2022, NextEra Energy Partners grew its LP distributions per unit by approximately 15% year-over-year and delivered more than 20% year-over-year growth in adjusted EBITDA, highlighting the strength of its operating portfolio. This growth is supported by NextEra Energy Partners' outstanding portfolio of clean energy assets, which was further diversified in 2022. During the year, NextEra Energy Partners acquired interests in approximately 1,200 net megawatts of long-term contracted renewables and storage assets from Energy Resources. Our confidence in NextEra Energy Partners' long runway of growth has been further bolstered by the IRA. Against a backdrop that we believe includes at least two decades of clean energy incentives, we expect NextEra Energy Partners' opportunity set for acquiring renewables from both Energy Resources and from third-parties to continue to be robust. NextEra Energy Partners' organic growth opportunities have also expanded significantly, and we are currently evaluating repowering investments for roughly 1.3 gigawatts of wind assets owned by NextEra Energy Partners for 2024 through 2026. Additionally, earlier this month NextEra Energy Partners leveraged its cost of capital advantages to execute early buyouts of tax equity interests on two of its existing asset portfolios for approximately $190 million. These transactions are intended to enable NextEra Energy Partners to take advantage of the IRA's new transferability provisions, which allow for the sale of tax credits to third-parties. With the buyouts and subsequent transfer of tax credits, NextEra Energy Partners can now fully access two cash flow streams for unitholders -- project cash flows and cash flows that result from the transfer of PTCs. Taken together, NextEra Energy Partners expects these early tax equity investor buyouts to deliver an attractive cash available for distribution yield for unitholders. The significant tailwinds provided by the IRA and Energy Resources' future renewables outlook, combined with NextEra Energy Partners' third-party M&A and organic growth opportunities and continued ability to raise low-cost capital, even in a challenging capital markets environment, provide us with long-term growth visibility. As a result, today we are pleased to announce that we are extending our financial expectations for NextEra Energy Partners by another year. We now see 12% to 15% per year growth and per unit distributions as a reasonable range of expectations through at least 2026. We believe that NextEra Energy Partners' distribution per unit growth expectations are best-in-class versus any other company of its kind in the market and that the combination of NextEra Energy Partners' clean energy portfolio, growth visibility and financing flexibility offers unitholders a uniquely attractive investor value proposition. In summary, both NextEra Energy and NextEra Energy Partners have never been better positioned. We anticipate a tremendous acceleration of growth in renewables and storage deployment across the U.S. due in part to the IRA, particularly in the latter half of the decade. And we believe that our substantial competitive advantages will allow us to continue delivering value to shareholders and unitholders for many years to come. Before turning the call over to Kirk, I'd like to talk about the important organizational changes we are announcing this morning. After 20 years with NextEra Energy, Eric Silagy has notified me of his intention to retire from FPL, where he has led the team for 11 years. Eric has been a passionate advocate for continuous improvement and under his leadership, FPL has been transformed into the Nation's largest and most reliable electric utility. Over the last decade, Eric has led the efforts to modernize FPL's generating fleet, making it one of the cleanest, lowest-cost and most fuel-efficient in the country. His commitment to putting customers first is demonstrated every day by FPL's award winning customer service, bills that are significantly lower than the national average and the best reliability in the country. Last year during hurricanes Ian and Nicole, I saw firsthand Eric's dedication and compassion for our customers as he steered the FPL team to quickly restore power and quickly get the State of Florida back on its feet. Over his 20 years of dedicated service to our company, Eric has also been a tremendous supporter of the communities where we do business. His advocacy across the State has helped to foster Florida's economic growth, strengthen our state university system and grow the next generation of Florida leaders, just to name a few of his many accomplishments. I want to thank Eric for his service and wish him and his family all the best on this next chapter in life. With Eric's departure we are excited to welcome Armando Pimentel back to NextEra Energy as FPL's President and CEO. As you know, Armando previously served as NextEra Energy's and FPL's CFO and the President and CEO of NextEra Energy Resources. As a lifelong Floridian, Armando is a proven leader that will be relentlessly focused on serving our customers. He is also a good friend and colleague who I've worked closely with for many years, and I am confident that under Armando's leadership, FPL will continue its long track record of delivering outstanding performance to our customers. Let me now turn the call over to Eric who will make some personal remarks.

Kirk Crews:

Thank you, Eric, and good morning everyone. Let's now turn to the detailed results, beginning with FPL. For the fourth quarter of 2022, FPL reported net income of $763 million, or $0.38 per share, up $0.07 per share year-over-year. For the full-year 2022, FPL reported net income of $3.7 billion, or $1.87 per share, an increase of $0.24 per share versus 2021. Regulatory capital employed increased by approximately 11.4% for 2022. We continue to expect FPL's average annual growth in regulatory capital employed to be roughly 9% over the four-year term of our current rate agreement. FPL's capital expenditures were approximately $3.1 billion in the fourth quarter, bringing its full-year capital investments to a total of roughly $9.2 billion. For the fourth quarter, FPL's net income was impacted by a number of factors, including favorable weather as well as an approximately $40 million pre-tax contribution to charitable foundations that will allow us to continue to support the communities that we serve. For the full-year 2022, FPL's year-over-year net income growth of nearly $500 million was aided by favorable weather, increased customer growth, and effective cost management that supported our ability to continue to deploy smart capital for the benefit of customers. FPL's reported ROE for regulatory purposes is expected to be 11.74% for the twelve months ended December 31, 2022. During the fourth quarter, we did not use any reserve amortization, leaving FPL with a year-end 2022 balance of $1.45 billion. Our overall capital program at FPL is progressing well. We continue to advance one of the nation's largest solar expansions and successfully met our solar deployment objectives at FPL in 2022. Beyond solar, construction on our green hydrogen pilot at the Okeechobee Clean Energy Center remains on schedule as it continues to advance towards its projected commercial operation date later this year. Earlier this week, FPL filed with the Florida Public Service Commission its proposed plan to recover approximately $2.1 billion of incremental fuel costs incurred in 2022. Under our proposed plan, FPL utilize its strong balance sheet to spread these unrecovered 2022 fuel costs over a 21-month period beginning in April 2023. Additionally, FPL's proposed plan would further benefit customers by offsetting the 2022 fuel cost recovery by approximately $1 billion this year based on the recent drop in projected natural gas prices compared to FPL's original 2023 projections made in the third quarter of 2022. We believe this proposal is a reflection of FPL's customer-centric strategy to navigate challenging environments for the benefit of customers. Separately, FPL is also seeking recovery of approximately $1.3 billion of storm costs incurred in 2022. Under FPL's proposal, the storm costs would be recovered over a 12-month period starting in April 2023 to reduce the potential customer bill impacts that could result from the simultaneous recovery of charges related to future storms. Taking both proposals together, we anticipate that FPL's typical 1,000 kilowatt hour residential customer bills as of April 2023 will remain well below the projected national average and the projected average for Florida investor-owned utilities. The Florida economy remains strong. Over the last 10 years, Florida's GDP has grown at a roughly 6% compound annual growth rate. The GDP of Florida is roughly $1.4 trillion, which is up approximately 10% from 2021. At the same time, Florida's population continues to grow at one of the fastest rates in the nation. Over the past year, Florida has created roughly 600,000 new private sector jobs, and Florida's labor force participation rate continues to improve at a faster rate than the rest of the country. Although we have seen the growth rate stabilize, three-month average Florida building permits, a leading indicator of residential new service accounts, have outpaced the nation's quarterly growth in new building permits by roughly 6%. Other measures of confidence in the Florida economy have meaningfully improved versus the prior-year, including an 11% improvement in Florida's retail sales index and a roughly 2% decline in mortgage delinquencies. During the quarter, FPL's average customer growth was strong, increasing by nearly 74,000 from the comparable prior-year quarter. FPL's fourth quarter retail sales were up 2.1% versus the prior-year period, primarily driven by a favorable weather comparison. For 2022, FPL's retail sales increased 1% from the prior-year on a weather-normalized basis, driven primarily by continued strong customer growth. Energy Resources reported fourth quarter 2022 GAAP net income of $996 million, or $0.50 per share. Adjusted earnings for the fourth quarter were $402 million, or $0.20 per share. For the full-year, Energy Resources reported GAAP earnings of $285 million, or $0.40 per share, and adjusted earnings of approximately $2.44 billion, or $1.23 per share. The effect of the mark-to-market on nonqualifying hedges, which is excluded from adjusted earnings, was the primary driver of the difference between Energy Resources full-year GAAP and adjusted earnings results. Energy Resources' full-year adjusted earnings per share contribution increased by $0.11 versus 2021. Contributions from new investments increased by $0.04 per share due to continued growth in our renewables and storage portfolio. As we previously highlighted, the Commerce Department's decision to investigate circumvention claims led to delays in the development of renewables, which effectively pushed out the completion of certain projects that we previously anticipated in 2022. As a result, contributions from new investments were negatively impacted in 2022. We anticipate that Energy Resources' adjusted earnings per share contributions from new investments will be much stronger in 2023, when we expect many of these delayed projects will be completed. Our customer supply and trading business increased results by $0.12 versus 2021, primarily due to higher margins in our customer-facing businesses and the absence of Winter Storm Uri impacts. Our existing clean energy assets also increased results by $0.02 per share year-over-year. All other net impacts decreased results by $0.07 year-over-year, driven primarily by higher debt balances reflecting growth in the business. Additional details of our full-year 2022 results at Energy Resources are shown on the accompanying slide. As John mentioned, Energy Resources delivered our best year ever for origination, signing approximately 8,030 megawatts of new renewables and battery storage projects. Since the last call, we have originated approximately 1,700 megawatts of renewables and storage projects, including approximately 300 megawatts of wind, 730 megawatts of solar and 670 megawatts of battery storage. Our origination performance in 2022 reflects continued high demand among all customer classes for clean energy solutions that not only help achieve their renewable energy goals but, perhaps more importantly, allow our customers to save on energy costs by switching to lower-cost forms of generation like wind, solar, and solar-plus-storage. Today, we are extending our renewables development expectations through 2026 as a result of our tremendous progress in 2022, strong continued origination success and the strong market demand for low-cost renewables driven in part by the IRA. Our revised expectations are by far the largest expected four-year development program in our history and reflect our high level of confidence in Energy Resources' ongoing leadership position and the continued acceleration of renewables penetration across the country. The accompanying slide provides additional details on our new expectations and where our development program at Energy Resources now stands. As you know, the industry has faced significant supply chain challenges and disruption over the past year and yet our integrated supply chain and engineering and construction teams demonstrated their resiliency by continuing to execute for our customers, and we have been working for over a year with our suppliers to manufacture wafers outside of China. We believe the Commerce Department's preliminary determination on circumvention of anti-dumping and countervailing duties late last year clarified that solar panels manufactured in Southeast Asia using wafers and cells produced outside of China are not circumventing anti-dumping and countervailing duty laws. We are confident that we can source panels consistent with these guidelines by the end of the two-year waiver period. Finally, we continue to advance discussions to support the domestic production of solar panels. Turning now to the consolidated results for NextEra Energy. For the fourth quarter of 2022, GAAP net income attributable to NextEra Energy was $1.52 billion, or $0.76 per share. NextEra Energy's 2022 fourth quarter adjusted earnings and adjusted EPS were approximately $1 billion, or $0.51 per share, respectively. For the full-year 2022, GAAP net income attributable to NextEra Energy was $4.15 billion, or $2.10 per share. Adjusted earnings were $5.74 billion or $2.90 per share. For the Corporate & Other segment, adjusted earnings for the full-year were roughly flat compared to the prior-year. As John mentioned, we invested more than $19 billion in our businesses in 2022, which we expect will again place NextEra Energy among the top capital investors in the U.S. across all sectors. Capital recycling remains an important part of our financing strategy and this year, we recycled more than $5 billion of capital through asset sales and tax equity financings. Additionally, as we have often highlighted, our underlying businesses generate significant cash flow and in 2022, our operating cash flow grew more than 9% year-over-year, despite FPL being under-recovered for fuel costs and incurring restoration costs for hurricanes Ian and Nicole. As a result of this strong cash generation, we proactively paid down nearly $3 billion in 2023 maturities. Finally, we ended the year with $15 billion of interest rate swaps to manage interest rate exposure on future debt issuances. As a reminder, the current interest rate environment is taken into account in our financial expectations. As John discussed, today we are reaffirming our adjusted earnings per share expectations for 2023 through 2025 and introducing expectations for 2026. Details of our new financial expectations are included in the accompanying slide. We will be disappointed if we are not able to deliver financial results at or near the top end of these ranges. From 2021 to 2026, we expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through at least 2024, off a 2022 base. As always, our expectations assume our usual caveats, including normal weather and operating conditions. Let me now turn to the detailed financial results for NextEra Energy Partners. Fourth quarter adjusted EBITDA was $360 million, up approximately 12% year-over-year. Adjusted EBITDA growth versus the prior-year comparable quarter was primarily due to new asset additions. Fourth quarter cash available for distribution was $74 million. As a reminder, NextEra Energy Partners' operating expenses and interest expense on project debt are typically higher in the fourth quarter versus the first three quarters of the year. For the full-year 2022, adjusted EBITDA was approximately $1.65 billion, up 21% year-over-year, and was primarily driven by the full contribution from new projects acquired in late 2021. Existing projects added approximately $13 million of adjusted EBITDA year-over-year, with the benefits of higher net generation for both wind and solar partially offset by relatively higher operating and maintenance costs versus 2021. NextEra Energy Partners' cash available for distribution was $634 million for the full-year. Relative to the growth in NextEra Energy Partners' full-year adjusted EBITDA, its cash available for distribution from existing projects was also impacted by relatively higher allocation of production tax credits to investors due to favorable wind resource versus 2021. Over the past five years, NextEra Energy Partners' cash available for distribution has grown at a compound annual growth rate of more than 20%. As a reminder, these results include the impact of IDR fees, which we treat as an operating expense. Additional details are shown on the accompanying slide. Yesterday, the NextEra Energy Partners Board declared a quarterly distribution of $0.8125 per common unit, or $3.25 per unit on an annualized basis, up approximately 15% year-over-year and at the top end of the range we discussed going into 2022. Inclusive of this increase, NextEra Energy Partners has grown its distribution per unit by more than 330% since the IPO. During 2022, NextEra Energy Partners executed several low-cost financings continuing its successful track record of accessing attractive sources of capital to support growth for unitholders. During the fourth quarter, NextEra Energy Partners entered into a new convertible equity portfolio financing for approximately $900 million with a low implied cash coupon of roughly 2.8% for up to 10 years, to be funded by the investor's share of ongoing portfolio cash flows. In December, NextEra Energy Partners raised approximately $500 million in new convertible notes with a 2.5% coupon, which along with the capped call entered into at the time of the financing provides unitholders with dilution protection for up to 50% accretion versus the NEP unit price at the time of issuance. The implied total cost of the convertible notes represents the most favorable spread to an alternative debt issuance in our history. These transactions executed during the fourth quarter were a continuation of NextEra Energy Partners' successful financing execution throughout 2022. In May 2022, NextEra Energy Partners increased the size of its revolving credit facility to approximately $2.5 billion, nearly all of which is currently available. With this available revolving credit capacity and the final funding of approximately $180 million expected from the 2022 convertible equity portfolio financing, NextEra Energy Partners enters 2023 with significant financing capacity to fund future growth. Additionally, NextEra Energy Partners still has $6 billion of Forward Starting Interest Rate Swaps, which is more than enough to cover its corporate maturities through 2027 and will help mitigate the impact of higher interest rates on future debt issuances, whether for maturities or net new issuances. Taken together, we believe that NextEra Energy Partners is extremely well positioned with significant interest rate protection and ample liquidity to finance future growth and to capture a meaningful share of the long-term opportunity set which has expanded as a result of the IRA. This significant opportunity set and NextEra Energy Partners' meaningful financing flexibility provides us with confidence in our ability to continue to deliver long-term value for unitholders over the coming years. From an updated base of our fourth quarter 2022 distribution per common unit at an annualized rate of $3.25, we now see 12% to 15% growth per year in LP distributions as being a reasonable range of expectations through at least 2026, which is an additional year beyond our prior expectations, driven by the partnership's tremendous long-term growth visibility. We expect the annualized rate of the fourth quarter 2023 distribution that is payable in February 2024 to be in a range of $3.64 to $3.74 per common unit. NextEra Energy Partners' run rate expectations for adjusted EBITDA and cash available for distribution at December 31, 2023 remain unchanged. Year-end 2023 run-rate adjusted EBITDA expectations are $2.22 billion to $2.42 billion and cash available for distribution of $770 million to $860 million, respectively, reflecting calendar year 2024 contributions expected from the forecasted portfolio at year-end 2023. As a reminder, all our expectations are subject to our normal caveats and include the impact of anticipated IDR fees, as we treat these as operating expense. In summary, we continue to believe that both NextEra Energy and NextEra Energy Partners have excellent prospects for growth both in the near-term and long-term. Near-term, the progress we made in 2022 reinforces our growth outlook and sets the foundation for continuing to deliver on our financial expectations. Long-term, we believe that the low cost of renewables combined with other clean energy solutions enabled in part by the IRA provides us with unprecedented visibility to extend our track record of delivering long-term growth for our shareholders and unitholders, and we could not be more excited about our future. That concludes our prepared remarks and with that we will open the line for questions.

Steve Fleishman:

Yes, hi. Good morning. So just a couple questions on the management changes. So you don't appear to be making any connection between the investigation in Eric's retirement. Could you just confirm if that's correct or not? And then I guess secondly, just thoughts on -- often with these successions you'd bring somebody kind of internally up. So maybe thoughts on bringing Armando back who we know well, but just as opposed to the kind of bringing someone internally up? Thanks.

Steve Fleishman:

Yes, definitely. Thanks.

Eric Silagy:

Steve, let me jump in here a little bit. Look…

Eric Silagy:

Because I'm sure you can appreciate these kind of decisions are never easy, and there's no ever perfect time. As John said with a transition of leadership last year, I gave John a commitment that I'd be here for at least a year. Didn't have any real hard timeline set, but I've been in the Chair for 11 years. This will be going into my 12th year. And my predecessor had been in the job for 10 years. Jim had been in his job for 10 years, before that Lew Hay had been in his job for 10 years. And as I look forward to, this is the kind of job that you have to plan ahead and we're getting ready to go in another rate case cycle. I mean, that's a multi-year type of approach. And so to go forward longer means I'm really committing through 2026. So a lot of factors come into play. John touched on all of the challenges in 2022. I'm really, really proud of how the team handled them. But it's a 24-hour day job. And there are a lot of challenges that we successfully managed, but it's a decision that is not easy, but I feel good about moving forward and putting -- doing it when the company is in its strongest financial and operational position it's ever been in. With a very strong leadership team, I think that's the right time to do it.

Rebecca Kujawa:

Good morning, Steve. It's Rebecca and I'll chime in on that. It is exactly what John and Kirk highlighted and what we've been talking about for the last couple of months following IRA. With IRA provisions, we now have extensions of incentives now through the end of the decades well decade plus, but just looking into visibility, it's exceptional now through the end of the decade and likely well beyond that. And it is a big change specifically for wind in this timeframe adding the 100% production tax credit now, obviously through this expectation, windows through it fully. And it's also supported by the backdrop of what I also have highlighted to you all. And John talked about in his remarks about all of the positive follow on effects from strong incentives on renewables and through the introduction of a hydrogen production tax credit. We're starting to see substantial demand and positive engagement around renewables to create green hydrogen and hydrogen related products thereafter. So our development team is busy having the types of conversations we've never had before, and we can't be more excited about what's ahead. And that's for wind solar storage and the hydrogen products that we're talking about.

Rebecca Kujawa:

Thanks, Steve.

Julien Dumoulin-Smith:

Hey, good morning team, and congrats, Eric on your stellar career. Armando, welcome back. Feels a little bit like when Maury came back in 2009 here, I must admit. Maybe just related to some of the changes here, just to follow-up on that super quick. First off is Armando committing to the full process here, as you alluded to the rate case cycle being a little bit protracted. And then related to that what is the final timing in terms of this internal process that you guys had underway per the 8-K and is that impacted at all by this pending FEC process that you allude to taking upwards of the balance of the year here?

Julien Dumoulin-Smith:

Got it. And then just super quickly, if I can, just with respect to the originations here, the 1.7 since the third quarter call, this seems a little bit down from the last quarterly call update in the slides. Can you comment a little bit about the trends? Obviously, I'm cognizant of the comments you made about the overall expectations through '26. How do you think about that materializing the pace and just what customer feedback is in putting in orders, "now versus in subsequent period"?

Julien Dumoulin-Smith:

Yes, absolutely. Thank you guys.

Constantine Lednev:

Good morning, team. It's actually Constantine here for Shar and congrats on a great quarter, and just wanted to wish Eric the best in the next steps. Certainly, appreciate that.

Constantine Lednev:

Maybe as a quick follow-up to Julien's question, and maybe just on the -- and you've noted prior impacts of the IRA having some pull and push on the demand for renewables, and maybe just specifically on the details of the cadence of the growth to reach those '26 targets front end loaded, backend loaded, anything there?

Constantine Lednev:

Excellent. And on a related note on the kind of upside from repowering opportunities, do you have any thoughts on kind of solar and storage type of repowering? I know that wind is starting to make it into the plan. Just curious on the other side.

Constantine Lednev:

Excellent, thanks so much. Yes, we're running a little bit late, so I'll jump back in the queue.

Operator:

Sorry, the next question comes from David Arcaro from Morgan Stanley. Please go ahead.

Kirk Crews:

Sure. Hi, Dave. This is Kirk, I'll take that. So the last time we spoke, I believe was on the third quarter earnings call. And we shared with you that as our integrated supply chain team had worked and certainly had a challenging year in 2022, but as we highlighted on the earnings call today despite that challenging year, they did a really admirable job. We were able to still put into service 5,000 megawatts. And I think that really speaks to their ability to navigate that disruption. And certainly part of that disruption was you highlighted, which was that the challenges around the ports and trying to work through the panels that had been detained and at the ports. And as I mentioned, the challenges around -- in the third quarter that we highlighted with some of the panels being detained there, what we've seen since the third quarter call is some positive improvement. We've seen some of the panels that had previously been detained, released. And so I would describe it as positive movement. We continue to see each day some positive movement. So we're continuing to monitoring it. We're watching it closely. The team is actively working with our suppliers and continuing to monitor it. But compared to where we were in the third quarter I think we're cautiously optimistic that we are seeing progress and at least from our perspective, we continue to feel like it's something that we can manage in terms of continuing to deliver for our customers.

Rebecca Kujawa:

It's certainly something, it's Rebecca. It's obviously something that we considered when we are setting the development expectations and what we laid out today for you all. I can tell you from a practical standpoint, it very much is starting to show up in the conversations that we're looking at including the 800 megawatt term sheet that we signed in recent weeks for a project that would be expected to COD in 2026. At this point, I think there are a number of folks and ourselves included working hard to put the right development opportunities together. But it is a very active market. We're really excited about opportunities to partner with key folks, Linde among them, as we talked about in the call, but others as well to put forward terrific projects and really bring forward the promise of this technology that we've now been talking about. But it's really coming to reality. I think '26 is probably on the earlier side of what we ultimately will see as a significant ramp-up going into the end of the decade where there's more opportunity to have supply ramp-up for electrolyzers as well as other related equipment for some of those green hydrogen related products as well as working through the development opportunities and establishing the ultimate customers for these products. But everything I see is really exciting and really starting to take shape just now a number of months after the IRA provisions were ultimately passed into law.

Operator:

This concludes our question-and-answer session. And the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator:

Good day and welcome to the NextEra Energy and NextEra Energy Partners Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Jessica Geoffroy, Director of Investor Relations. Please go ahead.

Kirk Crews :

Thank you, Jessica, and good morning, everyone. Before I begin today's discussion of our third quarter results, I would like to extend our deepest sympathies to all those who have been affected by the widespread destruction caused by hurricanes Fiona and Ian over the last month. Hurricane Ian was the fifth strongest hurricane to ever make landfall in the Continental U.S. The powerful and destructive storm hit Southwest Florida as a high-end Category 4 hurricane with sustained winds of approximately 150 miles per hour, devastating storm surges and numerous tornadoes, tragically resulting in the loss of lives and causing more than 2.1 million FPL customers to lose power. In preparation for the hurricane, FPL assembled a restoration workforce of approximately 20,000 workers. This preparation and coordinated response, combined with FPL's valuable hardening and smart grid investments, enabled the company to restore service to roughly 2/3 of affected customers after the first full day of restoration following Hurricane Ian's landfall. This represents the fastest restoration rate in our history for a major hurricane. Our dedicated and resourceful workforce was able to restore essentially all FPL customers who are able to safely accept power within eight days. I would like to thank all of our employees who made personal sacrifices leaving their own homes to serve our customers, our communities and our state. It was because of their training, their preparation their dedication and their commitment that we were able to restore power to our customers so quickly. I would also like to thank other members of the restoration team, including the contractors, vendors and first responders that supported our efforts, for their dedicated assistance during this critical time. Finally, we are deeply grateful for the assistance provided by our industry partners who came from 30 different states to help support our customers. Mutual aid in times of disaster is one of the hallmarks of our industry, and this storm was no exception. For nearly two decades, FPL has invested significantly in building a stronger, smarter and more storm-resilient grid. While no energy grid is hurricane-proof, the performance of our system demonstrates that FPL's hardening and undergrounding investments are providing significant benefits to our customers. Despite sustained winds of approximately 150 miles per hour, FPL did not lose a single transmission pole or tower during Hurricane Ian. Additionally, initial performance data show that FPL's undergrounding distribution power lines performed 5x better in terms of outage rates than existing overhead distribution power lines in Southwest Florida. On a related note, we were pleased that the Florida Public Service Commission substantially approved our 2023 Storm Protection Plan earlier this month, which we expect will lead to an even stronger and more resilient grid for the benefit of our customers. Finally, we are proud to report that our generation fleet, including our solar sites, sustained almost no structural damage. Despite 38 of FPL's 50 existing solar sites or approximately 12 million panels being exposed to storm conditions, less than 0.3% of our solar panels were affected, and those impacted were mostly at our older fixed racking sites. Our battery storage sites, including one of the world's largest solar power batteries at our Manatee Solar Energy Center, remained available throughout the storm. We believe these investments, together with our preparation and coordinated response, have improved FPL's overall reliability and resiliency, providing significant value to our customers. Although FPL has not completed the final accounting, our preliminary estimate of Hurricane Ian restoration costs that we plan to recover from customers through a surcharge is approximately $1.1 billion, of which approximately $220 million will be utilized to replenish the storm reserve, subject to a review and prudence determination of our final storm cost by the Florida Public Service Commission. Under its current settlement agreement, FPL is allowed to collect an equivalent of $4 for every 1,000 kilowatt hours of usage on residential bills but can request an increase to the $4 equivalent surcharge given the cost exceeded $800 million. We anticipate discussing the surcharge amount and timing with the Florida Public Service Commission in the coming months. Let me briefly comment on the Inflation Reduction Act, or IRA, and what it means for our customers, for our company and for our industry. At our investor conference in June, we announced our vision to lead the decarbonization of the U.S. economy, and we announced our industry-leading goal to deliver Real Zero emissions by no later than 2045. We discussed our strategy to get there and how every part of our strategy is focused on saving customers' money on their energy bills. We also said in June that achieving our goals would require constructive governmental policies and incentives. The IRA gives us those policies and incentives at the federal level. It also gives us visibility into what those policies and incentives will look like for what we believe will be more than two decades. We believe that the IRA will not only help reduce carbon emissions, strengthen energy independent and security, and create jobs in our industry and in our domestic supply chain, but also and most importantly will reduce the cost of energy for everyone. We can already see some of the positive impacts of the IRA on customer bills at FPL. Last month, we filed with the Florida Public Service Commission our estimate that the solar production tax credits in the IRA are expected to save customers nearly $400 million over the course of our current rate agreement. Those savings start with a onetime $25 million refund through the capacity cost recovery clause in January 2023 to reflect the solar PTCs on our completed 2022 rate-based solar projects, subject to a review by the commission, which we expect later this year. Looking forward for our FPL customers, we believe that the IRA makes every solar project, every battery storage project, every renewable gas project and every green hydrogen project more cost-effective. And these solar battery storage, renewable gas and green hydrogen projects are designed to reduce the impact that fuel volatility can have on customer bills. We believe the IRA will help make Florida an even better place to raise a family or build a business as we work toward our goal of delivering 100% carbon emissions free energy affordable and reliably. We believe the IRA will also make clean energy cheaper for our customers at Energy Resources. We have never been more excited about our opportunity to partner with customers to decarbonize the power sector as well as broader parts of the U.S. economy. The IRA provides decades of visibility to low-cost renewables, and that visibility has already encouraged our power sector customers and customers outside the power sector to think big about how they can realize the value of renewables to reduce cost and emissions. As a world leader in renewables with deep energy market expertise, we were having conversations with customers about large-scale opportunities unlike anything we have seen in the past. And while some will take time to develop, we cannot be more excited about the future. Turning now to our financial performance. NextEra Energy delivered strong third quarter results, with adjusted earnings per share increasing by approximately 13% year-over-year. FPL increased earnings per share by $0.07 year-over-year, growing regulatory capital employed by approximately 11% over the prior year period. We have highlighted in the past our smart capital investments in fuel efficiency, combined with our best-in-class O&M performance and productivity initiatives, provide significant benefits to customers and have allowed us to continue to deliver residential bills well below the national average and the lowest among all of the Florida investor-owned utilities. At Energy Resources, adjusted earnings per share increased by $0.06 year-over-year. We continue to capitalize on a terrific environment for renewables development, originating approximately 2,345 megawatts of new renewables and storage since the last call. With economics as a significant driver, Energy Resources continues to capitalize on strong renewables demand from both power and non-power sector customers, particularly in light of high power prices and high natural gas prices. Overall, we are well positioned to achieve our long-term financial expectations, subject to our usual caveats. For the third quarter of 2022, FPL reported net income of nearly $1.1 billion or $0.54 per share, which is an increase of $147 million and $0.07 per share, respectively, year-over-year. Regulatory capital employed increased by approximately 11% over the same quarter last year and was the principal driver of FPL's earnings per share growth of approximately 15%. FPL's capital expenditures were approximately $2 billion in the third quarter, and we continue to expect our full year capital investments to total roughly $8.5 billion. FPL's reported ROE for regulatory purposes is expected to be approximately 11.8% for the 12 months ended September 2022. Largely as a result of warm weather, we have fully restored our surplus depreciation reserve, leaving FPL with a balance of approximately $1.5 billion to use over the term of the current settlement agreement. As a reminder, our 2021 settlement agreement provided a mechanism whereby a sustained increase in 30-year Treasury Bond yields would trigger an increase in FPL's authorized ROE range. Accordingly, the Florida Public Service Commission approved an increase in FPL's authorized midpoint ROE from 10.6% to 10.8% with an allowed range of 9.8% to 11.8%, which became effective on September 1, 2022. Importantly, FPL will not increase base rates as a result of triggering the increased authorized ROE. For the full year 2022, FPL continues to target an 11.6% ROE but is allowed to earn at the high end of the revised range, which may occur based on, among other things, warmer-than-expected weather. The Florida economy continues to be healthy. Florida's unemployment rate of approximately 2.7% remains below the national average and at its lowest level in more than 15 years. Florida's labor force participation rate remains strong. In spite of significant inflationary pressures across many parts of the U.S., customer sentiment and Florida ticked up slightly in the third quarter. However, the August reading of the three-month average of new building permits in Florida declined year-over-year, which is not a surprise given the significant growth we have observed since the pandemic and the recent increase in mortgage rates. We continue to believe that Florida offers a unique value proposition and will continue to show strong population growth over the coming decades. FPL's average number of customers increased by nearly 83,000 or 1.5% versus the comparable prior year quarter driven by continued strong underlying population growth. FPL's third quarter retail sales increased 3.8% from the prior year comparable period. For the third quarter, we estimate that warmer weather had a positive year-over-year impact on usage per customer of approximately 2.9% and that Hurricane Ian had a negative impact of approximately 0.4%. After taking these factors into account, third quarter retail sales increased 1.3% on a weather-normalized basis, with a strong continued customer growth contributing favorably. Energy Resources reported third quarter 2022 GAAP earnings of $655 million or $0.33 per share. Adjusted earnings for the third quarter were adjusted earnings per share of more than 19% year-over-year. Contributions from new investments increased $0.02 per share versus the prior year, primarily reflecting continued growth in our renewable portfolio. Our existing generation and storage assets decreased results by $0.02 per share, primarily due to unfavorable wind resource during the third quarter, which was the third lowest wind resource quarter on record over the past 30 years. Our customer supply and trading business contributed $0.06 year-over-year primarily due to higher margins in our customer-facing businesses. All other net impacts were roughly flat year-over-year. Additional details of our third quarter results are shown on the accompanying slide. As I mentioned earlier, Energy Resources had another terrific quarter of origination, signing approximately 2,345 gigawatts of new renewables and storage projects since our last earnings call. Specifically, we originated approximately 1,215 megawatts of wind, 965 megawatts of solar and 165 megawatts of battery storage projects. Included in these solar additions is approximately 270 megawatts of post-2025 delivery. With these new additions, net of approximately 1.3 gigawatts of projects placed in service and roughly 680 megawatts of projects removed from our backlog, our renewables and storage backlog now stands at roughly 20,000 megawatts and provides strong visibility into the significant growth that is expected at Energy Resources over the next few years. Our development expectations through 2025 are unchanged from what we disclosed at our investor conference in June and reflect a planned renewables and storage build that is, at the midpoint, more than 20% larger than the entire renewables operating portfolio at Energy Resources today. The accompanying slide provides additional details on where our development program at Energy Resources now stands. As previously discussed, we believe Energy Resources is better positioned than anyone in our sector to benefit from the provisions of the IRA, particularly after 2025 when incentives were previously expected to expire or step down. With what we believe is over two decades of visibility for wind, solar and storage credits, the long-term growth opportunity set is expansive and exciting. Energy Resources is uniquely positioned to capitalize on battery storage colocation opportunities with wind and now has repowering opportunities across this existing renewables footprint. New markets and new investment opportunities are being created for renewables and renewable fuels that require wind and solar as their source. Transmission will be needed to support this significant renewables buildout. And all these opportunities support our vision of leading decarbonization of the U.S. economy. A key component of our vision is helping commercial and industrial customers meet their sustainability goals by providing them with comprehensive clean energy solutions, including providing renewable fuel alternatives such as hydrogen and renewable natural gas. To that end, today, we are excited to announce we reached an agreement to acquire a large portfolio of operating landfill gas to electric facilities, which will become a core part of our renewable fuels and potentially hydrogen strategies. This transaction represents an attractive opportunity for Energy Resources to expand its portfolio of renewable natural gas assets and grow its in-house capabilities in this rapidly expanding market. Energy Resources intends to purchase the portfolio for a total consideration of approximately $1.1 billion, subject to closing adjustments, plus the assumption of approximately $37 million in existing project finance debt estimated at the time of closing. Subject to regulatory approvals, the acquisition is expected to close in early 2023. In the coming years, we expect to invest roughly $400 million net of the investment tax credit benefit of additional capital into the portfolio of projects, primarily to enable production of renewable natural gas. In our base case, we expect that the acquired portfolio delivered more than $220 million of adjusted EBITDA at Energy Resources by 2025, which is included in our financial expectations. Moreover, the acquisition is expected to deliver double-digit returns. We are particularly excited about additional upside opportunities the portfolio may enable that are not included in our base case and look forward to potentially deploying additional capital and new ventures that may qualify for new federal incentives. Turning now to the consolidated results for NextEra Energy. For the third quarter of 2022, GAAP net income attributable to NextEra Energy was roughly $1.7 billion or $0.86 per share. NextEra Energy's 2022 third quarter adjusted earnings and adjusted EPS were approximately $1.683 billion and $0.85 per share, respectively. Adjusted results for the Corporate and Other segment decreased by $0.03 year-over-year. A hallmark of our business is our financial discipline and forward planning as we grow the business, including the consideration of a range of scenarios to manage interest rate risk. In recent years, we've proactively engaged in liability management initiatives, which we expect to yield significant interest cost savings through 2025. Additionally, we have $15 billion of interest rate swaps to manage interest rate exposure on future debt issuances. With the swaps in place, we're in good shape to manage 2023 and 2024 maturities and new debt issuances despite the current interest rate environment. Finally, the recent increase in interest rates is taken into account in our financial expectations. Our long-term financial expectations through 2025 remain unchanged. For 2022, NextEra Energy expects adjusted earnings per share to be in a range of $2.80 to $2.90. For 2023 and 2024, NextEra Energy expects adjusted earnings per share to be in the ranges of $2.98 to $3.13 and $3.23 to $3.43, respectively. For 2025, we expect to grow 6% to 8% off the 2024 adjusted earnings per share range, which translates to a range of $3.45 to $3.70. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges for 2022 through 2025, while at the same time, maintaining our strong balance sheet and credit ratings. Inclusive of the increases in our expectations in both January and June of this year, NextEra Energy's adjusted earnings per share expectations reflect a roughly 10% compound annual growth rate from 2021 to the high end of our range for 2025. In addition, for 2021 to 2025, we continue to expect our average annual growth and operating cash flow will be at or above our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at a roughly 10% rate per year through at least 2024 off a 2022 base. As always, our expectations assume normal weather and operating conditions. Now let's turn to NextEra Energy Partners, which delivered strong financial performance for the quarter. Third quarter adjusted EBITDA and cash available for distribution were up approximately 13% and 17%, respectively, against the prior year comparable quarter. Last week, the NextEra Energy Partners Board declared a quarterly distribution of 78.75 cents per common unit or $3.15 per common unit on an annualized basis, up approximately 15% from a year earlier. Inclusive of this increase, NextEra Energy Partners has now grown its distribution per unit by approximately 320% since the IPO. NextEra Energy Partners continued to execute against its growth initiatives during the quarter. Since the last earnings call, NextEra Energy Partners completed its previously announced acquisition of an approximately 67% interest in a 230-megawatt 4-hour battery storage facility in California from Energy Resources. This acquisition further diversifies NextEra Energy Partners portfolio into battery storage. During the quarter, NextEra Energy Partners issued approximately $145 million in new equity through its at-the-market program and used these proceeds, along with cash on hand, to fund this acquisition. Consistent with our long-term growth prospects, today, we are also introducing year-end 2023 run rate expectations, which are built upon NextEra Energy Partners' strong existing portfolio and cash flow generation potential and continued ability to access low-cost capital to acquire accretive renewable energy projects. At the midpoints, NextEra Energy Partners' new year-end 2023 run rate expectation ranges reflect estimated growth in adjusted EBITDA and cash available for distribution of roughly 23% and 12%, respectively, from the comparable year-end 2022 run rate expectations. Overall, we are pleased with the year-to-date execution at NextEra Energy Partners and believe we are well positioned to continue delivering LP unitholder value going forward. Turning to the detailed results. NextEra Energy Partners' third quarter adjusted EBITDA was $377 million, and cash available for distribution was $185 million. New projects, which primarily reflect contributions from approximately 2,400 net megawatts of new long-term contracted renewable projects acquired in 2021, contributed approximately $66 million of adjusted EBITDA and $23 million of cash available for distribution. The third quarter adjusted EBITDA contribution from existing projects declined by approximately $18 million year-over-year driven primarily by unfavorable renewable resource. Wind resource for the third quarter of 2022 was approximately 95% of the long-term average versus 101% in the third quarter of 2021. Third quarter cash available for distribution benefited from higher year-over-year PAYGO payments from both new and existing projects after a relatively strong wind resource period in the first half of this year. Additional details of our third quarter results are shown on the accompanying slides. From a base of our fourth quarter 2021 distribution per common unit at an annualized rate of $2.83, we continue to see 12% to 15% growth per year in LP distributions per unit as being a reasonable range of expectations through at least 2025. We expect the annualized rate of the fourth quarter 2022 distribution that is payable in February of 2023 to be in the range of $3.17 to $3.25 per common unit. Additional details of our long-term distribution per unit expectations are shown on the accompanying slide. NextEra Energy Partners continues to expect year-end 2022 run rate adjusted EBITDA and cash available for distribution in the ranges of $1.785 billion to $1.985 billion and $685 million to $775 million, respectively, reflecting calendar year 2023 contributions from the forecasted portfolio at the end of 2022. At year-end 2023, we expect the run rate for adjusted EBITDA to be in the range of $2.22 billion to $2.42 billion and run rate for cash available for distribution to be in the range of $770 million to $860 million. These expectations highlight our continued confidence in NextEra Energy Partners' ability to deliver on its long-term distribution per common unit growth expectations. As a reminder, all of our expectations are subject to our normal caveats and include the impact of anticipated IDR fees as we treat these as an operating expense. NextEra Energy Partners is well positioned to manage financing costs in the current interest rate environment. Approximately 98% of NextEra Energy Partners' long-term debt, including current maturities, is not exposed to fluctuations in interest rate as it is either fixed rate debt or financially hedged. Moreover, NextEra Energy Partners has $6 billion of forward starting interest rate swaps, which will help mitigate the impact of higher interest rates on future debt issuances, whether for growth or maturities. NextEra Energy Partners also has no significant debt maturities in '23, and debt maturities over the next five years are manageable in -- with the forward starting swaps. Finally, I'd like to close with a few words about how we expect the IRA may benefit NextEra Energy Partners and its LP unitholders. In response to the extension and expansion of clean energy tax credits, we anticipate an acceleration of renewables and storage deployment in the U.S. over the next few decades. In turn, we expect that NextEra Energy Partners will continue to have ample opportunities to acquire assets from both Energy Resources and from third parties. Additionally, we believe that the long-term organic growth potential for NextEra Energy Partners has increased, with potential new opportunities to repower its roughly 8 gigawatt existing wind and solar assets and to pair battery storage with this nearly 7 gigawatt existing wind portfolio. Considering the potential impacts of the IRA, our expectation regarding the overall tax position for NextEra Energy Partners remains largely unchanged, including that it is not expected to pay any meaningful taxes for at least the next 15 years. Combined with its current yield and the expectation of 12% to 15% annual distributions per unit growth through at least 2025, NextEra Energy Partners has the potential to deliver a total after-tax return of approximately 20% annually through this time frame. With the ongoing strength of the renewables development environment and all of the market tailwinds provided by the IR, we believe that NextEra Energy Partners remains well positioned to continue delivering on its unitholder value proposition. In summary, we continue to believe that both NextEra Energy and NextEra Energy Partners have some of the best execution track records in the industry, and we are extremely excited about the long-term growth prospects for both businesses and the value we can continue to create for both customers and shareholders. That concludes our prepared remarks. And with that, we will open the line for questions.

Steven Fleishman :

So just first on the -- last quarter, you had mentioned the 2 gigawatts of potential backlog that could be at risk due to circumvention and the like. And I don't see any updated footnotes on that. So I don't know if that's resolved or -- could you give us an update on those 2 gigawatts?

Steven Fleishman :

Okay. That's good. And I guess just specific to supply chain, any updated things that you're seeing related to UFLPA impacts?

Steven Fleishman :

Okay. Great. One last question, just, I guess, on the internal investigation related to the Florida political noise. Is there any update on timing or -- and/or outcome of that?

Operator:

Our next question will come from Julien Dumoulin-Smith with Bank of America.

John Ketchum :

Yes. Let me go ahead and take that, Julien. This is John. As you said, look, IRA provides a tremendous opportunity set for us across the board. Obviously, we've had some contracts that were already in place that assumed ITC on solar and obviously benefit from the production tax credit. So there's benefits certainly in the existing portfolio. I think we're also going to see some improvement going forward. As I said, I think recently at a conference in our 70-30 in the way things are treated on the unregulated business mix standpoint because, remember, those new PTCs that we get actually helped to buy down the contribution from the unregulated side of the business. So that's a big benefit for us as well going forward. We have transferability options now built into IRA that should help the cash flow from operations as well as we go -- as we think about the future of the business. I mean, obviously, it creates a lot of immediately in the money opportunities for us going forward, both on wind, on solar and on battery storage. Nobody has the existing footprint that we have. And so having not only a 20-gigawatt backlog, but you combine that with 25 gigawatts of operating renewables, and you just think about the potential opportunity of 45 gigawatts around repowerings and with regard to colocated storage because, as we all know, under the old regime, the only way you could really introduce storage into the puzzle was by combining it with solar. Nobody has the wind footprint that we do. And so now we have the opportunity to put -- colocate storage in all of our wind sites, not only that we own today, but that we might build going forward. The same goes with solar. And then obviously, there's an opportunity now to go ahead and build storage stand-alone. And so that is terrific, not only for Energy Resources, but obviously provides a great opportunity set for NEP going forward as well. In terms of timing, which I think was the other part of your question, I think we've been very open that we plan to provide a further update on the next call in January on the Q4 call.

John Ketchum :

Yes, Julien, we'll do the best we can. Remember, too, that there are some regulations we're working on with the Treasury Department as well. So some of that update around repower and colocated storage might be tied to finalization of those, but we'll certainly try to give a view.

Shahriar Pourreza :

Just a real quick follow-up on Julien's question. Just -- maybe just fine-tuning it a little bit, as we're kind of looking at just the near-term earnings guidance that you guys have out there, how do we sort of think about the IRA impact as we're thinking about the existing PPAs, right, which predominantly don't have any reopeners, and then you couple that with sort of some of the counteracting items like higher interest rate environment, do these two sort of items, are they offsetting? Are they accretive? I guess how do we think about those two items in the context of what you guys have just reiterated this morning?

Shahriar Pourreza :

Got it. Okay. That's helpful. And then just on -- FPL, obviously, you had a 10-year site plan adjusted for inclusion of tax legislation. I think IRA came out even better than prior proposals. So does that prompt an update for a preferred solution at FP&L, maybe going from 10 to 20 gigs? What would be the cadence for an update or to pivot resource strategy there?

Shahriar Pourreza :

Got it. Terrific. And then just one last quick one. Just curious on the move in the RNG side. Your '25 EBITDA guidance for the acquisition is based on existing operating assets or does that include a backlog of RNG development that would require additional funding?

Operator:

Our next question will come from David Arcaro with Morgan Stanley.

John Ketchum :

I will go ahead and take that. David, this is John. We have so many terrific organic opportunities, growth opportunities in front of us. M&A is not an area of focus.

John Ketchum:

I will go ahead and take as well. So FEMA did come forward with some recent proposals. Those have not been put to a final vote yet. I think the best example as to why none of those changes are required is what we just saw with Hurricane Ian. And so when you -- Kirk had some of those remarks in the script, but I think it's worth noting, and obviously, we put this information back in front of FEMA that none of this is necessary. Because if you evaluate what happened in Hurricane Ian, which was the fifth worst most catastrophic storm to ever hit the Continental United States, it passed over 38 to 50 of our solar sites with maximum sustained winds of 150 miles per hour. We had essentially no impact to our solar generating facilities. About 0.3% of the panels were impacted. And you got to remember, that slight number of impacts that even occurred were on the older sites that have the fixed tracker technology. Now if the new tracker technology, we can move it east to west, we can pivot it to the 35 degrees. The wind cuts right through it. We saw essentially no damage at those sites. The solar held up extremely well. And in some cases, I think probably better than even a gas plant, which are really rated up to only 100 miles an hour. So really happy with the way it all performed. We think the FEMA changes are completely unnecessary, and we are working through that with them with terrific evidence from how our own fleet just performed a couple of weeks ago as a no better case in point.

Operator:

Our next question will come from Michael Lapides with Goldman Sachs.

Eric Silagy :

Michael, it's Eric. So look, we have a robust capital plan that continues. We've talked about it before from a standpoint of our storm hardening that program. Obviously, you could see the impacts with Ian and how beautifully it really made a difference. We're going to continue with our storm hardening program, our undergrounding program, our solar build-out. We have great visibility into our capital deployed right through the rate case settlement period and what we have filed through our 10-year site plan.

Eric Silagy :

It's basically where it is at the '22 levels. It varies a little bit but is exactly what we put forward for the plan here for the last two years that we've had going forward.

Michael Lapides:

Yes. The only reason I ask -- and thank you for that -- is given the fact you've got the full surplus amortization back on board right now, you could actually invest more to improve reliability, and obviously, green the system even more without necessarily having to, A, hurt earnings; and B, increase customer rates for the next couple of years.

Michael Lapides :

Got it. And then one for Rebecca. Just curious, what are you seeing in terms of just -- just given what's happening inflation-wise around the world, especially commodity and labor, what the cost to install new wind and solar has -- kind of how much that has changed before we kind of bake in the higher tax credit levels?

Operator:

Our next question will come from Jeremy Tonet with JPMorgan.

Rebecca Kujawa :

And thanks for the question. We're very excited about the potential for RNG, in particular, as part of the broad set of solutions we want to offer our customers. So I would say this is just a large step forward in something we've already been working on with smaller investments and some other co-investments with other folks. And we're excited about not only adding these portfolio of projects and the value that this creates for our shareholders, but also using it as a platform for future growth. As part of this acquisition, building a services company along with it. That's part of what the existing portfolio provides, and we're excited about incorporating those capabilities into our team. And we are excited about both landfill gas and alternative forms of renewable natural gas, including [dairy] long term. So we'll do it both through organic as well as through acquisitions. So -- and all of the above. We're excited about the size of the acquisition space. But before I get too excited, we also need to keep in mind that as the $85 billion to $95 billion of capital we want to invest over the period we laid out at the investor conference, this is approximately $1 billion and change. So a great addition to our portfolio, but still in context, a measured step in the overall portfolio.

Rebecca Kujawa :

I'm thrilled with the prospects of hydrogen going forward and not just literally hydrogen itself, but the renewable fuels that, that creates is potential solutions for our customers, whether that's synthetic natural gas as a potential solutions for customers who are looking for 7/24 fully decarbonized power, but also through synthetic jet fuels, synthetic ammonia products, other things that will help bring out of people's supply chain, manufacturing processes, et cetera, their carbon-intensive fuels that they use today. Some of those are not going to be economic literally today, but there's a clear pathway to them being economic in a couple of years, but some of them with the benefit of the IRA incentives are economic today. And at the heart of them, what the opportunity is for us is to deploy a substantial amount of renewable energy in the form of wind, solar, battery storage, the core things that we have been very successful doing for years now, if not decades, and we're continuing to invest heavily to maintain those competitive advantages going forward.

Operator:

Good morning and welcome to the NextEra Energy and NextEra Energy Partners Q2 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. Please note that today's event is being recorded. At this time, I'd like to turn the conference call over to Jessica Geoffroy, Director of Investor Relations. Ma'am, please go ahead.

Kirk Crews:

Thank you, Jessica, and good morning, everyone. NextEra Energy delivered strong second quarter results and is well-positioned to meet its overall objectives for the year. Adjusted earnings per share increased approximately 14% year-over-year, reflecting continued strong financial and operational performance at both FPL and Energy Resources. FPL increased earnings per share by $0.05 year-over-year. Average regulatory capital employed increased by more than 11% versus the same quarter last year. With residential bills well below the national average and the lowest among all of the Florida investor-owned utilities, FPL's focus continues to be on identifying smart capital investments such as our planned solar expansion and T&D hardening and undergrounding projects to lower costs, improve reliability and provide clean energy for the benefit of our customers. Having saved customers more than $12 billion in fuel costs since 2001 and with the largest owned and operated solar portfolio of any utility in the country, FPL is well positioned to execute on its goal of achieving real zero carbon emissions by no later than 2045, which we announced last month at our investor conference, while continuing to deliver its best-in-class customer value proposition. At Energy Resources, adjusted earnings per share increased by $0.06 year-over-year. We continue to capitalize on a strong environment for renewables development, adding approximately 2,035 net megawatts to Energy Resources backlog since the last call. Included in these backlog additions is approximately 1,200 net megawatts of solar projects, which is the second largest quarter of solar origination in our history. As we highlighted at our investor conference last month, we believe that a number of powerful tailwinds support continued, strong renewables demand, particularly in the context of high power prices and high gas prices that are helping to make renewables the most economic form of generation. We expect these economic value drivers for new renewables, coupled with Energy Resources' significant competitive advantages to translate into a tremendous opportunity set as we deliver clean energy solutions to our customers seeking to both lower their energy bills and reduce their carbon emissions. We are pleased with the progress we have made at NextEra Energy so far in 2022 and heading into the second half of the year, we are well positioned to achieve the full year financial expectations that we have previously discussed, subject to our usual caveats. Now let's look at the detailed results beginning with FPL. For the second quarter of 2022, FPL reported net income of $989 million or $0.50 per share, which is an increase of $107 million and $0.05 per share, respectively, year-over-year. Regulatory capital employed increased by approximately 11.4% over the same quarter last year and was a principal driver of FPL's net income growth of approximately 12%. FPL's capital expenditures were approximately $1.9 billion in the second quarter, and we expect our full year capital investments to total roughly $8.5 billion. FPL's reported ROE for regulatory purposes is expected to be approximately 11.6% for the 12 months ended June 2022. Largely as a result of warm weather during the second quarter, we reversed roughly $44 million of reserve amortization recorded earlier in the year, leaving FPL with a balance of approximately $1.37 billion to use over the term of the current settlement agreement. During the quarter, FPL successfully commissioned the highly efficient, roughly 1,200 megawatt Dania Beach Clean Energy Center. The approximately $900 million project, which was completed on time and on budget, is expected to generate nearly $350 million in net cost savings for FPL customers, while reducing carbon emissions by roughly 70% compared to the previous Lauderdale plant. Longer term, we expect to convert approximately 16 gigawatts of our highly efficient gas fleet to run on green hydrogen, which will play an important role in the decarbonization of FPL's generation fleet as part of our goal to achieve real zero carbon emissions by no later than 2045. Last week, FPL also placed in service the North Florida Resiliency Connection transmission line, which physically connects the FPL grid and the legacy Gulf power grid. The new transmission line is expected to generate operational efficiencies and allow customers to benefit from both enhanced reliability and additional low-cost solar generation. FPL also filed its updated storm protection plan, which is filed every three years. The plan provides details on the billions of dollars of capital investment anticipated over the next 10 years to continue hardening FPL's energy grid for the benefit of customers. These hardening programs, several of which have been in progress since 2007, collectively provide increased resiliency and faster restoration times for FPL's approximately 5.8 million customer accounts when severe weather, including hurricanes, inevitably affects our service territory. The Florida economy remains strong. Florida's unemployment rate of approximately 3% remains below the national average and its labor force participation rate remains strong. The three-month moving average for new housing permits is up nearly 9% year-over-year, outpacing the national rate by roughly 7%. FPL's new service accounts increased more than 15% year-over-year, demonstrating continued strong growth in Florida's economy. FPL's average number of customers increased by more than 87,000 or 1.5% versus the comparable prior year quarter, driven by continued strong underlying population growth as Florida's population continues to increase at one of the fastest rates in the nation. FPL's second quarter retail sales increased 3.2% from the prior year comparable period, driven primarily by a favorable weather comparison. On a weather-normalized basis, second quarter retail sales increased 1.3% with strong continued customer growth contributing favorably. Energy Resources reported second quarter 2022 GAAP earnings of $133 million or $0.07 per share. Adjusted earnings for the second quarter were $683 million or $0.35 per share. The difference between Energy Resources second quarter GAAP and adjusted earnings results is primarily the effect of the mark-to-market on nonqualifying hedges, which is excluded from adjusted earnings. Contributions from new investments were roughly flat versus the prior year, driven by the timing of new solar and storage project additions. For the full year 2022, we anticipate the majority of our growth in new investments to occur in the fourth quarter. Our existing generation and storage assets added $0.03 per share primarily due to favorable wind resource during the second quarter. The second quarter adjusted earnings contributions from our customer supply and trading business increased by $0.02 year-over-year, driven primarily by the absence of winter storm Uri impacts that negatively impacted adjusted earnings in the second quarter of last year. All other impacts increased results by $0.01 versus 2021. As I mentioned earlier, Energy Resources had another strong quarter of origination, adding approximately 2,035 net megawatts of renewables and storage projects to our backlog, which is the third largest quarter of renewables and storage origination in our history. Since our last earnings call, we have added approximately 815 net megawatts of new wind, 1,200 net megawatts of solar and 20 net megawatts of battery storage to our backlog. With these additions, net of projects placed in service, our renewables and storage backlog now stands at approximately 19,600 megawatts and provides terrific visibility into the strong growth that is expected at Energy Resources over the next few years. We remain confident in our long-term development expectations at Energy Resources, which we increased and extended last month. From 2022 through the end of 2025, Energy Resources expects to build roughly 28 to 37 gigawatts of renewables and storage projects. To put these numbers in context, this expected renewables and storage build at the midpoint is approximately 30% larger than the entire renewables operating portfolio at Energy Resources today. We were pleased that the Biden administration made the decision last month to direct the Department of Commerce to waive additional duties for two years on solar panels imported from Malaysia, Thailand, Cambodia and Vietnam. The 24-month time frame is particularly important, as by the end of that period, we expect our suppliers to be making ingots and wafers outside of China. As a reminder, the Department of Commerce staff already publicly stated that panels with wafers made outside of China are not subject to its investigation. The actions by the Biden administration have provided much needed clarity to our suppliers to resume solar module production, recommence shipping of solar panels and for energy resources to restart its solar construction projects that have been halted due to the circumvention investigation. These new developments since our last call reinforce our confidence in both our near-term and long-term development expectations at Energy Resources. The accompanying slide provides additional details on where our development program at Energy Resources now stands. Beyond renewables and storage, during the quarter, NextEra Energy Water entered into an agreement to purchase a rate-regulated Pennsylvania wastewater system for approximately $115 million. Subject to regulatory approvals and other customary closing conditions, we anticipate this transaction will close in mid 2023. Additionally, last week, NextEra Energy Water closed on its previously announced acquisition of a portfolio of rate-regulated water and wastewater utility assets in Texas. These strategic investments should allow us to leverage our world-class operating platform to unlock value for both customers and our shareholders as we explore potential opportunities in the regulated water utility business. At NextEra Energy Transmission, we commissioned the Empire State transmission line earlier this month. This project is an excellent complement to our existing operations and further expand NextEra Energy's regulated business mix through the addition of attractive rate-regulated assets to our portfolio. It is expected to improve system reliability and deliver much needed zero carbon emissions generation to New Yorkers, while supporting the state's goals to decarbonize its grid. So far, in 2022, NextEra Energy Transmission has completed roughly $500 million of greenfield transmission projects. The addition of high-quality transmission projects such as the East West Tie and the Empire State Transmission line furthers our strategy to be North America's leading competitive transmission provider, both to accretively deploy capital as well as to enable further renewables development. Turning now to the consolidated results for NextEra Energy. For the second quarter of 2022, GAAP net income attributable to NextEra Energy was $1.3 billion or $0.70 per share. NextEra Energy's 2022 second quarter adjusted earnings and adjusted EPS were roughly $1.6 billion and $0.81 per share, respectively. Adjusted results from the Corporate & Other segment decreased by $0.01 year-over-year. At our investor conference, we highlighted roughly $400 million in run rate efficiencies identified through project velocity that we expect to be recognized over the next few years. This represents the largest identified cost savings in the history of our company-wide productivity initiatives. In connection with project velocity during the second quarter, we recorded transition costs of approximately $52 million pre-tax, of which $40 million was recorded at FPL and offset with the utilization of reserve amortization. The balance was recorded at Energy Resources and reduced adjusted EPS by roughly $0.01 per share. Our long-term financial expectations through 2025, which we increased last month at our investor conference, remain unchanged. For 2022, NextEra Energy expects adjusted earnings per share to be in a range of $2.80 to $2.90. For 2023 and 2024, NextEra Energy expects adjusted earnings per share to be in the ranges of $2.98 to $3.13 and $3.23 to $3.43, respectively. For 2025, we expect to grow 6% to 8% off the 2024 adjusted earnings per share range, which translates to a range of $3.45 to $3.70. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges in 2022, 2023, 2024 and 2025, while at the same time maintaining our strong balance sheet and credit ratings. Inclusive of the increases in our expectations in both January and June of this year, NextEra Energy's adjusted earnings per share expectations reflect a roughly 10% compound annual growth rate from 2021 to the high end of our range for 2025. Based upon the clear visibility into meaningful organic growth prospects across all of our businesses, we also remain confident in our near-term capital plan to deploy approximately $85 billion to $95 billion into new investments from 2022 through 2025. In addition, from 2021 to 2025, we continue to expect that our average annual growth and operating cash flow will be at or above our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at a roughly 10% rate per year through at least 2024 off a 2022 base. As always, our expectations assume normal weather and operating conditions. As a reminder, Energy Resources development expectations and NextEra Energy's financial expectations through 2025 do not assume any change in current tax law. We continue to see strong market demand for renewables, especially in light of the environment of high gas and power prices that we believe will persist going forward. Renewables are not just the most economic form of generation, they are deflationary and countercyclical. Renewable support energy independence, help stimulate economic growth, including domestic job creation. Renewables offer low-cost energy to help customers reduce their bills, and demand is being driven by a number of factors, as we discussed at our June Investor Conference. We continue to believe that NextEra Energy is better positioned than any other company in our industry to capitalize on these market conditions and deliver low-cost renewables and storage to our customers at both FPL and Energy Resources. Let me now turn to NextEra Energy Partners, which delivered outstanding operational and financial performance for the quarter. Second quarter adjusted EBITDA and cash available for distribution were up approximately 43% and 37%, respectively against the prior year comparable quarter. Yesterday, the NextEra Energy Partners Board declared a quarterly distribution of $0.7625 per common unit or $3.05 per common unit on an annualized basis, up approximately 15% from a year earlier. Inclusive of this increase, NextEra Energy Partners has now grown its distribution per unit by more than 300% since the IPO. Last month at our investor conference, NextEra Energy Partners announced a modification to incentive distribution rights fees, or IDRs, with NextEra Energy. The announced modification flattens IDR payments at $157 million annually based on a minimum annualized distribution rate of $3.05 per common unit. This modified IDR structure will be effective beginning in the third quarter of this year. We expect both NextEra Energy Partners' unitholders and NextEra Energy shareholders to benefit from the IDR modification. NextEra Energy Partners will need fewer asset additions to achieve its growth objectives with reduced equity needs, among other benefits. NextEra Energy expects to benefit from the potential increased value in its investment in NextEra Energy Partners while retaining an attractive incentive distribution fee stream as well as the ability to continue to recycle significant capital through Nexera Energy Partners. Putting it all together, these benefits are expected to provide a longer runway of LP distribution growth and support NextEra Energy Partners' best-in-class distribution per unit growth expectations that we extended last month. NextEra Energy Partners also completed multiple financings during the second quarter to further enhance its financing flexibility. In May, NextEra Energy Partners increased the size of its revolving credit facility by approximately $1.25 billion for a total of $2.5 billion in capacity, which is consistent with NextEra Energy Partners' growth since the facility was last upsized in 2019. The facility was approximately 1.6 times oversubscribed, which we believe demonstrates the strong credit quality of the NextEra Energy Partners portfolio as well as the market confidence in NextEra Energy Partners' growth outlook. Additionally, NextEra Energy Partners drew the approximately $410 million of remaining funds from its 2021 convertible equity portfolio financing. The strong demand for both the private investor and lending communities to provide NextEra Energy Partners with liquidity for growth demonstrates the Partnership's continued ability to raise capital at attractive terms. With another strong origination quarter at Energy Resources, NextEra Energy Partners' growth visibility is as strong as ever, and we remain on track to deliver on our best-in-class 12% to 15% annual distribution per unit growth expectations, which we extended through 2025 last month at our investor conference. Finally, last week, S&P favorably revised NextEra Energy Partners' business risk profile upward, from satisfactory to strong to reflect its positive outlook on the Partnership's continued growth and portfolio diversification while maintaining highly contracted revenue streams with highly rated counterparties. S&P also affirmed all of its ratings for NextEra Energy Partners and lowered his downgrade threshold for its funds from operations, or FFO, to debt metric from the previous level of 14% to the current level of 12%. We believe these favorable adjustments reflect the strength of NextEra Energy Partners business and a stable cash flow generation profile of its portfolio. Turning to the detailed results. NextEra Energy Partners' second quarter adjusted EBITDA was $500 million, and cash available for distribution was $207 million. New projects, which primarily reflect contributions from the approximately 2,400 net megawatts of new long-term contracted renewable projects acquired in 2021, contributed approximately $106 million of adjusted EBITDA and $41 million of cash available for distribution. Existing projects added roughly $51 million of adjusted EBITDA and $26 million of cash available for distribution in the second quarter, driven primarily by favorable wind resource. Wind resource for the second quarter of 2022 was approximately 112% of the long-term average versus 93% in the second quarter of 2021. Additional details of our second quarter results are shown on the accompanying slide. NextEra Energy Partners run rate adjusted EBITDA and cash available for distribution expectations for the forecasted portfolio at year-end 2022, which we increased last month at our investor conference, remain unchanged. NextEra Energy Partners continues to expect year-end 2022 run rate adjusted EBITDA and cash available for distribution in the ranges of $1.785 billion to $1.985 billion and $685 million to $775 million, respectively, reflecting calendar year 2023 contributions from the forecasted portfolio at the end of 2022. As a reminder, all of our expectations are subject to our normal caveats and include the impact of anticipated IDR fees as we treat fees as an operating expense. From a base of our fourth quarter 2021 distribution per common unit at an annualized rate of $2.83, we continue to see 12% to 15% growth per year and LP distributions per unit as being a reasonable range of expectations through at least 2025. We expect the annualized rate of the fourth quarter 2022 distribution that is payable in February of 2023 to be in the range of $3.17 to $3.25 per common unit. Additional details of our long-term distribution per unit expectations are shown on the accompanying slide. In summary, we remain as enthusiastic as ever about the long [ph] growth prospects at both NextEra Energy and NextEra Energy Partners. At FPL, that means continuing to deliver our best-in-class customer value proposition of low bills, high reliability and outstanding customer service. means pursuing our industry-leading real zero carbon emissions goal, which we detailed at our investor conference and in our zero-carbon blueprint to decarbonize FPL's operations by no later than 2045. At Energy Resources, we believe that our best-in-class development and operating platform will allow us to maintain our leadership position as we help both power and non-power sector customers save on energy costs and decarbonize operations with the adoption of new renewables and various forms of energy storage. And we expect NextEra Energy Partners to benefit greatly from the significant growth in renewables deployment across the United States, which presents terrific opportunities for acquisitions, both from Energy Resources and from third parties. That concludes our prepared remarks. And with that, we will open the line for questions.

Steve Fleishman:

Great. Thanks. I guess a couple of questions. Just a technical one on the new backlog additions. Could you give us some sense kind of what periods the 2 gigawatts were, is it mainly 2022, 2023 or 2024, 2025?

Steve Fleishman:

Great. Second question, I know that your plans do not include any BBB or any extension in tax credits at all, but would be curious of just your thoughts on chances for that to happen in tax extenders or kind of separately what the Biden administration might do on renewables with respect to just the executive actions and/or through the EPA?

Steve Fleishman:

Okay, great. I’ll let other ask questions. Thank you.

Operator:

Our next question comes from Julien Dumoulin-Smith from Bank of America.

Rebecca Kujawa:

Julien, it's Rebecca. I'll take that question. The team is doing a terrific job with ongoing conversations with customers. But as we've highlighted, really since for a very long period of time and consistently even since the start of the year when we've been talking a lot more about disruption across the industry. Interest from customers remains really robust. And that was throughout even the uncertainty around circumvention at the height of it, even around solar. And it really goes back to the heart of what Kirk said in the prepared remarks and what John just commented on a minute or two ago in response to one of Steve's questions, our customers are acutely aware of the value of renewables in their portfolio from an economic standpoint, both in the pure sense of being low cost, but also in the sense of being a terrific offset to inflationary concerns about other forms of generation in their portfolio. And then on top of that they have various commitments that they've talked to, to their own stakeholders about deploying renewables and reducing carbon in their portfolio. So, I think there's this underlying current of demand that has been far less affected than you might think by the headlines in our conversations about what's going on in the industry. So, I would say, the fundamentals are terrific. And as you can see from our origination, I always caution you all not to look at a single quarter in isolation to keep looking at multiple quarters over time. And you can see really strong demand for both wind and solar and battery storage throughout the portfolio. So, I'm thrilled with our conversations with our customers, I'm thrilled with the execution of the team and remain as excited as I've ever been about the prospects for us continuing to execute and delivering new renewables.

Rebecca Kujawa:

Julien, we continue to work through supply chain. Of course, you know all the headlines as well as anybody on circumvention. For WRO and the Weaker Force Labor Protection Act, obviously, we have for WRO some history already under our belt for us and for the industry and for the flip implementing regulations. We now have some time in place for those and our conversations with our suppliers remain really constructive. So, we're going to constantly be vigilant as our suppliers, but we continue to see a constructive path forward on being able to put projects in service over time.

Julien Dumoulin-Smith:

Okay, excellent. I'll leave it there. Thanks guys.

Shar Pourreza:

Hey, good morning guys.

Shar Pourreza:

Just what's the threshold for removing the language around the 2 gigawatts of projects that you noted in the footnotes that could still be at risk? I mean, can you maybe just elaborate on how the discussions are going with customers? And just given that you've been in discussions for some time, where are you sort of trending as we're thinking about the 1 to 2 gigawatt cancellation range that you sort of highlighted at the Analyst Day. I mean, could we end up with no cancellations. I guess when can we get an update there?

Shar Pourreza:

Got it. Got it. So just -- sorry, if I could just, it sounds like the way the discussions are going, there could be a situation where you see no cancellations.

Shar Pourreza:

Got it. Got it. And just wanted to follow up on the transaction value of renewable projects, especially as you're kind of looking at the rising interest rate environment. Do sort of the rising rates present a challenge to monetize projects both through net or third parties? And how do you see the interest rates impacting sort of the economics of the project, the development margins, the IRRs? So is there sort of pricing flexibility to pass those costs without seeing sort of that elasticity in demand?

Shar Pourreza:

Terrific. Thanks, guys. I’ll pass it to someone else. Congrats, John and team. Appreciate it.

Durgesh Chopra:

Hey, good morning, team. Thank you for taking my question. All my other questions have been answered. I wanted to go to sort of your water and wastewater strategy, and I appreciate it's small part of your business. But maybe just a two-part question there. One, can you talk about your outlook there? Obviously, the Texas deal is now closed and you made a key announcement where you talked about the PA wastewater system on the call today. So, can you discuss your outlook there? Do you see a lot of opportunity to grow there? That's part one. And then part two, how should we think about competition? Here, I'm referring to the local water utilities as you approach these deals. And what's your competitive advantage? Thank you.

Durgesh Chopra:

Thank you. I appreciate your time. Thanks.

Jeremy Tonet:

Hi, good morning.

Jeremy Tonet:

Just wanted to pick up maybe with M&A a little bit here. And how does the recently instated real zero goal impact your prospects around M&A going forward? And when you're looking at assets, is there more of an interest on water, as you talked about here? Or how is the appetite varied between water, electric gas?

Jeremy Tonet:

Got it. Thanks for that. And then maybe just coming back to supply chain a little bit more at high-level question. What do you think about the prospects regarding domestic manufacturing? What are your expectations for US market share multiple years down the road? What percentage of panels do you think could be domestically sourced today versus five years in the future?

Jeremy Tonet:

Got it. Thank you for taking my question.

Dave Arcaro:

Hi. It's Dave Arcaro on for Stephen. Thanks so much for taking my question. So I was wondering, just looking at the Energy Resources development outlook, there is a big ramp in solar from the 2022, 2023 period into the 2024, 2025 period. I was wondering, is there an opportunity or any effort to kind of pull forward projects from 2024, 2025 into 2023. Kind of curious how generally 2023 is shaping up in terms of industry growth that year?

Dave Arcaro:

Okay. Got it. Thanks. That's helpful. And then, on Florida, I was wondering if you could talk about bill inflation and just approaches that you're pursuing to manage the pressure that we're seeing on customer builds this year? Anything new in the works or creative ways to help spread that cost out or that bill inflation now?

Dave Arcaro:

Got it. Thanks so much.

James Thalacker:

Good morning, everybody. Thanks for taking my call.

James Thalacker:

Just a real quick question. Obviously, existing generation of storage and customer supply had a good quarter, quarter-over-quarter. I know obviously some of that was related to the above average wind resource, which rebounded quite a bit. But just wondering, post-Uri, a lot of the generators had restructured some of their contracts. Did you guys see any benefits in 2Q from any sort of maybe changing in your hedging strategy? And could that be something we could see flowing through through the rest of the year?

James Thalacker:

Okay, great. Thanks so much.

Operator:

Good morning and welcome to the NextEra Energy and NextEra Energy Partners First Quarter Earnings call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jessica Jeffery [ph], Director of Investor Relations. Please go ahead.

Kirk Crews:

Thank you, Jessica, and good morning everyone. NextEra Energy delivered strong first quarter results and is off to a solid start to meet its overall objectives for the year. Adjusted earnings per share increased by 10.4% year-over-year, reflecting successful performance across all of our underlying businesses. During the quarter, we were honored that NextEra Energy was again ranked number one in its sector of Fortune Magazine's world's most admired companies list for the 15th time in 16 years. Our culture of commitment to excellence in everything we do and our core values are what allow our team of approximately 15,000 employees to continue delivering best-in-class value to our customers and shareholders while helping build a sustainable energy era that is affordable and clean. FPL increased net income by approximately $98 million from the prior year comparable period, which was driven by continued investment in the business for the benefit of our customers. During the quarter, FPL successfully placed in-service, approximately 450 megawatts of additional cost-effective solar projects that are recovered through base rates as part of its new four year settlement agreement, which as a reminder became effective on January 1st of this year. As a result, FPL has now completed on time and within budget all of its planned solar build with 2022 in service dates. FPL now owns and operates more than 3,600 megawatts of solar, which is the largest solar portfolio of any utility in the country. FPL's modernization investments since 2001 have saved customers more than $12 billion in fuel costs and its customers have benefited from a 45% improvement in reliability over the last decade. FPL's other major capital investments are progressing well, including the North Florida Resiliency Connection and the highly efficient approximately 1,200 megawatts Dania Beach Clean Energy Center, both of which are scheduled for completion later this year. By executing on smart capital investments such as these and running the business efficiently, FPL continues to deliver its best-in-class customer value proposition of clean energy, low bills, high reliability and outstanding customer service. At Energy Resources, adjusted earnings per share increased by nearly 7% year-over-year, primarily driven by favorable performance in our existing wind portfolio. In terms of new origination, Energy Resources had another strong quarter of renewables and storage origination adding approximately 1,770 net megawatts to our backlog since the last call bringing our backlog total to approximately 17,700 megawatts. Included in the additions this quarter is approximately 1,200 net megawatts of wind projects, which is the second largest quarter of wind origination in our history. In the midst of inflationary pressures and uncertainty in solar supply chain, which I will discuss further in a few moments, our continued origination success in this environment is a testament to the strength of Energy Resources' competitive advantages and the ongoing demand from our customers for low cost renewals and storage. At this early point in the year, we are very pleased with our team's execution and progress at both FPL and Energy Resources. Now let's look at the detailed results beginning with FPL. For the first quarter of 2022, FPL reported net income of $875 million, or $0.44 per share, an increase of $0.05 year-over-year. Regulatory capital employed growth of approximately 11.3% was a significant driver of FPL's EPS growth versus the prior year comparable quarter. FPL's capital expenditures were approximately $2.2 billion for the quarter. We expect our full year 2022 capital investments at FPL to be between $7.9 billion and $8.3 billion. FPL's reported ROE for regulatory purposes will be approximately 11.6% for the 12 months ending March 2022. Under our rate agreement, we record reserve amortization entries to achieve a predetermined regulatory ROE for each trailing 12 month period. In this case, the 11.6% that I previously mentioned. While we initially expected to earn below our targeted ROE in the early part of 2022, a combination of warm weather, operational efficiencies and outstanding execution by the team resulted in us achieving our targeted 11.6% ROE while using $124 million of reserve amortization available under our current settlement agreement during the first quarter. Turning to our development and planning efforts, FPL recently filed its Annual Ten-Year Site Plan that presents our recommended generation resource plan through 2031. The recommended Ten-Year Site Plan includes roughly 9,500 megawatts of new solar capacity across our service territory over the next ten years, which would result in nearly 20% of FPL's forecasted energy delivery in 2031 coming from solar generation. This planned solar build-out includes nearly 1,200 megawatts of base rate solar projects inclusive of the approximately 450 megawatts placed in service during the first quarter that we plan to build over the next two years. In addition, it includes approximately 1,800 megawatts under the SoBRA mechanism of our settlement agreement, approximately 1,800 megawatts of SolarTogether community solar projects that we expect to construct over the next four years, as well as roughly 4,700 megawatts of additional solar after 2025, that is subject to approval by the Florida Public Service Commission. FPL continues to deliver what is one of the largest-ever solar expansions in the U.S. Compared to current levels, the recommended plan projects an approximately 65% increase in zero-carbon-emissions electricity produced by the FPL system over the next decade, largely as a result of FPL’s continued rapid expansion of solar energy through the execution of its 30-by-30 plan, which we now expect to complete by 2025, and the solar additions that I previously mentioned. This projected increase in zero carbon-emissions generation is significant for a utility system of our size, especially when considering that our total amount of energy delivered in 2031 is expected to be nearly 10 percentage points higher through customer growth and increased adoption of electric vehicles. Our green hydrogen pilot program plans are also reiterated in the site plan. As we’ve previously discussed, we intend to build an approximately 25-megawatt electrolysis system at our Okeechobee Clean Energy Center that will be powered entirely by solar energy from a nearby site. The pilot is designed to test, in practice, the concept of replacing natural gas with green hydrogen as fuel for combined cycle unit use. The pilot project is expected to guide the way for future use of hydrogen as a fuel source across FPL’s fleet of highly efficient combined cycle units, thus lowering or eliminating carbon emissions from FPL’s fleet in the future. This pilot project is projected to go into service in late 2023. Notably, our as-filed 10-year site plan recommends a total expected deployment of approximately 3,200 megawatts of new battery storage capacity by 2031. Included in this total is approximately 1,400 megawatts of incremental battery storage to enhance readiness and reliability for our customers during potential extreme weather events. We also plan to make other smart capital investments for winterization efforts designed to support potential increased customer load during extreme winter temperature conditions, while also providing additional day-to-day reliability benefits for customers. A hallmark of our culture is taking every opportunity to learn from events that happen in our industry, not just those that directly affect FPL, to ensure we continue to deliver the best possible value to our customers. Our planned targeted investments for winterization were identified as a result of our detailed assessment of our fleet following Winter Storm Uri last year that affected Texas and much of the South. We will provide additional detail on these programs and our other capital initiatives at our June investor conference. The Florida economy remains healthy and Florida’s population continues to grow at one of the fastest rates in the U.S. Florida’s job market continues to show healthy results, with more than 700,000 new private sector jobs added over the last year, and Florida’s labor force participation rate is up nearly 2% year-over-year. Other positive economic data across the state include the continued strength of Florida’s real estate market, with the three-month moving average for new housing permits up nearly 20% year-over-year. FPL’s average number of customers increased by more than 91,000, or 1.6%, versus the comparable prior-year quarter, driven by continued solid underlying population growth. FPL’s first quarter retail sales increased 2.6% from the prior-year comparable period, and we estimate that approximately 0.7% of this increase can be attributed to weather-related usage per customer. On a weather-normalized basis, first quarter retail sales increased 1.9%, with strong continued customer growth contributing favorably. Energy Resources reported a first quarter 2022 GAAP loss of approximately $1.5 billion, or $0.76 per share. Adjusted earnings for the first quarter were $628 million, or $0.32 per share, up $0.02 versus the prior-year comparable period. The effect of the mark-to-market on nonqualifying hedges, which is excluded from adjusted earnings, was the primary driver of the difference between Energy Resources’ first quarter GAAP and adjusted earnings results. As a reminder, this quarter’s GAAP results were also impacted by the write-off of our remaining investment in Mountain Valley Pipeline, which we have excluded from adjusted earnings. Contributions from new investments were roughly flat year-over-year, while our existing generation and storage assets added $0.05 per share due to favorable wind resource and the absence of Winter Storm Uri impacts. The contribution from our customer supply and trading business decreased by $0.02 per share and NextEra Energy Transmission increased results by $0.01 per share year-over-year. The comparative contribution from our gas infrastructure business decreased results by $0.02 per share following favorable performance in the first quarter of last year during Winter Storm Uri. All other impacts were roughly flat versus 2021. As I mentioned earlier, Energy Resources had another strong quarter of origination, which is reflective of our ability to continue leveraging our competitive advantages to deliver clean energy solutions to meet the ongoing market demand for renewables. Since the last call, we added approximately 1,200 net megawatts of new wind projects for 2022, 2023 and 2024 commercial operations dates to our backlog. Our backlog additions also include approximately 440 megawatts of solar projects and approximately 130 megawatts of battery storage projects. With more than 2.5 years remaining before the end of 2024, we have now signed more than 85% of the megawatts needed to realize the midpoint of our 2021 to 2024 development expectations range. Earlier this month, the U.S. Department of Commerce initiated a review of an anti-dumping and countervailing duties circumvention claim on solar cells and panels supplied from four Southeast Asian countries, which in recent years sourced over 80% of all solar panel imports into the United States. As we recently highlighted, we are disappointed by the Commerce Department’s decision to conduct this investigation. We believe the Commerce Department already settled this issue when it concluded in 2012 that the process of converting solar wafers into electricity-producing solar cells is technologically sophisticated and the most capital intensive part of the solar panel manufacturing process, and when that occurs outside of China, the cells are not subject to the 2012 anti-dumping and countervailing duties applicable to Chinese solar cell imports. The Commerce Department’s later rulings in 2014, 2020 and 2021 are consistent with this and have been relied upon by the solar industry as it continued to invest billions of dollars in new solar generating facilities in the United States over this period. In light of these four prior rulings, the reliance on them by the industry and the substantial, technologically sophisticated processing that occurs in the Southeast Asian countries, we believe it will be difficult for the Commerce Department to conclude under its circumvention standards that circumvention of the 2012 tariffs is actually occurring. If the Commerce Department were to find circumvention in the current investigation, we believe it would be unwinding a decade of consistent trade practice across the past three administrations, including the current administration just last year. We believe such a decision would create significant price uncertainty as additional tariffs on panels from the four Southeast Asian countries would likely remain unknown until close to 2025, as final tariff amounts are not determined for about two years after the year of importation. This price uncertainty would likely result in the unintended consequence of U.S. solar panel supply once again being sourced significantly from China, because the tariffs applicable to imports from China are more certain based on 10 years of assessed duty history. U.S. solar panel assemblers are, for the most part, sold out of solar panels through 2024 and, even at full capacity, are only capable of serving 10% to 20% of the U.S. solar panel demand in the first place. It should also be noted that nearly all of the large domestic solar panel assemblers in the U.S. do not support the efforts behind the circumvention claim or the Commerce Department’s decision to investigate, as they also primarily rely on imported cells from Southeast Asia to produce their panels in the United States. And all of the uncertainty from the investigation is occurring at a time when natural gas, coal and oil prices have increased dramatically, leaving solar and storage as one of the few ways to alleviate inflationary pressures on electricity prices. For these reasons, among others, we are optimistic that the investigation will ultimately be resolved favorably and the Commerce Department will conclude not to impose additional anti-dumping and countervailing duties on cells and panels sourced from these Southeast Asian countries. We believe that NextEra Energy is as well positioned as any company in the industry to manage these issues. However, given that a number of suppliers are not expected to ship panels to the U.S. until the Commerce Department makes a preliminary determination as late as August, we continue to expect some of our solar and storage projects may be adversely impacted by this delay. We are working closely with our suppliers and customers to assess the potential impacts of this investigation and are optimistic about our ability to arrive at acceptable mitigation measures. Based on what we know today, we believe that approximately 2.1 gigawatts to 2.8 gigawatts of our expected 2022 solar and storage build may shift from 2022 to 2023. Despite the delay, given our competitive advantages, including the strength of our supplier relationships and contracts, we remain comfortable with our current development expectations for wind, solar and storage, which are to build roughly 23 gigawatts to 30 gigawatts over the four-year period from 2021 through the end of 2024. We run a diversified business at Energy Resources that includes multiple renewable energy technologies and provides a natural hedge against temporary disruptions like the one our industry is currently experiencing. In fact, in light of the uncertainty in the solar supply chain, we believe renewable demand will likely temporarily shift in part from solar to wind, and we believe Energy Resources has terrific competitive advantages in wind development. The accompanying slide provides additional details. Finally, during the quarter NextEra Energy Transmission, along with its partners, completed the construction of the East-West Tie Transmission Line Project. The 450-kilometer, 230-kilovolt transmission line runs from Wawa to Thunder Bay, Ontario and is expected to address long-standing regional transmission constraints, thereby increasing much-needed access to energy to support new economic growth in the region for years to come. Turning now to the consolidated results for NextEra Energy, for the first quarter of 2022, GAAP net losses attributable to NextEra Energy were $415 [ph] million, or $0.23 per share. NextEra Energy’s 2022 first quarter adjusted earnings and adjusted EPS were approximately $1.46 billion and $0.74 per share, respectively. Adjusted earnings from the Corporate & Other segment were roughly flat year-over-year. Our long-term financial expectations, which we increased and extended earlier this year through 2025 remain unchanged. For 2022, NextEra Energy expects adjusted earnings per share to be in a range of $2.75 to $2.85. For 2023 through 2025, NextEra Energy expects to grow roughly 6% to 8% off the expected 2022 adjusted earnings per share range. NextEra Energy is in a strong position to meet its financial expectations through 2025, and we will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings expectations ranges in each of 2022, 2023, 2024 and 2025, while at the same time maintaining our strong balance sheet and credit ratings. A big part of NextEra Energy’s culture is a focus on continuous improvement and productivity. To that end, we are currently wrapping up our company-wide productivity initiative to reimagine everything that we do, which we call Project Velocity. Project Velocity built upon the success of Project Momentum and Project Accelerate, which were launched in 2013 and 2017, respectively. The employee-generated ideas implemented through Project Momentum and Project Accelerate are projected to deliver more than $1.8 billion in average annual run-rate savings first, our cost projections just 10 years ago. In fact, the ideas generated this year in Project Velocity alone are expected to reach roughly $400 million in additional run-rate efficiencies in the next few years, representing the largest identified O&M cost savings in the history of these programs. This result is another example of the strength of our culture and team and highlights our continued focus on productivity and our team’s willingness to embrace innovation and leverage technology. From 2021 to 2025, we also continue to expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through at least 2024, off a 2022 base. As always, our expectations assume normal weather and operating conditions. Let me now turn to NextEra Energy Partners, which delivered solid first quarter results, with year-over-year growth in adjusted EBITDA of more than 16% driven primarily by contributions from the approximately 2,400 net megawatts of renewables and storage added during 2021. Yesterday, the NEP Board declared a quarterly distribution of $0.7325 per common unit, or $2.93 per common unit on an annualized basis, up approximately 15% from a year earlier. Inclusive of this increase, NextEra Energy Partners has grown its LP distributions per unit by more than 290% since the IPO. Further building upon that strength, NextEra Energy Partners today is announcing that it has entered into an agreement with Energy Resources to acquire an approximately 67% interest in an approximately 230-megawatt, four-hour battery storage facility in California that is fully contracted with an investment grade counterparty for 15 years. The acquisition will further diversify NextEra Energy Partners’ existing portfolio with the addition of another battery storage project and is an excellent complement to NextEra Energy Partners’ existing operations. NextEra Energy Partners expects to acquire the project interest for approximately $191 million, subject to closing adjustments, which is expected to be funded with existing debt capacity. NextEra Energy Partners’ share of the asset’s tax equity financing is estimated to be approximately $80 million at the time of closing. The acquisition is expected to contribute adjusted EBITDA of approximately $30 million to $35 million and cash available for distribution of approximately $13 million to $18 million, each on a five-year average annual run-rate basis beginning December 31, 2022. The transaction is expected to close later this year, upon the project reaching its commercial operations date, and supports NextEra Energy Partners’ projected adjusted EBITDA and cash available for distribution growth in 2022. Finally, NextEra Energy Partners recently closed on a transaction to sell an approximately 156-mile gas pipeline from its existing portfolio for a total consideration of approximately $203 million to a third party. The sale price of the pipeline represents an attractive and accretive EBITDA multiple and further enhances the renewable energy profile of NextEra Energy Partners. We are pleased with this transaction and look forward to redeploying the proceeds into accretive renewable energy assets, like the battery storage acquisition from Energy Resources that I just mentioned, to support NextEra Energy Partners’ long-term distribution growth expectations. Turning to the detailed results, NextEra Energy Partners’ first quarter adjusted EBITDA was $412 million and cash available for distribution was $169 million. New projects, which primarily reflect the asset acquisitions that closed in the second half of 2021, contributed approximately $75 million of adjusted EBITDA and $25 million of cash available for distribution. The adjusted EBITDA and cash available for distribution contribution existing projects declined $9 million and $29 million respectively, versus the prior year comparable quarter. Favorable performance at existing projects drove an increase in adjusted EBITDA contributions of approximately $46 million year-over-year, which was more than offset by the absence of approximately $55 million in benefits realized during the last February's Winter Storm Uri. Excluding the positive impact of Winter Storm Uri from last year's first quarter results, this quarter's adjusted EBITDA and cash available for distribution were up nearly 38% and 31%, respectively, year-over-year. Cash available for distribution was also impacted by the timing of PAYGO payments. Wind resource for the first quarter of 2022 was 108% of the long-term average versus 98% in the first quarter of 2021. Additional details are shown on the accompanying slide. NextEra Energy Partners continues to expect run rate contributions for adjusted EBITDA and cash available for distribution from its forecasted portfolio at December 31, 2022, to be in the ranges of $1.775 billion to $1.975 billion and $675 million to $765 million, respectively. As a reminder, year-end 2022 run rate projections reflect calendar year 2023 contributions from the forecasted portfolio at year-end 2022 and include the impact of IDR fees, which we treat as an operating expense. As always, our expectations are subject to our usual caveats, including normal weather and operating conditions. From a base of our fourth quarter 2021 distribution per common unit at an annualized rate of $2.83, we continue to see 12% to 15% growth per year in LP distributions as being a reasonable range of expectations through at least 2024. We do not expect the recent solar supply chain disruption to impact our ability to deliver on these expectations. We expect the annualized rate of the fourth quarter 2022 distribution that is payable in February of 2023 to be in a range of $3.17 to $3.25 per common unit. We also continue to expect to achieve our 2022 distribution growth of 12% to 15% while maintaining a trailing 12-month payout ratio in the low-80% range. In summary, both NextEra Energy and NextEra Energy Partners are benefiting from our history of strong execution that has positioned us well to capitalize on the terrific growth opportunities available to us across our businesses. We look forward to sharing more detail with you on our growth plans for both NextEra Energy and NextEra Energy Partners at our investor conference in New York on June 14. Before taking your questions, I'd like to turn the call over to John Ketchum.

Operator:

We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Steve Fleishman with Wolfe Research. You may now go ahead.

John Ketchum:

Thank you.

Steve Fleishman:

So – you bet. Kirk, just the AD CVD is obviously an important issue and you made some really interesting comments here. So my questions are going to focus on that. The comment about the tariffs not being known if they decided to go that route till 2025, that would seem to be incredibly disruptive to the sector. So just – could you just talk about like how that process works and why to actually set the tariffs to better understand why it would be that long?

Steve Fleishman:

That's super helpful. Just a couple quick follow-ups on the same issue, which is, first, given everything you said, why did they initiate this in the first place? Did they not understand the implications? Second, are you seeing any better movement as a result of what's already happened to build back better? And then the last one is just in that worst-case event that we have to wait till 2025 to work this out and you reiterated back a month ago that even with this review confidence in the high end of the target, does that include that scenario?

Steve Fleishman:

Thank you very much.

Julien Dumoulin-Smith:

Hey, good morning team. Thanks for the time and congrats again on the promotions here guys.

Julien Dumoulin-Smith:

Good morning. So I just want to come back to the earnings impact on you guys. I certainly appreciate the macro that you guys have described here. But can you speak more specifically to the earnings offsets, not just in 2022, but especially 2023 and 2024, given that the timing of these renewable and services tends to impact the subsequent year more so? And then if I’m hearing you right, again, I know you keep talking about Chinese imports, but is that the answer here in lieu of having clarity effectively, and this is a matter of timing and pivoting into a Chinese supply solution in some form or another, or at least creating your own domestic supply rapidly. Just clearly, we’re not going to sit here until 2025. Just want to get some understanding as to what the earnings mitigation is in the near term and what that answer is in 2023, 2024?

Julien Dumoulin-Smith:

Got it. But just on your earnings impact, it sounds like this is about accelerating velocity, basically accelerating cost savings into the near term to offset some of the impacts as well as maybe some FPL drivers, rather than saying we’re going to do more wind versus what the plan is kind of a near-term sense. And actually, if you can speak to the FPL piece, just on CapEx changes versus the 10-K. It seems like the range is a little bit lower. But again, I’ll let you respond holistically.

Kirk Crews:

Sure. Julien, as we’ve thought about the CapEx plan at FPL, as we discussed on the call today, the expectation is – for this year is roughly $7.9 billion to $8.3 billion of capital that we plan to deploy. We also laid out in the discussion around the 10-year site plan what we’re thinking in terms of solar that we’re going to add to the system. We feel very good about the capital program that we have at FPL over the next four years in not just generation, but as well as T&D infrastructure, hardening and undergrounding. So, we have a very good plan there at FPL. Also, I think it’s important to keep in mind with respect to FPL, as we discussed on – in the prepared remarks as well, we are continuing to see just significant growth at FPL, organic growth, in terms of people coming to Florida. At 91,000 additional customers added in roughly four or five years, we’re going to add the size of Gulf to the system, and that’s going to continue to provide us with CapEx opportunities as well.

Operator:

Our next question will come from Shar Pourreza with Guggenheim Partners. You may now go ahead.

Kirk Crews:

Good morning.

John Ketchum:

Sure. Shar, I’ll take that. So the first point that I would make is that this is good for the wind business. I think you could see that from the results of our origination activity this quarter. So even to the extent we might see some shifting solar from 2022 to 2023 or 2023 to 2024, wind is coming online even faster. And remember, the development cycle for wind and the origination activity for wind is much shorter. We can originate a wind project and have it built in 10 months. And so to the extent you might see some solar activity drop off – and really, again, I view this as a 2022 and 2023 issue. The beauty of it is, you have wind to step in and gets placed. And that’s an area where we have significant competitive advantages. And being able to sell 23 wind at a 80% PTC, we can be extremely competitive in the pricing there and in the offering. And it provides us with, I think, a mitigation measure on top of the strong supplier contracts that we already have on the solar side that others in the industry don’t have. It’s great to have a diversified business to be able to fall back on, and that’s why we feel good about our financial expectations.

John Ketchum:

Yes. I think, first of all, I want to say the CapEx is actually up at FPL, just back to – I think it was Julien’s earlier question. Undergrounding is a piece of that. It’s really important we get our undergrounding in service on time and on budget. We continue to look to ways to shift that to the left. And look, as we are in an increasing natural gas price environment, the right answer for Florida customers certainly is to evaluate and look at trying to get more renewables online in Florida faster. It’s a hedge against rising natural gas prices in the state. And it’s a hedge for the country, which is another reason why, as I’ve said a couple of times already, what’s happening is quite silly.

Eric Silagy:

The only – this is Eric Silagy. The only thing I would add is the 10-year site plan we just filed, a pretty good road map of the future opportunities. We are going to be adding a lot more solar into the system, pending the PSC’s approval. And demand for solar together continues to remain very, very strong. And so we’re going to be continuing to look at the next round for SolarTogether after the current one we just filed for. So there’s going to be additional opportunities. But again, this is about smartly deploying capital and doing the right thing for customers for the long term.

Eric Silagy:

Absolutely.

John Ketchum:

Yes. Let me just give a little bit of background there. We were asked a while back to provide some documentation in connection with that matter, which we did. We cooperated in full. We were told and have been told we are not a target of the investigation. And I think the article you're referring to, the reporter just got it flat out wrong. We have not been subpoenaed as a witness in that matter.

John Ketchum:

Thank you.

Operator:

Our next question will come from Durgesh Chopra with Evercore ISI. You may now go ahead.

Kirk Crews:

Good morning.

Kirk Crews:

So the way to think about the process is right now, the DoC has provided questionnaires to different groups. Those questionnaires are being completed. I believe they're due this week for some. I believe others had requested some excisions and maybe have been granted. Once they have all that information, then the groups that are – that have standing are also allowed to weigh in on the matter. We do have standing in the case. So we will be weighing in on this as well. And then the DoC has all that information and reviews – essentially reviews the data and then reaches their preliminary determination, which is expected to happen by late August.

Kirk Crews:

Yes. We're not going to share that information at this time. I understand the reason for the question. I would just say, as we included in the press release and in the script, it was a very attractive and accretive EBITDA multiple. We're very happy with it.

Kirk Crews:

Thank you.

Dave Arcaro:

Hi. It's Dave Arcaro on for Stephen. Thanks for taking my question. I was wondering if you could just talk a little bit to PPA pricing that you're seeing for new contracts, I guess, across wind, solar and storage. Is there an approximate level that you would expect PPA prices to have to rise to absorb some of the inflationary pressures that we've seen? And at the end of the day, do you expect that to happen? Do you think they'll rise enough that you can protect your returns on incrementally new signed renewables contracts?

Dave Arcaro:

Great. Thanks. That's helpful color. And I was just wondering, just on the pace of new signings has that slowed down significantly since this investigation started? And would the preliminary determination potentially be a bit of a relief valve? Or could it take longer than that to start to maybe kick start the project signings again?

Dave Arcaro:

Great, appreciate that and thanks so much.

Operator:

Good morning, and welcome to the NextEra Energy and NextEra Energy Partners' Fourth Quarter and Full Year 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jessica Aldridge, Director of Investor Relations. Please go ahead.

Jim Robo:

Thanks, Jessica, and good morning everyone. Both NextEra Energy and NextEra Energy Partners had an outstanding year in 2021 and are well positioned to capitalize on the substantial opportunities that lie ahead. NextEra Energy's performance was strong both financially and operationally, and we executed the largest capital program in our history, investing approximately $16 billion in American Energy infrastructure in 2021, which we expect will again place NextEra Energy among the top capital investors in the U.S. across all industries. Continuing our long track record of delivering value for shareholders, NextEra Energy achieved full-year adjusted earnings per share of $2.55, up more than 10% from 2020. Over the past 10 years, we've delivered compound annual growth and adjusted EPS of approximately 9%, which is the highest among all top 10 U.S. power companies, who have achieved, on average, compound annual growth of roughly 3% over the same period. Amid this significant growth, the company has maintained one of the strongest balance sheets and credit positions in the industry. In 2021, we delivered a total shareholder return of more than 23%, significantly outperforming the S&P 500 Utilities Index and continuing to outperform both the S&P 500 and the S&P 500 Utilities Index in terms of total shareholder return on a 3, 5, 10 and 15-year basis. Over the past 15 years, we've outperformed nearly all of the other companies in the S&P 500 Utilities Index and quadrupled the average total shareholder return of the index. Over the same period, we've outperformed 80% of the companies in the S&P 500 while nearly tripling the average total shareholder return of the index. We are proud of our long-term track record of providing growth and value creation opportunities for our shareholders, and we remain intensely focused on execution and continuing to drive shareholder value over the coming years. At FPL, net income increased nearly 11% year-over-year while continuing to deliver on its commitment to making smart, long-term investments in innovative technology, clean energy and strengthening our electric grid for the benefit of our customers. We were pleased the Florida Public Service Commission unanimously approved the settlement agreement in October, an agreement, which we believe is a fair and balanced outcome in our base rate case. The 2021 settlement agreement supports continued smart capital investments, including the largest solar build-out by a utility in the U.S. while keeping FPL's typical residential bills well below the national average and among the lowest in Florida through the end of 2025. For customers in Northwest Florida, typical customer bills are projected to decline over the next four years. Among the long-term infrastructure investments anticipated in the new agreement, new solar generation is expected to grow through the expanded SolarTogether community solar program, which is expected to more than double over the next four years, as well as through new base rate solar generation, including the nearly 1,800 megawatts to be recovered under solar base rate adjustments, or SoBRA, upon reaching commercial operations in 2024 and 2025. In total, our current solar build-out expectations are for approximately 4,800 megawatts of new solar over the term of the settlement agreement. In early 2019, FPL announced its ground-breaking goal to install 30 million solar panels in Florida by 2030. With the anticipated solar additions approved under the settlement agreement, I am pleased to announce that we now expect to reach this milestone by 2025, five years earlier than previously anticipated. Including the solar additions anticipated through 2025, this ambitious 30-by-30 initiative is expected to have generated approximately $2.5 billion in fuel cost savings for customers and created more than 20,000 construction jobs, while supporting the Florida economy with more than $700 million in property taxes over the life of the assets. During 2021, FPL successfully executed on its strategic initiatives, including placing another 671 megawatts of cost effective solar in service, completing the first roughly 1,500-megawatt phase of our SolarTogether community solar program. Additionally, last month we commissioned the world’s largest integrated solar-powered battery system, the 409-megawatt Manatee Energy Storage Center, which will allow our customers to benefit from low-cost solar energy even during times when the sun is not shining. FPL has also continued to provide exceptional service reliability, achieving its best-ever reliability rate in 2021, and FPL was recognized for the sixth time in seven years as being the most reliable electric utility in the nation. Moreover, FPL was ranked number one in both residential and business customer satisfaction in the southern U.S. amongst large electric providers by J.D. Power in 2021, and we are completely committed to continuing to provide clean, affordable, and reliable service to our customers for many years to come. Energy Resources also had a terrific year in 2021, delivering adjusted earnings growth of 13% versus the prior year. The team also had an outstanding, record year of renewables and storage origination, adding approximately 7,200 net megawatts to our backlog during the year as we continue to capitalize on the ongoing clean energy transition that is occurring in our nation’s generation fleet. Our backlog additions have grown at a more than 20% compound annual growth rate since 2017, and we are well on our way to meeting our current development expectations for new signed contracts. With the significant additions to our backlog of signed contracts over the last year, we've now signed nearly 80% of the megawatts needed to realize the midpoint of our 2021 to 2024 development expectations range with significant time remaining to sign additional power purchase agreements. Our supply chain and engineering and construction teams also continued to execute in 2021, commissioning approximately 3,800 megawatts of new wind and wind repowerings, solar and storage projects. Over the past two years, Energy Resources has constructed more than 9,500 megawatts of renewables and storage projects, demonstrating the strength and resiliency of its execution expertise even in the midst of a global pandemic and industry-wide supply chain disruptions. Finally, during 2021 NextEra Energy Transmission furthered its efforts to grow America's leading competitive transmission company and had its best year ever. During the year, the business delivered a record earnings contribution by increasing net income by nearly 20% over its previous earnings contribution record in 2020. Growth in renewables means that there is also a growing imperative to build additional transmission across the U.S. to support this transition to a low-cost, low-carbon economy fueled by renewable energy. We anticipate that NextEra Energy Transmission will continue to capitalize on the growing opportunity set to both deploy capital profitably as well as to enable further renewables deployment. The tremendous execution of both of the major businesses in recent years including 2021 gives us great visibility to the longer-term outlook of NextEra Energy. Let me start with our opportunity set, which I would not trade with anyone in our industry. At Florida Power & Light, the settlement agreement allows us to focus on operating the business efficiently, reliably and affordably for the benefit of our customers. Under the new agreement, we expect our average annual growth in regulatory capital employed to be between 8 and 9 percent over the four-year term through 2025. When you put it all together

Rebecca Kujawa:

Thank you, John. And good morning, everyone. Let's now turn to the detailed results, beginning with FPL. For the fourth quarter of 2021, FPL reported net income of $560 million or $0.28 per share, up $0.03 per share year-over-year. For the full year 2021, FPL reported net income of $2.94 billion or $1.49 per share, an increase of $0.14 per share versus 2020. Regulatory capital employed increased by approximately 11% for 2021, and was the principal driver of FPL's net income growth of nearly 11% for the full year. During the fourth quarter, net income was impacted by a number of factors, including an approximately $32 million pretax contribution to our charitable foundation that will allow it to continue to support the communities that we serve. FPL's capital expenditures were approximately $2.2 billion in the fourth quarter, bringing its full year capital investments to a total of roughly $6.8 billion. FPL's reported ROE for regulatory purposes is expected to be 11.6% for the 12 months ended December 31, 2021. During the fourth quarter, we utilized approximately $137 million of reserved amortization, leaving FPL with a year-end 2021 balance of $460 million. As a reminder, our new four-year settlement agreement became effective this month, and includes the flexibility over the four-year term to amortize up to $1.45 billion of depreciation reserve surplus, which is inclusive of $346 million in reserve amount that we previously anticipated to be remaining at year-end 2021 under FPL's now expired 2016 rate agreement. Consistent with the terms of the 2021 settlement agreement, half of the $114 million in excess reserve balance at year-end 2021 will be used to reduce our outstanding capital recovery asset balance. And the other half will increase FPL's storm reserve to offset future restoration costs. As a reminder, the new agreement limits reserve amortization to $200 million in 2022, which we will treat as a limitation in any given quarter during the year. Given the historical shape of our customer usage, we typically use more reserve amortization in the first half of the year and reverse reserve amortization in the hotter summer months. We currently expect FPL to initially earn below our target regulatory ROE in the early part of 2022. Although for the full year we are targeting the upper end of the allowed range of 9.7% to 11.7%. As a result, we also expect FPL's earnings growth to be lower in the first half of the year and higher in the second half. As always, our expectations assume our usual caveats, including normal weather and operating conditions. Our overall capital program at Florida Power & Light is progressing well. We continue to advance one of the nation's largest solar expansions and met our solar deployment objectives at both FPL and Gulf Power in 2021, including commissioning more than 800 megawatts of new solar across the combined system. Beyond solar, construction on the highly efficient roughly 1,200-megawatt Dania Beach Clean Energy Center remains on schedule and on budget, as it continues to advance towards its projected commercial operations date later this year. The North Florida Resiliency Connection remains on track to be in service by mid-2022. Let me now turn to Gulf Power, which, as a reminder, was legally merged into FPL on January 1, 2021, but continue to be reported as a separate regulated segment during 2021. Gulf Power reported fourth quarter 2021 GAAP earnings of $60 million or $0.03 per share. For the full year, Gulf Power reported net income of $271 million or $0.14 per share an increase of $0.02 per share year-over-year. Base O&M reductions and investments in the business were the primary drivers of Gulf Power's approximately 14% year-over-year growth in net income. Gulf Power's capital expenditures for the full year were roughly $800 million, and it’s reported ROE for regulatory purposes is expected to be approximately 11.25% for the 12 months ending December 2021. Given that this is the last time we will be talking about Gulf Power's financial results, let me take a moment to summarize the team's execution over the past three years. Gulf Power has delivered significant improvements in all key financial and operational metrics, while meaningfully improving its customer value proposition. The execution of the NextEra Energy playbook at Gulf Power, which is focusing on reducing costs and making smart capital investments for the benefit of customers, has been a remarkable success. Gulf Power has realized a nearly 40% reduction in O&M costs since the acquisition. Since 2018, Gulf Power improved service reliability by nearly 60%, and was awarded national recognition for its outstanding reliability performance in the Southeast suburban and rural service area for the second year in a row in 2021. Over the same period, Gulf Power realized an approximately 60% improvement in safety among our employees who have worked tirelessly to help us execute on our plans. Regulatory capital employed has grown by approximately 16% compound annual growth rate since 2018. We have invested approximately $2.5 billion in long-term improvements to Gulf Power's existing system and generation fleet. As a result of our clean power modernization investments at Gulf Power, we have already delivered an approximately 25% reduction in CO2 emissions over the last three years, and we look forward to further expanding the opportunity for our customers to access clean, low-cost solar and storage in the years to come. This high level of performance across the board could not have been possible without the hard work and commitment of all of the Gulf Power employees. And I would like to thank all of our Florida Power & Light employees, old and new, for their relentless focus on reducing costs while improving reliability and safety over the past three years. Execution of the plans that we laid out at Gulf Power has generated great outcomes for our shareholders as well. Gulf Power's net income has grown by a compound annual growth rate of approximately 19% since 2018, an outcome that was even better than our expectations when we announced the acquisition. Our performance with Gulf Power is a clear validation of our strategy and our conviction that you can be clean, reliable, affordable and profitable at the same time. The Florida economy remains strong. Over the last 10 years, Florida's GDP has grown at a roughly 5% compound annual growth rate. The GDP of Florida is roughly $1.2 trillion, which is up approximately 8% from pre-pandemic levels and would make Florida the 15th largest economy in the world. At the same time, Florida's population continues to grow at one of the fastest rates in the nation. According to recent Census Bureau data, more people moved to Florida from other parts of the country than to any other state in 2021. We believe this is a reflection of Florida's unique proposition in terms of great weather, low taxes and a pro-business economy, all of which should support ongoing customer growth at Florida Power & Light. Over the past year, Florida has created more than 485,000 new private sector jobs and Florida's labor force participation rate has improved significantly. Three months average Florida building permits, a leading indicator of residential new service accounts are up 15% year-over-year and have outpaced the nation's quarterly growth in new building permits by roughly 13%. Other measures of confidence in the Florida economy have meaningfully improved versus the prior year, including a 34% improvement in Florida's retail sales index and a 2.6% decline in mortgage delinquencies while mortgage delinquencies across the U.S. have remained roughly flat. During the quarter, FPL's average customer growth was strong, increasing by nearly 82,000 customers from the comparable prior year quarter. FPL's fourth quarter retail sales were down 1.5% versus the prior year period, driven by an unfavorable weather comparison. For 2021, FPL's retail sales increased 1.7% from the prior year on a weather-normalized basis, driven primarily by ongoing strong customer growth and a 1.5% year-over-year increase in underlying usage per customer. Additional details are shown on the accompanying slide. Energy Resources reported fourth quarter 2021 GAAP net income of $851 million or $0.43 per share. Adjusted earnings for the fourth quarter were $414 million or $0.21 per share. Energy Resources contribution to adjusted earnings per share in the fourth quarter is up $0.04 versus the prior year comparable period. For the full year, Energy Resources reported GAAP earnings of $599 million or $0.30 per share and adjusted earnings of approximately $2.21 billion or $1.12 per share. Energy Resources full year adjusted earnings per share contribution increased $0.13 or approximately 13% versus 2020. For the full year, growth was driven by continued new additions to our renewables and energy storage portfolio as contributions from new investments increased by $0.12 per share. Contributions from existing generation and storage assets decreased $0.04 versus the prior year due primarily to underperformance in our existing wind fleet as a result of extreme market conditions in Texas in February of last year. NextEra Energy Transmission and Gas Infrastructure contributed favorably, increasing results by $0.01 and $0.02, respectively, year-over-year, while the contribution from our customer supply and trading businesses decreased $0.02 versus 2020; all of their impacts increased results by $0.04 year-over-year. As Jim mentioned, Energy Resources had an outstanding year delivering our best year ever for origination, adding approximately 7,200 net megawatts of new renewables and battery storage projects to our backlog. In 2021, we commissioned approximately 3,800 megawatts of wind, solar and storage projects, including a 110-megawatt build-on transfer project that was not included in our backlog. In addition, since the last call, we have added approximately 1,500 megawatts of renewable projects to our backlog; including approximately 700 megawatts of new wind and wind repowerings, 300 megawatts of solar, and 500 megawatts of battery storage. Our origination performance in 2021 reflects continued high demand among all customer classes for clean energy solutions that not only help achieve their renewable energy goals, but perhaps more importantly allow our customers to save energy on – save money on energy costs, while switching to lower cost forms of generation like wind, solar and solar-plus storage. Our renewables backlog now stands at more than 6,600 megawatts, which is roughly the size of our entire renewable generation portfolio at the end of 2017, and nearly 25% larger than our backlog at year-end 2020. And this provides terrific visibility into the strong growth that lies ahead for Energy Resources over the next few years. The accompanying slide provides additional details on where our development program and energy resources now stand. We remain optimistic about the expanded investment opportunities that the broad decarbonization of the U.S. economy presents for Energy Resources. We believe that there are many new market opportunities where our industry leading development platform will provide a competitive advantage to further grow our core long-term contractor of renewables and storage business. As we have previously discussed green hydrogen presents a particularly compelling new market for Energy Resources. During the fourth quarter a clean energy technology company in which we are a minority equity investor and that it has developed a proprietary process to decarbonize industrial production of hydrogen and economic prices. One, a conditional approval for an approximately $1 billion DOE, Department of Energy loan to expand its clean hydrogen and carbon black product facilities in Nebraska. Our agreement with this company provides Energy Resources the opportunity to be its preferred renewable energy supplier for the facility and we are encouraged by the acceleration of the facilities build-out that is expected to occur as a result of this new loan. Similarly, early in the year we completed the strategic investment in a liquid fuels company with a proprietary process to produce zero emissions synthetic fuels by combining green hydrogen with concentrated carbon dioxide streams captured from industrial processes. Our strategic partnership with this company includes the opportunity for energy resources to provide up to 3,000 megawatts under a preferential energy supply agreement. Finally, as part of our efforts to help our commercial and industrial customers achieve their substantial goals for both energy savings and decarbonization we recently announced an agreement with JPMorgan Chase that allows for use of our proprietary state-of-the-art smart energy software to optimize its energy use and reduce its carbon footprint. Energy Resources advanced software platform uses artificial intelligence and block-chain technology and leverages data from the industry leading renewables and storage fleet owned and operated by Energy Resources. Two, among other things match energy demand with clean energy resources available on the market in real time. We recently signed a similar agreement that allows a large university to use our advanced software platform to manage and optimize a more than 100-megawatt solar plus storage asset in California. Through these initiatives Energy Resources is leveraging its best-in-class renewable energy expertise to provide significant value to its customers in a market with meaningful growth potential. We are at the vanguard of building a sustainable energy era that is both clean and affordable, and we are driving hard to continue to be at the forefront of the disruption that is occurring within the energy sector and broader parts of the U.S. economy. Consistent with our long-term track record, we will remain disciplined as we take steps to be at the forefront of these developing markets, while taking a leadership role in clean energy transition, expected to drive tremendous growth for Energy Resources over the next decade and beyond. Turning now to the consolidated results for NextEra Energy. For the fourth quarter of 2021 GAAP net income attributable to NextEra Energy was $1.2 billion or $0.61 per share. NextEra Energy's 2021 fourth quarter adjusted earnings and adjusted EPS were $814 million or $0.41 per share respectively. For the full year 2021 GAAP net income attributable to NextEra Energy was $3.57 billion or $1.81 per share. Adjusted earnings were $5.02 billion or $2.55 per share. For the Corporate and Other segment, adjusted earnings for the full year decreased $0.05 per share compared to the prior year, primarily as a result of higher interest and refinancing costs associated with certain liability management initiatives completed during the fourth quarter to take advantage of the low interest rate environment. Our fourth quarter refinancing activities reduced nominal adjusted net income by roughly $140 million. We expect these initiatives to translate into favorable net income contribution in future years and an overall improvement in net present value for our shareholders. Specifically, during the fourth quarter, NextEra Energy successfully refinanced approximately $5.2 billion in existing debt and hybrid securities and proactively issued roughly $4.9 billion in replacement funding. This combination of redemptions and new issuance extended its maturity profile by over 6 years and is expected to generate an approximately $30 million after-tax reduction in annual interest expense in the near-term. Capital recycling remains an important part of our financing plan as we continue to execute on the tremendous growth opportunities in front of us. During the fourth quarter, Energy Resources closed on its previously announced agreements to sell a portfolio of newly constructed and under construction renewable assets to NextEra Energy Partners and to a third-party infrastructure investor. Through the sale of this 2.5-gigawatt renewables portfolio, Energy Resources was able to recycle nearly $3.5 billion of capital, including the tax equity proceeds in accretive manner, and take advantage of the strong market for wind, solar and storage assets. We believe that our renewables development platform at Energy Resources is second to none, and our ability to continue to harness market demand for renewables and recognize the value of that platform is a key competitive advantage for NextEra Energy as it continues to grow its portfolio of long-term contracted operating renewables and storage assets at Energy Resources. Turning now to our financial expectations for NextEra Energy. As Jim discussed, today we are increasing the ranges of our adjusted EPS expectations for 2022 and 2023, and introducing our expectations for 2024 and 2025. For 2022, NextEra Energy now expects adjusted earnings per share to be in a range of $2.75 to $2.85. For 2023 through 2025, NextEra Energy expects to grow roughly 6% to 8% off of the expected 2022 adjusted earnings per share range, and we will be disappointed if we are not able to deliver financial results at or near the top end of these ranges for each year. Details of our new financial expectations are included on the accompanying slide. From 2021 to 2025, we expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through at least 2022 off of a 2020 base. As always, our expectations assume our usual caveats. Let me now turn to the detailed financial results for NextEra Energy Partners. Fourth quarter adjusted EBITDA was $322 million and cash available for distribution was $91 million. Adjusted EBITDA growth versus the prior year comparable quarter was primarily due to the growth in the underlying portfolio. For the full year 2021, adjusted EBITDA was $1.36 billion, up 8% year-over-year, and was primarily driven by the full contribution from new projects acquired in late 2020. In our existing projects portfolio, favorable performance from NextEra Energy Partners' natural gas pipeline investments and contributions from the wind repowerings that we added at the end of 2020 were partially offset by weaker wind resource and lower generation at our Genesis solar project as a result of outages for major maintenance in the first and fourth quarters of 2021. For the full year, wind resource was 98% of the long-term average versus 100% in 2020. Cash available for distribution was $584 million for the full year. The benefit to cash available for distribution from lower corporate level interest expense was partially offset by comparably higher project-level financing costs on our Genesis solar project and other existing assets that were recapitalized to fund the acquisition of approximately 500 net megawatts from Energy Resources at the end of 2020. Over the past three years, NextEra Energy Partners' cash available for distribution has grown at a compound annual growth rate of approximately 20%. As a reminder, these results include the impact of IDR fees, which we treat as an operating expense. Additional details are shown on the accompanying slide. Yesterday the NextEra Energy Partners Board declared a quarterly distribution of $0.7075 per common unit, or $2.83 per unit on an annualized basis, up 15% from the comparable quarterly distribution a year earlier and at the top end of the range we discussed going into 2021. During the quarter, NextEra Energy Partners closed on the initial funding of its approximately $820 million convertible equity portfolio financing with Apollo Global Management and used those proceeds, along with existing NextEra Energy Partners debt capacity, to fund its acquisition of approximately 1,300 net megawatts of renewables and storage from Energy Resources. Under the terms of the agreement, NextEra Energy Partners is expected to benefit from a low implied initial cash coupon over the first ten years despite only providing approximately 4% of the upfront capital needed to purchase the assets, while we expect will allow NextEra Energy Partners to achieve a full return of its capital invested into this acquisition in less than two years. Additionally, the financing will provide NextEra Energy Partners the flexibility to periodically buy out the investor's equity interest between the five and ten-year anniversaries of the agreement at a fixed pre-tax return of approximately 5.6% inclusive of all prior distributions, making this NextEra Energy Partners' lowest cost convertible equity portfolio financing to date. NextEra Energy Partners will have the right to pay up to 100% of the buyout price in NEP common units, issued at no discount to the then-current market price. NextEra Energy Partners also issued approximately 7.25 million new NEP common units during the fourth quarter to acquire the remaining equity interests in a portfolio of 1,388 megawatts of wind and solar assets associated with the convertible equity portfolio financing that NEP entered into in 2018. NextEra Energy Partners funded the remaining roughly $265 million of the approximately $885 million of total consideration for the acquisition of equity in the portfolio with project-level debt issued on a subset of the underlying assets. The nearly $650 million project financing supported by these assets, which was also the lowest-cost project-level debt financing in the partnership's history, is reflective of the strong performance of the underlying assets in the portfolio and also supported financing of other growth opportunities executed in 2021. From an updated base of our fourth quarter 2021 distribution per common unit at an annualized rate of $2.83, we continue to see 12% to 15% growth per year in LP distributions as being a reasonable range of expectations through at least 2024. We expect the annualized rate of the fourth quarter 2022 distribution that is payable in February 2023 to be in a range of $3.17 to $3.25 per common unit. We continue to expect to achieve our 2022 distribution growth of 12% to 15% while maintaining a trailing 12-month payout ratio in the low-80% range. Given the successful execution of the recent acquisition from Energy Resources, as well as the approximately 100-megawatt operating wind facility from a third party, year-end December 31, 2021 run-rate adjusted EBITDA and cash available for distribution exceeded our previous expectations ranges. As a result, today we are introducing new year-end 2021 run-rate expectation ranges for adjusted EBITDA and cash available for distribution of $1.635 billion to $1.795 billion and $640 million to $720 million, respectively. With the combination of strong cash flow generation from the existing NextEra Energy Partners portfolio, including the approximately 2,400 net megawatts of new renewables and storage added during 2021 and its relatively low payout ratio, NextEra Energy Partners has significant flexibility in terms of acquisitions in the coming year. Although acquisitions could occur at any time in 2022, for modeling purposes it may be practical to assume that any new unannounced asset additions occur late in 2022 and therefore have limited contributions to the calendar-year 2022 expectations implied by the year-end 2021 run rates for adjusted EBITDA and cash available for distribution for the portfolio that we just discussed. NextEra Energy Partners run rate expectations for adjusted EBITDA and CAFD at December 31, 2022 remain unchanged. Year-end 2022 run-rate adjusted EBITDA expectations are $1.775 billion to $1.975 billion and CAFD in the range of $675 million to $765 million, respectively, reflecting calendar-year 2023 expectations for the forecasted portfolio at year-end 2022. As a reminder, all of our expectations are subject to our normal caveats and include the impact of anticipated IDR fees, as we treat these as an operating expense. In summary, we continue to believe that both NextEra Energy and NextEra Energy Partners have excellent prospects for growth both in the near and longer term. Florida Power & Light, Energy Resources and NextEra Energy Partners each have an outstanding set of opportunities across the board. The progress we made in 2021 reinforces our longer-term growth prospects and, while we have a lot to execute on in 2022, we believe that we have the building blocks in place for another excellent year. That concludes our prepared remarks and with that we will open the line for questions.

Julien Dumoulin-Smith:

Hi, good morning team and thank you for the time and congratulations to everyone here. So many folks so well deserved. Indeed, Jim, we'll miss you, but we'll see you soon enough here, I'm sure.

Julien Dumoulin-Smith:

Absolutely. If I can pivot here just to some of the core questions. First off, just impressive guidance. Can you talk about how you're thinking about BBB? I mean, maybe the way to ask this is a little bit in reverse. How do you think about BBB if that had actually happened here? What assumptions are you making out in 2025 on extensions or which frankly appear more likely than not eventually anyway? And perhaps more directly, how are you thinking about investments beyond wind and solar in those 2025 figures, for instance, storage or hydrogen, for instance?

Julien Dumoulin-Smith:

Yes. I got you there. Feel free to opine any more on the 2025 guidance. I know that it's probably preempting a little bit the June Analyst Day, regardless. And then maybe if I could pivot in brief, any thoughts or comments you'd like to share around some of the headlines pertaining to FPL here? I know there has been a lot of back and forth and perhaps there is a lot of context to provide there.

Rebecca Kujawa:

Julien, as you might appreciate, and I'm sure everyone does on the call, when we think about our ranges of expectations, particularly when we're talking about several years out, like you asked about specifically 2025, there are quite a number of variables that we consider in order to set those ranges. And in particular, for the comment that we provided that we'd be disappointed not to be at the high end of each of those ranges, including 2025. I would say the key parts that we think about, first on Florida Power & Light Company, we've got the outcome from the four year settlement agreement that is now the – how we expect to operate for the next couple of years, and that creates the opportunity to continue investing in the business and executing on the strategy that's been so successful for customers over quite a number of years looking back, so we can continue that for the next couple of years. And we believe that, that will enable us to grow rate base in the range of 8% to 9% on a compound annual growth rate basis, assuming all of the investments that were anticipated in the settlement agreement, ultimately, we're able to successfully bring into service. On the Energy Resources side, the biggest drivers are the ones that we've talked about and are laid out in the slide materials on Page 16. Looking at our development ranges for all of wind, solar, energy storage and wind repowering over this four year period from 2021 through 2024, which obviously would have the largest impact on what our earnings look like in 2025. As Jim highlighted, if there is change in regulatory or incentive structures, we would obviously factor that in the future. But that's not anticipated in these estimates, and we feel really good about how we're positioned to execute between now and then. We do have to execute a lot. We have to execute the energy resources, which I'm excited to take on that challenge. We have a lot to do to continue delivering like we have at Florida Power & Light, but I think we're in a great position to do so.

Rebecca Kujawa:

Thank you, Julien.

Steve Fleishman:

Yes. Thanks. Good morning. Congrats, Jim and John and everyone else. So maybe, Jim, could you just give us a little more color on what you are going to focus your time on as Executive Chair and how long you intend to likely be in that role?

Steve Fleishman:

Okay. That's helpful. Second question, just on the kind of renewables development, maybe you could just talk a little bit to the trends that you're seeing there. It did seem like fourth quarter slowed versus the prior quarters in terms of backlog growth. And is there may be some kind of waiting to see what happens with folks on BBB in the market right now or anything else that you might want to highlight?

Steve Fleishman:

Okay, great. And then one last question, just on the guidance improvement. If I had to kind of simplify kind of what's driving the higher guidance, 2022 and beyond in terms of factors? Any just kind of key reasons you would say for the higher guidance?

Steve Fleishman:

Great, thank you.

Operator:

The next question comes from Shar Pourreza with Guggenheim Partners. Please go ahead.

Rebecca Kujawa:

Good morning.

Rebecca Kujawa:

Thanks, Shar. And I appreciate the question. We do think there's a lot of opportunities as I talked about in the prepared remarks, not only of purely executing our renewables for the electricity sector, but helping use clean energy to decarbonize these other industries. And we're thinking about some of these investment opportunities as a way to explore how those business models and investment opportunities are ultimately going to shape up over time. But to answer your direct question around the incentives, the investments we've made to date do not assume that there's a change of incentives or even the specific question around hydrogen that there's a hydrogen PTC. But as John and his team, the Energy Resources team has evaluated a number of hydrogen pilot opportunities or future business opportunities. They certainly would be furthered and helped. Some of them would be by hydrogen PTC. And that's one of the things that I know we, as a whole team remain optimistic about that if something happens, whether it's the full BBB or just a climate title that happens through reconciliation, we're optimistic that a hydrogen incentive would be included in that package. I think there's a lot of opportunities to further the decarbonization of the U.S. economy through the use of hydrogen. So short answer, investments don't assume it, but I think there's even more opportunity if there are some incentives like the hydrogen PTC in the future.

Rebecca Kujawa:

Yes. One of the strategic imperatives, the way that we think about managing the business over the long-term, and I highlighted a couple of times in remarks and we highlighted on a consistent basis because it's a high priority for us is maintaining that strong balance sheet. As you've seen, quality of credit degrade elsewhere in the industry, we have remained as committed as ever to maintaining that strong balance sheet. We think it's a huge differentiator for us and being able to execute our business to deploy the capital that we deploy and to provide the stability that our customers assume and expect from us, we think a strong balance sheet is imperative. So, as we think about all of these investment opportunities, the growth in our business, that will remain a priority, and we will assume that as part of the way that we're thinking about the business as a private facia part of the strategy.

Rebecca Kujawa:

Thanks, Shar.

Steven Boyd:

Hey good morning. I just want to echo congratulations to Jim, and to John and Rebecca, and Kirk and Eric. The performance you all have achieved is really quite remarkable. So, congrats are absolutely in order. So just so happy for you all. I wanted to spend a little time on the technology side. I guess it strikes me that within NextEra for years; you've all been developing a variety of interesting technologies, sometimes not always as visible to us. But it just strikes me that some of those developments are becoming both more visible and potentially more commercial, more of interest in terms of ways you can monetize that to a fairly broad customer base. And then just curious, I know this is a high-level question, but just interested in your take on how important technology such as some of the software development that you all mentioned could be to driving earnings power to driving growth of NextEra in the long-term?

Steven Boyd:

That's really helpful Rebecca. And would that be essentially upside to the plan, in other words, sort of beyond the typical kind of numbers we see around renewables deployment, et cetera? Is this an area of upside? Or have you factored some of this into thinking about your growth?

Steven Boyd:

Okay, I agree. Maybe just one last one for me. We're often asked about impediments to growth in clean energy and pretty clearly, NextEra is not experiencing that. Just curious if you could talk a little bit more about just sort of some of those impediments sort of perception versus reality, things like supply chain, labor availability, permitting, anything else? Just sort of – I think there, frankly, is sometimes a misconception about those limits to growth. And it looks like clean energy growth remains very strong, especially for NextEra. But just curious if you could just comment on those perceptions of limits on growth.

Stephen Byrd:

That's great of you. Thank you so much.

Operator:

The next question comes from Michael Lapides with Goldman Sachs. Please go ahead.

Rebecca Kujawa:

Yes, it's probably about $7 billion to $8 billion per year. It's included, Michael, in the regulatory capital employed growth of roughly 8% to 9% per year.

Rebecca Kujawa:

There's a mix, of course, Michael, as you might expect and we certainly have our best laid plans that will include as part of the updated CapEx tables in the 10-K when we publish it in a couple of weeks. One comment on that, I would make and obviously there's a difference between, as you recall, from the CapEx table for FPL versus Energy Resources. But in both cases, as you get closer to that operating year, the teams tend to find good investment opportunities that are value accretive from a customer standpoint and may add and subtract to those over time. But those will be our best estimates based on what we've seen so far and also under the parameters of the settlement agreement inclusive of the SolarTogether investments that were approved as part of the settlement agreement. And also anticipate the current views around the investments on both storm hardening and undergrounding that, as you know, are included in a clause mechanism and recovered separately and approved separately over time. Those change over time depending on what we see and where we see the value coming for our customers, but we feel very good about the overall views. And of course, we'll give more details as we go into the investor conference in June.

Rebecca Kujawa:

Sure. Let me answer the – I don't know if you're asking full on the NextEra Energy side where we typically have the language would be disappointed not to be at or near the high end. That language is exactly the same. And if anything changes solely a stumble on my part in terms of speaking, but the language is exactly the same. If you're asking specifically around Florida Power & Light Company, the approved range, as you know, for the settlement agreement is the range of 9.7% to 11.7%. And my comment was specifically around our expectations for 2022, which, of course, is the first year of the new settlement agreement. And that also includes the one-year limitation that was included in the settlement agreement around the use of surplus amortization just in this year, which is a maximum amount of $200 million. When we think about everything, what our investment plans are, our opportunities for continuing to focus on cost improvements, other improvements for customers, the investments that we plan to make, and the use of the surplus amortization, including the shape over time. We believe that at the end of the year we'll be able to report a regulatory ROE at the high end of the range. Where exactly that is, of course, we'll refine it over the – as the year progresses. And then, of course, we'll be targeting the high end of the ROE range in future years as well.

Rebecca Kujawa:

Thank you so much, Michael.

Jeremy Tonet:

Hi, good morning.

Jeremy Tonet:

You covered a lot of ground today. Just one question for me and it's kind of been touched on a few different times, but just diving in with the transition, in general. Just wondering if you could comment a little bit more about why now is the right time versus any point in the past or in the future to make the transition. And then should we expect anything new in messaging from NextEra with the transition here? Could we expect something kind of new along these lines at the Analyst Day?

Rebecca Kujawa:

And I think, Jeremy, you had a second question going into the investor conference. Can you remind me what that was?

John Ketchum:

Yes. For the Analyst Day, first of all we have never been in a better position. We're coming off of what I would characterize as our best year as a company. And it's been really a testament to the entire lead team, not only obviously the job Jim's done, but the job Eric's done, the job Rebecca's done and the leadership team that we have in place at Energy Resources. We have an extremely deep bench with a ton of experience. I've been here almost two decades. Eric's been here almost two decades. Rebecca has been here 15 years. And we have just a wealth of experience in the team that will bring full bear on the opportunity set that we have that we have going forward. And the way I think about it is we will continue to double down on the core. That means execution. Like – unlike what we've seen in the past around FPL and the capital plan that they have for customers and for shareholders, the renewable opportunity that we have in this country. Don't forget renewables are cheap; they're the cheapest form of generation in this country with or without incentive. So we have a tremendous opportunity there as well. And then the third piece I would characterize as the renewable enablers. What are the other things that we can do as a company that we've been working on behind the scenes that will help position us to be the leader of the energy transition in this country, and we're going to deal with the best team in the industry. So that's really what you're going to hear about at the Analyst Day.

Operator:

This concludes our question-and-answer session and the NextEra Energy and NextEra Energy Partners earnings conference call. Thank you for attending today's presentation. You may now disconnect.

Operator:

Good morning, everyone, and welcome to the NextEra Energy and NextEra Energy Partners Q3 2021 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Jessica Aldridge, Director of Investor Relations. Ma'am, please go ahead.

Rebecca J. Kujawa:

Thank you, Jessica, and good morning, everyone. NextEra Energy delivered strong third quarter results with adjusted earnings per share increasing by approximately 12% year-over-year. Both the principal businesses executed well on major initiatives and we continue to advance our opportunity set for new renewables and storage. Building upon the solid progress made in the first half of the year, NextEra Energy is well positioned to meet its overall objectives for 2021 and beyond. Earlier this month, we were honored to be named on Fortune's 2021 Change the World list, the only electric utility in the world to be recognized. This recognition is a testament to NextEra Energy's best-in-class position in the renewable energy sector and our continued commitment to the customers and communities that we serve. At FPL, net income increased approximately 10% versus the prior-year comparable period, reflecting contributions from continued investment in the business. Most notably, during the quarter, we reached what we believe is a fair and constructive long-term settlement agreement with a number of intervenors in our rate case, continuing a long history of negotiated outcomes that benefit both customers and shareholders. We believe the agreement, if approved, should enable us to continue to focus on operating the business efficiently while investing in the future to ensure resilience, reliability, affordability and clean energy for generations to come in Florida. We expect the Florida Public Service Commission to vote on our agreement at its agenda conference on October 26, and I'll provide more details on the proposed agreement in a few minutes. FPL's major capital initiatives continue to progress well, including what will be the world's largest integrated solar power battery system, the 409-megawatt FPL Manatee Energy Storage Center that is now 75% complete and on track to begin serving customers later this year. Gulf Power also had a great quarter of execution, and its strong year-to-date financial performance is attributable to continued successful implementation of the cost reduction initiatives and smart capital investments that we previously outlined. Gulf Power's year-to-date net income contribution increased approximately 14% versus the prior-year comparable period. And we remain focused on improving Gulf Power value proposition by providing lower costs, higher reliability, outstanding customer service and clean energy solutions for the benefit of our customers. At Energy Resources, adjusted earnings for the quarter increased by approximately 12% year-over-year. Our development team had another terrific quarter of new renewables and storage origination, adding approximately 2,160 megawatt to our backlog since the last earnings call, marking the best quarter of overall origination and the best quarter of new wind additions in Energy Resources' history. These backlog additions include approximately 225 megawatts of combined solar and storage projects and a 500 megawatt wind project that is intended to power an adjacent new green hydrogen facility, which I'll provide some additional details on in just a few minutes. We continue to expect that our competitive advantages will drive meaningful growth in renewables and various forms of energy storage at Energy Resources in the coming years, as the trend toward broad decarbonization across many facets of the US economy takes hold. Overall, with three strong quarters complete in 2021, we are pleased with the progress we are making at NextEra Energy, and we are well positioned to achieve the full-year financial expectations that we have previously discussed subject to our usual caveats. Now, let's look at the detailed results, beginning with FPL. For the third quarter of 2021, FPL reported net income of $836 million or $0.42 per share, which is an increase of $79 million and $0.04 per share, respectively year-over-year. Regulatory capital employed increased by approximately 10.5% over the same quarter last year and was the principal driver of FPL's year-over-year net income growth of approximately 10%. FPL's capital expenditures were approximately $1.5 billion in the third quarter and we expect its full-year capital investments to total between $6.6 billion and $6.8 billion. Our reported ROE for regulatory purposes will be approximately 11.6% for the 12 months ended September 2021. During the quarter, we restored $124 million of reserve amortization, leaving FPL with a balance of $597 million. As you know, much of the East Coast of the US was recently impacted by Hurricane Ida, which made landfall on the Gulf Coast as a Category 4 hurricane and also caused catastrophic flooding across the Northeastern US. Our deepest sympathies are with those that have been impacted by Ida's widespread destruction. We value deeply the industry's commitment to mutual assistance and we were fortunate to be in a position to assist other utilities this year. As part of our assistance efforts, we sent more than 1,250 of our employees and contractors as well as transmission equipment and other supplies to help rebuild the grid to support the restoration efforts of the impacted utilities. Let me now turn to Gulf Power, which reported third quarter 2021 net income of $91 million or $0.05 per share. Gulf Power's third quarter EPS contribution was flat versus the prior-year comparable quarter. As a reminder, the third quarter of 2020 benefited from the reversal of COVID-19 related expenses that had occurred earlier in that year. During the quarter, Gulf Power's regulatory capital employed grew by approximately 13% year-over-year. Gulf Power's capital expenditures were approximately $200 million during the third quarter and we expect its full-year capital investments to be roughly $800 million. For the full year 2021, we continue to expect Gulf Power's regulatory ROE to be in the upper half of the allowed band of 9.25% to 11.25%. All of our major capital initiatives at Gulf Power are progressing well. Gulf Power anticipates bringing approximately 150 megawatts of cost effective zero emission solar capacity online within the next six months. The North Florida Resiliency Connection, which among other things, will allow customers to benefit from greater diversity in solar output across the two different time zones, is expected to be in service in mid-2022. These continued smart capital investments in renewables and core infrastructure are expected to drive customer benefits for many years to come. During the quarter, Gulf Power was impacted by Tropical Storm Fred, which experienced an unexpected change in path before striking the service territory. Through a restoration workforce of roughly 1,700 personnel, Gulf Power was able to restore its service to essentially all of the approximately 20,000 customers impacted by Fred in Northwest Florida in less than 24 hours. Moreover, the average customer outage was restored in less than 2 hours. Our culture of preparation, including our annual storm drills and the team's focused execution helped ensure an efficient, timely and safe response to the tropical storm. The economy in Florida continues to grow at a healthy pace and remains among the strongest in the nation. Florida's labor force participation rate has recovered to its highest level in nearly 18 months reflecting the ongoing recovery, following the onset of the COVID-19 pandemic last year. The real estate sector in Florida also continues to grow with a three-month average new housing starts up over 40% year-over-year. In August alone, there are -- there were twice as many new housing starts in Florida than in the average over the last 10 years. Florida building permits, a leading indicator of residential new service accounts, are up 47% year-over-year and have outpaced the nation's quarterly growth by 32%. As another indicator of Florida's economic health, Florida's retail sales index is up nearly 60% versus the prior year. During the quarter, FPL's average number of customers increased by approximately 77,500 or 1.5% from the comparable year prior quarter driven by continued solid underlying population growth. FPL's third quarter retail sales decreased 1.4% from the prior-year comparable period. A decline in weather related usage per customer of approximately 2.7% offset the benefits of customer growth. On a weather-normalized basis, third quarter sales increased 1.3% with continued strong underlying usage contributing favorably. For Gulf Power, the average number of customers grew 1.6% versus the comparable prior-year quarter. And Gulf Power's third quarter retail sales increased 0.6% year-over-year with strong usage from increased customer growth contributing favorably. As a reminder, on March 12th, we initiated Florida Power & Light's 2021 base rate proceeding for rate relief beginning in January of 2022. After months of negotiation, we reached a proposed settlement agreement in early August with a number of intervenors in the proceeding. The Office of Public Counsel, The Florida Retail Federation, The Florida Industrial Power Users Group, The Southern Alliance for Clean Energy, Vote Solar, The CLEO Institute and The Federal Executive Agencies all joined the agreement, reflecting a broad set of constituents across our customer base. The four-year proposed agreement, which begins on January 2022 provides for retail base revenue adjustments as shown on the accompanying slide and allowed regulatory return on equity of 10.6% with a range of 9.7% to 11.7%, and no change to FPL's equity ratio from investor sources for the combined system. Should the average 30-year US Treasury yields be 2.49% or greater over any consecutive six-month period during the term of the agreement, Florida Power & Light's allowed regulatory ROE would increase to 10.8% with a range of 9.8% to 11.8%. Additionally, if federal or state permanent corporate income tax changes become effective during the term of the proposed agreement, Florida Power & Light would be able to prospectively adjust base rates after review of the impacts on base revenue requirements. The proposed agreement also includes flexibility over the four-year term to amortize up to $1.45 billion of depreciation reserve surplus. Consistent with the rate plan filed in March, the proposed settlement agreement would unify the rates and tariffs of FPL and Gulf Power by implementing a five-year transition rider and credit mechanism to address the initial differences in cost of serving the existing FPL and Gulf Power customers. Additionally, the proposed settlement agreement also provides for Solar Base Rate Adjustments or SoBRA, upon reaching commercial operations of up to 894 megawatts annually of new solar generation in each of 2024 and 2025, subject to a cost cap of $1,250 per kilowatt and showing an overall cost effectiveness for FPL's customers. FPL would also be authorized to expand its SolarTogether voluntary community solar program by constructing an additional 1,788 megawatts of solar generation through 2025, which would more than double the size of our current SolarTogether program and is expected to save our customers millions of dollars over the lifetime of the assets. In addition to solar energy, the settlement agreement would support FPL's green hydrogen pilot project in Okeechobee County. This innovative technology could one day unlock 100% carbon-free electricity that's available 24 hours a day. The proposed settlement agreement also introduces several electric vehicle programs and pilots designed to accelerate the growth of electric vehicle adoption and charging infrastructure investment across Florida with a total capital investment of more than $200 million. Under the proposed agreement, FPL would continue to recover prudently incurred storm costs consistent with the framework in the current settlement agreement. Future storm restoration costs would be recoverable on an interim basis beginning 60 days from the filing of a cost recovery petition, but capped at an amount that could produce a surcharge of no more than $4 for every 1,000 kilowatt hour of usage on residential bills in the first 12 months of cost recovery. Any additional costs would be eligible for recovery in subsequent years. If storm restoration costs were to exceed $800 million in any given calendar year, FPL could request an increase to the $4 surcharge. We believe the proposed settlement is fair, balanced and constructive and supports our continued ability to provide highly reliable, low cost service for our customers through the end of the decade. FPL's typical resident bill is lower today than it was 15 years ago and is well below the national average. The proposed agreement would keep typical residential bills well below the national average and among the lowest in Florida through 2025. Let me now turn to Energy Resources, which reported third quarter 2021 GAAP losses of $428 million or $0.22 per share. Adjusted earnings for the third quarter were $619 million or $0.31 per share, which is an increase of $68 million and $0.03 per share, respectively year-over-year. The effect of mark-to-market on non-qualifying hedges, which is excluded from adjusted earnings, was the primary driver of the difference between Energy Resources' third quarter GAAP and adjusted earnings results. Contributions from new investments added $0.03 per share relative to the prior year comparable quarter, primarily reflecting continued growth in our contracted renewables and battery storage program. The contribution from existing generation assets increased $0.01 per share year-over-year. Our customer supply and trading business contribution was $0.02 higher year-over-year due to favorable market conditions in our retail supply and power marketing businesses. All other impacts decreased results by $0.03 per share versus 2020, driven primarily by miscellaneous tax items. As I mentioned earlier, Energy Resources' development team had a record quarter of origination success, adding approximately 2,160 megawatts to our backlog. Since our last earnings call, we have added approximately 1,240 megawatts of new wind projects, 515 megawatts of new solar projects and 345 megawatts of new storage assets to our renewables and storage backlog. In addition, our backlog increased by Energy Resources' share of NextEra Energy Partners' planned acquisition of an approximately 100 megawatt operating wind project that the partnership is announcing today. Through the three -- first three quarters of 2021, we have added more than 5,700 megawatts to our renewables and storage backlog. Energy Resources' backlog of signed contracts now stands at approximately 18,100 megawatts. At this early stage, we have made terrific progress toward our long-term development expectations with more than 7,600 megawatts of projects already in our post 2022 backlog. Our backlog additions for the third quarter include a 500 megawatt wind project, the majority of which is contracted with a hydrogen fuel cell company. The project's customer intends to construct a nearby hydrogen electrolyzer facility that will use the wind energy production to supply up to 100% of the facility's load requirements. The hydrogen manufactured by the facility would enable commercial and industrial end users to replace their current gray hydrogen and fossil fuel purchases with emissions-free green hydrogen, further accelerating the decarbonization of the industrial and transportation sectors. Energy Resources also add nearly 300 megawatts of battery storage projects in California, and we continue to experience significant demand from California based utilities and commercial and industrial customers for reliable energy storage solutions. We are currently developing nearly 2,400 megawatts of additional co-located and stand-alone battery storage projects in California with the potential to be deployed in 2023 and 2024, to enhance reliability and help meet the state's energy storage capacity requirements and ambitious clean energy goals. More than 30 years, we have been investing in clean energy in California and are proud to help the state lead the country to a carbon-free sustainable future. Consistent with our focus on growing our rate regulated and long-term contracted business operations, during the third quarter, Energy Resources entered into an agreement to acquire a portfolio of rate regulated water and wastewater utility assets in eight counties near Houston, Texas. The proposed acquisition expands our regulated utility business in an attractive market with significant expected customer growth and furthers our strategy to build a world class water utility in the coming years. Subject to regulatory approvals, the acquisition is expected to close in 2022. Energy Resources is also currently in construction on an innovative water reuse and reclamation project that would help our customer achieve significant savings on its water supply needs and make its operations more efficient and sustainable while at the same time, delivering attractive returns to Energy Resources. While the roughly $45 million total equity investment for these transactions is small in context of our overall capital program, we are optimistic about the strong growth anticipated in this new market and the potential for clean water solutions to generate additional contracted renewables opportunities going forward. Turning now to the consolidated results for NextEra Energy. For the third quarter of 2021, GAAP net income attributable to NextEra Energy was $447 million or $0.23 per share. NextEra Energy's 2021 third quarter adjusted earnings and adjusted EPS were $1.48 billion and $0.75 per share, respectively. Adjusted results from corporate and other segment increased by $0.01 year-over-year. Our long-term financial expectations through 2023 remain unchanged. For 2021, NextEra Energy expects adjusted earnings per share to be in the range of $2.40 to $2.54 and we would be disappointed not to be at or near the high-end of this range. While we are pleased with our year-to-date results, which have exceeded the top end of our growth rate expectations so far for the year, we expect the fourth quarter results to include impacts from certain liability management activities that we are currently reviewing to take advantage of the low interest rate environment. These initiatives could generate negative adjusted EPS impacts of as much as $0.08 to $0.10 in the fourth quarter before translating to favorable net income contributions in future years and an overall improvement in net present value for our shareholders. Looking further ahead, for 2022 and 2023, NextEra Energy expects to grow 6% to 8% off of the expected 2021 adjusted earnings per share, and we would be disappointed if we are not able to deliver financial results at or near the top-end of these ranges in 2022 and 2023. Our earnings expectations are supported by what we believe is the most attractive organic investment opportunity set in our industry. From 2018 to 2023, we continue to expect that operating cash flow will grow roughly in line with our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% rate per year through at least 2022 off of a 2020 base. As always, our expectations assume normal weather and operating conditions. Let me now turn to NextEra Energy Partners, which performed well and delivered third quarter results generally in line with our expectations. Yesterday, the NextEra Energy Partners Board declared a quarterly distribution of $0.685 per common unit or $2.74 per common unit on an annualized basis, continuing our track record of growing distributions at the top-end of our 12% to 15% per year growth range. Inclusive of this increase, NextEra Energy Partners has now grown its distribution per unit by more than 265% since the IPO. NextEra Energy Partners continues to execute against its growth initiatives during the quarter. Since the last earnings call, NextEra Energy Partners closed on its previously announced acquisitions of approximately 400 megawatts of operating wind projects from a third party and approximately 590 net megawatts of geographically diverse wind and solar projects from Energy Resources. In addition, today, we are announcing an agreement to acquire an approximately 100 megawatt operating wind asset in California from a third party to further expand NextEra Energy Partners portfolio and enhance its long-term growth visibility. The project is located in a strategic market with strong expected growth in renewables demand, and it also offers significant optionality to NextEra Energy Partners in terms of operational savings and long-term value creation. NextEra Energy Partners intends to purchase the asset for a total consideration of approximately $280 million, subject to closing adjustments, which includes the assumption of approximately $150 million in existing project finance debt estimated at the time of closing. NextEra Energy Partners expects to recapitalize this project finance debt in 2022 as it executes on its overall financing plan for the year. We expect to fund the approximately $130 million balance of the purchase price using existing debt capacity. Subject to regulatory approvals, the acquisition is expected to close later this year or in 2022. Following the project debt paydown next year, the asset is expected to contribute adjusted EBITDA and unlevered cash available for distribution of approximately $22 million to $27 million, each on a five-year average run rate -- annual run rate basis beginning December 31, 2022. NextEra Energy Partners continues to leverage its competitive advantages to be successful in third-party M&A and extend its long runway of growth. Consistent with our long-term growth prospects, today, we are also introducing year-end 2022 run rate expectations, which are built upon its strong existing portfolio cash generation and continued ability to access low cost capital to acquire accretive renewable energy projects. Overall, we are pleased with the year-to-date execution at NextEra Energy Partners and we believe we are well positioned to continue delivering LP unitholder value going forward. Now, let's look at the detailed results. Third quarter adjusted EBITDA was $334 million, up approximately 7% from the prior year comparable quarter due to growth in the underlying portfolio. New projects, which primarily reflect the asset acquisitions that closed at the end of 2020 and the recently closed acquisition of 391 megawatts of operating wind assets from a third party, contributed $23 million. Existing assets contributed $7 million, primarily driven by the wind repowerings that occurred in the fourth quarter of last year and an improvement in wind resource. Wind resource for the third quarter was 101% of the long-term average versus 96% in the third quarter of 2020. These favorable impacts were partially offset by lower solar resource in the third quarter of this year. Cash available for distribution of $158 million for the third quarter declined by $4 million versus the prior year, primarily as a result of lower year-over-year PAYGO payments after a weaker wind resource period in the second quarter of this year. As a reminder, NextEra Energy Partners recapitalized its Genesis Solar project and other existing assets at the end of last year and the impact of this new project level financing cost versus the prior year was offset by an associated reduction in corporate level interest expense as reflected in our other category. Additional details of our third quarter results are shown on the accompanying slide. On a year-to-date basis versus 2020, adjusted EBITDA and cash available for distribution have increased by roughly 9% and 6%, respectively. And NextEra Energy Partners remains well positioned to continue to deliver on its outstanding growth objectives. We continue to expect NextEra Energy Partners portfolio to support an annualized rate of fourth quarter 2021 distribution that is payable in February of 2022 to be in the range of $2.76 to $2.83 per common unit. From a base of our fourth quarter 2020 distribution per common unit at an annualized rate of $2.46, we continue to see 12% to 15% growth per year in LP distributions as being a reasonable range of expectations through at least 2024. NextEra Energy Partners continues to expect to be in the upper end of our previously disclosed year-end 2021 run rate adjusted EBITDA and cash available for distribution expectation ranges of $1.44 billion to $1.62 billion and $600 million to $680 million, respectively. We expect to achieve our 2022 distribution growth of 12% to 15% while maintaining a trailing 12-month payout ratio in the low 80% range. By year-end 2022, we expect the run rate for adjusted EBITDA to be in the range of $1.775 billion to $1.975 billion and run rate for cash available for distribution to be in the range of $675 million to $765 million. At the midpoint, these revised expectations ranges reflect estimated growth in adjusted EBITDA and cash available for distribution of roughly 23% and 13%, respectively, from the comparable year-end 2021 run rate expectations. These growth rates are supported by our strong execution against our long-term growth objectives in 2021, including opportunistic third-party transactions that were not previously in our plan. As a reminder, all of our expectations are subject to our normal caveats and include the impact of anticipated IDR fees as we treat these as an operating expense. Finally, during the quarter, S&P updated its ratings methodology for NextEra Energy Partners. And in particular, it will now evaluate NextEra Energy Partners debt metrics on a funds from operations or FFO to debt basis with a downgrade threshold of 14% instead of a debt-to-EBITDA basis. We believe that the combination of S&P's updated methodology, its assessment of NextEra Energy Partners improving diversity and its use of less conservative assumptions in the portfolios and renewable generation cash flows will allow for several hundred million dollars more of financing flexibility relative to our previous assumptions, providing the partnership with even greater flexibility going forward to finance accretive acquisition for the benefit of our unitholders. In summary, we continue to believe that both NextEra Energy and NextEra Energy Partners have some of the best opportunity sets and execution track records in the industry and we remain as enthusiastic as ever about our future prospects. That concludes our prepared remarks. And with that, we will open up the line for questions.

Julien Dumoulin-Smith:

Hey, good morning, team. Thank you for the time. I appreciate it. Impressive continued results here. Just if I can ask you at the outset here, can you perhaps describe how you see the backdrop here given the litany of different policy efforts underway around the availability of panel imports, and just how that positions your ability to execute right now. I certainly hear it echoing through your comments, but I just want to speak to that a little bit more specifically, if we can. And then subsequently, on the origination side, obviously, well down again. How do you think about the -- just the elevated energy price backdrop that we're seeing today? How quickly is that fomenting sort of a reinvigorated demand backdrop? And when could that materialize as you think about the backdrop in the '23, '24 backdrop or beyond?

James L. Robo:

Hey, Julien. Just --

James L. Robo:

The only thing I'd add is I think people don't really appreciate the 10-year strip is up $1 since January. It's hugely positive for the renewable business, enormously positive, right? So --

Steve Fleishman:

Thanks and good morning. Just could you maybe just give the name of the -- who the counterparty is for the green hydrogen project?

Steve Fleishman:

Okay. And then just on the -- a different way to ask the supply chain question. Just within your -- obviously, you had a lot to your backlog. If you look at the existing backlog, did anything move around meaningfully between years --

Steve Fleishman:

In the backlog?

Steve Fleishman:

Okay. And then last question, just obviously, I have to ask about the DC and the proposed clean energy credits and the reconciliation, etc., maybe just latest thoughts on what's most important to you and the likelihood and path to passage, how you're feeling about it?

Steve Fleishman:

And I'm sorry, just one follow-up. The -- this wind project for green hydrogen, is it -- does it depend on the hydrogen PTC passing? Or does it happen either way?

Steve Fleishman:

Great. Thank you very much.

Operator:

Our next question comes from Shar Pourreza from Guggenheim Partners. Please go ahead with your question.

Rebecca J. Kujawa:

Good morning, Shar.

Rebecca J. Kujawa:

Shar, I'm not sure I'm following completely the question. Are you asking whether or not there are other projects -- not our projects, but other projects that might be experiencing those? Or are you asking for us? Because I wasn't sure who the buyers were in that -- in your question.

Rebecca J. Kujawa:

We are not having any -- anything notable from a buyer perspective. And from our customers' perspective, we have a contract, and we are expecting to execute against what's laid out in those contracts. And from a supply chain standpoint, I think, we're very well positioned to navigate these uncertainties. And as I highlighted, line of sight of bringing out the projects that we intend to bring in in '21 into service and have great plans for executing against our '22 development program. And obviously, beyond that, one, there's a lot still to be seen as to what those conditions will ultimately be because now we're talking two-plus years out. But a great team and a great position in the industry to be able to navigate those. From a customer standpoint, we're continuing to see strong demand for new renewables. I think that's obvious from the contract signings that we were able to announce today, and John and his team have terrific backlog beyond that of opportunities that we have yet to sign and the team is really excited about being out in the field and talking with our customers. It is just a terrific time for renewables in our industry.

Rebecca J. Kujawa:

Sure, Shar. And obviously, we continue to work diligently at now what's going to be FPL going forward, particularly assuming the settlement agreement is approved next week by the commission, Gulf will be fully incorporated into the broader FPL enterprise. It largely is today, but obviously, from a regulatory standpoint, operates separately at least through the end of this year. We think there are continued opportunities to focus on optimization across the businesses. That's part of what we do as a company, is look for those opportunities to take opportunities to bring efficiencies to the business, and of course, invest capital to take cost out and lower fuel costs over time. One of the great ways that FPL, and that includes Gulf as part of it, will be to continue to deploy solar over the long term, because as you all well know, not only does it have the clean energy benefits, but it has low operating costs and no fuel costs, which will be a great offset in diversification in the state of Florida from our existing generation set. So I think there's continued opportunities. There's still a lot of work to be done. We focus hard on that every day and we think the team is all the cards in the hand to be able to continue executing.

Rebecca J. Kujawa:

Yes. So Shar, I would think if you look back at where we have taken the opportunity to invest capital historically, it really is on bringing long-term value to our customers. So being able to deliver lower cost over time, higher reliability, greater resilience, greater diversification and those clean energy benefits, and it would be short-sighted to stop investing in opportunities that are really clearly good for customers. We're very mindful of customer bills. You hear that from us from every day -- in all of our communications and it's what we focus on day to day, is making sure we have a terrific value proposition for our customers, and we will do everything we can to moderate those impacts over time.

Rebecca J. Kujawa:

Thank you.

Michael Lapides:

Hey, guys. Thank you for taking my question. I have one or two here. First of all, the water and wastewater utility system acquisitions in Texas, can you talk about just the size and scale of the capital you're employing there for that? And then more long-term, kind of more strategic, how do you think about the opportunity for growth in that business? Is it more organic? Is it more kind of continuing to roll up neighboring systems? Or are you thinking about a national strategy here?

Michael Lapides:

Got it. And then one question on Seabrook, and I know in the grand scheme of its [Phonetic] earnings power, Seabrook, while it's a large plant, is nowhere near the biggest contributor of that. But just curious, how should we think about how much you financially hedge Seabrook? I'm just thinking about given the move in forward power prices, and Jim referenced the move in natural gas dollar increase in the strip, how we should think about whether Seabrook actually benefits from that materially or had you already significantly hedged it out prior?

Michael Lapides:

Got it. Thank you. Much appreciated.

Operator:

Our next question comes from Maheep Mandloi from Credit Suisse. Please go ahead with your question.

Rebecca J. Kujawa:

So I'll come back to the second question. In terms of the transaction, as we highlighted, it was a third-party transaction, so it reflects a negotiated outcome. And we continue to believe that the renewable sector remains of high interest for a lot of folks and expect it to be competitive over time. But I think you can see with this transaction and with a prior third-party transaction that we announced and closed earlier this year, there are some specific advantages that NextEra Energy Partners has, both in its ability to find attractive financing, but also the relationship it has with NextEra Energy Resources of being able to add value on the operating side and bring to bear all of the scale benefits that we have. So in terms of the second part of the question, I think you were asking about the 2018 CEPF, and ultimately, the conversion that will happen in the very latter part of this year. And we're still -- obviously, some significant part of that gets converted up to 70% of it in NEP units and the balance is paid in cash. And we are still working through what the full impacts are and how we will finance that over time. But as we've laid out in terms of our run rate expectations, we will expect that year-end '22 to be in the ranges that we outlined today.

Rebecca J. Kujawa:

Thank you.

Durgesh Chopra:

Hey, good morning, team. Thank you for taking my question. I just wanted to go back to the water utility acquisition strategy a bit. Obviously, this is in Texas, but there's obviously a ton of small municipal systems across the country, which are sort of owned by small mom-and-pop type facilities. Just are you going to sort of be more aggressive throughout the country? Or is there something specific about taxes as we think about you sort of competing for these small water utility systems?

Durgesh Chopra:

Understood. Thank you for the time.

Operator:

Our next question comes from Jeremy Tonet from JPMorgan. Please go ahead with your question.

Rebecca J. Kujawa:

Good morning.

Rebecca J. Kujawa:

I think it's a great question. I think in the electricity sector, when it's going to be particularly relevant is the latter part of the 2020s into 2030s and beyond. And for the key reason for that being that you really need to have the need for long-duration storage, and it is particularly attractive when you have very, very low cost energy input, and particularly, low cost renewables, which will inevitably have when you have substantial renewable deployment, again, probably in the latter part of the 2020s and beyond. What may be different is in the transportation and industrial sector, where there's already built-in use of gray hydrogen and other fossil fuels that could be supplanted with green hydrogen when it's competitive. The big question mark would be whether or not there's a hydrogen production tax credit ultimately in the final reconciliation bill. Clearly, there's one anticipated today, and at $3 a kilogram production tax credit, that really closes the gap between gray hydrogen and green hydrogen alternatives. And so that's a terrific opportunity to see growth in the near term, and what that would represent is using green hydrogen alternatives to supplant gray hydrogen. From our perspective, that opportunity is clearly to build a lot of renewables and you saw the first step in that direction in our announcement today about a power purchase agreement that we've entered into. But there would be more -- a lot more like that in not just the renewable side, but also an opportunity for us to invest in the actual hydrogen production equipment such as the electrolyzer. So we'll see. We'll know a lot more in January once we've seen the final package, if there is one, as Jim highlighted and it will develop over time in terms of opportunities. We think it's exceptionally likely. It's really just a matter of timing.

Rebecca J. Kujawa:

Yes. We're really excited about transmission opportunities. Our NextEra Energy Transmission team has built a terrific business over the last decade with a number of organic wins as well as some acquisitions, as we've talked about in the past of, not only Trans Bay Cable, but GridLiance more recently, and we see a ton of opportunities going forward for us to be successful in winning some of those big opportunities to invest, realizing great returns, but also the strategic side of it of ensuring that it happens so that we can continue to realize the substantial renewables build-out that we already are seeing, and we expect to only continue to grow in this opportunity size over time. It may not be imperative today to have new transmission, but it's really, really important to start today because it will be imperative in the next decade and some of the policy considerations that FERC is undertaking today could be helpful to bringing that to reality over time.

Rebecca J. Kujawa:

Great. Thank you.

Operator:

Good morning everyone. And welcome to the NextEra Energy and NextEra Energy Partners Q2, 2021 Earnings Call. [Operator Instructions] Please also note today's event is being recorded. And at this time, I would like to turn the conference over to Jessica Aldridge, Director of Investor Relations. Ma'am, please go ahead.

Rebecca Kujawa:

Thank you, Jessica. And good morning everyone. NextEra Energy delivered strong second quarter results and is well positioned to meet its overall objectives for the year. Adjusted earnings per share increased more than 9% year-over-year reflecting continued strong financial and operational performance across all of the businesses. FPL increased earnings per share by $0.04 year-over-year driven by continued investments in the business. FPL's major capital initiatives remain on track and FPL's focus continues to be on identifying smart capital investments to lower costs, improve reliability and provide clean energy solutions for the benefit of our customers. In June, FPL demolished its last coal fired plant in Florida with plans to replace it with more clean emissions free solar energy facilities. During the quarter, FPL also successfully commissioned approximately 373 megawatts of new solar, including the FPL Discovery Solar Energy Center at Kennedy Space Center. With these new additions FPL surpassed 40% completion of its groundbreaking 30 by 30 plan to install 30 million solar panels by 2030. FPL expects to have installed more than 15 million panels by early 2022, which would put the company more than 50% on the way towards completing a 30 by 30 plan. And just over three years since the initial announcement. To support its solar build out, FPL recently began installing the first components of the world's largest integrated solar powered battery system. The 409 megawatt FPL Manatee Energy Storage Center which expected to begin serving customers later this year. Gulf Power also continued to execute on its growth initiatives during the quarter with its strong financial performance driven primarily by continued investment in the business and further improvements in operational cost effectiveness. Excluding the COVID-19 related expenses which were subsequent reversed and booked into a regulatory asset in the third quarter of 2020, Gulf Power's year-to-date O&M costs declined by approximately 9% versus the prior year comparable period, and have now declined by approximately 31% relative to 2018. Gulf Power's operational performance metrics also continue to improve with reliability of the generation fleet that we operate, and service reliability improving by 71% and 63% respectively, year-to-date versus the first half of 2018. We continue to expect the cost reduction initiatives and smart capital investments that we've previously outlined will generate significant customer and shareholder value in the coming years. At Energy Resources, adjusted earnings per share increased by more than 7% year-over-year. The energy resources team continues to capitalize on the terrific market opportunity for low cost renewables and storage, adding approximately 1840 megawatts to its backlog since the last earnings call. This continued origination success is a testament to Energy Resources' significant competitive advantages, including our large pipeline of sites and interconnection queue positions, strong customer relationships, purchasing power and supply chain execution, best-in-class construction expertise, resource assessment capabilities, cost of capital advantages, and world class operations capability. Moreover, Energy Resources Advanced Data analytics and machine learning capabilities allow us to utilize the nearly 40 billion operating data points our fleet provides every single day for predictive modeling, further extending our best-in-class O&M and development capabilities. We continue to believe that no company is better positioned than Energy Resources to capitalize on the best renewables development period in our history. We are pleased with the progress we've made at NextEra Energy so far in 2021. And headed into the second half of the year, we are well positioned to achieve the full year financial expectations that we've previously discussed, subject to our usual caveats. Now let's look at the detailed results beginning with FPL. For the second quarter of 2021, FPL reported net income of $819 million or $0.42 per share, which is an increase of $70 million and $0.04 per share, respectively year-over-year. Regulatory capital employed increased by approximately 10.7% over the same quarter last year, and was the principal driver of FPL's net income growth of more than 9%. FPL's capital expenditures were approximately $1.6 billion in the second quarter, and we expect our full year capital investments to total between $6.6 billion and $6.8 billion. Our reported ROE for regulatory purposes will be approximately 11.6% for the 12 months ended June 2021. During the quarter, we utilized $100 million of reserve amortization to achieve our target regulatory ROE leaving FPL with a balance of $473 million. As a reminder, rather than seek recovery from customers of the approximately $240 million in hurricane Dorian storm restoration costs, in 2019, FPL utilized its available reserve amortization to offset nearly all of the expense associated with the write-off of the regulatory assets related to Dorian cost recovery. Earlier in the year FPL and Office of Public council entered into a settlement regarding the prudence of FPL’s hurricane Dorian storm restoration costs and activities, which was approved by the Florida Public Service Commission in May. We were pleased by the Commission's determination that all of FPL hurricane Dorian restoration costs were prudently incurred, and we believe the settlement agreement fairly and reasonably balances the interests of FPL and its customers. Earlier this month, FPL responded to tropical storm Elsa, with a restoration workforce of approximately 7,000 FPL employees and contractors. FPL safely and quickly restored power to nearly 100,000 customers who were impacted by Elsa as the hardening and automation investments that FPL has made since 2006 to build a stronger, smarter and more storm resilient energy grid continued to benefit customers. Elsa was the earliest that a fifth named storm has formed in the Atlantic basin. And we remain prepared in advance of what is forecasted to be another active hurricane season in 2021. Let me now turn to Gulf Power, which reported second quarter 2021 net income of $63 million or $0.03 per share. During the quarter Gulf Power's capital expenditures were approximately $150 million and we expected full year capital investments to be between $800 million and $900 million. All of the major capital with the Gulf Power capital projects, including the North Florida resiliency connection that is expected to be in service in mid 2022 continue to progress well and Gulf Power's regulatory capital employed grew by approximately 17% year-over-year as a result of these smart capital investments for the benefit of customers. Gulf Power's reported ROE for regulatory purposes will be approximately 10.3% for the 12 months ended June 2021. For the full year 2021, we continue to target a regulatory ROE in the upper half of the allowed band of 9.25% to 11.25%. Earlier this month, Florida Public Service Commission also approved a settlement agreement between Gulf Power and the Office of Public Council for cost recovery of the approximately $13 million in COVID-19 related expenses, primarily reflected in incremental bad debt and safety expenses as a result of the pandemic. We are pleased with this outcome and believe it demonstrates the continued constructive regulatory environment in the state of Florida, as we work to improve Gulf Power's customer value proposition of low costs, high reliability, excellent customer service and clean energy for our customers. As we anticipated, Florida's economic activity has rebounded since the onset of the COVID-19 pandemic last year, as reflected by a wide range of positive economic indicators. Florida's current unemployment rate is 5%, which remains well below the national average. Rolling three month average of new building permits are up approximately 46% year-over-year, which is the highest growth rate in nearly eight years, and are the second highest new building permits in the nation. As another indicator of health in Florida's economy, Florida's retail sales index was up over 40% versus the prior year. The Case-Shiller seasonally adjusted index for South Florida home prices is up over 14% on an annual basis. Recent population growth estimates indicate that Florida remains one of the top destinations for relocating Americans, with Florida adding nearly 330,000 new residents between April of 2020 and April of 2021. We expect this trend to continue, with Florida's population projected to grow at an average annual rate of 1% through 2023 and FPL, including Gulf Power forecasts adding almost 500,000 new customer accounts from 2018 through 2025. During the quarter, FPL's average number of customers increased by approximately 70,400 from the comparable prior year quarter, driven by continued solid underlying population growth. FPL's second quarter retail sales increased 2.1% from the prior year comparable period. Partially offsetting customer growth was a decline in weather related usage per customer of approximately 2.8%. On weather normalized basis, second quarter sales increased 2.9% with continued strong underlying usage contributing favorably. For Gulf Power the average number of customers grew roughly 1.5% versus the comparable prior year quarter, and Gulf Power's second quarter retail sales decreased 1% year-over-year, as strong customer growth was more than offset by an unfavorable weather comparison relative to 2020. As we previously stated on March 12, we initiated Florida Power and Light 2021 base rate proceeding. The four year base rate plan we have proposed has been designed to support continued investments in clean energy generation, long-term infrastructure and advanced technology, which improves reliability and keeps customer bills low. Today FPL typical residential bills remain well below the national average and the lowest among the top 20 investor owned utilities in the nation. With a proposed base rate adjustments and current projections for fuel and other costs, FPL's typical residential bill is expected to be approximately 20% below the projected national average, and typical Gulf Power residential bills are projected to decrease approximately 1% over the four year rate plan. As always we are open to the possibility of resolving our rate request through our fair settlement agreement. And our core focus remains on pursuing a fair and objective review of our case that supports continued execution of our successful strategy for customers. Energy Resources reported second quarter 2021 GAAP losses of $315 million or $0.16 per share. Adjusted earnings for the second quarter were $574 million or $0.29 per share. Energy Resources adjusted earnings per share in the second quarter increased more than 7% versus the prior year comparable period. The effect of mark-to-market on non-qualifying hedges which is excluded from adjusted earnings was the primary driver of the difference between Energy Resources' second quarter GAAP and adjusted earnings results. Contributions from new investments added $0.04 per share versus the prior year and primarily reflect growth in our contract of renewables and battery storage program. Adjusted earnings per share contributions from existing generation and storage assets increased $0.01 year-over-year, which includes the impact of unfavorable wind resource during second quarter. NextEra Transmissions adjusted earnings per share contribution also increased $0.01 year-over-year. Our customer supply and trading business contribution was $0.3 lower year-over-year primarily due to unfavorable market conditions. All other impacts decreased results by $0.01 per share versus 2020. The Energy Resources Development team continues to capitalize on what we believe is the best renewables development environment in our history during the second quarter, with a team adding approximately 1,840 megawatts of renewables and storage projects to our backlog. Since our last earnings call, we've added approximately 285 megawatts of new wind and wind repowering, 1,450 megawatts of solar and 105 megawatts of battery storage to our backlog assign contracts. With nearly 3.5 years remaining before the end of 2024, we have already signed more than 75% of the megawatts needed to realize the low end of our 2021 to 2024 development expectations range. Since the last call, we have also executed a 310 megawatt build own transfer agreement which is not included in our backlog additions. Our customer intends to use this solar-plus-storage project to replace existing coal generation. And we are excited to be able to continue supporting the industry's transition away from old inefficient forms of generation into clean, reliable and low cost renewables and storage. Our engineering and construction team continues to perform exceptionally well commissioning approximately 330 megawatts during the quarter and keeping the backlog of wind, solar and storage projects that we expect to build in 2021 and 2022 on track. We are well positioned to complete our more than $20 billion capital investment program at Energy Resources for 2021 and 2022. Last month, the IRS extended safe harbor eligibility on production tax credits and investment tax credits. Providing projects that began construction between 2016 and 2019 with six years to complete construction and projects that started construction in 2020 with five years to achieve their in service dates and qualify for federal tax credits. We believe the extension reflects the strong support of the Biden administration for new renewables and may enable an incremental 1 to 1.5 gigawatts of new wind and wind repowering opportunities. We now have more than $2.2 billion of safe harbor wind and solar equipment, which could support as much as $45 billion of wind, solar and battery storage investments across all of our businesses from 2021 to 2024. Turning now to the consolidated results for NextEra Energy; for the second quarter of 2021, GAAP net income attributable to NextEra Energy was $256 million or $0.13 per share. NextEra Energy's 2021 second quarter adjusted earnings and adjusted EPS were $1.4 billion and $0.71 cents per share respectively. Adjusted earnings from corporate and other segment were roughly flat year-over-year. Over the past few months NextEra Energy issued nearly $3.3 billion in new financings under its innovative new NextEra Green bond structure. Funds raised with NextEra Energy green bonds are designated for specific renewable energy and storage projects under development across our businesses. And if funds are not used to bring the renewable projects online within two years, there was a step up in the interest rate on the debt. Our inaugural NextEra Green issuance was 4.5x oversubscribed, priced at a premium to the market and was well received by investors. We believe that NextEra Green will set a new standard for green issuances moving forward. NextEra Energy has raised more than $9 billion in new capital year-to-date on very favorable terms as we continue to execute on our financing plan for the year. Finally, in June, S&P affirmed all of its ratings for NextEra Energy and lowered its downgrade threshold for its Funds From Operation or FFO to debt metric, from the previous level of 21% to the new level of 20%. We believe this favorable adjustment reflects the strength of our business, as well as recognition of NextEra Energy's leading position in the utility and renewable energy sectors on environmental, social and governance or ESG factors. We believe this is the first time that S&P has formally recognized the benefits to business risk profile related to ESG factors by allowing more constructive financial metrics since it began its practice of identifying the specific ESG key metrics that drive a company's overall credit position. Notably, S&P also revised NextEra Energy's management and governance assessment, from satisfactory to strong to reflect its views on our comprehensive enterprise wide risk management standards, and successful track record of consistently implementing our strategic planning efforts. Our long-term financial expectations through 2023 remain unchanged. For 2021 NextEra Energy expects adjusted earnings per share to be in a range of $2.40 to $2.54. For 2022, and 2023, NextEra Energy expects to grow 6% to 8% off of the expected 2021 adjusted earnings per share. And we will be disappointed if we are not able to deliver financial results at or near the top end of these ranges in 2021, 2022, and 2023, while at the same time maintaining strong credit ratings. From 2018 to 2023, we continue to expect that operating cash flow will grow roughly in line with our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% rate per year to at least 2022 off of a 2020 base. As always, our expectations assume normal weather and operating conditions. Let me now turn to an NextEra Energy Partners, NextEra Energy Partners portfolio performed well and deliver financial results are generally in line with our expectations after accounting for the below average renewable resource. On a year-to-date basis, adjusted EBITDA and cash available for distribution have increased by roughly 9% and 11%, respectively, versus 2020. This strong operational and financial performance highlights the NextEra Energy Partners remains well positioned to continue to deliver on its outstanding growth objectives. Yesterday, the NextEra Energy Partners' board declared a quarterly distribution $0.6625 per common unit or $2.65 per common unit on an annualized basis, up approximately 15% from a year earlier. Inclusive of this increase NextEra Energy Partners has now grown its distribution per unit by more than 250% since the IPO. Further building on that strength, today we are announcing the NextEra Energy Partners has entered into an agreement to acquire approximately 590 net megawatts of geographically diverse wind and solar projects from NextEra Energy Resources. I'll provide additional details on the transaction in a few minutes. NextEra Energy Partners also completed multiple financing during second quarter to secure funding for its recently announced 2021 acquisitions and further enhance its financing flexibility. In June, NextEra Energy Partners raised approximately $500 million in new 0% coupon convertible notes and concurrently entered into a capped call structure that is expected to result in NextEra Energy Partners retaining the upside from up to 50% appreciation in its unit price over the three years associated with a convertible notes. NextEra Energy Partners also drew the remaining funds from its 2020 convertible equity portfolio financing, which was upsized by approximately $150 million during the quarter evidencing continued investor demand for exposure to the high quality long term contract of renewables projects and the underlying portfolio of assets that was established last year. Finally, NextEra Energy Partners has successfully completed the sale of approximately 700,000 NEP common units year-to-date through its recently expired at the market or ATM program, raising roughly $50 million in proceeds. Going forward, we will continue to seek opportunities to use the ATM program depending on market conditions and other considerations. And in the near term NextEra Energy Partners intends to renew the program for up to $300 million in issuances over the next three years to permit additional financing flexibility. As a result of these financings, and the strong cash flow generation of its existing portfolio, NextEra Energy Partners ended the quarter with more than $2.2 billion in liquidity, which includes funds raised in second quarter financing activities and existing partnership debt capacity to support its ongoing growth initiatives, including the acquisition of the approximately 599 megawatts of renewables from Energy Resources, as well as previously announced acquisition of approximately 400 megawatts of operating wind projects, both of which are expected to close later this year. Let me now review the detailed results for NextEra Energy Partners. Second quarter adjusted EBITDA $350 million was roughly flat versus the prior year comparable quarter driven by favorable contributions from the approximately 500 megawatts of new wind and solar projects acquired in 2020. Weaker wind and solar resource in this second quarter, which reduced this quarters adjusted EBITDA contribution from existing projects by roughly $22 million was partially offset by positive contributions to adjusted EBITDA from last year's repowering and the Texas pipelines. Wind resource for the quarter was 93% of the long-term average versus 100% in the second quarter of 2020. Cash available for distribution of $151 million for the second quarter was also reduced for existing projects due to the distributions for the convertible equity portfolio financing entered into late last year. As a reminder, this convertible equity portfolio financing recapitalize NextEra Energy Partners' existing Genesis solar project and other assets, and the proceeds were used to fund last year's acquisition from Energy Resources. Additional details of our second quarter results are shown on the accompanying slide. We remain on track for the strong full year growth consistent with our long-term growth objectives of 12% to 15% distributions per unit growth through at least 2024. As I previously mentioned, we continue to execute on our plan to expand NextEra Energy Partners' portfolio with an agreement to acquire assets in a diverse portfolio of long-term contracted wind and solar projects from Energy Resources. The portfolio consists of approximately 830 megawatts of renewables, of which NextEra Energy Partners will be acquiring an approximately 590 megawatt net interest. NextEra Energy Partners' interest in the portfolio will consist of approximately 510 megawatts of universal scale wind and solar projects, and approximately 80 megawatts of distributed solar projects, which is NextEra Energy Partners' first acquisition of distributed generation assets. The portfolio to be acquired by NextEra Energy Partners has a cash available for distribution weighted average contract life of approximately 17 years and a counterparty credit rating of Baa1 at Moody's and BBB at S&P. Additional details on the portfolio of assets to be acquired by NextEra Energy Partners can be found in the appendix of today's presentation. Energy Resources currently owns the country's largest portfolio of distributed generation assets with commercial and industrial customers, and expects to triple its capital investment and distributed generation from 2020 through 2020. NextEra Energy Partners expects to benefit from this expansion over the coming years through future acquisitions from Energy Resources. NextEra Energy Partners expects to acquire the portfolio for a total consideration of $563 million subject to working capital and other adjustments. NextEra Energy Partners' share of the portfolio's debt and tax equity financings is estimated to be approximately $270 million at the time of closing. The acquisition is expected to contribute adjusted EBITDA of approximately $90 million to $100 million, and cash available for distribution of approximately $41 million to $49 million, each on five year average annual run rate basis beginning on December 31 2021. The purchase price for the transaction is expected to be funded with existing liquidity, and the transaction is expected to close prior to year end and be immediately accretive to LP distributions. NextEra Energy Partners continues to expect to be in the upper end of our previously disclosed year end 2021 run rate adjusted EBITDA and capped the expectation ranges of $1.44 billion to $1.62 billion and $600 million to $680 million, respectively. As a reminder, all of our expectations are subject to our normal caveats, and include the impact of anticipated IDR fees as we treat these as an operating expense. From the base of our fourth quarter 2020 distribution per common unit at an annualized rate of $2.46, we continue to see 12% to 15% growth per year in LP distributions as being a reasonable range of expectations through at least 2024. We expect the annualized rate of the fourth quarter 2021 distribution that is payable in February of 2022, to be in the range of $2.76 to $2.83 per common unit. In summary, we remain as enthusiastic as ever about the long-term growth prospects for both NextEra Energy and NextEra Energy Partners. At NextEra Energy we were honored to be named on Time magazine's first ever list of Top 100 most influential companies, which highlights businesses making an extraordinary impact around the world. We are proud to be leading the clean energy transformation in our sector and remained focused on executing upon the opportunities presented by the significant growth in wind, solar and various forms of energy storage in the US over the coming decades. At FPL, including Gulf Power, that means continuing to deliver on our best-in-class customer value proposition of low bills, high reliability and clean energy solutions. At Energy Resources, our competitive advantages, position as well to capture a meaningful share of the significant and expanding market for renewables. And at NextEra Energy Partners with its continued access to low cost capital, and accretive acquisition opportunities, is well positioned as ever to take advantage of the clean energy transformation, reshaping the energy industry. That concludes our prepared remarks. And with that, we will open up the line for questions.

SharPourreza:

Hey, good morning, guys. Just a question with sort of the infrastructure discussions going on at the federal level and obviously, Rebecca, you highlighted opportunities on the wind and solar side. Does NextEra transmissions sort of seeing the upside from policy changes? And obviously, with the prior acquisitions closed, do you feel like you have a big enough platform to grow organically or is there an interest to roll up more standalone projects development entities?

SharPourreza:

Got it. And then the backlog additions look obviously more solid this quarter. Just thinking about maybe the market dynamics, there was some slowdown in early '21 with input costs and commodity inflation, right. Have you seen that or are the headwinds largely stabilized? And just as a follow up, is energy storage, still kind of a large component of the backlog and contracted additions or has there been some pricing pressure there?

SharPourreza:

Got it. And then just lastly, regarding just the rate case, I mean, obviously, you're having conversations with interveners and you're building a case record there and obviously highlighted you always prefer a settlement. Are there any moving pieces that you feel are in focus? And what do you sort of think you have some flexibility for a constructive kind of outcome versus a fully litigated case?

SharPourreza:

Perfect. Congrats guys on the results.

JulienSmith:

Excellent. Good morning, team. Thanks for the time. Maybe picking up where Shar left it off. Can you speak a little bit more about some of this inflation dynamic? And especially some of the elevated freight and logistics? I mean, it seems like your '21, '22 outlook here is relatively intact? Can you speak to some of the dynamics there in and just the competence? It seems like you guys are certainly staying on track of execution that you have historically. But also in the same vein of inflation, can you speak to what that does to your PPA offtake prices, right? I mean, how are you thinking about this being effectively passed through to your customers, if you will, whether that's as a proxy for higher gas and power prices, or simply just passing through your higher cost of goods here?

JohnKetchum:

One small add, I would I would make to listen to what Rebecca just said. This is John; it's actually creating opportunities for us. Our supply chain capability and our ability to manage that supply chain, the buying power, that we have spent an $11 billion in CapEx a year, it's creating opportunities for us in the renewable space because we can execute deliver where others can't.